Simmons First National Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
April 17, 2025

There are 9 speakers on the call.

Operator

Good morning, and welcome to the Simmons First National Corporation First Quarter twenty twenty five Earnings Conference Call and Webcast. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Ed Billick, Director of Investor Relations. Please go ahead.

Speaker 1

Good morning, and welcome to Simmons First National Corporation's First Quarter twenty twenty five Earnings Call. Joining me today are several members of our executive management team, including Chairman and CEO, George Macris President, Jay Brogdon and CFO, Daniel Hobbs. Today's call will begin with opening remarks followed by a Q and A session. Before we begin, I would like to remind you that our first quarter earnings materials, including the earnings release and presentation deck, are available on our website at simmonsbank.com under the Investor Relations tab. During today's call, we will make forward looking statements about our future plans, goals, expectations, estimates, projections, and outlook, including, among others, our outlook regarding future economic conditions, interest rates, lending and deposit activity, credit quality, liquidity, and net interest margin.

Speaker 1

These statements involve risk and uncertainties, and you should therefore not place undue reliance on any forward looking statement as actual results could differ materially from those expressed in or implied by the forward looking statements due to a variety of factors. Additional information concerning some of these factors is contained in our earnings release and investor presentation furnished with our Form eight ks yesterday and our Form 10 ks for the year ended 12/31/2024, including the risk factors contained in that Form 10 ks. These forward looking statements speak only as of the date they are made, and Simmons assumes no obligation to update or revise any forward looking statements or other information. Finally, in this presentation, we will discuss certain non GAAP financial metrics we believe provide useful information to investors. Additional disclosures regarding non GAAP metrics, including the reconciliations of those non GAAP metrics to GAAP, are contained in our earnings release and investor presentation, which are furnished as exhibits to the Form eight ks we filed yesterday with the SEC and are also available on the Investor Relations page of our website, simmonsbank.com.

Speaker 1

Before we begin the Q and A, I'd like to turn the call over to our President, Jay Brogdon, for some opening remarks.

Speaker 2

Thanks, Ed. I appreciate everyone joining us on the call this morning. I know we typically go right into Q and A, I think it's important to provide clarity regarding certain asset quality actions we undertook in the quarter as well as to highlight the underlying strength of our top line results. My comments will be relatively brief, and we'll touch on trends within three broad categories, balance sheet, earnings, and credit. Starting with the balance sheet, total period end loans were up 2% on a linked quarter annualized basis.

Speaker 2

This level of growth was consistent with our outlook. However, average loans were down for the quarter as most of our funded growth was back end loaded. Our commercial loan pipeline was up 43% linked quarter and is at its highest level since the second quarter of twenty twenty two. We remain cautious about loan growth in the current macro backdrop, but we're pleased with the ability of our borrowers to lock in attractive economics and move forward with planned investments throughout q one. Shifting to the right hand side of the balance sheet, total deposits were down slightly on a linked quarter basis due to reductions in brokered funding.

Speaker 2

Customer deposits grew 183,000,000 during the quarter, roughly 4% linked quarter annualized, as we continued to see a positive remixing into lower cost transaction accounts. One nonfinancial metric we monitor closely as a measure of the health of our deposit franchise is the growth in the number of consumer checking accounts. This metric grew by one and a half percent year over year. Overall, we are very pleased with loan and deposit trends for the quarter. Moving to earnings, from a top line perspective, total revenue was up 1,100,000 linked quarter despite fewer days in the first quarter of twenty twenty five.

Speaker 2

This was our fourth consecutive quarter delivering top line adjusted revenue growth and net interest margin expansion. First quarter net interest margin was 2.95%, up eight bps linked quarter and up 29 bps year over year, primarily driven by a 19 bps decline in total funding cost linked quarter. We continue to benefit from fixed rate loan repricing and expect this to be an ongoing tailwind. Non interest income grew 6% linked quarter. We delivered strong swap fee income in our q one loan production as well as diversified growth from our other fee based businesses.

