UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2021~~March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number 000-06253

SIMMONS FIRST NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)


Arkansas			71-0407808
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification No.)

501 Main Street			71601
Pine Bluff			(Zip Code)
Arkansas
(Address of principal executive offices)

(870) 541-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

SFNC

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging Growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.). ☐ Yes ☒ No

The number of shares outstanding of the Registrant’s Common Stock as of ~~August 3, 2021,~~May 4, 2022, was ~~108,284,170.~~130,654,183.

Simmons First National Corporation

Quarterly Report on Form 10-Q

~~June 30, 2021~~March 31, 2022

Table of Contents


		Page
Part I:	Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income (Loss)	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Stockholders' Equity	7
	Condensed Notes to Consolidated Financial Statements	98
	Report of Independent Registered Public Accounting Firm	4748
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4849
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	75
Item 4.	Controls and Procedures	77

Part II:	Other Information
Item 1.	Legal Proceedings	77
Item 1A.	Risk Factors	77
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 3.	Defaults Upon Senior Securities	*
Item 4.	Mine Safety Disclosures	*
Item 5.	Other Information	*
Item 6.	Exhibits	7879

Signatures		7981

___________________

* No reportable information under this item.

Part I: Financial Information

Item 1. Financial Statements (Unaudited)

Simmons First National Corporation

Consolidated Balance Sheets

~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021


		June 30,		December 31,			March 31,		December 31,
(In thousands, except share data)	(In thousands, except share data)	2021		2020		(In thousands, except share data)	2022		2021
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Cash and non-interest bearing balances due from banks	Cash and non-interest bearing balances due from banks	$	215,381	$	217,499	Cash and non-interest bearing balances due from banks	$	195,510	$	209,190
Interest bearing balances due from banks and federal funds sold	Interest bearing balances due from banks and federal funds sold	2,123,743		3,254,653		Interest bearing balances due from banks and federal funds sold	1,491,507		1,441,463
Cash and cash equivalents	Cash and cash equivalents	2,339,124		3,472,152		Cash and cash equivalents	1,687,017		1,650,653
Interest bearing balances due from banks - time	Interest bearing balances due from banks - time	1,335		1,579		Interest bearing balances due from banks - time	1,857		1,882
Investment securities:	Investment securities:					Investment securities:
Held-to-maturity, net of allowance for credit losses of $1,132 and $2,915 at June 30, 2021 and December 31, 2020, respectively		931,352		333,031
Available-for-sale, net of allowance for credit losses of $0 and $312 at June 30, 2021 and December 31, 2020, respectively (amortized cost of $6,543,022 and $3,397,043 at June 30, 2021 and December 31, 2020, respectively)		6,556,581		3,473,598
Held-to-maturity, net of allowance for credit losses of $1,377 and $1,279 at March 31, 2022 and December 31, 2021, respectively						Held-to-maturity, net of allowance for credit losses of $1,377 and $1,279 at March 31, 2022 and December 31, 2021, respectively	1,556,825		1,529,221
Available-for-sale, at estimated fair value (amortized cost of $7,070,582 and $7,130,861 at March 31, 2022 and December 31, 2021, respectively)						Available-for-sale, at estimated fair value (amortized cost of $7,070,582 and $7,130,861 at March 31, 2022 and December 31, 2021, respectively)	6,640,069		7,113,545
Total investments	Total investments	7,487,933		3,806,629		Total investments	8,196,894		8,642,766
Mortgage loans held for sale	Mortgage loans held for sale	36,011		137,378		Mortgage loans held for sale	18,206		36,356
Other assets held for sale						Other assets held for sale	—		100
Loans	Loans	11,386,352		12,900,897		Loans	12,028,593		12,012,503
Allowance for credit losses on loans	Allowance for credit losses on loans	(227,239)		(238,050)		Allowance for credit losses on loans	(178,924)		(205,332)
Net loans	Net loans	11,159,113		12,662,847		Net loans	11,849,669		11,807,171
Premises and equipment	Premises and equipment	429,587		441,692		Premises and equipment	486,531		483,469
Premises held for sale		6,090		15,008
Foreclosed assets and other real estate owned	Foreclosed assets and other real estate owned	15,239		18,393		Foreclosed assets and other real estate owned	5,118		6,032
Interest receivable	Interest receivable	67,916		72,597		Interest receivable	69,357		72,990
Bank owned life insurance	Bank owned life insurance	419,198		255,630		Bank owned life insurance	448,011		445,305
Goodwill	Goodwill	1,075,305		1,075,305		Goodwill	1,147,007		1,146,007
Other intangible assets	Other intangible assets	103,759		111,110		Other intangible assets	102,748		106,235
Other assets	Other assets	282,549		289,432		Other assets	469,853		325,793
Total assets	Total assets	$	23,423,159	$	22,359,752	Total assets	$	24,482,268	$	24,724,759

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:	Deposits:					Deposits:
Non-interest bearing transaction accounts	Non-interest bearing transaction accounts	$	4,893,959	$	4,482,091	Non-interest bearing transaction accounts	$	5,223,862	$	5,325,318
Interest bearing transaction accounts and savings deposits	Interest bearing transaction accounts and savings deposits	10,569,602		9,672,608		Interest bearing transaction accounts and savings deposits	12,105,948		11,588,770
Time deposits	Time deposits	2,841,052		2,832,327		Time deposits	2,062,612		2,452,460
Total deposits	Total deposits	18,304,613		16,987,026		Total deposits	19,392,422		19,366,548
Federal funds purchased and securities sold under agreements to repurchase	Federal funds purchased and securities sold under agreements to repurchase	187,215		299,111		Federal funds purchased and securities sold under agreements to repurchase	196,828		185,403
Other borrowings	Other borrowings	1,339,193		1,342,067		Other borrowings	1,337,243		1,337,973
Subordinated notes and debentures	Subordinated notes and debentures	383,143		382,874		Subordinated notes and debentures	384,242		384,131
Other liabilities held for sale		0		154,620
Accrued interest and other liabilities	Accrued interest and other liabilities	169,629		217,398		Accrued interest and other liabilities	209,926		201,863
Total liabilities	Total liabilities	20,383,793		19,383,096		Total liabilities	21,520,661		21,475,918

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, 40,040,000 shares authorized; Series D, $0.01 par value, $1,000 liquidation value per share; 767 shares issued and outstanding at June 30, 2021 and December 31, 2020		767		767
Common stock, Class A, $0.01 par value; 175,000,000 shares authorized at June 30, 2021 and December 31, 2020; 108,386,669 and 108,077,662 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		1,084		1,081
Common stock, Class A, $0.01 par value; 175,000,000 shares authorized at March 31, 2022 and December 31, 2021; 112,505,555 and 112,715,444 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively						Common stock, Class A, $0.01 par value; 175,000,000 shares authorized at March 31, 2022 and December 31, 2021; 112,505,555 and 112,715,444 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	1,125		1,127
Surplus	Surplus	2,021,128		2,014,076		Surplus	2,150,453		2,164,989
Undivided profits	Undivided profits	1,004,314		901,006		Undivided profits	1,136,990		1,093,270
Accumulated other comprehensive income		12,073		59,726
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(326,961)		(10,545)
Total stockholders’ equity	Total stockholders’ equity	3,039,366		2,976,656		Total stockholders’ equity	2,961,607		3,248,841
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	23,423,159	$	22,359,752	Total liabilities and stockholders’ equity	$	24,482,268	$	24,724,759

See Condensed Notes to Consolidated Financial Statements.

Simmons First National Corporation

Consolidated Statements of Income

Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands, except per share data)	(In thousands, except per share data)	2021		2020		2021		2020		(In thousands, except per share data)	2022		2021
		(Unaudited)				(Unaudited)					(Unaudited)
INTEREST INCOME	INTEREST INCOME									INTEREST INCOME
Loans, including fees	Loans, including fees	$	138,804	$	176,910	$	285,228	$	364,476	Loans, including fees	$	127,176	$	146,424
Interest bearing balances due from banks and federal funds sold	Interest bearing balances due from banks and federal funds sold	651		603		1,449		3,044		Interest bearing balances due from banks and federal funds sold	649		798
Investment securities	Investment securities	27,128		13,473		48,701		32,416		Investment securities	33,712		21,573
Mortgage loans held for sale	Mortgage loans held for sale	386		668		1,025		949		Mortgage loans held for sale	190		639
TOTAL INTEREST INCOME	TOTAL INTEREST INCOME	166,969		191,654		336,403		400,885		TOTAL INTEREST INCOME	161,727		169,434

INTEREST EXPENSE	INTEREST EXPENSE									INTEREST EXPENSE
Deposits	Deposits	10,782		18,006		23,961		49,283		Deposits	6,817		13,179
Federal funds purchased and securities sold under agreements to repurchase	Federal funds purchased and securities sold under agreements to repurchase	192		337		437		1,096		Federal funds purchased and securities sold under agreements to repurchase	68		245
Other borrowings	Other borrowings	4,897		4,963		9,699		9,840		Other borrowings	4,779		4,802
Subordinated notes and debentures	Subordinated notes and debentures	4,565		4,667		9,092		9,502		Subordinated notes and debentures	4,457		4,527
TOTAL INTEREST EXPENSE	TOTAL INTEREST EXPENSE	20,436		27,973		43,189		69,721		TOTAL INTEREST EXPENSE	16,121		22,753

NET INTEREST INCOME	NET INTEREST INCOME	146,533		163,681		293,214		331,164		NET INTEREST INCOME	145,606		146,681
Provision for credit losses	Provision for credit losses	(12,951)		21,915		(11,506)		45,049		Provision for credit losses	(19,914)		1,445

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	159,484		141,766		304,720		286,115		NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	165,520		145,236

NON-INTEREST INCOME	NON-INTEREST INCOME									NON-INTEREST INCOME
Trust income		7,238		7,253		13,904		14,404
Wealth management fees										Wealth management fees	7,968		7,361
Service charges on deposit accounts	Service charges on deposit accounts	10,050		8,570		19,765		21,898		Service charges on deposit accounts	10,696		9,715
Other service charges and fees	Other service charges and fees	2,048		1,489		3,970		3,077		Other service charges and fees	1,637		1,922
Mortgage lending income	Mortgage lending income	4,490		12,459		10,937		17,505		Mortgage lending income	4,550		6,447
SBA lending income		287		245		527		541
Investment banking income		654		571		1,349		1,448
Debit and credit card fees	Debit and credit card fees	7,882		6,575		15,283		13,140		Debit and credit card fees	7,449		6,610
Bank owned life insurance income	Bank owned life insurance income	2,038		1,445		3,561		2,743		Bank owned life insurance income	2,706		1,523
Gain on sale of securities, net		5,127		390		10,598		32,485
Gain (loss) on sale of securities, net										Gain (loss) on sale of securities, net	(54)		5,471
Other income	Other income	8,110		9,809		18,370		22,610		Other income	7,266		10,500
TOTAL NON-INTEREST INCOME	TOTAL NON-INTEREST INCOME	47,924		48,806		98,264		129,851		TOTAL NON-INTEREST INCOME	42,218		49,549

NON-INTEREST EXPENSE	NON-INTEREST EXPENSE									NON-INTEREST EXPENSE
Salaries and employee benefits	Salaries and employee benefits	60,261		57,644		120,601		125,568		Salaries and employee benefits	67,906		60,340
Occupancy expense, net	Occupancy expense, net	9,103		9,217		18,403		18,727		Occupancy expense, net	10,023		9,300
Furniture and equipment expense	Furniture and equipment expense	4,859		6,144		10,274		11,867		Furniture and equipment expense	4,775		5,415
Other real estate and foreclosure expense	Other real estate and foreclosure expense	863		274		1,206		599		Other real estate and foreclosure expense	343		343
Deposit insurance	Deposit insurance	1,687		2,838		2,995		5,313		Deposit insurance	1,838		1,308
Merger related costs	Merger related costs	686		1,830		919		2,898		Merger related costs	1,886		233
Other operating expenses	Other operating expenses	38,007		38,230		74,861		78,669		Other operating expenses	41,646		36,063
TOTAL NON-INTEREST EXPENSE	TOTAL NON-INTEREST EXPENSE	115,466		116,177		229,259		243,641		TOTAL NON-INTEREST EXPENSE	128,417		113,002

INCOME BEFORE INCOME TAXES	INCOME BEFORE INCOME TAXES	91,942		74,395		173,725		172,325		INCOME BEFORE INCOME TAXES	79,321		81,783
Provision for income taxes	Provision for income taxes	17,018		15,593		31,381		36,287		Provision for income taxes	14,226		14,363

NET INCOME	NET INCOME	74,924		58,802		142,344		136,038		NET INCOME	65,095		67,420
Preferred stock dividends	Preferred stock dividends	13		13		26		26		Preferred stock dividends	—		13
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	74,911	$	58,789	$	142,318	$	136,012	NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	65,095	$	67,407
BASIC EARNINGS PER SHARE	BASIC EARNINGS PER SHARE	$	0.69	$	0.54	$	1.31	$	1.23	BASIC EARNINGS PER SHARE	$	0.58	$	0.62
DILUTED EARNINGS PER SHARE	DILUTED EARNINGS PER SHARE	$	0.69	$	0.54	$	1.31	$	1.22	DILUTED EARNINGS PER SHARE	$	0.58	$	0.62

See Condensed Notes to Consolidated Financial Statements.

Simmons First National Corporation

Consolidated Statements of Comprehensive Income (Loss)

Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2022		2021
		(Unaudited)				(Unaudited)					(Unaudited)
NET INCOME	NET INCOME	$	74,924	$	58,802	$	142,344	$	136,038	NET INCOME	$	65,095	$	67,420

OTHER COMPREHENSIVE INCOME (LOSS)	OTHER COMPREHENSIVE INCOME (LOSS)									OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized holding gains (losses) arising during the period on available-for-sale securities		71,801		22,159		(53,916)		77,728
Less: Reclassification adjustment for realized gains included in net income		5,127		390		10,598		32,485
Unrealized holding losses arising during the period on available-for-sale securities										Unrealized holding losses arising during the period on available-for-sale securities	(465,708)		(125,717)
Less: Reclassification adjustment for realized (loss) gains included in net income										Less: Reclassification adjustment for realized (loss) gains included in net income	(54)		5,471
Less: Realized loss on available-for-sale securities interest rate hedges										Less: Realized loss on available-for-sale securities interest rate hedges	(37,199)		—

Less: Amortization of net unrealized gains on securities transferred from available-for-sale to held-to-maturity										Less: Amortization of net unrealized gains on securities transferred from available-for-sale to held-to-maturity	(84)		—
Other comprehensive income (loss), before tax effect	Other comprehensive income (loss), before tax effect	66,674		21,769		(64,514)		45,243		Other comprehensive income (loss), before tax effect	(428,371)		(131,188)
Less: Tax effect of other comprehensive income (loss)		17,425		5,689		(16,861)		11,824

Less: Tax effect of other comprehensive loss										Less: Tax effect of other comprehensive loss	(111,955)		(34,286)

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	49,249		16,080		(47,653)		33,419		TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	(316,416)		(96,902)

COMPREHENSIVE INCOME		$	124,173	$	74,882	$	94,691	$	169,457
COMPREHENSIVE INCOME (LOSS)										COMPREHENSIVE INCOME (LOSS)	$	(251,321)	$	(29,482)

See Condensed Notes to Consolidated Financial Statements.

Simmons First National Corporation

Consolidated Statements of Cash Flows

~~Six~~Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~


(In thousands)	(In thousands)	June 30, 2021		June 30, 2020		(In thousands)	March 31, 2022		March 31, 2021
		(Unaudited)					(Unaudited)
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income	Net income	$	142,344	$	136,038	Net income	$	65,095	$	67,420
Adjustments to reconcile net income to net cash (used in) provided by operating activities:	Adjustments to reconcile net income to net cash (used in) provided by operating activities:					Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	Depreciation and amortization	23,837		24,148		Depreciation and amortization	11,637		12,323
Provision for credit losses	Provision for credit losses	(11,506)		45,049		Provision for credit losses	(19,914)		1,445
Gain on sale of investments		(10,598)		(32,485)
(Gain) loss on sale of investments						(Gain) loss on sale of investments	54		(5,471)
Net accretion of investment securities and assets	Net accretion of investment securities and assets	(24,377)		(30,078)		Net accretion of investment securities and assets	(13,176)		(12,018)
Net amortization on borrowings	Net amortization on borrowings	269		271		Net amortization on borrowings	111		134
Stock-based compensation expense	Stock-based compensation expense	7,592		7,577		Stock-based compensation expense	3,941		3,852
Gain on sale of premises held for sale		(606)		0
Gain on sale of foreclosed assets held for sale		(177)		(400)
Gain on sale of premises and equipment, net of impairment						Gain on sale of premises and equipment, net of impairment	—		(177)
Gain on sale of foreclosed assets and other real estate owned						Gain on sale of foreclosed assets and other real estate owned	(235)		(134)
Gain on sale of mortgage loans held for sale	Gain on sale of mortgage loans held for sale	(20,006)		(14,993)		Gain on sale of mortgage loans held for sale	(2,931)		(11,409)
Gain on sale of other intangibles		0		(301)
Gain on sale of banking operations		(5,300)		(8,094)
Fair value write-down of closed branches		0		1,465
Gain on sale of branches						Gain on sale of branches	—		(5,300)
Deferred income taxes	Deferred income taxes	6,315		4,616		Deferred income taxes	9,107		3,227
Income from bank owned life insurance	Income from bank owned life insurance	(3,630)		(3,245)		Income from bank owned life insurance	(2,706)		(1,534)
Originations of mortgage loans held for sale	Originations of mortgage loans held for sale	(534,124)		(470,797)		Originations of mortgage loans held for sale	(189,361)		(298,914)
Proceeds from sale of mortgage loans held for sale	Proceeds from sale of mortgage loans held for sale	655,497		423,858		Proceeds from sale of mortgage loans held for sale	210,442		384,046
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Interest receivable	Interest receivable	4,680		(18,021)		Interest receivable	3,633		1,237
Other assets	Other assets	(2,402)		(19,676)		Other assets	(19,178)		(30,187)
Accrued interest and other liabilities	Accrued interest and other liabilities	(58,284)		76,265		Accrued interest and other liabilities	(5,045)		(20,733)
Income taxes payable	Income taxes payable	6,786		(34,233)		Income taxes payable	9,051		(12,055)
Net cash provided by operating activities	Net cash provided by operating activities	176,310		86,964		Net cash provided by operating activities	60,525		75,752

INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Net change in loans	Net change in loans	1,520,504		(318,795)		Net change in loans	(22,060)		705,540
Proceeds from sale of loans	Proceeds from sale of loans	1,847		4,600		Proceeds from sale of loans	1,237		1,847
Net change in due from banks - time	Net change in due from banks - time	244		(7)		Net change in due from banks - time	25		245
Purchases of premises and equipment, net	Purchases of premises and equipment, net	(5,829)		(19,784)		Purchases of premises and equipment, net	(7,156)		(2,514)
Proceeds from sale of premises held for sale	Proceeds from sale of premises held for sale	5,156		0		Proceeds from sale of premises held for sale	—		1,572
Proceeds from sale of foreclosed assets held for sale	Proceeds from sale of foreclosed assets held for sale	10,988		6,173		Proceeds from sale of foreclosed assets held for sale	1,623		8,338
Proceeds from sale of available-for-sale securities	Proceeds from sale of available-for-sale securities	249,454		1,201,778		Proceeds from sale of available-for-sale securities	—		135,651
Proceeds from maturities of available-for-sale securities	Proceeds from maturities of available-for-sale securities	314,547		2,048,453		Proceeds from maturities of available-for-sale securities	194,961		185,636
Purchases of available-for-sale securities	Purchases of available-for-sale securities	(3,672,029)		(2,386,878)		Purchases of available-for-sale securities	(162,359)		(1,464,377)
Proceeds from maturities of held-to-maturity securities	Proceeds from maturities of held-to-maturity securities	9,479		5,932		Proceeds from maturities of held-to-maturity securities	17,491		4,426
Purchases of held-to-maturity securities	Purchases of held-to-maturity securities	(606,187)		(16,997)		Purchases of held-to-maturity securities	(44,638)		(280,043)
Purchase of bank owned life insurance		(160,000)		0
Proceeds from bank owned life insurance death benefits	Proceeds from bank owned life insurance death benefits	3,032		763		Proceeds from bank owned life insurance death benefits	—		573
Disposition of assets and liabilities held for sale	Disposition of assets and liabilities held for sale	(134,166)		181,261		Disposition of assets and liabilities held for sale	—		(134,166)
Net cash (used in) provided by investing activities		(2,462,960)		706,499
Net cash used in investing activities						Net cash used in investing activities	(20,876)		(837,272)

FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Net change in deposits	Net change in deposits	1,307,965		561,185		Net change in deposits	25,874		1,192,740
Repayments of subordinated debentures		0		(5,927)
Dividends paid on preferred stock	Dividends paid on preferred stock	(26)		(26)		Dividends paid on preferred stock	—		(13)
Dividends paid on common stock	Dividends paid on common stock	(39,010)		(37,606)		Dividends paid on common stock	(21,375)		(19,500)
Net change in other borrowed funds	Net change in other borrowed funds	(2,874)		96,090		Net change in other borrowed funds	(730)		(1,600)
Net change in federal funds purchased and securities sold under agreements to repurchase	Net change in federal funds purchased and securities sold under agreements to repurchase	(111,896)		236,880		Net change in federal funds purchased and securities sold under agreements to repurchase	11,425		23,942
Net shares issued (cancelled) under stock compensation plans		1,373		(3,171)
Net shares (cancelled) issued under stock compensation plans						Net shares (cancelled) issued under stock compensation plans	(3,575)		1,172
Shares issued under employee stock purchase plan	Shares issued under employee stock purchase plan	1,170		956		Shares issued under employee stock purchase plan	1,151		1,170
Repurchases of common stock	Repurchases of common stock	(3,080)		(93,307)		Repurchases of common stock	(16,055)		(3,080)
Net cash provided by financing activities		1,153,622		755,074
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(3,285)		1,194,831

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(1,133,028)		1,548,537
INCREASE IN CASH AND CASH EQUIVALENTS						INCREASE IN CASH AND CASH EQUIVALENTS	36,364		433,311
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	3,472,152		996,623		CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	1,650,653		3,472,152

CASH AND CASH EQUIVALENTS, END OF PERIOD	CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,339,124	$	2,545,160	CASH AND CASH EQUIVALENTS, END OF PERIOD	$	1,687,017	$	3,905,463

See Condensed Notes to Consolidated Financial Statements.

Simmons First National Corporation

Consolidated Statements of Stockholders’ Equity

Three Months Ended ~~June 30,~~March 31, 2022 and 2021~~and 2020~~

(In thousands, except share data) Preferred Stock Common
Stock Surplus Accumulated
Other
Comprehensive
(Loss) Income Undivided
Profits Total
Three Months Ended June 30, 2021
Balance, March 31, 2021 (Unaudited) $ 767 $ 1,083 $ 2,017,188 $ (37,176) $ 948,913 $ 2,930,775
Comprehensive income — — — 49,249 74,924 124,173
Stock-based compensation plans, net – 40,937 shares — 1 3,940 — — 3,941
Dividends on preferred stock — — — — (13) (13)
Dividends on common stock – $0.18 per share — — — — (19,510) (19,510)
Balance, June 30, 2021 (Unaudited) $ 767 $ 1,084 $ 2,021,128 $ 12,073 $ 1,004,314 $ 3,039,366
Three Months Ended June 30, 2020
Balance, March 31, 2020 (Unaudited) $ 767 $ 1,090 $ 2,026,420 $ 38,230 $ 778,893 $ 2,845,400
Comprehensive income — — — 16,080 58,802 74,882
Stock-based compensation plans, net – 28,058 shares — — 2,963 — — 2,963
Dividends on preferred stock — — — — (13) (13)
Dividends on common stock – $0.17 per share — — �� — (18,529) (18,529)
Balance, June 30, 2020 (Unaudited) $ 767 $ 1,090 $ 2,029,383 $ 54,310 $ 819,153 $ 2,904,703

~~See Condensed Notes to Consolidated Financial Statements.~~

~~Simmons First National Corporation~~

~~Consolidated Statements of Stockholders’ Equity~~

~~Six Months Ended June 30, 2021 and 2020~~

(In thousands, except share data) Preferred Stock Common
Stock Surplus Accumulated
Other
Comprehensive
(Loss) Income Undivided
Profits Total
Six Months Ended June 30, 2021
Balance, December 31, 2020 $ 767 $ 1,081 $ 2,014,076 $ 59,726 $ 901,006 $ 2,976,656
Comprehensive (loss) income — — — (47,653) 142,344 94,691
Stock issued for employee stock purchase plan – 60,697 shares — 1 1,169 — — 1,170
Stock-based compensation plans, net – 379,226 shares — 3 8,962 — — 8,965
Stock repurchases – 130,916 shares — (1) (3,079) — — (3,080)
Dividends on preferred stock — — — — (26) (26)
Dividends on common stock – $0.36 per share — — — — (39,010) (39,010)
Balance, June 30, 2021 (Unaudited) $ 767 $ 1,084 $ 2,021,128 $ 12,073 $ 1,004,314 $ 3,039,366
Six Months Ended June 30, 2020
Balance, December 31, 2019 $ 767 $ 1,136 $ 2,117,282 $ 20,891 $ 848,848 $ 2,988,924
Impact of ASU 2016-13 adoption — — — — (128,101) (128,101)
Comprehensive income — — — 33,419 136,038 169,457
Stock issued for employee stock purchase plan – 43,681 shares — 1 955 — — 956
Stock-based compensation plans, net – 244,443 shares — 2 4,404 — — 4,406
Stock repurchases – 4,922,336 shares — (49) (93,258) — — (93,307)
Dividends on preferred stock — — — — (26) (26)
Dividends on common stock – $0.34 per share — — — — (37,606) (37,606)
Balance, June 30, 2020 (Unaudited) $ 767 $ 1,090 $ 2,029,383 $ 54,310 $ 819,153 $ 2,904,703


(In thousands, except share data)	Preferred Stock		Common Stock		Surplus		Accumulated Other Comprehensive (Loss) Income		Undivided Profits		Total
Three Months Ended March 31, 2022
Balance, December 31, 2021	$	—	$	1,127	$	2,164,989	$	(10,545)	$	1,093,270	$	3,248,841

Comprehensive (loss) income	—		—		—		(316,416)		65,095		(251,321)
Stock issued for employee stock purchase plan – 59,475 shares	—		1		1,150		—		—		1,151
Stock-based compensation plans, net – 244,361 shares	—		2		364		—		—		366
Stock repurchases – 513,725 shares	—		(5)		(16,050)		—		—		(16,055)
Dividends on common stock – $0.19 per share	—		—		—		—		(21,375)		(21,375)

Balance, March 31, 2022 (Unaudited)	$	—	$	1,125	$	2,150,453	$	(326,961)	$	1,136,990	$	2,961,607

Three Months Ended March 31, 2021
Balance, December 31, 2020	$	767	$	1,081	$	2,014,076	$	59,726	$	901,006	$	2,976,656

Comprehensive income	—		—		—		(96,902)		67,420		(29,482)
Stock issued for employee stock purchase plan – 60,697 shares	—		1		1,169		—		—		1,170
Stock-based compensation plans, net – 338,289 shares	—		2		5,022		—		—		5,024
Stock repurchases – 130,916 shares	—		(1)		(3,079)		—		—		(3,080)
Dividends on preferred stock	—		—		—		—		(13)		(13)
Dividends on common stock – $0.18 per share	—		—		—		—		(19,500)		(19,500)

Balance, March 31, 2021 (Unaudited)	$	767	$	1,083	$	2,017,188	$	(37,176)	$	948,913	$	2,930,775

See Condensed Notes to Consolidated Financial Statements.

SIMMONS FIRST NATIONAL CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: PREPARATION OF INTERIM FINANCIAL STATEMENTS

Description of Business and Organizational Structure

Simmons First National Corporation (“Company”) is a Mid-South financial holding company headquartered in Pine Bluff, Arkansas, and the parent company of Simmons Bank, an Arkansas state-chartered bank that has been in operation since 1903 (“Simmons Bank” or the “Bank”). Simmons First Insurance Services, Inc. and Simmons First Insurance Services of TN, LLC are wholly-owned subsidiaries of Simmons Bank and are insurance agencies that offer various lines of personal and corporate insurance coverage to individual and commercial customers. The Company, through its subsidiaries, offers, among other things, consumer, real estate and commercial loans; checking, savings and time deposits; and specialized products and services (such as credit cards, trust and fiduciary services, investments, agricultural finance lending, equipment lending, insurance and Small Business Administration (“SBA”) lending) from ~~approximately 198~~197 financial centers as of ~~June 30, 2021,~~March 31, 2022, located throughout market areas in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared based upon Securities and Exchange Commission (“SEC”) rules that permit reduced disclosures for interim periods. Certain information and footnote disclosures have been condensed or omitted in accordance with those rules and regulations. The accompanying consolidated balance sheet as of December 31, ~~2020,~~2021, was derived from audited financial statements. In the opinion of management, these financial statements reflect all adjustments that are necessary for a fair presentation of interim results of operations, including normal recurring accruals. Significant intercompany accounts and transactions have been eliminated in consolidation. The results for the interim periods are not necessarily indicative of results for the full year. For a more complete discussion of significant accounting policies and certain other information, this report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, which was filed with the SEC on February 25, ~~2021.~~2022.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States (“US GAAP”), requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income items and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements, and actual results may differ from these estimates. Such estimates include, but are not limited to, the Company’s allowance for credit losses.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans and the valuation of acquired loans. Management obtains independent appraisals for significant properties in connection with the determination of the allowance for credit losses and the valuation of foreclosed assets.

During the second ~~quarter~~and third quarters of 2021, certain debit and credit card transaction fees were reclassified from non-interest expense to non-interest income. These transaction fees, as well as additional certain prior year amounts, have been reclassified to conform to the current year financial statement presentation. These changes and reclassifications did not impact previously reported net income or comprehensive ~~income.~~income and were not material to the consolidated financial statements.

Recently Adopted Accounting Standards

Reference Rate Reform – In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides relief for companies preparing for discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”). LIBOR is a benchmark interest rate referenced in a variety of agreements that are used by numerous entities. On March 5, 2021, the U.K. Financial Conduct Authority (“FCA”) announced that the majority of

LIBOR rates will no longer be published after December 31, 2021, although a number of key settings will continue until June

2023, to support the rundown of legacy contracts only. As a result, LIBOR should be discontinued as a reference rate.

Other interest rates used globally could also be discontinued for similar reasons. ASU 2020-04 provides optional expedients and exceptions to contracts, hedging relationships and other transactions affected by reference rate reform. The main provisions for contract modifications include optional relief by allowing the modification as a continuation of the existing contract without additional analysis and other optional expedients regarding embedded features. Optional expedients for hedge accounting permits changes to critical terms of hedging relationships and to the designated benchmark interest rate in a fair value hedge and also provides relief for assessing hedge effectiveness for cash flow hedges. Companies are able to apply ASU 2020-04 immediately; however, the guidance will only be available for a limited time (generally through December 31, 2022). The Company formed a LIBOR Transition Team in 2020, has created standard LIBOR replacement language for new and modified loan notes, and is monitoring the remaining loans with LIBOR rates monthly to ensure progress in updating these loans with acceptable LIBOR replacement language or converting them to other interest rates. ~~The~~During 2021, the Company ~~has~~did not ~~been offering~~offer LIBOR-indexed rates on loans which it originated, although it did participate in some shared credit agreements originated by other banks subject to the Company’s determination that the LIBOR replacement language in the loan documents ~~meets~~met the Company’s standards. Pursuant to the ~~Interagency~~Joint Regulatory Statement on LIBOR ~~Transition~~transition issued in ~~November 2020,~~October 2021, the Company, ~~will~~as of January 1, 2022, is not ~~enter~~entering into any new LIBOR-based credit agreements ~~after December 31, 2021.~~and is not extending, renewing, or modifying any prior LIBOR credit agreements without requiring conversion of the agreements to other interest rates. The adoption of ASU 2020-04 has not had a material impact on the Company’s financial position or results of operations.

In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which clarifies that certain optional expedients and exceptions in Accounting Standard Codification (“ASC”) 848 for contract modifications and hedge accounting apply to derivatives that are affected by the changes in the interest rates used for margining, discounting, or contract price alignment for derivative instruments that are being implemented as part of the market-wide transition to new reference rates (commonly referred to as the “discounting transition”). ASU 2021-01 also amends the expedients and exceptions in ASC 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. ASU 2021-01 was effective upon issuance and generally can be applied through December 31, 2022. ASU 2021-01 did not have a material impact on the Company’s financial position or results of operations.

~~Income Taxes~~ ~~– In December 2019, the FASB issued ASU No. 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~ (“ASU 2019-12”), that removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 introduces the following new guidance: i) guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction and ii) a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax. Additionally, ASU 2019-12 changes the following current guidance: i) making an intraperiod allocation, if there is a loss in continuing operations and gains outside of continuing operations, ii) determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting, iii) accounting for tax law changes and year-to-date losses in interim periods, and iv) determining how to apply the income tax guidance to franchise taxes that are partially based on income. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2020. The adoption of ASU 2019-12 did not have a material impact on the Company’s operations, financial position or disclosures.

~~Fair Value Measurement Disclosures~~ ~~– In August 2018, the FASB issued ASU No. 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement~~ (“ASU 2018-13”), that eliminates, amends and adds disclosure requirements for fair value measurements. These amendments are part of FASB’s disclosure review project and are expected to reduce costs for preparers while providing more decision-useful information for financial statement users. The eliminated disclosure requirements include the 1) the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy; 2) the policy of timing of transfers between levels of the fair value hierarchy; and 3) the valuation processes for Level 3 fair value measurements. Among other modifications, the amended disclosure requirements remove the term “at a minimum” from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise of discretion by entities and clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. Under the new disclosure requirements, entities must disclose the changes in unrealized gains or losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The adoption of ASU 2018-13 did not have a material impact on the Company’s fair value disclosures.

~~Credit Losses on Financial Instruments~~ ~~– In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ (“ASU 2016-13”), which requires earlier measurement of credit losses, expands the range of information considered in determining expected credit losses and enhances disclosures. The main objective of ASU 2016-13 is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments replaced the incurred loss impairment methodology in US GAAP with a methodology (the current expected credit losses, or “CECL”, methodology) that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity debt securities and other receivables measured at amortized cost at the time the financial asset is originated or acquired. The allowance for credit losses is adjusted each period for changes in expected lifetime credit losses. This methodology replaced the multiple existing impairment methods in previous guidance, which generally required that a loss be incurred before it is recognized. Within the life cycle of a loan or other financial asset, this new guidance will generally result in the earlier recognition of the provision for credit losses and the related allowance for credit losses than previous practice. For available-for-sale debt securities that the Company intends to hold and where fair value is less than cost, credit-related impairment, if any, will be recognized through an allowance for credit losses and adjusted each period for changes in credit risk.

The effective date for these amendments was for fiscal years beginning after December 15, 2019. In preparation for implementation of ASU 2016-13, the Company formed a cross functional team that assessed its data and system needs and evaluated the potential impact of adopting the new guidance. The Company anticipated a significant change in the processes and procedures to calculate the loan losses, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the prior accounting practice that utilized the incurred loss model.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed in to law by the President of the United States (“President”) and allows the option to temporarily defer or suspend the adoption of ASU 2016-13. During the deferral, a registrant would continue to use the incurred loss model for the allowance for loan and lease losses and would be in accordance with US GAAP. The Company did not elect to temporarily defer the adoption of ASU 2016-13 and adopted the new standard as of January 1, 2020. Upon adoption, the Company recorded an additional allowance for credit losses on loans of approximately $151.4 million and an adjustment to the reserve for unfunded commitments recorded in other liabilities of $24.0 million. The Company also recorded an additional allowance for credit losses on investment securities of $742,000. The impact at adoption was reflected as an adjustment to beginning retained earnings, net of income taxes, in the amount of $128.1 million.

The significant impact to the Company’s allowance for credit losses at the date of adoption was driven by the substantial amount of loans acquired held by the Company. The Company had approximately one third of total loans categorized as acquired at the adoption date with very little reserve allocated to them due to the previous incurred loss impairment methodology. As such, the amount of the CECL adoption impact was greater on the Company when compared to a non-acquisitive bank of a similar size.

In December 2018, the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation (“FDIC”) (collectively, the “agencies”) issued a final rule revising regulatory capital rules in anticipation of the adoption of ASU 2016-13 that provided an option to phase in over a three year period on a straight line basis the day-one impact on earnings and Tier 1 capital (the “CECL Transition Provision”).

In March 2020 and in response to the COVID-19 pandemic, the agencies issued a new regulatory capital rule revising the CECL Transition Provision to delay the estimated impact on regulatory capital stemming from the implementation of ASU 2016-13. The rule provides banking organizations that implement CECL before the end of 2020 the option to delay for two years an estimate of CECL’s effect on regulatory capital, followed by a three-year transition period (the “2020 CECL Transition Provision”). The Company elected to apply the 2020 CECL Transition Provision.

The Company used the prospective transition approach for financial assets purchased with credit deterioration (“PCD”) that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30, ~~Loans and Debt Securities Acquired with Deteriorated Credit Quality~~. The Company increased the allowance for credit losses by approximately $5.4 million at adoption for the assets previously identified as PCI. In accordance with ASU 2016-13, the Company did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption.

~~Recently Issued Accounting Standards~~

Leases - In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors-Certain Leases with Variable Lease Payments (“ASU 2021-05”), that amends lease classification requirements for lessors. In accordance with ASU 2021-05, lessors should classify and account for a lease that have variable lease payments that do not depend on a reference index rate as an operating lease if both of the following criteria are met: i) the lease would have been classified as a sales-type lease or a direct financing lease under the previous lease classification criteria and ii) sales-type or direct financing lease classification would result in a Day 1 loss. ASU 2021-05 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The ~~Company is currently evaluating the impact~~adoption of ~~this standard, but the standard is~~ASU No. 2021-05 did not ~~expected to~~ have a material impact on the Company’s results of operations, financial position or disclosures.

Recently Issued Accounting Standards

Fair Value Hedging - In March 2022, the FASB issued ASU No. 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method (“ASU 2022-01”), which clarifies the guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets. This ASU amends the guidance in ASU 2017-12 that, among other things, established the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible. ASU 2022-01 renames that method the “portfolio layer” method and expands the scope of this guidance to allow entities to apply the portfolio layer method to portfolios of all financial assets, including both prepayable and nonprepayable financial assets. This scope expansion is consistent with the FASB’s efforts to simplify hedge accounting and allows entities to apply the same method to similar hedging strategies. ASU 2022-01 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact this standard will have on the Company’s results of operations, financial position and disclosures.

Credit Losses on Financial Instruments - In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which eliminates the accounting guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings made to borrowers experiencing financial difficulty. ASU 2022-02 is effective for public business entities for fiscal years, and

interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact this standard will have on the Company’s results of operations, financial position and disclosures.

There have been no other significant changes to the Company’s accounting policies ~~from~~as previously reported (disclosed) in the ~~2020~~2021 Form 10-K. Presently, the Company is not aware of any other changes to the Accounting Standards Codification that will have a material impact on its present or future financial position or results of operations.

