Southern Missouri Bancorp, Inc. (“Company”)
(NASDAQ: SMBC), the parent corporation of Southern Bank (“Bank”),
today announced preliminary net income for the fourth quarter of
fiscal 2020 of $6.9 million, a decrease of $656,000, or 8.7%, as
compared to the same period of the prior fiscal year. The decrease
was attributable to increases in noninterest expense and provision
for loan losses, partially offset by increases in net interest
income and noninterest income. Preliminary net income was $.76 per
fully diluted common share for the fourth quarter of fiscal 2020, a
decrease of $.05 as compared to the $.81 per fully diluted common
share reported for the same period of the prior fiscal year. For
fiscal year 2020, preliminary net income was $27.5 million, a
decrease of $1.4 million, or 4.7%, as compared to the prior fiscal
year. Preliminary net income was $2.99 per fully diluted common
share for fiscal 2020, a decrease of $0.15 as compared to the $3.14
per fully diluted common share reported for fiscal 2019.
Highlights for the fourth quarter of fiscal
2020:
- Annualized return on average assets was 1.10%, while annualized
return on average common equity was 10.8%, as compared to 1.37% and
12.9%, respectively, in the same quarter a year ago, and 0.88% and
8.1%, respectively, in the third quarter of fiscal 2020, the linked
quarter.
- Earnings per common share (diluted) were $.76, down $.05, or
6.2%, as compared to the same quarter a year ago, and up $.21, or
38.2%, from the third quarter of fiscal 2020, the linked
quarter.
- Provision for loan losses was $1.9 million, an increase of $1.3
million, or 242.1%, as compared to the same period of the prior
year, and down $1.0 million, or 34.5%, as compared to the third
quarter of fiscal 2020, the linked quarter. The increase as
compared to the same quarter a year ago was attributable primarily
to the current quarter’s increase in watch status loans, an
increase in net charge offs, and continued uncertainty regarding
the economic environment resulting from the COVID-19 pandemic and
the potential impact on the Company’s borrowers, partially offset
by current quarter declines in nonperforming and delinquent loans.
Nonperforming assets were $11.2 million, or 0.44% of total assets,
at June 30, 2020, as compared to $24.8 million, or 1.12% of total
assets, at June 30, 2019, and $14.9 million, or 0.63% of total
assets, at March 31, 2020, the linked quarter end. The decrease
over the quarter and fiscal year primarily reflected progress by
the Company in resolving acquired nonperforming assets resulting
from the November 2018 acquisition of Gideon Bancshares Company and
its subsidiary, First Commercial Bank (“the Gideon
Acquisition”).
- Net loan growth for the fourth quarter of fiscal 2020 was
$174.1 million, resulting from $132.3 million in the Small Business
Administration’s Paycheck Protection Program (PPP) loans, as well
as the acquisition of $51.4 million in loans, at fair value, in the
Company’s acquisition of Central Federal Bancshares, Inc. (“Central
Federal”). Net loans are up $295.5 million, or 16.0%, for the full
fiscal year.
- Deposit balances increased $213.2 million in the fourth
quarter, partially attributable to the Central Federal acquisition,
which included the assumption of deposits totaling $46.7 million,
at fair value, as well as to business, consumer, and public unit
depositors holding additional funds in nonmaturity accounts.
Management notes that some businesses are holding additional funds
following PPP loan originations or as a result of deferring their
tax payments as allowed under the CARES Act. Consumers have
benefitted from the CARES Act economic impact payments and other
relief measures, and may have reduced discretionary spending.
Deposits are up $291.2 million, or 15.4%, in fiscal
2020.
- Net interest margin for the fourth quarter of fiscal 2020 was
3.75%, down from the 3.77% reported for the year ago period, and up
from the 3.63% figure reported for the third quarter of fiscal
2020, the linked quarter. Discount accretion on acquired loan
portfolios was modestly lower in the current quarter as compared to
the linked quarter, and down more significantly from the year ago
period. Additionally, as compared to the linked quarter, the
Company noted an increase in the amount of interest income
resulting from resolution of loans that had been previously
classified as nonaccrual.
- Noninterest income was up 35.4% for the fourth quarter of
fiscal 2020, as compared to the year ago period, and was up 31.4%
as compared to the third quarter of fiscal 2020, the linked
quarter. The current period included a significant increase in
gains on sales of residential mortgage loans originated for that
purpose, while the linked quarter was negatively impacted by an
impairment charge for mortgage servicing rights, as discussed in
detail below.
- Noninterest expense was up 26.9% for the fourth quarter of
fiscal 2020, as compared to the year ago period, and was up 14.2%
from the third quarter of fiscal 2020, the linked quarter. The
current quarter included significant non-recurring charges related
to the Central Federal acquisition.
Dividend Declared:
The Board of Directors, on July 21, 2020, declared a quarterly
cash dividend on common stock of $0.15, payable August 31, 2020, to
stockholders of record at the close of business on August 14, 2020,
marking the 105th consecutive quarterly dividend since the
inception of the Company. The Board of Directors and management
believe the payment of a quarterly cash dividend enhances
stockholder value and demonstrates our commitment to and confidence
in our future prospects.
Other News:
As the Company noted in a current report on Form 8-K filed May
26, 2020, the Company completed its acquisition of Central Federal
on May 22, 2020. The data systems conversion was completed over the
weekend of June 5-7, 2020.
As noted in the quarterly report on Form 10-Q filed May 11,
2020, after having closed lobbies except by appointment on March
23, 2020, the Company began re-opening its lobbies on May 4, 2020,
subject to guidance by state and local authorities. Lobbies remain
open at this time. A number of team members in administrative
functions continue to work remotely in order to limit the potential
spread of COVID-19.
Conference Call:
The Company will host a conference call to review the
information provided in this press release on Tuesday, July 28,
2020, at 3:30 p.m., central time. The call will be available live
to interested parties by calling 1-888-339-0709 in the United
States (Canada: 1-855-669-9657, international: 1-412-902-4189).
