What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-05 compared with 2022-05-06 · 284 added, 228 removed, 542 unchanged (49% of the section changed)

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..

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.

As permitted by SEC rules, management presents a sequential quarterly analysis of the Company’s performance 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 than comparing to the same period in the prior year.

Accordingly, we have compared our results of operations for the three months ended June 30, 2022 to our results of operations for the three months ended March 31, 2022, as applicable, throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.

For additional information regarding the Company’s results for the three months ended March 31, 2022, please refer to our first quarter Form 10-Q filed with the SEC on May 6, 2022.

Our net income for the three months ended June 30, 2022 was $27.5 million, or $0.21 diluted earnings per share, decreases of $37.6 million and $0.37, respectively, compared to the three months ended March 31, 2022.

Included in both period end results were certain items related to our acquisitions and branch right sizing initiatives, while the results for the three months ended June 30, 2022 also include the Day 2 accounting provision required for loans and unfunded commitments acquired in connection with the Spirit acquisition.

Excluding these certain items, adjusted earnings for the three months ended June 30, 2022 were $66.8 million, or $0.52 adjusted diluted earnings per share, compared to $67.2 million, or $0.59 adjusted diluted earnings per share for the three months ended March 31, 2022.

Net income for the first six months of 2022 was $92.5 million, or $0.77 diluted earnings per share, compared to $142.3 million, or $1.31 diluted earnings per share, for the same period in 2021.

In addition to the certain items referenced above, gains associated with the sale of branch operations were included in the results for the first six months of 2021.

Excluding these certain items, year-to-date adjusted earnings were $134.0 million, a decrease of $5.5 million compared to the same period in the prior year.

Adjusted diluted earnings per share for the first half of 2022 were $1.11 compared to $1.28 for the same period in 2021.

Although second quarter results were significantly impacted by accounting adjustments and one-time merger expenses related to our acquisition of Spirit during the quarter, our adjusted operating results excluding these items were very strong.

Highlights for the quarter include a significant increase in revenue, well contained operating expense growth, improved asset quality, strong organic loan growth, marked improvement in the efficiency ratio, substantial expansion of the net interest margin, and excellent capital ratios.

On April 8, 2022 we completed our acquisition of Spirit, headquartered in Conroe, Texas, including its wholly-owned bank subsidiary, Spirit of Texas Bank SSB.

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 and our Chief Digital Officer was recently recognized by American Banker as a 2022 Digital Banker of the Year.

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.

Asset quality metrics show continued improvement and reflect both economic conditions in the markets we serve, as well as the impact of the Company’s strategic decision in 2019 designed to de-risk loan portfolios that were acquired in connection with its geographic diversification and expansion.

As a result of this strategic decision, over the past two years the Company has prudently and systematically exited certain non-relationship credits and non-core industries while also significantly reducing its exposure to commercial real estate to more acceptable levels.

Total nonperforming loans as of June 30, 2022, December 31, 2021, and June 30, 2021 were $63.6 million, $68.6 million, and $80.9 million, respectively.

Non-performing assets, including troubled debt restructurings (“TDRs”) and acquired foreclosed assets, as a percent of total assets were 0.27% at June 30, 2022, compared to 0.33% at December 31, 2021 and 0.43% at June 30, 2021.

Stockholders’ equity as of June 30, 2022 was $3.26 billion, book value per share was $25.31 and tangible book value per share was $14.07.

Our ratio of common stockholders’ equity to total assets was 11.98% and the ratio of tangible common stockholders’ equity to tangible assets was 7.03% at June 30, 2022.

The Company’s Tier 1 leverage ratio of 9.22%, 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.

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 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.

We repurchased approximately 2.0 million shares of our common stock under the 2022 Program during the second quarter of 2022.

Total deposits were $22.04 billion at June 30, 2022, compared to $19.37 billion at December 31, 2021.

Total loans were $15.11 billion at June 30, 2022, compared to $12.01 billion at December 31, 2021.The increase in total loans and deposits during these periods primarily reflects the acquisition of Spirit during the second quarter of 2022.

Net loan growth has also been driven by increased activity throughout our geographic footprint.

Our commercial pipeline rose for the seventh consecutive quarter to $3.02 billion and was up 28% from the prior quarter end and we are seeing activity from repeat customers across most of our business lines.

Our strategy of restructuring our loan portfolio over the past two years not only diversified the risk profile but also established capacity which should provide the foundation for additional loan and revenue growth, which is evident in our loan pipeline and unfunded commitments.

Our liquidity is solid, and our capital is strong.

We are growing in all markets as demonstrated by the addition of nearly 2,000 new business deposit accounts in 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.

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 adjusted 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.

Simmons First National Corporation is a Mid-South based financial holding company that, as of June 30, 2022, has approximately $27.2 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

CRITICAL ACCOUNTING ESTIMATES

16 unchanged sentences

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.

