Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Merger or Acquisition (January 2019)
34 slides from Simmons First National's merger presentation, Jan 28, 2019
Slide 1: Investor Presentation
NASDAQ - GS: SFNC Investor Presentation
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward - Looking Statements and Non - GAAP Financial Measures 2 Certain statements contained in this presentation may not be based on historical facts and are "forward - looking statements" within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securi
Slide 3: Additional Information & Where to Find It
Additional Information & Where to Find It 3 In connection with the proposed merger with Reliance Bancshares, Inc . ("RLBS"), Simmons First National Corporation "SFNC" has filed with the SEC a Registration Statement on Form S - 4 that includes a proxy statement of RLBS, and a prospectus of SFNC, as w
Slide 4: Company Profile
(1) Based on December 31, 2018 closing stock price of $24.13. (2) As of December 31, 2018. Company Profile 4 SOUTHEAST DIVISION SOUTHWEST DIVISION NORTH TEXAS DIVISION Arkansas SW Missouri (Springfield) Tennessee South Texas St. Louis Kansas City Colorado Kansas Oklahoma Dallas / Fort Worth Metrople
Slide 5: Non-Banking Business Units
Q4 2018 Non - Banking Business Units 5 ▪ $184.3 million nationwide credit card portfolio ▪ Loan yield (including fees): 16.4% ▪ History of excellent credit quality (1.65% net charge - off ratio) TRUST ▪ $5.2 billion in trust assets ($3.2 billion AUM) ▪ Profit Margin: ~26.3% ▪ Growing investment mana
Slide 6: Financial Highlights
Note: Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, which occurred o n February 8, 2018. Note: Core excludes non - core income and expense items (e.g., gain on sale of insurance lines of business, donation to Simmons F oundation, one - t
Slide 7: 2018 Financial Highlights
(1) Core excludes non - core income and expense items (e.g., gain on sale of insurance lines of business, donation to Simmons Foundati on, one - time tax adjustment, merger related costs and branch right - sizing costs). Core results are non - GAAP measurements. See Appendix for non - GA AP reconcil
Slide 8: 26.66% 25.36% 33.30% 28.11% 20.66% 23.79% 26.49% 33.16% 27.52% 20.66% 10.0% 15.0% 20.0% 25.0%
26.66% 25.36% 33.30% 28.11% 20.66% 23.79% 26.49% 33.16% 27.52% 20.66% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 2014 2015 2016 2017 2018 GAAP Core $- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 2014 2015 2016 2017 FY18 Q4 Loans Deposits 67.2% 59.0% 56.3% 55.3% 52.9% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.
Slide 9: $1.05 $1.31 $1.56 $1.33 $2.32 $1.14 $1.59 $1.64 $1.70 $2.37 $- $0.50 $1.00 $1.50
$1.05 $1.31 $1.56 $1.33 $2.32 $1.14 $1.59 $1.64 $1.70 $2.37 $- $0.50 $1.00 $1.50 $2.00 $2.50 2014 2015 2016 2017 FY18 Q4 (LTM) GAAP Core $35.7 $74.1 $96.8 $92.9 $215.7 $38.7 $89.6 $101.4 $119.0 $220.2 $- $25.0 $50.0 $75.0 $100.0 $125.0 $150.0 $175.0 $200.0 $225.0 $250.0 2014 2015 2016 2017 2018 GAAP
Slide 10: Regulatory Capital Ratios
14.5% 16.7% 15.1% 11.4% 13.3% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 2014 2015 2016 2017 FY18 Q4 12.8% 14.2% 13.5% 9.8% 10.2% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 2014 2015 2016 2017 FY18 Q4 13.4% 16.0% 14.5% 9.8% 10.2% 3.0% 5.0% 7.0% 9.0% 11.0% 13.0%
Slide 11: Loan Portfolio
(1) As of December 31, 2018. (2) Includes credit card, indirect, and equipment finance (nationwide). Loan Portfolio (1) 11 TOTAL LOAN PORTFOLIO $11.7 billion Agriculture 1.4% Credit Card 1.7% Consumer 1.8% Construction 14.8% Single Family Residential 17.0% Commercial Real Estate 43.3% Commercial 18.
