What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-07 compared with 2023-11-06 · 189 added, 239 removed, 562 unchanged (43% of the section changed)

1 unchanged sentence

As permitted by SEC rules, management presents a sequential quarterly analysis of the Company’s performance as we believe that comparing current quarter results to those of the immediately preceding fiscal quarter is more useful in identifying current business trends and provides a more relevant analysis of our business results.

Accordingly, we have compared our results of operations for the three months ended September 30, 2023 to our results of operations for the three months ended June 30, 2023, as applicable, throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.

For additional information regarding the Company’s results for the three months ended June 30, 2023, please refer to our second quarter Form 10-Q filed with the SEC on August 4, 2023.

During the first nine months of 2023, significant turmoil within the financial services industry, which was fueled by the failure of certain regional banks that utilized specialized business models as well as continued inflationary pressures and recessionary fears, resulted in industry concerns around the level of uninsured, non-collaterlized deposits, liquidity, capital and operations.

Despite these challenges, which have seemed to abate slightly in the third quarter of 2023, we remain resolute in serving our customers’ financial needs while diligently focusing on maintaining strong asset quality, capital and liquidity positions, and on strategies to improve our financial performance and maximize the value of our shareholders’ investment in the current rate environment.

Accordingly, we have compared our results of operations for the three months ended March 31, 2024 to our results of operations for the three months ended December 31, 2023 and March 31, 2023, as applicable, throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.

During the first three months of 2024, we delivered solid results in the quarter that clearly reflect our driving principles centered on a strong risk management culture, profitability and organic growth.

We remain resolute in serving our customers’ financial needs while diligently focusing on maintaining strong asset quality, capital and liquidity positions, and on strategies to improve our financial performance and maximize the value of our shareholders’ investment in the current rate environment.

We believe that our liquidity is solid and that our capital is strong:

• Deposits were relatively stable during the quarter, which highlights the granularity of our deposit base, as well as the long-term relationships we have with many of our customers.

Total deposits as of September 30, 2023 were $22.23 billion, compared to $22.55 billion as of December 31, 2022.

Uninsured deposits (excluding collateralized deposits and intercompany deposits) as of September 30, 2023 were approximately $4.63 billion, or 21% of total deposits.

• Capital levels were steady during the quarter, with all regulatory capital ratios remaining significantly above “well-capitalized” guidelines as of September 30, 2023 (see Table 11 in the Risk Based Capital section below).

As of September 30, 2023, our ratio of common equity to total assets was 11.92%, the ratio of tangible common equity to tangible assets was 7.07% and our Tier 1 leverage ratio was 9.31%.

• Key credit quality metrics as of September 30, 2023 also remained solid, with our nonperforming loan coverage ratio at 267% and our allowance for credit losses as a percent of total loans ratio was 1.30%.

• Significant liquidity position with a loan to deposit ratio of 75% as of September 30, 2023, compared to 72% as of December 31, 2022.

Additional liquidity sources available to us as of September 30, 2023 totaled $11.45 billion and our uninsured, non-collateralized deposit coverage ratio was 2.5x.

Our net income for the three months ended September 30, 2023 was $47.2 million, or $0.37 diluted earnings per share, compared to net income of $58.3 million, or $0.46 diluted earnings per share, for the three months ended June 30, 2023.

Included in each comparative period end results were certain items related to our acquisitions, early retirement program costs and branch right sizing initiatives.

Excluding these certain items and the tax effect, adjusted earnings for the three months ended September 30, 2023 were $48.8 million, or $0.39 adjusted diluted earnings per share, compared to $61.1 million, or $0.48 adjusted diluted earnings per share, for the three months ended June 30, 2023.

Net income for the nine months ended September 30, 2023 was $151.2 million, or $1.19 diluted earnings per share, compared to net income of $173.2 million, or $1.40 diluted earnings per share for the nine months ended September 30, 2022.

Included in the results for the nine months ended September 30, 2023 were certain items related to acquisition costs, early retirement costs and branch right sizing initiatives, while the results for the nine months ended September 30, 2022 included certain items related to acquisition costs, branch right sizing initiatives, the Day 2 CECL provision required for loans and unfunded commitments acquired in connection with the Spirit acquisition, loss from early retirement of TruPS, gain on sale of intellectual property and a donation to Simmons First Foundation.

Excluding these certain items and the tax effect, adjusted earnings for the nine months ended September 30, 2023 were $157.2 million, or $1.24 adjusted diluted earnings per share, compared to $217.5 million, or $1.76 adjusted diluted earnings per share for the nine months ended September 30, 2022.

Simmons Bank was named to Forbes magazine’s 2023 list of “World’s Best Banks” for the fourth consecutive year and recognized by Forbes’ as one of “America’s Best Midsize Employers” for 2023.

We continue to work to expand our suite of digital solutions to provide an enhanced customer experience to “bank when you want, where you want.”

Our Better Bank Initiative, which is focused on programs designed to optimize operational processes and increase capacity to capitalize on organic growth opportunities, achieved continued success across multiple fronts.

During the third quarter of 2023, we completed our early retirement program, which is expected to result in approximately $5.1 million in annual cost savings.

Extensive progress was also completed on other identified opportunities related to process improvements and streamlining or upgrading systems.

As a result, we were able to achieve all of the original $15 million of annual cost savings we previously estimated by the end of the third quarter, one quarter sooner than anticipated.

• Deposits were stable during the quarter, which highlights the granularity of our deposit base, as well as the long-term relationships we have with many of our customers.

Total deposits as of March 31, 2024 were $22.35 billion, compared to $22.24 billion as of December 31, 2023.

Uninsured deposits (excluding collateralized deposits and intercompany deposits) as of March 31, 2024 were approximately $4.64 billion, or 21% of total deposits.

• Capital levels were steady during the quarter, with all regulatory capital ratios remaining significantly above “well-capitalized” guidelines as of March 31, 2024 (see Table 11 in the Risk-Based Capital section below).

As of March 31, 2024, our ratio of common equity to total assets was 12.56%, the ratio of tangible common equity to tangible assets was 7.75% and our Tier 1 leverage ratio was 9.44%.

• Key credit quality metrics as of March 31, 2024 also remained solid, with our nonperforming loan coverage ratio at 212% and our allowance for credit losses as a percent of total loans ratio was 1.34%.

• Significant liquidity position with a loan to deposit ratio of 76% as of March 31, 2024 and December 31, 2023.

Additional liquidity sources available to us as of March 31, 2024 totaled $11.46 billion and our uninsured, non-collateralized deposit coverage ratio was 2.5x.

Net income for the three months ended March 31, 2024 was $38.9 million, or $0.31 diluted earnings per share, compared to net income of $23.9 million, or $0.19 diluted earnings per share, and $45.6 million, or $0.36 diluted earnings per share, for the three months ended December 31, 2023 and March 31, 2023, respectively.

Included in the results for the three months ended March 31, 2024 were certain items related to a FDIC special assessment and early retirement program costs;

results for the three months ended December 31, 2023 included certain items related to a FDIC special assessment, early retirement program costs and loss on sale of securities;

and results for the three months ended March 31, 2023 included certain items related to acquisition costs.

Also included in each comparative period end results were certain items related to branch right sizing initiatives.

Excluding these certain items and the tax effect, adjusted earnings for the three months ended March 31, 2024 were $40.4 million, or $0.32 adjusted diluted earnings per share, compared to $50.2 million, or $0.40 adjusted diluted earnings per share, and $47.3 million, or $0.37 adjusted diluted earnings per share, for the three months ended December 31, 2023 and March 31, 2023, respectively.

Credit trends throughout the industry are beginning to normalize after an extended period at historically low levels.

Asset quality metrics remain strong and reflect our conservative credit culture, as well as our focus on maintaining disciplined pricing and conservative underwriting standards given the current economic environment.

Total nonperforming loans as of September 30, 2023, December 31, 2022, and September 30, 2022 were $81.9 million, $58.9 million, and $57.8 million, respectively.

Non-performing assets as a percent of total assets were 0.32% at September 30, 2023, compared to 0.23% at both periods ended December 31, 2022 and September 30, 2022.

Stockholders’ equity as of September 30, 2023 was $3.29 billion, book value per share was $26.26 and tangible book value per share was $14.77.

We repurchased 1,128,962 shares of our common stock under the 2022 Program during the third quarter of 2023.

Total loans were $16.77 billion at September 30, 2023, compared to $16.14 billion at December 31, 2022.

The increase in total loans during the nine month period was supported by diverse growth in terms of type and geographic market.

Our unfunded commitments were $4.32 billion and $5.64 billion as of September 30, 2023 and December 31, 2022, respectively.

