Exhibit 99.1

 

 

 

 

For Immediate Release:   October 22, 2019

 

SIMMONS REPORTS THIRD QUARTER 2019 EARNINGS AND ANNOUNCES SHARE REPURCHASE PROGRAM

 

Pine Bluff, AR – Simmons First National Corporation (NASDAQ: SFNC) today announced net income of $81.8 million for the quarter ended September 30, 2019, compared to $55.2 million for the same period in 2018, an increase of $26.6 million, or 48.3%. Diluted earnings per share were $0.84, an increase of $0.25, or 42.4%, compared to the third quarter 2018. Included in third quarter 2019 results were $2.1 million in net after-tax merger-related, early retirement program and branch right-sizing costs. Excluding the impact of these items, core earnings were $84.0 million for the quarter ended September 30, 2019, compared to $56.5 million for the quarter ended September 30, 2018, an increase of $27.5 million, or 48.6%. Core diluted earnings per share were $0.87, an increase of $0.26, or 42.6%, from the same period in 2018.

 

Year-to-date net income for the first nine months of 2019 was $185.1 million, or $1.94 diluted earnings per share, compared to $160.1 million, or $1.72 diluted earnings per share, for the same period in 2018. Excluding $13.4 million in net after-tax merger-related, early retirement program and branch right-sizing costs, year-to-date core earnings for 2019 were $198.5 million, an increase of $34.7 million compared to the same period last year. Core diluted earnings per share were $2.08, an increase of $0.32, or 18.2%, from the same period in 2018.

 

The Company had several notable events that affected its operating results for the third quarter 2019:

 

Sale of $114 million of primarily CRE loans resulting in a net loss of $5.1 million.
Sale of Visa Inc. class B common stock resulting in a gain of $42.9 million.
Related to the Visa stock sale gain, contribution of $4 million to the Simmons First Foundation, so it may continue its work to provide community development grants throughout the Company’s footprint.
Provision expense increased $15 million primarily related to the charge-off of a participation interest in a shared national credit to White Star Petroleum, LLC (“White Star”) (discussed further below).

 

($ in millions)  Pre-tax 

 

After-tax (1)

  Income Statement Line
Item
Loss on sale of primarily CRE loans  ($5.1)  ($3.8)  Other income
Gain on sale of Visa Inc. class B common stock  $42.9   $31.7   Other income
Contribution to Simmons First Foundation  ($4.0)  ($3.0)  Other operating expenses
Additional provision for White Star charge-off  ($15.0)  ($11.1)  Provision for loan losses

 

(1)Effective tax rate of 26.135% used for after-tax calculations.

 

“We are very pleased with our operating results this quarter,” said George A. Makris, Jr., chairman and CEO of Simmons First National Corporation. “We continue to have very strong loan demand opportunities although our customers are displaying cautious optimism regarding the uncertainty in the world economy today and interest rate adjustments that may not appear to be related precisely to economic data.

 

“We are beginning to see significant results from our Next Generation Banking technology investment. We have successfully converted our system processing to a hosted environment increasing the security and reliability of our systems. Also, on October 16th, we launched our new mobile banking app. The customer response has been phenomenal. We will continue to expand our digital offerings over the coming months.”

 

 

P.O. BOX 7009           501 MAIN STREET           PINE BLUFF, ARKANSAS 71611-7009           (870) 541-1000           www.simmonsbank.com

 

 

Makris continued, “I have mentioned for some time now that asset quality is one of our top priorities, and the loss we experienced as a result of the White Star bankruptcy is certainly disappointing. In response to it, we have, among other things, made changes to our credit underwriting and approval processes that are consistent with the conservative credit culture at Simmons.

 

“We are on target to complete our previously announced acquisition of The Landrum Company on October 31 with an expected system conversion during the 1st quarter of 2020. We are excited about the expanded market presence in several states because of this merger.”

 

 

Selected Highlights:  3rd Qtr 2019  2nd Qtr 2019  3rd Qtr 2018
Net income  $81.8 million  $55.6 million  $55.2 million
Diluted earnings per share  $0.84  $0.58  $0.59
Return on avg assets  1.83%  1.28%  1.37%
Return on avg common equity  13.70%  9.48%  10.06%
Return on tangible common equity  24.89%  17.40%  18.38%
          
Core earnings (1)  $84.0 million  $65.5 million  $56.5 million
Diluted core earnings per share (1)  $0.87  $0.68  $0.61
Core return on avg assets (1)  1.88%  1.51%  1.40%
Core return on avg common equity (1)  14.06%  11.16%  10.30%
Core return on tangible common equity (1)  25.52%  20.36%  18.80%
          
Efficiency ratio (2)  43.77%  49.88%  53.47%

 

(1)Core earnings excludes non-core items, and is a non-GAAP measurement. Please see “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” below.
(2)Efficiency ratio is noninterest expense before foreclosed property expense, amortization of intangibles as a percent of net interest income (fully taxable equivalent) and noninterest revenues, excluding gains and losses from securities transactions and non-core items, and is a non-GAAP measurement. Please see “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” below.

 

Loans

 

($ in billions)  3rd Qtr 2019  2nd Qtr 2019  3rd Qtr 2018
Total loans  $13.0  $13.1  $11.9
Legacy loans (excludes loans acquired)  $9.6  $9.3  $8.1
Loans acquired  $3.4  $3.9  $3.8

 

Total loans, including those acquired, were $13.0 billion at September 30, 2019, an increase of $1.1 billion, or 9.7%, compared to $11.9 billion at September 30, 2018, primarily due to the Reliance Bank merger completed in the second quarter 2019. On a linked-quarter basis (September 30, 2019 compared to June 30, 2019), total loans decreased $124.1 million, or 0.9%, primarily due to a reduction in the CRE portfolio. During the third quarter 2019, the Company reduced its real estate portfolio by $165 million as part of an effort to manage its CRE concentration.

 

Deposits

 

($ in billions)  3rd Qtr 2019  2nd Qtr 2019  3rd Qtr 2018
Total deposits  $13.5  $13.5  $12.1
Non-time deposits  $10.4  $10.2  $9.6
Time deposits  $3.1  $3.3  $2.5

 

Total deposits were $13.5 billion at September 30, 2019, an increase of $1.4 billion, or 11.4%, since September 30, 2018, primarily due to the Reliance Bank merger completed during the second quarter 2019. Total deposits remained flat compared to June 30, 2019 as a result of the increase in non-time deposits being completely offset by a decrease in time deposits.

 

 

 

Net Interest Income

 

   3rd Qtr
2019
  2nd Qtr
2019
  1st Qtr
2019
  4th Qtr
2018
 

3rd Qtr

2018

Loan yield (1)  5.47%  5.58%  5.53%  5.39%  5.54%
Core loan yield (1) (2)  5.19%  5.26%  5.29%  5.25%  5.19%
Security yield (1)  2.83%  3.02%  3.09%  2.87%  2.74%
Cost of interest bearing deposits  1.40%  1.37%  1.31%  1.20%  1.05%
Cost of deposits (3)  1.09%  1.07%  1.02%  0.93%  0.81%
Cost of borrowed funds  2.52%  2.50%  2.73%  2.64%  2.48%
Net interest margin (1)  3.81%  3.92%  3.85%  3.76%  3.98%
Core net interest margin (1) (2)  3.58%  3.66%  3.67%  3.66%  3.71%

 

(1)Fully tax equivalent.
(2)Core loan yield and core net interest margin exclude accretion, and are non-GAAP measurements.
(3)Includes non-interest bearing deposits.

 

The Company’s net interest income for the third quarter of 2019 was $150.2 million, an increase of $7.2 million, or 5.0%, from the same period of 2018. Included in interest income was the yield accretion recognized on loans acquired of $9.3 million and $10.0 million for the third quarters of 2019 and 2018, respectively. Of this quarter’s yield accretion, $4.4 million, or 48%, was accretable credit mark related and $4.9 million, or 52%, was interest mark related.

