Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Q4 2022 Earnings Presentation
35 slides from Simmons First National's earnings presentation, Jan 24, 2023
Slide 1: 4th Quarter 2022 Earnings Presentation
Nasdaq: SFNC 4 th Quarter 2022 Earnings Presentation Contents 5 Q4 Highlights 6 Q4 Results Overview 12 Loans 16 Deposits, Liquidity, Securities, Interest Rate Sensitivity & Capital 21 Credit Quality 25 Key Takeaways 27 Appendix
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: Simmons Bank: The culmination of a deliberate growth strategy
94% 6% Arkansas Kansas $2.6B 1 Total Deposits 83 branches 35% 22% 17% 16% 9% 1% Arkansas Texas Tennessee Missouri Oklahoma Kansas $22.2B 2 Total Deposits 230 branches 3 Simmons Bank: The culmination of a deliberate growth strategy… 1903 - 2012 Since 2012, we have dramatically improved our growth pro
Slide 4: Strong foundation for the next stage: technology and digital enhancements
Simmons Bank’s first fully digital account origination solutions that generally require no human intervention on the bank’s side from beginning to end, while offering a streamlined and engaging opening process A fast, safe and easy way to send money to friends, family and other people you trust, reg
Slide 5: Q4 and FY Highlights
5 Q4 22 and FY 22 Highlights Q 4 net income $83.3M FY22 earnings of $256.4M 1 Q 4 earnings per share $0.65 Q4 adjusted EPS of $0.64 (1) 1 Net income up 3 % QoQ and up 73 % YoY EPS up 3 % QoQ and up 55 % YoY ROA of 1 . 22 % , ROE of 10 . 27 % and ROTCE ( 1 ) of 19 . 29 % Q 4 total revenue of $237.7M
Slide 6: Q4 Results Overview
7 Ay Simmons First National Corporation Q4 22 Results Overview
Slide 7: Summary Income Statement
Summary Income Statement FY $ in millions, except per share data Q4 22 Q3 22 Q4 21 Q3 22 Q4 21 2022 Net interest income 193.0 193.6 153.1 - 26 717.3 Noninterest income, excluding securities gain (loss) (1) 44.7 43.0 46.9 4 (5) 170.3 Total revenue, excluding securities gain (loss) (1) 237.7 236.6 200
Slide 8: Net Interest Income and Margin (FTE)
8 Net Interest Income and Margin (FTE) FTE – Fully taxable equivalent using an effective tax rate of 26.135% PPP – Paycheck Protection Program (1) Non - GAAP measures that management believes aids in the discussion of results. See appendix for Non - GAAP reconciliation (2) Adjusted loan yield exclud
Slide 9: Noninterest Income
FY YoY $ in millions Q4 22 Q3 22 Q4 21 Q3 22 Q4 21 2022 % Change Service charges on deposit accounts $11.9 $12.6 $ 11.9 (5) % - % $ 46.5 8 % Wealth management fees 8.2 8.6 8.0 (5) 1 31.9 2 Debit and credit card fees 7.8 7.7 7.5 2 5 31.2 10 Mortgage lending income 1.1 2.6 5.0 (56) (77) 10.5 (52) Bank
Slide 10: Noninterest Expense
FY YoY $ in millions Q4 22 Q3 22 Q4 21 Q3 22 Q4 21 2022 % Change Salaries and employee benefits $73.0 $71.9 $63.8 2 % 14 % 287.0 17 % Occupancy expense, net 11.6 11.7 11.0 - 5 44.3 14 Furniture and equipment 5.4 5.4 4.7 - 14 20.7 4 Deposit insurance 3.7 3.3 2.1 12 75 11.6 66 OREO and foreclosure exp
Slide 11: Digital: Significant growth and enhancements implemented throughout the year
Digital: Significant growth and enhancements implemented throughout the year Zelle and Zelle related marks are wholly owned by Early Warning Services, LLC and are used herein under license 11 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Zelle ® Volume (transactions) 66% 70% +59% +50% +30% +21% +274% Q4 21 Q4 22 Av
Slide 12: Loan Portfolio
7 Ay Simmons First National Corporation Loan Portfolio
Slide 13: Loan Portfolio: Well-diversified, granular portfolio with no significant concentrations
