Simmons First National Corporation Reports Fourth Quarter 2024 Results

Simmons' fourth quarter results were encouraging as we head into 2025.  Profitability trends improved and should be a good foundation from which to build. While we are cautiously optimistic as we enter the new year, we are also watching several factors that could impact us in 2025: a new administration and how its policies affect domestic growth; inflation and employment levels; the trajectory of short-term interest rates; regulatory changes and their effect on our operating costs and growth; insurance availability and costs for both commercial enterprises and consumers; and population migration's effects on housing trends geographically.

I also want to recognize and thank the following leaders who retired from Simmons at the end of 2024: Bob Fehlman, Steve Massanelli, Steve Wade, Johnny McCaleb, and Pat Neely. These leaders have played a significant role in the growth of Simmons, and they will be missed. At the same time, I am excited about the next generation of leadership and the opportunities we see ahead.

Simmons First National Corporation (NASDAQ: SFNC) (Simmons or Company) today reported net income of $48.3 million for the fourth quarter of 2024, compared to $24.7 million in the third quarter of 2024 and $23.9 million in the fourth quarter of 2023. Diluted earnings per share were $0.38 for the fourth quarter of 2024, compared to $0.20 in the third quarter of 2024 and $0.19 in the fourth quarter of 2023. Adjusted earnings¹ for the fourth quarter of 2024 were $49.6 million, compared to $46.0 million in the third quarter of 2024 and $50.2 million in the fourth quarter of 2023. Adjusted diluted earnings per share¹ for the fourth quarter of 2024 were $0.39, compared to $0.37 in the third quarter of 2024 and $0.40 in the fourth quarter of 2023.

The table below summarizes the impact of certain items, consisting primarily of branch right sizing, early retirement, loss on sale of available-for-sale (AFS) investment securities and FDIC special assessments. They are also described in further detail in the "Reconciliation of Non-GAAP Financial Measures" tables contained in this press release.

Impact of Certain Items on Earnings and Diluted EPS

Net Interest Income
Net interest income for the fourth quarter of 2024 totaled $164.9 million, compared to $157.7 million in the third quarter of 2024 and $155.6 million in the fourth quarter of 2023. Interest income totaled $326.0 million for the fourth quarter of 2024, compared to $334.3 million in the third quarter of 2024 and $323.5 million in the fourth quarter of 2023. The decrease in interest income on a linked quarter basis was primarily driven by a decline in the level of interest rates resulting from interest rate cuts at the end of the third quarter and during the fourth quarter of 2024. Interest expense totaled $161.0 million for the fourth quarter of 2024, compared to $176.6 million in the third quarter of 2024 and $167.9 million in the fourth quarter of 2023. The decrease in interest expense was driven by lower interest rates, coupled with management's ability to proactively manage deposit costs and reduced use of wholesale funding sources. Included in net interest income is accretion recognized on loans, which totaled $1.9 million in the fourth quarter of 2024, $1.5 million in the third quarter of 2024 and $1.8 million in the fourth quarter of 2023. 

The yield on loans on a fully taxable equivalent (FTE) basis for the fourth quarter of 2024 was 6.32 percent, down 12 basis points from 6.44 percent for the third quarter of 2024 and up 12 basis points from 6.20 percent in the fourth quarter of 2023. Cost of deposits for the fourth quarter of 2024 was 2.60 percent, down 19 basis points from 2.79 percent for the third quarter of 2024 and up 2 basis points from 2.58 percent in the fourth quarter of 2023. The net interest margin on an FTE basis for the fourth quarter of 2024 was 2.87 percent, up 13 basis points from 2.74 percent for the third quarter of 2024 and up 19 basis points from 2.68 percent in the fourth quarter of 2023. The increase in net interest margin on a linked quarter basis was primarily due to lower deposits costs, as well as the reduced use of and rate paid on other borrowings.

Noninterest Income
Noninterest income for the fourth quarter of 2024 was $43.6 million, compared to $17.1 million in the third quarter of 2024 and $22.0 million in the fourth quarter of 2023. Included in the third quarter of 2024 and fourth quarter of 2023 was a $28.4 million and $20.2 million pre-tax loss on the sale of AFS investment securities, respectively. Excluding these items (which are described in the "Reconciliation of Non-GAAP Financial Measures" tables below), adjusted noninterest income¹ was $45.5 million for the third quarter of 2024 and $42.2 million in the fourth quarter of 2023. The decrease in adjusted noninterest income on a linked quarter basis was primarily due to a higher level of other noninterest income resulting from the gain on sale of other real estate recorded in the third quarter of 2024, offset in part by increases in most of our major fee-based businesses.  

