Simmons First National (SFNC)

Regional banking company Simmons First National (NASDAQ:SFNC) announced better-than-expected revenue in Q4 CY2025, with sales up 15.9% year on year to $249 million. Its non-GAAP profit of $0.54 per share was 12.9% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1903 and a presence across Arkansas, Kansas, Missouri, Oklahoma, Tennessee, and Texas, Simmons First National (NASDAQ:SFNC) is a regional bank holding company that provides banking and financial services to individuals and businesses.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Simmons First National competes with other regional banks operating in the southern and midwestern United States, including Regions Financial (NYSE:RF), Prosperity Bancshares (NYSE:PB), Bank OZK (NASDAQ:OZK), and Trustmark Corporation (NASDAQ:TRMK).

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Unfortunately, Simmons First National’s 1.9% annualized revenue growth over the last five years was weak. This fell short of our benchmarks and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Simmons First National’s annualized revenue growth of 4% over the last two years is above its five-year trend, but we were still disappointed by the results. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Simmons First National reported year-on-year revenue growth of 15.9%, and its $249 million of revenue exceeded Wall Street’s estimates by 4.1%.

Net interest income made up 76.9% of the company’s total revenue during the last five years, meaning lending operations are Simmons First National’s largest source of revenue.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

Topline growth alone doesn't tell the complete story - the profitability of that growth shapes actual earnings impact. Banks track this dynamic through efficiency ratios, which compare non-interest expenses such as personnel, rent, IT, and marketing costs to total revenue streams.

Markets emphasize efficiency ratio trends over static measurements, recognizing that revenue compositions drive different expense bases. Lower efficiency ratios signal superior performance by indicating that banks are controlling costs effectively relative to their income.

Over the last five years, Simmons First National’s efficiency ratio has swelled by 14.9 percentage points, going from 60.3% to 40%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

Simmons First National’s efficiency ratio came in at 55.5% this quarter, beating analysts’ expectations by 266.1 basis points (100 basis points = 1 percentage point). This result was 10.1 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects Simmons First National to become less profitable as it anticipates an efficiency ratio of 58.7%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Simmons First National, its EPS declined by 6.7% annually over the last five years while its revenue grew by 1.9%. However, its efficiency ratio didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Simmons First National, its two-year annual EPS growth of 1.8% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q4, Simmons First National reported adjusted EPS of $0.54, up from $0.39 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Simmons First National’s full-year EPS of $1.70 to grow 13.5%.

Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

Simmons First National’s TBVPS declined at a 3.4% annual clip over the last five years. A turnaround doesn’t seem to be in sight as its TBVPS also dropped by 6.5% annually over the last two years ($15.92 to $13.91 per share).

Over the next 12 months, Consensus estimates call for Simmons First National’s TBVPS to grow by 8.4% to $15.07, paltry growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Simmons First National has averaged a Tier 1 capital ratio of 12%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, Simmons First National has averaged an ROE of 2%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

We enjoyed seeing Simmons First National beat analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock remained flat at $19.29 immediately following the results.

Updated: January 20, 2026 at 11:50 PM EST

Before investing in or passing on Simmons First National, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

We see the value of companies driving economic growth, but in the case of Simmons First National, we’re out. To begin with, its revenue growth was weak over the last five years. And while its improving efficiency ratio shows the business has become more productive, the downside is its relatively low ROE suggests management has struggled to find compelling investment opportunities. On top of that, its TBVPS has declined over the last five years.

Simmons First National’s P/B ratio based on the next 12 months is 0.8x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $22.17 on the company (compared to the current share price of $19.29).