-----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, l7mBP5Zhj7b9smUiaH4iwLF4cWkHMeb3N7ukQkmQlQ7bY7+ZbvEO3IheTLbtkpJ2 rgbbofjsjgv+7yiuy0G9wg== 0000090498-95-000030.txt : 19950512 0000090498-95-000030.hdr.sgml : 19950512 ACCESSION NUMBER: 0000090498-95-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950511 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMMONS FIRST NATIONAL CORP CENTRAL INDEX KEY: 0000090498 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 710407808 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06253 FILM NUMBER: 95536737 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) ----------- March 31, 1995 -------------- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1995 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 Part I: Summarized Financial Information Consolidated Balance Sheets -- March 31, 1995 and December 31, 1994 3-4 Consolidated Statements of Income -- Three months ended March 31, 1995 and 1994 5 Consolidated Statements of Cash Flows -- Three months ended March 31, 1995 and 1994 6 Consolidated Statement of Changes in Stockholders' Equity -- Three months ended March 31, 1995 and 1994 7 Notes to Consolidated Financial Statements 8-16 Management's Discussion and Analysis of Financial Condition and Results of Operations 17-18 Review by Independent Certified Public Accountants 19 Part I ------ A. Summarized Financial Information SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS MARCH 31, 1995 AND DECEMBER 31, 1994 ASSETS ------
March 31, December 31, (Dollars in Thousands) 1995 1994 - ------------------------------------------------------------------------------------ (Unaudited) Cash and due from banks $ 27,043 $ 33,476 Interest-bearing balances due from banks 56 101 Federal funds sold and securities purchased under agreements to resell 31,200 40,425 ---------- ---------- Cash and cash equivalents 58,299 74,002 Investment securities-taxable (Note 2) Held-to-maturity 101,693 91,470 Available-for-sale 41,124 29,610 Investment securities-nontaxable Held-to-maturity 50,322 50,904 Mortgage loans held for delivery against commitments 8,277 8,720 Assets held in trading accounts 1,074 2,734 Loans-non-taxable 2,011 2,021 Loans-taxable 403,725 416,371 Allowance for loan losses (Note 3) (7,917) (7,790) ---------- ---------- Net loans (Note 3) 397,819 410,602 Premises and equipment 12,897 12,115 Foreclosed assets held for sale, net 1,551 1,730 Interest receivable 6,245 6,289 Cost of loan-servicing rights acquired 3,747 3,825 Excess of cost over fair value of net assets acquired, at amortized cost 2,374 2,392 Other assets 24,192 18,869 ---------- ---------- Total Assets $ 709,614 $ 713,262 ========== ==========
The December 31, 1994 Consolidated Balance Sheet is as reported in the Corporation's 1994 Annual Report. See Notes to Consolidated Financial Statements. LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------
March 31, December 31, (Dollars in Thousands) 1995 1994 - ------------------------------------------------------------------------------------ (Unaudited) Non-interest bearing transaction accounts $ 107,340 $ 109,564 Interest bearing transaction and savings deposits 215,689 228,649 Time deposits (Note 9) 257,840 245,325 ---------- ---------- Total Deposits 580,869 583,538 Federal funds purchased and securities sold under agreements to repurchase 20,870 23,931 Other borrowed funds: Short-term debt 612 1,621 Long-term debt 1,135 1,144 Capital notes 11,000 11,000 Other liabilities 9,411 8,328 ---------- ---------- Total Liabilities 623,897 629,562 ---------- ---------- STOCKHOLDERS' EQUITY Capital stock Class A, common, par value $5 a share, authorized 10,000,000 shares; issued and outstanding 3,677,378 18,387 18,387 Surplus 19,827 19,827 Net unrealized gain (loss) on securities available for sale 475 233 Undivided profits (Note 12) 47,028 45,253 ---------- ---------- Total Stockholders' Equity $ 85,717 $ 83,700 ---------- ---------- Total Liabilities and Stockholders' Equity $ 709,614 $ 713,262 ========== ==========
