What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-27 · 116 added, 143 removed, 806 unchanged (24% of the section changed)

17 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

We account for our acquisitions under Accounting Standards Codification (“ASC”) Topic 805, Business Combinations , which requires the use of the acquisition method of accounting.

We account for our acquisitions under ASC Topic 805, Business Combinations , which requires the use of the acquisition method of accounting.

All identifiable assets acquired, including loans, are recorded at fair value.

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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 December 31, 2023.

Results are compared to book value;

no impairment was indicated as of December 31, 2024.

Judgement is inherent in assessing goodwill for impairment.

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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.

We are subject to the federal income tax laws of the United States, and the tax laws of the states and other jurisdictions where we conduct business.

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Our net income available to common shareholders for the year ended December 31, 2024 was $152.7 million, or $1.21 diluted earnings per share, compared to $175.1 million, or $1.38 diluted earnings per share, for the same period in 2023.

Included in 2024 results were $25.2 million of certain items, net of tax, that were primarily related to the loss on sale of securities, a FDIC special assessment and branch right sizing initiatives.

Included in 2023 results were $32.7 million of certain items, net of tax, that were primarily related to early retirement program costs, loss on sale of securities, a FDIC special assessment and branch right sizing initiatives.

Included in 2022 results were $42.4 million of certain items, net of tax, that were primarily related to our acquisitions, Day 2 accounting provision in connection with acquisitions, gain on an insurance settlement related to a weather event, merger related costs and branch right sizing initiatives.

Adjusting for these certain items, adjusted earnings for the year ended December 31, 2024 were $177.9 million, or $1.41 adjusted diluted earnings per share, compared to $207.7 million, or $1.64 adjusted diluted earnings per share, in 2023.

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

Throughout 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-collateralized deposits, liquidity, capital and operations.

Despite these challenges, which have seemed to abate slightly in the latter half of the year, 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:

Throughout 2024, we delivered solid results that clearly reflect our driving principles centered on a strong risk management culture, profitability and organic growth.

While we continue to operate against a backdrop of uncertainty concerning the macroeconomic environment and the timing of lower interest rates, we are comforted by our strong capital and liquidity positions:

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

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• Key credit quality metrics as of December 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 1.38%.

• Significant liquidity position with a loan to deposit ratio of 76% as of December 31, 2023, compared to 72% as of December 31, 2022.

• We maintained a significant liquidity position with a loan to deposit ratio of 78% as of December 31, 2024, compared to 76% as of December 31, 2023.

Additional liquidity sources available to us as of December 31, 2024 totaled $10.90 billion and our uninsured, non-collateralized deposit coverage ratio was 2.4x.

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.”

During 2023, we completed our Better Bank Initiative, which focused on programs designed to enhance operational processes and increase capacity to capitalize on organic growth opportunities, and achieved success across multiple fronts.

We completed our early retirement program and extensive progress was completed on other identified opportunities related to process improvements and streamlining or upgrading systems.

As a result, we were able to achieve $18 million of annualized cost savings, compared to the original $15 million of annual cost savings we previously estimated.

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.

In 2024, Simmons Bank was recognized by U.S.

News & World Report as one of the “2024-2025 Best Companies to Work For in the South” and by Forbes as one of “America’s Best-In-State Banks 2024 in Tennessee” and one of “America’s Best-In-State Employers 2024 in Missouri”.

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

Our 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 December 31, 2024 were $110.8 million, as compared to $84.5 million at December 31, 2023.

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Stockholders’ equity as of December 31, 2024 was $3.53 billion, book value per share was $28.08 and tangible book value per common share was $16.80.

Our ratio of common stockholders’ equity to total assets was 12.5% and the ratio of tangible common stockholders’ equity to tangible assets was 7.7% at December 31, 2023.

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

We repurchased approximately 2.3 million shares of our common stock during 2023.

Total loans were $17.01 billion at December 31, 2024, an increase of $160.3 million, or 1.0%, from the same time in 2023.

The increase in total loans during the period primarily reflects diverse loan growth driven by increased activity throughout our geographic footprint.

Our unfunded commitments decreased to $4.03 billion at December 31, 2024, as compared to $4.17 billion at December 31, 2023.

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 $948.2 million as of December 31, 2023, compared to $1.12 billion at December 31, 2022.

Our commercial loan pipeline totaled $1.26 billion as of December 31, 2024, compared to $948.2 million at December 31, 2023.

We are continually monitoring the impact of various global and national events on our results of operations and financial condition, including inflationary pressures, changes in market interest rates, deposit competition and liquidity strains and changes in political leadership.

The timing and impact of such events on our results of operation and financial condition will depend on future developments, which are highly uncertain.

In our discussion and analysis of our financial condition and results of operation in this Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we provide certain financial information determined by methods other than in accordance with US GAAP.

We believe the presentation of non-GAAP financial measures provides a meaningful basis for period-to-period and company-to-company comparisons, which we believe will assist investors and analysts in analyzing the core financial measures of the Company and predicting future performance.

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

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 an Arkansas-based financial holding company that, as of December 31, 2024, has approximately $26.88 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

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From early 2022 through 2023, the federal funds rate range was increased on eleven occasions and ended 2023 with a range set at 5.25% - 5.50%.

