Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — IPO Roadshow (March 2018)
40 slides from Simmons First National's IPO roadshow presentation, Mar 19, 2018
Slide 1: Subordinated Debt Offering
March 2018 NASDAQ - GS: SFNC Subordinated Debt Offering
Slide 2: Disclosure
2 Disclosure This presentation has been prepared by Simmons First National Corporation (“Simmons” or the “Company”) solely for informational purposes based on its own information, as well as information from public sources . This presentation has been prepared to assist interested parties in making
Slide 3: Forward-Looking Statements and Non-GAAP Financial Measures
3 Forward - Looking Statements and Non - GAAP Financial Measures Certain statements contained in this presentation may not be based on historical facts and are "forward - looking statements" wit hin the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securiti
Slide 4: Term Sheet
Term Sheet (1) A rating is not a recommendation to buy, sell or hold securities . Ratings may be subject to revision or withdrawal at any time by the assigning rating organization . Each rating agency has its own methodology for assigning ratings and, accordingly, each rating should be evaluated ind
Slide 5: Company Profile
Market Cap $2.8B P / E (2018E) (2) 12.9 x P / B 126.0% P / TBV 231.4% Assets $15.1B Loans $10.8B Deposits $11.1B NPAs / Assets 0.57% CET1 9.80% Tier 1 Leverage 9.21% Total Risk - Based Capital 11.35% ROA 0.92% Core ROA 1.18% ROTCE 11.26% Core ROTCE 14.28% (1) As of December 31, 2017 except market ca
Slide 6: Non-Banking Business Units
(1) For fiscal year 2017. (2) Data obtained from FICO score update as of October 24, 2017. (3) Includes Southwest Bank trust assets. 6 Non - Banking Business Units (1) ▪ $185 million nationwide credit card portfolio ▪ Loan yield (including fees) over 13.6% ▪ History of excellent credit quality (1.61
Slide 7: 109 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 $- $0.15 $0.30 $0.45 $0.60 $0.75 Note: Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, which occurred on Fe
Slide 8: Acquisitions Since 2013
(1) Deal ratios as of closed date. Source: S&P Global Market Intelligence. (2) Metropolitan was acquired from Section 363 Bankruptcy. (3) Estimated system conversion dates. 9 Acquisitions Since 2013 $ in millions System Total Trust Purchase Price / Estimated Bank Announced Closed Conversion Assets A
Slide 9: Management Bios
10 Management Bios George Makris Chairman & Chief Executive Officer, Simmons First National Corporation 5 years with Company Marty Casteel Chairman & Chief Executive Officer, Simmons Bank 30 years with Company George Makris, Jr . was elected to the Simmons Bank Board of Directors in 1997 and named C
Slide 10: Management Bios
11 Management Bios Brad Yaney SVP, Loan Portfolio Analytics 16 years with Company Steve Wade EVP, Chief Credit Officer 17 years with Company Steve Wade serves as Executive Vice President & Chief Credit Officer of Simmons Bank . Mr . Wade has been responsible for the ongoing development of the Bank’s
Slide 11: Performance Trends
71.2% 67.2% 59.0% 56.3% 55.3% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 2013 2014 2015 2016 2017 23.69% 26.66% 25.36% 33.30% 28.11% 23.77% 23.79% 26.49% 33.16% 27.52% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 2013 2014 2015 2016 2017 GAAP Core $4.4 $4.6 $7.6 $8.4 $15.1 $- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $
Slide 12: Performance Trends
$23.2 $35.7 $74.1 $96.8 $92.9 $27.6 $38.7 $89.6 $101.4 $119.0 $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 2013 2014 2015 2016 2017 GAAP Core 0.64% 0.80% 1.03% 1.25% 0.92% 0.77% 0.86% 1.25% 1.31% 1.18% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 2013 2014 2015 2016 2017 GAAP Core (1) Per shar
Slide 13: Capital Ratios
9.2% 8.8% 11.2% 11.0% 9.2% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 2013 2014 2015 2016 2017 13.0% 13.4% 16.0% 14.5% 9.8% 3.0% 6.0% 9.0% 12.0% 15.0% 18.0% 2013 2014 2015 2016 2017 14.1% 14.5% 16.7% 15.1% 11.4% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 2013 2014 2015 2016 2017
Slide 14: Deposits
$ in millions (1) As of December 31, 2017 15 Deposits TOTAL DEPOSITS (1) $11.1 billion Non - interest Bearing 24.0% Interest Bearing & Savings 58.6% Time Deposits 17.4% $3,698 $3,861 $6,086 $6,735 $11,093 0.29% 0.24% 0.26% 0.24% 0.36% 0.00% 0.20% 0.40% 0.60% 0.80% $- $2,000 $4,000 $6,000 $8,000 $10,
