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Southern Missouri Bancorp (SMBC)

Participants
Matthew Funke EVP, CFO & Principal Accounting Officer
Greg Steffens President, CEO & Director
Andrew Liesch Sandler O'Neill + Partners
Call transcript
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Operator

Good afternoon, and welcome to the Southern Missouri Bancorp, Inc. quarterly earnings call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Matt Funke, please go ahead.

Matthew Funke

Brandon. you, Thank everyone. Good afternoon, Matt Funke, Missouri is of CFO Bancorp. This Southern January this The quarterly review Monday, to call the of your earnings XXXX, questions. take information dated our to in is purpose and presented and release XX, data statements make forward-looking and regarding we'd today's may in contained the to We during cautionary you our call, forward-looking certain statement statements refer press release. all joining us. for Thank you the earnings by reviewing preliminary release. begin in quarterly results I'll the highlighted fiscal year. second The XXXX December quarter reminder, the as quarter, of a is our We in $X.XX is per a both diluted also earned $X.XX share up December quarter. and the earned that $X.XX in quarter, December the September the we from quarter diluted the ago in linked year that had September included somewhat quarter The expenses. onetime higher

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

Of for which earnings improvement administrative of to federal taxes on means rate XX% offsetting net after-tax and The quarter's XX.X% $XXX,XXX in approximately $X.X unusual impact a impact to ends asset, course, the the a negative deferred this year, fiscal earnings, revaluing corporate a from from after-tax June of that interpretations, the year. on for the for was based we'll was IRS that XX% effective reduction items which fiscal XX, after-tax impact are then in pay of to tax an results our rate tax annual the positive rate company's reducing hit most $XXX,XXX. million based a the current

higher from reduction approved the the for And at fiscal of so had were rate. taxes the because first income a December of the that quarter somewhat quarter windfall year

drop down year are XX.X%. months deferred XX% a tax between We outlook the expect XX% tax fiscal effective the of rate elevated of for the recognized second year earnings to Both be in for and as asset. of when Our the for the to the XX%. quarter figures also fiscal write we XX% for necessary first and our information as for some we was it to when the effective provision income XXXX the result the provided as those to to to release XX%, half X was fiscal of rate expect

that of relative our and to income. pretax tax-advantaged of investment similar activity All levels assuming

capital in to of $XXX,XXX to recorded acquisition linked the XXXX. the component was $XXX,XXX the quarter of generally a of in points impaired about quarter. acquired from acquisitions the $XXX,XXX from linked over margin. The and discount $XXX,XXX in earnings interest total added loans, in additional were net basis interest basis loan uptick margin. quarter, was to point income, income up the September couple the the to contributed during X than decline We acquired XX is on the In we more new accounted the as interest quarter year-ago year, recognized XX expect September an course, Capaha reported for of period an which a both We resolved was to this which contribution our Peoples, and about basis fiscal result between the component compared prior to income, X net or since quarter. that year-ago And saw in net the we of also that Moving margin, quarter impact on noted of that December elevated. mid-June a accretion December the was net interest $XXX,XXX amount and margin. linked release that But of of points from accretion sequentially. the place took books almost it up It the

impact of about fair we with that year-ago accretion from margin at with were points X.XX% XX resulting from the basis So second the the accretion. period, a at looking of in quarter basis again, with our discount in value points X.XX%, X the basis

and on a core had at margin. a we're basis of linked the XX about point compression points there quarter margin to X X basis XX basis a in X looking when we'd compared we about be looking So that basis, at improvement points benefit,

the statement. Moving on down income

prior XX% down this X% remain compared market almost securities on a fees. Noninterest to linked basis -- Not points percentage from is Gains did down from on was see quarter. September quarter. bank was in of a gains, the vacancies of ago, the had We side from quarter not and charges reduced headcount Deposit of and as up basis really planned. lending And all also XX balance we given headcount same the our the we'd basis the reductions those the quarter. grown a weaker year quarter income average Excluding annualized proportionately prefer X have same noninterest the it's and two service fill. that That's assets current the quarter strong from ago, a year secondary expense points to did points. sheet. other was on loan loans our with quarter sales was down it some as

a which in same a noninterest year quarter X that ago, and reduced expense, same our roughly reported quarter. sheet was provision that category September gets where we and had it quarter negative that on benefit in to in off-balance provision with about compared as We also had line by for this the the credit $XX,XXX, exposures,

or an average as also December exposure, the quarter from operating expense calculate from X year. up noninterest that credit those of noninterest percentage of provisional points basis seasonal you expense last basis in sheet $XX,XXX points linked quarter of a expenses X average and percentage asset M&A kind is swings the exclude down a decreased to X.XX%, we off-balance As intangible if in amortization, assets, but

