10q10k10q10k.net

What changed in SIMMONS FIRST NATIONAL CORP's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of SIMMONS FIRST NATIONAL CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+374 added−369 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-27)

Top changes in SIMMONS FIRST NATIONAL CORP's 2023 10-K

374 paragraphs added · 369 removed · 276 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

58 edited+16 added−9 removed132 unchanged
Biggest changeAlthough these laws and regulations impose compliance costs and create obligations and, in some cases, reporting obligations, and compliance with all of the laws, regulations, and reporting obligations may require significant resources of the Company and our subsidiary bank, these laws and regulations do not materially affect our products, services or other business activities. 16 Anti-Money Laundering and Anti-Terrorism Simmons Bank is subject to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (also known as the “PATRIOT Act”), the Bank Secrecy Act (“BSA”) and rules and regulations of the Office of Foreign Assets Control (“OFAC”).
Biggest changeAnti-Money Laundering and Anti-Terrorism Simmons Bank is subject to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (also known as the “PATRIOT Act”), the Bank Secrecy Act (“BSA”) and rules and regulations of the Office of Foreign Assets Control (“OFAC”).
Blocked assets (property and bank deposits) that are associated with such countries and SDNs cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with the OFAC Rules can result in serious legal and reputational consequences. In December 2020, the U.S.
Blocked assets (property and bank deposits) that are associated with such countries and SDNs cannot be paid out, withdrawn, set off, or transferred in any manner without a license from OFAC. Failure to comply with the OFAC Rules can result in serious legal and reputational consequences. 16 In December 2020, the U.S.
Additionally, Simmons First Insurance Services, Inc. and Simmons First Insurance Services of TN, LLC are wholly-owned subsidiaries of Simmons Bank and are insurance agencies that offer various lines of personal and corporate insurance coverage to individual and commercial customers. 5 Community, Metro and Corporate Bank Strategy Historically, the Company utilized separately chartered community bank subsidiaries to provide full-service banking products and services across our footprint.
Additionally, Simmons First Insurance Services, Inc. and Simmons First Insurance Services of TN, LLC are wholly-owned subsidiaries of Simmons Bank and are insurance agencies that offer various lines of personal and corporate insurance coverage to individual and commercial customers. 5 Community and Commercial Banking Strategy Historically, the Company utilized separately chartered community bank subsidiaries to provide full-service banking products and services across our footprint.
In addition, our website contains other news and announcements about the Company and its subsidiaries. Our website and the information contained on, or that can be accessed through, our website are not deemed to be incorporated by reference in, and are not considered part of, this Annual Report. 9 Human Capital Our associates are a critical component of our success.
In addition, our website contains other news and announcements about the Company and its subsidiaries. Our website and the information contained on, or that can be accessed through, our website are not deemed to be incorporated by reference in, and are not considered part of, this Annual Report. Human Capital Our associates are a critical component of our success.
We seek to promote from within the Company when feasible and have established programs, such as our “Next Generation Leadership Program,” to help develop future leadership talent. We are committed to maintaining a strong culture that not only engages associates but also serves as a catalyst for growth.
We seek to promote from within the Company when feasible and have established programs, such as our “Next Generation Leadership Program,” to help develop future leadership talent. 9 We are committed to maintaining a strong culture that not only engages associates but also serves as a catalyst for growth.
Additionally, we have instituted a Special Asset Committee for the purpose of reviewing criticized loans in regard to collateral adequacy, workout strategies and proper reserve allocations. Competition There is significant competition among commercial banks in our various market areas.
Additionally, we have instituted a Special Asset Committee for the purpose of reviewing criticized loans in regard to collateral adequacy, workout strategies and proper reserve allocations. 8 Competition There is significant competition among commercial banks in our various market areas.
Landmark had total assets of $968.8 million, while Triumph provided us 7 with $847.2 million in assets. These combined acquisitions allowed us to expand our existing footprint in Tennessee and to further enhance our scale in two of our key Tennessee growth markets – Memphis and Nashville.
Landmark had total assets of $968.8 million, while Triumph provided us with $847.2 million in assets. These combined acquisitions allowed us to expand our existing footprint in Tennessee and to further enhance our scale in two of our key Tennessee growth markets – Memphis and Nashville.
Financial activities include any activity that is financial in nature or any activity that is incidental or complimentary to a financial activity. 10 As a financial holding company, we are required to file with the FRB an annual report and such additional information as may be required by law.
Financial activities include any activity that is financial in nature or any activity that is incidental or complimentary to a financial activity. As a financial holding company, we are required to file with the FRB an annual report and such additional information as may be required by law.
Federal Home Loan Bank of Dallas Simmons Bank is a member of the Federal Home Loan Bank of Dallas (“FHLB-Dallas”), which is one of 11 regional Federal Home Loan Banks (“FHLBs”) that provide funding to their members for making housing loans as well as for affordable housing and community development loans.
Federal Home Loan Bank of Dallas Simmons Bank is a member of the Federal Home Loan Bank of Dallas (“FHLB-Dallas”), which is one of 11 regional Federal Home Loan Banks that provide funding to their members for making housing loans as well as for affordable housing and community development loans.
Further, pursuant to interpretive guidance issued under the GLBA and certain state laws, financial institutions are also required to notify customers of security breaches that result in unauthorized access to their nonpublic personal information.
Further, pursuant to interpretive guidance issued under the GLBA and certain state laws, financial institutions are also generally required to notify customers of security breaches that result in unauthorized access to their nonpublic personal information.
Liberty was headquartered in Springfield, Missouri, served southwest Missouri and had total assets of 6 $1.1 billion. The acquisition enhanced Simmons Bank’s presence not only in southwest Missouri, but also in the St. Louis and Kansas City metropolitan areas.
Liberty was headquartered in Springfield, Missouri, served southwest Missouri and had total assets of $1.1 billion. The acquisition enhanced Simmons Bank’s presence not only in southwest Missouri, but also in the St. Louis and Kansas City metropolitan areas.
However, it is the Company’s intent to generally maintain Simmons Bank as the Company’s sole subsidiary bank. 11 The lending powers of the subsidiary bank are generally subject to certain restrictions, including the amount which may be loaned to a single borrower.
However, it is the Company’s intent to generally maintain Simmons Bank as the Company’s sole subsidiary bank. The lending powers of the subsidiary bank are generally subject to certain restrictions, including the amount which may be loaned to a single borrower.
The Company and its subsidiary bank must hold a capital conservation buffer composed of CET1 capital above its minimum risk-based capital requirements. A banking organization’s qualifying total capital consists of two components: Tier 1 Capital and Tier 2 Capital.
The Company and its subsidiary bank must hold a capital conservation buffer composed of CET1 capital above its minimum risk-based capital requirements. 12 A banking organization’s qualifying total capital consists of two components: Tier 1 Capital and Tier 2 Capital.
As of December 31, 2022, the Bank was well capitalized under these regulations. The federal banking agencies are also required by FDICIA to prescribe standards for banks and bank holding companies (including financial holding companies) relating to operations and management, asset quality, earnings, stock valuation and compensation.
As of December 31, 2023, the Bank was well capitalized under these regulations. The federal banking agencies are also required by FDICIA to prescribe standards for banks and bank holding companies (including financial holding companies) relating to operations and management, asset quality, earnings, stock valuation and compensation.
In addition, Simmons Bank offers a variety of consumer banking products and services, including savings, time, and checking deposit products; ATM services; internet and mobile banking platforms; overdraft facilities; real estate, home equity, and other consumer loans and lines of credit; consumer credit card products; and safe deposit boxes.
In addition, Simmons Bank offers a variety of consumer banking products and services, including (among others) savings, time, and checking deposit products; ATM services; internet and mobile banking platforms; overdraft facilities; real estate, home equity, and other consumer loans and lines of credit; consumer credit card products; and safe deposit boxes.
Simmons Bank provides banking and other financial products and services to individuals and businesses using a network of approximately 230 financial centers in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. Simmons Bank offers commercial banking products and services to business and other corporate customers.
Simmons Bank provides banking and other financial products and services to individuals and businesses using a network of approximately 234 financial centers in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. Simmons Bank offers commercial banking products and services to business and other corporate customers.
During 2020, due to the COVID-19 pandemic, the FRB acting pursuant to the Federal Reserve Act reduced the reserve requirements to zero until further notice. As a result, as of December 31, 2022, the Company’s reserve balances were zero.
During 2020, due to the COVID-19 pandemic, the FRB acting pursuant to the Federal Reserve Act reduced the reserve requirements to zero until further notice. As a result, as of December 31, 2023, the Company’s reserve balances were zero.
Simmons Bank extends loans for a broad range of corporate purposes, including financing commercial real estate, construction of particular properties, commercial and industrial uses, acquisition and equipment financings, and other general corporate needs.
Simmons Bank extends loans for a broad range of corporate purposes, including (among others) financing commercial real estate, construction of particular properties, commercial and industrial uses, acquisition and equipment financings, and other general corporate needs.
Simmons Bank also maintains a networking arrangement with a third-party broker-dealer that offers brokerage services to Simmons Bank customers, as well as a trust department that provides a variety of trust, investment, agency, and custodial services for individual and corporate clients (including, among other things, administration of estates and personal trusts as well as management of investment accounts).
Simmons Bank also maintains a networking arrangement with a third-party broker-dealer that offers brokerage services to Simmons Bank customers, as well as a trust department that provides a variety of trust, investment, agency, and custodial services for individual and corporate clients (including, among others, administration of estates and personal trusts as well as management of investment accounts).
Our loan review department monitors loan information monthly. In order to verify the accuracy of the monthly analysis of the allowance for credit losses, the loan review department performs a detailed review of loans across each product line and all divisions on an annual basis or more often if warranted.
In order to verify the accuracy of the monthly analysis of the allowance for credit losses, the loan review department performs a detailed review of loans across each product line and all divisions on an annual basis or more often if warranted.
As of December 31, 2022, the Company and its subsidiaries had approximately 3,202 full time equivalent associates. None of our associates are represented by any union or similar groups, and we have not experienced any labor disputes or strikes arising from any such organized labor groups.
As of December 31, 2023, the Company and its subsidiaries had approximately 3,007 full time equivalent associates. None of our associates are represented by any union or similar groups, and we have not experienced any labor disputes or strikes arising from any such organized labor groups.
As of December 31, 2017, the Company exceeded $15 billion in total assets, and the grandfather provisions applicable to its trust preferred securities no longer apply, and trust preferred securities are no longer included as Tier 1 capital. Trust preferred securities and qualifying subordinated debt are included as total Tier 2 capital.
As of December 31, 2017, the Company exceeded $15 billion in total assets, and the grandfather provisions applicable to its trust preferred securities no longer apply, and trust preferred securities are no longer included as Tier 1 capital.
We offer mentorship opportunities through our “Simmons Sidekick,” “Ambassadors” and “Coaching Cohorts” programs, and we provide tuition reimbursement for associates to attend a higher education facility to obtain bachelor’s and master’s degrees that are relevant to the finance industry and/or their positions within the Company.
We offer mentorship opportunities through our “Simmons Sidekick” and “Ambassadors” programs, and we provide tuition reimbursement for associates to attend a higher education facility to obtain bachelor’s and master’s degrees that are relevant to the finance industry and/or their positions within the Company.
The federal banking agencies and the SEC most recently proposed such regulations in 2016, but the regulations have not yet been finalized. However, in late 2022, the SEC finalized a set of rules directing national securities exchanges to establish listing standards regarding clawbacks of incentive-based executive compensation, which rules were originally proposed in 2015.
The federal banking agencies and the SEC most recently proposed such regulations in 2016, but the regulations have not yet been finalized. However, in late 2022, the SEC finalized a set of rules directing national securities exchanges to establish listing standards regarding clawbacks of incentive-based executive compensation, which listing standards became effective in 2023.
Our sixth Culture Cornerstone, Build Loyalty, was added in 2022 to provide a compelling and pervasive customer service operational approach that is designed to produce exceptional internal and external customer experiences. In 2022, we also focused on our Culture Cornerstone of High Performance by implementing extensive new training and programming to support leaders and associates.
Our sixth Culture Cornerstone, Build Loyalty, was added in 2022 to provide a compelling and pervasive customer-first operational approach that is designed to produce exceptional internal and external customer experiences. In 2023, we continued our focus on our Culture Cornerstone of High Performance by implementing extensive new training and programming to support leaders and associates.
We acquired approximately $1.5 billion in assets and added 22 branches to the Simmons Bank footprint, substantially enhancing our retail presence within the St. Louis market, and entering the state of Illinois for the first time. The systems conversion was completed in April 2019, at which time Reliance Bank was merged into Simmons Bank.
We acquired approximately $1.5 billion in assets and added 22 branches to the Simmons Bank footprint, substantially enhancing our retail presence within the St. Louis market area. The systems conversion was completed in April 2019, at which time Reliance Bank was merged into Simmons Bank.
Among other things, the Dodd-Frank Act, through the Durbin Amendment, and associated Federal Reserve regulations cap the interchange rate on debit card transactions that can be charged by banks that, together with their affiliates, have at least $10 billion in assets at $0.21 per transaction plus five basis points multiplied by the value of the transaction.
Among other things, the Dodd-Frank Act, through the Durbin Amendment, and associated Federal Reserve regulations cap the interchange rate on debit card transactions that can be charged by banks that, together with their affiliates, have at least $10 billion in assets at $0.21 per transaction plus five basis points multiplied by the value of the transaction (plus, for a debit card issuer that meets certain fraud-prevention standards, a “fraud-prevention adjustment” of $0.01 per transaction).
In addition to amending the Dodd Frank Act, the EGRRCPA also includes certain additional banking-related provisions, consumer protection provisions and securities law-related provisions. Many of the EGRRCPA’s changes were implemented through rules finalized by the federal banking agencies over the course of 2019. These rules and their enforcement are subject to the substantial regulatory discretion of the federal banking agencies.
In addition to amending the Dodd Frank Act, the EGRRCPA also includes certain additional banking-related provisions, consumer protection provisions and securities law-related provisions. Many of the EGRRCPA’s changes were implemented through rules finalized by the federal banking agencies over the course of 2019.
(“Hardeman”), headquartered in Jackson, Tennessee, including its wholly-owned bank subsidiary, First South Bank. We acquired approximately $463 million in assets and strengthened our position in the western Tennessee market. We merged First South Bank into Simmons Bank and completed the systems conversion in September 2017.
In May 2017, we completed the acquisition of Hardeman County Investment Company, Inc. (“Hardeman”), headquartered in Jackson, Tennessee, including its wholly-owned bank subsidiary, First South Bank. We acquired approximately $463 million in assets and strengthened our position in the western Tennessee market. We merged First South Bank into Simmons Bank and completed the systems conversion in September 2017.
The Company is headquartered in Pine Bluff, Arkansas, and had total consolidated assets of $27.5 billion, total consolidated loans of $16.1 billion, total consolidated deposits of $22.5 billion and equity capital of $3.3 billion, each as of December 31, 2022.
