Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Q3 2021 Earnings Presentation
34 slides from Simmons First National's earnings presentation, Oct 26, 2021
Slide 1: 3rd Quarter 2021 Earnings Presentation
Contents 3 Q3 Key Highlights 4 Q3 Results Overview 11 Loans 16 Deposits, Liquidity, Securities, Interest Rate Sensitivity & Capital 21 Credit Quality 24 Key Takeaways and Management Outlook 26 Appendix 3 rd Quarter 2021 Earnings Presentation | NASDAQ: SFNC
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
2 Forward - Looking Statements and Non - GAAP Financial Measures Forward - Looking Statements . Certain statements by Simmons First National Corporation (the “Company”, which where appropriate includes the Company’s wholly - owned banking subsidiary, Simmons Bank) contained in this presentation may
Slide 3: Q3 21 Highlights
(1) Non - GAAP measures that management believes aids in the discussion of results. See Appendix for Non - GAAP reconciliation (2) Market conditions and our capital needs will drive the decisions regarding additional, future stock repurchases. Q3 21 Highlights 3 1 2 3 4 5 Strong capital position and
Slide 4: Q3 Results Overview
Q3 21 Results Overview 4
Slide 5: M&A: In just months since the date of the announcement
5 M&A : In just 4 months since the date of the announcement… June 7 Press Release Announced agreements to acquire 2 Tennessee banks Jun - Aug Regulatory filings S - 4 filed on 7/21 S - 4 effectiveness order 8/5 FRB filing on 6/29 FRB approval announced 8/12 Sept Shareholder Approval Landmark shareho
Slide 6: Summary Income Statement
Summary Income Statement YTD $ in millions, except per share data Q3 21 Q2 21 Q3 20 Q2 21 Q3 20 Q3 21 Interest income $163.9 $167.0 $179.7 (2) % (9) % $ 500.3 (14) % Interest expense 18.7 20.4 26.1 (9) (28) 61.9 (35) Net interest income 145.2 146.5 153.6 (1) (5) 438.5 (10) Noninterest income (1) 48.
Slide 7: Net Interest Income and Margin
$147.5 $149.4 $144.2 $145.5 $146.1 $156.5 $158.4 $150.8 $151.1 $150.2 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 CORE NII (1) Net Interest Income (1) Non - GAAP measure that management believes aids in the discussion of results. See Appendix for Non - GAAP reconciliation FTE – fully taxable equivalent Net Intere
Slide 8: Noninterest Income
(1) During 2021, certain debit and credit card transaction fees were reclassified from noninterest expense to noninterest in com e under the caption debit and credit card fees. Prior periods have been adjusted to reflect this reclassification (2) Non - GAAP measure that management believes aids in t
Slide 9: Noninterest Expense
2.12% 2.14% 2.30% 1.99% 1.97% 1.97% 2.04% 2.07% 2.07% 1.97% 1.95% 2.00% Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Noninterest Expense Core Noninterest Expense (2) (1) During Q221, certain debit and credit card transaction fees were reclassified from noninterest expense to noninterest in com e under the ca
Slide 10: Transformation of distribution model reflects shift in customer usage
Q3 20 Q4 20 Q3 21 Q3 20 Q4 20 Q3 21 Branch Transactions Digital Transactions Transformation of distribution model reflects shift in customer usage Branch Rationalization 251 240 226 226 204 198 198 185 4Q 19 1Q 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Location Date Closed Number of Branches One - time
Slide 11: Loans
LOANS 11
Slide 12: Loan Portfolio: Elevated loan origination volume in the quarter
