Southern Missouri Bancorp, Inc.

Hello and welcome to the Southern Missouri Bancorp quarterly earnings conference call. My name is Lauren and I will be coordinating your call today. If you would like to ask a question during the presentation you may do so by pressing star followed by one on your telephone keypad. I will now hand you over to your host Matt Funke to begin. Matt please go ahead.

Thank you, Lauren. Good morning, everyone. This is Matt Funke, CFO with Southern Missouri. Thank you for joining us. The purpose of our call this morning is to review the information and data presented in our quarterly earnings release, dated Monday, October 25th, 2021, and to take your questions. We may make certain forward-looking statements during today's call, and we refer you to our cautionary statement regarding forward-looking statements contained in the press release. I'm joined on the call today by Greg Steffens, our President and CEO, And Greg will lead off our conversation with commentary on our current operations, our lending activity, and our credit quality measures.

Thank you, Matt. And good morning, everyone. Again, I'm Greg Steffens, and I want to thank you for joining us this morning. Since our last call, public health authorities in our region did report a peak in COVID cases from mid to late August and now have been reporting substantial declines over the last eight weeks. We continue to see few restrictions on business activity in our primary markets, and our operations have been much less impacted since our prior call. We again remain positive about our credit profile and borrower performance. We continue to see limited number of relationships operating under modified terms under the CARES Act. We have four loans continuing under interest-only modifications are to borrowers in the hotel industry and total just under $24 million. We continue to analyze this portfolio closely, and we have continued to see improvement by most of these customers. PPP forgiveness continued in the September quarter. The release notes that we received almost $37 million in PPP forgiveness during the September quarter, down slightly from the prior two quarters. and $26 million in PPP loans remain outstanding. Accelerated fee recognition picked up some in the September quarter as the average fee was higher on second round loans that made up a larger percentage of those loans forgiven. As of September 30th, 87% of our PPP loans originated in both rounds one and two had been forgiven. Our non-performing loans were slightly higher this quarter, up about $300,000, but offsetting that was our adversely classified loans were slightly lower, down from the prior quarter by $1 million to $17.1 million. A year ago they were $25 million. Past due loans were higher, but only modestly so. They totaled $4.8 million. which represented 21 basis points on our loan portfolio, which is up from 17 basis points in the prior quarter. A year ago, they totaled 6.9 million, or 32 basis points. Any loans still requiring relief under the CARES Act are included as special mention credits and along with watch credits. These combined categories were at 39.3 million in September 30th, down from $48.4 million at June 30th and $50.9 million a year ago. For our agricultural update, ag production and other loans to farmers were up almost $22 million in the quarter and up $5 million compared to this same period of last year, while ag real estate balances were up about $5 million over the quarter and $3 million compared to the September 30th of last year. Our agricultural borrowers are in the middle of harvest season, and lenders note average to higher yields in their fall progress reports. Our corn harvest is mostly complete in yielding 175 to 200 bushels an acre for non-irrigated ground and in the 250 bushel an acre for irrigated ground. Pricing has been at $5.50 to $6 a bushel. Rice is mostly complete and yielding in the 180 bushel an acre for conventional rice varieties and 220 for our hybrid varieties. Pricing at this time is from 6 to 6.25 a bushel. The soybean harvest is about halfway complete, yielding 45 to 60 bushels an acre for non-irrigated ground and as high as 80 bushels an acre for irrigated ground. Pricings range from $12 to $13 a bushel, and some farmers are actually running into issues with elevators not accepting soybeans until they ship out corn or rice by rail or barge. Some farmers have on-farm storage, but others may be slower to complete the harvest if they can't deliver directly to the elevators. The cotton harvest is just beginning, but we expect results in line with the last several years at 1,200 pounds an acre on the less productive ground and 1,400 pounds an acre on the more productive ground. And pricing is 78 to 82 cents a pound. Pricing remained well above where we completed our underwriting for corn, soybeans, and cotton specifically, and modestly above underwriting for rice. The most significant downside risk for our borrowers that we see at this time is 2022 production costs, And higher input costs or supply chain issues may cause some farmers to alter their crop production schedule from corn to soybeans over the next year. Overall, even with reduced government payments this year, we expect our farmers to have a more profitable 2021 than 2020 where they performed well. Matt, would you like to give us an update on our financial results?