시몬스 퍼스트 내셔널(SFNC) 2026년 3분기 실적 발표 컨퍼런스 콜: NIM 3.92%로 확대

핵심 요약

• 시먼스 퍼스트 내셔널 코퍼레이션(Simmons First National Corporation)은 3분기 순이자마진(NIM)이 전분기 대비 8bp 확장된 3.92%를 기록했다고 밝혔다. 순이자이익 역시 전분기 대비 증가했다.
• 주당순이익(EPS)은 전분기 대비 0.04달러 증가했으며, 자산수익률(ROA)은 12bp, 유형주주지분수익률(ROTCE)은 113bp 개선됐다.
• 은행은 저수익 대출의 만기 상환(러너프)을 계속 용인했다. 수익률 4% 미만의 고정금리 대출 포트폴리오 규모는 21억 달러를 기록한 반면, 3분기 신규 실행 대출의 자본수익률은 만기 상환된 대출보다 300bp 이상 높았다.
• 경영진은 2026년 전체 순이자이익 성장률이 제시한 가이던스 범위인 9%~11%의 상단에 근접할 것이라는 확신을 유지하고 있다.
• 회사는 효율화 추진과 관련해 약 4,000만 달러의 일회성 비용을 반영했다. 이러한 조치를 통해 약 4,000만 달러의 충당금적립전순이익(PPNR) 개선이 이뤄질 것으로 예상되며, 절감된 비용의 일부는 예금, 기업금융(C&I) 인력, 기술 및 마케팅에 재투자될 예정이다.
• 경영진은 축소된 리스크 스프레드와 4분기 대출 조기상환 증가로 인해 단기 대출 성장에 대해서는 다소 신중한 태도를 보이고 있으나, 대차대조표 리포지셔닝이 수익성과 자본 유연성을 뒷받침할 것으로 기대하고 있다.

주요 재무 데이터

사업 및 운영 성과

시먼스는 대차대조표 외형 성장보다는 마진이 높은 관계형 대출을 우선시하고 있다. 경영진은 특히 약 5년 전 실행된 저금리 대출을 중심으로 3분기 만기 도래 및 조기상환 규모가 이례적으로 높았다고 밝혔다.

은행은 수익성 기준을 충족하지 못하는 단일 상품 대출의 이탈은 허용하는 한편, 수익성이 높은 고객 관계는 금리를 재조정하고 강화하고자 한다. 경영진은 이를 통해 확보된 자본을 마진이 더 높은 성장 분야에 투입하거나, 자본 유연성을 강화하고 자사주 매입을 지원하는 데 활용할 수 있다고 밝혔다.

예금 증대는 여전히 주요 재투자 우선순위다. 단기금융상품 가격 정책을 통해 일부 시장에서 금리를 약 15~20bp 인하함으로써 약 200만 달러의 이자비용을 절감했다. 해당 자금은 신규 예금 유치를 위한 프로모션에 재투입됐다. 이번 캠페인을 통해 유입된 예금의 약 75%는 은행에 새로 유입된 신규 자금이었다.

자산관리(Wealth Management) 부문도 견조한 수수료 이익을 기록했다. 경영진은 올해 초 합류한 세인트루이스 자산관리 팀이 기대 이상의 성과를 거두었으며, 전반적인 자산관리 투자가 고객 유치 및 예금 증대를 뒷받침했다고 설명했다.

운영 부문의 투자는 자동화, 대출 심사 및 실행 속도 향상, 중복 업무 제거, 프론트 및 백오피스 역량 강화에 집중되고 있다. 또한 시먼스는 어떤 시장에서도 철수하지 않으면서 점포망을 최적화하기 위해 26개 지점을 폐쇄할 계획이다.

경영진 가이던스

경영진은 2026년 순이자이익 성장률이 9%~11% 범위의 상단 수준에 도달할 것이라는 확신을 재확인했다.

2025년 대비 2026년 비용 증가율은 기존에 2%~3%로 제시된 바 있다. 회사는 이제 4분기 실적에 따라 비용이 변동 없이 유지되거나 소폭 감소할 수 있다고 보고 있다. 보다 구체적인 비용 및 투자 목표는 12월 10일 인베스터 데이(Investor Day)에서 공개될 예정이다.

경영진은 4분기 만기 도래 및 대출 조기상환 규모가 3분기보다는 낮아지겠지만 여전히 평년 수준을 상회할 것으로 예상하고 있다. 이에 따라 위험조정 스프레드가 축소된 상태를 유지할 경우 단기 대출 성장은 계속 압박을 받을 수 있다.

회사는 핵심 예금 증가, 대출 금리 재조정, 자산 감응도를 통해 순이자마진이 추가 상승할 여지가 있다고 보고 있다. 회사의 금리 모델링은 12월, 3월, 6월의 추가 금리 인상을 가정했으며, 이 과정에서 추정 대출 베타는 약 85%, 총예금 베타는 30%~35%로 설정됐다. 또한 시먼스는 금리 하락 리스크에 대응하기 위해 5억 5,000만 달러 규모의 스왑을 추가했다.

