-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Eff4u3Ugln/roGCpec17vneE3prxr05pB/58N2zb2TlhzC8e5piONGLElbUfzEN3 XYCjpBJctO1OrfMcCcM6Pg== 0000916907-00-000005.txt : 20000516 0000916907-00-000005.hdr.sgml : 20000516 ACCESSION NUMBER: 0000916907-00-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN MISSOURI BANCORP INC CENTRAL INDEX KEY: 0000916907 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 431665523 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-23406 FILM NUMBER: 633078 BUSINESS ADDRESS: STREET 1: 531 VINE ST CITY: POPLAR BLUFF STATE: MO ZIP: 63901 BUSINESS PHONE: 5737851421 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-23406 Southern Missouri Bancorp, Inc. (Exact name of registrant as specified in its charter) Missouri 43-1665523 (State or jurisdiction of incorporation) (IRS employer id. no.) 531 Vine Street Poplar Bluff, MO 63901 (Address of principal executive offices) (Zip code) (573) 785-1421 Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: Class Outstanding at May 12, 2000 Common Stock, Par Value $.01 1,249,691 Shares SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY FORM 10-QSB INDEX PART I. Financial Information (Unaudited) PAGE NO. Item 1. Consolidated Financial Statements (Unaudited) - Consolidated Statements of Financial Condition 3 - Consolidated Statements of Income and Comprehensive Income 4 - Consolidated Statements of Cash Flows 5-6 - Notes to Consolidated Financial Statements 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-13 PART II. OTHER INFORMATION 14 Item 1. Legal Proceedings 14 Item 2. Changes in Securities and Use of Proceeds 14 Item 3. Defaults upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security-Holders 14 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 14 - Signature Page 15 PART I Item 1. Financial Information SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION MARCH 31, 2000 AND JUNE 30, 1999 (UNAUDITED) ASSETS March 31, June 30, 2000 1999 Cash and due from banks $ 1,514,682 $ 1,790,590 Interest bearing deposits in other financial institutions 2,954,536 2,278,084 Cash and cash equivalents 4,469,218 4,068,674 Available-for-sale investment securities 21,903,881 20,979,044 Mortgage-backed securities, available-for-sale 13,390,270 16,899,641 Loans receivable, net 133,341,333 118,248,638 Foreclosed assets held for sale 552,004 477,537 Premises and equipment 1,864,130 1,878,719 Accrued interest receivable: Loans 604,370 560,165 Investments 356,952 472,911 Federal Home Loan Bank stock 1,500,000 1,091,000 Prepaid expenses and other assets 470,265 296,014 Total Assets $178,452,423 $164,972,343 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $125,420,802 $120,154,540 Federal Home Loan Bank advances 30,000,000 20,550,000 Accrued interest payable 741,602 728,859 Advances from borrowers for taxes and insurance 270,626 317,954 Accrued expenses and other liabilities 584,062 591,528 Total Liabilities 157,017,092 142,342,881 STOCKHOLDERS' EQUITY Preferred stock, $.01 par value; 500,000 shares authorized; none issued and outstanding - - Common stock, $.01 par value; 4,000,000 shares authorized; 1,803,201 shares issued 18,032 18,032 Additional paid-in capital 17,581,544 17,545,544 Accumulated other comprehensive income (613,026) (250,879) Retained earnings, substantially restricted 14,377,550 13,759,488 Unearned ESOP shares (363,353) (426,854) Unearned MRP shares (86,852) (104,214) Treasury stock, at cost; 549,352 and 424,991 shares at March 31, 2000 and June 30, 1999, respectively (9,478,564) (7,911,655) Total stockholders' equity 21,435,331 22,629,462 Total Liabilities and Stockholders' Equity $178,452,423 $164,972,343 See Notes to Consolidated Financial Statements SOUTHERN MISSOURI BANCORP, INC AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE AND NINE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
