Southern Missouri Bancorp(SMBC) - 2025 Q4 - Annual Results

Executive Summary & Financial Highlights This section highlights the company's strong financial performance, with increased net income and improved profitability for Q4 and FY2025 Preliminary Results (Q4 & FY2025) Southern Missouri Bancorp reported a significant increase in net income for both Q4 and the full fiscal year 2025, driven primarily by higher net interest income and lower income tax provision, despite increases in provision for credit loss and noninterest expense Net Income and Diluted EPS (Q4 & FY2025) | Metric | Q4 FY2025 | Q4 FY2024 | Change ($) | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | :--------- | | Net Income | $15.8 million | $13.5 million | $2.3 million | 16.7% | | Diluted EPS | $1.39 | $1.19 | $0.20 | - | | Metric | FY2025 | FY2024 | Change ($) | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | :--------- | | Net Income | $58.6 million | $50.2 million | $8.4 million | 16.7% | | Diluted EPS | $5.18 | $4.42 | $0.76 | - | - The increase in net income was primarily due to higher net interest income and lower provision for income taxes, partially offset by higher provision for credit loss (PCL), noninterest expense, and lower noninterest income[1] Key Performance Indicators (Q4 FY2025) The company demonstrated strong performance in Q4 FY2025 with improved profitability ratios and net interest margin, alongside significant loan growth. Noninterest income saw a decrease year-over-year due to accounting changes for tax credits but increased linked-quarter due to card network fees Key Performance Indicators (Q4 FY2025) | Metric | Q4 FY2025 | Q4 FY2024 | QoQ (Q3 FY2025) | YoY Change | QoQ Change | | :-------------------------------- | :-------- | :-------- | :-------------- | :--------- | :--------- | | Diluted EPS | $1.39 | $1.19 | $1.39 | Up $0.20 (16.8%) | Unchanged | | Annualized ROA | 1.27% | 1.17% | 1.27% | Up 0.10% | Unchanged | | Annualized ROE | 11.8% | 11.2% | 12.1% | Up 0.6% | Down 0.3% | | Net Interest Margin | 3.46% | 3.25% | 3.39% | Up 0.21% | Up 0.07% | | Net Interest Income | $40.3 million | $35.1 million | $39.5 million | Up $5.2 million (14.9%) | Up $854,000 (2.2%) | | Noninterest Income | $7.3 million | $7.8 million | $6.7 million | Down 6.3% | Up 9.2% | | Gross Loan Balances Increase (Q4) | $76.2 million | - | - | - | - | | Gross Loan Balances Increase (FY2025) | $249.9 million | - | - | 6.5% | - | - The decrease in noninterest income compared to the prior year was primarily due to a change in accounting for tax credit benefits (ASU 2023-02), which are now recognized as a direct reduction from the provision for income taxes, and a negative adjustment to mortgage servicing rights[2][22] - The increase in non-interest income compared to the linked quarter was largely due to additional card network fees based on volume incentives totaling $537,000[2] Dividend Declaration The Board of Directors declared a quarterly cash dividend of $0.25 per common share, marking the 125th consecutive quarterly dividend and an 8.7% increase from the previous payment Quarterly Dividend Details | Metric | Value | | :-------------------- | :---- | | Quarterly Dividend | $0.25 per share | | Increase from Previous | $0.02 per share (8.7%) | | Payable Date | August 29, 2025 | | Record Date | August 15, 2025 | - This is the 125th consecutive quarterly dividend since the Company's inception, reflecting confidence in future prospects and commitment to stockholder value[3] Conference Call Information Southern Missouri Bancorp will host a conference call on July 24, 2025, to discuss the preliminary results, with details provided for live access and telephone playback - A conference call is scheduled for Thursday, July 24, 2025, at 9:30 a.m. Central Time to review the press release information[4] - Dial-in details: 1-833-470-1428 (US) with participant access code 617584. Playback available until July 29, 2025, by dialing 1-866-813-9403 with passcode 612450[4] Balance Sheet Analysis This section analyzes the balance sheet, detailing asset, loan, and deposit growth, credit quality, and stockholders' equity changes Asset Growth The Company experienced significant balance sheet growth in fiscal 2025, with total assets increasing by 9.0% to $5.0 billion, primarily driven by increases in net loans receivable, cash equivalents, and available-for-sale (AFS) securities Asset Growth (June 30, 2025 vs. June 30, 2024) | Asset Category | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Total Assets | $5.0 billion | $4.6 billion | $415.3 million | 9.0% | | Cash Equivalents & Time Deposits | $193.1 million | $61.4 million | $131.7 million | 214.5% | | AFS Securities | $460.8 million | $427.9 million | $32.9 million | 7.7% | - Cash equivalents decreased by $34.0 million (15.0%) linked-quarter (compared to March 31, 2025), primarily used to fund loan growth, partially offset by deposit growth and earnings retention[6] Loan Portfolio Net loans receivable grew by 6.6% to $4.0 billion in FY2025, with growth across various loan types, particularly residential real estate and commercial and industrial loans. The bank maintains a significant concentration in non-owner occupied commercial real estate Loans, Net of ACL (June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Loans, net of ACL | $4.0 billion | $3.8 billion | $250.8 million | 6.6% | | Gross Loans Increase (FY2025) | $249.9 million | - | - | - | | ACL attributable to loans | $51.6 million | $52.5 million | -$887,000 | -1.7% | - Loan growth was primarily in residential real estate, commercial and industrial loans, drawn construction loan balances, multi-family real estate loans, and agricultural production draws, partially offset by payoffs in non-owner occupied commercial real estate and consumer loans[7][9] Summary Loan Data (in thousands) | Loan Type | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | 1-4 residential real estate | $991,553 | $925,397 | | Non-owner occupied commercial real estate | $888,317 | $899,770 | | Owner occupied commercial real estate | $442,984 | $427,476 | | Multi-family real estate | $422,758 | $384,564 | | Construction and land development | $332,405 | $290,541 | | Agriculture real estate | $244,983 | $232,520 | | Commercial and industrial | $510,259 | $450,147 | | Agriculture production | $206,128 | $175,968 | | Consumer | $55,387 | $59,671 | | Total Gross Loans | $4,099,698 | $3,849,803 | - Loans anticipated to fund in the next 90 days totaled $224.1 million at June 30, 2025, up from $157.1 million at June 30, 2024[9] Loan Composition - Concentration in non-owner occupied commercial real estate loans was 301.9% of Tier 1 capital and ACL at June 30, 2025, down from 317.5% a year prior, representing 40.1% of total loans[10] - Common collateral types within non-owner occupied commercial real estate include multi-family residential, hospitality, care facilities, strip centers, retail stand-alone, and storage units[10] - Non-owner occupied office property types comprised 33 loans totaling $24.3 million (0.59% of total loans) at June 30, 2025, with none adversely classified[10] Nonperforming Assets & Credit Quality Nonperforming Assets (June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :------------ | :--------- | :--------- | | Nonperforming Loans (NPLs) | $23.0 million | $6.7 million | $16.3 million | 243.3% | | NPLs as % of Gross Loans | 0.56% | 0.17% | - | - | | Nonperforming Assets (NPAs) | $23.7 million | $10.6 million | $13.1 million | 123.6% | | NPAs as % of Total Assets | 0.47% | 0.23% | - | - | - The year-over-year increase in NPLs was primarily due to several commercial relationships added in Q3 and Q4 FY2025, including a $5.7 million construction loan for a senior living facility and three commercial loans totaling $6.2 million (after charge-offs) secured by vacant special-purpose commercial properties[11][12] - Compared to March 31, 2025, NPAs declined by $104,000[11] Allowance for Credit Losses Allowance for Credit Losses (June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :------------ | :--------- | :--------- | | ACL | $51.6 million | $52.5 million | -$0.9 million | -1.7% | | ACL as % of Gross Loans | 1.26% | 1.36% | - | - | | ACL as % of Nonperforming Loans | 224% | 786% | - | - | | Annualized Net Charge-offs (Q4) | 0.53% | 0.06% | - | - | | Net Charge-offs (Q4) | $5.3 million | - | - | - | | Annualized Net Charge-offs (FY2025) | 0.17% | 0.05% | - | - | - The decrease in ACL was primarily due to net charge-offs (including a $3.8 million special-purpose CRE charge-off and a $742,000 commercial and industrial charge-off) and a decline in certain qualitative adjustments, partially offset by higher required reserves for pooled loans reflecting a deteriorating economic outlook and increased modeled loss drivers[13] - Management believes the ACL was adequate as of June 30, 2025, despite significant uncertainty as borrowers adjust to relatively high market interest rates[13] Liabilities Total liabilities increased by 8.7% in fiscal 2025, primarily driven by growth in total deposits, which saw increases in certificates of deposit and savings accounts due to the higher rate environment Total Liabilities (June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Total