Simmons First National Corporation

Good day and thank you for standing by. Welcome to the Simmons First National Corporation fourth quarter 2021 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 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Ed Billick. Please go ahead.

Good morning, and thank you for joining our fourth quarter earnings call. My name is Ed Billick, Director of Investor Relations at Simmons First National Corporation. Joining me today are George Makris, Chairman and Chief Executive Officer, Bob Feldman, President and Chief Operating Officer, Jay Brogdon, Chief Financial Officer and Treasurer, Steve Massanelli, Chief Administrative Officer, Matt Redden, Chief Banking Officer, and David Garner, Chief Accounting Officer. The purpose of our 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 2022. We will begin with prepared comments followed by a Q&A session. We have 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 on this conference call are in listen-only mode. 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 will make forward-looking statements about our future plans, goals, expectations, estimates, projections, and outlook. I'd remind you that you should not place undue reliance on any forward-looking statement, as actual results could differ materially from those projected in or implied by forward-looking statements due to a variety of factors. Additional information concerning some of these 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 release issued this morning. The company assumes no obligation to update or revise any forward-looking statements or other information. Finally, in this presentation, we will discuss certain non-GAAP financial metrics we believe provide useful information to investors. Additional disclosures regarding non-GAAP metrics, including the reconciliation of these non-GAAP metrics to GAAP, are contained in the company's earnings release and fourth quarter investor presentations. 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 will now turn the call over to George Makris.

Thanks, Ed, and welcome once again to our fourth quarter 2021 earnings call. I'd like to begin my comments by thanking the associates of Simmons Bank, for producing a record earnings year in 2021, despite the operational challenges associated with the pandemic and the artificial economy created over the past two years. Earlier today, we announced earnings of $271 million for the full year of 2021, a 6% increase over 2020. We also reported diluted earnings per share of $2.46, an increase of 6% from the previous year. Other important financial information for the fourth quarter and for the full year is available in our press release and our investor presentation published earlier today and available on the investor relations page of SimmonsBank.com. We simultaneously acquired and integrated Landmark Community Bank and Triumph Bank, both Memphis-based, in October of last year, so their activity is included in our fourth-quarter results. The acquisition of these banks has significantly enhanced our size and scale in Tennessee, where we now rank as eighth-largest bank based on deposit market share. Shortly after we completed these acquisitions, we announced a definitive agreement to acquire Spirit of Texas Bank shares. Strengthening our Texas franchise has been a strategic priority, and to partner with Spirit not only enhances our current footprint, but also establishes a platform for growth in Houston, Austin, San Antonio, and College Station. Net income for the fourth quarter was $48.2 million, and diluted earnings per share were 42 cents. Included in our results for the quarter were $11.3 million of after-tax non-core items primarily related to the acquisitions of Landmark and Triumph. Excluding these items, core earnings were $59.5 million or 52 cents on a diluted per share basis. I think it is remarkable that we closed and integrated two acquisitions repurchased approximately 2.6 million shares of our stock, contributed $2.5 million to our foundation, and grew our tangible book value per share by 2% during the fourth quarter alone. The positive momentum we began to see in terms of loan growth during the third quarter of 2021 accelerated in the fourth quarter. Newly funded loans in the quarter totaled $2.6 billion. Our commercial loan pipeline rose for the fifth consecutive quarter to $2.3 billion, up 56% on a linked quarter basis, as growth was broad-based throughout our community and metro markets, as well as in our new corporate banking unit. We're also encouraged by our level of unfunded commitment considered a leading indicator of loan growth, which rose to $2.9 billion in the fourth quarter, a 31% increase on a linked quarter basis. We believe this positive momentum, combined with the new loan producers we have added in 2021, and continue to actively recruit, positions us well in terms of loan growth in the year ahead. During the fourth quarter of 2021, we repurchased 2.6 million shares of our stock, and in January of 2022, substantially exhausted the remaining capacity under our existing share repurchase program. As a result, the Board of Directors authorized a new $175 million share repurchase program and raised the quarterly cash dividend 6% to 19 cents per share. In closing, the significant investments we have made in technology, particularly in terms of expanding our digital capabilities, are producing solid results and will allow us to continue to help meet the ever-changing needs of our customers while improving the speed and efficiency with which we deliver products and services to our customers. The investments we've made in M&A represent a meaningful geographic transformation with an emphasis on building scale and high-growth markets that significantly enhance our growth profile. Given our successful track record, we're confident in our ability to seamlessly convert and integrate spirit later this year and capitalize on the tremendous growth opportunity this acquisition presents. As a result, we enter the year with positive momentum and are confident in our ability to respond to the ever-changing landscape and challenging economic environment. We believe we're well positioned throughout our footprint to capture growth opportunities that will lead to another successful year. This concludes our prepared comments. I will now turn the line over to our operator and invite questions from our analysts and institutional investors.