SIMMONS FIRST NATIONAL CORP 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations In November 2020, the SEC issued Final Rule 33-10890, Management’s Discussion and Analysis, Selected Financial Data and Supplementary Financial Information, which modernizes and simplifies certain disclosure requirements of Regulation S-K. An update to Item 303(c) of Regulation S-K allows registrants to compare the results of the most recently completed quarter to the results of either the immediately preceding quarter or the corresponding quarter of the preceding fiscal year. The final rule became effective on February 10, 2021 and must be applied in a registrant’s first fiscal year ending on or after August 9, 2021. Management has elected to present sequential quarterly analysis as we believe that comparing current quarter results to those of the immediately preceding fiscal quarter is more useful in identifying current business trends and provides a more relevant analysis of our business results. Additionally, in the first filing after the adoption of these rule changes, we are required to present results in both the historic presentation and the new revised presentation formats. Accordingly, we have compared our results of operations for the three months ended March 31, 2022 to our results of operations for the three months ended December 31, 2021 and March 31, 2021, as applicable, throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.. OVERVIEW Net income for the first three months of 2022 was $65.1 million, or $0.58 diluted earnings per share, compared to net income of $48.2 million, or $0.42 diluted earnings per share and $67.4 million, or $0.62 diluted earnings per share, for the three months ended December 31, 2021 and March 31, 2021, respectively. Included in each comparative quarter’s results were non-core items related to our acquisitions and branch right sizing initiatives. In addition, gains associated with the sale of branch operations were included in the results for the first three months of 2021. Excluding these non-core items, core earnings for the three months ended March 31, 2022 were $67.2 million, an increase of $7.7 million as compared to the preceding sequential fiscal quarter, and an increase of $3.2 million compared to the same period in the prior year. Core diluted earnings per share for the first three months of 2022 were $0.59 compared to $0.52 and $0.59 for the three months ended December 31, 2021, and March 31, 2021, respectively. In November 2021, we announced the Company had entered into the Spirit Agreement with Spirit, headquartered in Conroe, Texas, including its wholly-owned bank subsidiary, Spirit of Texas Bank SSB. This acquisition was completed on April 8, 2022. We were able to obtain all necessary approvals, consummate the transaction and successfully complete the systems conversion less than five months after the announcement, which we believe speaks to the outstanding team we have developed. See Note 2, Acquisitions, in the accompanying Notes to Consolidated Financial Statements for additional information related to this acquisition. Simmons Bank was named to Forbes magazine’s list of “World’s Best Banks” for the third consecutive year and ranked among the top 45 banks in Forbes’ list of “America’s Best Banks” for 2022. We continue to work to develop new and innovative products and services using digital channels to provide an enhanced customer experience to “bank when you want, where you want”. Our asset quality continued to show marked improvement during the first quarter of 2022. Non-performing assets, including troubled debt restructurings (“TDRs”) and acquired foreclosed assets, as a percent of total assets were 0.30% at March 31, 2022, compared to 0.33% at December 31, 2021 and 0.56% at March 31, 2021. Stockholders’ equity as of March 31, 2022 was $2.96 billion, book value per share was $26.32 and tangible book value per share was $15.22. Our ratio of common stockholders’ equity to total assets was 12.10% and the ratio of tangible common stockholders’ equity to tangible assets was 7.37% at March 31, 2022. The Company’s Tier 1 leverage ratio of 9.00%, as well as our other regulatory capital ratios, remain significantly above the “well capitalized” guidelines (see Table 12 in the Capital section of this Item). We repurchased 513,725 shares of our common stock during the first quarter of 2022, which substantially exhausted the remaining capacity under the 2019 Program. As a result, in January 2022, our Board of Directors authorized the 2022 Program, which replaced the 2019 Program and under which the Company may repurchase up to $175.0 million of its Class A common stock currently issued and outstanding. Total deposits were $19.39 billion at March 31, 2022, compared to $19.37 billion at December 31, 2021 and $18.19 billion at March 31, 2021. The increase in total deposits from the same period end of 2021 primarily reflects the acquisition of Landmark and Triumph which were completed in the fourth quarter of 2021. 49 Total loans were $12.03 billion at March 31, 2022, compared to $12.01 billion at December 31, 2021 and $12.20 billion at March 31, 2021. Total loan production (loan originations and advances) during the first quarter of 2022 totaled $2.51 billion, which outpaced loan paydowns and payoffs. Our commercial loan pipeline rose for the sixth consecutive quarter to $2.36 billion at March 31, 2022, while our unfunded commitments rose for the fourth consecutive quarter to $3.43 billion at March 31, 2022, a 68% year-over-over increase. We are seeing activity from repeat customers across most of our business lines. For these reasons, amongst others, we are continuing to actively recruit loan producers across all of our business units. We continue to have good asset quality and positive credit performance during the quarter. In our discussion and analysis of our financial condition and results of operation in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we provide certain financial information determined by methods other than in accordance with US GAAP. We believe the presentation of non-GAAP financial measures provides a meaningful basis for period-to-period and company-to-company comparisons, which we believe will assist investors and analysts in analyzing the core financial measures of the Company and predicting future performance. See the GAAP Reconciliation of Non-GAAP Measures section below for additional discussion and reconciliations of non-GAAP measures. Simmons First National Corporation is a Mid-South based financial holding company that, as of March 31, 2022, has approximately $24.5 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. CRITICAL ACCOUNTING ESTIMATES Overview We follow accounting and reporting policies that conform, in all material respects, to US GAAP and to general practices within the financial services industry. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates. We consider accounting estimates to be critical to reported financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain and (ii) different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on our financial statements. The accounting policies that we view as critical to us are those relating to estimates and judgments regarding (a) the determination of the adequacy of the allowance for credit losses, (b) acquisition accounting and valuation of loans, (c) the valuation of goodwill and the useful lives applied to intangible assets, (d) the valuation of stock-based compensation plans and (e) income taxes. Allowance for Credit Losses The allowance for credit losses is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, historical loss experience, and other qualitative considerations. The allowance, in the judgment of management, is necessary to reserve for expected credit losses and risks inherent in the loan portfolio. Our allowance for credit loss methodology includes reserve factors calculated to estimate current expected credit losses to amortized cost balances over the remaining contractual life of the portfolio, adjusted for prepayments, in accordance with ASC Topic 326-20, Financial Instruments - Credit Losses . Accordingly, the methodology is based on our reasonable and supportable economic forecasts, historical loss experience, and other qualitative adjustments. For further information see the section Allowance for Credit Losses below. Our evaluation of the allowance for credit losses is inherently subjective as it requires material estimates. The actual amounts of credit losses realized in the near term could differ from the amounts estimated in arriving at the allowance for credit losses reported in the financial statements. 50 Acquisition Accounting, Loans We account for our acquisitions under ASC Topic 805, Business Combinations , which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. The fair value for acquired loans at the time of acquisition is based on a variety of factors including discounted expected cash flows, adjusted for estimated prepayments and credit losses. In accordance with ASC 326, the fair value adjustment is recorded as premium or discount to the unpaid principal balance of each acquired loan. Loans that have been identified as having experienced a more-than-insignificant deterioration in credit quality since origination are purchased credit deteriorated (“PCD”) loans. The net premium or discount on PCD loans is adjusted by our allowance for credit losses recorded at the time of acquisition. The remaining net premium or discount is accreted or amortized into interest income over the remaining life of the loan using a constant yield method. The net premium or discount on loans that are not classified as PCD (“non-PCD”), that includes credit and non-credit components, is accreted or amortized into interest income over the remaining life of the loan using a constant yield method. We then record the necessary allowance for credit losses on the non-PCD loans through provision for credit losses expense. Goodwill and Intangible Assets Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Other intangible assets represent purchased assets that also lack physical substance but can be separately distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability. We perform an annual goodwill impairment test, and more than annually if circumstances warrant, in accordance with ASC Topic 350, Intangibles – Goodwill and Other , as amended by ASU 2011-08 – Testing Goodwill for Impairment and ASU 2017-04 - Intangibles – Goodwill and Other. ASC Topic 350 requires that goodwill and intangible assets that have indefinite lives be reviewed for impairment annually or more frequently if certain conditions occur. Our assessment depends on several assumptions which are dependent on market and economic conditions. Impairment losses on recorded goodwill, if any, will be recorded as operating expenses. Stock-Based Compensation Plans We have adopted various stock-based compensation plans. 