 

Net interest margin (FTE) was 3.81% for the quarter ended September 30, 2019, an 11 basis point decrease from the second quarter of 2019. The Company’s core net interest margin, which excludes the accretion, was 3.58% for the third quarter of 2019, an 8 basis point decrease from the second quarter of 2019. The decrease in the net interest margin during the third quarter of 2019 was due to a timing difference between the Company’s ability to manage the rate decrease in its variable rate loan portfolio and its repricing of interest bearing deposits.

 

Non-Interest Income

 

Non-interest income for the third quarter of 2019 was $83.8 million, an increase of $50.1 million compared to the same period in the previous year. The majority of the increase was related to the gain on sale of the Visa Inc. class B common stock of $42.9 million recorded in Other Income. In addition, as part of a plan to rebalance its investment portfolio, the Company sold approximately $89 million of bonds during the quarter resulting in a gain on the sale of securities of $7.3 million.

 

Selected Non-Interest Income Items
($ in millions)
  3rd Qtr
2019
  2nd Qtr
2019
  1st Qtr
2019
  4th Qtr
2018
 

3rd Qtr

2018

Service charges on deposit accounts  $10.8  $10.6  $10.1  $11.3  $10.8
Mortgage lending income  $4.5  $3.7  $2.8  $1.5  $1.5
SBA lending income  $1.0  $0.9  $0.5  $0.2  $0.3
Debit and credit card fees  $7.1  $7.2  $6.1  $6.5  $6.8
Gain (loss) on sale of securities  $7.4  $2.8  $2.7  -  $0.1
Other income  $43.8  $5.1  $3.1  $5.7  $4.9

 

 

 

 

Non-Interest Expense

 

Non-interest expense for the third quarter of 2019 was $106.9 million, an increase of $6.6 million compared to the third quarter of 2018. Included in this quarter were $2.9 million of pre-tax non-core items, that mostly consisted of merger-related costs. Excluding these expenses, core non-interest expense was $104.0 million for the third quarter of 2019, an increase of $5.5 million compared to the same period in 2018. The increase is primarily due to the $4 million donation to the Simmons First Foundation and incremental software and technology costs of $2.2 million due to the Company’s Next Generation Banking technology initiative.

 

Selected Non-Interest Expense Items
($ in millions)
  3rd Qtr
2019
  2nd Qtr
2019
  1st Qtr
2019
  4th Qtr
2018
 

3rd Qtr

2018

Salaries and employee benefits  $52.1  $56.1  $56.4  $49.2  $55.5
Merger related costs  $2.6  $7.5  $1.5  $0.8  $0.8
Other operating expenses  $37.9  $32.9  $30.1  $30.2  $29.7
                
Core salaries and employee benefits  $51.9  $53.2  $56.0  $49.1  $55.5
Core merger related costs  -  -  -  -  -
Core other operating expenses  $37.8  $30.0  $30.1  $30.3  $28.7

 

The efficiency ratio for the third quarter of 2019 was 43.77% compared to 53.47% for the same period in 2018.

 

Asset Quality

 

   3rd Qtr
2019
  2nd Qtr
2019
  1st Qtr
2019
  4th Qtr
2018
 

3rd Qtr

2018

Allowance for loan losses to total loans  0.68%  0.68%  0.68%  0.67%  0.68%
Allowance for loan losses to non-performing loans  91%  101%  97%  164%  136%
Non-performing loans to total loans  0.76%  0.67%  0.70%  0.41%  0.50%
Net charge-off ratio (annualized)  0.78%  0.14%  0.20%  0.35%  0.36%
Net charge-off ratio YTD (annualized)  0.38%  0.17%  0.20%  0.28%  0.26%

 

All loans acquired are recorded at their discounted net present value; therefore, they are excluded from the computations of the asset quality ratios for the legacy loan portfolio, except for their inclusion in total assets.

 

At September 30, 2019, the allowance for loan losses for legacy loans was $66.0 million. The allowance for loan losses for loans acquired was $597,000 and the acquired loan discount mark was $60.4 million. The allowance for loan losses and discount mark provides a total of $127.0 million of coverage, which equates to a total coverage ratio of 0.97% of gross loans. The ratio of discount mark and related allowance to loans acquired was 1.78%.

 

Provision for loan losses for the third quarter of 2019 was $22.0 million, increases of $11.6 million when compared to September 30, 2018 and $14.9 million when compared to the second quarter of 2019. The sequential increase in the provision for loan losses was due to recording a special provision of $15.0 million during the third quarter, specifically related to the White Star charge-off.

 

Simmons Bank was a participant in a shared national credit (“SNC”) to White Star. White Star became the subject of bankruptcy proceedings earlier this year, and on September 30, 2019, the bankruptcy court handling the matter authorized the sale of White Star assets through a proceeding under Section 363 of the U.S. Bankruptcy Code to a third party. Our portion of the SNC was $19.1 million. Based on the anticipated net proceeds from the pending bankruptcy sale, our loss recognized in the third quarter was $14.7 million.

 

 

 

Foreclosed Assets and Other Real Estate Owned

 

At September 30, 2019, foreclosed assets and other real estate owned were $19.6 million, a decrease of $3.1 million, or 13.6%, compared to the same period in 2018 and a decrease of $5.2 million, or 20.9%, from June 30, 2019. The composition of these assets is divided into three types:

 

($ in millions)  3rd Qtr
2019
  2nd Qtr
2019
  1st Qtr
2019
  4th Qtr
2018
 

3rd Qtr

2018

Closed bank branches, branch sites & associate relocation  $5.9  $6.5  $7.6  $8.0  $9.6
Foreclosed assets - acquired  $10.1  $13.3  $6.2  $11.5  $8.0
Foreclosed assets - legacy  $3.6  $5.0  $5.2  $6.1  $5.1

 

Capital

 

   3rd Qtr
2019
  2nd Qtr
2019
  1st Qtr
2019
  4th Qtr
2018
 

3rd Qtr

2018

Stockholders’ equity to total assets  14.3%  13.8%  14.3%  13.6%  13.4%
Tangible common equity to tangible assets  9.1%  8.5%  9.0%  8.4%  8.1%
Regulatory tier 1 leverage ratio  9.1%  8.9%  9.1%  8.8%  8.7%
Regulatory total risk-based capital ratio  13.2%  12.7%  13.6%  13.3%  13.1%

 

At September 30, 2019, common stockholders' equity was $2.5 billion. Book value per share was $26.36 and tangible book value per share was $15.73 at September 30, 2019, compared to $23.66 and $13.48, respectively, at September 30, 2018.

 

Current Expected Credit Losses (“CECL”)

 

In 2016, new accounting guidance was issued that introduced a new credit loss methodology, the CECL methodology, which requires earlier recognition of credit losses, while also providing additional transparency about credit risk.

 

The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity debt securities and other receivables measured at amortized cost at the time the financial asset is originated or acquired. The allowance for credit losses is adjusted each period for changes in expected lifetime credit losses. This methodology replaces the multiple existing impairment methods in current guidance, which generally require that a loss be incurred before it is recognized. Within the life cycle of a loan or other financial asset, this new guidance will generally result in the earlier recognition of the provision for credit losses and the related allowance for credit losses than current practice. For available-for-sale debt securities that the Company intends to hold and where fair value is less than cost, credit-related impairment, if any, will be recognized through an allowance for credit losses and adjusted each period for changes in credit risk. The CECL guidance will be effective for the Company as of January 1, 2020.

 

The CECL methodology represents a significant change from existing guidance and is expected to result in material changes to the Company’s accounting for financial instruments. The Company is continuing to evaluate the effect that the new CECL methodology will have on its consolidated financial statements and related disclosures. Based on a preliminary analysis performed, the Company estimates that the allowance for credit losses will increase by approximately 130% to 170% over the allowance based on June 30, 2019 loan balances. When purchase discounts are considered, the increase is expected to be 10% to 30% over the June 30, 2019 total credit coverage ratio. These estimates are based upon the Company’s analysis of current macroeconomic conditions, assumptions and forecasts at this point in time and do not include the impact of the Company’s pending merger with The Landrum Company. These estimates are subject to change based on continuing review and challenge of the models, methodologies and judgements. The impact at adoption will also be influenced by the loan portfolio composition and quality at the adoption date, as well as, macroeconomic conditions and forecast at that time. The impact will be reflected as an adjustment to beginning retained earnings, net of income taxes, at adoption. Federal banking regulatory agencies have provided relief for an initial capital decrease at adoption by allowing the impact to be phased-in over three years on a straight-line basis. The adoption of CECL in 2020 could also impact the Company’s ongoing earnings, perhaps materially.

