Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Investor Day (November 2017)
127 slides from Simmons First National's investor day presentation, Nov 13, 2017
Slide 1: 2017 Investor Day
November 14, 2017 2017 Investor Day
Slide 2: Forward Looking Statements
Forward Looking Statements 2 Certain of the statements included in this presentation may not be based on historical facts and are “forward - looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 . These forward - looking statements may be identified by refere
Slide 3: Non-GAAP Financial Measures
Non - GAAP Financial Measures 3 This document contains financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP) . The Company's management uses these non - GAAP financial measures in their analysis of the company's performance . These
Slide 4: Agenda
Agenda 4 Strategic Overview George Makris 8:00 AM – 8:30 AM 5 A Wealth Management Group Trust, Retail Investment, Insurance, Q&A Philip Tappan 8:30 AM – 9:00 AM 16 B Commercial & Specialty Lending Group Commercial Lending, Credit Card, Mortgage, Equipment Finance, SBA Lending, Q&A Matt Reddin 9:00 A
Slide 5: A. Strategic Overview
A. Strategic Overview 5 George Makris – Chairman & Chief Executive Officer, Simmons First National Corporation
Slide 6: Strategic Overview: Company Profile
Strategic Overview 6 ▪ History of strong asset quality ▪ Excellent non - interest income (non - banking business units) ▪ Simmons Bank converted from a National Charter to a State Charter (Fed Member Bank) in March 2016 PROFILE (AS OF 10/27/17) Ticker SFNC Founded 1903 Estimated Total Assets $14.9 b
Slide 7: Profile and Footprint as of June 2013
Profile and Footprint as of June 2013 ($ in Millions) Strategic Overview 7 Northeast AR Searcy El Dorado Southeast AR Pine Bluff Northwest AR Russellville Hot Springs COMPANY HIGHLIGHTS BANK TOTAL ASSETS ▪ Total Assets: $3.5 billion ▪ 8 separately chartered banks SFNB $ 1,993 SFB - Northeast AR 357
Slide 8: Acquisitions between 2013 & 2017
Acquisitions between 2013 & 2017 Strategic Overview 8 2013 – 2014 Consolidated eight charters to one (Simmons Bank) National to State Charter Conversion (Fed Member Bank) 2015 2016 2017
Slide 9: Creating a premier regional banking network
Creating a premier regional banking network 9 Strategic Overview COMPANY HIGHLIGHTS (10/27/17) ▪ Estimated Total Assets: $14.9 billion ▪ Located in 7 states
Slide 10: Key Financial Highlights / Balance Sheet & Profitability
$- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 2013 2014 2015 2016 10/27/2017 (Estimated) Key Financial Highlights / Balance Sheet & Profitability ($ in Billions) (1) Core excludes non - core income, expense items (e.g. merger related cost and branch rightsizing cost) and purchase accounting inte rest accretion
Slide 11: Key Financial Highlights / Regulatory Capital Ratios
13.0% 13.4% 16.0% 14.5% 10.7% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 2013 2014 2015 2016 Pro Forma 12.3% 12.8% 14.2% 13.5% 8.6% 5.5% 6.5% 7.5% 8.5% 9.5% 10.5% 11.5% 12.5% 13.5% 14.5% 15.5% 2013 2014 2015 2016 Pro Forma Key Financial Highlights / Regulatory Capital Ratios (1)
Slide 12: Shareholder Value
Shareholder Value Note: Core excludes non - core income and expense items (e.g. merger related cost and branch rightsizing cost). Core results are non - GAA P measurements. See Appendix for non - GAAP reconciliations. Strategic Overview 12 ROA ROTCE NET INCOME ($ IN MILLIONS) EPS 0.64% 0.80% 1.03% 1
Slide 13: Shareholder Value (Continued)
Shareholder Value (Continued) Strategic Overview 13 DATE STOCK PRICE MARKET CAP DIVIDEND PER SHARE 6/30/13 $ 26.09 $0.4 billion 10/31/17 $ 57.70 $2.7 billion $0.84 $0.88 $0.92 $0.96 $1.00 $0.75 $0.80 $0.85 $0.90 $0.95 $1.00 $1.05 2013 2014 2015 2016 2017 (Expected)
Slide 14: Preparing for $10 Billion
Strategic Overview 14 PRE - CONVERSION EXAMINATION IN 2016 ▪ Jay Burchfield ▪ Chris Kirkland ▪ Mark Doramus ▪ Jerry Hunter ▪ OCC to State Fed Member EVP, Chief People Officer Jena Compton Johnny McCaleb Rusty Barham Paul Kanneman Pat Neeley EVP, Executive Director of Finance & Accounting EVP, Regula
Slide 15: Preparing for $10 Billion (Continued)
Strategic Overview 15 PROCESSES ISSUES ▪ Internal Audit ▪ ERM ▪ Compliance ▪ CRA ▪ Fair Lending ▪ Front - line Accountability ▪ Accounting Department Reorganization ▪ Culture ▪ M&A – Valuation – Due Diligence – Conversion and Integration – Review ▪ HHI & Rural Markets ▪ CRE Concentration Formula – N
Slide 16: B. Wealth Management Group
B. Wealth Management Group 16 Philip Tappan – EVP, Wealth Management
Slide 17: Trust / History
Trust / History ($ in Thousands) 17 Wealth Management Group ▪ Providing Trust services since 1922 ▪ Half of revenue from Investment Management Accounts (IMAs); IMAs line of business has highest margin of 45% ▪ Eight Portfolio managers in - house, purchase research from Northern Trust and Wright Inve