While unfunded commitments are considered a key indicator of future loan growth, the rapid increase in interest rates, coupled with softer economic conditions, have resulted in lower activity in our commercial loan pipeline, which was $877.3 million as of September 30, 2023, compared to $1.12 billion at December 31, 2022.

Total nonperforming loans as of March 31, 2024, December 31, 2023, and March 31, 2023 were $107.3 million, $84.5 million, and $63.7 million, respectively.

Non-performing assets as a percent of total assets were 0.41% at March 31, 2024, compared to 0.33% at December 31, 2023 and 0.26% at March 31, 2023.

Stockholders’ equity as of March 31, 2024 was $3.44 billion, book value per share was $27.42 and tangible book value per share was $16.02.

Total loans were $17.00 billion at March 31, 2024, compared to $16.85 billion at December 31, 2023, reflecting our focus on maintaining disciplined pricing strategies and prudent underwriting standards given in light of uncertainty related to near-term economic activity and conditions in our markets.

Our unfunded commitments were $4.14 billion and $4.17 billion as of March 31, 2024 and December 31, 2023, respectively.

Our commercial loan pipeline experienced growth for the third consecutive quarter and totaled $1.01 billion as of March 31, 2024, compared to $948.2 million at December 31, 2023.

In our discussion and analysis of our financial condition and results of operation in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we provide certain financial information determined by methods other than in accordance with US GAAP.

1 unchanged sentence

See the GAAP Reconciliation of Non-GAAP Financial Measures section below for additional discussion and reconciliations of non-GAAP measures.

Simmons First National Corporation is a Mid-South based financial holding company that, as of September 30, 2023, has approximately $27.6 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

Simmons First National Corporation is a Mid-South based financial holding company that, as of March 31, 2024, has approximately $27.4 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

CRITICAL ACCOUNTING ESTIMATES

11 unchanged sentences

The actual amounts of credit losses realized in the near term could differ from the amounts estimated in arriving at the allowance for credit losses reported in the financial statements.

In the first quarter of 2023, we refined the estimation process by improving systems, models, processes, methodology, and assumptions used within the calculation.

After multiple parallel runs with the former process, it was determined that the changes did not and are not expected to result in material differences of results.

Acquisition Accounting, Loans

5 unchanged sentences

The net premium or discount on PCD loans is adjusted by our allowance for credit losses recorded at the time of acquisition.

The remaining net premium or discount is accreted or amortized into interest income over the remaining life of the loan using a constant yield method.

The remaining net premium or

discount is accreted or amortized into interest income over the remaining life of the loan using a constant yield method.

The net premium or discount on loans that are not classified as PCD (“non-PCD”), that includes credit and non-credit components, is accreted or amortized into interest income over the remaining life of the loan using a constant yield method.

3 unchanged sentences

Other intangible assets represent purchased assets that also lack physical substance but can be separately distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability.

We perform an annual goodwill impairment test, and more than annually if circumstances warrant, in accordance with ASC Topic 350, Intangibles – Goodwill and Other , as amended by ASU 2011-08 – Testing Goodwill for Impairment and ASU 2017-04 - Intangibles – Goodwill and Other.

We perform an annual goodwill impairment test, and more than annually if circumstances warrant, in accordance with ASC Topic 350, Intangibles – Goodwill and Other , as amended by ASU 2011-08 – T esting Goodwill for Impairment and ASU 2017-04 - Intangibles – Goodwill and Other .

ASC Topic 350 requires that goodwill and intangible assets that have indefinite lives be reviewed for impairment annually or more frequently if certain conditions occur.

Our assessment depends on several assumptions which are dependent on market and economic conditions.

Impairment losses on recorded goodwill, if any, will be recorded as operating expenses.

To quantitatively test goodwill for impairment, a present value of discounted cash flows calculation is completed and relies on several assumptions that have a level of subjectivity and judgement.

5 unchanged sentences

Assumptions used in calculating the cost of equity are obtained from market and third-party data.

Results are compared to book value and no impairment was indicated as of September 30, 2023.

Results are compared to book value;

no impairment was indicated as of March 31, 2024.

Judgement is inherent in assessing goodwill for impairment.

The various assumptions used in assessing goodwill for impairment involve uncertainties that are beyond our control and could cause actual results to differ materially from those projected.

Impairment losses on recorded goodwill, if any, will be recorded as operating expenses.

Stock-Based Compensation Plans

1 unchanged sentence

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 awarding of restricted stock, restricted stock units, performance stock units or stock awards granted to directors, officers and other key employees.

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

In accordance with ASC Topic 718, Compensation – Stock Compensation , the fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that uses various assumptions.

15 unchanged sentences

In the last several years, on average, approximately 41% of our loan portfolio and approximately 89% of our time deposits have repriced in one year or less.

As of September 30, 2023, our interest rate sensitivity shows that approximately 41% of our loans and 95% of our time deposits will reprice in the next year.

As of March 31, 2024, our interest rate sensitivity shows that approximately 44% of our loans and 94% of our time deposits will reprice in the next year.

Net Interest Income - Sequential Quarter Analysis

For the three month period ended September 30, 2023, net interest income on a fully taxable equivalent basis was $159.9 million, a decrease of $9.4 million, or 5.5%, compared to the three months ended June 30, 2023.

The decrease in net interest income was primarily the result of a $13.5 million increase in fully tax equivalent interest income, more than offset by a $22.9 million increase in interest expense.

The increase in interest income primarily resulted from a $11.6 million increase in interest income on loans, coupled with an increase of $2.3 million in interest income on investment securities.

The majority of the increase in interest income provided by loans was due to yield increases during the quarter, as a 19 basis point increase in loan yield resulted in $10.8 million of interest income.

The loan yield for the third quarter of 2023 was 6.08% compared to 5.89% from the preceding sequential quarter.

The increase in interest income on investment securities was primarily due to a 25 basis point increase in our taxable security portfolio.

The increase in both loan and investment yield was due to the continued rising rate environment.

The $22.9 million increase in interest expense is mostly due to the increase in deposit account rates and change in deposit mix as consumers migrate toward higher rate deposits, principally certificates of deposit, in the current higher rate environment.

For the three month period ended March 31, 2024, net interest income on a fully taxable equivalent basis was $158.3 million, a decrease of $3.8 million, or 2.4%, compared to the three months ended December 31, 2023.

The decrease in net interest income was primarily the result of a $1.0 million decrease in fully tax equivalent interest income, coupled by a $2.9 million increase in interest expense.

The decrease in interest income primarily resulted from a $61,000 increase in interest income on loans, more than offset by a decrease of $919,000 in interest income on investment securities.

The marginal increase in interest income provided by loans reflects an increase in loan volume of $1.7 million, offset by a $1.6 million decrease in interest income related to loan yield.

While the loan yield for the first quarter of 2024 was 6.24% compared to 6.20% from the preceding sequential quarter, representing a 4 basis point increase, the lower number of days during the three month period ended March 31, 2024 led to the decrease in interest income related to loan yield.

The decrease in interest income on investment securities was primarily due to a $2.5 million decrease in volume related to our taxable investment portfolio, as our portfolio experienced pay downs and maturities over the period, which was reinvested into our loan portfolio.

Also contributing to the decrease in the average portfolio balance of our investment securities portfolio was a targeted sale of $241.1 million of lower-yielding AFS securities late in the fourth quarter of 2023, the proceeds of which we used to pay off higher-rate wholesale fundings.

The decrease in interest income on taxable investment securities due to volume decreases was mitigated by a $1.8 million increase in interest income on taxable investment securities due to yield increases of 22 basis points.

The $2.9 million increase in interest expense is mostly due to the increase in deposit account rates and change in deposit mix as consumers migrate toward higher rate deposits in the current higher rate environment.

Interest expense increased $6.0 million due to the increase in rate of 17 basis points on interest-bearing deposit accounts as pricing measures were implemented to defend the core deposit base.

Interest expense increased $4.6 million due to the increase in deposit volume over the period.

The increases due to deposit volume and yields were partially offset by the reduced reliance on other wholesale borrowings sources, primarily Federal Home Loan Bank advances during the third quarter of 2023, which led to a $2.2 million decrease in interest expense.

Interest expense also increased $2.0 million due to the increase in deposit volume over the period.

The increases due to deposit volume and yields were partially offset by the reduced reliance on other wholesale borrowings sources, which led to a $5.0 million decrease in interest expense.

Net Interest Income - Year-over-Year Analysis

Net interest income on a fully taxable equivalent basis for the nine month period ended September 30, 2023 decreased $28.8 million, or 5.3%, over the same period in 2022.

Net interest income on a fully taxable equivalent basis for the three month period ended March 31, 2024 decreased $25.8 million, or 14.0%, over the same period in 2023.

