Southern Missouri Bancorp, Inc. ("Company") (NASDAQ:SMBC), the parent corporation of Southern Bank ("Bank"), today announced preliminary net income for the first quarter of fiscal 2026 of $15.7 million, an increase of $3.2 million or 25.6%, as compared to the same period of the prior fiscal year. The increase was due primarily to higher net interest income and slightly lower non-interest expense. This was partially offset by an increase in provision for credit loss (PCL) expense, lower noninterest income and higher provision for income taxes. Preliminary net income was $1.38 per fully diluted common share for the first quarter of fiscal 2026, an increase of $0.28 as compared to $1.10 per fully diluted common share reported for the same period of the prior fiscal year. During the first quarter of fiscal 2026, the Company engaged with a consultant to complete the re-negotiation of a significant Bank contract. The cost associated with this process totaled $572,000, and reduced after-tax net income by $444,000, or $0.04 per fully diluted common share during the current period, noted in further detail below.
Highlights for the first quarter of fiscal 2026:
Earnings per common share (diluted) were $1.38, up $0.28, or 25.5%, as compared to the same quarter a year ago, and down $0.01, or 0.7% from the fourth quarter of fiscal 2025, the linked quarter.
Annualized return on average assets (ROA) was 1.24%, while annualized return on average common equity (ROE) was 11.3%, as compared to 1.07% and 9.9%, respectively, in the same quarter a year ago, and 1.27% and 11.8%, respectively, in the fourth quarter of fiscal 2025, the linked quarter.
Net interest margin for the quarter was 3.57%, up from the 3.34% reported for the year ago period, and up from 3.47% reported for the fourth quarter of fiscal 2025, the linked quarter. Net interest income increased $5.8 million, or 15.7%, as compared to the same quarter a year ago, and increased $2.1 million, or 5.2%, as compared to the fourth quarter of fiscal 2025, the linked quarter.
PCL was $4.5 million during the first quarter of fiscal 2026, an increase of $2.3 million from the year ago period, and an increase of $2.0 million from the June 30, 2025, linked quarter. Provisioning and allowance activity is discussed in further detail below.
Gross loan balances increased by $91.2 million during the first quarter of fiscal 2026, or 2.2%, and increased by $225.2 million, or 5.7%, over the last twelve months.
Deposit balances decreased by $878,000 during the first quarter of fiscal 2026 and increased by $240.3 million, or 5.9%, over the last twelve months.
Tangible book value per share was $43.35 as of September 30, 2025, and increased by $5.09 or 13.3% during the last twelve months.
The Company repurchased 8,145 shares of its common stock in the first quarter of 2026 at an average price of $54.84 per share, for a total of $447,000. The average purchase price was 127% of our tangible book value as of September 30, 2025.
Dividend Declared:
The Board of Directors, on October 21, 2025, declared a quarterly cash dividend on common stock of $0.25, payable November 28, 2025, to stockholders of record at the close of business on November 14, 2025, marking the 126th consecutive quarterly dividend since the inception of the Company. The Board of Directors and management believe the payment of a quarterly cash dividend enhances stockholder value and demonstrates our commitment to and confidence in our future prospects.
Conference Call:
The Company will host a conference call to review the information provided in this press release on Thursday, October 23, 2025, at 9:30 a.m., central time. The call will be available live to interested parties by calling 1-833-470-1428 in the United States and from all other locations. Participants should use participant access code 205221. Telephone playback will be available beginning one hour following the conclusion of the call through October 28, 2025. The playback may be accessed by dialing 1-866-813-9403, and using the conference passcode 138492.
Balance Sheet Summary:
The Company experienced balance sheet growth in the first three months of fiscal 2026, with total assets of $5.0 billion at September 30, 2025, reflecting an increase of $16.7 million, or 0.3%, as compared to June 30, 2025. Growth primarily resulted from an increase in net loans receivable, which was partially offset by a decrease in cash equivalents and time deposits and available for sale securities.
Cash equivalents and time deposits were $124.4 million at September 30, 2025, a decrease of $68.7 million, or 35.6%, as compared to June 30, 2025. This amount was used primarily to fund loan growth. Available for sale securities were $453.9 million at September 30, 2025, down $7.0 million, or 1.5%, as compared to June 30, 2025, as the Company was less active in reinvesting principal payments received.