NOTE 2: ~~PROPOSED~~ ACQUISITIONS

Landmark Community Bank

On ~~June 4,~~October 8, 2021, the Company ~~and~~completed its acquisition of Landmark Community Bank (“Landmark”) pursuant to the ~~Bank entered into an~~terms of the Agreement and Plan of Merger dated as of June 4, 2021 (“Landmark Agreement”) ~~with~~, at which time Landmark ~~Community Bank (“Landmark”), headquartered in Collierville, Tennessee, pursuant to which, upon the terms and subject to the conditions of the Landmark Agreement, Landmark will merge~~merged with and into ~~the~~Simmons Bank, with ~~the~~Simmons Bank continuing as the surviving entity. ~~According to the terms~~The Company issued 4,499,872 shares of ~~the Landmark Agreement, upon consummation of the merger, holders of Landmark’s~~its common stock ~~and~~valued at approximately $138.2 million as of October 8, 2021, plus $6,451,727.43 in cash, in exchange for all outstanding shares of Landmark capital stock (and common stock ~~equivalents will receive, in~~equivalents) to effect the ~~aggregate, 4,500,000 shares of the Company’s common stock and $7,000,000, all subject to certain conditions and potential adjustments under the Landmark agreement.~~merger.

Prior to the acquisition, Landmark, ~~conducts~~headquartered in Collierville, Tennessee, conducted banking business from 8 branches located in the Memphis and Nashville, Tennessee, metropolitan areas. AsIncluding the effects of ~~June 30, 2021, Landmark had~~the acquisition method accounting adjustments, the Company acquired approximately ~~$986.7~~$968.8 million in assets, ~~$783.1~~including approximately $789.5 million in loans (inclusive of loan discounts), and ~~$823.1~~approximately $802.7 million in deposits. ~~Completion~~

Goodwill of $31.5 million was recorded as a result of the transaction. The merger strengthened the Company’s market share and brought forth additional opportunities in the Company’s current footprint, which gave rise to the goodwill recorded. The goodwill will not be deductible for tax purposes.

A summary, at fair value, of the assets acquired and liabilities assumed in the Landmark acquisition, as of the acquisition date, is as follows:


(In thousands)	Acquired from Landmark		Fair Value Adjustments		Fair Value
Assets Acquired
Cash and due from banks	$	27,591	$	—	$	27,591
Due from banks - time	100		—		100
Investment securities	114,793		(125)		114,668
Loans acquired	785,551		3,953		789,504
Allowance for credit losses on loans	(5,980)		3,621		(2,359)
Premises and equipment	9,540		(4,099)		5,441
Bank owned life insurance	21,287		—		21,287
Core deposit intangible	88		4,071		4,159
Other assets	13,036		(4,655)		8,381
Total assets acquired	$	966,006	$	2,766	$	968,772


(In thousands)	Acquired from Landmark		Fair Value Adjustments		Fair Value
Liabilities Assumed
Deposits:
Non-interest bearing transaction accounts	$	110,393	$	—	$	110,393
Interest bearing transaction accounts and savings deposits	425,777		—		425,777
Time deposits	266,835		(334)		266,501
Total deposits	803,005		(334)		802,671
Other borrowings	47,023		—		47,023
Accrued interest and other liabilities	8,459		(3,122)		5,337
Total liabilities assumed	858,487		(3,456)		855,031
Equity	107,519		(107,519)		—
Total equity assumed	107,519		(107,519)		—
Total liabilities and equity assumed	$	966,006	$	(110,975)	$	855,031
Net assets acquired					113,741
Purchase price					145,195
Goodwill					$	31,454

The purchase price allocation and certain fair value measurements remain preliminary due to the timing of the merger. Management will continue to review the estimated fair values and evaluate the assumed tax positions. The Company expects to finalize its analysis of the acquired assets and assumed liabilities in this transaction ~~is expected during~~within one year of the ~~fourth quarter~~completion of ~~2021~~the merger. Therefore, adjustments to the estimated amounts and ~~is subject to certain closing conditions, including approval by~~carrying values may occur.

The Company’s operating results include the ~~shareholders~~operating results of the acquired assets and assumed liabilities of Landmark ~~and customary regulatory approvals.~~subsequent to the acquisition date.

Triumph Bancshares, Inc.

On ~~June 4,~~October 8, 2021, the Company ~~entered into an~~completed its merger with Triumph Bancshares, Inc. (“Triumph”) pursuant to the terms of the Agreement and Plan of Merger dated as of June 4, 2021 (“Triumph Agreement”) ~~with~~, at which time Triumph Bancshares, Inc. (“Triumph”), the parent company of Triumph Bank, headquartered in Memphis, Tennessee, pursuant to which, upon the terms and subject to the conditions of the Triumph Agreement, Triumph will mergemerged with and into the Company, with the Company continuing as the surviving corporation. ~~According to the terms~~The Company issued 4,164,712 shares of ~~the Triumph Agreement, upon consummation of the merger, holders of Triumph’s~~its common stock ~~and~~valued at approximately $127.9 million as of October 8, 2021, plus $1,693,402.93 in cash, in exchange for all outstanding shares of Triumph capital stock (and common stock ~~equivalents will receive, in~~equivalents) to effect the ~~aggregate, 4,164,839 shares of the Company’s common stock and $2,645,937.83, all subject to certain conditions and potential adjustments under the Triumph Agreement.~~merger.

Prior to the acquisition, Triumph, ~~conducts~~headquartered in Memphis, Tennessee, conducted banking business through its subsidiary bank, Triumph Bank, from 6 branches located in the Memphis and Nashville, Tennessee, metropolitan areas. AsIncluding the effects of ~~June 30, 2021, Triumph had~~the acquisition method accounting adjustments, the Company acquired approximately ~~$886.7~~$846.9 million in assets, ~~$715.8~~including approximately $698.8 million in loans (inclusive of loan discounts), and ~~$712.8~~approximately $719.7 million in deposits. ~~Completion~~

Goodwill of $40.2 million was recorded as a result of the transaction. The merger strengthened the Company’s market share and brought forth additional opportunities in the Company’s current footprint, which gave rise to the goodwill recorded. The goodwill will not be deductible for tax purposes.

A summary, at fair value, of the assets acquired and liabilities assumed in the Triumph acquisition, as of the acquisition date, is as follows:


(In thousands)	Acquired from Triumph		Fair Value Adjustments		Fair Value
Assets Acquired
Cash and due from banks	$	7,484	$	—	$	7,484
Due from banks - time	495		—		495
Investment securities	130,571		(1,116)		129,455
Loans acquired	702,460		(3,674)		698,786
Allowance for credit losses on loans	(12,617)		1,525		(11,092)
Premises and equipment	2,774		484		3,258
Goodwill	1,550		(1,550)		—
Core deposit intangible	—		5,136		5,136
Other assets	12,806		594		13,400
Total assets acquired	845,523		1,399		846,922

Liabilities Assumed
Deposits:
Non-interest bearing transaction accounts	$	115,729	$	—	$	115,729
Interest bearing transaction accounts and savings deposits	383,434		—		383,434
Time deposits	219,477		1,094		220,571
Total deposits	718,640		1,094		719,734
Other borrowings	2,854		—		2,854
Subordinated debentures	30,700		—		30,700
Accrued interest and other liabilities	2,882		455		3,337
Total liabilities assumed	755,076		1,549		756,625
Equity	90,446		(90,446)		—
Total equity assumed	90,446		(90,446)		—
Total liabilities and equity assumed	$	845,522	$	(88,897)	$	756,625
Net assets acquired					90,297
Purchase price					130,544
Goodwill					$	40,247

The Company’s operating results include the ~~shareholders~~operating results of the acquired assets and assumed liabilities of Triumph ~~and customary regulatory approvals.~~subsequent to the acquisition date.

The following is a description of the methods used to determine the fair values of significant assets and liabilities presented in the acquisitions above.

Cash and due from banks and time deposits due from banks – The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Investment securities – Investment securities were acquired with an adjustment to fair value based upon quoted market prices if material. Otherwise, the carrying amount of these assets was deemed to be a reasonable estimate of fair value.

Loans acquired – Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was

amortizing, and current discount rates. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. See Note 5, Loans and Allowance for Credit Losses, in the accompanying Notes to Consolidated Financial Statements for additional information related to purchased financial assets with credit deterioration.

Premises and equipment – Bank premises and equipment were acquired with an adjustment to fair value, which represents the difference between the Company’s current analysis of property and equipment values completed in connection with the acquisition and book value acquired.

Bank owned life insurance – Bank owned life insurance is carried at its current cash surrender value, which is the most reasonable estimate of fair value.

Goodwill – The consideration paid as a result of the acquisition exceeded the fair value of the assets acquired, resulting in an intangible asset, goodwill. Goodwill established prior to the acquisitions, if applicable, was written off.

Core deposit intangible – This intangible asset represents the value of the relationships that the acquired banks had with their deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base and the net maintenance cost attributable to customer deposits. Any core deposit intangible established prior to the acquisitions, if applicable, was written off.

Other assets – The fair value adjustment results from certain assets whose value was estimated to be more or less than book value, such as certain prepaid assets, receivables and other miscellaneous assets. Otherwise, the carrying amount of these assets was deemed to be a reasonable estimate of fair value.

Deposits – The fair values used for the demand and savings deposits that comprise the transaction accounts acquired, by definition equal the amount payable on demand at the acquisition date. The Company performed a fair value analysis of the estimated weighted average interest rate of the certificates of deposits compared to the current market rates and recorded a fair value adjustment for the difference when material.

Securities sold under agreement to repurchase – The carrying amount of securities sold under agreement to repurchase is a reasonable estimate of fair value based on the short-term nature of these liabilities.

Other borrowings – The fair value of other borrowings is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities.

Subordinated debentures – The fair value of subordinated debentures is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities.

Accrued interest and other liabilities – The fair value adjustment results from certain liabilities whose value was estimated to be more or less than book value, such as certain accounts payable and other miscellaneous liabilities. The adjustment also establishes a liability for unfunded commitments equal to the fair value of that liability at the date of acquisition. The carrying amount of accrued interest and the remainder of other liabilities was deemed to be a reasonable estimate of fair value.

Spirit of Texas Bancshares, Inc. (Subsequent Event)

On November 19, 2021, the Company announced that it had entered into an Agreement and Plan of Merger (“Spirit Agreement”) with Spirit of Texas Bancshares, Inc. (“Spirit”), headquartered in Conroe, Texas, to acquire Spirit, including its wholly-owned bank subsidiary, Spirit of Texas Bank SSB. The merger was completed on April 8, 2022, at which time Spirit was merged with and into the Company, with the Company continuing as the surviving corporation. Pursuant to the terms of the Spirit Agreement, holders of Spirit’s common stock and common stock equivalents received, in the aggregate, 18,275,074 shares of the Company’s common stock and $1,393,508.24 in cash.

Prior to the acquisition, Spirit conducted banking business from 35 branches located primarily in the Texas Triangle - consisting of Dallas-Fort Worth, Houston, San Antonio and Austin metropolitan areas - with additional locations in the Bryan-College Station, Corpus Christi and Tyler metropolitan areas, along with offices in North Central and South Texas. As of March 31, 2022, Spirit had approximately $3.22 billion in assets, $2.38 billion in loans and $2.74 billion in deposits.

The purchase price allocation and certain fair value measurements remain preliminary due to the timing of the merger. Due to the recent closing, management remains in the early stages of reviewing the estimated fair values and evaluating the assumed tax positions of this merger. The Company expects to finalize its analysis of the acquired assets and assumed liabilities in this transaction within one year of the merger.

NOTE 3: INVESTMENT SECURITIES

Held-to-maturity ~~securities~~ (“HTM”), securities, which include any security for which the Company has ~~both~~ the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the security’s estimated life. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date.

Available-for-sale ~~securities~~ (“AFS”), securities, which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in stockholders’ equity, further discussed below. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date.

During the quarter ended September 30, 2021, the Company transferred, at fair value, $500.8 million of securities from the available-for-sale portfolio to the held-to-maturity portfolio. The related remaining net unrealized gains of $918,000 in accumulated other comprehensive income (loss) will be amortized over the remaining life of the securities. No gains or losses on these securities were recognized at the time of transfer.

The amortized cost, fair value and allowance for credit losses of investment securities that are classified as HTM are as follows:


(In thousands)	(In thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value		(In thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value
Held-to-maturity	Held-to-maturity													Held-to-maturity

June 30, 2021
March 31, 2022														March 31, 2022
U.S. Government agencies	U.S. Government agencies	$	77,396	$	0	$	77,396	$	0	$	(2,054)	$	75,342	U.S. Government agencies	$	232,670	$	—	$	232,670	$	—	$	(31,510)	$	201,160
Mortgage-backed securities	Mortgage-backed securities	60,649		0		60,649		474		(729)		60,394		Mortgage-backed securities	112,496		—		112,496		1		(7,552)		104,945
State and political subdivisions	State and political subdivisions	794,178		(871)		793,307		8,118		(2,523)		798,902		State and political subdivisions	1,195,744		(1,285)		1,194,459		384		(209,191)		985,652
Other securities	Other securities	261		(261)		0		958		0		958		Other securities	17,292		(92)		17,200		—		(1,899)		15,301
Total HTM	Total HTM	$	932,484	$	(1,132)	$	931,352	$	9,550	$	(5,306)	$	935,596	Total HTM	$	1,558,202	$	(1,377)	$	1,556,825	$	385	$	(250,152)	$	1,307,058

December 31, 2020
December 31, 2021														December 31, 2021
U.S. Government agencies														U.S. Government agencies	$	232,609	$	—	$	232,609	$	—	$	(7,914)	$	224,695
Mortgage-backed securities	Mortgage-backed securities	$	22,354	$	0	$	22,354	$	683	$	0	$	23,037	Mortgage-backed securities	70,342		—		70,342		232		(1,425)		69,149
State and political subdivisions	State and political subdivisions	312,416		(2,307)		310,109		8,148		(30)		318,227		State and political subdivisions	1,210,248		(1,197)		1,209,051		6,166		(8,462)		1,206,755
Other securities	Other securities	1,176		(608)		568		93		0		661		Other securities	17,301		(82)		17,219		—		(440)		16,779
Total HTM	Total HTM	$	335,946	$	(2,915)	$	333,031	$	8,924	$	(30)	$	341,925	Total HTM	$	1,530,500	$	(1,279)	$	1,529,221	$	6,398	$	(18,241)	$	1,517,378

Mortgage-backed securities (“MBS”) are commercial MBS, secured by commercial properties, and residential MBS, generally secured by single-family residential properties. All mortgage-backed securities included in the table above were issued by U.S. government agencies or corporations. As of ~~June 30, 2021,~~March 31, 2022, HTM MBS consists of ~~$6.1~~$4.4 million and ~~$54.5~~$108.1 million of commercial MBS and residential MBS, respectively. As of December 31, ~~2020,~~2021, HTM MBS consists of ~~$7.7~~$4.9 million and ~~$14.7~~$65.5 million of commercial MBS and residential MBS, respectively.

The amortized cost, fair value and allowance for credit losses of investment securities that are classified as AFS are as follows:

(In thousands) Amortized
Cost Allowance
for Credit Losses Gross Unrealized
Gains Gross Unrealized
(Losses) Estimated Fair
Value
Available-for-sale
June 30, 2021
U.S. Treasury $ 600 $ 0 $ 0 $ 0 $ 600
U.S. Government agencies 567,722 0 720 (13,505) 554,937
Mortgage-backed securities 3,996,823 0 13,405 (23,019) 3,987,209
State and political subdivisions 1,526,833 0 36,945 (6,281) 1,557,497
Other securities 451,044 0 8,291 (2,997) 456,338
Total AFS $ 6,543,022 $ 0 $ 59,361 $ (45,802) $ 6,556,581


(In thousands)	(In thousands)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value		(In thousands)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value
December 31, 2020
Available-for-sale												Available-for-sale

March 31, 2022												March 31, 2022
U.S. Treasury												U.S. Treasury	$	—	$	—	$	—	$	—	$	—
U.S. Government agencies	U.S. Government agencies	$	477,693	$	0	$	844	$	(1,300)	$	477,237	U.S. Government agencies	367,730		—		239		(34,738)		333,231
Mortgage-backed securities	Mortgage-backed securities	1,374,769		0		21,261		(1,094)		1,394,936		Mortgage-backed securities	4,378,489		—		138		(212,519)		4,166,108
State and political subdivisions	State and political subdivisions	1,416,136		(217)		55,111		(307)		1,470,723		State and political subdivisions	1,812,534		—		2,727		(161,567)		1,653,694
Other securities	Other securities	128,445		(95)		2,447		(95)		130,702		Other securities	511,829		—		2,309		(27,102)		487,036
Total AFS	Total AFS	$	3,397,043	$	(312)	$	79,663	$	(2,796)	$	3,473,598	Total AFS	$	7,070,582	$	—	$	5,413	$	(435,926)	$	6,640,069

December 31, 2021												December 31, 2021
U.S. Treasury												U.S. Treasury	$	300	$	—	$	—	$	—	$	300
U.S. Government agencies												U.S. Government agencies	374,754		—		495		(10,608)		364,641
Mortgage-backed securities												Mortgage-backed securities	4,485,548		—		6,307		(43,239)		4,448,616
State and political subdivisions												State and political subdivisions	1,791,097		—		30,556		(1,995)		1,819,658
Other securities												Other securities	479,162		—		6,647		(5,479)		480,330
Total AFS												Total AFS	$	7,130,861	$	—	$	44,005	$	(61,321)	$	7,113,545

As of ~~June 30, 2021,~~March 31, 2022, AFS MBS consists of ~~$1.34~~$1.46 billion and ~~$2.65~~$2.70 billion of commercial MBS and residential MBS, respectively. As of December 31, ~~2020,~~2021, AFS MBS consists of ~~$406.1 million~~$1.53 billion and ~~$988.8 million~~$2.92 billion of commercial MBS and residential MBS, respectively.

Accrued interest receivable on HTM and AFS securities at ~~June 30, 2021~~March 31, 2022 was ~~$4.2~~$7.9 million and ~~$21.8~~$23.1 million, respectively, and is included in interest receivable on the consolidated balance sheets. The Company has made the election to exclude all accrued interest receivable from securities from the estimate of credit losses.

The following table summarizes the Company’s AFS investments in an unrealized loss position for which an allowance for credit loss has not been recorded as of ~~June 30, 2021,~~March 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:


		Less Than 12 Months				12 Months or More				Total					Less Than 12 Months				12 Months or More				Total
(In thousands)	(In thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		(In thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
Available-for-sale	Available-for-sale													Available-for-sale
U.S. Government agencies	U.S. Government agencies	$	429,402	$	(13,091)	$	35,862	$	(414)	$	465,264	$	(13,505)	U.S. Government agencies	$	94,352	$	(4,576)	$	211,178	$	(30,162)	$	305,530	$	(34,738)
Mortgage-backed securities	Mortgage-backed securities	2,196,453		(23,016)		290		(3)		2,196,743		(23,019)		Mortgage-backed securities	2,377,428		(115,730)		1,141,855		(96,789)		3,519,283		(212,519)
State and political subdivisions	State and political subdivisions	377,432		(6,196)		2,485		(85)		379,917		(6,281)		State and political subdivisions	1,337,236		(118,017)		152,722		(43,550)		1,489,958		(161,567)
Other securities	Other securities	142,041		(2,997)		0		0		142,041		(2,997)		Other securities	278,514		(13,127)		97,325		(13,975)		375,839		(27,102)
Total AFS	Total AFS	$	3,145,328	$	(45,300)	$	38,637	$	(502)	$	3,183,965	$	(45,802)	Total AFS	$	4,087,530	$	(251,450)	$	1,603,080	$	(184,476)	$	5,690,610	$	(435,926)

As of ~~June 30, 2021,~~March 31, 2022, the ~~Company��s~~Company’s investment portfolio included ~~$6.6~~$6.64 billion of AFS securities, of which ~~$3.2~~$5.69 billion, or ~~48.6%~~85.7%, were in an unrealized loss position that were not deemed to have credit losses. A portion of the unrealized losses were related to the Company’s MBS, which are issued and guaranteed by U.S. government-sponsored entities and agencies, and the Company’s state and political subdivision securities, specifically investments in insured fixed rate municipal bonds for which the issuers continue to make timely principal and interest payments under the contractual terms of the securities.

Furthermore, the decline in fair value for each of the above AFS securities is attributable to the rates for those investments yielding less than current market rates. Management does not believe any of the securities are impaired due to reasons of credit

quality. Management believes the declines in fair value for the securities are temporary. Management does not have the intent to sell the securities, and management believes it is more likely than not the Company will not have to sell the securities before recovery of their amortized cost basis.

Allowance for Credit Losses

All MBS held by the Company are issued by U.S. government-sponsored entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, highly rated by major rating agencies and have a long history of no credit losses. Accordingly, no allowance for credit losses has been recorded for these securities.

Regarding securities issued by state and political subdivisions and other HTM securities, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) internal forecasts, and (v) whether or not such securities provide insurance or other credit enhancement or are pre-refunded by the issuers.

The following table details activity in the allowance for credit losses by investment security type for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 on the Company’s HTM and AFS securities ~~portfolios.~~portfolio.

(In thousands) State and Political Subdivisions Other
Securities Total
Three Months Ended June 30, 2021
Held-to-maturity
Beginning balance, April 1, 2021 $ 1,042 $ 576 $ 1,618
Provision for credit loss expense (171) (315) (486)
Ending balance, June 30, 2021 $ 871 $ 261 $ 1,132
Available-for-sale
Beginning balance, April 1, 2021 $ 64 $ 2,390 $ 2,454
Net decrease in allowance on previously impaired securities (64) (2,390) (2,454)
Ending balance, June 30, 2021 $ 0 $ 0 $ 0
Six Months Ended June 30, 2021
Held-to-maturity
Beginning balance, January 1, 2021 $ 2,307 $ 608 $ 2,915
Provision for credit loss expense (1,436) 253 (1,183)
Securities charged-off 0 (600) (600)
Ending balance, June 30, 2021 $ 871 $ 261 $ 1,132
Available-for-sale
Beginning balance, January 1, 2021 $ 217 $ 95 $ 312
Reduction due to sales 0 (11) (11)
Net decrease in allowance on previously impaired securities (217) (84) (301)
Ending balance, June 30, 2021 $ 0 $ 0 $ 0

~~Activity in the allowance for credit losses by investment security type for the three and six months ended June 30, 2020 on the Company’s HTM and AFS securities portfolio was as follows:~~

(In thousands) State and Political Subdivisions Other
Securities Total
Three Months Ended June 30, 2020
Held-to-maturity
Beginning balance, April 1, 2020 $ 97 $ 312 $ 409
Provision for credit loss expense (2) (100) (102)
Ending balance, June 30, 2020 $ 95 $ 212 $ 307
Available-for-sale
Beginning balance, April 1, 2020 $ 95 $ 174 $ 269
Credit losses on securities not previously recorded 370 160 530
Net decrease in allowance on previously impaired securities (94) (96) (190)
Ending balance, June 30, 2020 $ 371 $ 238 $ 609

(In thousands) State and Political Subdivisions Other
Securities Total
Six Months Ended June 30, 2020
Held-to-maturity
Beginning balance, January 1, 2020 $ 0 $ 0 $ 0
Impact of ASU 2016-13 adoption 58 311 369
Provision for credit loss expense 37 (99) (62)
Ending balance, June 30, 2020 $ 95 $ 212 $ 307
Available-for-sale
Beginning balance, January 1, 2020 $ 0 $ 0 $ 0
Impact of ASU 2016-13 adoption 373 0 373
Credit losses on securities not previously recorded 77 192 269
Reduction due to sales (142) 0 (142)
Net increase in allowance on previously impaired securities 63 46 109
Ending balance, June 30, 2020 $ 371 $ 238 $ 609


(In thousands)	State and Political Subdivisions		Other Securities		Total
Three Months Ended March 31, 2022
Held-to-maturity
Beginning balance, January 1, 2022	$	1,197	$	82	$	1,279
Provision for credit loss expense	—		—		—
Securities charged-off	—		—		—
Recoveries	88		10		98
Ending balance, March 31, 2022	$	1,285	$	92	$	1,377

Three Months Ended March 31, 2021
Held-to-maturity
Beginning balance, January 1, 2021	$	2,307	$	608	$	2,915
Provision for credit loss expense	(1,265)		568		(697)
Securities charged off	—		(600)		(600)
Ending balance, March 31, 2021	$	1,042	$	576	$	1,618

Available-for-sale
Beginning balance, January 1, 2021	$	217	$	95	$	312
Credit losses on securities not previously recorded	61		2,237		2,298
Reduction due to sales	—		(11)		(11)
Net decrease in allowance on previously impaired securities	(214)		69		(145)
Ending balance, March 31, 2021	$	64	$	2,390	$	2,454

Based upon the Company’s analysis of the underlying risk characteristics of its AFS portfolio, including credit ratings and other qualitative factors, as previously discussed, there was no provision for credit losses related to AFS securities recorded in the first quarter of 2022. During the three months ended March 31, 2021, the provision for credit losses related to AFS securities was reduced by $2,454,000 and $312,000 during the three and six months ended June 30, 2021, respectively. During the three and six months ended June 30, 2020, the provision for credit losses was $340,000 and $236,000, respectively, related to AFS securities.$2.1 million.

The following table summarizes bond ratings for the Company’s HTM portfolio, based upon amortized cost, issued by state and political subdivisions and other securities as of ~~June 30, 2021:~~March 31, 2022:


		State and Political Subdivisions											State and Political Subdivisions
(In thousands)	(In thousands)	Not Guaranteed or Pre-Refunded		Other Credit Enhancement or Insurance		Pre-Refunded		Total		Other Securities		(In thousands)	Not Guaranteed or Pre-Refunded		Other Credit Enhancement or Insurance		Pre-Refunded		Total		Other Securities
Aaa/AAA	Aaa/AAA	$	63,864	$	57,797	$	0	$	121,661	$	0	Aaa/AAA	$	128,763	$	114,741	$	—	$	243,504	$	—
Aa/AA	Aa/AA	308,600		130,664		0		439,264		0		Aa/AA	479,331		305,542		—		784,873		—
A	A	31,365		9,970		0		41,335		0		A	42,708		89,299		—		132,007		17,292
Baa/BBB												Baa/BBB	—		13,540		—		13,540		—
Not Rated	Not Rated	185,598		6,320		0		191,918		261		Not Rated	6,182		15,638		—		21,820		0
Total	Total	$	589,427	$	204,751	$	0	$	794,178	$	261	Total	$	656,984	$	538,760	$	—	$	1,195,744	$	17,292

Historical loss rates associated with securities having similar grades as those in the Company’s portfolio have generally not been significant. Pre-refunded securities, if any, have been defeased by the issuer and are fully secured by cash and/or U.S. Treasury securities held in escrow for payment to holders when the underlying call dates of the securities are reached. Securities with other credit enhancement or insurance continue to make timely principal and interest payments under the contractual terms of the securities. Accordingly, no allowance for credit losses has been recorded for these securities as there is no current expectation of credit losses related to these securities.

Income earned on securities for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2022		2021
Taxable:	Taxable:									Taxable:
Held-to-maturity	Held-to-maturity	$	837	$	288	$	1,350	$	459	Held-to-maturity	$	1,912	$	513
Available-for-sale	Available-for-sale	13,757		7,086		23,364		19,667		Available-for-sale	16,236		9,607

Non-taxable:	Non-taxable:									Non-taxable:
Held-to-maturity	Held-to-maturity	3,030		68		5,034		140		Held-to-maturity	6,102		2,004
Available-for-sale	Available-for-sale	9,504		6,031		18,953		12,150		Available-for-sale	9,462		9,449
Total	Total	$	27,128	$	13,473	$	48,701	$	32,416	Total	$	33,712	$	21,573

The amortized cost and estimated fair value by maturity of securities as of ~~June 30, 2021~~March 31, 2022 are shown in the following table. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. Accordingly, actual maturities may differ from contractual maturities.


		Held-to-Maturity				Available-for-Sale					Held-to-Maturity				Available-for-Sale
(In thousands)	(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	One year or less	$	6,819	$	6,884	$	11,777	$	11,834	One year or less	$	4,331	$	4,355	$	6,564	$	6,560
After one through five years	After one through five years	7,680		8,029		51,854		52,281		After one through five years	4,213		4,291		65,960		64,934
After five through ten years	After five through ten years	9,734		10,115		531,599		537,748		After five through ten years	28,026		24,759		559,472		530,695
After ten years	After ten years	847,602		850,174		1,949,938		1,966,476		After ten years	1,409,136		1,168,709		2,059,481		1,871,156
Securities not due on a single maturity date	Securities not due on a single maturity date	60,649		60,394		3,996,823		3,987,209		Securities not due on a single maturity date	112,496		104,944		4,378,489		4,166,108
Other securities (no maturity)	Other securities (no maturity)	—		—		1,031		1,033		Other securities (no maturity)	—		—		616		616
Total	Total	$	932,484	$	935,596	$	6,543,022	$	6,556,581	Total	$	1,558,202	$	1,307,058	$	7,070,582	$	6,640,069

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to ~~$3.89~~$3.66 billion at ~~June 30, 2021~~March 31, 2022 and ~~$2.01~~$3.88 billion at December 31, ~~2020.~~2021.

There were approximately ~~$5.2~~$37,000 of gross realized gains and $91,000 of gross realized losses from the sale and calls of securities during the three months ended March 31, 2022. There were approximately $5.5 million of gross realized gains and ~~$26,000~~$13,000 of gross realized losses from the sale of securities during the three months ended ~~June 30, 2021, and approximately $10.6 million of gross realized gains and $39,000 of gross realized losses from the sale of securities during the six months ended June 30,~~March 31, 2021. The Company sold approximately $249.5 million of investment securities during the six months ended June 30, 2021. There were approximately $391,000 of gross realized gains and $1,000 of gross realized losses from the sale of securities during the three months ended June 30, 2020, and approximately $32.5 million of gross realized gains and $2,600 of gross realized losses from the sale of securities during the six months ended June 30, 2020. During the first half of 2020, the Company sold approximately $1.2 billion of investment securities to create additional liquidity. The income tax expense/benefit related to security gains/losses was 26.135% of the gross amounts in ~~2021~~2022 and ~~2020.~~2021.

The Company has entered into various fair value hedging transactions to mitigate the impact of changing interest rates on the fair value of AFS securities. See Note 23: Derivative Instruments for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities.

NOTE 4: OTHER LIABILITIES HELD FOR SALE

Illinois Branch Sale

On November 30, 2020, the Company’s subsidiary bank, Simmons Bank, entered into a Branch Purchase and Assumption Agreement (the “Citizens Equity Agreement”) with Citizens Equity First Credit Union (“CEFCU”).

On March 12, 2021, CEFCU completed its purchase of certain assets and assumption of certain liabilities (“Illinois Branch Sale”) associated with 4 Simmons Bank locations in the Metro East area of Southern Illinois, near St. Louis (collectively, the “Illinois Branches”). Pursuant to the terms of the Citizens Equity Agreement, CEFCU assumed certain deposit liabilities and acquired certain loans, as well as cash, personal property and other fixed assets associated with the Illinois Branches. The loan and deposit balances of the Illinois Branches were $354,000 and $137.9 million, respectively.

The Company recognized a gain on sale of $5.3 million related to the Illinois Branches in the ~~six~~three month period ended ~~June 30,~~March 31, 2021.

As of ~~June 30, 2021,~~March 31, 2022, there were 0no outstanding other liabilities held for sale.

NOTE 5: LOANS AND ALLOWANCE FOR CREDIT LOSSES

At ~~June 30, 2021,~~March 31, 2022, the Company’s loan portfolio was ~~$11.39~~$12.03 billion, compared to ~~$12.90~~$12.01 billion at December 31, ~~2020.~~2021. The various categories of loans are summarized as follows:


		June 30,		December 31,			March 31,		December 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Consumer:	Consumer:					Consumer:
Credit cards	Credit cards	$	177,634	$	188,845	Credit cards	$	184,372	$	187,052
Other consumer	Other consumer	181,712		202,379		Other consumer	180,602		168,318
Total consumer	Total consumer	359,346		391,224		Total consumer	364,974		355,370
Real Estate:	Real Estate:					Real Estate:
Construction and development	Construction and development	1,428,165		1,596,255		Construction and development	1,423,445		1,326,371
Single family residential	Single family residential	1,608,028		1,880,673		Single family residential	2,042,978		2,101,975
Other commercial	Other commercial	5,332,655		5,746,863		Other commercial	5,762,567		5,738,904
Total real estate	Total real estate	8,368,848		9,223,791		Total real estate	9,228,990		9,167,250
Commercial:	Commercial:					Commercial:
Commercial	Commercial	2,074,729		2,574,386		Commercial	2,016,405		1,992,043
Agricultural	Agricultural	193,462		175,905		Agricultural	150,465		168,717
Total commercial	Total commercial	2,268,191		2,750,291		Total commercial	2,166,870		2,160,760
Other	Other	389,967		535,591		Other	267,759		329,123
Total loans	Total loans	$	11,386,352	$	12,900,897	Total loans	$	12,028,593	$	12,012,503

The above table presents total loans at amortized cost. The difference between amortized cost and unpaid principal balance is primarily premiums and discounts associated with acquisition date fair value adjustments on acquired loans as well as net deferred origination fees totaling ~~$43.7~~$16.7 million and ~~$57.3~~$21.5 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled ~~$41.9~~$38.4 million and ~~$54.4~~$39.8 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and is included in interest receivable on the consolidated balance sheets.

Loan Origination/Risk Management – The Company seeks to manage its credit risk by diversifying its loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral; obtaining and monitoring collateral; and providing an adequate allowance for credit losses by regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose and industry. The Company seeks to use diversification within the loan portfolio to reduce its credit risk, thereby minimizing the adverse impact on the portfolio if weaknesses develop in either the economy or a particular segment of borrowers. Collateral requirements are based on credit assessments of borrowers and may be used to recover the debt in case of default.

Consumer – The consumer loan portfolio consists of credit card loans and other consumer loans. Credit card loans are diversified by geographic region to reduce credit risk and minimize any adverse impact on the portfolio. Although they are regularly reviewed to facilitate the identification and monitoring of creditworthiness, credit card loans are unsecured loans, making them more susceptible to economic downturns that result in increased unemployment. Other consumer loans include direct and indirect installment loans and account overdrafts. Loans in this portfolio segment are sensitive to unemployment and other key consumer economic measures.

Real estate – The real estate loan portfolio consists of construction and development loans (“C&D”), single family residential loans and commercial loans. C&D and commercial real estate (“CRE”) loans can be particularly sensitive to valuation of real estate. CRE cycles are inevitable. The long planning and production process for new properties and rapid shifts in business conditions and employment create an inherent tension between supply and demand for commercial properties. While general economic trends often move individual markets in the same direction over time, the timing and magnitude of changes are determined by other forces unique to each market. CRE cycles tend to be local in nature and longer than other credit cycles. Factors influencing the CRE market are traditionally different from those affecting residential real estate markets; thereby making predictions for one market based on the other difficult. Additionally, submarkets within CRE – such as office, industrial, apartment, retail and hotel – also experience different cycles, providing an opportunity to lower the overall risk through diversification across types of CRE loans. Management realizes that local demand and supply conditions will also mean that different geographic areas will experience cycles of different amplitude and duration. The Company monitors these loans closely.

Commercial – The commercial loan portfolio includes commercial and agricultural loans, representing loans to commercial customers and farmers for use in normal business or farming operations to finance working capital needs, equipment purchases or other expansion projects. Paycheck Protection Program (“PPP”) loans are also included in the commercial loan portfolio. Collection risk in this portfolio is driven by the creditworthiness of the underlying borrowers, particularly cash flow from customers’ business or farming operations. The Company continues its efforts to keep loan terms short, reducing the negative impact of upward movement in interest rates. Term loans are generally set up with one or three year balloons, and the Company has instituted a pricing mechanism for commercial loans. It is standard practice to require personal guaranties on commercial loans for closely-held or limited liability entities.

Paycheck Protection Program Loans – The Company originated loans pursuant to multiple PPP appropriations of the CARES Act which provided 100% federally guaranteed loans for small businesses to cover up to 24 weeks of payroll costs and assistance with mortgage interest, rent and utilities. Notably, these small business loans may be forgiven by the SBA if borrowers maintain their payrolls and satisfy certain other conditions. PPP loans have a zero percent risk-weight for regulatory capital ratios. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the total outstanding balance of PPP loans was ~~$441.4~~$61.9 million and ~~$904.7~~$116.7 million, respectively.

Nonaccrual and Past Due Loans – Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The amortized cost basis of nonaccrual loans segregated by category of loans are as follows:


		June 30,		December 31,			March 31,		December 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Consumer:	Consumer:					Consumer:
Credit cards	Credit cards	$	282	$	301	Credit cards	$	435	$	377
Other consumer	Other consumer	594		1,219		Other consumer	358		381
Total consumer	Total consumer	876		1,520		Total consumer	793		758
Real estate:	Real estate:					Real estate:
Construction and development	Construction and development	1,737		3,625		Construction and development	1,746		2,296
Single family residential	Single family residential	29,553		28,062		Single family residential	20,060		19,268
Other commercial	Other commercial	19,018		24,155		Other commercial	27,521		26,953
Total real estate	Total real estate	50,308		55,842		Total real estate	49,327		48,517
Commercial:	Commercial:					Commercial:
Commercial	Commercial	28,649		65,244		Commercial	13,726		18,774
Agricultural	Agricultural	449		273		Agricultural	247		152
Total commercial	Total commercial	29,098		65,517		Total commercial	13,973		18,926
Other						Other	3		3
Total	Total	$	80,282	$	122,879	Total	$	64,096	$	68,204

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, nonaccrual loans for which there was no related allowance for credit losses had an amortized cost of ~~$15.7~~$9.3 million and ~~$16.8~~$14.5 million, respectively. These loans are individually assessed and do not hold an allowance due to being adequately collateralized under the collateral-dependent valuation method.

