What changed in this filing

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Item 1. Financial Statements

2023-08-04 compared with 2023-05-05 · 285 added, 180 removed, 1362 unchanged (25% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

March 31, 2023 and December 31, 2022

March 31, December 31,

June 30, 2023 and December 31, 2022

June 30, December 31,

(In thousands, except share data) 2023 2022

4 unchanged sentences

Investment securities:

Held-to-maturity, net of allowance for credit losses of $ 1,888 and $ 1,388 at March 31, 2023 and December 31, 2022, respectively

Held-to-maturity, net of allowance for credit losses of $ 3,214 and $ 1,388 at June 30, 2023 and December 31, 2022, respectively

3,756,754 3,759,706

Available-for-sale, net of allowance for credit losses of $ 5,800 at March 31, 2023 (amortized cost of $ 4,186,431 and $ 4,331,413 at March 31, 2023 and December 31, 2022, respectively)

Available-for-sale, net of allowance for credit losses of $ 2,396 at June 30, 2023 (amortized cost of $ 4,012,265 and $ 4,331,413 at June 30, 2023 and December 31, 2022, respectively)

3,579,758 3,852,854

24 unchanged sentences

Common stock, Class A, $ 0.01 par value;

350,000,000 shares authorized at March 31, 2023 and December 31, 2022;

127,282,192 and 127,046,654 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

350,000,000 shares authorized at June 30, 2023 and December 31, 2022;

126,224,707 and 127,046,654 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Surplus 2,516,398 2,530,066

6 unchanged sentences

Consolidated Statements of Income

Three Months Ended March 31, 2023 and 2022

Three Months Ended March 31,

Three and Six Months Ended June 30, 2023 and 2022

Three Months Ended

June 30, Six Months Ended

(In thousands, except per share data) 2023 2022 2023 2022

(Unaudited) (Unaudited)

INTEREST INCOME

3 unchanged sentences

Mortgage loans held for sale 154 200 236 390

Other loans held for sale — 2,063 — 2,063

TOTAL INTEREST INCOME 297,220 204,806 576,357 366,533

35 unchanged sentences

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended March 31, 2023 and 2022

Three and Six Months Ended June 30, 2023 and 2022

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

(Unaudited) (Unaudited)

NET INCOME $ 58,314 $ 27,454 $ 103,903 $ 92,549

OTHER COMPREHENSIVE INCOME (LOSS)

Unrealized holding gains (losses) arising during the period on available-for-sale securities 69,963 ( 465,708 )

Unrealized holding (losses) gains arising during the period on available-for-sale securities ( 34,464 ) 11,763 35,499 ( 453,777 )

Reclassification adjustment for realized losses included in net income ( 391 ) ( 150 ) ( 391 ) ( 204 )

Realized gains (losses) on available-for-sale securities interest rate hedges 13,545 ( 37,199 )

Realized losses on available-for-sale securities interest rate hedges ( 28,506 ) ( 22,832 ) ( 14,961 ) ( 60,031 )

Net unrealized losses on securities transferred from available-for-sale to held-to-maturity during the period — ( 206,682 ) — ( 206,682 )

Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity ( 6,505 ) ( 4,785 ) ( 13,553 ) ( 4,701 )

6 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended March 31, 2023 and 2022

(In thousands) March 31, 2023 March 31, 2022

Six Months Ended June 30, 2023 and 2022

(In thousands) June 30, 2023 June 30, 2022

OPERATING ACTIVITIES

7 unchanged sentences

Stock-based compensation expense 8,018 8,164

Loss (gain) on sale of foreclosed assets and other real estate owned 8 ( 235 )

Gain on sale of foreclosed assets and other real estate owned ( 225 ) ( 290 )

Gain on sale of mortgage loans held for sale ( 3,683 ) ( 4,333 )

Gain on sale of loans — ( 228 )

Deferred income taxes ( 335 ) 917

19 unchanged sentences

Proceeds from bank owned life insurance death benefits 3,686 —

Purchase of Spirit of Texas Bancshares, Inc.

Net cash used in investing activities ( 419,836 ) ( 353,188 )

4 unchanged sentences

Net change in federal funds purchased and securities sold under agreements to repurchase ( 57,817 ) ( 30,302 )

Net shares issued (cancelled) under stock compensation plans ( 2,168 ) ( 3,575 )

Net shares cancelled under stock compensation plans ( 2,505 ) ( 3,905 )

Shares issued under employee stock purchase plan 833 1,151

1 unchanged sentence

Net cash provided by (used in) financing activities 324,694 ( 510,475 )

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 157,671 ) 36,364

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 63,790 ( 685,806 )

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 682,122 1,650,653

3 unchanged sentences

Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2023 and 2022

Three Months Ended June 30, 2023 and 2022

(In thousands, except share data) Common

3 unchanged sentences

Profits Total

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Balance, March 31, 2023 (Unaudited) $ 1,273 $ 2,533,589 $ ( 470,681 ) $ 1,275,720 $ 3,339,901

Comprehensive income — — 693 58,314 59,007

Stock-based compensation plans, net – 70,602 shares

— 2,820 — — 2,820

Stock repurchases – 1,128,087 shares

( 11 ) ( 20,011 ) — — ( 20,022 )

Dividends on common stock – $ 0.20 per share

— — — ( 25,380 ) ( 25,380 )

Balance, June 30, 2023 (Unaudited) $ 1,262 $ 2,516,398 $ ( 469,988 ) $ 1,308,654 $ 3,356,326

Three Months Ended June 30, 2022

Balance, March 31, 2022 (Unaudited) $ 1,125 $ 2,150,453 $ ( 326,961 ) $ 1,136,990 $ 2,961,607

Comprehensive (loss) income — — ( 123,467 ) 27,454 ( 96,013 )

Stock-based compensation plans, net – 42,459 shares

— 3,893 — — 3,893

Stock issued for Spirit acquisition – 18,275,074 shares

183 464,735 — — 464,918

Stock repurchases – 2,035,324 shares

( 20 ) ( 50,021 ) — — ( 50,041 )

Dividends on common stock – $ 0.19 per share

— — — ( 24,469 ) ( 24,469 )

Balance, June 30, 2022 (Unaudited) $ 1,288 $ 2,569,060 $ ( 450,428 ) $ 1,139,975 $ 3,259,895

See Condensed Notes to Consolidated Financial Statements.

Simmons First National Corporation

Consolidated Statements of Stockholders’ Equity

Six Months Ended June 30, 2023 and 2022

(In thousands, except share data) Common

Stock Surplus Accumulated

Comprehensive

(Loss) Income Undivided

Profits Total

Six Months Ended June 30, 2023

Balance, December 31, 2022 $ 1,270 $ 2,530,066 $ ( 517,560 ) $ 1,255,586 $ 3,269,362

4 unchanged sentences

3 5,510 — — 5,513

Stock repurchases – 1,128,087 shares

( 11 ) ( 20,011 ) — — ( 20,022 )

Dividends on common stock – $ 0.40 per share

— — — ( 50,835 ) ( 50,835 )

Balance, March 31, 2023 (Unaudited) $ 1,273 $ 2,533,589 $ ( 470,681 ) $ 1,275,720 $ 3,339,901

Three Months Ended March 31, 2022

Balance, June 30, 2023 (Unaudited) $ 1,262 $ 2,516,398 $ ( 469,988 ) $ 1,308,654 $ 3,356,326

Six Months Ended June 30, 2022

Balance, December 31, 2021 $ 1,127 $ 2,164,989 $ ( 10,545 ) $ 1,093,270 $ 3,248,841

4 unchanged sentences

2 4,257 — — 4,259

Stock issued for Spirit acquisition – 18,275,074 shares

183 464,735 — — 464,918

Stock repurchases – 2,549,049 shares

2 unchanged sentences

— — — ( 45,844 ) ( 45,844 )

Balance, March 31, 2022 (Unaudited) $ 1,125 $ 2,150,453 $ ( 326,961 ) $ 1,136,990 $ 2,961,607

Balance, June 30, 2022 (Unaudited) $ 1,288 $ 2,569,060 $ ( 450,428 ) $ 1,139,975 $ 3,259,895

See Condensed Notes to Consolidated Financial Statements.