Participants should ask to be joined into the Southern Missouri
Bancorp (SMBC) call. Telephone playback will be available beginning
one hour following the conclusion of the call through August 10,
2020. The playback may be accessed by dialing 1-877-344-7529
(Canada: 1-855-669-9658, international: 1-412-317-0088), and using
the conference passcode 10146849.
Balance Sheet Summary:
The Company experienced balance sheet growth in fiscal 2020,
with total assets of $2.5 billion at June 30, 2020, reflecting an
increase of $327.8 million, or 14.8%, as compared to June 30, 2019.
Asset growth was comprised mainly of increases in loans, cash and
cash equivalents, and available-for-sale (“AFS”) securities.
Cash equivalents and time deposits were a combined $55.2
million, an increase of $18.9 million, or 51.8%, as compared to
June 30, 2019. AFS securities were $176.5 million at June 30, 2020,
an increase of $11.0 million, or 6.6%, as compared to June 30,
2019.
Loans, net of the allowance for loan losses, were $2.1 billion
at June 30, 2020, an increase of $295.5 million, or 16.0%, as
compared to June 30, 2019. This growth was inclusive of the Central
Federal acquisition, which added loans totaling $51.4 million at
fair value, as of the acquisition date. The portfolio primarily saw
growth in residential real estate loans, commercial loans,
commercial real estate loans, and funded balances in construction
loans, partially offset by declines in consumer loans. Commercial
loans were higher as a result of the PPP loans, which totaled
$132.3 million at June 30, 2020. Residential real estate loan
balances were higher as the Company saw increases in loans secured
by both 1-to-4 family and multifamily real estate. Commercial real
estate loans increased primarily due to loans secured by
nonresidential properties, combined with a small increase in loans
secured by agricultural real estate. Construction loan balances
were increased as a result of both draws on existing construction
loans and new loan originations, primarily secured by multifamily,
1-4 family, and non-owner occupied commercial properties.
Reductions in consumer loans consisted primarily of loans secured
by deposits, partially offset by a modest increase in other
consumer loans. Loans anticipated to fund in the next 90 days stood
at $86.6 million at June 30, 2020, as compared to $76.6 million at
March 31, 2020, and $83.3 million at June 30, 2019.
Nonperforming loans were $8.7 million, or 0.40% of gross loans,
at June 30, 2020, as compared to $11.4 million, or 0.57% of gross
loans at March 31, 2020, and $21.0 million, or 1.13% of gross loans
at June 30, 2019. Nonperforming assets were $11.2 million, or 0.44%
of total assets, at June 30, 2020, as compared to $14.9 million, or
0.63% of total assets, at March 31, 2020, and $24.8 million, or
1.12% of total assets, at June 30, 2019. The decrease in
nonperforming loans over the most recent quarter and over the
fiscal year was attributed primarily to the resolution of certain
nonperforming loans acquired in the Gideon Acquisition. The Gideon
Acquisition resulted in an increase in nonperforming loans of $12.9
million (at fair value) as of December 31, 2018, the quarter end
following the acquisition. At June 30, 2019, this group of
nonperforming loans had declined to $10.2 million, and they have
declined further to $1.8 million as of June 30, 2020. The decrease
in nonperforming loans was also the principal reason for the
decrease in nonperforming assets, although sales of some foreclosed
properties and recognition of lower valuations on others in the
current quarter also contributed.
Our allowance for loan losses at June 30, 2020, totaled $25.1
million, representing 1.16% of gross loans and 290.4% of
nonperforming loans, as compared to $23.5 million, representing
1.18% of gross loans and 205.7% of nonperforming loans at March 31,
2020, and $19.9 million, or 1.07% of gross loans and 94.7% of
nonperforming loans, at June 30, 2019. Despite continued
provisioning at relatively high levels as compared to net charge
offs, the ratio of the allowance to gross loans declined, as the
current quarter included significant growth in 100% SBA-guaranteed
loans under the PPP program, and acquired loans subject to purchase
accounting, and not allowance methodology. The allowance would have
represented 1.24% of gross loans other than PPP loans. For all
impaired loans, the Company has measured impairment under ASC
310-10-35. Management believes the allowance for loan losses at
June 30, 2020, is adequate, based on that measurement; however,
there remains significant uncertainty regarding the possible length
of the COVID-19 pandemic and the aggregate impact that it will have
on global and regional economies, including uncertainty regarding
the effectiveness of recent efforts by the U.S. government and
Federal Reserve to respond to the pandemic and its economic impact.
Management considered the impact of the pandemic on its consumer
and business borrowers, particularly those business borrowers most
affected by efforts to contain the pandemic, including our
borrowers in the retail and multi-tenant retail industry,
restaurants, and hotels.
At June 30, 2020, following regulatory guidance encouraging
financial institutions to work with borrowers affected by the
COVID-19 pandemic, the Company had granted payment deferrals or
interest-only modifications for 906 loans totaling $380.2 million.
(See table on page 10, below.) These are loans that were otherwise
current and performing prior to the COVID-19 pandemic, but for
which borrowers anticipated difficulties in the coming months due
to impact of the pandemic. Generally, deferrals were granted for
three-month periods, while interest-only modifications were for six
month periods. These deferrals and modifications were made in
compliance with provisions of the CARES Act that allows financial
institutions the option to temporarily suspend certain requirements
under U.S. GAAP related to troubled debt restructurings (TDRs), and
the Company has not accounted for these loans as TDRs.
