8-K: Simmons First National Reports Strong Q4 2025 Earnings

Simmons First National Corporation announced fourth quarter 2025 net income of $78.1 million and diluted EPS of $0.54, exceeding expectations driven by balance sheet repositioning and strategic execution.

Summary

• Net income for the fourth quarter of 2025 was $78.1 million, with diluted earnings per share (EPS) of $0.54, a significant recovery from a net loss of $562.8 million and $(4.00) EPS in the third quarter of 2025.
• Adjusted net income was $79.0 million and adjusted diluted EPS was $0.54 for 4Q25.
• Net interest margin (FTE) increased by 31 basis points linked-quarter to 3.81%, reflecting the full impact of the third-quarter balance sheet repositioning.
• Adjusted pre-provision net revenue (PPNR) increased 19% linked-quarter to $110.4 million.
• The adjusted efficiency ratio improved by 408 basis points linked-quarter to 53.64%.
• Total loans grew 7% on an annualized basis to $17.5 billion, driven by increases in real estate, commercial, and consumer & other portfolios.
• Customer deposits increased 8% annualized, contributing to a 21 basis point decrease in the cost of deposits.
• The nonperforming loan (NPL) ratio decreased 26 basis points to 0.64%, and the nonperforming loan coverage ratio improved to 199%.
• Net charge-offs (NCOs) were 1.12% of average loans, including $28.2 million related to two previously disclosed credit relationships and $6.2 million from the sale of a run-off portfolio.
• The allowance for credit losses (ACL) ratio ended the quarter at 1.28%, which is near the top-end of the modeled range.
• The company redeemed $330 million principal amount of its Fixed-to-Floating Rate Subordinated Notes due 2028 on October 1, 2025.
• Capital ratios, including Common Equity Tier 1 (CET1) ratio of 11.63% and Total Risk-Based Capital ratio of 14.45%, continue to significantly exceed well-capitalized regulatory guidelines.

Sentiment

Score: 8

Explanation: The company reported strong financial results for Q4 2025, significantly recovering from a prior quarter loss, with improved net interest margin, efficiency, loan and deposit growth, and strong capital ratios. While net charge-offs increased, they were related to previously disclosed issues and managed with appropriate reserves. The outlook for 2026 is positive with expected growth and operating leverage.

Positives

• Net income of $78.1 million and diluted EPS of $0.54 for 4Q25 represent a substantial turnaround from a net loss of $562.8 million and $(4.00) EPS in 3Q25.
• Net interest margin (FTE) expanded significantly, up 31 basis points linked-quarter to 3.81% and 94 basis points year-over-year.
• Adjusted pre-provision net revenue (PPNR) increased 19% linked-quarter to $110.4 million, demonstrating strong operational leverage.
• The adjusted efficiency ratio improved by 408 basis points linked-quarter to 53.64%, indicating effective expense management.
• Total loans grew 7% on an annualized basis to $17.5 billion, reflecting solid balance sheet growth.
• Customer deposits increased 8% annualized, and the cost of deposits decreased by 21 basis points, improving funding costs.
• The nonperforming loan (NPL) ratio decreased 26 basis points to 0.64%, and the nonperforming loan coverage ratio improved to 199%, signaling improving credit quality.
• All applicable regulatory capital ratios for Simmons and Simmons Bank significantly exceed well-capitalized guidelines.
• The company successfully redeemed $330 million of subordinated debt due 2028, strengthening its capital structure.

Negatives

• The net charge-off ratio (NCO ratio) increased to 1.12% in 4Q25 from 0.25% in 3Q25, primarily due to charge-offs related to two previously disclosed credit relationships ($28.2 million) and a run-off portfolio sale ($6.2 million).
• The allowance for credit losses to loans (ACL ratio) decreased to 1.28% from 1.50% in 3Q25, mainly due to the utilization of specific reserves.
• Total deposits decreased year-over-year from $21.886 billion in 4Q24 to $20.184 billion in 4Q25, reflecting a strategic reduction of higher-rate, non-relationship wholesale and public fund deposits.
• Book value per share ($23.62) and tangible book value per share ($13.91) declined year-over-year, primarily due to an increase in outstanding shares from a public offering and the impacts of the balance sheet repositioning.

Risks

• Changes in economic conditions, credit quality, interest rates, and related governmental policies.
• The effects of a government shutdown, changes in loan demand, deposit flows, and real estate values.
• Changes in the securities markets generally or the price of Simmons common stock specifically.
• Changes in information technology affecting the financial industry, and changes in customer behaviors, including consumer spending, borrowing, and saving habits.
• Changes in tariff policies; general economic and market conditions; changes in governmental administrations.
• Market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises, war and other military conflicts (including the ongoing military conflicts in the Middle East and between Russia and Ukraine) or other major events, or the prospect of these events.
• The soundness of other financial institutions and any indirect exposure related to the closings of other financial institutions and their impact on the broader market.
• Increased inflation; the loss of key employees; increased competition in the markets in which the Company operates and from non-bank financial institutions.
• Claims, damages, and fines related to litigation or government actions.
• Changes in accounting principles relating to loan loss recognition (current expected credit losses, or CECL).
• Fraud that results in material losses or that has not been discovered yet that may result in material losses.
• The Company's ability to manage and successfully integrate its mergers and acquisitions and to fully realize cost savings and other benefits associated with acquisitions.
• Increased delinquency and foreclosure rates on commercial real estate loans; significant increases in nonaccrual loan balances.
• Cyber or other information technology threats, attacks or events; reliance on third parties for key services.
• Government legislation.
• There can be no guarantee that the board of directors will approve a quarterly dividend in future quarters, and the timing, payment, and amount of future dividends (if any) is subject to, among other things, the discretion of the Board and may differ significantly from past dividends.

