SMBC Southern Missouri Bancorp Inc

Southern Missouri Bancorp, Inc. (“Company”) (NASDAQ: SMBC), the parent corporation of Southern Bank (“Bank”), today announced preliminary net income available to common shareholders for the second quarter of fiscal 2016 of $4.2 million, an increase of $785,000, or 23.2%, as compared to the same period of the prior fiscal year. The increase was attributable to an increase in noninterest income, a decrease in noninterest expense, and a decrease in provision for loan losses, partially offset by a decrease in net interest income and an increase in provision for income tax. Preliminary net income available to common shareholders was $.56 per fully diluted common share for the second quarter of fiscal 2016, an increase of $0.11, or 24.4%, as compared to the same period of the prior fiscal year, adjusted for the two-for-one common stock split in the form of a 100% common stock dividend paid in January 2015.

Highlights for the second quarter of fiscal 2016:

• Earnings per common share (diluted) were up $.11, or 24.4%, as compared to $.45 earned in the same quarter a year ago (adjusted for the January 2015 stock split), and up $.08, or 16.7%, as compared to the $.48 earned in the first quarter of fiscal 2016, the linked quarter. Earnings included an after-tax benefit of approximately $510,000 resulting from nonrecurring noninterest income items discussed below. 
• Annualized return on average assets was 1.27%, while annualized return on average common equity was 14.0%, as compared to 1.06% and 12.5%, respectively, in the same quarter a year ago, and as compared to  1.12% and 12.6%, respectively, in the first quarter of fiscal 2016, the linked quarter. 
• Net loan growth for the first six months of fiscal 2016 was $26.3 million, or 2.5%. Deposits were up $62.0 million, or 5.9%. Loans were impacted negatively and deposits positively by seasonal factors discussed below. 
• Net interest margin for the second quarter of fiscal 2016 was 3.88%, down from the 4.03% reported for the year ago period, and up from the net interest margin of 3.87% for the first quarter of fiscal 2016, the linked quarter.  
• Noninterest income (excluding available-for-sale securities gains) was up 27.8% for the second quarter of fiscal 2016, compared to the year ago period, and up 26.7% from the first quarter of fiscal 2016, the linked quarter. Nonrecurring items impacted this figure and are discussed below. 
• Noninterest expense was down 4.9% for the second quarter of fiscal 2016, compared to the year ago period, and up 2.3% from the first quarter of fiscal 2016, the linked quarter. The year-ago period included $359,000 in noninterest expense related to merger and acquisition activity, with no comparable expenses in the current quarter, or in the linked quarter. 
• Nonperforming assets were $7.6 million, or 0.57% of total assets, at December 31, 2015, as compared to $8.6 million, or 0.65% of total assets, at September 30, 2015.

Dividend Declared:

As the Company noted in a report on Form 8-k filed January 21, 2016, the Board of Directors, on January 19, 2016, was pleased to declare its 87th consecutive quarterly dividend on common stock since the inception of the Company. The cash dividend of $.09 per common share will be paid February 29, 2016, to common stockholders of record at the close of business on February 15, 2016. The Board of Directors and management believe the payment of a quarterly cash dividend enhances shareholder value and demonstrates our commitment to and confidence in our future prospects.

Conference Call:

The Company will host a conference call to review the information provided in this press release on Tuesday, January 26, 2016, at 3:30 p.m. central time (4:30 p.m. eastern). The call will be available live to interested parties by calling 1-888-339-0709 in the United States (Canada: 1-855-669-9657, international: 1-412-902-4189). Telephone playback will be available beginning one hour following the conclusion of the call through February 9, 2016. The playback may be accessed by dialing 1-877-344-7529 (Canada: 1-855-669-9658, international: 1-412-317-0088), and using the conference passcode 10079855. Participants should ask to be joined into the Southern Missouri Bancorp (SMBC) call.

Balance Sheet Summary:

The Company experienced balance sheet growth in the first six months of fiscal 2016, with total assets of $1.3 billion at December 31, 2015, reflecting an increase of $37.6 million, or 2.9%, as compared to June 30, 2015. Balance sheet growth was funded primarily through deposit growth.

