Good day, and welcome to the Southern Missouri Bancorp Quarterly Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Matt Funke, Chief Financial Officer. Please go ahead.

Thank you, Aaron, and good afternoon, everyone. This is Matt Funke, CFO with Southern Missouri Bancorp. The purpose of this call is to review the information and data that we presented in our quarterly earnings release dated Monday, July 25, 2016, 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 that press release. I'll start off with some of our preliminary results highlighted in the quarterly release. Remember that the June quarter is the fourth quarter of our 2016 fiscal year. We earned $0.49 diluted in the June quarter, that's up $0.02 from the $0.47 diluted we reported for the same quarter a year ago, and it's up $0.04 from the $0.45 diluted that we earned in the linked quarter, which was our March 2016 quarter. For all of fiscal 2016, we're preliminarily reporting diluted EPS of $1.98, that's up $0.19 from the $1.79 in the prior fiscal year, and that prior fiscal year is a split-adjusted figure. In August of 2014, we closed on the Peoples Bank acquisition. We continue to report net interest income that results from fair value discount accretion on loans and time deposit premium amortization from that acquisition. In the current quarter, that item amounted to $416,000. In the year-ago quarter, we recognized accretion of $444,000. In the linked quarter, March, discount accretion accounted for $322,000 of net interest income. So it's jumped back up in this most recent quarter. It had also jumped up most recently in the December 2015 quarter at $557,000. Our general trend on that item is for it to be heading downward. And we think, basically, a year from now, we'll probably stop having to talk about this as a material item.…

All right, thank you, Matt. And I'd like to just start off with just some touching up on our lending activities. We are very pleased with our loan growth over the last quarter, again, totaling $41 million. Our loan growth for the year did come in at 7.8%, which is a little bit below our 8% to 10% target that we've established out there. We feel this is primarily due to payoffs related a lot to our acquisition of Peoples Bank. During the quarter, we did originate $128 million worth of loans compared to $107 million last year. So we were able to increase loan production, and we did see the bottom line growth. Overall, our loan growth has been strong, and ag has contributed a fair amount to that growth. When we look at the compositions of growth over the quarter, ag lines of credit again grew $19 million, ag real estate grew $6 million, then non-owner-occupied residential real estate was up $7 million, while owner-occupied was up $8 million and our multifamily loans were up $3 million. When we look at for the year at where our growth was concentrated for the year, we had ag real estate at $20 million, ag lines of credit were up $15 million, then non-owner-occupied commercial real estate was up $20 million and owner-occupied was up $10 million, while multifamily loans were up $14 million. When we look geographically at where our loan growth occurred over this last year, Southeast Missouri was our largest contributor to growth, growing nearly $40 million, while our Arkansas locations were up $23 million and Southwest Missouri was up $18 million. So again, we had a lot of our growth or nearly half of it was from Southeast Missouri. Some of that reflects competition that we saw…

Aaron, if you would, please remind callers how they could queue for questions?

[Operator Instructions] And our first question comes from Andrew Liesch of Sandler O'Neill + Partners.

Just a question, Matt, on the accretion that's left on the Peoples deal, it sounds like a year from now, it will basically be gone. But just kind of curious if you have a dollar amount on what you expect to flow through NII over the next 12 months.

I don't have it in front of me, Andrew. It's been -- if you kind of look at it over time and project that out going towards 0 in the next 15 months, that's probably about the right path for it. It will be a little bit up and down with some of these specific purchase credit impaired loans as those are resolved. But no, I don't have a number for you on that. I apologize.

Okay. And then the -- just looking at the non-performers, the dollars set aside and the net charge-offs, so it looks like the provision was that basically to cover loan growth because it seemed like the charge-offs or the provision was -- might have been just to cover -- or the -- I'm curious -- I'm sorry, was the provision to cover loan growth? Or was that related to the charge-offs in the quarter?

Most of it would have been for loan growth. The one we charged off was half-covered with dollars that we'd already set aside.

It was over half-covered with dollars we'd already set aside.

Okay. And then one last question, just on the loan paydowns. You had been pretty vocal about them from Peoples over -- or like the last part of last calendar year. But as you look at the -- your pipeline right now, your loan portfolio, do you see any large or maybe have any large loans paid off so far this month that might weigh on growth over the next -- over this quarter?

We haven't had anything to date that we're concerned about having paid off. We have had indications that we do have one $6 million, $7 million [ph] credit that's likely to pay off between now and September 30. But again, with the size of our pipeline, we don't think that will materially impact what we have targeted for growth for the year.

[Operator Instructions] Our next question comes from David Welch of River Oaks Capital.

Looking for kind of your commentary regarding prioritization in this merger effort. Kind of on the one end of the spectrum would be what I'm assuming are more rural markets that might have a lot of deposits and not many lending opportunities, which I could see being attractive with your 1 03 (sic) [ 100.2% ] loan-to-deposit ratio; and the flip side or the other end of the spectrum being more exposure to maybe more vibrant urban markets that are more competitive, but offer more loan growth. I'm kind of guessing the answer is you'd like to be looking at both, but prioritize for me what's more likely before year-end? If you could plan it, if you could wish it to come together.

Well, we would love for both to happen. I mean, priority-wise, our preference would be to have something in one of our stronger growth markets just because that's going to generate the engine to be able to have more growth and better EPS growth for the future, to where that would be our preferred priority. But secondarily, at rural market and more deposits to help with our loan-to-deposit ratio would be good, too. We do have other accesses to funding via brokered deposits and some of that, since brokered deposits are a small part of our balance sheet at this point, that we could always use to get our loan-to-deposit ratio under the 100% market. But overall, I mean, we feel good about the acquisitions we've done both in rural and urban markets. And we just want the opportunity to buy the right company that's going to be able to the generate returns like we have in our prior deals.

Okay. And I believe you referred to one that I think your phrase was you missed. Did you just get outbid? Did they like somebody else's lunch better? What was the process there?

It's a little bit of both. I think that our bids were very competitive. But I think that they basically decided that they were a little better suitor than us. I think they thought they were maybe a little sexier than we were.

[Operator Instructions] Gentlemen, it appears we have no further questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Matt Funke for any closing remarks.

Okay, Aaron. Thank you, everyone, for your participation. Pleased to spend some time with you talking about the results. And we appreciate your patience in allowing us to reschedule the call after the technical difficulties yesterday. So we'll talk to you again in 3 months.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.