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Southern Missouri Bancorp (SMBC)

Participants
Matt Funke CFO
Greg Steffens CEO
Andrew Liesch Sandler O'Neill
Kelly Motta KBW
Call transcript
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Operator

Good day and welcome to the Southern Missouri Bancorp Quarterly Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would like to now turn the conference over to Matt Funke. ahead. go Please

Matt Funke

presented July to to take and XX, CFO in Ben, our everyone. is regarding statements and our make cautionary We your and call the This today earnings and during Thank contained statements Southern good Missouri Funke, statement data information forward-looking the today's with to XXXX, press of we our Bancorp. Monday, Matt quarterly is release you, review afternoon in questions. may The dated call certain refer release. you forward-looking purpose

is I to to results XXXX our So, for earnings June June thank you the all year. the fiscal XXXX -- in by joining release. preliminary fourth us the quarter XXXX today. quarter ended sorry XX, want of reviewing The quarterly start I'm highlighted XX,

the earned $X.XX we the from $X.XX March So quarter June diluted that the diluted up we XXXX from $X.XX that it's $X.XX is in quarter, June up the quarter. and linked in earned

For year, these the show is prior share earnings the full diluted fiscal up from the in $X.XX fiscal $X.XX that $X.XX per year. preliminary

same Our ago resulted or from value terms. period, premium includes on fair of $XXX,XXX. XX dollar the X year acquired points net was deposits contribution points fourth the accretion of basis about discount fair amortization and accretion about our from value loan basis that the X.XX, In in and $XXX,XXX portfolios which margin was interest discount on in or X.XX% margin number quarter

year-over-year the Bancshares is First primarily Commercial And Gideon the acquisition. reason the or increase for

point the XXXX up margin base core XXXX quarter. it's quarter by to what our June on So a June as about basis X into see was compare we been,

total increase reduced as this up XX roughly cost XX points, core the basis deposit, funding. asset in of we our basis but wholesale core the benefit quarter saw points, Our is from core led funds cost our just of for yield equal was some

would net our was and X March basis core Compared benefit have quarter XX with to interest that when points basis we this X.XX% margins margin the linked indicate accretion, our was discounted points. up from

days annualized taking However, account on our in by June margin if we the net simply number figure that few into that quarter, quarterly of compared the impact to March interest four, because points measurement, figure we and XX-day basis methodology by and the quarter. the the think our we provides the quarter, as multiplying list XX-day take of

basis account and gain we improvement have points at we basis current the Adjusted as the securities in linked for the X assets of margin income a which ago. quarter the points, as annualized put and a no as of percent compared AFS as day closer to that In point. the count, X in the sales same March had basis linked X basis in quarter. quarter, quarter XX would is Non-interest quarter the a one core on points gain than basis the year same was lower ago year average from to on XXX,XXX $XX,XXX to

linked the more quarter in totaled items little $XXX,XXX. non-core Other a than

core values from year the year of positive a year. to did but to at a we decrease this same basis X points a below adjustment prior remain attributable about about as So basis non-interest average linked the a our the improved ago. by of of pay that quarter, our compared percentage rights swing mortgage Most points, end to to servicing in is X assets negative adjustment down quarter fair the

$XXX,XXX and ago, the expenses linked we the same quarter. current none XX.X% down year with we acquisitions expense compared to small compared year was Non-interest year to mergers at in the quarter the quarter, and the same X.X% a is amortization in quarter $XXX,XXX. off-balance as had quarter recovery credit and compared period. $XX,XXX, provision ago a intangible for ago, of In Core recovering deposit had same $XXX,XXX larger to sheet as higher a a this bit a at exposure currently

the the wealth of M&A $XXX,XXX linked unusual to we had in expenses some the quarter, related In and management establishment division charges.

