Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Q2 2021 Earnings Presentation
58 slides from Simmons First National's earnings presentation, Jul 27, 2021
Slide 1: Contents
Contents 4 Q2 Key Highlights 5 Q2 Results Overview 14 Loans 21 Deposits, Liquidity, Investments & Capital 27 Credit Quality 32 Performance Trends 38 Corporate Profile 46 Appendix 2 nd Quarter 2021 Investor 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: Important Additional Information and Where to Find It
3 Important Additional Information and Where to Find It This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the proposed transactions (“Proposed Transactions”) with Landmark Community
Slide 4: Q221 Key Highlights
(1) Non - GAAP measures that management believes aids in the discussion of results. See Appendix for Non - GAAP reconciliation. (2) Represents the estimated combined impact to EPS for the pending acquisitions of Landmark Community Bank and Triumph Banc sha res, Inc. in the first full - year of opera
Slide 5: Q221 Results Overview
Q221 Results Overview 5
Slide 6: M&A: Adding scale in key growth markets
Source: S&P Global Market Intelligence; SFNC financial data as of June 30, 2021, Landmark and Triumph data as of March 31, 20 21. (1) Based on deposit market share data as of June 30, 2020. (2) Estimated EPS accretion in first full year excluding one - time merger related costs; estimated impact on
Slide 7: Summary Income Statement
Summary Income Statement CORE (2) $ in millions Q221 Q121 Q220 Q121 Q220 Q221 Interest income $167.0 $169.4 $191.7 (1) % (13) % $ 167.0 (1) % Interest expense 20.4 22.8 28.0 (10) (27) 20.4 (10) Net interest income 146.5 146.7 163.7 - (10) 146.5 - Noninterest income (1) (2) 47.9 50.3 48.8 (5) (2) 47.
Slide 8: Net Interest Income and Margin
$154.3 $147.5 $149.4 $144.2 $145.5 $166.0 $156.5 $158.4 $150.8 $151.1 Q220 Q320 Q420 Q121 Q221 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. Net Interest Income and Margin 8 Net Interest
Slide 9: Noninterest Income
(1) During Q221, 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
Slide 10: Noninterest Expense
(1) During Q221, 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 restated to reflect this change. (2) Non - GAAP measure that management believes aids in the discus
Slide 11: Branch Rightsizing Initiative
Branch Rightsizing Initiative 11 Location Date Sold Number of Branches Deposits in millions Loans in millions Gain on Sale in millions South TX Feb. 2020 5 $140 $261 $5.9 Colorado May 2020 4 $63 $121 $2.2 Illinois Mar. 2021 4 $138 $0.4 $5.3 Location Date Closed Number of Branches One - time Charge i
Slide 12: Digital Banking: Deposit origination with automated ID scan
Digital Banking: Deposit origination with automated ID scan Note: No minimum balance required at account opening. A minimum of $0.01 required within 45 days of account opening. Accounts no t funded within 45 days of opening will be closed. All accounts subject to approval. Restrictions apply. Benefi
Slide 13: Digital Banking Growth
Digital Banking Growth 13 Digital Banking Users Q220 Q420 Q221 +24% Digital Banking Logins Q220 Q420 Q221 Customer Transactions by Channel Q220 Q420 Q221 Branch Transactions Digital Transactions Mobile Deposit Dollars Q220 Q420 Q221 +17% Digital up +31% +64%
Slide 14: Loans
LOANS 14
Slide 15: Loans – Including PPP Loans
Loans – Including PPP Loans as of December 31, 2020 as of June 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 189 2% 178 2% - - 3.1% - Consum
Slide 16: Loans – Excluding PPP Loans
Loans – Excluding PPP Loans as of December 31, 2020 as of June 30, 2021 $ in millions Balance $ % of Total Loans Balance $ % of Total Loans Classified $ Nonperforming $ ACL % Unfunded Commitment $ Unfunded Commitment Reserve Total Loan Portfolio (1) Consumer - Credit Card 189 2% 178 2% - - 3.1% - Co
Slide 17: Evolution of Loan Portfolio
Evolution of Loan Portfolio 17 Total loans at 12/31/19 Originations /Advances PPP, net Branch/ Loan Sales Paydowns/ payoffs & other Total loans at 12/31/20 Originations /Advances PPP, net Paydowns/ payoffs & other Total loans at 6/30/21 Includes strategic decision to exit or reduce exposure in certa
Slide 18: Commercial Loan Pipeline Trend by Category
Commercial Loan Pipeline Trend by Category (1) 18 $ in millions (1) Quarterly amounts adjusted for branches sold in South Texas and Colorado during 2020. $641 $219 $192 $247 $487 $340 $220 $90 $112 $250 $408 $484 $291 $72 $70 $177 $285 $467 4.70% 4.10% 4.37% 4.12% 3.81% 3.77% 0.00% 0.50% 1.00% 1.50%
Slide 19: Mortgage Loan Volume – Closed and Pipeline
Mortgage Loan Volume – Closed and Pipeline 19 $ in millions $126 $224 $243 $181 $183 $319 $408 $399 $326 $274 $77 $92 $86 $51 $145 $239 $307 $214 $166 $120 $0 $100 $200 $300 $400 $500 $600 $700 $800 Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121 Q221 Mortgage Closed Loan Volume Mortgage Pipeline Volum
Slide 20: PPP Loans
$ in millions Original Balance 6/30/21 Balance 3/31/21 Balance $ Change # of Loans Originated Net Fees Remaining PPP Phase I $ 976 $ 141 $ 570 $ (429) 8,208 $ 1.6 PPP Phase II 319 300 228 72 5,219 15.6 Total $ 1,295 $ 441 $ 798 $ (357) 13,427 $ 17.2 PPP Loans 20 PPP Summary ▪ PPP Loans are assigned
Slide 21: Deposits, Liquidity, Investments and Capital
DEPOSITS, LIQUIDITY, INVESTMENTS AND CAPITAL 21
Slide 22: Deposits Composition and Cost of Deposits
▪ Interest Rates – In March 2020, the Fed reduced the Fed Funds target rate by 150 basis points ▪ Interest Bearing Transaction Deposits – Rates were lowered during the latter part of the first quarter of 2020 ▪ Time Deposits – Rates were lowered during the latter part of the first quarter of 2020. B
Slide 23: Liquidity and Securities Portfolio
$655 $530 $997 $1,737 $2,545 $2,522 $3,472 $3,905 $2,339 Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121 Q221 Strategically deployed excess cash primarily into short - term securities and BOLI Down $1.6B ▪ Purchased $2.5 billion of investment securities in the quarter, including strategically redeploying a
Slide 24: Regulatory Capital Ratios
9.8% 10.2% 10.9% 13.4% 14.2% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2017 2018 2019 2020 Q221 W ELL C APITALIZED 8.0% 11.4% 13.4% 13.7% 16.8% 17.5% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2017 2018 2019 2020 Q221 9.8% 10.2% 10.9% 13.4% 14.2% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2017 2018
Slide 25: Stock Repurchase Program
Stock Repurchase Program 25 $10.1 $93.3 $0.0 $0.0 $20.0 $3.1 $0.0 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 Q419 Q120 Q220 Q320 Q420 Q121 Q221 SHARE REPURCHASES BY QUARTER ▪ Summary of stock repurchases since reinitiating program in Q4 2019: – $127 million – 6.5 million shares or ab
Slide 26: Book Value & Tangible Book Value
(1) As of December 31, except where otherwise stated. (2) Non - GAAP measure that management believes aids in the discussion of results. See Appendix for Non - GAAP reconciliation. 26 Book Value & Tangible Book Value BOOK VALUE ($ IN MILLIONS) (1) TANGIBLE BOOK VALUE PER COMMON SHARE (1)(2) BOOK VAL
Slide 27: Q221 Credit Quality
Q221 Credit Quality 27
Slide 28: Deep dive of pandemic impacted sectors
Completed a deep dive of certain pandemic impacted sectors… 28 (1) MSA concentration of entire portfolio. (2) Information based on sample size used in deep dive review of portfolio. MSA Concentration (1) Retail Tenancy Mix (2) by square feet Retail MSA Concentration (1) Office Tenancy Mix (2) by squ
Slide 29: Improving health of each portfolio; COVID-19 loan modifications
… that confirmed the improving health of each of our portfolios 29 Retail Office Hotel Evolution of COVID - 19 Loan Modifications $ in millions 6/30/20 3/31/21 6/30/21 Balance of loans modified $3,495 $208 $134 # of loans classified as modified 4,755 79 36 $0 $200,000 $400,000 $600,000 $800,000 No C
Slide 30: Asset Quality Trends
ASSET QUALTY TRENDS Credit Quality $ in millions Source: S&P Global Market Intelligence 2013 - 2020 (which metrics are as of December 31 of the relevant year) (1) ALLL for 2013 – 2019 and ACL 2020 – 2021 Q2. (2) YTD annualized net charge - offs. Nonperforming Loans / Loans 3.33% 2.50% 1.44% 1.68% 0.
