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Southern Missouri Bancorp(SMBC) - 2022 Q4 - Annual Report

Acquisitions and Goodwill - The company completed the acquisition of Fortune Financial, Inc. on February 25, 2022, with total assets of $253.0 million and loans net of $202.1 million, resulting in goodwill of $12.8 million [18]. - The acquisition of the Cairo branch of First National Bank on December 15, 2021, resulted in goodwill of $442,000, reflecting the company's commitment to the Cairo community [19]. - The company acquired Central Federal Bancshares, Inc. on May 22, 2020, with total assets of $70.6 million and a bargain purchase gain of $123,000 [20]. - The Company assumed $7.5 million in fixed-to-floating rate subordinated notes from the acquisition of Fortune Financial Corporation, with a carrying value of approximately $7.7 million at June 30, 2022 [149]. Financial Performance and Loans - As of June 30, 2022, the Bank's total mortgage loans amounted to $2,308.9 million, representing 85.96% of total loans [49]. - The Bank's net loans receivable totaled $2,686.2 million as of June 30, 2022, an increase from $2,200.2 million in 2021 [49]. - The Bank originated $1.1 billion in loans during fiscal 2022, an increase from $971.8 million in fiscal 2021 and $848.1 million in fiscal 2020, attributed to increased lending activity and borrower refinancing [83]. - The consumer loan portfolio totaled $93.0 million, representing 3.5% of net loans receivable, with home equity loans making up 48.9% of this portfolio at $45.5 million [67][68]. - The Bank's total loans at the end of the period were $2.84 billion, up from $2.31 billion at the beginning of the period [87]. Loan Losses and Nonperforming Assets - The total nonperforming assets decreased to $6.3 million at June 30, 2022, from $8.1 million at June 30, 2021, representing a reduction of approximately 22% [99]. - The allowance for credit losses at June 30, 2022, was $33.2 million, which represented 526% of nonperforming assets, compared to 409% at June 30, 2021 [106]. - Nonaccruing loans totaled $4.1 million at June 30, 2022, down from $5.9 million at June 30, 2021, indicating a decrease of approximately 30% [99]. - The total nonperforming loans to net loans ratio was 0.15% at June 30, 2022, compared to 0.27% at June 30, 2021 [99]. Economic Conditions and Competition - The company anticipates potential adverse impacts from ongoing economic conditions due to the COVID-19 pandemic, which could affect future performance [33]. - The company has identified fluctuations in interest rates and inflation as key factors that could impact its financial performance [33]. - The Bank expects competition for deposits and loans to increase due to legislative, regulatory, and technological changes in the financial services industry [41]. Deposits and Funding - As of June 30, 2022, the total deposits amounted to $2,815,075 thousand, reflecting a net increase of $484,272 thousand from the previous year [140]. - The composition of deposits included 41.62% in NOW accounts, 15.17% in non-interest bearing accounts, and 10.79% in money market deposit accounts [132]. - The Bank's time deposits totaled $638,631 thousand as of June 30, 2022, with 63.96% maturing in less than one year [135]. - The Bank's borrowings from the FHLB are utilized for liquidity and to fund loan growth, with specific collateral and membership requirements [141]. Capital and Regulatory Compliance - The Bank is categorized as "well capitalized" under the prompt corrective action standards as of June 30, 2022 [194]. - The minimum capital ratios required include a CET1 capital ratio of 4.5%, a Tier 1 capital ratio of 6.0%, and a total capital ratio of 8.0% [189]. - The capital conservation buffer requirement was fully implemented on January 1, 2019, requiring an additional CET1 capital greater than 2.5% of risk-weighted assets [193]. - The Company is subject to comprehensive regulation by the Federal Reserve Board under the Bank Holding Company Act, requiring it to file reports and serve as a source of financial strength for its subsidiary banks [210]. Employee and Community Engagement - The Company had a total of 511 full-time employees and 33 part-time employees as of June 30, 2022, totaling 544 employees [156]. - The Company maintains competitive pay and benefits, with 62% of its executive team promoted from within [157]. - The Company is committed to community involvement, budgeting funds each year to support local programs and encouraging Team Member participation [160].