-----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, VRe4D1GjEvSY55O2sBVkAt1BJrGQF+zAcHivCquK8o99hnErWZdoYbDdo2PGECeW bvTThUJmG/ZiRKGM5twkXQ== 0000916907-97-000003.txt : 19970222 0000916907-97-000003.hdr.sgml : 19970222 ACCESSION NUMBER: 0000916907-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NASD 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: 1934 Act SEC FILE NUMBER: 000-23406 FILM NUMBER: 97534229 BUSINESS ADDRESS: STREET 1: 531 VINE ST CITY: POPLAR BLUFF STATE: MO ZIP: 63901 BUSINESS PHONE: 3147851421 10QSB 1 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 December 31, 1996 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) Delaware 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) Registrant's telephone number, including area code 573-785-1421 Not Applicable Former name, former address and former fiscal year, if changed since last report. 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 APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 1,637,913 as of January 31, 1997. SOUTHERN MISSOURI BANCORP, INC. FORM 10-QSB FOR THE QUARTER ENDED DECEMBER 31, 1996 INDEX Page No. PART I - Financial Information Item 1. Financial Statements (Unaudited) Consolidated Statements of Financial Condition 1 Consolidated Statements of Income 2 Consolidated Statements of Cash Flows 3-4 Notes to Consolidated Financial Statements 5 (Unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6-12 PART II - Other Information Item 1. Legal Proceedings 13 Item 2. Changes in Securities 13 Item 3. Defaults upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security-Holders 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 14 SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) December 31, June 30, ASSETS 1996 1996 Cash and cash equivalents $ 5,627,388 4,477,872 Certificates of deposit 91,355 186,512 Investment and mortgage-backed and related securities: Available for sale - at estimated market value (amortized cost of $42,246,318 and $50,615,727 at December 31, 1996 and June 30, 1996, respectively) 42,244,939 49,980,348 Held to maturity - at amortized cost (estimated market value of $4,902,906 and $4,888,427 at December 31, 1996 and June 30, 1996, respectively) 4,831,267 4,851,454 Stock in Federal Home Loan Bank of Des Moines 1,519,700 1,519,700 Loans receivable, net 102,128,136 95,534,657 Accrued interest receivable 1,011,506 1,141,099 Foreclosed real estate, net 151,585 60,133 Premises and equipment 1,646,825 1,411,247 Prepaid expenses and other assets 400,407 684,701 Total assets $ 159,653,108 159,847,723 See accompanying notes to consolidated financial statements. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) December 31, June 30, LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1996 Deposits $ 118,738,220 120,138,066 Advances from borrowers for taxes and insurance 135,980 353,895 Advances from FHLB of Des Moines 13,543,050 11,550,478 Income taxes payable 132,693 136,210 Accounts payable and other liabilities 418,738 459,971 Accrued interest payable 870,879 981,809 Total liabilities 133,839,560 133,620,429 Commitments and contingencies Preferred stock, $.01 par value; 500,000 shares authorized; none issued and outstanding - - Common stock, $.01 par value; 3,000,000 shares authorized; 1,803,201 shares issued and outstanding 18,032 18,032 Additional paid-in capital 17,492,420 17,449,978 Retained earnings - substantially restricted 12,133,644 12,192,583 Treasury stock of 165,388 shares at December 31, 1996 and 102,188 shares at June 30, 1996, at cost (2,674,618) (1,691,030) Common stock acquired by ESOP (816,183) (918,207) Common stock acquired by MRP (332,973) (397,972) Unrealized loss on investment and mortgage-backed securities available for sale (469) (419,785) Minimum pension liability (6,305) (6,305) Total stockholders' equity 25,813,548 26,227,294 Total liabilities and stockholders' equity $ 159,653,108 159,847,723 See accompanying notes to consolidated financial statements. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended December 31, 1996 1995 Interest income: Loans receivable $ 2,002,973 1,803,557 Investment securities 256,879 477,472 Mortgage-backed and related securities 548,215 369,441 Other interest-earning assets 14,568 36,128 Total interest income 2,822,635 2,686,598 Interest expense: Deposits 1,368,068 1,483,873 Advances from FHLB of Des Moines 170,409 93,758 Total interest expense 1,538,477 1,577,631 Net interest income 1,284,158 1,108,967 Provision for loan losses 22,500 15,000 Net interest income after provision for loan losses 1,261,658 1,093,967 Noninterest income: Gain on sale of investment securities, available for sale 53,389 12,536 Gain (loss) on sale of mortgage-backed