 

 

 

Implementation efforts have been underway, including model development and validation, fulfillment of additional data needs for new disclosures and reporting requirements, and drafting of accounting policies. Model validations and user acceptance testing commenced in the first quarter of 2019, with loss forecast modeling taking place in the third quarter of 2019. The Company intends to utilize a single macroeconomic scenario in estimating expected credit losses. Reasonable and supportable forecast periods and methods to revert to historical averages to arrive at lifetime expected credit losses vary by product. The Company has completed decisions around model methodologies and relevant elections are being finalized.

 

Share Repurchase Program

 

The Company also announced today that its board of directors has authorized a new stock repurchase program (“Program”) under which the Company may repurchase up to $60,000,000 of its Class A common stock currently issued and outstanding. The Program will terminate on October 31, 2021 (unless terminated sooner). The new Program replaces the Company’s existing stock repurchase program, which was announced on July 23, 2012.

 

“By leveraging our strong balance sheet to responsibly reduce our number of outstanding shares, we expect to be able to both increase shareholder value and maintain sufficient resources to fund our operations and growth opportunities as they arise,” said George Makris, Jr., Simmons’ chairman and chief executive officer. “We believe our stock, particularly at current trading prices, continues to be an attractive investment, and the action of our board demonstrates our commitment to, and confidence in, the company’s future.”

 

Under the Program, the Company may repurchase shares of its common stock through open market and privately negotiated transactions or otherwise. The timing, pricing, and amount of any repurchases under the Program will be determined by the Company’s management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of the Company’s common stock, corporate considerations, the Company’s working capital and investment requirements, general market and economic conditions, and legal requirements. The Program does not obligate the Company to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice. The Company anticipates funding for this Program to come from available sources of liquidity, including cash on hand and future cash flow.

 

Simmons First National Corporation

 

Simmons First National Corporation is a financial holding company headquartered in Pine Bluff, Arkansas, with total consolidated assets of approximately $17.8 billion as of September 30, 2019, conducting financial operations in Arkansas, Colorado, Illinois, Kansas, Missouri, Oklahoma, Tennessee and Texas. The Company, through its subsidiaries, offers comprehensive financial solutions delivered with a client-centric approach. The Company’s common stock trades on the NASDAQ Market under the symbol “SFNC.”

 

Conference Call

 

Management will conduct a live conference call to review this information beginning at 9:00 a.m. CDT today, Tuesday, October 22, 2019. Interested persons can listen to this call by dialing toll-free 1-866-298-7926 (United States and Canada only) and asking for the Simmons First National Corporation conference call, conference ID 2285967. In addition, the call will be available live or in recorded version on the Company’s website at www.simmonsbank.com.

 

 

 

Non-GAAP Financial Measures

 

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP). The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance. These measures adjust GAAP performance measures to, among other things, include the tax benefit associated with revenue items that are tax-exempt, as well as exclude from income available to common shareholders certain expenses related to significant non-core activities, including merger-related expenses, expenses related to the Company’s early retirement program, and branch right-sizing expenses. In addition, the Company also presents certain figures based on tangible common stockholders’ equity, which excludes goodwill and other intangible assets. The Company’s management believes that these non-GAAP financial measures are useful to investors because they present the results of the Company’s ongoing operations without the effect of mergers or other items not central to the Company’s ongoing business, as well as normalizing for tax effects. Management, therefore, believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

 

Forward-Looking Statements

 

Some of the statements in this news release may not be based on historical facts and should be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by reference to future periods or by the use of forward-looking terminology, such as “believe,” “budget,” “expect,” “foresee,” “anticipate,” “intend,” “indicate,” “target,” “estimate,” “plan,” “project,” “continue,” “contemplate,” “positions,” “prospects,” “predict,” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could,” “might” or “may,” or by variations of such words or by similar expressions. These forward-looking statements include, without limitation, statements relating to Simmons’ future growth, revenue, assets, asset quality, profitability, net interest margin, non-interest revenue, share repurchase program, the adequacy of the allowance for loan losses, and the effect of certain new accounting standards (including, without limitation, the CECL methodology and its anticipated effect on the provision and allowance for credit losses) on the Company’s financial statements. Any forward-looking statement speaks only as of the date of this news release, and Simmons undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this news release. By nature, forward-looking statements are based on various assumptions and involve inherent risk and uncertainties. Various factors, including, but not limited to, changes in economic conditions, credit quality, interest rates, loan demand, deposit flows, real estate values, the assumptions used in making the forward-looking statements, the securities markets generally or the price of Simmons common stock specifically, information technology affecting the financial industry, the assumptions, forecasts, models, and methodology used to calculate the expected impact of CECL on the Company’s financial statements, and the Company’s ability to manage and successfully integrate its mergers and acquisitions could cause actual results to differ materially from those contemplated by the forward-looking statements. Additional information on factors that might affect Simmons First National Corporation’s financial results is included in its Form 10-K for the year ended December 31, 2018, which has been filed with, and is available from, the Securities and Exchange Commission.

 

####

 

FOR MORE INFORMATION CONTACT:

Stephen C. Massanelli

EVP, Chief Administrative Officer and Investor Relations Officer

Simmons First National Corporation

steve.massanelli@simmonsbank.com

 

 

 

 

Simmons First National Corporation              SFNC
Consolidated End of Period Balance Sheets               
For the Quarters Ended  Sep 30  Jun 30  Mar 31  Dec 31  Sep 30
(Unaudited)  2019  2019  2019  2018  2018
($ in thousands)               
ASSETS                         
Cash and non-interest bearing balances due from banks  $161,440   $145,491   $151,112   $171,792   $125,231 
Interest bearing balances due from banks and federal funds sold   368,530    509,765    340,049    661,666    388,573 
Cash and cash equivalents   529,970    655,256    491,161    833,458    513,804 
Interest bearing balances due from banks - time   5,041    5,041    4,684    4,934    3,954 
Investment securities - held-to-maturity   42,237    47,455    61,435    289,194    323,306 
Investment securities - available-for-sale   2,356,134    2,342,387    2,240,111    2,151,752    1,997,814 
Mortgage loans held for sale   50,099    34,999    18,480    26,799    48,195 
Other assets held for sale   383    397    397    1,790    5,136 
Loans:                         
Legacy loans   9,643,365    9,262,497    8,684,550    8,430,388    8,123,274 
Allowance for loan losses   (65,993)   (63,067)   (59,243)   (56,599)   (55,358)
Loans acquired, net of discount and allowance   3,359,587    3,864,516    3,056,187    3,292,783    3,734,921 
Net loans   12,936,959    13,063,946    11,681,494    11,666,572    11,802,837 
Premises and equipment   378,678    370,551    333,740    295,060    287,246 
Foreclosed assets and other real estate owned   19,576    24,761    18,952    25,565    22,664 
Interest receivable   53,966    54,781    51,796    49,938    51,509 
Bank owned life insurance   234,655    233,345    192,736    193,170    192,680 
Goodwill   926,648    926,450    845,687    845,687    845,687 
Other intangible assets   101,149    104,096    88,694    91,334    93,975 
Other assets   123,016    73,970    62,272    68,084    92,457 
Total assets  $17,758,511   $17,937,435   $16,091,639   $16,543,337   $16,281,264 
                          
LIABILITIES AND STOCKHOLDERS' EQUITY                         
Deposits:                         
Non-interest bearing transaction accounts  $3,044,330   $2,954,032   $2,674,034   $2,672,405   $2,778,670 
Interest bearing transaction accounts and savings deposits   7,337,571    7,258,005    6,666,823    6,830,191    6,776,330 
Time deposits   3,086,108    3,304,176    2,648,674    2,896,156    2,533,506 
Total deposits   13,468,009    13,516,213    11,989,531    12,398,752    12,088,506 
Federal funds purchased and securities sold under agreements to repurchase   116,536    130,470    120,213    95,792    109,213 
Other borrowings   1,098,395    1,324,094    1,169,989    1,345,450    1,420,917 
Subordinated notes and debentures   354,223    354,132    354,041    353,950    372,934 
Other liabilities held for sale   -    162    162    162    424 
Accrued interest and other liabilities   174,277    142,851    155,382    102,797    105,951 
Total liabilities   15,211,440    15,467,922    13,789,318    14,296,903    14,097,945 
                          