The Company has been closely tracking financial performance of
our larger relationships which requested these payment deferrals or
modifications, and notes that of our commercial-purpose (including
agriculture, non-residential construction, and multifamily) loans
originally granted deferrals, approximately 40% have returned to
principal and interest payments, 35% have converted to
interest-only payments for an additional period of time (generally,
three months), 18% have been granted an additional three-month
deferral, and for the remainder, the original three-month deferral
period has not yet elapsed. Our loans secured by hotels have been
the category most negatively impacted to date. As of July 24, 2020,
four loans secured by hotels have been granted additional three
month deferrals. These loans include $20.9 million in commercial
real estate and $4.4 million in construction loans, all of which
were downgraded to watch status. To date, no restaurant borrowers
have been granted additional deferrals, while approximately 62%
have returned to principal and interest payments. Most of the
remainder have been granted a three month period of interest-only
payments. Similarly, within our multi-tenant retail portfolio,
approximately 87% of those borrowers originally granted a deferral
period have returned to principal and interest payments, while the
remainder has been granted a three month period of interest-only
payments. The situation remains subject to change, and it is
possible that some borrowers that have not been granted additional
deferrals will request them and that our best option in some
circumstances may be to grant them. The Company has noted very few
residential or consumer borrowers that have requested additional
deferrals as of July 24, 2020.
The Company has continued working towards adoption of ASU
2016-13, regarding the current expected credit loss (CECL)
standard. Based on FASB implementation timelines, the standard was
to be effective for the Company on July 1, 2020, following the end
of our current fiscal year. Under the Coronavirus Aid, Relief and
Economic Security (CARES) Act, the Company has the option to
temporarily delay implementation of the standard until the earlier
of December 31, 2020, or the termination of the declared national
emergency related to the COVID-19 pandemic. At this time, the
Company is continuing to prepare as if we will adopt effective July
1, 2020, but we will continue to monitor the situation and evaluate
our options.
Total liabilities were $2.3 billion at June 30, 2020, an
increase of $307.8 million, or 15.6%, as compared to June 30,
2019.
Deposits were $2.2 billion at June 30, 2020, an increase of
$291.2 million, or 15.4%, as compared to June 30, 2019. This growth
was inclusive of the Central Federal acquisition, which added
deposits totaling $46.7 million at fair value, as of the
acquisition date. Deposit growth was partially offset by a $9.9
million net reduction in brokered deposits, which reflected a
decrease in brokered time deposits of $21.6 million, and an
increase in brokered money market deposits of $11.7 million.
Brokered time deposits were $23.3 million, and brokered money
market deposits were $20.0 million, at June 30, 2020. Better core
liquidity over the previous two quarters has reduced the Company’s
need for wholesale funding. Public unit balances were $305.3
million at June 30, 2020, reflecting an increase of $38.4 million
as compared to June 30, 2019, with the increase primarily resulting
from higher nonmaturity balances held by our existing customer
base. In total, deposit balances saw increases in interest-bearing
transaction accounts, noninterest-bearing transaction accounts,
money market deposit accounts, and savings accounts, partially
offset by declines in certificates of deposit. The average
loan-to-deposit ratio for the fourth quarter of fiscal 2020 was
98.9%, as compared to 97.6% for the same period of the prior fiscal
year.
FHLB advances were $70.0 million at June 30, 2020, an increase
of $25.1 million, or 55.9%, as compared to June 30, 2019, with the
increase primarily attributable to the Company’s use of this
funding source to fund increases in loans, cash balances, and
securities in excess of our increases in deposits and retained
earnings. The increase since the prior fiscal year end is comprised
entirely of term advances; through March 31, 2020, the Company had
utilized overnight funding during much of the fiscal year, but
deposit growth since then has been more than enough to fund our
significant loan growth as the Company originated PPP loans. The
Company is reviewing the availability of the Federal Reserve’s PPP
Lending Facility, but has not utilized it to date, given our
improved liquidity position and the lack of attractive alternative
investment options. Over the past several years, the Company has
worked to move public unit and business customers from a swept
repurchase agreement product, which required the use of the
Company’s AFS securities portfolio to collateralize those
borrowings, to a reciprocal deposit product. During the first
quarter of fiscal 2020, the final customers utilizing the sweep
product were migrated, and the Company saw a reduction of $4.4
million in this funding source as compared to June 30, 2019.
The Company’s stockholders’ equity was $258.3 million at June
30, 2020, an increase of $20.0 million, or 8.4%, as compared to
June 30, 2019. The increase was attributable primarily to retained
earnings, partially offset by cash dividends paid and by
repurchases during the fiscal year of 182,598 Company shares
acquired for $5.8 million, for an average price of $31.61 per
share. As the Company noted in its current report on Form 8-K filed
March 23, 2020, activity under the repurchase program was
temporarily suspended effective after the close of the market on
Thursday, March 26, 2020.
Quarterly Income Statement Summary:
The Company’s net interest income for the three-month period
ended June 30, 2020, was $21.8 million, an increase of $2.8
million, or 14.7%, as compared to the same period of the prior
fiscal year. The increase was attributable primarily to a 15.5%
increase in the average balance of interest-earning assets,
partially offset by a decrease in net interest margin to 3.75% in
the current three-month period, from 3.77% in the same period a
year ago.
Loan discount accretion and deposit premium amortization related
to the Company’s August 2014 acquisition of Peoples Bank of the
Ozarks (Peoples), the June 2017 acquisition of Capaha Bank
(Capaha), the February 2018 acquisition of Southern Missouri Bank
of Marshfield (SMB-Marshfield), the Gideon Acquisition, and the May
2020 acquisition of Central Federal resulted in $361,000 in net
interest income for the three-month period ended June 30, 2020, as
compared to $615,000 in net interest income for the same period a
year ago. The decline is attributable to expected reductions in
discount accretion as additional time has elapsed since the loan
portfolios were acquired and balances have declined, partially
offset by the mid-quarter impact of the Central Federal
acquisition, although the acquired loan book and resulting discount
accretion will be relatively small. The Company generally expects
this component of net interest income will continue to decline over
time, although volatility may occur to the extent we have periodic
resolutions of specific credit impaired loans. Combined, these
components of net interest income contributed six basis points to
net interest margin in the three-month period ended June 30, 2020,
as compared to a contribution of 12 basis points in the same period
of the prior fiscal year, and as compared to the eight basis point
contribution in the linked quarter, ended March 31, 2020, when net
interest margin was 3.63%. Additionally, in the current period, the
Company recognized an additional $159,000 in interest income as a
result of the resolution of a limited number of nonperforming
loans. This recognition of interest income contributed three basis
points to the net interest margin in the current period, without
material comparable items in the linked period or same period a
year ago.