The decrease in net interest income on a fully taxable equivalent basis was the result of a $43.6 million increase in fully tax equivalent interest income, more than offset by a $69.4 million increase in interest expense.

The increase in interest income during the nine month period ended September 30, 2023 resulted from increases in interest income on loans and investments as a result of rising market interest rates.

The increase in interest income during the three month period ended March 31, 2024 resulted from increases in interest income on loans and investments, primarily as a result of rising market interest rates.

The increase in interest income on loans of $34.2 million reflects an increase in loan volume of $8.2 million coupled with a 57 basis point rise in loan yield that resulted in a $26.0 million increase.

The increase in our loan volume during the first nine months of 2023 was due to the Spirit acquisition in the second quarter of 2022, combined with solid organic loan growth over the comparative period.

The increase of $35.4 million in interest income on investment securities reflects an increase of $48.6 million in interest income on investment securities due to yield increases over the period of 125 basis points and 14 basis points for our taxable and non-taxable investment security portfolios, respectively.

The increase in interest income on investment securities due to yield increases was mitigated by a $13.2 million decrease due to the decline in our investment portfolio average balances which decreased by $915.2 million or 11.0%, as our portfolio experienced pay downs and maturities over the period, which was reinvested into our loan portfolio.

The $319.3 million increase in interest expense is mainly due to the increase in our deposit account rates over the period, combined with the additional deposit base from the Spirit acquisition and change in deposit mix as the market experiences a shift in consumer sentiment given the attractiveness of higher yielding time deposits in the current higher interest rate environment.

The increase in our loan volume was due to solid organic loan growth over the comparative period.

The increase of $9.2 million in interest income on investment securities is primarily related to an increase of $15.1 million in interest income on taxable investment securities due to yield increases over the period of 138 basis points.

The increase in interest income on taxable investment securities due to yield increases was mitigated by a $5.7 million decrease due to the decline in our taxable investment portfolio average balances which decreased by $768.5 million or 15.6%, as our portfolio experienced pay downs, maturities and a strategic sale as discussed above.

The $69.4 million increase in interest expense is mainly due to the increase in our deposit account rates over the period, combined with the change in deposit mix as the market experiences a shift in consumer sentiment given the attractiveness of higher yielding time deposits in the current higher interest rate environment.

Interest expense increased $55.4 million due to the increase in rate of 138 basis points on interest-bearing deposit accounts and increased $9.0 million due to the increase in deposit volume over the period.

Further, an increase of $2.8 million to interest expense was related to an increase in other borrowings during the same period.

The rate increase of 338 basis points in other borrowings resulted in an increase of $29.3 million, that was partially offset by a $1.1 million decrease in volume over the period.

We continually monitor and look for opportunities to fairly reprice our deposits while remaining competitive in this current challenging rate environment.

Net Interest Margin

Our net interest margin on a fully tax equivalent basis was 2.61% and 2.82% for the three and nine month periods ended September 30, 2023, as compared to 2.76% and 3.12% for the three months ended June 30, 2023 and the nine months ended September 30, 2022, respectively.

The decrease of 15 basis points in the net interest margin during the three months ended September 30, 2023 compared to the three months ended June 30, 2023 was primarily due to the rising deposit rate pressure from increased market competition and consumer migration toward higher rate deposits.

The decrease of 30 basis points in the net interest margin during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was due to the rising deposit rate pressure and change in deposit mix previously discussed, mitigated by the overall increase in our earning assets average balances over the comparative periods which has improved interest income in the rising rate environment.

Our net interest margin on a fully tax equivalent basis was 2.66% for the three month period ended March 31, 2024, as compared to 2.68% and 3.09% for the three months ended December 31, 2023 and March 31, 2023, respectively.

While net interest margin was relatively flat compared to the preceding sequential quarter with a decrease of 2 basis points, net interest margin decreased 43 basis points during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

The decrease when compared to the same period in the prior year was primarily due to the rising deposit rate pressure from increased market competition and consumer migration toward higher rate deposits.

Net Interest Income Tables

Tables 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the three months ended September 30, 2023 and June 30, 2023 and the nine months ended September 30, 2023 and 2022, respectively.

Tables 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

Analysis of Net Interest Margin

(FTE = Fully Taxable Equivalent using an effective tax rate of 26.135%)

Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30,

Three Months Ended

March 31, December 31, March 31,

(In thousands) 2024 2023 2023

9 unchanged sentences

Changes in Fully Taxable Equivalent Net Interest Margin

Three Months Ended Nine Months Ended

(In thousands) September 30, 2023 compared to June 30, 2023 September 30, 2023 compared to September 30, 2022

Three Months Ended

(In thousands) March 31, 2024 compared to December 31, 2023 March 31, 2024 compared to March 31, 2023

Increase (decrease) due to change in earning assets $ (382) $ 1,491

Increase due to change in earning asset yields 14,772 204,619

Decrease due to change in interest bearing liabilities (1,480) (24,390)

Increase (decrease) due to change in earning asset yields (576) 42,132

Increase (decrease) due to change in interest bearing liabilities 2,530 (9,781)

Decrease due to change in interest rates paid on interest bearing liabilities (5,383) (59,660)

Decrease in net interest income $ (3,811) $ (25,818)

Table 3 shows, for each major category of earning assets and interest bearing liabilities, the average (computed on a daily basis) amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for the three months ended September 30, 2023 and June 30, 2023 and the nine months ended September 30, 2023 and 2022, respectively.

Table 3 shows, for each major category of earning assets and interest bearing liabilities, the average (computed on a daily basis) amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

The table also shows the average rate earned on all earning assets, the average rate expensed on all interest bearing liabilities, the net interest spread and the net interest margin for the same periods.

4 unchanged sentences

Three Months Ended

September 30, 2023 June 30, 2023

Average Income/ Yield/ Average Income/ Yield/

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

Earning assets:

Interest bearing balances due from banks and federal funds sold $ 331,444 $ 3,569 4.27 $ 404,639 $ 4,023 3.99

Investment securities - taxable 4,638,486 34,734 2.97 4,821,231 32,745 2.72

Investment securities - non-taxable 2,617,152 21,563 3.27 2,627,192 21,253 3.24

Mortgage loans held for sale 9,542 178 7.40 9,560 154 6.46

Loans - including fees 16,758,597 256,757 6.08 16,702,403 245,151 5.89

Total interest earning assets 24,355,221 316,801 5.16 24,565,025 303,326 4.95

Non-earning assets 3,239,390 3,201,114

Total assets $ 27,594,611 $ 27,766,139

LIABILITIES AND STOCKHOLDERS’ EQUITY

Interest bearing liabilities:

Interest bearing transaction and savings deposits $ 10,682,767 $ 65,095 2.42 $ 11,011,746 $ 54,485 1.98

Time deposits 6,558,110 68,062 4.12 5,911,139 53,879 3.66

Total interest bearing deposits 17,240,877 133,157 3.06 16,922,885 108,364 2.57

Federal funds purchased and securities sold under agreements to repurchase 89,769 277 1.22 119,985 318 1.06

Other borrowings 1,222,557 16,450 5.34 1,449,403 18,612 5.15

Subordinated debt and debentures 366,085 6,969 7.55 366,047 6,696 7.34

Total interest bearing liabilities 18,919,288 156,853 3.29 18,858,320 133,990 2.85

Noninterest bearing liabilities:

Noninterest bearing deposits 5,032,631 5,276,267

Other liabilities 271,014 272,628

Total liabilities 24,222,933 24,407,215

Stockholders’ equity 3,371,678 3,358,924

Total liabilities and stockholders’ equity $ 27,594,611 $ 27,766,139

Net interest spread – FTE 1.87 2.10

Net interest margin – FTE $ 159,948 2.61 $ 169,336 2.76

Nine Months Ended

September 30, 2023 September 30, 2022

Average Income/ Yield/ Average Income/ Yield/

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

March 31, 2024 December 31, 2023 March 31, 2023

Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/

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

Earning assets:

3 unchanged sentences

Mortgage loans held for sale 9,048 148 6.58 7,644 143 7.42 5,470 82 6.08

Other loans held for sale — — — 10,552 3,061 38.78

Loans - including fees 16,900,496 262,414 6.24 16,793,211 262,353 6.20 16,329,761 228,257 5.67

19 unchanged sentences

Net interest margin – FTE $ 158,328 2.66 $ 162,139 2.68 $ 184,146 3.09

Table 4 shows changes in interest income and interest expense resulting from changes in both volume and interest rates for the three months ended September 30, 2023 as compared to the three months ended June 30, 2023 and the nine months ended September 30, 2023 and 2022, respectively.

Table 4 shows changes in interest income and interest expense resulting from changes in both volume and interest rates for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023 and March 31, 2023, respectively.

