What changed in this filing

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Item 1. Business

2024-02-27 compared with 2023-02-27 · 35 added, 53 removed, 370 unchanged (19% of the section changed)

13 unchanged sentences

Simmons Bank offers commercial banking products and services to business and other corporate customers.

Simmons Bank extends loans for a broad range of corporate purposes, including financing commercial real estate, construction of particular properties, commercial and industrial uses, acquisition and equipment financings, and other general corporate needs.

Simmons Bank extends loans for a broad range of corporate purposes, including (among others) financing commercial real estate, construction of particular properties, commercial and industrial uses, acquisition and equipment financings, and other general corporate needs.

Simmons Bank also engages in small business administration (“SBA”) and agricultural finance lending, and it offers corporate credit card products, as well as corporate deposit products and treasury management services.

In addition, Simmons Bank offers a variety of consumer banking products and services, including savings, time, and checking deposit products;

In addition, Simmons Bank offers a variety of consumer banking products and services, including (among others) savings, time, and checking deposit products;

ATM services;

4 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 as well as management of investment accounts).

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 others, administration of estates and personal trusts as well as 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, Metro and Corporate Bank Strategy

Community and Commercial Banking Strategy

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

During 2014, we consolidated all separately chartered banks into Simmons Bank in order to more effectively meet the increased regulatory burden facing banks, reduce certain operating costs, and more efficiently perform operational duties.

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.

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)

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;

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;

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

To both effectively compete for and service the needs of different types of customers, Simmons Bank now operates using two main groups, a community banking group (which generally focuses on small-to-mid-size customer relationships) and a commercial banking group (which generally focuses on larger, more complex customers with intricate or unique banking needs).

Both of these groups are supported by Simmons Bank’s retail, private banking, trust and various operations divisions.

Growth Strategy

17 unchanged sentences

(“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.

34 unchanged sentences

We acquired approximately $1.5 billion in assets and added 22 branches to the Simmons Bank footprint, substantially enhancing our retail presence within the St.

Louis market, and entering the state of Illinois for the first time.

Louis market area.

The systems conversion was completed in April 2019, at which time Reliance Bank was merged into Simmons Bank.

5 unchanged sentences

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

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

with $847.2 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.

7 unchanged sentences

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.

Through our “Better Bank” initiative, we have also focused 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.

21 unchanged sentences

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 Officers, an Agriculture Loan Committee, an Executive Loan Committee, a 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 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.

27 unchanged sentences

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 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 leadership talent.

5 unchanged sentences

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.

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

In 2023, we continued our focus 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.

30 unchanged sentences

The approval of the Arkansas Bank Commissioner is, for instance, 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.

Under the foregoing dividend restrictions, and while maintaining its “well capitalized” status, at December 31, 2022, Simmons Bank had paid to the Company all available dividends.

Under the foregoing dividend restrictions, and while maintaining its “well capitalized” status, at December 31, 2023, Simmons Bank had approximately $54.4 million available for payment of dividends to the Company, without prior regulatory approval.

While past dividends are not necessarily indicative of amounts that may be paid or available to be paid in future periods, net profits of Simmons Bank and cash balances at the Company are projected to be sufficient to pay quarterly dividends on the Company’s common stock at current levels and interest and principal on the Company’s debt as well as meet other liquidity needs.

120 unchanged sentences

As described above in the section titled Potential Enforcement Action for Bank Holding Companies and Banks , the FDIC may terminate deposit insurance upon a finding that an institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

In November 2023, the FDIC issued a final rule to implement a special assessment to recover losses to the DIF incurred as a result of recent bank failures and the FDIC’s use of the systemic risk exception to cover certain deposits that were otherwise uninsured.

The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion) and will be assessed at a quarterly rate of 3.36 basis points, over eight quarterly assessment periods, beginning in the first quarter of 2024.

As a result of this final rule, we accrued $10.5 million related to this assessment in the fourth quarter of 2023.

This amount represents our current expectation of the full amount of the assessment based on our total uninsured deposits as of December 31, 2022.

Under the final rule, the estimated loss pursuant to the systemic risk determination will be periodically adjusted, and the FDIC has retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment on a one-time basis.

