Southern Missouri Bancorp: 3 Key Takeaways for Long-Term Investors

During its earnings call for the first quarter of fiscal year 2027, which took place on October 22, 2026, Southern Missouri Bancorp (NASDAQ:SMBC) reported diluted earnings per share of $1.73. For investors in the banking sector, the organization highlighted steady growth in deposits and robust agricultural crop yields, both of which are crucial for maintaining a healthy net interest margin—the difference between the income generated from loans and the costs associated with deposits.

Management identified three key points that stood out during the earnings presentation.

Firstly, increased crop yields are positively impacting agricultural borrowers and the overall quality of loans. Agriculture accounts for 12% of Southern Missouri Bancorp's total loan portfolio, meaning the financial health of farmers significantly influences the bank's credit risk. Favorable weather conditions during harvest and crop yields that surpassed initial expectations have enabled farming clients to manage rising costs for fuel and fertilizers more effectively.

“Lenders are reporting average to above-average yields on many of our crops, particularly on irrigated land. Current or contracted prices for corn, soybeans, rice, and cotton are generally exceeding the assumptions we made during spring underwriting,” stated Greg Steffens, the bank's Chairman and Chief Executive Officer.

The second point emphasized by management was the bank’s shift to local time deposits, which are proving to be a more cost-effective funding option compared to brokered markets. To support loan growth without putting pressure on profit margins, Southern Missouri Bancorp has moved away from wholesale funding and increased its reliance on local certificates of deposit (CDs). In the most recent quarter, core local CDs increased by $95 million, effectively replacing $35 million in more expensive brokered deposits.

“Given the significant rise in brokered CD rates, local CDs have become a more economical source of funding. Our strategy remains focused on financing loan growth through core customer deposits and enhancing our full banking relationships,” said Matthew Funke, the bank's President and Chief Administrative Officer.

The third takeaway from the call was the bank's strong capital position, which provides flexibility for pursuing potential acquisitions in the regional banking sector. With a tangible book value per share standing at $48.52, Southern Missouri Bancorp's balance sheet is robust enough to support targeted corporate acquisitions, all while continuing its share repurchase program. Management is currently assessing acquisition opportunities within Missouri to broaden its geographical footprint from Kansas City to St. Louis.

“Mergers and acquisitions discussions have become somewhat more active, and our strong capital position allows us the flexibility to seek out the right strategic partners while also returning capital to our shareholders through share buybacks,” added Steffens.

Looking ahead, the bank anticipates that seasonal agricultural paydowns and increased public deposit inflows will lead to shifts in its balance sheet over the next two quarters. The repricing of fixed-rate loans at current market rates is expected to provide structural support for profitability, as the leadership team remains committed to maintaining pricing discipline and enhancing customer retention.