Q2 2026 Simmons First National Corp Earnings Call

July 17, 2026

Speaker #1: Good day, and welcome to the Simmons First National Corporation Q2 2026 earnings conference call and webcast. All participants will be in a listen-only mode; should you need assistance, please signal Conference Specialist by pressing the star key, followed by 0.

Operator: Good day, welcome to the Simmons First National Corporation Q2 2026 earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Edward Bilek. Please go ahead, sir.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press * then 1 on your touchtone phone.

Speaker #1: Good day, and welcome to the Simmons First National Q2 2026 earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.

Speaker #1: And to withdraw your question, please press * then 2. Please note this event is being recorded; I would now like to turn the conference over to Mr. Ad Bilic.

Speaker #1: sir.

Speaker #2: Good morning, and welcome to Simmons First National Corporation Q2 2026 earnings call. Joining me today are several members of our executive management team, including President and CEO Jay Brogdon, and CFO Daniel Hobbs.

Ed Bilek: Good morning, welcome to Simmons First National Corporation Q2 2026 earnings call. Joining me today are several members of our executive management team, including President and CEO, Jay Brogdon, and CFO, Daniel Hobbs. Today's call will be in a Q&A format. Before we begin, I would like to remind you that our Q2 earnings materials, including the earnings release and presentation deck, are available on our website at simmonsbank.com under the Investor Relations tab. During today's call, we will make forward-looking statements about our future plans, goals, expectations, estimates, projections, and outlook, including, among others, our outlook regarding future economic conditions, interest rates, lending and deposit activity, credit quality, liquidity, and net interest margin.

Ed Bilek: Good morning, welcome to Simmons First National Corporation Q2 2026 earnings call. Joining me today are several members of our Executive Management team, including President and CEO, Jay Brogdon, and CFO, Daniel Hobbs. Today's call will be in a Q&A format. Before we begin, I would like to remind you that our Q2 earnings materials, including the earnings release and presentation deck, are available on our website at simmonsbank.com under the Investor Relations tab. During today's call, we will make forward-looking statements about our future plans, goals, expectations, estimates, projections, and outlook, including, among others, our outlook regarding future economic conditions, interest rates, lending and deposit activity, credit quality, liquidity, and net interest margin.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone.

Speaker #1: And to withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Mr. Edward Bilek.

Speaker #2: Today's call will be in the Q&A format. Before we begin, I would like to remind you that our Q2 earnings materials—including the earnings release and presentation deck—are available on our website at simmonsbank.com under the Investor Relations tab.

Speaker #1: Please go ahead, sir.

Speaker #2: Good morning, and welcome to the Simmons First National Q2 2026 earnings call. Joining me today are several members of our executive management team, including President and CEO Jay Brogdon, and CFO Daniel Hobbs.

Speaker #2: During today's call, we will make forward-looking statements about our future plans, goals, expectations, estimates, projections, and outlook. Including, among others, our outlook regarding future economic conditions, interest rates, lending and deposit activity, credit quality, liquidity, and then interest margin.

Speaker #2: Today's call will be in a Q&A format. Before we begin, I would like to remind you that our Q2 earnings materials, including the earnings release and presentation deck, are available on our website at simmonsbank.com under the Investor Relations tab.

Speaker #2: These statements involve risk and uncertainties, and you should therefore not place undue reliance on any forward-looking statement, as actual results could differ materially from those expressed in or implied by the forward-looking statements due to a variety of factors.

Ed Bilek: These statements involve risk and uncertainties. You should therefore not place undue reliance on any forward-looking statement, as actual results could differ materially from those expressed in or implied by the forward-looking statements due to a variety of factors. Additional information concerning some of these factors is contained in our earnings release and investor presentation furnished with our Form 8-K yesterday, as well as our Form 10-K for the year ended 31 December 2025, and our Form 10-Q for the quarter ended 31 March 2026, including the risk factors contained in those filings. These forward-looking statements speak only as of the date they are made, Simmons assumes no obligation to update or revise any forward-looking statements or other information. Finally, in this presentation, we will discuss certain non-GAAP financial metrics we believe provide useful information to investors.

Speaker #2: During today's call, we will make forward-looking statements about our future plans, goals, expectations, estimates, projections, and outlook, including, among others, our outlook regarding future economic conditions, interest rates, lending and deposit activity, credit quality, liquidity, and net interest margin.

Speaker #2: Additional information concerning some of these factors is contained in our earnings release and investor presentation furnished with our Form 8K yesterday, as well as our Form 10K for the year-end of December 31, 2025, and our Form 10Q for the quarter ended March 31, 2026, including the risk factors contained in those filings.

Speaker #2: These statements involve risk and uncertainties and you should therefore not place undue reliance on any forward-looking statement as actual results could differ materially from those expressed in or implied by the forward-looking statements due to a variety of factors.

Speaker #2: These forward-looking statements speak only as of the date they are made, and Simmons assumes no obligation to update or revise any forward-looking statements or other information.

Speaker #2: Additional information concerning some of these factors is contained in our earnings release and investor presentation furnished with our Form 8-K yesterday, as well as our Form 10-K for the year ended December 31, 2025, and our Form 10-Q for the quarter ended March 31, 2026, including the risk factors contained in those filings.

Speaker #2: Finally, in this presentation, we will discuss certain non-GAAP financial metrics we believe provide useful information to investors. Additional disclosures regarding non-GAAP metrics—including the reconciliation of those non-GAAP metrics to GAAP—are contained in our earnings release and investor presentation, which are furnished as Exhibits to the Form 8K we filed yesterday, with the SEC and are also available on our investor relations page of our website, simmonsbank.com.

Ed Bilek: Additional disclosures regarding non-GAAP metrics, including the reconciliation of those non-GAAP metrics to GAAP, are contained in our earnings release and investor presentation, which are furnished as exhibits to the Form 8-K we filed yesterday with the SEC and are also available on our investor relations page of our website, simmonsbank.com. Operator, we're ready to begin the Q&A.

Speaker #2: These forward-looking statements speak only as of the date they are made, and Simmons assumes no obligation to update or revise any forward-looking statements or other information.

Speaker #2: Finally, in this presentation, we will discuss certain non-GAAP financial metrics we believe provide useful information to investors. Additional disclosures regarding non-GAAP metrics, including the reconciliation of those non-GAAP metrics to GAAP, are contained in our earnings release and investor presentation, which are furnished as exhibits to the Form 8-K we filed yesterday with the SEC and are also available on the investor relations page of our website, simmonsbank.com.

Speaker #2: Operator, we're ready to begin the Q&A.

Speaker #1: Thank you. We will now begin the question-and-answer session. To ask a question, you may press * then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. Our first question for today will come from David Feaster with Raymond James. Please go ahead.

Speaker #1: If at any time your question has been addressed, and you would like to withdraw your question, please press * then 2. In our first question for today, we'll come from David Feaster with Raymond James.

Speaker #2: Operator, we're ready to begin the Q&A.

Speaker #1: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your touch-tone phone.

Speaker #1: Please go ahead.

Speaker #3: Hi, good morning, everybody.

David Feaster: Hey, good morning, everybody.

Speaker #4: Good morning, David.

Ed Bilek: Morning, David.

Jay Brogdon: Morning, David.

Speaker #3: I wanted to start on the funding side. Obviously, there are a lot of moving parts here just with seasonality of the public funds. You had some optimization of using borrowings versus brokered, but there are some really encouraging trends, right?

Speaker #1: If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2.

David Feaster: I wanted to start on the funding side. Obviously, there are a lot of moving parts here just with seasonality of the public funds. You had some optimization of using borrowings versus brokered. There's some really encouraging trends, right? You got NIB growth, had declining deposit costs. I was just hoping you could maybe elaborate on what you're seeing on the funding side, the competitive landscape, how you plan on driving core deposit growth, especially just given some of the recent leadership hires that you've made and initiatives they're working on.

Speaker #1: Our first question today comes from David Feaster with Raymond James. Please go ahead.

Speaker #3: You got NIB growth, had declining deposit costs. I was just hoping you could maybe elaborate, on what you're seeing on the funding side, the competitive landscape, how you plan on driving core deposit growth, especially just given some of the recent leadership hires that you've made and initiatives they're working on.

Speaker #3: Hi, good morning, everybody.

Speaker #4: Good morning, David.

Speaker #3: I wanted to start on the funding side. Obviously, there are a lot of moving parts here just with the seasonality of the public funds. You had some optimization of using borrowings versus brokered, but there are some really encouraging trends, right?

Speaker #4: Yeah, hey David, this is Daniel. appreciate that question. So, you know, we've been talking about deposits a lot, and, you know, that continues to be one of our biggest focuses, strategically and probably will be where we invest, probably some of the most investment that we'll have over the next 12 to 24 months.

Ed Bilek: Yeah. Hey, David, this is Daniel. Appreciate that question. We've been talking about deposits a lot, and that continues to be one of our biggest focuses strategically, and probably will be where we invest probably some of the most investment that we'll have over the next 12 to 24 months. We're proud of growth in our non-interest-bearing deposits in Q2. Obviously, that's the highest quality of deposits, and we grew that 4% annualized. If you work down the quality versus the highest quality to lowest quality, interest-bearing money market savings, although in an ending balance standpoint, it was down, when you look at it on average, we grew that.

Daniel Hobbs: Yeah. Hey, David, this is Daniel. Appreciate that question. We've been talking about deposits a lot, and that continues to be one of our biggest focuses strategically, and probably will be where we invest probably some of the most investment that we'll have over the next 12 to 24 months. We're proud of growth in our non-interest-bearing deposits in Q2. Obviously, that's the highest quality of deposits, and we grew that 4% annualized. If you work down the quality versus the highest quality to lowest quality, interest-bearing money market savings, although in an ending balance standpoint, it was down, when you look at it on average, we grew that.

Speaker #3: You got NIB growth, had declining deposit costs. I was just hoping you could maybe elaborate on what you're seeing on the funding side, the competitive landscape, and how you plan on driving core deposit growth, especially given some of the recent leadership hires that you've made and the initiatives they're working on.

Speaker #4: You know, we're proud of, of growth in, in our non-interest-bearing, deposits in the, in the second quarter. I mean, obviously that's the highest, quality of deposits, and, you know, we grew that 4% annualized, and if you kind of work down the quality versus the highest quality to lowest quality, the interest-bearing money market savings, although in an ending balance standpoint it was down, when you look at it on average, we grew that.

Speaker #4: Yeah, hey David, this is Daniel. I appreciate that question. So, you know, we've been talking about deposits a lot, and, you know, that continues to be one of our biggest focuses strategically, and probably will be where we invest, probably some of the most investment that we'll have over the next 12 to 24 months.

Speaker #4: You know, we're proud of growth in our non-interest-bearing deposits in Q2. I mean, obviously, that's the highest quality of deposits and, you know, we grew that 4% annualized.

Speaker #4: And so when you, when you think about those two pieces, we're starting to see some fruition of a lot of the work that we've put into place, and we're very early innings in, our strategy and executing around that deposit growth.

Ed Bilek: When you think about those two pieces, we're starting to see some fruition of a lot of the work that we've put into place, and we're very early innings in our strategy and executing around that deposit growth. A lot of the things that we're doing, we've talked about marketing campaigns, focus on traction of new customers versus deepening existing with existing customers and reducing attrition. Actually, when you look at actual balances from this quarter, we had more inflows of new customer balances versus outflows of customer balances, and so that was a positive trend for us. The other thing I think is as you think about core customer balances that we saw in Q1, especially on the consumer side, there was some headwinds there as it relates to debit spend around gas prices.

Daniel Hobbs: When you think about those two pieces, we're starting to see some fruition of a lot of the work that we've put into place, and we're very early innings in our strategy and executing around that deposit growth. A lot of the things that we're doing, we've talked about marketing campaigns, focus on traction of new customers versus deepening existing with existing customers and reducing attrition. Actually, when you look at actual balances from this quarter, we had more inflows of new customer balances versus outflows of customer balances, and so that was a positive trend for us. The other thing I think is as you think about core customer balances that we saw in Q1, especially on the consumer side, there was some headwinds there as it relates to debit spend around gas prices.

