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    SMBC
    Earnings call· Jun 2026(Q4 FY26)

    SOUTHERN MISSOURI BANCORP, INC. SMBC

    Jul 23, 2026 Source

    Executive summary

    Southern Missouri Bancorp Q4 FY26 — Strong Earnings Growth and Capital Position

    Southern Missouri Bancorp delivered strong Q4 FY26 results, driven by expanded net interest income and disciplined expense control, leading to robust earnings growth and profitability metrics. The company also increased its quarterly dividend and repurchased shares, reflecting a strong capital position. While credit quality showed some elevated problem assets and increased provision, management is actively strengthening credit practices and remains optimistic about future improvement and continued healthy profitability.

    Highlights

    7

    • Diluted EPS increased to $1.83 in Q4 FY26, up 14% QoQ and 32% YoY.

    • Full-year FY26 diluted EPS grew 24% to $6.43, from $5.18 in FY25.

    • Net interest margin (NIM) remained stable at 3.67% QoQ and expanded 22 bps for FY26.

    • Gross loan balances increased by $69 million in Q4 FY26, and $291 million (7.1%) YoY.

    • Tangible book value per share increased by $5.56 or 13% YoY to $47.43.

    • Quarterly dividend increased by $0.02 or 8% to $0.27 per share.

    • Return on assets (ROA) of 1.41% and return on tangible equity (ROTE) of 15% for FY26.

    Concerns

    5

    • Provision for credit loss increased to $3.2 million in Q4 FY26, up $1.1 million QoQ.

    • Net charge-offs were $4.3 million in Q4 FY26, a $4 million increase QoQ, primarily due to one ag production loan and one commercial loan.

    • Nonperforming assets increased $1.5 million to $33.5 million, primarily due to an increase in other real estate owned.

    • Loans past due 30 to 89 days were $13.4 million (30 bps of gross loans), up $2.9 million QoQ and 15 bps YoY.

    • Core NIM could face pressure in coming quarters due to increased short-term rates and elevated deposit competition.

    Guidance & targets

    4
    CategoryTargetConfidence
    Loan growth
    mid-single-digit
    high materiality
    High
    Operating expenses growth
    mid-single digits to low end of high single digits
    medium materiality
    Medium
    Normalized effective tax rate
    19% to 20%
    medium materiality
    High
    Overall charge-off balances
    Decline from recent levels (17-18 bps), moving halfway back to historical 3-5 bps range.
    high materiality
    Medium

    Operational metrics

    39
    Diluted EPS
    $1.83up $0.23 or about 14% from linked March quarter and up $0.44 or about 32% from June 2025 quarter
    Q4 FY26

    We earned $1.83 diluted in the June quarter, which was an increase of $0.23 or about 14% from the linked March quarter and up $0.44 or about 32% from the June 2025 quarter.

    Diluted EPS
    $6.43compared to $5.18 in fiscal '25
    FY26

    For full year fiscal 2026, we earned $6.43 compared to $5.18 in fiscal '25. The 24% increase year-over-year was predominantly driven by stronger net interest income, which stemmed from net interest margin expansion as funding costs declined, coupled with almost 5% average earning asset growth.

    Return on Assets
    1.41%
    FY26

    resulting in a return on assets of 1.41% for the fiscal year.

    Return on Tangible Equity
    15%
    FY26

    achieving a 1.41% return on average assets and 15% return on tangible equity.

    Net Interest Income growth
    3%quarter-over-quarter
    Q4 FY26

    Net interest income was up almost 3% quarter-over-quarter and up about 10% year-over-year.

    Net Interest Income growth
    10%year-over-year
    Q4 FY26

    Net interest income was up almost 3% quarter-over-quarter and up about 10% year-over-year.

    Fair value discount accretion / premium amortization impact on NIM
    3unchanged from a benefit in the linked March quarter of 3 basis points and 5 basis points in the prior year's June quarter
    Q4 FY26

    The NIM included about 3 basis points of fair value discount accretion on acquired loan portfolios and premium amortization on assumed deposits, unchanged from a benefit in the linked March quarter of 3 basis points and 5 basis points in the prior year's June quarter.

    Accrued interest income reversal impact on NIM
    5
    Q4 FY26

    this quarter's net interest income included a $603,000 reversal of accrued interest income, which weighed on the NIM and average earning asset yield by about 5 basis points.