the exposure, of interest year, non-interest efficiency points if down from would X.XX%, basis of and expense As expenses calculate year percentage basis continue X last asset down the average linked provision quarter basis off following a tangible and on point the XX other down we X from percentage as for a exclude we the same last as March amortization quarter a that are ago and quarter is quarter sheet M&A expenses, to improve average and several the June balance from points non-recurring operating assets, linked but both to of credit acquisitions. you

for rate rates year to tax XXXX. June XX a end. to income federal ago benefit XXXX able recognize Our federal December year, current We subject Beginning of the June due little administratively effective changed tax to was full rate of passage the the tax XX.X% were we a income rate. of tax bill, at following quarter first year quarter the XX% including a are federal into reduced XX.X% in fiscal our this lower tax

increased $XX growth to quarter. from balance over June in Moving to the March the million sheet, $XX slightly quarter in the loan million

have as increase quarter ago. XXst a year we market in June dollar growth over just through view the tilt we the in January as similar bit seasonal very ago, towards result year securities terms Available saw a are a from the would our figures more as did six little not a March since So sales hoped. for a June opportunities of that last months we favorably

about growth. $XX for cash vote securities June million the attributable to loans, increased and in equivalent Assets quarter Total

we sorry, as noted acquisition, securities full fiscal a total large of liquidated XXX the $XXX $XXX the did about quarter’s For last include to up total on assets million call. assets, part year, although attributable amount million, to in Gideon were which -- about good we their I'm

$XXX $XXX balances the that attributable year Gideon. almost acquired the up of million are from loans Gross million with fiscal for

remaining a $XX up Broker June year. deposits little So, little represent a growth organic in from a than the the $XX.X million $XXX X% for robust down were quarter. growth Deposits quarter, quarter. this more million in March less than were just would less slowing the million

quarters. happier or be result. we on basis, was And with So with down and March that what core off is were from line to that pace expect in for from growth growth deposit we the typically March the June to drop

broker For the under $XX fiscal $XXX acquisition of outside total Gideon up just million are of that the we year, growth. is and million

growing rate of to acquisition, a just our deposits of broker time XX%. growth under XX% any about Excluding deposits came from at

results excluding just that our A is a deposit and tilt grew acquisition, Non-maturity of funding X% broker the result time deposit, migrating rate. that -- the towards over the deposit lot of a is and core from two, taking at deposit the growth of X.X% we fiscal between better funding non-maturity for higher advantage rates CDs, Combined the year. put during than year. available fiscal little the of

or were FHLB From million home more March us up a June quarter. little about following reductions the we XX, than $X.X Federal quarter reduced cost funding the helped with pressures. significant XX%. and some significant from quarter, March quarter during million advances June a loan funding reflecting Average reduction in the almost declined the $XX bank by XXXX, March balances

XX doubled Non-performing they and of following ends quite acquisition. Gideon total as year loans quarter about stand this prior dropped loans, X.XX%. basis and million points the percentage down Not our a slightly at almost $X.X figure or

at from quarter $XX.X NPAs X.XX% total of Non-performing are banks The down non-performing expect at up NPL, that loan XX improvement as down make assets, our almost delinquencies end translate management assets at and X.XX%, as June and ago. year credit basis from and acquired March relationships soon of some were million more much the to points percentage continued to to asset this figures. in progress with one XX and team improve significant we will XX,

annualized quarter. X that the almost and the March provision a for which December quarter, the basis from year $X from the as year March average loan $XXX,XXX equal offs change on XX ago With unchanged and were growth is million slightly $XXX,XXX charge in quarter little was compared to quarter quarter quarter in to the June increase provisioned we Net June points loans. to ago. our the links points A basis

XX was basis provision quarterly This points.

