SMBC Southern Missouri Bancorp Inc

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

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SOUTHERN MISSOURI BANCORP, INC.

(Exact name of registrant as specified in its charter)

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N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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Securities registered pursuant to Section 12(b) of the Act:

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02     Results of Operations and Financial Condition

On October 23, 2023, Southern Missouri Bancorp, Inc., the parent corporation of Southern Bank, issued a press release announcing preliminary first quarter of fiscal 2024 results, and reiterating its quarterly dividend of $0.21 per common share, and the timing of its investor conference call. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

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Item 9.01     Financial Statements and Exhibits

(d)    Exhibits

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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Exhibit 99.1

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SOUTHERN MISSOURI BANCORP REPORTS PRELIMINARY RESULTS FOR FIRST QUARTER OF FISCAL 2024;

DECLARES QUARTERLY DIVIDEND OF $0.21 PER COMMON SHARE;

CONFERENCE CALL SCHEDULED FOR TUESDAY, OCTOBER 24, AT 9:30 AM CENTRAL TIME

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Poplar Bluff, Missouri - 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 2024 of $13.2 million, an increase of $3.5 million or 36.9%, as compared to the same period of the prior fiscal year. The increase was due to increases in net interest income and noninterest income paired with a lower provision for credit loss (“PCL”) expense, partially offset by an increase in noninterest expense. Preliminary net income was $1.16 per fully diluted common share for the first quarter of fiscal 2024, an increase of $0.12 as compared to $1.04 per fully diluted common share reported for the same period of the prior fiscal year.

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Highlights for the first quarter of fiscal 2024:

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Dividend Declared:

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The Board of Directors, on October 17, 2023, declared a quarterly cash dividend on common stock of $0.21, payable November 30, 2023, to stockholders of record at the close of business on November 15, 2023, marking the 118^th 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.

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Conference Call:

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The Company will host a conference call to review the information provided in this press release on Tuesday, October 24, 2023, 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, or 1-929-526-1599 from all other locations. Participants should use participant access code 243175. Telephone playback will be available beginning one hour following the conclusion of the call through October 29, 2023. The playback may be accessed in the United States by dialing 1-866-813-9403, or 1-929-458-6194 from all other locations, and using the conference passcode 239709.

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Balance Sheet Summary:

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The Company experienced balance sheet growth in the first three months of fiscal 2024, with total assets of $4.5 billion at September 30, 2023, reflecting an increase of $109.8 million, or 2.5%, as compared to June 30, 2023. Growth primarily reflected an increase in net loans receivable and cash and cash equivalents.

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Cash equivalents and time deposits were a combined $89.2 million at September 30, 2023, an increase of $34.0 million, or 61.5%, as compared to June 30, 2023. AFS securities were $405.2 million at September 30, 2023, down $12.4 million, or 3.0%, as compared to June 30, 2023, attributable to normal principal repayments.

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Loans, net of the allowance for credit losses (“ACL”), were $3.7 billion at September 30, 2023, increasing by $79.5 million, or 2.2%, as compared to June 30, 2023. The Company noted growth in drawn construction loan balances and commercial loans. Residential real estate loans were little changed as growth in loans secured by single family residences were offset by paydowns in loans secured by multifamily property. Commercial loan balances increased as the Company experienced seasonal draws on agriculture lines and modest growth in commercial and industrial loans.

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The Bank’s concentration in non-owner occupied commercial real estate is estimated at 324.1%of Tier 1 capital and ACL on September 30, 2023, as compared to 330.2% as of June 30, 2023, the linked quarter end, with these loans representing 40.8% of total loans at September 30, 2023. Multi-family residential real estate, hospitality (hotels/restaurants), retail stand-alone, and strip centers are the most common collateral types within the non-owner occupied commercial real estate portfolio. The multi-family residential real estate portfolio commonly includes loans collateralized by properties currently in the low-income housing tax credit (LIHTC) program or having exited the program. The hospitality and retail stand-alone segments include primarily franchised businesses, and the strip centers can be defined as non-mall shopping centers with a variety of tenants. Non-owner occupied office property types included 55 loans totaling $29.7 million, or 0.8% of total loans at September 30, 2023, none of which are adversely classified, and are generally comprised of smaller spaces with diverse tenants. The Company continues to monitor this concentration and the individual segments closely.

