SFNC - Earnings call transcript Q4 2018 | Simmons First National Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Simmons First National Corporation Fourth Quarter Earnings Call and Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Mr. Massanelli. Steve begin. may you Sir,

Steve Massanelli

at morning, and earnings I our quarter Relations for as Corporation. thank My name you Officer Investor call. and and Administrative joining First is National Chief fourth Officer Good Simmons Steve serve Massanelli,

Southeast Makris, are wholly-owned President and Garner, Bob CEO David and Chief and of Chairman bank and Chief Ledbetter, Accounting Simmons Joining Fehlman, George Executive our Financial our Chief subsidiary; me Barry of Chairman today Casteel, Bank, Officer; Controller Officer; of discuss Officer; Marty of information the Division; President to this Company’s for call earnings and by discuss purpose Reddin, Enterprise. The and outlook quarterly the Matt Banking provided issued our is the Company future. yesterday the release to in data

by followed a comments, prepared Q&A with begin will session. We

from call the All Q&A listen-only in website our session our firms and invited provide that investors the on and conference on session. mode. will in Investor simmonsbank.com our transcript We today’s have Q&A be the this Company are institutional participate posted in under tab. call, the equity including to of Relations prepared a remarks A guests analysts other research

about factors, estimates uncertainties, materially other we of and During may by current statements, be plans, Company, may and our performance and known may results forward-looking and forward-looking cautionary other unknown notice this may constitute estimates. that expectations, special the certain discussed risks, call than during matters and involve and expectations, certain our statements make cause statements presentations in different the and or to which goals, outlook. I’ll certain you made disclosures today’s call remind forward-looking regarding actual

most release the Exchange to section earnings please with of XX-K, with our list our of Commission. factors recent a risk press of U.S. description Forward-Looking Annual Report Information Securities Form For all filed the risk on in refer is certain the contained our business, certain and associated and

beliefs future The or projections, or new forward-looking its management of of the management the and obligation and of update Company no time otherwise. statements at estimates, undertakes are statements, Forward-looking of based on performance. information on by and Company the receipt events, any based future guarantees such occurrence the assumptions statements revise made to of not are

are presentation, are in not the These George certain our non-GAAP GAAP with viewed turn GAAP and X-K. of SEC Lastly, other those Form will note, to over as metrics. are report in nor we comparable I’ll intended the this be now on to be provide Makris. Please in non-GAAP filed measures presented performance non-GAAP accordance financial to operating a meaningful discuss they companies. disclosures by metrics the to with results yesterday call non-GAAP Any financial contained insights. current measures core references should necessarily may determined reconciliations substitute for that

George Makris

XXXX welcome earnings per fourth of press XXX% issued annual from to of Thanks, in we right-sizing in reported increase XXXX and $X.X million yesterday, branch previous call. an our increase $X.XX, were $XXX were of an quarter XXXX. Diluted or and release income year. XX.X% for merger-related earnings compared to Steve million the after-tax share XXXX, net Included earnings conference $X.XX, million costs. and In or $XXX our net

earnings XX% increase were $XXX XX% $X.XX, of these XXXX, of compared the per from core or or Excluding impact were the items, $X.XX, company’s increase XXXX. an $XXX share to of year. earnings million an last million core for Diluted

XXXX. billion total assets a During December of total XX, to at XXXX, billion $X.X grew $XX.X

for X.XX% assets on compared was XXXX. return X.X% Our in average XXXX to

earnings period $XX.X XXXX per $XX.X $X.XX to compared and efficiency same year. increases million diluted million net income $X.XX, was for Our were XX.X% and prior ratio XXXX, for the the share to of respectively, quarter XX.X% was compared in Fourth XXXX.

earnings core the were items, of impact fourth the quarter compared $XX.X fourth XX% for $XX.X to XXXX. an non-core the million of million Excluding increase or quarter, of

end quarter at billion, was from loan in quarter, million. last Of fourth of increase portfolio to September an the the our related the Loans of was by balance the seasonality or credit. of $XX.X $XXX year-end. decline decreased Our of Agri X.X% $XX warehouse the lines $XXX since million the million

also than We consumer remaining payoffs for liquidating $XX new of the continuing lending had loan loan our was decreases million fundings in to greater indirect decline The portfolios due during in finance. quarter.

