SOUTHERN MISSOURI BANCORP REPORTS PRELIMINARY RESULTS FOR FIRST QUARTER OF FISCAL 2025; DECLARES QUARTERLY DIVIDEND OF $0.23 PER COMMON SHARE; CONFERENCE CALL SCHEDULED FOR TUESDAY, OCTOBER 29, AT 9:30AM CENTRAL TIME
Poplar Bluff, Missouri, Oct. 28, 2024 (GLOBE NEWSWIRE) --
Southern Missouri Bancorp, Inc. ("Company") (NASDAQ:SMBC), the parent corporation of Southern Bank ("Bank"), today announced preliminary net income for the first quarter of fiscal 2025 of $12.5 million, a decrease of $693,000 or 5.3%, as compared to the same period of the prior fiscal year. The decrease was due primarily to higher provision for credit loss ("PCL") expense, as well as higher non-interest expense. This was partially offset by an increase in net interest income. Preliminary net income was $1.10 per fully diluted common share for the first quarter of fiscal 2025, a decrease of $0.06 as compared to $1.16 per fully diluted common share reported for the same period of the prior fiscal year. During the first quarter of fiscal 2025, the Company engaged with a consultant to complete a performance improvement project to enhance operations and revenues of the Bank. The one-time cost associated with this review totaled $840,000, reduced after-tax net income by $652,000, or $0.06 per fully diluted common share, and was a primary reason for the increase in non-interest expense during the current period, noted in further detail below.
Highlights for the first quarter of fiscal 2025:
Earnings per common share (diluted) were $1.10, down $0.06, or 5.2%, as compared to the same quarter a year ago, and down $0.09, or 7.6% from the fourth quarter of fiscal 2024, the linked quarter.
Annualized return on average assets ("ROA") was 1.07%, while annualized return on average common equity ("ROE") was 10.0%, as compared to 1.20% and 11.7%, respectively, in the same quarter a year ago, and 1.17% and 11.2%, respectively, in the fourth quarter of fiscal 2024, the linked quarter. The one-time costs of the performance review recognized in the current quarter reduced after-tax ROA by six basis points.
Net interest margin for the quarter was 3.37%, down from the 3.44% reported for the year ago period, and up from 3.25% reported for the fourth quarter of fiscal 2024, the linked quarter. Net interest income increased $1.3 million, or 3.6%, as compared to the same quarter a year ago, and increased $1.6 million, or 4.5%, as compared to the fourth quarter of fiscal 2024, the linked quarter.
Noninterest expense was up 9.0% for the quarter, as compared to the year ago period, primarily from increased compensation and benefits and legal and professional fees, and up 3.4% from the fourth quarter of fiscal 2024, the linked quarter. In the current quarter, legal and professional fees increased as the Bank incurred one-time costs of $840,000 associated with a performance improvement project.
Gross loan balances increased by $116.7 million during the first quarter of fiscal 2025, or 3.0%, and increased by $266.8 million, or 7.2%, over the last twelve months.
PCL was $2.2 million during the first quarter of fiscal 2025, a $1.3 million increase from both the year ago period and the June 30, 2024, linked quarter. The increase was primarily due to an increase in the allowance for credit losses ("ACL") attributable to individually evaluated loans, loan growth, and an increase in modeled expected losses.
Deposit balances increased by $97.1 million during the first quarter of fiscal 2025, or 2.5%, and increased by $208.4 million, or 5.4%, over the last twelve months.
Tangible book value per share was $38.26, and increased by $5.14 or 15.5% during the last twelve months.
Dividend Declared:
The Board of Directors, on October 22, 2024, declared a quarterly cash dividend on common stock of $0.23, payable November 29, 2024, to stockholders of record at the close of business on November 15, 2024, marking the 122nd consecutive quarterly dividend since the inception of the Company. 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, October 29, 2024, at 9:30 a.m., central time. The call will be available live to interested parties by calling 1-833-470-1428 in the United States and from all other locations. Participants should use participant access code 523822. Telephone playback will be available beginning one hour following the conclusion of the call through November 2, 2024. The playback may be accessed by dialing 1-866-813-9403, and using the conference passcode 217957.
Balance Sheet Summary:
The Company experienced balance sheet growth in the first three months of fiscal 2025, with total assets of $4.7 billion at September 30, 2024, reflecting an increase of $124.9 million, or 2.7%, as compared to June 30, 2024. Growth primarily reflected an increase in net loans receivable and cash equivalents and time deposits.
Cash equivalents and time deposits were $75.6 million at September 30, 2024, an increase of $14.2 million, or 23.1%, as compared to June 30, 2024. Available for sale securities were $420.2 million at September 30, 2024, down $7.7 million, or 1.8%, as compared to June 30, 2024, as the Company was less active in reinvesting principal payments received.
