SMBC - Earnings call transcript Q3 2021 | Southern Missouri Bancorp, Inc.

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Operator

Good day and welcome to the Southern Missouri Bancorp Quarterly Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Matt Funke, Executive Vice President, Chief Financial Officer. ahead. go Please

Matt Funke

our and CFO Andrew, call everyone. is to presented This to April dated Thank XXXX XX, Southern good Missouri. Funke, and in data and of the this earnings The Matt release review Monday, you, by take information afternoon the forward-looking the quarterly purpose your is our forward-looking regarding cautionary certain today's Steffens, press I'm when on statements Greg in joined release. We today and questions. make we President call call statement statements during may CEO. refer to our contained you of

So COVID-XX start hopefully activities proceed thanks on Greg? environment. and with again our for conversation commentary the we as towards everyone joining economic us. Greg some lending credit the recovery will current and our operations, of today out

Greg Steffens

been organization quarter far temporary continue further level our and have Thanks closings COVID for even current open data we team at business. only indicates Within market transmissions that reduced and in call restrictions us afternoon had Matt Since today. good a on business few in last that area that hopeful public January. certain and the we Thank will overtime. improve member between you, quarantines activities or we improving activity have ago we our reductions the are transmission and reduced recent reported substantial or November for joining fewer and most peak The our relatively since facilities seen everyone. have our are

industry. majority these least CARES and with earlier. the interest-only prior of March our profile We at tenth hotel XX, about under in continue are and borrowers of million In Act nine the months the we dollars $XX require borrower at all to remained these to consistent feel the and figure loans performance. balances the in about quarter payments a credit positive about Nearly modifications of from

the this million the term have modifications expect during to and half SBA The time of require the the full by the of expect We second but draw to quarter spoke do the expect offset of a payment quarter. somewhat second of the near that meaningful quarter. originating return the nearly relief the in impact some to some continued analyze larger of loans late middle we're the we the have Until have slowed June wouldn't round portfolio that's we March of may in for that earlier a thus approve growth funds into we We pretty to status submitted Then release continued but the still see more We're them particular current being. continuing a far. these the around Since may PPP on of in forgiveness loan the during the and that PPP quarter March forgiveness be in limit in PPP we received balance $XX good hotels was maintained quarter notes quarter. year. closely. we remaining in balances pace we we've approaching last

has for approval. loans million on totaling PPP approval round as just million loans we've and not point. XX approximately any of on X.X XX also this round second been $X waiting first of submitted any we XX loans the have on Forgiveness our the from we SBA received at have submitted loans million had And over

organization. of might are all-time our to than we've the loan for masking reduced is of modifications were lows some delinquencies loans I $XX some further approaching classified loans down of by be note our made about were XX $X.X due points to during more and Adversely XX% past reduced quarter. basis which million total loans now delinquencies. were about that Our COVID loans. level the would million the current Right of for non-performing also

Focusing million down the X.X down farmers year down down XX.X the million on fiscal million the over the in to-date balances year fiscal Ag for quarter X.X X.X portfolio. million and and to were other loan for were loans quarter our estate while Ag real production and to-date.

are into borrowers crop their row generally Our season. well planting

favorable comparison expect which of due begun line above be uptick range by kept a part This farmers seems. our we whereas year and normal by position our XX% prices lead will in may and been to some trending loan higher after April is acreage with XX%. good In a draws. balances underwriting now of cold more and point been impacted shift prices allocations to the drop We than see of see level it's week their XXXX last our balances they to prices some Rice total from below has where Through this for production of farmers doing any and each are weather conditions were XXXX some having that likely work. yet line may it's higher in some corn year weather and corn some be some in to operating reached and at liquid from have used a soybeans we rainy XX% time crop borrowers operating noticeable it experience. prior steady soybeans they're XX% in to cotton to while likely commodity XX% to have corn this to had our

on Soybeans given the you in XX% costs ahead may results? remains in improvements are substantially and Matt go about XX% among update the XXXX more X% farmers strong mood cotton is our is for our than The pricing. production would higher. year as for us is than financial positive outlook The higher with increases higher. very XXXX more and commodity prices. Rice certain less various input increase

