Simmons logs record earnings for ’19
Simmons First National Corp. weathered a slump in fourth-quarter profits to deliver record earnings in 2019, the bank announced Thursday.
Net income dropped 5% to $52.7 million and earnings per share were down 18% to 49 cents in the quarter that ended Dec. 31. For the full year, net income was up 10% and earnings per share increased nearly 4%.
Simmons Chairman and Chief Executive Officer George Makris rolled past commenting directly on the quarter and focused on the annual growth in a conference call Thursday morning with industry analysts.
“From time to time we tend to be focused more on specific metrics within our financial performance and lose sight of the bigger-picture results,” Makris said. “In retrospect, our performance in 2019 was remarkable.”
For the full year, net income reached $237.8 million, compared with $215.7 million in 2018. Earnings per share were $2.41 for 2019, an increase from $2.32 the previous year.
Total deposits reached $16.1 billion as of Dec. 31, up $2.6 billion from the third quarter and a $3.7 billion increase from 2018.
Net interest income in the quarter was $168 million, a 21.7% increase from the same period in 2018. Net interest margin, however, decreased to 3.43% in the quarter, down from 3.66% a year ago.
The margin decrease primarily was attributed to the Landrum acquisition, according to Bob Fehlman, the chief financial officer. “We think this was an unusual quarter, and this is the low end of it, and we’ll start building up … and we would expect to have improvement,” Fehlman told analysts on the call.
In December, Simmons agreed to sell five Texas branches in Austin, San Antonio and Tilden, a move that Makris said could continue with similar strategic exits from other outlying markets.
“We’re taking a look at our entire market strategy,” Makris said. “It is a constant evaluation for us.”
Though the bank is discarding branches and evaluating the sale of others, Makris said that Simmons is considering acquisitions that would expand operations. Any transaction likely would strengthen the bank’s footprint and not expand
into new markets, the chairman said.
“We’re still very interested in expanding our presence in the markets we serve today,” Makris said, noting that Simmons is having “very good conversations” about potential additions.
In 2019, the bank completed two acquisitions that added $4.9 billion in assets — Reliance Bank in St. Louis and Landrum Co. of Columbia, Mo.
Landrum, parent company of Landmark Bank, with assets of more than $3 billion was Simmons’ largest-ever acquisition. Integration of the bank is scheduled to be completed in February.
Internally, Simmons updated its digital banking offering to great success, according to Makris, who said mobile-banking use increased by 15% after the release of a new app in October that enhanced speed, bolstered security and heightened customization.
Expanding mobile banking is a core part of Simmons’ nextgeneration banking initiative, which represents a $100 million, multiyear commitment the bank has said it will invest in new technology.
Digital services are creating more channels to communicate with customers and expanding revenue opportunities.
“The opportunities we have as a bank … have grown exponentially over traditional methods of walking into a branch or even logging into online banking,” Makris said, adding that more products and services will be made available through digital offerings that will provide “great benefit to us going forward from a revenue-generation perspective.”
In 2019, the bank repurchased $10 million in stock and that should continue this year, Makris said.
Total loans, including those in the transactions, were $14.4 billion as of Dec. 31, up from $11.7 billion in the same period last year.
Simmons stock closed Thursday relatively flat at $25.70, down just 9 cents.
On the call Thursday, the bank announced the retirement of Marty Casteel, chairman and CEO of its subsidiary, Simmons Bank. Casteel will retire effective March 31 but will continue to serve as a director of both the company and Simmons Bank. General counsel Patrick Burrow also is retiring on March 31, the company announced.
Casteel is ending a 32-year career with Simmons Bank, where he has been chairman and CEO since January 2013. Makris will assume the duties of Casteel at the banking subsidiary while continuing as chairman and CEO of the parent company.