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What changed in SOUTHERN MISSOURI BANCORP, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SOUTHERN MISSOURI BANCORP, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+403 added−415 removedSource: 10-K (2024-09-13) vs 10-K (2023-09-13)

Top changes in SOUTHERN MISSOURI BANCORP, INC.'s 2024 10-K

403 paragraphs added · 415 removed · 328 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

159 edited+19 added−33 removed195 unchanged
Biggest changeTime Deposits by Rates The following table sets forth the time deposits in the Bank classified by rates at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ 2023 2022 2021 ​ (Dollars in thousands) 0.00 - 0.99% ​ $ 92,533 ​ $ 408,479 ​ $ 332,958 1.00 - 1.99% ​ 109,564 ​ 171,997 ​ 155,078 2.00 - 2.99% ​ 186,538 ​ 51,692 ​ 63,777 3.00 - 3.99% ​ 109,780 ​ 6,298 ​ 10,606 4.00 - 4.99% ​ 472,546 ​ 165 ​ 167 5.00 - 5.99% ​ ​ 93,057 ​ ​ — ​ ​ — 6.00% and above ​ 18 ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 1,064,036 ​ $ 638,631 ​ $ 562,586 ​ The following table sets forth the amount and maturities of all time deposits at June 30, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount Due ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent ​ ​ Less ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of Total ​ ​ Than One ​ 1-2 ​ 2-3 ​ 3-4 ​ After ​ ​ ​ ​ Certificate ​ Year Years Years Years 4 Years Total Accounts ​ (Dollars in thousands) ​ 0.00 – 0.99% ​ $ 71,716 ​ $ 13,882 ​ $ 5,961 ​ $ 860 ​ $ 114 ​ $ 92,533 8.70 % 1.00 – 1.99% ​ 51,929 ​ 24,995 ​ 15,083 ​ 16,189 ​ 1,368 ​ 109,564 10.30 ​ 2.00 - 2.99% ​ 126,350 ​ 55,440 ​ 1,271 ​ 537 ​ 2,940 ​ 186,538 17.53 ​ 3.00 - 3.99% ​ 78,044 ​ 13,766 ​ 3,866 ​ 10,360 ​ 3,744 ​ 109,780 10.32 ​ 4.00 - 4.99% ​ 274,993 ​ 100,172 ​ 43,155 ​ 21,393 ​ 32,833 ​ 472,546 44.41 ​ 5.00 - 5.99% ​ ​ 87,463 ​ ​ 310 ​ ​ — ​ ​ 100 ​ ​ 5,184 ​ ​ 93,057 ​ 8.74 ​ 6.00% and above ​ 5 ​ 13 ​ — ​ — ​ — ​ 18 — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 690,500 ​ $ 208,578 ​ $ 69,336 ​ $ 49,439 ​ $ 46,183 ​ $ 1,064,036 100.00 % ​ 28 ​ ​ Table of Contents Deposit Flow The following table sets forth the balance of deposits in the various types of accounts offered by the Bank at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ 2023 2022 ​ 2021 ​ ​ ​ ​ Percent of ​ Increase ​ ​ ​ Percent of ​ Increase ​ ​ Percent of ​ Increase ​ Amount Total (Decrease) Amount Total (Decrease) Amount Total (Decrease) ​ ​ (Dollars in thousands) Noninterest bearing ​ $ 597,600 16.04 % $ 170,671 ​ $ 426,929 15.17 % $ 68,511 ​ $ 358,418 15.38 % $ 42,370 NOW checking ​ 1,328,423 35.66 ​ 156,803 ​ 1,171,620 41.62 ​ 246,340 ​ 925,280 39.70 ​ 143,343 Savings accounts ​ 282,753 7.59 ​ 8,470 ​ 274,283 9.74 ​ 43,378 ​ 230,905 9.91 ​ 49,676 Money market deposit ​ 452,728 12.15 ​ 149,116 ​ 303,612 10.79 ​ 49,998 ​ 253,614 10.88 ​ 22,452 Fixed-rate certificates which mature (1) : ​ ​ ​ ​ ​ ​ Within one year ​ 690,500 18.53 ​ 312,658 ​ 377,842 13.42 ​ 19,065 ​ 358,777 15.39 ​ (140,642) Within three years ​ 277,914 7.46 ​ 114,779 ​ 163,135 5.80 ​ 51,436 ​ 111,699 4.79 ​ (13,907) After three years ​ 95,622 2.57 ​ (2,032) ​ 97,654 3.46 ​ 5,544 ​ 92,110 3.95 ​ 42,664 Variable-rate certificates which mature: ​ ​ ​ ​ ​ ​ Within one year ​ — — ​ — ​ — — ​ — ​ — — ​ — Within three years ​ — — ​ — ​ — — ​ — ​ — — ​ — Total ​ $ 3,725,540 100.00 % $ 910,465 ​ $ 2,815,075 100.00 % $ 484,272 ​ $ 2,330,803 100.00 % $ 145,956 (1) At June 30, 2023, 2022, and 2021, certificates in excess of $100,000 totaled $720.0 million, $392.8 million, and $341.4 million, respectively.
Biggest changeThe uninsured amounts are estimates based on the methodologies and assumptions used for Southern Bank’s regulatory reporting requirements. ​ The following table sets forth the portion of our time deposits that are in excess of the FDIC insurance limit, by remaining time until maturity, as of June 30, 2024. ​ ​ ​ ​ ​ Maturity Period Amount ​ ​ (Dollars in thousands) Three months or less ​ $ 69,624 Over three through six months ​ 111,318 Over six through twelve months ​ 112,197 Over 12 months ​ 174,519 Total ​ $ 467,658 ​ For additional information regarding our deposits, see Note 5, “Deposits” of the Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K. 26 Table of Contents Time Deposits by Rates The following table sets forth the time deposits in the Bank classified by rates at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ 2024 2023 2022 ​ (Dollars in thousands) 0.00 - 0.99% ​ $ 17,862 ​ $ 92,533 ​ $ 408,479 1.00 - 1.99% ​ 33,395 ​ 109,564 ​ 171,997 2.00 - 2.99% ​ 46,195 ​ 186,538 ​ 51,692 3.00 - 3.99% ​ 149,095 ​ 109,780 ​ 6,298 4.00 - 4.99% ​ 671,562 ​ 472,546 ​ 165 5.00 - 5.99% ​ ​ 421,816 ​ ​ 93,057 ​ ​ — 6.00% and above ​ 4,879 ​ 18 ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 1,344,804 ​ $ 1,064,036 ​ $ 638,631 ​ The following table sets forth the amount and maturities of all time deposits at June 30, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount Due ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent ​ ​ Less ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of Total ​ ​ Than One ​ 1-2 ​ 2-3 ​ 3-4 ​ After ​ ​ ​ ​ Certificate ​ Year Years Years Years 4 Years Total Accounts ​ (Dollars in thousands) ​ 0.00 – 0.99% ​ $ 12,408 ​ $ 4,657 ​ $ 697 ​ $ 100 ​ $ — ​ $ 17,862 1.33 % 1.00 – 1.99% ​ 15,438 ​ 8,170 ​ 8,807 ​ 887 ​ 93 ​ 33,395 2.48 ​ 2.00 - 2.99% ​ 39,208 ​ 3,136 ​ 1,615 ​ 2,236 ​ — ​ 46,195 3.44 ​ 3.00 - 3.99% ​ 122,671 ​ 15,434 ​ 3,483 ​ 4,525 ​ 2,982 ​ 149,095 11.09 ​ 4.00 - 4.99% ​ 489,738 ​ 61,139 ​ 40,702 ​ 52,985 ​ 26,998 ​ 671,562 49.94 ​ 5.00 - 5.99% ​ ​ 398,229 ​ ​ 8,879 ​ ​ 9,498 ​ ​ 5,183 ​ ​ 27 ​ ​ 421,816 ​ 31.36 ​ 6.00% and above ​ 4,879 ​ — ​ — ​ — ​ — ​ 4,879 0.36 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 1,082,571 ​ $ 101,415 ​ $ 64,802 ​ $ 65,916 ​ $ 30,100 ​ $ 1,344,804 100.00 % ​ 27 Table of Contents Deposit Flow The following table sets forth the balance of deposits in the various types of accounts offered by the Bank at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ 2024 2023 ​ 2022 ​ ​ ​ ​ Percent of ​ Increase ​ ​ ​ Percent of ​ Increase ​ ​ Percent of ​ Increase ​ Amount Total (Decrease) Amount Total (Decrease) Amount Total (Decrease) ​ ​ (Dollars in thousands) Noninterest bearing ​ $ 514,107 13.01 % $ (83,493) ​ $ 597,600 16.04 % $ 170,671 ​ $ 426,929 15.17 % $ 68,511 NOW checking ​ 1,239,663 31.36 ​ (88,760) ​ 1,328,423 35.66 ​ 156,803 ​ 1,171,620 41.62 ​ 246,340 Savings accounts ​ 517,084 13.08 ​ 234,331 ​ 282,753 7.59 ​ 8,470 ​ 274,283 9.74 ​ 43,378 Money market deposit ​ 336,799 8.52 ​ (115,929) ​ 452,728 12.15 ​ 149,116 ​ 303,612 10.79 ​ 49,998 Fixed-rate certificates which mature (1) : ​ ​ ​ ​ ​ ​ ​ ​ Within one year ​ 1,082,571 27.39 ​ 392,071 ​ 690,500 18.53 ​ 312,658 ​ 377,842 13.42 ​ 19,065 Within three years ​ 159,007 4.02 ​ (118,907) ​ 277,914 7.46 ​ 114,779 ​ 163,135 5.80 ​ 51,436 After three years ​ 96,016 2.43 ​ 394 ​ 95,622 2.57 ​ (2,032) ​ 97,654 3.47 ​ 5,544 Variable-rate certificates which mature: ​ ​ ​ ​ ​ ​ Within one year ​ — — ​ — ​ — — ​ — ​ — — ​ — Within three years ​ 7,210 0.18 ​ 7,210 ​ — — ​ — ​ — — ​ — Total ​ $ 3,952,457 100.00 % $ 226,917 ​ $ 3,725,540 100.00 % $ 910,465 ​ $ 2,815,075 100.00 % $ 484,272 (1) At June 30, 2024, 2023, and 2022, certificates in excess of $100,000 totaled $887.9 million, $720.0 million, and $392.8 million, respectively.
Under the prompt corrective action standards of the FRB, in order to be considered well-capitalized, the Bank must have a ratio of CET1 capital to risk-weighted assets of at least 6.5%, a ratio of Tier 1 capital to risk-weighted assets of at least 8%, a ratio of total capital to risk-weighted assets of at least 10%, and a leverage ratio of at least 5%; and in order to be considered adequately capitalized, it must have the minimum capital ratios described above.
Under the prompt corrective action (PCA) standards of the FRB, in order to be considered well-capitalized, the Bank must have a ratio of CET1 capital to risk-weighted assets of at least 6.5%, a ratio of Tier 1 capital to risk-weighted assets of at least 8%, a ratio of total capital to risk-weighted assets of at least 10%, and a leverage ratio of at least 5%; and in order to be considered adequately capitalized, it must have the minimum capital ratios described above.
The FRB requires all depository institutions to maintain reserves at specified levels against their transaction accounts (checking, NOW and Super NOW checking accounts). These reserves may be in the form of cash or deposits with the institution’s regional Federal Reserve Bank.
The FRB requires all depository institutions to maintain reserves at specified levels against their transaction accounts (checking and NOW accounts). These reserves may be in the form of cash or deposits with the institution’s regional Federal Reserve Bank.
The Bank’s north region includes two of its facilities, which are situated in Jefferson and St. Louis counties. The market area also includes the City of St. Louis. The two counties and the City of St. Louis have a total population of approximately 1.5 million. The north region market area is within the St. Louis MSA.
The Bank’s north region includes two of its facilities, which are situated in Jefferson and St. Louis counties. The market area also includes the City of St. Louis. The two counties and the City of St. Louis have a total population of approximately 1.5 million. The north region market area is within the St.
Risk Factors,” and other documents filed or furnished from time to time by the Company with the SEC (and are available on our website at www.bankwithsouthern.com and on the SEC’s website at www.sec.gov) could affect the Company’s financial performance and cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.
“Risk Factors,” and other documents filed or furnished from time to time by the Company with the SEC (and are available on our website at www.bankwithsouthern.com and on the SEC’s website at www.sec.gov) could affect the Company’s financial performance and cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.
Most properties securing real estate loans made by the Bank during fiscal 2023 had appraisals performed on them by independent fee appraisers approved and qualified by the Board of Directors. The Bank generally requires borrowers to obtain title insurance and fire, property and flood insurance (if indicated) in an amount not less than the amount of the loan.
Most properties securing real estate loans made by the Bank during fiscal 2024 had appraisals performed on them by independent fee appraisers approved and qualified by the Board of Directors. The Bank generally requires borrowers to obtain title insurance and fire, property and flood insurance (if indicated) in an amount not less than the amount of the loan.
Southern Missouri Statutory Trust I, a Delaware business trust subsidiary of the Company, issued $7.0 million in Floating Rate Capital Securities (the "Trust Preferred Securities") with a liquidation value of $1,000 per share in March, 2004. The securities are due in 30 years, were redeemable after five years and bear interest at a floating rate based on LIBOR.
Southern Missouri Statutory Trust I, a Delaware business trust subsidiary of the Company, issued $7.0 million in Floating Rate Capital Securities (the "Trust Preferred Securities") with a liquidation value of $1,000 per share in March, 2004. The securities are due in 30 years, were redeemable after five years and bear interest at a floating rate based on SOFR.
These loans normally remain outstanding for a substantially shorter period of time because of refinancing and other prepayments. A significant change in the interest rate 11 ​ ​ Table of Contents environment can alter the average life of a residential loan portfolio. The one- to four-family fixed-rate loans do not contain prepayment penalties.
These loans normally remain outstanding for a substantially shorter period of time because of refinancing and other prepayments. A significant change in the interest rate environment can alter the average life of a residential loan portfolio. The one- to four-family fixed-rate loans do not 10 Table of Contents contain prepayment penalties.
Foreclosure may not begin until the loan reaches 17 ​ ​ Table of Contents 120 days delinquency in the case of consumer residential loans. For consumer loans, the Missouri Right-To-Cure Statute is followed, which requires issuance of specifically worded notices at specific time intervals prior to repossession or further collection efforts.
Foreclosure may not begin until the loan reaches 120 days delinquency in the case of consumer residential loans. For consumer loans, the Missouri Right-To-Cure Statute 16 Table of Contents is followed, which requires issuance of specifically worded notices at specific time intervals prior to repossession or further collection efforts.
Any forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. The Company wishes to advise readers that the factors listed above and other risks described in this Annual Report on Form 10-K, including, without limitation, those described under “Item 1A.
Any forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. The Company wishes to advise readers that the factors listed above and other risks described in this Annual Report on Form 10-K, including, without limitation, those described under Item 1A.
Additionally, the Company’s training committee identifies opportunities and paths for development of our staff, and our Company seeks to, whenever possible, fill positions by promotion from within. Among our executive team, market presidents, regional retail officers, and administrative team, 62% of these leaders have been promoted to their position from within.
Additionally, the Company’s training committee identifies opportunities and paths for development of our staff, and our Company seeks to, whenever possible, fill positions by promotion from within. Among our executive team, market presidents, regional retail officers, and administrative team, 54% of these leaders have been promoted to their position from within.
Descriptions of laws and regulations here and elsewhere in this prospectus do not purport to be complete and are qualified in their entirety by reference to the actual laws and regulations. Legislation is introduced from time to time in the United States Congress or the Missouri state legislature that may affect the operations of the Company and the Bank.
Descriptions of laws and regulations here and elsewhere in this report do not purport to be complete and are qualified in their entirety by reference to the actual laws and regulations. Legislation is introduced from time to time in the United States Congress or the Missouri state legislature that may affect the operations of the Company and the Bank.
In the Peoples Acquisition, the Company assumed $6.5 million in floating rate junior subordinated debt securities. The debt securities had been issued in 2005 by PBC in connection with the sale of trust preferred securities, bear interest at a floating rate based on LIBOR, are now redeemable at par, and mature in 2035.
In the Peoples Acquisition, the Company assumed $6.5 million in floating rate junior subordinated debt securities. The debt securities had been issued in 2005 by PBC in connection with the sale of trust preferred securities, bear interest at a floating rate based on SOFR, are now redeemable at par, and mature in 2035.
We are proud of the efforts Team Members make to invest their time in their communities, and we appreciate the impact of that investment on the health of our communities and our organization. ​ 33 ​ ​ Table of Contents GOVERNMENT SUPERVISION AND REGULATION The following is a brief description of certain laws and regulations applicable to the supervision and regulation of the Company and the Bank.
We are proud of the efforts Team Members make to invest their time in their communities, and we appreciate the impact of that investment on the health of our communities and our organization. ​ 31 Table of Contents GOVERNMENT SUPERVISION AND REGULATION The following is a brief description of certain laws and regulations applicable to the supervision and regulation of the Company and the Bank.
Southern Bank Real Estate Investments, LLC is a REIT which is majority-owned by the investment subsidiary, but has other preferred shareholders in order to meet the requirements to be a REIT. At June 30, 2023, SB Real Estate Investments, LLC held assets of approximately $1.4 billion. Southern Bank Real Estate Investments, LLC held assets of approximately $1.3 billion.
Southern Bank Real Estate Investments, LLC is a REIT which is majority-owned by the investment subsidiary, but has other preferred shareholders in order to meet the requirements to be a REIT. At June 30, 2024, SB Real Estate Investments, LLC held assets of approximately $1.4 billion. Southern Bank Real Estate Investments, LLC held assets of approximately $1.3 billion.
For more information regarding access to these filings on our website, please contact our Corporate Secretary, Southern Missouri Bancorp, Inc., 2991 Oak Grove Road, Poplar Bluff, Missouri, 63901; telephone number (573) 778-1800. ​ 41 ​ ​ Table of Contents ​
For more information regarding access to 38 Table of Contents these filings on our website, please contact our Corporate Secretary, Southern Missouri Bancorp, Inc., 2991 Oak Grove Road, Poplar Bluff, Missouri, 63901; telephone number (573) 778-1800. ​ ​
At June 30, 2023 the Bank’s south region includes 13 of its facilities, one of which is limited service, which are situated in Dunklin, Howell, and Oregon counties in Missouri, and Craighead, Greene, Independence, Lonoke, and White counties in Arkansas.
At June 30, 2024 the Bank’s south region includes 13 of its facilities, one of which is limited service, which are situated in Dunklin, Howell, and Oregon counties in Missouri, and Craighead, Greene, Independence, Lonoke, and White counties in Arkansas.
(2) Amount reported in fiscal 2022 includes the Company’s acquisitions of loans from the Fortune and Cairo mergers recorded at a $202.1 million and $408,000 fair values, respectively. Loan Commitments The Bank issues commitments for single- and multi-family residential mortgage loans, commercial real estate loans, operating or working capital lines of credit, and standby letters-of-credit.
(2) Amount reported in fiscal 2022 includes the Company’s acquisition of loans from the Fortune and Cairo mergers recorded at fair values of $202.1 million and $408,000, respectively. ​ Loan Commitments The Bank issues commitments for single- and multi-family residential mortgage loans, commercial real estate loans, operating or working capital lines of credit, and standby letters-of-credit.
Fortune SBA, LLC is an entity acquired in the Fortune acquisition, and was engaged in the origination of SBA guaranteed loans, sale of the guaranteed portion of the loan, and servicing of loans. At June 30, 2023, Fortune SBA, LLC held no assets or liabilities and is currently inactive.
Fortune SBA, LLC is an entity acquired in the Fortune acquisition, and was engaged in the origination of SBA guaranteed loans, sale of the guaranteed portion of the loan, and servicing of loans. At June 30, 2024, Fortune SBA, LLC held no assets or liabilities and is currently inactive.
Missouri-based banks, such as the Bank, are subject to a Missouri bank franchise and income tax. Bank Franchise Tax. The Missouri bank franchise tax is imposed on the bank’s taxable income at the rate of 4.48%, less credits for certain Missouri taxes, including income taxes.
Missouri Taxation General. Missouri-based banks, such as the Bank, are subject to a Missouri bank franchise and income tax. Bank Franchise Tax. The Missouri bank franchise tax is imposed on the bank’s taxable income at the rate of 4.48%, less credits for certain Missouri taxes, including income taxes.
The Company completed each of the above whole bank acquisitions primarily for the purpose of expanding its commercial banking activities where it believes the Company’s business model will perform well and for the long-term value of its core deposit franchise. Capital Raising Transactions On June 20, 2017, the Company completed an at-the-market common stock issuance.
The Company completed each of the above whole bank acquisitions primarily for the purpose of expanding its commercial banking activities where it believes the Company’s business model will perform well and for the long-term value of its core deposit franchise. 4 Table of Contents Capital Raising Transactions On June 20, 2017, the Company completed an at-the-market common stock issuance.
Fortune Investment Group, LLC is an entity acquired in the Fortune acquisition that was engaged in the brokerage of wealth management products, with no assets or liabilities at June 30, 2023, and is currently inactive.
Fortune Investment Group, LLC is an entity acquired in the Fortune acquisition that was engaged in the brokerage of wealth management products, with no assets or liabilities at June 30, 2024, and is currently inactive.
A bank holding company is required to give the FRB prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net 38 ​ ​ Table of Contents consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth.
A bank holding company is required to give the FRB prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth.
