Simmons First National Corporation · NASDAQ:SFNC
Simmons First National — Investor Presentation (November 2018)
33 slides from Simmons First National's investor presentation, Nov 6, 2018
Slide 1: NASDAQ-GS: SFNC Investor Presentation
NASDAQ - GS: SFNC Investor Presentation
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
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
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
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
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
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
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
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% 6.0% 7.0%
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
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 ▪ $31 million increase in s
Slide 12: Credit Quality: Legacy Loan Portfolio
(1) Source: S&P Global Market Intelligence, all US Banks. September 30, 2018 unavailable. (2) Excluding credit card net charge - offs. Credit Quality: Legacy Loan Portfolio (Excluding Acquired Loans) 12 "Great Recession" 2018 Non-Performing Loans 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q3
Slide 13: Credit Quality: Credit Card Portfolio
1991 Recession 4.55% 2002 Recession 6.41% 2009 "Great Recession" 9.42% 1.42% 2.10% * 2.61% * 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% Net Charge - off % History of Strong Asset Quality (Net Charge - offs) * Federal bankruptcy reform impacted charge - offs in 2005 Sou
Slide 14: Credit Quality: Loan & Credit Coverage
Credit Quality: Loan & Credit Coverage 14 Upon acquisition of a portfolio, all loans are considered acquired and have a credit mark (loan discount) in place to cover potential exposure . When an acquired, non - impaired loan is renewed or otherwise is re - underwritten for a formal modification or c
Slide 15: Net Interest Income
(1) Fully tax equivalent (2) Core loan yield and core net interest margin exclude accretion and are non - GAAP measurements. Net Interest Income 15 Since December 2017 , the Federal Reserve Board increased the Fed Funds target rate by 75 basis points . The Company’s deposit beta was 56 % , loan beta
Slide 16: Projected Purchase Accounting Accretion & Loan Discount
($ 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
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
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
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
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
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
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
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
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
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
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
Slide 27: Appendix
Appendix 27
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
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
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
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
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
Slide 33: Simmons First National Corporation
7 Simmons First _ National Corporation
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