SFNC - Earnings call transcript Q2 2024 | Simmons First National Corporation

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Operator

Good day, and welcome to the Simmons First National Corporation Q2 earnings conference call. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Ed Bilek. Please go ahead.

Edward Bilek

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

are of Bob several team, today a Hobbs. me Joining members be will Executive Brogdon; CFO, in George Today's Jay call including format. our Chairman, Makris, President, CEO, Fehlman; Q&A and Daniel our management executive

under margin. including tab. economic like on lending forward-looking and factors. and release interest presentation by estimates, rates, -- risks differ are available the forward-looking I future among therefore credit uncertainties, Before variety in and and you including, call, regarding make our due earnings we would we those you begin, quality, others, a Relations second and actual implied projections our place forward-looking as the that conditions, website the at during materially today's any statements net statements of simmonsbank.com our on These from our undue reliance outlook remind expectations, expressed to Today should involve future to activity, outlook quarter could interest Investor earnings results not statements deposit liquidity materials, will goals, plans, statements and deck about or

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

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

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

Operator

Instructions]. [Operator

is line question Wood first Lay from of Our the from KBW.

Wood Lay

the quarter? we start a on you the some about to right the NIM see half you little this went can into do in where Can into back further could year of think great expansion? what you wanted carry just to of I it And It talk NIM. bit inflect sort see higher. the momentum the was

Jay Brogdon

I kind maybe as But Let additional me on of think this with some start here. is and just reminder. may well start a that, to want I comments Woody, have Jay, Daniel what

now, area. is We a we I $X.XX, have, NIM quarters a are for few feel like And basically stable of kind were last X range-bound quarters NIM $X.XX. of our highlighted the prints think that $X.XX, in our

those in Daniel a I items of of were us things -- a that been it for second that flip I'm right feel that's to the to us continued drivers unpack couple quarter. I for theme like to think some And NIM. in maybe definitely Again, right going we've speaking, are here generally So a sort expectation. to here. in We went

given for backdrop. macro for favorable very a very, down very And seeing environment I very, we're side. deposit balance we're poised asset liability our poised the sheet think Still We're or I on stability competitive type sensitivity very think some repricing. rates dynamics.

I a NIM of bit where But a talk Daniel, about headed of I expectations. picture think and from and the we've of big little the of kind where you a NIM couple your view. trajectory point we're dynamics and think within quarter the may been that's here So

Charles Hobbs

Yes. Woody.

side the of sheet. asset So let's start on the balance

yields that yields to points that our for us have rising trend you, the about or portfolio yields, relative that with QX. this expect our been for at quarter-over-quarter. increased basis wouldn't It's in increasing some loan sides I environment prior that, loan we have periods, in There on QX Of look -- and that a was basis XX you and been rate basis to if loan that to both yields of loan expect I'd continue. that fees X points. tell it's points, QX relative XX QX that So some timing

if So loan it's you of basis increase what was, X points. the think about the normalized yield around

there. momentum good So

kind has good mindset of We growth growth, and expect improve is Also that with we're continue. is X% we ROA. annualized. had that and on or the keenly loans, that we for our profitability in soundness to -- quarter-over-quarter that us. put focused fairway hurdle deposit we're loan middle tailwind us going order. that focused on in every to profitability on of X% And That's help

you headed, probably where think there, you on going loan may profitability the tapped be that's to demand little as would So a but not sacrifice and reach about tell there. out we're bit our

us. So a that for number is quarter-over-quarter X% good

deposits, to sheet, us. think for quarter, flip side was for of liability it story I think good the you if a Maybe the balance I the

it a You There a the see end $XXX can down quarter ending -- was kind number versus when quarter end. prior skew of sometimes you balance million. the look at

You've got funds, businesses sheet positions taking and that there. then you've public some balance seasonality got on timing us affect their of

were you that of million then in the balances that balances, the at look were the only look in start noninterest-bearing of quarter. we quarters down But remixing quarter, in base. You've in of one and probably specifically, we've $XXX best accounts, And in while average in you that's had quarter-over-quarter. a got balances $XX just there. they counties ease if if and the terms maybe disperse to we And down importantly, at more million schools first building second

