What changed in this filing

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Item 1. Financial Statements

2020-08-06 compared with 2020-05-07 · 501 added, 273 removed, 1185 unchanged (40% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

March 31, 2020 and December 31, 2019

June 30, 2020 and December 31, 2019

June 30, December 31,

(In thousands, except share data) 2020 2019

2 unchanged sentences

Cash and cash equivalents

2,545,160 996,623

Interest bearing balances due from banks - time 4,561 4,554

Investment securities:

Held-to-maturity, net of allowance for credit losses of $409 at March 31, 2020

Available-for-sale, net of allowance for credit losses of $269 at March 31, 2020 (amortized cost of $2,418,498 and $3,263,151 at March 31, 2020 and December 31, 2019, respectively)

Held-to-maturity, net of allowance for credit losses of $ 307 at June 30, 2020

51,720 40,927

Available-for-sale, net of allowance for credit losses of $ 609 at June 30, 2020 (amortized cost of $ 2,428,548 and $ 3,263,151 at June 30, 2020 and December 31, 2019, respectively)

2,496,896 3,288,343

Total investments

2,548,616 3,329,270

Mortgage loans held for sale 120,034 58,102

Other assets held for sale 399 260,332

Loans 14,606,900 14,425,704

Allowance for credit losses on loans ( 231,643 ) ( 68,244 )

14,375,257 14,357,460

Premises and equipment 478,896 492,384

Premises held for sale 4,576 —

Foreclosed assets and other real estate owned 14,111 19,121

1 unchanged sentence

Bank owned life insurance 256,643 254,152

Goodwill 1,064,765 1,055,520

Other intangible assets 117,823 127,340

Other assets 293,071 241,578

$ 21,903,684 $ 21,259,143

LIABILITIES AND STOCKHOLDERS’ EQUITY

3 unchanged sentences

Total deposits

16,616,118 16,108,940

Federal funds purchased and securities sold under agreements to repurchase 387,025 150,145

4 unchanged sentences

Total liabilities

18,998,981 18,270,219

Stockholders’ equity:

1 unchanged sentence

Series D, $ 0.01 par value, $ 1,000 liquidation value per share;

767 shares issued and outstanding at March 31, 2020 and December 31, 2019

767 shares issued and outstanding at June 30, 2020 and December 31, 2019

Common stock, Class A, $ 0.01 par value;

175,000,000 shares authorized at March 31, 2020 and December 31, 2019;

108,966,331 and 113,628,601 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

175,000,000 shares authorized at June 30, 2020 and December 31, 2019;

108,994,389 and 113,628,601 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Surplus 2,029,383 2,117,282

Undivided profits 819,153 848,848

1 unchanged sentence

Total stockholders’ equity

2,904,703 2,988,924

Total liabilities and stockholders’ equity

$ 21,903,684 $ 21,259,143

See Condensed Notes to Consolidated Financial Statements.

1 unchanged sentence

Consolidated Statements of Income

Three Months Ended March 31, 2020 and 2019

Three Months Ended March 31,

Three and Six Months Ended June 30, 2020 and 2019

Three Months Ended

June 30, Six Months Ended June 30,

(In thousands, except per share data) 2020 2019 2020 2019

(Unaudited) (Unaudited)

INTEREST INCOME

Loans $ 176,910 $ 178,122 $ 364,476 $ 337,562

Interest bearing balances due from banks and federal funds sold 603 1,121 3,044 3,275

3 unchanged sentences

INTEREST EXPENSE

Deposits 18,006 34,796 49,283 65,546

Federal funds purchased and securities sold under agreements to repurchase 337 257 1,096 393

6 unchanged sentences

NON-INTEREST INCOME

Trust income 7,253 5,794 14,404 11,502

Service charges on deposit accounts 8,570 10,557 21,898 20,625

6 unchanged sentences

Gain on sale of securities, net 390 2,823 32,485 5,563

Other income 9,809 6,065 22,610 10,221

TOTAL NON-INTEREST INCOME 50,227 39,934 132,621 74,726

10 unchanged sentences

Provision for income taxes 15,593 15,616 36,287 28,014

NET INCOME 58,802 55,924 136,038 103,619

Preferred stock dividends 13 326 26 326

5 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Ended March 31, 2020 and 2019

Three Months Ended March 31,

Three and Six Months Ended June 30, 2020 and 2019

Three Months Ended

June 30, Six Months Ended June 30,

(In thousands) 2020 2019 2020 2019

OTHER COMPREHENSIVE INCOME (LOSS)

(Unaudited) (Unaudited)

NET INCOME $ 58,802 $ 55,924 $ 136,038 $ 103,619

OTHER COMPREHENSIVE INCOME

Unrealized holding gains arising during the period on available-for-sale securities

22,159 31,681 77,728 60,811

Unrealized holding gain on the transfer of held-to-maturity securities to available-for-sale per ASU 2017-12

Reclassification adjustment for realized gains included in net income

Other comprehensive income (loss), before tax effect

Tax effect of other comprehensive income (loss)

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

390 2,823 32,485 5,563

Other comprehensive income, before tax effect 21,769 28,858 45,243 57,795

Tax effect of other comprehensive income 5,689 7,542 11,824 15,105

TOTAL OTHER COMPREHENSIVE INCOME 16,080 21,316 33,419 42,690

COMPREHENSIVE INCOME $ 74,882 $ 77,240 $ 169,457 $ 146,309

2 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended March 31, 2020 and 2019

(In thousands)

March 31, 2020

March 31, 2019

Six Months Ended June 30, 2020 and 2019

(In thousands) June 30, 2020 June 30, 2019

OPERATING ACTIVITIES

Net income $ 136,038 $ 103,619

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

10 unchanged sentences

Gain on sale of branches ( 8,094 ) —

Fair value write-down of closed branches 1,465 —

Deferred income taxes 4,616 4,940

5 unchanged sentences

Lease right-of-use assets 5,995 ( 2,469 )

Other assets ( 19,676 ) 18,911

Accrued interest and other liabilities 70,270 ( 5,326 )

3 unchanged sentences

Net originations of loans ( 318,795 ) ( 302,151 )

Decrease in due from banks - time

Proceeds from sale of loans 4,600 —

(Increase) decrease in due from banks - time ( 7 ) 395

Purchases of premises and equipment, net ( 19,784 ) ( 21,689 )

7 unchanged sentences

Disposition of assets and liabilities held for sale 181,261 1,393

Purchase of Reliance Bancshares, Inc.

Net cash provided by investing activities 706,499 39,617

1 unchanged sentence

Net change in deposits 561,185 ( 107,806 )

Repayments of subordinated debentures ( 5,927 ) —

Dividends paid on preferred stock ( 26 ) ( 326 )

4 unchanged sentences

Shares issued under employee stock purchase plan 956 1,312

Retirement of preferred stock — ( 42,000 )

Repurchases of common stock ( 93,307 ) —

Net cash used in financing activities

Net cash provided by (used in) financing activities 755,074 ( 340,339 )

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,548,537 ( 178,202 )

4 unchanged sentences

Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2020 and 2019

(In thousands, except share data)

Preferred Stock

Three Months Ended June 30, 2020 and 2019

(In thousands, except share data) Preferred Stock Common Stock Surplus Accumulated Other Comprehensive Income (Loss) Undivided Profits Total

Three Months Ended June 30, 2020

Balance, March 31, 2020 (Unaudited) $ 767 $ 1,090 $ 2,026,420 $ 38,230 $ 778,893 $ 2,845,400

Comprehensive income — — — 16,080 58,802 74,882

Stock-based compensation plans, net – 28,058 shares

— — 2,963 — — 2,963

Dividends on preferred stock — — — — ( 13 ) ( 13 )

Dividends on common stock – $ 0.17 per share

— — — — ( 18,529 ) ( 18,529 )

Balance, June 30, 2020 (Unaudited) $ 767 $ 1,090 $ 2,029,383 $ 54,310 $ 819,153 $ 2,904,703

Three Months Ended June 30, 2019

Balance, March 31, 2019 (Unaudited) $ — $ 926 $ 1,599,566 $ ( 6,000 ) $ 707,829 $ 2,302,321

Comprehensive income — — — 21,316 55,924 77,240

Stock-based compensation plans, net – 22,672 shares

— — 2,906 — — 2,906

Stock issued for Reliance acquisition – 3,999,623 shares

42,000 40 102,790 — — 144,830

Retirement of preferred stock ( 42,000 ) — — — — ( 42,000 )

Dividends on preferred stock — — — — ( 326 ) ( 326 )

Dividends on common stock – $ 0.16 per share

— — — — ( 15,458 ) ( 15,458 )

Balance, June 30, 2019 (Unaudited) $ — $ 966 $ 1,705,262 $ 15,316 $ 747,969 $ 2,469,513

See Condensed Notes to Consolidated Financial Statements.

Simmons First National Corporation

Consolidated Statements of Stockholders’ Equity

Six Months Ended June 30, 2020 and 2019

(In thousands, except share data) Preferred Stock Common

Stock Surplus Accumulated

Comprehensive

Income (Loss)

Three Months Ended March 31, 2020

Income (Loss) Undivided

Profits Total

Six Months Ended June 30, 2020

Balance, December 31, 2019 $ 767 $ 1,136 $ 2,117,282 $ 20,891 $ 848,848 $ 2,988,924

Impact of ASU 2016-13 adoption

— — — — ( 128,101 ) ( 128,101 )

Comprehensive income — — — 33,419 136,038 169,457

Stock issued for employee stock purchase plan – 43,681 shares

— 1 955 — — 956

Stock-based compensation plans, net – 244,443 shares

— 2 4,404 — — 4,406

Stock repurchases – 4,922,336 shares

— ( 49 ) ( 93,258 ) — — ( 93,307 )

Dividends on preferred stock

— — — — ( 26 ) ( 26 )

Dividends on common stock – $ 0.34 per share

Balance, March 31, 2020 (Unaudited)

Three Months Ended March 31, 2019

— — — — ( 37,606 ) ( 37,606 )

Balance, June 30, 2020 (Unaudited) $ 767 $ 1,090 $ 2,029,383 $ 54,310 $ 819,153 $ 2,904,703

Six Months Ended June 30, 2019

Balance, December 31, 2018 $ — $ 923 $ 1,597,944 $ ( 27,374 ) $ 674,941 $ 2,246,434

1 unchanged sentence

Stock issued for employee stock purchase plan – 60,413 shares

— 1 1,311 — — 1,312

Stock-based compensation plans, net – 182,977 shares

— 2 3,217 — — 3,219

Stock issued for Reliance acquisition – 3,999,623 shares

42,000 40 102,790 — — 144,830

Preferred stock retirement ( 42,000 ) — — — — ( 42,000 )

Dividends on preferred stock — — — — ( 326 ) ( 326 )

Dividends on common stock – $ 0.32 per share

Balance, March 31, 2019 (Unaudited)

— — — — ( 30,265 ) ( 30,265 )

Balance, June 30, 2019 (Unaudited) $ — $ 966 $ 1,705,262 $ 15,316 $ 747,969 $ 2,469,513

See Condensed Notes to Consolidated Financial Statements.