The December 31, 1994 Consolidated Balance Sheet is as reported in the Corporation's 1994 Annual Report. See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Three Months Ended March 31, (Dollars in thousands, except per share figures) 1995 1994 - --------------------------------------------------------------------------------------- INTEREST INCOME Loans $ 8,815 $ 7,150 Federal funds sold and securities purchased under agreements to resell 370 231 Investment securities - taxable Held to maturity 1,636 1,468 Available for sale 674 738 Investment securities - non-taxable Held to maturity 687 694 Mortgage loans held for delivery against commitments 144 611 Trading account 10 32 Other interest 26 11 --------- --------- TOTAL INTEREST INCOME 12,362 10,935 --------- --------- INTEREST EXPENSE Deposits Interest-bearing transaction accounts and savings deposits 1,349 1,217 Time deposits 2,987 2,167 Federal funds purchased and securities sold under agreements to repurchase 348 214 Other borrowed funds: Short-term debt 24 12 Long-term debt 28 32 Capital notes 231 161 --------- --------- TOTAL INTEREST EXPENSE 4,967 3,803 --------- --------- NET INTEREST INCOME 7,395 7,132 Provision for loan losses 449 525 --------- --------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 6,946 6,607 --------- --------- NON-INTEREST INCOME Trust income 418 455 Service charges on deposit accounts 599 548 Other service charges and fees 200 237 Income on sale of mortgage loans, net of commissions 92 210 Income on investment banking, net of commissions 123 565 Net realized gains on securities 1 19 Credit card fees 2,399 2,464 Loan servicing fees 1,386 1,985 Other operating income 745 473 --------- --------- TOTAL NON-INTEREST INCOME 5,963 6,956 --------- --------- NON-INTEREST EXPENSE Salaries and employee benefits 5,223 5,282 Net occupancy expense 532 480 Equipment expense 509 511 Loss on foreclosed assets 353 427 Other operating expense 3,073 3,238 --------- --------- TOTAL NON-INTEREST EXPENSE 9,690 9,938 --------- --------- NET INCOME BEFORE INCOME TAXES 3,219 3,625 Provision for income taxes (Note 8) 966 999 --------- --------- NET INCOME $ 2,253 $ 2,626 ========= ========= EARNINGS PER COMMON SHARE $ 0.61 $ 0.71 ========= ========= DIVIDENDS PER COMMON SHARE $ 0.13 $ 0.10 ========= =========
See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Three Months Ended March 31, March 31, (Dollars in Thousands) 1995 1994 - ------------------------------------------------------------------------------------------------ (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 2,253 $ 2,626 Items not requiring (providing) cash Depreciation and amortization 407 429 Provision for loan losses 449 525 Amortization of premiums and accretion of discounts on investment securities and mortgage- backed certificates (34) (72) Provision for foreclosed assets 40 53 Net realized gain on securities (1) (28) Gain on sale of premises and equipment -- (4) Deferred income taxes (127) (31) Changes in: Accrued interest receivable 44 47 Mortgage loans held for sale 443 12,845 Other assets 1,660 (7) Accounts payable and accrued expenses (5,191) 1,547 Income taxes payable 818 (798) Trading accounts 116 1,985 --------- --------- Net cash provided by operating activities 877 19,117 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Net collection of loans 12,371 21,844 Purchase of premises and equipment (1,098) (1,127) Proceeds from sale of fixed assets -- 405 Proceeds from the sale of foreclosed assets 102 578 Proceeds from maturities of available-for-sale securities 2,500 10,137 Purchases of available-for-sale securities (7,500) (4,541) Proceeds from maturities of held-to-maturity securities 12,994 5,785 Purchases of held-to-maturity securities (28,723) (18,165) --------- --------- Net cash provided by (used in) investing securities (9,354) 14,916 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in transactions accounts savings deposits (15,184) (7,819) Net issuance (repayment) of certificates of deposit 12,515 (6,917) Repayments of other borrowings (73,501) (235,530) Proceeds from other borrowings 72,483 232,644 Dividends paid (478) (368) Net increase in federal funds purchased and Securities sold under agreements to repurchase (3,061) (3,679) --------- --------- Net cash provided by financing activities (7,226) (21,669) --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (15,703) 12,364 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 74,002 49,090 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 58,299 $ 61,454 ========= =========
See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 1995 AND 1994
