SOUTHERN MISSOURI BANCORP, INC.
For the period ended Dec 31, 2025. Filed Feb 6, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2025 · Filed Feb 6, 2026
SMBC$70.46-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-07.
0001104659-25-108374
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-06.
0001104659-26-011588
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 82 previous paragraphs and 92 current paragraphs.
43 unchanged; 35 reworded; 10 added; 2 removed; 2 previous and 4 current paragraphs rearranged.
Tables are not compared: 36 previous and 45 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Cash equivalents and time deposits were a combined $134.3 million at December 31, 2025, a decrease of $58.8 million, or 30.4%, as compared to June 30, 2025. The decrease was primarily the result of loan growth that outpaced deposit generation during the period. AFS securities were $445.0 million at December 31, 2025, down $15.9 million, or 3.4%, as compared to June 30, 2025, reflecting normal principal amortization as well as early redemptions from callable securities, which accelerated portfolio runoff during the period.
Current report
Deposits were $4.3 billion at December 31, 2025, an increase of $27.0 million, or 0.63%, as compared to June 30, 2025. The deposit portfolio saw year-to-date increases in nonmaturity deposit accounts primarily from seasonal ag and public unit deposit inflows, which was partially offset by a decrease in certificates of deposit. Nonmaturity deposit growth was
Current report
General. Net income for the three-month period ended December 31, 2025, was $18.2 million, an increase of $3.5 million or 23.9%, as compared to the same period of the prior fiscal year. The increase was primarily attributable to an increase in net interest income, partially offset by increases in PCL and noninterest expense, and a decrease in noninterest income.
Current report
For the three-month period ended December 31, 2025, fully-diluted net income per share available to common stockholders was $1.62, up $0.32, or 24.6%, as compared to the same quarter a year ago. Our annualized return on average assets for the three-month period ended December 31, 2025, was 1.42%, as compared to 1.20% for the same period of the prior fiscal year. Our annualized return on average common stockholders’ equity for the three-month period ended December 31, 2025, was 12.8%, as compared to 11.4% in the same period of the prior fiscal year.
Current report
Net Interest Income. Net interest income for the three-month period ended December 31, 2025, was $42.9 million, an increase of $4.7 million, or 12.4%, as compared to the same period of the prior fiscal year. The increase was attributable to a 5.0% increase in the average balance of interest-earning assets and a 23-basis point increase in the net interest margin, from 3.34% to 3.57%, as the cost of interest-bearing liabilities decreased by 33 basis points, partially offset by a five-basis point decrease in the yield earned on interest earning assets.
Current report
Noninterest Expense. Noninterest expense for the three-month period ended December 31, 2025, was $25.3 million, an increase of $394,000, or 1.6%, as compared to the same period of the prior fiscal year. The increase was primarily attributable to higher data processing, occupancy and equipment, and advertising expenses. Data processing costs increased due to higher transaction volumes and increased software licensing costs. Occupancy and equipment expense growth was primarily driven by elevated maintenance and repair costs, additional depreciation associated with a new branch and remodel projects, and higher real estate taxes. Advertising expense increased due to increased marketing activity and charitable contributions. These increases were partially offset by lower legal and professional fees, reduced intangible amortization as certain merger-related intangibles became fully amortized, and lower compensation and benefits expense, reflecting refinements in the application of ASC 310-20, under which a greater portion of loan origination costs, including related compensation, is deferred and recognized as a reduction of interest income over the life of the loan.
Current report
20.0%, compared to 23.7% for the quarter ended December 31, 2024. The higher effective tax rate in the prior-year quarter primarily reflected adjustments to tax accruals related to completed merger and acquisition activity.
Current report
Results of Operations – Comparison of the six-month periods ended December 31, 2025, and 2024
Current report
For the six-month period ended December 31, 2025, fully-diluted net income per share available to common stockholders was $3.00, up $0.60, or 25.0%, as compared to the same quarter a year ago. Annualized return on average assets for the six-month period ended December 31, 2025, was 1.33%, as compared to 1.14% for the same period of the prior fiscal year. Annualized return on average common stockholders’ equity for the six-month period ended December 31, 2025, was 12.0%, as compared to 10.7% in the same period of the prior fiscal year.
Current report
Noninterest Expense. Noninterest expense for the six-month period ended December 31, 2025, was $50.3 million, a decrease of $397,000, or 0.8%, as compared to the same period of the prior fiscal year. The decrease was attributable primarily to lower compensation and benefits, legal and professional fees, intangible amortization, and
Removed paragraphs (2)
Previous report
Cash equivalents and time deposits were $124.4 million at September 30, 2025, a decrease of $68.7 million, or 35.6%, as compared to June 30, 2025. This amount was used primarily to fund loan growth. Available for sale securities were $453.9 million at September 30, 2025, down $7.0 million, or 1.5%, as compared to June 30, 2025, as the Company was less active in reinvesting principal payments received.
Previous report
For the three-month period ended September 30, 2025, fully-diluted net income per share available to common stockholders was $1.38, up $0.28, or 25.5%, as compared to the same quarter a year ago. Our annualized return on average assets for the three-month period ended September, 2025, was 1.24%, as compared to 1.07% for the same period of the prior fiscal year. Our return on average common stockholders’ equity for the three-month period ended September 30, 2025, was 11.3%, as compared to 9.9% in the same period of the prior fiscal year.
Reworded paragraphs (35)
Previous wording
Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes. The following discussion reviews the Company’s condensed consolidated financial condition at September 30, 2025, and results of operations for the three-month periods ended September 30, 2025, and 2024.
Current wording
Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes. The following discussion reviews the Company’s condensed consolidated financial condition at December 31, 2025, and results of operations for the three- and six-month periods ended December 31, 2025, and 2024.
Previous wording
Our results of operations may also be affected significantly by general and local economic and competitive conditions, particularly those with respect to changes in market interest rates, government policies, and actions of regulatory authorities.
Current wording
Results of operations may also be affected significantly by general and local economic and competitive conditions, particularly those with respect to changes in market interest rates, government policies, and actions of regulatory authorities.