XX% of basis a deposit that, before were up deposit quarter that the Last lower impact a for us significantly past. were that up so cost. our terms XX%. that's we had before in And positive been and forward, costs, in than in in fast had quarter, X where We only the XX% quarter points we

primarily deposits. noninterest-bearing And so driven that the by dramatically pace and of increase was slowed

renewals tell for than would month had I a is we positive And lower rates thing that CD on our were first at forward other is that the quarter. you maturing carried for entire In us going CDs. April, theme The rates. where the our

think even forward, and headed we of a positive flipping neutral trend for that slightly maybe somewhat a about is to hopefully as from headwind So us.

So us quarter. deposits helped with in NIM the our

some As competitive. mentioned -- you easing forward, pricing this as it's is Jay about not you That there. still little think about that bit, but there's a out very think irrational competitiveness

CDs You've what cost funding competitors our got some is. offering wholesale above

on we're thing growing And a deposit so we're going tell is checking focused keenly maintaining relationships, profitable relationships. from a standpoint, would to of battle our customer accounts that. you one we're But last number account core to year-to-date. I continue And accounts still

big us focus our is that's a that us. customer to to that provide for grow so for continue meaningful we And funding us, core base for thing stable

Wood Lay

pullback securities Maybe view throughout make seen That's the over more way constructive longer-term a some in to the quarter. shifting portfolio. the potential Does bond it sales? you on We've color. really helpful rates you get little

Jay Brogdon

it do year. think something I I last does. mean us Yes, that's you in saw QX

approach an maybe far kind of patient. approach. I Our been a has incremental call it thus really

we think disciplined our of sort look the well. of earn want optionality. in X focus the a We're taken as portfolio. to very between haven't around approach really, about maintain as kind things those And bond We trade-offs back to really Band-Aid the maintain capital want as kind at focused off it, and the we on we the and earnings of and rip

the So in XX-year XX-year. in movement no all doubt movement call to the going the with to associated I'm just -- the it the

constructive. more get do We

look heard at guys You I'll opportunities to have are me and lot continue rich. a different of we say the alternatives portfolio. within scenario say it, We bond before, very

So demonstrated lot patients us I that. don't around out because, over the again, want to we've of get a skis

you'll very come see your as doubt, rates disciplined. there. to it think relates continue us I no question our direction to But have

Operator

Feaster line from question next James. Raymond is from The the David of

David Feaster

touch maybe the Good morning, I line. expense bit wanted everybody. on a to

help just I'm You've active program? about what's obviously and done things left expenses you managing curious expected. that that new investing in how the And to very expense Bank invest think paying that some than continuing that? we've you think franchise. like I'm to in costs fund better balancing, trajectory. expenses the other on cutting versus how But hires been we're of Better And curious off. has initiative. It's with about

Jay Brogdon

that as of well, Big too again, comments and jump the David. just or one picture. the Bob be side. in on lot big to Daniel expense here But is say have have some continues I'll I'd discipline on a focus may or others picture to

That's we additional been have always hit board. that on side. that that's is systems very the results try invest we opportunities We're are and a the I But you to the ongoing expense pleased we all and really across in business. important that initiatives. theme expense from continuing the in reinforce, on people to think with

call good really talent upgrade year We we're a terms attracting have kind of at that very in what of bank. past the least talent pleased the the had with to category, I

the in of that fund if we to and ago, Some wage pretty successful a out is all really, to be as few there. far, it but environment, may include as ago, current not evaluating still a The is quite doing systems. overall mindset as on have And investments that it's going we severe have year inflationary inflation we thus quarters environment have that. of been was the tough new not initiatives systems But try the possible. adopted those much,

so a of think produce is results in for I that that piece face story. And of us have compelling the far we to the thus the

areas that. we we where everything to efficient plus The redundancies, doing think franchise identify serve associates opportunities ago, our some last to I mean we'll at a the I'd that bank back today. taking just our are back in most in at We're we're same of continue better opportunities looked better opportunities. is look it the to and to scalable way. as between I thing trying we're deep everything where going way initiatives And the in there that the to still identify network from serve hard a other year and do identify the there branch that say customers, have to the are

