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SOUTHERN MISSOURI BANCORP, INC. (SMBC)·Q3 2025 Earnings Summary

Executive Summary

  • EPS of $1.39 beat consensus by ~8% and rose 40% year over year and 7% sequentially; run-rate NIM guidance suggests further tailwinds from deposit repricing and remix into loans .
  • Revenue was near in-line to slightly below consensus on SPGI’s banking “Revenue” definition; net interest income grew 14% YoY and 3.5% QoQ, while noninterest income fell 2.9% sequentially on lower NSF/other loan fees .
  • Credit normalization emerged: NPLs rose to 0.55% of loans, driven by two specific-purpose medical CRE credits; ACL coverage to NPLs dropped to ~250%, and management expects some charge-offs on those credits .
  • Deposit growth (+$50.8M QoQ; +$275.3M YoY) and lower-rate CD renewals are key catalysts; management guided to ~3.4% reported NIM run-rate and mid-single-digit FY loan growth, with opportunistic buybacks under a ~3-year earn-back hurdle .

What Went Well and What Went Wrong

What Went Well

  • Strong profitability: EPS $1.39 (+$0.40 YoY; +$0.09 QoQ), ROA 1.27%, ROE 12.1%, efficiency ratio improved to 55.1% as revenues outpaced opex .
  • Margin tailwinds: NIM 3.39% benefited from lower deposit costs and ~13 bps of fair value accretion; CFO guided to ~3.4% reported run-rate as excess cash remix into loans .
  • Funding strength: Deposits +$50.8M QoQ and mix supports lower cost of funds; CDs rolling at lower rates provide ongoing NIM support (“$215M rolling at ~4.25% renewing ~4.10%; $1.2B over 12 months at 4.26%”) .

Quote: “Adjusting for the day count and the material accretion…we view our run rate net interest margin for the quarter to be about 3.4%.” — CFO Stefan Chkotovic .

What Went Wrong

  • Credit normalization: NPLs rose to $22.0M (0.55% of loans) from $8.3M in Q2; ACL-to-NPL coverage fell to ~250% from ~659% last quarter, largely due to two medical CRE properties with an insolvent tenant .
  • Modest fee pressure sequentially: Noninterest income -2.9% QoQ on lower NSF and origination-related fees given seasonality and softer volumes .
  • Elevated net charge-offs: $1.1M (annualized 11 bps) tied predominantly to a single agricultural relationship with suspected fraudulent activity; management added an Ag qualitative factor to CECL .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Net Interest Income ($USD Millions)$36.661 $38.143 $39.479
Noninterest Income ($USD Millions)$7.174 $6.865 $6.666
Revenue (SPGI) ($USD Millions)*$41.677*$44.076*$45.213*
Provision for Credit Losses ($USD Millions)$2.159 $0.932 $0.932
Net Income ($USD Millions)$12.458 $14.653 $15.683
Diluted EPS ($)$1.10 $1.30 $1.39
Net Interest Margin %3.37% 3.36% 3.39%
ROA %1.07% 1.21% 1.27%
ROE %10.0% 11.5% 12.1%
Efficiency Ratio %59.0% 55.3% 55.1%

*Values retrieved from S&P Global.

Segment breakdown: Not applicable; SMBC reports consolidated banking results.

KPIs

KPIQ1 2025Q2 2025Q3 2025
Gross Loans ($USD Millions, period-end)$3,966.518 $4,026.979 $4,023.509
Total Deposits ($USD Millions, period-end)$4,040.142 $4,210.627 $4,261.382
Avg Loan-to-Deposit Ratio %98.4% 96.4% 94.2%
NPL / Gross Loans %0.21% 0.21% 0.55%
ACL / Gross Loans %1.37% 1.36% 1.37%
ACL / NPLs %663.38% 658.80% 250.07%
Tangible Book Value per Share ($, non-GAAP)$38.26 $38.91 $40.37

Estimate comparison

MetricQ1 2025 Consensus*Q1 2025 ActualQ2 2025 Consensus*Q2 2025 ActualQ3 2025 Consensus*Q3 2025 Actual
EPS ($)1.1067*1.10 1.2433*1.30 1.2867*1.39
Revenue ($USD Millions)42.677*41.677*43.8425*44.076*45.331*45.213*
# EPS Estimates3*—3*—3*—
# Revenue Estimates3*—2*—3*—

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (reported run-rate)Near term (Q4 onward)Not provided~3.4% run-rate after adjusting for day count/accretion; excess cash remix to loans to benefit NIM Introduced
CD RenewalsNext 3 months; Next 12 monthsNot provided~$215M rolling at ~4.25% renewing at ~4.10%; ~$1.2B over 12 months at ~4.26% avg Detail added; margin tailwind
Loan Renewal RatesNext 12 monthsNot providedRenewals ~7.25–7.50%; ~$610M renewing at ~6.45% Positive spread shift after next quarter
Loan GrowthFY2025Not providedAt least mid single-digit FY growth; pipeline $163.3M (90-day) Introduced/affirmed
CRE ConcentrationFY2025~304% Tier1+ACL at bank level Expect 300–325%; grow CRE in line with capital Maintained range
DividendQuarterly$0.23 per share$0.23 per share (announced) Maintained
Capital/BuybacksOngoingNot specifiedOpportunistic buybacks with ~3-year earn-back; target TCE 8–9% Introduced flexibility