The branch offices are located in Poplar Bluff (4), Van Buren, Dexter (2), Kennett, Doniphan, Sikeston, Qulin, Springfield (3), Thayer (2), West Plains (2), Alton, Clever, Forsyth, Fremont Hills, Kimberling City, Ozark, Nixa, Rogersville, Marshfield, Cape Girardeau (2), Jackson, Gideon, Chaffee, Benton, Advance, Bloomfield, Essex, Rolla, Arnold, Oakville, Kansas City (2), Kearney, Lee’s Summit, Macon, Maryville, Boonville, Brookfield, Chillicothe (2), Smithville, St.
The branch offices are located in Poplar Bluff (4), Van Buren, Dexter (2), Kennett, Doniphan, Sikeston, Qulin, Springfield (3), Thayer (2), West Plains (2), Alton, Clever, Forsyth, Fremont 6 Table of Contents Hills, Kimberling City, Ozark, Nixa, Rogersville, Marshfield, Cape Girardeau (2), Jackson, Gideon, Chaffee, Benton, Advance, Bloomfield, Essex, Rolla, Arnold, Oakville, Kansas City (2), Kearney, Lee’s Summit, Macon, Maryville, Boonville, Brookfield, Chillicothe (2), Smithville, St.
The Bank’s east and south regions, and part of the northwest region. are generally rural in nature with economies supported by manufacturing activity, agriculture (livestock, dairy, poultry, rice, timber, soybeans, wheat, melons, corn, and cotton), healthcare, and education. Large employers include hospitals, manufacturers, school districts, 7 ​ ​ Table of Contents and colleges.
The Bank’s east and south regions, and part of the northwest region. are generally rural in nature with economies supported by manufacturing activity, agriculture (livestock, dairy, poultry, rice, timber, soybeans, wheat, melons, corn, and cotton), healthcare, and education. Large employers include hospitals, manufacturers, school districts, and colleges.
Companies will be required to report on Form 8-K any cybersecurity incident they determine to be material within four business days of making that determination. In addition to incident reporting, the new rules will also require companies to describe their cybersecurity processes and governance. The Company Federal Securities Law.
Companies will be required to report on Form 8-K any cybersecurity incident they determine to be material within four business days of making that determination. In addition to incident reporting, the new rules will also require companies to describe their cybersecurity processes and governance. 36 Table of Contents The Company Federal Securities Law.
Our policy is that we do not discriminate on the basis of race, color, religion, sex, gender, sexual orientation, ancestry, pregnancy, medical condition, age, marital status, national origin, citizenship status, 32 ​ ​ Table of Contents disability, veteran status, gender identity, genetic information, or any other status protected by law.
Our policy is that we do not discriminate on the basis of race, color, religion, sex, gender, sexual orientation, ancestry, pregnancy, medical condition, age, marital status, national origin, citizenship status, disability, veteran status, gender identity, genetic information, or any other status protected by law.
In general, these loans were subject to classification as TDRs at June 30, 2023 and 2022, on the basis of guidance under ASU 2011- 02 “Receivables: A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”, which indicates that the Company may not consider the borrower’s effective borrowing rate on the old debt immediately before the restructuring in determining whether a concession has been granted.
In general, these loans were subject to classification as TDRs at June 30, 2023, on the basis of guidance under ASU 2011- 02 “Receivables: A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”, which indicated that the Company may not consider the borrower’s effective borrowing rate on the old debt immediately before the restructuring in determining whether a concession has been granted.
Further discussion of the methodology used in establishing the allowance is provided in Note 1 and Note 3 of the Notes to the Consolidated Financial Statements contained in Item 8, and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies – Allowance for Credit Losses” in section of Item 7 of this Form 10-K. ​ 21 ​ ​ Table of Contents The following table sets forth an analysis of the Bank’s allowance for loan losses for the periods indicated.
Further discussion of the methodology used in establishing the allowance is provided in Note 1 and Note 3 of the Notes to the Consolidated Financial Statements contained in Item 8, and in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates – Allowance for Credit Losses” section of Item 7 of this Form 10-K. ​ 20 Table of Contents The following table sets forth an analysis of the Bank’s allowance for credit losses for the periods indicated.
Subsidiary Activities The Bank has six active subsidiaries, SB Corning, LLC, SB Real Estate Investments, LLC, Southern Insurance Services, LLC, Fortune Investment Group, LLC, Fortune Insurance Group, LLC, and Fortune SBA, LLC. SB Corning, LLC represents investment in a limited partnership formed for the purpose of generating low income housing tax credits.
Subsidiary Activities The Bank has six active subsidiaries, SB Corning, LLC, SB Real Estate Investments, LLC, Southern Insurance Services, LLC, Fortune Investment Group, LLC, Fortune Insurance Group, LLC, and Fortune SBA, LLC. SB Corning, LLC represents investment in a limited partnership formed for the purpose of generating low income housing tax 30 Table of Contents credits.
The acquisition resulted in goodwill of $12.8 million, which was attributable to synergies and economies of scale expected to result from combining the operations of the Bank and FB. Goodwill from this transaction was recorded at the Company level, and was not deductible for tax purposes.
The acquisition resulted in goodwill of $12.8 million, which was attributable to synergies and economies of scale expected to result from 3 Table of Contents combining the operations of the Bank and FB. Goodwill from this transaction was recorded at the Company level, and was not deductible for tax purposes.
The FRB as the primary federal regulator of the Company and the Bank has authority to impose 34 ​ ​ Table of Contents penalties, initiate civil and administrative actions and take other steps intended to prevent banks from engaging in unsafe or unsound practices. State Regulation and Supervision.
The FRB as the primary federal regulator of the Company and the Bank has authority to impose penalties, initiate civil and administrative actions and take other steps intended to prevent banks from engaging in unsafe or unsound practices. State Regulation and Supervision.
For larger depositors, such as public units, the Company often utilizes a reciprocal deposit program to provide additional FDIC coverage to our customer through other 26 ​ ​ Table of Contents financial institutions while conveniently allowing management of the deposit relationship through our institution.
For larger depositors, such as public units, the Company often utilizes a reciprocal deposit program to provide additional FDIC coverage to our customer through other financial institutions while conveniently allowing management of the deposit relationship through our institution.
The Bank received $555,000 and $239,000 in dividends from the FHLB of Des Moines for the years ended June 30, 2023 and 2022, respectively. The FHLBs continue to contribute to low- and moderately-priced housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects.
The Bank received $717,000 and $555,000 in dividends from the FHLB of Des Moines for the years ended June 30, 2024 and 2023, respectively. The FHLBs continue to contribute to low- and moderately-priced housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects.
In addition, in connection with examinations of insured institutions, regulatory examiners have 19 ​ ​ Table of Contents authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss.
In addition, in connection with examinations of insured institutions, regulatory examiners have authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss.
The Senior Loan Committee consists of our Senior Lending and Credit Officers and lenders selected by them 8 ​ ​ Table of Contents that have a higher level of lending experience. The Senior Loan Committee is authorized to approve lending relationships up to $10.0 million.
The Senior Loan Committee consists of our Senior Lending and Credit Officers and lenders selected by them that have a higher level of lending experience. The Senior Loan Committee is authorized to approve lending relationships up to $10.0 million.
The Bank’s commercial business loans are evaluated based on the loan application, a determination of the applicant’s 14 ​ ​ Table of Contents payment history on other debts, business stability and an assessment of ability to meet existing obligations and payments on the proposed loan.
The Bank’s commercial business loans are evaluated based on the loan application, a determination of the applicant’s payment history on other debts, business stability and an assessment of ability to meet existing obligations and payments on the proposed loan.
However, the ability of the Bank to attract and maintain money market deposit accounts, savings accounts, and certificates of deposit, and the rates paid on these deposits, has been and will continue to be significantly affected by market conditions.
However, the ability of the Bank to attract and maintain money market deposit accounts, savings accounts, and 25 Table of Contents certificates of deposit, and the rates paid on these deposits, has been and will continue to be significantly affected by market conditions.
The Bank’s west region includes 12 of its facilities, which are situated in Christian, Greene, Phelps, Stone, Taney, and Webster counties in Missouri. These counties have a total population of approximately 571,000, and included within this market area is the Springfield MSA, which has a population of approximately 493,000.
The Bank’s west region includes 12 of its facilities, which are situated in Christian, Greene, Phelps, Stone, Taney, and Webster counties in Missouri. These counties have a total population of approximately 575,000, and included within this market area is the Springfield MSA, which has a population of approximately 491,000.
Fixed rate loans secured by multi-family residential properties represented 85.7% of the multi-family residential property portfolio with a weighted average maturity of 7.6 years. The majority of the multi-family residential loans that are originated by the Bank are amortized over periods generally up to 25 years, with balloon maturities up to ten years.
Fixed rate loans secured by multi-family residential properties represented 77.5% of the multi-family residential property portfolio with a weighted average maturity of 6.5 years. The majority of the multi-family residential loans that are originated by the Bank are amortized over periods generally up to 25 years, with balloon maturities up to ten years.
Of this amount, $138.3 million were loans related to agriculture, including amortizing equipment loans and annual production lines. The Bank expects to maintain, and may increase, the percentage of commercial business loans in its total loan portfolio. The Bank currently offers both fixed and adjustable rate commercial business loans.
Of this amount, $176.0 million were loans related to agriculture, including amortizing equipment loans and annual production lines. The Bank expects to maintain, and may increase, the percentage of commercial business loans in its total loan portfolio. The Bank currently offers both fixed and adjustable rate commercial business loans.
Membership stock held in the FHLB of Des Moines, totaling $11.5 million and in the Federal Reserve Bank of St. Louis, totaling $9.1 million, along with equity stock of $929,000 in various correspondent (bankers’) banks, was not included in the above totals. Mortgage-Backed Securities.
Membership stock held in the FHLB of Des Moines, totaling $8.7 million, and in the Federal Reserve Bank of St. Louis, totaling $9.1 million, along with equity stock of $929,000 in various correspondent (bankers’) banks, was not included in the above totals. Mortgage-Backed Securities.
Substantially all of the one- to four-family residential mortgage originations in the Bank’s portfolio are secured by property located within the Bank’s market area. Fixed rate one- to four- family loans represented 81.3% of the one- to four- family portfolio with a weighted average maturity of 15.7 years.
Substantially all of the one- to four-family residential mortgage originations in the Bank’s portfolio are secured by property located within the Bank’s market area. Fixed rate one- to four- family loans represented 77.3% of the one- to four- family portfolio with a weighted average maturity of 14.7 years.
At June 30, 2023, the Bank also had an allowance for credit losses on off-balance sheet credit exposures of $6.3 million, as compared to $3.4 million at June 30, 2022.
At June 30, 2024, the Bank also had an allowance for credit losses on off-balance sheet credit exposures of $3.3 million, as compared to $6.3 million at June 30, 2023.
The initial investment in this subsidiary was $1.5 million, and at June 30, 2023, the carrying value of the investment was $530,000. SB Real Estate Investments, LLC is a wholly owned subsidiary of the Bank formed to hold Southern Bank Real Estate Investments, LLC.
The initial investment in this subsidiary was $1.5 million, and at June 30, 2024, the carrying value of the investment was $365,000. SB Real Estate Investments, LLC is a wholly owned subsidiary of the Bank formed to hold Southern Bank Real Estate Investments, LLC.
As of June 30, 2023, the majority of these credits were commercial real estate, multi-family real estate, or commercial business loans, and all of these relationships were performing in accordance with their terms. 9 ​ ​ Table of Contents Loan Portfolio Analysis.
As of June 30, 2024, the majority of these credits were commercial real estate, multi-family real estate, or commercial business loans, and all of these relationships were performing in accordance with their terms. 8 Table of Contents Loan Portfolio Analysis.
At June 30, 2023, AFS securities totaled $417.6 million (not including FHLB and Federal Reserve Bank membership stock, or other equity securities without readily-determinable fair values). For information regarding the amortized cost and market values of the Company’s investments, see Note 2 of Notes to the Consolidated Financial Statements contained in Item 8.
At June 30, 2024, AFS securities totaled $427.9 million (not including FHLB and Federal Reserve Bank membership stock, or other equity securities without readily-determinable fair values). For information regarding the amortized cost and market values of the Company’s investments, see Note 2 of Notes to the Consolidated Financial Statements contained in Item 8.
The corporate dividends-received deduction is generally 50% in the case of dividends received from unaffiliated corporations with which the Company and the Bank will not file a consolidated tax return, except that if the Company or the Bank owns more than 20% of the stock of a corporation distributing a dividend, then 65% of any dividends received may be deducted. 40 ​ ​ Table of Contents Missouri Taxation General.
The corporate dividends-received deduction is generally 50% in the case of dividends received from unaffiliated corporations with which the Company and the Bank will not file a consolidated tax return, except that if the Company or the Bank owns more than 20% of the stock of a corporation distributing a dividend, then 65% of any dividends received may be deducted.
Increases in originations over recent periods is attributed to increased lending activity, increased borrower refinancing, and an expanded market area and customer base following recent mergers. From time to time, the Bank has purchased loan participations consistent with its loan underwriting standards. During fiscal 2023, the Bank committed to purchase $118.7 million of new loan participations.
Increases in originations over recent periods is attributed to increased lending activity, increased borrower refinancing, and an expanded market area and customer base following recent mergers. From time to time, the Bank has purchased loan participations consistent with its loan underwriting standards. During fiscal 2024, the Bank committed to purchase $29.8 million of new loan participations.
At June 30, 2023, the Bank had additional borrowing capacity on its reported residential and commercial real estate loans pledged to the FHLB of approximately $541.3 million, as compared to $500.1 million at June 30, 2022. Additionally, the Bank is approved to borrow from the Federal Reserve Bank’s discount window on a primary credit basis.
At June 30, 2024, the Bank had additional borrowing capacity on its reported residential and commercial real estate loans pledged to the FHLB of approximately $742.5 million, as compared to $541.3 million at June 30, 2023. Additionally, the Bank is approved to borrow from the Federal Reserve Bank’s discount window on a primary credit basis.
Such commitments may be oral or in writing with specified terms, conditions and at a specified rate of interest. The Bank had outstanding net loan commitments of approximately $912.0 million at June 30, 2023. See Note 12 of Notes to the Consolidated Financial Statements contained in Item 8.
Such commitments may be oral or in writing with specified terms, conditions and at a specified rate of interest. The Bank had outstanding net loan commitments of approximately $898.6 million at June 30, 2024. See Note 12 of Notes to the Consolidated Financial Statements contained in Item 8.
These counties have a total population of approximately 458,000, and included within this market area is the Jonesboro MSA, which has a population of approximately 157,000. The Cabot, Arkansas, branch in Lonoke County, is located in the northeast corner of the Little Rock MSA.
These counties have a total population of approximately 430,000, and included within this market area is the Jonesboro MSA, which has a population of approximately 136,000. The Cabot, Arkansas, branch in Lonoke County, is located in the northeast corner of the Little Rock MSA, which has a population of approximately 764,000.
At June 30, 2023, the current rate was 8.26%. The securities represent undivided beneficial interests in the trust, which was established by Southern Missouri Bancorp for the purpose of issuing the securities.
At June 30, 2024, the current rate was 8.35%. The securities represent undivided beneficial interests in the trust, which was established by Southern Missouri Bancorp for the purpose of issuing the securities.
Included in adversely classified assets at June 30, 2023, were various loans totaling $46.3 million (see Note 3 of Notes to the Consolidated Financial Statements contained in Item 8 for more information on adversely classified loans) and foreclosed real estate and repossessed assets totaling $3.6 million.
Included in adversely classified assets at June 30, 2024, were various loans totaling $40.9 million (see Note 3 of Notes to the Consolidated Financial Statements contained in Item 8 for more information on adversely classified loans) and foreclosed real estate and repossessed assets totaling $3.8 million.
The Company had sold and was servicing $60.9 million of the guaranteed portion of SBA loans as of June 30, 2023. Contractual Obligations and Commitments, Including Off-Balance Sheet Arrangements . The following table discloses our fixed and determinable contractual obligations and commercial commitments by payment date as of June 30, 2023.
The Company had sold and was servicing $49.8 million of the guaranteed portion of SBA loans as of June 30, 2024. Contractual Obligations and Commitments, Including Off-Balance Sheet Arrangements . The following table discloses our fixed and determinable contractual obligations and commercial commitments by payment date as of June 30, 2024.
These counties have a total population of approximately 245,000, and included within this market area is the Cape Girardeau MSA, which has a population of approximately 103,000.
These counties have a total population of approximately 244,000, and included within this market area is the Cape Girardeau MSA, which has a population of approximately 98,000.
The important factors we discuss below, as well as other factors discussed under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and identified in the filing and in our other filings with the SEC and 5 ​ ​ Table of Contents those presented elsewhere by our management from time to time, could cause actual results to differ materially from those indicated by the forward-looking statements made in this document: ● the remaining effects of the COVID-19 pandemic on general economic conditions, either nationally or in the Company’s market and lending areas; ● expected cost savings, synergies and other benefits from our merger and acquisition activities, including our recently completed acquisitions, might not be realized within the anticipated time frames, to the extent anticipated, or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention and labor shortages, might be greater than expected and goodwill impairment charges might be incurred; ● the strength of the United States economy in general and the strength of the local economies in which we conduct operations; ● fluctuations in interest rates and inflation, including the effects of a potential recession whether caused by Federal Reserve actions or otherwise or slowed economic growth caused by changes in oil prices or supply chain disruptions; ● monetary and fiscal policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and the U.S.
The important factors we discuss below, as well as other factors discussed under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and identified in the filing and in our other filings with the SEC and those presented elsewhere by our management from time to time, could cause actual results to differ materially from those indicated by the forward-looking statements made in this document: ● expected cost savings, synergies and other benefits from our merger and acquisition activities, including our recently completed acquisitions, might not be realized within the anticipated time frames, to the extent anticipated, or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention and labor shortages, might be greater than expected and goodwill impairment charges might be incurred; ● potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth; ● the strength of the United States economy in general and the strength of the local economies in which we conduct operations; ● fluctuations in interest rates and inflation, including the effects of a potential recession whether caused by Federal Reserve actions or otherwise or slowed economic growth caused by changes in oil prices or supply chain disruptions; ● the impact of monetary and fiscal policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and the U.S.
The Bank’s commercial and construction business lending activity includes some loans guaranteed by the SBA. In fiscal 2023, $6.4 million in originations was guaranteed by the SBA, and as of June 30, 2023, the Company held balances of $9.5 million in its portfolio representing the unguaranteed portion of SBA loans it had originated.
The Bank’s commercial and construction business lending activity includes some loans guaranteed by the SBA. In fiscal 2024, $1.4 million in originations was guaranteed by the SBA, and as of June 30, 2024, the Company held balances of $14.4 million in its portfolio representing the unguaranteed portion of SBA loans it had originated.
At June 30, 2023, the carrying value was $5.5 million and bore interest at a current coupon rate of 7.35% and an effective rate of 10.11%. In the February 2022 acquisition of Fortune Financial Corporation (Fortune), the Company assumed $7.5 million in fixed-to-floating rate subordinated notes.
At June 30, 2024, the carrying value was $5.6 million and bore interest at a current coupon rate of 7.40% and an effective rate of 10.05%. In the February 2022 acquisition of Fortune Financial Corporation (Fortune), the Company assumed $7.5 million in fixed-to-floating rate subordinated notes.
Consumer loans for the purchase of automobiles represented 16.3% of the Bank’s consumer loan portfolio at June 30, 2023, and totaled $21.8 million, or 0.6% of net loans receivable. Of that total, an immaterial amount was originated by auto dealers. Typically, automobile loans are made for terms of up to 66 months for new and used vehicles.
Consumer loans for the purchase of automobiles represented 15.6% of the Bank’s consumer loan portfolio at June 30, 2024, and totaled $22.5 million, or 0.6% of net loans receivable. Of that total, an immaterial amount was originated by auto dealers. Typically, automobile loans are made for terms of up to 66 months for new and used vehicles.
The investment portfolio included $68.6 million of asset backed securities at June 30, 2023, all of which are subject to early redemption. The remaining portfolio consists of $3.6 million in other securities, primarily SBA pools. Based on projected maturities, the weighted average life of the debt and other securities portfolio at June 30, 2023, was 58 months.
The investment portfolio also included $58.7 million of asset-backed securities at June 30, 2024, all of which are subject to early redemption. The remaining portfolio consists of $5.3 million in other securities, primarily SBA pools. Based on projected maturities, the weighted average life of the debt and other securities portfolio at June 30, 2024, was 51 months.
SMS Financial Services, Inc. is a wholly owned subsidiary of the Bank, which had no assets or liabilities at June 30, 2023, and is currently inactive. Employees and Human Capital Resources As of June 30, 2023, the Company had 665 full-time employees and 38 part-time employees for a total of 703 employees (collectively, our “Team Members”).
SMS Financial Services, Inc. is a wholly owned subsidiary of the Bank, which had no assets or liabilities at June 30, 2024, and is currently inactive. Employees and Human Capital Resources As of June 30, 2024, the Company had 693 full-time employees and 41 part-time employees for a total of 734 employees (collectively, our “Team Members”).
One- to four-family loans tied to other indices totaled $65.9 million. ​ In underwriting one- to four-family residential real estate loans, the Bank evaluates the borrower’s ability to meet debt service requirements at current as well as fully indexed rates for ARM loans, and the value of the property securing the loan.
