SFNC - Earnings call transcript Q4 2024 | Simmons First National Corporation

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Operator

Good morning, and welcome to the Simmons First National Corporation Fourth Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Ed Bilek, Director of Investor Relations. Please go ahead.

Edward Bilek

Good morning, and welcome to Simmons First National Corporation's Fourth Quarter 2024 Earnings Call.

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

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

expectations, net our lending call, goals, and outlook quality, margin. economic interest will rates, regarding deposit future we outlook, activity, liquidity and today's forward-looking statements future projections During our including, and credit about interest make plans, estimates, among others, conditions,

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

Operator

from Woody comes with first The KBW. Instructions] question [Operator Lay

Wood Lay

sort range? the of into growth about end through major you the low end and know have that? NII takes assumptions high I curious on that the puts of loan And guide. to versus hoping walk the the baked the I any But just the the could behind I of you was are range guide. just Wanting was start

Jay Brogdon

on NII even. Woody. when some our comments in quarter think, in the the well I I'd that, jump here. the back even outlook Daniel start I is have to, guide, thing as Yes, fourth throughout I'll activities about think quarters and But first think going may I with

our we over We've net back belief half pointing more optimistic could margin our the this we ability, cross in that interest a year. were toward really of X% year that. or about been Obviously, the

that range had go do even October you believe when quarter. forwards back a If We to today. we at that, the of good maybe time expectations. they quarter really the within looked is very like still this But than different that

extent Honestly, our I to feel terms launching to off see can our beginning point for we confident the there call to the thought our some as expansion. it going original in of I look a that the and XXXX, to is than on think in better of questions NIM talk ability forecasting continue the But was there. at fourth quarter the about year we we today little are be still really to

of end puts remain asked fair to sensitive a range. the the a here, sensitive. high you liability low about the liability takes and bit Obviously, and We amount

both time, our any within we voice sheet, and outcomes then bankers the as actions impact And forwards conversations among over been I that's growth in and Fed's conversations balance range. and sort about today optimism think same certainly optimistic outlook more loan think growth of still at clients. the our the So we've changes or that would on just of the sides the

the the core wholesale we optimism side, to some through. very But funding that a much reading we've simultaneously into kind convert shoots on of shrink But balance do be it's that's deposit got see continue early see pipeline, will and the pipeline base focus pull there. the green the grow and our to the And then to see to through and sheet. that on customer bit

the growth equation on anything have be Daniel, I that you'd guide add so there. the And would to side the will on of think in obviously range where an we impact

Charles Hobbs

guide thing Yes. was important XX I forwards, to January would note forwards. that add by is an on that cut October based is full first our And of had our XXX the the which 'XX. rate

probably about If versus range of of that think opportunity. range. you rate the some then if the So cut end the and sooner, maybe of high high that the we'd end end be the at happened range low

could end And we feel pretty didn't cut that still low be if we get a that range. at of all, good we at that rate

to that's So you that. about how think I would tell

Wood Lay

up higher it. for costing what you growth to related deposits? to on below all more it follow-up all. to demand is low Is customer off run you sort that's disciplined single it to would rate is of a the all or normalized And good of Yes, part in order growth, related loan It digits. being I little a a consider hear. Got as then

Jay Brogdon

-- mute the on the I think profitability going that's you what it which of increasingly And on absolute side. of and this say to the have levels comment going is growth. growth in to We're and I that tie want both it's to have maintain all to to hearing hearing soundness you've loans discipline, been profitability something -- and deposits. applies us too, Woody, soundness, been order absolutely say, back always us

But candidly, of and increase to returns. that's going profitability levels

more sort our a profitability terms of with balance invested -- leaner much capital. sheet much in with of so returns on less of mean improved levels And

Wood Lay

balance opportunities capital mean, grow ahead? how do Yes. throughout just XXXX, the nicely to position? And relatively the are Makes pretty to should excess you I capital view your stable, sheet there capital remain some expect would sense. in for And last I deploy me, year given