리스크 및 관전 포인트

• 이번 분기 동안 리스크 스프레드가 축소되면서 은행의 수익성 및 대출 심사 기준을 충족하는 대출 건수가 제한되었다.
• 도매 자금 조달 비용은 여전히 높은 수준이다. 경영진은 브로커 예금(brokered deposits) 조달 비용이 연방홈론은행(FHLB) 자금 조달보다 약 30bp 높았다고 밝혔다.
• 수익률 4% 미만의 21억 달러 규모 고정금리 대출 포트폴리오는 특히 2026년 4분기 및 2027년 1분기에 추가적인 단기 이탈(러너프) 리스크를 야기할 수 있다.
• 금리 인상에 따라 예금 비용은 9월 말 분기말 수준(exit rate)인 1.83%에서 상승할 수 있다.
• 재투자 시점은 기회주의적으로 결정될 예정이므로, 비용 절감 및 지출 속도의 예측 가능성이 떨어질 수 있다.
• 경영진은 시장 가격 형성 및 리스크 스프레드가 개선되지 않을 경우, 4분기 순이자이익의 전분기 대비 성장이 더 어려워질 수 있다고 언급했다.

애널리스트 Q&A 주요 내용

애널리스트들은 대출 자산 축소가 전략적 변화를 의미하는지에 주목했다. 경영진은 장기 성장 프레임워크에는 변화가 없다고 답했다. 자산 축소는 주로 이례적으로 높은 만기 도래 및 조기상환과 더불어, 축소된 위험조정 스프레드를 수용하지 않기로 한 결정이 반영된 결과다.

자본 배분과 관련해 경영진은 일회성 운영 투자 자금을 확보해야 했고, 9월 초 서식 8-K를 통해 중요한 정보를 공시함에 따라 3분기 자사주 매입이 제한적이었다고 밝혔다. 구체적인 목표치가 제시되지는 않았으나 자본 창출력이 개선됨에 따라 자사주 매입 의지는 높아지고 있다.

경영진은 예금 유치와 기업금융(C&I) 인력 채용을 주요 재투자 분야로 꼽았다. 기술, 자동화, 다이렉트 마케팅 및 인재 개발에도 자금이 지원될 예정이다. 은행의 영업 지역 전반에 걸친 시장 변화가 채용 기회를 제공하고 있으나, 경영진은 규율 있는 채용 기조를 유지할 것이라고 밝혔다.

수수료 이익과 관련하여, 경영진은 자산관리 부문의 모멘텀이 지속될 것으로 기대하며 사업 확장 여지가 있다고 보고 있다. 또한 이번 분기 거래량 증가가 서비스 수수료 수익을 뒷받침했다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, and welcome to the Simmons First National Corporation Third Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ed Bilek, Investor Relations. Please go ahead.

Edward Bilek

Good morning, and welcome to Simmons First National Corporation's Third Quarter 2026 Earnings Call. Joining me today are several members of our executive management team, including President and CEO, Jay Bogden; and CFO, Daniel Hobbs. Today's call will be in a Q&A format.

Before we begin, I would like to remind you that our third quarter earnings materials, including the earnings release and presentation deck are available on our website at simmonsbank.com under the Investor Relations tab. During today's call, we will make forward-looking statements about our future plans, goals, expectations, estimates, projections and outlook, including, among others, our outlook regarding future economic conditions, interest rates lending and deposit activity, credit quality, liquidity and net interest margin.

These statements involve risks and uncertainties, and you should therefore not place undue reliance on any forward-looking statements as actual results could differ materially from those expressed in or implied by the forward-looking statements due to a variety of factors.

Additional information concerning some of these factors is contained in our earnings release and investor presentation furnished with our Form 8-K yesterday as well as our Form 10-K for the year ended December 31, 2025, and our Form 10-Q for the quarter ended June 30, 2026 including the risk factors contained in those filings.

These forward-looking statements speak only as of the date they are made, and Simmons assumes no obligation to update or revise any forward-looking statements or other information. Finally, in this presentation, we will discuss certain non-GAAP financial metrics we believe provide useful information to investors. Additional disclosures regarding non-GAAP metrics including the reconciliations of these non-GAAP metrics to GAAP are contained in our earnings release and investor presentation, which are furnished as exhibits to the Form 8-K we filed yesterday with the SEC and are also available on the Investor Relations page of our website, simmonsbank.com.

Operator, we're ready to begin the Q&A session.

Operator

[Operator Instructions] And our first question comes from Gary Tenner with D.A. Davidson..

질의응답

Gary Tenner

Morning. Pretty significant decline on an end-of-period basis. Can you just talk about how much of this was sort of selective on your side in terms of not chasing after certain deals and just kind of what the kind of go-forward looks like from here?

