-----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, OL4i0OeefcIusGdCNVJZzxGj25/zCUlK1FNR2tDligzB0cU2iM35UVX8Ky1hVYc6 ksB/wq09s6g6NP1DjxvlJg== 0000916907-97-000009.txt : 19970515 0000916907-97-000009.hdr.sgml : 19970515 ACCESSION NUMBER: 0000916907-97-000009 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 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: 97603934 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 March 31, 1997 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 April 30, 1997. SOUTHERN MISSOURI BANCORP, INC. FORM 10-QSB FOR THE QUARTER ENDED MARCH 31, 1997 INDEX Page No. PART I - Financial Information Item 1. Financial Statements (Unaudited) Consolidated Statements of Financial Condition Consolidated Statements of Income Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II - Other Information Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security-Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) March 31, June 30, ASSETS 1997 1996 Cash and cash equivalents $ 10,377,394 4,477,872 Certificates of deposit 91,277 186,512 Investment and mortgage-backed and related securities: Available for sale - at estimated market value (amortized cost of $40,482,098 and $50,615,727 at March 31, 1997 and June 30, 1996, respectively) 40,207,495 49,980,348 Held to maturity - at amortized cost (estimated market value of $4,869,920 and $4,888,427 at March 31, 1997 and June 30, 1996, respectively) 4,787,323 4,851,454 Stock in Federal Home Loan Bank of Des Moines 1,519,700 1,519,700 Loans receivable, net 105,381,564 95,534,657 Accrued interest receivable 945,077 1,141,099 Foreclosed real estate, net 120,264 60,133 Premises and equipment 1,707,552 1,411,247 Prepaid expenses and other assets 550,519 684,701 Total assets $ 165,688,165 159,847,723 SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $ 124,309,184 120,138,066 Advances from borrowers for taxes and insurance 239,473 353,895 Advances from FHLB of Des Moines 13,539,224 11,550,478 Federal income taxes payable 152,675 136,210 Accounts payable and other liabilities 460,813 459,971 Accrued interest payable 1,029,155 981,809 Total liabilities 139,730,524 133,620,429 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 18,032 18,032 Additional paid-in capital 17,521,753 17,449,978 Retained earnings - substantially restricted 12,344,661 12,192,583 Treasury stock of 165,288 shares at March 31, 1997 and 102,188 shares at June 30, 1996, at cost (2,673,618) (1,691,030) Common stock acquired by ESOP (765,172) (918,207) Common stock acquired by MRP (300,472) (397,972) Unrealized loss on investment and mortgage-backed securities available for sale (181,238) (419,785) Minimum pension liability (6,305) (6,305) Total stockholders' equity 25,957,641 26,227,294 Total liabilities and stockholders' equity $ 165,688,165 159,847,723 See accompanying notes to consolidated financial statements. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, 1997 1996 Interest income: Loans receivable $ 2,016,137 1,777,607 Investment securities 259,845 456,387 Mortgage-backed and related securities 495,557 580,779 Other interest-earning assets 49,961 68,285 Total interest income 2,821,500 2,883,058 Interest expense: Deposits 1,386,323 1,455,890 Advances from FHLB of Des Moines 221,049 166,011 Total interest expense 1,607,372 1,621,901 Net interest income 1,214,128 1,261,157 Provision for loan losses 22,500 15,000 Net interest income after provision for loan losses 1,191,628 1,246,157 Noninterest income: Gain on sale of investment securities, available for sale 5,073 - Gain (loss) on sale of mortgage-backed securities, available for sale 29,874 40,337 Gain on sale of mortgage-backed securities, held to maturity - 54,487 Insurance commissions 78,716 66,864 Banking service charges 41,453 32,027 Net income on foreclosed real estate (2,036) (7,513) Loan late charges 11,251 20,393 Other 349 5,573 Total noninterest income 164,680 212,168 Noninterest expense: Compensation and benefits 561,430 534,358 Occupancy and equipment 85,164 74,338 SAIF special assessment - - SAIF deposit insurance premium 4,122 68,672 Gain on foreclosed real estate, net (53,291) (30,322) Professional fees 46,308 35,275 Advertising 21,137 20,340 Postage and office supplies 36,415 32,449 Other 52,927 58,159 Total noninterest expense 754,212 793,269 Income before income taxes 602,096 665,056 Income taxes 186,964 210,706 Net income $ 415,132 454,350 Earnings per share $ .26 .27 Dividends per share $ .125 .125 See accompanying notes to consolidated financial statements. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Nine Months Ended March 31, 1997 1996 Interest income: Loans receivable $ 5,968,832 5,222,927 Investment securities 861,405 1,459,518 Mortgage-backed and related securities 1,610,017 1,348,407 Other interest-earning assets 79,929 152,275 Total interest income 8,520,183 8,183,127 Interest expense: Deposits 4,166,857 4,450,499 Advances from FHLB of Des Moines 561,135 276,289 Total interest expense 4,727,992 4,726,788 Net interest income 3,792,191 3,456,339 Provision for loan losses 62,500 45,000 Net interest income after provision for loan losses 3,729,691 3,411,339 Noninterest income: Gain on sale of investment securities, available for sale 58,462 75,633 Gain (loss) on sale of mortgage-backed securities, available for sale (23,550) (12,720) Gain on sale of mortgage-backed securities, held to maturity - 63,748 Insurance commissions 261,090 224,484 Banking service charges 126,569 106,339 Net income on foreclosed real estate (13,782) (17,981) Loan late charges 35,498 40,546 Other 14,217 11,035 Total noninterest income 458,504 491,084 Noninterest expense: Compensation and benefits 1,619,514 1,581,570 Occupancy and equipment 243,797 233,959 SAIF special assessment 779,184 - SAIF deposit insurance premium 144,302 205,587 Gain on foreclosed real estate, net (71,451) (64,075) Professional fees 107,019 109,518 Advertising 70,600 67,511 Postage and office supplies 88,104 85,145 Other 194,438 198,687 Total noninterest expense 3,175,507 2,417,902 Income before income taxes 1,012,688 1,484,521 Income taxes 271,251 425,062 Net income $ 741,437 1,059,459 Earnings per share $ .45 .63 Dividends per share $ .375 .375 See accompanying notes to consolidated financial statements. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended March 31, 1997 1996 Cash flows from operating activities: Net income $ 741,437 1,059,459 Items not requiring (providing) cash: Depreciation and amortization 133,774 131,727 MRP expense and ESOP expense 322,310 343,305 Gain on sale of investment securities - available for sale (58,462) (75,633) Loss on sale of mortgage-backed securities - available for sale 23,550 12,720 Gain on sale of mortgage-backed securities, held to maturity - (63,748) Provision for loan losses 62,500 45,000 FHLB stock dividend - (30,000) Gain on foreclosed real estate, net (71,451) (64,075) Net amortization of deferred income, premiums, and discounts 88,450 155,904 Changes in: Accrued interest receivable 196,022 106,821 Prepaid expenses and other assets 134,182 61,029 Accounts payable and other liabilities 842 (15,455) Federal income taxes payable 16,465 183,438 Accrued interest payable 47,346 194,376 Net cash provided by operating activities 1,636,965 2,044,868 Cash flows from investing activities: Net increase in loans (10,043,301) (8,632,133) Proceeds from sales of investment securities, available for sale 2,085,304 5,903,998 Proceeds from maturing investment securities, available for sale 3,738,955 8,775,000 Proceeds from maturing investment securities, held to maturity 90,000 2,900,000 Purchase of investment securities, available for sale (3,762,604) (7,457,104) Purchase of investment securities, held to maturity - (500,000) Proceeds from sales of mortgage-backed securities, held to maturity - 1,161,028 Proceeds from sales of mortgage-backed securities, available for sale 4,088,134 5,120,870 Proceeds from maturing mortgage-backed securities, available for sale 3,822,374 4,086,474 Proceeds from maturing mortgage-backed securities, held to maturity 59,178 1,064,529 Purchase of mortgage-backed securities, available for sale - (22,094,619) Proceeds from maturing certificates of deposit 95,000 90,000 Purchase of premises and equipment (403,578) (114,784) Proceeds from sale of foreclosed real estate 19,600 79,079 Net cash used in investing activities (210,938) (9,617,662) Cash flows from financing activities: Net increase in deposits $ 4,171,118 3,730,134 Net decrease in advances from borrowers for taxes and insurance (114,422) (188,135) Net increase in advances from FHLB of Des Moines 1,988,746 10,239,609 Dividends on common stock (589,359) (563,265) Sale of treasury stock 1,000 108,120 Payments to acquire treasury stock (983,588) (1,471,900) Net cash provided by financing activities 4,473,495 11,854,563 Increase in cash and cash equivalents 5,899,522 4,281,769 Cash and cash equivalents at beginning of period 4,477,872 2,985,898 Cash and cash equivalents at end of period $ 10,377,394 7,267,667 Supplemental disclosures of cash flow information: Noncash investing and financing activities Conversion of loans to foreclosed real estate $ 135,118 77,824 Conversion of foreclosed real estate to loans $ 55,100 93,892 Transfer of investment and mortgage-backed and related securities from held to maturity to available for sale $ - 23,041,000 Unrealized loss at transfer date $ - 227,000 Cash paid during the period for Interest (net of interest credited) $ 1,582,886 1,534,387 Income taxes $ 172,500 241,500 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 nine month periods ended March 31, 1997 are not 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 (MRP) 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. The Company has no significant assets other than common stock of the Savings Bank and net proceeds retained by the Company following the conversion. The Company's principal business is the business of the Savings Bank. Therefore, the discussion in the Management's Discussion and Analysis of Financial Condition and Results of Operations relates primarily to the Savings Bank and its operations. 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. Supervisory Agreement 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). SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued 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. As a part of the required actions, management contracted with an independent accounting firm to perform certain agreed upon procedures. Among other things, the procedures were designed to assist in determining whether the level of past due loans had been understated and/or whether net income had been overstated because funds in borrower's escrow accounts had been used to make payments of principal and interest rather than to pay taxes and insurance. Based upon the report received in April 1997, management has concluded payments of principal and interest from escrowed funds were immaterial in amount and neither past due loans nor net income were materially misstated. 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. Instead, the assessment rate is expected to increase from .065% to .095% of deposits beginning July 1, 1997. This will translate into approximately an additional $9,000 per quarter charged for deposit insurance. In a letter dated October 20, 1995, addressed to the Board of Directors of the Savings Bank, 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 SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued deposit liabilities (or earnings credited on share accounts) during the quarter." The Savings Bank has experienced growth in excess of the amount permitted by the foregoing restrictions. Management intends to seek approval from the District Director of the OTS for the growth that has already occurred and request advanced approval for a reasonable amount of additional growth. Excessive asset growth by any savings association, as determined by the District Director of the OTS on the basis of the association's management and asset quality, capital adequacy, interest rate risk profile, and operation controls and procedures, is an unsafe and unsound practice. A savings association engaging in unsafe and unsound practices is subject to a variety of regulatory enforcement actions. 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 Savings Bank need additional funds. Commitments to originate fixed rate and adjustable-rate mortgage loans at March 31, 1997 were approximately $1,186,000 and $3,255,000, 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 11.1% at March 31, 1997. 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 year in order to reduce inherent interest rate risk. Investment and mortgage-backed and related securities (MBSs) with a carrying value of $40,207,000 are classified as available for sale at March 31, 1997. Such securities are carried at fair SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued 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. Under the capital adequacy guidelines and regulatory framework for prompt corrective action, the Savings Bank is required to maintain tangible capital, core capital, tier 1 risk-based capital (core capital to risk-weighted assets), and risk based capital of 1.5%, 4%, 4% and 8%. The Savings Bank met such capital requirements at March 31, 1997. The following table presents the Savings Bank's capital position relative to its regulatory capital requirements at March 31, 1997: Unaudited Regulatory Capital Tangible Core Stockholders' equity per consolidated financial statements $ 25,957,641 25,957,641 Stockholders' equity of Southern Missouri Bancorp, Inc. not available for regulatory capital purposes (5,393,110) (5,393,110) GAAP capital 20,564,531 20,564,531 General valuation allowances - - Non-includable unrealized loss on investment and mortgage-backed and related securities available for sale 196,021 196,021 Non-includable deferred tax assets (293,981) (293,981) Non-includable intangible assets (63,852) (63,852) Regulatory capital 20,402,719 20,402,719 Regulatory capital requirement (2,422,000) (6,459,000) Regulatory capital - excess $ 17,980,719 13,943,719 Regulatory capital ratio 12.61% 12.61% Regulatory capital requirement 1.50 4.00 Regulatory capital ratio - excess 11.11% 8.61% SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Unaudited Regulatory Capital Tier 1 Risk-Based Risk-Based Stockholders' equity per consolidated financial statements $ 25,957,641 25,957,641 Stockholders' equity of Southern Missouri Bancorp, Inc. not available for regulatory capital purposes (5,393,110) (5,393,110) GAAP capital 20,564,531 20,564,531 General valuation allowances - 684,039 Non-includable unrealized loss on investment and mortgage-backed and related securities available for sale 196,021 196,021 Non-includable deferred tax assets (293,981) (293,981) Non-includable intangible assets (63,852) (63,852) Regulatory capital 20,402,719 21,086,758 Regulatory capital requirement (3,372,000) (6,744,000) Regulatory capital - excess $ 17,030,719 14,342,758 Regulatory capital ratio 24.20% 25.01% Regulatory capital requirement 4.00 8.00 Regulatory capital ratio - excess 20.20% 17.01% SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Financial Condition Total assets increased from $159,848,000 at June 30, 1996 to $165,688,000 at March 31, 1997. Cash flows from sales, maturities and prepayments of securities, deposits and advances from FHLB of Des Moines were used to originate loans, purchase securities and cash and cash equivalents. The Savings Bank intends to borrow from the FHLB when the cost is less than the overall cost of retail deposits. Premises and equipment increased due to the 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 from borrowers for taxes and insurance decreased as a result of real estate taxes being paid in December for loan customers. 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 a loss of $181,000 at March 31, 1997. 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 MBSs available for sale. COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996 Net Income Net income for the three months ended March 31, 1997 was $415,000 compared to $454,000 for the three months ended March 31, 1996. Net income for the nine months ended March 31, 1997 was $741,000 compared to $1,059,000 for the nine months ended March 31, 1996. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Net Interest Income Net interest income decreased from $1.26 million for the three months ended March 31, 1996 to $1.21 million for the comparable three month period in 1997. Net interest income decreased for this three month period due to a lower interest rate spread. Net interest income increased from $3.46 million for the nine months ended March 31, 1996 to $3.79 million for the comparable nine month period in 1997. Net interest income increased due to a higher interest rate spread. Interest Income Interest income was $2.88 million for the three months ended March 31, 1996 compared to $2.82 million for the comparable three month period in 1997. Interest income was $8.18 million for the nine months ended March 31, 1996 compared to $8.52 million for the comparable nine month period in 1997. Interest on loans receivable increased for both the three months and nine month periods ended March 31, 1997 compared to 1996 periods as a result of higher average loans outstanding for 1997, offset by a lower yield. The weighted-average rate on loans decreased from 7.83% at March 31, 1996 to 7.66% at March 31, 1997. Interest on mortgage-backed securities decreased from $581,000 for the three month period ended March 31, 1996 compared to $496,000 for the comparable three month