Available-for-sale (AFS) securities were $129.1 million at December 31, 2015, a decrease of $508,000, or 0.4%, as compared to June 30, 2015. Principal payments received on mortgage-backed securities and U.S. government agency obligations were mostly offset by purchases of municipal securities. Cash equivalents and time deposits were $25.8 million, an increase of $7.1 million, or 37.8%, as compared to June 30, 2015.

Loans, net of the allowance for loan losses, were $1.1 billion at December 31, 2015, an increase of $26.3 million, or 2.5%, as compared to June 30, 2015. The increase was primarily attributable to growth in residential real estate loan, construction loan, and commercial real estate loan balances, partially offset by lower consumer and commercial loan balances. The Company’s agricultural loan balances generally trend downward from autumn through late winter and, since September 30, 2015, agricultural operating and equipment loans were down $9.7 million.

Nonperforming loans were $3.9 million, or 0.36% of gross loans, at December 31, 2015, as compared to $3.8 million, or 0.36% of gross loans, at June 30, 2015. Nonperforming assets were $7.6 million, or 0.57% of total assets, at December 31, 2015, as compared to $8.3 million, or 0.64% of total assets, at June 30, 2015. Our allowance for loan losses at December 31, 2015, totaled $13.2 million, representing 1.21% of gross loans and 339% of nonperforming loans, as compared to $12.3 million, or 1.15% of gross loans, and 323% of nonperforming loans, at June 30, 2015. For all impaired loans, the Company has measured impairment under ASC 310-10-35, and management believes the allowance for loan losses at December 31, 2015, is adequate, based on that measurement.

Total liabilities were $1.2 billion at December 31, 2015, an increase of $51.0 million, or 4.4%, as compared to June 30, 2015.

Deposits were $1.1 billion at December 31, 2015, an increase of $62.0 million, or 5.9%, as compared to June 30, 2015. The increase was primarily attributable to growth in interest-bearing and noninterest-bearing transaction accounts, money market deposit accounts, and certificates of deposit, partially offset by declines in statement and passbook savings accounts. The Company’s public unit depositors generally hold larger balances around calendar year end, and since September 30, 2015, public unit balances were up $26.5 million. The average loan-to-deposit ratio for the second quarter of fiscal 2016 was 99.2%, as compared to 98.9% for the same period of the prior fiscal year.

FHLB advances were $58.9 million at December 31, 2015, a decrease of $5.9 million, or 9.1%, as compared to June 30, 2015. The decrease was attributable to the Company’s reduction in overnight borrowings due to strong deposit growth during the quarter ended December 31, 2015. Securities sold under agreements to repurchase totaled $23.1 million at December 31, 2015, a decrease of $4.3 million, or 15.6%, as compared to June 30, 2015. At both dates, the full balance of repurchase agreements was due to local small business and government counterparties.

The Company’s stockholders’ equity was $119.2 million at December 31, 2015, a decrease of $13.4 million, or 10.1%, as compared to June 30, 2015. The decrease was attributable to the redemption of the Company’s $20.0 million in preferred stock which had been issued in July 2011 under the U.S. Treasury’s Small Business Lending Fund program and payment of dividends on common and preferred stock, partially offset by retention of net income and an increase in accumulated other comprehensive income.

Income Statement Summary:

On August 5, 2014, the Company acquired Peoples Service Company and its subsidiaries, Peoples Banking Company and Peoples Bank of the Ozarks (the “Peoples Acquisition”). Beginning in the first quarter of fiscal 2015, the Peoples Acquisition impacted our reported results through a larger average balance sheet, and increased noninterest income and noninterest expense.

The Company’s net interest income for the three-month period ended December 31, 2015, was $11.9 million, a decrease of $262,000, or 2.2%, as compared to the same period of the prior fiscal year. The decrease was attributable to a decrease in net interest margin, to 3.88% in the current three-month period, as compared to 4.03% in the three-month period ended December 31, 2014, partially offset by a 1.6% increase in the average balance of interest-earning assets.

