SIMMONS FIRST NATIONAL CORP 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 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 March 31, 2025 to our results of operations for the three months ended December 31, 2024 and March 31, 2024, as applicable, throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations. OVERVIEW During the first three months of 2025, we demonstrated continued improvement in profitability fundamentals. Increases in loans and customer deposits combined with a decrease in wholesale funding have driven a healthy increase in our net interest margin and positive trends in total revenue. 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: • Total deposits as of March 31, 2025 were $21.68 billion, compared to $21.89 billion as of December 31, 2024. Uninsured, non-collateralized deposits as of March 31, 2025 were approximately $4.54 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, 2025 (see Table 11 in the Risk-Based Capital section below). As of March 31, 2025, our ratio of common equity to total assets was 13.18%, the ratio of tangible common equity to tangible assets was 8.34% and our Tier 1 leverage ratio was 9.83%. • Significant liquidity position with a loan to deposit ratio of 79% and 78% as of March 31, 2025 and December 31, 2024, respectively. Additional liquidity sources available to us as of March 31, 2025 totaled $10.41 billion and our uninsured, non-collateralized deposit coverage ratio was 2.3x. Our net income for the three months ended March 31, 2025 was $32.4 million, or $0.26 diluted earnings per share, compared to net income of $48.3 million, or $0.38 diluted earnings per share, and $38.9 million, or $0.31 diluted earnings per share, for the three months ended December 31, 2024 and March 31, 2024, respectively. Included in the results were certain items related to our branch right sizing initiatives, early retirement program costs (for the three months ended March 31, 2024 and December 31, 2024) and a FDIC special assessment (for the three months ended March 31, 2024). Excluding these certain items and the tax effect, adjusted earnings for the three months ended March 31, 2025 were $33.1 million, or $0.26 adjusted diluted earnings per share, compared to $49.6 million, or $0.39 adjusted diluted earnings per share, and $40.4 million, or $0.32 adjusted diluted earnings per share, for the three months ended December 31, 2024 and March 31, 2024, respectively. During the quarter, we increased the loss provision on two specific credit relationships that we have been watching for some time due to unfavorable events that occurred for both during the three months ended March 31, 2025. Otherwise, we believe the asset quality in our portfolio remains sound and reflects 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 March 31, 2025, December 31, 2024, and March 31, 2024 were $152.4 million, $110.8 million, and $107.3 million, respectively. Nonperforming assets as a percent of total assets were 0.61% at March 31, 2025, compared to 0.45% at December 31, 2024 and 0.41% at March 31, 2024. As of March 31, 2025, stockholders’ equity was $3.53 billion, book value per share was $28.04 and tangible book value per share was $16.81. Total loans were $17.09 billion at March 31, 2025, compared to $17.01 billion at December 31, 2024. Our unfunded commitments were $4.19 billion and $4.03 billion as of March 31, 2025 and December 31, 2024, respectively. Our commercial loan pipeline totaled $1.81 billion as of March 31, 2025, compared to $1.26 billion at December 31, 2024. 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 accounting principles generally accepted in the United States (“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 adjusted financial measures of the Company and predicting future performance. See the GAAP Reconciliation of Non-GAAP Financial Measures section below for additional discussion and reconciliations of non-GAAP measures. 47 Simmons First National Corporation is a Mid-South based financial holding company that, as of March 31, 2025, has approximately $26.8 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. CRITICAL ACCOUNTING ESTIMATES Overview The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates. We consider accounting estimates to be critical to reported financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain and (ii) different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on our financial statements. The accounting policies that we view as critical to us are those relating to estimates and judgments regarding (a) the determination of the adequacy of the allowance for credit losses, (b) acquisition accounting and valuation of loans, (c) the valuation of goodwill and the useful lives applied to intangible assets, (d) the valuation of stock-based compensation plans and (e) income taxes. Allowance for Credit Losses The allowance for credit losses is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, quantitative factors, and other qualitative considerations. The allowance, in the judgment of management, is necessary to reserve for expected credit losses and risks inherent in the loan portfolio. Our allowance for credit loss methodology includes reserve factors calculated to estimate current expected credit losses to amortized cost balances over the remaining contractual life of the portfolio, adjusted for prepayments, in accordance with Accounting Standards Codification (“ASC”) Topic 326-20, Financial Instruments - Credit Losses . Accordingly, the methodology is based on our reasonable and supportable economic forecasts, historical loss experience and other qualitative adjustments. For further information see the section Allowance for Credit Losses below. Our evaluation of the allowance for credit losses is inherently subjective as it requires material estimates. 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. Acquisition Accounting, Loans 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. The fair value for acquired loans at the time of acquisition is based on a variety of factors including discounted expected cash flows, adjusted for estimated prepayments and credit losses. In accordance with ASC 326, the fair value adjustment is recorded as a premium or discount to the unpaid principal balance of each acquired loan. Loans that have been identified as having experienced a more-than-insignificant deterioration in credit quality since origination are purchased credit deteriorated (“PCD”) loans. 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 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. We then record the necessary allowance for credit losses on the non-PCD loans through provision for credit losses expense. 48 Goodwill and Intangible Assets Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. 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 – 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. These assumptions are dependent on market and economic conditions. Key inputs to estimate terminal fair value of the Company include projected forecasts, noninterest expense savings and a pricing multiple based on a group of peer banks with similar characteristics. These inputs are discounted by the cost of equity, which includes assumptions involving our beta; equity risk, size and company premiums; and the 20-year treasury rate. Assumptions used in calculating the cost of equity are obtained from market and third-party data. Results are compared to book value; no impairment was indicated as of March 31, 2025. 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. Stock-Based Compensation Plans We have adopted various stock-based compensation plans. The plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, 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 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. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. For additional information, see Note 14, Stock-Based Compensation, in the accompanying Condensed Notes to Consolidated Financial Statements included elsewhere in this report. Income Taxes 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. Due to the complexity of these laws, taxpayers and the taxing authorities may subject these laws to different interpretations. Management must make conclusions and estimates about the application of these innately intricate laws, related regulations, and case law. When preparing the Company’s income tax returns, management attempts to make reasonable interpretations of the tax laws. Taxing authorities have the ability to challenge management’s analysis of the tax law or any reinterpretation management makes in its ongoing assessment of facts and the developing case law. Management assesses the reasonableness of its effective tax rate quarterly based on its current estimate of net income and the applicable taxes expected for the full year. On a quarterly basis, management also reviews circumstances and developments in tax law affecting the reasonableness of deferred tax assets and liabilities and reserves for contingent tax liabilities. 