Previous wording
During the first three months of fiscal 2026, total assets increased by $16.7 million. The increase was primarily attributable to an increase in net loans receivable, partially offset by decreases in cash and cash equivalents, and AFS securities. Loans, net of the ACL, increased $90.7 million; cash equivalents decreased by $68.7 million; and AFS securities decreased $7.0 million. Liabilities increased $1.2 million, primarily attributable to an increase in securities sold under agreements to repurchase of $5.0 million, partially offset by decreases in accounts payable and other liabilities of $2.1 million, FHLB advances of $2.0 million, and deposits of $878,000. Equity increased $15.5 million, attributable primarily to earnings retained after cash dividends paid, in combination with a $3.0 million reduction in
Current wording
During the first six months of fiscal 2026, total assets increased by $74.8 million. The increase was primarily attributable to an increase in net loans receivable, partially offset by decreases in cash and cash equivalents, and AFS securities. Loans, net of the ACL, increased $123.1 million; cash equivalents decreased by $58.8 million; and AFS securities decreased $15.9 million. Liabilities increased $52.1 million, primarily attributable to increases in deposits of $27.0 million, accounts payable and other liabilities of $22.2 million, and securities sold under agreements to repurchase of $5.0 million, partially offset by a decrease in FHLB advances of $2.0 million. Equity increased $22.7 million, attributable primarily to earnings retained after cash dividends paid, in combination with a $2.7 million reduction in
Previous wording
accumulated other comprehensive losses (AOCL) due to the market value of the Company’s investments appreciating as a result of the decrease in market interest rates, partially offset by the purchase of treasury stock totaling $446,000. For more information, see “Comparison of Financial Condition at September 30, 2025, and June 30, 2025.”
Current wording
accumulated other comprehensive losses (AOCL) due to the market value of the Company’s investments appreciating as a result of the decrease in market interest rates, partially offset by the purchase of treasury stock totaling $8.5 million. For more information, see “Comparison of Financial Condition at December 31, 2025, and June 30, 2025.”
Previous wording
Net income for the first three months of fiscal 2025 was $15.7 million, an increase of $3.2 million, or 25.6% as compared to the same period of the prior fiscal year. The increase was attributable to increases in net interest income and decreases in noninterest expense, partially offset by increases in PCL and income taxes, and decreases in noninterest income. For the three-month period ended September 30, 2025, fully-diluted net income per share available to common stockholders was $1.38, up $0.28, or 25.5%, as compared to the same quarter a year ago. Our annualized return on average assets for the three-month period ended September, 2025, was 1.24%, as compared to 1.07% for the same period of the prior fiscal year. Our return on average common stockholders’ equity for the three-month period ended September 30, 2025, was 11.3%, as compared to 9.9% in the same period of the prior fiscal year. For the first three months of fiscal 2025, as compared to the same period of the prior fiscal year, net interest income increased $5.8 million, or 15.7%, and noninterest expense decreased $790,000, or 3.1%; these items were partially offset by PCL, which increased $2.3 million, or 108.4%, noninterest income, which decreased $601,000, or 8.4%, and provision for income taxes, which increased $413,000, or 12.2%. For more information see “Results of Operations – Comparison of the three- month periods ended September 30, 2025, and 2024”.
Current wording
Net income for the first six months of fiscal 2026 was $33.8 million, an increase of $6.7 million, or 24.7% as compared to the same period of the prior fiscal year. The increase was due primarily to an increase in net interest income and a decrease in noninterest expense, partially offset by increases in PCL and provision for income taxes, and a decrease in noninterest income. For the six-month period ended December 31, 2025, fully-diluted net income per share available to common stockholders was $3.00, up $0.60, or 25.0%, as compared to the same period a year ago. Our annualized return on average assets for the six-month period ended December 31, 2025, was 1.33%, as compared to 1.14% for the same period of the prior fiscal year. Our annualized return on average common stockholders’ equity for the six-month period ended December 31, 2025, was 12.0%, as compared to 10.7% in the same period of the prior fiscal year. For the first six months of fiscal 2026, as compared to the same period of the prior fiscal year, net interest income increased $10.5 million, or 14.0%, and noninterest expense decreased $397,000, or 0.8%. These items were partially offset by an increase in PCL of $3.1 million, or 100.0%, an increase in provision for income taxes of $411,000, or 5.2%, and a decrease in noninterest income of $690,000, or 4.9%. For more information see “Results of Operations – Comparison of the six-month periods ended December 31, 2025, and 2024”.
Previous wording
Interest rates during the first three months of fiscal 2026 remained relatively stable and moved lower at the shorter end and mid-point of the curve due to Federal Open Market Committee (FOMC) approved a federal funds rate cut of 25 basis points in September 2025. Market expectations are for further reductions in the federal funds rate over the next year, while there are concerns that economic conditions could keep inflation somewhat elevated and above the FOMC target range, which has led to some steepening of the yield curve. At September 30, 2025, the yield curve had a 56 basis point positive slope between the two-year and ten-year treasury rates.
Current wording
Interest rates during the first six months of fiscal 2026 remained relatively stable and moved lower at the shorter end and mid-point of the curve as employment slowed somewhat and inflation remained relatively stable but above target. Market expectations are for further reductions in the federal funds rate over the next year, while there are concerns that economic conditions could keep inflation somewhat elevated and above the FOMC target range, which has led to some steepening of the yield curve. At December 31, 2025, the yield curve had a 71 basis point positive slope between the two-year and ten-year treasury rates.
