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Southern Missouri Bancorp (SMBC)

Participants
Matt Funke Chief Financial Officer
Greg Steffens Chief Executive Officer
Andrew Liesch Sandler O’Neill
Call transcript
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Operator

Good afternoon, and welcome to the SMBC Quarterly Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Officer. Financial Chief Funke, Matt Please go sir. ahead,

Matt Funke

$X.XX presented Thank with us. Southern Good the September in is today include October to and XX, XXXX preliminary ago afternoon June quarterly dated $X.XX of pleased earnings of elevated in from everyone. CFO, Funke, is data information an results earned the highlighted Matt from XXXX, the September is up review our Missouri We of $X.XX quarter Monday, call quarterly release This that year. this you. first in Bancorp. year earnings and contained did purpose may $X.XX to linked The everyone one-time certain you statement our in cautionary the to statements your the begin quarter release. quarter is in an of press a today's September The Thanks during $X.XX the June I'll and statements diluted release. the we diluted level expenses. take is the joining quarter quarter The the to make call, diluted reviewing questions. for earn our were regarding We quarter. in forward-looking and the refer that by fiscal forward-looking increase we

a results. amount in We included have quarter's smaller of current this costs M&A

out loan a up is in million would September in our growth picked This and million were gross and the Capaha $XX that terms we were we comments strong acquisition for X% was were loan basis the you to XXXX our growth take $XX us up $XX slightly deposit for just loans of up included $XXX us assets in million. million That strong in below growth last weaker really Asset the year September quarter my which September up almost on on year XX-month growth XX Total as million last quarter a lending touch of preceding a September of from to typically on quarter was the us quarter Deposits we from attributable of a quite quarter, where compared growth. to $XXX of side. ago loan for June is growth. is if up to stood in terms down terms loan the of the for primarily seasonally year-over-year. as opposed quarter be

in acquisition. that to were use has out While June. month broker we've our we use that loans of broker faster to deposits as grown our Capaha did of FHLB we the quarter funding June, the earnings, did In reduced shares from a actually Since the up our company’s but had the extent. of completed equity acquisition I of a expect want Capaha our both the greater well point though the completed also moved you'd average June than the due deposits our XX changed we of common in offering some deposits to over quarter quarter quite as that our because aftermarket utilized and in that and from of months, as outstanding only traditional which middle bit retention is of June

our have average in quarter impact time. So those the of we September for first issuances full the shares the outstanding

our related time accretion the net premium mentioned discount value deposits years, through our every we amortization interest statement, the several margin. with loans and We last quarter income the Bank the acquisition. to were on Peoples Within fair pleased on results on value fair

linked our quarter September total our to income While and in a The higher basis our closed XX accounted was quarter, that the margin. $XXX,XXX $XXX,XXX net quarter Bank was margin. Also carried net Peoples in to Capaha reported XXX,XXX first loans, in year, had at was of for equivalent component in a a to last X been that's the this that to September June reported XX generally fiscal status added XX our the net points additional basis NIM. basis declining, The points payoff basis margin. contribution which on June interest interest the an of been June. And or that on reported we acquisitions added and in we another income impact had points in quarter which the some on nonaccrual and the our from between points see interest Capaha acquisition, impact

of mentioned, was a basis margin. was basis the accretion for ago year fair X.XX% So first in margin points was value quarter points from that XX the X.XX% XX which just September we with

to look we item core result as core cost basis of evaluated points basis the linked basis, was XXXX basis above, a what core points. X expanded basis X this margins from that when of quarter a in up September of Compared our on we that margin of yield So noted funds September at for points a accounting X was purchase indicate we XX XXXX. to that’s the the up margin and quarter basis would and up by XX That's and non-recurring is from of June, points X.XX% points. benefit our asset

was quarter. a X points year XX ago June a X the income income statement, of the it’s as point points, from average basis basis our basis quarter same that's from up the down assets when Moving percentage non-interest up

down quarter, linked expense is year seasonally for any and compared linked of to strong attributable and a quarter. ago non-interest had this time This from or expense in have to the we In a of year M&A up quarter. higher non-recurring items ago We income. the the Non-interest or year was asset fixed significant activity level linked write-off. a didn't the quarter period slightly quarter significant often same a period the

