UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2000 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 870-541-1000
------------------
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 common
stock.
Class A, Common 7,329,778
Class B, Common None
<PAGE>
SIMMONS FIRST NATIONAL CORPORATION
INDEX
Page No.
Part I: Summarized Financial Information
Consolidated Balance Sheets --
March 31, 2000 and December 31, 1999 3-4
Consolidated Statements of Income --
Three months ended March 31, 2000 and 1999 5
Consolidated Statements of Cash Flows --
Three months ended March 31, 2000 and 1999 6
Consolidated Statements of Changes in Stockholders' Equity
Three months ended March 31, 2000 and 1999 7
Notes to Consolidated Financial Statements 8-17
Management's Discussion and Analysis of Financial
Condition and Results of Operations 18-20
Review by Independent Certified Public Accountants 21
Part II: Other Information 22-23
<PAGE>
Part I: Summarized Financial Information
<TABLE>
<CAPTION>
Simmons First National Corporation
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999
ASSETS
March 31, December 31,
(In thousands, except share data) 2000 1999
- -----------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Cash and non-interest bearing balances due from banks $ 51,081 $ 60,324
Interest bearing balances due from banks 18,848 15,381
Federal funds sold and securities purchased
under agreements to resell 52,645 5,500
---------- ---------
Cash and cash equivalents 122,574 81,205
Investment securities 407,072 409,279
Mortgage loans held for sale 7,144 6,814
Assets held in trading accounts 814 1,388
Loans 1,136,678 1,113,635
Allowance for loan losses (17,719) (17,085)
--------- ---------
Net loans 1,118,959 1,096,550
Premises and equipment 40,379 40,383
Foreclosed assets held for sale, net 1,632 747
Interest receivable 15,312 15,681
Intangible assets, net 26,609 27,226
Other assets 17,540 18,157
---------- ---------
TOTAL ASSETS $ 1,758,035 $ 1,697,430
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Simmons First National Corporation
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
(In thousands, except share data) 2000 1999
- -----------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
LIABILITIES
Non-interest bearing transaction accounts $ 196,418 $ 170,571
Interest bearing transaction accounts and savings deposits 437,743 463,354
Time deposits 845,954 776,708
---------- ----------
Total deposits 1,480,115 1,410,633
Federal funds purchased and securities sold
under agreements to repurchase 44,171 60,496
Short-term debt 8,981 5,044
Long-term debt 44,361 46,219
Accrued interest and other liabilities 17,614 15,667
---------- ----------
Total liabilities 1,595,242 1,538,059
---------- ----------
STOCKHOLDERS' EQUITY
Capital stock
Class A, common, par value $1 a share, authorized
30,000,000 shares 7,329,778 issued and outstanding
at 2000 and 7,315,575 at 1999 7,330 7,316
Surplus 50,925 50,770
Undivided profits 108,121 105,185
Accumulated other comprehensive income
Unrealized depreciation on available-for-sale securities,
net of income tax credit of $2,150 at 2000 and $2,340 at 1999 (3,583) (3,900)
---------- ----------
Total stockholders' equity 162,793 159,371
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,758,035 $ 1,697,430
========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Simmons First National Corporation
Consolidated Statements of Income
Three Months Ended March 31, 2000 and 1999
Three Months Ended
March 31,
(In thousands, except per share data) 2000 1999
- ---------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
INTEREST INCOME
Loans $ 24,726 $ 22,720
Federal funds sold and securities purchased
under agreements to resell 352 931
Investment securities 5,907 5,902
Mortgage loans held for sale, net of unrealized gains (losses) 118 197
Assets held in trading accounts 18 17
Interest bearing balances due from banks 142 186
-------- --------
TOTAL INTEREST INCOME 31,263 29,953
-------- --------
INTEREST EXPENSE
Deposits 13,304 12,605
Federal funds purchased and securities sold
under agreements to repurchase 710 852
Short-term debt 117 27
Long-term debt 886 961
-------- --------
TOTAL INTEREST EXPENSE 15,017 14,445
-------- --------
NET INTEREST INCOME 16,246 15,508
Provision for loan losses 1,720 1,652
-------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 14,526 13,856
-------- --------
NON-INTEREST INCOME
Trust income 1,214 1,190
Service charges on deposit accounts 1,727 1,664
Other service charges and fees 539 585
Income on sale of mortgage loans, net of commissions 365 611
Income on investment banking, net of commissions 88 134
Credit card fees 2,335 2,238
Other income 692 327
Gain on sale of securities, net -- --
-------- --------
TOTAL NON-INTEREST INCOME 6,960 6,749
-------- --------
NON-INTEREST EXPENSE
Salaries and employee benefits 8,387 8,151
