SMBC - Earnings call 2 2024 | Southern Missouri Bancorp, Inc.

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Operator

Good morning, everyone, and welcome to the Southern Missouri Bancorp Earnings Call. [Operator Instructions] I would now like to turn the conference call over to Stefan Chkautovich, CFO of Southern Missouri Bancorp. Please go ahead.

Stefan Chkautovich

Thank you, Kathy. Good morning, everyone. CFO Missouri Chkautovich, Stefan is with Bancorp. Southern This you for us. joining Thank January to this quarterly information Monday, to of purpose review your earnings XXXX, questions. take call dated our The in is the and presented and release, XX, data

statements make President forward-looking Steffens, and regarding we today's may Chief the Greg highlights Funke, in contained and Chairman the to We and our off from with quarter. I'm during cautionary call joined by our you on our call, Officer. Administrative Matt our CEO; forward-looking recent most certain lead and statement statements refer press today release. Matt today will conversation some

Matthew Funke

of absorbed due we've third balance deposit the addition and year. seen growth Citizens in quarter net the we've the impact loan growth our outlook a down rates, largest year's remain year, fiscal results the portfolio and cost fiscal Thanks morning, pleased with I'll larger the sharp weighed securities solid continued with with me us. excuse on bit Quarter-over-quarter December margin, you, of far of This -- is we loan second from fiscal increase early part funds profitability off the higher good We as quarter in and this of the along quarter, the prior short-term income for relatively Stefan, interest year. XX.X% the prior environment, our our joining was to Matt current and the a so Funke. start ahead. this Thank year-over-year with believe highlights of for weÃ¢â‚¬â„¢ve of everyone. the but a and sheet,

quarter the $X.XX quarter, $X.XX from the and XXXX the $X.XX that's December earned linked diluted in quarter. December down We from down September

earn $XX.X proceeds $X.XX less million bonds are diluted into book bonds, rate These of share after loss or with During which securities tax. back the of trade, years. result realizing million, of loss executed than expected a value $XXX,XXX were earnings a the a an per of $XX.X bank to selling realized of loss X reinvested higher in the quarter, fully in

income diluted on period. this $X.X income per XX.X%, X.XX%. last and for have would our share earnings after by quarter, share Excluding assets net increased with roughly AOCI $X.XX, since $XX.X Book or ago tax the would have the million, $X.XX, was return loss the and million, per average value $XX.XX year over XX months been has unchanged noninterest been

X.XX% the in first fiscal decrease down for of linked was of cost had as year-over-year period, which average quarter, of X.X% ago the as income merger. marks XX.X% accretion up and period, for cash as well interest higher to ago Net compared current year reported balances. We an Net and increase quarter reported year quarter linked balances. X.XX%, the a a as attributable to earning the for interest quarter-over-quarter, in Citizens advance quarter. slightly we purchase margin accounting lower asset to as of the just was the margin a quarter was amount of compared grew This was benefit compared X.XX% to deposits from in the as larger and the benefit 'XX,

XX, 'XX [$XXX.X gross year (sic) out accounted million (sic) XX%. $XXX under million]. [$XXX.X On during $XXX net grew million], quarter. and would quarter-over-quarter ago gross balances [$XXX.X acquired of The million to December the by XX be X and fiscal $XXX cash (sic) XXXX, rate growth, equivalents our equivalents or [$XXX.X million those of little loan loans growth the (sic) up a balances which are to up balance growth strong during million], increased the second cash $XXX year-over-year December million third Compared and are at for over sheet, adjusted million merger, Due $XX to (sic) the million] Citizens adjusting XX%. [$XX.X annual quarter deposit XXXX, and closed Citizens compared million] XX, months

by [$XXX.X attributable of balances inflows. million] to an fiscal in account increased offered during XX by credit. increased third [$XXX.X year. quarter almost That the With from again savings 'XX. to well-received some Citizens deposits million growth net second quarter $XXX over compared special quarter, $XXX was hand quarter Strong I'll the that, result of merger, million the of for increase million] the all [$XXX.X was as (sic) as and growth Greg prior it of seasonal the during fair (sic) Deposit in on million deposit $XXX which CD this December included a (sic) value million] rates and well discussion to

