Good day, and welcome to the Southern Missouri Bancorp Quarterly Earnings Conference Call. All participants will be in listen-only mode. [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, Michelle. Good afternoon, everyone. This is Matt Funke, CFO with Southern Missouri Bancorp. The purpose of this call is to review the information and data presented in our quarterly earnings release, dated Monday, April 23, 2018, 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 those forward-looking statements contained in the press release. So thank you, everyone, for joining us today. I'll begin by reviewing the preliminary results highlighted in the quarterly earnings release. The March quarter is the third quarter of our 2018 fiscal year. We earned $0.60 diluted in the March quarter. That's unchanged from the linked December quarter, and it's up $0.07 from the $0.53 diluted that we earned in the March quarter a year ago. This current quarter includes - basically, offsetting nonrecurring items and M&A expenses and gains on available-for-sale, AFS securities and fixed assets. The year-ago quarter and the linked quarter included relatively small amounts of M&A expense, while the linked quarter included a small AFS gain and the year ago period included a nonrecurring benefit from bank-owned life insurance. We noted in the earnings release that the amount of discount accretion recognized on acquired loan books was elevated because of the resolution of particular impaired loans from the Capaha acquisition, but we are actually down from the linked December quarter in terms of that discount accretion because impaired loan resolution from the Peoples acquisition had added quite a bit to net interest income in that quarter. We're up more than 300,000 from the year ago March quarter in discount accretion and down more than 300,000 from the linked December quarter. We generally expect that component of net interest income to decline sequentially, and while Capaha accretion is…

Thank you, Matt. Net loan growth for the March quarter totaled $1.2 million. This level of growth was slightly below our expectations due to a continuing trend of faster than expected prepayments. In spite of higher-than-anticipated loan production, as our loan production increased $35 million over the same period of the prior year and totaled $156 million this quarter. Higher than expected prepayments have been due to a variety of factors, which have included, increased interest rates, causing borrowers to seek more aggressively priced longer term fixed rates, customer selling assets before cap rates continue their rise to rise faster, and also due, in part, to us adopting recently more stringent underwriting standards, which has contributed to some of our payoffs of some of our acquired loan portfolios from Capaha and Marshfield. Payoffs from the Capaha and Marshfield acquisitions totaled $22 million for the last quarter, which did limit some of our loan growth. We are anticipating our rate of prepayments to slow. For the fiscal year, we have grown our loan balances $125 million, which includes the Marshfield acquisition. The mix in our portfolio has not changed significantly with the acquisition, but our relative level of CRE concentrations have declined and our multifamily portfolio has dropped fairly significantly, dropping $17 million over the last quarter, as this is one of the types of properties that are experiencing higher levels of prepayment. We believe that we will generate strong organic growth this quarter. But our overall level of growth rate will put us at the low end or somewhat below our consistent loan growth target of 8% to 10%. As we turn to our ag portfolio, we look at our ag real estate balances, which grew $14 million over the quarter, which did include $10 million from the Marshfield acquisition.…

Thanks. Michelle, if you wouldn't mind, please remind folks how they can queue for questions, and we’ll take those when they are ready.

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

Hey, guys.

Hello.

Could you just - how much was the provision for unfunded commitments this quarter?

Don't think I have it in front of me. It was probably north of 200,000 this quarter, and it was recovery, I think, less than 100,000 last quarter - the December quarter.

Got it. So if you back that out and back out the merger charges, maybe core operating expenses close to $11.25 million, is that a good run rate to build off of? Or there would be opportunities for some modest cost saves from the SMB deal going forward?

There're probably not real substantial cost saves there, and the current quarter would have only included half quarter's of the result anyway. We have some lending vacancies that we're working to sell as well. Those are generally little bit the higher salary, so we could see some build there. But when you strip some of those non-recurring items out of the fluctuating off balance sheet, we did feel better about where that number was.

Okay. Got you. And then, on the non-interest income side, backing out the fixed asset sale and securities gains, about 3 - a little under $3.5 million, is that a good level to build off? It's been running well below that in the prior quarters, so I was curious what may have driven this increase and if that's sustainable?

Those loan prepayment penalties, Greg was talking about some of the payouts we're experiencing, those are not something that we've always seen. So that's contributing to that a little bit. I'm at $3.4 million, I think, on that item with upside of the AFS gains and the fixed assets gains. So it - that's as high as we would probably expect it.

Okay. I think you guys have covered my questions in your prepared remarks. So I’ll step back. Thanks.

[Operator Instructions] This concludes our question-and-answer session. I will like to turn the conference back over to Matt Funke for any closing remarks.

Okay. Thank you, Michelle, and thank you, everyone, for your interest. We appreciate it, and we'll talk again in three months. Thank you.

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