Previous wording
As compared to the first three months of the prior fiscal year, our average yield on earning assets increased by one basis point, primarily attributable to increased yields on loans receivable, as loans renewed and new loans were originated at higher market rates, partially offset by decreased yields on AFS securities, and a higher percentage of earning assets in securities and cash. The cost of interest-bearing liabilities decreased by 28 basis points due primarily to lower market rates. Due to average earning assets repricing slightly higher, and interest-bearing liabilities repricing lower, the net interest spread increased 29 basis points to 3.02% and the net interest margin increased by 23 basis points to 3.57% during the first three-months of fiscal 2026, as compared to the same period in fiscal 2025. The increase in the net interest margin was due primarily to the increase in net interest spread, partially offset by a lower composition of higher yielding assets, primarily loans, and a higher balance of lower yielding cash and cash equivalents, compared to the prior fiscal year period. In addition, net interest income benefitted from an 8.1% increase in average earnings assets, compared to the prior fiscal year period. The combination of a higher percentage of variable rate deposits compared to the prior fiscal year and lower rates, easing the pressure on interest expense, and loans repricing to higher market rates, has allowed the net interest spread and net interest margin to expand in the fiscal 2026 period.
Current wording
As compared to the first six months of the prior fiscal year, our average yield on earning assets decreased by three basis points, primarily attributable to decreased yields on AFS securities, and a higher percentage of earning assets in securities and cash, partially offset by increased yields on loans receivable, as loans renewed and new loans were originated at higher market rates. The cost of interest-bearing liabilities decreased by 30 basis points due primarily to lower market rates. Driven by average interest-bearing liabilities repricing lower, the net interest spread increased 27 basis points from 2.76% to 3.03% and the net interest margin increased by 23 basis points from 3.34% to 3.57% during the first six months of fiscal 2026, as compared to the same period in fiscal 2025. In addition, net interest income benefitted from a 6.6% increase in average earnings assets, compared to the prior fiscal year period. The combination of a higher percentage of variable rate deposits compared to the prior fiscal year and lower short term rates, easing the pressure on interest expense, and loans repricing to higher market rates, has allowed the net interest spread and net interest margin to expand in the fiscal 2026 period.
Previous wording
The Company’s noninterest income for the three-month period ended September 30, 2025, was $6.6 million, a decrease of $601,000, or 8.4%, as compared to the same period of the prior fiscal year. In the current period, the decrease was primarily attributable to decreases in loan fees resulting from a refinement of fee recognition in our application of ASC 310-20, Receivables - Nonrefundable Fees and Other Costs, and lower realized gains on sales of loans, partially offset by increases in deposit account charges and related fees, wealth management fees, bank card interchange income, and earnings on bank owned life insurance.
Current wording
The Company’s noninterest income for the six-month period ended December 31, 2025, was $13.3 million, a decrease of $690,000, or 4.9%, as compared to the same period of the prior fiscal year. The decrease was primarily attributable to decreases in loan fees resulting from a refinement of fee recognition in our application of ASC 310-20, “Receivables -
Previous wording
Noninterest expense for the three-month period ended September 30, 2025, was $25.1 million, a decrease of $790,000, or 3.1%, as compared to the same period of the prior fiscal year. In the current quarter, this decrease in noninterest expense was attributable primarily to lower compensation and benefits, legal and professional fees, and telecommunication expenses. The decrease in compensation and benefits expense was primarily driven by a refinement of expense recognition in our applications of ASC 310-20. Legal and professional fees decreased from the prior-year period, which had included $840,000 of costs related to a performance improvement project designed to enhance the Bank’s operations and revenue performance. By comparison, in the first quarter of fiscal 2026, legal and professional fees included $572,000 of consulting costs associated with the negotiation of a new contract with a key vendor. This decrease was partially offset by higher data processing expenses, deposit insurance premiums, and various minor increases across other expense categories.
Current wording
Noninterest expense for the six-month period ended December 31, 2025, was $50.3 million, a decrease of $397,000, or 0.8%, as compared to the same period of the prior fiscal year. The decrease was attributable primarily to lower compensation and benefits, legal and professional fees, intangible amortization, and telecommunication expenses. The decrease in compensation and benefits expense was primarily driven by a refinement of expense recognition in our applications of ASC 310-20. Legal and professional fees decreased from the prior-year period, which included $840,000 of costs related to a performance improvement project designed to enhance the Bank’s operations and revenue performance, while in the first six months of fiscal 2026, legal and professional fees included $572,000 of consulting costs associated with the negotiation of a new contract with a key vendor. These decreases were partially offset by higher data processing expenses, occupancy expenses, advertising, deposit insurance premiums, and various minor increases across other expense categories.
Previous wording
The Company experienced balance sheet growth in the first three months of fiscal 2026, with total assets of $5.0 billion at September 30, 2025, reflecting an increase of $16.7 million, or 0.3%, as compared to June 30, 2025. Growth primarily resulted from an increase in net loans receivable, which was partially offset by a decrease in cash equivalents and time deposits and available for sale securities.
Current wording
The Company experienced balance sheet growth in the first six months of fiscal 2026, with total assets of $5.1 billion at December 31, 2025, reflecting an increase of $74.8 million, or 1.5%, as compared to June 30, 2025. Growth primarily reflected an increase in net loans receivable, partially offset by decreases in cash equivalents and time deposits and AFS securities.
Previous wording
Loans, net of the allowance for credit losses (ACL), were $4.1 billion at September 30, 2025, increasing by $90.7 million, or 2.2%, as compared to June 30, 2025. The Company noted growth in both the real estate and non-real estate portfolios. Real estate loan growth was primarily driven by increases in non-owner occupied commercial real estate, 1-4 residential real estate, and multi-family real estate loan balances. This was somewhat offset by a decrease in construction and land development loans, due to projects completed and transitioned to permanent financing, generally provided by the Company. In the non-real estate portfolio, growth was driven by seasonal agricultural production loan draws and modest growth in commercial and industrial loan balances.
Current wording
Loans, net of the ACL, were $4.2 billion at December 31, 2025, increasing by $123.1 million, or 3.0%, as compared to June 30, 2025. The Company noted growth primarily in 1-4 family residential real estate, multi-family real estate, commercial and industrial, both non-owner and owner occupied commercial real estate, and agriculture real estate loan balances. This was somewhat offset by decreases in construction and land development loans, agricultural production loans, and consumer loans.
Previous wording
Loans anticipated to fund in the next 90 days totaled $194.5 million at September 30, 2025, as compared to $224.1 million at June 30, 2025, and $168.0 million at September 30, 2024.
