Stockholders' Equity

12 Months Ended

Dec. 31, 2020

STOCKHOLDERS’ EQUITY

Simmons Bank, the Company’s subsidiary bank, is subject to legal limitations on dividends that can be paid to the parent company without prior approval of the applicable regulatory agencies. The approval of the Commissioner of the Arkansas State Bank Department is required if the total of all dividends declared by an Arkansas state bank in any calendar year exceeds seventy-five percent (75%) of the total of its net profits, as defined, for that year combined with seventy-five percent (75%) of its retained net profits of the preceding year. At December 31, 2020, Simmons Bank had approximately $45.6 million available for payment of dividends to the Company, without prior regulatory approval.

The Company’s bank subsidiary is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and its bank subsidiary must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The risk-based capital guidelines of the Federal Reserve Board include the definitions for (1) a well-capitalized institution, (2) an adequately-capitalized institution, and (3) an undercapitalized institution. Under the Basel III Rules effective January 1, 2015, the criteria for a well-capitalized institution are: a 5% “Tier l leverage capital” ratio, an 8% “Tier 1 risk-based capital” ratio, 10% “total risk-based capital” ratio; and a 6.5% “common equity Tier 1 (CET1)” ratio. CET1 generally consists of common stock; retained earnings; accumulated other comprehensive income and certain minority interests; all subject to applicable regulatory adjustments and deductions.

The Company and Simmons Bank, must hold a capital conservation buffer composed of CET1 capital above its minimum risk-based capital requirements. The implementation of the capital conservation buffer began on January 1, 2016, at the 0.625% level and was phased in over a four year period (increasing by that amount on each subsequent January 1 until it reached 2.5% on January 1, 2019). Failure to meet this capital conservation buffer would result in additional limits on dividends, other distributions and discretionary bonuses.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). As of December 31, 2020, the Company and its subsidiary bank met all capital adequacy requirements under the Basel III Capital Rules and exceeded the fully phased in capital conservation buffer.

As of the most recent notification from regulatory agencies, the subsidiary bank was well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company and the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed these categories.

The Company’s and the subsidiary banks’ actual capital amounts and ratios are presented in the following table.


	Actual			Minimum For Capital Adequacy Purposes			To Be Well Capitalized Under Prompt Corrective Action Provision
(In thousands)	Amount		Ratio (%)	Amount		Ratio (%)	Amount	Ratio (%)
December 31, 2020
Total Risk-Based Capital Ratio
Simmons First National Corporation	$	2,356,982	16.8	$	1,122,372	8.0	N/A
Simmons Bank	2,136,253		15.3	1,116,995		8.0	1,396,244	10.0
Tier 1 Risk-Based Capital Ratio
Simmons First National Corporation	1,884,562		13.4	843,834		6.0	N/A
Simmons Bank	2,046,711		14.6	841,114		6.0	1,121,485	8.0
Common Equity Tier 1 Capital Ratio
Simmons First National Corporation	1,883,795		13.4	632,618		4.5	N/A
Simmons Bank	2,046,711		14.6	630,836		4.5	911,207	6.5
Tier 1 Leverage Ratio
Simmons First National Corporation	1,884,562		9.1	828,379		4.0	N/A
Simmons Bank	2,046,711		9.9	826,954		4.0	1,033,692	5.0

December 31, 2019
Total Risk-Based Capital Ratio
Simmons First National Corporation	$	2,272,858	13.7	$	1,327,216	8.0	N/A
Simmons Bank	1,852,880		12.9	1,149,073		8.0	1,436,341	10.0
Landmark Bank (1)	291,378		13.9	167,700		8.0	209,624	10.0
Tier 1 Risk-Based Capital Ratio
Simmons First National Corporation	1,807,954		10.9	995,204		6.0	N/A
Simmons Bank	1,777,602		12.3	867,123		6.0	1,156,164	8.0
Landmark Bank (1)	290,016		13.8	126,094		6.0	168,125	8.0
Common Equity Tier 1 Capital Ratio
Simmons First National Corporation	1,807,187		10.9	746,086		4.5	N/A
Simmons Bank	1,777,602		12.3	650,342		4.5	939,383	6.5
Landmark Bank (1)	270,016		12.9	94,192		4.5	136,055	6.5
Tier 1 Leverage Ratio
Simmons First National Corporation	1,807,954		9.6	753,314		4.0	N/A
Simmons Bank	1,777,602		10.7	664,524		4.0	830,655	5.0
Landmark Bank (1)	290,016		8.8	131,825		4.0	164,782	5.0

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(1) Landmark Bank was merged into Simmons Bank on February 14, 2020.