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Simmons Revenue Falls in Q2, but $58M Profit Beats Expectations

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Simmons First National Corp. (Nasdaq: SFNC) of Pine Bluff on Tuesday reported second-quarter profit of $58.3 million, up from $27.5 million in the same quarter a year ago, when earnings were hit by one-time expenses related to the acquisition of Spirit of Texas Bancshares.

Adjusted earnings came to $61.1 million, down 25.8% from the $82.3 million in profit that the company would’ve posted a year ago if not for acquisition costs.

On a per share basis, adjusted earnings were 48 cents, beating Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 41 cents per share.

Revenue in the period was $208.2 million, down 7.6% from $225.3 million and below Wall Street projections.

In a statement, CEO Bob Fehlman said the holding company for Simmons Bank continues to seek savings as it navigates a “challenging economic environment.” The bank’s early retirement program saw substantial progress in the quarter and is expected to result in $5.1 million in annual cost savings.

Fehlman said the bank has identified other savings through process improvements and streamlining or upgrading systems. As a result, Simmons is on track to meet or exceed an estimated $15 million in annual cost savings by the end of the year.

Those savings will help offset higher funding costs. The bank’s cost of deposits for the second quarter was 1.96%, compared to 1.58% in the first quarter of 2023 and 0.18% in the second quarter of 2022.

Simmons attributed the increase to higher interest rates, customer migration to higher rate deposit products and increased competition for deposits.

Despite that competition, deposits continued to grow in the second quarter, totaling $22.49 billion. That’s up slightly from $22.45 billion in the first quarter of 2023 and higher than the $22.03 billion figure the bank reported in the second quarter of 2022. Meanwhile, uninsured deposits have fallen from $6.5 billion to $4.8 billion over the past year.

Loans in the second quarter totaled $16.8 billion, up 11% from $15.1 million in the second quarter of 2022. On a quarterly basis, loans grew by 2%.

Simmons said rising interest rates and softer economic conditions have resulted in lower activity in its commercial loan pipeline. Unfunded commitments at the end of the second quarter of 2023 were $4.4 million, down from $4.7 billion at the end of the first quarter of 2023 and $4.5 billion at the end of the second quarter of 2022.

The bank reported total assets of $27.96 billion, up from $27.2 billion a year ago.

Simmons Bank operates 231 branches in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

The company announced earlier this month that it’s restructuring its banking division to emphasize its community and retail franchise.

Shares of the company were flat Tuesday morning. Year to date, shares were down about 8%.

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