Simmons First National
Annual Report 2018

Plain-text annual report

APPROXIMATELY $16.5 BILLION TOTAL ASSETS AS OF DEC. 31, 2018 SFNC NASDAQ TRADE SYMBOL, GLOBAL SELECT MARKET IN THE UNITED STATES AS OF DEC, 31, 2018, ACCORDING TO THE FDIC AS OF DEC. 31, 2018 AVERAGE ANNUAL ASSET GROWTH RATE FOR THE PAST 3 YEARS FORWARD-LOOKING STATEMENTS Certain statements contained in this communication may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward- looking statements may be identified by reference to a future period(s) or by the use of forward-looking terminology, such as “anticipate,” “estimate,” “expect,” “foresee,” “may,” “might,” “will,” “would,” “could” or “intend,” future or conditional verb tenses, and variations or negatives of such terms. These forward-looking statements include, without limitation, those relating to Simmons First National Corporation’s (“Company”) future growth, revenue, assets, asset quality, profitability and customer service, critical accounting policies, net interest margin, non- interest revenue, market conditions related to the Company’s common stock repurchase program, allowance for loan losses, the effect of certain new accounting standards on the Company’s financial statements, income tax deductions, credit quality, the level of credit losses from lending commitments, net interest revenue, interest rate sensitivity, loan loss experience, liquidity, capital resources, market risk, earnings, effect of pending litigation, acquisition strategy, legal and regulatory limitations and compliance and competition. Readers are cautioned not to place undue reliance on the forward-looking statements contained in this document in that actual results could differ materially from those indicated in such forward-looking statements, due to a variety of factors. These factors include, but are not limited to, changes in the Company’s operating or expansion strategy, availability of and costs associated with obtaining adequate and timely sources of liquidity, the ability to maintain credit quality, possible adverse rulings, judgments, settlements and other outcomes of pending litigation, the ability of the Company to collect amounts due under loan agreements, changes in consumer preferences, effectiveness of the Company’s interest rate risk management strategies, laws and regulations affecting financial institutions in general or relating to taxes, the effect of pending or future legislation, the ability of the Company to repurchase its common stock on favorable terms, ability to successfully complete mergers and acquisitions and integrate target companies’ businesses, ability to fully realize cost savings and other benefits of mergers and acquisitions, business disruption following mergers and acquisitions, changes in interest rates and capital markets, inflation, customer acceptance of the Company’s products and services, and other risk factors. Other relevant risk factors may be detailed from time to time in the Company’s press releases and filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date of this communication, and the Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this communication. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts, and may not reflect actual results. 3 Simmons now has the ability to be a ‘one-stop financial shop’ for almost all of our customers, and we must seize the opportunity that presents through a heightened focus on relationship banking. LETTER TO SHAREHOLDERS Fellow Shareholders, “Relationship banking” is a phrase I used often in 2018. It refers to a business model centered on developing a broader, deeper connection with each of our customers. As an over $16 billion regional financial institution, Simmons has much to offer. Over time, we have built a full suite of quality banking products, including commercial and consumer loans, industry-leading credit cards and comprehensive treasury management services, as well as solid wealth management solutions offered through a host of seasoned professionals. As a result, Simmons now has the ability to be a “one-stop financial shop” for almost all of our customers, and we must seize the opportunity that presents through a heightened focus on relationship banking. In order to build those relationships, though, it is vital that we maintain the integrity in our operations that has been Simmons’ hallmark for the past 100-plus years. While no institution is perfect, I am a firm believer that our customers must feel confident that Simmons strives to do the right thing in all aspects of