Slide 15: 2017 Deposit Market Share
$ in millions (1) Branch counts as of December 31, 2017. Source: S&P Global Market Intelligence 2017 Deposit Market Share 16 United States Arkansas Market Deposit Market Deposit RankInstitution (ST) Branches Deposits Market Share RankInstitution (ST) Branches Deposits Market Share 1 Bank of America
Slide 16: 2017 Deposit Market Share
$ in millions (1) Branch counts as of December 31, 2017. Source: S&P Global Market Intelligence 2017 Deposit Market Share 17 Oklahoma Missouri Market Deposit Market Deposit RankInstitution (ST) Branches Deposits Market Share RankInstitution (ST) Branches Deposits Market Share 1 BOK Financial Corp. (
Slide 17: Investment Portfolio
Treasury / Agency 4.7% Fixed MBS (Agency) 20.8% Floating MBS (Agency) 9.1% CMO 32.8% Municipal 23.4% Corporate 0.0% Other 9.2% (1) As of December 31, 2017 Investment Portfolio (1) 18 Book Market Par ($M) Price Yield Price Yield Duration Treasury / Agency 84.25$ 99.82$ 1.64% 98.36$ 2.14% 2.57 Fixed M
Slide 18: Interest Rate Risk
(45.0%) (35.0%) (25.0%) (15.0%) (5.0%) 5.0% 15.0% 25.0% 35.0% 45.0% -400 -300 -200 -100 Level +100 +200 +300 +400 % EVE Change Policy Rnage $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00 Level Rates +200 bps -200 bps (25.0%) (15.0%) (5.0%) 5.0% 15.0% 25.0% -400 -300 -200 -100 Level +100 +200 +300
Slide 19: Loan Portfolio
(1) As of December 31, 2017. (2) Includes credit card, indirect, and equipment finance (nationwide). 20 Loan Portfolio (1) TOTAL LOAN PORTFOLIO $10.8 billion Agriculture 1.4% Credit Card 1.7% Consumer 3.1% Construction 12.0% Commercial 16.8% Single Family Residential 17.9% Commercial Real Estate 45.
Slide 20: Commercial Real Estate
Texas 25.2% Arkansas 25.1% Tennessee 17.5% Missouri 13.3% Oklahoma 8.0% Other States 11.0% CRE Concentrations & Geographic Composition (1) As of December 31, 2017. (2) Includes Bank SNB and Southwest Bank. Commercial Real Estate (1) 21 $ in millions Funded Unfunded Total Category Amount Amount Commi
Slide 21: Loan Growth
22 Loan Growth Linked Quarter Growth On a linked - quarter basis (December 31, 2017 compared to September 30, 2017), total loans increased $4.5 billion, or 71.0%. The increase was due to: ▪ $4.2 billion increase in loans acquired on October 19 th ▪ $193 million net increase in loans at Southwest Ban
Slide 22: Credit Quality: Legacy Loan Portfolio
(1) Excludes acquired loans. (2) Source: S&P Global Market Intelligence, all US Banks as of December 31, 2017. (3) Excluding credit card net charge - offs. 23 Credit Quality: Legacy Loan Portfolio (1) "Great Recession" 2017 Non-Performing Loans 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 Q2 Q3 Q
Slide 23: Asset Quality & Legacy vs. Acquired
Asset Quality & Legacy vs. Acquired 24 Asset Quality & Credit $ in millions Legacy Acquired Total Total Loans 5,706$ 5,074 10,780$ Classified Loans 82.2$ 93.4 175.6$ % of Total Loans 1.44% 1.84% 1.63% NPLs 46.2$ 45.9 92.0$ % of Total Loans 0.81% 0.90% 0.85% $ in millions Dec 31, '17 Total Assets 15,
Slide 24: Credit Quality: Loan & Credit Coverage
25 Credit Quality: Loan & Credit Coverage 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 25: OREO / Continuing Impact of Acquired OREO
OREO / Continuing Impact of Acquired OREO 26 Asset Quality & Credit ▪ For acquired banks, totals represent: – Properties held in OREO at merger date, which represent former loan collateral – Properties which were collateral for problem loans marked as impaired by SFNC at merger date – Former bank br
Slide 26: Projected Purchase Accounting Accretion & Loan Discount
$ in millions 27 Projected Purchase Accounting Accretion & Loan Discount HISTORICAL LOAN DISCOUNT BALANCE & ACCRETION INCOME 2018 ESTIMATED SCHEDULED ACCRETION $112.0 $114.1 $77.2 $55.7 $35.5 $89.3 $17.3 $39.6 $37.5 $46.1 $24.3 $27.8 $- $10.0 $20.0 $30.0 $40.0 $50.0 $- $20.0 $40.0 $60.0 $80.0 $100.0
Slide 27: 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 – 03/13/18) Note: Stock Price $30.60 as of March 13, 2018. Per share information has been adjusted to reflect the effects of the Company’s two - for - one stock split, whi
Slide 28: Why Simmons First?
