SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________
FORM 10-QSB
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-23406
Southern Missouri Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 43-1665523
(State or jurisdiction of incorporation) (IRS employer id. no.)
531 Vine Street Poplar Bluff, MO 63901
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 573-785-1421
Not Applicable
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 1,637,913, as of April 30, 1997.
SOUTHERN MISSOURI BANCORP, INC.
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1997
INDEX
Page No.
PART I - Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(Unaudited)
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
PART II - Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a
Vote of Security-Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
March 31, June 30,
ASSETS 1997 1996
Cash and cash equivalents $ 10,377,394 4,477,872
Certificates of deposit 91,277 186,512
Investment and mortgage-backed and
related securities:
Available for sale - at estimated
market value (amortized cost of
$40,482,098 and $50,615,727 at
March 31, 1997 and June 30, 1996,
respectively) 40,207,495 49,980,348
Held to maturity - at amortized cost
(estimated market value of $4,869,920
and $4,888,427 at March 31, 1997 and
June 30, 1996, respectively) 4,787,323 4,851,454
Stock in Federal Home Loan Bank
of Des Moines 1,519,700 1,519,700
Loans receivable, net 105,381,564 95,534,657
Accrued interest receivable 945,077 1,141,099
Foreclosed real estate, net 120,264 60,133
Premises and equipment 1,707,552 1,411,247
Prepaid expenses and other assets 550,519 684,701
Total assets $ 165,688,165 159,847,723
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 124,309,184 120,138,066
Advances from borrowers for taxes
and insurance 239,473 353,895
Advances from FHLB of Des Moines 13,539,224 11,550,478
Federal income taxes payable 152,675 136,210
Accounts payable and other liabilities 460,813 459,971
Accrued interest payable 1,029,155 981,809
Total liabilities 139,730,524 133,620,429
Commitments and contingencies
Preferred stock, $.01 par value;
500,000 shares authorized; none
issued and outstanding - -
Common stock, $.01 par value;
3,000,000 shares authorized;
1,803,201 shares issued 18,032 18,032
Additional paid-in capital 17,521,753 17,449,978
Retained earnings - substantially
restricted 12,344,661 12,192,583
Treasury stock of 165,288 shares at
March 31, 1997 and 102,188 shares at
June 30, 1996, at cost (2,673,618) (1,691,030)
Common stock acquired by ESOP (765,172) (918,207)
Common stock acquired by MRP (300,472) (397,972)
Unrealized loss on investment and
mortgage-backed securities available
for sale (181,238) (419,785)
Minimum pension liability (6,305) (6,305)
Total stockholders' equity 25,957,641 26,227,294
Total liabilities and
stockholders' equity $ 165,688,165 159,847,723
See accompanying notes to consolidated financial statements.
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1997 1996
Interest income:
Loans receivable $ 2,016,137 1,777,607
Investment securities 259,845 456,387
Mortgage-backed and related securities 495,557 580,779
Other interest-earning assets 49,961 68,285
Total interest income 2,821,500 2,883,058
Interest expense:
Deposits 1,386,323 1,455,890
Advances from FHLB of Des Moines 221,049 166,011
Total interest expense 1,607,372 1,621,901
Net interest income 1,214,128 1,261,157
Provision for loan losses 22,500 15,000
Net interest income after
provision for loan losses 1,191,628 1,246,157
Noninterest income:
Gain on sale of investment
securities, available for sale 5,073 -
Gain (loss) on sale of mortgage-backed
securities, available for sale 29,874 40,337
Gain on sale of mortgage-backed
securities, held to maturity - 54,487
Insurance commissions 78,716 66,864
Banking service charges 41,453 32,027
Net income on foreclosed real estate (2,036) (7,513)
Loan late charges 11,251 20,393
Other 349 5,573
Total noninterest income 164,680 212,168
Noninterest expense:
Compensation and benefits 561,430 534,358
Occupancy and equipment 85,164 74,338
SAIF special assessment - -
SAIF deposit insurance premium 4,122 68,672
Gain on foreclosed real estate, net (53,291) (30,322)
Professional fees 46,308 35,275
Advertising 21,137 20,340
Postage and office supplies 36,415 32,449
Other 52,927 58,159
Total noninterest expense 754,212 793,269
Income before income taxes 602,096 665,056
Income taxes 186,964 210,706
Net income $ 415,132 454,350
Earnings per share $ .26 .27
Dividends per share $ .125 .125
See accompanying notes to consolidated financial statements.
