Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Q1 2023 Earnings Presentation
37 slides from Simmons First National's earnings presentation, Apr 25, 2023
Slide 1: 1st Quarter 2023 Earnings Presentation
Nasdaq: SFNC 1st Quarter 2023 Earnings Presentation Contents 3 Company Profile 4 Q1 Financial Highlights 11 Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital 19 Loans 23 Credit Quality 26 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 community-based bank serving our customers and the communities where we work and live since 1903 $27.6 $22.5 BILLION BILLION TOTAL ASSETS TOTAL DEPOSITS CONSECUTIVE YEARS $7.7 $16.6 114 PAYING DIVIDENDS3 BILLION ASSETS UNDER BILLION MANAGEMENT/ T
Slide 4: Q1 Financial Highlights
7 Simmons First __ National Corporation Q1 23 Financial Highlights
Slide 5: Balance Sheet Highlights
Balance Sheet Highlights Q1 23 vs Q4 22 Q1 23 vs Q1 22 $ in millions, except per share data Q1 23 Q4 22 Q1 22 $ Change % Change $ Change % Change Period End Balances Total loans $16,555.1 $16,142.1 $12,028.6 $413.0 3 % $4,526.5 38 % Investment securities 7,521.4 7,612.6 8,196.9 (91.1) (1) (675.5) (8
Slide 6: Income Summary
Income Summary Income Summary % Change vs Q1 23 Highlights $ in millions, except per share data Q1 23 Q4 22 Q1 22 Q4 22 Q1 22 Linked Quarter Comparison (Q1 23 vs Q4 22) Net interest income $177.8 $193.0 $145.6 (8) % 22 % Noninterest income, excluding securities gain (loss) (1) 45.8 44.7 42.3 3 8 ❑ T
Slide 7: Net Interest Income and Margin (FTE)
Net Interest Income and Margin (FTE) Net Interest Income Net Interest Income Evolution $ in millions; FTE $ in millions; FTE Q1 23 Highlights Linked Quarter Comparison (Q1 23 vs Q4 22) ❑ Asset portion of balance sheet $199.8 $199.8 $191.2 $184.1 ▪ +27 bps increase in loan yields ▪ +24 bps increase i
Slide 8: Noninterest Income
Noninterest Income % Change vs Q1 23 Highlights $ in millions Q1 23 Q4 22 Q1 22 Q4 22 Q1 22 Linked Quarter Comparison (Q1 23 vs Q4 22) Service charges on deposit accounts $12.4 $11.9 $ 10.7 5 % 16 % ❑ Recurring fee income (service charges on deposit Wealth management fees 7.4 8.2 8.0 (10) (8) accoun
Slide 9: Noninterest Expense
Noninterest Expense % Change vs Q1 23 Highlights $ in millions Q1 23 Q4 22 Q1 22 Q4 22 Q1 22 Linked Quarter Comparison (Q1 23 vs Q4 22) Salaries and employee benefits $77.0 $73.0 $67.9 6 % 13 % ❑ Overall expenses held flat on a linked quarter basis Occupancy expense, net 11.6 11.6 10.0 - 16 ❑ Increa
Slide 10: Better Bank Initiative: Framework to deliver efficiencies and scalability
Better Bank Initiative: Framework to deliver efficiencies and scalability 2023 Efficiency Targets ❑ ~$15 million in annual noninterest expense cost savings ▪ ~50% achieved in Q2-Q3 and 100% achieved by Q4 ▪ Includes early retirement program, operational efficiencies Operational Excellence and other
Slide 11: Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital
Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital
Slide 12: Deposits: Granular and well-diversified relationship-driven deposit base
Deposits: Granular and well-diversified relationship-driven deposit base Core Deposits per Branch1 Deposit Portfolio Highlights (as of March 31, 2023) $360,778 $ in thousands ❑ More than 628,000 deposit accounts ❑ Excluding brokered deposits and public funds, average deposit size $25,000 ▪ $16,500 f
Slide 13: Deposits: Change in mix reflects current interest rate environment
Deposits: Change in mix reflects current interest rate environment +0% Deposit Mix $ in billions $22.1 $22.5 $22.5 $22.0 $19.4 Linked Quarter Deposit Change $ in millions Total Deposits $(96) Noninterest Bearing Transaction Accounts $(527) Interest Bearing Transaction Accounts $(311) Time Deposits $
