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Bank aims to boost commercial loans

by Andrew Moreau | August 11, 2021 at 2:12 a.m.

Simmons First National Corp. announced Tuesday that it has established an 11-member finance team to spark commercial and industrial lending efforts.

Simmons said the team will focus on commercial lending in specialty areas such as business aviation and marine financing and will offer its commercial finance customers "a deeper banking relationship" with access to other banking services.

The team will be led by Lee Palm, who most recently served as president of commercial finance at a $50 billion institution in Detroit, TCF Bank, where he developed a commercial lending effort focused on corporate aviation, inland marine and rail, trucking and other specialty areas.

Another key executive on the leadership team also joins Simmons from TCF Bank.

"Being able to add an entire team with the expertise and skillset that encompasses all of the business verticals necessary to begin operations represents a unique 'plug and play' opportunity that will allow us to immediately hit the ground running," Matt Reddin, executive vice president and chief banking officer, said in a news release. "Equally important, we'll be able to offer our commercial financial customers a deeper banking relationship with access to our full array of complementary commercial banking and wealth management products and services."

An analysis from Stephens Inc. released Tuesday said the "new team should help turn around (Simmons) organic growth trends."

Loan production has slipped in the past year, with core balances -- absent Paycheck Protection Program loans -- declining by 20%, the Stephens report said. Median organic loan growth of other banks in the region has been on the plus side at 2%, Stephens noted.

Part of Simmons' decline results from a strategic shift away from some sectors though "much of the contraction has been driven by higher levels of loan paydowns and slower new loan production during this time," analyst Matt Olney wrote in Tuesday's report.

Forming a team to focus on commercial loan production should boost organic loan production over time. "We don't expect the new team to have an immediate material effect on near-term earnings, but will help support C&I growth in the long term," the report said, referring to commercial and industrial loans.

The commercial lending team will focus on equipment financing for business aviation, over-the-road trucking, franchise finance and marine financing. Simmons said the initiative will expand and diversify its commercial banking capabilities, product offerings and customer base.

The lingering pandemic had no effect on the decision to begin the effort now, Simmons said. The health and economic crisis may allow the bank to take advantage of some lending opportunities to meet business needs created by the pandemic. "In fact, in many cases this team will help serve industries that are necessary to transport/distribute goods and services that people and businesses need to operate during the pandemic," Ed Bilek, executive vice president and director of investor relations, said in response to questions Tuesday.

In the second quarter, Simmons reported total loans of $11.4 billion, down from $14.6 billion recorded in the second quarter last year. Loans also declined from the $12.2 billion in the first quarter of this year.

Bilek pointed out Tuesday that the bank's commercial loan pipeline has increased for three consecutive quarters and Simmons is "cautiously optimistic that this trend is a positive sign going forward."

In addition to Palm, the leadership team includes Brian Shapiro and Lee Mulder.

Shapiro will be managing director of the group, leading the transportation and marine business and Mulder will lead credit and risk.

Shapiro has more than 30 years of experience in commercial finance and leasing and most recently led efforts at TCF Bank. Mulder has more than 20 years of experience at both JPMorgan Chase & Co. of New York City and, most recently, Citizens Financial Group Inc. of Providence, R.I.

Simmons First has total assets of $23.4 billion. The company operates as Simmons Bank with 198 branches in six states, including 68 in Arkansas.

Print Headline: Bank aims to boost commercial loans

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