SFNC - Earnings call transcript Q1 2022 | Simmons First National Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Edward Bilek

Good morning, and thank you for joining our first quarter earnings call. My name is Ed Bilek, Director of Investor Relations at Simmons First National Corporation.

Joining me today are several members of our executive management team, led by our Chairman and CEO, George Makris. The purpose of our call is to discuss the information and data provided by Simmons in its quarterly earnings release issued this morning and to discuss our outlook for the remainder of 2022.

We have invited institutional investors and analysts from the equity firms that provide research on Simmons to participate in the Q&A. the are on listen-only guests other conference in call mode. All XX be of Relations our least today's recording posted page call at Investor A the will on under website, for days. simmonsbank.com,

forward-looking from make implied statement forward-looking today's goals, due estimates, might as statements undue you actual and projections reliance we by that materially During I'd you not statements results expectations, remind variety call, those outlook. should a our or of future about on the projected plans, in will place to any differ forward-looking factors.

information these or information. concerning some of issued release is information revise other in SEC and update the Additional Simmons section our morning. factors December or this forward-looking filings, risk without of our no any of description factors the our ended obligation contained for statements to XX-K XXXX, year limitation, earnings in forward-looking assumes Form contained including, XX, certain the

call, provide this during we financial certain to non-GAAP information Finally, useful we discuss believe will metrics investors.

regarding presentation, Additional we the we investor metrics website, begin in are and release non-GAAP these session. this as X-K are to with and Operator, our on available filed Relations also Investor page earnings the are of non-GAAP morning Q&A reconciliations to exhibits Form GAAP of are SEC contained disclosures our simmonsbank.com. the included which including the metrics, our to ready

Operator

question first David James. Feaster from Our comes Instructions] [Operator from Raymond

David Feaster

you of we of pipeline as and how Improved And growth, composition throughout in the production growth about drivers that do both in the and 'XX? about you as segment? second do how think expect growth, that I guess, your about head think by of key outlook And quarter. we be do the to closed terms the just geographically you what think in the I'm curious, increase pipeline?

Matthew Reddin

David, Reddin. it's Matt

in where Bank of is quarter we're kind fund think were the the is opportunities back see Metro all and large come some had our DFW a show seeing as well. our Community real stars start loans the that being real [indiscernible]. really up we Nashville to second our in strong be So half Yes, and seen will opportunity back going well first that Bank third to diversified group loan that's as from. another quarter, first crop growth It payoffs on of annualized even real quarter X%. driver we think question. markets, real positive yes, opportunities in But in about X% we XX, where the our to as that number pipeline is core nice has of even -- to one great demand. St. the that the on be good to metro Page before Louis, But X% excited in loan XXXX in we going growth those the

-- $XX and Banking group, on true had They million brought So finance from that in net quarter summer. last we nice commercial we our a really in had team funding. Corporate the

also of some as strong good that far the you're the throughout have on as focused I finance very year. there's Commercial right see nice we're estate, rate a opportunities but continue kind the now, every real as with interest right leverage right of opportunities pretty environment some the environment, to commercial rest this rising area of really, low think feels in type So to that now opportunities opportunities. definitely going well

David Feaster

can that you of pace in that high remain? kind continue think where kind and see production I single-digit is as guess strong you you payoffs to deceleration and is hopefully, that So the paydowns, of

Matthew Reddin

we're still say said the quarters over of guidance last is kind that David, couple that of earlier Yes, we that would direction. I that trending

to rate is proved continue close to pipelines to grow. continuing grow, Our

I think that right on So for guidance. we're track

David Feaster

Terrific. how to you're are production? just hike trending new and new the opportunities? are coin, trending loan on side of sense came seeing loan and rate yields yields just get And a pricing of your I other quarter. the Obviously, wanted But new how then later the on most in the where

Matthew Reddin

was So for high going really we say spreads coming a say now economic on But to the now risk. to I the first good starting opportunities. we're a I would want on to be that's go quality, question. saw when the wide. news where credit at challenging started loan We're decreasing high always high-quality we spreads rates one that very quarter out, are a and actually not would high-yielding April,

so just at widen, at wins warehouse for I starting competitive. is we still to saying not you your have you those to spreads pick make lot in disciplined very, but to -- fishing opportunity this remaining environment. different where be higher the to specific multifamily, looking lower in an or up you're spreads very we're you It can types. are not And you're mean we're of I'm ponds especially see it's to need product if spreads. looking and to you're they sure but starting get -- a can going industrial

David Feaster

broadly, then competitive terms landscape. makes that's Okay. maybe competition more seeing standards? tough. on or to macroeconomic given starting you pricing on on structure But aggressiveness all? you box some then And credit That credit Are uncertainty? and to at anything or and just just starting And Or cause just you any intense Obviously, the tighten maybe continued sense. you seeing are are competition competitiveness staying remains more the the concern?

