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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 September 30, 2024
OR

☐ | 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 November 4, 2024, was 125,573,336.

Simmons First National Corporation
Quarterly Report on Form 10-Q
September 30, 2024
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 | 9
| Report of Independent Registered Public Accounting Firm | 49
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 50
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 76
Item 4. | Controls and Procedures | 78
Part II: | Other Information |
Item 1. | Legal Proceedings | 78
Item 1A. | Risk Factors | 78
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 78
Item 3. | Defaults Upon Senior Securities | *
Item 4. | Mine Safety Disclosures | *
Item 5. | Other Information | 79
Item 6. | Exhibits | 79
Signatures |  | 81

___________________
* No reportable information under this item.

Part I: Financial Information
Item 1. Financial Statements (Unaudited)
Simmons First National Corporation
Consolidated Balance Sheets
September 30, 2024 and December 31, 2023

| September 30, |  | December 31,
(In thousands, except share data) | 2024 |  | 2023
| (Unaudited) |  |
ASSETS |  |  |
Cash and noninterest bearing balances due from banks | $ | 398,321 |  |  | $ | 345,258 |
Interest bearing balances due from banks and federal funds sold | 205,081 |  |  | 268,834 |
Cash and cash equivalents | 603,402 |  |  | 614,092 |
Interest bearing balances due from banks - time | 100 |  |  | 100 |
Investment securities: |  |  |
Held-to-maturity, net of allowance for credit losses of $3,214 at September 30, 2024 and December 31, 2023 | 3,658,700 |  |  | 3,726,288 |
Available-for-sale, (amortized cost of $2,976,811 and $3,509,709 at September 30, 2024 and December 31, 2023, respectively) | 2,691,094 |  |  | 3,152,153 |
Total investments | 6,349,794 |  |  | 6,878,441 |
Mortgage loans held for sale | 8,270 |  |  | 9,373 |
Loans | 17,336,040 |  |  | 16,845,670 |
Allowance for credit losses on loans | (233,223) |  |  | (225,231) |
Net loans | 17,102,817 |  |  | 16,620,439 |
Premises and equipment | 584,366 |  |  | 570,678 |
Foreclosed assets and other real estate owned | 1,299 |  |  | 4,073 |
Interest receivable | 125,700 |  |  | 122,430 |
Bank owned life insurance | 508,781 |  |  | 500,559 |
Goodwill | 1,320,799 |  |  | 1,320,799 |
Other intangible assets | 101,093 |  |  | 112,645 |
Other assets | 562,983 |  |  | 592,045 |
Total assets | $ | 27,269,404 |  |  | $ | 27,345,674 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |
Deposits: |  |  |
Noninterest bearing transaction accounts | $ | 4,521,715 |  |  | $ | 4,800,880 |
Interest bearing transaction accounts and savings deposits | 10,863,945 |  |  | 10,997,425 |
Time deposits | 6,549,774 |  |  | 6,446,673 |
Total deposits | 21,935,434 |  |  | 22,244,978 |
Federal funds purchased and securities sold under agreements to repurchase | 51,071 |  |  | 67,969 |
Other borrowings | 1,045,878 |  |  | 972,366 |
Subordinated notes and debentures | 366,255 |  |  | 366,141 |
Accrued interest and other liabilities | 341,933 |  |  | 267,732 |
Total liabilities | 23,740,571 |  |  | 23,919,186 |
Stockholders’ equity: |  |  |
Common stock, Class A, $0.01 par value; 350,000,000 shares authorized at September 30, 2024 and December 31, 2023; 125,554,598 and 125,184,119 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | 1,256 |  |  | 1,252 |
Surplus | 2,508,438 |  |  | 2,499,930 |
Undivided profits | 1,355,000 |  |  | 1,329,681 |
Accumulated other comprehensive loss | (335,861) |  |  | (404,375) |
Total stockholders’ equity | 3,528,833 |  |  | 3,426,488 |
Total liabilities and stockholders’ equity | $ | 27,269,404 |  |  | $ | 27,345,674 |

See Condensed Notes to Consolidated Financial Statements.
3

Simmons First National Corporation
Consolidated Statements of Income
Three and Nine Months Ended September 30, 2024 and 2023

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands, except per share data) | 2024 |  | 2023 |  | 2024 |  | 2023
| (Unaudited) |  | (Unaudited)
INTEREST INCOME |  |  |  |  |  |  |
Loans, including fees | $ | 277,939 |  |  | $ | 255,901 |  |  | $ | 810,366 |  |  | $ | 727,691 |
Interest bearing balances due from banks and federal funds sold | 2,921 |  |  | 3,569 |  |  | 8,895 |  |  | 10,375 |
Investment securities | 53,220 |  |  | 50,638 |  |  | 166,271 |  |  | 148,163 |
Mortgage loans held for sale | 209 |  |  | 178 |  |  | 551 |  |  | 414 |
TOTAL INTEREST INCOME | 334,289 |  |  | 310,286 |  |  | 986,083 |  |  | 886,643 |
INTEREST EXPENSE |  |  |  |  |  |  |
Deposits | 152,244 |  |  | 133,157 |  |  | 457,210 |  |  | 329,049 |
Federal funds purchased and securities sold under agreements to repurchase | 138 |  |  | 277 |  |  | 483 |  |  | 918 |
Other borrowings | 17,067 |  |  | 16,450 |  |  | 43,741 |  |  | 43,910 |
Subordinated notes and debentures | 7,128 |  |  | 6,969 |  |  | 21,126 |  |  | 18,268 |
TOTAL INTEREST EXPENSE | 176,577 |  |  | 156,853 |  |  | 522,560 |  |  | 392,145 |
NET INTEREST INCOME | 157,712 |  |  | 153,433 |  |  | 463,523 |  |  | 494,498 |
Provision for credit losses | 12,148 |  |  | 7,722 |  |  | 33,453 |  |  | 31,999 |
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | 145,564 |  |  | 145,711 |  |  | 430,070 |  |  | 462,499 |
NONINTEREST INCOME |  |  |  |  |  |  |
Service charges on deposit accounts | 12,713 |  |  | 12,429 |  |  | 36,920 |  |  | 37,748 |
Debit and credit card fees | 8,144 |  |  | 7,712 |  |  | 24,552 |  |  | 23,650 |
Wealth management fees | 8,226 |  |  | 7,719 |  |  | 23,978 |  |  | 22,524 |
Mortgage lending income | 1,956 |  |  | 2,157 |  |  | 6,249 |  |  | 6,130 |
Bank owned life insurance income | 3,757 |  |  | 3,095 |  |  | 11,447 |  |  | 8,623 |
Other service charges and fees | 2,381 |  |  | 2,232 |  |  | 6,932 |  |  | 6,776 |
Loss on sale of securities, net | (28,393) |  |  | — |  |  | (28,393) |  |  | (391) |
Other income | 8,346 |  |  | 7,433 |  |  | 21,928 |  |  | 28,532 |
TOTAL NONINTEREST INCOME | 17,130 |  |  | 42,777 |  |  | 103,613 |  |  | 133,592 |
NONINTEREST EXPENSE |  |  |  |  |  |  |
Salaries and employee benefits | 69,167 |  |  | 67,374 |  |  | 212,536 |  |  | 219,135 |
Occupancy expense, net | 12,216 |  |  | 12,020 |  |  | 36,338 |  |  | 35,008 |
Furniture and equipment expense | 5,612 |  |  | 5,117 |  |  | 16,376 |  |  | 15,296 |
Other real estate and foreclosure expense | 87 |  |  | 228 |  |  | 383 |  |  | 703 |
Deposit insurance | 5,571 |  |  | 4,672 |  |  | 18,388 |  |  | 14,766 |
Merger related costs | — |  |  | 5 |  |  | — |  |  | 1,420 |
Other operating expenses | 44,540 |  |  | 42,582 |  |  | 132,405 |  |  | 128,594 |
TOTAL NONINTEREST EXPENSE | 137,193 |  |  | 131,998 |  |  | 416,426 |  |  | 414,922 |
INCOME BEFORE INCOME TAXES | 25,501 |  |  | 56,490 |  |  | 117,257 |  |  | 181,169 |
Provision for income taxes | 761 |  |  | 9,243 |  |  | 12,883 |  |  | 30,019 |
NET INCOME | $ | 24,740 |  |  | $ | 47,247 |  |  | $ | 104,374 |  |  | $ | 151,150 |
BASIC EARNINGS PER SHARE | $ | 0.20 |  |  | $ | 0.38 |  |  | $ | 0.83 |  |  | $ | 1.19 |
DILUTED EARNINGS PER SHARE | $ | 0.20 |  |  | $ | 0.37 |  |  | $ | 0.83 |  |  | $ | 1.19 |

See Condensed Notes to Consolidated Financial Statements.
4

Simmons First National Corporation
Consolidated Statements of Comprehensive Income (Loss)
Three and Nine Months Ended September 30, 2024 and 2023

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
| (Unaudited) |  | (Unaudited)
NET INCOME | $ | 24,740 |  |  | $ | 47,247 |  |  | $ | 104,374 |  |  | $ | 151,150 |
OTHER COMPREHENSIVE INCOME (LOSS) |  |  |  |  |  |  |
Unrealized holding gains (losses) arising during the period on available-for-sale securities | 97,187 |  |  | (131,603) |  |  | 71,400 |  |  | (96,104) |
Less: Reclassification adjustment for realized losses included in net income | (28,393) |  |  | — |  |  | (28,393) |  |  | (391) |
Less: Realized gains (losses) on available-for-sale securities interest rate hedges | 37,558 |  |  | (24,657) |  |  | 24,975 |  |  | (39,618) |
Less: Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity | (6,231) |  |  | (6,233) |  |  | (17,938) |  |  | (19,786) |
Other comprehensive income (loss), before tax effect | 94,253 |  |  | (100,713) |  |  | 92,756 |  |  | (36,309) |
Less: Tax effect of other comprehensive income (loss) | 24,633 |  |  | (26,321) |  |  | 24,242 |  |  | (9,489) |
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) | 69,620 |  |  | (74,392) |  |  | 68,514 |  |  | (26,820) |
COMPREHENSIVE INCOME (LOSS) | $ | 94,360 |  |  | $ | (27,145) |  |  | $ | 172,888 |  |  | $ | 124,330 |

See Condensed Notes to Consolidated Financial Statements.
5

Simmons First National Corporation
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2024 and 2023

(In thousands) | September 30, 2024 |  | September 30, 2023
| (Unaudited) |  | (Unaudited)
OPERATING ACTIVITIES |  |  |
Net income | $ | 104,374 |  |  | $ | 151,150 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |
Depreciation and amortization | 34,863 |  |  | 35,933 |
Provision for credit losses | 33,453 |  |  | 31,999 |
Loss on sale of investments | 28,393 |  |  | 391 |
Net amortization of investment securities and assets | 13,104 |  |  | 10,647 |
Net amortization on borrowings | 114 |  |  | 114 |
Stock-based compensation expense | 8,867 |  |  | 9,617 |
Loss (gain) on sale of foreclosed assets and other real estate owned | (911) |  |  | (193) |
Gain on sale of mortgage loans held for sale | (6,705) |  |  | (5,711) |
Loss on sale of loans | 234 |  |  | — |
Deferred income taxes | (3,254) |  |  | 4,202 |
Income from bank owned life insurance | (11,798) |  |  | (9,811) |
Originations of mortgage loans held for sale | (73,582) |  |  | (207,822) |
Proceeds from sale of mortgage loans held for sale | 81,390 |  |  | 205,329 |
Changes in assets and liabilities: |  |  |
Interest receivable | (3,270) |  |  | (7,469) |
Other assets | 65,650 |  |  | (99,325) |
Accrued interest and other liabilities | 74,820 |  |  | 5,115 |
Income taxes payable | (2,683) |  |  | (3,730) |
Net cash provided by operating activities | 343,059 |  |  | 120,436 |
INVESTING ACTIVITIES |  |  |
Net change in loans | (519,391) |  |  | (709,735) |
Proceeds from sale of loans | 6,099 |  |  | 69,760 |
Net change in due from banks - time | — |  |  | 695 |
Purchases of premises and equipment, net | (34,935) |  |  | (26,556) |
Proceeds from sale of foreclosed assets and other real estate owned | 5,100 |  |  | 1,867 |
Proceeds from sale of available-for-sale securities | 251,517 |  |  | — |
Proceeds from maturities of available-for-sale securities | 205,164 |  |  | 494,388 |
Purchases of available-for-sale securities | — |  |  | (2,286) |
Proceeds from maturities of held-to-maturity securities | 62,460 |  |  | 65,786 |
Purchases of held-to-maturity securities | (1,000) |  |  | (62,885) |
Surrender of bank owned life insurance | 2,201 |  |  | — |
Proceeds from bank owned life insurance death benefits | 1,376 |  |  | 3,686 |
Net cash used in investing activities | (21,409) |  |  | (165,280) |
FINANCING ACTIVITIES |  |  |
Net change in deposits | (309,544) |  |  | (316,514) |
Proceeds from issuance of other borrowed funds | 2,650,000 |  |  | 3,125,000 |
Repayments of other borrowed funds | (2,576,488) |  |  | (2,636,441) |
Dividends paid on common stock | (79,055) |  |  | (75,926) |
Net change in federal funds purchased and securities sold under agreements to repurchase | (16,898) |  |  | (85,921) |
Net shares cancelled under stock compensation plans | (1,325) |  |  | (2,662) |
Shares issued under employee stock purchase plan | 970 |  |  | 833 |
Repurchases of common stock | — |  |  | (39,999) |
Net cash (used in) provided by financing activities | (332,340) |  |  | (31,630) |
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (10,690) |  |  | (76,474) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 614,092 |  |  | 682,122 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 603,402 |  |  | $ | 605,648 |

See Condensed Notes to Consolidated Financial Statements.
6

Simmons First National Corporation
Consolidated Statements of Stockholders’ Equity
Three Months Ended September 30, 2024 and 2023

(In thousands, except share data) |  |  | Common Stock |  | Surplus |  | Accumulated Other Comprehensive Income (Loss) |  | Undivided Profits |  | Total
Three Months Ended September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
Balance, June 30, 2024 (Unaudited) |  |  | $ | 1,255 |  |  | $ | 2,506,469 |  |  | $ | (405,481) |  |  | $ | 1,356,626 |  |  | $ | 3,458,869 |
Comprehensive income |  |  | — |  |  | — |  |  | 69,620 |  |  | 24,740 |  |  | 94,360 |
Stock-based compensation plans, net – 67,078 shares |  |  | 1 |  |  | 1,969 |  |  | — |  |  | — |  |  | 1,970 |
Dividends on common stock – $0.21 per share |  |  | — |  |  | — |  |  | — |  |  | (26,366) |  |  | (26,366) |
Balance, September 30, 2024 (Unaudited) |  |  | $ | 1,256 |  |  | $ | 2,508,438 |  |  | $ | (335,861) |  |  | $ | 1,355,000 |  |  | $ | 3,528,833 |
Three Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |
Balance, June 30, 2023 (Unaudited) |  |  | $ | 1,262 |  |  | $ | 2,516,398 |  |  | $ | (469,988) |  |  | $ | 1,308,654 |  |  | $ | 3,356,326 |
Comprehensive (loss) income |  |  | — |  |  | — |  |  | (74,392) |  |  | 47,247 |  |  | (27,145) |
Stock-based compensation plans, net – 37,536 shares |  |  | 1 |  |  | 1,441 |  |  | — |  |  | — |  |  | 1,442 |
Stock repurchases – 1,128,962 shares |  |  | (12) |  |  | (19,965) |  |  | — |  |  | — |  |  | (19,977) |
Dividends on common stock – $0.20 per share |  |  | — |  |  | — |  |  | — |  |  | (25,091) |  |  | (25,091) |
Balance, September 30, 2023 (Unaudited) |  |  | $ | 1,251 |  |  | $ | 2,497,874 |  |  | $ | (544,380) |  |  | $ | 1,330,810 |  |  | $ | 3,285,555 |

See Condensed Notes to Consolidated Financial Statements.
7

Simmons First National Corporation
Consolidated Statements of Stockholders’ Equity
Nine Months Ended September 30, 2024 and 2023

(In thousands, except share data) |  |  | Common Stock |  | Surplus |  | Accumulated Other Comprehensive Income (Loss) |  | Undivided Profits |  | Total
Nine Months Ended September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
Balance, December 31, 2023 |  |  | $ | 1,252 |  |  | $ | 2,499,930 |  |  | $ | (404,375) |  |  | $ | 1,329,681 |  |  | $ | 3,426,488 |
Comprehensive income |  |  | — |  |  | — |  |  | 68,514 |  |  | 104,374 |  |  | 172,888 |
Stock issued for employee stock purchase plan – 53,161 shares |  |  | — |  |  | 970 |  |  | — |  |  | — |  |  | 970 |
Stock-based compensation plans, net – 317,318 shares |  |  | 4 |  |  | 7,538 |  |  | — |  |  | — |  |  | 7,542 |
Dividends on common stock – $0.63 per share |  |  | — |  |  | — |  |  | — |  |  | (79,055) |  |  | (79,055) |
Balance, September 30, 2024 (Unaudited) |  |  | $ | 1,256 |  |  | $ | 2,508,438 |  |  | $ | (335,861) |  |  | $ | 1,355,000 |  |  | $ | 3,528,833 |
Nine Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |
Balance, December 31, 2022 |  |  | $ | 1,270 |  |  | $ | 2,530,066 |  |  | $ | (517,560) |  |  | $ | 1,255,586 |  |  | $ | 3,269,362 |
Comprehensive (loss) income |  |  | — |  |  | — |  |  | (26,820) |  |  | 151,150 |  |  | 124,330 |
Stock issued for employee stock purchase plan – 42,510 shares |  |  | — |  |  | 833 |  |  | — |  |  | — |  |  | 833 |
Stock-based compensation plans, net – 301,166 shares |  |  | 4 |  |  | 6,951 |  |  | — |  |  | — |  |  | 6,955 |
Stock repurchases - 2,257,049 shares |  |  | (23) |  |  | (39,976) |  |  | — |  |  | — |  |  | (39,999) |
Dividends on common stock – $0.60 per share |  |  | — |  |  | — |  |  | — |  |  | (75,926) |  |  | (75,926) |
Balance, September 30, 2023 (Unaudited) |  |  | $ | 1,251 |  |  | $ | 2,497,874 |  |  | $ | (544,380) |  |  | $ | 1,330,810 |  |  | $ | 3,285,555 |

See Condensed Notes to Consolidated Financial Statements.
8

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 234 financial centers as of September 30, 2024, 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, 2023, 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, 2023, which was filed with the SEC on February 27, 2024.
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.
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, the valuation of acquired loans, valuation of goodwill and subsequent impairment analysis, stock-based compensation plans and income taxes. Management obtains third party valuations to assist in valuing certain aspects of these material estimates, as appropriate, including independent appraisals for significant properties in connection with the determination of the allowance for credit losses and the fair value of acquired loans. Assumptions used in the goodwill impairment analysis involve internally projected forecasts, coupled with market and third-party data. These material estimates could change as a result of the uncertainty in current macroeconomic conditions and other factors that are beyond the Company’s control and could cause actual results to differ materially from those projected.
The Company identified an error in its previously issued unaudited consolidated statements of cash flows. The cash flows associated with other borrowings were presented on a net basis, rather than on a gross basis. The Company corrected this error in the accompanying unaudited consolidated statements of cash flows for the nine months ended September 30, 2023. The correction had no impact to the total net cash used in financing activities in the period. The Company evaluated the materiality of this error utilizing Accounting Standards Codification (“ASC”) Topic 250 and SEC Staff Accounting Bulletin 99-M, both quantitatively and qualitatively, and concluded that this error is immaterial to the impacted prior period.
9

Recently Adopted Accounting Standards
Investment-Income Taxes - In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-02, Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (“ASU 2023-02”), that introduced the option to apply the proportional amortization method to account for investments made primarily for the purpose of receiving income tax credits and other income tax benefits when certain requirements are met. The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense (benefit). ASU 2023-02 was effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2023, with early adoption permitted. The Company elected to early adopt ASU 2023-02 and apply the proportional amortization method for all income tax credits during the first quarter of 2023 by utilizing the modified retrospective method. The adoption of ASU 2023-02 did not have a material impact on the Company’s results of operations, financial position or disclosures.
Credit Losses on Financial Instruments - In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which eliminated the accounting guidance on troubled debt restructurings (“TDRs”) for creditors in ASC Topic 310-40 and amended the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and restructurings made to borrowers experiencing financial difficulty. ASU 2022-02 was 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 adopted ASU 2022-02 effective January 1, 2023 on a prospective basis. The adoption of ASU 2022-02 did not have a material impact on the Company’s results of operations or financial position. See Note 4, Loans and Allowance for Credit Losses, for additional information.
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 clarified the guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets. This ASU amended 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 renamed that method the “portfolio layer” method and expanded the scope of the guidance to allow entities to apply the portfolio layer method to portfolios of all financial assets, including both prepayable and nonprepayable financial assets. The scope expansion is consistent with the FASB’s efforts to simplify hedge accounting and allowed entities to apply the same method to similar hedging strategies. ASU 2022-01 was 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 adoption of 2022-01 did not have a material impact on the Company’s results of operations, financial position or disclosures.
Reference Rate Reform – In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provided 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. Effective January 1, 2022, the ICE Benchmark Administration Limited, the administrator of the LIBOR, ceased the publication of one-week and two-month USD LIBOR and as of June 30, 2023, ceased the publications of the remaining tenors of USD LIBOR (one, three, six and 12-month).
Other interest rates used globally could also be discontinued for similar reasons. ASU 2020-04 provided 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 permitted changes to critical terms of hedging relationships and to the designated benchmark interest rate in a fair value hedge and also provided relief for assessing hedge effectiveness for cash flow hedges. Companies were able to apply ASU 2020-04 immediately; however, the guidance was only 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. During 2021, the Company did not 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 met the Company’s standards.
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Pursuant to the Joint Regulatory Statement on LIBOR transition issued in October 2021, the Company’s policy, as of January 1, 2022, is not to enter into any new LIBOR-based credit agreements and not extend, renew, or modify 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 clarified that certain optional expedients and exceptions in 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 amended 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 could 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.
In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”). ASU 2022-06 deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.
Recently Issued Accounting Standards
Stock Compensation - In March 2024, the FASB issued ASU No. 2024-01, Compensation-Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”), in response to feedback received by the FASB requesting guidance on how entities should determine the appropriate guidance to apply when accounting for the issuance of profits interest units and similar types of awards. ASU 2024-01 adds an example with four fact patterns to ASC 718-10 to assist preparers of financial statements in determining whether profits interest and similar awards should be accounted for within the scope of the guidance. ASU 2024-01 only addresses the scope determination and does not amend the recognition, classification or measurement guidance. ASU 2024-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024, with early adoption permitted for interim or annual financial statements that have not yet been issued or made available for issuance. Entities may choose to adopt 2024-01 on a prospective or retrospective basis. The adoption of ASU 2024-01 is not expected to have a material impact on the Company’s operations, financial position or disclosures.
Income Taxes - In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), primarily focused on income tax disclosures regarding effective tax rates and cash income taxes paid. ASU 2023-09 requires public business entities, on an annual basis, to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income by the applicable statutory income tax rate). ASU 2023-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024, with early adoption permitted. The adoption of ASU 2023-09 is not expected to have a material impact on the Company’s operations, financial position or disclosures.
Segment Reporting - In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which expands reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The amendments in this update introduce a new requirement to disclose significant segment expenses regularly provided to the chief operating decision maker, extend certain annual disclosures to interim periods, clarify that single reportable segment entities must apply Topic 280 in its entirety, permit more than one measure of segment profit or loss to be reported under certain conditions and require disclosure of the title and position of the chief operating decision maker. ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of ASU 2023-07 is not expected to have a material impact on the Company’s operations, financial position or disclosures.
There have been no other significant changes to the Company’s accounting policies disclosed in Note 1, Summary of Significant Accounting Policies, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. 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.
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NOTE 2: ACQUISITIONS
Spirit of Texas Bancshares, Inc.
On April 8, 2022, the Company completed its merger with Spirit of Texas Bancshares, Inc. (“Spirit”) pursuant to the terms of the Agreement and Plan of Merger dated as of November 18, 2021 (“Spirit Agreement”), at which time Spirit merged with and into the Company, with the Company continuing as the surviving corporation. The Company issued 18,275,074 shares of its common stock valued at approximately $464.9 million as of April 8, 2022, plus $1,393,508.90 in cash, in exchange for all outstanding shares of Spirit capital stock (and common stock equivalents) to effect the merger.
Prior to the acquisition, Spirit, headquartered in Conroe, Texas, conducted banking business through its subsidiary bank, Spirit of Texas Bank SSB, 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. Including the effects of the acquisition method accounting adjustments, the Company acquired approximately $3.11 billion in assets, including approximately $2.29 billion in loans (inclusive of loan discounts), and approximately $2.72 billion in deposits.
Goodwill of $174.1 million was recorded as a result of the transaction. The merger strengthened the Company’s position in the Texas market 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 Spirit acquisition, as of the acquisition date, is as follows:

