SFNC - Earnings call transcript Q1 2021 | Simmons First National Corporation

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Operator

Good day and thank you for standing by. Welcome to the Simmons First National Corporation First Quarter Earnings Call and Webcast. At this time, all participant are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today Steve Massanelli. ahead. go Please

Steve Massanelli

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

Makris, George Financial and Executive this company Matt Chief Accounting Chief Chief Director data are today Finance call and me its Chairman Chief The Accounting Banking Bob of is and Officer issued the David Executive and purpose Officer; Officer; the and Reddin, and outlook Operating of for Fehlman, release to provided Officer; Garner, discuss earnings the Chief by Joining and future. discuss in company's to quarterly information morning, Officer. this the and

call, investors and from firms with remarks be on company conference provide guests are page of equity begin in the analysts research listen-only mode. comments Investor that will other the participate least our session for session. will recording a A All Q&A Relations prepared Q&A at prepared XX institutional including in today's Q&A in posted simmonsbank.com, under the the days. this to our website, on by the We invited call followed session. We’ve and

make due expectations, to about could a variety I statement forward-looking we future factors. plans, from our those goals, materially differ call, today's you that During by implied estimates, forward-looking the will outlook. and results projections, statements remind actual projected in/or of

company’s obligation update statements press contained the of release the Information for section the is company or Forward-Looking revise information. Additional the Form certain issued in factors contained assumes SEC or including XXXX, ended other information earning factors company’s The forward-looking without year and concerning company’s of XX, some the December the any this morning. to no of risk in filings, limitation, description those XX-K

to GAAP metrics presentation, reconciliations Please metrics, to these release discuss first non-GAAP press disclosures believe in company’s quarter the the on useful Relations on this simmonsbank.com. that metrics Lastly, investor to Form contained we call George company’s with morning the note exhibits of the the Makris. non-GAAP in available including and presentation, are financial filed turn the of now earnings certain report investors. current at the to as provide website page company’s and non-GAAP we’ll which I’ll over are SEC additional Investor this included information regarding X-K

George Makris

income for first Thanks In share earnings our XXXX. our quarter per the branch Steve net welcome net $X.X release expenses. of quarter in earnings of million reported the of and to merger quarter we a on related million sizing right gain net and in was call. Included again for the once Diluted press our income of XXXX first quarter. in to earnings related $X.XX sale first were $XX branches Illinois the

core the the per share. these on impact $XX quarter share diluted earnings per million first company's items for the Excluding and were earnings were $X.XX

Our was X.X%. on assets average return

Our return on average common X.X%. equity was

XX.X% common on return Our was was tangible and our the ratio for first efficiency XX.X% quarter. equity

were $XX XX, of As total March billion. assets

March XX billion loan deposit in $XXX total billion. in was $XX in and Our was our Included $XX loans million balance loans. PPP balance was

year-end. PPP end the approximately $XXX program. the non-performing a assets of of from the while we quarter million $XXX were loans round of in two $XXX the decrease quarter During originated million At million $XX were first under forgiven million,

points. basis net loans Our charge-offs annualized total to were XX

company's was net the core Our excludes margin interest first XXXX. quarter margin which for was X.XX% for X.XX%. the of The interest net quarter accretion the

for for of securities. decrease and Non-interest million the million which million Core the to first the $XXX for compared XXXX. quarter of was was Our of $X.X the XXXX $XX branches on expense quarter million million. of when gains $XXX gain first sale represented the included on non-interest quarter in a quarter Illinois and million was non-interest for expense in $XX income $X.X sale

at very capital strong quarter Our end. remains

Our based XX.X%. was capital ratio total risk

card ratio XX% presentation much tier current tier at release was common equity On ratio other ratio of and We X%. with activity increased saw We're leverage financial we economy. information quarterly the about in balances XX% extensive one our results by important to the www.simmonsbank.com along one consumer stockholders while detail and equity go data tangible shared At but ratio press spending our the our company. up the regarding of common gives equity which Our more an March and our was credit was fell. XX, website have X%. encouraged

but excess liquidity strong decline development to the continuing stimulus this have be by programs the in refinance decrease activity pause activities activity in mortgage a in Our a taking generated demand. we've seen loan contributed a The continues to quarter. and