8 unchanged sentences

checking, savings and time deposits;

and specialized products and services (such as credit cards, trust and fiduciary services, investments, agricultural finance lending, equipment lending, insurance and small business administration (“SBA”) lending) from approximately 240 financial centers located throughout market areas in Arkansas, Colorado, Illinois, Kansas, Missouri, Oklahoma, Tennessee and Texas.

and specialized products and services (such as credit cards, trust and fiduciary services, investments, agricultural finance lending, equipment lending, insurance and Small Business Administration (“SBA”) lending) from approximately 226 financial centers located throughout market areas in Arkansas, Illinois, Kansas, Missouri, Oklahoma, Tennessee and Texas.

Basis of Presentation

21 unchanged sentences

Under the new disclosure requirements, entities must disclose the changes in unrealized gains or losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.

ASU 2018-13 is effective for fiscal years

beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted.

ASU 2018-13 is

effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted.

ASU 2018-13 did not have a material impact on the Company’s fair value disclosures.

21 unchanged sentences

As such, the amount of the CECL adoption impact was greater on the Company when compared to a non-acquisitive bank.

In December 2018, the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation (“FDIC”) (collectively, the “agencies”) issued a final rule revising regulatory capital rules in anticipation of the adoption of ASU 2016-13 that provided an option to phase in over a three year period on a straight line basis the day-one impact on earnings and tier one capital (the “CECL Transition Provision”).

In December 2018, the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation (“FDIC”) (collectively, the “agencies”) issued a final rule revising regulatory capital rules in anticipation of the adoption of ASU 2016-13 that provided an option to phase in over a three year period on a straight line basis the day-one impact on earnings and Tier 1 capital (the “CECL Transition Provision”).

In March 2020 and in response to the COVID-19 pandemic, the agencies issued a new regulatory capital rule revising the CECL Transition Provision to delay the estimated impact on regulatory capital stemming from the implementation of ASU 2016-13.

45 unchanged sentences

however, the guidance will only be available for a limited time (generally through December 31, 2022).

As of March 31, 2020 , the Company has not made any modifications to hedges or other instruments that reference an interest rate that is expected to be discontinued.

As of June 30, 2020, the Company has not made any modifications to hedges or other instruments that reference an interest rate that is expected to be discontinued.

Income Taxes – In December 2019, the FASB issued ASU No.

19 unchanged sentences

The goodwill will not be deductible for tax purposes.

A summary, at fair value, of the assets acquired and liabilities assumed in the Landrum transaction, as of the acquisition date, is as follows:

(In thousands)

Acquired from Landrum

Fair Value Adjustments

A summary, at fair value, of the assets acquired and liabilities assumed in the Landrum acquisition, as of the acquisition date, is as follows:

(In thousands) Acquired from Landrum Fair Value Adjustments Fair Value

Assets Acquired

7 unchanged sentences

Bank owned life insurance 19,206 — 19,206

Goodwill 407 ( 407 ) —

Core deposit intangible — 24,345 24,345

Other intangibles 412 4,704 5,116

Other assets 33,924 ( 13,290 ) 20,634

Total assets acquired $ 3,381,889 $ 17,349 $ 3,399,238

8 unchanged sentences

Total liabilities assumed 3,125,207 ( 1,164 ) 3,124,043

Equity 256,682 ( 256,682 ) —

Total equity assumed 256,682 ( 256,682 ) —

2 unchanged sentences

Purchase price 415,779

Goodwill $ 140,584

The purchase price allocation and certain fair value measurements remain preliminary due to the timing of the merger.

20 unchanged sentences

The goodwill will not be deductible for tax purposes.

A summary, at fair value, of the assets acquired and liabilities assumed in the Reliance transaction, as of the acquisition date, is as follows:

(In thousands)

Acquired from Reliance

Fair Value Adjustments

A summary, at fair value, of the assets acquired and liabilities assumed in the Reliance acquisition, as of the acquisition date, is as follows:

(In thousands) Acquired from Reliance Fair Value Adjustments Fair Value

Assets Acquired

8 unchanged sentences

Core deposit intangible — 18,350 18,350

Other assets 25,165 6,911 32,076

Total assets acquired $ 1,549,954 $ ( 15,642 ) $ 1,534,312

(In thousands)

Acquired from Reliance

Fair Value Adjustments

(In thousands) Acquired from Reliance Fair Value Adjustments Fair Value

Liabilities Assumed

7 unchanged sentences

Total liabilities assumed 1,412,289 ( 7,023 ) 1,405,266

Equity 137,665 ( 137,665 ) —

Total equity assumed 137,665 ( 137,665 ) —

2 unchanged sentences

Purchase price 207,539

Goodwill $ 78,493

During 2020, the Company finalized its analysis of the loans acquired along with other acquired assets and assumed liabilities.

37 unchanged sentences

The amortized cost, fair value and allowance for credit losses of investment securities that are classified as HTM are as follows:

(In thousands)

Amortized Cost

for Credit Losses

Net Carrying Amount

Gross Unrealized

Estimated Fair

(In thousands) Amortized Cost Allowance

for Credit Losses Net Carrying Amount Gross Unrealized

Gains Gross Unrealized

(Losses) Estimated Fair

Held-to-Maturity

March 31, 2020

June 30, 2020

Mortgage-backed securities

$ 25,980 $ — $ 25,980 $ 798 $ ( 1 ) $ 26,777

State and political subdivisions

24,872 ( 95 ) 24,777 1,125 ( 2 ) 25,900

Other securities 1,175 ( 212 ) 963 111 — 1,074

(In thousands)

Amortized Cost

for Credit Losses

Net Carrying Amount

Gross Unrealized

Estimated Fair

Total HTM $ 52,027 $ ( 307 ) $ 51,720 $ 2,034 $ ( 3 ) $ 53,751

(In thousands) Amortized Cost Allowance

for Credit Losses Net Carrying Amount Gross Unrealized

Gains Gross Unrealized

(Losses) Estimated Fair

December 31, 2019

Mortgage-backed securities

$ 10,796 $ — $ 10,796 $ 71 $ ( 59 ) $ 10,808

State and political subdivisions

27,082 — 27,082 849 — 27,931

Other securities 3,049 — 3,049 67 — 3,116

Total HTM $ 40,927 $ — $ 40,927 $ 987 $ ( 59 ) $ 41,855

The amortized cost, fair value and allowance for credit losses of investment securities that are classified as AFS are as follows:

(In thousands)

Allowance for Credit Losses

Gross Unrealized

Estimated Fair

(In thousands) Amortized

Cost Allowance for Credit Losses Gross Unrealized

Gains Gross Unrealized

(Losses) Estimated Fair

Available-for-sale

March 31, 2020

June 30, 2020

Government agencies $ 210,496 $ — $ 1,416 $ ( 991 ) $ 210,921

2 unchanged sentences

Other securities 76,943 ( 238 ) 1,354 ( 238 ) 77,821

Total AFS $ 2,428,548 $ ( 609 ) $ 71,084 $ ( 2,127 ) $ 2,496,896

December 31, 2019

Treasury $ 449,729 $ — $ 112 $ ( 112 ) $ 449,729

Government agencies 194,207 — 1,313 ( 1,271 ) 194,249

2 unchanged sentences

Other securities 20,092 — 822 ( 18 ) 20,896

Accrued interest receivable on HTM and AFS securities at March 31, 2020 was $ 334,000 and $ 9.7 million , respectively, and is included in interest receivable on the consolidated balance sheets.

Total AFS $ 3,263,151 $ — $ 31,740 $ ( 6,548 ) $ 3,288,343

Accrued interest receivable on HTM and AFS securities at June 30, 2020 was $ 247,000 and $ 12.7 million, respectively, and is included in interest receivable on the consolidated balance sheets.

The Company has made the election to exclude all accrued interest receivable from securities from the estimate of credit losses.

The following table summarizes the Company’s AFS investments in an unrealized loss position for which an allowance for credit loss has not been recorded as of March 31, 2020 , aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

Less Than 12 Months

12 Months or More

(In thousands)

The following table summarizes the Company’s AFS investments in an unrealized loss position for which an allowance for credit loss has not been recorded as of June 30, 2020, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

Less Than 12 Months 12 Months or More Total

(In thousands) Estimated

Losses Estimated

Available-for-sale

2 unchanged sentences

State and political subdivisions 30,468 ( 324 ) 388 ( 1 ) 30,856 ( 325 )

As of March 31, 2020 , the Company’s investment portfolio included $ 2.5 billion of AFS securities, of which $ 640.5 million , or 26.0 % were in an unrealized loss position that are not deemed to have credit losses.

The majority of these unrealized losses were related to the Company’s mortgage-backed securities, which are issued and guaranteed by U.S.

Total AFS $ 81,057 $ ( 488 ) $ 60,661 $ ( 1,030 ) $ 141,718 $ ( 1,518 )

As of June 30, 2020, the Company’s investment portfolio included $ 2.5 billion of AFS securities, of which $ 141.7 million, or 5.7 %, were in an unrealized loss position that are not deemed to have credit losses.

A portion of the unrealized losses were related to the Company’s mortgage-backed securities, which are issued and guaranteed by U.S.

government-sponsored entities and agencies, and the Company’s state and political securities, specifically investments in insured fixed rate municipal bonds meaning issuers continue to make timely principal and interest payments under the contractual terms of the securities.

10 unchanged sentences

Regarding securities issued by state and political subdivisions and other HTM securities, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) internal forecasts, (v) whether or not such securities provide insurance or other credit enhancement or pre-refunded by the issuers.

The following table details activity in the allowance for credit losses by investment security type for the three months ended March 31, 2020 on the Company’s HTM and AFS securities held.

