-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NB1i4iEKPzQXgDHRqwI0bmkrUfOHTgEbloYVyzPU8HwOvMhfMrK/VdTT3Ui0A4ao sxrdfcXjxj0rfo7owAgvOg== 0000090498-96-000018.txt : 19960514 0000090498-96-000018.hdr.sgml : 19960514 ACCESSION NUMBER: 0000090498-96-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMMONS FIRST NATIONAL CORP CENTRAL INDEX KEY: 0000090498 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 710407808 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06253 FILM NUMBER: 96560657 BUSINESS ADDRESS: STREET 1: 501 MAIN STREET CITY: PINE BLUFF STATE: AR ZIP: 71601 BUSINESS PHONE: 5015411000 10-Q 1 SIMMONS FIRST NATIONAL CORPORATION Financial Statements (Form 10-Q) March 31, 1996 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1996 Commission File Number 06253 -------------- ----- SIMMONS FIRST NATIONAL CORPORATION - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Arkansas 71-0407808 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 501 Main Street Pine Bluff, Arkansas 71601 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 501-541-1350 -------------------- Not Applicable - ------------------------------------------------------------------------------ Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period) and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Indicate the number of shares outstanding of each of issuer's classes of securities. Class A, Common 3,813,639 Class B, Common None SIMMONS FIRST NATIONAL CORPORATION INDEX Page No. Part I: Summarized Financial Information Consolidated Balance Sheets -- March 31, 1996 and December 31, 1995 3-4 Consolidated Statements of Income -- Three months ended March 31, 1996 and 1995 5 Consolidated Statements of Cash Flows -- Three months ended March 31, 1996 and 1995 6 Consolidated Statement of Changes in Stockholders' Equity -- Three months ended March 31, 1996 and 1995 7 Notes to Consolidated Financial Statements 8-16 Management's Discussion and Analysis of Financial Condition and Results of Operations 17-18 Review by Independent Certified Public Accountants 19 Part II: Other Information 20 Part I SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND DECEMBER 31, 1995 ASSETS
March 31, December 31, (In thousands) 1996 1995 - ----------------------------------------------------------------------------------- (Unaudited) Cash and non-interest-bearing balances due from banks .... $ 29,469 $ 36,179 Interest-bearing balances due from banks ................. 3,110 2,398 Federal funds sold and securities purchased under agreements to resell ............................. 39,530 34,845 ------- ------- Cash and Cash Equivalents ............................ 72,109 73,422 Investment securities Held-to-maturity ....................................... 137,553 134,433 Available-for-sale ..................................... 90,375 90,367 Mortgage loans held for sale, net of unrealized gains .... 27,785 26,159 Trading securities ....................................... 625 548 Loans .................................................... 462,759 471,956 Allowance for possible loan losses .................... (8,412) (8,418) ------- ------- Net loans ........................................... 454,347 463,538 Premises and equipment ................................... 17,565 16,201 Foreclosed assets held for sale .......................... 983 1,017 Interest receivable ...................................... 7,553 7,953 Cost of loan servicing rights acquired ................... 5,172 4,867 Excess of cost over fair value of net assets acquired, at amortized cost ...................................... 3,493 3,677 Other assets ............................................. 14,920 17,702 ------- ------- Total Assets .............. $832,480 $839,884 ======= =======