The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates in proportion to the relationship of absolute dollar amounts of the changes in rates and volume.

Volume/Rate Analysis

Three Months Ended Nine Months Ended

September 30, 2023 compared to June 30, 2023 September 30, 2023 compared to September 30, 2022

Three Months Ended

March 31, 2024 compared to December 31, 2023 March 31, 2024 compared to March 31, 2023

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

6 unchanged sentences

Mortgage loans held for sale 24 (19) 5 58 8 66

Other loans held for sale — — — (680) (2,381) (3,061)

Loans - including fees 1,671 (1,610) 61 8,190 25,967 34,157

7 unchanged sentences

Total (2,530) 5,383 2,853 9,781 59,660 69,441

(Decrease) increase in net interest income $ (2,777) $ (6,611) $ (9,388) $ 61,514 $ (90,275) $ (28,761)

Increase (decrease) in net interest income $ 2,148 $ (5,959) $ (3,811) $ (8,290) $ (17,528) $ (25,818)

PROVISION FOR CREDIT LOSSES

2 unchanged sentences

It is management’s practice to review the allowance on a monthly basis and, after considering the factors previously noted, to determine the level of provision made to the allowance.

The provision for credit losses for the three months ended September 30, 2023 was $7.7 million as compared to $61,000 for the three months ended June 30, 2023.

The change for the three month period ended September 30, 2023 as compared to the preceding quarter is primarily due to a $20.2 million expense related to loans and reflected loan growth, as well as the impact of updated economic assumptions, which was partially offset by the recapture of $11.3 million reflecting the continued decline in unfunded commitments and the recapture of $1.2 million based upon improvements in the value of select corporate bonds in the investment securities portfolio.

For the nine months ended September 30, 2023, our provision for credit losses was $32.0 million as compared to $14.0 million for the same period ended September 30, 2022.

The change for the nine months ended September 30, 2023 as compared to the same period ended September 30, 2022 is primarily due to the impacts described above, coupled with prior decreases in the value of select corporate bonds in the investment securities portfolio, while the nine months ended September 30, 2022 reflected the adjustments due to the Spirit Day 2 provision expense for the acquired loans and additional unfunded commitments added to our portfolio, offset by improved credit quality metrics and improved macroeconomic factors during the period.

For the three months ended March 31, 2024, our provision for credit losses was $10.2 million as compared to $24.2 million for the same period ended March 31, 2023.

Provision expense for the three months ended March 31, 2024 was related to loans and reflected loan growth in the quarter, as well as the impact of updated economic assumptions.

Provision expense for the same period ended March 31, 2023 consisted of a $10.9 million expense related to loans and was primarily due to the impacts described above, combined with a $13.3 million expense related to securities and was due to decreases in the value of corporate bonds in the investment securities portfolio.

NONINTEREST INCOME

1 unchanged sentence

Noninterest income also includes income on the sale of mortgage loans, income from the increase in cash surrender values of bank owned life insurance and gains (losses) from sales of securities.

For the three month period ended September 30, 2023, total noninterest income was $42.8 million, a decrease of approximately $2.2 million or 4.9%, compared to the three month period ended June 30, 2023.

The sequential decrease was primarily driven by the fair value adjustments related to Small Business Investment Company (“SBIC”) investments and death benefits from bank owned life insurance totaling $3.5 million recognized during the period ended June 30, 2023, and was partially offset by an incremental increase in bank owned life insurance income during the three month period ended September 30, 2023.

Noninterest income for the nine months ended September 30, 2023 increased by approximately $8.2 million or 6.5% as compared to the nine months ended September 30, 2022.

The increase as compared to the same period in 2022 was primarily due to the Spirit acquisition and attributable increased consumer base, coupled with a legal reserve recapture of $4.0 million previously disclosed and the fair value adjustments related to SBIC investments and death benefits from bank owned life insurance totaling $3.5 million discussed above.

The increase was partially offset by a $3.3 million decrease in mortgage lending income due to the rising interest rate environment and softening market conditions over the period, which slowed the demand for mortgage loans compared to the demand associated with the previous lower interest rate environment.

Table 5 shows noninterest income for the three month periods ended September 30, 2023 and June 30, 2023 and the nine months ended September 30, 2023 and 2022, respectively, as well as changes between periods.

For the three month period ended March 31, 2024, total noninterest income was $43.2 million, an increase of approximately $21.2 million or 96.5%, compared to the three month period ended December 31, 2023.

The sequential increase was primarily driven by a certain item related to the loss on sale of securities of $20.2 million during the three months ended December 31, 2023, which was due to a strategic decision to sell low yield securities and use the proceeds to pay off higher rate wholesale fundings, including both brokered deposits and FHLB advances.

Adjusting for this certain item, adjusted noninterest income for the three months ended March 31, 2024, increased $992,000, or 2.4%, as compared to the three months ended December 31, 2023.

Noninterest income for the three months ended March 31, 2024 decreased by approximately $2.7 million or 5.8% as compared to the three months ended March 31, 2023.

The decrease as compared to the same period in 2023 was primarily due to a $4.0 million legal reserve recapture associated with litigation recorded during the three months ended March 31, 2023, which was partially offset by a modest increase of $750,000 in mortgage lending income, coupled with an increase of $841,000 in bank owned life insurance income related to a higher earnings credit rate as compared to the prior period.

Table 5 shows noninterest income for the three month periods ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively, as well as changes between periods.

Noninterest Income

Three Months Ended Nine Months Ended

30, June 30, Change Sept.

Three Months Ended

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

(Dollars in thousands) 2024 2023 2023

6 unchanged sentences

Loss on sale of securities, net — (20,218) — 20,218 (100.0) — —

Loss on sale of branches — — — — — (153) 153 100.0

Other income 7,172 6,866 11,256 306 4.5 (4,084) (36.3)

Total noninterest income $ 43,184 $ 21,974 $ 45,835 $ 21,210 96.5% $ (2,651) (5.8)%

* Not meaningful

Recurring fee income (total service charges, wealth management fees, debit and credit card fees) for the three month period ended September 30, 2023 was $30.1 million, a decrease of $478,000 as compared to the three month period ended June 30, 2023 due to certain insufficient funds fee structure changes for consumer deposit accounts that were implemented during the third quarter of 2023.

Recurring fee income for the nine month period ended September 30, 2023 was $90.7 million, an increase of $3.4 million from the nine month period ended September 30, 2022 and was primarily due to the increased consumer base provided by the Spirit acquisition.

We expect service charges to moderate through the end of 2023 and into early 2024 due to the elimination of returned item fees for consumer deposit accounts with insufficient funds.

Recurring fee income (total service charges, wealth management fees, debit and credit card fees) was $29.9 million, $30.6 million, and $30.0 million for the three month periods ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively.

NONINTEREST EXPENSE

6 unchanged sentences

We also regularly monitor staffing levels at each subsidiary to ensure productivity and overhead are in line with existing workload requirements.

Noninterest expense was $132.0 million for the three month period ended September 30, 2023, as compared to noninterest expense of $139.7 million for the three month period ended June 30, 2023, representing a decrease of $7.7 million, or 5.5%, as compared to the preceding quarter.

Adjusted noninterest expense, which excludes branch right sizing, merger related costs and early retirement program costs, for the three months ended September 30, 2023, decreased $6.1 million, or 4.5%, as compared to the three months ended June 30, 2023.

Noninterest expense for the nine months ended September 30, 2023 decreased by approximately $9.3 million or 2.2% as compared to the nine months ended September 30, 2022.

Adjusted noninterest expense, which excludes branch right sizing, merger related costs, donation to Simmons First Foundation, and early retirement program costs, for the nine months ended September 30, 2023, increased $9.1 million, or 2.3%, as compared to the nine months ended September 30, 2022.

The $7.3 million decrease in salaries and employee benefits expense during the three month period ended September 30, 2023 as compared to the preceding sequential quarter is primarily due to the successful execution of programs as part of our Better Bank Initiative.

Adjusted salaries and employee benefits expense, which excludes early retirement program costs, for the three months ended September 30, 2023, decreased $5.3 million, or 7.4%, as compared to the three months ended June 30, 2023.

Salaries and employee benefits expense increased $5.2 million during the nine month period ended September 30, 2023 when compared to the same period in the prior year, primarily due to the impact from the Spirit acquisition.

Deposit insurance expense for the three and nine months ended September 30, 2023 as compared to the three months ended June 30, 2023 and nine months ended September 30, 2022 decreased by $529,000 and increased by $6.8 million, respectively.

The year-over-year increase was largely due to an increased base rate related to changes in the mix of deposits, coupled with the increase in deposits from the Spirit acquisition.