Loans, net of the ACL, were $3.9 billion at September 30, 2024, increasing by $114.8 million, or 3.0%, as compared to June 30, 2024. The Company noted growth in both the real estate and commercial portfolios. Real estate loan growth was primarily driven by drawn construction, 1-4 family residential, and owner occupied commercial real estate loan balances. This was somewhat offset by a decrease in loans secured by multi-family property. In the commercial portfolio, growth was driven by seasonal agricultural production loan draws and modest growth in commercial and industrial loan balances. The table below illustrates changes in loan balances by type over recent periods:
Summary Loan Data as of:
Sept 30,
June 30,
Mar. 31,
Dec. 31,
Sep. 30,
(dollars in thousands)
2024
2024
2024
2023
2023
1-4 residential real estate
$
942,916
$
925,397
$
903,371
$
893,940
$
875,666
Non-owner occupied commercial real estate
903,678
899,770
898,911
863,426
846,875
Owner occupied commercial real estate
438,030
427,476
412,958
403,109
422,824
Multi-family real estate
371,177
384,564
417,106
380,632
365,890
Construction and land development
567,002
499,587
495,284
562,773
620,313
Agriculture real estate
239,787
232,520
233,853
238,093
239,787
Total loans secured by real estate
3,462,590
3,369,314
3,361,483
3,341,973
3,371,355
Commercial and industrial
457,018
450,147
436,093
443,532
431,178
Agriculture production
200,215
175,968
139,533
146,254
164,631
Consumer
58,735
59,671
56,506
57,771
58,706
All other loans
3,699
3,981
4,799
7,106
6,724
Total loans
4,182,257
4,059,081
3,998,414
3,996,636
4,032,594
Unfunded commitments on construction loans
(215,521
(209,046
(226,969
(264,483
(332,633
Deferred loan fees, net
(218
(232
(251
(263
(282
Gross loans
3,966,518
3,849,803
3,771,194
3,731,890
3,699,679
Allowance for credit losses
(54,437
(52,516
(51,336
(50,084
(49,122
Net loans
$
3,912,081
$
3,797,287
$
3,719,858
$
3,681,806
$
3,650,557
Loans anticipated to fund in the next 90 days totaled $168.0 million at September 30, 2024, as compared to $157.1 million at June 30, 2024, and $158.2 million at September 30, 2023.
The Bank's concentration in non-owner occupied commercial real estate, as defined for regulatory purposes, is estimated at 320.1% of Tier 1 capital and ACL at September 30, 2024, as compared to 317.5% as of June 30, 2024, the linked quarter end, with these loans representing 46.4% of gross loans at September 30, 2024. Multi-family residential real estate, hospitality (hotels/restaurants), care facilities, retail stand-alone, and strip centers are the most common collateral types within the non-owner occupied commercial real estate loan portfolio. The multi-family residential real estate loan portfolio commonly includes loans collateralized by properties currently in the low-income housing tax credit (LIHTC) program or having exited the program. The hospitality and retail stand-alone segments include primarily franchised businesses; care facilities consisting mainly of skilled nursing and assisted living centers; and strip centers can be defined as non-mall shopping centers with a variety of tenants. Non-owner-occupied office property types included 34 loans totaling $24.9 million, or 0.63% of gross loans at September 30, 2024, none of which were adversely classified, and are generally comprised of smaller spaces with diverse tenants. The Company continues to monitor its commercial real estate concentration and the individual segments closely.
Nonperforming loans were $8.2 million, or 0.21% of gross loans, at September 30, 2024, as compared to $6.7 million, or 0.17% of gross loans at June 30, 2024. Nonperforming assets were $12.1 million, or 0.26% of total assets, at September 30, 2024, as compared to $10.6 million, or 0.23% of total assets, at June 30, 2024. The change in nonperforming assets was attributable to the increase of $1.5 million in nonperforming loans, of which the largest individual loan was collateralized by a single-family residential property.
Our ACL at September 30, 2024, totaled $54.4 million, representing 1.37% of gross loans and 663% of nonperforming loans, as compared to an ACL of $52.5 million, representing 1.36% of gross loans and 786% of nonperforming loans, at June 30, 2024. The Company has estimated its expected credit losses as of September 30, 2024, under ASC 326-20, and management believes the ACL as of that date was adequate based on that estimate. There remains, however, significant uncertainty as the Federal Reserve has tightened monetary policy to address inflation risks. Qualitative adjustments in the Company's ACL model were slightly decreased compared to June 30, 2024. The Company increased the allowance attributable to classified hotel loans that have been slow to recover from the COVID-19 pandemic. Additionally, PCL was required due to loan growth in the first quarter of fiscal year 2025 and a slight increase in modeled expected losses due to a modest increase in the unemployment rate expectations. As a percentage of average loans outstanding, the Company recorded net charge offs of 0.01% (annualized) during the current period, as compared to 0.03% for the same period of the prior fiscal year.
Total liabilities were $4.2 billion at September 30, 2024, an increase of $108.0 million, or 2.6%, as compared to June 30, 2024.
