Simmons First National Corporation Maintains Dividend Momentum with $0.2125 Quarterly Payout

Simmons First National Corporation (NASDAQ: SFNC) has announced its first-quarter 2025 dividend of $0.2125 per share, marking a modest increase from the $0.21 quarterly payout in late 2024. This decision underscores the bank’s commitment to its 116-year streak of uninterrupted dividend payments—a rare feat in the financial sector. However, the dividend increase arrives against a backdrop of mixed financial results, prompting questions about the sustainability of the payout and the broader risks facing the regional lender.

Dividend History and Yield: A Steady, if Modest, Growth Path

Simmons First National has increased its dividend for 14 consecutive years, earning it a place among the 26 U.S. companies with over 100 years of unbroken dividend payments. The $0.2125 quarterly dividend, when annualized, amounts to $0.85 per share, yielding approximately 4.46% based on the stock’s recent closing price of $19.06 (as of May 2025). This yield is comfortably above the average for regional banks and reflects the company’s focus on returning capital to shareholders.

The dividend’s growth trajectory has slowed in recent years. For instance, the annual dividend rose from $0.68 in 2020 to $0.80 in 2023 and $0.84 in 2024—a cumulative 25% increase over five years. The 2025 uptick to $0.85 represents just a 1.8% year-over-year rise, signaling a cautious approach amid economic uncertainty.

Financial Performance: Headwinds and Hidden Risks

The dividend decision must be evaluated in light of Simmons First National’s first-quarter 2025 earnings, which revealed both strengths and vulnerabilities.

Key Financial Highlights:

• Net Interest Margin (NIM) expanded to 2.95%, a 4-basis-point sequential increase, driven by lower deposit costs and reduced reliance on wholesale funding.
• Provision for Credit Losses surged to $26.8 million, a 103% jump from the prior quarter, due to two impaired loans totaling $49.8 million. These included a $26.9 million hotel loan and a $22.9 million fast-food operator loan, both facing sector-specific challenges.
• Adjusted diluted EPS of $0.26 remained stable compared to the prior quarter but trailed the $0.39 EPS in Q4 2024.

The elevated credit provisions highlight risks tied to specific borrowers, but management emphasized these were non-systemic issues, with the broader loan portfolio performing well. Asset quality metrics, however, deteriorated slightly, with nonperforming loans rising to 0.89% of total loans, up from 0.65% in Q4 2024.

Stock Performance: A Stable, if Volatile, Ride

The stock price in May 2025 traded in a narrow range of $18.49 to $19.52, reflecting investor caution about the bank’s credit quality and macroeconomic conditions. While the dividend yield remains attractive, the share price has lagged behind peers like Bank of America (BAC) and Wells Fargo (WFC), which benefit from scale and diversification.

Key Considerations for Investors:

1. Payout Ratio Sustainability:
   With the annualized dividend of $0.85, the payout ratio (dividend divided by earnings) stands at approximately 81% based on the $1.04 annualized EPS (assuming Q1’s $0.26 is representative of full-year performance). This is elevated but manageable, given the bank’s strong capital ratios (Tangible Common Equity ratio of 8.34%) and conservative risk management.

2. Credit Quality and Reserves:
   The $252.2 million allowance for credit losses (1.48% of loans) provides a buffer against future defaults. However, the spike in provisions underscores the risks of concentrated exposures, even in a regional lender’s portfolio.

3. Economic Uncertainty:
   CEO George Makris noted that “global volatility” continues to cloud the outlook, with the bank prioritizing capital preservation over aggressive growth. The lack of share buybacks in Q1 2025 signals a conservative approach to deploying excess capital.

Conclusion: A Dividend Reliant on Prudent Risk Management

Simmons First National’s $0.2125 dividend remains a testament to its long-standing reliability, but investors must weigh this against emerging risks. The bank’s 4.46% yield offers attractive income potential, particularly for income-focused portfolios. However, the elevated credit provisions and stagnant EPS growth suggest that future dividend hikes may be modest unless earnings recover.

The stock’s $19.06 price (as of May 2025) and historical stability make it a defensive play in a volatile market. Yet, its narrow margin of safety—price-to-book ratio of 1.0x—leaves little room for error.

In summary, Simmons First National is a solid dividend candidate for conservative investors, but its performance hinges on managing credit risks and navigating an uncertain economic environment. While the dividend is secure for now, the path to higher payouts requires a rebound in earnings and fewer surprises in the loan portfolio.

Final Note: All stock price and dividend data are sourced from third-party services and may not reflect Simmons First National’s official disclosures.