Table 6 below shows noninterest expense for the three month periods ended September 30, 2023 and June 30, 2023 and the nine months ended September 30, 2023 and 2022, respectively, as well as changes between periods.

Noninterest expense was $139.9 million for the three month period ended March 31, 2024, as compared to noninterest expense of $148.1 million for the three month period ended December 31, 2023, representing a decrease of $8.3 million, or 5.6%, as compared to the preceding quarter.

Adjusted noninterest expense, which excludes branch right sizing, FDIC special assessment and early retirement program costs, for the three months ended March 31, 2024, increased $5.1 million, or 3.9%, as compared to the three months ended December 31, 2023.

Noninterest expense for the three months ended March 31, 2024 decreased by approximately $3.3 million or 2.3% as compared to the three months ended March 31, 2023.

Adjusted noninterest expense, which excludes branch right sizing, merger related costs (for the three months ended March 31, 2023), FDIC special assessment (for the three months ended March 31, 2024) and early retirement program costs (for the three months ended March 31, 2024), decreased $3.0 million, or 2.1%, as compared to the three months ended March 31, 2023.

Salaries and employee benefits expense increased $5.7 million during the three month period ended March 31, 2024 as compared to the preceding sequential quarter and decreased $4.4 million when compared to the same period in the prior year.

Adjusted salaries and employee benefits expense, which excludes early retirement program costs, for the three months ended March 31, 2024, increased $6.5 million, or 9.8%, as compared to the preceding sequential quarter and decreased $4.6 million, or 6.0%, when compared to the same period in the prior year.

The increase as compared to the preceding sequential quarter is primarily due to higher payroll taxes typically incurred during the first quarter, while the decrease as compared to the same period in the prior year is primarily due to the successful execution of programs as part of our Better Bank Initiative.

Deposit insurance expense for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023 and three months ended March 31, 2023 decreased by $8.1 million and increased by $2.2 million, respectively.

The variances in deposit insurance expense are significantly attributable to the FDIC special assessments of $1.5 million during the three months ended March 31, 2024 and $10.5 million during the three months ended December 31, 2023, which were levied to support the Deposit Insurance Fund following the failure of certain banks in 2023.

Otherwise, increases in the base assessment rate related to changes in the mix of deposits contributed approximately $887,000 and $693,000 to the deposit insurance expense increases when comparing the three months ended March 31, 2024 to the three months ended December 31, 2023 and March 31, 2023, respectively.

Table 6 below shows noninterest expense for the three month periods ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively, as well as changes between periods.

Noninterest Expense

Three Months Ended Nine Months Ended

30, June 30, Change Sept.

Three Months Ended

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

(Dollars in thousands) 2024 2023 2023

Salaries and employee benefits $ 72,434 $ 65,950 $ 77,038 $ 6,484 9.8 % $ (4,604) (6.0)%

Early retirement program 219 1,032 — (813) (78.8) 219 —

Occupancy expense, net 12,258 11,733 11,578 525 4.5 680 5.9

15 unchanged sentences

Total noninterest expense $ 139,879 $ 148,139 $ 143,228 $ (8,260) (5.6)% $ (3,349) (2.3)%

* Not meaningful

INVESTMENTS AND SECURITIES

6 unchanged sentences

Our general policy is not to invest in derivative type investments or high-risk securities, except for collateralized MBS for which collection of principal and interest is not subordinated to significant superior rights held by others.

HTM and AFS investment securities were $3.74 billion and $3.36 billion, respectively, at September 30, 2023, compared to the HTM amount of $3.76 billion and AFS amount of $3.85 billion at December 31, 2022.

HTM and AFS investment securities were $3.71 billion and $3.03 billion, respectively, at March 31, 2024, compared to the HTM amount of $3.73 billion and AFS amount of $3.15 billion at December 31, 2023.

We will continue to look for opportunities to maximize the value of the investment portfolio.

During the quarters ended June 30, 2022 and September 30, 2021, we transferred, at fair value, $1.99 billion and $500.8 million, respectively, of securities from the AFS portfolio to the HTM portfolio.

The related remaining combined net unrealized losses of $131.2 million in accumulated other comprehensive income (loss) as of September 30, 2023 will be amortized over the remaining life of the securities.

The related remaining combined net unrealized losses of $121.9 million in accumulated other comprehensive income (loss) as of March 31, 2024 will be amortized over the remaining life of the securities.

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

2 unchanged sentences

We expect the cash flows from principal maturities of securities to provide flexibility to fund future loan growth or reduce wholesale funding.

Furthermore, as of September 30, 2023, we have the ability to hold the securities classified as AFS for a period of time sufficient for a recovery of amortized cost, we do not have an immediate intent to sell the securities classified as AFS, and we believe the accounting standard of “more likely than not” has not been met regarding whether we would be required to sell any of the AFS securities before recovery of amortized cost.

Furthermore, as of March 31, 2024, we have the ability to hold the securities classified as AFS for a period of time sufficient for a recovery of amortized cost, we do not have an immediate intent to sell the securities classified as AFS, and we believe the accounting standard of “more likely than not” has not been met regarding whether we would be required to sell any of the AFS securities before recovery of amortized cost.

During 2024, we may continue to evaluate targeted sales of AFS securities based on prevailing market conditions and our funding and liquidity positions.

The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased.

The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline.

During the third quarter of 2023, management reduced the allowance for credit loss related to isolated corporate bonds within the AFS investment securities portfolio by $1.2 million due to price recovery on the impaired bonds.

As of September 30, 2023, two nonperforming corporate bonds remained in the portfolio, and with the exception of these two bonds, management does not believe any of the securities are impaired due to reasons of credit quality.

Accordingly, as of March 31, 2024, we believe the declines in fair value are temporary and we do not believe any of the securities are impaired due to reasons of credit quality.

During the third quarter of 2021, we began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of $1.0 billion of fixed rate callable municipal securities held in the AFS portfolio.

1 unchanged sentence

Securities within these swap agreements have maturity dates varying between 2028 and 2029.

For the three months ended March 31, 2024, the net amount included in interest income on investment securities in the consolidated statements of income related to these swap agreements was $12.4 million.

LOAN PORTFOLIO

Our loan portfolio averaged $16.60 billion and $13.91 billion during the first nine months of 2023 and 2022, respectively.

As of September 30, 2023, total loans were $16.77 billion, an increase of $629.8 million from December 31, 2022.

The increase in the average loan balance during the first nine months of 2023 when compared to the same period in 2022 is primarily due to the acquisition of Spirit which provided $2.29 billion in total loans after purchase accounting discounts, coupled with continued widespread organic loan growth throughout our geographic markets over the comparative period.

Our loan portfolio averaged $16.90 billion and $16.33 billion during the first three months of 2024 and 2023, respectively.

As of March 31, 2024, total loans were $17.00 billion, an increase of $156.1 million from December 31, 2023.

The increase in the average loan balance during the first three months of 2024 when compared to the same period in 2023 is primarily due to the continued widespread organic loan growth throughout our geographic markets over the comparative period.

The most significant components of the loan portfolio were loans to businesses (commercial loans, commercial real estate loans and agricultural loans) and individuals (consumer loans, credit card loans and single-family residential real estate loans).

7 unchanged sentences

Loan Portfolio

September 30, December 31,

March 31, December 31,

(In thousands) 2024 2023

12 unchanged sentences

Consumer loans consist of credit card loans and other consumer loans.

Consumer loans were $304.4 million at September 30, 2023, or 1.8% of total loans, compared to $349.8 million, or 2.2% of total loans at December 31, 2022.

The decrease in consumer loans from December 31, 2022, to September 30, 2023, was primarily due to loan payoffs and pay downs within the other consumer portfolio during the period.

Consumer loans were $307.3 million at March 31, 2024, or 1.8% of total loans, compared to $318.7 million, or 1.9% of total loans at December 31, 2023.

The decrease in consumer loans from December 31, 2023, to March 31, 2024, was primarily due to loan payoffs and pay downs within the credit card portfolio during the period.

Real estate loans consist of construction and development loans (“C&D”) loans, single-family residential loans and commercial real estate (“CRE”) loans.

Real estate loans were $13.25 billion at September 30, 2023, or 79.0% of total loans, compared to $12.58 billion, or 77.9%, of total loans at December 31, 2022, an increase of $663.9 million, or 5.3%.

Our C&D loans increased by $455.7 million, or 17.8%, single family residential loans increased by $111.8 million, or 4.4%, and CRE loans increased by $96.5 million, or 1.3%.

The increases were due to diversified organic growth by type and geographic market during the first nine months of 2023.

Real estate loans were $13.46 billion at March 31, 2024, or 79.2% of total loans, compared to $13.34 billion, or 79.2%, of total loans at December 31, 2023, an increase of $126.3 million, or 0.9%.

