Simmons First National Corp. Wednesday announced net income available to common shareholders of $27.0 million for the fourth quarter of 2016, an increase of $3.2 million, or 13.4 percent, compared with the same quarter last year. Diluted earnings per share were $0.85, an increase of $0.07, or 9.0 percent.
“We are very pleased with our results during the fourth quarter,” George A. Makris Jr., chairman and CEO, said in a news release. “Our associates are beginning to leverage our size and integrate more of our services in markets previously unserved.”
“We are excited about our future related to our previously announced mergers,” Makris said. “Simmons Bank will enter new and very attractive markets as a result of the Bank SNB merger and will be able to expand in our current markets with the First South Bank merger. We look forward to significant growth from these mergers.”
Included in fourth quarter 2016 results were $1.8 million in net after-tax merger-related and branch right-sizing costs. Excluding the impact of these items, core earnings were $28.8 million for the fourth quarter of 2016 and diluted core earnings per share were $0.91.
Year-to-date net income was $96.8 million, an increase of $22.7 million, or 30.6 percent, compared with the same period of 2015. Year-to-date diluted earnings per share were $3.13, an increase of $0.50, or 19.0 percent. Year-to-date core earnings were $101.4 million, or $3.28 diluted core earnings per share.
Independent reporting for Pine Bluff & Jefferson County since 1879.
Loans
Total loans, including those acquired, were $5.6 billion at Dec. 31, 2016, an increase of $714 million, or 14.5 percent, compared with the same period in 2016. Legacy loans (all loans excluding acquired loans) grew $1.1 billion, or 33.3 percent. On a linked quarter basis, total loan growth was $232 million, including a reduction in agricultural production loans of $53 million.
Deposits
At Dec. 31, 2016, total deposits were $6.7 billion, an increase of $649 million, or 10.7 percent, compared with the same period in 2015. Total non-time deposits were $5.4 billion, an increase of $682 million, or 14.3 percent, and comprised 81 percent of total deposits.
Net Interest Income
The company’s net interest income for the fourth quarter of 2016 was $74.3 million, an increase of $577,000, or 0.8 percent, from the same period of 2015. The net interest income was impacted by a $4.5 million decline in yield accretion on acquired loans. Included in interest income was the yield accretion recognized on acquired loans of $6.6 million and $11.1 million for the fourth quarter of 2016 and 2015, respectively. Net interest margin was 4.12 percent for the quarter ended Dec. 31, 2016, a 41 basis-point decline from the same quarter of 2015. The company’s core net interest margin, excluding the accretion, was 3.76 percent for the fourth quarter of 2016, an 11 basis-point decline from the same quarter of 2015.
Provision for Loan Losses
Provision for loan losses for the fourth quarter of 2016 was $4.3 million, an increase of $1.1 million compared with the fourth quarter of 2015. The provision increase was necessary in order to maintain an appropriate allowance for loan losses for the company’s growing legacy loan portfolio.
Non-Interest Income
Non-interest income for the fourth quarter was $36.1 million, an increase of $7.5 million compared with the fourth quarter of 2015. The increase in non-interest income was due to additional mortgage lending, trust income, debit and credit card income.
Non-Interest Expense
Non-interest expense for the fourth quarter of 2016 was $66.7 million, a decrease of $1.1 million compared with the fourth quarter of 2015. Included in the quarter were $2.8 million of merger-related expenses. Salaries and benefits decreased by $5.7 million, or 14.5 percent, compared with the same quarter of 2015. This decrease was partially offset by increases in occupancy expenses and other operating expenses related to our recent acquisition and the restructuring of our compliance and risk areas in preparation for growth.
Asset Quality
All acquired loans are recorded at their discounted net present value; therefore, they are excluded from the computations of the asset quality ratios for the legacy loan portfolio, except for their inclusion in total assets.
At Dec. 31, 2016, the allowance for loan losses for legacy loans was $36.3 million. The company’s allowance for loan losses on legacy loans at Dec. 31, 2016 was 0.84 percent of total loans and 92 percent of non-performing loans. In the legacy portfolio, non-performing loans as a percent of total loans were 0.91 percent.
The allowance for loan losses for acquired loans was $1.0 million and the acquired loan discount credit mark was $35.5 million. The allowances for loan losses and credit marks provide a total of $72.7 million of coverage, which equates to a total coverage ratio of 1.3 percent of gross loans. The ratio of credit mark and related allowance to acquired loans was 2.7 percent.
The 2016 year-to-date net charge-off ratio, excluding credit cards, was 35 basis points, and the year-to-date credit card charge-off ratio was 1.28 percent.
Capital
At Dec. 31, 2016, common stockholders’ equity was $1.2 billion, book value per share was $36.80 and tangible book value per share was $23.97. The company’s ratio of stockholders’ equity to total assets was 13.7 percent and its ratio of tangible common equity to tangible assets was 9.4 percent.