Company: SFNC
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050112
Chunk: 20

Company: SIMMONS FIRST NATIONAL CORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 2
Chunk 20
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63

INVESTMENTS AND SECURITIES

Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue. Securities within the portfolio are classified as held-to-maturity (“HTM”), AFS or trading. Our philosophy regarding investments is conservative based on investment type and maturity. Investments in the portfolio primarily include U.S. Treasury securities, U.S. Government agencies, MBS and municipal securities. Our general policy is not to invest in derivative type investments or high-risk securities, except for collateralized MBS for which collection of principal and interest is not subordinated to significant superior rights held by others.

As of September 30, 2025, AFS investment securities and assets held in trading accounts were $3.32 billion and $12.7 million, respectively. As of December 31, 2024, AFS and HTM investment securities were $2.53 billion and $3.64 billion, respectively. We continue to look for opportunities to maximize the value of the investment portfolio.

During the third quarter of 2025, the Company and its subsidiaries initiated and completed steps taken to reposition the Company’s consolidated balance sheet and reclassified approximately $3.6 billion in HTM investment securities to AFS investment securities. Subsequently, the Company 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%). 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 quarters ended June 30, 2022 and September 30, 2021, the Company transferred, at fair value, $1.99 billion and $500.8 million, respectively, of securities from the AFS portfolio to the HTM portfolio. No gains or losses on these securities were recognized at the time of transfer. During the balance sheet repositioning that occurred during the third quarter of 2025, these securities were transferred out of the HTM portfolio to the AFS portfolio at fair value. The previous related remaining combined net unrealized losses in accumulated other comprehensive income (loss), which losses were $99.4 million, were either