Liabilities | $4.5 billion | $4.1 billion | $359.3 million | 8.7% | | Total Deposits | $4.3 billion | $3.9 billion | $338.3 million | 8.6% | | FHLB Advances | $104.1 million | $102.1 million | $2.0 million | 2.0% | - Growth in liabilities also reflected increases in other liabilities, accrued interest and income taxes payable, and securities sold under agreement to repurchase[14] Deposit Growth & Composition - Deposit portfolio increases were seen in certificates of deposit and savings accounts, as customers moved balances into special rate time deposits and high yield savings accounts[15] Summary Deposit Data (in thousands) | Deposit Type | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Non-interest bearing deposits | $508,110 | $514,107 | | NOW accounts | $1,132,298 | $1,239,663 | | MMDAs - non-brokered | $329,837 | $334,774 | | Brokered MMDAs | $1,414 | $2,025 | | Savings accounts | $661,115 | $517,084 | | Certificates of deposit - non-brokered | $1,414,945 | $1,163,650 | | Brokered certificates of deposit | $233,649 | $171,756 | | Total Deposits | $4,281,368 | $3,943,059 | | Public unit deposits | $550,836 | $594,589 | | Brokered deposits (total) | $233.6 million | $171.8 million | | Average Loan-to-Deposit Ratio (Q4) | 94.5% | 96.3% | | Period End Loan-to-Deposit Ratio | 97.6% | 95.8% | - Public unit balances decreased by $43.8 million due to losing a bid to retain a larger local public unit depositor[15] Stockholders' Equity Stockholders' equity increased by 11.4% to $544.7 million, primarily due to retained earnings and a reduction in accumulated other comprehensive losses (AOCL) as investment market values appreciated Stockholders' Equity (June 30, 2025 vs. June 30, 2024) | Metric | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Stockholders' Equity | $544.7 million | $488.7 million | $55.9 million | 11.4% | | AOCL | $11.4 million | $17.5 million | -$6.1 million | -34.9% | | Tangible Book Value per Share | $41.87 | $36.68 | $5.19 | 14.1% | - The reduction in AOCL was due to the appreciation of the Company's investments as market interest rates decreased[17] - The Company does not hold any securities classified as held-to-maturity[17] Income Statement Analysis (Quarterly) This section analyzes quarterly income statement performance, covering net interest income, credit loss provision, noninterest items, and income taxes Net Interest Income & Margin Net interest income increased by 14.9% year-over-year, driven by a 21 basis point expansion in net interest margin, primarily due to a decrease in the cost of interest-bearing liabilities Net Interest Income and Margin (Q4 FY2025 vs. Q4 FY2024) | Metric | Q4 FY2025 | Q4 FY2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Net Interest Income | $40.3 million | $35.1 million | $5.2 million | 14.9% | | Net Interest Margin | 3.46% | 3.25% | Up 21 bps | - | | Cost of Interest-Bearing Liabilities | - | - | Down 20 bps | - | | Yield on Interest-Earning Assets | - | - | Up 7 bps | - | | Average Interest-Earning Assets Growth | 7.9% | - | - | - | - Acquisition-related loan discount accretion and deposit premium amortization contributed 5 basis points to net interest margin in Q4 FY2025, down from 10 basis points in the prior year and 13 basis points in the linked quarter[19] Provision for Credit Losses The provision for credit losses significantly increased year-over-year, primarily to cover higher net charge-offs and support loan growth, as well as increased unfunded balances and expected funding rates Provision for Credit Losses (Q4 FY2025 vs. Q4 FY2024) | Metric | Q4 FY2025 | Q4 FY2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Provision for Credit Losses | $2.5 million | $0.9 million | $1.6 million | 177.8% | | Provision for ACL (loans) | $2.0 million | - | - | - | | Provision for Off-Balance Sheet Exposures | $0.475 million | - | - | - | - The increase was primarily attributable to providing for net charge-offs and to support loan growth, in addition to an increase in unfunded balances and an increase in the expected funding rate on available credit[20][21] Noninterest Income Noninterest income decreased year-over-year due to accounting changes for tax credits and negative adjustments to mortgage servicing rights, partially offset by increases in other loan fees and deposit account charges Noninterest Income (Q4 FY2025 vs. Q4 FY2024) | Metric | Q4 FY2025 | Q4 FY2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Total Noninterest Income | $7.3 million | $7.8 million | -$0.487 million | -6.3% | | Tax Credit Benefit (Q4 FY2024) | - | $0.675 million | - | - | | Mortgage Servicing Rights Adjustment (Q4 FY2025) | -$0.108 