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Simmons First National Corporation (NASDAQ:SFNC)
Q3 2018 Earnings Conference Call
Oct. 23, 2018, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Simmons First National Corporation Third Quarter Earnings Call and webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press * and then 0 on your touchtone telephone.

I would now like to introduce your host for today's conference, Mr. Steve Massanelli. Sir, you may begin.

Steve Massanelli -- Chief Administrative Officer and Investor Relations Officer

Good morning, and thank you for joining our third quarter earnings call. My name is Steve Massanelli, and I serve as Chief Administrative Officer and Investor Relations Officer at Simmons First National Corporation. Joining me today are George Makris, Chairman and Chief Executive Officer; Bob Fehlman, Chief Financial Officer; David Garner, Controller and Chief Accounting Officer; Marty Casteel, Chairman and CEO of Simmons Bank, our wholly owned bank subsidiary; Barry Ledbetter, President of our Southeast Division; and Matt Reddin, President of Banking Enterprise.

The purpose of this call is to discuss the information and data provided by the company in our quarterly earnings release issued yesterday, and to discuss the company's outlook for the future. We will begin with prepared statements, followed by a Q&A session. We have invited institutional investors and analysts from the equity firms that provide research on our company to participate in the Q&A session. All other guests in this conference call are in a listen-only mode. A transcript of today's call, including our prepared remarks and the Q&A session, will be posted on our website, simmonsbank.com, under the Investor Relations tab.

During today's call and in other disclosures and presentations made by the company, we may make certain forward-looking statements about our plans, goals, expectations, estimates, and outlook. I remind you of the special cautionary notice regarding forward-looking statements and that certain matters discussed during this call 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 than our current expectations, performance, or estimates. For a list of certain risk associated with our business, please refer to the Forward-Looking Information section of our earnings press release and the description of certain risk factors contained in our most recent Annual Report on Form 10-K. All is filed with the U.S. Securities and Exchange Commission.

Forward-looking statements made by the company and its management are based on estimates, projections, beliefs, and assumptions of management at the time of such statements, and are not guarantees of future performance. The Company undertakes no obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.

Lastly, in this presentation, we will discuss certain GAAP and non-GAAP financial metrics. Please note that the reconciliations of those metrics are contained in our current report filed yesterday with the SEC on Form 8-K. Any references to non-GAAP core financial measures are intended to provide meaningful insights. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

I will now turn the call over to George Makris.

George Makris -- Chairman and Chief Executive Officer

Thanks, Steve, and welcome to our third quarter earnings conference call. In our press release issued yesterday, we reported net income of $55.2 million for the third quarter of 2018, an increase of $26.3 million, or 91.3%, compared to the same quarter last year. Diluted earnings per share were $0.59, an increase of $0.15 or 34.1% from that same period in 2017. Included in the third quarter earnings were $1.3 million in net after tax, merger-related, and branch right-sizing costs. Excluding the impact of these items, the company's core earnings were $56.5 million for the third quarter, an increase of $28.8 million, or 103.7% compared to the same period in 2017. Diluted core earnings per share were $0.61, an increase of $0.18, or 41.9% from that same period in 2017.

Our loan balance at the end of the quarter was $11.9 billion, an increase of $429 million from last quarter, and an increase of $1.1 billion or 10% since yearend. Our markets in North Texas, Northwest Arkansas, Southwest Tennessee, middle Tennessee, Saint Louis, Kansas City, and Oklahoma City have all outpaced the company's average growth rate. Our loan pipeline, which we define as loans approved and ready to close, was $464 million at the end of the quarter.

On a consolidated basis, our concentration of construction and development loans was 97.4%, and our concentration of CRE loans was 296.8% at the end of the quarter. Total deposits at September 30th were $12.1 billion, an increase of $135.1 million from last quarter, and an increase of $1 billion or 9% from yearend 2017. The company's net interest income for the third quarter was $143 million, an 81.4% increase from the same period last year.

Accretion income from acquired loans during the quarter was $10 million. The accretion income in the third quarter was approximately $5.2 million more than our original estimates due to accelerated cash flows of acquired loans. Based on our cash flow projections, we expect accretion for the fourth quarter of approximately $4.2 million.