In accordance with ASC 326, the fair value adjustment is recorded as a 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.

27 unchanged sentences

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

the discussion and tables below on a fully taxable equivalent basis.

Net interest income is analyzed in 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%.

3 unchanged sentences

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.

For the three month period ended June 30, 2022, net interest income on a fully taxable equivalent basis was $191.2 million, an increase of $40.0 million, or 26.4%, compared to the three months ended March 31, 2022.

The increase in net interest income was primarily the result of a $43.6 million increase in fully tax equivalent interest income partially offset by a $3.6 million increase in interest expense.

The increase in interest income primarily resulted from a $36.6 million increase in interest income on loans, coupled with an increase of $4.4 million in interest income on investment securities.

Regarding the increase in interest income on loans during the second quarter of 2022, the increase in loan volume resulted in an increase of $28.9 million, in addition to an increase of $7.7 million of interest income from a 20 basis point increase in loan yield.

The loan yield for the second quarter of 2022 was 4.54% compared to 4.34% from the preceding sequential quarter.

The additional loan volume was due to the acquisition of Spirit early in the second quarter, along with strong organic loan growth.

The increase in both loan and investment yield was due to the rising rate environment and was also positively impacted by a significant decrease in the level of variable rate loans and securities at or below their interest rate floors during the quarter.

The $3.6 million increase in interest expense is mostly due to the increase in deposit account rates, as we manage the challenging rising rate environment.

Interest expense increased $2.3 million due to the increase in yield of 6 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.

For the six month period ended June 30, 2022, net interest income on a fully taxable equivalent basis was $342.4 million, an increase of $40.5 million, or 13.4%, over the same period in 2021.

The increase in net interest income was the result of a $33.1 million increase in fully tax equivalent interest income combined with a $7.4 million decrease in interest expense.

The increase in interest income during the six month period ended June 30, 2022 resulted from increases in interest income on loans and investments.

The increase in interest income on loans of $5.8 million reflects an increase in loan volume of $23.7 million partially offset by a 29 basis point decline in loan yield that resulted in a $17.9 million decrease.

The increase in our loan volume during the first six months of 2022 was primarily due to the Spirit acquisition noted above, along with the acquisition of Landmark and Triumph in the fourth quarter of 2021.

Forgiveness of PPP loans partially offset the additional loan volume provided by these acquisitions.

The increase in interest income on investment securities of $25.6 million was due to the growth in our investment portfolio average balances which increased by $3.1 billion or 56.4%, as we re-invested excess liquidity in our investment security portfolio throughout 2021.

The $7.4 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.

Interest expense decreased $7.3 million due to the decrease in rate of 15 basis points on interest-bearing deposit accounts as we continued efforts 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.

Our net interest margin on a fully tax equivalent basis increased 48 basis points to 3.24% for the three month period ended June 30, 2022, when compared to 2.76% for the three months ended March 31, 2022.

For the six month period ended June 30, 2022, our net interest margin increased 7 basis points to 3.01% when compared to 2.94% for the same period in 2021.

The increase in the net interest margin during the three months ended June 30, 2022 compared to the three months ended March 31, 2022 was primarily due to the rising rate environment and driven by increases in our loan and investment rates.

The slight increase in net interest margin on a year-over-year basis is mostly due to the effective management of our deposit costs, as we continued our effort to improve the mix of deposits into lower cost deposits and manage rates effectively.

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.

Tables 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the three months ended June 30, 2022 and March 31, 2022 and the six months ended June 30, 2022 and 2021, respectively.

Analysis of Net Interest Margin

1 unchanged sentence

Three Months Ended

March 31, December 31, March 31,

June 30, Six Months Ended

June 30, March 31, June 30, June 30,

(In thousands) 2022 2022 2022 2021

10 unchanged sentences

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

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.

June 30, Six Months Ended

(In thousands) June 30, 2022 compared to March 31, 2022 June 30, 2022 compared to June 30, 2021

Increase due to change in earning assets $ 27,805 $ 49,622

Increase (decrease) due to change in earning asset yields 15,768 (16,505)

Increase (decrease) due to change in interest bearing liabilities (700) 81

Increase (decrease) due to change in interest rates paid on interest bearing liabilities (2,886) 7,280

Increase in net interest income $ 39,987 $ 40,478

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 June 30, 2022 and March 31, 2022 and the six months ended June 30, 2022 and 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.