(In thousands) | Acquired from Spirit |  | Fair Value Adjustments |  | Fair Value
Assets Acquired |  |  |  |  |
Cash and due from banks | $ | 277,790 |  |  | $ | — |  |  | $ | 277,790 |
Investment securities | 362,088 |  |  | (13,401) |  |  | 348,687 |
Loans acquired | 2,314,085 |  |  | (19,925) |  |  | 2,294,160 |
Allowance for credit losses on loans | (17,005) |  |  | 7,382 |  |  | (9,623) |
Premises and equipment | 84,135 |  |  | (19,074) |  |  | 65,061 |
Bank owned life insurance | 36,890 |  |  | — |  |  | 36,890 |
Goodwill | 77,681 |  |  | (77,681) |  |  | — |
Core deposit and other intangible assets | 6,245 |  |  | 32,386 |  |  | 38,631 |
Other assets | 58,403 |  |  | (3,411) |  |  | 54,992 |
Total assets acquired | $ | 3,200,312 |  |  | $ | (93,724) |  |  | $ | 3,106,588 |
Liabilities Assumed |  |  |  |  |
Deposits: |  |  |  |  |
Noninterest bearing transaction accounts | $ | 825,228 |  |  | $ | (534) |  |  | $ | 824,694 |
Interest bearing transaction accounts and savings deposits | 1,383,663 |  |  | — |  |  | 1,383,663 |
Time deposits | 509,209 |  |  | 1,081 |  |  | 510,290 |
Total deposits | 2,718,100 |  |  | 547 |  |  | 2,718,647 |
Other borrowings | 37,547 |  |  | 503 |  |  | 38,050 |
Subordinated debentures | 36,491 |  |  | 879 |  |  | 37,370 |
Accrued interest and other liabilities | 23,667 |  |  | (3,311) |  |  | 20,356 |
Total liabilities assumed | 2,815,805 |  |  | (1,382) |  |  | 2,814,423 |
Equity | 384,507 |  |  | (384,507) |  |  | — |
Total equity assumed | 384,507 |  |  | (384,507) |  |  | — |
Total liabilities and equity assumed | $ | 3,200,312 |  |  | $ | (385,889) |  |  | $ | 2,814,423 |
Net assets acquired |  |  |  |  | 292,165 |
Purchase price |  |  |  |  | 466,311 |
Goodwill |  |  |  |  | $ | 174,146 |

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During 2023, the Company finalized its analysis of the loans acquired along with other acquired assets and assumed liabilities related to the Spirit acquisition.
The Company’s operating results include the operating results of the acquired assets and assumed liabilities of Spirit 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 acquisition above.
Cash and 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 4, 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.
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.
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NOTE 3: INVESTMENT SECURITIES
Held-to-maturity (“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 (“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 quarters ended June 30, 2022 and September 30, 2021, the Company transferred, at fair value, $1.99 billion and $500.8 million, respectively, of securities from the AFS portfolio to the HTM portfolio. As of September 30, 2024, the related remaining combined net unrealized losses of $112.7 million 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) | Amortized Cost |  | Allowance for Credit Losses |  | Net Carrying Amount |  | Gross Unrealized Gains |  | Gross Unrealized (Losses) |  | Estimated Fair Value
Held-to-maturity |  |  |  |  |  |  |  |  |  |  |
September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies | $ | 455,179 |  |  | $ | — |  |  | $ | 455,179 |  |  | $ | — |  |  | $ | (75,331) |  |  | $ | 379,848 |
Mortgage-backed securities | 1,093,070 |  |  | — |  |  | 1,093,070 |  |  | 571 |  |  | (88,660) |  |  | 1,004,981 |
State and political subdivisions | 1,857,510 |  |  | (227) |  |  | 1,857,283 |  |  | 176 |  |  | (368,773) |  |  | 1,488,686 |
Other securities | 256,155 |  |  | (2,987) |  |  | 253,168 |  |  | — |  |  | (17,073) |  |  | 236,095 |
Total HTM | $ | 3,661,914 |  |  | $ | (3,214) |  |  | $ | 3,658,700 |  |  | $ | 747 |  |  | $ | (549,837) |  |  | $ | 3,109,610 |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies | $ | 453,121 |  |  | $ | — |  |  | $ | 453,121 |  |  | $ | — |  |  | $ | (89,203) |  |  | $ | 363,918 |
Mortgage-backed securities | 1,161,694 |  |  | — |  |  | 1,161,694 |  |  | 354 |  |  | (107,834) |  |  | 1,054,214 |
State and political subdivisions | 1,858,680 |  |  | (2,006) |  |  | 1,856,674 |  |  | 284 |  |  | (369,509) |  |  | 1,487,449 |
Other securities | 256,007 |  |  | (1,208) |  |  | 254,799 |  |  | — |  |  | (25,010) |  |  | 229,789 |
Total HTM | $ | 3,729,502 |  |  | $ | (3,214) |  |  | $ | 3,726,288 |  |  | $ | 638 |  |  | $ | (591,556) |  |  | $ | 3,135,370 |

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 September 30, 2024, HTM MBS consisted of $137.2 million and $955.9 million of commercial MBS and residential MBS, respectively. As of December 31, 2023, HTM MBS consisted of $141.6 million and $1.02 billion of commercial MBS and residential MBS, respectively.
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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 |  |  |  |  |  |  |  |  |
September 30, 2024 |  |  |  |  |  |  |  |  |
U.S. Treasury | $ | 1,297 |  |  | $ | — |  |  | $ | — |  |  | $ | (7) |  |  | $ | 1,290 |
U.S. Government agencies | 59,247 |  |  | — |  |  | 23 |  |  | (873) |  |  | 58,397 |
Mortgage-backed securities | 1,634,391 |  |  | — |  |  | 18 |  |  | (124,007) |  |  | 1,510,402 |
State and political subdivisions | 1,042,823 |  |  | — |  |  | 180 |  |  | (144,825) |  |  | 898,178 |
Other securities | 239,053 |  |  | — |  |  | 159 |  |  | (16,385) |  |  | 222,827 |
Total AFS | $ | 2,976,811 |  |  | $ | — |  |  | $ | 380 |  |  | $ | (286,097) |  |  | $ | 2,691,094 |
December 31, 2023 |  |  |  |  |  |  |  |  |
U.S. Treasury | $ | 2,285 |  |  | $ | — |  |  | $ | — |  |  | $ | (31) |  |  | $ | 2,254 |
U.S. Government agencies | 74,460 |  |  | — |  |  | 35 |  |  | (1,993) |  |  | 72,502 |
Mortgage-backed securities | 2,138,652 |  |  | — |  |  | 8 |  |  | (198,353) |  |  | 1,940,307 |
State and political subdivisions | 1,035,147 |  |  | — |  |  | 187 |  |  | (132,541) |  |  | 902,793 |
Other securities | 259,165 |  |  | — |  |  | — |  |  | (24,868) |  |  | 234,297 |
Total AFS | $ | 3,509,709 |  |  | $ | — |  |  | $ | 230 |  |  | $ | (357,786) |  |  | $ | 3,152,153 |

As of September 30, 2024, AFS MBS consisted of $571.9 million and $938.5 million of commercial MBS and residential MBS, respectively. As of December 31, 2023, AFS MBS consisted of $710.1 million and $1.23 billion of commercial MBS and residential MBS, respectively.
Accrued interest receivable on HTM and AFS securities at September 30, 2024 was $17.3 million and $24.6 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 September 30, 2024, 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
(In thousands) | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses |  | Estimated Fair Value |  | Gross Unrealized Losses
Available-for-sale |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury | $ | 1,290 |  |  | $ | (7) |  |  | $ | — |  |  | $ | — |  |  | $ | 1,290 |  |  | $ | (7) |
U.S. Government agencies | 982 |  |  | (1) |  |  | 54,494 |  |  | (872) |  |  | 55,476 |  |  | (873) |
Mortgage-backed securities | 1,574 |  |  | (110) |  |  | 1,507,414 |  |  | (123,897) |  |  | 1,508,988 |  |  | (124,007) |
State and political subdivisions | 4,934 |  |  | (17) |  |  | 867,223 |  |  | (144,808) |  |  | 872,157 |  |  | (144,825) |
Other securities | 7,870 |  |  | (59) |  |  | 167,726 |  |  | (16,326) |  |  | 175,596 |  |  | (16,385) |
Total AFS | $ | 16,650 |  |  | $ | (194) |  |  | $ | 2,596,857 |  |  | $ | (285,903) |  |  | $ | 2,613,507 |  |  | $ | (286,097) |

As of September 30, 2024, the Company’s investment portfolio included $2.69 billion of AFS securities, of which $2.61 billion, or 97.1%, 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.
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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. As of September 30, 2024, management does not have the immediate intent to sell the securities, and management believes the accounting standard of “more likely than not” has not been met regarding whether the Company would be required to sell any of the AFS securities before recovery of amortized cost.
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, the adequacy of the reserve for credit loss is determined quarterly based on methodology similar to the methodology for determining the allowance for credit losses on loans. The methodology considers, but is not limited to: (i) issuer bond ratings, (ii) issuer geography, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) probability-weighted multiple scenario forecasts, and (v) the issuers’ size.
The following table details activity in the allowance for credit losses by investment security type for the three and nine months ended September 30, 2024 on the Company’s HTM securities portfolio.

(In thousands) | State and Political Subdivisions |  | Other Securities |  | Total
Three Months Ended September 30, 2024 |  |  |  |  |
Held-to-maturity |  |  |  |  |
Beginning balance, July 1, 2024 | $ | 191 |  |  | $ | 3,023 |  |  | $ | 3,214 |
Provision for credit loss expense | — |  |  | — |  |  | — |
Net increase (decrease) in allowance on previously impaired securities | 36 |  |  | (36) |  |  | — |
Ending balance, September 30, 2024 | $ | 227 |  |  | $ | 2,987 |  |  | $ | 3,214 |
Nine Months Ended September 30, 2024 |  |  |  |  |
Held-to-maturity |  |  |  |  |
Beginning balance, January 1, 2024 | $ | 2,006 |  |  | $ | 1,208 |  |  | $ | 3,214 |
Provision for credit loss expense | — |  |  | — |  |  | — |
Net (decrease) increase in allowance on previously impaired securities | (1,779) |  |  | 1,779 |  |  | — |
Ending balance, September 30, 2024 | $ | 227 |  |  | $ | 2,987 |  |  | $ | 3,214 |

Activity in the allowance for credit losses by investment security type for the three and nine months ended September 30, 2023 on the Company’s HTM and AFS securities portfolio was as follows:

(In thousands) | State and Political Subdivisions |  | Other Securities |  | Total
Three Months Ended September 30, 2023 |  |  |  |  |
Held-to-maturity |  |  |  |  |
Beginning balance, July 1, 2023 | $ | 934 |  |  | $ | 2,280 |  |  | $ | 3,214 |
Provision for credit loss expense | — |  |  | — |  |  | — |
Net increase (decrease) in allowance on previously impaired securities | 586 |  |  | (586) |  |  | — |
Ending balance, September 30, 2023 | $ | 1,520 |  |  | $ | 1,694 |  |  | $ | 3,214 |
Available-for-sale |  |  |  |  |
Beginning balance, July 1, 2023 | $ | — |  |  | $ | 2,396 |  |  | $ | 2,396 |
Provision for credit loss expense | — |  |  | — |  |  | — |
Net decrease in allowance on previously impaired securities | — |  |  | (1,200) |  |  | (1,200) |
Ending balance, September 30, 2023 | $ | — |  |  | $ | 1,196 |  |  | $ | 1,196 |

16

(In thousands) | State and Political Subdivisions |  | Other Securities |  | Total
Nine Months Ended September 30, 2023 |  |  |  |  |
Held-to-maturity |  |  |  |  |
Beginning balance, January 1, 2023 | $ | 110 |  |  | $ | 1,278 |  |  | $ | 1,388 |
Provision for credit loss expense | 824 |  |  | 1,002 |  |  | 1,826 |
Net increase (decrease) in allowance on previously impaired securities | 586 |  |  | (586) |  |  | — |
Ending balance, September 30, 2023 | $ | 1,520 |  |  | $ | 1,694 |  |  | $ | 3,214 |
Available-for-sale |  |  |  |  |
Beginning balance, January 1, 2023 | $ | — |  |  | $ | — |  |  | $ | — |
Provision for credit loss expense | — |  |  | 12,800 |  |  | 12,800 |
Reduction due to sales | — |  |  | (2,078) |  |  | (2,078) |
Net decrease in allowance on previously impaired securities | — |  |  | (2,526) |  |  | (2,526) |
Securities charged-off | — |  |  | (7,000) |  |  | (7,000) |
Ending balance, September 30, 2023 | $ | — |  |  | $ | 1,196 |  |  | $ | 1,196 |

Based upon the Company’s analysis of the underlying risk characteristics of its HTM and AFS portfolios, including credit ratings and other qualitative factors, as previously discussed, there was no provision for credit losses related to the Company’s securities portfolios recorded for the three and nine months ended September 30, 2024. The Company recorded a provision for credit losses related to AFS securities of $12.8 million for the nine months ended September 30, 2023. During the same period, the provision for credit loss expense on AFS securities was reduced by $2.5 million related to previously impaired securities. Additionally, during the nine months ended September 30, 2023, the Company charged-off $7.0 million directly related to one corporate bond which was deemed uncollectible in the period.
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 September 30, 2024:

| State and Political Subdivisions |  |
(In thousands) | Not Guaranteed or Pre-Refunded |  | Other Credit Enhancement or Insurance |  | Pre-Refunded |  | Total |  | Other Securities
Aaa/AAA | $ | 182,907 |  |  | $ | 300,167 |  |  | $ | — |  |  | $ | 483,074 |  |  | $ | — |
Aa/AA | 629,590 |  |  | 525,905 |  |  | — |  |  | 1,155,495 |  |  | — |
A | 37,021 |  |  | 161,726 |  |  | — |  |  | 198,747 |  |  | 98,760 |
Baa/BBB | — |  |  | 4,384 |  |  | — |  |  | 4,384 |  |  | 157,395 |
Not Rated | 15,810 |  |  | — |  |  | — |  |  | 15,810 |  |  | — |
Total | $ | 865,328 |  |  | $ | 992,182 |  |  | $ | — |  |  | $ | 1,857,510 |  |  | $ | 256,155 |

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.
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Income earned on securities for the three and nine months ended September 30, 2024 and 2023, is as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Taxable: |  |  |  |  |  |  |
Held-to-maturity | $ | 10,533 |  |  | $ | 11,062 |  |  | $ | 32,378 |  |  | $ | 33,133 |
Available-for-sale | 26,940 |  |  | 23,672 |  |  | 86,576 |  |  | 67,150 |
Non-taxable: |  |  |  |  |  |  |
Held-to-maturity | 10,101 |  |  | 10,137 |  |  | 30,298 |  |  | 30,488 |
Available-for-sale | 5,646 |  |  | 5,767 |  |  | 17,019 |  |  | 17,392 |
Total | $ | 53,220 |  |  | $ | 50,638 |  |  | $ | 166,271 |  |  | $ | 148,163 |

The amortized cost and estimated fair value by maturity of securities as of September 30, 2024 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
(In thousands) | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
One year or less | $ | 1,909 |  |  | $ | 1,906 |  |  | $ | 3,814 |  |  | $ | 3,791 |
After one through five years | 42,277 |  |  | 40,576 |  |  | 108,132 |  |  | 107,789 |
After five through ten years | 405,709 |  |  | 366,933 |  |  | 198,468 |  |  | 181,503 |
After ten years | 2,118,949 |  |  | 1,695,214 |  |  | 1,031,775 |  |  | 887,378 |
Securities not due on a single maturity date | 1,093,070 |  |  | 1,004,981 |  |  | 1,634,391 |  |  | 1,510,402 |
Other securities (no maturity) | — |  |  | — |  |  | 231 |  |  | 231 |
Total | $ | 3,661,914 |  |  | $ | 3,109,610 |  |  | $ | 2,976,811 |  |  | $ | 2,691,094 |

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $2.49 billion at September 30, 2024 and $3.32 billion at December 31, 2023.
There were no gross realized gains and $28.4 million gross realized losses from the sale of securities during the three and nine months ended September 30, 2024, as the Company sold approximately $251.5 million of AFS investment securities as part of a strategic decision to sell low yielding securities to pay off higher rate wholesale fundings consisting of Federal Home Loan Bank (“FHLB”) advances during the quarter. There were no gross realized gains and no gross realized losses from the call or sale of securities during the three months ended September 30, 2023. There were no gross realized gains and $391,000 of gross realized losses recorded from the sale of securities during the nine months ended September 30, 2023. The income tax expense/benefit related to security gains/losses was 26.135% of the gross amounts in 2024 and 2023.
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 22, 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.
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NOTE 4: LOANS AND ALLOWANCE FOR CREDIT LOSSES
At September 30, 2024, the Company’s loan portfolio was $17.34 billion, compared to $16.85 billion at December 31, 2023. The various categories of loans are summarized as follows:

| September 30, |  | December 31,
(In thousands) | 2024 |  | 2023
Consumer: |  |  |
Credit cards | $ | 177,696 |  |  | $ | 191,204 |
Other consumer | 113,896 |  |  | 127,462 |
Total consumer | 291,592 |  |  | 318,666 |
Real Estate: |  |  |
Construction and development | 2,796,378 |  |  | 3,144,220 |
Single family residential | 2,724,648 |  |  | 2,641,556 |
Other commercial | 7,992,437 |  |  | 7,552,410 |
Total real estate | 13,513,463 |  |  | 13,338,186 |
Commercial: |  |  |
Commercial | 2,467,384 |  |  | 2,490,176 |
Agricultural | 314,340 |  |  | 232,710 |
Total commercial | 2,781,724 |  |  | 2,722,886 |
Other | 749,261 |  |  | 465,932 |
Total loans | $ | 17,336,040 |  |  | $ | 16,845,670 |

The above table presents total loans at amortized cost. The difference between amortized cost and unpaid principal balance is due to (i) premiums and discounts associated with acquisition date fair value adjustments on acquired loans of $9.0 million and $13.2 million at September 30, 2024 and December 31, 2023, respectively, and (ii) deferred origination costs and fees of $10.1 million and $6.5 million at September 30, 2024 and December 31, 2023, respectively.
Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $83.9 million and $77.1 million at September 30, 2024 and December 31, 2023, 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 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.
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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 general 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 Coronavirus Aid, Relief and Economic Security 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 September 30, 2024 and December 31, 2023, the total outstanding balance of PPP loans was $2.4 million and $4.8 million, respectively.
Other – The other loan portfolio includes mortgage warehouse loans, representing warehouse lines of credit to mortgage originators for the disbursement of newly originated 1-4 family residential loans. Also included in the other loan portfolio are loans to public sector customers, including state and local governments.
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:

| September 30, |  | December 31,
(In thousands) | 2024 |  | 2023
Consumer: |  |  |
Credit cards | $ | 563 |  |  | $ | 487 |
Other consumer | 455 |  |  | 589 |
Total consumer | 1,018 |  |  | 1,076 |
Real estate: |  |  |
Construction and development | 5,497 |  |  | 2,457 |
Single family residential | 31,072 |  |  | 27,209 |
Other commercial | 27,018 |  |  | 11,960 |
Total real estate | 63,587 |  |  | 41,626 |
Commercial: |  |  |
Commercial | 35,648 |  |  | 39,886 |
Agricultural | 609 |  |  | 734 |
Total commercial | 36,257 |  |  | 40,620 |
Other | 3 |  |  | 3 |
Total | $ | 100,865 |  |  | $ | 83,325 |