Occupancy expense, net 872 865
Furniture and equipment expense 1,281 1,225
Loss on foreclosed assets 51 138
Merger-related -- 395
Other operating expenses 4,689 4,471
-------- --------
TOTAL NON-INTEREST EXPENSE 15,280 15,245
-------- --------
INCOME BEFORE INCOME TAXES 6,206 5,360
Provision for income taxes 1,878 1,652
-------- --------
NET INCOME $ 4,328 $ 3,708
======== ========
BASIC EARNINGS PER SHARE $ 0.59 $ 0.51
======== ========
DILUTED EARNINGS PER SHARE $ 0.59 $ 0.50
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Simmons First National Corporation
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999
March 31, March 31,
(In thousands) 2000 1999
- ----------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,328 $ 3,708
Items not requiring (providing) cash
Depreciation and amortization 1,632 1,509
Provision for loan losses 1,720 1,652
Net amortization (accretion) of investment securities 11 (169)
Deferred income taxes (152) 350
Provision for foreclosed assets 32 56
Changes in
Interest receivable 369 458
Mortgage loans held for sale (330) 843
Assets held in trading accounts 574 (2,979)
Other assets 617 (523)
Accrued interest and other liabilities 1,109 (7,700)
Income taxes payable 990 665
--------- ---------
Net cash provided by (used in) operating activities 10,900 (2,130)
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Net originations of loans (25,284) 19,602
Purchase of premises and equipment, net (1,011) (2,255)
Proceeds from sale of foreclosed assets 238 107
Proceeds from maturities of available-for-sale securities 31,105 48,639
Purchases of available-for-sale securities (32,237) (57,148)
Proceeds from maturities of held-to-maturity securities 6,630 28,220
Purchases of held-to-maturity securities (2,985) (16,879)
--------- ---------
Net cash (used in) provided by investing activities (23,544) 20,286
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 69,482 9,791
Net proceeds (repayments) of short-term debt 3,937 (406)
Dividends paid (1,392) (1,108)
Repayments of long-term debt (1,858) (373)
Net decrease in federal funds purchased and
securities sold under agreements to repurchase (16,325) (18,080)
Issuance of common stock, net 169 101
--------- ---------
Net cash provided by (used in) financing activities 54,013 (10,075)
--------- ---------
INCREASE IN CASH AND
CASH EQUIVALENTS 41,369 8,081
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 81,205 139,283
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 122,574 $ 147,364
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Simmons First National Corporation
Consolidated Statements of Changes in Stockholders' Equity
Three Months Ended March 31, 2000 and 1999
Accumulated
Other
Common Comprehensive Undivided
(In thousands, except per share data) Stock Surplus Income Profits Total
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 7,239 48,271 1,491 93,383 150,384
Comprehensive income
Net income -- -- -- 3,708 3,708
Change in unrealized appreciation on
available-for-sale securities, net of
income tax credit of $514 -- -- (869) -- (869)
-------
Comprehensive income 2,839
Exercise of stock options--10,300 shares 10 102 -- -- 112
Securities exchanged under stock option plan -- (11) -- -- (11)
Common stock issued in connection with the
purchase of the minority shares of the Bank
of Lincoln - 56,997 shares 57 2,230 -- -- 2,287
Cash dividends declared
Common stock ($0.17 per share) -- -- -- (1,108) (1,108)
Pooled institutions prior to pooling -- -- -- -- --
----- ------ ------ ------- -------
Balance, March 31, 1999 7,306 50,592 622 95,983 154,503
Comprehensive income
Net income -- -- -- 13,460 13,460
Change in unrealized appreciation on
available-for-sale securities, net of
income tax credit of $2,674 -- -- (4,522) -- (4,522)
-------
Comprehensive income 8,938
Exercise of stock options--9,600 shares 10 178 -- -- 188
Cash dividends declared
Common stock ($0.55 per share) -- -- -- (3,882) (3,882)
Pooled institutions prior to pooling -- -- -- (376) (376)
----- ------ ------ ------- -------
Balance, December 31, 1999 7,316 50,770 (3,900) 105,185 159,371
Comprehensive income
Net income -- -- -- 4,328 4,328
Change in unrealized depreciation on
available-for-sale securities, net of
income taxes of $190 -- -- 317 -- 317
-------
Comprehensive income 4,645
Exercise of stock options--14,400 shares 14 160 -- -- 174
Securities exchanged under stock option plan -- (5) -- -- (5)
Cash dividends declared ($0.19 per share) -- -- -- (1,392) (1,392)
----- ------ ------ ------- -------
Balance, March 31, 2000 $7,330 $50,925 $(3,583) $108,121 $162,793
===== ====== ====== ======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
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 financial information
has been restated for the mergers, which were accounted for as
poolings-of-interests.