Slide 12: Loan Growth
Loan Growth 12 Linked Quarter Growth On a linked - quarter basis (December 31, 2018 compared to September 30, 2018), total loans decreased $135 million, or 1.14%. The decrease was due to: ▪ $86 million decrease in agricultural portfolios and mortgage warehouse lines of credit ▪ $19 million decrease
Slide 13: Credit Quality: Legacy Loan Portfolio
(1) Source: S&P Global Market Intelligence, all US Banks. LTM as of September 30, 2018. December 31, 2018 unavailable. (2) Excluding credit card net charge - offs. Credit Quality: Legacy Loan Portfolio (Excluding Acquired Loans) 13 "Great Recession" Non-Performing Loans 2008 2009 2010 2011 2012 2013
Slide 14: Credit Quality: Credit Card Portfolio
1991 Recession 4.55% 2002 Recession 6.41% 2009 "Great Recession" 9.42% 1.42% 2.10% * 2.61% * 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% Net Charge - off % History of Strong Asset Quality (Net Charge - offs) * Federal bankruptcy reform impacted charge - offs in 2005 Source: Federal
Slide 15: Credit Quality: Loan & Credit Coverage
Credit Quality: Loan & Credit Coverage 15 Upon acquisition of a portfolio, all loans are considered acquired and have a credit mark (loan discount) in place to cover potential exposure . When an acquired, non - impaired loan is renewed or otherwise is re - underwritten for a formal modification or c
Slide 16: Net Interest Income
(1) Fully tax equivalent. (2) Core loan yield and core net interest margin exclude accretion and are non - GAAP measurements. Net Interest Income 16 Since December 2017 , the Federal Reserve Board increased the Fed Funds target rate by 100 basis points . The Company’s deposit beta was 45 % , loan be
Slide 17: Purchase Accounting Accretion & Loan Discount
$112.0 $114.1 $77.2 $55.7 $35.5 $89.3 $49.3 $17.3 $39.6 $37.5 $46.1 $24.3 $27.8 $35.3 $- $10.0 $20.0 $30.0 $40.0 $50.0 $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 2012 2013 2014 2015 2016 2017 2018 Loan Discount Balance Accretion Income ($ in Millions) Purchase Accounting Accretion & Loan Discount 17 H
Slide 18: Acquisitions Since 2013
(1) Purchase price and ratios as of closed date, except for Reliance Bancshares, Inc. Source: S&P Global Market Intelligence. (2) Metropolitan was acquired from Section 363 Bankruptcy. (3) Expected close date. Acquisitions Since 2013 18 2013 – 2014 Consolidated eight charters to one National to Stat
Slide 19: $10 Billion Threshold
$10 Billion Threshold 19 AUDIT & COMPLIANCE REGULATORY COST To strengthen the Audit and Regulatory Compliance groups, as well as to prepare for the increased regulatory requirements ass oci ated with exceeding $10 billion in assets, the Company has incurred the following costs: DURBIN AMENDMENT The
Slide 20: Subordinated Debt Offering & Kroll Rating
Subordinated Debt Offering & Kroll Rating 20 SENIOR UNSECURED DEBT SHORT - TERM DEBT SUBORDINATED DEBT SENIOR UNSECURED DEBT SHORT - TERM DEBT SUBORDINATED DEBT SHORT - TERM DEPOSIT DEPOSIT BBB+ BBB K2 SIMMONS FIRST NATIONAL CORPORATION SIMMONS BANK A - A - BBB+ K2 K2 SUBORDINATED DEBT OFFERING ▪ On
Slide 21: 108 Years of Consistent Dividend History
$0.14 $0.16 $0.18 $0.20 $0.22 $0.24 $0.27 $0.29 $0.31 $0.34 $0.37 $0.38 $0.38 $0.38 $0.38 $0.40 $0.42 $0.44 $0.46 $0.48 $0.50 $0.60 $0.64 $- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 Note: Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, wh
Slide 22: 1 Year Total Shareholder Return
(25.0%) (20.0%) (15.0%) (10.0%) (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Dividend + Stock Appreciation (12/13/17 – 12/31/18) Note: Stock Price $24.13 as of December 31, 2018. Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, which occurred o
Slide 23: 5 Year Total Shareholder Return
(20.0%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Dividend + Stock Appreciation (12/13/13 – 12/31/18) Note: Stock Price $24.13 as of December 31, 2018. Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, which o
Slide 24: 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% Dividend + Stock Appreciation (12/31/07 – 12/31/18) Note: Stock Price $24.13 as of December 31, 2018. Per share information has been adjusted to reflect the effects of the Company’s two - fo
Slide 25: Investment Profile
Note: Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, which occurred o n February 8, 2018. (1) LTM Core EPS excludes non - core income and expense items and is a non - GAAP measurement. See Appendix for non - GAAP reconciliations . (2) Bas
Slide 26: Strategic Focus
Strategic Focus 26 ▪ "Table Stakes" – Asset Quality – Regulatory Compliance ▪ Internal revenue opportunities ▪ Efficiency initiatives ▪ Branding in new markets and product enhancements ▪ Acquisitions – Traditional banking – enhance current footprint and consider expanding into adjoining states (insi
Slide 27: Why Simmons First?
Why Simmons First? 27 ▪ Multiple paths to potential above - average earnings growth – M&A accretion, cost savings and revenue enhancements – Continued efficiency initiatives – Organic legacy loan growth ▪ Experienced and deep management ▪ Exceptional balance sheet ▪ Consistent historical earnings pe
Slide 28: Appendix
Appendix 28
Slide 29: Non-GAAP Reconciliations
Non - GAAP Reconciliations 29 YTD Q4 Q4 $ in thousands 2015 2016 2017 2018 2017 2018 Calculation of Core Return on Average Assets Net income available to common stockholders 74,107$ 96,790$ 92,940$ 215,713$ 18,903$ 55,646$ Net non-core items, net of taxes, adjustment 15,515 4,619 26,109 4,520 23,115
Slide 30: Non-GAAP Reconciliations
(1) Effective tax rate of 26.135% for 2018 and 39.225% for prior periods, adjusted for non - deductible merger - related costs and defe rred 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. Non
Slide 31: Non-GAAP Reconciliations
Note: Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, which occurred o n February 8, 2018. (1) Effective tax rate of 26.135% for 2018 and 39.225% for prior periods, adjusted for non - deductible merger - related costs and defe rred tax ite
Slide 32: Non-GAAP Reconciliations
(1) Efficiency ratio is noninterest expense before foreclosed property expense and amortization of intangibles as a percent of ne t i nterest income (fully taxable equivalent) and noninterest revenues, excluding gains and losses from securities transactions and non - core items. Non - GAAP Reconcili
Slide 33: Non-GAAP Reconciliations
Note: Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, which occurred o n February 8, 2018. Non - GAAP Reconciliations 33 YTD Q4 Q4 $ in thousands, except per share and share count 2015 2016 2017 2018 2017 2018 Calculation of Core Net Inter
Slide 34: Simmons First National Corporation
F- Simmons First _ National Corporation
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