Simmons First National Corporation

Management did not provide revenue, EPS, or gross margin figures in the transcript. On funding, non-interest-bearing deposits grew 4% annualized in the second quarter, checking accounts rose more than 1% year over year and linked quarter, and average deposit costs were 193 bps for the quarter, exiting at about 190 bps. Loan growth was about 7% annualized year to date, and management said it remains comfortable with a low- to mid-single-digit full-year loan growth outlook. On expenses, Jay Brogdon said the company expects to beat its 2%-3% full-year non-interest expense growth guide and exceed its prior outlook for 5%+ positive operating leverage and strong PPNR growth. Credit commentary included an 11% specific reserve on the four-family construction borrower, and management reiterated its approximately 25 bp annual net charge-off outlook, saying it is below that pace through the first half of the year.

Jay Brogdon’s tone was constructive and confident, especially on deposit gathering, loan production, and the ability to keep investing while still improving profitability. He said the bank is seeing early success from its strategic initiatives and leadership hires, but emphasized discipline on pricing and credit and said Simmons will not stretch for growth. He also framed the business as having significant untapped efficiency and said the company is shifting from tactical improvement to more strategic operating changes around team structure, process, and technology.

Daniel Hobbs focused on balance sheet mix, funding costs, and operational savings. He said non-interest-bearing deposits grew 4% annualized, interest-bearing money market and savings balances improved on an average basis, and the bank is letting non-relationship CDs run off while using FHLB funding more when it is cheaper than brokered deposits. He also said average deposit costs were 193 bps, with about one more quarter of possible benefit, and that the bank reduced square footage another 2.5% in the quarter, bringing total reduction to 8.5% since the initiative began, with a stated goal of 15%.

Analysts focused on deposit competition, loan growth, pipeline conversion, loan pricing, credit, and capital deployment. Management said deposit competition is very fierce and likely to stay that way, but core deposit initiatives, new products, and hiring are starting to produce better mix and new customer balances. On loans, management said production remains strong even though second-quarter growth was slower than the first quarter, and it cited a healthy pipeline, higher unfunded commitments, and $1.8 billion of fixed-rate loans repricing over the next 12 months at an average yield below 4%. On credit, management said the troubled four-family construction loan may take time to resolve but reiterated confidence in overall loss content and the current charge-off outlook.