Speaker #4: I mean, if you kind of work down the quality—from the highest quality to lowest quality—the interest-bearing money market savings, although from an ending balance standpoint it was down, when you look at it on average, we grew that.

Speaker #4: So, a lot of the things that we're doing, we've talked about marketing campaigns focused on attraction of new customers versus deepening existing with, with existing customers and reducing attrition.

Speaker #4: And so when you think about those two pieces, we're starting to see some fruition of a lot of the work that we've put into place, and we're very early innings in our strategy and executing around that deposit growth.

Speaker #4: Actually, when you look at actual balances, from this quarter, we had more inflows of new customer balances versus outflows of customer balances and so that was a positive, trend for us.

Speaker #4: So, a lot of the things that we're doing—we've talked about marketing campaigns—focus on attracting new customers versus deepening relationships with existing customers and reducing attrition.

Speaker #4: You know, the other thing I think, as you think about core customer balances, that we saw in the first quarter, especially on the consumer side, there was some headwinds there as it relates to, debit spend around, gas prices.

Speaker #4: Actually, when you look at actual balances from this quarter, we had more inflows of new customer balances versus outflows of customer balances, and so that was a positive trend for us.

Speaker #4: gas prices were up, pretty significantly, about 35% in terms of the debit spend going to convenience ce stores, in the first quarter. And so that was a drag on, on, and we were still able to grow.

Ed Bilek: Gas prices were up pretty significantly, about 35% in terms of the debit spend going to convenience stores in Q1. That was a drag on, and we were still able to grow. We're pleased with that. As you work your way down, you look at non-relationship customer CDs. Those are balances that we're willing to let those run off. There's just not much ability to convert those to core customers. We've had a little bit of success there, but not a ton, so we're willing to let those go off at high prices. Public funds was very seasonal

Daniel Hobbs: Gas prices were up pretty significantly, about 35% in terms of the debit spend going to convenience stores in Q1. That was a drag on, and we were still able to grow. We're pleased with that. As you work your way down, you look at non-relationship customer CDs. Those are balances that we're willing to let those run off. There's just not much ability to convert those to core customers. We've had a little bit of success there, but not a ton, so we're willing to let those go off at high prices. Public funds was very seasonal

Speaker #4: You know, the other thing I think, as you think about the core customer balances that we saw in Q1, especially on the consumer side, there were some headwinds there as it relates to debit spend around gas prices.

Speaker #4: So we're, we're pleased with that. As you work your way down, you look at, non-relationship customer CDs, those are balances that we're willing to let those run off, there, there's just not much ability to convert those to, core customers.

Speaker #4: Gas prices were up pretty significantly, about 35% in terms of the debit spend going to convenience stores, in Q1. And so that was a drag on, on, and we were still able to grow.

Speaker #4: We've had a little bit of success there, but not a ton, so we're willing to let those go off, at high prices. and then public funds was very seasonal, and you typically see that this time of the year.

Speaker #4: So we're pleased with that. As you work your way down, you look at, non-relationship customer CDs, those are balances that we're willing to let those run off.

Daniel Hobbs: You typically see that this time of the year. We're not losing any customers there, it's just seasonal outflows. If you think about just the wholesale funding, we're really just taking a capitalistic approach to how we think about broker deposits and FHLB funding. You will see that we've kind of moved more into FHLB this quarter just because the spread of that price is material enough for us to do that. We will continue to be opportunistic and flexible around that. We're short duration in both of those. That's how we're thinking about that. Just as we go forward, again, our focus on growing high quality core customers is our biggest focus. One last thing as you think about core customers, we grew checking accounts over 1% year over year and linked quarter.

Speaker #4: We're not losing any customers there, it's just seasonal outflows. And then, if you think about just the wholesale funding, we're really just taking a capitalistic approach to how we think about brokered deposits, and FHLB funding, and you will see that we've kind of moved more into FHLB this quarter.

Speaker #4: There's just not much ability to convert those to core customers. We've had a little bit of success there, but not a ton. So we're willing to let those go off at high prices.

Speaker #4: And then public funds were very seasonal. You typically see that this time of year. We're not losing any customers there; it's just seasonal outflows.

Speaker #4: Just because the spread of that price is material enough for us to do that, and, and we will continue to be, opportunistic and flexible around that.

Speaker #4: And then, if you think about just the wholesale funding, we're really just taking a capitalistic approach to how we think about brokered deposits and FHLB funding.

Speaker #4: we're short duration in both of those, and so that's how we're thinking about that, and, and just as we go forward, again, our focus on growing, high-quality core customers, is, is our biggest focus.

Speaker #4: and you will see that we've kind of moved more into FHLB this Q. Just because the spread of that price is material enough for us to do that and we will continue to be, opportunistic and flexible around that.

Speaker #4: One last thing, as you think about core customers, we grew checking accounts, over 1% year over year, and, linked quarter. So that's an indication of some of the things that we're doing that are working and start to pay off, and, and, we'll be doubling down on those things over the next 12 to 24 months.

Speaker #4: We're short duration in both of those, and so that's how we're thinking about that. And just as we go forward, again, our focus on growing high-quality core customers is our biggest focus.

Daniel Hobbs: That's an indication of some of the things that we're doing that are working and starting to pay off, and we'll be doubling down on those things over the next 12 to 24 months.

Speaker #3: Hey, hey David, I'll jump in. This is Jay, just with one other incremental comment. One, one of the things in your ques in your question that you alluded to is just, you know, what's the competitive environment out there, and so, all of the things Daniel said, and, and what I would say unsurprisingly, is that, you know, deposit competition is, is very, very fierce, and our, our outlook is that that's going to continue, we saw that throughout the second quarter.

Jay Brogdon: Hey, David, I'll jump in. This is Jay. Just with one other incremental comment. One of the things in your question that you alluded to is just what's the competitive environment out there. All of the things Daniel said, and what I would say unsurprisingly, is that deposit competition is very, very fierce. Our outlook is that that's going to continue. We saw that throughout Q2. We've seen that for a couple of quarters now and really expect that to continue. When I think about all of the kind of underlying fundamentals that Daniel just discussed in terms of our ability to begin to see origination and growth and success in the highest quality categories of the funding base amidst that backdrop, that's actually very encouraging to me.

Speaker #4: One last thing is you think about core customers, we grew checking accounts. over 1% year over year and, late Q. So that's an indication of some of the things that we're doing that are working and start to pay off and, we'll be doubling down on those things over the next 12 to 24 months.

Speaker #3: Hey, hey David, I'll jump in. This is Jay, just with one other incremental comment. One of the things in your question that you alluded to is just, you know, what's the competitive environment out there?

Speaker #3: We, we, we've seen that for a couple of quarters now, and, and really expect that to continue. And so when I think about all of the kind of underlying fundamentals in terms of that, that Daniel just discussed, in terms of our ability to begin to see origination and, and growth and success in the highest quality categories of the funding base, amidst that backdrop, that, that's actually very encouraging to me.

Speaker #3: And so, all of the things Daniel said—and what I would say, unsurprisingly—is that, you know, deposit competition is very, very fierce, and our outlook is that that's going to continue.

Speaker #3: we saw that throughout the Q2. We've seen that for a couple of Qs now and really expect that to continue. And so when I think about all of the kind of underlying fundamentals in terms of that Daniel just discussed, in terms of our ability to begin to see origination and growth and success in the highest quality categories of the funding base, amidst that backdrop, that's actually very encouraging to me.

Speaker #2: Okay, that's great. and similarly encouraging, I thought was, you know, the, the, the loan production side. I mean, that near four-year highs, you know, obviously, you know, like 3% annualized growth, but I was just hoping you could touch on, on the lending landscape across your footprint.

David Feaster: Okay. That's great. Similarly encouraging, I thought was the loan production side. I mean, at near four-year highs, obviously like 3% annualized growth. I was just hoping you could touch on the lending landscape across your footprint. Where are you seeing opportunities, your willingness to compete on pricing to continue to drive growth? Just how you think about rebuilding the pipeline and expectations for growth as we look forward.

Speaker #2: Where, where are you seeing opportunities, your willingness to compete on pricing to continue to drive growth, and just how do you think about rebuilding the pipeline and expectations for growth as we look forward?

Speaker #2: Okay, that's great. similarly encouraging, I thought was, you know, the loan production side. I mean, at near four-year highs, you know, obviously, you know, like 3% annualized growth, but I was just hoping you could touch on the lending landscape across your footprint.

Speaker #4: Yeah, so I would say, y-you know, there too, am in, am encouraged from, from a loan growth perspective. you know, I think we kind of have low to mid-single-digit outlook for this year from a loan growth perspective.

Jay Brogdon: Yeah. I would say there too I am encouraged from a loan growth perspective. I think we kind of have low to mid-single digit outlook for this year from a loan growth perspective. We're at maybe 7% annualized loan growth year to date. We would be comfortably at kind of the top end of that outlook halfway through the year. Obviously, the Q2 growth wasn't as strong as the Q1. That, as you indicated, David, and as we disclosed in the materials, wasn't a sign of a lack of production. We had a great quarter of production. All of that production would fit squarely into our strong standards in terms of both credit underwriting as well as pricing. I don't see us unrelenting in our focus in either of those areas of generating production.

Speaker #2: Where are you seeing opportunities, your willingness to compete on pricing to continue to drive growth, and just how you think about rebuilding the pipeline and expectations for growth as we look forward?

Speaker #4: we're at maybe 7% annualized loan growth year to date, so, y-you know, we, we would be comfortably at kind of the top end of that, that outlook, halfway through the year.

Speaker #4: Yeah, so I would say, you know, there, too, I'm encouraged from a loan growth perspective. You know, I think we kind of have a low- to mid-single-digit outlook for this year from a loan growth perspective.

Speaker #4: y-you know, obviously the second quarter growth wasn't as strong as the first quarter, but that, as you indicated, David, and as we disclosed in the materials, wasn't a sign of a lack of production.

Speaker #4: we had, we had a, a great quarter of production, all of that production, would fit squarely into, you know, our strong standards in terms of both, you know, credit underwriting, as well as pricing, and, and I don't see us unrelenting in our focus in, in either of those.

Speaker #4: We're at maybe 7% annualized loan growth year-to-date. So, you know, we would be comfortably at kind of the top end of that outlook halfway through the year.

Speaker #4: You know, obviously the Q2 growth wasn't as strong as the first Q, but that, as you indicated, David, and as we disclosed in the materials, wasn't a sign of a lack of production.

Speaker #4: Areas of, of generating production, and so when you think about, you know, generating good growth in the second quarter, some of that growth obviously offset by, y-you know, a healthy level and an expected level of pay downs, I look at a very strong, amount of growth in the unfunded commitment bucket due to some of that production, continued health in the pipeline, and, and really a good top of funnel in terms of the opportunities we're seeing across the, the footprint and, and across asset classes, and, you know, I'm certainly, I'm certainly optimistic as we think about our ability to grow loans out into the future as a result of all of those things.

Speaker #4: we had a great Q of production, all of that production would fit squarely into, you know, our strong standards in terms of both, you know, credit underwriting as well as pricing.

Jay Brogdon: When you think about generating good growth in Q2, some of that growth obviously offset by a healthy level and an expected level of pay-downs. I look at a very strong amount of growth in the unfunded commitment bucket due to some of that production, continued health in the pipeline, and really a good top of funnel in terms of the opportunities we're seeing across the footprint and across asset classes. I'm certainly optimistic as we think about our ability to grow loans out into the future as a result of all of those things. I think the only thing I'd balance against that is maybe just that a balanced view on what Daniel talked about impacting the consumer in terms of some of the macro factors that are out there. We're not going to stretch for growth right now.

Speaker #4: And I don't see us unrelenting in our focus in either of those areas of generating production. And so when you think about, you know, generating good growth in the Q2, some of that growth obviously offset by, you know, a healthy level and an expected level of pay downs, I look at a very strong amount of growth in the unfunded commitment bucket due to some of that production.

Speaker #4: I think the only thing I'd balance against that is, is maybe just that a balanced view on, y-you know, what Daniel talked about impacting the consumer in terms of some of the macro factors that are out there, we're, we're not going to stretch for growth right now.

Speaker #4: Continued health in the pipeline, and really a good top of funnel in terms of opportunities we're seeing across the footprint and across asset classes.

