Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the Simmons First National Corporation Second Quarter 2023 Earnings Conference Call. All participants’ will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Ed Bilek. ahead. go Please

Ed Bilek

welcome XXXX and First Corporation National Good Call. to Quarter Earnings Second morning, Simmons

Joining several CEO, today our President me are CFO, Executive Team, Executive and Chairman, including Management George Brogdon. Makris; Jay Bob and members Fehlman; of our

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

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

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

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

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

Q&A. are the we ready to begin Operator,

Operator

question-and-answer ahead. the The first begin Instructions] session. KBW. go comes Please from Gailey Brady [Operator with now question We'll

Brady Gailey

thanks. Hey, morning guys. Good

Bob Fehlman

morning. Good

Brady Gailey

in down this the think I kind here, of interest peers. as of wanted you we're margin seeing year? from step a interest a the towards lot which margin, of look which about line net to net with the is your took do we half back start what How with

Jay Brogdon

So here around The to rate, to we've jump kind there I'll been has head holding seen driver that margin initial question. of within Jay. really portfolio back you the our your this migration of in so with a biggest a comments the slowing kind July been and few has it Brady, And is of the of far more in around so far deposit than that trend quarter migration. in sort will. and if half down of June, really the into on

of inflection and that as And so in I encourages think I think from NIM sort -- about forward. looking me NIM

was pressure NIM quite earlier of tell of I'll bit NIM, has than pace in in the the this the of on June half June a year of this it the months the year. first really lower been you any

July. is kind its of a So in that, here bit too, head holding

of as the of significant that pressure the I So year more in inflection is an as the in in again, still The nearly in first QX. QX. like significance back has as That there's not the might of think near-term half it some year. pressure mean half been

that too, the mind, swap And then in the you kick-in of keep will in that QX also September. have benefit in late

what have then benefit QX hopefully, point underlying of you even QX, in that. pressure likely from see the top swap we say, at little And to we have a trends. in as the see some inflecting that QX. I'll of of the well So bit on

Bob Fehlman

in a cost big obviously, increase banks is, experienced pretty all And Brady, I'd just deposits. add of too, have

presence, that we and the our we share of good market market things defend in those that in to our a not a deposits. to lot want is market of we're don't give markets up One very of share afraid have

pay willing we're that in we those. of select some this did critical. to quarter it And and up markets for defend really that those was So in some

Brady Gailey

you in then which infrastructure. to year, you made taking $XX have And I are for guys you you'll become efficient? out end with right. targeting of of by Once you reduction think think more look your Or good the base? expenses will get progress happy some opportunities some to you you're hit. a million beyond the guys I All that, of expense continue do the know

Jay Brogdon

for Yes. to look Brady. continue Definitely, there, we'll opportunities

one quarters, few sure and there's are The this of another of I think Better round more we just there And round, thing it talked of pencils measured are initial kind we -- I beyond be We like the sharpened on had cost there make if save Bank opportunities to deliberate know the our that. kind really number. about do a for we'll Initiative. net the wanted fact, in same we'll around thing were this.

just opportunities. into are while next in do look incremental where think and opportunistic the we also opportunities there where as opportunities I there like on of be making those investments side, year, feel investment side, to be expense sort we'll the some on But will I we there we think are need and

numbers. analysis feel of come the So good the kind on that about more to talking those about round out to and as opportunities we

Brady Gailey

of And company think would that you for X% continue you slow? in Or the repurchased the the to think about Is then me, right. All that, that you'll of year? buyback reason half any do there the second back finally consider to in quarter. the

Bob Fehlman

tangible buyback we we in when of our buyback, us $XX were part we earnings in would our off, near stay trending quarter-by-quarter at at basis the our stock would maximum on values, is would would be The it be -- very Brady, condition I in market accretive of cash bank quarter and within there what if early are. the for continue book less most capital I'd pricing a to the to what constraint, it our is on Bought based We'll point. dividends say, banks advantage needs this the all within back and one quarter. say amount. look stocks first that took really million did

we that's growth sheet where So very and a our way projected. balance is think prudent with

Brady Gailey

Okay, great. Thanks, guys.

