Southern Missouri Bancorp Reports Preliminary Results for Fourth Quarter of Fiscal 2017; Increases Quarterly Dividend by 10%, to $0.11 Per Common Share; Schedules Conference Call to Discuss Results for Tuesday, July 25 at 3:30 pm Central t

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| Source: Southern Missouri Bancorp, Inc.

Poplar Bluff, Missouri, July 24, 2017 (GLOBE NEWSWIRE) --


Southern Missouri Bancorp, Inc. (“Company”) (NASDAQ: SMBC), the parent corporation of Southern Bank (“Bank”), today announced preliminary net income available to common stockholders for the fourth quarter of fiscal 2017 of $3.7 million, an increase of $31,000, or 0.8%, as compared to the same period of the prior fiscal year. The increase was attributable to increases in net interest income and noninterest income, as well as reductions in provision for loan losses and provision for income taxes, partially offset by an increase in noninterest expense. Preliminary net income available to common stockholders was $.49 per fully diluted common share for the fourth quarter of fiscal 2017, equal to the $.49 per fully diluted common share reported for the same period of the prior fiscal year. Fourth quarter earnings were impacted by a number of one-time charges, including costs incurred due to the June 2017 acquisition of Tammcorp, Inc., and its subsidiary, Capaha Bank (the “Capaha Acquisition”). For fiscal 2017, preliminary net income available to common stockholders was reported at $15.6 million, an increase of $789,000, or 5.3%, as compared to the prior fiscal year. Per fully-diluted common share, preliminary net income available to common stockholders was $2.07 for fiscal 2017, an increase of $.09, or 4.5%, as compared to the prior fiscal year.

Highlights for the fourth quarter of fiscal 2017:

  • Earnings per common share (diluted) were $.49, unchanged as compared to the same quarter a year ago, and down $.04, or 7.5%, as compared to the $.53 earned in the third quarter of fiscal 2017, the linked quarter.
     
  • Annualized return on average assets was 0.97%, while annualized return on average common equity was 10.5%, as compared to 1.07% and 11.9%, respectively, in the same quarter a year ago, and 1.07% and 11.9%, respectively, in the third quarter of fiscal 2017, the linked quarter.
     
  • Net loan growth for the fourth quarter of fiscal 2017 was $171.8 million, as the Capaha Acquisition contributed $152.2 million in new loans. Net loans were up $262.3 million for the fiscal year, an increase of 23.1%. Deposit growth was $183.1 million for the fourth quarter, as the Capaha Acquisition contributed $166.8 million in new deposits. Deposits were up $334.9 million for the fiscal year, or 29.9%.
     
  • Net interest margin for the fourth quarter of fiscal 2017 was 3.82%, up from the 3.73% reported for the year ago period, and up from 3.64% for the third quarter of fiscal 2017, the linked quarter. Increased discount accretion on acquired loans and recognition of interest income on paid off loans which had been on nonaccrual status contributed to the increase in margin compared to both the year ago and linked quarter periods.
     
  • Noninterest income (excluding available-for-sale securities gains) was up 11.8% for the fourth quarter of fiscal 2017, compared to the year ago period, and down 1.3% from the third quarter of fiscal 2017, the linked quarter. The linked quarter included non-recurring benefits of $343,000, with no comparable benefits in the current period.
     
  • Noninterest expense was up 30.8% for the fourth quarter of fiscal 2017, compared to the year ago period, and up 13.2% from the third quarter of fiscal 2017, the linked quarter. The current quarter’s results included charges of $536,000 attributable to merger and acquisition activity, with no comparable charges in the year ago period, and $73,000 in comparable charges in the linked quarter. Additionally, the Company recognized impairments in the value of fixed assets totaling $329,000 as a result of the May flooding of its Doniphan, Missouri, location, and recognized an elevated level of expenses related to foreclosed and repossessed property.
     
  • Nonperforming assets were $6.3 million, or 0.37% of total assets, at June 30, 2017, as compared to $6.5 million, or 0.44% of total assets, at March 31, 2017.

Dividend Declared:

The Board of Directors, on July 21, 2017, declared a quarterly cash dividend on common stock of $0.11, payable August 31, 2017, to stockholders of record at the close of business on August 15, 2017, marking the 93rd consecutive quarterly dividend since the inception of the Company, and representing an increase of 10% over the quarterly dividend paid previously. The Board of Directors and management believe the payment of a quarterly cash dividend enhances stockholder value and demonstrates our commitment to and confidence in our future prospects.

