Company: SFNC
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001628280-25-037719
Chunk: 264

Company: SIMMONS FIRST NATIONAL CORP
Filing Date: 2025-08-05
Form: 10-Q
Item: Part I, Item 8
Chunk 264
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 approximately $604.0 million (based on an estimated tax rate of 24.3%), which will be recorded during the third quarter of 2025. 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 third quarter of 2021, we began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of $1.00 billion of fixed rate callable municipal securities held in the AFS portfolio. These swap agreements consist of a two year forward start date and involve the payment of fixed interest rates with a weighted average rate of 1.21% in exchange for variable interest rates based on federal funds rates, which became effective during late third quarter of 2023. Securities within these swap agreements have maturity dates varying between 2028 and 2029. For the six months ended June 30, 2025, the net amount included in interest income on investment securities in the consolidated statements of income related to these swap agreements was $16.0 million.

LOAN PORTFOLIO

Our loan portfolio averaged $16.98 billion and $17.00 billion during the first six months of 2025 and 2024, respectively. As of June 30, 2025, total loans were $17.11 billion, an increase of $105.2 million from December 31, 2024. The increase in the loan balance during the first six months of 2025 when compared to December 31, 2024 is primarily due to growth in the commercial real estate, agricultural and mortgage warehouse portfolios over the comparative period, while we continued to focus on maintaining prudent underwriting standards and pricing discipline. The most significant components of the loan portfolio were loans to businesses (commercial loans, commercial real estate loans and agricultural loans) and individuals (consumer loans, credit card loans and single-family residential real estate loans).

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We seek to manage our credit risk by diversifying our loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral, obtaining and monitoring collateral, providing an appropriate allowance for credit losses and regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose, industry and geographic region. We seek to use diversification within the loan portfolio to reduce credit risk, thereby minimizing the adverse impact on the portfolio