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 27-29 of the 1999 Annual Report to shareholders.
Earnings Per Share
Basic earnings per share is computed based on the weighted average number
of common shares outstanding during each year. Diluted earnings per share is
computed using the weighted average common shares and all potential dilutive
common shares outstanding during the period.
The computation of per share earnings for the three months ended March 31,
2000 and 1999 is as follows:
<TABLE>
<CAPTION>
(In thousands, except per share data) 2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Income $ 4,328 $ 3,708
-------- -------
Average common shares outstanding 7,322 7,291
Average common share stock options outstanding 26 81
--------- -------
Average diluted common shares 7,348 7,372
--------- -------
Basic earnings per share $ 0.59 $ 0.51
======== =======
Diluted earnings per share $ 0.59 $ 0.50
======== =======
</TABLE>
<PAGE>
NOTE 2: ACQUISITIONS
On January 15, 1999, the Company and Lincoln Bankshares, Inc. ("LBI")
merged. This merger was accounted for as a pooling-of-interests, except for the
acquisition of the minority shares (17.9%) of the Bank of Lincoln, which were
accounted for on a purchase accounting basis. Stockholders of LBI received
301,823 shares of Simmons First National Corporation stock in exchange for LBI
shares in the transaction. LBI owned the Bank of Lincoln, Lincoln, Arkansas with
assets, as of January 15, 1999, of $75 million. The Company merged the Bank of
Lincoln into Simmons First Bank of Northwest Arkansas during the second quarter
of 1999.
On July 9, 1999, the Company and NBC Bank Corp. ("NBC") merged in a
pooling-of-interests transaction. Stockholders of NBC received 784,887 shares of
Simmons First National Corporation stock in exchange for NBC shares in the
transaction. NBC owned National Bank of Commerce, El Dorado, Arkansas with
assets, as of July 9, 1999, of $155 million. The Company changed the name of
National Bank of Commerce to Simmons First Bank of El Dorado, N.A. The Company
will continue to operate Simmons First Bank of El Dorado, N.A. as a separate
community bank with the same board of directors and management.
On March 27, 2000, an announcement was made jointly by the Chief Executive
Officers of both the Company and First Financial Banc Corporation regarding the
execution of a definitive agreement under the terms of which First Financial
will sell eight of its locations to the Company. The eight locations have
approximately $68 million in loans and $70 million in total deposits. The
transaction is expected to close during the third quarter of 2000.