The provision for loan losses for the three-month period ended
June 30, 2020, was $1.9 million, as compared to $546,000 in the
same period of the prior fiscal year. The increase as compared to
the same quarter a year ago was attributable primarily to the
current quarter’s increase in watch status loans, an increase in
net charge offs, and continued uncertainty regarding the economic
environment resulting from the COVID-19 pandemic and the potential
impact on the Company’s borrowers, partially offset by current
quarter declines in nonperforming and delinquent loans. Stronger
loan growth was attributable primarily to the 100% SBA-guaranteed
PPP loans and acquired loans that are subject to purchase
accounting requirements, rather than allowance methodology, and
therefore had limited impact on the required provisioning. As a
percentage of average loans outstanding, the provision for loan
losses in the current three-month period represented a charge of
0.35% (annualized), while the Company recorded net charge offs
during the period of 0.04% (annualized). During the same period of
the prior fiscal year, the provision for loan losses as a
percentage of average loans outstanding represented a charge of
0.12% (annualized), while the Company recorded net charge offs of
0.02% (annualized).
The Company’s noninterest income for the three-month period
ended June 30, 2020, was $5.1 million, an increase of $1.3 million,
or 35.4%, as compared to the same period of the prior fiscal year.
In the current period, increases in gains realized on the sale of
residential real estate loans originated for that purpose, bank
card interchange income, loan servicing fees, and a $123,000
bargain purchase gain on the Central Federal acquisition were
partially offset by decreases in deposit account service charges
and other loan fees. Gains realized on the sale of residential real
estate loans originated for that purpose increased as origination
of these loans more than tripled, while pricing declined slightly;
originations were primarily refinancings, though purchase activity
was higher as well. Our portfolio of serviced loans increased by
13.2% during the quarter. Bank card interchange income increased as
a result of a 14.0% increase in bank card dollar volume and
incentive benefits under a new affiliation contract. Loan servicing
fees were increased as compared to the same period a year ago as a
result of the inclusion in the three-month period ended June 30,
2019, of a $207,000 charge to reduce the carrying value of mortgage
servicing rights, without comparable charges in the current
period.
Noninterest expense for the three-month period ended June 30,
2020, was $16.2 million, an increase of $3.4 million, or 26.9%, as
compared to the same period of the prior fiscal year. The increase
was attributable primarily to increases in compensation and
benefits, occupancy and data processing expenses, losses and
expenses on foreclosed real estate, bank card network expense,
legal and professional fees, advertising, and other expenses,
including losses on the disposition of fixed assets and
provisioning for off-balance sheet credit exposure. The Company
incurred $1.1 million in charges related to merger and acquisition
activity in the current quarter, with no material charges in the
same quarter a year ago. These charges included data processing
charges, legal and professional fees, severance and retention
payments, and other charges. Additionally, the current period
included a non-recurring loss on the disposition of fixed assets
totaling $149,000, attributable to the pending sale of a property
acquired in the Capaha acquisition which is no longer in service.
Based on the same qualitative evaluation of loss exposure utilized
in the allowance for loan losses, the Company saw an increase in
its off-balance sheet credit exposure, resulting in a charge of
$132,000 in the current period, as compared to a recovery of
$46,000 in the same period a year ago. Following the March 31,
2020, quarter, the FDIC’s temporary application of credits to the
deposit insurance assessments due from smaller banks, such as the
Company’s subsidiary, was mostly exhausted for our institution;
deposit insurance premium expense was reduced as compared to the
same period a year ago primarily due to benefits to the Company’s
assessment rate resulting from the reduction in nonperforming
assets as compared to the same period a year ago. The efficiency
ratio for the three-month period ended June 30, 2020, was 60.4%, as
compared to 56.2% in the same period of the prior fiscal year, with
the deterioration attributable primarily to current-period charges
related to the acquisition.
The income tax provision for the three-month period ended June
30, 2020, was $1.9 million, an increase of 0.4% as compared to the
same period of the prior fiscal year, as lower pre-tax income was
offset by an increase in the effective tax rate, to 21.2%, as
compared to 19.7% in the same period a year ago, with some
non-deductible acquisition-related charges contributing to the
increase. For the full fiscal year, the effective tax rate was
20.0% for fiscal 2020, as compared to 19.6% for fiscal 2019, with
the increase primarily attributable to a reduction in
tax-advantaged investments in fiscal 2020.
