SMBC - Earnings call transcript Q4 2024 | Southern Missouri Bancorp, Inc.

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Operator

Hello, and welcome to the Southern Missouri Bancorp First Quarterly Earnings Call. My name is Alex, I will be coordinating the call today. [Operator Instructions] I'll now hand it over to your host, Stefan Chkautovich, CFO, to begin. Please go ahead.

Greg Steffens

Thank you, Alex. everyone. morning, Good Chkautovich, Stefan Southern Bancorp. Missouri This CFO is with Thank you us. joining for July 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 forward-looking and regarding we today's may in contained the to We during cautionary you our call forward-looking certain statement statements refer press release.

conference Greg is on Funke, off today President fiscal Administrative recent investor Officer; Matt attending lead call CEO, and quarter and by Steffens, Matt today the Chairman our I'm with joined from our will some and today. an our Chief conversation year. highlights most

Matthew Funke

results Thank final decrease is I'll for Matt quarter, you, which joining quarter was This some in of us. net our morning, with start margin for Stefan. we everyone. Funke. off fiscal Quarter-over-quarter, Thank financial our highlights income the is year. Good noninterest a June and expenses. the an you bit as with in saw up our on small move in combination increase higher interest profitability a

quarter. our challenging on and $X.XX share grew it's diluted. per book XX.X% In linked quarter year. $X.XX per higher the environment fiscal March deposits, up the to our of but that down XXXX its during rate earned tangible the value are impact quarter, June we we by XXXX the report That's we Despite pleased cost June $X.XX share from from

we earned year compared For fiscal 'XX, full $X.XX fiscal $X.XX to in XXXX.

if excluded Citizens sale noninterest credit earned 'XX, or $X.XX earned $X.XX expenses, for $X.XX fiscal about would realized had losses $X.XX. so on have the have the XXXX, in we more Excluding securities, of about provision and would we losses more merger-related while in we

book margin growth figure The of on over last basis expense value revenues. per as fee Expense primarily by our last net decrease to that mentioned year's growth and income due has increased exceeded a exceeded months. income or our share reduced $X.XX interest the due and $XX.XX to result growth XX compression. also loan core an that we growth was Tangible NSF noninterest income is from that adjusted XX.X%

to a release, position, we the $X.XX we also of in Due over our a If by dividend, X.X% with would XX.X%. is improvement XX% out have impact our just annualized an XXXX quarterly loss and tangible executed were back about of the $X.XX or as fiscal our trades year-over-year book earnings the strong AOCI, both to our we value $X.XX the increase after-tax increased our results share announced capital bringing rate. it in which to year or

compared to quarter Net down down in is decrease the XX expansion but X.X% due assets margin quarter Net was margin. margin reported the for interest it's by compared earning decrease as costs, of linked the was X.X% Due however, average 'XX. primarily deposit points. a more as quarter-over-quarter in our interest third net X.XX% offset basis the interest than net X.X% to year ago, the the X.XX%, the up quarter to income in increase margin year-over-year, for same fiscal to interest

up quarter sale fee to ago. expense to to current gain the income, loans. the Year-over-year of including just fee same on for a Noninterest income partially quarter quarter, income realized this of linked due fee down linked to for was was and or $X.X was prior compared the on due other quarter XX.X% the quarter seasonal to compared XX.X% quarter income and the million up sale losses in X.X% loan reduced year the down the realized securities compared quarter. Noninterest the X.X%

job like our of more parts expense operating picture, a good within moving give expenses. we has the The of big detail later will control. feel Stefan done on some team

June On increased sheet, or gross year and balances compared to by $XXX the to compared X.X% million a March X.X% XX $XX balance or million XX by annualized loan ago.

balances to outflows the growth. seasonal equivalent loan and decreased strong Cash as of of due March compared XX, June deposits million by XX $XXX to

million opportunistic book During an some just the shares stock of quarter, repurchase over or had our activity we about utilizing of June acquire to than more little XX.X% XX, a $X.X price average XX,XXX at XXXX XX% value.

loans classified to than earnings, $X.X to or of loans. about our quarterly a compared strong, million and down of at adversely X.XX% points improved remained $XXX,XXX June of were sequential Nonperforming with million the during loans X.XX% quarter, In basis they totaled million more little of credit $X.X X XX total has quality a or $XX gross quarter. loans addition decrease last

loans comparison, XX a March or at compared little million points on XX June gross ago. million, March loans up basis delinquent to gross to on down points million and from basis year loans. compared due higher basis Loans $X.X were days 'XX, loans, point XX points were were XX X total June and year nonperforming XX March points $X.X a a to more loans basis Total $XXX,XXX X XX compared basis XX, and point X By than XX basis up to on than $X.X ago. past

