Company: SFNC
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001628280-25-037719
Chunk: 122

Company: SIMMONS FIRST NATIONAL CORP
Filing Date: 2025-08-05
Form: 10-Q
Item: Part I, Item 1
Chunk 122
---
 affecting the reasonableness of deferred tax assets and liabilities and reserves for contingent tax liabilities.

52

NET INTEREST INCOME

Overview

Net interest income, our principal source of earnings, is the difference between the interest income generated by earning assets and the total interest cost of the deposits and borrowings obtained to fund those assets. Factors that determine the level of net interest income include the volume of earning assets and interest bearing liabilities, yields 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 June 30, 2025, our interest rate sensitivity shows that approximately 53% of our loans and 97% of our time deposits will reprice in the next year.

Net Interest Income - Sequential Quarter Analysis

For the three month period ended June 30, 2025, net interest income on a fully taxable equivalent basis was $178.2 million, an increase of $8.4 million, or 5.0%, compared to the three months ended March 31, 2025. The increase in net interest income was primarily the result of a $7.2 million increase in fully tax equivalent interest income, coupled with a $1.2 million decrease in interest expense.

The increase in interest income on a fully taxable equivalent basis primarily resulted from a $7.6 million increase in interest income on loans. The increase in interest income provided by loans reflects an increase attributable to loan volume of $1.9 million, coupled with a $5.7 million increase in interest income related to loan yield. The loan yield for the second quarter of 2025 was 6.26% compared to 6.20% from the preceding sequential quarter, representing a 6 basis point increase, driven by disciplined pricing of new originations, as well as positive fixed-rate loan repricing.

The $1.2 million decrease in interest expense is primarily due to a $