Speaker #4: And, you know, I'm certainly optimistic as we think about our ability to grow loans out into the future as a result of all of those things.

Speaker #4: We, we are going to stick to our discipline, be unapologetic if, if the growth for some reason isn't there, but we are, we are certainly seeking to add clients and add, good assets, both in terms of relationships on the funding and on the loan side, all day, every day.

Jay Brogdon: We are going to stick to our discipline, be unapologetic if the growth for some reason isn't there. We are certainly seeking to add clients and add good assets, both in terms of relationships on the funding and on the loan side all day, every day. Wide open for business for that, and again, encouraged with some of the success we're seeing.

Speaker #4: I think the only thing I'd balance against that is maybe just a balanced view on, you know, what Daniel talked about impacting the consumer in terms of some of the macro factors that are out there.

Speaker #4: Wide open for business for that, and again, encouraged with some of the success we're seeing.

Speaker #4: We're not going to stretch for growth right now. We are going to stick to our discipline, be unapologetic if the growth for some reason isn't there, but we are certainly seeking to add clients and add good assets, both in terms of relationships on the funding and on the loan side, all day, every day.

Speaker #2: That's great. And, and just last one for me, I, I to me, I, I saw this quarter kind of really demonstrating you executing on your initiatives, especially on the efficiency front, post the restructuring, right?

David Feaster: That's great. Just last one from me. To me, I saw this quarter kind of really demonstrating you executing on your initiatives, especially on the efficiency front, post the restructuring, right? That's been a big focus. Could you just talk about, I guess, as we look forward, some of the initiatives and investments that you're working on. I know you've been very active recruiting. We've had several announcements both on the senior management and banker side. Then whether you can continue to fund a lot of the investments in the growth that you're making with internally generated savings and where some of those might be coming from.

Speaker #2: That's been a big focus. could you just talk about, I guess, as we look forward, some of the initiatives and investments that you're, you're, you're working on?

Speaker #4: Wide open for business for that, and again, encouraged with some of the success we're seeing.

Speaker #2: I know you've been very active recruiting. We've had several announcements, both on the, the senior management and, and banker side. and then whether you can continue to fund a lot of the investments in the growth that you're making with internally generated savings and, and where some of those might be coming from.

Speaker #2: That's great. And just one last one for me. To me, I saw this quarter really demonstrating you executing on your initiatives, especially on the efficiency front post the restructuring, right?

Speaker #2: That's been a big focus. Could you just talk about, I guess, as we look forward, some of the initiatives and investments that you're working on?

Speaker #4: I think what, y-you know, Daniel and I may both have some comments here, but I think what you hit on in the question is perhaps the most important thing to me, and it's something we've talked about before, and, and that is just a focus and an ability to, to self-fund investments, and, and importantly, we are investing and investing heavily in the business, and, and, y-you know, the market you all have seen evidence of that with some of the hires and other things that we're doing, but we're, we're we are actively investing in both talent and technology, among other things, and, and we really believe that there is a very opportune time right now in the marketplace for us to be doing those things.

Jay Brogdon: Daniel and I may both have some comments here, I think what you hit on in the question is perhaps the most important thing to me, it's something we've talked about before, that is just a focus and an ability to self-fund investments. Importantly, we are investing and investing heavily in the business. The market, you all have seen evidence of that with some of the hires and other things that we're doing. We are actively investing in both talent and technology, among other things. We really believe that there is a very opportune time right now in the marketplace for us to be doing those things.

Speaker #2: I know you've been very active recruiting. We've had several announcements, both on the senior management and banker side. And then, whether you can continue to fund a lot of the investments in the growth that you're making with internally generated savings, and where some of those might be coming from.

Speaker #4: I think what—you know, Daniel and I may both have some comments here—but I think what you hit on in the question is perhaps the most important thing to me.

Speaker #4: And it's something we've talked about before, and that is just a focus and an ability to self-fund investments. And importantly, we are investing—and investing heavily—in the business.

Speaker #4: So the, to, to be able to look into the business and y-you know, pull upon some of the muscle that I think we've developed over the last few years in terms of things we've historically called the better bank initiative, etc., to, to continue to fund those investments, I think is, is, is really, really important, and something that we'll continue to focus on.

Jay Brogdon: To be able to look into the business and pull upon some of the muscle that I think we've developed over the last few years in terms of things we've historically called the Better Bank Initiative, et cetera. To continue to fund those investments, I think is really, really important and something that we'll continue to focus on. Daniel, I don't know if you want to add anything specifically from your perspective.

Speaker #4: And, you know, the market—you all have seen evidence of that with some of the hires and other things that we're doing—but we're actively investing in both talent and technology, among other things.

Speaker #4: And we really believe that there is a very opportune time right now in the marketplace for us to be doing those things. So to be able to look into the business and, you know, pull upon some of the muscle that I think we've developed over the last few years, in terms of things we've historically called the Better Bank Initiative, etc., to continue to fund those investments, I think is really, really important.

Speaker #4: Daniel, I don't know if you want to add anything specifically from a from your perspective.

Speaker #3: Yeah, I, I would. So, you know, as you think about some of the things that we've done in the past, we feel like we've got a pretty extensive list of things that we're still working on and opportunities there.

Daniel Hobbs: Yeah, I would. As you think about some of the things that we've done in the past, we feel like we've got a pretty extensive list of things that we're still working on and opportunities there. You saw in the quarter that we reduced square footage another 2.5%, which brings our total up to 8.5% since we've started this initiative. We feel like we still got a lot of opportunity there. A lot of that's in corporate space, not just the branch space. That's probably going to be where some of our biggest opportunities come from as we move forward. Our goal is to do 15%, then we'll continue to go from there. The other thing we are looking at is just process improvement all across the bank, from the front, middle, and back office.

Speaker #3: You saw in the quarter that, re-reduced square footage, another two and a half percent, which brings our total up, to eight and a half percent since we've started this initiative.

Speaker #4: And that's something that we'll continue to focus on. Daniel, I don't know if you want to add anything specifically from your perspective.

Speaker #3: We feel like we, we feel like we've still got a lot of opportunity there, and a lot of that's in corporate space and not, not just the, the branch space, and, that's probably going to be where some of our biggest opportunities come from as we move forward.

Speaker #3: Yeah, I would. So, you know, as you think about some of the things that we've done in the past, we feel like we've got a pretty extensive list of things that we're still working on, and there are opportunities there.

Speaker #3: You saw in the Q that we reduced square footage, another two and a half percent, which brings our total up to eight and a half percent since we've started this initiative.

Speaker #3: we've, we've our goal is to do 15%, and we'll continue to go from there. and, and then so, that's part of it. The other thing we are looking at is just process improvement all across the bank, from the front, middle, and back office, there's a number of things that we're looking at that we have identified, and some of those things, back to your question around investments, some of those things are going to require investments to make it more efficient, and so, th-there's just a lot of opportunity for us as we move forward and things that we're working on that, we believe will help, as Jay said, fund the investments, that we need to make.

Speaker #3: We feel like we still have a lot of opportunity there, and a lot of that's in the corporate space and not just the branch space.

Daniel Hobbs: There's a number of things that we're looking at that we have identified, and some of those things, back to your question around investments, some of those things are going to require investments to make it more efficient. There's just a lot of opportunity for us as we move forward and things that we're working on that we believe will help, as Jay said, fund the investments that we need to make.

Speaker #3: And that's probably going to be where some of our biggest opportunities come from as we move forward. Our goal is to do 15%, and we'll continue to go from there.

Speaker #3: And then, so that's part of it. The other thing we are looking at is just process improvement all across the bank, from the front, middle, and back office.

Speaker #2: That's great. Thanks, everybody.

Speaker #3: There are a number of things that we're looking at that we've identified. And some of those things, back to your question around investment, are going to require investments to make them more efficient.

Jay Brogdon: That's great. Thanks, everybody.

Speaker #4: Thanks, David.

Speaker #1: The next question will come from, "What do you lay with KBW?" Please go ahead.

Daniel Hobbs: Thanks, David.

Operator: Your next question will come from Woody Lay with KBW. Please go ahead.

Speaker #3: And so, there's just a lot of opportunity for us as we move forward, and things that we're working on that we believe will help, as Jay said, fund the investments that we need to make.

Speaker #5: Hey, good morning, guys.

Woody Lay: Hey, good morning, guys.

Speaker #4: Good morning, Woody.

Jay Brogdon: Morning, Woody.

Speaker #5: Maybe just a follow-up on the expenses. I, I was just curious how the, y-you know, some, some of these initiatives you announced within the quarter, does that impact the annual expense guide you gave at the start of the year of kind of that two to three percent growth, just curious on your thoughts there?

Woody Lay: Maybe just to follow up on the expenses. I was just curious how some of these initiatives you announced within the quarter, does that impact the annual expense guide you gave at the start of the year of that 2% to 3% growth? Just curious on your thoughts there.

Speaker #2: That's great. Thanks, everybody.

Speaker #4: Thanks, David.

Speaker #1: The next question will come from, would you please go ahead with KBW?

Speaker #5: Hey, good morning, guys.

Speaker #4: Yeah, Woody, let me maybe just take that question and, and, and expand upon it. I, I, I'd go back. I, I'm a pretty simple guy.

Speaker #4: Good morning, Woody.

Jay Brogdon: Yeah, Woody, let me maybe just take that question and expand upon it. I'd go back. I'm a pretty simple guy. Daniel does a great job of filling in a lot of more sophistication than what I do, and I appreciate that about him. If I just sit back and think about the core fundamentals of the business now, including your question around expenses. We guided back in January our outlook for the year of 9% to 11% net interest income growth year over year. I would tell you, in the middle of the year, halfway through performing against that outlook, we are very comfortable at the top end of that range. We guided on fees and non-interest expenses. We are very comfortable in our ability to hit those guides.

Speaker #5: Maybe just a follow-up on the expenses. I was just curious how the—you know, some of these initiatives you announced within the quarter, does that impact the annual expense guide you gave at the start of the year of kind of that 2% to 3% growth?

Speaker #4: Daniel, Daniel does a great job of filling in a lot of a lot of more sophistication than what I do, and I appreciate that about him, but if I just sit back and think about kind of the core fundamentals of the business now, including your question around expenses, you know, we guided back in January, our, our outlook for the year of 9 to 11 percent net interest income growth year over year, and I would tell you in the middle of the year, halfway through performing against that, outlook, we are very comfortable at the top end of that range.

Speaker #5: Just curious on your thoughts there.

Speaker #4: Yeah, Woody, let me maybe just take that question and expand upon it. I'd go back. I'm a pretty simple guy. Daniel does a great job of filling in a lot more sophistication than what I do.

Speaker #4: And I appreciate that about him. But if I just sit back and think about kind of the core fundamentals of the business now, including your question around expenses, you know, we guided back in January, our outlook for the year of 9% to 11% net interest income growth year over year.

Speaker #4: you know, we guided on fees and non-interest expenses, we are very comfortable in our ability to hit those. Guide, and if your question on the expense guide, I, I think we will we will we will beat that guidance, for, for the year this year, and it's, it's hard for me as I sit here right now to, to give you an order of magnitude on that, but, you know, I think we guided the two to three percent growth in non-interest expenses back in January.

Jay Brogdon: To your question on the expense guide, I think we will beat that guidance for the year this year, and it's hard for me, as I sit here right now, to give you an order of magnitude on that. I think we guided the 2% to 3% growth in non-interest expenses back in January. I don't expect us to hit that level of non-interest expense growth for the year this year. Altogether, I think we had provided an outlook for 5%+ positive operating leverage, strong PPNR growth year over year. I think we will exceed, in 2026, all of those expectations based on the performance we're seeing and the fundamentals in the business as they sit here midway through the year.

Speaker #4: And I would tell you, in the middle of the year, halfway through performing against that outlook, we are very comfortable at the top end of that range.

Speaker #4: You know, we guided on fees and non-interest expenses. We are very comfortable in our ability to hit those guides. And to your question on the expense guide—

Speaker #4: I don't expect us to hit that level of non-interest expense growth for the year this year, and so, so altogether, y-you know, I think we had provided an outlook for, you know, five-plus percent positive operating leverage, strong PP&R growth year over year, I think we will we will exceed, in 2026 all of those expectations based on the performance we're seeing and the fundamentals in the business, as they sit here midway through the year.

