-----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, OT3MdIau3J4egRqgUTPJIPkHilN8I6yqU49cz8/qPRRWt8/42U2NV3yIjS9SWDOm S1ivHV1eAqnwCU0boTPSBw== 0000916907-00-000002.txt : 20000215 0000916907-00-000002.hdr.sgml : 20000215 ACCESSION NUMBER: 0000916907-00-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN MISSOURI BANCORP INC CENTRAL INDEX KEY: 0000916907 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 431665523 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-23406 FILM NUMBER: 538894 BUSINESS ADDRESS: STREET 1: 531 VINE ST CITY: POPLAR BLUFF STATE: MO ZIP: 63901 BUSINESS PHONE: 5737851421 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1999 OR ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-23406 Southern Missouri Bancorp, Inc. (Exact name of registrant as specified in its charter) Missouri 43-1665523 (State or jurisdiction of incorporation) (IRS employer id. no.) 531 Vine Street Poplar Bluff, MO 63901 (Address of principal executive offices) (Zip code) (573) 785-1421 Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: Class Outstanding at February 12, 2000 Common Stock, Par Value $.01 1,286,788 Shares SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY FORM 10-QSB INDEX PART I. Financial Information (Unaudited) PAGE NO. Item 1. Consolidated Financial Statements (Unaudited) - Consolidated Statements of Financial Condition 3 - Consolidated Statements of Income and Comprehensive Income 4 - Consolidated Statements of Cash Flows 5-6 - Notes to Consolidated Financial Statements 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 PART II. OTHER INFORMATION 13 Item 1. Legal Proceedings 13 Item 2. Changes in Securities and Use of Proceeds 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 13 - Signature Page 14 PART I Item 1. Financial Information SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION DECEMBER 31, 1999 AND JUNE 30, 1999 (UNAUDITED) ASSETS December 31, June 30, 1999 1999 Cash and due from banks $ 1,871,413 $ 1,790,590 Interest bearing deposits in other financial institutions 3,621,127 2,278,085 Cash and cash equivalents 5,492,540 4,068,675 Available-for-sale investment securities 22,307,704 20,979,044 Mortgage-backed securities, available-for-sale 13,762,049 16,899,641 Loans receivable, net 123,197,698 118,248,638 Foreclosed assets held for sale 534,120 477,537 Premises and equipment 1,850,555 1,878,719 Accrued interest receivable: Loans 560,241 555,923 Investments 489,091 477,152 Federal Home Loan Bank stock 1,362,500 1,091,000 Prepaid expenses and other assets 389,849 296,014 Total Assets $169,946,347 $164,972,343 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $119,478,267 $120,154,540 Federal Home Loan Bank advances 27,250,000 20,550,000 Accrued interest payable 579,649 707,341 Advances from borrowers for taxes and insurance 163,619 318,431 Accrued expenses and other liabilities 448,306 612,569 Total Liabilities 147,919,841 142,342,881 STOCKHOLDERS' EQUITY Preferred stock, $.01 par value; 500,000 shares authorized; none issued and outstanding - - Common stock, $.01 par value; 4,000,000 shares authorized; 1,803,201 shares issued 18,032 18,032 Additional paid-in capital 17,578,544 17,545,543 Accumulated other comprehensive income (556,217) (250,879) Retained earnings, substantially restricted 14,185,196 13,759,487 Unearned ESOP shares (366,853) (426,853) Unearned MRP shares (91,192) (104,214) Treasury stock, at cost; 487,841 and 424,991 shares at December 31, 1999 and June 30, 1999, respectively (8,741,004) (7,911,654) Total stockholders' equity 22,026,506 22,629,462 Total Liabilities and Stockholders' Equity $169,946,347 $164,972,343 See Notes to Consolidated Financial Statements SOUTHERN MISSOURI BANCORP, INC AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)
Three-months ended Six-months ended December 31, December 31, 1999 1998 1999 1998 INTEREST INCOME: Loans receivable $2,354,659 $2,362,830 $4,680,255 $4,735,787 Investment securities 368,528 181,304 721,882 384,866 Mortgage-backed and related securities 215,785 246,927 442,739 456,042 Other interest-earning assets 16,454 45,943 33,737 87,541 Total interest income 2,955,426 2,837,004 5,878,613 5,664,236 INTEREST EXPENSE: Deposits 1,287,612 1,345,284 2,594,211 2,631,073 Federal Home Loan Bank advances 333,300 245,287 596,645 501,592 Total interest expense 1,620,912 1,590,571 3,190,856 3,132,665 NET INTEREST INCOME 1,334,514 1,246,433 2,687,757 2,531,571 PROVISION FOR LOAN LOSSES 15,000 15,000 35,000 25,000 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,319,514 1,231,433 2,652,757 2,506,571 NONINTEREST INCOME: Service charges 93,568 82,344 180,823 147,076 Losses on investment and mortgage- backed securities, available-for-sale (3,250) 0 (21,205) (625) Insurance commissions 14,892 86,524 15,637 165,621 Income (expense) on foreclosed assets (9,813) (15,601) (12,734) (19,973) Late charges and other fees 16,889 18,251 34,886 36,404 Other income 15,606 3,950 28,246 4,724 Total noninterest income 127,892 175,468 225,653 333,227 NONINTEREST EXPENSE: Compensation and benefits 542,077 555,154 1,030,209 1,122,619 Occupancy and equipment, net 137,986 120,408 259,994 229,437 SAIF deposit insurance premiums 17,716 24,071 35,463 48,575 Professional fees 44,472 24,742 78,300 57,435 Advertising 28,322 30,029 50,530 56,775 Postage and office supplies 33,244 33,228 73,146 69,224 Other operating expense 106,165 104,884 196,798 189,232 Total noninterest expense 909,982 892,516 1,724,440 1,773,297 INCOME BEFORE INCOME TAXES 537,424 514,385 1,153,970 1,066,501 PROVISION FOR INCOME TAXES 177,381 176,495 393,321 371,117 NET INCOME 360,043 337,890 760,649 695,384 OTHER COMPREHENSIVE INCOME, NET: Unrealized gains (losses) AFS securities (296,076) (31,106) (318,697) 17,920 Adjustment for losses included in net income 2,048 - 13,359 394 Other comprehensive income (294,028) (31,106) (305,338) 18,314 COMPREHENSIVE INCOME $ 66,015 $ 306,784 $ 455,311 $ 713,698 Basic earnings per common share $ 0.27 $ 0.25 $ 0.57 $ 0.51 Diluted earnings per common share $ 0.27 $ 0.25 $ 0.57 $ 0.50 Dividends per common share $ 0.125 $ 0.125 $ 0.25 $ 0.25
See Notes to Consolidated Financial Statements PART I: FINANCIAL INFORMATION SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIRY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six-months ended December 31, 1999 1998 Cash Flows From Operating Activities: Net income $ 760,649 $ 695,384 Items not requiring (providing) cash: Depreciation and amortization 126,493 119,000 MRP expense and ESOP expense 106,022 162,101 Loss on sale of available-for-sale securities 21,205 625 Provision for loan losses 35,000 25,000 Gain on foreclosed real estate, net (10,700) (1,090) Net amortization of deferred income, premiums, and discounts 32,733 54,248 Changes in: Accrued interest receivable (16,256) (45,015) Prepaid expenses and other assets 18,756 7,950 Accounts payable and other liabilities (201,367) 193,987 Accrued expense and other liabilities (90,588) (48,054) Net cash provided by operating activities 781,947 1,164,136 Cash flows from investing activities: Net (increase) decrease in loans (5,065,642) 4,070,949 Proceeds from sales of available-for-sale investment securities 1,034,500 999,375 Proceeds from sales of available-for-sale mortgage-backed securities 3,365,084 - Proceeds from maturing available-for-sale investment securities 65,000 1,130,000 Proceeds from maturing available-for-sale mortgage-backed securities 1,536,186 2,841,321 Proceeds from maturing held-to-maturity mortgage-backed securities - 275,000 Purchase of Federal Home Loan Bank stock (271,500) (37,500) Purchase of available-for-sale securities (2,759,750) (8,667,519) Purchase of available-for-sale mortgage-backed securities (1,976,250) - Purchase of premises and equipment (98,328) (169,422) Proceeds from sale of foreclosed real estate 107,998 1,950 Net cash (used in) provided by investing activities (4,062,702) 444,154 Cash flows from financing activities: Net (decrease) increase in certificates of deposit (2,843,045) 2,709,826 Net increase in demand, NOW and Saving accounts 2,166,767 3,265,368 Net decrease in advances from borrowers for taxes and insurance (154,812) (174,527) Proceeds from Federal Home Loan Bank advances 107,050,000 5,500,000 Repayments of Federal Home Loan Bank advances (100,350,000) (6,768,905) Cash dividends paid (334,940) (350,419) Exercise of stock options 28,500 40,000 Purchase of treasury stock (857,850) (2,803,952) Net cash provided by financing activities 4,704,620 1,417,391 Increase in cash and cash equivalents 1,423,865 3,025,681 Cash and cash equivalents at beginning of period 4,068,675 4,326,474 Cash and cash equivalents at end of period $ 5,492,540 $7,352,155 See Notes to Consolidated Financial Statements SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIRY CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued (UNAUDITED) Six-months ended December 31, 1999 1998 Supplemental disclosures of Cash flow information: Noncash investing and financing activities: Conversion of loans to foreclosed real estate and other assets $ 306,075 $ 544,376 Conversion of foreclosed real estate to loans $ 87,000 $ 94,500 Cash paid during the period for: Interest (net of interest credited) $1,500,836 $1,501,063 Income taxes $ 335,000 $ 165,000 See Notes to Consolidated Financial Statements SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1: Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Rule 10-01 of Securities and Exchange Commission ("SEC") Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all material adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended December 31, 1999 are not necessarily indicative of the results that may be expected for the entire fiscal year. For additional information, refer to the Company's June 30, 1999 Form 10-KSB, which was filed with the SEC and the Company's annual report, which contains the audited consolidated financial statements for the fiscal years ended June 30, 1999 and 1998. Note 2: Holding Company Formation, and Stock Issuance, Charter Conversions and State of Incorporation Southern Missouri Bancorp, Inc. (the "Company"), a Delaware corporation, was incorporated on December 30, 1993 for the purpose of becoming a holding company for Southern Missouri Savings Bank, upon its conversion from a state chartered mutual savings bank to a state chartered stock savings bank. The Company's subscription and community stock offering was completed on April 13, 1994 with the issuance of 1,803,201 shares of common stock at a price of $10 per share. The stock offering provided net proceeds of approximately $15.2 million after conversion costs and unearned compensation related to shares issued to the Employee Stock Ownership Plan ("ESOP") and Management Recognition Plan ("MRP"). On June 20, 1995, Southern Missouri Savings Bank converted from a state chartered stock savings bank to a federally chartered stock savings bank and changed its name to Southern Missouri Savings Bank, FSB. On February 17, 1998, Southern Missouri Savings Bank, FSB converted from a federally chartered stock savings bank to a Missouri chartered stock savings bank and changed its name to Southern Missouri Bank and Trust Co. (the "Bank" or "SMBT"). On October 19, 1998, the Company's stockholders approved a proposal to change the Company's state of incorporation from Delaware to Missouri. This reincorporation was completed on April 1, 1999. Note 3: Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, SMBT, which in turn owns all of S.M.S. Financial Services, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. Note 4: Employee Stock Ownership Plan In conjunction with the stock offering, the Company established an ESOP with 142,832 unallocated shares available for distribution. The unallocated shares have been debited to unearned ESOP shares, a contra-equity account. The Company recognizes compensation expense based on shares expected to be released equal to the average market price of the shares in addition to including the shares as outstanding for purposes of determining earnings per share. At December 31, 1999, the ESOP had allocated 100,147 shares and had 6,000 shares committed for allocation to employees of the Bank. Note 5: Benefit Plans In conjunction with the stock offering, the Company established both a MRP and a Stock Option and Incentive Plan ("SOIP"). The MRP authorized 71,416 shares to be issued to directors, officers and employees of SMBT of which 62,158 have been awarded and vested, 5,100 have been awarded and are not yet vested and 4,158 remain unawarded. The SOIP authorized 246,472 stock options for shares to be issued to directors, officers and employees of SMBT, pursuant to which 192,540 options have been awarded and 115,623 remain outstanding and unexercised. Currently, awards under the MRP and SOIP vest over five years, with compensation expense for the MRP being amortized over each participant's vesting period. Note 6: Earnings Per Share Basic and diluted earnings per share are based upon the weighted-average shares outstanding. ESOP shares that have been committed to be released are considered outstanding. The following table summarizes basic and diluted earnings per common share for the three and six months ended December 31, 1999 and 1998, under SFAS No. 128:
Three Months Ended Six Months Ended December 31, December 31, 1999 1998 1999 1998 Net earnings $ 360,043 $ 337,890 $ 760,649 $ 695,384 Weighted-average shares - Basic earnings per share 1,325,318 1,326,412 1,332,860 1,358,148 Stock options under treasury stock method 14,631 34,144 16,231 38,859 Weighted-average shares - Diluted earnings per share 1,339,949 1,360,556 1,349,091 1,397,007 Basic earnings per common share $ 0.27 $ 0.25 $ 0.57 $ 0.51 Diluted earnings per common share $ 0.27 $ 0.25 $ 0.57 $ 0.50 PART I Item 2 Southern Missouri Bancorp, Inc. and Subsidiary Management's Discussion and Analysis of Financial Condition and Results of Operations General The Company's performance is reliant on the operations of the Bank, since the Company has no significant assets other than the common stock of the Bank and $875,000 in investments and other assets. The Bank's results of operations are primarily dependent on the difference (or "interest rate spread") between the average yield earned on its interest-earning assets and the average rate paid on interest-bearing liabilities. Interest-earning assets consist primarily of loans receivable, investment securities, mortgage-backed and related securities ("MBS") and other investments while interest bearing liabilities consist primarily of retail deposits and Federal Home Loan Bank ("FHLB") advances. The interest rate spread is affected by economic, regulatory, and competitive factors, which influence interest rates, loan demand, prepayment rates and deposit flows. The Bank remains subject to interest-rate risk to the degree that its interest-earning assets mature or reprice at different times, or on a varying basis, from its interest-bearing liabilities. The Bank's results of operations are also affected by provisions for loan losses, non-interest income and non-interest expenses, such as employee salary and benefits, occupancy expenses and other operational expenditures. The following discussion reviews the Company's consolidated financial condition at December 31, 1999 and the results of operations for the three and six-month periods ended December 31, 1999 and 1998, respectively. Forward Looking Statements Except for the historical information contained herein, the matters discussed in this Form 10-QSB may be deemed to be forward-looking statements that involve risks and uncertainties, including changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area and price competition for loans and deposits. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent the Company's judgement as of the date of this Form 10-QSB. The Company disclaims however, any intent or obligation to update these forward-looking statements. Financial Condition The Company's total assets increased $5.0 million, or 3.0%, to $170.0 million at December 31, 1999 as compared to $165.0 million at June 30, 1999. The increase was largely attributed to a $5.0 million, or 4.2% increase in loans receivable. The rate of growth was consistent with the Company's internal growth estimates and was comprised of $4.7 million in loans secured by one- to four-family real estate and $811,000 in commercial loans, which was partially offset by a $722,000 reduction in consumer loans. The Company's stockholders' equity declined from $22.6 million at June 30, 1999 to $22.0 million at December 31, 1999. The decline was primarily due to the repurchase of $858,000 of the Company's common stock, $345,000 in cash dividends paid on common stock and mark-to-market adjustments on the investment portfolio of $305,000. The decline was partially offset by the Company's $761,000 in net income and $106,000 in benefit shares committed to be released. The growth in loans receivable and reduction in stockholders' equity was primarily funded by an increase in FHLB advances of $6.7 million, or 32.6%, to $27.3 million at December 31, 1999 from $20.6 million at June 30, 1999. Outstanding advances have terms of up to ten years at either variable or fixed rates of interest and may be subject to early redemption on the part of the issuer. At December 31, 1999 the average cost of FHLB advances was 5.70%, which was 68 basis points higher than the average cost of the Company's certificates of deposit. Results of Operations - Comparison of the three and six month periods ended December 31, 1999 and 1998. Net Income. The Company's net income for the three and six month periods ended December 31, 1999 was $360,000 and $761,000, respectively, as compared to the $338,000 and $695,000 earned during the same periods of the prior year. Increased earnings over the three and six month periods ended December 31, 1999 was primarily due to increased net interest income, which was partially offset by reduced non-interest income. Net Interest Income. Net interest income increased $88,000, or 7.1%, to $1.3 million for the three months ended December 31, 1999 as compared to the $1.2 million earned during the same period of the prior year. The increase was primarily due to the incremental spread earned on the difference between the $12.0 million increase in average interest-earning assets and the $10.2 million increase in interest-bearing liabilities as the average interest rate spread remained stable at 2.71%. Net interest income increased $156,000, or 6.2%, to $2.7 million for the six months ended December 31, 1999 as compared to the $2.5 million earned during the same period of the prior year. The increase was primarily due to the incremental spread earned on the difference between the $10.8 million increase in average interest-earning assets and the $10.4 million increase in average interest-costing liabilities as well as a 4 basis point increase in the average interest rate spread, from 2.75% to 2.79%. Interest Income. Interest income for the three and six-month periods ended December 31, 1999 increased $118,000 and $214,000, respectively, as compared to the same periods of the prior year. The increase over the three-month period was primarily due to a $12.0 million, or 8.0% increase in average interest-earning assets, partially offset by a 26 basis point decline in the average yield earned on these assets, to 7.26% from 7.52%. Over the six-month period, the increase was primarily due to a $10.8 million, or 7.2% increase in average interest-earning assets, which was partially offset by a 24 basis point decline in the average yield earned on these assets, to 7.28% from 7.52%. The decline in the average yield earned on interest-earning assets was primarily due to the downward repricing of the Company's cost-of-funds indexed adjustable rate loans, partially offset by an increase in the average yield of the investment portfolio. Interest Expense. Interest expense for the three and six-month periods ended December 31, 1999 increased $30,000 and $58,000, respectively, as compared to the same periods of the prior year. The increase over the three-month period was primarily due to a $10.2 million, or 7.7% increase in average interest-bearing liabilities, partially offset by a 26 basis point decline in the average cost of these liabilities, to 4.55% from 4.81%. Over the six-month period, the increase was primarily due to a $10.4 million, or 7.9% increase in average interest-bearing liabilities, partially offset by a 28 basis point decline in the average cost of these liabilities, from 4.78% to 4.50%. The decline in the average cost of interest-bearing liabilities was primarily due to the downward repricing of the Company's certificates of deposit, partially offset by an increase in the average cost of FHLB advances. Provision for Loan Losses. The provision for loan losses for the three- month period ended December 31, 1999 was $15,000, which equaled the provision made during the same period of the prior year. The provision for loan losses for the six-month period ended December 31, 1999 was $35,000 as compared to the $25,000 provision made during the same period of the prior year (see "Loan Loss Activity" and "Nonperforming Assets"). Noninterest Income. Noninterest income for the three months ended December 31, 1999 declined $47,000, or 27.1%, to $128,000 as compared to the $175,000 earned during the same period of the prior year. The decline was primarily due to a $72,000 decline in insurance commissions, which was partially offset by a $12,000 increase in banking service charges and other income of $12,000. Noninterest income for the six months ended December 31, 1999 declined $108,000, or 32.3%, to $226,000 as compared to the $333,000 earned during the same period of the prior year. The decrease was primarily due to a $150,000 decline in insurance commissions and a $20,000 loss realized on the sale of available-for-sale securities, which was partially offset by a $34,000 increase in banking service charges and a $24,000 increase in other income. The decline in insurance commissions was due to the sale of the Company's insurance operation in the fourth quarter of fiscal 1999. Noninterest Expense. Noninterest expense for the three-month period ended December 31, 1999 increased $17,000, or 2.0%, to $910,000 as compared to the $893,000 expended during the same period of the prior year. The increase was primarily due to respective increases in professional fees and occupancy expense of $20,000 and $18,000, partially offset by respective declines in compensa- tion expense and SAIF insurance premiums of $13,000 and $6,000. Noninterest expense for the six-month period ended December 31, 1999 declined $49,000, or 2.8%, to $1.7 million as compared to the $1.8 million expended during the same period of the prior year. The decline was primarily due to a $92,000 decline in compensation expense, partially offset by increased occupancy expense of $31,000 and professional fees of $21,000. Respective one-time expenses of $13,000 and $9,000 were included in professional fees and compensation expense from the settlement of pending litigation. Overall, the decline in compensation expense was primarily due to the sale of the Company's insurance operation and a reduction in benefit plan expenditures. Provision for Income Taxes. The provision for income taxes for the three and six-month periods ended December 31, 1999 was $177,000 and $393,000, respectively, as compared to the $176,000 and $371,000 expended for the same periods of the prior year. Allowance for Loan Loss Activity The Company regularly reviews its allowance for loan losses and makes adjustments to its balance based on management's analysis of the loan portfolio, the amount of non-performing and classified assets, as well as general economic conditions. Although the Company maintains its allowance for loan losses at a level which it considers to be sufficient to provide for losses, there can be no assurance that future losses will not exceed internal estimates. In addition, the amount of the allowance for loan losses is subject to review by regulatory agencies, which can order the establish- ment of additional loss provisions. The following table summarizes changes in the allowance for loan losses over the six months ended December 31, 1999 and 1998: 1999 1998 Balance, beginning of period $1,191,147 $1,295,222 Loans charged off: Real estate (29,042) (37,664) Unsecured consumer (11,706) (52,275) Secured consumer (103,873) (36,310) Mobile homes (28,780) (4,038) Gross charged off loans (173,401) (130,287) Recoveries of loans previously charged off: Real estate 375 657 Unsecured consumer 11,744 3,070 Secured consumer 25,157 - Mobile homes 22,681 33,076 Gross recoveries of charged off loans 59,957 36,803 Net charge offs (113,444) (93,464) Provision charged to expense 35,000 25,000 Balance, end of period $1,112,703 $1,226,738 Ratio of net charge offs (recoveries) during the period to average loans outstanding during the period .09% .08% The increase in charge offs was partially the result of underwriting guidelines for secured and unsecured consumer loans, which were utilized during a period beginning in July 1997, which emphasized consumer loan portfolio growth. In an effort to reduce loan delinquencies and charge-offs in the future, the Company began to adopt and implement more restrictive consumer loan underwriting guidelines in December 1998. Management believes that these new guidelines will result in reduced future consumer loan charge- offs, while allowing modest portfolio growth. However, management anticipates that charge-offs will remain at levels higher