10-K: Simmons First National Reports $397.6M Loss Amid Strategic Repositioning

Simmons First National Corporation reported a net loss of $397.6 million for 2025, driven by a strategic balance sheet repositioning that included a significant securities sale loss, despite achieving strong adjusted earnings and capital ratios.

Summary

• Simmons First National Corporation reported a net loss of $397.6 million, or $(2.95) diluted earnings per share, for the year ended December 31, 2025, compared to a net income of $152.7 million, or $1.21 diluted earnings per share, in 2024.
• The net loss was primarily due to a $625.6 million after-tax realized loss from the sale of approximately $3.16 billion in amortized cost basis of available-for-sale (AFS) securities as part of a balance sheet repositioning.
• Adjusted earnings for 2025 were $233.1 million, or $1.73 adjusted diluted earnings per share, an increase from $177.9 million, or $1.41 adjusted diluted earnings per share, in 2024.
• The company raised $327.4 million in equity capital through a public offering of 18,653,000 shares of Class A common stock at $18.50 per share.
• Net interest income on a fully taxable equivalent basis increased by $84.5 million, or 12.9%, to $738.7 million in 2025, with the net interest margin expanding by 58 basis points to 3.32%.
• Total consolidated assets were $24.54 billion, total loans were $17.49 billion, total deposits were $20.18 billion, and equity capital was $3.42 billion as of December 31, 2025.
• Total loans increased by $486.2 million, or 2.9%, from December 31, 2024, driven by widespread loan growth across geographic markets.
• Total deposits decreased by $1.70 billion to $20.18 billion, primarily due to the pay-down of higher-rate, non-relationship wholesale and public fund deposits following the securities sale.
• Capital levels remained strong, with all regulatory capital ratios significantly above well-capitalized guidelines, including a Common Equity Tier 1 (CET1) ratio of 11.63% and a Tier 1 leverage ratio of 10.06%.
• Nonperforming loans increased slightly to $112.7 million, and the allowance for credit losses as a percent of total loans was 1.28%, with a nonperforming loan coverage ratio of 199%.
• The provision for credit losses increased to $65.8 million in 2025, including $15.6 million related to two specific credit relationships that migrated to nonperforming status and were subsequently charged off.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed but strategically challenging year. While the company undertook necessary balance sheet repositioning, the significant one-time loss and increased credit provisions weigh heavily, despite strong underlying capital and adjusted earnings. The long-term benefits of the repositioning are yet to be fully realized.

Positives

• Adjusted earnings for 2025 increased to $233.1 million, or $1.73 adjusted diluted earnings per share, from $177.9 million, or $1.41 adjusted diluted earnings per share, in 2024.
• Net interest income on a fully taxable equivalent basis increased by 12.9% to $738.7 million in 2025.
• Net interest margin on a fully taxable equivalent basis expanded by 58 basis points to 3.32% for 2025.
• Capital levels remained strong, with all regulatory capital ratios significantly above well-capitalized guidelines (CET1 ratio of 11.63%, Tier 1 leverage ratio of 10.06%, and Total risk-based capital ratio of 14.45%).
• The loan to deposit ratio improved to 87% as of December 31, 2025, from 78% in 2024.
• Additional liquidity sources available totaled $9.32 billion, providing a 2.0x coverage ratio for uninsured, non-collateralized deposits.
• Total loans increased by 2.9% to $17.49 billion, reflecting widespread organic growth.
• The commercial loan pipeline increased to $1.54 billion at year-end 2025, from $1.26 billion in 2024.
• Annualized net credit card charge-offs to average total credit card loans were 2.95%, which is 97 basis points better than the most recently published industry average.
• Cash dividends on common stock increased to $0.85 per share for 2025, up from $0.84 per share in 2024.

Negatives

• Reported a net loss of $397.6 million for the year ended December 31, 2025, compared to net income in the prior year.
• Incurred a significant after-tax realized loss of $625.6 million from the sale of investment securities as part of a balance sheet repositioning.
• Total deposits decreased by $1.70 billion to $20.18 billion as of December 31, 2025.
• The provision for credit losses increased to $65.8 million in 2025 from $46.8 million in 2024, partly due to specific credit relationships.
• Two specific credit relationships, totaling $49.3 million, were placed on nonaccrual status and subsequently charged off in 2025.
• Non-performing assets as a percent of total assets increased to 0.51% at December 31, 2025, from 0.45% at December 31, 2024.
• Annualized net charge-offs to total loans increased to 0.47% in 2025, a 25 basis point increase from 2024, primarily due to the charge-offs of the two specific credit relationships.
• Approximately $2.66 billion, or 81.4%, of AFS securities were in an unrealized loss position as of December 31, 2025, primarily due to increases in market interest rates.

