Southern Missouri Bancorp(SMBC) - 2026 Q2 - Quarterly Report

Financial Performance - Net income for the first six months of fiscal 2026 was $33.8 million, an increase of $6.7 million, or 24.7%, compared to the same period of the prior fiscal year[192] - Net income for the three-month period ended December 31, 2025, was $18.2 million, an increase of $3.5 million or 23.9% compared to the same period in the prior fiscal year[218] - Fully-diluted net income per share for the three-month period was $1.62, up $0.32 or 24.6% year-over-year[219] - Fully-diluted net income per share for the six-month period was $3.00, up $0.60 or 25.0% year-over-year[229] Income and Expenses - Net interest income increased by $10.5 million, or 14.0%, for the first six months of fiscal 2026 compared to the same period in fiscal 2025[194] - Noninterest income for the six-month period ended December 31, 2025, was $13.3 million, a decrease of $690,000, or 4.9%, compared to the same period of the prior fiscal year[196] - Noninterest expense decreased by $397,000, or 0.8%, to $50.3 million for the six-month period ended December 31, 2025, compared to the same period of the prior fiscal year[198] - Noninterest income for the three-month period was $6.8 million, a decrease of $89,000 or 1.3%, primarily due to lower other loan fees[223] - Noninterest expense for the three-month period was $25.3 million, an increase of $394,000 or 1.6%, mainly due to higher data processing and advertising expenses[224] Assets and Liabilities - Total assets increased by $74.8 million, or 1.5%, to $5.1 billion at December 31, 2025, compared to June 30, 2025[199] - Total liabilities as of December 31, 2025, were $4.52 billion, with total stockholders' equity of $563.02 million[212] - Cash equivalents and time deposits decreased by $58.8 million, or 30.4%, to $134.3 million at December 31, 2025, compared to June 30, 2025[200] - Deposits increased to $4.3 billion at December 31, 2025, reflecting a rise of $27.0 million, or 0.63%, compared to June 30, 2025[204] Loans and Credit Quality - Loans, net of the allowance for credit losses (ACL), increased by $123.1 million, or 3.0%, to $4.2 billion at December 31, 2025, compared to June 30, 2025[201] - The Bank's concentration in non-owner occupied commercial real estate is estimated at 289.4% of Tier 1 capital and ACL as of December 31, 2025, down from 301.9% as of June 30, 2025, with these loans representing 39.4% of gross loans[203] - The total past due loans increased from $25.6 million at June 30, 2025, to $32.0 million at December 31, 2025, attributed to two borrower relationships with significant concerns regarding cash flow[244] - Total nonperforming assets increased to $31.2 million at December 31, 2025, from $23.7 million at June 30, 2025, and $10.8 million at December 31, 2024, primarily due to an increase in nonperforming loans (NPLs)[248] - The Company recorded net charge-offs of $704,000 for the three-month period ended December 31, 2025, with net recoveries of 0.07% (annualized) of average loans outstanding, compared to net charge-offs of 0.02% for the same period of the prior fiscal year[241] Capital Ratios - The Company and Bank's total capital ratio was 13.91% as of December 31, 2025, exceeding the required minimum of 8.00%[258] - The Company had a Tier I capital ratio of 12.48% as of December 31, 2025, above the required minimum of 6.00%[258] Interest Rate Risk and Management - The effective duration of the investment portfolio indicated a stable price sensitivity of approximately 2.3% per 100 basis points movement in market rates as of December 31, 2025[263] - The company maintains a $60 million notional amount in pay-fixed/receive-floating interest rate swaps to hedge against rising interest rates[269] - The Asset/Liability Committee meets monthly to review interest rate risk, liquidity, and capital ratios[270] Internal Controls - The company's disclosure controls and procedures were deemed effective as of December 31, 2025, ensuring timely communication and reporting of required information[273] - There have been no changes in internal control over financial reporting that materially affected the company's controls during the quarter ended December 31, 2025[273] - The company acknowledges that its controls cannot prevent all errors and fraud, highlighting inherent limitations in control procedures[274]