Slide 18: Trust / Assets Under Management by Office
Trust / Assets Under Management (“AUM”) by Office Wealth Management Group 18 Fort Worth $350 million Dallas $350 million Missouri $1.91 billion Central AR $880 million NWA $68 million El Dorado $140 million Pine Bluff $1.9 billion NE AR $157 million West TN $11 million SE TN $183 million
Slide 19: Trust / Market Growth Potential
Trust / Market Growth Potential 19 Wealth Management Group ▪ Significant potential remains ▪ Recently hired Trust Business Development Officer (“BDO”); will work closely with legal community and community bankers in Arkansas ▪ Very strong opportunities ▪ Two business development officers; working wi
Slide 20: Retail Investments
Retail Investments 20 Wealth Management Group OVERVIEW / VALUE PROPOSITION HISTORY ▪ Full - service Wealth Management firm offering professional investment management consulting, financial planning brokerage and insurance services ▪ Differentiated product and service offerings that speak to the need
Slide 21: Retail Investments (Continued): Products & Services
Retail Investments (Continued) Wealth Management 21 PRODUCT & SERVICES ▪ Investing (stocks, bonds, mutual funds, 529 College Savings Plans, unit investment trusts, variable annuities, structured products, alternative investments) ▪ Fee - based investment management consulting (access to hundreds of
Slide 22: Retail Investments: Current Stats & Recent Trends
Retail Investments (Continued) Wealth Management 22 CURRENT STATS & RECENT TRENDS ▪ > $1.3 billion AUM, with $200 million in fee - based ▪ 4,400+ clients in 46 states ▪ 15 full - time financial advisors with 18 years of average experience – 9 of the 15 are age 45 or younger – Average age is 48 compa
Slide 23: Insurance / Employee Benefits
Insurance / Employee Benefits ($ in Thousands) Wealth Management Group 23 ▪ New business and renewals continue to be strong ▪ Profit margin of 28% year - to - date 9/30/17 ▪ First South Bank integration in full swing ▪ Efforts to improve core offerings to relieve pressure from consolidation in the i
Slide 24: Insurance / Employee Benefits (Continued)
Insurance / Employee Benefits (Continued) 24 Wealth Management Group ▪ Leverage First South Bank’s Employee Benefits team to create Best in Class Agency for West Tennessee ▪ Build on momentum ▪ Add bandwidth to service team ▪ Identify prospects with 10+ employees ▪ Identify “move now” prospects ▪ Cr
Slide 25: Philip Tappan Q & A
Philip Tappan 25 Wealth Management Group Q & A
Slide 26: C. Commercial & Specialty Lending Group
C. Commercial & Specialty Lending Group 26 Matt Reddin – EVP & Chief Lending Officer
Slide 27: Metro vs. Community Markets
(1) Over 500,000 residents in the metropolitan statistical area. (2) Under 500,000 residents in the metropolitan statistical area. 27 Commercial & Specialty Lending Group Metro vs. Community Markets PREVIOUS STRATEGIC MODEL NEW STRATEGIC MODEL TRANSFORMATION ▪ Implemented January 2017 ▪ Redefined ro
Slide 28: Little Rock Loan Market
Little Rock Loan Market 28 Commercial & Specialty Lending Group East TN North Nashville South Nashville Midwest TN Southwest TN St. Louis Sedalia Kansas City Wichita Northwest AR Fort Smith Russellville Hot Springs Pine Bluff Southeast AR El Dorado N Central AR Searcy Northeast AR Northwest TN South
Slide 29: New Markets – Southwest Bank & Bank SNB
Wichita Tulsa Denver Oklahoma City North Texas Austin San Antonio Tilden 29 Commercial & Specialty Lending Group New Markets – Southwest Bank & Bank SNB Metro Community MARKET KEY Stillwater
Slide 30: Key Talent Retention Strategy
30 Commercial & Specialty Lending Group Key Talent Retention Strategy ▪ Retention – CLO as Regional Chairman – Producing banking center Presidents (12) – All lenders (19) ▪ Reverse Integration – Loan platform – Commercial real estate funding ▪ Retention – Regional Chairmen (2) – Business Line Direct
Slide 31: Current Performance
(1) Simmons Bank excludes loan growth realized from First South conversion in September 2017. 31 Commercial & Specialty Lending Group Current Performance ($ in Thousands) AS OF 9/30/17 ▪ Simmons Bank has originated approximately $ 2 billion in gross production (funded and unfunded commitments) throu
Slide 32: Loan Growth Outlook
▪ Expected annualized net loan growth of 7 % for 2018 ▪ Commercial construction unfunded commitments of approximately $ 1 billion as of 10 / 31 / 17 ▪ Growth engine fueled by new opportunities in acquired markets from expanded balance sheet – New metro markets provide access to larger lending opport
Slide 33: Specialty Commercial Lending / SBA