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended
March 31,
1997 1996
Interest income:
Loans receivable $ 5,968,832 5,222,927
Investment securities 861,405 1,459,518
Mortgage-backed and related securities 1,610,017 1,348,407
Other interest-earning assets 79,929 152,275
Total interest income 8,520,183 8,183,127
Interest expense:
Deposits 4,166,857 4,450,499
Advances from FHLB of Des Moines 561,135 276,289
Total interest expense 4,727,992 4,726,788
Net interest income 3,792,191 3,456,339
Provision for loan losses 62,500 45,000
Net interest income after
provision for loan losses 3,729,691 3,411,339
Noninterest income:
Gain on sale of investment
securities, available for sale 58,462 75,633
Gain (loss) on sale of mortgage-backed
securities, available for sale (23,550) (12,720)
Gain on sale of mortgage-backed
securities, held to maturity - 63,748
Insurance commissions 261,090 224,484
Banking service charges 126,569 106,339
Net income on foreclosed real estate (13,782) (17,981)
Loan late charges 35,498 40,546
Other 14,217 11,035
Total noninterest income 458,504 491,084
Noninterest expense:
Compensation and benefits 1,619,514 1,581,570
Occupancy and equipment 243,797 233,959
SAIF special assessment 779,184 -
SAIF deposit insurance premium 144,302 205,587
Gain on foreclosed real estate, net (71,451) (64,075)
Professional fees 107,019 109,518
Advertising 70,600 67,511
Postage and office supplies 88,104 85,145
Other 194,438 198,687
Total noninterest expense 3,175,507 2,417,902
Income before income taxes 1,012,688 1,484,521
Income taxes 271,251 425,062
Net income $ 741,437 1,059,459
Earnings per share $ .45 .63
Dividends per share $ .375 .375
See accompanying notes to consolidated financial statements.
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net income $ 741,437 1,059,459
Items not requiring (providing) cash:
Depreciation and amortization 133,774 131,727
MRP expense and ESOP expense 322,310 343,305
Gain on sale of investment securities -
available for sale (58,462) (75,633)
Loss on sale of mortgage-backed
securities - available for sale 23,550 12,720
Gain on sale of mortgage-backed
securities, held to maturity - (63,748)
Provision for loan losses 62,500 45,000
FHLB stock dividend - (30,000)
Gain on foreclosed real estate, net (71,451) (64,075)
Net amortization of deferred income,
premiums, and discounts 88,450 155,904
Changes in:
Accrued interest receivable 196,022 106,821
Prepaid expenses and other assets 134,182 61,029
Accounts payable and other liabilities 842 (15,455)
Federal income taxes payable 16,465 183,438
Accrued interest payable 47,346 194,376
Net cash provided by operating
activities 1,636,965 2,044,868
Cash flows from investing activities:
Net increase in loans (10,043,301) (8,632,133)
Proceeds from sales of investment
securities, available for sale 2,085,304 5,903,998
Proceeds from maturing investment
securities, available for sale 3,738,955 8,775,000
Proceeds from maturing investment
securities, held to maturity 90,000 2,900,000
Purchase of investment securities,
available for sale (3,762,604) (7,457,104)
Purchase of investment securities,
held to maturity - (500,000)
Proceeds from sales of mortgage-backed
securities, held to maturity - 1,161,028
Proceeds from sales of mortgage-backed
securities, available for sale 4,088,134 5,120,870
Proceeds from maturing mortgage-backed
securities, available for sale 3,822,374 4,086,474
Proceeds from maturing mortgage-backed
securities, held to maturity 59,178 1,064,529
Purchase of mortgage-backed securities,
available for sale - (22,094,619)
Proceeds from maturing certificates
of deposit 95,000 90,000
Purchase of premises and equipment (403,578) (114,784)
Proceeds from sale of foreclosed
real estate 19,600 79,079
Net cash used in investing
activities (210,938) (9,617,662)
Cash flows from financing activities:
Net increase in deposits $ 4,171,118 3,730,134
Net decrease in advances from borrowers
for taxes and insurance (114,422) (188,135)
Net increase in advances from FHLB
of Des Moines 1,988,746 10,239,609
Dividends on common stock (589,359) (563,265)
Sale of treasury stock 1,000 108,120
Payments to acquire treasury stock (983,588) (1,471,900)
Net cash provided by
financing activities 4,473,495 11,854,563
Increase in cash and cash equivalents 5,899,522 4,281,769
Cash and cash equivalents at beginning
of period 4,477,872 2,985,898
Cash and cash equivalents at end
of period $ 10,377,394 7,267,667
Supplemental disclosures of
cash flow information:
Noncash investing and financing activities
Conversion of loans to foreclosed
real estate $ 135,118 77,824
Conversion of foreclosed real estate
to loans $ 55,100 93,892
Transfer of investment and
mortgage-backed and related
securities from held to maturity
to available for sale $ - 23,041,000
Unrealized loss at transfer date $ - 227,000
Cash paid during the period for
Interest (net of interest credited) $ 1,582,886 1,534,387
