NOTE

ACQUISITIONS

Hardeman County Investment Company, Inc.

May 15, 2017,

the Company completed the acquisition of Hardeman County Investment Company, Inc. (“Hardeman”), headquartered in Jackson, Tennessee, including its wholly-owned bank subsidiary, First South Bank. The Company issued

799,970

shares of its common stock valued at approximately

$42.6

million as of

May 15, 2017,

plus

$30.0

million in cash in exchange for all outstanding shares of Hardeman common stock.

Prior to the acquisition, Hardeman conducted banking business from

branches located in western Tennessee. Including the effects of the acquisition method accounting adjustments, the Company acquired approximately

$462.9

million in assets, including approximately

$251.6

million in loans (inclusive of loan discounts) and approximately

$389.0

million in deposits. The Company completed the systems conversion and merged Hardeman into Simmons Bank in

September 2017.

As part of the systems conversion,

existing Simmons and First South Bank branches were consolidated or closed.

Goodwill of

$29.4

million was recorded as a result of the transaction. The merger strengthened the Company’s position in the western Tennessee market, and the Company will be able to achieve cost savings by integrating the

two

companies and combining accounting, data processing, and other administrative functions, all of which gave rise to the goodwill recorded. The goodwill will

not

be deductible for tax purposes.

A summary, at fair value, of the assets acquired and liabilities assumed in the Hardeman transaction, as of the acquisition date, is as follows:

(In thousands)	Acquired from Hardeman			Fair Value Adjustments			Fair Value

Assets Acquired
Cash and due from banks	$	8,001		$	--		$	8,001
Interest bearing balances due from banks - time		1,984			--			1,984
Investment securities		170,654			(316	)		170,338
Loans acquired		257,641			(5,992	)		251,649
Allowance for loan losses		(2,382	)		2,382			--
Foreclosed assets		1,083			(452	)		631
Premises and equipment		9,905			1,258			11,163
Bank owned life insurance		7,819			--			7,819
Goodwill		11,485			(11,485	)		--
Core deposit intangible		--			7,840			7,840
Other intangibles		--			830			830
Other assets		2,639			(1	)		2,638
Total assets acquired	$	468,829		$	(5,936	)	$	462,893

Liabilities Assumed
Deposits:
Non-interest bearing transaction accounts	$	76,555		$	--		$	76,555
Interest bearing transaction accounts and savings deposits		214,872			--			214,872
Time deposits		97,917			(368	)		97,549
Total deposits		389,344			(368	)		388,976
Securities sold under agreement to repurchase		17,163			--			17,163
Other borrowings		3,000			--			3,000
Subordinated debentures		6,702			--			6,702
Accrued interest and other liabilities		1,891			1,924			3,815
Total liabilities assumed		418,100			1,556			419,656
Equity		50,729			(50,729	)		--
Total equity assumed		50,729			(50,729	)		--
Total liabilities and equity assumed	$	468,829		$	(49,173	)	$	419,656
Net assets acquired								43,237
Purchase price								72,639
Goodwill							$	29,402

The purchase price allocation and certain fair value measurements remain preliminary due to the timing of the acquisition. Management will continue to review the estimated fair values and evaluate the assumed tax positions. The Company expects to finalize its analysis of the acquired assets and assumed liabilities in this transaction over the next few months, within

one

year of the acquisition. Therefore, adjustments to the estimated amounts and carrying values

may

occur.

The Company’s operating results for

2017

include the operating results of the acquired assets and assumed liabilities of Hardeman subsequent to the acquisition date.

Citizens National Bank

September 9, 2016,

the Company completed the acquisition of Citizens National Bank (“Citizens”), headquartered in Athens, Tennessee. The Company issued

835,741

shares of its common stock valued at approximately

$41.3

million as of

September 9, 2016,

plus

$35.0

million in cash in exchange for all outstanding shares of Citizens common stock.

Prior to the acquisition, Citizens conducted banking business from

branches located in east Tennessee. Including the effects of the acquisition method accounting adjustments, the Company acquired approximately

$585.1

million in assets, including approximately

$340.9

million in loans (inclusive of loan discounts) and approximately

$509.9

million in deposits. The Company completed the systems conversion and merged Citizens into Simmons Bank in

October 2016.

Goodwill of

$23.4

million was recorded as a result of the transaction. The merger strengthened the Company’s position in the east Tennessee market, and the Company is able to achieve cost savings by integrating the

two

companies and combining accounting, data processing, and other administrative functions, all of which gave rise to the goodwill recorded. The goodwill will be deductible for tax purposes.

