Simmons First National Corp. of Pine Bluff on Wednesday reported second-quarter profit of $40.8 million, down 30% from the same quarter last year and up 4.9% from the first quarter of 2024.
This profit loss can largely be attributed to rising interest expenses, which totaled $175.2 million, a 31% increase from $133.9 million in the same quarter last year.
Interest expenses for time deposits were $73.9 million, a 31% increase from $53.9 million in the second quarter of 2023. Other deposits rose 36% to $79 million from $54.4 million in the second quarter of 2023.
The publicly traded bank holding company (Nasdaq: SFNC) faced a $300,000 FDIC special assessment in the quarter, following assessments of $1.6 million and $10.5 million in the first quarter of 2024 and fourth quarter of 2023, respectively.
Total noninterest expenses — which include the FDIC special assessment, branch rightsizing, early retirement of employees and termination of vendor and software services — dipped 0.2%, or about $300,000, from a year ago. Compared to the first quarter of 2024, those expenses fell 0.35%, or about $500,000. Simmons said the quarterly decrease was “primarily due to a decline in salaries and employee benefits.”
But lower noninterest expenses were offset by rising provisions for credit losses. At the end of the second quarter, Simmons had set aside $11.1 million to cover bad loans, up from $10.2 million in the first quarter and well above the $100,000 provision that the company reported a year ago.
Total allowance for credit losses was $230.4 million, a 9.7% increase from a year ago. Simmons said the increase reflects “continued normalization of the credit environment from historical lows, as well as changes in the macroeconomic conditions and increased activity in the loan portfolio.”
Simmons reported earnings of 32 cents per share. Adjusted earnings came to 33 cents per share.
The results surpassed Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 31 cents per share.
The bank posted net revenue of $197.2 million in the quarter, down 5.3% from $208.2 million a year ago and below Wall Street expectations.
Total loans for the quarter were $17.2 billion, up 2% compared to $16.8 billion in the second quarter of 2023.
Total deposits at the end of the second quarter of 2024 were $21.8 billion, compared to $22.4 billion in the first quarter, a 2.6% decrease. Mortgage lending was also down nearly 14.9% from the first quarter of 2024, and 17.9% from the same quarter in 2023.
Assets totaled $27.4 million, down from $27.9 million in the same quarter last year.
The bank said that overall, it was pleased with the results.
“While we continue to operate against a backdrop of uncertainty concerning slower economic growth and the timing of lower interest rates, we are comforted by our strong capital and liquidity positions,” Bob Fehlman, Simmons’ CEO, said in a statement.
Shares of the company were flat Wednesday morning, trading at around $21.60. Year to date, shares were up more than 9%.
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