Simmons First reports 40% adjusted PPNR growth, stable 3.84% NIM, and efficiency gains

Simmons First National Corporation disclosed second quarter 2026 results showing adjusted pre-provision net revenue (PPNR) up 40% year-over-year to $108.2 million, driven by balanced revenue growth including an 8% increase in noninterest income. The adjusted efficiency ratio improved 190 basis points on a linked-quarter basis to 54.26%. Net charge-offs were 20 basis points, and the allowance for credit losses ratio stood at 1.32%. Net interest margin remained stable at 3.84% with deposit costs declining 3 basis points.

Total loans grew 3% on an annualized linked-quarter basis and 7% annualized in the first half of 2026, reaching $18.1 billion. Noninterest bearing deposits increased 6% annualized on a linked-quarter basis. The company reported its largest quarterly committed loan production in almost four years with $1.8 billion in commitments, driving an 8% linked-quarter increase in unfunded commitments.

Credit quality metrics showed improvement with loans past due 30-89 days declining 22 basis points on a linked-quarter basis. Classified and criticized loans continued favorable migration trends, with classified loans dropping to 2% of total loans and criticized loans falling below 3% of total loans, the lowest level in the last 10 quarters. The linked-quarter increase in nonperforming loans reflects a single 1-4 family real estate construction relationship previously disclosed in the first quarter of 2026.

The company executed efficiency initiatives including eliminating 39 positions with $1.3 million in severance costs and exiting or optimizing four corporate/branch locations, reducing real estate footprint by approximately 53,000 square feet (2.1% of total). These actions resulted in $6.1 million in one-time costs with an estimated earnback period of less than one year. Total square footage has been reduced by approximately 8.6% since the beginning of 2025.

Simmons First repurchased approximately $14.2 million of shares during the second quarter of 2026 (approximately 0.7 million shares at an average price of $21.52). The Common Equity Tier 1 (CET1) capital ratio stood at 11.60%, up 2 basis points. The company has approximately $161 million remaining under its 2026 share repurchase authorization.

Simmons reported second quarter 2026 net income of $66.7 million, or $0.46 per diluted share, down slightly from $68.5 million ($0.47 per share) in the prior quarter but up from $54.8 million ($0.43 per share) in the year-ago quarter. Return on average assets was 1.09 percent and return on average common equity was 7.69 percent. Adjusted metrics (excluding branch/real estate rightsizing costs, severance, and other items) showed adjusted net income of $72.2 million, adjusted diluted EPS of $0.50, adjusted ROAA of 1.17 percent, and adjusted return on average tangible common equity of 14.37 percent.

The company's net interest margin held steady at 3.84 percent in the second quarter, unchanged from the prior quarter and up 78 basis points year-over-year. The cost of deposits declined 3 basis points to 1.93 percent, reflecting disciplined deposit pricing. Net interest income increased $3.5 million (7 percent annualized) from the prior quarter to $200.6 million, driven by a $7.0 million increase in loan interest income.

Total loans grew $129.5 million (3 percent annualized) to $18.1 billion, driven by increases in agricultural, commercial real estate, and consumer portfolios. Committed loan production of $1.8 billion was the highest quarterly level in almost four years. Unfunded loan commitments rose 8 percent to $4.4 billion, and the commercial loan pipeline totaled $1.4 billion with ready-to-close loans of $374 million at a weighted average rate of 6.73 percent.

Net charge-offs were 20 basis points of average loans, down from 21 basis points in the prior quarter. Provision for credit losses on loans totaled $17.4 million, exceeding net charge-offs by $8.3 million. Nonperforming loans increased to $166.0 million from $141.9 million, primarily due to the full migration of a single 1-4 family real estate construction relationship previously disclosed. The allowance for credit losses rose to 1.32 percent of total loans from 1.28 percent, and the nonperforming loan coverage ratio was 143 percent.

Noninterest expense totaled $147.7 million, including $7.4 million of branch/real estate rightsizing costs ($6.1 million) and severance/early retirement program costs ($1.3 million). Adjusted noninterest expense was $140.3 million. The company eliminated certain positions and reduced its real estate footprint through square footage reductions. The adjusted efficiency ratio improved to 54.26 percent from 56.16 percent in the prior quarter. Management stated these efficiency initiatives more than funded investments in the business.