SIMMONS FIRST NATIONAL CORPORATION
---------------------------------
Financial Statements
--------------------
(Form 10-Q)
----------
June 30, 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 June 30, 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 3,815,877
Class B, Common None
SIMMONS FIRST NATIONAL CORPORATION
INDEX
Page No.
Part I: Summarized Financial Information
Consolidated Balance Sheets --
June 30, 1995 and December 31, 1994 3-4
Consolidated Statements of Income --
Three months and six months ended
June 30, 1995 and 1994 5
Consolidated Statements of Cash Flows --
Six months ended June 30, 1995 and 1994 6
Consolidated Statement of Changes in Stockholders'
Equity -- Six months ended
June 30, 1995 and 1994 7
Notes to Consolidated Financial Statements 8-17
Management's Discussion and Analysis of Financial
Condition and Results of Operations 18-19
Review by Independent Certified Public Accountants 20
Part I
------
A. Summarized Financial Information
<TABLE>
SIMMONS FIRST NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
ASSETS
------
<CAPTION>
June 30, December 31,
(Dollars in Thousands) 1995 1994
----------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Cash and due from banks $ 31,302 $ 33,476
Interest-bearing balances due from banks 231 101
Federal funds sold and securities purchased
under agreements to resell 34,990 40,425
--------- ---------
Cash and cash equivalents 66,523 74,002
Investment securities (Note 2)
Securities held to maturity 163,085 142,374
Securities available for sale 42,835 29,610
Mortgage loans held for sale 18,835 8,720
Assets held in trading accounts 482 2,734
Loans 444,027 418,392
Allowance for loan losses (Note 3) (8,254) (7,790)
--------- ---------
Net loans (Note 3) 435,773 410,602
Premises and equipment 14,501 12,115
Foreclosed assets held for sale, net 1,568 1,730
Interest receivable 7,453 6,289
Other assets 31,521 25,086
--------- ---------
Total Assets $ 782,576 $ 713,262
========= =========
</TABLE>
The December 31, 1994 Consolidated Balance Sheet is as reported in the
Corporation's 1994 Annual Report.
See Notes to Consolidated Financial Statements.
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<CAPTION>
June 30, December 31,
(Dollars in Thousands) 1995 1994
----------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Non-interest bearing transaction accounts $ 106,137 $ 109,564
Interest bearing transaction and
savings deposits 231,688 228,649
Time deposits (Note 9) 304,497 245,325
--------- ---------
Total Deposits 642,322 583,538
Federal funds purchased and securities
sold under agreements to repurchase 23,587 23,931
Borrowed funds 15,195 13,765
Other liabilities 10,168 8,328
--------- ---------
Total Liabilities 691,272 629,562
--------- ---------
STOCKHOLDERS' EQUITY
Capital stock
Class A, common, par value $5 a share,
authorized 10,000,000 shares;
issued and outstanding 3,815,877 and
3,677,378 at 1995 and 1994, respectively 19,083 18,387
Surplus 22,651 19,827
Net unrealized gain (loss) on securities
available for sale 722 233
Undivided profits (Note 12) 48,848 45,253
--------- ---------
Total Stockholders' Equity $ 91,304 $ 83,700
--------- ---------
Total Liabilities and
Stockholders' Equity $ 782,576 $ 713,262
========= =========
</TABLE>
The December 31, 1994 Consolidated Balance Sheet is as reported in the
Corporation's 1994 Annual Report.
See Notes to Consolidated Financial Statements.