Income taxes $ 172,500 241,500
See accompanying notes to consolidated financial statements
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) The information contained in the accompanying consolidated
financial statements is unaudited. In the opinion of
management, the financial statements contain all adjustments
(none of which were other than normal recurring accruals)
necessary for a fair statement of the results of operations
for the interim periods. These financial statements should
be read in conjunction with the audited consolidated
financial statements contained in the Company's 1996 Annual
Report to Stockholders. The results of operations for the
three and nine month periods ended March 31, 1997 are not
indicative of the results of operations for the entire
fiscal year.
<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 (MRP) to fulfill its order in
the subscription offering. Net proceeds of the sale of common
stock in the subscription offering were $15,160,161, after
deduction of conversion costs of $729,369. The Company retained
50% of the net conversion proceeds less the funds used to make
the ESOP loan to the Savings Bank for the purchase of shares of
common stock for the Savings Bank's ESOP and used the balance of
the net proceeds to purchase all of the stock of the Savings Bank
in the conversion.
The Company has no significant assets other than common stock of
the Savings Bank and net proceeds retained by the Company
following the conversion. The Company's principal business is
the business of the Savings Bank. Therefore, the discussion in
the Management's Discussion and Analysis of Financial Condition
and Results of Operations relates primarily to the Savings Bank
and its operations.
Certain statements in this report which relate to the Company's
plans, objectives or future performance may be deemed to be
forward-looking statements within the meaning of Private
Securities Litigation Act of 1995. Such statements are based on
management's current expectations. Actual strategies and results
in future periods may differ materially from those currently
expected because of various risks and uncertainties. Additional
discussion of factors affecting the Company's business and
prospects is contained in periodic filings with the Securities
and Exchange Commission.
Supervisory Agreement
On December 21, 1994, the Savings Bank voluntarily entered into a
Supervisory Agreement with the Office of Thrift Supervision
(OTS), its primary federal regulator. The Supervisory Agreement
generally concerns the Savings Bank's investment portfolio and,
more specifically, focuses on the reporting, monitoring, and
assessment of interest rate risk in connection with the Savings
Bank's portfolio of collateralized mortgage obligations (CMO's).
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
In an effort to comply with the Supervisory Agreement, the
Savings Bank has hired a Chief Financial Officer who serves
primarily as a senior investment officer. In addition, the
Savings Bank revised its Investment Policy to conform more
closely to the OTS's policy on securities activities and
implemented additional procedures to review the investment
activities and monitor interest rate risk management. The
regulatory examination of the Savings Bank conducted during the
fourth quarter of 1996 noted noncompliance with the Supervisory
Agreement, and numerous additional actions required by management
to achieve compliance and improve the operations of the Savings
Bank. As a part of the required actions, management contracted
with an independent accounting firm to perform certain agreed
upon procedures. Among other things, the procedures were
designed to assist in determining whether the level of past due
loans had been understated and/or whether net income had been
overstated because funds in borrower's escrow accounts had been
used to make payments of principal and interest rather than to
pay taxes and insurance. Based upon the report received in April
1997, management has concluded payments of principal and interest
from escrowed funds were immaterial in amount and neither past
due loans nor net income were materially misstated. Failure to
achieve compliance with the Supervisory Agreement could lead to
further regulatory enforcement actions, including the assessment
of civil money penalties against the Savings Bank and/or its
officers and directors. The Supervisory Agreement will remain in
effect until it is terminated by the OTS. As a result of the
Savings Bank's current regulatory status, the Savings Bank will
no longer be eligible for the lowest assessment rate for deposit
insurance. Instead, the assessment rate is expected to increase
from .065% to .095% of deposits beginning July 1, 1997. This
will translate into approximately an additional $9,000 per
quarter charged for deposit insurance.
