Southern Missouri Bancorp Inc. (SMBC, Financial) filed Quarterly Report for the period ended 2011-12-31.
Southern Missouri Bancorp Inc. has a market cap of $47.3 million; its shares were traded at around $23 with a P/E ratio of 5.3 and P/S ratio of 1. The dividend yield of Southern Missouri Bancorp Inc. stocks is 2.1%. Southern Missouri Bancorp Inc. had an annual average earning growth of 12.2% over the past 10 years. GuruFocus rated Southern Missouri Bancorp Inc. the business predictability rank of 3-star.
Interest rates during the first six months of fiscal 2012 continued to decline from already historical lows. Across the yield curve, rates declined from June 30, 2011 through December 31, 2011, with longer-term rates decreasing the most, as the curve flattened somewhat. Despite this, our average yield on earning assets increased, due to effective rates on acquired loans (see “Results of Operations: Comparison of the three- and six-month periods ended December 31, 2011 and 2010 – Net Interest Income”). Relative to recent historical norms, the curve remained relatively steep, and a steep curve is generally beneficial to the Company. In December 2008, the Federal Reserve cut the targeted Federal Funds rate to a range of 0.00% to 0.25%, and in March 2009, it detailed its plan to purchase long-term mortgage-backed securities, agency debt, and long-term Treasuries. Those purchases ended in the first calendar quarter of 2010, and an additional, smaller quantitative easing program was initiated later in 2010, along with reinvestment of principal repaid under the original program. More recently, the Federal Reserve began indicating dates through which it expected to keep short-term rates near zero, first expressing an expectation that tightening would not occur until at least mid-2013, and then extending that through the end of 2014. It also announced that it would attempt to lower long-term rates by selling some of its short term securities holdings and purchasing securities with longer maturities. In this rate environment, our net interest margin was improved when comparing the first six months of fiscal 2012 to the same period of the prior year; however, much of the improvement was attributed to the Acquisition, whereby the Company acquired loans at a discount that resulted in yields significantly higher than the Company s legacy interest earning assets. The Company does not expect the full improvement in margin to be maintained; as the acquired loan portfolio pays down, the impact will be reduced and new assets will not be booked at similar spreads. Our net interest margin would have improved exclusive of the Acquisition, as declining loan and investment securities rates were more than offset by a lower cost of funds, as deposit account rates decreased further and fixed-rate FHLB advances matured and were replaced with deposit funding at a lower cost. These improvements in our net interest margin were partially offset by an increase in the average balance of cash and cash equivalents. Aside from the Acquisition, the Company s strong deposit growth was attributed in large part to the rewards checking product which has been offered at above-market rates, as we took advantage of the favorable rate environment to build market share. Compared to the year ago period, net interest income increased $5.5 million, or 59.5%, during the first six months of fiscal 2012, attributable to improvement in our net interest rate spread and growth in interest-earning assets. The Acquisition contributed to both.
Net Interest Income. Net interest income for the three- and six-month periods ended December 31, 2011, was $7.3 million and $14.8 million, respectively, increases of $2.6 million, or 53.7%, and $5.5 million, or 59.5%, respectively, as compared to the same periods of the prior fiscal year. For the three-and six-month periods ended December 31, 2011, net interest income excluding accretion of fair value discount on acquired loans and amortization of fair value premium on assumed time deposits was $6.3 million and $12.6 million, respectively. Our average interest rate spread for the three- and six month periods ended December 31, 2011, was 3.90% and 4.05%, respectively, as compared to 3.13% and 3.16%, respectively, for the same period of the prior fiscal year. Average interest rate spread excluding accretion of fair value discount on acquired loans and amortization of fair value premium on assumed time deposits was 3.33% and 3.41%, respectively, for the three- and six-month periods ended December 31, 2011. For the three- and six-month periods ended December 31, 2011, the 77 and 89 basis point increases, respectively, in the net interest rate spread, compared to the same periods a year ago, resulted from 31 and 41 basis point increases, respectively, in the average yield on interest-earning assets, combined with 46 and 48 basis point decreases, respectively, in the average cost of interest-bearing liabilities. Much of the improvement was attributed to the Acquisition, whereby the Company acquired loans at a discount that resulted in yields significantly higher than the Company s legacy interest-earning assets. The Company does not expect the full improvement in net interest rate spread to be maintained; as the acquired loan portfolio pays down, the impact will be reduced and new assets will not be booked at similar spreads. The Company does, however expect to redeploy cash, over time, into loans and investments at higher yields. Additionally, our growth initiatives, including the Acquisition, resulted in 24.7% and 26.2% increases, respectively, in the average balance of interest-earning assets (and 20.5% and 22.6% increases, respectively, in the average balance of interest-bearing liabilities) for the three- and six-month periods ended December 31, 2011, as compared to the same periods of the prior fiscal year. Our net interest margin for the three- and six-month periods ended December 31, 2011, determined by dividing annualized net interest income by total average interest-earning assets, was 4.12% and 4.27%, respectively, as compared to 3.34% and 3.38%, respectively, in the same periods of the prior fiscal year. Our net interest margin excluding accretion of fair value discount on
Interest Income. Total interest income for the three- and six-month periods ended December 31, 2011, was $9.9 million and $20.2 million, respectively, increases of $2.4 million, or 31.9%, and $5.3 million, or 35.9%, respectively, as compared to the amounts earned in the same periods of the prior fiscal year. The improvements were due to increases of $140.6 million, or 24.7%, and $144.1 million, or 26.2%, respectively, in the average balance of interest-earning assets for the three- and six-month periods ended December 31, 2011, as compared to the same periods of the prior fiscal year, combined with 31 and 41 basis point increases, respectively, in the average interest rate earned. For the three- and six-month periods ended December 31, 2011, the average interest rate on interest-earning assets was 5.60% and 5.81%, respectively, as compared to 5.29% and 5.40%, respectively, for the same periods of the prior fiscal year. The improvements were attributed to the Acquisition, whereby the Company acquired loans at a discount that resulted in yields significantly higher than the Company s legacy interest-earning assets.
