Simmons First National Corporation (SFNC) Q2 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the Simmons First National Corporation second quarter 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. Ed Bilek. Please go ahead, sir.

Good morning, and welcome to Simmons First National Corporation second quarter 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 second quarter 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. 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 December 31st, 2025, and our Form 10-Q for the quarter-ended March 31st, 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. 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.

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.

Hey, good morning, everybody.

Morning, David.

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 are 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.

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 12-24 months. We're proud of growth in our non-interest-bearing deposits in the second quarter. Obviously, that's the highest quality of deposits, and we grew that 4% annualized. If you work down the quality versus the highest quality, 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. 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 attraction of new customers versus deepening 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, that was a positive trend for us. 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. Gas prices were up pretty significantly, about 35% in terms of the debit spend going to convenience stores in the first quarter. 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. We're willing to let those go off at high prices. Public funds was very seasonal. You typically see that this time of 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. 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 12-24 months.

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 the second quarter. 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.

Okay. That's great. Similarly encouraging, I thought was the loan production side. I mean, that 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?

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 second quarter growth wasn't as strong as the first quarter. 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. When you think about generating good growth in the second quarter, 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. 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.

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. 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.

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 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. 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.

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 and 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. 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. Some of those things, back to your question around investment, 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.

That's great. Thanks, everybody.

Thanks, David.

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

Hey, good morning, guys.

Morning, Woody.

Maybe just a 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 kind of that 2%-3% growth? Just curious on your thoughts there.

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. 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%-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. To your question on the expense guide, I think we will beat that guidance for the year this year. 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%-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.

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.

Exactly.

Right. That's very encouraging to hear. My next question, I just wanted to shift to credit real fast, NPAs were up just a touch with this one, the four-family construction borrower. That's 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.

Yeah, I think, obviously, we're a bit top-heavy in NPLs when you look. 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. 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. 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, but 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 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.

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

Thanks, Woody.

The next question will come from Matt Olney with Stephens. Please go ahead.

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, it 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 the back half of the year.

I think some of that's probably just timing right at the end of the quarter, honestly, Matt. 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 the third quarter, 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. 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.

Okay. Perfect. That's helpful, Jay. 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, 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?

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

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.

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 to have an average yield below 4%. That back book tailwind is very real.

Okay, guys. Thanks for the color.

The next question will come from Stephen Scouten with Piper Sandler. Please go ahead.

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. I know some of that dynamic this quarter is obviously just that capitalistic shift you referenced of moving to the FHLB borrowings versus brokered. How do you think about what would be the level of comfort with that ratio, where you would allow it to go?

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.

Yep, makes sense. 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. 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?

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 timeframe. 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, and we're working through those. New product rollout, 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. 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 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 kind of started off, this is probably an area that we would have a lot of investment go into.

Chris, you want to chime in here too?

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 or 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.

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.

Yeah, 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 one time and time again. We do think there, 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 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, and you saw us have an opportunity to do that in the second quarter.

Great. Appreciate all that color. Congrats on a nice quarter.

Thanks, Stephen.

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

Hi, good morning.

Morning, Brian.

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, particularly if we end up in a higher for longer rate environment? Thanks.

Yeah. Hey, Brian, appreciate that question. I think what you will see is probably we kind of 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 10/26 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, we would view that what we're modeling is about a 45% beta increase. If we get a rate increase, if rates are flat, I think it'll kind of 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.

Brian, I would just add, too, I really think that my best read of the crystal ball here is kind of 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. 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.

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? Maybe for just funding mix more broadly, I did see that the borrowings were up a bit Q1 Q. Can you just talk about how you're managing that as we look ahead to the second half of the year?

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 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 brokers to mature and run off. We'll just continue to be opportunistic in that regard.

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, and just how you're thinking about the mix of incremental loan growth going forward?

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. When we're bringing in and leading with operating accounts, institutional and sort of corporate wealth fees, other fee type business, 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.

I really appreciate the detailed answer. Thank you for taking my questions.

Thanks, Brian.

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

Thanks. Good morning, everybody. I had just a question. Jay, I was just 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?

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. 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. 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. It's in the extreme early innings as we sit here today.

Got it. Appreciate that. Specific to the second quarter, 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?

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 in production in that business. 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?

The second part was on the yields on the ready to close. Yeah.

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. 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.

Thank you.

Thank you.

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.

I just want to spend a few moments as we wrap up here, 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, 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. 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. Again, 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 the second half of the year. Appreciate you for sharing some time with us this morning, and have a great day.