As of September 30, 2024 and December 31, 2023, nonaccrual loans for which there was no related allowance for credit losses had an amortized cost of $4.8 million and $3.2 million, respectively. These loans are individually assessed and do not hold an allowance due to being adequately collateralized under the collateral-dependent valuation method.
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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) | Gross 30-89 Days Past Due |  | 90 Days or More Past Due |  | Total Past Due |  | Current |  | Total Loans |  | 90 Days Past Due & Accruing
September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
Consumer: |  |  |  |  |  |  |  |  |  |  |
Credit cards | $ | 1,535 |  |  | $ | 706 |  |  | $ | 2,241 |  |  | $ | 175,455 |  |  | $ | 177,696 |  |  | $ | 561 |
Other consumer | 1,102 |  |  | 204 |  |  | 1,306 |  |  | 112,590 |  |  | 113,896 |  |  | — |
Total consumer | 2,637 |  |  | 910 |  |  | 3,547 |  |  | 288,045 |  |  | 291,592 |  |  | 561 |
Real estate: |  |  |  |  |  |  |  |  |  |  |
Construction and development | 4,338 |  |  | 1,438 |  |  | 5,776 |  |  | 2,790,602 |  |  | 2,796,378 |  |  | — |
Single family residential | 15,647 |  |  | 15,616 |  |  | 31,263 |  |  | 2,693,385 |  |  | 2,724,648 |  |  | 69 |
Other commercial | 12,161 |  |  | 21,959 |  |  | 34,120 |  |  | 7,958,317 |  |  | 7,992,437 |  |  | 86 |
Total real estate | 32,146 |  |  | 39,013 |  |  | 71,159 |  |  | 13,442,304 |  |  | 13,513,463 |  |  | 155 |
Commercial: |  |  |  |  |  |  |  |  |  |  |
Commercial | 12,407 |  |  | 24,566 |  |  | 36,973 |  |  | 2,430,411 |  |  | 2,467,384 |  |  | 114 |
Agricultural | 6 |  |  | 534 |  |  | 540 |  |  | 313,800 |  |  | 314,340 |  |  | — |
Total commercial | 12,413 |  |  | 25,100 |  |  | 37,513 |  |  | 2,744,211 |  |  | 2,781,724 |  |  | 114 |
Other | 277 |  |  | 3 |  |  | 280 |  |  | 748,981 |  |  | 749,261 |  |  | — |
Total | $ | 47,473 |  |  | $ | 65,026 |  |  | $ | 112,499 |  |  | $ | 17,223,541 |  |  | $ | 17,336,040 |  |  | $ | 830 |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
Consumer: |  |  |  |  |  |  |  |  |  |  |
Credit cards | $ | 1,734 |  |  | $ | 892 |  |  | $ | 2,626 |  |  | $ | 188,578 |  |  | $ | 191,204 |  |  | $ | 791 |
Other consumer | 1,471 |  |  | 216 |  |  | 1,687 |  |  | 125,775 |  |  | 127,462 |  |  | — |
Total consumer | 3,205 |  |  | 1,108 |  |  | 4,313 |  |  | 314,353 |  |  | 318,666 |  |  | 791 |
Real estate: |  |  |  |  |  |  |  |  |  |  |
Construction and development | 3,171 |  |  | 2,190 |  |  | 5,361 |  |  | 3,138,859 |  |  | 3,144,220 |  |  | — |
Single family residential | 30,697 |  |  | 12,522 |  |  | 43,219 |  |  | 2,598,337 |  |  | 2,641,556 |  |  | 7 |
Other commercial | 4,702 |  |  | 3,612 |  |  | 8,314 |  |  | 7,544,096 |  |  | 7,552,410 |  |  | — |
Total real estate | 38,570 |  |  | 18,324 |  |  | 56,894 |  |  | 13,281,292 |  |  | 13,338,186 |  |  | 7 |
Commercial: |  |  |  |  |  |  |  |  |  |  |
Commercial | 13,799 |  |  | 22,750 |  |  | 36,549 |  |  | 2,453,627 |  |  | 2,490,176 |  |  | 349 |
Agricultural | 92 |  |  | 516 |  |  | 608 |  |  | 232,102 |  |  | 232,710 |  |  | — |
Total commercial | 13,891 |  |  | 23,266 |  |  | 37,157 |  |  | 2,685,729 |  |  | 2,722,886 |  |  | 349 |
Other | — |  |  | 3 |  |  | 3 |  |  | 465,929 |  |  | 465,932 |  |  | — |
Total | $ | 55,666 |  |  | $ | 42,701 |  |  | $ | 98,367 |  |  | $ | 16,747,303 |  |  | $ | 16,845,670 |  |  | $ | 1,147 |

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Loan Modifications to Borrowers Experiencing Financial Difficulty
The Company has internal loan modification programs for borrowers experiencing financial difficulties. Modifications to borrowers experiencing financial difficulties may include interest rate reductions, principal or interest forgiveness and/or term extensions. The Company primarily uses interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal.
The following table presents a summary of the amortized cost basis of loan modifications granted to borrowers experiencing financial difficulty, segregated by class of loans and type of loan modification, for the three and nine month periods ended September 30, 2024.

|  |  | Percent of
| Interest Rate |  | Total Class
(Dollars in thousands) | Reduction |  | of Loans
Three Months Ended September 30, 2024 |  |  |
Real estate: |  |  |
Single family residential | $ | 142 |  |  | 0.01 | %
Total real estate | $ | 142 |  |  |
Nine Months Ended September 30, 2024 |  |  |
Real estate: |  |  |
Single family residential | $ | 795 |  |  | 0.03 | %
Total real estate | $ | 795 |  |  |

The financial effects of the loan modifications made to borrowers experiencing financial difficulty were not significant during the three and nine month periods ended September 30, 2024. Furthermore, such modifications did not significantly impact the Company’s determination of the allowance for credit losses during those periods.
The following table presents a summary of the amortized cost basis of loan modifications granted to borrowers experiencing financial difficulty, segregated by class of loans and type of loan modification, for the three and nine month periods ended September 30, 2023.

|  |  | Percent of
|  |  | Total Class
(Dollars in thousands) | Term Extension |  | of Loans
Three Months Ended September 30, 2023 |  |  |
Real estate: |  |  |
Other commercial | $ | 30,617 |  |  | 0.40 | %
Total real estate | 30,617 |  |  |
Commercial: |  |  |
Commercial | 85 |  |  | — | %
Total commercial | 85 |  |  |
Total | $ | 30,702 |  |  |
Nine Months Ended September 30, 2023 |  |  |
Real estate: |  |  |
Other commercial | $ | 30,617 |  |  | 0.40 | %
Total real estate | 30,617 |  |  |
Commercial: |  |  |
Commercial | 736 |  |  | 0.03 | %
Total commercial | 736 |  |  |
Total | $ | 31,353 |  |  |

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The financial effects of the loan modifications made to borrowers experiencing financial difficulty were not significant during the three and nine month periods ended September 30, 2023. Furthermore, such modifications did not significantly impact the Company’s determination of the allowance for credit losses during those periods.
The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty. There was one commercial loan to a borrower experiencing financial difficulty with a period-end amortized cost basis of $23,000 that was modified during the previous twelve months and which subsequently defaulted during the nine months ended September 30, 2024. There were no loans to borrowers experiencing financial difficulty that had a payment default during the nine months ended September 30, 2023 and were modified in the twelve months prior to default. In relation to loans modified to borrowers experiencing financial difficulty, the Company defines a payment default as a payment received more than 90 days after its due date.
At September 30, 2024 and December 31, 2023, the Company had $5.0 million and $2.5 million, respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process. At September 30, 2024 and December 31, 2023, the Company had $575,000 and $506,000, respectively, of Other Real Estate Owned (“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.
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•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.
The Company 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 risk rating scale includes Probability of Default levels of 1 – 16 and Loss Given Default levels of A – I. The scale allows for more granular recognition of risk and diversification of grading among traditional Pass grades.
The following is a reconciliation between the expanded risk rating scale 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 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 near term.
•Special Mention - Includes loans with an expanded risk rating of 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.
24

The following table presents a summary of loans by credit quality indicator, as of September 30, 2024, segregated by class of loans.

| Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |
(In thousands) | 2024 (YTD) |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 and Prior |  | Lines of Credit (“LOC”) Amortized Cost Basis |  | LOC Converted to Term Loans Amortized Cost Basis |  | Total
Consumer - credit cards |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delinquency: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 175,455 |  |  | $ | — |  |  | $ | 175,455 |
30-89 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,535 |  |  | — |  |  | 1,535 |
90+ days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 706 |  |  | — |  |  | 706 |
Total consumer - credit cards | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 177,696 |  |  | — |  |  | 177,696 |
Current-period consumer - credit cards gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,808 |  |  | — |  |  | 4,808 |
Consumer - other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delinquency: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current | 41,396 |  |  | 21,390 |  |  | 21,556 |  |  | 6,121 |  |  | 1,662 |  |  | 1,142 |  |  | 19,323 |  |  | — |  |  | 112,590 |
30-89 days past due | 182 |  |  | 84 |  |  | 605 |  |  | 35 |  |  | 50 |  |  | 60 |  |  | 86 |  |  | — |  |  | 1,102 |
90+ days past due | 15 |  |  | 66 |  |  | 44 |  |  | 20 |  |  | 1 |  |  | — |  |  | 58 |  |  | — |  |  | 204 |
Total consumer - other | 41,593 |  |  | 21,540 |  |  | 22,205 |  |  | 6,176 |  |  | 1,713 |  |  | 1,202 |  |  | 19,467 |  |  | — |  |  | 113,896 |
Current-period consumer - other gross charge-offs | 89 |  |  | 567 |  |  | 446 |  |  | 94 |  |  | 9 |  |  | 6 |  |  | 175 |  |  | — |  |  | 1,386 |
Real estate - C&D |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 38,923 |  |  | 122,586 |  |  | 71,963 |  |  | 32,303 |  |  | 18,737 |  |  | 24,537 |  |  | 2,474,525 |  |  | — |  |  | 2,783,574 |
Special mention | — |  |  | — |  |  | 65 |  |  | — |  |  | — |  |  | 381 |  |  | 2,790 |  |  | — |  |  | 3,236 |
Substandard | 59 |  |  | 69 |  |  | 26 |  |  | 3,957 |  |  | — |  |  | 99 |  |  | 5,358 |  |  | — |  |  | 9,568 |
Doubtful and loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total real estate - C&D | 38,982 |  |  | 122,655 |  |  | 72,054 |  |  | 36,260 |  |  | 18,737 |  |  | 25,017 |  |  | 2,482,673 |  |  | — |  |  | 2,796,378 |
Current-period real estate - C&D gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 52 |  |  | — |  |  | 52 |
Real estate - SF residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delinquency: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current | 198,979 |  |  | 338,458 |  |  | 578,282 |  |  | 326,621 |  |  | 196,334 |  |  | 588,250 |  |  | 466,461 |  |  | — |  |  | 2,693,385 |
30-89 days past due | 904 |  |  | 1,406 |  |  | 3,259 |  |  | 680 |  |  | 479 |  |  | 6,253 |  |  | 2,666 |  |  | — |  |  | 15,647 |
90+ days past due | — |  |  | 299 |  |  | 4,490 |  |  | 1,945 |  |  | 1,124 |  |  | 3,622 |  |  | 4,136 |  |  | — |  |  | 15,616 |
Total real estate - SF residential | 199,883 |  |  | 340,163 |  |  | 586,031 |  |  | 329,246 |  |  | 197,937 |  |  | 598,125 |  |  | 473,263 |  |  | — |  |  | 2,724,648 |
Current-period real estate - SF residential gross charge-offs | 3 |  |  | 46 |  |  | 136 |  |  | — |  |  | 1 |  |  | 69 |  |  | 56 |  |  | — |  |  | 311 |
Real estate - other commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 429,871 |  |  | 512,184 |  |  | 1,582,389 |  |  | 1,107,417 |  |  | 461,159 |  |  | 705,341 |  |  | 2,762,717 |  |  | — |  |  | 7,561,078 |
Special mention | 9,489 |  |  | 16,352 |  |  | 14,682 |  |  | 18,191 |  |  | 1,480 |  |  | 14,658 |  |  | 99,584 |  |  | — |  |  | 174,436 |
Substandard | 7,465 |  |  | 17,184 |  |  | 24,623 |  |  | 6,810 |  |  | 12,058 |  |  | 35,403 |  |  | 153,380 |  |  | — |  |  | 256,923 |
Doubtful and loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total real estate - other commercial | 446,825 |  |  | 545,720 |  |  | 1,621,694 |  |  | 1,132,418 |  |  | 474,697 |  |  | 755,402 |  |  | 3,015,681 |  |  | — |  |  | 7,992,437 |
Current-period real estate - other commercial gross charge-offs | — |  |  | 2,592 |  |  | — |  |  | 15 |  |  | — |  |  | 1 |  |  | 168 |  |  | — |  |  | 2,776 |

25

| Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |
(In thousands) | 2024 (YTD) |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 and Prior |  | Lines of Credit (“LOC”) Amortized Cost Basis |  | LOC Converted to Term Loans Amortized Cost Basis |  | Total
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 187,831 |  |  | 307,100 |  |  | 274,746 |  |  | 138,826 |  |  | 33,779 |  |  | 68,645 |  |  | 1,380,054 |  |  | — |  |  | 2,390,981 |
Special mention | 124 |  |  | 27 |  |  | 563 |  |  | 420 |  |  | 137 |  |  | 1,274 |  |  | 11,477 |  |  | — |  |  | 14,022 |
Substandard | 1,203 |  |  | 2,266 |  |  | 16,847 |  |  | 3,602 |  |  | 3,389 |  |  | 6,448 |  |  | 28,626 |  |  | — |  |  | 62,381 |
Doubtful and loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial | 189,158 |  |  | 309,393 |  |  | 292,156 |  |  | 142,848 |  |  | 37,305 |  |  | 76,367 |  |  | 1,420,157 |  |  | — |  |  | 2,467,384 |
Current-period commercial - gross charge-offs | 159 |  |  | 487 |  |  | 3,466 |  |  | 3,025 |  |  | 494 |  |  | 1,521 |  |  | 10,682 |  |  | — |  |  | 19,834 |
Commercial - agriculture |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 24,611 |  |  | 25,131 |  |  | 22,533 |  |  | 9,561 |  |  | 3,078 |  |  | 1,887 |  |  | 224,796 |  |  | — |  |  | 311,597 |
Special mention | 1,238 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 511 |  |  | — |  |  | 1,749 |
Substandard | — |  |  | 15 |  |  | 33 |  |  | — |  |  | 154 |  |  | 14 |  |  | 778 |  |  | — |  |  | 994 |
Doubtful and loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial - agriculture | 25,849 |  |  | 25,146 |  |  | 22,566 |  |  | 9,561 |  |  | 3,232 |  |  | 1,901 |  |  | 226,085 |  |  | — |  |  | 314,340 |
Current-period commercial - agriculture gross charge-offs | — |  |  | 222 |  |  | — |  |  | 8 |  |  | 6 |  |  | — |  |  | 1 |  |  | — |  |  | 237 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delinquency: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current | 35,103 |  |  | 36,091 |  |  | 140,685 |  |  | 27,563 |  |  | 1,564 |  |  | 31,530 |  |  | 476,445 |  |  | — |  |  | 748,981 |
30-89 days past due | — |  |  | 277 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 277 |
90+ days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | 3 |
Total other | 35,103 |  |  | 36,368 |  |  | 140,685 |  |  | 27,563 |  |  | 1,564 |  |  | 31,533 |  |  | 476,445 |  |  | — |  |  | 749,261 |
Current-period other - gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 420 |  |  | — |  |  | 420 |
Total | $ | 977,393 |  |  | $ | 1,400,985 |  |  | $ | 2,757,391 |  |  | $ | 1,684,072 |  |  | $ | 735,185 |  |  | $ | 1,489,547 |  |  | $ | 8,291,467 |  |  | $ | — |  |  | $ | 17,336,040 |

26

The following table presents a summary of loans by credit quality indicator, as of December 31, 2023, segregated by class of loans.

| Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |
(In thousands) | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 and Prior |  | Lines of Credit (“LOC”) Amortized Cost Basis |  | LOC Converted to Term Loans Amortized Cost Basis |  | Total
Consumer - credit cards |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delinquency: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 188,578 |  |  | $ | — |  |  | $ | 188,578 |
30-89 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,734 |  |  | — |  |  | 1,734 |
90+ days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 892 |  |  | — |  |  | 892 |
Total consumer - credit cards | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 191,204 |  |  | — |  |  | 191,204 |
Current-period consumer - credit cards gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,303 |  |  | — |  |  | 5,303 |
Consumer - other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delinquency: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current | 55,091 |  |  | 35,904 |  |  | 12,115 |  |  | 3,838 |  |  | 1,471 |  |  | 1,106 |  |  | 16,250 |  |  | — |  |  | 125,775 |
30-89 days past due | 400 |  |  | 719 |  |  | 127 |  |  | 53 |  |  | 2 |  |  | 16 |  |  | 154 |  |  | — |  |  | 1,471 |
90+ days past due | 35 |  |  | 127 |  |  | 46 |  |  | — |  |  | — |  |  | — |  |  | 8 |  |  | — |  |  | 216 |
Total consumer - other | 55,526 |  |  | 36,750 |  |  | 12,288 |  |  | 3,891 |  |  | 1,473 |  |  | 1,122 |  |  | 16,412 |  |  | — |  |  | 127,462 |
Current-period consumer - other gross charge-offs | 220 |  |  | 826 |  |  | 493 |  |  | 79 |  |  | 29 |  |  | 128 |  |  | 449 |  |  | — |  |  | 2,224 |
Real estate - C&D |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 138,749 |  |  | 143,711 |  |  | 52,081 |  |  | 45,027 |  |  | 10,278 |  |  | 13,632 |  |  | 2,710,853 |  |  | 504 |  |  | 3,114,835 |
Special mention | — |  |  | 1,143 |  |  | 7,284 |  |  | — |  |  | — |  |  | 396 |  |  | 16,682 |  |  | — |  |  | 25,505 |
Substandard | — |  |  | 101 |  |  | 48 |  |  | — |  |  | — |  |  | 247 |  |  | 3,484 |  |  | — |  |  | 3,880 |
Doubtful and loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total real estate - C&D | 138,749 |  |  | 144,955 |  |  | 59,413 |  |  | 45,027 |  |  | 10,278 |  |  | 14,275 |  |  | 2,731,019 |  |  | 504 |  |  | 3,144,220 |
Current-period real estate - C&D gross charge-offs | — |  |  | 1,148 |  |  | — |  |  | — |  |  | — |  |  | 8 |  |  | 349 |  |  | — |  |  | 1,505 |
Real estate - SF residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delinquency: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current | 371,326 |  |  | 620,933 |  |  | 352,589 |  |  | 238,128 |  |  | 121,416 |  |  | 504,675 |  |  | 388,705 |  |  | 565 |  |  | 2,598,337 |
30-89 days past due | 5,222 |  |  | 5,061 |  |  | 3,667 |  |  | 2,283 |  |  | 1,741 |  |  | 9,759 |  |  | 2,964 |  |  | — |  |  | 30,697 |
90+ days past due | 1,313 |  |  | 2,443 |  |  | 1,810 |  |  | 1,661 |  |  | 120 |  |  | 3,465 |  |  | 1,710 |  |  | — |  |  | 12,522 |
Total real estate - SF residential | 377,861 |  |  | 628,437 |  |  | 358,066 |  |  | 242,072 |  |  | 123,277 |  |  | 517,899 |  |  | 393,379 |  |  | 565 |  |  | 2,641,556 |
Current-period real estate - SF residential gross charge-offs | — |  |  | 111 |  |  | 12 |  |  | 73 |  |  | — |  |  | 677 |  |  | 232 |  |  | — |  |  | 1,105 |
Real estate - other commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 729,602 |  |  | 1,651,010 |  |  | 1,237,810 |  |  | 621,595 |  |  | 171,230 |  |  | 417,122 |  |  | 2,333,637 |  |  | — |  |  | 7,162,006 |
Special mention | 37,302 |  |  | 8,458 |  |  | 10,149 |  |  | 7,844 |  |  | 1,364 |  |  | 11,604 |  |  | 84,978 |  |  | — |  |  | 161,699 |
Substandard | 40,664 |  |  | 10,290 |  |  | 4,495 |  |  | 16,646 |  |  | 6,293 |  |  | 9,861 |  |  | 140,454 |  |  | — |  |  | 228,703 |
Doubtful and loss | — |  |  | — |  |  | — |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2 |
Total real estate - other commercial | 807,568 |  |  | 1,669,758 |  |  | 1,252,454 |  |  | 646,087 |  |  | 178,887 |  |  | 438,587 |  |  | 2,559,069 |  |  | — |  |  | 7,552,410 |
Current-period real estate - other commercial gross charge-offs | — |  |  | — |  |  | — |  |  | 7 |  |  | 2 |  |  | 35 |  |  | 9,731 |  |  | — |  |  | 9,775 |

27

| Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |
(In thousands) | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 and Prior |  | Lines of Credit (“LOC”) Amortized Cost Basis |  | LOC Converted to Term Loans Amortized Cost Basis |  | Total
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 440,872 |  |  | 354,016 |  |  | 200,941 |  |  | 67,320 |  |  | 27,374 |  |  | 42,953 |  |  | 1,271,826 |  |  | — |  |  | 2,405,302 |
Special mention | 157 |  |  | 14,117 |  |  | 316 |  |  | 367 |  |  | 98 |  |  | 889 |  |  | 8,228 |  |  | — |  |  | 24,172 |
Substandard | 1,998 |  |  | 11,874 |  |  | 6,272 |  |  | 2,934 |  |  | 1,722 |  |  | 3,392 |  |  | 32,510 |  |  | — |  |  | 60,702 |
Doubtful and loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial | 443,027 |  |  | 380,007 |  |  | 207,529 |  |  | 70,621 |  |  | 29,194 |  |  | 47,234 |  |  | 1,312,564 |  |  | — |  |  | 2,490,176 |
Current-period commercial - gross charge-offs | 463 |  |  | 2,081 |  |  | 778 |  |  | 197 |  |  | 244 |  |  | 815 |  |  | 1,351 |  |  | — |  |  | 5,929 |
Commercial - agriculture |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 39,680 |  |  | 30,075 |  |  | 13,940 |  |  | 6,280 |  |  | 2,071 |  |  | 303 |  |  | 134,180 |  |  | — |  |  | 226,529 |
Special mention | 363 |  |  | 733 |  |  | 1,068 |  |  | — |  |  | — |  |  | — |  |  | 3,257 |  |  | — |  |  | 5,421 |
Substandard | 518 |  |  | 37 |  |  | 71 |  |  | 104 |  |  | 26 |  |  | — |  |  | 4 |  |  | — |  |  | 760 |
Doubtful and loss | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total commercial - agriculture | 40,561 |  |  | 30,845 |  |  | 15,079 |  |  | 6,384 |  |  | 2,097 |  |  | 303 |  |  | 137,441 |  |  | — |  |  | 232,710 |
Current-period commercial - agriculture gross charge-offs | — |  |  | 7 |  |  | — |  |  | — |  |  | — |  |  | 26 |  |  | — |  |  | — |  |  | 33 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delinquency: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current | 45,234 |  |  | 144,732 |  |  | 28,413 |  |  | 2,543 |  |  | 3,255 |  |  | 36,719 |  |  | 205,033 |  |  | — |  |  | 465,929 |
30-89 days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
90+ days past due | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | 3 |
Total other | 45,234 |  |  | 144,732 |  |  | 28,413 |  |  | 2,543 |  |  | 3,255 |  |  | 36,722 |  |  | 205,033 |  |  | — |  |  | 465,932 |
Current-period other - gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 298 |  |  | — |  |  | 298 |
Total | $ | 1,908,526 |  |  | $ | 3,035,484 |  |  | $ | 1,933,242 |  |  | $ | 1,016,625 |  |  | $ | 348,461 |  |  | $ | 1,056,142 |  |  | $ | 7,546,121 |  |  | $ | 1,069 |  |  | $ | 16,845,670 |

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, quantitative factors, 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 prepayments, in accordance with ASC Topic 326-20, Financial Instruments - Credit Losses. Accordingly, the methodology is comprised of two components: individual assessments on loans with unique risk characteristics and collective assessments for loans that share similar risk characteristics. Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated for collective assessment. The Company uses statistically-based models that leverage assumptions about current and future economic conditions throughout the contractual life of the loan. Expected credit losses are estimated by either lifetime loss rates or expected loss cash flows based on three key parameters: probability-of-default (“PD”), exposure-at-default (“EAD”), and loss-given-default (“LGD”). Future economic conditions are incorporated to the extent that they are reasonable and supportable. Beyond the reasonable and supportable periods, the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenarios. To determine the best estimate of credit losses as of September 30, 2024, the Company utilized a probability-weighted, multiple-scenario approach consisting of Baseline, Upside (S1), and Downside (S3) scenarios published by Moody’s Analytics in June 2024 that was updated to reflect the U.S. economic outlook. The Company also includes qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for. These factors may include but are not limited to portfolio trends and considerations, other economic considerations, policy actions, concentration risk, or imprecision risk.
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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.
Loans that have unique risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating. 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.
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 $109.6 million and $144.6 million as of September 30, 2024 and December 31, 2023, 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.

