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Simmons First National Upped to Strong Buy

Zacks Equity Research

On Sep 18, Zacks Investment Research upgraded Simmons First National Corporation (SFNC) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Simmons First National has been witnessing rising earnings estimates on the back of strong second-quarter 2013 results. Moreover, this Southeast bank has delivered positive earnings surprise in 2 of the last 4 quarters with an average beat of 3.2%.

Simmons First National reported second-quarter results on Jul 18 with earnings per share of 39 cents, lagging the Zacks Consensus Estimate by 2.50% but beating the prior-year earnings by 2.6%. Higher expenses and increased provisions, partly offset by a rise in revenues led to the quarterly miss.

Total revenues rose 4.0% year over year to $88.4 million. This increase reflected growth in interest income as well as fee income. Net interest income increased 8.5% to $60.0 million. Moreover, non-interest income increased 3.5% to $2.6 million.

However, on the downside, expenses increased 9.4% to $62.2 million, as compared with the prior-year period. Higher salaries and occupancy, along with rise in other expenses primarily led to the increase. Provision for credit losses increased 26.3% year over year to $2.0 million.

Additionally on Aug 29, Simmons First National announced a 5.0% increase in its quarterly cash dividend. The new dividend of 21 cents per share will be paid on Oct 1, 2013 to shareholders of record on Sep 16, 2013.

Further, on Sep 12, Simmons First National announced that the U.S. Bankruptcy Court has approved a stock purchase agreement signed between Simmons First National and Rogers Bancshares, Inc. for the shares of Metropolitan National Bank. Simmons First National will purchase all the issued and outstanding common shares of Metropolitan National Bank. As per the deal, Rogers Bancshares will receive $53.6 million in cash. The transaction, which is subject to regulatory approvals, will expectedly close during the fourth quarter of this year.

Following second-quarter 2013 results, the Zacks Consensus Estimate for 2013 increased 0.6% to $2.26 per share on the back of 1 of the 2 upward estimate revisions, over the last 60 days. For 2014, the Zacks Consensus Estimate advanced 22.9% to $2.15 per share with both the estimates moving north over the same time period.

Other Stocks to Consider

Apart from Simmons First National, other Southeast banks with a Zacks Rank #1 include Seacoast Banking Corp. of Florida (SBCF), WesBanco Inc. (WSBC) and Yadkin Financial Corporation (YDKN).

Read the Full Research Report on SBCFRead the Full Research Report on WSBCRead the Full Research Report on YDKNRead the Full Research Report on SFNCZacks Investment Research