4 unchanged sentences

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 (%)

June 30, 2022 March 31, 2022

Average Income/ Yield/ Average Income/ Yield/

(In thousands) Balance Expense Rate (%) Balance Expense Rate (%)

Earning assets:

3 unchanged sentences

Mortgage loans held for sale 17,173 200 4.67 27,633 190 2.79

Other loans held for sale 22,114 2,063 37.42 — — —

Loans - including fees 14,478,183 163,995 4.54 11,895,805 127,405 4.34

5 unchanged sentences

Interest bearing transaction and savings deposits

$ 12,807,502 $ 6,879 0.22 $ 12,083,516 $ 4,314 0.14

Time deposits 2,586,567 2,875 0.45 2,241,123 2,503 0.45

1 unchanged sentence

Federal funds purchased and securities sold under agreements to repurchase

210,280 119 0.23 218,186 68 0.13

Other borrowings 1,241,501 4,844 1.56 1,337,654 4,779 1.45

7 unchanged sentences

Total liabilities and stockholders’ equity

$ 26,769,032 $ 24,826,199

Net interest spread – FTE 3.11 2.66

Net interest margin – FTE $ 191,195 3.24 $ 151,208 2.76

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.

Six Months Ended

June 30, 2022 June 30, 2021

Average Income/ Yield/ Average Income/ Yield/

(In thousands) Balance Expense Rate (%) Balance Expense Rate (%)

Earning assets:

Interest bearing balances due from banks and federal funds sold

$ 1,250,266 $ 1,766 0.28 $ 3,088,816 $ 1,449 0.09

Investment securities - taxable

5,681,352 39,943 1.42 3,373,375 24,714 1.48

Investment securities - non-taxable

2,784,863 42,669 3.09 2,039,153 32,338 3.20

Mortgage loans held for sale

22,375 390 3.51 73,202 1,025 2.82

Other loans held for sale 11,118 2,063 37.42 — — —

Loans - including fees 13,194,144 291,400 4.45 12,149,041 285,588 4.74

Total interest earning assets 22,944,118 378,231 3.32 20,723,587 345,114 3.36

Non-earning assets 2,858,864 2,276,218

Total assets $ 25,802,982 $ 22,999,805

LIABILITIES AND STOCKHOLDERS’ EQUITY

Interest bearing liabilities:

Interest bearing transaction and savings deposits

$ 12,447,510 $ 11,193 0.18 $ 10,249,756 $ 10,809 0.21

Time deposits 2,414,798 5,378 0.45 2,986,201 13,152 0.89

Total interest bearing deposits 14,862,308 16,571 0.22 13,235,957 23,961 0.37

Federal funds purchased and securities sold under agreements to repurchase

214,211 187 0.18 274,024 437 0.32

Other borrowings 1,289,311 9,623 1.51 1,340,531 9,699 1.46

Subordinated debt and debentures 401,351 9,447 4.75 383,011 9,092 4.79

Total interest bearing liabilities 16,767,181 35,828 0.43 15,233,523 43,189 0.57

Non-interest bearing liabilities:

Non-interest bearing deposits 5,557,611 4,624,158

Other liabilities 212,255 164,686

Total liabilities 22,537,047 20,022,367

Stockholders’ equity 3,265,935 2,977,438

Total liabilities and stockholders’ equity

$ 25,802,982 $ 22,999,805

Net interest spread – FTE 2.89 2.79

Net interest margin – FTE $ 342,403 3.01 $ 301,925 2.94

Table 4 shows changes in interest income and interest expense resulting from changes in both volume and interest rates for the three months ended June 30, 2022 as compared to the three months ended March 31, 2022 and the six months ended June 30, 2022 and 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.

1 unchanged sentence

Three Months Ended

March 31, 2022 compared to December 31, 2021 March 31, 2022 compared to March 31, 2021

June 30, Six Months Ended

June 30, 2022 compared to March 31, 2022 June 30, 2022 compared to June 30, 2021

(In thousands, on a fully taxable equivalent basis) Volume Yield/

6 unchanged sentences

Mortgage loans held for sale (90) 100 10 (841) 206 (635)

Other loans held for sale 446 1,617 2,063 302 1,761 2,063

Loans - including fees 28,916 7,674 36,590 23,694 (17,882) 5,812

7 unchanged sentences

Total 700 2,886 3,586 (81) (7,280) (7,361)

Decrease in net interest income $ 6 $ (7,458) $ (7,452) $ 9,602 $ (9,238) $ 364

Increase (decrease) in net interest income $ 27,105 $ 12,882 $ 39,987 $ 49,703 $ (9,225) $ 40,478

PROVISION FOR CREDIT LOSSES

2 unchanged sentences

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.

The provision for credit losses for the three months ended June 30, 2022 was an expense of $33.9 million as compared to a recapture of $19.9 million for the three months ended March 31, 2022.

For the six months ended June 30, 2022, the Company’s provision for credit losses was $13.9 million as compared to a recapture of $11.5 million for the same period ended June 30, 2021.

The change for the three month period ended June 30, 2022 as compared to the preceding quarter is primarily due to the Spirit acquisition and the related Day 2 provision expense for the acquired loans and additional unfunded commitments added to the Company’s portfolio.

The recapture of credit losses for the three month period ended March 31, 2022, and the three and six month periods ended June 30, 2021 was driven by improved credit quality metrics and improved macroeconomic factors.