Risks

• Changes in interest rates and monetary policy could adversely affect profitability, particularly if interest rates on deposits increase faster than those on loans and investments.
• The cost of funds may increase due to general economic conditions, interest rate fluctuations, and competitive pressures, potentially impacting profitability and liquidity.
• The investment securities portfolio could decline in value due to interest rate changes or changes in issuer credit quality, leading to potential losses.
• A lack of liquidity could impair the ability to fund business operations and adversely affect financial condition and results.
• Inability to maintain a strong core deposit base or access other low-cost funding sources could hinder asset growth and increase funding costs.
• Changes in benchmark rates, such as the transition from LIBOR, could adversely impact business and results of operations due to operational, legal, and compliance risks.
• Lending activities expose the company to credit risks, including potential future changes in collateral values and the risk of non-repayment, which could adversely affect financial condition.
• The allowance for credit losses may be inadequate if management's subjective estimates and predictions regarding credit risks and future market conditions are flawed.
• Significant portions of the loan portfolio in commercial real estate, construction and development, and commercial and industrial loans present heightened lending risks due to their sensitivity to economic conditions and collateral values.
• Reliance on the mortgage secondary market for liquidity exposes the company to risks if agencies limit loan purchases, affecting the ability to originate new mortgage loans.
• Sales of loan portfolios are subject to risks related to representations and warranties, potentially requiring indemnification or repurchases of non-performing loans.
• Loans made through federal programs are dependent on government continuation and compliance with program requirements, with failure potentially leading to loss of guarantees.
• Foreclosure on real estate-secured loans may not realize the full value of the collateral, leading to losses.
• Nonperforming assets take significant time to resolve, adversely affecting net income and increasing loan administration costs.
• Developments impacting the financial services industry, such as bank failures or liquidity concerns, could adversely affect financial performance and liquidity.
• General economic conditions, including inflation, recession, and market disruptions, could adversely affect asset values, loan repayment ability, and overall financial performance.
• Concentration of banking activities in specific states (Arkansas, Kansas, Missouri, Oklahoma, Tennessee, Texas) makes the company vulnerable to adverse local market conditions.
• Strong competition from other banks, financial services companies, and nonbank competitors, including fintechs, could lead to loss of market share and reduced profitability.
• Changes in service delivery channels and emerging technologies, including artificial intelligence, pose competitive risks and may require significant, costly investments.
• Growth and expansion strategies, particularly through acquisitions and de novo branching, may not be successful and could lead to integration difficulties or increased costs.
• The value of goodwill and other intangible assets may decline, necessitating impairment charges.
• Damage to reputation could significantly harm business, affecting customer and employee attraction, credit ratings, and capital market access.
• Fraud risk, including deposit and loan fraud, is increasing and could lead to financial losses, litigation, and reputational harm.
• Inadequate models and estimations used for risk management could lead to significant losses and regulatory scrutiny.
• The risk-management framework may not be effective in mitigating all risks and losses.
• Heavy reliance on third-party service providers exposes the company to risks of non-performance, defective products, or service disruptions.
• Inability to raise additional capital on acceptable terms could materially impair the ability to expand operations.
• Disruptions in information technology systems, facilities, or security breaches (cyber-attacks) could have significant negative impacts, including disclosure of confidential information and financial/legal exposure.
• Dependence on qualified employees and key personnel means inability to attract or retain them could adversely impact competitive position.
• Failure of internal controls, policies, and procedures, or employee non-adherence, could materially affect financial reporting and cause reputational harm.
• Errors or mistakes in service provision or transactions can subject the company to liability and losses.
• Changes in, or interpretations of, tax rules and regulations or tax positions may adversely affect income taxes.
• Accounting standards periodically change, and the application of accounting policies requires subjective estimates that could materially differ from actual results.
• Financial legislative and regulatory initiatives could adversely affect operations by limiting product offerings, increasing costs, or impacting markets.
• Failure to comply with applicable banking laws and regulations could result in significant monetary penalties and restrictions on growth.
• Litigation in the ordinary course of business, including regulatory matters, could result in adverse rulings or substantial legal costs.
• The Federal Reserve Board's source of strength doctrine could require diverting capital to the subsidiary bank, limiting other planned uses like acquisitions or dividends.
• Environmental liabilities may be incurred with respect to properties to which the company takes title.
• Allegations of intellectual property infringement or failure to protect own intellectual property rights could lead to damages or restrictions.
• Holders of subordinated notes have rights senior to common shareholders.
• The company may be unable to, or choose not to, pay dividends on common stock, depending on earnings, financial condition, and regulatory limitations.
• Future sales of additional common stock or preferred stock could dilute equity and adversely affect common stock value.
• Shares of common stock are not insured deposits and may lose value.
• Anti-takeover provisions could negatively impact shareholders by making acquisitions more difficult.
• Management has broad discretion over the use of proceeds from future stock offerings, with no assurance of successful integration of acquired businesses.
• Inability to sustain historical growth rates or expand business due to economic conditions, regulatory considerations, or competition.
• Weather-related events or natural/man-made disasters could disrupt business, damage properties, or impact local economies.

Future Outlook

The company anticipates continued expansion on its net interest margin during 2026, primarily from the full period benefit of the balance sheet repositioning. Modest organic loan growth is cautiously expected in 2026, subject to underlying economic conditions, with a continued focus on soundness, profitability discipline, and growth. Noninterest income is projected to be stable, and incremental increases in noninterest expenses are expected as the company invests in technology and talent, partially funded by cost savings.

