Simmons First National Corporation · NASDAQ:SFNC

Simmons First National — Investor Presentation (November 2018)

55 slides from Simmons First National's investor presentation, Nov 26, 2018

  1. Slide 1: Investor Presentation

    NASDAQ - GS: SFNC Investor Presentation

  2. 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

  3. Slide 3: Company Profile

    (1) Based on October 26, 2018 closing stock price of $25.48. (2) As of September 30, 2018. Company Profile 3 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

  4. Slide 4: Non-Banking Business Units

    Q3 2018 (1) Includes Southwest Bank trust assets. Non - Banking Business Units 4 ▪ $182.6 million nationwide credit card portfolio ▪ Loan yield (including fees): 14.1% ▪ History of excellent credit quality (1.58% net charge - off ratio) TRUST (1) ▪ $5.4 billion in trust assets ($3.1 billion AUM) ▪ P

  5. Slide 5: 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, merger related costs and branch rightsiz

  6. Slide 6: Financial Highlights – Q3 2018

    (1) Core excludes non - core income and expense items (e.g., gain on sale of insurance lines of business, merger related costs and bra nch rightsizing costs). Core results are non - GAAP measurements. See Appendix for non - GAAP reconciliations. Financial Highlights – Q3 2018 6 NON - RECURRING ITEMS

  7. Slide 7: Performance Trends

    (1) Efficiency ratio is 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 securities transactions and non - core items. See Appendix for

  8. Slide 8: 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 excludes non - core income and expense items (e.g. merger related costs and branch rightsizing costs). Core results are non - GAAP measurem

  9. Slide 9: Regulatory Capital Ratios

    Regulatory Capital Ratios 9 TIER 1 LEVERAGE RATIO TOTAL RISK - BASED CAPITAL RATIO TIER 1 RISK - BASED CAPITAL RATIO CET1 CAPITAL RATIO 14.5% 16.7% 15.1% 11.4% 13.1% 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 Q3 8.8% 11.2% 11.0% 9.2% 8.7% ​ ​ ​ ​ 4.0% 5.0% 6.

  10. Slide 10: Loan Portfolio

    (1) As of September 30, 2018. (2) Includes credit card, indirect, and equipment finance (nationwide). Loan Portfolio (1) 10 TOTAL LOAN PORTFOLIO $11.9 billion Agriculture 1.9% Credit Card 1.5% Consumer 2.4% Construction 14.3% Single Family Residential 16.9% Commercial Real Estate 43.2% Commercial 18

  11. Slide 11: Loan Growth

    Loan Growth 11 Linked Quarter Growth On a linked - quarter basis (September 30, 2018 compared to June 30, 2018), total loans increased $492 million, or 4.33%. The increase was due to: ▪ $285 million increase in real estate loans ▪ $171 million increase in commercial loans ▪ $31 million increase in s

  12. Slide 12: Credit Quality: Legacy Loan Portfolio

    (1) Source: S&P Global Market Intelligence, all US Banks. September 30, 2018 unavailable. (2) Excluding credit card net charge - offs. Credit Quality: Legacy Loan Portfolio (Excluding Acquired Loans) 12 "Great Recession" 2018 Non-Performing Loans 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q3

  13. Slide 13: Credit Quality: Credit Card Portfolio

    1991 Recession 4.55% 2002 Recession 6.41% 2009 "Great Recession" 9.42% 1.42% 2.10% * 2.61% * 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% Net Charge - off % History of Strong Asset Quality (Net Charge - offs) * Federal bankruptcy reform impacted charge - offs in 2005 Sou

  14. Slide 14: Credit Quality: Loan & Credit Coverage

    Credit Quality: Loan & Credit Coverage 14 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

  15. Slide 15: 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 15 Since December 2017 , the Federal Reserve Board increased the Fed Funds target rate by 75 basis points . The Company’s deposit beta was 56 % , loan beta

  16. Slide 16: Projected Purchase Accounting Accretion & Loan Discount

    ($ in Millions) Projected Purchase Accounting Accretion & Loan Discount 16 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

  17. Slide 17: Acquisitions Since 2013

    (1) Deal ratios as of closed date. Source: S&P Global Market Intelligence. (2) Metropolitan was acquired from Section 363 Bankruptcy. Acquisitions Since 2013 17 2013 – 2014 Consolidated eight charters to one National to State Charter Conversion (Fed Member Bank) 2015 2016 2017 $ in millions System T

  18. Slide 18: Complementary Lines of Business & Future Expansion

    Complementary Lines of Business & Future Expansion 18 MORTGAGE BANKING WEALTH MANAGEMENT & TRUST TREASURY SERVICES SBA LENDING TEAM INSURANCE CREDIT CARDS EQUIPMENT FINANCE MORTGAGE WAREHOUSE HEALTHCARE ENERGY LENDING