Current wording
Loans anticipated to fund in the next 90 days totaled $159.1 million at December 31, 2025, as compared to $224.1 million at June 30, 2025, and $172.5 million at December 31, 2024.
Previous wording
The Bank’s concentration in non-owner occupied commercial real estate loans is estimated at 295.7% of Tier 1 capital and ACL at September 30, 2025, as compared to 301.9% as of June 30, 2025, with these loans representing 39.3% of total loans at September 30, 2025. Multi-family residential real estate, hospitality (hotels/restaurants), care facilities, strip centers, retail stand-alone, and storage units are the most common collateral types within the non-owner occupied commercial real estate loan portfolio. The multi-family residential real estate loan portfolio commonly includes loans collateralized by properties currently in the low-income housing tax credit (LIHTC) program or that have exited the program. The hospitality and retail stand-alone segments include primarily franchised businesses; care facilities consisting mainly of skilled nursing and assisted living centers; and strip centers, which can be defined as non-mall shopping centers with a variety of tenants. Non-owner occupied office property types included 34 loans totaling $20.5 million, or 0.49% of total loans at September 30, 2025, none of which were adversely classified, and are generally comprised of smaller spaces with diverse tenants. The Company continues to monitor its commercial real estate concentration and its individual segments closely.
Current wording
The Bank’s concentration in non-owner occupied commercial real estate, as defined for regulatory purposes, is estimated at 289.4% of Tier 1 capital and ACL at December 31, 2025, as compared to 301.9% as of June 30, 2025, with these loans representing 39.4% of gross loans at December 31, 2025. Multi-family residential real estate, hospitality (hotels/restaurants), care facilities, strip centers, retail stand-alone, and storage units are the most common collateral types within the non-owner occupied commercial real estate loan portfolio. The multi-family residential real estate loan portfolio commonly includes loans collateralized by properties currently in the low-income housing tax credit (LIHTC) program or that have exited the program. The hospitality and retail stand-alone segments include primarily franchised businesses; care facilities consisting mainly of skilled nursing and assisted living centers; and strip centers, which can be defined as non-mall shopping centers with a variety of tenants. Non-owner-occupied office property types included 35 loans totaling $21.1 million, or 0.50% of gross loans at December 31, 2025, none of which were adversely classified, and are generally comprised of smaller spaces with diverse tenants. The Company continues to monitor its commercial real estate concentration and the individual segments closely.
Previous wording
Deposits were $4.3 billion at September 30, 2025, a decrease of $878,000, as compared to June 30, 2025. The deposit portfolio declined primarily in certificates of deposit and NOW accounts, as the Bank was less aggressive on deposit pricing given its excess funding position. This was partially offset by increases in savings and money market deposit accounts. The decrease in certificates of deposit was largely driven by a $33.2 million reduction in brokered certificates compared to June 30, 2025. Brokered deposits totaled $220.5 million at September 30, 2025, a decrease of $14.6 million from June 30, 2025. Short-term brokered money market deposit accounts were utilized to partially replace the outflow of brokered certificates of deposit. Public unit balances totaled $537.4 million at September 30, 2025, a decrease of $13.5 million compared to June 30, 2025, due to expected seasonal decreases in these accounts. Compared to the same quarter a year ago, nonmaturity accounts increased $150.3 million, or 6.0%, and non-brokered certificates of deposits increased $150.7 million, or 12.0%. The average loan-to-deposit ratio for the first quarter of fiscal 2026 was 96.3%, as compared to 94.5% for the quarter ended June 30, 2025, and 98.5% for the same quarter a year ago.
Current wording
primarily driven by savings, NOW, and non-interest bearing accounts. The decrease in certificates of deposit was largely driven by a $54.1 million reduction in brokered certificates compared to June 30, 2025. Brokered deposits totaled $182.2 million at December 31, 2025, a decrease of $52.9 million as compared to June 30, 2025. Public unit balances totaled $584.1 million at December 31, 2025, an increase of $33.3 million compared to June 30, 2025. The average loan-to-deposit ratio for the second quarter of fiscal 2026 was 96.7%, as compared to 94.5% for the quarter ended June 30, 2025, and 96.4% for the same period of the prior fiscal year.
Previous wording
FHLB advances were $102.0 million at September 30, 2025, a decrease of $2.0 million, or 2.0%, from June 30, 2025, due to maturing advances which were not renewed. For the quarter ended September 30, 2025, the Company continued to have no FHLB overnight borrowings at the end of the period.
Current wording
FHLB advances were $102.0 million at December 31, 2025, a decrease of $2.0 million, or 1.9%, as compared to June 30, 2025, due to maturing advances which were not renewed. For the quarter ended December 31, 2025, the Company continued to have no FHLB overnight borrowings at the end of the period.
Previous wording
The Company’s stockholders’ equity was $560.2 million at September 30, 2025, an increase of $15.5 million, or 2.9%, as compared to June 30, 2025. The increase was attributable primarily to earnings retained after cash dividends paid, in combination with a decrease AOCL as the market value of the Company’s investments appreciated due to decreases in market interest rates. The AOCL decreased from $11.4 million at June 30, 2025, to $8.4 million at September 30, 2025. The Company does not hold any securities classified as held-to-maturity. The increase in stockholders’ equity was partially offset by $447,000 utilized for repurchases of 8,145 shares of the Company’s common stock during the first fiscal quarter of fiscal 2026 at an average price of $54.84 per share.
Current wording
The Company’s stockholders’ equity was $567.4 million at December 31, 2025, an increase of $22.7 million, or 4.2%, as compared to June 30, 2025. The increase was attributable primarily to earnings retained after cash dividends paid, in combination with a $2.7 million reduction in accumulated other comprehensive losses (AOCL) as the market value of the Company’s investments appreciated due to the decrease in market interest rates. The AOCL totaled $8.6 million at December 31, 2025 compared to $11.4 million at June 30, 2025. The Company does not hold any securities classified as held-to-maturity. The increase in stockholders’ equity was partially offset by $8.5 million utilized for the repurchase of 156,000 shares of the Company’s common stock year-to-date at an average price of $54.34 per share.