Noninterest Income. Noninterest income for the three- and six-month periods ended December 31, 2011, was $899,000 and $2.0 million, respectively, decreases of $7.0 million, or 88.6%, and $6.7 million, or 76.8%, respectively, as compared to the same periods of the prior fiscal year. The decreases were attributed primarily to the inclusion in the prior periods results of the bargain purchase gain recorded on the Acquisition; other components of noninterest income included an increase in bank card transaction fees and gains on sales of loans, partially offset by a decrease in deposit account charges and related fees. Noninterest income for the six-month period ended December 31, 2011, includes $181,000 recovered on a legal claim acquired from the former First Southern Bank. The Company notes that regulation of interchange income by the Federal Reserve under the terms of the Dodd-Frank Wall Street Reform and Consumer Protection Act could significantly reduce the amount of income realized from bank card transactions. Although the Company s asset size shielded it from direct regulation of interchange income pricing, it remains to be seen how changes in the market may impact the Company s revenues.
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Southern Missouri Bancorp Inc. has a market cap of $47.3 million; its shares were traded at around $23 with a P/E ratio of 5.3 and P/S ratio of 1. The dividend yield of Southern Missouri Bancorp Inc. stocks is 2.1%. Southern Missouri Bancorp Inc. had an annual average earning growth of 12.2% over the past 10 years. GuruFocus rated Southern Missouri Bancorp Inc. the business predictability rank of 3-star.
Highlight of Business Operations:
Net income for the first six months of fiscal 2012 decreased 19.7% to $5.5 million, as compared to $6.9 million earned during the same period of the prior year. After accounting for dividends on preferred stock of $258,000 and a charge of $94,000 for the early redemption of preferred stock issued under the TARP program, net earnings available to common shareholders were $5.2 million in the six-month period ended December 31, 2011, a decrease of 21.9% as compared to the same period of the prior fiscal year. The decrease in net income compared to the year-ago period was primarily due to the inclusion in the prior period s results of the bargain purchase gain recorded on the Acquisition. Diluted net income available to common shareholders was $2.12 per share for the first six months of fiscal 2012, as compared to $3.11 per share for the same period of the prior year. For the first six months of fiscal 2012, net interest income increased $5.5 million, or 59.5%; noninterest income decreased $6.7 million, or 76.8%; noninterest expense increased $1.1 million, or 16.9%; provision for loan losses decreased $54,000, or 5.9%; and provision for income taxes decreased $852,000, or 23.6%, as compared to the same period of the prior fiscal year. For more information see “Results of Operations.”Interest rates during the first six months of fiscal 2012 continued to decline from already historical lows. Across the yield curve, rates declined from June 30, 2011 through December 31, 2011, with longer-term rates decreasing the most, as the curve flattened somewhat. Despite this, our average yield on earning assets increased, due to effective rates on acquired loans (see “Results of Operations: Comparison of the three- and six-month periods ended December 31, 2011 and 2010 – Net Interest Income”). Relative to recent historical norms, the curve remained relatively steep, and a steep curve is generally beneficial to the Company. In December 2008, the Federal Reserve cut the targeted Federal Funds rate to a range of 0.00% to 0.25%, and in March 2009, it detailed its plan to purchase long-term mortgage-backed securities, agency debt, and long-term Treasuries. Those purchases ended in the first calendar quarter of 2010, and an additional, smaller quantitative easing program was initiated later in 2010, along with reinvestment of principal repaid under the original program. More recently, the Federal Reserve began indicating dates through which it expected to keep short-term rates near zero, first expressing an expectation that tightening would not occur until at least mid-2013, and then extending that through the end of 2014. It also announced that it would attempt to lower long-term rates by selling some of its short term securities holdings and purchasing securities with longer maturities. In this rate environment, our net interest margin was improved when comparing the first six months of fiscal 2012 to the same period of the prior year; however, much of the improvement was attributed to the Acquisition, whereby the Company acquired loans at a discount that resulted in yields significantly higher than the Company s legacy interest earning assets. The Company does not expect the full improvement in margin to be maintained; as the acquired loan portfolio pays down, the impact will be reduced and new assets will not be booked at similar spreads. Our net interest margin would have improved exclusive of the Acquisition, as declining loan and investment securities rates were more than offset by a lower cost of funds, as deposit account rates decreased further and fixed-rate FHLB advances matured and were replaced with deposit funding at a lower cost. These improvements in our net interest margin were partially offset by an increase in the average balance of cash and cash equivalents. Aside from the Acquisition, the Company s strong deposit growth was attributed in large part to the rewards checking product which has been offered at above-market rates, as we took advantage of the favorable rate environment to build market share. Compared to the year ago period, net interest income increased $5.5 million, or 59.5%, during the first six months of fiscal 2012, attributable to improvement in our net interest rate spread and growth in interest-earning assets. The Acquisition contributed to both.
