- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the Simmons First National Corporation Third Quarter Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Ed Bilek, Executive Vice President and Director of Investor Relations. Please go ahead.

Edward Bilek

to National welcome XXXX Third and Call. Earnings morning, Simmons Corporation's First Quarter Good

are of Makris. several team, today me Joining members our and led our Chairman CEO, George by management executive

like Before the Investor third earnings website are including we materials, Relations at deck, you release presentation on Q&A, would tab. quarter and begin the available that to I simmonsbank.com our remind our the under

others, future our we implied uncertainties, net will and regarding deposit the outlook to due make plans, our variety actual risks reliance goals, might forward-looking on call, of about and and therefore, forward-looking a expectations, today's conditions, During factors. including, interest economic and statements among involve outlook or future lending not results statements place those interest undue projections estimates, by you should, from forward-looking margin. differ rates, statements as statements materially These and activity any in expressed

of earnings Additional the XXXX, assumes XX, or information XX, investor and risk December of in is with these as Form presentation Form contained factors concerning in some ended Form for form today, XX-K recent our XXXX, release These any our information. furnished the other forward-looking XX-Qs most update and year only speak and factors XX-K. Simmons or to no statements statements obligation that revise our including X-K our October contained forward-looking

financial provide metrics Finally, in information believe non-GAAP investors. we we certain presentation, this discuss will to useful

included Relations to Form also the this are contained our the in the to we on and and Additional filed are which simmonsbank.com. investor Operator, release of reconciliations morning these ready GAAP as begin the the available SEC non-GAAP to our disclosures of exhibits regarding Investor website, are we session. Q&A with metrics, page are non-GAAP X-K including earnings metrics presentation,

Operator

Instructions]. [Operator

KBW. is The of first Gailey Brady question from

Brady Gailey

that into with moderating was think growth low know do how guys from the economic about you pretty we potential double-digit uncertainty? the here. third about impressive you XXXX So head have some loan I range. talked But growth in loan quarter in as

Matthew Reddin

now you rates Fed the quarter it's it's strong that stress hurdles, result Matt. Brady, tests. our interest to basis is underwriting the reflective on started the really XXX but pipeline, and Throughout point of a we $X.X lot a from of Page the impressive strategy, construction it's a that of rising we X some growth. relationship points, quarter, hikes, quarter end illustrating in what this fallout the really to still had where I'll the of And to that's staying and we've is kind XX, comments the but of see economic our we pipeline really where really pipeline success space. disciplined second billion, our back conditions, said, current third delivered loan second definitely

moderate basis going is think to if to And I move we But rates XXX move up. construction that's did as but interest have loan continue increase our in I I So fourth second in back and on just what growth third between loan think the does, I what what some happened the think as another at some pipeline. through you at Fed growth and look to something the interests depending look we'll forward. but on, quarter the see just we continue quarter continue to points, and

Brady Gailey

XXXX? a linked little at you expense at when look bit All expenses of creep And actually it million. about How down flat. was on core the back out then side, are Okay. quarter pretty It's if kind right. expense $XXX the you you one-timers, thinking into

James Brogdon

with I'll Brady, some jump on in -- Jay. remarks. think I initial Well, that this is

environment over some tailwinds the we'll is last on Again, to acquisitions real we'll extracting fighting continue inflationary everyone ratio sort look, But execute there. the moving continue opportunities the those of quarters, good the we've it fight inflation think and our to direction. from that in have I front. efficiencies of fight a to think to I'm handful and had to efficiency pleased transactions. we is I relates see good identify on stay the as focused

we'll I continue inflation the we'll 'XX. seeing, But I to that throughout think see that is especially the on everyone same battle think wage see else front.