close, approved loans as quarter. $XXX of define we the which pipeline, to at million was and loan the Our ready end

in loan concentration acquired was net our XX.X% our XXXX million of expect million, $XX a and the basis, XXXX. construction Total Accretion be development of $XX to We to consolidated growth loans from of income million XXXX. interest million X% CRE range was million, the to the quarter concentration income On X.X% was our was for XXXX the fourth compared compared loans to of the in billion, third same quarter million, The in the $X.X quarter and deposits increases the increase at XXXX. last in of XX.X% and during were at $XXX.X fourth was income $XX.X an company’s $XX.X of period prior from in XXX% XXXX. $XX.X quarter. the in $X.X from X.X% million for quarter accretion Total year. billion year-end end year-end $XXX or loans and quarter, the from

projecting of upcoming are for excluding income we accretion estimate XXXX, $XX any acquisition. For Bank Reliance million

rate was interest a X.XX% the points excludes company’s previous points. interest risen compared The cost XX basis we points Our basis XX net XXXX, increased which quarter. expect to net has loan interest X.XX% margin margin, cost while the Since yield XX, of the fourth was and the environment, quarter. expand. X.XX% net XX accretion core our has funds our for to quarter for core margin the December risen deposits for has borrowed compared would to In X.XX% stable basis quarter previous

mostly service fourth quarter We last trust income. increases reductions by due card fees $XXX.X offset to and year $X.X Our acquisitions noninterest income in accounts for lending year. our XXXX was had the income were of an partially to and deposit on debit of SBA increase compared million, that in million charges

July to of we established debit million, the the Durbin XXXX the XXXX, amendment. million compared to decreased subject the Consequently, X, rate for to card cap which card during year, contributed the by fees $X.X net became of reduction when XXXX. has $X.X back fees half interchange debit As in

first remaining premium Lending lower to be debit the XXXX to of of million decreased as XXXX selective We as in have XXXX. a in quarter expect card in when continued XXXX. income half decisions rates in $X.X of to compared months loan premium compared of to the reduction a similar first the the sales result regarding half compared our recent SBA fees first

At The million deferred asset for legacy related discount for We million. expense was largely At quarter of tax our incentive into We fourth credit a Noninterest for expect million, to loan $XX.X tax XXXX and loans expense XXXX. The the segregation approximately million. made for was noninterest fourth XX other of in $XX.X the million Core million the a XXXX, true-up year. accounting million. noninterest of in XX.X%. was incremental nonperforming expense previous core the December $XX.X to the to this and estate positive which all continue cost tax decrease sale. adjustment. in million $XXX an year losses noninterest was trend nonperforming XXXX, due various coverage. estimate closed primarily Noninterest Income expense our of $XX included of accruals branches quarter of in is year. while tax which the year end XX, This in benefits $XXX million assets $XX.X XXXX last were bank for state from to $XX.X for in increase of impact in for a loans when of the year-to-date full million of allowance study quarter represented on discrete real was owned, up was expense increases the expense $XX loan be $XX.X rate tax total points. to results includes is lower The $XXX categories mark million, primarily the result $X the for for $XXX compared XXXX. held balance acquisitions million million over our

loans basis during to points XXXX. Our nonperforming XX total declined by loans ratio

annualized loans and points to to our acquired provision of projecting an increase for to previous acquisitions, loss loan basis in $XX.X $XX migration growth XXXX, loans which loan for related was X the includes third strong our increase XX charge-offs migrated XXXX, were basis legacy points, million we’re elevated. which were Due was from provision sales. which The During provision. million, net the consistent year is XXXX XXXX, guidance. loan loan total with our to due quarter during

billion. Our equity that year-end capital position holders’ $X.X strong common was stock very remains

was share increase last per value book Our an from X.X% of year. $XX.XX,

the X.X% at an was value was end to XX.X%. book share per X.X% equity tangible ratio common of $XX.XX, Our of compared at tangible year-end increase XXXX. of the

Our capital total XX.X% the December XXXX. XX ratio risk-based compared XX.X% at of at end was

of We’re our in proud XXXX. associates their and very accomplishments

new applications for Alliance merger the banking converted the our the We achievement to to systems work half In alliance the Bank conversion. and plan We human SNB of by for April initiative platform of organically. $X.X merger to in addition converted St. and been and ready first announced to we our a the day In with the regulatory generation earnings; are on to meantime, year. of both systems Bank systems filed assets be next we operations Southwest in IT record associated We transaction IT we The the in evaluation Bank close the and the completed hope activities of and XX. Louis. continue in we had resources during our acquisition the August. grew accounting billion