Conference Call:

The Company will host a conference call to review the information provided in this press release on Tuesday, July 25, 2017, at 3:30 p.m. central time (4:30 p.m. eastern). The call will be available live to interested parties by calling 1-888-339-0709 in the United States (Canada: 1-855-669-9657, international: 1-412-902-4189). Telephone playback will be available beginning one hour following the conclusion of the call through August 7, 2017. The playback may be accessed by dialing 1-877-344-7529 (Canada: 1-855-669-9658, international: 1-412-317-0088), and using the conference passcode 10111013. Participants should ask to be joined into the Southern Missouri Bancorp (SMBC) call.

Balance Sheet Summary:

The Company experienced balance sheet growth in fiscal 2017, with total assets of $1.7 billion at June 30, 2017, reflecting an increase of $303.8 million, or 21.6%, as compared to June 30, 2016. Balance sheet growth was funded through deposit growth, and was due in large part to the Capaha Acquisition.

Available-for-sale (“AFS”) securities were $144.4 million at June 30, 2017, an increase of $15.2 million, or 11.8%, as compared to June 30, 2016. The increase was attributable primarily to the Capaha Acquisition, which included securities balances totaling $9.9 million. Cash equivalents and time deposits were $31.5 million, an increase of $8.2 million, or 35.5%, as compared to June 30, 2016.

Loans, net of the allowance for loan losses, were $1.4 billion at June 30, 2017, an increase of $262.3 million, or 23.1%, as compared to June 30, 2016. The increase was attributable primarily to the Capaha Acquisition, which included loan balances totaling $152.2 million, at fair value. Inclusive of the acquisition, loan growth was noted in commercial real estate loans, residential real estate loans, and commercial loans. Loans anticipated to fund in the next 90 days stood at $80.7 million at June 30, 2017, as compared to $43.0 million at March 31, 2017, and $55.9 million at June 30, 2016.

Nonperforming loans were $3.2 million, or 0.23% of gross loans, at June 30, 2017, as compared to $5.7 million, or 0.50% of gross loans, at June 30, 2016. The decrease was attributable primarily to the restoration to accrual status of several purchased credit-impaired loans which have performed according to terms for a reasonable period and for which collateral analysis indicates the Company can be reasonably assured of collection of all principal and interest due, net of any purchase accounting adjustments. Nonperforming assets were $6.3 million, or 0.37% of total assets, at June 30, 2017, as compared to $9.0 million, or 0.64% of total assets, at June 30, 2016. The decrease in nonperforming assets primarily reflected the decrease in nonperforming loans. Our allowance for loan losses at June 30, 2017, totaled $15.5 million, representing 1.10% of gross loans and 482% of nonperforming loans, as compared to $13.8 million, or 1.20% of gross loans, and 244% of nonperforming loans, at June 30, 2016. The allowance as a percentage of gross loans declined due to the Capaha Acquisition, as acquired loans are carried at fair value. For all impaired loans, the Company has measured impairment under ASC 310-10-35. Management believes the allowance for loan losses at June 30, 2017, is adequate, based on that measurement.

Total liabilities were $1.5 billion at June 30, 2017, an increase of $256.7 million, or 20.1%, as compared to June 30, 2016.

Deposits were $1.5 billion at June 30, 2017, an increase of $334.9 million, or 29.9%, as compared to June 30, 2016. The increase was attributable primarily to the Capaha Acquisition, which included deposit balances totaling $166.8 million. Inclusive of the acquisition, deposit growth was comprised primarily of certificates of deposit, interest-bearing transaction accounts, and noninterest-bearing transaction accounts. Specifically, the Company’s public unit deposits have increased $45.8 million since June 30, 2016 (with $12.5 million of this growth attributable to the Capaha Acquisition). Brokered certificates of deposit increased $68.0 million (with $18.3 million of this growth attributable the Capaha Acquisition), and brokered nonmaturity deposits increased $8.0 million since June 30, 2016. Our discussion of brokered deposits excludes those brokered deposits originated through reciprocal arrangements, as our reciprocal brokered deposits are primarily originated by our public unit depositors and utilized as an alternative to pledging securities against those deposits. The average loan-to-deposit ratio for the fourth quarter of fiscal 2017 was 97.7%, as compared to 100.2% for the same period of the prior fiscal year.

FHLB advances were $43.6 million at June 30, 2017, a decrease of $66.6 million, or 60.4%, as compared to June 30, 2016, as the Company prepaid $16.5 million in term advances during the first quarter of fiscal 2017, and decreased overnight funding. The decrease in FHLB advances was attributable to the increase in deposit balances, including brokered funding and public unit deposits, partially offset by loan demand. Securities sold under agreements to repurchase totaled $10.2 million at June 30, 2017, a decrease of $16.9 million, or 62.3%, as compared to June 30, 2016. The decrease was attributable to several large public unit customers migrating from this product to a reciprocal brokered deposit arrangement. At both dates, the full balance of repurchase agreements was due to local small business and government counterparties.