(In thousands) | Real Estate Collateral |  | Other Collateral |  | Total
September 30, 2024 |  |  |  |  |
Construction and development | $ | 903 |  |  | $ | — |  |  | $ | 903 |
Single family residential | — |  |  | — |  |  | — |
Other commercial real estate | 80,591 |  |  | — |  |  | 80,591 |
Commercial | — |  |  | 28,154 |  |  | 28,154 |
Total | $ | 81,494 |  |  | $ | 28,154 |  |  | $ | 109,648 |
December 31, 2023 |  |  |  |  |
Construction and development | $ | 43,826 |  |  | $ | — |  |  | $ | 43,826 |
Single family residential | 3,870 |  |  | — |  |  | 3,870 |
Other commercial real estate | 76,229 |  |  | — |  |  | 76,229 |
Commercial | — |  |  | 20,679 |  |  | 20,679 |
Total | $ | 123,925 |  |  | $ | 20,679 |  |  | $ | 144,604 |

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The following table details activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2024. 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) | Commercial |  | Real Estate |  | Credit Card |  | Other Consumer and Other |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |
Three Months Ended September 30, 2024 |  |  |  |  |  |  |  |  |
Beginning balance, July 1, 2024 | $ | 43,550 |  |  | $ | 175,176 |  |  | $ | 5,765 |  |  | $ | 5,898 |  |  | $ | 230,389 |
Provision for credit loss expense | 8,088 |  |  | 1,598 |  |  | 1,755 |  |  | 707 |  |  | 12,148 |
Charge-offs | (8,235) |  |  | (159) |  |  | (1,744) |  |  | (524) |  |  | (10,662) |
Recoveries | 439 |  |  | 403 |  |  | 231 |  |  | 275 |  |  | 1,348 |
Net (charge-offs) recoveries | (7,796) |  |  | 244 |  |  | (1,513) |  |  | (249) |  |  | (9,314) |
Ending balance, September 30, 2024 | $ | 43,842 |  |  | $ | 177,018 |  |  | $ | 6,007 |  |  | $ | 6,356 |  |  | $ | 233,223 |
Nine Months Ended September 30, 2024 |  |  |  |  |  |  |  |  |
Beginning balance, January 1, 2024 | $ | 36,470 |  |  | $ | 177,177 |  |  | $ | 5,868 |  |  | $ | 5,716 |  |  | $ | 225,231 |
Provision for credit loss expense | 26,107 |  |  | 1,770 |  |  | 4,247 |  |  | 1,329 |  |  | 33,453 |
Charge-offs | (20,071) |  |  | (3,139) |  |  | (4,808) |  |  | (1,806) |  |  | (29,824) |
Recoveries | 1,336 |  |  | 1,210 |  |  | 700 |  |  | 1,117 |  |  | 4,363 |
Net (charge-offs) recoveries | (18,735) |  |  | (1,929) |  |  | (4,108) |  |  | (689) |  |  | (25,461) |
Ending balance, September 30, 2024 | $ | 43,842 |  |  | $ | 177,018 |  |  | $ | 6,007 |  |  | $ | 6,356 |  |  | $ | 233,223 |

Activity in the allowance for credit losses for the three and nine months ended September 30, 2023 was as follows:

(In thousands) | Commercial |  | Real Estate |  | Credit Card |  | Other Consumer and Other |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |
Three Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |
Beginning balance, July 1, 2023 | $ | 30,985 |  |  | $ | 165,813 |  |  | $ | 6,330 |  |  | $ | 6,838 |  |  | $ | 209,966 |
Provision for credit loss expense | 4,095 |  |  | 16,528 |  |  | 704 |  |  | (1,105) |  |  | 20,222 |
Charge-offs | (1,219) |  |  | (9,723) |  |  | (1,318) |  |  | (633) |  |  | (12,893) |
Recoveries | 245 |  |  | 429 |  |  | 234 |  |  | 344 |  |  | 1,252 |
Net (charge-offs) recoveries | (974) |  |  | (9,294) |  |  | (1,084) |  |  | (289) |  |  | (11,641) |
Ending balance, September 30, 2023 | $ | 34,106 |  |  | $ | 173,047 |  |  | $ | 5,950 |  |  | $ | 5,444 |  |  | $ | 218,547 |
Nine Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |
Beginning balance, January 1, 2023 | $ | 34,406 |  |  | $ | 150,795 |  |  | $ | 5,140 |  |  | $ | 6,614 |  |  | $ | 196,955 |
Provision for credit loss expense | 774 |  |  | 32,013 |  |  | 3,847 |  |  | (435) |  |  | 36,199 |
Charge-offs | (2,857) |  |  | (11,362) |  |  | (3,803) |  |  | (1,755) |  |  | (19,777) |
Recoveries | 1,783 |  |  | 1,601 |  |  | 766 |  |  | 1,020 |  |  | 5,170 |
Net (charge-offs) recoveries | (1,074) |  |  | (9,761) |  |  | (3,037) |  |  | (735) |  |  | (14,607) |
Ending balance, September 30, 2023 | $ | 34,106 |  |  | $ | 173,047 |  |  | $ | 5,950 |  |  | $ | 5,444 |  |  | $ | 218,547 |

As of September 30, 2024, the Company’s allowance for credit losses was considered sufficient based upon expected losses that were supported by scenario-weighted economic forecasts. The provision expense for the three and nine months ended September 30, 2024 was primarily due to the loan growth experienced during the periods, as well as the impact of updated economic assumptions.
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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 was $25.6 million for both periods ended September 30, 2024 and December 31, 2023. 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. No adjustment was made to the reserve for unfunded commitments during the three and nine month periods ended September 30, 2024, as it was considered sufficient to cover any loss expectations. During the three and nine month periods ended September 30, 2023, $11.3 million and $16.3 million, respectively, was released from the reserve for unfunded commitments primarily due to a decline in unfunded commitments resulting from customers utilizing lines of credit during the periods.
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 nine month periods ended September 30, 2024 and 2023 were as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Provision for credit losses related to: |  |  |  |  |  |  |
Loans | $ | 12,148 |  |  | $ | 20,222 |  |  | $ | 33,453 |  |  | $ | 36,199 |
Unfunded commitments | — |  |  | (11,300) |  |  | — |  |  | (16,300) |
Securities - HTM | — |  |  | — |  |  | — |  |  | 1,826 |
Securities - AFS | — |  |  | (1,200) |  |  | — |  |  | 10,274 |
Total | $ | 12,148 |  |  | $ | 7,722 |  |  | $ | 33,453 |  |  | $ | 31,999 |

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 Spirit acquisition with credit deterioration at acquisition:

(In thousands) | Commercial |  | Real Estate |  | Credit Card |  | Other Consumer and Other |  | Total
Unpaid principal balance | $ | 8,258 |  |  | $ | 66,534 |  |  | $ | — |  |  | $ | 59 |  |  | $ | 74,851 |
PCD allowance for credit loss at acquisition | (6,433) |  |  | (3,187) |  |  | — |  |  | (2) |  |  | (9,622) |
Non-credit related discount | (378) |  |  | (998) |  |  | — |  |  | (1) |  |  | (1,377) |
Fair value of PCD loans | $ | 1,447 |  |  | $ | 62,349 |  |  | $ | — |  |  | $ | 56 |  |  | $ | 63,852 |

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NOTE 5: 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 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 September 30, 2024 and December 31, 2023 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.

| September 30, |  | December 31,
(Dollars in thousands) | 2024 |  | 2023
Right-of-use lease assets | $ | 69,331 |  |  | $ | 67,267 |
Lease liabilities | 71,315 |  |  | 68,788 |
Weighted average remaining lease term | 8.45 years |  | 8.81 years
Weighted average discount rate | 3.65 | % |  | 3.52 | %

Operating lease cost for the three and nine month periods ended September 30, 2024 was $4.0 million and $12.2 million, respectively, as compared to $4.2 million and $11.7 million for the same periods in 2023.
NOTE 6: PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation and amortization. Total premises and equipment, net at September 30, 2024 and December 31, 2023 were as follows:

| September 30, |  | December 31,
(In thousands) | 2024 |  | 2023
Right-of-use lease assets | $ | 69,331 |  |  | $ | 67,267 |
Premises and equipment: |  |  |
Land | 124,247 |  |  | 122,093 |
Buildings and improvements | 400,014 |  |  | 388,675 |
Furniture, fixtures and equipment | 120,341 |  |  | 112,133 |
Software | 62,823 |  |  | 61,242 |
Construction in progress | 23,936 |  |  | 14,142 |
Accumulated depreciation and amortization | (216,326) |  |  | (194,874) |
Total premises and equipment, net | $ | 584,366 |  |  | $ | 570,678 |

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NOTE 7: 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 $1.32 billion at September 30, 2024 and December 31, 2023. Goodwill impairment was neither indicated nor recorded during the nine months ended September 30, 2024 or the year ended December 31, 2023.
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 8 years to 15 years.
Changes in the carrying amount and accumulated amortization of the Company’s core deposit premiums and other intangible assets at September 30, 2024 and December 31, 2023 were as follows:

| September 30, |  | December 31,
(In thousands) | 2024 |  | 2023
Core deposit premiums: |  |  |
Balance, beginning of year | $ | 101,344 |  |  | $ | 116,016 |
Amortization | (10,327) |  |  | (14,672) |
Balance, end of period | 91,017 |  |  | 101,344 |
Books of business and other intangibles: |  |  |
Balance, beginning of year | 11,301 |  |  | 12,935 |
Amortization | (1,225) |  |  | (1,634) |
Balance, end of period | 10,076 |  |  | 11,301 |
Total other intangible assets, net | $ | 101,093 |  |  | $ | 112,645 |

The carrying basis and accumulated amortization of the Company’s other intangible assets at September 30, 2024 and December 31, 2023 were as follows:

| September 30, |  | December 31,
(In thousands) | 2024 |  | 2023
Core deposit premiums: |  |  |
Gross carrying amount | $ | 177,624 |  |  | $ | 187,467 |
Accumulated amortization | (86,607) |  |  | (86,123) |
Core deposit premiums, net | 91,017 |  |  | 101,344 |
Books of business and other intangibles: |  |  |
Gross carrying amount | 22,068 |  |  | 22,068 |
Accumulated amortization | (11,992) |  |  | (10,767) |
Books of business and other intangibles, net | 10,076 |  |  | 11,301 |
Total other intangible assets, net | $ | 101,093 |  |  | $ | 112,645 |

The Company’s estimated remaining amortization expense on other intangible assets as of September 30, 2024 is as follows:

(In thousands) | Year |  | Amortization Expense
| Remainder of 2024 |  | $ | 3,851 |
| 2025 |  | 12,819 |
| 2026 |  | 12,346 |
| 2027 |  | 12,218 |
| 2028 |  | 11,312 |
| Thereafter |  | 48,547 |
| Total |  | $ | 101,093 |

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NOTE 8: TIME DEPOSITS
Time deposits included approximately $1.65 billion and $1.73 billion of certificates of deposit over $250,000 at September 30, 2024 and December 31, 2023, respectively. Brokered time deposits were $3.36 billion and $2.90 billion at September 30, 2024 and December 31, 2023, respectively.
NOTE 9: INCOME TAXES
The provision for income taxes is comprised of the following components for the periods indicated below:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Income taxes currently payable | $ | 2,777 |  |  | $ | 4,706 |  |  | $ | 16,137 |  |  | $ | 25,817 |
Deferred income taxes | (2,016) |  |  | 4,537 |  |  | (3,254) |  |  | 4,202 |
Provision for income taxes | $ | 761 |  |  | $ | 9,243 |  |  | $ | 12,883 |  |  | $ | 30,019 |

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:

| September 30, |  | December 31,
(In thousands) | 2024 |  | 2023
Deferred tax assets: |  |  |
Loans acquired | $ | 2,654 |  |  | $ | 3,644 |
Allowance for credit losses | 55,495 |  |  | 53,445 |
Valuation of foreclosed assets | 480 |  |  | 480 |
Tax NOLs from acquisition | 10,197 |  |  | 9,643 |
Deferred compensation payable | 4,002 |  |  | 3,355 |
Accrued equity and other compensation | 6,854 |  |  | 8,048 |
Acquired securities | 7,572 |  |  | 7,569 |
Right-of-use lease liability | 17,107 |  |  | 16,501 |
Unrealized loss on AFS securities | 116,437 |  |  | 143,624 |
Allowance for unfunded commitments | 6,148 |  |  | 6,148 |
Other | 8,403 |  |  | 7,627 |
Gross deferred tax assets | 235,349 |  |  | 260,084 |
Deferred tax liabilities: |  |  |
Goodwill and other intangible amortization | (39,267) |  |  | (41,174) |
Accumulated depreciation | (24,975) |  |  | (24,632) |
Right-of-use lease asset | (16,631) |  |  | (16,136) |
Unrealized gain on swaps | (19,449) |  |  | (25,371) |
Other | (11,263) |  |  | (10,995) |
Gross deferred tax liabilities | (111,585) |  |  | (118,308) |
Net deferred tax asset | $ | 123,764 |  |  | $ | 141,776 |

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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 September 30, |  | Nine Months Ended September 30,
(In thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Computed at the statutory rate (21%) | $ | 5,354 |  |  | $ | 11,862 |  |  | $ | 24,624 |  |  | $ | 38,045 |
Increase (decrease) in taxes resulting from: |  |  |  |  |  |  |
State income taxes, net of federal tax benefit | (644) |  |  | (40) |  |  | (1,370) |  |  | 657 |
Stock-based compensation | (14) |  |  | 28 |  |  | 454 |  |  | 469 |
Tax exempt interest income | (3,810) |  |  | (3,848) |  |  | (11,518) |  |  | (11,523) |
Tax exempt earnings on BOLI | (755) |  |  | (636) |  |  | (2,376) |  |  | (1,973) |
Federal tax credits | (546) |  |  | (567) |  |  | (1,667) |  |  | (1,501) |
Other differences, net | 1,176 |  |  | 2,444 |  |  | 4,736 |  |  | 5,845 |
Actual tax provision | $ | 761 |  |  | $ | 9,243 |  |  | $ | 12,883 |  |  | $ | 30,019 |

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 three tax-free reorganization transactions in which acquired net operating losses are limited pursuant to Section 382. In total, approximately $35.0 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 2020 tax year and forward. The Company’s various state income tax returns are generally open from the 2020 and later tax return years based on individual state statute of limitations.
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NOTE 10: 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 $50.7 million and $67.6 million at September 30, 2024 and December 31, 2023, respectively. The remaining contractual maturity of the securities sold under agreements to repurchase in the consolidated balance sheets as of September 30, 2024 and December 31, 2023 is presented in the following tables.

| Remaining Contractual Maturity of the Agreements
(In thousands) | Overnight and Continuous |  | Up to 30 Days |  | 30-90 Days |  | Greater than 90 Days |  | Total
September 30, 2024 |  |  |  |  |  |  |  |  |
Repurchase agreements: |  |  |  |  |  |  |  |  |
U.S. Government agencies | $ | 50,671 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 50,671 |
December 31, 2023 |  |  |  |  |  |  |  |  |
Repurchase agreements: |  |  |  |  |  |  |  |  |
U.S. Government agencies | $ | 67,569 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 67,569 |

NOTE 11: OTHER BORROWINGS AND SUBORDINATED NOTES AND DEBENTURES
Debt at September 30, 2024 and December 31, 2023 consisted of the following components:

| September 30, |  | December 31,
(In thousands) | 2024 |  | 2023
Other Borrowings |  |  |
FHLB advances, net of discount, due 2024 to 2033, 4.56% to 5.52% secured by real estate loans | $ | 1,028,016 |  |  | $ | 953,222 |
Other long-term debt | 17,862 |  |  | 19,144 |
Total other borrowings | 1,045,878 |  |  | 972,366 |
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)(1) | 330,000 |  |  | 330,000 |
Subordinated notes payable, net of premium adjustments, due 7/31/2030, fixed-to-floating rate (fixed rate of 6.00% through 7/30/2025, floating rate of 5.92% above the three month SOFR rate, reset quarterly) | 37,085 |  |  | 37,171 |
Unamortized debt issuance costs | (830) |  |  | (1,030) |
Total subordinated notes and debentures | 366,255 |  |  | 366,141 |
Total other borrowings and subordinated debt | $ | 1,412,133 |  |  | $ | 1,338,507 |

_________________________
(1) The Company transitioned from the three month LIBOR rate to the three month Secured Overnight Financing Rate (“SOFR”), plus a comparable spread adjustment of 26.161 basis points, beginning with interest accrued on the notes from and after October 1, 2023.
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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 initially bore interest at a 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 resets quarterly to an annual interest rate equal to the “then-current three month LIBOR rate” plus 215 basis points, payable quarterly in arrears, and the Company transitioned from the “then-current three month LIBOR rate” to the “three month SOFR, plus a comparable spread adjustment of 26.161 basis points,” beginning with interest accrued on the Notes from and after October 1, 2023. 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 Company assumed subordinated debt in an aggregate principal amount, net of premium adjustments, of $37.4 million in connection with the Spirit acquisition in April 2022 (the “Spirit Notes”). The Spirit Notes will mature on July 31, 2030, and initially bear interest at a fixed annual rate of 6.00%, payable quarterly, in arrears, to, but excluding, July 31, 2025. From and including July 31, 2025, to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be the then-current three-month SOFR rate, as published by the Federal Reserve Bank of New York (provided, that in the event the benchmark rate is less than zero, the benchmark rate will be deemed to be zero) plus 592 basis points, payable quarterly, in arrears.
The Company had total outstanding FHLB advances of $1.03 billion and $953.2 million at September 30, 2024 and December 31, 2023, respectively, which are primarily fixed rate, fixed term advances, are due less than one year from origination and therefore are classified as short-term advances by the Company. At September 30, 2024, the FHLB advances outstanding were secured by mortgage loans and investment securities totaling approximately $7.02 billion and the Company had approximately $4.96 billion of additional advances available from the FHLB.
The Company’s long-term debt primarily includes subordinated debt and other notes payable. Aggregate annual maturities of long-term debt at September 30, 2024, are as follows:

Year |  | (In thousands)
Remainder of 2024 |  | $ | 447 |
2025 |  | 1,822 |
2026 |  | 1,824 |
2027 |  | 1,919 |
2028 |  | 332,798 |
Thereafter |  | 48,323 |
Total |  | $ | 387,133 |

NOTE 12: 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 its 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.
The Company establishes 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 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 the Company’s 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 the Company’s results of operations for a given fiscal period.
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NOTE 13: 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. On April 27, 2022, the Company’s shareholders approved amendments to the Company’s Articles of Incorporation to remove an $80.0 million cap on the aggregate liquidation preference associated with the preferred stock and increase the number of authorized shares of the Company’s Class A common stock from 175,000,000 to 350,000,000.
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 (“Series D Preferred Stock”), 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, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation to remove the classification and designation for the Series D Preferred Stock. As of September 30, 2024, there were no shares of preferred stock issued or outstanding.
In January 2022, the Company’s Board of Directors authorized a stock repurchase program (“2022 Program”) under which the Company could repurchase up to $175.0 million of its Class A common stock currently issued and outstanding. Because the 2022 Program was set to terminate on January 31, 2024, the Company’s Board of Directors authorized a new stock repurchase program in January 2024 (“2024 Program”) under which the Company may repurchase up to $175.0 million of its Class A common stock currently issued and outstanding. The 2024 Program will be executed in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and will terminate on January 31, 2026 (unless terminated sooner).
Under the 2024 Program, which replaced the 2022 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 2024 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 2024 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 2024 Program to come from available sources of liquidity, including cash on hand and future cash flow.
No shares were repurchased during the three and nine month periods ended September 30, 2024. Market conditions and the Company’s capital needs, among other things, will drive decisions regarding additional, future stock repurchases. During the three and nine month periods ended September 30, 2023, the Company repurchased 1,128,962 shares at an average price of $17.69 per share and 2,257,049 shares at an average price of $17.72 per share, respectively, under the 2022 Program.
NOTE 14: 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. Since Simmons Bank is also under supervision of the Federal Reserve, it is further limited if the total of all dividends declared in any calendar year by Simmons Bank exceeds its net income to date for that year combined with its retained net profits for the preceding two years. At September 30, 2024, undivided profits of Simmons Bank were approximately $536.2 million, none of which were 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 September 30, 2024, 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 12.06% at September 30, 2024.
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NOTE 15: STOCK-BASED COMPENSATION
The Company’s Board of Directors has adopted various stock-based compensation plans, including the 2023 Stock and Incentive Plan that was approved by shareholders and became effective April 18, 2023. The plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock units and stock awards. 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, performance stock units or stock awards granted to directors, officers and other key employees or consultants.
The table below summarizes the transactions under the Company’s active stock-based compensation plans for the nine months ended September 30, 2024:

| Stock Options Outstanding |  | Non-vested Stock Awards Outstanding |  | Non-vested Stock Units Outstanding
(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, 2024 | 447 |  |  | $ | 22.56 |  |  | — |  |  | $ | — |  |  | 1,273 |  |  | $ | 24.23 |
Granted | — |  |  | — |  |  | — |  |  | — |  |  | 853 |  |  | 18.81 |
Stock options exercised | (38) |  |  | 20.29 |  |  | — |  |  | — |  |  | — |  |  | — |
Stock awards/units vested (earned) | — |  |  | — |  |  | — |  |  | — |  |  | (404) |  |  | 24.63 |
Forfeited/expired | (37) |  |  | 22.52 |  |  | — |  |  | — |  |  | (176) |  |  | 25.42 |
Balance, September 30, 2024 | 372 |  |  | $ | 22.80 |  |  | — |  |  | $ | — |  |  | 1,546 |  |  | $ | 21.01 |
Exercisable, September 30, 2024 | 372 |  |  | $ | 22.80 |  |  |  |  |  |  |  |  |