Operator

next Please Raymond go Feaster ahead. question with Your from James. comes David

David Feaster

everybody. Hey, good morning,

Bob Fehlman

morning, David. Good

Jay Brogdon

Good morning, David.

David Feaster

you just job pipeline construction you're on When would driver touching at your to it. clients? curious, across And on the from a appetite footprint? How loan Maybe expect. nice key what's look, touch yield the just have just able side. are I'm But as you side, And Obviously, I what demand growth And at been look good pushing trending we a great really from of the point? just we the slowing still doing is loan yields. it's for loan growth. get new could risk-adjusted are this mean just your returns to your loan growth? where your see maybe perspective, hearing fundings you

Jay Brogdon

Yes.

of David, a in So way. kind there of lot questions in roundabout a

to tackle of now So of be environment, let -- has calls that. me think that on fair caused several to do amount environment demand topic. rate just right I've the the to meetings, it past true this continue different I see elements overall still and said that I And past continues we try destruction. a think in

that across been. point the discipline and that, which board our well where think has anywhere pretty pricing up, at I is that's this showing I think

underwriting continues it been our to sound through the the all has way as very And very, cycle. be

good business kind the feel when And relationship-oriented couple our we and so that's is together, pipeline, underwriting come we very is borrowers kind what of pricing our now. of with appetite very seeing our are very, standards right we structure. And that standards the volume good and very into sound

I that terms it where one kind of and pipeline think of financing positive quarter, been put an last strong month more that trends they relationships, kind kind pipeline really will expect to right But projects potentially some down past, we've with forecasting are some customers equity that in a of in seems be in we really that, we the in positive tell can seeing with pipeline of the the trends and more trends to to are that is with the willing opportunities because kind you little deal two, sign sign And they're been with now. very borrowers, continue and at looking strong or and one of who with second the cash I lack underwriting in dealt an the there. of the out of our deals. equity are are indicator pricing, that's more and have area

Paydowns continue to fund can be going a and over be expect in slowing can off that are to bit the those good that commitments, in borrowers. that at where relationships. we loan on it's ups to low, overall good the probably to continue with opportunities expect. we to I again, close is look opportunistic here change. good think continue Pipeline, growth that good I hopefully, and to But with continue Unfunded of still a little I trend seen next trend see area very see the to be, you've those going but we'll but level growth so don't in, few some quarters. we'll And

David Feaster

that maybe you where business share still? markets open and can are more just you're because or you any opportunity think there Are you seeing segments for gain

Jay Brogdon

There's really pointing jumps think worth I is to. that out nothing that

growth right that, that long excited seen And for the and growth the and think that's to huge to in out. I good way a We've out But area. in be was and in to this think about area for area pretty not going our But saw continues it. that lot momentum agri a focus for just some the some balanced the across us be continue that of and -- our portfolio. us You board. quarter forward. a really we area, think it's opportunities. call got still still That's will that talent I diversified across One us. really one about, bank portfolio have there's in We've call history I'd great the it I

David Feaster

fee any Where that trends cross-selling And it's -- Better the time, revenue underlying know Initiative. the you've the other big revenue I'm for you fee to has Bank just expecting And this to generated from you see curious seeing see in part I side? just maybe the great on been thoughts growth across for presentation fee this opportunity going and some in growth a of franchise? you push all on lines slow. mentioned in the some you're we're businesses? across business big side the forward,

Jay Brogdon

the I we've about but an revenue lines uptick some side Well, to of Yes. still this both us. do we'll QX, from I the in it's cetera, there's a in continuing to think We've to opportunities whether got pleased wealth, see grow was for just still going to continue there. a think years. in a et to particular, acquired probably of that I will mortgage be areas, markets penetrate opportunity we the rates, that's think of that with those lot on say of better of lot over more I business little there, quarter past mortgage, out into the several a challenge well by in of recent

that's certainly objective so for and intermediate-term and current And us. opportunity

kind I evaluate to deposit really side we different the environment cetera, of services, of banking et where lot in charges, ways. continue think a get increasingly overall the market continues to competitive fee is where just

great that point markets going have and Bob's continue to earlier and protect we'll and to especially And something our where so to ensure market evaluate in in we're we markets defend share. that that's

work the doing that And that's now. so we're

David Feaster

Got it. Thanks, That's helpful. everybody.