Three-months ended Nine-months ended March 31, March 31, 2000 1999 2000 1999 INTEREST INCOME: Loans receivable $2,527,294 $2,194,964 $7,207,549 $6,930,751 Investment securities 364,040 270,218 1,085,922 673,577 Mortgage-backed and related securities 214,808 261,944 657,547 717,986 Other interest-earning assets 27,238 55,700 60,975 124,748 Total interest income 3,133,380 2,782,826 9,011,993 8,447,062 INTEREST EXPENSE: Deposits 1,374,776 1,292,436 3,968,987 3,923,509 Federal Home Loan Bank advances 410,618 239,955 1,007,263 741,547 Total interest expense 1,785,394 1,532,391 4,976,250 4,665,056 NET INTEREST INCOME 1,347,986 1,250,435 4,035,743 3,782,006 PROVISION FOR LOAN LOSSES 15,000 10,000 50,000 35,000 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,332,986 1,240,435 3,985,743 3,747,006 NONINTEREST INCOME: Service charges 96,868 51,533 277,692 185,599 Losses on investment and mortgage- backed securities, available-for-sale 0 0 (21,205) (625) Insurance commissions 3,464 90,553 19,101 256,175 Expense on foreclosed assets (8,049) (2,654) (20,783) (22,627) Late charges and other fees 14,789 31,721 49,675 68,124 Other income 22,865 28,058 51,110 47,065 Total noninterest income 129,937 199,211 355,590 533,711 NONINTEREST EXPENSE: Compensation and benefits 546,126 578,358 1,576,334 1,702,250 Occupancy and equipment, net 144,812 134,890 348,428 364,327 SAIF deposit insurance premiums 6,218 19,785 41,680 68,359 Professional fees 44,158 41,178 122,459 98,614 Advertising 26,795 33,909 77,325 90,684 Postage and office supplies 33,000 40,192 106,147 109,416 Deposit services 50,847 33,858 122,547 94,010 Other operating expense 73,736 65,486 255,212 194,566 Total noninterest expense 925,692 947,656 2,650,132 2,722,226 INCOME BEFORE INCOME TAXES 537,231 491,990 1,691,201 1,558,491 PROVISION FOR INCOME TAXES 185,521 162,496 578,842 533,614 NET INCOME 351,710 329,494 1,112,359 1,024,877 OTHER COMPREHENSIVE INCOME, NET: Unrealized (losses) AFS securities (56,809) (29,308) (375,506) (11,388) Adjustment for losses included in net income 0 0 13,359 394 Other comprehensive income (56,809) (29,308) (362,147) (10,994) COMPREHENSIVE INCOME $ 294,901 $ 300,186 $ 750,212 $ 1,013,883 Basic earnings per common share $ 0.29 $ 0.25 $ 0.86 $ 0.76 Diluted earnings per common share $ 0.28 $ 0.24 $ 0.85 $ 0.74 Dividends per common share $ 0.125 $ 0.125 $ 0.375 $ 0.375
See Notes to Consolidated Financial Statements SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine-months ended March 31, 2000 1999 Cash Flows From Operating Activities: Net income $ 1,112,359 $ 1,024,877 Items not requiring (providing) cash: Depreciation and amortization 196,160 185,202 MRP expense and ESOP expense 116,863 248,572 Loss on sale of available-for-sale securities 21,205 625 Provision for loan losses 50,000 35,000 Gain on foreclosed real estate, net (13,500) (20,580) Net amortization of deferred income, premiums, and discounts 44,612 83,134 Changes in: Accrued interest receivable 71,754 48,307 Prepaid expenses and other assets 4,767 (1,860) Accrued interest payable 34,260 342,438 Accounts payable and other liabilities (28,982) (39,911) Net cash provided by operating activities 1,609,498 1,905,804 Cash flows from investing activities: Net (increase) decrease in loans (15,313,109) 1,946,073 Proceeds from sales of available-for-sale investment securities 1,034,500 999,375 Proceeds from sales of available-for-sale mortgage-backed securities 3,365,084 - Proceeds from maturing available-for-sale investment securities 415,000 4,212,120 Proceeds from maturing available-for-sale mortgage-backed securities 1,856,588 4,276,567 Proceeds from maturing held-to-maturity mortgage-backed securities - 275,000 Purchase of Federal Home Loan Bank stock (409,000) (37,500) Purchase of available-for-sale investment securities (2,759,750) (11,581,011) Purchase of available-for-sale mortgage-backed securities (1,976,250) (8,048,143) Purchase of premises and equipment (181,570) (267,660) Proceeds from sale of foreclosed real estate 151,822 39,477 Net cash used in by investing activities (13,816,685) (8,185,702) Cash flows from financing activities: Net increase in certificates of deposit 1,050,794 7,446,654 Net increase in demand, NOW and Saving accounts 4,215,470 5,874,841 Net decrease in advances from borrowers for taxes and insurance (47,328) (64,219) Proceeds from Federal Home Loan Bank advances 128,550,000 5,500,000 Repayments of Federal Home Loan Bank advances(119,100,000) (6,768,905) Cash dividends paid (494,296) (510,719) Exercise of stock options 135,620 40,000 Purchase of treasury stock (1,702,530) (2,803,401) Net cash provided by financing activities 12,607,730 8,714,251 Increase in cash and cash equivalents 400,543 2,434,353 Cash and cash equivalents at beginning of period 4,068,675 4,326,474 Cash and cash equivalents at end of period $ 4,469,218 $6,760,827 