Matthew Reddin

we're say something right wouldn't I I that also X to not rising never the only finding on see that years But to focused is leverage but We're there, on deviated that construction would and rising just is -- side. opportunity with average, box. to our We've opportunities. to you're going sure we not those XX% on where maybe competitors we're starting We're bring we're That on making disciplined rates be especially say it tightening, only. culture. bend XX%, now has there just rising seeing we're development prudent credit we well, on David. pushing from I see we're playing on we out be say loan-to-value, where costs, definitely that. XX%, and very credit would opportunities. we're our I remaining interest were in in on fundamentals and But would -- policy, we're I very to we're can Where interest staying withstand every right down staying costs, at, say rate, rising

Operator

Gary Davidson. D.A. from comes with question next Our Tenner

Gary Tenner

attractive It pipeline, in of growth? is drill the most success the a you Obviously, in that is a follow wanted pretty construction lot to growth where of where your the just a but Just seeing in you're to areas, chunk growth looks loan there? sizable up seeing on little construction piece pipeline. bit question. Can the like in footprint about very you're the talk on

Matthew Reddin

Well, we do the Nashville close look you on have if we're real construction is our relationships some from way the at is say DFW I our second. not also the say, and today leading footprint, in side nationwide. -- opportunities that definitely would say I'd not to industrial development a But strong but book development,

but are demand places markets. coming the just it's ask So strong the I that that is those new from, pinpoint only for you say me if wouldn't where to

Gary Tenner

side, wonder April, you for quarter expense you Spirit And then kind provide of early could models if think operating with where any the closing second expense I on guidepost in are?

James Brogdon

Yes.

So This in is I'll on that, jump Gary. Jay.

think, were, we our First QX, I We of X% assets. guide. average to to all, close I'd at were just noninterest expense say, X.XX%

number. have non-retained be I think QX a for on We'll portion we is the noisy QX of going obviously where a quarter. in period a to good staff have

back of kind come average saw back savings We month the number, a noninterest to synergize I'll guide. give in you year. thing until to the of the down the fourth see Landmark in March, of up October in last and of one expense that expenses was integration even Triumph just assets not true you're quarter But the cost was quarter, of back sort X.XX%. So we going And that on come same year. fully our us half first of our closed

it where right would we trending So want to.

So that the going to coming quarters. I of Spirit kind with here develop same over pattern see think you're

Gary Tenner

then And question last for Okay. me.

topic has what caused of prices all We've been year. you've some on last market? active bank maybe obviously, and M&A the conversations talk in ongoing in Can about terms M&A, heard hearing the the M&A stock fairly decline some to pause. of commentary you're seeing delayed On you that or temporarily the be

George Makris

Well, this George. is

access think growth XX A markets, over up we So to we period a XX model. And great think just not They're Simmons the with and across acquisitions. we've our had we've to for growth. would fit at M&A forward-looking on we've country straight little And here will acquisitions expect ago, intentions banking done different approach to time those our now with market that Simmons objective a going about I the of an been the continue. to this years job. done while. continue discussions with that adjust I

greater next believe several to well a merger done if X that see consider markets I'm we growth. we that. like the focus you record strategic now. other years are and we where aggressive in on we're we're we a our for look opportunity. years. do well that positioned a that us there the we growth. capital shareholders, to sure that around partner to opportunities plan providing We revenue not developed be earnings if We wouldn't own are at we just we'd organic saw a and some benefit, ready have, that was our take We're We've And the provide shareholders. while right over finance us have any good actually growth but financial When our we are a that don't believe now where our give that Not to to point positioned at over trade footprint

access balance we've of since seen this So acquired to X mortgage, have wealth, adjusting years. professionals those and X business we development. take important sheets many to across got to very products that the bank markets. and the us to next gain over was to care plans build-out of those some do with that those we markets hiring partners provide job expansion merger that to because private today. great regard didn't the our in in that We've opportunity XXXX, expect M&A in banking, entire to services a we we're business done banks to not have in of We've We've got got footprint that

banking bought We on commercial metro markets. metro markets also banks deals. on focused commercial focused community banks, were The in larger very really that are we

a in to we Simmons every over banking. services commercial years. is the well Our of every is diversified bread focus importance And quality consumer for next the what that and butter going fashion at couple But is market. in our really to community discount of products provide banking, not really do and be

where are with the So what going caught we're M&A be gotten the to about we of dog when loan by believe our another pipeline, million We that today. has talk us We're are Spirit like quarter has successful. Texas. very very, we do to the car, we going what we now grown of the the inclusion at end with And published of $X it?