The following table summarizes information about stock options under the plans outstanding at September 30, 2024:

|  |  |  | Options Outstanding |  | Options Exercisable
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
$ | 20.29 |  |  | — |  | $ | 20.29 |  |  | 3 |  | 0.25 |  | $20.29 |  | 3 |  | $20.29
22.20 |  |  | — |  | 22.20 |  |  | 51 |  | 0.48 |  | 22.20 |  | 51 |  | 22.20
22.75 |  |  | — |  | 22.75 |  |  | 249 |  | 0.85 |  | 22.75 |  | 249 |  | 22.75
23.51 |  |  | — |  | 23.51 |  |  | 62 |  | 1.30 |  | 23.51 |  | 62 |  | 23.51
24.07 |  |  | — |  | 24.07 |  |  | 7 |  | 0.96 |  | 24.07 |  | 7 |  | 24.07
$ | 20.29 |  |  | — |  | $ | 24.07 |  |  | 372 |  | 0.87 |  | $22.80 |  | 372 |  | $22.80

The table below summarizes the Company’s performance stock unit activity for the nine months ended September 30, 2024:

(In thousands) |  | Performance Stock Units
Non-vested, January 1, 2024 |  | 492 |
Granted |  | 188 |
Vested (earned) |  | (42) |
Forfeited |  | (112) |
Non-vested, September 30, 2024 |  | 526 |

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Stock-based compensation expense was $8.9 million and $9.6 million during the nine month periods ended September 30, 2024 and 2023, respectively. Stock-based compensation expense is recognized ratably over the requisite service period for all stock-based awards. There was no unrecognized stock-based compensation expense related to stock options at September 30, 2024. Unrecognized stock-based compensation expense related to non-vested stock awards and stock units was $18.1 million at September 30, 2024. At such date, the weighted-average period over which this unrecognized expense is expected to be recognized was 1.7 years.
The intrinsic value of stock options outstanding and stock options exercisable at September 30, 2024 was $4,000. Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $21.54 as of September 30, 2024, and the exercise price multiplied by the number of options outstanding. There total intrinsic value of stock options exercised during the nine months ended September 30, 2024 and 2023 was $48,000 and $6,000, respectively.
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 no stock options granted during the nine months ended September 30, 2024 and 2023.
NOTE 16: EARNINGS PER SHARE (“EPS”)
Basic EPS is computed by dividing reported net income available to common stockholders by the 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 September 30, |  | Nine Months Ended September 30,
(In thousands, except per share data) | 2024 |  | 2023 |  | 2024 |  | 2023
Net income available to common stockholders | $ | 24,740 |  |  | $ | 47,247 |  |  | $ | 104,374 |  |  | $ | 151,150 |
Average common shares outstanding | 125,538 |  |  | 125,914 |  |  | 125,449 |  |  | 126,730 |
Average potential dilutive common shares | 461 |  |  | 370 |  |  | 461 |  |  | 370 |
Average diluted common shares | 125,999 |  |  | 126,284 |  |  | 125,910 |  |  | 127,100 |
Basic earnings per share | $ | 0.20 |  |  | $ | 0.38 |  |  | $ | 0.83 |  |  | $ | 1.19 |
Diluted earnings per share | $ | 0.20 |  |  | $ | 0.37 |  |  | $ | 0.83 |  |  | $ | 1.19 |

There were 371,790 stock options excluded from the three and nine months ended September 30, 2024 earnings per share calculation due to the related stock option exercise price exceeding the average market price of the Company’s stock during the periods. There were 469,280 stock options excluded from the earnings per share calculation for the three and nine months ended September 30, 2023 due to the related stock option exercise price exceeding the average market price of the Company’s stock during the periods.
NOTE 17: ADDITIONAL CASH FLOW INFORMATION
The following is a summary of the Company’s additional cash flow information:

| Nine Months Ended September 30,
(In thousands) | 2024 |  | 2023
Interest paid | $ | 494,968 |  |  | $ | 375,536 |
Income taxes paid | 10,085 |  |  | 21,915 |
Transfers of loans to foreclosed assets held for sale | 1,415 |  |  | 2,596 |

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NOTE 18: OTHER INCOME AND OTHER OPERATING EXPENSES
Other income for the three and nine months ended September 30, 2024 was $8.3 million and $21.9 million, respectively. Other income for the three and nine months ended September 30, 2023 was $7.4 million and $28.5 million, respectively. Included in other income during the nine month period ended September 30, 2023 was a $4.0 million legal reserve recapture associated with previously disclosed legal matters, coupled with fair value adjustments associated with certain equity investments and death benefits from bank owned life insurance.
Other operating expenses consisted of the following:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Professional services | $ | 5,554 |  |  | $ | 4,801 |  |  | $ | 15,950 |  |  | $ | 14,443 |
Postage | 2,296 |  |  | 2,283 |  |  | 6,507 |  |  | 6,973 |
Telephone | 1,580 |  |  | 1,750 |  |  | 4,860 |  |  | 5,182 |
Credit card expense | 3,201 |  |  | 3,356 |  |  | 9,744 |  |  | 9,989 |
Marketing | 7,059 |  |  | 5,787 |  |  | 20,066 |  |  | 18,041 |
Software and technology | 10,970 |  |  | 10,707 |  |  | 32,585 |  |  | 31,299 |
Operating supplies | 562 |  |  | 474 |  |  | 1,808 |  |  | 1,762 |
Amortization of intangibles | 3,851 |  |  | 4,097 |  |  | 11,553 |  |  | 12,291 |
Branch right sizing expense | 410 |  |  | 547 |  |  | 1,165 |  |  | 1,621 |
Other expense | 9,057 |  |  | 8,780 |  |  | 28,167 |  |  | 26,993 |
Total other operating expenses | $ | 44,540 |  |  | $ | 42,582 |  |  | $ | 132,405 |  |  | $ | 128,594 |

NOTE 19: 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 20: 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 September 30, 2024, the Company had outstanding commitments to extend credit aggregating approximately $759.1 million and $3.96 billion for credit card commitments and other loan commitments, respectively. At December 31, 2023, the Company had outstanding commitments to extend credit aggregating approximately $738.2 million and $4.17 billion for credit card commitments and other loan commitments, respectively.
As of September 30, 2024, the Company had outstanding commitments to originate fixed-rate mortgage loans of approximately $27.4 million. At December 31, 2023, the Company had outstanding commitments to originate fixed-rate mortgage loans of approximately $16.6 million. The commitments extend over varying periods of time with the majority being disbursed within a thirty-day period.
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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 $58.4 million and $54.2 million at September 30, 2024 and December 31, 2023, respectively, with terms ranging from 9 months to 15 years. At September 30, 2024 and December 31, 2023, the Company had no 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 $1.02 billion and $580.8 million at September 30, 2024 and December 31, 2023, respectively, and they expire in less than one year from issuance.
NOTE 21: 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. ASC 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 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.
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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 September 30, 2024 and December 31, 2023, 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.
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 September 30, 2024 and December 31, 2023.

|  |  |  | Fair Value Measurements Using
(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)
September 30, 2024 |  |  |  |  |  |  |  |
Available-for-sale securities |  |  |  |  |  |  |  |
U.S. Treasury |  | $ | 1,290 |  |  | $ | 1,290 |  |  | $ | — |  |  | $ | — |
U.S. Government agencies |  | 58,397 |  |  | — |  |  | 58,397 |  |  | — |
Mortgage-backed securities |  | 1,510,402 |  |  | — |  |  | 1,510,402 |  |  | — |
State and political subdivisions |  | 898,178 |  |  | — |  |  | 898,178 |  |  | — |
Other securities |  | 222,827 |  |  | — |  |  | 222,827 |  |  | — |
Mortgage loans held for sale |  | 8,270 |  |  | — |  |  | — |  |  | 8,270 |
Derivative asset |  | 108,170 |  |  | — |  |  | 108,170 |  |  | — |
Derivative liability |  | (28,397) |  |  | — |  |  | (28,397) |  |  | — |
December 31, 2023 |  |  |  |  |  |  |  |
Available-for-sale securities |  |  |  |  |  |  |  |
U.S. Treasury |  | $ | 2,254 |  |  | $ | 2,254 |  |  | $ | — |  |  | $ | — |
U.S. Government agencies |  | 72,502 |  |  | — |  |  | 72,502 |  |  | — |
Mortgage-backed securities |  | 1,940,307 |  |  | — |  |  | 1,940,307 |  |  | — |
States and political subdivisions |  | 902,793 |  |  | — |  |  | 902,793 |  |  | — |
Other securities |  | 234,297 |  |  | — |  |  | 234,297 |  |  | — |
Mortgage loans held for sale |  | 9,373 |  |  | — |  |  | — |  |  | 9,373 |
Derivative asset |  | 130,271 |  |  | — |  |  | 130,271 |  |  | — |
Derivative liability |  | (27,584) |  |  | — |  |  | (27,584) |  |  | — |

Certain 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. 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 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.
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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 assets by level within the fair value hierarchy that were measured at fair value on a nonrecurring basis as of September 30, 2024 and December 31, 2023.

|  |  | Fair Value Measurements Using
(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)
September 30, 2024 |  |  |  |  |  |  |
Individually assessed loans (1) (2) (collateral-dependent) | $ | 109,648 |  |  | $ | — |  |  | $ | — |  |  | $ | 109,648 |
Foreclosed assets and other real estate owned (1) | 902 |  |  | — |  |  | — |  |  | 902 |
December 31, 2023 |  |  |  |  |  |  |
Individually assessed loans (1) (2) (collateral-dependent) | $ | 144,604 |  |  | $ | — |  |  | $ | — |  |  | $ | 144,604 |
Foreclosed assets and other real estate owned (1) | 3,646 |  |  | — |  |  | — |  |  | 3,646 |

________________________
(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 $33.3 million and $18.7 million were related to collateral-dependent loans for which fair value re-measurements took place during the periods ended September 30, 2024 and December 31, 2023, 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.
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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.
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The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows:

| Carrying |  | Fair Value Measurements
(In thousands) | Amount |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
September 30, 2024 |  |  |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 603,402 |  |  | $ | 603,402 |  |  | $ | — |  |  | $ | — |  |  | $ | 603,402 |
Interest bearing balances due from banks - time | 100 |  |  | — |  |  | 100 |  |  | — |  |  | 100 |
Held-to-maturity securities, net | 3,658,700 |  |  | — |  |  | 3,109,610 |  |  | — |  |  | 3,109,610 |
Interest receivable | 125,700 |  |  | — |  |  | 125,700 |  |  | — |  |  | 125,700 |
Loans, net | 17,102,817 |  |  | — |  |  | — |  |  | 16,174,963 |  |  | 16,174,963 |
Financial liabilities: |  |  |  |  |  |  |  |  |
Noninterest bearing transaction accounts | 4,521,715 |  |  | — |  |  | 4,521,715 |  |  | — |  |  | 4,521,715 |
Interest bearing transaction accounts and savings deposits | 10,863,945 |  |  | — |  |  | 10,863,945 |  |  | — |  |  | 10,863,945 |
Time deposits | 6,549,774 |  |  | — |  |  | — |  |  | 6,542,007 |  |  | 6,542,007 |
Federal funds purchased and securities sold under agreements to repurchase | 51,071 |  |  | — |  |  | 51,071 |  |  | — |  |  | 51,071 |
Other borrowings | 1,045,878 |  |  | — |  |  | 1,045,075 |  |  | — |  |  | 1,045,075 |
Subordinated notes and debentures | 366,255 |  |  | — |  |  | 361,885 |  |  | — |  |  | 361,885 |
Interest payable | 63,210 |  |  | — |  |  | 63,210 |  |  | — |  |  | 63,210 |
December 31, 2023 |  |  |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 614,092 |  |  | $ | 614,092 |  |  | $ | — |  |  | $ | — |  |  | $ | 614,092 |
Interest bearing balances due from banks - time | 100 |  |  | — |  |  | 100 |  |  | — |  |  | 100 |
Held-to-maturity securities, net | 3,726,288 |  |  | — |  |  | 3,135,370 |  |  | — |  |  | 3,135,370 |
Interest receivable | 122,430 |  |  | — |  |  | 122,430 |  |  | — |  |  | 122,430 |
Loans, net | 16,620,439 |  |  | — |  |  | — |  |  | 15,734,766 |  |  | 15,734,766 |
Financial liabilities: |  |  |  |  |  |  |  |  |
Noninterest bearing transaction accounts | 4,800,880 |  |  | — |  |  | 4,800,880 |  |  | — |  |  | 4,800,880 |
Interest bearing transaction accounts and savings deposits | 10,997,425 |  |  | — |  |  | 10,997,425 |  |  | — |  |  | 10,997,425 |
Time deposits | 6,446,673 |  |  | — |  |  | — |  |  | 6,414,222 |  |  | 6,414,222 |
Federal funds purchased and securities sold under agreements to repurchase | 67,969 |  |  | — |  |  | 67,969 |  |  | — |  |  | 67,969 |
Other borrowings | 972,366 |  |  | — |  |  | 970,846 |  |  | — |  |  | 970,846 |
Subordinated notes and debentures | 366,141 |  |  | — |  |  | 349,424 |  |  | — |  |  | 349,424 |
Interest payable | 35,618 |  |  | — |  |  | 35,618 |  |  | — |  |  | 35,618 |

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.
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NOTE 22: 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 25% 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 loss or gain 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 two year forward start date for these swaps occurred during late third quarter of 2023 and involves the payment of fixed interest rates with a weighted average of 1.21% in exchange for variable interest rates based on federal funds rates. For the nine month period ended September 30, 2024, the net amount included in interest income on investment securities in the consolidated statements of income related to fair value hedges was $33.8 million.
The following table summarizes the fair value hedges recorded in the accompanying consolidated balance sheets.

|  |  |  | September 30, 2024 |  | December 31, 2023
(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 |  |  | $ | 79,743 |  |  | $ | 1,001,715 |  |  | $ | 102,644 |

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) | September 30, 2024 |  | December 31, 2023 |  | September 30, 2024 |  | December 31, 2023
Investment securities - Available-for-sale | $ | 959,342 |  |  | $ | 940,010 |  |  | $ | 80,038 |  |  | $ | 104,408 |

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Customer Risk Management Interest Rate Swaps
The 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.

| September 30, 2024 |  | December 31, 2023
(In thousands) | Notional |  | Fair Value |  | Notional |  | Fair Value
Derivative assets | $ | 689,471 |  |  | $ | 28,427 |  |  | $ | 551,314 |  |  | $ | 27,627 |
Derivative liabilities | 690,409 |  |  | 28,397 |  |  | 552,274 |  |  | 27,584 |

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 $23.4 million as of September 30, 2024.
Energy Hedging
The Company, from time-to-time, has provided energy derivative services to qualifying, high quality oil and gas borrowers for hedging purposes. The Company has served 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.
The energy hedging risk exposure to the Company’s customer would increase as energy prices for crude oil and natural gas rise. As prices decrease, exposure to the exchange would increase. These risks are mitigated by customer credit underwriting policies and establishing a predetermined hedge line for each borrower and by monitoring the exchange margin.
During the second quarter of 2023, the Company’s remaining energy hedge swap contracts expired and there were no outstanding notional values related to these contracts as of September 30, 2024. Currently, the Company generally does not intend to offer hedging services to any remaining energy related customers.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders, Board of Directors and Audit Committee
Simmons First National Corporation
Pine Bluff, Arkansas
Results of Review of Interim Financial Statements
We have reviewed the consolidated balance sheet of Simmons First National Corporation (“the Company”) and subsidiaries as of September 30, 2024, and the related consolidated statements of income, comprehensive income (loss), and stockholders’ equity for the three and nine month periods ended September 30, 2024 and 2023, and cash flows for the nine month periods ended September 30, 2024 and 2023, 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 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, 2023, 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 27, 2024, 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, 2023, 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 interim 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 review 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/ Forvis Mazars, LLP
Little Rock, Arkansas
November 7, 2024
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
As permitted by SEC rules, management presents a sequential quarterly analysis of the Company’s performance 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. Accordingly, we have compared our results of operations for the three months ended September 30, 2024 to our results of operations for the three months ended June 30, 2024, as applicable, throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations. For additional information regarding the Company’s results for the three months ended June 30, 2024, please refer to our second quarter Form 10-Q filed with the SEC on August 6, 2024.
OVERVIEW
During the first nine months of 2024, we delivered solid results that clearly reflect our driving principles centered on a strong risk management culture, profitability and organic growth. While we continue to operate against a backdrop of uncertainty concerning the macroeconomic environment and the timing of lower interest rates, we are comforted by our strong capital and liquidity positions:
•Total deposits as of September 30, 2024 were $21.94 billion, compared to $22.24 billion as of December 31, 2023. Uninsured non-collateralized deposits as of September 30, 2024 were approximately $4.66 billion, or 21% of total deposits.
•Capital levels were steady during the quarter, with all regulatory capital ratios remaining significantly above “well-capitalized” guidelines as of September 30, 2024 (see Table 11 in the Risk-Based Capital section below). As of September 30, 2024, our ratio of common equity to total assets was 12.94%, the ratio of tangible common equity to tangible assets was 8.15% and our Tier 1 leverage ratio was 9.57%.
•Key credit quality metrics as of September 30, 2024 also remained solid, with our nonperforming loan coverage ratio at 229% and our allowance for credit losses as a percent of total loans ratio was 1.35%.
•Significant liquidity position with a loan to deposit ratio of 79% and 76% as of September 30, 2024 and December 31, 2023, respectively. Additional liquidity sources available to us as of September 30, 2024 totaled $11.17 billion and our uninsured, non-collateralized deposit coverage ratio was 2.4x.
Our net income for the three months ended September 30, 2024 was $24.7 million, or $0.20 diluted earnings per share, compared to net income of $40.8 million, or $0.32 diluted earnings per share, for the three months ended June 30, 2024. Included in the results for the three months ended September 30, 2024 were the impacts of a loss on sale of securities; results for the three months ended June 30, 2024 included certain items related to a FDIC special assessment. Also included in both comparative period end results were certain items related to our branch right sizing initiatives, termination of vendor and software services, and early retirement program costs. Excluding these certain items and the tax effect, adjusted earnings for the three months ended September 30, 2024 were $46.0 million, or $0.37 adjusted diluted earnings per share, compared to $41.9 million, or $0.33 adjusted diluted earnings per share, for the three months ended June 30, 2024. During the third quarter of 2024, given prevailing market conditions, we executed a strategic decision to sell approximately $251.5 million of AFS investment securities with a weighted average yield of approximately 1.29%, resulting in an after-tax loss of $21.0 million. The proceeds from the sale were used to pay off higher rate wholesale funding consisting of Federal Home Loan Bank (“FHLB”) advances.
Net income for the nine months ended September 30, 2024 was $104.4 million, or $0.83 diluted earnings per share, compared to net income of $151.2 million, or $1.19 diluted earnings per share, for the nine months ended September 30, 2023. Included in the results for the nine months ended September 30, 2024 were certain items related to a FDIC special assessment and termination of vendor and software services; results for the nine months ended September 30, 2023 included certain items related to acquisition costs. Also included in each comparative period end results were certain items related to branch right sizing initiatives, loss on sale of securities and early retirement program costs. Excluding these certain items and the tax effect, adjusted earnings for the nine months ended September 30, 2024 were $128.3 million, or $1.02 adjusted diluted earnings per share, compared to $157.5 million, or $1.24 adjusted diluted earnings per share, for the nine months ended September 30, 2023.
In 2024, Simmons Bank was recognized by U.S. News & World Report as one of the “2024-2025 Best Companies to Work For in the South” and by Forbes as one of “America’s Best-In-State Banks 2024 in Tennessee” and one of “America’s Best-In-State Employers 2024 in Missouri”.
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Credit trends throughout the industry are beginning to normalize after an extended period at historically low levels. Our asset quality metrics remain strong and reflect our conservative credit culture, as well as our focus on maintaining disciplined pricing and conservative underwriting standards given the current economic environment. Total nonperforming loans as of September 30, 2024, December 31, 2023, and September 30, 2023 were $101.7 million, $84.5 million, and $81.9 million, respectively. Non-performing assets as a percent of total assets were 0.38% at September 30, 2024, compared to 0.33% at December 31, 2023 and 0.32% at September 30, 2023.
As of September 30, 2024, stockholders’ equity was $3.53 billion, book value per share was $28.11 and tangible book value per share was $16.78.
Total loans were $17.34 billion at September 30, 2024, compared to $16.85 billion at December 31, 2023. Our unfunded commitments were $3.96 billion and $4.17 billion as of September 30, 2024 and December 31, 2023, respectively. Our commercial loan pipeline totaled $1.24 billion as of September 30, 2024, compared to $948.2 million at December 31, 2023.
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 accounting principles generally accepted in the United States (“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 adjusted financial measures of the Company and predicting future performance. See the GAAP Reconciliation of Non-GAAP Financial 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 September 30, 2024, has approximately $27.3 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.
CRITICAL ACCOUNTING 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, quantitative factors, 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. 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.
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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, the fair value adjustment is recorded as a 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 the necessary allowance for credit losses on the non-PCD loans 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 – T esting 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.
To quantitatively test goodwill for impairment, a present value of discounted cash flows calculation is completed and relies on several assumptions that have a level of subjectivity and judgement. These assumptions are dependent on market and economic conditions. Key inputs to estimate terminal fair value of the Company include projected forecasts, noninterest expense savings and a pricing multiple based on a group of peer banks with similar characteristics. These inputs are discounted by the cost of equity, which includes assumptions involving our beta; equity risk, size and company premiums; and the 20-year treasury rate. Assumptions used in calculating the cost of equity are obtained from market and third-party data. Results are compared to book value; no impairment was indicated as of September 30, 2024. Judgement is inherent in assessing goodwill for impairment. The various assumptions used in assessing goodwill for impairment involve uncertainties that are beyond our control and could cause actual results to differ materially from those projected.
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, performance stock units and stock awards. 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 15, Stock-Based Compensation, in the accompanying Condensed Notes to Consolidated Financial Statements included elsewhere in this report.
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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 noninterest 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% of our loan portfolio and approximately 89% of our time deposits have repriced in one year or less. As of September 30, 2024, our interest rate sensitivity shows that approximately 46% of our loans and 94% of our time deposits will reprice in the next year.
Net Interest Income - Sequential Quarter Analysis
For the three month period ended September 30, 2024, net interest income on a fully taxable equivalent basis was $164.1 million, an increase of $3.6 million, or 2.3%, compared to the three months ended June 30, 2024. The increase in net interest income was primarily the result of a $5.0 million increase in fully tax equivalent interest income, partially offset by a $1.3 million increase in interest expense.
The increase in interest income on a fully taxable equivalent basis primarily resulted from a $6.9 million increase in interest income on loans, partially offset by a decrease of $1.9 million in interest income on investment securities. The increase in interest income provided by loans reflects an increase attributable to loan volume of $1.7 million, coupled with a $5.2 million increase in interest income related to loan yield. The loan yield for the third quarter of 2024 was 6.44% compared to 6.39% from the preceding sequential quarter, representing a 5 basis point increase. The decrease in interest income on investment securities was primarily related to a $2.0 million decrease attributable to volume related to our taxable investment portfolio, as our portfolio experienced pay downs, maturities, and a strategic sale of $251.5 million of lower-yielding available-for-sale (“AFS”) securities to pay off higher rate wholesale fundings consisting of FHLB advances during the three months ended September 30, 2024.
The $1.3 million increase in interest expense is mostly due to the additional reliance on other wholesale borrowings sources, primarily FHLB advances, which led to a $2.0 million increase in interest expense during the quarter. Interest expense decreased by $2.1 million due to the decrease in deposit volume over the period, which was partially offset by the $1.3 million increase related to rates, largely due to the modest 2 basis point increase related to time deposit accounts, as we believe deposit costs appeared to have peaked during the third quarter of 2024.
53