The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain.

Community Reinvestment Act

2 unchanged sentences

Simmons Bank received a “satisfactory” CRA rating during its most recent exam.

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

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.

In October 2023, the federal prudential regulatory agencies adopted substantial revisions to the regulations implementing the CRA.

The Company continues to assess the impact of the adopted changes to the CRA regulations.

UDAP and UDAAP

7 unchanged sentences

In addition, the GLBA requires that financial institutions, such as our subsidiary bank, implement comprehensive written information security programs that include administrative, technical, and physical safeguards to protect consumer information and data.

Further, pursuant to interpretive guidance issued under the GLBA and certain state laws, financial institutions are also required to notify customers of security breaches that result in unauthorized access to their nonpublic personal information.

Further, pursuant to interpretive guidance issued under the GLBA and certain state laws, financial institutions are also generally required to notify customers of security breaches that result in unauthorized access to their nonpublic personal information.

Although these laws and regulations impose compliance costs and create obligations and, in some cases, reporting obligations, and compliance with all of the laws, regulations, and reporting obligations may require significant resources of the Company and our subsidiary bank, these laws and regulations do not materially affect our products, services or other business activities.

14 unchanged sentences

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.

In December 2021, the Financial Crimes Enforcement Network (“FinCEN”) issued the first of three planned rules, which rule was adopted to implement a national beneficial ownership reporting framework.

In December 2023, FinCEN issued the second of the three planned rules, which rule was adopted to implement protocols for access to and disclosure of beneficial ownership information.

A subsequent rulemaking is expected to update the customer due diligence requirements that apply to the Company and the Bank to be consistent with this framework.

The Company and the Bank continue to monitor legislative, regulatory and supervisory developments related thereto.

Federal Home Loan Bank of Dallas

Simmons Bank is a member of the Federal Home Loan Bank of Dallas (“FHLB-Dallas”), which is one of 11 regional Federal Home Loan Banks (“FHLBs”) that provide funding to their members for making housing loans as well as for affordable housing and community development loans.

Simmons Bank is a member of the Federal Home Loan Bank of Dallas (“FHLB-Dallas”), which is one of 11 regional Federal Home Loan Banks that provide funding to their members for making housing loans as well as for affordable housing and community development loans.

Each FHLB serves as a reserve, or central bank, for the members within its assigned region and makes loans to its members in accordance with policies and procedures established by the board of directors of that FHLB.

4 unchanged sentences

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

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.

Specifically, Nasdaq implemented listing standards that require listed companies to adopt clawback policies, or policies mandating the recovery of excess incentive compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

We adopted a compensation recovery policy pursuant to the Nasdaq listing standards and the policy is included as Exhibit 97 to this Annual Report on Form 10-K.

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.

2 unchanged sentences

Because the Company and Simmons Bank have exceeded $10 billion in assets, each of the Company and the Bank are subject to heightened requirements (as compared to smaller community banking organizations) that are imposed by various federal banking law and regulations.

Among other things, the Dodd-Frank Act, through the Durbin Amendment, and associated Federal Reserve regulations cap the interchange rate on debit card transactions that can be charged by banks that, together with their affiliates, have at least $10 billion in assets at $0.21 per transaction plus five basis points multiplied by the value of the transaction.

The cap goes into effect July 1st of the year following the year in which a bank reaches the $10 billion asset threshold.

Simmons Bank became subject to the interchange rate cap effective July 1, 2018.

In October 2023, the Federal Reserve proposed lowering the maximum interchange fee, and the Company is monitoring developments related to the proposal and continuing to assess its potential impact.

As of December 31, 2017, the Company exceeded $15 billion in total assets, and the grandfather provisions applicable to its trust preferred securities no longer apply, and trust preferred securities are no longer included as Tier 1 capital.

9 unchanged sentences

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.

For example, in January 2024, the CFPB proposed rules that would subject (with certain exceptions) overdraft services provided by financial institutions with more than $10 billion in assets to the provisions of the Truth in Lending Act and other consumer financial protection laws.

The Company is currently evaluating the potential impact of the proposed rules and monitoring developments with respect thereto.

Pending Legislation

6 unchanged sentences

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