Simmons first quarter income down by $1.4 million, bank officials tout recent deals

Shareholder profits at Simmons First National Corp. declined by $1.4 million in the first quarter, but company officials were upbeat as the fast-growing regional financial group looks forward to completing two acquisitions that will expand the bank’s reach into seven states.

For the period ended March 13, the Pine Bluff-based banking group reported first quarter earnings of $22.1 million, or 70 cents per share, down 6% from nearly $23.5 million, or 77 cents per share in the same period a year ago. Wall Street analysts had expected the Arkansas bank to report quarterly earnings of 82 cents per share on revenue of $107.5 million, according to Thomson Reuters.

“We are satisfied with our operating results during the first quarter,” said Simmons Chairman and CEO George Makris Jr. “We continue to experience excellent loan growth throughout our market. While our core expense control remains relatively stable, our non-interest income experienced some usual seasonal declines along with a softer mortgage market during the first quarter.”

Makris also noted that the growth-oriented Arkansas bank will soon cross 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.

“As we prepare for the $10 billion asset threshold, we have managed to offset most of our increases in audit and regulatory affairs expenses with economies gained because of our size and scale,” Makris said.

In the past six months, Simmons has announced plans to acquire three out-of-state banks for in cash-and-stock deals that will likely push the Pine Bluff banks’ total assets to more than $13 billion by the end of 2017. The last deal came on Jan. 23, when Simmons announced it had entered into a $462 million stock-and-cash deal with First Texas is the parent company of Southwest Bank, which has 16 branch locations in Fort Worth, Dallas, Arlington, Burleson, Grapevine, Mansfield and Saginaw and mortgage operations in Fort Worth, Dallas and Austin.

Simmons’ announced an even larger deal on Dec. 14 when it entered into an agreement to acquire Stillwater, Okla.-based Southwest Bancorp Inc. in a cash-and-stock deal valued at more than $564 million. That deal, one of the largest in the Pine Bluff banking group’s history, is expected to close in the third quarter.

That deal was preceded by the bank’s recently closed deal 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, allows the Arkansas bank to expands its operations in western Tennessee.

Altogether, the three recent deals would push Simmons assets to more than $13 billion, where it will join Conway-based Home Bancshares, Bank of the Ozark and Arvest as the state’s only regional banks. Both the Southwest Bancorp and First Texas deals are expected to close during the third quarter of 2017. Simmons’ recent growth spurt led the Pine Bluff bank to purchase the former Acxiom Corp. office tower in downtown Little Rock last month for an undisclosed sum.

“We are excited about our previously announced mergers. As we have indicated, Simmons Bank will enter new and very attractive markets as a result of the Bank SNB and Southwest Bank mergers and will be able to expand in our current markets with the First South Bank merger. We look forward to closing these mergers and integrating these new markets,” Makris noted.

Following are other key financial highlights from the first quarter earnings report.
Total loans, including those acquired, were $5.8 billion at March 31, 2017, an increase of $847 million, or 17.2%, compared with the same period in 2016. Legacy loans (all loans excluding acquired loans) grew $1.2 billion, or 33.4%.

On March 31, 2017, total deposits were $6.8 billion, an increase of $709 million, or 11.7%, compared to a year ago. Total assets at the end of the quarter were $8.6 billion, up 14.7% from $7.5 billion the same period a year ago.

The company’s net interest income for the first quarter of 2016 was $72.4 million, an increase of $577,000, or 2.1%, from the same period of 2016. The net interest income was impacted negatively by a $3.7 million decline in yield accretion on acquired loans, bank officials said.

Common stockholders’ equity in the first was $1.2 billion, book value per share was $37.30 and tangible book value per share was $24.51.

Simmons’ shares (NASDAQ: SFNC) closed Wednesday at $53.80, up $1.15. During the past 52 weeks the share price has ranged between $45.90 and $67.