t1702176-8kexhibits_DIV_02_ex99-3 - none

t1702176-8kexhibits_DIV_02_ex99-3 - none - 2.4698214s

Exhibit 99.3

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

The following unaudited pro forma combined condensed consolidated financial statements and explanatory notes show the impact on the historical financial positions and results of operations of Simmons, OKSB and First Texas and have been prepared to illustrate the effects of the OKSB merger and First Texas merger under the acquisition method of accounting with Simmons treated as the acquirer. The following unaudited pro forma combined condensed consolidated financial statements have been prepared using the acquisition method of accounting, giving effect to our completed acquisition of Hardeman County Investment Company, Inc., or HCIC, which closed on May 15, 2017, and our announced acquisitions of OKSB and First Texas. The unaudited pro forma combined condensed consolidated balance sheets combine the historical financial information of Simmons and HCIC, OKSB and First Texas as of March 31, 2017, and assume that the acquisitions were completed on that date. The unaudited pro forma combined condensed consolidated statements of income for the three-month period ended March 31, 2017 and the 12-month period ended December 31, 2016 give effect to the acquisitions as if the transactions had been completed on January 1, 2016.

The unaudited pro forma combined condensed consolidated financial statements are presented for illustrative purposes only and does not indicate the financial results of the combined company had the companies actually been combined on the dates described above, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities. The unaudited pro forma combined condensed consolidated financial statements also do not consider any potential impacts of current market conditions on revenues, expense efficiencies, asset dispositions and share repurchases, among other factors.

TABLE OF CONTENTS

Unaudited Pro Forma Combined Condensed
Consolidated Balance Sheets
As of March 31, 2017

				Acquisition
(Dollars in thousands)	Simmons Historical			HCIC Historical			HCIC Pro Forma Acquisition Adjustments				Pro Forma Simmons and HCIC Combined
ASSETS
Cash and non-interest bearing balances due from banks		$	103,875		$	3,718		$	(30,001)	(a)			77,592
Interest bearing balances due from banks			201,406			15,560			—				216,966
Cash and cash equivalents			305,281			19,278			(30,001)				294,558
Interest bearing balances due from banks – time			4,563										4,563
Investment securities – held-to-maturity			431,176			—							431,176
Investment securities – available-for-sale			1,257,813			172,802			—				1,430,615
Total investments			1,688,989			172,802							1,861,791
Mortgage loans held for sale			9,754			104							9,858
Assets held in trading accounts			55			—							55
Loans:
Legacy loans			4,632,905										4,632,905
Allowance for loan losses			(37,865)			(2,418)			2,418	(b)			(37,865)
Loans acquired, net of discount and allowance			1,144,291			254,704			(5,992)	(c)			1,393,003
Net loans			5,739,331			252,286			(3,574)				5,988,043
Premises and equipment			221,880			10,085			1,257	(d)			233,222
Premises held for sale			4,611			—							4,611
Foreclosed assets			26,421			1,090			(452)	(e)			27,059
Interest receivable			26,089			1,933							28,022
Bank owned life insurance			139,439			7,803							147,242
Goodwill			350,035			11,485			16,513	(f)			378,033
Other intangible assets			51,408			168			8,502	(g)			60,078
Other assets			58,782			665			(1,908)	(h)			57,539
Total assets		$	8,626,638		$	477,699		$	(9,663)			$	9,094,674
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing transaction accounts		$	1,554,675		$	77,226						$	1,631,901
Interest bearing transaction accounts and savings deposits			3,987,730			201,610							4,189,340
Time deposits			1,245,883			115,214			368	(i)			1,361,465
Total deposits			6,788,288			394,050			368				7,182,706
Federal funds purchased and securities sold under agreements to repurchase			110,007			19,362							129,369
Other borrowings			441,074			—							441,074
Subordinated debentures			60,503			6,702							67,205
Accrued interest and other liabilities			55,877			4,416			500	(j)			60,793
Total liabilities			7,455,749			424,530			868				7,881,147
Stockholders’ equity:
Common stock			314			186			(178)	(a)(k)			322
Surplus			716,564			3,790			38,840	(a)(k)			759,194
Undivided profits			468,309			52,124			(52,124)	(k)			468,309
Accumulated other comprehensive income (loss)			(14,298)			(1,012)			1,012	(k)			(14,298)
Treasury Stock			—			(1,919)			1,919	(k)			—
Total stockholders’ equity			1,170,889			53,169			(10,531)				1,213,527
Total liabilities and stockholders’ equity		$	8,626,638		$	477,699		$	(9,663)			$	9,094,674

The accompanying notes are an integral part of these pro forma combined condensed consolidated financial statements.