XXXX. upgrade including I IT digital initiative, another banking involve systems which and most the to our prosperous will banking of of applications, forward year looking generation We’re the offerings. beginning next in of the mentioned our

with initiative with be pretax. customers, also We better achieve associated costs a product $XX associated in are million more to systems. to integrated the expected not only expect opportunity to XXXX efficiencies for incremental this our but The have

increase certainly our to we continue presence a potential. be We the priority growth in will to all communities are market Deposit on fuel will growth critical serve. as focus the our deposits in loan

will our We customers. relationships with portfolio and we diversify to the have loan continue deepen our

pursue of enhance regulatory our will partnerships to our President the leadership, for marketplace. the to North monitor we C&D division concentration in and I’d loans Vernon retirement this by acknowledge of will value with We that in an ensure like the CEO Division to continue Bank reputation our banks of Worth Texas will And and we Fort month collective developed Metroplex. abide guidance. CRE Bryant, Former Vernon’s excellent Southwest Under bank. the Southwest

We’ll comments. wish be and from for change prepared well-deserved the the We’re with and give analysts I’ll pace. now legacy institutional the as our in questions Vernon best investors. questions. associated his back the take on concludes very and instructions come fortunate call please the research This operator a enjoys all he to ask line of our to

Operator

[Operator our first KBW. comes Brady Instructions] And Gailey from question with

Your line open. is now

Brady Gailey

Hey, guys. good morning

George Makris

Brady. morning, Good

Brady Gailey

you reported five basis a talk add about then talking expansion points to When the you XX could basis frame are but color, much points help NIM the maybe, about or XXXX, think just or see how core out that a like and expanding just we do in bit? NIM little that little you us the NIM is

Bob Fehlman

if loans to dropped right below off A was Well end and this some of Bob, quarter; I guidance. that the look Brady, the we you obviously that the first, also at our this due seasonality quarter. at of is paid lot little a think

you they about short-term securities, were more in our the we $XXX some cash the million up quarter, if securities look quarter. on into money So, balances, at put

a this in have big did piece was of that for quarter. it an So a impact seasonality

lot Our comfortable this look year range. was we for $XXX relationship in – there outlook still of in deposits to on as is there. and And quarter, we bringing lending a $XXX focus feel that million next million in said

million So, our to guidance $XXX range. forward that in going still million is $XXX

Brady Gailey

And that’s core the margin, right?

Bob Fehlman

That’s correct, yes.

Okay.

Brady Gailey

X.X%, talk X% closer to Okay. about XX% the And I’ll the to growth guidance I something loan to think historically, have range. you then XX%

growth. loan dynamics What lower guidance? a some with of little the loan growth So, are the on lighter the

George Makris

and with a ask I’ll I that then play start it on of that. Brady, couple guys may to

quarter, of beginning there about During the $X see the anticipated during right that quarters, first to At fourth risk along a year, growth than diversity from of billion at loan our we conclusion the loans, a We faster of standpoint, year back billion. that loan loan our management the it standpoint. concentration that had quarter, met was our in them into we opportunity were evaluate that particularly before three which certainly we much during if And anticipated. from and the we’re happen, the loan coming to sheet, portfolio but sit time, in at point because we fourth level. probably certain was period balance was the of had allowed where comfort certain time XXXX, needed not some growth our good our pace loans, the all expectations. our to of all in portfolio, bank. in our necessarily, concentrations rebalance $X markets, certainly and exceeded the glad

a think I So, recognizing markets, very would the to yield as out diversity. you permanent went for We the it group which our is several some curve with of loans job that the did good had need of the bank, move today. expect

do well we were that’s we Some and asking bank, too. bank. of them of part management risk that this at And something left very because

a the take year’s is economy. of X.X% look next reflective to as we I I X% at loan think growth, today’s think,

about reading the a a see which to curve, going you lot economic not of an housing have sign expansion, inverted beginning you sometimes whole You’re recession yield south, is cycle.