See Notes to Consolidated Financial Statements SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued (UNAUDITED) Nine-months ended March 31, 2000 1999 Supplemental disclosures of Cash flow information: Noncash investing and financing activities: Conversion of loans to foreclosed real estate and other assets $ 423,091 $ 721,305 Conversion of foreclosed real estate to loans $ 87,000 $ 169,783 Cash paid during the period for: Interest (net of interest credited) $2,168,951 $1,158,376 Income taxes $ 446,000 $ 300,000 See Notes to Consolidated Financial Statements SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1: Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Rule 10-01 of Securities and Exchange Commission ("SEC") Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all material adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended March 31, 2000 are not necessarily indicative of the results that may be expected for the entire fiscal year. For additional information, refer to the Company's June 30, 1999 Form 10-KSB, which was filed with the SEC and the Company's annual report, which contains the audited consolidated financial statements for the fiscal years ended June 30, 1999 and 1998. Note 2: Holding Company Formation, and Stock Issuance, Charter Conversions and State of Incorporation Southern Missouri Bancorp, Inc. (the "Company"), a Delaware corporation, was incorporated on December 30, 1993 for the purpose of becoming a holding company for Southern Missouri Savings Bank, upon its conversion from a state chartered mutual savings bank to a state chartered stock savings bank. The Company's subscription and community stock offering was completed on April 13, 1994 with the issuance of 1,803,201 shares of common stock at a price of $10 per share. The stock offering provided net proceeds of approximately $15.2 million after conversion costs and unearned compensation related to shares issued to the Employee Stock Ownership Plan ("ESOP") and Management Recognition Plan ("MRP"). On June 20, 1995, Southern Missouri Savings Bank converted from a state chartered stock savings bank to a federally chartered stock savings bank and changed its name to Southern Missouri Savings Bank, FSB. On February 17, 1998, Southern Missouri Savings Bank, FSB converted from a federally chartered stock savings bank to a Missouri chartered stock savings bank and changed its name to Southern Missouri Bank and Trust Co. (the "Bank" or "SMBT"). On October 19, 1998, the Company's stockholders approved a proposal to change the Company's state of incorporation from Delaware to Missouri. This reincorporation was completed on April 1, 1999. Note 3: Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, SMBT, which in turn owns all of S.M.S. Financial Services, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. Note 4: Employee Stock Ownership Plan In conjunction with the stock offering, the Company established an ESOP with 142,832 unallocated shares available for distribution. The unallocated shares have been debited to unearned ESOP shares, a contra-equity account. The Company recognizes compensation expense based on shares expected to be released equal to the average market price of the shares in addition to including the shares as outstanding for purposes of determining earnings per share. At March 31, 2000, the ESOP had allocated 100,147 shares and had 7,500 shares committed for allocation to employees of the Bank. Note 5: Benefit Plans In conjunction with the stock offering, the Company established both a MRP and a Stock Option and Incentive Plan ("SOIP"). The MRP authorized 71,416 shares to be issued to directors, officers and employees of SMBT of which 62,158 have been awarded and vested, 5,100 have been awarded and are not yet vested and 4,158 remain unawarded. The SOIP authorized 246,472 stock options for shares to be issued to directors, officers and employees of SMBT, pursuant to which 192,540 options have been awarded and 115,623 remain outstanding and unexercised. Currently, awards under the MRP and SOIP vest over five years, with compensation expense for the MRP being amortized over each participant's vesting period. Note 6: Earnings Per Share Basic and diluted earnings per share are based upon the weighted-average shares outstanding. ESOP shares committed to be released are considered outstanding. The following table summarizes basic and diluted earnings per common share for the three and nine months ended March 31, 2000 and 1999, under SFAS No. 128:
Three-Months Ended Nine-Months Ended March 31, March 31, 2000 1999 2000 1999 Net earnings $ 351,710 $ 329,494 $1,112,359 $1,024,877 Weighted-average shares - Basic earnings per share 1,233,471 1,301,108 1,295,030 1,339,081 Stock options under treasury stock method 10,956 35,332 14,472 37,683 Weighted-average shares - Diluted earnings per share 1,248,102 1,336,440 1,309,502 1,376,764 Basic earnings per common share $ 0.29 $ 0.25 $ 0.86 $ 0.76 Diluted earnings per common share $ 0.28 $ 0.24 $ 0.85 $ 0.74
PART I Item 2 Southern Missouri Bancorp, Inc. and Subsidiary Management's Discussion and Analysis of Financial Condition and Results of Operations General The Company's performance is reliant on the operations of the Bank, since the Company has no significant assets other than the common stock of the Bank and $612,000 in investments and other assets. The Bank's results of operations are primarily dependent on the difference (or "interest rate spread") between the average yield earned on its interest-earning assets and the average rate paid on interest-bearing liabilities. Interest-earning assets consist primarily of loans receivable, investment securities, mortgage-backed and related securities ("MBS") and other investments while interest bearing liabilities consist primarily of retail deposits and Federal Home Loan Bank ("FHLB") advances. The interest rate spread is affected by economic, regulatory, and competitive factors, which influence interest rates, loan demand, prepayment rates and deposit flows. The Bank remains subject to interest-rate risk to the degree that its interest-earning assets mature or reprice at different times, or on a varying basis, from its interest-bearing liabilities. The Bank's results of operations are also affected by provisions for loan losses, non-interest income and non-interest expenses, such as employee salary and benefits, occupancy expenses and other operational expenditures. The following discussion reviews the Company's consolidated financial condition at March 31, 2000 and the results of operations for the three and nine-month periods ended March 31, 2000 and 1999, respectively. Forward Looking Statements Except for the historical information contained herein, the matters discussed in this Form 10-QSB may be deemed to be forward- looking statements that involve risks and uncertainties, including changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area and price competition for loans and deposits. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent the Company's judgement as of the date of this Form 10-QSB. The Company disclaims however, any intent or obligation to update these forward-looking statements. Financial Condition The Company's total assets increased $13.5 million, or 8.2%, to $178.5 million at March 31, 2000 as compared to $165.0 million at June 30, 1999. The increase was largely attributable to a $15.1 million, or 12.8% increase in loans receivable. The rate of loan growth slightly exceeded the Company's internal growth estimates and consisted primarily of $8.8 million in commercial loans and $6.4 million in loans secured by one- to four-family real estate. The Company's stockholders' equity declined from $22.6 million at June 30, 1999 to $21.4 million at March 31, 2000. The decline was primarily due to the repurchase of $1.8 million of the Company's common stock, $494,000 in cash dividends paid on common stock and mark-to-market adjustments on the investment portfolio of $362,000. The decline was partially offset by the Company's $1.1 million in net income. The growth in loans receivable and reduction in stockholders' equity was primarily funded by an increase in deposits of $5.3 million, or 4.4%, and an increase in FHLB advances of $9.5 million, or 46.0%, to $30.0 million at March 31, 2000 from $20.6 million at June 30, 1999. Outstanding FHLB advances have terms of up to ten years at either variable or fixed rates of interest and may be subject to early redemption on the part of the issuer. At March 31, 2000 the average cost of FHLB advances was 5.79%, which was 53 basis points higher than the average cost of the Company's certificates of deposit. During the quarter, the Company announced an