The December 31, 1995 Consolidated Balance Sheet is as reported in the Corporation's 1995 Annual Report. See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND DECEMBER 31, 1995 LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31, (In thousands) 1996 1995 - ------------------------------------------------------------------------------------ (Unaudited) Non-interest bearing transaction accounts ............... $102,132 $108,779 Interest-bearing transaction accounts and savings deposits ....................................... 242,443 251,065 Time deposits ........................................... 350,228 344,924 ------- ------- Total Deposits .................................. 694,803 704,768 Federal funds purchased and securities sold under agreements to repurchase ................... 23,068 20,861 Short-term debt ......................................... 1,594 1,405 Long-term debt .......................................... 4,747 4,757 Accrued interest and other liabilities .................. 10,728 11,296 ------- ------- Total Liabilities ............................... 734,940 743,087 ------- ------- STOCKHOLDERS' EQUITY Capital stock Class A, common, par value $5 a share, authorized 10,000,000 shares, issued and outstanding 3,813,639 and 3,816,612 at 1996 and 1995, respectively ...................................... 19,068 19,083 Surplus ............................................... 22,368 22,651 Undivided profits ..................................... 54,669 53,038 Unrealized appreciation on available-for-sale securities, net of income taxes of $817 and $1,152 at 1996 and 1995, respectively .............. 1,435 2,025 ------- ------- Total Stockholders' Equity ...................... 97,540 96,797 ------- ------- Total Liabilities and Stockholders' Equity $832,480 $839,884 ======= =======
The December 31, 1995 Consolidated Balance Sheet is as reported in the Corporation's 1995 Annual Report. See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 1996 AND 1995
THREE MONTHS ENDED March 31, March 31, (In thousands, except per share data) 1996 1995 - -------------------------------------------------------------------------------- (Unaudited) INTEREST INCOME Loans .................................................... $10,485 $ 8,815 Federal funds sold and securities purchased under agreements to resell ............................. 548 370 Investment securities Held-to-maturity ....................................... 1,954 2,323 Available-for-sale ..................................... 1,483 674 Mortgage loans held for sale, net of unrealized gains .... 400 144 Trading securities ....................................... 10 10 Interest-bearing balances due from banks ................. 30 26 ------ ------ TOTAL INTEREST INCOME ............................ 14,910 12,362 ------ ------ INTEREST EXPENSE Interest bearing transaction accounts and savings deposits 1,634 1,349 Time deposits ............................................ 4,788 2,987 Federal funds purchased and securities sold under agreements to repurchase .................... 391 348 Short-term debt .......................................... 14 24 Long-term debt ........................................... 104 259 ------ ------ TOTAL INTEREST EXPENSE ........................... 6,931 4,967 ------ ------ NET INTEREST INCOME .......................................... 7,979 7,395 Provision for possible loan losses ....................... 502 449 ------ ------ NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES .................................... 7,477 6,946 ------ ------ NON-INTEREST INCOME Trust department income .................................. 553 418 Service charges on deposit accounts ...................... 739 599 Other service charges and fees ........................... 229 200 Income on sale of mortgage loans, net of commissions ..... 106 92 Income on investment banking, net of commissions ......... 300 123 Net realized gains on securities ......................... 152 1 Credit card fees ......................................... 2,257 2,399 Loan service fees ........................................ 1,603 1,386 Other operating income ................................... 140 745 ------ ------ TOTAL NON-INTEREST INCOME ........................ 6,079 5,963 ------ ------ NON-INTEREST EXPENSE Salaries and employee benefits ........................... 5,629 5,223 Occupancy expense, net ................................... 613 532 Furniture & equipment expense ............................ 561 509 Loss on foreclosed assets ................................ 281 353 Other operating expenses ................................. 3,366 3,073 ------ ------ TOTAL NON-INTEREST EXPENSE ....................... 10,450 9,690 ------ ------ INCOME BEFORE INCOME TAXES ................................... 3,106 3,219 Provision for income taxes ............................... 864 966 ------ ------ NET INCOME ................................................... $ 2,242 $ 2,253 ====== ====== EARNINGS PER AVERAGE COMMON SHARE ............................ $ 0.59 $ 0.61 ====== ====== DIVIDENDS PER COMMON SHARE ................................... $ 0.16 $ 0.13 ====== ======
