Media Release: SIMMONS REPORTS THIRD QUARTER 2021 EARNINGS

October 26, 2021

Acquisitions and conversions of Landmark Community Bank and Triumph Bancshares, Inc. completed shortly after end of the quarter – approximately four months after announcement

Net income of $80.6 million for the third quarter of 2021, up 22 percent from the year ago quarter and up 8 percent compared to the second quarter of 2021
Diluted EPS of $0.74 for the quarter, up 23 percent from the year ago quarter and up 7 percent compared to the second quarter of 2021
Loan production tops $1.5 billion in the quarter while loan yields rise 3 bps on a linked quarter basis
Total deposits of $18.1 billion at the end of the third quarter of 2021, up $1.1 billion since year-end 2020 while deposit costs dropped 14 bps over the same period
Nonperforming loans decline for 4^thconsecutive quarter, down $21.5 million linked quarter; combined with continued improvement in macroeconomic scenario models drives $19.9 million provision expense recapture in the quarter. Nonperforming loan coverage ratio rises to 341 percent
Strong capital position as all regulatory risk-based capital ratios significantly exceed “well-capitalized” guidelines. Approximately 1.8 million shares of common stock repurchased during the third quarter of 2021

Simmons First National Corporation (NASDAQ: SFNC) (the “Company” or “Simmons”) today reported net income of $80.6 million for the third quarter of 2021 compared to net income of $65.9 million for the third quarter of 2020, an increase of $14.7 million, or 22 percent. Diluted earnings per share for the third quarter of 2021 were $0.74, an increase of $0.14, or 23 percent, compared to the same period in the prior year. Included in third quarter 2021 results was a $1.2 million net after-tax credit related to merger and integration expenses and net branch right-sizing activity. Excluding the impact of these items, core earnings were $79.4 million for the third quarter of 2021 compared to $68.3 million for the third quarter of 2020, an increase of $11.0 million, or 16 percent. Core diluted earnings per share were $0.73, an increase of $0.10, or 16 percent, from the comparable period in 2020.

On a year-to-date basis, net income for the first nine months of 2021 was $222.9 million, up 10 percent over the $201.9 million earned for the first nine months of 2020. Diluted earnings per share for the first nine months of 2021 were $2.05, up 12 percent compared to the same period in the prior year. Excluding $4.1 million in net after-tax merger-related and net branch right-sizing costs and the after-tax gain primarily associated with the sale of branches in Illinois, core earnings for the first nine months of 2021 were $218.8 million, an increase of $16.5 million compared to the first nine months of 2020. Core diluted earnings per share for the first nine months of 2021 were $2.01, an increase of $0.18, or 10 percent, from the comparable period of 2020.

“Simmons once again delivered solid results in the quarter reflecting our ability to execute basic blocking and tackling fundamentals,” said George A. Makris, Jr., Simmons chairman and CEO. “We also announced the completion of the acquisitions of Tennessee-based Landmark Community Bank and Triumph Bancshares, Inc. shortly after the end of the quarter. To be able to obtain all the necessary approvals, close and simultaneously complete the systems conversions of two banks in approximately four months is a remarkable accomplishment and speaks to the outstanding team we have built at Simmons. We’d like to welcome our new customers, associates and shareholders to the Simmons family.”

“While overall loan growth has been challenging given the high levels of liquidity throughout the system and corresponding paydowns, during the quarter we generated $1.5 billion in loan originations and advances, and our commercial loan pipeline rose for the fourth consecutive quarter to $1.5 billion, up 15 percent on a linked quarter basis. Our ability to build upon this positive momentum, coupled with our outstanding capital position and steadfast attention to maintaining a strong credit culture, give us reason to be cautiously optimistic as we enter the final quarter of the year and look forward to 2022.”

Selected Highlights:
3rd Qtr 2021
2nd Qtr 2021
3rd Qtr 2020
Net income
$80.6 million
$74.9 million
$65.9 million
Diluted earnings per share
$0.74
$0.69
$0.60
Return on avg assets
1.37%
1.29%
1.20%
Return on avg common equity
10.42%
10.08%
8.91%
Return on tangible common equity (1)
17.43%
17.25%
15.45%

Core earnings (2)
$79.4 million
$75.4 million
$68.3 million
Core diluted earnings per share (2)
$0.73
$0.69
$0.63
Core return on avg assets (2)
1.35%
1.30%
1.25%
Core return on avg common equity (2)
10.26%
10.15%
9.24%
Core return on tangible common equity (1)(2)
17.18%
17.36%
16.00%
Efficiency ratio (3)
58.10%
56.75%
53.58%
Adjusted pre-tax, pre-provision earnings (2)
$72.6 million
$74.6 million
$87.5 million

Return on tangible common equity excludes goodwill and other intangible assets and is a non-GAAP measurement. Please see “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” below.
Core figures exclude non-core items and are non-GAAP measurements. Adjusted pre-tax, pre-provision earnings exclude provision for income taxes, provisions for credit losses and unfunded commitments, gains on sales of securities, and other pre-tax, non-core items, and is also a non-GAAP measurement. Please see “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” below.
Efficiency ratio is core non-interest expense before foreclosed property expense and amortization of intangibles, as a percent of net interest income (fully taxable equivalent) and non-interest revenues, excluding gains and losses from securities transactions and non-core items, and is a non-GAAP measurement. Please see “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” below.

Loans

($ in billions)
3rd Qtr 2021
2nd Qtr 2021
3rd Qtr 2020
Total loans
$10.8
$11.4
$14.0

Total loans at the end of the third quarter of 2021 were $10.8 billion compared to $11.4 billion at the end of the second quarter of 2021 and $14.0 billion at the end of the third quarter of 2020. Loan production increased to $1.5 billion in the third quarter, but was offset by paydowns and payoffs, including higher activity associated with Paycheck Protection Program (“PPP”) loans. PPP loans at the end of the third quarter totaled $212 million, down $229 million from $441 million at the end of the second quarter of 2021.

Despite these headwinds, anecdotal evidence suggests that loan demand may be returning to more normalized levels. For the fourth consecutive quarter, the Company experienced an increase in its commercial loan pipeline. The Company’s total commercial loan pipeline consisting of all loan opportunities was $1.5 billion, up 15 percent on a linked quarter basis, and up substantially from $674 million at December 31, 2020. Loans approved and ready to close at the end of the quarter totaled $493 million.

PPP Loans

($ in millions)
PPP Round 1
PPP Round 2
Total PPP Loans
Beginning balance, January 1, 2021
$904.7
$ –
$904.7
PPP loan originations
–
318.9
318.9
PPP loan forgiveness and repayments
(882.3)
(129.2)
(1,011.5)
Ending balance, September 30, 2021
$22.4
$189.7
$212.1

Deposits

($ in billions)
3rd Qtr 2021
2nd Qtr 2021
3rd Qtr 2020
Total deposits
$18.1
$18.3
$16.2
Noninterest bearing deposits
$4.9
$4.9
$4.5
Interest bearing deposits
$10.7
$10.6
$9.0
Time deposits
$2.5
$2.8
$2.8

Total deposits at the end of the third quarter of 2021 were $18.1 billion, an increase of $1.8 billion or 11 percent from $16.2 billion at the end of the third quarter of 2020. The increase in total deposits from a year ago was fueled by a $1.7 billion increase in interest bearing deposits (checking, savings and money market account) which totaled $10.7 billion at the end of the third quarter of 2021. Growth in noninterest bearing deposits also contributed to the year-over-year increase in total deposits, rising $467 million or 11 percent to $4.9 billion. Time deposits totaled $2.5 billion at the end of the third quarter of 2021, down $346 million from $2.8 billion at the end of the third quarter of 2020.