NOTE 3: INVESTMENT SECURITIES
The amortized cost and fair value of investment securities that are
classified as held-to-maturity and available-for-sale are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------------------------------------------- -----------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
(In thousands) Cost Gains (Losses) Value Cost Gains (Losses) Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held-to-Maturity
- ----------------
U.S. Treasury $ 12,323 $ -- $ (137) $ 12,186 $ 13,576 $ 10 $ (115) $ 13,471
U.S. Government
agencies 36,655 37 (974) 35,718 36,654 57 (1,169) 35,542
Mortgage-backed
securities 16,113 57 (299) 15,871 16,920 84 (258) 16,746
State and political
subdivisions 105,565 638 (2,331) 103,872 107,157 662 (2,107) 105,712
Other securities 83 -- (1) 82 85 -- (2) 83
--------- ------ ----- --------- --------- ------ ------ ---------
$ 170,739 $ 732 $(3,742)$ 167,729 $ 174,392 $ 813 $(3,651) $ 171,554
========= ====== ====== ========= ========= ====== ====== =========
Available-for-Sale
- ------------------
U.S. Treasury $ 40,182 $ 35 $ (163) $ 40,054 $ 41,492 $ 83 $ (133) $ 41,442
U.S. Government
agencies 169,229 4 (5,577) 163,656 166,143 -- (6,287) 159,856
Mortgage-backed
securities 16,097 25 (223) 15,899 16,954 26 (234) 16,746
State and political
subdivisions 6,255 98 (71) 6,282 6,432 88 (88) 6,432
Other securities 10,048 394 -- 10,442 9,859 552 -- 10,411
--------- ------ ----- --------- --------- ------ ------ ---------
$ 241,811 $ 556 $(6,034) $ 236,333 $ 240,880 $ 749 $(6,742) $ 234,887
========= ====== ====== ========= ========= ====== ====== =========
</TABLE>
<PAGE>
The carrying value, which approximates the market value, of securities
pledged as collateral, to secure public deposits and for other purposes,
amounted to $242,606,000 at March 31, 2000 and $277,789,000 at December 31,
1999.
The book value of securities sold under agreements to repurchase amounted
to $25,606,000 and $39,956,000 for March 31, 2000 and December 31, 1999,
respectively.
Income earned on securities for the three months ended March 31, 2000 and
1999 is as follows:
<TABLE>
<CAPTION>
(In thousands) 2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Taxable
Held-to-maturity $ 1,024 $ 1,183
Available-for-sale 3,547 3,330
Non-taxable
Held-to-maturity 1,251 1,335
Available-for-sale 85 54
-------- -------
Total $ 5,907 $ 5,902
======== =======
</TABLE>
Maturities of investment securities at March 31, 2000 are as follows:
<TABLE>
<CAPTION>
Held-to-Maturity Available-for-Sale
-------------------------- ------------------------
Amortized Fair Amortized Fair
(In thousands) Cost Value Cost Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One year or less $ 19,076 $ 19,029 $ 53,298 $ 53,064
After one through five years 77,232 76,032 112,125 108,886
After five through ten years 51,752 50,112 54,288 52,005
After ten years 22,596 22,474 12,052 11,936
Other securities 83 82 10,048 10,442
---------- ---------- ---------- ---------
Total $ 170,739 $ 167,729 $ 241,811 $ 236,333
========== ========== ========== =========
</TABLE>
There were no gross realized gains or losses as of March 31, 2000 and 1999.
Most of the state and political subdivision debt obligations are non-rated
bonds and represent small, Arkansas issues, which are evaluated on an ongoing
basis.
<PAGE>
NOTE 4: LOANS AND ALLOWANCE FOR LOAN LOSSES
The various categories are summarized as follows:
<TABLE>
<CAPTION>
March 31, December 31,
(In thousands) 2000 1999
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer
Credit cards $ 177,762 $ 187,242
Student loans 71,048 66,739
Other consumer 185,063 181,380
Real estate
Construction 54,719 53,925
Single family residential 209,211 202,886
Other commercial 243,857 240,259
Commercial
Commercial 140,897 137,827
Agricultural 39,917 35,337
Financial institutions 2,856 3,165
Other 11,348 4,875
------------ -----------
Total loans before allowance for loan losses $ 1,136,678 $ 1,113,635
============ ===========
</TABLE>
During the first three months of 2000, foreclosed assets held for sale
increased $885,000 to $1,632,000 and are carried at the lower of cost or fair
market value. Other non-performing assets, non-accrual loans and other
non-performing loans for the Company at March 31, 2000, were $40,000, $7,622,000
and $2,154,000, respectively, bringing the total of non-performing assets to
$11,448,000.