Our C&D loans increased by $187.5 million, or 6.0%, single family residential loans decreased by $16.8 million, or 0.6%, and CRE loans decreased by $44.4 million, or 0.6%.

The incremental changes among our real estate portfolio reflected our focus on maintaining conservative underwriting standards and structure guidelines while emphasizing prudent pricing discipline during the first three months of 2024.

We expect to continue to manage our C&D and CRE portfolio concentration by developing deeper relationships with our customers.

Commercial loans consist of non-real estate loans related to business and agricultural loans.

Total commercial loans were $2.77 billion at September 30, 2023, or 16.5% of total loans, compared to $2.84 billion, or 17.6% of total loans at December 31, 2022, a decrease of $63.9 million, or 2.3%.

The decrease in non-real estate loans related to business of $155.2 million, or 5.9%, was partially offset by the increase in agricultural loans of $91.3 million, or 44.4%, primarily due to seasonality of the portfolio, which normally peaks in the third quarter.

Total commercial loans were $2.73 billion at March 31, 2024, or 16.0% of total loans, compared to $2.72 billion, or 16.2% of total loans at December 31, 2023, an increase of $3.1 million, or 0.1%.

The modest increase in non-real estate loans related to business of $9.1 million, or 0.4%, was partially offset by the decrease in agricultural loans of $6.1 million, or 2.6%, primarily due to seasonality of the portfolio, which normally peaks in the third quarter.

Other loans mainly consist of mortgage warehouse lending and municipal loans.

Mortgage volume experienced an increase in demand during the first nine months of 2023 as compared to December 31, 2022, and was coupled with continued organic growth in our municipal loans during the quarter, leading to an increase of $75.2 million in other loans.

While loan growth was widespread throughout our geographic markets and was generally broad-based by loan type during the first nine months of 2023, loan growth during the third quarter of 2023 reflected moderating demand and increased payoff activity, as we focus on maintaining disciplined pricing and conservative underwriting standards given the current economic environment.

Our commercial loan pipeline consisting of all commercial loan opportunities was $877.3 million at September 30, 2023 compared to $1.12 billion at December 31, 2022.

Mortgage volume experienced an increase in demand during the first three months of 2024 as compared to December 31, 2023, and was coupled with continued organic growth in our municipal loans during the quarter, leading to an increase of $38.1 million in other loans.

While loan growth was widespread throughout our geographic markets and was generally broad-based by loan type during the first three months of 2024, loan growth during the first quarter of 2024 reflected moderating demand and increased payoff activity, as we focus on maintaining disciplined pricing and conservative underwriting standards given the current economic environment.

Our commercial loan pipeline consisting of all commercial loan opportunities was $1.01 billion at March 31, 2024 compared to $948.2 million at December 31, 2023.

Loans approved and ready to close at the end of the quarter totaled $380.9 million.

9 unchanged sentences

The credit card recovery group pursues account holders until it is determined, on a case-by-case basis, to be uncollectible.

Total non-performing assets increased $24.7 million from December 31, 2022 to September 30, 2023.

Nonaccrual loans increased by $22.7 million during the period and foreclosed assets held for sale and other real estate owned increased $922,000 as compared to December 31, 2022.

The increase in nonaccrual assets during the period was primarily due to an increase in nonaccrual loans within our commercial loan portfolio.

Non-performing assets, including modifications to borrowers experiencing financial difficulty (“FDMs”, formerly known as troubled debt restructurings, or TDRs) and acquired foreclosed assets, as a percent of total assets were 0.44% at September 30, 2023, compared to 0.23% at December 31, 2022.

Total non-performing assets increased $22.0 million from December 31, 2023 to March 31, 2024.

Nonaccrual loans increased by $22.5 million from December 31, 2023 and foreclosed assets held for sale and other real estate owned decreased $562,000 as compared to December 31, 2023.

The increase in nonaccrual assets was primarily due to two large loans being placed in nonaccrual status during the period.

One is an $11.0 million asset based lending loan and the other is a $6.6 million non-owner occupied real estate loan to a business that was negatively impacted by the COVID-19 pandemic.

Non-performing assets, including modifications to borrowers experiencing financial difficulty (“FDMs”) and acquired foreclosed assets, as a percent of total assets were 0.53% at March 31, 2024, compared to 0.45% at December 31, 2023.

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

4 unchanged sentences

We primarily use interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal.

During the three months ended September 30, 2023, there were two commercial loans modified for borrowers experiencing financial difficulties, with a combined period-end balance of $85,000.

During the nine months ended September 30, 2023, there were three commercial loans modified for borrowers experiencing financial difficulties, with a combined period-end balance of $736,000.

The financial effects of the loan modifications made to borrowers experiencing financial difficulty, specifically related to the commercial portfolio, was not significant during the three and nine month periods ended September 30, 2023.

During the three and nine month periods ending September 30, 2023, there was one other CRE loan modified for a borrower experiencing financial difficulties, with a period-end balance of $30.6 million.

The modification allowed for two months of interest only payments with the remaining balance due at maturity.

There were no loan modifications granted to borrowers experiencing financial difficulty during the three month periods ended March 31, 2024 and 2023.

We continue to maintain good asset quality compared to the industry and strong asset quality remains a primary focus of our strategy.

The allowance for credit losses as a percent of total loans was 1.30% as of September 30, 2023.

The allowance for credit losses as a percent of total loans was 1.34% as of March 31, 2024.

Non-performing loans equaled 0.63% of total loans.

Non-performing assets were 0.32% of total assets, a 9 basis point increase from December 31, 2022.

Non-performing assets were 0.41% of total assets, an 8 basis point increase from December 31, 2023.

The allowance for credit losses was 212% of non-performing loans.

Our annualized net charge-offs to average total loans ratio for the first nine months of 2023 was 0.12%.

Annualized net credit card charge-offs to average total credit card loans were 2.04% for the first nine months of 2023, compared to 1.49% during the full year 2022, and 134 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks.

Our annualized net charge-offs to average total loans ratio for the first three months of 2024 was 0.19%.

Annualized net credit card charge-offs to average total credit card loans were 2.88% for the first three months of 2024, compared to 2.20% during the full year 2023, and 119 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks.

Table 8 presents information concerning non-performing assets, including nonaccrual loans at amortized cost and foreclosed assets held for sale.

Non-performing Assets

September 30, December 31, September 30,

March 31, December 31, March 31,

(Dollars in thousands) 2024 2023 2023

8 unchanged sentences

Total non-performing assets $ 112,317 $ 90,271 $ 71,388

Performing FDMs (formerly TDRs) $ 33,723 $ 1,849 $ 1,869

Performing FDMs $ 33,576 $ 33,577 $ 2,183

Allowance for credit losses to non-performing loans 212 % 267 % 324 %

Non-performing loans to total loans 0.63 % 0.50 % 0.38 %

Non-performing assets (including performing FDMs (formerly TDRs)) to total assets 0.44 % 0.23 % 0.24 %

Non-performing assets (including performing FDMs) to total assets 0.53 % 0.45 % 0.27 %

Non-performing assets to total assets 0.41 % 0.33 % 0.26 %

_______________________________________

(1) Includes nonaccrual FDMs (formerly known as TDRs) of approximately $209,000 at September 30, 2023 and $1.6 million at December 31, 2022.

For additional information about our implementation of accounting for FDMs, which replaced the accounting for TDRs, see Note 5, Loans and Allowance for Credit Losses.

The interest income on nonaccrual loans is not considered material for the three and nine month periods ended September 30, 2023 and 2022.

(1) Includes nonaccrual FDMs of approximately $282,000 at December 31, 2023.

The interest income on nonaccrual loans is not considered material for the three month periods ended March 31, 2024 and 2023.

ALLOWANCE FOR CREDIT LOSSES

30 unchanged sentences

Provision for credit losses 10,206 10,916

Acquisition adjustment for PCD loans — 5,100

Balance, September 30, $ 218,547 $ 197,589

Balance, March 31, $ 227,367 $ 206,557

Loans charged off:

12 unchanged sentences

Provision for credit losses 36,508

Acquisition adjustment for PCD loans 4,522

Balance, end of year $ 225,231

Provision for Credit Losses

The amount of provision added to or released from the allowance during the three and nine months ended September 30, 2023 and 2022, and for the year ended December 31, 2022, was based on management’s judgment, with consideration given to the composition and asset quality of the portfolio, historical loan loss experience, and assessment of current and expected economic forecasts and conditions.

The amount of provision added to or released from the allowance during the three months ended March 31, 2024 and 2023, and for the year ended December 31, 2023, was based on management’s judgment, with consideration given to the composition and asset quality of the portfolio, historical loan loss experience, and assessment of current and expected economic forecasts and conditions.