Jay Brogdon

Yes. Thanks, Gary. This is Jay. I'll -- let me start, and what I'd really like to do is maybe just sort of step back as part of answering that question. remind you sort of where we've been, what we're committed to, and then we'll talk about sort of growth and fundamentals and dynamics as we move forward. I think if you look back over the past year even or a year plus, you've seen a lot of expressions of our commitment to a few strategic objectives in the business. And if I were to really -- even just try to, in our most essential way describe those strategic objectives.

I think the first thing I'd say is that we're narrowing our focus on the type of growth that we pursue. And within that focus, again, in its simplest form, it is around driving very high value, high-margin business into the bank. We have a good amount of that business in our bank. We know what that looks like and we want to be consistently in pursuit of that. And what that ultimately means is there are going to be periods of time where the front book origination and mix is going to look somewhat different than the back book.

And that doesn't even necessarily mean new products or new types of loans in the front book. It just means that the quality of the relationship the quality of the profitability and the level of the profitability look very, very different. And so that would be kind of strategic objective, number one, we have been very resolute and committed to.

The second thing is really just what I would kind of call what we often refer to as continuous improvement. And what I would put into that category is every single day when we come into the bank, we're thinking about how can we do things more efficiently, how can we deliver the growth of high-quality, high-margin business in a very efficient and scalable way. And again, I think if you looked over the past year, you'd see a lot of evidence of that commitment and of those types of outcomes.

And so when I get into the third quarter and look back at the results that we're talking about today and even look forward to sort of where we're headed. There's a couple of dynamics coming to play. One is that continued expression of that commitment. The second thing is really alongside of that commitment, as you sort of indicated, I think, in your question, Gary, there are a number of environmental factors that don't make me all that optimistic about quality and profitable growth in the immediate term outlook. And what I mean by that is we see we see risk spreads compressing very meaningfully in a number of instances.

We don't think in those instances, we have the opportunity to be paid for the risk that we see in some of those situations. So we see risk spreads being competed away. And then at the same time, what we see in our own business and what we see just again in the market is significant demand for wholesale funding of any kind, and broker deposit costs, as an example, are meaningfully higher given the demand for that type of funding. And so if we think about the commitment of high-quality, high-margin business in that type of an environment, I think what you saw in the third quarter is just an expression of that commitment.

The other thing that you saw in the third quarter that I want to acknowledge is I think our level of paydowns, and this is just a factor of timing, sort of timing of cash flows, maturity walls, et cetera. We had extremely outsized maturities and paydowns in the third quarter. Good news is, and you see it in our return metrics, those were a lot of the lower rate fixed-rate loans that had been originated some 5 years ago. That are maturing. And so we're not going to have that level of pay down every quarter. And I think kind of the confluence of all of those factors comes together to really express all of that I want to just kind of -- I'll maybe wrap this part of the question, Gary, with just a couple of other thoughts.

And here's what I'd say. I'd say that we fully understand that the formula for revenue in this business is both P times V. And we are competing for volume all day, every day. And where there's strong relationship and profitable quality business, we're going to exception price and we do that and compete and win in those areas every single day. But what I'd also say is we're just not going to dilute our standards along the way in doing that just to solve for the side of the equation, the volume side of the equation.

And so as we continue to do that, I think what you'll see us be able to accomplish is you'll see quality of the balance sheet continue to improve, the profitability of the business to continue to improve, and really, the capital flexibility of our business to continue to improve, and we are very optimistic in our ability to do that.

Gary Tenner

Thanks, Jay, for the very comprehensive overlook on that side of things. I appreciate it. And then just to move over real quick to the expense side. I mean, obviously, a lot of moving parts some noise in the third quarter related to savings that you expect to start to show up in the fourth quarter. Can you talk about kind of where the -- maybe just a normalized expense run rate might look like when kind of with all the savings embedded. And then where you see some of the potential investment offsets focused on?

Jay Brogdon

Let me jump in with a couple of comments. I know Daniel is going to want to talk about that more specifically. But what I'd just remind everyone is -- we put out an 8-K, I think it was in early September. There are a number of initiatives underway in our business that fall into that category of continuous improvement designing an efficient and scalable model, et cetera, that I talked about earlier.

I believe we noted in that 8-K that the onetime charges this quarter would range in that area of $40 million plus or minus, which came to fruition in the quarter. We also commented that we would have in that area of $40 million of pre-provision net revenue improvement as a result of those initiatives. So I think that's really clear evidence again of some of the things that we're committed to in the business.

And I want to remind everyone, we commented in that 8-K that a portion of those savings would be earmarked for reinvestment in the business. And that reinvestment, again, is designed for the growth that we're pursuing and the growth that we're confident in being able to generate over time in the business. The pace and timing of that investment is going to be opportunistic. We're going to be just as disciplined in that investment as we are in the investments of our capital into a new loan or a new relationship in the business.