<TABLE>
SIMMONS FIRST NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands, except per share figures) 1995 1994 1995 1994
---------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 9,729 $ 7,353 $ 18,545 $ 14,503
Federal funds sold and securities
purchased under agreements to resell 548 174 918 405
Investment securities - taxable
Held to maturity 1,766 1,472 3,402 2,924
Available for sale 740 830 1,414 1,583
Investment securities - non-taxable
Held to maturity 742 698 1,429 1,393
Available for sale 1 -- 1 --
Mortgage loans held for sale 190 636 333 1,246
Trading account 14 24 23 56
Other interest 28 9 55 20
------- -------- ------- -------
TOTAL INTEREST INCOME 13,758 11,196 26,120 22,130
------- -------- ------- -------
INTEREST EXPENSE
Deposits 5,366 3,446 9,702 6,830
Borrowed funds 622 414 1,252 832
------- -------- ------- -------
TOTAL INTEREST EXPENSE 5,988 3,860 10,954 7,662
------- -------- ------- -------
NET INTEREST INCOME 7,770 7,336 15,166 14,468
Provision for loan losses 452 525 901 1,050
------- -------- ------- -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 7,318 6,811 14,265 13,418
------- -------- ------- -------
NON-INTEREST INCOME
Trust income 376 396 794 850
Service charges on deposit accounts 697 559 1,297 1,107
Other service charges and fees 201 208 402 445
Income on sale of mortgage loans,
net of commissions 54 (13) 146 197
Income on investment banking,
net of commissions 196 332 319 897
Gains on sale of securities -- 27 -- 56
Other operating income 4,308 4,561 8,837 9,483
------- -------- ------- -------
TOTAL NON-INTEREST INCOME 5,832 6,070 11,795 13,035
------- -------- ------- -------
NON-INTEREST EXPENSE
Salaries and employee benefits 5,310 5,070 10,533 10,369
Net occupancy expense 591 538 1,123 1,019
Equipment expense 522 473 1,031 984
Other operating expense 3,426 3,537 6,854 7,184
------- -------- ------- -------
TOTAL NON-INTEREST EXPENSE 9,849 9,618 19,541 19,556
------- -------- ------- -------
NET INCOME BEFORE INCOME TAXES 3,301 3,263 6,519 6,897
Provision for income taxes (Note 8) 908 911 1,873 1,919
------- -------- ------- -------
NET INCOME $ 2,393 $ 2,352 $ 4,646 $ 4,978
======= ======== ======= =======
EARNINGS PER COMMON SHARE AVG $ 0.63 $ 0.64 $ 1.24 $ 1.35
======= ======== ======= =======
DIVIDENDS PER COMMON SHARE $ 0.15 $ 0.12 $ 0.28 $ 0.22
======= ======== ======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
SIMMONS FIRST NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<CAPTION>
Six Months Ended
June 30, June 30,
(Dollars in Thousands) 1995 1994
------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES (Note 7)
Net Income $ 4,646 $ 4,978
Items not requiring (providing) cash
Depreciation and amortization 443 846
Provision for loan losses 901 1,050
Amortization of premiums and accretion of
discounts on investment securities and mortgage-
backed certificates (50) (152)
Provision for real estate owned losses 156 81
(Gain)/loss on sale of investments -- (56)
(Gain) on sale of premises and equipment -- (4)
Deferred income taxes (123) (173)
Changes in:
Accrued interest receivable (1,164) (591)
Mortgage loans held for sale (10,115) (6,734)
Other assets (6,122) 2,037
Accounts payable and accrued expenses 2,148 (1,792)
Income taxes payable (597) 1,315
Trading accounts 2,253 1,050
-------- --------
Net cash provided (used) by operating activities (7,624) 1,855
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net collection of loans (26,323) 31,767
Purchase of premises and equipment (5,173) (1,782)
Proceeds from sale of fixed assets 2,154 416
Proceeds from the sale of foreclosed assets
held for sale 256 808
Proceeds from maturing a-f-s securities 4,850 10,207
Purchases of a-f-s securities (16,985) (11,403)
Proceeds from maturing h-t-m securities 7,747 5,028
Purchases of h-t-m securities (28,720) (2,851)
-------- --------
Net cash provided (used) by investing securities (62,194) 32,190
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in demand deposits, money market,
all-in-one and savings accounts (388) (19,701)
Net repayment of certificates of deposit 59,172 (13,229)
Repayments of other borrowings (89,049) (55,420)
Proceeds from other borrowings 90,479 55,711
Dividends paid (1,051) (809)
Net (increase) federal funds purchased and
securities sold under agreements to repurchase (344) (9,974)
Issuance of common stock 3,520 --
-------- --------
Net cash used in financing activities $ 62,339 $ (43,422)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (7,479) $ (9,377)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 74,002 49,090