(1) Derived from the acquisition of Liberty Bank and the system conversion taking place in April 2015 and through December 2015. 33 Commercial & Specialty Lending Group Specialty Commercial Lending / SBA ($ in Thousands) 2015 (1) 2017 (AS OF 9/30/17) 2016 Arkansas 15 8,726$ 7,217$ 5.6% Kansas 7 4,14
Slide 34: Specialty Commercial Lending / SBA (Continued)
Specialty Commercial Lending / SBA ($ in Thousands) (Continued) (1) NAGGL national rankings as of 9/30/17. Commercial & Specialty Lending Group 34 ▪ SBA division originated in 2010; $149 million in production since inception ▪ 4 staff members (3 associates; 1 department manager) ▪ Currently use the
Slide 35: Specialty Commercial Lending / Healthcare Banking
35 Commercial & Specialty Lending Group Specialty Commercial Lending / Healthcare Banking as of 9/30/17 ▪ Loans: $188 million outstanding; $61 million available to draw – 48%: Nursing homes / assisted living facilities – 37%: Small independent / private practices (dental, orthodontist, family care,
Slide 36: CRE / Construction Monitoring
36 Commercial & Specialty Lending Group CRE / Construction Monitoring ($ in Thousands) ▪ Top 10 commercial construction loans represent 41% and Top 20 represents 61% of Simmons Bank commercial construction portfolio ▪ Advanced construction monitoring process for 2018; creating new construction manag
Slide 37: Consumer Loans / Origination Process & Underwriting
Consumer Loans / Origination Process & Underwriting Commercial & Specialty Lending Group 37 COMMUNITY MARKETS METRO MARKETS ▪ Originated by retail and community bankers ▪ Originated through retail branch network ▪ Underwrites and processes all applications ▪ Obtains objective, unbiased treatment of
Slide 38: Consumer Loans / Historical Production
Consumer Loans / Historical Production ($ in Thousands) (1) Decline due to lending policy changes occurring from the move to the Central Underwriting & Decision system. Credit standards we re changed and overrides of declined loans were regulated to ensure Fair Lending compliance. Commercial & Speci
Slide 39: Consumer Loans / Integration Opportunities
Consumer Loans / Integration Opportunities Commercial & Specialty Lending Group 39 ▪ 45 new, mostly metro locations from acquisitions ▪ Consumer lending not a strategic priority at Bank SNB or SWB, outside of their portfolio mortgages – We believe there is an opportunity for increased consumer growt
Slide 40: Credit Card / Portfolio Demographics & Production
$ Balance $171 million % Accounts Active 77.0% $ Avg. Credit Line 5,834$ $ Avg. Balance 2,050$ $ Avg. Spend 417$ % Utilization 35.0% % Delinquency YTD 0.7% $150,000 $155,000 $160,000 $165,000 $170,000 $175,000 $180,000 $185,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2017 Credit Ca
Slide 41: Credit Card / Asset Quality
0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2017 YTD 2017 Visa IRKI Avg. 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015 2016 2017 YTD 2017 Visa IRKI Median Credit Card / Asset Quality
Slide 42: Credit Card / Growth Strategy
Credit Card / Growth Strategy Commercial & Specialty Lending Group 42 ▪ Initiate mortgage cross - sell campaign (2017 Q4) ▪ Schedule pre - approved direct mail campaigns – Target new Bank SNB and SWB customers after conversion – Campaigns to include qualified existing Simmons customers without a Sim
Slide 43: Equipment Finance / Production & Asset Quality
$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 2017 YTD 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 YTD 2016 Equipment Finance / Production & Asset Quality Commercial & Specialty
Slide 44: Mortgage / Historical Production
Mortgage / Historical Production ($ in Thousands) Commercial & Specialty Lending Group 44 MONTHLY PRODUCTION SIMMONS LEGACY BREAKDOWN 2017 2016 September YTD Purchased 67.0% 75.0% Refinanced 33.0% 25.0% Government Loans 27.0% 29.0% Portfolio 6.0% 16.0% Secondary 94.0% 84.0% Secondary Margin 2.7% 2.7
Slide 45: Mortgage / Strategy
Mortgage / Strategy Commercial & Specialty Lending Group 45 ▪ Develop strategies to successfully recruit new MLOs in markets where Simmons Mortgage is underrepresented: – St. Louis, NWA, East TN, Nashville ▪ Continue to aggressively manage underperforming MLOs ▪ Successful transition for Bank SNB an
Slide 46: Matt Reddin Q & A
Matt Reddin 46 Commercial & Specialty Lending Group Q & A
Slide 47: D. Regional Overview
D. Regional Overview 47 Marty Casteel – Chairman & Chief Executive Officer, Simmons Bank Barry Ledbetter – EVP & Chief Banking Officer, Simmons Bank Vernon Bryant – Chairman & Chief Executive Officer, Southwest Bank Mark Funke – President & Chief Executive Officer, Bank SNB
Slide 48: Geographic Footprint – Simmons Bank
Geographic Footprint as of 9/30/17 48 Regional Overview – Simmons Bank BRANCHES Arkansas 80 Tennessee 44 Missouri / Kansas 30 Total 154 TOTAL ASSETS $9.5 billion
Slide 49: Loan Portfolio as of 9/30/17 – Simmons Bank