Future Outlook

The 2026 outlook projects low to mid-single-digit growth in total loans and customer deposits, with net interest income expected to increase by 9-11%. Adjusted noninterest income is anticipated to remain stable, while adjusted noninterest expense is projected to rise by 2-3%. The company expects net charge-offs to be around 25 basis points and an effective tax rate of approximately 20%, aiming for positive operating leverage of 5% or more.

Management Comments

• "Our results for the fourth quarter exceeded expectations across the board, reflecting the positive results of the balance sheet repositioning transactions in the third quarter as well as disciplined execution of our strategy." Jay Brogdon, Simmons President and CEO.
• "These results included strong revenue growth – notably with net interest margin expansion of 31 basis points to 3.81 percent – and continued expense discipline that resulted in a 19 percent linked-quarter increase in adjusted PPNR." Jay Brogdon.
• "Adjusted ROAA was 1.29 percent, and our adjusted efficiency ratio improved to 53.6 percent." Jay Brogdon.
• "Balance sheet growth was solid as total loans increased 7 percent on an annualized basis and customer deposits increased 8 percent annualized." Jay Brogdon.
• "Our strong top-line performance in the quarter was coupled with improving credit quality and capital metrics." Jay Brogdon.
• "Nonperforming loans decreased 26 basis points to 0.64 percent of total loans with the charge-offs of two previously disclosed credit relationships and the sale of a run-off portfolio." Jay Brogdon.
• "We performed a deep dive analysis of nonperforming loans and took aggressive action to improve the loss content of the portfolio. Our reserves on these relationships were appropriate, and the ACL ended the quarter at 1.28 percent and is near the top-end of our modeled range." Jay Brogdon.
• "As we enter 2026, our commitment to delivering profitable growth and efficient scale positions us well for the future. We are confident in our ability to build on our momentum, driving value for our customers and associates and generating attractive returns for our shareholders." Jay Brogdon.

Industry Context

The banking sector continues to navigate a dynamic interest rate environment, with Simmons First National Corporation demonstrating effective balance sheet management through its repositioning strategy. The increase in net interest margin and decrease in cost of deposits suggest a successful adaptation to market conditions, outperforming some peers struggling with deposit retention and margin compression. The focus on customer deposit growth and reduction of wholesale funding aligns with broader industry efforts to strengthen funding profiles amidst competitive pressures.

Comparison to Industry Standards

• Simmons Bank was recognized by Newsweek as one of Americas Best Regional Banks and Credit Unions 2026.
• Forbes recognized Simmons Bank as one of Americas Best-In-State Companies 2026.
• In 2025, Newsweek recognized Simmons Bank as one of Americas Greatest Workplaces 2025 in Arkansas and one of Americas Best Regional Banks 2025.
• U.S. News & World Report recognized Simmons Bank as one of the 2024-2025 Best Companies to Work For in the South.
• The company's capital ratios (CET1, Tier 1 Leverage, Total Risk-Based Capital) significantly exceed well-capitalized regulatory guidelines, indicating strong financial health relative to regulatory benchmarks.

Stakeholder Impact

• Shareholders: Positive impact due to strong earnings recovery, increased EPS, improved ROAA and ROTCE, and continued dividend payments (116 consecutive years). Potential for future share repurchases.
• Customers: Focus on customer deposit growth and comprehensive financial solutions.
• Employees: Recognized as a great workplace by Newsweek and U.S. News & World Report.

Next Steps

• Management will conduct a live conference call on January 21, 2026, to review the information.
• Continue disciplined execution of the strategic plan to deliver profitable growth and efficient scale.
• Build on momentum, driving value for customers and associates and generating attractive returns for shareholders.
• Focus on optimizing deposit balances and proactively managing costs.
• Maintain a strong capital position.
• Decisions regarding additional, future stock repurchases will be driven by market conditions and capital needs.

Key Dates

Recommendation

The company demonstrated a significant turnaround in Q4 2025, moving from a substantial loss to strong profitability, driven by successful balance sheet repositioning and strategic execution. Key metrics like net interest margin, adjusted PPNR, and efficiency ratio showed substantial improvement. While net charge-offs increased, they were largely anticipated and managed. The company maintains robust capital ratios and has a positive outlook for 2026, projecting continued growth and operating leverage. This strong performance, coupled with a clear strategic direction and commitment to shareholder value, makes it a compelling 'strong buy' for investors.

Keywords

banking, financial services, regional bank, net interest margin, earnings per share, loan growth, deposit growth, credit quality, nonperforming loans, capital ratios, balance sheet repositioning, subordinated debt, share repurchase, Simmons First National Corporation