In underwriting one- to four-family residential real estate loans, the Bank evaluates the borrower’s ability to meet debt service requirements at current as well as fully indexed rates for ARM loans, and the value of the property securing the loan.
At June 30, 2023, the Bank had purchased participation interests in 86 loans with balances outstanding totaling $155.6 million. Supervision of the loan portfolio is the responsibility of our Chief Lending Officer, Rick Windes, Regional President Justin Cox, and our Chief Credit Officer, Mark Hecker (our “Senior Lending and Credit Officers”).
At June 30, 2024, the Bank had purchased participation interests in 71 loans with balances outstanding totaling $178.5 million. Supervision of the loan portfolio is the responsibility of our Chief Lending Officer, Rick Windes, Regional President Justin Cox, and our Chief Credit Officer, Mark Hecker (our “Senior Lending and Credit Officers”).
These funds are also used to purchase mortgage-backed and related securities ("MBS"), municipal bonds, and other permissible investments. At June 30, 2023, the Company had total assets of $4.4 billion, total deposits of $3.7 b illion and stockholders’ equity of $446.1 million. The Company has not engaged in any significant activity other than holding the stock of the Bank.
These funds are also used to purchase mortgage-backed and related securities ("MBS"), municipal bonds, and other permissible investments. At June 30, 2024, the Company had total assets of $4.6 billion, total deposits of $4.0 billion and stockholders’ equity of $488.7 million. The Company has not engaged in any significant activity other than holding the stock of the Bank.
(2) Commercial business loan balances included agricultural equipment and production loans of $138.3 million, $110.3 million, $104.9 million, $100.3 million, and $95.5 million, as of June 30, 2023, 2022, 2021, 2020, and 2019, respectively.
(2) Commercial business loan balances included agricultural equipment and production loans of $176.0 million, $138.3 million, $110.3 million, $104.9 million, and $100.3 million, as of June 30, 2024, 2023, 2022, 2021, and 2020, respectively.
At June 30, 2023, the maximum amount which the Bank could lend to any one borrower and the borrower’s related entities was approximately $115.8 million. At June 30, 2023, the Bank’s ten largest credit relationships, as defined by loan to one borrower limitations, ranged from $76.8 million to $20.7 million, net of participation interests sold.
At June 30, 2024, the maximum amount which the Bank could lend to any one borrower and the borrower’s related entities was approximately $126.4 million. At June 30, 2024, the Bank’s ten largest credit relationships, as defined by loan to one borrower limitations, ranged from $27.3 million to $76.8 million, net of participation interests sold.
At June 30, 2023, one- to four-family loans with a fixed rate totaled $586.4 million and had a weighted-average maturity of 188 months. The Bank also originates one- to four-family ARM loans, which adjust annually, after an initial period of one to seven years.
At June 30, 2024, one- to four-family loans with a fixed rate totaled $622.1 million and had a weighted-average maturity of 176 months. The Bank also originates one- to four-family ARM loans, which adjust annually, after an initial period of one to seven years.
The Bank also originates loans secured by multi-family residential properties that are often located outside the Company’s primary market area, but made to borrowers who operate within the primary market area. At June 30, 2023, the Bank had $393.0 million, or 11.0% of net loans receivable, in multi-family residential real estate.
The Bank also originates loans secured by multi-family residential properties that are often located outside the Company’s primary market area, but made to borrowers who operate within the primary market area. At June 30, 2024, the Bank had $384.7 million, or 10.1% of net loans receivable, in multi-family residential real estate.
These provisions for credit losses are charged against earnings in the year they are established. The Bank had an allowance for credit losses at June 30, 2023, of $47.8 million, which represented 424% of nonperforming assets as compared to an allowance of $33.2 million, which represented 526% of nonperforming assets at June 30, 2022.
These provisions for credit losses are charged against earnings in the year they are established. The Bank had an allowance for credit losses at June 30, 2024, of $52.5 million, which represented 497% of nonperforming assets as compared to an allowance of $47.8 million, which represented 424% of nonperforming assets at June 30, 2023.
At June 30, 2023, the MBS portfolio included $90.1 million in fixed-rate residential MBS issued by government-sponsored enterprises (GSEs), $53.4 million in fixed-rate commercial MBS issued by GSEs, and $126.7 million in fixed rate collateralized mortgage obligations (“CMOs”) issued by GSEs generally consisting of underlying residential property loans, all of which passed the Federal Financial Institutions Examination Council’s sensitivity test.
At June 30, 2024, the MBS portfolio included $104.8 million in fixed-rate residential MBS issued by government-sponsored enterprises (GSEs), $59.7 million in fixed-rate commercial MBS issued by GSEs, and $140.4 million in fixed rate collateralized mortgage obligations (“CMOs”) issued by GSEs generally consisting of underlying residential property loans, all of which passed the Federal Financial Institutions Examination Council’s sensitivity test.
This amount is maintained as a separate liability account to cover estimated credit losses associated with off-balance sheet credit instruments such as off-balance sheet loan commitments, standby letters of credit, and guarantees.
This amount is maintained as a separate liability account to cover estimated credit losses associated with off-balance sheet credit instruments such as off-balance sheet loan commitments, standby letters of credit, and guarantees. The decrease was attributable primarily to a decrease in unfunded commitments.
The following table sets forth the deposit activities of the Bank for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ 2023 2022 2021 ​ (Dollars in thousands) Beginning Balance ​ $ 2,815,075 ​ $ 2,330,803 ​ $ 2,184,847 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase before interest credited ​ 866,073 ​ 472,450 ​ 131,067 Interest credited ​ 44,392 ​ 11,822 ​ 14,889 Net increase in deposits ​ 910,465 ​ 484,272 ​ 145,956 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ending balance ​ $ 3,725,540 ​ $ 2,815,075 ​ $ 2,330,803 ​ In the unlikely event the Bank is liquidated, depositors will be entitled to payment of their deposit accounts prior to any payment being made to the Company as the sole stockholder of the Bank.
The following table sets forth the deposit activities of the Bank for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ 2024 2023 2022 ​ (Dollars in thousands) Beginning Balance ​ $ 3,725,540 ​ $ 2,815,075 ​ $ 2,330,803 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase before interest credited ​ 124,760 ​ 866,073 ​ 472,450 Interest credited ​ 102,157 ​ 44,392 ​ 11,822 Net increase in deposits ​ 226,917 ​ 910,465 ​ 484,272 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ending balance ​ $ 3,952,457 ​ $ 3,725,540 ​ $ 2,815,075 ​ In the unlikely event the Bank is liquidated, depositors will be entitled to payment of their deposit accounts prior to any payment being made to the Company as the sole stockholder of the Bank.
During the year ended June 30, 2023, the Bank originated $38.4 million of ARM loans and $125.7 million of fixed-rate loans that were secured by one- to four-family residences, for retention in the Bank’s portfolio. An additional $21.5 million in fixed-rate one- to four-family residential loans were originated for sale on the secondary market.
During the year ended June 30, 2024, the Bank originated $49.4 million of ARM loans and $97.6 million of fixed-rate loans that were secured by one- to four-family residences, for retention in the Bank’s portfolio. An additional $21.9 million in fixed-rate one- to four-family residential loans were originated for sale on the secondary market.
Subject to certain regulatory exceptions, the FDIA and FDIC regulations provide that an insured state-chartered bank may not, directly, or indirectly through a subsidiary, engage as "principal" in any activity that is not permissible for a national bank unless the FDIC has determined that such activities would pose no risk to the Deposit Insurance Fund and that the bank is in compliance with applicable regulatory capital requirements. 37 ​ ​ Table of Contents Under regulations dealing with equity investments, an insured state bank generally may not directly or indirectly acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank.
Subject to certain regulatory exceptions, the FDIA and FDIC regulations provide that an insured state-chartered bank may not, directly, or indirectly through a subsidiary, engage as "principal" in any activity that is not permissible for a national bank unless the FDIC has determined that such activities would pose no risk to the Deposit Insurance Fund and that the bank is in compliance with applicable regulatory capital requirements.
The following table sets forth the composition of the Bank’s loan portfolio by type of loan and type of security as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent ​ ​ (Dollars in thousands) Type of Loan: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ $ 1,133,417 31.74 % $ 904,160 33.66 % $ 721,216 32.78 % $ 627,357 29.29 % $ 491,992 26.65 % Commercial real estate (1) ​ 1,562,379 43.75 ​ 1,146,673 42.69 ​ 889,793 40.44 ​ 887,419 41.43 ​ 840,777 45.53 ​ Construction ​ 550,052 15.40 ​ 258,072 9.61 ​ 208,824 9.49 ​ 185,924 8.68 ​ 123,287 6.68 ​ Total mortgage loans ​ 3,245,848 90.89 ​ 2,308,905 85.96 ​ 1,819,833 82.71 ​ 1,700,700 79.40 ​ 1,456,056 78.86 ​ Other Loans: ​ ​ ​ ​ ​ ​ Automobile loans ​ 21,761 0.61 ​ 17,316 0.64 ​ 15,146 0.69 ​ 12,084 0.56 ​ 11,379 0.62 ​ Commercial business (2) (3) ​ 599,030 16.77 ​ 441,598 16.44 ​ 414,124 18.82 ​ 468,448 21.87 ​ 355,874 19.27 ​ Home equity ​ 65,053 1.82 ​ 45,460 1.69 ​ 37,783 1.72 ​ 43,149 2.01 ​ 43,369 2.35 ​ Other ​ 46,701 1.32 ​ 30,220 1.13 ​ 24,745 1.12 ​ 25,534 1.20 ​ 42,786 2.32 ​ Total other loans ​ 732,545 20.52 ​ 534,594 19.90 ​ 491,798 22.35 ​ 549,215 25.64 ​ 453,408 24.56 ​ Total loans ​ 3,978,393 111.41 ​ 2,843,499 105.86 ​ 2,311,631 105.06 ​ 2,249,915 105.04 ​ 1,909,464 103.42 ​ Less: ​ ​ ​ ​ ​ ​ Undisbursed loans in process ​ 359,196 10.06 ​ 123,656 4.60 ​ 74,540 3.39 ​ 78,452 3.66 ​ 43,153 2.34 ​ Deferred fees and discounts ​ 299 0.01 ​ 453 0.02 ​ 3,625 0.16 ​ 4,395 0 ​ 3 0.00 ​ Allowance for loan losses ​ 47,820 1.34 ​ 33,192 1.24 ​ 33,222 1.51 ​ 25,139 1.17 ​ 19,903 1.08 ​ Net loans receivable ​ $ 3,571,078 100.00 % $ 2,686,198 100.00 % $ 2,200,244 100.00 % $ 2,141,929 100.00 % $ 1,846,405 100.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Security: ​ ​ ​ ​ ​ ​ Residential real estate ​ ​ ​ ​ ​ ​ One-to four-family ​ $ 865,144 24.23 % $ 690,478 25.71 % $ 526,208 23.92 % $ 482,009 22.50 % $ 395,317 21.41 % Multi-family ​ 648,697 18.17 ​ 376,854 14.03 ​ 359,200 16.33 ​ 286,654 13.38 ​ 172,303 9.33 ​ Commercial real estate ​ 1,431,166 40.08 ​ 975,100 36.30 ​ 701,438 31.88 ​ 688,145 32.13 ​ 647,078 35.05 ​ Land ​ 300,841 8.42 ​ 266,472 9.92 ​ 232,987 10.59 ​ 243,892 11.39 ​ 241,360 13.07 ​ Commercial ​ 599,030 16.77 ​ 441,598 16.44 ​ 414,124 18.82 ​ 468,448 21.88 ​ 355,874 19.28 ​ Consumer and other ​ 133,515 3.74 ​ 92,997 3.46 ​ 77,674 3.52 ​ 80,767 3.77 ​ 97,532 5.28 ​ Total loans ​ 3,978,393 ​ 111.41 ​ ​ 2,843,499 ​ 105.86 ​ ​ 2,311,631 ​ 105.06 ​ ​ 2,249,915 ​ 105.04 ​ ​ 1,909,464 ​ 103.42 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: ​ ​ ​ ​ ​ ​ Undisbursed loans in process ​ 359,196 10.06 ​ 123,656 4.60 ​ 74,540 3.39 ​ 78,452 3.66 ​ 43,153 2.34 ​ Deferred fees and discounts ​ 299 0.01 ​ 453 0.02 ​ 3,625 0.16 ​ 4,395 0.21 ​ 3 — ​ Allowance for loan losses ​ 47,820 1.34 ​ 33,192 1.24 ​ 33,222 1.51 ​ 25,139 1.17 ​ 19,903 1.08 ​ Net loans receivable ​ $ 3,571,078 100.00 % $ 2,686,198 100.00 % $ 2,200,244 100.00 % $ 2,141,929 100.00 % $ 1,846,405 100.00 % (1) Commercial real estate loan balances included farmland and other agricultural-related real estate loans of $238.1 million, $213.1, $180.6 million, $185.3 million, and $182.7 million, as of June 30, 2023, 2022, 2021, 2020, and 2019, respectively.
The following table sets forth the composition of the Bank’s loan portfolio by type of loan and type of security as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent ​ ​ (Dollars in thousands) Type of Loan: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ $ 1,185,692 31.22 % $ 1,133,417 29.85 % $ 904,160 33.66 % $ 721,216 32.78 % $ 627,357 29.29 % Commercial real estate (1) ​ 1,622,365 42.72 ​ 1,562,379 41.14 ​ 1,146,673 42.69 ​ 889,793 40.44 ​ 887,419 41.43 ​ Construction ​ 438,134 11.55 ​ 550,052 14.49 ​ 258,072 9.61 ​ 208,824 9.49 ​ 185,924 8.68 ​ Total mortgage loans ​ 3,246,191 85.49 ​ 3,245,848 85.48 ​ 2,308,905 85.96 ​ 1,819,833 82.71 ​ 1,700,700 79.40 ​ Other Loans: ​ ​ ​ ​ ​ ​ Automobile loans ​ 22,546 0.59 ​ 21,761 0.57 ​ 17,316 0.64 ​ 15,146 0.69 ​ 12,084 0.56 ​ Commercial business (2) (3) ​ 668,292 17.60 ​ 599,030 15.78 ​ 441,598 16.44 ​ 414,124 18.82 ​ 468,448 21.87 ​ Home equity ​ 73,053 1.92 ​ 65,053 1.71 ​ 45,460 1.69 ​ 37,783 1.72 ​ 43,149 2.01 ​ Other ​ 48,999 1.30 ​ 46,701 1.24 ​ 30,220 1.13 ​ 24,745 1.12 ​ 25,534 1.20 ​ Total other loans ​ 812,890 21.41 ​ 732,545 19.30 ​ 534,594 19.90 ​ 491,798 22.35 ​ 549,215 25.64 ​ Total loans ​ 4,059,081 106.90 ​ 3,978,393 104.78 ​ 2,843,499 105.86 ​ 2,311,631 105.06 ​ 2,249,915 105.04 ​ Less: ​ ​ ​ ​ ​ ​ Unfunded commitments on construction loans ​ 209,046 5.51 ​ 359,196 9.46 ​ 123,656 4.60 ​ 74,540 3.39 ​ 78,452 3.66 ​ Deferred fees and discounts ​ 232 0.01 ​ 299 0.01 ​ 453 0.02 ​ 3,625 0.16 ​ 4,395 0 ​ Allowance for credit losses ​ 52,516 1.38 ​ 47,820 1.26 ​ 33,192 1.24 ​ 33,222 1.51 ​ 25,139 1.17 ​ Net loans receivable ​ $ 3,797,287 100.00 % $ 3,571,078 94.05 % $ 2,686,198 100.00 % $ 2,200,244 100.00 % $ 2,141,929 100.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Type of Security: ​ ​ ​ ​ ​ ​ Residential real estate ​ ​ ​ ​ ​ ​ One-to four-family ​ $ 907,915 23.91 % $ 865,144 22.78 % $ 690,478 25.71 % $ 526,208 23.92 % $ 482,009 22.50 % Multi-family ​ 619,094 16.30 ​ 648,697 17.08 ​ 376,854 14.03 ​ 359,200 16.33 ​ 286,654 13.38 ​ Commercial real estate ​ 1,425,104 37.53 ​ 1,431,166 37.69 ​ 975,100 36.30 ​ 701,438 31.88 ​ 688,145 32.13 ​ Land ​ 294,077 7.74 ​ 300,841 7.92 ​ 266,472 9.92 ​ 232,987 10.59 ​ 243,892 11.39 ​ Commercial ​ 668,292 17.60 ​ 599,030 15.78 ​ 441,598 16.44 ​ 414,124 18.82 ​ 468,448 21.88 ​ Consumer and other ​ 144,599 3.82 ​ 133,515 3.52 ​ 92,997 3.46 ​ 77,674 3.52 ​ 80,767 3.77 ​ Total loans ​ 4,059,081 ​ 106.90 ​ ​ 3,978,393 ​ 104.77 ​ ​ 2,843,499 ​ 105.86 ​ ​ 2,311,631 ​ 105.06 ​ ​ 2,249,915 ​ 105.04 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: ​ ​ ​ ​ ​ ​ Unfunded commitments on construction loans ​ 209,046 5.51 ​ 359,196 9.46 ​ 123,656 4.60 ​ 74,540 3.39 ​ 78,452 3.66 ​ Deferred fees and discounts ​ 232 0.01 ​ 299 0.01 ​ 453 0.02 ​ 3,625 0.16 ​ 4,395 0.21 ​ Allowance for credit losses ​ 52,516 1.38 ​ 47,820 1.26 ​ 33,192 1.24 ​ 33,222 1.51 ​ 25,139 1.17 ​ Net loans receivable ​ $ 3,797,287 100.00 % $ 3,571,078 94.04 % $ 2,686,198 100.00 % $ 2,200,244 100.00 % $ 2,141,929 100.00 % (1) Commercial real estate loan balances included farmland and other agricultural-related real estate loans of $232.5 million, $238.1 million, $213.1 million, $180.6 million, and $185.3 million, as of June 30, 2024, 2023, 2022, 2021, and 2020, respectively.
The securities had been issued in June 2005 by Ozarks Legacy in connection with the sale of trust preferred securities, bear interest at a floating rate based on LIBOR, and mature in 2035. At June 30, 2023, the carrying value was $2.7 million, and bore interest at a current coupon rate of 8.00% and an effective rate of 10.02%.
The securities had been issued in June 2005 by Ozarks Legacy in connection with the sale of trust preferred securities, bear interest at a floating rate based on SOFR, and mature in 2035. At June 30, 2024, the carrying value was $2.8 million, and bore interest at a current coupon rate of 8.05% and an effective rate of 9.98%.
The Bank’s commercial business lending activities encompass loans with a variety of purposes and security, including loans to finance accounts receivable, inventory, equipment and operating lines of credit. At June 30, 2023, the Bank had $599.0 million in commercial business loans outstanding, or 16.8% of net loans receivable.
The Bank’s commercial business lending activities encompass loans with a variety of purposes and security, including loans to finance accounts receivable, inventory, equipment and operating lines of credit. At June 30, 2024, the Bank had $668.3 million in commercial business loans outstanding, or 17.6% of net loans receivable.
The Bank’s FDIC premiums are based on its supervisory ratings and certain financial ratios. 35 ​ ​ Table of Contents On October 18, 2022, the FDIC adopted a final rule to increase its initial base insurance assessment rate schedules by two basis points to improve the likelihood that the reserve ratio of the DIF would be restored to at least 1.35 percent by September 30, 2028.
On October 18, 2022, the FDIC adopted a final rule to increase its initial base insurance assessment rate schedules by two basis points to improve the likelihood that the reserve ratio of the DIF would be restored to at least 1.35 percent by September 30, 2028.
At June 30, 2023, the outstanding balance of loans originated with a loan-to-value ratio in excess of 80% was $129.2 million.
At June 30, 2024, the outstanding balance of loans originated with a loan-to-value ratio in excess of 80% was $142.9 million.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, we outsource some of our data processing to certain third-party providers. If these third-party providers encounter difficulties, including as a result of cyber-attacks or information security breaches, or if we have difficulty communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected.
Biggest changeIf these third-party providers encounter difficulties, including as a result of cyber-attacks or information security breaches, or if we have difficulty communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected. 48 Table of Contents The financial services industry has noted recent increases in electronic fraudulent activity, attempted security breaches, and cyber-attacks, including attempts to initiate fraudulent activity through consumer, commercial, and public unit accounts.
A bank that has experienced rapid growth in commercial real estate lending, has notable exposure to a specific type of commercial real estate loan, or is approaching or exceeding the following supervisory criteria may be identified for further supervisory analysis with respect to real estate concentration risk: total loans for construction land development and other land representing 100% or more of the bank’s tier 1 regulatory capital plus the allowance for loan losses includable in total regulatory capital; or total commercial real estate loans (as defined in the guidance) that exceed 300% of the bank’s tier 1 regulatory capital plus the allowance for loan losses includable in total regulatory capital and the bank’s commercial real estate portfolio has increased by 50% or more during the prior 36 months.
A bank that has experienced rapid growth in commercial real estate lending, has notable exposure to a specific type of commercial real estate loan, or is approaching or exceeding the following supervisory criteria may be identified for further supervisory analysis with respect to real estate concentration risk: total loans for construction land development and other land representing 100% or more of the bank’s tier 1 regulatory capital plus the allowance for loan losses includable in total regulatory capital; or total commercial real estate loans (as defined in the guidance) that exceed 300% of the bank’s tier 1 regulatory capital plus the allowance for credit losses includable in total regulatory capital and the bank’s commercial real estate portfolio has increased by 50% or more during the prior 36 months.
