Simmons First National (SFNC) - 2025 Q2 - Quarterly Results

CEO Commentary The CEO highlighted strong Q2 2025 results, driven by a fifth consecutive quarter of net interest margin expansion and disciplined expense management - Net interest margin increased for the fifth consecutive quarter, surpassing the 3% mark[3] - Loan yields increased while deposit costs declined for the third consecutive quarter[3] - Low-cost customer deposits saw a significant increase of $233.1 million, coupled with growth in the C&I loan portfolio[3] - The company continues to focus on organic growth, encouraged by positive momentum heading into the second half of 2025[4] Financial Performance The company reported strong profitability growth in Q2 2025, driven by increased net interest income and disciplined cost control Key Financial Highlights Simmons reported net income of $54.8 million and adjusted net income of $56.1 million in Q2 2025, with net interest margin expanding to 3.06% Q2 2025 Key Financial Metrics | FINANCIAL HIGHLIGHTS (in millions) | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Net income | $ 54.8 | $ 32.4 | $ 40.8 | | Adjusted net income¹ | $ 56.1 | $ 33.1 | $ 41.9 | | Total revenue | $ 214.2 | $ 209.6 | $ 197.2 | | Pre-provision net revenue¹ (PPNR) | $ 75.6 | $ 65.0 | $ 57.9 | | PER SHARE DATA | | | | | Diluted earnings | $ 0.43 | $ 0.26 | $ 0.32 | | Adjusted diluted earnings¹ | $ 0.44 | $ 0.26 | $ 0.33 | | ASSET QUALITY | | | | | Net charge-off ratio (NCO ratio) | 0.25% | 0.23% | 0.19% | | OTHER DATA | | | | | Net interest margin (FTE) | 3.06% | 2.95% | 2.69% | | Loan yield (FTE) | 6.26% | 6.20% | 6.39% | | Cost of deposits | 2.36% | 2.44% | 2.79% | Net Income Net income for Q2 2025 significantly increased to $54.8 million, with adjusted earnings reaching $56.1 million Net Income and EPS (GAAP vs. Adjusted) | $ in millions, except per share data | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Net income | $54.8 | $32.4 | $40.8 | | Total impact of certain items | 1.3 | 0.7 | 1.1 | | Adjusted earnings¹ | $56.1 | $33.1 | $41.9 | | Diluted EPS | $0.43 | $0.26 | $0.32 | | Total impact on EPS | 0.01 | — | 0.01 | | Adjusted Diluted EPS¹ | $0.44 | $0.26 | $0.33 | Net Interest Income Net interest income rose to $171.8 million in Q2 2025, driven by the fifth consecutive quarter of NIM expansion to 3.06% - NII totaled $171.8 million, an increase of $8.4 million (5%) quarter-over-quarter and $17.9 million (12%) year-over-year[9] - Net interest margin (FTE) expanded for the fifth consecutive quarter, increasing 11 basis points quarter-over-quarter to 3.06%[10] Select Yield/Rates Trend | | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Loan yield (FTE) | 6.26% | 6.20% | 6.39% | | Cost of deposits | 2.36% | 2.44% | 2.79% | | Net interest spread (FTE) | 2.41% | 2.30% | 1.92% | | Net interest margin (FTE) | 3.06% | 2.95% | 2.69% | Noninterest Income Noninterest income decreased to $42.4 million in Q2 2025, primarily due to lower swap fee income and an SBIC valuation adjustment - The decrease in noninterest income from Q1 2025 was mainly due to lower swap fee income from a large transaction in the prior quarter and an SBIC valuation adjustment[12] Noninterest Income Components | $ in millions | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Service charges on deposit accounts | $12.6 | $12.6 | $12.3 | | Wealth management fees | 9.5 | 9.6 | 9.2 | | Debit and credit card fees | 8.6 | 8.4 | 8.2 | | Other income | 4.8 | 8.0 | 6.4 | | Total noninterest income | $42.4 | $46.2 | $43.3 | Noninterest Expense Adjusted noninterest expense decreased to $136.8 million in Q2 2025, improving the adjusted efficiency ratio to 60.52% - Adjusted noninterest expense decreased to $136.8 million in Q2 2025 from $143.6 million in Q1 2025[14] - The linked-quarter decrease was primarily due to lower salaries and benefits (seasonal payroll tax decline) and the absence of a $4.3 million