Southern Missouri Bancorp SMBC Q4 2026 earnings

Loans anticipated to fund in the next 90 days totaled $181.7 million at June 30, 2026, as compared to $177.7 million at March 31, 2026, and $224.1 million at June 30, 2025.

The Bank’s concentration in non-owner occupied commercial real estate loans, as defined by banking regulatory guidance and including multi-family and construction and land development loans, is estimated at 287.7% of Tier 1 capital and ACL at June 30, 2026, as compared to 301.9% as of June 30, 2025. These loans represented 38.8% of gross loans at June 30, 2026. The largest component of this concentration is non-owner occupied commercial real estate, which is primarily comprised of loans secured by hospitality (hotels and restaurants), care facilities, strip centers, retail stand-alone properties, and storage units. Within this portfolio, the hospitality and retail stand-alone segments consist primarily of franchised businesses; care facilities consist mainly of skilled nursing and assisted living centers; and strip centers are generally non-mall shopping centers with a variety of tenants. The Bank’s multi-family real estate loan portfolio commonly includes loans secured by properties currently participating in the low-income housing tax credit (LIHTC) program or that have exited the program. The largest component of the construction and land development portfolio is commercial construction, consisting primarily of loans collateralized by multi-family real estate and industrial warehouse developments. The Company continues to monitor its commercial real estate concentration and each of its individual segments closely.

Nonperforming loans (NPLs) were $27.7 million, or 0.63% of gross loans, at June 30, 2026, as compared to $23.0 million, or 0.56% of gross loans, at June 30, 2025. Nonperforming assets (NPAs) were $33.5 million, or 0.64% of total assets, at June 30, 2026, as compared to $23.7 million, or 0.47% of total assets, at June 30, 2025. The rise in NPAs reflects an increase in NPLs and other real estate owned (OREO), partially offset by net charge-offs. The year-over-year increase in NPLs was primarily attributable to three borrower relationships: one commercial relationship consisting of multiple related loans collateralized by commercial real estate and equipment; one consisting of two related agricultural production loans secured by crops and equipment; and the other, which was added during the quarter ended June 30, 2026, consisting of several related agricultural production loans secured by crop insurance claims, restricted cash, crops, and equipment. The increase in OREO was primarily due to the foreclosure of a previously reported nonaccrual commercial loan relationship consisting of multiple loans collateralized by commercial real estate and equipment.

The ACL at June 30, 2026, totaled $54.9 million, representing 1.25% of gross loans and 199% 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 June 30, 2026, under ASC 326-20, and management believes the ACL as of that date was adequate based on that estimate. Economic uncertainty remains, including the potential effects of elevated and uncertain interest rates, as inflation remains above the Federal Reserve's long-term target, and evolving labor market and broader economic conditions. The increase in the ACL was primarily attributable to higher reserves required for pooled loans, driven largely by the Bank’s annual ACL model update, which reflected an increase in modeled loss drivers compared to the prior assessment as of June 30, 2025, and increased reserves on agriculture loans reflecting ongoing pressure in the agricultural sector. Additional reserves were also required to support loan growth. This was partially offset by net charge-offs. As a percentage of average loans outstanding, the Company recorded net charge-offs of 0.40% (annualized) during the current quarter, as compared to net charge-offs of 0.53% for the same quarter of the prior fiscal year. In the three-month period ended June 30, 2026, net charge offs were $4.3 million due primarily to a $2.6 million partial charge-off of the agricultural production loan relationship noted above which was placed on nonaccrual status during the quarter and a previously identified nonperforming commercial loan relationship that was transferred to OREO following foreclosure resulting in a charge off of $1.2 million. For fiscal year 2026, net charge-offs as a percentage of average loans were 0.18%, as compared to 0.17% for fiscal year 2025.

Total liabilities were $4.6 billion at June 30, 2026, an increase of $169.3 million, or 3.8%, as compared to June 30, 2025. Growth primarily reflected increases in total deposits, FHLB advances, and other liabilities which increased due to future capital contributions related to tax credit investments. This was partially offset by a $7.5 million decrease in subordinated debentures, as the Company retired debt that became callable during the three-month period ended June 30, 2026.

