
FY 2020
Annual Report

Financial
Summary EARNINGS (dollars in thousands) 2020 2019CHANGE (%) Net
interest income Provision for loan losses Noninterest income
Noninterest expense Income taxes Net income PER COMMON SHARE Net
income: Basic Diluted Closing market price Cash dividends declared
$80,136 6,002 14,750 54,452 6,887 27,545 E EE $3.00 2.99 24.30 0.60
$72,782 2,032 13,093 47,892 7,047 28,904 E EE $3.14 3.14 34.83 0.52
10.1 195.4 12.7 13.7 -2.3 -4.7 E -4.5 -4.8 -30.2 15.4 A T YEAR-END
(dollars in thousands) E EE E EEE Total assets Loans, net of
allowance Reserves as a percent of nonperforming loans Deposits
Stockholder’s equity $ 2,542,157 2,141,929 290 % $ 2,184,847
258,347 $ 2,214,402 1,846,405 95 % $ 1,893,695 238,392 14.8 16.0
15.4 8.4 FINANCIAL RA TIOS Return on average shareholder equity
Return on average assets Net interest margin Efficiency ratio
Allowance for loan losses to loans Equity to average assets at
year-end E EE 11.11 % 1.18 3.72 57.39 1.16 11.04 E EE 13.13 % 1.38
3.78 55.93 1.07 11.36 OTHER DA T A (1) E Common shares outstanding
Common shares outstanding for book value calculation(2) Average
common and dilutive shares outstanding Common stockholders record
Full-time equivalent employees Assets per employee (in thousands)
Banking offices E 9,127,390 9,099,365 9,199,169 251 475 $5,352 48 E
E 9,289,308 9,261,058 9,203,909 277 454 $4,878 47 $1.98 $2.07 $2.39
$3.14 $2.99 $0.36 $0.40 $0.52 $0.44 $0.60 $17.02 $20.19 $22.38
$25.74 $28.39 20162017201820192020 DILUTED EARNINGS PER SHARE
20162017201820192020 CASH DIVIDENDS PER SHARE 20162017201820192020
BOOK V ALUE PER SHARE (1) Other data is as of year-end, except for
average shares. (2) Excludes unvested restricted stock award
shares.

DEAR
SHAREHOLDER, In fiscal 2020, Southern Missouri Bancorp worked with
our customers in responding to the COVID-19 pandemic, reduced
nonperforming assets acquired in recent acquisitions, increased our
allowance for loan losses, completed a small acquisition in an
attractive market, and posted strong core results in a challenging
environment. Southern Missouri Bancorp, Inc. (the “Company” or
“SMBC”), reported net income of $27.5 million for fiscal 2020, a
decrease of $1.4 million, or 4.7%, from fiscal 2019. Despite
reporting a year-over-year decline, the Company was pleased to
continue to show relatively strong core profitability excluding the
increased provision for loan losses, with a return on average
common equity of 11.1%, and a return on average assets of 1.18% for
fiscal 2020, as compared to 13.1% and 1.38%, respectively, for
fiscal 2019. RETURN ON COMMON EQUITY DECLINES DUE TO INCREASED
PROVISIONING Peer banks1 figures are based on their twelve months
ended December 31, 2019, coinciding with their typical fiscal year,
and would not reflect increased provisioning for loan losses
following the onset of the COVID-19 pandemic. Return on Average
Common Equity 12.3% 11.7% 11.3% 13.1% 11.1% 8.8% 8.9% 8.0% 10.1%
9.6% SMBCpeer The Company saw a significant decrease in purchase
accounting benefits reported on acquired loan and deposit
portfolios, primarily due to inclusion in the prior year’s results
of benefits from the resolution of particular purchased credit
impaired loans, partially offset by a full-year’s results from the
mid-fiscal 2019 acquisition of Gideon Bancshares Company and its
subsidiary, First Commercial Bank (“Gideon”). In total, these
benefits increased net interest income (pre-tax) by $1.8 million in
fiscal 2020, as compared to $2.9 million in the prior fiscal year.
Partially offsetting the decline in the accretion of fair value
discount on acquired loans, the Company saw material benefits from
the resolution of a limited number of nonperforming loans, at
$767,000, while there was no comparable material item in the prior
fiscal year. Fiscal 2020 results included $1.0 million (pre-tax) in
merger-related expenses, net of a small bargain purchase gain, as
compared to $829,000 in the prior fiscal year. Net interest income
improved 10.1%, as our average earning asset balances increased by
11.8%, while net interest margin declined from 3.78% in fiscal 2019
to 3.72% in fiscal 2020. Average earning asset balance growth was
due mostly to solid organic growth through the first three quarters
of the fiscal year, the full-year effect of the mid-fiscal 2019
Gideon acquisition, and the SBA-guaranteed Paycheck Protection
Program (“PPP”) loans originated relatively late in the fiscal
year. Purchase accounting benefits from our three most recent
acquisitions, noted above, contributed eight basis points to net
interest margin in fiscal 2020, as compared to 15 basis points in
the prior 1 Peer data is based on the median year-end figures
(December) reported by S&P Global Market Intelligence for
publicly-traded commercial banks and thrifts with assets of $1
billion to $3 billion as of December 31, 2019, headquartered in
Missouri, Arkansas, Illinois, Iowa, Kansas, Kentucky, Nebraska,
Oklahoma, and Tennessee. SMBC data is as of fiscal year-end
(June).

