Simmons First National Corporation (NASDAQ:SFNC) Q1 2025 Results Conference Call April 17, 2025 8:30 AM ET Company Participants Ed Bilek - Director, Investor Relations Jay Brogdon - President Daniel Hobbs - CFO George Makris - Chairman & CEO Conference Call Participants David Feaster - Raymond James Woody Lay - KBW Matt Olney - Stephens Ahmad Hassan - D.A. Davidson Operator Good morning, and welcome to the Simmons First National Corporation First Quarter 2025 Earnings Conference Call and Webcast. All partic ...

Core Insights - Simmons First National (SFNC) reported revenue of $209.58 million for the quarter ended March 2025, reflecting a year-over-year increase of 7.4% [1] - The company's earnings per share (EPS) was $0.26, down from $0.32 in the same quarter last year, indicating a decline [1] - The reported revenue exceeded the Zacks Consensus Estimate of $205.86 million by 1.81%, while the EPS fell short of the consensus estimate of $0.36 by 27.78% [1] Financial Performance Metrics - Total non-performing assets amounted to $162.30 million, surpassing the average estimate of $125.29 million from two analysts [4] - The efficiency ratio was reported at 66.9%, slightly higher than the average estimate of 66.4% [4] - The net interest margin stood at 3%, exceeding the average estimate of 2.9% [4] - Total nonperforming loans were $152.30 million, compared to the average estimate of $114.60 million [4] - Total interest-earning assets (FTE) averaged $23.32 billion, slightly below the average estimate of $23.39 billion [4] - Net charge-offs to average loans were 0.2%, better than the average estimate of 0.3% [4] - Net interest income (FTE) was reported at $169.84 million, above the average estimate of $168.60 million [4] - Total non-interest income reached $46.16 million, exceeding the average estimate of $43.55 million [4] - Net interest income was $163.42 million, compared to the average estimate of $162.31 million [4] Stock Performance - Over the past month, shares of Simmons First National have returned -11.7%, while the Zacks S&P 500 composite experienced a -4.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Performance - Total revenue for Q1 2025 was $209.6 million, an increase of 7.2% compared to $195.1 million in Q1 2024[5] - Net income for Q1 2025 was $32.4 million, down from $48.3 million in Q4 2024 and $38.9 million in Q1 2024[6] - Diluted earnings per share for Q1 2025 were $0.26, compared to $0.38 in Q4 2024 and $0.31 in Q1 2024[6] - Noninterest income for Q1 2025 was $46.2 million, up 6% from $43.6 million in Q4 2024[14] - Total interest income for Q1 2025 was $307,837,000, a decrease of 5.5% from $325,982,000 in Q4 2024[39] - Net interest income after provision for credit losses was $136,625,000, down from $151,610,000 in the previous quarter, reflecting a decrease of 9.9%[39] - Pre-Provision Net Revenue (PPNR) for Q1 2025 was $64.997 million, down from $67.383 million in Q4 2024[53] - Adjusted Pre-Provision Net Revenue for Q1 2025 was $65.991 million, compared to $69.164 million in Q4 2024[53] - Total adjusted earnings available to common stockholders for Q1 2025 were $33.122 million, compared to $49.634 million in Q4 2024[52] - Net income for 2025 was $32,388 thousand, compared to $152,693 thousand in 2024, reflecting a decrease of 78.8% year-over-year[54] - Adjusted earnings (non-GAAP) for 2025 were $33,122 thousand, a decline from $177,887 thousand in 2024, representing a 81.3% decrease[54] Asset and Liability Management - Total assets decreased to $26.79 billion as of March 31, 2025, from $27.27 billion at the end of 2024, representing a decline of approximately 1.76%[38] - Total liabilities decreased to $23.26 billion, a decrease from $23.93 billion, representing a decline of approximately 2.79%[38] - Total deposits were $21,685 million in Q1 2025, a decrease from $22,353 million in Q1 2024[5] - Total deposits decreased to $21.68 billion from $22.35 billion, a decline of approximately 3.01%[38] - The company reported a total liabilities figure of $23.26 billion, a decrease from $23.93 billion, representing a decline of approximately 2.79%[38] Credit Quality - Provision for credit losses on loans was $26.8 million, with $15.6 million attributed to two specific credit relationships[5][9] - The nonperforming loan ratio increased to 0.89% in Q1 2025, compared to 0.63% in Q1 2024[5] - Net charge-offs as a percentage of average loans were 23 basis points in Q1 2025, down from 27 basis points in Q4 2024, with total nonperforming loans at $152.3 million[22] - Nonperforming loans totaled $152,391,000, up from $110,757,000 in the previous quarter, indicating a rise in credit risk[44] - The ratio of allowance for credit losses to nonperforming loans decreased to 165% from 212% in the previous quarter, suggesting a tightening of coverage[44] - The allowance for credit losses on loans increased to $252.17 million from $227.37 million, indicating a rise of about 10.89%[38] Operational Efficiency - The efficiency ratio for Q1 2025 was 66.94%, compared to 65.66% in Q4 2024, indicating a slight decline in operational efficiency[17] - Total noninterest expense for Q1 2025 was $144.6 million, up from $141.1 million in Q4 2024 and $139.9 million in Q1 2024, with adjusted noninterest expense at $143.6 million[16] - Total noninterest expense increased to $144,580,000 in Q1 2025, up from $141,117,000 in Q4 2024, marking a rise of 3.5%[39] - Adjusted efficiency ratio (non-GAAP) improved to 64.75% in 2025 from 64.56% in 2024, indicating a marginal improvement of 0.3%[55] Capital Position - Total stockholders' equity at the end of Q1 2025 was $3.5 billion, up from $3.4 billion in Q1 2024, with a book value per share of $28.04[26] - The common equity Tier 1 ratio (CET1) was 12.21% at the end of Q1 2025, slightly down from 12.38% in Q4 2024[40] - The equity to assets ratio improved to 13.18% in Q1 2025, compared to 13.13% in Q4 2024[40] - Average common stockholders' equity increased to $3,564,469 thousand in 2025 from $3,486,822 thousand in 2024, an increase of 2.2%[54] Future Outlook - Forward-looking statements indicate expectations for future growth and strategies, including digital banking initiatives and acquisition strategies[36] - The company's management emphasizes the importance of non-GAAP financial measures for assessing ongoing operations, excluding impacts from mergers and tax effects[35]

