Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Merger or Acquisition (September 2019)
36 slides from Simmons First National's merger presentation, Sep 3, 2019
Slide 1: Investor Presentation
NASDAQ: 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: Important Additional Information & Where to Find It
Important Additional Information & Where to Find It 3 This presentation 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 merger of The Landrum Company ("Landrum") with and into Simmons Fi
Slide 4: Company Profile
(1) Unless otherwise noted, the information on this slide is as of June 30, 2019. (2) Based on August 19, 2019 closing stock price of $25.23 and number of shares outstanding as of that date. Company Profile (1) 4 SOUTHEAST DIVISION SOUTHWEST DIVISION NORTH TEXAS DIVISION Arkansas SW Missouri (Spring
Slide 5: Q2 2019 Selected Business Units
Q2 2019 Selected Business Units 5 ▪ $187.9 million nationwide credit card portfolio ▪ Loan yield (including fees): 14.6% ▪ History of excellent credit quality (1.77% net charge - off ratio) TRUST ▪ Total Assets: $5.3 billion – Managed Assets: $3.0 billion – Non - managed / Custodial Assets: $2.3 bil
Slide 6: Financial Highlights
Note: Core results exclude non - core income and expense items (e.g., early retirement program costs, merger related costs and br anch right - sizing costs). Core NIM excludes purchase accounting interest accretion. Core results are non - GAAP measurements. See Appendix for non - GAAP reconciliation
Slide 7: Q2 2019 Financial Highlights
(1) Core results exclude non - core income and expense items (e.g., early retirement program costs, merger related costs and branch ri ght - sizing costs). Core results, tangible common equity to tangible assets and tangible book value are non - GAAP measurements. See Appendix for non - GAAP reconci
Slide 8: Performance Trends
(1) As of December 31 st , unless otherwise noted. (2) Efficiency ratio is core non - interest 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 securi
Slide 9: Performance Trends
(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 results exclude non - core income and expense items (e.g., early retirement program costs, gain on sale of insurance lines of business, don
Slide 10: Regulatory Capital Ratios
14.2% 13.5% 9.8% 10.2% 9.8% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2015 2016 2017 2018 FY19 Q2 16.0% 14.5% 9.8% 10.2% 9.8% 3.0% 6.0% 9.0% 12.0% 15.0% 18.0% 2015 2016 2017 2018 FY19 Q2 16.7% 15.1% 11.4% 13.3% 12.7% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 2015 2016 2017 2018 FY19 Q2
Slide 11: Loan Portfolio
Agriculture 1.5% Credit Card 1.4% Consumer 1.6% Construction 15.0% Single Family Residential 15.2% Commercial Real Estate 45.6% Commercial 17.1% Other 2.5% (1) As of June 30, 2019. (2) Includes credit card, indirect lending, and equipment finance (nationwide). Loan Portfolio (1) 11 TOTAL LOAN PORTFO
Slide 12: Loan Growth
Loan Growth 12 Linked Quarter Growth On a linked - quarter basis (June 30, 2019 compared to March 31, 2019), total loans increased to $13.1 billion, or 11.8%. Approximately $1.0 billion of the increase was due to the Reliance Bank merger completed in April, while the remainder of the increase was pr
Slide 13: Credit Quality: Legacy Loan Portfolio
(1) Source: S&P Global Market Intelligence, all US Banks. (2) Excluding credit card net charge - offs. Credit Quality: Legacy Loan Portfolio (Excluding Acquired Loans) 13 "Great Recession" Non-Performing Loans 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 FY19 Q2 SFNC 0.81% 1.35% 1.98% 1.74
Slide 14: Credit Quality: Credit Card Portfolio
1991 Recession 4.55% 2002 Recession 6.41% 2009 "Great Recession" 9.42% 1.42% 2.10% * 2.61% * 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% Net Charge - off % * Federal bankruptcy reform impacted charge - offs in 2005 Source: Industry data o
Slide 15: Credit Quality: Loan & Credit Coverage
Credit Quality: Loan & Credit Coverage 15 Upon acquisition of a portfolio, all loans are considered acquired and have a credit mark (loan discount) in place to cover potential exposure . When an acquired, non - impaired loan is renewed or otherwise is re - underwritten for a formal modification or c
Slide 16: Net Interest Income
(1) Fully tax equivalent. (2) Core loan yield and core net interest margin exclude accretion and are non - GAAP measurements. See Appendix for non - GAAP reconcil iations. Net Interest Income 16 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Loan Yield (1) 5.38% 5.40% 5.54% 5.39% 5.53% 5.58% Core Loan Yield (1)(2) 4.9
Slide 17: Purchase Accounting Accretion & Loan Discount
($ in Millions) Purchase Accounting Accretion & Loan Discount 17 HISTORICAL LOAN DISCOUNT BALANCE & ACCRETION INCOME 2019 ESTIMATED SCHEDULED ACCRETION (1) (1) Does not include any estimates or expectations associated with SFNC’s acquisition of The Landrum Company. $5.6 $6.7 $5.2 $10.2 Q1 (Actual) Q
Slide 18: Acquisitions Since 2013