Stockholders' equity:                         
Common stock   966    966    926    923    923 
Surplus   1,708,058    1,705,262    1,599,566    1,597,944    1,597,261 
Undivided profits   814,338    747,969    707,829    674,941    633,175 
Accumulated other comprehensive income (loss):                         
Unrealized accretion (depreciation) on AFS securities   23,709    15,316    (6,000)   (27,374)   (48,040)
Total stockholders' equity   2,547,071    2,469,513    2,302,321    2,246,434    2,183,319 
Total liabilities and stockholders' equity  $17,758,511   $17,937,435   $16,091,639   $16,543,337   $16,281,264 

 

Page 1

 

Simmons First National Corporation              SFNC
Consolidated Statements of Income - Quarter-to-Date               
For the Quarters Ended  Sep 30  Jun 30  Mar 31  Dec 31  Sep 30
(Unaudited)  2019  2019  2019  2018  2018
($ in thousands, except per share data)               
INTEREST INCOME                         
Loans  $179,971   $178,122   $159,440   $159,996   $162,438 
Interest bearing balances due from banks and federal funds sold   1,586    1,121    2,154    2,168    1,405 
Investment securities   15,367    16,594    17,312    15,760    14,640 
Mortgage loans held for sale   382    332    210    372    501 
TOTAL INTEREST INCOME   197,306    196,169    179,116    178,296    178,984 
INTEREST EXPENSE                         
Time deposits   15,573    14,606    12,320    11,273    8,017 
Other deposits   21,363    20,190    18,430    17,489    16,373 
Federal funds purchased and securities sold under agreements to repurchase   249    257    136    121    104 
Other borrowings   5,381    6,219    6,793    7,134    6,240 
Subordinated notes and debentures   4,576    4,541    4,411    4,498    5,282 
TOTAL INTEREST EXPENSE   47,142    45,813    42,090    40,515    36,016 
NET INTEREST INCOME   150,164    150,356    137,026    137,781    142,968 
Provision for loan losses   21,973    7,079    9,285    9,620    10,345 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   128,191    143,277    127,741    128,161    132,623 
NON-INTEREST INCOME                         
Trust income   6,108    5,794    5,708    5,980    6,277 
Service charges on deposit accounts   10,825    10,557    10,068    11,263    10,837 
Other service charges and fees   1,308    1,312    1,289    1,501    1,201 
Mortgage lending income   4,509    3,656    2,823    1,457    1,521 
SBA lending income   956    895    497    186    304 
Investment banking income   513    360    618    829    664 
Debit and credit card fees   7,059    7,212    6,098    6,547    6,820 
Bank owned life insurance income   1,302    1,260    795    1,105    1,105 
Gain on sale of securities, net   7,374    2,823    2,740    8    54 
Other income   43,821    5,137    3,125    5,712    4,942 
TOTAL NON-INTEREST INCOME   83,775    39,006    33,761    34,588    33,725 
NON-INTEREST EXPENSE                         
Salaries and employee benefits   52,065    56,128    56,367    49,193    55,515 
Occupancy expense, net   8,342    6,919    7,475    7,016    7,713 
Furniture and equipment expense   4,898    4,206    3,358    4,139    3,761 
Other real estate and foreclosure expense   1,125    591    637    1,540    538 
Deposit insurance   (2)   2,510    2,040    2,489    2,248 
Merger-related costs   2,556    7,522    1,470    797    804 
Other operating expenses   37,881    32,867    30,062    30,222    29,674 
TOTAL NON-INTEREST EXPENSE   106,865    110,743    101,409    95,396    100,253 
NET INCOME BEFORE INCOME TAXES   105,101    71,540    60,093    67,353    66,095 
Provision for income taxes   23,275    15,616    12,398    11,707    10,902 
NET INCOME   81,826    55,924    47,695    55,646    55,193 
Preferred stock dividends   -    326    -    -    - 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS  $81,826   $55,598   $47,695   $55,646   $55,193 
BASIC EARNINGS PER SHARE  $0.85   $0.58   $0.52   $0.60   $0.60 
DILUTED EARNINGS PER SHARE  $0.84   $0.58   $0.51   $0.60   $0.59 

 

Page 2

 

Simmons First National Corporation           SFNC
Consolidated Risk-Based Capital               
For the Quarters Ended  Sep 30  Jun 30  Mar 31  Dec 31  Sep 30
(Unaudited)  2019  2019  2019  2018  2018
($ in thousands)               
Tier 1 capital                         
Stockholders' equity  $2,547,071   $2,469,513   $2,302,321   $2,246,434   $2,183,319 
Disallowed intangible assets, net of deferred tax   (1,013,309)   (1,001,676)   (910,122)   (912,428)   (914,788)
Unrealized (gain) loss on AFS securities   (23,709)   (15,316)   6,000    27,374    48,040 
Total Tier 1 capital   1,510,053    1,452,521    1,398,199    1,361,380    1,316,571 
                          
Tier 2 capital                         
Qualifying unrealized gain on AFS equity securities   -    -    -    -    1 
Trust preferred securities and subordinated debt   354,223    354,132    354,041    353,950    372,934 
Qualifying allowance for loan losses and reserve for unfunded commitments   74,455    72,044    67,771    63,608    63,618 
Total Tier 2 capital   428,678    426,176    421,812    417,558    436,553 
Total risk-based capital  $1,938,731   $1,878,697   $1,820,011   $1,778,938   $1,753,124 
                          
Risk weighted assets  $14,725,571   $14,825,253   $13,364,636   $13,326,832   $13,402,910 
                          
Adjusted average assets for leverage ratio  $16,681,527   $16,382,520   $15,423,961   $15,512,042   $15,179,889 
                          
Ratios at end of quarter                         
Equity to assets   14.34%   13.77%   14.31%   13.58%   13.41%
Tangible common equity to tangible assets (1)   9.08%   8.51%   9.02%   8.39%   8.11%
Common equity Tier 1 ratio (CET1)   10.25%   9.80%   10.46%   10.22%   9.82%
Tier 1 leverage ratio   9.05%   8.87%   9.07%   8.78%   8.67%
Tier 1 risk-based capital ratio   10.25%   9.80%   10.46%   10.22%   9.82%
Total risk-based capital ratio   13.17%   12.67%   13.62%   13.35%   13.08%

 

(1) Calculations of tangible common equity to tangible assets and the reconciliations to GAAP are included in the schedules accompanying this release.

 

Page 3

 

Simmons First National Corporation           SFNC
Consolidated Loans and Investments               
For the Quarters Ended  Sep 30  Jun 30  Mar 31  Dec 31  Sep 30
(Unaudited)  2019  2019  2019  2018  2018
($ in thousands)               
Legacy Loan Portfolio - End of Period (1)                         
Consumer                         
Credit cards  $195,083   $187,919   $181,549   $204,173   $182,137 
Other consumer   208,643    207,445    213,659    201,297    259,581 
Total consumer   403,726    395,364    395,208    405,470    441,718 
Real Estate                         
Construction   1,712,858    1,540,352    1,376,162    1,300,723    1,229,888 
Single-family residential   1,448,455    1,444,525    1,431,407    1,440,443    1,401,991 
Other commercial   3,630,708    3,531,273    3,355,109    3,225,287    3,077,188 
Total real estate   6,792,021    6,516,150    6,162,678    5,966,453    5,709,067 
Commercial                         
Commercial   1,894,819    1,871,695    1,801,422    1,774,909    1,608,342 
Agricultural   213,753    191,922    147,216    164,514    218,778 
Total commercial   2,108,572    2,063,617    1,948,638    1,939,423    1,827,120 
Other   339,046    287,366    178,026    119,042    145,369 
Total Loans  $9,643,365   $9,262,497   $8,684,550   $8,430,388   $8,123,274 
                          
(1) Excludes all acquired loans.                         
                          