Deposits were $4.4 billion at June 30, 2026, an increase of $126.5 million, or 3.0%, as compared to June 30, 2025. Certificate of deposit growth was relatively balanced between brokered and non-brokered deposits. Nonmaturity deposit growth was primarily attributable to increases in non-interest bearing deposits, savings accounts, and brokered money market deposit accounts, partially offset by declines in NOW accounts and non-brokered money market deposit accounts. Public unit balances totaled $517.8 million at June 30, 2026, a decrease of $33.0 million compared to June 30, 2025, primarily due to competitive pricing dynamics on certain time deposits and normal fluctuations in operating account balances. Brokered deposits totaled $290.6 million at June 30, 2026, an increase of $55.6 million as compared to June 30, 2025, primarily attributable to brokered certificates of deposit. The average loan-to-deposit ratio for the fourth quarter of fiscal 2026 was 99.7%, as compared to 94.5% for the same period of the prior fiscal year. The table below illustrates changes in deposit balances by type over recent periods:

FHLB advances were $130.4 million at June 30, 2026, an increase of $26.4 million, or 25.3%, as compared to June 30, 2025. Outstanding FHLB daily reset borrowings were $28.4 million as of June 30, 2026, as compared to none outstanding as of June 30, 2025.

The Company’s stockholders’ equity was $590.7 million at June 30, 2026, an increase of $46.0 million, or 8.4%, as compared to June 30, 2025. The increase was attributable primarily to earnings retained after cash dividends paid, in combination with a $1.6 million reduction in accumulated other comprehensive losses (AOCL) as the market value of the Company’s investments appreciated due to tighter credit spreads and continued principal paydowns within the investment portfolio. The AOCL totaled $9.8 million at June 30, 2026, as compared to $11.4 million at June 30, 2025. The Company does not hold any securities classified as held-to-maturity. The increase in stockholders’ equity was partially offset by $18.6 million utilized to repurchase 317,000 shares of the Company’s common stock during fiscal 2026 at an average price of $58.59 per share.

Quarterly Income Statement Summary:

The Company’s net interest income for the three-month period ended June 30, 2026, was $44.4 million, an increase of $4.1 million, or 10.1%, as compared to the same period of the prior fiscal year. The increase was attributable to an increase of 20 basis points in the net interest margin, from 3.47% to 3.67%, coupled with a 4.0% increase in the average balance of interest-earning assets in the current three-month period compared to the same period a year ago. The primary driver of the net interest margin expansion, compared to the year ago period, was a decrease in the cost of interest-bearing liabilities of 29 basis points, partially offset by a decrease of six basis points in the yield 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 2024 acquisition of Citizens Bank & Trust resulted in $395,000 in net interest income for the three-month period ended June 30, 2026, as compared to $600,000 in net interest income for the same period a year ago. Combined, this component of net interest income contributed three basis points to net interest margin in the three-month period ended June 30, 2026, as compared to a five-basis point contribution for the same period of the prior fiscal year, and as compared to a three-basis point contribution in the linked quarter, ended March 31, 2026, when net interest margin was 3.67%.

The Company recorded a PCL of $3.2 million in the three-month period ended June 30, 2026, as compared to a PCL of $2.5 million in the same period of the prior fiscal year. The current period PCL was the result of a $3.3 million provision attributable to the ACL for outstanding loan balances and a $111,000 negative provision attributable to the allowance for off-balance sheet credit exposures, primarily reflecting changes in the composition of unfunded loan commitments. The factors considered when estimating a required ACL and PCL for loan balances outstanding are detailed above in the “Balance Sheet Summary”.

The Company’s noninterest income for the three-month period ended June 30, 2026, was $7.4 million, an increase of $78,000, or 1.1%, as compared to the same period of the prior fiscal year. The increase was attributable to an increase in earnings on bank owned life insurance (BOLI), wealth management fees, deposit account charges and related fees, and net realized gains on sale of loans. The increase in earnings on BOLI was mainly attributable to a mortality benefit of $231,000 recognized in the fourth quarter of 2026. Wealth management fees benefited from revenue growth at both Southern Financial Advisors and Southern Wealth Trust Services, primarily driven by market appreciation and the resulting increase in assets under management. Deposit account charges and related fees benefited from increased frequency of charges for non-sufficient funds and increased wire fee income from an increase of our wire fee rates and elevated wire activity. Lastly, the increase in gain on sale of loans was primarily attributable to gain on sale of SBA loans. These increases were partially offset by a decrease in other loan fees, 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.

