What changed in this filing

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Item 1. Business

2023-02-27 compared with 2022-02-25 · 71 added, 69 removed, 352 unchanged (28% of the section changed)

22 unchanged sentences

and safe deposit boxes.

Simmons Bank also maintains a networking arrangement with a third-party broker-dealer that offers brokerage services to Simmons Bank customers, as well as a trust department that provides a variety of trust, investment, agency, and custodial services for individual and corporate clients (including, among other things, administration of estates and personal trusts, and management of investment accounts).

Additionally, Simmons First Insurance Services, Inc.

and Simmons First Insurance Services of TN, LLC are wholly-owned subsidiaries of Simmons Bank and are insurance agencies that offer various lines of personal and corporate insurance coverage to individual and commercial customers.

Community and Metro Bank Strategy

Community, Metro and Corporate Bank Strategy

Historically, the Company utilized separately chartered community bank subsidiaries to provide full-service banking products and services across our footprint.

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To both effectively compete in and service the needs of the different types of markets that are now included in our footprint, Simmons Bank now operates using two main groups, a community banking group and a metro banking group, within its geographic footprint.

Currently, Simmons Bank’s community and metro banking groups are organized as follows:

Community Banking Group Metro Banking Group

Arkansas Community Division (East Central Arkansas;

North Central Arkansas;

Northeast Arkansas;

Arkansas River Valley;

South Arkansas;

and South Central Arkansas)

Central Arkansas and Tennessee Division (Little Rock, Arkansas;

Memphis, Tennessee;

Nashville, Tennessee)

Additionally, Simmons Bank has established a Corporate Banking Group that consists of certain specialized lending units to service the needs of particular types of borrowers.

Currently, Simmons Bank’s community, metro and corporate banking groups are organized as follows:

Community Banking Group Metro Banking Group Corporate Banking Group

East Arkansas Community Division Arkansas Metro Division (Little Rock, Arkansas;

Northwest Arkansas)

Structured Real Estate Unit

West Arkansas Community Division Nashville Metro Division (Nashville, Tennessee)

Commercial Finance Unit

Tennessee Community Division (East Tennessee and West Tennessee)

Louis Division (St.

Memphis Metro Division (Memphis, Tennessee)

Equipment Finance Unit

Missouri, Oklahoma and Texas Community Division (Central Missouri, South Central Missouri, Southwest Missouri, Southeast Oklahoma, Stillwater, Oklahoma, North Texas)

Missouri Metro Division (St.

Louis, Missouri;

MO/OK/TX Community Division (Central Missouri;

South Central Missouri;

Southwest Missouri;

Southeast Oklahoma;

Stillwater, Oklahoma;

Texas Division (Dallas, Texas;

Kansas City, Missouri;

Kansas City, Kansas)

Public Sector Banking Unit

Greater Texas Community Division (Houston, North Houston, South Texas, Northeast Texas, College Station, North Central Texas)

Texas Metro Division (Dallas, Texas;

Worth, Texas;

North Dallas, Texas;

Western Division (Northwest Arkansas;

Kansas City, Missouri/Kansas;

Wichita, Kansas;

Austin, Texas;

San Antonio, Texas)

Participations/Syndications Unit

Western Metro Division (Wichita, Kansas;

Oklahoma City, Oklahoma;

Tulsa, Oklahoma)

Asset Based Lending Unit

Mortgage Warehouse Unit

Growth Strategy

Over the past 32 years, as we have expanded our markets and services, our growth strategy has evolved and diversified.

Over the years, as we have expanded our markets and services, our growth strategy has evolved and diversified.

We have used varying acquisition and internal branching methods to enter key growth markets and increase the size of our footprint.

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(“Liberty”), including its wholly-owned bank subsidiary, Liberty Bank.

Liberty was headquartered in Springfield, Missouri, served southwest Missouri and had total assets of $1.1 billion.

Liberty was headquartered in Springfield, Missouri, served southwest Missouri and had total assets of

$1.1 billion.

The acquisition enhanced Simmons Bank’s presence not only in southwest Missouri, but also in the St.

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The acquisition expanded our footprint into Tennessee and allowed us the opportunity to provide additional services to customers in this area and expand our community banking strategy.

Community First’s expertise in SBA and consumer lending benefited our customers across each region.