A summary, at fair value, of the assets acquired and liabilities assumed in the Citizens transaction, as of the acquisition date, is as follows:

(In thousands)	Acquired from Citizens			Fair Value Adjustments			Fair Value

Assets Acquired
Cash and due from banks	$	131,467		$	(351	)	$	131,116
Federal funds sold		10,000			--			10,000
Investment securities		61,987			1			61,988
Loans acquired		350,361			(9,511	)		340,850
Allowance for loan losses		(4,313	)		4,313			--
Foreclosed assets		4,960			(1,518	)		3,442
Premises and equipment		6,746			1,339			8,085
Bank owned life insurance		6,632			--			6,632
Core deposit intangible		--			5,075			5,075
Other intangibles		--			591			591
Other assets		17,364			6			17,370
Total assets acquired	$	585,204		$	(55	)	$	585,149

Liabilities Assumed
Deposits:
Non-interest bearing transaction accounts	$	109,281		$	--		$	109,281
Interest bearing transaction accounts and savings deposits		204,912			--			204,912
Time deposits		195,664			--			195,664
Total deposits		509,857			--			509,857
Securities sold under agreement to repurchase		13,233			--			13,233
FHLB borrowings		4,000			47			4,047
Accrued interest and other liabilities		3,558			1,530			5,088
Total liabilities assumed		530,648			1,577			532,225
Equity		54,556			(54,556	)		--
Total equity assumed		54,556			(54,556	)		--
Total liabilities and equity assumed	$	585,204		$	(52,979	)	$	532,225
Net assets acquired								52,924
Purchase price								76,300
Goodwill							$	23,376

During

2017,

the Company finalized its analysis of the loans acquired along with the other acquired assets and assumed liabilities in this transaction.

The Company’s operating results for

2017

and

2016

include the operating results of the acquired assets and assumed liabilities of Citizens subsequent to the acquisition date.

The following is a description of the methods used to determine purchase price allocation for the fair values of significant assets and liabilities presented in the acquisitions above.

Cash and due from banks, time deposits due from banks and federal funds sold

– The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Investment securities

– Investment securities were acquired with an adjustment to fair value based upon quoted market prices if material. Otherwise, the carrying amount of these assets was deemed to be a reasonable estimate of fair value.

Loans acquired

– Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or

not

the loan was amortizing, and current discount rates. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does

not

include a factor for credit losses as that has been included in the estimated cash flows. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques.

Foreclosed assets

– These assets are presented at the estimated present values that management expects to receive when the properties are sold, net of related costs of disposal.

Premises and equipment

– Bank premises and equipment were acquired with an adjustment to fair value, which represents the difference between the Company’s current analysis of property and equipment values completed in connection with the acquisition and book value acquired.

Bank owned life insurance

– Bank owned life insurance is carried at its current cash surrender value, which is the most reasonable estimate of fair value.

Goodwill

– The consideration paid as a result of the acquisition exceeded the fair value of the assets acquired, resulting in an intangible asset, goodwill. Goodwill established prior to the acquisitions, if applicable, was written off.

Core deposit intangible

– This intangible asset represents the value of the relationships that the acquired banks had with their deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base and the net maintenance cost attributable to customer deposits. Core deposit intangible established prior to the acquisitions, if applicable, was written off.

Other intangibles

– These intangible assets represent the value of the relationships that Citizens had with their trust customers and Hardeman had with their insurance customers. The fair value of these intangible assets was estimated based on a combination of discounted cash flow methodology and a market valuation approach. Other intangibles established prior to the acquisitions, if applicable, were written off.

Other assets

– The fair value adjustment results from certain assets whose value was estimated to be less than book value, such as certain prepaid assets, receivables and other miscellaneous assets. Otherwise, the carrying amount of these assets was deemed to be a reasonable estimate of fair value.

Deposits

– The fair values used for the demand and savings deposits that comprise the transaction accounts acquired, by definition equal the amount payable on demand at the acquisition date. The Company performed a fair value analysis of the estimated weighted average interest rate of the certificates of deposits compared to the current market rates and recorded a fair value adjustment for the difference when material.

Securities sold under agreement to repurchase

– The carrying amount of securities sold under agreement to repurchase is a reasonable estimate of fair value based on the short-term nature of these liabilities.

FHLB and other borrowings

– The fair value of Federal Home Loan Bank and other borrowings is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities.

Subordinated debentures –

The fair value of subordinated debentures is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities. Due to the floating rate nature of the debenture, the fair value approximates book value as of the date acquired.

Accrued interest and other liabilities

– The adjustment establishes a liability for unfunded commitments equal to the fair value of that liability at the date of acquisition.

See Note

for additional information related to other acquisitions that were completed during the

fourth

quarter of

2017.