(In thousands)

State and Political Subdivisions

Other Securities

The following table details activity in the allowance for credit losses by investment security type for the three and six months ended June 30, 2020 on the Company’s HTM and AFS securities held.

(In thousands) State and Political Subdivisions Other Securities Total

Three Months Ended June 30, 2020

Held-to-Maturity

Balance, January 1, 2020

Beginning balance, April 1, 2020 $ 97 $ 312 $ 409

Provision for credit loss expense

( 2 ) ( 100 ) ( 102 )

Ending balance, June 30, 2020 $ 95 $ 212 $ 307

Available-for-sale

Beginning balance, April 1, 2020 $ 95 $ 174 $ 269

Credit losses on securities not previously recorded

Net increase (decrease) in allowance on previously impaired securities

( 94 ) ( 96 ) ( 190 )

Ending balance, June 30, 2020 $ 371 $ 238 $ 609

Six Months Ended June 30, 2020

Held-to-Maturity

Beginning balance, January 1, 2020 $ — $ — $ —

Impact of ASU 2016-13 adoption

Provision for credit loss expense

Balance, March 31, 2020

37 ( 99 ) ( 62 )

Ending balance, June 30, 2020 $ 95 $ 212 $ 307

Available-for-sale

Balance, January 1, 2020

Beginning balance, January 1, 2020 $ — $ — $ —

Impact of ASU 2016-13 adoption

Credit losses on securities not previously recorded

Reduction due to sales ( 142 ) — ( 142 )

Net increase (decrease) in allowance on previously impaired securities

Balance, March 31, 2020

During the three months ended March 31, 2020 , the provision for credit losses was reduced by $ 104,000 related to AFS securities.

The following table summarizes bond ratings for the Company’s HTM portfolio issued by state and political subdivisions and other securities as of March 31, 2020 :

Ending balance, June 30, 2020 $ 371 $ 238 $ 609

During the three and six months ended June 30, 2020, the provision for credit losses was $ 340,000 and $ 236,000 , respectively, related to AFS securities.

The following table summarizes bond ratings for the Company’s HTM portfolio issued by state and political subdivisions and other securities as of June 30, 2020:

State and Political Subdivisions

(In thousands)

Not Guaranteed or Pre-Refunded

Other Credit Enhancement or Insurance

Other Securities

(In thousands) Not Guaranteed or Pre-Refunded Other Credit Enhancement or Insurance Pre-Refunded Total Other Securities

Aaa/AAA $ 2,112 $ — $ — $ 2,112 $ —

Aa/AA 11,512 5,922 — 17,434 —

A 961 1,147 — 2,108 —

Not Rated 2,849 369 — 3,218 1,175

Total $ 17,434 $ 7,438 $ — $ 24,872 $ 1,175

Historical loss rates associated with securities having similar grades as those in the Company’s portfolio have generally not been significant.

Pre-refunded securities have been defeased by the issuer and are fully secured by cash and/or U.S.

Pre-refunded securities, if any, have been defeased by the issuer and are fully secured by cash and/or U.S.

Treasury securities held in escrow for payment to holders when the underlying call dates of the securities are reached.

1 unchanged sentence

Accordingly, no allowance for credit losses has been recorded for these securities as there is no current expectation of credit losses related to these securities.

Income earned on securities for the three months ended March 31, 2020 and 2019 , is as follows:

Income earned on securities for the three and six months ended June 30, 2020 and 2019, is as follows:

Three Months Ended

June 30, Six Months Ended

(In thousands) 2020 2019 2020 2019

3 unchanged sentences

Available-for-sale 6,031 4,511 12,150 7,672

Total $ 13,473 $ 15,666 $ 32,416 $ 31,947

The amortized cost and estimated fair value by maturity of securities are shown in the following table.

1 unchanged sentence

Accordingly, actual maturities may differ from contractual maturities.

Held-to-Maturity

Available-for-Sale

(In thousands)

Held-to-Maturity Available-for-Sale

(In thousands) Amortized

Value Amortized

One year or less $ 4,928 $ 4,962 $ 15,006 $ 15,077

4 unchanged sentences

Other securities (no maturity) — — 514 1,263

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $ 1.74 billion at March 31, 2020 and $ 1.73 billion at December 31, 2019 .

There were approximately $ 32.1 million of gross realized gains and $ 2,080 of gross realized losses from the sale of securities during the three months ended March 31, 2020 .

During the first quarter of 2020, the Company sold approximately $ 1.1 billion of investment securities to create additional liquidity.

There were approximately $ 2.7 million of gross realized gains and no gross realized losses from the sale of securities during the three months ended March 31, 2019 .

Total $ 52,027 $ 53,751 $ 2,428,548 $ 2,496,896

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $ 1.38 billion at June 30, 2020 and $ 1.73 billion at December 31, 2019.

There were approximately $ 391,000 of gross realized gains and $ 1,000 of gross realized losses from the sale of securities during the three months ended June 30, 2020, and approximately $ 32.5 million of gross realized gains and $ 2,600 of gross realized losses from the sale of securities during the six months ended June 30, 2020.

During the first half of 2020, the Company sold approximately $ 1.2 billion of investment securities to create additional liquidity.

There were approximately $ 2.8 million of gross realized gains and no gross realized losses from the sale of securities during the three months ended June 30, 2019, and approximately $ 5.6 million of gross realized gains and no gross realized losses from the sale of securities during the six months ended June 30, 2019.

The income tax expense/benefit related to security gain/losses was 26.135 % of the gross amounts in 2020 and 2019.

1 unchanged sentence

Colorado Branch Sale

On February 10, 2020, the Company’s subsidiary bank, Simmons Bank, entered into a Branch Purchase and Assumption Agreement (the “First Western Agreement”) with First Western Trust Bank (“First Western”), a wholly-owned subsidiary of First Western Financial, Inc., pursuant to which First Western will purchase certain assets and assume certain liabilities (the “Colorado Branch Sale”) associated with four Simmons Bank locations in Denver, Englewood, Highlands Ranch, and Lone Tree, Colorado (collectively, the “Colorado Branches”).

Pursuant to the terms of the First Western Agreement, First Western has agreed to assume certain deposit liabilities and to acquire certain loans, as well as cash, personal property and other fixed assets associated with the Colorado Branches.

The combined loan and deposit balances of the Colorado Branches (excluding certain loans and deposits not subject to the Colorado Branch Sale) as of March 31, 2020 , were approximately $ 114.9 million and $ 58.4 million , respectively.

Pursuant to the terms and subject to the conditions of the First Western Agreement, the purchase price for the transaction will be computed as the difference of (A) the sum of (i) the aggregate balance of the deposits to be assumed, together with accrued and unpaid interest thereon, (ii) the amount of certain accrued expenses, and (iii) the amount of certain other liabilities to be assumed, together with accrued and unpaid interest thereon, and (B) the sum of (i) the aggregate outstanding principal balance of the loans to be acquired, together with accrued and unpaid interest thereon, (ii) the aggregate amount of cash on hand, (iii) the amount of certain prepaid expenses, and (iv) the aggregate net book value of the personal property and ATMs to be acquired.

The purchase price is subject to a customary post-closing adjustment based on the delivery within 30 calendar days following the closing date of a final closing statement setting forth the purchase price and any necessary adjustment payment amount.

Additionally, First Western will pay a premium to Simmons Bank in an amount equal to the average aggregate daily closing balance of the deposits to be acquired for the 30-business day period prior to the closing date multiplied by the Applicable Percentage.

The “Applicable Percentage” equals (1) if the Colorado Branch Sale is completed on or before May 31, 2020, 6.06 % , (2) if the Colorado Branch Sale is completed after May 31, 2020, but on or before July 31, 2020, 7.06 % , or (3) if the Colorado Branch Sale is completed after July 31, 2020, 8.06 % .

The completion of the Colorado Branch Sale is subject to certain customary closing conditions.

Subject to the satisfaction of such conditions, First Western and Simmons Bank expect to close the Colorado Branch Sale in the second quarter of 2020.

On May 18, 2020, First Western completed its purchase of certain assets and assumption of certain liabilities (“Colorado Branch Sale”) associated with four Simmons Bank locations in Denver, Englewood, Highlands Ranch, and Lone Tree, Colorado (collectively, the “Colorado Branches”).

Pursuant to the terms of the First Western Agreement, First Western assumed certain deposit liabilities and acquired certain loans, as well as cash, personal property and other fixed assets associated with the Colorado Branches.

Texas Branch Sale

2 unchanged sentences

Pursuant to the terms of the Spirit Agreement, Spirit assumed certain deposit liabilities and acquired certain loans, as well as cash, real property, personal property and other fixed assets associated with the Texas Branches.

The Company recognized a gain of $ 5.9 million on the sale.

The Company recognized a combined gain on sale of $ 8.1 million related to the Texas Branches and Colorado Branches in the six month period ended June 30, 2020.

LOANS AND ALLOWANCE FOR CREDIT LOSSES

At March 31, 2020 , the Company’s loan portfolio was $ 14.37 billion , compared to $ 14.43 billion at December 31, 2019 .

At June 30, 2020, the Company’s loan portfolio was $ 14.61 billion, compared to $ 14.43 billion at December 31, 2019.

The various categories of loans are summarized as follows:

June 30, December 31,

(In thousands) 2020 2019

March 31, 2020

December 31, 2019

Credit cards $ 184,348 $ 204,802

Other consumer 214,024 249,195

4 unchanged sentences

Total real estate 10,533,787 11,021,940

Commercial 3,038,216 2,451,119

Agricultural 217,715 191,525

Total commercial 3,255,931 2,642,644

Other 418,810 307,123

Total loans $ 14,606,900 $ 14,425,704

The above table presents total loans at amortized cost.

The difference between amortized cost and unpaid principal balance is primarily premiums and discounts associated with acquisition date fair value adjustments on acquired loans as well as net deferred origination fees totaling $ 72.4 million and $ 91.6 million at March 31, 2020 and December 31, 2019 , respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $ 47.0 million and $ 48.9 million at March 31, 2020 and December 31, 2019 , respectively, and is included in interest receivable on the consolidated balance sheets.

The difference between amortized cost and unpaid principal balance is primarily premiums and discounts associated with acquisition date fair value adjustments on acquired loans as well as net deferred origination fees totaling $ 82.2 million and $ 91.6 million at June 30, 2020 and December 31, 2019, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $ 66.9 million and $ 48.9 million at June 30, 2020 and December 31, 2019, respectively, and is included in interest receivable on the consolidated balance sheets.