<PAGE>
Transactions in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
(In thousands) 2000 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance, beginning of year $ 17,085 $ 16,812
Additions
Provision charged to expense 1,720 1,652
--------- --------
18,805 18,464
Deductions
Losses charged to allowance, net of recoveries
of $595 and $238 for the first three months of
2000 and 1999, respectively 1,086 1,869
-------- -------
Balance, March 31 $ 17,719 $ 16,595
========= -------
Additions
Provision charged to expense 4,899
--------
21,494
Deductions
Losses charged to allowance, net of recoveries
of $1,178 for the last nine months of
1999 4,409
-------
Balance, end of year $ 17,085
=======
</TABLE>
At March 31, 2000 and December 31, 1999, impaired loans totaled $11,457,000
and $12,102,000, respectively. All impaired loans had designated reserves for
possible loan losses. Reserves relative to impaired loans at March 31, 2000,
were $2,452,000 and $2,803,000 at December 31, 1999.
Interest of $120,000 and $149,000 was recognized on average impaired loans
of $11,780,000 and $14,176,000 as of March 31, 2000 and 1999, respectively.
Interest recognized on impaired loans on a cash basis during the first three
months of 2000 and 1999 was immaterial.
<PAGE>
NOTE 5: TIME DEPOSITS
Time deposits include approximately $249,807,000 and $225,290,000 of
certificates of deposit of $100,000 or more at March 31, 2000 and December 31,
1999, respectively.
NOTE 6: INCOME TAXES
The provision for income taxes is comprised of the following components:
<TABLE>
<CAPTION>
March 31, March 31,
(In thousands) 2000 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income taxes currently payable $ 2,030 $ 1,302
Deferred income taxes (152) 350
--------------- ---------------
Provision for income taxes $ 1,878 $ 1,652
=============== ===============
</TABLE>
The tax effects of temporary differences related to deferred taxes shown on
the balance sheet are shown below:
<TABLE>
<CAPTION>
March 31, December 31,
(In thousands) 2000 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Allowance for loan losses $ 6,159 $ 5,906
Valuation of foreclosed assets 201 201
Deferred compensation payable 658 659
Deferred loan fee income 568 564
Vacation compensation 449 439
Mortgage servicing reserve 407 457
Loan interest 160 160
Available-for-sale securities 2,150 2,340
Other 119 144
--------------- ---------------
Total deferred tax assets 10,871 10,870
--------------- ---------------
Deferred tax liabilities
Accumulated depreciation (1,481) (1,473)
FHLB stock dividends (463) (432)
Other (214) (214)
--------------- ---------------
Total deferred tax liabilities (2,158) (2,119)
--------------- ---------------
Net deferred tax assets included in other
assets on balance sheets $ 8,713 $ 8,751
================ ===============
</TABLE>
<PAGE>
A reconciliation of income tax expense at the statutory rate to the
Company's actual income tax expense is shown below:
<TABLE>
<CAPTION>
March 31, March 31,
(In thousands) 2000 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computed at the statutory rate (35%) $ 2,172 $ 1,876
Increase (decrease) resulting from:
Tax exempt income (480) (489)
Other differences, net 186 265
--------------- ---------------
Actual tax provision $ 1,878 $ 1,652
=============== ===============
</TABLE>
NOTE 7: LONG-TERM DEBT
Long-term debt at March 31, 2000 and December 31, 1999, consisted of the
following components,
<TABLE>
<CAPTION>
March 31, December 31,
(In thousands) 2000 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
7.32% note due 2007, unsecured $ 16,000 $ 16,000
9.75% note due 2008, secured by land and building 903 917
5.36% to 8.41% FHLB advances due 2000 to 2018,
secured by residential real estate loans 10,208 12,052
Trust preferred securities 17,250 17,250
--------------- ---------------
$ 44,361 $ 46,219
=============== ===============
</TABLE>
The Company owns a wholly owned grantor trust subsidiary (the Trust) to
issue preferred securities representing undivided beneficial interests in the
assets of the respective Trust and to invest the gross proceeds of such
preferred securities into notes of the Company. The sole assets of the Trust are
$17.8 million aggregate principal amount of the Company's 9.12% Subordinated
Debenture Notes due 2027 which are redeemable beginning in 2002. Such securities
qualify as Tier 1 Capital for regulatory purposes.
<PAGE>
Aggregate annual maturities of long-term debt at March 31, 2000 are:
<TABLE>
<CAPTION>
Annual
(In thousands) Year Maturities
- -------------------------------------------------------------------------------------------------------
<S> <C>
2000 $ 2,681
2001 2,893
2002 2,925
2003 2,871
2004 2,876
Thereafter 30,115
---------------
Total $ 44,361
===============
</TABLE>
NOTE 8: CONTINGENT LIABILITIES
A number of legal proceedings exist in which the Company 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 Company and its
subsidiaries.