An age analysis of the amortized cost basis of past due loans, including nonaccrual loans, segregated by class of loans is as follows:


(In thousands)	(In thousands)	Gross 30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		90 Days Past Due & Accruing		(In thousands)	Gross 30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		90 Days Past Due & Accruing
June 30, 2021
March 31, 2022														March 31, 2022
Consumer:	Consumer:													Consumer:
Credit cards	Credit cards	$	644	$	273	$	917	$	176,717	$	177,634	$	132	Credit cards	$	840	$	362	$	1,202	$	183,170	$	184,372	$	238
Other consumer	Other consumer	944		121		1,065		180,647		181,712		0		Other consumer	1,083		92		1,175		179,427		180,602		—
Total consumer	Total consumer	1,588		394		1,982		357,364		359,346		132		Total consumer	1,923		454		2,377		362,597		364,974		238
Real estate:	Real estate:													Real estate:
Construction and development	Construction and development	4,360		1,595		5,955		1,422,210		1,428,165		0		Construction and development	426		118		544		1,422,901		1,423,445		—
Single family residential	Single family residential	6,883		8,061		14,944		1,593,084		1,608,028		0		Single family residential	18,273		8,546		26,819		2,016,159		2,042,978		—
Other commercial	Other commercial	11,846		15,242		27,088		5,305,567		5,332,655		127		Other commercial	5,677		11,743		17,420		5,745,147		5,762,567		—
Total real estate	Total real estate	23,089		24,898		47,987		8,320,861		8,368,848		127		Total real estate	24,376		20,407		44,783		9,184,207		9,228,990		—
Commercial:	Commercial:													Commercial:
Commercial	Commercial	18,162		9,167		27,329		2,047,400		2,074,729		394		Commercial	4,707		8,082		12,789		2,003,616		2,016,405		2
Agricultural	Agricultural	105		353		458		193,004		193,462		0		Agricultural	110		199		309		150,156		150,465		—
Total commercial	Total commercial	18,267		9,520		27,787		2,240,404		2,268,191		394		Total commercial	4,817		8,281		13,098		2,153,772		2,166,870		2
Other	Other	0		0		0		389,967		389,967		0		Other	17		3		20		267,739		267,759		—
Total	Total	$	42,944	$	34,812	$	77,756	$	11,308,596	$	11,386,352	$	653	Total	$	31,133	$	29,145	$	60,278	$	11,968,315	$	12,028,593	$	240

December 31, 2020
Consumer:
Credit cards		$	708	$	256	$	964	$	187,881	$	188,845	$	256
Other consumer		2,771		302		3,073		199,306		202,379		13
Total consumer		3,479		558		4,037		387,187		391,224		269
Real estate:
Construction and development		1,375		3,089		4,464		1,591,791		1,596,255		0
Single family residential		23,726		14,339		38,065		1,842,608		1,880,673		253
Other commercial		2,660		9,586		12,246		5,734,617		5,746,863		0
Total real estate		27,761		27,014		54,775		9,169,016		9,223,791		253
Commercial:
Commercial		7,514		7,429		14,943		2,559,443		2,574,386		56
Agricultural		226		187		413		175,492		175,905		0
Total commercial		7,740		7,616		15,356		2,734,935		2,750,291		56
Other		92		0		92		535,499		535,591		0
Total		$	39,072	$	35,188	$	74,260	$	12,826,637	$	12,900,897	$	578


(In thousands)	Gross 30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		90 Days Past Due & Accruing
December 31, 2021
Consumer:
Credit cards	$	847	$	413	$	1,260	$	185,792	$	187,052	$	247
Other consumer	1,149		130		1,279		167,039		168,318		—
Total consumer	1,996		543		2,539		352,831		355,370		247
Real estate:
Construction and development	114		504		618		1,325,753		1,326,371		—
Single family residential	11,313		9,398		20,711		2,081,264		2,101,975		102
Other commercial	2,474		12,268		14,742		5,724,162		5,738,904		—
Total real estate	13,901		22,170		36,071		9,131,179		9,167,250		102
Commercial:
Commercial	4,812		10,074		14,886		1,977,157		1,992,043		—
Agricultural	13		117		130		168,587		168,717		—
Total commercial	4,825		10,191		15,016		2,145,744		2,160,760		—
Other	—		3		3		329,120		329,123		—
Total	$	20,722	$	32,907	$	53,629	$	11,958,874	$	12,012,503	$	349

When the Company restructures a loan to a borrower that is experiencing financial difficulty and grants a concession that it would not otherwise consider, a “troubled debt restructuring” (“TDR”) results and the Company classifies the loan as a TDR. The Company grants various types of concessions, primarily interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal.

Once an obligation has been restructured because of such credit problems, it continues to be considered a TDR until paid in full; or, if an obligation yields a market interest rate and no longer has any concession regarding payment amount or amortization, then it is not considered a TDR at the beginning of the calendar year after the year in which the improvement takes place. The Company returns TDRs to accrual status only if (1) all contractual amounts due can reasonably be expected to be repaid within a prudent period and (2) repayment has been in accordance with the contract for a sustained period, typically at least six months.

The provisions in the CARES Act included an election to not apply the guidance on accounting for TDRs to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) December 31, 2020 or (ii) 60 days after the President terminates the COVID-19 national emergency declaration. In March 2020, the federal financial institution regulatory agencies issued an interagency statement encouraging financial institutions to work constructively with borrowers affected by COVID-19 and provided information regarding loan modifications. The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company elected to adopt these provisions of the CARES Act. In response to the concerns related to the expiration of the applicable period for which the election to not apply the guidance on accounting for TDRs to loan modifications, the CARES Act was amended in late fourth quarter of 2020 to extend COVID-19 relief related to loan modifications to the earlier of (i) January 1, 2022 or (ii) 60 days after the President terminates the COVID-19 national emergency declaration. As of June 30, 2021, the Company had 43 COVID-19 loan modifications outstanding in the amount of $134.5 million. Deferred interest on these loan modifications will be collected at the end of the note or once regular payments are resumed.

TDRs are individually evaluated for expected credit losses. The Company assesses the exposure for each modification, either by the fair value of the underlying collateral or the present value of expected cash flows, and determines if a specific allowance for credit losses is needed.

The following table presents a summary of TDRs segregated by class of loans.

Accruing TDR Loans Nonaccrual TDR Loans Total TDR Loans
(Dollars in thousands) Number Balance Number Balance Number Balance
June 30, 2021
Real estate:
Single-family residential 29 $ 3,074 13 $ 1,242 42 $ 4,316
Other commercial 2 825 1 5 3 830
Total real estate 31 3,899 14 1,247 45 5,146
Commercial:
Commercial 1 537 3 1,413 4 1,950
Total commercial 1 537 3 1,413 4 1,950
Total 32 $ 4,436 17 $ 2,660 49 $ 7,096
December 31, 2020
Real estate:
Single-family residential 28 $ 2,463 18 $ 2,736 46 $ 5,199
Other commercial 1 49 1 12 2 61
Total real estate 29 2,512 19 2,748 48 5,260
Commercial:
Commercial 3 626 3 1,627 6 2,253
Total commercial 3 626 3 1,627 6 2,253
Total 32 $ 3,138 22 $ 4,375 54 $ 7,513


	Accruing TDR Loans			Nonaccrual TDR Loans			Total TDR Loans
(Dollars in thousands)	Number	Balance		Number	Balance		Number	Balance
March 31, 2022
Real estate:
Single-family residential	23	$	2,238	14	$	1,167	37	$	3,405
Other commercial	1	760		1	46		2	806
Total real estate	24	2,998		15	1,213		39	4,211
Commercial:
Commercial	2	426		2	1,405		4	1,831
Total commercial	2	426		2	1,405		4	1,831
Total	26	$	3,424	17	$	2,618	43	$	6,042

~~The following table presents~~


	Accruing TDR Loans			Nonaccrual TDR Loans			Total TDR Loans
(Dollars in thousands)	Number	Balance		Number	Balance		Number	Balance
December 31, 2021
Real estate:
Single-family residential	28	$	3,087	14	$	1,196	42	$	4,283
Other commercial	1	766		2	48		3	814
Total real estate	29	3,853		16	1,244		45	5,097
Commercial:
Commercial	2	436		2	1,406		4	1,842
Total commercial	2	436		2	1,406		4	1,842
Total	31	$	4,289	18	$	2,650	49	$	6,939

There were no loans ~~that were~~ restructured as TDRs during the three ~~and six~~ month periods ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~

(Dollars in thousands) Number of loans Balance Prior to TDR Balance at June 30, Change in Maturity Date Change in Rate Financial Impact on Date of Restructure
Three and Six Months Ended June 30, 2021
Real estate:
Other commercial 1 $ 784 $ 778 $ 0 $ 778 $ 0
Total real estate 1 $ 784 $ 778 $ 0 $ 778 $ 0
Three and Six Months Ended June 30, 2020
Real estate:
Single-family residential 1 $ 147 $ 147 $ 147 $ 0 $ 0
Total real estate 1 $ 147 $ 147 $ 147 $ 0 $ 0

During the three and six months ended June 30, 2021, the Company modified 1 loan with a recorded investment of $784,000 prior to modification which was deemed a TDR. The restructured loan was modified by deferring amortized principal payments and requiring interest only payments for a period of up to 12 months. A specific reserve of approximately $5,100 was recorded with respect to this TDR. Also, there was no immediate financial impact from the restructuring of this loan, as it was not considered necessary to charge-off interest or principal on the date of restructure.

During the three and six months ended June 30, 2020, the Company modified 1 loan with a recorded investment of $147,000 prior to modification which was deemed troubled debt restructuring. The restructured loan was modified by deferring amortized principal payments, changing the maturity date and requiring interest only payments for a period of up to 12 months. A specific reserve of $7,200 was determined necessary for this loan. Also, there was no immediate financial impact from the restructuring of this loan, as it was not considered necessary to charge-off interest or principal on the date of restructure.2021.

Additionally, there were 0no loans considered TDRs for which a payment default occurred during the ~~six~~three months ended ~~June 30, 2021 or 2020.~~March 31, 2022 and 2021. The Company defines a payment default as a payment received more than 90 days after its due date.

There were 0no TDRs with pre-modification loan balances for which Other Real Estate Owned (“OREO”) was received in full or partial satisfaction of the loans during the three ~~and six~~ month periods ended ~~June 30, 2021~~March 31, 2022 or ~~2020.~~2021. At ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had ~~$3,364,000~~$1,143,000 and ~~$7,182,000,~~$1,806,000, respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process. At ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had ~~$1,752,000~~$647,000 and ~~$3,172,000,~~$831,000, respectively, of OREO secured by residential real estate properties.

Credit Quality Indicators – As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the weighted-average risk rating of commercial and real estate loans, (ii) the level of classified commercial and real estate loans, (iii) net charge-offs, (iv) non-performing loans (see details above) and (v) the general economic conditions of the Company’s local markets.

The Company utilizes a risk rating matrix to assign a risk rate to each of its commercial and real estate loans. Risk ratings are updated on an ongoing basis and are subject to change by continuous loan monitoring processes including lending management monitoring, executive management and board committee oversight, and independent credit review. A description of the general characteristics of the risk ratings is as follows:

•Pass (Excellent) – This category includes loans which are virtually free of credit risk. Borrowers in this category represent the highest credit quality and greatest financial strength.

•Pass (Good) - Loans under this category possess a nominal risk of default. This category includes borrowers with strong financial strength and superior financial ratios and trends. These loans are generally fully secured by cash or equivalents (other than those rated “excellent”).

•Pass (Acceptable – Average) - Loans in this category are considered to possess a normal level of risk. Borrowers in this category have satisfactory financial strength and adequate cash flow coverage to service debt requirements. If secured, the perfected collateral should be of acceptable quality and within established borrowing parameters.

•Pass (Monitor) - Loans in the Watch (Monitor) category exhibit an overall acceptable level of risk, but that risk may be increased by certain conditions, which represent “red flags”. These “red flags” require a higher level of supervision or monitoring than the normal “Pass” rated credit. The borrower may be experiencing these conditions for the first time, or it may be recovering from weakness, which at one time justified a higher rating. These conditions may include: weaknesses in financial trends; marginal cash flow; one-time negative operating results; non-compliance with policy or borrowing agreements; poor diversity in operations; lack of adequate monitoring information or lender supervision; questionable management ability/stability.

•Special Mention - A loan in this category has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention loans are not adversely classified (although they are “criticized”) and do not expose an institution to sufficient risk to warrant adverse classification. Borrowers may be experiencing adverse operating trends or an ill-proportioned balance sheet. Non-financial characteristics of a Special Mention

rating may include management problems, pending litigation, a non-existent or ineffective loan agreement or other material structural weakness, and/or other significant deviation from prudent lending practices.

•Substandard - A Substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. The loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. This does not imply ultimate loss of the principal, but may involve burdensome administrative expenses and the accompanying cost to carry the loan.

•Doubtful - A loan classified Doubtful has all the weaknesses inherent in a substandard loan except that the weaknesses make collection or liquidation in full (on the basis of currently existing facts, conditions, and values) highly questionable and improbable. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. The possibility of loss is extremely high, but because of specific pending events that may strengthen the asset, its classification as loss is deferred. Pending factors include: proposed merger or acquisition; liquidation procedures; capital injection; perfection of liens on additional collateral; and refinancing plans. Loans classified as Doubtful are placed on nonaccrual status.

•Loss - Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loans has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless loan, even though partial recovery may be affected in the future. Borrowers in the Loss category are often in bankruptcy, have formally suspended debt repayments, or have otherwise ceased normal business operations. Loans should be classified as Loss and charged-off in the period in which they become uncollectible.

The Company monitors credit quality in the consumer portfolio by delinquency status. The delinquency status of loans is updated daily. A description of the delinquency credit quality indicators is as follows:

•Current - Loans in this category are either current in payments or are under 30 days past due. These loans are considered to have a normal level of risk.

•30-89 Days Past Due - Loans in this category are between 30 and 89 days past due and are subject to the Company’s loss mitigation process. These loans are considered to have a moderate level of risk.

•90+ Days Past Due - Loans in this category are 90 days or more past due and are placed on nonaccrual status. These loans have been subject to the Company’s loss mitigation process and foreclosure and/or charge-off proceedings have commenced.

~~Effective April 2021, the~~The Company ~~implemented an expanded,~~uses a dual risk rating scale that utilizes quantitative models and qualitative factors (“score cards”) to assist in determining the appropriate risk rating for its commercial loans. This dual risk rating methodology incorporates a “probability of default” analysis which utilizes quantified metrics such as loan terms and financial performance, as well as a “loss given default” analysis which utilizes collateral values and economics of the market, among other attributes. Model outputs are reviewed and analyzed to ensure the projected risk levels are commensurate with underwriting and credit leader expectations. The ~~expanded~~ risk rating scale includes Probability of Default levels of 1 – 16 and Loss Given Default levels of A – I. The ~~expanded~~ scale allows for more granular recognition of risk and diversification of grading among traditional Pass grades. ~~Implementation of~~

The following is a reconciliation between the expanded risk rating scale ~~did not have~~and the Company’s traditional risk rating segments utilized within the commercial loan classes presented in the credit quality indicator tables.

•Pass - Includes loans with an expanded risk rating of 1 through 11. Loans with a ~~material impact~~risk rating of 10 and 11 equate to loans included on management’s “watch list” and is intended to be utilized on a temporary basis for pass grade borrowers where a significant risk-modifying action is anticipated in the ~~results~~near term.

•Special Mention - Includes loans with an expanded risk rating of ~~the allowance for credit losses calculation.~~12.

•Substandard - Includes loans with an expanded risk rating of 13 and 14.

•Doubtful and loss - Includes loans with an expanded risk rating of 15 and 16.

The following ~~tables present~~table presents a summary of loans by credit quality indicator, ~~other than pass or current,~~ as of ~~June 30, 2021 and December~~March 31, ~~2020~~2022, segregated by class of loans.


		Term Loans Amortized Cost Basis by Origination Year																			Term Loans Amortized Cost Basis by Origination Year
(In thousands)	(In thousands)	2021 (YTD)		2020		2019		2018		2017		2016 and Prior		Lines of Credit (“LOC”) Amortized Cost Basis		LOC Converted to Term Loans Amortized Cost Basis		Total		(In thousands)	2022 (YTD)		2021		2020		2019		2018		2017 and Prior		Lines of Credit (“LOC”) Amortized Cost Basis		LOC Converted to Term Loans Amortized Cost Basis		Total
June 30, 2021
Consumer - credit cards	Consumer - credit cards																			Consumer - credit cards
Delinquency:	Delinquency:																			Delinquency:
Current																				Current	$	—	$	—	$	—	$	—	$	—	$	—	$	183,170	$	—	$	183,170
30-89 days past due	30-89 days past due	$	0	$	0	$	0	$	0	$	0	$	0	$	644	$	0	$	644	30-89 days past due	—		—		—		—		—		—		840		—		840
90+ days past due	90+ days past due	0		0		0		0		0		0		273		0		273		90+ days past due	—		—		—		—		—		—		362		—		362
Total consumer - credit cards	Total consumer - credit cards	0		0		0		0		0		0		917		0		917		Total consumer - credit cards	—		—		—		—		—		—		184,372		—		184,372
Consumer - other	Consumer - other																			Consumer - other
Delinquency:	Delinquency:																			Delinquency:
Current																				Current	79,761		43,528		18,213		8,773		5,164		6,467		17,517		4		179,427
30-89 days past due	30-89 days past due	44		193		81		174		178		208		66		0		944		30-89 days past due	15		476		122		90		83		245		52		—		1,083
90+ days past due	90+ days past due	0		13		56		2		33		17		0		0		121		90+ days past due	—		31		7		9		3		42		—		—		92
Total consumer - other	Total consumer - other	44		206		137		176		211		225		66		0		1,065		Total consumer - other	79,776		44,035		18,342		8,872		5,250		6,754		17,569		4		180,602
Real estate - C&D	Real estate - C&D																			Real estate - C&D
Risk rating:	Risk rating:																			Risk rating:
Pass																				Pass	36,921		83,202		84,969		21,988		12,221		10,831		1,166,464		3,694		1,420,290
Special mention	Special mention	0		0		292		0		1,360		0		0		0		1,652		Special mention	—		—		—		265		—		46		—		—		311
Substandard	Substandard	1,740		42		547		401		333		733		10,513		1,954		16,263		Substandard	1,066		184		52		15		35		123		1,369		—		2,844
Doubtful and loss	Doubtful and loss	0		0		0		0		0		0		0		0		0		Doubtful and loss	—		—		—		—		—		—		—		—		—
Total real estate - C&D	Total real estate - C&D	1,740		42		839		401		1,693		733		10,513		1,954		17,915		Total real estate - C&D	37,987		83,386		85,021		22,268		12,256		11,000		1,167,833		3,694		1,423,445
Real estate - SF residential	Real estate - SF residential																			Real estate - SF residential
Delinquency:	Delinquency:																			Delinquency:
Current																				Current	94,349		432,131		331,902		154,549		217,889		519,907		263,355		2,077		2,016,159
30-89 days past due	30-89 days past due	111		1,034		540		2,033		844		1,744		505		72		6,883		30-89 days past due	52		2,445		3,040		2,010		1,348		8,189		1,189		—		18,273
90+ days past due	90+ days past due	0		69		1,203		2,177		1,870		2,197		545		0		8,061		90+ days past due	141		223		502		775		801		5,517		587		—		8,546
Total real estate - SF residential	Total real estate - SF residential	111		1,103		1,743		4,210		2,714		3,941		1,050		72		14,944		Total real estate - SF residential	94,542		434,799		335,444		157,334		220,038		533,613		265,131		2,077		2,042,978
Real estate - other commercial	Real estate - other commercial																			Real estate - other commercial
Risk rating:	Risk rating:																			Risk rating:
Pass																				Pass	512,084		1,559,457		917,510		295,515		176,517		579,079		1,317,696		19,730		5,377,588
Special mention	Special mention	30,225		69,187		1,818		8,584		40,531		34,225		127,273		18,393		330,236		Special mention	31,411		11,572		51,706		1,241		1,635		9,511		65,879		—		172,955
Substandard	Substandard	25,532		25,865		6,477		15,304		33,640		23,723		50,734		20,480		201,755		Substandard	4,895		67,793		49,225		3,416		3,000		30,247		53,448		—		212,024
Doubtful and loss	Doubtful and loss	0		0		0		0		0		0		0		0		0		Doubtful and loss	—		—		—		—		—		—		—		—		—
Total real estate - other commercial	Total real estate - other commercial	55,757		95,052		8,295		23,888		74,171		57,948		178,007		38,873		531,991		Total real estate - other commercial	548,390		1,638,822		1,018,441		300,172		181,152		618,837		1,437,023		19,730		5,762,567
Commercial	Commercial																			Commercial
Risk rating:	Risk rating:																			Risk rating:
Pass																				Pass	171,244		416,875		204,615		57,498		43,756		75,701		1,002,977		2,848		1,975,514
Special mention	Special mention	0		1,247		354		523		392		752		5,380		12,438		21,086		Special mention	3,718		1,373		1,808		112		12		1,038		3,803		—		11,864
Substandard	Substandard	3,627		21,024		3,616		2,035		796		799		25,859		6,601		64,357		Substandard	451		6,913		4,337		1,540		1,083		2,899		11,603		201		29,027
Doubtful and loss	Doubtful and loss	0		0		0		0		0		0		0		0		0		Doubtful and loss	—		—		—		—		—		—		—		—		—
Total commercial	Total commercial	3,627		22,271		3,970		2,558		1,188		1,551		31,239		19,039		85,443		Total commercial	175,413		425,161		210,760		59,150		44,851		79,638		1,018,383		3,049		2,016,405
Commercial - agriculture	Commercial - agriculture																			Commercial - agriculture
Risk rating:	Risk rating:																			Risk rating:
Pass																				Pass	12,418		31,654		16,797		7,300		2,234		1,987		76,716		1,059		150,165
Special mention	Special mention	0		0		6		10		15		0		0		0		31		Special mention	—		—		—		—		—		—		—		—		—
Substandard	Substandard	105		65		121		294		64		20		229		72		970		Substandard	—		79		—		68		39		1		113		—		300
Doubtful and loss	Doubtful and loss	0		0		0		0		0		0		0		0		0		Doubtful and loss	—		—		—		—		—		—		—		—		—
Total commercial - agriculture	Total commercial - agriculture	105		65		127		304		79		20		229		72		1,001		Total commercial - agriculture	12,418		31,733		16,797		7,368		2,273		1,988		76,829		1,059		150,465
Other	Other																			Other
Delinquency:	Delinquency:																			Delinquency:
Current																				Current	28		24,198		4,616		1,170		22,241		11,612		203,874		—		267,739
30-89 days past due	30-89 days past due	0		0		0		0		0		0		0		0		0		30-89 days past due	—		—		—		17		—		—		—		—		17
90+ days past due	90+ days past due	0		0		0		0		0		0		0		0		0		90+ days past due	—		—		—		—		—		3		—		—		3
Total other	Total other	0		0		0		0		0		0		0		0		0		Total other	28		24,198		4,616		1,187		22,241		11,615		203,874		—		267,759
Total	Total	$	61,384	$	118,739	$	15,111	$	31,537	$	80,056	$	64,418	$	222,021	$	60,010	$	653,276	Total	$	948,554	$	2,682,134	$	1,689,421	$	556,351	$	488,061	$	1,263,445	$	4,371,014	$	29,613	$	12,028,593

Term Loans Amortized Cost Basis by Origination Year
(In thousands) 2020 2019 2018 2017 2016 2015 and Prior Lines of Credit (“LOC”) Amortized Cost Basis LOC Converted to Term Loans Amortized Cost Basis Total
December 31, 2020
Consumer - credit cards
Delinquency:
30-89 days past due $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 708 $ 0 $ 708
90+ days past due 0 0 0 0 0 0 256 0 256
Total consumer - credit cards 0 0 0 0 0 0 964 0 964
Consumer - other
Delinquency:
30-89 days past due 234 441 327 658 689 84 339 0 2,772
90+ days past due 79 58 25 80 40 12 8 0 302
Total consumer - other 313 499 352 738 729 96 347 0 3,074
Real estate - C&D
Risk rating:
Special mention 2,728 344 259 2,107 19 0 9,613 0 15,070
Substandard 294 2,069 404 449 342 320 17,914 14 21,806
Doubtful and loss 0 0 0 0 0 0 0 0 0
Total real estate - C&D 3,022 2,413 663 2,556 361 320 27,527 14 36,876
Real estate - SF residential
Delinquency:
30-89 days past due 6,300 2,258 2,593 2,610 2,058 6,050 1,782 76 23,727
90+ days past due 557 1,853 2,735 2,582 832 3,852 1,928 0 14,339
Total real estate - SF residential 6,857 4,111 5,328 5,192 2,890 9,902 3,710 76 38,066
Real estate - other commercial
Risk rating:
Special mention 100,085 4,346 10,738 19,943 26,245 10,608 63,305 23,435 258,705
Substandard 66,737 9,418 24,380 14,067 3,744 11,158 52,182 39,486 221,172
Doubtful and loss 0 0 0 0 0 0 0 0 0
Total real estate - other commercial 166,822 13,764 35,118 34,010 29,989 21,766 115,487 62,921 479,877
Commercial
Risk rating:
Special mention 5,707 342 465 972 54 0 12,318 22,546 42,404
Substandard 23,227 4,495 1,586 730 276 334 53,682 7,522 91,852
Doubtful and loss 0 0 0 0 0 0 0 0 0
Total commercial 28,934 4,837 2,051 1,702 330 334 66,000 30,068 134,256
Commercial - agriculture
Risk rating:
Special mention 0 79 13 299 0 6 34 0 431
Substandard 86 101 64 47 12 10 68 75 463
Doubtful and loss 0 0 0 0 0 0 0 0 0
Total commercial - agriculture 86 180 77 346 12 16 102 75 894
Total $ 206,034 $ 25,804 $ 43,589 $ 44,544 $ 34,311 $ 32,434 $ 214,137 $ 93,154 $ 694,007
The following table presents a summary of loans by credit quality indicator, as of December 31, 2021, segregated by class of loans.


	Term Loans Amortized Cost Basis by Origination Year
(In thousands)	2021		2020		2019		2018		2017		2016 and Prior		Lines of Credit (“LOC”) Amortized Cost Basis		LOC Converted to Term Loans Amortized Cost Basis		Total
Consumer - credit cards
Delinquency:
Current	$	—	$	—	$	—	$	—	$	—	$	—	$	185,792	$	—	$	185,792
30-89 days past due	—		—		—		—		—		—		847		—		847
90+ days past due	—		—		—		—		—		—		413		—		413
Total consumer - credit cards	—		—		—		—		—		—		187,052		—		187,052
Consumer - other
Delinquency:
Current	97,830		21,885		11,712		6,756		5,416		3,833		19,607		—		167,039
30-89 days past due	265		121		164		49		219		156		175		—		1,149
90+ days past due	23		23		28		21		13		22		—		—		130
Total consumer - other	98,118		22,029		11,904		6,826		5,648		4,011		19,782		—		168,318
Real estate - C&D
Risk rating:
Pass	74,813		83,729		28,803		17,349		8,505		9,319		1,074,617		20,285		1,317,420
Special mention	—		—		270		—		—		47		—		—		317
Substandard	191		77		16		54		324		423		5,598		1,951		8,634
Doubtful and loss	—		—		—		—		—		—		—		—		—
Total real estate - C&D	75,004		83,806		29,089		17,403		8,829		9,789		1,080,215		22,236		1,326,371
Real estate - SF residential
Delinquency:
Current	419,605		335,788		185,190		260,037		193,110		421,957		256,155		9,422		2,081,264
30-89 days past due	1,061		883		1,662		791		1,077		4,360		1,479		—		11,313
90+ days past due	27		561		507		1,199		1,358		5,104		570		72		9,398
Total real estate - SF residential	420,693		337,232		187,359		262,027		195,545		431,421		258,204		9,494		2,101,975
Real estate - other commercial
Risk rating:
Pass	1,349,746		807,701		375,824		267,696		476,029		537,493		1,409,099		164,856		5,388,444
Special mention	28,151		30,981		2,799		6,650		39,361		4,801		38,638		1,608		152,989
Substandard	28,137		10,186		5,243		10,806		30,060		27,107		53,860		32,072		197,471
Doubtful and loss	—		—		—		—		—		—		—		—		—
Total real estate - other commercial	1,406,034		848,868		383,866		285,152		545,450		569,401		1,501,597		198,536		5,738,904
Commercial
Risk rating:
Pass	455,499		187,517		80,486		57,437		36,529		57,099		1,004,971		41,885		1,921,423
Special mention	670		2,482		1,066		189		261		2,770		8,500		10,499		26,437
Substandard	3,436		18,381		4,397		1,196		578		850		8,242		7,103		44,183
Doubtful and loss	—		—		—		—		—		—		—		—		—
Total commercial	459,605		208,380		85,949		58,822		37,368		60,719		1,021,713		59,487		1,992,043
Commercial - agriculture
Risk rating:
Pass	32,780		20,230		10,253		3,646		2,364		459		98,245		327		168,304
Special mention	—		—		—		—		—		—		—		—		—
Substandard	191		25		27		53		22		3		23		69		413
Doubtful and loss	—		—		—		—		—		—		—		—		—
Total commercial - agriculture	32,971		20,255		10,280		3,699		2,386		462		98,268		396		168,717
Other
Delinquency:
Current	24,247		4,740		1,236		22,438		6,692		5,578		264,189		—		329,120
30-89 days past due	—		—		—		—		—		—		—		—		—
90+ days past due	—		—		—		—		—		3		—		—		3
Total other	24,247		4,740		1,236		22,438		6,692		5,581		264,189		—		329,123
Total	$	2,516,672	$	1,525,310	$	709,683	$	656,367	$	801,918	$	1,081,384	$	4,431,020	$	290,149	$	12,012,503

Allowance for Credit Losses

Allowance for Credit Losses – The allowance for credit losses is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, historical loss experience, and other qualitative considerations. The allowance, in the judgment of management, is necessary to reserve for expected loan losses and risks inherent in the loan portfolio. The Company’s allowance for credit loss methodology includes reserve factors calculated to estimate current expected credit losses to amortized cost balances over the remaining contractual life of the portfolio, adjusted for the effective interest rate used to discount prepayments, in accordance with ASC Topic 326-20, Financial Instruments - Credit Losses. Accordingly, the methodology is based on the Company’s reasonable and supportable economic forecasts, historical loss experience, and other qualitative adjustments.

Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated into homogeneous segments for assessment. Reserve factors are based on estimated probability of default and loss given default for each segment. The estimates are determined based on economic forecasts over the reasonable and supportable forecast period based on projected performance of economic variables that have a statistical relationship with the historical loss experience of the segments. For contractual periods that extend beyond the one-year forecast period, the estimates revert to average historical loss experiences over a one-year period on a straight-line basis.

The Company also includes qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for. Qualitative adjustments include, but are not limited to:

•Changes in asset quality - Adjustments related to trending credit quality metrics including delinquency, non-performing loans, charge-offs, and risk ratings that may not be fully accounted for in the reserve factor.

•Changes in the nature and volume of the portfolio - Adjustments related to current changes in the loan portfolio that are not fully represented or accounted for in the reserve factors.

•Changes in lending and loan monitoring policies and procedures - Adjustments related to current changes in lending and loan monitoring procedures as well as review of specific internal policy compliance metrics.

•Changes in the experience, ability, and depth of lending management and other relevant staff - Adjustments to measure increasing or decreasing credit risk related to lending and loan monitoring management.

•Changes in the value of underlying collateral of collateralized loans - Adjustments related to improving or deterioration of the value of underlying collateral that are not fully captured in the reserve factors.

•Changes in and the existence and effect of any concentrations of credit - Adjustments related to credit risk of specific industries that are not fully captured in the reserve factors.

•Changes in regional and local economic and business conditions and developments - Adjustments related to expected and current economic conditions at a regional or local-level that are not fully captured within the Company’s reasonable and supportable forecast.

•Data imprecisions due to limited historical loss data - Adjustments related to limited historical loss data that is representative of the collective loan portfolio.

Loans that do not share similar risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating or are classified as a troubled debt restructuring. The allowance for credit loss is determined based on several methods including estimating the fair value of the underlying collateral or the present value of expected cash flows.

For a collateral dependent loan, the Company’s evaluation process includes a valuation by appraisal or other collateral analysis adjusted for selling costs, when appropriate. This valuation is compared to the remaining outstanding principal balance of the loan. If a loss is determined to be probable, the loss is included in the allowance for credit losses as a specific allocation. If the loan is not collateral dependent, the measurement of loss is based on the difference between the expected and contractual future cash flows of the loan.

Loans for which the repayment is expected to be provided substantially through the operation or sale of collateral and where the borrower is experiencing financial difficulty had an amortized cost of ~~$74.8~~$100.0 million and $47.1 million as of ~~June 30,~~March 31, 2022 and December 31, 2021, respectively, as further detailed in the table below. The collateral securing these loans consist of commercial real estate properties, residential properties, and other business ~~assets, and secured energy production~~ assets.


(In thousands)	(In thousands)	Real Estate Collateral		Energy		Other Collateral		Total		(In thousands)	Real Estate Collateral		Other Collateral		Total
March 31, 2022										March 31, 2022
Construction and development	Construction and development	$	2,788	$	0	$	0	$	2,788	Construction and development	$	1,369	$	—	$	1,369
Single family residential	Single family residential	2,940		0		0		2,940		Single family residential	1,947		—		1,947
Other commercial real estate	Other commercial real estate	34,431		0		0		34,431		Other commercial real estate	87,804		—		87,804
Commercial	Commercial	0		30,677		3,979		34,656		Commercial	—		8,877		8,877
Total	Total	$	40,159	$	30,677	$	3,979	$	74,815	Total	$	91,120	$	8,877	$	99,997

December 31, 2021										December 31, 2021
Construction and development										Construction and development	$	2,489	$	—	$	2,489
Single family residential										Single family residential	1,838		—		1,838
Other commercial real estate										Other commercial real estate	32,849		—		32,849
Commercial										Commercial	—		9,913		9,913
Total										Total	$	37,176	$	9,913	$	47,089

The following table details activity in the allowance for credit losses by portfolio segment for the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2022. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


(In thousands)	(In thousands)	Commercial		Real Estate		Credit Card		Other Consumer and Other		Total		(In thousands)	Commercial		Real Estate		Credit Card		Other Consumer and Other		Total
Allowance for credit losses:	Allowance for credit losses:											Allowance for credit losses:
Three Months Ended June 30, 2021
Beginning balance, April 1, 2021		$	34,633	$	195,826	$	2,172	$	2,485	$	235,116
Three Months Ended March 31, 2022												Three Months Ended March 31, 2022
Beginning balance, January 1, 2022												Beginning balance, January 1, 2022	$	17,458	$	179,270	$	3,987	$	4,617	$	205,332
Provision for credit loss expense	Provision for credit loss expense	(6,678)		(8,522)		4,072		1,117		(10,011)		Provision for credit loss expense	(2,519)		(17,822)		(447)		874		(19,914)
Charge-offs	Charge-offs	(309)		(439)		(1,046)		(411)		(2,205)		Charge-offs	(6,319)		(485)		(920)		(414)		(8,138)
Recoveries	Recoveries	2,147		1,523		244		425		4,339		Recoveries	557		426		274		387		1,644
Net charge-offs	Net charge-offs	1,838		1,084		(802)		14		2,134		Net charge-offs	(5,762)		(59)		(646)		(27)		(6,494)
Ending balance, June 30, 2021		$	29,793	$	188,388	$	5,442	$	3,616	$	227,239

Six Months Ended June 30, 2021
Beginning balance, January 1, 2021		$	42,093	$	182,868	$	7,472	$	5,617	$	238,050
Provision for credit loss expense		(13,599)		5,720		(515)		(1,617)		(10,011)
Charge-offs		(1,168)		(2,126)		(2,049)		(1,113)		(6,456)
Recoveries		2,467		1,926		534		729		5,656
Net charge-offs		1,299		(200)		(1,515)		(384)		(800)
Ending balance, June 30, 2021		$	29,793	$	188,388	$	5,442	$	3,616	$	227,239
Ending balance, March 31, 2022												Ending balance, March 31, 2022	$	9,177	$	161,389	$	2,894	$	5,464	$	178,924

Activity in the allowance for credit losses for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 was as follows:

(In thousands) Commercial Real
Estate Credit
Card Other
Consumer
and Other Total
Allowance for credit losses:
Three Months Ended June 30, 2020
Beginning balance, April 1, 2020 $ 76,327 $ 141,022 $ 7,817 $ 18,029 $ 243,195
Provision for credit losses 18,400 10,020 3,943 (5,685) 26,678
Charge-offs (35,687) (1,824) (1,053) (592) (39,156)
Recoveries 98 253 272 303 926
Net (charge-offs) recoveries (35,589) (1,571) (781) (289) (38,230)
Ending balance, June 30, 2020 $ 59,138 $ 149,471 $ 10,979 $ 12,055 $ 231,643


(In thousands)	Commercial		Real Estate		Credit Card		Other Consumer and Other		Total
Allowance for credit losses:
Three Months Ended March 31, 2021
Beginning balance, January 1, 2020 - prior to adoption of CECL	$	42,093	$	182,868	$	7,472	$	5,617	$	238,050
Provision for credit loss expense	(6,940)		14,242		(4,587)		(2,715)		—
Charge-offs	(859)		(1,687)		(1,003)		(702)		(4,251)
Recoveries	320		403		290		304		1,317
Net charge-offs	(539)		(1,284)		(713)		(398)		(2,934)
Ending balance, March 31, 2021	$	34,614	$	195,826	$	2,172	$	2,504	$	235,116

Six Months Ended June 30, 2020
Beginning balance, January 1, 2020 - prior to adoption of CECL $ 22,863 $ 39,161 $ 4,051 $ 2,169 $ 68,244
Impact of CECL adoption 22,733 114,314 2,232 12,098 151,377
Provision for credit loss expense 49,307 (2,138) 6,693 (987) 52,875
Charge-offs (36,210) (2,220) (2,494) (1,971) (42,895)
Recoveries 445 354 497 746 2,042
Net charge-offs (35,765) (1,866) (1,997) (1,225) (40,853)
Ending balance, June 30, 2020 $ 59,138 $ 149,471 $ 10,979 $ 12,055 $ 231,643

As of ~~June 30, 2021,~~March 31, 2022, the Company’s allowance for credit losses was considered sufficient based upon expected loan level cash flows that were supported by economic forecasts. Provision expense was recaptured for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 based upon improved asset credit quality metrics combined with improved Moody’s economic modeling scenarios.

NaN energy credits within the commercial segment were charged off during the second quarter of 2020 for a total of $32.6 million, of which $27.1 million was specifically reserved in the prior quarter. Additionally, during the second quarter of 2020, the change in the provision for credit losses was related to updated credit loss forecasts using multiple Moody’s economic scenarios. The updates were to reflect the possibility of a longer, more prolonged recovery to the economies that affect the loan portfolio.

Reserve for Unfunded Commitments

In addition to the allowance for credit losses, the Company has established a reserve for unfunded commitments, classified in other liabilities. This reserve is maintained at a level management believes to be sufficient to absorb losses arising from unfunded loan commitments. The reserve for unfunded commitments as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was $22.4 million. The adequacy of the reserve for unfunded commitments is determined quarterly based on methodology similar to the methodology for determining the allowance for credit losses. ~~NaN~~No adjustment was made to the reserve for unfunded commitments during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, as it was considered sufficient to cover any loss expectations. For the three and six month periods ended June 30, 2020, net adjustments to the reserve for unfunded commitments resulted in a benefit of $5.0 million and $8.0 million, respectively, and was included in the provision for credit losses in the statement of income.

Provision for Credit Losses

Provision for credit losses is determined by the Company as the amount to be added to the allowance for credit loss accounts for various types of financial instruments including loans, securities and off-balance-sheet credit exposure after net charge-offs have been deducted to bring the allowance to a level which, in management’s best estimate, is necessary to absorb expected credit losses over the lives of the respective financial instruments.

The components of the provision for credit losses for the three ~~and six~~ month periods ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2022		2021
Provision for credit losses related to:	Provision for credit losses related to:									Provision for credit losses related to:
Loans	Loans	$	(10,011)	$	26,678	$	(10,011)	$	52,875	Loans	$	(19,914)	$	—
Unfunded commitments	Unfunded commitments	0		(5,001)		0		(8,000)		Unfunded commitments	—		—
Securities - HTM	Securities - HTM	(486)		(102)		(1,183)		(62)		Securities - HTM	—		(697)
Securities - AFS	Securities - AFS	(2,454)		340		(312)		236		Securities - AFS	—		2,142
Total	Total	$	(12,951)	$	21,915	$	(11,506)	$	45,049	Total	$	(19,914)	$	1,445

Purchased Credit Deteriorated (“PCD”) Loans

Purchased loans that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. For PCD loans, the initial estimate of expected credit losses is recognized in the allowance for credit loss on the date of acquisition using the same methodology as discussed in the Allowance for Credit Losses section included above.