Jay Brogdon

David. Thanks,

Operator

comes with Stephens. The ahead. from Olney next go Please question Matt

Matt Olney

Good everybody. morning, Hey, thanks.

Bob Fehlman

Matt. morning, Good

Matt Olney

into the on of back in I funding stabilized trends want about, the quarter? strategy was strategy funding that, that the any looks you that like strategy just in in year recent executed commentary weeks. just appreciate market and to little to to should discussed third going with part deposit higher half about more appreciate if moving as borrowings love to the cases, quarter on comments in kind the share Would second in you there the Any deposit go Jay's part changes. leaned color the into beta be quarter. to a that more migration heavily second that It the the Bob's you I of as we is, first compared then of Thanks. any XQ? certain of the back the move read in And

Jay Brogdon

be industry, that especially within CDs. our times opportunistic. needed strategy we Thanks, just funding where and to That flows, say and throughout quarter, it leaning and just timelines where was ebbs that coming think wholesale really of There into side, we lot Matt. were in able the of out in meant we back more the just versus I'd I markets. the Well, first the March were on whether happened foremost, there were things opportunistic anything, brokered a anything borrowings at

need So I on them. to rely think evaluate markets kind of we'll we those just to as continue

forward, hopefully for into to quarters wholesale good I that We lean growth type any back that sheet place Generally the sheet should about, still our several speaking, more lines went I majority single-digit a optimization slows talked think as to needing the along the and and But we're as type where inherent fund less strategy growth of from cash here. sort on a those getting growth our last going to less of is of flows bit. can out we've bear of loan think rely little And growth funding. double-digit balance loan borrowing. balance here therefore, of

forward. the I of, bigger be part going would that think, strategy the So

one of little and the than we definitely two quarter quarter, quarter, nuance or in be early coming necessary. higher in cash March was The the a kept there this may early out what balances we bit

You think to might talks sort the even were going in of on that quarter. debt back ceiling

environment that felt So prudent QX we on we there in liquidity around pretty and the sheet. to keeping cautious tone what about just a was take were balance were the things some macro it

maybe the about. for those just quarter think So some to nuances were again,

Matt Olney

that, betas to following we in Jay, any or thoughts up on as third just it on saw quarter in comments And XQ? relates what the

Jay Brogdon

Yes.

yes. -- think I

overall than Yes, still have think I to beta move really the There's I I will stopped of think on will there in lower-cost -- you think been Sorry, still comments again, on drive the that beta larger competitive continue of volume, if some deposit I in will, has of I here. that missed betas I to pressure the deposits. the -- part sort the been similar It's think movement and NIM, piece think and rate. -- we'll environment But more I that continue deposits of the question. don't on front, from migration overall betas. out hope

weeks what well. several to from is trend as in hopeful yet, the there am enough I seeing I'm I'm optimistic but what hearing full not others we're really call and

piece I significance the slow trend a that here. or pressure, volume the both piece if fact, be some believe migration and will that, betas, that's So related to there the continued pressure down deposit in while think, I on be seems there. do NIM that does, slowing -- on of

Bob Fehlman

net Matt, That point from one with other would million the NIM did our little And there. couple dollar our may out not of at floating That's call a on it did but Yes. next It That's just quarter. to we fixed a have out. up interest good negative one-time go I a level bit this repriced to in is was same move, reset the a sub-debt income. quarter. the in that impact

Matt Olney

reset. If correctly, I impact remember the XQ think that of full I got

Bob Fehlman

That was April X.