See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Three Months Ended March 31, March 31, (In thousands) 1996 1995 - --------------------------------------------------------------------------------------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income .................................................. $ 2,242 $ 2,253 Items not requiring (providing) cash Depreciation and amortization ............................. 961 407 Provision for possible loan losses ........................ 502 449 Amortization of premiums and accretion of discounts on investment securities and mortgage-backed certificates (334) (34) Provision for foreclosed assets ........................... 80 40 Net realized gains/(losses) on securities ................ 152 (1) Gain on sale of premises and equipment .................... 4 -- Deferred income taxes ..................................... 7 (127) Changes in Interest receivable ....................................... 400 44 Mortgage loans held for sale .............................. (1,626) 443 Other assets .............................................. 1,284 1,660 Accrued interest and other liabilities .................... 600 (5,191) Income taxes payable ...................................... (68) 818 Trading securities ........................................ (77) 116 ------- ------- Net cash provided by operating activities .......... 4,127 877 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Net collections of loans .................................... 8,638 12,371 Purchase of premises and equipment .......................... (1,879) (1,098) Proceeds from sale of fixed assets .......................... 155 -- Proceeds from the sale of foreclosed assets ................. 5 102 Proceeds from the sale of available-for-sale securities ..... 145 -- Proceeds from maturities of available-for sale securities ... 20,270 2,500 Purchases of available-for-sale securities .................. (21,564) (7,500) Proceeds from maturities of held-to-maturity securities ..... 23,582 12,994 Purchases of held-to-maturity securities .................... (26,304) (28,723) ------- ------- Net cash provided by (used in) investing activities 3,048 (9,354) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in transaction accounts and savings deposits ...................................... (15,269) (15,184) Net increase in time deposits .............................. 5,304 12,515 Repayments of other borrowings .............................. (34,132) (73,501) Proceeds from other borrowings .............................. 34,311 72,483 Dividends paid .............................................. (611) (478) Net increase (decrease) federal funds purchased and securities sold under agreements to repurchase ........ 2,207 (3,061) Repurchase of common stock .................................. (298) -- ------- ------- Net cash used in financing activities ............... (8,488) (7,226) ------- ------- DECREASE IN CASH AND CASH EQUIVALENTS ......................... (1,313) (15,703) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR .................. 73,422 74,002 ------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD ...................... $ 72,109 $ 58,299 ======= =======
See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 1996 AND 1995
NET UNREALIZED COMMON GAIN ON AFS UNDIVIDED (In thousands) STOCK SURPLUS SECURITIES PROFITS TOTAL - ----------------------------------------------------------------------------------------------------- BALANCE, DECEMBER 31, 1994 ............ $ 18,387 $ 19,827 $ 233 $ 45,253 $ 83,700 NET INCOME ............................ 2,253 2,253 CASH DIVIDENDS DECLARED ($.13 PER SHARE) .................... (478) (478) CHANGE IN UNREALIZED APPRECIATION ON AVAILABLE-FOR-SALE SECURITIES, NET OF INCOME TAXES OF $150 ......... 242 242 -------- -------- -------- -------- -------- BALANCE, MARCH 31, 1995 ............... 18,387 19,827 475 47,028 85,717 EXERCISE OF STOCK OPTIONS--2,000 SHARES 10 10 20 COMMON STOCK ISSUED IN CONNECTION WITH PURCHASE OF DUMAS BANCSHARES, INC (137,234 SHARES @$25.50 PER SHARE) .... 686 2,814 3,500 NET INCOME ............................ 7,766 7,766 CASH DIVIDENDS DECLARED ($.46 PER SHARE) .................... (1,756) (1,756) CHANGE IN UNREALIZED APPRECIATION ON AVAILABLE-FOR-SALE SECURITIES, NET OF INCOME TAXES OF $882 ......... 