8 unchanged sentences

checking, savings and time deposits;

and specialized products and services (such as credit cards, trust and fiduciary services, investments, agricultural finance lending, equipment lending, insurance and Small Business Administration (“SBA”) lending) from approximately 231 financial centers as of March 31, 2023, located throughout market areas in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

and specialized products and services (such as credit cards, trust and fiduciary services, investments, agricultural finance lending, equipment lending, insurance and Small Business Administration (“SBA”) lending) from approximately 231 financial centers as of June 30, 2023, located throughout market areas in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

Basis of Presentation

8 unchanged sentences

The estimates and assumptions used in the accompanying consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements and actual results may differ from these estimates.

Such estimates include, but are not limited to, the Company’s allowance for credit losses.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans and the valuation of acquired loans.

Management obtains independent appraisals for significant properties in connection with the determination of the allowance for credit losses and the valuation of foreclosed assets.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, the valuation of acquired loans, valuation of goodwill and subsequent impairment analysis, stock-based compensation plans and income taxes.

Management obtains third party valuations to assist in valuing certain aspects of these material estimates, as appropriate, including independent appraisals for significant properties in connection with the determination of the allowance for credit losses and the fair value of acquired loans.

Assumptions used in the goodwill impairment analysis involve internally projected forecasts, coupled with market and third-party data.

These material estimates could change as a result of the uncertainty in current macroeconomic conditions and other factors that are beyond the Company’s control and could cause actual results to differ materially from those projected.

Recently Adopted Accounting Standards

150 unchanged sentences

During the quarters ended June 30, 2022 and September 30, 2021, the Company transferred, at fair value, $ 1.99 billion and $ 500.8 million, respectively, of securities from the available-for-sale portfolio to the held-to-maturity portfolio.

As of March 31, 2023, the related remaining combined net unrealized losses of $ 141.0 million in accumulated other comprehensive income (loss) will be amortized over the remaining life of the securities.

As of June 30, 2023, the related remaining combined net unrealized losses of $ 136.0 million in accumulated other comprehensive income (loss) will be amortized over the remaining life of the securities.

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

5 unchanged sentences

Held-to-maturity

March 31, 2023

June 30, 2023

Government agencies $ 451,737 $ — $ 451,737 $ — $ ( 94,515 ) $ 357,222

14 unchanged sentences

government agencies or corporations.

As of March 31, 2023, HTM MBS consists of $ 146.5 million and $ 1.05 billion of commercial MBS and residential MBS, respectively.

As of June 30, 2023, HTM MBS consists of $ 144.9 million and $ 1.05 billion of commercial MBS and residential MBS, respectively.

As of December 31, 2022, HTM MBS consists of $ 149.2 million and $ 1.04 billion of commercial MBS and residential MBS, respectively.

6 unchanged sentences

Available-for-sale

March 31, 2023

June 30, 2023

Treasury $ 2,271 $ — $ — $ ( 62 ) $ 2,209

11 unchanged sentences

Total AFS $ 4,331,413 $ — $ 373 $ ( 478,932 ) $ 3,852,854

As of March 31, 2023, AFS MBS consists of $ 985.7 million and $ 1.45 billion of commercial MBS and residential MBS, respectively.

As of June 30, 2023, AFS MBS consists of $ 898.2 million and $ 1.38 billion of commercial MBS and residential MBS, respectively.

As of December 31, 2022, AFS MBS consists of $ 1.07 billion and $ 1.47 billion of commercial MBS and residential MBS, respectively.

Accrued interest receivable on HTM and AFS securities at March 31, 2023 was $ 17.4 million and $ 16.7 million, respectively, and is included in interest receivable on the consolidated balance sheets.

Accrued interest receivable on HTM and AFS securities at June 30, 2023 was $ 20.7 million and $ 16.6 million, respectively, and is included in interest receivable on the consolidated balance sheets.

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

The following table summarizes the Company’s AFS investments in an unrealized loss position for which an allowance for credit loss has not been recorded as of March 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

The following table summarizes the Company’s AFS investments in an unrealized loss position for which an allowance for credit loss has not been recorded as of June 30, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

Less Than 12 Months 12 Months or More Total

9 unchanged sentences

Total AFS $ 91,580 $ ( 7,841 ) $ 3,440,690 $ ( 420,113 ) $ 3,532,270 $ ( 427,954 )

As of March 31, 2023, the Company’s investment portfolio included $ 3.76 billion of AFS securities, of which $ 3.68 billion, or 98.1 %, were in an unrealized loss position that were not deemed to have credit losses.

As of June 30, 2023, the Company’s investment portfolio included $ 3.58 billion of AFS securities, of which $ 3.53 billion, or 98.7 %, were in an unrealized loss position that were not deemed to have credit losses.

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

10 unchanged sentences

Accordingly, no allowance for credit losses has been recorded for these securities.

Regarding securities issued by state and political subdivisions and other HTM securities, the adequacy of the reserve for credit loss is determined quarterly based on methodology similar to the methodology for determining the loan allowance for credit losses.

The methodology considers, but is not limited to:

(i) issuer bond ratings, (ii) issuer geography, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) probability-weighted multiple scenario forecasts, and (v) the issuers’ size.

The following table details activity in the allowance for credit losses by investment security type for the three months ended March 31, 2023 on the Company’s HTM and AFS securities portfolios.

The following table details activity in the allowance for credit losses by investment security type for the three and six months ended June 30, 2023 on the Company’s HTM and AFS securities portfolios.