Jay Brogdon

it… of every bit Yes,

Matt Olney

switching guess, opportunities. to I the And then, Perfect. over repricing Okay. loan

of a And opportunities love that thoughts maturities next called little year just I your would know production about out kind the lower the repricing that? to rate. think directives billion those over debt of within staff over are general a $X some at where principal of targeting levels? the you're about your repricing I what to

Jay Brogdon

Yes.

to happening trajectory than of the trends continue is expect you that itself. over pricing renewals is even terms higher pipeline of sort time would pipeline on to that a in what up full rates Current-day that see be repricing similar and built is think kind -- I move. would higher we in because our as in pipeline of there where pipeline be

$X $X.X pretty we billion that think or are our I deck. significant in the renewal here out billion call on that So opportunities

on other those in we're at the I'd that renewal Matt, those throw opportunities. really And there thing focused enhancing is relationships

these in where opportunities. we availability of the a additional an credit we just good are question think not to renewals customers. additional deposits business account earlier have So the call, and in was bring back lot fee really for today in our to opportunity or a that marketplace operating or There's asked

our of that equation. and lot think even yield other that And enhance so beyond a the date. trying loan piece grow We advantage really to the of just of pricing, opportunity at every full take to we're renewal relationship there's

Matt Olney

that. appreciate lastly think And just guess, balances me, then, to loan the I continue I migrate I higher. Okay. for construction

I act kind any guideline governor on think as around you you Or on C&D thoughts a disclosed could that would and kind measurements. kind that you're just that buyback? at quarter the love on We'd to XX% the level? levels, move or appreciate of thoughts two? over threshold XXX% Just of be for those willing to a of

Jay Brogdon

not in jump in our at within not time. of afraid certainly strategy for stabilization just business. XXX% expertise you'd to be I'll above production Matt, sort et time, lot got just to same levels. one, see don't period the of a of really a operating a At rate us for going time, function those projects, of to Yes, and go over of It's It's I We're time. areas too. above think those those sustained XXX% periods But that we've cetera. on operate on sustained our of

Matt Olney

my Okay. taking Thanks guys. for questions

Bob Fehlman

Thanks, Matt.

Jay Brogdon

Thank you, Matt.

Operator

Davidson. from go comes Tenner question Please next with ahead. The D.A. Gary

Gary Tenner

if spot point Good the June it side, into deposit I jumping-off deck, but guess quarter? unless of on missed Thanks. you questions. sort did, third couple the the in just as follow-up guys. could I XX and A give of I rate the I morning interest-bearing apologize us a

Jay Brogdon

hand don't you Gary. back in Gary. we've think have off that I I'll got get to there. that, Yes, I with don't that here, right

Gary Tenner

announcements making those service range, Does potentially? or then hold quarter. you this XX And XX at you along is reductions range fee larger last service about end service anything a which don't of to charges lines. terms know on guided the all top quarter, were some And the pressure you that Or income I there recall the commentary in I there about right. All in charges, with even the to delta in still charges?

Bob Fehlman

a Well, to and it still talked service at it's where in charges wealth I'll on it's We charges, adjust all just or in see have and we still whether on service we our need not every charges changes. are service we QX where profitability. market to the continue start about on We whether of any basis. made on deposits, in the for quarter of that last year month-by-month the our evaluate look investments, off to

So have announce today. basis, want to overall we have a on to plans adjustments quarter. don't you may because any But the this go-forward a comment Jay, did on couple

Jay Brogdon

you're of We've Well, think kind historically kind right. the of end range been rate. We've a exceeded mind is mid-XXs overall quarters be of in adjustments row couple to a commented here. fair quarterly a range, in expect to top and the legal where a run quarter, we of That's that last fees that really that low at couple on my I et value for of reversal reserve cetera. consisted in of quarters some last

we've top more of range, middle couple for might bottom, the deposit end of the mid-XXs So to is competitive the I service here. point us good Depending put on a need whereas from that of side, the a to low range view dynamic for range range we toward think take me that a of that been here. still quarters might actions hitting on that

Gary Tenner

service I make Okay. side. sure charge any in reductions just to I about didn't deposit miss want announcements

then the us that And accretion color. for was? the or give what for quarter accounting the adjustments number could purchase discount you appreciate the the quarter, I So

Jay Brogdon

here. in think have I that we

George Makris

XX. It's on page

Jay Brogdon

million quarter, XX $XX little remains. the About $X That's over left. for a million remains. what

Gary Tenner

have quarter. you kind versus make then accurately. the to just And sure first last number know I Yes, I the delta of want me. I for Okay. flagged the

the we of they're more hedges In then hike in portfolio, money. value on terms got the fair week, a securities the this even

of the slide that and Just part think unwind in past the note -- you've or deck. about you talked in the I potential kind to all,

place? on them thoughts that. in are the how overall Or Just that? working evaluating to plan Is you keep

Jay Brogdon

opportunities, other those either well Well, as as rates continue any we -- candidly that's hedging to in evaluate hedges direction.

something exercise your of that as plans in anything is I call sort to it in continuous for soon would hedge I those monitor. us. that's will expect So as just And But don't think continue point, tomorrow. to further absolutely a there's what to the we that right to unwind be would money immediate now. even

Gary Tenner

Alright. Thanks, Appreciate it. guys.