securities, available for sale (53,424) 4,440 Gain on sale of mortgage-backed securities, held to maturity - - Insurance commissions 92,668 85,161 Banking service charges 46,471 38,214 Net income on foreclosed real estate (9,214) (7,818) Loan late charges 13,705 10,305 Other 5,958 2,530 Total noninterest income 149,553 145,368 Noninterest expense: Compensation and benefits 502,335 514,380 Occupancy and equipment 78,808 69,399 SAIF special assessment - - SAIF deposit insurance premium 69,858 68,722 Gain on foreclosed real estate, net (14,738) 4,698 Professional fees 36,603 42,774 Advertising 27,111 23,037 Postage and office supplies 28,513 25,783 Other 77,219 76,339 Total noninterest expense 805,709 825,132 Income before income taxes 605,502 414,203 Income taxes 180,950 111,181 Net income $ 424,552 303,022 Earnings per share $ .27 .18 Dividends per share $ .125 .125 See accompanying notes to consolidated financial statements. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Six Months Ended December 31, 1996 1995 Interest income: Loans receivable $ 3,952,695 3,445,320 Investment securities 601,560 1,003,131 Mortgage-backed and related securities 1,114,461 767,628 Other interest-earning assets 29,967 83,990 Total interest income 5,698,683 5,300,069 Interest expense: Deposits 2,780,534 2,994,609 Advances from FHLB of Des Moines 340,086 110,278 Total interest expense 3,120,620 3,104,887 Net interest income 2,578,063 2,195,182 Provision for loan losses 40,000 30,000 Net interest income after provision for loan losses 2,538,063 2,165,182 Noninterest income: Gain on sale of investment securities, available for sale 53,389 75,633 Gain (loss) on sale of mortgage-backed securities, available for sale (53,424) (53,057) Gain on sale of mortgage-backed securities, held to maturity - 9,261 Insurance commissions 182,374 157,620 Banking service charges 85,116 74,312 Net income on foreclosed real estate (11,746) (10,468) Loan late charges 24,247 20,153 Other 13,868 5,462 Total noninterest income 293,824 278,916 Noninterest expense: Compensation and benefits 1,058,084 1,047,212 Occupancy and equipment 158,633 159,621 SAIF special assessment 779,184 - SAIF deposit insurance premium 140,180 136,915 Gain on foreclosed real estate, net (18,160) (33,753) Professional fees 60,711 74,243 Advertising 49,463 47,171 Postage and office supplies 51,689 52,696 Other 141,511 140,528 Total noninterest expense 2,421,295 1,624,633 Income before income taxes 410,592 819,465 Income taxes 84,287 214,356 Net income 326,305 605,109 Earnings per share $ .21 .36 Dividends per share $ .250 .250 See accompanying notes to consolidated financial statements. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended December 31, 1996 Cash flows from operating activities: Net income $ 326,305 Items not requiring (providing) cash: Depreciation and amortization 83,409 MRP expense and ESOP expense 209,465 Gain on sale of investment securities - available for sale (53,389) Loss on sale of mortgage-backed securities - available for sale 53,424 Gain on sale of mortgage-backed securities - held to maturity - Provision for loan losses 40,000 FHLB stock dividend - Gain on foreclosed real estate, net (18,160) Net amortization of deferred income, premiums, and discounts 58,393 Changes in: Accrued interest receivable 129,593 Prepaid expenses and other assets 284,294 Accounts payable and other liabilities (41,233) Federal income taxes payable (3,517) Accrued interest payable (110,930) Net cash provided by operating activities 957,654 Cash flows from investing activities: Net increase in loans (6,867,375) Proceeds from sales of investment securities, available for sale 1,578,200 Proceeds from maturing investment securities, available for sale 3,538,955 Proceeds from maturing investment securities, held to maturity 30,000 Purchase of investment securities, available for sale - Purchase of investment securities, held to maturity - Proceeds from sales of mortgage-backed securities - held to maturity - Proceeds from sales of mortgage-backed securities, available for sale 639,376 Proceeds from maturing mortgage-backed securities, available for sale 2,453,518 Proceeds from maturing mortgage-backed securities, held to maturity 16,860 Purchase of mortgage-backed securities, available for sale - SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Proceeds from maturing certificates of deposit 95,000 Purchase of premises and equipment (303,351) Proceeds from sale of foreclosed real estate 4,700 Net cash used in investing activities 1,185,883 Cash flows from financing activities: Net (decrease) increase in deposits $(1,399,846) Net decrease in advances from borrowers for taxes and insurance (217,915) Net