(In thousands) State and Political Subdivisions Other

Securities Total

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Held-to-maturity

Beginning balance, April 1, 2023 $ 362 $ 1,526 $ 1,888

Provision for credit loss expense 572 754 1,326

Ending balance, June 30, 2023 $ 934 $ 2,280 $ 3,214

Available-for-sale

Beginning balance, April 1, 2023 $ — $ 5,800 $ 5,800

Provision for credit loss expense — — —

Reduction due to sales — ( 2,078 ) ( 2,078 )

Net increase (decrease) in allowance on previously impaired securities — ( 1,326 ) ( 1,326 )

Securities charged-off — — —

Ending balance, June 30, 2023 $ — $ 2,396 $ 2,396

Six Months Ended June 30, 2023

Held-to-maturity

Beginning balance, January 1, 2023 $ 110 $ 1,278 $ 1,388

Provision for credit loss expense 824 1,002 1,826

Ending balance, March 31, 2023 $ 362 $ 1,526 $ 1,888

Ending balance, June 30, 2023 $ 934 $ 2,280 $ 3,214

Available-for-sale

1 unchanged sentence

Provision for credit loss expense — 12,800 12,800

Reduction due to sales — ( 2,078 ) ( 2,078 )

Net increase (decrease) in allowance on previously impaired securities — ( 1,326 ) ( 1,326 )

Securities charged-off — ( 7,000 ) ( 7,000 )

Ending balance, March 31, 2023 $ — $ 5,800 $ 5,800

Activity in the allowance for credit losses by investment security type for the three months ended March 31, 2022 on the Company’s HTM securities portfolio was as follows:

Ending balance, June 30, 2023 $ — $ 2,396 $ 2,396

Activity in the allowance for credit losses by investment security type for the three and six months ended June 30, 2022 on the Company’s HTM securities portfolio was as follows:

(In thousands) State and Political Subdivisions Other

Securities Total

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Held-to-maturity

Beginning balance, April 1, 2022 $ 1,285 $ 92 $ 1,377

Provision for credit loss expense — — —

Net increase (decrease) in allowance on previously impaired securities ( 1,183 ) 1,183 —

Recoveries 1 3 4

Ending balance, June 30, 2022 $ 103 $ 1,278 $ 1,381

Six Months Ended June 30, 2022

Held-to-maturity

Beginning balance, January 1, 2022 $ 1,197 $ 82 $ 1,279

Provision for credit loss expense — — —

Net increase (decrease) in allowance on previously impaired securities ( 1,183 ) 1,183 —

Recoveries 89 13 102

Ending balance, March 31, 2022 $ 1,285 $ 92 $ 1,377

Based upon the Company’s analysis of the underlying risk characteristics of its AFS portfolio, including credit ratings and other qualitative factors, as previously discussed, the provision for credit losses related to AFS securities recorded for the three months ended March 31, 2023 was $ 12.8 million, while no provision for credit losses related to AFS securities was recorded during the three months ended March 31, 2022.

During the three months ended March 31, 2023, the Company charged-off $ 7.0 million directly related to one corporate bond which was deemed uncollectible in the period.

The remaining allowance for credit loss on the AFS portfolio of $ 5.8 million at March 31, 2023 is related to outstanding exposure for two nonperforming corporate bonds.

The following table summarizes bond ratings for the Company’s HTM portfolio, based upon amortized cost, issued by state and political subdivisions and other securities as of March 31, 2023:

Ending balance, June 30, 2022 $ 103 $ 1,278 $ 1,381

Based upon the Company’s analysis of the underlying risk characteristics of its AFS portfolio, including credit ratings and other qualitative factors, as previously discussed, the provision for credit losses related to AFS securities recorded for the six months ended June 30, 2023 was $ 11.5 million, while the provision for credit losses related to AFS securities was reduced by $ 1.3 million during the three months ended June 30, 2023.

During the six months ended June 30, 2023, the Company charged-off $ 7.0 million directly related to one corporate bond which was deemed uncollectible in the period.

The remaining allowance for credit loss on the AFS portfolio of $ 2.4 million at June 30, 2023 is related to outstanding exposure for two nonperforming corporate bonds.

The following table summarizes bond ratings for the Company’s HTM portfolio, based upon amortized cost, issued by state and political subdivisions and other securities as of June 30, 2023:

State and Political Subdivisions

9 unchanged sentences

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

Securities with other credit enhancement or insurance continue to make timely principal and interest payments under the contractual terms of the securities.

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

Income earned on securities for the three months ended March 31, 2023 and 2022, is as follows:

Income earned on securities for the three and six months ended June 30, 2023 and 2022, is as follows:

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

4 unchanged sentences

Total $ 48,751 $ 37,848 $ 97,525 $ 71,560

The amortized cost and estimated fair value by maturity of securities as of March 31, 2023 are shown in the following table.

The amortized cost and estimated fair value by maturity of securities as of June 30, 2023 are shown in the following table.

Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options.

10 unchanged sentences

Total $ 3,759,968 $ 3,094,858 $ 4,012,265 $ 3,579,758

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $ 3.82 billion at March 31, 2023 and $ 3.96 billion at December 31, 2022.

There were no gross realized gains and no gross realized losses recorded from the call of securities during the three months ended March 31, 2023, as they were recognized at book value of the security.

There were approximately $ 37,000 of gross realized gains and $ 91,000 of gross realized losses from the sale and calls of securities during the three months ended March 31, 2022.

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $ 3.75 billion at June 30, 2023 and $ 3.96 billion at December 31, 2022.

There were no gross realized gains and $ 391,000 gross realized losses recorded from the sale of securities during both the three and six months ended June 30, 2023.

There were no gross realized gains and approximately $ 150,000 of gross realized losses from the sale and calls of securities during the three months ended June 30, 2022, and approximately $ 37,000 of gross realized gains and $ 240,000 of gross realized losses from the sale and call of securities during the six months ended June 30, 2022.

The income tax expense/benefit related to security gains/losses was 26.135 % of the gross amounts in 2023 and 2022.

The Company has entered into various fair value hedging transactions to mitigate the impact of changing interest rates on the fair value of AFS securities.

Derivative Instruments for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities.

See Note 23, Derivative Instruments, for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities.

OTHER ASSETS AND OTHER LIABILITIES HELD FOR SALE

1 unchanged sentence

In connection with the acquisition of Spirit, the Company acquired a portfolio of loans which were identified as held for sale by the acquired bank prior to the completion of the acquisition.

These loans were valued at $ 35.2 million, net of fair value discounts, at the date of acquisition with no remaining balance as of March 31, 2023.

As of March 31, 2023, there were no outstanding other liabilities held for sale.

These loans were valued at $ 35.2 million, net of fair value discounts, at the date of acquisition with no remaining balance as of June 30, 2023.

As of June 30, 2023, there were no outstanding other liabilities held for sale.

LOANS AND ALLOWANCE FOR CREDIT LOSSES

At March 31, 2023, the Company’s loan portfolio was $ 16.56 billion, compared to $ 16.14 billion at December 31, 2022.

At June 30, 2023, the Company’s loan portfolio was $ 16.83 billion, compared to $ 16.14 billion at December 31, 2022.

The various categories of loans are summarized as follows:

March 31, December 31,

June 30, December 31,

(In thousands) 2023 2022

12 unchanged sentences

The above table presents total loans at amortized cost.

The difference between amortized cost and unpaid principal balance is primarily premiums and discounts associated with acquisition date fair value adjustments on acquired loans as well as net deferred origination fees totaling $ 19.2 million and $ 26.4 million at March 31, 2023 and December 31, 2022, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $ 64.7 million and $ 65.4 million at March 31, 2023 and December 31, 2022, respectively, and is included in interest receivable on the consolidated balance sheets.

The difference between amortized cost and unpaid principal balance is primarily premiums and discounts associated with acquisition date fair value adjustments on acquired loans as well as deferred origination costs and fees totaling $ 13.6 million and $ 26.4 million at June 30, 2023 and December 31, 2022, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $ 66.2 million and $ 65.4 million at June 30, 2023 and December 31, 2022, respectively, and is included in interest receivable on the consolidated balance sheets.

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

17 unchanged sentences

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

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

Additionally, submarkets within CRE – such as office, industrial,

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

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

9 unchanged sentences

PPP loans have a zero percent risk-weight for regulatory capital ratios.

As of March 31, 2023 and December 31, 2022, the total outstanding balance of PPP loans was $ 7.8 million and $ 8.9 million, respectively.

