Simmons First 2Q profits up $2 million over 2018

by Wesley Brown (wesbrocomm@gmail.com) 316 views 

Simmons First National Corp., which has moved its regional headquarters for central Arkansas to the former Acxiom building in Little Rock and established a foothold in the larger St. Louis market, posted second quarter profits of nearly $56 million on Tuesday (July 23).

For the period ended June 30, Simmons reported net income of $55.6 million, or 58 cents per share, up $2 million compared to $53.6 million, or 58 cents per share, in the same period a year ago. Included in second quarter 2019 results were $9.9 million in net after-tax merger-related, early retirement program and branch right-sizing costs.

Excluding the impact of those items, core earnings for the quarter ended June 30, 2019 were $65.5 million or 68 cents per share, up 15.3% from $54.7 million or 59 cents in the same period in 2018. Wall Street had expected the Arkansas regional bank to report second quarter earnings of 58 cents per share, according to Thomson Reuters.

During the second quarter, Simmons First completed its acquisition of St. Louis-based Reliance Bancshares Inc. in a $214 million cash-and-stock deal first announced in November. That deal continues a trend of growth through acquisition into larger markets for the Pine Bluff-based regional bank, which completed two of its largest deals valued at more than $1 billion in September 2017 with the buyout of Stillwater, Okla.-based Southwest Bancorp Inc. and First Texas BHC Inc. in Ft. Worth, Texas.

“We are very pleased with the results of our second quarter operations. We closed our acquisition of Reliance Bank in St. Louis and converted systems on April 12, finishing the quarter with just under $18 billion in assets,” said Simmons First Chairman and CEO George Makris Jr.

He also highlighted the bank’s organic loan and core deposit growth in the second quarter, noting that Simmons “loan pipeline is still very strong” with over $400 million approved and ready to close.

“We maintained a stable net interest margin and we improved our overall asset quality. We are very proud of our expense management demonstrated this quarter,” Makris continued. “We also completed the move to our new Little Rock corporate offices in the vibrant River Market area of downtown.”

Companywide, Simmons’ reported total loans of $13.1 billion, up 15.5% or $1.8 billion from $11.4 billion in the same period of 2018. The bank’s legacy loan portfolio, which excludes loans from acquisitions, also grew by 31% to $9.3 billion, up from $7.1 billion in the same period of 2018. Bank officials said organic loan growth, primarily in the real estate portfolio, accounted for nearly $387 million of the bank’s loan growth.

With the Reliance acquisition now on the books, Simmons’ total assets for the second quarter rose 10.5% to $17.9 billion, compared to $16.2 billion a year ago. During the quarter, foreclosed assets and other real estate owned were $24.8 million, a decrease of $5.7 million, or 18.8%, compared to the same period in 2018 and an increase of $5.8 million, or 30.7%, from March 31, 2019. The increase of $7.1 million in acquired foreclosed assets was due to the merger during the quarter.

Total deposits for the quarter $13.5 billion, an increase of $1.6 billion, or 13.1%, from a year ago. Simmons officials said total deposits increased over the three-month period by $1.2 billion due to the Reliance Bank merger and $322 million from organic deposit growth.

Simmons’ net interest income for the second quarter of 2019 was $150.4 million, an increase of $13.5 million, or 9.9%, from the same period of 2018. Included in interest income was the yield accretion recognized on loans acquired of $10.2 million and $10.1 million for the second quarters of 2019 and 2018, respectively.

Non-interest expense for the second quarter of 2019 was $110.7 million, an increase of $12.2 million compared to the second quarter of 2018. Included in this quarter were $13.3 million of pre-tax non-core items, including $7.5 million in merger-related costs totaled $7.5 million, early retirement program expenses of $2.9 million. Notably, branch right-sizing costs, primarily related to the relocation of the Little Rock corporate offices, were also $2.9 million.

Excluding these expenses, core non-interest expense was $97.4 million for the second quarter of 2019, an increase of $378,000 compared to the same period in 2018. Company officials said software and technology costs increased by nearly $2.2 million from the prior year as the bank’s next generation technology initiative is progressing on schedule.

Early in 2019, Simmons said it offered some qualifying associates an early retirement option resulting in $2.9 million of non-core expense during the second quarter. The Arkansas regional banking group expects ongoing net annualized savings of approximately $4.4 million.

As of June 30, Simmons’ common stockholders’ equity was $2.5 billion, book value per share was $25.57, and tangible book value per share was $14.90. Through its banking subsidiaries, Simmons now has financial operations in Arkansas, Colorado, Illinois, Kansas, Missouri, Oklahoma, Tennessee and Texas.

Following Tuesday’s earnings report, Simmons shares (NASDAQ: SFNC) were trending up 2.63%, or 61 cents at $23.83. The bank’s share price has ranged between $22.08 and $32.45 over the past 52 weeks.

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