The Company is headquartered in Pine Bluff, Arkansas, and had total consolidated assets of $27.3 billion, total consolidated loans of $16.8 billion, total consolidated deposits of $22.2 billion and equity capital of $3.4 billion, each as of December 31, 2023.
The following summary provides additional details concerning our more recent acquisition activity. In 2013, we completed the acquisition of Metropolitan National Bank (“Metropolitan” or “MNB”) from Rogers Bancshares, Inc. (“RBI”). The purchase was completed through an auction of the MNB stock by the U. S. Bankruptcy Court as a part of the Chapter 11 proceeding of RBI.
In 2013, we completed the acquisition of Metropolitan National Bank (“Metropolitan” or “MNB”) from Rogers Bancshares, Inc. (“RBI”). The purchase was completed through an auction of the MNB stock by the U. S. Bankruptcy Court as a part of the Chapter 11 proceeding of RBI.
Those standards seek to address problems associated with undercapitalized financial institutions and provide for five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. 13 For purposes of prompt corrective action, to be: • well capitalized , a bank must have a total risk based capital ratio of at least 10%, a Tier 1 risk based capital ratio of at least 8%, a CET1 risk based capital ratio of at least 6.5%, and a Tier 1 leverage ratio of at least 5%; • adequately capitalized , a bank must have a total risk based capital ratio of at least 8%, a Tier 1 risk based capital ratio of at least 6%, a CET1 risk based capital ratio of at least 4.5%, and a Tier 1 leverage ratio of at least 4%; • undercapitalized , a bank would have a total risk based capital ratio of less than 8%, a Tier 1 risk based capital ratio of less than 6%, a CET1 risk based capital ratio of less than 4.5%, and a Tier 1 leverage ratio of less than 4%; • significantly undercapitalized , a bank would have a total risk based capital ratio of less than 6%, a Tier 1 risk based capital ratio of less than 4%, a CET1 risk based capital ratio of less than 3%, and a Tier 1 leverage ratio of less than 3%; and • critically undercapitalized , a bank would have a ratio of tangible equity to total assets that is less than or equal to 2%.
For purposes of prompt corrective action, to be: • well capitalized , a bank must have a total risk based capital ratio of at least 10%, a Tier 1 risk based capital ratio of at least 8%, a CET1 risk based capital ratio of at least 6.5%, and a Tier 1 leverage ratio of at least 5%; • adequately capitalized , a bank must have a total risk based capital ratio of at least 8%, a Tier 1 risk based capital ratio of at least 6%, a CET1 risk based capital ratio of at least 4.5%, and a Tier 1 leverage ratio of at least 4%; • undercapitalized , a bank would have a total risk based capital ratio of less than 8%, a Tier 1 risk based capital ratio of less than 6%, a CET1 risk based capital ratio of less than 4.5%, and a Tier 1 leverage ratio of less than 4%; • significantly undercapitalized , a bank would have a total risk based capital ratio of less than 6%, a Tier 1 risk based capital ratio of less than 4%, a CET1 risk based capital ratio of less than 3%, and a Tier 1 leverage ratio of less than 3%; and • critically undercapitalized , a bank would have a ratio of tangible equity to total assets that is less than or equal to 2%.
Volcker Rule Section 619 of the Dodd-Frank Act, commonly known as the “Volcker Rule,” restricts the ability of banking entities from: (i) engaging in “proprietary trading” and (ii) investing in or sponsoring certain covered funds, subject to certain limited exceptions.
These rules and their enforcement are subject to the substantial regulatory discretion of the federal banking agencies. 14 Volcker Rule Section 619 of the Dodd-Frank Act, commonly known as the “Volcker Rule,” restricts the ability of banking entities from: (i) engaging in “proprietary trading” and (ii) investing in or sponsoring certain covered funds, subject to certain limited exceptions.
The Company gives stockholders a non-binding vote on executive compensation annually. 17 Impacts of Growth Because the Company and Simmons Bank have exceeded $10 billion in assets, each of the Company and the Bank are subject to heightened requirements (as compared to smaller community banking organizations) that are imposed by various federal banking law and regulations.
Impacts of Growth Because the Company and Simmons Bank have exceeded $10 billion in assets, each of the Company and the Bank are subject to heightened requirements (as compared to smaller community banking organizations) that are imposed by various federal banking law and regulations.
By combining the two companies, each company fills in strategic gaps that are essential for long-term survival. • Acquiring human resources and intellectual capital can help improve innovative thinking and development within the Company. • Acquiring a regional or multi-state bank can provide the Company with access to emerging/established markets and/or increased products and services. • Providing additional scale and market share within our existing footprint. 8 Loan Risk Assessment As part of our ongoing risk assessment and analysis, the Company utilizes credit policies and procedures, internal credit expertise and several internal layers of review.
By combining the two companies, each company fills in strategic gaps that are essential for long-term survival. • Acquiring human resources and intellectual capital can help improve innovative thinking and development within the Company. • Acquiring a regional or multi-state bank can provide the Company with access to emerging/established markets and/or increased products and services. • Providing additional scale and market share within our existing footprint.
As our first acquisition of a fee-only financial firm, Ozark Trust provided a new wealth management capability that could be leveraged across the Company’s entire geographic footprint. In September 2016, we completed the acquisition of Citizens National Bank (“Citizens”), headquartered in Athens, Tennessee. Citizens had total assets of $585 million and strengthened our position in east Tennessee by nine branches.
As our first acquisition of a fee-only financial firm, Ozark Trust provided a new wealth management capability that could be leveraged across the Company’s entire geographic footprint. 6 In September 2016, we completed the acquisition of Citizens National Bank (“Citizens”), headquartered in Athens, Tennessee.
Federal Deposit Insurance Corporation Improvement Act The Federal Deposit Insurance Corporation Improvement Act (“FDICIA”), enacted in 1991, requires the FDIC to increase assessment rates for insured banks and authorizes one or more “special assessments,” as necessary for the repayment of funds borrowed by the FDIC or any other necessary purpose.
As of December 31, 2023, Simmons Bank was “well capitalized” based on the aforementioned ratios. 13 Federal Deposit Insurance Corporation Improvement Act The Federal Deposit Insurance Corporation Improvement Act (“FDICIA”), enacted in 1991, requires the FDIC to increase assessment rates for insured banks and authorizes one or more “special assessments,” as necessary for the repayment of funds borrowed by the FDIC or any other necessary purpose.
UDAP and UDAAP Federal laws, including Section 5 of the Federal Trade Commission Act, prohibit financial institutions from engaging in unfair or deceptive acts or practices (“UDAP”) in or affecting commerce.
The Company continues to assess the impact of the adopted changes to the CRA regulations. 15 UDAP and UDAAP Federal laws, including Section 5 of the Federal Trade Commission Act, prohibit financial institutions from engaging in unfair or deceptive acts or practices (“UDAP”) in or affecting commerce.
The Dodd-Frank Act also previously required banks and bank holding companies with more than $10 billion in assets to adhere to certain enhanced prudential standards, including requirements to conduct annual stress tests, report the results to regulators and publicly disclose such results.
Trust preferred securities and qualifying subordinated debt are included as total Tier 2 capital. 17 The Dodd-Frank Act also previously required banks and bank holding companies with more than $10 billion in assets to adhere to certain enhanced prudential standards, including requirements to conduct annual stress tests, report the results to regulators and publicly disclose such results.
The Company is monitoring developments with respect to these listing standards, which are expected to be proposed in 2023. The Dodd-Frank Act also requires publicly traded companies to give stockholders a non-binding vote on executive compensation at least every three years and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions.
The Dodd-Frank Act also requires publicly traded companies to give stockholders a non-binding vote on executive compensation at least every three years and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions. The Company gives stockholders a non-binding vote on executive compensation annually.
Implementation of the final rule did not have a material impact on our subsidiary bank. 15 FDIC Deposit Insurance and Assessments Our customer deposit accounts are insured up to applicable limits by the FDIC’s Deposit Insurance Fund (“DIF”) up to $250,000 per separately insured depositor. Simmons Bank is required to pay deposit insurance assessments to maintain the DIF.
FDIC Deposit Insurance and Assessments Our customer deposit accounts are insured up to applicable limits by the FDIC’s Deposit Insurance Fund (“DIF”) up to $250,000 per separately insured depositor. Simmons Bank is required to pay deposit insurance assessments to maintain the DIF.
As a result, our subsidiary bank is limited in its ability to make extensions of credit to the Company, investing in the stock or other securities of the Company, and engaging in other affiliated financial transactions with the Company. 12 Potential Enforcement Action for Bank Holding Companies and Banks Enforcement proceedings seeking civil or criminal sanctions may be instituted against any bank, any financial or bank holding company, any director, officer, employee or agent of the bank or holding company, which is believed by the federal banking agencies to be violating any administrative pronouncement or engaged in unsafe and unsound practices.
Potential Enforcement Action for Bank Holding Companies and Banks Enforcement proceedings seeking civil or criminal sanctions may be instituted against any bank, any financial or bank holding company, any director, officer, employee or agent of the bank or holding company, which is believed by the federal banking agencies to be violating any administrative pronouncement or engaged in unsafe and unsound practices.
The acquisition expanded our footprint in east Tennessee and allowed us the opportunity to provide additional services to customers in this area and expand our community banking strategy. We merged Citizens into Simmons Bank and completed the systems conversion in October 2016. In May 2017, we completed the acquisition of Hardeman County Investment Company, Inc.
Citizens had total assets of $585 million and strengthened our position in east Tennessee by nine branches. The acquisition expanded our footprint in east Tennessee and allowed us the opportunity to provide additional services to customers in this area and expand our community banking strategy. We merged Citizens into Simmons Bank and completed the systems conversion in October 2016.
At December 31, 2022, Simmons Bank’s total investment in FHLB-Dallas was $52.5 million.
At December 31, 2023, Simmons Bank’s total investment in FHLB-Dallas was $58.2 million.
Community Reinvestment Act The Community Reinvestment Act of 1977 (“CRA”) requires that federal banking agencies evaluate the record of each financial institution in meeting the credit needs of the market areas they serve, including low and moderate-income (“LMI”) individuals and communities.
The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain. Community Reinvestment Act The Community Reinvestment Act of 1977 (“CRA”) requires that federal banking agencies evaluate the record of each financial institution in meeting the credit needs of the market areas they serve, including low and moderate-income (“LMI”) individuals and communities.
Additionally, under federal and state law, acquisitions of the Company’s common stock above certain thresholds or in connection with certain governance rights or business relationships may be subject to certain regulatory restrictions, including prior notice and approval requirements, and investors in the Company’s common stock are responsible for ensuring that they comply with these restrictions to the extent they are applicable.
No bank acquisition may be approved if, after such acquisition, the holding company would control, directly or indirectly, banks having 25% of the total bank deposits in the State of Arkansas, excluding deposits of other banks and public funds. 10 Additionally, under federal and state law, acquisitions of the Company’s common stock above certain thresholds or in connection with certain governance rights or business relationships may be subject to certain regulatory restrictions, including prior notice and approval requirements, and investors in the Company’s common stock are responsible for ensuring that they comply with these restrictions to the extent they are applicable.
In particular, subject to certain exceptions, banks, including our subsidiary bank, are prohibited from extending credit, leasing or selling property, furnishing services, or varying prices on the condition that the customer obtain an additional product or service from the bank or its affiliates or not obtain services of a competitor of the bank or its affiliates.
In particular, subject to certain exceptions, banks, including our subsidiary bank, are prohibited from extending credit, leasing or selling property, furnishing services, or varying prices on the condition that the customer obtain an additional product or service from the bank or its affiliates or not obtain services of a competitor of the bank or its affiliates. 11 Transactions with Affiliates and Insiders Under federal law, transactions between insured depository institutions and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act and its implementing regulation, Regulation W.
Under the foregoing dividend restrictions, and while maintaining its “well capitalized” status, at December 31, 2022, Simmons Bank had paid to the Company all available dividends.
Under the foregoing dividend restrictions, and while maintaining its “well capitalized” status, at December 31, 2023, Simmons Bank had approximately $54.4 million available for payment of dividends to the Company, without prior regulatory approval.
The appropriateness of the allowance for credit losses is determined based upon the aforementioned performance factors, and provision adjustments are made accordingly. The Board of Directors reviews the adequacy of its allowance for credit losses on a periodic basis giving consideration to past due loans, non-performing loans, other impaired loans, and current economic conditions.
The Board of Directors reviews the adequacy of its allowance for credit losses on a periodic basis giving consideration to past due loans, non-performing loans, other impaired loans, and current economic conditions. Our loan review department monitors loan information monthly.
Among other things, these provisions relaxed rules regarding interstate branching, allow financial institutions to pay interest on business checking accounts, and revised capital requirements on bank and thrift holding companies. 14 The Dodd-Frank Act also established the Bureau of Consumer Financial Protection (“CFPB”) as an independent entity within the Federal Reserve and provided it with the authority to promulgate consumer protection regulations applicable to all entities offering consumer financial services or products, including banks.
The Dodd-Frank Act also established the Bureau of Consumer Financial Protection (“CFPB”) as an independent entity within the Federal Reserve and provided it with the authority to promulgate consumer protection regulations applicable to all entities offering consumer financial services or products, including banks.
The internal layers of ongoing review include Division Presidents, Division and Senior Credit Officers, the Chief Credit Officer and Corporate Credit Officers, an Agriculture Loan Committee, an Executive Loan Committee, a Senior Credit Committee, and a Directors’ Credit Committee.
The internal layers of ongoing review include Division Presidents, Division and Senior Credit Officers, the Chief Credit Officer and Corporate Credit Officers, an Executive Loan Committee, a Senior Credit Committee, and a Directors’ Credit Committee. Additionally, the Company has an Asset Quality Review Committee comprised of management that meets quarterly to review the adequacy of the allowance for credit losses.
In December 2021, the Financial Crimes Enforcement Network (“FinCEN”) issued rules to implement a national beneficial ownership reporting framework and to update the customer due diligence requirements that apply to the Company and the Bank to be consistent with this framework. The Company and the Bank continue to monitor legislative, regulatory and supervisory developments related thereto.
A subsequent rulemaking is expected to update the customer due diligence requirements that apply to the Company and the Bank to be consistent with this framework. The Company and the Bank continue to monitor legislative, regulatory and supervisory developments related thereto.
The final rule became effective April 1, 2021; and full compliance was required by January 1, 2022.
The final rule became effective April 1, 2021; and full compliance was required by January 1, 2022. Implementation of the final rule did not have a material impact on our subsidiary bank.
To the extent that a strategic merger and acquisition opportunity becomes of interest, we believe our community banking philosophy, access to capital and successful merger and acquisition history would position us as a purchaser of choice for a community and regional bank seeking a strong partner.
Through our “Better Bank” initiative, we have also focused on evaluating and, where appropriate, enhancing our people, processes and systems so that we are able to more effectively and efficiently compete as an organization of the size and scale that we now have achieved. 7 To the extent that a strategic merger and acquisition opportunity becomes of interest, we believe our community banking philosophy, access to capital and successful merger and acquisition history would position us as a purchaser of choice for a community and regional bank seeking a strong partner.