Robert Fehlman

I better a at just after headcount better digesting when that -- in This time bank some is is this this and size This not that down we started time of X.X%. period XXX thought better was very this want We million there. to to think lost One being kind targeted if you about million. we bank did number But is $XX $XX say, a I gets make, not It's point One through back there. at forced not I think, of important of process look out what was becoming our out to the David, period it our bank during initiative. of all We're initiative. year, is is last we through just of layoffs. remember headcount M&A.

we So where proud of very the team there. are

As far encouraged But the to the good Jay said, will a how now. we're more we're point There say at and with not progress when very thus ready be too, and much. down to more come. road or

David Garner

And the say focus other control things the every we on I'd our we are can is one that at can't focused We are environment. expenses maybe say thing contracts. at we final and thing on we in that control our looking where executive one the a the an is We of a one off but have that. department. all can't procurement There is we and procurement, end we out. meetings, we savings and of counsel can contract control. just on give of that of invested to head day day things And we X% just vendor rate is paying of largest example in we our on just maybe had renegotiated you about and are And never control, investment

we in Our contract, the are of second that. largest renegotiating process

savings We get there. just the some to down then going expect meaningful And list.

that a and of saving the efficiency, Jay there's mentioned two that. There's of cost there's we're and retail may network, the investment sides side focused that so side. things And on. there's the and be lot

I we've still So to got think that. continue focus on opportunity we'll and

David Feaster

credit on look Any issue watching in maybe your increase at on curious thoughts asset thoughts the drove you're what and closely. to -- seem primarily what managing runoff it broadly just overall to I'm The book. portfolio, might be as quality. And seeing, what switching more isolated CRE, to classified? you But you're maybe It gears looks the the then credit. approach but great. like maybe any That's

Jay Brogdon

portion small area lot duration a your about balance think I we far, We're as we're We've of focus basis, rates. David, Fortunately, working in seeing and a exactly isolated of that statistical majority a we've Thus kind a how time. comment Those low a the or success the for seeing some the it. that shortening through about through credit. sheet, of balance percentage is overwhelming from portfolio But for talked feel working us have sheet. in initial period and identified in runoff very the normalization of is of good But portfolios. been to loss as that on very continuing those runoff that.

When focused beyond we that, of you low. I kind are and what we searching look asked mean on. I are high

point being problem to credits. any as we borrowers include focus can around of view. proactive as are of the of from We That identify would, stress significant kind a repricing course, just on

events. got You maturity

a scenario. that You've higher lot loans we've are repricing generate dives So a of in rates. got that stress? that done at Does lot deep

broad-based for of And to do resulting not that. kind continue in We that's any us. anything that's concern causing

There haven't stand runoff that sectors aren't previously kind within us other at put out or And we're there. so any particularly concerned that identified into be continue that proactive we our portfolio of we'll about. that to portfolio

I pretty from generally positive past some trends including we on linked-quarter perspective dues credit at And overall even a speaking, had focus basis, a kind to leading when quarter. I this of of on like look indicators, credit, the

the about time, very think about of same pretty perspective. credit lot we macroeconomic conservative in There's the a where we're we now a the feel But right good environment. as at uncertainty from are we So marketplace.

David Feaster

That's capital. to And maybe gears great. switching

any more mean we've focusing for about capital priorities maybe that expectations appetite do Obviously, strong you growth, or in I for talked the I'm other the how that curious your deal and consolidation. You've to how proven got you conversations picking in a organic are just really but is activity on more past curious participate that? your ahead you're I'm up, maybe acquirer expect in of a industries a balance commentary from have M&A? sheet. are perspective

Robert Fehlman

the first tell have Well, David, we We our to I'll then of of that. our you, Number I'll priorities. long start payment one dividends organic off, off be shareholders, our on would that. capital in on focus history growth.