1,550 1,550 -------- -------- -------- -------- -------- BALANCE, DECEMBER 31, 1995 ............ 19,083 22,651 2,025 53,038 96,797 EXERCISE OF STOCK OPTIONS--9,000 SHARES 45 57 102 REPURCHASE OF COMMON STOCK ............ (60) (340) (400) NET INCOME ............................ 2,242 2,242 CASH DIVIDENDS DECLARED ($.16 PER SHARE) .................... (611) (611) CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON AVAILABLE-FOR-SALE SECURITIES, NET OF INCOME TAX CREDIT OF $335 ............................. (590) (590) -------- ------- -------- -------- -------- BALANCE, MARCH 31, 1996 .............. $ 19,068 $ 22,368 $ 1,435 $ 54,669 $ 97,540 ======== ======= ======== ======== ========
See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1: ACCOUNTING POLICIES The consolidated financial statements include the accounts of Simmons First National Corporation and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. All adjustments made to the unaudited financial statements were of a normal recurring nature. In the opinion of management, all adjustments necessary for a fair presentation of the results of interim periods have been made. Certain prior year amounts are reclassified to conform to current year classification. The accounting policies followed in the presentation of interim financial results are presented on pages 26-29 of the 1995 Annual Report to shareholders. NOTE 2: INVESTMENT SECURITIES The amortized cost and fair value of investments in debt securities that are Held to Maturity and Available For Sale are as follows:
March 31, 1996 December 31, 1995 ------------------------------------------------------------------------------------------------ Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair (In thousands) Cost Gains (Losses) Value Cost Gains (Losses) Value - ----------------------------------------------------------------------------------------------------------------------- Held to Maturity U.S. Treasury ..... $ 36,921 $ 247 $ (239) $ 36,929 $ 45,920 $ 400 $ (46) $ 46,274 U.S. Government agencies ........ 34,835 386 (342) 34,879 23,569 692 (18) 24,243 Mortgage-backed securities ...... 6,136 24 (88) 6,072 6,344 37 (55) 6,326 State and political subdivisions .... 59,245 1,250 (277) 60,218 58,154 1,536 (356) 59,334 Other securities .. 416 2 (4) 414 446 11 -- 457 -------- -------- -------- -------- -------- -------- -------- -------- $ 137,553 $ 1,909 $ (950) $ 138,512 $ 134,433 $ 2,676 $ (475) $ 136,634 ======== ======== ======== ======== ======== ======== ======== ======== Available For Sale U.S. Treasury ..... $ 73,080 $ 1,432 $ (82) $ 74,430 $ 72,258 $ 2,102 $ (3) $ 74,357 U.S. Government agencies ........ 11,957 189 (82) 12,064 11,905 264 (35) 12,134 State and political subdivisions .... 50 -- -- 50 51 -- -- 51 Other securities .. 3,036 796 (1) 3,831 2,976 851 (2) 3,825 -------- -------- -------- -------- -------- -------- -------- -------- $ 88,123 $ 2,417 $ (165) $ 90,375 $ 87,190 $ 3,217 $ (40) $ 90,367 ======== ======== ======== ======== ======== ======== ======== ========
Maturities of investment securities at March 31, 1996
Held to Maturity Available for Sale Amortized Fair Amortized Fair (In thousands) Cost Value Cost Value - ------------------------------------------------------------------------------- One year or less ................. $ 24,330 $ 24,340 $ 42,345 $ 42,466 After one through five years ..... 52,942 53,253 42,742 44,078 After five through ten years ..... 47,707 47,858 -- -- After ten years .................. 6,022 6,575 -- -- Mortgage-backed securities not due on a single maturity date ...... 6,136 6,072 -- -- Other securities ................. 416 414 3,036 3,831 ------- ------- ------- ------- $137,553 $138,512 $ 88,123 $ 90,375 ======= ======= ======= =======
The book value of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $101,913,000 at March 31, 1996, and $107,133,000 at December 31, 1995. The approximate fair value of pledged securities amounted to $103,636,000 at March 31, 1996 and $110,319,000 at December 31, 1995. The book value of securities sold under agreements to repurchase amounted to $663,000 and $1,417,000 for March 31, 1996 and December 31, 1995, respectively. The table below shows gross realized gains and losses during the first three months of 1996 and 1995. There were no proceeds from sales at March 31, 1995 because the gains were the result of called bonds.
