SMBC - Earnings call transcript Q2 2020 | Southern Missouri Bancorp, Inc.

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Operator

Good afternoon. Welcome to Southern Missouri Bancorp Quarterly Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, that this event is being recorded. I now would like to turn the conference over to Matt Funke, CFO. ahead. go Please

Matt Funke

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

December begin all the from the $X.XX reviewing is year. the So joining quarter-ended We quarter, the fiscal earned that thank you for release. of earned that linked earnings up $X.XX quarter $X.XX from and preliminary us December $X.XX in today. it's diluted highlighted XXXX quarter. in quarter we I'll XXXX is XXXX current second down December by results XX, The diluted September the the our quarterly in

interest on Our which dollar accretion included of discount fair-value margin X.XX%, about and deposit, amortization in contribution was from on basis that $XXX,XXX quarter about premium assumed XX was loan terms. points net portfolios acquired the second for

X basis terms the period's included few benefit, had non-accrual. margin Additionally, interest been $XXX,XXX in that current dollar collected loans points about from larger a on treated as

quarter. the that quarter in a margin terms basis of the XX as comparing December basis again, then, dollar our was $XXX,XXX. points we which, XXXX year fair-value to about the was X.XX% our from discount period XXXX X basis December In accretion; margin ago On points core resulted down see was what

net points linked in but core less basis interest at basis limited which our discount the was higher, time Compared non-accrual; points total Our our little about been basis points less we the indicate core XX core as of of is XX deposits to X and interest basis than in cost than another core when up deposits our is X about margin a basis asset that points, of points higher. benefit number our margin previously X recognized XX a point yield that's cost funds had had we see similar up from that that would benefit increase plus this quarter, treated as in down from X.XX% basis loans was accretion, on sequentially. alone

compared income X.X% Non-interest was to to linked it's the up quarter. September period, as up year-ago compared and X.X% the

is of than average relevant ago from $XXX,XXX non-interest gains little basis have annualized sale no item; we as period, As than which the assets, for basis non-recurring point available main we on a are a on points, quarter securities identified percentage the our lower any more the but sale a same income gain period There linked quarter. of BOLI points a did of ago X were XX these [ph] stock. a losses year the year in improved basis and was in bankers that or X and benefit

management revenues. insurance an fees in our higher, item which to wealth per commissions, loan fees an lower sell and on the other compared NSF was loans were market with on along Additionally, gains Also brokerage quarter, card loan loan originate secondary and Compared and we up, charges, linked our were so deposit card loan our made period, the charge. September our debit debit year-ago as NSF income servicing service saw down. to revenues revenues were to our adjustment gains brokerage upward we sales we includes loan other increase

expense, had ago, year the Core the to we $XX,XXX September and the $XXX,XXX in our compared same quarter year than assets by quarter. up and linked quarter. same was is deposit current losses in totaling period bank $XX,XXX and acquisition a quarter as year a the we've was we it expense In linked ago comparison in higher only a Gideon X.X% to with on in Non-interest current compared sold merger facilities, X% September $XXX,XXX Gideon amortization reflecting as the in acquisition. acquisition. acquired fixed the ago, intangible period none the We recognized

$XXX,XXX; We the exposure compared compared as charge and also in same in XX. a recovery sheet of to ago, September for recorded lines $XXX,XXX at credit lows smaller quarter credit their seasonal the off current $XXX,XXX were linked at a a charge balance of in as a quarter for provision to at year the just quarter our as

the items assessments Turning insurance from decreases as benefits increases card to FDIC credits. realize to we expense one-time bank occupancy, compensation, to the in by ongoing in continue deposit see compared year-ago we period offset

exposure expect the to We balance noted, again fixed slight the expense level normalized seen in we offset returning would than credit quarter to and expense our Compared effects. of quarter losses quarter off credits the better the timing to non-interest March those September linked compensation already for a for we in due provisioning most the a asset to have other as decrease for before sheet quarter. had June

our sheet is quarter the at X M&A, pleased for As basis basis we year quarter; up control December exclude X that December the expense our year if operating credit from in and intangible down up points ago X quarter. from a exposure, point we're charges, X.XX%. the September non-recurring amortization points non-interest off non-interest and percentage balance very from X with provision calculate expense the quarter a other linked quarter up so But our expense linked you of the assets, basis ago, points average compared same basis the as a to is and

at as the range year. December effective prior some at we tax last year as a XX.X%, rate the little XX.X% bit running additional quarter we and of the tax was during changed lower in few the investments rate was Our our a lower had the the fiscal on slightly ago, it's rate little quarters. were In middle over advantage

