Table of Content

Abstract 4

Introduction. 5

History of Institution. 5

Growth of Institution. 6

1.    Amount of Growth. 6

2.    Strategies of Growth. 7

Stock Performance. 8

1.    Ownership. 8

2.    Dividends. 8

4.    P/ Book ratio. 9

Management 10

History. 10

Current 10

Fundamental Analysis. 10

1)    ROAA.. 11

2.    ROE.. 11

3.    Efficiency. 11

Products/Services. 12

Other Important issues for Institutions. 12

Employment Opportunities. 14

Summary. 15

Appendix. 16

References. 18

Abstract of the Simmons First National Corporation, Bank OZK, and Home BancShares

Simmons First National Corporation, Bank OZK, and Home BancShares are working in the banking sector. These institutions have products and services for households and businessman. Loans are provided to households and businessman to purchase assets, property, home, car, or to start up a business. As Simmons First National Corporation, Bank OZK, and Home BancShares work the same market, therefore, these are competitors for each other. In this present work, a comparative analysis is taken for these institutions while paying attention to history, managerial system, stock performance, market performance, sales, products, services, issues, and employment opportunities. Conclusively, Simmons First National Corporation, Bank OZK and Home BancShares have strength in various areas as well as weaknesses in other areas. In this present work, suggestions and recommendations are also stated with each issue.

Introduction of the Simmons First National Corporation, Bank OZK, and Home BancShares

Banks and financial institute’s works in the competitive market which is critical for sustainable growth and success. Main services of all banks and financial institutes relate which provide a wide variety of available options to the proposed customers and causes makes switching cost lower. However, effective and timely strategies developed at the corporate management level can support an institute to stand against competition and perform well in the market. In the present work, three institutes are analyzed with competitive measures to highlight the weaknesses and strength of each institute. Present work includes a history of institutes, management system, and fundamental analysis, the efficiency of asset management, stock performance, and major issues currently faced by Simmons First National Corporation, Home Bancshares, and Bank OZK. 

History of Institution of the Simmons First National Corporation, Bank OZK, and Home BancShares

Simmons First National Corporation was founded in the early 1900s by John Franklin Simmons. Simmons First National Corporation started working around 116 years ago under the supervision of the Simmons family. During 1903, the corporation acquired majority shares of a local bank of United States working in Texas, Missouri, and Kansas. In 1967, the company decided to offer credit card services for its subsidiary banks. While in 1984, Simmons First National Corporation made an international transaction possible via an ATM.

        Bank OZK is as old as Simmons First National Corporation. Bank OZK was founded in 1903 in the same geographical segment of Simmons First National Corporation. Bank OZK was established in Arkansas in the early 1900s. After this bank again established a new branch in Arkansas in 1937. Bank OZK was acquired by Rose Law Firm in 1979 at the net asset worth of 28 million dollars. The Rose Law Firm was headed by George Gleason therefore it is also said that Bank OZK was purchased by George Gleason. After this acquisition bank growth was increased rapidly. Records show that Mr George Gleason opened around 250 new office for Bank OZK after this acquisition to promote banks services and expand over the geographical segments (Ozk.com, 2019).

        Home BancShares was started in the late 1900s. John W. Allison established the first head office of Home BancShares in 1998 in Arkansas. In 1999, Home BancShares obtained a bank charter and got registered as the first official state bank in this area. Home BancShares also acquired some local level banks and introduced new products for the customers that contributed to the success of bank in the selected market.

Growth of Institution
1.  Amount of Growth

Currently, Simmons First National Corporation is generating around 74 million dollars on an annual basis. While Bank OZK and Home BancShare are generating more than $417 and $78 million net income annually from the sales of its products and interest income on offered services. The annual increase in sales is indicating towards sales growth and business growth in the targeted market. Comparative analysis of sales recorded by these institutes from 2005 to 2019 shows that all these institutes are currently having a growth trend. Sales revenue and interest-based income are increasing continuously. According to the table presented in the appendix, sales of these institutes are also fluctuating rather than having stability such situation is before of external environmental factors and macro-economic policies in the state. However, the overall annual trend can be considered as positive. The average growth rate from 2005 to 2019 is calculated as 0.04 for Simmons First National Corporation, 0.09 for Bank OZK, and 2.21 for Home BancShare institute. Average sales recorded in during the last 14 years is $306163 for Simmons First National Corporation, $425664 for Bank OZK, and $289842 for Home BancShare institute. See the presented below graph and tables in the appendix regarding sales growth in the last 14 years.     

