Southern Missouri Bancorp, Inc.

Hello, everyone, and welcome to the Southern Missouri Bank Corp Quarterly Earnings Conference Call. My name is Daisy, and I'll be coordinating your call today. If you would like to register a question, please press star followed by one on your telephone keypad. I would now like to hand the call over to your host, Laura Daves, CFO at Southern Missouri Bank Corp, to begin. So, Laura, please go ahead.

Thank you, Daisy. Good morning, everyone. This is Laura Daves, CFO for Southern Missouri Bank Corp. Thank you for joining us. The purpose of this call is to review the information and data presented in our quarterly earnings release, dated Monday, May 1st, 2023, 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 in the call today by Greg Stephens, our Chairman and CEO, and by Matt Funke, President and Chief Administrative Officer. Matt will lead off our conversation today with some highlights from our most recent quarter and fiscal year. Matt?

Thank you, Laura, and good morning, everyone. This is Matt Funke. Thanks for joining us. We'd like to touch first on our completed merger with Citizens Bank Shares and Citizens Bank and Trust. We completed the legal merger in late January and the operational merger five weeks later at the end of February. We're pleased to be participating in the life of these new communities, and we look forward to serving their financial needs. Of course, the merger had a lot of impact on this quarter's income statement and on our balance sheet. Our one-time costs look to be tracking in line with our modeling. Loan portfolio marks were in line with expectations, as was the day one provision for credit losses under CECL. These non-recurring charges accounted for $10.3 million pre-tax and are estimated to have reduced diluted EPS by 73 cents. Inclusive of those charges, our EPS declined to 22 cents for the March quarter. That figure compares to $1.26 from the linked December quarter and to $1.03 from the March 2022 quarter, which also included merger related charges, although they were significantly smaller. Net interest margin for the quarter was 348. That was unchanged from the year-ago period and up from 3.45 for the second quarter of fiscal 2023, the linked quarter. Net interest income from loan discount accretion and deposit amortization relating to the company's acquisitions resulted in a 14 basis point increase to the net interest margin compared to six basis points contributed in the second quarter of fiscal 23, the linked quarter. and six basis points in the one year ago period also. Net interest income resulting from accelerated accretion of deferred origination fees on PPP loans had no impact to the net interest margin this quarter compared to less than one basis point in the linked quarter and as compared to two basis points in the third quarter one year ago. Our average interest earning cash and cash equivalent balances increased compared to the linked quarter as a result of the citizens merger. And they declined from the year ago period as loan growth outpaced deposit growth over the intervening quarters prior to the merger. Our net interest income for the quarter was 33.8 million, an increase of 8.7 million or 34.5% as compared to the same period of the prior fiscal year. With no change in our reported margin, the increase was attributable simply to the increase in the average balance of interest earning assets. On the balance sheet, our gross loan balances increased $485 million during the third quarter, with citizens contributing $447 million of that net of fair value adjustments. Compared to March of 2022, gross loans are up $867 million. The investment portfolio was up $198 million over the quarter, primarily attributable to the citizens' merger, while cash and equivalents increased $60 million. Deposit balances increased by almost 750 million in the third quarter with citizens contributing 851 million and deposits are up 900 million compared to March 31st of the prior year. FHLB borrowings decreased 16 and a half million compared to the length quarter end as the company utilized cash acquired in the citizens merger. There were no overnight borrowings or short-term repo balances at March 31st. I'll hand it over now to Greg for some additional discussion.