Loan Origination/Risk Management – The Company seeks to manage its credit risk by diversifying its loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral;

17 unchanged sentences

thereby making predictions for one market based on the other difficult.

Additionally, submarkets within commercial real estate – such as office, industrial, apartment, retail and hotel – also experience different cycles, providing an opportunity to lower

the overall risk through diversification across types of CRE loans.

Additionally, submarkets within commercial real

estate – such as office, industrial, apartment, retail and hotel – also experience different cycles, providing an opportunity to lower the overall risk through diversification across types of CRE loans.

Management realizes that local demand and supply conditions will also mean that different geographic areas will experience cycles of different amplitude and length.

12 unchanged sentences

The amortized cost basis of nonaccrual loans segregated by class of loans are as follows:

June 30, December 31,

(In thousands) 2020 2019

March 31, 2020

December 31, 2019

Credit cards $ 223 $ 382

Other consumer 1,912 1,705

4 unchanged sentences

Total real estate 75,000 49,566

Commercial 53,538 40,924

Agricultural 710 753

Total commercial 54,248 41,677

Nonaccrual loans for which there is no related allowance for credit losses as of March 31, 2020 had an amortized cost of $ 22.4 million .

Total $ 131,383 $ 93,330

Nonaccrual loans for which there is no related allowance for credit losses as of June 30, 2020 had an amortized cost of $ 18.0 million.

These loans are individually assessed and do not hold an allowance due to being adequately collateralized under the collateral-dependent valuation method.

An age analysis of the amortized cost basis of past due loans, including nonaccrual loans, segregated by class of loans is as follows:

(In thousands)

March 31, 2020

(In thousands) Gross

Past Due 90 Days

Past Due Total

Past Due Current Total

Loans 90 Days

June 30, 2020

Credit cards $ 672 $ 262 $ 934 $ 183,414 $ 184,348 $ 262

Other consumer 2,626 724 3,350 210,674 214,024 1

4 unchanged sentences

Total real estate 22,044 39,567 61,611 10,472,176 10,533,787 50

Commercial 6,413 14,891 21,304 3,016,912 3,038,216 180

Agricultural 411 401 812 216,903 217,715 1

Total commercial 6,824 15,292 22,116 3,233,815 3,255,931 181

Other — — — 418,810 418,810 —

Total $ 32,166 $ 55,845 $ 88,011 $ 14,518,889 $ 14,606,900 $ 494

December 31, 2019

Credit cards $ 848 $ 641 $ 1,489 $ 203,313 $ 204,802 $ 259

Other consumer 4,884 735 5,619 243,576 249,195 —

4 unchanged sentences

Total real estate 39,755 21,317 61,072 10,960,868 11,021,940 597

Commercial 10,579 13,551 24,130 2,426,989 2,451,119 —

Agricultural 1,223 456 1,679 189,846 191,525 —

Total commercial 11,802 14,007 25,809 2,616,835 2,642,644 —

Other — — — 307,123 307,123 —

Total $ 57,289 $ 36,700 $ 93,989 $ 14,331,715 $ 14,425,704 $ 856

The following table presents information pertaining to impaired loans as of December 31, 2019, in accordance with previous US GAAP prior to the adoption of ASU 2016-13.

(In thousands)

Recorded Investment

With Allowance

Investment in

December 31, 2019

Three Months Ended

March 31, 2019

(In thousands) Unpaid

Balance Recorded Investment

Allowance Recorded

With Allowance Total

Investment Related

Allowance Average Investment in Impaired Loans Interest Income Recognized Average Investment in Impaired Loans Interest

December 31, 2019 Three Months Ended

June 30, 2019 Six Months Ended

June 30, 2019

Credit cards $ 382 $ 382 $ — $ 382 $ — $ 332 $ 40 $ 320 $ 70

Other consumer 1,537 1,378 — 1,378 — 1,563 12 1,762 25

4 unchanged sentences

Total real estate 34,759 24,318 6,775 31,093 740 25,517 178 25,095 354

Commercial 53,436 6,582 28,998 35,580 5,007 29,776 187 23,811 335

Agricultural 525 383 116 499 — 1,148 8 1,159 16

Total commercial 53,961 6,965 29,114 36,079 5,007 30,924 195 24,970 351

Total $ 90,639 $ 33,043 $ 35,889 $ 68,932 $ 5,747 $ 58,336 $ 425 $ 52,147 $ 800

When the Company restructures a loan to a borrower that is experiencing financial difficulty and grants a concession that it would not otherwise consider, a “troubled debt restructuring” (“TDR”) results and the Company classifies the loan as a TDR.

10 unchanged sentences

The following table presents a summary of TDRs segregated by class of loans.

Accruing TDR Loans

Nonaccrual TDR Loans

Total TDR Loans

(Dollars in thousands)

March 31, 2020

Construction and development

Accruing TDR Loans Nonaccrual TDR Loans Total TDR Loans

(Dollars in thousands) Number Balance Number Balance Number Balance

June 30, 2020

Single-family residential 12 $ 1,221 7 $ 680 19 $ 1,901

1 unchanged sentence

Total real estate 12 1,221 9 750 21 1,971

Commercial 4 2,739 3 68 7 2,807

Total commercial 4 2,739 3 68 7 2,807

Total 16 $ 3,960 12 $ 818 28 $ 4,778

December 31, 2019

3 unchanged sentences

Total real estate 8 1,627 15 823 23 2,450

Commercial 4 2,784 3 79 7 2,863

Total commercial 4 2,784 3 79 7 2,863

There were no loans restructured as TDRs during the three month periods ended March 31, 2020 or 2019 .

There were no loans considered TDRs for which a payment default occurred during the three months ended March 31, 2020 .

There was one commercial loan considered a TDR for which a payment default occurred during the three months ended March 31, 2019 .

Total 12 $ 4,411 18 $ 902 30 $ 5,313

The following table presents loans that were restructured as TDRs during the three and six months ended June 30, 2020.

There were no loans restructured as TDRs during the three and six month periods ended June 30, 2019.

(Dollars in thousands) Number of loans Balance Prior to TDR Balance at June 30, Change in Maturity Date Change in Rate Financial Impact on Date of Restructure

Three and Six Months Ended June 30, 2020

Single-family residential 1 $ 147 $ 147 $ 147 $ — $ —

Total real estate 1 $ 147 $ 147 $ 147 $ — $ —

During the three and six months ended June 30, 2020, the Company modified one loan with a recorded investment of $ 147,000 prior to modification which was deemed troubled debt restructuring.

The restructured loan was modified by deferring amortized principal payments, changing the maturity date and requiring interest only payments for a period of up to 12 months.

A specific reserve of $ 7,200 was determined necessary for this loan.

There were no loans considered TDRs for which a payment default occurred during the six months ended June 30, 2020.

There was one commercial loan considered a TDR for which a payment default occurred during the six months ended June 30, 2019.

A charge-off of approximately $ 138,000 was recorded for this loan.

The Company defines a payment default as a payment received more than 90 days after its due date.

There were no TDRs with pre-modification loan balances for which OREO was received in full or partial satisfaction of the loans during the three month periods ended March 31, 2020 or 2019 .

At March 31, 2020 and December 31, 2019 , the Company had $ 5,301,000 and $ 5,789,000 , respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process.

At March 31, 2020 and December 31, 2019 , the Company had $ 2,672,000 and $ 4,458,000 , respectively, of OREO secured by residential real estate properties.

There were no TDRs with pre-modification loan balances for which OREO was received in full or partial satisfaction of the loans during the three or six month periods ended June 30, 2020 or 2019.

At June 30, 2020 and December 31, 2019, the Company had $ 4,395,000 and $ 5,789,000 , respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process.

At June 30, 2020 and December 31, 2019, the Company had $ 2,321,000 and $ 4,458,000 , respectively, of OREO secured by residential real estate properties.

Credit Quality Indicators – As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the weighted-average risk rating of commercial and real estate loans, (ii) the level of classified commercial and real estate loans, (iii) net charge-offs, (iv) non-performing loans (see details above) and (v) the general economic conditions of the Company’s local markets.

54 unchanged sentences

These loans have been subject to the Company’s loss mitigation process and foreclosure and/or charge-off proceedings have commenced.

The following table presents a summary of loans by credit quality indicator as of March 31, 2020 segregated by class of loans.

The following table presents a summary of loans by credit quality indicator, other than pass or current, as of June 30, 2020 segregated by class of loans.

Term Loans Amortized Cost Basis by Origination Year

(In thousands)

2015 and Prior

Lines of Credit Amortized Cost Basis

Lines of Credit Converted to Term Loans Amortized Cost Basis

March 31, 2020

(In thousands) 2020 (YTD) 2019 2018 2017 2016 2015 and Prior Lines of Credit (“LOC”) Amortized Cost Basis LOC Converted to Term Loans Amortized Cost Basis Total

Consumer - credit cards

29 unchanged sentences

Total commercial - agriculture 21 198 208 474 149 11 100 — 1,161

Total $ 67,517 $ 22,117 $ 31,928 $ 14,898 $ 11,533 $ 26,416 $ 165,036 $ 36,653 $ 376,098

The following table presents a summary of loans by credit risk rating as of December 31, 2019 segregated by class of loans.

(In thousands)

(In thousands) Risk Rate

1-4 Risk Rate

December 31, 2019

Credit cards $ 204,161 $ — $ 641 $ — $ — $ 204,802

Other consumer 247,668 — 2,026 — — 249,694

4 unchanged sentences

Total real estate 10,691,728 75,864 116,765 130 37 10,884,524

Commercial 2,384,263 26,713 84,317 43 180 2,495,516

Agricultural 309,741 41 5,672 — — 315,454

Total commercial 2,694,004 26,754 89,989 43 180 2,810,970

Other 275,714 — — — — 275,714

Total $ 14,113,275 $ 102,618 $ 209,421 $ 173 $ 217 $ 14,425,704

Allowance for Credit Losses

5 unchanged sentences

Reserve factors are based on estimated probability of default and loss given default for each segment.

The estimates are determined based on economic forecasts over the reasonable and supportable forecast period based on projected performance of economic variables that have a statistical correlation with the historical loss experience of the segments.

The estimates are determined based on economic forecasts over the reasonable and supportable forecast period based on projected performance of economic variables that have a statistical relationship with the historical loss experience of the segments.

For contractual periods that extend beyond the one-year forecast period, the estimates revert to average historical loss experiences over a one-year period on a straight-line basis.