the than recent $XX September the accelerate some in seasonal our six to as months million year less growth saw quarter after first quarter. in loans six loan the seen growth first growth periods. Typically, December quarter of we're the million normal year the of we've sheet; gross $XX slower than in The fiscal less balance growing saw over increased million acquisition. is in in the in we last a December but Gideon impact $XX million bit we $XX months excluding in Moving seeing the the by

ago a portfolio little XX less a little at grow above was exclusive Over of acquired continues months than last that balances, running to X%. gross X% a rate; loan year the the the a

slightly in be portfolio the balance to continue whole. our a We to terribly but meaningful more as active investment it's not sheet

the of December Total assets about increased $XX quarter. million

funding in deposits see typically $XX well. this our run they the the amount bit quarter Deposits in September fair seasonal items quarter, cash and Brokered a we both in public of up increase unit year did higher a December the drop quarter-end at were funding changed having and and were a December September expect public dropped unit funding. balances million but as this Our the million little had from where back after to was in brokered we $XX quarter. little dropped quarter

higher. the reduced. trending grown down funding X.X% other time balances, brokered number about interest have saw Exclusive that [ph], funding - number acquisitions over XX clip non-maturity balances depositor an growth deposit me, and last and excuse is also is deposits but are of in balances X.X% and but about in trending months, We remains that at non-maturity while time up

a basis quarter-end to loan FHLB year as acquisition. up overnight taken The increase We're of quarter a assets reduction XX, million also faster and inflows the balances were down the Non-performing compared early $XX FHLB quarter-end, balances repayment of ago they December growing $X September points borrowed in year and $XX XX. December to quarter at XX, basis significant December $XX.X non-performing from September loans, now Non-performing stand the $XX.X which to percentage at time in points this close happy XX current a down it's prior ago, as borrowings as to $XX million are some in compared were quarter down million quarter, to another from after expect at total our XX down allow in the million we some to about more in this loans December followed the at Gideon at report that's our is public these was basis the year represent funds. of quarter-end on new million. for calendar at that sequential at million. an X.XX% at XX unit

and at points down XX a percent basis points, December down one year XX of ago. September NPAs assets from at are X.XX% from XX total XX basis As

basis We they level March Because charge-offs quarter; reduced classified be to a continue of loans non-performing the the December points any annualized charge-offs delinquent current in the that declined compared in to a growth in $XXX,XXX lower were expense by skewed our as quarter were to in that our but $XXX,XXX September our both $XXX,XXX pick since and but well. and of linked expect time X when up highest bit loans, stats delinquents, loan provisioned and our did reduction acquisition. indicative Gideon provision trend. classified year Our this the net don't is quarter. as the we Net in were credit XXXX that's at ago somewhat

average a as and of is trailing at from month which at basis charge-off loans at XX. Our loans measures a and those [ph] provision unchanged month linked is would XX percentage have a months current on At ago period. in a X points. X X XX last month the trailing of over XX X is XXXX, points those average if average over provision basis, points XX up basis our and year-ago to XX basis running basis been basis provision were XX of XXX a from we trailing points, loans December quarter And the points, to quarters charge-offs point our at four figures September the last basis where you look at are expense and XX

against are basis noted those value in allowance percentage fiscal and loans after began percentage fair adjustment smaller time Gideon as delinquents. XX June immediately loan make loans XX, December the ago a the which A by above, classifieds unless ago, of we as an at don't portfolio identified that's of seeing declines subsequent was at up for to XXXX; we're loan we've Acquired XX, and gross acquisition, losses back X gross but we also of same allowance the as year allowance to X.XX% at our compared of which acquisition, The non-performing subject our hold as a the months impairment; we XX. to December X.XX% our at points loans. level dropped year

accounting loss XXXX credit We which effective not continue expected on the standard to time. work new implementation developed July of the company but at X, this our the will impact towards on we've of be current for allowance estimates

on financial the That to Greg turn concludes prepared this Steffens. time, I'll performance. remarks And our at my call CEO, our over

Greg Steffens

going Thank I'm more you, about loans to a Matt. little briefly. talk bit

for our fiscal we're in pleased growth our gross of with loan overall, So quarter year. second rate and portfolio the

we or our been growth the million of For has for generated X.X% weaker which typically one quarter, quarters $XX.X and growth.

year modestly portfolio loan of for which to ahead realized For fiscal of X% $XX us X% of growth puts growth. X% million guidance of on the pace little our months achieving a our loan six over gross we've

NPAs, expected However, our which seasonal as we factors have over it slightly overall our and should recent been were our periods, be Gideon growth. less growth acquisition has reduced pronounced loan the to able non-performing from assets noted reduce that

had modest periods. has other organic our our while loan Overall, we loan one-to-four increases by slightly grown in portfolio more changes. loan has and portfolios multi-family residential over been family prior construction drawn the than Our several changed we quarters have growth housing, residential more property in had balances last as have led mix loans, in