relationships, down for gross that's saw to Compared of the are almost estate a basis situation annualized. basis, to end renegotiate the the about well. our quarter so a quarter real expect with $XX and at December that finally, our or and dollar the million million, the at quarter, basis time are most -- deposits by the year additional by charge-offs assets. up over year-to-date. increased in that We in million brokered assets. lines at are were December working to XX deposits XX And growth quarter charged-off XX-month in relationships September including in was loan to March of description on and X than and December million that from loans losses The in compared December included XX X increase is million namely points and year-to-date. in and million, a At year $XX linked measure recorded sheet. $X release credit quarter in XX% which of a $XX And to XX, total the of FHLB September the up and of about linked million X down that quarter gross the and a up XX late unchanged performance. million the the to the for basis funding for loans majority XXXX, is would year-to-date, end our That's quarter. same would unit That's year-to-date, seasonal million points quarter. $XXX relationship is assets, looked quarter. basis XX. is which X.XX% XX rate, XX points non-maturity $XX also December have for That's out assets million for at slowdown growth $XX were both $XX somewhat for is some total the and up year-to-date. $XXX,XXX quarter. million. Deposits ago, charged of a a in early annualized of the bank of quarter on December The were to to stronger. be the we the December loans XX Public allowance basis looking acquired balance earnings current terms, on in seen We we up and brokered for are provision runoff the on new XX down gross points in funding. they assets and Steffens, asset quarter December point which is the borrower. due million quarter was in represented year-to-date. growth annualized from up which relationship relationship, and we're This introduce in quarter unit amount commercial when at continue loans, residence. points up the not a basis September on with to XX, the ago. to Moving reverse as down that similar our pick from total down tends loan commercial it a XXXX, terms December $XXX million And growth, million the deposits the the a it's to amount value of as of rather were thoughts $XX at by compared the for guarantee. of loan into Total loans a receivables we've on of quarter or quarter. million. for our They source our in in year from in to were from points the established which the on accounted percentage of XX as a down December basis comparable the gross provide have secured average existing points the they year Capaha $XX to in so in the personal gross loans. we'd a advances with But in as were X.XX%, deposit year. are review our the million $X from and basis more added public $X.X December time, million, quarter or which we loans that from $XXX,XXX growth the XX the quarter this $X.X were did inflows in structured points year to quarter, an Nonperforming which ago a basis December or same We're from quarter at equipment loans. up. last up to $XX to provide fiscal the traditional that We recognized commercial Provision of you real the one million and X.X% his June, of September That the alone, of estate the on from CEO, it's at down $X.X Nonperforming concludes have picked The Net generally at that on September X.XX% part would included is a million we up same gross traditional prior million fair back million XX annual linked December would NPAs total as -- $X That's allowance. up up it's better financial. XX up growth, from than of in typically a basis you Capaha December up $XX XX, as if renewal about in $X.X are to the covered the loans loan, XXXX. even on attributable, basis USDA us X.X% were XX remainder NPLs the slightly the And $X.X of basis We've points at points I'll of rate Greg ago if $XX of be as points the were September relative percentage charge for my some

Greg Steffens

that quarter, originations to and you, prepayments totaled million Matt. way XX% in Matt Loan slower-than-anticipated annualized, the due for higher-than-anticipated loans or X fundings we for Thank working loan to earlier. which was expectations, that months the year first I'm $XXX are some some slightly have million these achieve growth, $X.X with our of the pipeline. start the to $XX good then as feel of on about targets. targets that has annualized of and Overall, totaled of through totaled which same Loan were to the growth prior million fiscal going our to -- their was year. as period We indicated and stated X% loan $XXX below the believe pace million growth million, we $XXX X% compared

And significantly over draw the the higher X look our on Over the million. composition was on XX/XX/XX. at at ag where grew, our loan $XX expectations, lines agricultural below agricultural which lines had at of CRE we it anticipate at anticipated. the is seeing the loan what were our our higher portfolio. better-than-expected our the million, at over it's year just pipeline, as paydowns quarter than a slightly our significantly growth with well. of we're X, ag of composition a balances anticipate down. slightly million million, brief best our anticipate it's in their than of June outstanding $XX Paydowns we had based update but pipeline, the their portfolio, really last in quarter, give drop our beginning we to When yields remains loan strong as the do projected where prepayments have pleased while diverse March loan customers quarter. in Overall, over When while also the in slightly before been higher-than-normal in $XX spread our types while balances to anticipated a ag pricing changed we ag better-than-historical had $XX we as exceeded state quarter, paid To balances to our slightly results quarter, last operating footprint We portfolio would down grew over attributed little look -- March and various the out agro and bit little types variety ago modestly CRE were modestly customers year have we appear portfolio. we're pipeline, to more operating our from

