PINE BLUFF, Ark., April 21, 2011 (GLOBE NEWSWIRE) -- Simmons First National Corporation (Nasdaq:SFNC) today announced core net income of $5.2 million for the quarter ended March 31, 2011, an increase of $225,000, or 4.5%, compared to the same period in 2010. Diluted core earnings per share for the quarter ended March 31, 2011 were $0.30, compared to $0.29 for 2010.
Core earnings exclude $115,000 in after-tax merger related expenses associated with the Company's 2010 FDIC-assisted acquisitions. Including the merger related expenses, net income for the first quarter of 2011 was $5.1 million, or $0.29 diluted earnings per share.
"While we are somewhat disappointed with the lack of loan demand throughout our markets, it was expected based on the economy. Considering the challenges of the economy and the negative impact of historically low interest rates on margins, we are pleased with our first quarter earnings performance," commented J. Thomas May, Chairman and CEO.
Total assets were $3.3 billion at March 31, 2011, an increase of 5.6% from $3.1 billion at March 31, 2010.
Loans
Total loans, including those covered by FDIC loss share agreements, were $1.8 billion at March 31, 2011, a decrease of 1.2% from the same period in 2010. "In our legacy portfolio, we experienced a decrease of $231 million, or 12.5%, compared to March 31, 2010. As expected, we saw a $96 million decrease in our student loan portfolio as a result of the irrational decision by the administration and congress to eliminate the private sector from providing student loans. Additionally, like the rest of the industry, we continue to experience weak loan demand as a result of a slow economy. We believe loan demand is likely to remain soft throughout the remainder of 2011, but we are committed and positioned to meet the borrowing needs of our consumer and business customers," commented May. Loans covered by FDIC loss share agreements, which provide 80% Government guaranteed protection against credit risk on those covered assets, were $209 million at March 31, 2011.
Deposits
At March 31, 2011, total deposits were $2.6 billion, an increase of $173 million, or 7.1%, compared to the same period in 2010. The March 31, 2011, deposits include $212 million of deposits in Missouri and Kansas. "We continue to emphasize core deposit growth and were able to achieve more than 22% growth, on average, of non-interest bearing deposits. We are very pleased with our ratio of non-time deposits as a percent of total deposits, which is a very favorable 64%," added May.
Net Interest Income
The Company's net interest income for the first quarter of 2011 increased 9.9% to $26.8 million compared to the same period of 2010. Net interest margin increased 16 basis points to 3.87% from the first quarter of 2010. The increase in both net interest income and margin was primarily due to a higher yield on covered loans acquired through acquisitions compared to the yield on loans in the Company's legacy portfolio.
Non-Interest Income
Non-interest income for the first quarter increased $432,000, or 3.5%, to $12.6 million compared to $12.2 million for the first quarter of 2010. Credit card fees increased $266,000, or 7.2%, due to a higher volume of credit and debit card transactions. Other non-interest income increased by $356,000 over the same period last year primarily due to accretion on assets acquired through FDIC-assisted transactions in 2010. In contrast, non-interest income was negatively impacted by a $444,000 decrease in service charges on deposit accounts, primarily due to lower fee income as a result of regulatory changes related to overdraft charges on point-of-sale transactions.
Non-Interest Expense
Non-interest expense for the first quarter of 2011 was $30.0 million, an increase of $3.2 million, compared to the same period in 2010. "This increase includes $2.7 million in normal operating expense at our Missouri and Kansas regions and $190,000 in merger related costs. Normalizing for these expenses, non-interest expense increased by less than 1%, compared to last year. This modest increase is the result of the implementation of our efficiency initiatives. Obviously, we are beginning to see the positive impact from our efficiency initiatives," according to May. "Initiatives related to revenue enhancements, process improvement and branch staffing levels are well into the implementation phase."
Asset Quality
During 2010, the Company 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 such loans and OREO. The loans and OREO covered by the FDIC loss share agreements and the related FDIC loss share indemnification asset were presented in the Company's financial reports as "covered" assets (i.e., covered by the FDIC loss share agreements) with a carrying value equal to the discounted net present value of expected future proceeds. At March 31, 2011, loans covered by loss share were carried at $209 million (net of discount), OREO covered by loss share was carried at $13 million (net of discount) and the FDIC loss share indemnification asset was carried at $59 million. As a result of the FDIC loss share indemnification related to these assets and the discounted net present value method of valuing these assets, such assets are excluded from the computations of the following asset quality ratios, except for their inclusion in total assets.
The Company's allowance for loan losses was $27.9 million at March 31, 2011, or 1.72% of total loans and 144% of non-performing loans. Non-performing assets as a percent of total assets were 1.32% as of March 31, 2011, an increase from 1.12% as of December 31, 2010. Non-performing loans as a percent of total loans were 1.19% as of March 31, 2011, an increase of 36 basis points from 0.83% as of December 31, 2010. These ratios include $2.6 million of Government guaranteed student loans that were over 90 days past due at the end of the quarter. Excluding the guaranteed past due student loans, non-performing assets as a percent of total assets were 1.24% and non-performing loans as a percent of total loans were 1.03%. "The increase in non-performings was primarily related to two classified credits, previously reported as TDRs, moving to a nonaccrual status" commented May. "As a result of this reclassification, non-performing assets, including TDRs, as a percent of total assets were 1.65%, compared to 1.71% at Q4 2010."
Excluding credit cards, the Company's annualized net charge-off ratio was 0.07% for the first quarter of 2011. The credit card annualized net charge-off ratio decreased to 2.06%, compared to 2.71% for the first quarter of 2010. The Company's credit card loss ratio is more than 500 basis points below the most recently published credit card charge-off industry average of over 7.5%.
Capital
At March 31, 2011, stockholders' equity was $400 million, book value per share was $23.06 and tangible book value per share was $19.43. The Company's ratio of stockholders' equity to total assets was 12.2% and its ratio of tangible stockholders' equity to tangible assets was 10.5%, as of March 31, 2011.
"Our exceptional level of capital puts us in the 97th 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 March 31, 2011, the Company's regulatory capital ratios remain significantly higher than regulatory "well capitalized" guidelines:
DAVID W. GARNER
