Company: SFNC
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050112
Chunk: 261

Company: SIMMONS FIRST NATIONAL CORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 8
Chunk 261
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 earned and rates paid, the level of nonperforming loans and the amount of noninterest bearing liabilities supporting earning assets. Net interest income is analyzed in the discussion and tables below on a fully taxable equivalent basis. The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate of 26.135%.

Our practice is to limit exposure to interest rate movements by maintaining a significant portion of earning assets and interest bearing liabilities in short-term repricing. In the last several years, on average, approximately 44% of our loan portfolio and approximately 92% of our time deposits have repriced in one year or less. As of September 30, 2025, our interest rate sensitivity shows that approximately 55% of our loans and 96% of our time deposits will reprice in the next year.

Net Interest Income - Sequential Quarter Analysis

For the three month period ended September 30, 2025, net interest income on a fully taxable equivalent basis was $190.5 million, an increase of $12.2 million, or 6.9%, compared to the three months ended June 30, 2025. The increase in net interest income was the result of a $4.2 million decrease in fully tax equivalent interest income, more than offset by a $16.4 million decrease in interest expense.

Several factors contributed to the decrease in net interest income on a fully taxable equivalent basis over the comparative period. During the third quarter of 2025, we completed a balance sheet repositioning that included the transfer of approximately $3.6 billion investment securities classified as HTM to the AFS investment securities portfolio, with a subsequent sale of approximately $3.2 billion in amortized cost basis of low-yielding AFS securities (including certain of those previously classified as HTM). Proceeds from the sale of the investment securities were primarily used to deleverage the balance sheet through the pay-down of higher rate, non-relationship wholesale and public fund deposits, as well as higher rate other borrowings primarily consisting of FHLB advances. The pay-down of higher rate funding was completed throughout the third quarter of 2025, and thus the benefits (including interest expense savings) are only partially reflected in the results for the quarter.

The decrease in interest income on a fully taxable equivalent basis primarily resulted from a $12.1 million decrease in interest income on investment securities, which reflects a $19.