Speaker #4: I think we will beat that guidance for the year this year. And it's hard for me as I sit here right now to give you an order of magnitude on that, but, you know, I think we guided to 2% to 3% growth in non-interest expenses back in January.

Speaker #4: I don't expect us to hit that level of non-interest expense growth for the year, this year. And so, altogether, I think we had provided an outlook for, you know, five-plus percent positive operating leverage, strong PP&R growth, year over year.

Speaker #3: And, and just one point to add to that, Woody, the, the comment Jay made around beating that guide, that's with making some significant investments.

Daniel Hobbs: Just one point to add to that, Woody, the comment Jay made around beating that guide, that's with making some significant investments. You've already seen us come to the market with some of those, and we'll continue to do that.

Speaker #3: You've already seen us come to the market with some of those, and we'll continue to do that.

Speaker #4: I think we will exceed, in 2026, all of those expectations based on the performance we're seeing and the fundamentals in the business as they sit here midway through the year.

Speaker #5: Exactly.

Jay Brogdon: Exactly.

Speaker #2: Right, that's yeah, no, that's, that's very encouraging to hear. maybe, maybe my next question, I, I just wanted to shift to credit real fast and, and NPAs were up just a touch, with this 1 to 4 family construction borrower, that fully migrated in the quarter.

Woody Lay: Right. That's very encouraging to hear. Maybe my next question, I just wanted to shift to credit real fast. NPAs were up just a touch with this one to four-family construction borrower that fully migrated in the quarter. I know it partly migrated last quarter. I think you have an 11% specific reserve against the loan. I was just curious how you all think about timing around resolution and what the ultimate loss content there could be.

Speaker #3: And just one point to add to that, Woody. The comment Jay made around beating that guide—that's with making some significant investments. You've already seen us come to the market with some of those.

Speaker #2: I know it partly migrated last quarter, I think you have an 11% specific reserve against the loan, which just curious how you all think about, timing around resolution and, and, you know, what the ultimate loss content there could be.

Speaker #3: And we'll continue to do that.

Speaker #5: Exactly.

Speaker #2: Right. Yeah, no, that's very encouraging to hear. Maybe my next question—I just wanted to shift to credit real fast and NPAs. We were up just a touch, with this one-to-four family construction borrower that fully migrated in the quarter.

Speaker #4: Yeah, I think, obviously, we're, we're a bit top-heavy in, in, in NPLs when you look and we put a top 10 list in the in the investor presentation.

Jay Brogdon: Yeah, I think, obviously, we're a bit top-heavy in NPLs. We put a top 10 list in the investor presentation. That loan certainly, that relationship certainly sticks out. Timing's difficult to predict right now, Woody. I would just tell you that we are obviously putting a tremendous amount of energy into seeking resolution there. You'll see us pursue that as quickly as we can. Does that carry past the end of the year and into next year, fully or partially? It could. I'm just not sure as I sit here, again, the assurance I can provide is we're all over it. I think the other assurance I can provide, and really this is across the board for us, and I think we've demonstrated this even with a couple of loans last year and really throughout our history.

Speaker #2: I know it partly migrated last quarter. I think you have an 11 percent specific reserve against the loan. I was just curious how you all think about timing around resolution and, you know, what the ultimate loss content there could be.

Speaker #4: That, that loan certainly that, that relationship certainly sticks out, timing's difficult to predict right now, Woody. I would just tell you that we are obviously, putting a tremendous amount of energy into seeking resolution there, and so you'll, you'll see us pursue that as, as, as quickly as we can.

Speaker #4: Yeah, I think obviously we're a bit top-heavy in NPLs when you look, and we put a top 10 list in the investor presentation. That loan, certainly, that relationship certainly sticks out.

Speaker #4: does that carry past the end of the year and into next year fully or partially? It, it, it could. I'm, I'm just not sure as I sit here, but I again, I'll the assurance I can provide is, is we're all over it.

Speaker #4: Timing's difficult to predict right now, Woody. I would just tell you that we are obviously putting a tremendous amount of energy into seeking resolution there.

Speaker #4: I think the other assurance I can provide and really, really, this is across, across the board for us, and I think we've demonstrated this even with a couple of loans last year and really throughout our history.

Speaker #4: And so you'll see us pursue that as quickly as we can. Does that carry past the end of the year and into next year fully or partially?

Speaker #4: We, we try to hit these things pretty conservatively. We're all about loss content. In the portfolio in particularly in these loans, and as I see credit, I see I see some pretty healthy migration in our credit backdrop right now.

Jay Brogdon: We try to hit these things pretty conservatively. We're all about loss content in the portfolio and particularly in these loans. As I see credit, I see some pretty healthy migration in our credit backdrop right now. I see the level of criticized and classified loans coming down, past dues moderating to historical norms, and some stacked quarter trends, again, in those criticized and classified buckets. That should be a leading indicator of the credit outlook into the future. Again, we're going to work expeditiously toward resolution of the things that have migrated into non-performing.

Speaker #4: It could. I'm just not sure as I sit here, but again, the assurance I can provide is we're all over it. I think the other assurance I can provide—and really this is across the board for us, and I think we've demonstrated this—even with a couple of loans last year and really throughout our history, is that we try to hit these things pretty conservatively.

Speaker #4: I see you know, the level of criticized and classified loans coming down, past dues moderating to, to historical norms, and, and some stacked quarter trends, again, in those criticized and classified buckets.

Speaker #4: We're all about loss content in the portfolio and particularly in these loans. And as I see credit, I see some pretty healthy migration in our credit backdrop right now.

Speaker #4: So that, that should be a leading indicator of, you know, the credit outlook into the future, and again, we're going to work expeditiously toward resolution of the things that have migrated into non-performing, and we feel we feel comfortable about the loss content in the portfolio, and, and have even stated in the presentation, and I'll say it out loud right now, but based on everything we know today, the, the other the other outlook we gave back in January for the year this year was, was, you know, approximately 25 basis points in annual net charge-offs.

Speaker #4: I see the level of criticized and classified loans coming down, past dues moderating to historical norms, and some stacked quarter trends again in those criticized and classified buckets.

Jay Brogdon: We feel comfortable about the loss content in the portfolio and have even stated in the presentation, and I'll say it out loud right now, based on everything we know today, the other outlook we gave back in January for the year this year was approximately 25 basis points in annual net charge-offs. We're below that through the H1 of the year. We don't know anything that would cause us to want to change that outlook as we sit here today.

Speaker #4: So that should be a leading indicator of the credit outlook into the future. And again, we're going to work expeditiously toward resolution of the things that have migrated into non-performing, and we feel comfortable about the loss content in the portfolio.

Speaker #4: We're below that through the first half of the year. We don't know anything that would cause us to want to change that outlook as we sit here today.

Speaker #4: And as I have even stated in the presentation—and I'll say it out loud right now—based on everything we know today, the outlook we gave back in January for this year was approximately 25 basis points in annual net charge-offs.

Speaker #2: Got it. That's helpful. All right, that's all from me. Thanks for taking my questions.

Woody Lay: Got it. That's helpful. All right. That's all from me. Thanks for taking my questions.

Speaker #4: Thanks, Woody.

Speaker #1: The next question will come from Matt Olney. With Stevens, please go ahead.

Jay Brogdon: Thanks, Woody.

Operator: Your next question will come from Matt Olney with Stephens. Please go ahead.

Speaker #6: Hey, thanks. Good morning, guys. Just want to follow up on the loan growth discussion. Jay, you mentioned the unfunded loan balance, moved higher, and I can see that in the deck.

Matt Olney: Hey, thanks. Good morning, guys. Just want to follow up on the loan growth discussion. Jay, you mentioned the unfunded loan balance moved higher. I can see that in the deck. On the other hand, looks like the ready-to-close loan pipeline moved a little bit lower. Just help us reconcile those two data points and what that means for loan growth for H2.

Speaker #4: We're below that through the first half of the year. We don't know anything that would cause us to want to change that outlook as we sit here today.

Speaker #2: Got it. That's helpful. All right, that's all from me. Thanks for taking my questions.

Speaker #6: On the other hand, it looks like the, the rate of closed loan pipeline moved a little bit lower. Just help us reconcile those two.

Speaker #4: Thanks, Woody.

Speaker #1: The next question will come from Matt Olney with Stephens. Please go ahead.

Speaker #6: Data points and what that means for loan growth for, for the back half of the year.

Speaker #2: Hey, thanks. Good morning, guys. I just want to follow up on the loan growth discussion. Jay, you mentioned the unfunded loan balance moved higher. I can see that in the deck.

Speaker #4: Well, I think some of that's probably just timing, right, at the end of the quarter, honestly, Matt. I mean, what, what some thing that's going to pull out of the pipeline and into an unfunded commitment's going to come out of that bucket, so, so if you kind of square up the, the statements, that quarterly committed production was at nearing an all-time high at a for a four-year high, against that move in the ready-to-close portion of the pipeline.

Jay Brogdon: Well, I think some of that's probably just timing right at the end of the quarter, honestly, Matt Olney. Something that's going to pull out of the pipeline and into an unfunded commitment is going to come out of that bucket. If you square up the statements that quarterly committed production was at nearing an all-time high, at a four-year high, against that move in the ready-to-close portion of the pipeline, those things square in my mind. I think what you'll see, what I expect to see, and what in fact already happened even here into Q3, is we continue to see things moving through the funnel from opportunity into ready to close. I think everything from my perspective in the pipeline is normal and healthy.

Speaker #2: On the other hand, it looks like the rate of closed loan pipeline moved a little bit lower. Just help us reconcile those two data points and what that means for loan growth for the back half of the year.

Speaker #4: Well, I think some of that's probably just timing, right? At the end of the quarter, honestly, Matt. I mean, something that's going to pull out of the pipeline and into an unfunded commitment is going to come out of that bucket.

Speaker #4: Th-those things square in my mind, and so I think you what you'll what you'll see what I expect to see and what in fact already happened even, even here into the third quarter, is we continue to see things moving through the funnel from opportunity into ready-to-close, and so I, I think everything from my perspective in the pipeline is normal and healthy, and, and so as I think about that in terms of outlook for growth, the, the most given item in that outlook is an unfunded commitment, and in the next most given would be something ready to close, and so, so I think if anything that kind of strengthens the outlook for assets to be able to fund in the balance of the year, and continue to offset any paydowns in the portfolio.

Speaker #4: So if you kind of square up the statements, that quarterly committed production was at nearing an all-time high at a four-year high. Against that move in the ready to close portion of the pipeline, those things square in my mind.

Jay Brogdon: As I think about that in terms of outlook for growth, the most given item in that outlook is an unfunded commitment, and then the next most given would be something ready to close. I think if anything, that kind of strengthens the outlook for assets to be able to fund in the balance of the year, and continue to offset any pay downs in the portfolio.

Speaker #4: So I think what you'll see—what I expect to see, and what, in fact, has already happened, even here into the third quarter—is that we continue to see things moving through the funnel from opportunity into ready to close.

Speaker #4: And so, I think everything from my perspective in the pipeline is normal and healthy. And so, as I think about that in terms of outlook for growth, the most given item in that outlook is an unfunded commitment.

Speaker #6: Okay. Perfect. That's helpful, Jay. Thanks for that. And then I guess shifting over to loan yields, the last few quarters, we've seen some nice repricing of loan yields, higher, that wasn't as apparent this quarter to me as it has been.

Matt Olney: Okay. Perfect. That's helpful, Jay Brogdon. Thanks for that. I guess, shifting over to loan yields. Over the last few quarters, we've seen some nice repricing of loan yields higher. That wasn't as apparent this quarter to me as it has been. Any more color on just loan yields, the competitive environment? I know you have a nice fixed rate repricing story. Just any more color on expectations that we should have the next few quarters there?

Speaker #4: And the next most given would be something ready to close. So, I think if anything, that kind of strengthens the outlook for assets to be able to fund in the balance of the year and continue to offset any paydowns in the portfolio.

Speaker #6: Any more color on just loan yields, the competitive environment, and I know you have a nice fixed-rate repricing story. Just any more color on expectations that we should have, the next few quarters there?

