-----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, NtzXO2mTAxcYMSpz43bXnh082hAREfIVFeT7+EVbuJ2CRQsxV9SfVIHIEi0qbaEN fJMkUKwMA7mCiHccPli0tw== 0000090498-97-000016.txt : 19970515 0000090498-97-000016.hdr.sgml : 19970515 ACCESSION NUMBER: 0000090498-97-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 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: 97603558 BUSINESS ADDRESS: STREET 1: 501 MAIN STREET CITY: PINE BLUFF STATE: AR ZIP: 71601 BUSINESS PHONE: 5015411000 10-Q 1 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, 1997 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 870-541-1350 ----------------------- 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 5,715,194 Class B, Common None SIMMONS FIRST NATIONAL CORPORATION INDEX Page No. Part I: Summarized Financial Information Consolidated Balance Sheets -- March 31, 1997 and December 31, 1996 3-4 Consolidated Statements of Income -- Three months ended March 31, 1997 and 1996 5 Consolidated Statements of Cash Flows -- Three months ended March 31, 1997 and 1996 6 Consolidated Statement of Changes in Stockholders' Equity -- Three months ended March 31, 1997 and 1996 7 Notes to Consolidated Financial Statements 8-17 Management's Discussion and Analysis of Financial Condition and Results of Operations 18-19 Review by Independent Certified Public Accountants 20 Part II: Other Information 21 Part I A. Summarized Financial Information Simmons First National Corporation Consolidated Balance Sheets March 31, 1997 and December 31, 1996 ASSETS
March 31, December 31, (In thousands) 1997 1996 - ----------------------------------------------------------------------------------------- (Unaudited) Cash and non-interest bearing balances due from banks $ 33,519 $ 41,989 Interest bearing balances due from banks 6,434 8,312 Federal funds sold and securities purchased under agreements to resell 41,470 18,980 --------- --------- Cash and cash equivalents 81,423 69,281 Investment securities 238,156 237,662 Mortgage loans held for sale, net of unrealized gains (losses) 5,911 10,101 Assets held in trading accounts 236 182 Loans 515,746 510,813 Allowance for loan losses (8,297) (8,366) --------- --------- Net loans 507,449 502,447 Premises and equipment 20,873 20,764 Foreclosed assets held for sale 975 903 Interest receivable 8,121 9,675 Cost of loan servicing rights acquired 8,374 8,906 Excess of cost over fair value of net assets acquired, at amortized cost 3,099 3,164 Other assets 16,646 18,247 --------- --------- TOTAL ASSETS $ 891,263 $ 881,332 ========= =========
The December 31, 1996 Consolidated Balance Sheet is as reported in the Corporation's 1996 Annual Report to the Stockholders. See Notes to Consolidated Financial Statements. Simmons First National Corporation Consolidated Balance Sheets March 31, 1997 and December 31, 1996 LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31, (In thousands) 1997 1996 - ---------------------------------------------------------------------------------------- (Unaudited) LIABILITIES Non-interest bearing transaction accounts $ 116,440 $ 126,568 Interest bearing transaction accounts and savings deposits 270,515 264,554 Time deposits 357,477 345,245 ----------- ----------- Total deposits 744,432 736,367 Federal funds purchased and securities sold under agreements to repurchase 28,288 29,079 Short-term debt 2,328 1,484 Long-term debt 1,056 1,067 Accrued interest and other liabilities 11,149 10,510 ----------- ----------- Total liabilities 787,253 778,507 ----------- ----------- STOCKHOLDERS' EQUITY Capital stock Class A, common, par value $5 a share, authorized 10,000,000 shares, 5,715,194 issued and outstanding at 1997 and 5,705,415 at 1996 28,576 28,527 Surplus 22,073 22,040 Undivided profits 52,951 51,106 Unrealized appreciation on available-for-sale securities, net of income taxes of $235 at 1997 and $655 at 1996 410 1,152 ----------- ----------- Total stockholders' equity 104,010 102,825 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 891,263 $ 881,332 =========== ===========