However, see light end to we're the at the starting tunnel. of

close Our pipeline $X.X at a approved quarter $XXX rural loans. reflected trend. growth million in pipeline $XXX approximately of end business the including footprint across loan up from at markets of to million in the the to That was both and our indicating metro billion is back December ready end

stimulus into to questions benefits from normalized over our to short-term the trajectory turn the to institutional this later our growth of quarter analysts prepared invite and before continue more the the payments our a This year. comments. investors. expect now line will will return second I operator We concludes we

Operator

line the Piper [Operator from Scouten Sandler. comes Our first of with question Stephen Instructions]

open. is Please go line ahead. Your

Stephen Scouten

Yes. Hi, Thanks good guys. morning.

George Makris

Good morning, Stephen.

Stephen Scouten

increase how lately. guess more investments curious, ideology securities I'm higher just bit kind rates if that about where of could around of move little in kind an begun a the environment thinking you about the and here talk you're I to and have

Bob Fehlman

Yes did cash security probably did portfolio. said is liquidity $X got or QX to Right and planned about invest $X.X the release our call we to at can billion will as we've in Stephen, so as a off then would and fully of Bob. end it invested the in get billion we quarter. what billion. see you we start close this the now still and I this we is still And the of our we're we

to We for when will quarter. for up opportunities sales events this come like look continue

$X.X Just four at an sales to time. example gain $XX years in hard one resulted interest a million a it's million it of not worth on we had in pass and

we of but years So manage that this we'll hovering The continue continue to go to at at that XX We'll at XXX. as XXX took been forward. to level. we advantage look it

into securities next that pickup probably, defensive go probably XX and very will you be it We that on some really about overnight a is may it security in short-term portfolio. to we basis see up really money the would in more securities but point quarter liquid cash is mechanism the that the put park

up you going the duration interim So on holding see it would should there it be it money improve portfolio the period. the do the in and if really

Stephen Scouten

it. Got

I it of if question I you but a then was loan Okay. guys could out Helpful. different very ask obviously know around similar noted the coming had $X.X to And looks growth which then the XQ build what environment. billion maybe we pipeline very ‘XX a

kind if maybe credit just term that wondering bottom that ex-PPP card the kind and was think it I'm wondering you there in around into the the of could near seemed past portfolio how was there? larger in line seasonality than the translate So anything of growth unusual and was I then net

Matt Reddin

let I'll talk couple first. that tackle and first I'll the one that Matt. is about pipeline. this things of then A talk me about Stephen, headwinds the

we that's $XX even originated we Those seasonality headwinds but the had also mortgage that that the energy. we pay the about on have, also money book, customers have come the in planned further a are has talked more last well market another in refinance. it's doing still our knew aggregate card. exit the We're they mortgage really that's but credit in tremendous seasonal then as but with That's have and we also down natural a ever million have them about we made another portfolio and secondary $XXX good stimulus You than you then seeing, year talked that our year portfolio of could is which we significant comment also our we exited great expected normally talked at our about million on have loans but in QX mortgages. with we down and warehouse in

you a are then down amount that our borrowers paying would knew that into we the regular but of So stimulus coming be kind QX debt. of in throw challenge

since So it's point that's we've X.X you faced seven and which seeing encouraging. is trough to and at not I now continued page that you're can pipeline the another continuing to we're to billion really we but you one headwind increase Investor and compounding When move at got Day, but and our point kind say look rebounded how right that's you we're of shows quarter-over-quarter really opportunity. the I'd

right because that in funnel more that to opportunity getting opportunities to billion into we funnel need this hitting have the and plan those but those For you and growing front us that us and XXX are it's that pipeline there. color gives payoffs. books Stephen a opportunity that's hopefully also all books one QX the the planned more get outpace bigger bigger headwinds getting the got the seasonality us that coming we and to we We're we've were those but of and that pre-COVID knew at but hit but ‘XX was we're getting about some in they that on starting -- now