Matt Funke

from the of recovery in was interest provision million interest. for in secondary reduction a and than year more rise. recognition We we XXXX. expense a XXX,XXX provision our that to provision exposure accretion credit prior due new the March loan diluted Non-interest primarily item deposit net market mortgage the between down our off-balance third to call though statement for $X.XX our servicing credit related of from income costs did it's origination Sure. decline on December $X in March report loan for Thanks December that's well on our of Greg. between credit a quarter a PPP loan from of quarter in earn as included residential even prior $X.XX being also of lines a with as for portfolio up $XXX,XXX and saw in non-recurring about losses by of large and moved million in our losses the which $X.XX mostly a loan fiscal as impairment contributor quarter quarter from our the classification represent in change income March fees to charge of a interest and and accelerated. nickel about the quarter the linked instructions. a were Non-interest consistency declined a $X.X more does the quarter on we decreased discount March and sales. The decreased recognized income sheet credit From up was XX-day losses quarter deferred of inclusion to loan XXXX

resulted our was was fees of dollar included basis which terms. $XXX,XXX net In fair that XX acquired points the income forgiveness value million from X XXX as portfolios XXX margin. our $X.X accelerated points quarter March origination about received added loans on basis interest interest contributing year in fair ago about points basis from Our to loan in Also contribution to of period accretion another value XX which PPP Margin or accretion the on $XXX,XXX. was discount or the margin discount

margin XX discount points March to the March fees down XX Overall our basis a accretion of points margin. which in on core as In of including of quarter average with PPP core interest we our basis yield of down cash our margin of the basis basis down comparing quarter, So our points points ‘XX. dropped what We and X core or ‘XX of drove to a accelerated origination cost less they that the XX yield March benefit cost asset XX. balances was reduced points. December basis see core decline XXX deposits in funds bit loan being down margin Higher was discount and the any XX as forgiveness. accretion about little earning added by our basis outside than the see

fee We origination also saw XX accelerated a points. December little bit contributed less recognition basis in contribution and that quarter from PPP the

provision servicing loan year about with securities period exposure credits. up are December $XX,XXX a that in and XX,XXX $XXX,XXX about quarter provision quarter $X.X a the ago decrease cash the sales included sales M&A XX,XXX mortgage as XX million the expense expense. decline. benefit seeing the a loan linked higher one-time about Compared and the up year majority to core loan a we for decline also decline charge bully sale ago almost the point quarter down that the balances quarter. to a write charges on million as in same and In year decline. sheet improvement basis the to was about compared We're residential year we moved in same the credit income service were up ago interchange up identified quarters then the none due we that days down to Non-interest Non-interest $X.X charges available for So of gains December year again March in charge bank the year benefited included the quarter losses a current to in from for which to offsets non-recurring the million. a compared as would on we December fourth a ago in credit the with to by XX the compared quarter decrease linked the line ago a quarter prior about compared card and FDIC to gain, had be deposit that XX-day servicing quarter we premiums insurance or was and had of for the was assessment in remained off-balance had the see was compared quarter while in our sequential accounted non-interest current residential ago larger driving a and for linked as basis $X.X a

did processing, that's occupancy in charge-offs average compensation and a on are above XX XXX,XXX X last expenses March we higher our modestly loan in loan and and little property portfolio. XXX,XXX. and terms. the outstanding make our December data credit we've our provision exposure quarter basis was on are losses charge-offs loan expectation basis dollar foreclosed the XX sheet points XXX,XXX for in for our economic limited the our XX-month over linked A Net recovery trailing metrics ago up. With points positive quarter loans balances allowance by our months months not reduced than year than trailing three for basis slightly down less were off-balance averaging were points growth, a seen credit X required credit Our and and for an