NET UNREALIZED GAIN (LOSS) COMMON SECURITIES UNDIVIDED (Dollars in Thousands except per share data) STOCK SURPLUS AFS PROFITS TOTAL - ----------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1993 $ 18,387 $ 19,827 $ $ 37,121 $ 75,335 Adoption of SFAS 115 "Accounting for Certain Investments in Debt and Equity Securities", January 1, 1994, net of income taxes of $487 946 946 Net income 2,626 2,626 Cash dividend declared ($.10 per share) (368) (368) Change in unrealized appreciation (depreciation) on available-for-sale securities, net of income tax credit of $133 (259) (259) ---------- ---------- ---------- ---------- ---------- Balance, March 31, 1994 18,387 19,827 687 39,379 78,280 Net income 7,234 7,234 Cash dividends declared ($0.37 per share) (1,360) (1,360) Change in unrealized appreciation (depreciation) on available-for-sale securities, net of income tax credit of $234 (454) (454) ---------- ---------- ---------- ---------- ---------- Balance, December 31, 1994 18,387 19,827 233 45,253 83,700 Net income 2,253 2,253 Cash dividends declared ($0.13 per share) (478) (478) Change in unrealized appreciation on available-for-sale securities, net of income taxes of $150 242 242 ---------- ---------- ---------- ---------- ---------- Balance, March 31, 1995 $ 18,387 $ 19,827 $ 475 $ 47,028 $ 85,717 ========== ========== ========== ========== ==========
See Notes to Consolidated Financial Statements. SIMMONS FIRST NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1: ACCOUNTING POLICIES The consolidated financial statements include the accounts of Simmons First National Corporation and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. All adjustments made to the unaudited financial statements were of a normal recurring nature. In the opinion of management, all adjustments necessary for a fair presentation of the results of interim periods have been made. Certain prior year amounts are reclassified to conform to current year classification. The accounting policies followed in the presentation of interim financial results are presented on pages 25-27 of the 1994 Annual Report to shareholders. NOTE 2: INVESTMENT SECURITIES The amortized cost and fair value of investments in debt securities that are Held-to-Maturity and Available-For-Sale are as follows:
March 31, 1995 December 31, 1994 ------------------------------------------------------------------------------------------------------------- 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 $ 79,983 $ 1,142 $ (800) $ 80,325 $ 74,544 $ 349 $ (1,479) $ 73,414 U.S. Government agencies 18,265 203 (163) 18,305 13,375 32 (289) 13,118 Mortgage-backed securities 3,445 13 (153) 3,305 3,551 6 (244) 3,313 State and political subdivisions 50,322 916 (959) 50,279 50,904 577 (1,962) 49,519 ---------- ---------- --------- --------- ---------- ---------- ---------- ---------- $ 152,015 $ 2,274 $ (2,075) $ 152,214 $ 142,374 $ 964 $ (3,974) $ 139,364 ========== ========== ========= ========= ========== ========== ========== ========== Available-For-Sale U.S. Treasury $ 36,792 $ 300 $ (67) $ 37,025 25,701 96 (202) $ 25,595 U.S. Government agencies 1,002 10 -- 1,012 1,002 3 -- 1,005 Other securities 2,584 503 -- 3,087 2,554 457 (1) 3,010 ---------- ---------- --------- --------- ---------- ---------- ---------- ---------- $ 40,378 $ 813 $ (67) $ 41,124 $ 29,257 $ 556 $ (203) $ 29,610 ========== ========== ========= ========= ========== ========== ========== ==========
Maturities of investment securities at March 31, 1995
Held-to-Maturity Available-for-Sale Amortized Fair Amortized Fair (Dollars in Thousands) Cost Value Cost Value - ------------------------------------------------------------------------------------------------------------------------- One year of less $ 36,224 $ 36,137 $ 19,400 $ 19,517 After one through five years 69,883 70,201 18,394 18,520 After five through ten years 37,183 36,783 -- -- After ten years 5,280 5,788 -- -- Mortgage-backed securities not due on a single maturity date 3,445 3,305 -- -- Other securities -- -- 2,584 3,087 ----------- ----------- ------------ ----------- $ 152,015 $ 152,214 $ 40,378 $ 41,124 =========== =========== ============ ===========
The book value of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $85,999,000 at March 31, 1995, and $70,981,000 at December 31, 1994. The approximate fair value of pledged securities amounted to $86,574,000 at March 31, 1995, and $70,217,000 at December 31, 1994. The book value of securities sold under agreements to repurchase amounted to $155,000 and $196,000 for March 31, 1995, and December 31, 1994, 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. During the first quarter of 1995, there was no unrealized loss on trading securities. During the first three months of 1995 and 1994, there were no securities sold. The gross realized gains and losses shown in the table below were the result of called bonds.