Stephen Scouten

of mid I note growth guess single that's of the did in half Yes super ‘XX. and helpful man, you guys back digit kind

fair book? this outright here bit the So quarter quarter is been see little on the we of second to do say your you of or might loan have decline it expectations another last the could from in decline based think

Matt Reddin

I he and owner off. went market that's great that X one has of tell example. had explained me conversation great He water been and give all you mark the that paid now just estate, would I a with clients low our just in would on That's stimulus question. yes that it's lunch stimulus occupied a you stimulus amount have paid our he $X a million with new this an to off last good real about has week through the of QX to ahead now. really the but cash I'll that business until came, a

So or those the anticipate that Q into are in unknowns did the coming not XXXX. we

to back we could normal bit but returning further said like water mark little rate. a the of growth the trail good the about it So but I we've a really feel believe year have could hit half low

Stephen Scouten

is Appreciate super That great. time. helpful. it. guys for Thanks Okay, the

George Makris

Thanks Steve.

Operator

of Raymond James. Thank comes from and with question our Feaster the you next line David

Your line go is ahead. Please open.

David Feaster

morning good Hey, everybody.

George Makris

David. morning Good

David Feaster

follow to both up segment I maybe just us and seeing it of in you give maybe improvement demand the by increased you're a Could growth just wanted where line. Glad sense kind of on to the the region? pipeline. see

Bob Fehlman

Memphis, Nashville, of I'll I'm that. start to seeing honestly this Sure. with bringing us. we're Arkansas do Texas, first Rock, City Northwest to nice now glad Yes in opportunities David Right kind nice Kansas Little opportunities all they're geographically.

I our think important if up now they're low also know trough their of it's the in community markets to to $XXX million pipeline. where all look at you was just

some warehouse out leveraged of to into then each Equipment there occupied real back and XXXX. do those private liquidity. for back conservative the So equity markets buying one half finance us continues very be segments of amount us opportunities nice to meaning this business Single-family it owner nice been for that's are going business continues space some Around ‘XX well. opportunities. seeing also Industrial for community businesses opportunities construction, and building with new estate. we're a of has

our some [form able so little competitive there solid the economy, of So some areas retooling much mortgage David of] on do pricing well. that more as portfolio also and those those we more in now right products, have transactions to we're our are footing products getting consumer we're that we're now

David Feaster

great would the how I it's and again helpful I the there. on guess higher you just credit estimates an and then the improving demand outlook front improved economy the of given hiring economic just improvement your Okay. to efforts? maybe growth That's of from sales and guess credit maybe a your for and growth versus acceleration see much appetite efforts an of for

Bob Fehlman

question. Okay. Good Yes.

market bankers being I can both a think out our opportunities into combination the really of more anything and than visibility they that bit play now back on little our but how borrowers seeing of a it's see else. it's they

David Feaster

continued increased. qualities quarter Okay. a And lower provision asset ratio the reserve this improve, then mean actually had on asset quality, I but to

the more maybe other outlook the improved you release the grow side? about think Just point? in on credit to ratio how and about outright base reserves you of economic you maybe do reserves quality your the a some release reserve reserve you opportunity or at Would that? see to improved normalized just are Maybe how do into where prefer thinking light

George Makris

Hey David, this is conversation. start that George. I'll

office to done our portfolio. dive be with this two and like going During of deep areas hotel It'd we're previously. quarter do retail a we've into

with today that's until we into to do grow some deterioration and dive but provision and to and coverage comfortable in areas very allowance I'm see prefer those not quarter we're base. and retail, comfortable certainly that not sure lag that of second a we are into releasing deep any We we credit our believe is would the going that will happen today. actually office the

quarter. rates; that that the Now centers to and of we space kind things in need we some all will we check rates, renewing office end done our demand dive do after in at second deep need this renewal dive may renewals, we key differently make sure the markets, deep this of for quarter see at our of to but go strip normal are be

a that hotel think we great job those I have a we'll idea portfolio say identifying better risk. we in our of segments then. So did this will portfolio

You there Those can market allowance hotels substantial see against a that that starting is better. perform segment. much to are

see So in be that it an that could outlook segment improved well. as we

So stay tuned.

what a to we quarter key for as of one those is evaluate in be segments. each quarter believe really we Second going is us

David Feaster

Okay. helpful. That's Thanks everybody.