XXX% of During Southern XXX% XX/XX. concentrations backed real Missouri has Bancorp's moved and up recent XXX% estate at at commercial at June XX/XX/XXXX to to from XXXX, periods, XX has now

fiscal the been evenly has Our spread loan during year of fairly each our three growth over continues regions. organic and

the during the at $XX million prior compared $XXX same totaled period quarter million was which up to the originations current loan of volume year. Our as

of However, the $XXX million, the year-to-date have down year. for which $XX loan million is fiscal from same period originations prior totaled the

bit the balances Now on and agricultural agricultural the and for production like $XX year-to-date, fiscal have our $X brief estate quarter to provide while quarter over a portfolio. $X year-to-date. real a over I'd fiscal million little for update decreased million loans the Agricultural dropped our million current

underwriting prices Our crop and our the support generally we agricultural customers expectations. production, finished the than our XXXX at had exceeded payments year beginning better year of expected amount as of

we We approximately have we anticipate process with to lines to overall, date. change have XXXX in operating and compared production this most limited of of planted would year. renewed crops XX% the be this renewal started through the process seen for we last pleased our We year year the renewal that Overall, and we're at mixture what expect point. be way that the to are

also Matt's on I'd loans. comments to like add non-performing our to

has balances acquisition. As we are in Gideon reduction our been pleased which the since non-performing with loan elevated

million to our have loans brought forecast loans ago $X.X improve non-performing We sequential as the have acquired million one in quarter. and and from to non-performing million continued down from $X $XX.X these year

forward, which our closely improvement will loans more modest averages. in would we non-performing Looking at only anticipate levels current approximate historical

quarters. have or in improvements recent to payment on We as seen over our performance more XX due have portfolio, also drop loan loans past days continued modest

in X% yet we XX pipeline our things several to remain is December at similar portfolio weaker construction funded guidance seasonality growth. grow is existing market compared aggressive that to XXXX. million XX/XX and loan drawn loans $XX include totaled than a competitors; a believe to proportion quarters. $XX assets. will various X% [ph], does at XX, Our pending of of anticipate but The line the loan types portfolio loans June for diverse by our Based fairly the and pipeline with not and million and $XX nature pricing slightly higher closed at are we but our pace to our on last portfolio various prepayment million within the increased to portfolio, to at pipeline agricultural next annualized be But loan days of on our fund as in growth rates do of XX,

strongest with We're million fiscal been over results our $XX.X has balances satisfied year's our deposit growth. And which of deposit quarters million exceeded $X.X of one the our for of quarter, for also growth typically prior of year-to-date in has growth $XX [ph]. our the million

$XX and public non-maturity X.X%. than is months first brokered guidance. are grown our less X% million with deposits the Non-maturity year, unit or expected for while or to six X.X%, the to which million deposits grow grown consistent our have for Excluding our fiscal fiscal have prior X% of CDs $X deposits year

growth declining given X% However, our we the rates, market is reduced increased of to a previous expected fall guidance deposit of now certificates for X% due to to reduction and of in customers deposit below deposit interest on interest our competition time preference rates.

be be growth Core due aforementioned deposit continues to challenging or likely to to so continue items. the

to going turn M&A. we're Now to

part is Inc. at and the system During declined improve Central we several two Bancshares This the XX. last XXXX. and converted have the late quarters partners in to targeted potential were intangible first of did our what of seeing quarter, period for years. completed We be we is year of the June than this a totaled number quarter. recent announce This Federal earnings anticipate the looked from to of acquisition on calendar as in million. our January acquisition acquisition over several looks was an acquisitions onto XXXX expected assets share smaller the than and modestly earn-back We per size approximately acquisition $XX has its approximately data smaller

this available an the to excited role options the market other our to shareholders are us, and for of believe is capital given transaction. risk enter of low use this effective integration We the and

grow believe continue to wherein will our We in business opportunity potential our to acquisitions offer where markets the well markets perform and franchise. nearby evaluate other our model we properly

continue core to long-term for for to good look acquisitions will we deposits Now, growth. offer that provide

but for and primarily $XXX will million the we and to patient depending target to companies consider being committed larger remain to $XXX will financially strategic million or both deals. we continue companies will the upon range, us, smaller benefit chase not in asset We we and geographically,

closing, plan shares In November XXX,XXX stock a we for repurchase announced in XXXX.

remaining and XXX,XXX peers have in stock our and During we value market our did look of the in authorized stocks stock, other quarter The metrics of the valuation at for repurchases. to repurchase any company region. industry compared for continues shares our shares December to not