period in 1997. This decrease was a result of a lower average balance outstanding in the three month period for 1997 compared to the 1996 period, offset by a higher weighted-average yield on MBSs. Interest on MBSs increased from $1.35 million for the nine month period ended March 31, 1996 compared to $1.61 million for the comparable nine month period in 1997. This increase was a result of a higher average balance and weighted-average yield on MBSs. The weighted-average rate on MBSs increased from 6.51% at March 31, 1996 to 6.92% at March 31, 1997. Interest on investment securities decreased due to lower average balances and slightly lower interest rates. The weighted-average rate on investment securities decreased from 6.82% at March 31, 1996 to 6.77% at March 31, 1997. Interest on other interest-earning assets decreased due to lower average balances. The components of interest-bearing assets change from time to time based on the availability and interest rates of loans, investment securities, and MBSs. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Interest Expense Interest expense remained substantially the same for all periods. This was a result of a higher average balance offset by a decrease in interest rates. The weighted-average rate on interest-bearing liabilities was 4.85% at March 31, 1996 as compared to 4.73% at March 31, 1997. Provision for Loan Losses Provision for loan losses are charged to income 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. For the three months ended March 31, 1997 the Savings Bank established a provision for loan losses of $22,500 compared with $15,000 for the three months ended March 31, 1996. For the nine months ended March 31, 1997 the Savings Bank established a provision for loan losses of $62,500 compared with $45,000 for the nine months ended March 31, 1996. Following is a summary of activity in the allowance for loan losses for the nine months ended March 31, 1997 and 1996: 1997 1996 Balance, beginning of period $ 627,564 572,341 Loans charged off - consumer (6,025) (5,167) Recoveries of loans previously charged off - consumer - 360 Net charge offs (6,025) (4,807) Provision charged to expense 62,500 45,000 Balance, end of period $ 684,039 612,534 Ratio of net charge-offs during the period to average loans outstanding during the period .01% .01% The book value of nonaccrual loans at March 31, 1997 was $1.70 million compared to $546,000 at June 30, 1996. The average balance of nonaccrual loans for the nine months ended March 31, 1997 was approximately $1.03 million. Allowance for losses on nonaccrual loans amounted to approximately $85,000 and $27,000 at March 31, 1997 and June 30, 1996, respectively. For the three months and nine months ended March 31, 1997, gross interest income which would have been recorded had nonaccrual loans been SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued current in accordance with their original terms amounted to approximately $37,000 and$52,000, respectively. The amount of interest income included in the Company's net earnings for these loans for the three months and nine months ended March 31, 1997 was approximately $13,000 and $82,000, respectively. The following table sets forth information with respect to the Savings Bank's nonaccrual loans at March 31, 1997 and June 30, 1996: 1997 1996 (Dollars in thousands) Loans accounted for on a nonaccrual basis Residential real estate $ 896 480 Commercial real estate 106 - Commercial 365 21 Consumer 100 45 Mobile Homes 232 - $ 1,699 546 Total loans delinquent 90 days or more to net loans 1.61% .57% Nonaccrual loans increased due to a number of factors. In response to requests by the Office of Thrift Supervision, the Savings Bank no longer charges advances from borrowers for taxes and insurance for delinquent mortgage payments, nor dealer reserve for delinquent consumer loan payments. The Savings Bank has a dealer reserve account which exceeds mobile home loans included above. A commercial loan with a past due balance of $324,000 was brought current in April, 1997. Management believes that the loan is well secured, and no loss is anticipated. Also in response to a recent OTS examination, collections duties were reassigned to other officers. However, decentralized collection efforts of the Savings Bank have not been as effective as the former method. Management is currently reviewing collection efforts in order to reduce the level on