fraud-related charge from Q1 2025[14] Efficiency Ratio Trend | | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Efficiency ratio | 62.82% | 66.94% | 68.38% | | Adjusted efficiency ratio¹ | 60.52% | 64.75% | 65.68% | Balance Sheet Analysis As of Q2 2025, the company's balance sheet showed stability with total assets at $26.7 billion, stable loans, and increased deposits Loans and Unfunded Loan Commitments Total loans remained stable at $17.1 billion in Q2 2025, with broad-based growth in commercial, agricultural, and consumer portfolios - Total loans were $17.1 billion, showing broad-based growth in commercial, agricultural, and consumer portfolios[17] - The commercial loan pipeline totaled $1.6 billion, with $564 million in ready-to-close loans at a weighted average rate of 7.35%[17] Deposits and Other Borrowings Total deposits increased to $21.8 billion in Q2 2025, driven by a rise in low-cost customer deposits and brokered funds, allowing for reduced borrowings - Low-cost customer deposits (noninterest bearing and interest bearing transaction accounts) increased by $233 million quarter-over-quarter[19] - Other borrowings decreased from $1.3 billion in Q1 2025 to $1.0 billion in Q2 2025, mainly due to a decrease in FHLB advances[19] Deposit Composition ($ in millions) | | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Noninterest bearing deposits | $ 4,468 | $ 4,455 | $ 4,624 | | Interest bearing transaction accounts | 10,532 | 10,621 | 10,092 | | Time deposits | 3,588 | 3,695 | 4,185 | | Brokered deposits | 3,237 | 2,914 | 2,940 | | Total deposits | $21,825 | $21,684 | $21,841 | Asset Quality Asset quality metrics remained stable in Q2 2025, with a net charge-off ratio of 0.25% and a decreased provision for credit losses - The net charge-off ratio was 0.25% in Q2 2025, compared to 0.23% in Q1 2025[21] - The provision for credit losses on loans decreased to $11.9 million in Q2 2025 from $26.8 million in Q1 2025, primarily due to a $15.6 million incremental provision for two specific credit relationships recorded in the first quarter[23] Key Asset Quality Metrics | | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Allowance for credit losses on loans to total loans | 1.48% | 1.48% | 1.34% | | Nonperforming loans to total loans | 0.92% | 0.89% | 0.60% | | Net charge-off ratio (annualized) | 0.25% | 0.23% | 0.19% | | Total nonperforming assets to total assets | 0.62% | 0.61% | 0.39% | Capital Management The company's capital position strengthened in Q2 2025, with all regulatory capital ratios remaining well above 'well-capitalized' guidelines Capital Ratios Total stockholders' equity increased to $3.5 billion, with the TCE ratio improving to 8.5% and CET1 ratio to 12.4% - Book value per share was $28.17, and tangible book value per share was $16.97, both increasing from Q1 2025[25] Select Capital Ratios | | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Stockholders' equity to total assets | 13.3% | 13.2% | 12.6% | | Tangible common equity to tangible assets¹ | 8.5% | 8.3% | 7.8% | | Common equity tier 1 (CET1) ratio | 12.4% | 12.2% | 12.0% | | Total risk-based capital ratio | 14.4% | 14.6% | 14.2% | Share Repurchase Program Simmons did not repurchase any shares in Q2 2025, with approximately $175 million remaining authorized under the 2024 program - No shares were repurchased in Q2 2025[28] - Approximately $175 million remains authorized for repurchase under the 2024 Program[28] Supplementary Information This section provides details for the investor conference call, an overview of the company, and important legal disclaimers regarding non-GAAP measures and forward-looking statements Conference Call Information Management will host a live conference call on Friday, July 18, 2025, at 7:30 a.m. Central Time to discuss Q2 2025 results - A conference call is scheduled for 7:30 a.m. Central Time on Friday, July 18, 2025[30] About Simmons First National Corporation