During 2024, as inflation declined, the FOMC cut rates on three occasions to a period end range of 4.25% - 4.50%.

To date in 2025, rates have been held steady by the FOMC.

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Similarly to the reduction in the federal funds rate, the prime rate was cut to 3.25% in mid-March of 2020 in response to the COVID-19 pandemic and remained unchanged throughout 2021 and into early 2022.

Paralleling the federal funds rate, multiple increases by the Federal Reserve during 2022 and 2023 increased the prime rate to 8.50% as of the end of 2023.

Markets anticipate potential rate cuts by the Federal Reserve during 2024.

Paralleling the federal funds rate, multiple increases by the Federal Reserve during 2022 and 2023 increased the prime rate to 8.50% as of the end of 2023 and a series of rate cuts during 2024 decreased the prime rate to 7.50% at the end of 2024.

To date in 2025, the prime interest rate has also been held steady.

Our practice is to limit exposure to interest rate movements by maintaining a significant portion of earning assets and interest bearing liabilities in short-term repricing.

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The increase in interest income primarily resulted from a $94.1 million increase in interest income on loans, coupled with an increase of $9.7 million in interest income on investment securities.

Regarding the increase in interest income on loans during 2023, the increase in loan volume resulted in an increase of $117.6 million in interest income, while a 113 basis point increase in yield due to rising market rates resulted in a $178.9 million increase in interest income during the year ended December 31, 2023.

Regarding the increase in interest income on loans during 2024, the increase in loan volume resulted in an increase of $27.9 million in interest income, while a 39 basis point increase in yield due to higher market interest rates resulted in a $66.2 million increase in interest income during the year ended December 31, 2024.

The loan yield for 2024 was 6.35%, compared to 5.96% for 2023.

The increase in our loan volume during 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 in interest income on investment securities reflects an increase of $66.0 million due to yield increases over the period of 132 basis points and 9 basis points for our taxable and non-taxable investment security portfolios, respectively, which were a result of rising market interest rates.

The increase in interest income on investment securities due to yield increases was mitigated by a $17.9 million decrease due to the decline in our investment portfolio average balances which decreased by $861.5 million or 10.5%, 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 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 increase in our loan volume during 2024 was due to solid organic loan growth over the comparative period.

The increase in interest income on investment securities is primarily related to our taxable investment securities and reflects an increase of $36.7 million due to yield increases over the period of 87 basis points which were a result of higher market interest rates.

The increase in interest income on taxable investment securities due to yield increases was mitigated by a $26.5 million decrease due to the decline in our taxable investment portfolio average balances which decreased by $785.2 million, or 16.7%, as our portfolio experienced pay downs, maturities and a strategic sale of $251.5 million of lower-yielding available-for-sale (“AFS”) securities to pay off higher rate wholesale fundings consisting of FHLB advances during the third quarter of 2024.

Included in interest income is the additional yield accretion recognized as a result of updated estimates of the cash flows of our loans acquired.

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For the years ended December 31, 2024, 2023 and 2022, interest income included $6.1 million, $8.8 million and $23.9 million, respectively, for the yield accretion recognized on loans acquired.

The $415.6 million increase in interest expense is mostly 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.

Interest expense increased $323.4 million due to the increase in rate of 212 basis points on interest-bearing deposit accounts and increased $50.5 million due to the increase in deposit volume over the period.

Additionally, interest expense increased $35.3 million due to the increase in rate of 302 basis points on other borrowings.

The $123.6 million increase in interest expense is mostly 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 $113.5 million due to the increase in rates of 68 basis points on interest-bearing deposit accounts and increased $13.8 million due to the increase in deposit volume over the period.

The increase in interest expense was partially offset by a decrease of $5.4 million related to a decreased reliance on other borrowings over the period.

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

Our net interest margin on a fully tax equivalent basis was 2.74% for the year ended December 31, 2024, down 4 basis points from 2023.

The decrease in the net interest margin 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.

The marginal decrease in the net interest margin was primarily due to the rising deposit rate pressure from increased market competition and consumer migration toward higher rate deposits, mitigated by the increased yields on our earning assets average balances over the comparative periods.

Over the course of 2025, we anticipate moderating pressure on our margin due to several factors.

We saw moderate organic loan growth during 2023, but our loan pipeline experienced decreased volume throughout the year.

We expect further modest organic loan growth during 2024, subject to macroeconomic uncertainties that may reduce or otherwise impact loan demand, with continued focus on maintaining prudent underwriting standards and pricing discipline given projects surrounding near term future economic growth.

We sold $241.1 million of low yield AFS securities late in the fourth quarter of 2023, and used sale proceeds to pay off higher rate wholesale fundings and we will continue to evaluate opportunities to optimize our balance sheet based on changing market conditions.

Further, we have $1.0 billion of fixed rate callable municipal securities held in the AFS portfolio under swap agreements, which involve the payment of fixed interest rates with a weighted average of 1.21% in exchange for variable interest rates based on federal funds rates that began in the third quarter of 2023.

Additionally, while our most likely forecast embeds several rate cuts during 2024, there is still much uncertainty as to decisions that will be made by the FOMC and the risks present in the economy.

We saw moderate organic loan growth during 2024 and we are cautiously optimistic regarding further modest organic loan growth during 2025, subject to the underlying economy and growth opportunities, with continued focus on maintaining prudent underwriting standards and profitability discipline.