NON-INTEREST INCOME

1 unchanged sentence

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.

Total non-interest income was $40.2 million for the three month period ended June 30, 2022, a decrease of approximately $2.0 million, or 4.8%, as compared to the three month period ended March 31, 2022, primarily driven by the decrease in mortgage lending income due to a decline in refinancing demand and mortgage loan volume driven by the current rising rate environment.

For the six month period ended June 30, 2022, total non-interest income was $82.4 million, a decrease of approximately $14.3 million, or 14.8%, compared to the same period in 2021, primarily due to decreases in the gains on sale of securities, gains on sale of branches and mortgage lending income.

During the first six months of 2021, we sold approximately $249.5 million of investment securities resulting in a net gain of $10.6 million.

Additionally, the Company recognized $5.9 million on the gain on sale of branches, which we exclude from adjusted earnings, during the first six months of 2021, primarily related to the sale of Illinois branches.

A decrease of $4.1 million in mortgage lending income for the six month period ended June 30, 2022 was due to the higher interest rate environment and softening market conditions.

An increase of $2.3 million in service charges on deposit accounts and an increase of $2.0 million in debit and credit card fees partially offset the overall decrease in non-interest income during the first six months of 2022 as a result of the additional customer base from the Landmark, Triumph and Spirit acquisitions and additional transactions due to the changes in customer spending habits, respectively.

Table 5 shows non-interest income for the three month period ended June 30, 2022 as compared to the three month period ended March 31, 2022 and the six month periods ended June 30, 2022 and 2021, respectively.

Non-Interest Income

Three Months Ended

March 31, December 31, March 31, Change from Quarter - Sequential Change from Quarter - Year-over-Year

June 30, Six Months Ended

June 30, March 31, Change June 30, June 30, Change

(Dollars in thousands) 2022 2022 $ % 2022 2021 $ %

13 unchanged sentences

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.

Recurring fee income (total service charges, wealth management fees, debit and credit card fees) for the three month period ended June 30, 2022 was $28.7 million, an increase of $938,000 as compared to the three month period ended March 31, 2022.

Recurring fee income for the six month period ended June 30, 2022, was $56.4 million, an increase of $3.8 million from the six month period ended June 30, 2021.

The increases in the periods presented are primarily the result of changes in total service charges and debit and credit card fees, previously discussed as well as the recent acquisitions.

NON-INTEREST EXPENSE

6 unchanged sentences

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.

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.

For the three month period ended June 30, 2022, non-interest expense was $156.8 million, an increase of $28.4 million, or 22.1%, from the three month period ended March 31, 2022.

Non-interest expense for the six months ended June 30, 2022 was $285.2 million, an increase of $57.6 million, or 25.3%, from the same period in 2021.

Salaries and employee benefits expense increased $6.2 million during the three month period ended June 30, 2022 as compared to the preceding sequential quarter and $21.4 million during the six month period June 30, 2022 as compared to same period in 2021.

The increase for the three month period reflects the impacts of the Spirit acquisition, while the increase for the six month period includes impacts from the Landmark, Triumph and Spirit acquisitions.

In addition, the Bank continues to add associates in our lending, wealth and mortgage programs as we continue to actively recruit new producers.

Merger related costs for the three and six month periods ended June 30, 2022 as compared to the three months ended March 31, 2022 and six months ended June 30, 2021, increased by $17.2 million and $20.1 million, respectively, and is primarily related 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 this acquisition.

Adjusted non-interest expense, which excludes branch right sizing and merger related costs, for the three and six months ended June 30, 2022, increased $11.8 million, or 9.4%, and increased $37.4 million, or 16.6%, respectively, as compared to the three months ended March 31, 2022 and six months ended June 30, 2021.

Marketing expense increased by $2.6 million during the three month period ended June 30, 2022 as compared to the three months ended March 31, 2022 and increased by $7.0 million during the six month period ended June 30, 2022 as compared to the same period in 2021.

The increase during the three month period ended June 30, 2022 was primarily related to a $1.6 million contribution to the Simmons First Foundation Conservation Fund, reflecting a portion of paper statement fees collected as part of a promotion to encourage customers to enroll in eStatements.

The increase during the six month period ended June 30, 2022 includes the previously mentioned contribution related to paper statement fees, in addition 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.

Table 6 below shows non-interest expense for the three month period ended June 30, 2022 as compared to the three month period ended March 31, 2022 and the six month periods ended June 30, 2022 and 2021, respectively.

Non-Interest Expense

Three Months Ended

March 31, December 31, March 31, Change from Quarter - Sequential Change from Quarter - Year-over-Year

June 30, Six Months Ended

June 30, March 31, Change June 30, June 30, Change

(Dollars in thousands) 2022 2022 $ % 2022 2021 $ %

30 unchanged sentences

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.