In addition, Community First’s expertise in SBA and consumer lending benefited our customers across each region.

We merged First State Bank into Simmons Bank and completed the systems conversion in September 2015.

In October 2015, we completed the acquisition of Ozark Trust & Investment Corporation (“Ozark Trust”), including its wholly-owned non-deposit trust company, Trust Company of the Ozarks.

Headquartered in Springfield, Missouri, Ozark Trust had over $1 billion in assets under management and provided a wide range of financial services for its clients including investment management, trust services, IRA rollover or transfers, successor trustee services, personal representatives and custodial services.

As our first acquisition of a fee-only financial firm, Ozark Trust provided a new wealth management capability that could be leveraged across the Company’s entire geographic footprint.

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(“Triumph”), including its wholly-owned bank subsidiary, Triumph Bank, headquartered in Memphis, Tennessee.

Landmark had total assets of $968.5 million, while Triumph provided us with $848.2 million in assets.

Landmark had total assets of $968.8 million, while Triumph provided us

with $847.2 million in assets.

These combined acquisitions allowed us to expand our existing footprint in Tennessee and to further enhance our scale in two of our key Tennessee growth markets – Memphis and Nashville.

The systems conversions for both Landmark and Triumph Bank were completed in October 2021, at which time Landmark and Triumph Bank were merged into Simmons Bank.

Additionally, on November 19, 2021, we announced the Company had entered into an Agreement and Plan of Merger (“Spirit Agreement”) with Spirit of Texas Bancshares, Inc.

(“Spirit”), headquartered in Conroe, Texas, including its wholly-owned bank subsidiary, Spirit of Texas Bank SSB.

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

In April 2022, we completed the acquisition of Spirit of Texas Bancshares, Inc.

(“Spirit”), headquartered in Conroe, Texas, including its wholly-owned bank subsidiary, Spirit of Texas Bank SSB (“Spirit Bank”).

We acquired approximately $3.1 billion in assets and further strengthened our position in Texas.

The systems conversion was completed in April 2022, at which time Spirit Bank merged into Simmons Bank.

Merger and Acquisition Strategy

Merger and acquisition activities are an important part of the Company’s growth strategy.

We intend to focus our near-term merger and acquisition strategy on traditional mergers and acquisitions.

We continue to believe that the current economic conditions combined with the possibility of a more restrictive bank regulatory environment will cause many financial institutions to seek merger partners in the near-to-intermediate future.

We also believe our community banking philosophy, access to capital and successful merger and acquisition history positions us as a purchaser of choice for community and regional banks seeking a strong partner.

We expect that our target areas for mergers and acquisitions will continue to be primarily banks operating in growth markets within our existing footprint of Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

In addition, we will pursue opportunities with financial service companies with specialty lines of business within the existing markets as and when they arise.

Merger and acquisition activities have been an important part of the Company’s growth strategy.

While we continue to consider strategic merger and acquisition opportunities if and as they arise, and while we continue to believe that current market and industry conditions will continue to cause various financial institutions to seek merger partners in the near-to-intermediate future, in the near term, we are also enhancing our focus on ensuring that we capitalize on organic growth opportunities in many of the markets that we have had the fortune to enter through previous mergers and acquisitions.

Through our “Better Bank” initiative, we are also focusing on evaluating and, where appropriate, enhancing our people, processes and systems so that we are able to more effectively and efficiently compete as an organization of the size and scale that we now have achieved.

To the extent that a strategic merger and acquisition opportunity becomes of interest, we believe our community banking philosophy, access to capital and successful merger and acquisition history would position us as a purchaser of choice for a community and regional bank seeking a strong partner.

As consolidations continue to unfold in the banking industry, the management of risk is an important consideration in how the Company evaluates and consummates these transactions.

The senior management teams of both the Company and Simmons Bank have extensive experience in acquiring banks, branches and deposits and post-acquisition integration of operations.

We believe this experience positions us to continue to successfully acquire and integrate banks.

We believe this experience positions us to successfully acquire and integrate banks to the extent a compelling strategic opportunity presents itself.

The process of merging or acquiring banking organizations is extremely complex;

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• Potentially retaining the target institution’s senior management and providing them with an appealing level of autonomy post-integration.

We intend to continue to pursue negotiated community and regional bank acquisitions, and we believe that our history with respect to such acquisitions has positioned us as an acquirer of choice for community and regional banks.

• Encouraging acquired banks, their boards and their associates to maintain their community involvement, while empowering the banks to offer a broader array of financial products and services.

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As part of our ongoing risk assessment and analysis, the Company utilizes credit policies and procedures, internal credit expertise and several internal layers of review.

The internal layers of ongoing review include Division Presidents, Division and Senior Credit Officers, the Chief Credit Officer and Corporate Credit Officer, Division Loan Committees, an Agriculture Loan Committee, an Executive Loan Committee, Senior Credit Committee, and a Directors’ Credit Committee.

The internal layers of ongoing review include Division Presidents, Division and Senior Credit Officers, the Chief Credit Officer and Corporate Credit Officers, an Agriculture Loan Committee, an Executive Loan Committee, a Senior Credit Committee, and a Directors’ Credit Committee.

Additionally, the Company has an Asset Quality Review Committee comprised of management that meets quarterly to review the adequacy of the allowance for credit losses.

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Our loan review department monitors loan information monthly.

In order to verify the accuracy of the monthly analysis of the allowance for credit losses, the loan review department performs a detailed review of each loan product on an annual basis or more often if warranted.

In order to verify the accuracy of the monthly analysis of the allowance for credit losses, the loan review department performs a detailed review of loans across each product line and all divisions on an annual basis or more often if warranted.

Additionally, we have instituted a Special Asset Committee for the purpose of reviewing criticized loans in regard to collateral adequacy, workout strategies and proper reserve allocations.

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3rd Street, Little Rock, Arkansas 72201.

We maintain a website at http://www.simmonsbank.com .

We maintain a website at www.simmonsbank.com .

On this website under the Investor Relations section, we make our filings with the SEC (including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended) available free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

In addition, our website contains other news and announcements about the Company and its subsidiaries.

Our website and the information contained on, or that can be accessed through, our website are not deemed to be incorporated by reference in, and are not considered part of, this Annual Report.

Human Capital

Our associates are a critical component of our success.

Because our business depends on our ability to attract, develop, and retain highly qualified, skilled lending, operations, information technology, and other associates, as well as managers who are experienced and effective at leading their respective departments, we have implemented wide-ranging programs focused on identifying and recruiting new talent, as well as enhancing the skills, qualifications, and satisfaction of our current associate base, under the umbrella program “Banking on Our People.” In recruiting, we employ a variety of strategies, including, among other things, the use of in-house recruiters, search firms, and employment agencies, designed to attract qualified and diverse candidates.

We offer, among other opportunities, student internships and a management trainee program that provides recent graduates the opportunity to gain insight into several Company departments.

In recruiting, we employ a variety of strategies, including, among other things, the use of in-house recruiters, search firms, and employment agencies, designed to attract qualified and diverse candidates.

Among other opportunities, we offer student internships and a banker trainee program that provides recent graduates with the opportunity to gain insight into several Company departments.

We believe our compensation program, which, in addition to base and incentive compensation, includes health, retirement, and an array of other benefit plans and programs, is competitive within the financial industry, and we periodically review our plans and programs, as well as market surveys, to help ensure that our compensation program is consistent with our level of performance and that we have a current understanding of peer practices.

We provide our associates a variety of professional development opportunities, including participation in industry conferences, instructor-led continuing education and training sessions, as well as online training sessions that focus, among other things, on industry, regulatory, business, and leadership topics.

We offer mentorship opportunities through our “Simmons Sidekick” and “Ambassadors” programs, and we provide tuition reimbursement for associates to attend a higher education facility to obtain bachelor’s and master’s degrees that are relevant to the finance industry and/or their positions within the Company.

We seek to promote from within the Company when feasible and have established programs, such as our “Next Generation Leadership Program,” to help develop future managerial talent.

We are committed to maintaining a strong culture that not only earns loyalty but also serves as a catalyst for growth.

We provide our associates a variety of professional development opportunities, including participation in industry conferences, instructor-led continuing education and training sessions, as well as online training sessions that focus on industry, regulatory, business, and leadership topics.

We offer mentorship opportunities through our “Simmons Sidekick,” “Ambassadors” and “Coaching Cohorts” programs, and we provide tuition reimbursement for associates to attend a higher education facility to obtain bachelor’s and master’s degrees that are relevant to the finance industry and/or their positions within the Company.

