Company: SFNC
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001628280-25-037719
Chunk: 269

Company: SIMMONS FIRST NATIONAL CORP
Filing Date: 2025-08-05
Form: 10-Q
Item: Part I, Item 8
Chunk 269
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 periods ended June 30, 2025 and 2024. 

ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses is a reserve established through a provision for credit losses charged to expense which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, quantitative factors, and other qualitative considerations.

Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated for collective assessment. We use statistically-based models that leverage assumptions about current and future economic conditions throughout the contractual life of the loan. Expected credit losses are estimated by either lifetime loss rates or expected loss cash flows based on three key parameters: probability-of-default (“PD”), exposure-at-default (“EAD”), and loss-given-default (“LGD”). Future economic conditions are incorporated to the extent that they are reasonable and supportable. Beyond the reasonable and supportable periods, the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenarios. We also include qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for. 

Loans that have unique risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating. For a collateral-dependent loan, our evaluation process includes a valuation by appraisal or other collateral analysis adjusted for selling costs, when appropriate. This valuation is compared to the remaining outstanding principal balance of the loan. If a loss is determined to be probable, the loss is included in the allowance for credit losses as a specific allocation.

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An analysis of the allowance for credit losses on loans is shown in Table 9.

Table 9: Allowance for Credit Losses 

(In thousands)20252024Balance, beginning of year$235,019 $225,231 Loans charged off:Credit card3,162 3,064 Other consumer1,484 1,282 Real estate5,875 2,980 Commercial12,500 11,836 Total loans charged off23,021 19,162 Recoveries of loans previously charged off:Credit card545 469 Other consumer600 842 Real estate186 807 Commercial1,466 897 Total recoveries2,797 3,015 Net loans charged off20,224 16,147 Provision for credit losses38,742 21,305 Balance, June 30,$253,537 $230