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News Simmons ponders $60M in TARP funds By Amy Riggin/OF THE COMMERCIAL STAFF Simmons First National Corp. plans a special shareholders meeting for Feb. 27 about its approval for $60 million from the U.S. Treasury’s Troubled Asset Relief Program. “Initially, the program was directed to these financial institutions in hopes that the new capital would encourage the banks to remain proactive in their lending activities throughout the economic downturn,” J. Thomas May, Simmons’ chairman and CEO, said Thursday. “In late October, we were invited by our primary regulator to participate because of our financial strength.” Shareholders will vote on the following items: “We expect the issue will be approved,” May said. “While there is some negativity related to government involvement and some concern on how the government might one day change the rules, the program now has a provision that would allow us to pay back the capital at any time we choose. “This is very much a positive for our company and shareholders.” Shareholders of record as of Dec. 17 will be entitled to vote. “We believe it is important to note that the Capital Purchase Program was established by the U.S. Treasury to infuse capital into strong banks, not problem banks,” May stated in the letter. “While we have very strong capital, liquidity and asset quality, we believe the additional capital will better position us to take advantage of opportunities that we believe will arise over the next three-year period.” May said Simmons capital or funding needs have historically been handled through equity or debt markets. “However, as you know, because of the national economic problems, access to these markets is somewhat limited and very expensive,” May said. “As such, we have simply made a strategic decision to strengthen our capital now in anticipation of opportunities in the future.” Simmons received preliminary approval in October, according to its proxy statement. On Jan. 6, the Treasury amended its approval to allow the bank to issue up to $59.7 million in preferred shares. “Since the equity market is basically frozen, having a tremendous war chest of capital is huge as we navigate through the challenges and opportunities of this economy,” May said. “While there are some drawbacks of participating in the plan, at this time we consider the positives to far outweigh the negatives.” Simmons reported fourth-quarter profit of $5.6 million or 40 cents a share, compared to 44 cents a share during the same quarter last year. Net income in 2008 was $26.9 million or $1.91 a share, down slightly from $1.92 a share in fourth quarter 2007. With total assets of $2.9 billion, Simmons operates eight community banks in Pine Bluff, Lake Village, Jonesboro, Rogers, Searcy, Russellville, El Dorado and Hot Springs. The company’s banks operate out of 88 offices in 47 communities. Simmons is the third publicly traded institution in Arkansas to receive TARP money. Others include Bank of the Ozarks of Little Rock ($75 million) and Home Bancshares of Conway ($50 million). Four private institutions in the state have received TARP money: To view the special meeting notice, letter to shareholders or proxy statement, go to www.simmonsfirst.com. |
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