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Executives

David Garner - IR

Tommy May - Chairman and CEO

David Bartlett - COO

Bob Fehlman - CFO

Analysts

David Scharf - Ftn Midwest Securities Corp.

Barry Mccarver - Stephens, Inc.

Simmons First National Corp. (SFNC) 1Q 2008 Earnings Call April 17, 2008 4:00 PM ET

Operator

At this time I would like to welcome everyone to the Simmons First Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session.

(Operator Instructions) Thank you. Mr. Garner, you may begin your conference.

David Garner

Thank you. Good afternoon. I am David Garner, Investor Relations Officer of Simmons First National Corporation. We want to welcome you to our first quarter earnings teleconference and webcast. Here with me today are Tommy May, our Chief Executive Officer, David Bartlett, our Chief Operating Officer, and Bob Fehlman, our Chief Financial Officer.

The purpose of this call is to discuss the information and data provided by the company in our quarterly earnings release issued this morning. We will begin our discussion with prepared comments and then we will entertain questions. We have invited the analysts from the invested firms that provide research on our company to participate in the question-and-answer session. All other guests in this conference call are in a listen-only mode.

I would remind you of the special cautionary notice regarding forward-looking statements and that certain matters discussed in this presentation may constitute forward-looking statements and may involve certain known and unknown risks, uncertainties, and other factors, which may cause actual results to be materially different from our current expectations, performance or achievements. Additional information concerning these factors can be found in the closing paragraphs of our press release and in our form 10-K.

With that said, I will turn the call over to Tommy May.

Tommy May

Thank you, David and welcome everyone to our first quarter conference call. In our press release issued earlier today Simmons First reported total assets of $2.9 billion and Stockholders' equity of $281 million at March 31, 2008. Our equity to asset was 9.8% and our tangible equity ratio was 7.8%, while our book value at March 31, '08 was $20.14 per share compared to $8.54 at March 31, 2007.

Obviously our company is well positioned with strong capital. Simmons First also reported first quarter 2008 earnings of $8.8 million or $0.63 diluted earnings per share, an increase of $2.2 million, or $0.17 diluted earnings per share over Q1 '07. This is a 37% increase in diluted EPS.

Needless to say our first quarter earnings represent record levels, which require further explanation. There were three significant events that positively impacted our company each related to our membership in Visa Inc.

First as expected during the first quarter, we recorded a nonrecurring $0.05 increase in earnings per share related to the reversal of the $1.2 million contingent liability established during the fourth quarter of 2007. As discussed in our last earnings conference, this contingent liability represented the company's pro-rata portion of Visa Inc's litigation liabilities, which was satisfied in conjunction with Visa's March IPO.

The second issue also as a result of the IPO, Simmons First received cash proceeds of $3 million on the mandatory partial redemption of its equity interest in Visa, benefiting our Q1 '08 results by $1.8 million after-tax, or $0.13 per share.

Lastly, associated with our membership in Visa, we received 110,308 Class B shares of Visa. The Class B shares have a restricted holding period and the company will not recognize any gain until such times the shares are redeemed for cash. Excluding both the Visa litigation reversal and the mandatory stock redemption gain, the company's Q1 '08 operating earnings were $6.3 million or $0.45 diluted operating EPS, a $0.01 decrease from the same period in 2007.

Net interest income for Q1 '08 increased $561,000 or 2.5% compared to Q1 '07. Net interest margin for Q1 '08 declined 8 basis points to 3.8% when compared to the same period last year.

On a link quarter basis, net interest margin declined 20 basis points due to the seasonal nature of our loan portfolio, significant repricing of earning assets due to declining interest rates during the past 90 days and our concentrated effort to increase liquidity. Due to the uncertainty of future rate movements and the continued impact of recent rate movements, we anticipate further margin compression for the remainder of 2008.

During Q1 '08, we introduced two new initiatives to enhance the liquidity of the company. First, we introduced the high yield investment account, which generated approximately $50 million in new core deposits.

Secondly, we made a strategic decision to secure about $55 million in long-term funding from federal home loan bank borrowings. Through this process while we slightly negatively impact margin, we were able to reduce our dependency on the more powerfully CD deposits, increase our liquidity, and at the same time develop 700 new customer relationships.

Non-interest income for Q1 ’08 was $15 million compared to $11.5 million for the same period last year, a 31% increase. Included in non-interest income is the $3 million Visa gain discussed earlier. Excluding this gain, non-interest income increased $565,000 or almost 5%.

Let me take a minute to discuss some of the other items that impacted our non-interest income. Credit card sales increased about $524,000 or 19.8% in Q1 '08 compared to Q1 '07. This increase was due to a higher volume of credit and debit card transactions. The higher credit card transaction volume is a direct result of the initiatives that we have discussed in previous conference calls. The second item, income on investment banking, also referred to as dealer bank operations, increased by $299,000 for the quarter when compared to the same period last year. This improvement was due to additional sales volume driven by the interest rate environment, call securities, and customer liquidity. The third item, these improvements in non-interest income was somewhat mitigated by decrease of $258,000 in premium on sales of student loans. This decrease was primarily the result of fewer loans being sold to avoid consolidation lenders in Q1 '08 versus Q1 '07.

Let me take a minute and move to the expense category. Non-interest expense for Q1 '08 was $23.1 million; a decrease of $84,000 or $0.04 of 1% from the same period in 2007. Included in the non-interest expense is the previously mentioned $1.2 million pretax non-recurring item related to the reversal of the company’s portion as a Visa contingent litigation liability that was established in Q4’07. Excluding this nonrecurring item, normalized non-interest expense for Q1 ‘08 was $24.4 million, an increase of $1.1 million or 4.9% over Q1’07. Also included in the first quarter of ’08 are the expenses associated with the company’s five new financial centers that we opened in 2007 and in the first quarter of 2008. Excluding the impact of these new branches and the nonrecurring expense reversal, non-interest expense increased by only 2.7%.

As of March 31, 2008, we reported total loans of $1.8 billion, an increase of $44 million or 2.4% compared to the same period a year ago. The growth was primarily attributable to the increase in our credit card portfolio, a 3.1% increase in the single family residential and commercial real estate loans and an 8.6% increase in commercial loans.

Overall loan growth was somewhat mitigated by 6.9% reduction in real estate development loan, also that was certainly related to a slowdown in the industry that we have seen throughout the state and a 4.2% decrease in other consumer loans. Like the rest of the industry, our portfolio pipeline is relatively soft.

Now, let me give a brief update on credit cards. Certainly this is a line of business that we are very proud of and especially what we have accomplished in the last 12 months or so. Our credit card portfolio balance increased in Q1 '08 by $25.2 million or 19% compared to the first quarter last year.

This continues the trend set in 2007 as we have now seen quarter-over-quarter growth in credit card balances for six consecutive quarters. The increased balances can be mostly attributed to the increase in new accounts. As we have discussed in detail in previous conference calls, after several years of net new account losses we introduced a number of initiatives that reversed the trend and in fact added nearly 15,000 net new accounts in 2007.

The positive trend has continued into 2008 with the addition of over 2400 net new accounts in the first quarter. Although the general state of the national economy is turbulent and despite our own challenges in the Northwest Arkansas region we continue to have good asset quality.

As of March 31, 2008 the companies non-performing loans, total loans were 60 basis points, unchanged from a year-end. The non-performing asset ratio was 79 basis points, up 4 basis points from year-end and at quarter end the allowance for loan losses equaled 1.38% of total loans and 229% of non-performing loans. Annualized net charge-offs to total loans for Q1 '08 were 30 basis points. Excluding credit cards annualized net charge-offs to total loans were 19 basis points.

For the first quarter of 2008 credit card net charge-offs as a percent of credit card portfolio was 1.47% slightly up from 1.41% in Q1 '07, but still more than 400 basis points below the most recently published credit card charge-off industry average. We continue to expect the credit card charge-offs were gradually returned to more historical levels in excess of 2%, high, but the trend continues to be slower than anticipated.

