Simmons First National Corporation announced earnings of $12,577,000, or $1.76 per diluted share for the nine-month period ended September 30, 2001. The diluted earnings per share reflect a decrease of 6.9% when compared to September 30, 2000 diluted earnings per share of $1.89. Earnings for the third quarter were $3,536,000, or $0.49 diluted earnings per share. These earnings are down $1,429,000, or $0.18 per share when compared to the same period of the previous year. The decrease in third quarter earnings was primarily attributable to continued pressure on net interest margin and a special $1.25 million provision to the loan loss reserve. According to J. Thomas May, Chairman and Chief Executive Officer, “The banking industry has had margin pressures most of the year due to the rapid decrease in interest rates. Simmons First has been impacted to a greater degree due to our usury law, which is tied to the Federal Reserve’s discount rate. Since December, the discount rate has dropped by 4.25%, thus we have been forced to decrease the rates in our credit card portfolio to a level significantly below the market.”
May also commented, “The third quarter earnings were impacted due to a special provision to the loan loss reserve for some problem credits identified at one of Simmons First’s affiliates.” May further stated, “The recent court ruling on the Gramm-Leach-Bliley Act amendment to the Arkansas usury law will give Arkansas banks greater flexibility to deal with interest rate movements like we’ve had this past year. Since rates will no longer be tied to the Federal Discount Rate, banks can control the pricing of their loans based on market verses an arbitrary formula. We estimate this will have a positive impact on earnings during 2002.”
Because of the Corporation’s cash acquisitions, cash operating earnings (net income excluding amortization of intangibles) are an integral component of earnings. Year-to-date diluted cash earnings, on a per share basis, as of September 30, 2001 were $1.97. Cash return on average assets was 0.99% and cash return on average stockholders’ equity was 10.66% for the nine-month period ended September 30, 2001. Diluted cash earnings for the third quarter of 2001 were $0.56 per share.
Total assets for the Corporation at September 30, 2001, were $2.0 billion, an increase of $167 million, or 8.9%, over the same figure at September 30, 2000.
Stockholders’ equity at the end of the third quarter of 2001 was $181.2 million, an $11.6 million, or 6.8%, increase from September 30, 2000. The allowance for loan losses as a percent of total loans equaled 1.64% as of September 30, 2001, compared to 1.63% for December 31, 2000. As of September 30, 2001, non-performing loans equaled 1.22% of total loans and the allowance for loan losses equaled 135% of non-performing loans.
Simmons First National Corporation is a financial holding company, with community banks in Pine Bluff, Jonesboro, Lake Village, Dumas, Rogers, Russellville, Searcy and El Dorado, Arkansas. The Company’s eight banks are conducting financial operations from 65 offices in 33 communities.
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