agreement to acquire two full-service banking facilities located in Kennett, Missouri and Qulin, Missouri, including deposits and loans of approximately $50.1 million and $27.8 million, respectively. In addition, the Company announced an agreement to sell two of its full- service banking facilities located in Malden, Missouri and Ellington, Missouri, including deposits and loans of approximately $15.0 million and $9.5 million, respectively. Both transactions are expected to be completed during the first quarter of fiscal 2001. Results of Operations - Comparison of the three and nine month periods ended March 31, 2000 and 1999. Net Income. The Company's net income for the three and nine month periods ended March 31, 2000 was $352,000 and $1.1 million, respectively, as compared to the $329,000 and $1.0 million earned during the same periods of the prior year. Increased earnings over the three and nine month periods ended March 31, 2000 was primarily due to increased net interest income and lower noninterest expense, which was partially offset by reduced noninterest income. Net Interest Income. Net interest income increased $98,000, or 7.8%, to $1.3 million for the three months ended March 31, 2000 as compared to the $1.2 million earned during the same period of the prior year. The increase was primarily due to the incremental spread earned on the difference between the $10.1 million increase in average interest-earning assets and the $11.4 million increase in interest-bearing liabilities and the 7 basis point increase in the average interest rate spread from 2.62% to 2.69% for the three month period. Net interest income increased $254,000, or 6.7%, to $4.0 million for the nine months ended March 31, 2000 as compared to the $3.8 million earned during the same period of the prior year. The increase was primarily due to the incremental spread earned on the difference between the $10.4 million increase in average interest-earning assets and the $10.6 million increase in average interest-bearing liabilities as well as a 5 basis point increase in the average interest rate spread, from 2.71% to 2.76% for the nine month period. Interest Income. Interest income for the three and nine-month periods ended March 31, 2000 increased $351,000 and $565,000, respectively, as compared to the same periods of the prior year. The increase over the three-month period was primarily due to a $10.1 million, or 6.4% increase in average interest-earning assets and a 41 basis point increase in the average yield earned on these assets, to 7.40% from 6.99%. Over the nine-month period, the increase was primarily due to a $10.4 million, or 6.8% increase in average interest-earning assets, while the average yield earned on these assets stayed substantially the same at 7.34%. Interest Expense. Interest expense for the three and nine- month periods ended March 31, 2000 increased $253,000 and $311,000, respectively, as compared to the same periods of the prior year. The increase over the three-month period was primarily due to an $11.4 million, or 8.1% increase in average interest-bearing liabilities and a 34 basis point increase in the average cost of these liabilities, to 4.71% from 4.37%. Over the nine-month period, the increase was primarily due to a $10.6 million, or 7.9% increase in average interest-bearing liabilities, partially offset by a decline in the average cost of these liabilities, from 4.63% to 4.58%. Provision for Loan Losses. The provision for loan losses for the three-month period ended March 31, 2000 was $15,000 as compared to the $10,000 provision made during the same period of the prior year. The provision for loan losses for the nine-month period ended March 31, 2000 was $50,000 as compared to the $35,000 provision made during the same period of the prior year (see "Allowance for Loan Loss Activity" and "Nonperforming Assets"). Noninterest Income. Noninterest income for the three months ended March 31, 2000 declined $69,000, or 34.8%, to $130,000 as compared to the $199,000 earned during the same period of the prior year. The decline was primarily due to declines in insurance commissions and loan late charges of $87,000 and $17,000, respectively, which was partially offset by a $45,000 increase in banking service charges. Noninterest income for the nine months ended March 31, 2000 declined $178,000, or 33.4%, to $356,000 