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Sep 30, 2022
Simmons Q3 2022 Earnings Report
Reported earnings of $80.6 million and EPS of $0.63, driven by positive operating leverage.
Key Takeaways
Simmons First National Corporation reported a net income of $80.6 million for Q3 2022, with diluted earnings per share of $0.63. Total revenue increased by 5% compared to the previous quarter, and noninterest expense decreased by 11%. The company's performance reflects the diversity of its franchise and its ability to navigate the current economic environment.
Diluted EPS of $0.63 and adjusted diluted EPS of $0.64.
Revenue increased 5%, fueled by a 5% increase in net interest income and a 7% increase in noninterest income.
Noninterest expense decreased 11%. Adjusted noninterest expense decreased 1%.
Positive operating leverage drives 13% increase in adjusted pre-provision net revenue and 308 bp improvement in efficiency ratio.
Simmons
Simmons
Forward Guidance
The company recognizes the backdrop of economic uncertainty that persists, with elevated inflation levels and market expectations of rising interest rates. They are focused on targeted balance sheet growth, prudently managing spreads, and maintaining disciplined loan and deposit pricing strategies.
Positive Outlook
- Simmons has a strong record of returning excess capital to shareholders through a strategic combination of cash dividends and share repurchases.
- The board of directors declared a quarterly cash dividend on Simmons’ Class A common stock of $0.19 per share, which is payable on January 3, 2023.
- The cash dividend represents an increase of $0.01 per share, or 6 percent, from the dividend paid for the same time period last year.
- The annual cash dividend rate of $0.76 for 2022 represents a ten-year compound annual growth rate of 7 percent, and 2022 represents the 113th consecutive year that Simmons has paid cash dividends.
- During the third quarter of 2022, Simmons repurchased approximately 1.9 million shares of its Class A common stock at an average price of $23.91 under its 2022 stock repurchase program.
Challenges Ahead
- Inflation levels remain elevated.
- Market expectations are that interest rates will continue to rise, which will most likely have an impact on future economic growth and activity.
- Activity within our commercial loan pipeline slowed, as expected, given the impact of the rapidly rising interest rates
- An increase in unrealized losses associated with investment securities classified as available-for-sale.
- Economic uncertainty that persists.