Noninterest Expense
Noninterest expense for the fourth quarter of 2024 was $141.1 million, compared to $137.2 million in the third quarter of 2024 and $148.1 million in the fourth quarter of 2023. Included in noninterest expense are certain items consisting of branch right sizing, early retirement and an FDIC special assessment. Collectively, these items totaled $1.8 million in the fourth quarter of 2024, $0.4 million in the third quarter of 2024 and $15.4 million in the fourth quarter of 2023. Excluding these items (which are described in the "Reconciliation of Non-GAAP Financial Measures" tables below), adjusted noninterest expense¹ was $139.3 million for the fourth quarter of 2024, $136.8 million in the third quarter of 2024 and $132.7 million in the fourth quarter of 2023. The increase in adjusted noninterest expense on a linked quarter basis was primarily due to seasonality in salaries and employee benefits.

Loans and Unfunded Loan Commitments
Total loans at the end of the fourth quarter of 2024 were $17.0 billion, compared to $17.3 billion at the end of the third quarter of 2024 and $16.8 billion at the end of the fourth quarter of 2023. The decrease in total loans on a linked quarter basis was primarily due to normal seasonality in the company's agricultural and mortgage warehouse loan portfolios, as well as further declines in a run-off portfolio consisting of small ticket equipment finance and acquired asset based lending portfolios (run-off portfolio). Unfunded loan commitments at the end of the fourth quarter of 2024 were $3.7 billion, up slightly from third quarter 2024 levels. The commercial loan pipeline ended the fourth quarter of 2024 at $1.3 billion and ready to close loans totaled $552 million, marking the second consecutive quarterly increase in both metrics.

Deposits and Other Borrowings
Total deposits at the end of the fourth quarter of 2024 were $21.9 billion, down slightly from third quarter 2024 levels. The decrease in deposits on a linked quarter basis was primarily due to a decline in time deposits and brokered deposits, offset in part by increases in interest bearing transaction accounts (checking, money market and savings accounts) and public fund deposits. Other borrowings totaled $1.1 billion at the end of the fourth quarter of 2024, compared to $1.5 billion at the end of the third quarter of 2024 and $1.4 billion at the end of the fourth quarter of 2023. The decrease in other borrowing both on a linked quarter and year-over-year basis was primarily due to lower levels of FHLB advances.

Asset Quality
Provision for credit losses totaled $13.3 million for the fourth quarter of 2024, compared to $12.1 million in the third quarter of 2024 and $10.0 million in the fourth quarter of 2023. Provision for credit losses on loans exceeded net charge-offs by $1.8 million during the fourth quarter of 2024. The allowance for credit losses on loans at the end of the fourth quarter of 2024 was $235.0 million, compared to $233.2 million at the end of the third quarter of 2024 and $225.2 million at the end of the fourth quarter of 2023. The increase in the allowance for credit losses on loans on a linked quarter basis and year-over-year basis reflected continued normalization of the credit environment, macroeconomic conditions and activity in the loan portfolio. The allowance for credit losses on loans was 1.38 percent at the end of the fourth quarter of 2024, compared to 1.35 percent at the end of the third quarter of 2024 and 1.34 percent at the end of the fourth quarter of 2023.

Net charge-offs as a percentage of average loans for the fourth quarter of 2024 were 27 basis points, compared to 22 basis points in the third quarter of 2024 and 11 basis points in the fourth quarter of 2023. Net charge-offs in the fourth quarter of 2024 included $2.5 million of charge-offs associated with the run-off portfolio. Net charge-offs from the run-off portfolio accounted for 6 basis points of total net charge-offs during the fourth quarter and 9 basis points of total net charge-offs during the third quarter of 2024.