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 awarding of restricted stock, restricted stock units or performance stock units granted to directors, officers and other key employees. In accordance with ASC Topic 718, Compensation – Stock Compensation , the fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that uses various assumptions. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. For additional information, see Note 16, Stock-Based Compensation, in the accompanying Condensed Notes to Consolidated Financial Statements included elsewhere in this report. Income Taxes We are subject to the federal income tax laws of the United States, and the tax laws of the states and other jurisdictions where we conduct business. Due to the complexity of these laws, taxpayers and the taxing authorities may subject these laws to different interpretations. Management must make conclusions and estimates about the application of these innately intricate laws, related regulations, and case law. When preparing the Company’s income tax returns, management attempts to make reasonable interpretations of the tax laws. Taxing authorities have the ability to challenge management’s analysis of the tax law or any reinterpretation management makes in its ongoing assessment of facts and the developing case law. Management assesses the reasonableness of its effective tax rate quarterly based on its current estimate of net income and the applicable taxes expected for the full year. On a quarterly basis, management also reviews circumstances and developments in tax law affecting the reasonableness of deferred tax assets and liabilities and reserves for contingent tax liabilities. NET INTEREST INCOME Overview Net interest income, our principal source of earnings, is the difference between the interest income generated by earning assets and the total interest cost of the deposits and borrowings obtained to fund those assets. Factors that determine the level of net interest income include the volume of earning assets and interest bearing liabilities, yields earned and rates paid, the level of non-performing loans and the amount of non-interest bearing liabilities supporting earning assets. Net interest income is analyzed in 51 the discussion and tables below on a fully taxable equivalent basis. The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate of 26.135%. Our practice is to limit exposure to interest rate movements by maintaining a significant portion of earning assets and interest bearing liabilities in short-term repricing. In the last several years, on average, approximately 43% of our loan portfolio and approximately 78% of our time deposits have repriced in one year or less. Our current interest rate sensitivity shows that approximately 43% of our loans and 81% of our time deposits will reprice in the next year. Net Interest Income - Sequential Quarter Analysis For the three month period ended March 31, 2022, net interest income on a fully taxable equivalent basis was $151.2 million, a decrease of $7.5 million, or 4.7%, compared to the three months ended December 31, 2021. The decrease in net interest income was the result of a $9.0 million decrease in fully tax equivalent interest income, partially offset by a $1.5 million decrease in interest expense. The decrease in interest income primarily resulted from a $10.4 million decrease in interest income on loans, that reflects a decrease in loan volume of $330,000 coupled with a 24 basis point decline in yield that resulted in a $10.0 million decrease, partially offset by an increase in interest income on investment securities of $1.4 million. The $1.5 million decrease in interest expense is mostly due to the decrease in our deposit account rates. Interest expense decreased $1.1 million due to the decrease in rate of 4 basis points on interest-bearing deposit accounts. Net Interest Income - Year-over-Year Analysis Net interest income on a fully taxable equivalent basis was relatively flat on a year-over-year basis, with a slight increase of $364,000, or 0.2%, when comparing the three months ended March 31, 2022 to the same period in the prior year. While the overall change was relatively flat, the components of net interest income fluctuated between periods. Net interest income for the three months ended March 31, 2022 experienced a $6.3 million decrease in fully tax equivalent interest income offset by a $6.6 million decrease in interest expense, on a year-over-year basis. The decrease in interest income compared to the three months ended March 31, 2021 primarily resulted from a $19.2 million decrease in interest income on loans, that reflects a decrease in loan volume of $7.1 million coupled with a 41 basis point decline in yield that resulted in a $12.1 million decrease, significantly offset by an increase in interest income on investment securities of $13.5 million. The decrease in loan volume during the first three months of 2022 was primarily due to the forgiveness of PPP loan balances, which averaged $89.8 million and $891.1 million for the three months ended March 31, 2022 and 2021, respectively. Forgiveness of PPP loans was partially offset by the acquired loan portfolios of Landmark and Triumph. The increase in interest income on investment securities was due to the growth in our investment portfolio average balances which increased by $4.1 billion or 94.3%, as we re-invested excess liquidity in our investment security portfolio throughout 2021. The $6.6 million decrease in interest expense is mostly due to the decrease in our deposit account rates. Interest expense decreased $5.9 million due to the decrease in rate of 22 basis points on interest-bearing deposit accounts. Additionally, while our overall average interest bearing deposit portfolio grew by approximately $1.2 billion, a decrease of $502,000 in interest expense was related to a $801.9 million decrease in time deposit accounts due to the maturing of existing time deposits, coupled with a continued effort to improve our mix of deposits into lower cost deposits. Net Interest Margin Our net interest margin on a fully tax equivalent basis was 2.76% for the three month period ended March 31, 2022, as compared to 2.86% and 2.99% for the three months ended December 31, 2021 and March 31, 2021, respectively. The decreases of 10 basis points and 23 basis points for the three month period ended March 31, 2022, as compared to the three month period ended December 31, 2021 and March 31, 2021, respectively, were primarily due to lower loan yields compared to previous periods, offset by the lower cost of deposits, as we continue to manage our interest expense through deposit pricing. Normalized for all accretion, our core net interest margin for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, was 2.70%, 2.75% and 2.86%, respectively. 52 Net Interest Income Tables Tables 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively. Table 1: Analysis of Net Interest Margin (FTE = Fully Taxable Equivalent using an effective tax rate of 26.135%) Three Months Ended March 31, December 31, March 31, (In thousands) 2022 2021 2021 Interest income $ 161,727 $ 170,732 $ 169,434 FTE adjustment 5,602 5,579 4,163 Interest income – FTE 167,329 176,311 173,597 Interest expense 16,121 17,651 22,753 Net interest income – FTE $ 151,208 $ 158,660 $ 150,844 Yield on earning assets – FTE 3.06 % 3.18 % 3.44 % Cost of interest bearing liabilities 0.40 % 0.44 % 0.61 % Net interest spread – FTE 2.66 % 2.74 % 2.83 % Net interest margin – FTE 2.76 % 2.86 % 2.99 % Table 2: Changes in Fully Taxable Equivalent Net Interest Margin Three Months Ended (In thousands) March 31, 2022 compared to December 31, 2021 March 31, 2022 compared to March 31, 2021 Increase (decrease) due to change in earning assets $ (227) $ 9,046 Decrease due to change in earning asset yields (8,755) (15,314) Increase due to change in interest bearing liabilities 233 556 Increase due to change in interest rates paid on interest bearing liabilities 1,297 6,076 Increase (decrease) in net interest income $ (7,452) $ 364 53 Table 3 shows, for each major category of earning assets and interest bearing liabilities, the average (computed on a daily basis) amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively. The table also shows the average rate earned on all earning assets, the average rate expensed on all interest bearing liabilities, the net interest spread and the net interest margin for the same periods. The analysis is presented on a fully taxable equivalent basis. Nonaccrual loans were included in average loans for the purpose of calculating the rate earned on total loans. Table 3: Average Balance Sheets and Net Interest Income Analysis (FTE = Fully Taxable Equivalent using an effective tax rate of 26.135%) Three Months Ended March 31, 2022 December 31, 2021 March 31, 2021 Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ (In thousands) Balance Expense Rate (%) Balance Expense Rate (%) Balance Expense Rate (%) ASSETS Earning assets: Interest bearing balances due from banks and federal funds sold $ 1,728,694 $ 649 0.15 $ 1,484,752 $ 583 0.16 $ 3,477,989 $ 798 0.09 Investment securities - taxable 5,688,306 18,148 1.29 5,790,429 17,186 1.18 2,334,078 10,120 1.76 Investment securities - non-taxable 2,844,777 20,937 2.98 2,787,301 