As of June 30, 2023 and December 31, 2022, the total outstanding balance of PPP loans was $ 6.8 million and $ 8.9 million, respectively.

Other – The other loan portfolio includes mortgage warehouse loans, representing warehouse lines of credit to mortgage originators for the disbursement of newly originated 1-4 family residential loans.

7 unchanged sentences

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

March 31, December 31,

June 30, December 31,

(In thousands) 2023 2022

10 unchanged sentences

Total $ 71,279 $ 58,434

As of March 31, 2023 and December 31, 2022, nonaccrual loans for which there was no related allowance for credit losses had an amortized cost of $ 14.3 million and $ 16.9 million, respectively.

As of June 30, 2023 and December 31, 2022, nonaccrual loans for which there was no related allowance for credit losses had an amortized cost of $ 13.0 million and $ 16.9 million, respectively.

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

5 unchanged sentences

Loans 90 Days

March 31, 2023

June 30, 2023

Credit cards $ 1,666 $ 495 $ 2,161 $ 207,291 $ 209,452 $ 426

10 unchanged sentences

Total $ 25,190 $ 40,185 $ 65,375 $ 16,768,278 $ 16,833,653 $ 738

(In thousands) Gross

Past Due 90 Days

Past Due Total

Past Due Current Total

Loans 90 Days

December 31, 2022

15 unchanged sentences

The Company primarily uses interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal.

There were no loans modified for borrowers experiencing financial difficulties during the three month period ending March 31, 2023.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three months ended March 31, 2023 and were modified in the twelve months prior to that default.

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

At March 31, 2023 and December 31, 2022, the Company had $ 3,248,000 and $ 3,009,000 , respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process.

At March 31, 2023 and December 31, 2022, the Company had $ 873,000 and $ 853,000 , respectively, of OREO secured by residential real estate properties.

The following table presents the period-end balance of loan modifications, segregated by type of modification, to borrowers experiencing financial difficulty during the three and six months ended June 30, 2023.

Interest Rate Percent of

Modification and Total Class

(Dollars in thousands) Term Extension of Loans

Commercial $ 655 0.03 %

Total commercial $ 655 0.03 %

The financial effects of the loan modification made to a borrower experiencing financial difficulty was not significant during the three and six month periods ended June 30, 2023.

The loan modification reported in the table above did not significantly impact the Company’s determination of the allowance for credit losses on loans during the three and six months ended June 30, 2023.

During the three and six months ended June 30, 2023, the Company modified one loan, whereby the borrower was experiencing financial difficulty at the time of modification, that was current as of June 30, 2023 with a recorded investment of $ 655,000 .

Additionally, there were no modified loans for which a payment default occurred during the three and six month periods ended June 30, 2023 and were modified in the 12 months prior to default.

At June 30, 2023 and December 31, 2022, the Company had $ 1.3 million and $ 3.0 million, respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process.

At June 30, 2023 and December 31, 2022, the Company had $ 423,000 and $ 853,000 , respectively, of Other Real Estate Owned (“OREO”) secured by residential real estate properties.

Troubled Debt Restructurings (Prior to the adoption of ASU 2022-02)

15 unchanged sentences

Total 24 $ 1,849 13 $ 1,622 37 $ 3,471

There were no loans restructured as TDRs during the three months ended March 31, 2022.

Additionally, there were no loans considered TDRs for which a payment default occurred during the three months ended March 31, 2022.

There were no TDRs with pre-modification loan balances for which Other Real Estate Owned (“OREO”) was received in full or partial satisfaction of the loans during the three month period ended March 31, 2022.

The following table presents loans that were restructured as TDRs during the three and six month periods ended June 30, 2022.

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

Three and Six Months Ended June 30, 2022

Other commercial 1 $ 13 $ 13 $ — $ 13 $ —

Total real estate 1 $ 13 $ 13 $ — $ 13 $ —

During the three and six months ended June 30, 2022, the Company modified one loan with a recorded investment of $ 13,000 prior to modification, which was deemed a TDR.

The restructured loan was modified by reducing the interest rate on the loan.

No specific reserve was recorded with respect to this TDR.

Also, there was no immediate financial impact from the restructuring of this loan, as it was not considered necessary to charge-off interest or principal on the date of restructure.

Additionally, there were no loans considered TDRs for which a payment default occurred during the six months ended June 30, 2022.

There were no TDRs with pre-modification loan balances for which OREO was received in full or partial satisfaction of the loans during the three and six month period ended June 30, 2022.

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

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• Doubtful and loss - Includes loans with an expanded risk rating of 15 and 16.

The following table presents a summary of loans by credit quality indicator, as of March 31, 2023, segregated by class of loans.

The following table presents a summary of loans by credit quality indicator, as of June 30, 2023, segregated by class of loans.

Term Loans Amortized Cost Basis by Origination Year

111 unchanged sentences

Beyond the reasonable and supportable periods, the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenarios.

To determine the best estimate of credit losses as of March 31, 2023, the Company utilized a probability-weighted, multiple-scenario approach consisting of Baseline, Upside (S1), and Downside (S3) scenarios published by Moody’s Analytics in March 2023 that was updated to reflect the U.S.

To determine the best estimate of credit losses as of June 30, 2023, the Company utilized a probability-weighted, multiple-scenario approach consisting of Baseline, Upside (S1), and Downside (S3) scenarios published by Moody’s Analytics in June 2023 that was updated to reflect the U.S.

economic outlook.

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If a loss is determined to be probable, the loss is included in the allowance for credit losses as a specific allocation.

Loans for which the repayment is expected to be provided substantially through the operation or sale of collateral and where the borrower is experiencing financial difficulty had an amortized cost of $ 101.4 million and $ 70.9 million as of March 31, 2023 and December 31, 2022, respectively, as further detailed in the table below.

Loans for which the repayment is expected to be provided substantially through the operation or sale of collateral and where the borrower is experiencing financial difficulty had an amortized cost of $ 99.7 million and $ 70.9 million as of June 30, 2023 and December 31, 2022, respectively, as further detailed in the table below.

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

(In thousands) Real Estate Collateral Other Collateral Total

March 31, 2023

June 30, 2023

Construction and development $ 7,517 $ — $ 7,517

9 unchanged sentences

Total $ 67,606 $ 3,320 $ 70,926

The following table details activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2023.

The following table details activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2023.