Operator

next question and you our of Thank Gailey Brady KBW. line from comes the with

Please is open. line go Your ahead.

Brady Gailey

guys. thank you. morning Good Hey,

George Makris

Good morning Brad.

Bob Fehlman

Good morning.

Brady Gailey

quarter, the is it net you going margin and perspective in of growth or the forward? and that think ‘XX look first might bottom we margin kind an do NIM quarter with start be of but of you dollars at that NII instead to easier think wanted see or of NII should the I from it interest a to both do this those

George Makris

in compares yield. We see and how That it X% the raw standpoint. the a well really to then but we're Bob Brady, use and there been I'm It loan and interest what our it talk look overall at to could internally from our our out That's core a going performing call about around turns measurement. cost. a to profitability it we take that a pricing a really over yield to start has market that's number for is we measurement year. consistent outlook net that be deposit

our in that portfolio been to decline a yield loan with our our proportionately during even period loan the costs of we've portfolio So manage and on time. able deposit

that. with pleased very we're So

deposit mean else Our turning them most I you getting of loan killed liquidity saw in but deposit very feel away challenged any might interest we're our more. to marketplace. probably and first net the that because interest growth from margin liquidity. is margin to pricing is income We're everybody the a just managing appropriately Bob in other coming continued in that going the to keeps net the quarter is our be as talk extent about be our is to and not we good but outpacing going the how standpoint want bank, banks. so deposits. We're you

Bob Fehlman

down it the of the we I down at they you quarter end expect for the but down Brady When of year margin. credit low we hit if look and paid the in George at quarter at were when thought it are PPP the we card at at think what but at the as loans Yes. said. look end which Matt seasonality would you were

about put the $X.X portfolio. side our and security deposits billion other grew billion we the $X.X On in

slight we So to see to slight improvement. expected flat

can't in you improve that's margin again and happened. put However, assets what grow and it and the cash earning your

estimating it's some and liquidity, points the George as basis to we're liquidity all comes about to related PPP. on it So back said XX still the

in corrects so XXX NIM, when XXX normalized George again. our at $X.X the more low NIM, a that still, you on sorry look we're XXX me again I'm and it's cash at still cash our on because quarter. went down range that So up billion the worse thought while basis we in deposits go the quarter cash end of the would in than

Brady Gailey

the stock wanted just ask to recently. done I here then well also And you Okay. has

currency So but while stronger side into about than rates do is helps it's the which at been for that efforts. to how a flip relative have and your a makes book little X.X value M&A Simmons year? on compelling this stock out M&A tangible now I How think buybacks guess times you're the you fits you on so a trading buybacks less that about

George Makris

have program buying an the we buyback opportunities. creates active down today whole still Well, little industry dips quite and bit experiencing in honestly like good we're when market the goes a

I today. would our those is we were them From picked hit, so in So an [dance] active ongoing card again. perspective, M&A filling we'll of just discussions back We're before that up. up. Many say very COVID consider

that great with our especially us the today. value for think we opportunity a So currency that is of

of viable I capital. would So those uses are tell of you both certainly our

Brady Gailey

the Bancorp last Yes merger kind and with where we've a that us, of deals George notable companies two doing would South you're guys transformational institution consider How think the almost mean we kind cadence MOE partnering putting very week. transactions in that's I seen several like remind like I and you a saw space together? with of and large

