Edgar Filing: SIMMONS FIRST NATIONAL CORP

a5467034.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended June 30, 2007

Commission File Number 0-6253

SIMMONS FIRST NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Arkansas	71-0407808
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

501 Main Street, Pine Bluff, Arkansas	71601
(Address of principal executive offices)	(Zip Code)

870-541-1000

(Registrant's telephone number, including area code)

Not Applicable

Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. S Yes £ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

£ Large accelerated filer

S Accelerated filer

£ Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.). £ Yes S No

The number of shares outstanding of the Registrant’s Common Stock as of July 27, 2007 was 14,012,191.

Simmons First National Corporation

Quarterly Report on Form 10-Q

June 30, 2007

INDEX

		Page No.

Part I: Financial Information

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets --
	June 30, 2007 and December 31, 2006	3-4

	Consolidated Statements of Income --
	Three months and six months ended June 30, 2007 and 2006	5

	Consolidated Statements of Cash Flows --
	Six months ended June 30, 2007 and 2006	6

	Consolidated Statements of Stockholders' Equity --	7
	Six months ended June 30, 2007 and 2006

	Condensed Notes to Consolidated Financial Statements	8-19

	Report of Independent Registered Public Accounting Firm	20

Item 2.	Management's Discussion and Analysis of Financial
	Condition and Results of Operations	21-45

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	45-48

Item 4.	Controls and Procedures	48

Part II: Other Information

Item 1A.	Risk Factors	49

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 4.	Submission of Matters to a Vote of Security Holders	49-50

Item 6.	Exhibits	50-52


Signatures		53

Part I: Financial Information

Item 1. Financial Statements

Simmons First National Corporation

Consolidated Balance Sheets

June 30, 2007 and December 31, 2006

ASSETS

	June 30,			December 31,
(In thousands, except share data)	2007			2006
	(Unaudited)
Cash and non-interest bearing balances due from banks	$	71,915		$	83,452
Interest bearing balances due from banks		45,084			45,829
Federal funds sold		2,600			21,870
Cash and cash equivalents		119,599			151,151

Investment securities		525,581			527,126
Mortgage loans held for sale		9,928			7,091
Assets held in trading accounts		4,496			4,487
Loans		1,821,430			1,783,495
Allowance for loan losses		(25,197	)		(25,385	)
Net loans		1,796,233			1,758,110

Premises and equipment		70,873			67,926
Foreclosed assets held for sale, net		1,484			1,940
Interest receivable		21,868			21,974
Bank owned life insurance		36,881			36,133
Goodwill		60,605			60,605
Core deposit premiums		3,786			4,199
Other assets		9,084			10,671

TOTAL ASSETS	$	2,660,418		$	2,651,413

See Condensed Notes to Consolidated Financial Statements.

Simmons First National Corporation

Consolidated Balance Sheets

June 30, 2007 and December 31, 2006

LIABILITIES AND STOCKHOLDERS’ EQUITY

	June 30,			December 31,
(In thousands, except share data)	2007			2006
	(Unaudited)
LIABILITIES
Non-interest bearing transaction accounts	$	308,047		$	305,327
Interest bearing transaction accounts and savings deposits		763,017			738,763
Time deposits		1,109,036			1,131,441
Total deposits		2,180,100			2,175,531
Federal funds purchased and securities sold
under agreements to repurchase		97,947			105,036
Short-term debt		11,072			6,114
Long-term debt		82,599			83,311
Accrued interest and other liabilities		25,395			22,405
Total liabilities		2,397,113			2,392,397

STOCKHOLDERS’ EQUITY
Capital stock
Class A, common, par value $0.01 a share, authorized
60,000,000 shares at 2007 and 30,000,000 shares at 2006,
14,059,631 issued and outstanding at 2007 and 14,196,855 at 2006		141			142
Surplus		44,773			48,678
Undivided profits		220,981			212,394
Accumulated other comprehensive loss
Unrealized depreciation on available-for-sale securities,
net of income tax credits of $1,554 at 2007 and $1,319 at 2006		(2,590	)		(2,198	)
Total stockholders’ equity		263,305			259,016

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,660,418		$	2,651,413

See Condensed Notes to Consolidated Financial Statements.

Simmons First National Corporation

Consolidated Statements of Income

Three and Six Months Ended June 30, 2007 and 2006

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands, except per share data)	2007		2006		2007		2006
	(Unaudited)				(Unaudited)
INTEREST INCOME
Loans	$	35,051	$	31,694	$	69,147	$	61,781
Federal funds sold		395		192		1,096		367
Investment securities		5,889		4,978		11,610		9,808
Mortgage loans held for sale		133		128		236		228
Assets held in trading accounts		35		19		53		44
Interest bearing balances due from banks		297		259		807		556
TOTAL INTEREST INCOME		41,800		37,270		82,949		72,784

INTEREST EXPENSE
Deposits		16,468		12,641		32,664		23,909
Federal funds purchased and securities sold
under agreements to repurchase		1,292		1,064		2,748		2,168
Short-term debt		49		225		118		321
Long-term debt		1,198		1,148		2,395		2,242
TOTAL INTEREST EXPENSE		19,007		15,078		37,925		28,640

NET INTEREST INCOME		22,793		22,192		45,024		44,144
Provision for loan losses		831		789		1,582		2,497

NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		21,962		21,403		43,442		41,647

NON-INTEREST INCOME
Trust income		1,474		1,293		3,111		2,660
Service charges on deposit accounts		3,656		4,209		7,153		7,972
Other service charges and fees		692		592		1,500		1,250
Income on sale of mortgage loans, net of commissions		727		755		1,407		1,431
Income on investment banking, net of commissions		153		90		303		197
Credit card fees		3,025		2,699		5,674		5,157
Premiums on sale of student loans		741		659		1,623		1,395
Bank owned life insurance income		359		415		723		716
Other income		510		804		1,298		1,350
TOTAL NON-INTEREST INCOME		11,337		11,516		22,792		22,128

NON-INTEREST EXPENSE
Salaries and employee benefits		13,903		13,466		27,628		26,971
Occupancy expense, net		1,624		1,541		3,273		3,061
Furniture and equipment expense		1,507		1,456		2,973		2,874
Loss on foreclosed assets		36		40		59		73
Deposit insurance		68		71		135		140
Other operating expenses		5,873		5,727		12,158		11,307
TOTAL NON-INTEREST EXPENSE		23,011		22,301		46,226		44,426

INCOME BEFORE INCOME TAXES		10,288		10,618		20,008		19,349
Provision for income taxes		3,257		3,322		6,340		6,065

NET INCOME	$	7,031	$	7,296	$	13,668	$	13,284
BASIC EARNINGS PER SHARE	$	0.50	$	0.51	$	0.97	$	0.93
DILUTED EARNINGS PER SHARE	$	0.49	$	0.51	$	0.95	$	0.92

See Condensed Notes to Consolidated Financial Statements.

Simmons First National Corporation

Consolidated Statements of Cash Flows

Six Months Ended June 30, 2007 and 2006

	June 30,			June 30,
(In thousands)	2007			2006
	(Unaudited)
OPERATING ACTIVITIES
Net income	$	13,668		$	13,284
Items not requiring (providing) cash
Depreciation and amortization		2,872			2,710
Provision for loan losses		1,582			2,497
Net amortization of investment securities		141			311
Deferred income taxes		71			(482	)
Bank owned life insurance income		(723	)		(716	)
Changes in
Interest receivable		106			183
Mortgage loans held for sale		(2,837	)		(5,391	)
Assets held in trading accounts		(9	)		24
Other assets		1,586			(1,631	)
Accrued interest and other liabilities		2,931			4,756
Income taxes payable		(12	)		147
Net cash provided by operating activities		19,376			15,692

INVESTING ACTIVITIES
Net originations of loans		(40,714	)		(24,525	)
Purchases of premises and equipment, net		(5,405	)		(4,620	)
Proceeds from sale of foreclosed assets		1,465			558
Proceeds from maturities of available-for-sale securities		60,238			13,512
Purchases of available-for-sale securities		(60,314	)		(6,805	)
Proceeds from maturities of held-to-maturity securities		17,509			9,933
Purchases of held-to-maturity securities		(16,422	)		(24,365	)
Purchases of bank owned life insurance		(25	)		--
Net cash used in investing activities		(43,668	)		(36,312	)

FINANCING ACTIVITIES
Net change in deposits		4,569			50,433
Net change in short-term debt		4,958			37,023
Dividends paid		(5,081	)		(4,698	)
Proceeds from issuance of long-term debt		4,725			--
Repayment of long-term debt		(5,437	)		(3,947	)
Net change in Federal funds purchased and
securities sold under agreements to repurchase		(7,089	)		(17,538	)
Repurchase of common stock, net		(3,905	)		(4,116	)
Net cash (used in) provided by financing activities		(7,260	)		57,157

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(31,552	)		36,537
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD		151,151			101,573
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	119,599		$	138,110

See Condensed Notes to Consolidated Financial Statements.

Simmons First National Corporation

Consolidated Statements of Stockholders’ Equity

Six Months Ended June 30, 2007 and 2006

							Accumulated
							Other
	Common						Comprehensive			Undivided
(In thousands, except share data)	Stock			Surplus			Loss			Profits			Total

Balance, December 31, 2005	$	143		$	53,723		$	(4,360	)	$	194,579		$	244,085
Comprehensive income
Net income		--			--			--			13,284			13,284
Change in unrealized depreciation on
available-for-sale securities, net of
income tax credits of $826		--			--			(1,375	)		--			(1,375	)
Comprehensive income														11,909
Stock issued as bonus shares – 7,700 shares		--			209			--			--			209
Exercise of stock options – 51,580 shares		1			788			--			--			789
Securities exchanged under stock option plan		--			(640	)		--			--			(640	)
Stock granted under
Stock-based compensation plans		--			50			--			--			50
Repurchase of common stock – 164,900 shares		(2	)		(4,523	)		--			--			(4,525	)
Dividends paid – $0.33 per share		--			--			--			(4,698	)		(4,698	)

Balance, June 30, 2006 (Unaudited)		142			49,607			(5,735	)		203,165			247,179
Comprehensive income
Net income		--			--			--			14,197			14,197
Change in unrealized depreciation on
available-for-sale securities, net of
income taxes of $2,122		--			--			3,537			--			3,537
Comprehensive income														17,734
Stock issued as bonus shares – 2,500 shares		--			66			--			--			66
Exercise of stock options – 55,300 shares		1			728			--			--			729
Stock granted under
Stock-based compensation plans		--			38			--			--			38
Securities exchanged under stock option plan		--			(651	)		--			--			(651	)
Repurchase of common stock – 38,200 shares		(1	)		(1,110	)		--			--			(1,111	)
Dividends paid – $0.35 per share		--			--			--			(4,968	)		(4,968	)

Balance, December 31, 2006		142			48,678			(2,198	)		212,394			259,016
Comprehensive income
Net income		--			--			--			13,668			13,668
Change in unrealized depreciation on
available-for-sale securities, net of
income tax credits of $235		--			--			(392	)		--			(392	)
Comprehensive income														13,276
Stock issued as bonus shares – 8,800 shares		--			250			--			--			250
Exercise of stock options – 17,900 shares		--			309			--			--			309
Stock granted under
Stock-based compensation plans		--			108			--			--			108
Securities exchanged under stock option plan		--			(98	)		--			--			(98	)
Repurchase of common stock – 161,578 shares		(1	)		(4,474	)		--			--			(4,475	)
Dividends paid – $0.36 per share		--			--			--			(5,081	)		(5,081	)

Balance, June 30, 2007 (Unaudited)	$	141		$	44,773		$	(2,590	)	$	220,981		$	263,305

See Condensed Notes to Consolidated Financial Statements.

SIMMONS FIRST NATIONAL CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1: BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Simmons First National Corporation and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.

All adjustments made to the unaudited financial statements were of a normal recurring nature. In the opinion of management, all adjustments necessary for a fair presentation of the results of interim periods have been made. Certain prior year amounts are reclassified to conform to current year classification. The consolidated balance sheet of the Company as of December 31, 2006 has been derived from the audited consolidated balance sheet of the Company as of that date. The results of operations for the period are not necessarily indicative of the results to be expected for the full year.

Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 2006 filed with the Securities and Exchange Commission.