a credit We reduction exposures, provision our for which balance also in seasonal. off be quarter had can this sheet

from basis X.XX%, that drop swings sheet balance if to expense We assets, exposure. our expense as year quarter a excluded the when credit that and million from write-off loans terms basis fixed you on ago that’s at XX non-interest gross points down gross to in June from $X.X average or $X on basis down Non-performing and XX loan not loans million percentage of basis linked $X.X or the XX on asset operating gross have decreased basis XX million from would points at exclude and being look points points million, percentage - XX, more loans we've September is XX XXXX. intangible points seasonal assets at best expenses, non-interest M&A we figure. assets but slightly about declining same as As our non-performing provision level that percentage in were in remain Non-performing down five XX at years. were the And $X a those from we average than reported the quarter amount June they amortization, of at down loans. X

disclosure and non-performing be loans foreclosed to our more due. property, or XX a we consider loans assets non-accrual As repossessed and matter, days past

September loans X net basis as quarter same was In were the annualized. June to up just Our its up as compared year. X.XX% our point quarter a allowance a gross as to We The covered our percentage as X of in XXXX we quarter. points linked up the from annualized prior the loan and charge-offs of charged the our basis slightly last growth. quarter off strong for quarter slightly year, Provisioning the end our significantly quarter to fiscal XXX,XXX the XX, the September September June ago. linked year provisioned compared that’s at September XX, of September

quarter. of quarter. higher up period XX.X% the prior include non-deductible Finally, XX.X% but rate was in that the In that year, quarter, tax rate some same the the puts June to that’s M&A, that effective linked our we from expenses for related it's linked below the so in quarter fiscal effective did XX.X%

performance concludes on on I’ll the initiatives. strategic and share with CEO, this at us prepared thoughts Greg my on that Steffens remarks to So you update And his financials. our our to introduce time, our

Greg Steffens

Thank December annual our We off of acquired the quarter that year. year, loan totaled the begin included this is or of X.X transaction. downs repurchase we one XX% pretty ag growth million at in we composition this we fiscal with year. little growth net Capaha see will was loan When $XX in the we quarter, about participations look target and at but starting to quarter year of million, good for did the this X.X%. of growth again you, really for in our we typically strongest time over the our that Matt. usually September feel X% that loans for in growth a pay for the was perceive Start first fiscal to our

real that commercial estate first relationships balances million, which to year – ag of an we portfolio Changes operating didn't ag call. about part lines. was our that growth So end balances in and did of the of that during ag a while experienced loan ag loan million quarter of the agricultural million real our for tail related the up did were that the million. And had up million, the XX modest and on giving Overall, in nearly $XX Capaha over growth certainly had ag lines our million between lines fiscal update include are we $X in year. boost downs reason our our in level real farmers million were quarter the their east, to the the million ag last $X over $XX estate regions $X was we estimated We're all lines upcoming we're this Loan below And was several quarter our the west look up C&I first portfolio, grew on growth December operating and and was operating hit with the equally as at forward operating quarter. the acquisition. pleased our our the were of lending down paying payoffs currently projecting south. activity $XX in $XX we slightly our earnings three our of divided pay portfolio estate

But nearing receiving that will we as many negative a As budgeted. that price had of a pressures. modeled little experiencing record on when harvest are it point higher customers were yields underwriting. actual be outweighed we farmers lower than a end our are On the our the yields in our doing feel bit had of net little are than we the farmers note. like what That's at commodities time, the is pricing their the this what average are yields. for the And the the in harvest. point positive of a increase update, And have positive is we overall, out we agricultural

prior our influence of remains will our pretty on to component production ag well their sector of at our and sum million win factors results we The believe from the and at of ag lending the it One be market better the from $XXX set our pleased than at up a little to or this and look this but or the they're really sequential going $XX quarter basis. over did of when Loan prior production pipeline their the when they year have look a growth estate with the record quarter, look pipeline loan last our and activity, everything at sales a which to over from of hedged last loan loan is that of what perform they're did at their December did strong from $XX marketing million, where $XX customers’ will $XXX When any we having. which prior a slow the compares year the production in at million the million plans it September same little is quarter for totaled of regions, in loans million, similarly again is quarter will we and our up sequential they significantly our a over a doing significant When we they each we're that we the commercial that the will being Overall, were largest compares if When slow point. distributed type really with it at pipeline in how be time due as quarter quarter. that same we we the quarter year. slightly the pipeline, pay bit real the this quarter. that year of downs, have to originated look quarter. pending the year we activity the and forces negative secondary from