Accretion of fair value discount on loans and amortization of fair value premiums on time deposits related to the Peoples Acquisition decreased to $557,000 for the three-month period ended December 31, 2015, as compared to $722,000 in the same period of the prior fiscal year. This component of net interest income contributed 19 basis points to net interest margin in the three-month period ended December 31, 2015, as compared to a contribution of 24 basis points in the same period of the prior fiscal year. The dollar impact of this component of net interest income has generally been declining each sequential quarter as assets from the Peoples Acquisition mature or prepay, but the quarter ended December 31, 2015, saw an increase as compared to the quarter ended September 30, 2015, primarily as a result of the resolution of a purchased credit-impaired loan with a carrying value less than the payoff realized.

The provision for loan losses for the three-month period ended December 31, 2015, was $496,000, as compared to $862,000 in the same period of the prior fiscal year. As a percentage of average loans outstanding, provision for loan losses in the current three-month period represented a charge of .18% (annualized), while the Company recorded net charge offs during the period of .05% (annualized). During the same period of the prior fiscal year, provision for loan losses as a percentage of average loans outstanding represented a charge of .33% (annualized), while the Company recorded net charge offs of .01% (annualized).

The Company’s noninterest income for the three-month period ended December 31, 2015, was $2.8 million, an increase of $604,000, or 27.6%, as compared to the same period of the prior fiscal year. The increase included nonrecurring items of $323,000 related to bank-owned life insurance and $301,000 related to the Company’s ownership of stock in Ozark Trust and Investment Corporation, the acquisition of which by Simmons First National Corporation closed during the quarter ended December 31, 2015. The bank-owned life insurance benefit is not subject to income tax. Other noninterest income categories were down slightly, in total, as decreases in deposit account service charges and gains realized on secondary market loan originations were partially offset by increases in bank card interchange income and loan fees.

Noninterest expense for the three-month period ended December 31, 2015, was $8.2 million, a decrease of $422,000, or 4.9%, as compared to the same period of the prior fiscal year. Included in noninterest expense for the three-month period ended December 31, 2014, was $359,000 in merger-related charges, with no comparable expenses in the current period. Other noninterest expense categories were down slightly, in total, as lower compensation and benefits, intangible amortization, legal and professional fees, and deposit insurance premiums were partially offset by higher occupancy expenses and charges related to the liquidation of foreclosed real estate. The efficiency ratio for the three-month period ended December 31, 2015, was 55.6%, as compared to 59.9% for the same period of the prior fiscal year. The improvement resulted from the increase in noninterest income and the decrease in noninterest expense, partially offset by the decrease in net interest income.

The income tax provision for the three-month period ended December 31, 2015, was $1.8 million, an increase of $360,000, or 24.7%, as compared to the same period of the prior fiscal year, attributable to higher pre-tax income, as well as an increase in the effective tax rate, from 30.2% to 29.8%. The general trend in the effective tax rate has been upward, as the Company’s taxable income has grown at a rate faster than its investments in tax advantaged assets; however, the increase was less pronounced in the current period, primarily as a result of the nonrecurring tax-free income related to bank-owned life insurance.

Forward-Looking Information:

Except for the historical information contained herein, the matters discussed in this press release may be deemed to be forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from the forward-looking statements, including: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; fluctuations in interest rates and in real estate values; monetary and fiscal policies of the Board of Governors of the Federal Reserve System and the U.S. Government and other governmental initiatives affecting the financial services industry; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; our ability to access cost-effective funding; the timely development of and acceptance of our new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services; expected cost savings, synergies and other benefits from the Company’s merger and acquisition activities might not be realized to the extent anticipated or within the anticipated time frames, if at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; legislative or regulatory changes that adversely affect our business; results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our reserve for loan losses or to write-down assets; the impact of technological changes; and our success at managing the risks involved in the foregoing. Any forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. We undertake no obligation to publicly update or revise any forward-looking statements or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed might not occur, and you should not put undue reliance on any forward-looking statements.