George Makris

are contribution who to and in in our be That's always are and to some something an We've that MOEs of and tough they with beneficiary at natural don't been are folks thing Simmons. good ability a will hire associated really you. those a with come real those The of some issues like happen a MOE. Well, overnight. over expect huge Brady honest tremendous I social making

to four organization of or Simmons not MOE. a in key out need that believe successful and a position or We're You everything not. through that how whether to plays reason we don't that's an transaction a not need everything have real two to of downsize or a any where we is

and building of Simmons creating forward. expect survivor real to In going the next be that leadership for future a we're generation we fact,

in you key consider I the of markets. have footprint we're Oklahoma City, So us would DFW we've share it to all mentioned be organic Kansas those that Memphis, in before to special through build Louis, are opportunities a opportunity, great in particularly Nashville, footprint, for Then growth an City Tulsa; us M&A. continue MOE. St. those tell that the or very would for either great to to see We circumstance currently

continue So we'll and pretty do course the stay do well. what we just to

Brady Gailey

sense. makes That Great. guys. Thanks

George Makris

Brady.

Operator

D.A. Thank you Davidson. from Tenner with line our next the and question Gary comes of

go Your line open. ahead. is Please

Gary Tenner

morning. Good you. Thank

George Makris

Good morning Gary.

Gary Tenner

I wanted about of liquidity. how sense a for to just to kind of expectations thinking you're get

comment made funding even the you invested of and pretty a loan you as that back think view I pace portfolio more obviously of in availability there. being kind will of plenty be growth securities fully the typical year of half a

you So how and thinking of your much just flows, the year expectations you're as have the wondering think year or things you half in being there I'm better may on a deposit back where about of back half conservative gone case do beat by? are the head outflow deposit of of

Bob Fehlman

first this back time. able be Well, what up year been with liquidity to beginning everybody is liquidity liquidity the last we to off protect this go Bob. a built company. like than to just We to to to gauge I'd more know say really we've else has then this Since crisis. at do of the had challenge our

think can tell So any I on we don't today. is you what -- temporary this funding bank liquidity don't

individuals, case stimulus to take off pay for that the money five. all to it's came loans going When came businesses it's the That's that in preparing and PPP. what is it into we're off through continue. billion those all in estimate runs billion into Our stimulus

the it manage trying balance this to our how for ready out and do I be figure we're So is yet but to runoff best would of say we another protect invest it. at and when liquidity -- still company through there year on some try this still

George Makris

top see looked our add would what We're profitable year year a money have their Gary, we and I'll Ag stimulus great give an a example. but getting money they'll our you even when money that first [rises] for last at last. all farmers use our of had without you the is renewing into of on and so production we year loans Ag farmers the typically

would a year. will not or that year funding level and may of hit that funding we expect a what in did from I we perspective last a So may normal see delay maybe top

more investing borrowers I is, $X.X most So there to securities comfortable also is quarter. what in more protect much normally trying they know going liquid feel just of as third is be the and money to know be. that much first in are don't ball use said look of I billion we're we'd second don't don't and before Bob card as short-term that keep that flexible that's use of why game some the than we're me in and It taking happen a to the but that's to just velocity can. in variable-rate to quarter we cash and we could money stay and they that's going portfolio wild available the why of we is to that who aspect so most the them could cash come back cash. borrow multi-year at a that instruments of would to

Bob Fehlman

basis X a is but X can points quarters. room another a X other customers improve there's bit there to on in still is realize to still still some the We're point We did that work little and coming on continuing deposits by that. the core One bit basis points. cost retain of think little benefit we probably that make to

the a for positive quarter. was So it

Gary Tenner

that Thank a Great. you follow-up. for then just and detail

You the all rationalizing closing the selling branch plus past in infrastructure, year active been pretty some others. branches, terms of

anything of branch within size is to the it be wondering footprint or anything rationalize from left one-offs Just would more if there here?