49 NET INTEREST INCOME Overview Net interest income, our principal source of earnings, is the difference between the interest income generated by earning assets and the total interest cost of the deposits and borrowings obtained to fund those assets. Factors that determine the level of net interest income include the volume of earning assets and interest bearing liabilities, yields earned and rates paid, the level of nonperforming loans and the amount of noninterest bearing liabilities supporting earning assets. Net interest income is analyzed in the discussion and tables below on a fully taxable equivalent basis. The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate of 26.135%. 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. In the last several years, on average, approximately 44% of our loan portfolio and approximately 92% of our time deposits have repriced in one year or less. As of March 31, 2025, our interest rate sensitivity shows that approximately 51% of our loans and 97% of our time deposits will reprice in the next year. Net Interest Income - Sequential Quarter Analysis For the three month period ended March 31, 2025, net interest income on a fully taxable equivalent basis was $169.8 million, a decrease of $1.5 million, or 0.9%, compared to the three months ended December 31, 2024. The decrease in net interest income was primarily the result of an $18.2 million decrease in fully tax equivalent interest income, partially offset by a $16.6 million decrease in interest expense. The decrease in interest income on a fully taxable equivalent basis primarily resulted from a $15.0 million decrease in interest income on loans, coupled with a decrease of $2.9 million in interest income on investment securities. The decrease in interest income provided by loans reflects a decrease attributable to loan volume of $4.6 million, coupled with a $10.4 million decrease in interest income related to loan yield. The loan yield for the first quarter of 2025 was 6.20% compared to 6.32% from the preceding sequential quarter, representing a 12 basis point decrease. The decrease in interest income on investment securities was primarily related to a $2.0 million decrease in interest income on taxable investment securities due to yield decreases of 15 basis points, combined with an $862,000 decrease attributable to volume related to our taxable investment portfolio, as our portfolio experienced pay downs and maturities during the three months ended March 31, 2025. The decrease in earning asset yields on a linked quarter basis was primarily driven by interest rate cuts at the end of 2024. The $16.6 million decrease in interest expense is mostly due to the $11.4 million decrease related to deposit rates, largely due to the 23 basis point decrease related to deposit accounts, corresponding with the rate cuts mentioned previously. Also contributing to the decrease in interest expense over the comparative quarters are reductions in the outstanding balances under and rates on wholesale borrowings sources, which led to a $3.7 million decrease in interest expense during the quarter. Net Interest Income - Year-over-Year Analysis Net interest income on a fully taxable equivalent basis for the three month period ended March 31, 2025 increased $11.5 million, or 7.3%, over the same period in 2024. The increase in net interest income on a fully taxable equivalent basis was the result of a $14.8 million decrease in fully tax equivalent interest income, more than offset by a $26.3 million decrease in interest expense. The decrease in interest income during the three month period ended March 31, 2025 primarily resulted from decreases in interest income on loans and investments. The decrease in interest income on loans was largely attributable to a 4 basis point decline in loan yield that resulted in a decrease of $4.1 million. Loan volume was relatively flat over the comparative periods. The decrease of $10.7 million in interest income on investment securities is primarily related to a $5.9 million decrease in interest income on taxable investment securities due to the decline in our taxable investment portfolio average balances which decreased by $621.9 million or 14.9%, 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 Federal Home Loan Bank (“FHLB”) advances during the third quarter of 2024. A yield decrease in the taxable investment portfolio over the period of 46 basis points led to a decrease of $4.7 million in interest income on taxable investment securities. 50 The $26.3 million decrease in interest expense is mainly due to the decrease in our deposit account rates over the period. Interest expense decreased $18.6 million due to the decrease in rate of 43 basis points on interest-bearing deposit accounts and $2.8 million due to the decrease in deposit volume over the period. Further, a decrease of $3.9 million in interest expense was related to reductions in the amounts outstanding under and rates on wholesale borrowings sources over the comparative 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 2.95% for the three month period ended March 31, 2025, as compared to 2.87% and 2.66% for the three months ended December 31, 2024 and the three months ended March 31, 2024, respectively. Net interest margin experienced an 8 basis point increase for the three months ended March 31, 2025 compared to the preceding sequential quarter, while net interest margin increased 29 basis points during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase over both comparative periods was primarily due to lower deposits costs, as well as the reduced rate and use of wholesale funding that more than offset a decline on the yield and volume of earning assets. The increase when compared to the same period in the prior year was also aided by the strategic sale of lower-yielding AFS investment securities during the third quarter of 2024. 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 March 31, 2025, December 31, 2024 and March 31, 2024, respectively. Table 1: Analysis of Net Interest Margin (FTE = Fully Taxable Equivalent using an effective tax rate of 26.135%) Three Months Ended March 31, December 31, March 31, (In thousands) 2025 2024 2024 Interest income $ 307,837 $ 325,982 $ 322,649 FTE adjustment 6,414 6,424 6,422 Interest income – FTE 314,251 332,406 329,071 Interest expense 144,415 161,040 170,743 Net interest income – FTE $ 169,836 $ 171,366 $ 158,328 Yield on earning assets – FTE 5.47 % 5.57 % 5.53 % Cost of interest bearing liabilities 3.17 % 3.42 % 3.64 % Net interest spread – FTE 2.30 % 2.15 % 1.89 % Net interest margin – FTE 2.95 % 2.87 % 2.66 % Table 2: Changes in Fully Taxable Equivalent Net Interest Margin Three Months Ended (In thousands) March 31, 2025 compared to December 31, 2024 March 31, 2025 compared to March 31, 2024 Decrease due to change in earning assets $ (5,663) $ (5,427) Decrease due to change in earning asset yields (12,492) (9,393) Increase due to change in interest bearing liabilities 3,760 4,907 Increase due to change in interest rates paid on interest bearing liabilities 12,865 21,421 Increase (decrease) in net interest income $ (1,530) $ 11,508 51 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, 2025, December 31, 2024 and March 31, 2024, 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. The analysis is presented on a fully taxable equivalent basis. Nonaccrual loans were included in average loans for the purpose of calculating the rate earned on total loans. Table 3: Average Balance Sheets and Net Interest Income Analysis (FTE = Fully Taxable Equivalent using an effective tax rate of 26.135%) Three Months Ended March 31, 2025 December 31, 2024 March 31, 2024 Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ (In thousands) Balance Expense Rate (%) Balance Expense Rate (%) Balance Expense Rate (%) ASSETS Earning assets: Interest bearing balances due from banks and federal funds sold $ 241,021 $ 2,703 