Simmons Bank execs provide industry, economic updates

Simmons Bank President Jay Brogdon said the banking industry is past its financial challenges in 2023, and banks are “leaning back on their front feet and playing offense in the industry. There’s still a lot of uncertainty in the marketplace.”

Brogdon and Chief Investment Officer Jason Waters recently answered questions about the banking industry and the company before Waters provided an economic update for area business leaders.

Simmons Bank, a subsidiary of Pine Bluff-based Simmons First National Corp., hosted the Rogers event as one of multiple across its six-state footprint.

Brogdon said the election outcome was expected to bring certainty, but tariffs have introduced uncertainty about how they might affect the economy and interest rates and have created challenges in forecasting industry growth. However, he said clients are optimistic about less regulation, pro-growth initiatives, and lower taxes. Still, the uncertainty has led some customers to be patient to act, making it difficult to determine the investment customers will make in their businesses.

“Periods of uncertainty tend to delay investment,” Brogdon said. “Tariffs, overall uncertainty amidst some of the backdrop — just global uncertainty that’s out there — that uncertainty is bringing tension against maybe the pro-growth movement over here because executives and owners of businesses, as an example, oftentimes delay that investment in periods of uncertainty.”

Waters said Trump is using tariffs as a “cudgel” to get what he wants, and if he gets what he wants, they might go away.

He expects interest rates to remain in the range they’ve been in over the past year. He also doesn’t expect a recession in 2025.

Regarding the industry’s health, Brogdon said banks have more capital now than before the Great Recession. The credit structure is stronger, especially with real estate loan investments, “so I feel really good about the overall credit and capital environment for banks. That’s the key safety and soundness measure.”

He said 2025 and 2026 are expected to be years of earnings growth for the industry, excluding macro issues such as tariffs.

“Balance sheets are healthy right now for banks, and … the earnings outlook is pretty strong,” he said. “And that’s consistent with how we look at our business today as well.”

Growth will be a top challenge for the industry in 2025 and 2026, Brogdon said. Non-bank competitors and technology are “enabling and disrupting the industry.” The outlook for loan and deposit growth remains uncertain. Too much regulation has been “holding the banking industry at bay,” he said. “It’s nice to see some regulatory relief and maybe some common sense coming back in from a regulatory perspective that I think is ultimately going to be good for bank customers as well as for banks, allowing our customers to come in and transact and invest in their businesses more readily.”

Brogdon expects regulatory agencies to ease compliance regulations while continuing to emphasize safety and soundness in the industry.

During the event, Waters showed a chart of the cost of regulation over the past four administrations as a percentage of GDP. He said the cost rises when a Democrat is president and falls when a Republican is president. Brogdon said customers are considering whether to invest in their businesses because of the cost reduction in regulations.

As of Dec. 31, Simmons First had total assets of $26.84 billion, according to the Federal Insurance Deposit Corp. As of that date, the company has 222 branches and 2,946 employees. That’s about 50 fewer staff and 12 fewer branches from the end of 2023.

While the numbers don’t show it, Brogdon said the bank “opened a number of branches last year, so we’re still investing in the business.” He said customer banking behaviors have changed, technology has enabled and influenced them, and the company has been investing based on these patterns. More banking can be done with technology and outside the branches. Still, he said the company will continue to open new branches.

Brogdon said recent investments have included people, processes, and systems, and this is expected to continue this year. This has enabled organic growth. He said the company had acquired many banks over the past 10 or 15 years, most of which were contiguous but new markets. He said the focus will be to grow organically throughout its six-state footprint but expects mergers or acquisitions to become available and something to evaluate at the right time.