Bank think as grow our some at Better moderate and brings As we through be some about good into initiative, we've back organically, really point, to line. to especially a our talked rates we footprint the that hopefully able of borrowers have

So there's we think of opportunity there. lot a

optimization. think that The That's Outside the would balance timing use Wood be are a capital other there we with our about over measured buybacks use other just if is better priorities is earlier and that, piece mix. of measured at it opportunities -- appropriate. We're talked We than of on it stock our time. right that we sheet it's look would stock in there's really -- is now buybacks. to we

better We end I the that. and talked we George, becoming we now on a priority. on on our a around the put right as room as our M&A and together of focus on bank said the really end our on focus And XXXX, that's and it's this we've really bank in lot about, all to So really a priorities. talked a acquisitions lower lower and time Jay side, really the we -- is about sat putting

do So road, going current now strategy we're that doesn't in our say point not not down M&A at but that's the mean the we right focus some time. of at our to

Operator

Olney The the next line Stephens. from of is Matt from question

Matt Olney

see funding the overall half we flow. of Are back What's borrowings ease pressure on continue at going see to there. of borrowing securities the did the borrowing -- already of step-up to especially seeing I the cash the of big XQ, and end the think the the side? the the we and position What Daniel strategy strategy summary for pricing in a good in deposit mentioned about period for a end quarter. year?

Just any color there?

Jay Brogdon

as anything, much timing. is I I way Matt, balance the think think really as think to just ending about

it's CD whether it, reduce else that. in anything us balances, I to a FHLB is overall so noise there's see or and think about there. priority we be But you we're in in some advance right? when really you'll out the look funding ending how opportunistic And out funding period-over-period wholesale of at timing think for wholesale or probably an brokered there. opportunistic generally,

You'll have net things. is strategy or relate wholesale terms it income that funding as some efficient the of public as be to kind as the some timing But net really, other interest in and of and possible of in might to funds out just in interest margin protecting area.

And consumer that commercial really back and other deepening on accounts. do Stepping but what areas cetera. that that Those that relationships broadly, the our what factors we quantitative and et to focused want core inflation retail the want the customer our of products, average have on in now treasury on, just I more has bank focus tightening, network think think but is we're we don't driving really control to really, the would whether whether sort about going touched categories of earlier, customers, and you forward. maximizing are focus to about it the you those primary go driving balances deposits, commercial impact we want Daniel into with of management that's on control,

Matt Olney

appreciate that. I Okay.

over you next fund to Let that a of cash $XXX X. year. I flow contract just allow allowing way that me assume cash ask continued just per expected of disclosed last loan to think kind continues growth different it you've securities maybe loan quarter been the then fund And Can million flows to the a portfolio, of quarter and the to that of this some on and topic same growth? we

Jay Brogdon

about exactly would I to way it. the think be think Yes. Yes, that

that order. growth balance So with funding priorities from reducing would the funding in be cash any and wholesale our sheet loan flow

Matt Olney

a think on And it's XX. Perfect. guys then Okay. -- you switching I Page disclosure gave great gears,

this now as continue commitments lower, why about those unfunded quarters we've far that kind is. as a and and few for move to of talked the On

Just you on any ultimately to expect quarters? over color next few land this where the

Jay Brogdon

from are clarify, point level of asking view? to just you unfunded Matt where we land commitment about an

Matt Olney

Correct. Correct.