Speaker #2: Okay, perfect. That's helpful, Jay. Thanks for that. And then, I guess shifting over to loan yields—over the last few quarters, we've seen some nice repricing of loan yields.

Speaker #4: I'll, I'll mention just a couple of things, and again, I'm, I'm sure Daniel may have some comments he wants to make on this one too, Matt, but, y-you know, I think that the, the competition for loans has been similar to, to what I commented earlier in this call around deposits.

Jay Brogdon: I'll mention just a couple of things. Again, I'm sure Daniel Hobbs may have some comments he wants to make on this one too, Matt Olney. I think that the competition for loans has been similar to what I commented earlier in this call around deposits. It's been very competitive. We have seen a number of opportunities, not just in Q2, but just in recent history, the last few quarters, a number of opportunities where we've missed, and we haven't been close in terms of what other banks have been willing to do from a pricing perspective. We believe we are as sophisticated as anyone, certainly in our asset class, when it comes to thinking about relationship profitability and how we price for relationships. We're going to stick to that discipline.

Speaker #2: Higher. That wasn’t as apparent this quarter to me as it has been. Any more color on just loan yields, the competitive environment? And I know you have a nice fixed-rate repricing story.

Speaker #4: It's been it's been very competitive. we, we have seen a number of opportunities, not, not just in Q2, but just in, in, in recent history, the last few quarters, a number of opportunities where we've missed and, and, and, and we haven't been close, in terms of what other banks have been willing to do from a pricing perspective.

Speaker #2: Do you have any additional color on the expectations we should have for the next few quarters?

Speaker #4: I'll mention just a couple of things. And again, I'm sure Daniel may have some comments he wants to make on this one too, Matt.

Speaker #4: But I think that the competition for loans has been similar to what I commented earlier in this call around deposits. It's been very competitive.

Speaker #4: We are you know, we, we believe we are as sophisticated as, as, as, as anyone certainly in, in, in our asset class when it comes to thinking about relationship profitability and how we price for relationships, and so we we're going to stick to that discipline, we are all about thinking about returns on invested capital, for, for every bit of funding and capital that we put into a relationship on the on the loan side, and the good news is, even amidst that competitive backdrop, again, we still see a healthy pipeline.

Speaker #4: We have seen a number of opportunities, not just in Q2, but also in recent history—the last few quarters—a number of opportunities where we've missed, and we haven't been close.

Speaker #4: In terms of what other banks have been willing to do from a pricing perspective, we believe we are as sophisticated as anyone, certainly in our asset class, when it comes to thinking about relationship profitability and how we price for relationships.

Jay Brogdon: We are all about thinking about returns on invested capital for every bit of funding and capital that we put into a relationship on the loan side. The good news is, even amidst that competitive backdrop, again, we still see a healthy pipeline. We've seen incredibly healthy production here in recent history. I think that we'll be able to continue to experience that, if that recent history is any indication of the future. The other data point that I'd point out here, again, some of it has to do with timing, so I don't want to overplay it, but as you think about pricing opportunities, you called out yourself, Matt, the pipeline and the movement in the ready to close portion of the pipeline.

Speaker #4: We've seen incredibly healthy production here in recent history, and, and I, I think that we'll be able to, to continue to experience that, if that recent history is any indication of the future.

Speaker #4: And so we're going to stick to that discipline. We are all about thinking about returns on invested capital for every bit of funding and capital that we put into a relationship on the loan side.

Speaker #4: The oth the other data point that I'd point out here and again, some of it has to do with, with timing, so I don't I don't want to overplay it, but, you know, as you think about pricing opportunity, you, you called out yourself, Matt, the pipeline and the movement in rate ready to close, or in ready in the ready-to-close portion of the pipeline.

Speaker #4: And the good news is, even amidst that competitive backdrop, again, we still see a healthy pipeline. We've seen incredibly healthy production here in recent history.

Speaker #4: And I think that we'll be able to continue to experience that if that recent history is any indication of the future. The other data point that I'd point out here—and again, some of it has to do with timing.

Speaker #4: I would point you to the statistic on our rate ready to close, and, and that, that actually improved pretty meaningfully from the first quarter to the second quarter, and so I think that's maybe a little bit further evidence of what I'm what I'm trying to describe in terms of our ability to demonstrate discipline, and, and pipeline opportunity and production at the same time.

Jay Brogdon: I would point you to the statistic on our rate ready to close, that actually improved pretty meaningfully from Q1 to Q2. I think that's maybe a little bit further evidence of what I'm trying to describe in terms of our ability to demonstrate discipline and pipeline opportunity and production at the same time. Daniel, I don't know if you want to add anything to any of that.

Speaker #4: So I don't want to overplay it, but as you think about pricing opportunities, you called out yourself, Matt, the pipeline and the movement in rate ready to close, or in the ready to close portion of the pipeline.

Speaker #4: Daniel, I don't know if you want to add anything to any of that.

Speaker #3: No, I I mean, I the only thing I would say is, you know, our yields were only down, one basis point late quarter prior, prior to that.

Speaker #4: I would point you to the statistic on our rate ready to close, and that actually improved pretty meaningfully from the first quarter to the second quarter.

Daniel Hobbs: No. The only thing I would say is our yields were only down 1 basis point linked quarter. Prior to that, it was down 7 basis points. That decline is lessening. As you think about just the betas on loans, we've got 18% cumulative to date what our beta was. As you think about forward views, right now in our outlook, we've got rate increase at the 10/26 meeting, that would provide loan yield growth as well if that were to happen.

Speaker #3: It was down seven basis points, so that, that decline is, is, is, lessening, and, and as you think about just the, the betas on loans, you know, we've got I think 18% cumulative to date what our, our beta was, and, you know, as you think about forward views, we've got right now in our outlook, we've got rate increase, at the 10/26 meeting and so you know, that would that would provide, loan yield, growth as well if, if that were to happen.

Speaker #4: And so I think that's maybe a little bit further evidence of what I'm trying to describe in terms of our ability to demonstrate discipline.

Speaker #4: And pipeline opportunity and production at the same time. Daniel, I don't know if you want to add anything to any of that.

Speaker #3: No, I mean, the only thing I would say is our yields were only down one basis point late quarter; prior to that, it was down seven basis points.

Speaker #3: So that decline is lessening. And as you think about just the betas on loans, we've got, I think, 18% cumulative to date, what our beta was.

Speaker #4: Matt, the last comment I'd call you to, the, that occurs to me, you, you referred to it in your question and, and I just want to point out that we in our interest rate sensitivity slide on slide 11, we point out that there's, there's 1.8 billion dollars of fixed-rate loans that are repricing in the next 12 months, to have an average yield below 4%, and so that, that backbook tailwind is very real.

Jay Brogdon: Matt, the last comment I'd call you to that occurs to me, you referred to it in your question. I just want to point out that in our interest rate sensitivity slide on slide 11, we point out that there's $1.8 billion of fixed rate loans that are repricing in the next 12 months that have an average yield below 4%. That back book tailwind is very real.

Speaker #3: And as you think about forward views, right now in our outlook, we've got a rate increase at the 10/26 meeting, and so that would provide loan yield growth as well if that were to happen.

Speaker #4: Matt, the last comment I'd call you to, that occurs to me, you referred to it in your question and I just want to point out that we in our interest rate sensitivity slide on slide 11, and we point out that there's 1.8 billion dollars of fixed rate loans that are repricing in the next 12 months.

Speaker #6: Okay, guys. Thanks for the color.

Matt Olney: Okay, guys. Thanks for the color.

Speaker #1: The next question will come from Steven Scoutin with Piper Sandler. Please go ahead.

Operator: Your next question will come from Stephen Scouten with Piper Sandler. Please go ahead.

Speaker #5: Yeah, good morning, guys. I'm, I'm curious just, how you think about the loan-to-deposit ratio from here. Kind of where you would allow that to, to move to if it if it continued to trend higher, and I know some of that dynamic this quarter is obviously just that, that kind of capitalistic shift you referenced of, of moving to the FHLB borrowings.

Stephen Scouten: Yeah. Good morning, guys. I'm curious just how you think about the loan-to-deposit ratio from here, where you would allow that to move to if it continued to trend higher. I know some of that dynamic this quarter is obviously just that capitalistic shift you referenced of moving to the FHLB borrowings versus brokerage. How do you think about what would be the level of comfort with that ratio, where you would allow it to go?

Speaker #4: To have an average yield below 4%, and so that backbook tailwind is very real.

Speaker #2: Okay, guys. Thanks for the color.

Speaker #1: The next question will come from Steven Scouton with Piper Sandler. Please go ahead.

Speaker #5: Versus brokered, but h-how do you think about what would be the level of comfort, with that ratio where you would allow it to go?

Speaker #5: Yeah, good morning, guys. I'm curious just how you think about the loan to deposit ratio from here. Kind of where you would allow that to move to if it continued to trend higher.

Speaker #4: I, I think, Steven, we're, you know, we're we're in the range of where our comfort level would be. It could flex it could flex any either direction incrementally from here, I think everything that Daniel described on the funding earlier is a-a-again, is just us being opportunistic, in and around any of the elements of funding that are you know, not, not as core as the core customer base is, but I, I think your, your point is, around the loan-to-deposit ratio is, y-you know, we have to continue to demonstrate the ability to grow the, the, the core deposit franchise as, as we are in order to y-you know, continue to core fund the, the loan book, and that, that's, that's our goal.

Daniel Hobbs: I think, Stephen, we're in the range of where our comfort level would be. It could flex either direction incrementally from here. I think everything that Daniel described on the funding earlier, again, is just us being opportunistic in and around any of the elements of funding that are not as core as the core customer base is. I think your point is around the loan-to-deposit ratio is, we have to continue to demonstrate the ability to grow the core deposit franchise as we are, in order to continue to core fund the loan book. That's our goal, that's our expectation. It's not our strategy to be a less than high-quality funded institution.

Jay Brogdon: I think, Stephen, we're in the range of where our comfort level would be. It could flex either direction incrementally from here. I think everything that Daniel described on the funding earlier, again, is just us being opportunistic in and around any of the elements of funding that are not as core as the core customer base is. I think your point is around the loan-to-deposit ratio is, we have to continue to demonstrate the ability to grow the core deposit franchise as we are, in order to continue to core fund the loan book. That's our goal, that's our expectation. It's not our strategy to be a less than high-quality funded institution.

Speaker #5: And I know some of that dynamic this quarter is obviously just that kind of capitalistic shift you referenced of moving to the FHLB borrowings.

Speaker #5: Versus brokered. But how do you think about what would be the level of comfort with that ratio where you would allow it to go?

Speaker #4: I think, Steven, we're in the range of where our comfort level would be. It could flex either direction incrementally from here. I think everything that Daniel described on the funding earlier is, again, is just us being opportunistic in and around any of the elements of funding that are not as core as the core customer base is.

Speaker #4: That's our expectation. We, we do not it's not our strategy to be a, less-than, than high-quality funded institution.

Speaker #4: But I think your point around the loan-to-deposit ratio is that we have to continue to demonstrate the ability to grow the core deposit franchise, as we are, in order to continue to core-fund the loan book.

Speaker #5: Yep, makes sense. And then you guys spoke to some of those metrics, the, the checking account growth year-over-year, quarter-over-quarter, and a, a lot of new customer looks.

Stephen Scouten: Yep, makes sense. You guys spoke to some of those metrics, the checking account growth year-over-year, quarter-over-quarter, and a lot of new customer looks. Has there been a push from an advertising perspective or a product perspective, or is some of that coming from just more looks given disruption of other banks in and around your markets? Can you give us a feel for what sort of looks you're getting due to that disruption in terms of whether it's new customers or new talent?

Speaker #5: I-is there been a push from a advertising perspective or a, you know, product perspective, or is some of that coming from just more looks given disruption of other you know, banks in and around your markets?

Speaker #4: And that's our goal. That's our expectation. It is not our strategy to be a less-than-high-quality, well-funded institution.

Speaker #5: Can you give us a feel for kind of what sort of looks you're getting due to that disruption in terms of where it's new customers or new talent?

Speaker #5: Yep, makes sense. And then you guys spoke to some of those metrics—the checking account growth year over year, quarter over quarter, and a lot of new customer looks.