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

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Allowance for credit losses:

Three Months Ended March 31, 2023

Beginning balance, January 1, 2023 $ 34,406 $ 150,795 $ 5,140 $ 6,614 $ 196,955

Three Months Ended June 30, 2023

Beginning balance, April 1, 2023 $ 30,256 $ 163,906 $ 6,446 $ 5,949 $ 206,557

Provision for credit loss expense 1,483 1,464 995 1,119 5,061

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Net (charge-offs) recoveries ( 754 ) 443 ( 1,111 ) ( 230 ) ( 1,652 )

Ending balance, March 31, 2023 $ 30,256 $ 163,906 $ 6,446 $ 5,949 $ 206,557

Activity in the allowance for credit losses for the three months ended March 31, 2022 was as follows:

Ending balance, June 30, 2023 $ 30,985 $ 165,813 $ 6,330 $ 6,838 $ 209,966

Six Months Ended June 30, 2023

Beginning balance, January 1, 2023 $ 34,406 $ 150,795 $ 5,140 $ 6,614 $ 196,955

Provision for credit loss expense ( 3,322 ) 15,485 3,144 670 15,977

Charge-offs ( 1,637 ) ( 1,639 ) ( 2,486 ) ( 1,122 ) ( 6,884 )

Recoveries 1,538 1,172 532 676 3,918

Net charge-offs ( 99 ) ( 467 ) ( 1,954 ) ( 446 ) ( 2,966 )

Ending balance, June 30, 2023 $ 30,985 $ 165,813 $ 6,330 $ 6,838 $ 209,966

Activity in the allowance for credit losses for the three and six months ended June 30, 2022 was as follows:

(In thousands) Commercial Real

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Allowance for credit losses:

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Beginning balance, April 1, 2022 $ 9,177 $ 161,389 $ 2,894 $ 5,464 $ 178,924

Acquisition adjustment for PCD loans 854 3,187 — 2 4,043

Provision for credit loss expense 22,853 1,629 4,470 1,454 30,406

Charge-offs ( 688 ) ( 124 ) ( 1,004 ) ( 518 ) ( 2,334 )

Recoveries 621 400 249 302 1,572

Net (charge-offs) recoveries ( 67 ) 276 ( 755 ) ( 216 ) ( 762 )

Ending balance, June 30, 2022 $ 32,817 $ 166,481 $ 6,609 $ 6,704 $ 212,611

Six Months Ended June 30, 2022

Beginning balance, January 1, 2022 $ 17,458 $ 179,270 $ 3,987 $ 4,617 $ 205,332

Acquisition adjustment for PCD loans 854 3,187 — 2 4,043

Provision for credit loss expense 20,334 ( 16,193 ) 4,023 2,328 10,492

1 unchanged sentence

Recoveries 1,178 817 523 689 3,207

Net charge-offs ( 5,762 ) ( 59 ) ( 646 ) ( 27 ) ( 6,494 )

Ending balance, March 31, 2022 $ 9,177 $ 161,389 $ 2,894 $ 5,464 $ 178,924

As of March 31, 2023, the Company’s allowance for credit losses was considered sufficient based upon expected losses that were supported by scenario-weighted economic forecasts.

The provision expense for the three months ended March 31, 2023 was primarily due to the loan growth experienced during the quarter, as well as the impact of updated economic assumptions.

Net (charge-offs) recoveries ( 5,829 ) 217 ( 1,401 ) ( 243 ) ( 7,256 )

Ending balance, June 30, 2022 $ 32,817 $ 166,481 $ 6,609 $ 6,704 $ 212,611

As of June 30, 2023, the Company’s allowance for credit losses was considered sufficient based upon expected losses that were supported by scenario-weighted economic forecasts.

The provision expense for the three and six months ended June 30, 2023 was primarily due to the loan growth experienced during the periods, as well as the impact of updated economic assumptions.

Reserve for Unfunded Commitments

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

The reserve for unfunded commitments as of March 31, 2023 and December 31, 2022 was $ 41.9 million.

The reserve for unfunded commitments was $ 36.9 million and $ 41.9 million as of June 30, 2023 and December 31, 2022, respectively.

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

No adjustment was made to the reserve for unfunded commitments during the three month periods ended March 31, 2023, and 2022, as it was considered sufficient to cover any loss expectations.

During the three and six month periods ended June 30, 2023, $ 5.0 million was released from the reserve for unfunded commitments primarily due to a decline in unfunded commitments resulting from customers utilizing lines of credit during the period.

For the three and six month periods ended June 30, 2022, an adjustment to the reserve for unfunded commitments resulted in an expense of $ 3.5 million associated with the Day 2 CECL provision related to the Spirit acquisition and was included in the provision for credit losses in the statement of income.

Provision for Credit Losses

Provision for credit losses is determined by the Company as the amount to be added to the allowance for credit loss accounts for various types of financial instruments including loans, securities and off-balance-sheet credit exposure after net charge-offs have been deducted to bring the allowance to a level which, in management’s best estimate, is necessary to absorb expected credit losses over the lives of the respective financial instruments.

The components of the provision for credit losses for the three month periods ended March 31, 2023 and 2022 were as follows:

The components of the provision for credit losses for the three and six month periods ended June 30, 2023 and 2022 were as follows:

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

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

The following table presents information as of March 31, 2023 and December 31, 2022 related to the Company’s right-of-use lease assets, included in premises and equipment, and lease liabilities, included in accrued interest and other liabilities.

March 31, December 31,

The following table presents information as of June 30, 2023 and December 31, 2022 related to the Company’s right-of-use lease assets, included in premises and equipment, and lease liabilities, included in accrued interest and other liabilities.

June 30, December 31,

(Dollars in thousands) 2023 2022

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Weighted average discount rate 3.33 % 2.41 %

Operating lease cost for the three month periods ended March 31, 2023 and 2022 was $ 3.9 million and $ 3.2 million, respectively.

Operating lease cost for the three and six month periods ended June 30, 2023 was $ 3.7 million and $ 7.6 million, respectively, as compared to $ 3.7 million and $ 6.9 million for the same periods in 2022.

PREMISES AND EQUIPMENT

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

Total premises and equipment, net at March 31, 2023 and December 31, 2022 were as follows:

March 31, December 31,

Total premises and equipment, net at June 30, 2023 and December 31, 2022 were as follows:

June 30, December 31,

(In thousands) 2023 2022

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

Goodwill totaled $ 1.32 billion at March 31, 2023 and December 31, 2022.

Goodwill impairment was neither indicated nor recorded during the three months ended March 31, 2023 or the year ended December 31, 2022.

Goodwill totaled $ 1.32 billion at June 30, 2023 and December 31, 2022.

Goodwill impairment was neither indicated nor recorded during the six months ended June 30, 2023 or the year ended December 31, 2022.

During March of 2023, the Company’s share price began to decline as markets in the United States (“US”) responded to the sudden collapse of two US banks.

As a result of the decrease in the Company’s market capitalization, the Company performed an interim goodwill impairment qualitative assessment and concluded that it is more likely-than-not that the fair value of goodwill continues to exceed its carrying value and therefore, goodwill is not impaired.

As a result of the decrease in the Company’s market capitalization, the Company performed an interim goodwill impairment qualitative assessment during the first quarter of 2023 and concluded that it was more likely-than-not that the fair value of goodwill continued to exceed its carrying value and therefore, goodwill was not impaired.

During the second quarter of 2023, the Company performed the annual goodwill impairment analysis and concluded that it is more likely-than-not that the fair value of goodwill continues to exceed its carrying value and therefore, goodwill is not impaired.

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

Other intangible assets represent the value of other acquired relationships, including relationships with trust and wealth management customers, and are being amortized over various periods ranging from 8 years to 15 years.

Changes in the carrying amount and accumulated amortization of the Company’s core deposit premiums and other intangible assets at March 31, 2023 and December 31, 2022 were as follows:

March 31, December 31,

Changes in the carrying amount and accumulated amortization of the Company’s core deposit premiums and other intangible assets at June 30, 2023 and December 31, 2022 were as follows:

June 30, December 31,

(In thousands) 2023 2022

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See Note 2, Acquisitions, for additional information on acquisitions.