prior $XXX more ag a totaled This were total $XXX loans. down and little of real X.X% our total to and a June $X year than quarter, or ag loans of production to down Compared about estate just estate million quarter were compared balances the real real loans X% $X equipment ago. or estate ag million ag and million balances XX million over down were end, were they balances

were Our due $XX million production mostly, up $XX seasonality also were up year-over-year. and to normal they equipment million quarter-over-quarter loans and

due planted of ag and in more harvested planting and in to with our borrowers began August corn earlier expected September. maturing soybeans Our the to report be weather are soybeans lenders corn XXXX as favorable March conditions as that majority and early some well were in

and June to weather down chemicals hold costs cotton some irrigation of for soybeans, costs rains for progresses, hot but irrigation heavy as weed are summer leading the fuel to was insurance. a conditions wetter in crop and increased Despite with replanting control. damage helped through required dry while, manageable for June The that

seeing increased cover on farmers lines fall. The be when are earlier loan lines credit start could to of annual that draws XX crop supplemental were means our planting year. costs, down We this little we to of renewed year June this season the earlier higher and a already at preapproved ahead with for returning also that some than balances are also last lines this this paid draws higher

delivery better pricing Lower challenges borrowers given pricing a farmers advantage in decrease this corn Rice for spring commodity this and take crop Although their led 'XX. delay in corn of we of increased overall prices in of see year. hoping could to is good prices sales our acreage most some with slightly advantageous for the condition. to acreage dates

good are weather of is an soybean estate early with compared the 'XX. real hopes Cotton and like a higher a Specialty to for yield used to stable. remain generally year dry better but if prices condition Farm average and falling are show popcorn, last equipment crops prices are in continues. planted yield values promise be reported high, condition than equipment

offset production year be strong. challenging area due set our come costs crop this looks to to for could yields prices, high helping 'XX and to in farmers in lower commodity The our quite

and give progress on months, by which of the better yields the over of us a 'XX crop fall. few their the making farm Our inspections early projection reliable estimated lenders should indicator a outcome are next

navigate stringent to borrowers underwriting, higher challenging this to would able and operating our pricing anticipate that Due commodity generally including be our stressed assumed costs, we year.

stemming from at Looking loan loans, good, portfolio the for residential commercial loan nonowner-occupied construction real estate it real loans was drawn estate loan a balances. overall, well-rounded and growth, quarter

with with was growth growing fiscal in And South, We're East to year, for the banking loan portfolio South, way. and regions through good our led and regions. our Northwest continuing This also relationships. prioritize our East our full growth credit the spread West footprint overall

We're $XXX loans in keeping share. one the to next ago. fund to adding going increase pipeline on as end, as XX market the At and days loan the of to pace fiscal compared 'XX $XXX we have quarter $XXX totaled we March into million pipeline. for million in at to our million that year our optimistic are we Producers look growth 'XX about experienced mid-single-digit brought

$XXX Our June current quarter the year originations family, a of leading compared the in loan $XXX ago, linked million in and was $XXX million in June March The to quarter million. quarter the volume originations in the were approximately X-X totaled CRE C&I. And quarter. construction, categories

capital was XXX% XXX% approximately at nonowner X at Tier losses allowance XX of down June CRE ago. XX from June Our a for at and and year XXX% XX at credit bank March the level concentration

XXX%. nonowner-occupied ratio On a about consolidated our CRE basis, is

with capital. to be this steady measure to and grow commensurate would intent on hold Our CRE relatively

totaling As earnings X.XX% our minimal, XX pointed with $XX out or in portfolio of loans. the total office million release, is loans

CRE The lending remainder or with footprint. primarily the numbers. some either Stefan, of from developers details would financial is our operate our our is multifamily diverse, provide our you rather in additional Midwest and on who footprint

Stefan Chkautovich

Matt. Thanks,

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

this margin points March quarter quarter. portfolios value included in the assumed it acquired year's interest amortization basis points net XX XX and about linked deposits to at on quarter's loan prior the of premium fair compared on accretion Looking X.XX%, discount basis basis of and of points XX June

expansion, XX while basis interest-earning points, expanded cost the of margin increased interest basis interest-bearing on yield primarily net due X The as points. increased loan the liabilities to yield assets

rate As modestly a to our slightly benefit fixed with calendar we CDs of XXXX, yields steadily increase lower loan net renewals. prior and high-cost we see on have portfolio repricing indicated in continue calls, while raised

not also margin from this, some continue further at experienced quarter. In loan in this the rates higher With we the benefit does see but margin at net additional FOMC cut addition, interest same next new the expansion. If see interest expansion to margin rates year, could could we we should increase this production rate any quarter.