Jay Brogdon

Yes.

kind how Woody. that me to priorities of evaluate So thinking terms of let just an our the around make to about in attempt we answer capital,

really the your mix continues capital growth be kind #X To don't around So balance new here, sheet, organic is I within think the to priority initiatives. hear anything of growth of et that cetera. you'll our but point,

And include organic to within would from asset capital be of base. balance continue able I we so sheet to initiatives. kind here should that grow on

to We balance evaluate also sheet opportunities. restructure continue

that seen in the past. most do We year. the last the You've -- did quarter in third recently us in one of

the think, those. continue So to opportunities will evaluate we'll that. market, give continue And evaluate I to us some to

be would use that of top around our So priorities capital.

then Obviously, dividend And buyback. a our priority. authorized is share to maintain continue there, an from we'll

buybacks place. in there. first or that. to that couple But capital external of we have We fall other behind outlined share would continue around priorities priorities that We'll evaluate those

Wood Lay

me. all for right. That's All

Operator

with from The next Olney Matt question comes Stephens.

Matt Olney

quarter it little a that expectations. margin X.XX% fourth the above was sounds I like margin want of to go And back to bit your discussion.

Just any color on that comment?

Jay Brogdon

But outperformed pricing couple I'll for in give thinking really, quarter. forecasting we remarks. know will to all, say both of the for at loan I side fourth quarter, pricing the a to think apologize this about but the Daniel things I fourth just the want even on I our our here, some don't too. deposit expectations, have and

We a than we yields little maybe loan pressure on more expected what saw.

the downward some and conversely to on with And least asset And lag Fed previously, back so to pleased our us especially you've And summer ability we now, off was. then work for did it spring Matt, discipline kind of this at benefit the side. double the sort last customer and the deposit by the about talk the movement around of over fend going elasticity on heard the side, were we but a of evaluating base. of our of lot and

across we points we we felt were assumed. were in would like mitigating see like to the doing different pull types of control again, types able really that different have otherwise were some where testing sort the fourth felt products We to of lag forward, elasticity across quarter of customers, the markets maybe of and

Maybe our the on beta assumptions outperforming side. deposit

I have in that us news, earlier, throughout the expectations as in NIM I think than XXXX so of terms XXXX. the original we're our is point said were. shape a Doesn't And where expansion change maybe better expecting of good to really allowed what that, launch

some of about those in the quarter earlier of But reasons. outperformance fourth see did dependencies for talked there. the some some We relative we

you have you do Daniel, want? anything

Charles Hobbs

a Maybe commentary Yes. couple points just around your of there. finer

look model you outperformance you'll and of funding benefit benefit. cost If and our see that at our our IP, forward walk from the our NIM changed to majority the

points cost second for the cost, got funding in funding and the mentioned. basis wholesale side, XX reasons the was of you've or that did Jay points about XX the drove lower than The within of that that of deposit the deposits majority of quarter, Our the FHLB about impact. funding. And basis from that kind side benefit NIM benefit the that probably XX% of cost came

third you basis you deposit quarter. our points back costs, the if -- at If so look we're XX down go in

think bit more I even little impressive. a it's

only our we cost we where were peer while If the from in peer back you to think at quarter deposit that the QX I QX to that group third go didn't period. increase flat time $X.XX our over were

