Simmons First National Q1 Earnings Call Highlights

Key Points

• Simmons posted roughly 10% annualized loan growth driven by a multi-year push for quality organic growth and recent robust demand, but management warned that deposit growth — not loan demand — will be the primary governor on future lending and cautioned against extrapolating one quarter’s pace.
• Net interest margin ticked up three basis points as the bank “remixed” its balance sheet (lowering time deposits and growing core deposits); loan yields fell while interest-bearing deposit costs were down about 48 bps year-over-year, and management said it is likely to hit the high end of its 9–11% net interest income growth target with year‑end NIM in the mid‑380s absent rate cuts.
• Credit migration was described as isolated after a modest NPL increase largely tied to an acquired construction relationship (about $18M of the uptick), while capital priorities remain investing in growth, preserving the dividend (a 117‑year streak) and being patient on buybacks; proposed regulatory capital changes are still under review but viewed as potentially beneficial with a CET1 target around 10.5%.

Simmons First National NASDAQ: SFNC executives pointed to strong organic loan growth, improving net interest margin trends, and continued expense discipline as key themes during the company’s first-quarter 2026 earnings call, while also addressing deposit competition, credit migration and capital priorities.

Loan growth driven by multi-year organic focus

In response to analyst questions about a strong growth quarter—described on the call as roughly 10% annualized—President and CEO Jay Brogdon said the company’s performance reflects a sustained internal effort rather than a sudden shift in demand alone.

“We’ve been focused on quality growth for really a few years now,” Brogdon said, citing “changes in behaviors, changes in incentive plans, changes in how we target clients that we want to grow.” He added that market conditions late last year and early this year were also “very, very good for us,” with “really, really robust demand.”

However, Brogdon cautioned against extrapolating one quarter’s pace forward. “I don’t want to promise 10% annualized loan growth every quarter,” he said, noting uncertainty in the macro environment and pricing competition as “non-controllables” that could affect results.

Later in the call, Brogdon said the company is still experiencing “a pretty elevated pay down environment,” and that recent growth has been achieved despite that backdrop. He also described competitive pressure in commercial real estate, where Simmons saw “plenty of demand” but less pipeline pull-through due to pricing discipline and “bigger banks getting a little more aggressive” in certain CRE products.

Talent additions and wealth management traction

Brogdon highlighted recent leadership hires overseeing consumer and commercial banking, saying both leaders had been in place for “eight or nine weeks” and were already influencing execution. On the consumer side, he said Simmons is emphasizing relationship deepening in its retail network, including better marketing and community penetration. On the commercial side, he described a push toward “total banking relationship focus,” including investments in treasury management and commercial payments capabilities.

Brogdon also provided early results from a newly hired wealth management team. He said half the team joined in January with the remainder arriving in March, and that the group had already generated “over $350 million in AUM” either transferring or verbally committed. He added that referrals flowing from wealth clients into the commercial bank and private banking were “the part of that team…that has me most excited.”

Net interest margin trends and deposit strategy

CFO Daniel Hobbs said the company’s net interest margin rose three basis points from the prior quarter, exceeding his earlier expectation for a one-to-two basis point improvement. He attributed the increase to continued efforts to lower funding costs through “remixing of the balance sheet,” including reducing time deposits and growing core deposits.

Hobbs noted that loan yields fell seven basis points in the quarter, “partially hedged” due to the “low fixed rate loans” the company has discussed previously. He added that loan yields were down four basis points year over year, while interest-bearing deposit costs were down 48 basis points over the same period. Hobbs also shared cumulative beta observations since rates began moving down in 2024, saying loan betas were “a little bit less than 15%,” while the cumulative interest-bearing deposit beta was down “63 basis points.”

Looking ahead, Hobbs referenced Simmons’ prior guidance calling for 9% to 11% net interest income growth and a year-end NIM in the “mid-380s,” assumptions that previously included two rate cuts. He said the forward rate-cut outlook has changed since then, and that “there’s 0 rate cuts,” which “should be marginally helpful” given that Simmons “flipped from liability sensitive to asset sensitive.” Hobbs said the company is “probably going to be looking at the high end of that range” for NII growth, while emphasizing that deposit trends remain a key driver.

Management repeatedly tied loan growth capacity to deposit growth. Hobbs said, “I think the biggest governor of our loan growth is going to be how we’re able to grow deposits,” adding that Simmons is willing to use wholesale funding “at the margin” but may “pull back a little bit on loan growth” if deposit growth does not keep pace.

On deposit trends, Hobbs said balances were “pretty much stable in the quarter” but outlined differences by segment. He said consumer deposits were showing improved stability, with noninterest-bearing and interest-bearing consumer deposits growing “in that 2%-3% range” on a year-over-year average basis over the past four quarters. On the commercial side, he said the bank has performed well in growing interest-bearing deposits but still has “some work remaining to do” on commercial noninterest-bearing deposits.

In discussing the company’s certificate of deposit repricing, Hobbs said CDs that matured during the first quarter averaged 3.56%, while new CDs booked averaged 3.13%. He said there is “probably 1 to 2 more quarters worth of CD repricing benefit,” after which the benefit “kind of neutralizes a bit.” He also told analysts the deposit cost for the month of March was 1.95%.

Efficiency efforts and operating leverage

Brogdon framed Simmons’ ongoing expense efforts under what the company calls its “Better Bank Initiative,” emphasizing a strategy of funding investments through expense discipline. “Our mantra in the bank is fund every investment that we want to make in the business,” he said, adding that the company made “very big investments” in talent and other areas in the first quarter while still showing “strong expense discipline.”

He described the company’s current focus as optimizing the structure of the business after addressing balance-sheet structure last year, including identifying redundancies and improving delivery speed for clients. Brogdon said these steps are intended to create “scalability and repeatability” and drive operating leverage.

When asked about full-year operating leverage, Brogdon said he remained confident the company would exceed its prior “5%+” outlook, without providing updated formal guidance. Hobbs agreed, emphasizing what he called “resiliency” in the earnings profile after the company’s balance-sheet restructuring and hedging program, noting that margin has increased in each quarter following three rate cuts.

Credit migration discussed; capital priorities and proposals

On credit, management addressed an increase in nonperforming loans, including a relationship that moved to nonaccrual. Brogdon said criticized and classified loans improved from the prior quarter, while the company saw “a little bit of migration into NPLs” and some past due migration that was “significantly alleviated…in the first few days in April.” He characterized the migration as “isolated or episodic,” adding, “No broad-based deterioration in the portfolio that we’re seeing.”

Regarding the larger nonperforming relationship, CFO Hobbs clarified that the approximately $30 million figure referenced by an analyst was “not just one loan,” but “multiple loans spread across a number of properties” within “one relationship.” Brogdon later described it as construction lending tied to “relatively large one to four family properties,” originating from a relationship acquired in the company’s most recent acquisition and not business Simmons would typically originate. He said the relationship represented “a little over $18 million” of the NPL increase in the quarter, and emphasized “very, very low LTVs,” fresh appraisals, and that the main driver of migration was a legal process that has now been resolved, allowing the bank to move toward resolution.

Management also discussed capital deployment, with Brogdon outlining priorities as investing in growth, paying the dividend—highlighting a “117 years” consecutive payment history—and then evaluating buybacks. He said the company is “exercise[ing] patience” on repurchases given investment opportunities and macro uncertainty, while acknowledging buybacks are attractive given what he called a “pretty low PE multiple right now on forward earnings.”

Asked about recently proposed regulatory capital changes, Hobbs said it is “still early” and the team is evaluating the proposal, with a potential effective timeline around “first part of 2027.” He said the changes should be beneficial for Simmons, pointing to an LTV component as “very helpful,” but did not provide a quantified estimate. Hobbs added that the company’s view of efficient capital remains “in and around kind of 10.5% CET1.”

On other items, Hobbs said the net impact of valuation changes, including an SBIC-related item, was negative $1.8 million, with “just the one item” being “a little over $2 million.”

About Simmons First National NASDAQ: SFNC

Simmons First National Corporation NASDAQ: SFNC is a bank holding company headquartered in Pine Bluff, Arkansas. Through its primary operating subsidiary, Simmons Bank, the company maintains a network of more than 200 branches across Arkansas, Tennessee, Missouri, Mississippi, Texas, Oklahoma and North Carolina. Simmons First National offers a full suite of financial services to individuals, small businesses and commercial clients, emphasizing relationship-driven community banking.

The company's core business activities span deposit-taking, lending and payment services.

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