its business, whether it’s working to ensure compliance with applicable regulatory and legal requirements or maintaining a resilient organization through prioritizing strong asset quality. Operating with integrity builds trust, which builds better, lasting relationships with our customers, which results in long-term success for our business. While this may seem obvious, it is always worth emphasizing, particularly during our integration of acquired institutions. As Simmons grows, we simply cannot afford to lose sight of this core value. That said, to develop broader, deeper relationships with our customers, we must also be responsive to their changing needs. Increasingly, our customers are demanding access to more sophisticated technological delivery channels for financial products and services. We are keenly aware of the convenience and efficiency that technology provides, and we are committed to responding to those demands in a meaningful way. In 2018, Simmons began to lay the foundation for our “Next Generation Bank” program, an approximately year-long effort to upgrade both our customer-facing and our back-office IT systems so that they compete both now and well into the future. That program will be implemented throughout 2019 and early 2020, and I look forward to sharing with our customers the fruits of that labor, including a totally new treasury management platform, as well as a completely redesigned online and mobile banking experience. It is an exciting time for Simmons, and I am certain that these enhancements will provide powerful support as we execute our relationship banking strategy. As always, I appreciate your confidence in our organization, and I also thank all of our associates who, on a daily basis, work to make Simmons better. I continue to be highly optimistic about the future of our company and extremely proud to be a part of it. Sincerely, George A. Makris, Jr. Chairman and Chief Executive Officer Simmons First National Corporation 5 As a banker, there’s nothing more rewarding than putting someone in business. — MATT REDDIN THE SIMMONS DIFFERENCE Growth, Integration and Customer Focus What sets Simmons apart from other banks? We asked some of our corporate leaders and here’s what they had to say. “Simmons is uniquely designed to add value for our customers in every stage of their lives. Whether we’re serving first-time home buyers, business owners or customers who need estate planning expertise, it all comes back to trust and reliability,” said Franklin Shirrell, executive vice president and chief retail officer. “Since 1903, Simmons has served as a trusted advisor that provides personalized financial guidance to our customers.” “We’re made up of both small community markets and large metro markets. It’s a pleasure and privilege to serve so many customers with such a wide variety of needs,” said Matt Reddin, executive vice president of banking enterprise. “Simmons bankers speak our clients’ language across our footprint. Our conversations might not even revolve around a product or a service, but we can always provide valuable, consultative advice to the people who walk through our door.” “Simmons Bank is a national issuer of credit cards,” noted Al Druso, senior vice president and bank card manager. “We have an established portfolio with a 50-year track record of success. Both our Simmons Card and our Simmons Rewards Card are two of the lowest-rate products in the industry. We can do this because charge- offs and delinquencies are half the industry and peer averages – so we can still produce an excellent return for our shareholders.” “The latest customer research from J.D. Power & Associates indicates that Simmons branch satisfaction among Generations X, Y and Z continues to climb,” said Shirrell. “These customers tend to choose a bank based on recommendations, and our long history of being a trusted partner in the community positions us well for more referrals.” Shirrell noted that Simmons is an extremely active Small Business Association (SBA) lender for new businesses with a commitment to helping businesses of all sizes maximize their cash position through excellent Treasury Management products and services. “Small businesses are the lifeblood of our economy and supporting them is part of our heritage as a community bank,” added Reddin. “As a banker, there’s nothing more rewarding than putting someone in business. Our SBA Preferred Lender status sets Simmons apart from our competitors 7 THE SIMMONS DIFFERENCE Growth, Integration and Customer Focus Southwest Bank