Net Interest Income - Year-over-Year Analysis
Net interest income on a fully taxable equivalent basis for the nine month period ended September 30, 2024 decreased $30.5 million, or 5.9%, over the same period in 2023. The decrease in net interest income on a fully taxable equivalent basis was the result of a $99.9 million increase in fully tax equivalent interest income, more than offset by a $130.4 million increase in interest expense.
The increase in interest income during the nine month period ended September 30, 2024 resulted from increases in interest income on loans and investments, primarily as a result of higher market interest rates. The increase in interest income on loans of $82.9 million reflects an increase attributable to loan volume of $21.2 million coupled with a 48 basis point rise in loan yield that resulted in a $61.7 million increase. The increase attributable to loan volume was due to solid organic loan growth over the comparative period. The increase of $18.4 million in interest income on investment securities is primarily related to an increase of $37.1 million in interest income on taxable investment securities due to yield increases over the period of 116 basis points. The increase in interest income on taxable investment securities due to yield increases was mitigated by an $18.4 million decrease due to the decline in our taxable investment portfolio average balances which decreased by $788.2 million or 16.4%, as our portfolio experienced pay downs, maturities, the strategic sale of lower-yielding AFS securities during the third quarter of 2024 as discussed above and a strategic sale of $241.1 million of lower-yielding AFS securities late in the fourth quarter of 2023, the proceeds of which we used to pay off higher-rate wholesale fundings in each period.
The $130.4 million increase in interest expense is mainly due to the increase in our deposit account rates over the period, combined with the change in deposit mix as the market experiences a shift in consumer sentiment given the attractiveness of higher yielding time deposits in the current higher interest rate environment. Interest expense increased $114.8 million due to the increase in rate of 92 basis points on interest-bearing deposit accounts and $13.3 million due to the increase in deposit volume over the period. Further, an increase of $2.9 million in interest expense was related to an increase in rates on our subordinated debentures during the same period. We continually monitor and look for opportunities to fairly reprice our deposits while remaining competitive in this current challenging rate environment.
Net Interest Margin
Our net interest margin on a fully tax equivalent basis was 2.74% and 2.70% for the three and nine month periods ended September 30, 2024, as compared to 2.69% and 2.82% for the three months ended June 30, 2024 and the nine months ended September 30, 2023, respectively. Net interest margin experienced a 5 basis point increase for the three months ended September 30, 2024 compared to the preceding sequential quarter, while net interest margin decreased 12 basis points during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase as compared to the preceding sequential quarter was aided by the strategic sale of lower-yielding AFS investment securities during the three month period ended September 30, 2024. The decrease when compared to the same period in the prior year was primarily due to the rising deposit rate pressure from increased market competition and consumer migration toward higher rate deposits.
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Net Interest Income Tables
Tables 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the three months ended September 30, 2024 and June 30, 2024 and the nine months ended September 30, 2024 and 2023, respectively.
Table 1: Analysis of Net Interest Margin
(FTE = Fully Taxable Equivalent using an effective tax rate of 26.135%)

| Three Months Ended |  | Nine Months Ended
| September 30, |  | June 30, |  | September 30, |  | September 30,
(In thousands) | 2024 |  | 2024 |  | 2024 |  | 2023
Interest income | $ | 334,289 |  |  | $ | 329,145 |  |  | $ | 986,083 |  |  | $ | 886,643 |
FTE adjustment | 6,398 |  |  | 6,576 |  |  | 19,396 |  |  | 18,932 |
Interest income – FTE | 340,687 |  |  | 335,721 |  |  | 1,005,479 |  |  | 905,575 |
Interest expense | 176,577 |  |  | 175,240 |  |  | 522,560 |  |  | 392,145 |
Net interest income – FTE | $ | 164,110 |  |  | $ | 160,481 |  |  | $ | 482,919 |  |  | $ | 513,430 |
Yield on earning assets – FTE | 5.68 | % |  | 5.64 | % |  | 5.62 | % |  | 4.97 | %
Cost of interest bearing liabilities | 3.73 | % |  | 3.72 | % |  | 3.69 | % |  | 2.81 | %
Net interest spread – FTE | 1.95 | % |  | 1.92 | % |  | 1.93 | % |  | 2.16 | %
Net interest margin – FTE | 2.74 | % |  | 2.69 | % |  | 2.70 | % |  | 2.82 | %

Table 2: Changes in Fully Taxable Equivalent Net Interest Margin

| Three Months Ended |  | Nine Months Ended
(In thousands) | September 30, 2024 compared to June 30, 2024 |  | September 30, 2024 compared to September 30, 2023 |  |
Decrease due to change in earning assets | $ | (283) |  |  | $ | (2,265) |  |  |
Increase due to change in earning asset yields | 5,249 |  |  | 102,169 |  |  |
Increase (decrease) due to change in interest bearing liabilities | 196 |  |  | (9,788) |  |  |
Decrease due to change in interest rates paid on interest bearing liabilities | (1,533) |  |  | (120,627) |  |  |
Increase (decrease) in net interest income | $ | 3,629 |  |  | $ | (30,511) |  |  |

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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 months ended September 30, 2024 and June 30, 2024 and the nine months ended September 30, 2024 and 2023, 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
| September 30, 2024 |  | June 30, 2024
| 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 | $ | 204,505 |  |  | $ | 2,921 |  |  | 5.68 |  |  | $ | 214,777 |  |  | $ | 2,964 |  |  | 5.55 |
Investment securities - taxable | 3,826,934 |  |  | 37,473 |  |  | 3.90 |  |  | 4,035,508 |  |  | 39,283 |  |  | 3.92 |
Investment securities - non-taxable | 2,617,532 |  |  | 21,318 |  |  | 3.24 |  |  | 2,597,005 |  |  | 21,429 |  |  | 3.32 |
Mortgage loans held for sale | 12,425 |  |  | 209 |  |  | 6.69 |  |  | 10,328 |  |  | 194 |  |  | 7.55 |
Loans - including fees | 17,208,162 |  |  | 278,766 |  |  | 6.44 |  |  | 17,101,799 |  |  | 271,851 |  |  | 6.39 |
Total interest earning assets | 23,869,558 |  |  | 340,687 |  |  | 5.68 |  |  | 23,959,417 |  |  | 335,721 |  |  | 5.64 |
Non-earning assets | 3,346,882 |  |  |  |  |  |  | 3,345,860 |  |  |  |  |
Total assets | $ | 27,216,440 |  |  |  |  |  |  | $ | 27,305,277 |  |  |  |  |
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Interest bearing liabilities: |  |  |  |  |  |  |  |  |  |  |
Interest bearing transaction and savings deposits | $ | 10,826,514 |  |  | $ | 78,307 |  |  | 2.88 |  |  | $ | 10,973,462 |  |  | $ | 79,087 |  |  | 2.90 |
Time deposits | 6,355,801 |  |  | 73,937 |  |  | 4.63 |  |  | 6,447,259 |  |  | 73,946 |  |  | 4.61 |
Total interest bearing deposits | 17,182,315 |  |  | 152,244 |  |  | 3.52 |  |  | 17,420,721 |  |  | 153,033 |  |  | 3.53 |
Federal funds purchased and securities sold under agreements to repurchase | 51,830 |  |  | 138 |  |  | 1.06 |  |  | 50,558 |  |  | 156 |  |  | 1.24 |
Other borrowings | 1,252,435 |  |  | 17,067 |  |  | 5.42 |  |  | 1,111,734 |  |  | 15,025 |  |  | 5.44 |
Subordinated debt and debentures | 366,236 |  |  | 7,128 |  |  | 7.74 |  |  | 366,198 |  |  | 7,026 |  |  | 7.72 |
Total interest bearing liabilities | 18,852,816 |  |  | 176,577 |  |  | 3.73 |  |  | 18,949,211 |  |  | 175,240 |  |  | 3.72 |
Noninterest bearing liabilities: |  |  |  |  |  |  |  |  |  |  |
Noninterest bearing deposits | 4,535,105 |  |  |  |  |  |  | 4,624,819 |  |  |  |  |
Other liabilities | 323,378 |  |  |  |  |  |  | 280,092 |  |  |  |  |
Total liabilities | 23,711,299 |  |  |  |  |  |  | 23,854,122 |  |  |  |  |
Stockholders’ equity | 3,505,141 |  |  |  |  |  |  | 3,451,155 |  |  |  |  |
Total liabilities and stockholders’ equity | $ | 27,216,440 |  |  |  |  |  |  | $ | 27,305,277 |  |  |  |  |
Net interest spread – FTE |  |  |  |  | 1.95 |  |  |  |  |  |  | 1.92 |
Net interest margin – FTE |  |  | $ | 164,110 |  |  | 2.74 |  |  |  |  | $ | 160,481 |  |  | 2.69 |

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| Nine Months Ended
| September 30, 2024 |  | September 30, 2023
| 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 | $ | 210,114 |  |  | $ | 8,895 |  |  | 5.65 |  |  | $ | 350,523 |  |  | $ | 10,375 |  |  | 3.96 |
Investment securities - taxable | 4,007,636 |  |  | 118,954 |  |  | 3.96 |  |  | 4,795,820 |  |  | 100,283 |  |  | 2.80 |
Investment securities - non-taxable | 2,616,638 |  |  | 64,048 |  |  | 3.27 |  |  | 2,622,967 |  |  | 64,338 |  |  | 3.28 |
Mortgage loans held for sale | 10,607 |  |  | 551 |  |  | 6.94 |  |  | 8,205 |  |  | 414 |  |  | 6.75 |
Loans - including fees | 17,070,656 |  |  | 813,031 |  |  | 6.36 |  |  | 16,598,492 |  |  | 730,165 |  |  | 5.88 |
Total interest earning assets | 23,915,651 |  |  | 1,005,479 |  |  | 5.62 |  |  | 24,376,007 |  |  | 905,575 |  |  | 4.97 |
Non-earning assets | 3,344,561 |  |  |  |  |  |  | 3,240,875 |  |  |  |  |
Total assets | $ | 27,260,212 |  |  |  |  |  |  | $ | 27,616,882 |  |  |  |  |
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Interest bearing liabilities: |  |  |  |  |  |  |  |  |  |  |
Interest bearing transaction and savings deposits | $ | 10,976,906 |  |  | $ | 236,086 |  |  | 2.87 |  |  | $ | 11,135,226 |  |  | $ | 167,570 |  |  | 2.01 |
Time deposits | 6,416,801 |  |  | 221,124 |  |  | 4.60 |  |  | 5,879,908 |  |  | 161,479 |  |  | 3.67 |
Total interest bearing deposits | 17,393,707 |  |  | 457,210 |  |  | 3.51 |  |  | 17,015,134 |  |  | 329,049 |  |  | 2.59 |
Federal funds purchased and securities sold under agreements to repurchase | 52,181 |  |  | 483 |  |  | 1.24 |  |  | 119,259 |  |  | 918 |  |  | 1.03 |
Other borrowings | 1,079,781 |  |  | 43,741 |  |  | 5.41 |  |  | 1,154,840 |  |  | 43,910 |  |  | 5.08 |
Subordinated debt and debentures | 366,199 |  |  | 21,126 |  |  | 7.71 |  |  | 366,047 |  |  | 18,268 |  |  | 6.67 |
Total interest bearing liabilities | 18,891,868 |  |  | 522,560 |  |  | 3.69 |  |  | 18,655,280 |  |  | 392,145 |  |  | 2.81 |
Noninterest bearing liabilities: |  |  |  |  |  |  |  |  |  |  |
Noninterest bearing deposits | 4,604,445 |  |  |  |  |  |  | 5,314,988 |  |  |  |  |
Other liabilities | 295,991 |  |  |  |  |  |  | 279,526 |  |  |  |  |
Total liabilities | 23,792,304 |  |  |  |  |  |  | 24,249,794 |  |  |  |  |
Stockholders’ equity | 3,467,908 |  |  |  |  |  |  | 3,367,088 |  |  |  |  |
Total liabilities and stockholders’ equity | $ | 27,260,212 |  |  |  |  |  |  | $ | 27,616,882 |  |  |  |  |
Net interest spread – FTE |  |  |  |  | 1.93 |  |  |  |  |  |  | 2.16 |
Net interest margin – FTE |  |  | $ | 482,919 |  |  | 2.70 |  |  |  |  | $ | 513,430 |  |  | 2.82 |

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Table 4 shows changes in interest income and interest expense resulting from changes in both volume and interest rates for the three months ended September 30, 2024 as compared to the three months ended June 30, 2024 and the nine months ended September 30, 2024 and 2023, 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 |  | Nine Months Ended
| September 30, 2024 compared to June 30, 2024 |  | September 30, 2024 compared to September 30, 2023
(In thousands, on a fully taxable equivalent basis) | Volume |  | Yield/ Rate |  | Total |  | Volume |  | Yield/ Rate |  | Total
Increase (decrease) in: |  |  |  |  |  |  |  |  |  |  |
Interest income: |  |  |  |  |  |  |  |  |  |  |
Interest bearing balances due from banks and federal funds sold | $ | (145) |  |  | $ | 102 |  |  | $ | (43) |  |  | $ | (5,018) |  |  | $ | 3,538 |  |  | $ | (1,480) |
Investment securities - taxable | (2,041) |  |  | 231 |  |  | (1,810) |  |  | (18,427) |  |  | 37,098 |  |  | 18,671 |
Investment securities - non-taxable | 168 |  |  | (279) |  |  | (111) |  |  | (155) |  |  | (135) |  |  | (290) |
Mortgage loans held for sale | 36 |  |  | (21) |  |  | 15 |  |  | 125 |  |  | 12 |  |  | 137 |
Loans - including fees | 1,699 |  |  | 5,216 |  |  | 6,915 |  |  | 21,210 |  |  | 61,656 |  |  | 82,866 |
Total | (283) |  |  | 5,249 |  |  | 4,966 |  |  | (2,265) |  |  | 102,169 |  |  | 99,904 |
Interest expense: |  |  |  |  |  |  |  |  |  |  |
Interest bearing transaction and savings accounts | (1,062) |  |  | 282 |  |  | (780) |  |  | (2,416) |  |  | 70,932 |  |  | 68,516 |
Time deposits | (1,056) |  |  | 1,047 |  |  | (9) |  |  | 15,736 |  |  | 43,909 |  |  | 59,645 |
Federal funds purchased and securities sold under agreements to repurchase | 4 |  |  | (22) |  |  | (18) |  |  | (593) |  |  | 158 |  |  | (435) |
Other borrowings | 1,917 |  |  | 125 |  |  | 2,042 |  |  | (2,947) |  |  | 2,778 |  |  | (169) |
Subordinated notes and debentures | 1 |  |  | 101 |  |  | 102 |  |  | 8 |  |  | 2,850 |  |  | 2,858 |
Total | (196) |  |  | 1,533 |  |  | 1,337 |  |  | 9,788 |  |  | 120,627 |  |  | 130,415 |
(Decrease) increase in net interest income | $ | (87) |  |  | $ | 3,716 |  |  | $ | 3,629 |  |  | $ | (12,053) |  |  | $ | (18,458) |  |  | $ | (30,511) |

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 provision for credit losses for the three months ended September 30, 2024 was $12.1 million as compared to $11.1 million for the three months ended June 30, 2024. Provision expense for both periods was related to loans and reflected loan growth in the quarters, as well as the impact of updated economic assumptions.
For the nine months ended September 30, 2024, our provision for credit losses was $33.5 million as compared to $32.0 million for the same period ended September 30, 2023. Provision expense for the nine months ended September 30, 2024 was related to loans and reflected loan growth in the quarter, as well as the impact of updated economic assumptions. Provision expense for the same period ended September 30, 2023 consisted of a $36.2 million expense related to loans and was primarily due to the impacts described above, which was partially offset by the recapture of $16.3 million reflecting the continued decline in unfunded commitments over the period, and a $12.1 million expense related to securities which was primarily due to decreases in the value of corporate bonds in the investment securities portfolio.
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NONINTEREST INCOME
Noninterest income is principally derived from recurring fee income, which includes service charges, wealth management fees and debit and credit card fees. Noninterest income also includes income on the sale of mortgage loans, income from the increase in cash surrender values of bank owned life insurance and gains (losses) from sales of securities.
For the three month period ended September 30, 2024, total noninterest income was $17.1 million, a decrease of approximately $26.2 million or 60.4%, compared to the three month period ended June 30, 2024. The majority of the decrease in noninterest income during the three months ended September 30, 2024 was due to a loss on sale of securities of $28.4 million. During the period, we sold approximately $251.5 million of AFS investment securities as part of a strategic decision to sell low yielding securities to pay off higher rate wholesale fundings consisting of FHLB advances. Adjusting for this certain item, adjusted noninterest income for the three month period ended September 30, 2024 increased $2.2 million, or 5.1%, from the prior sequential quarter. The increase in adjusted noninterest income on a sequential quarter basis was primarily due to an increase in other income of $1.9 million from the prior sequential quarter reflecting gains on the sale of other real estate owned largely related to two properties sold during the quarter.
Noninterest income for the nine months ended September 30, 2024 decreased by approximately $30.0 million or 22.4% as compared to the nine months ended September 30, 2023. The decrease, as compared to the same period in 2023, was primarily due to losses on sale of securities of $28.4 million discussed above and $391,000, recognized during each respective period. Adjusting for these certain items, adjusted noninterest income for the nine month period ended September 30, 2024 decreased $2.0 million, or 1.5%, from the prior comparative period. The decrease on an adjusted basis was related to a $6.6 million decrease in other income due to a $4.0 million legal reserve recapture associated with litigation, coupled with fair value adjustments related to Small Business Investment Company (“SBIC”) investments and death benefits from bank owned life insurance totaling $3.5 million recorded during the nine months ended September 30, 2023. Partially offsetting the decrease in other income was an increase of $2.8 million in bank owned life insurance income during the nine months ended September 30, 2024 related to a higher earnings credit rate as compared to the prior period.
Table 5 shows noninterest income for the three month periods ended September 30, 2024 and June 30, 2024 and the nine months ended September 30, 2024 and 2023, respectively, as well as changes between periods.
Table 5: Noninterest Income

| Three Months Ended |  | Nine Months Ended
| September 30, |  | June 30, |  | Change |  | September 30, |  | September 30, |  | Change
(Dollars in thousands) | 2024 |  | 2024 |  | $ |  | % |  | 2024 |  | 2023 |  | $ |  | %
Service charges on deposit accounts | $ | 12,713 |  |  | $ | 12,252 |  |  | $ | 461 |  |  | 3.8% |  | $ | 36,920 |  |  | $ | 37,748 |  |  | $ | (828) |  |  | (2.2)%
Debit and credit card fees | 8,144 |  |  | 8,162 |  |  | (18) |  |  | (0.2) |  | 24,552 |  |  | 23,650 |  |  | 902 |  |  | 3.8
Wealth management fees | 8,226 |  |  | 8,274 |  |  | (48) |  |  | (0.6) |  | 23,978 |  |  | 22,524 |  |  | 1,454 |  |  | 6.5
Mortgage lending income | 1,956 |  |  | 1,973 |  |  | (17) |  |  | (0.9) |  | 6,249 |  |  | 6,130 |  |  | 119 |  |  | 1.9
Bank owned life insurance income | 3,757 |  |  | 3,876 |  |  | (119) |  |  | (3.1) |  | 11,447 |  |  | 8,623 |  |  | 2,824 |  |  | 32.8
Other service charges and fees | 2,381 |  |  | 2,352 |  |  | 29 |  |  | 1.2 |  | 6,932 |  |  | 6,776 |  |  | 156 |  |  | 2.3
Loss on sale of securities, net | (28,393) |  |  | — |  |  | (28,393) |  |  | * |  | (28,393) |  |  | (391) |  |  | (28,002) |  |  | *
Other income | 8,346 |  |  | 6,410 |  |  | 1,936 |  |  | 30.2 |  | 21,928 |  |  | 28,532 |  |  | (6,604) |  |  | (23.2)
Total noninterest income | $ | 17,130 |  |  | $ | 43,299 |  |  | $ | (26,169) |  |  | (60.4)% |  | $ | 103,613 |  |  | $ | 133,592 |  |  | $ | (29,979) |  |  | (22.4)%

