Financial Data and Key Metrics Changes - The diluted EPS for the current quarter was $1.38, down $0.01 from the linked June 2025 quarter, but up $0.28 from the September quarter a year ago [4] - Net interest margin for the quarter was 3.57%, up from 3.47% for the fourth quarter of fiscal 2025 and from 3.34% in the year-ago quarter [5][18] - Non-interest income was down by 9.7% or $707,000 compared to the linked quarter, but was more than offset by lower non-interest expense of $925,000 or a 3.6% decrease quarter over quarter [5][22] - The allowance for credit losses at September 30, 2025, totaled $52.1 million, representing 1.24% of gross loans [23] Business Line Data and Key Metrics Changes - Gross loan balances increased by $91 million or 2.2% during the first quarter, with a year-over-year increase of $225 million or 5.7% [6] - The growth in the quarter was led by non-owner occupied commercial real estate, one-to-four family residential, commercial & industrial, and multifamily loans [6] - Deposit balances were relatively flat compared to the linked quarter but up $240 million or 5.9% over the last 12 months [7] Market Data and Key Metrics Changes - Strong growth was experienced in the east region, particularly in agricultural activity, while the south region also showed good growth [7] - The loan pipeline anticipated to fund in the next 90 days remains strong, totaling about $195 million at September 30 [7] Company Strategy and Development Direction - The company is optimistic about achieving mid-single-digit loan growth in the fiscal year despite expectations of a slowdown in loan growth due to seasonal factors [7][20] - The company is focusing on improving credit quality and has been proactive in working with borrowers to assess their positions and utilize government programs to mitigate risk [17] - There is a modest uptick in M&A discussions, with the company well-positioned to act when the right partner is ready [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about performance in the new fiscal year, despite a larger provision for credit losses due to the evolving economic environment [3][24] - The company expects to see continued net interest income growth through the year, despite historical seasonal slowdowns in loan growth [20][21] - Management noted that charge-off activity is expected to drop from the levels of the last two quarters, with current delinquency levels trending back to historical ranges [33] Other Important Information - The company has repurchased just over 8,000 shares at an average price of just under $55, with an average purchase price at 127% of tangible book value [9] - The tangible book value increased by $5.09 or 13.3% over the last 12 months, attributed to earnings retention and improvements in the bank's unrealized loss in the investment portfolio [8][9] Q&A Session Summary Question: Outlook for provision expense and charge-offs - Management expects charge-off activity to drop from the levels of the last two quarters, with current delinquency levels running similar to historical ranges [33] Question: Bank's rate sensitivity and margin expansion - The bank remains overall liability-sensitive, with expectations of being a net beneficiary of rate cuts, estimating a 1% to 3% increase in net interest income per 100 basis points of rate cuts [36] Question: Update on loan pipeline and growth expectations - The loan pipeline remains consistent, with expectations of mid-single-digit growth for the fiscal year, though seasonal slowdowns are anticipated [44] Question: Buyback activity and M&A discussions - Management anticipates being more active in buyback activity given current pricing and is in discussions for potential M&A opportunities, ideally targeting banks in the billion-dollar asset range [50][27]