Slide 31: Allowance for Credit Losses on Loans and Loan Coverage
$ ALLL or ACL Loan Discount Total Loan Coverage ACL (ALLL)/ Loans ACL (ALLL)/ Loans excluding PPP (1) ALLL as of 12/31/19 $ 68.2 $ 87.3 $ 155.5 0.47% 0.47% CECL Day 1 Adoption Impact 151.4 (87.3) 64.1 2020 Provision Expense 82.5 82.5 2020 Net charge - offs (64.1) (64.1) ACL as of 12/31/20 $ 238.0 $
Slide 32: Performance Trends
PERFORMANCE TRENDS 32
Slide 33: Net Interest Income
HISTORICAL LOAN DISCOUNT BALANCE & ACCRETION INCOME (1) Fully tax equivalent using an effective tax rate of 26.135%. (2) Non - GAAP measure that management believes aids in the discussion of results. See Appendix for Non - GAAP reconciliation. 33 Net Interest Income 2021 SCHEDULED ACCRETION Q1 (Actu
Slide 34: Performance Trends
(1) As of December 31, except where otherwise noted. (2) Efficiency ratio is core noninterest expense before foreclosed property expense and amortization of intangibles as a percent of net interest income (fully taxable equivalent) and non - interest revenues, excluding gains and losses from securit
Slide 35: Performance Trends: ROA, ROTCE, ROACE
Note: Core figures exclude non - core income and expense items (e.g., early retirement program costs, gain on early retirement of trust preferred securities, gain on sale of branches, gain on sale of insurance lines of business, donation to the Simmons Foundation, one - time tax adjustment, merger r
Slide 36: Performance Trends: Diluted EPS and Net Income
LTM = Last twelve months (1) Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, which occurred on Febr uary 8, 2018. Note: Core figures exclude non - core income and expense items (e.g., early retirement program costs, gain on early retiremen
Slide 37: Key Ratios Adjusted for PPP Loans
As of and for the quarter ended June 30, 2021 Including PPP Loans Excluding PPP Loans (1) Loan Yield 4.73% 4.71% Core Loan Yield (1) 4.54% 4.51% Allowance for Credit Losses to Total Loans 2.00% 2.08% Common Stockholders’ Equity to Total Assets 12.98% 13.23% Tangible Common Equity to Tangible Assets
Slide 38: Corporate Profile and Company Highlights
CORPORATE PROFILE AND COMPANY HIGHLIGHTS 38
Slide 39: Company Profile
(1) As of June 30, 2021, unless otherwise noted. (2) Based on July 13, 2021 closing stock price of $28.05 and number of shares outstanding as of that date. (3) Loan and deposit figures in billions. The balances include only those assigned to the division (the balances do not include o the r business
Slide 40: Selected Business Units
As of and for the quarter ended June 30, 2021 40 Selected Business Units ▪ $178 million nationwide credit card portfolio ▪ Loan yield (including fees): 13.5% (YTD) ▪ History of excellent credit quality (1.58% YTD net charge - off ratio) INVESTMENTS ▪ Retail investments services provided through netw
Slide 41: Disciplined and seasoned acquiror
(1) Purchase price and ratios as of closed date. Source: S&P Global Market Intelligence. (2) Metropolitan was acquired from Section 363 Bankruptcy. 41 Disciplined and seasoned acquiror (11 bank acquisitions completed since 2013) 2013 – 2014 Consolidated eight charters to one National to State Charte
Slide 42: 112 Years of Consistent Dividend History
(1) Based on July 13, 2021 closing stock price of $28.05. (2) Q2 2021 Year - to - Date EPS of $1.31. (3) Q2 2021 Year - to - Date Core EPS of $1.28, excludes non - core income and expense items and is a non - GAAP measurement. See Appendix f or non - GAAP reconciliations. Note: The future payment of
Slide 43: YTD Total Shareholder Return
(10.0)% (5.0)% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% Dividend + Stock Appreciation (12/31/20 – 7/13/21) Note: Based on July 13, 2021 closing stock price of $28.05. Source: S&P Global Market Intelligence 43 YTD Total Shareholder Return SFNC 31.4% SNL Mid Cap Bank
Slide 44: Long-term Shareholder Return
(75.0)% (55.0)% (35.0)% (15.0)% 5.0% 25.0% 45.0% 65.0% 85.0% 105.0% 125.0% 145.0% 165.0% 185.0% 205.0% 225.0% 245.0% Dividend + Stock Appreciation (12/31/07 – 7/13/21) Note: Based on July 13 , 2021 closing stock price of $28.05. Source: S&P Global Market Intelligence 44 Long - term Shareholder Retur
Slide 45: Investment Profile