4.55 $ 238,731 $ 2,913 4.85 $ 211,121 $ 3,010 5.73 Investment securities - taxable 3,540,559 31,584 3.62 3,633,138 34,459 3.77 4,162,455 42,198 4.08 Investment securities - non-taxable 2,608,070 21,217 3.30 2,633,148 21,260 3.21 2,635,368 21,301 3.25 Mortgage loans held for sale 8,142 122 6.08 10,713 180 6.68 9,048 148 6.58 Loans - including fees 16,920,050 258,625 6.20 17,212,034 273,594 6.32 16,900,496 262,414 6.24 Total interest earning assets 23,317,842 314,251 5.47 23,727,764 332,406 5.57 23,918,488 329,071 5.53 Non-earning assets 3,360,786 3,351,179 3,340,911 Total assets $ 26,678,628 $ 27,078,943 $ 27,259,399 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities: Interest bearing liabilities: Interest bearing transaction and savings deposits $ 11,177,550 $ 67,895 2.46 $ 10,967,450 $ 72,369 2.63 $ 11,132,396 $ 78,692 2.84 Time deposits 6,160,429 62,559 4.12 6,397,251 70,661 4.39 6,448,014 73,241 4.57 Total interest bearing deposits 17,337,979 130,454 3.05 17,364,701 143,030 3.28 17,580,410 151,933 3.48 Federal funds purchased and securities sold under agreements to repurchase 39,797 113 1.15 47,314 119 1.00 54,160 189 1.40 Other borrowings 706,402 7,714 4.43 932,366 11,386 4.86 873,278 11,649 5.37 Subordinated debt and debentures 366,312 6,134 6.79 366,274 6,505 7.07 366,160 6,972 7.66 Total interest bearing liabilities 18,450,490 144,415 3.17 18,710,655 161,040 3.42 18,874,008 170,743 3.64 Noninterest bearing liabilities: Noninterest bearing deposits 4,342,948 4,491,361 4,654,179 Other liabilities 320,721 333,781 284,191 Total liabilities 23,114,159 23,535,797 23,812,378 Stockholders’ equity 3,564,469 3,543,146 3,447,021 Total liabilities and stockholders’ equity $ 26,678,628 $ 27,078,943 $ 27,259,399 Net interest spread – FTE 2.30 2.15 1.89 Net interest margin – FTE $ 169,836 2.95 $ 171,366 2.87 $ 158,328 2.66 52 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, 2025 as compared to the three months ended December 31, 2024 and March 31, 2024, 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. Table 4: Volume/Rate Analysis Three Months Ended March 31, 2025 compared to December 31, 2024 March 31, 2025 compared to March 31, 2024 (In thousands, on a fully taxable equivalent basis) Volume Yield/ Rate Total Volume Yield/ Rate Total Increase (decrease) in: Interest income: Interest bearing balances due from banks and federal funds sold $ 28 $ (238) $ (210) $ 390 $ (697) $ (307) Investment securities - taxable (862) (2,013) (2,875) (5,885) (4,729) (10,614) Investment securities - non-taxable (203) 160 (43) (222) 138 (84) Mortgage loans held for sale (40) (18) (58) (14) (12) (26) Loans - including fees (4,586) (10,383) (14,969) 304 (4,093) (3,789) Total (5,663) (12,492) (18,155) (5,427) (9,393) (14,820) Interest expense: Interest bearing transaction and savings accounts 1,365 (5,839) (4,474) 318 (11,115) (10,797) Time deposits (2,550) (5,552) (8,102) (3,164) (7,518) (10,682) Federal funds purchased and securities sold under agreements to repurchase (20) 14 (6) (45) (31) (76) Other borrowings (2,556) (1,116) (3,672) (2,019) (1,916) (3,935) Subordinated notes and debentures 1 (372) (371) 3 (841) (838) Total (3,760) (12,865) (16,625) (4,907) (21,421) (26,328) (Decrease) increase in net interest income $ (1,903) $ 373 $ (1,530) $ (520) $ 12,028 $ 11,508 PROVISION FOR CREDIT LOSSES The provision for credit losses represents management’s determination of the amount necessary to be charged against the current period’s earnings in order to maintain the allowance for credit losses at a level considered appropriate in relation to the estimated lifetime risk inherent in the loan portfolio. The level of provision to the allowance is based on management’s judgment, with consideration given to the composition, maturity and other qualitative characteristics of the portfolio, assessment of current economic conditions, reasonable and supportable forecasts, past due and nonperforming loans and historical net credit loss experience. 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 March 31, 2025 was $26.8 million as compared to $13.3 million for the three months ended December 31, 2024. Provision expense for both periods was related to loans and reflected loan growth in the quarters, as well as the impact of updated economic assumptions. For the three months ended March 31, 2025, our provision for credit losses was $26.8 million as compared to $10.2 million for the same period ended March 31, 2024. The provision expense for the three months ended March 31, 2025 reflected a provision expense of $15.6 million related to two specific credit relationships which migrated to nonperforming during the period, as well as the impact of updated economic assumptions reflecting increased uncertainty. Provision expense for the same period ended March 31, 2024 was related to loans and reflected loan growth in the quarter, as well as the impact of updated economic assumptions. 53 NONINTEREST INCOME Noninterest income is principally derived from recurring fee income, which includes service charges, wealth management fees and debit and credit card fees. 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 March 31, 2025, total noninterest income was $46.2 million, an increase of approximately $2.6 million or 6.0%, compared to the three month period ended December 31, 2024 and an increase of $3.0 million or 6.9%, as compared to the three months ended March 31, 2024. The increase for the three month period ended March 31, 2025 to both comparative periods is primarily related to an increase in fair value adjustments related to Small Business Investment Company (“SBIC”) investments and increased swap fee income, which are both included in “Other income” in the table below. The increase for the three month period ended March 31, 2025 as compared to the same period in 2024 was also due to a $1.2 million increase in wealth management fees. Table 5 shows noninterest income for the three month periods ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively, as well as changes between periods. Table 5: Noninterest Income Three Months Ended March 31, December 31, March 31, Change from Quarter - Sequential Change from Quarter - Year-over-Year (Dollars in thousands) 2025 2024 2024 Service charges on deposit accounts $ 12,635 $ 12,978 $ 11,955 $ (343) (2.6)% $ 680 5.7% Debit and credit card fees 8,446 8,323 8,246 123 1.5 200 2.4 Wealth management fees 9,629 9,658 8,398 (29) (0.3) 1,231 14.7 Mortgage lending income 2,013 1,828 2,320 185 10.1 (307) (13.2) Bank owned life insurance income 4,092 3,780 3,814 312 8.3 278 7.3 Other service charges and fees 1,333 1,426 1,279 (93) (6.5) 54 4.2 Other income 8,007 5,565 7,172 2,442 43.9 835 11.6 Total noninterest income $ 46,155 $ 43,558 $ 43,184 $ 2,597 6.0% $ 2,971 6.9% Recurring fee income (total service charges, wealth management fees, debit and credit card fees) was $32.0 million, $32.4 million and $29.9 million for the three month periods ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively. NONINTEREST EXPENSE Noninterest expense consists of salaries and employee benefits, occupancy, equipment, foreclosure losses and other expenses necessary for our operations. Management remains committed to controlling the level of noninterest expense through the continued use of expense control measures. We utilize an extensive profit planning and reporting system involving all subsidiaries. Based on a needs assessment of the business plan for the upcoming year, monthly and annual profit plans are developed, including manpower and capital expenditure budgets. These profit plans are subject to extensive initial reviews and monitored by management monthly. Variances from the plan are reviewed monthly and, when required, management takes corrective action intended to ensure financial goals are met. We also regularly monitor staffing levels at each subsidiary to ensure productivity and overhead are in line with existing workload requirements. Noninterest expense was $144.6 million for the three month period ended March 31, 2025, as compared to noninterest expense of $141.1 million for the three month period ended December 31, 2024, representing an increase of $3.5 million, or 2.5%, as compared to the preceding quarter. Adjusted noninterest expense, which excludes branch right sizing and early retirement program costs (for the three months ended December 31, 2024), for the three months ended March 31, 2025 was $143.6 million, an increase of $4.3 million as compared to the three months ended December 31, 2024. Noninterest expense for the three months ended March 31, 2025 increased by approximately $4.7 million or 3.4% as compared to the three months ended March 31, 2024. Adjusted noninterest expense, which excludes branch right sizing, FDIC special assessment (for the three months ended March 31, 2024) and early retirement program costs (for the three months ended March 31, 2024), increased $5.7 million, or 4.1%, as compared to the three months ended March 31, 2024. 