Forward-Looking Information:
Except for the historical information contained herein, the
matters discussed in this press release may be deemed to be
forward-looking statements that are subject to known and unknown
risks, uncertainties, and other factors that could cause the actual
results to differ materially from the forward-looking statements,
including: potential adverse impacts to the economic conditions in
the Company’s local market areas, other markets where the Company
has lending relationships, or other aspects of the Company’s
business operations or financial markets, generally, resulting from
the ongoing COVID-19 pandemic and any governmental or societal
responses thereto; expected cost savings, synergies and other
benefits from our merger and acquisition activities might not be
realized to the extent anticipated, within the anticipated time
frames, or at all, and costs or difficulties relating to
integration matters, including but not limited to customer and
employee retention, might be greater than expected; the strength of
the United States economy in general and the strength of the local
economies in which we conduct operations; fluctuations in interest
rates and in real estate values; monetary and fiscal policies of
the FRB and the U.S. Government and other governmental initiatives
affecting the financial services industry; the risks of lending and
investing activities, including changes in the level and direction
of loan delinquencies and write-offs and changes in estimates of
the adequacy of the allowance for loan losses; our ability to
access cost-effective funding; the timely development of and
acceptance of our new products and services and the perceived
overall value of these products and services by users, including
the features, pricing and quality compared to competitors' products
and services; fluctuations in real estate values and both
residential and commercial real estate markets, as well as
agricultural business conditions; demand for loans and deposits;
legislative or regulatory changes that adversely affect our
business; changes in accounting principles, policies, or
guidelines; results of regulatory examinations, including the
possibility that a regulator may, among other things, require an
increase in our reserve for loan losses or write-down of assets;
the impact of technological changes; and our success at managing
the risks involved in the foregoing. Any forward-looking statements
are based upon management’s beliefs and assumptions at the time
they are made. We undertake no obligation to publicly update or
revise any forward-looking statements or to update the reasons why
actual results could differ from those contained in such
statements, whether as a result of new information, future events
or otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking statements discussed might not
occur, and you should not put undue reliance on any forward-looking
statements.
Southern Missouri Bancorp, Inc. |
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
INFORMATION |
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Summary Balance Sheet
Data as of: |
|
June 30, |
|
Mar. 31, |
|
Dec. 31, |
|
Sep. 30, |
|
June 30, |
|
(dollars in thousands,
except per share data) |
|
|
2020 |
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|
2020 |
|
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2019 |
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2019 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and time
deposits |
|
$ |
55,219 |
|
|
$ |
57,078 |
|
|
$ |
42,015 |
|
|
$ |
32,394 |
|
|
$ |
36,369 |
|
|
Available for sale
securities |
|
|
176,524 |
|
|
|
180,592 |
|
|
|
175,843 |
|
|
|
171,006 |
|
|
|
165,535 |
|
|
FHLB/FRB membership stock |
|
|
10,753 |
|
|
|
13,054 |
|
|
|
12,522 |
|
|
|
12,083 |
|
|
|
9,583 |
|
|
Loans receivable, gross |
|
|
2,167,067 |
|
|
|
1,991,328 |
|
|
|
1,943,599 |
|
|
|
1,895,207 |
|
|
|
1,866,308 |
|
|
Allowance for loan
losses |
|
|
25,138 |
|
|
|
23,508 |
|
|
|
20,814 |
|
|
|
20,710 |
|
|
|
19,903 |
|
|
Loans receivable, net |
|
|
2,141,929 |
|
|
|
1,967,820 |
|
|
|
1,922,785 |
|
|
|
1,874,497 |
|
|
|
1,846,405 |
|
|
Bank-owned life insurance |
|
|
43,363 |
|
|
|
39,095 |
|
|
|
38,847 |
|
|
|
38,593 |
|
|
|
38,337 |
|
|
Intangible assets |
|
|
21,789 |
|
|
|
21,573 |
|
|
|
22,423 |
|
|
|
22,889 |
|
|
|
23,328 |
|
|
Premises and equipment |
|
|
65,106 |
|
|
|
64,705 |
|
|
|
65,006 |
|
|
|
65,480 |
|
|
|
62,727 |
|
|
Other assets |
|
|
27,474 |
|
|
|
30,531 |
|
|
|
32,408 |