increase in advances from FHLB of Des Moines 1,992,572 Dividends on common stock (385,244) Payments to acquire treasury stock (983,588) Net cash provided by financing activities (994,021) Increase (decrease) in cash and cash equivalents 1,149,516 Cash and cash equivalents at beginning of period 4,477,872 Cash and cash equivalents at end of period $ 5,627,388 Supplemental disclosures of cash flow information: Noncash investing and financing activities Conversion of loans to foreclosed real estate $ 132,446 Conversion of foreclosed real estate to loans $ 39,100 Cash paid during the period for Interest (net of interest credited) $ 1,063,670 Income taxes $ 8,500 See accompanying notes to consolidated financial statements SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended December 31, 1995 Cash flows from operating activities: Net income 605,109 Items not requiring (providing) cash: Depreciation and amortization 95,596 MRP expense and ESOP expense 232,266 Gain on sale of investment securities - available for sale (75,633) Loss on sale of mortgage-backed securities - available for sale 53,057 Gain on sale of mortgage-backed securities - held to maturity ( 9,261) Provision for loan losses 30,000 FHLB stock dividend (30,000) Gain on foreclosed real estate, net (33,753) Net amortization of deferred income, premiums, and discounts 106,755 Changes in: Accrued interest receivable 66,441 Prepaid expenses and other assets 120,686 Accounts payable and other liabilities (5,974) Federal income taxes payable 130,686 Accrued interest payable 122,092 Net cash provided by operating activities 1,408,067 Cash flows from investing activities: Net increase in loans (5,215,700) Proceeds from sales of investment securities, available for sale 5,903,998 Proceeds from maturing investment securities, available for sale 3,295,000 Proceeds from maturing investment securities, held to maturity 2,900,000 Purchase of investment securities, available for sale (3,889,062) Purchase of investment securities, held to maturity (500,000) Proceeds from sales of mortgage-backed securities - held to maturity 978,784 Proceeds from sales of mortgage-backed securities, available for sale 3,430,168 Proceeds from maturing mortgage-backed securities, available for sale 1,375,759 Proceeds from maturing mortgage-backed securities, held to maturity 1,055,216 SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Purchase of mortgage-backed securities, available for sale (16,021,007) Proceeds from maturing certificates of deposit - Purchase of premises and equipment (64,847) Proceeds from sale of foreclosed real estate 74,500 Net cash used in investing activities (6,677,191) Cash flows from financing activities: Net (decrease) increase in deposits $ 1,451,674 Net decrease in advances from borrowers for taxes and insurance (307,105) Net increase in advances from FHLB of Des Moines 10,243,142 Dividends on common stock (416,497) Payments to acquire treasury stock (1,321,900) Net cash provided by financing activities 9,649,314 Increase (decrease) in cash and cash equivalents 4,380,190 Cash and cash equivalents at beginning of period 2,985,898 Cash and cash equivalents at end of period $ 7,366,088 Supplemental disclosures of cash flow information: Noncash investing and financing activities Conversion of loans to foreclosed real estate $ 15,000 Conversion of foreclosed real estate to loans $ 18,000 Cash paid during the period for Interest (net of interest credited) $ 1,002,332 Income taxes $ 88,000 See accompanying notes to consolidated financial statements SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) The information contained in the accompanying consolidated financial statements is unaudited. In the opinion of management, the financial statements contain all adjustments (none of which were other than normal recurring accruals) necessary for a fair statement of the results of operations for the interim periods. These financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company's 1996 Annual Report to Stockholders. The results of operations for the three and six month periods ended December 31, 1996 are not necessarily indicative of the results of operations for the entire fiscal year. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General On April 13, 1994, Southern Missouri Savings Bank (Savings Bank) completed its conversion from mutual to stock form and became a wholly-owned subsidiary of a newly formed Delaware holding company,Southern Missouri Bancorp, Inc. (Company). The Company sold 1,785,375 shares of common stock at $10 per share in conjunction with the subscription offering to the Savings Bank Employee Stock Ownership Plan (ESOP), eligible account holders and other members of the Savings Bank. In addition, 17,826 shares of authorized common stock were granted to the Savings Bank's Management Recognition Plan to fulfill its order in the subscription offering. Net proceeds of the sale of common stock in the subscription offering were $15,160,161, after deduction of conversion costs of $729,369. The Company retained 50% of the net conversion proceeds less the funds used to make the ESOP loan to the Savings Bank for the purchase of shares of common stock for the Savings Bank's ESOP and used the balance of the net proceeds to purchase all of the stock of the Savings Bank in the conversion. Certain statements in this report which relate to the Company's plans, objectives or future performance may be deemed to be forward-looking statements within the meaning of Private Securities Litigation Act of 1995. Such statements are based on management's current expectations. Actual strategies and results in future periods may differ materially from those currently expected because of various risks and uncertainties. Additional discussion of factors affecting the Company's business and prospects is contained in periodic filings with the Securities and Exchange Commission. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Supervisory Agreement and Regulatory Matters On December 21, 1994, the Savings Bank voluntarily entered into a Supervisory Agreement with the Office of Thrift Supervision (OTS), its primary federal regulator. The Supervisory Agreement generally concerns the Savings Bank's investment portfolio and, more specifically, focuses on the reporting, monitoring, and assessment of interest rate risk in connection with the Savings Bank's portfolio of collateralized mortgage obligations (CMO's). In an effort to comply with the Supervisory Agreement, the Savings Bank has hired a Chief Financial Officer who serves primarily as a senior investment officer. In addition, the Savings Bank revised its Investment Policy to conform more closely to the OTS's policy on securities activities and implemented additional procedures to review the investment activities and monitor interest rate risk management. The regulatory examination of the Savings Bank conducted during the fourth quarter of 1996 noted noncompliance with the Supervisory Agreement, and numerous additional actions required by management to achieve compliance and improve the operations of the Savings Bank. Among the actions being taken by management is a review of the activities in borrower's escrow accounts to determine whether a material amount of escrowed funds has been used to make payments of principal and interest rather than to pay taxes and insurance. Failure to achieve compliance with the Supervisory Agreement could lead to further regulatory enforcement actions, including the assessment of civil money penalties against the Savings Bank and/or its officers and directors. The Supervisory Agreement will remain in effect until it is terminated by the OTS. As a result of the Savings Bank's current regulatory status, the Savings Bank will no longer be eligible for the lowest assessment rate for deposit insurance. Consequently, the previously anticipated reduction will not occur. Instead, the assessment rate is expected to increase somewhat beginning June 30, 1997. In a letter dated October 20, 1995, addressed to the Board of Directors of the Savings Band, the OTS stated: "Southern Missouri Savings Bank continues to be designated a `problem' institution and in need of more than normal supervision. Accordingly, the institution is subject to the provisions of Regulatory Bulletin No. 3a-1 governing growth and to other restrictions and requirements in various other OTS regulations and memoranda." Regulatory Bulletin No. 3a-1 states, in pertinent part: "As a general rule, associations `requiring more than normal supervision' . . . will be permitted little to no growth under this policy, subject to District Director discretion and waiver authority . . . Without the prior written approval of the District Director, any association requiring more than normal supervision shall not increase its total assets during any quarter in excess of an amount equal to net interest credited on deposit liabilities (or earnings credited on 8 SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS share accounts) during the quarter." The continued existence of growth restrictions could have a material effect on the operations of the Savings Bank and, consequently, on the operations of the Company. Liquidity and Capital Resources The Savings Bank's principal sources of funds are cash receipts from deposits, loan repayments by borrowers, and net income. The Savings Bank has an agreement