4 unchanged sentences

• Changes in lending and loan monitoring policies and procedures - Adjustments related to current changes in lending and loan monitoring procedures as well as review of specific internal policy compliance metrics.

Change in the experience, ability, and depth of lending management and other relevant staff - Adjustments to measure increasing or decreasing credit risk related to lending and loan monitoring management.

• Changes in the experience, ability, and depth of lending management and other relevant staff - Adjustments to measure increasing or decreasing credit risk related to lending and loan monitoring management.

• Changes in the value of underlying collateral of collateralized loans - Adjustments related to improving or deterioration of the value of underlying collateral that are not fully captured in the reserve factors.

11 unchanged sentences

The collateral securing these loans consist of commercial real estate properties, residential properties, other business assets, and secured energy production assets.

(In thousands)

Real Estate Collateral

Other Collateral

(In thousands) Real Estate Collateral Energy Other Collateral Total

Construction and development $ 2,465 $ — $ — $ 2,465

1 unchanged sentence

Other commercial real estate 18,654 — — 18,654

The following table details activity in the allowance for credit losses by portfolio segment for loans for the three months ended March 31, 2020 .

Commercial — 21,755 6,696 28,451

Total $ 26,598 $ 21,755 $ 6,696 $ 55,049

The following table details activity in the allowance for credit losses by portfolio segment for loans for the three and six months ended June 30, 2020.

Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

(In thousands)

Three Months Ended March 31, 2020

(In thousands) Commercial Real

Estate Credit

and Other Total

Allowance for credit losses:

Beginning balance, prior to adoption of CECL

Three Months Ended June 30, 2020

Beginning balance, April 1, 2020 $ 76,327 $ 141,022 $ 7,817 $ 18,029 $ 243,195

Provision for credit loss expense 18,400 10,020 3,943 ( 5,685 ) 26,678

Charge-offs ( 35,687 ) ( 1,824 ) ( 1,053 ) ( 592 ) ( 39,156 )

Recoveries 98 253 272 303 926

Net charge-offs ( 35,589 ) ( 1,571 ) ( 781 ) ( 289 ) ( 38,230 )

Ending balance, June 30, 2020 $ 59,138 $ 149,471 $ 10,979 $ 12,055 $ 231,643

(In thousands) Commercial Real

Estate Credit

and Other Total

Six Months Ended June 30, 2020

Beginning balance, January 1, 2020 - prior to adoption of CECL

$ 22,863 $ 39,161 $ 4,051 $ 2,169 $ 68,244

Impact of CECL adoption 22,733 114,314 2,232 12,098 151,377

Provision for credit loss expense 49,307 ( 2,138 ) 6,693 ( 987 ) 52,875

Charge-offs ( 36,210 ) ( 2,220 ) ( 2,494 ) ( 1,971 ) ( 42,895 )

Recoveries 445 354 497 746 2,042

Net charge-offs ( 35,765 ) ( 1,866 ) ( 1,997 ) ( 1,225 ) ( 40,853 )

Balance, March 31, 2020

Activity in the allowance for credit losses for the three months ended March 31, 2019 was as follows:

(In thousands)

Three Months Ended March 31, 2019

Balance, beginning of period

Ending balance, June 30, 2020 $ 59,138 $ 149,471 $ 10,979 $ 12,055 $ 231,643

Activity in the allowance for credit losses for the three and six months ended June 30, 2019 was as follows:

(In thousands) Commercial Real

Estate Credit

and Other Total

Allowance for credit losses:

Three Months Ended June 30, 2019

Beginning balance, April 1, 2019 $ 19,394 $ 34,870 $ 3,919 $ 2,372 $ 60,555

Provision for credit losses 2,956 2,681 800 642 7,079

Charge-offs ( 1,963 ) ( 1,216 ) ( 1,039 ) ( 964 ) ( 5,182 )

Recoveries 967 158 271 331 1,727

Net charge-offs ( 996 ) ( 1,058 ) ( 768 ) ( 633 ) ( 3,455 )

Balance, March 31, 2019

A change in forecast methodology, as well as the composition of the loans resulted in a negative provision in the real estate-construction and development loan segment during the first quarter of 2020.

Under the current stressed economic conditions, the Company’s forecast of expected losses in the construction and development segment no longer produced a forecast that was considered reasonable and supportable.

As such, management adjusted the forecast methodology of this segment to better align with management’s expectation of loss under the modeled economic conditions.

The other categories saw increases in the provision related to increased concern over the economic stresses related to COVID-19, as well as increased specific provisions of $ 22 million for two energy credits, previously identified as problem loans, both of which experienced further deterioration during the first quarter of 2020 and were negatively impacted by the sharp decline in commodity pricing.

Ending balance, June 30, 2019 $ 21,354 $ 36,493 $ 3,951 $ 2,381 $ 64,179

Six Months Ended June 30, 2019

Beginning balance, January 1, 2019 $ 20,514 $ 29,838 $ 3,923 $ 2,419 $ 56,694

Provision for credit losses 4,830 7,988 1,698 1,848 16,364

Charge-offs ( 5,115 ) ( 1,633 ) ( 2,181 ) ( 2,517 ) ( 11,446 )

Recoveries 1,125 300 511 631 2,567

Net charge-offs ( 3,990 ) ( 1,333 ) ( 1,670 ) ( 1,886 ) ( 8,879 )

Ending balance, June 30, 2019 $ 21,354 $ 36,493 $ 3,951 $ 2,381 $ 64,179

Four energy credits within the Commercial segment were charged off during the second quarter of 2020 for a total of $ 32.6 million, of which $ 27.1 million was specifically reserved for at March 31, 2020.

The primary driver for the change in the provision for credit losses was related to updated credit loss forecasts using multiple Moody’s economic scenarios.

The baseline economic forecast was weighted 68 % by the Company, while the downside scenarios of S-2 and S-3 were weighted 22 % and 10 %, respectively, to capture the possibility of a longer, more prolonged recovery to the economies that affect the loan portfolio.

Reserve for Unfunded Commitments

1 unchanged sentence

This reserve is maintained at a level management believes to be sufficient to absorb losses arising from unfunded loan commitments.

The reserve for unfunded commitments as of March 31, 2020 and December 31, 2019 was $ 29.4 million and $ 8.4 million , respectively.

The reserve for unfunded commitments as of June 30, 2020 and December 31, 2019 was $ 24.4 million and $ 8.4 million, respectively.

The increase from year end was due to the adoption of CECL.

The adequacy of the reserve for unfunded commitments is determined monthly based on methodology similar to the methodology for determining the allowance for credit losses.

For the three months ended March 31, 2020 and 2019 , net adjustments to the reserve for unfunded commitments were a benefit of $ 3.0 million and an expense of $ 300,000 , respectively, and were included in other non-interest expense.

For the six months ended June 30, 2020 and 2019, net adjustments to the reserve for unfunded commitments were a benefit of $ 8.0 million and an expense of $ 950,000 , respectively, and were included in other non-interest expense.

RIGHT-OF-USE LEASE ASSETS AND LEASE LIABILITIES

9 unchanged sentences

The Company’s leases are classified as operating leases with a term, including expected renewal or termination options, greater than one year, and are related to certain office facilities and office equipment.

Right-of-use lease assets included in premises and equipment were $ 38.3 million and $ 40.7 million at March 31, 2020 and December 31, 2019 , respectively.

Lease liabilities included in other liabilities were $ 38.4 million and $ 40.9 million at March 31, 2020 and December 31, 2019 , respectively.

Right-of-use lease assets included in premises and equipment were $ 34.7 million and $ 40.7 million at June 30, 2020 and December 31, 2019, respectively.

Lease liabilities included in other liabilities were $ 34.8 million and $ 40.9 million at June 30, 2020 and December 31, 2019, respectively.

Other information related to the Company’s operating leases is presented in the table below:

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Operating lease cost $ 3,443,100 $ 2,613,600 $ 6,643,600 $ 6,048,500

Weighted average remaining lease term

Weighted average remaining lease term 8.53 years 8.92 years

Weighted average discount rate 3.25 % 3.47 %

1 unchanged sentence

Premises and equipment are stated at cost less accumulated depreciation and amortization.

Total premises and equipment, net at March 31, 2020 and December 31, 2019 were as follows:

Total premises and equipment, net at June 30, 2020 and December 31, 2019 were as follows:

June 30, December 31,

(In thousands) 2020 2019

March 31, 2020

December 31, 2019

Right-of-use lease assets $ 34,680 $ 40,675

Premises and equipment:

Land 96,607 99,931

Buildings and improvements 306,951 309,290

Furniture, fixtures and equipment 98,383 99,343

Software 63,995 56,012

Construction in progress 6,635 6,998

5 unchanged sentences

Subsequent increases in goodwill value are not recognized in the financial statements.

Goodwill totaled $ 1.065 billion at March 31, 2020 and $ 1.056 billion at December 31, 2019 .

Goodwill totaled $ 1.065 billion at June 30, 2020 and $ 1.056 billion at December 31, 2019.

During 2019, the Company recorded $ 131.3 million and $ 78.5 million of goodwill as a result of its acquisitions of Landrum and Reliance, respectively.

During the first quarter of 2020, goodwill increased $ 9.5 million related to the continued assessment of the fair value and assumed tax position of the Landrum acquisition.

Goodwill impairment was neither indicated nor recorded during the three months ended March 31, 2020 or the year ended December 31, 2019 .

During the first quarter 2020, the Company’s share price began to decline as the markets in the United States responded to the global COVID-19 pandemic.

As a result of the economic decline, the effect on share price and other factors, the Company performed an interim goodwill impairment qualitative assessment and concluded that it is more likely-than-not that the fair value of goodwill continues to exceed its carrying value and therefore, goodwill is not impaired.

During the first half of 2020, goodwill increased $ 9.2 million related to the continued assessment of the fair value and assumed tax position of the Landrum acquisition.

Goodwill impairment was neither indicated nor recorded during the six months ended June 30, 2020 or the year ended December 31, 2019.

During the first quarter of 2020, the Company’s share price began to decline as the markets in the United States responded to the global COVID-19 pandemic.

As a result of that economic decline, the effect on share price and other factors, the Company performed an interim goodwill impairment qualitative assessment during the first quarter and concluded no impairment existed.

During the second quarter of 2020, the Company performed the annual goodwill impairment analysis and concluded that it is more likely-than-not that the fair value of goodwill continues to exceed its carrying value and therefore, goodwill is not impaired.