commitments now $X.X yesterday. billion as unfunded Our are of

more last the great bank our So really be we with organically over go-to to in ability that the be couldn't business. about our we've markets years. do opportunity revenue I XX where we've the to got grow the built team optimistic

Operator

comes question KBW. from with next Brad Our Gailey

Brad Gailey

is all you see just buybacks to But volatile I stocks on continue bank here. share appetite know to for good be maybe continued the it's of active trading talk where your downside about given to buyback. be kind the stock now? So the just

James Brogdon

respond I'll to Jay. that here. it's Brady, initially

in were as we at So January. back throughout think, back was authorization, active really I in in with pending our January we fully authorized, on activity rounded the in January. quarter really that to we in transaction our the we unable out authorized which plan early the did quarter previous in newly the complete be earnings quarter, we're Spirit, Where the

policy with point around loaded -- I sort opportunistic continue very buybacks. in this sort never our optimistic around of or an to accounting think fully that's And or to want of I of be drive things. place million economic available. very So the $XXX share view rule and at we'll

well will economic value sheet be be capital. our And a TCE. of the portfolio do and our our capital. over optimize as activity let to continue is, the the the continue to of We will as balance time mindful to sort our to around real where have deliver wag accounting that AFS function not and we But dog sort going I buyback be of strong of have incredibly tail around be we But share optimize think we're and -- goal our given sheet to here.

Brad Gailey

it decent M&A Okay. then from growing sounds organic kind like All a there's right. and de just it much Maybe impact away of there's going like and effort have? hires amount of talk just a And expense that point of more want about a could novo at how big hiring so Simmons shift the sounds potential sizing be and on will make. the you view. via to bank George, the forward

George Makris

lender, themselves. But Well, Brady, take those all formas doesn't production there's new And that very it on hires. them pay so to for folks. no pro for let's associated with obviously, X, long we we established have new revenue a day have take just

example, they advisers footprint, the next to that's have out proven less service service But today. just be to than produce don't that to some upfront reasonable, you X expect XX those And in round investment And to that an and become forma positions well with years. continue So we markets the we're have and over we'll we money rate self-sufficient to just we're XX investment before periods I hires if you months. looking to our that our at going give they tell we across And new that's or where fill other that, would have our expense. available make. have earnback spent pro

those in gaps. today about $X mentioned manage of already wealth We're to billion our in our investment So in our assets we advisers I've footprint. our we've looking private origination gaps fill our across got territory. group, of mortgage XX%

our wealth. just So across you with have that can imagine private the expertise potential we

see great hire to of team to hire. don't became the professionals opportunities growing got We plan. we across to in disruption marketplace have we've rather scheduled a great with footprint. So And take we'd all our be If they the of who want later. a that part sooner tomorrow, today, development opportunities than advantage available a

James Brogdon

our view, other that to Yes. production I the earlier of as I'll so grow a our positioned our the just I those growth is the on around lot just about and a in all Matt's we of with revenue scenarios. and we're events, that any in would we're as where of at in the George's our comments of look expense comment will don't one the balance well. Brady. in investments comments inflection think for jump make that We're think where on side, of around just growth sheet going expenses inflection fast think in overlaying loan outpace as point with those I organic growth, from When that in margin today, growth revenue

Brad Gailey

achieve? return kind like more for me, story, And you and of Simmons level then common pivot finally ROA growth an see to that a there just is a as organic you'd level to on longer-term of equity tangible

Robert Fehlman

is company XX% mean, good think, I to range I community that's is on like this would focused Brady, really we for efficiency, on the banking. first, Bob. a XX% Yes. -- us say

we on is X.XX% goal common long-term term to would on should the equity long would Our range think ROA be be. be north X.XX% Return XX%. of we tangible where

we out those are targets day year. in that want the So internal day to throughout to and our strive

Operator

from comes Matt question Olney Stephens. next with Our

Matt Olney

sounds year longer-term to it just hope years, target for loan near say organic high growth down that goal single-digit growth is to a year? not talking target on the But for today, focus term. about with talked high or this like 'XX. single-digit a multiple You've achieve this commentary also at your this organic it in Is least for this renewed fair that you