just earlier year. we in think the are strong was it the So, as don’t markets

I’m the and I’m allocate take more Our broad But going and to bank much be a that’s selective our today and our can just primary talking with more look still customers, about theirs. how going to to bank, we we’re loan a we’re are be pipeline as customers to of a who rush important. And at relationships send not very those capital, have about looks relationships our that respectable. much deals talking

quarter, starting loan that has the transition good the year some happened a our little think the all at in second talk of a let I’m Reddin bit portfolio going XXXX fourth the the quarter. Matt culminating half dynamics during I about of in we’re So fourth point in of today. to

Matt Reddin

of that a discussed down as higher paid there’s outside ag Brady, of on expected. as Well, was a which some George. our to Thanks seasonality mortgage yielding things warehouse, portfolio, of and know Yes. couple the is it

saw, needed diversified ability payoff some where relationships. showing estate balance also to. projects transaction to in payoffs, thing. loans. saw to a completion the categories, from They all were of real we We concentration sheet were saw a Also, and C&I pruning our low-priced standpoint We and good payoffs good see but larger they come our not we

books. got those come to see we off And so our

fourth – saw I’d saw standpoint of help $XXX is we their you out in should Texas, a tell forward. great loans, being that from unfunded. moving So us production which North the almost expected of to production, the of half gross that quarter that new with be economy. We million

So, they I they’re do. doing to but that middle Oklahoma for payoffs, that fourth pipeline, on us. offsetting they’ll Tennessee to based City’s continued now those and big feel mark well. we help quarter had which able be Also, that’s to market do saw a other reloading well

based. growth some relationship all for actually market but in a we San saw Austin, so and newer And which us, is Antonio

highlight and some Tennessee, know going declining coming those our the Midwest, are Southeast markets Arkansas are we that be Arkansas, are be expected. we from payoffs the know Northeast those So, where to to growth. And

to overall, balance we needs in So I it needs came making like – sure George’s point sheets, where our we think it to on be. expected

George Makris

met respectable with quarters up of during just the didn’t, not Brady, had would stay our keep year, as think We and growth. with let the now is that in deposit been there level growth loan didn’t our that ratio. the more pace. hoping I we allowed for up expectations. XX% regard our It we’ve growth the clear point first our three year, it me accelerate comfort one portfolio. with to some loan-to-deposit to fact, our loan time deposit It make very Well, during keep

loan our ratio our which was Now, deposit is level. XX%, comfort

So, XX% we we growth. get unless XX% keep will with that, manage If deposits to than to the our core – it range. loan portfolio deposits higher in allow up that

or XX% to We will a range. manage into us Reasonable reasonable back that down is less.

Brady Gailey

right. Reliance, acquired loans the X.X% through All X% to correct? clarify, just any to excludes And

George Makris

That’s correct.

Bob Fehlman

Thanks organic. guys. All great. for all the That’s right, color

Operator

our with Thank question David James. Raymond Feaster next you. And from comes

now is line open. Your

David Feaster

guys. Hey, good morning

George Makris

Dave. Hey,

David Feaster

level saw free to downs of kind expect whether quarter. in the of impact guess just the quarter? And on that maybe going pay the much payoffs interest that how accruals you payment positively we fees of talk And the rate about and quantify forward. the NII impacted you that NIM, Could in continue with I run should in same

Bob Fehlman

in Yes. definitely unexpected payoffs. speak I saw can We to $XXX of payoffs. million in excess the

low our a that And do credits, asked. glad credits margin to planned. Some We million of their larger leave to to diversified the estate – were then market. lot it to because real thing. which go. multifamily, equate we hotels on, were planned we is $XX of that that needed in to I as one saw that bank that our them as completed also – that’s to spit ask say permanent was we footprint, specific they almost and discussed million some but moved good market business throughout it also as concentrated projects the was And $XX that projects, not just just and the wouldn’t Really

David Feaster

Okay. and number do NIM in on just have the interest positive the And or… quarter, the then that benefits you accruals the

George Makris

Can that you repeat again?

