Company: SFNC
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001628280-25-037719
Chunk: 19

Company: SIMMONS FIRST NATIONAL CORP
Filing Date: 2025-08-05
Form: 10-Q
Item: Part I, Item 2
Chunk 19
---
 flexibility to fund future loan growth or reduce wholesale funding. 

Furthermore, as of June 30, 2025, we had the ability to hold the securities classified as AFS for a period of time sufficient for a recovery of amortized cost and we believed the accounting standard of “more likely than not” has not been met regarding whether we would be required to sell any of the AFS securities before recovery of amortized cost. As of June 30, 2025, the unrealized losses were largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of June 30, 2025, we believed the declines in fair value are temporary and we did not believe any of the securities are impaired due to reasons of credit quality.

During July 2025, we initiated and completed steps taken to reposition our consolidated balance sheet and reclassified approximately $3.6 billion in HTM investment securities to AFS investment securities. Subsequently, we sold approximately $3.2 billion in amortized cost basis of AFS securities (including certain of those previously classified as HTM). The sale of investment securities resulted in an estimated, realized after-tax loss of approximately $604.0 million (based on an estimated tax rate of 24.3%), which will be recorded during the third quarter of 2025. The AFS securities sold were low-yield bonds and, by removing these bonds from our balance sheet, we reduced our level of high-cost wholesale funding and increased our ability to generate higher earnings and growth.

During the third quarter of 2021, we began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of $1.00 billion of fixed rate callable municipal securities held in the AFS portfolio. These swap agreements consist of a two year forward start date and involve the payment of fixed interest rates with a weighted average rate of 1.21% in exchange for variable interest rates based on federal funds rates, which became effective during late third quarter of 2023. Securities within these swap agreements have maturity dates varying between 2028 and 2029. For the six months ended June 30, 2025, the net amount included in interest income on investment securities in the consolidated statements of income related to these swap agreements was $