Simmons First National Corporation is a Mid-South financial holding company with a 116-year history of consecutive cash dividends and over 220 branches - The company has paid cash dividends to shareholders for 116 consecutive years[31] - Simmons Bank operates more than 220 branches in Arkansas, Kansas, Missouri, Oklahoma, Tennessee, and Texas[31] Non-GAAP Financial Measures The report uses non-GAAP financial measures to provide a clearer understanding of the company's ongoing operational performance by excluding certain non-core items - The report uses non-GAAP measures to exclude items such as merger-related expenses, branch right-sizing initiatives, early retirement programs, and FDIC special assessments[32] - Management believes these non-GAAP measures provide useful supplemental information for understanding the operating results of the Company's ongoing businesses[33] Forward-Looking Statements This section contains a standard safe harbor statement, cautioning that forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially - Forward-looking statements regarding future growth, profitability, and dividends are subject to various risks and uncertainties[34][35] - Factors that could cause actual results to differ include changes in economic conditions, interest rates, credit quality, and geopolitical conflicts[35] Consolidated Financial Statements This section presents detailed, unaudited consolidated financial statements for Q2 2025, including balance sheets, income statements, and various portfolio analyses Consolidated End of Period Balance Sheets As of June 30, 2025, total assets were $26.69 billion, with stable loans at $17.11 billion and increased total deposits of $21.82 billion Consolidated Balance Sheet Highlights | | Jun 30, 2025 ($ in thousands) | Mar 31, 2025 ($ in thousands) | Jun 30, 2024 ($ in thousands) | | :--- | :--- | :--- | :--- | | Total assets | $26,693,620 | $26,792,991 | $27,369,072 | | Net loans | 16,857,559 | 16,841,910 | 16,962,048 | | Total deposits | 21,824,990 | 21,684,620 | 21,840,883 | | Total stockholders' equity | 3,549,210 | 3,531,485 | 3,458,869 | Consolidated Statements of Income For Q2 2025, net interest income was $171.8 million, leading to a net income of $54.8 million, or $0.43 per diluted share Consolidated Income Statement Highlights | | Jun 30, 2025 ($ in thousands) | Mar 31, 2025 ($ in thousands) | Jun 30, 2024 ($ in thousands) | | :--- | :--- | :--- | :--- | | NET INTEREST INCOME | $171,824 | $163,422 | $153,905 | | PROVISION FOR CREDIT LOSSES | 11,945 | 26,797 | 11,099 | | TOTAL NONINTEREST INCOME | 42,354 | 46,155 | 43,299 | | TOTAL NONINTEREST EXPENSE | 138,589 | 144,580 | 139,354 | | NET INCOME | $54,773 | $32,388 | $40,763 | Consolidated Risk-Based Capital At the end of Q2 2025, the company maintained a strong capital position with a total risk-based capital ratio of 14.42% and a CET1 ratio of 12.36% Risk-Based Capital Ratios | | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | Common equity Tier 1 ratio (CET1) | 12.36% | 12.21% | 12.00% | | Tier 1 leverage ratio | 9.96% | 9.83% | 9.49% | | Total risk-based capital ratio | 14.42% | 14.59% | 14.17% | Consolidated Investment Securities Total investment securities were $6.0 billion as of June 30, 2025, comprising held-to-maturity and available-for-sale portfolios Investment Securities Portfolio | | Jun 30, 2025 ($ in thousands) | Mar 31, 2025 ($ in thousands) | | :--- | :--- | :--- | | Total held-to-maturity | $3,591,531 | $3,615,556 | | Total available-for-sale | 2,405,320 | 2,491,849 | | Total investment securities | $5,996,851 | $6,107,405 | Consolidated Loans The total loan portfolio stood at $17.11 billion at the end of Q2 2025, primarily composed of real estate loans Loan Portfolio Composition | | Jun 30, 2025 ($ in thousands) | Mar 31, 2025 ($ in thousands) | | :--- | :--- | :--- | | Total consumer | $ 299,997 | $ 276,878 | | Total real estate | 13,371,707 | 13,477,000 | | Total commercial | 2,773,585 | 2,637,150 | | Other | 665,807 | 703,050 | | Total loans | $17,111,096 | $17,094,078 | Consolidated Allowance and Asset Quality The allowance for credit losses on loans was $253.5 million, representing 1.48% of total loans and 161% coverage of nonperforming loans Allowance and Asset Quality Data | | Jun 30, 2025 ($ in thousands) | Mar 31, 2025 ($ in thousands) | | :--- | :--- | :--- | | Allowance for credit losses on loans | $253,537 | $252,168 | | Net loans charged off | 10,576 | 9,648 | | Total nonperforming loans | 157,162 | 152,391 | | Total nonperforming assets | $166,715 | $162,345 | Average Balance Sheet and Net Interest Income Analysis For Q2 2025, the average balance of total interest-earning assets was $23.3 billion, with an improved net interest margin (FTE) of 3.06% Net Interest Margin Analysis (FTE) | | Three Months Ended Jun 2025 | Three Months Ended Mar 2025 | Three Months Ended Jun 2024 | | :--- | :--- | :--- | :--- | | Total interest earning assets (Average Balance, $ in thousands) | $23,327,635 | $23,317,842 | $23,959,417 | | Net interest income (FTE, $ in thousands) | $178,246 | $169,836 | $160,481 | | Net interest spread (FTE) | 2.41% | 2.30% | 1.92% | | Net interest margin (FTE) | 3.06% | 2.95% | 2.69% | Selected Financial Data This table summarizes key performance indicators for Q2 2025, including diluted EPS, return on assets, and book value per share on both reported and adjusted bases Key Performance Indicators (Q2 2025) | | As Reported | Adjusted (non-GAAP) | | :--- | :--- | :--- | | Diluted earnings per share | $0.43 | $0.44 | | Return on average assets | 0.82% | 0.84% | | Return on average common equity | 6.20% | 6.34% | | Return on tangible common equity | 10.73% | 10.97% | | Efficiency ratio | 62.82% | 60.52% | | End of Period | | | | Book value per share | $28.17 | - | | Tangible book value per share | $16.97 | - | Reconciliation of Non-GAAP Financial Measures This section provides detailed reconciliations of GAAP financial measures to their non-GAAP counterparts, used by management for performance analysis Reconciliation of Adjusted Earnings These tables detail adjustments to GAAP net income to derive non-GAAP adjusted earnings, which reached $56.1 million in Q2 2025 Reconciliation of Net Income to Adjusted Earnings (Q2 2025) | ($ in thousands) | Amount | | :--- | :--- | | Net income (GAAP) | $ 54,773 | | Early retirement program | 1,594 | | Branch right sizing (net) | 163 | | Tax effect of certain items | (459) | | Adjusted earnings (non-GAAP) | $ 56,071 | Reconciliation of Tangible Common Equity and Other Ratios This section reconciles total stockholders' equity to tangible common stockholders' equity, resulting in a tangible book value per share of $16.98 as of June 30, 2025 Reconciliation of Tangible Book Value per Share (Jun 30, 2025) | ($ in thousands, except per share data) | Amount | | :--- | :--- | | Total common stockholders' equity | $ 3,549,210 | | Less: Total intangibles | (1,411,416) | | Tangible common stockholders' equity | $ 2,137,794 | | Shares of common stock outstanding | 125,926,248 | | Tangible book value per common share | $ 16.98 | Reconciliation of Performance Metrics These tables reconcile various performance metrics to their adjusted non-GAAP versions, including PPNR and the efficiency ratio Reconciliation of PPNR (Q2 2025) | ($ in thousands) | Amount | | :--- | :--- | | Pre-Provision Net Revenue (PPNR) | $ 75,589 | | Plus: Early retirement program costs | 1,594 | | Plus: Branch right sizing costs (net) | 163 | | Adjusted Pre-Provision Net Revenue | $ 77,346 | Reconciliation of Efficiency Ratio (Q2 2025) | | Numerator ($ in thousands) | Denominator ($ in thousands) | Ratio | | :--- | :--- | :--- | :--- | | Efficiency Ratio (GAAP) | $ 138,589 | $ 220,600 | 62.82% | | Adjustments | (5,071) | — | | | Adjusted Efficiency Ratio (non-GAAP) | $ 133,518 | $ 220,600 | 60.52% |