    Earning asset yield
    up 3quarter-over-quarter
    Q4 FY26

    With this adjustment, our earning asset yield would have been up 3 basis points, while our cost of interest-bearing liabilities decreased 1 basis point quarter-over-quarter.

    Cost of interest-bearing liabilities
    decreased 1quarter-over-quarter
    Q4 FY26

    With this adjustment, our earning asset yield would have been up 3 basis points, while our cost of interest-bearing liabilities decreased 1 basis point quarter-over-quarter.

    Net interest margin expansion
    22
    FY26

    Although we generated 22 basis points of net interest margin expansion during fiscal 2026, primarily driven by lower cost deposits from the declining rate environment, we could see some pressure on our core margin in the coming quarters as short-term rates have recently increased and deposit competition is elevated.

    Deposits indexed to 91-day treasury bill
    25%
    Q4 FY26

    Approximately 25% of our total deposits are indexed to the 91-day treasury bill and the increase in short-term rates could pressure funding costs.

    91-day treasury bill rate increase
    14
    July 2026

    The 91 day from the start of July for us is up about 14 basis points on those indexed deposits.

    Fixed rate loans maturing
    $550
    next 12 months

    we have about $550 million of fixed rate loans maturing -- and on that front, originating loans are about 25 basis points over what's maturing on the loan front.

    CDs repricing
    $1.3
    next 12 months

    And then on the CD front, we have about $1.3 billion repricing over the next 12 months. But on that front, we're seeing about new rates on the 3 to 5 basis points above maturing CD rates.

    Noninterest income growth
    3.8%compared to the linked quarter
    Q4 FY26

    Looking at noninterest income, we saw an increase of 3.8% compared to the linked quarter.

    Bank-owned life insurance mortality benefit
    $231,000
    Q4 FY26

    Bank-owned life insurance income was elevated during the quarter due to a $231,000 mortality benefit recognized in the period.

    Gain on sale of membership interest and tax credit investment
    $315,000
    Q3 FY26

    These increases were partially offset by lower other noninterest income as the linked March quarter included a $315,000 gain on sale of a membership interest and tax credit investment that did not recur in the June quarter.

    Noninterest income
    $27.8down a little less than 1% from the prior year
    FY26

    For the full fiscal year, we generated $27.8 million of noninterest income, down a little less than 1% from the prior year, primarily due to lower other loan fees following our refinement of fee recognition practices under ASC 310-20

    Noninterest expense growth
    down 2.6%compared to the linked quarter
    Q4 FY26

    Noninterest expense was down 2.6% compared to the linked quarter, primarily attributable to a decrease in other noninterest expense, occupancy and equipment expense and data processing costs.

    Noninterest expense
    $102.1in both fiscal 2026 and 2025
    FY26

    Noninterest expense totaled $102.1 million in both fiscal 2026 and 2025 as we benefited from our refined accounting for loan origination expenses under ASC 310-20, in addition to realizing about a $1.2 million benefit over the year from our medical insurance claims funding.

    Medical insurance claims funding benefit
    $1.2
    FY26

    realizing about a $1.2 million benefit over the year from our medical insurance claims funding.

    Net charge-offs
    $4.3a $4 million increase compared to the linked quarter
    Q4 FY26

    $4.3 million of net charge-offs were realized in the quarter, which was a $4 million increase compared to the linked quarter, primarily related to the ag production loan placed on nonaccrual in the quarter and a previously identified nonperforming commercial loan relationship that was transferred to OREO.

    Tax benefit from tax credit investments
    $1.7
    Q4 FY26

    The decline was primarily driven by a $1.7 million tax benefit related to 2 tax credit investments, including a larger transferable tax credit investment.

    Ag production watch loans reserve rate
    17%
    Q4 FY26

    So for ag production, we're actually reserving about 17% for watch loans.

    Ag real estate watch loans reserve rate
    4% to 5%
    Q4 FY26

    And on the ag real estate front, we're reserving, call it, 4% to 5%.

    Gross loan balances growth
    $69increased during the fourth quarter
    Q4 FY26

    gross loan balances increased by $69 million during the fourth quarter.

    Gross loan balances growth
    $291up 7.1% compared to June 30 a year ago
    FY26

    Compared to June 30 a year ago, gross loan balances are up $291 million or 7.1%.

    Loan originations
    $335up $85 million from the year ago period
    Q4 FY26

    We had another good quarter for loan originations, generating about $335 million, which was seasonally strong, up $85 million from the year ago period.

    Loan pipeline
    $182increasing approximately $4 million from the prior quarter
    next 90 days

    Our expected pipeline for the next 90 days remains healthy, increasing approximately $4 million from the prior quarter to $182 million.

    Deposit balances growth
    $67increased by about 1.5%
    Q4 FY26

    Deposit balances increased by about $67 million in the fourth quarter or 1.5%

    Deposit balances growth
    $126increased by about 3% year-over-year
    FY26

    and increased by roughly $126 million or about 3% year-over-year.

    Broker deposits growth
    $56increased just under $56 million year-over-year
    FY26

    Year-over-year, broker deposits have increased just under $56 million, moderate, but more than we would like as local deposit rate competition has increased and wholesale sources offered more cost-effective funding.

    Shares repurchased
    4,000
    Q4 FY26

    during the fourth quarter of fiscal '26, we repurchased 4,000 shares of common stock at an average price of just over $69 per share, representing a total investment of approximately $291,000.

    Shares repurchased
    317,000almost 3% of the average common shares outstanding at the beginning of the fiscal year
    FY26

    For the full fiscal year, we repurchased 317,000 shares or almost 3% of the average common shares outstanding at the beginning of the fiscal year at an average price of $58.59, utilizing about $19 million in capital.

    Ag real estate balances
    $296up $17 million compared to March 31, up $51 million compared to June 30 of last year
    June 30, 2026

    This quarter, ag real estate balances totaled $296 million or 7% of gross loans... ag real estate balances were up $17 million and up $51 million compared to June 30 of last year.

    Ag production and equipment loans
    $219up $15 million quarter-over-quarter, up $13 million year-over-year
    June 30, 2026

    ag production and equipment loans were $219 million or 5%. ... Agricultural production and equipment loan balances were up $15 million quarter-over-quarter due to normal seasonality associated with the planting season and higher operating costs and up $13 million year-over-year.

    Projected crop mix
    30% soybeans, 30% corn, 20% cotton, 15% rice and 5% specialty crops
    2026 production year

    our projected crop mix for the '26 production year consists of roughly 30% soybeans, 30% corn, 20% cotton, 15% rice and 5% specialty crops.

    Commodity prices and expected yields vs underwriting assumptions
    10% to 15%above our underwriting assumptions
    2026 production year

    In addition, both current commodity prices and expected yields are running approximately 10% to 15% above our underwriting assumptions, partially offsetting elevated production costs and improved projected farm profitability.

    Industry KPIs

    13
    MetricValueDetails
    Loans$4.39B
    Deposits$4.5B
    Rotce ROE15%%
    Cet1 ratio—
    Capital returns$0.27USD per share
    Fee income lines$27.8M
    Allowance reserves$54.9M
    Net interest income$603,000USD
    Net interest margin3.67%%
    Net charge offs npls0.63%%
    Total operating expenses$102.1M
    Provision for credit losses$3.2M
    Efficiency ratio operating leverage—

    Risks & headwinds

    7
    Increased provision for credit lossesQ4 FY26

    $3.2 million in Q4 FY26, a $1.1 million increase QoQ.

    Mitigation: Strengthening credit management practices, including changes to appraisal review, increased oversight of construction lending, and modified procedures for agricultural production loan monitoring. Optimistic about future improvement in problem asset levels.

    Elevated net charge-offsQ4 FY26

    $4.3 million in Q4 FY26, a $4 million increase QoQ, primarily from one ag production loan ($2.6M charge-off) and one commercial loan ($1.2M charge-off).

    Mitigation: Actively pursuing recovery avenues for the ag relationship (Chapter 7 bankruptcy, collateral rights, guarantor engagement). Commercial real estate from the other loan is actively marketed for sale.

    Increase in nonperforming assets (NPA)Q4 FY26

    $33.5 million, an increase of $1.5 million QoQ, primarily due to increase in other real estate owned (OREO).

    Mitigation: Property actively marketed for sale. Management states problem assets remain manageable and earnings are sufficient to cover potential reserves.

    Increase in loans past due 30 to 89 daysQ4 FY26

    $13.4 million (30 bps of gross loans), up $2.9 million QoQ and 15 bps YoY.

    Mitigation: Management is strengthening credit management practices and is optimistic about future improvement.

    Potential pressure on core net interest margin (NIM)Coming quarters (FY27)

    Short-term rates (91-day T-bill) up 14 bps, impacting 25% of deposits.