TABLE OF CONTENTS

Unaudited Pro Forma Combined Condensed
Consolidated Balance Sheets
As of March 31, 2017

				Acquisitions
(Dollars in thousands)	Pro Forma Simmons and HCIC Combined			OKSB Historical			First Texas Historical			Pro Forma Acquisition Adjustments				Pro Forma Combined
ASSETS
Cash and non-interest bearing balances due from banks		$	77,592		$	28,400		$	14,699		$	(184,500)	(1),(2)		$	(63,809)
Interest bearing balances due from banks			216,966			36,702			126,219			—				379,887
Cash and cash equivalents			294,558			65,102			140,918			(184,500)				316,078
Interest bearing balances due from banks – time			4,563													4,563
Investment securities – held-to-maturity			431,176			10,413			—							441,589
Investment securities – available-for-sale			1,430,615			422,640			63,671			—				1,916,926
Total investments			1,861,791			433,053			63,671			—				2,358,515
Mortgage loans held for sale			9,858			4,980			2,372							17,210
Assets held in trading accounts			55			—			—							55
Loans:
Legacy loans			4,632,905													4,632,905
Allowance for loan losses			(37,865)			(27,543)			(18,254)			45,797	(3)			(37,865)
Loans acquired, net of discount and allowance			1,393,003			1,931,463			1,913,348			(54,477)	(4)			5,183,337
Net loans			5,988,043			1,903,920			1,895,094			(8,680)				9,778,377
Premises and equipment			233,222			22,341			25,707			11,751	(5)			293,021
Premises held for sale			4,611			—			—							4,611
Foreclosed assets			27,059			350			398							27,807
Interest receivable			28,022			6,357			4,414							38,793
Bank owned life insurance			147,242			28,795			6,928							182,965
Goodwill			378,033			13,545			37,227			362,959	(6)			791,764
Other intangible assets			60,078			5,693			422			50,722	(7)			116,915
Other assets			57,539			38,458			24,353			(15,592)	(2),(8)			104,758
Total assets		$	9,094,674		$	2,522,594		$	2,201,504		$	216,660			$	14,035,432
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing transaction accounts		$	1,631,901		$	541,021		$	435,120						$	2,608,042
Interest bearing transaction accounts and savings deposits			4,189,340			827,431			1,056,789							6,073,560
Time deposits			1,361,465			608,813			167,503		$	(1,032)	(9)			2,136,749
Total deposits			7,182,706			1,977,265			1,659,412			(1,032)				10,818,351
Federal funds purchased and securities sold under agreements to repurchase			129,369			9,645			50,000							189,014
Other borrowings			441,074			185,000			219,994			(101)	(10)			845,967
Subordinated debentures			67,205			46,393			30,221			(5,325)	(11)			138,494
Accrued interest and other liabilities			60,793			13,377			8,447			1,000	(12)			83,617
Total liabilities			7,881,147			2,231,680			1,968,074			(5,458)				12,075,443
Stockholders’ equity:
Common stock			322			21,261			7,877			(29,000)	(1),(13)			460
Surplus			759,194			123,417			171,230			451,677	(1),(13)			1,505,518
Undivided profits			468,309			188,638			56,750			(245,388)	(13)			468,309
Accumulated other comprehensive income (loss)			(14,298)			(302)			(546)			848	(13)			(14,298)
Treasury Stock			—			(42,100)			(1,881)			43,981	(13)			—
Total stockholders’ equity			1,213,527			290,914			233,430			222,118				1,959,989
Total liabilities and stockholders’ equity		$	9,094,674		$	2,522,594		$	2,201,504		$	216,660			$	14,035,432

The accompanying notes are an integral part of these pro forma combined condensed consolidated financial statements.

TABLE OF CONTENTS

Unaudited Pro Forma Combined Condensed
Consolidated Statements of Income
For the Three Months Ended March 31, 2017