And so those things are all very fluid. There are environmental factors that will impact the timing and extent of those things. But in any scenario, I expect to see significant improvement in the run rate of our business and returns as a result of these initiatives that we've been working through and announce. Dan, do you want to let you kind of click into that in any way you want to.

Charles Hobbs

Yes. Gary, I'd maybe just add to that. I'll remind you back to our guidance that we gave for the year, which was 2% to 3% and expense growth in '26 over '25. And as I think about where we are today and what's left in the fourth quarter, we had a real shot to kind of be flat to maybe even slightly down depending on how the fourth quarter shapes up. So a lot of the things that Jay talked about, talked about continuous improvement even before the specific initiatives that we commented on in the 8-K, we've had a continuous improvement self-funding mindset for years here.

And so if you go back and think about what the run rate would have been with a 2% to 3% guide compare that to where we are for this year, we've already started to recognize some of those savings throughout the year. And then a number of these things that we talked about in the 8-K haven't even made it in the run rate yet. So I don't want to give you a number yet. We're going to talk about that at our Investor Day on December 10. But we do expect improvement from here, and then on the investment side, a lot of that -- we know what some of that investment is today, but some of that is going to be opportunistic as things come our way.

The buckets of those reinvestments. The #1 thing that we've talked about here is deposit growth. That's an area that will probably get the highest reinvestment. The second thing was just the hiring good quality bankers especially in that C&I space. And so we expect to have some meaningful investments here over time, some of it be opportunistic. So we'll come back to you on December 10 and give you more hard number of what that could look like for 2017 and beyond.

Operator

And the next question comes from David Feaster with Raymond James.

David Feaster

I wanted to follow up maybe on some of your comments, Jay, with Gary's first question. I mean, just kind of given the different focus in production, and some of the macro headwinds and competition. I mean, do you think you expect the balance sheet, I mean, to continue to contract? And just talk about maybe demand for a second. I mean production came down slightly, pipelines are down slightly, but still really good. Obviously, we're coming off a really strong quarter last quarter. I'm just curious how demand is trending? Where you're seeing opportunity? And then maybe just how you think about the size of the balance sheet as you focus on profitability and maybe a smaller, more profitable bank.

Jay Brogdon

Yes, the thing I'd say is, David, we're wide open for business. So when I think about top of funnel ability to generate production I don't have concerns in that regard right now in terms of our posture. I do think there's a couple of dynamics as I mentioned, one, Q3 was a very high level of maturities and pay downs. Q4 is going to be a reasonably high level. I don't expect it to be as high as Q3, but both of those would be -- both those quarters would be above sort of normal paydown quarters for us, maturity and pay down quarters.

And again, that's just kind of a function of timing. So you do have that factor in there in Q3 that impacted us and could impact us to some degree in Q4. But the bigger thing is just as I -- my confidence interval and top of funnel activity making its way in the sort of committed and funding production is a bit lower right now back to really just discipline and standards that we're going to -- we're not going to flex around. We're going to -- we're being reasonable. We're not being unreasonable about that.

But at the same time, we just see risk spreads that don't make sense and a lot of production that's happening away from us. And I think we're just going to have a thick skin about that for whatever period of time that, that lasts so that we are confident that, again, we're doing those high-value, high-margin things that are going to produce consistently strong outcomes over time.

David Feaster

Okay. And again, with that book that you're talking about that you've been deleveraging the lower yielding, low relationship credits, could you size that portfolio?

Jay Brogdon

What's that low rate fixed rate loan book down to I think you have that metric in here I think it's probably it's .

Charles Hobbs

It's $2.1 billion David of weighted average -- with a weighted average rate of less than 4%. And that expands as you make that weighted average rates go up. So it's still pretty sizable. Q3 was probably 1 of the bigger paydowns of that portion in Q4 will be another one, as Jay mentioned. But we do expect that to continue to be a favorable tailwind for us. I'll just give you 1 metric here the production that we put on in the third quarter versus that low rate stuff had a meaningfully higher return on capital of over 300 basis points from what ran off versus what we put on. So you couple that along with the ability to grow deposits and to fund that loan growth, all those things come together to kind of create this narrative of where we feel like it's appropriate to focus on profitability.

Jay Brogdon

The important thing to note there, David, is out of those out of the loans that we're talking about that would be lower profitability loans, not all of that is going away. I mean we're working hard to deepen those relationships, to reprice those relationships. And we have success doing that. That success varies kind of can vary quarter-to-quarter based on a variety of factors. But we are very committed to deepening those relationships. But at the same time, we're very committed to allowing sort of single threaded loan relationships that don't then a very high bar from a profitability perspective to find a home elsewhere.