Previous wording
Average Balance Sheet, Interest, and Average Yields and Rates for the Three-Month Periods Ended
Current wording
Average Balance Sheet, Interest, and Average Yields and Rates for the Three- and Six-Month Periods Ended
Previous wording
The table below presents certain information regarding our financial condition and net interest income for the three-month periods ended September 30, 2025, and 2024. The table presents the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. Yields on tax-exempt obligations were not computed on a tax equivalent basis.
Current wording
The table below presents certain information regarding our financial condition and net interest income for the three- and six-month periods ended December 31, 2025, and 2024. The table presents the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. Yields on tax-exempt obligations were not computed on a tax equivalent basis.
Previous wording
The following table sets forth the effects of changing rates and volumes on the Company’s net interest income for the three-month periods ended September 30, 2025, compared to the three-month periods ended September 30, 2024. Information is provided with respect to (i) effects on interest income and expense attributable to changes in volume (changes in volume multiplied by the prior rate), (ii) effects on interest income and expense attributable to change in rate (changes in rate multiplied by prior volume), and (iii) changes in rate/volume (change in rate multiplied by change in volume).
Current wording
The following table sets forth the effects of changing rates and volumes on the Company’s net interest income for the three- and six-month periods ended December 31, 2025, compared to the three- and six-month periods ended December 31, 2024. Information is provided with respect to (i) effects on interest income and expense attributable to changes in volume (changes in volume multiplied by the prior rate), (ii) effects on interest income and expense attributable to change in rate (changes in rate multiplied by prior volume), and (iii) changes in rate/volume (change in rate multiplied by change in volume).
Previous wording
Loan discount accretion and liability premium amortization related to the November 2018 acquisition of First Commercial Bank, the May 2020 acquisition of Central Federal Savings & Loan Association, the February 2022 merger of FortuneBank, and the January 2023 acquisition of Citizens Bank & Trust resulted in $876,000 in net interest income
Current wording
Loan discount accretion and liability premium amortization related to the November 2018 acquisition of First Commercial Bank, the May 2020 acquisition of Central Federal Savings & Loan Association, the February 2022 merger of FortuneBank, and the January 2023 acquisition of Citizens Bank & Trust resulted in $653,000 in net interest income for the three-month period ended December 31, 2025, as compared to $987,000 in net interest income for the same period a year ago. Combined, this component of net interest income contributed five basis points to net interest margin in the three-month period ended December 31, 2025, compared to nine basis points during the same period of the prior fiscal year.
Previous wording
General. Net income for the three-month period ended September 30, 2025, was $15.7 million, an increase of $3.2 million or 25.6%, as compared to the same period of the prior fiscal year. The increase was attributable to increases in net interest income and decreases in noninterest expense, partially offset by increases in PCL and income taxes, and decreases in noninterest income.
Current wording
General. Net income for the six-month period ended December 31, 2025, was $33.8 million, an increase of $6.7 million or 24.7%, as compared to the same period of the prior fiscal year. The increase was primarily attributable to an increase in net interest income and a decrease in noninterest expense, partially offset by increases in PCL and provision for income taxes, and a decrease in noninterest income.
Previous wording
Net Interest Income. Net interest income for the three-month period ended September 30, 2025, was $42.4 million, an increase of $5.8 million, or 15.7%, as compared to the same period of the prior fiscal year. The increase was attributable to an 8.1% increase in the average balance of interest-earning assets in the current three-month period, as compared to the same period a year ago, and a 23 basis point increase in net interest margin, from 3.34% to 3.57%, as the cost of interest-bearing liabilities decreased by 28 basis points, and the yield earned on interest earning assets increased by one basis point.
Current wording
Net Interest Income. Net interest income for the six-month period ended December 31, 2025, was $85.3 million, an increase of $10.5 million, or 14.0%, as compared to the same period of the prior fiscal year. The increase was attributable to a 6.6% increase in the average balance of interest-earning assets in the current six-month period, as compared to the same period a year ago, and a 23 basis point increase in net interest margin, from 3.34% to 3.57%, as the cost of interest-bearing liabilities decreased by 30 basis points, and the yield earned on interest earning assets decreased by three basis points.
Previous wording
for the three-month period ended September 30, 2025, as compared to $959,000 in net interest income for the same period a year ago. Combined, this component of net interest income contributed seven basis points to net interest margin in the three-month period ended September 30, 2025, as compared to a nine-basis point contribution for the same period of the prior fiscal year.
Current wording
Loan discount accretion and liability premium amortization related to the November 2018 acquisition of First Commercial Bank, the May 2020 acquisition of Central Federal Savings & Loan Association, the February 2022 merger of FortuneBank, and the January 2023 acquisition of Citizens Bank & Trust resulted in $1.5 million of net interest income for the six-month period ended December 31, 2025, as compared to $2.0 million of net interest income for the same period a year ago. Combined, this component of net interest income contributed six basis points to net interest margin in the six-month period ended December 31, 2025, as compared to a nine-basis point contribution for the same period of the prior fiscal year.
Previous wording
Provision for Credit Losses. The Company recorded a PCL of $4.5 million in the three-month period ended September 30, 2025, as compared to a PCL of $2.2 million in the same period of the prior fiscal year. The current period PCL was the result of a $4.1 million provision attributable to the ACL for loan balances outstanding and a $359,000 provision attributable to the allowance for off-balance sheet credit exposures. The factors considered when estimating a required ACL and PCL for loan balances outstanding is detailed below under “Allowance for Credit Loss Activity” and the PCL for off-balance sheet credit exposure was primarily attributable to an increase in unfunded balances and an increase in required reserves for pooled loans.
Current wording
Provision for Credit Losses. The Company recorded a PCL of $6.2 million in the six-month period ended December 31, 2025, as compared to a PCL of $3.1 million in the same period of the prior fiscal year. The current period PCL was the result of a $5.8 million provision attributable to the ACL for loan balances outstanding and a $359,000 provision attributable to the allowance for off-balance sheet credit exposures. The factors considered when estimating a required ACL and PCL for loan balances outstanding is detailed below under “Allowance for Credit Loss Activity” and the PCL for off-balance sheet credit exposure was primarily attributable to an increase in unfunded balances and an increase in required reserves for pooled loans.
