Southern Missouri Bancorp(US:SMBC)2025-11-07 19:34Financial Performance - Net income for the first three months of fiscal 2025 was $15.7 million, an increase of $3.2 million, or 25.6%, compared to the same period of the prior fiscal year [177]. - Fully-diluted net income per share increased by $0.28, or 25.5%, to $1.38 for the three-month period ended September 30, 2025 [177]. - Net interest income increased by $5.8 million, or 15.7%, for the first three months of fiscal 2025 [177]. - Noninterest income decreased by $601,000, or 8.4%, to $6.6 million for the three-month period ended September 30, 2025 [181]. - Noninterest expense decreased by $790,000, or 3.1%, to $25.1 million for the three-month period ended September 30, 2025 [183]. - The annualized return on average assets for the three-month period ended September 30, 2025, was 1.24%, up from 1.07% in the same period last year [202]. Asset and Liability Management - Total assets increased by $16.7 million, or 0.3%, to $5.0 billion at September 30, 2025, compared to June 30, 2025 [185]. - Loans, net of the allowance for credit losses, increased by $90.7 million, or 2.2%, to $4.1 billion at September 30, 2025 [187]. - Cash equivalents and time deposits decreased by $68.7 million, or 35.6%, to $124.4 million at September 30, 2025 [186]. - Deposits were $4.3 billion at September 30, 2025, a decrease of $878,000 compared to June 30, 2025, with a notable decline in certificates of deposit by $33.2 million [191]. - Stockholders' equity increased to $560.2 million at September 30, 2025, an increase of $15.5 million or 2.9% from June 30, 2025, primarily due to retained earnings [193]. Credit Quality and Loss Provisions - Provision for Credit Losses (PCL) increased to $4.5 million for the three-month period ended September 30, 2025, compared to $2.2 million in the same period last year, reflecting a $4.1 million provision for loan balances and a $359,000 provision for off-balance sheet credit exposures [206]. - Net charge-offs for the quarter were $3.7 million, with a net charge-off rate of 0.36%, compared to 0.01% in the same quarter last year [216]. - Loans adversely classified increased to $55.1 million, or 1.31% of total loans, as of September 30, 2025, up from $49.6 million, or 1.21%, at June 30, 2025 [219]. - Total past due loans rose from $25.6 million at June 30, 2025, to $29.3 million at September 30, 2025, compared to $13.4 million at September 30, 2024 [219]. - The Allowance for Credit Loss (ACL) at September 30, 2025, totaled $52.1 million, representing 1.24% of gross loans, compared to $51.6 million or 1.26% at June 30, 2025 [214]. Interest Rate Risk Management - The net interest margin increased by 23 basis points to 3.57% during the first three months of fiscal 2026 [179]. - The yield on interest-earning assets increased by one basis point, while the cost of interest-bearing liabilities decreased by 28 basis points, resulting in a net interest margin increase from 3.34% to 3.57% [203]. - The Company aims to manage interest rate sensitivity to maximize net interest income while minimizing excessive interest rate risk exposure [236]. - The Company has utilized longer-term fixed-rate FHLB advances to offset interest rate risk from fixed-rate lending [237]. - The company maintained a $60 million notional amount of pay-fixed/receive-floating interest rate swaps to hedge against rising interest rates [244]. Regulatory Capital and Compliance - Total capital to risk-weighted assets ratio was 13.94% for the consolidated entity as of September 30, 2025, exceeding the required minimum of 8.00% [233]. - Tier I capital to risk-weighted assets ratio was 12.51% for the consolidated entity as of September 30, 2025, above the required minimum of 6.00% [233]. - The Bank was categorized as well capitalized under the regulatory framework for prompt corrective action as of September 30, 2025 [231]. Operational Adjustments and Customer Focus - The Company continues to focus on customer retention and satisfaction while offering new products to increase less rate-sensitive deposit accounts [238]. - Modifications to borrowers experiencing financial difficulty totaled $28.7 million as of September 30, 2025, with $1.6 million considered nonperforming [223]. Control Procedures and Limitations - The Company acknowledges that its control procedures cannot guarantee the prevention of all errors and fraud, providing only reasonable assurance [249]. - Inherent limitations in control procedures may lead to undetected misstatements due to error or fraud [249]. - Control procedures can be circumvented by individual acts, collusion, or management override [249]. - The design of control procedures is based on assumptions about future events, which may not hold true [249]. - Over time, controls may become inadequate due to changing conditions or deteriorating compliance [249].