Greg Steffens

X.XX% total loans. Thank compared adversely down Total gross delinquent linked good is $XX X decrease strong percentage over morning, down points $X over loans. from $X pleased assets basis and outstanding. or Nonperforming and XX at September on $XX gross were over year were XX you, to million, report in to ago. nonperforming $X.X loans remains of low to relatively loans about which past but X nearly This quarter everyone. million, XX from $X.X down with XXXX, comparison classified increased in last basis to our I'm the points loans, $X XX Matt, points, total of from million line basis and of last XX In decrease quarter Loans September. and a the million $XX the a loans totaled of December of a million of a compared due quality overall a were days points little quarter. million, basis to million of was as as million XX/XX, or loans little asset flat X% a at December XX

quarter's This delinquent in the large in primarily delinquent quarter's noted due in of call. the was drop relationship is from we cure loans past that that last

they million compared a September prior they balances real XX down $X December ended seasonality, quarter of up the slower were year-over-year to Citizens quarter periods million, but were $XX XX, balances were in year. year million and ago. estate farmers compared to loan equipment up marketing ag for and to Ag production due million As our and nearly to some were down this $XX loans acquired part over $XX normal the due

better-than-average the availability In farmers water XXXX successful in harvest with agricultural irrigation season, our Despite rice particularly corn. most contributed drought experienced yields, in a above-average and similar a markets, cotton, to yields. for facing

river to their costs higher more all XXXX, XXXX input and the specifically to ahead will prices, the that farmers contributed we due that of corn levels, have on expense from for lower of corn our crop, Looking anticipated combination away to impact the anticipate crop. diversify drought

acres is will attributed drought remain rice of farmers most somewhat than entering commodity cotton the cultivation prior to input year, stable. Financial and and lower will levels, our While expected good to farmers prices, production declining indicate meet portfolio. feel maintain working capital that XXXX to likely costs. increased increase; their obligations are aim reviews that agricultural impacts we the segment Still, XXXX with about soybean

season, our credits of During we these stress underwriting production move cash ensuring new we flows, strong farm renewal the as tests lines. into on conduct

million] [$XX.X quarter. a at loan loans million Looking X.X% grew whole, as gross during or annualized (sic) portfolio $XX the the

for the growth slowest part due factors, in related to seasonal to loan especially year of are the We agriculture.

to our was from and growth owner-occupied and stemming some and experienced are which family. growth in C&I, good South by nonowner-occupied led X construction multi-payable markets. CRE, X loan bank The This growth regions, West well-rounded

to loan much credit are would net We available clients, construction draws. not in That making core though additional loan prioritize real seeing continues improved we continuing winter many seasonality, that commercial that anticipate growth March our even the stable and expect in-between growth to demand, to credit lead quarter, credits and pipeline to normal our could liquidity, opportunistically this evaluate summer. pickup we due line include increasing to said, a to high-quality during

days the totaled [$XXX.X end, loans at X [$XXX.X to [$XXX.X $XXX million million] (sic) ago. XX compared pipeline million September $XXX million] in and as year Our quarter $XXX fund (sic) million] (sic) for million XX to in next

to increase C&I multifamily. the categories September approximately year quarter million Our December originated in the loan was lending an were In quarter. quarter volume million of ago, quarter, $XX leading The December million. originations as for of $XXX $XXX and compared this we the a

approximately down level CRE for XX. percentage of nonowner-occupied Stefan? credit at X XX/XX, bank to Our and Tier by allowance losses capital at XXX% X was the point September concentration as compared

Stefan Chkautovich

hit key of Matt financial but to share the Greg. some wanted I details. few already, items Thanks, a

increase interest portfolios and prior from the FHLB contributor linked margin of Looking by The margin savings of on net compression X.XX% XX X.XX% amortization of and all primary of CDE points at basis basis this the linked in by cost last borrowings. to quarter's basis led points, deposits paid on the lower fair quarter At points. points loan the was XX acquired about year's interest X XX -- deposits compared discount of quarter assumed compared to which included XX the specials, quarter the value to end overnight December points quarter, September partially we off offset premium the primarily basis and net of balances. to accretion and

points was cost In only increased basis of the in basis liabilities the period. total, yield-on-average X.XX%. earning XX our same In up comparison, assets XX to points

the [ we over we deposit of percentage than margin near-term have month of seen As deposits. some rates December than already continue net higher the point a the as periods we significant rolling and the quarter the availability following balance the offered, quarter, average. repricing pressure rates. we rates liquidity modestly move inflection interest ] of slowed impact portfolio lower growth for our reduced the margin higher now compression landscape short-term an through lags as in liabilities, monthly more for by impacted expectations as in loan has in net of resulted offered see higher been special to Also, CD asset has being competitive each the have rates our month interest The in which sharp