During Q1 '08 the provision for loan losses increased $716,000 on a quarter-over-quarter basis returning to a more normalized level, more specifically the Q1 '08 provision equates to approximately a 32 basis points annual rate of which 20 basis points are allocated to the general portfolio and 12 basis points to the credit card portfolio.

On a link quarter basis the decrease in the provision the $282,000 is related to the Q4 '07 special provision for the Northwest Arkansas region. Because of the uncertainty in the overall economy, we will continue to be proactive relative to the adequacy of our loan loss reserves specifically in that region.

It is probable that the provision for loan losses will continue at more historical level throughout 2008 and throughout our company. Obviously this depends on credit card charge-offs loan growth and the overall assets quality trends that we see.

Let me take a minute to explain on what we see in the Northwest Arkansas region. While we continue to see bankruptcy and foreclosure filings associated with the residential real estate market in that region, and while we believe there are likely more to follow, at current time there is a general belief that there maybe some return to normalcy by the latter part of 2009, obviously that can change.

On a positive note Washington and Benton Counties continue to have population growth, thus absorption rates are likely to improve, since new developments and constructions have slowed significantly. Now concerning our company, as stated previously, we have one of our most seasoned management teams in that market.

We have been proactive in the identification and resolution of problem assets and we have significantly increased the loan loss reserve based on the challenges of the region. However, we fully recognized that the challenges remain in this economy and there is likely to be further deterioration in this region before a return to normalcy.

The company's current stock repurchase program authorizes the repurchase of up to 700,000 shares of Class A common stock or approximately 5% of the outstanding common stock or 667,000 shares remaining available. During 2008, we have repurchased approximately 23,500 shares with a weighted average to repurchase price of $26.65 per share or $626,000. While we continue to be active in the stock repurchase, we anticipate at lower level of repurchases in 2008 than in 2007.

I would like to update you on the latest additions in our De Novo brand expansion plan, which began in 2005 and is in its final stages. In February, we began operating the new regional headquarters in Rogers for our Northwest Arkansas affiliate. Then in March, we opened a new financial centre Little Rock, Midtown, near War Memorial Stadium and UAMS which is our eighth financial centre in Little Rock. We continue the process of evaluating all of our financial centers relative to their efficiency, profitability, and growth potential.

Bottom-line, quarter-over-quarter we experienced reasonable loan growth of 2.5%. The margin compression of 8 basis points was anticipated. Good asset quality in the midst of challenges, a continuation of low credit card charge offs at 1.47%, and the overall positive trend in the credit card portfolio remains very good. Like the rest of the industry, we expect the balance of 2008 to be a challenge relative to meeting our normal growth expectations. However, Simmons First is well positioned based on the strength of our capital, asset quality and liquidity to deal with the challenges and the opportunities that we may face in the balance of 2008.

We remind our listeners that Simmons First experiences seasonality in our quarterly earnings due to our agriculture lending and credit card portfolios. Quarterly estimate should always reflect this seasonality. This concludes our prepared comments and we would like to now open the phone line to questions from our analysts. Let me ask the operator to come back on the line and once again explain how to queue in for questions.

Question-and-Answer Session

Operator

(Operator Instructions) There are no further questions at this time.

Tommy May

Operator?

Operator

Yes.

Tommy May

You may try that again.

Operator

Your first question comes from the line of David Scharf.

David Scharf - Ftn Midwest Securities Corp.

Thank you.

Tommy May

Hello, David.

Bob Fehlman

Hey, David.

David Scharf - Ftn Midwest Securities Corp.

Hey, how are you?

Tommy May

Good.

David Scharf - Ftn Midwest Securities Corp.

Good, Hey, I was wondering if you could kind of go over some of the dynamics that affected the net interest margin this quarter and may be kind of give me some color on potential where you see going? I know, it’s very difficult environment to manage through it, but I would assume that funded cost are coming in pretty reasonably and that there should be some upside. Is that a fair assessment?

