Simmons First National Corporation

Good day and thank you for standing by. Welcome to the Simmons First National Corporation first quarter earnings call and webcast. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Steve Massinelli, please go ahead.

Good morning, and thank you for joining our first quarter earnings call. My name is Steve Massinelli, and I serve as Chief Administrative Officer of Simmons First National Corporation. Joining me today are George Macris, Chairman and Chief Executive Officer, Bob Feldman, Chief Financial Officer and Chief Operating Officer, David Garner, Executive Director of Finance and Accounting and Chief Accounting Officer, and Matt Redden, Chief Banking Officer. The purpose of this call is to discuss the information and data provided by the company in its quarterly earnings release issued this morning and to discuss the company's outlook for the future. We'll begin with prepared comments followed by a Q&A session. We've invited institutional investors and analysts from the equity firms that provide research on the company to participate in the Q&A session. All other guests in this conference call are in listen-only mode. A recording of today's call, including our prepared remarks, and the Q&A session will be posted on our website, SimmonsBank.com, under the Investor Relations page for at least 60 days. During today's call, we'll make forward-looking statements about our future plans, goals, expectations, estimates, projections, and outlook. I remind you that actual results could differ materially from those projected in or implied by the forward-looking statements due to a variety of factors. Additional information concerning some of those factors is contained in the company's SEC filings, including, without limitation, the description of certain risk factors contained in the company's Form 10-K for the year ended December 31, 2020, and the forward-looking information section of the company's earnings press release issued this morning. The company assumes no obligation to update or revise any forward-looking statements or other information. Lastly, in this presentation, we will discuss certain non-GAAP financial metrics we believe provide useful information to investors. Please note that additional disclosures regarding non-GAAP metrics, including the reconciliations of these non-GAAP metrics to GAAP, are contained in the company's earnings press release and first quarter investor presentation, which are included as exhibits to the company's current report filed this morning with the SEC on Form 8K and available on the investor relations page of the company's website SimmonsBank.com. I'll now turn the call over to George Makris.

Thanks, Steve, and welcome once again to our first quarter 2021 earnings call. In our press release, we reported net income of $67 million for the first quarter of 2021. Diluted earnings per share were 62 cents for the quarter. Included in the first quarter earnings was net income of $3.4 million related to a gain on the sale of our branches in Illinois and and merger-related and net branch rightsizing expenses, excluding the impact of these items. The company's core earnings were $64 million for the first quarter, and diluted earnings per share were 59 cents per share. Our return on average assets was 1.2 percent. Our return on average common equity was 9.2 percent. Our return on tangible common equity was 15.9 percent. and our efficiency ratio was 57.8% for the first quarter. As of March 31st, total assets were $23 billion. Our loan balance was $12 billion, and our deposit balance was $18 billion. Included in total loans at March 31st were $798 million in PPP loans. During the quarter, approximately $335 million and PPP loans were forgiven, while we originated $228 million under round two of the program. At the end of the first quarter, non-performing assets were $128 million, a decrease of $16 million from year end. Our annualized net charge-offs to total loans were 10 basis points. Our net interest margin for the quarter was 2.99%. The company's core net interest margin, which excludes the accretion, was 2.86% for the first quarter of 2021. Our non-interest income for the quarter was $52 million and included $5.3 million in gains on sale of our branches in Illinois and $5.5 million gain on the sale of securities. Non-interest expense for the first quarter of 2021 was $115 million. which represented a decrease of $13 million when compared to the first quarter of 2020. Core non-interest expense for the quarter was $114 million. Our capital remains very strong at quarter end. Our total risk-based capital ratio was 17.5%. Our common equity Tier 1 ratio increased to 14%, while our Tier 1 leverage ratio was 9%. At March 31st, the ratio of stockholders' equity was 13%, and the ratio of tangible common equity was 8%. On our website at www.simmonsbank.com, we have shared an extensive presentation along with press release and financial data, which gives much more detail regarding our quarterly results and other important information about our company. We're encouraged by the current activity in the economy. We saw consumer spending go up, but credit card balances fell. Our mortgage activity continues to be strong, but we've seen a decrease in the refinance activity in this quarter. The excess liquidity generated by the stimulus programs and development activities taking a pause have contributed to a continuing decline in loan demand. However, we're starting to see light at the end of the tunnel. Our loan pipeline at the end of the quarter was $1.2 billion, up from approximately $700 million at the end of December, including $300 million in approved ready-to-close loans. That pipeline growth is reflected across our footprint in both rural and metro markets, indicating a back-to-business trend. We expect the short-term benefits of the stimulus payments will continue into the second quarter before we return to a more normalized growth trajectory later this year. This concludes our prepared comments. I'll now turn the line over to our operator and invite questions from our analysts and institutional investors.