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Net Interest MarginQ1: 3.37%; Q2: 3.36%; accretion ~9 bps in Q2 3.39%; accretion ~13 bps; run-rate ~3.4%; day-count drag ~7 bps Improving
Deposit Mix & CDsQ2: deposit growth +$170.5M; seasonal inflows; brokered CDs tactically used CDs repricing down; ~$1.2B renewals over 12 months at ~4.26%; funding likely shifts to CDs near term Margin-supportive
Credit QualityQ1/Q2: NPL ~0.21%; ACL/NPL >650% NPL 0.55% on two medical CRE properties; expect some charge-offs; ACL/NPL ~250% Deteriorating (from very strong levels)
Agriculture ExposureQ1: seasonal ag draws; Q2: balances up; NCOs low Elevated NCOs from a single ag relationship; new Ag qualitative factor in CECL; monitoring tariffs/macro Mixed/Watchlist
Excess Cash RemixQ1/Q2: cash balances rising $143M avg interest-bearing cash; expected to decline as remix into loans boosts NIM Positive tailwind
Operating EfficiencyQ1: performance improvement project one-time costs $0.84M; efficiency 59% Efficiency 55.1%; project recommendations to be implemented over several years Improving
M&A/CapitalQ2: tax accrual adjustment (M&A-related) M&A likely quiet near term; potential buybacks if earn-back ~3 years; strong capital base Optionality maintained

Management Commentary

  • “Net interest income was up 3.5% quarter over quarter and up 14.4% year over year… NIM included 12 bps benefit from fair value accretion.” — Matt Funke, President & CAO .
  • “Adjusting for the day count and the material accretion…run rate NIM…about 3.4%.” — CFO Stefan Chkotovic .
  • “NPLs…mostly due to loans totaling $10,000,000…two specific purpose non-owner occupied CRE…originally leased to a single tenant who has since become insolvent.” — Management press release .
  • “We do anticipate a fair amount of charge off on these credits…marked to roughly 35% in our ACL of their balance.” — Management on medical CRE .
  • “We would anticipate…using some of our excess capital to repurchase shares…at the current trading prices…opportunistic.” — Management on buybacks .

Q&A Highlights

  • Margin trajectory: Analysts probed NIM run-rate; CFO anchored ~3.4% reported, with excess cash remix and deposit repricing as tailwinds; day-count and accretion effects quantified .
  • Funding mix/CDs: ~$215M CDs rolling in 3 months at ~4.25% replacing at ~4.10%; ~$1.2B over 12 months at 4.26%, implying gradual liability cost improvement .
  • Loan repricing: ~$610M renewals over 12 months at 6.45% moving to ~7.25–7.50%, offering asset yield uplift after next quarter .
  • Credit/NPLs specifics: Two medical CRE properties on nonaccrual; collateral re-tenanting required; ACL marks imply anticipated losses; agricultural relationship drove elevated NCOs .
  • Capital allocation: Potential buybacks with 8–9% TCE target and ~3-year earn-back discipline; M&A likely paused pending market stabilization .

Estimates Context

  • EPS: Q3 actual $1.39 vs consensus $1.2867* — bold beat; Q2 $1.30 vs $1.2433* — beat; Q1 $1.10 vs $1.1067* — slight miss .
  • Revenue (SPGI banking definition): Q3 actual $45.213M vs $45.331M* — slight miss; Q2 $44.076M vs $43.8425M* — beat; Q1 $41.677M vs $42.677M* — miss. Company-reported net interest income + noninterest income totaled $46.145M in Q3, highlighting definitional nuances in SPGI “Revenue” for banks .
  • Revisions outlook: Models likely lift NIM trajectory and EPS near term on deposit repricing and remix; raise credit costs on higher NPLs and anticipated write-downs; fee lines may remain seasonally softer in Q4 before normalizing .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • EPS beat with margin tailwinds: Deposit repricing and remixing excess cash into loans underpin management’s ~3.4% reported NIM run-rate guidance — supportive for near-term EPS momentum .
  • Watch credit normalization: NPLs rose on two medical CRE credits; expect some charge-offs; monitor ACL/NPL coverage and subsequent resolution/retention progress .
  • Funding strength and mix: Core deposit growth and lower-rate CD renewals should continue easing cost of funds, partially offsetting any asset yield pressure from curve shifts .
  • Loan growth setup: Pipeline ($163.3M next 90 days) and seasonally stronger Q4 support mid-single-digit FY loan growth; construction paydowns moderating CRE growth pace .
  • Capital optionality: Potential buybacks with disciplined earn-back; dividend maintained at $0.23 — returns supported by strong capital and profitability .
  • Tactical model changes: Lift NIM assumptions slightly; temper fee income near-term; increase credit costs (CECL qualitative factors) given NPL dynamics and ag exposure .
  • Trading lens: Positive EPS/margin beats vs consensus, coupled with credible NIM run-rate and deposit trajectory, are near-term catalysts; credit headlines are the primary risk to multiple until medical CRE exposures are resolved .