with the Federal Home Loan Bank of Des Moines (FHLB of Des Moines) to provide cash advances, should the need for additional funds be required. Commitments to originate fixed rate and adjustable-rate mortgage loans at December 31, 1996 were approximately $239,000 and $2,849,000, respectively. For regulatory purposes, liquidity is measured as a ratio of cash and certain investments to withdrawable deposits and short term borrowings. The minimum level of liquidity required by OTS regulation is presently 5%. The Savings Bank's liquidity ratio was approximately 10.6% at December 31, 1996. The Savings Bank maintains a high level of liquidity as a matter of management philosophy in order to more closely match interest-sensitive assets with interest-sensitive liabilities. The savings and loan industry historically has accepted interest rate risk as a part of its operating philosophy. Long-term, fixed-rate loans were funded with deposits which adjust to market interest rates more frequently. In recent years, the Savings Bank has originated primarily mortgage loans which permit adjustment of the interest rate after an initial term of one to three years in order to reduce inherent interest rate risk. Investment and mortgage-backed and related securities with a carrying value of $42,245,000 are classified as available for sale at December 31, 1996. Such securities are carried at fair value and can be liquidated with no further impact on capital. The Company's unrealized gains and losses on investment and mortgage- backed and related securities net, of applicable income taxes, are recorded in stockholders' equity. The Savings Bank must maintain core capital equal to 3% of adjusted total assets and maintain tangible capital equal to 1.5% of adjusted total assets. The Savings Bank must maintain an 8% risk-based capital. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table presents the Savings Bank's capital position relative to its regulatory capital requirements at December 31, 1996: Unaudited Regulatory Capital Tangible Stockholders' equity per consolidated financial statements $ 25,813,548 Stockholders' equity of Southern Missouri Bancorp, Inc. not available for regulatory capital purposes (5,474,409) GAAP capital 20,339,139 General valuation allowances - Non-includable unrealized loss on investment and mortgage-backed and related securities available for sale 30,196 Non-includable deferred tax assets (208,556) Non-includable intangible assets (71,670) Regulatory capital 20,089,109 Regulatory capital requirement (2,326,000) Regulatory capital - excess $ 17,763,109 Regulatory capital ratio 12.95% Regulatory capital requirement 1.50 Regulatory capital ratio - excess 11.45% Unaudited Regulatory Capital Core Risk-Based Stockholders' equity per consolidated financial statements $ 25,813,548 25,813,548 Stockholders' equity of Southern Missouri Bancorp, Inc. not available for regulatory capital purposes (5,474,409) (5,474,409) GAAP capital 20,339,139 20,339,139 General valuation allowances - 661,539 Non-includable unrealized loss on investment and mortgage-backed and related securities available for sale 30,196 30,196 Non-includable deferred tax assets (208,556) (208,556) Non-includable intangible assets (71,670) (71,670) Regulatory capital 20,089,109 20,750,648 Regulatory capital requirement (4,659,000) (6,325,000) Regulatory capital - excess $15,430,109 14,425,648 Regulatory capital ratio 12.95% 26.24% Regulatory capital requirement 3.00 8.00 Regulatory capital ratio - excess 9.95% 18.24% SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -Continued Financial Condition Total assets decreased slightly from $159,848,000 at June 30, 1996 to $159,653,000 at December 31, 1996. Cash flows from sales, maturities and prepayments of securities, and advances from the FHLB of Des Moines were used to originate loans and fund deposits. The Savings Bank intends to borrow from the FHLB when the cost of such borrowings is less than the overall cost of retail deposits. Premises and equipment increased due to the ongoing remodeling of the main banking facility, and an automatic teller machine added to the Van Buren, Missouri, branch. Foreclosed real estate, net, increased due to foreclosure of certain loans. Advances by borrowers for taxes and insurance decreased since real estate taxes are paid on behalf of borrowers in December of each year. Accrued interest payable decreased due to the timing of interest payments on certificates of deposit. Additional paid-in capital and common stock acquired by the ESOP and MRP changed as a result of the recognition of shares committed to be released for the ESOP and MRP. Unrealized loss on investment securities and mortgage-backed and related securities available for sale, net of income tax changed from a loss of $420,000 at June 30, 1996 to none at December 31, 1996. The balance is expected to fluctuate in the future based on changes in interest rates, as well as the amount and maturities of securities and mortgage-backed securities available for sale. COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995 Net Income Net income for the three-months ended December 31, 1996 was $425,000 compared with $303,000 for the three-months ended December 31, 1995. Net income for the six months ended December 31, 1996 was $326,000 compared with $605,000 for the six months ended December 31, 1995. Net Interest Income Net interest income increased from $1.11 million for the three months ended December 31, 1995 to $1.28 million for the comparable three month period in 1996. Net interest income increased from $2.20 million for the six months ended December 31, 1995 to $2.58 million for the comparable six month period in 1996. Net interest income increased due to a higher interest rate spread. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Interest Income Interest income was $2.69 million for the three-months ended December 31, 1995 compared with $2.82 million for the comparable three month period in 1996. Interest income was $5.30 million for the six months ended December 31, 1995 compared with $5.70 million for the comparable six month period in 1996. Interest on loans receivable increased for both the three months and six months periods ended December 31, 1996 compared to the 1995 periods as a result of higher average loans outstanding for 1996, offset by a slightly lower yield. The weighted-average rate on loans decreased from 7.79% at December 31, 1995 to 7.73% at December 31, 1996. Interest on mortgage-backed securities (MBSs) increased due to a higher average balance in the three and six month periods ended December 31, 1996 compared to the 1995 periods, offset by lower weighted-average yield on repricing of adjustable-rate MBSs. The weighted-average rate on MBSs decreased from 7.09% at December 31, 1995 to 6.67% at December 31, 1996. Interest on investment securities decreased due to lower interest rates and lower average balances. The weighted-average rate on investment securities decreased from 6.53% at December 31, 1995 to 6.33% at December 31, 1996. Interest on other interest-earning assets decreased due to lower average balance and lower interest rates on overnight funds and short term deposits. The components of interest-bearing assets change from time to time based on the availability and interest rates of loans, investment securities, and MBSs. Interest Expense Interest expense decreased due to lower interest rates offset by slightly higher average balances. The weighted-average rate on interest-bearing liabilities was 4.90% at December 31, 1995 as compared to 4.67% at December 31, 1996. Provision for Loan Losses Provision for loan losses are charged to earnings to bring the total allowance for loan losses to a level considered adequate by management to provide for loan losses based on prior loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral and current economic conditions. Management also considers other factors relating to the collectibility of the Savings Bank's loan portfolio. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued For the three months ended December 31, 1996, the Savings Bank established a provision for loan losses of $23,000 compared with $15,000 for the three months ended December 31, 1995. For the six months ended December 31, 1996, the Savings Bank established a provision for loan losses of $40,000 compared with $30,000 for the six months ended December 31, 1995. The book value of nonaccrual loans at December 31, 1996 was $822,000 compared to $546,000 at June 30, 1996. The average balance of nonaccrual loans for the six months ended December 31, 1996 was approximately $898,000. Allowance for losses on nonaccrual loans amounted to approximately $41,000 at December 31, 1996. For the three months and six months ended December 31, 1996, gross interest income which would have been recorded had nonaccrual loans been current in accordance with their original terms amounted to approximately $16,000 and $21,000, respectively. The amount of interest income included in the Company's net earnings for the three months and six months ended December 31, 1996 was approximately $9,000 and $23,000, respectively. Noninterest Income Noninterest income increased from $145,000 for the three months ended December 31, 1995 to $150,000 for 1996. Noninterest income increased from $279,000 for the six months ended December 31,1995 to $294,000 for 1996. The