I'm we've pretty how that. pleased combat with So been to able far,

some I opportunities still to got combat we've think that.

focused stay disciplined don't I it. expenses, So it's runway stay on there think we'll but and

Brady Gailey

All finally not repurchasing do your still on buyback the pretty slow level, for has was third it. about How a at Xth It in robust X.X% share of -- then right. now did me, at company. handle quarter. TCE And all the the you

about buyback you the forward? how do going think So

Robert Fehlman

tell Well, as to we Brady, buyback is continue I Bob. have would plan. this our capital of part management you, the

As always, we'll as go we evaluate each in. quarter

TCE, plan part above I the where We at which our of So will think it capitals, capitalized we shape so we regulatory our at also we'll are in forward. look there. in be all look and future, are going well well but evaluate good

say our is of the our overall plan. back management both paying quarter, this buy earnings we back We dividends cash current what strategy. that's part we'd do won't quarter, is Again, So but stock saying any in will just What it's not and management. our it buyback. more than

Operator

is Feaster question of James. David from The Raymond next

David Feaster

on And and where near just competition and your obviously, in in costs, deposits, continuing I'm if you the positioned you about But and with curious lock defending you some much we're could most what Officer competitive curious term, dynamics you ratio. pressure. starting how a about there? Chief Deposit as some think you're seeing deposits. geographic your about from strategy flows are managing this cycle deposit on better seeing loan-to-deposit just of touch perspective, the thinking funding. funding you're lower think Maybe a And maybe how just deposit to

James Brogdon

that, I'll David, on Jay, again Well, in jump here.

meaningfully has this the hit evolving, say competitive first of So year all, evolved you throughout I'd year. The spot on. is it dynamic

landscape tell is certainly we that our business, our that. best, is the deposits do really to throughout competitive -- in and our you, think good different at our pretty think competition we're I by we'll I I'll do continue footprint. geography managing

keep so continue But I'd we experience really And what we a have really and you kind deposits it's that run excess this business. tightening see for how in area tell pretty QX of overall, tailored thus our leaving where throughout we to of is bank, customers who approach the the far, cash. cycle to

a -- and our some that and It's of customers of having be keeping in of today. that those options But those place, to customers may that and work haven't types deposits deploying history situations commercial least worth or the So some those just and in our where put at balance historically that sheet revenue some customers, some had really to by that's net have of success accounts we those funds customer recent group. in -- high wealth sort operating off with into best We're in-house doing see attrition. excess are it's wealth really moving group leaving. not money of

Good And to we will be asset as as kind this margin. year. repricing we'll prices We're within or significantly and so aggressive protect have repriced here fight be is we of news can reason.

to the perspective the But we've a had balance So I margin really those thus feel from sheet. experience room some we've funds keep that's got some of like on far.

David Feaster

asset on maybe then touching quality. And Okay. just

credit your dropped great done and into managing more how you the you continued improvement credit. that's CECL is into as inputs reserves and or broadly, And provision? I just plays just look metrics. more here likelihood think that that maybe in in do I has We've the you're seen you portfolio probably you think for models? that any ratio given the guess, closely? mean there do watching you're Maybe worsening job reserve concern a anything seeing You've economy causing that

George Makris

that this they to. other on George. guys in can is and jump David, I'll touch want the if

have specific So we category-specific space. we last if factors tail during where had a just we we that Those understand office adjustments. quarter, leases retail, COVID keep whatnot. adjustment them, What those housing, renewals and hotels, we office in did X to quite place for since that space those we look of qualitative loans, eliminated X retail restaurants, were carried this don't going began. we individual said and student a that of with quarter categories And yet had and are took we because categories you X at recall, on were had additional

construction, You that But commitments, areas additional up. in increased for noticed those unfunded also, that's have reserve about and the And that, are good we we about. probably significantly X a resides. just while number we uncertainty that have some retail, future we our the space that partially office went construction believe between feeling where because

X%. than scenario. SX model was number toward quantitative scenario less a skewed downside Moody's spit our So But out our the

of we unfunded about loan going unfunded our We allowance as got losses. our So of believe, But that commitments feel funds for for migration actual good is reserve a forward, our funded may very we've aside see and million allowance set credit you allowance construction balances. to from for where $XXX collectively, today. our some

that testing from evaluating I approved Simmons numbers remind our guys necessarily credit Our down. standards. under dependent was job credit. those not credit numbers of banks you over see we And and go on you can that to even acquired credit do continue fantastic will a stress And heavily and are other those that time, initially underwriting

the in is today. saying today. uncertainty I based market analysis, is very on certainly So something we're But where I'm comfortable is prevalent guess our that we are with what