and Bank SNB, while also seeing strong organic growth exemplified by the fact that we grew loans by $1 billion,” said Reddin. “Many banks focus on niches where they perform well. We aspire to be a full-service financial partner to our clients, with guidance for every season of our customers’ lives. We’ll take full advantage of our increasing size and status, while staying true to our roots as a community bank.” “Our team of wealth professionals is equipped to manage and maximize wealth of any size,” stated Philip Tappan, executive vice president of financial services. “We serve a large spectrum of clients with diverse needs. Each request – large or small – is handled with great care, and with a focus on that customer’s unique needs. That’s what earns our clients’ trust. It all comes back to trust and reliability. — FRANKLIN SHIRRELL “For most people, it’s an incredible challenge to navigate vast amounts of products and delivery channels, especially when the tax implications for their choices are increasingly complex. Simmons’ team of Wealth Management professionals helps our customers cut through the maze of choices and tax implications to identify solutions customized to their needs and goals – everything from intricate financial planning, as a financial partner that can provide trusted, accelerated and personalized service. Rankings from around Simmons’ footprint confirm our commitment to our small business customers and show that we’ve successfully integrated offerings across our seven-state region.” “Simmons’ rapid growth makes it imperative to continue to train our associates not only about our products, but also in providing excellent and consistent customer experiences across our footprint with conversations tailored to customers’ goals,” said Shirrell. “One of Simmons’ greatest 2018 accomplishments is our outstanding workplace culture being recognized across our footprint. For example, we were named a ‘Best Place to Work’ by both Arkansas Business and the Wichita Business Journal. That’s essential, because if we serve our associates well, they’ll serve our customers well.” “In 2018, Simmons successfully integrated 8 Continued to guidance for generational transfer of wealth or a simple conversation about wise investments.” “It’s a challenge for people to find a bank that takes the opportunity to get to know them well enough to personalize products and services,” said Shirrell. “Simmons’ approach to banking built on relationships is what has set us apart for 116 years, and it’s what will continue to distinguish us in the future.” PRODUCT SPOTLIGHT The Simmons Treasury Management team helps our commercial clients manage their day-to-day financial activities by increasing efficiencies, minimizing risk and streamlining processes, all while helping clients manage their liquidity and maximize returns. We offer a full range of solutions tailored to fit any size business. — DEBBIE PRIOR Senior Vice President of Treasury Management Simmons Bank Everything you need, in one friendly place. PERSONAL BANKING LENDING Checking Savings & Money Market CDs Personal Lending Business Lending Agricultural Lending Credit Cards1 Home Equity Lines of Credit Mortgage Services BUSINESS BANKING WEALTH MANAGEMENT Business Checking Business Savings & Money Market Credit Cards1 Trust Investments2 Treasury Management4 Merchant Services4 Insurance3 1 Subject to credit approval. 2 Securities offered through Simmons First Investment Group, Inc., member FINRA and SIPC. 3 Insurance offered through Simmons First Insurance Services, Inc. and Simmons First Insurance Services of TN, LLC 4 All services are subject to qualifications and approval by Simmons Bank. Investment Products Are: Not FDIC Insured | Not Bank Guaranteed | May Lose Value COMMUNITY COMMITMENT 10 Doing Well by Doing Good. As a good corporate citizen, Simmons helps the communities we serve and encourages our associates to do the same. We all get better when we work together. SIMMONS SERVICE MONTH In September 2018, associates across our footprint participated in Simmons Service Month by volunteering in their local communities. To amplify our associates’ efforts, Simmons Bank committed to make a charitable donation up to $50,000, based on hours volunteered. The results were truly amazing! Nearly 4,500 volunteer hours were donated by Simmons Bank associates, resulting in a $50,000 corporate donation to Junior Achievement, a nonprofit selected because its work aligns seamlessly with Simmons’ mission to pass on financial knowledge and education to the next