We sold $251.5 million of low yield AFS securities in the third quarter of 2024, and used sale proceeds to pay off higher rate wholesale fundings and we will continue to evaluate opportunities to optimize our balance sheet based on changing market conditions.

We also expect modest increases in noninterest income related to fee based services and noninterest expenses related to continuous improvement initiatives and utilizing cost savings to partially fund targeted investments in technology and talent.

Additionally, while our balance sheet is in a favorable position for the repricing of assets and liabilities, there is still much uncertainty as to decisions that will be made by the FOMC and the risks present in the economy.

Tables 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the years ended December 31, 2024, 2023 and 2022, respectively, as well as changes in fully taxable equivalent net interest margin for the years 2024 versus 2023 and 2023 versus 2022.

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2023 2023 vs.

Increase due to change in earning assets $ 93,320 $ 147,423

Increase (decrease) due to change in earning assets $ (2,912) $ 93,320

Increase due to change in earning asset yields 105,193 255,878

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Decrease due to change in interest rates paid on interest bearing liabilities (117,026) (366,900)

(Decrease) increase in net interest income $ (66,418) $ 131,224

Decrease in net interest income $ (21,284) $ (66,418)

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 each of the years in the three-year period ended December 31, 2024.

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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.

During 2023, our provision for credit loss expense was $42.0 million, as compared to an expense of $14.1 million during 2022 and a recapture of $32.7 million during 2021.

During 2024, our provision for credit loss expense was $46.8 million, as compared to an expense of $42.0 million during 2023 and an expense of $14.1 million during 2022.

The provision for credit loss expense during 2024 was related to loans and reflected loan growth, as well as the impact of updated economic assumptions.

The provision for credit loss expense during 2023 was impacted by several factors throughout the year, including a $47.4 million expense related to loans and reflected loan growth, as well as the impact of updated economic assumptions, which was partially offset by a $16.3 million release from the reserve for unfunded commitments primarily due to a decline in unfunded commitments resulting from customers utilizing lines of credit during the year.

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Further recapture during 2022 was driven by the planned exit of several large oil and gas relationships during the year, along with our improved asset credit quality metrics and improved Moody’s economic modeling scenarios.

The recapture of credit losses during 2021 was driven by improved credit quality metrics, improved macroeconomic factors, and a maturing and amortizing loan portfolio.

This recapture was partially offset by $22.7 million in provision for credit loss expense for estimated lifetime credit losses for non-purchase credit deteriorated loans acquired through the acquisitions of Landmark and Triumph during the fourth quarter.

Noninterest Income

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Noninterest income for 2024 decreased $8.4 million, or 5.4%, from 2023.

Included in 2023 results was $20.6 million of a certain item related to the loss on the sale of securities during the period.

Included in 2022 results were $4.0 million of certain items, primarily made up of a $4.1 million gain on an insurance settlement related to a weather event that caused severe damage to one of our branch locations.

Adjusting for these certain items, adjusted noninterest income for the year ended December 31, 2023 increased $10.1 million, or 6.1%, from the prior year.

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

The majority of the decrease in noninterest income during 2023 was related to the loss on sale of securities as compared to 2022.

During 2023, we sold approximately $247.9 million of investment securities resulting in a net loss of $20.6 million, while we realized a net loss of $278,000 related to the call of securities during 2022.

The sale of securities during 2023 was primarily related 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.

Mortgage lending income decreased $2.8 million during 2023 due to the rising interest rate environment and softening market conditions throughout the year, which continued to slow the demand for mortgage loans.

We originated $428.0 million and $751.0 million in mortgage loans during 2023 and 2022, respectively.

These decreases in noninterest income during 2023 were partially offset by an increase of $4.0 million in service charges on deposit accounts primarily attributable to a full period including the customer base from the Spirit acquisition and additional transactions due to the changes in customer spending habits.

Also included in 2023 results is a $4.0 million legal reserve recapture associated with litigation.

Included in both 2024 and 2023 results were $28.4 million and $20.6 million, respectively, of certain items related to the loss on the sale of securities during the period.

Adjusting for these certain items, adjusted noninterest income for the year ended December 31, 2024 decreased $611,000, or 0.3%, from the prior year.

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

During 2024, we sold approximately $251.5 million of investment securities resulting in a net loss of $28.4 million, while we realized a net loss of $20.6 million related to the sale of $247.9 million of investment securities during 2023.

The sale of securities during both 2024 and 2023 was primarily related to strategic decisions to sell low yield securities and use the proceeds to pay off higher rate wholesale fundings.

The larger loss on sale of securities recognized during 2024, coupled with a $4.0 million legal reserve recapture associated with litigation recognized in 2023, were partially offset with increases in bank owned life insurance income and several fee-based businesses during 2024.

These incremental increases as compared to the prior period were primarily made up of a $3.5 million increase related to bank owned life insurance due to a higher earnings credit rate as compared to the prior period, a $2.6 million increase related to wealth management fees due to market conditions and a $1.4 million increase in debit and credit card fees related to increased customer activity.

Table 5 shows noninterest income for the years ended December 31, 2024, 2023 and 2022, respectively, as well as changes in 2024 from 2023 and in 2023 from 2022.