David Feaster

the that prepayments NII and downs fees stuff pay typically you accruals positively get interest and With that from impacts – higher…

George Makris

that. our quarter, impacted basis this just just Matt I’d this point million set, That’s – change. about seasonality on we’re in quarter, basis you four five probably and you ag in payoff That’s where definitely the tell over warehousing that was and take this quarter. when impact on you the talked $XXX take mortgage $XXX-some-million range the

David Feaster

the core impact good in you positive be from just the a XXXX? to rate and the quantify for expenses Okay. the accruals of incentive in what think run Could maybe you quarter impact plan

Bob Fehlman

the you as trued-up incentive that for the and incentives tell plans we company. quarter I’ll across the included all Well,

true-up So million about significantly our paid at to of that over the the sharing the out $X.X the and it’d equity had that Executive $X.X would still be been be And up The in We quarter. accruing profit grants. million part expectations. Management expectations. Group, was, was we fourth above

So it expense up million was our about On I a finished we next non-interest the go mean was true-up, to X.X% in over basis, the our forward was a be was fourth the year, so fourth $X.X increase a a year great this year. year, as quarter. budget for base just expectations our it for quarter about

on expense. So lot there’ll focus of non-interest a be

first of that top be about script on And the that’s we Now part would X.X% And million the spend it the would growth in the that as expense the you expect a non-interest next amount would the throughout building talked IT addition But in about discussion. that annual costs George base. of in to quarter earlier said, the year. $XX lower and be year. on

David Feaster

into strong Last the the Okay. from And your That’s income in other core what thoughts pretty notably one and helpful. Could quarter income was obviously you on some just talk maybe have pressure quarter the could fee and XXXX, fee pullback category. me, about higher income that? given in the drove in mortgage rates, we the given in trust, market head as SBA. then

want your on just into revenues So heading thoughts fee XXXX. to get

Bob Fehlman

But if fee was on about you recoveries and some we talk gains. OREO I’ll Well, quarter other, talk also the and income. that the primarily that in other had Mart about

on up. had gains down we foreclosure side, quarter. the our was expense expense the You But some category noticed in other in

we at offset, some kind then also of had off those been but recoveries charged point. the that other net loans some from So of

that similar throughout it’s year. quarter, see up can historically and So some would it We as goes levels that down you goes category kind to time on. recovers. lumpy there see of each expect be the But was other you

David Feaster

Okay.

Marty Casteel

selling, mortgage where think I and one are not and I from I going seasonality in say, today. And not far we’re retaining would fourth seasonally we’re a expect we’re probably I at as is declines have In not mortgage SBA, lower quarter standpoint to production. Marty. is think this any our production. of from David, impact But seasonality rates – always Mortgage SBA that the we’re SBA point the lending, probably a quarters would further we recovered a low little, is mortgage. as just

trust, in delayed that fundings interesting retreat our income So trust with we’ve be SBA that far from But in from where got I a just condominium. we say either. as as the any I don’t shutdown. loan government potentially see little are would

results rate on I the think see trust on pretty we’ll steady income. run

Bob Fehlman

of that debit as in and it’ll the David card the million next and impact the quarters on to a fees, have Durban credit reminder $X.X for we’ll first million. $X year two be

David Feaster

Okay, got Thanks it. guys.

Bob Fehlman

Thanks.

Operator

Sandler Our Instructions] [Operator Stephen next comes you. Scouten from question O’Neill. with Thank

now is line open. Your

Stephen Scouten

Hey, morning. everyone, good

George Makris

Good morning.

Stephen Scouten

around Hey, you too drivers. kind maybe talk help. certain color seen geographies the were around a I appreciate kind thing that on any of If bit curious And were it’s or markets. But specifically? of about you is the the you certain concentrations construction is, color of away some year-to-date even one loan that growth growth what Can little just still would all I’m in certain kind if and or of moving the concentrated the of some what concentrations from rapid to over that we’d was mentioned book.

Bob Fehlman

a we type trying we also absolutely. Yes, on opportunities and say see that but – that good product we geographically we look saw one overall but have being our exiting type markets, that’s in specific late hotels. concentration, footprint, to and and a multifamily lot throughout I and there’s definitely prudent are geographic market. getting manage opportunities look a product by any our not see We those as of the cycle market we We and we’re wouldn’t were a concerns soft, not the

in markets make based done or We are customers that’s we’ve those to customers doing with, still sense. with business – that new always business relationship

Marty Casteel

concentration underwriting enhanced in reflected and is And pricing. the management

Bob Fehlman

that’s yes, point, a Marty. great So

We on pricing a leverage, concentration got so much better due, looked real if the if to from – those management quality QX, standpoint. So her if from at also lower did look books QX under put credit the we quality. loans and note, you better estate got you hood are really that