We have used varying acquisition and internal branching methods to enter key growth markets and increase the size of our footprint. Since 1990, we have completed 21 whole bank acquisitions, one trust company acquisition, five bank branch acquisitions, one bankruptcy (363) acquisition, four FDIC failed bank acquisitions and four Resolution Trust Corporation failed thrift acquisitions.
Since 1990, we have completed 21 whole bank acquisitions, one trust company acquisition, five bank branch acquisitions, one bankruptcy (363) acquisition, four FDIC failed bank acquisitions and four Resolution Trust Corporation failed thrift acquisitions. The following summary provides additional details concerning our more recent acquisition activity.
Additionally, the Company has an Asset Quality Review Committee comprised of management that meets quarterly to review the adequacy of the allowance for credit losses. The Committee reviews the status of past due, non-performing and other impaired loans, reserve ratios, and additional performance indicators for Simmons Bank.
The Committee reviews the status of past due, non-performing and other impaired loans, reserve ratios, and additional performance indicators for Simmons Bank. The appropriateness of the allowance for credit losses is determined based upon the aforementioned performance factors, and provision adjustments are made accordingly.
To both effectively compete in and service the needs of the different types of markets that are now included in our footprint, Simmons Bank now operates using two main groups, a community banking group and a metro banking group, within its geographic footprint.
To both effectively compete for and service the needs of different types of customers, Simmons Bank now operates using two main groups, a community banking group (which generally focuses on small-to-mid-size customer relationships) and a commercial banking group (which generally focuses on larger, more complex customers with intricate or unique banking needs).
Prompt Corrective Action The Basel III Capital Rules also affected the FDIC’s prompt correction action standards.
Prompt Corrective Action The Basel III Capital Rules also affected the FDIC’s prompt correction action standards. Those standards seek to address problems associated with undercapitalized financial institutions and provide for five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.
Removed
Additionally, Simmons Bank has established a Corporate Banking Group that consists of certain specialized lending units to service the needs of particular types of borrowers.
Added
Both of these groups are supported by Simmons Bank’s retail, private banking, trust and various operations divisions. Growth Strategy Over the years, as we have expanded our markets and services, our growth strategy has evolved and diversified. We have used varying acquisition and internal branching methods to enter key growth markets and increase the size of our footprint.
Removed
Currently, Simmons Bank’s community, metro and corporate banking groups are organized as follows: Community Banking Group Metro Banking Group Corporate Banking Group East Arkansas Community Division Arkansas Metro Division (Little Rock, Arkansas; Northwest Arkansas) Structured Real Estate Unit West Arkansas Community Division Nashville Metro Division (Nashville, Tennessee) Commercial Finance Unit Tennessee Community Division (East Tennessee and West Tennessee) Memphis Metro Division (Memphis, Tennessee) Equipment Finance Unit Missouri, Oklahoma and Texas Community Division (Central Missouri, South Central Missouri, Southwest Missouri, Southeast Oklahoma, Stillwater, Oklahoma, North Texas) Missouri Metro Division (St.
Added
Loan Risk Assessment As part of our ongoing risk assessment and analysis, the Company utilizes credit policies and procedures, internal credit expertise and several internal layers of review.
Removed
Louis, Missouri; Kansas City, Missouri; Kansas City, Kansas) Public Sector Banking Unit Greater Texas Community Division (Houston, North Houston, South Texas, Northeast Texas, College Station, North Central Texas) Texas Metro Division (Dallas, Texas; Ft.
Added
As a result, our subsidiary bank is limited in its ability to make extensions of credit to the Company, investing in the stock or other securities of the Company, and engaging in other affiliated financial transactions with the Company.
Removed
Worth, Texas; North Dallas, Texas; Austin, Texas; San Antonio, Texas) Participations/Syndications Unit Western Metro Division (Wichita, Kansas; Oklahoma City, Oklahoma; Tulsa, Oklahoma) Asset Based Lending Unit Mortgage Warehouse Unit Growth Strategy Over the years, as we have expanded our markets and services, our growth strategy has evolved and diversified.
Added
Among other things, these provisions relaxed rules regarding interstate branching, allow financial institutions to pay interest on business checking accounts, and revised capital requirements on bank and thrift holding companies.
Removed
Through our “Better Bank” initiative, we are also focusing on evaluating and, where appropriate, enhancing our people, processes and systems so that we are able to more effectively and efficiently compete as an organization of the size and scale that we now have achieved.
Added
In November 2023, the FDIC issued a final rule to implement a special assessment to recover losses to the DIF incurred as a result of recent bank failures and the FDIC’s use of the systemic risk exception to cover certain deposits that were otherwise uninsured.
Removed
No bank acquisition may be approved if, after such acquisition, the holding company would control, directly or indirectly, banks having 25% of the total bank deposits in the State of Arkansas, excluding deposits of other banks and public funds.
Added
The special assessment was based on estimated uninsured deposits as of December 31, 2022 (excluding the first $5.0 billion) and will be assessed at a quarterly rate of 3.36 basis points, over eight quarterly assessment periods, beginning in the first quarter of 2024.
Removed
Transactions with Affiliates and Insiders Under federal law, transactions between insured depository institutions and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act and its implementing regulation, Regulation W.
Added
As a result of this final rule, we accrued $10.5 million related to this assessment in the fourth quarter of 2023. This amount represents our current expectation of the full amount of the assessment based on our total uninsured deposits as of December 31, 2022.
Removed
As of December 31, 2022, Simmons Bank was “well capitalized” based on the aforementioned ratios.
Added
Under the final rule, the estimated loss pursuant to the systemic risk determination will be periodically adjusted, and the FDIC has retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment on a one-time basis.
Removed
During recent years, the federal prudential regulatory agencies have been engaged in efforts to revise the regulations implementing the CRA. The Company continues to monitor developments with respect to proposals concerning these regulations and assess the impact, if any, of the proposed changes to the CRA regulations.
Added
In October 2023, the federal prudential regulatory agencies adopted substantial revisions to the regulations implementing the CRA.
Added
Although these laws and regulations impose compliance costs and create obligations and, in some cases, reporting obligations, and compliance with all of the laws, regulations, and reporting obligations may require significant resources of the Company and our subsidiary bank, these laws and regulations do not materially affect our products, services or other business activities.
Added
In December 2021, the Financial Crimes Enforcement Network (“FinCEN”) issued the first of three planned rules, which rule was adopted to implement a national beneficial ownership reporting framework. In December 2023, FinCEN issued the second of the three planned rules, which rule was adopted to implement protocols for access to and disclosure of beneficial ownership information.
Added
Specifically, Nasdaq implemented listing standards that require listed companies to adopt clawback policies, or policies mandating the recovery of excess incentive compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
Added
We adopted a compensation recovery policy pursuant to the Nasdaq listing standards and the policy is included as Exhibit 97 to this Annual Report on Form 10-K.

… 3 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

44 edited+14 added−18 removed148 unchanged
Biggest changeIdentifiable intangible assets other than goodwill consist of core deposit intangibles, books of business, and other intangible assets. Adverse events or circumstances could impact the recoverability of these intangible assets including loss of core deposits, significant losses of customer accounts and/or balances, increased competition or adverse changes in the economy.
Biggest changeAdverse events or circumstances could impact the recoverability of these intangible assets including loss of core deposits, significant losses of customer accounts and/or balances, increased competition or adverse changes in the economy. To the extent these intangible assets are deemed unrecoverable, a non-cash impairment charge would be recorded, which could have a material adverse effect on our results of operations.
Our cost of funds may increase as a result of general economic conditions, fluctuations in interest rates and competitive pressures. We have traditionally obtained funds principally through local deposits as we have a base of lower cost transaction deposits.
Our cost of funds may increase as a result of general economic conditions, interest rates and competitive pressures. Our cost of funds may increase as a result of general economic conditions, fluctuations in interest rates and competitive pressures. We have traditionally obtained funds principally through local deposits as we have a base of lower cost transaction deposits.
If we are unable to effectively compete for customers, we may lose loan and deposit market share, as well as experience reductions in net interest margin, fee income, and profitability, and our business, financial condition, and results of operations could be adversely affected. Changes in service delivery channels and emerging technologies pose a competitive risk.
If we are unable to effectively compete for customers, we may lose loan and deposit market share, as well as experience reductions in net interest margin, fee income, and profitability, and our business, financial condition, and results of operations could be adversely affected. 23 Changes in service delivery channels and emerging technologies pose a competitive risk.
While we maintain a vendor management program designed to assist in the oversight and monitoring of our third-party service providers, there can be no assurance that we will not experience service-related issues associated with our vendors. Our controls and procedures may fail, or our employees may not adhere to them.
While we maintain a vendor management program designed to assist in the oversight and monitoring of our third-party service providers, there can be no assurance that we will not experience service-related issues associated with our vendors. Our controls, policies and procedures may fail, or our employees may not adhere to them.
Reputational damage could also impact our relationships with investors, our credit ratings and our ability to access capital markets. 24 If we are unsuccessful in developing new, and adapting our current, products and services so that they respond to changing industry standards and customer preferences, our business may suffer.
Reputational damage could also impact our relationships with investors, our credit ratings and our ability to access capital markets. If we are unsuccessful in developing new, and adapting our current, products and services so that they respond to changing industry standards and customer preferences, our business may suffer.
However, the impact at adoption was influenced by our portfolios' composition and quality at the adoption date and economic conditions and forecasts at that time. In addition, our management must exercise judgment in appropriately applying many of our accounting policies and methods so they comply with generally accepted accounting principles.
However, the impact at adoption was influenced by our portfolios' composition and quality at the adoption date and economic conditions and forecasts at that time. 27 In addition, our management must exercise judgment in appropriately applying many of our accounting policies and methods so they comply with generally accepted accounting principles.
Accounting policies are critical to fairly presenting our financial condition and results of operations and may require management to make difficult, subjective or complex judgments about matters that are uncertain. 27 Risks Related to the Company’s Legal and Regulatory Environment Financial legislative and regulatory initiatives could adversely affect the results of our operations.
Accounting policies are critical to fairly presenting our financial condition and results of operations and may require management to make difficult, subjective or complex judgments about matters that are uncertain. Risks Related to the Company’s Legal and Regulatory Environment Financial legislative and regulatory initiatives could adversely affect the results of our operations.
A failure or circumvention of our controls and procedures, or a failure to comply with regulations related to controls and procedures, could have a material adverse effect on our business, financial condition, and results of operations, as well as cause reputational harm, which could limit our ability to access the capital markets.
A failure or circumvention of our controls, policies and procedures, or a failure to comply with regulations related to controls, policies and procedures, could have a material adverse effect on our business, financial condition, and results of operations, as well as cause reputational harm, which could limit our ability to access the capital markets.
Severe weather events or earthquakes could also impact the value of any collateral we hold, or significantly disrupt the local economies in the markets that we serve, manifesting in a decline in loan originations, as well as an increase in the risk of delinquencies, defaults, and foreclosures. 31
Severe weather events or earthquakes could also impact the value of any collateral we hold, or significantly disrupt the local economies in the markets that we serve, manifesting in a decline in loan originations, as well as an increase in the risk of delinquencies, defaults, and foreclosures.
De novo branching and growing through acquisition involve numerous risks, including the following: • the inability to obtain all required regulatory approvals; • the significant costs and potential operating losses associated with establishing a de novo branch or a new bank; • the inability to secure the services of qualified senior management; • the local market may not accept the services of a new bank owned and managed by a bank holding company headquartered outside of the market area of the new bank; • the risk of encountering an economic downturn in the new market; • the inability to obtain attractive locations within a new market at a reasonable cost; and • the additional strain on management resources and internal systems and controls.
De novo branching and growing through acquisition involve numerous risks, including the following (among others): • the inability to obtain all required regulatory approvals; • the significant costs and potential operating losses associated with establishing a de novo branch or a new bank; • the inability to secure the services of qualified senior management; • the local market may not accept the services of a new bank owned and managed by a bank holding company headquartered outside of the market area of the new bank; • the risk of encountering an economic downturn in the new market; • the inability to obtain attractive locations within a new market at a reasonable cost; and • the additional strain on management resources and internal systems and controls.
Our costs of funds and our profitability and liquidity are likely to be adversely affected if we have to rely upon higher cost borrowings from other institutional lenders or brokers to fund loan demand or liquidity needs.
Our cost of funds and our profitability and liquidity are likely to be adversely affected if we have to rely upon higher cost borrowings from other institutional lenders or brokers to fund loan demand or liquidity needs.
It is critical that our internal controls, disclosure controls and procedures, and corporate governance policies and procedures be effective in order to provide assurance that our financial reports and disclosures are materially accurate.
It is critical that our internal controls, disclosure controls and procedures, and corporate governance and operational policies and procedures be effective in order to provide assurance that our financial reports and disclosures are materially accurate.
From time to time, we are subject to litigation. Litigation and claims can arise in various contexts, including, among others, our lending activities, deposit activities, employment practices, commercial agreements, fiduciary responsibilities, compliance programs and other general business matters.
From time to time, we are subject to litigation. Litigation and claims can arise in various contexts, including, among others, our lending activities, deposit activities, employment practices, commercial agreements, fiduciary responsibilities, compliance programs, anti-money laundering programs and other general business matters.
We continue to experience fraud attempts and losses through, for example, deposit fraud (such as wire fraud and check fraud) and loan fraud. Fraud may also arise from the misconduct of our employees. The methods used to perpetrate and combat fraud continue to evolve, particularly as advances in technology occur.
We continue to experience fraud attempts and losses through, for example, deposit fraud (such as wire fraud and check fraud) and loan fraud. Fraud has also arisen from the misconduct of our employees. The methods used to perpetrate and combat fraud continue to evolve, particularly as advances in technology occur.
Future financial legislation and regulatory initiatives can limit the type of products we offer, the methods by which we offer them, and the prices at which they are offered. These provisions can also increase our costs in offering these products.
Future financial legislation and regulatory initiatives can limit the type of products we offer, the methods by which we offer them, the prices at which they are offered, and the fees that are associated with them. These provisions can also increase our costs in offering these products.
While we continue to experience a better performance with respect to net charge-offs than the national average in our credit card portfolio, our net charge-offs were 1.49% and 1.42% of our average outstanding credit card balances for the years ended December 31, 2022 and 2021, respectively.
While we continue to experience a better performance with respect to net charge-offs than the national average in our credit card portfolio, our net charge-offs were 2.20% and 1.49% of our average outstanding credit card balances for the years ended December 31, 2023 and 2022, respectively.
The market transition away from LIBOR to alternative reference rates is a complex process and could have a range of effects on the Company’s business, financial condition and results of operations, including but not limited to by (i) adversely affecting the interest rates received or paid on the revenues and expenses associated with, or the value of the Company’s LIBOR-based assets and liabilities; (ii) adversely affecting the interest rates paid on or received from other securities or financial arrangements, given LIBOR’s historically prominent role in determining market interest rates globally, or (iii) resulting in disputes, litigation or other actions with borrowers or other counterparties about the interpretation or enforceability of certain fallback language contained in LIBOR-based loans, securities or other contracts.