Charles Hobbs

Yes. Dave made 1 other just data point there that might help you contextualize this. When you look at the volume of paydowns that we had, we took a look at the paydowns that were $5 million or greater. And there was over $1 billion of that in terms of paydowns, and it only had a relationship deposits of around less than $50 million. So to Jay's point around single thread and nonrelationship staff -- that's the piece that we're either trying to deepen or figure out other places for it to go.

Jay Brogdon

And all of that gives us significant opportunity to recycle capital, right, recycle it back into higher margin growth or provide capital flexibility. And in either scenario, we think those things are going to point to an ability to -- even if we're sort of deleveraging or your question -- original question was really around shrinking the balance sheet, if that's the environment we find ourselves in an environment where the application of standards allows for further deleveraging. We're confident in our ability to not only expand returns, but it also grow earnings it's going to free up significant growth in capital, the ability to maybe be more aggressive from a share buyback point of view than we've been historically, et cetera. We're going to let the environment kind of drive that optionality for us, and we'll be opportunistic on either side.

David Feaster

That's great. And then maybe just following up kind of from the 8-K and the question on the expense front. I mean, obviously, if we're improving profitability, you're going to be accreting capital like you talked about positive operating leverage on the horizon. There's a lot of back book or price. There's a lot of tailwinds. And then you've got the savings, right? And a portion of which you're going to be in reinvested, and I don't want to steal too much of your thunder from the Analyst Day, but I'm curious, how do you think about reinvestment of those -- some of those savings? Like what are you focused on? You talked about C&I hiring? Is there technologies or systems that maybe help improve efficiency further? I'm just kind of curious, what kind of things are you looking at for reinvesting some of those savings?

Jay Brogdon

Yes, I'd say some of it is equipping and enabling. Daniel mentioned earlier, just activities that we maybe haven't done historically in the category of driving deposits and deposit outcomes. And so that investment could be in the form and will be in the form of technology enablement. It could be in the form of direct marketing spend and campaigns that we would do. All of this will include spend in the category of continuing to invest in people and talent, both are -- the strong talent we have here in the bank as well as opportunities in the marketplace to grow talent.

And then I do -- we're spending a fair amount of time thinking about some of the efficiencies embedded in what we put in the 8-K back in September includes the benefits of some technology and automation that we're continuing to insert into the business. And I think we're barely scratching the surface as we sit here today of what those continued opportunities will be. So I think that gives you some good flavor, David, around the main themes within the reinvestment buckets.

Operator

And the next question comes from Matt Olney with Stephens.

Matt Olney

Can you talk more about your recent investments that you've made and any early progress from these recent executive and new producer investments? And Jay, you mentioned that the bank will be opportunistic on additional producer hires from here. It seems like your footprint has a unique opportunity given the market disruption kind of throughout your entire footprint, frankly. So it feels like the window is open today to capitalize on that. Just appreciate any more thoughts you have on that dislocation and what that means for the bank being opportunistic?

Jay Brogdon

Yes. So I'd say in terms of -- again, I'll be more categorical, and we'll further reveal some of these things in December at Investor Day. But I think what I would with the first part of your question, Matt, what I would describe is a lot of our more recent kind of return -- measurable return on investment, looks like faster turn times, speed, generation of capacity, elimination of kind of redundancies and duplications in the business.

And so when you think about an ability to sustainably grow organically high-margin, high-value business, you've got to have really, really strong standards in terms of efficiency, turn times, et cetera. That's where some of the investments around some of the automation and tooling that we're doing are enabling our bankers and our back office teams kind of think front, middle and back office really making the job much more consistent, easier and freeing up time for sort of higher-value productivity. And there's a number of measures that we can look at and kind of see that return on investment. Number of days to close and fund a loan, et cetera. A number of ways we can look at those things. So those are big areas of investment.

Your point around talent is something that we get really, really excited about. And candidly, it was 1 of our big motivators for going in and identifying capacity in the system. So a great example would be, while we've not exited any markets, we've announced that we're going to close 26 branches. And in a number of those instances, the number of those markets are markets where over the past several years, we've actually built branches but didn't close any branches. And so we are taking that -- we observed customer behaviors. We've been patient. Now we're pulling the lever in terms of optimizing the footprint.

And that capacity allows us to reinvest back into what we think is an incredibly, incredibly robust environment from a talent acquisition point of view. We see tremendous dislocation already in our footprint. We see -- we expect more of that type of dislocation, and honestly, we're even benefiting in the instances where there's not existing dislocation. There's either just threat of dislocation or dissatisfaction, et cetera. We're beginning to developed a bit of a reputation for ourselves in the marketplace in terms of willingness to do the things to improve and grow the business, and that's attractive to strong talent out there in the market.

And so we are -- the spigot is wide open in terms of our hiring. But again, we want to be disciplined in hiring the same way we want to be disciplined in underwriting or other things in the business. And so we're going to be thoughtful and measured as we move forward in that. But we think the field is very, very right for harvest in that category.