Slide 14: Digital: Significantly expanded digital solutions focused on deposit gathering
Digital: Significantly expanded digital solutions focused on deposit gathering Customer Transactions by Channel Zelle® Volume (transactions) Expanding Suite of Digital Solutions +19% +168% Digital CDs & Money Market Q1 2023 +13% Further expanded digital deposit account 70% +21% offerings to include
Slide 15: Securities Portfolio: Highly rated portfolio and balance sheet optimization funding source
Securities Portfolio: Highly rated portfolio and balance sheet optimization funding source Securities Portfolio by Type Securities Portfolio Summary 7% 8% Yield Effective At March 31, 2023 (FTE)(1) Duration Fixed Rate Securities Portfolio Municipal 3.15% 11.64 Highlights 37% MBS/CMO 2.01 4.80 48% Tr
Slide 16: 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 13% 13% $4,103 $3,606 $3,286 10% 10% $3,150 $3,132 9% 9% 8% $2,321 7% $1,910 6% 6% 6% 6% 6% $1,824 5% $1,
Slide 17: Interest Rate Sensitivity
Interest Rate Sensitivity Balance Sheet Interest Rate Sensitivity Fair Value Hedges Over the next 12 months (estimated) At March 31, 2023 Entered into a 2-year forward starting swap in September 2021 to convert designated AFS securities from fixed interest rates Immediate change in interest rates to
Slide 18: Capital: Focused on maintaining a strong capital position and growth of tangible book value
Capital: Focused on maintaining a strong capital position and growth of tangible book value Tier 1 Leverage Ratio (1) CET 1 Capital Ratio (1) Tier 1 Risk-Based Capital Ratio (1) Total Risk-Based Capital Ratio (1) 9.0% 9.3% 9.2% 16.4% 13.5% 13.5% 11.9% 11.9% 11.9% 11.9% 14.2% 14.5% Q1 22 Q4 22 Q1 23
Slide 19: Loan Portfolio
7 Simmons First __ National Corporation Loan Portfolio
Slide 20: Loan Portfolio: Well-diversified, granular portfolio with no significant concentrations
Loan Portfolio: Well-diversified, granular portfolio with no significant concentrations Loan Portfolio – Geographic diversification Office Portfolio (non-owner occupied) Retail (non-owner occupied) Construction-Land Development By State By State By State By State 16% 14% 17% 32% 25% 3% 42% 2% 45% 48
Slide 21: Loan Portfolio: Solid growth that was geographically widespread
Loan Portfolio: Solid growth that was geographically widespread Loan Portfolio Waterfall Linked Quarter Loan Growth $ in millions $ in millions +3% Total Loans $413 RE - Commercial $53 RE - Construction $210 Funded loan Paydowns/ /advances payoffs Commercial $39 RE – Single Family $44 Consumer & Oth
Slide 22: Loan Pipelines: Reflect conservative credit underwriting standards and economic conditions
Loan Pipelines: Reflect conservative credit underwriting standards and economic conditions Commercial Loan Pipeline by Category $ in millions Q1 23 Highlights Opportunity Proposal Ready to Close $3,015 ❑ Focused on maintaining prudent underwriting standards and pricing discipline given projections s
Slide 23: Credit Quality
7 Simmons First __ National Corporation Credit Quality
Slide 24: Credit Quality: Key credit quality metrics remain at historically low-levels
Credit Quality: Key credit quality metrics remain at historically low-levels and reflect… Nonperforming loans / loans (1) Nonperforming assets / total assets (1) Net charge-offs to average loans (2) Strategic decision to de-risk certain elements of the loan portfolio through planned run-off of parti
Slide 25: ACL: Reflects Moody's revised economic forecast