The market transition away from a widely used benchmark rate to alternative reference rates is a complex process and can have (and has, on occasion, had) a range of effects on the Company’s business, financial condition and results of operations, including but not limited to, by (i) adversely affecting the interest rates received or paid on the revenues and expenses associated with, or the value of, the Company’s assets and liabilities; (ii) adversely affecting the interest rates paid on or received from other securities or financial arrangements, given a benchmark rate’s historically prominent role in determining market interest rates globally, or (iii) resulting in disputes, litigation or other actions with borrowers or other counterparties about the interpretation or enforceability of certain fallback language contained in benchmark rate-based loans, securities or other contracts.
In many areas of the financial services industry, competition for key personnel is fierce, and the departure of those individuals from our business presents risk that we will be unable to attract, develop and retain suitable successors, which could have a material, adverse impact on our competitive position in the marketplace. 26 Our business is heavily reliant on a variety of third-party service providers.
In many areas of the financial services industry, competition for key personnel is fierce, and the departure of those individuals from our business presents risk that we will be unable to attract, develop and retain suitable successors, which could have a material, adverse impact on our competitive position in the marketplace.
To ensure adequate liquidity to fund our operations, we rely heavily on our ability to generate deposits and effectively manage both the repayment of loans and the maturity schedules of our investment securities.
Liquidity is a critical component of our business. To ensure adequate liquidity to fund our operations, we rely heavily on our ability to generate deposits and effectively manage both the repayment of loans and the maturity schedules of our investment securities.
Developing or acquiring access to new technologies and incorporating those technologies into our products and services, or using them to expand our products and services, in each case in a way that enables us to remain competitive, may require significant investments, may take considerable time to complete, and ultimately may not be successful. 23 Our growth and expansion strategy may not be successful, and our market value and profitability may suffer.
Developing or acquiring access to new technologies and incorporating those technologies into our products and services, or using them to expand our products and services, in each case in a way that enables us to remain competitive, may require significant investments, may take considerable time to complete, and ultimately may not be successful.
Changes in the method pursuant to which the London Interbank Offered Rate (“LIBOR”) and other benchmark rates are determined, as well as the discontinuance and replacement of LIBOR as a reference rate, could adversely impact our business and results of operations. LIBOR and certain other interest rate benchmarks are the subject of recent national and international reform.
Changes in the method pursuant to which benchmark rates are determined, as well as the discontinuance and replacement of reference rates, could adversely impact our business and results of operations. Certain interest rate benchmarks, including the London Interbank Offered Rate (“LIBOR”), have, over the course of recent years, been the subject of national and international reform.
Risks Related to Our Business, Industry, and Markets Our business may be adversely affected by conditions in the financial markets and general economic conditions.
Our business may be adversely affected by conditions in the financial markets and general economic conditions.
We rely on a large number of vendors to provide products and services that we need for our day-to-day operations, particularly in the areas of loan and deposit operations, information technology, and security.
Our business is heavily reliant on a variety of third-party service providers. We rely on a large number of vendors to provide products and services that we need for our day-to-day operations, particularly in the areas of loan and deposit operations, information technology, and security.
If our security systems were penetrated or circumvented, it could cause serious negative consequences for us, including significant disruption of our operations, misappropriation of our confidential information or that of our customers, or damage our computers or systems and those of our customers and counterparties, and could result in violations of applicable privacy and other laws, financial loss to us or to our customers, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure, and harm to our reputation, all of which could have a material adverse effect on us.
If our security systems were penetrated or circumvented, it could cause serious negative consequences for us, including significant disruption of our operations, misappropriation of our confidential information or that of our customers, or damage our computers or systems and those of our customers and counterparties, and could result in violations of applicable privacy and other laws, financial loss to us or to our customers, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure, and harm to our reputation, all of which could have a material adverse effect on us. 26 We depend on qualified employees and key personnel to operate and lead our business, and we may not be able to attract or retain them in the future.
Due to the changing conditions in the national economy, we cannot predict with certainty how future changes in interest rates, deposit levels and loan demand will impact our business and profitability.
Due to the changing conditions in the national economy and uncertainty regarding the rate of inflation and the impacts of governmental policies to combat elevated inflation, we cannot predict with certainty how future changes in interest rates, deposit levels and loan demand will impact our business and profitability.
As of December 31, 2022, we had $1.3 billion of goodwill and $129.0 million of other intangible assets.
As of December 31, 2023, we had $1.3 billion of goodwill and $112.6 million of other intangible assets.
Many circumstances could require us to seek additional capital, such as: • faster than anticipated growth; • reduced earning levels; • operating losses; • changes in economic conditions; • revisions in regulatory requirements; or • additional acquisition opportunities.
Federal and state regulatory authorities require us and our subsidiary bank to maintain adequate levels of capital to support our operations. Many circumstances could require us to seek additional capital, such as: • faster than anticipated growth; • reduced earning levels; • operating losses; • changes in economic conditions; • revisions in regulatory requirements; or • additional acquisition opportunities.
As such, the models and estimations may not be effective in identifying and managing risks, which could adversely impact our financial condition and results of operations. Inadequate models may also result in compliance failures, which could lead to increased scrutiny by our regulators.
As such, the models and estimations may not be effective in identifying and managing risks, which could adversely impact our financial condition and results of operations.
Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; increases in inflation or interest rates; natural disasters; or a combination of these or other factors.
Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; increases in inflation or interest rates; natural disasters; or a combination of these or other factors. 22 The business environment in the states where we operate could deteriorate and adversely affect the credit quality of our loans and our results of operations and financial condition.
The discontinuation of LIBOR could result in operational, legal and compliance risks, and, if we are unable to adequately manage such risks and transition from LIBOR to new reference rates, our business, financial condition, results of operations and future prospects may be adversely impacted. 19 Our cost of funds may increase as a result of general economic conditions, interest rates and competitive pressures.
The future discontinuation of a benchmark rate could result in operational, legal and compliance risks, and, if we are unable to adequately manage such risks and transition, our business, financial condition, results of operations and future prospects may be adversely impacted.
Weaknesses in the credit quality of the issuers of the securities within our portfolio or in the strength of the collateral, if any, underlying those securities could also result in a decline in the value of our investment securities portfolio, which could negatively affect equity and potentially impact our earnings.
Weaknesses in the credit quality of the issuers of the securities within our portfolio or in the strength of the collateral, if any, underlying those securities could also result in a decline in the value of our investment securities portfolio, which could negatively affect equity and potentially impact our earnings or the liquidity that we could generate from our investment securities portfolio. 19 A lack of liquidity could impair our ability to fund our business and thereby adversely affect our financial condition and results of operations.
If we need additional capital but cannot raise it on terms acceptable to us, our ability to expand our operations or to engage in acquisitions could be materially impaired. 25 Our business is heavily reliant on information technology systems, facilities, and processes; and a disruption in those systems, facilities, and processes, or a breach, including cyber-attacks, in the security of our systems, could have significant, negative impact on our business, result in the disclosure of confidential information, and create significant financial and legal exposure for us.
Our business is heavily reliant on information technology systems, facilities, and processes; and a disruption in those systems, facilities, and processes, or a breach, including cyber-attacks, in the security of our systems, could have significant, negative impact on our business, result in the disclosure of confidential information, and create significant financial and legal exposure for us.
These risks include, among other risks: • credit risk associated with the acquired bank’s loans and investments; • difficulty of integrating operations and personnel; and • potential disruption of our ongoing business.
Any future acquisitions in which we might engage will be accompanied by the risks commonly encountered in acquisitions. These risks include, among other risks: • credit risk associated with the acquired bank’s loans and investments; • difficulty of integrating operations and personnel; and • potential disruption of our ongoing business.
Accounting standards periodically change, and the application of our accounting policies and methods may require management to make estimates about matters that are uncertain. The regulatory bodies that establish accounting standards, including, among others, the FASB and the SEC, periodically revise or issue new financial accounting and reporting standards that govern the preparation of our consolidated financial statements.
The regulatory bodies that establish accounting standards, including, among others, the Financial Accounting Standards Board (“FASB”) and the SEC, periodically revise or issue new financial accounting and reporting standards that govern the preparation of our consolidated financial statements.
Future regulatory actions could also have a material impact on assessments of goodwill for impairment. If we were to conclude that a future write-down of our goodwill is necessary, we would record the appropriate charge, which could have a material adverse effect on our results of operations.
If we were to conclude that a future write-down of our goodwill is necessary, we would record the appropriate charge, which could have a material adverse effect on our results of operations. 24 Identifiable intangible assets other than goodwill consist of core deposit intangibles, books of business, and other intangible assets.
In addition, continued inflationary pressures could increase the operating costs of our borrowers, which could adversely impact their profitability and financial condition and thereby increase the likelihood of defaults on loans we have extended. 22 Our concentration of banking activities in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas, including our real estate loan portfolio, makes us more vulnerable to adverse conditions in the particular local markets in which we operate.
Our concentration of banking activities in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas, including our real estate loan portfolio, makes us more vulnerable to adverse conditions in the particular local markets in which we operate.
Also, changes in our deposit mix and growth could adversely affect our profitability and the ability to expand our loan portfolio, as well as our liquidity and funding mix. Our investment securities portfolio could decline in value as a result of interest rate changes and changes in issuer credit quality or the strength of the associated collateral.
Also, changes in our deposit mix and growth could adversely affect our profitability and the ability to expand our loan portfolio, as well as our liquidity and funding mix.
The combination of these provisions effectively inhibits a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of our common stock. These provisions could also discourage proxy contests and make it more difficult for holders of our common stock to elect directors other than the candidates nominated by our Board of Directors.
The combination of these provisions effectively inhibits a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of our common stock.
We have historically employed, as important parts of our business strategy, growth through acquisitions of banks and, to a lesser extent, through branch acquisitions and de novo branching. Any future acquisitions in which we might engage will be accompanied by the risks commonly encountered in acquisitions.
Our growth and expansion strategy may not be successful, and our market value and profitability may suffer. We have historically employed, as important parts of our business strategy, growth through acquisitions of banks and, to a lesser extent, through branch acquisitions and de novo branching.
If interest rates change in the future, the market value of our investment securities portfolio may decline.
Our investment securities portfolio could decline in value as a result of interest rate changes and changes in issuer credit quality or the strength of the associated collateral. If interest rates change in the future, the market value of our investment securities portfolio may decline.
The business environment in the states where we operate could deteriorate and adversely affect the credit quality of our loans and our results of operations and financial condition. There can be no assurance that business and economic conditions will remain stable in the near term.
There can be no assurance that business and economic conditions will remain stable in the near term.
We may not be able to raise the additional capital we need to grow and, as a result, our ability to expand our operations could be materially impaired. Federal and state regulatory authorities require us and our subsidiary bank to maintain adequate levels of capital to support our operations.
Inadequate models may also result in compliance failures, which could lead to increased scrutiny by our regulators. 25 We may not be able to raise the additional capital we need to grow and, as a result, our ability to expand our operations could be materially impaired.
To the extent these intangible assets are deemed unrecoverable, a non-cash impairment charge would be recorded, which could have a material adverse effect on our results of operations. Damage to our reputation could significantly harm our business. Our ability to attract and retain customers, employees, and acquisition partners is influenced by our reputation.
Damage to our reputation could significantly harm our business. Our ability to attract and retain customers, employees, and acquisition partners is influenced by our reputation.
Additionally, the COVID-19 pandemic may also have the effect of heightening many of the other risks described herein and in other filings we make with the SEC. General Risk Factors Our management has broad discretion over the use of proceeds from future stock offerings.
These provisions could also discourage proxy contests and make it more difficult for holders of our common stock to elect directors other than the candidates nominated by our Board of Directors. 30 General Risk Factors Our management has broad discretion over the use of proceeds from future stock offerings.
Removed
We expect that the publication of the remaining LIBOR rates will cease immediately following the LIBOR publication on June 30, 2023. The U.S. federal banking agencies have issued statements to encourage U.S. banks to transition away from U.S. dollar LIBOR as soon as practicable and not to enter into new contracts that use U.S. dollar LIBOR after December 31, 2021.
Added
During 2022 and 2023, in response to rising market interest rates, our cost of funds increased due to customer migration from lower-cost to higher-cost deposit accounts, including interest-bearing transaction accounts and time deposits, which negatively impacted our cost of funds and net interest margin.
Removed
Due to LIBOR’s extensive use across financial markets, the transition away from LIBOR pose risks and challenges to financial markets and financial institutions, including the Company, and liquidity in certain interbank markets on which LIBOR estimates are based has been declining.
Added
For example, during 2023, the publication of LIBOR rates ceased.
Removed
At this time, it is not possible to predict exactly when and to what extent banks will discontinue providing submissions for the calculation of LIBOR.
Added
The transition from LIBOR has resulted in and could continue to result in added costs and employee efforts and could present additional risk. Since alternative reference rates are calculated differently than LIBOR, payments under contracts referencing new alternative reference rates will differ from those referencing LIBOR.
Removed
Similarly, at this time, it is not possible to predict exactly how long LIBOR will continue to be viewed as an acceptable market benchmark, what rate or rates may become the generally accepted alternatives to LIBOR, or what the effect of any such changes in views or alternatives may be on the markets for LIBOR-linked financial instruments.
Added
Risks Related to Our Business, Industry, and Markets Our business, financial condition, and results of operations could be adversely affected by developments impacting the financial services industry, such as recent bank failures or concerns involving liquidity.
Removed
Certain of our LIBOR-based financial products and contracts, including, but not limited to, hedging products, debt obligations, investments, and loans, extend beyond 2023.
Added
Recent events in the financial services industry (including the 2023 closures of Silicon Valley Bank, Signature Bank and First Republic Bank) caused general uncertainty and concern regarding the adequacy of liquidity of the financial services industry generally.
Removed
We are continuing to assess, and plan for, the impact that a cessation or market replacement of LIBOR will have on these various products and contracts and working to transition many LIBOR based products and contracts to other interest rate structures.
Added
While we rely on different sources of funding to meet potential liquidity needs, our business strategies are largely based on access to funding from customer deposits and supplemental funding provided by wholesale or other secondary liquidity sources.
Removed
A lack of liquidity could impair our ability to fund our business and thereby adversely affect our financial condition and results of operations. Liquidity is a critical component of our business.
Added
Deposit levels may be affected by various industry factors, including interest rates paid by competitors, general interest rate levels, returns available to customers on alternative investments, conditions in the financial services industry specifically and general economic conditions that impact the amount of liquidity in the economy and savings levels, and also by factors that impact customers’ perception of our financial condition and capital and liquidity levels.
Removed
The Great Recession elevated unemployment levels and negatively impacted consumer confidence. It also had a detrimental impact on industry-wide performance nationally as well as the Company’s market areas.
Added
In response to the closures of Silicon Valley Bank and Signature Bank, in 2023 the Secretary of the U.S.