Loans, net of the allowance for credit losses (ACL), were $4.1 billion at September 30, 2025, increasing by $90.7 million, or 2.2%, as compared to June 30, 2025. The Company noted growth in both the real estate and non-real estate portfolios. Real estate loan growth was primarily driven by increases in non-owner occupied commercial real estate, 1-4 residential real estate, and multi-family real estate loan balances. This was somewhat offset by a decrease in construction and land development loans, due to projects completed and transitioned to permanent financing, generally provided by the Company. In the non-real estate portfolio, growth was driven by seasonal agricultural production loan draws and modest growth in commercial and industrial loan balances. The table below illustrates changes in loan balances by type over recent periods:
Summary Loan Data as of:
Sep. 30,
June 30,
Mar. 31,
Dec. 31,
Sep. 30,
(dollars in thousands)
2025
2025
2025
2024
2024
1-4 residential real estate
$
1,021,300
$
992,445
$
978,908
$
967,196
$
942,916
Non-owner occupied commercial real estate
918,275
888,317
897,125
882,484
903,678
Owner occupied commercial real estate
454,265
442,984
440,282
435,392
438,030
Multi-family real estate
445,953
422,758
405,445
376,081
371,177
Construction and land development
283,912
332,405
323,499
393,388
351,481
Agriculture real estate
255,610
244,983
247,027
239,912
239,787
Total loans secured by real estate
3,379,315
3,323,892
3,292,286
3,294,453
3,247,069
Commercial and industrial
521,945
510,259
488,116
484,799
457,018
Agriculture production
229,338
206,128
186,058
188,284
200,215
Consumer
56,051
55,387
54,022
56,017
58,735
All other loans
5,094
5,102
3,216
3,628
3,699
Total loans
4,191,743
4,100,768
4,023,698
4,027,181
3,966,736
Deferred loan fees, net
—
(178)
(189)
(202)
(218)
Gross loans
4,191,743
4,100,590
4,023,509
4,026,979
3,966,518
Allowance for credit losses
(52,081)
(51,629)
(54,940)
(54,740)
(54,437)
Net loans
$
4,139,662
$
4,048,961
$
3,968,569
$
3,972,239
$
3,912,081
Loans anticipated to fund in the next 90 days totaled $194.5 million at September 30, 2025, as compared to $224.1 million at June 30, 2025, and $168.0 million at September 30, 2024.
The Bank's concentration in non-owner occupied commercial real estate loans is estimated at 295.7% of Tier 1 capital and ACL at September 30, 2025, as compared to 301.9% as of June 30, 2025, the linked quarter end, with these loans representing 39.3% of total loans at September 30, 2025. Multi-family residential real estate, hospitality (hotels/restaurants), care facilities, strip centers, retail stand-alone, and storage units are the most common collateral types within the non-owner occupied commercial real estate loan portfolio. The multi-family residential real estate loan portfolio commonly includes loans collateralized by properties currently in the low-income housing tax credit (LIHTC) program or that have exited the program. The hospitality and retail stand-alone segments include primarily franchised businesses; care facilities consisting mainly of skilled nursing and assisted living centers; and strip centers, which can be defined as non-mall shopping centers with a variety of tenants. Non-owner occupied office property types included 34 loans totaling $20.5 million, or 0.49% of total loans at September 30, 2025, none of which were adversely classified, and are generally comprised of smaller spaces with diverse tenants. The Company continues to monitor its commercial real estate concentration and its individual segments closely.
Nonperforming loans (NPLs) were $26.0 million, or 0.62% of gross loans, at September 30, 2025, as compared to $23.0 million, or 0.56% of gross loans at June 30, 2025. Nonperforming assets (NPAs) were $27.1 million, or 0.54% of total assets at September 30, 2025, as compared to $23.7 million, or 0.47% of total assets, at June 30, 2025. The change in NPAs was primarily attributable to the increase of $3.0 million in NPLs, as additions to NPLs were partially offset by net charge-offs. The increase in NPLs was primarily attributable to one commercial relationship consisting of two loans collateralized by commercial real estate and equipment, as well as three unrelated loans secured by one-to-four family residential properties, all of which were placed on nonaccrual status during the first quarter of fiscal 2026.
Our ACL at September 30, 2025, totaled $52.1 million, representing 1.24% of gross loans and 200% of nonperforming loans, as compared to an ACL of $51.6 million, representing 1.26% of gross loans and 224% of nonperforming loans, at June 30, 2025. The Company has estimated its expected credit losses as of September 30, 2025, under ASC 326-20, and management believes the ACL as of that date was adequate based on that estimate. There remains, however, significant economic uncertainty despite recent reductions in short-term interest rates as labor market conditions soften, while inflation remains above target. The increase in the ACL was primarily attributable to management's assessment of reserve adequacy amid an evolving economic environment, additions to individually reviewed loans, loan growth, and slightly higher reserves required for pooled loans. This was partially offset by net charge-offs, which reduced the overall required reserves for individually evaluated loans. As a percentage of average loans outstanding, the Company recorded net charge offs of 0.36% (annualized) during the current quarter, as compared to 0.01% for the same quarter of the prior fiscal year, and 0.53% during the linked quarter. In the three-month period ended September 30, 2025, net charge offs were $3.7 million, which was primarily attributable to a $2.8 million charge-off associated with a special-purpose CRE relationship, which was reserved for in the prior fiscal year.
Total liabilities were $4.5 billion at September 30, 2025, an increase of $1.2 million, or 0.03%, as compared to June 30, 2025.
Deposits were $4.3 billion at September 30, 2025, a decrease of $878,000, little changed as compared to June 30, 2025. The deposit portfolio declined primarily in certificates of deposit and NOW accounts, as the Bank was less aggressive on deposit pricing given its excess funding position. This was partially offset by increases in savings and money market deposit accounts. The decrease in certificates of deposit was largely driven by a $33.2 million reduction in brokered certificates compared to the linked quarter. Brokered deposits totaled $220.5 million at September 30, 2025, a decrease of $14.6 million from June 30, 2025. Short-term brokered money market deposit accounts were utilized to partially replace the outflow of brokered certificates of deposit. Public unit balances totaled $537.4 million at September 30, 2025, a decrease of $13.5 million compared to June 30, 2025, due to expected seasonal decreases in these accounts. Compared to the same quarter a year ago, nonmaturity accounts increased $150.3 million, or 6.0%, and non-brokered certificates of deposits increased $150.7 million, or 12.0%. The average loan-to-deposit ratio for the first quarter of fiscal 2026 was 96.3%, as compared to 94.5% for the linked quarter, and 98.5% for the same quarter a year ago. The table below illustrates changes in deposit balances by type over recent periods:
Summary Deposit Data as of:
Sep. 30,
June 30,
Mar. 31,
Dec. 31,
Sep. 30,
(dollars in thousands)
2025
2025
2025
2024
2024
Non-interest bearing deposits
$
501,885
$
508,110
$
513,418
$
514,199
$
503,209
NOW accounts
1,098,921
1,132,298
1,167,296
1,211,402
1,128,917
MMDAs - non-brokered
334,492
329,837
345,810
347,271
320,252
Brokered MMDAs
20,024
1,414
2,013
3,018
12,058
Savings accounts
715,406
661,115
626,175
573,291
556,030
Total nonmaturity deposits
2,670,728
2,632,774
2,654,712
2,649,181
2,520,466
Certificates of deposit - non-brokered
1,409,332
1,414,945
1,373,109
1,310,421
1,258,583
Brokered certificates of deposit
200,430
233,649
233,561
251,025
261,093
Total certificates of deposit
1,609,762
1,648,594
1,606,670
1,561,446
1,519,676
Total deposits
$
4,280,490
$
4,281,368
$
4,261,382
$
4,210,627
$
4,040,142
Public unit nonmaturity accounts
$
424,391
$
435,632
$
472,010
$
482,406
$
447,638
Public unit certificates of deposit
112,963
115,204
103,741
83,506
62,882
Total public unit deposits
$
537,354
$
550,836
$
575,751
$
565,912
$
510,520
FHLB advances were $102.0 million at September 30, 2025, a decrease of $2.0 million, or 2.0%, from June 30, 2025, due to maturing advances which were not renewed. For the quarter ended September 30, 2025, the Company continued to have no FHLB overnight borrowings at the end of the period.