Investment Securities - End of Period                         
Held-to-Maturity                         
U.S. Government agencies  $-   $999   $12,996   $16,990   $34,983 
Mortgage-backed securities   11,549    12,225    12,847    13,346    13,933 
State and political subdivisions   28,692    32,236    33,597    256,863    272,396 
Other securities   1,996    1,995    1,995    1,995    1,994 
Total held-to-maturity   42,237    47,455    61,435    289,194    323,306 
Available-for-Sale                         
U.S. Government agencies  $178,139   $197,656   $161,577   $154,301   $141,460 
Mortgage-backed securities   1,337,794    1,345,760    1,345,677    1,522,900    1,419,626 
State and political subdivisions   681,202    636,558    580,790    314,843    282,439 
FHLB stock   62,403    66,588    65,220    73,105    72,579 
Other securities   96,596    95,825    86,847    86,603    81,710 
Total available-for-sale   2,356,134    2,342,387    2,240,111    2,151,752    1,997,814 
Total investment securities  $2,398,371   $2,389,842   $2,301,546   $2,440,946   $2,321,120 
Fair value - HTM investment securities  $43,302   $48,640   $61,956   $290,830   $322,838 
                          
Investment Securities - QTD Average                         
Taxable securities  $1,712,672   $1,793,799   $1,880,694   $1,815,203   $1,775,193 
Tax exempt securities   681,505    624,898    590,941    551,185    539,135 
Total investment securities - QTD average  $2,394,177   $2,418,697   $2,471,635   $2,366,388   $2,314,328 

 

Page 4

 

Simmons First National Corporation              SFNC
Consolidated Loans and Credit Coverage               
For the Quarters Ended  Sep 30  Jun 30  Mar 31  Dec 31  Sep 30
(Unaudited)  2019  2019  2019  2018  2018
($ in thousands)               
LOANS                         
Legacy loans  $9,643,365   $9,262,497   $8,684,550   $8,430,388   $8,123,274 
Allowance for loan losses (legacy loans)   (65,993)   (63,067)   (59,243)   (56,599)   (55,358)
Legacy loans (net of allowance)   9,577,372    9,199,430    8,625,307    8,373,789    8,067,916 
Loans acquired   3,420,563    3,939,126    3,099,915    3,342,175    3,790,234 
Credit discount   (60,379)   (73,498)   (42,416)   (49,297)   (53,968)
Allowance for loan losses (loans acquired)   (597)   (1,112)   (1,312)   (95)   (1,345)
Loans acquired (net of discount and allowance)   3,359,587    3,864,516    3,056,187    3,292,783    3,734,921 
Net loans  $12,936,959   $13,063,946   $11,681,494   $11,666,572   $11,802,837 
                          
                          
Loan Coverage Ratios                         
Allowance for loan losses to legacy loans   0.68%   0.68%   0.68%   0.67%   0.68%
                          
Discount for credit losses and allowance on loans acquired
to total loans acquired plus discount for credit losses
and allowance on loans acquired (non-GAAP) (1)
 
 
 
 
 
 
 
 
1.78
 
 
%
 
 
 
 
 
 
 
 
1.89
 
 
%
 
 
 
 
 
 
 
 
1.41
 
 
%
 
 
 
 
 
 
 
 
1.48
 
 
%
 
 
 
 
 
 
 
 
1.46
 
 
%
                          
Total allowance and credit coverage (non-GAAP) (1)   0.97%   1.04%   0.87%   0.90%   0.93%

 

(1) Calculations of the non-GAAP loan coverage ratios and the reconciliations to GAAP are included in the schedules accompanying this release.

 

 

Page 5

 

Simmons First National Corporation           SFNC
Consolidated Allowance and Asset Quality               
For the Quarters Ended  Sep 30  Jun 30  Mar 31  Dec 31  Sep 30
(Unaudited)  2019  2019  2019  2018  2018
($ in thousands)               
Allowance for Loan Losses (Legacy Loans)                         
Balance, beginning of quarter  $63,067   $59,243   $56,599   $55,358   $51,732 
Loans charged off                         
Credit cards   1,117    1,039    1,142    1,121    919 
Other consumer   1,059    905    1,533    2,894    1,321 
Real estate   907    271    374    337    4,952 
Commercial   17,729    1,867    1,968    3,480    592 
Total loans charged off   20,812    4,082    5,017    7,832    7,784 
                          
Recoveries of loans previously charged off                         
Credit cards   223    271    240    227    229 
Other consumer   1,422    331    300    154    176 
Real estate   55    153    142    367    210 
Commercial   65    72    158    167    450 
Total recoveries   1,765    827    840    915    1,065 
Net loans charged off   19,047    3,255    4,177    6,917    6,719 
Provision for loan losses   21,973    7,079    6,821    8,158    10,345 
Balance, end of quarter  $65,993   $63,067   $59,243   $56,599   $55,358 
                          
Non-performing assets (1) (2)                         
Non-performing loans                         
Nonaccrual loans  $72,721   $61,956   $60,925   $34,201   $40,505 
Loans past due 90 days or more   155    267    281    224    281 
Total non-performing loans   72,876    62,223    61,206    34,425    40,786 
Other non-performing assets                         
Foreclosed assets and other real estate owned (2)   19,576    24,761    18,952    25,565    22,664 
Other non-performing assets   540    613    505    553    524 
Total other non-performing assets   20,116    25,374    19,457    26,118    23,188 
Total non-performing assets  $92,992   $87,597   $80,663   $60,543   $63,974 
Performing TDRs (troubled debt restructurings)  $6,519   $6,246   $6,297   $6,369   $8,413 
                          
Ratios (1) (2)                         
Allowance for loan losses to total loans   0.68%   0.68%   0.68%   0.67%   0.68%
Allowance for loan losses to non-performing loans   91%   101%   97%   164%   136%
Non-performing loans to total loans   0.76%   0.67%   0.70%   0.41%   0.50%
Non-performing assets (including performing TDRs) to total assets   0.56%   0.52%   0.54%   0.40%   0.44%
Non-performing assets to total assets   0.52%   0.49%   0.50%   0.37%   0.39%
Annualized net charge offs to total loans   0.78%   0.14%   0.20%   0.35%   0.36%
Annualized net credit card charge offs to total credit card loans   1.82%   1.63%   1.92%   1.86%   1.47%

 

(1) Excludes all acquired loans, except for their inclusion in total assets.

(2) Includes acquired foreclosed assets and acquired other real estate owned.       

 

Page 6

 

Simmons First National Corporation                       SFNC
Consolidated - Average Balance Sheet and Net Interest Income Analysis                  
For the Quarters Ended                           
(Unaudited)                           
   Three Months Ended
Sep 2019
  Three Months Ended
Jun 2019
  Three Months Ended
Sep 2018
($ in thousands)  Average
Balance
  Income/
Expense
  Yield/
Rate
  Average
Balance
  Income/
Expense
  Yield/
Rate
  Average
Balance
  Income/
Expense
  Yield/
Rate
ASSETS                                             
Earning assets:                                             
Interest bearing balances due from banks
and federal funds sold
  $344,761   $1,586    1.83%  $276,370   $1,121    1.63%  $373,528   $1,405    1.49%
Investment securities - taxable   1,712,672    10,414    2.41%   1,793,799    11,994    2.68%   1,775,193    10,892    2.43%
Investment securities - non-taxable (FTE)   681,505    6,687    3.89%   624,898    6,209    3.99%   539,135    5,064    3.73%
Mortgage loans held for sale   39,551    382    3.83%   32,030    332    4.16%   43,554    501    4.56%
Loans, including acquired loans   13,052,943    180,080    5.47%   12,813,274    178,219    5.58%   11,641,843    162,515    5.54%
Total interest earning assets (FTE)   15,831,432    199,149    4.99%   15,540,371    197,875    5.11%   14,373,253    180,377    4.98%
Non-earning assets   1,889,166              1,842,501              1,667,631           
Total assets  $17,720,598             $17,382,872             $16,040,884           
                                              