NOTE 9: UNDIVIDED PROFITS
The subsidiary banks are subject to a legal limitation on dividends that
can be paid to the parent company 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 75% of current year earnings plus
75% of the retained net earnings of the preceding year. At March 31, 2000, the
bank subsidiaries had approximately $8 million available for payment of
dividends to the Company without prior approval of the regulatory agencies.
The Federal Reserve Board's risk-based capital guidelines 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 are: a 5% "Tier l leverage capital"
ratio, a 6% "Tier 1 risk-based capital" ratio, and a 10% "total risk-based
capital" ratio. As of March 31, 2000, each of the eight subsidiary banks met the
capital standards for a well-capitalized institution. The Company's "total
risk-based capital" ratio was 15.0% at March 31, 2000.
<PAGE>
NOTE 10: STOCK OPTIONS AND RESTRICTED STOCK
At March 31, 2000, the Company had stock options outstanding of 227,200
shares and stock options exercisable of 166,880 shares. During the first three
months of 2000, there were 14,400 shares issued upon exercise of stock options
and no additional stock options of the Company were granted. No additional
shares of common stock of the Company were granted or issued as bonus shares of
restricted stock, during the first three months of 2000.
NOTE 11: ADDITIONAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(In thousands) 2000 1999
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Interest paid $ 15,025 $ 15,031
Income taxes paid $ 1,040 $ 643
</TABLE>
NOTE 12: CERTAIN TRANSACTIONS
From time to time the Company 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 the
Company's subsidiary banks. 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.
<PAGE>
NOTE 13: COMMITMENTS AND CREDIT RISK
The eight affiliate banks of the Company grant agribusiness, commercial,
consumer, and residential loans to their customers. Included in the Company's
diversified loan portfolio is unsecured debt in the form of credit card
receivables that comprised approximately 15.6% and 16.8% of the portfolio, as of
March 31, 2000 and December 31, 1999, 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 counterparty.
Collateral held varies, but may include accounts receivable, inventory,
property, plant and equipment, commercial real estate, and residential real
estate.
At March 31, 2000, the Company had outstanding commitments to extend credit
aggregating approximately $251,550,000 and $174,802,000 for credit card
commitments and other loan commitments, respectively. At December 31, 1999, the
Company had outstanding commitments to extend credit aggregating approximately
$227,358,000 and $105,145,000 for credit card commitments and other loan
commitments, respectively.
Letters of credit are conditional commitments issued by the bank
subsidiaries of the Company, 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
Company had total outstanding letters of credit amounting to $4,004,000 and
$3,035,000 at March 31, 2000 and December 31, 1999, respectively, with terms
ranging from 90 days to one year.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Operating earnings (net income excluding merger-related expenses) for the
quarter ended March 31, 2000, were $4,328,000, compared to earnings of
$4,103,000 for the same period in 1999. This represents a $225,000, or 5.5%
increase in the 2000 earnings over 1999. Diluted operating earnings per share
increased $0.03 to $0.59 in the first quarter of 2000 from $0.56 in the same
period of 1999. The Company's operating return on average assets and operating
return on average stockholder's equity for the three-month period ended March
31, 2000 was 1.02% and 10.66%, compared to 0.99% and 10.77%, respectively, for
the same period in 1999. In connection with the merger of Lincoln Bankshares,
Inc. ("LBI"), during the first quarter of 1999, after tax merger-related
expenses totaled $395,000, or $0.06 per share. After merger-related expenses,
Simmons First's first quarter 1999 earnings were $3,708,000 or $0.50 diluted
earnings per share. All financial information has been restated for the mergers
with LBI and NBC Bank Corp. ("NBC"), which were accounted for as
poolings-of-interests.
Diluted cash operating earnings (net income excluding amortization of
intangibles and merger-related expenses) for the first quarter of 2000 were
$0.65 per share compared with $0.61 for the first quarter of 1999, reflecting a
6.6% increase. Cash operating return on average assets was 1.13% and cash
operating return on average stockholders' equity was 11.79% for the three-month
period ended March 31, 2000, compared with 1.10% and 11.96%, respectively, for
the same period in 1999.