Our net interest margin for the quarter was 3.98% compared to 3.99% compared to the previous quarter. The company's core net interest margin, which excludes the accretion, was 3.71% for the third quarter, compared to 3.70% the previous quarter. Since December 31, 2017, core loan yield has increased 44 basis points, while cost of interest-bearing deposits has risen 42 basis points, and cost of barred funds has risen 70 basis points. The subordinated debt issuance at the end of the first quarter had a five basis point impact on our third quarter net interest margin. The timing of existing subordinated debt prepayment had an additional one basis point impact. Our non-interest in come for the quarter was $33.7 million, a decrease of $4.3 million compared to last quarter, primarily due to decreases in debit card fees and mortgage lending income.

As of July 1st, we became subject to the interchange rate cap, as established by the Durbin Amendment, resulting in a $3.3 million reduction in debit fees in third quarter compared to the second quarter. As a reminder, we estimate that we will receive approximately $7 million less in debit card fees in 2018 and $14 million less in 2019 on a pre-tax basis.

Mortgage lending income was $1.4 million less in the second quarter, mainly due to fewer transactions, driven by the rising rate environment. SVA income remained flat when compared to the second quarter as we remained selective in our loan sales, as premium rates have lowered in recent months to the 6 to 7% range compared to 10% during the first quarter of the year. Noninterest expense for the quarter was $100.3 million. Core noninterest expense for the quarter was $98.5 million, which represented an increase of $1.5 million when compared to the second quarter of 2018.

$1.2 million in computer and software items were expensed during the quarter as part of our next generation banking platform initiative. In addition, we spent an incremental $1.1 million in the third quarter for marketing campaigns directed toward deposit growth, and $1.1 million of 401k profit-sharing expense. Our efficiency ratio for the quarter was 53.7%. Income tax expense was lower in the third quarter, due largely to discrete tax benefits related to tax accounting for a cost segregation study and a state-deferred tax asset adjustment.

In September 30, 2018, the allowance for loan losses for legacy loans was $55.4 million, with an additional $1.3 million allowance for acquired loans. The loan discount credit mark was $54 million, for a total of $110.7 million of coverage. This equates to total coverage ratio of 93 basis points to total of gross loans. At the end of the third quarter, nonperforming assets were $71.9 million, a $4.1 million decrease from the second quarter. This balance is primarily made up of $40.8 million in nonperforming loans, and $31.1 million in other real estate-owned, which includes $9.6 million in closed bank branches still for sale. $2.8 million in closed bank branches was added in September, as we closed 10 branches.

During the third quarter, our annualized net charge-offs total loans were 36 basis points. The provision for loan loss during the quarter was $10.3 million, which includes an increase due to strong legacy loan growth and an increased loan migration during the quarter from the 2017 acquisitions, which is consistent with our previous guidance. During September, the company sold approximately $32 million of substandard rated loans that consisted of both legacy and acquired loans. The loans had adequate reserve; thus, no additional provision expense was required to acquire. However, the sale increased net charge-offs by approximately $4.6 million. Excluding these charge-offs, our annualized net charge-offs to total loans were 12 basis points.

Our capital position remains very strong. At quarter end, common stockholder's equity was $2.2 billion. Our book value per share was $23.66, an increase was 21.3% from the same period last year. Our tangible book value per share was $13.48, an increase of 5.2% from the same period last year. The ratio of tangible common equity was 8.1%.

We're very pleased with the organic balance sheet growth we've experienced this year. Our bankers have done an excellent job. While we have substantial funding sources available to sustain the current level of loan growth during this time of rising rates and tight liquidity, we intend to grow loans at a balanced pace with the growth of our core deposit funding. We have a commitment to provide capital for our relationship clients, which we will consider a priority as we manage our loan opportunities.

This concludes our prepared comments. We'll now take questions from our research analysts and institutional investors. I'll ask the operator to please come back on the line and give instructions, and open the call for questions.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, at this time, if you do have a question, please press the * and the number 1 key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the # key.

Our first question comes from the line of Brady Gailey of KBW. Your line is open.

Brady Gailey -- KBW -- Analyst

Hey. Good morning, guys.