1 - 4 Real Estate 23.9% CRE 53.3% Farm Real Estate 4.8% Loans to Farmers 3.8% C&I 11.9% Consumer Loans 1.7% Other Loans 0.6% Loan Portfolio as of 9/30/17 (1) (1) Excludes loans outside of banking region (credit card, equipment finance, indirect and consumer finance). 49 Regional Overview – Simmons B
Slide 50: Agriculture Loan Portfolio
Agriculture Loan Portfolio as of 9/30/17 Regional Overview – Simmons Bank 50 AGRICULTURE MIX AGRICULTURE LOANS BY STATE Farm Real Estate 55.6% Crop Production 44.4% TOTAL AGRICULTURE LOANS $497.7 million Arkansas 62.2% Tennessee 20.9% Missouri /Kansas 16.9%
Slide 51: Agriculture Loan Portfolio (Continued)
Agriculture Loan Portfolio (Continued) Regional Overview – Simmons Bank 51 ▪ Very stable and loyal customer base ▪ Experienced lending staff (30 years) ▪ Excellent asset quality ▪ Helps diversify loan portfolio ▪ Rice, Soybeans, Corn, and Cotton ▪ Crop production loans have higher yields; repriced a
Slide 52: Total Deposits as of 9/30/17
Non - interest Bearing Demand 26.6% Interest Bearing Demand & Savings 26.9% Savings & Money Market 29.1% Time Deposits 17.4% Arkansas 54.8% Tennessee 29.3% Missouri /Kansas 15.9% Total Deposits as of 9/30/17 52 Regional Overview – Simmons Bank DEPOSIT MIX DEPOSITS BY STATE DEPOSIT PROFILE Total Depo
Slide 53: Treasury Management as of 9/30/17
Treasury Management as of 9/30/17 ($ in Thousands) 53 Regional Overview – Simmons Bank Cash Management Customers 1,683 Treasury Management Users 4,034 ACH Origination Customers 1,095 YTD Average Monthly Originated ACH Transactions 214,605 YTD Average Monthly ACH Origination Dollar Volume 2,028,178$
Slide 54: Market Update / Arkansas
Market Update / Arkansas 54 Regional Overview – Simmons Bank ▪ Deposit market share rank: #5 ▪ 11 community banks ▪ Stable core deposit markets ▪ Expect strong future loan growth in Little Rock, Northeast, Northwest, and Ft. Smith ▪ Hired new lenders over the last several months in Ft. Smith, Northw
Slide 55: Market Update / Tennessee
Market Update / Tennessee 55 Regional Overview – Simmons Bank ▪ Deposit Market Share Rank: #11 ▪ 6 Community Banks ▪ Exceptional Asset Quality ▪ Recently converted First South Bank ▪ Strong current and future loan growth in Middle and East ▪ Added 2 new lenders in Nashville (CRE / C&I) ▪ Recruiting
Slide 56: Market Update / Kansas & Missouri
Market Update / Kansas & Missouri 56 Regional Overview – Simmons Bank ▪ Deposit Market Share Rank: #29 (MO) ▪ 5 Community Banks ▪ Highest Loan Yield/Largest SBA Lender ▪ Strong Current and Future Loan Growth in ST. Louis, Kansas City, and Springfield ▪ Added Two New C&I Lenders in Kansas City with a
Slide 57: Geographic Footprint – Southwest Bank
Geographic Footprint as of 9/30/17 57 Regional Overview – Southwest Bank Ft. Worth Dallas BRANCHES Fort Worth 14 Dallas 2 Total 16 TOTAL ASSETS $2.5 billion DALLAS / FORT WORTH METROPLEX
Slide 58: Overview & Highlights – Southwest Bank
Overview & Highlights 58 Regional Overview – Southwest Bank ▪ Southwest Bank has served North Texas customers for more than 50 years ▪ 16 banking centers ▪ Mortgage offices in Austin, Dallas and Fort Worth ▪ Mortgage Warehouse Lending ▪ Trust & Investments ▪ Small Business Lending
Slide 59: Loan Portfolio as of 9/30/17 – Southwest Bank
Loan Portfolio as of 9/30/17 59 Regional Overview – Southwest Bank LOAN PORTFOLIO MIX LOAN PROFILE Total Loans $2.3 billion # Loan Officers 35 Average # of Loans per Officer 108 Average Loan Portfolio per Officer $60.5 million Loan Yield (YTD) 4.92% Multifamily 1.9% Owner Occupied CRE 7.6% Non - Own
Slide 60: Non-owner Occupied CRE: Weighted Average Loan to Value
Non - owner Occupied Commercial Real Estate: Weighted Average Loan to Value as of 9/30/17 ($ in Thousands) Regional Overview – Southwest Bank 60 Balance Total Weighted # Loans Outstanding Committed Average LTV Hospitality 31 156,429$ 159,013$ 58.3% Medical Dental Facility 17 24,132 26,812 58.5% Mini
Slide 61: Locations of Loans as of 9/30/17
Locations of Loans as of 9/30/17 Regional Overview – Southwest Bank 61 Balance % of Location of Property Outstanding Total Tarrant 392,244$ 49.0% Dallas 236,466 29.5% Other 94,569 11.8% Out of State 77,518 9.7% Total 800,797$ 100.0%
Slide 62: Deposits as of 9/30/17 – Southwest Bank
Deposits as of 9/30/17 62 Regional Overview – Southwest Bank DEPOSIT MIX DEPOSIT PROFILE Total Deposits $ 1.9 billion Retail Customers 35.1% Commercial Customers 64.9% Cost of Interest Bearing Deposits (YTD) 1.05% Non - interest Bearing Deposits 26.6% Interest Bearing Deposits 4.5% Savings & Money M
Slide 63: Total Loans – Southwest Bank
Total Loans ($ in Millions) 63 Regional Overview – Southwest Bank $237 $426 $572 $632 $677 $939 $1,120 $1,366 $1,494 $1,796 $2,265 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Q3)