Our ability to borrow could also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry generally. Risks Relating to Acquisition Activities We may fail to realize all of the anticipated benefits of our acquisition activities.
Our ability to borrow could also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry generally. Risks Relating to Merger and Acquisition Activities We may fail to realize all of the anticipated benefits of our acquisition activities.
Since we plan to continue to increase our originations of these loans, it may be necessary to increase the level of our allowance for credit losses due to the increased risk characteristics associated with these types of loans. Any increase to our provision credit loan losses would adversely affect our operating results and financial condition.
Since we plan to continue to increase our originations of these loans, it may be necessary to increase the level of our allowance for credit losses due to the increased risk characteristics associated with these types of loans. Any increase to our provision credit credit losses would adversely affect our operating results and financial condition.
Severe weather and other natural disasters, acts of war or terrorism, new public health issues or other adverse external events could harm our business. Severe weather and other natural disasters, acts of war or terrorism, new public health issues or other adverse external events could have a significant impact on our ability to conduct business.
Severe weather and other natural disasters, acts of war or terrorism, new public health issues or other adverse external events could have a significant impact on our ability to conduct business.
If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth and acquisitions could be materially impaired and our financial condition and liquidity could be materially and adversely affected. ​ 50 ​ ​ Table of Contents Risks Relating to Regulation Legislative or regulatory changes or actions, or significant litigation, could adversely impact us or the businesses in which we are engaged.
If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth and acquisitions could be materially impaired and our financial condition and liquidity could be materially and adversely affected. ​ 45 Table of Contents Risks Relating to Regulation Legislative or regulatory changes or actions, or significant litigation, could adversely impact us or the businesses in which we are engaged.
The market value of our common stock will likely continue to fluctuate in response to a number of factors including the following, most of which are beyond our control, as well as the other factors described in this “Risk Factors” section: ● actual or anticipated quarterly fluctuations in our operating and financial results; 54 ​ ​ Table of Contents ● developments related to investigations, proceedings or litigation; ● changes in financial estimates and recommendations by financial analysts; ● dispositions, acquisitions and financings; ● actions of our current shareholders, including sales of common stock by existing shareholders and our directors and executive officers; ● fluctuations in the stock prices and operating results of our competitors; ● regulatory developments; and ● other developments in the financial services industry.
The market value of our common stock will likely continue to fluctuate in response to a number of factors including the following, most of which are beyond our control, as well as the other factors described in this “Risk Factors” section: ● actual or anticipated quarterly fluctuations in our operating and financial results; ● developments related to investigations, proceedings or litigation; ● changes in financial estimates and recommendations by financial analysts; ● dispositions, acquisitions and financings; ● actions of our current shareholders, including sales of common stock by existing shareholders and our directors and executive officers; ● fluctuations in the stock prices and operating results of our competitors; ● regulatory developments; and ● other developments in the financial services industry.
The amount of this allowance is determined by our management through a periodic review and consideration of several factors, including, but not limited to: ● historical default and loss experience; ● historical recovery experience; ● economic conditions; ● evaluation of non-performing loans; ● the amount and quality of collateral, including guarantees, securing the loans. ● risk characteristics of the various classifications of loans; and ● the rate of growth, quality, size and diversity of the loan portfolio; If actual credit losses exceed the projections modeled in arriving at our estimate of the allowance for credit losses, our business, financial condition and profitability may suffer.
The amount of this allowance is determined by our management through a periodic review and consideration of several factors, including, but not limited to: ● historical default and loss experience; ● historical recovery experience; ● economic conditions; ● evaluation of non-performing loans; ● the amount and quality of collateral, including guarantees, securing the loans. ● risk characteristics of the various classifications of loans; and ● the rate of growth, quality, size and diversity of the loan portfolio; 40 Table of Contents If actual credit losses exceed the projections modeled in arriving at our estimate of the allowance for credit losses, our business, financial condition and profitability may suffer.
Therefore, the current level of delinquencies and defaults may not be representative of the level that will prevail as the portfolio becomes more seasoned, which may be higher than current levels. If delinquencies and defaults increase, we may be required to increase our provision for loan losses, which would adversely affect our results of operations and financial condition.
Therefore, the current level of delinquencies and defaults may not be representative of the level that will prevail as the portfolio becomes more seasoned, which may be higher than current levels. If delinquencies and defaults increase, we may be required to increase our provision for credit losses, which would adversely affect our results of operations and financial condition.
This also includes the risk that interest-earning assets may be more responsive to changes in interest rates than interest-bearing liabilities, or vice versa (repricing risk), the risk that the individual interest rates or rate indices underlying various interest-earning assets and interest-bearing liabilities may not change in the same degree over a given time period (basis risk), and the risk of changing interest rate relationships across the spectrum of interest-earning asset and interest-bearing liability maturities (yield curve risk), including a prolonged flat or inverted yield curve environment.
This also includes the risk that interest-earning assets may be more responsive to changes in interest rates than interest-bearing liabilities, or vice versa 43 Table of Contents (repricing risk), the risk that the individual interest rates or rate indices underlying various interest-earning assets and interest-bearing liabilities may not change in the same degree over a given time period (basis risk), and the risk of changing interest rate relationships across the spectrum of interest-earning asset and interest-bearing liability maturities (yield curve risk), including a prolonged flat or inverted yield curve environment.
We have established policies and procedures to prevent or limit the impact of system failures, interruptions, and security breaches, including privacy breaches and cyber-attacks, but such events may still occur or may not be adequately addressed if they do occur. 52 ​ ​ Table of Contents There have been increasing efforts by third parties to breach data security at financial institutions.
We have established policies and procedures to prevent or limit the impact of system failures, interruptions, and security breaches, including privacy breaches and cyber-attacks, but such events may still occur or may not be adequately addressed if they do occur. There have been increasing efforts by third parties to breach data security at financial institutions.
If these issues or liabilities exceed our estimates, our results of operations and financial condition may be adversely affected; 49 ​ ​ Table of Contents ● Prices at which acquisitions can be made fluctuate with market conditions.
If these issues or liabilities exceed our estimates, our results of operations and financial condition may be adversely affected; 44 Table of Contents ● Prices at which acquisitions can be made fluctuate with market conditions.
Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by the institution and the adequacy of an institution’s allowance for loan losses.
Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by the institution and the adequacy of an institution’s allowance for credit losses.
These regulatory authorities have extensive discretion, including the ability to restrict an institution’s operations, require the institution to reclassify assets, determine the adequacy of the institution’s allowance for loan losses and determine the level of deposit insurance premiums assessed.
These regulatory authorities have extensive discretion, including the ability to restrict an institution’s operations, require the institution to reclassify assets, determine the adequacy of the institution’s allowance for credit losses and determine the level of deposit insurance premiums assessed.
The credit risk related to these types of loans is considered to be greater than the risk related to one- to four-family residential loans because the repayment of commercial real estate loans and commercial business loans typically is dependent on 45 ​ ​ Table of Contents the successful operation and income stream of the borrower’s business or the real estate securing the loans as collateral, which can be significantly affected by economic conditions.
The credit risk related to these types of loans is considered to be greater than the risk related to one- to four-family residential loans because the repayment of commercial real estate loans and commercial business loans typically is dependent on the successful operation and income stream of the borrower’s business or the real estate securing the loans as collateral, which can be significantly affected by economic conditions.
Based on the levels of taxable income in prior years and our expectation of profitability in the current year and future years, management has determined that no valuation allowance was required at June 30, 2023.
Based on the levels of taxable income in prior years and our expectation of profitability in the current year and future years, management has determined that no valuation allowance was required at June 30, 2024.
Such failure to perform could be disruptive to the Company’s operations, which could have a materially adverse impact on its business, results of operations and financial condition. These third parties are also sources of risk associated with operational errors, system interruptions or breaches and unauthorized disclosure of confidential information.
Such failure to perform could be disruptive to the Company’s operations, which could have a materially adverse impact on its business, results of operations and financial condition. 49 Table of Contents These third parties are also sources of risk associated with operational errors, system interruptions or breaches and unauthorized disclosure of confidential information.
Any of these factors, among others, could cause other-than-temporary impairments and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could have a material effect on our business, financial condition, and results of operations.
Any of these factors, among others, could cause credit impairments and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could have a material effect on our business, financial condition, and results of operations.
In that regard, we are 55 ​ ​ Table of Contents entitled, at our option but subject to certain conditions, to defer payments of interest on the junior subordinated debt securities from time to time for up to five years.
In that regard, we are entitled, at our option but subject to certain conditions, to defer payments of interest on the junior subordinated debt securities from time to time for up to five years.
At June 30, 2023, 60.5% of our loans, net, consisted of commercial real estate and commercial business loans to small and mid-sized businesses, generally located in our primary market area, which are the types of businesses that have a heightened vulnerability to local economic conditions.
At June 30, 2024, 60.3% of our loans, net, consisted of commercial real estate and commercial business loans to small and mid-sized businesses, generally located in our primary market area, which are the types of businesses that have a heightened vulnerability to local economic conditions.
Failure to successfully keep pace with technological change affecting the financial services industry or failure to successfully complete the replacement of the core deposit system, or another core technological system, could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company’s operations rely on certain external vendors.
Failure to successfully keep pace with technological change affecting the financial services industry or failure to successfully complete the replacement of the core deposit system, or another core technological system, could have a material adverse effect on the Company’s business, financial condition and results of operations.
Our agricultural real estate lending has grown significantly since June 30, 2013 when these loans totaled $53.0 million, or 8.2% of our loan portfolio, and we intend to continue to grow this portion of our loan portfolio. Included in the commercial business loans described above are agricultural production and equipment loans.
Our agricultural real estate lending has grown significantly since June 30, 2014 when these loans totaled $63.8 million, or 8.0% of our loan portfolio, and we intend to continue to grow this portion of our loan portfolio. Included in the commercial business loans described above are agricultural production and equipment loans.
The Company relies on third-party vendors to provide products and services necessary to maintain day-to-day operations. For example, the Company outsources a portion of its information systems, communication, data management, and transaction processing to third parties.
The Company’s operations rely on certain external vendors. The Company relies on third-party vendors to provide products and services necessary to maintain day-to-day operations. For example, the Company outsources a portion of its information systems, communication, data management, and transaction processing to third parties.
Should our management determine it is not more likely than not that the deferred tax assets will be realized, a valuation allowance with a charge to earnings would be reflected in the period. At June 30, 2023, our net deferred tax asset was $12.9 million, none of which was disallowed for regulatory capital purposes.
Should our management determine it is not more likely than not that the deferred tax assets will be realized, a valuation allowance with a charge to earnings would be reflected in the period. At June 30, 2024, our net deferred tax asset was $11.2 million, none of which was disallowed for regulatory capital purposes.
Any delinquent payments or the failure to repay these loans would hurt our operating results and financial condition. Our loan portfolio possesses risk due to our agricultural lending. Included in the commercial real estate loans described above are agricultural real estate loans totaling $238.1 million, or 6.7% of our loan portfolio, net, at June 30, 2023.
Any delinquent payments or the failure to repay these loans would hurt our operating results and financial condition. Our loan portfolio possesses risk due to our agricultural lending. Included in the commercial real estate loans described above are agricultural real estate loans totaling $232.5 million, or 6.1% of our loan portfolio, net, at June 30, 2024.
The process for determining whether impairment of a security is other-than-temporary usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer and any collateral underlying the security to assess the probability of receiving all contractual principal and interest payments on the security.
The process for determining whether impairment of a security is due to credit usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer and any collateral underlying the security to assess the probability of receiving all contractual principal and interest payments on the security.
In addition to the various risks to farm operations and management noted above, agricultural loans often are structured for 46 ​ ​ Table of Contents annual payments, to coincide with borrower cash flows.
In addition to the various risks to farm operations and management noted above, agricultural loans often are structured for annual payments, to coincide with borrower cash flows.
Future deterioration in economic conditions, particularly within our primary market area in southern Missouri and northern Arkansas, could result in the following consequences, among others, any of which could hurt our business materially: ● loan delinquencies may increase; ● problem assets and foreclosures may increase; ● demand for our products and services may decline; ● loan collateral may decline in value, in turn reducing a customer’s borrowing power and reducing the value of collateral securing our loans; and 42 ​ ​ Table of Contents ● the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us.
Future deterioration in economic conditions, particularly within our primary market area in Missouri and northern Arkansas, could result in the following consequences, among others, any of which could hurt our business materially: ● loan delinquencies may increase; ● problem assets and foreclosures may increase; ● demand for our products and services may decline; ● loan collateral may decline in value, in turn reducing a customer’s borrowing power and reducing the value of collateral securing our loans; ● the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and ● reduction in our low-cost or noninterest-bearing deposits.
The Company continually encounters technological change. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, including the entrance of financial technology companies offering new financial service products. The Company regularly upgrades or replaces core technological systems.
Risks Relating to Technology and Cyber Security and Other Operational Matters The Company continually encounters technological change. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services, including the entrance of financial technology companies offering new financial service products. The Company regularly upgrades or replaces core technological systems.
While we did not and do not have a sub-prime lending program, our residential real estate, construction and land loan portfolios, our commercial and multi-family loan portfolios and certain of our other loans could be affected by the downturn in the real estate market.
Our business activities and credit exposure are primarily concentrated in Missouri and northern Arkansas. While we did not and do not have a sub-prime lending program, our residential real estate, construction and land loan portfolios, our commercial and multi-family loan portfolios and certain of our other loans could be affected by the downturn in the real estate market.
Our earnings and cash flows depend substantially upon our net interest income. Net interest income is the difference between interest income earned on interest-earning assets, such as loans and investment securities, and interest expense paid on interest-bearing liabilities, such as deposits and borrowed funds.
Net interest income is the difference between interest income earned on interest-earning assets, such as loans and investment securities, and interest expense paid on interest-bearing liabilities, such as deposits and borrowed funds.
Furthermore, there can be no assurance that the declines in market value will not result in other-than-temporary impairments of these assets and lead to accounting charges that could have a material adverse effect on our net income and capital levels.
Furthermore, there can be no assurance that the declines in market value will not result in other-than-temporary impairments of these assets and lead to accounting charges that could have a material adverse effect on our net income and capital levels. For the year ended June 30, 2024, we did not incur any credit impairments on our securities portfolio.
Lending money is a substantial part of our business. Every loan carries a certain risk that it will not be repaid in accordance with its terms or that any underlying collateral will not be sufficient to ensure repayment.
Risks Relating to Credit and Lending Activities Our allowance for credit losses may be insufficient to absorb losses in our loan portfolio. Lending money is a substantial part of our business. Every loan carries a certain risk that it will not be repaid in accordance with its terms or that any underlying collateral will not be sufficient to ensure repayment.
As of June 30, 2023, we had outstanding $24.3 million aggregate principal amount of junior subordinated debt securities issued in connection with the sale of trust preferred securities by subsidiaries of ours that are statutory business trusts. As of that date, those debt securities were carried at a book value of $23.1 million.
As of June 30, 2024, we had outstanding $24.3 million aggregate principal amount of junior subordinated debt securities issued in connection with the sale of trust preferred securities by subsidiaries of ours that are statutory business trusts.
Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity.
Risks Relating to Liquidity Liquidity risk could impair our ability to fund operations and jeopardize our financial condition. Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity.
In general, expectations are that the CECL methodology will lead to increased volatility in banking organizations’ required level of allowances at different points in the economic cycle, and in their results of operations. 44 ​ ​ Table of Contents If our nonperforming assets increase, our earnings will be adversely affected.
In general, expectations are that the CECL methodology will lead to increased volatility in banking organizations’ required level of allowances at different points in the economic cycle, and in their results of operations. If our nonperforming assets increase, our earnings will be adversely affected. At June 30, 2024, our nonperforming assets were $10.6 million, or 0.23% of total assets.
Small and medium-sized businesses may be impacted more during periods of high inflation, as they are not able to leverage economies of scale to mitigate cost pressures compared to larger businesses.
Inflation has risen sharply since the end of 2021 to levels not seen in more than 40 years. Small and medium-sized businesses may be impacted more during periods of high inflation, as they are not able to leverage economies of scale to mitigate cost pressures compared to larger businesses.
Because the Company is an issuer of debit cards, it is periodically exposed to losses related to security breaches which occur at retailers that are unaffiliated with the 53 ​ ​ Table of Contents Company (e.g., customer card data being compromised at retail stores).
If the vendors encounter any of these issues, the Company could be exposed to disruption of service, damage to reputation and litigation. Because the Company is an issuer of debit cards, it is periodically exposed to losses related to security breaches which occur at retailers that are unaffiliated with the Company (e.g., customer card data being compromised at retail stores).
We face significant operational risks because the financial services business involves a high volume of transactions and increased reliance on technology, including risk of loss related to cyber-security breaches.
These precautions may not protect our systems from compromises or breaches of our security measures, which could damage our reputation and business. We face significant operational risks because the financial services business involves a high volume of transactions and increased reliance on technology, including risk of loss related to cyber-security breaches.
Our construction loan portfolio, which totaled $550.1 million, or 15.4% of loans, net, at June 30, 2023, includes residential and non-residential construction and development loans.
Our construction loan portfolio including unfunded commitments, which totaled $438.1 million, or 11.5% of loans, net, at June 30, 2024, includes residential and non-residential construction and development loans.
If we slow the growth of commercial real estate loans generally, or particular concentrations of borrowers or categories of properties within that definition, we may be negatively impacted in terms of our asset growth, net interest margin and earnings, leverage, or other targets. 47 ​ ​ Table of Contents Credit losses on investment securities could require charges to earnings, which could negatively impact our results of operations.
If we slow the growth of commercial real estate loans generally, or particular concentrations of borrowers or categories of properties within that definition, we may be negatively impacted in terms of our asset growth, net interest margin and earnings, leverage, or other targets. Climate change and related legislative and regulatory initiatives may materially affect our business and results of operations.
We currently exceed thresholds defined in interagency guidance on commercial real estate concentrations, and as such, we may incur additional expense or slow the growth of certain categories of commercial real estate lending.
Further, legislative proposals limiting our rights as a creditor could result in credit losses or increased expense in pursuing our remedies as a creditor. 46 Table of Contents We currently exceed thresholds defined in interagency guidance on commercial real estate concentrations, and as such, we may incur additional expense or slow the growth of certain categories of commercial real estate lending.
The same risk applies to agricultural operating loans which are unsecured or secured by rapidly depreciating assets such as farm equipment or assets such as livestock or crops.
As with agricultural real estate loans, the repayment of operating loans is dependent on the successful operation or management of the farm property. 42 Table of Contents The same risk applies to agricultural operating loans which are unsecured or secured by rapidly depreciating assets such as farm equipment or assets such as livestock or crops.
The value or market price of our securities could decline due to any of these identified or other risks, and you could lose all or part of your investment. Risks Relating to the Company and the Bank Risks Relating to Marco Economic Conditions Recent events in the financial services industry may have a material adverse effect on us.
The value or market price of our securities could decline due to any of these identified or other risks, and you could lose all or part of your investment. Risks Relating to the Company and the Bank Risks Relating to Marco Economic Conditions Changes in economic conditions, particularly an economic slowdown in Missouri or northern Arkansas, could hurt our business.
As a result, our ability to recover on defaulted loans by selling the underlying real estate would be diminished, and we would be more likely to suffer losses on defaulted loans. The events and conditions described in this risk factor could therefore have a material adverse effect on our business, results of operations and financial condition.
As a result, our ability to recover on defaulted loans by selling the underlying real estate would be diminished, and we would be more likely to suffer losses on defaulted loans.
Any repossessed collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation to the collateral. Our agricultural operating loans have also grown significantly since June 30, 2013, when such loans totaled $47.4 million, or 7.3% of our loan portfolio.
Any repossessed collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation to the collateral.
If we are required in the future to take a valuation allowance with respect to our deferred tax asset, our financial condition, results of operations and regulatory capital levels would be negatively affected.
If we are required in the future to take a valuation allowance with respect to our deferred tax asset, our financial condition, results of operations and regulatory capital levels would be negatively affected. 50 Table of Contents Risks Relating to Our Common Stock The price of our common stock may fluctuate significantly, and this may make it difficult for you to resell our common stock when you want or at prices you find attractive.
Security breaches in our mobile and consumer and commercial internet banking activities and wealth management or mobile access could expose us to possible liability and damage our reputation. Any compromise of our security also could deter customers from using our internet banking services that involve the transmission of confidential information.
We are subject to security and operational risks relating to our use of technology that could damage our reputation and business. Security breaches in our mobile and consumer and commercial internet banking activities and wealth management or mobile access could expose us to possible liability and damage our reputation.
Such events could also affect the stability of our deposit base, cause significant property damage, adversely affect our employees, adversely impact the values of collateral securing our loans and/or interfere with our borrowers’ abilities to repay their debt obligations to us. 43 ​ ​ Table of Contents Risks Relating to Credit and Lending Activities Our allowance for credit losses may be insufficient to absorb losses in our loan portfolio.
There is no assurance that our business continuity and disaster recovery program can adequately mitigate these risks. Such events could also affect the stability of our deposit base, cause significant property damage, adversely affect our employees, adversely impact the values of collateral securing our loans and/or interfere with our borrowers’ abilities to repay their debt obligations to us.
Over the last ten years, we have increased this type of lending from 57.7% of our portfolio at June 30, 2013, to 60.5% of our portfolio at June 30, 2023, in order to improve the yield on our assets.
Over the last ten years, we have increased this type of lending, in order to improve the yield on our assets. At June 30, 2024, our loan portfolio included $1.6 billion of commercial real estate loans and $668.3 million of commercial business loans.
