SIMMONS FIRST NATIONAL CORPSFNC
SIMMONS FIRST NATIONAL CORP Income Taxes Disclosure
INCOME TAXES
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The provision for income taxes for the years ended December 31 is comprised of the following components:
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Income taxes currently payable: | |||||||||||||||||
| Federal | $ | 9,701 | $ | 18,987 | $ | 27,129 | |||||||||||
| State | 13,717 | 2,410 | 877 | ||||||||||||||
| Deferred income taxes: | |||||||||||||||||
| Federal | (138,025) | (712) | (784) | ||||||||||||||
| State | (15,494) | (2,070) | (1,676) | ||||||||||||||
| Total income tax expense (benefit) | $ | (130,101) | $ | 18,615 | $ | 25,546 | |||||||||||
The Company does not have income from foreign sources and therefore does not have any foreign income tax.
The tax effects of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities, and their approximate tax effects, are as follows as of December 31, 2025 and 2024:
| (In thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Loans acquired | $ | 1,241 | $ | 2,141 | |||||||
| Allowance for credit losses | 52,923 | 55,196 | |||||||||
| Valuation of foreclosed assets | 31 | 374 | |||||||||
| Tax NOLs from acquisition | 6,507 | 9,945 | |||||||||
| Deferred compensation payable | 3,960 | 3,989 | |||||||||
| Accrued equity and other compensation | 11,626 | 9,323 | |||||||||
| Acquired securities | 7,010 | 7,504 | |||||||||
Capitalized intangibles(1) | 145,126 | — | |||||||||
| Right-of-use lease liability | 12,653 | 16,416 | |||||||||
| Unrealized loss on AFS securities | 98,492 | 128,873 | |||||||||
| Allowance for unfunded commitments | 6,094 | 6,069 | |||||||||
| Other | 7,488 | 7,163 | |||||||||
| Gross deferred tax assets | 353,151 | 246,993 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Goodwill and other intangible amortization | (36,335) | (38,139) | |||||||||
| Accumulated depreciation | (22,475) | (24,489) | |||||||||
| Right-of-use lease asset | (12,175) | (15,920) | |||||||||
| Unrealized gain on swaps | (14,437) | (25,174) | |||||||||
| Deferred loan fees and costs | — | (2,075) | |||||||||
| Other | (1,271) | (11,193) | |||||||||
| Gross deferred tax liabilities | (86,693) | (116,990) | |||||||||
| Net deferred tax asset | $ | 266,458 | $ | 130,003 | |||||||
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(1) Capitalized intangibles primarily consist of deferred loan origination costs, net with deferred loan origination fees, capitalized under Treas. Reg. §1.263(a)-4 and amortized as ordinary deductions over the estimated life of the related loans.
A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense and effective tax rate percentage is shown below for the years ended December 31:
| (Dollars in thousands) | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||
| Federal income tax expense computed at the US statutory rate | (110,807) | 21.0 | % | 35,974 | 21.0 | % | 42,127 | 21.0 | % | ||||||||||||||||||||||||||
| Increase (decrease) in taxes resulting from: | |||||||||||||||||||||||||||||||||||
State income taxes, net of federal tax benefit(1) | (4,748) | 0.9 | (165) | (0.1) | (983) | (0.5) | |||||||||||||||||||||||||||||
| Income tax credits: | |||||||||||||||||||||||||||||||||||
Tax credits(2) | (1,575) | 0.3 | (500) | (0.3) | (218) | (0.1) | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||||||||
| Tax exempt interest income | (11,596) | 2.2 | (15,330) | (9.0) | (15,357) | (7.7) | |||||||||||||||||||||||||||||
| Tax exempt earnings on bank owned life insurance | (3,741) | 0.7 | (3,136) | (1.8) | (2,607) | (1.3) | |||||||||||||||||||||||||||||
| Other | 4,475 | (0.9) | 3,512 | 2.1 | 2,646 | 1.3 | |||||||||||||||||||||||||||||
| Other differences: | |||||||||||||||||||||||||||||||||||
| Discrete items related to share-based compensation | 15 | — | 468 | 0.3 | 596 | 0.3 | |||||||||||||||||||||||||||||
| Other differences, net | (2,124) | 0.4 | (2,208) | (1.3) | (658) | (0.3) | |||||||||||||||||||||||||||||
| Total income tax expense (benefit) | $ | (130,101) | 24.7 | % | $ | 18,615 | 10.9 | % | $ | 25,546 | 12.7 | % | |||||||||||||||||||||||
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(1) In 2025, state taxes in Arkansas and Tennessee made up the majority (greater than 50 percent) of the tax effect in this category. In 2024, state taxes in Arkansas, Illinois, Missouri, Tennessee and Texas made up the majority (greater than 50 percent) of the tax effect in this category. In 2023, state taxes in Arkansas, Tennessee and Texas made up the majority (greater than 50 percent) of the tax effect in this category.
(2) Tax credits consist of low income housing, new markets and historic tax credits along with investment amortization, partnership losses and basis adjustments.
Income taxes paid (net of refunds) for the years ended December 31:
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal taxes paid | $ | 3,500 | $ | 7,200 | $ | 17,702 | |||||||||||
| State and city taxes paid: | |||||||||||||||||
| Arkansas | 2,868 | * | * | ||||||||||||||
| Missouri | 1,647 | 505 | * | ||||||||||||||
| Tennessee | 4,605 | * | * | ||||||||||||||
| Texas | 974 | 932 | * | ||||||||||||||
| Other | 5,708 | 1,322 | 3,216 | ||||||||||||||
| Total state and city taxes paid | 15,802 | 2,759 | 3,216 | ||||||||||||||
| Total income taxes paid (net of refunds) | $ | 19,302 | $ | 9,959 | $ | 20,918 | |||||||||||
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Jurisdiction below 5 percent of total income taxes paid (net of refunds) threshold for the period presented.
The Company follows ASC Topic 740, Income Taxes, which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. ASC Topic 740 also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties. The Company has no history of expiring net operating loss carryforwards and is projecting significant pre-tax and financial taxable income in future years. The Company expects to fully realize its deferred tax assets in the future.
The amount of unrecognized tax benefits may increase or decrease in the future for various reasons including adding amounts for current tax year positions, expiration of open income tax returns due to the statutes of limitation, changes in management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the addition or elimination of uncertain tax positions.
Section 382 of the Internal Revenue Code imposes an annual limit on the ability of a corporation that undergoes an “ownership change” to use its U.S. net operating losses to reduce its tax liability. The Company has engaged in three tax-free reorganization transactions in which acquired net operating losses are limited pursuant to Section 382. In total, approximately $27.8 million of federal net operating losses subject to the IRC Section 382 annual limitation are expected to be utilized by the Company. All of the acquired net operating loss carryforwards are expected to be fully utilized by 2036.
The Company files income tax returns in the U.S. federal jurisdiction. The Company’s U.S. federal income tax returns are open and subject to examinations from the 2022 tax year and forward. The Company’s various state income tax returns are generally open from the 2022 and later tax return years based on individual state statute of limitations.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.