20,470 2.91 2,057,132 15,439 3.04 Mortgage loans held for sale 27,633 190 2.79 42,866 310 2.87 97,409 639 2.66 Loans - including fees 11,895,805 127,405 4.34 11,924,444 137,762 4.58 12,518,300 146,601 4.75 Total interest earning assets 22,185,215 167,329 3.06 22,029,792 176,311 3.18 20,484,908 173,597 3.44 Non-earning assets 2,640,984 2,668,230 2,253,913 Total assets $ 24,826,199 $ 24,698,022 $ 22,738,821 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities: Interest bearing liabilities: Interest bearing transaction and savings deposits $ 12,083,516 $ 4,314 0.14 $ 11,413,325 $ 4,390 0.15 $ 10,093,868 $ 6,088 0.24 Time deposits 2,241,123 2,503 0.45 2,607,011 3,705 0.56 3,043,000 7,091 0.95 Total interest bearing deposits 14,324,639 6,817 0.19 14,020,336 8,095 0.23 13,136,868 13,179 0.41 Federal funds purchased and securities sold under agreements to repurchase 218,186 68 0.13 223,008 72 0.13 307,540 245 0.32 Other borrowings 1,337,654 4,779 1.45 1,340,825 4,903 1.45 1,341,059 4,802 1.45 Subordinated debt and debentures 384,187 4,457 4.70 383,489 4,581 4.74 382,943 4,527 4.79 Total interest bearing liabilities 16,264,666 16,121 0.40 15,967,658 17,651 0.44 15,168,410 22,753 0.61 Non-interest bearing liabilities: Non-interest bearing deposits 5,184,828 5,288,933 4,419,136 Other liabilities 207,597 179,362 177,819 Total liabilities 21,657,091 21,435,953 19,765,365 Stockholders’ equity 3,169,108 3,262,069 2,973,456 Total liabilities and stockholders’ equity $ 24,826,199 $ 24,698,022 $ 22,738,821 Net interest spread – FTE 2.66 2.74 2.83 Net interest margin – FTE $ 151,208 2.76 $ 158,660 2.86 $ 150,844 2.99 54 Table 4 shows changes in interest income and interest expense resulting from changes in both volume and interest rates for the three month period ended March 31, 2022, as compared to the three months ended December 31, 2021 and March 31, 2021, respectively. The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates in proportion to the relationship of absolute dollar amounts of the changes in rates and volume. Table 4: Volume/Rate Analysis Three Months Ended March 31, 2022 compared to December 31, 2021 March 31, 2022 compared to March 31, 2021 (In thousands, on a fully taxable equivalent basis) Volume Yield/ Rate Total Volume Yield/ Rate Total Increase (decrease) in: Interest income: Interest bearing balances due from banks and federal funds sold $ 93 $ (27) $ 66 $ (514) $ 365 $ (149) Investment securities - taxable (307) 1,269 962 11,298 (3,270) 8,028 Investment securities - non-taxable 423 44 467 5,802 (304) 5,498 Mortgage loans held for sale (106) (14) (120) (479) 30 (449) Loans - including fees (330) (10,027) (10,357) (7,061) (12,135) (19,196) Total (227) (8,755) (8,982) 9,046 (15,314) (6,268) Interest expense: Interest bearing transaction and savings accounts 249 (325) (76) 1,040 (2,814) (1,774) Time deposits (476) (726) (1,202) (1,542) (3,046) (4,588) Federal funds purchased and securities sold under agreements to repurchase (2) (2) (4) (57) (120) (177) Other borrowings (12) (112) (124) (12) (11) (23) Subordinated notes and debentures 8 (132) (124) 15 (85) (70) Total (233) (1,297) (1,530) (556) (6,076) (6,632) Decrease in net interest income $ 6 $ (7,458) $ (7,452) $ 9,602 $ (9,238) $ 364 PROVISION FOR CREDIT LOSSES The provision for credit losses represents management’s determination of the amount necessary to be charged against the current period’s earnings in order to maintain the allowance for credit losses at a level considered appropriate in relation to the estimated lifetime risk inherent in the loan portfolio. The level of provision to the allowance is based on management’s judgment, with consideration given to the composition, maturity and other qualitative characteristics of the portfolio, assessment of current economic conditions, reasonable and supportable forecasts, past due and non-performing loans and historical net credit loss experience. It is management’s practice to review the allowance on a monthly basis and, after considering the factors previously noted, to determine the level of provision made to the allowance. We had a recapture of $19.9 million of provision for credit losses for the three months ended March 31, 2022, as compared to a recapture of $1.3 million for the three months ended December 31, 2021 and a provision for credit losses of $1.4 million for the same period ended March 31, 2021. The recapture of credit losses was driven by improved credit quality metrics and improved macroeconomic factors, coupled with the planned exit of several large oil and gas relationships during the quarter. 55 NON-INTEREST INCOME Non-interest income is principally derived from recurring fee income, which includes service charges, wealth management fees and debit and credit card fees. Non-interest income also includes income on the sale of mortgage loans, income from the increase in cash surrender values of bank owned life insurance and gains (losses) from sales of securities. For the three month period ended March 31, 2022, total non-interest income was $42.2 million, a decrease of $4.4 million or 9.4% and $7.3 million or 14.8%, compared to the three months ended December 31, 2021 and March 31, 2021, respectively. The decrease reflects the normal seasonality of service charges. Mortgage lending income decreased by $493,000 and $1.9 million for the three month period ended March 31, 2022, as compared to the three months ended December 31, 2021 and March 31, 2021, respectively. The decrease was due to a decline in refinancing demand and mortgage loan volume driven by the current rising rate environment. Other income for the three month period ended March 31, 2022 decreased by $2.7 million as compared to the preceding sequential fiscal quarter, and increased by $2.1 million, when compared to the same period in the prior year. The changes in other income are primarily driven by the $1.4 million and $3.1 million settlement awards received by the Company during the three months ended March 31, 2022 and December 31, 2021, respectively. The additional year-over-year decreases are due to the recognizing a net gain of $5.5 million on the sale of investment securities and a $5.3 million gain on the sale of Illinois branches during the three months ended March 31, 2021. Table 5 shows non-interest income for the three month periods ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively, as well as changes between periods. Table 5: Non-Interest Income Three Months Ended March 31, December 31, March 31, Change from Quarter - Sequential Change from Quarter - Year-over-Year (Dollars in thousands) 2022 2021 2021 Wealth management fees $ 7,968 $ 8,042 $ 7,361 $ (74) (0.9) % $ 607 8.2 % Service charges on deposit accounts 10,696 11,909 9,715 (1,213) (10.2) % 981 10.1 Other service charges and fees 1,637 1,762 1,922 (125) (7.1) % (285) (14.8) Mortgage lending income 4,550 5,043 6,447 (493) (9.8) % (1,897) (29.4) Debit and credit card fees (1) 7,449 7,460 6,610 (11) (0.1) % 839 12.7 Bank owned life insurance income 2,706 2,768 1,523 (62) (2.2) % 1,183 77.7 Gain (loss) on sale of securities, net (54) (348) 5,471 294 * (5,525) * Gain on sale of branches — — 5,300 — * (5,300) * Other income 7,266 9,965 5,200 (2,699) (27.1) % 2,066 39.7 Total non-interest income $ 42,218 $ 46,601 $ 46,601 $ 49,549 $ (4,383) (9.4) % $ (7,331) (14.8) % _________________________ (1) During the second and third quarters of 2021, certain debit and credit card transaction fees were reclassified from non-interest expense to non-interest income. Prior periods have been adjusted to reflect this reclassification. Recurring fee income (total service charges, wealth management fees, debit and credit card fees) for the three month period ended March 31, 2022, was $27.8 million, a decrease of $1.4 million and an increase of $2.1 million from the three month periods ended December 31, 2021 and March 31, 2021, respectively. The decrease as compared to the preceding sequential fiscal quarter is due to the seasonal changes in customer spending habits, whereas the increase as compared to the same period in the prior year are primarily the result of the strengthened economic activity and increase in customer base from the Landmark and Triumph acquisitions. 56 NON-INTEREST EXPENSE Non-interest expense consists of salaries and employee benefits, occupancy, equipment, foreclosure losses and other expenses necessary for our operations. Management remains committed to controlling the level of non-interest expense through the continued use of expense control measures. We utilize an extensive profit planning and reporting system involving all subsidiaries. Based on a needs assessment of the business plan for the upcoming year, monthly and annual profit plans are developed, including manpower and capital expenditure budgets. These profit plans are subject to extensive initial reviews and monitored by management monthly. Variances from the plan are reviewed monthly and, when required, management takes corrective action intended to ensure financial goals are met. We also regularly monitor staffing levels at each subsidiary to ensure productivity and overhead are in line with existing workload requirements. For the three month period ended March 31, 2022, total non-interest expense was $128.4 million, a decrease of $13.2 million, or 9.3% and an increase of $15.4 million, or 13.6% compared to the three months ended December 31, 2021 and March 31, 2021, respectively. Salaries and employee benefits expense increased by $4.1 million and $7.6 million as compared to the three months ended December 31, 2021 and March 31, 2021, respectively. The increases reflects normal seasonality with respect to payroll taxes at the beginning of the year, as well as a profit-sharing contribution associated with the Company’s 401(k) plan and costs associated with equity compensation. Additionally, our results of operations for the three month period ended March 31, 2022 compared to the three month period ended March 31, 2021 includes the impacts of the Landmark and Triumph acquisitions. Merger related costs for the three month period ended March 31, 2022 decreased by $11.7 million as compared to the preceding sequential quarter, and increased by $1.7 million, when compared to the same period in the prior year. The decrease as compared to the preceeding sequential quarter is due to the Landmark and Triumph acquisitions, whereas the increase as compared to the same period in the prior year is primarily due to the Spirit acquisition completed April 8, 2022. See Note 2, Acquisitions, in the accompanying Notes to Consolidated Financial Statements for additional information related to these acquisitions. Core non-interest expense for the three month period ended March 31, 2022, which excludes branch right sizing and merger related costs, decreased by $734,000 or 0.6% and increased by $13.5 million or 12.0% from the three month periods ended December 31, 2021 and March 31, 2021, respectively. Marketing expense decreased by $3.2 million for the three month period ended March 31, 2022 as compared to the sequential quarter, primarily due to a $2.5 million donation to the Simmons First Foundation during the three months ended December 31, 2021. Marketing expense increased by $3.0 million when compared to the same period in the prior year due to increased advertising and public relations expenses, including a multi-university corporate sponsorship program designed to support female student athletes and serve as a program for developing women leaders in the corporate world. 