March 31, March 31, (In thousands) 1996 1995 - ------------------------------------------------ Proceeds from sales ..... $ 145 $ -- ----- ----- Gross gains ............. 152 1 Gross losses ............ -- -- ----- ----- Securities gains (losses) $ 152 $ 1 ===== =====
As of December 15, 1995, the Corporation redesignated held-to-maturity securities with an aggregate amortized cost of $40,193,000 and net unrealized gains of $1,905,000 to the available-for-sale portfolio. The redesignation was prompted by the recent announcement by the Financial Accounting Standards Board to allow a one-time redesignation and reflects management's revised expectations of liquidity needs. Approximately 13 percent of the state and political subdivision securities are rated A or above. Of the remaining securities, most are non-rated bonds and represent small, Arkansas issues, which are evaluated on an ongoing basis. NOTE 3: LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES The various categories are summarized as follows:
March 31, December 31, (In thousands) 1996 1995 - --------------------------------------------------------------------------- Loans Consumer Credit card ............................ $ 144,651 $ 154,808 Student loan ........................... 67,386 63,492 Other consumer ......................... 59,832 57,166 Real estate Construction ........................... 16,066 15,177 Single family residential .............. 53,040 54,341 Other commercial ....................... 59,855 59,012 Commercial Commercial ............................. 36,698 36,553 Agricultural ........................... 14,756 20,588 Financial institutions ................. 8,537 9,058 Other ..................................... 2,701 2,546 -------- -------- Total loans before unearned discount and allowances for possible loan losses .. 463,522 472,741 Unearned discount ......................... (763) (785) Allowance for possible loan losses ........ (8,412) (8,418) -------- -------- Net Loans ........................... $ 454,347 $ 463,538 ======== ========
During the first quarter of 1996, foreclosed assets held for sale decreased to $983,000 and are carried at the lower of cost or fair market value. Other non-performing assets, non-accrual loans and other non-performing loans for the Corporation at March 31, 1996, were $7,000, $1,623,000 and $1,513,000, respectively, bringing the total of non-performing assets to $4,126,000.
March 31, December 31, (In thousands) 1996 1995 - -------------------------------------------------------------------------- Allowance for Possible Loan Losses Balance, beginning of year .................. $8,418 $7,790 Additions Provision charged to expense ............. 502 449 ----- ----- 8,920 8,239 Deductions Losses charged to allowance, net of recoveries of $103 and $114 for the first three months of 1996 and 1995, respectively ........................... 508 322 ----- ----- Balance, March 31 ........................... $8,412 $7,917 ===== ----- Additions Provision charged to expense ............. 1,643 Allowance for loan losses of acquired institutions .............. 361 ----- 2,004 Deductions Losses charged to allowance, net of recoveries of $365 for the last nine months of 1995 1,503 ----- Balance, end of year ........................... $8,418 =====
As of January 1, 1995, the Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan. SFAS 114 requires discounting expected future cash flows to measure impairment of certain loans, or, as a practical expedient, impairment measurements based on the loan's observable market price or the fair value of collateral if the loan is collateral dependent. The adoption of SFAS 114 did not increase the 1995 loan loss provision. At March 31, 1996 and December 31, 1995, impaired loans totaled $4,564,000, all of which had reserves allocated. An allowance of $890,000 and $832,000 for possible losses related to those loans at March 31, 1996 and December 31, 1995, respectively. Interest of $65,000 and $38,000 was recognized on average impaired loans of $4,543,000 and $3,527,000 as of March 31, 1996 and 1995, respectively. Interest recognized on impaired loans on a cash basis during the first three months of 1996 and 1995 was immaterial. NOTE 4: ACQUISITIONS On April 1, 1995, and August 1, 1995, Simmons First National Corporation acquired all outstanding stock of Dumas Bancshares, Inc. (DBI), and Dermott State Bank Bancshares, Inc. (DSBB), respectively, in exchange for 137,234 shares of common stock valued at $25.50 per share and cash of $3,900,000. DBI and DSBB were liquidated into the Corporation leaving Dumas State Bank, First State Bank, and Dermott State Bank as subsidiaries of the Corporation. First State Bank was then merged into Simmons First National Bank and the names of the other two banks were changed to Simmons First Bank of Dumas and Simmons First Bank of Dermott. The acquisitions were accounted for as purchases, and the results of operations from the dates of acquisition are included in the December 31, 1995 consolidated financial statements. The total acquisition cost of $7,400,000 exceeded the fair value of net assets acquired by $1,599,000. Unaudited proforma consolidated operations assuming the purchases were made at the beginning of 1995 are shown below.