Charles Hobbs

Matt, I would maybe just give you 2 investments that would be visible to you in the numbers. The first was being, if you recall, we did a lift out of St. Louis Wealth team that has been very, very positive for us and has exceeded all expectations that we've had. We've also made investments within the core wealth business, and you can see the noninterest revenue growing faster. So that's very visible.

The other would be -- we've talked about the investments that we will be making in our deposit growth outlook. But we've made investments over the last year within that, how we've reallocated some marketing dollars, we self-funded some marketing dollars we funded incentives to grow deposits. And you can see that when you look at the deposit number, you look at what we focused on, which has been that core customer transaction type account growth, whether it be NIB, or whether it be money market, you can see that in the numbers. You can see it this quarter.

When I look at consumer and the consumer book and I go back and look at every month this year, we have grown our core customer transaction account balances year-over-year every single quarter. So all those things that we're focused on is showing some good early returns, and we will do more of that and at a bigger scale over the coming quarters and years.

Matt Olney

Okay. That's a great commentary. I appreciate the color there. And Vijun,maybe as a follow-up, Gene, maybe more on your side as far as the margin this quarter, good to see the 8 bps of expansion in the third quarter. It feels like that margin has nice momentum as you get more impact from kind of deleveraging the balance sheet. Any more color on the NIM as it progressed throughout the quarter or maybe to exit NIM for the quarter? .

Charles Hobbs

Yes. So Matt, let me back up just a second and I'll get into that specific question. But one, I just want to comment on every quarter that goes by, the quality and durability of our balance sheet continues to improve, with all the focus on profitability, the focus on some of the deleveraging that we've done. And our margins that sits today is 392, which is a very strong margin. We feel like that margin has meaningful upside as we continue to execute our strategy of growing core funding.

You also got a rate sub environment that's in front of us. I think the outlook when we did our modeling was another rate increase in December, 1 in March and 1 in June. So we've got that ability to grow. We've also -- so like from a durability standpoint, we continue to try to protect on the downside, and you will see that in the deck where we put on additional 550 million slots to do that. It was cheap opportunistic time to do that. While we still have asset sensitivity as rates go up, we want to be able to protect on the downside given the strong NIM that we have.

And then the other thing to think about that in conjunction is every quarter that goes by, we're adding asset sensitivity through the variable rate loan production mix increasing. So we need to do some of that hedging on the back side to see our sensitivity tamp down a little bit. So that's kind of the strategy on that. As you think -- as we look at the 8 basis point growth linked quarter. About half of that was from deleveraging and about half of that was from kind of core strategy around profitability, all the back book repricing and all of those things.

So I would expect us to be able to continue to do that. The pace at which we do that will depend on the deleveraging that could potentially happen in the fourth quarter. And some of that will be opportunistic, but we still believe there's strong upside from the core themes that are embedded in our strategy to grow NIM from here.

Jay Brogdon

Yes. I mean I'd just say, Matt, I look back at the quarter and just sort of think about what happened in the third quarter, right? I mean NII grew linked quarter compared to NIM expanded 8 bps. EPS grew by $0.04, ROA increased 12 basis points linked quarter. And candidly, ROA is above our long-range target that we had previously published. ROTCE improved 113 basis points. So I just -- I kind of look at the -- all of the mechanics of what we're talking about in our strategy and what we're focused on. And sort of the benefits of discipline here beginning to pay off. And I think we're going to continue to -- you asked about margin, but I guess I'm expanding the conversation beyond just net interest margin. I'm confident we can continue to see expansion in all of these returns as we execute forward from here.

Operator

Our next question comes from Woody Lay with KBW.

Wood Lay

Wanted to follow up on the margin and maybe focus on deposit costs. It was great to see costs down about 8 basis points quarter-over-quarter I know there's some moving pieces with the deleveraging and then you had the rate hike in September. So I was curious if you all had a spot rate for the cost of deposits? Just trying to kind of figure out the starting point for the fourth quarter.

Jay Brogdon

Yes. Woody. So there's a couple of things that went on within the quarter, about 8 basis points function of that was the deleveraging. A function of that was transitioning some of the remaining broker deposits into FHLB. The story behind that, we've talked about that, but broker deposit cost has outrun FHLB, in large part due to the demand of across the industry to find volume back to Jay's Pets Week conversation. And so that has caused the cost of brokered deposits to get about 30 basis points ahead of what FHLB for us is. So that's a piece that went in there.

And then the other part is just we continue to optimize the existing customer interest-bearing deposit book. And I'll give you a real quick example, then I'll answer your questions. But an example, in the third quarter, we did a pretty sizable test and control of consumer money market accounts, really looking at where the elasticity or the price sensitivity or rate sensitivity of customers are kind of trying to get to a terminal value. And we took a large portion of our money market book and reduce those by, call it, 15, 20 basis points across a bunch of different markets held out a control group and looked at that over time. And what we found is in large part, almost all of that decline was not sensitive to time.