|
|
|
34,265 |
|
|
|
32,118 |
|
|
Total assets |
|
$ |
2,542,157 |
|
|
$ |
2,374,448 |
|
|
$ |
2,311,849 |
|
|
$ |
2,251,207 |
|
|
$ |
2,214,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
|
$ |
1,868,799 |
|
|
$ |
1,738,379 |
|
|
$ |
1,691,010 |
|
|
$ |
1,663,874 |
|
|
$ |
1,674,806 |
|
|
Noninterest-bearing
deposits |
|
|
316,048 |
|
|
|
233,268 |
|
|
|
223,604 |
|
|
|
208,646 |
|
|
|
218,889 |
|
|
Securities sold under
agreements to repurchase |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,376 |
|
|
FHLB advances |
|
|
70,024 |
|
|
|
123,361 |
|
|
|
114,646 |
|
|
|
103,327 |
|
|
|
44,908 |
|
|
Note payable |
|
|
- |
|
|
|
3,000 |
|
|
|
3,000 |
|
|
|
3,000 |
|
|
|
3,000 |
|
|
Other liabilities |
|
|
13,797 |
|
|
|
11,469 |
|
|
|
15,627 |
|
|
|
15,030 |
|
|
|
14,988 |
|
|
Subordinated debt |
|
|
15,142 |
|
|
|
15,118 |
|
|
|
15,093 |
|
|
|
15,068 |
|
|
|
15,043 |
|
|
Total liabilities |
|
|
2,283,810 |
|
|
|
2,124,595 |
|
|
|
2,062,980 |
|
|
|
2,008,945 |
|
|
|
1,976,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stockholders'
equity |
|
|
258,347 |
|
|
|
249,853 |
|
|
|
248,869 |
|
|
|
242,262 |
|
|
|
238,392 |
|
|
Total stockholders'
equity |
|
|
258,347 |
|
|
|
249,853 |
|
|
|
248,869 |
|
|
|
242,262 |
|
|
|
238,392 |
|
|
Total liabilities and
stockholders' equity |
|
$ |
2,542,157 |
|
|
$ |
2,374,448 |
|
|
$ |
2,311,849 |
|
|
$ |
2,251,207 |
|
|
$ |
2,214,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity to assets ratio |
|
|
10.16 |
% |
|
|
10.52 |
% |
|
|
10.76 |
% |
|
|
10.76 |
% |
|
|
10.77 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding |
|
|
9,127,390 |
|
|
|
9,128,290 |
|
|
|
9,206,783 |
|
|
|
9,201,783 |
|
|
|
9,289,308 |
|
|
Less: Restricted common
shares not vested |
|
|
28,025 |
|
|
|
28,925 |
|
|
|
24,900 |
|
|
|
25,975 |
|
|
|
28,250 |
|
|
Common shares for book value
determination |
|
|
9,099,365 |
|
|
|
9,099,365 |
|
|
|
9,181,883 |
|
|
|
9,175,808 |
|
|
|
9,261,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per common
share |
|
$ |
28.39 |
|
|
$ |
27.46 |
|
|
$ |
27.10 |
|
|
$ |
26.40 |
|
|
$ |
25.74 |
|
|
Closing market price |
|
|
24.30 |
|
|
|
24.27 |
|
|
|
38.36 |
|
|
|
36.43 |
|
|
|
34.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming asset
data as of: |
|
June 30, |
|
Mar. 31, |
|
Dec. 31, |
|
Sep. 30, |
|
June 30, |
|
(dollars in
thousands) |
|
|
2020 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans |
|
$ |
8,657 |
|
|
$ |
11,428 |
|
|
$ |
10,419 |
|
|
$ |
14,021 |
|
|
$ |
21,013 |
|
|
Accruing loans 90 days or more
past due |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
Total nonperforming
loans |
|
|
8,657 |
|
|
|
11,428 |
|
|
|
10,420 |
|
|
|
14,021 |
|
|
|
21,013 |
|
|
Other real estate owned
(OREO) |
|
|
2,561 |
|
|
|
3,401 |
|
|
|
3,668 |
|
|
|
3,820 |
|
|
|
3,723 |
|
|
Personal property
repossessed |
|
|
9 |
|
|
|
38 |
|
|
|
26 |
|
|
|
71 |
|
|
|
29 |
|
|
Total nonperforming
assets |
|
$ |
11,227 |
|
|
$ |
14,867 |
|
|
$ |
14,114 |
|
|
$ |
17,912 |
|
|
$ |
24,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming assets to
total assets |
|
|
0.44 |
% |
|
|
0.63 |
% |
|
|
0.61 |
% |
|
|
0.80 |
% |
|
|
1.12 |
% |
|
Total nonperforming loans to
gross loans |
|
|
0.40 |
% |
|
|
0.57 |
% |
|
|
0.54 |
% |
|
|
0.74 |
% |
|
|
1.13 |
% |
|
Allowance for loan losses to
nonperforming loans |
|
|
290.38 |
% |
|
|
205.71 |
% |
|
|
199.75 |
% |
|
|
147.71 |
% |
|
|
94.72 |
% |
|
Allowance for loan losses to
gross loans |
|
|
1.16 |
% |
|
|
1.18 |
% |
|
|
1.07 |
% |
|
|
1.09 |
% |
|
|
1.07 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Performing troubled debt
restructurings (1) |
|
$ |
8,580 |
|
|
$ |
14,196 |
|
|
$ |
14,814 |
|
|
$ |
12,432 |
|
|
$ |
13,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Nonperforming troubled debt restructurings are included with
nonaccrual loans or accruing loans 90 days or more past due. |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three-month period ended |
Quarterly Average
Balance Sheet Data: |
|
June 30, |
|
Mar. 31, |
|
Dec. 31, |
|
Sep. 30, |
|
June 30, |
|
(dollars in
thousands) |
|
|
2020 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing cash
equivalents |
|
$ |
10,380 |
|
|
$ |
7,363 |
|
|
$ |
6,322 |
|
|
$ |
7,001 |
|
|
$ |
6,079 |
|
|
Available for sale securities
and membership stock |
|
|
188,497 |
|
|
|
184,389 |
|
|
|
183,748 |
|
|
|
179,623 |
|
|
|
174,063 |
|
|
Loans receivable, gross |
|
|
2,127,181 |
|
|
|
1,950,887 |
|
|
|
1,903,230 |
|
|
|
1,865,344 |
|
|
|
1,833,344 |