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Gain (loss) on sale of securities, net (28,393) (20,609) (278) (7,784) 37.8 (20,331) *

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

Gain on insurance settlement — — 4,074 — — (4,074) *

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*Not meaningful

Recurring fee income (total service charges, wealth management fees, debit and credit card fees) for 2023 was $121.3 million, an increase of $4.1 million, or 3.5%, when compared to the 2022 amounts.

The increase is primarily due to the increased consumer base provided by the Spirit acquisition.

We expect service charges to continue to moderate in early 2024 due to the elimination of returned item fees for consumer deposit accounts with insufficient funds implemented during the third quarter of 2023.

Overall, we expect flat to modest growth in noninterest income during 2024.

Recurring fee income (total service charges, wealth management fees, debit and credit card fees) for 2024 was $124.8 million, an increase of $3.4 million, or 2.8%, when compared to the 2023 amounts and was primarily related to the increases discussed above.

Noninterest Expense

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Noninterest expense for 2024 was $557.5 million, as compared to noninterest expense for 2023 of $563.1 million, a decrease of $5.5 million, or 1.0%, compared to the prior period.

Adjusted noninterest expense, which excludes branch right sizing, merger related costs, FDIC special assessment (for 2023 only), donation to Simmons First Foundation (for 2022 only) and early retirement program costs (for 2023 only), for the year ended December 31, 2023 increased $396,000, or 0.1%, from the prior year.

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

Merger related costs for 2023 and 2022 were $1.4 million and $22.5 million, respectively, and were primarily related to the Spirit acquisition.

Salaries and employee benefits expense decreased slightly by $865,000 as compared to 2022, while adjusted salaries and employee benefits expense decreased by $7.1 million as compared to 2022.

The decrease in adjusted salaries and employee benefits expense reflects the successful execution of programs as part of our Better Bank Initiative.

Early retirement program costs during 2023 were $6.2 million.

Deposit insurance increased by $18.4 million as compared to 2022.

Excluding the FDIC special assessment of $10.5 million levied to support the Deposit Insurance Fund following the failure of certain banks in 2023, deposit insurance increased by $7.9 million primarily due to an increased base rate related to changes in the mix of deposits, coupled with the increase in deposits from the Spirit acquisition.

Adjusted noninterest expense, which excludes branch right sizing, FDIC special assessment, early retirement program costs, termination of vendor and software services (for 2024 only), and merger related costs (for 2023 only), for the year ended December 31, 2024 increased $12.4 million, or 2.3%, from the prior year.

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

Salaries and employee benefits expense decreased by $2.0 million as compared to 2023, while adjusted salaries and employee benefits expense, which excludes early retirement program costs, increased by $3.7 million as compared to 2023.

The increase in adjusted salaries and employee benefits expense reflects incentive compensation accrual adjustments during the periods, in addition to annual merit increases.

Early retirement program costs during 2024 and 2023 were $536,000 and $6.2 million, respectively.

Deposit insurance expense decreased by $6.0 million as compared to 2023.

Excluding the FDIC special assessment of $1.8 million recorded during the year ended December 31, 2024 and $10.5 million recorded during the year ended December 31, 2023, both of which were levied to support the Deposit Insurance Fund following the failure of certain banks in 2023, adjusted deposit insurance expense increased by $2.6 million primarily due to an increased base assessment rate related to changes in the mix of deposits.

Amortization of intangibles recorded for the years ended December 31, 2024, and 2023 was $15.4 million and $16.3 million, respectively.

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Deposit insurance 23,938 29,986 11,608 (6,048) (20.2) 18,378 *

FDIC special assessment 10,521 — — 10,521 * — —

Merger related costs — 1,420 22,476 (1,420) (100.0) (21,056) (93.7)

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*Not meaningful

Due to our Better Bank Initiative and continuous efficiency improvements, we expect marginal growth in noninterest expense during 2024.

Due to our Better Bank Initiative and continuous efficiency improvements, offset by expected increases related to merit-based compensation adjustments and targeted investments during the upcoming period, we expect marginal growth in noninterest expense during 2025.

The provision for income taxes for 2024 was $18.6 million, compared to $25.5 million in 2023 and $50.1 million in 2022.

The effective income tax rates for the years ended 2024, 2023 and 2022 were 10.9%, 12.7% and 16.4%, respectively.

The decrease in the provision for income taxes during 2023 was primarily due to tax exempt income having a larger favorable impact on the rate and lower state taxes in 2023, both driven by the one time charges to income from the loss on sale of securities and the FDIC special assessment.

The decrease in the provision for income taxes during 2024 as compared to 2023 and 2023 as compared to 2022 was primarily due to tax exempt income having a larger favorable impact on the rate and lower state taxes during the periods, both driven by the one time charges to income from the loss on sale of securities during each respective period, in addition to the FDIC special assessment largely recognized during 2023.

Loan Portfolio

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As of December 31, 2024, total loans were $17.01 billion, compared to $16.85 billion on December 31, 2023, an increase of $160.3 million, or 1.0%.

The increase in the overall loan balance during 2023 is primarily due to widespread loan growth throughout our geographic markets during the year.

The increase in the overall loan balance during 2024 was primarily due to widespread loan growth throughout our geographic markets during the year.