The Company’s stockholders’ equity was $173.1 million at June 30, 2017, an increase of $47.1 million, or 37.4%, as compared to June 30, 2016. The increase was attributable to the “at-the-market” offering of the Company’s common shares which was conducted in June 2017, the issuance of common shares in the Capaha Acquisition, and retention of net income, partially offset by payment of dividends on common stock and a decrease in accumulated other comprehensive income.

Income Statement Summary:

The Company’s net interest income for the three-month period ended June 30, 2017, was $13.5 million, an increase of $1.7 million, or 14.4%, as compared to the same period of the prior fiscal year. The increase was attributable to an 11.6% increase in the average balance of interest-earning assets, combined with an increase in net interest margin to 3.82% in the current three-month period, as compared to 3.73% in the three-month period ended June 30, 2016.

Accretion of fair value discount on acquired loans and amortization of fair value premiums on assumed time deposits related to the Company’s acquisition of Peoples Service Company and its subsidiary, Peoples Bank of the Ozarks in August 2014 (the “Peoples Acquisition”), decreased to $409,000 for the three-month period ended June 30, 2017, as compared to $416,000 for the same period of the prior fiscal year. This component of net interest income contributed twelve basis points to net interest margin in the three-month period ended June 30, 2017, as compared to a contribution of 13 basis points for the same period of the prior fiscal year. For the linked quarter, ended March 31, 2017, discount accretion on loans and premium amortization on time deposits related to the Peoples Acquisition amounted to $216,000, contributing six basis points to net interest margin. The dollar impact of this component of net interest income has generally been declining each sequential quarter as assets from the Peoples Acquisition mature or prepay, however, the Company experienced an increase in the quarter ended June 30, 2017, as the result of a larger amount of payments received on loans acquired and recorded at a carrying value less than the principal repaid.

Additionally, in the three-month period ended June 30, 2017, the Company recognized $284,000 in interest income as a result of the repayment in full of loans which had been restored to accrual status during the quarter ended March 31, 2017.

The provision for loan losses for the three-month period ended June 30, 2017, was $383,000, as compared to $817,000 in the same period of the prior fiscal year. Decreased provisioning was attributed to the reduction in nonperforming loans and net charge offs. As a percentage of average loans outstanding, the provision for loan losses in the current three-month period represented a charge of 0.12% (annualized), while the Company recorded net charge offs during the period of 0.01% (annualized). During the same period of the prior fiscal year, provision for loan losses as a percentage of average loans outstanding represented a charge of 0.29% (annualized), while the Company recorded net charge offs of 0.26% (annualized).

The Company’s noninterest income for the three-month period ended June 30, 2017, was $2.9 million, an increase of $299,000, or 11.6%, as compared to the same period of the prior fiscal year. The increase was attributable to mortgage servicing income, deposit account service charges, bank card interchange income, loan fees, and increases in the cash value of bank-owned life insurance, partially offset by inclusion in the prior period’s results of a $138,000 one-time benefit resulting from the sale of the Company’s interest in a LIHTC limited partnership.

Noninterest expense for the three-month period ended June 30, 2017, was $10.8 million, an increase of $2.6 million, or 30.8%, as compared to the same period of the prior fiscal year. The increase was attributable in part to charges related to merger and acquisition activity ($536,000, primarily categorized in legal and professional fees, occupancy, advertising, and compensation and benefits) and charges for the impairment of fixed assets due to the May 2017 flooding of our Doniphan, Missouri, facility ($329,000). The Company also noted increases unrelated to merger and acquisition activity, primarily in the categories of compensation and benefits, provisioning for off-balance sheet credit exposure (a $217,000 charge in the current period as compared to a $67,000 recovery for this item in the year-ago period), charges related to foreclosed and repossessed property (including a charge to reduce the carrying value of foreclosed property), and occupancy. The efficiency ratio for the three-month period ended June 30, 2017, was 65.9%, as compared to 57.4% in the same period of the prior fiscal year.

The income tax provision for the three-month period ended June 30, 2017, was $1.5 million, a decrease of $146,000, or 8.8%, as compared to the same period of the prior fiscal year, attributable primarily to a decrease in the effective tax rate, to 28.9% from 31.0%, combined with a decrease in pre-tax income. The lower effective tax rate was attributed primarily to formation by the Company’s bank subsidiary of a Real Estate Investment Trust (“REIT”) to hold certain qualified assets in order to minimize state tax liability, partially offset by the inclusion in the current period’s results of some non-deductible expenses related to merger and acquisition activity.