LIABILITIES AND STOCKHOLDERS' EQUITY                                             
Interest bearing liabilities:                                             
Interest bearing transaction and
savings accounts
  $7,322,395   $21,363    1.16%  $7,139,356   $20,190    1.13%  $6,840,403   $16,373    0.95%
Time deposits   3,122,422    15,573    1.98%   3,072,246    14,606    1.91%   2,379,142    8,017    1.34%
Total interest bearing deposits   10,444,817    36,936    1.40%   10,211,602    34,796    1.37%   9,219,545    24,390    1.05%
Federal funds purchased and securities
sold under agreement to repurchase
   123,883    249    0.80%   133,242    257    0.77%   107,770    104    0.38%
Other borrowings   1,127,886    5,381    1.89%   1,277,450    6,219    1.95%   1,375,052    6,240    1.80%
Subordinated notes and debentures   354,178    4,576    5.13%   354,088    4,541    5.14%   379,168    5,282    5.53%
Total interest bearing liabilities   12,050,764    47,142    1.55%   11,976,382    45,813    1.53%   11,081,535    36,016    1.29%
Non-interest bearing liabilities:                                             
Non-interest bearing deposits   3,012,544              2,834,452              2,679,469           
Other liabilities   288,517              207,500              103,315           
Total liabilities   15,351,825              15,018,334              13,864,319           
Stockholders' equity   2,368,773              2,364,538              2,176,565           
Total liabilities and stockholders' equity  $17,720,598             $17,382,872             $16,040,884           
Net interest income (FTE)       $152,007             $152,062             $144,361      
Net interest spread (FTE)             3.44%             3.58%             3.69%
Net interest margin (FTE) - quarter-to-date             3.81%             3.92%             3.98%
                                              
Net interest margin (FTE) - year-to-date             3.86%             3.89%             4.04%
                                              
Core net interest margin (FTE) - quarter-to-date (1)             3.58%             3.66%             3.71%
Core loan yield (FTE) - quarter-to-date (1)             5.19%             5.26%             5.19%
                                              
Core net interest margin (FTE) - year-to-date (1)             3.63%             3.66%             3.74%
Core loan yield (FTE) - year-to-date (1)             5.24%             5.27%             5.06%

 

(1) Calculations of core net interest margin and core loan yield and the reconciliations to GAAP are included in the schedules accompanying this release.  

 

Page 7

 

Simmons First National Corporation           SFNC
Consolidated - Selected Financial Data               
For the Quarters Ended  Sep 30  Jun 30  Mar 31  Dec 31  Sep 30
(Unaudited)  2019  2019  2019  2018  2018
($ in thousands, except share data)               
QUARTER-TO-DATE                         
Financial Highlights - GAAP                         
Net Income  $81,826   $55,598   $47,695   $55,646   $55,193 
Diluted earnings per share   0.84    0.58    0.51    0.60    0.59 
Return on average assets   1.83%   1.28%   1.19%   1.35%   1.37%
Return on average common equity   13.70%   9.48%   8.60%   9.98%   10.06%
Return on tangible common equity   24.89%   17.40%   15.34%   17.96%   18.38%
Net interest margin (FTE)   3.81%   3.92%   3.85%   3.76%   3.98%
FTE adjustment   1,843    1,706    1,601    1,466    1,393 
Amortization of intangibles   2,947    2,947    2,641    2,642    2,745 
Amortization of intangibles, net of taxes   2,176    2,177    1,951    1,952    2,027 
Average diluted shares outstanding   96,968,775    96,367,857    92,870,813    92,897,105    92,840,851 
Cash dividends declared per common share   0.16    0.16    0.16    0.15    0.15 
Financial Highlights - Core (non-GAAP)                         
Core earnings (excludes non-core items) (1)  $83,963   $65,453   $49,076   $56,451   $56,504 
Diluted core earnings per share (1)   0.87    0.68    0.53    0.61    0.61 
Core net interest margin (FTE) (2)   3.58%   3.66%   3.67%   3.66%   3.71%
Accretable yield on acquired loans   9,322    10,162    6,660    3,850    10,006 
Efficiency ratio (1)   43.77%   49.88%   56.76%   51.99%   53.47%
Core return on average assets (1)   1.88%   1.51%   1.22%   1.37%   1.40%
Core return on average common equity (1)   14.06%   11.16%   8.85%   10.13%   10.30%
Core return on tangible common equity (1)   25.52%   20.36%   15.76%   18.21%   18.80%
YEAR-TO-DATE                         
Financial Highlights - GAAP                         
Net Income  $185,119   $103,293   $47,695   $215,713   $160,067 
Diluted earnings per share   1.94    1.09    0.51    2.32    1.72 
Return on average assets   1.44%   1.24%   1.19%   1.37%   1.37%
Return on average common equity   10.65%   9.05%   8.60%   10.00%   10.01%
Return on tangible common equity   19.27%   16.38%   15.34%   18.44%   18.61%
Net interest margin (FTE)   3.86%   3.89%   3.85%   3.97%   4.04%
FTE adjustment   5,150    3,307    1,601    5,297    3,831 
Amortization of intangibles   8,535    5,588    2,641    11,009    8,367 
Amortization of intangibles, net of taxes   6,304    4,128    1,951    8,132    6,180 
Average diluted shares outstanding   95,450,732    94,588,739    92,870,813    92,830,485    92,796,860 
Cash dividends declared per common share   0.48    0.32    0.16    0.60    0.45 
Financial Highlights - Core (non-GAAP)                         
Core earnings (excludes non-core items) (1)  $198,492   $114,529   $49,076   $220,233   $163,782 
Diluted core earnings per share (1)   2.08    1.21    0.53    2.37    1.76 
Core net interest margin (FTE) (2)   3.63%   3.66%   3.67%   3.72%   3.74%
Accretable yield on acquired loans   26,144    16,822    6,660    35,263    31,413 
Efficiency ratio (1)   49.49%   53.14%   56.76%   52.85%   53.14%
Core return on average assets (1)   1.55%   1.37%   1.22%   1.40%   1.41%
Core return on average common equity (1)   11.42%   10.04%   8.85%   10.21%   10.24%
Core return on tangible common equity (1)   20.62%   18.09%   15.76%   18.81%   19.03%
END OF PERIOD                         
Book value per share  $26.36   $25.57   $24.87   $24.33   $23.66 
Tangible book value per share   15.73    14.90    14.78    14.18    13.48 
Shares outstanding   96,613,855    96,590,656    92,568,361    92,347,643    92,291,070 
Full-time equivalent employees   2,701    2,700    2,602    2,654    2,635 
Total number of financial centers   212    212    191    191    191 

 

(1) Core earnings exclude non-core items, which is a non-GAAP measurement. Reconciliations to GAAP are included in the schedules accompanying this release.

(2) Excludes accretable yield adjustment on loans, which is a non-GAAP measurement. Reconciliations to GAAP are included in the schedules accompanying this release.

 

Page 8

 

Simmons First National Corporation           SFNC
Consolidated - Reconciliation of Core Earnings (non-GAAP)         
For the Quarters Ended  Sep 30  Jun 30  Mar 31  Dec 31  Sep 30
(Unaudited)  2019  2019  2019  2018  2018
($ in thousands, except per share data)               
QUARTER-TO-DATE               
Net Income  $81,826   $55,598   $47,695   $55,646   $55,193 
Non-core items                         
Merger-related costs   2,556    7,522    1,470    797    804 
Early retirement program   177    2,932    355    -    - 
Branch right-sizing   160    2,887    45    292    970 
Tax effect (1)   (756)   (3,486)   (489)   (284)   (463)
Net non-core items   2,137    9,855    1,381    805    1,311 
Core earnings (non-GAAP)  $83,963   $65,453   $49,076   $56,451   $56,504 
                          
Diluted earnings per share  $0.84   $0.58   $0.51   $0.60   $0.59 
Non-core items                         
Merger-related costs   0.04    0.08    0.02    0.01    0.01 
Early retirement program   -    0.03    0.01    -    - 
Branch right-sizing   -    0.03    -    -    0.01 
Tax effect (1)   (0.01)   (0.04)   (0.01)   -    - 
Net non-core items   0.03    0.10    0.02    0.01    0.02 
Core earnings (non-GAAP)  $0.87   $0.68   $0.53   $0.61   $0.61 
                          
