On this page of StockholderLetter.com we present the 9/23/2024 shareholder letter from SOUTHERN MISSOURI BANCORP, INC. — ticker symbol SMBC. Reading current and past SMBC letters to shareholders can bring important insights into the investment thesis.
20 24 AN N U A L R E P O R T
Financial Summary 2024 EARNI N G S (dollars in thousands) Net interest income Provision for credit losses Noninterest income Noninterest expense Income taxes Net income 2023 CHANGE (%) 139,483 3,600 24,844 97,617 12,928 50,182 126,745 17,061 26,204 86,425 10,226 39,237 10.1% -78.9% -5.2% 12.9% 26.4% 27.9% 4.42 4.42 45.01 0.84 3.86 3.85 38.45 0.84 14.5% 14.8% 17.1% 0.0% PER C O MMO N S H A R E Net income: Basic Diluted Closing market price Cash dividends declared AT YE A R -E N D (dollars in thousands) Total assets Loans, net of allowance Reserves as a percent of nonperforming loans Deposits Stockholder s equity $ 4,604,316 3,797,287 786 % $ 3,952,457 488,748 $ 4,360,211 3,571,078 625 % $ 3,725,540 446,058 10.74 % 1.10 3.27 58.87 1.36 10.46 10.39 % 1.03 3.54 56.51 1.32 11.70 FI NA N C I A L R ATI O S Return on average shareholder equity Return on average assets Net interest margin Efficiency ratio Allowance for credit losses to loans Equity to average assets at year-end OTHE R D ATA (1) 11,277,737 Common shares outstanding (2) 11,219,781 Common shares outstanding for book value calculation 11,301,279 Average common and dilutive shares outstanding 468 Common stockholders record 714 Full-time equivalent employees 6,449 Assets per employee (in thousands) 66 Banking offices 5.6% 6.3% 6.1% 9.6% 11,330,462 11,279,952 10,141,799 482 676 6,450 66 $43.56 $39.54 $5.22 $5.21 $4.42 $3.85 2021 2022 2023 2024 DILUTED EARNINGS PER SHARE 2020 $28.39 2022 2023 2023 CASH DIVIDENDS PER SHARE (1) Other data is as of year-end, except for average shares. (2) Excludes unvested restricted stock award shares. 2021 $34.91 $0.84 $0.84 $0.60 $0.62 $2.99 2020 $0.80 2020 $31.94 2021 2022 2023 2024 BOOK VALUE PER SHARE
D E A R SHA RE HOL DER, Fiscal year 2024 was a year of solid overall results despite headwinds from margin compression and a tough environment for noninterest income generation. While the industry faced a number of challenges, Southern Missouri Bancorp continued to create growth through opportunity, executing on our long-term goals for the benefit of our customers, communities, team members, and shareholders. In a year that continued to see the impact from the Federal Reserve s rapid rate increases from the prior year, along with sustained high levels of deposit competition, Southern Missouri Bancorp, Inc. (the Company ) reported an increase in earnings per share, but saw core profitability excluding non-recurring charges from the previous fiscal year decline. The primary driver was a decrease in net interest margin, coupled with a decline in noninterest income as a percentage of total assets. In fiscal year 2023, we completed a significant merger that enabled the Company to expand into a new metropolitan market and continued our long-term growth strategy. Taking all items into consideration, I am pleased to report the Company grew tangible book value per share, a non-GAAP measure, by 13.4% in fiscal year 2024. The Company reported net income of $50.2 million for fiscal 2024, an increase of $10.9 million, or 27.9%, as compared to the prior fiscal year, and representing earnings per fully-diluted share of $4.42, up from $3.85 in the prior fiscal year. To modestly reposition the securities portfolio, we recorded some strategic one-time loss trades on available-for-sale ( AFS ) securities in fiscal 2024 of $1.5 million. The loss trades negatively impacted diluted earnings per share by approximately $0.11 in fiscal 2024, while in fiscal 2023, one-time expenses related to the merger with Citizens Bancshares Co. ( Citizens ) including provision for credit losses and noninterest expenses, reduced diluted earnings per share by approximately $0.95. On an adjusted basis, the decrease from last year s core earnings was primarily due to core expense growth that outpaced our net interest income growth driven by margin compression and decreased noninterest income growth as a result of reduced loan fee income and deposit account charges and related fees. Our return on average assets increased from 1.03% in fiscal 2023 to 1.10% in fiscal 2024, while return on average equity increased from 10.4% to 10.7%. Overall, excluding non-core items, our view is that our results continued to approach our long-term targets despite the decline in net interest margin. RETURN ON COM M ON E QUITY INCRE A S E D, PRIMA RILY DUE TO MERGER-RELATED CHARG E S RE CORDE D IN THE PRIOR F IS CA L Y E A R. Core profitability decreased compared to prior years when excluding non-recurring merger-related costs, when due to a decrease in net interest margin, coupled with a decline in non-interest income. Return on Average Common Equity 17.7% 15.4% 13.3% 12.0% 11.1% 12.5% 11.3% 10.7% 10.4% 9.6% Dec. 2019 June 2020 Dec. 2020 June 2021 Dec. 2021 SMBC June 2022 Dec. 2022 June 2023 Dec 2023 June 2024 peer Peer 1 banks figures are based on their twelve months ended December 31, 2023. 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 $3 billion to $10 billion as of December 31, 2023, headquartered in Missouri, Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky, Nebraska, Oklahoma, and Tennessee. SMBC data is as of fiscal year-end (June). 1
