Simmons First National Corp. of Pine Bluff (Nasdaq: SFNC) on Friday reporting falling third-quarter profit as it offloaded available-for-sale investment securities for a loss.
The holding company for Simmons Bank said that due to “favorable market conditions,” it decided to sell about $252 million of available-for-sale investment securities with a weighted average yield of approximately 1.29% during the quarter. The result was an an after-tax loss of $21 million.
Simmons said that proceeds from the sale were used to pay off higher-rate wholesale funding consisting of Federal Home Loan Bank advances.
In a statement, CEO Bob Fehlman said the bank sold certain lower-yielding bonds to “hasten the pace of our ongoing balance sheet optimization strategy.”
“While the loss on the sale of these securities weighed on reported results, on an adjusted basis total revenue, noninterest income and pre-provision net revenue posted solid growth on a linked quarter basis,” he said.
Simmons reported net income of $24.7 million, down 47.7% from $47.2 million a year ago. Per share, earnings came to 20 cents. Adjusted earnings came to 37 cents per share.
The results exceeded Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 33 cents per share.
Simmons posted revenue of $351.4 million in the period. Its revenue net of interest expense was $174.8 million, down 11% from $196.2 million and below Street forecasts.
Loans at the end of the third quarter totaled $17.3 billion, up $564.2 million, or 3%, compared to $16.8 billion at the end of the third quarter of 2023. Loans were up 3% on a linked quarterly basis.
Unfunded loan commitments were $3.7 billion, slightly lower than the second-quarter level of $3.74 billion an ddown 9.1% from $4 million a year ago. The commercial loan pipeline ended the third quarter at $1.2 billion, compared to $1 billion at the end of the second quarter and $877 million a year ago.
Total deposits at the end of the third quarter were $21.9 billion, up from $21.8 billion at the end of the second quarter but down from $22.2 billion a year ago. The increase in total deposits on a linked quarter basis was primarily attributable to an increase in public funds and brokered deposits. Deposit costs were unchanged from the second quarter and appear to have peaked, Fehlman said.
The bank reported $27.27 billion in total assets, down from $27.37 billion in the second quarter and below the $27.35 billion in assets the bank reported a year ago.
Shares of the company were down nearly 1% on Friday morning to $23.28. Year to date, shares were up nearly 18%.
Simmons Bank operates 234 branches in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.
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