57 Table 6 below shows non-interest expense for the three month periods ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively, as well as changes between periods. Table 6: Non-Interest Expense Three Months Ended March 31, December 31, March 31, Change from Quarter - Sequential Change from Quarter - Year-over-Year (Dollars in thousands) 2022 2021 2021 Salaries and employee benefits $ 67,906 63,832 $ 60,340 $ 4,074 6.4 % $ 7,566 12.5 % Occupancy expense, net 10,023 11,033 9,300 (1,010) (9.2) % 723 7.8 % Furniture and equipment expense 4,775 4,721 5,415 54 1.1 % (640) (11.8) % Other real estate and foreclosure expense 343 576 343 (233) (40.5) % — — % Deposit insurance 1,838 2,108 1,308 (270) (12.8) % 530 40.5 % Merger related costs 1,886 13,591 233 (11,705) * 1,653 * Other operating expenses: Professional services 5,446 4,714 5,247 732 15.5 % 199 3.8 % Postage 2,126 1,999 2,370 127 6.4 % (244) (10.3) % Telephone 1,558 1,477 1,632 81 5.5 % (74) (4.5) % Debit and credit card (1) 2,706 3,524 2,331 (818) (23.2) % 375 16.1 % Marketing 6,140 9,322 3,153 (3,182) (34.1) % 2,987 94.7 % Software and technology 10,147 10,366 10,251 (219) (2.1) % (104) (1.0) % Operating supplies 698 753 570 (55) (7.3) % 128 22.5 % Amortization of intangibles 3,486 3,486 3,344 — — % 142 4.2 % Branch right sizing 909 1,650 625 (741) (44.9) % 284 45.4 % Other 8,430 8,445 6,540 (15) (0.2) % 1,890 28.9 % Total non-interest expense $ 128,417 $ 141,597 $ 113,002 $ (13,180) (9.3) % $ 15,415 13.6 % _________________________ (1) During the second and third quarters of 2021, certain debit and credit card transaction fees were reclassified from non-interest expense to non-interest income. Prior periods have been adjusted to reflect this reclassification. * Not meaningful 58 INVESTMENTS AND SECURITIES Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue. Securities within the portfolio are classified as either HTM or AFS. Our philosophy regarding investments is conservative based on investment type and maturity. Investments in the portfolio primarily include U.S. Treasury securities, U.S. Government agencies, MBS and municipal securities. Our general policy is not to invest in derivative type investments or high-risk securities, except for collateralized MBS for which collection of principal and interest is not subordinated to significant superior rights held by others. HTM and AFS investment securities were $1.6 billion and $6.6 billion, respectively, at March 31, 2022, compared to the HTM amount of $1.5 billion and AFS amount of $7.1 billion at December 31, 2021. We will continue to look for opportunities to maximize the value of the investment portfolio. Management has the ability and intent to hold the securities classified as HTM until they mature, at which time we expect to receive full value for the securities. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Furthermore, as of March 31, 2022, management also had the ability and intent to hold the securities classified as AFS for a period of time sufficient for a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. During the third quarter of 2021, the Company began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of $1.0 billion of fixed rate callable municipal securities held in the AFS portfolio. These swap agreements involve the payment of fixed interest rates with a weighted average of 1.21% in exchange for variable interest rates based on federal funds rates and consist of a two year forward start date and maturity dates varying between 2028 and 2029. LOAN PORTFOLIO Our loan portfolio averaged $11.90 billion and $12.52 billion during the first three months of 2022 and 2021, respectively. As of March 31, 2022, total loans were $12.03 billion, a slight increase of $16.1 million from December 31, 2021. The average loan balance for the first three months of 2021 included $891.1 million of PPP loans compared to an average PPP loan balance of $89.8 million for the first three months of 2022. This period-to-period decline in average PPP loan balance was partially offset by the 2021 acquisitions of Landmark and Triumph. See Note 2, Acquisitions, in the accompanying Notes to Consolidated Financial Statements for additional information related to these acquisitions. The most significant components of the loan portfolio were loans to businesses (commercial loans, commercial real estate loans and agricultural loans) and individuals (consumer loans, credit card loans and single-family residential real estate loans). We seek to manage our credit risk by diversifying our loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral, obtaining and monitoring collateral, providing an appropriate allowance for credit losses and regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose, industry and geographic region. We seek to use diversification within the loan portfolio to reduce credit risk, thereby minimizing the adverse impact on the portfolio, if weaknesses develop in either the economy or a particular segment of borrowers. Collateral requirements are based on credit assessments of borrowers and may be used to recover the debt in case of default. We use the allowance for credit losses as a method to value the loan portfolio at its estimated collectible amount. Loans are regularly reviewed to facilitate the identification and monitoring of deteriorating credits. 59 The balances of loans outstanding at the indicated dates are reflected in Table 7, according to type of loan. Table 7: Loan Portfolio March 31, December 31, (In thousands) 2022 2021 Consumer: Credit cards $ 184,372 $ 187,052 Other consumer 180,602 168,318 Total consumer 364,974 355,370 Real estate: Construction and development 1,423,445 1,326,371 Single family residential 2,042,978 2,101,975 Other commercial 5,762,567 5,738,904 Total real estate 9,228,990 9,167,250 Commercial: Commercial 2,016,405 1,992,043 Agricultural 150,465 168,717 Total commercial 2,166,870 2,160,760 Other 267,759 329,123 Total loans before allowance for credit losses $ 12,028,593 $ 12,012,503 Consumer loans consist of credit card loans and other consumer loans. Consumer loans were $365.0 million at March 31, 2022, or 3.0% of total loans, compared to $355.4 million, or 3.0% of total loans at December 31, 2021. The increase in consumer loans from December 31, 2021, to March 31, 2022, was primarily due to growth in direct consumer loans partially offset by the expected seasonal decline in our credit card portfolio. Real estate loans consist of C&D loans, single-family residential loans and CRE loans. Real estate loans were $9.23 billion at March 31, 2022, or 76.7% of total loans, compared to $9.17 billion, or 76.3%, of total loans at December 31, 2021, a slight increase of $61.7 million, or 0.7%. Our C&D loans increased by $97.1 million, or 7.3%, single family residential loans decreased by $59.0 million, or 2.8%, and CRE loans experienced a marginal increase of $23.7 million, or 0.4%. In the near term, we expect to continue to manage our C&D and CRE portfolio concentration by developing deeper relationships with our customers. Commercial loans consist of non-real estate loans related to business and agricultural loans. Total commercial loans were relatively flat between periods with a balance of $2.17 billion at March 31, 2022, or 18.0% of total loans, compared to $2.16 billion, or 18.0% of total loans at December 31, 2021, an increase of $6.1 million, or 0.3%. New commercial fundings and advances outpaced the planned run-off of $54.5 million in our energy portfolio and the $54.8 million of PPP loan payoffs during the quarter. Agricultural loans decreased $18.3 million, or 10.8%, primarily due to seasonality of the portfolio, which normally peaks in the third quarter. In addition, we are continuing with our planned exit of the energy portfolio. Other loans mainly consists of mortgage warehouse lending. Mortgage volume experienced a market driven decline during the first three months of 2022 when compared to 2021, leading to a decrease of $61.4 million in other loans primarily from mortgage warehouse lines of credit. Loan demand appears to be returning to more normalized levels. For the sixth consecutive quarter, we have experienced an increase in commercial loan demand. We are seeing loan growth in our metro, community and corporate banking groups and continue to add new producers in these areas. Our loan pipeline consisting of all loan opportunities was $2.36 billion at March 31, 2022, compared to $2.31 billion at December 31, 2021. Loans approved and ready to close at the end of the quarter totaled $775.7 million. 60 ASSET QUALITY Non-performing loans are comprised of (a) nonaccrual loans, (b) loans that are contractually past due 90 days and (c) other loans for which terms have been restructured to provide a reduction or deferral of interest or principal, because of deterioration in the financial position of the borrower. Simmons Bank recognizes income principally on the accrual basis of accounting. When loans are classified as nonaccrual, generally, the accrued interest is charged off and no further interest is accrued. Loans, excluding credit card loans, are placed on a nonaccrual basis either: (1) when there are serious doubts regarding the collectability of principal or interest or (2) when payment of interest or principal is 90 days or more past due and either (i) not fully secured or (ii) not in the process of collection. If a loan is determined by management to be uncollectible, the portion of the loan determined to be uncollectible is then charged to the allowance for credit losses. When credit card loans reach 90 days past due and there are attachable assets, the accounts are considered for litigation. Credit card loans are generally charged off when payment of interest or principal exceeds 150 days past due. The credit card recovery group pursues account holders until it is determined, on a case-by-case basis, to be uncollectible. Total non-performing assets decreased $5.3 million from December 31, 2021 to March 31, 2022. Nonaccrual loans decreased by $4.1 million during the period and foreclosed assets held for sale and other real estate owned decreased by $914,000. The decrease in nonaccrual loans was primarily due to an overall improvement in economic conditions. Non-performing assets, including troubled debt restructurings (“TDRs”) and acquired foreclosed assets, as a percent of total assets were 0.30% at March 31, 2022, compared to 0.33% at December 31, 2021. From time to time, certain borrowers experience declines in income and cash flow. As a result, these borrowers seek to reduce contractual cash outlays, the most prominent being debt payments. In an effort to preserve our net interest margin and earning assets, we are open to working with existing customers in order to maximize the collectability of the debt. When we restructure a loan for a borrower experiencing financial difficulty and grant a concession we would not otherwise consider, a “troubled debt restructuring” occurs and the loan is classified as a TDR. The Company grants various types of concessions, primarily interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal. Once an obligation has been restructured due to such credit problems, it continues to be considered a TDR until paid in full; or, if an obligation yields a market interest rate and no longer has any concession regarding payment amount or amortization, then it is not considered a TDR at the beginning of the calendar year after the year in which the improvement takes place. Our TDR balance remained relatively flat at $6.0 million as of March 31, 2022, decreasing $897,000 from December 31, 2021. TDRs are individually evaluated for expected credit losses. We assess the exposure for each modification, using either the fair value of the underlying collateral or the present value of expected cash flows, and determine if a specific allowance for credit losses is needed. We return TDRs to accrual status only if (1) all contractual amounts due can reasonably be expected to be repaid within a prudent period, and (2) repayment has been in accordance with the contract for a sustained period, typically at least six months. We continue to maintain good asset quality compared to the industry and strong asset quality remains a primary focus of our strategy. The allowance for credit losses as a percent of total loans was 1.49% as of March 31, 2022. Non-performing loans equaled 0.53% of total loans. Non-performing assets were 0.29% of total assets, a 2 basis point decrease from December 31, 2021. The allowance for credit losses was 278% of non-performing loans as of March 31, 2022. Our annualized net charge-offs to average total loans for the first three months of 2022 was 0.22%. Excluding credit cards, the annualized net charge-offs to average total loans for the same period was 0.20%. Annualized net credit card charge-offs to average total credit card loans were 1.39%, compared to 1.40% during the full year 2021, and 18 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks. 61 Table 8 presents information concerning non-performing assets, including nonaccrual loans at amortized cost and foreclosed assets held for sale. Table 8: Non-performing Assets March 31, December 31, (Dollars in thousands) 2022 2021 Nonaccrual loans (1) $ 64,096 $ 68,204 Loans past due 90 days or more (principal or interest payments) 240 349 Total non-performing loans 64,336 68,553 Other non-performing assets: Foreclosed assets held for sale and other real estate owned 5,118 6,032 Other non-performing assets 1,479 1,667 Total other non-performing assets 6,597 7,699 Total non-performing assets $ 70,933 $ 76,252 Performing TDRs $ 3,424 $ 4,289 Allowance for credit losses to non-performing loans 278 % 300 % Non-performing loans to total loans 0.53 % 0.57 % Non-performing assets (including performing TDRs) to total assets 0.30 % 0.33 % Non-performing assets to total assets 0.29 % 0.31 % _______________________________________ (1) Includes nonaccrual TDRs of approximately $2,618,000 at March 31, 2022 and $2,650,000 at December 31, 2021. The interest income on nonaccrual loans is not considered material for the three month periods ended March 31, 2022 and 2021. ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses is a reserve established through a provision for credit losses charged to expense which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, historical loss experience, and other qualitative considerations. Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated into homogeneous segments for assessment. 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. 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. We also include qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for. Qualitative adjustments include, but are not limited to: • Changes in asset quality - Adjustments related to trending credit quality metrics including delinquency, non-performing loans, charge-offs, and risk ratings that may not be fully accounted for in the reserve factor. • Changes in the nature and volume of the portfolio - Adjustments related to current changes in the loan portfolio that are not fully represented or accounted for in the reserve factors. • 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. • 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. • Changes in and the existence and effect of any concentrations of credit - Adjustments related to credit risk of specific industries that are not fully captured in the reserve factors. 62 • Changes in regional and local economic and business conditions and developments - Adjustments related to expected and current economic conditions at a regional or local-level that are not fully captured within our reasonable and supportable forecast. • Data imprecision due to limited historical loss data - Adjustments related to limited historical loss data that is representative of the collective loan portfolio. Loans that do not share similar risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating or that are classified as a TDR. The allowance for credit loss is determined based on several methods including estimating the fair value of the underlying collateral or the present value of expected cash flows. An analysis of the allowance for credit losses on loans is shown in Table 9. Table 9: Allowance for Credit Losses (In thousands) 2022 2021 Balance, beginning of year $ 205,332 $ 238,050 Loans charged off: Credit card 920 1,003 Other consumer 414 702 Real estate 485 1,687 Commercial 6,319 859 Total loans charged off 8,138 4,251 Recoveries of loans previously charged off: Credit card 274 290 Other consumer 387 304 Real estate 426 403 Commercial 557 320 Total recoveries 1,644 1,317 Net loans charged off 6,494 2,934 Provision for credit losses (19,914) — Balance, March 31, $ 178,924 $ 235,116 Loans charged off: Credit card 2,622 Other consumer 1,351 Real estate 9,004 Commercial 9,754 Total loans charged off 22,731 Recoveries of loans previously charged off: Credit card 758 Other consumer 1,100 Real estate 4,507 Commercial 4,340 Total recoveries 10,705 Net loans charged off 12,026 Provision for credit losses (31,209) Acquisition adjustment for PCD loans 13,451 Balance, end of year $ 205,332 63 Provision for Credit Losses The amount of provision added to or released from the allowance during the three months ended March 31, 2022 and 2021, and for the year ended December 31, 2021, was based on management’s judgment, with consideration given to the composition of the portfolio, historical loan loss experience, assessment of current economic forecasts and conditions, past due and non-performing loans and net loss experience. It is management’s practice to review the allowance on a monthly basis, and after considering the factors previously noted, to determine the level of provision made to the allowance. Allowance for Credit Losses Allocation As of March 31, 2022, the allowance for credit losses reflected a decrease of approximately $26.4 million from December 31, 2021 while total loans were relatively flat with a slight increase of $16.1 million over the same three month period. The allocation in each category within the allowance generally reflects the overall changes in the loan portfolio mix. The decrease in the allowance for credit losses during the first three months of 2022 was predominately related to improved credit quality metrics and improved macroeconomic factors, coupled with the planned exit of several large oil and gas relationships during the quarter. Additionally, there was a reduction of pandemic-era qualitative factors that were established based on unidentifiable risks with borrowers in at-risk industries. We considered our allowance for credit losses at March 31, 2022 appropriate given the considerable amount of uncertainty as to the structure and timing of potential economic recovery, the impact