Speaker 2

Adjusted noninterest expense increased 4,300,000.0 linked quarter, including a customer deposit fraud event that involved entities affiliated with a borrower whose credit relationship was placed on nonaccrual this quarter. Excluding this item, adjusted noninterest expense would have totaled a hundred and 39,300,000.0, down slightly from fourth quarter twenty twenty four levels and reflective of our continued expense management discipline. For some time now, you've heard us say that our focus is on soundness, profitability, and growth, and in that order. This first quarter reflected our continued commitment to soundness as well as Simmons' conservative nature when we have historically tackled potential challenged credits early and aggressively. To that end and moving to credit, we migrated two specific credit relationships to nonperforming in the quarter and boosted our level of specific reserves associated with each credit.

Speaker 2

These relationships have been on our classified list for some time. Given further deterioration in the quarter in each relationship, we chose to take action and expedite our path toward resolution. The first credit was originated pre pandemic and relates to a hotel property in Downtown Saint Louis, and it represents our only credit in the downtown area. This is a $27,000,000 loan that has been in our classified total since early twenty twenty one, primarily due to the pandemic and subsequent deterioration of business and consumer activity in Downtown Saint Louis. The property securing the credit remains open and operating, and we believe is entering seasonally stronger occupancy and financial performance with spring and summer months ahead.

Speaker 2

We have recourse to the operator and continue discussions on appropriate resolution strategies. Based on current conditions and market valuations, we believe the level of specific reserves we have in place represents a very conservative mark against any possible exposure. The second credit is to a borrower that is a fast food franchise operator, and it was primarily an acquired relationship from our most recent acquisition. The relationship totals 23,000,000 and has been in our classified total since June 2024. The borrower is part of a larger franchise operation that involves multiple entities with multiple brands across a broad geography.

Speaker 2

Late in the quarter, we discovered activity in deposit accounts of entities affiliated with our borrower that gave us concern. Upon further investigation, we determined there was a fraudulent activity occurring in those accounts, and as a result, we recorded a $4,300,000 fraud. The fraud charge is in non interest expense this quarter. We are exploring our rights and remedies with respect to this situation, potential opportunities for some level of recovery in future periods. The loan relationship with our borrower, though, remains current as of the end of q one.

Speaker 2

However, considering the fraud event and the global cash flow challenges experienced by the borrower, we moved the relationship to non accrual and increased our reserve levels as of 03/31. We have personal recourse to the principal, and we are in active discussions regarding the best possible outcome for the bank. In prior quarters, we carried roughly 30% specific reserves on each of these two relationships. Due to recent developments, we increased our specific reserves to approximately 60% for each relationship, which resulted in additional provision expense of 15,600,000.0 in the quarter. As a result, total provision expense for the quarter was 26,800,000.0, and our ACL ratio increased to 1.48%.

Speaker 2

In both cases, we believe we are exercising a proactive and conservative approach to address these two situations. Importantly, and not to overlook the serious nature of credit deterioration, we believe these situations are unique to these particular borrowers, and we believe our overall loan portfolio remains healthy. To illustrate this point further, I will outline a few portfolio statistics. Past due loans were 21 basis points as of 03/31, down from 22 bps at 12/31. NPLs increased 89 bps in the quarter.

Speaker 2

However, absent the two specific relationships, nonperforming loans declined five bps linked quarter to 60 basis points. Net charge offs for the quarter were 23 bps compared to 27 bps in q four of twenty twenty four. As I reflect on recent weeks, it seems like the word of the day is uncertainty. Amidst this challenging backdrop, I will conclude my remarks this morning with three things we believe about Simmons as we look to the rest of 2025. Number one, our original 2025 outlook that calls for 3% plus positive operating leverage and implies mid teens year over year growth in PPNR remains intact.