54 Other noninterest expense increased $3.2 million during the three month period ended March 31, 2025 as compared to the preceding sequential quarter and increased $3.1 million during the three month period ended March 31, 2025 when compared to the same period in the prior year. The increase during the three month period ended March 31, 2025 as compared to both periods is primarily due to a $4.3 million charge related to a commercial customer deposit fraud event that was identified during the period. Salaries and employee benefits expense increased $3.2 million during the three month period ended March 31, 2025 as compared to the preceding sequential quarter and increased $2.2 million during the three month period ended March 31, 2025 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 increase as compared to the same period in the prior year is primarily due to employee merit increases over the comparative periods. Deposit insurance expense for the three months ended March 31, 2025 as compared to the three months ended December 31, 2024 and three months ended March 31, 2024 decreased by $159,000 and $1.7 million, respectively. While the variance in deposit insurance expense on a sequential quarter basis is relatively flat, the decrease on a year over year basis for the three months ended March 31, 2025 is significantly attributable to the additional FDIC special assessments totaling $1.5 million during the three months ended March 31, 2024, which were levied to support the Deposit Insurance Fund following the failure of certain banks in 2023. Table 6 below shows noninterest expense for the three month periods ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively, as well as changes between periods. Table 6: Noninterest Expense Three Months Ended March 31, December 31, March 31, Change from Quarter - Sequential Change from Quarter - Year-over-Year (Dollars in thousands) 2025 2024 2024 Salaries and employee benefits $ 74,824 $ 71,588 $ 72,653 $ 3,236 4.5% $ 2,171 3.0% Occupancy expense, net 12,651 11,876 12,258 775 6.5 393 3.2 Furniture and equipment expense 5,465 5,671 5,141 (206) (3.6) 324 6.3 Other real estate and foreclosure expense 198 317 179 (119) (37.5) 19 10.6 Deposit insurance 5,391 5,550 7,135 (159) (2.9) (1,744) (24.4) Other operating expenses: Professional services 4,867 6,229 4,067 (1,362) (21.9) 800 19.7 Postage 2,280 2,228 2,037 52 2.3 243 11.9 Telephone 1,479 1,528 1,720 (49) (3.2) (241) (14.0) Debit and credit card 3,029 3,142 3,328 (113) (3.6) (299) (9.0) Marketing 6,826 7,303 6,648 (477) (6.5) 178 2.7 Software and technology 10,036 10,354 10,743 (318) (3.1) (707) (6.6) Operating supplies 627 674 639 (47) (7.0) (12) (1.9) Amortization of intangibles 3,527 3,850 3,850 (323) (8.4) (323) (8.4) Branch right sizing 994 1,581 236 (587) (37.1) 758 * Other 12,386 9,226 9,245 3,160 34.3 3,141 34.0 Total noninterest expense $ 144,580 $ 141,117 $ 139,879 $ 3,463 2.5% $ 4,701 3.4% _________________________ *Not meaningful INVESTMENTS AND SECURITIES Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue. Securities within the portfolio are classified as either held-to-maturity (“HTM”) or AFS. Our philosophy regarding investments is conservative based on investment type and maturity. Investments in the portfolio primarily include U.S. Treasury securities, U.S. Government agencies, MBS and municipal securities. 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. 55 HTM and AFS investment securities were $3.62 billion and $2.49 billion, respectively, at March 31, 2025, compared to the HTM amount of $3.64 billion and AFS amount of $2.53 billion at December 31, 2024. We 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 $103.8 million in accumulated other comprehensive income (loss) as of March 31, 2025 will be amortized over the remaining life of the securities. No gains or losses on these securities were recognized at the time of transfer. Management has 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. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. 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 March 31, 2025, 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. For the remainder of 2025, 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. Accordingly, as of March 31, 2025, 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 $1.00 billion of fixed rate callable municipal securities held in the AFS portfolio. These swap agreements consist of a two year forward start date and involve the payment of fixed interest rates with a weighted average rate of 1.21% in exchange for variable interest rates based on federal funds rates, which became effective during late third quarter of 2023. Securities within these swap agreements have maturity dates varying between 2028 and 2029. For the three months ended March 31, 2025, the net amount included in interest income on investment securities in the consolidated statements of income related to these swap agreements was $7.9 million. LOAN PORTFOLIO Our loan portfolio averaged $16.92 billion and $16.90 billion during the first three months of 2025 and 2024, respectively. As of March 31, 2025, total loans were $17.09 billion, an increase of $88.1 million from December 31, 2024. The increase in the loan balance during the first three months of 2025 when compared to December 31, 2024 is primarily due to growth in the commercial real estate and mortgage warehouse portfolios over the comparative period, while we continued to focus on maintaining prudent underwriting standards and pricing discipline. 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). We seek to manage our credit risk by diversifying our loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral, obtaining and monitoring collateral, providing an appropriate allowance for credit losses and regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose, industry and geographic region. We seek to use diversification within the loan portfolio to reduce credit risk, thereby minimizing the adverse impact on the portfolio, if weaknesses develop in either the economy or a particular segment of borrowers. Collateral requirements are based on credit assessments of borrowers and may be used to recover the debt in case of default. We use the allowance for credit losses as a method to value the loan portfolio at its estimated collectible amount. Loans are regularly reviewed to facilitate the identification and monitoring of deteriorating credits. 56 The balances of loans outstanding at the indicated dates are reflected in Table 7, according to type of loan. Table 7: Loan Portfolio March 31, December 31, (In thousands) 2025 2024 Consumer: Credit cards $ 179,680 $ 181,675 Other consumer 97,198 127,319 Total consumer 276,878 308,994 Real estate: Construction and development 2,778,245 2,789,249 Single family residential 2,647,451 2,689,946 Other commercial 8,051,304 7,912,336 Total real estate 13,477,000 13,391,531 Commercial: Commercial 2,372,681 2,434,175 Agricultural 264,469 261,154 Total commercial 2,637,150 2,695,329 Other 703,050 610,083 Total loans before allowance for credit losses $ 17,094,078 $ 17,005,937 Consumer loans consist of credit card loans and other consumer loans. Consumer loans were $276.9 million at March 31, 2025, or 1.6% of total loans, compared to $309.0 million, or 1.8% of total loans at December 31, 2024. The decrease in consumer loans from December 31, 2024, to March 31, 2025, was primarily due to loan payoffs and pay downs within the other consumer 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 $13.48 billion at March 31, 2025, or 78.8% of total loans, compared to $13.39 billion, or 78.7%, of total loans at December 31, 2024, an increase of $85.5 million, or 0.6%. Our C&D loans decreased by $11.0 million, or 0.4%, single family residential loans decreased by $42.5 million, or 1.6%, and CRE loans increased by $139.0 million, or 1.8%. 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 first three months of 2025. 