The Company adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, on January 1, 2007. See Note 6 – Income Taxes for additional information. There have been no other significant changes to the Company’s accounting policies from the 2006 Form 10-K.

Recently Issued Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements. Statement No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The Statement is effective for the Company on January 1, 2008 and is not expected to have a significant impact on the Company’s financial position, operations or cash flows.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115. Statement No. 159 permits entities to choose to measure eligible items at fair value at specified election dates. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings at each subsequent reporting date. The fair value option (i) may be applied instrument by instrument, with certain exceptions, (ii) is irrevocable (unless a new election date occurs) and (iii) is applied only to entire instruments and not to portions of instruments. Statement No. 159 is effective for the Company on January 1, 2008 and is not expected to have a significant impact on the Company’s financial position, operations or cash flows.

In September 2006, the FASB ratified the consensus reached by the FASB’s Emerging Issues Task Force (EITF) relating to EITF 06-4, Accounting for the Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. EITF 06-4 requires employers accounting for endorsement split-dollar life insurance arrangements that provide a benefit to an employee that extends to postretirement periods should recognize a liability for future benefits in accordance with FASB Statement of Financial Accounting Standards No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, or Accounting Principles Board (APB) Opinion No. 12, Omnibus Opinion – 1967. Entities should recognize the effects of applying this issue through either (a) a change in accounting principle through a cumulative-effect adjustment to retained earnings or to other components of equity or net assets in the statement of financial position as of the beginning of the year of adoption or (b) a change in accounting principle through retrospective application to all prior periods. EITF 06-4 is effective for the Company on January 1, 2008. The Company is currently evaluating the effect the implementation of EITF 06-4 will have on its financial position, operations and cash flows.

Earnings Per Share

Basic earnings per share are computed based on the weighted average number of common shares outstanding during each year. Diluted earnings per share are computed using the weighted average common shares and all potential dilutive common shares outstanding during the period.

Following is the computation of per share earnings for the three and six months ended June 30, 2007 and 2006.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands, except per share data)	2007		2006		2007		2006

Net income	$	7,031	$	7,296	$	13,668	$	13,284

Average common shares outstanding		14,099		14,248		14,138		14,256
Average potential dilutive common shares		214		259		214		259
Average diluted common shares		14,313		14,507		14,352		14,515

Basic earnings per share	$	0.50	$	0.51	$	0.97	$	0.93
Diluted earnings per share	$	0.49	$	0.51	$	0.95	$	0.92

NOTE 2: INVESTMENT SECURITIES

The amortized cost and fair value of investment securities that are classified as held-to-maturity and available-for-sale are as follows:

	June 30,									December 31,
	2007									2006
			Gross		Gross			Estimated				Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value

Held-to-Maturity
U.S. Treasury	$	1,500	$	--	$	--		$	1,500	$	--	$	--	$	--		$	--
U.S. Government
agencies		44,000		20		(363	)		43,657		54,998		367		(272	)		55,093
Mortgage-backed
securities		140		2		--			142		155		3		(1	)		157
State and political
subdivisions		130,846		295		(2,925	)		128,216		122,472		667		(892	)		122,247
Other securities		2,355		--		--			2,355		2,319		--		--			2,319

	$	178,841	$	317	$	(3,288	)	$	175,870	$	179,944	$	1,037	$	(1,165	)	$	179,816

Available-for-Sale
U.S. Treasury	$	8,982	$	--	$	(7	)	$	8,975	$	6,970	$	--	$	(30	)	$	6,940
U.S. Government
agencies		327,125		6		(4,444	)		322,687		326,301		287		(4,177	)		322,411
Mortgage-backed
securities		2,996		--		(203	)		2,793		3,032		--		(76	)		2,956
State and political
subdivisions		980		4		--			984		1,360		10		--			1,370
Other securities		10,801		500		--			11,301		13,035		470		--			13,505

	$	350,884	$	510	$	(4,654	)	$	346,740	$	350,698	$	767	$	(4,283	)	$	347,182

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $411,105,000 at June 30, 2007 and $400,668,000 at December 31, 2006.

The book value of securities sold under agreements to repurchase amounted to $85,222,000 and $80,566,000 for June 30, 2007 and December 31, 2006, respectively.

Income earned on securities for the six months ended June 30, 2007 and 2006 is as follows:

(In thousands)	2007		2006

Taxable
Held-to-maturity	$	1,385	$	726
Available-for-sale		7,681		6,726

Non-taxable
Held-to-maturity		2,513		2,294
Available-for-sale		31		62

Total	$	11,610	$	9,808

Maturities of investment securities at June 30, 2007 are as follows:

	Held-to-Maturity				Available-for-Sale
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value

One year or less	$	16,181	$	16,025	$	88,140	$	87,409
After one through five years		54,390		53,828		91,117		89,766
After five through ten years		84,344		82,755		158,728		156,333
After ten years		22,501		21,837		2,098		1,931
Other securities		1,425		1,425		10,801		11,301

Total	$	178,841	$	175,870	$	350,884	$	346,740

There were no realized gains or losses as of June 30, 2007 or 2006.

The state and political subdivision debt obligations are primarily non-rated bonds and represent small, Arkansas issues, which are evaluated on an ongoing basis.

NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES

The various categories are summarized as follows:

	June 30,		December 31,
(In thousands)	2007		2006

Consumer
Credit cards	$	140,327	$	143,359
Student loans		68,477		84,831
Other consumer		139,908		142,596
Real Estate
Construction		265,705		277,411
Single family residential		372,026		364,450
Other commercial		540,042		512,404
Commercial
Commercial		183,349		178,028
Agricultural		96,213		62,293
Financial institutions		5,351		4,766
Other		10,032		13,357

Total loans before allowance for loan losses	$	1,821,430	$	1,783,495

As of June 30, 2007, credit card loans, which are unsecured, were $140,327,000, or 7.7% of total loans, versus $143,359,000, or 8.0% of total loans at December 31, 2006. The credit card loans are diversified by geographic region to reduce credit risk and minimize any adverse impact on the portfolio. Credit card loans are regularly reviewed to facilitate the identification and monitoring of creditworthiness.

At June 30, 2007 and December 31, 2006, impaired loans totaled $11,775,000 and $12,829,000, respectively. All impaired loans had either specific or general allocations within the allowance for loan losses. Allocations of the allowance for loan losses relative to impaired loans were $3,397,000 at June 30, 2007 and $3,418,000 at December 31, 2006. Approximately $44,000 and $207,000 of interest income was recognized on average impaired loans of $11,471,000 and $13,524,000 as of June 30, 2007 and 2006, respectively. Interest recognized on impaired loans on a cash basis during the first six months of 2007 and 2006 was immaterial.

Transactions in the allowance for loan losses are as follows:

(In thousands)	2007		2006

Balance, beginning of year	$	25,385	$	26,923
Additions
Provision charged to expense		1,582		2,497
		26,967		29,420
Deductions
Losses charged to allowance, net of recoveries
of $1,397 and $1,359 for the first six months of
2007 and 2006, respectively		1,770		1,721
Reclassification of reserve related to unfunded commitments⁽¹⁾		--		1,525

Balance, June 30	$	25,197		26,174

Additions
Provision charged to expense				1,265

Deductions
Losses charged to allowance, net of recoveries
of $1,747 for the last six months of 2006				2,054

Balance, end of year			$	25,385

(1)	On March 31, 2006, the reserve for unfunded commitments was reclassified from the allowance for loan losses to other liabilities.

NOTE 4: GOODWILL AND CORE DEPOSIT PREMIUMS

Goodwill is tested annually for impairment. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the financial statements.

Core deposit premiums are periodically evaluated as to the recoverability of their carrying value.

The carrying basis and accumulated amortization of core deposit premiums (net of core deposit premiums that were fully amortized) at June 30, 2007 and December 31, 2006, were as follows:

	June 30,			December 31,
(In thousands)	2007			2006

Gross carrying amount	$	6,822		$	6,822
Accumulated amortization		(3,036	)		(2,623	)

Net core deposit premiums	$	3,786		$	4,199

Core deposit premium amortization expense recorded for the six months ended June 30, 2007 and 2006, was $413,000 and $416,000, respectively. The Company’s estimated amortization expense for the remainder of 2007 is $405,000, and for each of the following four years is:

2008 – $807,000; 2009 – $802,000; 2010 – $699,000; and 2011 – $451,000.

NOTE 5: TIME DEPOSITS

Time deposits include approximately $422,580,000 and $450,310,000 of certificates of deposit of $100,000 or more at June 30, 2007 and December 31, 2006 respectively.

NOTE 6: INCOME TAXES

The provision for income taxes is comprised of the following components:

	June 30,		June 30,
(In thousands)	2007		2006

Income taxes currently payable	$	6,269	$	6,547
Deferred income taxes		71		(482	)

Provision for income taxes	$	6,340	$	6,065

The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:

	June 30,			December 31,
(In thousands)	2007			2006

Deferred tax assets
Allowance for loan losses	$	8,711		$	8,543
Valuation of foreclosed assets		74			74
Valuation of foreclosed assets		63			63
Deferred compensation payable		1,357			1,275
FHLB advances		40			58
Vacation compensation		781			740
Loan interest		140			140
Available-for-sale securities		1,554			1,319
Other		126			174
Total deferred tax assets		12,772			12,312

Deferred tax liabilities
Accumulated depreciation		(667	)		(852	)
Deferred loan fee income and expenses, net		(819	)		(787	)
FHLB stock dividends		(945	)		(887	)
Goodwill and core deposit premium amortization		(6,277	)		(6,051	)
Other		(1,045	)		(880	)
Total deferred tax liabilities		(9,753	)		(9,457	)

Net deferred tax assets included in other
assets on balance sheets	$	3,019		$	2,855

A reconciliation of income tax expense at the statutory rate to the Company's actual income tax expense is shown below:


	June 30,			June 30,
(In thousands)	2007			2006

Computed at the statutory rate (35%)	$	7,003		$	6,772

Increase (decrease) resulting from:
Tax exempt income		(982	)		(925	)
Other differences, net		319			218

Actual tax provision	$	6,340		$	6,065

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109, effective January 1, 2007. Interpretation 48 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. Interpretation 48 also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties. Adoption of Interpretation 48 did not have a significant impact on the Company’s financial position, operations or cash flows.

The amount of unrecognized tax benefits may increase or decrease in the future for various reasons including adding amounts for current tax year positions, expiration of open income tax returns due to the statutes of limitation, changes in management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the addition or elimination of uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction. The Company’s U.S. federal income tax returns are open and subject to examinations from the 2003 tax year and forward. The Company’s various state income tax returns are generally open from the 2003 and later tax return years based on individual state statute of limitations.

NOTE 7: SHORT-TERM AND LONG-TERM DEBT

Long-term debt at June 30, 2007 and December 31, 2006, consisted of the following components:

	June 30,		December 31,
(In thousands)	2007		2006

Note Payable, due 2007, at a floating rate of
0.90% above the one-month LIBOR rate, reset
monthly, unsecured	$	2,000	$	2,000
FHLB advances, due 2007 to 2024, 2.58% to 8.41%
secured by residential real estate loans		49,669		50,381
Trust preferred securities, due 2033,
fixed at 8.25%, callable in 2008 without penalty		10,310		10,310
Trust preferred securities, due 2033,
floating rate of 2.80% above the three-month LIBOR
reset quarterly, callable in 2008 without penalty		10,310		10,310
Trust preferred securities, due 2033,
fixed rate of 6.97% through 2010, thereafter,
at a floating rate of 2.80% above the three-month
LIBOR rate, reset quarterly, callable
in 2010 without penalty		10,310		10,310

	$	82,599	$	83,311

At June 30, 2007, the Company had Federal Home Loan Bank (“FHLB”) advances with original maturities of one year or less of $9.4 million with a weighted average rate of 5.28% which are not included in the above table.

The trust preferred securities are tax-advantaged issues that qualify for Tier 1 capital treatment. Distributions on these securities are included in interest expense on long-term debt. Each of the trusts is a statutory business trust organized for the sole purpose of issuing trust securities and investing the proceeds thereof in junior subordinated debentures of the Company, the sole asset of each trust. The preferred securities of each trust represent preferred beneficial interests in the assets of the respective trusts and are subject to mandatory redemption upon payment of the junior subordinated debentures held by the trust. The common securities of each trust are wholly-owned by the Company. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related junior subordinated debentures. The Company’s obligations under the junior subordinated securities and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by the Company of each respective trust’s obligations under the trust securities issued by each respective trust.