In a letter dated October 20, 1995, addressed to the Board of
Directors of the Savings Bank, the OTS stated: "Southern
Missouri Savings Bank continues to be designated a `problem'
institution and in need of more than normal supervision.
Accordingly, the institution is subject to the provisions of
Regulatory Bulletin No. 3a-1 governing growth and to other
restrictions and requirements in various other OTS regulations
and memoranda." Regulatory Bulletin No. 3a-1 states, in
pertinent part: "As a general rule, associations `requiring more
than normal supervision' . . . will be permitted little to no
growth under this policy, subject to District Director discretion
and waiver authority . . . Without the prior written approval of
the District Director, any association requiring more than normal
supervision shall not increase its total assets during any
quarter in excess of an amount equal to net interest credited on
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
deposit liabilities (or earnings credited on share accounts)
during the quarter." The Savings Bank has experienced growth in
excess of the amount permitted by the foregoing restrictions.
Management intends to seek approval from the District Director of
the OTS for the growth that has already occurred and request
advanced approval for a reasonable amount of additional growth.
Excessive asset growth by any savings association, as determined
by the District Director of the OTS on the basis of the
association's management and asset quality, capital adequacy,
interest rate risk profile, and operation controls and
procedures, is an unsafe and unsound practice. A savings
association engaging in unsafe and unsound practices is subject
to a variety of regulatory enforcement actions. The continued
existence of growth restrictions could have a material effect on
the operations of the Savings Bank, and, consequently, on the
operations of the Company.
Liquidity and Capital Resources
The Savings Bank's principal sources of funds are cash receipts
from deposits, loan repayments by borrowers, and net income. The
Savings Bank has an agreement with the Federal Home Loan Bank of
Des Moines (FHLB of Des Moines) to provide cash advances, should
the Savings Bank need additional funds. Commitments to originate
fixed rate and adjustable-rate mortgage loans at March 31, 1997
were approximately $1,186,000 and $3,255,000, respectively.
For regulatory purposes, liquidity is measured as a ratio of cash
and certain investments to withdrawable deposits and short term
borrowings. The minimum level of liquidity required by OTS
regulation is presently 5%. The Savings Bank's liquidity ratio
was approximately 11.1% at March 31, 1997. The Savings Bank
maintains a high level of liquidity as a matter of management
philosophy in order to more closely match interest-sensitive
assets with interest-sensitive liabilities.
The savings and loan industry historically has accepted interest
rate risk as a part of its operating philosophy. Long-term,
fixed-rate loans were funded with deposits which adjust to market
interest rates more frequently. In recent years, the Savings
Bank has originated primarily mortgage loans which permit
adjustment of the interest rate after an initial term of one year
in order to reduce inherent interest rate risk.
Investment and mortgage-backed and related securities (MBSs) with
a carrying value of $40,207,000 are classified as available for
sale at March 31, 1997. Such securities are carried at fair
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
value and can be liquidated with no further impact on capital.
The Company's unrealized gains and losses on investment and
mortgage-backed and related securities net of applicable income
taxes, are recorded in stockholders' equity.
Under the capital adequacy guidelines and regulatory framework
for prompt corrective action, the Savings Bank is required to
maintain tangible capital, core capital, tier 1 risk-based
capital (core capital to risk-weighted assets), and risk based
capital of 1.5%, 4%, 4% and 8%. The Savings Bank met such
capital requirements at March 31, 1997.