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).

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Consumer loans were $309.0 million at December 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 was primarily due to loan payoffs and pay downs within the other consumer portfolio during the year.

Our credit card portfolio has remained a stable source of lending.

The decrease in consumer loans was primarily due to loan payoffs and pay downs within the credit card portfolio during the year.

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

Real estate loans were $13.34 billion at December 31, 2023, or 79.2% of total loans, compared to $12.58 billion, or 77.9% of total loans at December 31, 2022, an increase of $756.9 million, or 6.0%.

Our C&D loans increased by $577.6 million, or 22.5%, single family residential loans increased by $95.4 million, or 3.7%, and CRE loans increased by $83.9 million, or 1.1%.

The increases were due to diversified organic growth by type and geographic market during the period.

Real estate loans were $13.39 billion at December 31, 2024, or 78.7% of total loans, compared to $13.34 billion, or 79.2% of total loans at December 31, 2023, a modest increase of $53.3 million, or 0.4%.

Our C&D loans decreased by $355.0 million, or 11.3%, single family residential loans increased by $48.4 million, or 1.8%, and CRE loans increased by $359.9 million, or 4.8%.

The changes among our real estate portfolio reflected our focus on maintaining conservative underwriting standards and structure guidelines while emphasizing prudent pricing discipline during the period.

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 $2.72 billion at December 31, 2023, or 16.2% of total loans, compared to $2.84 billion, or 17.6% of total loans at December 31, 2022, a decrease of $115.0 million, or 4.1%.

Total commercial loans were $2.70 billion at December 31, 2024, or 15.8% of total loans, compared to $2.72 billion, or 16.2% of total loans at December 31, 2023, an incremental decrease of $27.6 million, or 1.0%.

The decrease in non-real estate loans related to business of $56.0 million, or 2.2%, was partially offset by the increase in agricultural loans of $28.4 million, or 12.2%.

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Mortgage volume experienced an increase in demand during 2024 as compared to 2023, and was coupled with continued organic growth in our municipal loans during the period, leading to an increase of $144.2 million in other loans.

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

Our commercial loan pipeline consisting of all commercial loan opportunities was $948.2 million at December 31, 2023, compared to $1.12 billion at December 31, 2022.

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

Our commercial loan pipeline consisting of all commercial loan opportunities was $1.26 billion at December 31, 2024, compared to $948.2 million at December 31, 2023.

The pipeline includes $551.8 million in loans approved and ready to close at the end of the year.

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Total loans before allowance for credit losses $ 17,005,937 $ 16,845,670 $ 16,142,124 $ 12,012,503 $ 12,900,897

Table 8 reflects the remaining maturities and interest rate sensitivity of loans at December 31, 2023.

Maturity and Interest Rate Sensitivity of Loans

Table 8 reflects the remaining loan maturities by interest rate type at December 31, 2024.

Maturity Distribution of Loan Portfolio by Rate Type

1 year Over 1 year through Over 5 years through Over

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Total $ 2,355,345 $ 5,080,012 $ 944,718 $ 264,549 $ 8,644,624

Floating rate

Variable rate

Consumer $ 4,695 $ 126,088 $ 64 $ 188 $ 131,035

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Nonaccrual loans increased by $26.8 million during 2024, in addition to an increase in foreclosed assets held for sale of $5.2 million.

The increase in nonaccrual assets 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 0.45% at December 31, 2023 compared to 0.23% at December 31, 2022.

The increase in nonaccrual loans was primarily spread within our real estate and commercial loan portfolios.

The increase in foreclosed assets held for sale was primarily related to the addition of two commercial properties with net book values totaling $7.4 million during the period.

Total non-performing assets increased by $27.8 million from December 31, 2022 to December 31, 2023.

Nonaccrual loans increased by $24.9 million during 2023, in addition to an increase in foreclosed assets held for sale of $1.2 million.

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

Total non-performing assets decreased by $13.8 million from December 31, 2021 to December 31, 2022.

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Louis area and the disposition of one piece of commercial land with net book values at the time of sale of $6.5 million and $2.8 million, respectively.

Total non-performing assets increased by $28.6 million from December 31, 2019 to December 31, 2020.

Nonaccrual loans increased by $29.5 million during 2020, partially offset by a decrease in foreclosed assets held for sale of $728,000.

The increase in nonaccrual loans during 2020 is primarily related to one energy loan totaling $22.0 million which moved to nonaccrual during the fourth quarter of 2020.

The remaining increase was related to various other CRE loans and commercial loan relationships.

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

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

The financial effects of the modified loans made to borrowers experiencing financial difficulty in the single family residential real estate and commercial portfolio were not significant during the year ended December 31, 2023 and did not significantly impact our determination of the allowance for credit losses on loans during the year.

During the year ended December 31, 2023, we modified one loan related to the other CRE portfolio, whereby the borrower was experiencing financial difficulty at the time of modification.

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

Upon modification, a charge-off of $9.6 million was recorded in relation to this modified loan during 2023.

As a result of the other CRE loan modified during the year ended December 31, 2023 being collateral-dependent, the impact to our allowance for credit losses on loans was the difference between the fair value of the underlying collateral, adjusted for selling costs, and the remaining outstanding principal balance of the loan.