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 $2.64 billion at March 31, 2025, or 15.4% of total loans, compared to $2.70 billion, or 15.8% of total loans at December 31, 2024, a decrease of $58.2 million, or 2.2% related to loan payoffs and pay downs during the period. Agricultural loans remained relatively flat with an increase of $3.3 million, or 1.3%. Other loans mainly consist of mortgage warehouse lending and municipal loans. Mortgage volume experienced an increase in demand during the first three months of 2025 as compared to December 31, 2024, leading to an increase of $93.0 million in other loans. Our commercial loan pipeline consisting of all commercial loan opportunities was $1.81 billion at March 31, 2025 compared to $1.26 billion at December 31, 2024. Loans approved and ready to close at the end of the quarter totaled $756.8 million. 57 ASSET QUALITY Nonperforming loans are comprised of (a) nonaccrual loans, (b) loans that are contractually past due 90 days and (c) other loans for which terms have been restructured to provide a reduction or deferral of interest or principal, because of deterioration in the financial position of the borrower. Simmons Bank recognizes income principally on the accrual basis of accounting. When loans are classified as nonaccrual, generally, the accrued interest is charged off and no further interest is accrued. Loans, excluding credit card loans, are placed on a nonaccrual basis either: (1) when there are serious doubts regarding the collectability of principal or interest, or (2) when payment of interest or principal is 90 days or more past due and either (i) not fully secured or (ii) not in the process of collection. If a loan is determined by management to be uncollectible, the portion of the loan determined to be uncollectible is then charged to the allowance for credit losses. When credit card loans reach 90 days past due and there are attachable assets, the accounts are considered for litigation. Credit card loans are generally charged off when payment of interest or principal exceeds 150 days past due. The credit card recovery group pursues account holders until it is determined, on a case-by-case basis, to be uncollectible. Total nonperforming assets increased $41.1 million from December 31, 2024 to March 31, 2025. Nonaccrual loans increased by $41.7 million from December 31, 2024 and foreclosed assets held for sale and other real estate owned decreased $294,000 as compared to December 31, 2024. The increase in nonaccrual loans was primarily due to two specific credit relationships being placed on nonaccrual status during the period. One relationship totaling $26.9 million relates to a downtown St. Louis hotel that was originated pre-pandemic and has been on our classified list since April of 2021. This is the only credit relationship within our portfolio located in downtown St. Louis. The other relationship totaling $22.9 million relates to a fast-food operator and has been on our classified list since June of 2024 due to sector-related headwinds and global cash flow concerns with the borrower. From time to time, certain borrowers experience declines in income and cash flow. As a result, these borrowers seek to reduce contractual cash outlays, the most prominent being debt payments. In an effort to preserve our net interest margin and earning assets, we are open to working with existing customers in order to maximize the collectability of the debt. We have internal loan modification programs for borrowers experiencing financial difficulties. Modifications to borrowers experiencing financial difficulties (“FDMs”) may include interest rate reductions, principal or interest forgiveness and/or term extensions. We primarily use interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal. There were four loan modifications granted to borrowers experiencing financial difficulty during the three month period ended March 31, 2025. Such modifications included interest rate reductions and had a total period-end amortized cost basis of $451,000 at March 31, 2025. The allowance for credit losses as a percent of total loans was 1.48% as of March 31, 2025. Nonperforming loans equaled 0.89% of total loans. Nonperforming assets were 0.61% of total assets, a 16 basis point increase from December 31, 2024. The allowance for credit losses was 165% of nonperforming loans. Our annualized net charge-offs to average total loans ratio for the first three months of 2025 was 0.23%. Annualized net credit card charge-offs to average total credit card loans were 2.72% for the first three months of 2025, compared to 2.93% during the full year 2024, and 176 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks. 58 Table 8 presents information concerning nonperforming assets, including nonaccrual loans at amortized cost and foreclosed assets held for sale. Table 8: Nonperforming Assets March 31, December 31, March 31, (Dollars in thousands) 2025 2024 2024 Nonaccrual loans (1) $ 151,897 $ 110,154 $ 105,788 Loans past due 90 days or more (principal or interest payments) 494 603 1,527 Total nonperforming loans 152,391 110,757 107,315 Other nonperforming assets: Foreclosed assets held for sale and other real estate owned 8,976 9,270 3,511 Other nonperforming assets 978 1,202 1,491 Total other nonperforming assets 9,954 10,472 5,002 Total nonperforming assets $ 162,345 $ 121,229 $ 112,317 Allowance for credit losses to nonperforming loans 165 % 212 % 212 % Nonperforming loans to total loans 0.89 % 0.65 % 0.63 % Nonperforming assets to total assets 0.61 % 0.45 % 0.41 % _______________________________________ (1) Includes nonaccrual FDMs of approximately $28.2 million and $597,000 at March 31, 2025 and December 31, 2024, respectively. The interest income on nonaccrual loans is not considered material for the three month periods ended March 31, 2025 and 2024. ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses is a reserve established through a provision for credit losses charged to expense which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, quantitative factors, and other qualitative considerations. Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated for collective assessment. We use statistically-based models that leverage assumptions about current and future economic conditions throughout the contractual life of the loan. Expected credit losses are estimated by either lifetime loss rates or expected loss cash flows based on three key parameters: probability-of-default (“PD”), exposure-at-default (“EAD”), and loss-given-default (“LGD”). Future economic conditions are incorporated to the extent that they are reasonable and supportable. Beyond the reasonable and supportable periods, the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenarios. We also include qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for. Loans that have unique risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating. For a collateral-dependent loan, our evaluation process includes a valuation by appraisal or other collateral analysis adjusted for selling costs, when appropriate. This valuation is compared to the remaining outstanding principal balance of the loan. If a loss is determined to be probable, the loss is included in the allowance for credit losses as a specific allocation. 59 An analysis of the allowance for credit losses on loans is shown in Table 9. Table 9: Allowance for Credit Losses (In thousands) 2025 2024 Balance, beginning of year $ 235,019 $ 225,231 Loans charged off: Credit card 1,460 1,646 Other consumer 1,133 732 Real estate 4,425 2,857 Commercial 4,243 4,593 Total loans charged off 11,261 9,828 Recoveries of loans previously charged off: Credit card 211 248 Other consumer 306 333 Real estate 99 735 Commercial 997 442 Total recoveries 1,613 1,758 Net loans charged off 9,648 8,070 Provision for credit losses 26,797 10,206 Balance, March 31, $ 252,168 $ 227,367 Loans charged off: Credit card 4,791 Other consumer 1,579 Real estate 4,092 Commercial 22,274 Total loans charged off 32,736 Recoveries of loans previously charged off: Credit card 843 Other consumer 1,063 Real estate 750 Commercial 1,153 Total recoveries 3,809 Net loans charged off 28,927 Provision for credit losses 36,579 Balance, end of year $ 235,019 Provision for Credit Losses The amount of provision added to or released from the allowance during the three months ended March 31, 2025 and 2024, and for the year ended December 31, 2024, 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 March 31, 2025, the allowance for credit losses reflected an increase of approximately $17.1 million from December 31, 2024, while total loans increased by $88.1 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. 60 The increase in the allowance for credit losses during the first three months of 2025 was primarily due to a provision expense of $15.6 million related to two specific credit relationships which migrated to nonperforming during the period, as well as the impact of updated economic forecasts. Our allowance for credit losses at March 31, 2025 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. The table also reflects the percentage of loans in each category to the total loan portfolio for each of the periods indicated. The allowance for credit losses by loan category is determined by (i) our estimated reserve factors by category including applicable qualitative adjustments and (ii) any specific allowance allocations that are identified on individually evaluated loans. The amounts shown are not necessarily indicative of the actual future losses that may occur within individual categories. Table 10: Allocation of Allowance for Credit Losses March 31, 2025 December 31, 2024 (Dollars in thousands) Allowance Amount % of loans (1) Allowance Amount % of loans (1) Credit cards $ 6,117 1.1 % $ 6,007 1.1 % Other consumer 6,059 4.7 % 5,463 4.3 % Real estate 200,079 78.8 % 181,962 78.8 % Commercial 39,913 15.4 % 41,587 15.8 % Total $ 252,168 100.0 % $ 235,019 100.0 % Allowance for credit losses to period-end loans 1.48 % 1.38 % _______________________________________ (1) Percentage of loans in each category to total loans. DEPOSITS Deposits are our primary source of funding for earning assets and are primarily developed through our network of 222 financial centers as of March 31, 2025. 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 March 31, 2025, core deposits comprised 79.5% of our total deposits. We continually monitor the funding requirements along with competitive interest rates in the markets we serve. Because of our community banking philosophy, our executives in the local markets, with oversight by the Chief Deposit Officer, Asset Liability Committee and the Bank’s Treasury Department, establish the interest rates offered on both core and non-core deposits. This approach helps ensure that the interest rates being paid are competitively priced for each particular deposit product and structured to meet the funding requirements. We believe we are paying a competitive rate when compared with pricing in those markets. We manage our interest expense through deposit pricing. We believe that additional funds can be attracted and deposit growth can be accelerated through deposit pricing if we experience increased loan demand or other liquidity needs. We can also utilize brokered deposits as an additional source of funding to meet liquidity needs. 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 March 31, 2025, were $21.68 billion, compared to $21.89 billion as of December 31, 2024. Noninterest bearing transaction accounts, interest bearing transaction accounts and savings accounts totaled $15.72 billion at March 31, 2025, compared to $15.44 billion at December 31, 2024, an increase of $278.3 million. Total time deposits decreased $479.4 million to $5.96 billion at March 31, 2025, from $6.44 billion at December 31, 2024. We had $2.91 billion and $3.30 billion of brokered deposits at March 31, 2025, and December 31, 2024, respectively. 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. 61 OTHER BORROWINGS AND SUBORDINATED NOTES AND DEBENTURES Our total debt was $1.25 billion and $1.11 billion at March 31, 2025 and December 31, 2024, respectively. The outstanding balance for March 31, 2025 includes $867.9 million in FHLB advances; $366.3 million in subordinated notes and unamortized debt issuance costs; and $17.0 million of other long-term debt. FHLB advances outstanding at March 31, 2025 are whole loan 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. We incurred $3.6 million in debt issuance costs related to the offering. The Notes will mature on April 1, 2028 and are subordinated in right of payment to the payment of our other existing and future senior indebtedness, including all our general creditors. The Notes are obligations of the Company only and are not obligations of, and are not guaranteed by, any of its subsidiaries. We assumed Fixed-to-Floating Rate Subordinated Notes in an aggregate principal amount, net of premium adjustments, of $37.4 million in connection with the Spirit acquisition in April 2022 (the “Spirit Notes”). The Spirit Notes will mature on July 31, 2030, and initially bear interest at a fixed annual rate of 6.00%, payable quarterly, in arrears, to, but excluding, July 31, 2025. From and including July 31, 2025, to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be the then-current three-month Secured Overnight Financing Rate (“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. For information about the regulatory capital treatment of the Notes and the Spirit Notes, see the section “ Capital—Risk-Based Capital .” CAPITAL Overview At March 31, 2025, total capital was $3.53 billion. Capital represents shareholder ownership in the Company – the book value of assets in excess of liabilities. At March 31, 2025, our common equity to asset ratio was 13.18% compared to 13.13% at year-end 2024. Capital Stock On February 27, 2009, at a special meeting, our shareholders approved an amendment to the Articles of Incorporation to establish 40,040,000 authorized shares of preferred stock, $0.01 par value. On April 27, 2022, our shareholders approved amendments to our Articles of Incorporation to remove an $80.0 million cap on the aggregate liquidation preference associated with the preferred stock and increase the number of authorized shares of our Class A common stock from 175,000,000 to 350,000,000. On October 29, 2019, we filed Amended and Restated Articles of Incorporation (“October Amended Articles”) with the Arkansas Secretary of State. The October Amended Articles classified and designated Series D Preferred Stock, Par Value $0.01 Per Share (“Series D Preferred Stock”), out of our authorized preferred stock. On November 30, 2021, we redeemed all of the Series D Preferred Stock, including accrued and unpaid dividends. 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 March 31, 2025 and December 31, 2024, there were no shares of preferred stock issued or outstanding. 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. 62 Stock Repurchase Program In January 2022, our Board of Directors authorized a stock repurchase program (“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, which replaced the 2022 Program, will be executed in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (“Exchange Act”) and will terminate on January 31, 2026 (unless terminated sooner). Under the 2024 Program, we may repurchase shares of our common stock through open market and privately negotiated transactions or otherwise. The timing, pricing, and amount of any repurchases under the 2024 Program will be determined by management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of our common stock, corporate considerations, our working capital and investment requirements, general market and economic conditions, and legal requirements. The 2024 Program does not obligate us to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice. We anticipate funding for this 2024 Program to come from available sources of liquidity, including cash on hand and future cash flow. No shares were repurchased during the three month periods ended March 31, 2025 and 2024. Market conditions and the Company’s capital needs, among other things, will drive decisions regarding additional, future stock repurchases. Cash Dividends We declared cash dividends on our common stock of $0.2125 per share for the first three months of 2025 compared to $0.21 per share for the first three months of 2024, an increase of $0.0025, or 1%. 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. Our Board of Directors anticipates that we will continue to pay quarterly dividends in amounts determined based on the factors discussed above. However, there can be no assurance that we will continue to pay dividends on our common stock at the current levels or at all. Parent Company Liquidity The primary liquidity needs of the Parent Company are the payment of dividends to shareholders, the funding of debt obligations and cash needs for acquisitions. 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. For additional information regarding the parent company’s liquidity, see “ Liquidity Management ” and “ Market Risk Management ” in Item 3 – Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10-Q. We continually assess our 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. 63 Risk-Based Capital The Company and Simmons Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Company and Simmons Bank must hold a capital conservation buffer composed of common equity Tier 1 capital above its minimum risk-based capital requirements. Failure to meet this capital conservation buffer would result in additional limits on dividends, other distributions and discretionary bonuses. The Company’s management reviews regulatory capital levels on an ongoing basis in light of the size, composition and quality of the Company’s capital resources, and of trends and anticipated changes thereto. 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 March 31, 2025, 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. To be categorized as well capitalized, the Company and Simmons Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution’s categories. The Company’s risk-based capital ratios at March 31, 2025 and December 31, 2024 are presented in Table 11 below: Table 11: Risk-Based Capital March 31, December 31, (Dollars in thousands) 2025 2024 Tier 1 capital: Stockholders’ equity $ 3,531,485 $ 3,528,872 CECL transition provision — 30,873 Goodwill and other intangible assets (1,381,953) (1,385,128) Unrealized loss on available-for-sale securities, net of income taxes 367,710 360,910 Total Tier 1 capital 2,517,242 2,535,527 Tier 2 capital: Subordinated notes and debentures 366,331 366,293 Subordinated debt phase out (132,000) (132,000) Qualifying allowance for credit losses and reserve for unfunded commitments 257,769 222,313 Total Tier 2 capital 492,100 456,606 Total risk-based capital $ 3,009,342 $ 2,992,133 Risk weighted assets $ 20,621,540 $ 20,473,960 Assets for leverage ratio $ 25,619,424 $ 26,037,459 Ratios at end of period: Common equity Tier 1 ratio (CET1) 12.21 % 12.38 % Tier 1 leverage ratio 9.83 % 9.74 % Tier 1 risk-based capital ratio 12.21 % 12.38 % Total risk-based capital ratio 14.59 % 14.61 % Minimum guidelines: Common equity Tier 1 ratio (CET1) 4.50 % 4.50 % Tier 1 leverage ratio 4.00 % 4.00 % Tier 1 risk-based capital ratio 6.00 % 6.00 % Total risk-based capital ratio 8.00 % 8.00 % 64 Regulatory Capital Changes In December 2018, the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation (“FDIC”) (collectively, the “agencies”) issued a final rule revising regulatory capital rules in anticipation of the adoption of ASU 2016-13 that provided an option to phase in over a three year period on a straight line basis the day-one impact of the adoption on earnings and Tier 1 capital (the “CECL Transition Provision”). In March 2020 and in response to the COVID-19 pandemic, the agencies issued a new regulatory capital rule revising the CECL Transition Provision to delay the estimated impact on regulatory capital stemming from the implementation of ASU 2016-13. The rule provided banking organizations that implement CECL before the end of 2020 the option to delay for two years an estimate of CECL’s effect on regulatory capital, followed by a three-year transition period (the “2020 CECL Transition Provision”). The Company elected to apply the 2020 CECL Transition Provision. The Basel III Capital Rules define the components of capital and address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The rules also address risk weights and other issues affecting the denominator in banking institutions’ regulatory capital ratios with a more risk-sensitive approach. The Basel III Capital Rules established risk-weighting categories depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures. The final rules included a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5% and a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets. The rules also raised the minimum ratio of Tier 1 capital to risk-weighted assets to 6.0% and require a minimum leverage ratio of 4.0%. Qualifying subordinated debt of $234.3 million is included as Tier 2 and total capital of the Company for both periods ended March 31, 2025 and December 31, 2024. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS See the Recently Issued Accounting Standards section in Note 1, Preparation of Interim Financial Statements, in the accompanying Condensed Notes to Consolidated Financial Statements included elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on the Company’s ongoing financial position and results of operation. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained in this quarterly report may not be based on historical facts and should be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by reference to a future period(s) or by the use of forward-looking terminology, such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,” “estimate,” “expect,” “foresee,” “intend,” “indicate,” “likely,” “target,” “plan,” “positions,” “prospects,” “project,” “predict,” or “potential,” by future conditional verbs such as “could,” “may,” “might,” “should,” “will,” or “would,” or by variations of such words or by similar expressions. These forward-looking statements include, without limitation, those relating to the Company’s future growth, business strategies, product development, acquisitions and their expected benefits, revenue, expenses, assets, asset quality, profitability, earnings, accretion, dividends, customer service, lending capacity and lending activity, loan demand, deposit levels, investment in digital channels, critical accounting policies and estimates, net interest income, net interest margin, noninterest income, noninterest expense, the Company’s stock repurchase program, consumer behavior and liquidity, the Company’s ability to recruit and retain key employees, the adequacy of the allowance for credit losses, the estimated cost savings associated with the Company’s Better Bank Initiative, income tax deductions, credit quality, the level of credit losses from lending commitments, net interest revenue, interest rates and interest rate sensitivity (including, among other things, the impact of rising or declining interest rates), economic conditions, repricing of loans and time deposits, loan loss experience, liquidity, the Company’s expectations regarding actions by the FHLB and other agencies, capital resources, the expected expenses and cost savings associated with branch closures, market risk, plans for investments in (and cash flows from) securities and investment portfolio strategies, effect of pending and future litigation, staffing initiatives, estimated cost savings associated with the Company’s early retirement program and Better Bank Initiative, legal and regulatory limitations and compliance and competition. 65 These forward-looking statements are based on various assumptions and involve inherent risks and uncertainties, and may not be realized due to a variety of factors, including, without limitation: changes in the Company’s operating, acquisition, or expansion strategy; the effects of future economic conditions (including unemployment levels and slowdowns in economic growth), governmental monetary and fiscal policies (including the policies of the Federal Reserve, as well as legislative and regulatory changes); changes in tariff policies; 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, and the availability of and costs associated with obtaining adequate and timely sources of liquidity; increased inflation; changes in the level and composition of deposits, loan demand, deposit flows, 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; changes in the securities markets generally or the price of the Company’s common stock, specifically; changes in the assumptions used in making the forward-looking statements; developments in information technology affecting the financial industry; cyber threats, attacks or events, including at third parties on which we rely for key services; the ability to collect amounts due under loan agreements; reliance on third parties for the provision of key services; further changes in accounting principles relating to loan loss recognition; the costs of evaluating possible acquisitions and the risks inherent in integrating acquisitions; possible adverse rulings, judgements, settlements, fines and other outcomes of pending or future litigation or government actions; 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 conflicts between Russia and Ukraine) or other major events, or the prospect of these events; changes in customer behaviors and preferences, 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; fraud that results in material losses or that we have not discovered yet that may result in material losses; increased unemployment; labor shortages; the Company’s ability to manage and successfully integrate its mergers and acquisitions to fully realize cost savings and other benefits associated with those transactions; increased delinquency and foreclosure rates on commercial real estate and other loans; significant increases in nonaccrual loan balances; 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; the failure of assumptions underlying the establishment of reserves for possible credit losses, fair value for loans, other real estate owned and other cautionary statements set forth elsewhere in this report. 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, 2024, 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. In addition, as a result of these and other factors, our past financial performance should not be relied upon as an indication of future performance. We believe the assumptions and expectations that underlie or are reflected in our forward-looking statements are reasonable, based on information available to us on the date hereof. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations or whether our future performance will differ materially from the performance reflected in or implied by our forward-looking statements, and you should not place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date hereof, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and all written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this section. 66 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, FDIC special assessment, early retirement program costs and tax effect}) (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 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). 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. These non-GAAP financial measures are also used by management to assess the performance of the Company’s business because management does not consider these certain items to be relevant to ongoing financial performance. Management and the Board of Directors utilize “adjusted earnings” (non-GAAP) for the following purposes: • Preparation of the Company’s operating budgets • Monthly financial performance reporting • Monthly “flash” reporting of consolidated results (management only) • Investor presentations of Company performance We believe the presentation of “adjusted earnings” on a diluted per share basis (non-GAAP) 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. These non-GAAP financial measures are also used by management to assess the performance of the Company’s business, because management does not consider these certain items to be relevant to ongoing financial performance on a per share basis. Management and the Board of Directors utilize “adjusted diluted earnings per share” (non-GAAP) for the following purposes: • Calculation of annual performance-based incentives for certain executives • Calculation of long-term performance-based incentives for certain executives • Investor presentations of Company performance We have $1.415 billion and $1.418 billion total goodwill and other intangible assets for the periods ended March 31, 2025 and December 31, 2024, 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). We believe that presenting these non-GAAP financial measures permits 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. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. To mitigate these limitations, we have procedures in place to identify and approve each item that qualifies as adjusted to ensure that the Company’s “adjusted” results are properly reflected for period-to-period comparisons. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes certain items does not represent the amount that effectively accrues directly to stockholders (i.e., certain items are included in earnings and stockholders’ equity). Additionally, similarly titled non-GAAP financial measures used by other companies may not be computed in the same or similar fashion. 67 See Table 12 below for the reconciliation of non-GAAP financial measures, which exclude certain items for the periods presented. Table 12: Reconciliation of Adjusted Earnings (non-GAAP) Three Months Ended March 31, December 31, March 31, (In thousands, except per share data) 2025 2024 2024 Net income available to common stockholders $ 32,388 $ 48,319 $ 38,871 Certain items: FDIC Special Assessment — — 1,549 Early retirement program — 200 219 Branch right sizing (net) 994 1,581 236 Tax effect (1) (260) (466) (524) Certain items, net of tax 734 1,315 1,480 Adjusted earnings (non-GAAP) $ 33,122 $ 49,634 $ 40,351 Diluted earnings per share (2) $ 0.26 $ 0.38 $ 0.31 Certain items: FDIC Special Assessment — — 0.01 Early retirement program — — — Branch right sizing (net) — 0.01 — Tax effect (1) — — — Certain items, net of tax — 0.01 0.01 Adjusted diluted earnings per share (non-GAAP) $ 0.26 $ 0.39 $ 0.32 _______________________________________ (1) Effective tax rate of 26.135%. (2) See Note 15, Earnings Per Share (“EPS”), for number of shares used to determine EPS. 68 See Table 13 below for the reconciliation of adjusted noninterest expense for the periods presented. Table 13: Reconciliation of Adjusted Noninterest Expense (non-GAAP) Three Months Ended March 31, December 31, March 31, (In thousands) 2025 2024 2024 Noninterest expense $ 144,580 $ 141,117 $ 139,879 Certain items: Early retirement program — (200) (219) FDIC Special Assessment — — (1,549) Branch right sizing (994) (1,581) (236) Total certain items (994) (1,781) (2,004) Adjusted noninterest expense (non-GAAP) $ 143,586 $ 139,336 $ 137,875 See Table 14 below for the reconciliation of tangible book value per common share. Table 14: Reconciliation of Tangible Book Value per Common Share (non-GAAP) March 31, December 31, (In thousands, except per share data) 2025 2024 Total common stockholders’ equity $ 3,531,485 $ 3,528,872 Intangible assets: Goodwill (1,320,799) (1,320,799) Other intangible assets (93,714) (97,242) Total intangibles (1,414,513) (1,418,041) Tangible common stockholders’ equity $ 2,116,972 $ 2,110,831 Shares of common stock outstanding 125,926,822 125,651,540 Book value per common share $ 28.04 $ 28.08 Tangible book value per common share (non-GAAP) $ 16.81 $ 16.80 69 See Table 15 below for the calculation of tangible common equity and the reconciliation of tangible common equity to tangible assets. Table 15: Reconciliation of Tangible Common Equity and the Ratio of Tangible Common Equity to Tangible Assets (non-GAAP) March 31, December 31, (Dollars in thousands) 2025 2024 Total common stockholders’ equity $ 3,531,485 $ 3,528,872 Intangible assets: Goodwill (1,320,799) (1,320,799) Other intangible assets (93,714) (97,242) Total intangibles (1,414,513) (1,418,041) Tangible common stockholders’ equity $ 2,116,972 $ 2,110,831 Total assets $ 26,792,991 $ 26,876,049 Intangible assets: Goodwill (1,320,799) (1,320,799) Other intangible assets (93,714) (97,242) Total intangibles (1,414,513) (1,418,041) Tangible assets $ 25,378,478 $ 25,458,008 Ratio of common equity to assets 13.18 % 13.13 % Ratio of tangible common equity to tangible assets (non-GAAP) 8.34 % 8.29 % See Table 16 below for the reconciliation of uninsured, non-collateralized deposits and the calculation of uninsured, non-collateralized deposit coverage ratio. Table 16: Reconciliation of Uninsured, Non-Collateralized Deposits and the Calculation of Uninsured, Non-Collateralized Deposit Coverage Ratio (non-GAAP) March 31, December 31, (In thousands) 2025 2024 Uninsured deposits at Simmons Bank $ 8,614,833 $ 8,467,291 Less: Collateralized deposits (excluding portion that is FDIC insured) 3,005,328 2,790,339 Less: Intercompany eliminations 1,073,500 1,045,734 Total uninsured, non-collateralized deposits $ 4,536,005 $ 4,631,218 FHLB borrowing availability $ 4,432,000 $ 4,716,000 Unpledged securities 4,197,000 4,103,000 Fed funds lines, Fed discount window and Bank Term Funding Program (1) 1,780,000 2,081,000 Additional liquidity sources $ 10,409,000 $ 10,900,000 Uninsured, non-collateralized deposit coverage ratio 2.3x 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. 70