Previous wording
Noninterest Income. Noninterest income for the three-month period ended September 30, 2025, was $6.6 million, a decrease of $601,000, or 8.4%, as compared to the same period of the prior fiscal year. The decrease was primarily attributable to lower other loan fees and a decrease in net realized gains on sale of loans driven by a lower volume of SBA production. Other loan fees declined, reflecting a refinement of our fee recognition under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs, with a greater portion now recognized in interest income over the life of the loan. These decreases were partially offset by an increase in deposit account charges and related fees, wealth management fees, and other non-interest income. Other non-interest income increased primarily due to the recognition of modest losses on the disposal of fixed assets in the year ago period, attributable to various equipment disposals, with no similar activity in the current quarter.
Current wording
Noninterest Income. Noninterest income for the six-month period ended December 31, 2025, was $13.3 million, a decrease of $690,000, or 4.9%, as compared to the same period of the prior fiscal year. The decrease was primarily attributable to lower other loan fees and a decrease in net realized gains on sales of loans driven by a lower volume of SBA production. Other loan fees declined, reflecting a refinement of our fee recognition under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs, with a greater portion now recognized in interest income over the life of the loan. These decreases were partially offset by increases in deposit account charges and related fees, bank card interchange income, wealth management fees, insurance brokerage income, earnings on bank owned life insurance, and other noninterest income. Other noninterest income increased primarily due to the recognition of modest losses on the disposal of fixed assets in the year ago period, attributable to various equipment disposals, with no similar activity in the current period.
Previous wording
Noninterest Expense. Noninterest expense for the three-month period ended September 30, 2025, was $25.1 million, a decrease of $790,000, or 3.1%, as compared to the same period of the prior fiscal year. In the current quarter, this decrease in noninterest expense was attributable primarily to lower compensation and benefits, legal and professional fees, and telecommunication expenses. The decrease in compensation and benefits expense was primarily driven by the aforementioned refinement in the application of ASC 310-20, under which a larger portion of loan origination costs, including related compensation, is being deferred and recognized as a reduction of interest income over the life of the loan. Legal and professional fees decreased from the prior-year period, which had included $840,000 of costs related to a performance improvement project designed to enhance the Bank’s operations and revenue performance. By comparison, the first quarter of fiscal 2026, legal and professional fees included $572,000 of consulting costs associated with the negotiation of a new contract with a key vendor. This net decrease was partially offset by higher data processing costs, deposit insurance premiums, and various minor increases across other expense categories.
Current wording
telecommunication expenses. The decrease in compensation and benefits expense was primarily driven by the aforementioned refinement in the application of ASC 310-20, under which a larger portion of loan origination costs, including related compensation, are being deferred and recognized as a reduction of interest income over the life of the loan. Legal and professional fees decreased from the prior-year period, which included $840,000 in costs related to a performance improvement project designed to enhance the Bank’s operations and revenue performance. By comparison, the first six months of fiscal 2026, legal and professional fees included $572,000 of consulting costs associated with the negotiation of a new contract with a key vendor. These decreases were partially offset by higher data processing costs, occupancy expenses, advertising, deposit insurance premiums, and various minor increases across other expense categories.
Previous wording
Income Taxes. The income tax provision for the three-month period ended September 30, 2025, was $3.8 million, an increase of 12.2%, as compared to the same period of the prior fiscal year, primarily due to the increase in net income before income taxes. The effective tax rate for the quarter was 19.5%, compared to 21.3% in the same quarter of the prior fiscal year. The lower rate was due to the absence of merger-related tax accrual adjustments that elevated the same period of the prior fiscal year’s rate, combined with the impact of lower state tax rates and a revised apportionment methodology, in the current period. The current quarter also benefited from the recognition of tax credits under the proportional amortization method in accordance with ASC 2023-02.
Current wording
Income Taxes. The income tax provision for the six-month period ended December 31, 2025, was $8.3 million, an increase of $411,000, or 5.2%, as compared to the same period of the prior fiscal year, primarily due to the increase in net income before income taxes. The effective tax rate for the fiscal year to date was 19.8%, compared to 22.6% in the same period of the prior fiscal year. The lower rate was due to the absence of merger-related tax accrual adjustments that elevated the same period of the prior fiscal year’s rate, combined with the impact of lower state tax rates and a revised apportionment methodology, in the current period. The current period also benefited from the recognition of tax credits under the proportional amortization method in accordance with ASC 2023-02.
Previous wording
Although the Company maintains its ACL at a level that it considers sufficient to provide for losses, there can be no assurance that future losses will not exceed internal estimates. In addition, the amount of the ACL is subject to review by
Current wording
Although the Company maintains its ACL at a level that it considers sufficient to provide for losses, there can be no assurance that future losses will not exceed internal estimates. In addition, the amount of the ACL is subject to review by regulatory agencies, which can order the Company to record additional allowances. The required ACL has been estimated based upon the guidelines in ASC Topic 326, Financial Instruments – Credit Losses.
Previous wording
The following table summarizes changes in the ACL over the three-month periods ended September 30, 2025, and 2024:
Current wording
The following table summarizes changes in the ACL over the three- and six-month periods ended December 31, 2025, and 2024:
Previous wording
required reserves for individually evaluated loans. As a percentage of average loans outstanding, the Company recorded net charge offs of 0.36% (annualized) during the current quarter, as compared to 0.01% for the same quarter of the prior fiscal year. In the three-month period ended September 30, 2025, net charge offs were $3.7 million, which was primarily attributable to a $2.8 million charge-off associated with a special-purpose CRE relationship, which was reserved for in the prior fiscal year. At September 30, 2025, the Company had accrued within other liabilities an allowance for off-balance sheet credit exposures of $4.3 million, as compared to $3.9 million at June 30, 2025. The increase reflects the component of the PCL attributable to off-balance sheet credit exposures. 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 $359,000 increase in the estimated allowance for off-balance sheet credit exposures was primarily the result of an increase in unfunded balances and an increase in required reserves for pooled loans.