XX gross loans compared you within at basis XX in months off points. XX percentage average of to and A up figures to loans average quarters trailing at on of X provision the XX, X.XX% a XX. points. those points year X are basis, a loans The last as X.XX% our the in of of our offs as for figures as are basis provision basis charge to four If X basis March charged allowance basis XXXX look points those was ago and points a net

of at against loans X.XX% in on was fair acquisition, A loans acquisition period. terms year year do the before subject adjustment hold loans. And ALLL of compared to the most those ago not we ago time the our are impairment. and value violence the in to decrease the ALLL that identify we explains subsequently Gideon gross percentage Acquired unless the

CEO, concluded I've and Steffens. my that, I'll With prepared remarks Greg our introduce

Greg Steffens

Thank Matt. you,

For to growth organic Exclusive our Gideon the initial quarter exceeded both of a long the fiscal expectations. $XXX the year as totaled quarter for million loan we're fiscal at X%. revised for quarter. to acquisition, X%, projected please the growth with with The the and year originally to last quarter. XX% or year X% organic for the at June loan the in million We nearly for $XX in essence growth growth come X%

to $XX,XXX loan Our $XX commercial occupied in of changed non-residential estate portfolios. million estate, our $XX Gideon non-owner by non-residential, real occupied along in in This acquisition loans, an one increase commercial and million multi-family, the portfolio, in loan be $XX estate, family. real of million growth organic our in to ag owner in growth with has million million continues the increases led $XX real four composition $XX with

and a With XX, holding portfolio, in CRE XX. move XXX% to as X-XX-XX growth XXX% our XXX% ’XX below at concentration changes level from of loan percentage company our remained this slightly June at June and the

centered east continues also million from million $XXX with the million up which the year. primarily fiscal regions, of prior quarter growth in was during grew from million and million and pleased in west year, by our We're totaled is origination which the loan be for $XX volume $XX organic and $XXX $XXX respectively the year. Our to

quarter, due million by while flat the grew million Gideon and production respectively, real I'd primarily $XX like upstate. production $XX the agricultural balances loans grew balances acquisition. to real Ag million $XX estate Now, an for the fiscal balances remains and provide to year. Agricultural agricultural over estate

and Our as Agricultural the normal. approximately wet weather slowly cool to conditions customers a XXXX one crop to remained has states for leaving due years wet our most later be harvest anticipated year, started of and month

the at it's are just sections we're the ascertain where to delays, of present these beginning has and and by hard to assess time to much crop yields customers. we anticipated Given been our make how put anticipated our in farmers

with but prices. were our crop to delays approximately due to plan more and able to to mix to also their was market Generally, farmers due there some planning their plan transition remainder anticipated soybeans include of acreage from to wet not the this, XX%

Our our agricultural this loan by have farmers' be we from financial the will performance Overall, prices than issue government less portfolio determined made. at crop weather, on upcoming will clarity time. be largely payments normal

I to regarding Matt's loans. would to like also non-performing add our comments

asset to from working and Our larger the on our which several these anticipating current we're Gideon balances quarter, non-performing credits will elevated at been been closer during acquisition. historical non-performing loan resolution diligently historic the levels We've the ones move have since ratios. us resolving

have more XXXX also at past million X.XX% days on or loans due million X.XX% payment June loan XX We our to just from as or at XX, $XX.X dropped to $XX.X improved portfolio seen XX. March performance

$XX existing year based. nature quarter in totaled speed days to loan both prior our Our similar to end. last for The is loan a is diverse is funded fiscal million, pipeline pipeline similar XX which and in portfolio

have seasonality pipeline, our the drop and anticipate acquisition averages. drop demand grow below increased some drop required of recent to pressure and loan the in we rates. loan recent to historical our loans portfolio, and our the agricultural interest loans in anticipate with the a treasury on Based in Pricing in marketplace slightly offs portfolio Gideon demand, rates, in reductions reduction

and loan the X% Due also approximately growth to growth fiscal and acquired year we're reductions Gideon to expecting quarter deposit year slower acquire growth to rate loan $XX during recent in interest of excluding the demands, the softening loan $XXX funding. fourth our fiscal again of the for and balances, outlook Deposit and the to some range. brokered bringing for year the million million X% acquisition slowed the