The carrying basis and accumulated amortization of the Company’s other intangible assets at March 31, 2023 and December 31, 2022 were as follows:

March 31, December 31,

The carrying basis and accumulated amortization of the Company’s other intangible assets at June 30, 2023 and December 31, 2022 were as follows:

June 30, December 31,

(In thousands) 2023 2022

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Total other intangible assets, net $ 120,758 $ 128,951

The Company’s estimated remaining amortization expense on other intangible assets as of March 31, 2023 is as follows:

The Company’s estimated remaining amortization expense on other intangible assets as of June 30, 2023 is as follows:

(In thousands) Year Amortization

3 unchanged sentences

TIME DEPOSITS

Time deposits included approximately $ 1.46 billion and $ 1.08 billion of certificates of deposit over $250,000 at March 31, 2023 and December 31, 2022, respectively.

Brokered time deposits were $ 2.95 billion and $ 2.75 billion at March 31, 2023 and December 31, 2022, respectively.

Time deposits included approximately $ 1.60 billion and $ 1.08 billion of certificates of deposit over $250,000 at June 30, 2023 and December 31, 2022, respectively.

Brokered time deposits were $ 3.24 billion and $ 2.75 billion at June 30, 2023 and December 31, 2022, respectively.

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

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

3 unchanged sentences

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

March 31, December 31,

June 30, December 31,

(In thousands) 2023 2022

22 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

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

The gross amount of recognized liabilities for repurchase agreements was $ 142.9 million and $ 152.4 million at March 31, 2023 and December 31, 2022, respectively.

The remaining contractual maturity of the securities sold under agreements to repurchase in the consolidated balance sheets as of March 31, 2023 and December 31, 2022 is presented in the following tables.

The gross amount of recognized liabilities for repurchase agreements was $ 102.2 million and $ 152.4 million at June 30, 2023 and December 31, 2022, respectively.

The remaining contractual maturity of the securities sold under agreements to repurchase in the consolidated balance sheets as of June 30, 2023 and December 31, 2022 is presented in the following tables.

Remaining Contractual Maturity of the Agreements

2 unchanged sentences

90 Days Total

March 31, 2023

June 30, 2023

Repurchase agreements:

4 unchanged sentences

OTHER BORROWINGS AND SUBORDINATED NOTES AND DEBENTURES

Debt at March 31, 2023 and December 31, 2022 consisted of the following components:

March 31, December 31,

Debt at June 30, 2023 and December 31, 2022 consisted of the following components:

June 30, December 31,

(In thousands) 2023 2022

13 unchanged sentences

Total other borrowings and subordinated debt $ 1,739,404 $ 1,225,285

_________________________

(1) The Company will transition from the three month LIBOR rate to the three month Secured Overnight Financing Rate (“SOFR”), plus a comparable spread adjustment of 26.161 basis points, beginning with interest accrued on the notes from and after October 1, 2023.

In March 2018, the Company issued $ 330.0 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.

1 unchanged sentence

The Notes will mature on April 1, 2028 and will bear interest at an initial fixed rate of 5.00 % per annum, payable semi-annually in arrears.

From and including April 1, 2023 to, but excluding, the maturity date or the date of earlier redemption, the interest rate will reset quarterly to an annual interest rate equal to the “then-current three month LIBOR rate” plus 215 basis points, payable quarterly in arrears (provided that the Company will transition from the “then-current three month LIBOR rate” to the “three month SOFR, plus a comparable spread adjustment of 26.161 basis points,” beginning with interest accrued on the Notes from and after October 1, 2023).

The Notes will be subordinated in right of payment to the payment of the Company’s other existing and future senior indebtedness, including all of its general creditors.

2 unchanged sentences

The Notes qualify for Tier 2 capital treatment.

The terms of the Company’s Notes utilize the three month LIBOR rate to determine the interest rate and expense due each quarter.

The Company is currently reviewing all applicable documents and working with the debt holders and all relevant parties to determine the alternate interest rate index to be utilized, or other impacts, when LIBOR is discontinued.

The Company assumed subordinated debt 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”).

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 had total FHLB advances of $ 1.00 billion and $ 838.5 million at March 31, 2023 and December 31, 2022, respectively, which are primarily fixed rate, fixed term advances, which are due less than one year from origination and therefore are classified as short-term advances by the Company.

At March 31, 2023, the FHLB advances outstanding were secured by mortgage loans and investment securities totaling approximately $ 6.9 billion and the Company had approximately $ 5.6 billion of additional advances available from the FHLB.

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 SOFR 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 had total FHLB advances of $ 1.35 billion and $ 838.5 million at June 30, 2023 and December 31, 2022, respectively, which are primarily fixed rate, fixed term advances, which are due less than one year from origination and therefore are classified as short-term advances by the Company.

At June 30, 2023, the FHLB advances outstanding were secured by mortgage loans and investment securities totaling approximately $ 6.95 billion and the Company had approximately $ 5.35 billion of additional advances available from the FHLB.

The Company’s long-term debt primarily includes subordinated debt and other notes payable.

Aggregate annual maturities of long-term debt at March 31, 2023, are as follows:

Aggregate annual maturities of long-term debt at June 30, 2023, are as follows:

Year (In thousands)

3 unchanged sentences

CONTINGENT LIABILITIES

In the ordinary course of its operations, the Company and its subsidiaries are parties to various legal proceedings incidental to the conduct of our business, including proceedings based on breach of contract claims, lender liability claims, and other ordinary-course claims, some of which seek substantial relief or damages.

In the ordinary course of its operations, the Company and its subsidiaries are parties to various legal proceedings incidental to the conduct of its business, including proceedings based on breach of contract claims, lender liability claims, and other ordinary-course claims, some of which seek substantial relief or damages.

On June 29, 2020, Shunda Wilkins, Diann Graham, and David Watson filed a putative class action complaint against Simmons Bank in the United States District Court for the Eastern District of Arkansas.

The complaint alleges that Simmons Bank improperly charges multiple insufficient funds or overdraft fees when a merchant resubmits a rejected payment request.

The complaint asserts claims for breach of contract and unjust enrichment.

Plaintiffs seek to represent a proposed class of all Simmons Bank checking account customers who were charged multiple insufficient funds or overdraft fees on resubmitted payment requests.

Plaintiffs seek unspecified damages, costs, attorney’s fees, pre-judgment interest, an injunction, and other relief as the Court deems proper for themselves and the purported class.

Simmons Bank denies the allegations and is vigorously defending the matter.

The complaint alleged that Simmons Bank improperly charges multiple insufficient funds or overdraft fees when a merchant resubmits a rejected payment request.

The complaint asserted claims for breach of contract and unjust enrichment.

Plaintiffs sought to represent a proposed class of all Simmons Bank checking account customers who were charged multiple insufficient funds or overdraft fees on resubmitted payment requests.

Plaintiffs sought unspecified damages, costs, attorney’s fees, pre-judgment interest, an injunction, and other relief as the Court deems proper for themselves and the purported class.

Simmons Bank denied the allegations and has vigorously defended the matter.

On February 9, 2023, the district court denied plaintiffs’ motion for class certification, granted Simmons Bank’s motion for summary judgment in part, and granted Simmons Bank’s motion to exclude testimony of plaintiffs’ expert.

The lawsuit remains pending.

We establish reserves for legal proceedings when potential losses become probable and can be reasonably estimated.

While the ultimate resolution (including amounts thereof) of any legal proceedings, including the matter described above, cannot be determined at this time, based on information presently available and after consultation with legal counsel, management believes that the ultimate outcome in such proceedings, either individually or in the aggregate, will not have a material adverse effect on our business, consolidated results of operations, financial condition, or cash flows.

