-----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, B0/MNLAnDRDLp409DJUsbtTa3u5PWQT+F6W+wYIkdLkFbtlb16wu3X48szujYLo2 xOGlhWm8WBG89G3Lw1oRXA== 0000090498-01-500018.txt : 20010810 0000090498-01-500018.hdr.sgml : 20010810 ACCESSION NUMBER: 0000090498-01-500018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010809 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: 1702798 BUSINESS ADDRESS: STREET 1: 501 MAIN STREET STREET 2: C/O SIMMONS FIRST NATIONAL CORP CITY: PINE BLUFF STATE: AR ZIP: 71601 BUSINESS PHONE: 8705411000 MAIL ADDRESS: STREET 1: 501 MAIN STREET STREET 2: C/O SIMMONS FIRST NATIONAL CORP CITY: PINE BLUFF STATE: AR ZIP: 71601 10-Q 1 q10-0601.txt 10Q SECOND QUARTER 2001 UNITED STATES 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 June 30, 2001 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 870-541-1000 ---------------------- 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 common stock. Class A, Common 7,101,045 Class B, Common None SIMMONS FIRST NATIONAL CORPORATION INDEX Page No. Part I: Summarized Financial Information Consolidated Balance Sheets -- June 30, 2001 and December 31, 2000 3-4 Consolidated Statements of Income -- Three months and six months ended June 30, 2001 and 2000 5 Consolidated Statements of Cash Flows -- Six months ended June 30, 2001 and 2000 6 Consolidated Statements of Changes in Stockholders' Equity Six months ended June 30, 2001 and 2000 7 Condensed Notes to Consolidated Financial Statements 8-17 Management's Discussion and Analysis of Financial Condition and Results of Operations 18-34 Review by Independent Certified Public Accountants 35 Part II: Other Information 36-38 Part I: Summarized Financial Information
Simmons First National Corporation Consolidated Balance Sheets June 30, 2001 and December 31, 2000 ASSETS June 30, December 31, (In thousands, except share data) 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Cash and non-interest bearing balances due from banks $ 68,053 $ 77,495 Interest bearing balances due from banks 62,035 12,990 Federal funds sold and securities purchased under agreements to resell 52,650 20,650 ----------- ----------- Cash and cash equivalents 182,738 111,135 Investment securities 382,244 398,483 Mortgage loans held for sale 21,457 8,934 Assets held in trading accounts 162 1,127 Loans 1,298,212 1,294,710 Allowance for loan losses (21,221) (21,157) ----------- ----------- Net loans 1,276,991 1,273,553 Premises and equipment 45,831 46,597 Foreclosed assets held for sale, net 1,252 1,104 Interest receivable 17,248 18,878 Intangible assets, net 33,698 35,241 Other assets 16,924 17,441 ----------- ----------- TOTAL ASSETS $ 1,978,545 $ 1,912,493 ========== ==========
See Condensed Notes to Consolidated Financial Statements.
Simmons First National Corporation Consolidated Balance Sheets June 30, 2001 and December 31, 2000 LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, (In thousands, except share data) 2001 2000 - ----------------------------------------------------------------------------------------------------------------------------------- (Unaudited) LIABILITIES Non-interest bearing transaction accounts $ 228,233 $ 213,312 Interest bearing transaction accounts and savings deposits 465,872 471,609 Time deposits 936,953 920,665 ----------- ----------- Total deposits 1,631,058 1,605,586 Federal funds purchased and securities sold under agreements to repurchase 94,990 67,250 Short-term debt 10,204 4,070 Long-term debt 44,491 41,681 Accrued interest and other liabilities 19,239 20,563 ----------- ----------- Total liabilities 1,799,982 1,739,150 ----------- ----------- STOCKHOLDERS' EQUITY Capital stock Class A, common, par value $1 a share, authorized 30,000,000 shares, 7,101,045 issued and outstanding at 2001 and 7,180,966 at 2000 7,101 7,181 Surplus 45,918 47,964 Undivided profits 124,224 118,232 Accumulated other comprehensive income Unrealized appreciation (depreciation) on available-for-sale securities, net of income taxes of $792 at 2001 and income tax credit of $20 at 2000 1,320 (34) ----------- ----------- Total stockholders' equity 178,563 173,343 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,978,545 $ 1,912,493 ========== ==========
See Condensed Notes to Consolidated Financial Statements.
Simmons First National Corporation Consolidated Statements of Income Three Months and Six Months Ended June 30, 2001 and 2000 Three Months Ended Six Months Ended June 30, June 30, (In thousands, except per share data) 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ (Unaudited) (Unaudited) INTEREST INCOME Loans $28,368 $26,019 $57,529 $50,745 Federal funds sold and securities purchased under agreements to resell 504 565 1,143 917 Investment securities 5,261 5,966 10,961 11,873 Mortgage loans held for sale, net of unrealized gains (losses) 267 121 439 239 Assets held in trading accounts 2 65 9 83 Interest bearing balances due from banks 354 238 689 380 ------- ------- ------- ------- TOTAL INTEREST INCOME 34,756 32,974 70,770 64,237 ------- ------- ------- ------- INTEREST EXPENSE Deposits 16,284 15,028 33,362 28,332 Federal funds purchased and securities sold under agreements to repurchase 690 624 1,747 1,334 Short-term debt 76 131 180 248 Long-term debt 840 889 1,659 1,775 ------- ------- ------- ------- TOTAL INTEREST EXPENSE 17,890 16,672 36,948 31,689 ------- ------- ------- ------- NET INTEREST INCOME 16,866 16,302 33,822 32,548 Provision for loan losses 1,967 1,925 3,820 3,645 ------- ------- ------- ------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 14,899 14,377 30,002 28,903 ------- ------- ------- ------- NON-INTEREST INCOME Trust income 1,249 1,290 2,656 2,504 Service charges on deposit accounts 2,307 1,905 4,408 3,632 Other service charges and fees 438 475 966 1,014 Income on sale of mortgage loans, net of commissions 813 391 1,437 756 Income on investment banking, net of commissions 178 87 340 175 Credit card fees 2,666 2,624 5,122 4,959 Other income 660 741 1,475 1,433 Gain on sale of securities, net -- -- -- -- ------- ------- ------- ------- TOTAL NON-INTEREST INCOME 8,311 7,513 16,404 14,473 ------- ------- ------- ------- NON-INTEREST EXPENSE Salaries and employee benefits 8,902 8,304 17,905 16,691 Occupancy expense, net 1,094 923 2,260 1,795 Furniture and equipment expense 1,338 1,274 2,674 2,555 Loss on foreclosed assets 87 77 162 128 Other operating expenses 5,425 4,672 10,662 9,361 ------- ------- ------- ------- TOTAL NON-INTEREST EXPENSE 16,846 15,250 33,663 30,530 ------- ------- ------- ------- INCOME BEFORE INCOME TAXES 6,364 6,640 12,743 12,846 Provision for income taxes 1,877 2,031 3,702 3,909 ------- ------- ------- ------- NET INCOME $ 4,487 $ 4,609 $ 9,041 $ 8,937 ====== ====== ====== ====== BASIC EARNINGS PER SHARE $ 0.63 $ 0.63 $ 1.27 $ 1.22 ====== ====== ====== ====== DILUTED EARNINGS PER SHARE $ 0.63 $ 0.63 $ 1.27 $ 1.22 ====== ====== ====== ======
See Condensed Notes to Consolidated Financial Statements.
Simmons First National Corporation Consolidated Statements of Cash Flows Six Months Ended June 30, 2001 and 2000 June 30, June 30, (In thousands) 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------------ (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 9,041 $ 8,937 Items not requiring (providing) cash Depreciation and amortization 3,825 3,253 Provision for loan losses 3,820 3,645 Net (accretion) amortization of investment securities (659) 214 Deferred income taxes (203) (629) Provision for foreclosed assets 130 103 Changes in Interest receivable 1,630 (304) Mortgage loans held for sale (12,523) (651) Assets held in trading accounts 965 998 Other assets 517 (387) Accrued interest and other liabilities (666) 1,264 Income taxes payable (455) 126 --------- --------- Net cash provided by operating activities 5,422 16,569 --------- --------- CASH FLOW FROM INVESTING ACTIVITIES Net originations of loans (8,086) (62,026) Purchase of premises and equipment, net (1,516) (2,857) Proceeds from sale of foreclosed assets 550 701 Proceeds from maturities of available-for-sale securities 139,985 73,635 Purchases of available-for-sale securities (94,125) (62,878) Proceeds from maturities of held-to-maturity securities 58,896 13,522 Purchases of held-to-maturity securities (86,504) (14,045) --------- --------- Net cash provided by (used in) investing activities 9,200 (53,948) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits 25,472 78,843 Net proceeds of short-term debt 6,134 1,471 Dividends paid (3,049) (2,859) Proceeds from issuance of long-term debt 4,085 -- Repayments of long-term debt (1,275) (2,085) Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase 27,740 (12,940) (Repurchase) issuance of common stock, net (2,126) 240 --------- --------- Net cash provided by financing activities 56,981 62,670 --------- --------- INCREASE IN CASH AND CASH EQUIVALENTS 71,603 25,291 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 111,135 81,205 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 182,738 $ 106,496 ======== ========
See Condensed Notes to Consolidated Financial Statements.
Simmons First National Corporation Consolidated Statements of Changes in Stockholders' Equity Six Months Ended June 30, 2001 and 2000 Accumulated Other Common Comprehensive Undivided (In thousands, except share data) Stock Surplus Income Profits Total - ------------------------------------------------------------------------------------------------------------------------------------ Balance, December 31, 1999 7,316 50,770 (3,900) 105,185 159,371 Comprehensive income Net income -- -- -- 8,937 8,937 Change in unrealized depreciation on available-for-sale securities, net of income taxes of $128 -- -- 214 -- 214 --------- Comprehensive income 9,151 Exercise of stock options - 18,600 shares 19 238 -- -- 257 Securities exchanged under stock option plan (1) (16) -- -- (17) Cash dividends declared - $0.39 per share -- -- -- (2,859) (2,859) --------- --------- --------- --------- --------- Balance, June 30, 2000 7,334 50,992 (3,686) 111,263 165,903 Comprehensive income Net income -- -- -- 9,932 9,932 Change in unrealized depreciation on available-for-sale securities, net of income taxes of $2,192 -- -- 3,652 -- 3,652 --------- Comprehensive income 13,584 Exercise of stock options - 7,200 shares 7 106 -- -- 113 Securities exchanged under stock option plan (3) (63) -- -- (66) Repurchase of common stock - 156,827 shares (157) (3,071) -- -- (3,228) Cash dividends declared - $0.41 per share -- -- -- (2,963) (2,963) --------- --------- --------- --------- --------- Balance, December 31, 2000 7,181 47,964 (34) 118,232 173,343 Comprehensive income Net income -- -- -- 9,041 9,041 Change in unrealized depreciation on available-for-sale securities, net of income taxes of $812 -- -- 1,354 -- 1,354 --------- Comprehensive income 10,395 Exercise of stock options - 45,900 shares 46 844 -- -- 890 Securities exchanged under stock option plan (5) (137) -- -- (142) Repurchase of common stock - 120,955 shares (121) (2,753) -- -- (2,874) Cash dividends declared - $0.43 per share -- -- -- (3,049) (3,049) --------- --------- --------- --------- --------- Balance, June 30, 2001 $ 7,101 $ 45,918 $ 1,320 $ 124,224 $ 178,563 ======== ======== ======== ======== ========
See Condensed Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1: BASIS OF PRESENTATION 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 results of operations for the period are not necessarily indicative of the results to be expected for the full year. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Form 10-K annual report for 2000 filed with the Securities and Exchange Commission. Earnings Per Share Basic earnings per share is computed based on the weighted average number of common shares outstanding during each year. Diluted earnings per share is computed using the weighted average common shares and all potential dilutive common shares outstanding during the period. The computation of per share earnings for the six months ended June 30, 2001 and 2000 is as follows:
(In thousands, except per share data) 2001 2000 - ------------------------------------------------------------------------------------------------------------------- Net Income $ 9,041 $ 8,937 -------- -------- Average common shares outstanding 7,104 7,327 Average common share stock options outstanding 29 22 --------- -------- Average diluted common shares 7,133 7,349 --------- -------- Basic earnings per share $ 1.27 $ 1.22 ======== ======= Diluted earnings per share $ 1.27 $ 1.22 ======== =======
NOTE 2: ACQUISITIONS On July 17, 2000, the Company expanded its coverage of Central and Northwest Arkansas with a $7.6 million cash purchase of two Conway and six Northwest Arkansas locations from First Financial Banc Corporation. Simmons First National Bank acquired the two offices in Conway and Simmons First Bank of Northwest Arkansas acquired the six offices in Northwest Arkansas. As of July 14, 2000, the eight locations combined had total loans of $71.8 million, total deposits of $71.0 million and net assets of $8.5 million. The total acquisition cost exceeded the fair value of tangible assets and liabilities acquired by $10.8 million. The intangible assets are being amortized using the straight-line method over 15 years. NOTE 3: INVESTMENT SECURITIES The amortized cost and fair value of investment securities that are classified as held-to-maturity and available-for-sale are as follows: June 30, December 31, 2001 2000 --------------------------------------------- ----------------------------------------- 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 $ 31,072 $ 569 $ -- $ 31,641 $ 21,923 $ 246 $ (8) $ 22,161 U.S. Government agencies 54,406 427 (8) 54,825 40,965 229 (145) 41,049 Mortgage-backed securities 9,005 117 (7) 9,115 11,065 46 (117) 10,994 State and political subdivisions 117,747 2,515 (78) 120,184 110,380 1,593 (594) 111,379 Other securities 129 -- -- 129 80 -- -- 80 --------- ------- ------ ---------- ---------- ------- ------- ---------- $ 212,359 $ 3,628 $ (93) $ 215,894 $ 184,413 $ 2,114 $ (864) $ 185,663 ========= ====== ===== ========= ========= ====== ====== ========= Available-for-Sale - ------------------ U.S. Treasury $ 19,766 $ 380 $ -- $ 20,146 $ 23,889 $ 160 $ (12) $ 24,037 U.S. Government agencies 119,193 956 (3) 120,146 157,434 167 (1,165) 156,436 Mortgage-backed securities 13,364 112 (66) 13,410 15,266 55 (140) 15,181 State and political subdivisions 6,441 269 -- 6,710 6,621 217 (17) 6,821 Other securities 8,659 814 -- 9,473 10,541 1,054 -- 11,595 ---------- ------- ------ ---------- ---------- ------- ------- ---------- $ 167,423 $ 2,531 $ (69) $ 169,885 $ 213,751 $ 1,653 $(1,334) $ 214,070 ========= ====== ===== ========= ========= ====== ====== =========
The carrying value, which approximates the market value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $279,076,000 at June 30, 2001 and $279,286,000 at December 31, 2000. The book value of securities sold under agreements to repurchase amounted to $32,200,000 and $34,235,000 for June 30, 2001 and December 31, 2000 respectively. Income earned on securities for the six months ended June 30, 2001 and 2000 is as follows:
(In thousands) 2001 2000 - ------------------------------------------------------------------------------------------------------------------- Taxable Held-to-maturity $ 2,768 $ 2,081 Available-for-sale 5,367 7,113 Non-taxable Held-to-maturity 2,646 2,505 Available-for-sale 180 174 --------- -------- Total $ 10,961 $ 11,873 ======== =======
Maturities of investment securities at June 30, 2001 are as follows:
Held-to-Maturity Available-for-Sale -------------------------- ------------------------- Amortized Fair Amortized Fair (In thousands) Cost Value Cost Value - ------------------------------------------------------------------------------------------------- One year or less $ 27,609 $ 27,765 $ 21,278 $ 21,546 After one through five years 127,182 128,817 109,662 110,662 After five through ten years 43,370 44,776 17,817 18,115 After ten years 14,069 14,407 10,007 10,089 Other securities 129 129 8,659 9,473 ----------- ----------- ----------- ---------- Total $ 212,359 $ 215,894 $ 167,423 $ 169,885 ========== ========== ========== =========
There were no gross realized gains or losses as of June 30, 2001 and 2000. Most of the state and political subdivision debt obligations are non-rated bonds and represent small, Arkansas issues, which are evaluated on an ongoing basis. NOTE 4: LOANS AND ALLOWANCE FOR LOAN LOSSES The various categories are summarized as follows:
June 30, December 31, (In thousands) 2001 2000 - ----------------------------------------------------------------------------------------------------------- Consumer Credit cards $ 187,880 $ 197,567 Student loans 71,619 67,145 Other consumer 186,246 192,595 Real estate Construction 73,348 69,169 Single family residential 236,776 244,377 Other commercial 284,521 287,170 Commercial Commercial 166,892 161,134 Agricultural 70,538 57,164 Financial institutions 6,146 2,339 Other 14,246 16,050 ------------- ------------ Total loans before allowance for loan losses $ 1,298,212 $ 1,294,710 ============ ===========