YEAR-TO-DATE                         
Net Income  $185,119   $103,293   $47,695   $215,713   $160,067 
Non-core items                         
Merger-related costs   11,548    8,992    1,470    4,777    3,980 
Early retirement program   3,464    3,287    355    -    - 
Branch right-sizing   3,092    2,932    45    1,341    1,049 
Tax effect (1)   (4,731)   (3,975)   (489)   (1,598)   (1,314)
Net non-core items   13,373    11,236    1,381    4,520    3,715 
Core earnings (non-GAAP)  $198,492   $114,529   $49,076   $220,233   $163,782 
                          
Diluted earnings per share  $1.94   $1.09   $0.51   $2.32   $1.72 
Non-core items                         
Merger-related costs   0.12    0.10    0.02    0.05    0.04 
Early retirement program   0.04    0.03    0.01    -    - 
Branch right-sizing   0.03    0.03    -    0.02    0.01 
Tax effect (1)   (0.05)   (0.04)   (0.01)   (0.02)   (0.01)
Net non-core items   0.14    0.12    0.02    0.05    0.04 
Core earnings (non-GAAP)  $2.08   $1.21   $0.53   $2.37   $1.76 
                          
(1) Effective tax rate of 26.135%.                         
                          
Reconciliation of Selected Non-Core Non-Interest Expense Items (non-GAAP)                         
                          
QUARTER-TO-DATE                         
Salaries and employee benefits  $52,065   $56,128   $56,367   $49,193   $55,515 
Non-core items (1)   (176)   (2,937)   (351)   (118)   - 
Core salaries and employee benefits (non-GAAP)  $51,889   $53,191   $56,016   $49,075   $55,515 
                          
Merger related costs  $2,556   $7,522   $1,470   $797   $804 
Non-core items (1)   (2,556)   (7,522)   (1,470)   (797)   (804)
Core merger related costs (non-GAAP)  $-   $-   $-   $-   $- 
                          
Other operating expenses  $37,881   $32,867   $30,062   $30,222   $29,674 
Non-core items (1)   (90)   (2,834)   (10)   70    (957)
Core other operating expenses (non-GAAP)  $37,791   $30,033   $30,052   $30,292   $28,717 

 

(1) Non-core items include merger related costs, early retirement program expenses and branch right sizing costs.

 

Page 9

 

Simmons First National Corporation              SFNC
Reconciliation Of Non-GAAP Financial Measures - End of Period         
For the Quarters Ended               
(Unaudited)  Sept 30  Jun 30  Mar 31  Dec 31  Sept 30
   2019  2019  2019  2018  2018
($ in thousands, except per share data)               
                
Calculation of Tangible Common Equity and the Ratio of Tangible Common Equity to Tangible Assets      
                
Total common stockholders' equity  $2,547,071   $2,469,513   $2,302,321   $2,246,434   $2,183,319 
Intangible assets:                         
Goodwill   (926,648)   (926,450)   (845,687)   (845,687)   (845,687)
Other intangible assets   (101,149)   (104,096)   (88,694)   (91,334)   (93,975)
Total intangibles   (1,027,797)   (1,030,546)   (934,381)   (937,021)   (939,662)
Tangible common stockholders' equity  $1,519,274   $1,438,967   $1,367,940   $1,309,413   $1,243,657 
                          
Total assets  $17,758,511   $17,937,435   $16,091,639   $16,543,337   $16,281,264 
Intangible assets:                         
Goodwill   (926,648)   (926,450)   (845,687)   (845,687)   (845,687)
Other intangible assets   (101,149)   (104,096)   (88,694)   (91,334)   (93,975)
Total intangibles   (1,027,797)   (1,030,546)   (934,381)   (937,021)   (939,662)
Tangible assets  $16,730,714   $16,906,889   $15,157,258   $15,606,316   $15,341,602 
                          
Ratio of equity to assets   14.34%   13.77%   14.31%   13.58%   13.41%
Ratio of tangible common equity to tangible assets   9.08%   8.51%   9.02%   8.39%   8.11%
                          
Calculation of Discount for credit losses and allowance on loans acquired to total loans acquired plus discount for credit losses and allowance on loans acquired
                          
Credit discount on acquired loans  $60,379   $73,498   $42,416   $49,297   $53,968 
Allowance for loan losses on acquired loans   597    1,112    1,312    95    1,345 
Total credit discount and ALLL on acquired loans  $60,976   $74,610   $43,728   $49,392   $55,313 
Total loans acquired  $3,420,563   $3,939,126   $3,099,915   $3,342,175   $3,790,234 
Discount and ALLL on acquired loans to acquired loans   1.78%   1.89%   1.41%   1.48%   1.46%
                          
Calculation of Total Allowance and Credit Coverage                         
                          
Allowance for loan losses  $65,993   $63,067   $59,243   $56,599   $55,358 
Total credit discount and ALLL on acquired loans   60,976    74,610    43,728    49,392    55,313 
Total allowance and credit discount  $126,969   $137,677   $102,971   $105,991   $110,671 
Total loans  $13,063,928   $13,201,623   $11,784,465   $11,772,563   $11,913,508 
Total allowance and credit coverage   0.97%   1.04%   0.87%   0.90%   0.93%
                          
Calculation of Tangible Book Value per Share                         
                          
Total common stockholders' equity  $2,547,071   $2,469,513   $2,302,321   $2,246,434   $2,183,319 
Intangible assets:                         
Goodwill   (926,648)   (926,450)   (845,687)   (845,687)   (845,687)
Other intangible assets   (101,149)   (104,096)   (88,694)   (91,334)   (93,975)
Total intangibles   (1,027,797)   (1,030,546)   (934,381)   (937,021)   (939,662)
Tangible common stockholders' equity  $1,519,274   $1,438,967   $1,367,940   $1,309,413   $1,243,657 
Shares of common stock outstanding   96,613,855    96,590,656    92,568,361    92,347,643    92,291,070 
Book value per common share  $26.36   $25.57   $24.87   $24.33   $23.66 
Tangible book value per common share  $15.73   $14.90   $14.78   $14.18   $13.48 

 

Page 10

 

Simmons First National Corporation              SFNC
Reconciliation Of Non-GAAP Financial Measures - Quarter-to-Date         
For the Quarters Ended               
(Unaudited)  Sept 30  Jun 30  Mar 31  Dec 31  Sept 30
   2019  2019  2019  2018  2018
($ in thousands)               
Calculation of Core Return on Average Assets               
                
Net income  $81,826   $55,598   $47,695   $55,646   $55,193 
Net non-core items, net of taxes, adjustment   2,137    9,855    1,381    805    1,311 
Core earnings  $83,963   $65,453   $49,076   $56,451   $56,504 
                          
Average total assets  $17,720,598   $17,382,872   $16,302,197   $16,357,753   $16,040,884 
                          
Return on average assets   1.83%   1.28%   1.19%   1.35%   1.37%
Core return on average assets   1.88%   1.51%   1.22%   1.37%   1.40%
                          
Calculation of Return on Tangible Common Equity                         
                          
Net income  $81,826   $55,598   $47,695   $55,646   $55,193 
Amortization of intangibles, net of taxes   2,176    2,177    1,951    1,952    2,027 
Total income available to common stockholders  $84,002   $57,775   $49,646   $57,598   $57,220 
                          
Net non-core items, net of taxes   2,137    9,855    1,381    805    1,311 
Core earnings   83,963    65,453    49,076    56,451    56,504 
Amortization of intangibles, net of taxes   2,176    2,177    1,951    1,952    2,027 
Total core income available to common stockholders  $86,139   $67,630   $51,027   $58,403   $58,531 
                          
Average common stockholders' equity  $2,368,773   $2,351,603   $2,248,898   $2,211,217   $2,176,565 
Average intangible assets:                         
Goodwill   (926,687)   (915,445)   (845,687)   (845,687)   (845,687)
Other intangibles   (103,028)   (104,050)   (90,317)   (92,990)   (95,576)
Total average intangibles   (1,029,715)   (1,019,495)   (936,004)   (938,677)   (941,263)
Average tangible common stockholders' equity  $1,339,058   $1,332,108   $1,312,894   $1,272,540   $1,235,302 
                          