				Acquisition
(Dollars and shares in thousands, except per share data)	Simmons Historical			HCIC Historical			HCIC Pro Forma Acquisition Adjustments				Pro Forma Simmons and HCIC Combined
INTEREST INCOME
Loans		$	68,728		$	3,264		$	145	(l)		$	72,137
Federal funds sold			1			—							1
Investment securities			9,451			946							10,397
Mortgage loans held for sale			126			—							126
Interest bearing balances due from banks			121			30							151
Other interest-earning assets			—			—			—				—
TOTAL INTEREST INCOME			78,427			4,240			145				82,812
INTEREST EXPENSE
Deposits			4,204			321							4,525
Federal funds purchased and securities sold under agreements to repurchase			75			—							75
Other borrowings			1,194			30							1,224
Subordinated debentures			574			41			—				615
TOTAL INTEREST EXPENSE			6,047			392			—				6,439
NET INTEREST INCOME			72,380			3,848			145				76,373
Provision for loan losses			4,307			—			—				4,307
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			68,073			3,848			145				72,066
NON-INTEREST INCOME
Trust income			4,212			—							4,212
Service charges on deposit accounts			8,102			684							8,786
Other service charges and fees (includes insurance income)			2,197			1,112							3,309
Mortgage and SBA lending income			2,423			—							2,423
Investment banking income			690			—							690
Debit and credit card fees			7,934			—							7,934
Bank owned life insurance income			818			—							818
Gain (loss) on sale of securities			63			—							63
Other income			3,621			193			—				3,814
TOTAL NON-INTEREST INCOME			30,060			1,989			—				32,049
NON-INTEREST EXPENSE
Salaries and employee benefits			35,536			2,327							37,863
Occupancy expense, net			4,663			493							5,156
Furniture and equipment expense			4,443			—							4,443
Other real estate and foreclosure expense			589			—							589
Deposit insurance			680			—							680
Merger related costs			524			—							524
Other operating expenses			19,887			964			142	(m)			20,993
TOTAL NON-INTEREST EXPENSE			66,322			3,784			142				70,248
NET INCOME BEFORE INCOME TAXES			31,811			2,053			3				33,867
Provision for income taxes			9,691			134			1	(n)			9,826
NET INCOME			22,120			1,919			2				24,041
Preferred stock dividends			—			—			—				—
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	22,120		$	1,919		$	2			$	24,041
BASIC EARNINGS PER SHARE		$	0.71		$	11.85						$	0.75
DILUTED EARNINGS PER SHARE		$	0.70		$	11.85						$	0.74
Average common shares outstanding			31,351						800	(o)			32,151
Average diluted shares outstanding			31,613						800	(o)			32,413

The accompanying notes are an integral part of these pro forma combined condensed consolidated financial statements.

TABLE OF CONTENTS

Unaudited Pro Forma Combined Condensed
Consolidated Statements of Income
For the Three Months Ended March 31, 2017

				Acquisitions
(Dollars and shares in thousands, except per share data)	Pro Forma Simmons and HCIC Combined			OKSB Historical			First Texas Historical			OKSB and First Texas Pro Forma Acquisition Adjustments				Pro Forma Combined
INTEREST INCOME
Loans		$	72,137		$	20,944		$	21,353		$	2,268	(14)		$	116,702
Federal funds sold			1			—			—							1
Investment securities			10,397			2,052			267							12,716
Mortgage loans held for sale			126			—			—							126
Interest bearing balances due from banks			151			75			224							450
Other interest-earning assets			—			—			129			—				129
TOTAL INTEREST INCOME			82,812			23,071			21,973			2,268				130,124
INTEREST EXPENSE
Deposits			4,525			1,840			2,564			—	(15)			8,929
Federal funds purchased and securities sold under agreements to repurchase			75			—			520							595
Other borrowings			1,224			478			333							2,035
Subordinated debentures			615			590			335			—				1,540
TOTAL INTEREST EXPENSE			6,439			2,908			3,752			—				13,099
NET INTEREST INCOME			76,373			20,163			18,221			2,268				117,025
Provision for loan losses			4,307			1,776			1,111			—				7,194
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			72,066			18,387			17,110			2,268				109,831
NON-INTEREST INCOME
Trust income			4,212			—			1,198							5,410
Service charges on deposit accounts			8,786			1,840			428							11,054
Other service charges and fees (includes insurance income)			3,309			434			81							3,824
Mortgage and SBA lending income			2,423			552			487							3,462
Investment banking income			690			—			65							755
Debit and credit card fees			7,934			407			235							8,576
Bank owned life insurance income			818			220			61							1,099
Gain (loss) on sale of securities			63			451			—							514
Other income			3,814			976			552			—				5,342
TOTAL NON-INTEREST INCOME			32,049			4,880			3,107			—				40,036
NON-INTEREST EXPENSE
Salaries and employee benefits			37,863			9,900			9,394							57,157
Occupancy expense, net			5,156			2,373			982							8,511
Furniture and equipment expense			4,443			—			508							4,951
Other real estate and foreclosure expense			589			3			4							596
Deposit insurance			680			273			275							1,228
Merger related costs			524			—			—							524
Other operating expenses			20,993			2,754			3,498			845	(16)			28,090
TOTAL NON-INTEREST EXPENSE			70,248			15,303			14,661			845				101,057
NET INCOME BEFORE INCOME TAXES			33,867			7,964			5,556			1,423				48,810
Provision for income taxes			9,826			2,685			1,923			558	(17)			14,992
NET INCOME			24,041			5,279			3,633			865				33,818
Preferred stock dividends			—			—			—			—				—
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	24,041		$	5,279		$	3,633		$	865			$	33,818
BASIC EARNINGS PER SHARE		$	0.75		$	0.28		$	0.46						$	0.74
DILUTED EARNINGS PER SHARE		$	0.74		$	0.28		$	0.43						$	0.73
Average common shares outstanding			32,151									13,750	(18)			45,901
Average diluted shares outstanding			32,413									13,750	(18)			46,163