Aggregate annual maturities of long-term debt at June 30, 2007 are:

		Annual
(In thousands)	Year	Maturities

	2007	$	5,774
	2008		13,194
	2009		5,434
	2010		5,363
	2011		4,171
	Thereafter		48,663

	Total	$	82,599

NOTE 8: CONTINGENT LIABILITIES

The Company and/or its subsidiaries have various unrelated legal proceedings, most of which involve loan foreclosure activity pending, which, in the aggregate, are not expected to have a material adverse effect on the financial position of the Company and its subsidiaries. The Company or its subsidiaries remain the subject of one (1) lawsuit asserting claims against the Company or its subsidiaries.

On October 1, 2003, an action in Pulaski County Circuit Court was filed by Thomas F. Carter, Tena P. Carter and certain related entities against Simmons First Bank of South Arkansas and Simmons First National Bank alleging wrongful conduct by the banks in the collection of certain loans. The plaintiffs are seeking $2,000,000 in compensatory damages and $10,000,000 in punitive damages. The Company and the banks have filed a Motion to Dismiss. The plaintiffs were granted additional time to discover any evidence for litigation, and have submitted such findings. Final arguments on the Motions for Summary Judgment are scheduled on September 19, 2007. At this time, no basis for any material liability has been identified. The Company and the banks continue to vigorously defend the claims asserted in the suit.

On April 3, 2006, an action in Johnson County Circuit Court was filed by Tria Xiong and Mai Lee Xiong against Simmons First Bank of Russellville and certain individuals alleging wrongful conduct by the bank in the underwriting and origination of certain loans. The plaintiffs were seeking an unspecified sum in compensatory damages and $1,000,000.00 in punitive damages. On June 21, 2007, an Order of Dismissal was signed in Johnson County Circuit Court dismissing the case with prejudice.

NOTE 9: CAPITAL STOCK

On May 25, 2004, the Company announced the adoption by the Board of Directors of a stock repurchase program. The program authorizes the repurchase of up to 5% of the then outstanding Common Stock, or 733,485 shares. Under the repurchase program, there is no time limit for the stock repurchases, nor is there a minimum number of shares the Company intends to repurchase. The Company may discontinue purchases at any time that management determines additional purchases are not warranted. The shares are to be purchased from time to time at prevailing market prices, through open market or unsolicited negotiated transactions, depending upon market conditions. The Company intends to use the repurchased shares to satisfy stock option exercises, payment of future stock dividends and general corporate purposes.

During the six-month period ended June 30, 2007, the Company repurchased 160,578 shares of stock under the repurchase plan with a weighted average repurchase price of $27.92 per share. Under the current stock repurchase plan, the Company can repurchase an additional 180,389 shares.

NOTE 10: UNDIVIDED PROFITS

The Company’s subsidiary banks are subject to a legal limitation on dividends that can be paid to the parent company without prior approval of the applicable regulatory agencies. The approval of the Comptroller of the Currency is required, if the total of all dividends declared by a national bank in any calendar year exceeds the total of its net profits, as defined, for that year combined with its retained net profits of the preceding two years. Arkansas bank regulators have specified that the maximum dividend limit state banks may pay to the parent company without prior approval is 75% of current year earnings plus 75% of the retained net earnings of the preceding year. At June 30, 2007, the bank subsidiaries had approximately $9 million available for payment of dividends to the Company, without prior approval of the regulatory agencies.

The Federal Reserve Board's risk-based capital guidelines include the definitions for (1) a well-capitalized institution, (2) an adequately-capitalized institution, and (3) an undercapitalized institution. The criteria for a well-capitalized institution are: a 5% "Tier l leverage capital" ratio, a 6% "Tier 1 risk-based capital" ratio, and a 10% "total risk-based capital" ratio. As of June 30, 2007, each of the eight subsidiary banks met the capital standards for a well-capitalized institution. The Company's “total risk-based capital” ratio was 13.58% at June 30, 2007.

NOTE 11: STOCK BASED COMPENSATION

The Company’s Board of Directors has adopted various stock compensation plans. The plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, and bonus stock awards. Pursuant to the plans, shares are reserved for future issuance by the Company, upon exercise of stock options or awarding of bonus shares granted to officers and other key employees.

The table below summarizes the transactions under the Company's active stock compensation plans for the six months ended June 30, 2007:

	Stock Options					Non-Vested Stock
	Outstanding					Awards Outstanding
				Weighted					Weighted
	Number			Average		Number			Average
	of			Exercise		of			Grant-Date
	Shares			Price		Shares			Fair-Value

Balance, January 1, 2007		516,670		$	16.32		22,646		$	25.69
Granted		56,500			28.42		8,800			28.42
Stock Options Exercised		(17,900	)		17.25		--			--
Stock Awards Vested		--			--		(6,064	)		25.26
Forfeited/Expired		--			--		--			--

Balance, June 30, 2007		555,270		$	17.52		25,382		$	26.74

Exercisable, June 30, 2007		453,584		$	15.39

The following table summarizes information about stock options under the plans outstanding at June 30, 2007:

Options Outstanding

Options Exercisable

Weighted

Average

Weighted

Remaining

Average

Range of

Options

Contractual

Exercise

Options

Exercise

Exercise Prices

Outstanding

Life

Price

Exercisable

Price

$10.56 to $12.22

325,500

1.4 Years

$12.07

325,500

$12.07

$15.35 to $16.32

12,860

1.5 years

$15.85

12,860

$15.85

$23.78 to $24.50

98,210

3.9 Years

$24.06

87,984

$24.07

$26.19 to $28.42

118,700

5.9 Years

$27.26

27,240

$26.86

Stock-based compensation expense totaled $261,780 and $194,569 during the six months ended June 30, 2007 and 2006, respectively. Stock-based compensation expense is recognized ratably over the requisite service period for all stock-based awards. Unrecognized stock-based compensation expense related to stock options totaled $514,975 at June 30, 2007. At such date, the weighted-average period over which this unrecognized expense is expected to be recognized was 2.12 years. Unrecognized stock-based compensation expense related to non-vested stock awards was $678,631 at June 30, 2007. At such date, the weighted-average period over which this unrecognized expense is expected to be recognized was 2.10 years.

Aggregate intrinsic values of outstanding stock options and exercisable stock options at June 30, 2007 were $5.6 million and $5.5 million, respectively. Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $27.59 as of June 29, 2007, and the exercise price multiplied by the number of options outstanding. The total intrinsic values of stock options exercised during the six months ended June 30, 2007 and 2006, were $185,007 and $672,603, respectively.

NOTE 12: ADDITIONAL CASH FLOW INFORMATION

	Six Months Ended
	June 30,
(In thousands)	2007		2006

Interest paid	$	35,044	$	27,788
Income taxes paid	$	5,897	$	6,399

NOTE 13: CERTAIN TRANSACTIONS

From time to time the Company and its subsidiaries have made loans and other extensions of credit to directors, officers, their associates and members of their immediate families. From time to time directors, officers and their associates and members of their immediate families have placed deposits with the Company’s subsidiary banks. Such loans, other extensions of credit and deposits were made in the ordinary course of business, on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons and did not involve more than normal risk of collectibility or present other unfavorable features.

NOTE 14: COMMITMENTS AND CREDIT RISK

The Company grants agri-business, commercial and residential loans to customers throughout Arkansas, along with credit card loans to customers throughout the United States. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.

At June 30, 2007, the Company had outstanding commitments to extend credit aggregating approximately $225,621,000 and $439,694,000 for credit card commitments and other loan commitments, respectively. At December 31, 2006, the Company had outstanding commitments to extend credit aggregating approximately $202,047,000 and $529,697,000 for credit card commitments and other loan commitments, respectively.

Letters of credit are conditional commitments issued by the Company, to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company had total outstanding letters of credit amounting to $10,020,000 and $5,477,000 at June 30, 2007 and December 31, 2006, respectively, with terms ranging from 90 days to three years. At June 30, 2007 and December 31, 2006 the Company’s deferred revenue under standby letter of credit agreements is approximately $104,000 and $35,000, respectively.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

BKD, LLP

Certified Public Accountants

200 East Eleventh

Pine Bluff, Arkansas

Audit Committee, Board of Directors and Stockholders

Simmons First National Corporation

Pine Bluff, Arkansas

We have reviewed the accompanying consolidated balance sheet of SIMMONS FIRST NATIONAL CORPORATION as of June 30, 2007, and the related consolidated statements of income for the three-month and six-month periods ended June 30, 2007 and 2006, and the related consolidated statements of stockholders’ equity and cash flows for the six-month periods ended June 30, 2007 and 2006. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2006, and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended (not presented herein): and in our report dated February 19, 2007, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2006, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

	BKD, LLP

	/s/ BKD, LLP

Pine Bluff, Arkansas

August 3, 2007

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

Simmons First National Corporation recorded earnings of $7,031,000, or $0.49 diluted earnings per share for the second quarter of 2007, compared to earnings of $7,296,000, or $0.51 diluted earnings per share for same period in 2006. This represents a $265,000, or 3.6% decrease in the second quarter 2007 earnings compared to 2006. From June 30, 2006 to June 30, 2007, quarterly diluted earnings per share decreased by $0.02, or 3.9%. Annualized return on average assets and annualized return on average stockholders’ equity for the three-month period ended June 30, 2007, were 1.07% and 10.64%, compared to 1.15% and 11.77%, respectively, for the same period in 2006. The decrease in earnings for the quarter compared to the same period last year was primarily due to a decline in NSF income and to one-time income items recorded during the quarter last year.

Earnings for the six-month period ended June 30, 2007, were $13,668,000, or $0.95 per diluted share. These earnings reflect an increase of $384,000, or $0.03 per share, when compared to the six-month period ended June 30, 2006, earnings of $13,284,000, or $0.92 per diluted share. Annualized return on average assets and annualized return on average stockholders’ equity for the six-month period ended June 30, 2007, were 1.04% and 10.45%, compared to 1.06% and 10.83%, respectively, for the same period in 2006.

The non-performing assets ratio (the sum of non-performing loans and foreclosed assets divided by the sum of total loans and foreclosed assets) was 67 basis points both at June 30, 2007 and December 31, 2006. Non-performing loans to total loans were 58 basis points at the end of the quarter, compared to 56 basis points at December 31, 2006. The allowance for loan losses equaled 237% of non-performing loans as of June 30, 2007, compared to 252% as of year-end 2006. The allowance for loan losses as a percent of total loans equaled 1.38% and 1.42% as of June 30, 2007 and December 31, 2006, respectively.

Annualized net charge-offs to total loans for the second quarter of 2007 were 17 basis points. Excluding credit cards, annualized net charge-offs to total loans were 10 basis points. The credit card annualized net charge-offs as a percent of the credit card portfolio were 1.04% for the quarter ended June 30, 2007, more than 400 basis points below the most recently published industry average of 5.06%. For the six-month period ended June 30, 2007, the credit card annualized net charge-offs as a percent of the credit card portfolio were 1.23%. Credit card charge-offs increased during the fourth quarter of 2005 due to a new bankruptcy law that went into effect in October of 2005. While bankruptcy filings have declined significantly from the high levels of the fourth quarter of 2005, the Company does not expect the year-to-date results to be maintained throughout the balance of 2007. The Company anticipates credit card charge-offs will gradually return to the Company’s more historical level in excess of 2%.

Total assets for the Company at June 30, 2007, were $2.660 billion, an increase of $9.0 million, or 0.3% from December 31, 2006. Stockholders’ equity at the end of the second quarter of 2007 was $263.3 million, a $4.3 million, or 1.7% increase from December 31, 2006.

Simmons First National Corporation is an Arkansas based financial holding company with eight community banks in Pine Bluff, Lake Village, Jonesboro, Rogers, Searcy, Russellville, El Dorado and Hot Springs, Arkansas. The Company's eight banks conduct financial operations from 86 offices, of which 82 are financial centers, located in 48 communities.

CRITICAL ACCOUNTING POLICIES

Overview

Management has reviewed its various accounting policies. Based on this review management believes the policies most critical to the Company are the policies associated with its lending practices including the accounting for the allowance for loan losses, treatment of goodwill, recognition of fee income, estimates of income taxes and employee benefit plans as it relates to stock options.

