Simmons First Ntl (NASDAQ:SFNC) released first-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
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Access the full call at https://app.webinar.net/4bJO197X0Ll
Summary
Simmons First Ntl reported a strong quarter with 10% annualized loan growth, driven by a focus on quality growth and internal shifts, such as changes in incentive plans and client targeting strategies.
The company is optimistic about future organic growth, supported by a favorable talent environment and recent leadership hires in commercial and consumer sectors.
Simmons First Ntl expects net interest margin (NIM) to continue improving, driven by deposit cost management, balance sheet remixing, and a structural tailwind from back book repricing.
Operating leverage is expected to surpass the initial 5% growth guidance for the year, with confidence in achieving the top end of the 9-11% NII growth range.
Credit quality remains stable despite some non-performing loan increases, with management expressing confidence in their net charge-off outlook.
Capital deployment remains focused on organic growth and dividends, with share buybacks under consideration given the current valuation and earnings outlook.
Full Transcript
Ed Billick (Director of Investor Relations)
Good morning and welcome to the Simmons First National Corporation First Quarter 2026 Earnings Conference call and webcast. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing Star then zero on your telephone keypad. After today’s presentation there will be an opportunity to ask questions. To ask a question, you may press Star then one on your telephone keypad. To withdraw your question, please press Star then two. Please note this event is being recorded. I would now like to turn the conference over to Ed Billick,, Director of Investor Relations. Please go ahead. Good morning and welcome to Simmons First National Corporation first quarter 2026 earnings call. Joining me today are several members of our Executive management team including President and CEO Jay Brogden and CFO Daniel Hobbs. Today’s call will be in a Q and A format. Before we begin, I would like to remind you that our first quarter earnings materials, including the earnings release and presentation deck are available on our website at simmonsbank.com under the Investor Relations tab. During today’s call we will make forward looking statements about our future plans, goals, expectations, estimates, projections and outlook including among others, our outlook regarding future economic conditions, interest rates, lending and deposit activity, credit quality, liquidity and net interest margin. These statements involve risks and uncertainties and you should therefore not place undue reliance on any forward looking statement as actual results could differ materially from those expressed in or implied by the forward looking statements due to a variety of factors. Additional information concerning some of these factors is contained in our earnings release and investor presentation furnished with our Form 8K yesterday as well as our Form 10K for the year ended December 31, 2025 including the risk factors contained in that filing. These forward looking statements speak only as of the date they are made and Simmons assumes no obligation to update or revise any forward looking statements or other information. Finally, in this presentation we will discuss certain non-GAAP financial metrics we believe provide useful information to investors. Additional disclosures regarding non-GAAP metrics, including the reconciliations of these non-GAAP metrics to GAAP are contained in our Earnings Release and Investor presentation which are furnished as exhibits to the Form 8K we filed yesterday with the SEC and are also available on the Investor Relations page of our website. simmonsbank.com Operator we’re ready to begin the Q and A session.
OPERATOR
Thank you. We will now begin the Question and Answer session. To ask a question, you may press Star then one on your telephone keypad. If you’re using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you’d like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from David Feaster with Raymond James. Please go ahead.
David Feaster (Equity Analyst)
Hey, good morning, everybody. Hey, David. Good morning. I wanted to start on the growth front. It was a terrific quarter for growth. You know, 10% annualized, that was, it was diverse. Pipelines remain solid. You know, I think one of the concerns that the markets had over the past few years, we’ve really questioned your ability to grow like this and your growth clearly showing what you can do. I guess my question is, what’s changed to get here? Is this a function of demand? Is payoffs and pay downs improving? Or is this just more of an internal shift, like a cultural shift and an increased emphasis on quality growth? And just how sustainable do you think this kind of 7 to 10% pace of annualized growth that we’ve seen over the past couple quarters is?
