Company: SFNC
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050112
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Company: SIMMONS FIRST NATIONAL CORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 2
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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

As permitted by SEC rules, management presents a sequential quarterly analysis of the Company’s performance as we believe that comparing current quarter results to those of the immediately preceding fiscal quarter is more useful in identifying current business trends and provides a more relevant analysis of our business results. Accordingly, we have compared our results of operations for the three months ended September 30, 2025 to our results of operations for the three months ended June 30, 2025, as applicable, throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations. For additional information regarding the Company’s results for the three months ended June 30, 2025, please refer to our second quarter Form 10-Q filed with the SEC on August 5, 2025.

OVERVIEW

The third quarter of 2025 was transformative for our Company. We successfully raised $326.9 million of equity capital to reposition our balance sheet. We effectively addressed a negative arbitrage between long-term bond yields and shorter-term funding costs which freed up capital for future growth. We reclassified approximately $3.6 billion in held-to-maturity (“HTM”) securities to available-for-sale (“AFS”) securities and 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 a realized, after-tax loss of $625.6 million (based on actual tax rate of 21.946%). 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. While the one-time loss on the sale of the bonds was significant, the financial strength of our company coupled with the positive sentiment from investors allowed us that opportunity.

We followed the balance sheet repositioning by issuing $325.0 million in aggregate principal amount of 6.25% Fixed-to-Floating Rate Subordinated Notes (“2025 Notes”), which qualify as Tier 2 regulatory capital of the Company. The proceeds of this issuance were used to redeem $330.0 million of our 5.00% Fixed-to-Floating Rate Subordinated Notes (“2018 Notes”), which qualified as Tier 2 regulatory capital but were subject to amortizing regulatory capital treatment as they approached maturity