Simmons First quarterly income and revenue beat estimates, bank boosts digital deposits

by Michael Tilley ([email protected]) 725 views 

Pine Bluff-based Simmons First reported second quarter net income and revenue that beat the consensus estimate, and deposit and total asset gains thanks to acquisitions made in 2019. The bank also said it now processes more deposits by digital means than in branches.

The bank holding company on Tuesday (July 21) posted second quarter net income of $58.8 million, just ahead of the $56.6 million in the same quarter of 2019. The 54 cents per share was well ahead of the 33 cents that was the consensus estimate of analysts.

Net income in the first half of 2019 was $136 million, up from $103.3 million during the same quarter of 2019.

Revenue in the quarter was $213.908 million, up 13% from the $189.362 million in the same quarter of 2019. The revenue also beat the consensus estimate of $204.98 million.

Revenue and income were bolstered by the 2019 acquisitions of Reliance Bank in St. Louis and Landmark Bank in Columbia, Mo., which added $4.9 billion in assets to Simmons First operations. Simmons paid $435 million in an all stock deal to acquire Landmark, and paid $214 million in a cash and stock deal to acquire Reliance Bank.

George Makris, Jr., chairman and CEO of Simmons First National Corp., said the company continues to respond to operating in the COVID-19 economy and called on a “sustainable plan” for opening the economy and schools nationwide.

“Our associates at Simmons Bank have done an amazing job of adapting to the changes that have occurred over the past four months,” Makris, Jr., said in the earnings report. “We continue to operate in an uncertain environment, and we will continue to adjust as necessary. We have consolidated various operations to provide capacity for continued service to our customers and communities. Our digital banking options have been very well received by our customers, and we expect to continue to see the trend toward more self-service. We need a sustainable plan for the opening of the economy, including public education across the country. We remain optimistic we will get one soon.”

The company reported the addition of more than 38,000 new digital banking users since February 2020, a 23% increase. More than 78% of deposit transaction accounts are now enrolled in digital banking, according to the company.

“For the first time, in March, the Company processed more weekly transactions using the digital channels than at the branches. During May 2020, the Company completed the conversion of all consumer customers to the new online platform. All consumer customers are now on the same online and mobile platforms, including acquired institutions,” the company noted in Tuesday’s earnings report.

Simmons closed 11 branch locations during June 2020, with estimated net annual cost savings of $2.4 million related to these locations. Bank officials also expect to close another 23 branch locations and one loan production office during the fourth quarter of 2020, with an expected net annual cost savings of $6.8 million.

Following are other highlights from the second quarter report.
• Total assets at the end of the quarter totaled $21.903 billion, up from $17.937 billion at the end of the same quarter in 2019.
• Total deposits at the end of the quarter totaled $16.6 billion, up from $13.5 billion at the end of the same quarter in 2019.
• Return on assets, a key metric in the banking industry, was 1.08% at the end of the second quarter, down from 1.28% at the end of the same quarter in 2019.
• Total loans were $14.6 billion at June 30, 2020, an increase of $1.5 billion, or 11.3%, compared to June 30, 2019, primarily due to The Landrum Company merger completed during the fourth quarter 2019.
• During the second quarter of 2020, the Company had $963.7 million in loan originations under the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and an increase in agricultural loans of $26.2 million.

Simmons First National Corp. is a financial holding company with operations in Arkansas, Illinois, Kansas, Missouri, Oklahoma, Tennessee and Texas. Simmons shares (NASDAQ: SFNC) closed Monday at $15.90, and was trading almost 8% higher in midday trading Tuesday. During the past 52 weeks the share price has ranged between $27.29 and $13.75.