Speaker 2

Number two, our net interest margin could cross 3% sooner than originally anticipated given positive trends in customer deposits and favorable asset repricing. I will also remind you that our 2025 outlook contemplated only one rate cut in '4 this year. Number three, we feel very good about our asset quality outlook for the remainder of the year. We're confident in our level of reserves based on today's circumstances. In March, our bank celebrated its one hundred and twenty second year.

Speaker 2

Our focus on soundness, profitability, and growth remains unwavering, and we believe we are well positioned to navigate even the uncertain times with a high level of confidence in the future of Simmons. I will now turn the call back to the operator, and we look forward to answering your questions.

Operator

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. The first question comes from David Feaster with Raymond James. Please go ahead.

Speaker 2

Hi. Good morning, everybody. Morning, David. I

Speaker 3

just wanted to appreciate all that color. That was extremely helpful. Do you have a timeline for resolution of those credits? I know you mentioned that there could potentially be some resolution by end of year in the guidance slide, but I'm just kind of curious your expectations for the timeline of potentially resolving these.

Speaker 2

Yeah, David, I'll respond on that at least initially here. So I would say, fact pattern could be a little different between the two situations. On the Downtown St. Louis Hotel, again, they're entering, as we've indicated, into seasonally stronger months here. We'd probably like to see some of that seasonality come into the mix as we evaluate our options there.

Speaker 2

I think in any scenario, we'd like to see that one resolved before the end of the year. But again, if it benefits us to be patient around that situation, we'll allow that to happen to get to the best kind of net result in terms of recovery around that or best dollar in terms of resolution. On the other one, again, this is a loan that's been classified since last year. However, the fraud related activity is not something that we anticipated. It happened late in the quarter.

Speaker 2

So we're still early in our analysis of that situation, both as it relates to the fraud event and potential recovery there as well as resolution of the credit relationship itself. So again, we're going to be as proactive as possible and we want to move these out of the bank as quickly as possible. But we're going to be thoughtful in how we do that and make sure that we've got the best possible path forward. So I think the short answer to your question is we'd love to get them out this year, but they're both going to have some timeline associated with them. And in any scenario, we think whatever charge off risk is there is adequately covered in our level of specific reserves today.

Speaker 3

Okay. Terrific. Then, maybe I just wanted to touch on the pipeline. It's extremely encouraging to see that improvement and with really attractive rates. I guess the first part of my question is, could you just touch on what's driving that?

Speaker 3

Where are you seeing opportunities and just the kind of the pulse of the client from your And then secondarily, how has that pipeline shifted early in the second quarter and your thoughts on pull through and whether you started to see any of that fall out, just kind of given to you Jamie Dimon's words, kerfuffle in the market. I mean, it's just, I'm just kinda curious, your thoughts on that.

Speaker 2

Yeah. So I would say that we're pretty cautious about the kerfuffle in the market ourselves. But when we talk our borrowers, when we talk to our bankers on the front line, one of the consistent themes is nothing's happened yet. We're all concerned about it. We're seeing some delays in activity or delays in investments, but it's really more conversational.

Speaker 2

It's more, hey, we're thinking about delaying investment. The flip side of what we saw in the quarter is, maybe, David, is a pull forward in some of the demand. We saw some of the projects that were closer to the start date, further in their analysis, further in the initiatives to get off the ground, whether it was C and I, CRE or otherwise. Those situations, we had borrowers who were, I think, very effective in locking in economics. Whether that's pre ordering supplies, whether that's hedging, etcetera.

Speaker 2

So that allowed, I think, some of our opportunities that were in the pipeline to pull forward a bit. And then the flip side or the other piece of it is, it's broad based. When we look deeply into the pipeline, we see it really across the, what I'll call the community and the commercial bank. It's broad based within our geography and even within category. There's C and I, there's CRE, there's agricultural, and we do have some seasonal benefits this time of year as well in that pipeline.

Speaker 2

That's not the driver of the seasonal piece, but just keep in mind within there, for example, agricultural, mortgage warehouse, etcetera, are entering more seasonally positive periods here. And I think that's what drove some of the late quarter nature of the funding that we saw.