Jay Brogdon

say used given where tepid of think the growth our outlook more I'd perspective. Yes. loan a from pipeline and is, Daniel earlier phrase I sort

of commitments, I think that somewhere unfunded a it's kind have in going be to floor there. them in

that Probably line with the of We closer commitments that but cetera, et floor expect credits that we're borrowers, reason fund a up. is to it. say not, to unfunded are commercial have of I lot necessarily getting now. wouldn't we And

there on out patient that that of you sheet, trend If trends for off have a there's up it's have, whether side we and around similar the credit paying their now, got excess it's rates the cash borrowers right in extent see more kind balance elsewhere. lot just a lower among of bonds the conservatism laying they've their or commercial bank or the they of borrowings of to fortressing

And up, and of I of difficult But course normal here. spike of of to of this think be to I et cetera, at you're the have When as so up sort that, just commitments. at pipeline, look environment, don't from I at to go it's -- in to I some healthy terms in and loans I floor market, the I in fund commitments just because X, go expect going what that look I our described. current right, look unfunded permanent unfunded going a them to paydowns dynamics see to expect

Operator

question Tenner next from is from of Davidson. the D.A. The line Gary

Gary Tenner

I a over think, a maybe if a a I just two in quarters, maybe been previous kind call stable revisit what's on where you of thoughts? that then growth but loan those I more relative the about several course had mentioned past, for a you just minutes below pretty distant And the tepid comment, late, growing the talk around last been that to second. obviously, just wonder outlook. could few the kind juxtapose that and hopped on of more of pipeline it

Jay Brogdon

Yes.

a I add growth to or a I we'd there, aspiration for point Gary, I be think think think healthy would is what closer of aspirations is lot of from environment. loan double-digit macro growth a loan normal I color view, environment more kind

single low for this the year from year was the outlook of year digits. Our the beginning

growth, the think that an of isn't we acknowledgment was the seeing the that the that at first all environment. of play way kind half I lower just back we're the Through beginning And type are single-digit January, with year out. seeing and we're in in year, of that that this of pleased and this that environment.

borrowers just our continue that of loan pipelines as that recently or to to necessarily -- see I'm sit up paydowns, we kind here out think expected kind theme as just at in to of of really flows down up flows that some rate single-digit in good the calling not growth. back cetera. look has environment, the really, across rate portfolio, maturities et rates anything a expected start I uptick today, are most a think not shifted projects need that. the and just think of I market there, on, thing, or for permanent which look I an impacted our from level borrowers working I'm the this healthy second loans that declining to like to those I cash come rate in to quarter maintain of We'll scenario. theme, broadly, was is demand a were I for

just growth. we're relates pretty it so outlook cautious to keeping a loan as And

standards profitability Daniel this around credit to continue said now. we're say it. or growth are right chase going You hear not call, earlier soundness, our the to loan in nor to us standards guys sacrifice around

those demand of come and all of so from And point together a view. outlook things influence our

Gary Tenner

floating then loans increase thoughts point? a a relates And loans. pipeline XX there. ready Is in mix pretty of that as the on highlighted just at the rate based appreciate rate close I slide, healthy on that this commercial it of fixed to point kind to that Great. and basis

Jay Brogdon

all We're some the It's total percentage there's rate where to the that the swap that definitely relative it's success marketplace. loans But and the But seeing activity of generate is had again, of -- is. of total there. quarters fees good probably in some some even around overall focus recent today. focused few of last in a the a a as more on variable in both. function -- some mix have pipeline been mix that's opportunities. floating there some with out and demand loans just in We've opportunities It

Operator

Thank comments. to concludes you. the would I our like back question-and-answer for this over George closing turn to gentlemen, Ladies session. Makris and any conference

George Makris

website like Bob Daniel, my would information I'd the of simmonsbank.com on under for a Simmons I Ed, to is by here. morning. our comments what bank, at great at quarter the encourage Investor start our if information Jay, points and that the out -- haven't and together Relations performance tab. think recognizing you to Good to and each you to really team stable lot I bank. the about it put which A go traditional our looked it, And is Bank condition they

our all-round We performance. with be continue pleased solid to

interest encouraged favorable game a indicate which be return strategy. conducive data, long seems by eventually our rate are environment, to reductions future We which economic to and to neutral rate will

the careers to filling the associates. be of focusing continue while needs our on meantime, we'll the and our patient of in However, customers supporting

thank you morning. this So great day. us joining very a Have much for

Operator

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

You disconnect. now may

Simmons First National (SFNC) 24 Jul 242024 Q2 Earnings call transcript