Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Q2 2023 Earnings Presentation
37 slides from Simmons First National's earnings presentation, Jul 25, 2023
Slide 1: 2nd Quarter 2023 Earnings Presentation
Nasdaq: SFNC 2nd Quarter 2023 Earnings Presentation Contents 3 Company Profile 4 Q2 Financial Highlights 12 Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital 18 Loan Portfolio 22 Credit Quality 26 Q2 23 Key Takeaways 28 Appendix
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
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 not be base
Slide 3: Simmons First National Corporation Company Overview
Simmons First National Corporation Company Overview A Mid-South based financial holding company serving our customers and the communities where we work and live since 1903 $28.0 $22.5 BILLION BILLION TOTAL ASSETS TOTAL DEPOSITS CONSECUTIVE YEARS $7.8 $16.8 114 PAYING DIVIDENDS3 BILLION ASSETS UNDER
Slide 4: Q2 Financial Highlights
7 Simmons First __ National Corporation Q2 23 Financial Highlights
Slide 5: Q2 Highlights
Q2 23 Highlights Q2 net income Q2 earnings per share Bottom line results reflect continued focus on basic 1 “blocking and tackling” fundamentals while navigating the challenging interest rate environment $58.3M Adjusted earnings1 of $61.1M $0.46 Adjusted EPS1 of $0.48 Decline in noninterest expense
Slide 6: Balance Sheet Highlights
Balance Sheet Highlights Q2 23 vs Q1 23 Q2 23 vs Q2 22 $ in millions, except per share data Q2 23 Q1 23 Q2 22 $ Change % Change $ Change % Change Period End Balances Total loans $16,833.7 $16,555.1 $15,110.3 $278.6 2 % $1,723.3 11 % Investment securities 7,336.5 7,521.4 8,161.3 (184.9) (2) (824.8) (
Slide 7: Income Summary
Income Summary Income Summary % Change vs Q2 23 Highlights $ in millions, except per share data Q2 23 Q1 23 Q2 22 Q1 23 Q2 22 Linked Quarter Comparison (Q2 23 vs Q1 23) Net interest income $163.2 $177.8 $185.1 (8) % (12) % Noninterest income, excluding securities gain (loss) 1 45.4 45.8 40.3 (1) 13
Slide 8: Net Interest Income and Margin (FTE)
Net Interest Income and Margin (FTE) Net Interest Income Net Interest Income Evolution $ in millions; FTE $ in millions; FTE Q2 23 Highlights Linked Quarter Comparison (Q2 23 vs Q1 23) ❑ Asset portion of balance sheet $199.8 $199.8 $191.2 $184.1 ▪ +22 bps increase in yield on loans $169.3 ▪ -1 bp de
Slide 9: Noninterest Income
Noninterest Income % Change vs Q2 23 Highlights $ in millions Q2 23 Q1 23 Q2 22 Q1 23 Q2 22 Linked Quarter Comparison (Q2 23 vs Q1 23) Service charges on deposit accounts $12.9 $12.4 $ 11.4 4 % 13 % ❑ Recurring fee income (service charges on deposit Wealth management fees 7.4 7.4 7.2 1 3 accounts, w
Slide 10: Noninterest Expense
Noninterest Expense % Change vs Q2 23 Highlights $ in millions Q2 23 Q1 23 Q2 22 Q1 23 Q2 22 Linked Quarter Comparison (Q2 23 vs Q1 23) Salaries and employee benefits $74.7 $77.0 $74.1 (3) % 1 % ❑ Better Bank Initiative and focus on actively managing controllable expenses leads to decline in noninte
Slide 11: Better Bank Initiative: On track to meet or exceed 2023 efficiency targets
Better Bank Initiative: On track to meet or exceed 2023 efficiency targets 2023 Efficiency Targets Update ❑ Early Retirement Program ▪ Program substantially completed during Q2 ▪ ~$5.1 million of annual cost savings ❑ Other Identified Opportunities ▪ Extensive progress completed on other identified
Slide 12: Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital
Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital
Slide 13: Deposits: Reflects industry-wide migration to interest bearing deposits
Deposits: Reflects industry-wide migration to interest bearing deposits Deposit Mix $ in billions $22.5 $22.5 $22.5 $22.0 $22.1 Linked Quarter Deposit Change $ in millions Total Deposits $37 Noninterest Bearing Transaction Accounts $(225) Interest Bearing Transaction Accounts $(421) Time Deposits $3