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 66,523 $ 39,713
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
SIMMONS FIRST NATIONAL CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<CAPTION>
NET UNREALIZED
GAIN (LOSS)
COMMON SECURITIES UNDIVIDED
(Dollars in Thousands) STOCK SURPLUS AFS PROFITS TOTAL
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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 4,978 4,978
Cash dividend declared
($0.22 per share) (809) (809)
Change in unrealized appreciation
(depreciation) on available-for-sale
securities, net of income tax credit
of $87 (169) (169)
--------- --------- --------- --------- ---------
Balance, June 30, 1994 18,387 19,827 777 41,290 80,281
Net income 4,882 4,882
Cash dividends declared
($0.25 per share) (919) (919)
Change in unrealized appreciation
(depreciation) on available-for-sale
securities, net of income tax credit
of $280 (544) (544)
--------- --------- --------- --------- ---------
Balance, December 31, 1994 18,387 19,827 233 45,253 83,700
Exercise of stock options--2,000 shares 10 10 20
Common Stock issued in connection with
purchase of Dumas Bancshares, Inc.
(136,499 shares @$25.50 per share) 686 2,814 3,500
Net income 4,646 4,646
Cash dividends declared
($0.28 per share) (1,051) (1,051)
Change in unrealized appreciation
(depreciation) on available-for-sale
securities, net of income taxes
of $290 489 489
--------- --------- --------- --------- ---------
Balance, June 30, 1995 $ 19,083 $ 22,651 $ 722 $ 48,848 $ 91,304
========= ========= ========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
SIMMONS FIRST NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: ACCOUNTING POLICIES
The consolidated financial statements include the accounts of
Simmons First National Corporation and its subsidiaries. Significant
intercompany accounts and transactions have been eliminated in consolidation.
All adjustments made to the unaudited financial statements were of a
normal recurring nature. In the opinion of management, all adjustments
necessary for a fair presentation of the results of interim periods have been
made. Certain prior year amounts are reclassified to conform to current year
classification.
The accounting policies followed in the presentation of interim
financial results are presented on pages 30-32 of the 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:
<TABLE>
<CAPTION>
June 30, 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
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held to Maturity
U.S. Treasury $ 81,163 $ 2,025 $ (281) $ 82,907 $ 74,544 $ 349 $ (1,479) $ 73,414
U.S. Government
agencies 23,100 637 (63) 23,674 13,375 32 (289) 13,118
Mortgage-backed
securities 3,370 12 (79) 3,303 3,551 6 (244) 3,313
State and political
subdivisions 55,248 1,217 (513) 55,952 50,904 577 (1,962) 49,519
Other securities 204 3 -- 207
-------- -------- --------- -------- -------- -------- -------- --------
$ 163,085 $ 3,894 $ (936) $ 166,043 $ 142,374 $ 964 $ (3,974) $ 139,364
======== ======== ========= ======== ======== ======== ======== ========
Available For Sale
U.S. Treasury $ 37,578 $ 496 $ (9) $ 38,065 $ 25,701 $ 96 $ (202) $ 25,595
U.S. Government
agencies 1,308 20 -- 1,328 1,002 3 -- 1,005
State and political
subdivisions 50 -- -- 50 -- -- -- --
Other securities 2,767 625 -- 3,392 2,554 457 (1) 3,010
-------- -------- --------- -------- -------- -------- -------- --------
$ 41,703 $ 1,141 $ (9) $ 42,835 $ 29,257 $ 556 $ (203) $ 29,610
======== ======== ========= ======== ======== ======== ======== ========
</TABLE>
Maturities of investment securities at June 30, 1995
<TABLE>
<CAPTION>
Held to Maturity Available for Sale
Amortized Fair Amortized Fair
(Dollars in Thousands) Cost Value Cost Value
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One year of less $ 41,272 $ 41,372 $ 21,804 $ 21,923
After one through five years 73,223 75,065 17,132 17,520
After five through ten years 38,354 38,900 -- --
After ten years 6,662 7,196 -- --
Mortgage-backed securities not due
on a single maturity date 3,370 3,303 -- --
Other securities 204 207 2,767 3,392
----------- ----------- ----------- -----------
$ 163,085 $ 166,043 $ 41,703 $ 42,835
=========== =========== =========== ===========
</TABLE>
The book value of securities pledged as collateral, to secure
public deposits and for other purposes, amounted to $99,745,000 at
June 30, 1995, and $70,981,000 at December 31, 1994. The approximate fair
value of pledged securities amounted to $102,218,000 at June 30, 1995 and
$70,217,000 at December 31, 1994.