The accompanying notes are an integral part of these pro forma combined condensed consolidated financial statements.

TABLE OF CONTENTS

Unaudited Pro Forma Combined Condensed
Consolidated Statements of Income
For the Year Ended December 31, 2016

				Acquisition
(Dollars and shares in thousands, except per share data)	Simmons Historical			HCIC Historical			HCIC Pro Forma Acquisition Adjustments				Pro Forma Simmons and HCIC Combined
INTEREST INCOME
Loans		$	265,652		$	13,475		$	699	(l)		$	279,826
Federal funds sold			57			36							93
Investment securities			33,479			3,349							36,828
Mortgage loans held for sale			1,102			7							1,109
Interest bearing balances due from banks			699			—			—				699
Other interest-earning assets			16			—							16
TOTAL INTEREST INCOME			301,005			16,867			699				318,571
INTEREST EXPENSE
Deposits			15,217			1,321							16,538
Federal funds purchased and securities sold under agreements to repurchase			273			113							386
Other borrowings			4,148			24							4,172
Subordinated debentures			2,161			145			—				2,306
TOTAL INTEREST EXPENSE			21,799			1,603			—				23,402
NET INTEREST INCOME			279,206			15,264			699				295,169
Provision for loan losses			20,065			120			—				20,185
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			259,141			15,144			699				274,984
NON-INTEREST INCOME
Trust income			15,442			—							15,442
Service charges on deposit accounts			32,414			3,470							35,884
Other service charges and fees (includes insurance income)			6,913			3,491							10,404
Mortgage and SBA lending income			22,442			338							22,780
Investment banking income			3,471			—							3,471
Debit and credit card fees			30,740			10							30,750
Bank owned life insurance income			3,324			234							3,558
Gain (loss) on sale of securities			5,848			70							5,918
Other income			18,788			41			—				18,829
TOTAL NON-INTEREST INCOME			139,382			7,654			—				147,036
NON-INTEREST EXPENSE
Salaries and employee benefits			133,457			9,741							143,198
Occupancy expense, net			18,667			2,057							20,724
Furniture and equipment expense			16,683										16,683
Other real estate and foreclosure expense			4,461			205							4,666
Deposit insurance			3,469			170							3,639
Merger related costs			4,835										4,835
Other operating expenses			73,513			3,990			567	(m)			78,070
TOTAL NON-INTEREST EXPENSE			255,085			16,163			567				271,815
NET INCOME BEFORE INCOME TAXES			143,438			6,635			132				150,205
Provision for income taxes			46,624			405			52	(n)			47,081
NET INCOME			96,814			6,230			80				103,124
Preferred stock dividends			24			—							24
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	96,790		$	6,230		$	80			$	103,100
BASIC EARNINGS PER SHARE		$	3.16		$	38.22						$	3.28
DILUTED EARNINGS PER SHARE		$	3.13		$	38.22						$	3.25
Average common shares outstanding			30,646						800	(o)			31,446
Average diluted shares outstanding			30,964						800	(o)			31,764

The accompanying notes are an integral part of these pro forma combined condensed consolidated financial statements.