Slide 14: Securities Portfolio: Highly rated portfolio and balance sheet optimization funding source
Securities Portfolio: Highly rated portfolio and balance sheet optimization funding source Securities Portfolio by Type Securities Portfolio Summary 7% 9% Yield Effective Securities Portfolio At June 30, 2023 (FTE)(1) Duration Highlights Fixed Rate ❑ Continued focus on balance sheet Municipal 3.23%
Slide 15: Liquidity: Significant sources of liquidity and low reliance on borrowed funds
Liquidity: Significant sources of liquidity and low reliance on borrowed funds Cash and Cash Equivalents + Variable Rate Securities Borrowed Funds as a Percent of Total Liabilities $ in millions $3,606 13% 13% $3,286 $3,150 $3,132 10% 10% 9% $2,321 8% 7% 7% $1,910 $1,824 6% 6% $1,578 6% 6% 6% $1,572
Slide 16: Interest Rate Sensitivity: Swap resets rate on hedged securities at the end of Q3
Interest Rate Sensitivity: Swap resets rate on hedged securities at the end of Q3 Balance Sheet Interest Rate Sensitivity Fair Value Hedges Over the next 12 months (estimated) At June 30, 2023 Entered into a 2-year forward starting swap in September 2021 to convert designated AFS securities from fix
Slide 17: Capital: Focused on growing tangible book value while maintaining a strong capital position
Capital: Focused on growing tangible book value while maintaining a strong capital position Tier 1 Leverage Ratio1 CET 1 Capital Ratio1 Tier 1 Risk-Based Capital Ratio1 Total Risk-Based Capital Ratio1 9.2% 9.2% 9.2% 12.1% 12.1% 14.8% 14.5% 11.9% 11.9% 11.9% 11.9% 14.2% Q2 22 Q1 23 Q2 23 Q2 22 Q1 23
Slide 18: Loan Portfolio
7 Simmons First __ National Corporation Loan Portfolio
Slide 19: Loan Portfolio: Solid growth that was geographically widespread
Loan Portfolio: Solid growth that was geographically widespread Loan Portfolio Waterfall Linked Quarter Loan Growth $ in millions $ in millions +2% Total Loans $279 RE - Commercial $25 RE - Construction $154 Funded loan Paydowns/ /advances payoffs Commercial $(99) RE – Single Family $43 Consumer & O
Slide 20: Loan Portfolio: Well-diversified, granular portfolio with no significant concentrations
Loan Portfolio: Well-diversified, granular portfolio with no significant concentrations Loan Portfolio – Geographic diversification Office Portfolio (non-owner occupied) Key Statistics At 6/30/23 By State By State NPL Ratio 0.00% 16% 2% Past Due 30+ Days 0.01% 17% 3% 32% 44% Average Loan Size $2.3M
Slide 21: Loan Pipelines: Reflects economic conditions and prudent credit underwriting standards
Loan Pipelines: Reflects economic conditions and prudent credit underwriting standards Commercial Loan Pipeline by Category $ in millions Q2 23 Highlights Opportunity Proposal Ready to Close ❑ Focused on maintaining prudent underwriting standards $3,015 and pricing discipline given projections surro
Slide 22: Credit Quality
7 Simmons First __ National Corporation Credit Quality
Slide 23: Credit Quality: Remains at historically low-levels in the current environment
Credit Quality: Remains at historically low-levels in the current environment Nonperforming loans / loans1 Nonperforming assets / total assets1 Net charge-offs to average loans2 Strategic decision to de-risk certain elements of the loan portfolio through planned run-off of particular acquired non-re
Slide 24: ACL: Reflects Moody's revised economic forecast
ACL: Reflects Moody’s revised economic forecast ACL/ALLL1 / Loans (%) and ACL/ALLL ($)2 Allowance for Credit Losses on Loans and Loan Coverage $ in millions ACL / ACL Loans 1.71% $ in millions $250 2.00% $225 1.52% 1.80% ACL as of 3/31/22 $ 178.9 1.49% $200 1.49% 1.60% 1.85% 1.41% $175 1.27% 1.40% Q
Slide 25: Breakout: Loan portfolio by category