million | - | - | - | | Mortgage Servicing Rights Benefit (Q4 FY2024) | - | $0.131 million | - | - | - The decrease was primarily due to the adoption of ASU 2023-02, which now recognizes tax credit benefits as a direct reduction to income tax provision instead of noninterest income, and a negative fair value adjustment to mortgage servicing rights[22] - These decreases were partially offset by higher other loan fees from increased originations and increased deposit account charges due to higher non-sufficient fund activity and maintenance fees[22] Noninterest Expense & Efficiency Noninterest expense increased year-over-year due to higher legal and professional fees, data processing expense, and other noninterest expenses, but the efficiency ratio improved due to faster net interest income growth Noninterest Expense and Efficiency Ratio (Q4 FY2025 vs. Q4 FY2024) | Metric | Q4 FY2025 | Q4 FY2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Total Noninterest Expense | $26.0 million | $25.0 million | $0.974 million | 3.9% | | Efficiency Ratio | 54.6% | 58.3% | Down 3.7% | - | - Key drivers of expense increase included elevated legal and professional fees ($425,000) for vendor contract negotiation, data processing expense (third-party software), and other noninterest expense (card fraud losses, deposit product expenses)[23] - These increases were partially offset by decreases in intangible amortization expense (due to full amortization of an older merger's core deposit intangible) and reduced telecommunication expenses[23] Income Taxes The income tax provision remained flat year-over-year, but the effective tax rate decreased significantly due to a tax benefit from recognizing tax credits under the proportional amortization method (ASC 2023-02) Income Tax Provision and Effective Tax Rate (Q4 FY2025 vs. Q4 FY2024) | Metric | Q4 FY2025 | Q4 FY2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Income Tax Provision | $3.4 million | $3.4 million | $0 | 0% | | Effective Tax Rate | 17.5% | 20.2% | Down 2.7% | - | | Income Tax Benefit from Tax Credits | $0.701 million | - | - | - | - The decrease in the effective tax rate was primarily attributable to a $701,000 income tax benefit from the recognition of tax credits utilizing the proportional amortization method under ASC 2023-02[25] - In the prior fiscal year, similar benefits were recognized through noninterest income[25] Forward-Looking Statements This section outlines various known and unknown risks and uncertainties that could cause actual results to differ materially from forward-looking statements, including economic conditions, merger integration, interest rate fluctuations, regulatory changes, and technological impacts - Forward-looking statements are subject to risks and uncertainties, including potential adverse impacts to economic conditions, challenges in realizing merger benefits, fluctuations in interest rates, and governmental policies[27] - Other risks include changes in loan delinquencies, ability to access funding, acceptance of new products, real estate value fluctuations, legislative/regulatory changes, accounting principle changes, and results of regulatory examinations[27] - The Company undertakes no obligation to publicly update or revise any forward-looking statements[27] Unaudited Condensed Consolidated Financial Information This section provides unaudited condensed consolidated financial data, including balance sheets, nonperforming assets, income statements, and key ratios Summary Balance Sheet Data This section provides a detailed breakdown of the Company's balance sheet at various quarter-ends, highlighting asset and liability composition, equity, and key per-share metrics Summary Balance Sheet Data (dollars in thousands, except per share data) | Item | June 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Sep. 30, 2024 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | :------------ | :------------ | :------------ | | Cash equivalents and time deposits | $193,105 | $227,136 | $146,078 | $75,591 | $61,395 | | AFS securities | $460,844 | $462,930 | $468,060 | $420,209 | $427,903 | | Loans receivable, gross | $4,099,698 | $4,023,509 | $4,026,979 | $3,966,518 | $3,849,803 | | Allowance for credit losses | $51,629 | $54,940 | $54,740 | $54,437 | $52,516 | | Loans receivable, net | $4,048,069 | $3,968,569 | $3,972,239 | $3,912,081 | $3,797,287 | | Total assets | $5,019,607 | $4,976,496 | $4,907,674 | $4,729,200 | $4,604,316 | | Interest-bearing deposits | $3,773,258 | $3,747,964 | $3,696,428 | $3,536,933 | $3,428,952 | | Noninterest-bearing deposits | $508,110 | $513,418 | $514,199 | $503,209 | $514,107 | | Total liabilities | $4,474,915 | $4,447,706 | $4,395,303 | $4,223,571 | $4,115,568 | | Total stockholders' equity | $544,692 | $528,790 | $512,371 | $505,629 | $488,748 | | Equity to assets ratio | 10.85% | 10.63% | 10.44% | 10.69% | 10.61% | | Book value per common share | $48.42 | $47.01 | $45.62 | $45.06 | $43.56 | | Tangible book value per common share | $41.87 | $40.37 | $38.91 | $38.26 | $36.68 | Nonperforming Asset Data This table provides a detailed view of nonperforming assets, including nonaccrual loans, other real estate owned, and their ratios to total assets and gross loans, showing a significant increase in nonperforming loans year-over-year Nonperforming Asset Data (dollars in thousands) | Item | June 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Sep. 30, 2024 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | :------------ | :------------ | :------------ | | Nonaccrual loans | $23,040 | $21,970 | $8,309 | $8,206 | $6,680 | | Total nonperforming loans | $23,040 | $21,970 | $8,309 | $8,206 | $6,680 | | Other real estate owned (OREO) | $625 | $1,775 | $2,423 | $3,842 | $3,865 | | Total nonperforming assets | $23,697 | $23,801 | $10,769 | $12,069 | $10,568 | | Total nonperforming assets to total assets | 0.47% | 0.48% | 0.22% | 0.26% | 0.23% | | Total nonperforming loans to gross loans | 0.56% | 0.55% | 0.21% | 0.21% | 0.17% | | Allowance for credit losses to nonperforming loans | 224.08% | 250.07% | 658.80% | 663.38% | 786.17% | | Allowance for credit losses to gross loans | 1.26% | 1.37% | 1.36% | 1.37% | 1.36% | | Performing modifications to borrowers experiencing financial difficulty | $26,642 | $23,304 | $24,083 | $24,340 | $24,602 | Quarterly Summary Income Statement Data This table presents a detailed quarterly breakdown of the Company's income statement, including interest income and expense, net interest income, provision for credit losses, noninterest income, noninterest expense, and net income Quarterly Summary Income Statement Data (dollars in thousands, except per share data) | Item | June 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Sep. 30, 2024 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | :------------ | :------------ | :------------ | | Total interest income | $70,638 | $69,925 | $69,424 | $67,378 | $64,667 | | Total interest expense | $30,305 | $30,446 | $31,281 | $30,717 | $29,572 | | Net interest income | $40,333 | $39,479 | $38,143 | $36,661 | $35,095 | | Provision for credit losses | $2,500 | $932 | $932 | $2,159 | $900 | | Total noninterest income | $7,280 | $6,666 | $6,865 | $7,174 | $7,767 | | Total noninterest expense | $25,976 | $25,391 | $24,876 | $25,841 | $25,002 | | Net income before income taxes | $19,137 | $19,822 | $19,200 | $15,835 | $16,960 | | Income taxes | $3,351 | $4,139 | $4,547 | $3,377 | $3,430 | | Net income | $15,786 | $15,683 | $14,653 | $12,458 | $13,530 | | Diluted earnings per common share | $1.39 | $1.39 | $1.30 | $1.10 | $1.19 | | Dividends per common share | $0.23 | $0.23 | $0.23 | $0.23 | $0.21 | Quarterly Average Balance Sheet Data & Key Ratios This section provides average balance sheet data for key interest-earning assets and interest-bearing liabilities, along with critical performance ratios such as return on average assets, return on average common stockholders' equity, net interest margin, net interest spread, and efficiency ratio Quarterly Average Balance Sheet Data (dollars in thousands) | Item | June 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Sep. 30, 2024 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | :------------ | :------------ | :------------ | | Total interest-earning assets | $4,668,640 | $4,655,400 | $4,534,252 | $4,355,474 | $4,324,839 | | Total assets | $4,967,857 | $4,946,139 | $4,825,469 | $4,638,530 | $4,610,795 | | Total interest-bearing liabilities | $3,870,090 | $3,882,225 | $3,760,996 | $3,575,958 | $3,552,664 | | Total liabilities | $4,431,964 | $4,426,664 | $4,317,316 | $4,141,641 | $4,127,499 | | Total stockholders' equity | $535,893 | $519,475 | $508,153 | $496,889 | $483,296 | Key Ratios | Ratio | June 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Sep. 30, 2024 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | :------------ | :------------ | :------------ | | Return on average assets | 1.27% | 1.27% | 1.21% | 1.07% | 1.17% | | Return on average common stockholders' equity | 11.8% | 12.1% | 11.5% | 10.0% | 11.2% | | Net interest margin | 3.46% | 3.39% | 3.36% | 3.37% | 3.25% | | Net interest spread | 2.92% | 2.87% | 2.79% | 2.75% | 2.65% | | Efficiency ratio | 54.6% | 55.1% | 55.3% | 59.0% | 58.3% |