by Gwen Moritz
Posted 4/18/2012 09:26 am
Updated 11 months ago
PINE BLUFF - The post-recession recovery has been slower than normal and slower than expected, but Simmons First National Corp. is poised to profit when economic activity does return to normal, CEO J. Thomas May said at the company's 109th annual shareholders' meeting Tuesday night.
An upbeat May, on stage in a wheelchair, introduced a video of himself, which he said was an accommodation to the voice weakness caused by his "challenge" - Lou Gerhig's disease.
Simmons earned $25.4 million in 2011, down from $37.12 million in 2010. But core earnings were down only slightly, May pointed out, because $11 million of 2010's earnings represented the after-tax gain on FDIC-assisted acquisitions. Simmons tried to do more such acquisitions last year but didn't win any bids.
As a result, the holding company for eight separate bank charters still has enough excess capital following a 2009 stock issue to support adding $1 billion to $1.5 billion to its current assets of $3.37 billion.
"We have a history of being an acquirer of traditional banks, we have a history of integrating them into our system, and we have plenty of capital to do it with," May told ArkansasBusiness.com after the meeting.
May predicted a period of consolidation in community banks to come when the slow recovery reaches normal levels, and he said the company would confine its search for acquisitions to a 325-mile radius of central Arkansas.
Savings But No Layoffs
During what May called "the gap" between the normal pre-recession economy and the normal recovery yet to come, Simmons has nearly completed the consolidation of "back shop" processing operations for its eight banks into Pine Bluff. The company will realize savings of about $5 million a year through this step, he told ArkansasBusiness.com, but might have enjoyed more savings faster if all back shop employees had not been promised training for other jobs in the company. No employees were laid off because of the consolidation, which he said would also make future acquisitions even more profitable.
Last year the company, flush with capital, bought back 150,000 shares of stock, improving earnings by about 3 cents per share, May said. It has also increased the annual dividend paid to shareholders to 80 cents per share.
This year, Simmons has stimulated some improvement in loan demand by offering what he called "loan specials" - attractive interest rates - on commercial, consumer and agricultural loans. But May told ArkansasBusiness.com that lending activity mainly depends on factors beyond any bank's control.
"When business and the consumer have confidence that we are having a sustained recovery ... we'll start seeing that increased loan demand," he said.
May was assisted in the presentation by directors George A. Makris Jr. and Dr. Harry Ryburn and by the corporation's president and chief operating officer, David Bartlett.
During the dinner meeting, which attracted about 500 shareholders, the company:
- Re-elected its 10 current board members: May, Ryburn, Makris, William E. Clark II, Steven A. Cosse, Edward Drilling, Sharon Gaber, Eugene Hunt, W. Scott McGeorge and Robert L. Shoptaw.
- Announced that the corporation's executive compensation formula had received nonbinding approved from the holders of 98.1 percent of shares voted;
- Ratified the hiring of BKD LLP as independent auditor;
- Recognized the retirement of Glen Rambin, president of the flagship Simmons First National Bank, at the end of February, after 20 years with the company.
- Recognized the impending retirement of Tom Spillyards, president and CEO of Simmons First Bank of Northwest Arkansas, who joined the company in 1996 and will retire on Dec. 31; and
- Honored the memory of Stanley Reed, the corporate director who died last July.
More on Simmons
Our 2011 Executive Q&A with May, who talked about acquisitions, the student loan business and his illness.