Net Interest Income

3rd Qtr
2021
2nd Qtr
2021
1st Qtr
2021
4th Qtr
2020
3rd Qtr
2020
Loan yield (1)
4.76%
4.73%
4.75%
4.74%
4.54%
Core loan yield (1) (2)
4.61%
4.54%
4.53%
4.47%
4.29%
Security yield (1)
1.77%
1.97%
2.36%
2.48%
2.60%
Cost of interest bearing deposits
0.27%
0.32%
0.41%
0.47%
0.54%
Cost of deposits (3)
0.20%
0.24%
0.30%
0.34%
0.39%
Cost of borrowed funds
1.96%
1.97%
1.91%
1.88%
1.85%
Net interest margin (1)
2.85%
2.89%
2.99%
3.22%
3.21%
Core net interest margin (1) (2)
2.77%
2.78%
2.86%
3.04%
3.02%

Fully tax equivalent using an effective tax rate of 26.135%.
Core loan yield and core net interest margin exclude accretion and are non-GAAP measurements. Please see “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” below.
Includes noninterest bearing deposits.

Net interest income for the third quarter of 2021 totaled $145.2 million compared to $146.5 million in the second quarter of 2021 and $153.6 million in the third quarter of 2020. Included in net interest income is accretion recognized on loans acquired totaling $4.1 million in the third quarter of 2021, $5.6 million in the second quarter of 2021 and $8.9 million in the third quarter of 2020. Excluding the impact of accretion, core net interest income for the third quarter of 2021 was up slightly on a linked quarter basis.

The decrease in net interest income from a year ago reflects lower average loan balance, offset in part by an increase in loan yields. To further offset the expected pressure on net interest income given the current low interest rate environment, the Company has been successful in its efforts to reduce deposit costs. Cost of deposits for the third quarter of 2021 were 20 basis points, down 4 basis points on a linked quarter basis and down 19 basis points compared to the third quarter of 2020.

The yield on loans for the third quarter of 2021 was 4.76 percent, up 3 basis points on a linked quarter basis and up 22 basis points compared to the third quarter of 2020. The core loan yield, which excludes accretion, for the third quarter of 2021 was 4.61 percent, up 7 basis points compared to the second quarter of 2021 and up 32 basis points compared to the third quarter of 2020. The yield on PPP loans (including accretion of net fees) was approximately 10.60 percent during the third quarter of 2021, reflecting a substantial increase in forgiveness and repayment activity compared to prior quarters.

The net interest margin on a fully taxable equivalent basis was 2.85 percent for the third quarter of 2021 compared to 2.89 percent for the second quarter of 2021 and 3.21 percent for the third quarter of 2020. Core net interest margin (excluding accretion on acquired loans) was 2.77 percent compared to 2.78 percent for the second quarter of 2021 and 3.02 percent for the third quarter of 2020. During the third quarter of 2021, the Company strategically redeployed excess liquidity through the purchase of approximately $1.2 billion of investments securities, including $226 million of short-term, variable rate investment securities. The duration of the investment securities portfolio at September 30, 2021 was 5.0 years compared to 4.9 years at June 30, 2021.

Noninterest Income
Noninterest income for the third quarter of 2021 was $48.6 million compared to $47.1 million for the second quarter of 2021 and $69.5 million in the third quarter of 2020. The decrease in noninterest income compared to the third quarter of 2020 is partially attributable to mortgage lending income in the third quarter of 2020, which was aided by strong mortgage production during favorable market conditions. Gains on sales of investment securities totaled $5.2 million in the third quarter of 2021, $5.1 million in the second quarter of 2021 and $22.3 million in the third quarter of 2020. Core noninterest income totaled $48.8 million in the third quarter of 2021 compared to $46.7 million in the second quarter of 2021 and $69.1 million in the third quarter of 2020. Core noninterest income excludes net gains on the sale of branches which totaled $(239,000) in the third quarter of 2021, $445,000 in the second quarter of 2021 and $370,000 in the third quarter of 2020.