Financial Performance - The company reported a net income of $100 million for Q3 2025, a 25% increase from $80 million in Q2 2025, with normalized earnings per share growing 13% year-over-year [4][11] - Return on average assets for the quarter was 2.1%, significantly higher than the previous quarter [11] - Net interest income reached $217.9 million, an 8% increase compared to Q3 2024, with a net interest margin of 4.57%, up 32 basis points over the last four quarters [14][15] Loan and Deposit Growth - Total loans grew by $181 million, or 5.6% annualized, surpassing $13 billion for the first time since 2010 [5] - Core franchise deposits increased by $140 million, with favorable trends in market flows despite higher competition [7] - The company experienced a slowdown in consumer credit demand, particularly in the auto industry, which saw a 7% decline in total retail sales year-to-date [6][9] Asset Quality and Credit Trends - Non-performing assets decreased by 7% with a reduction in charge-offs and stable credit trends [7][19] - The allowance for credit losses decreased to 1.89% of loans, reflecting improved loss severities in the residential mortgage portfolio [20][21] - Net charge-offs for the quarter were $19.9 million, representing 0.62% of average loans, slightly up from the previous quarter [20] Strategic Outlook and Market Conditions - The company plans to strategically deploy excess capital to support organic growth, particularly in commercial and residential mortgage lending [9][10] - The operating environment remains stable, with potential impacts from evolving trade dynamics and inflationary pressures being monitored [8] - The company expects loan growth for the year to be in the range of 3% to 4%, down from previous guidance of 5% [10][64] Management Commentary - Management expressed confidence in the resilience of the labor market in Puerto Rico and the positive impact of federal disaster funds on local economies [9] - The company is optimistic about the ongoing expansion of the manufacturing sector and its potential benefits for the franchise [9] - Management noted that competitive pressures in the deposit market are primarily from smaller players, with expectations for some reduction in deposit costs due to rate cuts [38][41] Other Important Information - The board authorized an additional $200 million share buyback program, continuing the strategy of returning 100% of annual earnings to shareholders [8][22] - The effective tax rate for 2025 is estimated to be around 22.2%, reflecting some expected improvements [84] Q&A Session Summary Question: Is the tax situation a one-time benefit? - Management confirmed that while there will be no further reversals of deferred tax assets at the same level, there will be ongoing benefits from normal operating losses [26] Question: What is the health of the consumer in Puerto Rico? - Management indicated that auto sales are normalizing and credit demand has been lower, but overall consumer credit trends remain stable [30] Question: What are the expectations for deposit costs with upcoming rate cuts? - Management expects some reduction in deposit costs, but noted that the timing of these reductions may lag behind floating asset products [41] Question: What is the outlook for loan growth into Q4? - The company maintains a loan growth guidance of 3% to 4% for the year, with a strong pipeline in commercial lending [64] Question: Can you elaborate on competitive pressures in the deposit market? - Management noted that competitive pressures are primarily from smaller players and that they are managing this by offering additional services beyond just deposit products [39]

Financial Performance - Net income increased by $1 million to $211 million in Q3 2025 compared to Q2 2025[3] - Net interest income increased by $15 million to $647 million in Q3 2025[4, 18] - Earnings per share (EPS) increased by $006 to $315 in Q3 2025[3] - Tangible book value per share increased by $371 to $7912[6] Balance Sheet - Loans held in portfolio grew by $502 million or 13% to $38687 million[3, 4, 62] - Total deposits decreased by $704 million or 11% to $66513 million[3, 4] - Common Equity Tier 1 decreased 12 bps to 1579%[6] Credit Quality - Non-performing loans (NPLs) increased by $190 million to $502 million, with the NPL ratio at 130% versus 082% in Q2 2025[3, 6] - The ACL-NPL ratio decreased to 157% from 247% in Q2 2025[3, 6] - Net charge-offs (NCO) ratio increased to 060% from 045% in Q2 2025[3, 6] Business Segment Performance - BPPR's loans held in portfolio increased by $357 million to $27131 million[7, 9] - Popular US's loans held in portfolio increased by $145 million to $11525 million[7, 9]

Financial Performance - The company reported a net income of $100 million for Q3 2025, a 25% increase from $80 million in Q2 2025, with normalized earnings per share growing 13% year-over-year [4][10] - Return on average assets for the quarter was 2.1%, significantly higher than the previous quarter [10] - Net interest income reached $217.9 million, an 8% increase compared to Q3 2024, with a net interest margin of 4.57%, up 32 basis points over the last four quarters [12][10] Business Line Performance - Total loans grew by $181 million, or 5.6% annualized, surpassing $13 billion for the first time since 2010 [5] - The company experienced a slowdown in consumer credit demand, particularly in the auto industry, which saw a 7% decline in total retail sales year-to-date [5][6] - Commercial and construction lending segments showed growth, while residential mortgage business maintained steady loan production [6] Market Data - The company noted a 7% reduction in non-performing assets and stable credit quality, with consumer charge-offs normalizing [6][18] - The competitive landscape for deposits remains challenging, particularly from smaller players, but the company is optimistic about stabilizing deposit costs amid expected rate cuts [6][36] Strategic Direction - The company plans to continue its strategy of returning 100% of annual earnings to shareholders, with a new $200 million share buyback program authorized [7][21] - The management emphasized the importance of organic growth and potential M&A opportunities in the Florida market, focusing on franchises that complement existing operations [21][44] Management Commentary - Management expressed confidence in the resilience of the labor market in Puerto Rico and the positive impact of federal disaster funds on local economies [8] - The outlook for loan growth is projected to be between 3% and 4% for the year, influenced by the slowdown in auto lending but supported by strong pipelines in commercial lending [9][61] Other Important Information - The effective tax rate is expected to stabilize around 22.2% for 2025, reflecting improvements from recent legislative changes [10][78] - The company has seen a shift in deposit mix, with time deposits increasing while lower-cost non-maturity deposits decreased [13] Q&A Session Summary Question: Is the tax situation a one-time benefit? - Management confirmed that while there will be no further reversals of deferred tax assets at the same level, there will be ongoing benefits from normal operating losses [25] Question: What is the outlook for consumer health in Puerto Rico? - Management noted that while auto sales are normalizing, credit demand has been lower, but overall consumer credit trends remain stable [26][28] Question: What are the expectations for deposit costs with upcoming rate cuts? - Management expects some reduction in deposit costs due to rate cuts, but the timing of these reductions may lag behind asset repricing [40] Question: How does credit performance at other banks influence reserving? - Management stated that they maintain a firm risk appetite and focus on their portfolio's performance, without seeing systemic impacts from competitors [41] Question: What are the capital deployment priorities? - The company prioritizes organic growth and is open to M&A opportunities that enhance their franchise, particularly in Florida [44]

