Simmons First Eyes Opportunity Backed by $70 Million Offering

Simmons First National Corp. of Pine Bluff is poised for aggressive action on the acquisition trail in 2010.

The bank holding company known for its conservative ways amassed a $70 million war chest last month through a well-received stock offering that boosted its capital to super-surplus status.

“Obviously, we’re talking about offensive capital,” said Chairman and CEO Tommy May. (See sidebar on May at bottom.)

Flush with cash, the management team at the $3 billion-asset concern is shopping for acquisitions that could boost total assets by as much as $1.5 billion during the next few years.

Simmons First has entered the fifth year of a 10-year plan to transform itself from a small super community bank to a mid-sized super community bank through opportunities in Arkansas and surrounding states.

Depending on what deals reach fruition, Simmons First could buy as many as five community banks in the $200 million-$300 million-asset range. The deals could come in the form of conventional transactions.

May said the greater opportunities during the next 18 months lie with FDIC-assisted transactions, and the company is looking to buy failed banks in good markets.

“We believe that in this particular market there will be opportunities to continue with merger and acquisitions,” he said. “We have a history of being very patient. Even though we’ve raised all of this money, we are willing to be very patient.”

Simmons First is frequently mentioned as a potential buyer of Little Rock’s Metropolitan National Bank, which has endured a combined $53 million loss during the past seven quarters.

The closest that May will come to the possibilities of a Metropolitan Bank transaction in the coming weeks is: “Central Arkansas creates a significant opportunity for us.”

Metropolitan’s 10.4 percent market share in Pulaski County deposits, third- largest, stands in marked contrast to Simmons First’s 1.23 percent stake at No. 17.

 

On The Road

May led a four-man executive team on an early November whirlwind road show in advance of the stock offering. The group made 40 presentations to 50 investment groups in 10 states in six days.

He said the groups embraced the company’s conservative culture and were happy to hear the bank’s profitable story amid the financial chaos nationally. A steady performer, Simmons First’s annual return on average equity has only fluctuated between 9.23-11.57 percent since 2001.

“That seems to have resonated with the investment community more than at any other time,” May said. “One investor remarked, ‘You know, yesterday I doubt if I even knew where Arkansas was, but it’s refreshing to hear a story like yours.’ “

Accompanying May on the road show were David Bartlett, president and chief operating officer; Robert Fehlman, executive vice president and chief financial officer; and Marty Casteel, executive vice president; and a rotating cast of Stephens Inc. executives.

Little Rock’s Stephens serves as lead book-runner and Stifel Nicolaus & Co. of St. Louis serves as joint book-runner for the Simmons stock offering. Raymond James & Associates Inc. of St. Petersburg, Fla., serves as co-manager.

May is pleased with the outcome of the stock offering after toying with the idea of participating in a $60 million Capital Purchase Plan offered by the U.S. Treasury as part of the bank bailout of 2008-09. The fourth-largest banking franchise in Arkansas, Simmons First is made up of eight community banks in Pine Bluff, Rogers, El Dorado, Jonesboro, Lake Village, Russellville, Searcy and Hot Springs.

May quotes Louis Ramsay Jr., a mentor and predecessor at Simmons First: “We don’t do extraordinary things. We do ordinary things extraordinarily well.”

The company’s credit card operations have a national reputation for low interest rates, accompanied by picky underwriting standards.

“And proud of it,” May said.

The flagship bank, corporate headquarters and branches in Pine Bluff are home to about 450 of the 1,118 Simmons First jobs. The recent stock offering gave rise to a new bout of worry that the company might move from downtown Pine Bluff.

May said any new acquisitions could only add to the local corporate staff and pose no threat to relocation.

“Any concerns that this expansion will hurt the local community are misguided,” he said.

Simmons First Bank of Northwest Arkansas in Rogers weathered the trials of its real estate market fairly well compared to other lenders in that part of the state.

“The challenges of Northwest Arkansas obviously are all about an overbuilt market,” May said. “Amazingly enough, the overall economy is still relatively good. Housing is overbuilt, but it’s going to get better. It’s all about absorption.”

How much longer will it take to find equilibrium?

“We’re going to be living with this for the next two to three years,” May said. “Our company has been blessed in that we have transitioned with this recession very well.”

 

 

 

Despite Health Challenges, Tommy May Stays Active

Tommy May maintains a busy schedule as CEO of Simmons First National Corp. even as his physical pace has slowed some since he was diagnosed in December 2005 with amyotrophic lateral sclerosis, also known as Lou Gehrig’s Disease.

His case presents a slow progression of the motor-neuron disease that affects voluntary muscle control. In the past four years, the 63-year-old executive has transitioned from a cane to a wheeled walker to aid his mobility.

Muscular degenerative in nature, ALS doesn’t pose a threat to his cognitive abilities, though May quips that some questioned his mental skills long before his 2005 diagnosis.

“Retirement is not in my immediate future,” he said. “My plans are to work for another four years until I’m 67 years old. I feel very positive that I will be able to do that.”

May sports a red wrist band on his right hand that bears the inscription “I support ALS research in the honor of Tommy May.”

The band is more than a donation magnet bearing a suggested price of a $10 donation that has raised $7,000 for research at the University of Arkansas for Medical Sciences in Little Rock.

The brainchild of Kay Shankles, an executive assistant at Simmons corporate headquarters, the band represents a talisman of affection for May by co-workers and others around the state.

“It’s not about Tommy May,” he said of his reasons for approving the gesture. “It’s about raising awareness and helping find a cure. Who’s to say it couldn’t happen tomorrow, or happen right here in Arkansas?”

In addition to his duties at Simmons, May serves on the board of directors for the Federal Reserve Bank of St. Louis and the Arkansas Research Alliance, a public-private nonprofit organization devoted to increasing university-based research and innovation as a path to developing the state’s knowledge-based economy.

May will be inducted on Feb. 12 into the Arkansas Business Hall of Fame along with the late William “Bill” Clark, CEO of Little Rock’s CDI Contractors; Jerry Jones, owner of the Dallas Cowboys; and Jim Lindsey, CEO of Fayetteville’s Lindsey Management.