George Makris

left. room of bit little a have we Gary,

low-hanging what branches. should here expect gotten metro particularly forward going is fruit from we have we've in think you really where multiple us a I but markets

of locations probably We will of we many establish those also reduce offices in markets. will but corporate number the

facility new throughout into folks, them So corporate we the treasury lenders, instead headquarters marketplace. folks out will of support hiring wealth a spreading management new of more new

use our a our as we realized branches deposits the transactional still we'll have need and of has of become just branches up has have for up continued won't as up and use all from Now medium perspective and go cashing the and checks to less. digital less many banks and but

need sure going transactional offices So not communities. translate for locations. cost really I'm more branches, fewer these it's corporate fewer for to going translate need That's into to rate. in into

Gary Tenner

Thanks Great. it. guys. appreciate I

Bob Fehlman

Thanks.

Operator

Thank Jed] you. line Instructions] comes of [Operator Inc. And question [Jordan our next Stephens with from

line is go ahead. Your open. Please

Unidentified Analyst

I'm morning. question Matt good loan Hi, for have core in regarding yields. your I a Olney.

the X.XX X.X%. XX. be for guys So help yields you around stable loan you on calls has colonials have appreciate slide X there that compression outlook and I'm Can me the it why guys additional loan assuming this means on won't slide when

George Makris

just That's commercial.

Bob Fehlman

really see that encompass pipeline That's Yes. opportunities just commercial loan other pipeline is yield higher. a all the not but that there our question that our that does drive good would there you

George Makris

much in of credit the Some yields. are you are equipment that pipeline see card, would not A at be those finance, that in Ag lot those others numbers lending. higher of

that but in was four you for As can we We've maintaining blip for that down quarters. quarter. had really the see in just one been a QX five last that or was XXX that not,

Unidentified Analyst

Perfect. Thank you.

Operator

And like to Mr. over to questions. turn no any you. further I remarks. would showing Thank for the conference And further Makris I'm

George Makris

you much. very Okay. Thank

see an economy we right in project quarters just and effort last the want So to and to an functioning flexible done is the of that. customers just be think advantage predict be able that marketplace in take I in we of this job our few to are to artificial now based ability the and to opportunities to say and we've recap, our on have good and maintain a futility I

exiting for adjustment before an credits that began was If energy you telling branch you in exiting we non-relationship portfolio, rationalization. estate, recall COVID particularly commercial included and us real that XXXX period XXXX our

really I to think through metrics when we because XXXX park. you three those think look hit of a give want define what of the I today. I going these perspective back we're out over all four

are you notice will our If XX%. deposits up year-over-year

up fees Our credit card are XX%.

money. are have that money spending people So

XX%, which looks balances XX% that down X%. and what like our are eye wrong to try an timing it's been keep our really marketplace predict reflects to However, artificial would that's liquidity I've to charges for but are than year-over-year I it today liquidity back forward. gauge normal service on that work I've normal. we going excess the card down been card up and us trying right the are Until through more We're fees of in hate hard to to while our

flexibility once of COVID system economy. set successful not out up as we've to for we we come be important for this extremely but again So communities is in our think the extremely bank ourselves the and serve I only artificial in

little Now I want ago I on a that opportunity want to the Will got to a over man note the to end recognize a high year really Zalatoris. and to here take know we and young a half and that's

weeks and golfer. he got air team is time of he professional He's losing ago. a Simmons Will at shot. the second because Masters Will finished of a a couple one week by know may all lot You last on

Open. last tagline finished here story is may year Will sixth Simmons. that probably U.S. remember of realized our not the epitome and A earlier You real the which success at dreams in

members will three on Kevin two success in the We have Ferry Simmons; the of and Korn Armstrong, Dougherty who've be open had Dawson also team Simmons great in other Bank weeks Thornberry highlighted TOUR Nashville. Braden and at

hope day. what very important us. fine have appreciate for a a joining men great just representing today and they've Thanks you and in segment I for to we bank done shout So demographic a us in out young those Simmons

Operator

Thank for conference This participating. call. concludes today's you

Everyone day. disconnect. now a may great You have

Simmons First National (SFNC) 20 Apr 212021 Q1 Earnings call transcript