we that The not that are low should day March re-escalate. count at in comparison margins assets, additional liabilities Looking to small we are repricing spring, coming net in competition our impact could see a pressure. earning to negative continue see quarterly reduced deposit if this income. will our interest quarter optimistic some we point have With our does on

the net we and If start beneficiary a sensitive. the we FOMC trade net cutting resulting if expect income, $XXX,XXX. the some on noise the are yield of we to income quarter interest liability margin loss in would from the had executed, net the those somewhat. year, interest normalize the Lastly, be curve of especially rates slope Noninterest cuts, this with of loss would does

would X% in the September linked to fiscal noninterest year XQ been have compared quarter. ago up as Citizens up almost primarily the period, due this, XX% income to compared Excluding merger to and

result of the fees linked settlement fees and trust loan offset $XX,XXX. income. categories noninterest with increase favor impact increased by of the lower a legals of a bank's several the wealth For total partially quarter, was as in and other was income settled of management This from

expense have Although drag assess we our reduction and more the the line. and compensation addition benefited was fees of up we the about having no Last resulted some will to benefits comparison, of a effect. expenses due adopted compared an bank of had as quarter year-over-year cost March comparison see the quarter, in material we comparisons $XXX,XXX first other associated living on to we FTE. another In quarter, quarter. changes with fiscal by quarter compensation not merger Noninterest from quarterly fee increase expect compared would expense increases to We expense in NSF the the continue ago higher quarter, policy impacting and from charges. take to expense due Citizens, XX.X% that X.X% how offset was increased to in higher mostly with income. That the July and year than annual up larger benefit XXXX, in the for a head merit linked our linked to adjustments items the count to in on quarterly the base

expense in As positioned to indicated we relocated on the occupancy better market. our a personnel Kansas uptick in City slight offices we as last had earnings call,

charge-offs we but merger. still annualized, very points from net did were the to XX Greg real industry related an basis charge-offs uptick half About mentioned, in quarter historical figures. from to As one Citizens the performance by see estate benign, remains these credit for of relationship comparison solid a

in period as the prior credit same the losses line was compared quarter. $X.X the Our $XXX,XXX million year, to quarter in in for and with the provision linked for

XX, XX, XXXX, of an and December at XXX% gross and X.XX% September nonperforming losses at credit for or gross allowance million X.XX% Our as was of the loans, loans nonperforming loans ACL $XX.X $XX.X XXX% loans million compared XXXX, linked of or of of to quarter.

provision of attributable offset increasing The the sheet loan PCL our allowance outstanding, the and a million exposure. was credit the and balances $X.X to credit for of reducing was to draws provision, ACL period a $X the recovery -- This exposure. on-balance by partially current due result off-balance our million balance to available sheet for attributable construction

outlook the environment, overall navigated economic of the challenges last as rate Our the economy assessment the and impacting little was few Despite of slowing margin, changed. over quarters, interest this higher our secondary lower in bank the resulting optimistic Greg, market thoughts? benign beyond earnings closing revise. a and for about originations any loan June in if quarter we overall credit and fees, the margin feel we remain and some

Greg Steffens

steady and how those our into great the over We now and merger months our systems and and integrating our year focused job. and improvements is team procedures, core conversion. have retention doing a markets seen operations on in those We're Citizens we're past Stefan. quarters past remain Thanks, XX with and elsewhere the team Bankshares deposit members a

the achieved and merger, to are anticipated markets. have expand metro we'd at here savings We forward, looking our from cost the in we

As our modest of noninterest could upticks markets, some expense. we new there community incremental are bankers also looking in and Stefan to in noted, recruit be so

could We rural That in potential merger merger, committed partners. Kansas uptick the an to actively currently are metro services to more Citizens additional opportunities. regulatory macroeconomic addition City other in our interested providing and not the pursuing excellent continued to through said, lead added pressuring middle-market we factors communities XXX% in being We're area. the eventually banks and

Stefan Chkautovich

Thank At ready take this our we're Kathy, Greg. questions participants. to you, time, from

would you folks at please questions if they queue for remind So, time. how may this

Operator

from [Operator line our KBW. first Instructions] So question the of comes Kelly of Motta

Kelly Motta

out, a noted repositioned quarter. starting maybe, of you you securities portion think, the small that book your I during

margin -- well you of doing quarter as within another X, it, know, potentially that for, as the Just the we to look timing relative, appetite December as piece wondering at ahead?