David Feaster

in maybe work touch on been an showing all you Look, sense. great the this a some the the do gears And emphasis could see you few in That for just hard And you're then if to Maybe market for obviously, past. It's where makes has income the having headwinds to of income. switching fee the some of have these. success. we businesses, touch fee most on up.

other how about would any lines fee within you takes puts curious income and revenues trends be and helpful. in Just think other the fee

James Brogdon

there of couple David. a give I'll as well, remarks Yes.

the just as little area in were, in a that discount quarter sort good events were both wealth related. will the of area, no in there, the the And was a all. in management of customer There front to acquisition of I a well in quarter some quarter certainly think, us. good look, success it income timing don't the want -- I couple however, was on at really the having fee hiring bit wealth as doubt fee front. there say we're that for

and And little from that is ahead bit a so probably a that's was going area. rate, certainly run typical an our but that headwind a time, is -- of time quarter happen a to this maybe quarter to area

side we're kind business. of of sales customer that some and the the cutting through think again acquisition that I of headwind on

now, right to of about in we're business good business feel overwhelming its uptick in mortgage. us. moderate, It It's albeit, focus but that linked-quarter So volume. in-footprint just this committed one a Virtually customer-centric was see but it's environment basis quarter very of purchase good to. there. an a is majority that to That's in the on tough all

good what And be to time feel seasonality that we quarter the time. deposit-related and So have had good we of about from just then there. there. service We charges a typical will fees impact kind they'll

for some I a of the think and QX. waivers phasing in late stick tailwinds little that us will whatnot as just hopefully, one in QX are bit here did Spirit QX, QX acquisition and it of around in the that the we well in off late as

the fee certainly in well. quarter us the late on as that aided So front

Operator

D.A. Next of Tenner question Davidson. is Gary from

Gary Tenner

this as $X.X construction up billion you talk the around are construction about uncertainty amount book. portfolio, that projects you I maybe increases economic mentioned is Can commentary much and the quarter, any wanted follow a in rise. how that delayed being to commercial commitments versus the commentary, is curious residential? I'm really about on of large unfunded kind terminated around George, of of or the rate And

Matthew Reddin

in. of That's This your on industrial are unfunded. That's book our supply well And that When about builder it's million credit. that X finance as A business of That's unfunded X think this really $X can unfunded. about it those the your And kind start billion and itself, in X area. months about of comments. And $XXX $X is as multifamily. both kind look coming -- commitments, is of if industrial. into in lot we into construction been segments billion to that, affordability has the that's last businesses. pushing of your our multifamily that lines you is far with from the very, environment on of where up of C&I you question think originations When X. you of our jump Matt. can of I all very holding chain and and a couple

outside in on and So at of we're we've daily seeing question have monitoring put system not construction. look a delays, pretty carefully. And our very then around where the robust our a function. centralized we that, like we capital kind And your bankers, of that

outside now concerned. so I what want to release. far, normal we're Projects delays on now call supply And scheduled where issues, no chain this, of it, significant are

So, so interest and we very good. we've costs. disciplined far, I plus to you we're further are I'll also not inflationary mean rates, QX, just comments betting space. made we're are at above well in mean so And rates those point on in this underwriting today where then stressing our

construction on books. so low when low, And out, you're size loan that's leveraged really those producing a our

Gary Tenner

since of tightening embedded the terms you sensitivity, kind I XXX of of what XXX the that XXX XX. basis next basis question, basis point curious, rate points to think as points provide basis I'm betas appreciate sensitivity, the in second of deposit that are you next XXX points your comment. Slide And sensitivity? in then

James Brogdon

And how I historically, historical consistent answer this, right, indifferent that Yes. betas. I'll have based the we on with is wrong or way model

not override. management a it's really It's forward-looking not So beta. a

we and when year-to-date. much modeled historical so mid-XXs the than seeing has betas kind in been look industry, our for you're beta what the but of for beta are sensitivity, And higher at that us this into that

Gary Tenner

that's bearing. interest beta, And total correct? deposit Not

James Brogdon

That's Man. right. deposit total Yes, that's do Yes. a that's I believe beta. right.