Current wording
The ACL at December 31, 2025, totaled $54.5 million, representing 1.29% of gross loans and 184% of nonperforming loans, as compared to an ACL of $51.6 million, representing 1.26% of gross loans and 224% of nonperforming loans at June 30, 2025. The Company has estimated its expected credit losses as of December 31, 2025, under ASC 326-20, and management believes the ACL as of that date was adequate based on that estimate. There remains, however, significant economic uncertainty despite recent reductions in short-term interest rates as labor market conditions soften, while inflation remains above target. The increase in the ACL was primarily attributable to management’s assessment of reserve adequacy amid an evolving economic environment, additions to individually reviewed loans, slightly higher reserves required for pooled loans, and loan growth. This was partially offset by net charge-offs. As a percentage of average loans outstanding, the Company recorded net recoveries of 0.07% (annualized) during the current quarter, as compared to net charge-offs of 0.02% for the same period of the prior fiscal year. In the three-month period ended December 31, 2025, net recoveries were $704,000, which was primarily attributable to a $2.0 million recovery associated with one of the loan modifications to borrowers experiencing financial difficulty, which was reserved for in the fourth quarter of fiscal 2025 and charged off in the first quarter of fiscal 2026. At December 31, 2025, the Company had accrued within other liabilities an allowance for off-balance sheet credit exposures of $4.3 million, as compared to $3.9 million at June 30, 2025. The increase reflects the component of the PCL attributable to off-balance sheet credit exposures. 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 $359,000 increase in the estimated allowance for off-balance sheet credit exposures was primarily the result of an increase in unfunded balances and an increase in required reserves for pooled loans.
Previous wording
At September 30, 2025, the Company had loans of $55.1 million, or 1.31% of total loans, adversely classified ($54.5 million classified “substandard”; $603,000 classified “doubtful”), as compared to loans of $49.6 million, or 1.21% of total loans, adversely classified ($49.6 million classified “substandard”; none classified “doubtful”) at June 30, 2025, and $40.4 million, or 1.02% of total loans, adversely classified ($40.4 million classified “substandard”; none classified “doubtful”), at September 30, 2024. Classified loans were generally comprised of loans secured by commercial and residential real estate, and other commercial purpose collateral. All loans were classified due to concerns as to the borrowers’ ability to continue to generate sufficient cash flows to service the debt. Of our classified loans, the Company had ceased recognition of interest on loans with a carrying value of $22.5 million at September 30, 2025. The Company’s total past due loans increased from $25.6 million at June 30, 2025, to $29.3 million at September 30, 2025. Total past due loans were $13.4 million at September 30, 2024. See Note 4 – “Loans and Allowance for Credit Losses” in the Notes to Consolidated Financial Statements. For additional information on the increase in substandard loans, see “Non-Performing Assets” within Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Current wording
At December 31, 2025, the Company had loans of $58.8 million, or 1.39% of total loans, adversely classified ($58.2 million classified “substandard”; $599,000 classified “doubtful”), as compared to loans of $49.6 million, or 1.21% of total loans, adversely classified ($49.6 million classified “substandard”; none classified “doubtful”) at June 30, 2025, and $39.6 million, or 0.98% of total loans, adversely classified ($39.6 million classified “substandard”; none classified “doubtful”), at December 31, 2024. Classified loans were generally comprised of loans secured by commercial and residential real estate, and other commercial purpose collateral. All loans were classified due to concerns as to the borrowers’ ability to continue to generate sufficient cash flows to service the debt. Of our classified loans, the Company had ceased recognition of interest on loans with a carrying value of $25.9 million at December 31, 2025. The Company’s total past due loans increased from $25.6 million at June 30, 2025, to $32.0 million at December 31, 2025. The increase in classified loans and past dues was primarily attributable to two borrower relationships: one consisting of multiple loans collateralized by commercial real estate and equipment; and the other, consisting of two related agricultural production loans secured by crops and equipment, partially offset by improvement in previously nonperforming loans and net charge-offs. Both relationships noted were placed on nonaccrual status during the second quarter of fiscal 2026. See Note 4 – “Loans and Allowance for Credit Losses” in the Notes to Consolidated Financial Statements. For additional information on the increase in substandard loans, see “Non-Performing Assets” within Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Previous wording
At September 30, 2025, modifications to borrowers experiencing financial difficulty totaled $28.7 million, of which $1.6 million was considered nonperforming and included in the nonaccrual loan total above. The remaining $27.1 million in modified loans have complied with the modified terms for a reasonable period of time and are therefore considered by the Company to be accrual status loans. On the basis of guidance under ASU No. 2022-02, in general, $25.5 million of these loans were subject to classification as modifications due to interest rate reductions, $1.7 million due to term extensions, and $1.5 million due to payment delays, given to borrowers experiencing financial difficulty at September 30, 2025. At June 30, 2025, these modifications totaled $28.2 million, of which $1.6 million was considered
Current wording
At December 31, 2025, modifications to borrowers experiencing financial difficulty totaled $32.8 million, of which $793,000 was considered nonperforming and included in the nonaccrual loan total above. The remaining $32.0 million in modified loans have complied with the modified terms for a reasonable period of time and are therefore considered by the Company to be accrual status loans. On the basis of guidance under ASU No. 2022-02, in general, $25.3 million of these loans were subject to classification as modifications due to interest rate reductions, $1.6 million due to term extensions, $4.4 million due to payment delays, and $1.5 million due to principal forgiveness given to borrowers experiencing financial difficulty at December 31, 2025. At June 30, 2025, these modifications totaled $28.2 million, of
Previous wording
nonperforming and included in the nonaccrual loan total above. The remaining $26.6 million in modifications at June 30, 2025, had complied with the modified terms for a reasonable period of time and were therefore considered by the Company to be accrual status loans.