The Company's stockholders' equity was $560.2 million at September 30, 2025, an increase of $15.5 million, or 2.9%, as compared to June 30, 2025. The increase was attributable primarily to earnings retained after cash dividends paid, in combination with a decrease in accumulated other comprehensive losses (AOCL) as the market value of the Company's investments appreciated due to decreases in market interest rates. The AOCL decreased from $11.4 million at June 30, 2025, to $8.4 million at September 30, 2025. The Company does not hold any securities classified as held-to-maturity. The increase in stockholders' equity was partially offset by $447,000 utilized for repurchases of 8,145 shares of the Company's common stock during the first fiscal quarter of 2026 at an average price of $54.84 per share.
Quarterly Income Statement Summary:
The Company's net interest income for the three-month period ended September 30, 2025, was $42.4 million, an increase of $5.8 million, or 15.7%, as compared to the same period of the prior fiscal year. The increase was attributable to an 8.1% increase in the average balance of interest-earning assets in the current three-month period, as compared to the same period a year ago, and a 23 basis point increase in net interest margin, from 3.34% to 3.57%, as the cost of interest-bearing liabilities decreased by 28 basis points, in addition to a one basis point increase in the yield earned on interest earning assets.
Loan discount accretion and liability premium amortization related to the November 2018 acquisition of First Commercial Bank, the May 2020 acquisition of Central Federal Savings & Loan Association, the February 2022 merger of FortuneBank, and the January 2023 acquisition of Citizens Bank & Trust resulted in $876,000 in net interest income for the three-month period ended September 30, 2025, as compared to $959,000 in net interest income for the same period a year ago. Combined, this component of net interest income contributed seven basis points to net interest margin in the three-month period ended September 30, 2025, as compared to a nine-basis point contribution for the same period of the prior fiscal year, and as compared to a five-basis point contribution in the linked quarter ended June 30, 2025, when net interest margin was 3.47%.
The Company recorded a PCL of $4.5 million in the three-month period ended September 30, 2025, as compared to a PCL of $2.2 million in the same period of the prior fiscal year. The current period PCL was the result of a $4.1 million provision attributable to the ACL for loan balances outstanding and a $359,000 provision attributable to the allowance for off-balance sheet credit exposures. The factors considered when estimated and required ACL and PCL for loan balances outstanding is detailed above in the "Balance Sheet Summary" and the PCL for off-balance sheet credit exposure was primarily attributable to an increase in unfunded balances and an increase in required reserves for pooled loans.
The Company's noninterest income for the three-month period ended September 30, 2025, was $6.6 million, a decrease of $601,000, or 8.4%, as compared to the same period of the prior fiscal year. The decrease was primarily attributable to other loan fees and net realized gains on sale of loans driven by lower volume of SBA production and sales. Other loan fees declined, reflecting a refinement of our fee recognition under ASC 310-20, Receivables, Nonrefundable Fees and Other Costs, with a greater portion now recognized in interest income over the life of the loan. These decreases were partially offset by an increase in deposit account charges and related fees, wealth management fees, and other non-interest income. Other non-interest income increased primarily due to the recognition of modest losses on the disposal of fixed assets in the year ago period, attributable to various equipment disposals, with no similar activity in the current quarter.
Noninterest expense for the three-month period ended September 30, 2025, was $25.1 million, a decrease of $790,000, or 3.1%, as compared to the same period of the prior fiscal year. In the current quarter, this decrease in noninterest expense was attributable primarily to lower compensation and benefits, legal and professional fees, and telecommunication expenses. The decrease in compensation and benefits expense was primarily driven by the aforementioned refinement in the application of ASC 310-20, under which a larger portion of loan origination costs, including related compensation, is being deferred and recognized as a reduction of interest income over the life of the loan. Legal and professional fees decreased from the prior-year period, which had included $840,000 of costs related to a performance improvement project designed to enhance the Bank's operations and revenue performance. In the first quarter of fiscal 2026, legal and professional fees included $572,000 of consulting costs associated with the negotiation of a new contract with a key vendor. These decreases were partially offset by higher data processing costs, deposit insurance premiums, and various minor increases across other expense categories.The efficiency ratio for the three-month period ended September 30, 2025, was ...
