Good afternoon, and welcome to the Southern Missouri Bancorp, Inc. quarterly earnings call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Matt Funke, please go ahead.

Thank you, Brandon. Good afternoon, everyone. This is Matt Funke, CFO of Southern Missouri Bancorp. The purpose of this call is to review the information and data presented in our quarterly earnings release dated Monday, January 22, 2018, and to take your questions. We may make certain forward-looking statements during today's call, and we'd refer you to our cautionary statement regarding forward-looking statements contained in the press release. Thank you all for joining us. I'll begin by reviewing the preliminary results highlighted in the quarterly earnings release. The December quarter, as a reminder, is the second quarter of our 2018 fiscal year. We earned $0.60 diluted in the December quarter, that is up $0.04 from the $0.56 diluted per share that we earned both in the December quarter a year ago and also in the linked September quarter. The September quarter had included somewhat higher onetime expenses. We have a smaller amount of M&A cost included in this quarter's results. Of course, the most unusual items in this quarter's results are the negative impact of revaluing our deferred tax asset, that was a $1.1 million hit to after-tax earnings, and then a positive impact from reducing the annual effective tax rate for the company's fiscal year, which ends June 30, which was an offsetting $840,000 improvement to after-tax earnings for a net after-tax impact of $284,000. The reduction in the federal corporate rate from 35% to 21% means that based on IRS administrative interpretations, we'll pay taxes based on a rate of approximately 28.1% for the current fiscal year. And so the December quarter had somewhat of a windfall from that reduction because income taxes were approved for the first quarter of the fiscal year at the higher rate. Our effective rate for the quarter was 33% and for the…

Thank you, Matt. Overall, I'm going to start with loan growth for the quarter, which totaled $3.4 million, which was slightly below our expectations, and that was due to higher-than-anticipated prepayments and then some slower-than-anticipated fundings of some loans that were working their way through the pipeline. Loan originations have totaled $260 million -- $268 million for the first 6 months of the fiscal year as compared to $276 million in the same period of the prior year. Loan growth has totaled $55 million or 8% annualized, as Matt indicated earlier. We believe that we are on pace to achieve our stated targets of 8% to 10% annualized loan growth, and we feel good about these targets. Over the last quarter, the loan portfolio composition really changed little as our CRE balances of various types grew, while our ag operating lines paid down. To give a brief update on our agricultural portfolio, agro state balances grew modestly over the quarter, while our operating lines were slightly -- were down slightly more than anticipated at $19 million, where we had projected paydowns of $15 million. Paydowns have been attributed to slightly better-than-expected agricultural results from our customers as their yields exceeded expectations, while pricing was just a little bit below where we had anticipated. Overall, our ag customers appear to have had their best year in the last 3, and we're pleased with what we're seeing in the ag portfolio. We anticipate ag balances to drop modestly over the March quarter before beginning to draw significantly higher in the June quarter. When we look at our loan pipeline, it remains strong at $97 million, which is significantly higher than the $41 million outstanding 1 year ago at 12/31/16. And based on our pipeline, we would anticipate better-than-historical growth in the March…

All right. Brandon, at this time, if you would remind folks how they can queue for questions.

[Operator Instructions]. Our first question comes from Andrew Liesch with Sandler O'Neill.

Question on the margin outlook here going forward. Just curious if this latest rate hike, what you expect. And what you might be seeing in your markets related to loan yield, but then also with deposit pricing.

Let me take that in reverse order, Andrew. I'd say, on the deposit side, we're seeing some more aggressive pricing on the certificates pricing. Non-maturity, which is really where we've tried to focus on growth over the last several years, is more limited. And so we're hopeful that we'll be able to slow down the increase in cost of fund. On the loan side, Greg, do you want to tackle that one or?

On the loan side, we're seeing increases in loan rates that are coming through the pipeline. It's usually a 30- to 60-day lag between rate movements and before the loans close. We are seeing upward pricing but it is trailing a little bit where we would like it to be. We continue to see significant competition as some of the smaller players in the market continue to drag their feet on repricing up even though the yield curve has moved up quite a bit across the slope of the yield curve.

Got you. And then, just going to some of your prepared comments, a couple of follow-up questions there, Greg, you're expecting higher prepays than normal in the commercial real estate portfolio here this quarter. Just curious what's driving that. Is it refinancings by other companies? By other banks? Maybe offering terms and conditions that you're not comfortable with? Just curious what's driving your expectation for higher prepays.

We've had several larger customers that have ended up selling off some of their CRE that they have. And so we're anticipating some prepayment activity from that as well as then there are some people that are moving from being floating rate to locking in some longer-term rates at some rates that we chose not to match.

Got you. And then, one final comment here. I think you've mentioned that maybe seeing few opportunities on M&A related to tax reform, is this from some targets or prospective targets wanting to go it alone because they're paying a lower tax rate? Or is it with pricing, what they think they deserve a better multiple?

I think there's a variety of factors, and we're not really sure what all of them are, but some of them definitely are that they feel like they weren't going to necessarily receive the value of what their higher earnings will be going forward with the tax reform, and they're not certain that the market has fully factored in the anticipated higher earnings that they might have relative to stock if you are giving them stock in a cash and stock transaction.

[Operator Instructions]. It appears there are no more questions. So this concludes our question-and-answer session. I would like to turn the conference back over to Matt Funke for any closing remarks.

Okay. Thanks, again, Brandon, and thank you, everyone, for your interest in the company. We'll be looking to speak with you again here in about three months, and appreciate your interest. Thank you.

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