HTM and AFS investment securities were $3.8 billion and $4.3 billion, respectively, at June 30, 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.

During our second quarter review of the Company’s balance sheet composition, liquidity and capital levels, along with our analysis of the macroeconomic factors influencing interest rates, we determined the need to reclassify certain securities from the AFS portfolio to the HTM portfolio.

During the quarter ended June 30, 2022, the Company transferred, at fair value, $ 1.99 billion of securities from the AFS portfolio to the HTM portfolio.

Previously, during the quarter ended September 30, 2021, the Company transferred, at fair value, $ 500.8 million of securities from AFS to HTM.

The related remaining net unrealized losses of $ 151.9 million and net unrealized gains of $ 791,000 , respectively, in accumulated other comprehensive income (loss) are being amortized over the remaining life of the securities.

No gains or losses on these securities were recognized at the time of transfer.

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.

Furthermore, as of June 30, 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.

3 unchanged sentences

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.

Maturity Distribution of Investment Securities

Table 7 reflects the amortized cost and estimated fair value of securities at June 30, 2022, by contractual maturity and the weighted average yields (for tax-exempt obligations on a fully taxable equivalent basis, assuming a 26.135% tax rate) of such securities and is presented due to the reclassification of certain securities during the quarter.

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties.

June 30, 2022

1 year 5 years Total

1 year through through Over No fixed Amortized Par Fair

(In thousands) or less 5 years 10 years 10 years maturity Cost Value Value

Held-to-Maturity

Government agencies $ — $ — $ 48,038 $ 398,751 $ — $ 446,789 $ 480,246 $ 379,503

Mortgage-backed securities — — — — 1,244,713 1,244,713 1,313,282 1,186,682

State and political subdivisions 3,794 6,384 12,296 1,846,553 — 1,869,027 1,879,997 1,472,083

Other securities — 1,129 253,390 6,015 — 260,534 274,878 240,694

Total $ 3,794 $ 7,513 $ 313,724 $ 2,251,319 $ 1,244,713 $ 3,821,063 $ 3,948,403 $ 3,278,962

Percentage of total 0.1 % 0.2 % 8.2 % 58.9 % 32.6 % 100.0 %

Weighted average yield 4.9 % 3.5 % 3.4 % 2.5 % 3.1 % 2.8 %

Available-for-Sale

Treasury $ — $ 1,447 $ — $ — $ — $ 1,447 $ 1,500 $ 1,441

Government agencies 77 94,672 51,810 55,969 — 202,528 200,230 198,333

Mortgage-backed securities — — — — 3,150,519 3,150,519 3,088,139 2,963,934

State and political subdivisions 4,007 15,948 20,685 1,062,620 — 1,103,260 1,115,494 915,255

Other securities — 59,614 206,005 6,196 609 272,424 271,976 262,684

Total $ 4,084 $ 171,681 $ 278,500 $ 1,124,785 $ 3,151,128 $ 4,730,178 $ 4,677,339 $ 4,341,647

Percentage of total 0.1 % 3.6 % 5.9 % 23.8 % 66.6 % 100.0 %

Weighted average yield 2.1 % 1.6 % 3.4 % 2.1 % 1.2 % 1.6 %

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.

Our loan portfolio averaged $13.19 billion and $12.15 billion during the first six months of 2022 and 2021, respectively.

As of June 30, 2022, total loans were $15.11 billion, an increase of $3.1 billion from December 31, 2021.

The increase in the average loan balance during the first six months of 2022 when compared to the same period in 2021 was due to the 2021 acquisitions of Landmark and Triumph and the 2022 acquisition of Spirit.

See Note 2, Acquisitions, in the accompanying Notes to Consolidated Financial Statements for additional information related to these acquisitions.

This period-to-period increase was partially offset by the decline in average PPP loan balance, which totaled $70.9 million for the six months ended June 30, 2022 as compared to $802.4 million for the same period ended June 30, 2021.

Loan growth was weighted toward the latter half of the quarter.

The higher level of period end loan balances should provide a platform for interest income growth going forward.

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).

7 unchanged sentences

Loan Portfolio

March 31, December 31,

June 30, December 31,

(In thousands) 2022 2021

12 unchanged sentences

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.

Consumer loans were $394.4 million at June 30, 2022, or 2.6% 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 June 30, 2022, was primarily due to the combined acquired and organic growth in direct consumer loans.

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%.

Real estate loans were $11.52 billion at June 30, 2022, or 76.3% of total loans, compared to $9.17 billion, or 76.3%, of total loans at December 31, 2021, an increase of $2.36 billion, or 25.7%.

Our C&D loans increased by $756.3 million, or 57.0%, single family residential loans increased by $256.0 million, or 12.2%, and CRE loans increased by $1.34 billion, or 23.4%.

The increases were largely due to the Spirit acquisition noted above, coupled with strong organic loan growth.