George Makris

high yes, lack is of would of in that's in we the tell markets because community you, think I double we the not should we opportunity. it's single reason be. Matt, And and the digits where our today conservatively, -- lot where of a only share banking are is digits

bar markets look in sort first I when I'm quarter doesn't community dilute much I all metro our going in blow here our think growth However, going, Group's that right scratching Banking were the market low, growth set how my just percentage. up we sitting X%. look now. they're like to high the loans digits It's our head, too Community because It at our of and diluted are single out. overall hey, at results will

the all assuming So community up can for that. be high-single achieve digits our markets, to next I greater keep we X that we work with good would we X in think years. might than But happy

Matt Olney

Okay. about Bank team it Or about distinct the within talk And it banking those does separate commercial? sit? where and Metro you from the the Community is Commercial me, just that Corporate remind teams? the team, team, team, you Is talked X

Matthew Reddin

is this specialty team yes, Matt, They're our handle really Matt. set So is verticals. aside that

on gives aligned blocking their from So is companies, aside Corporate and see the team focus. that banking million is you banking your set them Metro they're in-market Commercial above operating, the team And really when $XX that. banking, that's banking team, where and but tackling, all revenue is Commercial

Matt Olney

following size over Matt, of high a and there single group beyond say it recent of we Corporate that on the few hiring, and given up fair growth that to the the expect the digits is that, should efforts next that banking that some some And of renewed team years? is

Matthew Reddin

space well, engine that the is time, double-digit some be into future make set the But limits. going an I yes, that I unit think with ABL to from know that's monitor very, very of some our like we'll we're over sure we can growth bank. those possible. think be for that, know -- came But this well, really absolutely we that think specialties Triumph, I

Matt Olney

of you loan fee like and the on fees. your Help and some Okay. planned on growth details side? kind is support fees. recent What sounds also guess to the expenses. about some of outlook It I the on us there hires Perfect. here appreciate us are your hires what gave good help switching gears,

us you color give that? can on any So

James Brogdon

it's of Matt, a comments. Yes. in Jay. with couple I'll jump

volatility First charges the well see from on our throughout deposits, return of to think pretty all, you with et we'll the back trend There's view about those and degree with in a in mortgage in lawn the when seen just a quarter, a kind we've line point of way offs of But those the think down the some it was view. Service obvious of QX, QX. businesses point the to I headwinds fell holding seasonal we're of normal first I the year seasonal and expectations. throughout well in cetera, market here. from same think typically decent

Our income, areas, as where our services from but some out all almost those the acquisitions that in, of round great to opportunity we is number footprint. in all there And in we markets, are those of a particularly of markets more was markets. of for fee There those it. fee are have of capacity our George we're of then have mentioning, that penetration recent where zero

continue have so a hiring around in got time a be place fee But lines to broadening growth fee are initiatives deepening the loan just side. to Those our income. longer new on of than a I loan we've I growth. think momentum and we'll think and both grow And to and lot focus to able having producer

Operator

question from with next Stephen Our Piper comes Scouten Sandler.

Stephen Scouten

of the you spread somewhat. It's questions guess pressure did yields. loan I extremely around kind following know you saw first the David's so NIM always on on earlier you numbers the slide said on that I any appreciate in quarter? guys for the this I of have detail, thanks the yields deck. Do that in maybe First useful on-off that. detail one all up the

James Brogdon

the a But QX really in kind on. that's I comments. handle. of just what's between part with Matt made between in think I on of I throughout delta what's coming with off, coming of a what's benefit, have of big here really will a that lot really -- We I hike. didn't chime maybe X the mean of what the much So just yields for QX quarter lot rate is with here industry if any, not paying the that's Stephen, delta of us, X that us, mean, is a rolling in some but think folks the handle off inflection difficult

that plus got we've degree. coming -- the into just back spreads now, Matt's some lot So comments a spreads numbers widening of credit on to

can So from there. Matt, take you that

Matthew Reddin

say increase mid spreads even but was point Yes, say I coming already, it's up, what's say, more for be coming that a books high to at see but delta our versus what bringing going got XX day would were get on point basis I loans this delta floors our point of we definitely me it's over like the differential, And to number type And day, -- we're off continuing a Stephen, that basis and to down the you moving track little books it I'd over higher I to coming out, day rate that's speaking to the with the there bit hold is track to in we want of we to on. fixed day, we we've generalities it rates, some off a And gotten or that but compressing. type here with remember, fours. XX still. itself, high sure,

got bringing on, range. haven't we X.XX% uptick you're at probably X% we're So to an still the yet

narrow, that still gives It's a there. but getting Hopefully, color. you it's So little