Southern Missouri Bancorp, Inc.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Summary Balance Sheet Data as of:	December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands, except per share data)		2015			2015			2015			2015			2014
Cash equivalents and time deposits	$	25,794		$	20,250		$	18,719		$	23,496		$	40,018
Available for sale securities		129,085			127,485			129,593			133,637			146,030
FHLB/FRB membership stock		6,238			7,162			6,467			6,475			5,384
Loans receivable, gross		1,092,599			1,081,899			1,065,443			1,061,267			1,025,447
Allowance for loan losses		13,172			12,812			12,297			11,743			10,958
Loans receivable, net		1,079,427			1,069,087			1,053,146			1,049,524			1,014,489
Bank-owned life insurance		19,754			19,836			19,692			19,549			19,409
Intangible assets		8,238			8,470			8,757			9,007			9,289
Premises and equipment		45,505			42,788			39,726			37,490			35,982
Other assets		23,631			24,715			23,964			23,680			25,650
Total assets	$	1,337,672		$	1,319,793		$	1,300,064		$	1,302,858		$	1,296,251
Interest-bearing deposits	$	990,103		$	935,375		$	937,771		$	935,347		$	937,273
Noninterest-bearing deposits		127,118			122,341			117,471			121,647			125,603
Securities sold under agreements  to repurchase		23,066			24,429			27,332			27,960			21,385
FHLB advances		58,929			82,110			64,794			65,080			62,966
Other liabilities		4,543			4,981			5,395			5,232			4,472
Subordinated debt		14,705			14,682			14,658			14,635			14,617
Total liabilities		1,218,464			1,183,918			1,167,421			1,169,901			1,166,316
Preferred stock		-			20,000			20,000			20,000			20,000
Common stockholders' equity		119,208			115,875			112,643			112,957			109,935
Total stockholders' equity		119,208			135,875			132,643			132,957			129,935
Total liabilities and   stockholders' equity	$	1,337,672		$	1,319,793		$	1,300,064		$	1,302,858		$	1,296,251
Equity to assets ratio		8.91	%		10.30	%		10.20	%		10.21	%		10.02	%
Common shares outstanding		7,428,416			7,424,666			7,419,666			7,413,666			7,411,666
Less: Restricted common  shares not vested		53,150			54,800			55,600			73,200			71,200
Common shares for  book value determination		7,375,266			7,369,866			7,364,066			7,340,466			7,340,466
Book value per common share	$	16.16		$	15.72		$	15.30		$	15.39		$	14.98
Closing market price		23.90			20.72			18.85			18.87			18.99
Nonperforming asset data as of:	December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands)		2015			2015			2015			2015			2014
Nonaccrual loans	$	3,803		$	4,021		$	3,758		$	4,200		$	4,665
Accruing loans 90 days or more past due		79			50			45			137			15
Nonperforming troubled  debt restructurings (1)		-			-			-			-			-
Total nonperforming loans		3,882			4,071			3,803			4,337			4,680
Other real estate owned (OREO)		3,617			4,392			4,440			4,291			4,099
Personal property repossessed		118			109			64			36			29
Total nonperforming assets	$	7,617		$	8,572		$	8,307		$	8,664		$	8,808
Total nonperforming assets to total assets		0.57	%		0.65	%		0.64	%		0.66	%		0.68	%
Total nonperforming loans to gross loans		0.36	%		0.38	%		0.36	%		0.41	%		0.46	%
Allowance for loan losses  to nonperforming loans		339.31	%		314.71	%		323.35	%		270.76	%		234.15	%
Allowance for loan losses to gross loans		1.21	%		1.18	%		1.15	%		1.11	%		1.07	%
Performing troubled debt restructurings	$	5,548		$	6,949		$	6,548		$	3,620		$	3,503
(1) reported here only if not otherwise listed as nonperforming (i.e., nonaccrual or 90+ days past due)