And so what that did is that generated about a $2 million interest expense savings that we then put that back into money market promos to bring in new customers. So we self-funded some of that, and there will probably be a little bit of timing difference as you think about that relative to Q3 to Q4. But specific to your question on cost of deposits, our exit rate for September was $1.83. And I would tell you that's probably going to be the bottom. We will go up from here primarily because we got the rate increase in September. We expect to get another 1 in December.

But having said that, the betas that we've modeled for loan beta and deposit beta we will significantly drive value through the margin because of our asset sensitivity. If you look through the entire cycle of the additional 3 rate cuts that we've got in there. , I'm sorry, rate hikes, yes. The loan beta is going to be around 85% and the total deposit beta is going to be 30% to 35%. That will give you a sense of how we're thinking about that.

Wood Lay

Great. That's really helpful color. And maybe to circle back to deposits and that those core customer growth that you did see this past quarter. It sounds like this is a reflection of some investments you've made some focus that you've been on I was just curious, is this mostly coming from current customers and you're taking more of their wallet? Is it new customers to the bank? And any specific segments or markets where you're seeing the success in?

Jay Brogdon

Yes. Chris can jump into here in just a second. Well, go ahead.

Christopher J. Steenberg

Yes, great question. I think we're seeing a fair mix of both deepening with existing relationships, which is where we started out when we went down this -- started on this journey last year, and continue to expand that. But where we've really seen some positive returns is on the acquisition side. So stepping into markets where we have both a long legacy as well as some of the markets we acquired into over the last decade. We're seeing really good response rates, seeing good, sticky relationship showing up as a result of that. So it's a nice mix of deepening with existing, which is always valuable. But the harder thing to do, and we're demonstrating that to our own satisfaction is the ability to acquire in markets where we don't necessarily have the same brand depth and tenure that we have in some of our legacy markets.

Jay Brogdon

Well, I'd give you 1 more data point on that, on the example that I gave you around our campaign. The campaign was designed around new money to the bank. And that new money comes from deepening existing and new customers. And what we've seen so far is about 75% of that campaign is new money to the bank.

Operator

And the next question comes from Stephen Scouten with Piper Sandler.

Stephen Scouten

Yes. I wanted to kind of circle back on the kind of mindset of the strategic mindset kind of through the quarter. If we go back to last quarter's call, thinking about maybe still mid-single-digit growth. Was there at some point during the quarter, a decision change or a shift change that said, hey, let's actually remix some of this loan book more aggressively? Or was it just pricing and spreads kind of as you spoke to, Jay, maybe a reduction in risk-adjusted spreads that said, hey, these 4% loans, let's not rebook the loans, but they're still kind of very price con. Just walk me through maybe the ideology about what maybe changed from last quarter's call to what progressed in the quarter?

Jay Brogdon

Yes. I think the first thing I'd say is I don't think really anything has structurally changed in terms of like a reasonable expectation for terminal growth for our business. Nothing's really changed there and nothing changed in the quarter from that point of view in my mind. The couple of things that did maybe happen to a greater degree than I would have anticipated even 90 days ago. One is I knew there was a good-sized maturity wall in the third quarter. The level of early paydowns again was as great as it was at any point in 2-plus years, maybe even longer than that.

So the early paydown environment was underappreciated. So I think that's just 1 aspect of it. But again, a lot of the paydowns that we saw in the quarter, whether they were maturities or paydowns were low rate in nature. And there's nothing that changed from Q2 to Q3 in terms of our focus around either converting that business to more profitable business, deepening those relationships or allowing those relationships to walk out the door. So that's 1 part of it.

The second part is, we -- as I mentioned earlier, Stephen, we just saw risk spreads continue to compress all throughout the quarter. And I would say there was a shift at least in my mindset in the third quarter around appetite and that was purely a rates moved a lot this quarter, and rates have been volatile and the beta, if you will, on pricing for loans has not reflected that environment because spreads have compressed so much. And so that would be the only part of that I would look to as kind of a mindset shift throughout the quarter. But again, overall, I just look at it as we understand P times V. We just think that sort of consistent premium valuation in any industry. And in this industry comes from doing high-quality things repeatably, and that's what we're focused on right now.

Stephen Scouten

Yes. Well, clearly, it's the right decision based on profitability and earnings trajectory. So congratulations on making what was probably a hard decision. Would that be -- would it be fair to say that this $2.1 billion with a rate less than 4% given this compression and risk spreads that you're seeing could be more at risk to lead the balance sheet and maybe see that kind of fixed asset repricing tailwind as we sit here today?

