ITEM:
2.02
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The
following is the text of a press release issued by the registrant at 8:15 a.m.
Central Time on January 17, 2008.
SIMMONS
FIRST ANNOUNCES FOURTH QUARTER EARNINGS
Pine
Bluff, AR – Simmons First National Corporation (NASDAQ-GS: SFNC) today announced
fourth quarter 2007 operating earnings (net income excluding nonrecurring items)
of $6.9 million, or $0.49 diluted operating earnings per share, an increase
of
$186,000, or $0.02 diluted operating earnings per share from the same period
in
2006. This represents a 2.8% increase in operating earnings and a
4.3% increase in diluted operating earnings per share over the comparable period
in 2006. During the fourth quarter the Company recorded a
nonrecurring $0.05 reduction in earnings per share to recognize the Company’s
pro-rata portion of Visa, Inc.’s litigation liabilities. Including
the nonrecurring expense, Simmons First’s fourth quarter 2007 earnings were $6.2
million, or $0.44 diluted earnings per share.
“Considering
the challenges of our national economy, we are very pleased with our quarterly
and annual operating earnings performance,” commented J. Thomas May, Chairman
and Chief Executive Officer. “Following the guidance of Visa, Inc.
and the Securities and Exchange Commission, most member banks have reported
a
nonrecurring expense associated with the litigation liability during the fourth
quarter of 2007. We expect to record a similar nonrecurring gain when
Visa completes its IPO during the first half of 2008. As mentioned in
our 8-K filings, this contingent liability is created based on member banks’
pro-rata ownership. We believe that the ownership in Visa will
produce significant value to our shareholders going forward.”
Operating
earnings for the year ended December 31, 2007, were $28.1 million, or $1.97
diluted operating earnings per share. These operating earnings
reflect a 3.9% increase on a diluted operating per share basis when compared
to
operating earnings for the same period last year. For the twelve
month period ended December 31, 2007, the Company reported net income after
nonrecurring expenses of $27.4 million, or $1.92 diluted earnings per
share.
The
Company’s net interest income for the fourth quarter of 2007 increased 5.6% to
$23.5 million compared to $22.3 million for 2006. Net interest margin
increased 14 basis points to 4.00% from the fourth quarter of 2006 and declined
one basis point from the third quarter of 2007.
The
Company’s loan portfolio totaled $1.85 billion at December 31, 2007 compared to
$1.78 billion at December 31, 2006, an increase of 3.8%. The growth
was primarily attributable to increases in commercial loans, real estate loans
and the credit card portfolio. More specifically, the credit card
portfolio increased $22.7 million, or 15.8% compared to the prior
year.
Asset
quality remained strong with the allowance for loan losses as a percent of
total
loans at 1.37% as of December 31, 2007. Non-performing loans equaled
0.60% of total loans, while the allowance for loan losses equaled 226% of
non-performing loans. The Company’s annualized net charge-offs to
total loans for the fourth quarter of 2007 were 0.33%. Excluding
credit cards, the annualized net charge-offs to total loans for the fourth
quarter were 0.26%. Annualized net credit card charge-offs for the
fourth quarter were 1.12%, approximately 300 basis points below the most
recently published credit card charge-off industry average.
Total
assets for the Company were $2.7 billion and deposits were $2.2 billion at
December 31, 2007. Stockholders’ equity increased 5.2% to $272 million at
December 31, 2007 compared to $259 million at December 31,
2006. Book value per share increased 7.3% to $19.57 at
December 31, 2007 compared to $18.24 at December 31,
2006. “Simmons First is well positioned based on the strength of its
capital and asset quality to deal with the challenges and opportunities that
we
face in 2008,” added May.
In
October
2007, Simmons First, as a member of Visa U.S.A., received shares of restricted
stock in Visa, Inc. (Visa) as a result of its preparation for an initial public
offering. Visa U.S.A. believes that its member banks are required to
indemnify Visa U.S.A. for potential losses arising from certain covered
litigation. Although Simmons First has not accepted the Visa U.S.A.’s
assertions, Simmons First has determined that it is required to recognize
certain contingent obligations. Simmons First filed two Form 8-K’s
with the Securities and Exchange Commission in December related to Visa’s
ongoing litigation. The first Form 8-K, filed on December 17,
reported that Simmons First recorded a $928,000, or $0.04 earnings per share
expense related to Visa’s settlement of a lawsuit with American
Express. Simmons First filed another Form 8-K on December 28 to
report an additional expense of $292,000, or $0.01 earnings per share related
to
its pro-rata portion of Visa’s estimated contingent liability in the Discover
lawsuit. These two contingent liabilities total $1.2 million, or a
$0.05 reduction in earnings per share. At this time, with respect to
the remaining covered litigation, Simmons First does not know the probable
outcome of such litigation and cannot reasonably estimate a range of
loss. The Company will continue to monitor both the litigation and
Visa’s proposed IPO, and will properly reflect these activities in its financial
statements, when and if appropriate.
As
reported in the Form 8-K’s, as well as in Visa’s Form 8-K filed on November 7,
upon successful completion of Visa’s first quarter 2008 IPO, Visa will establish
an escrow account to fund the litigation liabilities. Thus, provided
that the escrow account has sufficient funds, the liability will no longer
be
required, and Simmons First will reverse the $1.2 million liability and record
a
non-operating gain of $0.05 earnings per share.
Simmons
First made its initial entry into the Paragould market with the opening of
a new
financial center in December. In addition, a new financial center in
Little Rock – Midtown (near War Memorial Stadium and UAMS) and a new regional
headquarters in Rogers, for the Northwest Arkansas affiliate, are under
construction and scheduled to open in early 2008.
Simmons
First National Corporation is an Arkansas based financial holding company with
eight community banks in Pine Bluff, Lake Village, Jonesboro, Rogers, Searcy,
Russellville, El Dorado and Hot Springs, Arkansas. The Company’s
eight banks conduct financial operations from 86 offices, of which 83 are
financial centers, in 48 communities.
CONFERENCE
CALL
Management
will conduct a conference call to review this information at 3:00 p.m. Central
Time on Thursday, January 17, 2008. Interested parties can listen to
this call by calling 1-800-854-4175 (United States and Canada only) and
asking for the Simmons First National Corporation conference call. A
recorded playback of the call will be available the next morning by calling
1-800-642-1687. The passcode for this playback is 29612467 and the
recording will be available through the end of business January 31,
2008. In addition, the call will be available live or in recorded
version on the Company’s website at
www.simmonsfirst.com
under the “webcast” icon.
GENERAL
Statements
in this press release that are not historical facts should be considered
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements of this
type speak only as of the date of this news release. By nature,
forward-looking statements involve inherent risk and
uncertainties. Various factors, including, but not limited to,
economic conditions, credit quality, interest rates, loan demand and changes
in
the assumptions used in making the forward-looking statements, could cause
actual results to differ materially from those contemplated by the
forward-looking statements. Additional information on factors that
might affect Simmons First National Corporation’s financial results is included
in its Form 10-K filing with the Securities and Exchange
Commission.
####
FOR
MORE
INFORMATION CONTACT:
DAVID
W.
GARNER
Senior
Vice President and Investor Relations Officer
Simmons
First National Corporation
(870)
541-1000