TABLE OF CONTENTS

Unaudited Pro Forma Combined Condensed
Consolidated Statements of Income
For the Year Ended December 31, 2016

				Acquisitions
(Dollars and shares in thousands, except per share data)	Pro Forma Simmons and HCIC Combined			OKSB Historical			First Texas Historical			Pro Forma Acquisition Adjustments				Pro Forma Combined
INTEREST INCOME
Loans		$	279,826		$	81,527		$	77,971		$	17,106	(14)		$	456,430
Federal funds sold			93			—			—							93
Investment securities			36,828			7,407			1,134							45,369
Mortgage loans held for sale			1,109			—			—							1,109
Interest bearing balances due from banks			699			—			251							950
Other interest-earning assets			16			206			398			—				620
TOTAL INTEREST INCOME			318,571			89,140			79,754			17,106				504,571
INTEREST EXPENSE
Deposits			16,538			5,968			7,472			1,032	(15)			31,010
Federal funds purchased and securities sold under agreements to repurchase			386			—			2,118							2,504
Other borrowings			4,172			1,379			921							6,472
Subordinated debentures			2,306			2,350			1,340			—				5,996
TOTAL INTEREST EXPENSE			23,402			9,697			11,851			1,032				45,982
NET INTEREST INCOME			295,169			79,443			67,903			16,074				458,589
Provision for loan losses			20,185			4,769			2,109			—				27,063
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			274,984			74,674			65,794			16,074				431,526
NON-INTEREST INCOME
Trust income			15,442			—			4,925							20,367
Service charges on deposit accounts			35,884			7,638			1,688							45,210
Other service charges and fees (includes insurance income)			10,404			1,014			232							11,650
Mortgage and SBA lending income			22,780			2,672			2,970							28,422
Investment banking income			3,471			—			261							3,732
Debit and credit card fees			30,750			1,906			938							33,594
Bank owned life insurance income			3,558			899			85							4,542
Gain (loss) on sale of securities			5,918			294			—							6,212
Other income			18,829			1,662			2,627			—				23,118
TOTAL NON-INTEREST INCOME			147,036			16,085			13,726			—				176,847
NON-INTEREST EXPENSE
Salaries and employee benefits			143,198			37,724			33,536							214,458
Occupancy expense, net			20,724			11,059			3,828							35,611
Furniture and equipment expense			16,683			—			2,045							18,728
Other real estate and foreclosure expense			4,666			(222)			117							4,561
Deposit insurance			3,639			1,376			832							5,847
Merger related costs			4,835			—			—							4,835
Other operating expenses			78,070			13,309			10,493			3,381	(16)			105,253
TOTAL NON-INTEREST EXPENSE			271,815			63,246			50,851			3,381				389,293
NET INCOME BEFORE INCOME TAXES			150,205			27,513			28,669			12,693				219,080
Provision for income taxes			47,081			9,809			10,050			4,979	(17)			71,919
NET INCOME			103,124			17,704			18,619			7,714				147,161
Preferred stock dividends			24			—			22			—				46
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	103,100		$	17,704		$	18,597		$	7,714			$	147,115
BASIC EARNINGS PER SHARE		$	3.28		$	0.93		$	2.40						$	3.26
DILUTED EARNINGS PER SHARE		$	3.25		$	0.92		$	2.18						$	3.23
Average common shares outstanding			31,446									13,750	(18)			45,196
Average diluted shares outstanding			31,764									13,750	(18)			45,514

The accompanying notes are an integral part of these pro forma combined condensed consolidated financial statements.

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Notes to Pro Forma Combined Condensed Consolidated Financial Statements

Note 1. Basis of Presentation

The unaudited pro forma combined condensed consolidated financial statements and explanatory notes show the impact on the historical financial condition and results of operations of Simmons resulting from the HCIC, OKSB and First Texas acquisitions under the acquisition method of accounting. Under the acquisition method of accounting, the assets and liabilities of HCIC, OKSB and First Texas are recorded by Simmons at their respective fair values as of the date the transaction is completed. The unaudited pro forma combined condensed consolidated balance sheets combine the historical financial information of Simmons and Hardeman, Southwest Bancorp and First Texas as of March 31, 2017, and assume that the HCIC, OKSB and First Texas acquisitions were completed on that date. The unaudited pro forma combined condensed consolidated statements of income for the three-month period ended March 31, 2017, and for the year ended December 31, 2016, give effect to the HCIC, OKSB and First Texas acquisitions as if the transactions had been completed on January 1, 2016.

Since the transactions are recorded using the acquisition method of accounting, all loans are recorded at fair value, including adjustments for credit quality, and no allowance for credit losses is carried over to Simmons’ balance sheet. In addition, certain anticipated nonrecurring costs associated with the Hardeman, Southwest Bancorp and First Texas acquisitions such as potential severance, professional fees, legal fees and conversion-related expenditures are not reflected in the pro forma statements of income and will be expensed as incurred.