So Jay's lag, starting at -- strong lag. change point about the eliminated pulling typically our forward cycle. was a the months which when around effectively to comments X the We X to is of

points lot the variable was were points, the rate yield XX were down and fourth rate repricing but that then XX side, fixed on points. yields think and basis yields, loan loans drove really So outperforming we the variable X about our basis quarter, of that a benefit down our loan between And portfolio in up model. you our about basis fixed

talking been about for XXX rate quarters yield. our quarter loans the they about within the now by we've that fixed portfolio fourth repriced several tailwind that repricing points in higher So around higher, basis

production, So fixed the basis points the portfolio loan positivity, side which the XXX improvement going versus new points paydowns basis was spread off yield the -- fixed side. a total of there on drove of asset about X

where things we of thought. those kind So X outperformed

really a the we're good so quarter. going And spot into in first

Matt Olney

rate my you commentary. me pricing of around Okay. that into that kind And the that question Daniel, book. next led fixed of loan Appreciate

flows disclosures some got $X.X number. great of during small Not around XX XXXX. Slide a billion the cash You've on that

have So more it some like still you tailwinds there. sounds

Any that to weighted term -- XXX is basis assume that point these few specific is as ago, far that the near mentioned the at least throughout in that renewals. some relatively as any evenly? and year reasonable is that of just minutes a Or quarter you number a increase towards as spread

Charles Hobbs

Yes.

fair but to to assumption. across a fair. it for into that fixed probably I continue don't terms the repricing of in think rate of the going that's tailwind think it's it's time frame, spreading book me, continue I I In time going some front know the is probably 'XX. of I have

continue to for going that's So be us. a to benefit

on basis a think have XXX about fair to modeling but to think that, way that the at it. And I our -- point look spread, that's I'd probably

Jay Brogdon

on pipeline I'd I thought maybe rate also to XX And -- ready the Matt, add I'd you you color, see our market to of the the to add maybe think loan I'd pipeline can influence close bit both don't disagree. there. as little as Slide just trends. I the a process in where materials point well

point I the certainly What seeing, already term. fair think basis price in seeing competition, see we fair opportunities are particularly is When really still that a is immediate pipeline. credit so And the in what really XXX out marketplace. our spread high-quality of in really, I'm we're amount Those the already is coveted there. good really -- on still a in the credit marketplace,

as mentioned it. opportunities, competition yet. in it, now, just earlier, lot therefore, to right volume see you to those. come not shoots But we're price some has some seeing activity, of The bear to the on a good seeing I market when optimism And tremendous green we're

basis XXX maintain we year? for months can so spread this point XX And

flex growth the the relationships that maintain we're and to that's paid, think year. get and to And profitability in this environment to talking maintain and is priorities again, ability -- that question play where about your where we're year I out of to on those we're to competitive going going and there. depend -- we're will matters soundness going That's matter. going part just relationships that around that through

as And there's deposit probably into well. some through lead color to the there side

in pretty but are You've despite the got out competition, Fed. by this there some pricing still both deposit side, the side intense on using market and loan the

Charles Hobbs

Daniel here.

in got eliminating more one increase jumping got we the that good of for the bringing make a the forward first that the quarter about points first about lag lot really Let of fourth improvement looking and quarter. that bringing me of lag. kind XX the and I expect basis make quarter, we because in the we I'll NIM But comment We've -- forward forward. pace the talked to fourth off quarter got from wouldn't of benefit a occur same that point that in

level first So just do the at expansion -- saw but the fourth. not in some in we that expect the we quarter,

Jay Brogdon

our point, X% that of accentuate to that, first get at if the on, point the mean, we at quarters the year as the I the had year. half we'd expectation rate, believe all year. we NIM saying we can X, the a Yes. of a stack And basis we've and start if quarter is been of in together, run back XX be to we

I point. that think way that's a summarize good to

Operator

next Feaster Raymond The with comes question from James. David

David Feaster

just I deposit growth thus is landscape costs, to client accelerate as to on to on reduce it to rates reception the bit reducing talked industry continue have if extent. follow competitive great an far guys were just in deposit starts what you been your we've the of lower to like deposit just the especially talking loan see about? we wanted But How up costs. kind a side, funding job optimizing the of base, about done a you ability

Jay Brogdon

Yes.

