Simmons First National Corporation Reports Mixed Q3 Results, Decline in Profitability Amid Increased Credit Risk

Simmons First National Corporation reported its financial results for the third quarter and the nine months ended September 30, 2024, highlighting a mixed performance in revenue, profitability, and strategic developments compared to the previous fiscal period.

For the three months ended September 30, 2024, the company recorded net income of $24.7 million, or $0.20 per diluted share, a significant decrease from $47.2 million, or $0.38 per diluted share, in the same period of 2023. For the nine months, net income was $104.4 million, down from $151.2 million in the prior year. The decline in profitability was attributed to a substantial loss on the sale of securities amounting to $28.4 million during the third quarter.

Interest income for the third quarter increased to $334.3 million from $310.3 million year-over-year, driven by a rise in loan volume and yield. However, total interest expense also rose significantly, reaching $176.6 million compared to $156.9 million in the prior year, leading to a net interest income of $157.7 million, slightly up from $153.4 million. The net interest margin for the quarter was 2.74%, reflecting a modest increase from the previous quarter but a decrease from 2.69% in the same quarter last year.

Total loans increased to $17.34 billion as of September 30, 2024, up from $16.85 billion at the end of 2023, with notable growth in commercial loans and single-family residential loans. However, consumer loans decreased, reflecting a strategic shift in the loan portfolio. The company reported a rise in non-performing loans to $101.7 million, up from $84.5 million at the end of 2023, indicating increased credit risk.

Total deposits decreased to $21.94 billion from $22.24 billion at year-end 2023, with a notable increase in brokered deposits. The company’s capital position remained strong, with total stockholders' equity rising to $3.53 billion, and a common equity to total assets ratio of 12.94%.

Strategically, Simmons First National Corporation continues to focus on managing credit risk through diversification and regular loan reviews. The company has also implemented a stock repurchase program, although no shares were repurchased during the reported periods. The allowance for credit losses increased to $233.2 million, reflecting the company's proactive approach to potential credit losses amid changing economic conditions.

Overall, while Simmons First National Corporation experienced growth in loans and interest income, challenges in profitability and increased non-performing assets highlight the need for continued vigilance in credit risk management and strategic financial planning.