James Brogdon

or quarter the call our rate sheet. XX%. floors, XX% legacy based but Simmons one bottom We points I'll deck, basis just other balance talk that's of, up, there's And loans where variable but rate you jump chart just Page you charts bottom goes back in I'll point our XX sensitivity, all And sort of in, to XX we another that half on to our kind slide of the at of point in and the down on to on page, -- comment, particular. of the Simmons with it, about one the ended right, and the of to I'd that everybody Stephen, some and a interest [XXX]

numbers with to Spirits. this degree page the of on some improve All

loan just where sensitivity, if another relates portfolio, of our nature will, the portfolio. it of in and all of variable you rate as kind improves pro what's forma, at happening the is the asset yields that another we're of but to Our spin dynamics loan on

Stephen Scouten

sure. then obviously, I around the maybe duration book. second could you book you're mean, Jay. match as if wondering XX noted, for of Yes, kind we that helpful, today, increased. And securities how talk hikes I'm kind Yes. effective on hits a touch with thinking as bit thinking if Slide guys the what you're there rate about could for as about additional managing of coming, this incremental a especially investments about AOCI and little book within further swap. the well securities just you

James Brogdon

Yes.

it maybe back flexibility AFS think portfolio, portfolio. of go relates from point even the accounting the like really I of to that maturity I So I or struggle held from for a again, optionality, prefer, rest to view. AFS with I'll the different the the philosophically, balance the I portfolio sheet as to value fair of

growth we off to of historically invest flow. very But bond cash loan the cash here. portfolio not quarter investments. have We've able of flow pipeline. out. particularly we a the be the portfolio quarter continue will invest to in and lot got grow here, looking bond see flows We been coming We're continue to from given opportunistic cash in the around that We'll to

to of continue the bond sort invest cycle a here. like grow rate And from not so portfolio we we'll But always throughout there's focus the to have. definitely

for quarters, opportunity think XX, it's really this saying that chart. on I bottom several we've Page been that bigger left our

to some that and pro forma, margin, expand. is to growth. really lot a to time loan continue kind before optimizing our going continued fuel line Again, we're XX% the Our of that be forward loan-to-deposit goal XX% closer That's to sheet. normalizing the any of Spirit see balance pulls to

where of So that's the liquidity view. is focus a from really point

Robert Fehlman

in as Jay, cash the see billion in $X.X left variable top securities. We cash and still it's and And still box, equivalents. you rate about have our cash you Yes.

Operator

with next comes question from Our Davidson. Gary D.A. Tenner

Gary Tenner

on you embedded assumptions remind it your rate just XX beta follow-up simulation? a I your Could us just had your Slide relates quick what sensitivity. to are on deposit as

James Brogdon

it assumption about conservative if type, very deposit underlying about there blend sort is beta. XX%. It's you XX% the of by by mind, a It's It's in blended. product. in, But my all a

Robert Fehlman

as And would Gary, most help account modeling take into #X, It's just forward. really it expect like are going is I'd process. our best say interaction management conservative we can #X doesn't decisions management We in modeling just the driven. to

Gary Tenner

is Just that a to beta clear. or beta? just total deposit Okay. deposit And interest-bearing be

Robert Fehlman

Interest-bearing.

Operator

I'm And time. further to call the any not George showing I'd closing this to questions back any at for turn Makris remarks. like

George Makris

Well, thank take customers associates, from very the And to like to opportunity now welcome this I'd shareholders Spirit to you much. Texas. and

information private and extremely build them are better they revenue and We conversion bank term to we've proud more the customer strong with products kick in team, our would going saying the of new brand. future never we're much our proud been near had go built to of of initiative a our our of organic have in is to community experience I've ground well. as date. the transition detailed We're to across diversified tell we I to close ready lending, today. our of continue want to Simmons focus extremely you We're want integration for am continues and can this more into metro encourage said the you partner, market I've by to company probably transformation I that performance. mentioned And digital optimistic to great banking best before, just best the to and want the running as channels this to help Disney branding to part hiring on about website, banking, the than and professionals, again, get hit our I suite, our the our which the getting growth, this aggressive footprint the markets, I'm the part and it build off and focus have development be Institute. banking to agri about company's simmonsbank.com I've a I to I do assets say reemphasize wealth, the delivery utilize recognized our related of one And extremely business to and products team. branch that our which mortgage, network. our of going of services business today. each

you great thank joining us Hope have today. So a for weekend. you

Operator

concludes presentation. this gentlemen, and today's Ladies

You a wonderful have may and now day. disconnect,

Simmons First National (SFNC) 30 Apr 222022 Q1 Earnings call transcript