months mid-single-digit Fed points of cuts our rate to basis income low rate rate depending cut in the to to on of the result projected percentage XX over is funds growth. of growth the net interest following XXX

the As XX.X%, by year-over-year. increased adopted the in other a how we and impacted XX.X% of quarter negatively was of year-over-year March losses in income. excluding comparison assess gains bond the XXXX of The Matt lower mentioned, realized down from due for XX.X% on $XXX,XXX but compared sale would our the noninterest July up by income year at it have items, fee to changes loan sales, was beginning also policy on we quarter, some was reduction of fiscal fees it to fees linked loans NSF resulting this and quarter, but

a the year-over-year the the completion be With this negative of change this comparison fiscal impact will from on drag year, not anymore.

network card was the trade annual and additional benefits recognition For excluding and change noninterest fees loss from $XXX,XXX volume on from of the increase the rights. fair based $XXX,XXX the $XXX,XXX servicing linked mortgage incentives income, value credit tax the from quarter, in other from of

as Going we the will incentives well benefits the be throughout forward, volume evenly recognizing estimating the more credit tax year. card and as

Noninterest credits come, utilize and some quarter expense and quarter compared XX expect we points was that operating to We grows. costs to bank benefit up not to increase the quarter. the did totaling a compared to the continue XX from the linked XX,XXX points will basis year in in basis the ago down to onetime as vendor we with quarters

legal want a corresponding and of in some that and $XXX,XXX we in processing and data both also the professional reclassifications a in increase point do I that about resulted in had to and fees. out decrease quarter, occupancy equipment $XXX,XXX expenses

and benign, remains industry historical credit which in annualized current were X the months basis by for basis comparison mentioned, points is in trailing Matt and charge-offs very performance XX solid figures. the points net quarter X As a

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

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

by offset $XXX,XXX reduced for of off-balance $X.X provision the credit allowance sheet exposure attributable recovery for period loss and construction result provision loan to the balances for outstanding current ACL credit a million to on-balance increased partially available and exposure. of as attributable provision was credit sheet The draws

but improved, factors and and environment. has impacting economy increased secondary our remain if stable for margin overall outlook our loan fees, some the navigated overall feel to challenges optimistic environment in credit slowing rate originations XXXX XXXX due Despite we resulting earnings fiscal margin, and and the lower beyond individually of in about over market this credits. evaluated qualitative fiscal as economic the of modestly the bank assessment interest were reserves higher and Our a we

With our to anticipated continue to and see earnings level our and increase. similar XXXX, we should growth ratios loan capital

stock equity activity. was levels manage tool periods we'll repurchase made capital expect The a to M&A earn-back a dividend about repurchase than attractive but and little periodic management ago, has primarily few will anticipated activity as would remain current opportunistic through the less weeks activity We our it a it. when justify price

thoughts? closing any Matt,

Matthew Funke

Stefan. Thank you,

We have additions progress our St. in in Louis remained care front. deposit core teams development relationships. past year We've our to City fiscal expansion made taking our and we're a of variety Kansas of focused the and business on some markets and in seeing markets, on the retention,

in markets. with to to prospects, in the of the target to M&A explore partners The remain scale we preliminary potential continue look calendar and to do medium- half conversations somewhat they first further achieve year, opportunities longer-term but

we with. service to Additionally, we financial providers other partner could look continue at

could We further discussions lead expect in valuations potential bank to with the some uptick partners.

a our culture fostering future. to been recently last and able operational we're since the efficiencies focused activity for that clients, and we've M&A strong been merger, shareholders a on potential As positioned over it's local in better identifying our well serve so year communities our and

Stefan Chkautovich

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

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

Operator

Our from Instructions] for [Operator comes Olney first from question Matt today Stephens.

Matt Olney

mentioned how think few for could quarter. CD you favorable the renewal what the level this next maturing what's the color dynamics months? And of in overall nice you on more And coming just forward. I of just Any and are those those past this that guess I or be CDs going rates some Stefan, amount was a compare to tailwind pricing off?

Matthew Funke

Yes. the average, around is months, And XX $X CDs currently, average on renewal next $X.XX. In have we billion rate of the about repricing.

Stefan Chkautovich

And book XX.X% have we rate. then on renewing from loan of fixed the our flip a side,

Matt Olney

there the next the portfolio? on of Any loan the over roll-off, renewing just rates XX% months. color XX roll-on

Stefan Chkautovich

loan they're our that renewing. XX.X% just and Yes. renewing of [ book $XXX $XXX, Right now, that's fixed rate about the at so, or ] is

Matt Olney

the near Okay. And weigh expenses mentioned where a against term? quarter the as then few on put natural forecasting you the the of more during would for parts growth us Stefan, bank, expense you side, you moving parts moving just those

Stefan Chkautovich

line They probably in rate. with would still continue bank's the to grow

So we're it in could be much digits mid-single plus depending on somewhere growing. the how

Matthew Funke

growth the catch-up of affected quarter we in our January adjustments, would Matt, little rate. compensation normal see pattern that is a with mostly when bit be to our