We continue to maintain good asset quality, compared to the industry, and strong asset quality remains a primary focus for us.

The financial effects of the modified loans made to borrowers experiencing financial difficulty in the single family residential real estate portfolio were not significant during the year ended December 31, 2024 and did not significantly impact the Company’s determination of the allowance for credit losses on loans during the year.

During the year ended December 31, 2024, the Company modified one loan for a borrower experiencing financial difficulty related to the CRE portfolio, whereby the modification extended the term of the loan 1.5 years.

As a result of the CRE loan modified during the year ended December 31, 2024 being collateral-dependent, the impact to the Company’s allowance for credit losses on loans was the difference between the fair value of the underlying collateral, adjusted for selling costs, and the remaining outstanding principal balance of the loan.

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 1.38% as of December 31, 2024.

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Total non-performing assets $ 121,229 $ 90,271 $ 62,472 $ 76,252 $ 143,866

Performing FDMs (formerly TDRs) $33,577 $1,849 $4,289 $3,138 $5,887

Allowance for credit losses to non-performing loans 212 % 267 % 334 % 300 % 193 %

Non-performing loans to total loans 0.65 % 0.50 % 0.37 % 0.57 % 0.96 %

Non-performing assets (including performing FDMs (formerly TDRs)) to total assets 0.45 % 0.23 % 0.33 % 0.66 % 0.57 %

Non-performing assets to total assets 0.45 % 0.33 % 0.23 % 0.31 % 0.64 %

_________________________

(1) Includes nonaccrual FDMs (formerly known as TDRs) of approximately $282,000, $1.6 million, $2.7 million, $4.4 million and $1.6 million at December 31, 2023, 2022, 2021, 2020 and 2019, respectively.

There was no interest income on nonaccrual loans recorded for the years ended December 31, 2023, 2022 and 2021.

(1) Includes nonaccrual financial difficulty modifications (formerly known as troubled debt restructurings) of approximately $597,000, $282,000, $1.6 million, $2.7 million and $4.4 million at December 31, 2024, 2023, 2022, 2021 and 2020, respectively.

The interest income on nonaccrual loans is not considered material for the years ended December 31, 2024, 2023 and 2022.

Allowance for Credit Losses

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Credit cards $ 6,007 1.1% $ 5,868 1.1% $ 5,140 1.2%

Other consumer 5,716 3.5% 6,614 3.2% 4,617 4.1%

Other consumer and Other 5,463 4.3% 5,716 3.5% 6,614 3.2%

Real estate 181,962 78.8% 177,177 79.2% 150,795 78.0%

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Under this model, an estimate of expected credit losses that represents all contractual cash flows that is deemed uncollectible over the contractual life of the financial asset must be recorded.

During 2023, we recorded $9.1 million of provision for credit losses related to AFS securities due to isolated corporate bonds within the portfolio.

We charged-off $7.0 million directly related to one corporate bond, which was deemed uncollectible in the period, while the remaining isolated bonds were sold or experienced price recovery on previous impairments prior to the end of the period.

There was no provision for credit losses related to the Company’s securities portfolios recorded for the year ended December 31, 2024.

We recorded a provision for credit losses related to AFS securities of $12.8 million for the year ended December 31, 2023 due to isolated corporate bonds within the portfolio.

During the same period, the provision for credit loss expense on AFS securities was reduced by $3.7 million related to previously impaired securities.

We also charged-off $7.0 million directly related to one corporate bond, which was deemed uncollectible in the period, while the remaining isolated bonds were sold or experienced price recovery on previous impairments prior to the end of the period.

Based upon our analysis of the underlying risk characteristics of the AFS portfolio, including credit ratings and other qualitative factors, no allowance for credit losses related to AFS securities was deemed necessary at December 31, 2024 and 2023.

Our allowance for credit losses related to HTM securities was $3.2 million and $1.4 million at December 31, 2023 and 2022, respectively.

Our allowance for credit losses related to HTM securities was $3.2 million for both periods ended December 31, 2024 and 2023.

An allowance for credit losses related to mortgage-backed securities and U.S.

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See Note 3, Investment Securities, in the accompanying Notes to Consolidated Financial Statements for additional information related to our allowance for credit losses on investment securities held.

We had no gross realized gains and $20.6 million of gross realized losses from the sale of securities during the year ended December 31, 2023, compared to $46,000 of gross realized gains and $324,000 of gross realized losses from the call of securities during the year ended December 31, 2022.

We sold approximately $247.9 million of investment securities during 2023, while no securities were sold during 2022.

Securities sold during 2023 were in large part related 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.

We had no gross realized gains and $28.4 million of gross realized losses from the sale of securities during the year ended December 31, 2024, compared to no gross realized gains and $20.6 million of gross realized losses from the sale of securities during the year ended December 31, 2023.

We sold approximately $251.5 million of AFS investment securities as part of a strategic decision to sell low yielding securities to pay off higher rate wholesale fundings consisting of Federal Home Loan Bank (“FHLB”) advances during 2024, while we sold approximately $247.9 million of investment securities during 2023 related to a strategic decision to sell low yielding securities and use the proceeds to pay off higher rate wholesale fundings, including both brokered deposits and FHLB advances.

We have the ability and intent to hold the securities classified as HTM until they mature, at which time we expect to receive full value for the securities.

