Simmons First sees quarterly income decline, but earnings beat market expectations

Pine Bluff-based Simmons First National Corp. posted third quarter net income of $65.9 million, down from the $81.8 million in the same period of 2019. Revenue during the quarter was $225.461 million, below the $233.939 million in the 2019 quarter.

The per share earnings of 60 cents beat the consensus estimate among analysts of 40 cents, and the revenue beat the consensus estimate of $208.62 million.

Third quarter numbers included a one-time charge of $2.5 million in costs related to mergers, retirement programs and closing branch bank operations.

Total loans from the second to the third quarter fell 4%, with George Makris Jr., chairman and CEO of the bank holding company, noting that loan demand is “very weak in almost every aspect of our commercial economy.” He said the bank did well in the quarter despite headwinds primarily caused by the COVID-19 pandemic.

“We are very proud of our results under these trying conditions. We have experienced very meaningful shifts in consumer habits which we believe will impact our delivery of products and services as well as the retail delivery of everyday amenities.Our investment in digital channels will continue to position our company for these changes and our associates are ready for the new normal,” Makris, Jr., noted in the earnings report.

Net income in the first nine months of the year totaled $201.897 million, better than the $185.119 million in the same period of 2019. Simmons in 2019 acquired 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.

Following are other metrics and actions from the third quarter earnings report.
• Total assets of Sept. 30 were $21.437 billion, above the $17.758 billion as of Sept. 30, 2019.
• Total deposits of Sept. 30 were $16.246 billion, above the $13.468 billion as of Sept. 30, 2019.
• Return on assets, a key metric in the banking industry, was 1.2% at the end of the third quarter, down from the 1.83% at the end of the 2019 third quarter.
• As of Sept. 30, 2020, Payroll Protection Program (PPP) loans totaled $970.5 million.
• As of Sept. 30, 2020, foreclosed assets and other real estate owned were $12.6 million, down 35.7% compared to the same period in 2019.
• The bank closed 23 branch locations on Oct. 9, 2020, with an expected net annual cost savings of approximately $6.7 million. The bank also closed 11 branch locations during the second quarter of 2020, with estimated net annual cost savings of approximately $2.4 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) opened Monday at $15.59. During the past 52 weeks the share price has ranged between $27.29 and $13.75.