Deposits were $4.0 billion at September 30, 2024, an increase of $97.1 million, or 2.5%, as compared to June 30, 2024. The deposit portfolio saw increases in certificates of deposit and savings accounts, as customers remained willing to move balances into high yield savings accounts and special rate time deposits during the higher rate environment. Public unit balances totaled $510.5 million at September 30, 2024, a decrease of $84.1 million compared to June 30, 2024, due to the Company losing the bid to retain a larger local public unit depositor, and also experienced expected seasonal decreases in these accounts. Brokered deposits totaled $273.2 million at September 30, 2024, an increase of $99.4 million compared to June 30, 2024. The Company increased brokered deposits in the quarter due to more attractive pricing for brokered certificates of deposits relative to local market rates and the need to meet seasonal loan demand. The average loan-to-deposit ratio for the first quarter of fiscal 2025 was 98.4%, as compared to 96.3% for the linked quarter. The table below illustrates changes in deposit balances by type over recent periods:
Summary Deposit Data as of:
Sep. 30,
June 30,
Mar. 31,
Dec. 31,
Sep. 30,
(dollars in thousands)
2024
2024
2024
2023
2023
Non-interest bearing deposits
$
503,209
$
514,107
$
525,959
$
534,194
$
583,353
NOW accounts
1,128,917
1,239,663
1,300,358
1,304,371
1,231,005
MMDAs - non-brokered
320,252
334,774
359,569
378,578
415,115
Brokered MMDAs
12,058
2,025
10,084
20,560
20,272
Savings accounts
556,030
517,084
455,212
372,824
313,135
Total nonmaturity deposits
2,520,466
2,607,653
2,651,182
2,610,527
2,562,880
Certificates of deposit - non-brokered
1,258,583
1,163,650
1,158,063
1,194,993
1,066,165
Brokered certificates of deposit
261,093
171,756
176,867
179,980
202,683
Total certificates of deposit
1,519,676
1,335,406
1,334,930
1,374,973
1,268,848
Total deposits
$
4,040,142
$
3,943,059
$
3,986,112
$
3,985,500
$
3,831,728
Public unit nonmaturity accounts
$
447,638
$
541,445
$
572,631
$
544,873
$
491,868
Public unit certificates of deposit
62,882
53,144
51,834
49,237
52,989
Total public unit deposits
$
510,520
$
594,589
$
624,465
$
594,110
$
544,857
FHLB advances were $107.1 million at September 30, 2024, a decrease of $5.0 million, or 4.9%, from June 30, 2024, due to maturing advances which were not renewed. For the quarter ended September 30, 2024, the Company continued to have no FHLB overnight borrowings at the end of the period.
The Company's stockholders' equity was $505.6 million at September 30, 2024, an increase of $16.9 million, or 3.5%, as compared to June 30, 2024. The increase was attributable primarily to earnings retained after cash dividends paid, in combination with a decrease in accumulated other comprehensive losses ("AOCL") as the market value of the Company's investments appreciated due to decreases in market interest rates. The AOCL decreased from $17.4 million at June 30, 2024, to $10.6 million at September 30, 2024. The Company does not hold any securities classified as held-to-maturity.
Quarterly Income Statement Summary:
The Company's net interest income for the three-month period ended September 30, 2024, was $36.7 million, an increase of $1.3 million, or 3.6%, as compared to the same period of the prior fiscal year. The increase was attributable to a 5.9% increase in the average balance of interest-earning assets in the current three-month period, as compared to the same period a year ago, partially offset by a seven-basis point decrease in net interest margin, from 3.44% to 3.37%, as the cost of interest-bearing liabilities increased by 70 basis points, outpacing the 54-basis point increase in the yield earned on interest earning assets. Net interest income for the three-month period ended September 30, 2024, grew $1.6 million, or 4.5%, as compared to the June 30, 2024, linked quarter, attributable to a 12-basis point increase in the net interest margin and a 0.7% increase in the average balance of interest-earning assets. The primary driver of the net interest margin expansion, compared to the linked quarter, was the 21-basis point increase in the yield on interest-earning assets, partially offset by the 11-basis point increase in the cost of interest-bearing liabilities. Contributing to the margin increase, the average loan to deposit ratio increased by 2.4 percentage points in the current period, as compared to the linked quarter, as the balance sheet composition shifted toward higher yielding assets.
Loan discount accretion and deposit premium amortization related to the November 2018 acquisition of First Commercial Bank, the May 2020 acquisition of Central Federal Savings & Loan Association, the February 2022 merger of FortuneBank, and the January 2023 acquisition of Citizens Bank & Trust resulted in $975,000 in net interest income for the three-month period ended September 30, 2024, as compared to $1.7 million in net interest income for the same period a year ago. Combined, this component of net interest income contributed nine basis points to net interest margin in the three-month period ended September 30, 2024, as compared to a 16-basis point contribution for the same period of the prior fiscal year, and as compared to a ten-basis point contribution in the linked quarter ended June 30, 2024, when net interest margin was 3.25%.
The Company recorded a PCL of $2.2 million in the three-month period ended September 30, 2024, as compared to a PCL of $900,000 in the same period of the prior fiscal year. The current period PCL was the result of a $2.0 million provision attributable to the ACL for loan balances outstanding and a $138,000 provision attributable to the allowance for off-balance sheet credit exposures.
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