2. Strategies of Growth of the Simmons First National Corporation, Bank OZK, and Home BancShares

         Home Bancshares, Bank OZK, and Simmons First National Corporation are working in a highly competitive market. Many competitor banks working in the same market failed to survive in this competitive market and uncertain financial crisis. However, these institutes are succeeded to remain competitive and sustainable because of efficient strategies developed at the corporate level. Simmons First National Corporation and Home BancShare both maintained continuous growth in the market with a focus on geographical expansion by acquisition and consolidation. During 5 years (starting from 2003 to 2008), Home BancShares took the decision of mergers and acquisitions for three local banks known as Centennial Bank, Community Bank, and Bank of Mountain View.  After this acquisition, Home BancShares also acquired 100% shares of its current subsidiary banks in 2005 which includes Twin City Bank and Marine Bank (Homebancshares.com, 2019).

         However, during 2010 to 2012 Home BancShares acquired 9 more banks which include Old Southern Bank, Wakulla Bank, Coastal Community Bank, Heritage Bank of Florida, Key West Bank, Gulf State Community Bank, Premier Bank, and Bayside Savings Bank. While in 2012, Simmons First National Corporation also took the decision of acquisition for Truman Bank and Excel Bank. Additionally, in 2013, Simmons First National Corporation made consolidation with Simmons Tower and Metropolitan Nation Bank. Acquisition and consolidation are appropriate growth strategies that provide double benefits to a company. Acquisition of growing competitor not only reduces competition but also increases the revenue stream of the company. Although, Bank OZK paid attention to marketing, innovative services and sustainable business operations to ensure growth in the targeted market.

Stock Performance of the Simmons First National Corporation, Bank OZK, and Home BancShares

In this section, key information regarding ownership, dividend policy, and market ratios are presented in brief details for Simmons First National Corporation, Home Bancshares, and Bank OZK.   

1.  Ownership of the Simmons First National Corporation, Bank OZK, and Home BancShares

Financial institutes Simmons First National Corporation, Home Bancshares, and Bank OZK have equity-based ownership system. Institutes have offered equity shares in the open market for the collection of investment and funds from the public. In Bank OZK, 8.59% of shares are owned by Vanguard Group. While the majority of shares are under the ownership of Principal Global Investors LLC, BlackRock Fund Advisors, and Diamond Hill Capital Management (Money.cnn.com, 2019). While shares of Simmons First National Corporation are offered at NASDAQ, thus the majority of shares owners are from the local market.     

2.  Dividends of the Simmons First National Corporation, Bank OZK, and Home BancShares

Financial institutes get investment from the public to execute business operations in an appropriate way as well as a successful way. In return of this, institutes are required to pay a dividend to its shareholders. Historical analysis indicates that Simmons First National Corporation, Home Bancshares, and Bank OZK are the high paying financial institutes in the market. Excluding, the yield earned by the increase in market prices of shares, investors of Simmons First National Corporation, Home Bancshares, and Bank OZK is also offered dividends after a specific period. According to NASDAQ, dividend yield in the current year is around 2.57% while annual dividend per share is around $0.64 for common shareholders of Simmons First National Corporation (Nasdaq.com, 2019). Comparatively, dividend yields for Home BancShares and Bank OZK are recorded as 2.8% and 3.4% respectively. NASDAQ records show that per share dividend amount was $0.13 for the shareholders of for Home BancShares and $1 for Bank OZK (see appendix below).   

3. Price-earnings ratio of the Simmons First National Corporation, Bank OZK, and Home BancShares

Price-earnings ratio for Simmons First National Corporation, Home Bancshares, and Bank OZK are 10.40, 9.38 and 6.98 respectively (see the ratios presented in the appendix). Price-earnings ratio of Simmons First National Corporation is higher than ratios of other competitor institutes which indicate that its stock is overvalued and investors would have higher expectations for stock return in future. Additionally, the per-share price of Simmons First National Corporation, Home Bancshares, and Bank OZK are $24.13, $22.64, and $16.24. Per-share prices are indicating market demand for these shares.        

4.  P/ Book ratio of the Simmons First National Corporation, Bank OZK, and Home BancShares

According to the calculations of price to book value ratio, Simmons First National Corporation has ratio 0.99 in 2018. While ratios of Bank OZK and Home BancShares are 0.77 and 1.18 respectively (see the ratios presented in the appendix). Although, book value per share of Bank OZK is greater than the book value of shares offered by other institutes. Higher price to book ratio of Home BancShare indicates that investors have high expectation for this institute.