Speaker #4: Yeah, Steven, we've, we've, we've got a lot of different initiatives, how we think about deposit growth. marketing is one significant one, one that we've only been doing really for the better part of a year, and we've been kind of testing and learning and growing into that over that over that timeframe.

Daniel Hobbs: Yeah, Stephen, we've got a lot of different initiatives how we think about deposit growth. Marketing is one significant one that we've only been doing really for the better part of a year. We've been kind of testing and learning and growing into that over that time frame. We've been targeting consumer, small business, and private wealth customers, and we're seeing some positive momentum there. Other things that we're doing is around incentives, making sure that our incentives are aligned both on the consumer and the commercial side. We're working through those. New product rollout, you asked about that. We did roll out some new products on the consumer side on 31 March, we're starting to see some of that come through.

Speaker #5: Has there been a push from a advertising perspective or a product perspective or some of that coming from just more looks given disruption of other banks in and around your markets?

Speaker #5: Can you give us a feel for kind of what sort of looks you're getting due to that disruption in terms of where it's new customers or new talent?

Speaker #4: we, we've been targeting consumers, small business, and private wealth customers, and we're seeing some positive momentum there, you know, other things that we're doing is around incentives, making sure that, that our incentives are aligned both on the consumer and the commercial side.

Speaker #3: Yeah, Steven. We've got a lot of different initiatives in how we think about deposit growth. Marketing is one significant one, and it's one that we've really only been doing for the better part of a year.

Speaker #4: We're working through those, and, new product rollout, you, you asked about that. We did roll out some new products on the consumer side, on March 31, so we're starting to see some of that come through, and then there are other investments that we're looking to make on the commercial side from a platform standpoint that we feel like will give us some advantages in order to, to get some deeper relationships and some new customer looks that we might not have gotten before, so there's a number of things that we're working on there, and as I said earlier in the call and kind of started off, this is probably an area that we would, have a lot of investment, go into.

Speaker #3: And we've been kind of testing, learning, and growing into that over that timeframe. We've been targeting consumer, small business, and private wealth customers.

Speaker #3: And we're seeing some positive momentum there. Other things that we're doing are around incentives—making sure that our incentives are aligned both on the consumer and the commercial side.

Daniel Hobbs: There are other investments that we're looking to make on the commercial side from a platform standpoint that we feel like will give us some advantages in order to get some deeper relationships and some new customer looks that we might not have gotten before. There's a number of things that we're working on there. As I said earlier in the call when I kind of started off, this is probably an area that we would have a lot of investment go into.

Speaker #3: We're working through those. And regarding new product rollout—you asked about that—we did roll out some new products on the consumer side on March 31.

Speaker #3: So we're starting to see some of that come through. And then there are other investments that we're looking to make on the commercial side from a platform standpoint that we feel will give us some advantages, allowing us to establish deeper relationships and gain some new customer opportunities that we might not have gotten before.

Speaker #5: Chris, you want to chime in?

Speaker #4: Yeah, hey, Steven. Chris Van Steenberg here.

Stephen Scouten: Chris, you want to chime in on that too?

Jay Brogdon: Chris, you want to chime in on that too?

Chris Van Steenberg: Hey, Stephen. Chris Van Steenberg here. I'd say the other thing, a couple of folks have mentioned some of the hires we've made this year, and you've referenced disruption in the industry. As we look at some of the teams and individuals we've brought in this year, we're already seeing some meaningful wins from those as well. Those are investments that are already returning for us, and those are showing up both in terms of wealth generation and movement balances here in terms of AUA. AUM is also on the deposit side. Good early results there, which I think reinforces the message that we've sent around taking advantage of other people's lack of focus due to M&A. I think that just reinforces where we're headed.

Speaker #2: I, I'd say the other thing, you know, a couple of folks have, have mentioned some of the hires we've made this year, and you've referenced disruption in the industry.

Speaker #2: As we look at some of the, the teams or, or in individuals, we've brought in this year, we're already seeing some meaningful wins from those as well, and so those are those are investments that are already returning for us, and those are showing up both in terms of, you know, wealth generation a-and moving balances here in terms of AUA, AUM is also on the deposit side, so good, good early results there, which I think reinforces the message that we've sent around, taking advantage of other people's lack of focus due to M&A, so I think that just reinforces where we're headed.

Speaker #3: So there are a number of things that we're working on there. And as I said earlier in the call, and kind of started off, this is probably an area that would have a lot of investment going into it.

Speaker #5: Chris, do you want to chime in?

Speaker #4: Yeah, hey Steven, Chris Van Steenberg here. I'd say the other thing—a couple of folks have mentioned some of the hires we've made this year, and you've referenced disruption in the industry.

Speaker #4: As we look at some of the teams or individuals we've brought in this year, we're already seeing some meaningful wins from those as well.

Speaker #4: And so those are investments that are already returning for us. And those are showing up both in terms of wealth generation and moving balances here in terms of AUA, AUM, and also on the deposit side.

Speaker #5: Got it. And maybe one last thing for me is just the, the repurchase, obviously, was, was a nice-to-see this quarter, and I, and I think if I remember correctly, you talked about excess capital kind of being north of 10.5% CET1, so it seems like you've got a fair amount of room, so just wondering how to think about that, remaining what is it?

Stephen Scouten: Got it. Maybe one last thing from me is just the repurchase obviously was nice to see this quarter, and I think if I remember correctly, you talked about excess capital kind of being north of 10.5% CET1. It seems like you've got a fair amount of room. Just wondering how to think about that remaining, there's $161 million remaining in that authorization.

Speaker #4: So, good early results there, which I think reinforces the message that we've sent around taking advantage of other people's lack of focus due to M&A.

Speaker #4: So, I think that just reinforces where we're headed.

Speaker #5: 161 million remaining in that authorization.

Speaker #5: Got it. And maybe one last thing for me is just the repurchase. Obviously, it was nice to see this quarter. And I think, if I remember correctly, you talked about excess capital kind of being north of 10.5% CET1.

Speaker #4: Yeah, I think, Steven, we'll just continue to, you know, be we'll evaluate that, we'll, we'll continue to be opportunistic there. You've heard us, we're going to be a broken record on this, but our, our, our priority is investing in the business, and so if we have opportunities to drive organic growth, drive investment in the business that has strong returns, that's going to be clear priority number one, time and time again, but, but we do think there y-you know, with, with the excess capital and particularly with how we how we look at kind of the, the, the shape of our returns outlook when we look forward and y-you know, the, the capital levels that should build as a result of that, y-y-you know, we've got we've got pencil-to-paper a little more in terms of how we think about being able to return some of that capital to the shareholder via the buyback, a-and you saw us have an opportunity to do that in the second quarter.

Daniel Hobbs: I think, Stephen, we'll evaluate that. We'll continue to be opportunistic there. You've heard us. We're going to be a broken record on this, but our priority is investing in the business. If we have opportunities to drive organic growth, drive investment in the business that has strong returns, that's going to be clear priority number 1 time and time again. We do think there, with the excess capital and particularly with how we look at kind of the shape of our returns outlook when we look forward and the capital levels that should build as a result of that. We've got pencil to paper a little more in terms of how we think about being able to return some of that capital to the shareholder via the buyback. You saw us have an opportunity to do that in the Q2.

Speaker #5: So it seems like you've got a fair amount of room. So, just wondering how to think about that remaining $161 million remaining in that authorization.

Speaker #4: Yeah, I think, Steven, we'll just continue to evaluate that. We'll continue to be opportunistic there. You've heard us—we're going to be a broken record on this.

Speaker #4: But our priority is investing in the business. So, if we have opportunities to drive organic growth and invest in the business that has strong returns, that's going to be priority number one, time and time again.

Speaker #4: But we do think that, with the excess capital and particularly with how we look at the shape of our returns outlook when we look forward, and the capital levels that should build as a result of that, we've put pencil to paper a little more in terms of how we think about being able to return some of that capital to the shareholder via the buyback.

Speaker #5: Great, appreciate all that, Caller. Congrats on the last quarter.

Stephen Scouten: Great. Appreciate all that color. Congrats on a nice quarter.

Speaker #4: Thanks, Steven.

Speaker #1: Your next question will come from Brian Wolzinski with Morgan Stanley. Please go ahead.

Daniel Hobbs: Thanks, Stephen.

Operator: Your next question will come from Brian Wilczynski with Morgan Stanley. Please go ahead.

Speaker #6: Hi, good morning. So you, you talked about deposit competition earlier in the call, and it's very clear that you're really focused on growing customer deposits.

Brian Wilczynski: Hi, good morning.

Daniel Hobbs: Morning, Brian.

Jay Brogdon: Morning, Brian.

Brian Wilczynski: You talked about deposit competition earlier in the call, and it's very clear that you're really focused on growing customer deposits. Given the environment and that focus that you have, how should we think about the trajectory of deposit costs in H2 of the year, particularly if we end up in a higher for longer rate environment? Thanks.

Speaker #4: And you saw us have an opportunity to do that in the second quarter.

Speaker #6: You know, given the environment and that focus, that you have, how should we think about the trajectory of deposit costs in the second half of the year?

Speaker #5: Great. Appreciate all that color. Congrats on the last quarter.

Speaker #4: Thanks, Steven.

Speaker #1: Your next question will come from Brian Wolzynski with Morgan Stanley. Please go ahead.

Speaker #6: Particularly if we end up in a higher for longer rate environment. Thanks.

Speaker #6: Hi, good morning.

Speaker #4: Good morning, Brian.

Speaker #6: So, you talked about deposit competition earlier in the call, and it’s very clear that you’re really focused on growing customer deposits. Given the environment and that focus that you have, how should we think about the trajectory of deposit costs in the second half of the year?

Speaker #4: Yeah, hey, Brian, appreciate that question. So, I, I, I think what you will see is probably you know, we kind of exited the quarter at about a 190, deposit cost.

Daniel Hobbs: Yeah. Hey, Brian. Appreciate that question. I think what you will see is probably, we exited the quarter at about a 190 deposit cost. The average for the quarter was 193. There's probably one more quarter of potential benefit from deposit costs. If we get the rate increase in the October 27-28 meeting, that would obviously flip that the other way. As you think about deposit costs and the beta over that course of the rest of this year and next year, what we're modeling is about a 45% beta

Speaker #4: That's, the average for the quarter was 193, so there's probably one more quarter of potential, benefit from deposit costs if we get the rate increase in, the 10/26 meeting, that would kind of obviously flip that the other way.

Speaker #6: Particularly if we end up in a higher-for-longer rate environment. Thanks.

Speaker #4: Yeah, hey Brian, appreciate that question. So, I think what you will see is we kind of exited the quarter at about a 190 basis point deposit cost.

Speaker #4: so the as you think about deposit costs and the beta over, over that course of the rest of this year and next year, we would view that prob what we're modeling is about a 45% beta, increase if we get a rate increase.

Speaker #4: The average for the quarter was 193. So there's probably one more quarter of potential benefit from deposit costs. If we get the rate increase in the 10/26 meeting, that would obviously flip that the other way.

Daniel Hobbs: increase. If we get a rate increase, if rates are flat, I think it'll hover where we are. I mentioned some of the investments that we may be making. Those investments will be on the rate side as well as the marketing side. That could potentially drive that up. If rates stay flat, I think you'll see deposit costs relatively hover in that, call it 190, 195 range. There's probably one more quarter of benefit there.

Speaker #4: If rates are flat, I think it'll kind of hover, you know, kind of where we are I mentioned some of the investments that we may be making.

Speaker #4: So, as you think about deposit costs and the beta over the course of the rest of this year and next year, we would view that what we're modeling is about a 45% beta increase if we get a rate increase.

Speaker #4: Those investments will be on the rate side as well as the marketing side, so that could potentially drive that up, but if rates stay flat, I think you'll see deposit costs relatively hover in that, you know, call it 190, 195 range, but there's probably one more quarter of benefit there.

Speaker #4: If rates are flat, I think it’ll kind of hover around where we are. I mentioned some of the investments that we may be making—those investments will be on the rate side as well as the marketing side.

Speaker #5: Brian, I would just add to I, I, I really think that y-y-you know, my, my best read of the crystal ball here is, kind of regardless of what the Fed does, th-there's, there's some amount of competition on the deposit side that could that is going to compete away some of the industry's either either asset sensitivity, if rates do come up, or compete away some of the, the backbook repricing that's there, and, and that's, that's not Simmon's commentary that I'm giving you, that's I, that's more just my perspective.