still I The of is think flip very, the talked in competitive out It's influenced as obvious. of state -- still think, about deposit to it's that David, I positively, side good that around we've deposit base the we've side, there. been on elasticity it. the very the news is the

testing summer base. as more some reduce around -- year, in lags, became to the became we talked last about in ability over we of When increasingly little earlier, our a some of to did of assumptions the customer confident beta we really kind of the core some confident our the

far. and -- regretted so our thus I'm portfolio of of And made we've where administered aware I rate don't moves within anything not those moves sort

is piece today. thought environment ours the years So consistent that been. that side. it past we're to that's competition more just And we around really don't a sort has The our really be wouldn't to I it's say of continues encouraging. than environment the about operating couple -- influence XXXX, doesn't intense a the is of just very for piece expect abate. we It been outlook in of think throughout competitive That's how and deposit

Charles Hobbs

Yes. And And the there. we there, part our rate trade-off of David, peers in than have growth, maximize and optimization to our balance of a I and there's rate point our might you're book. trying terms add, probably always right more

peers, balance. us to we're as right growth you about think to for So relative trying find that

slide we that IB deposits, our I good forward just at is, think In really deposits our fourth but it walk point increased. the a maybe time forget around a we've done where that. deposits job that, I do and what notice customer on quarter, declined you'll

through And the retain CDs the if look we the into that you so quarter, where were dig able you CDs. in and really that that a quarter, side, fourth relationship to at customer with either more just over lower-cost other of those closure pulls in the closed words, in those of relationship balances retain is those those were on fourth CDs CD -- than to able XX% had us, we in

or the closed they lower deposits. words, At rate lower they moved CD. they other went lower-cost in current -- a the CD interest-bearing, into cost in were They and into

with team, relationship, ones And showing to of there. able that's are and the on we that then even those stressing through XX% so profitability, are really were we And relationship balances. our really retain

fourth generally of in And for quarter, that's if growth in the average balance quarter. Consumer all the growth in or that so seasonal at analysis the balanced tier, which just But every those one an you then rate And at so we the in in an both and encouraging And looks consumer you with time. growth is funding, the us see encouraged basis as quarter the saw even saw in the that consumer. long of ending house. NIB, X we time fourth side on we're a we tiers fourth core really tiers. do to look in really single X different first

a that we're the engine by one is consumer the of And that. And on consumer for then lifeblood year, core by checking is So accounts and bank. we encouraged final grew that that X.X%. point the

into we're so forward. going leaning expect to that, that And continue

David Feaster

bit pipeline complexion on the just on of other great Maybe Could color. you'd We just drivers to a the to bit be of growth? loans. you side, expect touch That's about talked key switching what the and that. a

relatively half in you expect first growth? drive order the improve? the seasonally growth on the be stronger do pricing staying the demand with growth of slower just to in year stable, some of front ag with like the starts maybe And as pipeline focused mean, maybe kind to more would you more you And increasing I quarters point just on what do at getting to competitive start and

Jay Brogdon

not would -- a relationship we're of includes We're and again, view It's that views. things, competitive. from discipline I point of even we'll pricing just pricing out be of say maintaining market transaction be point single Well, of of profitability, trying that David. a not be from to all we'll comprehensive views just around view, today. those

So seeking I we're The and think into risk-adjusted to as today seeking I go on it's we're loan We're about get XXXX, investments. there. good seeing that's just pretty clear way the returns really want to be those the to diversified. portfolio opportunities well really real grow we good pipeline

It's broad-based we're opportunities it's footprint. be basis to commercial within also DFQ diversified I pretty and markets areas markets real broad-based point and some healthy the diversified within us pretty other the and can't positive certainly, -- geographically. that a me. bank, continue commercial part our on somewhat areas It's of good where feels like seeing for to estate Nashville entire in relative