Loans

Loans which the Company has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance adjusted for any loans charged-off, any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. Interest income is reported on the accrual method and includes amortization of net deferred loan fees and costs over the estimated life of the loan. Generally, loans are placed on non-accrual status at ninety days past due and interest is considered a loss, unless the loan is well secured and in the process of collection.

Discounts and premiums on purchased residential real estate loans are amortized to income using the interest method over the remaining period to contractual maturity, adjusted for anticipated prepayments. Discounts and premiums on purchased consumer loans are recognized over the expected lives of the loans using methods that approximate the interest method.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance is maintained at a level considered adequate to provide for potential loan losses related to specifically identified loans as well as probable credit losses inherent in the remainder of the loan portfolio that have been incurred as of period end. This estimate is based on management's evaluation of the loan portfolio, as well as on prevailing and anticipated economic conditions and historical losses by loan category. General reserves have been established, based upon the aforementioned factors and allocated to the individual loan categories. Allowances are accrued on specific loans evaluated for impairment for which the basis of each loan, including accrued interest, exceeds the discounted amount of expected future collections of interest and principal or, alternatively, the fair value of loan collateral. The unallocated reserve generally serves to compensate for the uncertainty in estimating loan losses, including the possibility of changes in risk ratings and specific reserve allocations in the loan portfolio as a result of the Company’s ongoing risk management system.

A loan is considered impaired when it is probable that the Company will not receive all amounts due according to the contractual terms of the loan. This includes loans that are delinquent 90 days or more, nonaccrual loans and certain other loans identified by management. Certain other loans identified by management consist of performing loans with specific allocations of the allowance for loan losses. Specific allocations are applied when quantifiable factors are present requiring a greater allocation than that established using the classified asset approach, as defined by the Office of the Comptroller of the Currency. Accrual of interest is discontinued and interest accrued and unpaid is removed at the time such amounts are delinquent 90 days, unless management is aware of circumstances which warrant continuing the interest accrual. Interest is recognized for nonaccrual loans only upon receipt and only after all principal amounts are current according to the terms of the contract.

Goodwill

Goodwill represents the excess of cost over the fair value of net assets of acquired subsidiaries and branches. Financial Accounting Standards Board (FASB) Statement No. 142 and No. 147 eliminated the amortization for these assets as of January 1, 2002. While goodwill is not amortized, impairment testing of goodwill is performed annually, or more frequently if certain conditions occur. The Company did not record impairment of goodwill in 2007 or 2006.

Core Deposit Premiums

Core deposit premiums are being amortized using both straight-line and accelerated methods over periods ranging from 8 to 11 years. Such assets are periodically evaluated as to the recoverability of their carrying value.

Fee Income

Periodic credit card fees, net of direct origination costs, are recognized as revenue on a straight-line basis over the period the fee entitles the cardholder to use the card. Origination fees and costs for other loans are being amortized over the estimated life of the loan.

Income Taxes

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, on January 1, 2007. See Note 6 – Income Taxes in the accompanying notes to consolidated financial statements included elsewhere in this report for additional information.

Employee Benefit Plans

The Company has stock-based employee compensation plans and recognizes compensation expense for stock options in accordance with FASB Statement No. 123, Share-Based Payment (Revised 2004).

NET INTEREST INCOME

Overview

Net interest income, the Company's principal source of earnings, is the difference between the interest income generated by earning assets and the total interest cost of the deposits and borrowings obtained to fund those assets. Factors that determine the level of net interest income include the volume of earning assets and interest bearing liabilities, yields earned and rates paid, the level of non-performing loans and the amount of non-interest bearing liabilities supporting earning assets. Net interest income is analyzed in the discussion and tables below on a fully taxable equivalent basis. The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate of 37.50%.

The Company’s practice is to limit exposure to interest rate movements by maintaining a significant portion of earning assets and interest bearing liabilities in short-term repricing. Historically, approximately 70% of the Company’s loan portfolio and approximately 80% of the Company’s time deposits have repriced in one year or less. These historical percentages are consistent with the Company’s current interest rate sensitivity.

Net Interest Income Quarter-to-Date Analysis

For the three-month period ended June 30, 2007, net interest income on a fully taxable equivalent basis was $23.7 million, an increase of $654,000, or 2.8%, from the same period in 2006. The increase in net interest income was the result of a $4.6 million increase in interest income offset by a $3.9 million increase in interest expense.

The $4.6 million increase in interest income primarily is the result of a 49 basis point increase in yield on earning assets associated with the repricing to a higher interest rate environment, as well as a $97.5 million increase in average interest earning assets due to internal growth. The growth in average interest earning assets resulted in a $1.9 million improvement in interest income. The growth in average loans accounted for $1.6 million of this increase. The higher interest rates accounted for a $2.7 million increase in interest income. The most significant component of this increase was the $1.7 million increase associated with the repricing of the Company’s loan portfolio that resulted from loans that matured during the period or were tied to a rate that fluctuated with changes in market rates. Historically, approximately 70% of the Company’s loan portfolio reprices in one year or less. As a result, the average rate earned on the loan portfolio increased 38 basis points from 7.43% to 7.81%.

The $3.9 million increase in interest expense is the result of a 64 basis point increase in cost of funds due to competitive repricing during a higher interest rate environment, coupled with an $84.0 million increase in average interest bearing liabilities generated through internal growth. The higher interest rates accounted for a $3.1 million increase in interest expense. The most significant component of this increase was the $2.3 million increase associated with the repricing of the Company’s time deposits that resulted from time deposits that matured during the period or were tied to a rate that fluctuated with changes in market rates. Historically, approximately 80% of the Company’s time deposits reprice in one year or less. As a result, the average rate paid on time deposits increased 86 basis points from 3.83% to 4.69%. The higher level of average interest bearing liabilities resulted in an $862,000 increase in interest expense. More specifically, the higher level of average interest bearing liabilities was the result of an increase of approximately $93.7 million from internal deposit growth partially offset by a decrease of $9.7 million in federal funds purchased and other debt.

Net Interest Income Year-to-Date Analysis

For the six-month period ended June 30, 2007, net interest income on a fully taxable equivalent basis was $46.7 million, an increase of $979,000, or 2.1%, from the same period in 2006. The increase in net interest income was the result of a $10.3 million increase in interest income offset by a $9.3 million increase in interest expense.

The $10.3 million increase in interest income primarily is the result of a 55 basis point increase in yield on earning assets associated with the repricing to a higher interest rate environment, as well as a $115.7 million increase in average interest earning assets due to internal growth. The growth in average interest earning assets resulted in a $4.1 million improvement in interest income. The growth in average loans accounted for $3.2 million of this increase. The higher interest rates accounted for a $6.1 million increase in interest income. The most significant component of this increase was the $4.1 million increase associated with the repricing of the Company’s loan portfolio that resulted from loans that matured during the period or were tied to a rate that fluctuated with changes in market rates. Historically, approximately 70% of the Company’s loan portfolio reprices in one year or less. As a result, the average rate earned on the loan portfolio increased 48 basis points from 7.32% to 7.80%.

The $9.3 million increase in interest expense is the result of a 75 basis point increase in cost of funds due to competitive repricing during a higher interest rate environment, coupled with a $107.1 million increase in average interest bearing liabilities generated through internal growth. The higher interest rates accounted for a $7.1 million increase in interest expense. The most significant component of this increase was the $5.3 million increase associated with the repricing of the Company’s time deposits that resulted from time deposits that matured during the period or were tied to a rate that fluctuated with changes in market rates. Historically, approximately 80% of the Company’s time deposits reprice in one year or less. As a result, the average rate paid on time deposits increased 97 basis points from 3.69% to 4.66%. The higher level of average interest bearing liabilities resulted in a $2.2 million increase in interest expense. More specifically, the higher level of average interest bearing liabilities was the result of an increase of approximately $109.4 million from internal deposit growth partially offset by a decrease of $2.3 million in federal funds purchased and other debt.

Net Interest Margin

The Company’s net interest margin decreased 5 basis points to 3.96% for the three-month period ended June 30, 2007, when compared to 4.01% for the same period in 2006. This decrease in the net interest margin was primarily due to the increase in the cost of funds resulting from deposit repricing, coupled with the effect of the inverted yield curve between short-term and long-term interest rates. Net interest margin increased by 8 basis points from the previous quarter, the second consecutive improvement in net interest margin following seven successive quarterly declines. The margin improvement was due primarily to the improvement in the yield on securities from maturities and repricing during the quarter. The rate of increase in the average cost of deposits also slowed more rapidly during the quarter. Due to the current yield curve, the competitive deposit market, and the recent uncertainty relative to inflationary pressures, the Company anticipates a slightly improving margin for the balance of 2007.

Net Interest Income Tables

Table 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the three-month and six-month periods ended June 30, 2007 and 2006, respectively, as well as changes in fully taxable equivalent net interest margin for the three-month and six-month periods ended June 30, 2007 versus June 30, 2006.

Table 1: Analysis of Net Interest Income

(FTE =Fully Taxable Equivalent)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2007			2006			2007			2006

Interest income	$	41,800		$	37,270		$	82,949		$	72,784
FTE adjustment		857			804			1,683			1,584

Interest income - FTE		42,657			38,074			84,632			74,368
Interest expense		19,007			15,078			37,925			28,640

Net interest income – FTE	$	23,650		$	22,996		$	46,707		$	45,728

Yield on earning assets – FTE		7.14	%		6.65	%		7.10	%		6.55	%
Cost of interest bearing liabilities		3.72	%		3.08	%		3.71	%		2.96	%
Net interest spread – FTE		3.42	%		3.57	%		3.39	%		3.59	%
Net interest margin – FTE		3.96	%		4.01	%		3.92	%		4.03	%

Table 2: Changes in Fully Taxable Equivalent Net Interest Margin

	Three Months Ended			Six Months Ended
	June 30,			June 30,
(In thousands)	2007 vs. 2006			2007 vs. 2006

Increase due to change in earning assets	$	1,866		$	4,109
Increase due to change in earning asset yields		2,717			6,155
Decrease due to change in interest
bearing liabilities		(863	)		(2,202	)
Decrease due to change in interest rates
paid on interest bearing liabilities		(3,066	)		(7,083	)
Increase in net interest income	$	654		$	979

Table 3 shows, for each major category of earning assets and interest bearing liabilities, the average (computed on a daily basis) amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for the three-month and six-month periods ended June 30, 2007 and 2006. The table also shows the average rate earned on all earning assets, the average rate expensed on all interest bearing liabilities, the net interest spread and the net interest margin for the same periods. The analysis is presented on a fully taxable equivalent basis. Non-accrual loans were included in average loans for the purpose of calculating the rate earned on total loans.