Source: S&P Global Market Intelligence (1) Core EPS excludes non - core income and expense items and is a non - GAAP measurement. See Appendix for non - GAAP reconciliations. (2) Based upon the Company’s average six analyst consensus EPS of $2.02 for 2021 and $2.12 for 2022 (analyst’s published esti
Slide 46: Appendix
APPENDIX 46
Slide 47: Non-GAAP Reconciliations
(1) Effective tax rate of 26.135% for 2018 - 2021 and 39.225% for 2017, adjusted for non - deductible merger - related costs and deferr ed tax items on P&C insurance sale. (2) Tax adjustment to revalue deferred tax assets and liabilities to account for the future impact of lower corporate tax. 47 No
Slide 48: Non-GAAP Reconciliations
(1) Effective tax rate of 26.135% for 2018 - 2021 and 39.225% for prior periods, adjusted for non - deductible merger - related costs a nd deferred tax items on P&C insurance sale. (2) Tax adjustment to revalue deferred tax assets and liabilities to account for the future impact of lower corporate t
Slide 49: Non-GAAP Reconciliations
49 Non - GAAP Reconciliations Q2 Q2 YTD $ in thousands 2017 2018 2019 2020 2020 2021 2021 Calculation of Core Return on Average Assets Net income available to common stockholders $ 92,940 $ 215,713 $ 237,828 $ 254,852 $ 58,789 $ 74,911 $ 142,318 Net non - core items, net of taxes, adjustment (non -
Slide 50: Non-GAAP Reconciliations
50 Non - GAAP Reconciliations Q2 Q1 Q2 YTD $ in thousands 2017 2018 2019 2020 2020 2021 2021 2021 Calculation of Noninterest Income to Revenue Net Interest Income $ 354,930 $ 552,552 $ 601,753 $ 639,734 $ 163,681 $ 146,681 $ 146,533 $ 293,214 Noninterest income 136,374 139,660 200,202 ____242,618 __
Slide 51: Non-GAAP Reconciliations
(1) Effective tax rate of 26.135% (2) Efficiency ratio is core noninterest expense before foreclosed property expense and amortization of intangibles as a percent of net interest income (fully taxable equivalent) and noninterest revenues, excluding gains and losses from securities transactions and n
Slide 52: Non-GAAP Reconciliations
52 Non - GAAP Reconciliations Q2 Q3 Q4 Q1 Q2 $ in thousands, except per share and share count 2020 2020 2020 2021 2021 Calculation of Core Net Interest Margin Net interest income $ 163,681 $ 153,610 $ 154,960 $ 146,681 $ 146,533 Fully tax - equivalent adjustment 2,350 2,864 3,482 4,163 _______4,548
Slide 53: Non-GAAP Reconciliations
53 Non - GAAP Reconciliations Q2 $ in thousands, except per share and share count 2017 2018 2019 2020 2021 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 $ 3,038,599 Intangible assets: Goodwill (842,651) (
Slide 54: Non-GAAP Reconciliations
54 Non - GAAP Reconciliations Q2 Q3 Q4 Q1 Q2 $ in thousands 2020 2020 2020 2021 2021 Calculation of Core Loan Yield Loan interest income (FTE) $ 177,168 $ 163,379 $ 160,306 $ 146,601 $ 138,987 Total accretable yield (11,723) (8,948) (8,999) (6,630) ______(5,619) Core loan interest income (non - GAAP
Slide 55: Non-GAAP Reconciliations
Non - GAAP Reconciliations 55 Q1 Q2 $ in thousands 2021 2021 Calculation of Tangible Common Equity to Tangible Assets Total stockholders' equity $ 2,930,775 $ 3,039,366 Preferred stock (767) (767) Total common stockholders' equity 2,930,008 3,038,599 Intangible assets: Goodwill (1,075,305) (1,075,30
Slide 56: Non-GAAP Reconciliations
Non - GAAP Reconciliations 56 Q2 Q3 Q4 Q1 Q2 $ in thousands 2020 2020 2020 2021 2021 Calculation of ACL / Loans (exluding PPP Loans) Total loans $ 14,606,900 $ 14,017,442 $ 12,900,897 $ 12,195,873 $ 11,386,352 Allowance for credit losses on loans $ 231,643 $ 248,251 $ 238,050 $ 235,116 $ 227,239 ACL
Slide 57: Non-GAAP Reconciliations
Non - GAAP Reconciliations 57 Q2 Q3 Q4 Q1 Q2 $ in thousands 2020 2020 2020 2021 2021 Calculation of Regulatory Tier 1 Leverage Ratio Excluding Average PPP Loans Total Tier 1 capital $ 1,820,488 $ 1,868,173 $ 1,884,563 $ 1,939,868 $ 2,000,023 Adjusted average assets for leverage ratio $ 20,742,824 $
Slide 58: Contents
Contents 4 Q2 Key Highlights 5 Q2 Results Overview 14 Loans 21 Deposits, Liquidity, Investments & Capital 27 Credit Quality 32 Performance Trends 38 Corporate Profile 46 Appendix 2 nd Quarter 2021 Investor Presentation | NASDAQ: SFNC
Simmons First National — Q2 2021 Earnings Presentation on 6ix