Net Interest Income. Net interest income for the three- and six-month periods ended December 31, 2011, was $7.3 million and $14.8 million, respectively, increases of $2.6 million, or 53.7%, and $5.5 million, or 59.5%, respectively, as compared to the same periods of the prior fiscal year. For the three-and six-month periods ended December 31, 2011, net interest income excluding accretion of fair value discount on acquired loans and amortization of fair value premium on assumed time deposits was $6.3 million and $12.6 million, respectively. Our average interest rate spread for the three- and six month periods ended December 31, 2011, was 3.90% and 4.05%, respectively, as compared to 3.13% and 3.16%, respectively, for the same period of the prior fiscal year. Average interest rate spread excluding accretion of fair value discount on acquired loans and amortization of fair value premium on assumed time deposits was 3.33% and 3.41%, respectively, for the three- and six-month periods ended December 31, 2011. For the three- and six-month periods ended December 31, 2011, the 77 and 89 basis point increases, respectively, in the net interest rate spread, compared to the same periods a year ago, resulted from 31 and 41 basis point increases, respectively, in the average yield on interest-earning assets, combined with 46 and 48 basis point decreases, respectively, in the average cost of interest-bearing liabilities. Much of the improvement was attributed to the Acquisition, whereby the Company acquired loans at a discount that resulted in yields significantly higher than the Company s legacy interest-earning assets. The Company does not expect the full improvement in net interest rate spread to be maintained; as the acquired loan portfolio pays down, the impact will be reduced and new assets will not be booked at similar spreads. The Company does, however expect to redeploy cash, over time, into loans and investments at higher yields. Additionally, our growth initiatives, including the Acquisition, resulted in 24.7% and 26.2% increases, respectively, in the average balance of interest-earning assets (and 20.5% and 22.6% increases, respectively, in the average balance of interest-bearing liabilities) for the three- and six-month periods ended December 31, 2011, as compared to the same periods of the prior fiscal year. Our net interest margin for the three- and six-month periods ended December 31, 2011, determined by dividing annualized net interest income by total average interest-earning assets, was 4.12% and 4.27%, respectively, as compared to 3.34% and 3.38%, respectively, in the same periods of the prior fiscal year. Our net interest margin excluding accretion of fair value discount on
Interest Income. Total interest income for the three- and six-month periods ended December 31, 2011, was $9.9 million and $20.2 million, respectively, increases of $2.4 million, or 31.9%, and $5.3 million, or 35.9%, respectively, as compared to the amounts earned in the same periods of the prior fiscal year. The improvements were due to increases of $140.6 million, or 24.7%, and $144.1 million, or 26.2%, respectively, in the average balance of interest-earning assets for the three- and six-month periods ended December 31, 2011, as compared to the same periods of the prior fiscal year, combined with 31 and 41 basis point increases, respectively, in the average interest rate earned. For the three- and six-month periods ended December 31, 2011, the average interest rate on interest-earning assets was 5.60% and 5.81%, respectively, as compared to 5.29% and 5.40%, respectively, for the same periods of the prior fiscal year. The improvements were attributed to the Acquisition, whereby the Company acquired loans at a discount that resulted in yields significantly higher than the Company s legacy interest-earning assets.
Noninterest Income. Noninterest income for the three- and six-month periods ended December 31, 2011, was $899,000 and $2.0 million, respectively, decreases of $7.0 million, or 88.6%, and $6.7 million, or 76.8%, respectively, as compared to the same periods of the prior fiscal year. The decreases were attributed primarily to the inclusion in the prior periods results of the bargain purchase gain recorded on the Acquisition; other components of noninterest income included an increase in bank card transaction fees and gains on sales of loans, partially offset by a decrease in deposit account charges and related fees. Noninterest income for the six-month period ended December 31, 2011, includes $181,000 recovered on a legal claim acquired from the former First Southern Bank. The Company notes that regulation of interchange income by the Federal Reserve under the terms of the Dodd-Frank Wall Street Reform and Consumer Protection Act could significantly reduce the amount of income realized from bank card transactions. Although the Company s asset size shielded it from direct regulation of interchange income pricing, it remains to be seen how changes in the market may impact the Company s revenues.
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