Southern Missouri Bancorp (SMBC) Q2 2025 earnings summary

Executive summary

• Net income for Q2 FY2025 was $14.7 million, up 20.2% year-over-year and 17.6% sequentially, with diluted EPS of $1.30, up $0.23 year-over-year and $0.20 from Q1 FY2025.

• Net income for the six months ended December 31, 2024, was $27.1 million, up 7.0% year-over-year, with diluted EPS of $2.40, up from $2.23.

• Earnings and profitability improved quarter-over-quarter, driven by a larger earning asset base, higher net interest income, lower provision for credit losses, and decreased non-interest expense.

• Total assets grew 6.6% to $4.9 billion, driven by increases in net loans, cash, and AFS securities.

• Quarterly dividend of $0.23 per share declared, marking the 123rd consecutive quarterly dividend.

Financial highlights

• Net interest margin was 3.36% for Q2 FY2025, up from 3.25% a year ago, and 3.37% for the six months ended December 31, 2024.

• Net interest income increased 10.6% year-over-year to $38.1 million in Q2 FY2025 and 7.0% to $74.8 million for the six months.

• Gross loan balances rose by $60 million in Q2 and $295 million (8%) year-over-year; net loans receivable increased by $175.0 million (4.6%) since June 30, 2024.

• Deposit balances increased by $170 million in Q2 and $225 million (5.5%) year-over-year; deposits rose by $267.6 million (6.8%) to $4.2 billion.

• Tangible book value per share reached $38.91, up 12% year-over-year.

Outlook and guidance

• Optimism for at least mid-single-digit loan growth for the fiscal year, with potential for higher growth depending on agricultural conditions.

• Management expects continued asset growth through loan originations and investment securities purchases, funded primarily by deposits and supplemented by brokered funding and FHLB borrowings.

• Net interest margin may face compression in the March quarter due to elevated cash balances, but net interest spread is expected to improve as loans and CDs reprice.

• Effective tax rate expected to normalize in the second half after a temporary increase due to merger-related accruals.

• The company will continue to monitor commercial real estate concentrations and pursue strategic expansion opportunities.