Deterioration in our construction portfolio could result in increases in the provision for credit losses and an increase in charge-offs, all of which could have a material adverse effect on our financial condition and results of operations. Our loan portfolio possesses increased risk due to our percentage of commercial real estate and commercial business loans.
Additionally, we may experience significant construction credit losses because independent appraisers or project engineers inaccurately estimate the cost or value of construction loan projects. 41 Table of Contents Deterioration in our construction portfolio could result in increases in the provision for credit losses and an increase in charge-offs, all of which could have a material adverse effect on our financial condition and results of operations.
Furthermore, a prolonged period of inflation could cause wages and other costs to the Company to increase, which could adversely affect our results of operations and financial condition. The economic impact of the COVID-19 pandemic could continue to adversely affect us.
Furthermore, a prolonged period of inflation could cause wages and other costs to the Company to increase, which could adversely affect our results of operations and financial condition. Severe weather and other natural disasters, acts of war or terrorism, new public health issues or other adverse external events could harm our business.
The Bank and Company may see its non-owner occupied commercial real estate lending grow as a percentage of total regulatory capital, or it may slow the growth of this type of lending activity. Should we continue to grow this category of our loan portfolio, we may incur additional expense to meet increasing supervisory expectations related to this lending activity.
Should we continue to grow this category of our loan portfolio, we may incur additional expense to meet increasing supervisory expectations related to this lending activity.
In assessing the potential credit losses of investment securities, we are required to evaluate instances in which the fair value of particular securities are less than their amortized cost basis. The evaluation considers factors including; past events, current conditions, and reasonable & supportable forecasts, and the Company’s ability and intent to hold the security until maturity.
Credit losses on investment securities could require charges to earnings, which could negatively impact our results of operations. In assessing the potential credit losses of investment securities, we are required to evaluate instances in which the fair value of particular securities are less than their amortized cost basis.
We rely on internet security systems to provide the security and authentication necessary to effect secure transmission of data. These precautions may not protect our systems from compromises or breaches of our security measures, which could damage our reputation and business.
Any compromise of our security also could deter customers from using our internet banking services that involve the transmission of confidential information. We rely on internet security systems to provide the security and authentication necessary to effect secure transmission of data.
However, non-owner occupied commercial real estate portfolio growth (inclusive of acquisitions) during fiscal years 2022 and 2023 has resulted in the Company reporting 330% of tier 1 regulatory capital plus the allowance for loan losses includable in total regulatory capital at June 30, 2023, as compared to 313% at June 30, 2022.
The Bank’s concentration in non-owner occupied commercial real estate loans was 317.5% of Tier 1 capital and ACL at June 30, 2024, as compared to 330.2% as of June 30, 2023, with these loans representing 41.5% of total loans at June 30, 2024. The 36-month growth rate at June 30, 2024, inclusive of acquisitions, was 84.2%.
At June 30, 2023, our loan portfolio included $1.6 billion of commercial real estate loans and $599.0 million of commercial business loans compared to $1.1 billion and $441.6 million, respectively, at June 30, 2022.
Our loan portfolio possesses increased risk due to our percentage of commercial real estate and commercial business loans.
We could be subject to a number of risks as the result of the COVID-19 pandemic, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations.
Further, the effects of climate change may negatively impact regional and local economic activity, which could lead to an adverse effect on our customers and impact the communities in which we operate. Overall, climate change, its effects and the resulting, unknown impact could have a material adverse effect on our financial condition and results of operations.
Removed
Recent events in the financial services industry, including the failures of two large U.S. banks in the span of three days in March 2023 and another failure in early May 2023, created industry-wide concerns related to liquidity, deposit outflows, uninsured deposit concentrations and eroding consumer confidence in the banking system.
Added
In addition, a decline in local or regional economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are more geographically diverse. Downturns in the real estate markets in our primary market area could hurt our business.
Removed
These events occurred against the backdrop of a rapidly rising interest rate environment which, among other things, has resulted in unrealized losses in longer duration securities and loans held by banks and more competition for bank deposits. These events have had, and may continue to have, an adverse impact on the market price of our common stock. While the U.S.
Added
The events and conditions described in this risk factor could therefore have a material adverse effect on our business, results of operations and financial condition. ​ 39 Table of Contents Inflationary pressures and rising prices may adversely affect our results of operations and financial condition.
Removed
Department of the Treasury, the Federal Reserve and the FDIC acted to fully protect the insured and uninsured depositors of two of the recently failed banks, and the FDIC secured an agreement with a large financial institution for that institution to assume all the deposits of the third recently failed bank, no assurance can be given that these or similar actions will restore confidence in the banking system, and we may be further impacted by concerns regarding the soundness of other financial institutions, or other future bank failures or disruptions.
Added
At June 30, 2024, these loans totaled $176.0 million, or 4.6%, of our loan portfolio, net.
Removed
Any loss of customer deposits could increase our cost of funding or negatively affect our overall liquidity or capital. The cost of resolving the recent bank failures may prompt the FDIC to charge higher deposit insurance premiums and/or impose special assessments on insured depository institutions.
Added
Our agricultural operating loans have also grown significantly since June 30, 2014, when such loans totaled $53.4 million, or 6.7% of our loan portfolio, and we intend to continue to grow this portion of our loan portfolio.
Removed
These events and any future similar events may also result in changes to laws or regulations governing bank holding companies and banks, including higher capital requirements, or the imposition of restrictions through supervisory or enforcement activities, any of which could have a material adverse effect on us. ​ Changes in economic conditions, particularly an economic slowdown in southern Missouri or northern Arkansas, could hurt our business.
Added
The evaluation considers factors including; past events, current conditions, and reasonable & supportable forecasts, and the Company’s ability and intent to hold the security until maturity. A qualitative determination is acceptable. There were no credit-related factors underlying unrealized losses on AFS securities at June 30, 2024, or June 30, 2023.
Removed
Downturns in the real estate markets in our primary market area could hurt our business. Our business activities and credit exposure are primarily concentrated in southern Missouri and northern Arkansas.
Added
Risks Relating to Market Interest Rates Changes in interest rates may negatively affect our earnings and the value of our assets. Our earnings and cash flows depend substantially upon our net interest income.
Removed
Inflationary pressures and rising prices may adversely affect our results of operations and financial condition. Inflation has risen sharply since the end of 2021 to levels not seen in more than 40 years.
Added
The Company’s non-owner occupied commercial real estate loans was 305.3% of Tier 1 capital and ACL at June 30, 2024, as compared to 316.9% as of June 30, 2023.
Removed
The COVID-19 pandemic has adversely impacted the global and national economy and certain industries and geographies in which our customers reside and operate. Because of its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on the Company and its customers, employees and third-party service providers.
Added
The Company’s non-owner occupied commercial real estate includes other nonfarm nonresidential real estate (174.4% as a percentage of Tier 1 capital and ACL), multifamily properties (74.6% as a percentage of Tier 1 capital and ACL), and construction and land development (56.3% as a percentage of Tier 1 capital and ACL).
Removed
The extent of this impact will depend on future developments, which are highly uncertain. Additionally, the responses of various governmental and nongovernmental authorities and consumers to the pandemic may have material long-term effects on the Company and its customers, which are difficult to quantify in the near-term or long-term.
Added
The majority of these loans are concentrated within the company’s primary operational footprint. The other nonfarm nonresidential real estate portfolio includes a variety of collateral types, with hospitality (hotels/restaurants), care facilities, retail stand-alone properties, and strip centers being the most common. The hospitality and retail segments are predominantly composed of franchised businesses.
Removed
These risks include, but are not limited to, changes in demand for our products and services; increased loan losses or other impairments in our loan portfolios and increases in our allowance for loan losses; a decline in collateral for our loans, especially real estate; unanticipated unavailability of employees; increased cyber security risks to the extent employees work remotely; a prolonged weakness in economic conditions; and increased costs as we and our regulators, customers and third-party service providers adapt to evolving pandemic conditions.
Added
Care facilities primarily consist of skilled nursing and assisted living centers, while strip centers are defined as non-mall shopping centers with multiple tenants. The Bank and Company may see its non-owner occupied commercial real estate lending grow as a percentage of total regulatory capital, or it may slow the growth of this type of lending activity.
Removed
There is no assurance that our business continuity and disaster recovery program can adequately mitigate these risks.
Added
The effects of climate change continue to create an alarming level of concern for the state of the global environment. As a result, the global business community has increased its political and social awareness surrounding the issue, and the United States has entered into international agreements in an attempt to reduce global temperatures, such as reentering the Paris Agreement.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. ​ ​ Description of Properties At June 30, 2023, the Bank operated from its headquarters, 62 full-service branch offices, and three limited-service branch offices. The Bank owns the office building and related land in which its headquarters are located, and 58 of its branch offices. The remaining seven branch offices are either leased or partially owned.
Biggest changeItem 2. ​ ​ Description of Properties At June 30, 2024, the Bank operated from its headquarters, 62 full-service branch offices, three limited-service branch offices, and two LPOs. The Bank owns the office building and related land in which its headquarters are located, and 59 of its branch offices. The remaining seven branch offices are either leased or partially owned.
However, we will continue to monitor customer growth and expand our branching network, if necessary, to serve our customers’ needs. ​
However, we will continue to monitor customer growth and expand our branching network, if necessary, to serve our customers’ needs. ​ 54 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changePeriodically, there have been various claims and lawsuits involving the Company or the Bank, mainly as defendants, such as claims to enforce liens, condemnation proceedings on properties in which the Company or the Bank holds security interests, claims involving the making and servicing of real property loans and other activities incident to the Company’s or the 56 ​ ​ Table of Contents Bank’s business.
Biggest changePeriodically, there have been various claims and lawsuits involving the Company or the Bank, mainly as defendants, such as claims to enforce liens, condemnation proceedings on properties in which the Company or the Bank holds security interests, claims involving the making and servicing of real property loans and other activities incident to the Company’s or the Bank’s business.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 57 Item 4A. Information About Our Executive Officers 57 ​ ​ ​ PART II ​ 60 ​ ​ ​ Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 60 Item 6. [Reserved] 61 Item 7.
Biggest changeItem 4. Mine Safety Disclosures 55 Item 4A. Information About Our Executive Officers 55 ​ ​ ​ PART II ​ 58 ​ ​ ​ Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 58 Item 6. [Reserved] 59 Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations 62 Item 7A Quantitative and Qualitative Disclosures About Market Risk 76 Item 8. Financial Statements and Supplementary Information 78
Management’s Discussion and Analysis of Financial Condition and Results of Operations 60 Item 7A Quantitative and Qualitative Disclosures About Market Risk 74 Item 8. Financial Statements and Supplementary Information 76

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table summarizes the Company’s stock repurchase activity for each month during the three months ended June 30, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total # of Shares ​ ​ ​ ​ ​ Average ​ Purchased as Part of a ​ Maximum Number ​ ​ Total # ​ Price ​ Publicly ​ of Shares That ​ ​ of Shares ​ Paid Per ​ Announced ​ May Yet Be ​ ​ Purchased ​ Share ​ Program ​ Purchased (1) 04/01/23 - 04/30/23 period — ​ $ — — 306,375 05/01/23 - 05/31/23 period — ​ — — 306,375 06/01/23 - 06/30/23 period — ​ — — 306,375 (1) Represents the remaining shares available for purchase as of the last calendar day of the month shown. ​ 60 ​ ​ Table of Contents The following graph shows a comparison of stockholder return on the common stock of Southern Missouri Bancorp, Inc., to the cumulative total returns for the indices shown below.
Biggest changeThe following table summarizes the Company’s stock repurchase activity for each month during the three months ended June 30, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total # of Shares ​ ​ ​ ​ ​ Average ​ Purchased as Part of a ​ Maximum Number ​ ​ Total # ​ Price ​ Publicly ​ of Shares That ​ ​ of Shares ​ Paid Per ​ Announced ​ May Yet Be ​ ​ Purchased ​ Share ​ Program ​ Purchased (1) 04/01/24 - 04/30/24 period — ​ $ — — 301,937 05/01/24 - 05/31/24 period 51,282 ​ 41.62 51,282 250,655 06/01/24 - 06/30/24 period 37,075 ​ 41.42 37,075 213,580 (1) Represents the remaining shares available for purchase as of the last calendar day of the month shown. ​ 58 Table of Contents The following graph shows a comparison of stockholder return on the common stock of Southern Missouri Bancorp, Inc., to the cumulative total returns for the indices shown below.
Risk Factors – Risks Relating to our Common Stock – Regulatory and Contractual Restrictions may limit or prevent us from paying dividends on and repurchasing our common stock.” Information regarding our equity compensation plans is included in Part II, Item 11 of this Form 10-K. From time to time, the Company has utilized share repurchase programs.
Risk Factors – Risks Relating to our Common Stock – Regulatory and Contractual Restrictions may limit or prevent us from paying dividends on and repurchasing our common stock.” Information regarding our equity compensation plans is included in Part II, Item 11 of this Form 10-K. Stock Repurchases From time to time, the Company has utilized share repurchase programs.
Item 5. ​ ​ Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The common stock of Southern Missouri Bancorp, Inc., is traded under the symbol “SMBC” on the Nasdaq Global Market. At September 8, 2023, there were 11,336,462 shares of common stock outstanding and approximately 482 common stockholders of record.
Item 5. ​ ​ Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The common stock of Southern Missouri Bancorp, Inc., is traded under the symbol “SMBC” on the Nasdaq Global Market. At September 8, 2024, there were 11,277,737 shares of common stock outstanding and approximately 468 common stockholders of record.
The graph is historical only and may not be indicative of possible future performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 6/30/18 6/30/19 6/30/20 6/30/21 6/30/22 6/30/23 Southern Missouri Bancorp, Inc. 100.00 90.60 64.47 121.69 124.49 107.78 KBW NASDAQ Bank Index 100.00 96.97 76.40 132.25 109.47 90.06 S&P U.S.
The graph is historical only and may not be indicative of possible future performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 6/30/19 6/30/20 6/30/21 6/30/22 6/30/23 6/30/24 Southern Missouri Bancorp, Inc. 100.00 71.15 134.32 137.41 118.97 142.03 KBW NASDAQ Bank Index 100.00 78.78 136.38 112.89 92.87 125.70 S&P U.S.
Removed
Repurchased shares will be held as treasury shares to be used for general corporate purposes. During fiscal 2023, there was no stock repurchase activity.
Added
Repurchased shares will be held as treasury shares to be used for general corporate purposes. From time to time, the Company may utilize a pre-arranged trading plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934 to repurchase its shares under its repurchase programs.
Removed
SmallCap Banks Index 100.00 92.03 68.77 115.59 106.94 87.01 S&P U.S. BMI Banks - Midwest Region Index 100.00 97.46 71.98 117.04 103.34 83.57 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Added
SmallCap Banks Index 100.00 74.72 125.60 116.20 94.55 116.29 S&P U.S. BMI Banks - Midwest Region Index 100.00 73.86 120.10 106.03 85.74 112.60 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

102 edited+35 added−23 removed65 unchanged
Biggest changeWhen interest-earning assets approximate or exceed interest-bearing liabilities, any positive interest rate spread will generate net interest income. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ ​ 2023 ​ 2022 ​ 2021 (dollars in thousands) Average Interest and Yield/ Average Interest and Yield/ Average Interest and Yield/ ​ ​ Balance ​ Dividends ​ Cost Balance ​ Dividends ​ Cost Balance ​ Dividends ​ Cost Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage loans (1) ​ $ 2,585,065 ​ $ 126,315 ​ 4.89 % $ 1,953,460 ​ $ 90,522 ​ 4.63 % $ 1,664,650 ​ $ 84,319 ​ 5.07 % Other loans (1) ​ ​ 589,625 ​ ​ 35,909 ​ 6.09 ​ ​ 471,350 ​ ​ 20,973 ​ 4.45 ​ ​ 505,350 ​ ​ 20,758 ​ 4.11 ​ Total net loans ​ 3,174,690 ​ 162,224 5.11 ​ 2,424,810 ​ 111,495 4.60 ​ 2,170,000 ​ 105,077 4.84 ​ Mortgage-backed securities ​ ​ 241,642 ​ ​ 6,967 ​ 2.88 ​ ​ 152,280 ​ ​ 2,738 ​ 1.80 ​ ​ 121,149 ​ ​ 2,042 ​ 1.69 ​ Investment securities (2) ​ ​ 118,386 ​ ​ 5,324 ​ 4.50 ​ ​ 77,996 ​ ​ 2,197 ​ 2.82 ​ ​ 71,489 ​ ​ 2,130 ​ 2.98 ​ Other interest-earning assets ​ ​ 42,287 ​ ​ 1,901 ​ 4.50 ​ ​ 127,958 ​ ​ 437 ​ 0.34 ​ ​ 97,548 ​ ​ 226 ​ 0.23 ​ TOTAL INTEREST- EARNING ASSETS (1) ​ 3,577,005 ​ 176,416 4.93 ​ 2,783,044 ​ 116,867 4.20 ​ 2,460,186 ​ 109,475 4.45 ​ Other noninterest-earning assets (3) ​ ​ 234,047 ​ ​ — ​ — ​ ​ 181,973 ​ ​ — ​ — ​ ​ 170,336 ​ ​ — ​ — ​ TOTAL ASSETS ​ $ 3,811,052 ​ ​ 176,416 — ​ $ 2,965,017 ​ ​ 116,867 — ​ $ 2,630,522 ​ ​ 109,475 — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ Savings accounts ​ $ 286,959 ​ ​ 1,623 ​ 0.57 ​ $ 253,651 ​ ​ 672 ​ 0.26 ​ $ 203,493 ​ ​ 566 ​ 0.28 ​ NOW accounts ​ ​ 1,280,134 ​ ​ 17,756 ​ 1.39 ​ ​ 1,062,913 ​ ​ 5,164 ​ 0.49 ​ ​ 861,796 ​ ​ 5,036 ​ 0.58 ​ Money market accounts ​ ​ 382,032 ​ ​ 7,846 ​ 2.05 ​ ​ 276,579 ​ ​ 928 ​ 0.34 ​ ​ 241,534 ​ ​ 833 ​ 0.34 ​ Certificates of deposit ​ ​ 810,570 ​ ​ 17,167 ​ 2.12 ​ ​ 586,017 ​ ​ 5,058 ​ 0.86 ​ ​ 618,884 ​ ​ 8,454 ​ 1.37 ​ TOTAL INTEREST- BEARING DEPOSITS ​ 2,759,695 ​ 44,392 1.61 ​ 2,179,160 ​ 11,822 0.54 ​ 1,925,707 ​ 14,889 0.77 ​ Borrowings: ​ ​ ​ ​ ​ ​ ​ ​ Securities sold under agreements to repurchase ​ ​ 4,148 ​ ​ 213 ​ 5.13 ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ — ​ FHLB advances ​ ​ 107,661 ​ ​ 3,627 ​ 3.37 ​ ​ 43,410 ​ ​ 792 ​ 1.83 ​ ​ 65,896 ​ ​ 1,366 ​ 2.07 ​ Junior subordinated debt ​ ​ 23,253 ​ ​ 1,439 ​ 6.19 ​ ​ 18,189 ​ ​ 686 ​ 3.77 ​ ​ 15,193 ​ ​ 534 ​ 3.51 ​ TOTAL INTEREST- BEARING LIABILITIES ​ 2,894,757 ​ 49,671 1.72 ​ 2,240,759 ​ 13,300 0.59 ​ 2,006,796 ​ 16,789 0.84 ​ Noninterest-bearing demand deposits ​ ​ 522,159 ​ ​ — ​ — ​ ​ 408,148 ​ ​ — ​ — ​ ​ 343,643 ​ ​ — ​ — ​ Other liabilities ​ ​ 16,484 ​ ​ — ​ — ​ ​ 10,651 ​ ​ — ​ — ​ ​ 13,375 ​ ​ — ​ — ​ TOTAL LIABILITIES ​ 3,433,400 ​ 49,671 — ​ 2,659,558 ​ 13,300 — ​ 2,363,814 ​ 16,789 — ​ Stockholders’ equity ​ 377,652 ​ — — ​ 305,459 ​ — — ​ 266,708 ​ — — ​ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ​ $ 3,811,052 ​ ​ 49,671 — ​ $ 2,965,017 ​ ​ 13,300 — ​ $ 2,630,522 ​ ​ 16,789 — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ ​ $ 126,745 ​ ​ $ 103,567 ​ ​ $ 92,686 ​ Interest rate spread (4) ​ ​ 3.21 % ​ 3.61 % ​ 3.61 % Net interest margin (5) ​ ​ 3.54 % ​ 3.72 % ​ 3.77 % Ratio of average interest-earning assets to average interest-bearing liabilities ​ 123.57 % ​ 124.20 % ​ 122.59 % ​ (1) Calculated net of deferred loan fees, loan discounts and loans-in-process.