George Makris -- Chairman and Chief Executive Officer

Good morning, Brady.

Brady Gailey -- KBW -- Analyst

I know last quarter, we talked about kind of a forward quarterly expense rate of around $95 million. You all came at $98.5. And I understand a couple of things that pushed that up in 3Q. But going forward, how do you see your kind of quarterly expense rate trending?

George Makris -- Chairman and Chief Executive Officer

Well, Brady, we still think that $95 million is a good run rate on a consistent basis. However, I will say that we're much more focused on what our efficiency ratio is. So, we still intend to invest in our business. And you've probably noted that during the quarter, we had a little over a million dollars on our technology project. Most of that was related to the change to work day, which completely replaced our accounting and HR systems that went life in August. Also, you probably note that our loan growth has far exceeded our expectations for the year. And while we've experienced good deposit growth throughout the year, loans have outpaced deposits. And therefore, we chose to spend a little extra marketing dollars to promote deposits to keep that loan growth going at the current pace. So, we will manage our expenses appropriately within that efficiency ratio range.

But as we see opportunities based on growth and other market conditions, we'll take advantage of that. So, when we take a look at budget, that's what we know. We've got to be flexible and deal with what we don't know. You also maybe recall that at the beginning of the year, when we talked about how we were gonna allocate some of the benefit from the tax rate adjustment, we were very clear that we were gonna share some of that with our associates. And obviously, we've been very successful financially this year, and I think our growth for our profit sharing plan that we're sharing that profitability with others who made it possible.

So, we'll continue to do those things that we think are good business decisions. But based on what we know today, $95 million a quarter is still a good run rate.

Brady Gailey -- KBW -- Analyst

Okay. And then loan growth in the past, you've talked about the 10% to 12% range. You look at the last couple quarters, and you've been higher than that, like that kind of the mid-teens, if not a little better in 3Q. But is that 10% to 12% still the right way to think about forward loan growth, or could it be better?

George Makris -- Chairman and Chief Executive Officer

Well, I'm gonna let Matt predict what our loan growth is gonna be. But I'll make a couple of comments. One is, obviously, the intent of rising rates is to slow the economy down a little bit. And I think we all have seen that demonstrated and prove out in the marketplace. Our mortgage loans were down this month, and I think that's probably a national trend. Commercial loans are in that same bucket. And when you expect two more rate increases in the next six months, you have borrowers really questioning whether or not the cash flows based on today's rates are realistic. So, we're seeing a little bit more hesitancy on the part of borrowers to take the risks they may have been willing to take a year ago. But Matt, you might talk about our loan pipeline and what you see going forward.

Matt Reddin -- President of Banking Enterprise

Yeah, thanks, George. Brady, I'll tell you, if you look at kind of our approved rate close, where that went from the second quarter to $613 million; now it's at $464 million, I think George is right, that while we're seeing really good opportunities, we're remaining disciplined to conservative underwriting, as we always have, as well as our pricing standards and relationship standards. And so, as George commented earlier, we're gonna make sure we can take care of our existing customers. And we have plenty of capabilities to do so. But as long as we can grow deposits and it fits our standards, we'll continue to look at those opportunities. But you do see that pipeline did shrink. I think it's relative of rising rates.

Brady Gailey -- KBW -- Analyst

All right. And then finally for me, just an update on M&A. George, I know you said you'd kind of be back in the game next year, that your stock price is off -- but I guess everybody's is off, at least the publicly traded guys. So, just an update on kind of how you're thinking about M&A as we enter 2019.

George Makris -- Chairman and Chief Executive Officer

Well, we continue to believe that there are excellent opportunities for us in the M&A arena. We're having some really good conversations currently. The stock price and the devaluation in the banking sector has somewhat of a negative impact on the optics around an acquisition, especially when you consider privately held banks don't see that same fluctuation on a daily basis that publicly traded banks see. However, we believe that the whole industry is affected by that valuation. So, to the extent that we can all see eye to eye on relative valuation, we believe there's still a really good opportunity, because the value of our company relative to some of those we compete with in the M&A business is still very healthy. So, you know, it really just depends on the reasons for the merger, the timing of the merger. I have to believe that over the course of time, the pricing will take care of itself.