(In thousands) 1995 - ----------------------------- Total revenue .... $82,213 Net income ....... 10,168 Earnings per share 2.66
The pro forma results are not necessarily indicative of what would have occurred had the acquisitions been on these dates, nor are they necessarily indicative of future operations. Pro forma data reflect the adjusted depreciation and amortization from adjusting DBI and DSBB assets to market value. No adjustment was made to reflect the combined impact of operations on income tax expenses of the separate companies. In February, 1996, the flagship bank, Simmons First National, located in Pine Bluff, opened an additional branch in Little Rock, Arkansas, bringing its total branches to twenty-four. NOTE 5: CERTAIN TRANSACTIONS From time to time the Corporation and its subsidiaries have made loans and other extensions of credit to directors, officers, their associates and members of their immediate families, and from time to time directors, officers and their associates and members of their immediate families have placed deposits with Simmons First National Bank, Simmons First Bank of Lake Village, Simmons First Bank of Jonesboro, Simmons First Bank of Dumas and Simmons First Bank of Dermott. Such loans, other extensions of credit and deposits were made in the ordinary course of business, on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons and did not involve more than normal risk of collectibility or present other unfavorable features. NOTE 6: STOCK OPTIONS As of March 31, 1996, 107,500 shares of common stock of the Corporation had been granted through an incentive stock option plan. There were 52,500 exercisable options at the end of the first quarter of 1996. Eleven thousand shares have been issued upon exercise of options. NOTE 7: ADDITIONAL CASH FLOW INFORMATION
Three Months Ended March 31, (In thousands) 1996 1995 - ------------------------------------- Interest paid $ 6,898 $ 4,808 Income taxes paid ..... $ 86 $ --
NOTE 8: INCOME TAXES The provision for income taxes is comprised of the following components:
March 31, March 31, (In thousands) 1996 1995 - ----------------------------------------------------- Income taxes currently payable $ 857 $ 1,093 Deferred income taxes ........ 7 (127) ------ ------ Provision for income taxes ... $ 864 $ 966 ====== ======
The tax effects of temporary differences related to deferred taxes shown on the balance sheet are shown below:
March 31, December 31, (In thousands) 1996 1995 - --------------------------------------------------------------------- Deferred tax assets Allowance for loan losses ............... $ 2,938 $ 2,940 Valuation adjustment of foreclosed assets held for sale ......................... 252 250 Deferred compensation payable ........... 434 444 Deferred loan fee income ................ 704 707 Other ................................... 837 847 ------ ------ Total deferred tax assets .............. 5,165 5,188 ------ ------ Deferred tax liabilities Accumulated depreciation ................ (731) (718) Available-for-sale securities .......... (814) (1,151) Other ................................... (309) (338) ------ ------ Total deferred tax liabilities ....... (1,854) (2,207) ------ ------ Net deferred tax assets included in other assets on balance sheets ............. $ 3,311 $ 2,981 ====== ======
A reconciliation of income tax expense at the statutory rate to the Corporation's actual income tax expense is shown below:
March 31, March 31, (In thousands) 1996 1995 - ------------------------------------------------------------ Computed at the statutory rate (34%) $ 1,056 $ 1,093 Increase (decrease) resulting from: Tax exempt income ............... (258) (222) Other difference, net ........... 66 95 ------ ------ Actual tax provision ............... $ 864 $ 966 ====== ======
NOTE 9: TIME DEPOSITS Time deposits include approximately $105,695,000 and $104,906,000 of certificates of deposit of $100,000 or more at March 31, 1996, and December 31, 1995, respectively. NOTE 10: COMMITMENTS AND CREDIT RISK The five affiliate banks of the Corporation grant agribusiness, commercial, consumer, and residential loans to their customers. Included in the Corporation's diversified loan portfolio is unsecured debt in the form of credit card receivables that comprised approximately 31.3% and 32.8% of the portfolio, as of March 31, 1996 and December 31, 1995, respectively. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate, and residential real estate. At March 31, 1996 and December 31, 1995, the Corporation had outstanding commitments to originate loans aggregating approximately $92,025,000 and $67,853,000, respectively. The commitments extended over varying periods of time, with the majority being disbursed within a one year period. Loan commitments at fixed rates of interest amounted to $43,069,000 and $26,744,000 at March 31, 1996 and December 31, 1995, respectively, with the remainder at floating market rates. Letters of credit are conditional commitments issued by the bank subsidiaries of the Corporation, to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Corporation had total outstanding letters of credit amounting to $2,171,000 and $1,954,000 at March 31, 1996 and December 31, 1995, respectively, with terms ranging from 90 days to one year. Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate, and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on balance sheet instruments. At March 31, 1996, the Corporation had granted unused lines of credit to borrowers aggregating approximately $4,929,000 and $162,560,000 for commercial lines and open-end consumer lines, respectively. At December 31, 1995, unused lines of credit to borrowers aggregated approximately $3,365,000 for commercial lines and $157,068,000 for open-end consumer lines, respectively. Mortgage loans serviced for others totaled $1,236,399,000 and $1,224,467,000 at March 31, 1996 and December 31, 1995, respectively, of which mortgage-backed securities serviced totaled $1,136,790,000 and $1,166,906,000 at March 31, 1996 and December 31, 1995, respectively. Simmons First National Bank serviced VA loans subject to certain recourse provisions totaling approximately $136,094,000 and $145,185,000, at March 31, 1996 and December 31, 1995, respectively. A reserve was established for potential loss obligations, based on management's evaluation of a number of variables, including the amount of delinquent loans serviced for other investors, length of delinquency, and amounts previously advanced on behalf of the borrower that the Corporation does not expect to recover. This reserve is netted against foreclosure receivables included in other assets. As of March 31, 1996 and December 31, 1995, this reserve balance was $534,000 and $573,000, respectively. NOTE 11: CONTINGENT LIABILITIES A number of legal proceedings exist in which the Corporation and/or its subsidiaries are either plaintiffs or defendants or both. Most of the lawsuits involve loan foreclosure activities. The various unrelated legal proceedings pending against the subsidiary banks in the aggregate are not expected to have a material adverse effect on the financial position of the Corporation and its subsidiaries. NOTE 12: UNDIVIDED PROFITS The subsidiary banks are subject to a legal limitation on dividends that can be paid to the parent corporation without prior approval of the applicable regulatory agencies. The approval of the Comptroller of the Currency is required, if the total of all dividends declared by a national bank in any calendar year exceeds the total of its net profits, as defined, for that year combined with its retained net profits of the preceding two years. Arkansas bank regulators have specified that the maximum dividend limit state banks may pay to the parent company without prior approval is 50% of current year earnings. At March 31, 1996, the bank subsidiaries had approximately $12.4 million available for payment of dividends to the Corporation without prior approval of the regulatory agencies. The Federal Reserve Board's risk-based capital guidelines require a minimum risk-adjusted ratio for total capital of 8% at the end of 1992. The Federal Reserve Board has further refined its guidelines to include the definitions for (1) a well-capitalized institution, (2) an adequately-capitalized institution, and (3) an undercapitalized institution. The criteria for a well-capitalized institution are: a 5% "Tier l leverage capital" ratio, a 6% "Tier 1 risk-based capital" ratio, and a 10% "total risk-based capital" ratio. As of March 31, 1996, each of the five subsidiary banks met the capital standards for a well-capitalized institution. The Corporation's total capital to total risk-weighted assets ratio was 21.0% at March 31, 1996, well above the minimum required. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net income for the quarter ended March 31, 1996, was $2,242,000, a decrease of $11,000, or .49%, over the same period of 1995. Earnings per share for the three-month periods ended March 31, 1996 and 1995, were $.59 and $.61, respectively. The Corporation's annualized return on average assets (ROA) for the three-month periods ended March 31, 1996 and 1995, were 1.08% and 1.31%, respectively. Annualized return on equity (ROE) for the same three-month periods were 9.22% and 10.71%, respectively. Net interest income, the difference between interest income and interest expense, for the three-month period ended March 31, 1996, increased $584,000, or 7.9%, when compared to the same period in 1995. The increase is primarily due to the growth in earning assets due to the acquisition consummated in the second and third quarters of 1995. During the first quarter, interest income increased $2,548,000, or 20.6%, while interest expense increased $1,964,000, or 39.5%, when compared to the same period in 