Company: SFNC
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050112
Chunk: 7

Company: SIMMONS FIRST NATIONAL CORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 2
Chunk 7
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 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 $19.0 million decrease due to the decline in our investment portfolio average balances, which decreased by $2.05 billion or 34.0%. The decrease was partially offset by an increase of $6.9 million in interest income on investment securities due to yield increases over the period of 61 basis points and 26 basis points for our taxable and non-taxable investment security portfolios, respectively. These changes, including a $3.9 million increase in interest income related to interest bearing balances due from banks, were primarily due to the balance sheet repositioning previously discussed. A $3.8 million increase in interest income on loans reflects a decrease attributable to loan volume of $1.1 million, more than offset by a $4.9 million increase in interest income related to loan yield. The loan yield for the third quarter of 2025 was 6.31% compared to 6.26% from the preceding sequential quarter, representing a 5 basis point increase, driven by disciplined pricing of new originations, as well as positive fixed-rate loan repricing.

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The $16.4 million decrease in interest expense is primarily due to an $8.2