Table 3: Average Balance Sheets and Net Interest Income Analysis

	Three Months Ended June 30
	2007						2006
	Average		Income/		Yield/		Average		Income/		Yield/
($ in thousands)	Balance		Expense		Rate(%)		Balance		Expense		Rate(%)

ASSETS
Earning Assets
Interest bearing balances
due from banks	$	22,636	$	297		5.26	$	21,929	$	259		4.74
Federal funds sold		25,263		395		6.27		16,138		192		4.77
Investment securities - taxable		401,884		4,581		4.57		411,548		3,782		3.69
Investment securities - non-taxable		129,169		2,093		6.50		119,138		1,914		6.44
Mortgage loans held for sale		9,241		133		5.77		8,426		128		6.09
Assets held in trading accounts		4,567		35		3.07		4,575		19		1.67
Loans		1,802,917		35,123		7.81		1,716,396		31,780		7.43
Total interest earning assets		2,395,677		42,657		7.14		2,298,150		38,074		6.65
Non-earning assets		250,528						247,112
Total assets	$	2,646,205					$	2,545,262

LIABILITIES AND
STOCKHOLDERS’ EQUITY
Liabilities
Interest bearing liabilities
Interest bearing transaction
and savings accounts	$	739,972	$	3,324		1.80	$	751,262	$	2,909		1.55
Time deposits		1,123,898		13,144		4.69		1,018,887		9,732		3.83
Total interest bearing deposits		1,863,870		16,468		3.54		1,770,149		12,641		2.86
Federal funds purchased and
securities sold under agreement
to repurchase		99,808		1,292		5.19		96,041		1,064		4.44
Other borrowed funds
Short-term debt		3,088		49		6.36		15,804		225		5.71
Long-term debt		82,177		1,198		5.85		82,957		1,148		5.55
Total interest bearing liabilities		2,048,943		19,007		3.72		1,964,951		15,078		3.08
Non-interest bearing liabilities
Non-interest bearing deposits		309,753						311,102
Other liabilities		22,465						20,486
Total liabilities		2,381,161						2,296,539
Stockholders’ equity		265,044						248,723
Total liabilities and
stockholders’ equity	$	2,646,205					$	2,545,262
Net interest spread						3.42						3.57
Net interest margin			$	23,650		3.96			$	22,996		4.01

	Six Months Ended June 30
	2007						2006
	Average		Income/		Yield/		Average		Income/		Yield/
(In thousands)	Balance		Expense		Rate(%)		Balance		Expense		Rate(%)

ASSETS
Earning Assets
Interest bearing balances
due from banks	$	30,254	$	807		5.38	$	24,949	$	556		4.49
Federal funds sold		38,251		1,096		5.78		16,186		367		4.57
Investment securities - taxable		404,180		9,067		4.52		410,306		7,452		3.66
Investment securities - non-taxable		126,034		4,069		6.51		117,899		3,769		6.45
Mortgage loans held for sale		7,809		236		6.09		7,498		228		6.13
Assets held in trading accounts		4,656		53		2.30		4,604		44		1.93
Loans		1,792,579		69,304		7.80		1,706,626		61,952		7.32
Total interest earning assets		2,403,763		84,632		7.10		2,288,068		74,368		6.55
Non-earning assets		251,315						246,291
Total assets	$	2,655,078					$	2,534,359

LIABILITIES AND
STOCKHOLDERS’ EQUITY
Liabilities
Interest bearing liabilities
Interest bearing transaction
and savings accounts	$	735,617	$	6,503		1.78	$	749,154	$	5,453		1.47
Time deposits		1,130,966		26,161		4.66		1,008,021		18,456		3.69
Total interest bearing deposits		1,866,583		32,664		3.53		1,757,175		23,909		2.74
Federal funds purchased and
securities sold under agreement
to repurchase		108,859		2,748		5.09		102,669		2,168		4.26
Other borrowed funds
Short-term debt		3,557		118		6.69		10,775		321		6.01
Long-term debt		82,181		2,395		5.88		83,458		2,242		5.42
Total interest bearing liabilities		2,061,180		37,925		3.71		1,954,077		28,640		2.96
Non-interest bearing liabilities
Non-interest bearing deposits		307,897						313,640
Other liabilities		22,235						19,248
Total liabilities		2,391,312						2,286,965
Stockholders’ equity		263,766						247,394
Total liabilities and
stockholders’ equity	$	2,655,078					$	2,534,359
Net interest spread						3.39						3.59
Net interest margin			$	46,707		3.92			$	45,728		4.03

Table 4 presents changes in interest income and interest expense, resulting from changes in volume and changes in interest rates for the three-month and six-month period ended June 30, 2007, as compared to the same period of the prior year. The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates, in proportion to the relationship of absolute dollar amounts of the changes in rates and volume.

Table 4: Volume/Rate Analysis

	Three Months Ended June 30,									Six Months Ended June 30,
	2007 over 2006									2007 over 2006
(In thousands, on a fully				Yield/									Yield/
taxable equivalent basis)	Volume			Rate			Total			Volume			Rate			Total

Increase (decrease) in

Interest income
Interest bearing balances
due from banks	$	8		$	30		$	38		$	131		$	120		$	251
Federal funds sold		131			72			203			611			118			729
Investment securities - taxable		(91	)		890			799			(114	)		1,729			1,615
Investment securities - non-taxable		163			16			179			263			37			300
Mortgage loans held for sale		12			(7	)		5			9			(1	)		8
Assets held in trading accounts		--			16			16			--			9			9
Loans		1,643			1,700			3,343			3,209			4,143			7,352

Total		1,866			2,717			4,583			4,109			6,155			10,264

Interest expense
Interest bearing transaction and
savings accounts		(45	)		460			415			(101	)		1,151			1,050
Time deposits		1,074			2,338			3,412			2,438			5,267			7,705
Federal funds purchased
and securities sold under
agreements to repurchase		43			185			228			136			444			580
Other borrowed funds
Short-term debt		(199	)		23			(176	)		(237	)		34			(203	)
Long-term debt		(10	)		60			50			(34	)		187			153

Total		863			3,066			3,929			2,202			7,083			9,285
Increase (decrease) in net
interest income	$	1,003		$	(349	)	$	654		$	1,907		$	(928	)	$	979

PROVISION FOR LOAN LOSSES

The provision for loan losses represents management's determination of the amount necessary to be charged against the current period's earnings, in order to maintain the allowance for loan losses at a level, which is considered adequate, in relation to the estimated risk inherent in the loan portfolio. The level of provision to the allowance is based on management's judgment, with consideration given to the composition, maturity and other qualitative characteristics of the portfolio, historical loan loss experience, assessment of current economic conditions, past due and non-performing loans and net loan loss experience. It is management's practice to review the allowance on a quarterly basis to determine the level of provision made to the allowance after considering the factors noted above.

The provision for loan losses for the three-month period ended June 30, 2007, was $831,000, compared to $789,000 for the three-month period ended June 30, 2006, an increase of $42,000. The provision for loan losses for the six-month period ended June 30, 2007, was $1.6 million, compared to $2.5 million for the six-month period ended June 30, 2006, a reduction of $0.9 million. The provision reduction for the six-month period was primarily driven by two factors.

First, there was improvement in the credit quality of the loan portfolio in 2006, particularly due to the payoff of two large credit relationships after March 31, 2006. One was upgraded two levels from substandard to watch, based on improved financial condition of the borrower, and was ultimately paid off. The other impaired relationship, graded substandard, was refinanced with another financial institution. A specific reserve was applied to both of these credit relationships. Additional loans were classified in 2006 and in 2007 as non-performing based upon various criteria; however, there were no specific reserve allocations required for these loans. Second, the Company continued to see a sustained decrease in credit card charge-offs, recording 1.23% credit card net charge-offs as a percent of the credit card portfolio during the six-months ended June 30, 2007, still well below its historical level in excess of 2%. The provision for loan losses after the first quarter of 2006 was reduced due to the improvement in credit quality of loans with specific reserves and the continued significant reduction in credit card charge-offs.

NON-INTEREST INCOME

Total non-interest income was $11.3 million for the three-month period ended June 30, 2007, compared to $11.5 million for the same period in 2006. For the six-months ended June 30, 2007, non-interest income was $22.8 million compared to the $22.1 million reported for the same period ended June 30, 2006. Non-interest income is principally derived from recurring fee income, which includes service charges, trust fees and credit card fees. Non-interest income also includes income on the sale of mortgage loans, investment banking income, premiums on sale of student loans, income from the increase in cash surrender values of bank owned life insurance, and gains (losses) from sales of securities.

Table 5 details non-interest income for the three-month and six-month periods ended June 30, 2007 and 2006, respectively, as well as changes in 2007 from 2006.

Table 5: Non-Interest Income

	Three Months				2007					Six Months				2007
	Ended June 30				Change from					Ended June 30				Change from
(In thousands)	2007		2006		2006					2007		2006		2006

Trust income	$	1,474	$	1,293	$	181		14.00	%	$	3,111	$	2,660	$	451		16.95	%
Service charges on
deposit accounts		3,656		4,209		(553	)	(13.14	)		7,153		7,972		(819	)	(10.27	)
Other service charges and fees		692		592		100		16.89			1,500		1,250		250		20.00
Income on sale of mortgage loans,
net of commissions		727		755		(28	)	(3.71	)		1,407		1,431		(24	)	(1.68	)
Income on investment banking,
net of commissions		153		90		63		70.00			303		197		106		53.81
Credit card fees		3,025		2,699		326		12.08			5,674		5,157		517		10.03
Premiums on sale of student loans		741		659		82		12.44			1,623		1,395		228		16.34
Bank owned life insurance income		359		415		(56	)	(13.49	)		723		716		7		0.98
Other income		510		804		(294	)	(36.57	)		1,298		1,350		(52	)	(3.85	)
Total non-interest income	$	11,337	$	11,516	$	(179	)	(1.55	)%	$	22,792	$	22,128	$	664		3.00	%

Recurring fee income for the three-month period ended June 30, 2007, was $8.8 million, an increase of $54,000, or 0.6% from the three-month period ended June 30, 2006. Trust income increased by $181,000, due mainly to new accounts and an improvement in fee structure. Service charges on deposit accounts decreased by $553,000 due to reduced income on insufficient funds (NSF) charges. The decrease in NSF income is primarily due to the increase in consumer use of debit cards and internet banking, and the associated decrease in paper transactions. Other service charges and fees increased by $100,000, primarily due to an increase in ATM income, driven by an increase in pin based debit card volume and an improvement in the fee structure. Credit card fees increased by $326,000 due primarily to a higher volume of credit and debit card transactions.

Recurring fee income for the six-month period ended June 30, 2007, was $17.4 million, an increase of $399,000, or 2.3% from the six-month period ended June 30, 2006. Trust Income increased by $451,000, due mainly to new accounts and an improvement in fee structure. Service charges on deposit accounts decreased by $819,000 due to reduced income on insufficient funds charges. The decrease in NSF income is primarily due to the increase in consumer use of debit cards and internet banking, and the associated decrease in paper transactions. The Company’s debit card transaction volume for the six-month period ended June 30, 2007, increased 28% over the same period of 2006. Other service charges and fees increased by $250,000, primarily due to an increase in ATM income, driven by an increase in pin based debit card volume and an improvement in the fee structure. Credit card fees increase by $517,000 due primarily to a higher volume of credit and debit card transactions.

Premiums of sale of student loans increased by $228,000 for the six-months ended June 30, 2007, compared to the same period in 2006, due primarily to early sales to avoid losing the premium to consolidation lenders.

Other non-interest income for the three-months ended June 30, 2007, was $510,000, a decrease of $294,000 compared to the three-months ended June 30, 2006. The decrease primarily resulted from a one-time distribution of approximately $90,000 the Company received in the second quarter of 2006 as part of a contract with VISA DPS, along with additional income from equity investments received in the second quarter of 2006.

There were no gains or losses on sale of securities during the three-months or six-months ended June 30, 2007 or 2006.

NON-INTEREST EXPENSE

Non-interest expense consists of salaries and employee benefits, occupancy, equipment, foreclosure losses and other expenses necessary for the operation of the Company. Management remains committed to controlling the level of non-interest expense, through the continued use of expense control measures that have been installed. The Company utilizes an extensive profit planning and reporting system involving all affiliates. Based on a needs assessment of the business plan for the upcoming year, monthly and annual profit plans are developed, including manpower and capital expenditure budgets. These profit plans are subject to extensive initial reviews and monitored by management on a monthly basis. Variances from the plan are reviewed monthly and, when required, management takes corrective action intended to ensure financial goals are met. Management also regularly monitors staffing levels at each affiliate, to ensure productivity and overhead are in line with existing workload requirements.

Non-interest expense for the three-month and six-month periods ended June 30, 2007, was $23.0 million and $46.2 million, an increase of $710,000, or 3.2%, and $1.8 million, or 4.1%, respectively, from the same periods in 2006. These increases are primarily the result of an increase in normal ongoing operating expenses and the additional expense associated with the operation of three new financial centers opened in 2006 and early 2007. Two other items contributed significantly to the increase in non-interest expense.

Credit card expense increased for the three-month and six-month periods ended June 30, 2007, over the same periods in 2006 by $196,000, or 26.4%, and $427,000, or 28.8%, respectively. These increases were primary due to the increased volume in credit card applications, card creation, interchange and other related expense resulting from the previously reported initiatives the Company has taken to stabilize its credit card portfolio.