Operator

The next is Matt from Stephens. Olney of question

Matthew Olney

is you likely discussion. to in good gave fund assume the Is it I to about near the balance want And term. commentary up back construction loan go fair to some to into loan us Matt, could quarter uncertainty the in far just fourth as remain low 'XX, range economy? overall that annualized growth this slow given in the in growth then the double-digit the as likely growth and

Matthew Reddin

think sure. reasonable for can't certain, assumption. say for that's Matt, a I that I

yes, down in rate in and saw seeing happen I Just also increases unfunded knowing, again. I'll we basis we're may my again, third there. the upward XXX out that mean, comment pay repeat to But environment. our quarter construction, that's yes, expected this seeing points be borrowers with

in So And depending can't and back reasonable expectation. that, you graph I but our there's this moves taking our on where we're we the moving that's where after a you little that show environment. just anticipate, Fed yields really and the is point a things to where pipeline pipeline

James Brogdon

right many of sensitivity see the I money on not time conviction And of of pile predictability. additional some now, out uncertain of one just these Matt, doing this terms time team timing here, time. pretty And but every lot to creating is is to of the We're here. listening course, think other fund one those these in Jay we've here. the prepayments a just Reddin's from times first are cash sure We're some And I'm acknowledge around ups. to modeling macro same is got and flows are Yes. that doing forecasting, there management I'll there, that, to comments Matt just just I is of of big forecasts Maybe spending comment. these unpredictability levels flows, we think analysis We're, thing thing. of lot a

to And look flows fund-ups. to be so know cash now. when flows at scheduled like. pretty cash not these and and we of you repricing originations look And us. about loan our are some deposit sort Timing loans that's maturities of interesting what and deposit going think of flows, right for But

think that be I I will just -- that's think industry-wide.

Matthew Olney

from I maintain with in Or quarter. here? perspective? going of similar-ish pretty the betas on loan you from kind good that think on you they the third the then And loan forward can Anything Understood. Yes. betas unusual balances, guess looked your

Matthew Reddin

in communication we and our first being take we models I'll comment. but ultimately are the we're take say we remain very our with customers, very let and business would in our market. still make mean disciplined and I X to disciplined sometimes to the the relationship Jay care clients. core with always avenue bankers it we're weeks, pricing to an Matt, every and of our on have field fitted adjusting sure I we rates

to we're the do that that fight. go continue yield we're on we'll side. So field fight I going to side, And that to on think hopeful

James Brogdon

just on you or of Yes. loan out depict to our X growth, even a revenue when point in is the accretion or really purchase QX of And interest we accounting think just this sort point PPP the margin, net net quarter accretion interest one Slide variance thing margin, unfavorable our But and income a headwind about to, beta compared I'd of our of through view. million this $X.X kind materials. from

even those scheduled Matt, I back got a XX? then one we've in QX. point want also of I in fixed Yes. fundamentals some of the other the bit And rate is all months. think in, way compared to. It's a $X.X QX over over rate that that that's on months. underlying XX goodness, just think I you. little that to $X.X next mature mature next maturities. it point, come We've at are probably that everybody the oh or On of in reinvest billion give And will fact assets I or to mentioned -- data our It's So masked comment earlier, up timing cash XX slides. least that the All probably I'd got for XX. 'XX, we've reprice flows, billion fixed will just got loans

us. I our sort be assets or repricing off and And think are today asset on of coming the migration I so we're where for be the optimization when side and books, sheet continued think pretty those balance of about pricing yields where good will that

Matthew Olney

point of and the about tailwinds few the towards? still the I'm to core on following third And margins thinking like some the some on commentary of some there's of improvement. any see It over about. the that, noise here you around quarters you feels takes margin puts kind from Any margin up talked next ex, quarter. range the Jay, of us And lots just