The book value of securities sold under agreements to repurchase
amounted to $2,457,000 and $196,000 for June 30, 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 second quarter of 1995, there were $1,000 in unrealized
gains on trading securities.
During the first six 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.
<TABLE>
<CAPTION>
June 30, June 30,
(Dollars in Thousands) 1995 1994
----------------------------------------------------------------------------------------
<S> <C> <C>
Proceeds from sales $ -- $ --
----------- -----------
Gross gains -- 60
Gross losses -- (4)
----------- -----------
Securities gains (losses) $ -- $ 56
=========== ===========
</TABLE>
Approximately 11 percent of the state and political subdivisions
are rated A or above. Of the remaining securities, most are non-rated 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:
<TABLE>
<CAPTION>
June 30, December 31,
(Dollars in Thousands) 1995 1994
------------------------------------------------------------------------------------------
<S> <C> <C>
Loans:
Consumer:
Credit card $ 147,099 $ 164,501
Student loan 59,893 62,836
Other consumer 51,710 40,739
Real estate:
Construction 8,470 6,232
Single family residential 51,571 43,629
Other commercial 56,485 44,141
Commercial:
Commercial 33,230 29,047
Agricultural 23,036 16,048
Financial institutions 10,734 6,681
Other 2,709 5,122
---------- ----------
Total loans before unearned discount and
allowances for loan losses 444,937 418,976
Unearned discount (910) (584)
Allowance for loan losses (8,254) (7,790)
---------- ----------
Net Loans $ 435,773 $ 410,602
========== ==========
</TABLE>
During the second quarter of 1995, foreclosed assets held for
sale decreased to $1,567,000 and are carried at the lower of cost or fair
market value. Non-accrual loans and other non-performing loans for the
Corporation at June 30, 1995, were $1,379,000 and $978,000, respectively,
bringing the total of non-performing assets to $3,924,000.
<TABLE>
<CAPTION>
June 30, December 31,
(Dollars in Thousands) 1995 1994
------------------------------------------------------------------------------------------
<S> <C> <C>
Allowance for Loan Losses:
Balance, beginning of year $ 7,790 $ 7,430
Additions
Provision charged to expense 901 1,050
Allowance for loan losses of
acquired institutions 314
-------- --------
9,005 8,480
Deductions
Losses charged to allowance, net of
recoveries of $213,000 and $81,000 for
the first six months of 1995 and 1994,
respectively 751 966
--------- --------
Balance, June 30 $ 8,254 $ 7,514
========= --------
Additions
Provision charged to expense 1,000
--------
8,514
Deductions
Losses charged to allowance,
net of recoveries of $339,000
for the last six months of
1994 724
--------
Balance, end of year $ 7,790
========
</TABLE>
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 loans'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 loan losses.
At June 30, 1995, impaired loans totaled $3,407,000, all of which
had reserves allocated. An allowance of $646,000 for possible losses related
to those loans.
Interest of $88,000 was recognized on average impaired loans of
$3,548,000 as of June 30, 1995. No interest was recognized on impaired loans
on a cash basis during the first six months 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 owned 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, was merged
into Simmons First National Bank, SFNC's lead bank, and Dumas State Bank
became Simmons First Bank of Dumas and will continue to operate as a
subsidiary bank of the Corporation.