Other non-interest expense for the six-month period ended June 30, 2007, was $5.6 million, an increase of $424,000 over the six-months ended June 30, 2006. The increase is primarily due to student loan origination fees paid by the Company during 2007. The Federal Student Loan Program is phasing out origination fees on its loans over the next three years. Most of the national market began waiving and absorbing the fees themselves during the phase-out period; therefore, as a leader in the Arkansas student loan market, the Company decided to do the same in order to prevent putting itself at a competitive disadvantage. Proper accounting for these fees requires them to be amortized over the period in which the Company holds the loans. The Company expensed $300,000 of student loan origination fees during the six-months ended June 30, 2007, compared to none in the same period of 2006. As future loans are originated with waived fees, management anticipates this expense to increase through March 31, 2008, then to gradually decline each quarter through the end of the three year phase-out period, March 31, 2009. Thereafter, the expense should decline as the remaining fees are amortized over the remaining life of the loans. The Company believes the full year 2007 impact of this expense will decrease income, net of income taxes, by approximately $450,000, or $.03 diluted earnings per share.

Table 6 below details non-interest expense for the three-month and six-month periods ended June 30, 2007 and 2006, respectively, as well as changes in 2007 from 2006.

Table 6: Non-Interest Expense

	Three Months				2007					Six Months				2007
	Ended June 30				Change from					Ended June 30				Change from
(In thousands)	2007		2006		2006					2007		2006		2006

Salaries and employee benefits	$	13,903	$	13,466	$	437		3.25	%	$	27,628	$	26,971	$	657		2.44	%
Occupancy expense, net		1,624		1,541		83		5.39			3,273		3,061		212		6.93
Furniture and equipment expense		1,507		1,456		51		3.50			2,973		2,874		99		3.44
Loss on foreclosed assets		36		40		(4	)	(10.00	)		59		73		(14	)	(19.18	)
Other operating expenses
Professional services		549		639		(90	)	(14.08	)		1,291		1,302		(11	)	(0.84	)
Postage		605		562		43		7.65			1,183		1,135		48		4.23
Telephone		458		507		(49	)	(9.66	)		869		978		(109	)	(11.15	)
Credit card expenses		938		742		196		26.42			1,910		1,483		427		28.79
Operating supplies		431		411		20		4.87			890		815		75		9.20
FDIC insurance		68		71		(3	)	(4.23	)		135		140		(5	)	(3.57	)
Amortization of intangibles		207		209		(2	)	(0.96	)		413		416		(3	)	(0.72	)
Other expense		2,685		2,657		28		1.05			5,602		5,178		424		8.19
Total non-interest expense	$	23,011	$	22,301	$	710		3.18	%	$	46,226	$	44,426	$	1,800		4.05	%

LOAN PORTFOLIO

The Company's loan portfolio averaged $1.803 billion and $1.716 billion during the first six months of 2007 and 2006, respectively. As of June 30, 2007, total loans were $1.821 billion, an increase of $37.9 million from December 31, 2006. The most significant components of the loan portfolio were loans to businesses (commercial loans, commercial real estate loans and agricultural loans) and individuals (consumer loans, credit card loans and single-family residential real estate loans).

The Company seeks to manage its credit risk by diversifying its loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral, obtaining and monitoring collateral, providing an adequate allowance for loan losses and regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose and industry and, in the case of credit card loans, which are unsecured, by geographic region. The Company seeks to use diversification within the loan portfolio to reduce credit risk, thereby minimizing the adverse impact on the portfolio, if weaknesses develop in either the economy or a particular segment of borrowers. Collateral requirements are based on credit assessments of borrowers and may be used to recover the debt in case of default. The Company uses the allowance for loan losses as a method to value the loan portfolio at its estimated collectible amount. Loans are regularly reviewed to facilitate the identification and monitoring of deteriorating credits.

Consumer loans consist of credit card loans, student loans and other consumer loans. Consumer loans were $348.7 million at June 30, 2007, or 19.1% of total loans, compared to $370.8 million, or 20.8% of total loans at December 31, 2006. The consumer loan decrease from December 31, 2006 to June 30, 2007 is the result of the Company’s seasonal decline and early sale of student loans, along with a seasonal decline in the Company’s credit card portfolio.

As a general rule, the Company’s credit card portfolio experiences seasonal fluctuations, reaching its highest level during the fourth quarter and dropping off with paydowns to its lowest level during the first quarter. The Company continues to experience significant competitive pressure from the credit card industry. From 2002 through 2005, the credit card portfolio decreased by approximately $10 million to $14 million each year, primarily due to closed accounts. However, the Company experienced a slow-down in this trend throughout 2006, with the credit card portfolio balance increasing by approximately $300,000 from December 31, 2005 to December 31, 2006. The credit card portfolio balance at June 30, 2007, increased by $7.9 million, or 5.94%, compared to the balance at June 30, 2006.

After five consecutive years of net decreases in the number of credit card accounts, the Company experienced an addition of 1,650 net new accounts in 2006. This year, through June 30, 2007, the Company has added over 6,400 net new accounts. Management believes the increase in outstanding balances and the addition of new accounts are the result of the introduction of several initiatives over the past two years to make the Company’s credit card products more competitive. The latest of those initiatives was the introduction of a 7.25% fixed rate card in July 2006, with no fees and no rewards. While these results are positive, because of the significant competitive pressures in the credit card industry, management cannot be assured that a sustained growth trend has yet been established.

Real estate loans consist of construction loans, single-family residential loans and commercial real estate loans. Real estate loans were $1.178 billion at June 30, 2007, or 64.7% of total loans, compared to the $1.154 billion, or 64.7% of total loans at December 31, 2006. Commercial real estate loans increased by $27.6 million from December 31, 2006 to June 30, 2007, primarily due to increased loan demand in various growth areas of Arkansas.

Commercial loans consist of commercial loans, agricultural loans and loans to financial institutions. Commercial loans were $284.9 million at June 30, 2007, or 15.6% of total loans, compared to $245.1 million, or 13.7% of total loans at December 31, 2006. The commercial loan increase is primarily due to seasonal increases in agricultural and commercial loans.

The amounts of loans outstanding at the indicated dates are reflected in Table 7, according to type of loan.

Table 7: Loan Portfolio

	June 30,		December 31,
(In thousands)	2007		2006
Consumer
Credit cards	$	140,327	$	143,359
Student loans		68,477		84,831
Other consumer		139,908		142,596
Real Estate
Construction		265,705		277,411
Single family residential		372,026		364,450
Other commercial		540,042		512,404
Commercial
Commercial		183,349		178,028
Agricultural		96,213		62,293
Financial institutions		5,351		4,766
Other		10,032		13,357

Total loans before allowance for loan losses	$	1,821,430	$	1,783,495

ASSET QUALITY

A loan is considered impaired when it is probable that the Company will not receive all amounts due according to the contracted terms of the loans. Impaired loans include non-performing loans (loans past due 90 days or more and nonaccrual loans) and certain other loans identified by management that are still performing.

Non-performing loans are comprised of (a) nonaccrual loans, (b) loans that are contractually past due 90 days and (c) other loans for which terms have been restructured to provide a reduction or deferral of interest or principal, because of deterioration in the financial position of the borrower. The subsidiary banks recognize income principally on the accrual basis of accounting. When loans are classified as nonaccrual, generally, the accrued interest is charged off and no further interest is accrued. Loans, excluding credit card loans, are placed on a nonaccrual basis either: (1) when there are serious doubts regarding the collectability of principal or interest, or (2) when payment of interest or principal is 90 days or more past due and either (i) not fully secured or (ii) not in the process of collection. If a loan is determined by management to be uncollectible, the portion of the loan determined to be uncollectible is then charged to the allowance for loan losses.

Credit card loans are classified as impaired when payment of interest or principal is 90 days past due. Litigation accounts are placed on nonaccrual until such time as deemed uncollectible. Credit card loans are generally charged off when payment of interest or principal exceeds 180 days past due, but are turned over to the credit card recovery department, to be pursued until such time as they are determined, on a case-by-case basis, to be uncollectible.

At June 30, 2007, impaired loans were $11.8 million compared to $12.8 million at December 31, 2006.

Table 8 presents information concerning non-performing assets, including nonaccrual and other real estate owned.

Table 8: Non-performing Assets

	June 30,			December 31,
($ in thousands)	2007			2006

Nonaccrual loans	$	9,521		$	8,958
Loans past due 90 days or more
(principal or interest payments)		1,133			1,097
Total non-performing loans		10,654			10,055

Other non-performing assets
Foreclosed assets held for sale		1,484			1,940
Other non-performing assets		30			52
Total other non-performing assets		1,514			1,992

Total non-performing assets	$	12,168		$	12,047

Allowance for loan losses to
non-performing loans		236.50	%		252.46	%
Non-performing loans to total loans		0.58	%		0.56	%
Non-performing assets to total assets		0.46	%		0.45	%
Non-performing assets ratio⁽¹⁾		0.67	%		0.67	%

(1) (Non-performing loans + foreclosed assets) / (total loans + foreclosed assets)

There was no interest income on the nonaccrual loans recorded for the six-month periods ended June 30, 2007 and 2006.

ALLOWANCE FOR LOAN LOSSES

Overview

The Company maintains an allowance for loan losses. This allowance is created through charges to income and maintained at a sufficient level to absorb expected losses in the Company’s loan portfolio. The allowance for loan losses is determined monthly based on management’s assessment of several factors such as 1) historical loss experience based on volumes and types, 2) reviews or evaluations of the loan portfolio and allowance for loan losses, 3) trends in volume, maturity and composition, 4) off balance sheet credit risk, 5) volume and trends in delinquencies and non-accruals, 6) lending policies and procedures including those for loan losses, collections and recoveries, 7) national, state and local economic trends and conditions, 8) concentrations of credit that might affect loss experience across one or more components of the loan portfolio, 9) the experience, ability and depth of lending management and staff and 10) other factors and trends, which will affect specific loans and categories of loans.

As the Company evaluates the allowance for loan losses, it is categorized as follows: 1) specific allocations, 2) allocations for classified assets with no specific allocation, 3) general allocations for each major loan category and 4) unallocated portion.

Specific Allocations

Specific allocations are made when factors are present requiring a greater reserve than would be required when using the assigned risk rating allocation. As a general rule, if a specific allocation is warranted, it is the result of an analysis of a previously classified credit or relationship. The evaluation process in specific allocations for the Company includes a review of appraisals or other collateral analysis. These values are compared to the remaining outstanding principal balance. If a loss is determined to be reasonably possible, the possible loss is identified as a specific allocation. If the loan is not collateral dependent, the measurement of loss is based on the expected future cash flows of the loan.

Allocations for Classified Assets with no Specific Allocation

The Company establishes allocations for loans rated “watch” through “doubtful” in accordance with the guidelines established by the regulatory agencies. A percentage rate is applied to each category of these loan categories to determine the level of dollar allocation.

General Allocations

The Company establishes general allocations for each major loan category. This section also includes allocations to loans which are collectively evaluated for loss such as credit cards, one-to-four family owner occupied residential real estate loans and other consumer loans. The allocations in this section are based on a historical review of loan loss experience and past due accounts. The Company gives consideration to trends, changes in loan mix, delinquencies, prior losses, and other related information.

Unallocated Portion

Allowance allocations other than specific, classified and general for the Company are included in unallocated.

Reserve for Unfunded Commitments

Historically, the Company has included reserves for unfunded commitments in the allowance for loan losses. On March 31, 2006, the reserve for unfunded commitments was reclassified from the allowance for loan losses to other liabilities. This reserve will be maintained at a level sufficient to absorb losses arising from unfunded loan commitments. The adequacy of the reserve for unfunded commitments is determined monthly based on methodology similar to the Company’s methodology for determining the allowance for loan losses. Future net adjustments to the reserve for unfunded commitments will be included in other non-interest expense.

An analysis of the allowance for loan losses is shown in Table 9.

Table 9: Allowance for Loan Losses

(In thousands)	2007		2006

Balance, beginning of year	$	25,385	$	26,923

Loans charged off
Credit card		1,360		1,193
Other consumer		729		495
Real estate		748		1,001
Commercial		330		391
Total loans charged off		3,167		3,080

Recoveries of loans previously charged off
Credit card		533		507
Other consumer		257		309
Real estate		403		411
Commercial		204		132
Total recoveries		1,397		1,359
Net loans charged off		1,770		1,721
Reclassification of reserve
related to unfunded commitments⁽¹⁾		--		(1,525	)
Provision for loan losses		1,582		2,497

Balance, June 30	$	25,197	$	26,174

Loans charged off
Credit card				1,261
Other consumer				747
Real estate				867
Commercial				926
Total loans charged off				3,801

Recoveries of loans previously charged off
Credit card				533
Other consumer				320
Real estate				490
Commercial				404
Total recoveries				1,747
Net loans charged off				2,054
Provision for loan losses				1,265

Balance, end of year			$	25,385

(1)	On March 31, 2006, the reserve for unfunded commitments was reclassified from the allowance for loan losses to other liabilities.