During the first six months of 2001, foreclosed assets held for sale increased $148,000 to $1,252,000 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 Company at June 30, 2001, were $247,000, $12,485,000 and $2,656,000, respectively, bringing the total of non-performing assets to $16,640,000. Transactions in the allowance for loan losses are as follows:
June 30, December 31, (In thousands) 2001 2000 - ------------------------------------------------------------------------------------------------------------------ Balance, beginning of year $ 21,157 $ 17,085 Additions Provision charged to expense 3,820 3,645 --------- -------- 24,977 20,730 Deductions Losses charged to allowance, net of recoveries of $866 and $918 for the first six months of 2001 and 2000, respectively 3,756 2,728 --------- -------- Balance, June 30 $ 21,221 $ 18,002 ======== -------- Additions Allowance for loan losses of acquired branches 2,605 Provision charged to expense 3,886 -------- 24,493 Deductions Losses charged to allowance, net of recoveries of $767 for the last six months of 2000 3,336 -------- Balance, end of year $ 21,157 =======
At June 30, 2001 and December 31, 2000, impaired loans totaled $23,187,000 and $18,099,000, respectively. All impaired loans had designated reserves for possible loan losses. Reserves relative to impaired loans at June 30, 2001, were $5,104,000 and $3,070,000 at December 31, 2000. Approximately, $476,000 and $231,000 of interest income was recognized on average impaired loans of $21,030,000 and $11,468,000 as of June 30, 2001 and 2000, respectively. Interest recognized on impaired loans on a cash basis during the first six months of 2001 and 2000 was immaterial. NOTE 5: TIME DEPOSITS Time deposits include approximately $351,523,000 and $324,969,000 of certificates of deposit of $100,000 or more at June 30, 2001 and December 31, 2000, respectively. NOTE 6: INCOME TAXES The provision for income taxes is comprised of the following components:
June 30, June 30, (In thousands) 2001 2000 - -------------------------------------------------------------------------------------------------------- Income taxes currently payable $ 3,905 $ 4,538 Deferred income taxes (203) (629) ---------------- ---------------- Provision for income taxes $ 3,702 $ 3,909 =============== ================
The tax effects of temporary differences related to deferred taxes shown on the balance sheet are shown below:
June 30, December 31, (In thousands) 2001 2000 - ------------------------------------------------------------------------------------------------------- Deferred tax assets Allowance for loan losses $ 7,913 $ 7,696 Valuation of foreclosed assets 217 231 Deferred compensation payable 698 708 Deferred loan fee income 378 414 Vacation compensation 459 453 Mortgage servicing reserve 387 384 Loan interest 136 126 Available-for-sale securities -- 20 Other 142 127 ------------- ------------- Total deferred tax assets 10,330 10,159 ------------- ------------- Deferred tax liabilities Accumulated depreciation (1,496) (1,577) Available-for-sale securities (792) -- FHLB stock dividends (659) (590) Other (202) (202) ------------- ------------- Total deferred tax liabilities (3,149) (2,369) ------------- ------------- Net deferred tax assets included in other assets on balance sheets $ 7,181 $ 7,790 ============ ============
A reconciliation of income tax expense at the statutory rate to the Company's actual income tax expense is shown below:
June 30, June 30, (In thousands) 2001 2000 - ------------------------------------------------------------------------------------------------------- Computed at the statutory rate (35%) $ 4,460 $ 4,496 Increase (decrease) resulting from: Tax exempt income (1,104) (1,001) Other differences, net 346 414 ---------------- ---------------- Actual tax provision $ 3,702 $ 3,909 =============== ===============
NOTE 7: LONG-TERM DEBT Long-term debt at June 30, 2001 and December 31, 2000, consisted of the following components,
June 30, December 31, (In thousands) 2001 2000 - --------------------------------------------------------------------------------------------------- 7.32% note due 2007, unsecured $ 14,000 $ 14,000 9.75% note due 2008, secured by land and building -- 857 4.33% to 8.41% FHLB advances due 2001 to 2021, secured by residential real estate loans 13,241 9,574 Trust preferred securities 17,250 17,250 ------------- ------------- $ 44,491 $ 41,681 ============ ============
The Company owns a wholly owned grantor trust subsidiary (the Trust) to issue preferred securities representing undivided beneficial interests in the assets of the respective Trust and to invest the gross proceeds of such preferred securities into notes of the Company. The sole assets of the Trust are $17.8 million aggregate principal amount of the Company's 9.12% Subordinated Debenture Notes due 2027 which are redeemable beginning in 2002. Such securities qualify as Tier 1 Capital for regulatory purposes. Aggregate annual maturities of long-term debt at June 30, 2001 are:
Annual (In thousands) Year Maturities - ---------------------------------------------------------------------------------------------------- 2001 $ 2,428 2002 5,884 2003 2,824 2004 2,824 2005 2,893 Thereafter 27,638 ------------- Total $ 44,491 ============
NOTE 8: CONTINGENT LIABILITIES A number of legal proceedings exist in which the Company 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 Company and its subsidiaries. NOTE 9: UNDIVIDED PROFITS The subsidiary banks are subject to a legal limitation on dividends that can be paid to the parent company 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 75% of current year earnings plus 75% of the retained net earnings of the preceding year. At June 30, 2001, the bank subsidiaries had approximately $10 million available for payment of dividends to the Company 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 June 30, 2001, each of the eight subsidiary banks met the capital standards for a well-capitalized institution. The Company's "total risk-based capital" ratio was 13.53% at June 30, 2001. NOTE 10: STOCK OPTIONS AND RESTRICTED STOCK At June 30, 2001, the Company had stock options outstanding of 424,550 shares and stock options exercisable of 218,100 shares. During the first six months of 2001, there were 21,200 shares issued upon exercise of stock options and 210,300 additional stock options of the Company were granted. Also, 24,700 additional shares of common stock of the Company were granted and issued to executive officers of the Company as restricted stock, during the first six months of 2001. NOTE 11: ADDITIONAL CASH FLOW INFORMATION
Six Months Ended June 30, (In thousands) 2001 2000 - ------------------------------------------------------------------------------------- Interest paid $ 37,420 $ 31,512 Income taxes paid $ 4,360 $ 4,412
NOTE 12: CERTAIN TRANSACTIONS From time to time the Company and its subsidiaries have made loans and other extensions of credit to directors, officers, their associates and members of their immediate families. From time to time directors, officers and their associates and members of their immediate families have placed deposits with the Company's subsidiary banks. 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 13: COMMITMENTS AND CREDIT RISK The eight affiliate banks of the Company grant agribusiness, commercial, consumer, and residential loans to their customers. Included in the Company's diversified loan portfolio is unsecured debt in the form of credit card receivables that comprised approximately 14.5% and 15.3% of the portfolio, as of June 30, 2001 and December 31, 2000, 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 June 30, 2001, the Company had outstanding commitments to extend credit aggregating approximately $246,559,000 and $221,841,000 for credit card commitments and other loan commitments, respectively. At December 31, 2000, the Company had outstanding commitments to extend credit aggregating approximately $246,550,000 and $157,859,000 for credit card commitments and other loan commitments, respectively. Letters of credit are conditional commitments issued by the bank subsidiaries of the Company, 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 Company had total outstanding letters of credit amounting to $3,347,000 and $3,400,000 at June 30, 2001 and December 31, 2000, respectively, with terms ranging from 90 days to one year. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW - -------- Simmons First National Corporation recorded net income of $4,487,000, or $0.63 per diluted share for the quarter ended June 30, 2001. This compares with last year's second quarter earnings of $4,609,000, or $0.63 per diluted share. The Company's return on average assets and return on average stockholder's equity for the three-month period ended June 30, 2001, was 0.93% and 10.16%, compared to 1.06% and 11.23%, respectively, for the same period in 2000. Earnings for the six-month period ended June 30, 2001 were $9,041,000, or $1.27 diluted earnings per share. These earnings reflect an increase of $104,000, or $0.05 per share over the six-month period ended June 30, 2000 earnings of $8,937,000, or $1.22 diluted earnings per share. Return on average assets and return on average stockholders' equity for the six-month period ended June 30, 2001, was 0.95% and 10.36%, compared to 1.04% and 10.97%, respectively, for the same period in 2000. Because of the Company's previous cash acquisitions, cash earnings (net income excluding amortization of intangible assets) are an integral component of earnings. Diluted cash earnings for the second quarter of 2001 were $0.70 compared with $0.68 for the second quarter of 2000, reflecting a $0.02 increase. Year-to-date diluted cash earnings, on a per share basis, as of June 30, 2001, were $1.41, an increase of $0.08, or 6.0% when compared to $1.33 as of June 30, 2000. Cash return on average assets was 1.05% and cash return on average stockholders' equity was 11.32% for the second quarter of 2001, compared with 1.17% and 12.35%, respectively, for the same period in 2000. Cash return on average assets was 1.07% and cash return on average stockholders' equity was 11.58% for the six-month period ended June 30, 2001, compared with 1.15% and 12.09%, respectively, for the same period in 2000. Total assets for the Company at June 30, 2001, were $1.979 billion, an increase of $66 million over the same figure at December 31, 2000. Stockholders' equity at the end of the second quarter of 2001 was $178.6 million, a $5.2 million, or 3.0%, increase from December 31, 2000. During the first six months of 2001 the Company repurchased 120,955 common shares of stock. This stock repurchase decreased stockholders' equity by $2.9 million. Simmons First National Corporation is an Arkansas based, Arkansas committed, financial holding company, with community banks in Pine Bluff, Jonesboro, Lake Village, Dumas, Rogers, Russellville, Searcy and El Dorado, Arkansas. The Company's eight banks conduct financial operations from 64 offices in 33 communities throughout Arkansas. ACQUISITIONS - ------------ On July 17, 2000, the Company expanded its coverage of Central and Northwest Arkansas with a $7.6 million cash purchase of two Conway and six Northwest Arkansas locations from First Financial Banc Corporation. Simmons First National Bank acquired the two offices in Conway and Simmons First Bank of Northwest Arkansas acquired the six offices in Northwest Arkansas. As of July 14, 2000, the eight locations combined had total loans of $71.8 million, total deposits of $71.0 million and net assets of $8.5 million. The total acquisition cost exceeded the fair value of tangible assets and liabilities acquired by $10.8 million. The intangible assets are being amortized using the straight-line method over 15 years. CONSOLIDATION OF SUBSIDIARIES - ----------------------------- During the second quarter of 2001, the Company made a strategic decision to consolidate the charters of its two smallest banking subsidiaries. The Company is planning to consolidate Simmons First Bank of Dumas into Simmons First Bank of South Arkansas during the fourth quarter of 2001. After the consolidation, Simmons First Bank of South Arkansas will have four banking locations in Southeast Arkansas, with assets totaling approximately $98 million. The Company remains committed to a community banking philosophy. This consolidation will not have a material impact on current or future earnings of the Company. CHANGE IN CONTROL AGREEMENTS. - ----------------------------- During the second quarter, the Company entered into Executive Severance Agreements with 21 of its key officers. These agreements are intended to give executives additional assurances concerning their continued employment in the event the Company were to engage in discussions concerning or consummate a transaction which involved a change in control of the Company. A change in control transaction includes a merger, share exchange, tender offer or cash purchase of at least 25% of the shares of the Company, if within two years after such transaction; there occurs a change in more than a majority of the board of directors. Management believes that it is in the best interests of the stockholders to provide certain assurances regarding continued employment of selected key officers to better assure that the Company will be able to properly evaluate any proposed transaction and to continue the Company's operations during any transition period. The agreements, which are only effective for a period of up to two years after a change in control occurs, provide for severance benefits ranging from an amount equal to one year's annual salary to an amount equal to twice the executive's annual salary plus bonus but only if the executive separates from service under certain circumstances within the two year period. Management believes that any potential adverse effect that the existence of these agreements may have on a proposed change in control transaction is outweighed by the benefit to the Company of providing additional employment security to the key officers so that the Company may retain the services of its experienced officers in evaluating such an offer and continuing its operations either in its present from or following the consummation of such a change in control transaction. STOCK REPURCHASE - ---------------- On January 23, 2001, the Company announced the expansion of the stock repurchase program. This expansion authorized the repurchase of an additional 200,000 common shares. The expanded program now has authorized the repurchase of up to 400,000 common shares. Under the repurchase program, there is no time limit for the stock repurchases, nor is there a minimum number of shares the Company intends to repurchase. The Company may discontinue purchases at any time that management determines additional purchases are not warranted. The shares are to be purchased from time to time at prevailing market prices, through open market or unsolicited negotiated transactions, depending upon market conditions. The Company intends to use the repurchased shares to satisfy stock option exercise, payment of future stock dividends and general corporate purposes. During the six-month period ended June 30, 2001, the Company repurchased 120,955 common shares of stock with a weighted average repurchase price of $23.77 per share. As of June 30, 2001, the Company has repurchased a total of 277,782 common shares of stock with a weighted average repurchase price of $21.97 per share. The Company anticipates the repurchase program will have a positive impact on earnings per share of approximately $0.07 for 2001 year-to-date earnings. NET INTEREST INCOME - ------------------- Net interest income, the Company's principal source of earnings, is the difference between the interest income generated by earning assets and the total interest cost of the deposits and borrowings obtained to fund those assets. Factors that determine the level of net interest income include the volume of earning assets and interest bearing liabilities, yields earned and rates paid, the level of non-performing loans and the amount of non-interest bearing liabilities supporting earning assets. Net interest income is analyzed in the discussion and tables below on a fully taxable equivalent basis. The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate (37.50% for June 30, 2001 and 2000). For the three-month period ended June 30, 2001, net interest income on a fully taxable equivalent basis was $17.6 million, an increase of $619,000, or 3.6%, from the same period in 2000. The increase in net interest income was the result of a $1.8 million increase in interest income and a $1.2 million increase in interest expense. The increase in interest income was the result of growth in the loan portfolio, which was offset by a lower yield earned on earning assets. The increase in interest expense was the result of deposit growth, which was offset by a lower cost of funds. The net interest margin declined 23 basis points