generation. Top volunteers – or Simmons associates who donated 15 or more volunteer hours in September – also received up to $150 for charities of their choice. These top volunteers raised a combined $4,200 for additional charities across Simmons’ footprint. SIMMONS FIRST FOUNDATION GRANTED $5 MILLION Simmons Bank endowed the Simmons First Foundation with $5 million to create a stable income flow for Foundation grants. Since 2014, the Foundation has given a total of $825,000 for “Make a Difference” grants focusing on education or health care for youth. In 2018 alone, “Make a Difference” grants contributed $125,000 in funding. A new “Community Enhancement Grant” initiative was also established this year to invest in programs helping low-to-moderate- income families across our entire seven-state footprint. During 2018, $117,000 was funded for investments made in Dallas, Springfield, Memphis and Little Rock. COMMUNITY COMMITMENT SIMMONS ACQUIRES NAMING RIGHTS FOR VERIZON ARENA Simmons Bank has acquired the naming rights to the 18,000-seat multi-purpose civic center located in North Little Rock, formerly known as Verizon Arena. “We are proud to be associated with an organization that does so much for our economy, while providing some of the best entertainment in the region,” said George Makris, Simmons First National Corporation chairman and CEO. “Sponsorships are an increasingly important component of our marketing strategy, and naming rights opportunities have only grown in value. It’s a wonderful channel to engage customers and promote awareness of our brand.” SIMMONS BANK FIELD AND PAVILION AT UAPB Simmons donated $2.5 million to the University of Arkansas at Pine Bluff for football stadium renovations – including a new scoreboard and turf, as well as the completion of the baseball pavilion at the Torii Hunter Baseball and Softball Complex. COMMUNITY SERVICE ACTS 12 Reinvesting in the Community As a financial institution, Simmons is subject to various regulatory requirements, including the Community Reinvestment Act (CRA). Simmons Bank Senior Vice President of Community Development/CRA Martie North summarizes the CRA team’s proudest 2018 accomplishments and how they benefit the communities Simmons serves. Simmons is the bank that will roll up its sleeves! Volunteerism and giving are central to our community bank heritage, and our CRA efforts continue to focus specifically on affordable housing, economic development and community service. I’m very proud of Simmons’ success in obtaining grants from the Federal Home Loan Bank of Dallas, Texas (FHLB Dallas) to help low-to-moderate-income (LMI) members of our communities. For example, in 2018, Simmons was the first bank to be awarded the Disaster Rebuilding Assistance Program grant through FHLB Dallas. With this $10,000 grant, Simmons helped a LMI homeowner who was affected by the severe storms, tornados and flooding that led to a federally declared disaster in Arkansas the year before. The funds provided the homeowner with much-needed repairs to his home. On a broader scale, Simmons has created the Affordable Advantage mortgage product to address a nationwide struggle among LMI individuals to gain access to affordable housing. The product is based on consultations with numerous nonprofits that serve LMI populations and has continued to outperform expectations since its 2015 launch. Simmons is also piloting an Affordable Advantage Home Improvement product in select communities. AWARDS & RECOGNITION Giving our customers all our best. HERE’S A GLIMPSE OF JUST A FEW OF OUR 2018 RECOGNITIONS. Arkansas Democrat-Gazette, Best of the Best Finalist Best Low-interest Credit Cards in America CREDIT.COM Pine Bluff Commercial, #1 Bank, #1 Mortgage Lender Wichita Business Journal, Best Places to Work St. Louis Business Journal, Top 25 SBA Lender AY Magazine, One of the Best Banks in Arkansas Soirée Magazine (Little Rock, Arkansas), Soirée Recommends Awards – Wealth Management, Simmons First Investment Group, Inc. Chickasha Express Star, Best Loan Company, Best Customer Service, Friendliest Staff The Advocate and Democrat (Sweetwater, Tennessee), One of the Best Financial Institutions Global Service Quality Award VISA BUSINESS DEBIT CARD Honorable Mention for Community & Economic Development Awards AMERICAN BANKERS ASSOCIATION Best Places to Work ARKANSAS BUSINESS Lexington Progress, 2018 Readers’ Choice Awards, Top Bank Top U.S. Bank, Five-Star Award BAUER FINANCIAL The Sentinel Record (Hot Springs, Arkansas), One of the Best Mortgage Companies 14 One of the