fiscal
year. An additional four basis points in net interest margin was
the result of recognition of income on a limited number of
nonperforming relationships favorably resolved during the year
which had been on nonaccrual status. Noninterest income increased
12.7%, and the increase continued to be attributable in part to our
growth through acquisitions. The increase consisted of higher bank
card interchange income, deposit account service charges, gains on
the sale of residential real estate loans originated for that
purpose, and a small bargain purchase gain, partially offset by
decreases in loan servicing income, gains realized on the sale of
available-for-sale securities, and earnings on bank-owned life
insurance, which decreased due to the inclusion in the prior year’s
results of a nonrecurring benefit. Noninterest expense increased
13.7%, also due in part to our growth through acquisitions, as we
saw increases in compensation expenses, occupancy, and data
processing expenses, and expenses related to foreclosed properties,
partially offset by decreases in assessments for deposit insurance,
as the Company benefited from credits made available by the FDIC
for smaller banks, such as the Company’s subsidiary, as required
under the Dodd-Frank Act to offset the costs borne by smaller banks
over several years in order to increase the deposit insurance fund
to levels required under that law. Noninterest expenses
attributable to mergers and acquisition were up modestly in fiscal
2020. The Company saw slight deterioration in its efficiency ratio
for the year, as noninterest expenses grew faster than net interest
income and noninterest income, on a combined basis. Increased
expenses related to acquisition activities pushed the figure
higher. EFFICIENCY DETERIORA TES, BUT REMAINS AHEAD OF PEERS
Noninterest expenses grew faster than revenues, in part due to
M&A expenses. Efficiency Ratio 70.8% 68.2% 65.1% 67.3% 66.3%
57.0% 60.8% 57.7% 55.9% 57.4% SMBCpeer Loan growth was strong in
fiscal 2020, aided by the PPP lending activity, which added $132.3
to our portfolio at fiscal year end. In total, net loans increased
$295.5 million, or 16.0%, inclusive of the May 2020 acquisition of
Central Federal Bancshares (“Central Federal”), which contributed
$51.4 million in loans at fair value as of the acquisition date.
Inclusive of these acquired loans, growth consisted primarily of
residential real estate loans, commercial loans, commercial real
estate loans, and funded balances in construction loans, partially
offset by declines in consumer loans. We had a very strong year for
deposit growth, as businesses and consumers held more cash in the
face of economic uncertainty, and as cash available from payments
to taxpayers under the CARES Act, deferrals of payroll and other
taxes due from businesses, and proceeds not yet utilized from PPP
activity swelled account balances. Total deposit growth of $291.2
million, or 15.4%, included $46.7 million from the Central Federal
acquisition, while traditional brokered deposit funding declined by
$9.9 million. Total public unit deposits increased $38.4 million,
with a minimal amount attributable to the Central Federal
acquisition. The increase in public unit funding was primarily the
result of higher nonmaturity balances held by our existing customer
base.