Financial Data and Key Metrics Changes - Net interest income increased by $1.5 million compared to the second quarter and by $5 million year-over-year [4] - Net income rose by $3.5 million, or 43%, compared to Q3 of 2024 [5] - Return on average assets improved by 28 basis points to 1.16% compared to 0.88% in the third quarter of last year [5] - Earnings per share increased to $0.47 in the third quarter, a 46% increase compared to Q3 a year ago [5] - Return on tangible common equity was reported at 12.35% [5] Business Line Data and Key Metrics Changes - Loans increased by $47 million for the second quarter, or 5.6% annualized, and grew by $286 million, or over 9%, year-over-year [8] - C&I loans grew by $194 million, and owner-occupied commercial real estate loans increased by $40 million [8] - Specialized lending groups now constitute 16% of total loans, with no single niche exceeding 5% of total loans [5] - Non-performing assets declined to 36 basis points compared to 40 basis points at June 30 and 47 basis points one year ago [11] Market Data and Key Metrics Changes - Deposit balances increased by over $55 million during the quarter, or an annualized 7% [9] - Average cost of deposits declined by 3 basis points to 2.69% for the quarter [9] - Average non-interest-bearing deposits grew by $21 million during the quarter and by $52 million year-to-date [15] Company Strategy and Development Direction - The company is evolving into a middle-market commercial bank, focusing on relationship-driven strategies rather than growth for its own sake [19] - New branch openings and strategic closures are part of the company's efforts to optimize its branch network [17] - The company aims to maintain a balance between growing deposits and managing costs effectively [15] Management's Comments on Operating Environment and Future Outlook - The economic outlook remains uncertain, but the company is well-positioned for various rate environments [7] - Management is focused on maintaining credit quality despite some softness in the small business segment [6] - The company anticipates a modest increase in expenses due to new branches but aims to keep overall costs flat [35] Other Important Information - Non-interest income totaled $2.4 million in Q3 2025, down from $2.7 million in Q2 [12] - The efficiency ratio improved to 52%, remaining below 60% for the 25th consecutive quarter [13] - The company repurchased almost 120,000 shares at an average price of $14.91 during the quarter [7] Q&A Session Summary Question: Discussion on expenses and efficiency actions - Management highlighted ongoing focus on cost control while balancing investment opportunities, with no major new costs anticipated [32][34] Question: Margin and deposit cost adjustments following Federal Reserve cuts - Management indicated that adjustments to deposit costs will be made in response to Federal Reserve actions, aiming for a neutral impact on margins [38][39] Question: Capital levels and buyback considerations - The company maintains a soft limit on total risk-based capital ratio around 11.5% and is open to capital deployment through buybacks depending on market conditions [43][44]