Biggest changeWhen interest-earning assets approximate or exceed interest-bearing liabilities, any positive interest rate spread will generate net interest income. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ ​ 2024 ​ 2023 ​ 2022 (dollars in thousands) Average Interest and Yield/ Average Interest and Yield/ Average Interest and Yield/ ​ ​ Balance ​ Dividends ​ Cost Balance ​ Dividends ​ Cost Balance ​ Dividends ​ Cost Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage loans (1) ​ $ 3,009,263 ​ $ 168,894 ​ 5.61 % $ 2,585,065 ​ $ 126,315 ​ 4.89 % $ 1,953,460 ​ $ 90,522 ​ 4.63 % Other loans (1) ​ ​ 708,881 ​ ​ 53,618 ​ 7.56 ​ ​ 589,625 ​ ​ 35,909 ​ 6.09 ​ ​ 471,350 ​ ​ 20,973 ​ 4.45 ​ Total net loans ​ 3,718,144 ​ 222,512 5.98 ​ 3,174,690 ​ 162,224 5.11 ​ 2,424,810 ​ 111,495 4.60 ​ Mortgage-backed securities ​ ​ 304,778 ​ ​ 14,631 ​ 4.80 ​ ​ 241,642 ​ ​ 6,967 ​ 2.88 ​ ​ 152,280 ​ ​ 2,738 ​ 1.80 ​ Investment securities (2) ​ ​ 165,307 ​ ​ 6,877 ​ 4.16 ​ ​ 118,386 ​ ​ 5,324 ​ 4.50 ​ ​ 77,996 ​ ​ 2,197 ​ 2.82 ​ Other interest-earning assets ​ ​ 79,116 ​ ​ 4,355 ​ 5.50 ​ ​ 42,287 ​ ​ 1,901 ​ 4.50 ​ ​ 127,958 ​ ​ 437 ​ 0.34 ​ TOTAL INTEREST- EARNING ASSETS (1) ​ 4,267,345 ​ 248,375 5.82 ​ 3,577,005 ​ 176,416 4.93 ​ 2,783,044 ​ 116,867 4.20 ​ Other noninterest-earning assets (3) ​ ​ 290,952 ​ ​ — ​ — ​ ​ 234,047 ​ ​ — ​ — ​ ​ 181,973 ​ ​ — ​ — ​ TOTAL ASSETS ​ $ 4,558,297 ​ ​ 248,375 — ​ $ 3,811,052 ​ ​ 176,416 — ​ $ 2,965,017 ​ ​ 116,867 — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ Savings accounts ​ $ 382,713 ​ ​ 8,176 ​ 2.14 ​ $ 286,959 ​ ​ 1,623 ​ 0.57 ​ $ 253,651 ​ ​ 672 ​ 0.26 ​ NOW accounts ​ ​ 1,265,325 ​ ​ 26,528 ​ 2.10 ​ ​ 1,280,134 ​ ​ 17,756 ​ 1.39 ​ ​ 1,062,913 ​ ​ 5,164 ​ 0.49 ​ Money market accounts ​ ​ 403,170 ​ ​ 12,596 ​ 3.12 ​ ​ 382,032 ​ ​ 7,846 ​ 2.05 ​ ​ 276,579 ​ ​ 928 ​ 0.34 ​ Certificates of deposit ​ ​ 1,300,561 ​ ​ 54,857 ​ 4.22 ​ ​ 810,570 ​ ​ 17,167 ​ 2.12 ​ ​ 586,017 ​ ​ 5,058 ​ 0.86 ​ TOTAL INTEREST- BEARING DEPOSITS ​ 3,351,769 ​ 102,157 3.05 ​ 2,759,695 ​ 44,392 1.61 ​ 2,179,160 ​ 11,822 0.54 ​ Borrowings: ​ ​ ​ ​ ​ ​ ​ Securities sold under agreements to repurchase ​ ​ — ​ ​ — ​ — ​ ​ 4,148 ​ ​ 213 ​ 5.13 ​ ​ — ​ ​ — ​ — ​ FHLB advances ​ ​ 123,986 ​ ​ 4,993 ​ 4.03 ​ ​ 107,661 ​ ​ 3,627 ​ 3.37 ​ ​ 43,410 ​ ​ 792 ​ 1.83 ​ Junior subordinated debt ​ ​ 23,130 ​ ​ 1,742 ​ 7.53 ​ ​ 23,253 ​ ​ 1,439 ​ 6.19 ​ ​ 18,189 ​ ​ 686 ​ 3.77 ​ TOTAL INTEREST- BEARING LIABILITIES ​ 3,498,885 ​ 108,892 3.11 ​ 2,894,757 ​ 49,671 1.72 ​ 2,240,759 ​ 13,300 0.59 ​ Noninterest-bearing demand deposits ​ ​ 561,004 ​ ​ — ​ — ​ ​ 522,159 ​ ​ — ​ — ​ ​ 408,148 ​ ​ — ​ — ​ Other liabilities ​ ​ 31,366 ​ ​ — ​ — ​ ​ 16,484 ​ ​ — ​ — ​ ​ 10,651 ​ ​ — ​ — ​ TOTAL LIABILITIES ​ 4,091,255 ​ 108,892 — ​ 3,433,400 ​ 49,671 — ​ 2,659,558 ​ 13,300 — ​ Stockholders’ equity ​ 467,042 ​ — — ​ 377,652 ​ — — ​ 305,459 ​ — — ​ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ​ $ 4,558,297 ​ ​ 108,892 — ​ $ 3,811,052 ​ ​ 49,671 — ​ $ 2,965,017 ​ ​ 13,300 — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ ​ $ 139,483 ​ ​ $ 126,745 ​ ​ $ 103,567 ​ Interest rate spread (4) ​ ​ 2.71 % ​ 3.21 % ​ 3.61 % Net interest margin (5) ​ ​ 3.27 % ​ 3.54 % ​ 3.72 % Ratio of average interest-earning assets to average interest-bearing liabilities ​ 121.96 % ​ 123.57 % ​ 124.20 % ​ (1) Calculated net of deferred loan fees, loan discounts and unfunded commitments on construction loans.
(See Note 1 and Note 3 of the Notes to Consolidated Financial Statements, “Critical Accounting Policies” and “Financial Condition – Allowance for Credit Losses” in this Item 7, and “Asset Quality” in Item 1 of this Form 10-K.) ​ Noninterest Income.
(See Note 1 and Note 3 of the Notes to Consolidated Financial Statements, “Critical Accounting Policies” and “Financial Condition – Allowance for Credit Losses” in this Item 7, and “Asset Quality” in Item 1 of this Form 10-K.) Noninterest Income.
SELECTED CONSOLIDATED FINANCIAL INFORMATION ​ The following tables set forth selected consolidated financial information and other financial data of the Company. The summary statement of financial condition information and statement of income information are derived from our consolidated financial statements, which have been audited by FORVIS LLP. See Item 8.
SELECTED CONSOLIDATED FINANCIAL INFORMATION ​ The following tables set forth selected consolidated financial information and other financial data of the Company. The summary statement of financial condition information and statement of income information are derived from our consolidated financial statements, which have been audited by FORVIS MAZARS, LLP. See Item 8.
While 71 ​ ​ Table of Contents scheduled repayments on loans and securities as well as the maturity of short-term investments are a relatively predictable source of funding, deposit flows, FHLB advance redemptions and loan and security prepayment rates are significantly influenced by factors outside of the Bank’s control, including general economic conditions and market competition.
While scheduled repayments on loans and securities as well as the maturity of short-term investments are a relatively predictable source of funding, deposit flows, FHLB advance redemptions and loan and security prepayment rates are 69 Table of Contents significantly influenced by factors outside of the Bank’s control, including general economic conditions and market competition.
In March 2004, $7.0 million of Floating Rate Capital Securities of Southern Missouri Statutory Trust I, with a liquidation value of $1,000 per share were issued. The securities bear interest at a floating rate based on LIBOR, are now redeemable at par, and mature in 2034.
In March 2004, $7.0 million of Floating Rate Capital Securities of Southern Missouri Statutory Trust I, with a liquidation value of $1,000 per share were issued. The securities bear interest at a floating rate based on SOFR, are now redeemable at par, and mature in 2034.
Southern Bank’s noninterest income consists primarily of fees charged on transaction and loan accounts, interchange income from customer debit and ATM card use, gains on sales of loans, trust and wealth management services, and increased cash surrender value of bank owned life insurance (“BOLI”).
Southern Bank’s noninterest income consists primarily of fees charged on transaction and loan accounts, interchange income from customer debit and ATM card use, gains on sales of loans, trust and wealth management services, insurance brokerage commissions, and increased cash surrender value of bank owned life insurance (“BOLI”).
INTEREST RATE SENSITIVITY ANALYSIS The following table sets forth as of June 30, 2023 and 2022, management’s estimates of the projected changes in net portfolio value in the event of 100, 200, and 300 basis point, instantaneous and permanent increases or decreases in market interest rates.
INTEREST RATE SENSITIVITY ANALYSIS The following table sets forth as of June 30, 2024 and 2023, management’s estimates of the projected changes in net portfolio value in the event of 100, 200, and 300 basis point, instantaneous and permanent increases or decreases in market interest rates.
Intangible Assets. The July 2009 acquisition of the Southern Bank of Commerce resulted in goodwill of $126,000. The October 2013 acquisition of Ozarks Legacy Community Financial, Inc., resulted in goodwill of $1.5 million. The August 2014 acquisition of Peoples Service Company, Inc., and its subsidiary, Peoples Bank of the Ozarks (the “Peoples Acquisition”) resulted in goodwill of $3.0 million.
The July 2009 acquisition of the Southern Bank of Commerce resulted in goodwill of $126,000. The October 2013 acquisition of Ozarks Legacy Community Financial, Inc., resulted in goodwill of $1.5 million. The August 2014 acquisition of Peoples Service Company, Inc., and its subsidiary, Peoples Bank of the Ozarks (the “Peoples Acquisition”) resulted in goodwill of $3.0 million.
(2) Does not include dividends earned on equity securities. ​ Item 7A ​ ​ Quantitative and Qualitative Disclosures About Market Risk The goal of the Company’s asset/liability management strategy is to manage the interest rate sensitivity of both interest-earning assets and interest-bearing liabilities in order to maximize net interest income without exposing the Company to an excessive level of interest rate risk.
(2) Does not include dividends earned on equity securities. 73 Table of Contents Item 7A ​ ​ Quantitative and Qualitative Disclosures About Market Risk The goal of the Company’s asset/liability management strategy is to manage the interest rate sensitivity of both interest-earning assets and interest-bearing liabilities in order to maximize net interest income without exposing the Company to an excessive level of interest rate risk.
To be considered well capitalized, the Bank must maintain tier 1 leverage capital levels of at least 5.0% of adjusted total assets and 8.0% of risk-weighted assets, total risk-based capital of 10.0% of risk-weighted assets, and tangible common equity capital of 6.5% of risk-weighted assets.
To be considered well capitalized, the Bank must maintain tier 1 capital levels of at least 5.0% of adjusted total assets and 8.0% of risk-weighted assets, total risk-based capital of 10.0% of risk-weighted assets, and common equity tier 1 capital of 6.5% of risk-weighted assets.
The January 2023 Citizens merger resulted in goodwill of $23.5 million, as well as a $22.1 million core deposit intangible which is being amortized over a ten year period using the straight-line method, and a $2.6 million intangible related to the acquired trust and wealth management business line which is being amortized over a ten year period using the straight-line method.
The January 2023 Citizens merger resulted in goodwill of $23.5 million, as well as a $22.1 million core deposit intangible which is being amortized over a ten year period using the straight-line method, and a $2.6 million intangible related to the acquired trust and wealth management business line which is being amortized over a ten year 64 Table of Contents period using the straight-line method.
The increase in the average rate paid on deposits was attributable primarily to higher market interest rates over the course of fiscal 2023. 68 ​ ​ Table of Contents Interest expense on FHLB advances was $3.6 million for fiscal 2023, an increase of $2.8 million, or 358.0%, when compared to the prior fiscal year.
The increase in the average rate paid on deposits was attributable primarily to higher market interest rates over the course of fiscal 2023. Interest expense on FHLB advances was $3.6 million for fiscal 2023, an increase of $2.8 million, or 358.0%, when compared to the prior fiscal year.
The June 2017 acquisition of Tammcorp, Inc., and its 66 ​ ​ Table of Contents subsidiary, Capaha Bank (the “Capaha Acquisition”) resulted in goodwill of $4.1 million and a $3.4 million core deposit intangible which is being amortized over a seven-year period using the straight-line method.
The June 2017 acquisition of Tammcorp, Inc., and its subsidiary, Capaha Bank (the “Capaha Acquisition”) resulted in goodwill of $4.1 million and a $3.4 million core deposit intangible which is being amortized over a seven-year period using the straight-line method.
We believe that our liquid assets combined with the available lines of credit provide adequate liquidity to meet our current financial obligations for at least the next 12 months. REGULATORY CAPITAL Federally insured financial institutions are required to maintain minimum levels of regulatory capital.
We believe that our liquid assets combined with the available lines of credit provide adequate liquidity to meet our current financial obligations for at least the next 12 months. 70 Table of Contents REGULATORY CAPITAL Federally insured financial institutions are required to maintain minimum levels of regulatory capital.
Another indicator of an institution’s net interest income is its net yield (or net interest margin) on interest-earning assets, which is its net interest income divided by the average balance of interest-earning assets. Net interest income is affected by the interest rate spread and by the relative amounts of interest-earning assets and interest-bearing liabilities.
Another indicator of an institution’s net interest income is its net yield (or net interest margin) on interest-earning assets, which is its net interest income divided by the average balance of interest-earning assets. Net interest income is affected by the interest rate spread and by the 71 Table of Contents relative amounts of interest-earning assets and interest-bearing liabilities.
The degree to which each segment of the strategy is achieved will affect profitability and exposure to interest rate risk. 76 ​ ​ Table of Contents The Company continues to generate long-term, fixed-rate residential loans.
The degree to which each segment of the strategy is achieved will affect profitability and exposure to interest rate risk. The Company continues to generate long-term, fixed-rate residential loans.
For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates.
For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in differing degrees to changes in market interest rates.
Our ACL at June 30, 2023, totaled $47.8 million, representing 1.32% of gross loans and 624.9% of nonperforming loans, as compared to $33.2 million, representing 1.22% of gross loans and 806.2% of nonperforming loans at June 30, 2022.
Our ACL at June 30, 2023, totaled $47.8 million, representing 1.32% of gross loans and 634% of nonperforming loans, as compared to an ACL of $33.2 million, representing 1.22% of gross loans and 806% of nonperforming loans at June 30, 2022.
The carrying value of these debt securities was approximately $2.7 million at June 30, 2023, relatively unchanged as compared to June 30, 2022. In connection with the Peoples Acquisition, the Company assumed $6.5 million in floating rate junior subordinated debt securities.
The carrying value of these debt securities was approximately $2.8 million at June 30, 2024, as compared to $2.7 million at June 30, 2023. In connection with the Peoples Acquisition, the Company assumed $6.5 million in floating rate junior subordinated debt securities.
In total, FHLB borrowings are limited to 45% of Bank assets, or approximately $1.9 billion as most recently reported by the FHLB as of June 30, 2023, which means that an amount up to $1.8 billion may still be eligible to be borrowed from the FHLB, subject to available collateral.
In total, FHLB borrowings are limited to 45% of Bank assets, or approximately $2.1 billion as most recently reported by the FHLB as of June 30, 2024, which means that an amount up to $2.0 billion may still be eligible to be borrowed from the FHLB, subject to available collateral.
The amount of capital investment is influenced by, among other things, current and projected demand for our services and products, cash flow generated by operating activities, cash required for other purposes and regulatory considerations. At June 30, 2023, we had other future obligations and accrued expenses of $18.6 million.
The amount of capital investment is influenced by, among other things, current and projected demand for our services and products, cash flow generated by operating activities, cash required for other purposes and regulatory considerations. At June 30, 2024, we had other future obligations and accrued expenses of $19.9 million.
During the fiscal year ended June 30, 2023, fixed rate residential loan originations totaled $147.2 million (of which $21.5 million was originated for sale into the secondary market), compared to $269.9 million during the prior year (of which $43.2 million was originated for sale into the secondary market).
During the fiscal year ended June 30, 2024, fixed rate residential loan originations totaled $119.4 million (of which $21.9 million was originated for sale into the secondary market), compared to $147.2 million during the prior fiscal year (of which $21.5 million was originated for sale into the secondary market).
“Financial Statements and Supplementary Data.” Results for past periods are not necessarily indicative of results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ At June 30, Financial Condition Data: 2023 2022 2021 2020 2019 Total assets ​ $ 4,360,211 ​ $ 3,214,782 ​ $ 2,700,530 ​ $ 2,542,157 ​ $ 2,214,402 Loans receivable, net ​ 3,571,078 ​ 2,686,198 ​ 2,200,244 ​ 2,141,929 ​ 1,846,405 Mortgage-backed securities ​ 270,252 ​ 170,585 ​ 138,341 ​ 126,912 ​ 110,429 Cash, interest-bearing deposits and investment securities ​ 202,523 ​ 156,369 ​ 193,250 ​ 104,831 ​ 91,475 Deposits ​ 3,725,540 ​ 2,815,075 ​ 2,330,803 ​ 2,184,847 ​ 1,893,695 Borrowings ​ 133,514 ​ 37,957 ​ 57,529 ​ 70,024 ​ 52,284 Subordinated debt ​ 23,105 ​ 23,055 ​ 15,243 ​ 15,142 ​ 15,043 Stockholder's equity ​ 446,058 ​ 320,772 ​ 283,423 ​ 258,347 ​ 238,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands, except per share data) ​ For the Year Ended June 30, Operating Data: 2023 2022 2021 2020 2019 Interest income ​ $ 176,416 ​ $ 116,867 ​ $ 109,475 ​ $ 107,052 ​ $ 97,482 Interest expense ​ 49,671 ​ 13,300 ​ 16,789 ​ 26,916 ​ 24,700 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ 126,745 ​ 103,567 ​ 92,686 ​ 80,136 ​ 72,782 Provision (benefit) for credit losses ​ 17,061 ​ 1,487 ​ (1,024) ​ 6,002 ​ 2,032 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income after provision (benefit) for credit losses ​ 109,684 ​ 102,080 ​ 93,710 ​ 74,134 ​ 70,750 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest income ​ 26,204 ​ 21,203 ​ 20,042 ​ 14,750 ​ 13,093 Noninterest expense ​ 86,425 ​ 63,379 ​ 54,047 ​ 54,452 ​ 47,892 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 49,463 ​ 59,904 ​ 59,705 ​ 34,432 ​ 35,951 Income taxes ​ 10,226 ​ 12,735 ​ 12,525 ​ 6,887 ​ 7,047 Net Income ​ $ 39,237 ​ $ 47,169 ​ $ 47,180 ​ $ 27,545 ​ $ 28,904 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per share available to common stockholders ​ $ 3.86 ​ $ 5.22 ​ $ 5.22 ​ $ 3.00 ​ $ 3.14 Diluted earnings per share available to common stockholders ​ $ 3.85 ​ $ 5.21 ​ $ 5.22 ​ $ 2.99 ​ $ 3.14 Dividends per share ​ $ 0.84 ​ $ 0.80 ​ $ 0.62 ​ $ 0.60 ​ $ 0.52 ​ 62 ​ ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, Other Data: 2023 2022 2021 2020 2019 Number of: Real Estate Loans 9,707 9,190 8,506 8,127 7,695 Deposit Accounts 144,219 107,038 100,407 96,813 91,086 Full service offices 63 49 47 46 45 Limited service offices 3 2 2 2 2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or for the year ended June 30, Key Operating Ratios: 2023 2022 2021 2020 2019 Return on assets (net income divided by average assets) ​ 1.03 % 1.59 % 1.79 % 1.18 % 1.38 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on average common equity (net income available to common stockholders divided by average common equity) ​ 10.39 15.44 17.69 11.11 13.13 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average equity to average assets ​ 9.91 10.30 10.14 10.60 10.49 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate spread (spread between weighted average rate on all interest-earning assets and all interest-bearing liabilities) ​ 3.21 3.61 3.61 3.50 3.56 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest margin (net interest income as a percentage of average interest-earning assets ​ 3.54 3.72 3.77 3.72 3.78 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest expense to average assets ​ 2.27 2.14 2.05 2.33 2.28 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average interest-earning assets to average interest-bearing liabilities ​ 123.57 124.20 122.59 117.63 116.89 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses to gross loans (1) ​ 1.32 1.22 1.49 1.16 1.07 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses to nonperforming loans (1) ​ 624.93 806.02 566.16 290.38 94.72 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net charge-offs (recoveries) to average outstanding loans during the period ​ 0.02 0.00 0.03 0.04 0.02 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratio of nonperforming assets to total assets (1) ​ 0.26 0.20 0.30 0.44 1.12 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividend payout ratio ​ 22.00 15.25 11.87 20.02 16.48 ​ (1) At end of period. 63 ​ ​ Table of Contents OVERVIEW Southern Missouri Bancorp, Inc., is a Missouri corporation originally organized for the principal purpose of becoming the holding company of Southern Bank.