(1) Purchase price and ratios as of closed date, except for The Landrum Company, which is as of the announced date. Source: S&P G lob al Market Intelligence. (2) Metropolitan was acquired from Section 363 Bankruptcy. (3) Expected closed date. Acquisitions Since 2013 18 2013 – 2014 Consolidated eight
Slide 19: $10 Billion Threshold
(1) Estimated. $10 Billion Threshold 19 AUDIT & COMPLIANCE REGULATORY COST To strengthen the Audit and Regulatory Compliance groups, as well as address the increased regulatory requirements associated wi th exceeding $10 billion in assets, the Company has incurred the following costs: DURBIN AMENDME
Slide 20: Subordinated Debt Offering & Kroll Rating
(1) The ratings provided by KBRA are subject to revision or withdrawal by KBRA at any time and are not recommendations to buy, se ll or hold these securities. Each rating should be evaluated independently of any other rating. Subordinated Debt Offering & Kroll Rating 20 SENIOR UNSECURED DEBT SHORT -
Slide 21: 111 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 (1) Based on August 19, 2019 closing stock price of $25.23 and number of shares outstanding as of that date. (2) FY19
Slide 22: 1 Year Total Shareholder Return
(30.0%) (25.0%) (20.0%) (15.0%) (10.0%) (5.0%) 0.0% 5.0% 10.0% Dividend + Stock Appreciation (08/19/18 – 08/19/19) Note: Based on August 19, 2019 closing stock price of $25.23. Source: S&P Global Market Intelligence 1 Year Total Shareholder Return 22 SFNC (16.3%) SNL Mid Cap Bank (18.2%)
Slide 23: 5 Year Total Shareholder Return
(10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% Dividend + Stock Appreciation (08/19/14 – 08/19/19) Note: Based on August 19, 2019 closing stock price of $25.23. Source: S&P Global Market Intelligence 5 Year Total Shareholder Return 23 SFNC 42.5% SNL Mid Cap Bank 45.3%
Slide 24: Long-term Shareholder Return
(75.0%) (50.0%) (25.0%) 0.0% 25.0% 50.0% 75.0% 100.0% 125.0% 150.0% 175.0% 200.0% 225.0% Dividend + Stock Appreciation (12/31/07 – 08/19/19) Note: Based on August 19, 2019 closing stock price of $25.23. Source: S&P Global Market Intelligence Long - term Shareholder Return 24 SFNC 154.0% SNL Mid Cap
Slide 25: Investment Profile
(1) LTM 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 seven analyst consensus EPS of $2.44 for 2019 and $2.59 for 2020, as of August 1, 2019. (3) Tangible Book Value is a non -
Slide 26: Next Generation Bank Program
Next Generation Bank Program 26 WHY WHAT ▪ Allows us to better identify opportunities for our customers and offer them proactively vs. waiting for our customer to ask for help ▪ Enhanced customer engagement and interaction across all channels, including digital ▪ Data will be more efficiently entere
Slide 27: 2019 Strategy
2019 Strategy Great Place to We Exceptional Associate ae fs owerful Culture ee eine 2019 Strategy Operational Excellence Systems Strong Leadershi High-Performing Teams Sustainable Growth Expand Profitable Lines of Busines MELEE AUS increase Deposit Market Share Exceptional Customer Experience
Slide 28: Appendix
Appendix 28
Slide 29: Non-GAAP Reconciliations
Non - GAAP Reconciliations 29 Q2 Q2 YTD YTD $ in thousands 2015 2016 2017 2018 2018 2019 2018 2019 Calculation of Core Return on Average Assets Net income available to common stockholders 74,107$ 96,790$ 92,940$ 215,713$ 53,562$ 55,598$ 104,874$ 103,293$ Net non-core items, net of taxes, adjustment
Slide 30: Non-GAAP Reconciliations
(1) Effective tax rate of 26.135% for 2018/2019 and 39.225% for prior periods, adjusted for non - deductible merger - related costs and 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 tax.
Slide 31: Non-GAAP Reconciliations
(1) Effective tax rate of 26.135% for 2018/2019 and 39.225% for prior periods, adjusted for non - deductible merger - related costs and 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 tax.
Slide 32: Non-GAAP Reconciliations
(1) Efficiency ratio is core non - interest 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 non - core items. Non - GAAP Rec
Slide 33: Non-GAAP Reconciliations
Non - GAAP Reconciliations 33 YTD YTD $ in thousands, except per share and share count 2015 2016 2017 2018 2018 2019 Calculation of Core Net Interest Margin Net interest income 278,595$ 279,206$ 354,930$ 552,552$ 271,803$ 287,382$ Fully tax-equivalent adjustment 8,517 7,722 7,723 5,297 2,438 3,307 F
Slide 34: Non-GAAP Reconciliations
Non - GAAP Reconciliations 34 YTD YTD $ in thousands 2015 2016 2017 2018 2018 2019 Calculation of Non-interest Income to Revenue Non-interest Income (GAAP) 94,661$ 139,382$ 138,765$ 143,896$ 75,583$ 72,767$ Net Interest Income 278,595 279,206 354,930 552,552 271,803 287,382 Non-interest income 94,66
Slide 35: Non-GAAP Reconciliations
Non - GAAP Reconciliations 35 Q1 Q2 Q3 Q4 Q1 Q2 $ in thousands 2018 2018 2018 2018 2019 2019 Calculation of Core Loan Yield Loan Interest Income 143,350$ 150,253$ 162,438$ 159,996$ 159,440$ 178,122$ Total Accretable Yield (11,294) (10,113) (10,006) (3,850) (6,660) (10,162) Core Loan Interest Income
Slide 36: Simmons First National Corporation
7 Simmons First National ‘Corporation
Simmons First National — Merger or Acquisition (September 2019) on 6ix