Brady Gailey -- KBW -- Analyst

Got it. Thanks, guys.

Operator

Thank you. Our next question comes from the line of David Feaster of Raymond James. Your line is open.

David Feaster -- Raymond James -- Analyst

Hey. Good morning, guys.

George Makris -- Chairman and Chief Executive Officer

Hi, David.

Steve Massanelli -- Chief Administrative Officer and Investor Relations Officer

Good morning, David.

David Feaster -- Raymond James -- Analyst

So, we're sitting here at the low end of the core NIM range. There's a lot of moving parts today with the sub-debt, the seasonal strength in AG. I just wanted to get your thoughts on the core NIM going forward. Is that 370 to 380 range still reasonable, or could we see the core NIM kind of inflect going forward as you start growing loans, like you talked about, at that more balanced pace?

George Makris -- Chairman and Chief Executive Officer

First of all, we probably should have been clearer last quarter about what that range should be. We took on additional sub-debt. So, we refinanced some debt that we had, but we also took on a little over a $100 million of additional sub-debt. That additional debt by itself is gonna cost us five basis points with regard to our NIM. So, really, that top end of the range should move from 380 to 375. We believe that 370, 375 is still a good range. And we intend to balance our ability to raise our core loan yields with our deposit cost increase. And I think we've demonstrated since the 1st of the year, when we combined Bank SNB and Southwest Bank into Simmons Bank, that we've been able to manage that process since the end of 2017. And we've had a little variance quarter to quarter, but some of that's been driven by the timing of paying off some of the refinanced debt.

So, we still believe 370, 375 is a good operating range for us. We also believe that we're still in a lag position for loan yields catching up to deposit costs. So, we're a little more optimistic about the ability maybe to expand that NIM in the future. But currently, we are very satisfied with the ability to balance costs and deposits with loan yields.

David Feaster -- Raymond James -- Analyst

Okay. That's great color. Thank you. Your commercial loan growth was notably strong on the quarter, which is kind of a stark contrast to what we've seen from several other banks this quarter, where pay-downs and competitions really weighed on growth. What do you think's driving your ability to grow C&I loans at an outside pace, and are there any specific segments that were notably strong or where you're gaining share?

George Makris -- Chairman and Chief Executive Officer

We'll ask Matt to sort of address that for us.

Matt Reddin -- President of Banking Enterprise

Yeah, that's a good question. The C&I that we've seen quarter to quarter has been in our energy group. If you look at our group that came onboard from Bank SNB, very, very experienced team. We have a very disciplined, conservative underwriting, and we've taken advantage of that over the last two quarters. Now, I will tell you now that with the robust energy sector right now, we're seeing bigger banks come down to compete. While credit standards are staying good, credit spreads are getting smaller. So, we're seeing that slow down now because we'll remain disciplined on our credit spreads.

David Feaster -- Raymond James -- Analyst

Got it. Last one from me. I just wanted to kind of get your thoughts on fee income more broadly. It's been tough in some of these sectors with mortgage and SBA, like you talked about, margins coming down. Just kind of wanted to hear your thoughts on fee income going forward. Where do you see the most opportunity to grow fees and start getting that ratio of fees to revenues back up? Are there any other lines you'd like to add or supplement, either organically or through M&A?

George Makris -- Chairman and Chief Executive Officer

Yeah. So, first of all, I'll answer your last comment first. And that is through M&A, yes, noninterest income lines of business with acquired banks is very important to us, so that's gonna be a priority. We have lagged behind in our ability to roll out some of our fee businesses throughout our new footprint, particularly our wealth management group. That's gonna be a real focus for us over the next two years. We need to make sure we get our wealth management group prominently entrenched in all of our markets. We've not made that a priority in the past, but it will be going forward. We're gonna lose the Durbin income. That's a big chunk to overcome. So, $14 million pre-tax revenue out the window for 2019, just because we exceeded a certain size. Doesn't make sense, but that's the way it is, and those are the rules of the game.

I will say this. Our mortgage group does a fantastic job. We view mortgage as a very necessary product if we're gonna call ourselves a community bank. We do not intend to create a mortgage company. It is gonna be one line of business that we offer in all our communities. So, we're gonna be subject to, in our mortgage business, what effect rates have on the normal course of home purchasing. And I think you see that reflected.