The following table provides a summary of loans purchased as part of the Landmark acquisition with credit deterioration at acquisition:


(In thousands)	Commercial	Real Estate	Credit Card	Other Consumer and Other	Total
Unpaid principal balance	11,046	55,549	—	67	66,662
PCD allowance for credit loss at acquisition	(350)	(2,008)	—	(1)	(2,359)
Non-credit related discount	(160)	(2,415)	—	(2)	(2,577)
Fair value of PCD loans	10,536	51,126	—	64	61,726

The following table provides a summary of loans purchased as part of the Triumph acquisition with credit deterioration at acquisition:


(In thousands)	Commercial	Real Estate	Credit Card	Other Consumer and Other	Total
Unpaid principal balance	40,466	80,803	—	15	121,284
PCD allowance for credit loss at acquisition	(2,999)	(8,093)	—	—	(11,092)
Non-credit related discount	(279)	(1,314)	—	(1)	(1,594)
Fair value of PCD loans	37,188	71,396	—	14	108,598

NOTE 6: RIGHT-OF-USE LEASE ASSETS AND LEASE LIABILITIES

The Company accounts for its leases in accordance with ASC Topic 842, Leases, which requires recognition of most leases, including operating leases, with a term greater than 12 months on the balance sheet. At lease commencement, the lease contract is reviewed to determine whether the contract is a finance lease or an operating lease; a lease liability is recognized on a discounted basis, related to the Company’s obligation to make lease payments; and a right-of-use asset is also recognized related to the Company’s right to use, or control the use of, a specified asset for the lease term. The Company accounts for lease and non-lease components (such as taxes, insurance and common area maintenance costs) separately as such amounts are generally readily determinable under the lease contracts. Lease payments over the expected term are discounted using the Company’s Federal Home Loan Bank (“FHLB”) advance rates for borrowings of similar term. If it is reasonably certain that a renewal or termination option will be exercised, the effects of such options are included in the determination of the expected lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The Company’s leases are classified as operating leases with a term, including expected renewal or termination options, greater than one year, and are related to certain office facilities and office equipment. The following table presents information as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 related to the Company’s right-of-use lease assets, included in premises and equipment, and lease liabilities, included in accrued interest and other liabilities.


		June 30,			December 31,				March 31,			December 31,
(Dollars in thousands)	(Dollars in thousands)	2021			2020			(Dollars in thousands)	2022			2021
Right-of-use lease assets	Right-of-use lease assets	$	34,748		$	31,348		Right-of-use lease assets	$	52,912		$	48,855
Lease liabilities	Lease liabilities	35,072			31,433			Lease liabilities	53,533			49,321

Weighted average remaining lease term	Weighted average remaining lease term	8.30 years			6.55 years			Weighted average remaining lease term	8.43 years			7.96 years
Weighted average discount rate	Weighted average discount rate	2.79		%	3.09		%	Weighted average discount rate	1.75		%	2.00		%

Operating lease cost, classified in occupancy expense, for the three ~~and six~~ month periods ended ~~June 30,~~March 31, 2022 and 2021 was ~~$2.9~~$3.2 million and ~~$5.7~~$2.8 million, ~~respectively, as compared to $3.4 million and $6.6 million for the same periods in 2020.~~respectively.

NOTE 7: PREMISES AND EQUIPMENT

Premises and equipment are stated at cost less accumulated depreciation and amortization. Total premises and equipment, net at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were as follows:


		June 30,		December 31,			March 31,		December 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Right-of-use lease assets	Right-of-use lease assets	$	34,748	$	31,348	Right-of-use lease assets	$	52,912	$	48,855
Premises and equipment:	Premises and equipment:					Premises and equipment:
Land	Land	89,950		90,953		Land	101,444		101,728
Buildings and improvements	Buildings and improvements	289,934		293,338		Buildings and improvements	320,024		320,844
Furniture, fixtures and equipment	Furniture, fixtures and equipment	101,962		100,863		Furniture, fixtures and equipment	107,739		107,122
Software	Software	65,675		64,877		Software	67,175		66,947
Construction in progress	Construction in progress	3,698		763		Construction in progress	15,570		9,117
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(156,380)		(140,450)		Accumulated depreciation and amortization	(178,333)		(171,144)
Total premises and equipment, net	Total premises and equipment, net	$	429,587	$	441,692	Total premises and equipment, net	$	486,531	$	483,469

NOTE 8: GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill is tested annually, or more often than annually, if circumstances warrant, for impairment. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated, and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the financial statements. Goodwill totaled $1.1 billion at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~

2021. Goodwill ~~impairment was neither indicated nor recorded~~increased $1.0 million during the ~~six months~~quarter ended ~~June 30, 2021 or the year ended December~~March 31, ~~2020. During the first quarter of 2020, the Company’s share price began to decline as the markets in the United States responded~~2022 due to the ~~global COVID-19 pandemic. As a result~~continued assessment of ~~that economic decline,~~ the ~~effect on share price~~fair value and ~~other factors,~~assumed tax position of the ~~Company performed an interim goodwill impairment assessment during each quarter of 2020~~Landmark and concluded 0 impairment existed during each period. While the goodwill impairment analyses indicated 0 impairment during 2020, the Company’s assessment depended on several assumptions which were dependent on market and economic conditions, and future changes in those conditions could impact the Company’s assessment in the future. Due to the improved market and economic conditions, and the related effects on the Company’s share price, the Company did not perform an interim goodwill impairment assessment during the first quarter of 2021. During the second quarter of 2021, the Company performed an annual goodwill impairment analysis and concluded 0 impairment existed.Triumph acquisitions.

Core deposit premiums represent the value of the relationships that acquired banks had with their deposit customers and are amortized over periods ranging from 10 years to 15 years and are periodically evaluated, at least annually, as to the recoverability of their carrying value. Other intangible assets represent the value of other acquired relationships, including relationships with trust and wealth management customers, and are being amortized over various periods ranging from 10 years to 15 years.

Changes in the carrying amount and accumulated amortization of the Company’s core deposit premiums and other intangible assets at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were as follows:


		June 30,		December 31,			March 31,		December 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Core deposit premiums:	Core deposit premiums:					Core deposit premiums:
Balance, beginning of year	Balance, beginning of year	$	97,363	$	111,808	Balance, beginning of year	$	93,862	$	97,363
Disposition of intangible asset(1)		(674)		(2,324)
Acquisitions(1)						Acquisitions(1)	—		9,295
Disposition of intangible asset(2)						Disposition of intangible asset(2)	—		(674)
Amortization	Amortization	(5,990)		(12,121)		Amortization	(3,144)		(12,122)
Balance, end of period	Balance, end of period	90,699		97,363		Balance, end of period	90,718		93,862
Books of business and other intangibles:	Books of business and other intangibles:					Books of business and other intangibles:
Balance, beginning of year	Balance, beginning of year	13,747		15,532		Balance, beginning of year	12,373		13,747
Disposition of intangible asset		0		(413)
Amortization	Amortization	(687)		(1,372)		Amortization	(343)		(1,374)
Balance, end of period	Balance, end of period	13,060		13,747		Balance, end of period	12,030		12,373
Total other intangible assets, net	Total other intangible assets, net	$	103,759	$	111,110	Total other intangible assets, net	$	102,748	$	106,235

_________________________

(1) Core deposit premiums of $5.1 million and $4.2 million were recorded during 2021 as part of the Triumph and Landmark acquisitions, respectively. See Note 2, Acquisitions, for additional information on acquisitions completed in 2021.

(2) Adjustments recorded for the premiums on certain deposit liabilities associated with the sale of banking operations.

The carrying basis and accumulated amortization of the Company’s other intangible assets at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were as follows:


		June 30,		December 31,			March 31,		December 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Core deposit premiums:	Core deposit premiums:					Core deposit premiums:
Gross carrying amount	Gross carrying amount	$	144,202	$	146,355	Gross carrying amount	$	153,496	$	153,496
Accumulated amortization	Accumulated amortization	(53,503)		(48,992)		Accumulated amortization	(62,778)		(59,634)
Core deposit premiums, net	Core deposit premiums, net	90,699		97,363		Core deposit premiums, net	90,718		93,862
Books of business and other intangibles:	Books of business and other intangibles:					Books of business and other intangibles:
Gross carrying amount	Gross carrying amount	19,937		19,937		Gross carrying amount	19,937		19,937
Accumulated amortization	Accumulated amortization	(6,877)		(6,190)		Accumulated amortization	(7,907)		(7,564)
Books of business and other intangibles, net	Books of business and other intangibles, net	13,060		13,747		Books of business and other intangibles, net	12,030		12,373
Total other intangible assets, net	Total other intangible assets, net	$	103,759	$	111,110	Total other intangible assets, net	$	102,748	$	106,235

The Company’s estimated remaining amortization expense on other intangible assets as of ~~June 30, 2021~~March 31, 2022 is as follows:

(In thousands) Year Amortization
Expense
Remainder of 2021 $ 6,663
2022 13,275
2023 12,992
2024 12,090
2025 9,505
Thereafter 49,234
Total $ 103,759


(In thousands)	Year	Amortization Expense
	Remainder of 2022	$	10,408
	2023	13,612
	2024	12,709
	2025	10,125
	2026	9,652
	Thereafter	46,242
	Total	$	102,748

NOTE 9: TIME DEPOSITS

Time deposits included approximately ~~$2.10 billion~~$541.5 million and ~~$2.03 billion of certificates of deposit of $100,000 or more, at June 30, 2021, and December 31, 2020, respectively. Of this total approximately $1.00 billion and $889.8~~$784.9 million of certificates of deposit ~~were~~ over $250,000 at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Brokered time deposits were $890.9 million and $466.0 million at March 31, 2022 and December 31, 2021, respectively.

NOTE 10: INCOME TAXES

The provision for income taxes is comprised of the following components for the periods indicated below:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2022		2021
Income taxes currently payable	Income taxes currently payable	$	13,930	$	9,391	$	25,066	$	31,671	Income taxes currently payable	$	5,119	$	11,136
Deferred income taxes	Deferred income taxes	3,088		6,202		6,315		4,616		Deferred income taxes	9,107		3,227
Provision for income taxes	Provision for income taxes	$	17,018	$	15,593	$	31,381	$	36,287	Provision for income taxes	$	14,226	$	14,363

The tax effects of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities, and their approximate tax effects, are as follows:


		June 30,		December 31,			March 31,		December 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Deferred tax assets:	Deferred tax assets:					Deferred tax assets:
Loans acquired	Loans acquired	$	7,084	$	10,100	Loans acquired	$	4,334	$	4,832
Allowance for credit losses	Allowance for credit losses	55,064		58,028		Allowance for credit losses	42,112		48,462
Valuation of foreclosed assets	Valuation of foreclosed assets	1,673		1,673		Valuation of foreclosed assets	628		628
Tax NOLs from acquisition	Tax NOLs from acquisition	14,720		16,028		Tax NOLs from acquisition	13,287		13,537
Deferred compensation payable	Deferred compensation payable	3,267		3,060		Deferred compensation payable	3,559		3,426
Accrued equity and other compensation	Accrued equity and other compensation	5,081		5,905		Accrued equity and other compensation	4,477		5,776
Acquired securities	Acquired securities	491		587		Acquired securities	177		223
Right-of-use lease liability	Right-of-use lease liability	8,742		7,835		Right-of-use lease liability	13,007		11,984
Unrealized loss on AFS securities						Unrealized loss on AFS securities	115,121		8,164
Allowance for unfunded commitments	Allowance for unfunded commitments	5,583		5,583		Allowance for unfunded commitments	5,442		5,442
Other	Other	7,578		7,600		Other	6,410		7,202
Gross deferred tax assets	Gross deferred tax assets	109,283		116,399		Gross deferred tax assets	208,554		109,676
Deferred tax liabilities:	Deferred tax liabilities:					Deferred tax liabilities:
Goodwill and other intangible amortization	Goodwill and other intangible amortization	(37,914)		(38,882)		Goodwill and other intangible amortization	(37,828)		(38,329)
Accumulated depreciation	Accumulated depreciation	(33,670)		(34,667)		Accumulated depreciation	(26,176)		(26,347)
Right-of-use lease asset	Right-of-use lease asset	(8,661)		(7,813)		Right-of-use lease asset	(12,856)		(11,871)
Unrealized gain on AFS securities	Unrealized gain on AFS securities	(2,058)		(17,521)		Unrealized gain on AFS securities	—		—
Unrealized gain on swaps						Unrealized gain on swaps	(12,489)		(2,767)
Other	Other	(4,335)		(4,021)		Other	(4,044)		(3,718)
Gross deferred tax liabilities	Gross deferred tax liabilities	(86,638)		(102,904)		Gross deferred tax liabilities	(93,393)		(83,032)

Net deferred tax asset	Net deferred tax asset	$	22,645	$	13,495	Net deferred tax asset	$	115,161	$	26,644

A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is shown for the periods indicated below:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2022		2021
Computed at the statutory rate (21%)	Computed at the statutory rate (21%)	$	19,305	$	15,620	$	36,477	$	36,180	Computed at the statutory rate (21%)	$	16,657	$	17,172
Increase (decrease) in taxes resulting from:	Increase (decrease) in taxes resulting from:									Increase (decrease) in taxes resulting from:
State income taxes, net of federal tax benefit	State income taxes, net of federal tax benefit	1,488		2,296		3,378		4,359		State income taxes, net of federal tax benefit	1,125		1,890
Stock-based compensation	Stock-based compensation	(66)		43		37		69		Stock-based compensation	(202)		103
Tax exempt interest income	Tax exempt interest income	(2,741)		(1,421)		(5,251)		(2,842)		Tax exempt interest income	(3,403)		(2,510)
Tax exempt earnings on BOLI	Tax exempt earnings on BOLI	(319)		(212)		(560)		(531)		Tax exempt earnings on BOLI	(425)		(241)
Federal tax credits	Federal tax credits	(589)		(1,034)		(1,179)		(2,068)		Federal tax credits	(588)		(590)
Other differences, net	Other differences, net	(60)		301		(1,521)		1,120		Other differences, net	1,062		(1,461)
Actual tax provision	Actual tax provision	$	17,018	$	15,593	$	31,381	$	36,287	Actual tax provision	$	14,226	$	14,363

The Company follows ASC Topic 740, Income Taxes, which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. ASC Topic 740 also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties. The Company has no history of expiring net operating loss carryforwards and is projecting significant pre-tax and financial taxable income in future years. The Company expects to fully realize its deferred tax assets in the future.

The amount of unrecognized tax benefits may increase or decrease in the future for various reasons including adding amounts for current tax year positions, expiration of open income tax returns due to the statutes of limitation, changes in management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the addition or elimination of uncertain tax positions.

Section 382 of the Internal Revenue Code imposes an annual limit on the ability of a corporation that undergoes an “ownership change” to use its U.S. net operating losses to reduce its tax liability. The Company has engaged in two tax-free reorganization transactions in which acquired net operating losses are limited pursuant to Section 382. In total, approximately ~~$65.2~~$57.7 million of federal net operating losses subject to the IRC Section 382 annual limitation are expected to be utilized by the Company. All of the acquired net operating loss carryforwards are expected to be fully utilized by 2036.

The Company files income tax returns in the U.S. federal jurisdiction. The Company’s U.S. federal income tax returns are open and subject to examinations from the ~~2017~~2018 tax year and forward. The Company’s various state income tax returns are generally open from the ~~2017~~2018 and later tax return years based on individual state statute of limitations.

NOTE 11: SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Company utilizes securities sold under agreements to repurchase to facilitate the needs of its customers and to facilitate secured short-term funding needs. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. The Company monitors collateral levels on a continuous basis. The Company may be required to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with the Company’s safekeeping agents.

The gross amount of recognized liabilities for repurchase agreements was ~~$172.2~~$178.8 million and ~~$248.9~~$170.4 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The remaining contractual maturity of the securities sold under agreements to repurchase in the consolidated balance sheets as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 is presented in the following tables.


		Remaining Contractual Maturity of the Agreements											Remaining Contractual Maturity of the Agreements
(In thousands)	(In thousands)	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total		(In thousands)	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
June 30, 2021
March 31, 2022												March 31, 2022
Repurchase agreements:	Repurchase agreements:											Repurchase agreements:
U.S. Government agencies	U.S. Government agencies	$	172,215	$	0	$	0	$	0	$	172,215	U.S. Government agencies	$	178,828	$	—	$	—	$	—	$	178,828

December 31, 2020
December 31, 2021												December 31, 2021
Repurchase agreements:	Repurchase agreements:											Repurchase agreements:
U.S. Government agencies	U.S. Government agencies	$	248,861	$	0	$	0	$	0	$	248,861	U.S. Government agencies	$	170,403	$	—	$	—	$	—	$	170,403

NOTE 12: OTHER BORROWINGS AND SUBORDINATED NOTES AND DEBENTURES

Debt at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 consisted of the following components:


		June 30,		December 31,			March 31,		December 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Other Borrowings	Other Borrowings					Other Borrowings
FHLB advances, net of discount, due 2022 to 2035, 0.23% to 7.37% secured by real estate loans	FHLB advances, net of discount, due 2022 to 2035, 0.23% to 7.37% secured by real estate loans	$	1,306,576	$	1,308,674	FHLB advances, net of discount, due 2022 to 2035, 0.23% to 7.37% secured by real estate loans	$	1,305,812	$	1,306,143
Other long-term debt	Other long-term debt	32,617		33,393		Other long-term debt	31,431		31,830
Total other borrowings	Total other borrowings	1,339,193		1,342,067		Total other borrowings	1,337,243		1,337,973

Subordinated Notes and Debentures	Subordinated Notes and Debentures					Subordinated Notes and Debentures
Subordinated notes payable, due 4/1/2028, fixed-to-floating rate (fixed rate of 5.00% through 3/31/2023, floating rate of 2.15% above the three month LIBOR rate, reset quarterly)	Subordinated notes payable, due 4/1/2028, fixed-to-floating rate (fixed rate of 5.00% through 3/31/2023, floating rate of 2.15% above the three month LIBOR rate, reset quarterly)	330,000		330,000		Subordinated notes payable, due 4/1/2028, fixed-to-floating rate (fixed rate of 5.00% through 3/31/2023, floating rate of 2.15% above the three month LIBOR rate, reset quarterly)	330,000		330,000
Trust preferred securities, due 9/15/2037, floating rate of 1.37% above the three month LIBOR rate, reset quarterly	Trust preferred securities, due 9/15/2037, floating rate of 1.37% above the three month LIBOR rate, reset quarterly	10,310		10,310		Trust preferred securities, due 9/15/2037, floating rate of 1.37% above the three month LIBOR rate, reset quarterly	10,310		10,310
Trust preferred securities, due 6/6/2037, floating rate of 1.57% above the three month LIBOR rate, reset quarterly, callable without penalty	Trust preferred securities, due 6/6/2037, floating rate of 1.57% above the three month LIBOR rate, reset quarterly, callable without penalty	10,310		10,310		Trust preferred securities, due 6/6/2037, floating rate of 1.57% above the three month LIBOR rate, reset quarterly, callable without penalty	10,310		10,310
Trust preferred securities, due 12/15/2035, floating rate of 1.45% above the three month LIBOR rate, reset quarterly, callable without penalty	Trust preferred securities, due 12/15/2035, floating rate of 1.45% above the three month LIBOR rate, reset quarterly, callable without penalty	6,702		6,702		Trust preferred securities, due 12/15/2035, floating rate of 1.45% above the three month LIBOR rate, reset quarterly, callable without penalty	6,702		6,702
Trust preferred securities, net of discount, due 6/15/2037, floating rate of 1.85% above the three month LIBOR rate, reset quarterly, callable without penalty	Trust preferred securities, net of discount, due 6/15/2037, floating rate of 1.85% above the three month LIBOR rate, reset quarterly, callable without penalty	25,250		25,172		Trust preferred securities, net of discount, due 6/15/2037, floating rate of 1.85% above the three month LIBOR rate, reset quarterly, callable without penalty	25,368		25,329
Trust preferred securities, net of discount, due 12/15/2036, floating rate of 1.85% above the three month LIBOR rate, reset quarterly, callable without penalty	Trust preferred securities, net of discount, due 12/15/2036, floating rate of 1.85% above the three month LIBOR rate, reset quarterly, callable without penalty	3,032		3,023		Trust preferred securities, net of discount, due 12/15/2036, floating rate of 1.85% above the three month LIBOR rate, reset quarterly, callable without penalty	3,046		3,041
Unamortized debt issuance costs	Unamortized debt issuance costs	(2,461)		(2,643)		Unamortized debt issuance costs	(1,494)		(1,561)
Total subordinated notes and debentures	Total subordinated notes and debentures	383,143		382,874		Total subordinated notes and debentures	384,242		384,131
Total other borrowings and subordinated debt	Total other borrowings and subordinated debt	$	1,722,336	$	1,724,941	Total other borrowings and subordinated debt	$	1,721,485	$	1,722,104

In March 2018, the Company issued $330.0 million in aggregate principal amount, of 5.00% Fixed-to-Floating Rate Subordinated Notes (“Notes”) at a public offering price equal to 100% of the aggregate principal amount of the Notes. The Company incurred $3.6 million in debt issuance costs related to the offering during March 2018. The Notes will mature on April 1, 2028 and will bear interest at an initial fixed rate of 5.00% per annum, payable semi-annually in arrears. From and including April 1, 2023 to, but excluding, the maturity date or the date of earlier redemption, the interest rate will reset quarterly to an annual interest rate equal to the then-current three month LIBOR rate plus 215 basis points, payable quarterly in arrears. The Notes will be subordinated in right of payment to the payment of the Company’s other existing and future senior indebtedness, including all of its general creditors. The Notes are obligations of the Company only and are not obligations of, and are not guaranteed by, any of its subsidiaries. The Company used a portion of the net proceeds from the sale of the Notes to repay certain outstanding indebtedness. The Notes qualify for Tier 2 capital treatment.

The terms of the Company’s Notes and trust preferred securities utilize the three month LIBOR rate to determine the interest rate and expense due each quarter. The Company is currently reviewing all applicable documents and working with the debt holders and all relevant parties to determine the alternate interest rate index to be utilized, or other impacts, when LIBOR is discontinued.

The Company had total FHLB advances of $1.31 billion at ~~June 30,~~March 31, 2022 and December 31, 2021, of which $1.30 billion are FHLB Owns the Option (“FOTO”) advances. FOTO advances are a low cost, fixed-rate source of funding in return for granting to FHLB the flexibility to choose a termination date earlier than the maturity date. Typically, FOTO exercise dates follow a specified lockout period at the beginning of the term when FHLB cannot terminate the FOTO advance. If FHLB exercises its option to terminate the FOTO advance at one of the specified option exercise dates, there is no termination or prepayment fee, and replacement funding will be available at then-prevailing market rates, subject to FHLB’s credit and collateral requirements. The Company’s FOTO advances outstanding at ~~June 30, 2021~~March 31, 2022 have original maturity dates of ten years to fifteen years with lockout periods that have expired. The Company expects the FHLB’s option to terminate the FOTO advances prior to stated maturity dates will not be exercised due to the current low interest rate environment. The possibility of the FHLB exercising the options is continually analyzed by the Company along with the market expected rate outcome. At ~~June 30, 2021,~~March 31, 2022, the FHLB advances outstanding were secured by mortgage loans and investment securities totaling approximately ~~$4.9~~$5.0 billion and the Company had approximately ~~$3.5~~$3.6 billion of additional advances available from the FHLB.

The trust preferred securities are tax-advantaged issues that qualify for inclusion as Tier 2 capital at ~~June 30, 2021.~~March 31, 2022. Distributions on these securities are included in interest expense on long-term debt. Each of the trusts is a statutory business trust organized for the sole purpose of issuing trust securities and investing the proceeds thereof in junior subordinated debentures of the Company, the sole asset of each trust. The preferred securities of each trust represent preferred beneficial interests in the assets of the respective trusts and are subject to mandatory redemption upon payment of the junior subordinated debentures held by the trust. The common securities of each trust are wholly-owned by the Company. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payments on the related junior subordinated debentures. The Company’s obligations under the junior subordinated securities and other relevant trust agreements, in the aggregate, constitute a full and unconditional guarantee by the Company of each respective trust’s obligations under the trust securities issued by each respective trust.

The Company’s long-term debt primarily includes subordinated debt and long-term FHLB advances with an original maturity of greater than one year. Aggregate annual maturities of long-term debt at ~~June 30, 2021,~~March 31, 2022, are as follows:


Year	Year	(In thousands)		Year	(In thousands)
Remainder of 2021		$	923
2022		1,727
Remainder of 2022				Remainder of 2022	$	1,342
2023	2023	1,686		2023	1,796
2024	2024	2,327		2024	2,412
2025	2025	4,876		2025	4,882
2026				2026	1,877
Thereafter	Thereafter	1,710,797		Thereafter	1,709,176
Total	Total	$	1,722,336	Total	$	1,721,485

NOTE 13: CONTINGENT LIABILITIES

In the ordinary course of its operations, the Company and its subsidiaries are parties to various legal proceedings incidental to the conduct of our business, including proceedings based on breach of contract claims, lender liability claims, and other ordinary-course claims, some of which seek substantial relief or damages.

On May 22, 2019, Danny Walkingstick and Whitnye Fort filed a putative class action complaint against Simmons Bank in the United States District Court for the Western District of Missouri. The operative complaint alleges that Simmons Bank improperly charges overdraft fees on transactions that did not actually overdraw customers’ accounts by utilizing the checking account’s “available balance” to assess overdraft fees instead of the “ledger balance.” Plaintiffs’ claims include breach of contract and unjust enrichment, and they seek to represent a proposed class of all Simmons Bank checking account customers who were assessed an overdraft fee on a transaction that purportedly did not overdraw the account. Plaintiffs seek unspecified damages, costs, attorneys’ fees, pre- and post-judgment interest, and other relief as the Court deems proper for themselves and the putative class. Simmons Bank denies the allegations but has ~~reached~~entered into a settlement ~~in principle~~agreement and release with the plaintiffs on behalf of themselves and the proposed class to resolve this matter, subject to ~~the preparation and execution of a mutually acceptable settlement agreement and release, as well as~~ the court’s approval. The settlement is not expected to have a material adverse effect on the Company’s business, consolidated results of operations, financial condition, or cash flows.

On January 14, 2020, Susanne Pace filed a putative class action complaint in the Circuit Court of Boone County, Missouri against Landmark Bank, formerly a wholly-owned subsidiary of The Landrum Company, to which Simmons Bank is a successor by merger in connection with the Company’s acquisition of The Landrum Company, which closed in October ~~2019 in the Circuit Court of Boone County, Missouri.~~2019. The complaint alleges that Landmark Bank improperly charged overdraft fees where a transaction was initially authorized on sufficient funds but later settled negative due to intervening transactions. The complaint asserts a claim for breach of contract, which incorporates the implied duty of good faith and fair dealing. Plaintiff seeks to represent a proposed class of all Landmark Bank checking account customers from Missouri who were allegedly charged overdraft fees on transactions that did not overdraw their checking account. Plaintiff seeks unspecified actual, statutory, and punitive damages as well as costs, attorneys’ fees, prejudgment interest, an injunction, and other relief as the Court deems proper for herself and the putative class. Simmons Bank denies the allegations but has reached a settlement in principle with the plaintiff to resolve this matter, subject to the preparation and execution of a mutually acceptable settlement agreement and release, as well as the court’s approval. The settlement is ~~vigorously defending~~not expected to have a material adverse effect on the ~~matter.~~Company’s business, consolidated results of operations, financial condition, or cash flows.

On June 29, 2020, Shunda Wilkins, Diann Graham, and David Watson filed a putative class action complaint against Simmons Bank in the United States District Court for the Eastern District of Arkansas. The complaint alleges that Simmons Bank improperly charges multiple insufficient funds or overdraft fees when a merchant resubmits a rejected payment request. The

complaint asserts claims for breach of contract and unjust enrichment. Plaintiffs seek to represent a proposed class of all Simmons Bank checking account customers who were charged multiple insufficient funds or overdraft fees on resubmitted payment requests. Plaintiffs seek unspecified damages, costs, attorney’s fees, pre-judgment interest, an injunction, and other relief as the Court deems proper for themselves and the purported class. Simmons Bank denies the allegations and is vigorously defending the matter.

On May 13, 2021, Susanne Pace filed a second putative class action complaint in the circuit court of Boone County, Missouri against Landmark Bank, to which Simmons Bank is a successor by merger, ~~in the circuit court of Boone County, Missouri,~~ which ~~has been~~was removed to the United States District Court for the Western District of Missouri, Central Division. The complaint ~~alleges~~alleged that Landmark Bank improperly charged multiple insufficient funds or overdraft fees when a merchant or other originator resubmits a rejected payment request. The complaint ~~asserts~~asserted claims for breach of contract, including breach of the covenant of good faith and fair dealing. Plaintiff ~~seeks~~sought to represent a proposed class of all Landmark Bank checking account customers who were charged multiple insufficient funds or overdraft fees on resubmitted payment requests. Plaintiff ~~seeks~~sought unspecified damages, costs, attorney’s fees, pre- and post-judgment interest, an injunction, and other relief as the Court deems proper for herself and the purported class. Simmons Bank denies the allegations, and ~~is vigorously defending~~on January 11, 2022, the ~~matter.~~Court granted Simmons Bank’s motion to compel arbitration.

We establish reserves for legal proceedings when potential losses become probable and can be reasonably estimated. While the ultimate resolution (including amounts thereof) of any legal proceedings, including the matters described above, cannot be determined at this time, based on information presently available and after consultation with legal counsel, management believes that the ultimate outcome in such proceedings, either individually or in the aggregate, will not have a material adverse effect on our business, consolidated results of operations, financial condition, or cash flows. It is possible, however, that future developments could result in an unfavorable outcome for or resolution of any of these proceedings, which may be material to our results of operations for a given fiscal period.

NOTE 14: CAPITAL STOCK

On February 27, 2009, at a special meeting, the Company’s shareholders approved an amendment to the Articles of Incorporation to establish 40,040,000 authorized shares of preferred stock, $0.01 par value. ~~The~~As of March 31, 2022, the aggregate liquidation preference of all shares of preferred stock cannot exceed $80,000,000.

On October 29, 2019, the Company filed Amended and Restated Articles of Incorporation (“October Amended Articles”) with the Arkansas Secretary of State. The October Amended Articles classified and designated Series D Preferred Stock, Par Value $0.01 Per Share, out of the Company’s authorized preferred stock. On November 30, 2021, the Company redeemed all of the Series D Preferred Stock, including accrued and unpaid dividends.

On April 27,2022, shareholder of the Company approved an increase in the number of authorized shares of its Class A common stock from 175,000,000 to 350,000,000.

Effective July 23, 2021, the Company’s Board of Directors approved an amendment to the Company’s ~~current~~ stock repurchase program originally established in October 2019 (“2019 Program”) that ~~increases~~increased the amount of the Company’s Class A common stock that may be repurchased under the 2019 Program from a maximum of $180 million to a maximum of $276.5 million and ~~extends~~extended the term of the 2019 Program from October 31, 2021, to October 31, 2022 (unless terminated sooner). ~~The Program was originally approved on October 17, 2019 and first amended in~~

During the three month period ended March ~~2020; and as of June 30, 2021,~~31, 2022, the Company ~~has~~ repurchased ~~approximately $126.5~~513,725 shares at an average price of $31.25 per share under the 2019 Program. The Company repurchased 130,916 shares at an average price of $23.53 per share under the 2019 Program during the three months ended March 31, 2021.

During January 2022, the Company substantially exhausted the remaining capacity under the 2019 Program. As a result, the Company’s Board of Directors authorized a new stock repurchase program in January 2022 (the “2022 Program”) under which the Company may repurchase up to $175.0 million of its Class A common stock ~~under the Program.~~currently issued and outstanding. The 2022 Program will terminate on January 31, 2024 (unless terminated sooner).

Under the 2022 Program, which replaced the 2019 Program, the Company may repurchase shares of its common stock through open market and privately negotiated transactions or otherwise. The timing, pricing, and amount of any repurchases under the 2022 Program will be determined by the Company’s management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of the Company’s common stock, corporate considerations, the Company’s working capital and investment requirements, general market and economic conditions, and legal requirements. The 2022 Program does not obligate the Company to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice. The Company anticipates funding for this 2022 Program to come from available sources of liquidity, including cash

on hand and future cash flow.

~~During the six month period ended June 30, 2021,~~ As of March 31, 2022, the Company had not repurchased ~~130,916~~any shares ~~at an average price of $23.53 per share~~ under the ~~Program. NaN shares were repurchased during the second quarter of 2021 under the~~2022 Program. Market conditions and the Company’s capital needs will drive decisions regarding additional, future stock repurchases. ~~The Company repurchased 4,922,336 shares at an average price of $18.96 per share under the Program during the six months ended June 30, 2020.~~

NOTE 15: UNDIVIDED PROFITS

Simmons Bank, the Company’s subsidiary bank, is subject to legal limitations on dividends that can be paid to the parent company without prior approval of the applicable regulatory agencies. The approval of the Commissioner of the Arkansas State Bank Department is required if the total of all dividends declared by an Arkansas state bank in any calendar year exceeds seventy-five percent (75%) of the total of its net profits, as defined, for that year combined with seventy-five percent (75%) of its retained net profits of the preceding year. At ~~June 30, 2021,~~March 31, 2022, Simmons Bank had approximately ~~$99.3~~$176.5 million available for payment of dividends to the Company, without prior regulatory approval.

The risk-based capital guidelines of the Federal Reserve Board and the Arkansas State Bank Department include the definitions for (1) a well-capitalized institution, (2) an adequately-capitalized institution, and (3) an undercapitalized institution. The criteria for a well-capitalized institution are: a 5% “Tier l leverage capital” ratio, an 8% “Tier 1 risk-based capital” ratio, 10% “total risk-based capital” ratio; and a 6.5% “common equity Tier 1 (CET1)” ratio.

The Company and Simmons Bank, must hold a capital conservation buffer of 2.5% composed of CET1 capital above its minimum risk-based capital requirements. Failure to meet this capital conservation buffer would result in additional limits on dividends, other distributions and discretionary bonuses. As of ~~June 30, 2021,~~March 31, 2022, the Company and Simmons Bank met all capital adequacy requirements, including the capital conservation buffer, under the Basel III Capital Rules. The Company’s CET1 ratio was ~~14.20%~~13.52% at ~~June 30, 2021.~~March 31, 2022.

NOTE 16: STOCK-BASED COMPENSATION

The Company’s Board of Directors has adopted various stock-based compensation plans. The plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and performance stock units. Pursuant to the plans, shares are reserved for future issuance by the Company upon exercise of stock options or awards of restricted stock, restricted stock units, or performance stock units granted to directors, officers and other key employees.

The table below summarizes the transactions under the Company’s active stock-based compensation plans for the ~~six~~three months ended ~~June 30, 2021:~~March 31, 2022:


		Stock Options Outstanding			Non-vested Stock Awards Outstanding			Non-vested Stock Units Outstanding				Stock Options Outstanding			Non-vested Stock Awards Outstanding			Non-vested Stock Units Outstanding
(Shares in thousands)	(Shares in thousands)	Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Grant-Date Fair Value		Number of Shares	Weighted Average Grant-Date Fair Value		(Shares in thousands)	Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Grant-Date Fair Value		Number of Shares	Weighted Average Grant-Date Fair Value
Beginning balance, January 1, 2021		658	$	22.48	5	$	22.35	1,032	$	24.53
Beginning balance, January 1, 2022											Beginning balance, January 1, 2022	473	$	22.50	2	$	22.20	1,111	$	26.49
Granted	Granted	—	—		0	0		474	29.18		Granted	—	—		—	—		403	15.99
Stock options exercised	Stock options exercised	(183)	22.50		—	—		—	—		Stock options exercised	(1)	20.36		—	—		—	—
Stock awards/units vested (earned)	Stock awards/units vested (earned)	—	—		(3)	22.48		(302)	25.77		Stock awards/units vested (earned)	—	—		(2)	22.20		(294)	26.66
Forfeited/expired	Forfeited/expired	0	0		0	0		(60)	26.02		Forfeited/expired	—	—		—	—		(26)	21.28

Balance, June 30, 2021		475	$	22.47	2	$	22.20	1,144	$	26.02
Balance, March 31, 2022											Balance, March 31, 2022	472	$	22.50	—	$	—	1,194	$	23.03

Exercisable, June 30, 2021		475	$	22.47
Exercisable, March 31, 2022											Exercisable, March 31, 2022	472	$	22.50

The following table summarizes information about stock options under the plans outstanding at ~~June 30, 2021:~~March 31, 2022:


					Options Outstanding			Options Exercisable						Options Outstanding			Options Exercisable
Range of Exercise Prices	Range of Exercise Prices				Number of Shares (In thousands)	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price	Number of Shares (In thousands)	Weighted Average Exercise Price	Range of Exercise Prices				Number of Shares (In thousands)	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price	Number of Shares (In thousands)	Weighted Average Exercise Price
$	9.46	—	$	9.46	1	0.55	$9.46	1	$9.46	10.65	—	$	10.65	3	0.83	$10.65	3	$10.65
10.65		—	10.65		3	1.58	10.65	3	10.65
20.29	20.29	—	20.29		47	3.50	20.29	47	20.29	20.29	—	20.29		47	2.75	20.29	47	20.29
20.36		—	20.36		1	3.38	20.36	1	20.36
22.20	22.20	—	22.20		51	3.73	22.20	51	22.20	22.20	—	22.20		51	2.98	22.20	51	22.20
22.75	22.75	—	22.75		293	4.11	22.75	293	22.75	22.75	—	22.75		293	3.36	22.75	293	22.75
23.51	23.51	—	23.51		72	4.56	23.51	72	23.51	23.51	—	23.51		71	3.81	23.51	71	23.51
24.07	24.07	—	24.07		7	4.21	24.07	7	24.07	24.07	—	24.07		7	3.46	24.07	7	24.07
$	9.46	—	$	24.07	475	4.05	$22.47	475	$22.47	10.65	—	$	24.07	472	3.31	$22.50	472	$22.50

The table below summarizes the Company’s performance stock unit activity for the ~~six~~three months ended ~~June 30, 2021:~~March 31, 2022:


(In thousands)						Performance Stock Units
Non-vested, January 1, ~~2021~~2022						~~222~~257
Granted						96174
Vested (earned)						~~(57)~~(74)
Forfeited						~~(5)~~(7)
Non-vested, ~~June 30, 2021~~March 31, 2022						~~256~~350

Stock-based compensation expense was ~~$7.6~~$3.9 million ~~for~~during both ~~of the six~~three month periods ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021. Stock-based compensation expense is recognized ratably over the requisite service period for all stock-based awards. There was 0no unrecognized stock-based compensation expense related to stock options at ~~June 30, 2021.~~March 31, 2022. Unrecognized stock-based compensation expense related to non-vested stock awards and stock units was ~~$19.6~~$18.2 million at ~~June 30, 2021.~~March 31, 2022. At such date, the weighted-average period over which this unrecognized expense is expected to be recognized was 1.9 years.

The intrinsic value of stock options outstanding and stock options exercisable at ~~June 30, 2021~~March 31, 2022 was ~~$3.3~~$1.8 million. Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was ~~$29.34~~$26.22 as of ~~June 30, 2021,~~March 31, 2022, and the exercise price multiplied by the number of options outstanding. ~~The~~There was no intrinsic value of stock options exercised during the three months ended March 31, 2022, while the total intrinsic value of stock options exercised during the ~~six~~three months ended ~~June 30,~~March 31, 2021, ~~and 2020,~~ was ~~$1.3 million and $6,000, respectively.~~$1.2 million.