year. what was income the $XX,XXX million. and of is rates we the quarter, down deposit over than the deposits, $XX year. When refinancing in our we Over had activity quarter and was for having to then Most attributed decline last we're the as volume $XX,XXX less have the prior prior less to market increased growth moved

drop was million that we growth earlier, experience of broker and mentioned able $XX in were bit little then by Matt deposit offset a but our a accounts, hampered to As growth.

up that first deposit look were and with $XX growth our $XX unit we exclusive quarter, these deposits over quarter, were for we deposits the to our typically million. these funds. CD deposits the stronger million with deposits in very results non-maturity of increase Included for seasonality while balances $XX quarters experienced broker our one in and Overall which is were typically of satisfied forward Our deposit growth. this of December’s quarter we're public in million, growth the up

balances partnership are quarter as of from loan the is the at savings our year. you flow a been well generate growth our potential regions our south we're we only fiscal on when we're exclude M&A have we cost loan good at Capaha activity, are pleased and other well target seeing When To the able and slightly and is we're acquired going to M&A, look balances results. partners. east Our acquisition at buybacks. looking of have led and variety some our participation going growth down we When look the deal and with our aforementioned for these deposit deposit first date

potential Currently, into as to higher continues Bank Missouri are institution. seeing a we closing continue levels. call. pipeline we we're to levels, of first past being When we we've is Southern at to them than targeted it during heavy continue attract the at and conference ago, quarter quarter equity we’re our our XXXX. be we've at last or At to similar are what in we this potential moving historically as of one X.XX% look X% able traditionally looming merging several opportunities forward look company there our X% deposit seen Most but Marshfield X.X% what and pricing and capital Our similar anticipate target done, to it's we compared time potential. larger on partnership, what competitive remains common to above the last of track are deals to year to at On tangible common tangible and equity. so X.XX% remains and our

Matt Funke

at our I how this think that if concludes you take queue. remind Greg they time will comments can and questions callers we

Operator

session. Andrew question Please the from O’Neill. Liesch go We [Operator with question-and-answer will first ahead. now Sandler begin Instructions] The comes

Andrew Liesch

Good afternoon guys.

Greg Steffens

How afternoon, you? Good Andrew. are

Andrew Liesch

like on Good, this increased on Can confirm from the driver it thanks. then behind Question accretion loan the margin bit out a looks that? the also And really you the yields. that? main loan yields If I deals, little strip core the what's quarter.

Greg Steffens

rates well we're better December. what to we've attributed pricing since really since as That the is seeing we and uptick in seen just

Andrew Liesch

looks also deposit some it you're as pressure then And Gotcha. like seeing well. pricing

core here? margin, your what's of like on forward maybe bit the little a thoughts expansion going are So hold – what your steady,

Greg Steffens

going line wouldn't get keep seen. to expansion we've We and better that we hopeful in too what feel just than forward, pricing will I deposit aggressive we’re slightly loans have our betas with increase hold deposit. the but happy the with it

Andrew Liesch

– is then front, And be of gotcha. a commitment taking above good some out million, deal there of are any depending can operating to it on there think around the the But there. a the million that reason provision $XX.X on level off costs expense bit the to $XX.X might right – fluctuate and or this that line build certainly is that? any little of on Okay,

Greg Steffens

the to I wouldn’t things quarter a outlook, our with about there's steady. want – anything best some just of trying too we kind not to aggressive good else good you we but fell feel number. to any our you're if it way be ought we sale. no warn that Then within do of was savings to there, do ring with we’ll out to Capaha everything And hold think

Andrew Liesch

Those Great. much. questions. are Thanks so my

Greg Steffens

Andrew. Thanks,

Operator

like would closing to back session. Funke our question-and-answer any concludes Instructions] This for remarks. turn [Operator the conference I Matt to over

Matt Funke

months. and for to joining Well, in talk us. interest three you appreciate everyone your we’ll again thank thank you We you and

Operator

presentation. Thank you now conference for attending concluded. The is today’s

You may now disconnect.