Simmons First’s 2018 profit streak continues, posts 3Q earnings of $55 million

by Wesley Brown ([email protected]) 324 views 

Simmons First National Corp. kept its streak of record quarterly profits in 2018 by nearly doubling its earnings from a year ago as the Pine Bluff-based banking group rests from a busy period of acquisitions.

Still, the Arkansas financial concern’s shares flirted with a 52-week low in Monday trading session on the Nasdaq stock exchange as regional banks that service rural and Main Street consumers try to quell concerns about rising interest rates. Last week, Simmons’ rival Bank OZK offered mixed earnings results, while Home Bancshares reported solid profits.

For the period ended Sept. 30, Simmons reported net income of $55.2 million, or 59 cents per share, up 91.3% compared to $28.9 million or 44 cents per share in the same period of 2017. The quarterly results included after-tax merger-related expenses and “branch right-sizing costs” of $1.3 million related to key acquisitions in 2017.

Excluding those items, the Arkansas regional bank reported earnings of $56.5 million, or 61 cents for the third quarter, compared to $27.7 million in the same period a year ago, an increase of $28.8 million, or 104%. Wall Street had expected the bank to report second quarter earnings of 58 cents per share, according to Thomson Reuters.

The record earnings report follows another best-ever, profit-production in the previous two quarters when Simmons reported earnings of $54.7 million and $51.3 million, respectively. Simmons Chairman and CEO George Makris said the company will now focus on moving forward with operations in seven states, including Arkansas.

“We are proud to again report record earnings for this quarter building off the strong results in the first half of the year,” said Makris. ”We continue to experience excellent organic growth in all of our markets. We are also very pleased that we have been able to balance year-to-date loan yields with deposit costs in this rising-rate environment.”

More than a year ago, Simmons completed two of the biggest acquisitions in the company’s history, paying just over $1 billion. In September 2017, Simmons completed its previously announced acquisitions of Stillwater, Okla.-based Southwest Bancorp Inc. and parent company Bank SNB, and First Texas BHC Inc., or Southwest Bank of Fort Worth. The out-of-state acquisitions helped to double Simmons’ first quarter earnings to $51.3 million, up from $22.1 million in the previous year.

“The system conversions and integration for our most recent acquisitions are now complete and we are excited to turn our focus on expanding our products and services throughout our Simmons First larger footprint,” Makris said of the bank’s operations in Arkansas, Colorado, Kansas, Missouri, Oklahoma, Tennessee and Texas.

In the first quarter, the Pine Bluff bank also completed a successful $330 million public two-for-one stock offering, using nearly $22 million of the net proceeds to reduce outstanding debt and fund other corporate expenses, officials said. The Arkansas regional bank closed eight branch locations and two mobile branch locations in September, which provided annual cost savings of nearly $2.2 million.

“Management continuously evaluates the company’s branch network to determine the locations that are meeting the greatest needs of its customers,” bank officials said.

In the third quarter, the record earnings were primarily driven by total loans of $11.9 billion, up from $10.8 billion in the fourth quarter of 2017 following the two acquisitions. The bank’s legacy loan portfolio also increased 55.8% to $8.1 billion, up from $5.2 billion in the same period of 2017.

Following are other items included in the second quarter earnings report:

• Simmons’ net interest income for the second quarter was $243 million, an increase of $64.1 million, or 81.4%, from the same period of 2017. Included in interest income was the yield accretion recognized on loans acquired of $10 million and $2.9 million for the first quarter of 2018 and 2017, respectively.

• For the three months ended Sept. 30, total deposits were $12.1 billion, an increase of 68.3%, compared to the same period in 2017. Entering the fourth quarter, Simmons had total assets of $16.3 billion.

• As of Sept. 30, common stockholders’ equity was $2.2 billion, book value per share was $23.66 and tangible book value per share was $13.48.

In Monday’s trading session, Simmons shares touched a yearly low before reversing course and closing at $25.64, down 76 cents. More than 563,000 shares traded hands, nearly double normal volume. The bank’s share price has ranged between $25.40 and $33.45 over the past 52 weeks.