Company: SFNC
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001628280-25-023690
Chunk: 231

Company: SIMMONS FIRST NATIONAL CORP
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 8
Chunk 231
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 to challenge management’s analysis of the tax law or any reinterpretation management makes in its ongoing assessment of facts and the developing case law. Management assesses the reasonableness of its effective tax rate quarterly based on its current estimate of net income and the applicable taxes expected for the full year. On a quarterly basis, management also reviews circumstances and developments in tax law affecting the reasonableness of deferred tax assets and liabilities and reserves for contingent tax liabilities.

49

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 March 31, 2025, our interest rate sensitivity shows that approximately 51% 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 March 31, 2025, net interest income on a fully taxable equivalent basis was $169.8 million, a decrease of $1.5 million, or 0.9%, compared to the three months ended December 31, 2024. The decrease in net interest income was primarily the result of an $18.2 million decrease in fully tax equivalent interest income, partially offset by a $16.6 million decrease in interest expense.

The decrease in interest income on a fully taxable equivalent basis primarily resulted from a $15.0 million decrease in interest income on loans, coupled with a decrease of $2.9 million in interest income on investment securities. The decrease in interest income provided by loans reflects a decrease attributable to loan volume of $4.6 million,