Simmons First National Corporation (SFNC) Q3 2026 earnings review
Simmons' margin widens, but its loans and deposits shrink
Simmons earned more on each loan, but it did so by shrinking the bank. Chief executive Jay Brogdon ran off loans and deposits he calls low value, so the margin widened to 3.92% while deposits fell $1.1 billion. Profit excluding one-offs rose, yet those one-offs reached $43 million and reported profit fell.
| Net interest margin | 3.92% 3.84% last quarter |
|---|---|
| Profit per share, excluding one-offs | $0.54 $0.46 a year ago |
| Total deposits | $18.6B $19.7B last quarter |
| Full-year outlook | Not updated new targets promised at the December Investor Day |
⚖️ Verdict: 🔴 Bearish
The story got worse because the deposit base and loan book are shrinking while bad loans keep rising. The reserve now covers 133% of nonperforming loans, down from 199% in December. The good news: the wider margin came from the repricing Brogdon promised, and costs fell with fewer staff.
The question now is whether Simmons can grow again without giving back the margin. Either repricing keeps lifting the margin while the balance sheet steadies, or the margin has peaked. The January plan implies the latter: by our math it leaves fourth-quarter interest income below the third's. The December Investor Day and the fourth-quarter deposit figure will tell.
🐂 Bull Case
Margin Widens as Simmons Runs Off Cheap Loans
Net interest margin is the gap between what a bank earns on loans and pays for deposits. Chief executive Jay Brogdon has made widening it his main goal. He is running off loans and deposits with "low relationship value" and repricing older loans as they mature.
- Net interest margin: 3.92%, up from 3.84% last quarter and 3.50% a year ago
- Loan yield: 6.20%, up 5 basis points; cost of deposits 1.85%, down 8
- Net interest income: $204.0 million, up 9% from a year ago
This matters because pricing, not volume, is doing all the work. Average earning assets fell $327 million in the quarter by our math, so the extra $3.3 million of interest income came from better rates alone. The risk is that the margin has peaked. Simmons' own estimate has swap income falling next quarter, and its January plan, by our math, leaves fourth-quarter interest income below this quarter's.
What to watch: the fourth-quarter net interest margin, due in January. A margin held at 3.92% with loans no longer falling would show that repricing lifts earnings without the help of a shrinking bank.
Simmons Cut 197 Jobs and Underlying Costs Fell
Brogdon has run a cost programme for two years, and this quarter he went further. Headcount fell by 197 people to 2,712 after an early-retirement programme. Adjusted noninterest expense, which leaves out the one-off charges, dropped to $138.9 million, the lowest in a year.
The savings matter because revenue is barely moving. Adjusted revenue rose 1% from last quarter, so lower pay did most of the work in lifting adjusted pre-provision profit 4%. Brogdon said the gains "will more than fund ongoing investments that support high-value organic growth", a claim the shrinking loan book does not yet support.
What to watch: fourth-quarter adjusted noninterest expense, due in January, against this quarter's $138.9 million. A lower figure would confirm that the full saving from the staff cuts is in the run-rate.
🐻 Bear Case
Deposits Fell $1.1 Billion and Simmons Borrowed More
Simmons wants fewer brokered deposits, the wholesale money a bank buys from other institutions. This quarter it cut them, but customer money left too, and total deposits fell $1.1 billion, to $18.6 billion.
- Brokered deposits: $935 million, down $878 million
- All other deposits, by our math: down $234 million, or 1.3%
- Advances from the Federal Home Loan Bank: $1.4 billion, up $424 million
- Commercial loan pipeline: $1.3 billion, down from $1.4 billion in June
Simmons blamed "seasonal decreases in public fund deposits" and a switch to Federal Home Loan Bank advances "given favorable pricing". Loans fell too, by $598 million, as the lender ran off "lower yielding, low relationship credits". But deposits dropped nearly twice as fast, and overnight borrowing rather than customer money filled the gap.
This matters because the January plan called for loans and customer deposits to grow this year. Nine months in, loans are down 0.2% and other deposits 3.3%, by our math.
What to watch: fourth-quarter total deposits, due in January. A figure below $18.6 billion would mean the outflow has moved past brokered and seasonal money into customer accounts.
Bad Loans Rise Again While Reserves Cover Less
"Credit quality metrics remained relatively stable during the quarter, as we actively manage legacy credits and pursue early identification of potential problems," Brogdon said. Nonperforming loans have risen for three straight quarters, which does not read as stable.
- Nonperforming loans: $179.9 million, up 8% from June and 60% from December
- Nonperforming loans as a share of the book: 1.03%, up from 0.64% in December
- Reserve for loan losses as a share of nonperforming loans: 133%, down from 199% in December
Simmons called the increase "normal credit migration". The dollar reserve did not move, because the provision barely exceeded the $11.9 million written off. Its ratio to loans rose only because the book shrank. Brogdon's "strengthening reserves" claim holds for the ratio, not for the dollars set against a rising stock of bad loans.