Noninterest expense for the three-month period ended June 30, 2026, was $25.5 million, a decrease of $431,000, or 1.7%, as compared to the same period of the prior fiscal year. The decrease as compared to the year-ago period was primarily attributable to decreases in legal and professional fees, intangible amortization, deposit insurance premiums, and other noninterest expenses. The decrease in legal and professional fees was primarily due to $425,000 of consulting costs incurred in the prior-year period in connection with negotiating a new contract with a significant vendor that did not reoccur in the current period. The decrease in intangible amortization expense was attributable to a core deposit intangible that was fully amortized in the second quarter of fiscal 2026 from a previous merger. The Company also benefited from lower deposit insurance premiums, primarily reflecting improvements in the financial metrics used to determine assessment rates. Lastly, other noninterest expense decreased largely due to loan product expense associated with expenses for loan collection and lending activities. These decreases when compared to the prior year period were partially offset by increases in compensation and benefits, primarily due to annual merit increases, as well as a trend increase in team member headcount.

The efficiency ratio for the three-month period ended June 30, 2026, was 49.3%, as compared to 54.6% in the same period of the prior fiscal year. The improvement was attributable to increases in net interest income and noninterest income, and a decline in operating expenses.

The income tax provision was $2.7 million for the three-month period ended June 30, 2026, a decrease of 18.0% as compared to the same period of the prior fiscal year. The effective tax rate for the fourth quarter of fiscal year 2026 was 11.9%, as compared to 17.5% in the same period of the prior fiscal year. The decrease in the effective tax rate was primarily attributable to a $1.7 million income tax benefit recognized from tax credit investments. In the same period of the prior fiscal year, the Company recognized a $701,000 benefit from tax credit investments.

Forward-Looking Information:

Except for the historical information contained herein, the matters discussed in this press release may be deemed to be forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from the forward-looking statements, including: expected cost savings, synergies and other benefits from our merger and acquisition activities, might not be realized within the anticipated time frames, to the extent anticipated, or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention and labor shortages, might be greater than expected and goodwill impairment charges might be incurred; potential adverse impacts to economic conditions both nationally and in our local market areas and other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth; the strength of the United States economy in general and the strength of the local economies in which we conduct operations; fluctuations in interest rates and inflation, including the effects of a potential recession whether caused by Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) actions or otherwise or slowed economic growth caused by changes in oil prices or supply chain disruptions; the impact of monetary and fiscal policies of the Federal Reserve Board and the U.S.

Government or other governmental initiatives affecting the financial services industry; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the ACL on loans; our ability to access cost-effective funding and maintain sufficient liquidity; the timely development of and acceptance of new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors’ products and services; fluctuations in real estate values in both residential and commercial real estate markets, as well as agricultural business conditions; fluctuations in the demand for loans and deposits, including our ability to attract and retain deposits; the impact of a federal government shutdown; legislative or regulatory changes that adversely affect our business; the effects of climate change, severe weather events, other natural disasters, war, terrorist activities or civil unrest and their effects on economic and business environments in which the Company operates; changes in accounting principles, policies, or guidelines; results of examinations of us by our regulators, including the impact on FDIC insurance premiums and the possibility that our regulators may, among other things, require an increase in our reserve for credit losses on loans or a write-down of assets; the impact of technological changes and an inability to keep pace with the rate of technological advances; the inability of key third party providers to perform their obligations to us; cyber threats, such as phishing, ransomware, and insider attacks, which can lead to financial loss, reputational damage, and regulatory penalties if sensitive customer data and critical infrastructure are not adequately protected; our ability to retain key members of our management team; and our success at managing the risks involved in the foregoing. Any forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. We undertake no obligation to publicly update or revise any forward-looking statements or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed might not occur, and you should not put undue reliance on any forward-looking statements.

Non-GAAP Financial Measures:

Tangible common equity and tangible book value per common share are financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States (GAAP). These non-GAAP financial measures are supplemental and are not intended to be a substitute for analyses based on GAAP measures. As other companies may utilize different methodologies for calculating these measures, this presentation may not be comparable to similarly titled measures used by other institutions.

Tangible common equity is calculated by excluding intangible assets from common stockholders’ equity. Tangible book value per common share is calculated by dividing tangible common equity by common shares outstanding, less restricted common shares not vested. For comparison, book value per common share is calculated by dividing common stockholders’ equity by common shares outstanding, less restricted common shares not vested. This approach is consistent with the treatment applied by bank regulatory agencies, which generally exclude intangible assets from the calculation of risk-based capital ratios.

Each of these non-GAAP financial measures provides information considered important to investors and is useful in understanding the Company’s capital position. Calculations of tangible common equity and tangible book value per common share to the corresponding GAAP measures of common stockholders’ equity and book value per common share are presented below.

Southern Missouri Bancorp, Inc.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION

(1)Non-GAAP financial measure.