Select Noninterest Income Items
($ in millions)
3rd Qtr
2021
2nd Qtr
2021
1st Qtr
2021
4th Qtr
2020
3rd Qtr
2020
Service charges on deposit accounts
$11.6
$10.1
$9.7
$10.8
$10.4
Trust income
$7.1
$7.2
$6.7
$6.6
$6.7
Mortgage lending income
$5.8
$4.5
$6.4
$3.0
$14.0
SBA lending income
$0.2
$0.3
$0.2
$0.5
$0.3
Debit and credit card fees (1)
$7.1
$7.1
$6.6
$6.4
$6.5
Gain on sale of securities
$5.2
$5.1
$5.5
–
$22.3
Other income
$6.2
$8.1
$10.3
$10.6
$5.4

Core other income (2)
$6.5
$7.7
$4.8
$10.3
$5.0

During the second quarter of 2021, certain debit and credit card transaction fees were reclassified from noninterest expense to noninterest income. Prior periods have been adjusted to reflect this reclassification.
Core figures exclude non-core items and are non-GAAP measurements. Please see “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” below.

Noninterest Expense
Noninterest expense for the third quarter of 2021 totaled $114.3 million compared to $114.7 million for the second quarter of 2021 and $116.6 million for the third quarter of 2020. Included in noninterest expense are pre-tax, non-core items for merger-related expenses, early retirement and branch right sizing costs. Excluding these items, core noninterest expense was $116.2 million for the third quarter of 2021, $113.5 million for the second quarter of 2021 and $112.9 million for the third quarter of 2020. During the quarter, the Company recorded in other expense a $3.3 million reversal of mark-to-market adjustment related to branches held for sale. As previously announced, during the quarter the Company closed 13 branches in connection with its branch right sizing initiative.

Select Noninterest Expense Items
($ in millions)
3rd Qtr
2021
2nd Qtr
2021
1st Qtr
2021
4th Qtr
2020
3rd Qtr
2020
Salaries and employee benefits
$61.9
$60.3
$60.3
$55.8
$61.1
Merger related costs
$1.4
$0.7
$0.2
$0.7
$0.9
Other operating expenses (1)
$34.6
$37.2
$36.1
$52.0
$35.8

Core salaries and employee benefits (2)
$61.8
$60.3
$60.3
$55.6
$58.7
Core merger related costs (2)
–
–
–
–
–
Core other operating expenses (2)
$38.3
$37.1
$35.9
$41.8
$35.8

Asset Quality

($ in millions)
3rd Qtr
2021
2nd Qtr
2021
1st Qtr
2021
4th Qtr
2020
3rd Qtr
2020
Allowance for credit losses on loans to total loans
1.87%
2.00%
1.93%
1.85%
1.77%
Allowance for credit losses on loans to nonperforming loans
341%
281%
204%
193%
148%
Nonperforming loans to total loans
0.55%
0.71%
0.95%
0.96%
1.20%
Net charge-off ratio (annualized)
0.17%
(0.07%)
0.10%
0.52%
0.16%
Net charge-off ratio YTD (annualized)
0.06%
0.01%
0.10%
0.45%
0.43%

Total nonperforming loans
$59.4
$80.9
$115.5
$123.5
$167.9
Total other nonperforming assets
$13.5
$16.3
$12.4
$20.4
$14.6

For the fourth consecutive quarter, asset quality metric continued to show marked improvement with nonperforming loans now at their lowest level since the fourth quarter of 2018. Total nonperforming loans at the end of the quarter totaled $59.4 million, down $21.5 million compared to $80.9 million at the end of the second quarter of 2021 and down $108.5 million from the third quarter of 2020. Net charge-offs as a percentage of average total loans for the quarter were 17 basis points, relatively unchanged from the 16 basis points recorded in the third quarter a year ago. The increase in net charge-offs on a linked quarter basis was primarily associated with a single previously identified commercial loan. Provision for credit losses in the quarter was a credit of $19.9 million, reflecting continued positive trends in asset quality metrics and improved economic modeling scenarios. The allowance for credit losses at the end of the third quarter of 2021 totaled $202.5 million compared to $227.2 million at the end of the second quarter of 2021 and $248.3 million at the end of the third quarter of 2020. At the same time, all of our coverage ratios remain strong. The allowance to loan ratio ended the quarter at 1.87 percent compared to 2.00 percent at the end of the second quarter of 2021 and 1.77 percent at the end of the third quarter of 2020. The nonperforming loan coverage ratio rose to 341 percent compared to 281 percent at the end of the second quarter of 2021 and 148 percent at the end of the third quarter of 2020.