The fair value of the Company’s employee stock options granted is estimated on the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. There were 0no stock options granted during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

NOTE 17: EARNINGS PER SHARE (“EPS”)

Basic EPS is computed by dividing reported net income available to common stockholders by weighted average number of common shares outstanding during each period. Diluted EPS is computed by dividing reported net income available to common stockholders by the weighted average common shares and all potential dilutive common shares outstanding during the period.

The computation of earnings per share is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands, except per share data)	(In thousands, except per share data)	2021		2020		2021		2020		(In thousands, except per share data)	2022		2021
Net income available to common stockholders	Net income available to common stockholders	$	74,911	$	58,789	$	142,318	$	136,012	Net income available to common stockholders	$	65,095	$	67,407

Average common shares outstanding	Average common shares outstanding	108,362		108,982		108,286		110,936		Average common shares outstanding	112,439		108,210
Average potential dilutive common shares	Average potential dilutive common shares	460		148		460		148		Average potential dilutive common shares	588		445
Average diluted common shares	Average diluted common shares	108,822		109,130		108,746		111,084		Average diluted common shares	113,027		108,655

Basic earnings per share	Basic earnings per share	$	0.69	$	0.54	$	1.31	$	1.23	Basic earnings per share	$	0.58	$	0.62
Diluted earnings per share	Diluted earnings per share	$	0.69	$	0.54	$	1.31	$	1.22	Diluted earnings per share	$	0.58	$	0.62

There were 0no stock options excluded from the earnings per share calculation for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 due to the average market price exceeding the related stock option exercise price. There were approximately 653,718 stock options excluded from the earnings per share calculation for the three and six months ended June 30, 2020 due to the related stock option exercise price exceeding the average market price.

NOTE 18: ADDITIONAL CASH FLOW INFORMATION

The following is a summary of the Company’s additional cash flow information:


		Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Interest paid	Interest paid	$	44,281	$	72,146	Interest paid	$	12,901	$	19,264
Income taxes (refunded) paid	Income taxes (refunded) paid	(32,980)		3,196		Income taxes (refunded) paid	(363)		(366)
Transfers of loans to foreclosed assets held for sale	Transfers of loans to foreclosed assets held for sale	3,289		1,147		Transfers of loans to foreclosed assets held for sale	474		979
Transfers of premises to foreclosed assets and other real estate owned		0		3,120
Transfers of premises held for sale to other real estate owned		4,368		0
Transfers of loans to other assets held for sale		0		114,925
Transfers of deposits to other liabilities held for sale		0		58,405
Transfers of assets held for sale to other assets						Transfers of assets held for sale to other assets	100		—

NOTE 19: OTHER INCOME AND OTHER OPERATING EXPENSES

Other income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 was ~~$8.1~~$7.3 million and ~~$18.4 million, respectively. Other income for the same periods in 2020 was $9.8 million and $22.6~~$10.5 million, respectively. During the ~~six~~three month ~~periods in~~period ended March 31, 2021, ~~and 2020,~~ the Company recognized ~~gains~~a gain on sale of ~~$5.9~~$5.3 million ~~and $8.1 million, respectively,~~ related to the sale of banking operations and bank branches.

Other operating expenses consisted of the following:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2022		2021
Professional services	Professional services	$	4,561	$	3,921	$	9,808	$	9,750	Professional services	$	5,446	$	5,247
Postage	Postage	1,943		1,769		4,313		4,005		Postage	2,126		2,370
Telephone	Telephone	1,610		2,450		3,242		4,635		Telephone	1,558		1,632
Credit card expense (1)	Credit card expense (1)	3,339		3,161		6,461		6,194		Credit card expense (1)	2,706		2,331
Marketing	Marketing	4,740		3,528		7,893		7,913		Marketing	6,140		3,153
Software and technology	Software and technology	9,857		10,024		20,108		19,469		Software and technology	10,147		10,251
Operating supplies	Operating supplies	838		828		1,408		1,764		Operating supplies	698		570
Amortization of intangibles	Amortization of intangibles	3,332		3,369		6,676		6,782		Amortization of intangibles	3,486		3,344
Branch right sizing expense	Branch right sizing expense	468		1,721		1,093		1,959		Branch right sizing expense	909		625
Other expense	Other expense	7,319		7,459		13,859		16,198		Other expense	8,430		6,540
Total other operating expenses	Total other operating expenses	$	38,007	$	38,230	$	74,861	$	78,669	Total other operating expenses	$	41,646	$	36,063

_________________________

(1) During ~~the second quarter of~~ 2021, certain debit and credit card transaction fees were reclassified from non-interest expense to non-interest income. Prior periods have been adjusted to reflect this reclassification.

NOTE 20: CERTAIN TRANSACTIONS

From time to time, the Company and its subsidiaries have made loans, other extensions of credit, and vendor contracts to directors, officers, their associates and members of their immediate families. Additionally, some directors, officers and their associates and members of their immediate families have placed deposits with the Company’s subsidiary bank, Simmons Bank. Such loans and other extensions of credit, deposits and vendor contracts (which were not material) were made in the ordinary course of business, on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with unrelated persons or through a competitive bid process. Further, in management’s opinion, these extensions of credit did not involve more than normal risk of collectability or present other unfavorable features.

NOTE 21: COMMITMENTS AND CREDIT RISK

The Company grants agribusiness, commercial and residential loans to customers primarily throughout Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas, along with credit card loans to customers throughout the United States. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.

At ~~June 30, 2021,~~March 31, 2022, the Company had outstanding commitments to extend credit aggregating approximately ~~$682.8~~$689.4 million and ~~$2.45~~$3.78 billion for credit card commitments and other loan commitments, respectively. At December 31, ~~2020,~~2021, the Company had outstanding commitments to extend credit aggregating approximately ~~$671.5~~$685.3 million and ~~$2.36~~$3.41 billion for credit card commitments and other loan commitments, respectively.

As of ~~June 30, 2021,~~March 31, 2022, the Company had outstanding commitments to originate fixed rate-rate mortgage loans of approximately ~~$122.0~~$96.7 million. At December 31, ~~2020,~~2021, the Company had outstanding commitments to originate fixed-rate mortgage loans of approximately ~~$214.0~~$108.5 million.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company had total outstanding letters of credit amounting to ~~$41.9~~$39.4 million and ~~$49.0~~$37.7 million at ~~June 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~2021, respectively, with terms ranging from 9 months to 15 years. At ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had 0no deferred revenue under standby letter of credit agreements.

The Company has purchased letters of credit from the FHLB as security for certain public deposits. The amount of the letters of credit was ~~$97.6~~$59.3 million and ~~$1.5 billion~~$59.1 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and they expire in less than one year from issuance.

NOTE 22: FAIR VALUE MEASUREMENTS

ASC Topic 820, Fair Value Measurements defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance also establishes a fair value hierarchy that requires the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Topic 820 describes three levels of inputs that may be used to measure fair value:

•Level 1 Inputs – Quoted prices in active markets for identical assets or liabilities.

•Level 2 Inputs – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 Inputs – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein. A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Following is a description of the inputs and valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.

Available-for-sale securities – Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and ~~exchange traded equities.~~certain other financial products. Other securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things. In order to ensure the fair values are consistent with ASC Topic 820, the Company periodically checks the fair values by comparing them to another pricing source, such as Bloomberg. The availability of pricing confirms Level 2 classification in the fair value hierarchy. The third-party pricing service is subject to an annual review of internal controls. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The Company’s investment in U.S. Treasury securities, if any, is reported at fair value utilizing Level 1 inputs. The remainder of the Company’s available-for-sale securities are reported at fair value utilizing Level 2 inputs.

Mortgage loans held for sale – Mortgage loans held for sale are reported at fair value on an aggregate basis. Adjustments to fair value are recognized monthly and reflected in earnings. In determining the fair value of loans held for sale, the Company may consider outstanding investor commitments, discounted cash flow analyses with market assumptions or the fair value of the collateral if the loan is collateral dependent. Such loans are classified within either Level 2 or Level 3 of the fair value hierarchy. Where assumptions are made using significant unobservable inputs, such loans held for sale are classified as Level 3. At ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the aggregate fair value of mortgage loans held for sale exceeded their cost.

Derivative instruments – The Company’s derivative instruments are reported at fair value utilizing Level 2 inputs. The Company obtains fair value measurements from dealer quotes.

~~Other liabilities held for sale~~ ~~– The Company’s other liabilities held for sale are reported at fair value utilizing Level 3 inputs. See Note 4, Other Liabilities Held for Sale.~~

The following table sets forth the Company’s financial assets by level within the fair value hierarchy that were measured at fair value on a recurring basis as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.


				Fair Value Measurements Using									Fair Value Measurements Using
(In thousands)	(In thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(In thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2021
March 31, 2022										March 31, 2022
Available-for-sale securities	Available-for-sale securities									Available-for-sale securities
U.S. Treasury	U.S. Treasury	$	600	$	600	$	0	$	0	U.S. Treasury	$	—	$	—	$	—	$	—
U.S. Government agencies	U.S. Government agencies	554,937		0		554,937		0		U.S. Government agencies	333,231		—		333,231		—
Mortgage-backed securities	Mortgage-backed securities	3,987,209		0		3,987,209		0		Mortgage-backed securities	4,166,108		—		4,166,108		—
State and political subdivisions	State and political subdivisions	1,557,497		0		1,557,497		0		State and political subdivisions	1,653,694		—		1,653,694		—
Other securities	Other securities	456,338		0		456,338		0		Other securities	487,036		—		487,036		—
Mortgage loans held for sale	Mortgage loans held for sale	36,011		0		0		36,011		Mortgage loans held for sale	18,206		—		—		18,206
Derivative asset	Derivative asset	20,475		0		20,475		0		Derivative asset	57,707		—		57,707		—
Derivative liability	Derivative liability	(20,659)		0		(20,659)		0		Derivative liability	(10,554)		—		(10,554)		—

December 31, 2020
December 31, 2021										December 31, 2021
Available-for-sale securities	Available-for-sale securities									Available-for-sale securities
U.S. Treasury										U.S. Treasury	$	300	$	300	$	—	$	—
U.S. Government agencies	U.S. Government agencies	$	477,237	$	0	$	477,237	$	0	U.S. Government agencies	364,641		—		364,641		—
Mortgage-backed securities	Mortgage-backed securities	1,394,936		0		1,394,936		0		Mortgage-backed securities	4,448,616		—		4,448,616		—
States and political subdivisions	States and political subdivisions	1,470,723		0		1,470,723		0		States and political subdivisions	1,819,658		—		1,819,658		—
Other securities	Other securities	130,702		0		130,702		0		Other securities	480,330		—		480,330		—
Mortgage loans held for sale	Mortgage loans held for sale	137,378		0		0		137,378		Mortgage loans held for sale	36,356		—		—		36,356
Derivative asset	Derivative asset	35,846		0		35,846		0		Derivative asset	25,852		—		25,852		—
Other liabilities held for sale		(154,620)		0		0		(154,620)
Derivative liability	Derivative liability	(36,141)		0		(36,141)		0		Derivative liability	(15,443)		—		(15,443)		—

Certain financial assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Financial assets and liabilities measured at fair value on a nonrecurring basis include the following:

Individually assessed loans (collateral-dependent) – When the Company has a specific expectation to initiate, or has initiated, foreclosure proceedings, and when the repayment of a loan is expected to be substantially dependent on the liquidation of underlying collateral, the relationship is deemed collateral-dependent. Fair value of the loan is determined by establishing an allowance for credit loss for any exposure based on the valuation of the underlying collateral. The valuation of the collateral is determined by either an independent third-party appraisal or other collateral analysis. Discounts can be made by the Company based upon the overall evaluation of the independent appraisal. Collateral-dependent loans are classified within Level 3 of the fair value ~~hierarchy.~~hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the borrower’s underlying financial condition. Collateral values supporting the individually assessed loans are evaluated quarterly for updates to appraised values or adjustments due to non-current valuations.

Foreclosed assets and other real estate owned – Foreclosed assets and other real estate owned are reported at fair value, less estimated costs to sell. At foreclosure, if the fair value, less estimated costs to sell, of the real estate acquired is less than the Company’s recorded investment in the related loan, a write-down is recognized through a charge to the allowance for credit losses. Additionally, valuations are periodically performed by management and any subsequent reduction in value is recognized by a charge to income. The fair value of foreclosed assets and other real estate owned is estimated using Level 3 inputs based on unobservable market data.

The significant unobservable inputs (Level 3) used in the fair value measurement of collateral for collateral-dependent loans and foreclosed assets primarily relate to the specialized discounting criteria applied to the borrower’s reported amount of collateral. The amount of the collateral discount depends upon the condition and marketability of the collateral, as well as other factors which may affect the collectability of the loan. Management’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset. It is reasonably possible that a change in the estimated fair value for instruments measured using Level 3 inputs could occur in the future. As the Company’s primary objective in the event of default would be to liquidate the collateral to settle the outstanding balance of the loan, collateral that is less marketable would receive a larger discount.

The following table sets forth the Company’s financial assets by level within the fair value hierarchy that were measured at fair value on a nonrecurring basis as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.


				Fair Value Measurements Using									Fair Value Measurements Using
(In thousands)	(In thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(In thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2021
March 31, 2022										March 31, 2022
Individually assessed loans (1) (2) (collateral-dependent)	Individually assessed loans (1) (2) (collateral-dependent)	$	31,232	$	0	$	0	$	31,232	Individually assessed loans (1) (2) (collateral-dependent)	$	92,039	$	—	$	—	$	92,039
Foreclosed assets and other real estate owned (1)	Foreclosed assets and other real estate owned (1)	1,889		0		0		1,889		Foreclosed assets and other real estate owned (1)	278		—		—		278

December 31, 2020
December 31, 2021										December 31, 2021
Individually assessed loans (1) (2) (collateral-dependent)	Individually assessed loans (1) (2) (collateral-dependent)	$	66,209	$	0	$	0	$	66,209	Individually assessed loans (1) (2) (collateral-dependent)	$	47,089	$	—	$	—	$	47,089
Foreclosed assets and other real estate owned (1)	Foreclosed assets and other real estate owned (1)	17,074		0		0		17,074		Foreclosed assets and other real estate owned (1)	4,875		—		—		4,875

________________________

(1)These amounts represent the resulting carrying amounts on the consolidated balance sheets for collateral-dependent loans and foreclosed assets and other real estate owned for which fair value re-measurements took place during the period.

(2)Identified reserves of ~~$8,340,000~~$10,664,000 and ~~$13,725,000~~$4,214,000 were related to collateral-dependent loans for which fair value re-measurements took place during the periods ended ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

ASC Topic 825, Financial Instruments, requires disclosure in annual and interim financial statements of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis. The following methods and assumptions were used to estimate the fair value of each class of financial instruments not previously disclosed.

Cash and cash equivalents – The carrying amount for cash and cash equivalents approximates fair value (Level 1).

Interest bearing balances due from banks – The fair value of interest bearing balances due from banks – time is estimated using a discounted cash flow calculation that applies the rates currently offered on deposits of similar remaining maturities (Level 2).

Held-to-maturity securities – Fair values for held-to-maturity securities equal quoted market prices, if available, such as for highly liquid government bonds (Level 1). If quoted market prices are not available, fair values are estimated based on quoted market prices of similar securities. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things (Level 2). In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Loans – The fair value of loans is estimated by discounting the future cash flows, using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Additional factors considered include the type of loan and related collateral, variable or fixed rate, classification status, remaining term, interest rate, historical delinquencies, loan to value ratios, current market rates and remaining loan balance. The loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. The discount rates used for loans were based on current market rates for new originations of similar loans. Estimated credit losses were also factored into the projected cash flows of the loans. The fair value of loans is estimated on an exit price basis incorporating the above factors (Level 3).

Deposits – The fair value of demand deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date (i.e., their carrying amount) (Level 2). The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities (Level 3).

Federal Funds purchased, securities sold under agreement to repurchase and short-term debt – The carrying amount for Federal funds purchased, securities sold under agreement to repurchase and short-term debt are a reasonable estimate of fair value (Level 2).

Other borrowings – For short-term instruments, the carrying amount is a reasonable estimate of fair value. For long-term debt, rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value (Level 2).

Subordinated debentures – The fair value of subordinated debentures is estimated using the rates that would be charged for subordinated debentures of similar remaining maturities (Level 2).

Accrued interest receivable/payable – The carrying amounts of accrued interest approximated fair value (Level 2).

Commitments to extend credit, letters of credit and lines of credit – The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows:


		Carrying		Fair Value Measurements									Carrying		Fair Value Measurements
(In thousands)	(In thousands)	Amount		Level 1		Level 2		Level 3		Total		(In thousands)	Amount		Level 1		Level 2		Level 3		Total
June 30, 2021
March 31, 2022												March 31, 2022
Financial assets:	Financial assets:											Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	2,339,124	$	2,339,124	$	0	$	0	$	2,339,124	Cash and cash equivalents	$	1,687,017	$	1,687,017	$	—	$	—	$	1,687,017
Interest bearing balances due from banks - time	Interest bearing balances due from banks - time	1,335		0		1,335		0		1,335		Interest bearing balances due from banks - time	1,857		—		1,857		—		1,857
Held-to-maturity securities		931,352		0		935,596		0		935,596
Held-to-maturity securities, net												Held-to-maturity securities, net	1,556,825		—		1,307,058		—		1,307,058
Interest receivable	Interest receivable	67,916		0		67,916		0		67,916		Interest receivable	69,357		—		69,357		—		69,357
Loans, net	Loans, net	11,159,113		0		0		11,270,332		11,270,332		Loans, net	11,849,669		—		—		11,897,022		11,897,022

Financial liabilities:	Financial liabilities:											Financial liabilities:
Non-interest bearing transaction accounts	Non-interest bearing transaction accounts	4,893,959		0		4,893,959		0		4,893,959		Non-interest bearing transaction accounts	5,223,862		—		5,223,862		—		5,223,862
Interest bearing transaction accounts and savings deposits	Interest bearing transaction accounts and savings deposits	10,569,602		0		10,569,602		0		10,569,602		Interest bearing transaction accounts and savings deposits	12,105,948		—		12,105,948		—		12,105,948
Time deposits	Time deposits	2,841,052		0		0		2,849,515		2,849,515		Time deposits	2,062,612		—		—		2,041,775		2,041,775
Federal funds purchased and securities sold under agreements to repurchase	Federal funds purchased and securities sold under agreements to repurchase	187,215		0		187,215		0		187,215		Federal funds purchased and securities sold under agreements to repurchase	196,828		—		196,828		—		196,828
Other borrowings	Other borrowings	1,339,193		0		1,417,544		0		1,417,544		Other borrowings	1,337,243		—		1,353,902		—		1,353,902
Subordinated notes and debentures	Subordinated notes and debentures	383,143		0		397,691		0		397,691		Subordinated notes and debentures	384,242		—		387,031		—		387,031
Interest payable	Interest payable	7,795		0		7,795		0		7,795		Interest payable	9,979		—		9,979		—		9,979

December 31, 2020
December 31, 2021												December 31, 2021
Financial assets:	Financial assets:											Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	3,472,152	$	3,472,152	$	0	$	0	$	3,472,152	Cash and cash equivalents	$	1,650,653	$	1,650,653	$	—	$	—	$	1,650,653
Interest bearing balances due from banks - time	Interest bearing balances due from banks - time	1,579		0		1,579		0		1,579		Interest bearing balances due from banks - time	1,882		—		1,882		—		1,882
Held-to-maturity securities		333,031		0		341,925		0		341,925
Held-to-maturity securities, net												Held-to-maturity securities, net	1,529,221		—		1,517,378		—		1,517,378
Interest receivable	Interest receivable	72,597		0		72,597		0		72,597		Interest receivable	72,990		—		72,990		—		72,990
Loans, net	Loans, net	12,662,847		0		0		12,736,991		12,736,991		Loans, net	11,807,171		—		—		11,922,735		11,922,735

Financial liabilities:	Financial liabilities:											Financial liabilities:
Non-interest bearing transaction accounts	Non-interest bearing transaction accounts	4,482,091		0		4,482,091		0		4,482,091		Non-interest bearing transaction accounts	5,325,318		—		5,325,318		—		5,325,318
Interest bearing transaction accounts and savings deposits	Interest bearing transaction accounts and savings deposits	9,672,608		0		9,672,608		0		9,672,608		Interest bearing transaction accounts and savings deposits	11,588,770		—		11,588,770		—		11,588,770
Time deposits	Time deposits	2,832,327		0		0		2,848,621		2,848,621		Time deposits	2,452,460		—		—		2,451,055		2,451,055
Federal funds purchased and securities sold under agreements to repurchase	Federal funds purchased and securities sold under agreements to repurchase	299,111		0		299,111		0		299,111		Federal funds purchased and securities sold under agreements to repurchase	185,403		—		185,403		—		185,403
Other borrowings	Other borrowings	1,342,067		0		1,448,625		0		1,448,625		Other borrowings	1,337,973		—		1,393,711		—		1,393,711
Subordinated notes and debentures	Subordinated notes and debentures	382,874		0		398,827		0		398,827		Subordinated notes and debentures	384,131		—		394,464		—		394,464
Interest payable	Interest payable	8,887		0		8,887		0		8,887		Interest payable	6,759		—		6,759		—		6,759

The fair value of commitments to extend credit, letters of credit and lines of credit is not presented since management believes the fair value to be insignificant.

NOTE 23: DERIVATIVE INSTRUMENTS

The Company utilizes derivative instruments to manage exposure to various types of interest rate risk for itself and its customers within policy guidelines. Transactions should only be entered into with an associated underlying exposure. All derivative instruments are carried at fair value.

Derivative contracts involve the risk of dealing with institutional derivative counterparties and their ability to meet contractual terms. Institutional counterparties must have an investment grade credit rating and be approved by the Company’s asset/liability management committee. In arranging these products for its customers, the Company assumes additional credit risk from the customer and from the dealer counterparty with whom the transaction is undertaken. Credit risk exists due to the default credit risk created in the exchange of the payments over a period of time. Credit exposure on interest rate swaps is limited to the net favorable value and interest payments of all swaps with each counterparty. Access to collateral in the event of default is reasonably assured. Therefore, credit exposure may be reduced by the amount of collateral pledged by the counterparty.

Hedge Structures

The Company will seek to enter derivative structures that most effectively address the risk exposure and structural terms of the underlying position being hedged. The term and notional principal amount of a hedge transaction will not exceed the term or principal amount of the underlying exposure. In addition, the Company will use hedge indices which are the same as, or highly correlated to, the index or rate on the underlying exposure. Derivative credit exposure is monitored on an ongoing basis for each customer transaction and aggregate exposure to each counterparty is tracked. The Company has set a maximum outstanding notional contract amount at 10% of the Company’s assets.

Fair Value Hedges

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item. During the third quarter of 2021, the Company began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate callable AFS securities. The hedging strategy converts the fixed interest rates to variable interest rates based on federal funds rates.

The following table summarizes the fair value hedges recorded in the accompanying consolidated balance sheets.


				March 31, 2022				December 31, 2021
(In thousands)	Balance Sheet Location	Weighted Average Pay Rate	Receive Rate	Notional		Fair Value		Notional		Fair Value
Derivative assets	Other assets	1.21%	Federal Funds	$	1,001,715	$	47,163	$	1,001,715	$	10,524

The following amounts were recorded on the balance sheet related to carrying amounts and cumulative basis adjustments for fair value hedges.


	Carrying Amount of Hedged Assets				Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets
Line Item on the Balance Sheet (In thousands)	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Investment securities - Available-for-sale	$	914,706	$	1,063,173	$	47,163	$	10,524

Customer Risk Management Interest Rate Swaps

The ~~Company’s~~Company��s qualified loan customers have the opportunity to participate in its interest rate swap program for the purpose of managing interest rate risk on their variable rate loans with the Company. The Company enters into such agreements with customers, then offsetting agreements are executed between the Company and an approved dealer counterparty to minimize market risk from changes in interest rates. The counterparty contracts are identical to customer contracts in terms of notional amounts, interest rates, and maturity dates, except for a fixed pricing spread or fee paid to the Company by the dealer counterparty. These interest rate swaps carry varying degrees of credit, interest rate and market or liquidity risks. The fair value of these derivative instruments is recognized as either derivative assets or liabilities in the accompanying consolidated balance sheets. The Company has a limited number of swaps that are standalone without a similar agreement with the loan customer.

The following table summarizes the fair values of loan derivative contracts recorded in the accompanying consolidated balance sheets.

June 30, 2021 December 31, 2020
(In thousands) Notional Fair Value Notional Fair Value
Derivative assets $ 343,900 $ 20,475 $ 408,881 $ 35,846
Derivative liabilities 347,630 20,659 417,941 36,141


	March 31, 2022				December 31, 2021
(In thousands)	Notional		Fair Value		Notional		Fair Value
Derivative assets	$	321,796	$	10,544	$	318,428	$	15,328
Derivative liabilities	325,265		10,554		321,985		15,443

Risk Participation Agreements

The Company has a limited number of Risk Participation Agreement swaps, that are associated with loan participations, where the Company is not the counterparty to the interest rate swaps that are associated with the risk participation sold. The interest rate swap mark to market only impacts the Company if the swap is in a liability position to the counterparty and the customer defaults on payments to the counterparty. The notional amount of these contingent agreements is ~~$31.8~~$36.9 million as of ~~June 30, 2021.~~March 31, 2022.

Energy Hedging

The Company provides energy derivative services to qualifying, high quality oil and gas borrowers for hedging purposes. The Company serves as an intermediary on energy derivative products between the Company’s borrowers and dealers. The Company will only enter into back-to-back trades, thus maintaining a balanced book between the dealer and the borrower.

Energy hedging risk exposure to the Company’s customer increases as energy prices for crude oil and natural gas rise. As prices decrease, exposure to the exchange increases. These risks are mitigated by customer credit underwriting policies and establishing a predetermined hedge line for each borrower and by monitoring the exchange margin.

The outstanding notional value as of ~~June 30, 2021~~March 31, 2022 for energy hedging Customer Sell to Company swaps were ~~$18.1~~$13.1 million and the corresponding Company Sell to Dealer swaps were ~~$18.1~~$13.1 million and the corresponding net fair value of the derivative asset and derivative liability was ~~$346,800.~~$150,000.

4647

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders, Board of Directors and Audit Committee

Simmons First National Corporation

Pine Bluff, Arkansas

Results of Review of Interim Financial Statements

We have reviewed the condensed consolidated balance sheet of Simmons First National Corporation and subsidiaries (“the Company”) as of ~~June 30, 2021,~~March 31, 2022, and the related condensed consolidated statements of income, comprehensive income (loss) ~~and~~, stockholders’ equity ~~for the three-month and six-month periods ended June 30, 2021 and 2020,~~ and cash flows for the ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the related notes (collectively referred to as the “interim financial information or statements”). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company and subsidiaries as of December 31, ~~2020,~~2021, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the year then ended (not presented herein), and in our report dated February 25, ~~2021,~~2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2020,~~2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ BKD, LLP

Little Rock, Arkansas

~~August~~May 6, ~~2021~~2022

4748

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~OVERVIEW~~

~~Our net income~~In November 2020, the SEC issued Final Rule 33-10890, Management’s Discussion and Analysis, Selected Financial Data and Supplementary Financial Information, which modernizes and simplifies certain disclosure requirements of Regulation S-K. An update to Item 303(c) of Regulation S-K allows registrants to compare the results of the most recently completed quarter to the results of either the immediately preceding quarter or the corresponding quarter of the preceding fiscal year. The final rule became effective on February 10, 2021 and must be applied in a registrant’s first fiscal year ending on or after August 9, 2021. Management has elected to present sequential quarterly analysis as we believe that comparing current quarter results to those of the immediately preceding fiscal quarter is more useful in identifying current business trends and provides a more relevant analysis of our business results. Additionally, in the first filing after the adoption of these rule changes, we are required to present results in both the historic presentation and the new revised presentation formats. Accordingly, we have compared our results of operations for the three months ended ~~June 30,~~March 31, 2022 to our results of operations for the three months ended December 31, 2021 and March 31, 2021, as applicable, throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations..

OVERVIEW

Net income for the first three months of 2022 was ~~$74.9~~$65.1 million, or ~~$0.69~~$0.58 diluted earnings per share, ~~increases of $16.1 million and $0.15, respectively,~~ compared to net income of $48.2 million, or $0.42 diluted earnings per share and $67.4 million, or $0.62 diluted earnings per share, for the ~~second quarter of 2020.~~three months ended December 31, 2021 and March 31, 2021, respectively. Included in ~~both second quarter 2021 and 2020~~each comparative quarter’s results were non-core items related to our acquisitions and branch right sizing initiatives. ~~Also included in 2020 results were non-core items related to early retirement programs. Included in both period results are~~In addition, gains associated with the sale of branch ~~operations.~~operations were included in the results for the first three months of 2021. Excluding ~~all~~these non-core items, core earnings for the three months ended ~~June 30, 2021~~March 31, 2022 were ~~$75.4 million, or $0.69 core diluted earnings per share, compared to $60.1 million, or $0.55 core diluted earnings per share for the three months ended June 30, 2020.~~

Net income for the first six months of 2021 was $142.3 million, or $1.31 diluted earnings per share, compared to $136.0 million, or $1.22 diluted earnings per share, for the same period in 2020. Excluding the same non-core items referenced above, year-to-date core earnings were $139.4$67.2 million, an increase of ~~$5.4~~$7.7 million as compared to the preceding sequential fiscal quarter, and an increase of $3.2 million compared to the same period in the prior year. Core diluted earnings per share for the first ~~half~~three months of ~~2021~~2022 were ~~$1.28~~$0.59 compared to ~~$1.21~~$0.52 and $0.59 for the ~~same period in 2020.~~three months ended December 31, 2021, and March 31, 2021, respectively.

In ~~June~~November 2021, we announced the ~~acquisitions~~Company had entered into the Spirit Agreement with Spirit, headquartered in Conroe, Texas, including its wholly-owned bank subsidiary, Spirit of ~~Landmark, based~~Texas Bank SSB. This acquisition was completed on April 8, 2022. We were able to obtain all necessary approvals, consummate the transaction and successfully complete the systems conversion less than five months after the announcement, which we believe speaks to the outstanding team we have developed. See Note 2, Acquisitions, in ~~Collierville, TN, and Triumph, based in Memphis, TN. Completion of~~ the ~~Landmark and Triumph transactions is expected during the fourth quarter of 2021 and is subject~~accompanying Notes to ~~certain closing conditions, including approval by the shareholders of Landmark and Triumph, as well as customary regulatory approvals.~~

~~We continuously evaluate our branch network~~Consolidated Financial Statements for additional information related to ensure it reflects our core footprint and changes in customer behavior which allows us to efficiently serve our customers’ evolving needs. As part of our ongoing branch right sizing initiative, during the second quarter of 2021, we announced plans to close 12 branches during the third quarter of 2021.this acquisition.

Simmons Bank was named to Forbes magazine’s list of “World’s Best Banks” for the ~~second~~third consecutive year and ranked among the top 3045 banks in Forbes’ list of “America’s Best Banks” for ~~2021.~~2022. We continue to ~~introduce~~work to develop new and innovative products and services using digital channels to provide an enhanced customer experience to “bank when you want, where you want”.

On March 12, 2021, we completed the sale of four Simmons Bank locations in the Metro East area of Southern Illinois, near St. Louis. We recognized a gain of $5.3 million on the sale of the Illinois branches.

We delivered solid performance in multiple areas while continuing to navigate the challenging environment. We are still feeling the effects of the COVID-19 pandemic in the economy and some industries are still struggling to return to pre-COVID levels of performance; however, ourOur asset quality continued to show marked improvement during the ~~second~~first quarter of 2022. Non-performing assets, including troubled debt restructurings (“TDRs”) and acquired foreclosed assets, as a percent of total assets were 0.30% at March 31, 2022, compared to 0.33% at December 31, 2021 and 0.56% at March 31, 2021.

Stockholders’ equity as of ~~June 30, 2021~~March 31, 2022 was ~~$3.0~~$2.96 billion, book value per share was ~~$28.03~~$26.32 and tangible book value per share was ~~$17.16.~~$15.22. Our ratio of common stockholders’ equity to total assets was ~~12.97%~~12.10% and the ratio of tangible common stockholders’ equity to tangible assets was ~~8.36%~~7.37% at ~~June 30, 2021.~~March 31, 2022. The Company’s Tier 1 leverage ratio of ~~8.99%~~9.00%, as well as our other regulatory capital ratios, remain significantly above the “well capitalized” guidelines (see Table 12 in the Capital section of this Item). We repurchased 513,725 shares of our common stock during the first quarter of 2022, which substantially exhausted the remaining capacity under the 2019 Program. As a result, in January 2022, our Board of Directors authorized the 2022 Program, which replaced the 2019 Program and under which the Company may repurchase up to $175.0 million of its Class A common stock currently issued and outstanding.

Total deposits were ~~$18.3~~$19.39 billion at ~~June 30, 2021,~~March 31, 2022, compared to ~~$17.0~~$19.37 billion at December 31, ~~2020~~2021 and ~~$16.6~~$18.19 billion at ~~June 30, 2020.~~March 31, 2021. The increase in total deposits ~~is,~~from the same period end of 2021 primarily reflects the acquisition of Landmark and Triumph which were completed in ~~significant part, a reflection~~the fourth quarter of the multiple rounds of economic stimulus legislation in response to the COVID-19 pandemic that have created a rapid rise in liquidity and have led to changes in customer spending habits. Trends affected by the increase in customer cash balances are pay downs on loans, decreased loan demand, reduced credit card balances and fewer overdraft activities.2021.

Total loans were $11.4 billion at June 30, 2021, compared to $12.9 billion at December 31, 2020 and $14.6 billion at June 30, 2020. Total loan production (loan originations and advances) during the first half of 2021 totaled $1.8 billion, which positions us to exceed loan production volume reported for the full year of 2020. While loan originations and advances are outpacing prior year production, the decline in loan balances reflects, in significant part, the substantial government stimulus to support the economy during the COVID-19 pandemic which contributed to an increase in the level of loan paydowns, payoffs and corresponding sluggish loan demand throughout the financial services industry.

4849

~~As of June 30,~~Total loans were $12.03 billion at March 31, 2022, compared to $12.01 billion at December 31, 2021 ~~we had $441.4 million in loans outstanding under the PPP. The change in total PPP~~and $12.20 billion at March 31, 2021. Total loan ~~balances~~production (loan originations and advances) during the ~~second~~first quarter of ~~2021 was as follows:~~2022 totaled $2.51 billion, which outpaced loan paydowns and payoffs.

PPP PPP Total
(Dollars in thousands) Round 1 Round 2 PPP Loans
Beginning balance, January 1, 2021 $ 904,673 $ — $ 904,673
PPP loan originations — 318,906 318,906
PPP loan forgiveness and repayments (763,902) (18,324) (782,226)
Ending balance, June 30, 2021 $ 140,771 $ 300,582 $ 441,353

~~PPP loans~~Our commercial loan pipeline rose for the sixth consecutive quarter to $2.36 billion at March 31, 2022, while our unfunded commitments rose for the fourth consecutive quarter to $3.43 billion at March 31, 2022, a 68% year-over-over increase. We are ~~100% federally guaranteed and have a zero percent risk-weight for regulatory capital ratios. As a result, excluding PPP loans~~seeing activity from ~~total assets, common equity~~repeat customers across most of our business lines. For these reasons, amongst others, we are continuing to ~~total assets was 13.22% and tangible common equity to tangible assets was 8.53% as~~actively recruit loan producers across all of ~~June 30, 2021.~~

our business units. We continue to ~~closely monitor~~have good asset quality and positive credit performance during the COVID-19 pandemic and expect to make future changes to respond as this situation continues to evolve. Further economic downturns accompanying this pandemic, or a delayed economic recovery from this pandemic, could result in increased deterioration in credit quality, past due loans, loans charge offs and collateral value declines, which could cause our results of operations and financial condition to be negatively impacted.quarter.

In our discussion and analysis of our financial condition and results of operation in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we provide certain financial information determined by methods other than in accordance with US GAAP. We believe the presentation of non-GAAP financial measures provides a meaningful basis for period-to-period and company-to-company comparisons, which we believe will assist investors and analysts in analyzing the core financial measures of the Company and predicting future performance. See the GAAP Reconciliation of Non-GAAP Measures section below for additional discussion and reconciliations of non-GAAP measures.

Simmons First National Corporation is a Mid-South based financial holding company that, as of ~~June 30, 2021,~~March 31, 2022, has approximately ~~$23.4~~$24.5 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

CRITICAL ACCOUNTING ~~POLICIES~~ESTIMATES

Overview

We follow accounting and reporting policies that conform, in all material respects, to US GAAP and to general practices within the financial services industry. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates.

We consider accounting estimates to be critical to reported financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain and (ii) different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on our financial statements.

The accounting policies that we view as critical to us are those relating to estimates and judgments regarding (a) the determination of the adequacy of the allowance for credit losses, (b) acquisition accounting and valuation of loans, (c) the valuation of goodwill and the useful lives applied to intangible assets, (d) the valuation of stock-based compensation plans and (e) income taxes.

Allowance for Credit Losses

The allowance for credit losses is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, historical loss experience, and other qualitative considerations. The allowance, in the judgment of management, is necessary to reserve for expected credit losses and risks inherent in the loan portfolio. Our allowance for credit loss methodology includes reserve factors calculated to estimate current expected credit losses to amortized cost balances over the remaining contractual life of the portfolio, adjusted for prepayments, in accordance with ASC Topic 326-20, Financial Instruments - Credit Losses. Accordingly, the methodology is

based on our reasonable and supportable economic forecasts, historical loss experience, and other qualitative adjustments. For further information see the section Allowance for Credit Losses below.

Our evaluation of the allowance for credit losses is inherently subjective as it requires material estimates. The actual amounts of credit losses realized in the near term could differ from the amounts estimated in arriving at the allowance for credit losses reported in the financial statements. ~~On January 1, 2020, the Company adopted the new CECL methodology. See Note 1,~~

~~Preparation of Interim Financial Statements~~

~~, in the accompanying Condensed Notes to Consolidated Financial Statements for additional information.~~

Acquisition Accounting, Loans

We account for our acquisitions under ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. The fair value for acquired loans at the time of acquisition is based on a variety of factors including discounted expected cash flows, adjusted for estimated prepayments and credit losses. In accordance with ASC 326, wethe fair value adjustment is recorded as premium or discount to the unpaid principal balance of each acquired loan. Loans that have been identified as having experienced a more-than-insignificant deterioration in credit quality since origination are purchased credit deteriorated (“PCD”) loans. The net premium or discount on PCD loans is adjusted by our allowance for credit losses recorded at the time of acquisition. The remaining net premium or discount is accreted or amortized into interest income over the remaining life of the loan using a constant yield method. The net premium or discount on loans that are not classified as PCD (“non-PCD”), that includes credit and non-credit components, is accreted or amortized into interest income over the remaining life of the loan using a constant yield method. We then record ~~both a discount and an~~the necessary allowance for credit losses on ~~acquired loans. Loans acquired are recorded at fair value in accordance with~~ the ~~fair value methodology prescribed in ASC Topic 820. The fair value estimates associated with the~~non-PCD loans ~~included estimates related to expected prepayments and the amount and timing of undiscounted expected principal, interest and other cash flows.~~

~~We evaluate loans acquired in accordance with the provisions of ASC Topic 310-20,~~ ~~Nonrefundable Fees and Other Costs. The fair value discount on these loans is accreted into interest income over the weighted average life of the loans using a constant yield method.~~through provision for credit losses expense.