Savings Bank realized net gains on sales of securities and MBSs of $17,000 for the three months ended December 31, 1995, compared to none in 1996. Such gains were $32,000 for the six months ended December 31, 1995, compared to none in 1996. Gains on sales of securities and MBSs are not a stable source of income and no assurance can be given that the Savings Bank will generate such gains in the future. Gain on sale of MBSs held to maturity relate to small balance pools, which are permitted to be sold prior to maturity under Statement of Financial Accounting Standards No. 115. Commissions on insurance increased for both the three and six months ended December 31, 1996 over the comparable periods in 1995 due to increased activity. Banking service charges increased for both periods in 1996 over 1995 periods due to increased checking account activity. Miscellaneous income increased for both periods in 1996 over the 1995 periods due to fees received from the new automatic teller machines installed within the past year. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Noninterest Expense Noninterest expense decreased from $825,000 for the three months ended December 31, 1995 to $806,000 for the three months ended December 31, 1996. Noninterest expense increased from $1.62 million for the six months ended December 31, 1995 to $2.42 million for the six months ended December 31, 1996. Compensation and benefits decreased for the three month period in 1996 over 1995 due to lower ESOP expense and lower bonuses partially offset by salary increases. Compensation and benefits increased for the six month period in 1996 over 1995 due to salary increases, partially offset by lower bonuses and ESOP expense. Under generally accepted accounting principles, expense of the ESOP is affected by changes in the market price of the Company's stock, which has been lower during 1996 as compared to 1995. ESOP expense will fluctuate in the future based on changes in the market price of the Company's stock. Occupancy and equipment increased for the three month period ended December 31, 1996 over the comparable period in 1995 as a result of higher repair and maintenance charges. The SAIF special assessment recorded for the six month period ended December 31, 1996 is a result of legislation enacted September 30,1996 to recapitalize the Savings Association Insurance Fund. The Savings Bank was assessed .657% of deposits at March 31, 1995. The assessment of $779,000 was paid on November 28, 1996. Income Taxes Income tax expense increased from $111,000 for the three months ended December 31, 1995 to $181,000 for 1996 due to an increase in income before income taxes. Income taxes decreased from $214,000 for the six months ended December 31, 1995 to $84,000 for 1996. This decrease is a result of the lower income before income taxes for this period. The effective rate of income taxes is affected by the relationship of nontaxable municipal interest income to income before income taxes. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY PART II - OTHER INFORMATION Item 1 - Legal Proceedings There are no material legal proceedings to which the Holding Company or the Savings Bank is a party or of which any of their property is subject. From time to time, the Savings Bank is a party to various legal proceedings incident to its business. Item 2 - Changes in Securities None Item 3 - Defaults upon Senior Securities Not applicable Item 4 - Submission of Matters to a Vote of Security-Holders The Annual Meeting of Stockholders of the Company (Meeting) was held on October 28, 1996. The results of the vote on the matters presented at the Meeting are as follows: 1. The following individuals were elected as directors, each for a three-year term: Vote For Vote Withheld Robert A. Seifert 1,403,592 55,801 James W. Tatum 1,403,592 55,801 The terms of Directors Samuel H. Smith, Thadis R. Seifert, Leonard W. Ehlers, and Donald R. Crandell continued after the meeting. Broker non-votes totalled 0 . Item 5 - Other Information None SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits: none (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: February 12, 1997 BY: Donald R. Crandell Donald R. Crandell, Chief Executive Officer Chief Financial Officer and Duly Authorized Officer EX-27 2
9 6-MOS JUN-30-1997 DEC-31-1996 5,627,388 91,355 0 0 42,244,939 4,831,267 4,888,427 102,878,723 661,538 159,653,108 118,738,220 13,1250,000 1,558,290 293,050 18,032 0 0 25,795,516 159,653,108 2,002,973 805,094 14,586 2,822,635 1,368,068 1,538,477 1,284,158 22,500 (35) 805,709 605,502 0 0 0 424,552 .27 .27 7.42 822,000 0 129,494 0 645,063 6025 0 661,538 0 0 661,538
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