Management Comments

• "We are encouraged by our positive momentum, while maintaining solid capital and liquidity positions."
• "We believe the asset quality in our portfolio remains sound and reflects our conservative credit culture, as well as our focus on maintaining disciplined pricing and conservative underwriting standards given the current economic environment."
• "We are cautiously optimistic regarding modest organic loan growth during 2026, subject to the underlying economy, with continued focus on soundness, profitability discipline and growth."

Industry Context

StockSavvy.ai notes that the strategic balance sheet repositioning, while resulting in a significant one-time loss, aligns with broader industry efforts to optimize asset-liability management in a volatile interest rate environment. The focus on organic growth and disciplined underwriting reflects a cautious approach amidst economic uncertainties and increased competition from fintechs and digital-only banks. The decline in brokered deposits and FHLB advances, funded by securities sales, indicates a move towards more stable, lower-cost funding sources, a common goal for regional banks seeking to enhance funding stability and reduce interest expense.

Comparison to Industry Standards

• Annualized net credit card charge-offs to average total credit card loans were 2.95%, which is 97 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks.
• Capital ratios (CET1 11.63%, Tier 1 leverage 10.06%, Total risk-based 14.45%) are significantly above well-capitalized guidelines (CET1 6.5%, Tier 1 leverage 5.0%, Total risk-based 10.0%), indicating a strong capital position compared to regulatory minimums.

Corporate Governance

Legal Proceedings

• The company and its subsidiaries are parties to various legal proceedings incidental to the conduct of business, including breach of contract and lender liability claims.
• Management believes that the ultimate outcome of these proceedings, individually or in aggregate, will not have a material adverse effect on the company's business, consolidated results of operations, financial condition, or cash flows, based on currently available information and legal counsel consultation.

Related Party Transactions

• Extensions of credit to executive officers and directors and their companies totaled $4.5 million at December 31, 2025, down from $5.9 million at December 31, 2024. These loans were made in the ordinary course of business on substantially the same terms as with unrelated persons and did not involve more than the normal risk of collectability.
• An Aircraft Time Sharing Agreement between Simmons First National Corporation and Steve Coss was dated July 1, 2024.
• An Aircraft Time Sharing Agreement between Simmons First National Corporation and George Makris, Jr. was dated December 23, 2025.

Stakeholder Impact

• Shareholders: Experienced a significant net loss and dilution from a stock offering, but also saw an increase in dividends and the authorization of a new stock repurchase program, with strategic actions aimed at long-term value.
• Employees: Affected by early retirement program costs and benefit from the company's focus on attracting, developing, and retaining talent through competitive compensation, benefits, and professional development opportunities.
• Customers: Impacted by changes in deposit pricing and product offerings, with the company emphasizing customer service and relationship building.
• Creditors: Holders of subordinated notes have rights senior to common shareholders. The redemption of older notes and issuance of new ones alters the company's debt structure and capital base.

Next Steps

• Continue to focus on organic growth opportunities in many of the markets entered through previous mergers and acquisitions.
• Evaluate and enhance people, processes, and systems to more effectively and efficiently compete as an organization of its current size and scale.
• Monitor legislative, regulatory, and supervisory developments related to the Corporate Transparency Act (CTA) and Beneficial Ownership Information (BOI) Reporting Rule.
• Continually monitor and look for opportunities to fairly reprice deposits while remaining competitive in the current challenging rate environment.
• Anticipate continued expansion on net interest margin during 2026, primarily related to the full period benefit of the balance sheet repositioning.
• Cautiously optimistic regarding modest organic loan growth during 2026, subject to the underlying economy, with continued focus on soundness, profitability discipline and growth.
• Expect noninterest income to be stable and incremental increases in noninterest expenses as the company continues to focus on improvement initiatives and utilizing cost savings to partially fund targeted investments in technology and talent.
• The Board of Directors anticipates continuing to pay quarterly dividends in amounts determined based on consolidated earnings, financial condition, liquidity, capital requirements, and regulatory policies.
• Management will determine the timing, pricing, and amount of any repurchases under the 2026 stock repurchase program, which is set to terminate on January 31, 2028.

Key Dates

Recommendation

The company undertook a significant balance sheet repositioning that resulted in a substantial one-time net loss, which is a negative. However, this action was strategic, aimed at deleveraging and improving future net interest margin, and was supported by a capital raise. The company maintains strong capital and liquidity positions, and adjusted earnings show growth. The future outlook anticipates margin expansion and modest loan growth. While the immediate financial results are poor, the underlying strategic moves and strong capital base suggest a 'hold' as the company navigates this transition and aims for future profitability.

Keywords

Regional Bank, Financial Holding Company, SEC Filing, 10-K, Balance Sheet Repositioning, Net Loss, Adjusted Earnings, Capital Ratios, Net Interest Margin, Loan Growth, Deposit Trends, Credit Quality, Investment Securities, Subordinated Debt, Stock Repurchase Program, Dividends, Cybersecurity, Regulatory Compliance, Risk Management, Arkansas, Kansas, Missouri, Oklahoma, Tennessee, Texas