Goodwill and Intangible Assets

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Other intangible assets represent purchased assets that also lack physical substance but can be separately distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability. We perform an annual goodwill impairment test, and more than annually if circumstances warrant, in accordance with ASC Topic 350, Intangibles – Goodwill and Other, as amended by ASU 2011-08 – Testing Goodwill for Impairment and ASU 2017-04 - Intangibles – Goodwill and Other. ASC Topic 350 requires that goodwill and intangible assets that have indefinite lives be reviewed for impairment annually or more frequently if certain conditions occur. Our assessment depends on several assumptions which are dependent on market and economic conditions. Impairment losses on recorded goodwill, if any, will be recorded as operating expenses.

Stock-Based Compensation Plans

We have adopted various stock-based compensation plans. The plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and performance stock units. Pursuant to the plans, shares are reserved for future issuance by the Company upon exercise of stock options or awarding of restricted stock, restricted stock units or performance stock units granted to directors, officers and other key employees.

In accordance with ASC Topic 718, Compensation – Stock Compensation, the fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that uses various assumptions. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. For additional information, see Note 16, Stock-Based Compensation, in the accompanying Condensed Notes to Consolidated Financial Statements included elsewhere in this report.

Income Taxes

We are subject to the federal income tax laws of the United States, and the tax laws of the states and other jurisdictions where we conduct business. Due to the complexity of these laws, taxpayers and the taxing authorities may subject these laws to different interpretations. Management must make conclusions and estimates about the application of these innately intricate laws, related regulations, and case law. When preparing the Company’s income tax returns, management attempts to make reasonable interpretations of the tax laws. Taxing authorities have the ability to challenge management’s analysis of the tax law or any reinterpretation management makes in its ongoing assessment of facts and the developing case law. Management assesses the reasonableness of its effective tax rate quarterly based on its current estimate of net income and the applicable taxes expected for the full year. On a quarterly basis, management also reviews circumstances and developments in tax law affecting the reasonableness of deferred tax assets and liabilities and reserves for contingent tax liabilities.

NET INTEREST INCOME

Overview

Net interest income, our principal source of earnings, is the difference between the interest income generated by earning assets and the total interest cost of the deposits and borrowings obtained to fund those assets. Factors that determine the level of net interest income include the volume of earning assets and interest bearing liabilities, yields earned and rates paid, the level of non-performing loans and the amount of non-interest bearing liabilities supporting earning assets. Net interest income is analyzed in

the discussion and tables below on a fully taxable equivalent basis. The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate of 26.135%.

Our practice is to limit exposure to interest rate movements by maintaining a significant portion of earning assets and interest bearing liabilities in short-term repricing. In the last several years, on average, approximately ~~41%~~43% of our loan portfolio and approximately ~~74%~~78% of our time deposits have repriced in one year or less. Our current interest rate sensitivity shows that approximately ~~44%~~43% of our loans and ~~86%~~81% of our time deposits will reprice in the next year.

Net Interest Income ~~Quarter-to-Date~~- Sequential Quarter Analysis

For the three month period ended ~~June 30, 2021,~~March 31, 2022, net interest income on a fully taxable equivalent basis was ~~$151.1~~$151.2 million, a decrease of ~~$15.0~~$7.5 million, or ~~9.0%~~4.7%, ~~over~~compared to the ~~same period in 2020.~~three months ended December 31, 2021. The decrease in net interest income was ~~primarily~~ the result of a ~~$22.5~~$9.0 million decrease in fully tax equivalent interest income, partially offset by a ~~$7.5 million decrease in interest expense.~~

The reduction in interest income primarily resulted from a $38.2 million decrease in interest income on loans partially offset by an increase of $15.9 million in interest income on investment securities. The decrease in interest income on loans during the second quarter of 2021, reflects a lower average loan balance combined with an 11 basis point decline in loan yield. The loan yield for the second quarter of 2021 was 4.73% compared to 4.84% from the same period in 2020. We generated additional interest income on investment securities by redeploying a portion of excess cash to purchase $2.5 billion of investment securities during the second quarter of 2021, which included $1.1 billion of short-term, variable rate securities.

The $7.5 million decrease in interest expense is mostly due to the decline in our deposit account rates. Interest expense decreased $7.7 million due to the decrease in yield of 27 basis points on interest-bearing deposit accounts.

~~Net Interest Income Year-to-Date Analysis~~

For the six month period ended June 30, 2021, net interest income on a fully taxable equivalent basis was $301.9 million, a decrease of $33.9 million, or 10.1%, over the same period in 2020. The decrease in net interest income was the result of a $60.4 million decrease in fully tax equivalent interest income partially offset by a $26.5$1.5 million decrease in interest expense.

The decrease in interest income ~~during the first half of 2021~~ primarily resulted from a ~~$79.3~~$10.4 million decrease in interest income on loans, that reflects a decrease in loan volume of ~~$59.4 million~~$330,000 coupled with a 2724 basis point decline in yield that resulted in a ~~$19.9~~$10.0 million decrease, partially offset by an increase in interest income on investment securities of ~~$20.4~~$1.4 million. The decrease in our loan volume during the first six months of 2021 was primarily due to weak loan demand throughout 2020 and into the first half of 2021 as a result of the COVID-19 pandemic. Furthermore, the decline in loan volume also reflects the substantial governmental stimulus to support the economy during the COVID-19 pandemic which contributed to an increase in the level of loan paydowns and payoffs.

We sold approximately $249.5 million of investment securities during the first half of 2021 compared to $1.2 billion of investment securities during the same period in 2020. During the second quarter of 2020, in response to the unfolding events of the COVID-19 pandemic, we focused on the creation of additional liquidity and strengthening our balance sheet. We began to re-invest in our investment security portfolio during the fourth quarter of 2020 and continued into the first half of 2021.

The ~~$26.5~~$1.5 million decrease in interest expense is mostly due to the decrease in our deposit account rates. Interest expense decreased ~~$27.4~~$1.1 million due to the decrease in ~~yield~~rate of 444 basis points on interest-bearing deposit ~~accounts, partially~~accounts.

Net Interest Income - Year-over-Year Analysis

Net interest income on a fully taxable equivalent basis was relatively flat on a year-over-year basis, with a slight increase of $364,000, or 0.2%, when comparing the three months ended March 31, 2022 to the same period in the prior year. While the overall change was relatively flat, the components of net interest income fluctuated between periods. Net interest income for the three months ended March 31, 2022 experienced a $6.3 million decrease in fully tax equivalent interest income offset by a $6.6 million decrease in interest expense, on a year-over-year basis.

The decrease in interest income compared to the three months ended March 31, 2021 primarily resulted from a $19.2 million decrease in interest income on loans, that reflects a decrease in loan volume of $7.1 million coupled with a 41 basis point decline in yield that resulted in a $12.1 million decrease, significantly offset by an increase in interest income on investment securities of ~~$2.0~~$13.5 million. The decrease in loan volume during the first three months of 2022 was primarily due to the forgiveness of PPP loan balances, which averaged $89.8 million ~~related~~and $891.1 million for the three months ended March 31, 2022 and 2021, respectively. Forgiveness of PPP loans was partially offset by the acquired loan portfolios of Landmark and Triumph. The increase in interest income on investment securities was due to ~~approximately $1.1~~the growth in our investment portfolio average balances which increased by $4.1 billion or 94.3%, as we re-invested excess liquidity in ~~average deposit growth.~~our investment security portfolio throughout 2021.

51The $6.6 million decrease in interest expense is mostly due to the decrease in our deposit account rates. Interest expense decreased $5.9 million due to the decrease in rate of 22 basis points on interest-bearing deposit accounts. Additionally, while our overall average interest bearing deposit portfolio grew by approximately $1.2 billion, a decrease of $502,000 in interest expense was related to a $801.9 million decrease in time deposit accounts due to the maturing of existing time deposits, coupled with a continued effort to improve our mix of deposits into lower cost deposits.

Net Interest Margin

Our net interest margin on a fully tax equivalent basis ~~decreased 53 basis points to 2.89%~~was 2.76% for the three month period ended ~~June 30, 2021, when~~March 31, 2022, as compared to ~~3.42%~~2.86% and 2.99% for the ~~same~~three months ended December 31, 2021 and March 31, 2021, respectively. The decreases of 10 basis points and 23 basis points for the three month period ~~in 2020.~~ ended March 31, 2022, as compared to the three month period ended December 31, 2021 and March 31, 2021, respectively, were primarily due to lower loan yields compared to previous periods, offset by the lower cost of deposits, as we continue to manage our interest expense through deposit pricing.

Normalized for all accretion, our core net interest margin for the three months ended ~~June 30,~~March 31, 2022, December 31, 2021 and ~~2020~~March 31, 2021, was ~~2.78%~~2.70%, 2.75% and ~~3.18%~~2.86%, respectively. ~~For the six month period ended June 30, 2021, our net interest margin decreased 61 basis points to 2.94% when compared to 3.55% for the same period in 2020.~~

The decreases in the net interest margin during the three and six months ended June 30, 2021 compared to the same periods in 2020, were primarily due to the aforementioned decline in net interest income coupled with a $1.6 billion increase in average cash and equivalents driven by the lower interest rate environment and additional liquidity created in response to the COVID-19 pandemic. We purchased investment securities which added approximately $2.5 billion to our average investment securities portfolio during the first half of 2021. The impact of these items on net interest margin for the six months ended June 30, 2021 was 27 basis points, bringing the net interest margin adjusted for PPP loans and additional liquidity to 3.21%.

During March 2020, the Federal Open Market Committee, or FOMC, of the Federal Reserve substantially reduced interest rates in response to the economic crisis brought on by the COVID-19 pandemic and rates have continued to remain at historically low levels through the second quarter of 2021. As such, our variable rate loan portfolio has repriced to a lower yield and, in response to offset the decline, we have worked to lower our cost of deposits. In addition, our decreased net interest margin is being driven by the decrease in our non-PPP loan portfolio as a result of COVID-19 but our loan pipeline has started to rebuild and we expect modest organic loan growth during the second half of 2021.

Net Interest Income Tables

Tables 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022, December 31, 2021 and ~~2020,~~March 31, 2021, respectively.

Table 1: Analysis of Net Interest Margin

(FTE = Fully Taxable Equivalent using an effective tax rate of 26.135%)


															Three Months Ended
		Three Months Ended June 30,						Six Months Ended June 30,							March 31,			December 31,			March 31,
(In thousands)	(In thousands)	2021			2020			2021			2020			(In thousands)	2022			2021			2021
Interest income	Interest income	$	166,969		$	191,654		$	336,403		$	400,885		Interest income	$	161,727		$	170,732		$	169,434
FTE adjustment	FTE adjustment	4,548			2,350			8,711			4,655			FTE adjustment	5,602			5,579			4,163
Interest income – FTE	Interest income – FTE	171,517			194,004			345,114			405,540			Interest income – FTE	167,329			176,311			173,597
Interest expense	Interest expense	20,436			27,973			43,189			69,721			Interest expense	16,121			17,651			22,753
Net interest income – FTE	Net interest income – FTE	$	151,081		$	166,031		$	301,925		$	335,819		Net interest income – FTE	$	151,208		$	158,660		$	150,844

Yield on earning assets – FTE	Yield on earning assets – FTE	3.28		%	4.00		%	3.36		%	4.28		%	Yield on earning assets – FTE	3.06		%	3.18		%	3.44		%
Cost of interest bearing liabilities	Cost of interest bearing liabilities	0.54		%	0.78		%	0.57		%	0.98		%	Cost of interest bearing liabilities	0.40		%	0.44		%	0.61		%
Net interest spread – FTE	Net interest spread – FTE	2.74		%	3.22		%	2.79		%	3.30		%	Net interest spread – FTE	2.66		%	2.74		%	2.83		%
Net interest margin – FTE	Net interest margin – FTE	2.89		%	3.42		%	2.94		%	3.55		%	Net interest margin – FTE	2.76		%	2.86		%	2.99		%

Table 2: Changes in Fully Taxable Equivalent Net Interest Margin


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended
(In thousands)	(In thousands)	2021 vs. 2020		2021 vs. 2020		(In thousands)	March 31, 2022 compared to December 31, 2021		March 31, 2022 compared to March 31, 2021
Decrease due to change in earning assets		$	(15,336)	$	(27,555)
Increase (decrease) due to change in earning assets						Increase (decrease) due to change in earning assets	$	(227)	$	9,046
Decrease due to change in earning asset yields	Decrease due to change in earning asset yields	(7,151)		(32,871)		Decrease due to change in earning asset yields	(8,755)		(15,314)
Decrease due to change in interest bearing liabilities		(89)		(1,566)
Increase due to change in interest bearing liabilities						Increase due to change in interest bearing liabilities	233		556
Increase due to change in interest rates paid on interest bearing liabilities	Increase due to change in interest rates paid on interest bearing liabilities	7,626		28,098		Increase due to change in interest rates paid on interest bearing liabilities	1,297		6,076
Decrease in net interest income		$	(14,950)	$	(33,894)
Increase (decrease) in net interest income						Increase (decrease) in net interest income	$	(7,452)	$	364

5253

Table 3 shows, for each major category of earning assets and interest bearing liabilities, the average (computed on a daily basis) amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022, December 31, 2021 and ~~2020.~~March 31, 2021, respectively. The table also shows the average rate earned on all earning assets, the average rate expensed on all interest bearing liabilities, the net interest spread and the net interest margin for the same periods. The analysis is presented on a fully taxable equivalent basis. Nonaccrual loans were included in average loans for the purpose of calculating the rate earned on total loans.

Table 3: Average Balance Sheets and Net Interest Income Analysis

(FTE = Fully Taxable Equivalent using an effective tax rate of 26.135%)

Three Months Ended June 30,
2021 2020
Average Income/ Yield/ Average Income/ Yield/
(In thousands) Balance Expense Rate (%) Balance Expense Rate (%)
ASSETS
Earning assets:
Interest bearing balances due from banks and federal funds sold $ 2,703,920 $ 651 0.10 $ 2,190,878 $ 603 0.11
Investment securities - taxable 4,265,545 14,594 1.37 1,642,083 7,131 1.75
Investment securities - non-taxable 2,157,076 16,899 3.14 866,944 8,434 3.91
Mortgage loans held for sale 49,262 386 3.14 86,264 668 3.11
Loans 11,783,839 138,987 4.73 14,731,306 177,168 4.84
Total interest earning assets 20,959,642 171,517 3.28 19,517,475 194,004 4.00
Non-earning assets 2,298,279 2,304,798
Total assets $ 23,257,921 $ 21,822,273
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Interest bearing liabilities:
Interest bearing transaction and savings deposits $ 10,403,932 $ 4,721 0.18 $ 9,138,563 $ 7,203 0.32
Time deposits 2,930,025 6,061 0.83 3,057,153 10,803 1.42
Total interest bearing deposits 13,333,957 10,782 0.32 12,195,716 18,006 0.59
Federal funds purchased and securities sold under agreements to repurchase 240,876 192 0.32 392,633 337 0.35
Other borrowings 1,340,008 4,897 1.47 1,395,109 4,963 1.43
Subordinated debt and debentures 383,078 4,565 4.78 387,422 4,667 4.84
Total interest bearing liabilities 15,297,919 20,436 0.54 14,370,880 27,973 0.78
Non-interest bearing liabilities:
Non-interest bearing deposits 4,826,927 4,354,781
Other liabilities 151,699 216,508
Total liabilities 20,276,545 18,942,169
Stockholders’ equity 2,981,376 2,880,104
Total liabilities and stockholders’ equity $ 23,257,921 $ 21,822,273
Net interest spread – FTE 2.74 3.22
Net interest margin – FTE $ 151,081 2.89 $ 166,031 3.42

Six Months Ended June 30,
2021 2020
Average Income/ Yield/ Average Income/ Yield/
(In thousands) Balance Expense Rate (%) Balance Expense Rate (%)
ASSETS
Earning assets:
Interest bearing balances due from banks and federal funds sold $ 3,088,816 $ 1,449 0.09 $ 1,477,759 $ 3,044 0.41
Investment securities - taxable 3,373,375 24,714 1.48 1,983,134 19,883 2.02
Investment securities - non-taxable 2,039,153 32,338 3.20 883,585 16,749 3.81
Mortgage loans held for sale 73,202 1,025 2.82 64,927 949 2.94
Loans 12,149,041 285,588 4.74 14,640,082 364,915 5.01
Total interest earning assets 20,723,587 345,114 3.36 19,049,487 405,540 4.28
Non-earning assets 2,276,218 2,321,761
Total assets $ 22,999,805 $ 21,371,248
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Interest bearing liabilities:
Interest bearing transaction and savings deposits $ 10,249,756 $ 10,809 0.21 $ 9,072,133 $ 25,157 0.56
Time deposits 2,986,201 13,152 0.89 3,104,030 24,126 1.56
Total interest bearing deposits 13,235,957 23,961 0.37 12,176,163 49,283 0.81
Federal funds purchased and securities sold under agreements to repurchase 274,024 437 0.32 361,768 1,096 0.61
Other borrowings 1,340,531 9,699 1.46 1,357,677 9,840 1.46
Subordinated debt and debentures 383,011 9,092 4.79 387,876 9,502 4.93
Total interest bearing liabilities 15,233,523 43,189 0.57 14,283,484 69,721 0.98
Non-interest bearing liabilities:
Non-interest bearing deposits 4,624,158 3,978,728
Other liabilities 164,686 213,918
Total liabilities 20,022,367 18,476,130
Stockholders’ equity 2,977,438 2,895,118
Total liabilities and stockholders’ equity $ 22,999,805 $ 21,371,248
Net interest spread – FTE 2.79 3.30
Net interest margin – FTE $ 301,925 2.94 $ 335,819 3.55


	Three Months Ended
	March 31, 2022					December 31, 2021					March 31, 2021
	Average		Income/		Yield/	Average		Income/		Yield/	Average		Income/		Yield/
(In thousands)	Balance		Expense		Rate (%)	Balance		Expense		Rate (%)	Balance		Expense		Rate (%)
ASSETS
Earning assets:
Interest bearing balances due from banks and federal funds sold	$	1,728,694	$	649	0.15	$	1,484,752	$	583	0.16	$	3,477,989	$	798	0.09
Investment securities - taxable	5,688,306		18,148		1.29	5,790,429		17,186		1.18	2,334,078		10,120		1.76
Investment securities - non-taxable	2,844,777		20,937		2.98	2,787,301		20,470		2.91	2,057,132		15,439		3.04
Mortgage loans held for sale	27,633		190		2.79	42,866		310		2.87	97,409		639		2.66
Loans - including fees	11,895,805		127,405		4.34	11,924,444		137,762		4.58	12,518,300		146,601		4.75
Total interest earning assets	22,185,215		167,329		3.06	22,029,792		176,311		3.18	20,484,908		173,597		3.44
Non-earning assets	2,640,984					2,668,230					2,253,913
Total assets	$	24,826,199				$	24,698,022				$	22,738,821

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:
Interest bearing liabilities:
Interest bearing transaction and savings deposits	$	12,083,516	$	4,314	0.14	$	11,413,325	$	4,390	0.15	$	10,093,868	$	6,088	0.24
Time deposits	2,241,123		2,503		0.45	2,607,011		3,705		0.56	3,043,000		7,091		0.95
Total interest bearing deposits	14,324,639		6,817		0.19	14,020,336		8,095		0.23	13,136,868		13,179		0.41
Federal funds purchased and securities sold under agreements to repurchase	218,186		68		0.13	223,008		72		0.13	307,540		245		0.32
Other borrowings	1,337,654		4,779		1.45	1,340,825		4,903		1.45	1,341,059		4,802		1.45
Subordinated debt and debentures	384,187		4,457		4.70	383,489		4,581		4.74	382,943		4,527		4.79
Total interest bearing liabilities	16,264,666		16,121		0.40	15,967,658		17,651		0.44	15,168,410		22,753		0.61

Non-interest bearing liabilities:
Non-interest bearing deposits	5,184,828					5,288,933					4,419,136
Other liabilities	207,597					179,362					177,819
Total liabilities	21,657,091					21,435,953					19,765,365
Stockholders’ equity	3,169,108					3,262,069					2,973,456
Total liabilities and stockholders’ equity	$	24,826,199				$	24,698,022				$	22,738,821
Net interest spread – FTE					2.66					2.74					2.83
Net interest margin – FTE			$	151,208	2.76			$	158,660	2.86			$	150,844	2.99

Table 4 shows changes in interest income and interest expense resulting from changes in both volume and interest rates for the three ~~and six~~ month ~~periods~~period ended ~~June 30, 2021,~~March 31, 2022, as compared to the ~~same periods of the prior year.~~three months ended December 31, 2021 and March 31, 2021, respectively. The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates in proportion to the relationship of absolute dollar amounts of the changes in rates and volume.

Table 4: Volume/Rate Analysis


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended
		2021 vs. 2020						2021 vs. 2020							March 31, 2022 compared to December 31, 2021						March 31, 2022 compared to March 31, 2021
(In thousands, on a fully taxable equivalent basis)	(In thousands, on a fully taxable equivalent basis)	Volume		Yield/ Rate		Total		Volume		Yield/ Rate		Total		(In thousands, on a fully taxable equivalent basis)	Volume		Yield/ Rate		Total		Volume		Yield/ Rate		Total
Increase (decrease) in:	Increase (decrease) in:													Increase (decrease) in:
Interest income:	Interest income:													Interest income:
Interest bearing balances due from banks and federal funds sold	Interest bearing balances due from banks and federal funds sold	$	129	$	(81)	$	48	$	1,819	$	(3,414)	$	(1,595)	Interest bearing balances due from banks and federal funds sold	$	93	$	(27)	$	66	$	(514)	$	365	$	(149)
Investment securities - taxable	Investment securities - taxable	9,259		(1,796)		7,463		11,228		(6,397)		4,831		Investment securities - taxable	(307)		1,269		962		11,298		(3,270)		8,028
Investment securities - non-taxable	Investment securities - non-taxable	10,390		(1,925)		8,465		18,724		(3,135)		15,589		Investment securities - non-taxable	423		44		467		5,802		(304)		5,498
Mortgage loans held for sale	Mortgage loans held for sale	(290)		8		(282)		117		(41)		76		Mortgage loans held for sale	(106)		(14)		(120)		(479)		30		(449)
Loans		(34,824)		(3,357)		(38,181)		(59,443)		(19,884)		(79,327)
Loans - including fees														Loans - including fees	(330)		(10,027)		(10,357)		(7,061)		(12,135)		(19,196)
Total	Total	(15,336)		(7,151)		(22,487)		(27,555)		(32,871)		(60,426)		Total	(227)		(8,755)		(8,982)		9,046		(15,314)		(6,268)

Interest expense:	Interest expense:													Interest expense:
Interest bearing transaction and savings accounts	Interest bearing transaction and savings accounts	893		(3,375)		(2,482)		2,915		(17,263)		(14,348)		Interest bearing transaction and savings accounts	249		(325)		(76)		1,040		(2,814)		(1,774)
Time deposits	Time deposits	(432)		(4,310)		(4,742)		(884)		(10,090)		(10,974)		Time deposits	(476)		(726)		(1,202)		(1,542)		(3,046)		(4,588)
Federal funds purchased and securities sold under agreements to repurchase	Federal funds purchased and securities sold under agreements to repurchase	(122)		(23)		(145)		(223)		(436)		(659)		Federal funds purchased and securities sold under agreements to repurchase	(2)		(2)		(4)		(57)		(120)		(177)
Other borrowings	Other borrowings	(199)		133		(66)		(124)		(17)		(141)		Other borrowings	(12)		(112)		(124)		(12)		(11)		(23)
Subordinated notes and debentures	Subordinated notes and debentures	(51)		(51)		(102)		(118)		(292)		(410)		Subordinated notes and debentures	8		(132)		(124)		15		(85)		(70)
Total	Total	89		(7,626)		(7,537)		1,566		(28,098)		(26,532)		Total	(233)		(1,297)		(1,530)		(556)		(6,076)		(6,632)
Decrease in net interest income	Decrease in net interest income	$	(15,425)	$	475	$	(14,950)	$	(29,121)	$	(4,773)	$	(33,894)	Decrease in net interest income	$	6	$	(7,458)	$	(7,452)	$	9,602	$	(9,238)	$	364

PROVISION FOR CREDIT LOSSES

The provision for credit losses represents management’s determination of the amount necessary to be charged against the current period’s earnings in order to maintain the allowance for credit losses at a level considered appropriate in relation to the estimated lifetime risk inherent in the loan portfolio. The level of provision to the allowance is based on management’s judgment, with consideration given to the composition, maturity and other qualitative characteristics of the portfolio, assessment of current economic conditions, reasonable and supportable forecasts, past due and non-performing loans and historical net credit loss experience. It is management’s practice to review the allowance on a monthly basis and, after considering the factors previously noted, to determine the level of provision made to the allowance.

~~The~~We had a recapture of $19.9 million of provision for credit losses for the three ~~and six~~ months ended ~~June 30, 2021 was~~March 31, 2022, as compared to a recapture of ~~$13.0~~$1.3 million for the three months ended December 31, 2021 and ~~$11.5 million, respectively, compared to an expense~~a provision for credit losses of ~~$21.9 million and $45.0~~$1.4 million for the same ~~periods~~period ended ~~June 30, 2020.~~March 31, 2021. The recapture of credit losses was driven by improved credit quality metrics and improved macroeconomic ~~factors. Two energy credits that experienced further deterioration~~factors, coupled with the planned exit of several large oil and ~~were negatively impacted by the sharp decline in commodity pricing~~gas relationships during the first quarter of 2020, resulting in incremental provision expense of $22.0 million during that quarter and combined with uncertain economic forecasts during the first six months of 2020 to drive higher provisions for credit losses during that period.quarter.

NON-INTEREST INCOME

Non-interest income is principally derived from recurring fee income, which includes service charges, ~~trust~~wealth management fees and debit and credit card fees. Non-interest income also includes income on the sale of mortgage ~~and SBA~~ loans, ~~investment banking income,~~ income from the increase in cash surrender values of bank owned life insurance and gains (losses) from sales of securities.

~~Total~~For the three month period ended March 31, 2022, total non-interest income was ~~$47.9~~$42.2 million, a decrease of $4.4 million or 9.4% and $7.3 million or 14.8%, compared to the three months ended December 31, 2021 and March 31, 2021, respectively. The decrease reflects the normal seasonality of service charges.

Mortgage lending income decreased by $493,000 and $1.9 million for the three month period ~~June 30,~~ended March 31, 2022, as compared to the three months ended December 31, 2021 and March 31, 2021, respectively. The decrease was due to a ~~decrease of approximately $882,000, or 1.8%,~~decline in refinancing demand and mortgage loan volume driven by the current rising rate environment.

Other income for the three month period ended March 31, 2022 decreased by $2.7 million as compared to the preceding sequential fiscal quarter, and increased by $2.1 million, when compared to the same period in ~~2020,~~the prior year. The changes in other income are primarily driven by ~~decreases in mortgage lending income~~the $1.4 million and $3.1 million settlement awards received by the ~~difference in gains on sale of branches recognized~~Company during the ~~periods. Conversely, we had increases in total service charges on deposit accounts~~three months ended March 31, 2022 and ~~fees~~December 31, 2021, respectively.

The additional year-over-year decreases are due to the recognizing a net gain of ~~$2.0~~$5.5 million ~~or 20.3%, primarily attributable to additional customer transactions related to changes in customer spending habits and incremental gains~~ on the sale of ~~securities during the second quarter of 2021.~~

For the six month period ended June 30, 2021, total non-interest income was $98.3 million, a decrease of approximately $31.6 million, or 24.3%, compared to the same period in 2020, primarily due to decreases in the gains on sale ofinvestment securities and ~~mortgage lending income. During the first six months of 2021, we sold approximately $249.5~~a $5.3 million ~~of investment securities resulting in a net~~ gain of $10.6 million, compared to $1.2 billion of investment securities sold for a net gain of $32.5 million in the first six months of 2020. Additionally, the gain on sale of branches decreased approximately $2.2 million, which we consider a non-core item, compared to the same period in 2020. An increase of $2.1 million in debit and credit fees partially offset the overall decrease in non-interest income during the first six months of 2021 as a result of additional transactions due to the changes in customer spending habits.

Decreases of $8.0 million and $6.6 million in mortgage lending income for the three and six month periods ended June 30, 2021 were largely a result of decreases in the value of derivative contracts related to the mortgage banking operations partially offset by gains on the sale of ~~mortgage loans that were driven by an increase in volume of loans sold~~Illinois branches during the first half of 2021 compared to the same period in 2020. Beginning in 2020 and continuing into 2021, we experienced an increase in mortgage lending transactions as a result of the low mortgage interest rate environment due to the COVID-19 pandemic. However, we expect mortgage lending volume to continue to decline throughout 2021 given the current environment.three months ended March 31, 2021.

Table 5 shows non-interest income for the three ~~and six~~ month periods ended ~~June 30,~~March 31, 2022, December 31, 2021 and ~~2020,~~March 31, 2021, respectively, as well as changes ~~in 2021 from 2020.~~between periods.

Table 5: Non-Interest Income


																	Three Months Ended
		Three Months Ended June 30,				2021 Change from			Six Months Ended June 30,				2021 Change from				March 31,		December 31,				March 31,		Change from Quarter - Sequential								Change from Quarter - Year-over-Year
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2020			2021		2020		2020			(Dollars in thousands)	2022		2021				2021
Trust income		$	7,238	$	7,253	$	(15)	(0.2)%	$	13,904	$	14,404	$	(500)	(3.5)%
Wealth management fees																Wealth management fees	$	7,968	$	8,042			$	7,361			$	(74)			(0.9)	%			$	607			8.2	%
Service charges on deposit accounts	Service charges on deposit accounts	10,050		8,570		1,480		17.3	19,765		21,898		(2,133)		(9.7)	Service charges on deposit accounts	10,696		11,909				9,715		(1,213)				(10.2)	%			981				10.1
Other service charges and fees	Other service charges and fees	2,048		1,489		559		37.5	3,970		3,077		893		29.0	Other service charges and fees	1,637		1,762				1,922		(125)				(7.1)	%			(285)				(14.8)
Mortgage lending income	Mortgage lending income	4,490		12,459		(7,969)		(64.0)	10,937		17,505		(6,568)		(37.5)	Mortgage lending income	4,550		5,043				6,447		(493)				(9.8)	%			(1,897)				(29.4)
SBA lending income		287		245		42		17.1	527		541		(14)		(2.6)
Investment banking income		654		571		83		14.5	1,349		1,448		(99)		(6.8)
Debit and credit card fees (1)	Debit and credit card fees (1)	7,882		6,575		1,307		19.9	15,283		13,140		2,143		16.3	Debit and credit card fees (1)	7,449		7,460				6,610		(11)				(0.1)	%			839				12.7
Bank owned life insurance income	Bank owned life insurance income	2,038		1,445		593		41.0	3,561		2,743		818		29.8	Bank owned life insurance income	2,706		2,768				1,523		(62)				(2.2)	%			1,183				77.7
Gain on sale of securities, net		5,127		390		4,737		*	10,598		32,485		(21,887)		(67.4)
Gain (loss) on sale of securities, net																Gain (loss) on sale of securities, net	(54)		(348)				5,471		294				*				(5,525)				*
Gain on sale of branches	Gain on sale of branches	445		2,204		(1,759)		(79.8)	5,922		8,093		(2,171)		(26.8)	Gain on sale of branches	—		—				5,300		—				*				(5,300)				*
Other income	Other income	7,665		7,605		60		0.8	12,448		14,517		(2,069)		(14.3)	Other income	7,266		9,965				5,200		(2,699)				(27.1)	%			2,066				39.7
Total non-interest income	Total non-interest income	$	47,924	$	48,806	$	(882)	(1.8)%	$	98,264	$	129,851	$	(31,587)	(24.3)%	Total non-interest income	$	42,218	$	46,601	$	46,601	$	49,549	$	(4,383)			(9.4)	%			$	(7,331)			(14.8)	%

_________________________

(1) During the second ~~quarter~~and third quarters of 2021, certain debit and credit card transaction fees were reclassified from non-interest expense to non-interest income. Prior periods have been adjusted to reflect this reclassification.

* Not meaningful

Recurring fee income (total service charges, ~~trust~~wealth management fees, debit and credit card fees) for the three month period ended ~~June 30, 2021~~March 31, 2022, was ~~$27.2~~$27.8 million, a decrease of $1.4 million and an increase of ~~$3.3~~$2.1 million from the three month periods ended December 31, 2021 and March 31, 2021, respectively. The decrease as compared to the preceding sequential fiscal quarter is due to the seasonal changes in customer spending habits, whereas the increase as compared to the same period in ~~2020. Recurring fee income for~~ the ~~six month period ended June 30, 2021, was $52.9 million, an increase of $403,000 from the six month period ended June 30, 2020. The increases in the periods presented~~prior year are primarily the result of ~~changes~~the strengthened economic activity and increase in ~~total service charges~~customer base from the Landmark and ~~debit and credit card fees, previously discussed.~~Triumph acquisitions.

NON-INTEREST EXPENSE

Non-interest expense consists of salaries and employee benefits, occupancy, equipment, foreclosure losses and other expenses necessary for our operations. Management remains committed to controlling the level of non-interest expense through the continued use of expense control measures. We utilize an extensive profit planning and reporting system involving all subsidiaries. Based on a needs assessment of the business plan for the upcoming year, monthly and annual profit plans are developed, including manpower and capital expenditure budgets. These profit plans are subject to extensive initial reviews and monitored by management monthly. Variances from the plan are reviewed monthly and, when required, management takes corrective action intended to ensure financial goals are met. We also regularly monitor staffing levels at each subsidiary to ensure productivity and overhead are in line with existing workload requirements.

For the three month period ended ~~June 30, 2021,~~March 31, 2022, total non-interest expense was ~~$115.5~~$128.4 million, a decrease of ~~$711,000,~~$13.2 million, or ~~0.6%, from~~9.3% and an increase of $15.4 million, or 13.6% compared to the three ~~month period~~months ended ~~June 30, 2020.~~ December 31, 2021 and March 31, 2021, respectively.

Salaries and employee benefits expense increased ~~$3.1~~by $4.1 million ~~during~~and $7.6 million as compared to the three months ended December 31, 2021 and March 31, 2021, respectively. The increases reflects normal seasonality with respect to payroll taxes at the beginning of the year, as well as a profit-sharing contribution associated with the Company’s 401(k) plan and costs associated with equity compensation. Additionally, our results of operations for the three month period ended March 31, 2022 compared to the three month period ended March 31, 2021 includes the impacts of ~~2021 due to associates being hired in lending, wealth~~the Landmark and ~~mortgage as we continue to actively recruit new producers.~~Triumph acquisitions.

~~Non-interest expense~~Merger related costs for the ~~six months~~three month period ended ~~June 30, 2021 was $229.3~~March 31, 2022 decreased by $11.7 million ~~a decrease of $14.4~~as compared to the preceding sequential quarter, and increased by $1.7 million, ~~or 5.9%, from~~when compared to the same period in ~~2020. Normalizing~~the prior year. The decrease as compared to the preceeding sequential quarter is due to the Landmark and Triumph acquisitions, whereas the increase as compared to the same period in the prior year is primarily due to the Spirit acquisition completed April 8, 2022. See Note 2, Acquisitions, in the accompanying Notes to Consolidated Financial Statements for ~~the non-core costs, core~~additional information related to these acquisitions. Core non-interest expense for the ~~six~~three month period ended March 31, 2022, which excludes branch right sizing and merger related costs, decreased by $734,000 or 0.6% and increased by $13.5 million or 12.0% from the three month periods ended December 31, 2021 and March 31, 2021, respectively.

Marketing expense decreased by $3.2 million for the three month period ended March 31, 2022 as compared to the sequential quarter, primarily due to a $2.5 million donation to the Simmons First Foundation during the three months ended ~~June 30, 2021 decreased $11.0~~December 31, 2021. Marketing expense increased by $3.0 million ~~or 4.6%, from~~when compared to the same period in ~~2020.~~the prior year due to increased advertising and public relations expenses, including a multi-university corporate sponsorship program designed to support female student athletes and serve as a program for developing women leaders in the corporate world.

The decreases in non-interest expense were primarily related to the realization of expected synergies from the continuous evaluation of our branch network and the branch sales and closures that began in 2020 and have continued in 2021. Additionally, salaries and employee benefits expense during the six month period June 30, 2021 was impacted by savings resulting from the early retirement program offered in the prior year.

Table 6 below shows non-interest expense for the three ~~and six~~ month periods ended ~~June 30,~~March 31, 2022, December 31, 2021 and ~~2020,~~March 31, 2021, respectively, as well as changes ~~in 2021 from 2020.~~between periods.

Table 6: Non-Interest Expense


																	Three Months Ended
		Three Months Ended June 30,				2021 Change from			Six Months Ended June 30,				2021 Change from				March 31,		December 31,		March 31,		Change from Quarter - Sequential								Change from Quarter - Year-over-Year
(Dollars in thousands)	(Dollars in thousands)	2021		2020		2020			2021		2020		2020			(Dollars in thousands)	2022		2021		2021
Salaries and employee benefits	Salaries and employee benefits	$	60,261	$	57,151	$	3,110	5.4%	$	120,601	$	125,075	$	(4,474)	(3.6)%	Salaries and employee benefits	$	67,906	63,832		$	60,340			$	4,074			6.4	%			$	7,566			12.5	%
Early retirement expense		—		493		(493)		(100.0)	—		493		(493)		(100.0)
Occupancy expense, net	Occupancy expense, net	9,103		9,217		(114)		(1.2)	18,403		18,727		(324)		(1.7)	Occupancy expense, net	10,023		11,033		9,300		(1,010)				(9.2)	%			723				7.8	%
Furniture and equipment expense	Furniture and equipment expense	4,859		6,144		(1,285)		(20.9)	10,274		11,867		(1,593)		(13.4)	Furniture and equipment expense	4,775		4,721		5,415		54				1.1	%			(640)				(11.8)	%
Other real estate and foreclosure expense	Other real estate and foreclosure expense	863		274		589		*	1,206		599		607		101.3	Other real estate and foreclosure expense	343		576		343		(233)				(40.5)	%			—				—	%
Deposit insurance	Deposit insurance	1,687		2,838		(1,151)		(41.0)	2,995		5,313		(2,318)		(43.6)	Deposit insurance	1,838		2,108		1,308		(270)				(12.8)	%			530				40.5	%
Merger related costs	Merger related costs	686		1,830		(1,144)		(62.5)	919		2,898		(1,979)		(68.3)	Merger related costs	1,886		13,591		233		(11,705)				*				1,653				*
Other operating expenses:	Other operating expenses:															Other operating expenses:
Professional services	Professional services	4,561		3,921		640		16.3	9,808		9,750		58		0.6	Professional services	5,446		4,714		5,247		732				15.5	%			199				3.8	%
Postage	Postage	1,943		1,769		174		9.8	4,313		4,005		308		7.7	Postage	2,126		1,999		2,370		127				6.4	%			(244)				(10.3)	%
Telephone	Telephone	1,610		2,450		(840)		(34.3)	3,242		4,635		(1,393)		(30.1)	Telephone	1,558		1,477		1,632		81				5.5	%			(74)				(4.5)	%
Credit card (1)		3,339		3,161		178		5.6	6,461		6,194		267		4.3
Debit and credit card (1)																Debit and credit card (1)	2,706		3,524		2,331		(818)				(23.2)	%			375				16.1	%
Marketing	Marketing	4,740		3,528		1,212		34.4	7,893		7,913		(20)		(0.3)	Marketing	6,140		9,322		3,153		(3,182)				(34.1)	%			2,987				94.7	%
Software and technology	Software and technology	9,857		10,024		(167)		(1.7)	20,108		19,469		639		3.3	Software and technology	10,147		10,366		10,251		(219)				(2.1)	%			(104)				(1.0)	%
Operating supplies	Operating supplies	838		828		10		1.2	1,408		1,764		(356)		(20.2)	Operating supplies	698		753		570		(55)				(7.3)	%			128				22.5	%
Amortization of intangibles	Amortization of intangibles	3,332		3,369		(37)		(1.1)	6,676		6,782		(106)		(1.6)	Amortization of intangibles	3,486		3,486		3,344		—				—	%			142				4.2	%
Branch right sizing	Branch right sizing	468		1,721		(1,253)		(72.8)	1,093		1,959		(866)		(44.2)	Branch right sizing	909		1,650		625		(741)				(44.9)	%			284				45.4	%
Other	Other	7,319		7,459		(140)		(1.9)	13,859		16,198		(2,339)		(14.4)	Other	8,430		8,445		6,540		(15)				(0.2)	%			1,890				28.9	%
Total non-interest expense	Total non-interest expense	$	115,466	$	116,177	$	(711)	(0.6)%	$	229,259	$	243,641	$	(14,382)	(5.9)%	Total non-interest expense	$	128,417	$	141,597	$	113,002	$	(13,180)			(9.3)	%			$	15,415			13.6	%

_________________________

* Not meaningful

INVESTMENTS AND SECURITIES

Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue. Securities within the portfolio are classified as either HTM or AFS. Our philosophy regarding investments is conservative based on investment type and maturity. Investments in the portfolio primarily include U.S. Treasury securities, U.S. Government agencies, MBS and municipal securities. Our general policy is not to invest in derivative type investments or high-risk securities, except for collateralized MBS for which collection of principal and interest is not subordinated to significant superior rights held by others.