Removed
While improvement in several economic indicators have been noted since 2013, including increasing consumer confidence levels, increased economic activity and a continued decline in unemployment levels, the COVID-19 pandemic led to extensive additional disruptions to the economy generally during 2020 and 2021.
Added
Department of the Treasury approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank and Signature Bank in a manner that fully protected depositors by utilizing the Deposit Insurance Fund, and the Federal Reserve announced it would make available additional funding for eligible depository institutions to help assure banks have the ability to meet the needs of their depositors.
Removed
We depend on qualified employees and key personnel to operate and lead our business, and we may not be able to attract or retain them in the future.
Added
While it appears these steps by the banking regulators helped customers’ perception of the financial markets and financial services industry generally, a number of factors, including further bank closures, or deposit outflows (and particularly sudden deposit outflows) from banks, may drive additional deposit outflows, increased borrowing and funding costs, and increased competition for liquidity, any of which could have a material adverse impact on our financial performance or financial condition.
Removed
Risks Related to the COVID-19 Pandemic The COVID-19 pandemic and resulting economic conditions have adversely impacted our business, and may adversely impact our business in the future, as well as that of our customers and third-party vendors.
Added
In addition, continued inflationary pressures could increase the operating costs of our borrowers, which could adversely impact their profitability and financial condition and thereby increase the likelihood of defaults on loans we have extended.
Removed
The COVID-19 pandemic and responses to it have impacted, and may continue to impact, our business, results of operations, and financial condition, as well as those of our customers and third-party vendors. The COVID-19 pandemic caused significant disruptions to the global economy and the lives of people around the world.
Added
Future regulatory actions could also have a material impact on assessments of goodwill for impairment.
Removed
As a result of the pandemic, governmental authorities, businesses, and the public have taken unprecedented actions designed to limit the scope and duration of the COVID-19 pandemic, as well as mitigate its effects.
Added
If we need additional capital but cannot raise it on terms acceptable to us, our ability to expand our operations or to engage in acquisitions could be materially impaired.
Removed
We are unable to determine how long it may take for the pandemic to fully subside. 30 Changes due to COVID-19 may continue to have adverse impacts on the Company’s business due to, among other things, reduced effectiveness of operations, supply-chain challenges, unavailability of personnel (including due to illness), and increased cybersecurity risks related to use of remote technology.
Added
Accounting standards periodically change, and the application of our accounting policies and methods may require management to make estimates about matters that are uncertain.
Removed
We may experience financial losses and declines in our financial condition due to a number of factors associated with the pandemic, including, among other things, deteriorations in credit quality, past due loans, challenges faced by our third-party vendors who provide key services, and charge offs resulting from difficulties faced by our hospitality, retail, restaurant, energy, and other borrowers as a result of the pandemic and responses to it (although these difficulties recently seem to be improving).
Removed
The COVID-19 pandemic has contributed to significant volatility in the financial markets. Depending on the extent and duration of the COVID-19 pandemic, and perceptions regarding national and global recovery from the pandemic, volatility in the financial markets may continue which may adversely impact the price of the Company’s common stock.
Removed
The Company may still experience adverse impacts of the COVID-19 pandemic based on future developments, including, among other things, how long the pandemic lasts, how successful vaccination efforts are, the significant spread of new strains of the virus, and whether additional restrictions are imposed on businesses and individuals.
Removed
Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future, or as a result of changes in the behavior of customers, businesses and their employees.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeThe Company and its subsidiaries conduct financial operations from approximately 230 financial centers located in communities throughout Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. We believe our properties are suitable and adequate for our present operations.
Biggest changeThe Company and its subsidiaries conduct financial operations from approximately 234 financial centers located in communities throughout Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. We believe our properties are suitable and adequate for our present operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+3 added−1 removed1 unchanged
Biggest changeUnder the 2022 Program, the Company has approximately $79.9 million of remaining funds that may be used to repurchase shares of the Company’s Class A Common Stock. 32 Performance Graph The performance graph below compares the cumulative total shareholder return on the Company’s Common Stock with the cumulative total return of the Russell 2000 Index and the KBW Regional Banking Index.
Biggest changeAs of December 31, 2023, the Company had approximately $39.9 million of remaining funds that could have been used to repurchase shares of the Company’s Class A Common Stock under the 2022 Program. The 2024 Program has since replaced the 2022 Program.
The repurchase authorization under the 2019 Program was substantially exhausted during January 2022. On January 27, 2022, we announced a new stock repurchase program (the “2022 Program”) under which we may repurchase up to $175.0 million of our Class A Common Stock currently issued and outstanding. The 2022 Program replaced the 2019 Program.
The repurchase authorization under the 2019 Program was substantially exhausted during January 2022. On January 27, 2022, we announced a new stock repurchase program (“2022 Program”) under which we may repurchase up to $175.0 million of our Class A Common Stock currently issued and outstanding. The 2022 Program replaced the 2019 Program.
Issuer Purchases of Equity Securities Effective July 23, 2021, our Board of Directors approved an amendment to the Company’s stock repurchase program originally approved in October 2019 and first amended in March 2020 (“2019 Program”) that increased the amount of our Class A Common Stock that may be repurchased under the 2019 Program from a maximum of $180 million to a maximum of $276.5 million and extended the term of the 2019 Program from October 31, 2021, to October 31, 2022.
Issuer Purchases of Equity Securities Effective July 23, 2021, our Board of Directors approved an amendment to the Company’s stock repurchase program originally approved in October 2019 and first amended in March 2020 (“2019 Program”) that increased the amount of our Class A Common Stock that may be repurchased under the 2019 Program from a maximum of $180.0 million to a maximum of $276.5 million and extended the term of the 2019 Program from October 31, 2021, to October 31, 2022.
The timing, pricing, and amount of any repurchases under the 2022 Program will be determined by management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of our common stock, corporate considerations, the Company working capital and investment requirements, general market and economic conditions, and legal requirements.
The timing, pricing, and amount of any repurchases under the 2024 Program will be determined by management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of our common stock, corporate considerations, the Company working capital and investment requirements, general market and economic conditions, and legal requirements.
Under the 2022 Program, we may repurchase shares of our Class A Common Stock through open market and privately negotiated transactions or otherwise. The 2022 Program does not obligate us to repurchase any of our Class A Common Stock and may be modified, discontinued, or suspended at any time without prior notice.
Under the 2024 Program, we may repurchase shares of our Class A Common Stock through open market and privately negotiated transactions or otherwise. The 2024 Program does not obligate us to repurchase any of our Class A Common Stock and may be modified, discontinued, or suspended at any time without prior notice.
The graph assumes an investment of $100 on December 31, 2017 and reinvestment of dividends on the date of payment without commissions. The performance graph represents past performance and should not be considered as an indication of future performance.
The graph assumes an investment of $100 on December 31, 2018 and reinvestment of dividends on the date of payment without commissions. The performance graph represents past performance and should not be considered as an indication of future performance.
We anticipate funding for the 2022 Program to come from available sources of liquidity, including cash on hand and future cash flow. The Company made no purchases of its common stock during the three months ended December 31, 2022.
We anticipate funding for the 2024 Program to come from available sources of liquidity, including cash on hand and future cash flow. The Company made no purchases of its common stock during the three months ended December 31, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the Nasdaq Global Select Market under the symbol “SFNC.” As of February 21, 2023, there were approximately 2,501 shareholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the Nasdaq Global Select Market under the symbol “SFNC.” As of February 23, 2024, there were approximately 2,379 shareholders of record of our common stock.
Removed
Period Ending Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Simmons First National Corporation 100.00 86.23 98.21 82.40 115.63 87.16 Russell 2000 Index 100.00 88.99 111.70 134.00 153.85 122.41 KBW Nasdaq Regional Banking Index 100.00 82.50 102.15 93.25 127.42 118.59
Added
Because the 2022 Program was set to terminate on January 31, 2024, the Company’s Board of Directors authorized a new stock repurchase program in January 2024 (“2024 Program”) under which the Company may repurchase up to $175.0 million of its Class A common stock currently issued and outstanding. The 2024 Program has replaced the 2022 Program.
Added
Information concerning our repurchases of Class A Common Stock during the quarter ended December 31, 2023 is as follows: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2023 - October 31, 2023 — $ — — $ 39,922,000 November 1, 2023 - November 30, 2023 — — — $ 39,922,000 December 1, 2023 - December 31, 2023 — — — $ 39,922,000 Total — $ — — _________________________ (1) No shares of restricted stock were purchased in connection with employee tax withholding obligations under employee compensation plans, which are not purchases under any publicly announced plan. 34 Performance Graph The performance graph below compares the cumulative total shareholder return on the Company’s Common Stock with the cumulative total return of the Russell 2000 Index and the KBW Nasdaq Regional Banking Index.
Added
Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Simmons First National Corporation 100.00 113.90 95.56 134.10 101.08 97.08 Russell 2000 Index 100.00 125.53 150.58 172.90 137.56 160.85 KBW Nasdaq Regional Banking Index 100.00 123.81 113.03 154.45 143.75 143.17

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

158 edited+63 added−65 removed76 unchanged
Biggest changeTable 6: Noninterest Expense Years Ended December 31, 2022 Change from 2021 Change from (Dollars in thousands) 2022 2021 2020 2021 2020 Salaries and employee benefits $ 286,982 $ 246,335 $ 239,573 $ 40,647 16.5 % $ 6,762 2.8 % Early retirement program — — 2,901 — — (2,901) (100.0) Occupancy expense, net 44,321 38,797 37,556 5,524 14.2 1,241 3.3 Furniture and equipment expense 20,665 19,890 24,038 775 3.9 (4,148) (17.3) Other real estate and foreclosure expense 1,003 2,121 1,752 (1,118) (52.7) 369 21.1 Deposit insurance 11,608 6,973 9,184 4,635 66.5 (2,211) (24.1) Merger related costs 22,476 15,911 4,531 6,565 41.3 11,380 251.2 Other operating expenses: Professional services 19,138 18,921 18,688 217 1.2 233 1.3 Postage 8,955 8,276 7,538 679 8.2 738 9.8 Telephone 6,394 6,234 8,833 160 2.6 (2,599) (29.4) Credit card expenses 12,243 11,112 10,199 1,131 10.2 913 9.0 Marketing 28,870 22,234 19,396 6,636 29.9 2,838 14.6 Software and technology 40,906 40,608 39,724 298 0.7 884 2.2 Operating supplies 2,556 2,766 3,322 (210) (7.6) (556) (16.7) Amortization of intangibles 15,915 13,494 13,495 2,421 17.9 (1) — Branch right sizing expense 3,475 (537) 14,097 4,012 * (14,634) (103.8) Other expense 41,241 30,454 29,909 10,787 35.4 545 1.8 Total noninterest expense $ 566,748 $ 483,589 $ 484,736 $ 83,159 17.2 % $ (1,147) (0.2) % _________________________ *Not meaningful Income Taxes The provision for income taxes for 2022 was $50.1 million, compared to $61.3 million in 2021 and $64.9 million in 2020.
Biggest changeTable 6: Noninterest Expense Years Ended December 31, 2023 Change from 2022 Change from (Dollars in thousands) 2023 2022 2021 2022 2021 Salaries and employee benefits $ 279,919 $ 286,982 $ 246,335 $ (7,063) (2.5) % $ 40,647 16.5 % Early retirement program 6,198 — — 6,198 * — — Occupancy expense, net 46,741 44,321 38,797 2,420 5.5 5,524 14.2 Furniture and equipment expense 20,741 20,665 19,890 76 0.4 775 3.9 Other real estate and foreclosure expense 892 1,003 2,121 (111) (11.1) (1,118) (52.7) Deposit insurance 19,465 11,608 6,973 7,857 67.7 4,635 66.5 FDIC special assessment 10,521 — — 10,521 * — — Merger related costs 1,420 22,476 15,911 (21,056) (93.7) 6,565 41.3 Other operating expenses: Professional services 19,612 19,138 18,921 474 2.5 217 1.2 Postage 9,458 8,955 8,276 503 5.6 679 8.2 Telephone 6,965 6,394 6,234 571 8.9 160 2.6 Credit card expenses 13,243 12,243 11,112 1,000 8.2 1,131 10.2 Marketing 24,008 28,870 22,234 (4,862) (16.8) 6,636 29.9 Software and technology 42,530 40,906 40,608 1,624 4.0 298 0.7 Operating supplies 2,591 2,556 2,766 35 1.4 (210) (7.6) Amortization of intangibles 16,306 15,915 13,494 391 2.5 2,421 17.9 Branch right sizing expense 5,467 3,475 (537) 1,992 57.3 4,012 * Other expense 36,984 41,241 30,454 (4,257) (10.3) 10,787 35.4 Total noninterest expense $ 563,061 $ 566,748 $ 483,589 $ (3,687) (0.7) % $ 83,159 17.2 % _________________________ *Not meaningful Due to our Better Bank Initiative and continuous efficiency improvements, we expect marginal growth in noninterest expense during 2024.
Management and the Board of Directors utilize “adjusted earnings” (non-GAAP) for the following purposes: • Preparation of the Company’s operating budgets • Monthly financial performance reporting • Monthly “flash” reporting of consolidated results (management only) • Investor presentations of Company performance 59 We believe the presentation of “adjusted earnings” on a diluted per share basis (non-GAAP) provides a meaningful basis for period-to-period and company-to-company comparisons, which management believes will assist investors and analysts in analyzing the adjusted financial measures of the Company and predicting future performance.
Management and the Board of Directors utilize “adjusted earnings” (non-GAAP) for the following purposes: • Preparation of the Company’s operating budgets • Monthly financial performance reporting • Monthly “flash” reporting of consolidated results (management only) • Investor presentations of Company performance We believe the presentation of “adjusted earnings” on a diluted per share basis (non-GAAP) provides a meaningful basis for period-to-period and company-to-company comparisons, which management believes will assist investors and analysts in analyzing the adjusted financial measures of the Company and predicting future performance.
Certain reclassifications have been made to make prior periods comparable. This discussion and analysis should be read in conjunction with our financial statements, notes thereto and other financial information appearing elsewhere in this report, as well as the cautionary note regarding forward-looking statements and the risks discussed in Item 1A of Part I of this Form 10-K.
Certain immaterial reclassifications have been made to make prior periods comparable. This discussion and analysis should be read in conjunction with our financial statements, notes thereto and other financial information appearing elsewhere in this report, as well as the cautionary note regarding forward-looking statements and the risks discussed in Item 1A of Part I of this Form 10-K.
During 2022, adjusted items primarily consisted of $33.8 million of Day 2 provision expense required for loans and unfunded commitments related to the Spirit acquisition, merger-related costs of $22.5 million, primarily related to the Spirit acquisitions, and net branch right sizing costs of $3.6 million, mainly due to branch closures across our footprint during the year.
During 2022, adjusted items primarily consisted of $33.8 million of Day 2 provision expense required for loans and unfunded commitments related to the Spirit acquisition, merger-related costs of $22.5 million, primarily related to the Spirit acquisition, and net branch right sizing costs of $3.6 million, mainly due to branch closures across our footprint during the year.
Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in stockholders’ equity. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield 50 method over the estimated life of the security.
Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in stockholders’ equity. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security.
Additionally, we had a gain on insurance settlement of $4.1 million related to a weather event that caused severe damage to one of our branch locations. The net after-tax impact of all adjusted items was $42.2 million, or $0.34 per diluted earnings per share.
Additionally, we had a gain on insurance settlement of $4.1 million related to a weather event that caused severe damage to one of our branch locations. The net after-tax impact of all adjusted items was $42.4 million, or $0.34 per diluted earnings per share.
We have historically funded our growth in earning assets through the use of core deposits, large certificates of deposits from local markets, reciprocal brokered deposits, FHLB borrowings and Federal funds purchased. Management anticipates that these sources will provide necessary funding in the foreseeable future.
We have historically funded our growth in earning assets through the use of core deposits, large certificates of deposits from local markets, brokered deposits, FHLB borrowings and Federal funds purchased. Management anticipates that these sources will provide necessary funding in the foreseeable future.
Pursuant to the plans, shares are reserved for future issuance by the Company upon exercise of stock options or awarding of restricted stock, restricted stock units or performance stock units granted to directors, officers and other key employees.
Pursuant to the plans, shares are reserved for future issuance by the Company upon exercise of stock options or awarding of restricted stock, restricted stock units, performance stock units or stock awards granted to directors, officers and other key employees.
The timing, pricing, and amount of any repurchases under the 2022 Program will be determined by management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of our common stock, corporate considerations, our working capital and investment requirements, general market and economic conditions, and legal requirements.
The timing, pricing, and amount of any repurchases under the 2024 Program will be determined by management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of our common stock, corporate considerations, our working capital and investment requirements, general market and economic conditions, and legal requirements.
An allowance for credit losses related to mortgage-backed securities and U.S. government agencies was not recorded as of December 31, 2022 due to those securities being explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses.
An allowance for credit losses related to mortgage-backed securities and U.S. government agencies was not recorded as of December 31, 2023 due to those securities being explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses.
This approach ensures that the interest rates being paid are competitively priced for each particular deposit product and structured to meet the funding requirements. We believe we are paying a competitive rate when compared with pricing in those markets. 53 We manage our interest expense through deposit pricing.
This approach ensures that the interest rates being paid are competitively priced for each particular deposit product and structured to meet the funding requirements. We believe we are paying a competitive rate when compared with pricing in those markets. 55 We manage our interest expense through deposit pricing.
The 2022 Program does not obligate us to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice. We anticipate funding for the 2022 Program to come from available sources of liquidity, including cash on hand and future cash flow.
The 2024 Program does not obligate us to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice. We anticipate funding for the 2024 Program to come from available sources of liquidity, including cash on hand and future cash flow.
Effective July 23, 2021, the Company’s Board of Directors approved another amendment to the 2019 Program that increased the amount of the Company’s Class A common stock that may be repurchased from a maximum of $180.0 million to a maximum of $276.5 million and extended the term of the 2019 Program from October 31, 2021, to October 31, 2022.
Effective July 23, 2021, our Board of Directors approved another amendment to the 2019 Program that increased the amount of our Class A common stock that may be repurchased from a maximum of $180.0 million to a maximum of $276.5 million and extended the term of the 2019 Program from October 31, 2021, to October 31, 2022.
Management believes that, as of December 31, 2022, we met all capital adequacy requirements to which we are subject. As of the most recent notification from regulatory agencies, Simmons Bank was well capitalized under the regulatory framework for prompt corrective action.
Management believes that, as of December 31, 2023, we met all capital adequacy requirements to which we are subject. As of the most recent notification from regulatory agencies, Simmons Bank was well capitalized under the regulatory framework for prompt corrective action.
Table 13: Maturity Distribution of Investment Securities December 31, 2022 Over Over 1 year 5 years Total 1 year through through Over No fixed Amortized Par Fair (In thousands) or less 5 years 10 years 10 years maturity Cost Value Value Held-to-Maturity U.S.
Table 13: Maturity Distribution of Investment Securities December 31, 2023 Over Over 1 year 5 years Total 1 year through through Over No fixed Amortized Par Fair (In thousands) or less 5 years 10 years 10 years maturity Cost Value Value Held-to-Maturity U.S.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2022 and 2021 and results of operations for each of the years then ended.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2023 and 2022 and results of operations for each of the years then ended.
Table 12: Investment Securities (In thousands) Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Held-to-maturity December 31, 2022 U.S.
Table 12: Investment Securities (In thousands) Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Held-to-maturity December 31, 2023 U.S.
Table 14 reflects the classification of the average deposits and the average rate paid on each deposit category which is in excess of 10 percent of average total deposits for the three years ended December 31, 2022.
Table 14 reflects the classification of the average deposits and the average rate paid on each deposit category which is in excess of 10 percent of average total deposits for the three years ended December 31, 2023.
We do not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of December 31, 2022, we believe the declines in fair value detailed in the table below are temporary. Table 12 presents the amortized cost, fair value and allowance for credit losses on investment securities for each of the years indicated.
Accordingly, as of December 31, 2023, we believe the declines in fair value detailed in the table below are temporary and we do not believe any of the securities are impaired due to reasons of credit quality. 53 Table 12 presents the amortized cost, fair value and allowance for credit losses on investment securities for each of the years indicated.
Our allowance for credit losses at December 31, 2022 was considered appropriate given the current economic environment and other related factors. The following table sets forth the sum of the amounts of the allowance for credit losses attributable to individual loans within each category, or loan categories in general.
Our allowance for credit losses at December 31, 2023 was considered appropriate given the current economic environment and other related factors. 51 The following table sets forth the sum of the amounts of the allowance for credit losses attributable to individual loans within each category, or loan categories in general.
Based upon our analysis of the underlying risk characteristics of the AFS portfolio, including credit ratings and other qualitative factors, no allowance for credit losses related to AFS securities was deemed necessary at December 31, 2022 and 2021. Our allowance for credit losses related to HTM securities was $1.4 million and $1.3 million at December 31, 2022 and 2021, respectively.
Based upon our analysis of the underlying risk characteristics of the AFS portfolio, including credit ratings and other qualitative factors, no allowance for credit losses related to AFS securities was deemed necessary at December 31, 2023 and 2022. Our allowance for credit losses related to HTM securities was $3.2 million and $1.4 million at December 31, 2023 and 2022, respectively.
Included in 2022 results were $42.2 million of certain items, net of tax, that were primarily related to our acquisitions, Day 2 accounting provision in connection with acquisitions, gain on an insurance settlement related to a weather event, and branch right sizing initiatives.
Included in 2022 results were $42.4 million of certain items, net of tax, that were primarily related to our acquisitions, Day 2 accounting provision in connection with acquisitions, gain on an insurance settlement related to a weather event, merger related costs and branch right sizing initiatives.
Refer to the accompanying notes to consolidated financial statements elsewhere in this report for the expected timing of such payments as of December 31, 2022.
Refer to the accompanying notes to consolidated financial statements elsewhere in this report for the expected timing of such payments as of December 31, 2023.
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 42% of our loan portfolio and approximately 80% of our time deposits have repriced in one year or less.
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 41% of our loan portfolio and approximately 89% of our time deposits have repriced in one year or less.
There was no interest income on nonaccrual loans recorded for the years ended December 31, 2022, 2021 and 2020.
There was no interest income on nonaccrual loans recorded for the years ended December 31, 2023, 2022 and 2021.
Management and the Board of Directors utilize “adjusted diluted earnings per share” (non-GAAP) for the following purposes: • Calculation of annual performance-based incentives for certain executives • Calculation of long-term performance-based incentives for certain executives • Investor presentations of Company performance We have $1.45 billion and $1.25 billion total goodwill and other intangible assets for the periods ended December 31, 2022 and 2021, respectively.
Management and the Board of Directors utilize “adjusted diluted earnings per share” (non-GAAP) for the following purposes: • Calculation of annual performance-based incentives for certain executives • Calculation of long-term performance-based incentives for certain executives • Investor presentations of Company performance 61 We have $1.43 billion and $1.45 billion total goodwill and other intangible assets for the periods ended December 31, 2023 and 2022, respectively.
Simmons First National Corporation is an Arkansas-based financial holding company that, as of December 31, 2022, has approximately $27.5 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.
Simmons First National Corporation is an Arkansas-based financial holding company that, as of December 31, 2023, has approximately $27.35 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.
Additionally, we are continuing to hone our product offerings to give customers flexibility of choice while maintaining the ability to adjust interest rates timely in the current rate environment.
We are continuing to refine our product offerings to give customers flexibility of choice while maintaining the ability to adjust interest rates timely in the current rate environment.
Credit card loans are generally charged off when payment of interest or principal exceeds 150 days past due. The credit card recovery group pursues account holders until it is determined, on a case-by-case basis, to be uncollectible. Total non-performing assets decreased $13.8 million from December 31, 2021 to December 31, 2022.
Credit card loans are generally charged off when payment of interest or principal exceeds 150 days past due. The credit card recovery group pursues account holders until it is determined, on a case-by-case basis, to be uncollectible. Total non-performing assets increased $27.8 million from December 31, 2022 to December 31, 2023.
Noninterest income also includes income on the sale of mortgage loans, income from the increase in cash surrender values of bank owned life insurance and gains (losses) from sales of securities. Total noninterest income was $170.1 million in 2022, compared to $191.8 million in 2021 and $239.8 million in 2020.
Noninterest income also includes income on the sale of mortgage loans, income from the increase in cash surrender values of bank owned life insurance and gains (losses) from sales of securities. Total noninterest income was $155.6 million in 2023, compared to $170.1 million in 2022 and $191.8 million in 2021.
These swap agreements consist of a two year forward start date and involve the payment of fixed interest rates with a weighted average of 1.21% in exchange for variable interest rates based on federal funds rates beginning in the third quarter of 2023. Securities within these swap agreements have maturity dates varying between 2028 and 2029.
These swap agreements consist of a two year forward start date and involve the payment of fixed interest rates with a weighted average of 1.21% in exchange for variable interest rates based on federal funds rates, which became effective during the late third quarter of 2023. Securities within these swap agreements have maturity dates varying between 2028 and 2029.
In the near term, we expect to continue to manage our C&D and CRE portfolio concentration by developing deeper relationships with our customers. Commercial loans consist of non-real estate loans related to business and agricultural loans.
We expect to continue to manage our C&D and CRE portfolio concentration by developing deeper relationships with our customers. Commercial loans consist of non-real estate loans related to business and agricultural loans.
During January 2022, we substantially exhausted the remaining capacity under the 2019 Program, and our Board of Directors authorized a new stock repurchase program (the “2022 Program”) under which we may repurchase up to $175.0 million of our Class A Common Stock currently issued and outstanding. The 2022 Program replaced the 2019 Program.
During January 2022, we substantially exhausted the repurchase capacity under the 2019 Program. As a result, our Board of Directors authorized a new stock repurchase program in January 2022 (“2022 Program”) under which we may repurchase up to $175.0 million of our Class A common stock currently issued and outstanding.
Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the SEC on February 25, 2022 (the “ 2021 Form 10-K ”) for a discussion and analysis of the more significant factors that affected periods prior to 2021, which are incorporated herein by reference.
Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the SEC on February 27, 2023 (the “ 2022 Form 10-K ”) for a discussion and analysis of the more significant factors that affected the 2021 period, which are incorporated herein by reference.
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. 35 2022 Overview Our net income available to common shareholders for the year ended December 31, 2022 was $256.4 million, or $2.06 diluted earnings per share, compared to $271.1 million, or $2.46 diluted earnings per share, for the same period in 2021.
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. 37 2023 Overview Our net income available to common shareholders for the year ended December 31, 2023 was $175.1 million, or $1.38 diluted earnings per share, compared to $256.4 million, or $2.06 diluted earnings per share, for the same period in 2022.
Allowance for Credit Losses The allowance for credit losses is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, historical loss experience, and other qualitative considerations.
Allowance for Credit Losses The allowance for credit losses is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, quantitative factors, and other qualitative considerations.
Allowance for Credit Losses The allowance for credit losses is a reserve established through a provision for credit losses charged to expense which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, historical loss experience, and other qualitative considerations.
Allowance for Credit Losses The allowance for credit losses is a reserve established through a provision for credit losses charged to expense which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, quantitative factors, and other qualitative considerations.
Table 16: Short-Term Borrowings December 31, (Dollars in thousands) 2022 2021 2020 Amount outstanding at year-end $ 835,000 $ — $ — Weighted-average interest rate at year-end 4.20 % — % — % Maximum amount outstanding at any month-end during the year $ 1,300,000 $ — $1,350,000 Average amount outstanding during the year $ 1,124,314 $ — $1,094,808 Weighted-average interest rate for the year 2.08 % — % 1.69 % During the third quarter of 2022, we redeemed the five issuances of trust preferred securities which had an outstanding aggregate principal amount of $56.2 million.
Table 16: Short-Term Borrowings December 31, (Dollars in thousands) 2023 2022 2021 Amount outstanding at year-end $ 950,000 $ 835,000 $ — Weighted-average interest rate at year-end 5.40 % 4.20 % — % Maximum amount outstanding at any month-end during the year $ 1,350,000 $ 1,300,000 $ — Average amount outstanding during the year $ 1,149,387 $ 1,124,314 $ — Weighted-average interest rate for the year 5.20 % 2.08 % — % During the third quarter of 2022, we redeemed the five issuances of trust preferred securities which had an outstanding aggregate principal amount of $56.2 million.
GAAP Reconciliation of Non-GAAP Financial Measures The tables below present computations of adjusted earnings (net income excluding certain items {gain on sale of branches, early retirement program costs, loss from early retirement of TruPS, gain on sale of intellectual property, gain on insurance settlement, donation to Simmons First Foundation, merger related costs, net branch right sizing costs, and the Day 2 CECL Provision}) (non-GAAP) and adjusted diluted earnings per share (non-GAAP) as well as a computation of tangible book value per common share (non-GAAP), tangible common equity to tangible assets (non-GAAP), adjusted noninterest income (non-GAAP), and adjusted noninterest expense (non-GAAP).
GAAP Reconciliation of Non-GAAP Financial Measures The tables below present computations of adjusted earnings (net income excluding certain items {gain on sale of branches, early retirement program costs, loss from early retirement of TruPS, gain on sale of intellectual property, gain on insurance settlement, donation to Simmons First Foundation, merger related costs, FDIC special assessment, loss (gain) on sale of securities, net branch right sizing costs, and the Day 2 CECL Provision}) (non-GAAP) and adjusted diluted earnings per share (non-GAAP) as well as a computation of tangible book value per common share (non-GAAP), tangible common equity to tangible assets (non-GAAP), adjusted noninterest income (non-GAAP), adjusted noninterest expense (non-GAAP), adjusted salaries and employee benefits expense (non-GAAP) and the coverage ratio of uninsured, non-collateralized deposits (non-GAAP).