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Our total deposits as of December 31, 2024, were $21.89 billion, a decrease of $359.2 million from December 31, 2023.

Noninterest bearing transaction accounts, interest bearing transaction accounts and savings accounts totaled $15.80 billion at December 31, 2023, compared to $17.78 billion at December 31, 2022, a decrease of $1.98 billion.

Total time deposits increased $1.68 billion to $6.45 billion at December 31, 2023, from $4.77 billion at December 31, 2022.

Noninterest bearing transaction accounts, interest bearing transaction accounts and savings accounts totaled $15.44 billion at December 31, 2024, compared to $15.80 billion at December 31, 2023, a decrease of $355.8 million.

Total time deposits were relatively flat over the period and totaled $6.44 billion at December 31, 2024 as compared to $6.45 billion at December 31, 2023.

We had $3.30 billion and $2.90 billion of brokered deposits at December 31, 2024, and December 31, 2023, respectively.

Our uninsured deposits as of December 31, 2024 and 2023 were $4.63 billion and $4.75 billion, respectively.

The change in the mix of deposits at December 31, 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.

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.

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and $17.4 million of other long-term debt.

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

A summary of information related to our FHLB short-term advances, consisting of fixed rate, fixed term advances, is presented in Table 16.

FHLB advances outstanding at December 31, 2024, which decreased as compared to December 31, 2023 due to a reduced reliance on wholesale funding, are primarily whole loan advances, which are due less than one year from origination and therefore are classified as short-term advances.

A summary of information related to our FHLB short-term advances, consisting of primarily whole loan advances, is presented in Table 16.

Short-Term Borrowings

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

On March 31, 2021, we filed a shelf registration with the SEC.

The shelf registration statement provides increased flexibility and more efficient access to raise capital from time to time through the sale of common stock, preferred stock, debt securities, depository shares, warrants, purchase contracts, purchase units, subscription rights, units or a combination thereof, subject to market conditions.

On May 17, 2024, we filed a shelf registration with the SEC.

The shelf registration statement provides increased flexibility and more efficient access to raise capital from time to time through the sale of common stock, preferred stock, debt securities, depository shares, warrants, purchase contracts, subscription rights, units or a combination thereof, subject to market conditions.

Specific terms and prices are determined at the time of any offering under a separate prospectus supplement that we are required to file with the SEC at the time of the specific offering.

Stock Repurchase Program

On October 22, 2019, we announced a stock repurchase program (the “2019 Program”) under which we could repurchase up to $60.0 million of our Class A Common Stock currently issued and outstanding.

On March 5, 2020, we announced an amendment to the 2019 Program that increased the maximum amount that could be repurchased under the 2019 Program from $60.0 million to $180.0 million.

Effective July 23, 2021, our Board of Directors approved another amendment to the 2019 Program that increased the amount of our Class A common stock that may be repurchased 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 repurchase capacity under the 2019 Program.

As a result, our Board of Directors authorized a new stock repurchase program in January 2022 (“2022 Program”) under which we may 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.

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

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

The 2024 Program will be executed in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and will terminate on January 31, 2026 (unless terminated sooner).

During 2024, no shares were repurchased under the 2024 Program.

During 2023, we repurchased 2,257,049 shares at an average price of $17.72 per share under the 2022 Program.

During 2022, we 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, respectively.

The 2022 Program repurchases were all completed during the second and third quarters of 2022.

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

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The primary sources for meeting these liquidity needs are the current cash on hand at the parent company and the future dividends received from Simmons Bank.

Payment of dividends by Simmons Bank is subject to various regulatory limitations.

Payment of dividends by Simmons Bank is subject to various regulatory limitations and, in certain instances, regulatory approval requirements.

The Company continually assesses its capital and liquidity needs and the best way to meet them, including, without limitation, through capital raising in the market via stock or debt offerings.

See Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”, for additional information regarding the parent company’s liquidity, which is incorporated herein by reference.

The redemption of our trust preferred securities during the third quarter of 2022 did not have a meaningful impact on the Parent Company’s liquidity.

Risk-Based Capital

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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 are no longer included as Tier 1 capital.

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

Qualifying subordinated debt of $234.3 million is included as Tier 2 and total capital of the Company as of December 31, 2024.

3 unchanged sentences

GAAP Reconciliation of Non-GAAP Financial Measures

The tables below present computations of adjusted earnings (net income excluding certain items {gain on sale of branches, early retirement program costs, loss from early retirement of TruPS, gain on sale of intellectual property, gain on insurance settlement, donation to Simmons First Foundation, merger related costs, FDIC special assessment, loss (gain) on sale of securities, net branch right sizing costs, and the Day 2 CECL Provision}) (non-GAAP) and adjusted diluted earnings per share (non-GAAP) as well as a computation of tangible book value per common 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 {early retirement program costs, loss from early retirement of TruPS, gain on sale of intellectual property, gain on insurance settlement, donation to Simmons First Foundation, merger related costs, FDIC special assessment, loss on sale of securities, termination of vendor and software services, net branch right sizing costs, Day 2 CECL Provision and tax effect}) (non-GAAP) and adjusted diluted earnings per share (non-GAAP) as well as a computation of tangible book value per common 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), adjusted deposit insurance expense (non-GAAP), uninsured, non-collateralized deposits (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).