The December 31, 1996 Consolidated Balance Sheet is as reported in the Corporation's 1996 Annual Report to the Stockholders. See Notes to Consolidated Financial Statements. Simmons First National Corporation Consolidated Statements of Income Three Months Ended March 31, 1997 and 1996
March 31, (In thousands, except per share data) 1997 1996 - --------------------------------------------------------------------------------------- (Unaudited) INTEREST INCOME Loans $11,521 $10,485 Federal funds sold and securities purchased under agreements to resell 538 548 Investment securities 3,672 3,437 Mortgage loans held for sale, net of unrealized gains (losses) 117 400 Assets held in trading accounts 16 10 Interest bearing balances due from banks 77 30 ------- ------- TOTAL INTEREST INCOME 15,941 14,910 ------- ------- INTEREST EXPENSE Interest bearing transaction accounts and savings deposits 1,884 1,634 Time deposits 4,653 4,788 Federal funds purchased and securities sold under agreements to repurchase 463 391 Short-term debt 29 14 Long-term debt 26 104 ------- ------- TOTAL INTEREST EXPENSE 7,055 6,931 ------- ------- NET INTEREST INCOME 8,886 7,979 Provision for loan losses 764 502 ------- ------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 8,122 7,477 ------- ------- NON-INTEREST INCOME Trust department income 604 553 Service charges on deposit accounts 745 739 Other service charges and fees 309 229 Income on sale of mortgage loans, net of commissions 121 106 Income on investment banking, net of commissions 275 300 Credit card fees 2,194 2,257 Loan servicing fees 1,706 1,603 Other income 272 140 Investment securities gains (losses), net -- 152 ------- ------- TOTAL NON-INTEREST INCOME 6,226 6,079 ------- ------- NON-INTEREST EXPENSE Salaries and employee benefits 5,636 5,629 Occupancy expense, net 621 613 Furniture and equipment expense 743 561 Loss on foreclosed assets 252 281 Other expense 3,480 3,366 ------- ------- TOTAL NON-INTEREST EXPENSE 10,732 10,450 ------- ------- INCOME BEFORE INCOME TAXES 3,616 3,106 Provision for income taxes 1,028 864 ------- ------- NET INCOME $ 2,588 $ 2,242 ======= ======= EARNINGS PER AVERAGE COMMON SHARE $ .45 $ .39 ======= ======= DIVIDENDS PER COMMON SHARE $ 0.13 $ 0.11 ======= =======
See Notes to Consolidated Financial Statements. Simmons First National Corporation Consolidated Statements of Cash Flows Three Months Ended March 31, 1997 and 1996
March 31, (In thousands, except per share data) 1997 1996 - -------------------------------------------------------------------------------------------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 2,588 $ 2,242 Items not requiring (providing) cash Depreciation and amortization 1,151 961 Provision for loan losses 764 502 Amortization of premiums and accretion of discounts on investment securities 651 (334) Deferred income taxes (40) 7 Provision for foreclosed assets 81 80 Investment securities gains, net -- 152 (Gain) loss on sale of premises and equipment (1) 4 Changes in Interest receivable 1,554 400 Mortgage loans held for sale, net of unrealized gains (losses) 4,190 (1,626) Assets held in trading accounts (54) (77) Other assets 1,676 1,284 Accounts payable and accrued expenses (39) 600 Income taxes payable 1,138 (68) -------- -------- Net cash provided by operating activities 13,659 4,127 -------- -------- CASH FLOW FROM INVESTING ACTIVITIES Net (originations) collections of loans (6,093) 8,638 Purchase of premises and equipment (901) (1,879) Proceeds from sale of premises and equipment 338 155 Proceeds from sale of foreclosed assets -- 5 Proceeds from sale of available-for-sale securities -- 145 Proceeds from maturities of available-for-sale securities 21,560 20,270 Purchases of available-for-sale securities (23,900) (21,564) Proceeds from maturities of held-to-maturity securities 4,320 23,582 Purchases of held-to-maturity securities (4,287) (26,304) -------- -------- Net cash provided by (used in) investing activities (8,963) 3,048 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in transaction accounts and savings deposits (4,167) (15,269) Net increase in time deposits 12,232 5,304 Net increase in other borrowings 833 179 Dividends paid (743) (611) Net increase in federal funds purchased and securities sold under agreements to repurchase (791) 2,207 Issuance (repurchase) of common stock 82 (298) -------- -------- Net cash provided by (used in) financing activities 7,446 (8,488) -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,142 (1,313) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 69,281 73,422 -------- -------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 81,423 $ 72,109 ======== ========