    Mitigation: Launched new suite of business deposit accounts, aligning sales initiatives and incentive structure to emphasize core deposit growth and capturing operating deposits with new loan relationships.

    Elevated local deposit rate competition and wholesale funding costsOngoing

    Broker deposits increased by $56 million YoY.

    Mitigation: Launching new business account suite, tweaking team member incentives to increase lower-cost operating accounts, reinforcing importance of capturing operating deposits with new loan relationships.

    Ag sector prolonged pressureOngoing

    Elevated reserves maintained for agricultural production portfolio.

    Mitigation: Projected crop mix, favorable rainfall, commodity prices and expected yields 10-15% above underwriting assumptions, and expected USDA program payments should provide liquidity and improve farm profitability.

    What to watch in Q1 FY27

    5

    Core Net Interest Margin (NIM) trajectory

    Next quarter (Q1 FY27)
    Current3.67% (Q4 FY26)
    TargetStable or improving, despite short-term rate increases

    Why it matters

    NIM is a key driver of profitability for banks, and management anticipates potential pressure from rising short-term rates and deposit competition.

    Although we generated 22 basis points of net interest margin expansion during fiscal 2026, primarily driven by lower cost deposits from the declining rate environment, we could see some pressure on our core margin in the coming quarters⏳ as short-term rates have recently increased and deposit competition is elevated.

    Q&A highlights

    6

    Quantify near-term NIM pressure and remaining tailwinds from fixed loan repricing.

    Stefan Chkautovich indicated potential NIM compression in the next quarter due to increased short-term rates (91-day T-bill up 14 bps affecting 25% of deposits). He noted $550 million in fixed-rate loans repricing at 25 bps higher than maturing rates, but $1.3 billion in CDs repricing at 3-5 bps higher, suggesting a small net benefit to NIM.

    “Right now, there's been an increase in short-term rates. The 91 day from the start of July for us is up about 14 basis points on those indexed deposits. So seeing a little bit of pressure on that front to start the quarter and year.”

    asked by Matt Olney · answered by Stefan Chkautovich

    2 min read6 chapters

    Detailed Narrative

    01

    Fiscal Year 2026 Performance Highlights

    Southern Missouri Bancorp achieved strong financial performance in FY26, with diluted EPS increasing 24% to $6.43, driven by net interest margin expansion and nearly 5% average earning asset growth. The company reported a return on assets of 1.41% and return on tangible equity of 15%, reflecting the positive results of performance improvement initiatives launched in FY24.

    02

    Credit Quality Management and Outlook

    While problem credits increased modestly, adversely classified loans and nonperforming loans improved quarter-over-quarter. Management is actively strengthening credit management practices, including changes to appraisal review, increased oversight of construction lending, and modified procedures for agricultural production loan monitoring. The company is optimistic about future improvement in problem asset levels and remains confident in its ability to manage credit risk.

    03

    Net Interest Margin Dynamics

    The net interest margin remained stable at 3.67% in Q4 FY26, but management anticipates potential pressure in coming quarters due to recent increases in short-term rates, particularly impacting 25% of total deposits indexed to the 91-day treasury bill. While fixed-rate loan repricing offers some benefit, the higher volume of CD renewals at increased rates suggests a small net benefit to NIM.

    04

    Deposit Strategy and Funding

    Deposit balances increased by $67 million (1.5%) QoQ and $126 million (3%) YoY, with Q4 growth primarily from broker deposits. To strengthen its deposit franchise and improve mix, the bank launched a new suite of business accounts and is aligning sales incentives to emphasize core deposit growth and capturing operating deposits with new loan relationships.

    05

    Noninterest Income and Expense Trends

    Noninterest income increased 3.8% QoQ, driven by higher interchange income, bank-owned life insurance earnings (including a $231,000 mortality benefit), SBA loan gains, and wealth management fees. Noninterest expense decreased 2.6% QoQ due to lower other noninterest expenses, occupancy, and data processing costs. For FY26, noninterest expense was flat YoY, benefiting from refined loan origination accounting and a $1.2 million medical insurance claims funding benefit.

    06

    Capital Allocation and M&A

    The company repurchased 317,000 shares (almost 3% of outstanding) for $19 million in FY26 at an average price of $58.59. The quarterly dividend was increased by 8% to $0.27 per share. Management views M&A as offering quicker returns given current trading multiples and a strong capital position, with an active pipeline of potential opportunities in its footprint and adjacent markets.

    AI-generated summary of the company’s earnings call. Not investment advice.