Loan Portfolio: Elevated loan origination volume in the quarter… 12 PPP – Paycheck Protection Program Loan Portfolio Waterfall $ in millions Total loans at 6/30/21 Originations /Advances PPP Forgiveness Paydowns/ Payoffs & Other Total loans at 9/30/21 … offset by PPP forgiveness, planned run - off a
Slide 13: Commercial loan pipeline increases for the 4th consecutive quarter
Commercial loan pipeline increases for the 4 th consecutive quarter… 13 (1) Quarterly amounts adjusted for branches sold in South Texas and Colorado during 2020 and Illinois in 2021 … suggesting loan demand is trending in a positive direction Commercial Loan Pipeline by Category (1) $ in millions $6
Slide 14: Mortgage Loan Volume – Closed and Pipeline
Mortgage Loan Volume – Closed and Pipeline 14 $ in millions $126 $224 $243 $181 $183 $319 $408 $399 $326 $274 $242 $77 $92 $86 $51 $145 $239 $307 $214 $166 $120 $97 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Mortgage Closed Loan Volume Mortgage Pipeline Volume Mortgage origina
Slide 15: Breakout: Loan Portfolio by Category
Breakout: Loan Portfolio by Category 15 as of June 30, 2021 as of September 30, 2021 $ in millions Balance $ % of Total Loans Balance $ % of Total Loans Classified $ Nonperforming $ ACL % Unfunded Commitment $ Unfunded Commitment Reserve Total Loan Portfolio Consumer - Credit Card 178 1% 176 2% 1 1
Slide 16: Deposits, Liquidity, Securities, Interest Rate Sensitivity and Capital
DEPOSITS, LIQUIDITY, SECURITIES, INTEREST RATE SENSITIVITY AND CAPITAL 16
Slide 17: Deposits: Strategically changed the mix and cost structure
Deposits: While demonstrating our ability to generate deposits… 17 … we have also strategically changed the mix and cost structure $ in billions 1.09% 0.94% 0.80% 0.44% 0.39% 0.34% 0.30% 0.24% 0.20% 0.15% 0.25% 0.35% 0.45% 0.55% 0.65% 0.75% 0.85% 0.95% 1.05% 1.15% $0.0 $2.5 $5.0 $7.5 $10.0 $12.5 $15
Slide 18: Liquidity, Securities and Interest Rate Sensitivity
18 FTE – fully taxable equivalent Cash and Cash Equivalents $ in millions Securities Portfolio Summary $ in millions Liquidity, Securities and Interest Rate Sensitivity As of 9/30/21 Par Value Yield (FTE) Effective Duration AFS HTM Fixed Rate MBS $2,938 1.24% 3.76 98% 2% Municipal 2,702 2.68% 8.11 5
Slide 19: Strong Capital Position
9.8% 10.2% 10.9% 13.4% 14.3% 2017 2018 2019 2020 Q3 21 W ELL C APITALIZED 8.0% 9.8% 10.2% 10.9% 13.4% 14.3% 2017 2018 2019 2020 Q3 21 11.4% 13.4% 13.7% 16.8% 17.4% 2017 2018 2019 2020 Q3 21 9.2% 8.8% 9.6% 9.1% 9.1% 2017 2018 2019 2020 Q3 21 (1) As of December 31, except where otherwise stated (2) No
Slide 20: Book Value, Tangible Book Value and Capital Returns
$22.65 $24.33 $26.30 $27.53 $27.04 $28.03 $28.42 2017 2018 2019 2020 Q1 21 Q2 21 Q3 21 (1) As of December 31, except where otherwise stated (2) Non - GAAP measure that management believes aids in the discussion of results. See Appendix for Non - GAAP reconciliation (3) Based on October 13, 2021 clos
Slide 21: Q3 Credit Quality
Q3 21 Credit Quality 21
Slide 22: Credit Quality: Commitment to strong underwriting standards
Source: S&P Global Market Intelligence 2016 - 2020 (which metrics are as of December 31 of the relevant year) (1) ALLL for 2016 – 2019 and ACL 2020 – 2021 Q3 (2) YTD annualized net charge - offs 22 Nonperforming loans / Loans ACL/ALLL (1) / Loans (%) and ACL/ALLL ($) Nonperforming Assets / Assets Cr
Slide 23: Allowance for Credit Losses: Reflects continued improvement