Slide 64: Total Deposits – Southwest Bank
Total Deposits ($ in Millions) 64 Regional Overview – Southwest Bank $354 $451 $575 $629 $750 $818 $990 $1,277 $1,398 $1,654 $1,887 $- $500 $1,000 $1,500 $2,000 $2,500 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Q3)
Slide 65: Net Income – Southwest Bank
Net Income ($ in Thousands) Regional Overview – Southwest Bank 65 $(3,429) $(756) $1,204 $4,357 $5,795 $9,530 $12,738 $16,819 $20,228 $18,175 $(5,000) $- $5,000 $10,000 $15,000 $20,000 $25,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 9/30/2017 YTD
Slide 66: ROAA – Southwest Bank
ROAA Regional Overview – Southwest Bank 66 (0.60%) (0.10%) 0.15% 0.49% 0.58% 0.82% 0.89% 1.04% 1.09% 1.10% 1.26% (1.00%) (0.50%) 0.00% 0.50% 1.00% 1.50% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (YTD) 2017 (Q3)
Slide 67: NPA / Risk-based Capital (Texas Ratio)
NPA / Risk - based Capital (Texas Ratio) Regional Overview – Southwest Bank 67 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Q1) 2017 (Q2) 2017 (Q3) Non-Accrual Loans Past Due 90 Days & Over OREO Other Repossessed Assets
Slide 68: Mortgage Warehouse Lending Since Inception
Mortgage Warehouse Lending Since Inception ($ in Thousands) Regional Overview – Southwest Bank 68 ▪ F r o m Oc tober ‘ 16 t o S ep tember ’ 17, loans origin at ed in 45 stat es a n d t h e Di s trict of Col u m b ia ▪ Th e only stat es WH L did no t h av e loans f o r w e r e: M ai n e, New Y o r k
Slide 69: 3rd Quarter 2017 Mortgage Warehouse Lending
3 rd Quarter 2017 Mortgage Warehouse Lending ($ in Thousands) Regional Overview – Southwest Bank 69 TRANSACTION TYPE BY FUNDING VOLUME PRODUCT TYPE BY FUNDING VOLUME CREDIT SCORE BY ENDING BALANCE $462,016 Refinance 37.7% $764,209 Purchase 62.3% $919,561 FNMA / FHLMC 75.0% $240,743 Government 19.6%
Slide 70: Treasury Management as of 9/30/17 – Southwest Bank
Treasury Management as of 9/30/17 Regional Overview – Southwest Bank 70 ▪ T r easu r y On l i ne/ B us i nes s On li n e Ban k i n g: – Number o f R el a ti onsh i p s : 47 7 – Number o f Ac c ou n t s : 1 , 6 8 1 ▪ R e m o t e Depos it Ca p t u r e h a d: – 16 4 R el a t i onshi p s – 73 1 Ac c ou
Slide 71: Geographic Footprint – Bank SNB
Geographic Footprint 71 Regional Overview – Bank SNB BRANCHES Oklahoma 19 Texas 5 Kansas 4 Colorado 3 Total 31 9/30/17 Total Assets $2.6 billion Total Loans $2.0 billion Total Deposits $2.1 billion Non - interest Income / Total Revenue 17.1%
Slide 72: Overview & Highlights – Bank SNB
Overview & Highlights 72 Regional Overview – Bank SNB ▪ Founded in 1894 as Stillwater State Bank ▪ Consolidated bank charters in 2013 ▪ Changed to state charter and renamed remaining bank subsidiary Bank SNB ▪ Acquired First Commercial Bank ($330 million in assets and ten branches) in October 2015 ▪
Slide 73: Loan Portfolio as of 9/30/17 – Bank SNB
Loan Portfolio as of 9/30/17 73 Regional Overview – Bank SNB LOAN PORTFOLIO MIX LOANS BY STATE LOAN PROFILE Total Loans $2.0 billion # Loan Officers 36 Average # of Loans per Officer 74 Average Loan Portfolio per Officer $55.0 million Loan Yield 4.59% Oklahoma 55.8% Texas 33.0% Kansas 6.8% Colorado
Slide 74: Total Loans by State – Bank SNB
Total Loans by State ($ in Millions) Regional Overview – Bank SNB 74 12/31/15 3/31/16 6/30/16 9/30/16 12/31/16 3/31/17 6/30/17 9/30/17 Oklahoma $1,010 $1,012 $1,039 $1,053 $1,030 $1,153 $1,113 $1,133 Texas $580 $560 $577 $606 $637 $640 $637 $670 Kansas $150 $161 $158 $157 $145 $143 $142 $138 Colorad
Slide 75: Healthcare Banking Highlights – 3rd Quarter 2017
Healthcare Banking Highlights – 3 rd Quarter 2017 Regional Overview – Bank SNB 75 ▪ Retained Director of Healthcare Banking ▪ Core market comprised of established healthcare providers ▪ Additional expertise in the funding challenges of smaller, growing healthcare businesses ▪ Core market expansion d
Slide 76: Energy Banking Highlights – 3rd Quarter 2017
Energy Banking Highlights – 3 rd Quarter 2017 ($ in Millions) Regional Overview – Bank SNB 76 ▪ Committed Production Based Credit - $81.5 million ▪ Service Based Credit - $32.3 million ▪ Indirect Energy Exposure - $56.1 million ▪ 33 Relationships ▪ Recently added two experienced energy bankers ▪ Tot
Slide 77: Deposit Mix as of 9/30/17 – Bank SNB
DEPOSIT MIX Non - interest Bearing Demand 27.8% Interest Bearing Demand 8.5% Savings & Money Market 33.4% Time Deposits 20.0% Other Deposits 10.3% Total Deposits as of 9/30/17 77 Regional Overview – Bank SNB DEPOSITS BY STATE DEPOSIT PROFILE Total Deposits $ 2.1 billion Cost of Interest Bearing Depo
Slide 78: Credit Risk Profile
Credit Risk Profile ($ in Thousands) Note: Nonperforming assets defined as nonaccrual loans, loans past due 90 days or more and still accruing, and other real est ate owned. Regional Overview – Bank SNB 78 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% $- $20,000 $40,000 $60,000 $80,000 $100,