13 Loan Portfolio: Well - diversified, granular portfolio with no significant concentrations (1) Total loans excluding credit card portfolio and mortgage warehouse Data shown above as of December 31, 2022. By State Loan Portfolio – Geographic diversification 33% 18% 16% 11% 5% 2% 15% Texas Arkansas
Slide 14: Loan portfolio: Solid growth that was geographically widespread
$2,943 $3,428 $4,473 $5,138 $5,000 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Unfunded Commitments $ in millions Mortgage Warehouse / PPP Agricultural 14 Loan portfolio: Solid growth that was geographically widespread PPP – Paycheck Protection Program Corporate Banking includes the following units: Corporate CRE
Slide 15: Loan pipelines: Disciplined pricing and underwriting standards
+101 bps $340 $503 $766 $750 $824 $455 $392 $484 $484 $929 $838 $1,077 $542 $460 $467 $493 $619 $776 $1,114 $552 $270 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Opportunity Proposal Ready to Close $1,291 $2,314 $2,364 $3,015 $1,480 $1,549 $1,122 15 Loan pipelines: Steadfastly focused on disciplined p
Slide 16: Deposits, Liquidity, Securities, Interest Rate Sensitivity and Capital
Deposits, Liquidity, Securities, Interest Rate Sensitivity and Capital
Slide 17: Deposits: Strategic decision in Q4 to extend the duration of certain wholesale deposits
0.65% 1.41% 0.47% 1.02% 2.20% 3.65% 0.00% 0.75% 1.50% 2.25% 3.00% 3.75% Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Interest Bearing Deposits Cost of Deposits Avg Fed Funds Rate Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Noninterest Bearing Interest Bearing Transactions Time Deposits 17 Deposits: Strategic decision in Q4 to e
Slide 18: Liquidity: Significant sources of liquidity
18 Liquidity: Significant sources of liquidity Cash and Cash Equivalents + Variable Rate Securities $ in millions Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Cash & Cash Equivalents Variable Rate Securities $3,527 $4,103 $3,606 $3,286 $3,150 $3,132 $2,321 $1,910 $1,824 At December 31, 2022
Slide 19: Interest Rate Sensitivity
19 Interest Rate Sensitivity Balance Sheet Interest Rate Sensitivity Over the next 12 months (estimated) (0.49)% 0.40% 0.81% D50 bps U25 bps U50 bps Estimated net interest income sensitivity given immediate, parallel shift in interest rates across the yield curve with a static balance sheet Immediat
Slide 20: Capital: Focused on tangible book value and strong regulatory capital levels
20 Capital: Focused on tangible book value and maintaining strong regulatory capital levels (1) Q4 22 data as of December 31, 2022, 3Q 22 data as of September 30, 2022, and Q4 21 data as of December 31, 2021 (2) Non - GAAP measure that management believes aids in the discussion of results. See Appen
Slide 21: Credit Quality
7 Ay Simmons First National Corporation Credit Quality
Slide 22: Credit Quality: Key metrics remain at historically low levels
22 Credit Quality: Key credit quality metrics remain at historically low - levels and reflect… Source: S&P Global Market Intelligence 2017 – 2021 (1) As of December 31, for each respective year shown above; quarterly data as of the end of the quarter for each respectiv e p eriod (2) Net charge - off
Slide 23: ACL: Reflects improved asset quality metrics and Moody's economic forecast
23 ACL: Reflects improved asset quality metrics and Moody’s economic forecast ACL – Allowance for Credit Losses on Loans (1) ALLL for 2017 – 2019 and ACL 2020 – 2022 (2) As of December 31, for each respective year shown above; quarterly data as of the end of the quarter for each respectiv e p eriod