Net interest income, the difference between interest income and interest
expense, for the three-month period ended March 31, 2000, increased $738,000, or
4.8%, when compared to the same period in 1999. During the first quarter,
interest income increased $1,310,000, or 4.4%, while interest expense increased
$572,000 or 4.0%, when compared to the same period in 1999. These increases
reflect the growth the Company experienced in the loan portfolio and
interest-bearing deposits from 1999 to 2000.
The provision for loan losses for the first quarter of 2000 was $1,720,000,
compared to $1,652,000 for the same period of 1999, resulting in a $68,000 or
4.1% increase. The provision in the first quarter of 2000 was increased as a
result of growth in the loan portfolio.
Non-interest income for the first quarter ended March 31, 2000, was
$6,960,000, a 3.1% increase over the $6,749,000 reported for the same period in
1999. This increase is primarily due to internal growth of the Company.
During the three months ended March 31, 2000, non-interest expense
(excluding merger-related expenses of $395,000 during 1999) increased $430,000,
or 2.9%, over the same period in 1999. This increase is attributable to the
normal increase in the cost of doing business.
<PAGE>
FINANCIAL CONDITION
- -------------------
Total assets for the Company at March 31, 2000, were $1.758 billion, an
increase of $61 million, or 3.6%, over the same figure at December 31, 1999. As
a result of strong loan demand, the Company's loan portfolio increased $23
million, or 2.1% from $1.114 billion at December 31, 1999 to $1.137 billion at
March 31, 2000. Deposits at March 31, 2000 totaled $1.480 billion, an increase
of $69 million, or 4.9% from the same figure at December 31, 1999. Stockholders'
equity at the end of the first quarter was $162,793,000, an increase of
$3,422,000, or 2.1%, from the December 31, 1999 figure.
Asset quality remains strong with the allowance for loan losses as a
percent of total loans at 1.56% as of March 31, 2000, compared to 1.53% at
December 31, 1999. As of March 31, 2000, non-performing loans equaled 0.86% of
total loans, while the allowance for loan losses equaled 181% of non-performing
loans.
Generally speaking, the Company'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
measure liquid assets as well as relevant ratios concerning earning asset levels
and purchased funds. Each bank subsidiary is also required to monitor these same
indicators and report regularly to its own senior management and board of
directors. At March 31, 2000, each bank was within established guidelines and
total corporate liquidity was strong. At March 31, 2000, cash and due from
banks, securities available for sale and held in trading accounts, federal funds
sold and securities purchased under agreements for resell, and mortgage loans
held for sale were 20.9% of total assets.
<PAGE>
ACQUISITIONS
- ------------
On January 15, 1999, the Company and LBI merged in a pooling-of-interests
transaction, except for the acquisition of the minority shares (17.9%) of the
Bank of Lincoln, which were accounted for on a purchase accounting basis.
Stockholders of LBI received 301,823 shares of Simmons First National
Corporation stock in exchange for LBI shares in the transaction. LBI owned the
Bank of Lincoln, Lincoln, Arkansas with assets, as of January 15, 1999, of $75
million. The Company merged the Bank of Lincoln into Simmons First Bank of
Northwest Arkansas during the second quarter of 1999.
On July 9, 1999, the Company acquired all the common stock of NBC in
exchange for 784,887 shares of the Company's common stock. NBC owned National
Bank of Commerce, El Dorado, Arkansas with assets of $155 million, as of July 9,
1999. The Company changed the name of National Bank of Commerce to Simmons First
Bank of El Dorado, N.A. The Company will continue to operate Simmons First Bank
of El Dorado, N.A. as a separate community bank with the same board of
directors, management and staff. This acquisition was accounted for as a
pooling-of-interests.
On March 27, 2000, an announcement was made jointly by the Chief Executive
Officers of both the Company and First Financial Banc Corporation regarding the
execution of a definitive agreement under the terms of which First Financial
will sell eight of its locations to the Company. The eight locations have
approximately $68 million in loans and $70 million in total deposits. The
transaction is expected to close during the third quarter of 2000.