to 4.00% for the three-month period ended June 30, 2001, when compared to 4.23% for the same period in 2000. For the six-month period ended June 30, 2001, net interest income on a fully taxable equivalent basis was $35.4 million, an increase of $1.4 million, or 4.0%, from the same period in 2000. The increase in net interest income was the result of a $6.6 million increase in interest income and a $5.2 million increase in interest expense. The increase in interest income was the result of growth in the loan portfolio. The increase in interest expense was the result of a higher cost of funds and deposit growth. The net interest margin declined 24 basis points to 4.04% for the six-month period ended June 30, 2001, when compared to 4.28% for the same period in 2000. The decrease in net interest margins is the direct result of the interest rate volatility during the reporting periods. The Federal Reserve has decreased the discount rate by 275 basis points during the first half of the current year. The Federal Reserve's actions to decrease interest rates have negatively affected the net interest margin of Simmons First, as interest rates on earning assets have declined more rapidly than rates paid on interest bearing liabilities. More specifically, the negative impact on net interest margin is due in part to Arkansas's restrictive usury law. The usury law limits the interest rate the Company can charge on the loan portfolio to a maximum of five percentage points over the Federal Reserve discount rate, which has dropped significantly during the first six months of 2001. The most significant impact to net interest margin was in the credit card portfolio, which had to be repriced immediately after all reductions in the discount rate. The Company anticipates net interest margin will improve when interest rates stabilize and/or when the usury cap is lifted, which could be before year-end. Further decreases in interest rates may further compress interest margins, but stabilization in interest rates should begin the process of improving net interest margin. On November 11, 1999, the Gramm Leach Bliley Act was adopted by Congress and signed by the President. This Act included a provision which would set the maximum interest rate on loans made in Arkansas, by banks with Arkansas as their Home State, at the greater of the rate authorized by Arkansas law or the highest rate permitted by any of the out-of-state banks which maintain branches in Arkansas. This added flexibility in establishing the maximum interest rate will enable the Company to manage interest rate risk more effectively. An action was brought in the Western District of Arkansas, attacking the validity of the statute in 2000. Subsequently, the District Court issued a decision upholding the statute. The case is currently on appeal to the Eighth Circuit Court of Appeals. The matter was briefed and submitted to the Court in late spring of 2001. The parties were recently notified that the case had been designated for oral argument during September 2001. The Company is optimistic that the matter will be affirmed on appeal. However, until the appeal process is completed, the Company will continue to apply the Arkansas usury ceiling requiring it to lower the interest rate on its credit cards immediately after the Federal Reserve lowers the discount rate. Table 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the three-month and six-month periods ended June 30, 2001 and 2000, respectively, as well as changes in fully taxable equivalent net interest margin for the three-month and six-month periods ended June 30, 2001 versus June 30, 2000. Table 1: Analysis of Net Interest Income (FTE =Fully Taxable Equivalent)
Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------------------ Interest income $ 34,756 $ 32,974 $ 70,770 $ 64,237 FTE adjustment 787 732 1,537 1,438 ----------- ----------- ----------- ----------- Interest income - FTE 35,543 33,706 72,307 65,675 Interest expense 17,890 16,672 36,948 31,689 ----------- ----------- ----------- ----------- Net interest income - FTE $ 17,653 $ 17,034 $ 35,359 $ 33,986 ========== ========== ========== ========== Yield on earning assets - FTE 8.06% 8.36% 8.26% 8.27% Cost of interest bearing liabilities 4.72% 4.82% 4.90% 4.65% Net interest spread - FTE 3.34% 3.54% 3.36% 3.62% Net interest margin - FTE 4.00% 4.23% 4.04% 4.28%
Table 2: Changes in Fully Taxable Equivalent Net Interest Margin
Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2001 vs. 2000 2001 vs. 2000 - -------------------------------------------------------------------------------------------------------------------- Increase due to change in earning assets $ 3,132 $ 7,133 Decrease due to change in earning asset yields (1,295) (501) Decrease due to change in interest bearing liabilities (1,589) (3,833) Increase (decrease) due to change in interest rates paid on interest bearing liabilities 371 (1,426) ------------- ------------ Increase in net interest income $ 619 $ 1,373 ============ ===========
Table 3 shows, for each major category of earning assets and interest bearing liabilities, the average amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for the three-month and six-month periods ended June 30, 2001 and 2000. The table also shows the average rate earned on all earning assets, the average rate expensed on all interest bearing liabilities, the net interest spread and the net interest margin for the same periods. The analysis is presented on a fully taxable equivalent basis. Non-accrual loans were included in average loans for the purpose of calculating the rate earned on total loans. Table 3: Average Balance Sheets and Net Interest Income Analysis
Three Months Ended June 30, ---------------------------------------------------------------------- 2001 2000 --------------------------------- ----------------------------------- Average Income/ Yield/ Average Income/ Yield/ (In thousands) Balance Expense Rate(%) Balance Expense Rate(%) - ------------------------------------------------------------------------------------------------------------------- ASSETS - ------ Earning Assets Interest bearing balances due from banks $ 33,943 $ 354 4.18 $ 14,935 $ 238 6.41 Federal funds sold 47,674 504 4.24 36,277 565 6.26 Investment securities - taxable 260,941 3,825 5.88 296,027 4,623 6.28 Investment securities - non-taxable 118,943 2,223 7.50 112,157 2,075 7.44 Mortgage loans held for sale 17,913 267 5.98 6,612 121 7.36 Assets held in trading accounts 246 2 3.26 3,372 65 7.75 Loans 1,289,129 28,368 8.83 1,152,127 26,019 9.08 ----------- --------- ----------- --------- Total interest earning assets 1,768,789 35,543 8.06 1,621,507 33,706 8.36 --------- --------- Non-earning assets 156,764 134,963 ----------- ----------- Total assets $ 1,925,553 $ 1,756,470 ========== ========== LIABILITIES AND - --------------- STOCKHOLDERS' EQUITY - -------------------- Liabilities Interest bearing liabilities Interest bearing transaction and savings accounts $ 462,431 $ 2,683 2.33 $ 436,777 $ 3,102 2.86 Time deposits 938,592 13,601 5.81 854,321 11,926 5.61 ----------- --------- ----------- --------- Total interest bearing deposits 1,401,023 16,284 4.66 1,291,098 15,028 4.68 Federal funds purchased and securities sold under agreement to repurchase 69,294 690 3.99 44,748 624 5.61 Other borrowed funds Short-term debt 6,885 76 4.43 9,696 131 5.43 Long-term debt 42,323 840 7.96 44,190 889 8.09 ----------- --------- ----------- --------- Total interest bearing liabilities 1,519,525 17,890 4.72 1,389,732 16,672 4.82 --------- --------- Non-interest bearing liabilities Non-interest bearing deposits 208,812 185,084 Other liabilities 20,058 16,634 ----------- ----------- Total liabilities 1,748,395 1,591,450 Stockholders' equity 177,158 165,020 ----------- ----------- Total liabilities and stockholders' equity $ 1,925,553 $ 1,756,470 ========== ========== Net interest spread 3.34 3.54 Net interest margin $ 17,653 4.00 $ 17,034 4.23 ======== ========
Six Months Ended June 30, ---------------------------------------------------------------------- 2001 2000 --------------------------------- ----------------------------------- Average Income/ Yield/ Average Income/ Yield/ (In thousands) Balance Expense Rate(%) Balance Expense Rate(%) - ------------------------------------------------------------------------------------------------------------------- ASSETS - ------ Earning Assets Interest bearing balances due from banks $ 29,597 $ 689 4.69 $ 12,456 $ 380 6.14 Federal funds sold 46,943 1,143 4.91 30,488 917 6.05 Investment securities - taxable 267,030 8,135 6.14 296,621 9,194 6.23 Investment securities - non-taxable 117,353 4,363 7.50 112,009 4,117 7.39 Mortgage loans held for sale 14,607 439 6.06 6,319 239 7.61 Assets held in trading accounts 468 9 3.88 2,349 83 7.11 Loans 1,288,384 57,529 9.00 1,136,481 50,745 8.98 ----------- --------- ----------- --------- Total interest earning assets 1,764,382 72,307 8.26 1,596,723 65,675 8.27 --------- --------- Non-earning assets 158,061 136,542 ----------- ----------- Total assets $ 1,922,443 $ 1,733,265 ========== ========== LIABILITIES AND - --------------- STOCKHOLDERS' EQUITY - -------------------- Liabilities Interest bearing liabilities Interest bearing transaction and savings accounts $ 462,224 $ 5,864 2.56 $ 439,721 $ 6,074 2.78 Time deposits 934,789 27,498 5.93 824,043 22,258 5.43 ----------- --------- ----------- --------- Total interest bearing deposits 1,397,013 33,362 4.82 1,263,764 28,332 4.51 Federal funds purchased and securities sold under agreement to repurchase 75,349 1,747 4.68 51,185 1,334 5.24 Other borrowed funds Short-term debt 6,523 180 5.56 10,183 248 4.90 Long-term debt 41,932 1,659 7.98 44,318 1,775 8.05 ----------- --------- ----------- --------- Total interest bearing liabilities 1,520,817 36,948 4.90 1,369,450 31,689 4.65 --------- --------- Non-interest bearing liabilities Non-interest bearing deposits 205,767 183,683 Other liabilities 19,829 16,265 ----------- ----------- Total liabilities 1,746,413 1,569,398 Stockholders' equity 176,030 163,867 ----------- ----------- Total liabilities and stockholders' equity $ 1,922,443 $ 1,733,265 ========== ========== Net interest spread 3.36 3.62 Net interest margin $ 35,359 4.04 $ 33,986 4.28 ======== ========
Table 4 shows changes in interest income and interest expense, resulting from changes in volume and changes in interest rates for the three-month and six-month month periods ended June 30, 2001 as compared to the prior period. The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates, in proportion to the relationship of absolute dollar amounts of the changes in rates and volume. Table 4: Volume/Rate Analysis
Three Months Ended June 30, Six Months Ended June 30, 2001 over 2000 2001 over 2000 --------------------------------- -------------------------------- (In thousands, on a fully Yield/ Yield/ taxable equivalent basis) Volume Rate Total Volume Rate Total - ------------------------------------------------------------------------------------------------------------------- Increase (decrease) in Interest income Interest bearing balances due from banks $ 220 $ (104) $ 116 $ 417 $ (108) $ 309 Federal funds sold 149 (210) (61) 426 (200) 226 Investment securities - taxable (526) (272) (798) (903) (156) (1,059) Investment securities - non-taxable 127 21 148 199 47 246 Mortgage loans held for sale 172 (26) 146 258 (58) 200 Assets held in trading accounts (39) (24) (63) (47) (27) (74) Loans 3,029 (680) 2,349 6,783 1 6,784 -------- -------- -------- ------- --------- -------- Total 3,132 (1,295) 1,837 7,133 (501) 6,632 -------- -------- ----- ------- --------- -------- Interest expense Interest bearing transaction and savings accounts 174 (593) (419) 300 (510) (210) Time deposits 1,208 467 1,675 3,152 2,088 5,240 Federal funds purchased and securities sold under agreements to repurchase 278 (212) 66 573 (160) 413 Other borrowed funds Short-term debt (34) (21) (55) (98) 30 (68) Long-term debt (37) (12) (49) (94) (22) (116) -------- -------- -------- ------- --------- ---- Total 1,589 (371) 1,218 3,833 1,426 5,259 -------- -------- -------- ------- --------- ----- Increase (decrease) in net interest income $ 1,543 $ (924) $ 619 $ 3,300 $ (1,927) $ 1,373 ======= ======= ======= ====== ======== =======
PROVISION FOR LOAN LOSSES - ------------------------- The provision for loan losses represents management's determination of the amount necessary to be charged against the current period's earnings, in order to maintain the allowance for loan losses at a level, which is considered adequate, in relation to the estimated risk inherent in the loan portfolio. The provision for the three-month period ended June 30, 2001 and 2000 was $2.0 million and $1.9 million, respectively. The provision for the six-month period ended June 30, 2001 and 2000 was $3.8 million and $3.6 million, respectively. The primary reason for these increases is the growth in the loan portfolio from June 30, 2000 to 2001. NON-INTEREST INCOME - ------------------- Total non-interest income was $8.3 million for the three-month period ended June 30, 2001, compared to $7.5 million for the same period in 2000. For the six-months ended June 30, 2001, non-interest income was $16.4 million, a 13.3% increase from the $14.5 million reported for the same period ended June 30, 2000. Non-interest income is principally derived from recurring fee income, which includes service charges, trust fees and credit card fees. Non-interest income also includes income on the sale of mortgage loans and investment banking profits. Table 5 shows non-interest income for the three-month and six-month periods ended June 30, 2001 and 2000, respectively, as well as changes in 2001 from 2000. Table 5: Non-Interest Income
Three Months Six Months Ended June 30, 2001 Ended June 30, 2001 -------------------- Change from --------------------- Change from (In thousands) 2001 2000 2000 2001 2000 2000 - ---------------------------------------------------------------------------------------------------------------------- Trust income $ 1,249 $ 1,290 $ (41) -3.18% $ 2,656 $ 2,504 $ 152 6.07% Service charges on deposit accounts 2,307 1,905 402 21.10 4,408 3,632 776 21.37 Other service charges and fees 438 475 (37) -7.79 966 1,014 (48) -4.73 Income on sale of mortgage loans, net of commissions 813 391 422 107.93 1,437 756 681 90.08 Income on investment banking, net of commissions 178 87 91 104.60 340 175 165 94.29 Credit card fees 2,666 2,624 42 1.60 5,122 4,959 163 3.29 Other income 660 741 (81) -10.93 1,475 1,433 42 2.93 -------- --------- -------- --------- --------- -------- Total non-interest income $ 8,311 $ 7,513 $ 798 10.62% $ 16,404 $ 14,473 $ 1,931 13.34% ======= ======== ======= ======== ======== =======
Recurring fee income for the three-month and six-month periods ended June 30, 2001 were $6.7 million and $13.2 million, an increase of approximately $400,000, or 5.8% and $1.0 million, or 8.6%, respectively, when compared with the same periods for 2000. These increases are primarily attributable to the growth in service charges on deposit accounts. The increase in service charges on deposit accounts for 2001 is the result of internal deposit growth, an improved fee structure and the acquisition completed during July 2000. Also, contributing to the six-month period ended recurring fee income growth was the increase in trust fees and credit cards fees. This increase in trust fees is primarily the result of growth in the number of trust relationships and an improved fee structure. The increase in credit card fees for 2001 is the result of growth in the credit card portfolio (June 30, 2000 to June 30, 2001). During the three-month and six-month periods ended June 30, 2001, income on the sale of mortgage loans increased $422,000 and $681,000 from the same periods during 2000. These increases were the result of a higher mortgage origination volume for 2001 compared to 2000. This increase in volume was primarily the result of the decline in mortgage interest rates during the first six months of 2001. NON-INTEREST EXPENSE - -------------------- Non-interest expense consists of salaries and employee benefits, occupancy, equipment, foreclosure losses and other expenses necessary for the operation of the Company. Management remains committed to controlling the level of non-interest expense, through the continued use of expense control measures that have been installed. The Company utilizes an extensive profit planning and reporting system involving all affiliates. Based on a needs assessment of the business plan for the upcoming year, monthly and annual profit plans are developed, including manpower and capital expenditure budgets. These profit plans are subject to extensive initial reviews and monitored by management on a monthly basis. Variances from the plan are reviewed monthly and, when required, management takes corrective action intended to ensure financial goals are met. Management also regularly monitors staffing levels at each affiliate, to ensure productivity and overhead are in line with existing workload requirements. Non-interest expense for the three-month and six-month periods ended June 30, 2001, were $16.8 million and $33.7 million, an increase of $1.6 million or 10.5% and $3.1 million or 10.3%, respectively, from the same periods in 2000. These increases reflect the acquisition completed during July 2000 and the normal increased cost of doing business. Table 6 below shows non-interest expense for the three-month and six-month periods ended June 2001 and 2000, respectively, as well as changes in 2001 from 2000. Table 6: Non-Interest Expense
Three Months Six Months Ended June 30 2001 Ended June 30 2001 -------------------- Change from --------------------- Change from (In thousands) 2001 2000 2000 2001 2000 2000 - ------------------------------------------------------------------------------------------------------------------------ Salaries and employee benefits $ 8,902 $ 8,304 $ 598 7.20% $ 17,905 $ 16,691 $ 1,214 7.27% Occupancy expense, net 1,094 923 171 18.53 2,260 1,795 465 25.91 Furniture and equipment expense 1,338 1,274 64 5.02 2,674 2,555 119 4.66 Loss on foreclosed assets 87 77 10 12.99 162 128 34 26.56 Other operating expenses Professional services 399 367 32 8.72 822 751 71 9.45 Postage 541 539 2 0.37 1,051 1,069 (18) -1.68 Telephone 386 341 45 13.20 766 678 88 12.98 Credit card expenses 447 422 25 5.92 871 826 45 5.45 Operating supplies 406 384 22 5.73 809 739 70 9.47 FDIC insurance 77 93 (16) -17.20 153 169 (16) -9.47 Amortization of intangibles 728 618 110 17.80 1,513 1,236 277 22.41 Other expense 2,441 1,908 533 27.94 4,677 3,893 784 20.14 -------- --------- -------- --------- --------- -------- Total non-interest expense $ 16,846 $ 15,250 $ 1,596 10.47% $ 33,663 $ 30,530 $ 3,133 10.26% ======= ======== ======= ======== ======== =======
EARNINGS/RATIOS EXCLUDING INTANGIBLES - ------------------------------------- Table 7 reconciles reported earnings to net income excluding intangible amortization (cash earnings) for the three-month and six-month periods ended June 30, 2001 and 2000. Table 8 presents the calculation of the cash return on assets and cash return on equity for the three-month and six-month periods ended June 30, 2001 and 2000. The Company specifically formulated these calculations and the results may not be comparable to similarly titled measures reported by other companies. Also, cash earnings are not entirely available for use by management. See the Consolidated Statements of Cash Flows and Condensed Notes to the Financial Statements for other information regarding funds available for use by management. Table 7: Earnings Excluding Intangibles and Merger-Related Expenses
For the Three Months For the Six Months ---------------------------------- ----------------------------------- Reported Intangible "Cash" Reported Intangible "Cash" (In thousands) Earnings Amortization Earnings Earnings Amortization Earnings - ---------------------------------------------------------------------------------------------------------------- Ended June 30, 2001 - ------------------- Income before income taxes $ 6,364 $ 728 $ 7,092 $ 12,743 $ 1,513 $ 14,256 Provision for income taxes 1,877 252 2,129 3,702 519 4,221 ---------- --------- --------- ---------- --------- --------- Net Income $ 4,487 $ 476 $ 4,963 $ 9,041 $ 994 $ 10,035 ========= ======== ======== ========= ======== ======== Basic earnings per common share $ 0.63 $ 0.07 $ 0.70 $ 1.27 $ 0.14 $ 1.41 ========= ======== ======== ========= ======== ======== Diluted earnings per common share $ 0.63 $ 0.07 $ 0.70 $ 1.27 $ 0.14 $ 1.41 ========= ======== ======== ========= ======== ======== Ended June 30, 2000 - ------------------- Income before income taxes $ 6,640 $ 618 $ 7,258 $ 12,846 $ 1,236 $ 14,082 Provision for income taxes 2,031 203 2,234 3,909 406 4,315 ---------- --------- --------- ---------- --------- --------- Net Income $ 4,609 $ 415 $ 5,024 $ 8,937 $ 830 $ 9,767 ========= ======== ======== ========= ======== ========= Basic earnings per common share $ 0.63 $ 0.05 $ 0.68 $ 1.22 $ 0.11 $ 1.33 ========= ======== ======== ========= ======== ======== Diluted earnings per common share $ 0.63 $ 0.05 $ 0.68 $ 1.22 $ 0.11 $ 1.33 ========= ======== ======== ========= ======== ========
Table 8: Ratios Excluding Intangibles and Merger-Related Expenses
Three Months Six Months Ended June 30, Ended June 30, ------------------------- --------------------------- (In thousands) 2001 2000 2001 2000 - -------------------------------------------------------------------------------------------------------- Cash ROA: A/(B-D)*(G/F) 1.05% 1.17% 1.07% 1.15% Cash ROE: A/(C-E) *(G/F) 11.32% 12.35% 11.58% 12.09% (A) Cash Earnings $ 4,963 $ 5,024 $ 10,035 $ 9,767 (B) Average total assets 1,925,553 1,756,470 1,922,443 1,733,265 (C) Average stockholders' equity 177,158 165,020 176,030 163,867 (D) Average total intangible assets 34,084 26,296 34,460 26,605 (E) Average intangible assets remaining in stockholders' equity 1,292 1,392 1,306 1,419 (F) Total days during the period 91 91 181 182 (G) Total days during the year 365 366 365 366
LOAN PORTFOLIO - -------------- The Company's loan portfolio averaged $1.288 billion and $1.136 billion during the first six months of 2001 and 2000, respectively. As of June 30, 2001, total loans were $1.298 billion, compared to $1.295 billion on December 31, 2000. The most significant components of the loan portfolio were loans to businesses (commercial loans and commercial real estate loans) and individuals (consumer loans, credit card loans and single-family residential real estate loans). The Company seeks to manage its credit risk by diversifying its loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral, obtaining and monitoring collateral, providing an adequate allowance for loan losses and regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose and industry and, in the case of credit card loans, which are unsecured, by geographic region. The Company seeks to use diversification within the loan portfolio to reduce credit risk, thereby minimizing the adverse impact on the portfolio, if weaknesses develop in either the economy or a particular segment of borrowers. Collateral requirements are based on credit assessments of borrowers and may be used to recover the debt in case of default. The Company uses the allowance for loan losses as a method to value the loan portfolio at its estimated collectible amount. Loans are regularly reviewed to facilitate the identification and monitoring of deteriorating credits. Consumer loans consist of credit card loans, student loans and other consumer loans. Consumer loans were $445.7 million at June 30, 2001, or 34.3% of total loans, compared to $457.3 million, or 35.3% of total loans at December 31, 2000. The consumer loan decrease from December 31, 2000 to June 30, 2001 is the result of the Company's lower credit card portfolio and other consumer loans. However, those lower levels were offset by an increase in student loans. The credit card portfolio decrease and the student loan increase was the result of seasonality in the Company's portfolio for those respective products. The decrease in other consumer loans is the result of a decline in the Company's indirect lending. Real estate loans consist of construction loans, single-family residential loans and commercial loans. Real estate loans were $594.6 million at June 30, 2001, or 45.8% of total loans, which is comparable to the $600.7 million, or 46.4% of total loans at December 31, 2000. Commercial loans consist of commercial loans, agricultural loans and financial institution loans. Commercial loans were $243.6 million at June 30, 2001, or 18.8% of total loans, compared to $220.6 million, or 17.0% of total loans at December 31, 2000. The commercial loan increase from December 31, 2000 to June 30, 2001 is the result of seasonality in the Company's agricultural loan portfolio and continued strong commercial loan demand. The amounts of loans outstanding at the indicated dates are reflected in Table 9, according to type of loan. Table 9: Loan Portfolio
June 30, December 31, (In thousands) 2001 2000 - -------------------------------------------------------------------------------------------- Consumer Credit cards $ 187,880 $ 197,567 Student loans 71,619 67,145 Other consumer 186,246 192,595 Real Estate Construction 73,348 69,169 Single family residential 236,776 244,377 Other commercial 284,521 287,170 Commercial Commercial 166,892 161,134 Agricultural 70,538 57,164 Financial institutions 6,146 2,339 Other 14,246 16,050 ------------- ------------- Total loans $ 1,298,212 $ 1,294,710 ============ ============
ASSET QUALITY - ------------- A loan is considered impaired when it is probable that the Company will not receive all amounts due according to the contracted terms of the loans. This includes loans past due 90 days or more, nonaccrual loans and certain loans identified by management. Non-performing loans are comprised of (a) nonaccrual loans, (b) loans that are contractually past due 90 days and (c) other loans for which terms have been restructured to provide a reduction or deferral of interest or principal, because of deterioration in the financial position of the borrower. The subsidiary banks recognize income principally on the accrual basis of accounting. When loans are classified as nonaccrual, the accrued interest is charged off and no further interest is accrued. Loans, excluding credit card loans, are placed on a nonaccrual basis either: (1) when there are serious doubts regarding the collectability of principal or interest, or (2) when payment of interest or principal is 90 days or more past due and either (i) not fully secured or (ii) not in the process of collection. If a loan is determined by management to be uncollectible, the portion of the loan determined to be uncollectible is then charged to the allowance for loan losses. Credit card loans are classified as impaired when payment of interest or principal is 90 days past due. Litigation accounts are placed on nonaccrual until such time as deemed uncollectible. Credit card loans are generally charged off when payment of interest or principal exceeds 180 days past due, but are turned over to the credit card recovery department, to be pursued until such time as they are determined, on a case-by-case basis, to be uncollectible. At June 30, 2001, impaired loans were $23.2 million compared to $18.1 million at December 31, 2000. The increase in impaired loans from December 31, 2000, primarily relates to the $4.1 million increase in non-performing loans and the additional $1.0 million of borrowers that are still performing, but for which management has internally identified as impaired. Management has evaluated the underlying collateral on these loans and has allocated specific reserves in order to absorb potential losses if the collateral were ultimately foreclosed. Table 10 presents information concerning non-performing assets, including nonaccrual and other real estate owned. Table 10: Non-performing Assets
June 30, December 31, (In thousands) 2001 2000 - ------------------------------------------------------------------------------------------ Nonaccrual loans $ 12,485 $ 8,212 Loans past due 90 days or more (principal or interest payments) 2,656 2,752 ------------- ------------- Total non-performing loans 15,141 10,964 ------------- ------------- Other non-performing assets Foreclosed assets held for sale 1,252 1,104 Other non-performing assets 247 196 ------------- ------------ Total other non-performing assets 1,499 1,300 ------------- ------------ Total non-performing assets $ 16,640 $ 12,264 ============ ============ Allowance for loan losses to period-end loans 1.63% 1.63% Allowance for loan losses to non-performing loans 140.16% 192.97% Non-performing loans to total loans 1.17% 0.85% Non-performing assets to total assets 0.84% 0.64%
Approximately $557,000 and $378,000 of interest income would have been recorded for the six-month periods ended June 30, 2001 and 2000, respectively, if the nonaccrual loans had been accruing interest in accordance with their original terms. There was no interest income on the nonaccrual loans recorded for the six-month periods ended June 30, 2001 and 2000. ALLOWANCE FOR LOAN LOSSES - ------------------------- An analysis of the allowance for loan losses is shown in Table 11. Table 11: Allowance for Loan Losses
(In thousands) 2001 2000 - ----------------------------------------------------------------------------------------------- Balance, beginning of year $ 21,157 $ 17,085 --------------- -------------- Loans charged off Credit card 2,157 1,588 Other consumer 1,198 1,059 Real estate 634 349 Commercial 633 650 ---------------- --------------- Total loans charged off 4,622 3,646 ---------------- --------------- Recoveries of loans previously charged off Credit card 260 231 Other consumer 388 357 Real estate 107 75 Commercial 111 255 ---------------- --------------- Total recoveries 866 918 ---------------- --------------- Net loans charged off 3,756 2,728 Provision for loan losses 3,820 3,645 ---------------- --------------- Balance, June 30 $ 21,221 $ 18,002 =============== -------------- Loans charged off Credit card 1,796 Other consumer 1,290 Real estate 257 Commercial 760 --------------- Total loans charged off 4,103 --------------- Recoveries of loans previously charged off Credit card 237 Other consumer 443 Real estate 17 Commercial 70 --------------- Total recoveries 767 --------------- Net loans charged off 3,336 Allowance for loan losses of acquired institutions 2,605 Provision for loan losses 3,886 --------------- Balance, end of year $ 21,157 ==============
The amount of provision to the allowance during the six-month periods ended June 30, 2001 and 2000, and for the year ended 2000, was based on management's judgment, with consideration given to the composition of the portfolio, historical loan loss experience, assessment of current economic conditions, past due loans and net losses from loans charged off for the last five years. It is management's practice to review the allowance on a monthly basis to determine whether additional provisions should be made to the allowance after considering the factors noted above. DEPOSITS - -------- Deposits are the Company's primary source of funding for earning assets. The Company offers a variety of products designed to attract and retain customers, with the primary focus on core deposits. Total deposits as of June 30, 2001, were $1.631 billion, compared to $1.606 billion on December 31, 2000. The increase in deposits from December 31, 2000 to June 30, 2001, is primarily attributable to an increase in large certificates of deposit from local markets. As of June 30, 2001, time deposits over $100,000 were $351.5 million, an increase of $26.5 million over the $325.0 million reported as of December 31, 2000. CAPITAL - ------- At June 30, 2001, total capital reached $178.6 million. Capital represents shareholder ownership in the Company -- the book value of assets in excess of liabilities. At June 30, 2001, the Company's equity to asset ratio was 9.02% compared to 9.06% at year-end 2000. This decrease in the equity to asset ratio was primarily attributable to the Company's stock repurchase program. The Federal Reserve Board's risk-based guidelines established a risk-adjusted ratio, relating capital to different categories of assets and off-balance sheet exposures, such as loan commitments and standby letters of credit. These guidelines place a strong emphasis on tangible stockholders' equity as the core element of the capital base, with appropriate recognition of other components of capital. At June 30, 2001, the leverage ratio and the Tier 1 capital ratio was 8.47% and 12.25%, respectively, while the Company's total risk-based capital ratio was 13.53%, all of which exceed the capital minimums established in the risk-based capital requirements. The Company's risk-based capital ratios at June 30, 2001 and December 31, 2000, are presented in Table 12. Table 12: Risk-Based Capital
June 30, December 31, (In thousands) 2001 2000 - ---------------------------------------------------------------------------------------------------------- Tier 1 capital Stockholders' equity $ 178,563 $ 173,343 Trust preferred securities 17,250 17,250 Intangible assets (33,698) (35,241) Unrealized (gain) loss on available- for-sale securities (1,320) 34 Other (898) (916) -------------- -------------- Total Tier 1 capital 159,897 154,470 -------------- -------------- Tier 2 capital Qualifying unrealized gain on available-for-sale equity securities 366 475 Qualifying allowance for loan losses 16,376 16,193 -------------- -------------- Total Tier 2 capital 16,742 16,668 -------------- -------------- Total risk-based capital $ 176,639 $ 171,138 ============= ============= Risk weighted assets $ 1,305,274 $ 1,290,494 ============= ============= Assets for leverage ratio $ 1,887,167 $ 1,837,163 ============= ============= Ratios at end of year Leverage ratio 8.47% 8.41% Tier 1 capital 12.25% 11.97% Total risk-based capital 13.53% 13.26% Minimum guidelines Leverage ratio 4.00% 4.00% Tier 1 capital 4.00% 4.00% Total risk-based capital 8.00% 8.00%
FORWARD-LOOKING STATEMENTS - -------------------------- Statements in this report that are not historical facts should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements of this type speak only as of the date of this report. By nature, forward-looking statements involve inherent risk and uncertainties. Various factors, including, but not limited to, economic conditions, credit quality, interest rates, loan demand and changes in the assumptions used in making the forward-looking statements, could cause actual results to differ materially from those contemplated by the forward-looking statements. Additional information on factors that might affect the Company's financial results is included in its annual report for 2000 (Form 10-K) filed with the Securities and Exchange Commission. REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS BKD, LLP Certified Public Accountants 200 East Eleventh Pine Bluff, Arkansas Board of Directors Simmons First National Corporation Pine Bluff, Arkansas We have reviewed the accompanying condensed consolidated balance sheet of SIMMONS FIRST NATIONAL CORPORATION as of June 30, 2001, and the related condensed consolidated statements of income for the three-month and six-month periods ended June 30, 2001 and 2000 and cash flows and changes in stockholders' equity for the six-month periods ended June 30, 2001 and 2000. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of 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 reviews, we are not aware of any material modifications that should be made to the condensed consolidated 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 in the United States of America, the consolidated balance sheet as of December 31, 2000, 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, 2001, 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, 2000, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ BKD, LLP BKD, LLP Pine Bluff, Arkansas July 31, 2001 Part II: Other Information Item 2. Changes in Securities. Recent Sales of Unregistered Securities. The following transactions are sales of unregistered shares of Class A Common Stock of the Company which were issued to executive and senior management officers upon the exercise of rights granted under (i)the Simmons First National Corporation Incentive and Non-qualified Stock Option Plan (ii) the Simmons First National Corporation Executive Stock Incentive Plan, or (iii) the Simmons First National Corporation Executive Stock Incentive Plan - 2001. No underwriters were involved and no underwriter's discount or commissions were involved. Exemption from registration is claimed under Section 4(2) of the Securities Act of 1933 as private placements. The Company received cash or exchanged shares of the Company's Class A Common Stock as the consideration for the transactions.
Number Identity(1) Date of Sale of Shares Price(2) Type of Transaction - ------------------------------------------------------------------------------------------------ 1 Officer April, 2001 600 9.6250 Incentive Stock Option 7 Officers May, 2001 21,700 0.0000 Restricted Stock 1 Officer May, 2001 100 21.1250 Incentive Stock Option 1 Officer June, 2001 3,000 1.0000 Bonus Stock 1 Officer June, 2001 6,000 8.2917 Incentive Stock Option 2 Officers June, 2001 1,200 15.8333 Incentive Stock Option 2 Officers June, 2001 600 20.5000 Incentive Stock Option 2 Officers June, 2001 600 25.6667 Incentive Stock Option - ------------- Notes: 1. The transactions are grouped to show sales of stock based upon exercises of rights by officers of the registrant or its subsidiaries under the stock plans, which occurred at the same price during a calendar month. 2. The per share price paid for incentive stock options represents the fair market value of the stock as determined under the terms of the Plan on the date the incentive stock option was granted to the officer. The per share price paid for shares issued under the Restricted Stock under the Simmons First National Corporation Executive Stock Incentive Plan - 2001 is set in the plan to be $0.00. The per share price paid for shares issued under the Bonus Stock under the Simmons First National Corporation Executive Stock Incentive Plan is set in the plan to be the par value of the Class A common stock, $1.00.
Item 4. Submission of Matters to a Vote of Security Holders. (a) The annual shareholders meeting of the Company was held on April 24, 2001. The matters submitted to the security holders for approval included setting the number of directors at seven (7) and the election of directors. (b) At the annual meeting, all seven (7) incumbent directors were re-elected by proxies solicited pursuant to Section 14 of the Securities Exchange Act of 1934, without any solicitation in opposition thereto. The following table shows the required analysis of the voting by security holders at the annual meeting:
Voting of Shares Broker Action For Against Abstain Non-Votes - ---------------------------------------------------------------------------------------------------------- Set Number of Directors 5,191,066 32,629 48,170 513,752 at seven (7)
Withhold Broker Director Election For Authority Non-Votes - ---------------------------------------------------------------------------------------- Hutt 5,250,463 21,406 513,751 Makris 5,193,950 21,406 570,264 May 5,250,088 21,781 513,751 Perdue 5,250,463 21,406 513,751 Ryburn 5,249,863 21,906 513,851 Trotter 5,249,963 22,006 513,651 Watkins 5,250,463 21,406 513,751
Broker Action For Against Abstain Non-Votes - ----------------------------------------------------------------------------------------------------------- Proposal to ratify and approve 4,825,930 246,166 199,772 513,754 the adoption of the Simmons First National Corporation Executive Stock Incentive Plan - 2001
Item 6. Exhibits and Reports on Form 8-K a) Exhibits Exhibit 10(a) - Executive Severance Agreement for J, Thomas May Exhibit 10(b) - Executive Severance Agreement for Barry L. Crow Exhibit 10(c) - Executive Severance Agreement for James P. Powell b) Reports on Form 8-K The registrant filed Form 8-K on April 19, 2001. The report contained the text of a press release issued by the registrant concerning the announcement of first quarter earnings. The registrant filed Form 8-K on June 1, 2001. The report contained the text of a press release issued by the registrant concerning the declaration of a quarterly cash dividend. 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: August 6, 2001 /s/ J. Thomas May ---------------------- --------------------------------------- J. Thomas May, Chairman, President and Chief Executive Officer Date: August 6, 2001 /s/ Barry L. Crow ---------------------- --------------------------------------- Barry L. Crow, Executive Vice President and Chief Financial Officer Form 10-Q Index to Exhibits ----------------- Exhibit Description - ------- ----------- 10(a) Executive Severance Agreement for J, Thomas May 10(b) Executive Severance Agreement for Barry L. Crow 10(c) Executive Severance Agreement for James P. Powell Exhibit 10(a) EXECUTIVE SEVERANCE AGREEMENT THIS EXECUTIVE SEVERANCE AGREEMENT (the "Agreement"), made and entered into on the 7th day ofJune, 2001, by and between Simmons First National Corporation (the "Company"), an Arkansas corporation, and J. Thomas May (the "Executive"). R E C I T A L S: The Company acknowledges that the Executive has significantly contributed to the growth and success of the Company and is expected to continue to do so. As a publicly held corporation, a Change in Control of the Company may occur with or without the approval of the Board of Directors of the Company ("Board"). The Board also recognizes that the possibility of such a Change in Control may contribute to uncertainty on the part of senior management resulting in distraction from their operating responsibilities or in the departure of senior management. The Board believes that outstanding management is critical to advancing the best interests of the Company and its shareholders. It is essential that the management of the Company's business be continued with a minimum of disruption during any proposed bid to acquire the Company or to engage in a business combination with the Company. The Company believes that the objective of securing and retaining outstanding management will be achieved if certain of the Company's senior management employees are given assurances of employment security so they will not be distracted by personal uncertainties and risks created by such circumstances. NOW, THEREFORE, in consideration of the mutual covenants and obligations herein and the compensation the Company agrees herein to pay the Executive, and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Executive agree as follows: ARTICLE 1 TERM OF AGREEMENT 1.1 Term. This Agreement shall become effective as of the date on which it is executed by the Company (the "Effective Date"). The Agreement shall be effective for thirty-six months (36) and will automatically be extended for twelve (12) months as of each anniversary date of the Effective Date (the "Agreement Term") unless the Agreement Term is terminated by the Company, upon written notification to the Executive, within thirty (30) days before an anniversary date of the Effective Date, that the Agreement will terminate as of last day of the Agreement Term as in effect immediately prior to such anniversary date. Unless the Company has effectively terminated this Agreement as prescribed above in this Section 1.1, in the event of a Change in Control, the Agreement Term shall be amended to twenty-four (24) months commencing upon the Change in Control Date and shall then expire at the end of such twenty-four (24) month period. 1.2 Change in Control, means if: (i) after the date of the Agreement, any person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of Company securities having 25% or more of the combined voting power of the then outstanding Company securities that may be cast for the election of the Company's directors (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases are directors at the time the purchases are made); or (ii) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these transactions, the persons who were directors of the Company before such transactions cease to constitute a majority of the Board, or any successor's board, within two years of the last of such transactions. 1.3 Control Change Date, means the date on which an event described in Section 1.2 occurs. If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such transactions. ARTICLE 2 TERMINATION OF EMPLOYMENT 2.1 General. Executive is entitled to receive Termination Compensation, as defined in Section 2.5, according to this Article if: (a) the Executive's employment is involuntarily terminated as specified in Section 2.2; or (b) the Executive voluntarily terminates employment as specified in Section2.3. 2.2 Termination by the Company. (a) Executive is entitled to receive Termination Compensation (as described in Section 2.5) if Executive's employment is terminated by the Company without Cause during an Agreement Term and on or after a Control Change Date. (b) Executive is entitled to receive Termination Compensation (as described in Section 2.5) if Executive's employment is terminated by the Company without Cause by reason of or after the occurrence of a Trigger Event (as defined in Section 2.4) during an Agreement Term and within the 180 days immediately preceding a Control Change Date. (c) Cause, means, for purposes of this Agreement, (i) willful and continued failure by the Executive to perform his duties as established by the Board of Directors of the Company; (ii) a material breach by the Executive of his fiduciary duties of loyalty or care to the Company; (iii) conviction of a felony; or (iv) willful, flagrant, deliberate and repeated infractions of material published policies and procedures of the Company of which the Executive has actual knowledge (the "Cause Exception"). If the Company desires to discharge the Executive under the Cause Exception, it shall give notice to the Executive as provided in Section 2.7 and the Executive shall have thirty (30) days after notice has been given to him in which to cure the reason for the Company's exercise of the Cause Exception. If the reason for the Company's exercise of the Cause Exception is timely cured by the Executive (as determined by a committee appointed by the Board of Directors), the Company's notice shall become null and void. 2.3 Voluntary Termination. (a) In the event a Change in Control occurs during an Agreement Term, the Executive shall have the right at any time during the twelve (12) months next following the Control Change Date to receive Termination Compensation without regard to the event or reason for his termination of employment, provided he elects in writing in a manner prescribed by the Company to receive such Termination Compensation. (b) In the event a Change in Control occurs during an Agreement Term, Executive is entitled to receive Termination Compensation if Executive voluntarily terminates employment within an Agreement Term and within six (6) months following the occurrence of a Trigger Event. 2.4 Trigger Event. A Trigger Event means, for purposes of this Agreement, the occurrence of any one of the following events: (a) the failure by the Board to reelect the Executive to a responsible executive position in the Company; (b) if after a Change in Control, the Company continues to exist as a separate corporation, the removal of the Executive from the Board or the failure of the Board to solicit the re-election of the Executive to the Board pursuant to the routine proxy solicitations for election of directors at its annual meeting of shareholders; (c) a material modification by the Board of the duties, functions responsibilities of the Executive without his consent; (d) the failure of the Company to permit the Executive to exercise such responsibilities as are consistent with the Executive's position and are of such a nature as are usually associated with such office of a corporation engaged in substantially the same business as the Company; (e) the Company requires the Executive to relocate his employment more than fifty (50) miles from his place of employment, without the consent of the Executive, excluding reasonably required business travel or temporary assignments for a reasonable period of time; (f) a reduction in Executive's compensation or benefits; or (g) the Company shall fail to make a payment when due to the Executive. 2.5 Termination Compensation. Termination Compensation equal to 2.00 times Executive's Base Period Income shall be paid in a single sum payment in cash or in common stock of the Company, at the election of the Executive. Payment of Termination Compensation to Executive shall be made on the later of the thirtieth (30th) business day after Executive's employment termination or the first day of the month following his employment termination. 2.6 Base Period Income. Executive's Base Period Income equals the sum of (i) his annual base salary as of Executive's termination date, and (ii) the greater of the average of any incentive bonus payable to Executive for the Company's last two completed fiscal years or the Executive's target bonus opportunity for the then current year under the Company's annual incentive plan. 2.7 Notice of Termination. Any termination by the Company under the Cause Exception or by the Executive shall be communicated by Notice of Termination to the other party hereto. A "Notice of Termination" shall be a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) in the case of terminations under 2.2 or 2.3 (b) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the termination date is other than the date of receipt of such notice, specifies the effective date of termination. ARTICLE 3 GROSS UP OF PAYMENTS In the event that any amounts required to be paid or distributed to the Executive from the Company, whether pursuant to this agreement or any other arrangement or agreement, shall constitute a parachute payment within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or any successor statutory provision ("Excess Parachute Payments") and the aggregate of such parachute payments and any other amounts or property otherwise required to be paid or distributed to the Executive by the Company would cause the Executive to be subject to the excise tax on excess parachute payments under Section 4999 of the Code, or any successor or similar provision thereof, the Company shall pay to the Executive such additional amounts as are necessary so that, after taking into account any tax imposed by such Section 4999 or any successor statutory provision, on any Excess Parachute Payments, as well as on payments made pursuant to this sentence, and any federal or state income taxes payable as a result of any payments due to the Executive pursuant to this sentence, the Executive is in the same after-tax position the Executive would have been in if such Section 4999 or any successor statutory provision did not apply and no payments were made pursuant to this sentence. ARTICLE 4 ATTORNEY'S FEES In the event that the Executive incurs any attorney's fees in protecting or enforcing his rights under this Agreement, the Company shall reimburse the Executive for such reasonable attorneys' fees and for any other reasonable expenses related thereto. Such reimbursement shall be made within thirty (30) days following final resolution of the dispute or occurrence giving rise to such fees and expenses. ARTICLE 5 WELFARE BENEFIT PLAN EQUIVALENTS 5.1 Continuation of Coverage of Welfare Benefit Plans. If the Executive is entitled to receive Termination Compensation under this Agreement, the Company shall maintain in full force and effect for the continued benefit of Executive and his eligible dependents, for a period of thirty-six (36) months following the date of termination, each Welfare Benefit Plan in which the Executive was entitled to participate immediately prior to the date of termination, at the benefit levels then in effect with the Executive and the Company sharing the cost of coverage in the same manner as in effect upon the Control Change Date. In the event that the Executive's continued participation in any such plan is not permitted thereunder, then the Company shall provide the Executive and his eligible dependents a benefit substantially similar to and no less favorable than the benefit provided under such plan immediately prior to such termination of coverage and the cost to the executive shall not exceed the cost which the Executive would have incurred had participation in the plan been permitted. At the termination of any period of coverage provided above, the Executive shall have the option to have assigned to him, at no cost and no apportionment of prepaid premiums, any assignable insurance owned by the Company and relating specifically to the Executive. In lieu of being provided with the benefits as described in the preceding sentence, the Executive may, at the Executive's election and sole discretion, require the Company to include in the Executive's Termination Compensation a lump sum amount equal to the value of the benefits described in the preceding sentence. 5.2 Optional Additional Continuation of Coverage. If the Executive is at least 55 years of age when he becomes entitled to receive Termination Compensation, then after the expiration of the period of extended coverage under the Welfare Benefit Plans as set forth in Section 5.1 above, the Company shall permit the Executive, at his option, to further continue participation in any Welfare Benefit Plan, if such Executive is not then eligible to participate in any other plan sponsored by the then current employer of the Executive or the Executive's spouse offering substantially similar benefits. The Executive's continued participation under this Section 5.2 shall (i) be at the sole cost and expense of the Executive, and (ii) shall terminate upon the earliest of (A) the Executive becoming eligible to participate in a plan sponsored by the current employer of the Executive or the Executive's spouse offering substantially similar benefits, (B) upon the date that the Executive is no longer eligible to participate in the Welfare Benefit Plan, or (C) the Executive and the executive's spouse becoming eligible for Medicare coverage. If the executive elects this continued coverage, the Company shall use its best efforts to cause the Welfare Benefit Plan to maintain the eligibility of the Executive to participate therein or make alternative arrangements to provide the Executive and his spouse coverage reasonably equivalent to that provided by the Welfare Benefit Plan at the equivalent cost to the Executive. 5.3 Welfare Benefit Plan. The term Welfare Benefit Plan as used in this Article 5 refers to any plan, fund or program as defined under Section 3(1) of the Employee Retirement Income Security Act ("ERISA"), which has been established and is maintained by the Company for the purpose of providing its employees or their beneficiaries, through the purchase of insurance or otherwise, medical, surgical, hospital care or benefits, or benefits in the event of sickness, accident, disability or death. ARTICLE 6 MITIGATION OF PAYMENT The Company and the Executive agree that, following the termination of employment by the Executive with Company, the Executive has no obligation to take any steps whatsoever to secure other employment and such failure by the Executive to search for or to find other employment upon termination from Company shall in no way impact the Executive's right to receive payment under any of the provisions of this Agreement. ARTICLE 7 DECISIONS BY COMPANY; FACILITY OF PAYMENT Any powers granted to the Board hereunder may be exercised by a committee, appointed by the Board, and such committee, if appointed, shall have general responsibility for the administration and interpretation of this Agreement. If the Board or the committee shall find that any person to whom any amount is or was payable hereunder is unable to care for his affairs because of illness or accident, or has died, then the Board or the committee, if it so elects, may direct that any payment due him or his estate (unless a prior claim therefore has been made by a duly appointed legal representative) or any part thereof be paid or applied for the benefit of such person or to or for the benefit of his spouse, children or other dependents, an institution maintaining or having custody of such person, any other person deemed by the Board or committee to be a proper recipient on behalf of such person otherwise entitled to payment, or any of them, in such manner and proportion as the Board or committee may deem proper. Any such payment shall be in complete discharge of the liability of the Company therefor. ARTICLE 8 INDEMNIFICATION The Company shall indemnify the Executive during his employment and thereafter to the maximum extent permitted by applicable law for any and all liability of the Executive arising out of, or in connection with, his employment by the Company or membership on the Board; provided, that in no event shall such indemnity of the Executive at any time during the period of his employment by the Company be less than the maximum indemnity provided by the Company at any time during such period to any other officer or director under an indemnification insurance policy or the bylaws or charter of the Company or by agreement. ARTICLE 9 SOURCE OF PAYMENTS; NO TRUST The obligations of the Company to make payments hereunder shall constitute an unsecured liability of the Company to the Executive. Such payments shall be from the general funds of the Company, and the Company shall not be required to establish or maintain any special or separate fund, or otherwise to segregate assets to assure that such payments shall be made, and neither the Executive nor his designated beneficiary shall have any interest in any particular asset of the Company by reason of its obligations hereunder. Nothing contained in this Agreement shall create or be construed as creating a trust of any kind or any other fiduciary relationship between the Company and the Executive or any other person. To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than the right of an unsecured creditor of the Company. ARTICLE 10 SEVERABILITY All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such invalid agreements or covenants were not contained herein. ARTICLE 11 ASSIGNMENT PROHIBITED This Agreement is personal to each of the parties hereto, and neither party may assign nor delegate any of his or its rights or obligations hereunder. Any attempt to assign any rights or delegate any obligations under this Agreement shall be void. ARTICLE 12 NO ATTACHMENT Except as otherwise provided in this Agreement or required by applicable law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy, or similar process or assignment by operation of law and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. ARTICLE 13 HEADINGS The headings of articles, paragraphs and sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. ARTICLE 14 GOVERNING LAW The parties intend that this Agreement and the performance hereunder and all suits and special proceedings hereunder shall be construed in accordance with and under and pursuant to the laws of the State of Arkansas, and that in any action, special proceeding or other proceeding that may be brought arising out of, in connection with, or by reason of this Agreement, the laws of the State of Arkansas, shall be applicable and shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which any action or special proceeding may be instituted. ARTICLE 15 BINDING EFFECT This Agreement shall be binding upon, and inure to the benefit of, the Executive and his heirs, executors, administrators and legal representatives and the Company and its permitted successors and assigns. ARTICLE 16 MERGER OR CONSOLIDATION The Company will not consolidate or merge into or with another corporation, or transfer all or substantially all of its assets to another corporation (the "Successor Corporation") unless the Successor Corporation shall assume this Agreement, and upon such assumption, the Executive and the Successor Corporation shall become obligated to perform the terms and conditions of this Agreement. ARTICLE 17 ENTIRE AGREEMENT This Agreement expresses the whole and entire agreement between the parties with referenced to the employment of the Executive and, as of the effective date hereof, supersedes and replaces any prior employment agreement, understanding or arrangement (whether written or oral) between the Company and the Executive. Each of the parties hereto has relied on his or its own judgment in entering into this Agreement. ARTICLE 18 NOTICES All notices, requests and other communications to any party under this Agreement shall be in writing and shall be given to such party at its address set forth below or such other address as such party may hereafter specify for the purpose by notice to the other party: (a) If to the Executive: J. Thomas May 2111 Country Club Lane Pine Bluff, Arkansas 71603 (b) If to the Company: Simmons First National Corporation ATTN.: Chairman 501 Main Street P. O. Box 7009 Pine Bluff, Arkansas 71611 Each such notice, request or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (ii) if given by any other means, when delivered at the address specified in this ARTICLE 18. ARTICLE 19 MODIFICATION OF AGREEMENT No waiver or modification of this Agreement or of any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith. No evidence of any waiver of modification shall be offered or received in evidence at any proceeding, arbitration, or litigation between the parties hereto arising out of or affecting this Agreement, or the rights or obligations of the parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid. The parties further agree that the provisions of this ARTICLE 19 may not be waived except as herein set forth. ARTICLE 20 TAXES To the extent required by applicable law, the Company shall deduct and withhold all necessary Social Security taxes and all necessary federal and state withholding taxes and any other similar sums required by laws to be withheld from any payments made pursuant to the terms of this Agreement. ARTICLE 21 RECITALS The Recitals to this Agreement are incorporated herein and shall constitute an integral part of this Agreement IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written. EXECUTIVE: /s/ J. Thomas May ------------------------------------- J. Thomas May SIMMONS FIRST NATIONAL CORPORATION By: /s/ Barry Crow Title: EVP & CFO Exhibit 10(b) EXECUTIVE SEVERANCE AGREEMENT THIS EXECUTIVE SEVERANCE AGREEMENT (the "Agreement"), made and entered into on the 7th day of June, 2001, by and between Simmons First National Corporation (the "Company"), an Arkansas corporation, and Barry Crow (the "Executive"). R E C I T A L S: The Company acknowledges that the Executive has significantly contributed to the growth and success of the Company and is expected to continue to do so. As a publicly held corporation, a Change in Control of the Company may occur with or without the approval of the Board of Directors of the Company ("Board"). The Board also recognizes that the possibility of such a Change in Control may contribute to uncertainty on the part of senior management resulting in distraction from their operating responsibilities or in the departure of senior management. The Board believes that outstanding management is critical to advancing the best interests of the Company and its shareholders. It is essential that the management of the Company's business be continued with a minimum of disruption during any proposed bid to acquire the Company or to engage in a business combination with the Company. The Company believes that the objective of securing and retaining outstanding management will be achieved if certain of the Company's senior management employees are given assurances of employment security so they will not be distracted by personal uncertainties and risks created by such circumstances. NOW, THEREFORE, in consideration of the mutual covenants and obligations herein and the compensation the Company agrees herein to pay the Executive, and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Executive agree as follows: ARTICLE 1 TERM OF AGREEMENT 1.1 Term. This Agreement shall become effective as of the date on which it is executed by the Company (the "Effective Date"). The Agreement shall be effective for thirty-six months (36) and will automatically be extended for twelve (12) months as of each anniversary date of the Effective Date (the "Agreement Term") unless the Agreement Term is terminated by the Company upon written notification to the Executive, within thirty (30) days before an anniversary date of the Effective Date, that the Agreement will terminate as of last day of the Agreement Term as in effect immediately prior to such anniversary date. Unless the Company has effectively terminated this Agreement as prescribed above in this Section 1.1, in the event of a Change in Control, the Agreement Term shall be amended to twenty-four (24) months commencing upon the Change in Control Date and shall then expire at the end of such twenty-four (24) month period. 1.2 Change in Control, means if: (i) after the date of the Agreement, any person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of Company securities having 25% or more of the combined voting power of the then outstanding Company securities that may be cast for the election of the Company's directors (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases are directors at the time the purchases are made); or (ii) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these transactions, the persons who were directors of the Company before such transactions cease to constitute a majority of the Board, or any successor's board, within two years of the last of such transactions. 1.3 Control Change Date, means the date on which an event described in Section 1.2 occurs. If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such transactions. ARTICLE 2 TERMINATION OF EMPLOYMENT 2.1 General. Executive shall be entitled to receive Termination Compensation, as defined in Section 2.5, according to this Article if: (a) the Executive's employment is involuntarily terminated as specified in Section 2.2, or (b) the Executive voluntarily terminates employment as specified in Section 2.3. 2.2 Termination by the Company. (a) Executive shall be entitled to receive Termination Compensation (as described in Section 2.5) if during an Agreement Term, Executive's employment is terminated by the Company without Cause by reason of or after the occurrence of a Trigger Event (as defined in Section 2.4) which occurs on or after a Control Change Date. (b) Executive shall be entitled to receive Termination Compensation (as described in Section 2.5) if during an Agreement Term, Executive's employment is terminated by the Company without Cause by reason of or after the occurrence of a Trigger Event (as defined in Section 2.4) which occurs within the 180 days immediately preceding a Control Change Date. (c) Cause, means, for purposes of this Agreement, (i) willful and continued failure by the Executive to perform his duties as established by the Board of Directors of the Company; (ii) a material breach by the Executive of his fiduciary duties of loyalty or care to the Company; (iii) conviction of a felony; or (iv) willful, flagrant, deliberate and repeated infractions of material published policies and procedures of the Company of which the Executive has actual knowledge (the "Cause Exception"). If the Company desires to discharge the Executive under the Cause Exception, it shall give notice to the Executive as provided in Section 2.7 and the Executive shall have thirty (30) days after notice has been given to him in which to cure the reason for the Company's exercise of the Cause Exception. If the reason for the Company's exercise of the Cause Exception is timely cured by the Executive (as determined by a committee appointed by the Board of Directors), the Company's notice shall become null and void. 2.3 Voluntary Termination. Executive shall be entitled to receive Termination Compensation (as defined in Section 2.5) if a Change in Control occurs during an Agreement Term, and the Executive voluntarily terminates employment during an Agreement Term and within six (6) months following the occurrence of a Trigger Event. 2.4 Trigger Event. A Trigger Event means, for purposes of this Agreement, the occurrence of any one of the following events: (a) the failure by the Board to reelect or appoint the Executive to a position with duties, functions and responsibilities substantially equivalent to the position held by the Executive on the Control Change Date; (b) a material modification by the Board of the duties, functions responsibilities of the Executive without his consent; (c) the failure of the Company to permit the Executive to exercise such responsibilities as are consistent with the Executive's position and are of such a nature as are usually associated with such office of a corporation engaged in substantially the same business as the Company; (d) the Company requires the Executive to relocate his employment more than fifty (50) miles from his place of employment, without the consent of the Executive, excluding reasonably required business travel or temporary assignments for a reasonable period of time; (e) a reduction in Executive's compensation or benefits; or (f) the Company shall fail to make a payment when due to the Executive. 2.5 Termination Compensation. Termination Compensation equal to 1.50 times Executive's Base Period Income shall be paid in a single sum payment in cash or in common stock of the Company, at the election of the Executive. Payment of Termination Compensation to Executive shall be made on the later of the thirtieth (30th) business day after Executive's employment termination or the first day of the month following his employment termination. 2.6 Base Period Income. Executive's Base Period Income equals the sum of (i) his annual base salary as of Executive's termination date, and (ii) the greater of the average of any incentive bonus payable to Executive for the Company's last two completed fiscal years or the Executive's target bonus opportunity for the then current year under the Company's annual incentive plan 2.7 Notice of Termination. Any termination by the Company under the Cause Exception or by the Executive after a Trigger Event shall be communicated by Notice of Termination to the other party hereto. A "Notice of Termination" shall be a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the termination date is other than the date of receipt of such notice, specifies the effective date of termination. ARTICLE 3 ATTORNEY'S FEES In the event that the Executive incurs any attorney's fees in protecting or enforcing his rights under this Agreement, the Company shall reimburse the Executive for such reasonable attorneys' fees and for any other reasonable expenses related thereto. Such reimbursement shall be made within thirty (30) days following final resolution of the dispute or occurrence giving rise to such fees and expenses. ARTICLE 4 WELFARE BENEFIT PLAN EQUIVALENTS 4.1 Continuation of Coverage of Welfare Benefit Plans. If the Executive is entitled to receive Termination Compensation under this Agreement, the Company shall maintain in full force and effect for the continued benefit of Executive and his eligible dependents, for a period of thirty-six (36) months following the date of termination, each Welfare Benefit Plan in which the Executive was entitled to participate immediately prior to the date of termination, at the benefit levels then in effect with the Executive and the Company sharing the cost of coverage in the same manner as in effect upon the Control Change Date. In the event that the Executive's continued participation in any such plan is not permitted thereunder, then the Company shall provide the Executive and his eligible dependents a benefit substantially similar to and no less favorable than the benefit provided under such plan immediately prior to such termination of coverage and the cost to the executive shall not exceed the cost which the Executive would have incurred had participation in the plan been permitted. At the termination of any period of coverage provided above, the Executive shall have the option to have assigned to him, at no cost and no apportionment of prepaid premiums, any assignable insurance owned by the Company and relating specifically to the Executive. In lieu of being provided with the benefits as described in the preceding sentence, the Executive may, at the Executive's election and sole discretion, require the Company to include in the Executive's Termination Compensation a lump sum amount equal to the value of the benefits described in the preceding sentence. 4.2 Optional Additional Continuation of Coverage. If the Executive is at least 55 years of age when he becomes entitled to receive Termination Compensation, then after the expiration of the period of extended coverage under the Welfare Benefit Plans as set forth in Section 4.1 above, the Company shall permit the Executive, at his option, to further continue participation in any Welfare Benefit Plan, if such Executive is not then eligible to participate in any other plan sponsored by the then current employer of the Executive or the Executive's spouse offering substantially similar benefits. The Executive's continued participation under this Section 4.2 shall (i) be at the sole cost and expense of the Executive, and (ii) shall terminate upon the earliest of (A) the Executive becoming eligible to participate in a plan sponsored by the current employer of the Executive or the Executive's spouse offering substantially similar benefits, (B) upon the date that the Executive is no longer eligible to participate in the Welfare Benefit Plan, or (C) the Executive and the executive's spouse becoming eligible for Medicare coverage. If the executive elects this continued coverage, the Company shall use its best efforts to cause the Welfare Benefit Plan to maintain the eligibility of the Executive to participate therein or make alternative arrangements to provide the Executive and his spouse coverage reasonably equivalent to that provided by the Welfare Benefit Plan at the equivalent cost to the Executive. 4.3 Welfare Benefit Plan. The term Welfare Benefit Plan as used in this Article 4 refers to any plan, fund or program as defined under Section 3(1) of the Employee Retirement Income Security Act ("ERISA"), which has been established and is maintained by the Company for the purpose of providing its employees or their beneficiaries, through the purchase of insurance or otherwise, medical, surgical, hospital care or benefits, or benefits in the event of sickness, accident, disability or death. ARTICLE 5 MITIGATION OF PAYMENT The Company and the Executive agree that, following the termination of employment by the Executive with Company, the Executive has no obligation to take any steps whatsoever to secure other employment and such failure by the Executive to search for or to find other employment upon termination from Company shall in no way impact the Executive's right to receive payment under any of the provisions of this Agreement. ARTICLE 6 DECISIONS BY COMPANY; FACILITY OF PAYMENT Any powers granted to the Board hereunder may be exercised by a committee, appointed by the Board, and such committee, if appointed, shall have general responsibility for the administration and interpretation of this Agreement. If the Board or the committee shall find that any person to whom any amount is or was payable hereunder is unable to care for his affairs because of illness or accident, or has died, then the Board or the committee, if it so elects, may direct that any payment due him or his estate (unless a prior claim therefore has been made by a duly appointed legal representative) or any part thereof be paid or applied for the benefit of such person or to or for the benefit of his spouse, children or other dependents, an institution maintaining or having custody of such person, any other person deemed by the Board or committee to be a proper recipient on behalf of such person otherwise entitled to payment, or any of them, in such manner and proportion as the Board or committee may deem proper. Any such payment shall be in complete discharge of the liability of the Company therefor. ARTICLE 7 INDEMNIFICATION The Company shall indemnify the Executive during his employment and thereafter to the maximum extent permitted by applicable law for any and all liability of the Executive arising out of, or in connection with, his employment by the Company or membership on the Board; provided, that in no event shall such indemnity of the Executive at any time during the period of his employment by the Company be less than the maximum indemnity provided by the Company at any time during such period to any other officer or director under an indemnification insurance policy or the bylaws or charter of the Company or by agreement. ARTICLE 8 SOURCE OF PAYMENTS; NO TRUST The obligations of the Company to make payments hereunder shall constitute an unsecured liability of the Company to the Executive. Such payments shall be from the general funds of the Company, and the Company shall not be required to establish or maintain any special or separate fund, or otherwise to segregate assets to assure that such payments shall be made, and neither the Executive nor his designated beneficiary shall have any interest in any particular asset of the Company by reason of its obligations hereunder. Nothing contained in this Agreement shall create or be construed as creating a trust of any kind or any other fiduciary relationship between the Company and the Executive or any other person. To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than the right of an unsecured creditor of the Company. ARTICLE 9 SEVERABILITY All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such invalid agreements or covenants were not contained herein. ARTICLE 10 ASSIGNMENT PROHIBITED This Agreement is personal to each of the parties hereto, and neither party may assign nor delegate any of his or its rights or obligations hereunder. Any attempt to assign any rights or delegate any obligations under this Agreement shall be void. ARTICLE 11 NO ATTACHMENT Except as otherwise provided in this Agreement or required by applicable law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy, or similar process or assignment by operation of law and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. ARTICLE 12 HEADINGS The headings of articles, paragraphs and sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. ARTICLE 13 GOVERNING LAW The parties intend that this Agreement and the performance hereunder and all suits and special proceedings hereunder shall be construed in accordance with and under and pursuant to the laws of the State of Arkansas, and that in any action, special proceeding or other proceeding that may be brought arising out of, in connection with, or by reason of this Agreement, the laws of the State of Arkansas, shall be applicable and shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which any action or special proceeding may be instituted. ARTICLE 14 BINDING EFFECT This Agreement shall be binding upon, and inure to the benefit of, the Executive and his heirs, executors, administrators and legal representatives and the Company and its permitted successors and assigns. ARTICLE 15 MERGER OR CONSOLIDATION The Company will not consolidate or merge into or with another corporation, or transfer all or substantially all of its assets to another corporation (the "Successor Corporation") unless the Successor Corporation shall assume this Agreement, and upon such assumption, the Executive and the Successor Corporation shall become obligated to perform the terms and conditions of this Agreement. ARTICLE 16 ENTIRE AGREEMENT This Agreement expresses the whole and entire agreement between the parties with referenced to the employment of the Executive and, as of the effective date hereof, supersedes and replaces any prior employment agreement, understanding or arrangement (whether written or oral) between the Company and the Executive. Each of the parties hereto has relied on his or its own judgment in entering into this Agreement. ARTICLE 17 NOTICES All notices, requests and other communications to any party under this Agreement shall be in writing and shall be given to such party at its address set forth below or such other address as such party may hereafter specify for the purpose by notice to the other party: (a) If to the Executive: Barry Crow 3906 King Richard Drive Pine Bluff, Arkansas 71603 (b) If to the Company: Simmons First National Corporation Attention: Chairman 501 Main Street P. O. Box 7009 Pine Bluff, Arkansas 71611 Each such notice, request or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (ii) if given by any other means, when delivered at the address specified in this ARTICLE 17. ARTICLE 18 MODIFICATION OF AGREEMENT No waiver or modification of this Agreement or of any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith. No evidence of any waiver of modification shall be offered or received in evidence at any proceeding, arbitration, or litigation between the parties hereto arising out of or affecting this Agreement, or the rights or obligations of the parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid. The parties further agree that the provisions of this ARTICLE 18 may not be waived except as herein set forth. ARTICLE 19 TAXES To the extent required by applicable law, the Company shall deduct and withhold all necessary Social Security taxes and all necessary federal and state withholding taxes and any other similar sums required by laws to be withheld from any payments made pursuant to the terms of this Agreement. ARTICLE 20 RECITALS The Recitals to this Agreement are incorporated herein and shall constitute an integral part of this Agreement IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written. EXECUTIVE: /s/ Barry Crow ------------------------------------- Barry Crow SIMMONS FIRST NATIONAL CORPORATION By: J. Thomas May Title: Chairman Exhibit 10(c) EXECUTIVE SEVERANCE AGREEMENT THIS EXECUTIVE SEVERANCE AGREEMENT (the "Agreement"), made and entered into on the 7th day ofJune, 2001, by and between Simmons First National Corporation (the "Company"), an Arkansas corporation, and Jim Powell (the "Executive"). R E C I T A L S: The Company acknowledges that the Executive has significantly contributed to the growth and success of the Company and is expected to continue to do so. As a publicly held corporation, a Change in Control of the Company may occur with or without the approval of the Board of Directors of the Company ("Board"). The Board also recognizes that the possibility of such a Change in Control may contribute to uncertainty on the part of senior management resulting in distraction from their operating responsibilities or in the departure of senior management. The Board believes that outstanding management is critical to advancing the best interests of the Company and its shareholders. It is essential that the management of the Company's business be continued with a minimum of disruption during any proposed bid to acquire the Company or to engage in a business combination with the Company. The Company believes that the objective of securing and retaining outstanding management will be achieved if certain of the Company's senior management employees are given assurances of employment security so they will not be distracted by personal uncertainties and risks created by such circumstances. NOW, THEREFORE, in consideration of the mutual covenants and obligations herein and the compensation the Company agrees herein to pay the Executive, and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Executive agree as follows: ARTICLE 1 TERM OF AGREEMENT 1.1 Term. This Agreement shall become effective as of the date on which it is executed by the Company (the "Effective Date"). The Agreement shall be effective for thirty-six months (36) and will automatically be extended for twelve (12) months as of each anniversary date of the Effective Date (the "Agreement Term") unless the Agreement Term is terminated by the Company upon written notification to the Executive, within thirty (30) days before an anniversary date of the Effective Date, that the Agreement will terminate as of last day of the Agreement Term as in effect immediately prior to such anniversary date. Unless the Company has effectively terminated this Agreement as prescribed above in this Section 1.1, in the event of a Change in Control, the Agreement Term shall be amended to twenty-four (24) months commencing upon the Change in Control Date and shall then expire at the end of such twenty-four (24) month period. 1.2 Change in Control, means if: (i) after the date of the Agreement, any person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of Company securities having 25% or more of the combined voting power of the then outstanding Company securities that may be cast for the election of the Company's directors (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases are directors at the time the purchases are made); or (ii) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these transactions, the persons who were directors of the Company before such transactions cease to constitute a majority of the Board, or any successor's board, within two years of the last of such transactions. 1.3 Control Change Date, means the date on which an event described in Section 1.2 occurs. If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such transactions. ARTICLE 2 TERMINATION OF EMPLOYMENT 2.1 General. Executive shall be entitled to receive Termination Compensation, as defined in Section 2.5, according to this Article if: (a) the Executive's employment is involuntarily terminated as specified in Section 2.2, or (b) the Executive voluntarily terminates employment as specified in Section 2.3. 2.2 Termination by the Company. (a) Executive shall be entitled to receive Termination Compensation (as described in Section 2.5) if during an Agreement Term, Executive's employment is terminated by the Company without Cause by reason of or after the occurrence of a Trigger Event (as defined in Section 2.4) which occurs on or after a Control Change Date. (b) Executive shall be entitled to receive Termination Compensation (as described in Section 2.5) if during an Agreement Term, Executive's employment is terminated by the Company without Cause by reason of or after the occurrence of a Trigger Event (as defined in Section 2.4) which occurs within the 180 days immediately preceding a Control Change Date. (c) Cause, means, for purposes of this Agreement, (i) willful and continued failure by the Executive to perform his duties as established by the Board of Directors of the Company; (ii) a material breach by the Executive of his fiduciary duties of loyalty or care to the Company; (iii) conviction of a felony; or (iv) willful, flagrant, deliberate and repeated infractions of material published policies and procedures of the Company of which the Executive has actual knowledge (the "Cause Exception"). If the Company desires to discharge the Executive under the Cause Exception, it shall give notice to the Executive as provided in Section 2.7 and the Executive shall have thirty (30) days after notice has been given to him in which to cure the reason for the Company's exercise of the Cause Exception. If the reason for the Company's exercise of the Cause Exception is timely cured by the Executive (as determined by a committee appointed by the Board of Directors), the Company's notice shall become null and void. 2.3 Voluntary Termination. Executive shall be entitled to receive Termination Compensation (as defined in Section 2.5) if a Change in Control occurs during an Agreement Term, and the Executive voluntarily terminates employment during an Agreement Term and within six (6) months following the occurrence of a Trigger Event. 2.4 Trigger Event. A Trigger Event means, for purposes of this Agreement, the occurrence of any one of the following events: (a) the failure by the Board to reelect or appoint the Executive to a position with duties, functions and responsibilities substantially equivalent to the position held by the Executive on the Control Change Date; (b) a material modification by the Board of the duties, functions responsibilities of the Executive without his consent; (c) the failure of the Company to permit the Executive to exercise such responsibilities as are consistent with the Executive's position and are of such a nature as are usually associated with such office of a corporation engaged in substantially the same business as the Company; (d) the Company requires the Executive to relocate his employment more than fifty (50) miles from his place of employment, without the consent of the Executive, excluding reasonably required business travel or temporary assignments for a reasonable period of time; (e) a reduction in Executive's compensation or benefits; or (f) the Company shall fail to make a payment when due to the Executive. 2.5 Termination Compensation. Termination Compensation equal to 1.50 times Executive's Base Period Income shall be paid in a single sum payment in cash or in common stock of the Company, at the election of the Executive. Payment of Termination Compensation to Executive shall be made on the later of the thirtieth (30th) business day after Executive's employment termination or the first day of the month following his employment termination. 2.6 Base Period Income. Executive's Base Period Income equals the sum of (i) his annual base salary as of Executive's termination date, and (ii) the greater of the average of any incentive bonus payable to Executive for the Company's last two completed fiscal years or the Executive's target bonus opportunity for the then current year under the Company's annual incentive plan. 2.7 Notice of Termination. Any termination by the Company under the Cause Exception or by the Executive after a Trigger Event shall be communicated by Notice of Termination to the other party hereto. A "Notice of Termination" shall be a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the termination date is other than the date of receipt of such notice, specifies the effective date of termination. ARTICLE 3 ATTORNEY'S FEES In the event that the Executive incurs any attorney's fees in protecting or enforcing his rights under this Agreement, the Company shall reimburse the Executive for such reasonable attorneys' fees and for any other reasonable expenses related thereto. Such reimbursement shall be made within thirty (30) days following final resolution of the dispute or occurrence giving rise to such fees and expenses. ARTICLE 4 WELFARE BENEFIT PLAN EQUIVALENTS 4.1 Continuation of Coverage of Welfare Benefit Plans. If the Executive is entitled to receive Termination Compensation under this Agreement, the Company shall maintain in full force and effect for the continued benefit of Executive and his eligible dependents, for a period of thirty-six (36) months following the date of termination, each Welfare Benefit Plan in which the Executive was entitled to participate immediately prior to the date of termination, at the benefit levels then in effect with the Executive and the Company sharing the cost of coverage in the same manner as in effect upon the Control Change Date. In the event that the Executive's continued participation in any such plan is not permitted thereunder, then the Company shall provide the Executive and his eligible dependents a benefit substantially similar to and no less favorable than the benefit provided under such plan immediately prior to such termination of coverage and the cost to the executive shall not exceed the cost which the Executive would have incurred had participation in the plan been permitted. At the termination of any period of coverage provided above, the Executive shall have the option to have assigned to him, at no cost and no apportionment of prepaid premiums, any assignable insurance owned by the Company and relating specifically to the Executive. In lieu of being provided with the benefits as described in the preceding sentence, the Executive may, at the Executive's election and sole discretion, require the Company to include in the Executive's Termination Compensation a lump sum amount equal to the value of the benefits described in the preceding sentence. 4.2 Optional Additional Continuation of Coverage. If the Executive is at least 55 years of age when he becomes entitled to receive Termination Compensation, then after the expiration of the period of extended coverage under the Welfare Benefit Plans as set forth in Section 4.1 above, the Company shall permit the Executive, at his option, to further continue participation in any Welfare Benefit Plan, if such Executive is not then eligible to participate in any other plan sponsored by the then current employer of the Executive or the Executive's spouse offering substantially similar benefits. The Executive's continued participation under this Section 4.2 shall (i) be at the sole cost and expense of the Executive, and (ii) shall terminate upon the earliest of (A) the Executive becoming eligible to participate in a plan sponsored by the current employer of the Executive or the Executive's spouse offering substantially similar benefits, (B) upon the date that the Executive is no longer eligible to participate in the Welfare Benefit Plan, or (C) the Executive and the executive's spouse becoming eligible for Medicare coverage. If the executive elects this continued coverage, the Company shall use its best efforts to cause the Welfare Benefit Plan to maintain the eligibility of the Executive to participate therein or make alternative arrangements to provide the Executive and his spouse coverage reasonably equivalent to that provided by the Welfare Benefit Plan at the equivalent cost to the Executive. 4.3 Welfare Benefit Plan. The term Welfare Benefit Plan as used in this Article 4 refers to any plan, fund or program as defined under Section 3(1) of the Employee Retirement Income Security Act ("ERISA"), which has been established and is maintained by the Company for the purpose of providing its employees or their beneficiaries, through the purchase of insurance or otherwise, medical, surgical, hospital care or benefits, or benefits in the event of sickness, accident, disability or death. ARTICLE 5 MITIGATION OF PAYMENT The Company and the Executive agree that, following the termination of employment by the Executive with Company, the Executive has no obligation to take any steps whatsoever to secure other employment and such failure by the Executive to search for or to find other employment upon termination from Company shall in no way impact the Executive's right to receive payment under any of the provisions of this Agreement. ARTICLE 6 DECISIONS BY COMPANY; FACILITY OF PAYMENT Any powers granted to the Board hereunder may be exercised by a committee, appointed by the Board, and such committee, if appointed, shall have general responsibility for the administration and interpretation of this Agreement. If the Board or the committee shall find that any person to whom any amount is or was payable hereunder is unable to care for his affairs because of illness or accident, or has died, then the Board or the committee, if it so elects, may direct that any payment due him or his estate (unless a prior claim therefore has been made by a duly appointed legal representative) or any part thereof be paid or applied for the benefit of such person or to or for the benefit of his spouse, children or other dependents, an institution maintaining or having custody of such person, any other person deemed by the Board or committee to be a proper recipient on behalf of such person otherwise entitled to payment, or any of them, in such manner and proportion as the Board or committee may deem proper. Any such payment shall be in complete discharge of the liability of the Company therefor. ARTICLE 7 INDEMNIFICATION The Company shall indemnify the Executive during his employment and thereafter to the maximum extent permitted by applicable law for any and all liability of the Executive arising out of, or in connection with, his employment by the Company or membership on the Board; provided, that in no event shall such indemnity of the Executive at any time during the period of his employment by the Company be less than the maximum indemnity provided by the Company at any time during such period to any other officer or director under an indemnification insurance policy or the bylaws or charter of the Company or by agreement. ARTICLE 8 SOURCE OF PAYMENTS; NO TRUST The obligations of the Company to make payments hereunder shall constitute an unsecured liability of the Company to the Executive. Such payments shall be from the general funds of the Company, and the Company shall not be required to establish or maintain any special or separate fund, or otherwise to segregate assets to assure that such payments shall be made, and neither the Executive nor his designated beneficiary shall have any interest in any particular asset of the Company by reason of its obligations hereunder. Nothing contained in this Agreement shall create or be construed as creating a trust of any kind or any other fiduciary relationship between the Company and the Executive or any other person. To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than the right of an unsecured creditor of the Company. ARTICLE 9 SEVERABILITY All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such invalid agreements or covenants were not contained herein. ARTICLE 10 ASSIGNMENT PROHIBITED This Agreement is personal to each of the parties hereto, and neither party may assign nor delegate any of his or its rights or obligations hereunder. Any attempt to assign any rights or delegate any obligations under this Agreement shall be void. ARTICLE 11 NO ATTACHMENT Except as otherwise provided in this Agreement or required by applicable law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy, or similar process or assignment by operation of law and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. ARTICLE 12 HEADINGS The headings of articles, paragraphs and sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. ARTICLE 13 GOVERNING LAW The parties intend that this Agreement and the performance hereunder and all suits and special proceedings hereunder shall be construed in accordance with and under and pursuant to the laws of the State of Arkansas, and that in any action, special proceeding or other proceeding that may be brought arising out of, in connection with, or by reason of this Agreement, the laws of the State of Arkansas, shall be applicable and shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which any action or special proceeding may be instituted. ARTICLE 14 BINDING EFFECT This Agreement shall be binding upon, and inure to the benefit of, the Executive and his heirs, executors, administrators and legal representatives and the Company and its permitted successors and assigns. ARTICLE 15 MERGER OR CONSOLIDATION The Company will not consolidate or merge into or with another corporation, or transfer all or substantially all of its assets to another corporation (the "Successor Corporation") unless the Successor Corporation shall assume this Agreement, and upon such assumption, the Executive and the Successor Corporation shall become obligated to perform the terms and conditions of this Agreement. ARTICLE 16 ENTIRE AGREEMENT This Agreement expresses the whole and entire agreement between the parties with referenced to the employment of the Executive and, as of the effective date hereof, supersedes and replaces any prior employment agreement, understanding or arrangement (whether written or oral) between the Company and the Executive. Each of the parties hereto has relied on his or its own judgment in entering into this Agreement. ARTICLE 17 NOTICES All notices, requests and other communications to any party under this Agreement shall be in writing and shall be given to such party at its address set forth below or such other address as such party may hereafter specify for the purpose by notice to the other party: (a) If to the Executive: Jim Powell Highway 35 North Rison, Arkansas 71665 (b) If to the Company: Simmons First National Corporation Attention: Chairman 501 Main Street P. O. Box 7009 Pine Bluff, Arkansas 71611 Each such notice, request or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (ii) if given by any other means, when delivered at the address specified in this ARTICLE 17. ARTICLE 18 MODIFICATION OF AGREEMENT No waiver or modification of this Agreement or of any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith. No evidence of any waiver of modification shall be offered or received in evidence at any proceeding, arbitration, or litigation between the parties hereto arising out of or affecting this Agreement, or the rights or obligations of the parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid. The parties further agree that the provisions of this ARTICLE 18 may not be waived except as herein set forth. ARTICLE 19 TAXES To the extent required by applicable law, the Company shall deduct and withhold all necessary Social Security taxes and all necessary federal and state withholding taxes and any other similar sums required by laws to be withheld from any payments made pursuant to the terms of this Agreement. ARTICLE 20 RECITALS The Recitals to this Agreement are incorporated herein and shall constitute an integral part of this Agreement IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written. EXECUTIVE: /s/ Jim Powell ------------------------------------- Jim Powell SIMMONS FIRST NATIONAL CORPORATION By: /s/ J. Thomas May Title: Chairman -----END PRIVACY-ENHANCED MESSAGE-----