1995. Continued improvement in asset quality has resulted in allowance for possible loan losses to be at 1.82% of total loans at March 31, 1996, compared to 1.95% at March 31, 1995. The provision for the first quarter of 1996 was $502,000, compared to $449,000 for the same period of 1995, resulting in a $53,000, or 11.8%, increase. Non-interest income, exclusive of net gains on securities sold, for the first quarter ended March 31, 1996, was $5,927,000, a decrease of $35,000, or .59%, from the same period in 1995. The 1995 non-interest income does, however, include $603,000 in non-recurring income. During the three months ended March 31, 1996, non-interest expense increased $760,000, or 7.8%, over the same period in 1995. This increase reflects the normal increase in the cost of doing business along with the inclusion of the operating costs associated with the acquisitions completed in 1995. At March 31, 1996, total assets for the Corporation were $832,480,000, an increase of $7,404,000, or .88%, from the same figure at December 31, 1995, and $122,866,000, or 17.3% from the same figure at March 31, 1995. Deposits at March 31, 1996, totaled $694,803,000, an decrease of $9,965,000, or 1.4%, from the same figure at December 31, 1995. Compared to March 31, 1995, deposits show an increase of $113,934,000, or 19.6%. Stockholders' equity at the end of the quarter was $97,540,000, an increase of $743,000, or .77%, from the December 31, 1995 figure. FINANCIAL CONDITION Generally speaking, the Corporation's banking subsidiaries rely upon net inflows of cash from financing activities, supplemented by net inflows of cash from operating activities, to provide cash used in their investing activities. As is typical of most banking companies, significant financing activities include: deposit gathering; use of short-term borrowing facilities, such as federal funds purchased and repurchase agreements; and the issuance of long-term debt. The banks' primary investing activities include loan originations and purchases of investment securities, offset by loan payoffs and investment maturities. Liquidity represents an institution's ability to provide funds to satisfy demands from depositors and borrowers, by either converting assets into cash or accessing new or existing sources of incremental funds. It is a major responsibility of management to maximize net interest income within prudent liquidity constraints. Internal corporate guidelines have been established to constantly measure liquid assets as well as relevant ratios concerning earning asset levels and purchased funds. Each bank subsidiary is also required to monitor these same indicators and report regularly to its own senior management and board of directors. At March 31, 1996, each bank was within established guidelines and total corporate liquidity was strong. At March 31, 1996, cash and due from banks, securities available for sale, federal funds sold and securities purchased under agreements for resale, and mortgage loans held for sale were 22.9% of total assets. REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS BAIRD, KURTZ & DOBSON Certified Public Accountants 200 East Eleventh Pine Bluff, Arkansas Board of Directors Simmons First National Bank Pine Bluff, Arkansas We have made a review of the accompanying consolidated condensed financial statements, appearing on pages 3 to 7 of the accompanying Form 10-Q, of SIMMONS FIRST NATIONAL CORPORATION and consolidated subsidiaries as of March 31, 1996 and for the three-month periods ended March 31, 1996 and 1995, in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an examination in accordance with generally accepted auditing standards, the objective which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1995, and the related consolidated statements of income, cash flows and changes in stockholders' equity for the year then ended (not presented herein), and in our report dated February 2, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1995, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/ BAIRD, KURTZ & DOBSON Pine Bluff, Arkansas May 2, 1996 Part II Other Information SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SIMMONS FIRST NATIONAL CORPORATION ---------------------------------- (Registrant) Date: 5/10/96 /s/ J. Thomas May ------------------ ---------------------------------------- J. Thomas May, Chairman and Chief Executive Officer Date: 5/10/96 /s/ Barry L. Crow ------------------ ---------------------------------------- Barry L. Crow, Executive Vice President and Chief Financial Officer EX-27 2
9 1000 3-MOS DEC-31-1996 MAR-31-1996 29,469 3,110 39,530 625 90,377 137,553 138,512 462,759 8,412 832,480 694,803 1,594 10,728 4,747 0 0 19,068 78,472 832,480 10,485 3,437 988 14,910 6,422 6,931 7,979 502 7 10,450 3,106 2,242 0 0 2,242 .59 .59 4.44 1,623 1,513 0 0 8,418 611 103 8,412 8,412 0 0
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