James Brogdon

Well, fortune I in experienced and a itself think, on a back that gapped and be I'm could well. or expectation over cash QX margin certainly forward. more as pretty going really that expectation is But its which going just quarter-to-quarter of course My quarters. in incremental steep of I of our the I the QX caveat, timing believe, betas, I next the up industry with a will I think do. the margin and move of much think nicely initial my in exactly to lag to we've -- terms for flows, is all a drive that, expansion the deposit that perspective, But by the might that's to Fed it's had margin moderate general, coming itself that's quarters. basis and has modest going good nice in the several go we've industry, what over think from

so be I the think modest And as NIM well. more will expansion

Operator

of The next Sandler. Dick question from Piper is Graham

Graham Dick

been big to a that loan little of questions I step down growth. robust portfolio bit. on but Obviously, have answered, I a wanted bond my touch Most help guess, on the from just this fund quarter,

trending Just wondering -- you over year target, the have an don't on maybe I see the if know don't know, next, or this got I update you guys on so? assets too guys

James Brogdon

and given the or view we opportunities to point Well, really securities where we now. portfolio of in given bonds point active certainly purchasing loan mix a not have just the from right securities I are of think view we're assets

work cycle, opportunities from the priority that earlier. in underwrite investment about have Matt always with we if first good talking point the our was is as to portfolio put through funds loan to we Our view of an

just still really what our So really change are good we're we're having and growth and not They experiencing underwriting they good pricing. are, standards. to

of And priority with that out fund loan-to-asset so loan-to-deposit we'll growth where think, of those we'll with our will cash expand increase. flows that with numbers lot and of I And be. of a statements, ratio to kind that's securities see, that, all portfolio. will continue the

Graham Dick

I you then I loan correctly, then Spirit, close guys loan that pipeline? wanted just growth, Spirit announced was a -- much from pretty how remember and of to I growing if Understood. the I'm well deal commercial on. after And pipeline Okay. wondering on just is guess,

Matthew Reddin

growth. give Great of question. I'll data think you as points couple about their you kind a of

of a of grown a part they've As loan Simmons company our they in did $XXX -- since been growth, April. million they've

more that's of quarter. third billion that's than done They've not -- the new also $X production. So

And So overall we're if our real pipeline. around their came our at look in organization now, million and they're right our $XXX into proud hit of of fully running. million Spirit $XXX pipeline of overall how the ground you

James Brogdon

incredibly maybe attention just we deposit the pile And deposit has been to paid on overall side, close one the which retention, to on, real of is things strong.

So on great. loan retention And -- see which front, the I really has both retention and then most, it where think employee is on the been it been Matt's has matters you Deposit side. on candidly, comments strong. origination the loan

we're yes, pleased across the very board. So there

Operator

to There our this to George remarks. closing over like time. questions conference at for This are I other back concludes Makris turn question-and-answer the no session. would

George Makris

joining to for today. thanks each of you Well, us

I third the to organic we're and forward. speaks very fundamentals committed quarter think what our going to well

think good. looks really, I runway our really

visited like few serious Dean hospital. to And in great weeks car ago shout involved I've out Before in best recovery. we to just pretty give a was in he's him in the accident out recovering of wish we morning, Today, one his Dean, our speedy with spirits. I'd off, directors, want to a the a and Bass, this give a who all to special him sign is shout

for morning, joining again and we'll do us this this quarter. So next again, thanks,

Edward Bilek

by call, during today's were forward-looking technical statement. have we been Before there I legal advised our difficulties some counsel our that end

actual undue risks forward-looking and rates, outlook results and the lending we not materially others, among future place future statements margin. and net therefore, These activity statements XX-Q our differ These on variety and projections involve regarding reliance expectations, estimates, our deposit factors. uncertainties to as and make any filings, forward-looking Simmons statements about interest including that filed from expressed could should interest information. any you conditions, a goals, update reiterate call did forward-looking plans, other to our during So economic XXXX, we that would like XX, by as today, statements no today October our are implied of X-K other statements contained are to in and or as the due assumes SEC was or factors in Those our Form forward-looking as statements or those Form of revise outlooks XX-K. and obligation well forward-looking

We we our reconcilements that in also did certain for joining GAAP of metrics, discuss again those and our have X-K deck provided you day. in non-GAAP. non-GAAP Form metrics disclosure our and GAAP the and in to have good earnings release investor Thank from us, and a contains

Operator

now has attending call today's presentation. Thank for concluded. The you

now may You disconnect.

Simmons First National (SFNC) 25 Oct 222022 Q3 Earnings call transcript