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, 1996
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-23406
Southern Missouri Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 43-1665523
(State or jurisdiction of incorporation) (IRS employer id. no.)
531 Vine Street Poplar Bluff, MO 63901
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 573-785-1421
Not Applicable
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 1,724,013 as of April 30, 1996.
<PAGE>
SOUTHERN MISSOURI BANCORP, INC.
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
Page No.
PART I - Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition 1-2
Consolidated Statements of Income 3-4
Consolidated Statements of Cash Flows 5-6
Notes to Consolidated Financial Statements 7-8
(Unaudited)
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9-15
PART II - Other Information
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults upon Senior Securities 16
Item 4. Submission of Matters to a
Vote of Security-Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
March 31, June 30,
ASSETS 1996 1995
Cash and cash equivalents $ 7,267,667 2,985,898
Certificates of deposit 186,519 276,741
Investment and mortgage-backed and
related securities:
Available for sale
- at estimated market value
(amortized cost of $52,280,200 and
$17,938,084 at March 31, 1996 and
June 30, 1995, respectively) 52,144,966 17,762,860
Held to maturity - at amortized cost
(estimated market value of $5,682,192
and $39,442,358 at March 31, 1996 and
June 30, 1995, respectively) 5,621,340 38,969,530
Total investment and mortgage-
backed and related securities 57,766,306 56,732,390
Stock in Federal Home Loan Bank
of Des Moines 1,519,700 1,489,700
Loans receivable, net 91,489,764 82,886,563
Accrued interest receivable 1,088,172 1,194,993
Foreclosed real estate, net 680,403 727,518
Premises and equipment 1,319,945 1,294,741
Prepaid expenses and other assets 673,409 734,438
Total assets $ 161,991,885 148,322,982
See accompanying notes to consolidated financial statements.<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
March 31, June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
Deposits $ 121,882,519 118,152,385
Advances from borrowers for taxes
and insurance 284,711 472,846
Advances from FHLB of Des Moines 11,554,083 1,314,474
Federal income taxes payable 191,681 8,243
Accounts payable and other liabilities 514,318 529,773
Accrued interest payable 992,661 798,285
Total liabilities 135,419,973 121,276,006
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 17,408,733 17,325,586
Common stock acquired by ESOP (969,217) (1,122,251)
Common stock acquired by MRP (433,681) (540,805)
Retained earnings
-substantially restricted 11,987,290 11,491,096
Unrealized loss on investment
securities and mortgage-backed
and related securities available
for sale, net (66,430) (115,647)
Minimum pension plan liability (9,035) (9,035)
Treasury stock, 79,188 shares at cost (1,363,780) --
Total stockholders' equity 26,571,912 27,046,976
Total liabilities and
stockholders' equity $ 161,991,885 148,322,982
See accompanying notes to consolidated financial statements.
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1996 1995
Interest income:
Loans receivable $ 1,777,607 1,448,084
Investment securities 456,387 492,602
Mortgage-backed and related securities 580,779 426,526
Other interest-earning assets 68,285 42,834
Total interest income 2,883,058 2,410,046
Interest expense:
Deposits 1,455,890 1,308,478
Other borrowings - 172
Advances from FHLB of Des Moines 166,011 16,243
Total interest expense 1,621,901 1,324,893
Net interest income 1,261,157 1,085,153
Provision for loan losses 15,000 15,000
Net interest income after
provision for loan losses 1,246,157 1,070,153
Noninterest income:
Gain on sale of investment
securities, available for sale -- --
Gain (loss) on sale of mortgage-backed
securities, available for sale 40,337 --
Gain on sale of mortgage-backed
securities, held to maturity 54,487 --
Insurance commissions 66,864 69,874
Banking service charges 32,027 28,840
Net income on foreclosed real estate (7,513) (15,626)
Loan late charges 20,393 8,075
Other 5,573 5,766
Total noninterest income 212,168 96,929
Noninterest expense:
Compensation and benefits 534,358 514,490
Occupancy and equipment 62,634 70,378
SAIF deposit insurance premium 68,672 66,432
Gain on foreclosed real estate, net (30,322) (9,121)
Professional fees 25,743 48,917
Advertising 19,260 25,030
Postage and office supplies 29,994 31,549
Other 82,930 76,463
Total noninterest expense 793,269 824,138
Income before income taxes 665,056 342,944
Income taxes 210,706 96,985
Net income $ 454,350 245,959
Earnings per share $ .29 .16
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,
1996 1995
Interest income:
Loans receivable $ 5,222,927 4,300,144
Investment securities 1,459,518 1,469,133
Mortgage-backed and related securities 1,348,407 1,253,988
Other interest-earning assets 152,275 132,652
Total interest income 8,183,127 7,155,917
Interest expense:
Deposits 4,450,499 3,714,796
Other borrowings -- 1,551
Advances from FHLB of Des Moines 276,289 28,935
Total interest expense 4,726,788 3,745,282
Net interest income 3,456,339 3,410,635
Provision for loan losses 45,000 20,000
Net interest income after
provision for loan losses 3,411,339 3,390,635
Noninterest income:
Gain on sale of investment
securities, available for sale 75,633 85,172
Gain (loss) on sale of mortgage-backed
securities, available for sale (12,720) (74,295)
Gain on sale of mortgage-backed
securities, held to maturity 63,748 --
Insurance commissions 224,484 214,986
Banking service charges 106,339 90,372
Net income on foreclosed real estate (17,981) (32,970)
Loan late charges 40,546 26,323
Other 11,035 10,705
Total noninterest income 491,084 320,293
Noninterest expense:
Compensation and benefits 1,581,570 1,454,801
Occupancy and equipment 222,255 240,582
SAIF deposit insurance premium 205,587 209,008
Gain on foreclosed real estate, net (64,075) (47,357)
Professional fees 99,986 126,384
Advertising 66,431 68,919
Postage and office supplies 82,690 80,212
Other 223,458 223,705
Total noninterest expense 2,417,902 2,356,254
Income before income taxes 1,484,521 1,354,674
Income taxes 425,062 385,127
Net income $ 1,059,459 969,547
Earnings per share $ .65 .61
Dividends per share $ .375 .275
See accompanying notes to consolidated financial statements.
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
1996 1995
Cash flows from operating activities:
Net income $ 1,059,459 969,547
Items not requiring (providing) cash:
Depreciation and amortization 131,727 156,957
MRP expense and ESOP expense 343,305 260,158
Gain on sale of investment
securities - available for sale (75,633) (85,172)
Loss on sale of mortgage-backed
securities - available for sale 12,720 74,295
Gain on sale of mortgage-backed
securities, held to maturity (63,748) --
Provision for loan losses 45,000 20,000
FHLB stock dividend (30,000) --
Gain on foreclosed real estate, net (64,075) (47,357)
Net amortization of deferred income,
premiums, and discounts 155,904 (46,160)
Changes in:
Accrued interest receivable 106,821 36,088
Prepaid expenses and other assets 61,029 (118,204)
Accounts payable and other liabilities (15,455) (220,877)
Federal income taxes payable 183,438 17,673
Accrued interest payable 194,376 497,638
Net cash provided by
operating activities 2,044,868 1,514,586
Cash flows from investing activities:
Net increase in loans (8,632,133) (6,027,213)
Proceeds from sales of investment
securities, available for sale 5,903,998 2,792,770
Proceeds from maturing investment
securities, available for sale 8,775,000 3,250,000
Proceeds from maturing investment
securities, held to maturity 2,900,000 1,040,000
Purchase of investment securities,
available for sale (7,457,104) (1,095,361)
Purchase of investment securities,
held to maturity (500,000) (4,279,568)
Proceeds from sales of mortgage-backed
securities, held to maturity 1,161,028 --
Proceeds from sales of mortgage-backed
securities, available for sale 5,120,870 369,256
Proceeds from maturing mortgage-backed
securities, available for sale 4,086,474 884,064
Proceeds from maturing mortgage-backed
securities, held to maturity 1,064,529 2,043,818
Purchase of mortgage-backed securities,
held to maturity -- (3,426,640)
Purchase of mortgage-backed securities,
available for sale (22,094,619) --
Purchase of certificates of deposits
of other financial institutions -- (500,000)
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
1996 1995
Proceeds from maturing certificates
of deposit $ 90,000 340,000
Purchase of premises and equipment (114,784) (178,150)
Proceeds from sale of foreclosed
real estate 79,079 11,475
Net cash used in
investing activities (9,617,662) (4,775,549)
Cash flows from financing activities:
Net increase in deposits 3,730,134 4,506,395
Net decrease in advances from borrowers
for taxes and insurance (188,135) (110,141)
Repayment of other borrowings -- (84,250)
Proceeds from advances from FHLB
of Des Moines 15,250,000 2,000,000
Repayment of advances from FHLB
of Des Moines (5,010,391) (2,010,143)
Dividends on common stock (563,265) (495,880)
Sale of treasury stock 108,120 --
Payments to acquire treasury stock (1,471,900) --
Net cash provided by
financing activities 11,854,563 3,805,981
Increase in cash and cash equivalents 4,281,769 545,018
Cash and cash equivalents
at beginning of period 2,985,898 5,094,873
Cash and cash equivalents
at end of period $ 7,267,667 5,639,891
Supplemental disclosures of
cash flow information:
Noncash investing and financing activities
Conversion of loans to
foreclosed real estate $ 77,824 44,450
Conversion of foreclosed
real estate to loans $ 93,892 58,845
Cash paid during the period for
Interest (net of interest credited) $ 1,534,387 1,069,124
Income taxes $ 241,500 352,400
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 1995 Annual
Report to Stockholders. The results of operations for the
three and nine month periods ended March 31, 1996 are not
indicative of the results of operations for the entire
fiscal year.
(2) The Savings Bank is a member of the Savings Association
Insurance fund (SAIF). Legislation has been introduced in
the United State Congress that would require financial
institutions that are members of SAIF to pay a one-time
premium to recapitalize the SAIF, which is expected to be
approximately 85 basis points applied to insured deposits.
If this legislation is enacted into law, it is likely that
the premium would be immediately charged against current
earnings and therefor would serve to reduce the capital of
the Company by the amount of the premium, net of related
income taxes. Based upon the Savings Bank's level of
insured deposits at March 31, 1995, the measurement date
proposed in the legislation and the provisions of the
legislation currently proposed, the potential one-time
premium would be approximately $1,008,000. Management
cannot predict whether the proposed legislation will be
enacted or, if enacted, the amount of the one-time premium.
Proposed legislation before the U.S. Congress contains a
provision that repeals the reserve method of accounting for
thrift bad debt reserves (including the percentage-of-
taxable-income) for tax years beginning after December 31,
1995. This would require the Savings Bank to account for
bad debts using the specific charge-off method. Under the
proposed legislation, the change in accounting method that
eliminates the reserve method would trigger bad debt reserve
recapture for post-1987 excess reserves over a six-year
period. However, at December 31, 1995 the Savings Bank had
no post-1987 excess reserves. A special provision suspends
recapture of post-1987 excess reserves for up to two years
if, during those years, the institution satisfies a
"residential loan requirement." This requirement would be
met if the principal amount of the institution's residential
loans exceeds a base year amount, which is determined by
reference to be the average of the institution's loans
during the six taxable years ending before January 1, 1996.
However, notwithstanding this special provision, recapture
would be required to begin no later than the first taxable
year beginning after December 31, 1997. Management cannot
predict whether the legislation providing for the recapture
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
of bad debt reserves will be enacted, or, if enacted, the
final form of such legislation and its ultimate impact on
the Savings Bank.
(3) A recent interpretation of Statement of Financial Accounting
Standards (SFAS) No. 115 permitted a one-time opportunity,
through December 1995, to transfer investment and mortgage-
backed and related securities from held to maturity
classification to the available for sale classification.
SFAS No. 115 permits transfer from the held to maturity
classification to the available for sale classification only
in rare circumstances. The Company transferred $23,041,000
of investment and mortgage-backed and related securities
from the held to maturity classification to the available
for sale classification. The transfer under this one-time
opportunity was made in order to increase investment
management flexibility. Available for sale securities are
recorded at fair value. Unrealized gains and losses, net of
tax effect, are reported as a separate component of
stockholders' equity. Stockholders' equity will be subject
to increased volatility to the extent that changes in
interest rates affect the fair value of securities available
for sale.<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
On April 13, 1994, Southern Missouri Savings Bank (Savings Bank)
completed its conversion from mutual to stock form and became a
wholly-owned subsidiary of a newly formed Delaware holding
company, Southern Missouri Bancorp, Inc. (Company). The Company
sold 1,785,375 shares of common stock at $10 per share in
conjunction with the subscription offering to the Savings Bank
Employee Stock Ownership Plan (ESOP), eligible account holders
and other members of the Savings Bank. In addition, 17,826
shares of authorized common stock were granted to the Savings
Bank's Management Recognition Plan to fulfill its order in the
subscription offering. Net proceeds of the sale of common stock
in the subscription offering were $15,160,161, after deduction of
conversion costs of $729,369. The Company retained 50% of the
net conversion proceeds less the funds used to make the ESOP loan
to the Savings Bank for the purchase of shares of common stock
for the Savings Bank's ESOP and used the balance of the net
proceeds to purchase all of the stock of the Savings Bank in the
conversion.