<PAGE>
REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BAIRD, KURTZ & DOBSON
Certified Public Accountants
200 East Eleventh
Pine Bluff, Arkansas
Board of Directors
Simmons First National Corporation
Pine Bluff, Arkansas
We have made a review of the accompanying consolidated condensed financial
statements, appearing on pages 3 to 17 of the accompanying Form 10-Q, of SIMMONS
FIRST NATIONAL CORPORATION and consolidated subsidiaries as of March 31, 2000
and for the three-months ended March 31, 2000 and 1999, 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, 1999, 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 February 4, 2000, 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, 1999,
is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
/s/ Baird, Kurtz & Dobson
BAIRD, KURTZ & DOBSON
Pine Bluff, Arkansas
May 2, 2000
<PAGE>
Part II: Other Information
Item 2. Changes in Securities.
Recent Sales of Unregistered Securities. The following transactions are
sales of unregistered shares of Class A Common Stock of the Company which were
issued to executive and senior management officers upon the exercise of rights
granted under either the Simmons First National Corporation Incentive and
Non-qualified Stock Option Plan or the Simmons First National Corporation
Executive Stock Incentive Plan. No underwriters were involved and no
underwriter's discount or commissions were involved. Exemption from registration
is claimed under Section 4(2) of the Securities Act of 1933 as private
placements. The Company received cash or exchanged shares of the Company's Class
A Common Stock as the consideration for the transactions.
<TABLE>
<CAPTION>
Number
Identity(1) Date of Sale of Shares Price(2) Type of Transaction
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Officer January, 2000 2,400 9.625 Incentive Stock Option
1 Officer January, 2000 1,500 15.833 Incentive Stock Option
9 Officers February, 2000 3,000 15.833 Incentive Stock Option
7 Officers March, 2000 6,900 9.625 Incentive Stock Option
1 Officer March, 2000 600 22.167 Incentive Stock Option
<FN>
- --------------
Notes:
1. The transactions are grouped to show sales of stock based upon exercises of
rights by officers of the Company or its subsidiaries under the stock
plans, which occurred at the same price during a calendar month.
2. The per share price paid for incentive stock options represents the fair
market value of the stock as determined under the terms of the Plan on the
date the incentive stock option was granted to the officer.
</FN>
</TABLE>
Item 6. Reports on Form 8-K
The registrant filed Form 8-K on March 28, 2000. The report contained the
text of a press release issued by the registrant concerning the acquisition of
eight locations from First Financial Banc Corporation.
<PAGE>
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: May 4, 2000 /s/ J. Thomas May
--------------------- ---------------------------------------
J. Thomas May, Chairman,
President and Chief Executive Officer
Date: May 4, 2000 /s/ Barry L. Crow
--------------------- ---------------------------------------
Barry L. Crow, Executive Vice President
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 51,081
<INT-BEARING-DEPOSITS> 18,848
<FED-FUNDS-SOLD> 52,645
<TRADING-ASSETS> 814
<INVESTMENTS-HELD-FOR-SALE> 236,333
<INVESTMENTS-CARRYING> 170,739
<INVESTMENTS-MARKET> 167,729
<LOANS> 1,136,678
<ALLOWANCE> 17,719
<TOTAL-ASSETS> 1,758,035
<DEPOSITS> 1,480,115
<SHORT-TERM> 8,981
<LIABILITIES-OTHER> 61,785
<LONG-TERM> 44,361
0
0
<COMMON> 7,330
<OTHER-SE> 155,463
<TOTAL-LIABILITIES-AND-EQUITY> 1,758,035
<INTEREST-LOAN> 24,726
<INTEREST-INVEST> 5,907
<INTEREST-OTHER> 630
<INTEREST-TOTAL> 31,263
<INTEREST-DEPOSIT> 13,304
<INTEREST-EXPENSE> 15,017
<INTEREST-INCOME-NET> 16,246
<LOAN-LOSSES> 1,720
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 15,280
<INCOME-PRETAX> 6,206
<INCOME-PRE-EXTRAORDINARY> 4,328
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,328
<EPS-BASIC> 0.59
<EPS-DILUTED> 0.59
<YIELD-ACTUAL> 0
<LOANS-NON> 7,622
<LOANS-PAST> 2,154
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 17,085
<CHARGE-OFFS> 1,681
<RECOVERIES> 595
<ALLOWANCE-CLOSE> 17,719
<ALLOWANCE-DOMESTIC> 17,719
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