While the recording of the acquired loans at their fair value will impact the prospective determination of the provision for credit losses and the allowance for credit losses, for purposes of the unaudited pro forma combined condensed consolidated statement of income for the three-month period ended March 31, 2017 and for the year ended December 31, 2016, Simmons assumed no adjustments to the historical amount of HCIC’s, OKSB’s, and First Texas’ provision for credit losses. If such adjustments were estimated, there could be a significant change to the historical amounts of provision for credit losses presented.

The pro forma information is presented in two stages. The first stage presents the results of HCIC as combined with the historical results of Simmons and reflecting pro forma adjustments. The HCIC transaction closed effective May 15, 2017 and is not a significant acquisition under SEC rules and regulations and, while not required to be presented, is provided for information purposes only. The second stage presents the combined results of Simmons with HCIC, with the historical results and pro forma adjustments for OKSB and First Texas. These transactions combined are significant and are subject to shareholder approval.

Note 2. Merger and Acquisition Integration Costs

The retail branch operations, commercial lending activities, mortgage banking operations, trust and investment services, along with all other operations of HCIC, OKSB and First Texas will be integrated into Simmons Bank. The operation integration and the system conversion for HCIC are scheduled for September 2017. The operation integration and the system conversion for First Texas are scheduled for the first quarter of 2018. The operation integration and the system conversion for Southwest Bancorp are scheduled for the second quarter of 2018.

The specific details of the plan to integrate the operations of HCIC, Southwest Bancorp and First Texas will continue to be refined over the next several months, and will include assessing personnel, benefit plans, premises, equipment and service contracts to determine where we may take advantage of redundancies. Certain decisions arising from these assessments may involve involuntary termination of employees, vacating leased premises, changing information systems, canceling contracts with certain service providers, and selling or otherwise disposing of certain premises, furniture and equipment. Simmons also expects to incur merger-related costs including professional fees, legal fees, system conversion costs and costs related to communications with customers and others. To the extent there are costs associated with these actions, the costs will be recorded based on the nature of the cost and the timing of these integration actions.

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Note 3. Estimated Annual Cost Savings

Simmons expects to realize cost savings and to generate revenue enhancements from the HCIC, OKSB and First Texas acquisitions. Revenue enhancements are expected from an expansion of trust services, SBA lending activities, consumer finance products and credit card services to the larger footprint of Simmons. Cost savings for HCIC are projected at 30% of non-interest expense; cost savings for First Texas are projected at 32% of non-interest expense; and cost savings for OKSB are projected at 35% of non-interest expense. These cost savings and revenue enhancements are not reflected in the pro forma combined condensed consolidated financial statements and there can be no assurance they will be achieved in the amount or manner currently contemplated.

Note 4. Pro Forma Adjustments

The following pro forma adjustments have been reflected in the unaudited pro forma combined condensed consolidated financial statements presented for HCIC. All adjustments are based on current assumptions and valuations, which are subject to change. Unless otherwise noted, all adjustments are based on assumptions and valuations as of the merger agreement dates for the respective pending acquisitions and are subject to change.

(a)

Adjustment reflects the consideration to be paid for HCIC and is based upon the actual consideration paid on the closing date of May 15, 2017. Pursuant to the Agreement and Plan of Merger, dated as of November 17, 2016 between Simmons and HCIC, or the HCIC merger agreement, each share of HCIC common stock issued and outstanding on the merger date shall be converted into the right to receive an amount of cash equal to $181.47 and 4.8393 shares of Simmons common stock. The total number of shares of HCIC common stock outstanding on the merger date was 165,311; the actual cash consideration paid was approximately $30 million and the 165,311 shares were converted into the right to receive an aggregate of 799,970 shares of Simmons common stock to be issued in connection with the HCIC merger. The closing price of Simmons common stock on the merger date of May 15, 2017 was $53.30, which equates to total stock consideration valued at $42.6 million. The fair value of total consideration paid to existing shareholders of HCIC was $72.6 million.

(b)

Purchase accounting adjustment to eliminate HCIC’s allowance for loan losses, which cannot be carried over in accordance with GAAP.

(c)

Adjustment reflects the necessary write down of the acquired loan portfolio to estimated fair value based on Simmons’ evaluation as of the merger date.

(d)

Adjustment made to reflect the estimated fair value of acquired premises and equipment, including all branches, based on Simmons’ evaluation as of the merger date.

(e)

Adjustment made to reflect the estimated fair value of acquired OREO properties, based on the Simmons’ evaluation as of the merger date.

(f)

Adjustment represents the excess of the consideration paid over the fair value of net assets acquired, net of the reversal of HCIC’s previously recorded goodwill of $11.5 million. The reconciliation of the purchase price to goodwill recorded can be summarized as follows.