Annualized net credit card charge-offs to average total credit card loans were 1.49%, compared to 1.42% during 2021, and 45 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks.
Annualized net credit card charge-offs to average total credit card loans were 2.20%, compared to 1.49% during 2022, and 129 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks.
Qualifying subordinated debt of $366.0 million is included as Tier 2 and total capital as of December 31, 2022. Liquidity In the normal course of business we have entered into a number of contractual obligations and have made commitments to make future payments.
Qualifying subordinated debt of $300.1 million is included as Tier 2 and total capital of the Company as of December 31, 2023. Liquidity In the normal course of business we have entered into a number of contractual obligations and have made commitments to make future payments.
The shelf registration statement provides increased flexibility and more efficient access to raise capital from time to time through the sale of common stock, preferred stock, debt securities, depository shares, warrants, purchase contracts, purchase units, subscription rights, units or a combination thereof, subject to market conditions.
On March 31, 2021, we filed a shelf registration with the SEC. The shelf registration statement provides increased flexibility and more efficient access to raise capital from time to time through the sale of common stock, preferred stock, debt securities, depository shares, warrants, purchase contracts, purchase units, subscription rights, units or a combination thereof, subject to market conditions.
There are no securities of any one state or political subdivision issuer exceeding ten percent of our stockholders’ equity at December 31, 2022. We had approximately $3.73 billion, or 49.0%, of our total portfolio invested in mortgaged-backed securities at December 31, 2022. These mortgage-backed securities were issued by agencies of the U.S. government.
There are no securities of any one state or political subdivision issuer exceeding ten percent of our stockholders’ equity at December 31, 2023. 52 We had approximately $3.10 billion, or 45.1%, of our total portfolio invested in mortgaged-backed securities at December 31, 2023. These mortgage-backed securities were issued by agencies of the U.S. government.
Cash Dividends We declared cash dividends on our common stock of $0.76 per share for the twelve months ended December 31, 2022, compared to $0.72 per share for the twelve months ended December 31, 2021, an increase of $0.04, or 6%.
Cash Dividends We declared cash dividends on our common stock of $0.80 per share for the twelve months ended December 31, 2023, compared to $0.76 per share for the twelve months ended December 31, 2022, an increase of $0.04, or 5%.
The pipeline includes $270.5 million in loans approved and ready to close at the end of the year. 45 The balances of loans outstanding at the indicated dates are reflected in Table 7, according to type of loan.
The pipeline includes $416.0 million in loans approved and ready to close at the end of the year. 47 The balances of loans outstanding at the indicated dates are reflected in Table 7, according to type of loan.
The Basel III Capital Rules include certain provisions that require trust preferred securities to be phased out of qualifying Tier 1 capital when assets surpass $15 billion.
The Tier 1 capital for the Company consisted of common equity Tier 1 capital and trust preferred securities. The Basel III Capital Rules include certain provisions that require trust preferred securities to be phased out of qualifying Tier 1 capital when assets surpass $15 billion.
From and including July 31, 2025, to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be the then-current three-month Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York (provided, that in the event the benchmark rate is less than zero, the benchmark rate will be deemed to be zero) plus 592 basis points, payable quarterly, in arrears.
From and including July 31, 2025, to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be the then-current three-month Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York (provided, that in the event the benchmark rate is less than zero, the benchmark rate will be deemed to be zero) plus 592 basis points, payable quarterly, in arrears. 57 Aggregate annual maturities of long-term debt at December 31, 2023 are presented in Table 17.
We offer a variety of products designed to attract and retain customers with a continuing focus on developing core deposits. Our core deposits consist of all deposits excluding time deposits of more than $250,000 and brokered deposits. As of December 31, 2022, core deposits comprised 83.0% of our total deposits.
We offer a variety of products designed to attract and retain customers with a continuing focus on developing core deposits. Our core deposits consist of all deposits excluding time deposits of $250,000 or more and brokered deposits. As of December 31, 2023, core deposits comprised 79.2% of our total deposits.
These profit plans are subject to extensive initial reviews and monitored by management monthly. Variances from the plan are reviewed monthly and, when required, management takes corrective action intended to ensure financial goals are met. We also regularly monitor staffing levels at each subsidiary to ensure productivity and overhead are in line with existing workload requirements.
Variances from the plan are reviewed monthly and, when required, management takes corrective action intended to ensure financial goals are met. We also regularly monitor staffing levels at each subsidiary to ensure productivity and overhead are in line with existing workload requirements.
We continually monitor and look for opportunities to fairly reprice our deposits while remaining competitive in this current challenging rate environment. Our net interest margin on a fully tax equivalent basis was 3.17% for the year ended December 31, 2022, up 28 basis points from 2021.
We continually monitor and look for opportunities to fairly reprice our deposits while remaining competitive in this current challenging rate environment. Our net interest margin on a fully tax equivalent basis was 2.78% for the year ended December 31, 2023, down 39 basis points from 2022.
Nonaccrual loans decreased by $9.8 million during 2022, in addition to a decrease in foreclosed assets held for sale of $3.1 million. The decrease in nonaccrual loans was primarily due to an overall improvement in economic conditions from pandemic related stresses.
Nonaccrual loans decreased by $9.8 million during 2022, in addition to a decrease in foreclosed assets held for sale of $3.1 million. The decrease in nonaccrual loans was primarily due to an overall improvement in economic conditions from pandemic related stresses. Total non-performing assets decreased by $67.6 million from December 31, 2020 to December 31, 2021.
Our ratio of common stockholders’ equity to total assets was 11.9% and the ratio of tangible common stockholders’ equity to tangible assets was 7.0% at December 31, 2022. See GAAP Reconciliation of Non-GAAP Financial Measures for additional discussion and reconciliations of non-GAAP measures.
Our ratio of common stockholders’ equity to total assets was 12.5% and the ratio of tangible common stockholders’ equity to tangible assets was 7.7% at December 31, 2023. See GAAP Reconciliation of Non-GAAP Financial Measures for additional discussion and reconciliations of non-GAAP measures.
During the quarters ended June 30, 2022 and September 30, 2021, we transferred, at fair value, $1.99 billion and $500.8 million, respectively, of securities from the available-for-sale portfolio to the held-to-maturity portfolio.
During the quarters ended June 30, 2022 and September 30, 2021, we transferred, at fair value, $1.99 billion and $500.8 million, respectively, of securities from the AFS portfolio to the HTM portfolio.
Table 9: Non-performing Assets Years Ended December 31, (Dollars in thousands) 2022 2021 2020 2019 2018 Nonaccrual loans (1) $ 58,434 $ 68,204 $ 122,879 $ 93,330 $ 55,841 Loans past due 90 days or more (principal or interest payments) 507 349 578 856 226 Total non-performing loans 58,941 68,553 123,457 94,186 56,067 Other non-performing assets: Foreclosed assets held for sale and other real estate owned 2,887 6,032 18,393 19,121 25,565 Other non-performing assets 644 1,667 2,016 1,964 553 Total other non-performing assets 3,531 7,699 20,409 21,085 26,118 Total non-performing assets $ 62,472 $ 76,252 $ 143,866 $ 115,271 $ 82,185 Performing TDRs $1,849 $4,289 $3,138 $5,887 $7,436 Allowance for credit losses to non-performing loans 334 % 300 % 193 % 72 % 101 % Non-performing loans to total loans 0.37 % 0.57 % 0.96 % 0.65 % 0.48 % Non-performing assets (including performing TDRs) to total assets 0.23 % 0.33 % 0.66 % 0.57 % 0.54 % Non-performing assets to total assets 0.23 % 0.31 % 0.64 % 0.54 % 0.50 % _________________________ (1) Includes nonaccrual TDRs of approximately $1.6 million, $2.7 million, $4.4 million, $1.6 million and $6.3 million at December 31, 2022, 2021, 2020, 2019 and 2018, respectively.
Table 9: Non-performing Assets Years Ended December 31, (Dollars in thousands) 2023 2022 2021 2020 2019 Nonaccrual loans (1) $ 83,325 $ 58,434 $ 68,204 $ 122,879 $ 93,330 Loans past due 90 days or more (principal or interest payments) 1,147 507 349 578 856 Total non-performing loans 84,472 58,941 68,553 123,457 94,186 Other non-performing assets: Foreclosed assets held for sale and other real estate owned 4,073 2,887 6,032 18,393 19,121 Other non-performing assets 1,726 644 1,667 2,016 1,964 Total other non-performing assets 5,799 3,531 7,699 20,409 21,085 Total non-performing assets $ 90,271 $ 62,472 $ 76,252 $ 143,866 $ 115,271 Performing FDMs (formerly TDRs) $33,577 $1,849 $4,289 $3,138 $5,887 Allowance for credit losses to non-performing loans 267 % 334 % 300 % 193 % 72 % Non-performing loans to total loans 0.50 % 0.37 % 0.57 % 0.96 % 0.65 % Non-performing assets (including performing FDMs (formerly TDRs)) to total assets 0.45 % 0.23 % 0.33 % 0.66 % 0.57 % Non-performing assets to total assets 0.33 % 0.23 % 0.31 % 0.64 % 0.54 % _________________________ (1) Includes nonaccrual FDMs (formerly known as TDRs) of approximately $282,000, $1.6 million, $2.7 million, $4.4 million and $1.6 million at December 31, 2023, 2022, 2021, 2020 and 2019, respectively.
HTM and AFS investment securities were $3.76 billion and $3.85 billion, respectively, at December 31, 2022, compared to the HTM amount of $1.53 billion and AFS amount of $7.11 billion at December 31, 2021. We will continue to look for opportunities to maximize the value of the investment portfolio.
HTM and AFS investment securities were $3.73 billion and $3.15 billion, respectively, at December 31, 2023, compared to the HTM amount of $3.76 billion and AFS amount of $3.85 billion at December 31, 2022. We will continue to look for opportunities to maximize the value of the investment portfolio.
Our loan pipeline consisting of all loan opportunities was $1.12 billion at December 31, 2022, compared to $2.31 billion at December 31, 2021.
Our commercial loan pipeline consisting of all commercial loan opportunities was $948.2 million at December 31, 2023, compared to $1.12 billion at December 31, 2022.
Due to the complexity of these laws, taxpayers and the taxing authorities may subject these laws to different interpretations. Management must make conclusions and estimates about the application of these innately intricate laws, related regulations, and case law. When preparing the Company’s income tax returns, management attempts to make reasonable interpretations of the tax laws.
Management must make conclusions and estimates about the application of these innately intricate laws, related regulations, and case law. When preparing the Company’s income tax returns, management attempts to make reasonable interpretations of the tax laws.
Government agencies $ 448,012 $ — $ 448,012 $ — $ (102,558) $ 345,454 Mortgage-backed securities 1,190,781 — 1,190,781 227 (118,960) 1,072,048 State and political subdivisions 1,861,102 (110) 1,860,992 56 (446,198) 1,414,850 Other securities 261,199 (1,278) 259,921 — (29,040) 230,881 Total HTM $ 3,761,094 $ (1,388) $ 3,759,706 $ 283 $ (696,756) $ 3,063,233 December 31, 2021 U.S.
Government agencies $ 448,012 $ — $ 448,012 $ — $ (102,558) $ 345,454 Mortgage-backed securities 1,190,781 — 1,190,781 227 (118,960) 1,072,048 State and political subdivisions 1,861,102 (110) 1,860,992 56 (446,198) 1,414,850 Other securities 261,199 (1,278) 259,921 — (29,040) 230,881 Total HTM $ 3,761,094 $ (1,388) $ 3,759,706 $ 283 $ (696,756) $ 3,063,233 (In thousands) Amortized Cost Allowance for Credit Losses Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Available-for-sale December 31, 2023 U.S.
Adjusting for these certain items, adjusted earnings for the year ended December 31, 2022 were $298.6 million, or $2.40 adjusted diluted earnings per share, compared to $295.0 million, or $2.68 adjusted diluted earnings per share, in 2021. See GAAP Reconciliation of Non-GAAP Financial Measures for additional discussion and reconciliations of non-GAAP measures.
Adjusting for these certain items, adjusted earnings for the year ended December 31, 2023 were $207.7 million, or $1.64 adjusted diluted earnings per share, compared to $298.8 million, or $2.40 adjusted diluted earnings per share, in 2022. See GAAP Reconciliation of Non-GAAP Financial Measures for additional discussion and reconciliations of non-GAAP measures.
Table 7: Loan Portfolio Years Ended December 31, (In thousands) 2022 2021 2020 2019 2018 Consumer: Credit cards $ 196,928 $ 187,052 $ 188,845 $ 204,802 $ 204,173 Other consumer 152,882 168,318 202,379 249,694 215,763 Total consumer 349,810 355,370 391,224 454,496 419,936 Real Estate: Construction and development 2,566,649 1,326,371 1,596,255 2,236,861 1,736,817 Single family residential 2,546,115 2,101,975 1,880,673 2,442,064 1,994,716 Other commercial 7,468,498 5,738,904 5,746,863 6,205,599 5,073,994 Total real estate 12,581,262 9,167,250 9,223,791 10,884,524 8,805,527 Commercial: Commercial 2,632,290 1,992,043 2,574,386 2,495,516 2,192,497 Agricultural 205,623 168,717 175,905 315,454 166,225 Total commercial 2,837,913 2,160,760 2,750,291 2,810,970 2,358,722 Other 373,139 329,123 535,591 275,714 139,081 Total loans before allowance for credit losses $ 16,142,124 $ 12,012,503 $ 12,900,897 $ 14,425,704 $ 11,723,266 Table 8 reflects the remaining maturities and interest rate sensitivity of loans at December 31, 2022.
Table 7: Loan Portfolio Years Ended December 31, (In thousands) 2023 2022 2021 2020 2019 Consumer: Credit cards $ 191,204 $ 196,928 $ 187,052 $ 188,845 $ 204,802 Other consumer 127,462 152,882 168,318 202,379 249,694 Total consumer 318,666 349,810 355,370 391,224 454,496 Real Estate: Construction and development 3,144,220 2,566,649 1,326,371 1,596,255 2,236,861 Single family residential 2,641,556 2,546,115 2,101,975 1,880,673 2,442,064 Other commercial 7,552,410 7,468,498 5,738,904 5,746,863 6,205,599 Total real estate 13,338,186 12,581,262 9,167,250 9,223,791 10,884,524 Commercial: Commercial 2,490,176 2,632,290 1,992,043 2,574,386 2,495,516 Agricultural 232,710 205,623 168,717 175,905 315,454 Total commercial 2,722,886 2,837,913 2,160,760 2,750,291 2,810,970 Other 465,932 373,139 329,123 535,591 275,714 Total loans before allowance for credit losses $ 16,845,670 $ 16,142,124 $ 12,012,503 $ 12,900,897 $ 14,425,704 Table 8 reflects the remaining maturities and interest rate sensitivity of loans at December 31, 2023.
A summary of information related to our FHLB short-term advances, including FOTO advances, is presented in Table 16.
A summary of information related to our FHLB short-term advances, consisting of fixed rate, fixed term advances, is presented in Table 16.