nonperforming loans. Management believes that the allowance for loan losses is adequate. See Provision for Loan Losses. The Savings Bank does not accrue interest on loans more than 90 days past due. SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued Noninterest Income Noninterest income decreased from $212,000 for the three months ended March 31, 1996 to $165,000 for the three months ended March 31, 1997. Noninterest income decreased from $491,000 for the nine months ended March 31, 1996 to $459,000 for the nine months ended March 31, 1997. The Savings Bank realized net gains on sales of securities and MBSs of $35,000 for the three months ended March 31, 1997 compared to $95,000 in 1996. Such gains were $35,000 for the nine months ended March 31, 1997, compared to $127,000 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 the sale of small balance pools, which are permitted to be sold prior to maturity under Statement of Financial Accounting Standards No. 115. Commissions on insurance and banking service charges increased for both the three months and nine months ended March 31, 1997 over the comparable periods in 1996 due to increased activity. Loan late charges decreased for both periods in 1997 over 1996 periods due to the collection of fewer late charges. Noninterest Expense Noninterest expense decreased from $793,000 for the three months ended March 31, 1996 to $754,000 for the three months ended March 31, 1997. Noninterest expense increased from $2.42 million for the nine months ended March 31, 1996 to $3.18 million for the nine months ended March 31, 1997. Compensation and benefits increased due to hiring of additional employees, and salary increases, partially offset by lower ESOP expense and lower bonuses. 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 1997 as compared to 1996. ESOP expense will fluctuate in the future based on changes in the market price of the Company's stock. Occupancy and equipment expense increased as a result of higher depreciation expense being recorded on the main office remodeling and the purchase of ATM machines. The SAIF special assessment recognized during the nine month period ended March 31, 1997 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 SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued November 28, 1996. SAIF deposit insurance premium decreased as a result of a substantially lower assessment rate. Professional fees increased for the three month period ended March 31, 1997 over the comparable period in 1996 as a result of services performed in connection with the supervisory agreement and other regulatory concerns. Income Taxes Income taxes decreased for the three and nine months ended March 31, 1997 compared with the same periods in 1996 due to lower earnings before income taxes. 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. 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 None Item 5 - Other Information None Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 11 (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 10, 1997 BY: Donald R. Crandell, Chief Executive Officer Chief Financial Officer and Duly Authorized Officer Exhibit 11 EX-11 2 SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS Three Months Ended Nine Months Ended March 31, March 31, 1997 1996 1997 1996 Primary Average shares outstanding 1,558,744 1,658,728 1,595,554 1,653,627 Net effect of dilutive stock options - based on the treasury stock method using average market price 35,306 44,972 35,307 39,732 Total 1,594,050 1,703,700 1,630,861 1,693,359 Net income $ 415,132 454,350 741,437 1,059,459 Earnings per share $ .26 .27 .45 .63 Fully Diluted Average shares outstanding 1,558,744 1,658,728 1,595,554 1,653,627 Net effect of dilutive stock options - based on the treasury stock method using the period end market price, if greater than average market price 39,326 44,972 39,069 40,649 Total 1,598,070 1,703,700 1,634,623 1,694,276 Net income $ 415,132 454,350 741,437 1,059,459 Earnings per share $ .26 .27 .45 .63 EX-27 3
9 9-MOS JUN-30-1997 MAR-31-1997 10,377,394 91,277 0 0 40,207,495 4,787,323 4,869,920 106,149,453 684,038 165,688,165 124,309,184 13,250,000 1,882,116 289,224 18,032 0 0 25,939,609 165,688,165 5,968,832 2,471,422 79,929 8,520,183 4,166,857 4,727,992 3,792,191 62,500 34,912 3,175,507 1,012,688 0 0 0 741,437 .45 0 7.19 1,699,697 0 143,915 0 661,538 0 0 684,038 0 0 684,038
-----END PRIVACY-ENHANCED MESSAGE-----