Now, SBA, we obviously have two choices there. We can leave SBA loans on our books and collect that interest over the life of the loan, or we can sell those loans or the guaranteed portion early on in the process and book fee income. It's sort of a break-even analysis for us. If the premium in the marketplace indicates it's a better option to go ahead and sell those loans and book fee income, we'll do that. And you've seen us do that in the past. Currently, that's not the case. With rising rates, SBA loan yields are very, very good. And when the premium only is 6% to 7%, it doesn't justify selling those in the marketplace. We're better off keeping them on the books. So, that will fluctuate based on what's most advantageous to the company long-term. So, yes, our fee income is extremely important to us. Diversity in everything we do, including our revenue stream, is sort of a table stake for us. So, we are gonna focus on driving that noninterest income going forward in all of our lines of business.

David Feaster -- Raymond James -- Analyst

Okay, great. Thank you.

Operator

Thank you. And our next question is from the line of Matt Olney from Stephens. Your line is open.

Matt Olney -- Stephens -- Analyst

Thanks. Great. Good morning, guys.

George Makris -- Chairman and Chief Executive Officer

Hey, Matt.

Matt Olney -- Stephens -- Analyst

I want to go back to the discussion on operating expenses. And I'm still confused why the expense run rate should be close to that $95 million after seeing these 3Q results. Are there any more cost savings coming from previous acquisitions? Is the deposit campaign now complete? Just any more color would be helpful on that.

George Makris -- Chairman and Chief Executive Officer

Well, we have the expense savings from the branch closures that we'll have in the fourth quarter going forward. They didn't close until the end of September. So, we got no benefit in the third quarter at all from the branch closings. So, there's gonna be a little benefit from that. The other two expenses were sort of one-time occurrences. Now, our profit-sharing plan, we'll just have to take a look at what we plan to do in 2019. But I think we have exceeded our expectations this year, and therefore, that profit-sharing number was up proportionally.

We still feel pretty good about what our budget looks like. Our compensation expense was down, and we would expect that to continue to go down as severance payments roll off. We have some retirements at the end of the year. So, we're fairly comfortable with that number.

Matt Reddin -- President of Banking Enterprise

And Matt, on the profit sharing, as George said, that was part of what we gave back to the associates as part of the tax savings for the year. As we got to the -- into the third quarter, the numbers became a little truer to what the yearend results would be. And so, that was more of a true-up of the number, not indicative of one quarter. So, it was really a one-time adjustment on some of that. Now, it will be higher in the fourth quarter as we accrue that one quarter, but it was a year-to-date catch up.

Matt Olney -- Stephens -- Analyst

Okay. And I think earlier, you mentioned that you are trying to manage to an efficiency ratio. I think you mentioned that when you talked about expenses. Can you give us more color about what efficiency ratio you're trying to manage to over the next few quarters?

George Makris -- Chairman and Chief Executive Officer

Yeah. So, here are the financial metrics we use internally as we make decisions. One is our target ROA of 1.50%, and a lot of that's gonna be dependent on whether or not we're successful in driving this noninterest income up to a 30% level, where it is today at about 21%. Of course, a lot of that revenue has no assets tied to it. So, we expect we should get to 1.50%. And we're gonna manage between 50% and 55% efficiency ratio. So, from time-to-time, we're gonna have investments that we need to make. For instance, as we roll out our coverage of our wealth management group, we're gonna have to hire people with no revenue associated and invest in those markets, put those people in place so we can offer those products and services. So, those are really the two financial drivers that we use internally that we think -- we base our decisions on. ROA at 1.50%, efficiency ratio between 50% and 55%.

Matt Olney -- Stephens -- Analyst

Okay. That's helpful, George. And then on deposit growth and deposit cost, you mentioned you ran some new campaigns during the third quarter. Can you talk about the success of those campaigns and interest bearing deposit cost? I think it ticked up around 21 bps this quarter, which is a pretty good size jump from where we were previously. Are you saying that you expect that cost, the relative increase to slow down somewhat in the next few quarters as the campaign ends, or -- any color there would be helpful.