▪ “Table Stakes” – Asset Quality – Regulatory Compliance ▪ 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
Slide 29: Appendix
Appendix 30
Slide 30: New Subordinated Debt Analysis
New Subordinated Debt Analysis (1) Source: Bloomberg. Current interest rate for the revolving line of credit derived using 1 - month LIBOR rate of 1.79%. Current int erest rate for all TruPS derived using 3 - month LIBOR rate of 2.15%. Published on March 15, 2018. Proposed Offering 31 $ in millions
Slide 31: Double Leverage Ratio & Interest Coverage
$ in millions (1) The Company does not currently plan to downstream any amount of the subordinated debt to its subsidiaries, thus not affecting th e double leverage ratio. Note: Core excludes non - core income and expense items (e.g. merger related cost and branch rightsizing cost). Core NIM exclude
Slide 32: Non-GAAP Reconciliations
Note: Per share information has been prospectively adjusted to reflect the effects of the Company’s two - for - one stock split, wh ich will be payable February 8, 2018. Note: Core excludes non - core income and expense items (e.g. merger related cost and branch rightsizing cost). Core NIM exclude s
Slide 33: Non-GAAP Reconciliations
34 Non - GAAP Reconciliations Reconciliation Of Non-GAAP Financial Measures Q4 Q4 $ in thousands 2015 2016 2017 2016 2017 Calculation of Core Return on Average Assets Net income available to common stockholders 74,107$ 96,790$ 92,940$ 26,971$ 18,903$ Net non-core items, net of taxes, adjustment 15,5
Slide 34: Non-GAAP Reconciliations
(1) Effective tax rate of 39.225%, adjusted for non - deductible merger related costs and deferred tax items from the sale of P&C insu rance lines of business. (2) Tax adjustment to revalue deferred tax assets and liabilities to account for the future impact of lower corporate tax of 26.1 35% . 35 N
Slide 35: 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 on February 8, 2018. (1) Effective tax rate of 39.225%, adjusted for non - deductible merger related costs and deferred tax items from the sale of P&C insu rance lines of
Slide 36: Non-GAAP Reconciliations
37 Non - GAAP Reconciliations Reconciliation of Non-GAAP Financial Measures Q4 Q1 Q2 Q3 Q4 $ in thousands 2016 2017 2017 2017 2017 Calculation of Pre-tax Income - Core Pre-tax Income 39,386$ 31,811$ 34,125$ 43,530$ 45,457$ Non-core items Gain on sale of P&C insurance business - - - (3,708) - Donatio
Slide 37: 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. 38 Non - GAAP Reconc
Slide 38: 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 on February 8, 2018. 39 Non - GAAP Reconciliations Reconciliation Of Non-GAAP Financial Measures Q4 Q4 $ in thousands 2015 2016 2017 2016 2017 Calculation of Core Net Int
Slide 39: Non-GAAP Reconciliations
40 Non - GAAP Reconciliations Reconciliation of Non-GAAP Financial Measures Q4 Q4 $ in thousands 2015 2016 2017 2016 2017 Calculation of Tangible Common Equity to Tangible Assets Ratio Total stockholders' equity 1,076,855$ 1,151,111$ 2,084,564$ 1,156,933$ 1,931,804$ Preferred stock (30,852) - - - -
Slide 40: Simmons First National Corporation
Simmons First National Corpor: