Southern Missouri Bancorp, Inc. (NASDAQ:SMBC) Q1 2019 Earnings Conference Call Transcript

Oct 23, 2018 • 04:30 pm ET


Southern Missouri Bancorp, Inc. (NASDAQ:SMBC) Q1 2019 Earnings Conference Call Transcript


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Good day, and welcome to the Southern Missouri Bancorp, Inc. First Quarter Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Matt Funke. Please go ahead.

Matt Funke

Well thank you, Brandon. Good afternoon, everyone. This is Matt Funke, CFO with Southern Missouri Bancorp. The purpose of this call is to review the information and data we presented in our quarterly earnings release dated Monday, October 22nd, 2018, and to take your questions.

(Forward-looking Cautionary Statements)

So thanks again for joining us today. I'll start by reviewing the preliminary results highlighted in the quarterly earnings release. And as a reminder, the September quarter is the first quarter of our 2019 fiscal year. We earned $0.76 diluted in the September quarter, that figure is up $0.13 from the linked June quarter, and is up $0.20 from the $0.56 diluted that we earned in the September quarter a year ago. We reported a larger amount of discount accretion from acquired loan portfolios in the current period, as we worked through some relationships we had identified as impaired from the Capaha and Peoples acquisitions.

We had a modest amount of M&A expenses in the current period, in the linked period and in the year ago period, so really not much of a difference-maker in that regard. And finally, this quarter is also the first in which we realized the full impact of the lower corporate tax rate enacted in December 2017, and we saw a decrease in the effective rate compared to where it ran in the second half of the fiscal year ended June 30, 2018.

This was the second full quarter following our acquisition of Southern Missouri Bank of Marshfield, and the impact of discount accretion on their loans and time deposits, improved net interest income by $92,000 in the current quarter, that's up a little bit from the $79,000 in the linked quarter and, of course, with no comparable item in the year ago period. The similar items from the Capaha acquisition contributed $740,000 in the current quarter, that's up significantly from the $159,000 in the linked June quarter and up from $231,000 in the year ago period. The current quarter impact was higher primarily due to resolution of an impaired relationship with a larger credit mark.

Finally, the similar items from the Peoples acquisition improved net interest income in the current quarter by $358,000, that's compared to $120,000 in the linked June quarter and $234,000 in the September quarter a year ago. We had a couple of impaired -- acquired relationships which we paid during the current quarter from that acquisition also. We expect this component of net interest income to be significantly lower in the future.

The total between the 3 acquisitions accounted for an additional $1.2 million in net interest income, which added about 27 basis points to our reported net interest margin. The impact in the linked June quarter