Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Q3 2023 Earnings Presentation
36 slides from Simmons First National's earnings presentation, Oct 24, 2023
Slide 1: 3rd Quarter 2023 Earnings Presentation
Nasdaq: SFNC 3rd Quarter 2023 Earnings Presentation Contents 3 Company Profile 4 Q3 Financial Highlights 12 Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital 18 Loan Portfolio 22 Credit Quality 26 Q3 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 $27.6 $22.2 BILLION BILLION TOTAL ASSETS TOTAL DEPOSITS CONSECUTIVE YEARS $7.7 $16.8 114 PAYING DIVIDENDS3 BILLION ASSETS UNDER
Slide 4: Q3 Financial Highlights
7 Simmons First __ National Corporation Q3 23 Financial Highlights
Slide 5: Q3 Highlights
Q3 23 Highlights Q3 net income Q3 diluted EPS Bottom line results reflect continued focus on maintaining 1 strong asset quality, capital and liquidity positions while navigating the challenging interest rate environment $47.2M Adjusted earnings1 of $48.8M $0.37 Adjusted EPS1 of $0.39 Continued imple
Slide 6: Balance Sheet Highlights
Balance Sheet Highlights Q3 23 vs Q2 23 Q3 23 vs Q3 22 $ in millions, except per share data Q3 23 Q2 23 Q3 22 $ Change % Change $ Change % Change Period End Balances Total loans $16,771.9 $16,833.7 $15,607.1 $(61.8) - % $1,164.8 7 % Q3 23 Highlights Investment securities 7,100.7 7,336.5 7,724.6 (235
Slide 7: Income Summary
Income Summary Income Summary % Change vs Q3 23 Highlights $ in millions, except per share data Q3 23 Q2 23 Q3 22 Q2 23 Q3 22 Linked Quarter Comparison (Q3 23 vs Q2 23) Net interest income $153.4 $163.2 $193.6 (6) % (21) % 1 42.8 45.4 43.0 (6) (1) ❑ Total revenue of $196.2 million reflects impact fr
Slide 8: Net Interest Income and Margin (FTE)
Net Interest Income and Margin (FTE) Net Interest Income and Margin Net Interest Income Evolution $ in millions; FTE $ in millions; FTE Q3 23 Highlights Linked Quarter Comparison (Q3 23 vs Q2 23) $199.8 $199.8 $184.1 ❑ Asset portion of balance sheet $169.3 $159.9 ▪ +19 bps increase in yield on loans
Slide 9: Noninterest Income
Noninterest Income % Change vs Q3 23 Highlights $ in millions Q3 23 Q2 23 Q3 22 Q2 23 Q3 22 Linked Quarter Comparison (Q3 23 vs Q2 23) Service charges on deposit accounts $12.4 $12.9 $ 12.6 (4) % (1) % ❑ Decrease in service charges on deposits accounts was Wealth management fees 7.7 7.4 8.6 4 (10) p
Slide 10: Noninterest Expense
Noninterest Expense % Change vs Q3 23 Highlights $ in millions Q3 23 Q2 23 Q3 22 Q2 23 Q3 22 Linked Quarter Comparison (Q3 23 vs Q2 23) Salaries and employee benefits $67.4 $74.7 $71.9 (10) % (6) % ❑ Better Bank Initiative and focus on actively managing controllable expenses leads to decline in noni
Slide 11: Better Bank Initiative: Achieved 2023 efficiency targets ahead of schedule
Better Bank Initiative: Achieved 2023 efficiency targets ahead of schedule 2023 Efficiency Targets Update ❑ Early Retirement Program ▪ Program completed during Q3 ▪ ~$5.1 million of annual cost savings ❑ Other Identified Opportunities ▪ Completed other identified opportunities during Q2 and Q3 ▪ Ach
Slide 12: Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital
Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital
Slide 13: Deposits: Mix shift reflects continued customer migration to higher rate deposit offerings