March 31, March 31, (Dollars in Thousands) 1995 1994 - ------------------------------------------------------------------------------------------ Proceeds from sales $ -- $ -- ----------- ----------- Gross gains 1 28 Gross losses -- (9) ----------- ----------- Securities gains (losses) $ 1 $ 19 =========== ===========
Approximately 12 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 3: LOANS AND ALLOWANCE FOR LOAN LOSSES The various categories are summarized as follows:
March 31, December 31, (Dollars in Thousands) 1995 1994 - ---------------------------------------------------------------------------------------------------------------------- Loans: Consumer: Credit card $ 148,267 $ 164,501 Student loan 63,220 62,836 Other consumer 42,683 40,739 Real estate: Construction 6,328 6,232 Single family residential 44,384 43,629 Other commercial 45,980 44,141 Commercial: Commercial 31,790 29,047 Agricultural 10,317 16,048 Financial institutions 11,131 6,681 Other 2,498 5,122 ----------------- ----------------- Total loans before unearned discount and allowances for loan losses 406,598 418,976 Unearned discount (862) (584) ----------------- ----------------- Total loans after unearned discount and before reserves 405,736 418,392 Allowance for loan losses (7,917) (7,790) ----------------- ----------------- Net Loans $ 397,819 $ 410,602 ================= =================
During the first quarter of 1995, foreclosed assets held for sale decreased to $1,551,000 and are carried at the lower of cost or fair market value. Nonaccrual and other non-performing loans for the Corporation at March 31, 1995, were $2,744,000, bringing the total of non-performing assets to $4,295,000.
March 31, December 31, (Dollars in Thousands) 1995 1994 - ---------------------------------------------------------------------------------------------------------------------- Allowance for Loan Losses: Balance, beginning of year $ 7,790 $ 7,430 Additions Provision charged to expense 449 525 ----------------- ----------------- 8,239 7,955 Deductions Losses charged to allowance, net of recoveries of $114 and $81 for the first three months of 1995 and 1994, respectively 322 443 ----------------- ----------------- Balance, March 31 $ 7,917 7,512 ================= Additions Provision charged to expense 1,525 ----------------- 9,037 Deductions Losses charged to allowance, net of recoveries of $339 for the last nine months of 1994 1,247 ----------------- Balance, end of year $ 7,790 =================
As of January 1, 1995, the Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan. FAS 114 requires discounting expected future cash flows to measure impairment of certain loans, or, as a practical expedient, impairment measurements based on the loan's observable market price or the fair value of collateral if the loan is collateral dependent. The adoption of FAS 114 did not increase the 1995 loan loss provision. Total impaired loans at December 31, 1994, was $3,766,000. At that time, $587,000 of the allowance for loan losses related to those loans. All impaired loans had designated reserves for possible losses. At March 31, 1995, impaired loans totaled $3,462,000, all of which had reserves allocated. An allowance of $645,000 for possible losses related to those loans. Interest of $38,000 was recognized on average impaired loans of $3,527,000 as of March 31, 1995. No interest was recognized on impaired loans on a cash basis during the first quarter of 1995. NOTE 4: ACQUISITIONS On April 1, 1995, the acquisition of Dumas Bancshares, Inc. (DBI) was completed and DBI was merged into Simmons First National Corporation (SFNC) in a transaction valued at $5 million. DBI owns Dumas State Bank, Dumas, Arkansas, and First State Bank, Gould, Arkansas, with consolidated assets at March 31, 1995, of approximately $42 million. First State Bank, which has branches in Grady and Star City, Arkansas, in addition to its primary location in Gould, Arkansas, will be merged into Simmons First National Bank, the Corporation's lead bank, and Dumas State Bank will become Simmons First Dumas and will continue to operate as a subsidiary bank of the Corporation. On April 25, 1995, the Corporation entered into a definitive agreement to merge DSB Banschares, Inc. (DSBB) located in Dermott, Arkansas into SFNC. The Corporation will acquire all of the outstanding capital stock of DSBB in a cash purchase transaction valued at approximately $2.4 million. DSBB, which owns Dermott State Bank, has consolidated assets as of March 31, 1995, of approximately $20 million. NOTE 5: CERTAIN TRANSACTIONS From time to time the Corporation and its subsidiaries have made loans and other extensions of credit to directors, officers, their associates and members of their immediate families, and from time to time directors, officers and their associates and members of their immediate families have placed deposits with Simmons First National Bank, Simmons First Bank of Lake Village, 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 6: STOCK OPTIONS As of March 31, 1995, 80,000 shares of common stock of the Corporation had been granted through an employee stock option incentive plan. There were 44,800 exercisable shares at the end of the first quarter, none of which had been issued. NOTE 7: ADDITIONAL CASH FLOW INFORMATION