The Company reported solid asset growth of $244 million, or 5.6%, for fiscal 2024. We experienced well-distributed loan growth spread throughout our footprint for fiscal year 2024. Loans, net of allowance for credit losses ( ACL ), grew $226 million, or 6.3%. Loan portfolio growth was driven by non-owner occupied commercial real estate loans, residential real estate loans, agricultural revolving lines of credit, and drawn construction loan balances. We continue to monitor our concentration in non-owner occupied commercial real estate. As of June 30, 2024, our sole bank subsidiary, Southern Bank (the Bank ) reported a non-owner occupied commercial real estate concentration ratio of 318% of Tier 1 capital and ACL, as compared to 330% at prior year end. Deposits increased $227 million, or 6.1%, for fiscal 2024. The deposit portfolio saw increases during the fiscal year in certificates of deposit and savings accounts, as customers moved their balances into high yield savings accounts and special rate time deposits in response to the elevated rate environment. The increase in deposits was inclusive of a $16.1 million increase in public unit funds, and a $14.2 million increase in brokered deposits. Competition for deposits remained strong throughout the year. LONG-TERM GROW TH IN LOA NS , DE POS ITS , A ND TOTA L A S S E TS Loan growth remained solid on an organic basis, and deposit growth remained challenging and CD-based with increased competition in the higher rate environment. Total Assets Total Loans (Dollars in millions) net of allowance for loan losses (Dollars in millions) $4,360 $4,604 $3,571 $3,215 $2,542 2020 $2,701 2021 $2,142 $2,200 2022 2023 2024 2020 2021 Total Deposits (Dollars in millions) $3,726 $3,797 $2,686 2022 2023 2024 $3,952 $2,815 $2,185 $2,331 2020 2021 2022 2023 2024 Our provision for credit losses ( PCL ) was $3.6 million in fiscal 2024, as compared to a PCL of $17.1 million in fiscal 2023, declining from the elevated provisioning required by the Citizens merger. This year, organic loan growth required provisioning to cover our larger loan portfolio balance, and while our view of the projected economic environment improved somewhat compared to the prior fiscal year, we still saw a four-basis point increase in our ACL as a percentage of loans outstanding, to 1.36% at June 30, 2024, primarily due to qualitative factor adjustments and individually evaluated credits. The credit quality of the loan portfolio remained strong, with adversely classified assets totaling $44.7 million, or 0.96% of total assets, as compared to $50.0 million, or 1.15% of total assets at the prior fiscal year end. The Company reported nonperforming assets (NPAs) of $10.6 million, or 0.23% of total assets, at June 30, 2024, as compared to $11.3 million, or 0.26% of total assets, at the prior fiscal year end. Nonperforming loans (NPLs) were 0.17% of gross loans at June 30, 2024, as compared to 0.21%, at the prior fiscal year end. Net charge-offs for fiscal 2024 increased to 0.05% of average loans outstanding, up three basis points when compared to fiscal 2023, but still remained at a very low level historically compared to peers.
ASSET QUA LITY RE MA INE D S TRONG A decrease in non-performing assets shows the Company s commitment to maintain and improve credit quality. Non-performing Assets Ratio 0.40% 0.44% 0.42% 0.26% 0.30% 0.27% 0.23% 0.26% Dec. 2019 June 2020 Dec. 2020 June 2021 Dec. 2021 0.20% 0.21% June 2022 Dec. 2022 SMBC June 2023 Dec 2023 June 2024 peer The 2024 fiscal year was challenging due to the previous year s rapid increase in interest rates and the inverted yield curve. We saw an increase in net interest income of $12.7 million, or 10.1%, when compared to the prior fiscal year, as a 19.3% increase in average interest earning assets was partially offset by a decline in net interest margin from 3.54% to 3.27%. Increases in our average cost of funds began to abate later in the fiscal year, while loan portfolio yields continued to steadily and modestly increase. We re optimistic this positive trend will carry into fiscal 2025. Noninterest income, excluding the loss of AFS securities, increased $129,000, as increases in wealth management fees, bank card interchange income, and earnings on bank owned life insurance were mostly offset by decreases in deposit account charges and related fees, loan servicing and other loan fees, realized gains on sales of loans, and other income. Noninterest expense increased 12.9%, mainly attributable to a full year impact of the prior year merger. On a core basis, expense growth was higher, as the prior year included $4.9 million in nonrecurring expenses attributable to the Citizens merger, with negligible expenses in the current year. Increases were seen in compensation and benefits, occupancy expenses, data processing expenses, amortization of intangibles due to the Citizens merger, deposit insurance premiums, advertising, and other noninterest expenses. In addition to the merger, the inflationary environment contributed to the year-over-year increase. The Company s efficiency ratio increased to 58.9%, as expense growth outpaced revenues. E F F I CIENCY RATIO TRENDED H IGHE R IN CHA LLE NGING RE V E NUE E NV IRONME NT The Company s M&A activity contributed to the prior year increase, but moved higher in the current year as net interest income and noninterest income increased less than expenses, due in part to inflationary pressure. Efficiency Ratio 57.1% 56.4% 55.0% 54.4% 57.4% 50.8% 48.0% Dec. 2019 June 2020 Dec. 2020 June 2021 56.5% 54.9% Dec. 2021 SMBC June 2022 Dec. 2022 peer June 2023 Dec 2023 58.9% June 2024
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SMBC 9/23/2024 Shareholder/Stockholder Letter Transcript:

20 24 AN N U A L R E P O R T

Financial Summary
2024
EARNI N G S (dollars in thousands)
Net interest income
Provision for credit losses
Noninterest income
Noninterest expense
Income taxes
Net income
2023
CHANGE (%)

139,483
3,600
24,844
97,617
12,928
50,182

126,745
17,061
26,204
86,425
10,226
39,237
10.1%
-78.9%
-5.2%
12.9%
26.4%
27.9%

4.42
4.42
45.01
0.84

3.86
3.85
38.45
0.84
14.5%
14.8%
17.1%
0.0%
PER C O MMO N S H A R E
Net income:
Basic
Diluted
Closing market price
Cash dividends declared
AT YE A R -E N D (dollars in thousands)
Total assets
Loans, net of allowance
Reserves as a percent of nonperforming loans
Deposits
Stockholder   s equity
$ 4,604,316
3,797,287
786 %
$ 3,952,457
488,748
$ 4,360,211
3,571,078
625 %
$ 3,725,540
446,058
10.74 %
1.10
3.27
58.87
1.36
10.46
10.39 %
1.03
3.54
56.51
1.32
11.70
FI NA N C I A L R ATI O S
Return on average shareholder equity
Return on average assets
Net interest margin
Efficiency ratio
Allowance for credit losses to loans
Equity to average assets at year-end
OTHE R D ATA (1)
11,277,737
Common shares outstanding
(2)
11,219,781
Common shares outstanding for book value calculation
11,301,279
Average common and dilutive shares outstanding
468
Common stockholders record
714
Full-time equivalent employees
6,449
Assets per employee (in thousands)
66
Banking offices
5.6%
6.3%
6.1%
9.6%
11,330,462
11,279,952
10,141,799
482
676
6,450
66
$43.56
$39.54
$5.22 $5.21
$4.42
$3.85
2021
2022
2023
2024
DILUTED EARNINGS PER SHARE
2020
$28.39
2022
2023
2023
CASH DIVIDENDS PER SHARE
(1) Other data is as of year-end, except for average shares.
(2) Excludes unvested restricted stock award shares.
2021
$34.91
$0.84 $0.84
$0.60 $0.62
$2.99
2020
$0.80
2020
$31.94
2021
2022
2023
2024
BOOK VALUE PER SHARE

D E A R SHA RE HOL DER,
Fiscal year 2024 was a year of solid overall results despite headwinds from margin compression and a tough
environment for noninterest income generation. While the industry faced a number of challenges, Southern Missouri
Bancorp continued to create growth through opportunity, executing on our long-term goals for the benefit of our
customers, communities, team members, and shareholders.
In a year that continued to see the impact from the Federal Reserve   s rapid rate increases from the prior year, along
with sustained high levels of deposit competition, Southern Missouri Bancorp, Inc. (the    Company   ) reported an
increase in earnings per share, but saw core profitability     excluding non-recurring charges from the previous fiscal
year     decline. The primary driver was a decrease in net interest margin, coupled with a decline in noninterest
income as a percentage of total assets. In fiscal year 2023, we completed a significant merger that enabled the
Company to expand into a new metropolitan market and continued our long-term growth strategy. Taking all items
into consideration, I am pleased to report the Company grew tangible book value per share, a non-GAAP measure, by
13.4% in fiscal year 2024.
The Company reported net income of $50.2 million for fiscal 2024, an increase of $10.9 million, or 27.9%, as
compared to the prior fiscal year, and representing earnings per fully-diluted share of $4.42, up from $3.85 in the
prior fiscal year. To modestly reposition the securities portfolio, we recorded some strategic one-time loss trades on
available-for-sale (   AFS   ) securities in fiscal 2024 of $1.5 million. The loss trades negatively impacted diluted earnings
per share by approximately $0.11 in fiscal 2024, while in fiscal 2023, one-time expenses related to the merger with
Citizens Bancshares Co. (   Citizens   ) including provision for credit losses and noninterest expenses, reduced diluted
earnings per share by approximately $0.95. On an adjusted basis, the decrease from last year   s core earnings was
primarily due to core expense growth that outpaced our net interest income growth driven by margin compression
and decreased noninterest income growth as a result of reduced loan fee income and deposit account charges and
related fees.
Our return on average assets increased from 1.03% in fiscal 2023 to 1.10% in fiscal 2024, while return on average
equity increased from 10.4% to 10.7%. Overall, excluding non-core items, our view is that our results continued to
approach our long-term targets despite the decline in net interest margin.
RETURN ON COM M ON E QUITY INCRE A S E D, PRIMA RILY DUE TO
MERGER-RELATED CHARG E S RE CORDE D IN THE PRIOR F IS CA L Y E A R.
Core profitability decreased compared to prior years when excluding non-recurring merger-related costs,
when due to a decrease in net interest margin, coupled with a decline in non-interest income.
Return on Average Common Equity
17.7%
15.4%
13.3%
12.0%
11.1%
12.5%
11.3%
10.7%
10.4%
9.6%
Dec.
2019
June
2020
Dec.
2020
June
2021
Dec.
2021
SMBC
June
2022
Dec.
2022
June
2023
Dec
2023
June
2024
peer
Peer 1 banks    figures are based on their twelve months ended December 31, 2023.
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 $3 billion to $10 billion as of December 31, 2023, headquartered in Missouri, Arkansas, Illinois, Indiana,
Iowa, Kansas, Kentucky, Nebraska, Oklahoma, and Tennessee. SMBC data is as of fiscal year-end (June).
1