ACL: Reflects Moody’s revised economic forecast ACL/ALLL(1) / Loans (%) and ACL/ALLL ($) (2) Allowance for Credit Losses on Loans and Loan Coverage $ in millions ACL / ACL Loans 1.85% $ in millions $250 2.00% 1.71% ACL as of 12/31/21 $ 205.3 1.71% $225 1.80% $200 1.49% 1.41% 1.60% $175 1.40% Q1 22 R
Slide 26: Key Takeaways
7 Simmons First __ National Corporation Key Takeaways
Slide 27: Key Takeaways
Key Takeaways 1 Balance sheet optimization reflected continued shift in earnings asset mix and utilization of cash flows from principal maturities of investment securities portfolio as a funding source 2 Granular and well-diversified relationship driven deposit base enabled overall level of deposits
Slide 28: Appendix
7 Simmons First __ National Corporation Appendix
Slide 29: Breakout: Loan portfolio by Category
Breakout: Loan portfolio by Category as of December 31, 2022 as of March 31, 2023 % of % of Unfunded Unfunded Balance Total Balance Total Classified Nonperforming ACL Commitment Commitment $ in millions $ Loans $ Loans $ $ % $ Reserve Total Loan Portfolio Consumer - Credit Card 197 1% 189 1% 1 1 3.5
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q1 Q2 Q3 Q4 Q1 $ in thousands, except per share data 2022 2022 2022 2022 2023 Calculation of Adjusted Earnings Net Income $ 65,095 $ 27,454 $ 80,603 $ 83,260 $ 45,589 Certain items Merger related costs 1,886 19,133 1,422 35 1,396 Branch right sizing, net 909 380 1,235 1,104
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q1 Q2 Q3 Q4 Q1 $ in thousands 2022 2022 2022 2022 2023 Calculation of Pre-Provision Net Revenue (PPNR) Net interest income $ 145,606 $ 185,099 $ 193,585 $ 193,026 $ 177,835 Noninterest income 42,218 40,178 43,023 44,647 45,835 Less: Gain (loss) on sale of securities (54) (15
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q1 Q2 Q3 Q4 Q1 $ in thousands, except number of employees (FTE) 2022 2022 2022 2022 2023 Calculation of Total Revenue Excluding Securities Gain (Loss) and Adjusted Total Revenue Net Interest Income (GAAP) $ 145,606 $ 185,099 $ 193,585 $ 193,026 $ 177,835 Noninterest Income (
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q1 Q2 Q3 Q4 Q1 $ in thousands 2022 2022 2022 2022 2023 Calculation of Noninterest Income to Total Revenue Noninterest Income to Total Revenue 22.48% 17.83% 18.18% 18.79% 20.49% Adjusted Noninterest Income, excluding securities gain (loss) to Adjusted Total Revenue (non-GAAP)
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q1 Q2 Q3 Q4 Q1 $ in thousands 2022 2022 2022 2022 2023 Calculation of Efficiency Ratio and Adjusted Efficiency Ratio Noninterest Expense (efficiency ratio numerator) $ 128,417 $ 156,813 $ 138,943 $ 142,575 $ 143,228 Total Revenue $ 187,824 $ 225,277 $ 236,608 $ 237,673 $ 223
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q1 Q4 Q1 $ in thousands 2022 2022 2023 Calculation of Tangible Common Equity (TCE) Total stockholders’ equity $ 2,961,607 $ 3,269,362 $ 3,339,901 Less: Preferred stock _______ _- _______ _- _______ _- Total common stockholders’ equity $ 2,961,607 $ 3,269,362 $ 3,339,901 Tota
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Q1 Q4 Q1 $ in thousands 2022 2022 2023 Calculation of Uninsured Deposit Coverage Ratio Uninsured deposits at Simmons Bank $ 6,414,459 $ 7,267,220 $ 5,896,752 Less: Intercompany eliminations ____ _504,306 ______527,542 ______628,592 Total uninsured deposits $ 5,910,153 $ 6,73
Slide 37: 1st Quarter 2023 Earnings Presentation
Nasdaq: SFNC 1st Quarter 2023 Earnings Presentation Contents 3 Company Profile 4 Q1 Financial Highlights 11 Deposits, Securities, Liquidity, Interest Rate Sensitivity and Capital 19 Loans 23 Credit Quality 26 Key Takeaways 28 Appendix
Simmons First National — Q1 2023 Earnings Presentation on 6ix