Matt Olney

far Okay. cut. gave as some us on any then of you details rate the as And kind good sensitivity Fed

So details I appreciate the there.

the On the but a -- credit model range. CECL that really are trends front, here this to degree, really, you allowance looks ratio, credit I think I strong. certain handcuffs it's remain like mid-$XXX in the know it

change opportunity to so if move could curious lower an be this to macro. the there there's think Just over you year or real no if next

there. any thoughts curious Just

Matthew Funke

But want on kind reasonably of feel don't commit that we in conservative I to like we're to any that. percentage. decrease do

provisioning. So have we the upside surprises hope with not on to any

Operator

Sandler. Liesch Our Piper of next question Andrew from is

Andrew Liesch

this growth of Matt, single that was family was it or loan the part quarter. residential multi-family? on Question you mentioned

Matthew Funke

we in growth single the as described is would have family. think what call I

Andrew Liesch

you Got that's types? if right how it. that is specifically areas? than other look it as now weighted stronger as pipeline, the Then loan driving far Anything at

Matthew Funke

some. additional Still could a whole There's XX of probably construction commercial over draw of there lot not that, anticipated the be amount real within a but draws fair Anything. estate. ag days, next some

Andrew Liesch

XX and in with in then that look to months, might stronger little winter bit the if with kind you the the And and the of pace similar you. spring do Got summer? be 'XX had at growth weaker a stronger we think fiscal something just quarters growth in like could or what next you

Matthew Funke

anything, being might year, If we last would ag with where it be we to little above were anticipate a more pronounced. Yes, little even a that continue.

Stefan Chkautovich

Yes.

we that So could see on front.

Andrew Liesch

there, fee Yes. Yes. mentioned the fair the gains income could but $X.X might more out then you value out year. the mortgage you of the just Makes if with the of be or some kind sense. like million, -- towards And back spread X-point side, other commentary the on things throughout the servicing

a So here $X forward? income rate be do fee could on going you million of run north think

Matthew Funke

a crazy Probably manageable. It not number. is

Andrew Liesch

All other right, answered my all you've Wonderful. questions. guys,

Operator

question Instructions] Motta KBW. Our next from comes Kelly from [Operator

Kelly Motta

mortgage had carrying pretty fees, has running production up. been like it on looks And Maybe mentioned gain that the low. has picked sale you had about running thought on been there

your wondering outlook of to is Just rate potentially on normalized what line returning sale. for that item a more gain

Matthew Funke

Really What that's the Kelly. activity. a we've to seen residential market some would right in at Long that portfolio. back the up in-house, term, we on some rental secondary some indication we we're seeing point. side, maintained would been stronger now that properties stronger little which include as not owner-occupied our that anticipate probably any pick

point, is hopefully, we some bit make rate improvement. we But see longer-term at folks a of do will, have at or move some a point a see little turnaround to movement

Kelly Motta

it. Maybe commentary Got more appreciate turning term this point. longer M&A. to I the back that to it's at medium

Just you you us interested more too? the or markets footprint to potentially strategically, level, your remind density in, high where like you're out that from a can add expand

Operator

Speakers. Can you us? hear

Unknown Attendee

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Operator

patience we Thank line now you have for your is with speakers. open. Kelly, reconnected our your

remind your just please. question, should you us If

Kelly Motta

just about where sure if the out. got to or density with add to remind I'm up that M&A was looking could not asking footprint the if you expand you're caught transcripts. last potentially about I us

Matthew Funke

yes. Kelly,

interest circle Springfield Missouri, Northwest Kansas to always us. to Rock from Little St. Louis, With to Our Memphis. Louis through Southwest of some City would priorities, over entry St. Arkansas, a over definitely talked we've and to about kind have that down

same already Little we'd market. an to way We've the in Rock. about Arkansas love City, We attractive there add Northwest more is but got density a Kansas feel little bit

Kelly Motta

me, is loan It for housekeeping as the last for run consideration we is consider growth just average if rate balance Wondering mid-single-digit that Or of $XX is good cash the it, maybe And with sheet liquidity? question size balance with ahead. looks it. level your and Got call significantly like down the a sheet. million any there quarter-over-quarter.

Stefan Chkautovich

Yes. Total a range cash and point. more million from probably probably range, plus due should of $XX lower the that's in

Operator

have time, no [Operator this currently Instructions] questions. we At registered

back Funke further hand I'll remarks. to So for any Matt

Matthew Funke

We're to snafu good looking interest Alex, again for a Have months. 'XX. apologize fiscal our and your to you everyone company. in thanks for technical with day. you, I participating. forward X Thank in the to there. And But speaking I appreciate

Operator

Thank call. joining today's you for

You may now disconnect your lines.

Southern Missouri Bancorp (SMBC) 30 Jul 242024 Q4 Earnings call transcript