Core Insights - The company reported a net income of $32.4 million for Q1 2025, a decrease from $48.3 million in Q4 2024 and $38.9 million in Q1 2024, with diluted earnings per share at $0.26 [4][6][26] - Total loans increased to $17.1 billion, while total deposits decreased to $21.7 billion, reflecting a decline in time and brokered deposits [17][19] - The net interest margin improved to 2.95%, marking the fourth consecutive quarterly increase, driven by lower deposit costs and reduced use of wholesale funding [9][11] Financial Performance - Total revenue for Q1 2025 was $209.6 million, up from $195.1 million in Q1 2024, with adjusted total revenue also at $209.6 million [4][12] - Noninterest income rose to $46.2 million, compared to $43.2 million in Q1 2024, primarily due to increased swap fee income and wealth management fees [12][14] - Noninterest expense increased to $144.6 million, influenced by a $4.3 million charge related to a customer deposit fraud event [15][16] Asset Quality - The provision for credit losses on loans totaled $26.8 million, significantly higher than $10.2 million in Q1 2024, largely due to two specific credit relationships migrating to nonperforming status [23][22] - The nonperforming loan ratio increased to 0.89%, up from 0.63% in Q1 2024, with total nonperforming loans at $152.3 million [22][21] - The allowance for credit losses on loans was 1.48% of total loans, compared to 1.34% in Q1 2024 [25][23] Capital Position - Total stockholders' equity was $3.5 billion, reflecting a year-over-year increase of $92.4 million, with a book value per share of $28.04 [26][27] - The common equity tier 1 (CET1) ratio stood at 12.21%, indicating a strong capital position exceeding regulatory requirements [28][29] - The company did not repurchase shares during Q1 2025, with approximately $175 million remaining under its stock repurchase program [30]

Core Viewpoint - Analysts project that Simmons First National (SFNC) will report quarterly earnings of $0.36 per share, reflecting a year-over-year increase of 12.5% and revenues of $205.86 million, up 5.5% from the same quarter last year [1] Earnings Projections - There has been no revision in the consensus EPS estimate for the quarter over the last 30 days, indicating that analysts have not changed their initial forecasts during this period [2] - Changes in earnings projections are crucial for predicting investor reactions to the stock, with empirical studies showing a strong correlation between earnings estimate trends and short-term stock price movements [3] Key Metrics Estimates - Analysts estimate 'Total non-performing assets' will reach $125.29 million, up from $112.32 million a year ago [5] - The 'Efficiency Ratio' is projected at 66.4%, an improvement from 69.4% reported in the same quarter last year [5] - 'Total nonperforming loans' are expected to be $114.60 million, compared to $107.32 million a year ago [5] Interest Earning Assets - 'Total interest earning assets (FTE) - Average Balance' is expected to be $23.39 billion, down from $23.92 billion in the same quarter last year [6] - Analysts predict 'Net Interest Income - FTE' to be $168.60 million, compared to $158.33 million a year ago [6] Non-Interest Income - The consensus for 'Total Non-Interest Income' is $43.55 million, slightly up from $43.18 million in the same quarter last year [7] - 'Net Interest Income' is expected to be $162.31 million, compared to $151.91 million a year ago [7] Stock Performance - Simmons First National shares have decreased by 11.5% in the past month, while the Zacks S&P 500 composite has declined by 6.1% [8] - The company holds a Zacks Rank 4 (Sell), indicating expectations of underperformance relative to the overall market in the near term [8]