We seek to promote from within the Company when feasible and have established programs, such as our “Next Generation Leadership Program,” to help develop future leadership talent.

We are committed to maintaining a strong culture that not only engages associates but also serves as a catalyst for growth.

Our values-based culture is memorialized in a set of “Culture Cornerstones” that are communicated to all associates and incorporated in various ways throughout our operations.

We strive for all five of our Culture Cornerstones - Better Together;

We strive for all six of our Culture Cornerstones - Better Together;

High Performance;

and Pursue Growth - to be reflected in everything we do, including how we interact with each other, how we

interact with our customers, and how we interact with our vendors and business partners.

Pursue Growth;

and Build Loyalty - to be reflected in everything we do, including how we interact with each other, how we interact with our customers, and how we interact with our vendors and business partners.

Our sixth Culture Cornerstone, Build Loyalty, was added in 2022 to provide a compelling and pervasive customer service operational approach that is designed to produce exceptional internal and external customer experiences.

In 2022, we also focused on our Culture Cornerstone of High Performance by implementing extensive new training and programming to support leaders and associates.

We are also committed to promoting our associates’ well-being.

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We believe these differences help us better serve our customers and make us stronger as a whole.

In connection with this program, we recently introduced Employee Resource Groups for veterans, women, African Americans, and LGBTQIA+ associates.

In connection with this program, we have introduced Employee Resource Groups for veterans, women, African Americans, and LGBTQIA+ associates.

As of December 31, 2022, the Company and its subsidiaries had approximately 3,202 full time equivalent associates.

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In a bank holding company context, at a minimum, the parent holding company of a bank, any companies which are controlled by such parent holding company, and financial subsidiaries of the bank, are affiliates of the bank.

Generally, Sections 23A and 23B of the Federal Reserve Act are intended to

protect insured depository institutions from losses arising from transactions with non-insured affiliates by limiting the extent to which a bank or its subsidiaries may engage in covered transactions with any one affiliate and with all affiliates of the bank in the aggregate, and requiring that such transactions be on terms consistent with safe and sound banking practices.

Generally, Sections 23A and 23B of the Federal Reserve Act are intended to protect insured depository institutions from losses arising from transactions with non-insured affiliates by limiting the extent to which a bank or its subsidiaries may engage in covered transactions with any one affiliate and with all affiliates of the bank in the aggregate, and requiring that such transactions be on terms consistent with safe and sound banking practices.

Loans to executive officers, directors, or any person who directly or indirectly, or acting through or in concert with one or more persons, owns, controls, or has the power to vote more than 10% of any class of voting securities of a bank (“10% Shareholders”), are subject to Sections 22(g) and 22(h) of the Federal Reserve Act and their corresponding regulations (Regulation O) and Section 13(k) of the Exchange Act relating to the prohibition on personal loans to executives (which exempts financial institutions in compliance with the insider lending restrictions of Section 22(h) of the Federal Reserve Act).

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retained earnings;

accumulated other comprehensive income and certain minority interests;

all subject to applicable regulatory adjustments and deductions.

accumulated other comprehensive income;

and certain minority interests, all subject to applicable regulatory adjustments and deductions.

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

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At least 50% of the banking organization’s total regulatory capital must consist of Tier 1 Capital.

Tier 2 Capital is an amount equal to the sum of the qualifying portion of the allowance for credit losses, certain preferred stock not included in Tier 1, hybrid capital instruments (instruments with characteristics of debt and equity), certain long-term debt

securities and eligible term subordinated debt, in an amount up to 50% of Tier 1 Capital.

The eligibility of these items for inclusion as Tier 2 Capital is subject to certain additional requirements and limitations of the federal banking agencies.

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The federal banking agencies are also required by FDICIA to prescribe standards for banks and bank holding companies (including financial holding companies) relating to operations and management, asset quality, earnings, stock valuation and compensation.

A bank or bank holding company that fails to comply with such standards will be required to submit a plan

designed to achieve compliance.

A bank or bank holding company that fails to comply with such standards will be required to submit a plan designed to achieve compliance.

If no plan is submitted or the plan is not implemented, the bank or holding company would become subject to additional regulatory action or enforcement proceedings.

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These rules and their enforcement are subject to the substantial regulatory discretion of the federal banking agencies.