George Makris

mention to portfolio other we is me do what and that, one lending, on thing intend do too, market. to that let we pullback each don’t under any in is circumstances, intend Stephen, diversify our

So to consider to balance we that have then lending, encourage CRE we’re extent a more the that’s lending out. C&I to that heavy going market market that to might in

So looking a diversification we’re for. a that it’s it’s not uncertain areas, pullback the necessarily

area maybe emphasis been a in our it different in certain in than a So market has past. the

Stephen Scouten

Okay. lot sounds those been if say? migrating Tell seems from maybe migrate maybe had this most two you me recent of That’s Is legacy a from that the re-mixing and this the the assumption helpful. same of the new correct. book the fair portfolio was me didn’t into to the It markets acquisitions, recent rebalance like those pace the that that as of kind loans acquired maybe some to book at deals. from from two

George Makris

think certainly coming Well, that book. came early was those yes, migration new the from into I markets of year legacy our

of the loans the had think book of loans and the of mentioned at the construction of moved we construction on that the lot in construction that year. fund to that A and of of those a period. end I those we during lot end Matt a those dead lot we two out lot mentioned markets, particularly a at we’re going year unfunded had earlier

was new just still primarily construction the probably XXX%. of you from the migration under So still bank two out that so, yes, from They’re loans, development pipeline, filling concentration the most saw was that our markets. construction of

those it markets. in continue those we’ll primarily from two that permanent, we’ll and to do construction as move So to replace

Stephen Scouten

you Bob, helpful. that a question Brady’s around And the categories time think non-interest one deposit Okay, within and pretty the and for on of recover. in of trends into But mix heard and costs deposits deposits any much your obviously NIM the occur in might higher There’s bearing? big jump just I And the versus maybe the quarter. within more time shift I’m NIM to negative continuation color how other wondering last pressure how me. could competition some these

Bob Fehlman

previously What were was question quarter, range. deposits that agencies classified $XXX-plus a some state that’s had rate market. accounts. million on number. in in market with the distorted funds, That’s this changes. that the kind a great We up as go able we were the to We were because at was – basically lower really pricing various of that Those significantly the those for money those to with brokered find rates, expectations the

replace CDs. we So classified as those with

move savings category that money really So about market $XXX the down investments. time was million to the from

really, from raise it didn’t that impact the had what about one The that on is lot $XXX it next, rest was funds quarter the have of went to cost funds we don’t of market time a It So but an it to cost really out move. the it read the we’ve reclass. from increases – that a of deposit. million

Stephen Scouten

sort wouldn’t helpful term really have what to That’s Okay. that, taking brokered are you do Bob. And of you on those CDs?

Bob Fehlman

You cut out, what did you the… say with

Stephen Scouten

or on brokered those term taking duration, sort like you of CDs? It are

Bob Fehlman

to going, on and versus deposits, customer our those still term staying we’re was relatively so goal was differentiation short there retail Because Generally, points replace basis with brokered. we’re the with XX state basically, those. commercial But almost and with pretty going the short.

Stephen Scouten

all Thanks it. I perfect. for guys. Okay, appreciate color the

Bob Fehlman

Sure.

Operator

question Our next with Matt Instructions] comes [Operator Stephens. you. Olney Thank from

is Your open. now line

Matt Olney

Want the back Hey. and that on expenses, discussion Bob, morning previously? thanks go operating before that guys. base Great, you to mentioned with we the rate the clarify, you X.X% can should to that expense start we growth what’s add run

Bob Fehlman

as you kind because for an growth. and a expect top you’d we for talked of a NGB Next if not Banking and million but million quarter at on give true-up $X.X what take about annualized talked system. about for But IT hesitant about on related what that that if kind you number each we’ve of product, the on Generation core little to We’re incentives, it the of this the quarter. that lot what $XX a IT we that’s add basis, quarterly the grow base, quarter, is then the call per X.X% for about that’s the on basis, you And

Matt Olney

entire amount entire up $XX XXXX, will towards until year? that million that we the the captured in are you amount in be following and will capture And ramping that won’t

Bob Fehlman

be a $X.X our total the quarter Yes, is it ramp I’ll million $XX That’s estimate the you up give to it’ll ramp first million. year about is from budget and end of it’ll And estimate. up. – towards

You on finish But know estimate goes never these that’s you of timings, our production. when it it actually into today. as and