Tommy May

Let me just start, I will get to the go forward in just a second. When you look at our quarter-over-quarter when we were down eight basis points, we of course have been talking about that all year with the rapid decrease in the interest rates, but then on the link quarter basis we were down 20 basis points and I think the big issue that we need to remind ourselves starts with seasonality.

Trying to compare margin or anything else on the fourth quarter and the first quarter will create some challenges there for the seasonality. In fact a big portion of that 20 basis points would be associated with that. I think the second thing is and you can see that in the balance sheet that we have been very aggressive in attempting to grow our liquidity, and as a result of that we introduced what we call a high yield investment account, which we created at about $50 million to $55 million in new money on a temporary basis until some of that money goes into the seasonality pool, it is being invested in overnight assets which would be putting some pressure on the earning assets.

So, I think it's a combination of 2 or 3 things, David. None of it was unexpected. I think going forward, as you said it's with the headwinds that we are seeing right now it's pretty hard to know where this margin is going to go. I would say from our perspective that until we fulfill that the Fed has stopped dropping interest rates then we would anticipate a little bit more compression over the next 90 days.

David Scharf - Ftn Midwest Securities Corp.

Okay.

Tommy May

Remembering that we have a pretty large percent of our credit card that are also variable rate, but we would say that that would probably just simply be over the next 90 days and we would have to reevaluate it from there. I'd also just simply reiterate that we still have the 3.8% margin, which obviously is pretty good.

David Scharf - Ftn Midwest Securities Corp.

Yeah, no question for that.

Bob Fehlman

David, also in this on our balance sheet we've got 105% on the 90-day gap, as Mr. May said a little more assets sensitive on the short-term, when rates change that takes that when rates moves so quicker like to do our earnings assets repricing a little bit faster than our liability and that takes a little bit longer to catch up on that.

David Scharf - Ftn Midwest Securities Corp.

Okay. And then with regard to the new branches and the regional center, is that pretty much all those highers rolled in to the personal expense items, which saw kind of meaning link quarter increase?

Tommy May

Yes. I think that number one we've completed all the new branch expansion and most of the highers were done actually.

Bob Fehlman

In the fourth quarter and in the first, yeah first quarter, let you say in first quarter should be fully already going forward.

David Scharf - Ftn Midwest Securities Corp.

Okay.

Tommy May

The de novo branches, but you'd also obviously see the quarter-over-quarter as were pretty big increases. We will have a little bit on the some of the operating expenses that will start rolling in probably in April might be in depreciation and operations, but the headcount is all in there.

David Scharf - Ftn Midwest Securities Corp.

Okay.

David Bartlett

And at this point we like to say, we have completed our branch expansion for the time being we have acquired another piece of property in Little Rock, but we have no plans to begin a new branch at this time.

David Scharf - Ftn Midwest Securities Corp.

And with the share price, the currency certainly performed a lot better than many of yours peers. You do have a great deal of capital too. What your thoughts with regard to going ahead and you just spoken before, going ahead and making that transaction into contiguous states. Is that it's accelerated or still evaluating them. Can I get a bit of color there?

David Bartlett

I think that's a good observation, as we have said probably since mid-year last year is that we do believe that, is time to consider expanding our model beyond the borders of Arkansas. I don't know that I can say we had accelerated the process for any particular reasons, but what I can say is that our management team is well into the process not only developing the overall strategy, but obviously looking at certain markets that have a growth potential larger than the markets that we are currently in. We have identified those markets and we have identified various locations. However, we have not gone any further than that.

David Scharf - Ftn Midwest Securities Corp.

Would you continue to do it on the decentralized model and build from there?

David Bartlett

Yes. We would.

David Scharf - Ftn Midwest Securities Corp.

Okay.

David Bartlett

You know, we know that decentralized model is expensive. We believe it is best work for us likewise we think we are much more out to bring the right partner to the table it's all about culture, which identified location. We have to find a partner that has our culture and best way to do that is for them to not only see they're getting good return, but they're able to continue to do banking the way they have always done it. So, that’s allowing me answer to your short question, but yes I think the nice model will continue.

David Scharf - Ftn Midwest Securities Corp.