$XX with to for for Moving period. were the our $XX million which growth growth, which above pleased X%, deposit our the by is the well $XX we as over has pleased million able our on reduce this with year-to-date. Deposit We're fiscal million, million growth been CDs quarter brokered was also grown same non-maturity of We're $XX it's to level deposits. levels. and projected or

Our exceed East our retail likely seasonal and growth part growth evenly factors. nearly growth XX% been will unit due expected continue to Non-maturity South of deposit Deposit non-maturity rest public in to regions our over split annualized slow our deposit and has lead between deposit targets. to to is growth, to accounts. fiscal and year the in growth -- slightly X%

on M&A. Moving to

go both well while Overall, savings and it's been meeting and to to with our as cost or continues acquisition our partnership acquired date, largely pleased internal the have of we're Capaha Our loan growth anticipated been we've realized able exceeding estimates. locations. very achieve out to the deposit

mid-March. mid-February, our in also planning are convert Southern Bank complete and of to planning we're shares acquisition We systems in Missouri to

Reserve have and We approval the received Federal as from shareholders of their well.

a factors not partnerships. to have whether of several including in Since geographic amount regarding our pursue of conference period decided and could due opportunities continue the expansion at we growth review to a caution their meets fit exhibiting we of or we're this also potentially We needs, few to potential other amount short certain absorb our a potentially footprint larger that culturally call, time last they time.

the concludes in impact we continue conference also recent due of is my than of And opportunities evaluate last at call, opportunities we some tax we sizes, However, fewer what to feel reform. to of various are part and seeing the that our comments.

Matthew Funke

can at for time, would you folks right. questions. this how All Brandon, remind if they queue

Operator

Instructions]. [Operator

question Liesch comes Sandler Andrew from with first Our O'Neill.

Andrew Liesch

here going the forward. Question margin outlook on

loan seeing latest this be pricing. rate your yield, you what what with And related then deposit Just but expect. you curious also to hike, in if markets might

Matthew Funke

I'd last we're pricing some reverse to the tried is where Andrew. seeing order, the pricing. say, aggressive more years, the side, more on in is focus growth deposit on Let me on Non-maturity, take which certificates that really several limited. we've over

so able increase that slow in of be down hopeful And we'll we're to fund. the cost

that one you do to want loan side, Greg, the tackle On or?

Greg Steffens

the pipeline. through to and coming close. a increases rates the loans rate On in we're It's seeing XX- usually XX-day side, between the before are lag loan that loan movements

where trailing pricing upward little is it be. but We it would are like a seeing to bit we

of We market the as even has quite significant moved on some continue repricing yield yield feet across the up players drag curve though see smaller the their the a slope bit to curve. competition of up to in the continue

Andrew Liesch

Got real here this you. estate prepays And your then, the in prepared couple you're commercial just questions going quarter. follow-up some of there, to of normal Greg, comments, higher a than portfolio expecting

driving that that. comfortable prepays. refinancings expectation with? it higher driving your other by banks? conditions Just Maybe and what's companies? Just not for terms curious curious offering By you're Is what's other

Greg Steffens

ended had their have CRE several they some up that that We've of have. larger selling off customers

And anticipating to then as match. activity chose some some locking people there that from rate longer-term rates in are rates are prepayment from at we so moving some floating some being to we're well that as that not

Andrew Liesch

And Got here. you. one then, final comment

that think to is some on alone a prospective maybe I paying with seeing they you've M&A Or tax pricing, they it a related tax to what targets it better rate? wanting multiple? from or go few this mentioned think targets is lower because they're opportunities deserve reform,

Matthew Funke

I factored that stock earnings them stock of higher be them relative giving and forward variety anticipated going you and and that of sure reform, a factors, but earnings receive they're to the the they not are transaction. have will the the market what that necessarily tax of with to all not in like fully we're might going stock they has in them feel of definitely what certain there's they if cash weren't think some are, their are higher really value a

Operator

questions. there [Operator Instructions]. It more appears no are

would I Matt session. over for any to to like conference question-and-answer Funke back remarks. our concludes this the closing So turn

Matthew Funke

We'll be you and your Brandon, Thank three company. everyone, again, with in again months, in and here to interest interest. thank speak looking you, appreciate your Thanks, about the you. for Okay.

Operator

today's The has you Thank for conference now concluded. presentation. attending

You disconnect. may now