On April 25, 1995, SFNC entered into a definitive agreement to
stock purchase Dermott State Bank Bancshares, Inc. (DSBB), located in
Dermott, Arkansas, into the Corporation. That acquisition was completed
August 1, 1995, in a transaction valued at approximately $2.4 million. DSBB,
the holding company for Dermott State Bank, has consolidated assets as of
June 30, 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, Simmons First Bank of Jonesboro, and Simmons First Bank of Dumas.
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 June 30, 1995, 80,000 shares of common stock of the
Corporation had been granted through an employee stock option incentive plan.
There were 49,600 exercisable options at the end of the second quarter after
2,000 shares had been issued.
NOTE 7: ADDITIONAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Six Months Ended
June 30,
(Dollars in Thousands) 1995 1994
------------------------------------------------------------------------
<S> <C> <C>
Interest paid $ 10,256 $ 7,643
Income taxes paid $ 1,582 $ 2,121
</TABLE>
NOTE 8: INCOME TAXES
The provision for income taxes is comprised of the following
components:
<TABLE>
<CAPTION>
June 30, June 30,
(Dollars in Thousands) 1995 1994
----------------------------------------------------------------------------------
<S> <C> <C>
Income taxes currently payable $ 1,996 $ 2,092
Increase in future income tax benefits (123) (173)
--------- ---------
Provision for income taxes $ 1,873 $ 1,919
========= =========
</TABLE>
The tax effects of temporary differences related to deferred
taxes shown on the balance sheet are:
<TABLE>
<CAPTION>
June 30, December 31,
(Dollars in Thousands) 1995 1994
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 2,926 $ 2,744
Valuation adjustment of foreclosed assets held for sale 294 281
Deferred compensation payable 364 373
Deferred loan fee income 779 773
Other 716 645
--------- ---------
Total deferred tax assets 5,079 4,816
--------- ---------
Deferred tax liabilities:
Accumulated depreciation (384) (405)
Available-for-sale securities (93) (120)
--------- ---------
Total deferred tax liabilities (477) (525)
--------- ---------
Net Deferred tax assets before
valuation allowance $ 4,602 $ 4,291
--------- ---------
Valuation allowance:
Beginning balance -- (564)
Change during period -- 564
--------- ---------
Ending balance -- --
--------- ---------
Net deferred tax asset $ 4,602 $ 4,291
========= =========
</TABLE>
A reconciliation of income tax expense at the statutory rate to the
Corporation's actual income tax expense is shown below:
<TABLE>
<CAPTION>
June 30, June 30,
(Dollars in Thousands) 1995 1994
------------------------------------------------------------------------------------
<S> <C> <C>
Computed at the statutory rate (34%) $ 2,345 $ 2,345
Increase (decrease) resulting from:
Tax exempt income (488) (502)
Other difference, net 16 76
-------- --------
Actual tax provision $ 1,873 $ 1,919
======== ========
</TABLE>
NOTE 9: TIME DEPOSITS
Time deposits include approximately $80,670,000 and $55,222,000 of
certificates of deposit of $100,000 or more at June 30, 1995, and
December 31, 1994, respectively.
NOTE 10: COMMITMENTS AND CREDIT RISK
The four 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 33.1% and 39.3% of the
portfolio, as of June 30, 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 June 30, 1995 and December 31, 1994, the Corporation had
outstanding commitments to originate loans aggregating approximately
$88,912,000 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 $40,755,000
and $16,519,000 at June 30, 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 $1,184,000 and $918,000 at June 30, 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 June 30, 1995, the Corporation had granted unused lines of credit
to borrowers aggregating approximately $13,861,000 and $166,127,000 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 $1,207,261,000 and
$1,228,311,000 at June 30, 1995 and December 31, 1994, respectively, of which
mortgage-backed securities serviced totaled $1,118,571,000 and $1,027,855,000
at June 30, 1995 and December 31, 1994, respectively. Simmons First National
Bank serviced VA loans subject to certain recourse provisions totaling
approximately $148,041,000 and $156,650,000, at June 30, 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 June 30, 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
A number of legal proceedings exist in which the Corporation
and/or its subsidiaries are either plaintiffs or defendants or both. Most of
the lawsuits involve loan foreclosure activities. The various unrelated
legal proceedings pending against the subsidiary banks in the aggregate are
not expected to have a material adverse effect on the financial position of
the Corporation and its subsidiaries.