Provision for Loan Losses

The amount of provision to the allowance during the six-month periods ended June 30, 2007 and 2006, and for the year ended December 31, 2006, was based on management's judgment, with consideration given to the composition of the portfolio, historical loan loss experience, assessment of current economic conditions, past due and non-performing loans and net loan loss experience. It is management's practice to review the allowance on at least a quarterly basis, but generally on a monthly basis, to determine the level of provision made to the allowance after considering the factors noted above.

Allocated Allowance for Loan Losses

The Company utilizes a consistent methodology in the calculation and application of its allowance for loan losses. Because there are portions of the portfolio that have not matured to the degree necessary to obtain reliable loss statistics from which to calculate estimated losses, the unallocated portion of the allowance is an integral component of the total allowance. Although unassigned to a particular credit relationship or product segment, this portion of the allowance is vital to safeguard against the imprecision inherent when estimating credit losses.

Several factors in the national economy, including seventeen successive interest-rate increases by the Federal Reserve from June 2004 through June 2006, the effect of fuel prices on the commercial and consumer market, and certain loan sectors which may be exhibiting weaknesses, further justifies the need for unallocated reserves.

As of June 30, 2007, the allowance for loan losses reflects a decrease of approximately $188,000 from December 31, 2006. As a general rule, the allocation in each category within the allowance reflects the overall changes in loan portfolio mix.

The Company still has some concerns over the uncertainty of the economy and the impact of pricing in the poultry and timber industries in Arkansas. The Company is also cautious regarding the softening of the real estate market in Arkansas. Based on our analysis of loans within these business sectors, the Company believes the allowance for loan losses is adequate for the period ended June 30, 2007. Management actively monitors the status of these industries as they relate to the Company’s loan portfolio and makes changes to the allowance for loan losses as necessary.

An analysis of the allocation of allowance for loan losses is presented in Table 10.

Table 10: Allocation of Allowance for Loan Losses

	June 30, 2007				December 31, 2006
	Allowance		% of		Allowance		% of
($ in thousands)	Amount		loans⁽¹⁾		Amount		loans⁽¹⁾

Credit cards	$	3,337		7.7%	$	3,702		8.0%
Other consumer		1,534		11.4%		1,402		12.8%
Real estate		10,081		64.7%		9,835		64.7%
Commercial		2,519		15.6%		2,856		13.7%
Other		193		0.6%		--		0.8%
Unallocated		7,533				7,590

Total	$	25,197		100.0%	$	25,385		100.0%

(1) Percentage of loans in each category to total loans

DEPOSITS

Deposits are the Company’s primary source of funding for earning assets and are primarily developed through the Company’s network of 82 financial centers as of June 30, 2007. The Company offers a variety of products designed to attract and retain customers with a continuing focus on developing core deposits. The Company’s core deposits consist of all deposits excluding time deposits of $100,000 or more and brokered deposits. As of June 30, 2007, core deposits comprised 78.6% of the Company’s total deposits.

The Company continually monitors the funding requirements at each affiliate bank along with competitive interest rates in the markets it serves. Because the Company has a community banking philosophy, managers in the local markets establish the interest rates being offered on both core and non-core deposits. This approach ensures that the interest rates being paid are competitively priced for each particular deposit product and structured to meet each affiliate bank’s respective funding requirements. The Company believes it is paying a competitive rate, when compared with pricing in those markets. As a result, year-to-date internal deposit growth was $4.6 million. More specifically, total deposits as of June 30, 2007, were $2.180 billion versus $2.176 billion on December 31, 2006.

The Company manages its interest expense through deposit pricing and does not anticipate a significant change in total deposits. The Company believes that additional funds can be attracted and deposit growth can be accelerated through promotion and deposit pricing if it experiences accelerated loan demand or other liquidity needs beyond its current projections. The Company also utilizes brokered deposits as an additional source of funding to meet liquidity needs.

Total time deposits decreased approximately $22.4 million to $1.109 billion at June 30, 2007, from $1.131 billion at December 31, 2006. Non-interest bearing transaction accounts increased $2.7 million to $308.0 million at June 30, 2007, compared to $305.3 million at December 31, 2006. Interest bearing transaction and savings accounts were $763.0 million at June 30, 2007, a $24.3 million increase compared to $738.8 million on December 31, 2006. The Company had $45.0 million and $50.0 million of brokered deposits at June 30, 2007 and December 31, 2006, respectively.

LONG-TERM DEBT

During the six month period ended June 30, 2007, the Company decreased long-term debt by $712,000, or 0.9% from December 31, 2006. This decrease is primarily the result of scheduled principal pay downs on FHLB long-term advances.

CAPITAL

Overview

At June 30, 2007, total capital reached $263.3 million. Capital represents shareholder ownership in the Company – the book value of assets in excess of liabilities. At June 30, 2007, the Company’s equity to asset ratio was 9.90% compared to 9.77% at year-end 2006.

Capital Stock

At the Company’s annual shareholder meeting held on April 10, 2007, the shareholders approved an amendment to the Articles of Incorporation increasing the number of authorized shares of Class A, $0.01 par value, Common Stock from 30,000,000 to 60,000,000. Class A Common Stock is the Company’s only outstanding class of stock.

Stock Repurchase

Cash Dividends

The Company declared cash dividends on its common stock of $0.36 per share for the first six months of 2007 compared to $0.33 per share for the first six months of 2006. In recent years, the Company increased dividends no less than annually and presently plans to continue with this practice.

Parent Company Liquidity

The primary sources for payment of dividends by the Company to its shareholders and the share repurchase plan are the current cash on hand at the parent company plus the future dividends received from the eight affiliate banks. Payment of dividends by the eight affiliate banks is subject to various regulatory limitations. Reference is made to the Liquidity and Market Risk Management discussions of Item 3 – Quantitative and Qualitative Disclosure About Market Risk for additional information regarding the parent company’s liquidity.

Risk Based Capital

The Company’s subsidiaries are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). As of June 30, 2007, the Company meets all capital adequacy requirements to which it is subject.

As of the most recent notification from regulatory agencies, the subsidiaries were well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company and subsidiaries must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institutions’ categories.

The Company's risk-based capital ratios at June 30, 2007 and December 31, 2006, are presented in table 11.

Table 11: Risk-Based Capital

	June 30,			December 31,
($ in thousands)	2007			2006

Tier 1 capital
Stockholders’ equity	$	263,305		$	259,016
Trust preferred securities		30,000			30,000
Intangible assets		(64,144	)		(64,334	)
Unrealized loss on available-
for-sale securities, net of taxes		2,590			2,198

Total Tier 1 capital		231,751			226,880

Tier 2 capital
Qualifying unrealized gain on
available-for-sale equity securities		187			167
Qualifying allowance for loan losses		23,565			22,953

Total Tier 2 capital		23,752			23,120

Total risk-based capital	$	255,503		$	250,000

Risk weighted assets	$	1,882,040		$	1,831,063

Assets for leverage ratio	$	2,584,670		$	2,568,472

Ratios at end of period
Leverage ratio		8.97	%		8.83	%
Tier 1 capital		12.31	%		12.39	%
Total risk-based capital		13.58	%		13.65	%

Minimum guidelines
Leverage ratio		4.00	%		4.00	%
Tier 1 capital		4.00	%		4.00	%
Total risk-based capital		8.00	%		8.00	%

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

FORWARD-LOOKING STATEMENTS

Certain statements contained in this quarterly report may not be based on historical facts and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by reference to a future period(s) or by the use of forward-looking terminology, such as “anticipate,” “estimate,” “expect,” “foresee,” “may,” “might,” “will,” “would,” “could” or “intend,” future or conditional verb tenses, and variations or negatives of such terms. These forward-looking statements include, without limitation, those relating to the Company’s future growth, revenue, assets, asset quality, profitability and customer service, critical accounting policies, net interest margin, non-interest revenue, market conditions related to the Company’s stock repurchase program, allowance for loan losses, the effect of certain new accounting standards on the Company’s financial position, operations, cash flows, income tax deductions, credit quality, the level of credit losses from lending commitments, net interest revenue, interest rate sensitivity, loan loss experience, liquidity, capital resources, market risk, earnings, effect of pending litigation, acquisition strategy, legal and regulatory limitations and compliance and competition.

We caution the reader not to place undue reliance on the forward-looking statements contained in this Report in that actual results could differ materially from those indicated in such forward-looking statements, due to a variety of factors. These factors include, but are not limited to, changes in the Company’s operating or expansion strategy, availability of and costs associated with obtaining adequate and timely sources of liquidity, the ability to maintain credit quality, possible adverse rulings, judgments, settlements and other outcomes of pending litigation, the ability of the Company to collect amounts due under loan agreements, changes in consumer preferences, effectiveness of the Company’s interest rate risk management strategies, laws and regulations affecting financial institutions in general or relating to taxes, the effect of pending or future legislation, the ability of the Company to repurchase its Common Stock on favorable terms and other risk factors. Other relevant risk factors may be detailed from time to time in the Company’s press releases and filings with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of this Report.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Parent Company

The Company has leveraged its investment in subsidiary banks and depends upon the dividends paid to it, as the sole shareholder of the subsidiary banks, as a principal source of funds for dividends to shareholders, stock repurchase and debt service requirements. At June 30, 2007, undivided profits of the Company's subsidiaries were approximately $150.6 million, of which approximately $9 million was available for the payment of dividends to the Company without regulatory approval. In addition to dividends, other sources of liquidity for the Company are the sale of equity securities and the borrowing of funds.

Banking Subsidiaries

Generally speaking, the Company's banking subsidiaries rely upon net inflows of cash from financing activities, supplemented by net inflows of cash from operating activities, to provide cash used in investing activities. Typical of most banking companies, significant financing activities include: deposit gathering; use of short-term borrowing facilities, such as federal funds purchased and repurchase agreements; and the issuance of long-term debt. The banks' primary investing activities include loan originations and purchases of investment securities, offset by loan payoffs and investment maturities.

Liquidity represents an institution's ability to provide funds to satisfy demands from depositors and borrowers, by either converting assets into cash or accessing new or existing sources of incremental funds. A major responsibility of management is to maximize net interest income within prudent liquidity constraints. Internal corporate guidelines have been established to constantly measure liquid assets, as well as relevant ratios concerning earning asset levels and purchased funds. The management and board of directors of each bank subsidiary monitor these same indicators and make adjustments as needed. At June 30, 2007, each subsidiary bank was within established guidelines and total corporate liquidity remains strong. At June 30, 2007, cash and cash equivalents, trading and available-for-sale securities and mortgage loans held for sale were 18.1% of total assets, as compared to 19.4% at December 31, 2006.

Liquidity Management

The objective of the Company’s liquidity management is to access adequate sources of funding to ensure that cash flow requirements of depositors and borrowers are met in an orderly and timely manner. Sources of liquidity are managed so that reliance on any one funding source is kept to a minimum. The Company’s liquidity sources are prioritized for both availability and time to activation.

The Company’s liquidity is a primary consideration in determining funding needs and is an integral part of asset/liability management. Pricing of the liability side is a major component of interest margin and spread management. Adequate liquidity is a necessity in addressing this critical task. There are six primary and secondary sources of liquidity available to the Company. The particular liquidity need and timeframe determine the use of these sources.

The first source of liquidity available to the Company is Federal funds. Federal funds, primarily from downstream correspondent banks, are available on a daily basis and are used to meet the normal fluctuations of a dynamic balance sheet. In addition, the Company and its affiliates have approximately $106 million in Federal funds lines of credit from upstream correspondent banks that can be accessed, when needed. In order to ensure availability of these upstream funds, the Company has a plan for rotating the usage of the funds among the upstream correspondent banks, thereby providing approximately $40 million in funds on a given day. Historical monitoring of these funds has made it possible for the Company to project seasonal fluctuations and structure its funding requirements on month-to-month basis.

A second source of liquidity is the retail deposits available through the Company’s network of affiliate banks throughout Arkansas. Although this method can be somewhat of a more expensive alternative to supplying liquidity, this source can be used to meet intermediate term liquidity needs.