Fed potentially the we terms see seeing here -- through predicting loan is But I level this that sit pleased about move this I'm year the do. as throughout in as going year. as the we're an to growth with we I opportunities. confident is will in do uptick what of believe today, I productivity But volume as really, the of footprint

in commercial I good customer -- demand the shoots very, point very NII We around an healthy. mentioned balance and look credit that we today. bad. That's the we also at see view the our about takes little That's of are base, we volume, some see outlook both from puts overall sheets just a bit. conversations can of opening mute and earlier my green good for when when but positive comments some talked more

the balance onslaught see year, more more as you've we got to we're going the healthy to for of to that really think some today, really, through we a lead see more an may need and there. need if not optimistic move I'm When continues optimism of borrowing that invest willingness sheet, I opportunity out investment,

it's The I'd healthy of mention shape already of exactly thing permanent have paydowns growth last in that that the have paydowns, that terms paydowns, talked just kind of some is good one in We'll way year. earlier questions to that around of for example, goes supposed CRE we'll rate about to. this fixed the market, we loan the

our to a that. -- so up And we of think lot do grow on be fill -- pipeline seeking the that of see to top and good, we'll able will in that then be what we'll activity and healthy

David Feaster

I'm kind of feels watching of of just one kind me, front? weakness curious, right? what Great. But like are What closely? that's just on of And you and on your credit That's the kind for you in touching great. like the things kind seeing just some last guidance it Obviously, seems normalizing, looking what credit. are broadly, areas are just consumer. a It normalization, like implies.

what of the just or kind Is on you're there credit seeing broadly? anything front curious notable

Jay Brogdon

Yes, I would that's that notable thanks. new. Nothing call

the talked It we portfolio. still of to about David, significantly. identified to happening right we've what's runoff how off portfolio. we've specific in run us, continues is in think normalization about, the think term terms I exactly a

there. said some your are the portfolios about. in to are getting see balances are before, that somewhat irrelevant in that deal ones talk could have ones to we've to best are with and paying off continue ones the But loans the as that those Those remain we'll and charge-offs

one close a portfolio, keep So but balance, small the we that's eye runoff on.

that's portfolio, then It's nothing of of in handful nothing that, migrated in. new a really kind And it's credits. our just mean, outside new. of I It's

dues, the around we keep feel we we to that got et a When performance, like about the cetera. have estate close the our think and broadly, box breakdowns the we've on. real commercial credits really have nonaccruals, in eye So portfolios, about some and makeup of portfolios levels terms detailed of and a of those talk tight I past

is We're not those that in seeing us new kind anything any just we're portfolios. of concerns causing

runoff classified So work known have, even lot I the just prudent of think we'll quarter. some credits the good we within not like in good that, continue Outside of news trends as we is criticized we're front, a be through in dealing with to portfolio seeing had as small the the aggressively that the and those can. changes on credit we'll and

really picture of credit So business this feel I at is as point. like the kind usual

Operator

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

Gary Tenner

environment of just to of NIM get wanted about ROA positive you rate over mean on will to talked about X%? you XXXX. ask the kind do you I profitability kind I and the think the back focus the direction profitability. expensive you longer-term What's for if need you growth, see the at the

kind around for of set there of you that? visibility optimal the the kind What's and up

Jay Brogdon

steepening kind think about or of a NIM a our good area sits kind for feel all Gary, balance environment that a of optimized think minus well We've that that so a as risk the within good us feel whole an first that top. the of operating an around And something of at down I sheet. starting in is within a would kind range of the just area. I the before, pretty the think, and industry. pretty of appetite KPIs I of fit thing the think industry, NIM talked need let's That I more what we plus really good yield XXX right? being about curve XXX well foremost, is of in would for couple us,

retail community still have we're when bank think I to out to be a going proud -- there. we're

of that get probably in and -- a low base in Hard ratio. the we a that the like still think top would out granularity So our result that something That to spells model in business X.XX% I and the area model. something lot efficiency of ROA. on retail a a you XXs NIM in that whole than lower XXX take have

around there. to continuous those a get continue through have forward. of got to assets real we duration the and to We of overhang And on all on of chew press metrics improvement to some balance those the things the sheet. better some

there's So a of and element time that. rate

Every talk opportunities in line, you or to otherwise those the about we environment time talk accelerate to will what's that time time have rate restructure we about have time balance line? what sheet And then a lines. help from

about we path getting how and there. that's So think scenarios targets our the long-range the or to

Gary Tenner

My appreciate answered. other were questions I Okay. that.