Deposits: Mix shift reflects continued customer migration to higher rate deposit offerings Deposit Mix $ in billions Conservative Deposit Base1 $22.5 $22.5 $22.5 $22.2 $ in billions as of September 30, 2023 $22.1 $22.2 Uninsured, Non- $4.6 Collateralized Deposits $2.8 Collateralized Deposits Approxi
Slide 14: Securities Portfolio: Utilizing as a funding source to support balance sheet optimization
Securities Portfolio: Utilizing as a funding source to support balance sheet optimization Securities Portfolio by Type Securities Portfolio Summary 7% 9% Yield Effective Securities Portfolio At September 30, 2023 (FTE)(1) Duration Highlights Fixed Rate ❑ Focus on balance sheet optimization Municipal
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 Period End Balances $3,286 13% 13% $3,150 $3,132 10% 10% $2,321 9% $1,910 $1,824 7% 7% 7% $1,572 $1,578 6
Slide 16: Interest Rate Sensitivity
Interest Rate Sensitivity Balance Sheet Interest Rate Sensitivity Schedule of Select Maturities (over the next 12 months) Over the next 12 months (estimated) $ in millions Weighted Average Rates Immediate change in interest rates ❑ ~$140 - $180 million per quarter of 4.23% 4.90% 3.64% 5.09% 3.99% 5.
Slide 17: Capital: Strong regulatory capital position and focused on tangible book value per share
Capital: Strong regulatory capital position and focused on tangible book value per share Tier 1 Leverage Ratio1 CET 1 Capital Ratio1 Tier 1 Risk-Based Capital Ratio1 Total Risk-Based Capital Ratio1 9.2% 9.2% 9.3% 11.9% 12.0% 11.9% 12.0% 11.7% 11.7% 14.1% 14.2% 14.3% Q3 22 Q2 23 Q3 23 Q3 22 Q2 23 Q3
Slide 18: Loan Portfolio
7 Simmons First __ National Corporation Loan Portfolio
Slide 19: Loan Portfolio: Well-diversified, granular portfolio with no significant concentrations
Loan Portfolio: Well-diversified, granular portfolio with no significant concentrations Loan Portfolio Waterfall Linked Quarter Loan Growth $ in millions $ in millions Total Loans $(62) RE - Commercial $19 RE - Construction $91 Funded loans Paydowns/ /advances payoffs Commercial $(92) Includes $160M
Slide 20: Loan Portfolio: Well-performing and low leverage in key portfolios
Loan Portfolio: Well-performing and low leverage in key portfolios Loan Portfolio – Geographic diversification Office Portfolio (non-owner occupied) Key Statistics At 9/30/23 By State By State NPL Ratio 0.00% 17% Past Due 30+ Days 0.00% 2% 18% 32% 2% 44% Average Loan Size $2.3M 2% 10% $0.9B Median L
Slide 21: Loan Pipelines: Capitalizing on opportunities that meet pricing and disciplined credit appetite
Loan Pipelines: Capitalizing on opportunities that meet pricing and disciplined credit appetite Commercial Loan Pipeline by Category $ in millions Q3 23 Highlights Opportunity Proposal Ready to Close ❑ Focused on maintaining prudent underwriting standards $3,015 and pricing discipline given projecti
Slide 22: Credit Quality
7 Simmons First __ National Corporation Credit Quality
Slide 23: Credit Quality: Key credit quality metrics remain near historical lows
Credit Quality: Key credit quality metrics remain near historical lows Nonperforming loans / loans1 Nonperforming assets / total assets1 Net charge-offs to average loans2 Strategic decision to de-risk certain elements of the loan portfolio through planned run-off of particular NCO Ratio (as reported
Slide 24: ACL: Reflects current economic forecast and composition of loan portfolio
ACL: Reflects current economic forecast and composition of loan portfolio ACL / Loans (%) and ACL ($)1 Allowance for Credit Losses on Loans and Loan Coverage $ in millions ACL / ACL Loans 1.85% $ in millions $250 2.00% $225 1.52% 1.71% 1.80% ACL as of 6/30/22 $ 212.6 1.41% $200 1.49% 1.41% 1.60% 1.3