Total nonperforming loans at the end of the fourth quarter of 2024 were $110.7 million, compared to $101.7 million at the end of the third quarter of 2024 and $84.5 million at the end of the fourth quarter of 2023. The increase in nonperforming loans on a linked quarter basis was primarily due to increases from the real estate construction and real estate 1-4 family loan portfolios. The nonperforming loan coverage ratio ended the fourth quarter of 2024 at 212 percent, compared to 229 percent at the end of the third quarter of 2024 and 267 percent at the end of the fourth quarter of 2023. Total nonperforming assets as a percentage of total assets were 45 basis points at the end of the fourth quarter of 2024, compared to 38 basis points at the end of the third quarter of 2024 and 33 basis points at the end of the fourth quarter of 2023. The increase in nonperforming assets as a percentage of total assets on a linked quarter basis was primarily due to an increase in nonperforming loans and an increase in other nonperforming assets resulting from the addition of two foreclosed properties.

Capital
Total stockholders' equity at the end of the fourth quarter of 2024 was $3.5 billion, up slightly from the end of the third quarter 2024 and up $102.4 million from $3.4 billion at the end of the fourth quarter of 2023. The increase on a year-over-year basis was primarily due to an increase of $47.3 million in retained earnings, coupled with a $43.5 million recapture of accumulated other comprehensive income principally associated with the mark-to-market adjustment on AFS investment securities. Book value per share at the end of the fourth quarter of 2024 was $28.08, compared to $28.11 at the end of the third quarter of 2024 and $27.37 at the end of the fourth quarter of 2023. Tangible book value per share¹ at the end of the fourth quarter of 2024 was $16.80, compared to $16.78 at the end of the third quarter of 2024 and $15.92 at the end of the fourth quarter of 2023.

Total stockholders' equity as a percentage of total assets at the end of the fourth quarter of 2024 was 13.1 percent, up from 12.9 percent at the end of the third quarter of 2024 and up from 12.5 percent at the end the fourth quarter of 2023. Tangible common equity as a percentage of tangible assets¹ at the end of the fourth quarter of 2024 was 8.3 percent, compared to 8.2 percent at the end of the third quarter of 2024 and 7.7 percent at the end of the fourth quarter of 2023. Each of the regulatory capital ratios for Simmons and its lead subsidiary, Simmons Bank, continue to significantly exceed "well-capitalized" regulatory guidelines.

Share Repurchase Program
During the fourth quarter of 2024, Simmons did not repurchase shares under its stock repurchase program that was authorized in January 2024 (2024 Program), which replaced its former repurchase program that was authorized in January 2022. Remaining authorization under the 2024 Program as of December 31, 2024, was approximately $175 million. The timing, pricing and amount of any repurchases under the 2024 Program will be determined by Simmons' management at its discretion based on a variety of factors including, but not limited to, market conditions, trading volume and market price of Simmons' common stock, Simmons' capital needs, Simmons' working capital and investment requirements, other corporate considerations, economic conditions, and legal requirements.  The 2024 Program does not obligate Simmons to repurchase any common stock and may be modified, discontinued or suspended at any time without prior notice.

Conference Call
Management will conduct a live conference call to review this information beginning at 7:30 a.m. Central Time on Wednesday, January 22, 2025. Interested persons can listen to this call by dialing toll-free 1-844-481-2779 (North America only) and asking for the Simmons First National Corporation conference call, conference ID 10195421. In addition, the call will be available live or in recorded version on Simmons' website at simmonsbank.com for at least 60 days following the date of the call.

Simmons First National Corporation
Simmons First National Corporation (NASDAQ: SFNC) is a Mid-South based financial holding company that has paid cash dividends to its shareholders for 115 consecutive years. Its principal subsidiary, Simmons Bank, operates 222 branches in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. Founded in 1903, Simmons Bank offers comprehensive financial solutions delivered with a client-centric approach. In 2024, Simmons Bank was recognized by Newsweek as one of America's Best Regional Banks 2025, by U.S. News & World Report as one of the 2024-2025 Best Companies to Work For in the South and by Forbes as one of America's Best-In-State Banks 2024 in Tennessee and America's Best-In-State Banks 2024 in Missouri.  Additional information about Simmons Bank can be found on our website at simmonsbank.com, by following @Simmons_Bank on X (formerly Twitter) or by visiting our newsroom.

Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). The Company's management uses these non-GAAP financial measures in their analysis of the Company's performance. These measures adjust GAAP performance measures to, among other things, include the tax benefit associated with revenue items that are tax-exempt, as well as exclude from net income (including on a per share diluted basis), pre-tax, pre-provision earnings, net charge-offs, income available to common shareholders, noninterest income, and noninterest expense certain income and expense items attributable to, for example, merger activity (primarily including merger-related expenses), gains and/or losses on sale of branches, net branch right-sizing initiatives, early retirement program, FDIC special assessment charges and gain/loss on the sale of AFS investment securities. The Company has updated its calculation of certain non-GAAP financial measures to exclude the impact of gains or losses on the sale of AFS investment securities and has presented past periods on a comparable basis.

In addition, the Company also presents certain figures based on tangible common stockholders' equity, tangible assets and tangible book value, which exclude goodwill and other intangible assets. The Company further presents certain figures that are exclusive of the impact of deposits and/or loans acquired through acquisitions, mortgage warehouse loans, and/or energy loans, or gains and/or losses on the sale of securities. The Company's management believes that these non-GAAP financial measures are useful to investors because they, among other things, present the results of the Company's ongoing operations without the effect of mergers or other items not central to the Company's ongoing business, as well as normalize for tax effects and certain other effects. Management, therefore, believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's ongoing businesses, and management uses these non-GAAP financial measures to assess the performance of the Company's ongoing businesses as related to prior financial periods. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

Forward-Looking Statements
Certain statements in this press release may not be based on historical facts and should be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including, without limitation, statements made in Mr. Makris's quote, may be identified by reference to future periods or by the use of forward-looking terminology, such as "believe," "budget," "expect," "foresee," "anticipate," "intend," "indicate," "target," "estimate," "plan," "project," "continue," "contemplate," "positions," "prospects," "predict," or "potential," by future conditional verbs such as "will," "would," "should," "could," "might" or "may," or by variations of such words or by similar expressions. These forward-looking statements include, without limitation, statements relating to Simmons' future growth, business strategies, lending capacity and lending activity, loan demand, revenue, assets, asset quality, profitability, dividends, net interest margin, non-interest revenue, share repurchase program, acquisition strategy, digital banking initiatives, the Company's ability to recruit and retain key employees, the adequacy of the allowance for credit losses, and future economic conditions and interest rates. Any forward-looking statement speaks only as of the date of this press release, and Simmons undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this press release. By nature, forward-looking statements are based on various assumptions and involve inherent risk and uncertainties. Various factors, including, but not limited to, changes in economic conditions, changes in credit quality, changes in interest rates and related governmental policies, changes in loan demand, changes in deposit flows, changes in real estate values, changes in the assumptions used in making the forward-looking statements, changes in the securities markets generally or the price of Simmons' common stock specifically, changes in information technology affecting the financial industry, and changes in customer behaviors, including consumer spending, borrowing, and saving habits; general economic and market conditions; changes in governmental administrations; market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises, war and other military conflicts (including the ongoing military conflicts between Russia and Ukraine and between Israel and Hamas) or other major events, or the prospect of these events; the soundness of other financial institutions and any indirect exposure related to the closings of other financial institutions and their impact on the broader market through other customers, suppliers and partners, or that the conditions which resulted in the liquidity concerns experienced by closed financial institutions may also adversely impact, directly or indirectly, other financial institutions and market participants with which the Company has commercial or deposit relationships; increased inflation; the loss of key employees; increased competition in the markets in which the Company operates and from non-bank financial institutions; increased unemployment; labor shortages; claims, damages, and fines related to litigation or government actions; changes in accounting principles relating to loan loss recognition (current expected credit losses); the Company's ability to manage and successfully integrate its mergers and acquisitions and to fully realize cost savings and other benefits associated with acquisitions; increased delinquency and foreclosure rates on commercial real estate loans; cyber or other information technology threats, attacks or events; reliance on third parties for key services; government legislation; and other factors, many of which are beyond the control of the Company, could cause actual results to differ materially from those projected in or contemplated by the forward-looking statements. In addition, there can be no guarantee that the board of directors (Board) of Simmons will approve a quarterly dividend in future quarters, and the timing, payment, and amount of future dividends (if any) is subject to, among other things, the discretion of the Board and may differ significantly from past dividends. Additional information on factors that might affect the Company's financial results is included in the Company's Form 10-K for the year ended December 31, 2023, and other reports that the Company has filed with or furnished to the U.S. Securities and Exchange Commission (the SEC), all of which are available from the SEC on its website, www.sec.gov.