Simmons First Announces Third Quarter Earnings

PINE BLUFF, Ark., Oct. 25, 2012 (GLOBE NEWSWIRE) -- Simmons First National Corporation SFNC today announced net income of $6.8 million and diluted earnings per share of $0.41 for the quarter ended September 30, 2012. Net income for the nine months ended September 30, 2012, was $19.7 million, or $1.16 diluted earnings per share.

On September 14, 2012, the Company announced that its wholly-owned bank subsidiary, Simmons First National Bank, entered into a purchase and assumption agreement with loss share arrangements with the FDIC to purchase $219 million in assets and assume substantially all of the deposits and other liabilities of Truman Bank of St. Louis, Missouri. Another $63 million in Truman Bank assets were acquired through a linked-bid loan sale agreement with the FDIC. The Company recognized a pre-tax bargain purchase gain of $1.1 million on this transaction and incurred pre-tax merger related costs of $815,000. After taxes, the combined non-recurring items from the transactions contributed $185,000 to net income, or $0.01 to diluted earnings per share.

"Excluding the non-recurring items from the Truman Bank acquisition, and other non-recurring items from 2011, quarterly core EPS decreased $0.02, or 4.8%, and year-to-date core EPS increased $0.07, or 6.5%. We are pleased with our third quarter earnings performance. We continue to benefit significantly from strong asset quality, which has resulted in a reduction in our provision for loan losses, and from our on-going efficiency initiatives that resulted in a decrease in our year-to-date non-interest expense," commented J. Thomas May, Chairman and CEO.

Loans

Total loans, including those acquired, were $1.9 billion at September 30, 2012, an increase of $56 million compared to the same period in 2011. "On a quarter over quarter basis, loans acquired in the Truman acquisition were $130 million net of discounts, FDIC covered loans from previous acquisitions declined $66 million, as expected, and legacy loans declined $8 million," commented May.

Legacy loans (excluding acquired loans) increased $8.7 million from the previous quarter end. "This increase was primarily driven by our commercial real estate and seasonality in our agricultural lending, somewhat mitigated by a slight decline in student loans and commercial loan portfolios," added May.

Deposits

At September 30, 2012, total deposits were $2.8 billion, an increase of $160 million, or 6.1%, compared to the same period in 2011. Deposits acquired in the Truman acquisition were $194 million at quarter end. Total non-time deposits totaled $1.9 billion, or 68% of total deposits.

Net Interest Income

The Company's net interest income for the third quarter of 2012 was $27.9 million, a $662,000 increase from the same period of 2011. Included in interest income for the period is the additional yield accretion recognized as a result of updated estimates of the cash flows of the loan pools acquired in the Company's 2010 FDIC-assisted transactions. Each quarter, the Company estimates the cash flows expected to be collected from the acquired loan pools, and adjustments may or may not be required. The cash flows estimate has increased based on payment histories and reduced loss expectations of the loan pools. This resulted in increased interest income that is spread on a level-yield basis over the remaining expected lives of the loan pools. The increases in expected cash flows also reduce the amount of expected reimbursements under the loss sharing agreements with the FDIC, which are recorded as indemnification assets. The impact of the adjustments on the Company's financial results for the current reporting period is shown below:

	Three Months Ended	Nine Months Ended
(In thousands)	September 30, 2012	September 30, 2012
Impact on net interest income	$ 2,915	$ 9,104
Non-interest income	(2,729)	(8,245)
Net impact to pre-tax income	$ 186	$ 859

Because these adjustments will be recognized over the remaining lives of the loan pools and the remainder of the loss sharing agreements, respectively, they will impact future periods as well. The current estimate of the remaining accretable yield adjustment that will positively impact interest income is $18.0 million and the remaining adjustment to the indemnification assets that will reduce non-interest income is $15.8 million. Of the remaining adjustments, we expect to recognize $2.6 million of interest income and a $2.4 million reduction of non-interest income, for a net addition to pre-tax income of approximately $182,000 during the remainder of 2012. "While these items create some noise in the quarter, the bottom line is a positive impact of $186,000 for the third quarter and estimated $182,000 for rest of the year," said May. The accretable yield adjustments recorded in future periods will change as we continue to evaluate expected cash flows from the acquired loan pools. Net interest margin was 3.94% for the quarter ended September 30, 2012.

Non-Interest Income

Non-interest income for the third quarter was $11.8 million, compared to $13.7 million for the third quarter of 2011. "As previously discussed, there was a $2.7 million decrease due to reductions of the indemnification assets resulting from increased cash flows expected to be collected from the FDIC covered loan portfolios," reiterated May. "Excluding the indemnification asset adjustment and a non-recurring $1.1 million bargain purchase gain on the Truman Bank acquisition, non-interest income decreased $267,000, or 2.0%."

Non-Interest Expense

Non-interest expense for the third quarter of 2012 was $28.7 million, an increase of $1.1 million compared to the same period in 2011. "Included in the quarter were $815,000 in merger related expenses associated with the Truman Bank acquisition. Excluding the non-recurring item, non-interest expense for the quarter increased $271,000, or 1.0%. Obviously, we continue to have good expense control as a result of the implementation of our efficiency initiatives," added May.

Asset Quality

Beginning in 2010, the Company has acquired loans and foreclosed real estate ("OREO") through FDIC-assisted acquisitions. Through the loss share provisions of the purchase and assumption agreements, the FDIC agreed to reimburse the Company for 80% of the losses incurred on the disposition of covered loans and OREO. The acquired loans and OREO and any related FDIC loss share indemnification asset were presented in the Company's financial reports with a carrying value equal to the discounted net present value of expected future proceeds. At September 30, 2012, acquired loans covered by loss share were carried at $164 million, OREO covered by loss share was carried at $26 million and the FDIC loss share indemnification asset was carried at $60 million. Acquired loans and OREO not covered by loss share were carried at $73 million and $6.5 million, respectively. As a result of using the discounted net present value method of valuing these assets, and due to the significant protection against possible losses provided by the FDIC loss share indemnification, all acquired assets, with the exception of OREO not covered by loss share, are excluded from the computations of the asset quality ratios for the legacy loan portfolio, except for their inclusion in total assets.

The Company's allowance for loan losses was $28.1 million at September 30, 2012, or 1.73% of total loans and 238% of non-performing loans. Non-performing loans as a percent of total loans were 0.73% as of September 30, 2012, a decrease of 6 basis points from 0.79% as of June 30, 2012. "Because of the Truman Bank acquisition, we reflect an addition of $6.5 million to non-performing assets related to the Truman Bank non-covered OREO we acquired with a very conservative mark. Normalizing for the acquired OREO, our legacy non-performing assets decreased $1.7 million. Our legacy non-performing assets as a percent of total assets of 1.02% as of September 30, 2012 continues to compare favorably to the industry and our peer group," commented May. For the third quarter, the annualized net charge-off ratio, excluding credit cards, was 0.27%, and the annualized credit card charge-off ratio was 1.27%.

Capital

At September 30, 2012, stockholders' equity was $404 million, book value per share was $24.26 and tangible book value per share was $20.47. The Company's ratio of stockholders' equity to total assets was 11.8% and its ratio of tangible stockholders' equity to tangible assets was 10.2%, as of September 30, 2012.

"Our exceptional level of capital puts us in the 84^th percentile of our peer group and allows us to actively pursue the right opportunities that meet our strategic plan regarding mergers and acquisitions," continued May. As of September 30, 2012, the Company's regulatory capital ratios remain significantly higher than regulatory "well capitalized" guidelines:

Stock Repurchase Program

During 2012, the Company has repurchased approximately 608,000 shares at an average price of $24.16. Due to the substantial completion of the existing stock repurchase plan, on July 23, the Board of Directors approved a new stock repurchase program, authorizing the repurchase of up to 850,000 additional shares of stock, which is approximately 5% of the shares outstanding. The Company plans to continue to allocate its earnings, less dividends, to its stock repurchase program.

Missouri Bank Acquisition

Subsequent to quarter end, on October 19, the Company announced that its wholly-owned bank subsidiary, Simmons First National Bank, entered into a purchase and assumption agreement with loss share arrangements with the FDIC to purchase $201 million in assets and assume all of the deposits and substantially all other liabilities of Excel Bank of Sedalia, Missouri, at a discount of $21.0 million and no deposit premium. "Our fourth acquisition was strategic in that it complements the footprint we have been building in the Kansas and Missouri market," commented May on the recent acquisition. "We fully expect to pursue other opportunities to expand our footprint in that geographic region through additional FDIC and/or traditional acquisitions going forward."

Simmons First National Corporation

Simmons First National Corporation is an eight bank financial holding company with community banks in Pine Bluff, Lake Village, Jonesboro, Rogers, Searcy, Russellville, El Dorado and Hot Springs, Arkansas. The Company's eight banks conduct financial operations from 96 offices, of which 92 are financial centers, in 55 communities in Arkansas, Missouri and Kansas, including its recently acquired branches in Missouri. The Company's common stock trades on the NASDAQ Global Select Market under the symbol "SFNC".

The Simmons First National Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4819

Conference Call

Management will conduct a conference call to review this information beginning at 3:00 p.m. Central Time on Thursday, October 25, 2012. Interested persons can listen to this call by dialing 1-888-438-5535 (United States and Canada only) and asking for the Simmons First National Corporation conference call. A replay of the call will be available through 5:00 p.m. Central Time on October 31, 2012, by dialing 1-888-203-1112. The passcode for the replay is 4128323. In addition, the call will be available live or in recorded version on the Company's website at www.simmonsfirst.com.

Non-GAAP Financial Measures

This press release 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 measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or nonrecurring transactions. Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. 

Forward Looking Statements

Statements in this press release that are not historical facts should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements of this type speak only as of the date of this news release. By nature, forward-looking statements involve inherent risk and uncertainties. Various factors, including, but not limited to, economic conditions, credit quality, interest rates, loan demand and changes in the assumptions used in making the forward-looking statements, could cause actual results to differ materially from those contemplated by the forward-looking statements. Additional information on factors that might affect Simmons First National Corporation's financial results is included in its Form 10-K filing with the Securities and Exchange Commission.