Foreclosed Assets and Other Real Estate Owned
At September 30, 2021, foreclosed assets and other real estate owned (“OREO”) totaled $11.8 million compared to $15.2 million at the June 30, 2021 and $12.6 million at September 30, 2020. A breakdown of the composition of foreclosed assets and OREO is provided in the table below:

($ in millions)
3rd Qtr
2021
2nd Qtr
2021
1st Qtr
2021
4th Qtr
2020
3rd Qtr
2020
Closed bank branches and branch sites
$2.7
$4.4
$0.5
$0.6
$0.6
Foreclosed assets – acquired
$6.0
$6.7
$7.7
$15.3
$9.3
Foreclosed assets – legacy
$3.1
$4.1
$3.0
$2.5
$2.7

Capital

3rd Qtr
2021
2nd Qtr
2021
1st Qtr
2021
4th Qtr
2020
3rd Qtr
2020
Stockholders’ equity to total assets
13.1%
13.0%
12.6%
13.3%
13.7%
Tangible common equity to tangible assets (1)

8.4%

7.9%

8.5%

8.7%
Regulatory common equity tier 1 ratio
14.3%
14.2%
14.1%
13.4%
12.6%
Regulatory tier 1 leverage ratio
9.1%
9.0%
9.0%
9.1%
9.1%
Regulatory tier 1 risk-based capital ratio
14.3%
14.2%
14.1%
13.4%
12.6%
Regulatory total risk-based capital ratio
17.4%
17.5%
17.5%
16.8%
15.8%

Tangible common equity to tangible assets is a non-GAAP measurement. Please see “Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Financial Measures” below.

Total common stockholders’ equity at the end of the second and third quarters of 2021 totaled $3.0 billion compared to $2.9 billion at the end of the third quarter of 2020. Book value per share at the end of the quarter was $28.42 compared to $28.03 at the end of the second quarter of 2021 and $26.98 at the end of the third quarter of 2020. Tangible book value per share was $17.39 compared to $17.16 at the end of the second quarter of 2021 and $16.07 at the end of the third quarter of 2020. The ratio of stockholders’ equity to total assets at September 30, 2021 was 13.1 percent while tangible common equity to tangible total assets was 8.4 percent. The Company continues to maintain an outstanding capital positions with each of its regulatory capital ratios significantly in excess of “well-capitalized” guidelines.

Share Repurchase Program
During the third quarter of 2021, the Company repurchased approximately 1.8 million shares of its common stock at an average price of $28.48 pursuant to the Company’s stock repurchase program (the “Program”), with remaining capacity under the Program totaling approximately $98.5 million. Market conditions and our capital needs will drive the decisions regarding additional, future stock repurchases.

The Program permits the Company to repurchase shares of its common stock through open market and privately negotiated transactions or otherwise. The timing, pricing, and amount of any repurchases under the Program will be determined by the Company’s management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of the common stock, corporate considerations, the Company’s working capital and investment requirements, general market and economic conditions, and legal requirements. The Program does not obligate the Company to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice.

Simmons First National Corporation
Simmons First National Corporation (NASDAQ: SFNC) is a Mid-South based financial holding company whose principal subsidiary, Simmons Bank, operates more than 200 financial centers in Arkansas, Missouri, Tennessee, Texas, Oklahoma and Kansas. Founded in 1903, Simmons Bank offers comprehensive financial solutions delivered with a client-centric approach. Simmons Bank was named to Forbes’ list of “World’s Best Banks” for the second consecutive year and ranked among the top 30 banks in Forbes’ list of “America’s Best Banks” for 2021. Additional information about Simmons and Simmons Bank can be found on our website at simmonsbank.com, by following @Simmons_Bank on Twitter or by visiting our newsroom.

