Simmons First National (US:SFNC)2025-11-06 20:39Financial Performance - The net loss for Q3 2025 was $562.8 million, or $(4.00) diluted earnings per share, compared to a net income of $54.8 million, or $0.43 diluted earnings per share for Q2 2025 [219]. - Adjusted earnings for Q3 2025 were $64.9 million, or $0.46 adjusted diluted earnings per share, compared to $56.1 million, or $0.44 adjusted diluted earnings per share for Q2 2025 [219]. - Total net income available to common stockholders for the three months ended September 30, 2025, was $(562,792) thousand, compared to $54,773 thousand for the previous quarter [354]. - Adjusted earnings (non-GAAP) for the three months ended September 30, 2025, were $64,930 thousand, an increase from $56,071 thousand in the previous quarter [354]. - The diluted earnings per share for the three months ended September 30, 2025, was $(4.00), compared to $0.43 in the previous quarter [354]. - Noninterest income for Q3 2025 was $(756,187) thousand, while adjusted noninterest income (non-GAAP) was $45,875 thousand [357]. - The company reported a realized after-tax loss of $625.6 million from the sale of approximately $3.2 billion in AFS securities during the third quarter of 2025 [278]. - Loss on sale of securities for Q3 2025 amounted to $801,492 thousand, significantly impacting net income [354]. Balance Sheet and Capital Management - The company raised $326.9 million in equity capital to reposition its balance sheet and address negative arbitrage between long-term bond yields and short-term funding costs [217]. - Stockholders' equity was $3.35 billion as of September 30, 2025, with a book value per share of $23.18 and tangible book value per share of $13.45 [223]. - Total assets decreased to $26.07 billion as of September 30, 2025, from $27.26 billion a year earlier, representing a decline of approximately 4.4% [254]. - The common equity to asset ratio improved to 13.85% at September 30, 2025, compared to 13.13% at year-end 2024, reflecting stronger capital management [325]. - The company raised $327.4 million from a public offering of 18,653,000 shares at $18.50 per share, which helped offset a realized after-tax loss of $625.6 million from selling AFS securities [329]. - The total Tier 1 capital was $2,291,191 thousand, down from $2,535,527 as of December 31, 2024 [337]. - The company's common equity Tier 1 ratio (CET1) was 11.54% as of September 30, 2025, compared to 12.38% at the end of 2024 [337]. - Total risk-based capital as of September 30, 2025, was $2,990,877, slightly down from $2,992,133 at the end of 2024 [337]. - Risk-weighted assets decreased to $19,861,879 as of September 30, 2025, from $20,473,960 as of December 31, 2024 [337]. - The company did not repurchase any shares during the three and nine month periods ended September 30, 2025 and 2024, with future repurchase decisions dependent on market conditions and capital needs [332]. Deposits and Loans - Total deposits as of September 30, 2025, were $19.84 billion, down from $21.89 billion as of December 31, 2024 [221]. - The loan to deposit ratio increased to 87% as of September 30, 2025, compared to 78% as of December 31, 2024 [221]. - As of September 30, 2025, total loans amounted to $17.19 billion, an increase of $182.9 million from December 31, 2024 [284]. - The loan portfolio averaged $16.98 billion during the first nine months of 2025, compared to $17.07 billion in the same period of 2024 [284]. - Real estate loans represented 77.8% of total loans at September 30, 2025, totaling $13.37 billion, a decrease of $23.2 million from December 31, 2024 [288]. - Commercial loans increased to $2.75 billion, or 16.0% of total loans, reflecting a growth of $55.2 million, or 2.0%, from December 31, 2024 [289]. - Nonperforming loans as of September 30, 2025, were $153.9 million, up from $110.8 million as of December 31, 2024 [222]. - The allowance for credit losses was 1.50% of total loans as of September 30, 2025, with a coverage ratio of 168% of nonperforming loans [299]. - The commercial loan pipeline was $1.61 billion at September 30, 2025, with $489.9 million approved and ready to close [291]. Interest Income and Expenses - Net interest income for Q3 2025 was $190.5 million, an increase of $12.2 million, or 6.9%, compared to Q2 2025 [240]. - Net interest margin on a fully taxable equivalent basis was 3.50% for the three months ended September 30, 2025, compared to 3.06% for the three months ended June 30, 2025, representing a 44 basis point increase [247]. - A $108.2 million decrease in interest expense was mainly due to a reduction in deposit account rates and lower volumes of higher-rate wholesale borrowings [246]. - Interest expense for the nine months ended September 30, 2025, totaled $108.2 million, compared to $73.6 million for the same period in 2024, reflecting an increase of 47.0% [256]. - The average rate paid on interest-bearing transaction and savings deposits was 2.45% as of September 30, 2025, down from 2.81% at December 31, 2024 [320]. Noninterest Income and Expenses - Noninterest income for the three months ended September 30, 2025, showed a loss of $756.2 million, a decrease of approximately $798.5 million compared to the previous quarter [261]. - Adjusted noninterest income for the three months ended September 30, 2025, increased by $3.5 million, or 8.3%, from the prior sequential quarter [261]. - Noninterest expense for the three months ended September 30, 2025 was $142.0 million, an increase of $3.4 million or 2.5% compared to the previous quarter [269]. - Salaries and employee benefits expense increased by $2.4 million or 3.2% for the three months ended September 30, 2025 compared to the previous quarter [271]. - Noninterest expense for the nine months ended September 30, 2025 increased by approximately $8.8 million or 2.1% compared to the same period in 2024 [270]. Credit Losses and Provisions - Provision for credit losses for the nine months ended September 30, 2025, was $50.7 million, up from $33.5 million for the same period in 2024, reflecting an increase of 51.4% [259]. - The provision for credit losses for the first nine months of 2025 was $53.9 million, compared to $33.5 million for the same period in 2024, reflecting a significant increase in credit risk [308]. - The allowance for credit losses increased by approximately $23.0 million from December 31, 2024, to September 30, 2025, while total loans increased by $182.9 million during the same period [310].