Operator

Stephen Piper Scouten The from next question comes Sandler. with

Stephen Scouten

book Jay, talk I still you more this Obviously, in and you about But evaluate guys just maybe around how compel the restructuring. on the touched would be guys securities level, kind compelling may about what dynamics a potential high now maybe at saying help slightly potentially a you that? held-to-maturity would rates think you little to higher, that? math can would of particular know I do and you to with think

Jay Brogdon

the Yes, Stephen. I appreciate question.

like I as you a a -- of there's we reality top changes where and a did we're balance at it's the versions it that sensitivity held-to-maturity all looking those I dramatically. transaction that, example, scenarios an a the of think mean, larger scenario the look that in single not portfolio mentioned through. sheet the dimension at not is we

me sheet the we sheet aspects trade-offs capital kind at capital forma. and looking we when of pre evaluate And Stephen. of heard balance that's balance ALM our leading earnings. restructures, the evaluation just and -- say you've Obviously, this and earnings probably -- evaluate before, between so That's it's we're probably pro

here. of background of the trade balance Can things big I within the X, is a you over that or X I in X, to like years. next scenario, us some hear look in to one of of out small sheet the still look any kind at on One restructure like -- those kind

Charles Hobbs

with [Technical help Drew, Can you Difficulty] that?

Operator

I Please go there. ahead, sir. out just dropped

Jay Brogdon

line not finish the comment you can us? just call. comment are Stephen, of on I'll in extent are me my to hear just sure finish we the that still So I'm terms operator my But let in where the the those for there here.

important period different things of X kind of of is for a that down rates of One time XXX, scenarios, I and rate look shock, the in that context on example, out the at points. looking particularly years is trade X focus think XXX look we or XXX, out over any basis

And is pro trade. over more the making rate that balance time versus what a outlook in less earnings environments. money current or our Are money on different for sheet period we forma the of

And so we run really lot you've of things. -- these say a lot scenarios We as very scenario a heard rich. me before, of we're around

to an there's viable of And take time that. think that obviously, want to pull if for we path economically a forward those of going advantage lines, we're

Operator

At this any session. back like to Okay. Stephen, question-and-answer concludes to George over are still turn remarks. the time, me, our closing there? I this you conference for Excuse would Makris

George Makris

us will for conservative exceed say Thank we've a optimistic our outlined help outlook you we're And favorable environment cautiously that a very much. XXXX, I pretty surprisingly, expectations. will not but business that

So stay tuned.

as Chief served retired Johnny Pat Way, the who end Chief Chief our XXXX. at Steve Executive; McHale, who all like Feldman, at operations, retired We our drop as ran Audit the we make. of special CEO, Administrative got who key end some executives to Neeley, who bank who I'd Officer, today, five had of Credit I've Steve off is recognition Massanelli, Before our is XXXX. had Bob served our and Officer,

over excited banks, credit That's day-to-day And I they our and improve Simmons Bank. years that. lose a meant our these XX pivotal integrated a as we're think but manage for and as of you, our about time, about enough for management can These it they're as talent the to I'll but were with was X if able what also task, to they've operations, oversee operation how thank operation, risk monumental role our we a can't long at lot tell one runway, replacements good last grew. played XX folks are you we just guys

So very guys, we'll miss you, much. thanks but

way. day. the company a today. for all That's great have for us, a good you left and we really Thank You joining have in

Operator

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

now disconnect. may You

Simmons First National (SFNC) 22 Jan 252024 Q4 Earnings call transcript