The following table presents the Savings Bank's capital position
relative to its regulatory capital requirements at March 31,
1997:
Unaudited Regulatory Capital
Tangible Core
Stockholders' equity
per consolidated
financial statements $ 25,957,641 25,957,641
Stockholders' equity of
Southern Missouri
Bancorp, Inc. not
available for regulatory
capital purposes (5,393,110) (5,393,110)
GAAP capital 20,564,531 20,564,531
General valuation
allowances - -
Non-includable unrealized
loss on investment and
mortgage-backed and
related securities
available for sale 196,021 196,021
Non-includable deferred
tax assets (293,981) (293,981)
Non-includable intangible
assets (63,852) (63,852)
Regulatory capital 20,402,719 20,402,719
Regulatory capital
requirement (2,422,000) (6,459,000)
Regulatory capital
- excess $ 17,980,719 13,943,719
Regulatory capital ratio 12.61% 12.61%
Regulatory capital
requirement 1.50 4.00
Regulatory capital
ratio - excess 11.11% 8.61%
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Unaudited Regulatory Capital
Tier 1
Risk-Based Risk-Based
Stockholders' equity
per consolidated
financial statements $ 25,957,641 25,957,641
Stockholders' equity of
Southern Missouri
Bancorp, Inc. not
available for regulatory
capital purposes (5,393,110) (5,393,110)
GAAP capital 20,564,531 20,564,531
General valuation
allowances - 684,039
Non-includable unrealized
loss on investment and
mortgage-backed and
related securities
available for sale 196,021 196,021
Non-includable deferred
tax assets (293,981) (293,981)
Non-includable intangible
assets (63,852) (63,852)
Regulatory capital 20,402,719 21,086,758
Regulatory capital
requirement (3,372,000) (6,744,000)
Regulatory capital
- excess $ 17,030,719 14,342,758
Regulatory capital ratio 24.20% 25.01%
Regulatory capital
requirement 4.00 8.00
Regulatory capital
ratio - excess 20.20% 17.01%
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Financial Condition
Total assets increased from $159,848,000 at June 30, 1996 to
$165,688,000 at March 31, 1997. Cash flows from sales,
maturities and prepayments of securities, deposits and advances
from FHLB of Des Moines were used to originate loans, purchase
securities and cash and cash equivalents. The Savings Bank
intends to borrow from the FHLB when the cost is less than the
overall cost of retail deposits. Premises and equipment
increased due to the remodeling of the main banking facility, and
an automatic teller machine added to the Van Buren, Missouri
branch. Foreclosed real estate, net, increased due to
foreclosure of certain loans. Advances from borrowers for taxes
and insurance decreased as a result of real estate taxes being
paid in December for loan customers. Additional paid-in capital
and common stock acquired by the ESOP and MRP changed as a result
of the recognition of shares committed to be released for the
ESOP and MRP. Unrealized loss on investment securities and
mortgage-backed and related securities available for sale, net of
income tax changed from a loss of $420,000 at June 30, 1996 to a
loss of $181,000 at March 31, 1997. The balance is expected to
fluctuate in the future based on changes in interest rates as
well as the amount and maturities of securities and MBSs
available for sale.
COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS
ENDED MARCH 31, 1997 AND 1996
Net Income
Net income for the three months ended March 31, 1997 was $415,000
compared to $454,000 for the three months ended March 31, 1996.
Net income for the nine months ended March 31, 1997 was $741,000
compared to $1,059,000 for the nine months ended March 31, 1996.
<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 decreased from $1.26 million for the three
months ended March 31, 1996 to $1.21 million for the comparable
three month period in 1997. Net interest income decreased for
this three month period due to a lower interest rate spread. Net
interest income increased from $3.46 million for the nine months
ended March 31, 1996 to $3.79 million for the comparable nine
month period in 1997. Net interest income increased due to a
higher interest rate spread.
Interest Income
Interest income was $2.88 million for the three months ended
March 31, 1996 compared to $2.82 million for the comparable three
month period in 1997. Interest income was $8.18 million for the
nine months ended March 31, 1996 compared to $8.52 million for
the comparable nine month period in 1997.
Interest on loans receivable increased for both the three months
and nine month periods ended March 31, 1997 compared to 1996
periods as a result of higher average loans outstanding for 1997,
offset by a lower yield. The weighted-average rate on loans
decreased from 7.83% at March 31, 1996 to 7.66% at March 31,
1997. Interest on mortgage-backed securities decreased from
$581,000 for the three month period ended March 31, 1996 compared
to $496,000 for the comparable three month period in 1997. This
decrease was a result of a lower average balance outstanding in
the three month period for 1997 compared to the 1996 period,
offset by a higher weighted-average yield on MBSs. Interest on
MBSs increased from $1.35 million for the nine month period ended
March 31, 1996 compared to $1.61 million for the comparable nine
month period in 1997. This increase was a result of a higher
average balance and weighted-average yield on MBSs. The
weighted-average rate on MBSs increased from 6.51% at March 31,
1996 to 6.92% at March 31, 1997. Interest on investment
securities decreased due to lower average balances and slightly
lower interest rates. The weighted-average rate on investment
securities decreased from 6.82% at March 31, 1996 to 6.77% at
March 31, 1997.