Management of the Simmons First National Corporation, Bank OZK, and Home BancShares

History

According to the historical analysis, Bank OZK is working under the supervision of Mr Gleason since 1979. From the beginning, all major decisions are taken at the corporate level with the support of directors and board members. However, comparatively management of Home BancShares is changed over time. In past, Home BancShare was working under the control of Chairman, Vice Chairman, and directors. John W. Allison and Robert H. Adcock were chairmen and vice-chairman respectively. Somehow, from beginning to now management of Simmons First National Cooperation have changed a lot. The company started its operations when John Franklin Simmons was appointed as Chainman and main head of the company.        

Current of the Simmons First National Corporation, Bank OZK, and Home BancShares

Currently, management of Bank OZK includes Chairman, President, Chief Executive officer, and Directors. Beverly Cole, Paula H. J. Cholmondeley, and Nicholas Brown are working on the director’s board. Comparatively, the managerial system of Bank OZK is simple and fixed (Ir.bankozarks.com, 2019). While Home BancShares and Simmons First National Corporation have some other directors and managerial positions also to facilitate decision making process and overall management of the business operations. Director of Investor relations Mr Donna Townsell is also included in the boards of directors at Home BancShares. In these institutes, major operations are headed and managed by the department heads and directors.        

Fundamental Analysis

Fundamental analysis of Simmons First National Corporation, Home Bancshares, and Bank OZK are based on the ratio analysis. In these ratio analyses, financial data and information about accounts are extracted from the financial statements of these institutes published in annual reports of 2018.  

1)         ROAA of the Simmons First National Corporation, Bank OZK, and Home BancShares

According to the calculations of return on asset ratio, Home BancShares has a comparatively higher ratio. Calculated ratios for Simmons First National Corporation, Home Bancshares, and Bank OZK are 0.013, 0.018, and 1.96 (see appendix). Comparatively, a higher ratio of Home BancShare indicates asset management efficiency as managers are capable to generate more income on each dollar of asset.

2.  ROE of the Simmons First National Corporation, Bank OZK, and Home BancShares

Return on equity ratios calculated for Simmons First National Corporation, Home Bancshares, and Bank OZK are 0.096, 0.110, and 12.78 respectively (see appendix). Analysis indicates that Home BancShare is generating greater income through equity financing of operations. Moreover, the higher ratio also indicates towards over emphasis of management on equity rather than assets and debt financing.  

3.  Efficiency of the Simmons First National Corporation, Bank OZK, and Home BancShares

Efficiency ratios are calculated by dividing up total revenue generated in a fiscal year by total assets of the institute recorded in the financial statement. Following calculations, efficiency ratios are 0.041, 0.049, and 0.515 for Simmons First National Corporation, Bank OZK, and Home BancShare orderly (see appendix).

4.                  Profit Margin  of the Simmons First National Corporation, Bank OZK, and Home BancShares

Profit margin is calculated as dividing net income by total sales revenue of the fiscal year 2018. Profit margin ratios of Simmons First National Corporation, Bank OZK, and Home BancShare are 0.31, 0.37, and 3.8 in sequence. Comparatively profit margin ratio of Home BancShare is greater than other competitor institutes Simmons First National Corporation and Bank OZK. Higher profit margin ratio projects that Home Bancshares has a higher profit margin than the industry average. Such a situation shows the operational efficiency of the institute in the competitive market.        

Products/Services of the Simmons First National Corporation, Bank OZK, and Home BancShares

Simmons First National Corporation offers various kind of products and services which includes applications for the credit card, applications for buying cars, insurance services, financial advisory services, merchant services, treasury management, and business loans. Institute offers financial services to the businessman as well as households to get financing from the bank on a fixed interest rate to meet with their requirements such as start-up of business or home purchases. Excluding this, Home BancShares and Bank OZK also provide similar services. Comparatively, Home BancShares services are covering more areas than the services or products of competitor institutes. For instance, Home BancShares also provide attractive investment opportunities in the industrial sectors through the sales of securities and bonds to the household and businessman. Apart from this, services of Simmons First National Corporation are covering more geographical segments as the institute has more than 200 branches in 8 states. However, Bank OZK also provide filing and stock related advice to its registered clients which enable them to invest in high paying investment products offered by the Bank OZK and other financial markets.        