Slide 24: Company Ratings
24 Company Ratings Rating Disclaimer: The ratings provided by Moody’s Investors Service, Kroll Bond Rating Agency and BauerFinancial are subject to review or withdrawal by Moody’s Investors Service, Kroll Bond Rating Agency and BauerFinancial , respectively, at any time and are not recommendations t
Slide 25: Key Takeaways
7 Ay Simmons First National Corporation Key Takeaways
Slide 26: Key Takeaways
26 Key Takeaways 1 Strong foundation for the next stage centered on “Better Bank Initiative” that focuses on P eople, P rocesses and S ystems 2 Capital position provides a strong foundation to support future organic growth while also focusing on growing tangible book value per share 3 Credit quality
Slide 27: Appendix
7 Ay Simmons First National Corporation Appendix
Slide 28: Breakout: Loan portfolio by Category
28 Breakout: Loan portfolio by Category as of September 30, 2022 as of December 31, 2022 $ in millions Balance $ % of Total Loans Balance $ % of Total Loans Classified $ Nonperforming $ ACL % Unfunded Commitment $ Unfunded Commitment Reserve Total Loan Portfolio Consumer - Credit Card 193 1% 197 1%
Slide 29: Non-GAAP Reconciliations
29 Non - GAAP Reconciliations Q4 Q1 Q2 Q3 Q4 YTD YTD $ in thousands, except per share data 2021 2022 2022 2022 2022 2022 2021 Calculation of Adjusted Earnings Net Income $ 48,238 $ 65,095 $ 27,454 $ 80,603 $ 83,260 $ 256,412 $ 271,156 Certain items Merger related costs 13,591 1,886 19,133 1,422 35 2
Slide 30: Calculation of Pre-Provision Net Revenue (PPNR)
Q4 Q1 Q2 Q3 Q4 YTD YTD $ in thousands 2021 2022 2022 2022 2022 2022 2021 Calculation of Pre - Provision Net Revenue (PPNR) Net interest income $ 153,081 $ 145,606 $ 185,099 $ 193,585 $ 193,026 $ 717,316 $ 591,532 Noninterest income 46,601 42,218 40,178 43,023 44,647 170,066 191,815 Less: Gain (loss)
Slide 31: Non-GAAP Reconciliations
31 Non - GAAP Reconciliations Q4 Q1 Q2 Q3 Q4 YTD YTD $ in thousands, except number of employees (FTE) 2021 2022 2022 2022 2022 2022 2021 Calculation of Total Revenue Excluding Securities Gain (Loss) and Adjusted Total Revenue Net Interest Income (GAAP) $ 153,081 $ 145,606 $ 185,099 $ 193,585 $ 193,0
Slide 32: Non-GAAP Reconciliations
32 Non - GAAP Reconciliations Calculation of Adjusted Noninterest Expense Noninterest Expense (GAAP) $ 141,597 $ 128,417 $ 156,813 $ 138,943 $ 142,575 $ 566,748 $ 483,589 Less: Merger related costs 13,591 1,886 19,133 1,422 35 22,476 15,911 Less: Branch right sizing expense 1,650 909 292 1,170 1,104
Slide 33: Non-GAAP Reconciliations
33 Non - GAAP Reconciliations Q4 Q1 Q2 Q3 Q4 $ in thousands 2021 2022 2022 2022 2022 Calculation of Efficiency Ratio and Adjusted Efficiency Ratio Noninterest Expense (efficiency ratio numerator) $ 141,597 $ 128,417 $ 156,813 $ 138,943 $ 142,575 Total Revenue $ 199,682 $ 187,824 $ 225,277 $ 236,608
Slide 34: Non-GAAP Reconciliations
34 Non - GAAP Reconciliations Q3 Q4 $ in thousands 2022 2022 Calculation of Net Interest Margin Net Interest Income $ 193,585 $ 193,026 Plus: taxable equivalent adjustment ________6,203 ________6,770 Net Interest Income – fully taxable equivalent 199,788 199,796 Less: Accretion (5,834) (4,473) Less:
Slide 35: 4th Quarter 2022 Contents
Nasdaq: SFNC 4 th Quarter 2022 Earnings Presentation Contents 5 Q4 Highlights 6 Q4 Results Overview 12 Loans 16 Deposits, Liquidity, Securities, Interest Rate Sensitivity & Capital 21 Credit Quality 25 Key Takeaways 27 Appendix
Simmons First National — Q4 2022 Earnings Presentation on 6ix