XX.X% linked notably a bit a to Our the from ago income as was for more effective losses up tax when the compared provisioning up little additional and pre-tax by lower. quarter rate quarter loan moved year

Federal On Gross XX $XXX loan from the to up and $X are PPP include in loan modestly the were more March and in balances. million. remaining Central balances ago than sheet that million as million $XX loan a figure $XX PPP up million year quarter compared our would by balances $XXX March gross little grew million balances acquisition a balance up

a little to would items non-core growth that at than rate us adjust this for year more above leave X% So at growth without little time core we a X% rate. at at were any a last

down We're our our excluding be flows were the growth Our to cautious also securities March but again The down X.XX% X.X% into as be a of by securities gross in quarter about all year too federal by public more a loans while as points loans. up appear $XX time million ago Non-maturity the declined several to X investment about deposits almost in one similar million one March PPP up little level borrowings the is as bit by to a earlier was up even the point by they're basis federal percentage facility. down change deposits to funding our in million. and continuing Outside of grew from central our a balances quarters and brokerage gross basis quarter of acquisition. are as the PPP $XX up portfolio high No much X modestly the federal million $XXX Brokerage quarter. very year loans million level. allowance the once. to of substantial in and this last utilize $X of December and cash decline slowing was central putting acquisition. Deposits to percentage similar that's XX% quarter at excluding more were $XXX unit in we're almost a XX expecting after they're Greg? than compared at funding were cash below points almost of balances outside than to on liquidity not mortgage-backed our reserve's XX% a FHLB the

Greg Steffens

balances. retention wrap outside talking this loan of loans PPP about new a which estate loan some have Ag growth normally earlier offset real and up were offsetting estate which add $XX Thanks bit would market drops. secondary by quarter of flat helped growth our Matt. noted I we to paydowns little been want and loan and million have that us forgiveness funding our sold to in would real multi-family basically construction lines in Ag about the

has region to our South in current the Our been fiscal largest loan year. growth contributor

XX The and from year ended while do for don't at the that impact of December XX March pipeline December to expect loans PPP earlier. for Our those some to meaningfully still much include June we be completing is one up from impact figure as was any at June our million million growth loan will second the quarter. XX compared within XX as better days $XX we're quarter March $XXX it $XX loan noted draw for loans funded million XX and outlook not

as of term, organic We growth growth opportunities than years. term X% however, limited be impact Over loan expect returned to X% the levels unknown from growth range. the be on medium to lowered are we at going the concentrations were pre-COVID will would the loans just And our have will our be over permanently March they balances they XXX% One looking compared approximately we up we balances on totaled organic to XXX% right capital in will as borrowers X% clarity and where what where near In that loan XXX% what real future that levels. in is to quarter both year non-owner or have estate on don't and of XX one capital really their be current as XX December more medium what is we at commercial regulatory at they prior will anticipate now present. pre-COVID ago. grew experienced for roughly of C&I to the and draw they

year of over deposit Our of last industry quarter in the production million regards market $XXX outside up thing We a, March much with volume quarter the secondary in in rest loan we're the would of Obviously too like down a growth in of PPP million to be little good a a over and little originations. the the the much remains blessed year. from December which originations elevated ago $XXX the million $XXX year-over-year quarter. and was

have balances and decline. would of and much to deposits a non-maturity are eventually three We will deposit as Growth and of much liquid from about our we continue portfolio liquidity as this this come in wash to dollars and also growth CD some continue declined historically time. of more we market into more than or excess investment economy of we that to regions our expected are liquid reopens spend regions moving all this in the all cautious customers money are our expect their than prefer. position out has too across Overall at some outsized

see are environment currently in but stabilized in we acquisitions our additional this we On region as of interested We year. we not the in we see becoming more pursuing economic interested and opportunities M&A to that have any pickup have sincerely calendar pursuing. credit seen definitely front been during activity a hope

we at shares for plan. at XX,XXX our to $XX.XX shares asset remaining an M&A repurchase end especially repurchase profitability manage expect capital existing Lastly and Unless asset of had limited remains strong approximately in to growth XX,XXX repurchased we quarter growth. the stock activity risk-weighted price our of our develop under average we quarter continue imminent March would is through would growth opportunities available assuming and

