SIMMONS FIRST NATIONAL CORP Q4 FY2024 earnings call

• Focus on soundness, profitability, and growth in that order, maintaining discipline in lending and deposits to enhance profitability. - Fourth quarter NIM was 2.87% and outperformed expectations due to better loan pricing (fixed rate loans repricing higher) and deposit cost management. - Priorities for capital deployment include organic growth initiatives, balance sheet restructure, dividend, and share buyback. - Credit picture is normalizing, with a run-off portfolio monitored and no new significant concerns in other portfolios. - Long-term profitability outlook tied to NIM, efficiency ratio, and ROA, with focus on yield curve steepening and balance sheet dynamics.

No specific product segment financial performance with revenue contribution % provided in the transcript.

• NII guide based on January 13th forwards, sensitive to Fed actions and loan/deposit growth. - Expect NIM expansion in 2025, with first quarter expected to have some expansion but not at the fourth quarter's pace. - Loan growth guided in low-single-digits, driven by discipline and focus on soundness and profitability. - Capital growth expected from organic initiatives, with priorities on organic growth, balance sheet restructure, dividend, and share buyback.

• Forward-looking statements involve risks due to economic conditions, interest rates, lending/deposit activity, credit quality, etc. - Competitive deposit landscape and potential impact on deposit costs. - Uncertainty around loan growth conversion from pipeline to actual growth.

Q: Wanted to start on the NII guide and was hoping you could just walk through any major assumptions that are baked into that.

A: Jay Brogdon and Daniel Hobbs discussed NII guide assumptions, including sensitivity to Fed actions, loan and deposit growth, and forwards as of January 13th.

Q: Follow-up on the loan growth, up low-single-digits that it is below what I would consider as sort of a normalized growth rate for you all. Is it all related to customer demand or is part of it related to you all being a little more disciplined in order to run-off higher costing deposits?

A: Jay Brogdon stated it's due to maintaining discipline on soundness, profitability, and growth in that order, which mutes absolute growth but increases profitability.

Q: Just given the balance sheet should remain relatively stable. I would expect capital to grow pretty nicely throughout 2025. How do you view your excess capital position? And are there opportunities to deploy some capital in the year ahead?

A: Jay Brogdon mentioned top priorities for capital are organic growth initiatives, balance sheet restructure, dividend, and then share buyback.

Q: Hey, thanks. Good morning. I want to go back to the margin discussion and it sounds like that fourth quarter margin at 2.87% was a little bit above your expectations. Just any color on that comment?

A: Jay Brogdon and Daniel Hobbs discussed fourth quarter margin outperformance due to better loan and deposit pricing, including fixed rate loan repricing and deposit cost management.

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

A: Jay Brogdon and Daniel Hobbs discussed competitive deposit landscape, positive client reception on deposit side, and focus on relationship profitability.

Q: I just wanted to ask about longer-term profitability. I mean you talked about the kind of the focus on profitability at the kind of expensive growth, if you will and the positive NIM direction you see for 2025. What's the rate environment do you think you need to get the ROA back over 1%? What's the kind of the optimal set up for you there and kind of visibility around that?

A: Jay Brogdon discussed long-term profitability outlook tied to NIM, efficiency ratio, and ROA, with focus on yield curve steepening and balance sheet dynamics.

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

A: Jay Brogdon discussed evaluating balance sheet restructures based on ALM, capital, earnings, and different rate scenarios over 3-5 years.