“Financial Statements and Supplementary Data.” Results for past periods are not necessarily indicative of results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ At June 30, Financial Condition Data: 2024 2023 2022 2021 2020 Total assets ​ $ 4,604,316 ​ $ 4,360,211 ​ $ 3,214,782 ​ $ 2,700,530 ​ $ 2,542,157 Loans receivable, net ​ 3,797,287 ​ 3,571,078 ​ 2,686,198 ​ 2,200,244 ​ 2,141,929 Mortgage-backed securities ​ 304,861 ​ 270,252 ​ 170,585 ​ 138,341 ​ 126,912 Cash, interest-bearing deposits and investment securities ​ 184,437 ​ 202,523 ​ 156,369 ​ 193,250 ​ 104,831 Deposits ​ 3,952,457 ​ 3,725,540 ​ 2,815,075 ​ 2,330,803 ​ 2,184,847 Borrowings ​ 102,050 ​ 133,514 ​ 37,957 ​ 57,529 ​ 70,024 Subordinated debt ​ 23,156 ​ 23,105 ​ 23,055 ​ 15,243 ​ 15,142 Stockholder's equity ​ 488,748 ​ 446,058 ​ 320,772 ​ 283,423 ​ 258,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands, except per share data) ​ For the Year Ended June 30, Operating Data: 2024 2023 2022 2021 2020 Interest income ​ $ 248,375 ​ $ 176,416 ​ $ 116,867 ​ $ 109,475 ​ $ 107,052 Interest expense ​ 108,892 ​ 49,671 ​ 13,300 ​ 16,789 ​ 26,916 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ 139,483 ​ 126,745 ​ 103,567 ​ 92,686 ​ 80,136 Provision (benefit) for credit losses ​ 3,600 ​ 17,061 ​ 1,487 ​ (1,024) ​ 6,002 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income after provision (benefit) for credit losses ​ 135,883 ​ 109,684 ​ 102,080 ​ 93,710 ​ 74,134 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest income ​ 24,844 ​ 26,204 ​ 21,203 ​ 20,042 ​ 14,750 Noninterest expense ​ 97,617 ​ 86,425 ​ 63,379 ​ 54,047 ​ 54,452 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 63,110 ​ 49,463 ​ 59,904 ​ 59,705 ​ 34,432 Income taxes ​ 12,928 ​ 10,226 ​ 12,735 ​ 12,525 ​ 6,887 Net Income ​ $ 50,182 ​ $ 39,237 ​ $ 47,169 ​ $ 47,180 ​ $ 27,545 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per share available to common stockholders ​ $ 4.42 ​ $ 3.86 ​ $ 5.22 ​ $ 5.22 ​ $ 3.00 Diluted earnings per share available to common stockholders ​ $ 4.42 ​ $ 3.85 ​ $ 5.21 ​ $ 5.22 ​ $ 2.99 Dividends per share ​ $ 0.84 ​ $ 0.84 ​ $ 0.80 ​ $ 0.62 ​ $ 0.60 ​ 60 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, Other Data: 2024 2023 2022 2021 2020 Number of: Real Estate Loans 10,073 9,707 9,190 8,506 8,127 Deposit Accounts 151,374 144,219 107,038 100,407 96,813 Full service offices 63 63 49 47 46 Limited service offices 3 3 2 2 2 Loan production offices ​ 2 ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or for the year ended June 30, Key Operating Ratios: 2024 2023 2022 2021 2020 Return on assets (net income divided by average assets) ​ 1.10 % 1.03 % 1.59 % 1.79 % 1.18 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on average common equity (net income available to common stockholders divided by average common equity) ​ 10.74 10.39 15.44 17.69 11.11 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average equity to average assets ​ 10.25 9.91 10.30 10.14 10.60 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest rate spread (spread between weighted average rate on all interest-earning assets and all interest-bearing liabilities) ​ 2.71 3.21 3.61 3.61 3.50 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest margin (net interest income as a percentage of average interest-earning assets ​ 3.27 3.54 3.72 3.77 3.72 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest expense to average assets ​ 2.14 2.27 2.14 2.05 2.33 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average interest-earning assets to average interest-bearing liabilities ​ 121.96 123.57 124.20 122.59 117.63 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses to gross loans (1) ​ 1.36 1.32 1.22 1.49 1.16 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses to nonperforming loans (1) ​ 786.17 624.93 806.02 566.16 290.38 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net charge-offs (recoveries) to average outstanding loans during the period ​ 0.05 0.02 0.00 0.03 0.04 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratio of nonperforming assets to total assets (1) ​ 0.23 0.26 0.20 0.30 0.44 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividend payout ratio ​ 18.98 22.00 15.25 11.87 20.02 ​ (1) Total loans before allowance for credit losses and deferred loan fees at end of period. 61 Table of Contents OVERVIEW Southern Missouri Bancorp, Inc., is a Missouri corporation originally organized for the principal purpose of becoming the holding company of Southern Bank.
In addition, for the fiscal year ending June 30, 2024, we project that our fixed commitments will include (i) $1.0 million of operating and 72 ​ ​ Table of Contents finance lease and other fixed payments and (ii) $1.7 million of scheduled interest payments on subordinate notes.
In addition, for the fiscal year ending June 30, 2025, we project that our fixed commitments will include (i) $1.5 million of operating and finance lease and other fixed payments and (ii) $1.7 million of scheduled interest payments on subordinate notes.
Management anticipates that current funding sources will be adequate to meet foreseeable liquidity needs. For the fiscal year ended June 30, 2023, Southern Missouri increased deposits by $910.5 million, and increased FHLB advances by $95.6 million. During the prior fiscal year, Southern Missouri increased deposits by $484.3 million and decreased FHLB advances by $19.6 million.
Management anticipates that current funding sources will be adequate to meet foreseeable liquidity needs. For the fiscal year ended June 30, 2024, Southern Missouri increased deposits by $226.9 million, and decreased FHLB advances by $31.5 million. During the prior fiscal year, Southern Missouri increased deposits by $910.5 million, and increased FHLB advances by $95.6 million.
Nonaccrual loans are included with other noninterest-earning assets. 73 ​ ​ Table of Contents The table also presents information with respect to the difference between the weighted-average yield earned on interest-earning assets and the weighted-average rate paid on interest-bearing liabilities, or interest rate spread, which financial institutions have traditionally used as an indicator of profitability.
The table also presents information with respect to the difference between the weighted-average yield earned on interest-earning assets and the weighted-average rate paid on interest-bearing liabilities, or interest rate spread, which financial institutions have traditionally used as an indicator of profitability.
Based on our current capital allocation objectives, during fiscal 2024 we project expending approximately $6.0 million to $8.0 million of cash for capital investment in technology, property, plant and equipment.
Based on our current capital allocation objectives, during fiscal 2025 we project expending approximately $7.0 million to $10.0 million of cash for capital investment in technology, property, plant and equipment.
The Bank had also pledged $344.3 million of its agricultural real estate and agricultural operating and equipment loans to the Federal Reserve Bank of St. Louis’s discount window for available credit of approximately $276.6 million, as of June 30, 2023, none of which was advanced.
The Bank had also pledged $383.6 million of its agricultural real estate and agricultural operating and equipment loans to the Federal Reserve Bank of St. Louis’s discount window for available credit of approximately $323.4 million, as of June 30, 2024, none of which was advanced.
The Company recorded an income tax provision of $10.2 million for fiscal 2023, a decrease of $2.5 million, or 19.7%, as compared to the prior fiscal year, which was attributable to lower pre-tax income and a decrease in the effective tax rate to 20.7% for fiscal 2023, as compared to 21.3% for fiscal 2022. ​ COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED JUNE 30, 2022 AND 2021 Net Income.
The Company recorded an income tax provision of $10.2 million for fiscal 2023, a decrease of $2.5 million, or 19.7%, as compared to the prior fiscal year, which was attributable to lower pre-tax income and a decrease in the effective tax rate to 20.7% for fiscal 2023, as compared to 21.3% for fiscal 2022.
The Company originated $614.2 million in fixed rate commercial, commercial real estate, and multi-family loans during the year ended June 30, 2023, compared to $580.0 million during the prior fiscal year.
The Company originated $300.3 million in fixed rate commercial, commercial real estate, and multi-family loans during the year ended June 30, 2024, compared to $614.2 million during the prior fiscal year.
The Company also originated $157.0 million in adjustable rate commercial, commercial real estate, and multi-family loans during the fiscal year ended June 30, 2023, compared to $64.2 million during the prior fiscal year. At June 30, 2023, adjustable-rate home equity lines of credit totaled $64.6 million, compared to $45.4 million as of June 30, 2022.
The Company also originated $109.9 million in adjustable rate commercial, commercial real estate, and multi-family loans during the fiscal year ended June 30, 2024, compared to $157.0 million during the prior fiscal year. At June 30, 2024, adjustable-rate home equity lines of credit totaled $72.8 million, compared to $64.6 million as of June 30, 2023.
The Company experienced balance sheet growth in fiscal 2023, with total assets of $4.4 billion at June 30, 2023, reflecting an increase of $1.1 billion, or 35.6%, as compared to June 30, 2022. Asset growth was attributable in large part to the Citizens merger and was comprised mainly of increases in loans and available-for-sale (“AFS”) securities. Cash and equivalents.
The Company experienced balance sheet growth in fiscal 2024, with total assets of $4.6 billion at June 30, 2024, reflecting an increase of $244.1 million, or 5.6%, as compared to June 30, 2023. Asset growth was attributable mainly to increases in loans, available-for-sale (“AFS”) securities, and cash equivalents. Cash and equivalents.
To be considered adequately capitalized, the Bank must maintain tier 1 leverage capital levels of at least 4.0% of adjusted total assets and 6.0% of risk-weighted assets, total risk-based capital of 8.0% of risk-weighted assets, and tangible common equity capital of 4.5% of risk-weighted assets.
To be considered adequately capitalized under the FDIC Prompt Corrective Action (PCA) guidelines, the Bank must maintain tier 1 capital levels of at least 4.0% of adjusted total assets and 6.0% of risk-weighted assets, total risk-based capital of 8.0% of risk-weighted assets, and common equity tier 1 capital of 4.5% of risk-weighted assets.
The Company originated $38.4 million in adjustable rate residential loans during the fiscal year ended June 30, 2023, compared to $14.9 million during the prior fiscal year.
The Company originated $109.0 million in adjustable rate residential loans during the fiscal year ended June 30, 2024, compared to $38.4 million during the prior fiscal year.
At June 30, 2023, the fixed-rate, single-family residential loan portfolio totaled $586.4 million, with a weighted average maturity of 188 months, compared to $499.2 million with a weighted average maturity of 183 months at June 30, 2022.
At June 30, 2024, the fixed-rate, single-family residential loan portfolio totaled $622.1 million, with a weighted average maturity of 176 months, compared to $586.4 million, with a weighted average maturity of 188 months at June 30, 2023.
These yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the years indicated.
These yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the years indicated. Nonaccrual loans are included with other noninterest-earning assets.
Exclusive of the charges required as a result of the Citizens merger, the Company would have recorded a PCL of approximately $10.1 million in the current year, reflecting an $9.0 million increase in the Company’s required ACL on outstanding loan balances based on organic loan growth and changes in the current expected credit losses on the portfolio, and a $1.1 million increase in the required allowance for off-balance sheet credit exposure based on increased anticipated draws of available credit and changes in the mix of loan types anticipated to be funded. ​ Our ACL at June 30, 2023, totaled $47.8 million, representing 1.32% of gross loans and 634% of nonperforming loans, as compared to an ACL of $33.2 million, representing 1.22% of gross loans and 806% of nonperforming loans at June 30, 2022.
Exclusive of the charges required as a result of the Citizens merger, the Company would have recorded a PCL of approximately $10.1 million in the current year, reflecting an $9.0 million increase in the Company’s required ACL on outstanding loan balances based on organic loan growth and changes in the current expected credit losses on the portfolio, and a $1.1 million increase in the required allowance for off-balance sheet credit exposure based on increased anticipated draws of available credit and changes in the mix of loan types anticipated to be funded.
The Bank has purchased “key person” life insurance policies (BOLI) on employees at various times since fiscal 2003, and has acquired additional BOLI in connection with certain mergers. At June 30, 2023, the cash surrender value of all such policies was $71.7 million, up $23.0 million, or 47.2%, as compared to June 30, 2022, attributable primarily to the Citizens merger.
The Bank has purchased “key person” life insurance policies (BOLI) on employees at various times since fiscal 2003, and has acquired additional BOLI in connection with certain mergers. At June 30, 2024, the cash surrender value of all such policies was $73.6 million, up $1.9 million, or 2.7%, as compared to June 30, 2023. Intangible Assets.
At June 30, 2023, fixed rate loans with remaining maturities in excess of 10 years totaled $365.1 million, or 10.2%, of loans receivable, compared to $338.1 million, or 15.4%, of loans receivable, at June 30, 2022.
At June 30, 2024, fixed rate loans with remaining maturities in excess of 10 years totaled $369.8 million, or 9.7%, of loans receivable, compared to $365.1 million, or 10.2%, of loans receivable, at June 30, 2023.
At June 30, 2023, the Bank had outstanding commitments to extend credit of $912.0 million (including $552.1 million in unused lines of credit). Total commitments to originate fixed-rate loans with terms in excess of one year were $213.3 million at rates ranging from 3.95% to 11.0%, with a weighted-average rate of 6.07%.
At June 30, 2024, the Bank had outstanding commitments to extend credit of $898.6 million (including $689.6 million in unused lines of credit). Total commitments to originate fixed-rate loans with terms in excess of one year were $159.3 million at rates ranging from 4.95% to 9.0%, with a weighted-average rate of 7.04%.
At June 30, 2023, the Bank reported $1.1 billion of its single-family residential and commercial real estate loan portfolios as eligible collateral to the FHLB for available credit of approximately $675.7 million, of which $133.7 million was advanced, while $417,000 was encumbered in relation to residential real estate loans sold onto the secondary market through the FHLB, and $305,000 was utilized for the issuance of letters of credit to secure public unit deposits.
At June 30, 2024, the Bank reported $1.4 billion of its single-family residential and commercial real estate loan portfolios as eligible collateral to the FHLB for available credit of approximately $845.1 million, of which $102.1 million was advanced, while $461,000 was encumbered in relation to residential real estate loans sold onto the secondary market through the FHLB.
(5) Represents net interest income divided by average interest-earning assets. ​ 74 ​ ​ Table of Contents YIELDS EARNED AND RATES PAID The following table sets forth for the periods and at the date indicated, the weighted average yields earned on the Company’s assets, the weighted average interest rates paid on the Company’s liabilities, together with the net yield on interest-earning assets. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ For The Year Ended June 30, ​ 2023 2023 2022 2021 Weighted-average yield on loan portfolio 5.58 % 5.11 % 4.60 % 4.84 % Weighted-average yield on mortgage-backed securities 3.24 2.88 1.80 1.69 ​ Weighted-average yield on investment securities (1) 5.82 4.50 2.82 2.98 ​ Weighted-average yield on other interest-earning assets 3.02 4.50 0.34 0.23 ​ Weighted-average yield on all interest-earning assets 5.43 4.93 4.20 4.45 ​ Weighted-average rate paid on interest-bearing deposits 2.32 1.61 0.54 0.77 ​ Weighted-average rate paid on FHLB advances 3.95 3.37 1.83 2.07 ​ Weighted-average rate paid on subordinated debt 7.40 6.19 3.77 3.51 ​ Weighted-average rate paid on all interest-bearing liabilities 2.42 1.72 0.59 0.84 ​ Interest rate spread (spread between weighted average rate on all interest-earning assets and all interest- bearing liabilities) 3.01 3.21 3.61 3.61 ​ Net interest margin (net interest income as a percentage of average interest-earning assets) 3.48 3.54 3.72 3.77 ​ (1) Includes Federal Home Loan Bank and Federal Reserve Bank stock. 75 ​ ​ Table of Contents RATE/VOLUME ANALYSIS The following table sets forth the effects of changing rates and volumes on net interest income of the Company.
(5) Represents net interest income divided by average interest-earning assets. ​ 72 Table of Contents YIELDS EARNED AND RATES PAID The following table sets forth for the periods and at the date indicated, the weighted average yields earned on the Company’s assets, the weighted average interest rates paid on the Company’s liabilities, together with the net yield on interest-earning assets. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At June 30, ​ For The Year Ended June 30, ​ 2024 2024 2023 2022 Weighted-average yield on loan portfolio 6.15 % 5.98 % 5.11 % 4.60 % Weighted-average yield on mortgage-backed securities 4.99 4.80 2.88 1.80 ​ Weighted-average yield on investment securities (1) 4.15 4.16 4.50 2.82 ​ Weighted-average yield on other interest-earning assets 4.87 5.50 4.50 0.34 ​ Weighted-average yield on all interest-earning assets 6.00 5.82 4.93 4.20 ​ Weighted-average rate paid on interest-bearing deposits 3.34 3.05 1.61 0.54 ​ Weighted-average rate paid on FHLB advances 3.82 4.03 3.37 1.83 ​ Weighted-average rate paid on subordinated debt 7.44 7.53 6.19 3.77 ​ Weighted-average rate paid on all interest-bearing liabilities 3.38 3.11 1.72 0.59 ​ Interest rate spread (spread between weighted average rate on all interest-earning assets and all interest- bearing liabilities) 2.62 2.71 3.21 3.61 ​ Net interest margin (net interest income as a percentage of average interest-earning assets) 3.21 3.27 3.54 3.72 ​ (1) Includes Federal Home Loan Bank and Federal Reserve Bank stock.
The debt securities had been issued in June 2005 by Ozarks Legacy in connection with the sale of trust preferred securities, bear interest at a floating rate based on LIBOR, are now redeemable at par, and mature in 2035.
In connection with its October 2013 acquisition of Ozarks Legacy, the Company assumed $3.1 million in floating rate junior subordinated debt securities. The debt securities had been issued in June 2005 by Ozarks Legacy in connection with the sale of trust preferred securities, bear interest at a floating rate based on SOFR, are redeemable at par, and mature in 2035.
The Company recorded a provision for credit losses (PCL) of $1.5 million for fiscal 2022, as compared to a negative PCL of $1.0 million for the prior fiscal year.
The Company recorded a provision for credit losses (PCL) of $3.6 million for fiscal 2024, as compared to a PCL of $17.1 million for the prior fiscal year.
The Bank’s tier 1 capital represented 9.54% of total adjusted assets and 10.56% of total risk-weighted assets, while total risk-based capital was 11.77% of total risk-weighted assets, and tangible common equity capital was 10.56% of total risk-weighted assets.
The Bank’s tier 1 capital represented 9.79% of total adjusted assets and 11.43% of total risk-weighted assets, while total risk-based capital was 12.68% of total risk-weighted assets, and common equity tier 1 capital was 11.43% of total risk-weighted assets.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED JUNE 30, 2023 AND 2022 Net Income. The Company’s net income for the fiscal year ended June 30, 2023, was $39.2 million, a decrease of $7.9 million, or 16.8%, as compared to the prior fiscal year. Net Interest Income .
The Company’s net income for the fiscal year ended June 30, 2023, was $39.2 million, a decrease of $7.9 million, or 16.8%, as compared to the prior fiscal year. Net Interest Income . Net interest income for fiscal 2023 was $126.7 million, an increase of $23.2 million, or 22.4%, when compared to the prior fiscal year.
The notes had been issued in May 2021 by Fortune to a multi-lender group, bear interest through May 2026 at a fixed rate of 4.5%, and will bear interest thereafter at SOFR plus 3.77%. The notes will be redeemable at par beginning in May 2026, and mature in May 2031.
In connection with the Fortune acquisition, the Company assumed $7.5 million in fixed-to-floating rate subordinated notes. The notes had been issued in May 2021 by Fortune to a multi-lender group, bear interest through May 2026 at a fixed rate of 4.5%, and will bear interest thereafter at SOFR plus 3.77%.
As a percentage of average loans outstanding, the Company recorded net charge offs of less than one basis point during fiscal year 2022, as compared to net charge offs of 0.04% in the prior fiscal year.
As a percentage of average loans outstanding, the Company recorded net charge offs of 0.05% during fiscal year 2024, as compared to net charge offs of 0.02% in the prior fiscal year.
Noninterest income was $21.2 million for fiscal 2022, an increase of $1.2 million, or 5.8%, when compared to the prior fiscal year.
Noninterest income was $24.8 million for fiscal 2024, a decrease of $1.4 million, or 5.2%, when compared to the prior fiscal year.
At June 30, 2023, the Bank exceeded regulatory capital requirements with tier 1 leverage, total risk-based capital, and tangible common equity capital of $407.8 million, $454.7 million and $407.8 million, respectively.
At June 30, 2024, the Bank exceeded regulatory capital requirements with tier 1 capital, total risk-based capital, and common equity tier 1 capital of $447.2 million, $496.1 million and $447.2 million, respectively.
Interest expense on subordinated debt was $1.4 million for fiscal year 2023, an increase of $753,000, or 109.8%, when compared to the prior fiscal year. The increase was due primarily to a 242-basis point increase in the average rate paid on subordinated debt, combined with a $5.1 million, or 27.8%, increase in the average balance of subordinated debt.
Interest expense on subordinated debt was $1.7 million for fiscal year 2024, an increase of $303,000, or 21.1%, when compared to the prior fiscal year. The increase was due primarily to a 134-basis point increase in the average rate paid on subordinated debt.
The Company's allowance for credit losses is its estimate of credit losses expected in the loan portfolio, on unfunded lending commitments, or in its available-for-sale securities portfolio over the expected life of those assets.
The Company's allowance for credit losses (ACL) is its estimate of credit losses expected in the loan portfolio, on unfunded lending commitments, and held-to maturity securities over the expected life of those assets or in securities available-for-sale when credit loss is identified, which is limited to the difference in fair value and cost.
The Company’s net income for the fiscal year ended June 30, 2022, was $47.2 million, roughly unchanged as compared to the prior fiscal year. Net Interest Income . Net interest income for fiscal 2022 was $103.6 million, an increase of $10.9 million, or 11.7%, when compared to the prior fiscal year.
The Company’s net income for the fiscal year ended June 30, 2024, was $50.2 million, an increase of $10.9 million, or 27.9%, as compared to the prior fiscal year. Net Interest Income . Net interest income for fiscal 2024 was $139.5 million, an increase of $12.7 million, or 10.1%, when compared to the prior fiscal year.
The Company’s tier 1 capital represented 9.95% of total adjusted assets and 11.10% of total risk-weighted assets, while total risk-based capital was 12.52% of total risk-weighted assets, and tangible common equity capital was 10.70% of total risk-weighted assets.
The Company’s tier 1 capital represented 10.19% of total adjusted assets and 11.79% of total risk-weighted assets, while total risk-based capital was 13.23% of total risk-weighted assets, and common equity tier 1 capital was 11.39% of total risk-weighted assets.
Interest income for fiscal 2023 was $176.4 million, an increase of $59.5 million, or 51.0%, when compared to the prior fiscal year.
Interest income for fiscal 2024 was $248.4 million, an increase of $72.0 million, or 40.8%, when compared to the prior fiscal year.
The increase, as compared to the prior fiscal year, was attributable to a 13.1% increase in the average balance of interest-earning assets, partially offset by a decrease in the net interest margin, from 3.77% to 3.72%.
The increase was attributable to a 19.3% increase in the average balance of interest-earning assets, partially offset by a decrease in the net interest margin, from 3.54% to 3.27%.
The debt securities had been issued in 2005 by Peoples, in connection with the sale of trust preferred securities, bear interest at a floating rate based on LIBOR, are now redeemable at par, and mature in 2035.
The debt securities had been issued in 2005 by Peoples, in connection with the sale of trust preferred securities, bear interest at a floating rate based on SOFR, are redeemable at par, and mature in 2035. The carrying value of these debt securities was approximately $5.6 million at June 30, 2024, as compared to $5.5 million at June 30, 2023.
Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate), (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) changes in rate/volume (change in rate multiplied by change in volume). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ Years Ended June 30, ​ ​ 2023 Compared to 2022 ​ 2022 Compared to 2021 ​ ​ Increase (Decrease) Due to ​ Increase (Decrease) Due to ​ ​ ​ ​ ​ ​ Rate/ ​ ​ ​ ​ ​ ​ ​ Rate/ ​ ​ (dollars in thousands) Rate ​ Volume ​ Volume ​ Net Rate ​ Volume ​ Volume ​ Net Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans receivable (1) ​ $ 12,664 ​ $ 34,531 ​ $ 3,534 ​ $ 50,729 ​ $ (5,452) ​ $ 13,232 ​ $ (1,362) ​ $ 6,418 Mortgage-backed securities ​ 1,653 ​ 1,607 ​ 969 ​ 4,229 ​ 136 ​ 525 ​ 35 ​ 696 Investment securities (2) ​ 1,311 ​ 1,138 ​ 678 ​ 3,127 ​ (117) ​ 194 ​ (10) ​ 67 Other interest-earning deposits ​ 5,315 ​ (293) ​ (3,558) ​ 1,464 ​ 108 ​ 70 ​ 33 ​ 211 Total net change in income on interest-earning assets ​ 20,943 ​ 36,983 ​ 1,623 ​ 59,549 ​ (5,325) ​ 14,021 ​ (1,304) ​ 7,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ 22,447 ​ 3,435 ​ 6,688 ​ 32,570 ​ (4,011) ​ 986 ​ (42) ​ (3,067) Securities sold under agreements to repurchase ​ ​ — ​ ​ — ​ ​ 213 ​ ​ 213 ​ ​ — ​ ​ — ​ ​ — ​ ​ — FHLB advances ​ 670 ​ ​ 1,173 ​ 992 ​ 2,835 ​ (163) ​ ​ (466) ​ 55 ​ (574) Subordinated debt ​ 440 ​ 191 ​ 122 ​ 753 ​ 38 ​ 105 ​ 9 ​ 152 Total net change in expense on interest-bearing liabilities ​ 23,557 ​ 4,799 ​ 8,015 ​ 36,371 ​ (4,136) ​ 625 ​ 22 ​ (3,489) Net change in net interest income ​ $ (2,614) ​ $ 32,184 ​ $ (6,392) ​ $ 23,178 ​ $ (1,189) ​ $ 13,396 ​ $ (1,326) ​ $ 10,881 (1) Does not include interest on loans placed on nonaccrual status.
Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate), (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) changes in rate/volume (change in rate multiplied by change in volume). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ Years Ended June 30, ​ ​ 2024 Compared to 2023 ​ 2023 Compared to 2022 ​ ​ Increase (Decrease) Due to ​ Increase (Decrease) Due to ​ ​ ​ ​ ​ ​ Rate/ ​ ​ ​ ​ ​ ​ ​ Rate/ ​ ​ (dollars in thousands) Rate ​ Volume ​ Volume ​ Net Rate ​ Volume ​ Volume ​ Net Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans receivable (1) ​ $ 27,460 ​ $ 27,991 ​ $ 4,837 ​ $ 60,288 ​ $ 12,664 ​ $ 34,531 ​ $ 3,534 ​ $ 50,729 Mortgage-backed securities ​ 4,633 ​ 1,820 ​ 1,211 ​ 7,664 ​ 1,653 ​ 1,607 ​ 969 ​ 4,229 Investment securities (2) ​ (399) ​ 2,110 ​ (158) ​ 1,553 ​ 1,311 ​ 1,138 ​ 678 ​ 3,127 Other interest-earning deposits ​ 426 ​ 1,656 ​ 373 ​ 2,455 ​ 5,315 ​ (293) ​ (3,558) ​ 1,464 Total net change in income on interest-earning assets ​ 32,120 ​ 33,577 ​ 6,263 ​ 71,960 ​ 20,943 ​ 36,983 ​ 1,623 ​ 59,549 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ 34,703 ​ 11,149 ​ 11,914 ​ 57,766 ​ 22,447 ​ 3,435 ​ 6,688 ​ 32,570 Securities sold under agreements to repurchase ​ ​ — ​ ​ — ​ ​ (213) ​ ​ (213) ​ ​ — ​ ​ — ​ ​ 213 ​ ​ 213 FHLB advances ​ 708 ​ ​ 550 ​ 108 ​ 1,366 ​ 670 ​ ​ 1,173 ​ 992 ​ 2,835 Subordinated debt ​ 312 ​ (8) ​ (1) ​ 303 ​ 440 ​ 191 ​ 122 ​ 753 Total net change in expense on interest-bearing liabilities ​ 35,723 ​ 11,691 ​ 11,808 ​ 59,222 ​ 23,557 ​ 4,799 ​ 8,015 ​ 36,371 Net change in net interest income ​ $ (3,603) ​ $ 21,886 ​ $ (5,545) ​ $ 12,738 ​ $ (2,614) ​ $ 32,184 ​ $ (6,392) ​ $ 23,178 (1) Does not include interest on loans placed on nonaccrual status.
In the current period, the PCL was attributable to the $1.9 million charge required to fund the ACL for purchased credit deteriorated (PCD) loans acquired in the Fortune acquisition, along with a charge of $120,000 to fund to the allowance for off-balance sheet credit exposures acquired in the Fortune acquisition.
In the prior period, the larger PCL was attributable in part to the $5.2 million charge required to fund the ACL for non-purchased credit deteriorated loans acquired in the Citizens merger, along with a $1.8 million charge to fund the allowance for off-balance sheet credit exposures acquired in the Citizens merger.
The decrease was due to a $22.5 million decrease in the average balance of these advances, combined with a 24 basis point decrease in the average rate paid on advances.
The increase was due primarily to a $16.3 million, or 15.2%, increase in the average balance of these advances, combined with a 66-basis point increase in the average rate paid on advances.
At June 30, 2023, the Company exceeded regulatory capital requirements with tier 1 leverage, total risk-based capital, and tangible common equity capital of $426.6 million, $481.2 million and $411.2 million, respectively.
At June 30, 2024, the Company exceeded regulatory capital requirements with tier 1 capital, total risk-based capital, and common equity tier 1 capital of $467.0 million, $524.0 million and $451.5 million, respectively.
Finally, the ability of many borrowers to service their debt may decrease in the event of an interest rate increase. ​ 77 ​ ​ Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NPV as Percentage of ​ ​ Net Portfolio ​ PV of Assets Change in Rates Value Change % Change NPV Ratio Change ​ ​ (Dollars in thousands) ​ (%) ​ (basis points) ​ +300 bp ​ $ 259,599 ​ $ (114,765) (31) ​ 6.66 ​ (226) ​ +200 bp ​ 296,514 ​ (77,850) (21) ​ 7.43 ​ (149) ​ +100 bp ​ 334,226 ​ (40,138) (11) ​ 8.17 ​ (75) ​ 0 bp ​ 374,364 ​ — — ​ 8.92 ​ — ​ ‑100 bp ​ 426,243 ​ 51,879 14 ​ 9.91 ​ 99 ​ ‑200 bp ​ 480,345 ​ 105,981 28 ​ 10.95 ​ 203 ​ ‑300 bp ​ 518,672 ​ 144,307 39 ​ 11.64 ​ 272 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NPV as Percentage of ​ ​ Net Portfolio ​ PV of Assets Change in Rates Value Change % Change NPV Ratio Change ​ ​ (Dollars in thousands) ​ (%) ​ (basis points) ​ +300 bp ​ $ 189,624 ​ $ (129,048) (40) ​ 6.50 ​ (345) ​ +200 bp ​ 231,603 ​ (87,069) (27) ​ 7.70 ​ (225) ​ +100 bp ​ 286,614 ​ (32,058) (10) ​ 9.20 ​ (75) ​ 0 bp ​ 318,672 ​ — — ​ 9.95 ​ — ​ ‑100 bp ​ 350,857 ​ 32,185 10 ​ 10.66 ​ 71 ​ ‑200 bp ​ 442,479 ​ 123,807 39 ​ 13.06 ​ 311 ​ ‑300 bp ​ 523,486 ​ 204,814 64 ​ 15.09 ​ 514 ​ ​ The Company’s growth strategy has included the origination of fixed-rate loans, as discussed under Item 7a “Quantitative and Qualitative Disclosures About Market Risk” above.
Finally, the ability of many borrowers to service their adjustable-rate debt may decrease in the event of an interest rate increase. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NPV as Percentage of ​ ​ Net Portfolio ​ PV of Assets Change in Rates Value Change % Change NPV Ratio Change ​ ​ (Dollars in thousands) ​ (%) ​ (basis points) ​ +300 bp ​ $ 355,100 ​ $ (117,925) (25) ​ 8.49 ​ (211) ​ +200 bp ​ 398,386 ​ (74,640) (16) ​ 9.32 ​ (129) ​ +100 bp ​ 438,278 ​ (34,748) (7) ​ 10.03 ​ (57) ​ 0 bp ​ 473,026 ​ — — ​ 10.60 ​ — ​ ‑100 bp ​ 502,260 ​ 29,235 6 ​ 11.03 ​ 43 ​ ‑200 bp ​ 517,334 ​ 44,308 9 ​ 11.16 ​ 55 ​ ‑300 bp ​ 512,487 ​ 39,461 8 ​ 10.89 ​ 28 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NPV as Percentage of ​ ​ Net Portfolio ​ PV of Assets Change in Rates Value Change % Change NPV Ratio Change ​ ​ (Dollars in thousands) ​ (%) ​ (basis points) ​ +300 bp ​ $ 259,599 ​ $ (114,765) (31) ​ 6.66 ​ (226) ​ +200 bp ​ 296,514 ​ (77,850) (21) ​ 7.43 ​ (149) ​ +100 bp ​ 334,226 ​ (40,138) (11) ​ 8.17 ​ (75) ​ 0 bp ​ 374,364 ​ — — ​ 8.92 ​ — ​ ‑100 bp ​ 426,243 ​ 51,879 14 ​ 9.91 ​ 99 ​ ‑200 bp ​ 480,345 ​ 105,981 28 ​ 10.95 ​ 203 ​ ‑300 bp ​ 518,672 ​ 144,307 39 ​ 11.64 ​ 272 ​ ​ The Company’s growth strategy has included origination of fixed-rate loans, as discussed under “Quantitative and Qualitative Disclosures About Market Risk,” above.
Cash and cash equivalents were $55.2 million at June 30, 2023, a decrease of $36.3 million, or 39.7%, as compared to June 30, 2022. The decrease was primarily a result of organic loan growth outpacing organic deposit growth during the period, partially offset by the net effects of the Citizens merger.
Cash and cash equivalents were $61.4 million at June 30, 2024, an increase of $6.2 million, or 11.2%, as compared to June 30, 2023. The increase was primarily a result of organic deposit growth during the period, partially offset by the funding of loan growth.
The increase in FHLB advances resulted from organic loan growth outpacing organic deposit growth, partially offset by the net effects of the Citizens merger, and was inclusive of $62.1 million in term advances and $33.5 million in overnight borrowings, as compared to no overnight borrowings at June 30, 2022. Subordinated Debt.
The decrease in FHLB advances resulted from deposit growth and earnings retention outpacing loan growth. FHLB advances at June 30, 2024, were comprised of $102.1 million in term advances and no overnight borrowings, as compared to $62.1 million in term advances and $33.5 million overnight borrowings at June 30, 2023. Subordinated Debt.
Interest income on loans receivable for fiscal 2022 was $111.5 million, an increase of $6.4 million, or 6.1%, when compared to the prior fiscal year. The increase was due to a $254.8 million increase in the average balance of loans receivable, partially offset by a 24 basis point decrease in the average yield earned on loans receivable.
Interest income on loans receivable for fiscal 2024 was $222.5 million, an increase of $60.3 million, or 37.2%, when compared to the prior fiscal year. The increase was due to a $543.5 million, or 17.1%, increase in the average balance of loans receivable, combined with an 87-basis point increase in the average yield earned on loans receivable.
The decrease in the average rate paid on deposits was attributable primarily to lower market interest rates over the course of fiscal 2022, as compared to the prior fiscal year. Interest expense on FHLB advances was $792,000 million for fiscal 2022, a decrease of $574,000, or 42.0%, when compared to the prior fiscal year.
The increase in the average rate paid on deposits was attributable primarily to higher market interest rates and a more competitive deposit environment over the course of fiscal 2024. Interest expense on FHLB advances was $5.0 million for fiscal 2024, an increase of $1.4 million, or 37.7%, when compared to the prior fiscal year.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant. provide qualitative and quantitative information necessary to understand the estimation uncertainty and the impact the critical accounting estimate has had or is reasonably likely to have on financial condition or results of operations to the extent the information is material and reasonably available. this information should include why each critical accounting estimate is subject to uncertainty and, to the extent the information is material and reasonably available, how much each estimate and/or assumption has changed over a relevant period, and sensitivity of the reported amount to the methods, assumptions and estimates underlying its calculation. ​ 64 ​ ​ Table of Contents The Company has established various accounting policies, which govern the application of accounting principles generally accepted in the United States of America in the preparation of our financial statements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant, and provide qualitative and quantitative information necessary to understand the estimation uncertainty and the impact the critical accounting estimate has had or is reasonably likely to have on financial condition or results of operations to the extent the information is material and reasonably available.
Inclusive of the merger, the deposit portfolio saw fiscal year-to-date increases in certificates of deposit, interest-bearing transaction accounts, money market deposit accounts, and noninterest bearing transaction accounts. Public unit balances totaled $578.5 million at June 30, 2023, an increase of $105.3 million compared to June 30, 2022.
The deposit portfolio saw increases in certificates of deposit and savings accounts, which were partially offset by decreases in money market deposit accounts, interest-bearing transaction accounts, and noninterest bearing transaction accounts. Public unit balances totaled $594.6 million at June 30, 2024, an increase of $16.1 million compared to June 30, 2023.
Management cannot accurately predict future interest rates or their effect on the Company’s NPV and net interest income in the future. Certain shortcomings are inherent in the method of analysis presented in the computation of NPV.
Further, the computations do not contemplate any actions the Bank may undertake in response to changes in interest rates. Management cannot accurately predict future interest rates or their effect on the Bank’s NPV in the future. Certain shortcomings are inherent in the method of analysis presented in the computation of NPV.
Our significant accounting policies are described in Item 8 of this Form 10-K under the Notes to the Consolidated Financial Statements. Certain accounting policies involve significant judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities; management considers such accounting policies to be critical accounting policies.
Certain accounting policies involve significant judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities; management considers such accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances.
Interest expense on deposits was $11.8 million for fiscal 2022, a decrease of $3.1 million, or 20.6%, when compared to the prior fiscal year. The decrease was due to a 23 basis point decrease in the average rate paid on interest-bearing deposits, partially offset by the $253.5 million increase in the average balance of those deposits.
Interest expense on deposits was $102.2 million for fiscal 2024, an increase of $57.8 million, or 130.1%, as compared to the prior fiscal year. The increase was due to a 144-basis point increase in the average rate paid on interest-bearing deposits, combined with the $592.1 million, or 21.5%, increase in the average balance of those deposits.
Interest income for fiscal 2022 was $116.9 million, an increase of $7.4 million, or 6.8%, when compared to the prior fiscal year.
Interest expense was $108.9 million for fiscal 2024, an increase of $59.2 million, or 119.2%, when compared to the prior fiscal year.
Goodwill from these acquisitions is not being amortized, but is tested for impairment at least annually. Deposits. Deposits were $3.7 billion at June 30, 2023, an increase of $910.5 million, or 32.3%, as compared to June 30, 2022. An increase of $851.1 million in deposit balances, net of fair value adjustments, was attributable to the Citizens merger.
Goodwill from these acquisitions is not being amortized, but is tested for impairment at least annually. Deposits. Deposits were $4.0 billion at June 30, 2024, an increase of $226.9 million, or 6.1%, as compared to June 30, 2023.
Net interest income for fiscal 2023 was $126.7 million, an increase of $23.2 million, or 22.4%, when compared to the prior fiscal year. The increase, as compared to the prior fiscal year, was attributable to a 28.5% increase in the average balance of interest-earning assets, partially offset by a decrease in the net interest margin, from 3.72% to 3.54%.
The increase, as compared to the prior fiscal year, was attributable to a 28.5% increase in the average balance of interest-earning assets, partially offset by a decrease in the net interest margin, from 3.72% to 3.54%. Average earning asset balance growth was due primarily to loan growth and increases in investment securities, attributable in part to the Citizens merger.
The increase was primarily attributable to the Citizens merger, and reflected increased holdings of CMOs, asset-backed securities, corporate obligations, and residential MBS. Loans. Loans, net of the ACL, were $3.6 billion at June 30, 2023, an increase of $884.9 million, or 32.9%, as compared to June 30, 2022.
Total deposits were $4.0 billion at June 30, 2024, an increase of $226.9 million, or 6.1% as compared to June 30, 2023. Investments. AFS securities were $427.9 million at June 30, 2024, an increase of $10.3 million, or 2.5%, as compared to June 30, 2023. The increase was primarily attributable to increased holdings of residential MBS and CMOs. Loans.
Management believes that most maturing interest-bearing liabilities will be retained or replaced by new interest-bearing liabilities. Also, at June 30, 2023, the Bank had $33.5 million in overnight advances from the FHLB, $13.0 million in term FHLB advances maturing within one year, and $87.0 million in FHLB advances with a maturity date in excess of one year.
At June 30, 2024, the Bank had $1.1 billion in CDs maturing within one year and $2.6 billion in non-maturity deposits, as compared to $690.5 million in CDs maturing within one year and $2.7 billion in non-maturity deposits as of June 30, 2023. Management believes that most maturing interest-bearing liabilities will be retained or replaced by new interest-bearing liabilities.
The increase was attributable primarily to $98.3 million in equity issued to Citizens shareholders, as well as to earnings retained after cash dividends paid, partially offset by a $4.4 million increase in accumulated other comprehensive loss as the market value of the Company’s investments declined due to increases in market interest rates.
The increase was attributable primarily to earnings retained after cash dividends paid, in combination with a $4.5 million reduction in accumulated other comprehensive losses (“AOCL”) primarily as a result of the market value of the Company’s investments appreciating during the fiscal year due to the decrease in market interest rates.
Computations of prospective effects of hypothetical changes in interest rates and are based on an internally generated model using the actual maturity and repricing schedules for Southern Bank’s loans and deposits, adjusted by management’s assumptions for prepayment rates and deposit runoff.
Computations of prospective effects of hypothetical interest rate changes are based on an internally generated model using actual maturity and repricing schedules for the Bank’s loans and deposits, and are based on numerous assumptions, including relative levels of market interest rates, loan repayments and deposit run-offs, and should not be relied upon as indicative of actual results.
The decrease was due to a 25 basis point decrease in the average rate paid on interest-bearing liabilities, from 0.84% in fiscal 2021, to 0.59% in fiscal 2022, partially offset by an increase of $234.0 million, or 11.7%, in the average balance of interest-bearing liabilities.
The increase was due to a 140-basis point increase in the average rate paid on interest-bearing liabilities, to 3.11% in fiscal 2024, from 1.72% in fiscal 2023, combined with an increase of $604.1 million, or 20.9%, in the average balance of interest-bearing liabilities.
Exclusive of the charges required as a result of the Fortune acquisition, the Company would have recorded a negative PCL of approximately $533,000 in the current year, reflecting a decrease in the Company’s required ACL on outstanding loan balances, partially offset by an increase in the required allowance for off-balance sheet credit exposure.
Exclusive of the charges required as a result of the Citizens merger, the Company would have recorded a PCL of approximately $10.1 million for fiscal 2023, reflecting a $9.0 million increase in the Company’s required ACL on outstanding loans based on organic loan growth changes in the current expected credit losses on the portfolio, and a $1.1 million increase in the required allowance for off-balance sheet credit exposure.

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