Top Banks STILLWATER NEWS PRESS A LOOK INSIDE SIMMONS Values like integrity, passion, pursuit of growth, high performance and a “better together” mindset bind together Simmons’ ever expanding team. Our goal is to be one of the best places to work in the country. Culture awards from publications across our footprint show that Simmons is serious about achieving that goal. George A. Makris, Jr. Chairman and CEO Simmons First National Corporation Cornerstones of Our Culture These are the ideals we strive for in order to make Simmons a better place to work – and to help make our customers’ dreams come true. THE FUTURE OF BANKING STARTS NOW: Next Generation Bank Transformation at Simmons Bank Working with speed, agility and efficiency, Next Generation Bank (NGB) is a new strategic initiative that kicked off in 2018 to position Simmons Bank for the future. NGB will transform our bank by creating a differentiated customer and associate experience – using the latest in banking technologies. KEY BENEFITS: • Intuitive User Experience • Simplified Processes • Seamless Customer Engagement • Accurate and Available Data • More Rewarding Associate Opportunities 16 Congratulations to our Hot Springs team for winning Simmons’ 2018 Community Bank of the Year Award. The award recognizes outstanding loan and core deposit growth, J.D. Power & Associates customer satisfaction survey scores and beneficial cross-selling results. As Community Bank of the Year, Hot Springs will be awarded $10,000 to donate to the local organization of their choice. Winning associates will receive $100, a plaque, a shirt and a certificate of recognition. Each branch will also receive banners and window clings to honor this achievement. We are proud of our Hot Springs associates for taking great care of Simmons’ customers, and for their inspiring example of excellence. A strong belief in community banking has always been the guiding philosophy behind Simmons Bank’s success. Our customers place great value in their long-standing relationships with local Simmons contacts. As we move forward and grow, it’s vital that we maintain these connections with talented associates who are deeply rooted in the local communities, who understand the market and who make decisions at the local level. Customers want that personal touch. And Simmons is the bank that can bring that personal touch to life. NEXTGen: Meet Our Future Leaders NEXTGen is a leadership development program that pairs high-performing young professionals with executive mentors. The intensive one-year program sharpens business and leadership skills through classroom sessions, webinars, stretch assignments, hands-on leadership activities and executive mentoring. The program exemplifies Simmons’ emphasis on leadership development and our commitment to invest in our people by providing them with career growth opportunities. FINANCIAL HIGHLIGHTS CAPITAL & ASSET QUALITY STRONG REGULATORY CAPITAL As of Dec. 31, 2018 REGULATORY MINIMUM REGULATORY “WELL-CAPITALIZED” SIMMONS FIRST NATIONAL CORPORATION 8.78% 10.22% 5.00% 4.00% 6.50% 4.50% LEVERAGE RATIO COMMON EQUITY TIER 1 CAPITAL RATIO 10.22% 8.00% 8.00% 6.00% 10.00% 13.35% TIER 1 CAPITAL RATIO TOTAL RISK-BASED CAPITAL RATIO STRONG ASSET QUALITY Year ended Dec. 31, 2018 SFNC ALL U.S. BANKS Nonperforming Loans as a % of Loans1 0.48%2 1.1 9 % Net Charge-Offs as a % of Average Loans 0.25 %3 0.44 % Net Credit Card Charge-Offs as a % of Credit Card Portfolio 1.64% 3.57 % 4 ¹ Includes troubled-debt restructures ² Legacy loans; excluding all acquired loans ³ Legacy loans; excluding all acquired loans and credit cards ⁴ Most recently published industry average 18 FINANCIAL HIGHLIGHTS ASSET GROWTH TOTAL ASSET GROWTH PREVIOUS FIVE YEARS | IN THOUSANDS $16,543,337 $15,055,806 $8,400,056 $7,559,658 $4,643,354 2014 2015 2016 2017 2018 910111213141516178765432FINANCIAL HIGHLIGHTS EARNINGS & MARKET CAPITALIZATION MARKET CAPITALIZATION PREVIOUS FIVE YEARS | IN THOUSANDS $2,627,431 $1,943,910 $2,228,349 $1,555,100 $733,833 2014 2015 2016 2017 2018 EARNINGS GROWTH PREVIOUS FIVE YEARS | IN THOUSANDS, EXCEPT PER SHARE DATA $220,233 Diluted EPS (Core): $2.37 $215,713 Diluted EPS (GAAP): $2.32 $96,790 Diluted EPS (GAAP): $1.56 $101,409 Diluted EPS (Core): $1.64 $92,940 Diluted EPS (GAAP): $1.33 $119,049 Diluted EPS (Core): $1.70 $89,622 Diluted EPS (Core): $1.59 $74,107 Diluted EPS (GAAP): $1.31 $35,688 Diluted EPS (GAAP): $1.05 $38,707 Diluted EPS (Core): $1.14 2.5 2.0 1.5 1.0 .5 240 220 200 180 160 140 120 100 80 60 40 20 2014 2015 2016 2017 2018 Per share