HTM and AFS investment securities were ~~$931.4 million~~$1.6 billion and $6.6 billion, respectively, at ~~June 30, 2021,~~March 31, 2022, compared to the HTM amount of ~~$333.0 million~~$1.5 billion and AFS amount of ~~$3.5~~$7.1 billion at December 31, 2020. As anticipated, our security portfolio increased during the first six months of 2021 as we reinvested PPP loan repayments and utilized additional liquidity held in cash and cash equivalents. During the second quarter of 2021, we purchased $2.5 billion of investment securities, including strategically redeploying $1.1 billion of excess cash into short-term, variable rate securities, as previously discussed.2021. We will continue to look for opportunities to maximize the value of the investment portfolio.

Management has the ability and intent to hold the securities classified as HTM until they mature, at which time we expect to receive full value for the securities. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Furthermore, as of ~~June 30, 2021,~~March 31, 2022, management also had the ability and intent to hold the securities classified as AFS for a period of time sufficient for a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality.

During the third quarter of 2021, the Company began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of $1.0 billion of fixed rate callable municipal securities held in the AFS portfolio. These swap agreements involve the payment of fixed interest rates with a weighted average of 1.21% in exchange for variable interest rates based on federal funds rates and consist of a two year forward start date and maturity dates varying between 2028 and 2029.

LOAN PORTFOLIO

Our loan portfolio averaged ~~$12.15~~$11.90 billion and ~~$14.64~~$12.52 billion during the first ~~six~~three months of 2022 and 2021, respectively. As of March 31, 2022, total loans were $12.03 billion, a slight increase of $16.1 million from December 31, 2021. The average loan balance for the first three months of 2021 ~~and 2020, respectively. As~~included $891.1 million of ~~June 30, 2021, total~~PPP loans ~~were $11.39 billion, a decrease~~compared to an average PPP loan balance of ~~$1.5 billion from December 31, 2020. The~~$89.8 million for the first three months of 2022. This period-to-period decline in ~~the~~ average PPP loan balance ~~during~~was partially offset by the ~~first half~~2021 acquisitions of ~~2021 when compared~~Landmark and Triumph. See Note 2, Acquisitions, in the accompanying Notes to ~~the same period in 2020 was due~~Consolidated Financial Statements for additional information related to ~~the tepid loan demand that began in late first quarter of 2020 and has continued through 2021 largely as a result of the economic uncertainty stemming from the COVID-19 pandemic.~~these acquisitions. The most significant components of the loan portfolio were loans to businesses (commercial loans, commercial real estate loans and agricultural loans) and individuals (consumer loans, credit card loans and single-family residential real estate loans).

We seek to manage our credit risk by diversifying our loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral, obtaining and monitoring collateral, providing an appropriate allowance for credit losses and regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose, industry and geographic region. We seek to use diversification within the loan portfolio to reduce credit risk, thereby minimizing the adverse impact on the portfolio, if weaknesses develop in either the economy or a particular segment of borrowers. Collateral requirements are based on credit assessments of borrowers and may be used to recover the debt in case of default. We use the allowance for credit losses as a method to value the loan portfolio at its estimated collectible amount. Loans are regularly reviewed to facilitate the identification and monitoring of deteriorating credits.

5859

The balances of loans outstanding at the indicated dates are reflected in Table 7, according to type of loan.

Table 7: Loan Portfolio


		June 30,		December 31,			March 31,		December 31,
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Consumer:	Consumer:					Consumer:
Credit cards	Credit cards	$	177,634	$	188,845	Credit cards	$	184,372	$	187,052
Other consumer	Other consumer	181,712		202,379		Other consumer	180,602		168,318
Total consumer	Total consumer	359,346		391,224		Total consumer	364,974		355,370
Real estate:	Real estate:					Real estate:
Construction and development	Construction and development	1,428,165		1,596,255		Construction and development	1,423,445		1,326,371
Single family residential	Single family residential	1,608,028		1,880,673		Single family residential	2,042,978		2,101,975
Other commercial	Other commercial	5,332,655		5,746,863		Other commercial	5,762,567		5,738,904
Total real estate	Total real estate	8,368,848		9,223,791		Total real estate	9,228,990		9,167,250
Commercial:	Commercial:					Commercial:
Commercial	Commercial	2,074,729		2,574,386		Commercial	2,016,405		1,992,043
Agricultural	Agricultural	193,462		175,905		Agricultural	150,465		168,717
Total commercial	Total commercial	2,268,191		2,750,291		Total commercial	2,166,870		2,160,760
Other	Other	389,967		535,591		Other	267,759		329,123
Total loans before allowance for credit losses	Total loans before allowance for credit losses	$	11,386,352	$	12,900,897	Total loans before allowance for credit losses	$	12,028,593	$	12,012,503

Consumer loans consist of credit card loans and other consumer loans. Consumer loans were ~~$359.3~~$365.0 million at ~~June 30, 2021,~~March 31, 2022, or ~~3.2%~~3.0% of total loans, compared to ~~$391.2~~$355.4 million, or 3.0% of total loans at December 31, ~~2020.~~2021. The ~~decrease~~increase in consumer loans from December 31, ~~2020,~~2021, to ~~June 30, 2021,~~March 31, 2022, was primarily due to growth in direct consumer loans partially offset by the expected seasonal decline in our credit card ~~portfolio as well as loan payoffs and pay downs due to additional customer liquidity driven by the government economic stimulus programs in response to the COVID-19 pandemic.~~portfolio.

Real estate loans consist of C&D loans, single-family residential loans and CRE loans. Real estate loans were ~~$8.37~~$9.23 billion at ~~June 30, 2021,~~March 31, 2022, or ~~73.5%~~76.7% of total loans, compared to ~~$9.22~~$9.17 billion, or ~~71.5%~~76.3%, of total loans at December 31, ~~2020,~~2021, a ~~decrease~~slight increase of ~~$854.9~~$61.7 million, or ~~9.3%~~0.7%. Our C&D loans ~~decreased~~increased by ~~$168.1~~$97.1 million, or ~~10.5%~~7.3%, single family residential loans decreased by ~~$272.6~~$59.0 million, or ~~14.5%~~2.8%, and CRE loans ~~decreased by $414.2~~experienced a marginal increase of $23.7 million, or ~~7.2%~~0.4%. ~~The decreases were largely due to less activity as a result of the pandemic and our effort to manage our real estate portfolio concentration.~~ In the near term, we expect to continue to manage our C&D and CRE portfolio concentration by developing deeper relationships with our customers.

Commercial loans consist of non-real estate loans related to business and agricultural loans. Total commercial loans were ~~$2.27~~relatively flat between periods with a balance of $2.17 billion at ~~June 30, 2021,~~March 31, 2022, or ~~19.9%~~18.0% of total loans, compared to ~~$2.75~~$2.16 billion, or ~~21.3%~~18.0% of total loans at December 31, ~~2020, a decrease~~2021, an increase of ~~$482.1~~$6.1 million, or ~~17.5%~~0.3%. New commercial fundings and advances outpaced the planned run-off of $54.5 million in our energy portfolio and the $54.8 million of PPP loan ~~balances declined by $782.2 million~~payoffs during the first six months of 2021 as a result of expected reimbursements from the SBA related to PPP loan forgiveness, partially offset by PPP Round 2 loan originations of $318.9 million during 2021. We expect PPP balances to continue to decline through the remainder of the year.quarter. Agricultural loans ~~increased $17.6~~decreased $18.3 million, or ~~10.0%~~10.8%, primarily due to seasonality of the portfolio, which normally peaks in the third quarter. In addition, we are continuing with our planned exit of the energy portfolio.

Other loans mainly consists of mortgage warehouse lending. Mortgage volume ~~while still strong, declined~~experienced a market driven decline during the first ~~six~~three months of ~~2021~~2022 when compared to ~~2020,~~2021, leading to a decrease of ~~$145.6~~$61.4 million in other loans primarily from mortgage warehouse lines of credit.

Loan demand appears to be returning to more normalized levels. For the ~~third~~sixth consecutive quarter, we have experienced an increase in commercial loan demand. We are seeing loan growth in our metro, community and corporate banking groups and continue to add new producers in these areas. Our loan pipeline consisting of all loan opportunities was ~~$1.3~~$2.36 billion at ~~June 30, 2021~~March 31, 2022, compared to ~~$673.7 million~~$2.31 billion at December 31, ~~2020.~~2021. Loans approved and ready to close at the end of the quarter totaled ~~$467.1~~$775.7 million.

5960

ASSET QUALITY

Non-performing loans are comprised of (a) nonaccrual loans, (b) loans that are contractually past due 90 days and (c) other loans for which terms have been restructured to provide a reduction or deferral of interest or principal, because of deterioration in the financial position of the borrower. Simmons Bank recognizes income principally on the accrual basis of accounting. When loans are classified as nonaccrual, generally, the accrued interest is charged off and no further interest is accrued. Loans, excluding credit card loans, are placed on a nonaccrual basis either: (1) when there are serious doubts regarding the collectability of principal or interest or (2) when payment of interest or principal is 90 days or more past due and either (i) not fully secured or (ii) not in the process of collection. If a loan is determined by management to be uncollectible, the portion of the loan determined to be uncollectible is then charged to the allowance for credit losses.

When credit card loans reach 90 days past due and there are attachable assets, the accounts are considered for litigation. Credit card loans are generally charged off when payment of interest or principal exceeds 150 days past due. The credit card recovery group pursues account holders until it is determined, on a case-by-case basis, to be uncollectible.

Total non-performing assets decreased ~~$46.6~~$5.3 million from December 31, ~~2020~~2021 to ~~June 30, 2021.~~March 31, 2022. Nonaccrual loans decreased by ~~$42.6~~$4.1 million during the period and foreclosed assets held for sale and other real estate owned decreased by ~~$3.2 million.~~$914,000. The decrease in nonaccrual loans was primarily due to an overall improvement in economic conditions while the decrease in foreclosed assets held for sale and other real estate owned is mainly the result of the disposition of one commercial building in the St. Louis area partially offset by $4.4 million in closed bank branch facilities that were reclassified from premises held for sale during the second quarter of 2021.conditions.

Non-performing assets, including troubled debt restructurings (“TDRs”) and acquired foreclosed assets, as a percent of total assets were ~~0.43%~~0.30% at ~~June 30, 2021,~~March 31, 2022, compared to ~~0.66%~~0.33% at December 31, ~~2020.~~2021. From time to time, certain borrowers experience declines in income and cash flow. As a result, these borrowers seek to reduce contractual cash outlays, the most prominent being debt payments. In an effort to preserve our net interest margin and earning assets, we are open to working with existing customers in order to maximize the collectability of the debt.

When we restructure a loan for a borrower experiencing financial difficulty and grant a concession we would not otherwise consider, a “troubled debt restructuring” occurs and the loan is classified as a TDR. The Company grants various types of concessions, primarily interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal.

Once an obligation has been restructured due to such credit problems, it continues to be considered a TDR until paid in full; or, if an obligation yields a market interest rate and no longer has any concession regarding payment amount or amortization, then it is not considered a TDR at the beginning of the calendar year after the year in which the improvement takes place. Our TDR balance remained relatively flat at ~~$7.1~~$6.0 million as of ~~June 30, 2021,~~March 31, 2022, decreasing ~~$417,000~~$897,000 from December 31, ~~2020.~~2021.

TDRs are individually evaluated for expected credit losses. We assess the exposure for each modification, using either the fair value of the underlying collateral or the present value of expected cash flows, and determine if a specific allowance for credit losses is needed.

We return TDRs to accrual status only if (1) all contractual amounts due can reasonably be expected to be repaid within a prudent period, and (2) repayment has been in accordance with the contract for a sustained period, typically at least six months.

The provisions in the CARES Act included an election to not apply the guidance on accounting for TDRs to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) December 31, 2020 or (ii) 60 days after the President terminates the COVID-19 national emergency declaration. The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company elected to adopt these provisions of the CARES Act and is following the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) issued by regulatory agencies. In response to the concerns related to the expiration of the applicable period for which the election to not apply the guidance on accounting for TDRs to loan modifications, the CARES Act was amended late in the fourth quarter of 2020 to extend COVID-19 relief related to loan modifications to the earlier of (i) January 1, 2022 or (ii) 60 days after the President terminates the COVID-19 national emergency declaration.

During 2020 and the first half of 2021, we processed over 3,700 COVID-19 loan modifications in excess of $3.0 billion. At June 30, 2021, the Company had 43 COVID-19 loan modifications outstanding in the amount of $134.5 million. The COVID-19 pandemic has had an unprecedented impact on the hotel, restaurant and retail industries, causing our borrowers in those industries to require loan modifications. At June 30, 2021, the majority of these balances have returned to regular payments and we expect most of the remaining COVID-19 loan modifications to return to regular payments with no credit downgrade or long-term restructure.

We continue to maintain good asset quality compared to the industry and strong asset quality remains a primary focus of our strategy. The allowance for credit losses as a percent of total loans was ~~2.00%~~1.49% as of ~~June 30, 2021.~~March 31, 2022. Non-performing loans equaled ~~0.71%~~0.53% of total loans. Non-performing assets were ~~0.42%~~0.29% of total assets, a 222 basis point decrease from December 31, ~~2020.~~2021. The allowance for credit losses was ~~281%~~278% of non-performing ~~loans.~~loans as of March 31, 2022. Our annualized net charge-offs to average total loans for the first ~~six~~three months of ~~2021~~2022 was ~~(0.07)%~~0.22%. Excluding credit cards, the annualized net charge-offs to average total loans for the same period was ~~(0.10)%~~0.20%. Annualized net credit card charge-offs to average total credit card loans were ~~1.78%~~1.39%, compared to ~~1.60%~~1.40% during the full year ~~2020,~~2021, and ~~117~~18 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks.

Table 98 presents information concerning non-performing assets, including nonaccrual loans at amortized cost and foreclosed assets held for sale.

Table 9:8: Non-performing Assets


		June 30,			December 31,				March 31,			December 31,
(Dollars in thousands)	(Dollars in thousands)	2021			2020			(Dollars in thousands)	2022			2021
Nonaccrual loans (1)	Nonaccrual loans (1)	$	80,282		$	122,879		Nonaccrual loans (1)	$	64,096		$	68,204
Loans past due 90 days or more (principal or interest payments)	Loans past due 90 days or more (principal or interest payments)	653			578			Loans past due 90 days or more (principal or interest payments)	240			349
Total non-performing loans	Total non-performing loans	80,935			123,457			Total non-performing loans	64,336			68,553
Other non-performing assets:	Other non-performing assets:							Other non-performing assets:
Foreclosed assets held for sale and other real estate owned	Foreclosed assets held for sale and other real estate owned	15,239			18,393			Foreclosed assets held for sale and other real estate owned	5,118			6,032
Other non-performing assets	Other non-performing assets	1,062			2,016			Other non-performing assets	1,479			1,667
Total other non-performing assets	Total other non-performing assets	16,301			20,409			Total other non-performing assets	6,597			7,699
Total non-performing assets	Total non-performing assets	$	97,236		$	143,866		Total non-performing assets	$	70,933		$	76,252

Performing TDRs	Performing TDRs	$	4,436		$	3,138		Performing TDRs	$	3,424		$	4,289
Allowance for credit losses to non-performing loans	Allowance for credit losses to non-performing loans	281		%	193		%	Allowance for credit losses to non-performing loans	278		%	300		%
Non-performing loans to total loans	Non-performing loans to total loans	0.71		%	0.96		%	Non-performing loans to total loans	0.53		%	0.57		%
Non-performing assets (including performing TDRs) to total assets	Non-performing assets (including performing TDRs) to total assets	0.43		%	0.66		%	Non-performing assets (including performing TDRs) to total assets	0.30		%	0.33		%
Non-performing assets to total assets	Non-performing assets to total assets	0.42		%	0.64		%	Non-performing assets to total assets	0.29		%	0.31		%

(1)Includes nonaccrual TDRs of approximately ~~$2,660,000~~$2,618,000 at ~~June 30, 2021~~March 31, 2022 and ~~$4,375,000~~$2,650,000 at December 31, ~~2020.~~2021.

The interest income on nonaccrual loans is not considered material for the three ~~and six~~ month periods ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses is a reserve established through a provision for credit losses charged to expense which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, historical loss experience, and other qualitative considerations.

Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated into homogeneous segments for assessment. Reserve factors are based on estimated probability of default and loss given default for each segment. The estimates are determined based on economic forecasts over the reasonable and supportable forecast period based on projected performance of economic variables that have a statistical correlation with the historical loss experience of the segments. For contractual periods that extend beyond the one-year forecast period, the estimates revert to average historical loss experiences over a one-year period on a straight-line basis.

We also include qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for. Qualitative adjustments include, but are not limited to:

•Changes in the nature and volume of the portfolio - Adjustments related to current changes in the loan portfolio that are not fully represented or accounted for in the reserve factors.

•Changes in and the existence and effect of any concentrations of credit - Adjustments related to credit risk of specific industries that are not fully captured in the reserve factors.

•Data imprecision due to limited historical loss data - Adjustments related to limited historical loss data that is representative of the collective loan portfolio.

Loans that do not share similar risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating or that are classified as a TDR. The allowance for credit loss is determined based on several methods including estimating the fair value of the underlying collateral or the present value of expected cash flows.

An analysis of the allowance for credit losses on loans is shown in Table ~~10.~~9.

Table ~~10:~~9: Allowance for Credit Losses


(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Balance, beginning of year	Balance, beginning of year	$	238,050	$	68,244	Balance, beginning of year	$	205,332	$	238,050

Impact of CECL adoption		—		151,377
Loans charged off:
Credit card		2,049		2,494
Other consumer		1,113		1,971
Real estate		2,126		2,220
Commercial		1,168		36,210
Total loans charged off		6,456		42,895
Recoveries of loans previously charged off:
Credit card		534		497
Other consumer		729		746
Real estate		1,926		354
Commercial		2,467		445
Total recoveries		5,656		2,042
Net loans charged off		800		40,853
Provision for credit losses		(10,011)		52,875
Balance, June 30,		$	227,239	$	231,643

Loans charged off:	Loans charged off:					Loans charged off:
Credit card	Credit card			1,619		Credit card	920		1,003
Other consumer	Other consumer			2,051		Other consumer	414		702
Real estate	Real estate			11,568		Real estate	485		1,687
Commercial	Commercial			12,526		Commercial	6,319		859
Total loans charged off	Total loans charged off			27,764		Total loans charged off	8,138		4,251
Recoveries of loans previously charged off:	Recoveries of loans previously charged off:					Recoveries of loans previously charged off:
Credit card	Credit card			517		Credit card	274		290
Other consumer	Other consumer			719		Other consumer	387		304
Real estate	Real estate			551		Real estate	426		403
Commercial	Commercial			2,771		Commercial	557		320
Total recoveries	Total recoveries			4,558		Total recoveries	1,644		1,317
Net loans charged off	Net loans charged off			23,206		Net loans charged off	6,494		2,934
Provision for credit losses	Provision for credit losses			29,613		Provision for credit losses	(19,914)		—
Balance, March 31,						Balance, March 31,	$	178,924	$	235,116

Loans charged off:						Loans charged off:
Credit card						Credit card			2,622
Other consumer						Other consumer			1,351
Real estate						Real estate			9,004
Commercial						Commercial			9,754
Total loans charged off						Total loans charged off			22,731
Recoveries of loans previously charged off:						Recoveries of loans previously charged off:
Credit card						Credit card			758
Other consumer						Other consumer			1,100
Real estate						Real estate			4,507
Commercial						Commercial			4,340
Total recoveries						Total recoveries			10,705
Net loans charged off						Net loans charged off			12,026
Provision for credit losses						Provision for credit losses			(31,209)
Acquisition adjustment for PCD loans						Acquisition adjustment for PCD loans			13,451
Balance, end of year	Balance, end of year			$	238,050	Balance, end of year			$	205,332

Provision for Credit Losses

The amount of provision added to or released from the allowance during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and for the year ended December 31, ~~2020,~~2021, was based on management’s judgment, with consideration given to the composition of the portfolio, historical loan loss experience, assessment of current economic forecasts and conditions, past due and non-performing loans and net loss experience. It is management’s practice to review the allowance on a monthly basis, and after considering the factors previously noted, to determine the level of provision made to the allowance.

Allowance for Credit Losses Allocation

As of ~~June 30, 2021,~~March 31, 2022, the allowance for credit losses reflected a decrease of approximately ~~$10.8~~$26.4 million from December 31, ~~2020~~2021 while total loans ~~decreased $1.5 billion~~were relatively flat with a slight increase of $16.1 million over the same ~~six~~three month period. The allocation in each category within the allowance generally reflects the overall changes in the loan portfolio mix. ~~During the first quarter of 2020, we recorded an additional allowance for credit losses for loans of approximately $151.4 million due to the adoption of CECL.~~

The significant impact to the allowance for credit losses at the date of CECL adoption was driven by the substantial amount of loans acquired held by the Company. We had approximately one third of total loans categorized as acquired at the adoption date with very little reserve allocated to them due to the previous incurred loss impairment methodology. As such, the amount of the CECL adoption impact was greater on the Company when compared to a non-acquisitive bank.

The decrease in the allowance for credit losses during the first ~~six~~three months of ~~2021~~2022 was predominately related to ~~economic recovery from~~improved credit quality metrics and improved macroeconomic factors, coupled with the ~~effects~~planned exit of several large oil and gas relationships during the COVID-19 pandemic and the decline in our loan portfolio. While the economic conditions appear to be improving, certain industries continue to be more adversely impacted than others by this pandemic, such as the restaurant, retail and hotel industries, andquarter. Additionally, there ~~remains uncertainty regarding how~~was a reduction of pandemic-era qualitative factors that were established based on unidentifiable risks with borrowers in ~~these industries will recover. Our~~at-risk industries. We considered our allowance for credit losses at ~~June 30, 2021 was considered~~March 31, 2022 appropriate given the considerable amount of uncertainty as to the structure and timing of potential economic recovery, the impact of new COVID-19 variants, future of government assistance related to COVID-19 recovery efforts and other related factors.

The following table sets forth the sum of the amounts of the allowance for credit losses attributable to individual loans within each category, or loan categories in general. The table also reflects the percentage of loans in each category to the total loan portfolio for each of the periods indicated. The allowance for credit losses by loan category is determined by i) our estimated reserve factors by category including applicable qualitative adjustments and ii) any specific allowance allocations that are identified on individually evaluated loans. The amounts shown are not necessarily indicative of the actual future losses that may occur within individual categories.

Table ~~11:~~10: Allocation of Allowance for Credit Losses


		June 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Allowance Amount		% of loans (1)		Allowance Amount		% of loans (1)		(Dollars in thousands)	Allowance Amount		% of loans (1)		Allowance Amount		% of loans (1)
Credit cards	Credit cards	$	5,442	1.7	%	$	7,472	1.4	%	Credit cards	$	2,894	1.6	%	$	3,987	1.6	%
Other consumer	Other consumer	1,160		1.6	%	4,100		1.6	%	Other consumer	3,397		1.5	%	2,676		1.4	%
Real estate	Real estate	188,388		73.5	%	182,868		71.5	%	Real estate	161,389		76.7	%	179,270		76.3	%
Commercial	Commercial	29,793		19.9	%	42,093		21.3	%	Commercial	9,177		18.0	%	17,458		18.0	%
Other	Other	2,456		3.4	%	1,517		4.2	%	Other	2,067		2.2	%	1,941		2.7	%
Total	Total	$	227,239	100.0	%	$	238,050	100.0	%	Total	$	178,924	100.0	%	$	205,332	100.0	%

(1)Percentage of loans in each category to total loans.

DEPOSITS

Deposits are our primary source of funding for earning assets and are primarily developed through our network of approximately ~~198~~197 financial centers as of ~~June 30, 2021.~~March 31, 2022. We offer a variety of products designed to attract and retain customers with a continuing focus on developing core deposits. Our core deposits consist of all deposits excluding time deposits of ~~$100,000~~$250,000 or more and brokered deposits. As of ~~June 30, 2021,~~March 31, 2022, core deposits comprised ~~86.4%~~92.6% of our total deposits.

We continually monitor the funding requirements along with competitive interest rates in the markets we serve. Because of our community banking philosophy, our executives in the local markets, with oversight by the Chief Deposit Officer, Asset Liability Committee and the Bank’s Treasury Department, establish the interest rates offered on both core and non-core deposits. This approach ensures that the interest rates being paid are competitively priced for each particular deposit product and structured to meet the funding requirements. We believe we are paying a competitive rate when compared with pricing in those markets.

We manage our interest expense through deposit pricing. We believe that additional funds can be attracted and deposit growth can be accelerated through deposit pricing if we experience increased loan demand or other liquidity needs. We can also utilize brokered deposits as an additional source of funding to meet liquidity needs. We are continually monitoring and looking for opportunities to fairly reprice our deposits while remaining competitive in this current challenging rate environment.

Our total deposits as of ~~June 30, 2021,~~March 31, 2022, were ~~$18.30~~$19.39 billion, an slight increase of ~~$1.32 billion~~$25.9 million from December 31, ~~2020, primarily driven by the government economic stimulus programs and changes in customer spending resulting from the COVID-19 pandemic.~~2021. Non-interest bearing transaction accounts, interest bearing transaction accounts and savings accounts totaled ~~$15.46~~$17.33 billion at ~~June 30, 2021,~~March 31, 2022, compared to ~~$14.15~~$16.91 billion at December 31, ~~2020,~~2021, an increase of ~~$1.31 billion.~~$415.7 million. Total time deposits ~~increased $8.7~~decreased $389.8 million to ~~$2.84~~$2.06 billion at ~~June 30, 2021,~~March 31, 2022, from ~~$2.83~~$2.45 billion at December 31, ~~2020.~~2021. The decrease in time deposits is attributable to maturing time deposits, coupled with a continued effort to improve our mix of deposits into lower costs funds. We had ~~$388.5~~$890.9 million and ~~$512.3~~$466.0 million of brokered deposits at ~~June 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~2021, respectively. ~~Both consumer and commercial deposit balances have grown since the COVID-19 related economic stimulus legislation, including legislation that established the PPP program, was implemented in mid-2020.~~ We are managing our balance sheet and our net interest margin by continuing to eliminate several high-cost deposits related to public funds and brokered ~~deposits.~~deposits as well as hone our product offerings to give customers flexibility of choice while maintaining the ability to adjust interest rates timely in the current rate environment.

OTHER BORROWINGS AND SUBORDINATED NOTES AND DEBENTURES

Our total debt was $1.72 billion at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. The outstanding balance for ~~June 30, 2021~~March 31, 2022 includes ~~$1.3~~$1.31 billion in FHLB long-term advances; $330.0 million in subordinated notes; ~~$53.1~~$54.2 million of trust preferred securities and unamortized debt issuance costs; and ~~$32.6~~$31.4 million of other long-term debt.

The FHLB long-term advances outstanding at the end of the ~~second~~first quarter ~~2021~~2022 are primarily FOTO advances which are a low cost, fixed-rate source of funding in return for granting to FHLB the flexibility to choose a termination date earlier than the maturity date. Our FOTO advances outstanding at ~~June 30, 2021~~March 31, 2022 had original maturity dates of 10 years to 15 years with lockout periods that have expired. We expect the FHLB to not exercise the options to terminate the FOTO advances prior to their stated maturity dates due to the current low interest rate environment. We continually analyze the possibility of the FHLB exercising the options along with the market expected rate outcome. As of ~~June 30, 2021,~~March 31, 2022, there were no FHLB short-term advances outstanding.

In March 2018, we issued $330 million in aggregate principal amount of 5.00% Fixed-to-Floating Rate Subordinated Notes (“Notes”) at a public offering price equal to 100% of the aggregate principal amount of the Notes. The Company incurred $3.6 million in debt issuance costs related to the offering. The Notes will mature on April 1, 2028 and are subordinated in right of payment to the payment of our other existing and future senior indebtedness, including all our general creditors. The Notes are obligations of the Company only and are not obligations of, and are not guaranteed by, any of its subsidiaries.

CAPITAL

Overview

At ~~June 30, 2021,~~March 31, 2022, total capital was ~~$3.04~~$2.96 billion. Capital represents shareholder ownership in the Company – the book value of assets in excess of liabilities. At ~~June 30, 2021,~~March 31, 2022, our common equity to asset ratio was ~~12.97%~~12.10% compared to ~~13.31%~~13.14% at year-end ~~2020.~~2021.

Capital Stock

On February 27, 2009, at a special meeting, our shareholders approved an amendment to the Articles of Incorporation to establish 40,040,000 authorized shares of preferred stock, $0.01 par value. ~~The~~As of March 31, 2022, the aggregate liquidation preference of all shares of preferred stock cannot exceed $80,000,000.

On October 29, 2019, we filed Amended and Restated Articles of Incorporation (“October Amended Articles”) with the Arkansas Secretary of State. The October Amended Articles classified and designated Series D Preferred Stock, Par Value $0.01 Per Share, out of our authorized preferred stock. On November 30, 2021, the Company redeemed all of the Series D Preferred Stock, including accrued and unpaid dividends.

On April 27, 2022, shareholders of the Company approved an increase in the number of authorized shares of its Class A common stock from 175,000,000 to 350,000,000.

Stock Repurchase Program

Effective July 23, 2021, our Board of Directors approved an amendment to the Company’s ~~current~~ stock repurchase program originally approved in October 2019 (“2019 Program”) that ~~increases~~increased the amount of our common stock that ~~may~~could be repurchased under the 2019 Program from a maximum of $180 million to a maximum of $276.5 million and ~~extends~~extended the term of the 2019 Program from October 31, 2021, to October 31, 2022 (unless terminated sooner).

During the three month period ended March 31, 2022, we repurchased 513,725 shares at an average price per share of $31.25 under the 2019 Program. During the three month period ended March 31, 2021, 130,916 shares at an average price per share of $23.53 were repurchased under the 2019 Program.

During January 2022, the Company substantially exhausted the remaining capacity under the 2019 Program. As a result, in January 2022, the Company’s Board of Directors authorized a new stock repurchase program (the “2022 Program”) under which the Company may repurchase up to $175.0 million of its Class A common stock currently issued and outstanding. The 2022 Program ~~was originally approved~~will terminate on ~~October 17, 2019 and first amended in March 2020.~~January 31, 2024 (unless terminated sooner).

Under the 2022 Program, wewhich replaced the 2019 Program, the Company may repurchase shares of ~~our~~its common stock through open market and privately negotiated transactions or otherwise. The timing, pricing, and amount of any repurchases under the 2022 Program will be determined by the Company’s management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of ~~our~~the Company’s common stock, corporate considerations, ~~our~~the Company’s working capital and investment requirements, general market and economic conditions, and legal requirements. The 2022 Program does not obligate usthe Company to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice. ~~We anticipate~~The Company anticipates funding for this 2022 Program to come from available sources of liquidity, including cash on hand and future cash flow.

~~During~~ As of March 31, 2022, the ~~six month periods ended June 30, 2021 and 2020, we~~Company had not repurchased ~~130,916~~any shares ~~at an average price per share of $23.53 and 4,922,336 shares at an average price per share of $18.96, respectively,~~ under the 2022 Program. ~~No shares were repurchased under~~Market conditions and the ~~Program during the three months ended June 30, 2021 and 2020.~~Company’s capital needs will drive decisions regarding additional, future stock repurchases.

Cash Dividends

We declared cash dividends on our common stock of ~~$0.36~~$0.19 per share for the first ~~six~~three months of ~~2021~~2022, compared to ~~$0.34~~$0.18 per share for the first ~~six~~three months of ~~2020,~~2021, an increase of ~~$0.02,~~$0.01, or 6%. The timing and amount of future dividends are at the discretion of our Board of Directors and will depend upon our consolidated earnings, financial condition, liquidity and capital requirements, the amount of cash dividends paid to us by our subsidiaries, applicable government regulations and policies and other factors considered relevant by our Board of Directors. Our Board of Directors anticipates that we will continue to pay quarterly dividends in amounts determined based on the factors discussed above. However, there can be no assurance that we will continue to pay dividends on our common stock at the current levels or at all.

Parent Company Liquidity

The primary liquidity needs of the Parent Company are the payment of dividends to shareholders, the funding of debt obligations and cash needs for acquisitions. The primary sources for meeting these liquidity needs are the current cash on hand at the parent company and the future dividends received from Simmons Bank. Payment of dividends by Simmons Bank is subject to various regulatory limitations. See the Liquidity and Market Risk Management discussions of Item 3 – Quantitative and Qualitative Disclosures About Market Risk for additional information regarding the parent company’s liquidity. The Company continually assesses its capital and liquidity needs and the best way to meet them, including, without limitation, through capital raising in the market via stock or debt offerings.

Risk Based Capital

The Company and Simmons Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Company and Simmons Bank must hold a capital conservation buffer composed of common equity Tier 1 capital above its minimum risk-based capital requirements. Failure to meet this capital conservation buffer would result in additional limits on dividends, other distributions and discretionary bonuses.

Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes that, as of ~~June 30, 2021,~~March 31, 2022, we meet all capital adequacy requirements to which we are subject. As of the most recent notification from regulatory agencies, Simmons Bank was well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company and Simmons Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution’s categories.

Our risk-based capital ratios at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 are presented in Table 1211 below:

Table ~~12:~~11: Risk-Based Capital


		June 30,			December 31,				March 31,			December 31,
(Dollars in thousands)	(Dollars in thousands)	2021			2020			(Dollars in thousands)	2022			2021
Tier 1 capital:	Tier 1 capital:							Tier 1 capital:
Stockholders’ equity	Stockholders’ equity	$	3,039,366		$	2,976,656		Stockholders’ equity	$	2,961,607		$	3,248,841
CECL transition provision	CECL transition provision	128,933			131,430			CECL transition provision	92,619			114,458
Goodwill and other intangible assets	Goodwill and other intangible assets	(1,156,203)			(1,163,797)			Goodwill and other intangible assets	(1,224,691)			(1,226,686)
Unrealized loss (gain) on available-for-sale securities, net of income taxes	Unrealized loss (gain) on available-for-sale securities, net of income taxes	(12,073)			(59,726)			Unrealized loss (gain) on available-for-sale securities, net of income taxes	326,961			10,545
Total Tier 1 capital	Total Tier 1 capital	2,000,023			1,884,563			Total Tier 1 capital	2,156,496			2,147,158
Tier 2 capital:	Tier 2 capital:							Tier 2 capital:
Trust preferred securities and subordinated debt	Trust preferred securities and subordinated debt	383,143			382,874			Trust preferred securities and subordinated debt	384,242			384,131
Qualifying allowance for credit losses and reserve for unfunded commitments	Qualifying allowance for credit losses and reserve for unfunded commitments	79,138			89,546			Qualifying allowance for credit losses and reserve for unfunded commitments	78,057			71,853
Total Tier 2 capital	Total Tier 2 capital	462,281			472,420			Total Tier 2 capital	462,299			455,984
Total risk-based capital	Total risk-based capital	$	2,462,304		$	2,356,983		Total risk-based capital	$	2,618,795		$	2,603,142

Risk weighted assets	Risk weighted assets	$	14,076,975		$	14,048,608		Risk weighted assets	$	15,953,622		$	15,538,967

Assets for leverage ratio	Assets for leverage ratio	$	22,244,118		$	20,765,127		Assets for leverage ratio	$	23,966,206		$	23,647,901

Ratios at end of period:	Ratios at end of period:							Ratios at end of period:
Common equity Tier 1 ratio (CET1)	Common equity Tier 1 ratio (CET1)	14.20		%	13.41		%	Common equity Tier 1 ratio (CET1)	13.52		%	13.82		%
Tier 1 leverage ratio	Tier 1 leverage ratio	8.99		%	9.08		%	Tier 1 leverage ratio	9.00		%	9.08		%
Tier 1 leverage ratio, excluding average PPP loans (non-GAAP)(1)	Tier 1 leverage ratio, excluding average PPP loans (non-GAAP)(1)	9.29		%	9.50		%	Tier 1 leverage ratio, excluding average PPP loans (non-GAAP)(1)	9.03		%	9.15		%
Tier 1 risk-based capital ratio	Tier 1 risk-based capital ratio	14.21		%	13.41		%	Tier 1 risk-based capital ratio	13.52		%	13.82		%
Total risk-based capital ratio	Total risk-based capital ratio	17.49		%	16.78		%	Total risk-based capital ratio	16.42		%	16.75		%
Minimum guidelines:	Minimum guidelines:							Minimum guidelines:
Common equity Tier 1 ratio (CET1)	Common equity Tier 1 ratio (CET1)	4.50		%	4.50		%	Common equity Tier 1 ratio (CET1)	4.50		%	4.50		%
Tier 1 leverage ratio	Tier 1 leverage ratio	4.00		%	4.00		%	Tier 1 leverage ratio	4.00		%	4.00		%
Tier 1 risk-based capital ratio	Tier 1 risk-based capital ratio	6.00		%	6.00		%	Tier 1 risk-based capital ratio	6.00		%	6.00		%
Total risk-based capital ratio	Total risk-based capital ratio	8.00		%	8.00		%	Total risk-based capital ratio	8.00		%	8.00		%

(1)PPP loans are 100% federally guaranteed and have a zero percent risk-weight for regulatory capital ratios. Tier 1 leverage ratio, excluding average PPP loans is a non-GAAP measurement.