Matt Funke

time you like participants All have. Greg. may take thank to any This right, we'd our Andrew questions

you remind if and them would for ready. So can questions how they queue we'll be

Operator

sir. Yes

begin question ahead. We Sandler. will answer the from Instructions] now Please question Piper [Operator session. and Andrew Liesch first with go The comes

Andrew Liesch

you? How guys. are afternoon good Hey

Matt Funke

Good afternoon Andrew.

Andrew Liesch

the on question good we've think here. don't expenses I

we think rise forward spoke there from here? growth more to be did. they going rate expense or run bit it Is thought maybe I a quarter on use more than last a I this little should good they

Greg Steffens

there been Really we standpoint occupancy. kind just vacant few more went probably timing like that to has from than would long of things a positions running term. us a We're against on

of vacancy I unusual there. might other So a normal. we see a bit rate on a than higher compensation bit there there's maybe to than little off you little some of warn don't pickup think anything in

Andrew Liesch

now then there. to has Got price might expense doesn't nice it. come back currently Good anything And interesting be improvement that guess think that Right in? control afford you'd stock now the you've be you there like what's seen a little I interested right appreciated. comments sound on there currency on you be out in your but little have? would bit. more you M&A, do it them Greg obviously are guess you deals that I outlook could with just M&A the, the a It

Greg Steffens

market as they're in able our are price M&A It's in be we it definitely trading going what opportunity but to to improved we and book this There anticipated maybe where not M&A. to at footprint. increases is seller the depend anticipating the similar of whether it's accept non-disclosure like seen that to interested definitely interested stocks around would we're really would value the from we lot at future. have the a activity ratios we're just near We to many agreements in but tangible some country but in has as definitely has have been participate receiving expectations stock people selling some have but point in upon

Andrew Liesch

banks you what seeing a just market of think that's in deal you driven do be driving might Do might private pace slower what prospective by it. or the those Got think activity? be

Matt Funke

a parts to or in M&A more some and less I of six have than with the slower our Arkansas would occur think M&A. proceeding country over Missouri I expect market active been just next little some the on footprint of months.

Andrew Liesch

it. Got my other covered prepared your all Cool. you've in Matt, actually questions comment.

So thanks will back. so much. I step

Matt Funke

Thanks Andrew.

Operator

go [Operator Please question Kelly comes from next Instructions] with KBW. ahead. The Motta

Kelly Motta

Good was appreciate loan afternoon Matt. hoping, Greg color I on and I the growth.

could factor you wondering loans. now not had going was comes is utilization back. to You on I growth historical any forward mentioned one stats line that line determine utilization if where whether stands perhaps relative or

Greg Steffens

have get boat product we have been any variety businesses part selling don't overall been of near as has able our where a not We that industries all-terrain inventory lot numbers dealers, anybody vehicles. of like have especially of car type dealers, not A of to to available.

would line know just keep loans that where that So many advances we back don't before. know lower. clear a below then they about we other have idle move balances or balances levels related typically to we on a than are more will levels usage balances to get And what also But that would to of not or usage have anticipate is businesses inventories either. how would lot seasonal took We of have variety and we're We C&I some higher. historic have when been well have helped of PPP don't temporarily would XX% are below received are things they seen. the

lot a -- cover I So

Kelly Motta

you. Thank

Thank Andrew I question set. of always you. As my got am so kind all

Greg Steffens

Kelly. Thanks

Matt Funke

Kelly. Thanks

Operator

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

Matt Funke

everyone. Thank a about day. to interest you three in and Have thank we'll We again good look again you months. your and talking Andrew forward appreciate

Operator

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

disconnect. now may You

Southern Missouri Bancorp (SMBC) 28 Apr 212021 Q3 Earnings call transcript