This matters because problem loans disclosed in early 2025 ended that year with charge-offs far above plan. The nine-month rate of 23 basis points still sits inside this year's plan of about 25.
What to watch: fourth-quarter nonperforming loans, due in January. A fourth straight increase with the dollar reserve flat would mean the provision has fallen behind.
One-Off Charges Ate 43% of Pre-Tax Profit
"We continue to achieve reductions in noninterest expenses as well as back-book loans and deposits with low relationship value," Brogdon said. Reported noninterest expense rose 23% in a quarter, to $182.0 million, because of charges excluded from adjusted profit.
- Certain professional services: $17.1 million, not described
- Branch rightsizing $14.2 million; severance $6.0 million; accelerated prepaid expenses $5.9 million
- Total: $43.1 million, or 43% of pre-tax profit before the charges, by our math
The lender has booked such items in each of the last five quarters; this one is nearly six times the last. Profit excluding one-offs therefore overstates what shareholders received.
What to watch: whether Simmons explains the $17.1 million at the December Investor Day. Another large charge in January would make reported profit, not adjusted profit, the number to follow.
Risks This Quarter Didn't Answer
Four standing concerns got no reading from the press release. They stay open until the quarterly filing and the December Investor Day, where Brogdon promises new targets.
- Parent-company cash: Simmons Bank needs regulatory approval to send dividends to its parent after last year's loss; the release is silent.
- Loan pricing: competition, which the bank flagged last year, gets no mention; the only pricing figure is the 6.78% rate on loans ready to close.
- Swap income: Simmons estimated $4.9 million for this quarter but does not break it out; the release reports a "decrease in swap fee income" without a figure.
- The January outlook: interest income up 9-11%, loans and customer deposits up; none restated or withdrawn, and by our math the interest-income range leaves the fourth quarter below the third.
👓 Other Themes
Higher Long-Term Rates Cut Tangible Book Value 6%
Simmons holds $2.7 billion of bonds that it values at market prices, and "higher long-term interest rates" in the quarter lowered their value. The unrealised loss widened by $150 million, to $445 million, so equity fell even though the bank made money. Tangible book value per share dropped to $13.52 from $14.42 in June. Regulatory capital ignores the mark, so the CET1 ratio still rose, to 12.05%.
No Buybacks This Quarter; Targets Due in December
Simmons bought back no shares in the quarter, after making its first repurchases in the spring, and about $161 million of the January programme remains. The dividend stays at $0.215 a share. Brogdon said the bank will "further outline our strategic objectives and future financial targets" at an Investor Day on December 10. That is the first chance to learn whether the January plan still stands.
💲 Other KPIs
Up 17% from a year ago and 8% from last quarter, the third rise in a row. Adjusted return on tangible common equity, profit as a share of shareholders' money after goodwill, reached 15.5%, the second-highest of the five quarters shown. The share count is 3% higher than a year ago after the July 2025 stock sale, so per-share growth trails the rise in adjusted profit.
Up 3% from a year ago but down 2% from last quarter. Service charges on deposit accounts and wealth management fees each rose by more than a million dollars, their best quarters in the period shown. Other income fell $2.6 million on lower swap fees and a smaller write-up of small-business investments than in June. Fees are 19% of revenue, so lending still decides the result.
Down 11% from June to the lowest level of the five quarters shown. The bond book shrank by $334 million while deposits fell much more, so maturing bonds covered part of the outflow. Bonds are now 11% of assets. The yield on them rose to 4.33% from 4.26% as older low-rate bonds matured.
❓ Key Questions
Does the January interest-income plan still stand?
The January outlook, by our math, leaves fourth-quarter net interest income below this quarter's level. Simmons has neither restated nor withdrawn it, and the December Investor Day should say which it is.
What are the $17.1 million of professional services?
The largest excluded item this quarter has no description. Readers need to know whether it is advisory work for the December strategy, a one-time project, or a cost that will recur.
How much of the deposit outflow was planned?
Brokered deposits explain most of the $1.1 billion decline, but other deposits fell by $234 million by our math. The split between seasonal public funds, deliberate run-off and customers leaving decides whether funding is a problem.
What loss does Simmons expect on its bad loans?
Nonperforming loans have risen for three quarters while the dollar reserve stayed flat. The reserve set against the construction relationship that migrated in June, and any charge-off on it, would show whether coverage of 133% is enough.
When can Simmons Bank pay dividends to the parent freely?
After last year's securities loss the bank needs regulatory approval to send cash upstream, while the parent pays the dividend and funds buybacks. The release does not say what parent cash remains or when the restriction ends.