_________________________
*Not meaningful
Recurring fee income (total service charges, wealth management fees, debit and credit card fees) was $31.5 million and $31.0 million for the three month periods ended September 30, 2024 and June 30, 2024, respectively, and was $92.4 million and $90.7 million for the nine month periods ended September 30, 2024 and 2023, respectively.
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NONINTEREST EXPENSE
Noninterest 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 noninterest 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.
Noninterest expense was $137.2 million for the three month period ended September 30, 2024, as compared to noninterest expense of $139.4 million for the three month period ended June 30, 2024, representing a decrease of $2.2 million, or 1.6%, as compared to the preceding quarter. Adjusted noninterest expense, which excludes branch right sizing, early retirement program costs, termination of vendor and software services, and FDIC special assessment (for the three months ended June 30, 2024), for the three months ended September 30, 2024 was $136.8 million, a decrease of $1.0 million as compared to the three months ended June 30, 2024.
Noninterest expense for the nine months ended September 30, 2024 increased by approximately $1.5 million or 0.4% as compared to the nine months ended September 30, 2023. Adjusted noninterest expense, which excludes branch right sizing, merger related costs (for the nine months ended September 30, 2023), FDIC special assessment (for the nine months ended September 30, 2024), termination of vendor and software services (for the nine months ended September 30, 2024) and early retirement program costs, increased $5.8 million, or 1.4%, as compared to the nine months ended September 30, 2023.
Salaries and employee benefits expense decreased $1.5 million during the three month period ended September 30, 2024 as compared to the preceding sequential quarter and decreased $6.6 million during the nine month period ended September 30, 2024 when compared to the same period in the prior year. Adjusted salaries and employee benefits expense, which excludes early retirement program costs, for the three months ended September 30, 2024, decreased $1.4 million, or 2.0%, as compared to the preceding sequential quarter and decreased $1.8 million, or 0.8%, during the nine month period ended September 30, 2024 when compared to the same period in the prior year. The decrease as compared to the preceding sequential quarter reflects incentive compensation accrual adjustments, while the decrease as compared to the same period in the prior year is primarily due to the successful execution of programs as part of our Better Bank Initiative.
Deposit insurance expense for the three and nine months ended September 30, 2024 as compared to the three months ended June 30, 2024 and nine months ended September 30, 2023 decreased by $111,000 and increased by $3.6 million, respectively. While the variance in deposit insurance expense on a sequential quarter basis is relatively flat, the increase on a year over year basis for the nine months ended September 30, 2024 is significantly attributable to the additional FDIC special assessments totaling $1.8 million during the nine months ended September 30, 2024, which were levied to support the Deposit Insurance Fund following the failure of certain banks in 2023, coupled with base assessment rate increases related to changes in the mix of deposits.
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Table 6 below shows noninterest expense for the three month periods ended September 30, 2024 and June 30, 2024 and the nine months ended September 30, 2024 and 2023, respectively, as well as changes between periods.
Table 6: Noninterest Expense

| Three Months Ended |  | Nine Months Ended
| September 30, |  | June 30, |  | Change |  | September 30, |  | September 30, |  | Change
(Dollars in thousands) | 2024 |  | 2024 |  | $ |  | % |  | 2024 |  | 2023 |  | $ |  | %
Salaries and employee benefits | $ | 69,168 |  |  | $ | 70,598 |  |  | $ | (1,430) |  |  | (2.0)% |  | $ | 212,200 |  |  | $ | 213,969 |  |  | $ | (1,769) |  |  | (0.8)%
Early retirement program | (1) |  |  | 118 |  |  | (119) |  |  | (100.9) |  | 336 |  |  | 5,166 |  |  | (4,830) |  |  | (93.5)
Occupancy expense, net | 12,216 |  |  | 11,864 |  |  | 352 |  |  | 3.0 |  | 36,338 |  |  | 35,008 |  |  | 1,330 |  |  | 3.8
Furniture and equipment expense | 5,612 |  |  | 5,623 |  |  | (11) |  |  | (0.2) |  | 16,376 |  |  | 15,296 |  |  | 1,080 |  |  | 7.1
Other real estate and foreclosure expense | 87 |  |  | 117 |  |  | (30) |  |  | (25.6) |  | 383 |  |  | 703 |  |  | (320) |  |  | (45.5)
Deposit insurance | 5,571 |  |  | 5,682 |  |  | (111) |  |  | (2.0) |  | 18,388 |  |  | 14,766 |  |  | 3,622 |  |  | 24.5
Merger related costs | — |  |  | — |  |  | — |  |  | — |  | — |  |  | 1,420 |  |  | (1,420) |  |  | (100.0)
Other operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Professional services | 5,554 |  |  | 6,329 |  |  | (775) |  |  | (12.3) |  | 15,950 |  |  | 14,443 |  |  | 1,507 |  |  | 10.4
Postage | 2,296 |  |  | 2,174 |  |  | 122 |  |  | 5.6 |  | 6,507 |  |  | 6,973 |  |  | (466) |  |  | (6.7)
Telephone | 1,580 |  |  | 1,560 |  |  | 20 |  |  | 1.3 |  | 4,860 |  |  | 5,182 |  |  | (322) |  |  | (6.2)
Debit and credit card | 3,201 |  |  | 3,215 |  |  | (14) |  |  | (0.4) |  | 9,744 |  |  | 9,989 |  |  | (245) |  |  | (2.5)
Marketing | 7,059 |  |  | 6,359 |  |  | 700 |  |  | 11.0 |  | 20,066 |  |  | 18,041 |  |  | 2,025 |  |  | 11.2
Software and technology | 10,970 |  |  | 10,872 |  |  | 98 |  |  | 0.9 |  | 32,585 |  |  | 31,299 |  |  | 1,286 |  |  | 4.1
Operating supplies | 562 |  |  | 607 |  |  | (45) |  |  | (7.4) |  | 1,808 |  |  | 1,762 |  |  | 46 |  |  | 2.6
Amortization of intangibles | 3,851 |  |  | 3,852 |  |  | (1) |  |  | — |  | 11,553 |  |  | 12,291 |  |  | (738) |  |  | (6.0)
Branch right sizing | 410 |  |  | 519 |  |  | (109) |  |  | (21.0) |  | 1,165 |  |  | 1,621 |  |  | (456) |  |  | (28.1)
Other | 9,057 |  |  | 9,865 |  |  | (808) |  |  | (8.2) |  | 28,167 |  |  | 26,993 |  |  | 1,174 |  |  | 4.4
Total noninterest expense | $ | 137,193 |  |  | $ | 139,354 |  |  | $ | (2,161) |  |  | (1.6)% |  | $ | 416,426 |  |  | $ | 414,922 |  |  | $ | 1,504 |  |  | 0.4%

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 held-to-maturity (“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 $3.66 billion and $2.69 billion, respectively, at September 30, 2024, compared to the HTM amount of $3.73 billion and AFS amount of $3.15 billion at December 31, 2023. We continue to look for opportunities to maximize the value of the investment portfolio.
During the quarters ended June 30, 2022 and September 30, 2021, we transferred, at fair value, $1.99 billion and $500.8 million, respectively, of securities from the AFS portfolio to the HTM portfolio. The related remaining combined net unrealized losses of $112.7 million in accumulated other comprehensive income (loss) as of September 30, 2024 will be amortized over the remaining life of the securities. No gains or losses on these securities were recognized at the time of transfer.
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. We expect the cash flows from principal maturities of securities to provide flexibility to fund future loan growth or reduce wholesale funding.
During the three month period ended September 30, 2024, we sold approximately $251.5 million of AFS investment securities as part of a strategic decision to sell low yielding securities to pay off higher rate wholesale fundings consisting of FHLB advances resulting in a gross realized loss of $28.4 million.
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Furthermore, as of September 30, 2024, we have the ability to hold the securities classified as AFS for a period of time sufficient for a recovery of amortized cost, we do not have an immediate intent to sell the securities classified as AFS, and we believe the accounting standard of “more likely than not” has not been met regarding whether we would be required to sell any of the AFS securities before recovery of amortized cost. For the remainder of 2024, we will continue to evaluate targeted sales of AFS securities based on prevailing market conditions and our funding and liquidity positions. 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. Accordingly, as of September 30, 2024, we believe the declines in fair value are temporary and we do not believe any of the securities are impaired due to reasons of credit quality.
During the third quarter of 2021, we began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of $1.00 billion of fixed rate callable municipal securities held in the AFS portfolio. These swap agreements consist of a two year forward start date and involve the payment of fixed interest rates with a weighted average rate of 1.21% in exchange for variable interest rates based on federal funds rates, which became effective during late third quarter of 2023. Securities within these swap agreements have maturity dates varying between 2028 and 2029. For the nine months ended September 30, 2024, the net amount included in interest income on investment securities in the consolidated statements of income related to these swap agreements was $33.8 million.
LOAN PORTFOLIO
Our loan portfolio averaged $17.07 billion and $16.60 billion during the first nine months of 2024 and 2023, respectively. As of September 30, 2024, total loans were $17.34 billion, an increase of $490.4 million from December 31, 2023. The increase in the average loan balance during the first nine months of 2024 when compared to the same period in 2023 is primarily due to the continued widespread organic loan growth throughout our geographic markets over the comparative period. 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.
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The balances of loans outstanding at the indicated dates are reflected in Table 7, according to type of loan.
Table 7: Loan Portfolio

| September 30, |  | December 31,
(In thousands) | 2024 |  | 2023
Consumer: |  |  |
Credit cards | $ | 177,696 |  |  | $ | 191,204 |
Other consumer | 113,896 |  |  | 127,462 |
Total consumer | 291,592 |  |  | 318,666 |
Real estate: |  |  |
Construction and development | 2,796,378 |  |  | 3,144,220 |
Single family residential | 2,724,648 |  |  | 2,641,556 |
Other commercial | 7,992,437 |  |  | 7,552,410 |
Total real estate | 13,513,463 |  |  | 13,338,186 |
Commercial: |  |  |
Commercial | 2,467,384 |  |  | 2,490,176 |
Agricultural | 314,340 |  |  | 232,710 |
Total commercial | 2,781,724 |  |  | 2,722,886 |
Other | 749,261 |  |  | 465,932 |
Total loans before allowance for credit losses | $ | 17,336,040 |  |  | $ | 16,845,670 |

Consumer loans consist of credit card loans and other consumer loans. Consumer loans were $291.6 million at September 30, 2024, or 1.7% of total loans, compared to $318.7 million, or 1.9% of total loans at December 31, 2023. The decrease in consumer loans from December 31, 2023, to September 30, 2024, was primarily due to loan payoffs and pay downs within the credit card and other consumer portfolios during the period.
Real estate loans consist of construction and development loans (“C&D”) loans, single-family residential loans and commercial real estate (“CRE”) loans. Real estate loans were $13.51 billion at September 30, 2024, or 78.0% of total loans, compared to $13.34 billion, or 79.2%, of total loans at December 31, 2023, an increase of $175.3 million, or 1.3%. Our C&D loans decreased by $347.8 million, or 11.1%, single family residential loans increased by $83.1 million, or 3.1%, and CRE loans increased by $440.0 million, or 5.8%. The changes among our real estate portfolio reflected our focus on maintaining conservative underwriting standards and structure guidelines while emphasizing prudent pricing discipline during the first nine months of 2024. 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 $2.78 billion at September 30, 2024, or 16.0% of total loans, compared to $2.72 billion, or 16.2% of total loans at December 31, 2023, an increase of $58.8 million, or 2.2%. The increase in commercial loans was related to the increase in agricultural loans of $81.6 million, or 35.1%, primarily due to seasonality of the portfolio, which normally peaks in the third quarter.
Other loans mainly consist of mortgage warehouse lending and municipal loans. Mortgage volume experienced an increase in demand during the first nine months of 2024 as compared to December 31, 2023, and was coupled with continued organic growth in our municipal loans during the quarter, leading to an increase of $283.3 million in other loans.
While loan growth was widespread throughout our geographic markets and was generally broad-based by loan type during the first nine months of 2024, loan growth during the first nine months of 2024 reflected moderating demand and increased payoff activity, as we focus on maintaining disciplined pricing and conservative underwriting standards given the current economic environment. Our commercial loan pipeline consisting of all commercial loan opportunities was $1.24 billion at September 30, 2024 compared to $948.2 million at December 31, 2023. Loans approved and ready to close at the end of the quarter totaled $549.1 million.
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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 increased $14.0 million from December 31, 2023 to September 30, 2024. Nonaccrual loans increased by $17.5 million from December 31, 2023 and foreclosed assets held for sale and other real estate owned decreased $2.8 million as compared to December 31, 2023. The increase in nonaccrual assets was primarily due to two large loans being placed in nonaccrual status during the period. One is a $3.9 million non-owner occupied real estate construction loan and the other is a $6.6 million non-owner occupied real estate loan to a business that was negatively impacted by the COVID-19 pandemic.
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.
We have internal loan modification programs for borrowers experiencing financial difficulties. Modifications to borrowers experiencing financial difficulties (“FDMs”) may include interest rate reductions, principal or interest forgiveness and/or term extensions. We primarily use interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal.
There were three loan modifications granted to borrowers experiencing financial difficulty during the nine month period ended September 30, 2024. Such modifications included interest rate reductions and had a total period-end amortized cost basis of $795,000 at September 30, 2024.
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 1.35% as of September 30, 2024. Non-performing loans equaled 0.59% of total loans. Non-performing assets were 0.38% of total assets, a 5 basis point increase from December 31, 2023. The allowance for credit losses was 229% of non-performing loans. Our annualized net charge-offs to average total loans ratio for the first nine months of 2024 was 0.20%. Annualized net credit card charge-offs to average total credit card loans were 2.87% for the first nine months of 2024, compared to 2.20% during the full year 2023, and 186 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks.
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Table 8 presents information concerning non-performing assets, including nonaccrual loans at amortized cost and foreclosed assets held for sale.
Table 8: Non-performing Assets

| September 30, |  | December 31, |  | September 30,
(Dollars in thousands) | 2024 |  | 2023 |  | 2023
Nonaccrual loans (1) | $ | 100,865 |  |  | $ | 83,325 |  |  | $ | 81,135 |
Loans past due 90 days or more (principal or interest payments) | 830 |  |  | 1,147 |  |  | 806 |
Total non-performing loans | 101,695 |  |  | 84,472 |  |  | 81,941 |
Other non-performing assets: |  |  |  |  |
Foreclosed assets held for sale and other real estate owned | 1,299 |  |  | 4,073 |  |  | 3,809 |
Other non-performing assets | 1,311 |  |  | 1,726 |  |  | 1,417 |
Total other non-performing assets | 2,610 |  |  | 5,799 |  |  | 5,226 |
Total non-performing assets | $ | 104,305 |  |  | $ | 90,271 |  |  | $ | 87,167 |
Allowance for credit losses to non-performing loans | 229 | % |  | 267 | % |  | 267 | %
Non-performing loans to total loans | 0.59 | % |  | 0.50 | % |  | 0.49 | %
Non-performing assets to total assets | 0.38 | % |  | 0.33 | % |  | 0.32 | %

_______________________________________
(1)Includes nonaccrual FDMs of approximately $818,000 and $282,000 at September 30, 2024 and December 31, 2023, respectively.
The interest income on nonaccrual loans is not considered material for the three and nine month periods ended September 30, 2024 and 2023.
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, quantitative factors, and other qualitative considerations.
Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated for collective assessment. We use statistically-based models that leverage assumptions about current and future economic conditions throughout the contractual life of the loan. Expected credit losses are estimated by either lifetime loss rates or expected loss cash flows based on three key parameters: probability-of-default (“PD”), exposure-at-default (“EAD”), and loss-given-default (“LGD”). Future economic conditions are incorporated to the extent that they are reasonable and supportable. Beyond the reasonable and supportable periods, the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenarios. We also include qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for.
Loans that have unique risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating. For a collateral-dependent loan, our 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.
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An analysis of the allowance for credit losses on loans is shown in Table 9.
Table 9: Allowance for Credit Losses

(In thousands) | 2024 |  | 2023
Balance, beginning of year | $ | 225,231 |  |  | $ | 196,955 |
Loans charged off: |  |  |
Credit card | 4,808 |  |  | 3,803 |
Other consumer | 1,806 |  |  | 1,755 |
Real estate | 3,139 |  |  | 11,362 |
Commercial | 20,071 |  |  | 2,857 |
Total loans charged off | 29,824 |  |  | 19,777 |
Recoveries of loans previously charged off: |  |  |
Credit card | 700 |  |  | 766 |
Other consumer | 1,117 |  |  | 1,020 |
Real estate | 1,210 |  |  | 1,601 |
Commercial | 1,336 |  |  | 1,783 |
Total recoveries | 4,363 |  |  | 5,170 |
Net loans charged off | 25,461 |  |  | 14,607 |
Provision for credit losses | 33,453 |  |  | 36,199 |
Balance, September 30, | $ | 233,223 |  |  | $ | 218,547 |
Loans charged off: |  |  |
Credit card |  |  | 1,500 |
Other consumer |  |  | 767 |
Real estate |  |  | 1,023 |
Commercial |  |  | 3,105 |
Total loans charged off |  |  | 6,395 |
Recoveries of loans previously charged off: |  |  |
Credit card |  |  | 242 |
Other consumer |  |  | 518 |
Real estate |  |  | 785 |
Commercial |  |  | 309 |
Total recoveries |  |  | 1,854 |
Net loans charged off |  |  | 4,541 |
Provision for credit losses |  |  | 11,225 |
Balance, end of year |  |  | $ | 225,231 |

Provision for Credit Losses
The amount of provision added to or released from the allowance during the three and nine months ended September 30, 2024 and 2023, and for the year ended December 31, 2023, was based on management’s judgment, with consideration given to the composition and asset quality of the portfolio, historical loan loss experience, and assessment of current and expected economic forecasts and conditions. 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 September 30, 2024, the allowance for credit losses reflected an increase of approximately $8.0 million from December 31, 2023, while total loans increased by $490.4 million over the same nine month period. The allocation in each category within the allowance generally reflects the overall changes in the loan portfolio mix.
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The increase in the allowance for credit losses during the first nine months of 2024 was primarily due to the loan growth experienced during the first three quarters of the year, as well as refreshed economic forecasts. Our allowance for credit losses at September 30, 2024 was considered appropriate given the current economic environment 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 10: Allocation of Allowance for Credit Losses

| September 30, 2024 |  | December 31, 2023
(Dollars in thousands) | Allowance Amount |  | % of loans (1) |  | Allowance Amount |  | % of loans (1)
Credit cards | $ | 6,007 |  |  | 1.0 | % |  | $ | 5,868 |  |  | 1.1 | %
Other consumer | 6,356 |  |  | 5.0 | % |  | 5,716 |  |  | 3.5 | %
Real estate | 177,018 |  |  | 78.0 | % |  | 177,177 |  |  | 79.2 | %
Commercial | 43,842 |  |  | 16.0 | % |  | 36,470 |  |  | 16.2 | %
Total | $ | 233,223 |  |  | 100.0 | % |  | $ | 225,231 |  |  | 100.0 | %
Allowance for credit losses to period-end loans | 1.35 | % |  |  |  | 1.34 | % |  |