Slide 79: Non-interest Income – Bank SNB
Non - interest Income ($ in Thousands) Regional Overview – Bank SNB 79 12/31/15 3/31/16 6/30/16 9/30/16 12/31/16 3/31/17 6/30/17 9/30/17 Service Charges and fees $2,675 $2,549 $2,556 $2,681 $2,772 $2,681 $2,800 $2,767 Gain on Sales of Loans $645 $401 $723 $774 $774 $552 $695 $679 Gain on Investment
Slide 80: Treasury Management – YTD Revenue by Product
Treasury Management – YTD Revenue by Product as of 9/30/17 ($ in Thousands) Note: There are two Direct Remit MD (“DRMD”) implementations currently pending. Regional Overview – Bank SNB 80 $314,012 ACH/Pos Pay 7.0% $314,181 DRMD* 7.0% $1,071,572 Lockbox 23.8% $463,352 Online Banking 10.3% $2,017,085
Slide 81: Treasury Management – Lockbox Clients in States
Treasury Management – Lockbox Clients in 24 states Regional Overview – Bank SNB 81
Slide 82: Treasury Management – YTD Results as of 9/30/17
Treasury Management – YTD Results as of 9/30/17 Regional Overview – Bank SNB 82 ▪ New TM Revenue: $364 thousand in annual revenue ▪ New Core Deposits: $32 million ▪ 515 Commercial Accounts Opened
Slide 83: 2018 Regional Organizational Structure
2018 Regional Organizational Structure 83 Regional Overview NORTH TEXAS DIVISION SOUTHWEST DIVISION SOUTHEAST DIVISION Arkansas SW Missouri (Springfield) Tennessee South Texas St. Louis Kansas City Colorado Kansas Oklahoma DFW Metroplex President Barry Ledbetter Loans $5.1 billion Deposits $6.6 bill
Slide 84: Regional Overview Q & A
Marty Casteel, Barry Ledbetter, Vernon Bryant, Mark Funke 84 Regional Overview Q & A
Slide 85: E. Asset Quality & Credit
E. Asset Quality & Credit 85 Steve Wade – EVP & Chief Credit Officer
Slide 86: Asset Quality & Legacy vs. Acquired
Asset Quality & Legacy vs. Acquired ($ in Thousands) (1) Includes all bank affiliates. Charter consolidation into Simmons Bank occurred in 2014. 86 Asset Quality & Credit SFNC⁽¹⁾ Bank SNB SWB ASSET QUALITY 12/31/2013 9/30/17 9/30/17 9/30/17 Total Assets 4,383,100$ 9,535,370$ 2,614,921$ 2,535,898$ To
Slide 87: OREO / Historical Trend & Composition
OREO / Historical Trend & Composition ($ In Thousands) (1) Includes $39.4 million in FDIC Loss Share OREO; legacy OREO was $21.5 million. (2) Includes $20.6 million in FDIC Loss Share OREO and Metropolitan OREO added November 12, 2013. (3) Includes $11.1 million in FDIC Loss Share OREO. (4) Includes
Slide 88: OREO / Continuing Impact of Acquired OREO
OREO / Continuing Impact of Acquired OREO 88 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 89: CRE Lending / Historic Loss Rates
CRE Lending / Historic Loss Rates 89 Asset Quality & Credit HISTORICAL LOSS RATE 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 SFNC BANK SNB SWB C&D 0.09% 1.48% 0.38% 3.42% 0.67% (0.01%) 0.57% 0.30% 0.02% 0.01% Total CRE (0.86%) 1.34% 0.64% 4.15% 0.87% 0.08% 0.72% 0.15% 0.05% 0.03% C&D 0.04% 0.4
Slide 90: Commercial Credit Underwriting & Approval Process / Key Component
Commercial Credit Underwriting & Approval Process / Key Component 90 Asset Quality & Credit ▪ Lender - Based Underwriting: Up to market approval limits ▪ Parallel Underwriting: By lenders and independent credit analysts above market limits ▪ Decentralized Community Bank - Level Approval: Up to total
Slide 91: Senior Credit Officer Team
Commercial Credit Underwriting & Approval Process / Senior Credit Officer (“SCO”) Team 91 Asset Quality & Credit ▪ Veteran team with lending, lending management, credit, and regulatory experience ▪ Provide counsel to lenders in assigned markets on credit structuring, underwriting and portfolio manag
Slide 92: Loan Committees (Post-Conversion)
Commercial Credit Underwriting & Approval Process / Loan Committees (Post - Conversion) 92 Asset Quality & Credit ▪ Provides board - level oversight of lending and credit ▪ Includes outside directors and members of executive management ▪ Will approve credit proposals involving total credit exposure
Slide 93: Consumer Credit Underwriting & Approval
Portfolio Consumer Credit Underwriting & Approval 93 Asset Quality & Credit ▪ Designed to ensure fair lending compliance and to promote efficiency ▪ Centralized consumer underwriting and approval ▪ Approval by decision model – Based on typical consumer credit standards adopted into Credit Policy – S
Slide 94: Steve Wade Q & A
Steve Wade 94 Asset Quality & Credit Q & A
Slide 95: F. M&A
F. M&A 95 George Makris – Chairman & Chief Executive Officer, Simmons First National Corporation Marty Casteel – Chairman & Chief Executive Officer, Simmons Bank Pat Burrow – EVP & General Counsel Steve Massanelli – EVP & Chief Administrative Officer Jena Compton – EVP & Chief People Officer
Slide 96: Geographic Priorities
Geographic Priorities 96 M&A
Slide 97: Priority MSA Markets