Speaker 3

Okay. That's helpful. And then, and maybe along the same lines on the other side of the balance sheet, just touching on deposits. I mean, the core deposit trends that you saw were also very encouraging. And again, in a seasonally weaker quarter with tax payments and end of the year payments and all those of things.

Speaker 3

I just wanted to get your thoughts on the deposit growth strategy, where you're seeing opportunity, kind of the competitive landscape and how you think about deposit growth and your ability to continue to drive deposit growth and whether it's primarily gonna be like flattish balances and really a remixing and optimization in there. Just kinda curious how you're thinking about the deposit side today.

Speaker 2

Yeah. So a lot of things to unpack there, David, in that question. But I would just start with one of the things you included in your comment was or in your question was the competitive environment. It's still very competitive. Just rest assured that it is a competitive environment.

Speaker 2

One of the things we've been pleased with both within our own balance sheet and sort of that competitive landscape is it does seem that the banks have done a good job of aggressively moving prices down on the deposit side with the rate moves late last year. So that's been good news. But again, we're still seeing a lot of deposit competition, a lot of protection of existing relationships, etcetera. And I really don't expect that to abate anytime soon. Keep in mind when you think about our deposits, and this is really reflected in how we talk about the outlook both back in January and still today.

Speaker 2

We're actively working to remix deposits and to reduce the level of brokered funding. We were successful with that in the first quarter. That's going to continue to be a focus for us. In addition, you'll see that we were successful in the quarter in remixing out of customer CDs and into interest bearing transaction accounts. And while NIBs were basically flat or very, very slightly down linked quarter, that's the best quarter we've had in NIBs in quite some period of time.

Speaker 2

And so we're pretty positive that a lot of those trends are inflecting. We have all of the systems on go really with focus around deposits and we have had for quite some time. Every lending opportunity that we're looking at has a deposit conversation involved in it And really, the hurdle requires that deposit activity. And so continue to be pleased with the trends there. But again, I want to reiterate that the competitive environment is still pretty difficult.

Speaker 2

Daniel, you want add anything on the deposit front?

Speaker 4

Yeah. Hi, David. I think the thing that I would add is if you think Jay's comments around NIB being relatively flat, we were down $5,000,000 but relatively flat, first time in a while that we've been close to that. If you break that down into our different businesses and you look at the consumer customer, our consumer deposits make up about mid 40% of our total customer deposit base. We're actually pleased with what we're seeing there.

Speaker 4

The last two quarters we've seen positive growth. That's kind of the first time in a long time probably since the rate rising cycle in the last part of 'twenty two that we've seen consumer deposit growth. So we're pleased with that. It's getting back to a more traditional seasonal patterns that's predictable. So we feel good about that.

Speaker 4

The other thing I would say about consumer is we're actually growing the core customer account. So you think about the core checking account, which is the number one driver of revenue in the consumer bank. We've grown that year over year 1.5% and we'll continue to focus on that. We have a number of initiatives that we're working on this year with various campaigns and whatnot that we expect to continue to grow that. And then the other piece of that we've seen some in this quarter specifically, just some seasonality natures with public funds.

Speaker 4

And then on the commercial side, I would tell you there's still probably some pressure on the commercial side. It's less than it has been. We were down a little bit on the NIV side there, but hopefully over the coming quarters, if we can get that piece back to flattish or to growing, that will provide us a lot of tailwind as we think about just the overall deposit costs going forward. Jay talked about time deposits. We are seeing some really positive shifts there into interest bearing.

Speaker 4

If you go back to the last ninety days and you look at the CD closures that occurred, we retained about 65 to 70% of those deposits and we're okay with the others that left because they were seeking higher rate. Of that 65%, about two thirds of those stayed in CDs but at a lower cost. The CDs that matured in the last quarter was in that four fourteen, four 15 range, and the renewal rates is in the three forty range. So we feel good about that piece of it. But then that other third of the CDs that closed went into DDA accounts, which are at a much lower cost.