Jay Brogden (President and CEO)
Yeah. Hey, David, I’ll jump in on that. Thanks for the comments and the question there. So, you know, I think overall probably the best way to answer the sustainability of the loan growth is really say we’ve been focused on quality growth for really a few years now. We started focusing on organic growth really a handful of years ago. And it’s taken time to inflect and create some of those internal capabilities, bring maturity. Big part of that has been focus on both soundness and profitability, as you’ve heard us say over and over again. And so there’s been changes in behaviors, changes in incentive plans, changes in how we, you know, target clients that we want to grow. And I think what you’ve seen in the last couple of quarters is, you know, one part, some of that, you know, inflecting some of the maturity in those programs coming to bear. I do think you also have to acknowledge that a part of it is just the timing. The market setup, the last part of last year and early into this year has been very, very good for us. We’ve seen really, really robust demand. Our biggest concern as we think about the growth outlook really isn’t the things that we control, it’s the non controllables. We would acknowledge uncertainty in the macro. We have acknowledged, I think several times in recent calls, pricing, competition, all of those things still give us some caution to the overall optimism that we have about our business and our ability to grow the business. But we were really, really pleased with what we saw in the quarter this quarter. I don’t want to promise 10% annualized loan growth every quarter. This just happened to be a really good quarter for that. But I do think it clearly demonstrates the capabilities that we’ve been working on and our ability to bring those to bear in the marketplace.
David Feaster (Equity Analyst)
Okay, that’s great. And then one of the comments in the press release that stood out to me is just the comments on the talent environment being favorable and supporting that organic growth trajectory. So a couple questions on the talent side first. I know you’ve made a couple leadership hires on the commercial and consumer side, so was hoping you could touch on what they’re working on and where they see the most opportunity near term to kind of accelerate organic growth. And then secondarily, just on the banker side, the pipelines that you’ve got there, your appetite for new hires, and then just any comments on that? I know you hired a recent wealth management team. How have some of the new hires that you’ve. You’ve made been going so far?
Jay Brogden (President and CEO)
Yeah. So again, I’ll jump in on this. Our two new leadership hires over consumer and commercial have been here, I guess eight or nine weeks at this point. So really, really pleased with what they’re already bringing to bear in the organization. On the consumer side, I think just the rhythms of everyday life are in our retail network is changing or evolving in very, very good ways. And the approach to driving business, deepening relationships. We’ve got some very strong and loyal customers that have been with us for a long time. But in many of those situations with those customers, there’s still relatively thin relationships to the bank and so really focused on deepening and capitalizing on the loyalty and strong relationships we have in those regards as well as driving marketing and better penetrating the communities that we serve throughout the retail network. So real focus on sales, performance and again, kind of deepening through that network. On the commercial side, it’s really a lot of the things that I was describing in the first question that you asked around, that real organic growth emphasis, its total banking relationship focus. I think it would be fair to say that a lot of our focus in some of our recent history has been more kind of a lending growth focus and a commercial loan growth focus. We’ve been really, really investing heavily in commercial treasury management, really our full commercial payments suite of products, and the talent in the organization that can really go after those types of relationships and drive more diversified commercial business. And so we’ve got a lot of really good things going in that regard under both of those leaders. And I would just say that the talent pipeline, the opportunities that we are seeing, from senior leadership all the way down to very productive bankers who have strong reputations in our markets, we’re seeing some really, really good opportunities to continue to grow and invest in that way. So that will continue to be a great focus. You asked about the wealth team that we also brought on throughout the first quarter and just as a reminder, we brought on about half that team in kind of mid or late January. The other half joined in March. So they haven’t been here for all that long when you think about first quarter results. But what I could tell you is that that group has already brought over about in terms of assets under management that are either transferring or verbally committed, over 350 million in AUM. And so we could not be more pleased with what we’re seeing in terms of early success. And actually the part of that team, what we’re seeing that has me most excited is the referrals. When I think about what that team’s doing in terms of referring their client relationships into the commercial bank, into private banking, et cetera, really, really excited. And that’s just one small example, David. We can look all across the footprint and see some great examples of those kinds of behaviors. And again, I dovetail that all the way back to your first question. Those are the things that are helping me, helping all of us get more and more optimistic about our ability to drive organic growth in a very meaningful and profitable way.
David Feaster (Equity Analyst)
The business that’s great. And then maybe just staying a bit more high level still. And you know, kind of following up on some of your commentary. I mean, in the release you talked about designing a more efficient and scalable infrastructure. And I know we’ve spent a lot of time talking about the Better bank initiative and some of the things that you’re focusing on there from improving processes and procedures. I mean, you’ve obviously made a lot of progress on the expense front that’s demonstrated in your results. I was just hoping you could maybe elaborate on some of the things that you’re working on to improve the efficiency and scalability of what you got to support the organic growth that you got. Just some of the things that you’re more excited about and key initiatives that you’re focused on as a part of that Better bank initiative.
Jay Brogden (President and CEO)
Yeah, I think, at least for now, David, I’ll probably sound like a broken record here or Daniel would too. But really our mantra in the bank is fund every investment that we want to make in the business. And we have been able to do that over the last few years. We were able to do that here in the …
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