The Company continues to evaluate the impact of the EGRRCPA as it is further implemented by the federal banking agencies.

Section 619 of the Dodd-Frank Act, commonly known as the “Volcker Rule,” restricts the ability of banking entities from:

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Section 29 of the FDIA and the FDIC regulations promulgated thereunder limit the ability of any bank to accept, renew or roll over any brokered deposit unless it is well capitalized or, with the FDIC’s approval, adequately capitalized.

However, a result of the EGRRCPA, the FDIC has undertaken a comprehensive review of its regulatory approach to brokered deposits, including reciprocal deposits, and interest rate caps applicable to banks that are less than well capitalized.

However, as a result of the EGRRCPA, the FDIC has undertaken a comprehensive review of its regulatory approach to brokered deposits, including reciprocal deposits, and interest rate caps applicable to banks that are less than well capitalized.

In December 2020, the FDIC issued a final rulemaking to modernize its brokered deposit regulations.

Among other things, the final rule establishes a new

framework for analyzing certain provisions of the “deposit broker” definition and establishes certain automatic “primary purpose” exemptions from the deposit broker definition, as well as revises certain interest rate restrictions that apply to less than well capitalized insured depository institutions.

Among other things, the final rule established a new framework for analyzing certain provisions of the “deposit broker” definition and established certain automatic “primary purpose” exemptions from the deposit broker definition, as well as revised certain interest rate restrictions that apply to less than well capitalized insured depository institutions.

The final rule became effective April 1, 2021;

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During recent years, the federal prudential regulatory agencies have been engaged in efforts to revise the regulations implementing the CRA.

The Company will monitor developments with respect to proposals concerning these regulations and assess the impact, if any, of the proposed changes to the CRA regulations.

The Company continues to monitor developments with respect to proposals concerning these regulations and assess the impact, if any, of the proposed changes to the CRA regulations.

UDAP and UDAAP

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In December 2020, the U.S.

Congress enacted the National Defense Authorization Act (the “NDAA”) that, among other provisions, made significant updates to the federal BSA/AML regulations that aims to eliminate the use of shell companies that facilitate the laundering of criminal proceeds.

Congress enacted the National Defense Authorization Act (the “NDAA”) that, among other provisions, made significant updates to the federal BSA/AML regulations that aim to eliminate the use of shell companies that facilitate the laundering of criminal proceeds.

In December 2021, the Financial Crimes Enforcement Network (“FinCEN”) issued rules to implement a national beneficial ownership reporting framework and to update the customer due diligence requirements that apply to the Company and the Bank to be consistent with this framework.

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The federal banking agencies and the SEC most recently proposed such regulations in 2016, but the regulations have not yet been finalized.

However, in 2021 the SEC signaled a renewed interest in these matters by re-opening the comment period on a proposed rule regarding clawbacks of incentive-based executive compensation, which was originally proposed in 2015.

However, in late 2022, the SEC finalized a set of rules directing national securities exchanges to establish listing standards regarding clawbacks of incentive-based executive compensation, which rules were originally proposed in 2015.

The Company is monitoring developments with respect to these listing standards, which are expected to be proposed in 2023.

The Dodd-Frank Act also requires publicly traded companies to give stockholders a non-binding vote on executive compensation at least every three years and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions.

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Simmons Bank continues to be subject to the oversight of its other regulators with respect to matters outside the scope of the CFPB’s jurisdiction.

The CFPB has broad rule-making, supervisory, examination and enforcement authority, as well as expanded data collecting and enforcement powers, all of which impacts the operations of Simmons Bank.

The CFPB has broad rule-making, supervisory, examination and enforcement authority, as well as expanded data collecting and enforcement powers, all of which impact the operations of Simmons Bank.

Pending Legislation

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Effect of Governmental Monetary Policies

The FRB uses monetary policy tools to impact interest rates, credit market conditions and money market conditions and to influence general economic conditions, including employment, market interest and inflation rates.

The FRB uses monetary policy tools to impact interest rates, credit market conditions and money market conditions, as well as to influence general economic conditions, including employment, market interest and inflation rates.

These policies can have a significant impact on the absolute levels and distribution of deposits, loans and investment securities, as well as on market interest rates charged on loans or paid for deposits and other borrowings.

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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-K

Item 1. Business