ACL = Allowance for Credit Losses on Loans (1) Non - GAAP measure that management believes aids in the discussion of results. See Appendix for Non - GAAP reconciliation 23 Reserve for Unfunded Commitments Allowance for Credit Losses (ACL): Reflects continued improvement… … in credit quality trends a
Slide 24: Key Takeaways and Management Outlook
Key Takeaways and Management Outlook 24
Slide 25: Key Takeaways and Management Outlook
Key Takeaways and Management Outlook 25 1 Effectively managing the current economic environment without sacrificing future growth potential 2 Committed to maintaining a strong credit culture and capital position that reflects our risk profile while returning excess capital to shareholders 3 Reinvest
Slide 26: Appendix
APPENDIX 26
Slide 27: Reconciliations: Return on Tangible Common Equity
27 Non - GAAP Reconciliations Q3 Q2 Q3 YTD $ in thousands 2017 2018 2019 2020 2020 2021 2021 2021 Calculation of Return on Tangible Common Equity Net income available to common stockholders $ 92,940 $ 215,713 $ 237,828 $ 254,852 $ 65,885 $ 74,911 $ 80,561 $ 222,879 Amortization of intangibles, net o
Slide 28: Reconciliations: Core Noninterest Income to Revenue
FTE – full - time equivalent 28 Non - GAAP Reconciliations Q3 Q4 Q1 Q2 Q3 $ in thousands 2020 2020 2021 2021 2021 Calculation of Core Noninterest Income to Revenue Net Interest Income $ 153,610 $ 154,960 $ 146,681 $ 146,533 $ 145,237 Noninterest income 69,479 _____41,761 ___49,549 ____47,115 48,550
Slide 29: Reconciliations: Efficiency Ratio
(1) Effective tax rate of 26.135%for 1018 – 2021 and 39.225% for 2017, adjusted for non - deductible merger - related costs and deferred tax items on P&C (2) Efficiency ratio is core noninterest expense before foreclosed property expense and amortization of intangibles as a percent of net interest i
Slide 30: Reconciliations: Core Net Interest Margin
30 Non - GAAP Reconciliations Q3 Q4 Q1 Q2 Q3 $ in thousands 2020 2020 2021 2021 2021 Calculation of Core Net Interest Margin Net interest income $ 153,610 $ 154,960 $ 146,681 $ 146,533 $ 145,237 Fully tax - equivalent adjustment 2,864 3,482 4,163 _______4,548 4,941 Fully tax - equivalent net interes
Slide 31: Reconciliations: Book Value and Tangible Book Value per Share
31 Non - GAAP Reconciliations $ in thousands, except per share and share count 2017 2018 2019 2020 Calculation of Book Value and Tangible Book Value per Share Total common stockholders' equity $ 2,084,564 $ 2,246,434 $ 2,988,157 $ 2,975,889 Intangible assets: Goodwill (842,651) (845,687) (1,055,520)
Slide 32: Reconciliations: Core Loan Yield
32 Non - GAAP Reconciliations Q3 Q4 Q1 Q2 Q3 $ in thousands 2020 2020 2021 2021 2021 Calculation of Core Loan Yield Loan interest income (FTE) $ 163,379 $ 160,306 $ 146,601 $ 138,987 $ 132,399 Total accretable yield (8,948) (8,999) (6,630) ______(5,619) (4,122) Core loan interest income (non - GAAP)
Slide 33: Reconciliations: Tier 1 Leverage Ratio Excluding PPP Loans
Non - GAAP Reconciliations 33 Q3 Q4 Q1 Q2 Q3 $ in thousands 2020 2020 2021 2021 2021 Calculation of Regulatory Tier 1 Leverage Ratio Excluding Average PPP Loans Total Tier 1 capital $ 1,868,173 $ 1,884,563 $ 1,939,868 $ 2,000,023 $ 2,012,059 Adjusted average assets for leverage ratio $ 20,652,454 $
Slide 34: Contents
Contents 3 Q3 Key Highlights 4 Q3 Results Overview 11 Loans 16 Deposits, Liquidity, Securities, Interest Rate Sensitivity & Capital 21 Credit Quality 24 Key Takeaways and Management Outlook 26 Appendix 3 rd Quarter 2021 Earnings Presentation | NASDAQ: SFNC
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