Priority MSA Markets 97 M&A 2016 # % Deposit PotentialHigh Performing MSA Deposit Rank Deposits Deposit Share Branches Branches State % of Branches Markets Pine Bluff 1 868,602$ 56.88% 10 34.48% AR (342,065)$ Martin 1 277,986 53.87% 5 38.00% TN (81,894) Stillwater 1 720,181 41.63% 6 18.75% OK (395,8
Slide 98: Regulatory Preparedness
Regulatory Preparedness / Marty Casteel 98 M&A ▪ Charter Conversion – OCC to State/Fed Member – Pre - conversion examination provided a roadmap for Compliance Program success – Third - party compliance program assessment ▪ Key Hires – Internal Audit strengthened controls and accountability – Regulat
Slide 99: Application & Approval Process
Application & Approval Process / Pat Burrow 99 M&A ▪ Two - step merger process, – Holding company merger – Bank merger ▪ BHC Merger – FRB Holding Company Merger Application • Up to 30 day preparation; 45 - 60 day processing by FRBSL (best case) • Public Comment will add 60 - 120 days in processing –
Slide 100: Conversion & Integration
Conversion & Integration / Steve Massanelli 100 M&A PAST PRESENT FUTURE ▪ With assistance of Grant Thornton, we created an M&A playbook, which includes formalized governance and reporting processes ▪ Each business unit has a defined due diligence scope of assessment for target bank and a formal inte
Slide 101: Talent Retention
Talent Retention / Jena Compton 101 M&A ▪ Talent retention is applied through a continual, thoughtful and methodical approach to keep associates engaged and optimistic from announcement through conversion ▪ Key Elements – Culture assessment during due diligence – Target key talent immediately after
Slide 102: G. Financials
G. Financials 102 Bob Fehlman – Senior EVP, Chief Financial Officer & Treasurer Pat Neeley – EVP, Executive Director of Finance & Accounting David Garner – EVP, Chief Accounting Officer & Controller
Slide 103: Balance Sheet – Q317 Update
($ in Millions) (1) See Appendix for non - GAAP reconciliations. Balance Sheet – Q317 Update 103 2017 QUARTERLY TREND Q1 Q2 Q3 Loans, net 5,739$ 6,184$ 6,261$ Securities 1,689 1,610 1,723 Other Assets 1,199 1,274 1,551 Total Assets 8,627 9,068 9,535 Deposits 6,788$ 7,104$ 7,326$ Borrowing 612 664 71
Slide 104: Income Statement – Q317 Update
($ in Thousands, except EPS) Note: Core excludes non - core income, expense items (e.g. merger related cost and branch rightsizing cost) and purchase accountin g interest accretion. Core results are non - GAAP measurements. See Appendix for non - GAAP reconciliations. Income Statement – Q317 Update
Slide 105: Consolidated Balance Sheet
Consolidated Balance Sheet As of 9/30/17: ASSETS: Cash and Equivalents 432,290$ 87,458$ 128,287$ (169,376)$ (1) 478,659$ Total Investment Securities 1,727,512 379,835 62,021 - 2,169,368 HFS Loans 12,663 5,658 3,082 - 21,403 Legacy Loans 5,211,312 - - - 5,211,312 Acquired Loans (net of discounts) 1,0
Slide 106: Balance Sheet Footnotes
($ in Thousands) Balance Sheet Footnotes 106 (6) Estimated Core Deposit Intangible Adjustment Southwest Bancorp 23,671$ First Texas 30,336 Total Core Deposit Intangible 54,007$ (7) Deferred Tax Asset / (Liability) Fair Value DTA / Mark (DTL) Net Loans 9,828$ 3,855$ Property (11,751) (4,609) Core Dep
Slide 107: Balance Sheet Footnotes
($ in Thousands) Balance Sheet Footnotes 107 (11) Estimated Fair Value Discount on Trust Preferred Securities Southwest Bancorp (4,500)$ First Texas (825) Total Fair Value Adjustment (5,325)$ (12) (13) Adjustment to Common Equity Elimination of Southwest Bancorp Equity (299,712)$ Elimination of Firs
Slide 108: Consolidated Regulatory Capital
Consolidated Regulatory Capital As of 9/30/17: Tangible Common Equity 825,967$ 280,418$ 209,670$ (193,476)$ 1,122,579$ Tier 1 Capital 933,849 330,320 218,291 (193,476) 1,288,984 Tier 2 Capital 46,710 29,204 42,805 (53,091) 65,628 Total Risk Based Capital 980,559 359,524 261,096 (246,567) 1,354,612 T
Slide 109: Consolidated CRE Guidelines
Consolidated CRE Guidelines As of 9/30/17: Total Loans HFI 6,303,351$ 2,024,891$ 2,262,170$ (57,594)$ 10,532,818$ Total CL&D Loans 567,999 185,668 367,869 (6,985) 1,114,551 CL&D / Total Loans HFI 9.0% 9.2% 16.3% 10.6% Total CRE Loans 2,279,888 927,826 1,168,666 (27,794) 4,348,587 CRE / Total Loans H
Slide 110: Combined Income Statement
Combined Income Statement MRQ 9/30/17: Total Interest Income 87,484$ 25,551$ 28,190$ 141,225$ 559,753$ Total Interest Expense 8,665 3,794 6,092 18,551 73,536 Net Interest Income 78,819 21,757 22,098 122,674 486,696 Non Interest Income 32,624 4,510 3,704 40,838 162,020 Gain on Sale of P&C Insurance B
Slide 111: Estimated Projected Cost Savings & Durbin Impact
(Pre - tax, $ in Millions) Estimated Projected Cost Savings & Durbin Impact 111 Note: Based on Management’s estimates. ▪ First Texas BHC $17.0 (Conversion February 16, 2018 , estimated cost savings begin May 2018) ▪ Southwest Bancorp $21.5 (Conversion May 25, 2018, estimated cost savings begin Augus