as compared to the $534,000 earned during the same period of the prior year. The decrease was primarily due to a $237,000 decline in insurance commissions, a $21,000 loss realized on the sale of available-for-sale securities and an $18,000 reduction in loan late charges, which was partially offset by a $92,000 increase in banking service charges. The decline in insurance commissions was due to the sale of the Company's insurance operation in the fourth quarter of fiscal 1999. Noninterest Expense. Noninterest expense for the three-month period ended March 31, 2000 declined $22,000, or 2.3%, to $926,000 as compared to the $948,000 expended during the same period of the prior year. The decline was primarily due to respective declines in compensation expense and SAIF insurance premiums of $32,000 and $14,000, partially offset by respective increases in occupancy expense and deposit services of $10,000 and $17,000,. Noninterest expense for the nine-month period ended March 31, 2000 declined $72,000, or 2.7%, to $2.6 million as compared to the $2.7 million expended during the same period of the prior year. The decline was primarily due to respective declines in compensation expense and SAIF insurance premiums of $126,000 and $27,000, partially offset by increased occupancy expense of $16,000, professional fees of $24,000 and deposit services of $24,000. Reduced compensation expense was primarily due to the sale of the Company's insurance operation in the fourth quarter of fiscal 1999 offset by hiring additional personnel in the loan department during this fiscal year. Provision for Income Taxes. The provision for income taxes for the three and nine-month periods ended March 31, 2000 was $186,000 and $579,000, respectively, as compared to the $162,000 and $534,000 expended for the same periods of the prior year. The increases were primarily due to increased taxable income. Allowance for Loan Loss Activity The Company regularly reviews its allowance for loan losses and makes adjustments to its balance based on management's analysis of the loan portfolio, the amount of non-performing and classified assets, as well as general economic conditions. Although the Company maintains its allowance for loan losses at a level, which it considers to be sufficient to provide for losses, there can be no assurance that future losses will not exceed internal estimates. In addition, the amount of the allowance for loan losses is subject to review by regulatory agencies, which can order the establishment of additional loss provisions. The following table summarizes changes in the allowance for loan losses over the nine months ended March 31, 2000 and 1999: 2000 1999 Balance, beginning of period $1,191,147 $1,295,222 Loans charged off: Real estate (29,042) (37,664) Unsecured consumer (12,108) (68,426) Secured consumer (127,018) (80,739) Mobile homes (37,554) (11,120) Gross charged off loans (205,722) (197,949) Recoveries of loans previously charged off: Real estate 625 1,790 Unsecured consumer 11,744 4,195 Secured consumer 44,040 8,919 Mobile homes 29,122 54,309 Gross recoveries of charged off loans 85,531 69,213 Net charge offs (120,191) (128,736) Provision charged to expense 50,000 35,000 Balance, end of period $1,120,956 $1,201,486 Ratio of net charge offs (recoveries) during the period to average loans outstanding during the period .10% .11% During the last two fiscal years, the Company's level of net loan charge offs has been higher than historical averages. This increase was partially the result of underwriting guidelines and collection procedures used by previous management. Beginning in mid-1999, the process of implementing revised underwriting guidelines, loan programs and collection procedures was instituted. The implementation of each of these initiatives is underway, but full attainment and compliance with these initiatives is not expected to be achieved for several quarters. Net loan charge offs are expected to rise over the next several quarters as more aggressive collection procedures are fully implemented. Management believes that these new guidelines, over time, will result in a lower percentage of future loan charge- offs, while allowing loan portfolio growth. These factors were considered in the Company's analysis of the adequacy of its provision for loan losses. In addition, the Company anticipates future