Jay Brogdon

Thank you.

Operator

question there's ahead. Scouten, -- go This actually, Sandler. here. concludes Piper one Stephen Please more

Stephen Scouten

Hey, Appreciate million much Guys, to good curious annualized kind the progress of saves of if of -- rate? on levels how morning. it. was would incremental expense in that the that expense already Or be just run was the million, in saves $XX I today? $XX

Jay Brogdon

initiatives I No, we from achieved Stephen, had that I'm feel the if very of fully period, I a this quarter, will. partial and still here any good are that sure we'll full -- There in of have XX-day initiatives of have benefit don't I that like full -- progress We'll certainly of think progress. quarter. made not benefit those the we full kind quarter some third in benefit underway in you QX. here things other our

chip So number to QX, and ability guidance to at turn little of is sort year, year even be we exceed we hit out bit we'll about given The still that that as continue to kind that the able that. into I Hope of have of feel think kind to our rate we've fully very good that of in that. net to year. as go by next meet a the away run next number

enhance growth the there our and but our that's in there's some are we mentioned for will investments, or enhance talent hope whether beyond as profile, that, opportunities call, we further be otherwise some to And earlier more acquisition that there make we scalability. enhance our believe expect opportunities us will more business, also

we that to to million, our first this net and beyond around inform be forward. save about that all expectation we'll as cost you continue balanced we'll $XX think progress So we moving as how of move

Stephen Scouten

heard answer points asset and think of borrowings I like third down average just It more in earning NIM sounds for some mid-single then of about from really the growth I'm curious kind your That's couple thing appropriately, growth question Great. If how maybe working loan And you last good. here. the digits. Okay. quarter. of basis Brady's maybe to a low in the compression me.

earning NIM, think how of what for sheet you direction the path do dollars this and just the compression rest assets? you with So year? the do And think balance that overall is the about for on the of average NII

Jay Brogdon

Yes. than speaking Well, the quarters, piece as now it, for anything I more we've balance sheet the that growth of is strategy think to several Stephen, said optimization.

So it's remixing the we with that. success earning assets kind of month, day in We're quarter every and having through. day out, that every move

think I And of we the that mix, think move NII, remix on point But forward. wholesale funding I want grow I asset continue as able we I view as success out I of rely continues from guide sheet, density, to expect should that to us attractive specific of us as for as we Certainly earning to well. don't NIM on kind that kind there. with Absolute dollars great with. think we move be pretty from NII for that forward. have as there's be move we there opportunity be good balance less kind that for that of a have to think a as to about asset a you you risk-weighted

Stephen Scouten

time I Jay. appreciate guys. Thanks, the it. Got

Jay Brogdon

you. Thank

Operator

I would session. our Makris any concludes question-and-answer conference to turn the for over like George closing to This remarks.

George Makris

us joining today. very and all of you Thank much appreciate you I

in And committed the that markets, today's Simmons company you diverse, and based out our that's should of really what to is community and We're you conservative, meaning customer is history acquisition, the have playing what our Simmons seeing product, through that banking are markets and certainly banking. market. entered is expected and in philosophy well, of think is starting who risk I on base to profile. the our and what is, banking. relationship we fortunately that relationship us some And philosophy understand for of

our to certainly Initiative, and pause think [Indiscernible] the our long in beneficial is timely in I M&A will very be term. Bank Better

months this and from doing again appreciate look Have great a us now. joining forward We you day. three to we today

Operator

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

You disconnect. may now

Simmons First National (SFNC) 25 Jul 232023 Q2 Earnings call transcript