See Notes to Consolidated Financial Statements. Simmons First National Corporation Consolidated Statements of Changes in Stockholders' Equity Three Months Ended March 31, 1997 and 1996
Unrealized Appreciation On Available- Common For-Sale Undivided (In thousands) Stock Surplus Securities, Net Profits Total - -------------------------------------------------------------------------------------------------------- Balance, December 31, 1995 $ 19,115 $ 22,619 $ 2,025 $ 53,038 $ 96,797 Common stock dividend paid in December, 1996--1,901,776 shares 9,509 (9,509) -------- -------- -------- -------- -------- Restated to reflect the common stock dividend at December 31, 1995 28,624 22,619 2,025 43,529 96,797 Exercise of stock options--13,500 shares 68 34 102 Repurchase of common stock (90) (310) (400) Net income 2,242 2,242 Cash dividends declared ($0.11 per share) (611) (611) Change in unrealized appreciation on available for sale securities, net of income tax credit of $335 (590) (590) -------- -------- -------- -------- -------- Balance, March 31, 1996 28,602 22,343 1,435 45,160 97,540 Exercise of stock options--3,000 shares 15 8 23 Repurchase of common stock (60) (341) (401) Net income 8,059 8,059 Cash dividends declared ($0.37 per share) (2,113) (2,113) Change in unrealized appreciation on available-for-sale securities, net of income taxes of $162 (283) (283) -------- -------- -------- -------- -------- Balance, December 31, 1996 28,527 22,040 1,152 51,106 102,825 Exercise of stock options--10,500 shares 53 48 101 Repurchase of common stock (4) (15) (19) Net income 2,588 2,588 Cash dividends declared ($0.13 per share) (743) (743) Change in unrealized appreciation on available-for-sale securities, net of income tax credit of $420 (742) (742) -------- -------- -------- -------- -------- Balance, March 31, 1997 $ 28,576 $ 22,073 $ 410 $ 52,951 $104,010 ======== ======== ======== ======== ========
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 25-28 of the 1996 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, December 31, 1997 1996 --------------------------------------------- ------------------------------------------ Gross Gross Estimated Gross Gross Estimated Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair (In thousands) Cost Gains (Losses) Value Cost Gains (Losses) Value - ---------------------------------------------------------------------------------------------------------------- Held-to-Maturity U.S. Treasury $ 27,157 $ 94 $ (245) $ 27,006 $ 24,700 $ 179 $ (122) $ 24,757 U.S. Government agencies 33,747 221 (575) 33,393 35,286 527 (167) 35,646 Mortgage-backed securities 3,965 9 (111) 3,863 4,243 13 (69) 4,187 State and political subdivisions 63,121 1,031 (520) 63,632 63,586 1,116 (327) 64,375 Other securities 332 1 (5) 328 332 2 (4) 330 -------- ----- ----- ------- -------- ----- ----- -------- $ 128,322 $ 1,356 $(1,456) $ 128,222 $ 128,147 $ 1,837 $ (689) $ 129,295 ========= ====== ====== ======== ========= ====== ====== ========= Available-for-Sale U.S. Treasury $ 66,966 $ 552 $ (265) $ 67,253 $ 63,248 $ 1,006 $ (55) $ 64,199 U.S. Government agencies 39,043 75 (516) 38,602 41,358 186 (135) 41,409 Other securities 3,180 799 -- 3,979 3,102 805 -- 3,907 -------- ----- ----- ------- -------- ----- ----- -------- $ 109,189 $ 1,426 $ (781) $ 109,834 $ 107,708 $ 1,997 $ (190) $ 109,515 ========= ====== ====== ======== ========= ====== ====== =========
The book value of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $94,917,000 at March 31, 1997, and $86,360,000 at December 31, 1996. The approximate fair value of pledged securities amounted to $94,868,000 at March 31, 1997 and $87,399,000 at December 31, 1996. The book value of securities sold under agreements to repurchase amounted to $1,318,000 and $169,000 for March 31, 1997 and December 31, 1996, respectively. Income earned on the above securities for the quarter ended March 31, 1997 and 1996 is as follows:
(In thousands) 1997 1996 - ----------------------------------------- Taxable Held-to-maturity $1,018 $1,185 Available-for-sale 1,833 1,483 Non-taxable Held-to-maturity 821 769 Available-for-sale -- -- ------ ------ Total $3,672 $3,437 ====== ======
Maturities of investment securities at March 31, 1997, are as follows:
Held-to-Maturity Available-for-Sale -------------------- ---------------------- Amortized Fair Amortized Fair (In thousands) Cost Value Cost Value - --------------------------------------------------------------------------------- One year or less $ 19,665 $ 19,663 $ 40,773 $ 40,904 After one through five years 53,224 53,245 52,887 52,901 After five through ten years 45,417 44,873 12,349 12,050 After ten years 5,719 6,250 -- -- Mortgage-backed securities not due on a single date 3,965 3,863 -- -- Other securities 332 328 3,180 3,979 -------- -------- -------- -------- Total $128,322 $128,222 $109,189 $109,834 ======== ======== ======== ========
The table below shows gross realized gains and losses during the first three months of 1997 and 1996.
March 31, (In thousands) 1997 1996 - ------------------------------------------- Proceeds from sales $ -- $152 ---- ---- Gross gains -- 152 Gross losses -- -- ---- ---- Securities gains (losses) $ -- $152 ==== ====
Approximately 10 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) 1997 1996 - -------------------------------------------------------------------- Consumer Credit cards $159,361 $166,346 Student loans 68,726 64,193 Other consumer 66,234 65,384 Real estate Construction 23,714 20,325 Single family residential 57,115 57,251 Other commercial 60,764 60,439 Commercial Commercial 52,202 41,375 Agricultural 15,805 21,003 Financial institutions 7,883 8,469 Other 3,942 6,028 -------- -------- Total loans before allowance for loan losses $515,746 $510,813 ======== ========
During the first three months of 1997, foreclosed assets held for sale increased to $975,000 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, 1997, were $5,000, $2,967,000 and $1,457,000, respectively, bringing the total of non-performing assets to $5,404,000. Transactions in the allowance for loan losses are as follows:
March 31, December 31, (In thousands) 1997 1996 - --------------------------------------------------------------------------- Balance, beginning of year $ 8,366 $ 8,418 Additions Provision charged to expense 764 502 ------- ------- 9,130 8,920 Deductions Losses charged to allowance, net of recoveries of $174 and $103 for the first three months of 1997 and 1996, respectively 833 508 ------- ------- Balance, March 31 $ 8,297 $ 8,412 ======= ------- Additions Provision charged to expense 1,839 ------- 10,251 Deductions Losses charged to allowance, net of recoveries of $388 for the last nine months of 1996 1,885 ------- Balance, end of year $ 8,366 =======
At March 31, 1997 and December 31, 1996, impaired loans totaled $4,607,000 and $4,912,000, respectively, all of which had reserves allocated. An allowance of $923,000 and $831,000 for possible losses related to those loans at March 31, 1997 and December 31, 1996, respectively. Interest of $59,000 and $65,000 was recognized on average impaired loans of $4,300,000 and $4,543,000 as of March 31, 1997 and 1996, respectively. Interest recognized on impaired loans on a cash basis during the first three months of 1997 and 1996 was immaterial. NOTE 4: ACQUISITIONS In August, 1996, the Simmons First Bank of Dermott charter was moved to Rogers, Arkansas. The three branches of Simmons First National Bank located in Rogers, Springdale, and Bella Vista, Arkansas were then sold to the relocated bank and the bank name was changed to Simmons First Bank of Northwest Arkansas. The banking facility remaining at Dermott, along with its assets and liabilities, was then transferred to Simmons First Bank of Lake Village, Arkansas and is now a branch of that bank. The name of Simmons First Bank of Lake Village was subsequently changed to Simmons First Bank of South Arkansas. 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. On March 21, 1997, an announcement was made jointly by the Chief Executive Officers of both the Corporation and First Commercial Corporation of Little Rock, Arkansas regarding a definitive agreement to acquire all of the outstanding capital stock of First Bank of Arkansas, Searcy, Arkansas and First Bank of Arkansas, Russellville, Arkansas, in a cash purchase transaction valued at $53 million. The banks to be acquired had consolidated assets, as adjusted, of approximately $310 million, as of December 31, 1996. 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 South Arkansas, Simmons First Bank of Jonesboro, Simmons First Bank of Dumas and Simmons First Bank of Northwest Arkansas. 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, 1997, 208,500 shares of common stock of the Corporation had been granted through an employee stock option incentive plan. There were 105,750 exercisable options at the end of the first quarter of 1997. Thirty thousand shares have been issued upon exercise of options. NOTE 7: ADDITIONAL CASH FLOW INFORMATION
Three Months Ended March 31, (In thousands) 1997 1996 - ------------------------------------------- Interest paid $6,997 $6,898 Income taxes paid $ 59 $ 86
NOTE 8: INCOME TAXES The provision for income taxes is comprised of the following components:
March 31, (In thousands) 1997 1996 - ----------------------------------------------------- Income taxes currently payable $ 1,068 $ 857 Deferred income taxes (40) 7 ------- ------- Provision for income taxes $ 1,028 $ 864 ======= =======
The tax effects of temporary differences related to deferred taxes shown on the balance sheet are shown below:
March 31, December 31, (In thousands) 1997 1996 - ------------------------------------------------------------------- Deferred tax assets Allowance for loan losses $ 2,932 $ 2,952 Valuation of foreclosed assets held for sale 309 299 Deferred compensation payable 441 445 Deferred loan fee income 668 642 Other 750 706 ------- ------- Total deferred tax assets 5,100 5,044 ------- ------- Deferred tax liabilities Accumulated depreciation (785) (776) Available-for-sale securities (234) (655) Other (295) (288) ------- ------- Total deferred tax liabilities (1,314) (1,719) ------- ------- Net deferred tax assets included in other assets on balance sheets $ 3,786 $ 3,325 ======= =======
A reconciliation of income tax expense at the statutory rate to the Corporation's actual income tax expense is shown below:
March 31, (In thousands) 1997 1996 - ----------------------------------------------------------- Computed at the statutory rate (34%) $ 1,230 $ 1,056 Increase (decrease) resulting from: Tax exempt income (288) (258) Other differences, net 86 66 ------- ------- Actual tax provision $ 1,028 $ 864 ======= =======
NOTE 9: TIME DEPOSITS Time deposits include approximately $97,747,000 and $88,731,000 of certificates of deposit of $100,000 or more at March 31, 1997, and December 31, 1996, 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 30.9% and 32.6% of the portfolio, as of March 31, 1997 and December 31, 1996, 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, 1997 and December 31, 1996, the Corporation had outstanding commitments to originate loans aggregating approximately $62,524,000 and $79,710,000, 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 $50,019,000 and $64,616,000 at March 31, 1997 and December 31, 1996, 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 $3,022,000 and $2,113,000 at March 31, 1997 and December 31, 1996, 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, 1997, the Corporation had granted unused lines of credit to borrowers aggregating approximately $41,889,000 and $165,423,000 for commercial lines and open-end consumer lines, respectively. At December 31, 1996, unused lines of credit to borrowers aggregated approximately $12,677,000 for commercial lines and $160,938,000 for open-end consumer lines, respectively. Mortgage loans serviced for others totaled $1,448,501,000 and $1,477,945,000 at March 31, 1997 and December 31, 1996, respectively.. A reserve has been 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, 1997 and December 31, 1996, this reserve balance was $625,000 and $566,000, 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, 1997, the bank subsidiaries had approximately $12 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 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, 1997, 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 20.1% at March 31, 1997, 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, 1997, was $2,588,000, an increase of $346,000, or 15.4%, over the same period in 1996. Earnings per share for the three-month periods ended March 31, 1997 and 1996, were $.45 and $.39, respectively, when adjusted for the fifty percent stock dividend announced in the fourth quarter of 1996. The Corporation's annualized return on average assets (ROA) for the three-month periods ended March 31, 1997 and 1996, were 1.19% and 1.08%, respectively. Annualized return on equity (ROE) for the same three-month periods were 10.07% and 9.22 %, respectively. Net interest income, the difference between interest income and interest expense, for the three-month period ended March 31, 1997, increased $907,000, or 11.4%, when compared to the same period in 1996, due to the increase in earning assets and a strong interest margin. During the first quarter, interest income increased $1,031,000, or 6.9%, while interest expense increased a modest $124,000, or 1.8%, when compared to the same period in 1996. The provision for loan losses for the first quarter of 1997 was $764,000, compared to $502,000 for the same period of 1996. Non-interest income, exclusive of net gains on securities sold, for the first quarter ended March 31, 1997, was $6,226,000, a 5.0% increase over the $5,927,000 reported for the same period in 1996. During the three months ended March 31, 1997, non-interest expense increased $282,000, or 2.7%, over the same period in 1996. This increase reflects the normal increase in the cost of doing business. At March 31, 1997, total assets for the Corporation were $891,263,000, an increase of $9,931,000, or 1.1%, from the same figure at December 31, 1996, and $58,783,000, or 7.1%, over the March 31, 1996 total. Deposits at March 31, 1997, totaled $744,432,000, an increase of $8,065,000, or 1.1%, from the same figure at December 31, 1996. The allowance for loan losses as a percentage of total loans was 1.61% at March 31, 1997. The coverage ratio (allowance for loan losses as a percentage of non-performing loans) was 187.5% and foreclosed assets increased slightly to $975,000 from $903,000 at December 31, 1996. Stockholders' equity at the end of the first quarter was $104,010,000, an increase of $1,185,000, or 1.2%, from the December 31, 1996 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, 1997, each bank was within established guidelines and total corporate liquidity was strong. At March 31, 1997, cash and due from banks, securities available-for-sale and held in trading accounts, federal funds sold and securities purchased under agreements for resale, and mortgage loans held for sale were 21.9% 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, 1997 and for the three-months ended March 31, 1997 and 1996, 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, 1996, 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 January 29, 1997, 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, 1996, 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 7, 1997 Part II A. 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: May 7, 1997 /s/ J. Thomas May -------------- --------------------------------------- J. Thomas May, Chairman, President and Chief Executive Officer Date: May 7, 1997 /s/ Barry L. Crow -------------- --------------------------------------- Barry L. Crow, Executive Vice President and Chief Financial Officer EX-27 2
9 1,000 3-MOS DEC-31-1997 MAR-31-1997 33,519 6,434 41,470 236 109,834 128,322 128,222 515,746 8,297 891,263 744,432 2,328 11,149 1,056 28,576 0 0 75,434 891,263 11,521 3,671 748 15,941 6,537 7,055 8,886 764 0 10,732 3,616 2,588 0 0 2,588 .45 .45 4.72 2,967 1,457 0 0 8,366 1,007 174 8,297 8,297 0 0
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