Simmons First 4Q profits jump 13%, ends 2016 with assets of $8.4 billion on market-expanding acquisitions

by Wesley Brown ([email protected]) 287 views 

Simmons First National Corp. profits jumped more than 13% in the fourth quarter as the fast-growing Arkansas banking group looks to expand its reach westward in 2017 through a recently-announced acquisition.

For the year, the Pine Bluff-based company pushed its total assets closer to the much $10 billion asset level, a goal it expects to reach in the third quarter. For the period ended Dec. 31, 2016, Pine Bluff-based Simmons First reported net income of $27 million, or 85 cents per share, up 13.4% from $12.6 million, or 78 cents per share a year ago. Excluding a one-time, merger-related charge of $1.8 million, Simmons’ fourth quarter core earnings were $28.8, or 91 cents per share.

A survey of five Wall Street analysts had expected the bank to report fourth quarter earnings of 83 cents on sales of $108.8 million, according to Thomson Reuters. At the close of business, Simmons First (NASDAQ: SFNC) ended the midweek session at $59.30, up 80 cents or 1.37%. During the past 52 weeks, the share price has ranged from a $67 high to a $39.78 low. The Pine Bluff bank’s stock price has traded nearly 21% above the S&P 500 Industrial Average over the past year.

“We are very pleased with our results during the fourth quarter. Our associates are beginning to leverage our size and integrate more of our services in markets previously unserved,” said Simmons First Chairman and CEO George Makris Jr.

For the full year, the bank reported net income of $96.8 million, or $3.13 per share, up 30.6% from $74.1 million, or $2.63 per share, in the same period a year ago.

In 2016, Simmons First completed the $77 million acquisition of Citizens National Bank (CNB) of Athens, Tenn. That deal was followed up by an agreement in November to acquire Hardeman County Investment Company, Inc., a Jackson, Tenn.-based financial firm that owns First South Bank. The transaction, valued at $72.2 million, is expected to close in the first quarter.

However, it was the market-moving deal with a publicly traded banking group in central Oklahoma that is likely to push the growth-oriented Arkansas financial concern well over the $10 billion asset mark, the key financial touchstone established by the Dodd-Frank Wall Street Reform and Consumer Protection act as the regulatory baseline between super-community banks and larger regional banking groups.

On Dec. 14, Simmons First announced an agreement to acquire Stillwater, Okla.-based Southwest Bancorp Inc. in a cash-and-stock deal valued at more than $564 million, one of the largest deals in the Pine Bluff banking group’s history. In the third quarter, Southwest Bancorp reported assets of $2.5 billion. Its operating subsidiary, Bank SNB, offers commercial and deposit services from offices in Oklahoma, Kansas, Texas and Colorado.

According to the terms of the deal, which is expected to close in the third quarter of 2017, shareholders of SBI’s common stock will have the right to receive 0.3903 shares of Simmons First’s common stock and $5.11 in cash, subject to certain conditions and potential adjustments.

After closing, which is subject to approval by shareholders of both companies and state and federal regulatory endorsements, SNB is expected to continue operations as a separate bank subsidiary of Simmons for an interim period until it is fully merged into the fast-growing Arkansas financial concern.

“We are excited about our future related to our previously announced mergers. Simmons Bank will enter new and very attractive markets as a result of the Bank SNB merger and will be able to expand in our current markets with the First South Bank merger,” Makris said. “We look forward to significant growth from these mergers.”

Following are other key financial highlights from the earnings report.
• Total loans, including those acquired, were $5.6 billion at Dec. 31, 2016, an increase of $714 million, or 14.5%, compared with the same period in 2015. Legacy loans (all loans excluding acquired loans) grew $1.1 billion, or 33.3%.

• At Dec. 31, 2016, total deposits were $6.7 billion, an increase of $649 million, or 10.7%, compared to a year ago. Total assets at the end of the quarter were $8.4 billion, up 12% from $7.5 billion the same period a year ago.

• The company’s net interest income for the fourth quarter of 2016 was $74.3 million, an increase of $577,000, or 0.8%, from the same period of 2016. The net interest income was impacted by a $4.5 million decline in yield accretion on acquired loans, bank officials said.

• At Dec. 31, 2016, common stockholders’ equity was $1.2 billion, book value per share was $36.80 and tangible book value per share was $23.97.