  19. 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

  20. 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

  21. 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 $- $0.10 $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, which oc

  22. Slide 22: 1 Year Total Shareholder Return

    Dividend + Stock Appreciation (10/26/17 – 10/26/18) Note: Stock Price $25.48 as of October 26, 2018. Per share information has been adjusted to reflect the effects of the Company’s t wo - for - one stock split, which occurred on February 8, 2018. Source: S&P Global Market Intelligence 1 Year Total S

  23. Slide 23: Long-term Shareholder Return

    Dividend + Stock Appreciation (12/31/07 – 10/36/18) Note: Stock Price $25.48 as of October 26, 2018. Per share information has been adjusted to reflect the effects of the Company’s t wo - for - one stock split, which occurred on February 8, 2018. Source: S&P Global Market Intelligence Long - term Sh

  24. Slide 24: 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

  25. Slide 25: Strategic Focus

    Strategic Focus 25 ▪ "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

  26. Slide 26: Why Simmons First?

    Why Simmons First? 26 ▪ 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

  27. Slide 27: Appendix

    Appendix 27

  28. Slide 28: Non-GAAP Reconciliations

    Non - GAAP Reconciliations 28 Q3 Q3 YTD YTD $ in thousands 2015 2016 2017 2017 2018 2017 2018 Calculation of Core Return on Average Assets Net income available to common stockholders 74,107$ 96,790$ 92,940$ 28,852$ 55,193$ 74,037$ 160,067$ Net non-core items, net of taxes, adjustment 15,515 4,619 26

  29. Slide 29: 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

  30. Slide 30: 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

  31. Slide 31: 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

  32. Slide 32: 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 32 Q3 Q3 YTD YTD $ in thousands, except per share and share count 2015 2016 2017 2017 2018 2017 2018 Calculation of Core

  33. Slide 33: Simmons First National Corporation

    7 Simmons First _ National Corporation

  34. Slide 34: Acquisition of Reliance Bancshares, Inc.

    November 13, 2018 Nasdaq: SFNC Acquisition of Reliance Bancshares, Inc.

  35. Slide 35: Forward-Looking Statements and Non-GAAP Financial Measures

    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” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities

  36. Slide 36: Important Additional Information and Where to Find It

    Important Additional Information and Where to Find It In connection with the proposed merger, Simmons First National Corporation "SFNC" will file with the SEC a Registration Statement on Form S - 4 that will include a proxy statement of RLBS , and a prospectus of SFNC, as well as other relevant docu

  37. Slide 37: Pro Forma Franchise Highlights

    OK SC KY TN MO CO AR Lincoln Kansas City Jefferson City Tulsa Houston San Antonio Austin Tampa Knoxville Chattanooga Nashville Atlanta Memphis St. Louis Springfield Wichita Denver Little Rock Dallas New Orleans Oklahmoa City AL FL GA IL IN IA KS LA MS NE NM NC OH TX VA WV El Paso Charlotte Cincinnat

  38. Slide 38: Overview of Reliance Bancshares, Inc.

    Source: S&P Global Market Intelligence Data as of or for the three months ended 9/30/18; deposit data as of 6/30/18 Note: Core deposits defined as total deposits less jumbo time deposits greater than $250, 000 (1) Includes all banks operating in the St. Louis MSA with 6/30/18 assets greater than $1.

  39. Slide 39: Strategic Acquisition, Low Risk, Financially Attractive

    Note: FDIC deposit data as of 6/30/18 Strategic Acquisition Low Risk Profile F i n a nc i a l l y Attractive St r a t egi c Value • Builds meaningful scale in attractive St. Louis MSA • Creates a top 10 deposit franchise in Missouri • Strong retail footprint with a sticky deposit base • Opportunity

  40. Slide 40: Diversifying and Improving Position in Key Markets

    Source: S&P Global Market Intelligence Data as of 6/30 of each respective year (1) Over 500,000 residents in the metropolitan statistical area (2) Under 500,000 residents in the metropolitan statistical area Diversifying and Improving Position in Key Markets 50% 50% 44% 56% 34% 66% Metro Markets (1)

  41. Slide 41: Top 15 Largest Markets of Operation by Population

    7,576 2,960 2,810 2,543 2,187 2,158 1,956 1,407 1,352 1,000 887 745 648 554 468 0.0 2,000 4,000 6,000 8,000 SFNC Metro Markets of Operation Top 15 Largest Markets of Operation by Population (000s) Source: S&P Global Market Intelligence Data as of 6/30/18 41 Reliance Bank