Conference Call
Management will conduct a live conference call to review this information beginning at 9:00 a.m. CDT today, Tuesday, October 26, 2021. Interested persons can listen to this call by dialing toll-free 1-866-298-7926 (United States and Canada only) and asking for the Simmons First National Corporation conference call, conference ID 6606988. In addition, the call will be available live or in recorded version on the Company’s website at simmonsbank.com for at least 60 days.

Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance. These measures adjust GAAP performance measures to, among other things, include the tax benefit associated with revenue items that are tax-exempt, as well as exclude from income available to common shareholders, non-interest income, and non-interest expense certain income and expenses related to significant non-core activities, including merger-related expenses, gain on sale of branches, early retirement program expenses and net branch right-sizing expenses. In addition, the Company also presents certain figures based on tangible common stockholders’ equity, tangible assets and tangible book value, which exclude goodwill and other intangible assets. The Company further presents certain figures that are exclusive of the impact of PPP loans. The Company’s management believes that these non-GAAP financial measures are useful to investors because they, among other things, present the results of the Company’s ongoing operations without the effect of mergers or other items not central to the Company’s ongoing business, as well as normalize for tax effects. Management, therefore, believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses, and management uses these non-GAAP financial measures to assess the performance of the Company’s core businesses as related to prior financial periods. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

Forward-Looking Statements
Certain statements in this news release may not be based on historical facts and should be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including, without limitation, statements made in Mr. Makris’s quotes, may be identified by reference to future periods or by the use of forward-looking terminology, such as “believe,” “budget,” “expect,” “foresee,” “anticipate,” “intend,” “indicate,” “target,” “estimate,” “plan,” “project,” “continue,” “contemplate,” “positions,” “prospects,” “predict,” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could,” “might” or “may,” or by variations of such words or by similar expressions. These forward-looking statements include, without limitation, statements relating to Simmons’ future growth, lending capacity and lending activity, loan demand, revenue, assets, asset quality, profitability, net interest margin, non-interest revenue, share repurchase program, acquisition strategy, digital banking initiatives, the Company’s ability to recruit and retain key employees, the benefits associated with the Company’s early retirement program, branch closures and branch sales, the adequacy of the allowance for credit losses, the ability of the Company to manage the impact of the COVID-19 pandemic, and the impacts of the Company’s and its customers’ participation in the PPP. Any forward-looking statement speaks only as of the date of this news release, and Simmons undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this news release. By nature, forward-looking statements are based on various assumptions and involve inherent risk and uncertainties. Various factors, including, but not limited to, changes in economic conditions, credit quality, interest rates, loan demand, deposit flows, real estate values, the assumptions used in making the forward-looking statements, the securities markets generally or the price of Simmons common stock specifically, and information technology affecting the financial industry; the effect of steps the Company takes and has taken in response to the COVID-19 pandemic; the severity and duration of the pandemic, including the effectiveness of “booster” vaccination efforts and developments with respect to COVID-19 variants; the pace of recovery when the pandemic subsides and the heightened impact it has on many of the risks described herein; the effects of the COVID-19 pandemic on, among other things, the Company’s operations, liquidity, and credit quality; general economic and market conditions; unemployment; claims, damages, and fines related to litigation or government actions, including litigation or actions arising from the Company’s participation in and administration of programs related to the COVID-19 pandemic; changes in accounting principles relating to loan loss recognition (current expected credit losses, or CECL); the Company’s ability to manage and successfully integrate its mergers and acquisitions; cyber threats, attacks or events; reliance on third parties for key services; government legislation; and other factors, many of which are beyond the control of the Company, could cause actual results to differ materially from those contemplated by the forward-looking statements. Additional information on factors that might affect the Company’s financial results is included in the Company’s Form 10-K for the year ended December 31, 2020, which has been filed with, and is available from, the U.S. Securities and Exchange Commission.