than historical averages over the next several quarters due to the previous underwriting guidelines. These factors were considered in the Company's analysis of the adequacy of its provision for loan losses. In addition, the Company anticipates future loan recoveries since it has 16 loans totaling $132,000, secured primarily by mobile home loans which have been charged off, but the actual value of the collateral had not yet been realized through repossession. The Company does not expect to realize the full charged off balance of these loans. Nonperforming Assets The allowance for loan losses has been calculated based upon an evaluation of pertinent factors underlying the various types and quality of the Company's loans. Management considers such factors as the repayment status of a loan, the estimated net fair value of the underlying collateral, the borrower's intent and ability to repay the loan, local economic conditions, and the Company's historical loss ratios. The allowance for loan losses declined $114,000 to $1.1 million at December 31, 1999 from $1.2 million on June 30, 1999. At December 31, 1999, the Bank had $5.0 million, or 3.0% of assets adversely classified (substandard, doubtful, or loss) as compared to adversely classified assets of $5.1 million, or 3.1% of assets at June 30, 1999. The ratio of nonperforming assets to total assets and net loans receivable is another measure of asset quality. Nonperforming assets of the Company include nonaccruing loans, accruing loans delinquent/past maturity 90 days or more and assets which have been acquired as a result of foreclosure or deed-in-lieu of foreclosure. The following table summarizes changes in the Company's level of nonperforming assets over selected time periods: Loans past maturity/delinquent 90 days or more 12/31/99 6/30/99 12/31/98 Residential real estate $ 394,000 $ 181,000 $ 677,000 Commercial real estate 182,000 86,000 2,306,000 Commercial 60,000 27,000 - Consumer 39,000 143,000 189,000 Mobile homes 23,000 55,000 182,000 Total loans past maturity/delinquent 90+ days 698,000 492,000 3,354,000 Assets acquired in settlement of loans 534,000 560,000 556,000 Total nonperforming assets $1,232,000 $1,052,000 $3,876,000 Percentage nonperforming assets to total assets .72% .64% 2.47% Percentage nonperforming loans to net loans .57% .42% 3.41% Asset and Liability Management and Market Risk The goal of the Bank's asset/liability management strategy is to manage the interest rate sensitivity of both interest-earning assets and interest- bearing liabilities so as to maximize net interest income without exposing it or the Bank to an excessive level of interest-rate risk. The Bank has employed various strategies intended to manage the potential effect that changing interest rates have on future operating results. Historically, the primary asset/liability management strategy had been to focus on matching the repricing intervals of interest-earning assets and interest-bearing liabilities. This strategy has resulted in a manageable exposure to interest-rate risk with modest asset and loan growth rates. The primary elements of the Bank's current asset/liability strategy includes (i) increasing loans receivable through the origination of both fixed and adjustable-rate residential loans, (ii) growth in loans secured by commercial real estate, which typically provide higher yields, increased credit risk and shorter repricing periods, (iii) expanding the consumer loan portfolio by beginning to offer home equity lines-of-credit, which reprice monthly and typically provide higher average loan yields with a moderate increase in credit risk, (iv) active solicitation of less rate-sensitive deposits, (v) offering competitively priced short-term certificates of deposit, and (vi) the use of FHLB advances to help manage sensitivity to fluctuating interest rates. The degree to which each segment of the strategy is achieved will affect profitability and exposure to interest-rate risk. The Bank has not and does not anticipate the use of derivative financial instruments or other financial instruments for managing its exposure to interest-rate risk or use in a trading account. Further, the Bank is not subject to any foreign currency exchange rate risk, commodity price risk, equity price risk or risk to any hedge funds. Liquidity and Capital Resources The Company's primary sources of funds are deposits, the receipt of principal and interest payments on loans and mortgage-backed securities, investments and FHLB advances. While the scheduled repayments on loans and securities as well as the maturity of short-term investments are somewhat predictable sources of funding, deposit flows and loan prepayment rates are influenced by many factors, which make their cash flows difficult to anticipate. The Company uses its liquidity resources principally to satisfy its ongoing cash requirements which include funding loan commitments, funding maturing certificates of deposit as well as deposit withdrawals, maintaining liquidity, purchasing investments, and meeting operating expenses. At December 31, 1999, the Company had outstanding commitments to fund $7.9 million in mortgage loans and $2.8 million in non-mortgage loans. These commitments are expected to be funded through existing cash balances, cash flow from normal operations and, if needed, FHLB advances. At December 31, 1999, the Bank had available credit at the FHLB of approximately $86.8 million, of which $27.3 million had been advanced. Management believes that these and other liquidity resources will be sufficient to meets the Company's liquidity needs. Regulatory Capital The Bank is subject to minimum regulatory capital requirements equal to a leverage ratio (or core capital) of 4.0% of average total assets, a tier I capital to risk-weighted assets of 4.0% and a risk-based capital ratio of 8.0% of risk-weighted assets. At December 31, 1999, the Bank exceeded all regulatory capital requirements with leverage capital of $21.3 million (12.7% of average total assets), tier I capital of $21.3 million (22.9% of risk-based assets) and risk-based capital of $22.4 million (24.1% of risk-weighted assets). Under current regulatory guidelines, the Bank is considered to be "well- capitalized". PART II - OTHER INFORMATION Southern Missouri Bancorp, Inc. and Subsidiary Item 1 - Legal Proceedings The Company and the Bank are not involved in any pending legal proceedings other than legal proceedings incident to the business of the Company and the Bank, which involve aggregate amounts management believes to be immaterial to the financial condition and results of operations of the Company and the Bank. Item 2 - Changes in Securities and Use of Proceeds None Item 3 - Defaults upon Senior Securities Not applicable Item 4 - Submission of Matters to a Vote of Security-Holders None Item 5 - Other Information None Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits (3) (a) Certificate of Incorporation of the Registrant* (3) (b) Bylaws of the Registrant* 10 (a) Registrant's Stock Option Plan** 10 (b) Southern Missouri Savings Bank, FSB Management Recognition and Development Plans** 10 (c) Employment Agreement with Greg Steffens **** 10 (d) Director's Retirement Agreements*** (i) Robert A. Seifert (ii) Thadis R. Seifert (iii) Leonard W. Ehlers (iv) James W. Tatum (v) Samuel H. Smith 10 (e) Tax Sharing Agreement*** (27) Financial Data Schedule * Filed as an exhibit to the registrant's Registration Statement on Form S-1 (33-73746). ** Filed as an exhibit to the registrant's 1994 annual meeting proxy statement dated October 21, 1994. *** Filed as an exhibit to the registrant's Annual Report on Form 10-KSB for the year ended June 30, 1995. **** Files as an exhibit to the registrant's Annual Report on Form 10-KSB for the year ended June 30, 1999. (b) Reports on Form 8-K: No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SOUTHERN MISSOURI BANCORP, INC. Registrant Date: February 14, 2000 xThadis R. Seifert Thadis R. Seifert President and Chief Executive Officer Date: February 14, 2000 xGreg A. Steffens Greg A. Steffens Chief Financial Officer
EX-27 2
9 6-MOS JUN-30-2000 DEC-31-1999 1,871,413 3,621,127 0 0 36,069,753 0 0 124,310,401 1,112,703 169,946,347 119,478,267 13,750,000 1,191,574 13,500,000 0 0 17,566,576 4,459,930 169,946,347 4,680,255 1,164,621 33,737 5,878,613 2,594,211 3,190,856 2,687,757 35,000 (21,205) 1,724,440 1,153,970 1,153,970 0 0 760,649 .57 .57 7.05 233,000 465,000 0 5,022,713 1,191,147 173,401 59,957 1,112,703 1,112,703 0 0
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