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#Yes, <UNK>, as you probably know, we've been planning with both Liberty and First State for several months for the integration.
They have done an excellent job in identifying cost save opportunities, and I would tell you that they both had great first quarters and particularly on the expense side.
So, I would say that we're probably a little ahead of the game with regard to realization of those cost saves.
We still think that our original projections (inaudible) come out but they were just a little earlier than we had projected them to happen.
So we were the beneficiary of a little bit from a timing standpoint in the first quarter.
But remember, they are only in our financials for one month and one day in the first quarter.
I will just touch on that briefly and I'll let <UNK> <UNK> to talk a little bit more about that.
Our cash position is good.
We are restructuring our investment portfolios.
So all three banks sold some securities during the first quarter.
We're holding that cash because we didn't want to go back in all at one time and invest it in the securities portfolio.
But I'll let <UNK> give you a few more details on our cash position.
Yes, <UNK>, as you know on the purchase accounting of a mark-to-market on investment security portfolio and as we mark those securities, we looked at what would fit into our portfolio.
So we have a couple of hundred extra million in liquidity right now that we will layer back into the investment portfolio over the next couple of months.
We don't want to put it all in one time, we want to layer it in and obviously the rates are on the lower end right now.
So we'll look for opportunistic times to put that in.
We would like it obviously to go into the loan portfolio.
You mentioned on the loan to deposit ratio, we're in the low 70% range.
Our target over a period of time would be north of the 80% range, is where we would like to be.
But as we merge the companies together and put new programs in place, that would be our target over that period of time.
<UNK>, we have.
We will take a look at it now.
I am going to let <UNK> talk a little bit about the excess mark we have on our books, what that means to us long term and surely give you an idea of what the financial yield that FDIC would have to look like for us to be willing to exit that loss share [please].
Yes, <UNK>, we're looking at the possibilities of exiting the market or the FDIC loss share agreement.
One of the things to remember for our company is the excess mark that we have related to the [Kansas loans], related to that we have the FDIC indemnification asset.
Those assets ---+ that is being expensed over the life of the loan or the agreement period whichever shorter.
We have a negative amount in the non-interest income.
So it could be when we analyze this that there is a one-time hit.
All that would be a timing difference of when that expense hits whether it's on the day we sign the agreement or we expense it over the next period of time.
But we continue to evaluate the financial trade on this if it's worth exiting or not.
The FDIC is looking at it more today than they have in the past.
So we're hopeful at some point we will exit.
<UNK>, I'll talk a little bit about our modeling run-off on loans.
And we never model keeping 100% of the loans.
We usually build in about a 10% run-off.
We're very hopeful and optimistic that that's not going to happen and we don't believe it's going to happen because the same staff that made those loans at both Missouri and Tennessee are still in place taking care of those customers.
So we're hopeful that our run-off will be less than our model of 10%.
I am going to let <UNK> <UNK> talk a little bit about where we're experiencing this organic growth.
Hi, <UNK>.
This is <UNK> <UNK>.
Most of our loan growth is coming out of some of our metropolitan markets.
Wichita has been a great loan growth market for us, so is St.
Louis, Little Rock has contributed some good growth.
As in just our legacy footprint in Arkansas from Jonesboro, that's always a good loan growth market for us.
Little Rock has shown some relevant growth this past quarter as has South Arkansas.
As you remember, we're in the ag business and the ag business cycle is just starting to pick up and some of the agricultural lenders in our footprint are starting to see some benefit at the end of the first quarter, most of that's going to be coming in the second quarter.
So that's the history of where we're seeing most of our pick-up in our core loan growth.
Well, it will be if we lose 10% of the acquired loans in our model.
If we don't, then we expect it to be double digits as we've experienced over the last several quarters.
First on the reported NIM with the increased accounting interest, it's going to be bumpy just like it has.
It will be anywhere from [4.10 to 4.50].
On the core side, we're very pleased with this staying pretty consistent at the [3.85, 3.86] level.
We see the core side span [3.85 to 3.90] in the next couple of months.
We will have a pick-up in the second quarter as we fund those agri loans.
But probably not as much as we've seen in the past based on the size of the balance sheet.
But I would say a pretty stable core NIM in the foreseeable future in that [3.85 to 3.90] range.
Sure, <UNK>.
I am going to let <UNK> <UNK> field that question if you don't mind.
Well, <UNK>, as you noted our trust and our mortgage income and investment banking income are all pretty solid.
Our deposit fee income was soft and that's really a reflection of frankly NSF fees.
This quarter is typically historically a low point for NSF fees.
That's not surprising, tax free funds, honestly probably the lower price of gasoline has helped consumers a lot.
That's all good news in many respects.
It does show up in NSF fee income.
We would expect that historical trend to continue and we'd see some rising of those deposit fees over the coming months.
<UNK>, this is <UNK> <UNK> again.
We've talked a lot about our non-interest income lines of business and the real opportunity we have long term from the revenue enhancement standpoint.
We've just hired Philip Tappan in the last quarter to head our financial services division.
Phil looks over our trust, our investments, our insurance and our new private bank operation.
