SFNC's Q2 Earnings: Can Regional Bank Navigate Growth Amid Peer Struggles?

Simmons First National Corporation (NASDAQ: SFNC) is set to release its second-quarter 2025 earnings on July 17, with investors scrutinizing its ability to sustain revenue growth amid a backdrop of uneven performance from regional peers. Analysts project a 10.1% year-over-year revenue increase to $217.1 million, a reversal from the 5.3% decline reported in Q2 2024. But will SFNC's trajectory hold up against rivals like Fulton Financial (FULT) and FB Financial (FBK), which recently stumbled? Here's what the numbers say—and what investors should watch.

Revenue Growth: A Regional Play in a Volatile Market

SFNC's Q1 2025 results provided a glimpse of its growth playbook. Net interest margin (NIM) expanded to 2.95%, driven by lower deposit costs (2.44%) and reduced reliance on wholesale funding. This trend, if sustained, could fuel Q2 earnings. However, peer performance casts a shadow: FB Financial's Q2 revenue dropped sharply due to credit issues, while Fulton Financial's results were mixed. SFNC's stable loan portfolio ($17.09 billion) and deposit growth ($183 million in Q1) position it better than some competitors, but risks remain.

Valuation: Overpriced or Undervalued?

At a trailing P/E of 15.6, SFNC trades at a premium to the banking sector's median of 11. But its forward P/E of 11.9 suggests analysts see improvement ahead. Compare this to FB Financial's 18.2 P/E and Fulton's 12.7—a reminder that SFNC's valuation is neither screaming cheap nor obviously overvalued. The key question: Can its NIM expansion and deposit strategy offset macroeconomic risks?

The Elephant in the Room: Credit Quality and Costs

SFNC's Q1 stumble included a $15.6 million provision for two nonperforming loans—a St. Louis hotel and a fast-food operator. While management called these isolated cases, the banking sector's overall credit outlook is clouded by rising defaults in sectors like hospitality. Meanwhile, SFNC's $4.3 million fraud-related charge underscores operational risks. Investors must assess whether these one-time hits are anomalies or signs of deeper issues.

Dividend Discipline and Capital Strength

SFNC's 116-year dividend streak is a testament to its stability. The Q1 dividend of $0.2125 per share reflects cautious optimism, but with a payout ratio of 59% (based on Q1 EPS of $0.36), there's room to grow if earnings improve. Its CET1 ratio of 12.21% and TCE ratio of 8.34% also suggest ample capital to weather economic storms—a plus in a volatile environment.

Investment Takeaway: A Hold with Upside Potential

SFNC appears positioned to meet Q2 revenue estimates, but its valuation leaves little margin for error. If the earnings call on July 18 confirms NIM expansion and signals resilience against credit risks, the stock could inch toward its $21.60 price target. However, investors should remain wary of broader economic headwinds.

Recommendation: Hold SFNC ahead of earnings. Buy if management provides clarity on loan growth, deposit costs, and credit reserves. Avoid if peers' struggles—like FB Financial's stumble—suggest a sector-wide slowdown.

In a sector where differentiation is key, SFNC's regional focus and disciplined balance sheet give it an edge—but execution in Q2 will be the ultimate test.