Simmons First profit up 17%; Oklahoma, Texas acquisitions highlight busy 3Q

by Wesley Brown ([email protected]) 255 views 

Simmons First National Corp. closed out a historic third quarter with another strong earnings report that saw the Pine Bluff banking group expand its reach into Oklahoma, Texas and Colorado, the company reported on Sunday.

For the period ended Sept. 30, Simmons reported net income of $28.9 million, 89 cents per share, up 17% from 76 cents per share, for the same period in 2016. Those results included $721,000 in net after-tax merger-related and branch closure costs as well as a $1.8 million gain on the sale of insurance lines.

Excluding the impact of these items, Simmons earnings $27.7 million, or 86 cents per share in the third quarter, compared to year ago results of $24.4 million, or 79 cents per share. That met analysts’ expectations of 86 cent per share on quarterly revenue of $115.5 million, according to Thomson Reuters.

The Pine Bluff bank’s busy third quarter was highlighted by the company’s announcement on Friday (Oct. 20) that it had completed the previously announced acquisitions of Stillwater, Okla.-based Southwest Bancorp Inc. and parent company Bank SNB, and First Texas BHC Inc., or Southwest Bank for Fort Worth. Simmons has now moved well beyond its $10 billion asset goal, an industry benchmark established by the Dodd-Frank Act as the regulatory baseline between super-community banks and larger regional banking groups.

The bank first announced a definitive agreement to acquire Oklahoma’s Southwest Bancorp Inc. for $565 million in December 2016, followed a month later by a slightly smaller $462 million deal to purchase First Texas in January 2017. Shareholders of Simmons, Southwest Bancorp and First Texas each approved the transactions earlier this month.

“The third quarter was certainly an exciting and eventful quarter for us,” Simmons Chairman and CEO George Makris Jr., said in a statement. “We are pleased with the operating results from the third quarter and I am extremely proud of our associates’ ability to manage the significant transactions during the quarter while producing outstanding results. We are also excited to welcome the associates of Bank SNB and Southwest Bank to the Simmons family. We look forward to a great partnership.”

Besides the two market-moving acquisitions, Simmons was also the successful bidder at a public auction of the debt of Little Rock-based Health Bank on Aug. 28. Simmons is the sole shareholder of Heartland Bank, which remains a separately chartered state bank. Simmons is evaluating the next steps with respect to the institution.

On Sept. 1, Simmons’ insurance affiliates completed the sale of their property and casualty insurance business lines, posting an after-tax gain of $1.8 million after the deal.  Tangible common equity was positively impacted by $7.2 million due to a reduction in intangible assets related to the sold business. The Pine Bluff regional bank also completed its conversion and integration of First South Bank of Tennessee into its Simmons Bank subsidiary. That $72 acquisition was first announced nearly a year ago.

Before Sunday’s third quarter earnings report, Simmons officials said the Arkansas bank will have more than $14 billion in assets, nearly $10.4 billion in loans, and $11.2 billion in deposits across a seven-state footprint that includes Arkansas, Colorado, Kansas, Missouri, Oklahoma, Tennessee and Texas.

Following are other selected financial highlights from the third quarter earnings report.
• Simmons’ net interest income for the third quarter of 2017 was $78.8 million, an increase of $10.8 million, or 15.8%, from the same period of 2016. Included in interest income was the yield accretion recognized on loans acquired of $2.9 million and $4.9 million for the third quarter of 2017 and 2016, respectively.

• For the period ended Sept. 30, Simmons total deposits were $7.3 billion, an increase of 10.7%, compared to the same period in 2016. The increase is from recent acquisitions and growth in core deposits.

• Simmons’ allowance for loan losses for legacy loans was $42.7 million. The allowance for loan losses for loans acquired was $391,000 and the acquired loan discount credit mark was $25 million. The allowances for loan losses and credit marks provide a total of $68.1 million of coverage, which equates to a total coverage ratio of 1.1% of gross loans. The ratio of credit mark and related allowance to loans acquired was 2.3%.

• At Sept. 30, 2017, common stockholders’ equity was $1.3 billion, book value per share was $39.03 and tangible book value per share was $25.64.

Ahead of Monday’s opening bell, Simmons’ pre-market stock price (NASDAQ: SFNC) was at $60.45. The share price has ranged between $45.01 and $67 over the past 52 weeks, and closed out last week trending up nearly 2%.