Company: SFNC
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050112
Chunk: 250

Company: SIMMONS FIRST NATIONAL CORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 8
Chunk 250
---
 exposure and structural terms of the underlying position being hedged. The term and notional principal amount of a hedge transaction will not exceed the term or principal amount of the underlying exposure. In addition, the Company will use hedge indices which are the same as, or highly correlated to, the index or rate on the underlying exposure. Derivative credit exposure is monitored on an ongoing basis for each customer transaction and aggregate exposure to each counterparty is tracked. The Company has set a maximum outstanding notional contract amount at 25% of the Company’s assets.Fair Value HedgesFor derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item. During the third quarter of 2021, the Company began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate callable AFS securities. The hedging strategy converts the fixed interest rates to variable interest rates based on federal funds rates. The two year forward start date for these swaps occurred during late third quarter of 2023 and involves the payment of fixed interest rates with a weighted average of 1.21% in exchange for variable interest rates based on federal funds rates. For the nine month period ended September 30, 2025, the net amount included in interest income on investment securities in the consolidated statements of income related to fair value hedges was $24.2 million.During the third quarter of 2025, the Company began utilizing step-down interest rate swaps designated as fair value hedges to mitigate the risk of changes in the fair value of the $325.0 million in aggregate principal amount of the 2025 Notes due to changes in market interest rates. These receive-fixed/pay-variable swaps have maturities ranging from 2026 to 2030 and the fixed interest rate decreases in predetermined intervals over the contractual term of the agreement. The following table summarizes the fair value hedges recorded in the accompanying consolidated balance sheets.September 30, 2025December 31, 2024(In thousands)Balance Sheet LocationWeighted Average Pay RateReceive RateNotionalFair ValueNotionalFair ValueDerivative assetsOther assets1.21%Federal Funds$1,001,715 $63,