Speaker 4

So we feel good about that as well. So we're encouraged about the momentum that we've got along with the deposits and the cost of those deposits.

Speaker 3

We're kind of thinking about continued deposit optimization, maybe deposit balances relatively stable and and the growth kind of funded by by securities cash flows and and that remixing and repricing of both assets and liabilities is what's driving margin expansion. Am I thinking about that the right way?

Speaker 2

You are. Yep. That's exactly right, David.

Speaker 3

Thanks, everybody.

Speaker 5

Thank you. Thank you.

Operator

The next question comes from Woody Lay with KBW. Please go ahead.

Speaker 6

Hey, good morning, guys.

Speaker 2

Good morning, Woody. I

Speaker 5

had a couple of

Speaker 6

follow ups on the credit side. Wanted to start with the fast food operator. Just any color you could give on the underlying collateral there? It sounds like it's tied potentially to a couple of different entities.

Speaker 2

Yes. I mean, we've got the stores themselves, the real estate collateral. We have, again, full recourse as we've outlined in the materials to the principal here. So I think we've got a decent amount of collateral and guarantor support, but again, we're also maybe more aware now, given what we discovered late in the quarter on the fraud event, of some global concerns around the cash flow picture for the principal. So the guarantor reliance is not probably as valuable as we would have otherwise hoped.

Speaker 2

But again, we have real estate, we have the stores, we have the equipment in the stores, etcetera.

Speaker 6

Got it. That's helpful. And then maybe shifting over to hospitality. It looks like hotels are about 4% of loans. Just any commentary on how the rest of the portfolio is performing?

Speaker 6

Are there any other geographic concentrations within that portfolio?

Speaker 2

No, there's no real concentrations to speak to there on the hospitality side. Really, this has been you think back to the pandemic, this was obviously a major focus across all of that hospitality portfolio. You flash forward to today, but for maybe a small exception or two that I can't even think of, this is the one. I mean, this is the one we've been talking about internally since kind of what you might call the dust settling on the pandemic a couple of years ago. And what really happened in this situation, Woody, is we believe, just unique to that downtown area.

Speaker 2

Unfortunately, business climate there has just continued to suffer. And again, we were specific to point out, that we obviously have a very good St. Louis presence. We really like our presence in that market. It's that downtown area that's suffering so bad and this is the only credit of any kind, not just hospitality of any kind that you would kind of put in the city blocks of downtown that's in our portfolio.

Speaker 6

Got it. And then last for me, it was helpful that you provided the ACL methodology on slide 26. Just two quick questions around that. First, did you adjust the scenario weighting quarter over quarter? And then second, I think if you look at April Moody's baseline, it looks like GDP was moved a little lower and unemployment was moved higher.

Speaker 6

How would you all expect this to impact forward reserve levels?

Speaker 2

Yeah, I think we would expect the baseline scenarios based on everything we know today to continue to worsen from what we and we did update scenarios, update baseline from Q4 to Q1. We'll do that every quarter. So we do that again in Q2. So my expectation, unless there is a really significant about shift, would be that you would see a worsening in the baseline scenarios. You could see a worsening in the weightings, shifting in how we weight the scenarios.

Speaker 2

But we'll determine that later in the quarter in Q2. But I think it would be our expectation that I'm going make this comment outside of the specific reserves for these two specific credits. I think it would be our expectation that based on trends we see today that reserves for the industry would be building throughout the year this year based on those dynamics.

Speaker 4

Yeah, maybe I'd add one thing to that. We use Moody's analytics for our modeling and we have taken a look at the April scenarios and they did worsen as you would expect. Our management percentages that we put in fourth quarter versus first quarter, the mix didn't change very much, but as you think about where we land in our range, so our models spit out kind of an estimate. We put ranges on both sides of that. We are currently reserved at the high end of our range.