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

That concludes remarks. my

Matt Funke

you, Greg. this may have. our participants And Thank any like at time questions to Kate, right. we'd All take

how could you would if for wait. So, we'll remind they queue folks those,

Operator

question-and-answer will Our Liesch session. Instructions] Go the [Operator ahead. begin We from question first Andrew Piper Sandler. is from

Andrew Liesch

Good afternoon, everyone.

good brokerage there, seasonal So income rose Matt, upward other going from run of income there. at you like adjustment and just income NSF off loan little and this changes made to higher have be It fees the If bit, fees maybe in talking of? forward; fee the some a years? were from fee you I previous about that seems has mortgage rate the guys but down factors just than been what fee a should is quarter-over-quarter; look it build your income then

Matt Funke

Well, some taken we've a should but we're good quarter, of in hold a our with year so originations; for be some so NSF we we'll hoping insurance always will up start no mortgage on so the with that. business, should activity servicing seasonality optimistic, well. we're the has fee that March of think We see It's on good and refi relatively that - especially; do mindful and continue be the building brokerage the far that from I got pretty hit that been a increase. as charges

Andrew Liesch

[indiscernible] this higher - you call level? margin; paying which to margin in year you then conference could some on from earlier And referenced have Great. the guys expect think How provide off the funding some XXX this that cost do I early might just following last up you trend relief. CDs

Matt Funke

X-X guaranteed we ago than money were we've are bit But just quarter some seeing a margin funding market pricing made more now additional right loan or some March quarter little rates of thought and to crunched a loan we side weeks about what would see ago, March right that some even pressure this look for and should we not new we CDs, I'd concessions the the relief. cause cost aggressive the some may say when some roll-off during for year basically time; somewhat other market those the fund now. to have seeing more optimistically on continue it's Well, more of in treasury but be that. on we're we're pricing at probably of what

the at point be maintain especially the to in think consider reported the number well. we benefits I into funds, little of that happy we'll see cost the XX-day that we it the this March you on seen should struggle we with to should So, margin should as have a quarter, say continue bit quarter. But on when then March going always peak some quarter, I

Andrew Liesch

very helpful. Thanks. that's step Great, back. will I

Matt Funke

Andrew. Thanks,

Operator

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

Kelly Motta

you more be your and guys. - taking off how Hi investment I'd any Thank there thinking assets? we in active think, of Matt, about start are being thought should for a building earning so question. the prepared as much you've maybe remarks strategies portfolio. I securities average implementing percentage mentioned Thanks. my I Wondering in maybe

Matt Funke

of just on we're anything is will be moves growth our Yes, overall that the typically the needle really this little think been it investment novel to faster year-to-date going the what we've yield. compared pursued. into, in in nothing portfolio a I don't it's terms investments

Kelly Motta

it kind that Okay, or… then, kind at this you of average where good last keep X% were assets of the than and Is should earning we then quarter? size; of - and

Greg Steffens

along interest lag It with little in the of year, half just Yes, rate environment might think if grow our especially modeling continues. this [ph] bit second I sheet. a balance the overall to

Kelly Motta

was landscape? and could you And pressure pricing mentioned competitive the what know it. in you is I yields; how the I I markets on more Got trending provide wondering loan on you're seeing color if - your in

Greg Steffens

but on the more losing a had We're think that be looking has than a We've it's of seen been. size, deals, West going to what getting; slightly to aggressive it we're our lot quarter, than where increased loan region I lot at competition more primarily margin larger - in deals positive. a lot of pricing what for Overall, we're flat basically no. become

Kelly Motta

like Thanks. Thanks an maybe balance provision had for there. on increased it in expenses; for And that, sheet expenses looks Greg. the you then, off

range? good rate a the Excluding build that is million of kind that to off of run $XX dollar around

Greg Steffens

acquired. Well, branches of having another don't of anticipate loss disposition the we

So we thing that have. won't will be one

Matt Funke

a in the little we [ph] in bit first annual expense. always cost March month little lot quarter. our with us Kelly, do see of a pressure the quarter more do January; a compensation always in We hurts bit that so the of generally legitimates

expenses I our think otherwise, of should remain most steady. pretty

Kelly Motta

Great. of And amount had then benefit you lastly, this FDIC the quarter? the

Greg Steffens

X.XX X.XX, running on a [ph] be quarter it. should We

Kelly Motta

thank you. Great,

Greg Steffens

You're welcome.

Operator

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

Matt Funke

months. thank Thank with again, for we'll Okay. appreciate us. again you, joining And interest your We you Kate. and talk Thanks. three you everyone in

Operator

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

now may You disconnect.

Southern Missouri Bancorp (SMBC) 28 Jan 202020 Q2 Earnings call transcript