information has been retrospectively adjusted to reflect the effects of the two-for-one stock split, which became effective Feb. 8, 2018. “Core earnings” and “diluted core earnings per share” are financial measures that exclude non-core items, including items related to branch right sizing and merger related costs. We believe these non-GAAP financial measures provide a meaningful base for period-to-period and company-to-company comparisons, which will assist investors and analysts in evaluating the core operating results of the company and predicting future performance. See “Reconciliation of Non-GAAP Financial Measures” in the 2018 Form 10-K for a GAAP reconciliation of these non-GAAP financial measures. 20 2018 ANNUAL DIVIDEND YIELD: 2.5% BASED ON DEC. 31, 2018 STOCK PRICE FINANCIAL HIGHLIGHTS DIVIDENDS $0.60 $0.50 $0.48 $0.46 $0.44 $0.42 $0.40 $0.38 $0.36 $0.34 $0.30 $0.28 $0.26 $0.24 $0.22 $0.20 $0.18 $0.16 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 110 CONSECUTIVE YEARS OF PAYING DIVIDENDS TO OUR SHAREHOLDERS FINANCIAL HIGHLIGHTS SHAREHOLDER RETURN 1 YEAR TOTAL SHAREHOLDER RETURN DIVIDENDS + STOCK APPRECIATION | DEC. 31, 2017—DEC. 31, 2018 20.0% 15.0% 10.0% 5.0% 0.0% (5.00%) (10.00%) (15.00%) (20.00%) (25.00%) D E C. 31, '17 JA N. 31, '18 FE B. 28, '18 M A R. 31, '18 A P R. 30, '18 M A Y 31, '18 JU N E 30, '18 JU LY 31, '18 A U G. 31, '18 SEP. 30, '18 O C T. 31, '18 N O V. 30, '18 D E C. 31, '18 22 SFNC (13.7%) SNL Mid Cap Bank (18.2%) FINANCIAL HIGHLIGHTS SHAREHOLDER RETURN 5 YEAR TOTAL SHAREHOLDER RETURN DIVIDENDS + STOCK APPRECIATION | DEC. 31, 2013—DEC. 31, 2018 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% (10.0%) (20.0%) M A R C H 31, '14 D E C. 31, '13 JU N E 30, '14 SEP. 30, '14 SFNC 43.5% SNL Mid Cap Bank 25.0% SEP. 30, '17 D E C. 31, '17 M A R C H 31, '18 JU N E 30, '18 SEP. 30, '18 D E C. 31, '18 SEP. 30, '15 D E C. 31, '15 M A R C H 31, '16 JU N E 30, '16 SEP. 30, '16 D E C. 31, '16 M A R C H 31, '17 JU N E 30, '17 D E C. 31, '14 M A R C H 31, '15 JU N E 30, '15 LONG-TERM SHAREHOLDER RETURN DIVIDENDS + STOCK APPRECIATION | DEC. 31, 2007—DEC. 31, 2018 225% 205% 185% 165% 145% 125% 105% 85% 65% 45% 25% 5.0% (15.0%) (35.0%) (55.0%) (75.0%) D E C. 31, ‘0 7 J U N E 3 0, ‘0 8 D E C. 31, ‘0 8 J U N E 3 0, ‘0 9 D E C. 31, ‘0 9 J U N E 3 0, ‘10 D E C. 31, ‘10 J U N E 3 0, ‘11 D E C. 31, ‘11 J U N E 3 0, ‘12 D E C. 31, ‘12 J U N E 3 0, ‘13 D E C. 31, ‘13 J U N E 3 0, ‘14 D E C. 31, ‘14 J U N E 3 0, ‘15 D E C. 31, ‘15 J U N E 3 0, ‘16 D E C. 31, ‘16 J U N E 3 0, ‘17 D E C. 31, ‘17 J U N E 3 0, ‘18 SFNC 139.7% SNL Mid Cap Bank (5.8%) D E C. 31, ‘18 FINANCIAL HIGHLIGHTS CONSOLIDATED DATA & FINANCIAL SHEETS CONDENSED CONSOLIDATED BALANCE SHEETS DEC. 31, 2018 AND 2017 | IN THOUSANDS ASSETS Cash and cash equivalents Investment securities Mortgage loans held for sale Other assets held for sale Legacy loans Allowance for loan losses Loans acquired, net NET LOANS Premises and equipment Foreclosed assets and other real estate owned Goodwill and other intangible assets Other assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Non-interest bearing transaction accounts Interest bearing transaction accounts and saving deposits Time deposits TOTAL DEPOSITS Other borrowings Subordinated debentures Other liabilities held for sale Accrued interest and other liabilities TOTAL LIABILITIES Total stockholders' equity 2018 $833,458 2, 445,880 26,799 1,790 2017 $598,042 1,960,889 24,038 1 65,780 8,430,388 5,705,609 (56,599 ) ( 4 1 ,668 ) 3,292,783 5,074,076 $1 1 ,666,572 $10,738,017 295,060 25,565 937, 0 2 1 3 1 1 , 1 9 2 287,249 32, 1 1 8 948,722 300,9 5 1 $16,543,337 $15,055,806 2,672,405 6,830, 1 9 1 2,896,1 5 6 2,665,249 6,494,896 1 ,932,730 $12,398,752 $ 1 1 ,092,875 1,345,450 353,950 1 6 2 198,589 1 ,380,024 1 4 0,565 1 5 7,366 200,4 1 2 $14,296,903 $12,971,242 2,246,434 2,084,564 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $16,543,337 $15,055,806 24 FINANCIAL HIGHLIGHTS STATEMENTS OF INCOME CONDENSED CONSOLIDATED STATEMENTS OF INCOME IN THOUSANDS, EXCEPT PER SHARE DATA Interest income Interest expense NET INTEREST INCOME Provision for loan losses NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES NON-INTEREST INCOME Trust income Service charges on deposit accounts Other service charges and fees Mortgage and SBA lending income Investment banking income Debit and credit card fees Bank-owned life insurance income Gain on sale of securities, net Other income TOTAL NON-INTEREST INCOME NON-INTEREST EXPENSE Salaries and employee benefits Occupancy expense, net Furniture