Some of the increases you've seen is because of our increased emphasis on those product lines.
And quite honestly, they are very limited in their offering throughout our footprint.
So our priority over the next two to three years is to make sure we have those products and services available in all our markets.
So Philip has done a great job and I certainly expect those areas of our business to continue to increase our revenue opportunities.
<UNK> that's a good question.
When you put ---+ in the last 12, 18 months when you put four banks together it's hard to figure out what the legacy is and what was Bank yesterday, but I can just tell you, as you can see we've had good legacy growth.
The fee income, as we said, we've had a little bit of challenges on the end of sales with some of those service charges in the credit card area.
On the expense side, we've seen good cost saves as we look across our efficiency initiatives.
So I don't know if <UNK>, he has got a page with him, respond to that.
Hi <UNK>.
<UNK> here.
We have seen some organic improvement in Simmons First National Bank.
We are up significantly in the legacy assets being compared to where we were in the first quarter of last year.
And those are trends that we expect to see going forward.
So we've got the legacy improvement of SFNB and then we are just layering on these acquisitions to help accelerate that improvement and growth.
<UNK>, we've talked a little bit about our legacy loan growth and that continues to be strong.
So that would be in those numbers.
And I think we've talked before about exceeding our expectations on the cost save model on Metropolitan and certainly I would tell you that Delta Trust acquisition, we've exceeded that cost saving estimate as well.
Our merger-related costs, particularly on these two latest transactions were below our model, which is one of the things that has contributed to our stronger equity position on our balance sheet.
So I would tell you that both on the revenue side and the cost save side, we're doing a little better than we anticipated if you'd asked six months ago.
Another good question and it is the big challenge trying to get our hands around that too.
I going to give you some numbers, but it's like you said a range of where we will be.
Again we're putting these companies together.
We've got cost saves we're putting in from past acquisitions and cost saves from future ones.
But I'd tell you without the cost saves going forward we're looking at a run rate on a quarterly basis of about $62 million would be a good number and that number will be reducing with the cost saves as we go forward.
That's what our modeling is showing right now as we look to the next couple quarters.
Yes, as we said Liberty converts tomorrow.
It's generally about 30 days before some of those cost savings start hitting.
Community First will be September 4 and it will be 30 days.
So we think fourth quarter of this year will be a good run rate going forward with all the cost ---+ most of the cost saves in.
<UNK>, for fear of being strangled by some of these guys sitting around me, we're continuing to be very active in talking to prospective merger partners.
We're seeing a lot of activity in the market.
I will tell you that we had originally several years ago established sort of a 350-mile radius around Central Arkansas as our target territory.
That's probably expanded a little bit since our territory now includes the entire state of Tennessee.
I would tell you we're looking at more of an inside out growth strategy.
We said we'd like to go west, the multiples going west are a little high now.
So we might have some opportunities in some contiguous territory to Tennessee for instance.
So we continue to work first for an organization whose culture is very similar to ours.
If we go into a new territory, we will make sure that we have a good strong management team in an organization that is well respected, a long history, excellent service in the markets.
And quite honestly, we're having discussions with several of those institutions that meet those characteristics right now.
I really can't give you much of a timeline.
We're very comfortable with our ability to integrate these two deals as we've mentioned earlier.
So I would expect that if we're successful with any of these discussions, we will slot closings and conversions similarly to what we've done with these two deals.
I would tell you, again that's a bumpy number as we go forward.
While that is $10 million in the first quarter, remember there is also some indemnification asset that goes against that number as we go forward.
I think <UNK> was saying ---+
For the second quarter for Liberty and First State, we're going to add about $3.5 million in accretion, just for those two new portfolios.
That is the expected credit mark accretion in the second quarter for those two deals.
And, <UNK>, remember those numbers are in ---+ those are at our expectation levels of the numbers we gave last year when we projected the earnings going forward for those entities.
Thank you, <UNK>.
<UNK>, we've set as our target based on our current risk profile a range of operating capital TCE of 7.5% to 8.5%.
So we're well within those guidelines.
It's quite honestly, probably 30 basis points higher than we thought it was going to be, primarily because of the delay in the closing.
So we got the benefit of earnings of Liberty and First State during the first three months of the year, actually for three months because we expected to close last November.
They rolled into capital instead of earnings.
So we're pleased about that.
We're going to sit on this capital and try to utilize it in future acquisitions.
If we get above 8.5% then we've got some deployment issues that we'll start talking about internally.
Either larger cash pieces of acquisitions or potential stock buyback.
So I would tell you that over 8.5% based on the current risk profile, we will consider that to be excess capital.
Well, I'm going to answer it this way, I'm looking at our Lead Director at the end of the table and he was expecting me to expect us to have record core earnings.
So, yes, that's the result of our acquisitions.
They've all been very strategic and all been very good financially for our company.
So I would say, yes we expected to have record core earnings.
Well, thank you very much for joining us today.
Many of you we will see between now and the end of the second quarter, but we'll look forward to doing this again the end of June.
Thanks a lot and have a good day.