loan recoveries since it has 16 loans totaling $123,000, secured primarily by mobile home loans which have been charged off, but the actual value of the collateral had not yet been realized through repossession. The Company does not expect to realize the full charged off balance of these loans. Nonperforming Assets The allowance for loan losses has been calculated based upon an evaluation of pertinent factors underlying the various types and quality of the Company's loans. Management considers such factors as the repayment status of a loan, the estimated net fair value of the underlying collateral, the borrower's intent and ability to repay the loan, local economic conditions, and the Company's historical loss ratios. The allowance for loan losses declined $70,000 to $1.1 million at March 31, 2000 from $1.2 million on June 30, 1999. At March 31, 2000, the Bank had $4.4 million, or 2.5% of assets adversely classified (substandard, doubtful, or loss) as compared to adversely classified assets of $5.1 million, or 3.1% of assets at June 30, 1999. The ratio of nonperforming assets to total assets and net loans receivable is another measure of asset quality. Nonperforming assets of the Company include nonaccru ing loans, accruing loans delinquent/past maturity 90 days or more and assets which have been acquired as a result of foreclosure or deed-in-lieu of foreclosure. The following table summarizes changes in the Company's level of nonperforming assets over selected time periods: Loans past maturity/delinquent 90 days or more 3/31/00 6/30/99 3/31/99 Residential real estate $ 196,000 $ 181,000 $ 326,000 Commercial real estate 161,000 86,000 415,000 Commercial 82,000 27,000 - Consumer 49,000 143,000 145,000 Mobile homes 13,000 55,000 167,000 Total loans past maturity/delinquent 90+ days 501,000 492,000 1,053,000 Assets acquired in settlement of loans 552,000 560,000 478,000 Total nonperforming assets $1,053,000 $1,052,000 $1,531,000 Percentage nonperforming assets to total assets 0.59% 0.64% 0.92% Percentage nonperforming loans to net loans 0.38% 0.42% 0.90% Asset and Liability Management and Market Risk The goal of the Bank's asset/liability management strategy is to manage the interest rate sensitivity of both interest-earning assets and interest-bearing liabilities so as to maximize net interest income without exposing it or the Bank to an excessive level of interest-rate risk. The Bank has employed various strategies intended to manage the potential effect that changing interest rates have on future operating results. Historically, the primary asset/liability management strategy had been to focus on matching the repricing intervals of interest-earning assets and interest-bearing liabilities. This strategy has resulted in a manageable exposure to interest-rate risk with modest asset and loan growth rates. The primary elements of the Bank's current asset/liability strategy includes (i) increasing loans receivable through the origination of both fixed and adjustable-rate residential loans, (ii) growth in loans secured by commercial real estate, which typically provide higher yields, increased credit risk and shorter repricing periods, (iii) expanding the consumer loan portfolio by offering home equity lines-of-credit, which reprice monthly and typically provide higher average loan yields with a moderate increase in credit risk, (iv) active solicitation of less rate-sensitive deposits, (v) offering competitively priced short-term certificates of deposit, and (vi) the use of FHLB advances to help manage sensitivity to fluctuating interest rates. The degree to which each segment of the strategy is achieved will affect profitability and exposure to interest-rate risk. The Bank has not used and does not anticipate the use, of derivative financial instruments or other financial instruments for managing its exposure to interest-rate risk or use in a trading account. Further, the Bank is not subject to any foreign currency exchange rate risk, commodity price risk, equity price risk or risk to any hedge funds. The Bank anticipates the average spread and net interest margin to remain under downward pressure over the next several quarters due to rising interest rates, a mismatch in the volume of assets and liabilities subject to repricing, the use of annual and lifetime interest rate caps on the Bank's adjustable-rate