  42. Slide 42:              

                             l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l

  43. Slide 43: St. Louis, MO Market Overview

    St. Louis, MO Market Overview Source: S&P Global Market Intelligence, St. Louis Regional Chamber of Commerce, St. Louis Business Journal, Bureau of Labor S ta tistics Demographic data deposit weighted by county as of 6/30/18 (1) Based on 8/30/18 Bureau of Labor Statistics U.S. seasonally adjusted fi

  44. Slide 44: Transaction Overview

    Pricing data based on SFNC’s closing price of $27.22 as of 11/12/18 (1) Based on RLB’s tangible equity of $134.0 million as of 9/30/18 (inclusive of $42.1 million of preferred equity and $5.5 milli on convertible debentures with $0.50 conversion price) (2) Based on RLBS’s tangible common equity of $

  45. Slide 45: Comprehensive Credit Due Diligence

    Comprehensive Credit Due Diligence • Comprehensive credit due diligence process to review RLBS ’s loan and OREO portfolios • Experienced loan review team, which has a good understanding of borrowers and local markets • Reviewed 92% of the $1.1 billion loan portfolio • Estimated Loan Credit Mark of $

  46. Slide 46: Key Transaction Assumptions

    Key Transaction Assumptions Cost Savings • Expected non - interest expense savings of 30%, with 66% being achieved during 2019 and 100% thereafter Revenue Enhancements • None included in projections One - time Merger Related Cost • Approximately $6.4 million pre - tax (expected) Loan Mark • $12.7 mi

  47. Slide 47: Key Transaction Impacts

    Transaction Overview 47 Key Transaction Impacts (Expected) Capital Impact SFNC 9/30/18 Pro Forma 2019E / 2020E EPS Accretion IRR TBV Dilution (%) TBV Earnback Period TCE / TA Tier 1 Leverage Ratio Common Equity Tier 1 Ratio Tier 1 Risk - Based Capital Ratio Total Risk - Based Capital Ratio ~4% / ~6%

  48. Slide 48: Proven Acquiror and Integrator

    Proven Acquiror and Integrator 2013 - 2014 2016 2017 2015 2019 Metropolitan National Bank Arkansas Total Assets $920,000,000 November 2013 Delta Trust & Banking Corp. Arkansas Total Assets $420,000,000 August 2014 Community First Bancshares Tennessee Total Assets $1,915,000,000 February 2015 Liberty

  49. Slide 49: Summary

    Summary • Pro forma assets of $1 7 . 8 billion ; 64 th largest bank in the country • Top 10 deposit franchise in Missouri and St. Louis • In - line with in - market expansion strategy • Strong St. Louis franchise with excellent retail footprint • Financially attractive to combined shareholder base •

  50. Slide 50: Supplemental Information

    Supplemental Information 50

  51. Slide 51: Pro Forma Loan Composition

    14% 17% 4% 10% 28% 18% 7% 13% 17% 5% 11% 31% 16% 7% 8% 6% 8% 9% 60% 7% 2% Source: S&P Global Market Intelligence Data bank level as of or for the three months ended 9/30/18 Pro Forma Loan Composition 3 % Yield on Total Loans: 5.58 % Yield on Total Loans: 4. 18 % SFNC RLBS Pro Forma Loans ($mm) Loans

  52. Slide 52: Pro Forma Deposit Composition

    3% 2% 59% 25% 10% 10% 2% 68% 15% 6% Pro Forma Deposit Composition 3 % Cost of Deposits : 0.82 % Cost of Deposits : 0 .87 % SFNC RLBS Pro Forma Deposits ($mm) Deposits ($mm) Deposits ($mm) 9% 2% 67% 16% 6% Source: S&P Global Market Intelligence Data bank level as of or for the three months ended 9/30

  53. Slide 53: Pro Forma Deposit Composition by State

    Dollars in thousands Source: S&P Global Market Intelligence Data as of 6/30/18 Pro Forma Deposit Composition by State 3 % SFNC RLBS Pro Forma Deposits ($mm) Deposits ($mm) Deposits ($mm) 15% 85% 49% <1% 2% 9% 11% 16% 13% Arkansas $5,960 49.0% Colorado 56 0.5 Kansas 210 1.7 Missouri 1,080 8.9 Oklahom

  54. Slide 54: Reliance Bank Historical Balance Sheet Growth

    $914 $1,015 $1,163 $1,215 $1,295 $1,412 $1,513 $400 $700 $1,000 $1,300 $1,600 2012 2013 2014 2015 2016 2017 Q3 '18 Source: S&P Global Market Intelligence Data as of 12/31 each respective year; Q3 ’18 data as of 9/30/18 Reliance Bank Historical Balance Sheet Growth Assets ($mm) Deposits ($mm) Loans /

  55. Slide 55: Simmons First National Corporation

    7 Simmons First _ National Corporation

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