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.

Total commercial loans were $2.83 billion at June 30, 2022, or 18.7% of total loans, compared to $2.16 billion, or 18.0% of total loans at December 31, 2021, an increase of $670.2 million, or 31.0%, was primarily due to the combined acquired and organic growth.

Agricultural loans increased $50.0 million, or 29.7%, primarily due to seasonality of the portfolio, which normally peaks in the third quarter.

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.

Mortgage volume experienced a market driven decline during the first six months of 2022 when compared to 2021, but was more than offset by the Spirit acquisition, leading to an increase of $33.2 million in other loans.

Loan demand appears to be returning to more normalized levels similar to levels experienced prior to the onset of the COVID-19 pandemic.

For the seventh 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.

Our loan pipeline consisting of all loan opportunities was $3.02 billion at June 30, 2022 compared to $2.31 billion at December 31, 2021.

Loans approved and ready to close at the end of the quarter totaled $1.11 billion.

ASSET QUALITY

8 unchanged sentences

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.

Total non-performing assets decreased $6.3 million from December 31, 2021 to June 30, 2022.

Nonaccrual loans decreased by $5.5 million during the period and foreclosed assets held for sale and other real estate owned decreased by $1.9 million.

The decrease in nonaccrual loans was primarily due to an overall improvement in economic conditions.

From time to time, certain borrowers experience declines in income and cash flow.

5 unchanged sentences

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.

Our TDR balance decreased to $5.2 million as of June 30, 2022, compared to $6.9 million as of December 31, 2021.

TDRs are individually evaluated for expected credit losses.

2 unchanged sentences

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.

The allowance for credit losses as a percent of total loans was 1.41% as of June 30, 2022.

Non-performing loans equaled

0.42% of total loans.

Non-performing assets were 0.26% of total assets, a 5 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.

The allowance for credit losses was 334% of non-performing loans.

Our annualized net charge-offs to average total loans for the first six months of 2022 was 0.11%.

Annualized net credit card charge-offs to average total credit card loans were 1.47% for the first six months of 2022, compared to 1.40% during the full year 2021, and 35 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks.

Table 9 presents information concerning non-performing assets, including nonaccrual loans at amortized cost and foreclosed assets held for sale.

Non-performing Assets

March 31, December 31,

June 30, December 31,

(Dollars in thousands) 2022 2021

14 unchanged sentences

_______________________________________

(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.

(1) Includes nonaccrual TDRs of approximately $2,523,000 at June 30, 2022 and $2,650,000 at December 31, 2021.

The interest income on nonaccrual loans is not considered material for the three and six month periods ended June 30, 2022 and 2021.

ALLOWANCE FOR CREDIT LOSSES

35 unchanged sentences

Provision for credit losses 10,492 (10,011)

Balance, March 31, $ 178,924 $ 235,116

Acquisition adjustment for PCD loans 4,043 —

Balance, June 30, $ 212,611 $ 227,239

Loans charged off:

15 unchanged sentences

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.

The amount of provision added to or released from the allowance during the three and six months ended June 30, 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.

As of June 30, 2022, the allowance for credit losses reflected an increase of approximately $7.3 million from December 31, 2021 while total loans increased by $3.10 billion over the same six 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.

The increase in the allowance for credit losses during the first six months of 2022 was primarily due to the Spirit acquisition, which provided $2.29 billion in total loans after purchase accounting discounts.

The increase was partially offset by improved credit quality metrics and improved macroeconomic factors, coupled with the planned exit of several large oil and gas relationships during the year.

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.

Our allowance for credit losses at June 30, 2022 was considered 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.

3 unchanged sentences

Allocation of Allowance for Credit Losses

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(Dollars in thousands) Allowance

5 unchanged sentences

Total $ 212,611 100.0 % $ 205,332 100.0 %

Allowance for credit losses to period-end loans 1.41 % 1.71 %

_______________________________________

(1) Percentage of loans in each category to total loans.

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.

Deposits are our primary source of funding for earning assets and are primarily developed through our network of 233 financial centers as of June 30, 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.

As of June 30, 2022, core deposits comprised 89.3% of our total deposits.

We continually monitor the funding requirements along with competitive interest rates in the markets we serve.

6 unchanged sentences

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.

Our total deposits as of June 30, 2022, were $22.04 billion, an increase of $2.67 billion from December 31, 2021, primarily driven by the acquisition of Spirit, which contributed $2.72 billion, net of fair value adjustments.

Non-interest bearing transaction accounts, interest bearing transaction accounts and savings accounts totaled $18.87 billion at June 30, 2022, compared to $16.91 billion at December 31, 2021, an increase of $1.96 billion.

Total time deposits increased $710.0 million to $3.16 billion at June 30, 2022, from $2.45 billion at December 31, 2021.

We had $1.35 billion and $466.0 million of brokered deposits at June 30, 2022, and December 31, 2021, respectively.

These category increases were primarily related to the Spirit acquisition.

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;

Our total debt was $1.48 billion and $1.72 billion at June 30, 2022 and December 31, 2021, respectively.

The outstanding balance for June 30, 2022 includes $1.0 billion in FHLB short-term advances;

$367.3 million in subordinated notes;

1 unchanged sentence

and $31.0 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.

All of the FHLB short-term advances outstanding at the end of the second quarter 2022 are 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 June 30, 2022 had original maturity dates of 10 years to 15 years with lockout periods that have expired and, as a result, are considered and monitored as short-term advances.

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.

2 unchanged sentences

The Notes are obligations of the Company only and are not obligations of, and are not guaranteed by, any of its subsidiaries.

At March 31, 2022, total capital was $2.96 billion.

The Company assumed Fixed-to-Floating Rate Subordinated Notes in an aggregate principal amount, net of premium adjustments, of $37.4 million in connection with the Spirit acquisition in April 2022.

The Spirit Notes will mature on July 31, 2030, and initially bear interest at a fixed annual rate of 6.00%, payable quarterly, in arrears, to, but excluding, July 31, 2025.

From and including July 31, 2025, to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be the then-current three-month Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York (provided, that in the event the benchmark rate is less than zero, the benchmark rate will be deemed to be zero) plus 592 basis points, payable quarterly, in arrears.

The Company has received approval from the Federal Reserve to redeem the five issuances of trust preferred securities and expects to complete the redemptions during the third quarter of 2022.

At June 30, 2022, total capital was $3.26 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.

At June 30, 2022, our common equity to asset ratio was 11.98% 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.

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.

4 unchanged sentences

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.

1 unchanged sentence

The 2022 Program will terminate on January 31, 2024 (unless terminated sooner).

During the six month period ended June 30, 2022, we repurchased 513,725 shares at an average price per share of $31.25 under the 2019 Program and 2,035,324 shares at an average price per share of $24.59 under the 2022 Program.

During the six month period ended June 30, 2021, we repurchased 130,916 shares at an average price per share of $23.53 under the 2019 Program.

No shares were repurchased under the 2019 Program during the three months ended June 30, 2021.

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.

2 unchanged sentences

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%.

We declared cash dividends on our common stock of $0.38 per share for the first six months of 2022 compared to $0.36 per share for the first six months of 2021, an increase of $0.02, 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.

5 unchanged sentences

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.

See the Liquidity and Market Risk Management discussions of Item 3 – Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10Q 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.

7 unchanged sentences

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.

Management believes that, as of June 30, 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.

1 unchanged sentence

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:

Our risk-based capital ratios at June 30, 2022 and December 31, 2021 are presented in Table 12 below:

Risk-Based Capital

March 31, December 31,

June 30, December 31,

(Dollars in thousands) 2022 2021

15 unchanged sentences

Tier 1 leverage ratio 9.22 % 9.08 %

Tier 1 leverage ratio, excluding average PPP loans (non-GAAP) (1)

9.03 % 9.15 %

Tier 1 risk-based capital ratio 12.10 % 13.82 %

Total risk-based capital ratio 14.83 % 16.75 %

June 30, December 31,

(Dollars in thousands) 2022 2021

Minimum guidelines:

4 unchanged sentences

_______________________________________

(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

13 unchanged sentences

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.

Trust preferred securities and qualifying subordinated debt of $421.7 million is included as Tier 2 and total capital as of June 30, 2022.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

3 unchanged sentences

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 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 and estimates, 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, the impacts of the Company’s and its customers’ participation in the PPP, 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, staffing initiatives, 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 effects of future economic conditions (including unemployment levels and slowdowns in economic growth), governmental monetary and fiscal policies, including policies of the Federal Reserve, 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;

9 unchanged sentences

reliance on third parties for the provision of key services;

changes in accounting principles, including changes related to loan loss recognition;

further changes in accounting principles relating to loan loss recognition;

uncertainty and disruption associated with the discontinued use of the London Inter-Bank Offered Rate;

11 unchanged sentences

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:

The tables below present computations of adjusted earnings (net income excluding certain items {gain on sale of branches, merger related costs, net branch right sizing costs, and the Day 2 CECL Provision}) (non-GAAP), and adjusted 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), adjusted other income (non-GAAP) and adjusted non-interest expense (non-GAAP).

Adjusted items are included in financial results presented in accordance with generally accepted accounting principles (US GAAP).

We believe the exclusion of these certain items in expressing earnings and certain other financial measures, including “adjusted 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 adjusted 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 certain items to be relevant to ongoing financial performance.

Management and the Board of Directors utilize “adjusted earnings” (non-GAAP) for the following purposes:

• Preparation of the Company’s operating budgets

2 unchanged sentences

• 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:

We believe the presentation “adjusted earnings” on a diluted per share basis (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 adjusted 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 certain items to be relevant to ongoing financial performance on a per share basis.