Jay Brogdon

I think our -- again, our commitment to the discipline overlaid against the environment. As I said earlier, I'm less optimistic about growth in the immediate term, by Q4 or Q1 just in -- this is the whole -- the environmental piece, we don't control more influence, but I mean it's real right now. And so I would say, yes, there's some risk to that outlook from an immediate term kind of loan growth outlook in Maman as a result of those things. Again, none of that gives me concern about our ability to continue to expand returns meaningfully and to drive in that scenario, if that's the scenario we're in, to drive significant capital flexibility beyond what we would otherwise kind of model or expect in a more normal environment.

Stephen Scouten

Yes. Makes sense. And then maybe just last thing for me. Kind of thinking about the share repurchase, I know you've kind of stacked ranked priority growth dividend and the repurchase, but obviously the loan book did shrink this quarter. CET1 was higher. Kind of maybe talk about why no share repurchases this quarter. Is that more a function of TCE and the rate move? Or -- and how we should think about the potential aggressiveness on that repurchase moving forward?

Jay Brogdon

Really, the patients from a share repurchase point of view, in the third quarter was a function of a couple of things. The primary 1 is we were just really earmarking capital. You can accuse us of being conservative here, but we were really earmarking capital around the onetime investments we made in the quarter. There was significant onetime charges. We sort of think of that as an investment in the business with a return associated with it. And we thought the returns associated with that investment were much stronger than any share repurchase we could have done would have been.

And so that kind of be the primary factor. Candidly, the secondary factor, but it's an important factor is we had important information to share with the market in the form of that 8-K that came out in early September. And so we just felt like, again, it was the right thing to do for a number of reasons to sort of not be active in the third quarter. Our appetite to repurchase in the sort of environment that we see evolving right now is increasing. And so I think what you saw as patients in the third quarter is not how I would extrapolate from here.

Operator

And the next question comes from Brian Wilczynski with Morgan Stanley.

Brian Wilczynski

I wanted to ask about fee income. So you saw some nice growth this quarter in both wealth management and also service charges. Can you talk a little bit more about the progress you're making in those areas? And any updated thoughts on the outlook for total fees over the next few quarters?

Charles Hobbs

Brian. So I've kind of referred to this a little bit earlier. So if you look at wealth management was an area of strength for us and that's a reflection of some of the investments that we've made early in the year and investments in the overall business. We're just seeing a lot of good momentum there, a lot of good customer acquisition. We're seeing some deposit growth there. So we would expect that to continue to inflect from here, and we will likely continue to make investments in that business. We feel like that should -- that business has an opportunity to be much bigger than it is today.

And then on service charges, that's really a function of just higher level of transaction volume that has service fees associated with that. So that's kind of what drove that. We'll talk a bit more about how we're thinking about a go-forward run rate for us at Investor Day. But a good quarter for us, and it's an area that we continue to focus on invest in.

Brian Wilczynski

Great. Appreciate that color. And then as a follow-up, I wanted to ask about the net interest income outlook. You talked about the upside drivers to NIM. You're clearly focused on the profitability of the loan book, which does include some loan runoff. Can you just give us an update on the net interest income outlook? I think last quarter, you had talked about maybe being near the high end of the up 9% to 11% for the year. Is that still a good expectation as we look at it?

Charles Hobbs

Yes, it is, Brian. We still feel really confident about the high end of that range. So yes.

Jay Brogdon

Yes. And I would just say from an -- that was an annual outlook. We feel very confident in that outlook. We had an annual outlook for operating leverage, and we're going to blow that 1 out of the park. I think for this year. I think, again, back to NII and discipline and commitment we were able through really good discipline and commitment in the third quarter to grow NII linked quarter, while significantly expanding margin returns. Look, if the environment doesn't change, that gets harder to do in the fourth quarter in my mind. I'm not saying that's not doable, but that gets more challenging in the immediate term if we don't see sort of risk spreads coming back into the business.

Again, I don't think that's a long-term concern from a terminal growth rate point of view for our business. But I want to be realistic about what we're seeing in the marketplace and very expressive around our commitment to the standards and discipline that we've talked about in the call today.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Jay Broughton for any closing remarks.

Jay Brogdon

Yes. Just a few closing remarks today. First, what I'd really like to do in light of everything we've talked about on this call is just acknowledge things like instilling new discipline, setting higher standards, evolving an operating model, these things don't -- they don't happen easily, and they don't happen overnight. And we've just -- I couldn't be more proud of how we've been tackling some very difficult decisions head on in our business, and we're producing results that indicate real progress toward our goals.

So with that acknowledgment, what I really want to do is just thank every single associate at Simmons Bank for the dedication and for the loyalty to our customers, to our teammates and of course, to our shareholders. And then just 1 final reminder as we wrap up here. Again, we're going to be in New York on December 10 for Investor Day. We really look forward to sharing more about our strategy, more about our outlook and we hope to see you there. Thanks for your time today, and have a great day.

Operator

The conference has now concluded. You may now disconnect.