Forward-Looking Information:

Except for the historical information contained herein, the matters discussed in this press release may be deemed to be forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from the forward-looking statements, including: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; fluctuations in interest rates and in real estate values; monetary and fiscal policies of the Board of Governors of the Federal Reserve System and the U.S. Government and other governmental initiatives affecting the financial services industry; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; our ability to access cost-effective funding; the timely development of and acceptance of our new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services; expected cost savings, synergies and other benefits from the Company’s merger and acquisition activities might not be realized to the extent anticipated or within the anticipated time frames, if at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; legislative or regulatory changes that adversely affect our business; results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our reserve for loan losses or to write-down assets; the impact of technological changes; and our success at managing the risks involved in the foregoing. Any forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. We undertake no obligation to publicly update or revise any forward-looking statements or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed might not occur, and you should not put undue reliance on any forward-looking statements.



Southern Missouri Bancorp, Inc.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
      
Summary Balance Sheet Data as of: June 30  March 31  December 31,  September 30,  June 30,
  (dollars in thousands, except per share data)   2017    2017    2016    2016    2016  
      
Cash equivalents and time deposits$  31,533 $   21,508 $  30,865 $  21,978 $  23,277 
Available for sale securities   144,416    134,048    132,116    124,249     129,224 
FHLB/FRB membership stock   6,119    6,220    8,256    9,121    8,352 
Loans receivable, gross   1,413,268    1,241,120    1,224,828    1,218,228    1,149,244 
  Allowance for loan losses   15,538    15,190    14,992    14,456    13,791 
Loans receivable, net   1,397,730    1,225,930    1,209,836    1,203,772    1,135,453 
Bank-owned life insurance   34,329    30,147     30,491    30,282    30,071 
Intangible assets   15,390    7,287    7,478    7,657    7,851 
Premises and equipment   54,167    46,624    46,371    46,615    46,943 
Other assets   24,030     24,220     26,936     26,138     22,739  
  Total assets$  1,707,712  $  1,495,984  $  1,492,349  $  1,469,812  $  1,403,910  
      
Interest-bearing deposits$  1,268,662 $  1,133,405 $  1,075,792 $  1,032,810 $  988,696 
Noninterest-bearing deposits   186,935    139,095    136,024    134,540     131,997 
Securities sold under agreements to repurchase   10,212    17,900    22,542    25,450    27,085 
FHLB advances   43,637     51,619    107,502    129,184    110,216 
Note payable   3,000    -     -     -      -  
Other liabilities   7,335    5,156    5,336    4,156    5,197 
Subordinated debt   14,848      14,824     14,800     14,776     14,753  
  Total liabilities   1,534,629     1,361,999     1,361,996     1,340,916     1,277,944  
      
Common stockholders' equity   173,083     133,985     130,353     128,896     125,966  
  Total stockholders' equity   173,083     133,985     130,353     128,896     125,966  
      
  Total liabilities and stockholders' equity$  1,707,712  $  1,495,984  $  1,492,349  $  1,469,812  $   1,403,910  
      
Equity to assets ratio 10.14% 8.96% 8.73% 8.77% 8.97%
Common shares outstanding   8,591,363    7,450,041    7,450,041    7,436,866    7,437,616 
  Less: Restricted common shares not vested   18,775     33,175     33,175     36,000     36,800  
Common shares for book value determination   8,572,588     7,416,866    7,416,866    7,400,866    7,400,816 
      
Book value per common share$  20.19 $  18.06 $  17.58 $  17.42 $   17.02 
Closing market price   32.26    35.52    35.38    24.90    23.53 
      
Nonperforming asset data as of: June 30  March 31  December 31,  September 30,  June 30,
  (dollars in thousands)   2017    2017    2016    2016    2016  
      
Nonaccrual loans$  2,825 $  3,069 $  5,572 $  4,969 $   5,624 
Accruing loans 90 days or more past due   401     134     85     54     36  
  Total nonperforming loans   3,226    3,203    5,657    5,023    5,660 
Other real estate owned (OREO)   3,014    3,296     3,310    3,182    3,305 
Personal property repossessed   86     37     39     45      61  
  Total nonperforming assets$  6,326  $  6,536  $  9,006  $  8,250  $  9,026  
      
Total nonperforming assets to total assets 0.37% 0.44% 0.60% 0.56% 0.64%
Total nonperforming loans to gross loans 0.23% 0.26% 0.47% 0.42% 0.50%
Allowance for loan losses to nonperforming loans 481.65% 474.24% 265.02% 287.80% 243.66%
Allowance for loan losses to gross loans 1.10% 1.22% 1.22% 1.19% 1.20%
      
Performing troubled debt restructurings (1)$  10,908 $  8,649 $  7,673 $  7,853 $  6,078 
      
  (1) Nonperforming troubled debt restructurings are included with nonaccrual loans or accruing loans 90 days or more past due.
      