Okay, I'll pop up right now and give anybody else a chance to jump in, but thank you very much for your time.

David Bartlett

Thank you, David.

Tommy May

Thank you, David.

Operator

(Operator Instructions) There are no further questions at this time.

David Scharf - Ftn Midwest Securities Corp.

Hello.

Tommy May

Hello.

David Scharf - Ftn Midwest Securities Corp.

Could you guys hear me?

Tommy May

We can.

David Scharf - Ftn Midwest Securities Corp.

This is David again. And I guess it is just me, but one more follow-up. What are your thoughts with the loan loss reserve -- asset quality how that pretty well considering are you getting any pressure from your accountants to loosen up the reserve a little?

Tommy May

If you look on a quarter-over-quarter basis, we had some deterioration in our asset quality, primarily in Northwest Arkansas we mentioned before in realizing that the first quarter '07 was probably the best asset quality numbers that we could ever have. We have increased our provisions accordingly and no, we have not received any pressure to change.

We got a -- we think a very good methodology in justifying our reserve for it is. It is a little bit higher, then maybe some institutions, but when you take into consideration our credit card portfolio and those types of things we think we do pretty good job in justifying it for you.

David Scharf - Ftn Midwest Securities Corp.

And would you mind kind of going over what right now is comprised in the [MPL] as far as product type and also the various stages of where you are in the OREO if the contracts can expect some movement out of there.

Tommy May

You were saying the nonperforming assets, right?

David Scharf - Ftn Midwest Securities Corp.

Yes sir.

Tommy May

Our total nonperforming assets, which you see [14.667] million of which 3.5 million is in OREO and then $11.1 million would be in the non-accruals. The OREO, the bulk of that is in North West Arkansas. And, most of that OREO is, I know there is one piece of property that was recently taken back in the form of a dividend and later of about $1 million.

We believe that we may have somebody that is interested in that piece of property. I think most of the rest of the OREO is in that wonderful family, at least in North West Arkansas, most of which if not all is completed. There may be some work to be done in one or two, but most of it is completed.

David Scharf - Ftn Midwest Securities Corp.

And, what sort of entry level performance or what sort of performance, are these entry mid level?

Tommy May

I don't know.

David Scharf - Ftn Midwest Securities Corp.

Okay.

Tommy May

Don’t know. Outside of that, outside of North West Arkansas in OREO we have 500 in Central Arkansas, may be little bit more than that, but 500 or 600 in Central Arkansas which is 1 to 4 and then in North East Arkansas, we have got one piece of property that is 1 to 4 and in Western Arkansas, I think we have got two pieces of property 1 to 4. And, so nothing out of the ordinary in all the other areas, in all the other banks.

And the area of the non-accrual, out of the $11.1 million once again about $3 million of that is in the North West Arkansas region and outside of, and I'm not even sure probably there is 2 or 3 properties that make up that again. This would be construction and, well yeah I think all of this would be construction and then in Central Arkansas we have about $3 million in non-performing there which is made up of 2 properties and those are unrelated to the real estate market.

David Scharf - Ftn Midwest Securities Corp.

Okay. So, it's more Simmons.

Tommy May

Yeah more Simmons again, you know as far as the total is not outside of, outside of the norms relative to the size of the particular buying.

David Scharf - Ftn Midwest Securities Corp.

How was the traffic, would you characterize the traffic with the 1 to 4 still come in hand and make it bad or this is sort of slow going?

Tommy May

No it's slow going.

David Scharf - Ftn Midwest Securities Corp.

Got you.

Tommy May

Certainly in North West Arkansas again I would reiterate what I said in the text in North West Arkansas that it is a issues of a over built market. The good part of that it is there's obviously been a significant slowdown relative to lots being developed and then relative to developments. The new housing starts and yet you’re still having growth in both Washington and Denton Counties. So you know ultimately that absorption is going to catch up with -- we hope and I assume, certainly I think there will be some, feel some downside before we see the light at the end of the tunnel.

David Scharf - Ftn Midwest Securities Corp.