Group 1 - Simmons First National Corporation is scheduled to release its first quarter 2025 earnings on April 16, 2025, after market closing [1] - A live conference call will be held on April 17, 2025, at 7:30 a.m. Central Time to discuss the earnings [1] - Interested parties can access the call by dialing a toll-free number or through the company's website, where a recorded version will be available for at least 60 days [1] Group 2 - Simmons First National Corporation has paid cash dividends to shareholders for 116 consecutive years [2] - The principal subsidiary, Simmons Bank, operates over 220 branches across several states including Arkansas, Kansas, Missouri, Oklahoma, Tennessee, and Texas [2] - Simmons Bank has received multiple recognitions in 2024, including being named one of America's Best Regional Banks 2025 by Newsweek and one of the Best Companies to Work For in the South by U.S. News & World Report [2]

Core Viewpoint - Simmons First National (SFNC) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with stock price movements, making it a valuable tool for investors [2][4]. - The recent upgrade reflects an improvement in Simmons First National's earnings outlook, likely leading to a favorable impact on its stock price [3][5]. Earnings Estimate Revisions - Simmons First National is projected to earn $1.59 per share for the fiscal year ending December 2025, representing a year-over-year increase of 12.8% [8]. - Over the past three months, the Zacks Consensus Estimate for the company has risen by 1.1%, indicating a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade to Zacks Rank 2 places Simmons First National in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Company Overview - Simmons First National (SFNC) is headquartered in Pine Bluff and operates in the Finance sector [3] - The stock has experienced a price decline of 5.82% since the beginning of the year [3] Dividend Information - SFNC currently pays a dividend of $0.21 per share, resulting in a dividend yield of 4.07%, which is significantly higher than the Banks - Southeast industry's yield of 2.4% and the S&P 500's yield of 1.58% [3] - The annualized dividend of $0.85 has increased by 1.2% from the previous year, with a five-year average annual increase of 5.21% [4] - The current payout ratio for SFNC is 60%, indicating that 60% of its trailing 12-month earnings per share (EPS) is distributed as dividends [4] Earnings Growth - The Zacks Consensus Estimate for SFNC's earnings in 2025 is projected at $1.59 per share, reflecting a year-over-year earnings growth rate of 12.77% [5] Investment Appeal - SFNC is considered a compelling investment opportunity due to its attractive dividend yield and strong Zacks Rank of 2 (Buy) [7] - The company is positioned well for income investors, especially in contrast to tech start-ups and growth businesses that typically do not offer dividends [6][7]

Core Points - Simmons Bank has opened a new regional office in Jonesboro, Arkansas, to enhance its service to the community and local businesses in Northeast Arkansas [1][3] - The new financial center spans 19,790 square feet and includes a full-service branch with four drive-thru lanes and an ATM with deposit capabilities [3] - Simmons Bank operates approximately 64 full-service branches in Arkansas and a total of 222 branches across six states in the Mid-South [1][4] Company Overview - Simmons Bank is a wholly owned subsidiary of Simmons First National Corporation, which has been in operation since 1903 and has paid cash dividends for 116 consecutive years [5] - The bank has nearly 3,000 associates and offers a comprehensive range of financial solutions with a client-centric approach [4][5] - In 2024, Simmons Bank received multiple recognitions, including being named one of America's Best Regional Banks 2025 by Newsweek and one of the Best Companies to Work For in the South by U.S. News & World Report [5]

Core Insights - Simmons Bank has appointed Leasa Melton as the community division director of payment product and sales strategy, focusing on the development and implementation of payment products [1] - Leasa Melton brings over 20 years of banking experience, previously serving as vice president of product strategy at a regional financial services company [1] - Simmons Bank has a strong reputation, having been recognized by various publications for its services and workplace environment [3] Company Overview - Simmons Bank is a wholly owned subsidiary of Simmons First National Corporation, operating 222 branches across multiple states [3] - The bank has a long history, founded in 1903, and has paid cash dividends for 116 consecutive years [3] - In 2024, Simmons Bank received accolades from Newsweek, U.S. News & World Report, and Forbes for its regional banking services and workplace culture [3]