It is management’s practice to review the allowance on a monthly basis, and after considering the factors previously noted, to determine the level of provision made to the allowance.

Allowance for Credit Losses Allocation

As of September 30, 2023, the allowance for credit losses reflected an increase of approximately $21.6 million from December 31, 2022 while total loans increased by $629.8 million over the same nine month period.

As of March 31, 2024, the allowance for credit losses reflected an increase of approximately $2.1 million from December 31, 2023, while total loans increased by $156.1 million over the same three month period.

The allocation in each category within the allowance generally reflects the overall changes in the loan portfolio mix.

The increase in the allowance for credit losses during the first nine months of 2023 was primarily due to the loan growth experienced during the first three quarters of the year, as well as refreshed economic forecasts.

Our allowance for credit losses at September 30, 2023 was considered appropriate given the current economic environment and other related factors.

The increase in the allowance for credit losses during the first three months of 2024 was primarily due to the loan growth experienced during the first quarter of the year, as well as refreshed economic forecasts.

Our allowance for credit losses at March 31, 2024 was considered appropriate given the current economic environment and other related factors.

The following table sets forth the sum of the amounts of the allowance for credit losses attributable to individual loans within each category, or loan categories in general.

3 unchanged sentences

Allocation of Allowance for Credit Losses

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(Dollars in thousands) Allowance

7 unchanged sentences

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

Deposits are our primary source of funding for earning assets and are primarily developed through our network of 232 financial centers as of September 30, 2023.

Deposits are our primary source of funding for earning assets and are primarily developed through our network of 233 financial centers as of March 31, 2024.

We offer a variety of products designed to attract and retain customers with a continuing focus on developing core deposits.

Our core deposits consist of all deposits excluding time deposits of $250,000 or more and brokered deposits.

As of September 30, 2023, core deposits comprised 77.8% of our total deposits.

As of March 31, 2024, core deposits comprised 78.6% of our total deposits.

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

6 unchanged sentences

We are continually monitoring and looking for opportunities to fairly reprice our deposits while remaining competitive in this current challenging rate environment.

Our total deposits as of September 30, 2023, were $22.23 billion, compared to $22.55 billion as of December 31, 2022.

Noninterest bearing transaction accounts, interest bearing transaction accounts and savings accounts totaled $15.56 billion at September 30, 2023, compared to $17.78 billion at December 31, 2022, a decrease of $2.22 billion.

Total time deposits increased $1.90 billion to $6.67 billion at September 30, 2023, from $4.77 billion at December 31, 2022.

We had $3.26 billion and $2.75 billion of brokered deposits at September 30, 2023, and December 31, 2022, respectively.

The change in the mix of deposits at September 30, 2023 as compared to December 31, 2022 reflects increased market competition and consumer migration toward higher rate deposits, principally certificates of deposit, given the rapid increase in interest rates that has occurred over the past year.

Our total deposits as of March 31, 2024, were $22.35 billion, compared to $22.24 billion as of December 31, 2023.

Noninterest bearing transaction accounts, interest bearing transaction accounts and savings accounts totaled $15.77 billion at March 31, 2024, compared to $15.80 billion at December 31, 2023, a slight decrease of $29.0 million.

Total time deposits increased $137.0 million to $6.58 billion at March 31, 2024, from $6.45 billion at December 31, 2023.

We had $3.02 billion and $2.90 billion of brokered deposits at March 31, 2024, and December 31, 2023, respectively.

The change in the mix of deposits at March 31, 2024 as compared to December 31, 2023 reflects increased market competition and consumer migration toward higher rate deposits, principally certificates of deposit, given the rapid increase in interest rates that has occurred over the past year.

We are continuing to refine our product offerings to give customers flexibility of choice while maintaining the ability to adjust interest rates timely in the current rate environment.

OTHER BORROWINGS AND SUBORDINATED NOTES AND DEBENTURES

Our total debt was $1.71 billion and $1.23 billion at September 30, 2023 and December 31, 2022, respectively.

The outstanding balance for September 30, 2023 includes $1.33 billion in FHLB advances;

Our total debt was $1.24 billion and $1.34 billion at March 31, 2024 and December 31, 2023, respectively.

The outstanding balance for March 31, 2024 includes $853.2 million in FHLB advances;

$366.2 million in subordinated notes and unamortized debt issuance costs;

and $18.7 million of other long-term debt.

FHLB advances outstanding at September 30, 2023, which increased as compared to December 31, 2022 due to a strategic decision to utilize short-term borrowings to elevate our liquidity position given the macroeconomic environment during the period, are primarily fixed rate, fixed term advances, which are due less than one year from origination and therefore are classified as short-term advances.

FHLB advances outstanding at March 31, 2024 are primarily fixed rate, fixed term advances, which are due less than one year from origination and therefore are classified as short-term advances.

In March 2018, we 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.

4 unchanged sentences

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.

At September 30, 2023, total capital was $3.29 billion.

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 (“SOFR”), 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.

At March 31, 2024, total capital was $3.44 billion.

Capital represents shareholder ownership in the Company – the book value of assets in excess of liabilities.

At September 30, 2023, our common equity to asset ratio was 11.92% compared to 11.91% at year-end 2022.

At March 31, 2024, our common equity to asset ratio was 12.56% compared to 12.53% at year-end 2023.

Capital Stock

5 unchanged sentences

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

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

As of March 31, 2024 and December 31, 2023, there were no shares of preferred stock issued or outstanding.

Stock Repurchase Program

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

During January 2022, we substantially exhausted the remaining capacity under the 2019 Program, and our Board of Directors authorized a new stock repurchase program (the “2022 Program”) under which we may repurchase up to $175.0 million of our Class A common stock currently issued and outstanding.

The 2022 Program replaced the 2019 Program and will terminate on January 31, 2024 (unless terminated sooner).

During the three and nine month periods ended September 30, 2023, we repurchased 1,128,962 shares at an average price per share of $17.69 and 2,257,049 shares at an average price of $17.72 per share, respectively, under the 2022 Program.

During the three month period ended September 30, 2022, the Company repurchased 1,883,713 shares at an average price of $23.91 per share under the 2022 Program.

During the nine month period ended September 30, 2022, the Company repurchased 513,725 shares at an average price of $31.25 per share under the 2019 Program and 3,919,037 shares at an average price of $24.26 per share under the 2022 Program.

In January 2022, our Board of Directors authorized a stock repurchase program (the “2022 Program”) under which we could repurchase up to $175.0 million of our Class A common stock currently issued and outstanding.

Because the 2022 Program was set to terminate on January 31, 2024, our Board of Directors authorized a new stock repurchase program in January 2024 (“2024 Program”) under which we may repurchase up to $175.0 million of our Class A common stock currently issued and outstanding.

The 2024 Program will be executed in accordance with Rule 10b-18 under the Exchange Act and will terminate on January 31, 2026 (unless terminated sooner).

No shares were repurchased during the three month periods ended March 31, 2024 and 2023.

Under the 2024 Program, we may repurchase shares of our common stock through open market and privately negotiated transactions or otherwise.

3 unchanged sentences

Cash Dividends

We declared cash dividends on our common stock of $0.60 per share for the first nine months of 2023 compared to $0.57 per share for the first nine months of 2022, an increase of $0.03, or 5%.

We declared cash dividends on our common stock of $0.21 per share for the first three months of 2024 compared to $0.20 per share for the first three months of 2023, an increase of $0.01, or 5%.

The timing and amount of future dividends are at the discretion of our Board of Directors and will depend upon our consolidated earnings, financial condition, liquidity and capital requirements, the amount of cash dividends paid to us by our subsidiaries, applicable government regulations and policies and other factors considered relevant by our Board of Directors.

15 unchanged sentences

Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined).

Management believes that, as of September 30, 2023, we meet all capital adequacy requirements to which we are subject.

Management believes that, as of March 31, 2024, we meet all capital adequacy requirements to which we are subject.

As of the most recent notification from regulatory agencies, Simmons Bank was well capitalized under the regulatory framework for prompt corrective action.

1 unchanged sentence

There are no conditions or events since that notification that management believes have changed the institution’s categories.

Our risk-based capital ratios at September 30, 2023 and December 31, 2022 are presented in Table 11 below:

The Company’s risk-based capital ratios at March 31, 2024 and December 31, 2023 are presented in Table 11 below:

Risk-Based Capital

September 30, December 31,

March 31, December 31,

(Dollars in thousands) 2024 2023

35 unchanged sentences

Prior to December 31, 2017, Tier 1 capital included common equity Tier 1 capital and certain additional Tier 1 items as provided under the Basel III Capital Rules.

The Tier 1 capital for the Company consisted of common equity Tier 1 capital and trust preferred securities.