and equipment expense Other real estate and foreclosure expense Deposit insurance Merger related costs Other operating expenses TOTAL NON-INTEREST EXPENSE INCOME BEFORE INCOME TAXES Provision for income taxes NET INCOME AVAILABLE TO COMMON STOCKHOLDERS DILUTED EARNINGS PER SHARE Net non-core items CORE EARNINGS AVAILABLE TO COMMON STOCKHOLDERS1 DILUTED CORE EARNINGS PER SHARE1 2018 $680,687 1 2 8 , 1 3 5 $552,552 38,1 4 8 $514,404 23, 1 2 8 42,508 7,469 1 1 ,043 3, 1 4 1 32,268 4, 4 1 5 6 1 1 9,863 2017 $395,004 40,074 $354,930 26,393 $328, 5 37 1 8,570 36,079 9, 9 1 9 1 3, 3 1 6 2,7 9 3 34, 2 5 8 3,503 1,059 1 9,268 $ 143,896 $ 138,765 216,743 29, 6 1 0 16,323 4,480 8 , 7 2 1 4,777 1 1 1 ,575 $392,229 $266,071 50,358 $ 2 1 5 ,7 1 3 $2.32 4,520 $220,233 $2.37 154, 3 1 4 21, 1 5 9 19,366 3,042 3,696 2 1, 92 3 88, 879 $312,379 $154,923 6 1 ,98 3 $92,940 $1.33 26, 1 0 9 $119,049 $1.70 1 “Core earnings” and “diluted core earnings per share” are financial measures that exclude non-core items such as items related to branch right sizing and merger related costs. Included in the 2017 non-core total is the one-time non-cash charge of $11.5 million related to the tax law changes. We believe these non-GAAP financial measures provide a meaningful base for period-to-period and company-to-company comparisons, which will assist investors and analysts in evaluating the core operating results of the company and predicting future performance. See “Reconciliation of Non-GAAP Financial Measures” in the 2018 Form 10-K for a GAAP reconciliation of these non- GAAP financial measures. FINANCIAL HIGHLIGHTS SELECTED CONSOLIDATED FINANCIAL DATA YEARS ENDED DEC. 31 | IN THOUSANDS, EXCEPT PER SHARE AMOUNTS FINANCIAL STATEMENT DATA 2018 2017 2016 2015 2014 Total assets Total loans Total deposits Total equity Net income available to common shareholders Core earnings available to common shareholders1 $16,543,337 $15,055,806 $8,400,056 $7,559,658 $4,643,354 1 1 ,7 2 3 ,1 7 1 10,779,685 5, 63 2,890 4,919,355 2,736,634 12,398,752 11 ,092,875 6,73 5 , 2 1 9 6,086,096 3,860, 7 1 8 2,246,434 2,084,564 1 , 1 5 1 , 1 1 1 1 ,076,855 494, 3 1 9 2 1 5 ,7 1 3 92,940 96,790 74,1 0 7 35,688 220,233 1 1 9 ,049 1 0 1,409 89,622 38,707 PER SHARE DATA3 Diluted earnings Diluted core earnings (non-GAAP)1 Book value Tangible book value (non-GAAP)2 Dividends CAPITAL RATIOS AT PERIOD END Common shareholders' equity to total assets Tangible common equity to tangible assets (non-GAAP)2 Tier 1 leverage ratio Common equity Tier 1 risk-based ratio Tier 1 risk-based ratio Total risk-based capital ratio Dividend payout to common shareholders $2.32 2.37 24.33 1 4. 1 8 0.60 $1.33 1.70 22.65 12.34 0.50 $1.56 1.64 18.40 1 1.98 0.48 $1. 3 1 1.59 1 7.27 10.98 0.46 $1 .05 1 . 1 4 13.69 10.07 0.44 13.58% 13.85% 13.70% 13.84% 10.65% 8.39% 8.78% 1 0.22% 1 0.22% 1 3.35% 8.05% 9.2 1 % 9.80% 9.80% 1 1 .35% 9.37% 9.26% 10.95% 1 1 .20% 1 3.45% 1 4.45% 15.1 2 % 1 4. 2 1 % 1 6.02% 1 6.72% 8.06% 8.77% - 13.43% 14.50% 25.86% 37.59% 30.67% 34.98% 4 1. 7 1 % 1 2 3 “Core earnings” and “diluted core earnings per share” are financial measures that exclude non-core items such as items related to branch right sizing and merger-related costs. Included in the 2017 non-core total is the one-time non-cash charge of $11.5 million related to the tax law changes. We believe these non-GAAP financial measures provide a meaningful base for period-to-period and company-to-company comparisons, which will assist investors and analysts in evaluating the core operating results of the company and predicting future performance. See “Reconciliation of Non-GAAP Financial Mea- sures” in the 2018 Form 10-K for a GAAP reconciliation of these non-GAAP financial measures. Because of our significant level of intangible assets, total goodwill and core deposit premiums, we believe a useful calculation for investors in their analy- sis of Simmons is tangible book value per share and tangible common equity to tangible assets, which are non-GAAP financial measures. See “Reconcili- ation of Non-GAAP Financial Measures” in the 2018 Form 10-K for a GAAP reconciliation of these non-GAAP financial measures. Per share information has been retrospectively adjusted to reflect the effects of the two-for-one stock split that was effected Feb. 8, 2018. 26 SELECTED CONSOLIDATED FINANCIAL DATA - continued YEARS ENDED DEC. 31 ANNUALIZED PERFORMANCE RATIOS Return on average assets Return on average common equity Return on average tangible common equity (non-GAAP)2 2018 1.37% 10.00% 18.44% 2017 0.92% 6.68% 2016 1.25% 8.75% 2015 1 .03% 7.90% 2014 0.80% 8. 