We had $46,000 of gross realized gains and $324,000 of gross realized losses from the call of securities during the year ended December 31, 2022, compared to $15.9 million of gross realized gains and $422,000 of gross realized losses from the sale of securities during the year ended December 31, 2021.
We had no gross realized gains and $20.6 million of gross realized losses from the sale of securities during the year ended December 31, 2023, compared to $46,000 of gross realized gains and $324,000 of gross realized losses from the call of securities during the year ended December 31, 2022.
As of December 31, 2022, the related remaining net unrealized losses of $147.0 million and net unrealized gains of $690,000, respectively, in accumulated other comprehensive income (loss) will be amortized over the remaining life of the securities. No gains or losses on these securities were recognized at the time of transfer.
As of December 31, 2023, the related remaining combined net unrealized losses of $126.4 million in accumulated other comprehensive income (loss) will be amortized over the remaining life of the securities. No gains or losses on these securities were recognized at the time of transfer.
Treasury $ — $ 2,257 $ — $ — $ — $ 2,257 $ 2,300 $ 2,197 U.S.
Treasury $ 2,257 $ — $ — $ (60) $ 2,197 U.S.
As of December 31, 2022, our liquidity is solid, and our capital is strong. 36 In our discussion and analysis of our financial condition and results of operation in this Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we provide certain financial information determined by methods other than in accordance with US GAAP.
In our discussion and analysis of our financial condition and results of operation in this Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we provide certain financial information determined by methods other than in accordance with US GAAP.
Stock-Based Compensation Plans We have adopted various stock-based compensation plans. The plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and performance stock units.
The plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock units, and stock awards.
Other Borrowings and Subordinated Debentures Our total debt was $1.23 billion and $1.72 billion at December 31, 2022 and 2021, respectively. The outstanding balance for December 31, 2022 includes $835.0 million in FHLB short-term advances; $366.0 million in subordinated notes and unamortized debt issuance costs; and $20.8 million of other long-term debt.
Other Borrowings and Subordinated Debentures Our total debt was $1.34 billion and $1.23 billion at December 31, 2023 and 2022, respectively. The outstanding balance for December 31, 2023 includes $953.2 million in FHLB advances; $366.1 million in subordinated notes and unamortized debt issuance costs; and $19.1 million of other long-term debt.
Consumer loans consist of credit card loans and other consumer loans. Consumer loans were $349.8 million at December 31, 2022, or 2.2% of total loans, compared to $355.4 million, or 3.0% of total loans at December 31, 2021. The decrease in consumer loans was primarily due to loan payoffs and pay downs during the year.
Consumer loans consist of credit card loans and other consumer loans. Consumer loans were $318.7 million at December 31, 2023, or 1.9% of total loans, compared to $349.8 million, or 2.2% of total loans at December 31, 2022. The decrease in consumer loans was primarily due to loan payoffs and pay downs within the other consumer portfolio during the year.
Noninterest income for 2022 decreased $21.7 million, or 11.3%, from 2021. Included in 2022 results were $4.3 million of certain items, primarily made up of a $4.1 million gain on an insurance settlement related to a weather event that caused severe damage to one of our branch locations.
Included in 2022 results were $4.0 million of certain items, primarily made up of a $4.1 million gain on an insurance settlement related to a weather event that caused severe damage to one of our branch locations.
Our capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. 57 Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined).
Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined).
Table 14: Average Deposit Balances and Rates December 31, 2022 2021 2020 (In thousands) Average Amount Average Rate Paid Average Amount Average Rate Paid Average Amount Average Rate Paid Noninterest bearing transaction accounts $ 5,827,160 — % $ 4,836,839 — % $ 4,225,618 — % Interest bearing transaction and savings deposits 12,253,164 0.51 % 10,638,665 0.18 % 9,128,936 0.42 % Time deposits 3,094,747 1.16 % 2,804,851 0.77 % 3,006,768 1.38 % Total $ 21,175,071 0.47 % $ 18,280,355 0.23 % $ 16,361,322 0.49 % Our maturities of time deposits not covered by deposit insurance at December 31, 2022 are presented in Table 15.
Table 14: Average Deposit Balances and Rates December 31, 2023 2022 2021 (In thousands) Average Amount Average Rate Paid Average Amount Average Rate Paid Average Amount Average Rate Paid Noninterest bearing transaction accounts $ 5,201,384 — % $ 5,827,160 — % $ 4,836,839 — % Interest bearing transaction and savings deposits 11,033,263 2.17 % 12,253,164 0.51 % 10,638,665 0.18 % Time deposits 6,038,640 3.87 % 3,094,747 1.16 % 2,804,851 0.77 % Total $ 22,273,287 2.12 % $ 21,175,071 0.47 % $ 18,280,355 0.23 % Our maturities of time deposits not covered by deposit insurance at December 31, 2023 are presented in Table 15.
Interest expense increased $52.1 million due to the increase in rate of 34 basis points on interest-bearing deposit accounts and increased $5.8 million due to the increase in deposit volume over the period. Additionally, interest expense increased $8.4 million due to the increase in rate of 71 basis points on other borrowings.
Interest expense increased $323.4 million due to the increase in rate of 212 basis points on interest-bearing deposit accounts and increased $50.5 million due to the increase in deposit volume over the period. Additionally, interest expense increased $35.3 million due to the increase in rate of 302 basis points on other borrowings.
Paralleling the federal funds rate, multiple increases by the Federal Reserve during 2022 increased the prime rate to 7.50% as of the end of 2022. Markets continue to anticipate more gradual rate increases by the Federal Reserve during 2023.
Paralleling the federal funds rate, multiple increases by the Federal Reserve during 2022 and 2023 increased the prime rate to 8.50% as of the end of 2023. Markets anticipate potential rate cuts by the Federal Reserve during 2024.
Table 1: Analysis of Net Interest Margin (FTE = Fully Taxable Equivalent using an effective tax rate of 26.135%) Years Ended December 31, (In thousands) 2022 2021 2020 Interest income $ 861,735 $ 671,061 $ 759,718 FTE adjustment 24,671 19,231 11,001 Interest income - FTE 886,406 690,292 770,719 Interest expense 144,419 79,529 119,984 Net interest income - FTE $ 741,987 $ 610,763 $ 650,735 Yield on earning assets - FTE 3.79 % 3.27 % 4.00 % Cost of interest bearing liabilities 0.84 % 0.52 % 0.84 % Net interest spread - FTE 2.95 % 2.75 % 3.16 % Net interest margin - FTE 3.17 % 2.89 % 3.38 % Table 2: Changes in Fully Taxable Equivalent Net Interest Margin (In thousands) 2022 vs. 2021 2021 vs. 2020 Increase (decrease) due to change in earning assets $ 147,423 $ (40,169) Increase (decrease) due to change in earning asset yields 48,691 (40,258) Decrease due to change in interest bearing liabilities (3,274) (2,191) Increase (decrease) due to change in interest rates paid on interest bearing liabilities (61,616) 42,646 Increase (decrease) in net interest income $ 131,224 $ (39,972) Table 3 shows, for each major category of earning assets and interest bearing liabilities, the average (computed on a daily basis) amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for each of the years in the three-year period ended December 31, 2022.
Table 1: Analysis of Net Interest Margin (FTE = Fully Taxable Equivalent using an effective tax rate of 26.135%) Years Ended December 31, (In thousands) 2023 2022 2021 Interest income $ 1,210,161 $ 861,735 $ 671,061 FTE adjustment 25,443 24,671 19,231 Interest income - FTE 1,235,604 886,406 690,292 Interest expense 560,035 144,419 79,529 Net interest income - FTE $ 675,569 $ 741,987 $ 610,763 Yield on earning assets - FTE 5.09 % 3.79 % 3.27 % Cost of interest bearing liabilities 2.99 % 0.84 % 0.52 % Net interest spread - FTE 2.10 % 2.95 % 2.75 % Net interest margin - FTE 2.78 % 3.17 % 2.89 % Table 2: Changes in Fully Taxable Equivalent Net Interest Margin (In thousands) 2023 vs. 2022 2022 vs. 2021 Increase due to change in earning assets $ 93,320 $ 147,423 Increase due to change in earning asset yields 255,878 48,691 Decrease due to change in interest bearing liabilities (48,716) (3,274) Decrease due to change in interest rates paid on interest bearing liabilities (366,900) (61,616) (Decrease) increase in net interest income $ (66,418) $ 131,224 Table 3 shows, for each major category of earning assets and interest bearing liabilities, the average (computed on a daily basis) amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for each of the years in the three-year period ended December 31, 2023.
The Notes will mature on April 1, 2028 and will be subordinated in right of payment to the payment of our other existing and future senior indebtedness, including all our general creditors.
The Notes will mature on April 1, 2028 and are subordinated in right of payment to the payment of our other existing and future senior indebtedness, including all our general creditors. The Notes are obligations of the Company only and are not obligations of, and are not guaranteed by, any of its subsidiaries.
Over the course of 2023, we anticipate pressure on our margin due to several factors. We saw strong organic loan growth during 2022, but our loan pipeline experienced decreased volume throughout the year. We expect modest organic loan growth during 2023 in the higher interest rate environment.
Over the course of 2024, we anticipate moderating pressure on our margin due to several factors. We saw moderate organic loan growth during 2023, but our loan pipeline experienced decreased volume throughout the year.
The prime interest rate remained flat until it began to decrease in July 2019 and was eventually reduced to 4.75% in October 2019. Similarly to the reduction in the federal funds rate, the prime rate was cut to 3.25% in mid-March of 2020 in response to the COVID-19 pandemic and remained unchanged throughout 2021 and into early 2022.
Similarly to the reduction in the federal funds rate, the prime rate was cut to 3.25% in mid-March of 2020 in response to the COVID-19 pandemic and remained unchanged throughout 2021 and into early 2022.
The provision for credit loss expense during 2022 was impacted by several factors throughout the year, including a $33.8 million Day 2 provision expense required for loans and unfunded commitments related to the Spirit acquisition, and an expense of $16.0 million related to the overall increase in unfunded commitments during the year, primarily made up of commercial construction loans, which receive a higher reserve allocation than other loans.
Additionally, provision expense related to AFS and HTM securities recorded during the twelve months ended December 31, 2023 was $9.1 million and $1.8 million, respectively, primarily due to decreases in the value of select corporate bonds in the investment securities portfolio. 43 The provision for credit loss expense during 2022 was impacted by several factors throughout the year, including a $33.8 million Day 2 provision expense required for loans and unfunded commitments related to the Spirit acquisition, and an expense of $16.0 million related to the overall increase in unfunded commitments during the year, primarily made up of commercial construction loans, which receive a higher reserve allocation than other loans.
During 2021, adjusted items consisted of $22.7 million of Day 2 provision expense required for loans related to the Landmark and Triumph acquisitions, $15.9 million of merger-related costs, related to the Landmark and Triumph acquisitions and net branch right sizing gains of $0.9 million, primarily due to branch closures across our footprint during the year.
During 2021, adjusted items primarily consisted of $22.7 million of Day 2 provision expense required for loans related to the Landmark and Triumph acquisitions, $15.9 million of merger-related costs, related to the Landmark and Triumph acquisitions and $15.5 million of gains related to the sale of securities.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

… 206 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+2 added−0 removed22 unchanged
Biggest changeAs of December 31, 2022, the model simulations projected that 100 and 200 basis point increases in interest rates would result in a positive variance in net interest income of 1.59% and 3.14%, respectively, relative to the base case over the next 12 months, while decreases in interest rates of 100 basis points would result in a negative variance in net interest income of 1.13% relative to the base case over the next 12 months.
Biggest changeAs of December 31, 2023, the model simulations projected that 100 and 200 basis point increases in interest rates would result in negative variances in net interest income of 2.72% and 5.57%, respectively, relative to the base case over the next 12 months.
Since these correlations are based on competitive and market conditions, we anticipate that our future results will likely be different from the foregoing estimates, and such differences could be material. The table below presents our sensitivity to net interest income at December 31, 2022.
Since these correlations are based on competitive and market conditions, we anticipate that our future results will likely be different from the foregoing estimates, and such differences could be material. The table below presents our sensitivity to net interest income at December 31, 2023.
We also use securities held in the securities portfolio to pledge when obtaining public funds. 64 Sixth, we have a network of downstream correspondent banks from which we can access debt to meet liquidity needs. Finally, we have the ability to access funds through the Federal Reserve Bank Discount Window.
We also use securities held in the securities portfolio to pledge when obtaining public funds. 66 Sixth, we have a network of downstream correspondent banks from which we can access debt to meet liquidity needs. Finally, we have the ability to access funds through the Federal Reserve Bank Discount Window.
The Bank has approximat ely $520.0 million in f ederal funds lines of credit from upstream correspondent banks that can be accessed, when needed. In order to ensure availability of these upstream funds we test these borrowing lines at least annually.
As of December 31, 2023, the Bank had approximat ely $510.0 million in f ederal funds lines of credit from upstream correspondent banks that can be accessed, when needed. In order to ensure availability of these upstream funds we test these borrowing lines at least annually.
Fifth, we use a laddered investment portfolio that ensures there is a steady source of intermediate term liquidity. These funds can be used to meet seasonal loan patterns and other intermediate term balance sheet fluctuations. Approximately 50.6% of the investment portfolio is classified as available-for-sale.
Fifth, we use a laddered investment portfolio that ensures there is a steady source of intermediate term liquidity. These funds can be used to meet seasonal loan patterns and other intermediate term balance sheet fluctuations. Approximately 45.8% of the investment portfolio is classified as available-for-sale, and we may generate additional liquidity through opportunistic sales of investment securities.
At December 31, 2022, undivided profits of Simmons Bank were approximately $648.1 million, of which approximately $114.0 million was available for the payment of dividends to the Company without regulatory approval. In addition to dividends, other sources of liquidity for the Company are the sale of equity securities and the borrowing of funds.
At December 31, 2023, undivided profits of Simmons Bank were approximately $622.9 million, of which approximately $54.4 million was available for the payment of dividends to the Company without regulatory approval. In addition to dividends, other sources of liquidity for the Company are the sale of equity securities and the borrowing of funds.
Table 23: Net Interest Income Sensitivity Interest Rate Scenario % Change from Base Up 300 basis points 4.46 % Up 200 basis points 3.14 % Up 100 basis points 1.59 % Down 100 basis points (1.13) % Down 200 basis points (3.50) % Down 300 basis points (5.39) % 65
Table 24: Net Interest Income Sensitivity Interest Rate Scenario % Change from Base Up 200 basis points (5.57) % Up 100 basis points (2.72) % Down 100 basis points 2.18 % Down 200 basis points 5.36 % 67
Added
Interest rate decreases of 100 and 200 basis points would result in positive variances in net interest income of 2.18% and 5.36%, respectively, relative to the base case over the next 12 months.
Added
These results reflect a liability-sensitive balance sheet and are consistent with the Company’s shift toward short-term funding combined with relatively little change in the mix of interest-earning assets.

Other SFNC 10-K year-over-year comparisons