(g)

Purchase accounting adjustment to establish core deposit and insurance customer intangibles of approximately $7.8 million and $830,000, respectively, in recognition of the fair value of core deposits and insurance customers acquired. The core deposit and insurance customer intangible assets represent the value of the relationships that HCIC had with their deposit and insurance customers as of the merger date. The core deposit intangible is approximately 2.9% of core deposit liabilities. The core deposit intangible fair value estimate is based on a discounted cash flow methodology that considers expected customer attrition rates, cost of the deposit base and the net maintenance cost attributable to customer deposits. The insurance customer intangible fair value estimate is based on a discounted cash flow methodology that considers expected revenue growth, expected customer attrition rates, and the contributory asset charges attributable to the insurance department.

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The adjustment includes a credit of $168,000 to reverse the intangibles recorded by HCIC prior to its acquisition by Simmons.

(h)

Adjustment represents the current and deferred income tax assets and liabilities recorded to reflect the differences in the carrying values of the acquired assets and assumed liabilities for financial reporting purposes and the cost basis for federal and state income tax purposes at Simmons’ combined federal and state income tax rate of 39.225%.

(i)

Adjustment reflects the estimated fair value premium of HCIC’s time deposits as of the merger date. The fair value was estimated using a discounted cash flow methodology based on current market rates for similar remaining maturities.

(j)

Adjustment made to reflect the Company’s estimate of the fair value of a reserve for unfunded commitments not previously recorded by HCIC.

(k)

Purchase accounting adjustment to eliminate HCIC’s previously existing equity accounts.

(l)

Simmons has evaluated the acquired portfolio to estimate the necessary credit and interest rate fair value adjustments. Subsequently, the accretable portion of the fair value adjustment will be accreted into earnings using the level yield method over the remaining maturity of the underlying loans. For purposes of the pro forma impact on the three months ended March 31, 2017 and the year ended December 31, 2016, the net discount accretion was calculated by summing monthly estimates of accretion/amortization on each loan portfolio, which was calculated based on the remaining maturity of each loan pool. The overall weighted average maturity of the loan portfolio is approximately 4.6 years. The 2016 pro forma accretion income projected for Hardeman is $580,000. The estimated non-accretable yield portion of the net discount of approximately $167,000 will not be accreted into earnings.

(m)

The core deposit intangible will be amortized over Fifteen years on a straight-line basis. The annual amortization expense will be approximately $850,000. The pro forma amortization income impact for the three months ended March 31, 2017 is $213,000.

(n)

Reflects the tax impact of the pro forma acquisition adjustments at Simmons’ combined federal and state income tax rate of 39.225%.

(o)

Pro forma weighted average common shares outstanding assumes the actual stock issued at the close of the HCIC merger on May 15, 2017 of 799,970 shares of common stock was outstanding for the full period presented.

(1)

Adjustment reflects the merger consideration expected to be paid for each acquisition. The merger consideration expected to be paid for OKSB is $494.8 million, consisting of $399.8 million in Simmons common stock and $95.0 million in cash (based on Simmons’ closing common stock price of $55.15 per share on March 31, 2017, OKSB shares of common stock outstanding of 18,689,022 as of March 31, 2017, and the right to receive $5.08 and 0.3879 shares of Simmons common stock for each share of OKSB common stock based on the number of shares of OKSB common stock that were outstanding on March 31, 2017). The merger consideration expected to be paid for First Texas is $428.5 million, consisting of $358.5 million in Simmons common stock and $70 million in cash (based on Simmons’ closing common stock price of $55.15 per share on March 31, 2017 and the right to receive 6,500,000 shares of Simmons common stock and $70 million, pursuant to the First Texas merger agreement).

(2)

Adjustment represents the estimated seller-incurred merger expenses, which are expected to be paid immediately prior to the merger closing date, and the related tax benefit. Estimated seller-incurred merger expenses are $9.7 million for OKSB and the related tax benefit is $3.8 million. Estimated seller-incurred merger expenses are $9.8 million for First Texas and the related tax benefit is $3.8 million.

Estimated Simmons’-incurred merger expenses primarily including severance, professional, legal and conversion related expenditures, are not reflected in the pro forma combined condensed consolidated balance sheet as these integrated costs will be expensed by Simmons as required by U.S. generally accepted accounting principles, or GAAP.

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(3)

Purchase accounting adjustment to eliminate each target’s allowance for loan losses, which cannot be carried over in accordance with GAAP.