LONG-TERM
GROWTH IN LOANS, DEPOSITS, AND TOT AL ASSETS Loan growth was strong
in fiscal 2020, ahead of the pandemic, and increased further with
the PPP program. Nonmaturity deposit growth was also strong in
advance of the pandemic, though CDs attracted fewer depositors due
to falling rates. Total Assets (Dollars in millions) Total Loans,
net of allowance for loan losses (Dollars in millions) Total
Deposits (Dollars in millions) $1,404 $1,708 $1,886 $2,542 $2,214
$1,135 $1,398 $1,563 $1,846 $2,142 $1,121 $1,456 $1,580 $1,894
$2,185 20162017201820192020 20162017201820192020
20162017201820192020 The Company reported nonperforming assets of
$11.2 million, or 0.44% of total assets, at June 30, 2020, as
compared to $24.8 million, or 1.12% of total assets, at the
previous fiscal year end. Nonperforming loans (NPLs) were 0.40% of
gross loans at June 30, 2020, as compared to 1.13%, at the prior
fiscal year end. The Company improved nonperformers due in large
part to a reduction in problem loans and assets acquired in the
Gideon acquisition, which included NPLs of $1.8 million, at fair
value, as of June 30, 2020, down from $10.2 million a year earlier.
Net charge-offs for fiscal 2020 remained low, at 0.04% of average
loans outstanding, up from 0.02% in fiscal 2019. PROBLEM ASSET
LEVELS IMPROVED Nonperforming asset (NPA) levels decreased as a
percentage of average assets, as the Company resolved a number of
NPAs acquired through the Gideon acquisition. 1.20% Non-performing
Assets Ratio 1.12% 0.64% 0.71% 0.69% 0.69% 0.62% 0.51% Dec. 2015
June 2016 Dec. 2016 0.37% June 2017 Dec. 2017 June 2018 Dec. 2018
June 2019 Dec. 2019 0.44% June 2020 SMBCpeer Book value per common
share at June 30, 2020, was $28.39, an increase of 10.3% from June
30, 2019. Tangible book value per common share, a non-GAAP measure,
improved 12.0%, to $26.00 at June 30, 2020. Despite improvements in
our book value and earnings per share, however, our closing stock
price at the end of the fiscal year was $24.30, down 30.2% from
$34.83 at the previous fiscal year end. Over that same period, the
SNL U.S. Bank and Thrift Index reported a decline of 24.7%, while
the S&P 500 increased 5.4%. Our total shareholder return over
the five years ended June 30, 2020, assuming dividends had been
reinvested, has been 39.3%, while the SNL U.S. Bank and Thrift
Index has returned 7.1%, and the S&P 500 has returned 66.5%. We
understand that bank stocks in general are out of favor in the
market, with expectations for tighter margins in a lower rate
environment coupled with the possibility of higher credit losses in
coming periods. Further, the market has favored larger-cap stocks
in the volatile economy. While we think our stock is attractively
priced, we continue to remain paused on our stock repurchase plan,
until we see more economic data that will allow us to better assess
the possibility of credit losses and ensure that we preserve
capital and liquidity to meet the credit needs of our customers. To
date, we remain cautiously optimistic about the performance of our
loan portfolio.

Our
dividends paid during fiscal 2020 represented a 2.5% return on our
closing stock price on the final day of the fiscal year, and a 1.9%
return on our average closing stock price for fiscal 2020. In
assessing our dividend payments in July 2020, the board determined
that maintaining our current dividend level of $0.15 per quarter is
appropriate and prudent at this time. The Company’s capital base
grew somewhat slower than our assets in fiscal 2020, as the
late-year surge of loans and deposits resulting from our PPP
activity and the Central Federal acquisition combined to add to
what would have otherwise been more contained growth levels
relative to capital retention. As PPP loans are forgiven, we would
expect capital ratios to rebound. Earlier in the fiscal year, the
Company utilized $5.8 million in capital in its stock repurchase
activity. We ended fiscal 2020 with a ratio of tangible common
equity to tangible assets (TCE/TA) of 9.39%, down 43 basis points
from 9.82% a year earlier. Regulatory risk-based ratios saw a
minimal decrease, while the regulatory leverage ratio saw a larger
decline, owing in large part to the increase in PPP loans. For
fiscal 2021, we expect to be focused on credit management,
assisting our borrowers as they work through this unprecedented
environment. We expect to have less interest in growth through
acquisitions, though we will continue to evaluate opportunities.
We’re pleased with progress made in reduction of our nonperforming
assets, and we’ll look to continue reducing the nonperformers we
hold as we prepare for the possibility of increased credit
difficulties in the coming year. We expect that growth will be
difficult to achieve in fiscal 2021, due to the anticipated
forgiveness of most of the PPP loans originated in the fiscal year
just ended, but we do want to support our communities by continuing
to originate loans based on sound underwriting. It’s too early to
assess commercial borrower appetite as the economy attempts to
recover, though homebuyer and refinancing activity remains strong
at this time. We will work to improve our ability to serve our
customers through digital channels and reduce reliance on in-branch
services. Additionally, we will be focused on mitigating spread
compression. I would like to take this opportunity to recognize the
importance to our Company of John Abercrombie, who retired from our
board last fall. Mr. Abercrombie served as Chairman, President
& CEO of Capaha Bank prior to its merger with our Company in
June of 2017. I knew John for many years prior to our merger, and I
know how his leadership of Capaha Bank guided that institution from
its roots as a small, rural Illinois savings bank to become a
significant participant in the Cape Girardeau, Missouri, MSA. The
Capaha acquisition provided Southern Bank with an opportunity to
enter that market, which has been a key to our growth over the last
three years. We’ve been very pleased with the continued expansion
there from the great entry position from which we benefited. I
extend my congratulations and best wishes to John for a long and
happy retirement. In the last six months, Southern Missouri has
required unprecedented contributions from our team members, and we
are fortunate to have had the fantastic team available to meet our
organization’s needs. I am grateful for each and every one of them.
We continue to do our part to help limit the spread of COVID-19,
maintain availability to meet the needs of our customers, and
provide an essential service to our communities. Our Company always
appreciates the opportunity to serve our customers, and I
especially appreciate the flexibility they’ve shown in recent
months as we follow the recommendations of our state and local
authorities. Finally, I am thankful to you, our shareholders, for
your investment and continued confidence in Southern Missouri.
Sincerely, Greg Steffens President and Chief Executive Officer
Southern Missouri Bancorp, Inc.