The Basel III Capital Rules include certain provisions that require trust preferred securities to be phased out of qualifying Tier 1 capital when assets surpass $15 billion.

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

All of the Company’s trust preferred securities were redeemed during the third quarter 2022.

Qualifying subordinated debt of $300.1 million is included as Tier 2 and total capital as of September 30, 2023.

Qualifying subordinated debt of $300.2 million is included as Tier 2 and total capital as of March 31, 2024 and December 31, 2023.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

7 unchanged sentences

the effects of future economic conditions (including unemployment levels and slowdowns in economic growth), governmental monetary and fiscal policies, including policies of the Federal Reserve, as well as legislative and regulatory changes;

general business conditions, as well as conditions within the financial markets, developments impacting the financial services industry, such as bank failures or concerns involving liquidity;

changes in real estate values;

changes in interest rates and related governmental policies;

changes in liquidity;

changes in the level and composition of deposits, loan demand, deposit flows, credit quality and the values of loan collateral, securities and interest sensitive assets and liabilities;

changes in credit quality;

actions taken by the Company to manage its investment securities portfolio;

5 unchanged sentences

further changes in accounting principles relating to loan loss recognition;

uncertainty and disruption following the sunsetting of the London Inter-Bank Offered Rate in June 2023;

the costs of evaluating possible acquisitions and the risks inherent in integrating acquisitions;

1 unchanged sentence

market disruptions, including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises, war and other military conflicts (including the ongoing military conflict between Russia and Ukraine and between Israel and Hamas) or other major events, or the prospect of these events;

soundness of other financial institutions and indirect exposure related to the closings of Silicon Valley Bank (SVB), Signature Bank, First Republic Bank and Silvergate Bank in the first quarter of 2023 and their impact on the broader market through other customers, suppliers and partners (or that the conditions which resulted in the liquidity concerns with SVB, First Republic Bank, Signature Bank and Silvergate Bank may also adversely impact, directly or indirectly, other financial institutions and market participants with which the Company has commercial or deposit relationships);

changes in customer behavior, including consumer spending, borrowing and saving habits;

the soundness of other financial institutions and indirect exposure related to the closings of other financial institutions and their impact on the broader market through other customers, suppliers and partners (or that the conditions which resulted in the liquidity concerns that led to the large regional bank failures during 2023 may also adversely impact, directly or indirectly, other financial institutions and market participants with which the Company has commercial or deposit relationships);

the loss of key employees;

4 unchanged sentences

the effects of government legislation;

the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, cell phone/tablet, telephone, computer and the Internet;

banking products and services by mail, cell phone/tablet, telephone, computer and the Internet;

the failure of assumptions underlying the establishment of reserves for possible credit losses, fair value for loans, OREO, and other cautionary statements set forth elsewhere in this report.

Additional information on factors that might affect the Company’s financial results is included in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this quarterly report, the Company’s annual report on Form 10-K for the year ended December 31, 2022, and the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2023, and related disclosures in other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov.

Additional information on factors that might cause the Company’s results to differ materially from those disclosed in the forward-looking statements is included in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this quarterly report, the Company’s annual report on Form 10-K for the year ended December 31, 2023, and related disclosures in other filings with the SEC, which are available on the SEC’s website at www.sec.gov.

Many of these factors are beyond our ability to predict or control, and actual results could differ materially from those in the forward-looking statements due to these factors and others.

4 unchanged sentences

GAAP RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The tables below present computations of adjusted earnings (net income excluding certain items {net branch right sizing costs, merger related costs, donation to Simmons First Foundation, loss from early retirement of TruPS, gain on sale of intellectual property and early retirement program costs}) (non-GAAP), and adjusted diluted earnings per share (non-GAAP) as well as a computation of tangible book value per share (non-GAAP), tangible common equity to tangible assets (non-GAAP), adjusted noninterest income (non-GAAP), adjusted noninterest expense (non-GAAP), adjusted salaries and employee benefits expense (non-GAAP) and the coverage ratio of uninsured, non-collateralized deposits (non-GAAP).

The tables below present computations of adjusted earnings (net income excluding certain items {net branch right sizing costs, merger related costs, FDIC special assessment, loss (gain) on sale of securities and early retirement program costs}) (non-GAAP), and adjusted diluted earnings per share (non-GAAP) as well as a computation of tangible book value per share (non-GAAP), tangible common equity to tangible assets (non-GAAP), adjusted noninterest income (non-GAAP), adjusted noninterest expense (non-GAAP), adjusted salaries and employee benefits expense (non-GAAP) and the coverage ratio of uninsured, non-collateralized deposits (non-GAAP).

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

The Company has updated its calculation of certain non-GAAP financial measures to exclude the impact of gains or losses on the sale of AFS investment securities in light of the impact of the Company’s strategic AFS investment securities transactions during the fourth quarter of 2023 and has presented past periods on a comparable basis.

We believe the exclusion of these certain items in expressing earnings and certain other financial measures, including “adjusted earnings,” provides a meaningful basis for period-to-period and company-to-company comparisons, which management believes will assist investors and analysts in analyzing the adjusted financial measures of the Company and predicting future performance.

11 unchanged sentences

• Investor presentations of Company performance

We have $1.437 billion and $1.449 billion total goodwill and other intangible assets for the periods ended September 30, 2023 and December 31, 2022, respectively.

We have $1.430 billion and $1.433 billion total goodwill and other intangible assets for the periods ended March 31, 2024 and December 31, 2023, respectively.

Because our acquisition strategy has resulted in a high level of intangible assets, management believes useful calculations include tangible book value per share (non-GAAP) and tangible common equity to tangible assets (non-GAAP).

7 unchanged sentences

Reconciliation of Adjusted Earnings (non-GAAP)

Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30,

Three Months Ended

March 31, December 31, March 31,

(In thousands, except per share data) 2024 2023 2023

1 unchanged sentence

Certain items:

Loss from early retirement of TruPS — — — 365

Gain on sale of intellectual property — — — (750)

Donation to Simmons First Foundation — — — 1,738

FDIC Special Assessment 1,549 10,521 —

Merger related costs — — 1,396

Early retirement program 219 1,032 —

Loss on sale of securities — 20,218 —

Branch right sizing (net) 236 3,846 979

Day 2 CECL Provision — — — 33,779

Tax effect (1)

5 unchanged sentences

Certain items:

Loss from early retirement of TruPS — — — —

Gain on sale of intellectual property — — — (0.01)

Donation to Simmons First Foundation — — — 0.01

FDIC Special Assessment 0.01 0.08 —

Merger related costs — — 0.01

Early retirement program — 0.01 —

Loss on sale of securities — 0.16 —

Branch right sizing (net) — 0.03 0.01

Day 2 CECL Provision — — — 0.28

Tax effect (1)

7 unchanged sentences

Reconciliation of Adjusted Noninterest Income (non-GAAP), Adjusted Noninterest Expense (non-GAAP) and Adjusted Salaries and Employee Benefits Expense (non-GAAP)

Three Months Ended Nine Months Ended

September 30, June 30, September 30, September 30,

Three Months Ended

March 31, December 31, March 31,

(In thousands) 2024 2023 2023

1 unchanged sentence

Certain items:

Loss from early retirement of TruPS — — — 365

Gain on sale of intellectual property — — — (750)

Branch right sizing — — — 153

Loss on sale of securities — 20,218 —

Total certain items — 20,218 —

4 unchanged sentences

Early retirement program (219) (1,032) —

Donation to Simmons First Foundation — — — (1,738)

FDIC Special Assessment (1,549) (10,521) —

Branch right sizing (236) (3,846) (979)

2 unchanged sentences

Salaries and employee benefits expense $ 72,653 $ 66,982 $ 77,038

Early retirement program costs (1,557) (3,609) (5,166) —

Early retirement program (219) (1,032) —

Adjusted salaries and employee benefits expense (non-GAAP) $ 72,434 $ 65,952 $ 77,038

1 unchanged sentence

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

September 30, December 31,

March 31, December 31,

(In thousands, except per share data) 2024 2023

10 unchanged sentences

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

September 30, December 31,

March 31, December 31,

(Dollars in thousands) 2024 2023

15 unchanged sentences

Calculation of Uninsured, Non-Collateralized Deposit Coverage Ratio (non-GAAP)

September 30, December 31,

March 31, December 31,

(In thousands) 2024 2023

6 unchanged sentences

Fed funds lines, Fed discount window and Bank Term Funding Program (1)

2,009,000 1,998,000

Additional liquidity sources $ 11,457,000 $ 11,216,000

Uninsured, non-collateralized deposit coverage ratio 2.5x 2.4x

___________________________________

(1) The Bank Term Funding Program closed for new loans on March 11, 2024.

At no time did the Company borrow funds under this program.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis