Simmons First National NASDAQ: SFNC executives used the company’s fourth-quarter 2025 earnings call to highlight stronger loan production, a sharply improved net interest margin compared with a year earlier, and continued progress on expense initiatives, while also emphasizing that deposit growth remains a key strategic priority.
Loan growth driven by strong production, tempered outlook for 2026
Management said fourth-quarter loan growth marked the strongest production pace in at least a couple of years, more than offsetting elevated paydowns. CEO Jay Brogdon noted that some parts of the portfolio were seasonally weaker in the quarter, including agricultural lending and mortgage warehouse loans, and that the company also divested certain loans and recorded charge-offs. As a result, he said the “underlying” growth rate was “well in excess” of the roughly 7% annualized growth disclosed for total loans.
Even with the strong quarter, Brogdon cautioned against extrapolating that pace into next year. He said the company’s outlook for 2026 is for low-to-mid single-digit loan growth, citing both timing effects in late third quarter and early fourth quarter pipelines and the bank’s continued focus on credit discipline and profitability in competitive markets.
On pipeline details, management described “approved and ready to close” commitments as a particularly firm indicator of near-term funding and said that metric was at a multi-quarter high, supporting production expectations early in the year. Brogdon added that the overall pipeline level—typically between roughly $1.5 billion and $2 billion—was within a normal range for the bank and that opportunities were broad-based across its footprint.
Net interest margin improved; guidance points to stability
CFO Daniel Hobbs broke down the linked-quarter net interest margin (NIM) increase of 31 basis points to 3.81%. He attributed roughly 19 to 20 basis points of that improvement to a partial-quarter benefit from a balance sheet restructuring completed in the prior quarter, with the remaining 11 basis points coming from “core” NIM expansion. Of that core increase, Hobbs said 3 basis points came from loan growth and 8 basis points came from rate and mix.
Hobbs said the balance sheet repositioning shifted the company from liability sensitive to asset sensitive, but he emphasized a nuance: Simmons remains “a little bit liability sensitive” on the short end of the curve (day one to three months). He said the three rate cuts in September, October, and December benefited fourth-quarter results, and that sensitivity moves toward asset sensitive further out on the curve.
For 2026, management’s expectation is for a relatively stable NIM. Hobbs said first-quarter margin should be “relatively stable” to 3.81%, with the possibility of a modest benefit, and that the full-year profile could be stable with a small lift into the “mid-380s” by fourth quarter. He added that the company’s interest-rate forecast embedded in guidance assumes rate cuts in May and August.
Management also reiterated a repricing tailwind from lower-yielding loans. Hobbs said Simmons still has more than $2 billion to $2.5 billion of loans repricing over the next two years with rates below 4%, though he noted the benefit will lessen somewhat if rate cuts continue. On deposit costs, he said the cumulative deposit beta stands at 64% and is expected to moderate, in part because the company now has about $1.4 billion less brokered deposits following the restructuring—deposits that carry a 100% beta. Hobbs estimated the incremental beta for future rate cuts at around 50%, with cumulative beta settling in the high-50% range by the end of 2026.
Brogdon added that upside to the margin outlook would largely depend on deposit mix improvement, particularly organic growth in low-cost deposits.
Competitive dynamics: deposit pricing steadier than loan pricing
In response to questions about competitive pressure, Brogdon said deposit competition remains intense in some areas, particularly from smaller banks. However, he said Simmons has dominant market share in many of those markets and can “flex” accordingly. He also said industry behavior around recent rate cuts has been constructive, with betas “relatively high” and lags “short.”
On the lending side, he described competition as more challenging, especially for commercial and industrial (C&I) lending. While Simmons remains focused on building C&I, Brogdon said risk-adjusted returns in recent months have been stronger in a commercial real estate (CRE) blend, citing what he called “very, very irrational pricing” that erodes profitability—even in relationship-based deals that include deposits and treasury management.
Asset quality actions and “deep dive” on NPAs
Management said it resolved two problem credits with less impact than initially expected and completed a sale of the Equipment Finance business. Brogdon said reserve levels, including specific reserves, proved “more than adequate” for the actions taken, including on larger credits and the equipment finance portfolio.
He characterized recent credit issues as “very unique” and tied some to legacy exposures. The equipment finance portfolio, he noted, had been in runoff for a long period and had not originated loans in several years following a historical acquisition. Brogdon said the company used the credit review process to clean up legacy nonperformers, identify loss content, resolve several credits, and pursue rigorous resolution processes for remaining items while already having sufficient analysis to recognize loss content where appropriate.
Overall, management described credit conditions as stable, with early and predictive indicators also falling into a stable category.
Efficiency initiatives, hiring, and capital priorities
Management said the company remains in the “middle innings” of its Better Bank initiative and broader efficiency efforts. Brogdon noted that progress is harder in later stages after tackling lower-hanging opportunities, but pointed to expense performance: he said 2025 expenses were below the run-rate level of fourth-quarter 2022, despite three years of inflation, merit increases, and ongoing investment. He cited automation, centralization, and standardization across the bank, describing efforts to more fully integrate a footprint shaped by years of acquisitions.
COO Chris Van Steenberg described a “continuous improvement mindset,” saying the bank is inspecting processes across back, middle, and front office functions, sometimes tweaking and sometimes rebuilding them entirely. He highlighted procurement work begun about two years ago and said additional opportunity remains over the next 12 to 24 months. Van Steenberg also said the bank reduced square footage by 6% over the year, with savings split roughly 60% retail and 40% corporate, including avoided future maintenance costs.
On investing and hiring, Brogdon said the bank expects to continue adding and upgrading talent across the footprint, including in revenue areas and support functions tied to automation and efficiency. He said talent pipelines are “as strong as they’ve ever been,” aided by disruption in parts of the industry.
Deposit growth was repeatedly framed as a central strategic focus. Brogdon outlined efforts across consumer banking, private banking (expanded in 2025 after an earlier rollout), and commercial initiatives tied to middle-market C&I capabilities and treasury management. Van Steenberg added small business as another area of emphasis, describing opportunities to attract “deposit-rich customers” with significant transaction needs but limited credit needs. Brogdon also noted that non-interest-bearing deposits as a percentage of total deposits remain below peers, calling that gap a major opportunity.
On capital deployment, Brogdon said priorities remain organic growth and investment first, followed by the company’s long-standing dividend. He said share repurchases are not embedded in current budgets or forecasts but remain “a tool in the toolkit,” with management prepared to be opportunistic based on growth conditions and stock valuation.
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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