|
|
Total interest-earning
assets |
|
|
2,326,058 |
|
|
|
2,142,639 |
|
|
|
2,093,300 |
|
|
|
2,051,968 |
|
|
|
2,013,486 |
|
|
Other assets |
|
|
194,651 |
|
|
|
180,981 |
|
|
|
184,028 |
|
|
|
184,415 |
|
|
|
185,403 |
|
|
Total assets |
|
$ |
2,520,709 |
|
|
$ |
2,323,620 |
|
|
$ |
2,277,328 |
|
|
$ |
2,236,383 |
|
|
$ |
2,198,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
|
$ |
1,838,606 |
|
|
$ |
1,729,327 |
|
|
$ |
1,674,198 |
|
|
$ |
1,660,994 |
|
|
$ |
1,652,831 |
|
|
Securities sold under
agreements to repurchase |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
329 |
|
|
|
4,463 |
|
|
FHLB advances |
|
|
83,130 |
|
|
|
83,916 |
|
|
|
99,728 |
|
|
|
82,192 |
|
|
|
51,304 |
|
|
Note payable |
|
|
1,187 |
|
|
|
3,000 |
|
|
|
3,000 |
|
|
|
3,000 |
|
|
|
3,000 |
|
|
Subordinated debt |
|
|
15,130 |
|
|
|
15,105 |
|
|
|
15,080 |
|
|
|
15,055 |
|
|
|
15,031 |
|
|
Total interest-bearing
liabilities |
|
|
1,938,053 |
|
|
|
1,831,348 |
|
|
|
1,792,006 |
|
|
|
1,761,570 |
|
|
|
1,726,629 |
|
|
Noninterest-bearing
deposits |
|
|
311,555 |
|
|
|
223,865 |
|
|
|
222,187 |
|
|
|
218,755 |
|
|
|
224,932 |
|
|
Other noninterest-bearing
liabilities |
|
|
15,937 |
|
|
|
17,634 |
|
|
|
17,533 |
|
|
|
16,014 |
|
|
|
12,548 |
|
|
Total liabilities |
|
|
2,265,545 |
|
|
|
2,072,847 |
|
|
|
2,031,726 |
|
|
|
1,996,339 |
|
|
|
1,964,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stockholders'
equity |
|
|
255,164 |
|
|
|
250,773 |
|
|
|
245,602 |
|
|
|
240,044 |
|
|
|
234,780 |
|
|
Total stockholders'
equity |
|
|
255,164 |
|
|
|
250,773 |
|
|
|
245,602 |
|
|
|
240,044 |
|
|
|
234,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity |
|
$ |
2,520,709 |
|
|
$ |
2,323,620 |
|
|
$ |
2,277,328 |
|
|
$ |
2,236,383 |
|
|
$ |
2,198,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three-month period ended |
Quarterly Summary
Income Statement Data: |
|
June 30, |
|
Mar. 31, |
|
Dec. 31, |
|
Sep. 30, |
|
June 30, |
|
(dollars in thousands,
except per share data) |
|
|
2020 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
$ |
18 |
|
|
$ |
33 |
|
|
$ |
31 |
|
|
$ |
46 |
|
|
$ |
38 |
|
|
Available for sale
securities and membership stock |
|
|
1,146 |
|
|
|
1,218 |
|
|
|
1,194 |
|
|
|
1,236 |
|
|
|
1,220 |
|
|
Loans receivable |
|
|
26,099 |
|
|
|
24,969 |
|
|
|
25,421 |
|
|
|
25,640 |
|
|
|
24,789 |
|
|
Total interest
income |
|
|
27,263 |
|
|
|
26,220 |
|
|
|
26,646 |
|
|
|
26,922 |
|
|
|
26,047 |
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
4,923 |
|
|
|
6,135 |
|
|
|
6,448 |
|
|
|
6,578 |
|
|
|
6,422 |
|
|
Securities sold under
agreements to repurchase |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10 |
|
|
FHLB advances |
|
|
398 |
|
|
|
439 |
|
|
|
573 |
|
|
|
522 |
|
|
|
352 |
|
|
Note payable |
|
|
11 |
|
|
|
31 |
|
|
|
34 |
|
|
|
37 |
|
|
|
38 |
|
|
Subordinated debt |
|
|
151 |
|
|
|
197 |
|
|
|
214 |
|
|
|
225 |
|
|
|
232 |
|
|
Total interest
expense |
|
|
5,483 |
|
|
|
6,802 |
|
|
|
7,269 |
|
|
|
7,362 |
|
|
|
7,054 |
|
|
Net interest income |
|
|
21,780 |
|
|
|
19,418 |
|
|
|
19,377 |
|
|
|
19,560 |
|
|
|
18,993 |
|
|
Provision for loan losses |
|
|
1,868 |
|
|
|
2,850 |
|
|
|
388 |
|
|
|
896 |
|
|
|
546 |
|
|
Noninterest income |
|
|
5,066 |
|
|
|
3,856 |
|
|
|
4,334 |
|
|
|
4,101 |
|
|
|
3,741 |
|
|
Noninterest expense |
|
|
16,216 |
|
|
|
14,196 |
|
|
|
13,685 |
|
|
|
12,961 |
|
|
|
12,778 |
|
|
Income taxes |
|
|
1,861 |
|
|
|
1,129 |
|
|
|
1,921 |
|
|
|
1,976 |
|
|
|
1,853 |
|
|
Net income |
|
$ |
6,901 |
|
|
$ |
5,099 |
|
|
$ |
7,717 |
|
|
$ |
7,828 |
|
|
$ |
7,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common
share |
|
$ |
0.76 |
|
|
$ |
0.55 |
|
|
$ |
0.84 |
|
|
$ |
0.85 |
|
|
$ |
0.81 |
|
|
Diluted earnings per common
share |
|
|
0.76 |
|
|
|
0.55 |
|
|
|
0.84 |
|
|
|
0.85 |
|
|
|
0.81 |
|
|
Dividends per common
share |
|
|
0.15 |
|
|
|
0.15 |
|
|
|
0.15 |
|
|
|
0.15 |
|
|
|
0.13 |
|
|
Average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
9,128,000 |
|
|
|
9,197,000 |
|
|
|
9,202,000 |
|
|
|
9,232,000 |
|
|
|
9,316,000 |
|
|
Diluted |
|
|
9,130,000 |
|
|
|
9,205,000 |
|
|
|
9,213,000 |
|
|
|
9,244,000 |
|
|
|
9,328,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
1.10 |
% |
|
|
0.88 |
% |
|
|
1.36 |
% |
|
|
1.40 |
% |
|
|
1.37 |
% |
|
Return on average common
stockholders' equity |
|
|
10.8 |
% |
|
|
8.1 |
% |
|
|
12.6 |
% |
|
|
13.0 |
% |
|
|
12.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin |
|
|
3.75 |
% |
|
|
3.63 |
% |
|
|
3.70 |
% |
|
|
3.81 |
% |
|
|
3.77 |
% |
|