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

We believe that presenting these non-GAAP financial measures will permit investors and analysts to assess the performance of the Company on the same basis as that is applied by management and the Board of Directors.

We believe that presenting these non-GAAP financial measures will permit investors and analysts to assess the performance of the Company on the same basis that is applied by management and the Board of Directors.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited.

3 unchanged sentences

Additionally, similarly titled non-GAAP financial measures used by other companies may not be computed in the same or similar fashion.

During 2024, adjusted items primarily consisted of net branch right sizing costs of $2.7 million, mainly due to branch closures across our footprint during the year, and a $28.4 million loss on sale of securities due to the strategic sale of AFS securities during the year.

We also recorded an additional $1.8 million related to a FDIC special assessment levied to support the Deposit Insurance Fund following the failure of certain banks in 2023.

The net after-tax impact of all adjusted items on net income was $25.2 million, or a $0.20 impact on diluted earnings per share.

During 2023, adjusted items primarily consisted of net branch right sizing costs of $5.5 million, mainly due to branch closures across our footprint during the year, $6.2 million in early retirement program costs related to our Better Bank Initiative, and a $20.6 million loss on sale of securities due to the strategic sale of AFS securities during the year.

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The net after-tax impact of all adjusted items was $42.4 million, or $0.34 per diluted earnings per share.

During 2021, adjusted items primarily consisted of $22.7 million of Day 2 provision expense required for loans related to the Landmark and Triumph acquisitions, $15.9 million of merger-related costs, related to the Landmark and Triumph acquisitions and $15.5 million of gains related to the sale of securities.

Additionally, we had total gains on sale of branches of $5.3 million due to the Illinois Branch Sale.

The net after-tax impact of these items was $12.5 million, or $0.11 per diluted earnings per share.

See Table 19 below for the reconciliation of adjusted earnings, which exclude certain items for the periods presented.

3 unchanged sentences

Certain items:

Gain on sale of branches — — (5,316)

Termination of vendor and software services 602 — —

Loss from early retirement of TruPS — — 365

5 unchanged sentences

Early retirement program 536 6,198 —

Loss (gain) on sale of securities 20,609 278 (15,498)

Loss on sale of securities 28,393 20,609 278

Branch right sizing, net 2,746 5,467 3,628

6 unchanged sentences

Certain items:

Gain on sale of branches — — (0.05)

Termination of vendor and software services — — —

Loss from early retirement of TruPS — — —

5 unchanged sentences

Early retirement program — 0.05 —

Loss (gain) on sale of securities 0.17 — (0.14)

Loss on sale of securities 0.23 0.17 —

Branch right sizing, net 0.02 0.04 0.03

6 unchanged sentences

(1) Effective tax rate of 26.135%.

See Table 20 below for the reconciliation of adjusted noninterest income, adjusted noninterest expense and adjusted salaries and employee benefits expense for the periods presented.

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

See Table 20 below for the reconciliations of adjusted noninterest income, adjusted noninterest expense, adjusted salaries and employee benefits expense and adjusted deposit insurance expense for the periods presented.

Reconciliations of Adjusted Noninterest Income (non-GAAP), Adjusted Noninterest Expense (non-GAAP), Adjusted Salaries and Employee Benefits Expense (non-GAAP) and Adjusted Deposit Insurance Expense (non-GAAP)

(In thousands) 2024 2023 2022

1 unchanged sentence

Certain items:

Gain on sale of branches — — (5,316)

Gain on insurance settlement — — (4,074)

1 unchanged sentence

Gain on sale of intellectual property — — (750)

Loss (gain) on sale of securities 20,609 278 (15,498)

Loss on sale of securities 28,393 20,609 278

Branch right sizing — — 153

3 unchanged sentences

Certain items:

Termination of vendor and software services (602) — —

Merger related costs — (1,420) (22,476)

7 unchanged sentences

Early retirement program costs (536) (6,198) —

Other 2 — (66)

Adjusted salaries and employee benefits expense (non-GAAP) $ 283,588 $ 279,921 $ 286,982

Deposit insurance expense $ 23,938 $ 29,986 $ 11,608

FDIC special assessment (1,832) (10,521) —

Adjusted deposit insurance expense (non-GAAP) $ 22,106 $ 19,465 $ 11,608

See Table 21 below for the reconciliation of tangible book value per common share.

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8.29 % 7.69 % 7.00 %

See Table 23 below for the calculation of uninsured, non-collateralized deposit coverage ratio.

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

See Table 23 below for the reconciliation of uninsured, non-collateralized deposits and the calculation of uninsured, non-collateralized deposit coverage ratio.

Reconciliation of Uninsured, Non-Collateralized Deposits and the Calculation of Uninsured, Non-Collateralized Deposit Coverage Ratio (non-GAAP)

(In thousands) 2024 2023 2022

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

2,081,000 1,998,000 1,982,000

Additional liquidity sources $ 10,900,000 $ 11,216,000 $ 10,604,000

Uninsured, non-collateralized deposit coverage ratio 2.4x 1.9x

Uninsured, non-collateralized deposit coverage ratio 2.4x 2.4x 1.9x

___________________________________

(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-K

Item 7. Management’s Discussion and Analysis