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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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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

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