Acquisition-minded Simmons First National Corp. on Wednesday (July 19) reported second quarter profits of more than $23 million on strong loan and deposit growth as the Pine Bluff-based bank prepares to cross the $10 billion asset mark, a key milestone in the community bank’s history since its doors opened in 1903.
For the period ended June 30, Simmons report second quarter earnings of $23.1 million, or 72 cents per share, compared to $22.9 million, or 75 cents a year ago, for the same period a year ago. The results included a $3.7 million expense for after-tax merger-related and branch right-sizing costs on total revenue of $119.6 million, bank officials said.
Excluding one-time items, the bank reported core earnings of $26.8 million, or 84 cents per share, compared to $25.1 million, or 82 cents per share in the same quarter of 2016. Wall Street analysts had expected the bank to report second quarter earnings of 80 cents per share on revenue of $110.4 million, according to Thomson Reuters
During the quarter, Simmons completed the acquisition of Jackson, Tenn.-based Hardeman County Investment Company Inc., including its wholly-owned bank subsidiary First South Bank on May 15. Bank officials said the systems conversion of the Tennessee bank’s operations will take place on Sept. 5, at which time the First South Bank will be merged into Simmons Bank.
“We welcome our newest associates from the First South Bank merger into the Simmons family. We look forward to continued growth in our Tennessee markets,” said Simmons Chairman and CEO George Makris. “We are also very excited about our previously announced mergers with Southwest Bancorp, Inc. (Bank SNB) and First Texas BHC, Inc. (Southwest Bank) and the new and attractive markets they serve.”
Now with the First South merger nearly complete, Simmons will now concentrate two larger acquisitions of community banks in Oklahoma and Texas that will move the Pine Bluff bank beyond its $10 billion asset goal, 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.
In the past nine months, Simmons has announced plans to acquire three out-of-state banks for in cash-and-stock deals that could push the Pine Bluff banks’ total assets closer to Arkansas banking rivals Bank of the Ozarks, Home Bancshares and privately-held Arvest Bank by the end of 2017.
Beside First South in Tennessee, the last deal came on Jan. 23 when Simmons announced it had entered into a $462 million stock-and-cash deal with First Texas BHC Inc. in Fort Worth, Texas. 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.
At the end of 2016, 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, according to company officials, is one of the largest in the Pine Bluff banking group’s history.
Simmons officials said the merger applications for Southwest Bancorp and First Texas deals, which are expected to close in the third quarter, were filed July 14. Conversion and integration plans are also underway as the company anticipates a closing date as early as October 2017 or as late as January 2018.
Simmons’ recent growth spurt led the Pine Bluff bank to purchase the former Acxiom Corp. office tower in downtown Little Rock for an undisclosed sum earlier this year. Once the Southwest Bancorp and First Texas deals, Simmons will have operations across seven states, including Arkansas, Kansas, Missouri, Tennessee, Oklahoma, Texas and Colorado.
“We had solid results in the second quarter. Our loan growth continues to be strong. We are experiencing some upward pressure on cost of funds which is currently prohibiting an expansion in the net interest margin,” Makris said. “We continue to expand our risk management programs in anticipation of surpassing $10 billion in assets within the next few months. All-in-all, we feel we are well-prepared for continued growth both organically and through acquisitions.”
Following are other key financial highlights from the second quarter earnings report.
• Total loans, including those acquired, were $6.2 billion at June 30, an increase of $1.2 million, or 24.2%, compared with the same period in 2016. Legacy loans (all loans excluding acquired loans) grew $1.3 billion, or 34.2%.
• For the quarter, total deposits were $7.1 billion, an increase of $1.1 million, or 17.8%, compared to a year ago. The majority of the spike in deposits resulted from accounts acquired in acquisitions, company officials said. Total assets at the end of the quarter were $9 billion, up 20% from $7.5 billion the same period a year ago.
• The company’s net interest income for the second quarter was $76.8 million, an increase of $10.2 million or 15.4% from the same period of 2016. Net interest margin was 4.04% for the quarter ended June 30, a 10 basis point decline from the same quarter of 2016.
• Common stockholders’ equity in the second quarter was $1.2 billion, book value per share was $38.31 and tangible book value per share was $24.71.
Simmons’ shares (NASDAQ: SFNC) closed Wednesday at $52.55, up 35 cents. During the past 52 weeks the share price has ranged between $45.01 and $67.