Jay Brogdon: Brian, I would just add, too, I really think that my best read of the crystal ball here is regardless of what the Fed does, there's some amount of competition on the deposit side that is going to compete away some of the industry's either asset sensitivity if rates do come up or compete away some of the back book repricing that's there. That's not Simmons commentary that I'm giving you. That's more just my perspective as I think about the industry right now. I think that our particular focus on deposits actually has an opportunity to perhaps even help us outperform that industry headwind because we have opportunities from a remix perspective, given that we're coming from behind in some of our composition of the deposit franchise.

Speaker #4: So that could potentially drive that up. But if rates stay flat, I think you'll see deposit costs relatively hover in that, call it, 190 to 195 range.

Speaker #4: But there's probably one more quarter of benefit there.

Speaker #5: Brian, I would just add to I really think that my best read of the crystal ball here is kind of regardless of what the Fed does, that there's some amount of competition on the deposit side that could that is going to compete away some of the industry's either asset sensitivity if rates do come up or compete away some of the backbook repricing that's there.

Speaker #5: As I think about the industry right now, and I think that our, our particular focus on deposits actually has an opportunity to perhaps even help us outperform that, that industry headwind, because we have opportunities from a remix perspective, given that we're, we're, we're coming from behind in some of our, you know, composition of the deposit franchise, so, so perhaps we can make some of the investments that we've been making in both people, products, tools, and, and even in frontbook pricing to drive mix, that would benefit the overall cost of deposits.

Speaker #5: And that's not Simmons commentary that I'm giving you. That's more just my perspective. As I think about the industry right now, I think that our particular focus on deposits actually has an opportunity to perhaps even help us outperform that industry headwind, because we have opportunities from a remix perspective.

Jay Brogdon: Perhaps we can make some of the investments that we've been making in both people, products, tools, and even in front book pricing to drive mix that would benefit the overall cost of deposits.

Speaker #6: And, and just to the point on mix, can you just give a little bit more color on the opportunity to pay down brokered deposits from here, and then maybe for just funding mix more broadly?

Speaker #5: Given that we're coming from behind in some of our composition of the deposit franchise, so perhaps we can make some of the investments that we've been making in both people, products, tools, and even in front-book pricing to drive mix that would benefit the overall cost of deposits.

Brian Wilczynski: Just to the point on mix, can you just give a little bit more color on the opportunity to pay down brokered deposits from here and then maybe for just funding mix more broadly? I did see that the borrowings were up a bit Q1, Q2. Can you just talk about how you're managing that as we look ahead to H2?

Speaker #6: I did see that the borrowings were up a bit Q on Q. Can you just talk about how you're managing that as we look ahead to the second half of the year?

Speaker #4: Yeah, Brian, so on, on the on the funding mix side, Daniel, I think what it really goes back to your earlier comment, if I understand Brian's question, that, the way we're looking at the outlook, Brian, for, for FHLBs versus brokers is really just, Daniel's word earlier is we're going to be capitalists about it.

Jay Brogdon: Yeah. Brian, on the funding mix side, Daniel, I think it really goes back to your earlier comment, if I understand Brian's question, that the way we're looking at the outlook, Brian, for FHLBs versus brokers is really just Daniel's word earlier is we're going to be capitalists about it. We're going to be opportunistic about it. Right now, or at least late in Q2 and coming into Q3, it's more advantageous from a cost perspective for us to lean into FHLBs and allow some of the short duration brokers to mature and run off. We'll just continue to be opportunistic in that regard.

Speaker #6: And just to the point on mix, can you give a little bit more color on the opportunity to pay down brokered deposits from here and then maybe talk about the funding mix more broadly?

Speaker #6: I did see that the borrowings were up a bit quarter-on-quarter. Can you just talk about how you're managing that as we look ahead to the second half of the year?

Speaker #4: We're going to be opportunistic about it, and so right now, or at least late in the second quarter and coming into the third quarter, it's more advantageous from a cost perspective for us to, to, to lean into FHLBs and allow some of the short-duration brokers to y-you know, to, to mature and run off, and so we'll, we'll just continue to be opportunistic in that regard.

Speaker #4: Yeah, Brian. So, on the funding mix, Daniel, I think it really goes back to your earlier comment — if I understand Brian's question — that the way we're looking at the outlook, Brian, for FHLBs versus brokers is really just, as Daniel said earlier, we're going to be capitalists about it.

Speaker #4: We're going to be opportunistic about it. And so right now, or at least late in the second quarter and coming into the third quarter, it's more advantageous from a cost perspective for us to lean into FHLBs and allow some of the short-duration brokereds to mature and run off.

Speaker #6: Got it. And then maybe just one more on loan growth. You talked about not stretching for growth, just given the competitive environment, and you have a pretty conservative posture around, returns and credit.

Brian Wilczynski: Got it. Maybe just one more on loan growth. You talked about not stretching for growth, just given the competitive environment, and you have a pretty conservative posture around returns and credit. Can you just talk a little bit about where you're seeing the most attractive risk-adjusted return across the portfolio today, whether it's C&I versus CRE? Just how you're thinking about the mix of incremental loan growth going forward.

Speaker #6: can you just talk a little bit about where you're seeing the most attractive risk-adjusted return across the portfolio today? Whether it's, you know, CNI versus CRE, and just how you're thinking about the mix of incremental loan growth going forward.

Speaker #4: And so we'll just continue to be opportunistic in that regard.

Speaker #4: Yeah. Yeah, so I think on y-y-y again, you have to look relationship here. Pure, purely on, on the asset side, without any kind of allocation of funding against it, we-we're, we're seeing we-we're still seeing some really good returns from a commercial real estate point of view and some good opportunities there.

Jay Brogdon: Yeah. I think, again, you have to look relationship here. Purely on the asset side, without any kind of allocation of funding against it, we're still seeing some really good returns from a commercial real estate point of view and some good opportunities there. Again, that's through a very strong lens in terms of exactly what asset classes and even just sort of what geographies and what street corners we're willing to look at for some of those transactions. I think when you think about C&I, the real opportunity to drive stronger returns, and we're seeing some of this, is on being able to pull over full relationships.

Speaker #6: Can you talk a little bit about where you're seeing the most attractive risk-adjusted return across the portfolio today, whether it's C&I versus CRE, and just how you're thinking about the mix of incremental loan growth going forward?

Speaker #4: y-you know, and again, that's through a very, very strong lens in terms of exactly what asset classes and, and even just sort of what, what geographies and what street corners we're willing to look at, for some of those, those transactions.

Speaker #4: Yeah. Yeah. So I think, again, you have to look at the relationship here. Purely on the asset side, without any kind of allocation of funding against it, we're still seeing some really good returns from a commercial real estate point of view and some good opportunities there.

Speaker #4: but I think if you y-you know, when you think about CNI, the real opportunity to drive stronger returns, and, and we're seeing some of this, is on being able to pull over full relationships, and so when we're bringing in y-you know, and, and leading with operating accounts, y-y-you know, institutional and, and sort of corporate, corporate wealth fees, other fee-type business, and then, of course, bringing in the, the credit relationships alongside of those as well.

Speaker #4: And again, that's through a very, very strong lens in terms of exactly what asset classes and even just sort of what geographies and what street corners we're willing to look at for some of those transactions.

Jay Brogdon: When we're bringing in and leading with operating accounts, institutional and sort of corporate wealth fees, other fee type business, and then of course, bringing in the credit relationships alongside of those as well, those are some incredibly attractive return profiles. That's something that we're very focused on seeing some success on. That's some of our heaviest investment as we look forward, is continuing to build the teams and the platforms to generate that type of client profile growth on a consistent and respectable basis.

Speaker #4: But I think if you, when you think about CNI, the real opportunity to drive stronger returns—and we're seeing some of this—is being able to pull over full relationships.

Speaker #4: Those are some incredibly attractive return profiles, and that's something that we're very, very focused on, seeing some success on, and that's some of our heaviest investment as we look forward is continuing to build the y-you know, the teams and the platforms to generate that type of, of client profile growth on a on a consistent and respectable basis.

Speaker #4: And so, when we're bringing in and leading with operating accounts, institutional and sort of corporate wealth fees, other fee-type business, and then, of course, bringing in the credit relationships alongside those as well.

Speaker #4: Those are some incredibly attractive return profiles, and that's something that we're very, very focused on. We're seeing some success on that, and that's some of our heaviest investment as we look forward—continuing to build the teams and platforms to generate that type of client profile growth on a consistent and respectable basis.

Speaker #6: I, I really appreciate the detailed answer and thank you for taking my questions.

Brian Wilczynski: I really appreciate the detailed answer, and thank you for taking my questions.

Speaker #4: Thanks, Brian.

Jay Brogdon: Thanks, Brian.

Speaker #1: The next question will come from Gary Tenner with DA Davidson. Please go ahead.

Operator: The next question will come from Gary Tenner with D.A. Davidson. Please go ahead.

Speaker #7: thanks. Good morning, everybody. I had a just a question. Jay, I was wondering, as you talk about the CNI opportunity and investments you've made, any comments you wanted to make around, bringing on Jim Reiser?

Gary Tenner: Thanks. Good morning, everybody. I had just a question. Jay, I was wondering, as you talk about the C&I opportunity and investments you've made, any comments you wanted to make around bringing on Jim Recer to the business and kind of the opportunity to focus on C&I through his relationships?

Speaker #6: I really appreciate the detailed answer, and thank you for taking my questions.

Speaker #7: to the business and kind of the opportunity to focus on CNI, through his relationships?

Speaker #4: Thanks, Brian.

Speaker #1: The next question will come from Gary Tenner with D.A. Davidson. Please go ahead.

Speaker #5: Yeah, well, I appreciate that question. I couldn't be more excited to have Jim here, and we-we've had, you know, we've had a number of great talent, opportunities, Chris Van Steenberg mentioned earlier.

Jay Brogdon: Yeah. Well, I appreciate that question. I couldn't be more excited to have Jim here. We've had a number of great talent opportunities. Chris Van Steenberg mentioned earlier, I think basically was referring to the St. Louis wealth team and others. We brought a team on a bit earlier this year that is absolutely knocking the cover off the ball in terms of new business that they're bringing into the bank. Those businesses, I want to use that example to kind of get all the way back to your question with Jim. The business that that team and those types of talent are bringing into the organization are very synergistic to the commercial bank as well because we are banking in those markets, commercial executives, centers of influence, et cetera, that we just didn't have as deep a relationship with before.

Speaker #7: Thanks. Good morning, everybody. I had just a question. Jay, I was wondering—as you talk about the CNI opportunity and investments you've made—if you had any comments you wanted to make around bringing on Jim Reiser to the business, and kind of the opportunity to focus on CNI through his relationships?

Speaker #5: I think basically was referring to the St. Louis wealth team, and, and others, but, you know, we brought a team on a, a bit earlier this year, that is absolutely knocking the cover off the ball in terms of new business that they're bringing into the bank, and those businesses, in that and just I want to use that example to kind of get all the way back to your question with Jim.

Speaker #5: Yeah. Well, I appreciate that question. I couldn't be more excited to have Jim here, and we've had a number of great talent opportunities. Chris Van Steenberg, mentioned earlier, I think, basically was referring to the St.

Speaker #5: It's the, the business that, that that team and those types of talent are bringing into the organization are, are very, very synergistic to, to the commercial bank as well, because you're bringing you know, we are banking, in those markets, commercial executives, centers of influence, etc., that we just didn't have as deep a relationship with before, and so that's really opening up the pipeline, and I think it's, it's, it's some of those things that are unfolding inside the business that allow us to sit down with a professional like Jim Reiser and, and he, he gets excited about the direction of, of the bank and, and the things that we're building, and, and I think, Gary, in, in a nutshell, we're, we're just kind of seeing s-success beget success right now, on both the talent and the production front there, and it's in the extreme early innings, as we sit here today.

Speaker #5: Louis Wealth team, and others. But we brought a team on a bit earlier this year that is absolutely knocking the cover off the ball in terms of new business that they're bringing into the bank.

