Southern Missouri Margin Expands After One-Quarter Pause

The Tip Desk · November 8, 2026 · 4 min read

Net interest income reached $45.9 million in the fiscal first quarter as the margin lifted to 3.70% and preliminary net income rose 22.0% to $19.1 million.

Southern Missouri Bancorp (SMBC), the parent of Southern Bank, reported preliminary net income of $19.1 million for the first quarter of fiscal 2027, up $3.4 million, or 22.0%, from the year-ago period, or $1.73 a share.

The company said the increase was driven by higher net interest income, a lower provision for credit losses, and higher noninterest income, partially offset by higher noninterest expense and a higher tax provision. Diluted earnings were $0.35, or 25.4%, above the year-ago $1.38 a share.

Net interest margin expanded 3 bps sequentially to 3.70% after holding at 3.67% in the prior quarter, and 13 bps versus the year-ago 3.57%. Net interest income rose $1.5 million, or 3.5%, sequentially to $45.9 million, after a $1.3 million, or 2.9%, sequential increase in the prior quarter, and 8.3% year over year on a 4.5% rise in average interest-earning assets. The company attributed the year-over-year margin expansion primarily to a 19 bps drop in interest-bearing liability costs that more than offset a 4 bps decline in asset yields. Acquisition-related discount accretion and premium amortization contributed about five bps to the margin, versus about seven bps a year earlier.

The provision for credit losses fell to $3.0 million, down $240,000 from $3.2 million in the prior quarter, after PCL had risen $1.1 million sequentially in the prior quarter. The current provision comprised a $3.9 million loan ACL charge and a $902,000 negative off-balance-sheet provision, the company said, primarily reflecting a lower required reserve rate on unfunded commitments. Annualized net charge-offs were 0.04% of average loans, versus 0.40% in the linked quarter and 0.36% a year earlier.

The ACL rose $3.4 million to $58.3 million, or 1.31% of gross loans, from 1.25% at June 30, 2026. The company said the increase was primarily attributable to management’s assessment of reserve adequacy amid economic uncertainty and to support loan growth, partially offset by net charge-offs of $494,000. Nonperforming loans declined $996,000, or 3.6%, to $26.7 million, or 0.60% of gross loans, from 0.63% at June 30, 2026. Performing loan modifications to borrowers in financial difficulty rose to $51.1 million from $31.0 million, primarily from a C&I payment-term modification.

Gross loans increased $63.9 million, or 1.5%, sequentially, after a $69.4 million sequential increase in the prior quarter, and $263.9 million, or 6.3%, over the last twelve months. Growth concentrated in 1-4 family residential, agriculture production, C&I, agriculture real estate, and construction and land development, offset by declines in multi-family, non-owner occupied CRE, and owner occupied CRE. Agriculture production loans rose $23.3 million to $242.4 million and construction and land development rose $4.5 million to $314.5 million, while non-owner occupied CRE fell $3.3 million to $920.8 million and multi-family fell $15.5 million to $454.4 million. Total assets were $5.3 billion at September 30, 2026.

Deposits increased $66.1 million, or 1.5%, sequentially, after a $66.9 million sequential increase in the prior quarter, and $193.5 million, or 4.5%, over the last twelve months. Non-interest-bearing deposits fell $20.1 million to $540.6 million while non-brokered CDs rose $95.1 million to $1.56 billion. The average loan-to-deposit ratio was 98.8%, versus 99.7% in the linked quarter and 96.3% a year earlier. FHLB advances fell $7.7 million, or 5.9%, to $122.7 million.

Noninterest income rose $573,000, or 8.7%, year over year to $7.1 million on merchant program income, a tax-credit sale gain, NSF fees, BOLI including a $150,000 mortality benefit, and card interchange, partially offset by lower swap fees. Noninterest expense rose $1.5 million, or 6.1%, year over year to $26.6 million, and the efficiency ratio improved to 50.0% from 51.1% a year earlier. The tax provision was $4.5 million, up $678,000 from the prior-year quarter, primarily reflecting higher pretax income. The linked-quarter increase of $1.7 million reflected a $1.7 million tax benefit from tax credit investments that did not recur.

The company repurchased 19,000 shares for $1.4 million at an average $72.63, versus 4,000 shares for $291,000 at $69.10 in the prior quarter. The board declared a $0.27 quarterly dividend, matching the prior quarter and up from $0.25 two quarters earlier. Tangible book value per share was $48.52 at September 30, 2026.