Simmons First National (SFNC) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $40.8M ($0.32 diluted EPS), up from $38.9M in Q1 2024 but down from $58.3M in Q2 2023; adjusted Q2 earnings were $41.9M ($0.33 EPS) sequentially higher.

• Net interest margin (NIM) remained stable at 2.69% in Q2 2024, up 3 bps sequentially, with favorable asset repricing and disciplined loan pricing.

• Deposit growth was 1% quarter-over-quarter (4% annualized), but total deposits declined 2% sequentially to $21.8B; deposit costs rose only 4 bps, a marked slowdown.

• Credit quality remained strong, with nonperforming loans at 0.60% of total loans, allowance for credit losses at 1.34%, and net charge-offs at 0.19% annualized.

• Capital and liquidity positions are robust, with CET1 ratio at 12.00%, total risk-based capital at 14.17%, and tangible common equity to tangible assets at 7.84%.

Financial highlights

• Total revenue was $197.2M (adjusted), up 1% from Q1 2024; net interest income was $153.9M, and noninterest income was $43.3M, flat sequentially.

• Noninterest expense was $139.4M, slightly lower than Q1 2024; efficiency ratio improved to 65.7% (adjusted 65.68%).

• Loan portfolio grew to $17.19B, up 1% from Q1 2024, with a loan-to-deposit ratio of 79%.

• Book value per share was $27.56; tangible book value per share was $16.20 as of June 30, 2024.

• Provision for credit losses was $11.1M, exceeding net charge-offs by $3.0M.

Outlook and guidance

• Management expects continued profitable growth, with a focus on risk management, disciplined loan pricing, and organic growth amid economic and rate uncertainty.

• NIM is expected to remain stable, with favorable asset repricing and a liability-sensitive balance sheet positioning for a rates-down environment.

• Asset quality is expected to remain strong, with conservative underwriting and prudent pricing.

• The company will continue to monitor deposit pricing and liquidity, with $11.1B in additional liquidity sources and a 2.5x uninsured, non-collateralized deposit coverage ratio.