Speaker 4

So if you think about scenarios worsening, you would think that range would go up. Even if we held our reserve where it is, we would still likely be in the middle of that range. So to Jay's point, we will evaluate all the different components of that come June and make decisions accordingly. But I just want to make a point that we are already reserved in the high end of our range.

Speaker 6

Good point. All right. Thanks for taking my questions.

Speaker 5

Thank you, William.

Operator

The next question comes from Matt Olney with Stephens. Please go ahead.

Speaker 7

Thanks. Good morning, everybody.

Speaker 2

Hey, Matt. Good morning.

Speaker 7

Sticking with credit, it sounds like you've got a meaningful specific reserve on each of these two credits. Any color on just the process of how you ended up with a specific reserve allocation? Was there an appraisal of the assets? I'm trying to appreciate the risk of additional impact to the reserve when these two loans do kind of reach resolution.

Speaker 2

Yeah, I would just say, Matt, both of these credit relationships have been, for some period of time now, managed within our special assets group. So we're intimately familiar with the properties, the values around the properties. We've been in active conversations with the borrowers even before this quarter given that treatment. So I think we've got as good a handle as you can have around what we think the underlying value upon resolution could be here. Now that said, both situations are struggling properties And as an example, on the St.

Speaker 2

Louis Hotel in a struggling market itself. So we were pretty heavy in our discounts to what we thought that value would be or said differently. We were very conservative in our approach to where we would kind of record net value here. And the whole thought process around all of that was to ensure that whatever we're going to build the provision to here would be an area where we would have strong conviction that there wouldn't be incremental loss beyond those reserves today.

Speaker 7

Okay. All right. Appreciate that, Jay. And then I guess switching over to the expense side, if I understand this right, it sounds like you reiterated the full year expense guidance even though there were some higher fraud expenses in first quarter. So it sounds like there was some good progress kind of beneath the surface.

Speaker 7

Any color on the progress you're seeing on the expense side?

Speaker 2

Yeah, I'll quickly say and I bet Daniel maybe want to make a comment or two here as well. But I'll just quickly say that even if you strip out the fraud impact in the first quarter, expenses in the quarter actually came in a little ahead of where we had budgeted and thought they would. We were already seeing and working on some opportunities that we thought could give us some expense tailwinds in the balance of the year. And again, we're seeing pull forwards in some of that even here in the first quarter. So we already kind of had a pretty bullish view on the expense outlook for our bank as we were making progress through the quarter.

Speaker 2

Obviously, the fraud event is, we feel very strongly, is a one time item. We also recorded 100% of that expense this quarter. Given how late in the quarter it came through, It's difficult for us to estimate yet what we think the recovery on that will be, which would offset that expense to a degree. And we're continuing to explore very aggressively all of those opportunities for recovery. And then I think we'll just be, this will enhance our already disciplined focus around expenses as we think about the balance of the year.

Speaker 2

And when we put all of that together, at least top of house view is, I think we can stand by the expense guidance that we had originally given for the year this year, even with the $4,300,000 fraud in there. Daniel, I don't if you've got any other color you'd want to provide on that.

Speaker 4

Yeah. We've talked about before that the things that we focus on, the things that we can control, and expenses are the one thing that we can control. You know, we talk about continuous improvement, and, you know, we we continue to have a pipeline of ongoing initiatives all the time that we are looking to to be more efficient. We're continuing to get benefit out of our centralized procurement group through contract renegotiations to establishing standards and processes by how we do things. You know, every time a position comes open, we evaluate whether we need to refill it.

Speaker 4

We have a lot of conversation and discussion around new positions. You know, if you I'll make a a point there. If you look at our headcount, we were up three headcount quarter over quarter, but we self funded. We added 15 on the banking side, so revenue producing, and we funded that with 12 reductions on the support group side. So everything that we do when we spend the dollar, we're evaluating that.

Speaker 4

And having said that, I will say again that we are making investments in our business, and we'll continue to do that. That won't be anything that we stop. So we do feel good and confident about our expense guide, even with $4,300,000 fraud in there. And then to the extent that the recovery comes in, that would give us even more ground there.

Speaker 7

Okay. Appreciate that, Daniel. And then I guess going back to previous comment, I was looking for little more color around broker deposits and remixing away from those. I think it's still a pretty material balance around $2,900,000,000 Good progress in the quarter, but still on a year over year basis, it looks like broker deposits are still relatively flat. So just looking for any kind of help thinking about kind of what is the plan to remix that over the next year?

Speaker 4

Yes. So if you look at it year over year, we're down close to about $100,000,000 and we've talked about growing customer deposits. So for every NIB dollar that we can grow or every customer deposit, even if it's interest bearing or time, that's a dollar of brokered that we don't have to have. So brokerage is kind of a back end funding mechanism that we do to fund the balance sheet at the end of the day along with SHLB. And by the way, those two things we kind of go in and out of depending on what's most most feasible from a cost standpoint.

Speaker 4

But, you know, the main focus there is growing core deposits, and that's the arm that's gonna let us reduce our reliance on wholesale funding. We've got a number of initiatives going in this year, with the addition of Chris Van Steenberg. He's brought a number of, ideas and things to the table, and so we'll continue to work on that. But that's primary mechanism by how we can reduce wholesale funding.

Speaker 2

And the only other thing I'd add in there, Matt, is it's grow core deposits to everything Daniel said. And then to the extent there's not loan growth, and we're growing loans and seeking to grow loans, but to the extent there's not good profitable loan growth, the other thing that would reduce the reliance on wholesale funding is just ongoing reduction in the securities balances.

Speaker 7

Yeah. Okay. All right, guys. Thank you.

Operator

Thank you, Matt. The next question comes from Ahmad Hassan with D. A. Davidson. Please go ahead.

Speaker 5

Hey, good morning guys. I just got one quick one on capital deployment. So you guys had a strong capital with modest loan growth projected for the year and with shares just modestly above tangible book, what would kind of get you off the sidelines on buybacks? Was it like the pressure on earnings this quarter from higher provisioning? Was that why you guys did not execute repurchases this quarter?

Speaker 2

Yeah, I appreciate the question. I think generally, and we've for a number of quarters and continue to feel that this way today, that really our priorities around capital sort of start with organic growth in the balance sheet. We've also been kind of in that same vein. We've very much been in capital preservation mode or opting to have optionality around capital as it relates to securities restructurings, etcetera. You've seen us do a couple of those over the past several quarters.

Speaker 2

And so we'll continue to be opportunistic in that regard. So that's kind of priority one for us. Priority two is, of course, our dividend. And then any other kind of capital deployment opportunity is really beneath those first couple of priorities. And I think just overall, outlook there, want to for the macro outlook, we think it's smart right now and the right thing to do as we think about the long game to preserve capital and be smart with our capital.

Speaker 2

But at the same time, we always want to have the buyback in place. If we were to see market dislocation or opportunities where it was very, very attractive for us to leverage some of our excess capital in the buyback regard, we have that tool in the toolkit if and when we need it.

Speaker 5

That sounds great. Thanks.

Operator

Thank you. This concludes our question and answer session. I would like to turn the conference back over to George Macris for any closing remarks.

Speaker 8

Thank you very much and I appreciate everyone joining us today. As you can tell from our comments, we're pleased with our profitability trends and we expect those to continue to improve. We took some very conservative actions on two specific credits, which is not a surprise regarding the way Simmons handles our risk management. For the time being, we're going to keep our head down and keep focused on organic growth opportunities, which have some positive momentum right now. And I guess to quote Jerome Powell in today's session, for the time being, we're well positioned to wait for greater clarity.

Speaker 8

So thanks again for joining our call this morning. We will do this again three months from now. Have a great day.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Powered by Quartr
Earnings Conference Call
Simmons First National Q1 2025
00:00 / 00:00