NOTE 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 June 30, 1995, the bank subsidiaries had
approximately $12.5 million available for payment of dividends to the
Corporation without prior approval of the regulatory agencies.
The Federal Reserve Board's risk-based capital guidelines require a
minimum risk-adjusted ratio for total capital of 8% at 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 June 30, 1995, each of the four subsidiary banks met
the capital standards for a well-capitalized institution. The Corporation's
total capital to total risk-weighted assets ratio was 20.5% at June 30, 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 June 30, 1995, was $2,393,000, an
increase of $41,000, or 1.7%, over the same period of 1994. Earnings per
share for the three-month periods ended June 30, 1995 and June 30, 1994,
were $.63 and $.64, respectively. Year-to-date earnings for 1995 were
$4,646,000, a decrease of $332,000 or 6.7%, over earnings of the first six
months of 1994. Per share earnings for the six-month periods ended June 30,
1995 and 1994, were $1.24 and $1.35, respectively.
The Corporation's annualized return on average assets (ROA) for the
three-month periods ended June 30, 1995 and 1994, were 1.26% and 1.34%,
respectively. For the six-month periods ended June 30, 1995 and 1994,
annualized ROA were 1.28 and 1.40%, respectively. Annualized return on
equity (ROE) for the same six-month periods were 10.52% and 12.83%,
respectively.
Net interest income, the difference between interest income and
interest expense, for the three-month period ended June 30, 1995, increased
$434,000, or 5.9%, when compared to the same period in 1994. During the
second quarter, interest income increased $2,562,000, or 22.9%, and interest
expense increased $2,128,000, or 55.1%, when compared to the same period in
1994. Total interest income figures for the six months ended June 30, 1995
and 1994, were $26,120,000 and $22,130,000, respectively. Total interest
expense for this same period in 1995 increased $3,292,000 to $10,954,000,
resulting in a net interest income of $15,166,000, a 4.8% increase during the
six-month period in 1995, when compared to the same period figures of 1994.
These increases in net interest income can be attributed to an increase in
the Corporation's interest margin.
Continued improvement in asset quality resulted in a reduction in
the provision for loan losses for the second quarter of 1995, to $452,000,
compared to $525,000 for the same period of 1994 resulting in a $73,000, or
13.9% decrease. The year-to-date provision for loan losses decreased
$149,000, to $901,000 from $1,050,000 at June 30, 1994, a 14.2% reduction.
Non-interest income for the second quarter ending at June 30, 1995
was $5,832,000, a reduction of $238,000, or 3.9%, from the same period in
1994. For the six-month periods ended June 30, 1995 and 1994, non-interest
income was down 9.5% to 11,795,000 from $13,035,000. This is primarily
attributable to reduced profits in the mortgage, dealer bank, and bank card
operations as a result of the unstable interest rate environment that has
existed.
During the three months ended June 30, 1995, non-interest expense
decreased $231,000, or 2.4%, over the same period in 1994. For the first six
months of 1995 and 1994, non-interest expense was $19,541,000 and
$19,556,000, respectively. This $15,000 decrease, primarily in the dealer
bank operations is also tied to the general slowdown nationally in fixed
income securities sales.
At June 30, 1995, total assets for the Corporation were
$782,576,000, an increase of $69,314,000, or 9.7%, from the same figure at
December 31, 1994. Deposits at June 30, 1995, totaled $642,322,000, an
increase of $58,784,000 or 10.1%, from the same figure at December 31, 1994.