PLEASE
JOIN US at our 2020 Annual Meeting, where shareholders will hear
management review this year’s performance in detail. ANNUAL MEETING
Monday, October 26, 2020 at 9:00 AM to be held at our headquarters
facility, located at: 2991 Oak Grove Road Poplar Bluff,
Missouri

Directors
L. DOUGLAS BAGBY Chairman of the Board; Retired City Manager, City
of Poplar Bluff SAMMY A. SCHALK Vice-Chairman of the Board;
President, Gamblin Lumber Company RONNIE D. BLACK Retired Executive
Director, General Association of General Baptists GREG A. STEFFENS
President & CEO, Southern Missouri Bancorp, Inc. REBECCA M.
BROOKS Financial Manager, McLane Transport CHARLES R. LOVE
Certified Public Accountant, Kraft, Miles & Tatum DENNIS C.
ROBISON President, Robison Farms, Inc. DA VID J. TOOLEY Retired
President & CEO, Metropolitan National Bank TODD E. HENSLEY
Investor/Former Chairman, Peoples Bank of the Ozarks Executive
Officers GREG A. STEFFENS President Chief Executive Officer LORA L.
DA VES Executive Vice President Chief Risk Officer RICK A. WINDES
Executive Vice President Chief Lending Officer KIMBERLY A. CAPPS
Executive Vice President Chief Operations Officer JUSTIN G. COX
Executive Vice President Regional President BRETT A. DORTON
Executive Vice President Chief Strategies Officer MA TTHEW T. FUNKE
Executive Vice President Chief Financial Officer MARK E. HECKER
Executive Vice President Chief Credit Officer MARTIN J. WEISHAAR
Executive Vice President Chief Legal Officer

Southern
Missouri Bancorp, Inc. offers community banking services in
Missouri, Arkansas, and Illinois through its single bank
subsidiary, Southern Bank. Southern Bank is... ACCESSIBLESouthern
Bank is always accessible through our branches, website, mobile
applications, ATMs and ITMs. DYNAMICWe are charismatic and
progressive. We grow and adapt to meet the ever-changing needs of
our customers and communities. INNOV A TIVEWe are unconventional
pioneers. We offer cutting edge products, like Kasasa, to help our
customers put their hard-earned money to work. COMPETITIVEWe are as
ambitious and driven as the people we serve. We offer the same
quality products of mega bank chains without losing personal
service or outsourcing decisions. ROOTEDOur culture is rooted in
more than 130 years of impeccable customer service, superior
products, and philanthropy. INVOL VEDWe believe that our personal
investment in the lives of our customers and in the communities we
serve is just as important as our financial investments. Southern
Missouri Bancorp, Inc. 2991 Oak Grove Road | Poplar Bluff, Missouri
63901 (573) 778-1800 www.bankwithsouthern.com

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Investor
Relations Contact Lorna Brannum
bancorp@bankwithsouthern.com

Southern
Missouri Bancorp, Inc. 2991 Oak Grove Road Poplar Bluff, Missouri
63901 (573) 778-1800
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