of new COVID-19 variants, future of government assistance related to COVID-19 recovery efforts and other related factors. The following table sets forth the sum of the amounts of the allowance for credit losses attributable to individual loans within each category, or loan categories in general. The table also reflects the percentage of loans in each category to the total loan portfolio for each of the periods indicated. The allowance for credit losses by loan category is determined by i) our estimated reserve factors by category including applicable qualitative adjustments and ii) any specific allowance allocations that are identified on individually evaluated loans. The amounts shown are not necessarily indicative of the actual future losses that may occur within individual categories. Table 10: Allocation of Allowance for Credit Losses March 31, 2022 December 31, 2021 (Dollars in thousands) Allowance Amount % of loans (1) Allowance Amount % of loans (1) Credit cards $ 2,894 1.6 % $ 3,987 1.6 % Other consumer 3,397 1.5 % 2,676 1.4 % Real estate 161,389 76.7 % 179,270 76.3 % Commercial 9,177 18.0 % 17,458 18.0 % Other 2,067 2.2 % 1,941 2.7 % Total $ 178,924 100.0 % $ 205,332 100.0 % _______________________________________ (1) Percentage of loans in each category to total loans. DEPOSITS Deposits are our primary source of funding for earning assets and are primarily developed through our network of approximately 197 financial centers as of March 31, 2022. We offer a variety of products designed to attract and retain customers with a continuing focus on developing core deposits. Our core deposits consist of all deposits excluding time deposits of $250,000 or more and brokered deposits. As of March 31, 2022, core deposits comprised 92.6% of our total deposits. We continually monitor the funding requirements along with competitive interest rates in the markets we serve. Because of our community banking philosophy, our executives in the local markets, with oversight by the Chief Deposit Officer, Asset Liability Committee and the Bank’s Treasury Department, establish the interest rates offered on both core and non-core deposits. This approach ensures that the interest rates being paid are competitively priced for each particular deposit product and structured to meet the funding requirements. We believe we are paying a competitive rate when compared with pricing in those markets. 64 We manage our interest expense through deposit pricing. We believe that additional funds can be attracted and deposit growth can be accelerated through deposit pricing if we experience increased loan demand or other liquidity needs. We can also utilize brokered deposits as an additional source of funding to meet liquidity needs. We are continually monitoring and looking for opportunities to fairly reprice our deposits while remaining competitive in this current challenging rate environment. Our total deposits as of March 31, 2022, were $19.39 billion, an slight increase of $25.9 million from December 31, 2021. Non-interest bearing transaction accounts, interest bearing transaction accounts and savings accounts totaled $17.33 billion at March 31, 2022, compared to $16.91 billion at December 31, 2021, an increase of $415.7 million. Total time deposits decreased $389.8 million to $2.06 billion at March 31, 2022, from $2.45 billion at December 31, 2021. The decrease in time deposits is attributable to maturing time deposits, coupled with a continued effort to improve our mix of deposits into lower costs funds. We had $890.9 million and $466.0 million of brokered deposits at March 31, 2022, and December 31, 2021, respectively. We are managing our balance sheet and our net interest margin by continuing to eliminate several high-cost deposits related to public funds and brokered deposits as well as hone our product offerings to give customers flexibility of choice while maintaining the ability to adjust interest rates timely in the current rate environment. OTHER BORROWINGS AND SUBORDINATED NOTES AND DEBENTURES Our total debt was $1.72 billion at March 31, 2022 and December 31, 2021. The outstanding balance for March 31, 2022 includes $1.31 billion in FHLB long-term advances; $330.0 million in subordinated notes; $54.2 million of trust preferred securities and unamortized debt issuance costs; and $31.4 million of other long-term debt. The FHLB long-term advances outstanding at the end of the first quarter 2022 are primarily FOTO advances which 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. Our FOTO advances outstanding at March 31, 2022 had original maturity dates of 10 years to 15 years with lockout periods that have expired. We expect the FHLB to not exercise the options to terminate the FOTO advances prior to their stated maturity dates due to the current low interest rate environment. We continually analyze the possibility of the FHLB exercising the options along with the market expected rate outcome. As of March 31, 2022, there were no FHLB short-term advances outstanding. In March 2018, we issued $330 million in aggregate principal amount of 5.00% Fixed-to-Floating Rate Subordinated Notes (“Notes”) at a public offering price equal to 100% of the aggregate principal amount of the Notes. The Company incurred $3.6 million in debt issuance costs related to the offering. The Notes will mature on April 1, 2028 and are subordinated in right of payment to the payment of our other existing and future senior indebtedness, including all our general creditors. The Notes are obligations of the Company only and are not obligations of, and are not guaranteed by, any of its subsidiaries. CAPITAL Overview At March 31, 2022, total capital was $2.96 billion. Capital represents shareholder ownership in the Company – the book value of assets in excess of liabilities. At March 31, 2022, our common equity to asset ratio was 12.10% compared to 13.14% at year-end 2021. Capital Stock On February 27, 2009, at a special meeting, our shareholders approved an amendment to the Articles of Incorporation to establish 40,040,000 authorized shares of preferred stock, $0.01 par value. As of March 31, 2022, the aggregate liquidation preference of all shares of preferred stock cannot exceed $80,000,000. On October 29, 2019, we filed Amended and Restated Articles of Incorporation (“October Amended Articles”) with the Arkansas Secretary of State. The October Amended Articles classified and designated Series D Preferred Stock, Par Value $0.01 Per Share, out of our authorized preferred stock. On November 30, 2021, the Company redeemed all of the Series D Preferred Stock, including accrued and unpaid dividends. On April 27, 2022, shareholders of the Company approved an increase in the number of authorized shares of its Class A common stock from 175,000,000 to 350,000,000. 65 Stock Repurchase Program Effective July 23, 2021, our Board of Directors approved an amendment to the Company’s stock repurchase program originally approved in October 2019 (“2019 Program”) that increased the amount of our common stock that could be repurchased under the 2019 Program from a maximum of $180 million to a maximum of $276.5 million and extended the term of the 2019 Program from October 31, 2021, to October 31, 2022 (unless terminated sooner). During the three month period ended March 31, 2022, we repurchased 513,725 shares at an average price per share of $31.25 under the 2019 Program. During the three month period ended March 31, 2021, 130,916 shares at an average price per share of $23.53 were repurchased under the 2019 Program. During January 2022, the Company substantially exhausted the remaining capacity under the 2019 Program. As a result, in January 2022, the Company’s Board of Directors authorized a new stock repurchase program (the “2022 Program”) under which the Company may repurchase up to $175.0 million of its Class A common stock currently issued and outstanding. The 2022 Program will terminate on January 31, 2024 (unless terminated sooner). Under the 2022 Program, which replaced the 2019 Program, the Company may repurchase shares of its common stock through open market and privately negotiated transactions or otherwise. The timing, pricing, and amount of any repurchases under the 2022 Program will be determined by the Company’s management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of the Company’s common stock, corporate considerations, the Company’s working capital and investment requirements, general market and economic conditions, and legal requirements. The 2022 Program does not obligate the Company to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice. The Company anticipates funding for this 2022 Program to come from available sources of liquidity, including cash on hand and future cash flow. As of March 31, 2022, the Company had not repurchased any shares under the 2022 Program. Market conditions and the Company’s capital needs will drive decisions regarding additional, future stock repurchases. Cash Dividends We declared cash dividends on our common stock of $0.19 per share for the first three months of 2022, compared to $0.18 per share for the first three months of 2021, an increase of $0.01, or 6%. The timing and amount of future dividends are at the discretion of our Board of Directors and will depend upon our consolidated earnings, financial condition, liquidity and capital requirements, the amount of cash dividends paid to us by our subsidiaries, applicable government regulations and policies and other factors considered relevant by our Board of Directors. Our Board of Directors anticipates that we will continue to pay quarterly dividends in amounts determined based on the factors discussed above. However, there can be no assurance that we will continue to pay dividends on our common stock at the current levels or at all. Parent Company Liquidity The primary liquidity needs of the Parent Company are the payment of dividends to shareholders, the funding of debt obligations and cash needs for acquisitions. The primary sources for meeting these liquidity needs are the current cash on hand at the parent company and the future dividends received from Simmons Bank. Payment of dividends by Simmons Bank is subject to various regulatory limitations. See the Liquidity and Market Risk Management discussions of Item 3 – Quantitative and Qualitative Disclosures About Market Risk for additional information regarding the parent company’s liquidity. The Company continually assesses its capital and liquidity needs and the best way to meet them, including, without limitation, through capital raising in the market via stock or debt offerings. Risk Based Capital The Company and Simmons Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Company and Simmons Bank must hold a capital conservation buffer composed of common equity Tier 1 capital above its minimum risk-based capital requirements. Failure to meet this capital conservation buffer would result in additional limits on dividends, other distributions and discretionary bonuses. 