Slide 112: Projected Purchase Accounting Accretion & Loan Discount
($ in Millions) Projected Purchase Accounting Accretion & Loan Discount 112 Note : Management estimates purchase accounting accretion utilizing the estimated credit mark on acquired loans and the anticipated migration of acquired loans to legacy loans based upon the contractual maturity of the loans
Slide 113: Consolidated Shares Outstanding
(Shares in Thousands) Consolidated Shares Outstanding 113 As of 10/31/17 Total Common Shares Outstanding 45,971 Diluted Shares 210 Total Diluted Shares Outstanding 46,181 SFNC
Slide 114: Wrap-up Q & A
George Makris, Marty Casteel, Bob Fehlman 114 Wrap - up Q & A
Slide 115: H. Appendix
H. Appendix 115
Slide 116: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) Reconciliations of Non - GAAP Financial Measures 116 Calculation of Non-Interest Income to Revenue 2013 2014 2015 2016 2017 YTD Non-interest income - GAAP 40,616$ 62,192$ 94,661$ 139,382$ 102,136$ Net interest income 130,850$ 171,064$ 278,595$ 279,206$ 228,011$ Non-interest income 4
Slide 117: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) Reconciliations of Non - GAAP Financial Measures 117 Calculation of Efficiency Ratio 2013 2014 2015 2016 QTD 3-17 Non-interest expense 134,812$ 175,721$ 256,970$ 255,085$ 66,159$ Non-core non-interest expense adjustment (7,017) (13,747) (18,747) (8,435) (862) Other real estate and f
Slide 118: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) Reconciliations of Non - GAAP Financial Measures 118 Calculation of ROA 2013 2014 2015 2016 2017 YTD QTD 3-17 Net income available to common stockholders 23,231$ 35,688$ 74,107$ 96,790$ 74,037$ 28,852$ Net non-core items, net of taxes, adjustment 4,381 3,019 15,515 4,619 2,994 (1,10
Slide 119: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) (1) Effective tax rate of 39.225%, adjusted for non - deductible merger - related costs. Reconciliations of Non - GAAP Financial Measures 119 Calculation of Core Earnings 2013 2014 2015 2016 YTD 2017 Net Income 23,231$ 35,688$ 74,107$ 96,790$ 74,037$ Non-core items Accelerated vesti
Slide 120: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) (1) Effective tax rate of 39.225%, adjusted for non - deductible merger - related costs. Reconciliations of Non - GAAP Financial Measures 120 Calculation of Diluted EPS 2013 2014 2015 2016 YTD 2017 Diluted earnings per share 1.42$ 2.11$ 2.63$ 3.13$ 2.31$ Non-core items Accelerated v
Slide 121: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) Reconciliations of Non - GAAP Financial Measures 121 Calculation of Tangible Common Equity & the Ratio of Tangible Common Equity to Tangible Assets 2012 2013 2014 2015 2016 Q1-17 Q2-17 Q3-17 Total stockholders' equity 406,062$ 403,832$ 494,319$ 1,076,855$ 1,151,111$ 1,170,889$ 1,234
Slide 122: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) Reconciliations of Non - GAAP Financial Measures 122 Calculation of Core Net Interest Margin Q3-17 Net interest income 78,819$ FTE adjustment 1,751 Fully tax equivalent net interest income 80,570 Total accretable yield (2,890) Core net interest income 77,680$ Average earning assets
Slide 123: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) Reconciliations of Non - GAAP Financial Measures 123 SFNC Proforma Calculation of Tangible Book Value per Share Q3-17 Combined Total common stockholders' equity 1,257,199$ 1,972,736$ Total intangibles (431,232) (850,157) Tangible common stockholders' equity 825,967$ 1,122,579$ Share
Slide 124: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) Reconciliations of Non - GAAP Financial Measures 124 Calculation of Tangible Common Equity & the Ratio of Southwest First Texas Acquisition Proforma Tangible Common Equity to Tangible Assets SFNC Bancorp BHC Adjustments Combined Total common stockholders' equity 1,257,199$ 299,712$
Slide 125: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) Reconciliations of Non - GAAP Financial Measures 125 Southwest First Texas QTD QTD Calculation of Core Net Interest Margin SFNC Bancorp BHC Combined Annualized Net interest income 78,819$ 21,757$ 22,098$ 122,674$ 486,696$ FTE adjustment 1,751 - - 1,751 6,947 Fully tax equivalent net
Slide 126: Reconciliations of Non-GAAP Financial Measures
($ in Thousands) Reconciliations of Non - GAAP Financial Measures 126 Southwest First Texas QTD QTD Calculation of Efficiency Ratio SFNC Bancorp BHC Combined Annualized Non-interest expense 66,159$ 15,391$ 13,661$ 95,211$ 377,738$ Non-core non-interest expense adjustment (862) (805) (117) (1,784) (7
Slide 127: Simmons First National Corporation
- Simmons First __ National Corporation
Simmons First National — Investor Day (November 2017) on 6ix