Regulatory Capital Changes

In December 2018, the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation (“FDIC”) (collectively, the “agencies”) issued a final rule revising regulatory capital rules in anticipation of the adoption of ASU 2016-13 that provided an option to phase in over a three year period on a straight line basis the day-one impact of the adoption on earnings and Tier 1 capital (the “CECL Transition Provision”).

In July 2013, the Company’s primary federal regulator, the Federal Reserve, published final rules (the “Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banks. The rules implement the Basel Committee’s December 2010 framework known as “Basel III” for strengthening international capital standards. The Basel III Capital Rules introduced substantial revisions to the risk-based capital requirements applicable to bank holding companies and depository institutions.

The Basel III Capital Rules define the components of capital and address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The rules also address risk weights and other issues affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing risk-weighting approach with a more risk-sensitive approach.

The Basel III Capital Rules ~~expanded the~~established risk-weighting ~~categories from four Basel I-derived categories (0%, 20%, 50% and 100%) to a much larger and more risk-sensitive number of~~ categories depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity ~~exposures, and resulting in higher risk weights for a variety of asset categories, including many residential mortgages and certain commercial real estate.~~exposures.

The final rules included a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5% and a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets. The rules also raised the minimum ratio of Tier 1 capital to risk-weighted assets ~~from 4.0%~~ to 6.0% and require a minimum leverage ratio of 4.0%. ~~The Basel III Capital Rules became effective for the Company and its subsidiary bank on January 1, 2015, with full compliance with all of the final rule’s requirements on January 1, 2019.~~

Prior to December 31, 2017, Tier 1 capital included common equity Tier 1 capital and certain additional Tier 1 items as provided under the Basel III Capital Rules. The Tier 1 capital for the Company consisted of common equity Tier 1 capital and trust preferred securities. The Basel III Capital Rules include certain provisions that require trust preferred securities to be phased out of qualifying Tier 1 capital when assets surpass $15 billion. As of December 31, 2017, the Company exceeded $15 billion in total assets and the grandfather provisions applicable to its trust preferred securities no longer apply and trust preferred securities are no longer included as Tier 1 capital. Trust preferred securities and qualifying subordinated debt of ~~$383.1~~$384.2 million is included as Tier 2 and total capital as of ~~June 30, 2021.~~March 31, 2022.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

See the Recently Issued Accounting Standards section in Note 1, Preparation of Interim Financial Statements, in the accompanying Condensed Notes to Consolidated Financial Statements included elsewhere in this report for details of recently issued accounting pronouncements and their expected impact on the Company’s ongoing financial position and results of operation.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this quarterly report may not be based on historical facts and should be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by reference to a future period(s) or by the use of forward-looking terminology, such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,” “estimate,” “expect,” “foresee,” “intend,” “indicate,” “target,” “plan,” positions,” “prospects,” “project,” “predict,” or “potential,” by future conditional verbs such as “could,” “may,” “might,” “should,” “will,” or “would,” or by variations of such words or by similar expressions. These forward-looking statements include, without limitation, those relating to the Company’s future growth, ~~pending~~completed acquisitions, revenue, expenses, assets, asset quality, profitability, earnings, accretion, customer service, lending capacity and lending activity, investment in digital channels, critical accounting policies, net interest margin, non-interest revenue, market conditions related to and the impact of the Company’s stock repurchase program, consumer behavior and liquidity, the adequacy of the allowance for credit losses, the impacts of the COVID-19 pandemic and the ability of the Company to manage the impacts of the COVID-19 pandemic, ~~the impacts of the Company’s and its customers’ participation in the Paycheck Protection Program, the expected performance of COVID-19 loan modifications,~~ income tax deductions, credit quality, the level of credit losses from lending commitments, net interest revenue, interest rate sensitivity, loan loss experience, liquidity, the Company’s expectations regarding actions by the FHLB including with respect to the FHLB’s option to terminate FOTO advances, capital resources, market risk, plans for investments in securities, effect of pending and future litigation, including the results of the overdraft fee litigation against the Company that is described in this quarterly report, acquisition strategy and activity, legal and regulatory limitations and compliance and competition.

These forward-looking statements involve risks and uncertainties, and may not be realized due to a variety of factors, including, without limitation: changes in the Company’s operating, acquisition, or expansion strategy; the effects of future economic conditions (including unemployment levels and slowdowns in economic growth), governmental monetary and fiscal policies, as well as legislative and regulatory changes, including in response to the COVID-19 pandemic; the impacts of the COVID-19 pandemic on the Company’s operations and performance; the ultimate effect of measures the Company takes or has taken in response to the COVID-19 pandemic; the severity and duration of the COVID-19 pandemic, including the effectiveness of vaccination efforts and developments with respect to COVID-19 variants; the pace of recovery when the COVID-19 pandemic subsides and the heightened impact it has on many of the risks described herein; changes in real estate values; changes in interest rates; inflation; changes in the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest sensitive assets and liabilities; changes in the securities markets generally or the price of the Company’s common stock specifically; developments in information technology affecting the financial industry; cyber threats, attacks or events; reliance on third parties for the provision of key services; ~~further~~ changes in accounting principles, ~~relating~~including changes related to loan loss recognition; uncertainty and disruption associated with the discontinued use of the London Inter-Bank Offered Rate; the costs of evaluating possible acquisitions and the risks inherent in integrating acquisitions; possible adverse rulings, judgements, settlements, and other outcomes of pending or future ~~litigation,~~litigation; market disruptions including ~~litigation~~pandemics or ~~actions arising from~~significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises, war and other military conflicts (including the ~~Company’s participation in~~ongoing military conflict between Russia and ~~administration~~Ukraine) or other major events, or the prospect of ~~programs related to the COVID-19 pandemic (including, among others, the PPP);~~these events; the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet; the failure of assumptions underlying the establishment of reserves for possible credit losses, fair value for loans, other real estate owned, and other cautionary statements set forth elsewhere in this report. Please also refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this quarterly report and the Company’s annual report on Form 10-K for the year ended December 31, ~~2020,~~2021, and related disclosures in other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. Many of these factors are beyond our ability to predict or control, and actual results could differ materially from those in the forward-looking statements due to these factors and others. In addition, as a result of these and other factors, our past financial performance should not be relied upon as an indication of future performance.

We believe the assumptions and expectations that underlie or are reflected in our forward-looking statements are reasonable, based on information available to us on the date hereof. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations or whether our future performance will differ materially from the performance reflected in or implied by our forward-looking statements, and you should not place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date hereof, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and all written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this section.

GAAP RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The tables below present computations of core earnings (net income excluding non-core items {gain on sale of branches, merger related ~~costs, early retirement program~~ costs, and the net branch right sizing costs}) (non-GAAP) and core diluted earnings per share (non-GAAP) as well as a computation of tangible book value per share (non-GAAP), tangible common equity to tangible assets (non-GAAP), the core net interest margin (non-GAAP), core other income (non-GAAP) and core non-interest expense (non-GAAP). Non-core items are included in financial results presented in accordance with generally accepted accounting principles (US GAAP). The tables below also present computations of certain figures that are exclusive of the impact of PPP loans: ~~the ratios of common equity to total assets and tangible common equity to tangible assets, each adjusted for PPP loans (each non-GAAP),~~ Tier 1 leverage ratio excluding average PPP loans (non-GAAP), and net interest income and net interest margin, each adjusted for PPP loans ~~and additional liquidity~~ (each non-GAAP).

We believe the exclusion of these non-core items in expressing earnings and certain other financial measures, including “core earnings,” provides a meaningful basis for period-to-period and company-to-company comparisons, which management believes will assist investors and analysts in analyzing the core financial measures of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of the Company’s business because management does not consider these non-core items to be relevant to ongoing financial performance. Management and the Board of Directors utilize “core earnings” (non-GAAP) for the following purposes:

• Preparation of the Company’s operating budgets

• Monthly financial performance reporting

• Monthly “flash” reporting of consolidated results (management only)

• Investor presentations of Company performance

We believe the presentation of “core earnings” on a diluted per share basis, “core diluted earnings per share” (non-GAAP) and core net interest margin (non-GAAP), provides a meaningful basis for period-to-period and company-to-company comparisons, which management believes will assist investors and analysts in analyzing the core financial measures of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of the Company’s business, because management does not consider these non-core items to be relevant to ongoing financial performance on a per share basis. Management and the Board of Directors utilize “core diluted earnings per share” (non-GAAP) for the following purposes:

• Calculation of annual performance-based incentives for certain executives

• Calculation of long-term performance-based incentives for certain executives

• Investor presentations of Company performance

We have ~~$1.179~~$1.250 billion and ~~$1.186~~$1.252 billion total goodwill and other intangible assets for the periods ended ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Because our acquisition strategy has resulted in a high level of intangible assets, management believes useful calculations include tangible book value per share (non-GAAP) and tangible common equity to tangible assets (non-GAAP).

We believe the exclusion of PPP loans or their impact, as applicable, in expressing earnings and certain other financial measures provides a meaningful basis for period-to-period and company-to-company comparisons because PPP loans are 100% federally guaranteed and have very low interest rates. The Company’s non-GAAP financial measures that exclude PPP loans or their impact include the ratios of ~~“common equity to total assets” and “tangible common equity to tangible assets,” each adjusted for PPP loans (each non-GAAP),~~ “Tier 1 leverage ratio excluding average PPP loans” (non-GAAP), and “net interest margin,” adjusted for PPP loans ~~and additional liquidity~~ (non-GAAP). ~~Additional liquidity is defined as average interest-bearing balances due from banks greater than normal liquidity levels.~~ Management believes these non-GAAP presentations will assist investors and analysts in analyzing the core financial measures of the Company, including the performance of the Company’s loan portfolio and the Company’s regulatory capital position, and predicting future performance. Management and the Board of Directors utilize these non-GAAP financial measures for financial performance reporting and investor presentations of Company performance.

We believe that presenting these non-GAAP financial measures will permit investors and analysts to assess the performance of the Company on the same basis as that is applied by management and the Board of Directors.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. To mitigate these limitations, we have procedures in place to identify and approve each item that qualifies as non-core to ensure that the Company’s “core” results are properly reflected for period-to-period comparisons. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes non-core items does not represent the amount that effectively accrues directly to stockholders (i.e., non-core items are included in earnings and stockholders’ equity). Additionally, similarly titled non-GAAP financial measures used by other companies may not be computed in the same or similar fashion.

See Table 1312 below for the reconciliation of non-GAAP financial measures, which exclude non-core items for the periods presented.

Table ~~13:~~12: Reconciliation of Core Earnings (non-GAAP)


											Three Months Ended
		Three Months Ended June 30,				Six Months Ended June 30,					March 31,		December 31,		March 31,
(In thousands, except per share data)	(In thousands, except per share data)	2021		2020		2021		2020		(In thousands, except per share data)	2022		2021		2021
Net income available to common stockholders	Net income available to common stockholders	$	74,911	$	58,789	$	142,318	$	136,012	Net income available to common stockholders	$	65,095	$	48,230	$	67,407
Non-core items:	Non-core items:									Non-core items:
Gain on sale of branches	Gain on sale of branches	(445)		(2,204)		(5,922)		(8,093)		Gain on sale of branches	—		—		(5,300)
Merger related costs	Merger related costs	686		1,830		919		2,898		Merger related costs	1,886		13,591		233
Early retirement program		—		493		—		493
Branch right sizing		468		1,721		1,093		1,959
Branch right sizing (net)										Branch right sizing (net)	909		1,648		448
Tax effect (1)	Tax effect (1)	(185)		(482)		1,022		716		Tax effect (1)	(731)		(3,983)		1,207
Net non-core items	Net non-core items	524		1,358		(2,888)		(2,027)		Net non-core items	2,064		11,256		(3,412)
Core earnings (non-GAAP)	Core earnings (non-GAAP)	$	75,435	$	60,147	$	139,430	$	133,985	Core earnings (non-GAAP)	$	67,159	$	59,486	$	63,995

Diluted earnings per share(2)	Diluted earnings per share(2)	$	0.69	$	0.54	$	1.31	$	1.22	Diluted earnings per share(2)	$	0.58	$	0.42	$	0.62
Non-core items:	Non-core items:									Non-core items:
Gain on sale of branches	Gain on sale of branches	(0.01)		(0.02)		(0.06)		(0.07)		Gain on sale of branches	—		—		(0.05)
Merger related costs	Merger related costs	0.01		0.02		0.01		0.03		Merger related costs	0.01		0.12		—
Branch right sizing		—		0.02		0.01		0.02
Branch right sizing (net)										Branch right sizing (net)	0.01		0.01		0.01
Tax effect (1)	Tax effect (1)	—		(0.01)		0.01		0.01		Tax effect (1)	(0.01)		(0.03)		0.01
Net non-core items	Net non-core items	—		0.01		(0.03)		(0.01)		Net non-core items	0.01		0.10		(0.03)
Core diluted earnings per share (non-GAAP)	Core diluted earnings per share (non-GAAP)	$	0.69	$	0.55	$	1.28	$	1.21	Core diluted earnings per share (non-GAAP)	$	0.59	$	0.52	$	0.59

(1)Effective tax rate of 26.135%.

(2)See Note 17, Earnings Per Share, for number of shares used to determine EPS.

See Table 1413 below for the reconciliation of core other income and core non-interest expense for the periods presented.

Table ~~14:~~13: Reconciliation of Core Other Income and Core Non-Interest Expense (non-GAAP)


											Three Months Ended
		Three Months Ended June 30,				Six Months Ended June 30,					March 31,		December 31,		March 31,
(In thousands)	(In thousands)	2021		2020		2021		2020		(In thousands)	2022		2021		2021
Other income	Other income	$	8,110	$	9,809	$	18,370	$	22,610	Other income	$	7,266	$	9,965	$	10,500
Gain on sale of branches	Gain on sale of branches	(445)		(2,204)		(5,922)		(8,093)		Gain on sale of branches	—		—		(5,300)
Branch right sizing										Branch right sizing	—		(2)		(177)
Core other income (non-GAAP)	Core other income (non-GAAP)	$	7,665	$	7,605	$	12,448	$	14,517	Core other income (non-GAAP)	$	7,266	$	9,963	$	5,023

Non-interest expense	Non-interest expense	$	115,466	$	116,177	$	229,259	$	243,641	Non-interest expense	$	128,417	$	141,597	$	113,002
Non-core items:	Non-core items:									Non-core items:
Merger related costs	Merger related costs	(686)		(1,830)		(919)		(2,898)		Merger related costs	(1,886)		(13,591)		(233)
Early retirement program		—		(493)		—		(493)
Branch right sizing	Branch right sizing	(468)		(1,721)		(1,093)		(1,959)		Branch right sizing	(909)		(1,650)		(625)
Total non-core items	Total non-core items	(1,154)		(4,044)		(2,012)		(5,350)		Total non-core items	(2,795)		(15,241)		(858)
Core non-interest expense (non-GAAP)	Core non-interest expense (non-GAAP)	$	114,312	$	112,133	$	227,247	$	238,291	Core non-interest expense (non-GAAP)	$	125,622	$	126,356	$	112,144

See Table 1514 below for the reconciliation of tangible book value per common share.

Table ~~15:~~14: Reconciliation of Tangible Book Value per Common Share (non-GAAP)


		June 30,		December 31,			March 31,		December 31,
(In thousands, except per share data)	(In thousands, except per share data)	2021		2020		(In thousands, except per share data)	2022		2021
Total stockholders’ equity	Total stockholders’ equity	$	3,039,366	$	2,976,656	Total stockholders’ equity	$	2,961,607	$	3,248,841
Preferred stock	Preferred stock	(767)		(767)		Preferred stock	—		—
Total common stockholders’ equity	Total common stockholders’ equity	3,038,599		2,975,889		Total common stockholders’ equity	2,961,607		3,248,841
Intangible assets:	Intangible assets:					Intangible assets:
Goodwill	Goodwill	(1,075,305)		(1,075,305)		Goodwill	(1,147,007)		(1,146,007)
Other intangible assets	Other intangible assets	(103,759)		(111,110)		Other intangible assets	(102,748)		(106,235)
Total intangibles	Total intangibles	(1,179,064)		(1,186,415)		Total intangibles	(1,249,755)		(1,252,242)
Tangible common stockholders’ equity	Tangible common stockholders’ equity	$	1,859,535	$	1,789,474	Tangible common stockholders’ equity	$	1,711,852	$	1,996,599
Shares of common stock outstanding	Shares of common stock outstanding	108,386,669		108,077,662		Shares of common stock outstanding	112,505,555		112,715,444

Book value per common share	Book value per common share	$	28.03	$	27.53	Book value per common share	$	26.32	$	28.82

Tangible book value per common share (non-GAAP)	Tangible book value per common share (non-GAAP)	$	17.16	$	16.56	Tangible book value per common share (non-GAAP)	$	15.22	$	17.71

See Table 1615 below for the calculation of tangible common equity and the reconciliation of tangible common equity to tangible assets.

Table ~~16:~~15: Reconciliation of Tangible Common Equity and the Ratio of Tangible Common Equity to Tangible Assets (non-GAAP)


		June 30,			December 31,				March 31,			December 31,
(Dollars in thousands)	(Dollars in thousands)	2021			2020			(Dollars in thousands)	2022			2021
Total common stockholders’ equity	Total common stockholders’ equity	$	3,038,599		$	2,975,889		Total common stockholders’ equity	$	2,961,607		$	3,248,841
Intangible assets:	Intangible assets:							Intangible assets:
Goodwill	Goodwill	(1,075,305)			(1,075,305)			Goodwill	(1,147,007)			(1,146,007)
Other intangible assets	Other intangible assets	(103,759)			(111,110)			Other intangible assets	(102,748)			(106,235)
Total intangibles	Total intangibles	(1,179,064)			(1,186,415)			Total intangibles	(1,249,755)			(1,252,242)
Tangible common stockholders’ equity	Tangible common stockholders’ equity	$	1,859,535		$	1,789,474		Tangible common stockholders’ equity	$	1,711,852		$	1,996,599

Total assets	Total assets	$	23,423,159		$	22,359,752		Total assets	$	24,482,268		$	24,724,759
Intangible assets:	Intangible assets:							Intangible assets:
Goodwill	Goodwill	(1,075,305)			(1,075,305)			Goodwill	(1,147,007)			(1,146,007)
Other intangible assets	Other intangible assets	(103,759)			(111,110)			Other intangible assets	(102,748)			(106,235)
Total intangibles	Total intangibles	(1,179,064)			(1,186,415)			Total intangibles	(1,249,755)			(1,252,242)
Tangible assets	Tangible assets	$	22,244,095		$	21,173,337		Tangible assets	$	23,232,513		$	23,472,517

Paycheck Protection Program (“PPP”) loans		(441,353)			(904,673)
Total assets excluding PPP loans		$	22,981,806		$	21,455,079
Tangible assets excluding PPP loans		$	21,802,742		$	20,268,664

Ratio of common equity to assets	Ratio of common equity to assets	12.97		%	13.31		%	Ratio of common equity to assets	12.10		%	13.14		%
Ratio of tangible common equity to tangible assets (non-GAAP)	Ratio of tangible common equity to tangible assets (non-GAAP)	8.36		%	8.45		%	Ratio of tangible common equity to tangible assets (non-GAAP)	7.37		%	8.51		%
Ratio of common equity to assets excluding PPP loans (non-GAAP)		13.22		%	13.87		%
Ratio of tangible common equity to tangible assets excluding PPP loans (non-GAAP)		8.53		%	8.83		%

See Table 1716 below for the calculation of Tier 1 leverage ratio excluding average PPP loans for the period presented.

Table ~~17:~~16: Reconciliation of Tier 1 Leverage Ratio Excluding Average PPP Loans (non-GAAP)

~~(Dollars in thousands)~~


(Dollars in thousands)	Three Months Ended March 31, 2022			Three Months Ended March 31, 2021
Total Tier 1 capital	$	2,156,496		$	1,939,868

Adjusted average assets for leverage ratio	$	23,966,206		$	21,668,406
Average PPP loans	(89,757)			$	(891,070)
Adjusted average assets excluding average PPP loans	$	23,876,449		$	20,777,336

Tier 1 leverage ratio	9.00		%	8.95		%
Tier 1 leverage ratio excluding average PPP loans (non-GAAP)	9.03		%	9.34		%

Three Months Ended
June 30, 2021

~~Total Tier 1 capital~~

~~2,000,023~~

~~Adjusted average assets for leverage ratio~~

~~22,244,118~~

~~Average PPP loans~~

~~(707,296)~~

~~Adjusted average assets excluding average PPP loans~~

~~21,536,822~~

~~Tier 1 leverage ratio~~

~~8.99~~

~~Tier 1 leverage ratio excluding average PPP loans (non-GAAP)~~

~~9.29~~

See Table 1817 below for the calculation of core net interest margin and net interest margin adjusted for PPP loans ~~and additional liquidity~~ for the periods presented.

Table ~~18:~~17: Reconciliation of Core Net Interest Margin (non-GAAP)


															Three Months Ended
		Three Months Ended June 30,						Six Months Ended June 30,							March 31,			December 31,			March 31,
(Dollars in thousands)	(Dollars in thousands)	2021			2020			2021			2020			(Dollars in thousands)	2022			2021			2021
Net interest income	Net interest income	$	146,533		$	163,681		$	293,214		$	331,164		Net interest income	$	145,606		$	153,081		$	146,681
FTE adjustment	FTE adjustment	4,548			2,350			8,711			4,655			FTE adjustment	5,602			5,579			4,163
Fully tax equivalent net interest income	Fully tax equivalent net interest income	151,081			166,031			301,925			335,819			Fully tax equivalent net interest income	151,208			158,660			150,844
Total accretable yield	Total accretable yield	(5,619)			(11,723)			(12,249)			(23,560)			Total accretable yield	(3,703)			(5,758)			(6,630)
Core net interest income	Core net interest income	$	145,462		$	154,308		$	289,676		$	312,259		Core net interest income	$	147,505		$	152,902		$	144,214

PPP loan and additional liquidity (1) interest income		(9,445)			(5,623)			(21,694)
Net interest income adjusted for PPP loans and additional liquidity (1)		$	141,636		$	160,408		$	280,231
PPP loan interest income														PPP loan interest income	(2,113)			(5,107)			(11,652)
Net interest income adjusted for PPP loans														Net interest income adjusted for PPP loans	$	149,095		$	153,553		$	139,192

Average earning assets	Average earning assets	$	20,959,642		$	19,517,475		$	20,723,587		$	19,049,487		Average earning assets	$	22,185,215		$	22,029,792		$	20,484,908
Average PPP loan balance and additional liquidity (1)		(2,659,831)			(2,071,411)			3,139,749
Average earning assets adjusted for PPP loans and additional liquidity (1)		$	18,299,811		$	17,446,064		$	23,863,336
Average PPP loan balance														Average PPP loan balance	(89,757)			(172,130)			(891,070)
Average earning assets adjusted for PPP loans														Average earning assets adjusted for PPP loans	$	22,095,458		$	21,857,662		$	19,593,838

Net interest margin	Net interest margin	2.89		%	3.42		%	2.94		%	3.55		%	Net interest margin	2.76		%	2.86		%	2.99		%
Core net interest margin (non-GAAP)	Core net interest margin (non-GAAP)	2.78		%	3.18		%	2.82		%	3.30		%	Core net interest margin (non-GAAP)	2.70		%	2.75		%	2.86		%
Net interest margin adjusted for PPP loans and additional liquidity (1) (non-GAAP)		3.10		%	3.70		%	3.21		%
Net interest margin adjusted for PPP loans (non-GAAP)														Net interest margin adjusted for PPP loans (non-GAAP)	2.74		%	2.79		%	2.88		%

~~(1)Additional liquidity is estimated as the average interest bearing balances due from banks and federal funds sold greater than $750.0 million.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company has leveraged its investment in its subsidiary bank and depends upon the dividends paid to it, as the sole shareholder of the subsidiary bank, as a principal source of funds for dividends to shareholders, stock repurchases and debt service requirements. At ~~June 30, 2021,~~March 31, 2022, undivided profits of Simmons Bank were approximately ~~$462.9~~$516.9 million, of which approximately ~~$99.3~~$176.5 million was available for the payment of dividends to the Company without regulatory approval. In addition to dividends, other sources of liquidity for the Company are the sale of equity securities and the borrowing of funds.

Subsidiary Bank

Generally speaking, the Company’s subsidiary bank relies upon net inflows of cash from financing activities, supplemented by net inflows of cash from operating activities, to provide cash used in investing activities. Typical of most banking companies, significant financing activities include: deposit gathering; use of short-term borrowing facilities, such as federal funds purchased and repurchase agreements; and the issuance of long-term debt. The subsidiary bank’s primary investing activities include loan originations and purchases of investment securities, offset by loan payoffs and investment cash flows and maturities.

Liquidity represents an institution’s ability to provide funds to satisfy demands from depositors and borrowers by either converting assets into cash or accessing new or existing sources of incremental funds. A major responsibility of management is to maximize net interest income within prudent liquidity constraints. Internal corporate guidelines have been established to constantly measure liquid assets as well as relevant ratios concerning earning asset levels and purchased funds. The management and Board of Directors of the subsidiary bank monitors these same indicators and makes adjustments as needed.

Liquidity Management

The objective of our liquidity management is to access adequate sources of funding to ensure that cash flow requirements of depositors and borrowers are met in an orderly and timely manner. Sources of liquidity are managed so that reliance on any one funding source is kept to a minimum. Our liquidity sources are prioritized for both availability and time to activation.

Our liquidity is a primary consideration in determining funding needs and is an integral part of asset/liability management. Pricing of the liability side is a major component of interest margin and spread management. Adequate liquidity is a necessity in addressing this critical task. There are seven primary and secondary sources of liquidity available to the Company. The particular liquidity need and timeframe determine the use of these sources.

The first source of liquidity available to the Company is federal funds. Federal funds are available on a daily basis and are used to meet the normal fluctuations of a dynamic balance sheet. The Bank has approximately $415 million in federal funds lines of credit from upstream correspondent banks that can be accessed, when needed. In order to ensure availability of these upstream funds we test these borrowing lines at least annually. Historical monitoring of these funds has made it possible for us to project seasonal fluctuations and structure our funding requirements on a month-to-month basis.

Second, Simmons Bank has lines of credit available with the Federal Home Loan Bank. While we use portions of those lines to match off longer-term mortgage loans, we also use those lines to meet liquidity needs. Approximately ~~$3.5~~$3.6 billion of these lines of credit are currently available, if needed, for liquidity.

A third source of liquidity is that we have the ability to access large wholesale deposits from both the public and private sector to fund short-term liquidity needs.

A fourth source of liquidity is the retail deposits available through our network of financial centers throughout Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. Although this method can be a somewhat more expensive alternative to supplying liquidity, this source can be used to meet intermediate term liquidity needs.

Fifth, we use a laddered investment portfolio that ensures there is a steady source of intermediate term liquidity. These funds can be used to meet seasonal loan patterns and other intermediate term balance sheet fluctuations. Approximately ~~87.6%~~81.0% of the investment portfolio is classified as available-for-sale. We also use securities held in the securities portfolio to pledge when obtaining public funds.

Sixth, we have a network of downstream correspondent banks from which we can access debt to meet liquidity needs.

Finally, we have the ability to access funds through the Federal Reserve Bank Discount Window.

We believe the various sources available are ample liquidity for short-term, intermediate-term and long-term liquidity.

Market Risk Management

Market risk arises from changes in interest rates. We have risk management policies to monitor and limit exposure to market risk. In asset and liability management activities, policies designed to minimize structural interest rate risk are in place. The measurement of market risk associated with financial instruments is meaningful only when all related and offsetting on- and off-balance-sheet transactions are aggregated, and the resulting net positions are identified.

Interest Rate Sensitivity

Interest rate risk represents the potential impact of interest rate changes on net income and capital resulting from mismatches in repricing opportunities of assets and liabilities over a period of time. A number of tools are used to monitor and manage interest rate risk, including simulation models and interest sensitivity gap analysis. Management uses simulation models to estimate the effects of changing interest rates and various balance sheet strategies on the level of the Company’s net income and capital. As a means of limiting interest rate risk to an acceptable level, management may alter the mix of floating and fixed-rate assets and liabilities, change pricing schedules and manage investment maturities during future security purchases, or enter into derivative contracts such as interest rate swaps.

The simulation model incorporates management’s assumptions regarding the level of interest rates or balance changes for indeterminate maturity deposits for a given level of market rate changes. These assumptions have been developed through anticipated pricing behavior. Key assumptions in the simulation models include the relative timing of prepayments, cash flows and maturities. These assumptions are inherently uncertain and, as a result, the model cannot precisely estimate net interest income or precisely predict the impact of a change in interest rates on net income or capital. Actual results will differ from simulated results due to the timing, magnitude and frequency of interest rate changes and changes in market conditions and management strategies, among other factors.

As of ~~June 30, 2021,~~March 31, 2022, the model simulations projected that 100 and 200 basis point increases in interest rates would result in a positive variance in net interest income of ~~4.53%~~3.05% and ~~9.52%~~5.62%, respectively, relative to the base case over the next 12 months, while decreases in interest rates of 25 basis points would result in a negative variance in net interest income of ~~(0.67)%~~1.14% relative to the base case over the next 12 months. The likelihood of a decrease in interest rates in excess of 25 basis points as of ~~June 30, 2021,~~March 31, 2022, is considered remote given current interest rate ~~levels.~~levels and the recent rate increase by the Federal Reserve. These are good faith estimates and assume that the composition of our interest sensitive assets and liabilities existing at each period-end will remain constant over the relevant twelve month measurement period and that changes in market interest rates are instantaneous and sustained across the yield curve regardless of duration of pricing characteristics of specific assets or liabilities. Also, this analysis does not contemplate any actions that we might undertake in response to changes in market interest rates. We believe these estimates are not necessarily indicative of what actually could occur in the event of immediate interest rate increases or decreases of this magnitude. As interest-bearing assets and liabilities reprice in different time frames and proportions to market interest rate movements, various assumptions must be made based on historical relationships of these variables in reaching any conclusion. Since these correlations are based on competitive and market conditions, we anticipate that our future results will likely be different from the foregoing estimates, and such differences could be material.

The table below presents our sensitivity to net interest income at ~~June 30, 2021:~~March 31, 2022:

Table ~~19:~~18: Net Interest Income Sensitivity


Interest Rate Scenario			% Change from Base
Up 200 basis points			~~9.52%~~5.62%
Up 100 basis points			~~4.53%~~3.05%
Down 25 basis points			~~(0.67)~~(1.14)%

Item 4. Controls and Procedures

Management, under the supervision and with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, has reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer have concluded that the Company’s current disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosure. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the Company’s disclosure controls and procedures will detect or uncover every situation involving the failure of persons within the Company or its subsidiary to disclose material information required to be set forth in the Company’s periodic reports.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting during the quarter ended ~~June 30, 2021,~~March 31, 2022, which materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II: Other Information

Item 1. Legal Proceedings

The information contained in Note 13, Contingent Liabilities, of the Condensed Notes to Consolidated Financial Statements in Part I, Item 1 of this report is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes in the risk factors faced by the Company from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (“~~2020~~2021 Form 10-K”).

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Effective July 23, 2021, ~~our~~the Company’s Board of Directors approved an amendment to the ~~Company’s current stock repurchase program (“Program”)~~2019 Program that ~~increases~~increased the amount of ~~our~~the Company’s Class A common stock that may be repurchased under the 2019 Program from a maximum of $180 million to a maximum of $276.5 million and ~~extends~~extended the term of the 2019 Program from October 31, 2021, to October 31, 2022 (unless terminated sooner). The 2019 Program was originally approved on October 17, 2019 and first amended in March 2020. During January 2022, the Company substantially exhausted the remaining capacity under the 2019 Program, and as a result, the Company’s Board of Directors authorized a new stock repurchase program (the “2022 Program”), which replaced the 2019 Program and under which the Company may repurchase up to $175.0 million of its Class A common stock currently issued and outstanding. The timing, pricing, and amount of any repurchases under the 2022 Program will be determined by the Company’s management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of ~~our~~the Company’s common stock, corporate considerations, ~~our~~the Company’s working capital and investment requirements, general market and economic conditions, and legal requirements. As of March 31, 2022, the Company had not repurchased any shares under the 2022 Program. Market conditions and the Company’s capital needs will drive decisions regarding additional, future stock repurchases.

During the quarter ended ~~June 30, 2021,~~March 31, 2022, we repurchased restricted stock in connection with employee tax withholding obligations under employee compensation plans. Information concerning our purchases of common stock is as follows:

Period
Total Number of Shares Purchased (1)
Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2021 - April 30, 2021 — $ — — $ 53,463,000
May 1, 2021 - May 31, 2021 143 29.99 — $ 53,463,000
June 1, 2021 - June 30, 2021 — — — $ 53,463,000
Total 143 $ 29.99 —


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2022 - January 31, 2022	514,622	$	31.25	513,725	$	175,000,000
February 1, 2022 - February 28, 2022	—	—		—	$	175,000,000
March 1, 2022 - March 31, 2022	—	—		—	$	175,000,000
Total	514,622	$	31.25	513,725

(1)Total number of shares purchased consists of ~~143~~897 shares with an average price ~~$29.99~~$27.44 of restricted stock purchased in connection with employee tax withholding obligations under employee compensation plans, which are not purchases under any publicly announced plan.

7778

Item 6. Exhibits


Exhibit No.			Description
2.1			Agreement and Plan of Merger, dated as of June 4, 2021, by and among Simmons First National Corporation, Simmons Bank and Landmark Community Bank (incorporated by reference to Annex A to the Registration Statement on Form S-4 filed under the Securities Act of 1933 by Simmons First National Corporation on July 21, 2021 (File No. 333-258059)).
2.2			Agreement and Plan of Merger, dated as of June 4, 2021, by and among Simmons First National Corporation and Triumph Bancshares, Inc. (incorporated by reference to Annex B to the Registration Statement on Form S-4 filed under the Securities Act of 1933 by Simmons First National Corporation on July 21, 2021 (File No. 333-258059)).
2.3			Agreement and Plan of Merger, dated as of November 18, 2021, by and among Simmons First National Corporation and Spirit of Texas Bancshares, Inc. (incorporated by reference to Annex A to the Registration Statement on Form S-4 filed under the Securities Act of 1933 by Simmons First National Corporation on January 18, 2022 (File No. 333-261842)).
3.1			Amended and Restated Articles of Incorporation of Simmons First National Corporation, as amended on July 14, 2021 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-4 filed under the Securities Act of 1933 by Simmons First National Corporation on July 21, 2021 (File No. 333-258059)).
3.2			As Amended and Restated By-Laws of Simmons First National Corporation ~~as amended on October 21, 2020~~ (incorporated by reference to Exhibit 3.1 to Simmons First National Corporation’s Current Report on Form 8-K filed ~~October 22, 2020~~on February 18, 2022 (File No. 000-06253)).
4.1			Instruments defining the rights of security holders, including indentures. Simmons First National Corporation hereby agrees to furnish copies of instruments defining the rights of holders of long-term debt of the Corporation and its consolidated subsidiaries to the U.S. Securities and Exchange Commission upon request. No issuance of debt exceeds ten percent of the total assets of the Corporation and its subsidiaries on a consolidated basis.
10.1			Deferred Compensation Agreement for George A. Makris III dated March 11, 2022.*^
10.2			Form of Associate Restricted Stock Unit Award Certificate and Terms and Conditions (2022).*^
10.3			Form of Associate Performance Share Unit Award Certificate and Terms and Conditions (2022).*^
10.4			Form of Associate Cash Award Certificate and Terms and Conditions (2022).*^
10.5			Form of Director Restricted Stock Unit Award Certificate and Terms and Conditions (2022).*^
14.1			Amended and Restated Simmons First National Corporation Code of Ethics (as amended and restated on July 23, 2020) (incorporated by reference to Exhibit 14.1 to Simmons First National Corporation’s Current Report on Form 8-K filed July 28, 2020 (File No. 000-06253)).
15.1			Awareness Letter of BKD, LLP.*
31.1			Rule 13a-15(e) and 15d-15(e) Certification – George A. Makris, Jr., Chairman and Chief Executive Officer.*
31.2			Rule 13a-15(e) and 15d-15(e) Certification – James M. Brogdon, Executive Vice President, Chief Financial Officer, and Treasurer.*
31.3			Rule 13a-15(e) and 15d-15(e) Certification – David W. Garner, Executive Vice President, Executive Director of Finance and Accounting and Chief Accounting Officer.*
32.1			Certification Pursuant to 18 U.S.C. Sections 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – George A. Makris, Jr., Chairman and Chief Executive Officer.*
32.2			Certification Pursuant to 18 U.S.C. Sections 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – James M. Brogdon, Executive Vice President, Chief Financial Officer, and Treasurer.*
32.3			Certification Pursuant to 18 U.S.C. Sections 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – David W. Garner, Executive Vice President, Executive Director of Finance and Accounting and Chief Accounting Officer.*
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


Exhibit No.			Description
101.SCH			Inline XBRL Taxonomy Extension Schema.
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB			Inline XBRL Taxonomy Extension Labels Linkbase.
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase.
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

^ Management contract or a compensatory plan or arrangement.

7880

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SIMMONS FIRST NATIONAL CORPORATION

(Registrant)


Date:	~~August~~May 6, ~~2021~~2022	/s/ George A. Makris, Jr.
		George A. Makris, Jr.
		Chairman and Chief Executive Officer


Date:	~~August~~May 6, ~~2021~~2022	/s/ James M. Brogdon
		James M. Brogdon
		Executive Vice President, Chief Financial Officer and Treasurer


Date:	~~August~~May 6, ~~2021~~2022	/s/ David W. Garner
		David W. Garner
		Executive Vice President, Executive Director of Finance and
		Accounting and Chief Accounting Officer

7981



(Dollars in thousands)	Number of loans	Balance Prior to TDR		Balance at June 30,		Change in Maturity Date		Change in Rate		Financial Impact on Date of Restructure
Three and Six Months Ended June 30, 2021
Real estate:
Other commercial	1	$	784	$	778	$	0	$	778	$	0
Total real estate	1	$	784	$	778	$	0	$	778	$	0

Three and Six Months Ended June 30, 2020
Real estate:
Single-family residential	1	$	147	$	147	$	147	$	0	$	0
Total real estate	1	$	147	$	147	$	147	$	0	$	0


Six Months Ended June 30, 2020
Beginning balance, January 1, 2020 - prior to adoption of CECL	$	22,863	$	39,161	$	4,051	$	2,169	$	68,244
Impact of CECL adoption	22,733		114,314		2,232		12,098		151,377
Provision for credit loss expense	49,307		(2,138)		6,693		(987)		52,875
Charge-offs	(36,210)		(2,220)		(2,494)		(1,971)		(42,895)
Recoveries	445		354		497		746		2,042
Net charge-offs	(35,765)		(1,866)		(1,997)		(1,225)		(40,853)
Ending balance, June 30, 2020	$	59,138	$	149,471	$	10,979	$	12,055	$	231,643


	PPP		PPP		Total
(Dollars in thousands)	Round 1		Round 2		PPP Loans
Beginning balance, January 1, 2021	$	904,673	$	—	$	904,673
PPP loan originations	—		318,906		318,906
PPP loan forgiveness and repayments	(763,902)		(18,324)		(782,226)
Ending balance, June 30, 2021	$	140,771	$	300,582	$	441,353