Net interest spread |
|
|
3.56 |
% |
|
|
3.40 |
% |
|
|
3.47 |
% |
|
|
3.58 |
% |
|
|
3.54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio |
|
|
60.4 |
% |
|
|
61.0 |
% |
|
|
57.7 |
% |
|
|
54.8 |
% |
|
|
56.2 |
% |
|
Loan portfolio as of
June 30, 2020 |
|
Balance |
|
Payment |
|
Interest-only |
(dollars in
thousands) |
|
Outstanding |
|
Deferrals |
|
Modifications |
|
|
|
|
|
|
|
1- to 4-family residential
loans |
|
$ |
429,894 |
|
$ |
13,385 |
|
$ |
21,194 |
Multifamily residential
loans |
|
|
197,463 |
|
|
1,912 |
|
|
28,101 |
Total residential loans |
|
|
627,357 |
|
|
15,297 |
|
|
49,295 |
1- to 4-family owner-occupied
construction loans |
|
|
24,267 |
|
|
- |
|
|
- |
1- to 4-family speculative
construction loans |
|
|
13,284 |
|
|
- |
|
|
- |
Multifamily construction
loans |
|
|
44,904 |
|
|
- |
|
|
31 |
Other construction loans |
|
|
25,017 |
|
|
4,367 |
|
|
290 |
Total construction loan balances drawn |
|
|
107,472 |
|
|
4,367 |
|
|
321 |
Agricultural real estate
loans |
|
|
185,312 |
|
|
2,803 |
|
|
5,537 |
Loans for vacant land -
developed, undeveloped, and other purposes |
|
|
58,580 |
|
|
106 |
|
|
4,196 |
Owner-occupied commercial real
estate loans to: |
|
|
|
|
|
|
Churches and nonprofits |
|
|
18,771 |
|
|
- |
|
|
4,213 |
Non-professional services |
|
|
17,404 |
|
|
333 |
|
|
3,160 |
Retail |
|
|
25,636 |
|
|
3,285 |
|
|
3,960 |
Automobile dealerships |
|
|
22,745 |
|
|
- |
|
|
3,977 |
Healthcare providers |
|
|
8,332 |
|
|
- |
|
|
334 |
Restaurants |
|
|
46,498 |
|
|
22,988 |
|
|
10,745 |
Convenience stores |
|
|
22,793 |
|
|
- |
|
|
14,817 |
Automotive services |
|
|
7,698 |
|
|
- |
|
|
1,509 |
Manufacturing |
|
|
18,706 |
|
|
4,938 |
|
|
3,140 |
Professional services |
|
|
15,218 |
|
|
248 |
|
|
719 |
Warehouse/distribution |
|
|
4,737 |
|
|
485 |
|
|
- |
Grocery |
|
|
5,617 |
|
|
- |
|
|
26 |
Other |
|
|
14,629 |
|
|
- |
|
|
2,417 |
Total owner-occupied commercial real estate loans |
|
|
228,784 |
|
|
32,277 |
|
|
49,017 |
Non-owner-occupied commercial
real estate loans to: |
|
|
|
|
|
|
Care facilities |
|
|
32,605 |
|
|
- |
|
|
15,943 |
Non-professional services |
|
|
15,073 |
|
|
- |
|
|
3,864 |
Retail |
|
|
32,741 |
|
|
3,125 |
|
|
1,537 |
Healthcare providers |
|
|
22,546 |
|
|
- |
|
|
1,489 |
Restaurants |
|
|
47,813 |
|
|
17,418 |
|
|
5,839 |
Convenience stores |
|
|
9,097 |
|
|
- |
|
|
1,285 |
Automotive services |
|
|
6,409 |
|
|
- |
|
|
- |
Hotels |
|
|
81,159 |
|
|
39,622 |
|
|
26,092 |
Manufacturing |
|
|
5,161 |
|
|
- |
|
|
2,011 |
Storage units |
|
|
14,462 |
|
|
- |
|
|
3,711 |
Professional services |
|
|
13,039 |
|
|
- |
|
|
723 |
Multi-tenant retail |
|
|
77,873 |
|
|
21,817 |
|
|
35,791 |
Warehouse/distribution |
|
|
26,323 |
|
|
141 |
|
|
3,809 |
Other |
|
|
30,442 |
|
|
- |
|
|
8,055 |
Total non-owner-occupied commercial real estate loans |
|
|
414,743 |
|
|
82,123 |
|
|
110,149 |
Total commercial real estate loans |
|
|
887,419 |
|
|
117,309 |
|
|
168,899 |
Home equity lines of
credit |
|
|
43,149 |
|
|
91 |
|
|
- |
Deposit-secured loans |
|
|
5,571 |
|
|
45 |
|
|
1 |
All other consumer loans |
|
|
32,047 |
|
|
1,319 |
|
|
199 |
Total consumer loans |
|
|
80,767 |
|
|
1,455 |
|
|
200 |
Agricultural production and
equipment loans |
|
|
100,342 |
|
|
400 |
|
|
586 |
Loans to municipalities or
other public units |
|
|
10,595 |
|
|
- |
|
|
- |
Commercial and industrial
loans to: |
|
|
|
|
|
|
Forestry, fishing, and hunting |
|
|
14,401 |
|
|
50 |
|
|
612 |
Construction |
|
|
29,514 |
|
|
125 |
|
|
148 |
Finance and insurance |
|
|
50,954 |
|
|
- |
|
|
20 |
Real estate rental and leasing |
|
|
26,426 |
|
|
- |
|
|
1,299 |
Healthcare and social assistance |
|
|
38,674 |
|
|
- |
|
|
1,576 |
Accommodations and food services |
|
|
32,575 |
|
|
175 |
|
|
2,595 |
Manufacturing |
|
|
16,476 |
|
|
- |
|
|
3,271 |
Retail trade |
|
|
55,079 |
|
|
1,189 |
|
|
1,512 |
Transportation and warehousing |
|
|
37,502 |
|
|
194 |
|
|
5,636 |
Professional services |
|
|
8,747 |
|
|
- |
|
|
12 |
Administrative support and waste management |
|
|
8,597 |
|
|
- |
|
|
1,962 |
Arts, entertainment, and recreation |
|
|
4,052 |
|
|
732 |
|
|
27 |
Other commercial loans |
|
|
34,514 |
|
|
179 |
|
|
741 |
Total commercial and industrial loans |
|
|
357,511 |
|
|
2,644 |
|
|
19,411 |
Total commercial loans |
|
|
468,448 |
|
|
3,044 |
|
|
19,997 |
Total gross loans receivable, excluding deferred
loan fees |
|
$ |
2,171,463 |
|
$ |
141,472 |
|
$ |
238,712 |
MATT FUNKE
573-778-1800
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