1 1 % 1 1 .26% 13.92% 1 2.53% 10.99% Net interest margin Efficiency ratio4 3.97% 4.07% 4.19% 4.55% 52.85% 55.27% 56.32% 59.01% 4.47% 67.22% ASSET QUALITY RATIOS5 Nonperforming assets/total assets Nonperforming loans/total loans 0.37% 0.41% 0.52% 0.81 % 0.79% 0.91% 0.85% 0.58% 1.25% 0.63% Allowance/nonperforming loans 164.41% 90.26% 92.09% 165.83% 223.31% Allowance/total loans Net charge-offs/average loans6 Net credit card charge-offs/credit card loans OTHER DATA Number of financial centers Number of full-time equivalent employees 0.67% 0.25% 1 .64% 0.73% 0.3 1% 1.61% 0.84% 0.35% 1.28% 0.97% 0.1 6 % 1.28% 1.41% 0.20% 1.27% 1 9 1 200 2,654 2,640 1 50 1,875 1 4 9 1,946 1 09 1,338 4 5 6 The efficiency ratio is non-interest expense before foreclosed property expense and amortization of intangibles as a percent of net interest income (fully taxable equivalent) and non-interest revenues, excludes gains and losses from securities transactons and non-core items. See "Reconciliation of Non-GAAP Financial Measures" in the 2018 Form 10-K for a GAAP reconciliation of this non-GAAP financial measure. Excludes all acquired loans, except for their inclusion in total assets. Excludes credit cards. SIMMONS FIRST NATIONAL CORPORATION BOARD OF DIRECTORS 1 2 3 4 5 6 7 8 William E. Clark, II CHAIRMAN & CHIEF EXECUTIVE OFFICER, CLARK CONTRACTORS, LLC Tom E. Purvis PARTNER, L2L DEVELOPMENT ADVISORS, LLC Susan S. Lanigan RETIRED EXECUTIVE VICE PRESIDENT & GENERAL COUNSEL, CHICO’S FAS, INC. Jerry M. Hunter PARTNER, BRYAN CAVE LEIGHTON PAISNER, LLP 5 6 7 8 W. Scott McGeorge CHAIRMAN, PINE BLUFF SAND & GRAVEL COMPANY Russell Teubner FOUNDER & CHIEF EXECUTIVE OFFICER, HOSTBRIDGE TECHNOLOGY, LLC Mark C. Doramus CHIEF FINANCIAL OFFICER, STEPHENS, INC. Christopher R. Kirkland PRINCIPAL, THE KIRKLAND GROUP 1 2 3 4 28 9 10 11 12 13 14 15 9 Edward Drilling SVP, REGULATORY AND EXTERNAL AFFAIRS, AT&T INC. 13 Jay D. Burchfield RETIRED FINANCIAL SERVICES EXECUTIVE 10 Eugene Hunt ATTORNEY, HUNT LAW FIRM 14 Malynda K. West EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER & TREASURER, MURPHY USA, INC. 11 12 Steven A. Cossé RETIRED PRESIDENT & CHIEF EXECUTIVE OFFICER, MURPHY OIL CORPORATION 15 Robert L. Shoptaw RETIRED EXECUTIVE ARKANSAS BLUE CROSS & BLUE SHIELD George A. Makris, Jr. CHAIRMAN & CHIEF EXECUTIVE OFFICER, SIMMONS FIRST NATIONAL CORPORATION SIMMONS BANK BOARD OF DIRECTORS Vernon Bryant NORTH TEXAS DIVISION PRESIDENT, SIMMONS BANK Dean Chambliss OWNER, H&D FARMS Mark C. Doramus CHIEF FINANCIAL OFFICER, STEPHENS, INC. Jay D. Burchfield RETIRED FINANCIAL SERVICES EXECUTIVE William E. Clark, II CHAIRMAN & CHIEF EXECUTIVE OFFICER, CLARK CONTRACTORS, LLC Edward Drilling SENIOR VICE PRESIDENT, REGULATORY AND EXTERNAL AFFAIRS, AT&T INC. Marty D. Casteel SENIOR EXECUTIVE VICE PRESIDENT, SIMMONS FIRST NATIONAL CORPORATION; CHAIRMAN & CHIEF EXECUTIVE OFFICER, SIMMONS BANK Steven A. Cossé RETIRED PRESIDENT & CHIEF EXECUTIVE OFFICER, MURPHY OIL CORPORATION Mark W. Funke SOUTHWEST DIVISION PRESIDENT, SIMMONS BANK 30 Eugene Hunt ATTORNEY, HUNT LAW FIRM Christopher R. Kirkland PRINCIPAL, THE KIRKLAND GROUP W. Scott McGeorge CHAIRMAN, PINE BLUFF SAND & GRAVEL COMPANY Jerry M. Hunter PARTNER, BRYAN CAVE LEIGHTON PAISNER, LLP Susan S. Lanigan RETIRED EXECUTIVE VICE PRESIDENT & GENERAL COUNSEL, CHICO’S FAS, INC. Johnny McGraw OWNER, MCGRAW FARMS Met L. Jones, II GENERAL MANAGER, DICKEY MACHINE WORKS John Lytle, M.D. ORTHOPEDIC SURGEON Beverly Morrow VICE PRESIDENT, TLM MANAGEMENT SIMMONS BANK BOARD OF DIRECTORS George O’Connor OWNER & PRESIDENT, O’CONNOR DISTRIBUTING Adam B. Robinson, Jr. PRESIDENT, RALPH ROBINSON & SON, INC. H. Ford Trotter, III GENERAL MANAGER, TROTTER AUTO GROUP Tom E. Purvis PARTNER, L2L DEVELOPMENT ADVISORS, LLC Robert L. Shoptaw RETIRED EXECUTIVE, ARKANSAS BLUE CROSS & BLUE SHIELD Malynda K. West EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER, MURPHY USA, INC. H. Glenn Rambin PRESIDENT, R&R FARMS Russell Teubner FOUNDER & CHIEF EXECUTIVE OFFICER, HOSTBRIDGE TECHNOLOGY, LLC C. Edward Woodside RETIRED FINANCIAL SERVICES EXECUTIVE 32 A final word from some of our most important stakeholders, our communities. 34 A final word from some of our most important stakeholders, our communities. CORPORATE HEADQUARTERS 501 Main Street Pine Bluff, AR 71601 870.541.1000 LITTLE ROCK CORPORATE OFFICES 425 W. Capitol Avenue, Suite 1400 Little Rock, AR 72201 501.558.3100 simmonsbank.com 601 E. 3rd Street Little Rock, AR 72201 

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