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Loans anticipated to fund in the next 90 days totaled $158.2 million at September 30, 2023, as compared to $134.8 million at June 30, 2023, and $229.6 million at September 30, 2022.

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Nonperforming loans were $5.7 million, or 0.16% of gross loans, at September 30, 2023, as compared to $7.7 million, or 0.21% of gross loans at June 30, 2023. Nonperforming assets were $10.8 million, or 0.24% of total assets, at September 30, 2023, as compared to $11.3 million, or 0.26% of total assets, at June 30, 2023. The net change in nonperforming assets was attributable to a decrease of $1.9 million in nonperforming loans, partially offset by a net increase of $1.4 million in other real estate owned.

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Our ACL at September 30, 2023, totaled $49.1 million, representing 1.33% of gross loans and 856% of nonperforming loans, as compared to an ACL of $47.8 million, representing 1.32% of gross loans and 625% of nonperforming loans, at June 30, 2023. The Company has estimated its expected credit losses as of September 30, 2023, under ASC 326-20, and management believes the ACL as of that date is adequate based on that estimate. There remains, however, significant economic uncertainty as the Federal Reserve has significantly tightened monetary policy to address inflation. Management continues to closely monitor, in particular, borrowers in the hotel industry that were slow to recover from the COVID-19 pandemic.

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Total liabilities were $4.0 billion at September 30, 2023, an increase of $102.0 million, or 2.6%, as compared to June 30, 2023.

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Deposits were $3.8 billion at September 30, 2023, an increase of $115.6 million, or 3.1%, as compared to June 30, 2023. The deposit portfolio saw increases in certificates of deposits and savings accounts, as customer willingness to move balances into time deposits continued to increase in the higher rate environment, and as depositors responded to special rates offered during the quarter. Public unit balances totaled $544.9 million at September 30, 2023, a decrease of $33.7 million compared to June 30, 2023. Brokered deposits totaled $223.0 million at September 30, 2023, an increase of $63.3 million compared to June 30, 2023. The loan-to-deposit ratio for the first quarter of fiscal 2024 was 96.3%, as compared to 97.1% for the linked quarter. The table below illustrates changes in deposit balances by type over recent periods:

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FHLB advances were $114.0 million at September 30, 2023, a decrease of $19.5 million, or 14.6%, from June 30, 2023, as the Company utilized deposit growth to repay all FHLB overnight borrowings outstanding as of the prior fiscal year end.

The Company’s stockholders’ equity was $453.9 million at September 30, 2023, an increase of $7.9 million, or 1.8%, as compared to June 30, 2023. The increase was attributable primarily to earnings retained after cash dividends paid, partially offset by a modest increase in accumulated other comprehensive losses (“AOCL”) as the market value of the Company’s investments declined due to increases in market interest rates. The AOCL increased from $21.9 million at June 30, 2023, to $25.2 million at September 30, 2023. The Company does not hold any securities classified as held-to-maturity.

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Quarterly Income Statement Summary:

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The Company’s net interest income for the three-month period ended September 30, 2023, was $35.4 million, an increase of $6.9 million, or 24.2%, as compared to the same period of the prior fiscal year. The increase was attributable to a 31.6% increase in the average balance of interest-earning assets in the current three-month period, as compared to the same period a year ago, partially offset by a 21 basis point decrease in net interest margin from 3.65% to 3.44%.

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Loan discount accretion and deposit premium amortization related to the Company’s May 2020 acquisition of Central Federal Savings & Loan Association, the February 2022 merger of Fortune Bank, and the January 2023 acquisition of Citizens Bank & Trust resulted in $1.7 million in net interest income for the three-month period ended September 30, 2023, as compared to $520,000 in net interest income for the same period a year ago. Combined, this component of net interest income contributed 16 basis points to net interest margin in the three-month period ended September 30, 2023, as compared to a seven basis point contribution for the same period of the prior fiscal year, and as compared to a 16 basis points contribution in the linked quarter ended June 30, 2023, when net interest margin was 3.60%.