Greg Steffens

those in to mid- We December. late securities completed the of repositioning

to an of the December's much at anticipate results going we see didn't to whether and all evaluate a continue securities more. would we So, the from impact do little we're in transaction, we that

Matthew Funke

made that's Kelly, it. amount there. it's pretty where for dollar to we securities the little we of that a it's a a enough there yield But bit of at low limited as lot could additional have that is up sense clean

Kelly Motta

growth. spoke up ag like for looking And the it. this last think seasonality might at I slow, you It we expect time, then, noted seems Got the but near be in when it, quarter last were appreciate mid-single-digit you term, loan you pick to summer.

for something the is a wondering -- think still you Just over expectation? full fiscal that mid-single-digits is year, reasonable

Greg Steffens

Yes.

forward, somewhere would to X% between think I going annual X% anticipate we growth.

XX/XX of X% you calendar X% look another 'XX. we'd if year at at course to look So, our over the figures,

Kelly Motta

from Got me. it. X X Appreciate Maybe more it. or

appear And margin be you to X.XX% On the from like with of trends looks seasonality look deposit any was the month-over-month it is good. mentioned that? deposits. side, Can public growth which as that the you us, remind ahead, we stabilizing,

adding which stabilization to rate Just you're does were new cost, take think rate where incrementally order you cuts, a adding in at funding that with get rate do deposits? in kind on there in would Or done a cut? you stabilization still likely the a you're expect And the on costs? provided of it

Matthew Funke

our tricky those ago of have from do It's the expect new was know a that we will did now. public in at to a out. quarter. - public some customers that just units, this always We how have to on some would So, merger out. year back some play dollars unit yes, come exactly go We little

flows back have in with out quarter. we March that of overall, So, a we're our specials growth not definitely, Margin their wash But would be. CD bit. the would some little familiar reduced what XXX%

rates -- on we decrease long lower, in the higher Some stay how feel to cost savings on products we're an pace in where are as a past We much at that really CDs to of stable. see ought has inflection the see But really look increases, as the or we absorbed pretty move funds. really already of good pricing. here those ought and uptick point that

Operator

from of Our next question Sandler. of comes Andrew Piper Liesch the line

Andrew Liesch

public I were balances to curious what And be drove year-end. the guess I'm is this at for these just forward? but going bit that what might question, for elevated funds any funds plans this cash related or that? little cash -- a here

Matthew Funke

Yes, would that we expect, those on to seasonal any obviously, use of some deposits. fund to outflows of

of had anticipated the book of through calendar calendar deposit half some with would better our of Some as we second ag than it it 'XX; of first half 'XX a in specials. we seasonal fund is move did the just little we

back So, that surprise have we're It those us deposit outflows And same both if noted, funding into we to on a do some again. like reins specials to have we reprice middle the the incrementally But 'XX. at brokered of of wouldn't little term, we bit wouldn't some growth get long optimistic maintain some then Greg that. are. we pulling we more the would as about levels be we loan little calendar a look Stefan as and

Andrew Liesch

All to if then Fed quantify reduction you just the that, rate right. helpful. margin? missed Stefan, sorry if basis And did? point I'm That's I each did in it. Got you XX do the could funds what

Matthew Funke

Policy...

Stefan Chkautovich

static quantify XXX balance basis a be of But sort growth, our with didn't And basis about points points. interest on big benefit. income. would to net XX budgeted mid-single-digit single-digit sheet about low a would I on No, picture, it be a benefit

Operator

this no for over to there Bancorp's Chkautovich, remarks. the Missouri Southern time, hand questions back at CFO, conference Stefan closing additional are waiting to As I'd like

Stefan Chkautovich

Have speak and and again in good your joining thanks, for about everyone, company in Kathy, Appreciate months. X day. Thanks, interest a the us.

Matthew Funke

good day. Everybody, have a

Operator

day. a joining call. for today's us Have your rest of gentlemen, and you great Ladies for thank

lines. may disconnect your You now

Southern Missouri Bancorp (SMBC) 30 Jan 242024 Q2 Earnings call transcript