	For the three-month period ended
Quarterly Average Balance Sheet Data:	December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands)		2015			2015			2015			2015			2014
Interest-bearing cash equivalents	$	10,352		$	9,488		$	12,398		$	16,148		$	20,542
Available for sale securities  and membership stock		135,044			135,706			136,063			147,433			155,506
Loans receivable, gross		1,080,526			1,063,851			1,050,087			1,040,371			1,030,821
Total interest-earning assets		1,225,922			1,209,045			1,198,548			1,203,952			1,206,869
Other assets		96,411			91,437			91,493			92,966			90,682
Total assets	$	1,322,333		$	1,300,482		$	1,290,041		$	1,296,918		$	1,297,551
Interest-bearing deposits	$	963,510		$	935,089		$	933,444		$	943,035		$	920,566
Securities sold under  agreements to repurchase		24,861			25,885			27,442			26,256			23,475
FHLB advances		70,107			68,844			56,377			57,596			88,642
Subordinated debt		14,694			14,670			14,647			14,626			14,606
Total interest-bearing liabilities		1,073,172			1,044,488			1,031,910			1,041,513			1,047,289
Noninterest-bearing deposits		125,759			120,283			124,436			123,033			121,280
Other noninterest-bearing liabilities		755			1,472			802			754			658
Total liabilities		1,199,686			1,166,243			1,157,148			1,165,300			1,169,227
Preferred stock		3,261			20,000			20,000			20,000			20,000
Common stockholders' equity		119,386			114,239			112,893			111,618			108,324
Total stockholders' equity		122,647			134,239			132,893			131,618			128,324
Total liabilities and  stockholders' equity	$	1,322,333		$	1,300,482		$	1,290,041		$	1,296,918		$	1,297,551
	For the three-month period ended
Quarterly Summary Income Statement Data:	December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands, except per share data)		2015			2015			2015			2015			2014
Interest income:
Cash equivalents	$	9		$	7		$	18		$	16		$	49
Available for sale securities   and membership stock		864			865			843			918			948
Loans receivable		13,362			13,098			12,955			12,975			13,361
Total interest income		14,235			13,970			13,816			13,909			14,358
Interest expense:
Deposits		1,847			1,785			1,800			1,756			1,703
Securities sold under  agreements to repurchase		29			29			32			30			27
FHLB advances		320			317			304			301			333
Subordinated debt		139			135			134			125			133
Total interest expense		2,335			2,266			2,270			2,212			2,196
Net interest income		11,900			11,704			11,546			11,697			12,162
Provision for loan losses		496			618			659			837			862
Securities gains		-			-			-			3			3
Other noninterest income		2,791			2,202			2,398			2,091			2,184
Noninterest expense		8,168			7,988			8,002			8,091			8,590
Income taxes		1,820			1,665			1,718			1,497			1,460
Net income		4,207			3,635			3,565			3,366			3,437
Less: effective dividend  on preferred shares		35			50			50			50			50
Net income available  to common shareholders	$	4,172		$	3,585		$	3,515		$	3,316		$	3,387
Basic earnings per common share (2)	$	0.56		$	0.48		$	0.47		$	0.45		$	0.46
Diluted earnings per common share (2)		0.56			0.48			0.47			0.44			0.45
Dividends per common share (2)		0.090			0.090			0.085			0.085			0.085
Average common shares outstanding (2):
Basic		7,425,000			7,422,000			7,418,000			7,413,000			7,404,000
Diluted		7,460,000			7,454,000			7,524,000			7,604,000			7,593,000
Return on average assets		1.27	%		1.12	%		1.11	%		1.04	%		1.06	%
Return on average  common shareholders' equity		14.0	%		12.6	%		12.5	%		11.9	%		12.5	%
Net interest margin		3.88	%		3.87	%		3.85	%		3.89	%		4.03	%
Net interest spread		3.77	%		3.75	%		3.73	%		3.77	%		3.92	%
Efficiency ratio		55.6	%		57.4	%		57.4	%		58.7	%		59.9	%
(2) adjusted to reflect the 2-for-1 stock split in the form of a 100% stock dividend paid January 30, 2015