SIMMONS FIRST NATIONAL CORP Q3 FY2024 earnings call

• Bond portfolio management: Patient approach, evaluating opportunities when market affords, balancing earnings and capital, and being disciplined around earn-back. - Deposit pricing: Deposits peaked at 2.81% in June, trended down, with a 50 basis point cut in September helping to lower costs. Brokered deposits and money market tests played a role. - Branch consolidation: Constantly reviewing retail network, evaluating profitability and customer usage, with plans to reinvest savings from branch closings into revenue-generating initiatives. - Loan growth focus: Focused on soundness, profitability, and growth, with large relationship wins in commercial side, and optimistic about future demand if macro conditions improve. - Expense management: Core expense levels stepped down, with renegotiated vendor contracts providing permanent expense reductions, and plans to self-fund investments.

No detailed product segment financial performance discussed in the transcript.

• NIM trajectory: Anticipates a notable inflection in net interest margin, with a glide path toward 3% in the back half of 2025 assuming macro conditions hold. - Operating leverage: Optimistic about achieving positive operating leverage in 2025 through balance sheet management, loan growth, and expense discipline. - ROA targets: Aiming for ROA back toward 1% in the near to intermediate term and higher returns on tangible common equity in the long term, with targets including mid-3s net interest margin and lower efficiency ratio.

• Economic and interest rate uncertainties: Forward-looking statements involve risks due to potential material differences between actual results and projections based on economic conditions and interest rate movements. - Competitive dynamics: Uncertainties regarding competitive environment in deposits and lending, which could impact funding costs and lending activity.

Q: Could you give detail on the thought process of the opportunistic bond sale and sizing?

A: Jay Brogdon mentioned patient evaluation of bond portfolio, balancing earnings and capital, and taking advantage of market opportunities when rates moved favorably. - Q: Color on deposit pricing trends pre and post 50 basis point cut?

A: Daniel Hobbs said deposits peaked at 2.81% in June, trended down, with the 50 basis point cut in September helping to lower costs to 2.75% in September, with rate cut impacting about 2-3 basis points for the quarter. - Q: Incremental repricing of CDs in fourth quarter and duration?

A: Daniel Hobbs said CDs maturing at 4.40% going on today at 3.97%, expecting short duration near term. - Q: Expense reinvestment and near-term expense levels?

A: Daniel Hobbs said branch consolidation is part of reviewing retail network, with reinvestment in revenue-generating initiatives like better bank initiative, and expense guidance below previous targets. - Q: NIM trajectory and deposit betas?

A: Jay Brogdon said NIM could move toward 3% in back half of 2025, and Daniel Hobbs said deposit beta on the way down would be difficult to replicate the previous path. - Q: Competitive lending dynamics and FHLB maturing?

A: Jay Brogdon said more willingness to lend across industry, but no massive influx of demand yet, and FHLB and brokered funding changes related to funding and customer account growth.