Speaker #5: And those businesses in that, and I want to use that example to kind of get all the way back to your question with Jim.

Jay Brogdon: That's really opening up the pipeline. I think it's some of those things that are unfolding inside the business that allow us to sit down with a professional like Jim Recer, and he gets excited about the direction of the bank and the things that we're building. I think, Gary, in a nutshell, we're just kind of seeing success beget success right now on both the talent and the production front there, and it's in the extreme early innings as we sit here today.

Speaker #5: The business that that team and those types of talent are bringing into the organization are very, very synergistic to the commercial bank as well, because you're bringing—we are banking in those markets—commercial executives, centers of influence, etc., that we just didn't have as deep a relationship with before.

Speaker #5: And so that's really opening up the pipeline, and I think it's some of those things that are unfolding inside the business that allow us to sit down with a professional like Jim Reiser, and he gets excited about the direction of the bank and the things that we're building. And I think, Gary, in a nutshell, we're just kind of seeing success beget success right now on both the talent and the production front there.

Speaker #7: Got it. Appreciate that. And then specific to the second quarter, can you talk a little bit about just, you know, the, the strength in the ag growth that really drove CNI this quarter, and then, secondarily, you had mentioned earlier, I think Daniel mentioned, you know, the increase in the yield in the ready-to-close portfolio.

Gary Tenner: Got it. Appreciate that. Specific to the Q2, can you talk a little bit about just the strength in the ag growth that really drove C&I this quarter? Secondarily, you had mentioned earlier, I think Daniel mentioned the increase in the yield in the ready to close portfolio. I think it was up like 33 basis points quarter-over-quarter. Is that a mix phenomenon, or what's kind of driving that?

Speaker #5: And it's in the extremely early innings as we sit here today.

Speaker #7: I think it was up like 33 basis points quarter over quarter. is that a mix phenomenon, or what's, what's kind of driving that?

Speaker #7: Got it. Appreciate that. And then, specific to the second quarter, can you talk a little bit about the strength in ag growth that really drove CNI this quarter?

Speaker #5: Yeah, so on, on the ag side, I want I want to remind everyone, we-we've been we've been banking farmers for 123 years, at, at Simmons Bank, so, that's a sector that is, requires a unique kind of set of experience and understanding, of the farmer and, and of the entire system, and, and so that's something we pride ourselves on.

Jay Brogdon: Yeah. On the ag side, I want to remind everyone, we've been banking farmers for 123 years at Simmons Bank. That's a sector that requires a unique kind of set of experience and understanding of the farmer and of the entire system. That's something we pride ourselves on. It is a sector that has challenges right now. We're finding ourselves, I think, benefiting just for the quarter, to your question, Gary, just to limit it just to the quarter, we're benefiting, I think, from a couple of things. One is just some seasonality. One is just seasonality and production in that business.

Speaker #7: And then, secondarily, you had mentioned earlier—I think Daniel mentioned—the increase in the yield in the ready-to-close portfolio. I think it was up like 33 basis points quarter over quarter.

Speaker #7: Is that a mixed phenomenon, or what's kind of driving that?

Speaker #4: Yeah. So on the ag side, I want to remind everyone, we've been banking farmers for 123 years at Simmons Bank. So that's a sector that requires a unique set of experience and understanding of the farmer and of the entire system.

Speaker #5: it is a sector that has challenges right now, and, we're, we're finding ourselves I think benefiting just for the quarter to, to your question, Gary, just to limit it just to the quarter, we're benefiting I think from a couple of things.

Speaker #5: One is just some seasonality, one is just seasonality, and, and, and production in that business, but, but the other is some of the headwinds to that sector are y-you know, have a lot of folks who who are looking a little bit inward or less willing to y-you know, support kind of generational, farmers and, and top-tier clients in our footprint that we've been close to for a long, long time, and we're now able to take kind of primary relationship with, and so, so that's, that's some of what we're seeing, I think, on that side of the business.

Speaker #4: And so that's something we pride ourselves on. It is a sector that has challenges right now. And we're finding ourselves, I think, benefiting just for the quarter, to your question, Gary—just to limit it to the quarter.

Jay Brogdon: The other is some of the headwinds to that sector have a lot of folks who are looking a little bit inward or less willing to support kind of generational farmers and top-tier clients in our footprint that we've been close to for a long time, and we're now able to take kind of primary relationship with. That's some of what we're seeing, I think, on that side of the business. Gary, remind me, what was the second part of your question there?

Speaker #4: We're benefiting, I think, from a couple of things. One, it's just some seasonality—one is just seasonality in production in that business. But the other is, some of the headwinds to that sector have a lot of folks who are looking a little bit inward or less willing to support kind of generational farmers and top-tier clients in our footprint that we've been close to for a long, long time, and we're now able to take kind of primary relationship with.

Speaker #5: Gary, remind me, what was the second part of your question there?

Speaker #4: Great.

Speaker #7: the second part was the.

Speaker #5: About the yeah, yeah.

Gary Tenner: The second part was on the-

Speaker #7: The, the yields on the ready-to-close, yeah.

Jay Brogdon: Oh, yeah

Gary Tenner: the yields on the ready to close. Yeah.

Speaker #5: Yeah, I, I think I think there is a bit of enumerator and denominator impact to that, so y-you know, that and that's why I mentioned earlier, in, in response to another question, that I don't want to overplay the increase in, in the yield in that bucket, because there the denominator impact is just with some of the production that we saw, and, and just there's some asset specificity in there that's driving a portion of that.

Jay Brogdon: Yeah. I think there is a bit of a numerator and denominator impact to that. That's why I mentioned earlier in response to another question that I don't want to overplay the increase in the yield in that bucket because the denominator impact is just with some of the production that we saw, and there's some asset specificity in there that's driving a portion of that. At the same time, I don't want to apologize for the reality that a portion of that is more on that numerator side, as I'll call it, which is just driving discipline in terms of how we evaluate profitable relationships and what we're willing to move through the production.

Speaker #4: And so that's some of what we're seeing, I think, on that side of the business. Gary, remind me, what was the second part of your question there?

Speaker #7: The second part was the yields on the ready-to-close. Yeah.

Speaker #4: Yeah, I think there is a bit of numerator and denominator impact to that. So, and that's why I mentioned earlier, in response to another question, that I don't want to overplay the increase in the yield in that bucket because the denominator impact is just with some of the production that we saw, and there's some asset specificity in there that's driving a portion of that.

Speaker #5: At the same time, I don't want to apologize for the reality that a portion of that is, is more on that numerator side, as I'll call it, which is just driving discipline in terms of how we evaluate profitable relationships and what we're willing to, y-you know, to move through the production.

Speaker #7: Thank you.

Speaker #5: Thank you.

Gary Tenner: Thank you.

Jay Brogdon: Thank you.

Speaker #1: And this will conclude our question and answer session. I would like to turn the conference back over to Mr. Jay Brogdon, president and CEO, for any closing remarks.

Speaker #4: At the same time, I don't want to apologize for the reality that a portion of that is more on that numerator side, as I'll call it, which is just driving discipline in terms of how we evaluate profitable relationships and what we're willing to move through the production.

Operator: This will conclude our question and answer session. I would like to turn the conference back over to Mr. Jay Brogdon, President and CEO, for any closing remarks. Please go ahead.

Speaker #1: Please go ahead.

Speaker #5: Yeah, a-allow me to I just I just want to spend a few moments as we wrap up here, and I'm may-maybe just share a few things that are on the top of my mind as I as I think about our business.

Jay Brogdon: Yeah. I just want to spend a few moments as we wrap up here, and maybe just share a few things that are on the top of my mind as I think about our business. What I'd say is I believe there is significant untapped efficiency and potential in our business as we sit here today. I might look backwards before I look forward a bit here. If you think about the past few years, and we've commented on this on the call, we've been deep into what we've called a Better Bank Initiative. I think we've demonstrated some very real results in terms of expense discipline. What I'd categorize that as over the last couple of years is mostly very tactical things that we've worked on. We're still doing that in 2026. We sometimes refer to it as good hygiene, or continuous improvement.

Speaker #7: Thank you.

Speaker #4: Thank you.

Speaker #5: what I'd say is I, I believe there is significant untapped efficiency and potential in our business as we sit here today. yeah, I might I might look backwards before I, I look forward a bit here.

Speaker #1: And this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Jay Brogdon, President and CEO, for any closing remarks.

Speaker #1: Please go ahead.

Speaker #5: Yeah. Allow me to—I just want to spend a few moments as we wrap up here and maybe just share a few things that are on the top of my mind as I think about our business.

Speaker #5: If you if you think about the past few years, and we've commented on this on the call, we-we've been deep into what we've called a better bank initiative.

Speaker #5: What I'd say is, I believe there is significant untapped efficiency and potential in our business as we sit here today. I might look backwards before I look forward a bit here.

Speaker #5: I think we've demonstrated some very real results in terms of, expense discipline, and what I'd categorize that as over the last couple of years is, is mostly very tactical things that we've worked on, and we're still doing that in 2026.

Speaker #5: If you think about the past few years—and we've commented on this on the call—we've been deep into what we've called a Better Bank initiative.

Speaker #5: We-we sometimes refer to it as good hygiene, or continuous improvement, and so th-that work will continue and is continuing now. What I what I want to call everybody's attention to is our focus over the past year in addition to those tactical efforts has also shifted a lot more strategic.

Jay Brogdon: That work will continue and is continuing now. What I want to call everybody's attention to is our focus over the past year, in addition to those tactical efforts, has also shifted a lot more strategic. You've seen evolution in our leadership team to support some of that strategic shift. What I'd say is right now, we are in that strategic focus. We're focused heavily on how we optimize the organization of our teams, how we engineer better processes, and how we enable the business through technology. I think these investments, as we move forward through the balance of the year, are going to allow us to deliver an operating model at Simmons Bank that can consistently drive returns at or above any of the long-range targets we've published.

Speaker #5: I think we've demonstrated some very real results in terms of expense discipline, and what I'd categorize that as over the last couple of years is mostly very tactical things that we've worked on.

Speaker #5: And we're still doing that in 2026. We sometimes refer to it as good hygiene. We're about continuous improvement. And so, that work will continue and is continuing now.

Speaker #5: You've seen evolution in our leadership team to support some of that strategic shift, and what I'd say is, right now, we are in that strategic focus, we're focused heavily on how we optimize the organization of our teams, how we engineer better processes, and how we enable the business through technology.

Speaker #5: What I want to call everybody's attention to is our focus over the past year. In addition to those tactical efforts, it has also shifted a lot more strategic.

Speaker #5: You've seen evolution in our leadership team to support some of that strategic shift. And what I'd say is, right now, we are in that strategic focus.

Speaker #5: I think these investments as we move forward through the balance of the year are going to allow us to deliver and operating model at Simmons Bank that can consistently drive returns, at or above any of the long-range targets we've published.

Speaker #5: We're focused heavily on how we optimize the organization of our teams, how we engineer better processes, and how we enable the business through technology.

Speaker #5: Again, what I'd say is, we have a demonstrated track record in this regard over the past few years, so as I as I look forward, what I would describe today is, I think there's more to come in this regard, and I don't think you will be disappointed as we deliver those results.

Jay Brogdon: What I'd say is we have a demonstrated track record in this regard over the past few years. As I look forward, what I would describe today is I think there's more to come in this regard, and I don't think you will be disappointed as we deliver those results. We'll look forward to sharing more of this with you as we move through H2 of the year. Appreciate you for sharing some time with us this morning, and have a great day.

Speaker #5: I think these investments, as we move forward through the balance of the year, are going to allow us to deliver an operating model at Simmons Bank that can consistently drive returns at or above any of the long-range targets we've published.

Speaker #5: So we'll look forward to sharing more of this with you as we move through the second half of the year. Appreciate you for sharing some time with us this morning, and have a great day.

Speaker #5: Again, what I'd say is we have a demonstrated track record in this regard over the past few years. So, as I look forward, what I would describe today is I think there's more to come in this regard.

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

Speaker #5: And I don't think you will be disappointed as we deliver those results. So, we'll look forward to sharing more of this with you as we move through the second half of the year.

Speaker #5: We appreciate you for sharing some time with us this morning, and have a great day.

Q2 2026 Simmons First National Corp Earnings Call

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