Breakout: Loan portfolio by category as of March 31, 2023 as of June 30, 2023 % of % of Unfunded Unfunded Balance Total Balance Total Classified Nonperforming Commitment ACL Commitment $ in millions $ Loans $ Loans $ $ $ % Reserve Total Loan Portfolio Consumer - Credit Card 189 1% 210 1% 1 1 - 3.1%
Slide 26: Q2 Key Takeaways
7 Simmons First __ National Corporation Q2 23 Key Takeaways
Slide 27: Q2 Key Takeaways
Q2 23 Key Takeaways 1 Extensive progress completed on Better Bank Initiative during the quarter. On track to meet or exceed estimated annual cost savings that have been identified to date by the end of 2023 2 Balance sheet optimization driven by disciplined loan growth and utilization of maturities
Slide 28: Appendix
7 Simmons First __ National Corporation Appendix
Slide 29: Digital: Digital solutions focused on expanding deposit gathering capabilities
Digital: Digital solutions focused on expanding deposit gathering capabilities Customer Transactions by Channel Zelle® Volume (transactions) Expanding Suite of Digital Solutions +13% +106% Digital CDs & Money Market Q1 2023 +16% Further expanded digital deposit account 70% +13% offerings to include
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q2 Q3 Q4 Q1 Q2 $ in thousands, except per share data 2022 2022 2022 2023 2023 Calculation of Adjusted Earnings Net Income $ 27,454 $ 80,603 $ 83,260 $ 45,589 $ 58,314 Certain items Merger related costs 19,133 1,422 35 1,396 19 Branch right sizing, net 380 1,235 1,104 979 95
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q2 Q3 Q4 Q1 Q2 $ in thousands 2022 2022 2022 2023 2023 Calculation of Pre-Provision Net Revenue (PPNR) Net interest income $ 185,099 $ 193,585 $ 193,026 $ 177,835 $ 163,230 Noninterest income 40,178 43,023 44,647 45,835 44,980 Less: Gain (loss) on sale of securities (150) (2
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q2 Q3 Q4 Q1 Q2 $ in thousands, except number of employees (FTE) 2022 2022 2022 2023 2023 Calculation of Total Revenue Excluding Securities Gain (Loss) and Adjusted Total Revenue Net Interest Income (GAAP) $ 185,099 $ 193,585 $ 193,026 $ 177,835 $ 163,230 Noninterest Income (
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q2 Q3 Q4 Q1 Q2 $ in thousands 2022 2022 2022 2023 2023 Calculation of Noninterest Income to Total Revenue Noninterest Income to Total Revenue 17.83% 18.18% 18.79% 20.49% 21.60% Adjusted Noninterest Income, excluding securities gain (loss) to Adjusted Total Revenue (non-GAAP)
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q2 Q3 Q4 Q1 Q2 $ in thousands 2022 2022 2022 2023 2023 Calculation of Efficiency Ratio and Adjusted Efficiency Ratio Noninterest Expense (efficiency ratio numerator) $ 156,813 $ 138,943 $ 142,575 $ 143,228 $ 139,696 Total Revenue $ 225,277 $ 236,608 $ 237,673 $ 223,670 $ 208
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q2 Q1 Q2 $ in thousands 2022 2023 2023 Calculation of Tangible Common Equity (TCE) Total stockholders’ equity $ 3,259,895 $ 3,339,901 $ 3,356,326 Less: Preferred stock _______ _- _______ _- _______ _- Total common stockholders’ equity $ 3,259,895 $ 3,339,901 $ 3,356,326 Tota
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q2 Q1 Q2 $ in thousands 2022 2023 2023 Calculation of Uninsured Deposit Coverage Ratio Uninsured deposits at Simmons Bank $ 7,071,483 $ 5,896,752 $ 5,491,062 Less: Intercompany eliminations ____ _555,636 ______628,592 ______674,552 Total uninsured deposits $ 6,515,847 $ 5,26
Slide 37: 2nd Quarter 2023 Earnings Presentation
Nasdaq: SFNC 2nd Quarter 2023 Earnings Presentation Contents 3 Company Profile 4 Q2 Financial Highlights 12 Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital 18 Loan Portfolio 22 Credit Quality 26 Q2 23 Key Takeaways 28 Appendix
Simmons First National — Q2 2023 Earnings Presentation on 6ix