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.
Supervisory Agreement
On December 21, 1994, the Savings Bank voluntarily entered into a
Supervisory Agreement with the OTS as a result of its latest OTS
examination. 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 (CMOs). As part of the Supervisory
agreement, the Savings Bank has hired an investment officer who
will augment the Savings Bank's expertise and facilitate
compliance with regard to the Savings bank's portfolio of CMOs.
The investment officer is expected to become the Savings Bank's
Chief Financial Officer. In addition, the Savings Bank has
revised its Investment Policy to conform more closely to the
OTS's policy on securities activities and the Savings Bank's
Board of Directors are expected to implement additional
procedures to review the Savings Bank's investment activities and
monitor its interest rate risk management.
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Liquidity and Capital Resources
The Savings Bank's principal sources of funds are cash receipts
from deposits, loan repayments by borrowers, and net income. The
Savings Bank has an agreement with the Federal Home Loan Bank of
Des Moines (FHLB of Des Moines) to provide cash advances, should
the need for additional funds be required. Commitments to
originate fixed rate and adjustable-rate mortgage loans at March
31, 1996 were approximately $289,000 and $4,144,000,
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 11.71% at March 31, 1996. The Savings Bank
maintains a high level of liquidity as a matter of management
philosophy in order to more closely match interest-sensitive
assets with interest-sensitive liabilities.
The savings and loan industry historically has accepted interest
rate risk as a part of its operating philosophy. Long-term,
fixed-rate loans were funded with deposits which adjust to market
interest rates more frequently. In recent years, the Savings
Bank has originated primarily mortgage loans which permit
adjustment of the interest rate after an initial term of one year
in order to reduce inherent interest rate risk.
Investment and mortgage-backed and related securities with a
carrying value of $52,145,000 are classified as available for
sale at March 31, 1996. Such securities are carried at fair
value and can be liquidated with no further impact on capital.
The Company's unrealized gains and losses on investment and
mortgage-backed and related securities net of applicable income
taxes, are recorded in stockholders' equity.
The Savings Bank must maintain core capital equal to 3% of
adjusted total assets and tangible capital equal to 1.5% of
adjusted total assets. The Savings Bank must maintain an 8%
risk-based capital.
In November, 1994 the OTS adopted a regulation which excludes
unrealized losses or gains on debt securities classified as
available for sale and unrealized gains on equity securities for
regulatory capital purposes.
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
The following table presents the Savings Bank's capital position
relative to its regulatory capital requirements at March 31,
1996:
Unaudited Regulatory
Capital
Tangible Core
Stockholders' equity per
consolidated financial statements $ 26,571,912 26,571,912
Stockholders' equity of Southern
Missouri Bancorp, Inc. not available
for regulatory capital purposes 6,937,504 6,937,504
GAAP capital 19,634,408 19,634,408
General valuation allowances -- --
Non-includable unrealized loss on
investment and mortgage-backed and
related securities available for sale 89,255 89,255
Non-includable deferred tax assets (309,980) (309,980)
Non-includable intangible assets (95,124) (95,124)
Regulatory capital 19,318,559 19,318,559
Regulatory capital requirement 2,346,000 4,692,000
Regulatory capital - excess $ 16,972,559 14,626,559
Regulatory capital ratio 12.33% 12.33%
Regulatory capital requirement 1.50 3.00
Regulatory capital ratio - excess 10.83% 9.33%
Unaudited Regulatory
Capital
Risk-Based
Stockholders' equity per
consolidated financial statements $ 26,571,912
Stockholders' equity of Southern
Missouri Bancorp, Inc. not available
for regulatory capital purposes 6,937,504
GAAP capital 19,634,408
General valuation allowances 612,535
Non-includable unrealized loss on
investment and mortgage-backed and
related securities available for sale 89,255
Non-includable deferred tax assets (300,980)
Non-includable intangible assets (95,124)
Regulatory capital 19,940,094
Regulatory capital requirement 6,077,000
Regulatory capital - excess $ 13,863,094
Regulatory capital ratio 26.24%
Regulatory capital requirement 8.00
Regulatory capital ratio - excess 18.24%
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Financial Condition
Total assets increased from $148.3 million at June 30, 1995 to
$162.0 million at March 31, 1996. Cash flows from the
maturities, sales and prepayments of securities, deposits and
advances from the 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. Foreclosed real
estate, net decreased due to the sale of certain properties.
Premises and equipment increased due to the purchase of an
automatic teller machine to be installed at the Poplar Bluff
branch in the fourth quarter. Advances from borrowers for taxes
and insurance decreased as a result of real estate taxes being
paid in December for loan customers. Federal income taxes
payable increased due to the timing of federal income tax
payments. Accrued interest payable increased due to the timing
of interest payments on a promotional nine-month certificate.
Additional paid-in capital and common stock acquired by the ESOP
and MRP changed as a result of the recognition of compensation
expense 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 $116,000 at June
30, 1995 to a loss of $66,000 at March 31, 1996. The balance is
expected to fluctuate in the future based on changes in interest
rates, as well as the amount and maturities of securities and
mortgage-backed securities available for sale.
COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS
ENDED MARCH 31, 1996 AND 1995
Net Income
Net income for the three-months ended March 31, 1996 was $454,000
compared to $246,000 for the three-months ended March 31, 1995.
Net income increased due to higher net interest income and higher
noninterest income and lower noninterest expense. Net income for
the nine months ended March 31, 1996 was $1,059,000 compared to
$970,000 for the nine months ended March 31, 1995. The increase
was due to higher net interest income and noninterest income,
offset by higher provision for loan losses and noninterest
expense.
<PAGE>
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 increased from $1.08 million for the three
months ended March 31, 1995 to $1.26 million for the comparable
three month period in 1996. Net interest income increased from
$3.41 million for the nine months ended March 31, 1995 to $3.46
million for the comparable nine month period in 1996. The
interest rate spread increased due to an increase in average
interest earnings assets and weighted average rates. This
increase was offset, in part, by an increase in interest expense
due to higher weighted average rates on interest-bearing
liabilities, as well as an increase in average interest-bearing
liabilities. Interest rates in 1996 were generally higher than
in 1995.
Interest Income
Interest income was $2.41 million for the three months ended
March 31, 1995 compared to $2.88 million for the comparable three
month period in 1996. Interest income was $7.16 million for the
nine months ended March 31, 1995 compared to $8.18 million for
the comparable nine month period in 1996.
Interest on loans receivable increased for both the three months
and nine months periods ended March 31, 1996 compared to 1995
periods as a result of higher average loans outstanding for 1996,
and a higher yield. The weighted-average rate on loans increased
from 7.15% at March 31, 1995 to 7.83% at March 31, 1996. New
loans originated in 1996 generally had a higher interest rate
than those originated in 1995. In addition, adjustable-rate
mortgage loans repriced upwards to reflect higher interest rates
in 1996. Interest on mortgage-backed securities (MBSs) increased
due to a higher average balance outstanding in the three and nine
month periods ended March 31, 1996 compared to the 1995 periods,
offset by lower weighted-average yield on MBSs. The weighted-
average rate on MBSs decreased from 6.64% at March 31, 1995 to
6.33% at March 31, 1996. Interest on investment securities
decreased in the three and nine month periods ended March 31,
1996 compared to the 1995 periods due to lower average balance
outstanding, offset by a higher weighted-average yield. The
weighted average rate on investment securities increased from
6.51% at March 31, 1995 to 6.82% at March 31, 1996.
Interest on other interest-earning assets increased in the three
months ended March 31, 1996 from the comparable period in 1995
due to higher average balance and higher interest rates on
overnight funds and short term deposits. The components of
interest-bearing assets change from time to time based on the
availability and interest rates of loans, investment securities,
and MBSs.
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
In the prevailing interest rate environment, the Savings Bank was
able to take advantage of investment opportunities resulting from
the interest rate differential between the yield earned on
investment securities and the rate paid on advances from the FHLB
of Des Moines. During the quarter ended December 31, 1995, the
Savings Bank borrowed $11.2 million from the FHLB of Des Moines
at an average rate of 5.68% and invested such funds in adjustable
rate MBSs with an average yield of 6.53%. The Savings Bank
expects to continue to evaluate these arbitrage opportunities as
they arise.
Interest Expense
Interest expense increased due to higher interest rates and
higher average balances. The weighted-average rate on interest-
bearing liabilities was 4.73% at March 31, 1995 as compared to
4.85% at March 31, 1996.
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, 1996 and 1995 the Savings
Bank established a provision for loan losses of $15,000. For the
nine months ended March 31, 1996 the Savings Bank established a
provision for loan losses of $45,000 compared with $20,000 for
the nine months ended March 31, 1995.
The book value of nonaccrual loans at March 31, 1996 was $867,000
compared to $737,000 at June 30, 1995. The average balance of
nonaccrual loans for the nine months ended March 31, 1996 was
approximately $771,000. Allowance for losses on nonaccrual loans
amounted to approximately $25,000 at March 31, 1996. For the
three months and nine months ended March 31, 1996, gross interest
income which would have been recorded had nonaccrual loans been
current in accordance with their original terms amounted to
approximately $18,000 and $55,000, respectively. The amount of
interest income included in the Company's net earnings for the
three months and nine months ended March 31, 1996 was
approximately $11,000 and $48,000, respectively.<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Noninterest Income
Noninterest income increased from $97,000 for the three months
ended March 31, 1995 to $212,000 for 1996. Noninterest income
increased from $320,000 for the nine months ended March 31, 1995
to $491,000 for 1996. The Savings Bank realized net gains on
sales of securities and MBSs of $95,000 for the three months
ended March 31, 1996 compared to none in 1995. Such gains were
$127,000 for the nine months ended March 31, 1996, compared to
$11,000 in 1995. Gains on sales of securities and MBSs are not a
stable source of income and no assurance can be given that the
Savings Bank will generate such gains in the future. Gain on
sale of MBSs held to maturity relate to small balance pools,
which are permitted to be sold prior to maturity under Statement
of Financial Accounting Standards No. 115.
Banking service charges increased for both the three and nine
months ended March 31, 1996 over comparable periods in 1995 due
to increased checking account activity. Loan late charges
increased for both periods in 1996 over 1995 periods due to the
collection of more late charges. In prior years the Savings Bank
waived late charges for many borrowers. Although past due loans
over 30 days have increased slightly, there was no significant
change in the trend of delinquent loans.
Noninterest Expense
Noninterest expense decreased from $824,000 for the three months
ended March 31, 1995 to $793,000 for the three months ended March
31, 1996. Noninterest expense increased from $2,356,000 for the
nine months ended March 31, 1995 to $2,418,000 for the nine
months ended March 31, 1996. The increase is due primarily to
higher compensation and benefits in 1996 due to higher Employee
Stock Ownership (ESOP) expense, hiring of an additional officer
and salary increases, offset by 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
increased substantially during 1996. ESOP expense will fluctuate
in the future based on changes in the market price of the
Company's stock. Occupancy and equipment expense decreased as a
result of lower repairs in 1996. Professional fees decreased as
a result of services performed in connection with the supervisory
agreement in 1995.
Income Taxes
Income taxes increased for the three and nine months ended March
31, 1996 compared with the same periods in 1995 due to higher
earnings before income taxes and a higher effective tax rate, as
a result of lower nontaxable municipal interest income.<PAGE>
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: none
(b) Reports on Form 8-K: No reports on Form 8-K have been
filed during the quarter for which this report is
filed.
SIGNATURES
Persuant 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, 1996 BY: Donald R. Crandell
Donald R. Crandell,
Chief Executive Officer
Chief Financial Officer and
Duly Authorized Officer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,267,667
<INT-BEARING-DEPOSITS> 186,519
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,144,966
<INVESTMENTS-CARRYING> 5,621,340
<INVESTMENTS-MARKET> 5,682,192
<LOANS> 92,099,646
<ALLOWANCE> 609,822
<TOTAL-ASSETS> 161,991,885
<DEPOSITS> 121,882,519
<SHORT-TERM> 11,250,000
<LIABILITIES-OTHER> 1,983,371
<LONG-TERM> 304,083
0
0
<COMMON> 18,032
<OTHER-SE> 26,553,880
<TOTAL-LIABILITIES-AND-EQUITY> 161,991,885
<INTEREST-LOAN> 1,777,607
<INTEREST-INVEST> 1,037,166
<INTEREST-OTHER> 68,285
<INTEREST-TOTAL> 2,903,451
<INTEREST-DEPOSIT> 1,455,890
<INTEREST-EXPENSE> 1,621,901
<INTEREST-INCOME-NET> 1,281,550
<LOAN-LOSSES> 15,000
<SECURITIES-GAINS> 94,824
<EXPENSE-OTHER> 793,269
<INCOME-PRETAX> 665,056
<INCOME-PRE-EXTRAORDINARY> 665,056
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 454,350
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
<YIELD-ACTUAL> 3.15
<LOANS-NON> 867,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 426,206
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 600,093
<CHARGE-OFFS> 5,118
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 609,882
<ALLOWANCE-DOMESTIC> 609,882
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 609,882
</TABLE>