Core deposit premiums represent the value of the relationships that acquired banks had with their deposit customers and are amortized over periods ranging from 10 years to 15 years and are periodically evaluated, at least annually, as to the recoverability of their carrying value.

Other intangible assets represent the value of other acquired relationships, including relationships with trust and wealth management customers, and are being amortized over various periods ranging from 10 years to 15 years.

Changes in the carrying amount and accumulated amortization of the Company’s core deposit premiums and other intangible assets at March 31, 2020 and December 31, 2019 were as follows:

Changes in the carrying amount and accumulated amortization of the Company’s core deposit premiums and other intangible assets at June 30, 2020 and December 31, 2019 were as follows:

June 30, December 31,

(In thousands) 2020 2019

March 31, 2020

December 31, 2019

Core deposit premiums:

2 unchanged sentences

Disposition of intangible asset (2)

Amortization ( 6,094 ) ( 10,694 )

Balance, end of period 103,390 111,808

3 unchanged sentences

Disposition of intangible asset ( 413 ) —

Amortization ( 686 ) ( 1,111 )

Balance, end of period 14,433 15,532

3 unchanged sentences

See Note 2, Acquisitions, for additional information on acquisitions completed in 2019.

(2) Consisting of an adjustment for the premium on certain deposit liabilities related to the sale of the Texas Branches.

(2) Adjustments recorded for the premiums on certain deposit liabilities associated with the sale of the Texas Branches and Colorado Branches.

(3) The Company recorded $ 5.1 million during 2019 primarily related to the wealth management operations acquired from Landrum.

See Note 2, Acquisitions, for additional information on acquisitions completed in 2019.

The carrying basis and accumulated amortization of the Company’s other intangible assets at March 31, 2020 and December 31, 2019 were as follows:

The carrying basis and accumulated amortization of the Company’s other intangible assets at June 30, 2020 and December 31, 2019 were as follows:

June 30, December 31,

(In thousands) 2020 2019

March 31, 2020

December 31, 2019

Core deposit premiums:

7 unchanged sentences

Total other intangible assets, net $ 117,823 $ 127,340

The Company’s estimated remaining amortization expense on other intangible assets as of March 31, 2020 is as follows:

(In thousands)

The Company’s estimated remaining amortization expense on other intangible assets as of June 30, 2020 is as follows:

(In thousands) Year Amortization

Remainder of 2020 $ 6,714

Thereafter 59,218

Total $ 117,823

TIME DEPOSITS

Time deposits included approximately $ 2.14 billion and $ 2.15 billion of certificates of deposit of $100,000 or more, at March 31, 2020 , and December 31, 2019 , respectively.

Of this total approximately $ 1.1 billion and $ 837.3 million of certificates of deposit were over $250,000 at March 31, 2020 and December 31, 2019 , respectively.

Time deposits included approximately $ 2.09 billion and $ 2.15 billion of certificates of deposit of $100,000 or more, at June 30, 2020, and December 31, 2019, respectively.

Of this total approximately $ 1.1 billion and $ 837.3 million of certificates of deposit were over $250,000 at June 30, 2020 and December 31, 2019, respectively.

The provision for income taxes is comprised of the following components for the periods indicated below:

Three Months Ended

June 30, Six Months Ended

(In thousands) 2020 2019 2020 2019

3 unchanged sentences

The tax effects of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities, and their approximate tax effects, are as follows:

June 30, December 31,

(In thousands) 2020 2019

March 31, 2020

December 31, 2019

Deferred tax assets:

8 unchanged sentences

Allowance for unfunded commitments 6,122 —

Other 5,655 7,886

Gross deferred tax assets 120,702 89,186

6 unchanged sentences

Acquired securities ( 820 ) —

Other ( 5,113 ) ( 4,633 )

Gross deferred tax liabilities ( 110,308 ) ( 99,322 )

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands) 2020 2019 2020 2019

Computed at the statutory rate (21%)

$ 15,620 $ 14,955 $ 36,180 $ 27,575

Increase (decrease) in taxes resulting from:

31 unchanged sentences

Securities pledged as collateral under repurchase agreements are maintained with the Company’s safekeeping agents.

The gross amount of recognized liabilities for repurchase agreements was $ 334.1 million and $ 133.2 million at March 31, 2020 and December 31, 2019 , respectively.

The remaining contractual maturity of the securities sold under agreements to repurchase in the consolidated balance sheets as of March 31, 2020 and December 31, 2019 is presented in the following tables.

The gross amount of recognized liabilities for repurchase agreements was $ 335.2 million and $ 133.2 million at June 30, 2020 and December 31, 2019, respectively.

The remaining contractual maturity of the securities sold under agreements to repurchase in the consolidated balance sheets as of June 30, 2020 and December 31, 2019 is presented in the following tables.

Remaining Contractual Maturity of the Agreements

(In thousands)

Overnight and

Up to 30 Days

March 31, 2020

(In thousands) Overnight and

Continuous Up to 30 Days 30-90 Days Greater than

90 Days Total

June 30, 2020

Repurchase agreements:

4 unchanged sentences

OTHER BORROWINGS AND SUBORDINATED NOTES AND DEBENTURES

Debt at March 31, 2020 and December 31, 2019 consisted of the following components:

Debt at June 30, 2020 and December 31, 2019 consisted of the following components:

June 30, December 31,

(In thousands) 2020 2019

March 31, 2020

December 31, 2019

Other Borrowings

FHLB advances, net of discount, due 2020 to 2034, 0.23 % to 7.37 % secured by real estate loans

$ 1,359,532 $ 1,262,691

Other long-term debt

34,157 34,908

Total other borrowings 1,393,689 1,297,599

1 unchanged sentence

Subordinated notes payable, due 4/1/2028, fixed-to-floating rate (fixed rate of 5.00 % through 3/31/2023, floating rate of 2.15 % above the three month LIBOR rate, reset quarterly)

330,000 330,000

Trust preferred securities, net of discount, due 9/15/2037, floating rate of 1.37 % above the three month LIBOR rate, reset quarterly

10,310 10,310

Trust preferred securities, net of discount, due 6/6/2037, floating rate of 1.57 % above the three month LIBOR rate, reset quarterly, callable without penalty

10,310 10,310

Trust preferred securities, due 12/15/2035, floating rate of 1.45 % above the three month LIBOR rate, reset quarterly, callable without penalty

Trust preferred securities, net of discount, due 6/15/2037, floating rate of 1.85 % above the three month LIBOR rate, reset quarterly, callable without penalty

25,094 25,015

Trust preferred securities, net of discount, due 12/15/2036, floating rate of 1.85 % above the three month LIBOR rate, reset quarterly, callable without penalty

11 unchanged sentences

The Notes qualify for Tier 2 capital treatment.

The Company assumed subordinated debt of $ 33.9 million in connection with the Landrum acquisition in October 2019.

At March 31, 2020 , the Company had $ 1.35 billion of FHLB advances outstanding with original or expected maturities of one year or less, of which $ 1.30 billion are FHLB Owns the Option (“FOTO”) advances.

The Company assumed subordinated debt of $ 33.9 million in connection with the Landrum acquisition in October 2019, of which $ 5.9 million was repaid during second quarter of 2020.

At June 30, 2020, the Company had $ 1.35 billion of FHLB advances outstanding with original or expected maturities of one year or less, of which $ 1.30 billion are FHLB Owns the Option (“FOTO”) advances.

FOTO advances are a low cost, fixed-rate source of funding in return for granting to FHLB the flexibility to choose a termination date earlier than the maturity date.

1 unchanged sentence

If FHLB exercises its option to terminate the FOTO advance at one of the specified option exercise dates, there is no termination or prepayment fee, and replacement funding will be available at then-prevailing market rates, subject to FHLB’s credit and collateral requirements.

The Company’s FOTO advances outstanding at March 31, 2020 have maturity dates of ten years to fifteen years with lockout periods that have expired and, as a result, are considered and monitored by the Company as short-term advances.

The Company’s FOTO advances outstanding at June 30, 2020 have maturity dates of ten years to fifteen years with lockout periods that have expired and, as a result, are considered and monitored by the Company as short-term advances.

The possibility of the FHLB exercising the options is analyzed by the Company along with the market expected rate outcome.

The Company had total FHLB advances of $ 1.36 billion at March 31, 2020 , with approximately $ 2.1 billion of additional advances available from the FHLB.

The FHLB advances are secured by mortgage loans and investment securities totaling approximately $ 5.4 billion at March 31, 2020 .

The Company had total FHLB advances of $ 1.36 billion at June 30, 2020, with approximately $ 2.8 billion of additional advances available from the FHLB.

The FHLB advances are secured by mortgage loans and investment securities totaling approximately $ 6.1 billion at June 30, 2020.

The trust preferred securities are tax-advantaged issues that qualified for Tier 1 capital treatment until December 31, 2017, when the Company reached $ 15 billion in assets.

They still qualify for inclusion as Tier 2 capital at March 31, 2020 .

They still qualify for inclusion as Tier 2 capital at June 30, 2020.

Distributions on these securities are included in interest expense on long-term debt.

5 unchanged sentences

The Company’s long-term debt primarily includes subordinated debt and long-term FHLB advances with an original maturity of greater than one year.

Aggregate annual maturities of long-term debt at March 31, 2020 , are as follows:

(In thousands)

Aggregate annual maturities of long-term debt at June 30, 2020, are as follows:

Year (In thousands)

Remainder of 2020 $ 1,193

Thereafter 416,056

Total $ 426,293

CONTINGENT LIABILITIES

19 unchanged sentences

The Company anticipates funding for this Program to come from available sources of liquidity, including cash on hand and future cash flow.

During the three months ended March 31, 2020 , the Company repurchased 4,922,336 shares at an average price of $ 18.96 under the Program.

No shares have been repurchased since March 31, 2020 .

During the six months ended June 30, 2020, the Company repurchased 4,922,336 shares at an average price of $ 18.96 under the Program.

No shares have been repurchased under the Program since March 31, 2020.

Market conditions and the Company’s capital needs will drive decisions regarding additional, future stock repurchases.

The Company had no repurchases of its common stock during the three month period ended March 31, 2019 .

The Company had no repurchases of its common stock during the three and six month periods ended June 30, 2019.

UNDIVIDED PROFITS

Simmons Bank is subject to legal limitations on dividends that can be paid to the parent company without prior approval of the applicable regulatory agencies.