Return on average common equity   13.70%   9.48%   8.60%   9.98%   10.06%
Return on tangible common equity   24.89%   17.40%   15.34%   17.96%   18.38%
Core return on average common equity   14.06%   11.16%   8.85%   10.13%   10.30%
Core return on tangible common equity   25.52%   20.36%   15.76%   18.21%   18.80%
                          
Calculation of Efficiency Ratio (1)                         
                          
Non-interest expense  $106,865   $110,743   $101,409   $95,396   $100,253 
Non-core non-interest expense adjustment   (2,893)   (13,341)   (1,870)   (1,089)   (1,774)
Other real estate and foreclosure expense adjustment   (1,057)   (563)   (599)   (1,300)   (538)
Amortization of intangibles adjustment   (2,947)   (2,947)   (2,641)   (2,642)   (2,745)
Efficiency ratio numerator  $99,968   $93,892   $96,299   $90,365   $95,196 
                          
Net-interest income  $150,164   $150,356   $137,026   $137,781   $142,968 
Non-interest income   83,775    39,006    33,761    34,588    33,725 
Fully tax-equivalent adjustment   1,843    1,706    1,601    1,466    1,393 
Gain on sale of securities   (7,374)   (2,823)   (2,740)   (8)   (54)
Efficiency ratio denominator  $228,408   $188,245   $169,648   $173,827   $178,032 
                          
Efficiency ratio (1)   43.77%   49.88%   56.76%   51.99%   53.47%
                          
Calculation of Core Net Interest Margin                         
                          
Net interest income  $150,164   $150,356   $137,026   $137,781   $142,968 
Fully tax-equivalent adjustment   1,843    1,706    1,601    1,466    1,393 
Fully tax-equivalent net interest income   152,007    152,062    138,627    139,247    144,361 
                          
Total accretable yield   (9,322)   (10,162)   (6,660)   (3,850)   (10,006)
Core net interest income  $142,685   $141,900   $131,967   $135,397   $134,355 
Average earning assets  $15,831,432   $15,540,371   $14,593,905   $14,686,038   $14,373,253 
                          
Net interest margin   3.81%   3.92%   3.85%   3.76%   3.98%
Core net interest margin   3.58%   3.66%   3.67%   3.66%   3.71%
                          
Calculation of Core Loan Yield                         
                          
Loan interest income  $179,971   $178,122   $159,440   $159,996   $162,438 
Total accretable yield   (9,322)   (10,162)   (6,660)   (3,850)   (10,006)
Core loan interest income  $170,649   $167,960   $152,780   $156,146   $152,432 
Average loan balance  $13,052,943   $12,813,274   $11,710,075   $11,788,838   $11,641,843 
                          
Core loan yield   5.19%   5.26%   5.29%   5.25%   5.19%

 

(1) Efficiency ratio is noninterest expense before foreclosed property expense and amortization of intangibles as a percent of net interest income (fully taxable equivalent) and noninterest revenues, excluding gains and losses from securities transactions and non-core items.

 

Page 11

 

Simmons First National Corporation              SFNC
Reconciliation Of Non-GAAP Financial Measures - Year-to-Date            
For the Quarters Ended               
(Unaudited)  Sept 30  Jun 30  Mar 31  Dec 31  Sept 30
   2019  2019  2019  2018  2018
($ in thousands)               
Calculation of Core Return on Average Assets               
                
Net income  $185,119   $103,293   $47,695   $215,713   $160,067 
Net non-core items, net of taxes, adjustment   13,373    11,236    1,381    4,520    3,715 
Core earnings  $198,492   $114,529   $49,076   $220,233   $163,782 
                          
Average total assets  $17,140,419   $16,845,528   $16,302,197   $15,771,362   $15,573,762 
                          
Return on average assets   1.44%   1.24%   1.19%   1.37%   1.37%
Core return on average assets   1.55%   1.37%   1.22%   1.40%   1.41%
                          
Calculation of Return on Tangible Common Equity                         
                          
Net income  $185,119   $103,293   $47,695   $215,713   $160,067 
Amortization of intangibles, net of taxes   6,304    4,128    1,951    8,132    6,180 
Total income available to common stockholders  $191,423   $107,421   $49,646   $223,845   $166,247 
                          
Net non-core items, net of taxes   13,373    11,236    1,381    4,520    3,715 
Core earnings   198,492    114,529    49,076    220,233    163,782 
Amortization of intangibles, net of taxes   6,304    4,128    1,951    8,132    6,180 
Total core income available to common stockholders  $204,796   $118,657   $51,027   $228,365   $169,962 
                          
Average common stockholders' equity  $2,323,530   $2,300,535   $2,248,898   $2,157,097   $2,138,818 
Average intangible assets:                         
Goodwill   (896,236)   (880,759)   (845,688)   (845,308)   (845,180)
Other intangibles   (99,178)   (97,221)   (90,316)   (97,820)   (99,448)
Total average intangibles   (995,414)   (977,980)   (936,004)   (943,128)   (944,628)
Average tangible common stockholders' equity  $1,328,116   $1,322,555   $1,312,894   $1,213,969   $1,194,190 
                          
Return on average common equity   10.65%   9.05%   8.60%   10.00%   10.01%
Return on tangible common equity   19.27%   16.38%   15.34%   18.44%   18.61%
Core return on average common equity   11.42%   10.04%   8.85%   10.21%   10.24%
Core return on tangible common equity   20.62%   18.09%   15.76%   18.81%   19.03%
                          
Calculation of Efficiency Ratio (1)                         
                          
Non-interest expense  $319,017   $212,152   $101,409   $392,229   $296,833 
Non-core non-interest expense adjustment   (18,104)   (15,211)   (1,870)   (6,118)   (5,029)
Other real estate and foreclosure expense adjustment   (2,219)   (1,162)   (599)   (4,240)   (2,940)
Amortization of intangibles adjustment   (8,535)   (5,588)   (2,641)   (11,009)   (8,367)
Efficiency ratio numerator  $290,159   $190,191   $96,299   $370,862   $280,497 
                          
Net-interest income  $437,546   $287,382   $137,026   $552,552   $414,771 
Non-interest income   156,542    72,767    33,761    143,896    109,308 
Fully tax-equivalent adjustment   5,150    3,307    1,601    5,297    3,831 
Gain on sale of securities   (12,937)   (5,563)   (2,740)   (61)   (53)
Efficiency ratio denominator  $586,301   $357,893   $169,648   $701,684   $527,857 
                          
Efficiency ratio (1)   49.49%   53.14%   56.76%   52.85%   53.14%
                          
Calculation of Core Net Interest Margin                         
                          
Net interest income  $437,546   $287,382   $137,026   $552,552   $414,771 
Fully tax-equivalent adjustment   5,150    3,307    1,601    5,297    3,831 
Fully tax-equivalent net interest income   442,696    290,689    138,627    557,849    418,602 
                          
Total accretable yield   (26,144)   (16,822)   (6,660)   (35,263)   (31,413)
Core net interest income  $416,552   $273,867   $131,967   $522,586   $387,189 
Average earning assets  $15,326,432   $15,069,751   $14,593,905   $14,036,614   $13,837,639 
                          
Net interest margin   3.86%   3.89%   3.85%   3.97%   4.04%
Core net interest margin   3.63%   3.66%   3.67%   3.72%   3.74%
                          
Calculation of Core Loan Yield                         
                          
Loan interest income  $517,533   $337,562   $159,440   $616,037   $456,041 
Total accretable yield   (26,144)   (16,822)   (6,660)   (35,263)   (31,413)
Core loan interest income  $491,389   $320,740   $152,780   $580,774   $424,628 
Average loan balance  $12,530,348   $12,264,724   $11,710,075   $11,355,890   $11,209,992 
                          
Core loan yield   5.24%   5.27%   5.29%   5.11%   5.06%

 

(1) Efficiency ratio is noninterest expense before foreclosed property expense and amortization of intangibles as a percent of net interest income (fully taxable equivalent) and noninterest revenues, excluding gains and losses from securities transactions and non-core items.

 

 

Page 12

 


The following information was filed by Simmons First National Corp (SFNC) on Tuesday, October 22, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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