Simmons reports 1Q profit of $77M

PB bank’s CEO brags on ‘team’

Simmons First National Corp. announced Tuesday that first-quarter profit jumped 62% to $77.2 million. Profit was bolstered by a one-time gain of $4.4 million from the sale of five bank branches in Texas.

Earnings per share reached 68 cents, an increase of 17 cents or 33%, for the quarter ended March 31. The Pine Bluff bank had total assets of $20.8 billion, up nearly 30% from $16 billion in the same period last year.

“I am very proud of our team and their demonstration of our community banking values during these trying times,” said George Makris Jr., chairman and chief executive officer.

Included in first-quarter 2020 results was $965,000 in net after-tax merger-related and branch consolidation expenses as well as the $4.4 million after-tax gain from the sale of the Texas branches. Excluding the one-time items, core earnings were $73.8 million for the quarter and earnings per share was 65 cents.

The bank, Makris told analysts on a conference call Tuesday, has a solid foundation to battle the coronavirus pandemic’s impact on customers and the economy. “We feel very good about our preparation for weathering

the storm,” he said.

“We believe we are well-positioned to help our customers and communities as we come out of these unprecedented times,” Makris added. “We have very strong liquidity and capital that we believe should assist Simmons once again in weathering critical economic times.”

Simmons produced solid results in a quarter when the economy was ripped by the spread of the coronavirus, which forced the closing or reduced operations for many customers with Simmons loans. Simmons itself closed bank branches or reduced operations during the quarter to support social-distancing recommendations.

“Simmons had a good first quarter and continues to perform well in spite of the temporary closing of 52 branches during March and many of its employees working from home due to the coronavirus,” Little Rock banking analyst Garland Binns said. “Simmons experienced positive growth both in total loans and total deposits.”

Allowance for loan losses increased 1.17% compared to the first quarter of 2019 in part to adjust for the impact of the coronavirus. Simmons accounted for Current Expected Credit Losses in retained earnings. The credit-losses accounting rules, which went into effect Jan. 1, have stiffened standards for how banks project potential loan losses, leading them to increase their reserves.

In the first quarter, Simmons recorded an additional allowance for credit losses of about $151 million and adjusted the reserve for unfunded commitments of $24 million.

To help its small-business customers, the bank made nearly 3,200 small-business loans as part of emergency funding provided through U.S. Small Business Administration’s programs aimed at battling economic distress caused by the pandemic. The loans were valued at $750 million and had an average amount of $236,000. About 95% of those loans were made to existing Simmons customers, the bank said Tuesday.

In addition, Simmons modified nearly 3,700 loans to provide relief during the crisis. Makris said those modifications, which included deferred payments, were for loan balances of nearly $2.9 billion, or about 20% of the bank’s portfolio. Modifications were made with assurances customers were committed to remaining with Simmons. “We feel like customers should be all in before we modify their loans,” Makris said.

Simmons repurchased $103 million in stock but stopped the buyback program at the end of the quarter. The bank still has another $76.5 million it is authorized to repurchase and the program could be revived once the economic picture clears up, Makris said.

Simmons completed its integration of Landrum Co. of Columbia, Mo., in February. The $435 million purchase included Landrum Bank branches in Missouri, Oklahoma and Texas. Sale of the five Texas branches closed in February, and Simmons has another four branches in Colorado it has agreed to sell. That sale is expected to be completed later this year.

Makris noted that more branches could be put on the market. “It’s possible some further consolidation could happen in 2020 or it could roll into 2021,” he added.

The bank’s stock closed Tuesday at $17.60, down less than 1% on a day the Dow Jones industrial average fell 2.67%. Simmons operates 244 bank branches, counting 79 in Arkansas, four in Illinois, six in Kansas, 59 in Missouri, 26 in Oklahoma, 42 in Tennessee and 28 in Texas.