Simmons Bank, the Company’s subsidiary bank, is subject to legal limitations on dividends that can be paid to the parent company without prior approval of the applicable regulatory agencies.

The approval of the Commissioner of the Arkansas State Bank Department is required if the total of all dividends declared by an Arkansas state bank in any calendar year exceeds seventy-five percent ( 75 %) of the total of its net profits, as defined, for that year combined with seventy-five percent ( 75 %) of its retained net profits of the preceding year.

At March 31, 2020 , Simmons Bank had approximately $ 222.5 million available for payment of dividends to the Company, without prior regulatory approval.

At June 30, 2020, Simmons Bank had approximately $ 165.1 million available for payment of dividends to the Company, without prior regulatory approval.

The risk-based capital guidelines of the Federal Reserve Board and the Arkansas State Bank Department include the definitions for (1) a well-capitalized institution, (2) an adequately-capitalized institution, and (3) an undercapitalized institution.

2 unchanged sentences

and a 6.5 % “common equity Tier 1 (CET1)” ratio.

The Company and its subsidiary bank, Simmons Bank, must hold a capital conservation buffer composed of CET1 capital above its minimum risk-based capital requirements.

The Company and Simmons Bank, must hold a capital conservation buffer composed of CET1 capital above its minimum risk-based capital requirements.

The implementation of the capital conservation buffer began on January 1, 2016, at the 0.625 % level and was phased in over a four year period (increasing by that amount on each subsequent January 1 until it reached 2.5 % on January 1, 2019).

As of March 31, 2020 , the Company and Simmons Bank met all capital adequacy requirements under the Basel III Capital Rules.

The Company’s CET1 ratio was 11.10 % at March 31, 2020 .

Failure to meet this capital conservation buffer would result in additional limits on dividends, other distributions and discretionary bonuses.

As of June 30, 2020, the Company and Simmons Bank met all capital adequacy requirements, including the capital conservation buffer, under the Basel III Capital Rules.

The Company’s CET1 ratio was 11.85 % at June 30, 2020.

STOCK-BASED COMPENSATION

1 unchanged sentence

The plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and performance stock units.

Pursuant to the plans, shares are reserved for future issuance by the Company upon exercise of stock options or awards of stock appreciation rights, stock awards or units granted to directors, officers and other key employees.

The table below summarizes the transactions under the Company’s active stock-based compensation plans for the three months ended March 31, 2020 :

Pursuant to the plans, shares are reserved for future issuance by the Company upon exercise of stock options or awards of stock appreciation rights, stock awards or units, or performance shares granted to directors, officers and other key employees.

The table below summarizes the transactions under the Company’s active stock-based compensation plans for the six months ended June 30, 2020:

Stock Options

(Shares in thousands)

Outstanding Non-vested

(Shares in thousands) Number

of Shares Weighted

Fair Value Number

of Shares Weighted

Balance, January 1, 2020 692 $ 22.46 21 $ 23.19 1,152 $ 26.79

Granted — — — — 480 22.37

Stock options exercised ( 1 ) 10.71 — — — —

1 unchanged sentence

Forfeited/expired ( 33 ) 22.49 — — ( 62 ) 26.66

Balance, March 31, 2020

Exercisable, March 31, 2020

The following table summarizes information about stock options under the plans outstanding at March 31, 2020 :

Options Outstanding

Options Exercisable

Exercise Prices

(In thousands)

The table below summarizes the Company’s performance stock unit activity for the three months ended March 31, 2020 :

(In thousands)

Performance Stock Units

Balance, June 30, 2020 658 $ 22.48 16 $ 23.75 1,184 $ 25.23

Exercisable, June 30, 2020 658 $ 22.48

The following table summarizes information about stock options under the plans outstanding at June 30, 2020:

Options Outstanding Options Exercisable

Exercise Prices Number

(In thousands) Weighted

Life (Years) Weighted

(In thousands) Weighted

$ 9.46 — $ 9.46 1 1.55 $ 9.46 1 $ 9.46

10.65 — 10.65 3 2.58 10.65 3 10.65

20.29 — 20.29 66 3.70 20.29 66 20.29

20.36 — 20.36 2 4.38 20.36 2 20.36

22.20 — 22.20 74 3.63 22.20 74 22.20

22.75 — 22.75 412 4.39 22.75 412 22.75

23.51 — 23.51 93 4.80 23.51 93 23.51

24.07 — 24.07 7 5.21 24.07 7 24.07

$ 9.46 — $ 24.07 658 4.29 $ 22.48 658 $ 22.48

The table below summarizes the Company’s performance stock unit activity for the six months ended June 30, 2020:

(In thousands) Performance Stock Units

Non-vested, January 1, 2020 199

Vested (earned) ( 80 )

Non-vested, March 31, 2020

Stock-based compensation expense was $ 4,506,000 and $ 3,084,000 during the three months ended March 31, 2020 and 2019 , respectively.

Forfeited ( 18 )

Non-vested, June 30, 2020 217

Stock-based compensation expense was $ 7,577,000 and $ 6,249,000 during the six months ended June 30, 2020 and 2019, respectively.

Stock-based compensation expense is recognized ratably over the requisite service period for all stock-based awards.

There was no unrecognized stock-based compensation expense related to stock options at March 31, 2020 .

Unrecognized stock-based compensation expense related to non-vested stock awards and stock units was $ 24,697,000 at March 31, 2020 .

There was no unrecognized stock-based compensation expense related to stock options at June 30, 2020.

Unrecognized stock-based compensation expense related to non-vested stock awards and stock units was $ 21,925,000 at June 30, 2020.

At such date, the weighted-average period over which this unrecognized expense is expected to be recognized was 1.9 years.

The intrinsic value of stock options outstanding and stock options exercisable at March 31, 2020 was $ 33,000 .

Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $ 18.40 as of March 31, 2020 , and the exercise price multiplied by the number of options outstanding.

The total intrinsic value of stock options exercised during the three months ended March 31, 2020 and March 31, 2019 , was $ 8,000 and $ 6,000 , respectively.

The intrinsic value of stock options outstanding and stock options exercisable at June 30, 2020 was $ 28,000 .

Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $ 17.11 as of June 30, 2020, and the exercise price multiplied by the number of options outstanding.

The total intrinsic value of stock options exercised during the six months ended June 30, 2020 and June 30, 2019, was $ 6,000 and $ 5,000 , respectively.

The fair value of the Company’s employee stock options granted is estimated on the date of grant using the Black-Scholes option-pricing model.

This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate.

There were no stock options granted during the three months ended March 31, 2020 and 2019 .

There were no stock options granted during the six months ended June 30, 2020 and 2019.

EARNINGS PER SHARE (“EPS”)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands, except per share data) 2020 2019 2020 2019

5 unchanged sentences

Diluted earnings per share $ 0.54 $ 0.58 $ 1.22 $ 1.09

There were 614,100 stock options excluded from the three months ended March 31, 2020 earnings per share calculation due to the average market price exceeding the related exercise prices.

There were no stock options excluded from the earnings per share calculation for the three months ended March 31, 2019 due to the related exercise price exceeding the average market price.

There were approximately 653,718 stock options excluded from the three and six months ended June 30, 2020 earnings per share calculations due to the average market prices of the Company’s common stock exceeding the related stock option exercise prices.

There were 6,610 stock options excluded from the three months ended June 30, 2019 earnings per share calculation due to the average market price of the Company’s stock exceeding the related stock option exercise price.

There were no stock options excluded from the earnings per share calculation for the six months ended June 30, 2019 due to the related exercise price exceeding the average market price.

ADDITIONAL CASH FLOW INFORMATION

The following is a summary of the Company’s additional cash flow information:

Three Months Ended

Six Months Ended

(In thousands) 2020 2019

3 unchanged sentences

Transfers of premises to foreclosed assets and other real estate owned

Transfers of premises to premises held for sale

Transfers of other real estate owned to premises held for sale

Right-of-use lease assets obtained in exchange for lessee operating lease liabilities (adoption of ASU 2016-02)

2 unchanged sentences

OTHER INCOME AND OTHER OPERATING EXPENSES

Other income for the three months ended March 31, 2020 was $ 12.8 million which included the $ 5.9 million gain on the Texas Branch Sale.

Other income for the three months ended March 31, 2019 was $ 4.2 million .

Other income for the three and six months ended June 30, 2020 was $ 9.8 million and $ 22.6 million, respectively, which included the $ 8.1 million gains on sale of the Texas Branch Sale and Colorado Branch Sale.

Other income for the three and six months ended June 30, 2019 was $ 6.1 million and $ 10.2 million, respectively.

Other operating expenses consisted of the following:

Three Months Ended

June 30, Six Months Ended

(In thousands) 2020 2019 2020 2019

Professional services $ 3,921 $ 3,492 $ 9,750 $ 7,815

Postage 1,769 1,445 4,005 3,171

Telephone 2,450 1,480 4,635 3,099

Credit card expense 4,582 3,762 8,964 7,622

Marketing 3,528 2,436 7,913 5,493

Software and technology 10,024 5,580 19,469 10,076

10 unchanged sentences

COMMITMENTS AND CREDIT RISK

The Company grants agri-business, commercial and residential loans to customers primarily throughout Arkansas, Colorado, Illinois, Kansas, Missouri, Oklahoma, Tennessee and Texas, along with credit card loans to customers throughout the United States.

The Company grants agri-business, commercial and residential loans to customers primarily throughout Arkansas, Illinois, Kansas, Missouri, Oklahoma, Tennessee and Texas, along with credit card loans to customers throughout the United States.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.

4 unchanged sentences

Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.

At March 31, 2020 , the Company had outstanding commitments to extend credit aggregating approximately $ 618,583,000 and $ 3,148,372,000 for credit card commitments and other loan commitments.

At June 30, 2020, the Company had outstanding commitments to extend credit aggregating approximately $ 670,546,000 and $ 2,933,075,000 for credit card commitments and other loan commitments, respectively.

At December 31, 2019, the Company had outstanding commitments to extend credit aggregating approximately $ 634,788,000 and $ 3,991,931,000 for credit card commitments and other loan commitments, respectively.

2 unchanged sentences

The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.

The Company had total outstanding letters of credit amounting to $ 70,628,000 and $ 71,074,000 at March 31, 2020 , and December 31, 2019 , respectively, with terms ranging from 9 months to 15 years .

At March 31, 2020 and December 31, 2019 , the Company had no deferred revenue under standby letter of credit agreements.