Matt Olney

helpful. like margin, me course, margin in the X.XX% in the of should of you’re the that for it we for the That’s then guidance X.XX%, Okay. Reliance XQ? seasonality core on terms impact Help expect? about sounds of of And in And think XXXX. the XXXX what I iterating guess

George Makris

quarter, the in still got obviously, first we’ve Well, seasonality.

some have pay of those credit portfolios. quarter. the Agri We’ll in downs high yielding Both pay more [ph] are fairly first downs. we’ll also have card So,

extract little rate. would Reliance forward. The probably of in lower that’s it the on going it Reliance transaction, we as up going first to effect run So has to we’re prior going little a for than through always, process premature be plans the integration higher it’s year exactly know what quarter our have where today, margin our to and

It so $XX have is diversify margin. a they’re a chance lot million CRE. think I net books. to portfolio pay going off. to have But remember, the X% take heavily current as well. have they of think on And we money obviously that expensive diversification in interest interest expense, invested they that still We of that their will

we’re pieces books. point run not one that we hit way. the quite So comfortable It there when be. than that to we’re have it margin that before to absolutely higher net ought rates to we put they interest to our of But that current going be with to examine a what their lot are their

Matt Olney

What XXXX I that on the you year be full in will in think, you the Thank ex-Reliance. that What’s George. accretion, purchase in quarter? first million for Okay. then the projection that XQ? And $XX said, accounting for

Bob Fehlman

that but I say? but number, have don’t I did know, if you – it’s what

George Makris

It’s to $X.X be is going our bit, quarter. projecting little the quarter. or going slightly loaded decline a forward projections it’s million first to front moving roughly Certainly, it’ll each be we’re but in what

Bob Fehlman

have. that’s payments payments, Reliance scheduled would we that you give you guidance, our And we that again, payoffs, that. higher be right include the than when we now have And there Matt, also it’ll not And expect does transaction. be. would scheduled our that’s if that But early

George Makris

but know our time million accretion relation, to quarter. was was numbers, quarter only income I million. in out one that from it’s the Matt, worthy in $X.X in it’s $XX fourth more the think point third our our it’s It I And

that we pace on if missed income, would were continue a we that same accretion that by So expectations lot.

So we quarter. you believe that results break accretion don’t that the out substantial negatively, in will have our have to not really and including positively the core you know fourth a And on We as done there. guys vary we it’s hat into income. time but We control look We timing the long know accretion core at our income, out really that. of we take performance. come don’t it’ll hang our and

Bob Fehlman

much was reminder it’s as I the the expense related a how provision loans. migrated this to good to And think point up year

was acquired did we have from for significant So the legacy the provision to income, while a of accretion there significant buildup expense bucket the loans amount buckets. migrated

George Makris

below we the what to at which on what were that be, pace nearly based they And that the is be will expect migrating XXXX. – believe in provision in substantially what loans XXXX, we it was said our don’t the fact expense earlier, we’ve

So a is positive XXXX. there going in offset forward

Matt Olney

on was That question Okay. next my provision the expense.

well number get be million, higher positive understand consensus downs million? excess $XX a you of would would say the right If a we paid than expectations that or and that’s there payoffs below me because that towards now. $XX number so now, that a forecast a bias that’s So in do help

Steve Massanelli

bucket? the saying Now, in you’re payoffs acquired

Matt Olney

Yes, yes.

Steve Massanelli

if strategy that. for the go same migrate accretion, will if the payoffs If we up those allowance down build there’s it’s in related, we but loans have even had that significant have to over, a – and we we not acquired will as

for we be on a migrate there what growth a loan based would $XX we And correlation again, normal But budgeting loans more loans year. and our in migrated were right projecting there. we’re have we’re next now that will provision portfolio, for and million So over, up. provision go our expecting if

Matt Olney

or imply that allowance guidance, in million would the would believe continue down And that that XXXX? assume move ratio to then $XX within provision I

Bob Fehlman

you’re expect flat moving to would it saying? ratio, that I is overall stay I expect the what allowance to would up.

Matt Olney

follow confused point. maybe, call But little because Okay. we after by that, the up on I’m that can

Bob Fehlman

Yes.

building than expected the we the have. think, we’re that allowance charge-offs into I more

George Makris

with the have that, them that because loans. got with acquired we’ve our confused got the our allowance got stay I loans legacy associated Matt, these mark two buckets. associated on we’ve then We’ve and

at We have to look those together.

to adjust some hard portfolio how relate to to we as it’s So, is really with our going over. tell one the other, loans migrate

So, it’s a I’d you it. great me point. Once know. a and appreciate call figure please it out, me give let

Matt Olney

appreciate guys. right I it. All thanks for Well, color.