Financial Data and Key Metrics Changes - Earnings per share for Q3 2025 were reported at $0.30 on a fully diluted GAAP basis and $0.36 on a core basis [5] - Net interest income increased by $3 million compared to the prior quarter, marking the fourth consecutive quarter of growth [6] - The net interest margin remained stable at 2.91% compared to the second quarter [6] - Total loans increased by $373 million, representing a 14% annualized growth rate driven by strong originations of $1 billion [6][9] - Asset quality remained strong, with total loans classified as special mention and substandard decreasing 15% to $124 million, or 1.2% of total loans [7] Business Line Data and Key Metrics Changes - Loan originations for the quarter totaled $1 billion, resulting in loan growth of $373 million [9] - The commercial and industrial segment saw a 12% increase for the quarter [9] - Non-interest income increased by 5% to $12.3 million, primarily driven by strong swap demand linked to commercial growth [11] Market Data and Key Metrics Changes - Total deposits increased by $203 million, with organic growth at $321 million before decreases in broker CDs [10] - Premier banking teams contributed $128 million of new deposits for the quarter, with a target of $500 million by the end of 2025 [10] - Deposit balances totaled $242 million across more than 1,100 accounts, with approximately 20% in non-interest-bearing DDA [10] Company Strategy and Development Direction - The company is focusing on outsourcing residential loan originations and underwriting functions to improve operating leverage and earnings in 2026 [8] - The board approved a quarterly cash dividend of $0.20 per common share, marking the 115th consecutive quarterly cash dividend [8] - The company expects 7% to 9% annualized loan growth for 2026, predominantly driven by commercial and industrial loans [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong asset quality and expects positive expansion in net interest income in line with or higher than loan growth [13][17] - The company anticipates modest short-term compression on margin in Q4 due to seasonality and residual repricing of legacy deposit relationships [13] - Management highlighted the importance of evaluating capital optimization opportunities while supporting loan growth [17] Other Important Information - Operating expenses for the quarter were $76 million, including $4 million of restructuring charges related to outsourcing initiatives [8] - The CET1 ratio is estimated at 10.6%, reflecting robust capital levels despite loan growth [8][16] - The company expects a pre-tax improvement in annual operating results of approximately $10 million from restructuring initiatives [16] Q&A Session Summary Question: Clarification on net interest income guidance - Management clarified that the 3% terminal rate refers to assumptions around Fed rate cuts, not the NIM margin, and expects NIM to breach 3% in the first half of next year [21][23] Question: Premier banking segment deposit growth - Management attributed deposit growth to the acclimation of newly hired teams and operational accounts being converted to funding [36][37] Question: Impact of restructuring on non-interest income - Management confirmed a $10 million pre-tax benefit from restructuring, with a $4 million headwind in revenue expected [41][44] Question: Update on GovCon exposure - Management indicated a $100 million exposure focused on mission-critical contractors, with no significant concerns regarding credit quality [52][56] Question: ROA expectations - Management anticipates achieving a 1% ROA by the first quarter of 2027, with continued growth throughout that year [67]

Financial Data and Key Metrics Changes - Earnings per share for Q3 2025 were reported at $0.30 on a fully diluted GAAP basis and $0.36 on a core basis [5] - Net interest income increased by $3 million compared to the prior quarter, driven by an increase in average net loans of $242 million [6] - The net interest margin remained stable at 2.91% compared to the second quarter [6] - Total loans increased by $373 million, representing a 14% annualized growth rate [6] - Asset quality remained strong, with total loans classified as special mention and substandard decreasing 15% to $124 million, or 1.2% of total loans [7] Business Line Data and Key Metrics Changes - Loan originations for the quarter totaled $1 billion, resulting in loan growth of $373 million [9] - The commercial and industrial loan segment increased by 12% for the quarter [9] - Non-interest income increased by 5% to $12.3 million, primarily driven by strong swap demand linked to commercial growth [11] Market Data and Key Metrics Changes - Total deposits increased by $203 million, with organic growth at $321 million before decreases in broker CDs [10] - Approximately 20% of new deposit balances are in non-interest-bearing demand deposit accounts (DDA) [10] - The overall weighted average cost of deposits was reported at 2.6% [10] Company Strategy and Development Direction - The company is focusing on outsourcing residential loan originations and underwriting functions to improve operating leverage and earnings in 2026 [8] - The board approved a quarterly cash dividend of $0.20 per common share, marking the 115th consecutive quarterly cash dividend [8] - The company expects 7%-9% annualized loan growth for 2026, predominantly driven by growth in commercial and industrial loans [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong asset quality and indicated that credit quality remains among the best in the peer group [15] - The company anticipates modest short-term compression on margin in Q4 due to seasonality and residual repricing of large legacy deposit relationships [13] - Management expects to achieve a return on average assets of 90 basis points by Q4 2026, with a glide path to achieving a 1% return on assets in early 2027 [19] Other Important Information - Operating expenses for the quarter were $76 million, including $4 million of restructuring charges [8] - The CET1 ratio was reported at 10.6%, driven down by loan growth during the quarter [16] - The company plans to maintain a loan-to-deposit ratio of approximately 100% [17] Q&A Session Summary Question: Clarification on net interest income guidance - Management clarified that the 3% terminal rate refers to assumptions around Fed rate cuts, not the net interest margin [23] Question: Update on premier banking segment deposit growth - Management attributed deposit growth to the acclimation of newly hired teams and the conversion of operational accounts to funding [37] Question: Expectations on non-interest income and restructuring impact - Management indicated that restructuring would provide a $10 million pre-tax benefit, with some headwinds expected in non-interest income due to outsourcing initiatives [41][44] Question: Update on GovCon exposure and credit perspective - Management reported a $100 million exposure in GovCon, focused on mission-critical contractors, and expressed confidence in the portfolio's stability [56] Question: When can the company expect to hit a 1% ROA? - Management projected crossing above 1% ROA in the first quarter of 2027, with expectations for continued growth throughout that year [67]