Stockholders' equity at the end of the quarter was $91,304,000, an
increase of $7,604,000, or 9.1%, 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 June 30, 1995, each
bank was within established guidelines and total corporate liquidity was
strong. At June 30, 1995, cash and due from banks, securities available for
sale, and federal funds sold and securities purchased under agreements for
resale were 16.4% of total assets.
REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BAIRD, KURTZ & DOBSON
Certified Public Accountants
200 East Eleventh
Pine Bluff, Arkansas
Board of Directors
Simmons First National Bank
Pine Bluff, Arkansas
We have made a review of the accompanying consolidated condensed
financial statements, appearing on pages 3 to 8 of the accompanying Form
10-Q, of SIMMONS FIRST NATIONAL CORPORATION and consolidated subsidiaries
as of June 30, 1995 and for the three-month and six-month periods ended
June 30, 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.
BAIRD, KURTZ & DOBSON
Pine Bluff, Arkansas
August 4, 1995
Part II
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The annual shareholders meeting of the Company was held
on April 25, 1995. The matters submitted to the security holders for
approval included setting the number of directors at nine (9) and the
election of directors and two amendments to the Articles of Incorporation
of the Company.
(b) At the annual meeting, all nine (9) nominees for director were
elected by the voting of proxies solicited pursuant to Section 14 of
the Security Exchange Act of 1934, without any solicitation in opposition
thereto.
(c) The following table shows the required analysis of the voting
by security holders at the annual meeting:
<TABLE>
Voting of Shares
<CAPTION>
Action For Against Adstain
------ --- ------- -------
<S> <C> <C> <C>
Set Number of
Directors
at Nine (9) 3,010,465 2,797 14,255
Director Election:
Ayres 3,013,039 5,552 1,530
Floriani 3,012,771 5,820 1,530
Greenwood 3,018,579 5,542 1,000
Hutt 3,017,660 6,317 1,000
May 3,014,039 5,552 1,530
Perdue 3,017,123 5,564 1,000
Ryburn 3,017,831 5,964 1,000
Stone 3,013,039 5,552 1,530
Trotter 3,014,528 8,009 1,000
</TABLE>
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: 8/14/95 /s/J. Thomas May
-------------------- --------------------------------------
J. Thomas May
President & CEO
Date: 8/14/95 /s/Barry L. Crow
-------------------- ---------------------------------------
Barry L. Crow, Executive Vice President
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 31,302
<INT-BEARING-DEPOSITS> 231
<FED-FUNDS-SOLD> 34,990
<TRADING-ASSETS> 482
<INVESTMENTS-HELD-FOR-SALE> 42,835
<INVESTMENTS-CARRYING> 163,085
<INVESTMENTS-MARKET> 166,043
<LOANS> 441,814
<ALLOWANCE> 8,254
<TOTAL-ASSETS> 782,576
<DEPOSITS> 642,322
<SHORT-TERM> 3,269
<LIABILITIES-OTHER> 10,168
<LONG-TERM> 11,926
<COMMON> 19,083
0
0
<OTHER-SE> 72,221
<TOTAL-LIABILITIES-AND-EQUITY> 782,576
<INTEREST-LOAN> 18,545
<INTEREST-INVEST> 6,246
<INTEREST-OTHER> 1,329
<INTEREST-TOTAL> 26,120
<INTEREST-DEPOSIT> 9,702
<INTEREST-EXPENSE> 10,954
<INTEREST-INCOME-NET> 15,166
<LOAN-LOSSES> 901
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 19,541
<INCOME-PRETAX> 6,519
<INCOME-PRE-EXTRAORDINARY> 4,646
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,646
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
<YIELD-ACTUAL> 4.88
<LOANS-NON> 1,379
<LOANS-PAST> 978
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 7,790
<CHARGE-OFFS> 964
<RECOVERIES> 213
<ALLOWANCE-CLOSE> 8,254
<ALLOWANCE-DOMESTIC> 8,254
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,330
</TABLE>