Slide 25: Breakout: Loan portfolio by category
Breakout: Loan portfolio by category as of June 30, 2023 as of September 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 210 1% 192 1% 1 1 - 3
Slide 26: Q3 Key Takeaways
7 Simmons First __ National Corporation Q3 23 Key Takeaways
Slide 27: Q3 23 Key Takeaways
Q3 23 Key Takeaways 1 Continued implementation of Better Bank Initiative with focus on actively managing expenses enabled us to achieve $15M in targeted annual cost savings ahead of schedule 2 Balance sheet optimization remains a primary focus and will be driven by targeted loan growth that reflects
Slide 28: Appendix
7 Simmons First __ National Corporation Appendix
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q3 Q4 Q1 Q2 Q3 $ in thousands, except per share data 2022 2022 2023 2023 2023 Calculation of Adjusted Earnings Net Income $ 80,603 $ 83,260 $ 45,589 $ 58,314 $ 47,247 Certain items Merger related costs 1,422 35 1,396 19 5 Branch right sizing, net 1,235 1,104 979 95 547 Loss
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q3 Q4 Q1 Q2 Q3 $ in thousands 2022 2022 2023 2023 2023 Calculation of Pre-Provision Net Revenue (PPNR) Net interest income $ 193,585 $ 193,026 $ 177,835 $ 163,230 $ 153,433 Noninterest income 43,023 44,647 45,835 44,980 42,777 Less: Gain (loss) on sale of securities (22) (52
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q3 Q4 Q1 Q2 Q3 $ in thousands, except number of employees (FTE) 2022 2022 2023 2023 2023 Calculation of Total Revenue Excluding Securities Gain (Loss) and Adjusted Total Revenue Net Interest Income (GAAP) $ 193,585 $ 193,026 $ 177,835 $ 163,230 $ 153,433 Noninterest Income (
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q3 Q4 Q1 Q2 Q3 $ in thousands 2022 2022 2023 2023 2023 Calculation of Noninterest Income to Total Revenue Noninterest Income to Total Revenue 18.18% 18.79% 20.49% 21.60% 21.80% Adjusted Noninterest Income, excluding securities gain (loss) to Adjusted Total Revenue (non-GAAP)
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q3 Q4 Q1 Q2 Q3 $ in thousands 2022 2022 2023 2023 2023 Calculation of Efficiency Ratio and Adjusted Efficiency Ratio Noninterest Expense (efficiency ratio numerator) $ 138,943 $ 142,575 $ 143,228 $ 139,696 $ 131,998 Total Revenue $ 236,608 $ 237,673 $ 223,670 $ 208,210 $ 196
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q3 Q2 Q3 $ in thousands 2022 2023 2023 Calculation of Tangible Common Equity (TCE) Total common stockholders’ equity $ 3,157,151 $ 3,356,326 $ 3,285,555 Total assets $ 27,076,074 $ 27,959,123 $ 27,564,325 Less: Intangible assets (1,442,059) (1,441,557) (1,437,459) Total tang
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q3 Q2 Q3 $ in thousands 2022 2023 2023 Calculation of Uninsured, Non-Collateralized Deposit Coverage Ratio Uninsured deposits at Simmons Bank $ 9,315,086 $ 8,507,395 $ 8,143,200 Less: Collateralized deposits (excluding portion that is FDIC insured) 3,094,859 3,030,550 2,835,
Slide 36: 3rd Quarter 2023 Earnings Presentation
Nasdaq: SFNC 3rd Quarter 2023 Earnings Presentation Contents 3 Company Profile 4 Q3 Financial Highlights 12 Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital 18 Loan Portfolio 22 Credit Quality 26 Q3 23 Key Takeaways 28 Appendix
Simmons First National — Q3 2023 Earnings Presentation on 6ix