Third, the Company’s affiliate banks have lines of credits available with the Federal Home Loan Bank. While the Company uses portions of those lines to match off longer-term mortgage loans, the Company also uses those lines to meet liquidity needs. Approximately $404 million of these lines of credit are currently available, if needed.

Fourth, the Company uses a laddered investment portfolio that ensures there is a steady source of intermediate term liquidity. These funds can be used to meet seasonal loan patterns and other intermediate term balance sheet fluctuations. Approximately 66% of the investment portfolio is classified as available-for-sale. The Company also uses securities held in the securities portfolio to pledge when obtaining public funds.

The fifth source of liquidity is the ability to access large deposits from both the public and private sector to fund short-term liquidity needs.

Finally, the Company has established a $5 million unsecured line of credit with a major commercial bank that could be used to meet unexpected liquidity needs at both the parent company level as well as at any affiliate bank.

The Company believes the various sources available are ample liquidity for short-term, intermediate-term and long-term liquidity.

Market Risk Management

Market risk arises from changes in interest rates. The Company has risk management policies to monitor and limit exposure to market risk. In asset and liability management activities, policies are in place designed to minimize structural interest rate risk. The measurement of market risk associated with financial instruments is meaningful only when all related and offsetting on- and off-balance-sheet transactions are aggregated, and the resulting net positions are identified.

Interest Rate Sensitivity

Interest rate risk represents the potential impact of interest rate changes on net income and capital resulting from mismatches in repricing opportunities of assets and liabilities over a period of time. A number of tools are used to monitor and manage interest rate risk, including simulation models and interest sensitivity gap analysis. Management uses simulation models to estimate the effects of changing interest rates and various balance sheet strategies on the level of the Company’s net income and capital. As a means of limiting interest rate risk to an acceptable level, management may alter the mix of floating and fixed-rate assets and liabilities, change pricing schedules and manage investment maturities during future security purchases.

The simulation models incorporate management’s assumptions regarding the level of interest rates or balance changes for indeterminate maturity deposits for a given level of market rate changes. These assumptions have been developed through anticipated pricing behavior. Key assumptions in the simulation models include the relative timing of prepayments, cash flows and maturities. In addition, the impact of planned growth and anticipated new business is factored into the simulation models. These assumptions are inherently uncertain and, as a result, the models cannot precisely estimate net interest income or precisely predict the impact of a change in interest rates on net income or capital. Actual results will differ from simulated results due to the timing, magnitude and frequency of interest rate changes and changes in market conditions and management strategies, among other factors.

Table A below presents the Company’s interest rate sensitivity position at June 30, 2007. This analysis is based on a point in time and may not be meaningful because assets and liabilities are categorized according to contractual maturities, repricing periods and expected cash flows rather than estimating more realistic behaviors, as is done in the simulation models. Also, this analysis does not consider subsequent changes in interest rate level or spreads between asset and liability categories.

Table A: Interest Rate Sensitivity

	Interest Rate Sensitivity Period
	0-30			31-90			91-180			181-365			1-2			2-5			Over 5
(In thousands, except ratios)	Days			Days			Days			Days			Years			Years			Years			Total
Earning assets
Short-term investments	$	47,684		$	--		$	--		$	--		$	--		$	--		$	--		$	47,684
Assets held in trading
accounts		1,500			--			--			2,996			--			--			--			4,496
Investment securities		60,408			26,488			35,001			74,557			154,780			96,916			77,431			525,581
Mortgage loans held for sale		9,928			--			--			--			--			--			--			9,928
Loans		556,461			174,960			156,034			324,561			242,624			337,895			28,895			1,821,430

Total earning assets		675,981			201,448			191,035			402,114			397,404			434,811			106,326			2,409,119

Interest bearing liabilities
Interest bearing transaction
and savings deposits		437,736			--			--			--			65,056			195,169			65,056			763,017
Time deposits		117,108			209,092			286,114			390,406			79,582			26,734			--			1,109,036
Short-term debt		109,019			--			--			--			--			--			--			109,019
Long-term debt		13,107			1,411			2,078			8,626			6,787			25,902			24,688			82,599
Total interest bearing
liabilities		676,970			210,503			288,192			399,032			151,425			247,805			89,744			2,063,671

Interest rate sensitivity Gap	$	(989	)	$	(9,055	)	$	(97,157	)	$	3,082		$	245,979		$	187,006		$	16,582		$	345,448
Cumulative interest rate
sensitivity Gap	$	(989	)	$	(10,044	)	$	(107,201	)	$	(104,119	)	$	141,860		$	328,866		$	345,448
Cumulative rate sensitive asset
to rate sensitive liabilities		99.9	%		98.9	%		90.9	%		93.4	%		108.2	%		116.7	%		116.7	%
Cumulative Gap as a % of
earning assets		0.0	%		(0.4	)%		(4.4	)%		(4.3	)%		5.9	%		13.7	%		14.3	%

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in 15 C.F.R. 240.13a-15(e) or 15 C.F.R. 240.15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no significant changes in the Company’s internal controls or in other factors that could significantly affect those controls subsequent to the date of evaluation.

Part II: Other Information

Item 1A. Risk Factors

There has been no material change in the risk factors disclosure from that contained in the Company’s 2006 Form 10-K for the fiscal year ended December 31, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) Issuer Purchases of Equity Securities. The Company made the following purchases of its common stock during the three months ended June 30, 2007:

					Total Number		Maximum
					of Shares		Number of
	Total Number		Average		Purchased as		Shares that May
	of Shares		Price Paid		Part of Publicly		Yet be Purchased
Period	Purchased		Per Share		Announced Plans		Under the Plans

April 1 – April 30		16,100	$	29.00		16,100		255,189
May 1 – May 31		44,300		26.88		44,300		210,889
June 1 – June 30		30,500		27.26		30,500		180,389

Total		90,900	$	27.38		90,900

Item 4. Submission of Matters to a Vote of Security Holders

(a) The annual shareholders meeting of the Company was held on April 10, 2007. The matters submitted to the security holders for approval included (1) setting the number of directors at nine (9), (2) the election of nine (9) directors and (3) amending the Articles of Incorporation to increase the number of authorized shares of Class A, $0.01 par value, Common Stock of the Company from 30,000,000 to 60,000,000.

(b) At the annual meeting, all nine (9) directors were elected by proxies solicited pursuant to Section 14 of the Securities Exchange Act of 1934, without any solicitation in opposition thereto.

The following table summarizes the required analysis of the voting by security holders at the annual meeting of shareholders held on April 10, 2007:

Voting of Shares

				Broker
Action	For	Against	Abstain	Non-Votes
Set number of directors
at nine (9)	9,331,907	7,893	118,392	2,265,922

			Withhold	Broker
Election of Directors:	For	Against	Authority	Non-Votes
William E. Clark ⁽¹⁾	9,417,191	--	46,857	2,260,066
Steven A. Cossé	9,390,527	--	73,522	2,260,066
George A. Makris, Jr.	9,380,303	--	83,644	2,260,167
J. Thomas May	9,425,924	--	36,743	2,261,448
W. Scott McGeorge	9,388,127	--	75,920	2,261,067
Stanley E. Reed	9,443,130	--	20,918	2,260,067
Harry L. Ryburn	9,375,797	--	88,250	2,240,067
Robert L. Shoptaw	9,416,182	--	47,866	2,260,067
Henry F. Trotter, Jr.	9,420,389	--	43,588	2,260,167

Action	For	Against	Abstain	Non-Votes
Amend the Articles of Incorporation
to increase the number of
authorized shares of Class A,
$0.01 par value, Common Stock of
the Company from 30,000,000
to 60,000,000	8,853,061	435,787	145,627	2,289,640

(1)	On May 15, 2007, Mr. Clark died after a brief illness. There are no current plans to replace Mr. Clark on the board, but as provided in the Company’s bylaws, the remaining members of the board may appoint a replacement to serve until the Company’s annual meeting in 2008.

Item 6. Exhibits

Exhibit No.	Description

3.1	Restated Articles of Incorporation of Simmons First National Corporation.*

3.2	Amended By-Laws of Simmons First National Corporation (incorporated by reference to Exhibit 3.2 to Simmons First National Corporation’s Quarterly Report on Form 10-Q for the Quarter ended March 31, 2005 (File No. 0-6253)).

10.1	Amended and Restated Trust Agreement, dated as of December 16, 2003, among the Company, Deutsche Bank Trust Company Americas, Deutsche Bank Trust Company Delaware and each of J. Thomas May, Barry L. Crow and Robert A. Fehlman as administrative trustees, with respect to Simmons First Capital Trust II (incorporated by reference to Exhibit 10.1 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2003 (File No. 0-6253)).

10.2	Guarantee Agreement, dated as of December 16, 2003, between the Company and Deutsche Bank Trust Company Americas, as guarantee trustee, with respect to Simmons First Capital Trust II (incorporated by reference to Exhibit 10.2 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2003 (File No. 0-6253)).

10.3	Junior Subordinated Indenture, dated as of December 16, 2003, among the Company and Deutsche Bank Trust Company Americas, as trustee, with respect to the junior subordinated note held by Simmons First Capital Trust II (incorporated by reference to Exhibit 10.3 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2003 (File No. 0-6253)).

10.4	Amended and Restated Trust Agreement, dated as of December 16, 2003, among the Company, Deutsche Bank Trust Company Americas, Deutsche Bank Trust Company Delaware and each of J. Thomas May, Barry L. Crow and Robert A. Fehlman as administrative trustees, with respect to Simmons First Capital Trust III (incorporated by reference to Exhibit 10.4 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2003 (File No. 0-6253)).

10.5	Guarantee Agreement, dated as of December 16, 2003, between the Company and Deutsche Bank Trust Company Americas, as guarantee trustee, with respect to Simmons First Capital Trust III (incorporated by reference to Exhibit 10.5 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2003 (File No. 0-6253)).

10.6	Junior Subordinated Indenture, dated as of December 16, 2003, among the Company and Deutsche Bank Trust Company Americas, as trustee, with respect to the junior subordinated note held by Simmons First Capital Trust III (incorporated by reference to Exhibit 10.6 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2003 (File No. 0-6253)).

10.7	Amended and Restated Trust Agreement, dated as of December 16, 2003, among the Company, Deutsche Bank Trust Company Americas, Deutsche Bank Trust Company Delaware and each of J. Thomas May, Barry L. Crow and Robert A. Fehlman as administrative trustees, with respect to Simmons First Capital Trust IV (incorporated by reference to Exhibit 10.7 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2003 (File No. 0-6253)).

10.8	Guarantee Agreement, dated as of December 16, 2003, between the Company and Deutsche Bank Trust Company Americas, as guarantee trustee, with respect to Simmons First Capital Trust IV (incorporated by reference to Exhibit 10.8 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2003 (File No. 0-6253)).

10.9	Junior Subordinated Indenture, dated as of December 16, 2003, among the Company and Deutsche Bank Trust Company Americas, as trustee, with respect to the junior subordinated note held by Simmons First Capital Trust IV (incorporated by reference to Exhibit 10.9 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2003 (File No. 0-6253)).

10.10	Long-Term Executive Incentive Agreement, dated as of January 1, 2005, by and between the Company and J. Thomas May (incorporated by reference to Exhibit 10.10 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2005 (File No. 0-6253)).

14	Code of Ethics, dated December 2003, for CEO, CFO, controller and other accounting officers (incorporated by reference to Exhibit 14 to Simmons First National Corporation’s Annual Report on Form 10-K for the Year ended December 31, 2003 (File No. 0-6253)).

31.1	Rule 13a-14(a)/15d-14(a) Certification – J. Thomas May, Chairman and Chief Executive Officer.*

31.2	Rule 13a-14(a)/15d-14(a) Certification – Robert A. Fehlman, Chief Financial Officer.*

32.1	Certification Pursuant to 18 U.S.C. Sections 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – J. Thomas May, Chairman and Chief Executive Officer.*

32.2	Certification Pursuant to 18 U.S.C. Sections 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Robert A. Fehlman, Chief Financial Officer.*

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SIMMONS FIRST NATIONAL CORPORATION

(Registrant)

Date:August 9, 2007		/s/ J. Thomas May
		J. Thomas May
		Chairman and
		Chief Executive Officer



Date:August 9, 2007		/s/ Robert A. Fehlman
		Robert A. Fehlman
		Executive Vice President and
		Chief Financial Officer