66 Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes that, as of March 31, 2022, we meet all capital adequacy requirements to which we are subject. As of the most recent notification from regulatory agencies, Simmons Bank was well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company and Simmons Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution’s categories. Our risk-based capital ratios at March 31, 2022 and December 31, 2021 are presented in Table 11 below: Table 11: Risk-Based Capital March 31, December 31, (Dollars in thousands) 2022 2021 Tier 1 capital: Stockholders’ equity $ 2,961,607 $ 3,248,841 CECL transition provision 92,619 114,458 Goodwill and other intangible assets (1,224,691) (1,226,686) Unrealized loss (gain) on available-for-sale securities, net of income taxes 326,961 10,545 Total Tier 1 capital 2,156,496 2,147,158 Tier 2 capital: Trust preferred securities and subordinated debt 384,242 384,131 Qualifying allowance for credit losses and reserve for unfunded commitments 78,057 71,853 Total Tier 2 capital 462,299 455,984 Total risk-based capital $ 2,618,795 $ 2,603,142 Risk weighted assets $ 15,953,622 $ 15,538,967 Assets for leverage ratio $ 23,966,206 $ 23,647,901 Ratios at end of period: Common equity Tier 1 ratio (CET1) 13.52 % 13.82 % Tier 1 leverage ratio 9.00 % 9.08 % Tier 1 leverage ratio, excluding average PPP loans (non-GAAP) (1) 9.03 % 9.15 % Tier 1 risk-based capital ratio 13.52 % 13.82 % Total risk-based capital ratio 16.42 % 16.75 % Minimum guidelines: Common equity Tier 1 ratio (CET1) 4.50 % 4.50 % Tier 1 leverage ratio 4.00 % 4.00 % Tier 1 risk-based capital ratio 6.00 % 6.00 % Total risk-based capital ratio 8.00 % 8.00 % _______________________________________ (1) PPP loans are 100% federally guaranteed and have a zero percent risk-weight for regulatory capital ratios. Tier 1 leverage ratio, excluding average PPP loans is a non-GAAP measurement. Regulatory Capital Changes 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 of the adoption 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. The rule provides banking organizations that implement CECL before the end of 2020 the option to delay for two years an estimate of CECL’s effect on regulatory capital, followed by a three-year transition period (the “2020 CECL Transition Provision”). The Company elected to apply the 2020 CECL Transition Provision. 67 The Basel III Capital Rules define the components of capital and address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The rules also address risk weights and other issues affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing risk-weighting approach with a more risk-sensitive approach. The Basel III Capital Rules established risk-weighting categories depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures. The final rules included a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5% and a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets. The rules also raised the minimum ratio of Tier 1 capital to risk-weighted assets to 6.0% and require a minimum leverage ratio of 4.0%. Prior to December 31, 2017, Tier 1 capital included common equity Tier 1 capital and certain additional Tier 1 items as provided under the Basel III Capital Rules. The Tier 1 capital for the Company consisted of common equity Tier 1 capital and trust preferred securities. The Basel III Capital Rules include certain provisions that require trust preferred securities to be phased out of qualifying Tier 1 capital when assets surpass $15 billion. As of December 31, 2017, the Company exceeded $15 billion in total assets and the grandfather provisions applicable to its trust preferred securities no longer apply and trust preferred securities are no longer included as Tier 1 capital. Trust preferred securities and qualifying subordinated debt of $384.2 million is included as Tier 2 and total capital as of March 31, 2022. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS See the Recently Issued Accounting Standards section in Note 1, Preparation of Interim Financial Statements, in the accompanying Condensed Notes to Consolidated Financial Statements included elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on the Company’s ongoing financial position and results of operation. 68 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained in this quarterly report 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 may be identified by reference to a future period(s) or by the use of forward-looking terminology, such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,” “estimate,” “expect,” “foresee,” “intend,” “indicate,” “target,” “plan,” positions,” “prospects,” “project,” “predict,” or “potential,” by future conditional verbs such as “could,” “may,” “might,” “should,” “will,” or “would,” or by variations of such words or by similar expressions. These forward-looking statements include, without limitation, those relating to the Company’s future growth, completed acquisitions, revenue, expenses, assets, asset quality, profitability, earnings, accretion, customer service, lending capacity and lending activity, investment in digital channels, critical accounting policies, net interest margin, non-interest revenue, market conditions related to and the impact of the Company’s stock repurchase program, consumer behavior and liquidity, the adequacy of the allowance for credit losses, the impacts of the COVID-19 pandemic and the ability of the Company to manage the impacts of the COVID-19 pandemic, income tax deductions, credit quality, the level of credit losses from lending commitments, net interest revenue, interest rate sensitivity, loan loss experience, liquidity, the Company’s expectations regarding actions by the FHLB including with respect to the FHLB’s option to terminate FOTO advances, capital resources, market risk, plans for investments in securities, effect of pending and future litigation, including the results of the overdraft fee litigation against the Company that is described in this quarterly report, acquisition strategy and activity, legal and regulatory limitations and compliance and competition. These forward-looking statements involve risks and uncertainties, and may not be realized due to a variety of factors, including, without limitation: changes in the Company’s operating, acquisition, or expansion strategy; the effects of future economic conditions (including unemployment levels and slowdowns in economic growth), governmental monetary and fiscal policies, as well as legislative and regulatory changes, including in response to the COVID-19 pandemic; the impacts of the COVID-19 pandemic on the Company’s operations and performance; the ultimate effect of measures the Company takes or has taken in response to the COVID-19 pandemic; the severity and duration of the COVID-19 pandemic, including the effectiveness of vaccination efforts and developments with respect to COVID-19 variants; the pace of recovery when the COVID-19 pandemic subsides and the heightened impact it has on many of the risks described herein; changes in real estate values; changes in interest rates; inflation; changes in the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest sensitive assets and liabilities; changes in the securities markets generally or the price of the Company’s common stock specifically; developments in information technology affecting the financial industry; cyber threats, attacks or events; reliance on third parties for the provision of key services; changes in accounting principles, including changes related to loan loss recognition; uncertainty and disruption associated with the discontinued use of the London Inter-Bank Offered Rate; the costs of evaluating possible acquisitions and the risks inherent in integrating acquisitions; possible adverse rulings, judgements, settlements, and other outcomes of pending or future litigation; 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 conflict between Russia and Ukraine) or other major events, or the prospect of these events; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet; the failure of assumptions underlying the establishment of reserves for possible credit losses, fair value for loans, other real estate owned, and other cautionary statements set forth elsewhere in this report. Please also refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this quarterly report and the Company’s annual report on Form 10-K for the year ended December 31, 2021, and related disclosures in other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. Many of these factors are beyond our ability to predict or control, and actual results could differ materially from those in the forward-looking statements due to these factors and others. In addition, as a result of these and other factors, our past financial performance should not be relied upon as an indication of future performance. We believe the assumptions and expectations that underlie or are reflected in our forward-looking statements are reasonable, based on information available to us on the date hereof. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations or whether our future performance will differ materially from the performance reflected in or implied by our forward-looking statements, and you should not place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date hereof, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and all written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this section. 69 GAAP RECONCILIATION OF NON-GAAP FINANCIAL MEASURES The tables below present computations of core earnings (net income excluding non-core items {gain on sale of branches, merger related costs, and the net branch right sizing costs}) (non-GAAP) and core diluted earnings per share (non-GAAP) as well as a computation of tangible book value per share (non-GAAP), tangible common equity to tangible assets (non-GAAP), the core net interest margin (non-GAAP), core other income (non-GAAP) and core non-interest expense (non-GAAP). Non-core items are included in financial results presented in accordance with generally accepted accounting principles (US GAAP). The tables below also present computations of certain figures that are exclusive of the impact of PPP loans: Tier 1 leverage ratio excluding average PPP loans (non-GAAP) and net interest income and net interest margin, each adjusted for PPP loans (each non-GAAP). We believe the exclusion of these non-core items in expressing earnings and certain other financial measures, including “core earnings,” provides a meaningful basis for period-to-period and company-to-company comparisons, which management believes will assist investors and analysts in analyzing the core financial measures of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of the Company’s business because management does not consider these non-core items to be relevant to ongoing financial performance. Management and the Board of Directors utilize “core earnings” (non-GAAP) for the following purposes: • Preparation of the Company’s operating budgets • Monthly financial performance reporting • Monthly “flash” reporting of consolidated results (management only) • Investor presentations of Company performance We believe the presentation of “core earnings” on a diluted per share basis, “core diluted earnings per share” (non-GAAP) and core net interest margin (non-GAAP), provides a meaningful basis for period-to-period and company-to-company comparisons, which management believes will assist investors and analysts in analyzing the core financial measures of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of the Company’s business, because management does not consider these non-core items to be relevant to ongoing financial performance on a per share basis. Management and the Board of Directors utilize “core diluted earnings per share” (non-GAAP) for the following purposes: • Calculation of annual performance-based incentives for certain executives • Calculation of long-term performance-based incentives for certain executives • Investor presentations of Company performance We have $1.250 billion and $1.252 billion total goodwill and other intangible assets for the periods ended March 31, 2022 and December 31, 2021, respectively. Because our acquisition strategy has resulted in a high level of intangible assets, management believes useful calculations include tangible book value per share (non-GAAP) and tangible common equity to tangible assets (non-GAAP). We believe the exclusion of PPP loans or their impact, as applicable, in expressing earnings and certain other financial measures provides a meaningful basis for period-to-period and company-to-company comparisons because PPP loans are 100% federally guaranteed and have very low interest rates. The Company’s non-GAAP financial measures that exclude PPP loans or their impact include the ratios of “Tier 1 leverage ratio excluding average PPP loans” (non-GAAP) and “net interest margin,” adjusted for PPP loans (non-GAAP). Management believes these non-GAAP presentations will assist investors and analysts in analyzing the core financial measures of the Company, including the performance of the Company’s loan portfolio and the Company’s regulatory capital position, and predicting future performance. Management and the Board of Directors utilize these non-GAAP financial measures for financial performance reporting and investor presentations of Company performance. We believe that presenting these non-GAAP financial measures will permit investors and analysts to assess the performance of the Company on the same basis as that is applied by management and the Board of Directors. 70 Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. To mitigate these limitations, we have procedures in place to identify and approve each item that qualifies as non-core to ensure that the Company’s “core” results are properly reflected for period-to-period comparisons. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes non-core items does not represent the amount that effectively accrues directly to stockholders (i.e., non-core items are included in earnings and stockholders’ equity). Additionally, similarly titled non-GAAP financial measures used by other companies may not be computed in the same or similar fashion. See Table 12 below for the reconciliation of non-GAAP financial measures, which exclude non-core items for the periods presented. Table 12: Reconciliation of Core Earnings (non-GAAP) Three Months Ended March 31, December 31, March 31, (In thousands, except per share data) 2022 2021 2021 Net income available to common stockholders $ 65,095 $ 48,230 $ 67,407 Non-core items: Gain on sale of branches — — (5,300) Merger related costs 1,886 13,591 233 Branch right sizing (net) 909 1,648 448 Tax effect (1) (731) (3,983) 1,207 Net non-core items 2,064 11,256 (3,412) Core earnings (non-GAAP) $ 67,159 $ 59,486 $ 63,995 Diluted earnings per share (2) $ 0.58 $ 0.42 $ 0.62 Non-core items: Gain on sale of branches — — (0.05) Merger related costs 0.01 0.12 — Branch right sizing (net) 0.01 0.01 0.01 Tax effect (1) (0.01) (0.03) 0.01 Net non-core items 0.01 0.10 (0.03) Core diluted earnings per share (non-GAAP) $ 0.59 $ 0.52 $ 0.59 _______________________________________ (1) Effective tax rate of 26.135%. (2) See Note 17, Earnings Per Share, for number of shares used to determine EPS. 71 See Table 13 below for the reconciliation of core other income and core non-interest expense for the periods presented. Table 13: Reconciliation of Core Other Income and Core Non-Interest Expense (non-GAAP) Three Months Ended March 31, December 31, March 31, (In thousands) 2022 2021 2021 Other income $ 7,266 $ 9,965 $ 10,500 Gain on sale of branches — — (5,300) Branch right sizing — (2) (177) Core other income (non-GAAP) $ 7,266 $ 9,963 $ 5,023 Non-interest expense $ 128,417 $ 141,597 $ 113,002 Non-core items: Merger related costs (1,886) (13,591) (233) Branch right sizing (909) (1,650) (625) Total non-core items (2,795) (15,241) (858) Core non-interest expense (non-GAAP) $ 125,622 $ 126,356 $ 112,144 See Table 14 below for the reconciliation of tangible book value per common share. Table 14: Reconciliation of Tangible Book Value per Common Share (non-GAAP) March 31, December 31, (In thousands, except per share data) 2022 2021 Total stockholders’ equity $ 2,961,607 $ 3,248,841 Preferred stock — — Total common stockholders’ equity 2,961,607 3,248,841 Intangible assets: Goodwill (1,147,007) (1,146,007) Other intangible assets (102,748) (106,235) Total intangibles (1,249,755) (1,252,242) Tangible common stockholders’ equity $ 1,711,852 $ 1,996,599 Shares of common stock outstanding 112,505,555 112,715,444 Book value per common share $ 26.32 $ 28.82 Tangible book value per common share (non-GAAP) $ 15.22 $ 17.71 72 See Table 15 below for the calculation of tangible common equity and the reconciliation of tangible common equity to tangible assets. Table 15: Reconciliation of Tangible Common Equity and the Ratio of Tangible Common Equity to Tangible Assets (non-GAAP) March 31, December 31, (Dollars in thousands) 2022 2021 Total common stockholders’ equity $ 2,961,607 $ 3,248,841 Intangible assets: Goodwill (1,147,007) (1,146,007) Other intangible assets (102,748) (106,235) Total intangibles (1,249,755) (1,252,242) Tangible common stockholders’ equity $ 1,711,852 $ 1,996,599 Total assets $ 24,482,268 $ 24,724,759 Intangible assets: Goodwill (1,147,007) (1,146,007) Other intangible assets (102,748) (106,235) Total intangibles (1,249,755) (1,252,242) Tangible assets $ 23,232,513 $ 23,472,517 Ratio of common equity to assets 12.10 % 13.14 % Ratio of tangible common equity to tangible assets (non-GAAP) 7.37 % 8.51 % See Table 16 below for the calculation of Tier 1 leverage ratio excluding average PPP loans for the period presented. Table 16: Reconciliation of Tier 1 Leverage Ratio Excluding Average PPP Loans (non-GAAP) (Dollars in thousands) Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Total Tier 1 capital $ 2,156,496 $ 1,939,868 Adjusted average assets for leverage ratio $ 23,966,206 $ 21,668,406 Average PPP loans (89,757) $ (891,070) Adjusted average assets excluding average PPP loans $ 23,876,449 $ 20,777,336 Tier 1 leverage ratio 9.00 % 8.95 % Tier 1 leverage ratio excluding average PPP loans (non-GAAP) 9.03 % 9.34 % 73 See Table 17 below for the calculation of core net interest margin and net interest margin adjusted for PPP loans for the periods presented. Table 17: Reconciliation of Core Net Interest Margin (non-GAAP) Three Months Ended March 31, December 31, March 31, (Dollars in thousands) 2022 2021 2021 Net interest income $ 145,606 $ 153,081 $ 146,681 FTE adjustment 5,602 5,579 4,163 Fully tax equivalent net interest income 151,208 158,660 150,844 Total accretable yield (3,703) (5,758) (6,630) Core net interest income $ 147,505 $ 152,902 $ 144,214 PPP loan interest income (2,113) (5,107) (11,652) Net interest income adjusted for PPP loans $ 149,095 $ 153,553 $ 139,192 Average earning assets $ 22,185,215 $ 22,029,792 $ 20,484,908 Average PPP loan balance (89,757) (172,130) (891,070) Average earning assets adjusted for PPP loans $ 22,095,458 $ 21,857,662 $ 19,593,838 Net interest margin 2.76 % 2.86 % 2.99 % Core net interest margin (non-GAAP) 2.70 % 2.75 % 2.86 % Net interest margin adjusted for PPP loans (non-GAAP) 2.74 % 2.79 % 2.88 % 74