And, did you all get a chance to check out the article on the Fayetteville Shale in our, the Arkansans democrat today.

Tommy May

I think yesterday…

David Scharf - Ftn Midwest Securities Corp.

It was actually April 16th yesterday. Okay. Well I mean this -- this natural, McClendon, he said that he is expecting about a $75 billion to $100 billion of investment from the gas companies. What are your thoughts on the Fayetteville Shale and how you’ll use it and if you can give me some color on that.

Tommy May

Well, I can say that basically the numbers you just you talked about as far as the capital investments of 75 million, I think it's about $75 million…

David Scharf - Ftn Midwest Securities Corp.

Billion, would it be.

Bob Fehlman - Chief Financial Officer

You're talking about capital investments.

David Scharf - Ftn Midwest Securities Corp.

Yeah. It's a - I’ll forward this article to you. Maybe we'll just do this offline, if you want. I will forward to you this article and see what you guys think

Tommy May

I think these type of information, I don't have. That's good.

David Scharf - Ftn Midwest Securities Corp.

I mean, it's something. It seems like a crazy number though you know. The university is talking about 18 billion and this guy comes out with 75, it’s a big number.

Tommy May

That is a number that I have not heard nor that the numbers that I know. What I do know is that the 2007 the economic impact was $2.6 billion -- they got 10,000 new jobs and I know the capital expansion by Southwest energy and Chesapeake continues at least the same level in '08 as it was in '07, and I think accelerated.

Bob Fehlman

And, we know that what they are projecting as a benefit for the five year period was $22 billion, and I think what they might had in the paper yesterday David, they might have been going up 10 to 15 years.

David Scharf - Ftn Midwest Securities Corp.

Yeah. I think that…

Bob Fehlman

That benefited is $75 billion over 10 to 15 years.

David Scharf - Ftn Midwest Securities Corp.

Yeah, I think that's right, Bob.

Bob Fehlman

For the next five years the University of Arkansas, their group is projected about $22 billion. What they projected a couple of years ago was only as (inaudible) $5 billion to $8 billion, and what actually happen in '07 from their projection was they were very conservative in their projections.

David Scharf - Ftn Midwest Securities Corp.

Okay.

Tommy May

And, in that $22 billion economic impact is 3,20,12.

Bob Fehlman

Correct. And, I think the other one goes on another 5 to 10 years. Also, the addition of the natural gas price and its increasing has that impact to cause the total impact to go up.

David Scharf - Ftn Midwest Securities Corp.

And, are you going to see some of that benefit work into your balance sheets.

Tommy May

Yeah. I think one of the things that we've said is that rising impact is where you best figure results and I think we are involved these in the deposit side and I think maybe little bit in the wealth management trust side.

David Scharf - Ftn Midwest Securities Corp.

Okay. Once again guys thanks, so much for your time.

Tommy May

Well, thank you David.

Operator

Your next question comes from the line of Barry McCarver.

Tommy May

Hello, Barry.

Bob Fehlman

Hey, Barry.

Barry McCarver - Stephens, Inc.

Hey guys, I will tell you what, I didn't think you will let me ask a question. I queued up about 15 times.

Tommy May

Go ahead, Barry.

Barry McCarver - Stephens, Inc.

Thank you. The article he is referring to is quotes by the CEO of Chesapeake and I think he is suggesting

$75 to $100 million over 10 years and he acknowledges the fact that is a multiplier higher than the (inaudible) study, so.

Tommy May

Once again that would be very positive.

Barry McCarver - Stephens, Inc.

Yeah, certainly it would be. You have got most of my questions now, I just had a couple of follow-up, a little more color. Looking at the credit card portfolio and obviously that thing fluctuates seasonally, but even still very strong, even seasonally adjusted and I'm curious asked your overall thoughts on the quality, credit quality of that portfolio and how much of this growth is coming from new accounts versus just increases in existing accounts. Is that play in to the, your thoughts about credit quality.