Bob Fehlman

Matt. Thanks,

George Makris

Matt. Thanks,

Operator

I further for further George showing turn like I’m at back Makris And to call now would over you. time. questions remarks. Thank the to this not any any

George Makris

make, want year. Thank I I sure remarks we do XXXX our and to have you. recap that And make few properly to a

ago close acquisition We’re pretty which other to want we that when year not results and XXXX, us take would pleased on concentrate announced we with any us to allow in back I a our of this previous based exceeded the performance I so those mergers. year. full the integration made bank and $X.XX. we’ve our of benefit We the our the time, believe analysts on At consensus that would announcements, was

we think clear billion. were be growth to $X I loan our that we expected

of Bob a how didn’t balances. during OREO FDIC had couple further I’ll them particular, about four $XX purchased million growth an expected We’ve bank acquisitions. objective achieved first spend wanted One qualities asset We for time are talking where today to back earlier, attention improved manage that. associated that very pay fundamental lot loans, We’ve in substantial significant, and close standpoint, targets its five We the is, you is income XXXX. year. bank. reduced accretion to little company XXXX We that’s fundamentals over. banks allowance loans. primary and took OREO the the particularly we based amount. a to To those went as XX% that a asset even When of nonperforming asset migrated total we with a you also sort our ago. up particularly overall at five had quality, while much a I our both were talk improvement asset of we our that is from a our when of years take had of also said about see on our during than demonstrates times and our our I one risk bit deposit to in mentioned quality we foremost those company, that take at year migrated loans and size look of appropriately be an loans trouble quality. to is to equal our done appropriate by And allowance.

line. So, effect down over trickle didn’t the accretion income bottom net to that basis all

in that going see but organizations, here So that not at do see we Simmons. to you’re other

bank. those We’re also provision going as new for a I whole that billion the who you because this with familiar regulatory were ballgame. of appropriately first we to compliance, a milestone, our as are grow. $XX loans And for time, mentioned year that’s examined

I think very the we and forward. are came and expectations where scalability those of meeting good management feel our through programs about our going we that risk

don’t deterrent see growth. So, hands-on you, we all an as it effort year But last to I that typically. was a during tell can future deck the

were congratulations organization. risk who a managing as we appropriately that mile extra billion our that sure associates, to $XX with So to make

that see to conscious while also CRE the can with we’re willing want that out Then limit. to that guidance We very and push to regard construction of guidance. point we’re regulatory you

in Not but go And on loan want we haven’t why we we our we guidance. programs place, based to far, guidance a that over that risk specific basis. portfolio willing been So we manage management purpose. in appreciate the proper that we that in wouldn’t, for is permanent on guidance have and to it’s place believe place

During accomplish the of size able billion that of we grew to full a organically is were the our year, XX% company XXXX. $X.X in we

that conscious has of before and they driven responded We have banking to have are and field very mentioned relationship been that we down the extremely well.

less. about little is year. that most level bit. or that comfort us of ratio Our already talked We’ve a the XX% exceeded It loan-to-deposit for

Our not we’re our efficiencies that services, hit that our been part year we’ve that line to next between shareholder can program, XX% and bottom our efficiency to data $XX fluctuate digital XX.X%. long-term this in to a invest continue our what’s we’re as our IT to ratio to going see this treasury operational create We’ve of you we and banking with to XX% million mentioned was our going accomplish generation today. improve value. of where business year with programs analytics our able create investing to bank, And

be our develop our forward, to So and excellent customers. continue in also we look encourage to relationships in market are continue find we our we the the bankers to those continue that significant organization, to and to significant invest, to going to but field

this in are for We the long-term.

for to is think objective value. And long-term speaks Our our create record I shareholder itself.

today. your months now. I will appreciate call I participation in this to all three forward having So, our in from look of again,

Operator

thank all gentlemen, conference. today’s in you program. and may And This disconnect. concludes Everyone, wonderful Ladies today’s for have participating you a day.

Simmons First National (SFNC) 23 Jan 192018 Q4 Earnings call transcript