Current wording
which $1.6 million was considered nonperforming and included in the nonaccrual loan total above. The remaining $26.6 million in modifications at June 30, 2025, had complied with the modified terms for a reasonable period of time and were therefore considered by the Company to be accrual status loans.
Previous wording
At September 30, 2025, nonperforming assets totaled $ 27.1 million, as compared to $23.7 million at June 30, 2025, and $12.1 million at September 30, 2024. The increase in nonperforming assets, compared to June 30, 2025, primarily reflects an increase in nonperforming loans (NPLs). The increase in NPLs compared to June 30, 2025, was primarily attributable to one commercial relationship consisting of two loans collateralized by commercial real estate and equipment, as well as three unrelated loans secured by one-to-four family residential properties, all of which were placed on nonaccrual status during the first quarter of fiscal 2026.
Current wording
At December 31, 2025, nonperforming assets totaled $31.2 million, as compared to $23.7 million at June 30, 2025, and $10.8 million at December 31, 2024. The increase in nonperforming assets, compared to June 30, 2025, primarily reflects an increase in NPLs. The increase in NPLs compared to June 30, 2025, was due to the previously mentioned increase in classified loans and past dues.
Previous wording
At September 30, 2025, the Company had outstanding commitments and approvals to extend credit of approximately $984.7 million (including $623.2 million in unused lines of credit) in mortgage and non-mortgage loans. These commitments and approvals are expected to be funded through existing cash balances, cash flow from normal operations and, if needed, advances from the FHLB or the Federal Reserve’s discount window. At September 30, 2025, the Bank had pledged $1.6 billion of its single-family residential, home equity, and commercial real estate loan portfolios to the FHLB for available credit of approximately $899.7 million, of which $102.1 million was advanced, while $621,000 was encumbered by residential real estate loans sold onto the secondary market through the FHLB, and none was utilized as collateral for the issuance of letters of credit to secure public unit deposits. In total, FHLB borrowings are generally limited to 45% of Bank assets, or approximately $2.2 billion, subject to available collateral. Also, at September 30, 2025, the Bank had pledged a total of $419.7 million in loans secured by farmland and agricultural production loans to the Federal Reserve, providing access to $368.1 million in primary credit borrowings from the Federal Reserve’s discount window, none of which was advanced at September 30, 2025. In addition, the Bank has other assets available to pledge to the Federal Reserve, such as commercial loans, which could provide additional collateral for additional borrowings. Management believes its liquid resources will be sufficient to meet the Company’s liquidity needs.
Current wording
At December 31, 2025, the Company had outstanding commitments and approvals to extend credit of approximately $981.2 million (including $654.1 million in unused lines of credit) in mortgage and non-mortgage loans. These commitments and approvals are expected to be funded through existing cash balances, cash flow from normal operations and, if needed, advances from the FHLB or the Federal Reserve’s discount window. At December 31, 2025, the Bank had pledged $1.4 billion of its single-family residential, home equity, and commercial real estate loan portfolios to the FHLB for available credit of approximately $854.7 million, of which $102.1 million was advanced, while $626,000 was encumbered by residential real estate loans sold onto the secondary market through the FHLB, and none was utilized as collateral for the issuance of letters of credit to secure public unit deposits. In total, FHLB borrowings are generally limited to 45% of Bank assets, or approximately $2.2 billion, subject to available collateral. Also, at December 31, 2025, the Bank had pledged a total of $410.6 million in loans secured by farmland and agricultural production loans to the Federal Reserve, providing access to $360.0 million in primary credit borrowings from the Federal Reserve’s discount window, none of which was advanced at December 31, 2025. In addition, the Bank has other assets available to pledge to the Federal Reserve, such as commercial loans, which could provide additional collateral for additional borrowings. Management believes its liquid resources will be sufficient to meet the Company’s liquidity needs.
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Current report — wording carried from elsewhere
Nonrefundable Fees and Other Costs”, and lower realized gains on sales of loans, partially offset by increases in deposit account charges and related fees, bank card interchange income, wealth management fees, insurance brokerage income, and earnings on bank owned life insurance.
Current report — wording carried from elsewhere
Provision for Credit Losses. The Company recorded a PCL of $1.7 million in the three-month period ended December 31, 2025, as compared to a PCL of $932,000 in the same period of the prior fiscal year. The current period PCL had no provision attributable to the allowance for off-balance sheet credit exposures. The factors considered when estimating a required ACL and PCL for loan balances outstanding is detailed below under “Allowance for Credit Loss Activity”.
Current report — wording carried from elsewhere
Noninterest Income. Noninterest income for the three-month period ended December 31, 2025, was $6.8 million, a decrease of $89,000, or 1.3%, as compared to the same period of the prior fiscal year. The decrease was primarily attributable to other loan fees, reflecting a refinement of our fee recognition under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs, with a greater portion now recognized in interest income over the life of the loan. The decrease was partially offset by an increase in bank card interchange income, deposit account charges and related fees, and wealth management fees.
Current report — wording carried from elsewhere
Income Taxes. The income tax provision for the three-month period ended December 31, 2025, was $4.5 million, relatively unchanged from the same period in the prior fiscal year. The effective tax rate for the current quarter was
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
regulatory agencies, which can order the Company to record additional allowances. The required ACL has been estimated based upon the guidelines in ASC Topic 326, Financial Instruments – Credit Losses.
Previous report — wording carried elsewhere
The ACL at September 30, 2025, totaled $52.1 million, representing 1.24% of gross loans and 200% of nonperforming loans, as compared to an ACL of $51.6 million, representing 1.26% of gross loans and 224% of nonperforming loans at June 30, 2025. The Company has estimated its expected credit losses as of September 30, 2025, under ASC 326-20, and management believes the ACL as of that date was adequate based on that estimate. There remains, however, significant economic uncertainty despite recent reductions in short-term interest rates as labor market conditions soften, while inflation remains above target. The increase in the ACL was primarily attributable to management’s assessment of reserve adequacy amid an evolving economic environment, additions to individually reviewed loans, loan growth, and slightly higher reserves required for pooled loans. This was partially offset by net charge-offs, which reduced the overall