June with Non-deposit -- grew during or non-maturity million the occurring million approximately deposits quarter. $XX X% $XX

but historical This X%, our we was CD Our as internal greater below non-maturity X% migration fell of succeeding. goal from exceeded this let which and accounts to due rates. marketing deposits and growth migration as growth primarily efforts increased non-maturity for to anticipated well to target growth, than continued

by in continues the to the million be fiscal second the $XX companies. XX% We're to growth year during to pleased For banks especially June $X occurring fiscal deposits year Core CDs or be half deposit likely $XX when quarter. continue grew growth and both grew the from by so or with deposit due of million with competition challenging investment million. aggressive the

We expect XXXX non-maturity years. sinking and deposit both fiscal growth the CDs and for

We of growth X% CD are non-maturity projecting X%. and to

achieved. well and we been the and anticipated of and the acquisition completed June data we're the on First announce with Today, transitions acquisition savings November X. went We cost XX the last year XXth Overall, have December the of on Commercial conversion retention. loan pleased deposit Bank and completed acquisition the

at of the rural last urban both number and partners potential several have over submitted bits We a areas. looked of and quarter

opportunities The that profitably offer continue to and potential look model bases and price perform competitive. good where nearby we core been acquisitions quite for provide offered grow well and will growth. deposit has evaluate our franchise activity long-term our our business to We'll for believe markets we'll where in markets

plan We the to upon smaller will or that financially shares being million steel. us XXX,XXX say We're repurchase companies November to $XXX stock patient stock geographic. committed range not will the depending and announced We to of XXXX. in target for million companies consider their larger will for of $XXX our benefit and strategic both continue in

repurchased other region. evaluation stocks The Company the to and our we at shares our quarter, last to continues peers value metrics of in the our XX,XXX During stocks of stock. in look industry market compare for our

provide potential to to long-term capital continue options shareholder to deploy for versus other We to stock and evaluate use will the of returns. repurchases capital

shares we through note, and period repurchased Of did plan XX,XXX adopt term quiet plan XXXX. approximately XX, June XXbX-X also during the the under

remarks. That my concludes

Matt Funke

Okay, Ben, any questions. at this take time, to we like

to if So how listeners two our you questions. would remind

Operator

Okay, Instructions] ahead. Okay, Please go from of thank Andrew question you. [Operator Liesch Sandler comes O'Neill. our first

Andrew Liesch

here fed Can a from you next going to little the perform you outlook with how margins the expectation rates think give week? just cutting the on of

Greg Steffens

is Andrew, reduction and time identify funding what we’ll we’re, seen loans can happen We have on the that what we will We’ve know that side. re-price. for we deposit. know already some don't that competition

over still So, lower. more about priced have time older year deposits are originally literally a and or rolling we that then would amount the fair

six some adjustments before to last short, achieve of on some months, that made rather bit to Also on over make our pricing. roll little commitments any as take we time a we've of growth short-term through well will but deposit the that rate, can

provide significant, or over some term, the we margin realistically, months but not So so. expect would to that pressures probably it know, the six on medium you

Andrew Liesch

or some sounds this quarter to the going it late so in and Okay, points peak might, cost here you're like be deposit might October?

Greg Steffens

we bit little probably that's Yes, get.

Andrew Liesch

It on like are just get of growth -- but little trying and the credit a and to guys just on here. from shouldn’t some handle if you acquired loans Gideon, then non-performers. the bit working a going provision some seems be -- out out on working loan with the slower to Okay,

provisions something So historically in be, quarter? the you of fourth you've that did provided also kind maybe here similar than the lower

Greg Steffens

at see are yes, point than and to we in do allows that renewals we has everything to we ahead go organic loan and if subject dollars we, even those make for lower that less have by We through dollars it it provision that else acquired, thinking that still accounting, something on be otherwise what been equal. would, dollars. for So have growth have expect come kind or replaced those are revision customers, production value would

guide So, want But provision to to to would low. that, on remain assuming we you don't want don't consistently low give we number be would it. we relatively a forward charge-offs expect the

Operator

Motta comes with question next Go Our Kelly ahead. Instructions] [Operator from KBW.