Interest on other interest-earning assets decreased due to lower
average balances. The components of interest-bearing assets
change from time to time based on the availability and interest
rates of loans, investment securities, and MBSs.
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Interest Expense
Interest expense remained substantially the same for all periods.
This was a result of a higher average balance offset by a
decrease in interest rates. The weighted-average rate on
interest-bearing liabilities was 4.85% at March 31, 1996 as
compared to 4.73% at March 31, 1997.
Provision for Loan Losses
Provision for loan losses are charged to income to bring the
total allowance for loan losses to a level considered adequate by
management to provide for loan losses based on prior loss
experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay, the
estimated value of any underlying collateral and current economic
conditions. Management also considers other factors relating to
the collectibility of the Savings Bank's loan portfolio.
For the three months ended March 31, 1997 the Savings Bank
established a provision for loan losses of $22,500 compared with
$15,000 for the three months ended March 31, 1996. For the nine
months ended March 31, 1997 the Savings Bank established a
provision for loan losses of $62,500 compared with $45,000 for
the nine months ended March 31, 1996.
Following is a summary of activity in the allowance for loan
losses for the nine months ended March 31, 1997 and 1996:
1997 1996
Balance, beginning of period $ 627,564 572,341
Loans charged off - consumer (6,025) (5,167)
Recoveries of loans previously
charged off - consumer - 360
Net charge offs (6,025) (4,807)
Provision charged to expense 62,500 45,000
Balance, end of period $ 684,039 612,534
Ratio of net charge-offs during
the period to average loans
outstanding during the period .01% .01%
The book value of nonaccrual loans at March 31, 1997 was $1.70
million compared to $546,000 at June 30, 1996. The average
balance of nonaccrual loans for the nine months ended March 31,
1997 was approximately $1.03 million. Allowance for losses on
nonaccrual loans amounted to approximately $85,000 and $27,000 at
March 31, 1997 and June 30, 1996, respectively. For the three
months and nine months ended March 31, 1997, gross interest
income which would have been recorded had nonaccrual loans been
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
current in accordance with their original terms amounted to
approximately $37,000 and$52,000, respectively. The amount of
interest income included in the Company's net earnings for these
loans for the three months and nine months ended March 31, 1997
was approximately $13,000 and $82,000, respectively.
The following table sets forth information with respect to the
Savings Bank's nonaccrual loans at March 31, 1997 and June 30,
1996:
1997 1996
(Dollars in thousands)
Loans accounted for on
a nonaccrual basis
Residential real estate $ 896 480
Commercial real estate 106 -
Commercial 365 21
Consumer 100 45
Mobile Homes 232 -
$ 1,699 546
Total loans delinquent 90 days
or more to net loans 1.61% .57%
Nonaccrual loans increased due to a number of factors. In
response to requests by the Office of Thrift Supervision, the
Savings Bank no longer charges advances from borrowers for taxes
and insurance for delinquent mortgage payments, nor dealer
reserve for delinquent consumer loan payments. The Savings Bank
has a dealer reserve account which exceeds mobile home loans
included above. A commercial loan with a past due balance of
$324,000 was brought current in April, 1997. Management believes
that the loan is well secured, and no loss is anticipated.
Also in response to a recent OTS examination, collections duties
were reassigned to other officers. However, decentralized
collection efforts of the Savings Bank have not been as effective
as the former method. Management is currently reviewing
collection efforts in order to reduce the level on nonperforming
loans. Management believes that the allowance for loan losses is
adequate. See Provision for Loan Losses. The Savings Bank does
not accrue interest on loans more than 90 days past due.
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Noninterest Income
Noninterest income decreased from $212,000 for the three months
ended March 31, 1996 to $165,000 for the three months ended
March 31, 1997. Noninterest income decreased from $491,000 for
the nine months ended March 31, 1996 to $459,000 for the nine
months ended March 31, 1997. The Savings Bank realized net gains
on sales of securities and MBSs of $35,000 for the three months
ended March 31, 1997 compared to $95,000 in 1996. Such gains
were $35,000 for the nine months ended March 31, 1997, compared
to $127,000 in 1996. Gains on sales of securities and MBSs are
not a stable source of income and no assurance can be given that
the Savings Bank will generate such gains in the future. Gain on
sale of MBSs held to maturity relate to the sale of small balance
pools, which are permitted to be sold prior to maturity under
Statement of Financial Accounting Standards No. 115.