(4)

Adjustment reflects the necessary write down of the acquired loan portfolios, allocated to each target as described below, based on Simmons’ evaluation of the loan portfolio during due diligence, which included review of approximately 45% of the portfolios.

OKSB: The total adjustment of ($33.0) million is comprised of approximately $7.0 million of non-accretable credit adjustments and approximately $26.0 million of accretable yield adjustments.

First Texas: The total adjustment of ($21.5) million is comprised of approximately $125,000 of non-accretable credit adjustments and approximately $21.4 million of accretable yield adjustments.

(5)

Adjustment made to reflect the estimated fair value of acquired premises and equipment, including all branches, based on Simmons’ evaluation during due diligence. Adjustment is ($1.2) million for OKSB and $13 million for First Texas.

(6)

Adjustment represents the excess of the consideration paid over the fair value of net assets acquired, net of the reversal of OKSB’s and First Texas’ previously recorded goodwill of $13.5 million and $37.2 million, respectively. See Note (1) for additional information regarding how the pro forma purchase price was calculated. The reconciliation of the pro forma purchase price to goodwill recorded can be summarized as follows.

(7)

Preliminary purchase accounting adjustment to establish a core deposit intangible in recognition of the fair value of core deposits acquired, which is approximately 1.9% of core deposit liabilities for OKSB and First Texas. This intangible asset represents the value of the relationships that OKSB and First Texas had with their deposit customers as of the date of acquisition. The preliminary fair value was estimated based on a discounted cash flow methodology that gave consideration to expected customers attrition rates, cost of the deposit base and the net maintenance cost attributable to customer deposits. A core deposit intangible asset of $23.1 million was estimated for Southwest Bancorp and $27.6 million for First Texas.

The adjustment includes a credit of $2.2 million to reverse the intangibles recorded by OKSB and First Texas prior to their pending acquisition by Simmons.

(8)

Adjustment represents the estimated current and deferred income tax assets and liabilities recorded to reflect the differences in the carrying values of the acquired assets and assumed liabilities for financial reporting purposes and the cost basis for federal and state income tax purposes at Simmons’ combined federal and state income tax rate of 39.225%. OKSB is estimated to have a net deferred tax asset adjustment of ($8.3) million. First Texas is estimated to have a net deferred tax asset adjustment of ($14.9) million.

(9)

Adjustment reflects the estimated fair value discount of OKSB’s and First Texas’ time deposits of $800,000 and $232,000, respectively, based on Simmons’ evaluation during due diligence. The fair value was estimated using a discounted cash flow methodology based on current market rates for similar remaining maturities.

(10)

Adjustment made to reflect the Company’s estimate of the fair value of FHLB advances during due diligence, of which $593,000 is attributable to OKSB and ($693,000) is attributable to First Texas.

(11)

Adjustment reflects the Company’s estimated fair value discount of the trust preferred securities during due diligence, of which $4.5 million is attributable to OKSB and $825,000 is attributable to First Texas.

(12)

Adjustment made to reflect the Company’s estimate of the fair value of a reserve for unfunded commitments not previously recorded by First Texas. No adjustment was necessary for OKSB as the Company determined the existence of an adequate reserve during due diligence.

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(13)

Purchase accounting adjustment to eliminate OKSB’s and First Texas’ previously existing equity accounts.

(14)

Upon completion of the mergers, Simmons will evaluate each acquired loan portfolio to finalize the necessary credit and interest rate fair value adjustments. Subsequently, the accretable portion of the fair value adjustment will be accreted into earnings using the level yield method over the remaining maturity of the underlying loans. This adjustment represents the Company’s best estimate of the expected accretion that would have been recorded in 2016 and the first three months of 2017 assuming the mergers closed on January 1, 2016. Subsequent to the closing of the transactions, the amount and timing of the estimated accretion of this purchase accounting adjustment could be revised significantly.

(15)

The pro forma adjustment to reflect the estimated fair value of time deposits of OKSB and First Texas based on current interest rates for comparable deposits will be amortized as an addition to the cost of such time deposits over an estimated life of one year.

(16)

The core deposit intangible will be amortized over Fifteen years on a straight-line basis. The annual amortization expense will be approximately $1.5 million and $1.8 million for OKSB and First Texas, respectively.

(17)

Reflects the tax impact of the pro forma acquisition adjustments at Simmons’ combined federal and state income tax rate of 39.225%.

(18)

Pro forma weighted average common shares outstanding assumes 7,249,472 common shares issued for OKSB and 6,500,000 common shares issued for First Texas.