George Makris -- Chairman and Chief Executive Officer

Yeah. I do expect that growth slowdown, and I expect our loan yields to pick up the pace. And once again, we expect to manage those on a balance basis for the fourth quarter. We'll take a look at what it looks like in 2019, but we feel pretty good about the fourth quarter.

And I will say this, Matt. You probably heard it from most every bank that you cover. And that is, deposit gathering is real challenge today and it's -- there are really a couple of factors that I'd like to mention that we see happening in the marketplace. One is, there are billions of dollars that used to be in the banking system that now reside in fintech companies or other payment systems that could really help if they were back in the banking business. Those groups are not driving the economy, but they're siphoning off the funding that we use to drive the economy.

And the second this, we're a little disappointed in the way our public funds are managed. Public funds ought to be given to those institutions that help drive the local economy. And I think we have seen, at least recently, more of a bid process to maximize return, instead of understanding that maybe there is a responsibility of public entities to help drive the economic growth in their geographies. So, those two factors control billions of deposit dollars. And I think that's why you see so much emphasis on digital banking -- and we obviously are very interested in our digital offerings as well. But we're much more focused on growing deposits in markets we currently serve than going nationwide with a digital deposit gathering. That doesn't do those local economies any good, when the group that holds those deposits is not investing in the growth in that economy.

So, something's gotta give at some point in time. I don't know what that answer is, but I do know it's having an effect on the banking business, and it's causing us to really take a good hard look at whether or not we're interested in funding transactional loans. We value our relationship, particularly with our commercial customers. Those customers that think of us as their primary bank, we're gonna make sure we have the capital to support their growth. So, the other shift we're seeing is in our commercial customers. They're having to make a choice. Who's gonna be my primary bank, and are they gonna have the ability to fund my growth going forward? Because some of these transactional loans are gonna dry up in the marketplace, not only at Simmons, but in other banks as well.

Matt Olney -- Stephens -- Analyst

And as a follow-up, George, you mentioned capital, and I was confused about the prepared remarks. Did you say that you guys paid down some sub-debt capital over this year, but you also issued new sub-debt capital? I was confused on that point.

Matt Reddin -- President of Banking Enterprise

Matt, as you know, back in March, we had the $330 million in sub-debt we raised. But there was the timing of paying off either sub-debt or trust preferred. We had about $20 million at 6% that we were not able to pay off until September 30th. It was actually called on September -- we called it on September 30th. So, that was the sub-debt. The rest of it was the trusts.

George Makris -- Chairman and Chief Executive Officer

Yeah, but Matt, we raised $330 million in the second quarter. $220 million was to refinance current debt. $110 of that was new debt on our books.

Matt Olney -- Stephens -- Analyst

Got it. Okay. Thank you, guys.

George Makris -- Chairman and Chief Executive Officer

You betcha. Thanks.

Operator

Thank you. And our next question comes from the line of Bryce Rowe of Baird. Your line is open.

Bryce Rowe -- Baird -- Analyst

Thanks. Good morning.

George Makris -- Chairman and Chief Executive Officer

Good morning, Bryce. How are you?

Bryce Rowe -- Baird -- Analyst

I'm doing well, t hank you. Just a couple of questions here. I just wanted to ask about the sale of substandard loans, and if there are any more planned within that bucket, and what brought on or initiated that process?

George Makris -- Chairman and Chief Executive Officer

Well, I don't know that we have any more currently that we're marketing. Our experience is this. We would rather eliminate substandard loans than foreclose and take assets into, say, other real estate. That's not a good prospect for us. The longer we hold that other real estate, the more we get to write it down. So, our philosophy is to move those loans while we can. It's a large distraction to our business going forward, and I would say that these, while they were performing, for the most part, had become a large distraction. They also take up quite a bit of allowance associated with them and we wanted to free that up. So, I think it was a one-time situation. As we managed our portfolio, we saw an opportunity to go ahead and get rid of those troubled loans, increase our asset quality, and move forward. So, Marty or Matt might have other comments about that.

Marty Casteel -- Chairman and CEO of Simmons Bank

Well, that's exactly right. But I think we'll always be looking at opportunities. We get calls every day as to all our other financial institutions, loan borrowers. And if our loans match up and it's in our best interest, we think, to move those, we will do so. We do not have an active plan right now to market. A pool of loans, but that could change tomorrow.