 For the three-month period ended
Quarterly Average Balance Sheet Data: June 30  March 31  December 31,  September 30,  June 30,
   (dollars in thousands)   2017    2017    2016    2016    2016  
      
Interest-bearing cash equivalents$  2,482 $  1,896 $  1,599 $  7,730 $  8,883 
Available for sale securities and membership stock   143,114    141,223    139,183    135,188    134,823 
Loans receivable, gross   1,271,705     1,221,642     1,216,607     1,178,067     1,126,630  
  Total interest-earning assets   1,417,301    1,364,761    1,357,389    1,320,985    1,270,336 
Other assets   117,235     119,436     123,287     115,277     109,506  
  Total assets$  1,534,536  $  1,484,197  $  1,480,676  $  1,436,262  $   1,379,842  
      
Interest-bearing deposits$  1,155,547 $  1,099,319 $  1,043,542 $  994,518 $  996,760 
Securities sold under agreements to repurchase   13,694    24,053    24,323    26,723    29,305 
FHLB advances   55,914    71,405    124,834    132,107     80,155 
Note payable   1,451    -     -     -     -  
Subordinated debt   14,836      14,812     14,788     14,765     14,741  
  Total interest-bearing liabilities   1,241,442    1,209,589    1,207,487    1,168,113     1,120,961 
Noninterest-bearing deposits   145,790    138,667    137,468    133,601    127,687 
Other noninterest-bearing liabilities   5,191     3,479     5,874     7,082     7,091  
  Total liabilities   1,392,423     1,351,735     1,350,829     1,308,796      1,255,739  
      
Common stockholders' equity   142,113     132,462     129,847     127,466     124,103  
  Total stockholders' equity   142,113      132,462     129,847     127,466     124,103  
      
  Total liabilities and stockholders' equity$  1,534,536  $  1,484,197  $  1,480,676  $  1,436,262  $  1,379,842  
      
 For the three-month period ended
Quarterly Summary Income Statement Data: June 30  March 31  December 31,  September 30,  June 30,
  (dollars in thousands, except per share data)   2017    2017    2016    2016    2016  
      
Interest income:     
  Cash equivalents$  8 $  13 $  4 $  4 $  7 
  Available for sale securities and membership stock   895    875    848    851    849 
  Loans receivable   15,442      14,067     14,229     14,250     13,405  
  Total interest income   16,345     14,955     15,081     15,105     14,261  
Interest expense:     
  Deposits   2,386    2,111    2,043    1,932    1,903 
  Securities sold under agreements to repurchase   18    25    25    27    30 
  FHLB advances   214     224    282    418    341 
  Note payable   13    -     -     -     -  
  Subordinated debt   172     163     160     152     149  
  Total interest expense    2,803     2,523     2,510     2,529     2,423  
Net interest income   13,542    12,432    12,571     12,576    11,838 
Provision for loan losses   383    376    656    925    817 
Securities gains    -     -     -     -     5 
Other noninterest income   2,886    2,925     2,702    2,575    2,582 
Noninterest expense   10,825    9,564    8,706    9,159    8,273 
Income taxes   1,507     1,463     1,735     1,358     1,653  
  Net income available to common stockholders$  3,713  $   3,954  $  4,176  $  3,709  $  3,682  
      
Basic earnings per common share$  0.49 $  0.53 $  0.56 $   0.50 $  0.50 
Diluted earnings per common share   0.49    0.53    0.56    0.50    0.49 
Dividends per common share   0.10    0.10    0.10    0.10    0.09 
Average common shares outstanding:     
  Basic   7,606,000     7,450,000    7,441,000    7,437,000    7,438,000 
  Diluted   7,635,000    7,479,000    7,467,000    7,466,000    7,468,000 
      
Return on average assets 0.97% 1.07% 1.13% 1.03% 1.07%
Return on average common stockholders' equity 10.5% 11.9% 12.9% 11.6% 11.9%
      
Net interest margin 3.82% 3.64% 3.70% 3.81% 3.73%
Net interest spread 3.71% 3.55% 3.61% 3.70% 3.63%
      
Efficiency ratio 65.9% 62.3% 57.0% 60.5% 57.4%

Matt Funke, CFO
573-778-1809
mfunke@bankwithsouthern.com