Other Important issues for Institutions of the Simmons First National Corporation, Bank OZK, and Home BancShares

In these sections, important issues related to the operations and finances are presented for Simmons First National Corporation, Home Bancshares, and Bank OZK. According to the (Gandel, 2018), banks and financial institutes are having problems in the operations as demands and requirements from the customer market is increasing. Banks are in trouble to manage their expenditures and profit margin or to offer innovative products and services at the lowest rates to the customers in the competitive markets. Bank OZK is working in the most aggressive commercial real estate market which has a threat of financial loss in future as earnings will decrease in future. According to Bloomberg opinion, third-quarter earnings of Bank OZK are decreased unexpectedly by the percentage of 23 in a quarter which indicates that in the fourth-quarter bank would not only have to increase profit but also need to cover downfall of the third quarter. The decrease in the earnings of the third quarter will disappoint current investors as investors were expecting high return and yield for their investment in equity stock. The drop in earnings will lead to a drop of share prices as investors may sell out shares of Bank OZK for a better or higher-paying investment product. Thus market prices for each share will decrease. Conclusively, a decrease in earnings of the third quarter is a major problem for the financial operations of the fourth quarter in 2019.  

Excluding this, Simmons  First National Corporation is also facing a challenge in the market regarding its share prices because of negative propaganda against its image and reputation. Many private blogs and websites are writing against the share prices and future earnings of the corporation in this current fiscal year as a result of this propaganda Simmons  First National Corporation is having a negative impact on share prices. According to a website Marketbeat.com, Simmons  First National Corporation is ranked one of the most favourable company although negative image building websites may influence its sales and stock market performance. Simmons  First National Corporation can handle this situation by working on positive marketing and promotional efforts (Marketbeat.com, 2019).

Comparatively, Home BancShares has very limited challenges and issues in the market. Home BancShares has an issue related to competitive forces and sustainable growth. Increasing the use of marketing strategies and the introduction of new products from competitor corporations and banks is a problem which can be handled by promoting creativity and innovativeness. Apart from this, auditing challenges are also there in the market for these institutions. For instance, frauds and manipulations of financial data can be critical for the success of these institutions. Internal managerial staff need to pay special attention to the independence of the internal and external audit team to ensure the success of audit and control of uncertain risk factors linked with financial sectors (Goodwin-Stewart & Kent, 2006; Spira & Page, 2003).

 Employment Opportunities of the Simmons First National Corporation, Bank OZK, and Home BancShares

In this section employment opportunities of Simmons First National Corporation, Home Bancshares, and Bank OZK are discussed in detail. In Simmons First National Corporation currently, more than 2654 employees are working on various job duties and positions. While on the other hand, the total number of employee working in Bank OZK is 2563 (according to the records of 2018).  However, the total number of employees working in Home BancShares is less than the total employee's strength of Simmons First National Corporation and Bank OZK. According to the records of 2018, the total employee working on various positions in Home BancShares is limited to 1815 only.

Comparatively, employment opportunities are more for Simmons First National Corporation and Bank OZK as in these institutions employment demands remain high because of expansion in business. Simmons First National Corporation has business operations in more states as compared to Bank OZK and Home Bancshares, therefore, total number branches for Simmons First National Corporation are also more than the total branches of Bank OZK and Home BancShares. Excluding this, Home BancShares is highly concerned about employees development and training. While Simmons First National Corporation is practically implementing equal opportunity act in the workplace for hiring, promotion and retirement benefit programs.

Summary of the Simmons First National Corporation, Bank OZK, and Home BancShares

The whole discussion in the above sections can be summarized as Simmons First National Corporation, Bank OZK, and Home BancShares are working in the market of United States with relatively similar products but different operational policies and strategies. The financial condition of Home BancShares was relatively better than other institutions in the industry as suggested by the fundamental analysis of 2018 performances. Conclusively, major products and services similar in these institutions are financial advisory services, saving services, interest-based securities, and loans for home, car, and business start-up. Moreover, analysis of the internal and external environment of these institutions conclude that employment opportunities in Simmons First National Corporation are more than Bank OZK and Home BancShares. While uncertain risk factors and stock market issues of these institutions can be handled with marketing and promotional campaigns. Excluding this stock market performance of 2018 was acceptable for these institutions. Additionally, the sales growth trend was observed as a positive trend after analyzing historical information on sales revenue.