Southern Missouri Bancorp (SMBC) Q4 2024 earnings summary

Executive summary

• Profitability improved quarter-over-quarter, driven by higher net interest margin, increased non-interest income, and lower expenses, despite a challenging high-rate environment impacting deposit costs.

• Preliminary net income for Q4 FY2024 was $13.5 million, down 13.0% year-over-year, but up 20.2% sequentially from Q3; full-year net income was $50.2 million, up $10.9 million from FY2023.

• Tangible book value per share grew 13.4% year-over-year to $36.68, with a $4.34 increase over the last 12 months.

• Fiscal 2024 diluted EPS was $4.42, up from $3.85 in fiscal 2023; adjusted for securities losses, EPS would have been $4.53.

• Quarterly dividend increased to $0.23 per share, a 9.5% rise, marking the 121st consecutive quarterly dividend.

Financial highlights

• Net interest margin for the quarter was 3.25%, up from 3.15% in the prior quarter but down 35 basis points year-over-year.

• Net interest income rose 1.7% sequentially but fell 3.1% year-over-year due to margin compression.

• Non-interest income increased 39.1% from the prior quarter, aided by seasonal fee income and absence of prior quarter securities losses; down 13.2% year-over-year.

• Non-interest expense was $25.0 million, up 0.5% year-over-year, mainly due to higher compensation, benefits, and occupancy costs.

• Efficiency ratio for Q4 FY2024 was 58.3%, up from 55.1% year-over-year, but improved from 61.2% in Q3.

Outlook and guidance

• Optimism for margin and earnings in fiscal 2025, assuming a stable credit environment and similar loan growth to 2024.

• Loan growth expected to continue at a mid-single-digit pace, with a strong pipeline for the next 90 days.

• Margin could benefit from higher loan production and potential Fed rate cuts; 100 basis points of rate cuts projected to yield low- to mid-single-digit net interest income growth over 12 months.

• Management remains confident in future prospects, as reflected in the dividend increase and ongoing share repurchases.

• Forward-looking statements highlight risks from economic conditions, interest rate fluctuations, integration of acquisitions, and regulatory changes.