Three Months Ended March 31, (Dollars in Thousands) 1995 1994 - ---------------------------------------------------------------------- Interest paid $ 4,808 $ 3,674 Income taxes paid $ -- $ 550
NOTE 8: INCOME TAXES The provision for income taxes is comprised of the following components:
March 31, March 31, (Dollars in Thousands) 1995 1994 - ------------------------------------------------------------------------------------------------------------- Income taxes currently payable $ 1,093 $ 1,030 Increase in future income tax benefits (127) (31) ------------ ------------ Provision for income taxes $ 966 $ 999 ============ ============
The tax effects of temporary differences related to deferred taxes shown on the balance sheet are:
March 31, December 31, (Dollars in Thousands) 1995 1994 - --------------------------------------------------------------------------------------------------------------- Deferred tax assets: Allowance for loan losses $ 2,870 $ 2,744 Valuation adjustment of foreclosed assets held for sale 293 281 Deferred compensation payable 357 373 Deferred loan fee income 776 773 Other 641 645 ------------- ------------- Total deferred tax assets 4,937 4,816 ------------- ------------- Deferred tax liabilities: Accumulated depreciation (398) (405) Available-for-sale securities (121) (120) ------------- ------------- Total deferred tax liabilities (519) (525) ------------- ------------- Net Deferred tax assets before valuation allowance $ 4,418 $ 4,291 ------------- ------------- Valuation allowance: Beginning balance -- (564) Change during period -- 564 ------------- ------------- Ending balance -- -- ------------- ------------- Net deferred tax asset $ 4,418 $ 4,291 ============= =============
A reconciliation of income tax expense at the statutory rate to the Corporation's actual income tax expense is shown below:
March 31, March 31, (Dollars in Thousands) 1995 1994 - ------------------------------------------------------------------------------------------------------------- Computed at the statutory rate (34%) $ 1,093 $ 1,243 Increase (decrease) resulting from: Tax exempt income (222) (233) Other differences, net 95 (11) ------------ ------------ Actual tax provision $ 966 $ 999 ============ ============
NOTE 9: TIME DEPOSITS Time deposits include approximately $57,917,000 and $55,222,000 of certificates of deposit of $100,000 or more at March 31, 1995, and December 31, 1994, respectively. NOTE 10: 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 36.5% and 39.3% of the portfolio, as of March 31, 1995 and December 31, 1994, 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 March 31, 1995 and December 31, 1994, the Corporation had outstanding commitments to originate loans aggregating approximately $74,610,000 and $47,733,000, 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 $33,850,000 and $16,519,000 at March 31, 1995 and December 31, 1994, 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 $1,073,000 and $918,000 at March 31, 1995 and December 31, 1994, 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 March 31, 1995, the Corporation had granted unused lines of credit to borrowers aggregating approximately $27,017,000 and $170,884,000 for commercial lines and open-end consumer lines, respectively. At December 31, 1994, unused lines of credit to borrowers aggregated approximately $4,568,000 for commercial lines and $143,563,000 for open-end consumer lines, respectively. Mortgage loans serviced for others totaled $1,209,615,000 and $1,228,311,000 at March 31, 1995 and December 31, 1994, respectively, of which mortgage-backed securities serviced totaled $1,019,003,000 and $1,027,855,000 at March 31, 1995 and December 31, 1994, respectively. Simmons First National Bank serviced VA loans subject to certain recourse provisions totaling approximately $154,398,000 and $156,650,000, at March 31, 1995 and December 31, 1994, 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 March 31, 1995 and December 31, 1994, this reserve balance was $43,000 and $210,000, respectively, and is included in other liabilities. NOTE 11: CONTINGENT LIABILITIES The Corporation and/or its subsidiary banks have various unrelated legal proceedings, most of which involve loan foreclosure activity pending, which, in the aggregate are not expected to have a material adverse effect on the financial position of the Corporation and its subsidiaries. NOTE 12: UNDIVIDED PROFITS The subsidiary banks are subject to a legal limitation on dividends that can be paid to the parent corporation without prior approval of the applicable regulatory agencies. The approval of the Comptroller of the Currency is required, if the total of all dividends declared by a national bank in any calendar year exceeds the total of its net profits, as defined, for that year combined with its retained net profits of the preceding two years. Arkansas bank regulators have specified that the maximum dividend limit state banks may pay to the parent company without prior approval is 50% of current year earnings. At March 31, 1995, the bank subsidiaries had approximately $11.1 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 required 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 March 31, 1995, 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 22.5% at March 31, 1995, well above the minimum required. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- Net income for the quarter ended March 31, 1995, was $2,253,000, an decrease of $373,000, or 14.2%, over the same period of 1994. Earnings per share for the three-month periods ended March 31, 1995 and March 31, 1994, were $0.61 and $0.71, respectively. The Corporation's annualized return on average assets (ROA) for the three-month periods ended March 31, 1995 and 1994, were 1.31% and 1.47%, respectively. Annualized return on equity (ROE) for the same three-month periods were 10.71% and 13.80%, respectively. Net interest income, the difference between interest income and interest expense, for the three-month period ended March 31, 1995, increased $263,000, or 3.7%, when compared to the same period in 1994. During the first quarter, interest income increased $1,427,000, or 13.1%, and interest expense increased $1,164,000, or 30.6%, when compared to the same period in 1994. These increases in net interest income can be attributed to an increase in the Corporation's interest margin. Continued improvement in asset quality led to a reduction in the provision for loan losses for the first quarter of 1995, to $449,000, compared to $525,000 for the same period of 1994 resulting in a $76,000, or 14.5% decrease. Non-interest income at March 31, 1995, was $5,963,000, a reduction of $993,000, or 14.3%, from the same period in 1994. This is primarily attributable to reduced profits in the mortgage marketing and dealer bank operations as a result of the negative impact of rising interest rates on the nation's mortgage and securities markets. For the three-months ended March 31, 1995, non-interest expense was $9,690,000, a decrease of $248,000, or 2.5%, from the March 31, 1994 total of $9,938,000. This decrease, primarily in the mortgage servicing operation, is tied to the general slowdown nationally in mortgage lending and fixed income securities sales. At March 31, 1995, total assets for the Corporation were $709,614,000, a decrease of $3,648,000, or 0.5%, from the same figure at December 31, 1994. Deposits at March 31, 1995, totaled $580,869,000, a decrease of $2,669,000 or 0.5%, from the same figure at December 31, 1994. Stockholders' equity at the end of the first quarter was $85,717,000, an increase of $2,017,000, or 2.4%, from the December 31, 1994 figure. FINANCIAL CONDITION - ------------------- Generally speaking, the Corporation's banking subsidiaries rely upon net inflows of cash from financing activities, supplemented by net inflows of cash from operating activities, to provide cash used in their investing activities. As is typical of most banking companies, significant financing activities include: deposit gathering; use of short-term borrowing facilities, such as federal funds purchased and repurchase agreements; and the issuance of long-term debt. The banks' primary investing activities include loan originations and purchases of investment securities, offset by loan payoffs and investment maturities. Liquidity represents an institution's ability to provide funds to satisfy demands from depositors and borrowers, by either converting assets into cash or accessing new or existing sources of incremental funds. It is a major responsibility of management to maximize net interest income within prudent liquidity constraints. Internal corporate guidelines have been established to constantly measure liquid assets as well as relevant ratios concerning earning asset levels and purchased funds. Each bank subsidiary is also required to monitor these same indicators and report regularly to its own senior management and board of directors. At March 31, 1995, each bank was within established guidelines and total corporate liquidity was strong. At March 31, 1995, cash and cash equivalents, trading and available-for-sale securities, and mortgage loans held for sale were 15.3% 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 16 of the accompanying Form 10-Q, of SIMMONS FIRST NATIONAL CORPORATION and consolidated subsidiaries as of March 31, 1995, and for the three-month periods ended March 31, 1995 and 1994, 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, 1994, 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 27, 1995, 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, 1994, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/ Baird, Kurtz & Dobson BAIRD, KURTZ & DOBSON Pine Bluff, Arkansas May 8, 1995 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SIMMONS FIRST NATIONAL CORPORATION -------------------------------------- (Registrant) Date: 5/11/95 /s/ J. Thomas May -------------------- --------------------------------------- J. Thomas May President & Chief Executive Officer Date: 5/11/95 /s/ Barry L. Crow -------------------- ---------------------------------------- Barry L. Crow, Executive Vice President and Chief Financial Officer EX-27 2
9 1000 3-MOS DEC-31-1995 MAR-31-1995 27,043 56 31,200 1,074 41,235 152,015 152,214 403,725 7,917 709,614 580,869 21,482 9,411 12,135 18,387 0 0 67,330 709,614 8,815 2,997 550 12,362 4,336 4,967 7,395 449 1 9,690 3,219 3,219 0 0 2,253 .61 .61 5.01 1,800 829 0 0 7,790 436 114 7,917 7,917 0 1,943
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