Commissions on insurance and banking service charges increased
for both the three months and nine months ended March 31, 1997
over the comparable periods in 1996 due to increased activity.
Loan late charges decreased for both periods in 1997 over 1996
periods due to the collection of fewer late charges.
Noninterest Expense
Noninterest expense decreased from $793,000 for the three months
ended March 31, 1996 to $754,000 for the three months ended March
31, 1997. Noninterest expense increased from $2.42 million for
the nine months ended March 31, 1996 to $3.18 million for the
nine months ended March 31, 1997.
Compensation and benefits increased due to hiring of additional
employees, and salary increases, partially offset by lower ESOP
expense and lower bonuses. Under generally accepted accounting
principles, expense of the ESOP is affected by changes in the
market price of the Company's stock, which has been lower during
1997 as compared to 1996. ESOP expense will fluctuate in the
future based on changes in the market price of the Company's
stock. Occupancy and equipment expense increased as a result of
higher depreciation expense being recorded on the main office
remodeling and the purchase of ATM machines.
The SAIF special assessment recognized during the nine month
period ended March 31, 1997 is a result of legislation enacted
September 30, 1996 to recapitalize the Savings Association
Insurance Fund. The Savings Bank was assessed .657% of deposits
at March 31, 1995. The assessment of $779,000 was paid on
<PAGE>
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
November 28, 1996. SAIF deposit insurance premium decreased as
a result of a substantially lower assessment rate. Professional
fees increased for the three month period ended March 31, 1997
over the comparable period in 1996 as a result of services
performed in connection with the supervisory agreement and other
regulatory concerns.
Income Taxes
Income taxes decreased for the three and nine months ended March
31, 1997 compared with the same periods in 1996 due to lower
earnings before income taxes. The effective rate of income taxes
is affected by the relationship of nontaxable municipal interest
income to income before income taxes.
<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: Exhibit 11
(b) Reports on Form 8-K: No reports on Form 8-K have been filed
during the quarter for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SOUTHERN MISSOURI BANCORP, INC.
(Registrant)
Date: May 10, 1997 BY:
Donald R. Crandell,
Chief Executive Officer
Chief Financial Officer and
Duly Authorized Officer<PAGE>
Exhibit 11
SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
Primary
Average shares
outstanding 1,558,744 1,658,728 1,595,554 1,653,627
Net effect of dilutive
stock options - based
on the treasury stock
method using average
market price 35,306 44,972 35,307 39,732
Total 1,594,050 1,703,700 1,630,861 1,693,359
Net income $ 415,132 454,350 741,437 1,059,459
Earnings per share $ .26 .27 .45 .63
Fully Diluted
Average shares
outstanding 1,558,744 1,658,728 1,595,554 1,653,627
Net effect of dilutive
stock options - based
on the treasury stock
method using the period
end market price, if
greater than average
market price 39,326 44,972 39,069 40,649
Total 1,598,070 1,703,700 1,634,623 1,694,276
Net income $ 415,132 454,350 741,437 1,059,459
Earnings per share $ .26 .27 .45 .63
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,377,394
<INT-BEARING-DEPOSITS> 91,277
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 40,207,495
<INVESTMENTS-CARRYING> 4,787,323
<INVESTMENTS-MARKET> 4,869,920
<LOANS> 106,149,453
<ALLOWANCE> 684,038
<TOTAL-ASSETS> 165,688,165
<DEPOSITS> 124,309,184
<SHORT-TERM> 13,250,000
<LIABILITIES-OTHER> 1,882,116
<LONG-TERM> 289,224
<COMMON> 18,032
0
0
<OTHER-SE> 25,939,609
<TOTAL-LIABILITIES-AND-EQUITY> 165,688,165
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<INTEREST-TOTAL> 8,520,183
<INTEREST-DEPOSIT> 4,166,857
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<LOAN-LOSSES> 62,500
<SECURITIES-GAINS> 34,912
<EXPENSE-OTHER> 3,175,507
<INCOME-PRETAX> 1,012,688
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 741,437
<EPS-PRIMARY> .45
<EPS-DILUTED> 0
<YIELD-ACTUAL> 7.19
<LOANS-NON> 1,699,697
<LOANS-PAST> 0
<LOANS-TROUBLED> 143,915
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<ALLOWANCE-CLOSE> 684,038
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