_______________________________________
(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 234 financial centers as of September 30, 2024. 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 $250,000 or more and brokered deposits. As of September 30, 2024, core deposits comprised 77.2% 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 helps ensure 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 September 30, 2024, were $21.94 billion, compared to $22.24 billion as of December 31, 2023. Noninterest bearing transaction accounts, interest bearing transaction accounts and savings accounts totaled $15.39 billion at September 30, 2024, compared to $15.80 billion at December 31, 2023, a decrease of $412.6 million. Total time deposits increased $103.1 million to $6.55 billion at September 30, 2024, from $6.45 billion at December 31, 2023. We had $3.36 billion and $2.90 billion of brokered deposits at September 30, 2024, and December 31, 2023, respectively. We are continuing to refine our product offerings to give customers flexibility of choice while maintaining the ability to adjust interest rates timely in the current rate environment.
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OTHER BORROWINGS AND SUBORDINATED NOTES AND DEBENTURES
Our total debt was $1.41 billion and $1.34 billion at September 30, 2024 and December 31, 2023, respectively. The outstanding balance for September 30, 2024 includes $1.03 billion in FHLB advances; $366.3 million in subordinated notes and unamortized debt issuance costs; and $17.9 million of other long-term debt. FHLB advances outstanding at September 30, 2024 are primarily fixed rate, fixed term advances, which are due less than one year from origination and therefore are classified as short-term advances.
In March 2018, we 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. We 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.
We assumed Fixed-to-Floating Rate Subordinated Notes in an aggregate principal amount, net of premium adjustments, of $37.4 million in connection with the Spirit acquisition in April 2022 (the “Spirit Notes”). The Spirit Notes will mature on July 31, 2030, and initially bear interest at a fixed annual rate of 6.00%, payable quarterly, in arrears, to, but excluding, July 31, 2025. From and including July 31, 2025, to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be the then-current three-month Secured Overnight Financing Rate (“SOFR”), as published by the Federal Reserve Bank of New York (provided, that in the event the benchmark rate is less than zero, the benchmark rate will be deemed to be zero) plus 592 basis points, payable quarterly, in arrears.
For information about the regulatory capital treatment of the Notes and the Spirit Notes, see the section “Capital—Risk-Based Capital.”
CAPITAL
Overview
At September 30, 2024, total capital was $3.53 billion. Capital represents shareholder ownership in the Company – the book value of assets in excess of liabilities. At September 30, 2024, our common equity to asset ratio was 12.94% compared to 12.53% at year-end 2023.
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. On April 27, 2022, our shareholders approved amendments to our Articles of Incorporation to remove an $80.0 million cap on the aggregate liquidation preference associated with the preferred stock and increase the number of authorized shares of our Class A common stock from 175,000,000 to 350,000,000.
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 (“Series D Preferred Stock”), out of our authorized preferred stock. On November 30, 2021, we redeemed all of the Series D Preferred Stock, including accrued and unpaid dividends. On April 27, 2022, our shareholders approved an amendment to our Articles of Incorporation to remove the classification and designation for the Series D Preferred Stock. As of September 30, 2024 and December 31, 2023, there were no shares of preferred stock issued or outstanding.
Stock Repurchase Program
In January 2022, our Board of Directors authorized a stock repurchase program (“2022 Program”) under which we could repurchase up to $175.0 million of our Class A common stock currently issued and outstanding. Because the 2022 Program was set to terminate on January 31, 2024, our Board of Directors authorized a new stock repurchase program in January 2024 (“2024 Program”) under which we may repurchase up to $175.0 million of our Class A common stock currently issued and outstanding. The 2024 Program will be executed in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (“Exchange Act”) and will terminate on January 31, 2026 (unless terminated sooner).
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Under the 2024 Program, we may repurchase shares of our common stock through open market and privately negotiated transactions or otherwise. The timing, pricing, and amount of any repurchases under the 2024 Program will be determined by management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of our common stock, corporate considerations, our working capital and investment requirements, general market and economic conditions, and legal requirements. The 2024 Program does not obligate us to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice. We anticipate funding for this 2024 Program to come from available sources of liquidity, including cash on hand and future cash flow.
No shares were repurchased during the three and nine month periods ended September 30, 2024. During the three and nine month periods ended September 30, 2023, we repurchased 1,128,962 shares at an average price of $17.69 and 2,257,049 shares at an average price per share of $17.72 under the 2022 Program.
Cash Dividends
We declared cash dividends on our common stock of $0.63 per share for the first nine months of 2024 compared to $0.60 per share for the first nine months of 2023, an increase of $0.03, or 5%. 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. For additional information regarding the parent company’s liquidity, see “Liquidity Management” and “Market Risk Management” in Item 3 – Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10-Q. We continually assess our 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. The Company’s management reviews regulatory capital levels on an ongoing basis in light of the size, composition and quality of the Company’s capital resources, and of trends and anticipated changes thereto.
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 September 30, 2024, 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.
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The Company’s risk-based capital ratios at September 30, 2024 and December 31, 2023 are presented in Table 11 below:
Table 11: Risk-Based Capital

| September 30, |  | December 31,
(Dollars in thousands) | 2024 |  | 2023
Tier 1 capital: |  |  |
Stockholders’ equity | $ | 3,528,833 |  |  | $ | 3,426,488 |
CECL transition provision | 30,873 |  |  | 61,746 |
Goodwill and other intangible assets | (1,388,549) |  |  | (1,398,810) |
Unrealized loss on available-for-sale securities, net of income taxes | 335,861 |  |  | 404,375 |
Total Tier 1 capital | 2,507,018 |  |  | 2,493,799 |
Tier 2 capital: |  |  |
Subordinated notes and debentures | 366,255 |  |  | 366,141 |
Subordinated debt phase out | (132,000) |  |  | (66,000) |
Qualifying allowance for credit losses and reserve for unfunded commitments | 220,517 |  |  | 170,977 |
Total Tier 2 capital | 454,772 |  |  | 471,118 |
Total risk-based capital | $ | 2,961,790 |  |  | $ | 2,964,917 |
Risk weighted assets | $ | 20,790,941 |  |  | $ | 20,599,238 |
Assets for leverage ratio | $ | 26,198,178 |  |  | $ | 26,552,988 |
Ratios at end of period: |  |  |
Common equity Tier 1 ratio (CET1) | 12.06 | % |  | 12.11 | %
Tier 1 leverage ratio | 9.57 | % |  | 9.39 | %
Tier 1 risk-based capital ratio | 12.06 | % |  | 12.11 | %
Total risk-based capital ratio | 14.25 | % |  | 14.39 | %
Minimum guidelines: |  |  |
Common equity Tier 1 ratio (CET1) | 4.50 | % |  | 4.50 | %
Tier 1 leverage ratio | 4.00 | % |  | 4.00 | %
Tier 1 risk-based capital ratio | 6.00 | % |  | 6.00 | %
Total risk-based capital ratio | 8.00 | % |  | 8.00 | %

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 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 provided 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 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 with a more risk-sensitive approach. The Basel III Capital Rules established risk-weighting 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.
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 to 6.0% and require a minimum leverage ratio of 4.0%.
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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. Qualifying subordinated debt of $234.3 million and $300.1 million is included as Tier 2 and total capital of the Company as of September 30, 2024 and December 31, 2023, respectively.
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, completed acquisitions, revenue, expenses, assets, asset quality, profitability, earnings, accretion, dividends, customer service, lending capacity and lending activity, investment in digital channels, critical accounting policies and estimates, net interest margin, noninterest revenue, noninterest expense, 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, income tax deductions, credit quality, the level of credit losses from lending commitments, net interest revenue, interest rate sensitivity, repricing of loans and time deposits, loan loss experience, liquidity, the Company’s expectations regarding actions by the FHLB and other agencies, capital resources, market risk, plans for future and current investments in securities and investment portfolio strategies, effect of pending and future litigation, staffing initiatives, estimated cost savings associated with the Company’s early retirement program and Better Bank Initiative, acquisition strategy and activity, legal and regulatory limitations and compliance and competition.
These forward-looking statements are based on various assumptions and involve inherent 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, including policies of the Federal Reserve, as well as legislative and regulatory changes; general business conditions, as well as conditions within the financial markets, developments impacting the financial services industry, such as bank failures or concerns involving liquidity; changes in real estate values; changes in interest rates and related governmental policies; changes in liquidity; inflation; changes in the level and composition of deposits, loan demand, deposit flows, credit quality and the values of loan collateral, securities and interest sensitive assets and liabilities; changes in credit quality; actions taken by the Company to manage its investment securities portfolio; changes in the securities markets generally or the price of the Company’s common stock; developments in information technology affecting the financial industry; changes in customer behaviors, including consumer spending, borrowing and saving habits; cyber threats, attacks or events, including at third-parties with which we rely on for key services; reliance on third parties for the provision of key services; further changes in accounting principles relating to loan loss recognition (current expected credit losses); the costs of evaluating possible acquisitions and the risks inherent in integrating acquisitions; possible adverse rulings, judgements, settlements, fines and other outcomes of pending or future litigation or government actions; market disruptions, including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises, war and other military conflicts (including the ongoing military conflict between Russia and Ukraine and between Israel and Hamas) or other major events, or the prospect of these events; the soundness of other financial institutions and indirect exposure related to the closings of other financial institutions and their impact on the broader market through other customers, suppliers and partners (or that the conditions which resulted in the liquidity concerns that led to the large regional bank failures during 2023 may also adversely impact, directly or indirectly, other financial institutions and market participants with which the Company has commercial or deposit relationships); the loss of key employees; increased unemployment; labor shortages; the Company’s ability to manage and successfully integrate its mergers and acquisitions and to fully realize cost savings and other benefits associated with those transactions; the effects of government legislation; 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, cell phone/tablet, telephone, computer and the Internet; the failure of assumptions underlying the establishment of reserves for possible credit losses, fair value for loans, OREO, and other cautionary statements set forth elsewhere in this report.
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Additional information on factors that might cause the Company’s results to differ materially from those disclosed in the forward-looking statements is included in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this quarterly report, the Company’s annual report on Form 10-K for the year ended December 31, 2023, and related disclosures in other filings with the SEC, which 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 adjusted earnings (net income excluding certain items {net branch right sizing costs, merger related costs, FDIC special assessment, loss (gain) on sale of securities, termination of vendor and software services, early retirement program costs and tax effect}) (non-GAAP), and adjusted 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), adjusted noninterest income (non-GAAP), adjusted noninterest expense (non-GAAP), adjusted salaries and employee benefits expense (non-GAAP), uninsured, non-collateralized deposits (non-GAAP) and the coverage ratio of uninsured, non-collateralized deposits (non-GAAP). Adjusted items are included in financial results presented in accordance with generally accepted accounting principles (US GAAP). The Company has updated its calculation of certain non-GAAP financial measures to exclude the impact of gains or losses on the sale of AFS investment securities in light of the impact of the Company’s strategic AFS investment securities transactions during the fourth quarter of 2023 and has presented past periods on a comparable basis.
We believe the exclusion of these certain items in expressing earnings and certain other financial measures, including “adjusted 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 adjusted 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 certain items to be relevant to ongoing financial performance. Management and the Board of Directors utilize “adjusted 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 “adjusted earnings” on a diluted per share basis (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 adjusted 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 certain items to be relevant to ongoing financial performance on a per share basis. Management and the Board of Directors utilize “adjusted 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 $1.422 billion and $1.433 billion total goodwill and other intangible assets for the periods ended September 30, 2024 and December 31, 2023, 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 that presenting these non-GAAP financial measures permits 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.
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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 adjusted to ensure that the Company’s “adjusted” 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 certain items does not represent the amount that effectively accrues directly to stockholders (i.e., certain 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 12 below for the reconciliation of non-GAAP financial measures, which exclude certain items for the periods presented.
Table 12: Reconciliation of Adjusted Earnings (non-GAAP)

| Three Months Ended |  | Nine Months Ended
| September 30, |  | June 30, |  | September 30, |  | September 30,
(In thousands, except per share data) | 2024 |  | 2024 |  | 2024 |  | 2023
Net income available to common stockholders | $ | 24,740 |  |  | $ | 40,763 |  |  | $ | 104,374 |  |  | $ | 151,150 |
Certain items: |  |  |  |  |  |  |
FDIC Special Assessment | — |  |  | 283 |  |  | 1,832 |  |  | — |
Merger related costs | — |  |  | — |  |  | — |  |  | 1,420 |
Early retirement program | (1) |  |  | 118 |  |  | 336 |  |  | 5,166 |
Termination of vendor and software services | (13) |  |  | 615 |  |  | 602 |  |  | — |
Loss on sale of securities | 28,393 |  |  | — |  |  | 28,393 |  |  | 391 |
Branch right sizing (net) | 410 |  |  | 519 |  |  | 1,165 |  |  | 1,621 |
Tax effect (1) | (7,524) |  |  | (401) |  |  | (8,449) |  |  | (2,247) |
Certain items, net of tax | 21,265 |  |  | 1,134 |  |  | 23,879 |  |  | 6,351 |
Adjusted earnings (non-GAAP) | $ | 46,005 |  |  | $ | 41,897 |  |  | $ | 128,253 |  |  | $ | 157,501 |
Diluted earnings per share(2) | $ | 0.20 |  |  | $ | 0.32 |  |  | $ | 0.83 |  |  | $ | 1.19 |
Certain items: |  |  |  |  |  |  |
FDIC Special Assessment | — |  |  | — |  |  | 0.02 |  |  | — |
Merger related costs | — |  |  | — |  |  | — |  |  | 0.01 |
Early retirement program | — |  |  | — |  |  | — |  |  | 0.04 |
Termination of vendor and software services | — |  |  | 0.01 |  |  | — |  |  | — |
Loss on sale of securities | 0.23 |  |  | — |  |  | 0.23 |  |  | — |
Branch right sizing (net) | — |  |  | — |  |  | 0.01 |  |  | 0.02 |
Tax effect (1) | (0.06) |  |  | — |  |  | (0.07) |  |  | (0.02) |
Certain items, net of tax | 0.17 |  |  | 0.01 |  |  | 0.19 |  |  | 0.05 |
Adjusted diluted earnings per share (non-GAAP) | $ | 0.37 |  |  | $ | 0.33 |  |  | $ | 1.02 |  |  | $ | 1.24 |

_______________________________________
(1)Effective tax rate of 26.135%.
(2)See Note 16, Earnings Per Share (“EPS”), for number of shares used to determine EPS.
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See Table 13 below for the reconciliations of adjusted noninterest income, adjusted noninterest expense and adjusted salaries and employee benefits expense for the periods presented.
Table 13: Reconciliations of Adjusted Noninterest Income (non-GAAP), Adjusted Noninterest Expense (non-GAAP) and Adjusted Salaries and Employee Benefits Expense (non-GAAP)

| Three Months Ended |  | Nine Months Ended
| September 30, |  | June 30, |  | September 30, |  | September 30,
(In thousands) | 2024 |  | 2024 |  | 2024 |  | 2023
Noninterest income | $ | 17,130 |  |  | $ | 43,299 |  |  | $ | 103,613 |  |  | $ | 133,592 |
Certain items: |  |  |  |  |  |  |
Loss on sale of securities | 28,393 |  |  | — |  |  | 28,393 |  |  | 391 |
Total certain items | 28,393 |  |  | — |  |  | 28,393 |  |  | 391 |
Adjusted noninterest income (non-GAAP) | $ | 45,523 |  |  | $ | 43,299 |  |  | $ | 132,006 |  |  | $ | 133,983 |
Noninterest expense | $ | 137,193 |  |  | $ | 139,354 |  |  | $ | 416,426 |  |  | $ | 414,922 |
Certain items: |  |  |  |  |  |  |
Merger related costs | — |  |  | — |  |  | — |  |  | (1,420) |
Early retirement program | 1 |  |  | (118) |  |  | (336) |  |  | (5,166) |
Termination of vendor and software services | 13 |  |  | (615) |  |  | (602) |  |  | — |
FDIC Special Assessment | — |  |  | (283) |  |  | (1,832) |  |  | — |
Branch right sizing | (410) |  |  | (519) |  |  | (1,165) |  |  | (1,621) |
Total certain items | (396) |  |  | (1,535) |  |  | (3,935) |  |  | (8,207) |
Adjusted noninterest expense (non-GAAP) | $ | 136,797 |  |  | $ | 137,819 |  |  | $ | 412,491 |  |  | $ | 406,715 |
Salaries and employee benefits expense | $ | 69,167 |  |  | $ | 70,716 |  |  | $ | 212,536 |  |  | $ | 219,135 |
Early retirement program | 1 |  |  | (118) |  |  | (336) |  |  | (5,166) |
Other | (1) |  |  | 1 |  |  | — |  |  | — |
Adjusted salaries and employee benefits expense (non-GAAP) | $ | 69,167 |  |  | $ | 70,599 |  |  | $ | 212,200 |  |  | $ | 213,969 |

See Table 14 below for the reconciliation of tangible book value per common share.
Table 14: Reconciliation of Tangible Book Value per Common Share (non-GAAP)

| September 30, |  | December 31,
(In thousands, except per share data) | 2024 |  | 2023
Total common stockholders’ equity | $ | 3,528,833 |  |  | $ | 3,426,488 |
Intangible assets: |  |  |
Goodwill | (1,320,799) |  |  | (1,320,799) |
Other intangible assets | (101,093) |  |  | (112,645) |
Total intangibles | (1,421,892) |  |  | (1,433,444) |
Tangible common stockholders’ equity | $ | 2,106,941 |  |  | $ | 1,993,044 |
Shares of common stock outstanding | 125,554,598 |  |  | 125,184,119 |
Book value per common share | $ | 28.11 |  |  | $ | 27.37 |
Tangible book value per common share (non-GAAP) | $ | 16.78 |  |  | $ | 15.92 |

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See Table 15 below for the calculation of tangible common equity and the reconciliation of tangible common equity to tangible assets.
Table 15: Reconciliation of Tangible Common Equity and the Ratio of Tangible Common Equity to Tangible Assets (non-GAAP)

| September 30, |  | December 31,
(Dollars in thousands) | 2024 |  | 2023
Total common stockholders’ equity | $ | 3,528,833 |  |  | $ | 3,426,488 |
Intangible assets: |  |  |
Goodwill | (1,320,799) |  |  | (1,320,799) |
Other intangible assets | (101,093) |  |  | (112,645) |
Total intangibles | (1,421,892) |  |  | (1,433,444) |
Tangible common stockholders’ equity | $ | 2,106,941 |  |  | $ | 1,993,044 |
Total assets | $ | 27,269,404 |  |  | $ | 27,345,674 |
Intangible assets: |  |  |
Goodwill | (1,320,799) |  |  | (1,320,799) |
Other intangible assets | (101,093) |  |  | (112,645) |
Total intangibles | (1,421,892) |  |  | (1,433,444) |
Tangible assets | $ | 25,847,512 |  |  | $ | 25,912,230 |
Ratio of common equity to assets | 12.94 | % |  | 12.53 | %
Ratio of tangible common equity to tangible assets (non-GAAP) | 8.15 | % |  | 7.69 | %

See Table 16 below for the reconciliation of uninsured, non-collateralized deposits and the calculation of uninsured, non-collateralized deposit coverage ratio.
Table 16: Reconciliation of Uninsured, Non-Collateralized Deposits and the Calculation of Uninsured, Non-Collateralized Deposit Coverage Ratio (non-GAAP)

| September 30, |  | December 31,
(In thousands) | 2024 |  | 2023
Uninsured deposits at Simmons Bank | $ | 8,355,496 |  |  | $ | 8,328,444 |
Less: Collateralized deposits (excluding portion that is FDIC insured) | 2,710,167 |  |  | 2,846,716 |
Less: Intercompany eliminations | 986,626 |  |  | 728,480 |
Total uninsured, non-collateralized deposits | $ | 4,658,703 |  |  | $ | 4,753,248 |
FHLB borrowing availability | $ | 4,955,000 |  |  | $ | 5,401,000 |
Unpledged securities | 4,110,000 |  |  | 3,817,000 |
Fed funds lines, Fed discount window and Bank Term Funding Program (1) | 2,109,000 |  |  | 1,998,000 |
Additional liquidity sources | $ | 11,174,000 |  |  | $ | 11,216,000 |
Uninsured, non-collateralized deposit coverage ratio | 2.4x |  | 2.4x

___________________________________
(1)The Bank Term Funding Program closed for new loans on March 11, 2024. At no time did the Company borrow funds under this program.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company has leveraged its investment in Simmons Bank and depends upon the dividends paid to it, as the sole shareholder of Simmons Bank, as a principal source of funds for dividends to shareholders, stock repurchases and debt service requirements. At September 30, 2024, undivided profits of Simmons Bank were approximately $536.2 million, none of which were 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, Simmons 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. Simmons 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. As of September 30, 2024, Simmons Bank had approximately $435.0 million in federal funds lines of credit from upstream correspondent banks that can be accessed, if and 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 FHLB. While we use portions of those lines to match off longer-term mortgage loans, we also use those lines to meet liquidity needs. Approximately $4.96 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 42.4% o f the investment portfolio is classified as available-for-sale, and we may generate additional liquidity through opportunistic sales of investment securities. 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.
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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 September 30, 2024, the model simulations projected that 100 and 200 basis point increases in interest rates would result in a negative variance in net interest income of 1.83% and 3.82%, respectively, relative to the base case over the next 12 months. Interest rate decreases of 100 and 200 basis points would result in positive variances in net interest income of 1.59% and 2.62%, respectively, relative to the base case over the next 12 months. These results reflect a liability-sensitive balance sheet and are consistent with the Company’s shift toward short-term funding combined with relatively little change in the mix of interest-earning assets. 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 September 30, 2024:
Table 17: Net Interest Income Sensitivity

Interest Rate Scenario | % Change from Base
Up 200 basis points | (3.82)%
Up 100 basis points | (1.83)%
Down 100 basis points | 1.59%
Down 200 basis points | 2.62%

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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 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 at the reasonable assurance levels 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 September 30, 2024, 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 12, 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, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In January 2022, our Board of Directors authorized a stock repurchase program (the “2022 Program”) under which we could repurchase up to $175.0 million of our Class A common stock currently issued and outstanding. Because the 2022 Program was set to terminate on January 31, 2024, our Board of Directors authorized a new stock repurchase program in January 2024 (“2024 Program”) under which we may repurchase up to $175.0 million of our Class A common stock currently issued and outstanding. The 2024 Program will be executed in accordance with Rule 10b-18 under the Exchange Act and will terminate on January 31, 2026 (unless terminated sooner). The timing, pricing, and amount of any repurchases under the 2024 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.
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Information concerning our purchases of common stock during the quarter ended September 30, 2024 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
July 1, 2024 - July 31, 2024 | — |  |  | $ | — |  |  | — |  |  | $ | 175,000,000 |
August 1, 2024 - August 31, 2024 | — |  |  | — |  |  | — |  |  | $ | 175,000,000 |
September 1, 2024 - September 30, 2024 | — |  |  | — |  |  | — |  |  | $ | 175,000,000 |
Total | — |  |  | $ | — |  |  | — |  |  |

_______________________________________
(1)No shares of restricted stock were purchased in connection with employee tax withholding obligations under employee compensation plans, which are not purchases under any publicly announced plan.
Item 5. Other Information
During the three months ended September 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).
Item 6. Exhibits

Exhibit No. | Description
2.1 | 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 | Articles of Amendment to the Amended and Restated Articles of Incorporation of Simmons First National Corporation, dated August 3, 2022 (incorporated by reference to Exhibit 3.2 to Simmons First National Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 (File No. 000-06253)).
3.3 | Amended and Restated By-Laws of Simmons First National Corporation (incorporated by reference to Exhibit 3.1 to Simmons First National Corporation’s Current Report on Form 8-K filed on December 26, 2023 (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 | Aircraft Time Sharing Agreement between Simmons First National Corporation and Steve Cossé, dated July 1, 2024 (incorporated by reference to Exhibit 10.1 to Simmons First National Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (File No. 000-06253)).
14.1 | Amended and Restated Simmons First National Corporation Code of Ethics (as amended and restated on December 19, 2023) (incorporated by reference to Exhibit 14.1 to Simmons First National Corporation’s Current Report on Form 8-K filed on December 26, 2023 (File No. 000-06253)).
14.2 | Simmons First National Corporation Finance Group Code of Ethics (as amended and restated on December 19, 2023) (incorporated by reference to Exhibit 14.2 to Simmons First National Corporation’s Current Report on Form 8-K filed on December 26, 2023 (File No. 000-06253)).
15.1 | Awareness Letter of Forvis Mazars, LLP.*
31.1 | Rule 13a-15(e) and 15d-15(e) Certification – Robert A. Fehlman, Chief Executive Officer.*
31.2 | Rule 13a-15(e) and 15d-15(e) Certification – C. Daniel Hobbs, Executive Vice President and Chief Financial Officer.*
31.3 | Rule 13a-15(e) and 15d-15(e) Certification – David W. Garner, Executive Vice President and Chief Accounting Officer.*

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Exhibit No. | Description
32.1 | Certification Pursuant to 18 U.S.C. Sections 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Robert A. Fehlman, 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 – C. Daniel Hobbs, Executive Vice President and Chief Financial Officer.*
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 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.*
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
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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: | November 7, 2024 | /s/ Robert A. Fehlman
|  | Robert A. Fehlman
|  | Chief Executive Officer
|  | (Principal Executive Officer)
Date: | November 7, 2024 | /s/ C. Daniel Hobbs
|  | C. Daniel Hobbs
|  | Executive Vice President and Chief Financial Officer
|  | (Principal Financial Officer)
Date: | November 7, 2024 | /s/ David W. Garner
|  | David W. Garner
|  | Executive Vice President and Chief Accounting Officer
|  | (Principal Accounting Officer)

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