Net Interest Income & Margin - Net interest income is expected to continue to grow at double digits into the end of this year and next year [2] - Net interest margin guidance is between 3 and 5 basis points [2] Regional Economic Activity & Lending - Central New York is experiencing strong employment growth, even before the Micron investment [4] - Manufacturing is strong from Western New York through Massachusetts up to northeastern Pennsylvania, driving growth [5][6] - The company is seeing increased activity from contractors and subcontractors preparing for site work, beginning in November [5] Credit Quality & Loan Provisions - Credit quality is very good in the company's markets [7] - The company lowered loan provisions due to strong housing and commercial lending markets [6][7] - The company is not seeing signs of stress in credit markets, except for temporary weakness related to Canadian tourism in Vermont and northern New York [8]

Financial Outlook - Lloyds raised its outlook for net interest income [1] Economic Forecast - Lloyds forecast UK economic growth would be slow [1]

Core Insights - Southern Missouri Bancorp, Inc. reported preliminary net income of $15.7 million for Q1 fiscal 2026, a 25.6% increase from the previous year, driven by higher net interest income and lower non-interest expenses [2][3][18] - The company declared a quarterly cash dividend of $0.25, marking the 126th consecutive quarterly dividend [4] - The company will host a conference call on October 23, 2025, to discuss the financial results [5] Financial Performance - Earnings per diluted share increased to $1.38, up $0.28 or 25.5% year-over-year [5][18] - Annualized return on average assets (ROA) was 1.24%, and return on average common equity (ROE) was 11.3%, compared to 1.07% and 9.9% respectively in the same quarter last year [5][18] - Net interest margin improved to 3.57%, up from 3.34% a year ago [5][18] Balance Sheet Highlights - Total assets reached $5.0 billion, reflecting a 0.3% increase from the previous quarter [7] - Gross loan balances increased by $91.2 million or 2.2% during the quarter, and by $225.2 million or 5.7% year-over-year [9] - Deposit balances decreased slightly by $878,000 during the quarter but increased by $240.3 million or 5.9% over the last twelve months [15] Loan and Credit Quality - Provision for credit losses (PCL) was $4.5 million, an increase of $2.3 million from the previous year [20][13] - Nonperforming loans (NPLs) rose to $26.0 million, or 0.62% of gross loans, compared to $23.0 million or 0.56% in the prior quarter [12][33] - The allowance for credit losses (ACL) was $52.1 million, representing 1.24% of gross loans [13][33] Non-Interest Income and Expenses - Non-interest income decreased by $601,000 or 8.4% year-over-year, primarily due to lower loan fees and net realized gains on loan sales [21] - Non-interest expenses decreased by $790,000 or 3.1% compared to the same period last year, driven by lower compensation and benefits [22] - The efficiency ratio improved to 51.1%, down from 59.0% in the same quarter last year [23] Tax and Equity - The income tax provision increased by 12.2% to $3.8 million, with an effective tax rate of 19.5% [24] - Stockholders' equity rose to $560.2 million, a 2.9% increase from the previous quarter [17]