Bryce Rowe -- Baird -- Analyst

That's helpful. And then, maybe wanted to ask a little bit more about the deposit campaign. It sounds like it may have wrapped up in the third quarter, so I was curious if that did in fact correct. And then, wanted to get an understanding of kind of the nature of the deposit campaign. Was it directed at certain markets or a certain median? Just any color around that would be helpful. Thanks.

Matt Reddin -- President of Banking Enterprise

Hey, this is Matt. I'll give you some color, yes. It was the market that -- well, two ways. But specifically, it was marketed to markets where we have low market share and we direct campaign new customers to the bank, CDs, and money markets. But also, as you can imagine, we solicited the existing customers of our bank that we now had an additional share of new money that we could bring into the bank in those markets. We did that as well. But it was low market share markets for us where we knew we had opportunities.

Bryce Rowe -- Baird -- Analyst

And so, it's wrapped up in the third quarter, Matt? And have you been able to kind of quantify the results of the campaign?

Matt Reddin -- President of Banking Enterprise

Sure. So, it's still ongoing, but the direct marketing is wrapping up, but those opportunities are still coming into our branches and calling in. So, we're still seeing new growth, but we're not direct mailing anymore. And if you look at the overall campaign so far and new money, it's $400 million of new deposits to the bank through that specific campaign. Now, that's specific products. Now, that's not indicative of other existing products that we've sold on our existing deposit special -- on our existing deposit rates.

Bryce Rowe -- Baird -- Analyst

Great. That's helpful. And then, maybe one housekeeping item. From a tax rate perspective, you called it out as being lower here in the third quarter. I'm curious what you're seeing for the fourth quarter.

Marty Casteel -- Chairman and CEO of Simmons Bank

Well, I'll tell you, first off, it was a bit of an anomaly for all of 2018, as we've had several adjustments. A lot of it related to the acquisitions and the conversions from one state to another on our charters. During this quarter, we did complete a cost segregation study, and some of it related to the new acquisitions we had, and the buildings they had there and others. We were able to take advantage of that. That cost savings -- the segregation study was pretty substantial. We also had some new market tax credits that hit in this quarter that were a benefit, and an apportionment for our state taxes on the deferred taxes. A lot of that hit this quarter and in prior quarters. I would say, we'll have -- this year, even into the fourth quarter, we'll probably be in that same range of tax rate. But I would estimate that in 2020, we'll be back to the normal rate of, say --

George Makris -- Chairman and Chief Executive Officer

2019.

Marty Casteel -- Chairman and CEO of Simmons Bank

I'm sorry, 2019 -- normal tax rate in the 23% range is a rough estimate right now.

Bryce Rowe -- Baird -- Analyst

Great. Thank you, guys.

George Makris -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. As a reminder, ladies and gentlemen, if you have a question at this time, please press the * and the number 1 key on your touchtone telephone. Just one moment for any additional questions.

And I'm showing no further questions at this time. I'd like to turn the conference back over to Mr. George Makris for closing remarks.

George Makris -- Chairman and Chief Executive Officer

Okay. Thank you very much, and I want to thank all of you for joining us today. We said at the beginning of the year that we had several integration projects going on during 2018 that should be able to demonstrate our future growth of our company, and I'm awfully pleased with the organic growth that we've been able to accomplish this year while doing those integration activities. We've grown organically by over $1 billion this year. We think that we've established our reputation in the marketplace as a bank that is very flexible and easy to do business with, and we hope to capitalize on that in the years to come. So, thanks again for joining us, and we'll look forward to visiting again next quarter. Have a great day.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Duration: 42 minutes

Call participants:

Steve Massanelli -- Chief Administrative Officer and Investor Relations Officer

George Makris -- Chairman and Chief Executive Officer

Matt Reddin -- President of Banking Enterprise

Marty Casteel -- Chairman and CEO of Simmons Bank

Brady Gailey -- KBW -- Analyst

David Feaster -- Raymond James -- Analyst

Matt Olney -- Stephens -- Analyst

Bryce Rowe -- Baird -- Analyst

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