On July 14, 2023, the district court denied plaintiffs’ motion to reconsider the court’s February 9, 2023 ruling, and ruled in favor of Simmons Bank on the outstanding issues.

The Company establishes reserves for legal proceedings when potential losses become probable and can be reasonably estimated.

While the ultimate resolution (including amounts thereof) of any legal proceedings, including the matter described above, cannot be determined at this time, based on information presently available and after consultation with legal counsel, management believes that the ultimate outcome in such proceedings, either individually or in the aggregate, will not have a material adverse effect on the Company’s business, consolidated results of operations, financial condition, or cash flows.

It is possible, however, that future developments could result in an unfavorable outcome for or resolution of any of these proceedings, which may be material to the Company’s results of operations for a given fiscal period.

5 unchanged sentences

On April 27, 2022, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation to remove the classification and designation for the Series D Preferred Stock.

As of March 31, 2023, there were no shares of preferred stock issued or outstanding.

As of June 30, 2023, there were no shares of preferred stock issued or outstanding.

Effective July 23, 2021, the Company’s Board of Directors approved an amendment to the Company’s stock repurchase program originally established in October 2019 (“2019 Program”) that increased the amount of the Company’s Class A common stock that may be repurchased under the 2019 Program from a maximum of $ 180.0 million to a maximum of $ 276.5 million and extended the term of the 2019 Program from October 31, 2021, to October 31, 2022.

2 unchanged sentences

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

No shares were repurchased during the three month period ended March 31, 2023.

During the three and six month periods ended June 30, 2023, the Company repurchased 1,128,087 shares at an average price of $ 17.75 per share under the 2022 Program.

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

During the three month period ended March 31, 2022, the Company repurchased 513,725 shares at an average price of $ 31.25 per share under the 2019 Program.

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

The 2022 Program repurchases during the six months ended June 30, 2022 were all completed during the second quarter of 2022.

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.

5 unchanged sentences

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

At March 31, 2023, Simmons Bank had approximately $ 330.1 million available for payment of dividends to the Company, without prior regulatory approval.

At June 30, 2023, Simmons Bank had approximately $ 285.9 million available for payment of dividends to the Company, without prior regulatory approval.

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

4 unchanged sentences

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

As of March 31, 2023, the Company and Simmons Bank met all capital adequacy requirements, including the capital conservation buffer, under the Basel III Capital Rules.

The Company’s CET1 ratio was 11.87 % at March 31, 2023.

As of June 30, 2023, the Company and Simmons Bank met all capital adequacy requirements, including the capital conservation buffer, under the Basel III Capital Rules.

The Company’s CET1 ratio was 11.92 % at June 30, 2023.

STOCK-BASED COMPENSATION

The Company’s Board of Directors has adopted various stock-based compensation plans.

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

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

The table below summarizes the transactions under the Company’s active stock-based compensation plans for the three months ended March 31, 2023:

The Company’s Board of Directors has adopted various stock-based compensation plans, including the 2023 Stock and Incentive Plan that was approved by shareholders and became effective April 18, 2023.

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

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

The table below summarizes the transactions under the Company’s active stock-based compensation plans for the six months ended June 30, 2023:

Stock Options

10 unchanged sentences

Forfeited/expired — — — — ( 138 ) 24.78

Balance, March 31, 2023 469 $ 22.58 — $ — 1,443 $ 25.01

Exercisable, March 31, 2023 469 $ 22.58

The following table summarizes information about stock options under the plans outstanding at March 31, 2023:

Balance, June 30, 2023 469 $ 22.58 — $ — 1,408 $ 24.41

Exercisable, June 30, 2023 469 $ 22.58

The following table summarizes information about stock options under the plans outstanding at June 30, 2023:

Options Outstanding Options Exercisable

9 unchanged sentences

$ 20.29 — $ 24.07 469 1.95 $ 22.58 469 $ 22.58

The table below summarizes the Company’s performance stock unit activity for the three months ended March 31, 2023:

The table below summarizes the Company’s performance stock unit activity for the six months ended June 30, 2023:

(In thousands) Performance Stock Units

2 unchanged sentences

Forfeited ( 53 )

Non-vested, March 31, 2023 538

Stock-based compensation expense was $ 4.9 million and $ 3.9 million during the three month periods ended March 31, 2023 and 2022, respectively.

Non-vested, June 30, 2023 529

Stock-based compensation expense was $ 8.0 million and $ 8.2 million during the six month periods ended June 30, 2023 and 2022, respectively.

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

There was no unrecognized stock-based compensation expense related to stock options at March 31, 2023.

Unrecognized stock-based compensation expense related to non-vested stock awards and stock units was $ 23.9 million at March 31, 2023.

There was no unrecognized stock-based compensation expense related to stock options at June 30, 2023.

Unrecognized stock-based compensation expense related to non-vested stock awards and stock units was $ 21.3 million at June 30, 2023.

At such date, the weighted-average period over which this unrecognized expense is expected to be recognized was 1.7 years.

There was no intrinsic value of stock options outstanding and stock options exercisable at March 31, 2023.

Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $ 17.49 as of March 31, 2023, and the exercise price multiplied by the number of options outstanding.

Total intrinsic value of stock options exercised during the three months ended March 31, 2023 was $ 6,000 , while there was no intrinsic value of stock options exercised during the three months ended March 31, 2022.

There was no intrinsic value of stock options outstanding and stock options exercisable at June 30, 2023.

Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $ 17.25 as of June 30, 2023, and the exercise price multiplied by the number of options outstanding.

Total intrinsic value of stock options exercised during the six months ended June 30, 2023 was $ 6,000 , while there was no intrinsic value of stock options exercised during the six months ended June 30, 2022.

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

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

There were no stock options granted during the three months ended March 31, 2023 and 2022.

There were no stock options granted during the six months ended June 30, 2023 and 2022.

EARNINGS PER SHARE (“EPS”)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands, except per share data) 2023 2022 2023 2022

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Diluted earnings per share $ 0.46 $ 0.21 $ 0.82 $ 0.77

There were 422,180 stock options excluded from the three months ended March 31, 2023 earnings per share calculation due to the related stock option exercise price exceeding the average market price of the Company’s stock during the period.

There were no stock options excluded from the earnings per share calculation for the three months ended March 31, 2022 due to the average market price of the Company’s stock exceeding the related stock option exercise price.

There were 469,280 stock options excluded from the three and six months ended June 30, 2023 earnings per share calculation due to the related stock option exercise price exceeding the average market price of the Company’s stock during the periods.

There were 6,610 stock options excluded from the earnings per share calculation for the three months ended June 30, 2022 due to the related stock option exercise price exceeding the average market price of the Company’s stock during the period.

There were no stock options excluded from the earnings per share calculation for the six months ended June 30, 2022 due to the average market price of the Company’s stock exceeding the related stock option exercise price during the period.

ADDITIONAL CASH FLOW INFORMATION

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

Three Months Ended

Six Months Ended

(In thousands) 2023 2022

Interest paid $ 224,345 $ 36,049

Income taxes paid (refunded) 207 ( 363 )

Income taxes paid 1,425 4,881

Transfers of loans to foreclosed assets held for sale 2,274 581

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OTHER INCOME AND OTHER OPERATING EXPENSES

Other income for the three months ended March 31, 2023 and 2022 was $ 11.3 million and $ 7.3 million, respectively.

Included in other income in the first quarter 2023 was a $ 4.0 million legal reserve recapture associated with previously disclosed legal matters.

Other income for the three and six months ended June 30, 2023 was $ 9.8 million and $ 21.1 million, respectively.

Other income for the same periods in 2022 was $ 6.8 million and $ 14.1 million, respectively.

Included in other income during the six month period ended June 30, 2023 was a $ 4.0 million legal reserve recapture associated with previously disclosed legal matters.

Additionally, other income increased on a year-over-year basis, primarily as a result of fair value adjustments associated with certain equity investments and death benefits from bank owned life insurance.

Other operating expenses consisted of the following:

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

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

At March 31, 2023, the Company had outstanding commitments to extend credit aggregating approximately $ 711.9 million and $ 5.01 billion for credit card commitments and other loan commitments, respectively.

At June 30, 2023, the Company had outstanding commitments to extend credit aggregating approximately $ 717.1 million and $ 4.71 billion for credit card commitments and other loan commitments, respectively.

At December 31, 2022, the Company had outstanding commitments to extend credit aggregating approximately $ 696.7 million and $ 5.64 billion for credit card commitments and other loan commitments, respectively.

As of March 31, 2023, the Company had outstanding commitments to originate fixed-rate mortgage loans of approximately $ 35.4 million.

As of June 30, 2023, the Company had outstanding commitments to originate fixed-rate mortgage loans of approximately $ 30.4 million.

At December 31, 2022, the Company had outstanding commitments to originate fixed-rate mortgage loans of approximately $ 21.1 million.

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

The Company had total outstanding letters of credit amounting to $ 46.7 million and $ 44.4 million at March 31, 2023, and December 31, 2022, respectively, with terms ranging from 9 months to 15 years.

At March 31, 2023 and December 31, 2022, the Company had no deferred revenue under standby letter of credit agreements.

The Company had total outstanding letters of credit amounting to $ 52.0 million and $ 44.4 million at June 30, 2023, and December 31, 2022, respectively, with terms ranging from 9 months to 15 years.

At June 30, 2023 and December 31, 2022, the Company had no deferred revenue under standby letter of credit agreements.

The Company has purchased letters of credit from the FHLB as security for certain public deposits.

The amount of the letters of credit was $ 285.6 million and $ 265.7 million at March 31, 2023 and December 31, 2022, respectively, and they expire in less than one year from issuance.

The amount of the letters of credit was $ 245.2 million and $ 265.7 million at June 30, 2023 and December 31, 2022, respectively, and they expire in less than one year from issuance.

FAIR VALUE MEASUREMENTS

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

At March 31, 2023 and December 31, 2022, the aggregate fair value of mortgage loans held for sale exceeded their cost.

At June 30, 2023 and December 31, 2022, the aggregate fair value of mortgage loans held for sale exceeded their cost.

Derivative instruments – The Company’s derivative instruments are reported at fair value utilizing Level 2 inputs.

The Company obtains fair value measurements from dealer quotes.

The following table sets forth the Company’s financial assets by level within the fair value hierarchy that were measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022.

The following table sets forth the Company’s financial assets by level within the fair value hierarchy that were measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022.

Fair Value Measurements Using

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Unobservable Inputs

March 31, 2023

June 30, 2023

Available-for-sale securities

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As the Company’s primary objective in the event of default would be to liquidate the collateral to settle the outstanding balance of the loan, collateral that is less marketable would receive a larger discount.

The following table sets forth the Company’s assets by level within the fair value hierarchy that were measured at fair value on a nonrecurring basis as of March 31, 2023 and December 31, 2022.

The following table sets forth the Company’s assets by level within the fair value hierarchy that were measured at fair value on a nonrecurring basis as of June 30, 2023 and December 31, 2022.

Fair Value Measurements Using

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Unobservable Inputs

March 31, 2023

June 30, 2023

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

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Foreclosed assets and other real estate owned (1)

3,052 — — 3,052

December 31, 2022

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

(2) Identified reserves of $ 10,770,000 and $ 5,214,000 were related to collateral-dependent loans for which fair value re-measurements took place during the periods ended March 31, 2023 and December 31, 2022, respectively.

(2) Identified reserves of $ 12.8 million and $ 5.2 million were related to collateral-dependent loans for which fair value re-measurements took place during the periods ended June 30, 2023 and December 31, 2022, respectively.

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

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

March 31, 2023

June 30, 2023

Financial assets:

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Derivative credit exposure is monitored on an ongoing basis for each customer transaction and aggregate exposure to each counterparty is tracked.

The Company has set a maximum outstanding notional contract amount at 10 % of the Company’s assets.

Fair Value Hedges

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The hedging strategy converts the fixed interest rates to variable interest rates based on federal funds rates.

The two year forward start date for these swaps will be effective beginning in the third quarter of 2023 and 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.

The two year forward start date for these swaps occurs during the third quarter of 2023 and 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.

The following table summarizes the fair value hedges recorded in the accompanying consolidated balance sheets.

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(In thousands) Balance Sheet Location Weighted Average Pay Rate Receive Rate Notional Fair Value Notional Fair Value

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Carrying Amount of Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets

Line Item on the Balance Sheet (In thousands) March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022

Line Item on the Balance Sheet (In thousands) June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022

Investment securities - Available-for-sale $ 926,745 $ 944,115 $ 120,919 $ 106,321

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(In thousands) Notional Fair Value Notional Fair Value

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

The notional amount of these contingent agreements is $ 11.3 million as of March 31, 2023.

The notional amount of these contingent agreements is $ 20.1 million as of June 30, 2023.

Energy Hedging

The Company provides energy derivative services to qualifying, high quality oil and gas borrowers for hedging purposes.

The Company, from time-to-time, provides energy derivative services to qualifying, high quality oil and gas borrowers for hedging purposes.

The Company serves as an intermediary on energy derivative products between the Company’s borrowers and dealers.

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

The outstanding notional value as of March 31, 2023 for energy hedging Customer Sell to Company swaps were $ 782,100 and the corresponding Company Sell to Dealer swaps were $ 782,100 and the corresponding net fair value of the derivative asset and derivative liability was $ 23,800 .

During the second quarter of 2023, the Company’s remaining energy hedge swap contracts expired and there were no outstanding notional values related to these contracts as of June 30, 2023.

Currently, the Company generally does not intend to offer hedging services to any remaining energy related customers.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Results of Review of Interim Financial Statements

We have reviewed the consolidated balance sheet of Simmons First National Corporation and subsidiaries (“the Company”) as of March 31, 2023, and the related consolidated statements of income, comprehensive income (loss), stockholders’ equity and cash flows for the three-month periods ended March 31, 2023 and 2022, and the related notes (collectively referred to as the “interim financial information or statements”).

We have reviewed the consolidated balance sheet of Simmons First National Corporation and subsidiaries (“the Company”) as of June 30, 2023, and the related consolidated statements of income, comprehensive income (loss) and stockholders’ equity for the three and six month periods ended June 30, 2023 and 2022, and cash flows for the six month periods ended June 30, 2023 and 2022, and the related notes (collectively referred to as the “interim financial information or statements”).

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

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Little Rock, Arkansas

August 4, 2023

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

What changed 10-Q

Item 1. Financial Statements