Simmons First National (SFNC) risk factors, FY2025 10-K

Risks Related to Market Interest Rates and Liquidity

1. 01Changes in interest rates and monetary policy could adversely affect our profitability
2. 02Our cost of funds may increase as a result of general economic conditions, interest rates and competitive pressures
3. 03Our investment securities portfolio could decline in value and we may incur losses as a result of interest rate changes and changes in issuer credit quality or the strength of the associated collateral31% rewritten
4. 04A lack of liquidity could impair our ability to fund our business and thereby adversely affect our financial condition and results of operations
5. 05We may not be able to maintain a strong core deposit base or access other low-cost funding sourcesNew
6. 06Changes in the method pursuant to which benchmark rates are determined, as well as the discontinuance and replacement of reference rates, could adversely impact our business and results of operations

Risks Related to the Company’s Lending Activities

1. 07Our lending activities expose us to a range of credit risks, which could adversely affect our business, financial condition, and results of operationsNew
2. 08We may not maintain an appropriate allowance for credit losses
3. 09Significant portions of our loan portfolio include commercial real estate, construction and development, and commercial and industrial loans, each of which presents heightened lending risks
4. 10We rely on the mortgage secondary market from time to time to provide liquidity
5. 11Sales of our loans are subject to a variety of risks
6. 12Loans made through federal programs are dependent on the federal government’s continuation and support of these programs and on our compliance with program requirements
7. 13In the event we are required to foreclose on a loan secured by real estate, we may not be able to realize the value of that real estate as indicated in any independent appraisals upon which we relied in extending the loan
8. 14Nonperforming assets take significant time to resolve and may adversely affect our business, results of operations and financial condition

Risks Related to Our Business, Industry, and Markets

1. 15Our business, financial condition, results of operations and liquidity could be adversely affected by developments impacting the financial services industry57% rewritten
2. 16Our business may be adversely affected by conditions in the financial markets and general economic conditions
3. 17Continued inflationary pressures could increase our costs (and the costs of our borrowers) and otherwise negatively impact our business
4. 18Our concentration of banking activities in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas, including our real estate loan portfolio, makes us more vulnerable to adverse conditions in the particular local markets in which we operate
5. 19We face strong competition from other banks, bank holding companies, financial services companies and nonbank competitors
6. 20Changes in service delivery channels and emerging technologies pose a competitive risk22% rewritten
7. 21Our growth and expansion strategy may not be successful, and our market value and profitability may suffer
8. 22The value of our goodwill and other intangible assets may decline in the future
9. 23Damage to our reputation could significantly harm our business
10. 24If we are unsuccessful in developing new, and adapting our current, products and services so that they respond to changing industry standards and customer preferences, our business may suffer36% rewritten

Risks Related to the Company’s Operations

1. 25We are subject to fraud risk, which could have a material adverse effect on our business and results of operations49% rewritten
2. 26Our models and estimations may be inadequate, which could lead to significant losses and regulatory scrutiny47% rewritten
3. 27Our risk-management framework may not be effective in mitigating risks and/or losses
4. 28Our business is heavily reliant on a variety of third-party service providers
5. 29We may not be able to raise the additional capital we need to grow and, as a result, our ability to expand our operations could be materially impaired
6. 30We depend on qualified employees and key personnel to operate and lead our business, and we may not be able to attract or retain them in the future
7. 31Our controls, policies and procedures may fail, or our employees may not adhere to them
8. 32Errors or mistakes in the provision of services to our customers or in carrying out our own transactions can subject us to liability, result in losses, or otherwise negatively impact our business
9. 33Changes in, or interpretations of, tax rules and regulations or our tax positions may adversely affect our income taxes, financial condition or results of operationsNew
10. 34Accounting standards periodically change, and the application of our accounting policies and methods may require management to make estimates about matters that are uncertain

Risks Related to the Company’s Legal and Regulatory Environment

1. 35Financial legislative and regulatory initiatives could adversely affect the results of our operations
2. 36Our failure to comply with applicable banking laws and regulations could result in significant monetary penalties and losses, restrict our ability to execute our growth strategy, and have other material adverse impacts on our business27% rewritten
3. 37We are subject to litigation in the ordinary course of our business, and adverse rulings, judgments, settlements, and other outcomes of such litigation, as well as our associated legal expenses, may adversely affect our results
4. 38The Federal Reserve Board’s source of strength doctrine could require that we divert capital to our subsidiary bank instead of applying available capital towards planned uses, such as engaging in acquisitions or paying dividends to shareholders
5. 39We may incur environmental liabilities with respect to properties to which we take title
6. 40We may be subject to allegations of intellectual property infringement or may fail to effectively protect our own intellectual property rights

Risks Related to the Company’s Securities

1. 41The holders of our subordinated notes have rights that are senior to those of our common shareholders
2. 42We may be unable to, or choose not to, pay dividends on our common stock
3. 43There may be future sales of additional common stock or preferred stock or other dilution of our equity, which may adversely affect the value of our common stock
4. 44Shares of our common stock, as well as our other securities, are not insured deposits and may lose value
5. 45Anti-takeover provisions could negatively impact our shareholders
6. 46Our management has broad discretion over the use of proceeds from future stock offerings
7. 47Our recent results do not indicate our future results and may not provide guidance to assess the risk of an investment in our common stock
8. 48Weather-related events or natural or man-made disasters could cause a disruption in our business or have other effects which could adversely impact our financial condition and results of operations45% rewritten