The Company had total outstanding letters of credit amounting to $ 63,279,000 and $ 71,074,000 at June 30, 2020, and December 31, 2019, respectively, with terms ranging from 9 months to 15 years.

At June 30, 2020 and December 31, 2019, the Company had no deferred revenue under standby letter of credit agreements.

FAIR VALUE MEASUREMENTS

35 unchanged sentences

See Note 4, Other Assets and Other Liabilities Held for Sale.

The following table sets forth the Company’s financial assets by level within the fair value hierarchy that were measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 .

The following table sets forth the Company’s financial assets by level within the fair value hierarchy that were measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019.

Fair Value Measurements Using

(In thousands)

Quoted Prices in

(In thousands) Fair Value Quoted Prices in

Active Markets for

Identical Assets

Significant Other

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant

Unobservable Inputs

March 31, 2020

June 30, 2020

Available-for-sale securities

5 unchanged sentences

Derivative asset 44,702 — 44,702 —

Other liabilities held for sale

Derivative liability ( 45,080 ) — ( 45,080 ) —

1 unchanged sentence

Available-for-sale securities

Treasury $ 449,729 $ 449,729 $ — $ —

Government agencies 194,249 — 194,249 —

28 unchanged sentences

Where assumptions are made using significant unobservable inputs, such loans held for sale are classified as Level 3.

At March 31, 2020 and December 31, 2019 , the aggregate fair value of mortgage loans held for sale exceeded their cost.

At June 30, 2020 and December 31, 2019, the aggregate fair value of mortgage loans held for sale exceeded their cost.

Accordingly, no mortgage loans held for sale were marked down and reported at fair value.

The following table sets forth the Company’s financial assets by level within the fair value hierarchy that were measured at fair value on a nonrecurring basis as of March 31, 2020 and December 31, 2019 .

The following table sets forth the Company’s financial assets by level within the fair value hierarchy that were measured at fair value on a nonrecurring basis as of June 30, 2020 and December 31, 2019.

Fair Value Measurements Using

(In thousands)

Quoted Prices in

(In thousands) Fair Value Quoted Prices in

Active Markets for

Identical Assets

Significant Other

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant

Unobservable Inputs

March 31, 2020

June 30, 2020

Individually assessed loans (1) (2) (collateral-dependent)

$ 47,585 $ — $ — $ 47,585

Foreclosed assets and other real estate owned (1)

2,995 — — 2,995

December 31, 2019

Individually assessed loans (1) (2) (collateral-dependent)

$ 49,190 $ — $ — $ 49,190

Foreclosed assets and other real estate owned (1)

18,798 — — 18,798

________________________

(1) These amounts represent the resulting carrying amounts on the consolidated balance sheets for collateral-dependent loans and foreclosed assets and other real estate owned for which fair value re-measurements took place during the period.

(2) Identified reserves of $ 27,131,000 and $ 1,297,000 were related to collateral-dependent loans for which fair value re-measurements took place during the periods ended March 31, 2020 and December 31, 2019 , respectively.

(2) Identified reserves of $ 8,283,000 and $ 1,297,000 were related to collateral-dependent loans for which fair value re-measurements took place during the periods ended June 30, 2020 and December 31, 2019, respectively.

ASC Topic 825, Financial Instruments , requires disclosure in annual and interim financial statements of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis.

31 unchanged sentences

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows:

Fair Value Measurements

(In thousands)

March 31, 2020

Carrying Fair Value Measurements

(In thousands) Amount Level 1 Level 2 Level 3 Total

June 30, 2020

Financial assets:

Cash and cash equivalents

$ 2,545,160 $ 2,545,160 $ — $ — $ 2,545,160

Interest bearing balances due from banks - time

4,561 — 4,561 — 4,561

Held-to-maturity securities

51,720 — 53,751 — 53,751

Mortgage loans held for sale

120,034 — — 120,034 120,034

Interest receivable

79,772 — 79,772 — 79,772

14,375,257 — — 14,420,889 14,420,889

Financial liabilities:

Non-interest bearing transaction accounts

4,608,098 — 4,608,098 — 4,608,098

Interest bearing transaction accounts and savings deposits

8,978,045 — 8,978,045 — 8,978,045

Time deposits

3,029,975 — — 3,046,955 3,046,955

Federal funds purchased and securities sold under agreements to repurchase

387,025 — 387,025 — 387,025

Other borrowings

1,393,689 — 1,504,732 — 1,504,732

Subordinated notes and debentures

382,604 — 402,716 — 402,716

Interest payable

10,473 — 10,473 — 10,473

December 31, 2019

1 unchanged sentence

Cash and cash equivalents

$ 996,623 $ 996,623 $ — $ — $ 996,623

Interest bearing balances due from banks - time

4,554 — 4,554 — 4,554

Held-to-maturity securities

40,927 — 41,855 — 41,855

Mortgage loans held for sale

58,102 — — 58,102 58,102

Interest receivable

62,707 — 62,707 — 62,707

14,357,460 — — 14,290,188 14,290,188

Financial liabilities:

Non-interest bearing transaction accounts

3,741,093 — 3,741,093 — 3,741,093

Interest bearing transaction accounts and savings deposits

9,090,878 — 9,090,878 — 9,090,878

Time deposits

3,276,969 — — 3,270,333 3,270,333

Federal funds purchased and securities sold under agreements to repurchase

150,145 — 150,145 — 150,145

Other borrowings

1,297,599 — 1,298,011 — 1,298,011

Subordinated debentures

388,260 — 397,088 — 397,088

Interest payable

12,898 — 12,898 — 12,898

The fair value of commitments to extend credit, letters of credit and lines of credit is not presented since management believes the fair value to be insignificant.

26 unchanged sentences

The following table summarizes the fair values of loan derivative contracts recorded in the accompanying consolidated balance sheets.

March 31, 2020

December 31, 2019

(In thousands)

June 30, 2020 December 31, 2019

(In thousands) Notional Fair Value Notional Fair Value

Derivative assets $ 445,660 $ 44,702 $ 401,969 $ 14,903

3 unchanged sentences

The interest rate swap mark to market only impacts the Company if the swap is in a liability position to the counterparty and the customer defaults on payments to the counterparty.

The notional amount of these contingent agreements is $ 52.7 million as of March 31, 2020 .

The notional amount of these contingent agreements is $ 52.2 million as of June 30, 2020.

Energy Hedging

5 unchanged sentences

These risks are mitigated by customer credit underwriting policies and establishing a predetermined hedge line for each borrower and by monitoring the exchange margin.

The outstanding notional value as of March 31, 2020 for energy hedging Customer Sell to Company swaps were $ 10.7 million and the corresponding Company Sell to Dealer swaps were $ 10.7 million and the corresponding net fair value of the derivative asset and derivative liability was $ 531,400 .

The outstanding notional value as of June 30, 2020 for energy hedging Customer Sell to Company swaps were $ 12.6 million and the corresponding Company Sell to Dealer swaps were $ 12.6 million and the corresponding net fair value of the derivative asset and derivative liability was $ 514,800 .

RECENT EVENTS

2 unchanged sentences

The Company has implemented a number of procedures in response to the pandemic to support the safety and well being of its employees, customers and shareholders that continue through the date of filing this report.

Some of the newly implemented procedures include:

Some of the implemented procedures include:

• Addressing the safety of the Company’s 226 branches, following local, state, and federal guidelines.

In March, the Company announced the temporary closure of 52 branches and is focusing on the enhanced digital banking experience;

In March, the Company announced the temporary closure of 52 branches and increased its focus on the enhanced digital banking experience.

Many of the branches have now been reopened, however we will continue to review our branch network;

• Holding regular executive and pandemic task force meetings to address issues that change rapidly;

1 unchanged sentence

• Providing extensions and deferrals to loan customers affected by COVID-19 provided such customers were not 30 days or more past due at December 31, 2019.

Through May 5, 2020, the Company has completed or is in the process of modifying more than 4,300 loans totaling over $ 3.2 billion ;

Participating in both appropriations of the CARES Act Paycheck Protection Program (“PPP”) that provides 100% federally guaranteed loans for small businesses to cover up to eight weeks of payroll costs and assist with mortgage interest, rent and utilities.

Through June 30, 2020, the Company has modified more than 4,600 loans totaling approximately $ 3.3 billion;

• Participating in both appropriations of the CARES Act Paycheck Protection Program (“PPP”) that provides 100% federally guaranteed loans for small businesses to cover up to 24 weeks of payroll costs and assist with mortgage interest, rent and utilities.

Notably, these small business loans may be forgiven by the SBA if borrowers maintain their payrolls and satisfy certain other conditions during this crisis.

Through May 5, 2020, the Company has completed over 7,600 applications and funded over $ 978 million of such loans.

The Company originated over 7,800 PPP loans with a balance of $ 963.7 million at June 30, 2020.

The Company continues to closely monitor this pandemic and expects to make future changes to respond to the pandemic as this situation continues to evolve.

Further economic downturns accompanying this pandemic could result in increased deterioration in credit quality, past due loans, loans charge offs and collateral value declines, which could cause our results of operations and financial condition to be negatively impacted.

Further economic downturns accompanying this pandemic, or a delayed economic recovery from this pandemic, could result in increased deterioration in credit quality, past due loans, loans charge offs and collateral value declines, which could cause our results of operations and financial condition to be negatively impacted.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

Results of Review of Interim Financial Statements

We have reviewed the condensed consolidated balance sheet of Simmons First National Corporation (“the Company”) as of March 31, 2020 , and the related condensed consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the three -month periods ended March 31, 2020 and 2019 , and the related notes (collectively referred to as the “interim financial information or statements”).

We have reviewed the condensed consolidated balance sheet of Simmons First National Corporation (“the Company”) as of June 30, 2020, and the related condensed consolidated statements of income, comprehensive income and stockholders’ equity for the three-month and six-month periods ended June 30, 2020 and 2019, and cash flows for the six-month periods ended June 30, 2020 and 2019, and the related notes (collectively referred to as the “interim financial information or statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the condensed financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

10 unchanged sentences

Emphasis of Matter

As discussed in Notes 1 and 5 to the condensed consolidated financial statements, the Company has changed its method of accounting for the allowance for credit losses in 2020 due to the adoption of Topic 326.

As discussed in Note 1 to the condensed consolidated financial statements, the Company has changed its method of accounting for the allowance for credit losses in 2020 due to the adoption of Topic 326.

Little Rock, Arkansas

August 6, 2020

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements