-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, et9Xzf83yU0Aj8gvlv7WWv8FHO33gO+7w6gW/R20/bR7IhI5gMQ9thPLOEdZ0nfl MRyf4F/SxQhHre12L2We0Q== 0000090498-94-000023.txt : 19941116 0000090498-94-000023.hdr.sgml : 19941116 ACCESSION NUMBER: 0000090498-94-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMMONS FIRST NATIONAL CORP CENTRAL INDEX KEY: 0000090498 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94558903 BUSINESS ADDRESS: STREET 1: PO BOX 7009 STREET 2: ATTN: TRUST SERVICES DIVISION CITY: PINE BLUFF STATE: AR ZIP: 71611-7009 BUSINESS PHONE: 5015411350 10-Q 1 SIMMONS FIRST NATIONAL CORPORATION ---------------------------------- Financial Statements -------------------- (Form 10-Q) ------------- September 30, 1994 ------------------- 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 September 30, 1994 Commission File Number 06253 ------------------ ----- SIMMONS FIRST NATIONAL CORPORATION - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Arkansas 71-0407808 - ----------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 501 Main Street Pine Bluff, Arkansas 71601 - ----------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 501-541-1350 -------------------------- Not Applicable - ----------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period) and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Indicate the number of shares outstanding of each of issuer's classes of securities. Class A, Common 3,677,378 Class B, Common None SIMMONS FIRST NATIONAL CORPORATION INDEX Page No. Part I: Summarized Financial Information Consolidated Balance Sheets -- September 30, 1994 and December 31, 1993 3-4 Consolidated Statements of Income -- Three months and nine months ended September 30, 1994 and 1993 5 Consolidated Statements of Cash Flows -- Nine months ended September 30, 1994 and 1993 6-7 Consolidated Statement of Changes in Stockholders' Equity -- Nine months ended September 30, 1994 and 1993 8 Notes to Consolidated Financial Statements 9-16 Management's Discussion and Analysis of Financial Condition and Results of Operations 17-18 Review by Independent Certified Public Accountants 19 Part I ------ A. Summarized Financial Information SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1994 AND DECEMBER 31, 1993 ASSETS -------
September 30, December 31, (Dollars in Thousands) 1994 1993 - ------------------------------------------------------------------------------------ (Unaudited) Cash and due from banks $ 31,456 $ 35,020 Federal funds sold and securities purchased under agreements to resell 21,190 14,070 ---------- ---------- Cash and cash equivalents 52,646 49,090 Investment securities (Note 6) Securities held to maturity 139,879 198,626 Securities available for sale 29,608 Mortgage loans held for delivery against commitments 24,220 47,775 Assets held in trading accounts 996 3,759 Loans 407,040 394,426 Allowance for loan losses (Note 5) (7,711) (7,430) ---------- ---------- Net loans (Note 5) 399,329 386,996 Premises and equipment 11,257 10,220 Foreclosed assets held for sale, net 1,956 2,877 Interest receivable 6,207 5,829 Other assets 26,417 33,588 ---------- ---------- Total Assets $ 692,515 $ 738,760 ========== ==========
The December 31, 1993 Consolidated Balance Sheet is as reported in the Corporation's 1993 Annual Report. See Notes to Consolidated Financial Statements. LIABILITIES AND STOCKHOLDERS' EQUITY -------------------------------------
September 30, December 31, (Dollars in Thousands) 1994 1993 - ------------------------------------------------------------------------------------ (Unaudited) Non-interest bearing transaction accounts $ 95,128 $ 135,468 Interest bearing transaction and savings deposits 232,517 224,730 Time deposits (Note 9) 239,496 250,157 ---------- ---------- Total Deposits 567,141 610,355 Federal funds purchased and securities sold under agreements to repurchase 14,359 26,347 Borrowed funds 19,522 17,191 Other liabilities 9,223 9,532 ---------- ---------- Total Liabilities 610,245 663,425 ---------- ---------- STOCKHOLDERS' EQUITY Capital stock Class A, common, par value $5 a share, authorized 10,000,000 shares; issued and outstanding 3,677,378 at 1993 and 1994 18,387 18,387 Surplus 19,827 19,827 Net unrealized gain (loss) on securities available for sale 554 Undivided profits (Note 10) 43,502 37,121 ---------- ---------- Total Stockholders' Equity $ 82,270 $ 75,335 ---------- ---------- Total Liabilities and Stockholders' Equity $ 692,515 $ 738,760 ========== ==========
The December 31, 1993 Consolidated Balance Sheet is as reported in the Corporation's 1993 Annual Report. See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
Three Months Ended Nine Months Ended September 30, September 30, (Dollars in thousands, except per share figures) 1994 1993 1994 1993 - ------------------------------------------------------------------------------------------------------- INTEREST INCOME Loans $ 8,093 $ 7,174 $ 22,595 $ 21,027 Federal funds sold and securities purchased under agreements to resell 183 142 588 584 Investment securities - taxable Held to maturity 1,419 2,479 4,342 7,924 Available for sale 678 2,261 Investment securities - non-taxable Held to maturity 673 663 2,066 1,934 Mortgage loans held for delivery against commitments 506 598 1,753 1,559 Trading account 19 16 76 138 Other interest 6 13 26 47 ------- ------- ------- ------- TOTAL INTEREST INCOME 11,577 11,085 33,707 33,213 ------- ------- ------- ------- INTEREST EXPENSE Deposits 3,652 3,521 10,482 10,765 Borrowed funds 503 374 1,335 1,298 ------- ------- ------- ------- TOTAL INTEREST EXPENSE 4,155 3,895 11,817 12,063 ------- ------- ------- ------- NET INTEREST INCOME 7,422 7,190 21,890 21,150 Provision for loan losses 525 714 1,575 2,292 NET INTEREST INCOME AFTER PROVISION ------- ------- ------- ------- FOR LOAN LOSSES 6,897 6,476 20,315 18,858 NON-INTEREST INCOME ------- ------- ------- ------- Trust income 437 477 1,288 1,345 Service charges on deposit accounts 550 580 1,657 1,719 Other service charges and fees 210 197 655 650 Income (loss) on sale of mortgage loans and trading account income, net of commissions (442) 600 652 1,740 Securities gains (losses) 74 70 130 91 Other operating income 5,332 4,722 14,815 13,725 ------- ------- ------- ------- TOTAL NON-INTEREST INCOME 6,161 6,646 19,197 19,270 NON-INTEREST EXPENSE ------- ------- ------- ------- Salaries and employee benefits 4,885 4,877 15,255 14,626 Net occupancy expense 530 490 1,549 1,434 Equipment expense 499 463 1,483 1,467 Other operating expense 3,438 3,787 10,622 10,982 ------- ------- ------- ------- TOTAL NON-INTEREST EXPENSE 9,352 9,617 28,909 28,509 ------- ------- ------- ------- NET INCOME BEFORE INCOME TAXES 3,706 3,505 10,603 9,619 Provision for income taxes (Note 8) 1,053 999 2,972 2,655 ------- ------- ------- ------- NET INCOME $ 2,653 $ 2,506 $ 7,631 $ 6,964 ======= ======= ======= ======= EARNINGS PER COMMON SHARE AVG $ 0.73 $ 0.68 $ 2.08 $ 2.13 ======= ======= ======= ======= DIVIDENDS PER COMMON SHARE $ 0.12 $ 0.10 $ 0.34 $ 0.30 ======= ======= ======= =======
See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
Nine Months Ended September 30, September 30, (Dollars in Thousands) 1994 1993 - --------------------------------------------------------------------------------------------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES (Note 3) Net Income $ 7,631 $ 6,964 Items not requiring (providing) cash Depreciation and amortization 1,260 1,320 Provision for loan losses 1,575 2,292 Amortization of premiums and accretion of discounts on investment securities and mortgage- backed certificates (124) 539 Provision for real estate owned losses 127 171 (Gain)/loss on sale of investments (130) (91) (Gain) on sale of premises and equipment (20) (15) Deferred income taxes (107) (419) Changes in: Accrued interest receivable (378) 722 Mortgage loans held for delivery against commitments 23,555 (14,395) Prepaid expenses 6,950 (1,303) Accounts payable and accrued expenses (1,572) 311 Income taxes payable 1,263 (501) Trading accounts 2,763 (40) -------- -------- Net cash provided (used) by operating activities 42,793 (4,445) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Net collection of loans (14,032) (12,395) Purchase of premises and equipment (2,446) (2,262) Proceeds from sale of fixed assets 498 605 Proceeds from the sale of real estate owned 918 615 Proceeds from maturing investment securities 70,513 88,146 Purchase of investment securities (40,567) (83,010) -------- -------- Net cash provided (used) by investing securities 14,884 (8,301) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in demand deposits, money market, all-in-one and savings accounts (32,553) 95,315 Net repayment of certificates of deposit (10,661) (107,309) Repayments of other borrowings (88,640) (89,558) Proceeds from other borrowings 90,971 91,253 Dividends paid (1,250) (1,022) Net (increase) federal funds purchased and securities sold under agreements to repurchase (11,988) (19,341) Sale of common stock 16,110 -------- -------- Net cash used in financing activities $ (54,121) $ (14,552) -------- --------
See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993 (Continued)
Nine Months Ended September 30, September 30, (Dollars in Thousands) 1994 1993 - --------------------------------------------------------------------------------------------- (Unaudited) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 3,556 $ (27,298) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 49,090 64,059 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 52,646 $ 36,761 ======== ========
See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
NET UNREALIZED GAIN (LOSS) COMMON SECURITIES UNDIVIDED (Dollars in Thousands) STOCK SURPLUS AFS PROFITS TOTAL - -------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1992 $ 14,362 $ 7,742 $ $ 29,115 $ 51,219 Sale of additional stock June 10, 1993 (805,000 shares at $22 per share) 4,025 12,085 16,110 Net income 6,964 6,964 Cash dividend declared (1,023) (1,023) --------- --------- --------- --------- --------- Balance, September 30, 1993 18,387 19,827 35,056 73,270 Net income 2,433 2,433 Cash dividends declared (368) (368) --------- --------- --------- --------- --------- Balance, December 31, 1993 18,387 19,827 37,121 75,335 Net unrealized gain (loss) on securities available for sale (SFAS 115 "Accounting for Certain Investments in Debt and Equity Securities", adopted January 1, 1994.) 554 554 Net income 7,631 7,631 Cash dividends declared (1,250) (1,250) --------- --------- --------- --------- --------- Balance, September 30, 1994 $ 18,387 $ 19,827 $ 554 $ 43,502 $ 82,270 ========= ========= ========= ========= =========
See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1: ACCOUNTING POLICIES The consolidated financial statements include the accounts of Simmons First National Corporation and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. All adjustments made to the unaudited financial statements were of a normal recurring nature. In the opinion of management, all adjustments necessary for a fair presentation of the results of interim periods have been made. Certain prior year amounts are reclassified to conform to current year classification. The accounting policies followed in the presentation of interim financial results are presented on pages 30-32 of the 1993 Annual Report to shareholders. NOTE 2: CONTINGENT LIABILITIES A number of legal proceedings exist in which the Corporation and/or its subsidiaries are either plaintiffs or defendants or both. Most of the lawsuits involve loan foreclosure activities. The various unrelated legal proceedings pending against the subsidiary banks in the aggregate are not expected to have a material adverse effect on the financial position of the Corporation and its subsidiaries. NOTE 3: ADDITIONAL CASH FLOW INFORMATION FOR NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
Nine Months Ended September 30, (Dollars in Thousands) 1994 1993 - --------------------------------------------------------------------- Interest paid $ 11,790 $ 12,240 Income taxes paid $ 3,209 $ 3,064
NOTE 4: CERTAIN TRANSACTIONS From time to time the Corporation and its subsidiaries have made loans and other extensions of credit to directors, officers, their associates and members of their immediate families, and from time to time directors, officers and their associates and members of their immediate families have placed deposits with Simmons First National Bank, Simmons First Bank of Lake Village, and Simmons First Bank of Jonesboro. 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 5: LOANS AND ALLOWANCE FOR LOAN LOSSES The various categories are summarized as follows:
September 30, December 31, (Dollars in Thousands) 1994 1993 - ----------------------------------------------------------------------------------------- Loans: Consumer: Credit card $ 157,670 $ 168,673 Student loan 56,544 65,379 Other consumer 40,433 36,763 Real estate: Construction 5,569 6,281 Single family residential 38,471 36,651 Other commercial 44,606 37,853 Commercial: Commercial 28,668 20,007 Agricultural 29,495 16,088 Financial institutions 2,936 3,087 Other 2,951 3,998 --------- --------- Total loans before unearned discount and allowances for loan losses 407,343 394,780 Unearned discount (303) (354) Allowance for loan losses (7,711) (7,430) --------- --------- $ 399,329 $ 386,996 ========= =========
September 30, December 31, (Dollars in Thousands) 1994 1993 - ---------------------------------------------------------------------------------------- Allowance for Loan Losses: Balance, beginning of year $ 7,430 $ 5,748 Additions Provision charged to expense 1,575 2,292 --------- --------- 9,005 8,040 Deductions Losses charged to allowance, net of recoveries of $300,000 and $324,000 for the first nine months of 1994 and 1993, respectively 1,294 1,165 --------- --------- Balance, September 30 $ 7,711 $ 6,875 ========= Additions Provision charged to expense 714 --------- 7,589 Deductions Losses charged to allowance, net of recoveries of $403,000 for the last three months of 1993 159 --------- Balance, end of year $ 7,430 =========
During the first quarter of 1994, foreclosed assets held for sale decreased to $1,956,000 and are carried at the lower of cost or fair market value. Nonaccrual loans and other non-performing assets for the Corporation at September 30, 1994, were $3,973,000 and $780,000, respectively, bringing the total of non-performing assets to $6,709,000. NOTE 6: INVESTMENT SECURITIES The amortized cost and fair value of investments in debt securities that are Held to Maturity and Available For Sale are as follows:
September 30, 1994 December 31, 1993 ---------------------------------------------------------------------------------------------------------- Gross Gross Gross Gross (Dollars in Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Thousands) Cost Gains (Losses) Value Cost Gains (Losses) Value - ---------------------------------------------------------------------------------------------------------------------------------- Held to Maturity U.S. Treasury $ 74,588 $ 1,134 $ (1,064) $ 74,658 $ 132,778 $ 5,599 $ (33) $ 138,344 U.S. Government agencies 11,386 105 (190) 11,301 13,215 546 (28) 13,733 Mortgage-backed securities 3,690 10 (197) 3,503 1,008 24 (10) 1,022 State and political subdivisions 50,215 847 (1,074) 49,988 49,438 2,680 (52) 52,066 Other securities 2,187 365 (1) 2,551 --------- --------- ---------- --------- ---------- --------- --------- ---------- $ 139,879 $ 2,096 $ (2,525) $ 139,450 $ 198,626 $ 9,214 $ (124) $ 207,716 ========= ========= ========== ========= ========== ========= ========= ========== Available For Sale U.S. Treasury $ 24,737 $ 412 $ (66) $ 25,083 U.S. Government agencies 1,503 25 1,528 Mortgage-backed securities State and political subdivisions Other securities 2,528 470 (1) 2,997 --------- --------- ---------- --------- $ 28,768 $ 907 $ (67) $ 29,608 ========= ========= ========== =========
Maturities of investment securities at September 30, 1994
Held to Maturity Available for Sale Amortized Fair Amortized Fair (Dollars in Thousands) Cost Value Cost Value - --------------------------------------------------------------------------------------------------------- One year of less $ 19,348 $ 19,348 $ 8,017 $ 8,151 After one through five years 70,750 70,664 18,223 18,460 After five through ten years 41,471 40,983 After ten years 4,620 4,952 Mortgage-backed securities not due on a single maturity date 3,690 3,503 Other securities 2,528 2,997 ----------- ---------- ----------- ----------- $ 139,879 $ 139,450 $ 28,768 $ 29,608 =========== ========== =========== ===========
The book value of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $73,792,000 at September 30, 1994, and $74,492,000 at December 31, 1993. The approximate fair value of pledged securities amounted to $74,422,000 at September 30, 1994 and $79,588,000 at December 31, 1993. The book value of securities sold under agreements to repurchase amounted to $2,494,000 and $152,000 for September 30, 1994 and December 31, 1993, respectively. As of January 1, 1994, the Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 115. "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires the classification of securities into one of three categories: Trading, Available for Sale, or Held to Maturity. Management will determine the appropriate classification of debt securities at the time of purchase and re-evaluate the classifications periodically. Trading account securities are used to provide inventory for resale. Debt securities are classified as held to maturity when the Corporation has the positive intent and ability to hold the securities to maturity. Securities not classified as held to maturity or trading are classified as available for sale. The following table shows the net change in the Net Unrealized Gain and Loss on Securities Available for Sale shown in the equity section of the Corporation's balance sheet:
Balance, January 1, 1994 $ 624 Net change for period (70) ---------- Balance, September 30, 1994 $ 554 ==========
The table below shows the mark-to-market adjustment made for the first nine months to the securities held in trading accounts:
Balance, December 31, 1993 $ 3,759 Net Securities traded (2,759) Mark-to-market adjustment (4) ---------- Balance, September 30, 1994 $ 996 ==========
During 1994 and 1993, there were no securities sold. The gross realized gains and losses shown in the table below were the result of called bonds.
September 30, December 31, (Dollars in Thousands) 1994 1993 - ------------------------------------------------------------------------ Proceeds from sales $ -- $ -- --------- --------- Gross gains 134 21 Gross losses 4 -- --------- --------- Securities gains (losses) $ 130 $ 21 ========= =========
Approximately 14 percent of the state and political subdivisions are rated A or above. Of the remaining securities, most are nonrated bonds and represent small, Arkansas issues, which are evaluated on an ongoing basis. NOTE 7: STOCK OPTIONS As of September 30, 1994, 63,000 shares of common stock of the Corporation had been granted through an employee stock option incentive plan. There were 40,400 exercisable shares at the end of the third quarter, none of which had been issued. NOTE 8: INCOME TAXES The provision for income taxes is comprised of the following components:
September 30, September 30, (Dollars in Thousands) 1994 1993 - ------------------------------------------------------------------------------ Income taxes currently payable $ 3,079 $ 3,074 Increase in future income tax benefits (107) (419) -------- -------- Provision for income taxes $ 2,972 $ 2,655 ======== ========
The tax effects of temporary differences related to deferred taxes shown on the balance sheet are:
September 30, December 31, (Dollars in Thousands) 1994 1993 - ------------------------------------------------------------------------------ Deferred tax assets: Allowance for loan losses $ 3,150 $ 2,929 Valuation adjustment of foreclosed assets held for sale 314 470 Deferred compensation payable 398 342 Deferred loan fee income 819 980 Other 807 706 -------- -------- Total deferred tax assets 5,488 5,427 ---------------- ----------------- Deferred tax liabilities: Accumulated depreciation (433) (389) -------- -------- Total deferred tax liabilities (433) (389) -------- -------- Net Deferred tax assets before valuation allowance $ 5,055 $ 5,038 ---------------- ----------------- Valuation allowance: Beginning balance (543) (466) Change during period (23) (98) -------- -------- Ending balance (566) (564) -------- -------- Net deferred tax asset $ 4,489 $ 4,474 ======== ========
A reconciliation of income tax expense at the statutory rate to the Corporation's actual income tax expense is shown below:
September 30, September 30, (Dollars in Thousands) 1994 1993 - ---------------------------------------------------------------------------------- Computed at the statutory rate (34%) $ 3,039 $ 3,271 Increase (decrease) resulting from: Tax exempt income (614) (663) Liquidation of foreclosed assets held for sale 457 Other difference, net 90 47 -------- -------- Actual tax provision $ 2,972 $ 2,655 ======== ========
NOTE 9: TIME DEPOSITS Time deposits include approximately $48,919,000 and $61,353,000 of certificates of deposit of $100,000 or more at September 30, 1994, and December 31, 1993, respectively. NOTE 10: UNDIVIDED PROFITS The subsidiary banks are subject to a legal limitation on dividends that can be paid to the parent corporation without prior approval of the applicable regulatory agencies. The approval of the Comptroller of the Currency is required, if the total of all dividends declared by a national bank in any calendar year exceeds the total of its net profits, as defined, for that year combined with its retained net profits of the preceding two years. Arkansas bank regulators have specified that the maximum dividend limit state banks may pay to the parent company without prior approval is 50% of current year earnings. At September 30, 1994, the bank subsidiaries had approximately $13.8 million available for payment of dividends to the Corporation without prior approval of the regulatory agencies. The Federal Reserve Board's risk-based capital guidelines require a minimum risk-adjusted ratio for total capital of 8% by the end of 1992. The Federal Reserve Board has further refined its guidelines to include the definitions for (1) a well-capitalized institution, (2) an adequately- capitalized institution, and (3) an undercapitalized institution. The criteria for a well-capitalized institution is 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 September 30, 1994, each of the three subsidiary banks met the capital standards for a well-capitalized institution. The Corporation's total capital to total risk-weighted assets ratio was 21.0% at September 30, 1994, well above the minimum required. NOTE 11: COMMITMENTS AND CREDIT RISK The three affiliate banks of the Corporation grant agribusiness, commercial, consumer, and residential loans to their customers. Included in the Corporation's diversified loan portfolio is unsecured debt in the form of credit card receivables that comprised approximately 38.7% and 42.8% of the portfolio, as of September 30, 1994 and December 31, 1993, 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 counter party. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate, and residential real estate. At September 30, 1994 and December 31, 1993, the Corporation had outstanding commitments to originate loans aggregating approximately $45,503,000 and $48,238,000, respectively. The commitments extended over varying periods of time, with the majority being disbursed within a one year period. Loan commitments at fixed rates of interest amounted to $16,601,000 and $12,025,000 at September 30, 1994 and December 31, 1993, respectively, with the remainder at floating market rates. Letters of credit are conditional commitments issued by the bank subsidiaries of the Corporation, to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Corporation had total outstanding letters of credit amounting to $821,000 and $820,000 at September 30, 1994 and December 31, 1993, respectively, with terms ranging from 90 days to one year. Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, upon extension of credit, is based on management's credit evaluation of the counter party. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate, and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on balance sheet instruments. At September 30, 1994, the Corporation had granted unused lines of credit to borrowers aggregating approximately $5,012,000 and $153,416,000 for commercial lines and open-end consumer lines, respectively. At December 31, 1993, unused lines of credit to borrowers aggregated approximately $3,615,000 for commercial lines and $132,140,000 for open-end consumer lines, respectively. Mortgage loans serviced for others totaled $1,311,043,000 and $1,395,424,000 at September 30, 1994 and December 31, 1993, respectively, of which mortgage-backed securities serviced totaled $1,097,842,000 and $1,123,747,000 at September 30, 1994 and December 31, 1993, respectively. Simmons First National Bank serviced VA loans subject to certain recourse provisions totaling approximately $159,573,000 and $187,338,000, at September 30, 1994 and December 31, 1993, respectively. A reserve was established for potential loss obligations, based on management's evaluation of historical losses, as well as prevailing and anticipated economic conditions, giving consideration for specific reserves. As of September 30, 1994 and December 31, 1993, this reserve balance was $210,000, and is included in other liabilities. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- Net income for the quarter ended September 30, 1994, was $2,653,000, an increase of $147,000, or 5.9%, over the same period of 1993. Earnings per share for the three month periods ended September 30, 1994 and September 30, 1993, were $.73 and $.68, respectively. Year-to-date earnings for 1994 were $7,631,000, an increase of $668,000 or 9.6%, over earnings of the first nine months of 1993. Per share earnings for the nine month periods ended September 30, 1994 and 1993, were $2.08 and $2.13, respectively. The Corporation's annualized return on average assets (ROA) for the three-month periods ended September 30, 1994 and 1993, were 1.51% and 1.40%, respectively. For the nine month periods ended September 30, 1994 and 1993, annualized ROA were 1.44% and 1.33%, respectively. Annualized return on equity (ROE) for the same nine-month periods were 12.86% and 14.85%, respectively. Net interest income, the difference between interest income and interest expense, for the three month period ended September 30, 1994, increased $232,000, or 3.2%, when compared to the same period in 1993. During the third quarter, interest income increased $492,000, or 4.4%, and interest expense increased $260,000, or 6.7%, when compared to the same period in 1993. Total interest income figures for the nine months ended September 30, 1994 and 1993, were $33,707,000 and $33,212,000, respectively. Total interest expense for this same period in 1994 decreased $246,000 to $11,817,000, resulting in a net interest income of $21,890,000, a 3.5% increase during the nine-month period in 1994, when compared to the same period figures of 1993. These increases in net interest income can be attributed to an increase in the Corporation's interest margin. Continued improvement in asset quality resulted in a reduction in the provision for loan losses for the third quarter of 1994, to $525,000, compared to $714,000 for the same period of 1993 resulting in a $189,000, or 26.5% decrease. The year-to-date provision for loan losses decreased $717,000, to $1,575,000 from $2,292,000 at September 30, 1993, a 31.3% reduction. A reduction of $485,000, in non-interest income during the third quarter of 1994 and $73,000 for the nine-month period as compared to the 1993 figures, is primarily attributable to a mortgage marketing loss of $626,000 and reduced profits in the dealer bank operation. The resulting reduced level of income for these two operations for the third quarter and nine-month period ended September 30, 1994, can be directly attributed to the negative impact of rising interest rates on the nation's mortgage and securities markets and a breach of company policy limiting the amount of open positions in mortgage marketing which led to increased exposure during this period. The overall reduction in mortgage income was partially offset by the scheduled sale of a portion of the Corporation's servicing rights, which resulted in a profit of $733,000. During the three months ended September 30, 1994, non-interest expense decreased $265,000, or 2.8%, over the same period in 1993, For the first nine months of 1994 and 1993, non-interest expense was $28,909,000 and $28,509,000, respectively. This $400,000, or 1.4% increase primarily reflects the normal increase in the costs of doing business. At September 30, 1994, total assets for the Corporation were $692,515,000, a decrease of $46,245,000, or 6.3%, from the same figure at December 31, 1993. Deposits at September 30, 1994, totaled $567,141,000, a decrease of $43,214,000 or 7.1%, from the same figure at December 31, 1993. Approximately, $30,264,000 of the decrease in non-interest bearing deposits is a direct result of the reduced level of mortgage refinancing attributed to rising interest rates. An additional $8,648,000 of the decrease in non- interest bearing deposits is the result of trust deposits for a bond called during the fourth quarter of 1993. Stockholders' equity at the end of the quarter was $82,270,000, an increase of $6,935,000, or 9.2%, from the December 31, 1993 figure. FINANCIAL CONDITION - ------------------- Generally speaking, the Corporation's banking subsidiaries rely upon net inflows of cash from financing activities, supplemented by net inflows of cash from operating activities, to provide cash used in their investing activities. As is typical of most banking companies, significant financing activities include: deposit gathering; use of short-term borrowing facilities, such as federal funds purchased and repurchase agreements; and the issuance of long-term debt. The banks' primary investing activities include loan originations and purchases of investment securities, offset by loan payoffs and investment maturities. Liquidity represents an institution's ability to provide funds to satisfy demands from depositors and borrowers, by either converting assets into cash or accessing new or existing sources of incremental funds. It is a major responsibility of management to maximize net interest income within prudent liquidity constraints. Internal corporate guidelines have been established to constantly measure liquid assets as well as relevant ratios concerning earning asset levels and purchased funds. Each bank subsidiary is also required to monitor these same indicators and report regularly to its own senior management and board of directors. At September 30, 1994, each bank was within established guidelines and total corporate liquidity was strong. At September 30, 1994, cash and due from banks, securities available for sale, and federal funds sold and securities purchased under agreements for resale were 11.9% of total assets. REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS BAIRD, KURTZ & DOBSON Certified Public Accountants 200 East Eleventh Pine Bluff, Arkansas Board of Directors Simmons First National Bank Pine Bluff, Arkansas We have made a review of the accompanying consolidated condensed financial statements, appearing on pages 3 to 8 of the accompanying Form 10-Q, of SIMMONS FIRST NATIONAL CORPORATION and consolidated subsidiaries as of September 30, 1994 and for the three month and nine month periods ended September 30, 1994 and 1993, in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an examination in accordance with generally accepted auditing standards, the objective which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1993, and the related consolidated statements of income, cash flows and changes in stockholders' equity for the year then ended (not presented herein) and in our report dated January 28, 1994, 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, 1993, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. BAIRD, KURTZ & DOBSON Pine Bluff, Arkansas November 3, 1994 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: 11-10-94 /s/W. E. Ayres -------------- -------------------------------------- W. E. Ayres Chairman of the Board Date: 11-10-94 /s/Barry L. Crow -------------- --------------------------------------- Barry L. Crow, Executive Vice President and Chief Financial Officer EX-27 2
9 0000090498 SIMMONS FIRST NATIONAL 1,000 9-MOS DEC-31-1994 SEP-30-1994 31,382 74 21,190 996 29,608 139,879 139,450 407,040 7,711 692,515 567,141 21,727 9,223 12,154 18,387 0 0 63,883 692,515 22,595 8,669 2,443 33,707 10,482 11,817 21,890 1,575 130 28,909 10,603 7,631 0 0 7,631 2.08 2.08 4.80 2,634 1,224 115 0 7,430 1,594 300 7,711 7,711 0 2,022
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