mortgages and the Bank's historic use of "lagging" loan indices. Liquidity and Capital Resources The Company's primary sources of funds are deposits, the receipt of principal and interest payments on loans and mortgage- backed securities, investments and FHLB advances. While the scheduled repayments on loans and securities as well as the maturity of short-term investments are somewhat predictable sources of funding, deposit flows and loan prepayment rates are influenced by many factors, which make their cash flows difficult to anticipate. The Company uses its liquidity resources principally to satisfy its ongoing cash requirements which include funding loan commitments, funding maturing certificates of deposit as well as deposit withdrawals, maintaining liquidity, purchasing investments, and meeting operating expenses. At March 31, 2000, the Company had outstanding commitments to fund $6.4 million in mortgage loans and $4.3 million in non-mortgage loans. These commitments are expected to be funded through existing cash balances, cash flow from normal operations and, if needed, FHLB advances. At March 31, 2000, the Bank had available credit at the FHLB of approximately $88.3 million, of which $30.0 million had been advanced. Management believes that these and other liquidity resources will be sufficient to meets the Company's liquidity needs. Regulatory Capital The Bank is subject to minimum regulatory capital requirements equal to a leverage ratio (or core capital) of 4.0% of average total assets, a tier I capital to risk-weighted assets of 4.0% and a risk-based capital ratio of 8.0% of risk-weighted assets. At March 31, 2000, the Bank exceeded all regulatory capital requirements with leverage capital of $21.4 million (12.1% of average total assets), tier I capital of $21.4 million (21.1% of risk-based assets) and risk-based capital of $22.6 million (22.2% of risk-weighted assets). Under current regulatory guidelines, the Bank is considered to be "well-capitalized". PART II - OTHER INFORMATION Southern Missouri Bancorp, Inc. and Subsidiary Item 1 - Legal Proceedings The Company and the Bank are not involved in any pending legal proceedings other than legal proceedings incident to the business of the Company and the Bank, which involve aggregate amounts management believes to be immaterial to the financial condition and results of operations of the Company and the Bank. Item 2 - Changes in Securities and Use of Proceeds None Item 3 - Defaults upon Senior Securities Not applicable Item 4 - Submission of Matters to a Vote of Security-Holders None Item 5 - Other Information None Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits (3) (a) Certificate of Incorporation of the Registrant* (3) (b) Bylaws of the Registrant* 10 (a) Registrant's Stock Option Plan** 10 (b) Southern Missouri Savings Bank, FSB Management Recognition and Development Plans** 10 (c) Employment Agreements (i) Greg A. Steffens**** 10 (d) Director's Retirement Agreements*** (i) Robert A. Seifert (ii) Thadis R. Seifert (iii) Leonard W. Ehlers (iv) James W. Tatum (v> Samuel H. Smith (vi) L. Douglas Bagby (vii) Ronnie D. Black 10 (e) Tax Sharing Agreement*** (27) Financial Data Schedule * Filed as an exhibit to the registrant's Registration Statement on Form S-1 (33-73746). ** Filed as an exhibit to the registrant's 1994 annual meeting proxy statement dated October 21, 1994. *** Filed as an exhibit to the registrant's Annual Report on Form 10-KSB for the year ended June 30, 1995. **** Filed as an exhibit to the registrant's Annual Report on Form 10-KSB for the year ended June 30, 1999. (b) Reports on Form 8-K: No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SOUTHERN MISSOURI BANCORP, INC. Registrant Date: May 12, 2000 xThadis R. Seifert Thadis R. Seifert President Date: May 12, 2000 xGreg A. Steffens Greg A. Steffens Chief Financial Officer EX-27 2
9 0000916907 SOUTHERN MISSOURI BANCORP, INC 9-MOS JUN-30-2000 MAR-31-2000 1,514,682 2,954,536 0 0 35,294,151 0 0 134,523,534 1,182,201 178,452,423 125,420,802 0 1,596,290 30,000,000 0 0 17,599,576 3,835,755 178,452,423 7,207,549 1,743,469 60,975 9,011,993 3,968,987 4,976,250 4,035,743 50,000 (21,205) 2,650,132 1,691,201 1,691,201 0 0 1,112,359 .86 .85 6.94 220,250 281,016 0 4,420,585 1,191,147 (205,722) 85,531 1,120,956 1,120,956 0 0
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