Management and the Board of Directors utilize “adjusted diluted earnings per share” (non-GAAP) for the following purposes:

• Calculation of annual performance-based incentives for certain executives

1 unchanged sentence

• 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.

We have $1.448 billion and $1.252 billion total goodwill and other intangible assets for the periods ended June 30, 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.

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.

To mitigate these limitations, we have procedures in place to identify and approve each item that qualifies as adjusted to ensure that the Company’s “adjusted” 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).

In particular, a measure of earnings that excludes certain items does not represent the amount that effectively accrues directly to stockholders (i.e., certain 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.

Reconciliation of Core Earnings (non-GAAP)

See Table 13 below for the reconciliation of non-GAAP financial measures, which exclude certain items for the periods presented.

Reconciliation of Adjusted Earnings (non-GAAP)

Three Months Ended

March 31, December 31, March 31,

June 30, Six Months Ended

June 30, March 31, June 30, June 30,

(In thousands, except per share data) 2022 2022 2022 2021

Net income available to common stockholders $ 27,454 $ 65,095 $ 92,549 $ 142,318

Non-core items:

Certain items:

Gain on sale of branches — — — (5,316)

1 unchanged sentence

Branch right sizing (net) 380 909 1,289 487

Day 2 CECL Provision 33,779 — 33,779 —

Tax effect (1)

(13,928) (731) (14,658) 1,022

Net non-core items 2,064 11,256 (3,412)

Core earnings (non-GAAP) $ 67,159 $ 59,486 $ 63,995

Net certain items 39,364 2,064 41,429 (2,888)

Adjusted earnings (non-GAAP) $ 66,818 $ 67,159 $ 133,978 $ 139,430

Diluted earnings per share (2)

$ 0.21 $ 0.58 $ 0.77 $ 1.31

Non-core items:

Certain items:

Gain on sale of branches — — — (0.05)

1 unchanged sentence

Branch right sizing (net) — 0.01 0.01 —

Day 2 CECL Provision 0.27 — 0.28 —

Tax effect (1)

(0.11) (0.01) (0.12) 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

Net certain items 0.31 0.01 0.34 (0.03)

Adjusted diluted earnings per share (non-GAAP) $ 0.52 $ 0.59 $ 1.11 $ 1.28

_______________________________________

1 unchanged sentence

(2) See Note 17, Earnings Per Share, for number of shares used to determine EPS.

See Table 13 below for the reconciliation of core other income and core non-interest expense for the periods presented.

Reconciliation of Core Other Income and Core Non-Interest Expense (non-GAAP)

See Table 14 below for the reconciliation of adjusted other income and adjusted non-interest expense for the periods presented.

Reconciliation of Adjusted Other Income and Adjusted Non-Interest Expense (non-GAAP)

Three Months Ended

March 31, December 31, March 31,

June 30, Six Months Ended

June 30, March 31, June 30, June 30,

(In thousands) 2022 2022 2022 2021

Other income $ 6,837 $ 7,266 $ 14,103 $ 18,897

Certain items:

Gain on sale of branches — — — (5,316)

Branch right sizing 88 — 88 (606)

Core other income (non-GAAP) $ 7,266 $ 9,963 $ 5,023

Total certain items 88 — 88 (5,922)

Adjusted other income (non-GAAP) $ 6,925 $ 7,266 $ 14,191 $ 12,975

Non-interest expense $ 156,813 $ 128,417 $ 285,230 $ 227,659

Non-core items:

Certain items:

Merger related costs (19,133) (1,886) (21,019) (919)

Branch right sizing (292) (909) (1,201) (1,093)

Total non-core items (2,795) (15,241) (858)

Core non-interest expense (non-GAAP) $ 125,622 $ 126,356 $ 112,144

Total certain items (19,425) (2,795) (22,220) (2,012)

Adjusted non-interest expense (non-GAAP) $ 137,388 $ 125,622 $ 263,010 $ 225,647

See Table 15 below for the reconciliation of tangible book value per common share.

Reconciliation of Tangible Book Value per Common Share (non-GAAP)

March 31, December 31,

June 30, 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 $ 3,259,895 $ 3,248,841

9 unchanged sentences

Reconciliation of Tangible Common Equity and the Ratio of Tangible Common Equity to Tangible Assets (non-GAAP)

March 31, December 31,

June 30, December 31,

(Dollars in thousands) 2022 2021

13 unchanged sentences

Ratio of tangible common equity to tangible assets (non-GAAP) 7.03 % 8.51 %

See Table 16 below for the calculation of Tier 1 leverage ratio excluding average PPP loans for the period presented.

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 %

See Table 17 below for the calculation of core net interest margin and net interest margin adjusted for PPP loans for the periods presented.

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 %

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 2. Management’s Discussion and Analysis