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The Company recorded a PCL of $900,000 in the three-month period ended September 30, 2023, as compared to a PCL of $5.1 million in the same period of the prior fiscal year. The current period PCL was the result of a $1.6 million provision attributable to the ACL for loan balances outstanding, partially offset by a recovery of $670,000 in provision attributable to the allowance for off-balance sheet credit exposures. The Company’s assessment of the economic outlook at September 30, 2023, was little changed as compared to the assessment as of June 30, 2023. Qualitative adjustments in the Company’s ACL model were slightly decreased based on a reduced pace of loan growth. The Company increased adjustments related to classified hotel loans that have been slow to recover from the COVID-19 pandemic and modestly decreased the ACL attributable to other individually identified loans. As a percentage of average loans outstanding, the Company recorded net charge offs of 0.03% (annualized) during the current period, up slightly from the same period of the prior fiscal year.

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The Company’s noninterest income for the three-month period ended September 30, 2023, was $5.9 million, an increase of $339,000, or 6.1%, as compared to the same period of the prior fiscal year. In the current period, increases in bank card interchange income, earnings on bank owned life insurance, and the addition of trust and wealth management services from the Citizens merger were partially offset by decreases in gains realized on the sale of residential real estate loans originated for that purpose, loan servicing fees, and other loan fees. Interchange revenue has increased as compared to the year ago period as a result of the Citizens merger. Fee income from the origination of residential real estate loans for sale on the secondary market was down 52% as compared to the year ago period, as both refinancing and purchase activity declined due to the increase in market interest rates, resulting in a decrease to both gains on sale of these loans and recognition of new mortgage servicing rights.

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Noninterest expense for the three-month period ended September 30, 2023, was $23.7 million, an increase of $6.8 million, or 40.1%, as compared to the same period of the prior fiscal year. In the current quarter, this increase in noninterest expense was attributable primarily to increases in compensation and benefits, data processing fees, occupancy expenses, and other noninterest expenses. The increase in

compensation and benefits as compared to the prior year period was primarily due to increased headcount resulting from the Citizen merger, and a trend increase in legacy employee headcount, as well as annual merit increases. Occupancy expenses increased primarily due to facilities added through the Citizens merger, and other equipment purchases. Other noninterest expenses increased primarily due to expenses related to the increase in FDIC deposit insurance premiums and electronic banking expenses.

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The efficiency ratio for the three-month period ended September 30, 2023, was 57.5%, as compared to 49.7% in the same period of the prior fiscal year. The change is attributable to noninterest expense growing faster than revenues which compressed the efficiency ratio.

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The income tax provision for the three-month period ended September 30, 2023, was $3.5 million, an increase of 42.7%, as compared to the same period of the prior fiscal year, primarily due to the increase of net income before income taxes. The effective tax rate was 21.0% as compared to 20.3% in the same quarter of the prior fiscal year.

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Forward-Looking Information:

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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: the remaining effects of the COVID-19 pandemic on general changes in economic conditions, either nationally or in the Company’s market and lending areas; expected cost savings, synergies and other benefits from our merger and acquisition activities might not be realized to the extent anticipated, within the anticipated time frames, 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; 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 the possibility of a recession whether caused by Federal Reserve actions or otherwise; 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; monetary and fiscal policies of the FRB and the U.S. Government and other governmental initiatives affecting the financial services industry; 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 allowance for credit losses; our ability to access cost-effective funding; the timely development of and acceptance of our 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 and both residential and commercial real estate markets, as well as agricultural business conditions; demand for loans and deposits; legislative or regulatory changes that adversely affect our business; the transition from LIBOR to new interest rate benchmarks; 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 regulatory examinations, including the possibility that a regulator may, among other things, require an increase in our reserve for loan losses or write-down of assets; the impact of technological changes; 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. The Company wishes to advise readers that the factors listed above and other risks described in the Company’s most recent Annual Report on Form 10-K, including, without limitation, those described under “Item 1A. Risk Factors,” and Quarterly Reports on Form 10-Q and other documents filed or furnished from time to time by the Company with the SEC (and are available on our website at www.bankwithsouthern.com and on the SEC’s website at www.sec.gov) could affect the Company’s financial performance and cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. 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.

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Southern Missouri Bancorp, Inc.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION

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(1)   Nonperforming modifications (referred to as troubled debt restructurings, or TDRs, prior to the July 1, 2023 adoption of ASU 2022-02) are included with nonaccrual loans or accruing loans 90 days or more past due.

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