Kelly Motta

us and demand. if in referenced the maybe Matt. why wondering overview if remarks you've drop an certain and it, Thanks you Greg I that loan so think could question. your prepared about categories give may there's Hi, the be was driving that is? you Hey, Greg in any for

Greg Steffens

less of --we're just where lot levels having having lot particularly a in a we saying space, we're not before. real the estate interest inquiries, had We're the commercial that

less that have are loans We CRE in the pipelines.

of And residential Our we been is level the we're having in the where will we demand real more period. actually activity that an commercial but not increasing, arena. learn had more estate in prior dollars of commercial just

Kelly Motta

Okay. assume the Is like remains repurchases growth you with you for the quarter. to case know be mentioned plan may last with loan XXbX-X a if this the I then it quarter? this established And more started slowing that you and that that outlook you that had active fair

Greg Steffens

stock two have quarter. we shares We're the on going appropriate. where quarters, and our hadn't capital. going shares. running In uses been continue plan, And growing, repurchased prior this had the of evaluate our we and repurchase what be when a to And, be our definitely level we're any stock ratios evaluations may best to capital repurchases started of we're to repurchasing

Kelly Motta

I it had be I you really gave planted, prepared portfolio I on really How is think overview is I would XX% harvest this your been And I maybe any quarter, have if Missouri the to Okay, that's directly you priority do had I referenced lower. there's ag alluded kind in helpful. but the customers, less to color at see. had expectation of you you would to said area thanks. in know, increased now ag your for been flooding remarks. was where impacting you the I remarks be the -- your it if then and interested and hoping, that in was appreciated prepared read think some XXX. hoping about And

Greg Steffens

did We figure some was to never never that some much just planted referenced, really of flooding got XX% enough our so have market Mississippi wasn't ground had areas not and for river with is that We I with, XX% it, bottom most area. where planted. largely to too begin problem in have the that dry plant

really area of been areas severe very we've might of been parts water that, where Missouri. of that by yes, very state other hampered over a being there any had as period short flooding, of in time, as the little lot of of our have yields far So had flooding, really as a there's

enough answer you're that looking Does what for for?

Kelly Motta

Yes. And me. loans referenced as had the No, was it that's dollar helpful. of ag I do the how of you but amount quarter-over-quarter front in you much I don't think have X/XX? up,

Matt Funke

I -- growth referenced Greg probably think, the the year. had the for

Kelly Motta

Yes. Okay.

Matt Funke

the would in But $XX quarter probably the been have growth for the million range.

Greg Steffens

is $XX $XX million. million It or Yes.

Kelly Motta

loan loan where stand? So -- the balances ag balances

Matt Funke

estate real the probably XXX-ish. of Including portion it,

Kelly Motta

All right, you. And... that's helpful. Thank

Greg Steffens

Ag operating is ag real was estate $XX and XXX million. lines

Kelly Motta

Maybe one was that much. what you fees referenced is quarter, of so Thank a non-core you this last that? there $XXX,XXX

Matt Funke

mortgage non-core The purchase servicing.

Kelly Motta

Okay.

Matt Funke

that So for the prior quarter, you're what asking? is

Kelly Motta

Maybe said misunderstood. $XXX,XXX perhaps but it quarter, had Okay. quarter. you was this higher I thought I

Matt Funke

I quarter. If prior the I misspoke. did, in was It

Kelly Motta

you. Got

Thanks. Okay.

Operator

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

Matt Funke

day. quarter. Ben, everyone for to you Thank we'll and in again good a appreciate And We your Okay. Have interest. speak thank a you, participating.

Greg Steffens

you, Thank all.

Operator

for presentation. Conference attending Thank is now concluded. today's you

now may disconnect. You