The Company reported solid asset growth of $244 million, or 5.6%, for fiscal 2024. We experienced well-distributed
loan growth spread throughout our footprint for fiscal year 2024. Loans, net of allowance for credit losses (   ACL   ),
grew $226 million, or 6.3%. Loan portfolio growth was driven by non-owner occupied commercial real estate
loans, residential real estate loans, agricultural revolving lines of credit, and drawn construction loan balances. We
continue to monitor our concentration in non-owner occupied commercial real estate. As of June 30, 2024, our sole
bank subsidiary, Southern Bank (the    Bank   ) reported a non-owner occupied commercial real estate concentration
ratio of 318% of Tier 1 capital and ACL, as compared to 330% at prior year end.
Deposits increased $227 million, or 6.1%, for fiscal 2024. The deposit portfolio saw increases during the fiscal year
in certificates of deposit and savings accounts, as customers moved their balances into high yield savings accounts
and special rate time deposits in response to the elevated rate environment. The increase in deposits was inclusive
of a $16.1 million increase in public unit funds, and a $14.2 million increase in brokered deposits. Competition for
deposits remained strong throughout the year.
LONG-TERM GROW TH IN LOA NS , DE POS ITS , A ND TOTA L A S S E TS
Loan growth remained solid on an organic basis, and deposit growth remained challenging and CD-based with
increased competition in the higher rate environment.
Total Assets
Total Loans
(Dollars in millions)
net of allowance for loan losses
(Dollars in millions)
$4,360
$4,604
$3,571
$3,215
$2,542
2020
$2,701
2021
$2,142 $2,200
2022
2023
2024
2020
2021
Total Deposits
(Dollars in millions)
$3,726
$3,797
$2,686
2022 2023 2024
$3,952
$2,815
$2,185 $2,331
2020 2021
2022 2023 2024
Our provision for credit losses (   PCL   ) was $3.6 million in fiscal 2024, as compared to a PCL of $17.1 million in fiscal
2023, declining from the elevated provisioning required by the Citizens merger. This year, organic loan growth
required provisioning to cover our larger loan portfolio balance, and while our view of the projected economic
environment improved somewhat compared to the prior fiscal year, we still saw a four-basis point increase in our
ACL as a percentage of loans outstanding, to 1.36% at June 30, 2024, primarily due to qualitative factor adjustments
and individually evaluated credits.
The credit quality of the loan portfolio remained strong, with adversely classified assets totaling $44.7 million,
or 0.96% of total assets, as compared to $50.0 million, or 1.15% of total assets at the prior fiscal year end. The
Company reported nonperforming assets (NPAs) of $10.6 million, or 0.23% of total assets, at June 30, 2024, as
compared to $11.3 million, or 0.26% of total assets, at the prior fiscal year end. Nonperforming loans (NPLs) were
0.17% of gross loans at June 30, 2024, as compared to 0.21%, at the prior fiscal year end. Net charge-offs for fiscal
2024 increased to 0.05% of average loans outstanding, up three basis points when compared to fiscal 2023, but
still remained at a very low level historically compared to peers.

ASSET QUA LITY RE MA INE D S TRONG
A decrease in non-performing assets shows the Company   s commitment to maintain and improve credit quality.
Non-performing Assets Ratio
0.40%
0.44%
0.42%
0.26%
0.30%
0.27%
0.23%
0.26%
Dec.
2019
June
2020
Dec.
2020
June
2021
Dec.
2021
0.20%
0.21%
June
2022
Dec.
2022
SMBC
June
2023
Dec
2023
June
2024
peer
The 2024 fiscal year was challenging due to the previous year   s rapid increase in interest rates and the inverted yield
curve. We saw an increase in net interest income of $12.7 million, or 10.1%, when compared to the prior fiscal year, as
a 19.3% increase in average interest earning assets was partially offset by a decline in net interest margin from 3.54%
to 3.27%. Increases in our average cost of funds began to abate later in the fiscal year, while loan portfolio yields
continued to steadily and modestly increase. We   re optimistic this positive trend will carry into fiscal 2025.
Noninterest income, excluding the loss of AFS securities, increased $129,000, as increases in wealth management
fees, bank card interchange income, and earnings on bank owned life insurance were mostly offset by decreases in
deposit account charges and related fees, loan servicing and other loan fees, realized gains on sales of loans, and
other income.
Noninterest expense increased 12.9%, mainly attributable to a full year impact of the prior year merger. On a core
basis, expense growth was higher, as the prior year included $4.9 million in nonrecurring expenses attributable
to the Citizens merger, with negligible expenses in the current year. Increases were seen in compensation and
benefits, occupancy expenses, data processing expenses, amortization of intangibles due to the Citizens merger,
deposit insurance premiums, advertising, and other noninterest expenses. In addition to the merger, the inflationary
environment contributed to the year-over-year increase. The Company   s efficiency ratio increased to 58.9%, as
expense growth outpaced revenues.
E F F I CIENCY RATIO TRENDED H IGHE R IN CHA LLE NGING RE V E NUE E NV IRONME NT
The Company   s M&A activity contributed to the prior year increase, but moved higher in the current year
as net interest income and noninterest income increased less than expenses, due in part to inflationary pressure.
Efficiency Ratio
57.1%
56.4%
55.0%
54.4%
57.4%
50.8%
48.0%
Dec.
2019
June
2020
Dec.
2020
June
2021
56.5% 54.9%
Dec.
2021
SMBC
June
2022
Dec.
2022
peer
June
2023
Dec
2023
58.9%
June
2024


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SMBC Stockholder/Shareholder Letter (SOUTHERN MISSOURI BANCORP, INC.) 9/23/2024 | www.StockholderLetter.com
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