Tommy May

Good question. I think first of all, we are seeing across board increased volume, in the credit card area. Both on the credit side, I mean credit card side and on the debit card side. And we are benefiting from that as you can see, on the non-interest income. I do believe that the fact that we have 15,000 net new accounts quarter-over-quarter in about 2400 I think 2500 in the first quarter would tell us that most of the growth is coming from the new account.

Also, if you go and you look at the average debt per account, average [earning] per account is somewhere around, in 2000 or latten out somewhere around $2000. And that just has not grown very much and also we are staying -- we are staying, I think, with our same underwriting standards and have not stay of our pretty restrictive on the level that we will grant on a new account.

The big driver obviously is the 7.25% fixed rate card. Now, lot of the application volume that we had in 2007 came through internet application, and that is slow. We don't know exactly why slow. There is obviously a couple of reasons, one rates have got so much and we had held at the 7.25% on that fixed rate card, even though is still one of the best in the country.

And there are some other competitive cards out there that maybe getting a little bit more play, but we are still getting good positive growth and we are not really willing to come much off of where we are on fixed rate cards.

Barry McCarver - Stephens, Inc.

Okay.

Bob Fehlman

Also, Barry on the charge-offs, you saw 1.47 for 2008, first quarter is a little bit higher, usually last year was 1.4. You will see a pick up from the fourth quarter to the first quarter, but still very favorable and much lower than our historical two to two in quarter range we'd say and we still think in some days it can move back to that level, but continues to be a lot slower than that we first though. Did you mention the 400 basis points below the...

Tommy May

Yeah, we said in your script 400 some basis points better than the national, but still.

David Bartlett

You know, Barry obviously in a “recessionary environment” with an unsecured portfolio -- it gives you a little bit of heartburn. It gives us a little bit of heartburn except three things we must consider. First is diversification, geographic diversification, we’re where in all 50 states, 50% of it is in Arkansas and as we said Arkansas don’t have the peaks and the valleys, when you go through some economic challenges, and that turns out to be very much positive.

Also when we look at our concentration and we look at Florida, California, Michigan, Ohio and Illinois, where some of the pockets of challenges are in New York, our numbers there are not excessive and then last, but not least when you look at the $2,000 per account.

So even though it’s unsecured and even though you'd think unsecured portfolio would be most challenged in the recessionary period where you lose jobs, what we have found when we shock it back to previous recessions, 90's, and I mean, 2000 and 90 is that people want to keep their credit card and as long as they are not taking bankruptcies they quit paying a lot of banks before they quit paying their credit card because of the immediate availability of funds.

Barry McCarver - Stephens, Inc.

Well alright just two quick ones. I can't recall what you said last quarter, but in terms of the new branching for the rest of the year, do I hear the word pretty much done?

Tommy May

Done

Barry McCarver - Stephens, Inc.

Okay and…

Tommy May

I think, we were done anyway with where we, our de nova strategy. If not they might be in 2 or 3 others that we were looking at in the Little Rock market, but I think right now until the clouds a little bit, I think we're pretty well complete.

Barry McCarver - Stephens, Inc.

Okay. And, then I noticed back to David's question about capital, I noticed you repurchased some shares in that quarter with the average price 26 unchanged with the stock 30 unchanged, should we expecting any at all.

Tommy May

I think, you should expect probably a significant slowdown, like we've already done…

Bob Fehlman

But, similar to the first quarter.

Tommy May

Similar to the first quarter, we're going to stay in it, we're going to methodical, but we're quite honestly we're going to just like we have built liquidity we're going to look at capital retention.

Bob Fehlman

It's all driven right now, but just deciding to keep our capital at this point, but still be in the market on a systematic basis, but at a lower level than last year.

Barry McCarver - Stephens, Inc.

Okay.

Tommy May

And remember we were at a accelerated level last year also.

Barry McCarver - Stephens, Inc.

All right guys, thanks a lot.

Tommy May

Thank you, Barry.

David Garner

Thank you, Barry. Thanks David. I appreciate it. Thanks everybody for being here.

Operator

This concludes today's conference call. You may now disconnect.

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Source: Simmons First National Corp. 1Q 2008 Earnings Call Transcript
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