SOUTHERN MISSOURI BANCORP, INC.
For the period ended Sep 30, 2026. Filed Nov 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.
Sep 30, 2026 · Filed Nov 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 2026-03-31; filed 2026-05-08.
0001104659-26-058037
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-06.
0001104659-26-123927
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 92 previous paragraphs and 87 current paragraphs.
42 unchanged; 30 reworded; 12 added; 18 removed; 2 previous and 3 current paragraphs rearranged.
Tables are not compared: 45 previous and 36 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 (12)
Current report
comprehensive losses (AOCL) as the market value of the Company’s investments declined due to higher market interest rates, and $1.4 million used to repurchase 19,000 shares of the Company’s common stock during the first quarter of fiscal 2027 at an average price of $72.63 per share. For more information, see “Comparison of Financial Condition at September 30, 2026, and June 30, 2026.”
Current report
Interest rates generally increased during the first three months of fiscal 2027, particularly at the intermediate and longer portions of the Treasury yield curve, amid continued uncertainty regarding inflation, economic conditions, and the future path of monetary policy. The yield curve steepened modestly during the quarter, with the spread between the two-year and ten-year Treasury rates increasing to 41 basis points at September 30, 2026, from 30 basis points at June 30, 2026.
Current report
The Company’s noninterest income for the three-month period ended September 30, 2026, was $7.1 million, an increase of $573,000, or 8.7%, as compared to the same period of the prior fiscal year. The increase was primarily driven by higher other noninterest income, reflecting increased merchant program income and a gain on sale of membership interest in a tax credit investment, and higher deposit account charges and related fees, driven by a higher volume of nonsufficient funds charges. Noninterest income also benefited from increased earnings on bank-owned life insurance, including a $150,000 mortality benefit recognized in the first quarter of fiscal 2027, and higher bank card interchange income. These increases were partially offset by lower other loan fees, as swap fees were recognized in the prior-year period but not in the current period.
Current report
Noninterest expense for the three-month period ended September 30, 2026, was $26.6 million, an increase of $1.5 million, or 6.1%, as compared to the same period of the prior fiscal year. The increase was driven primarily by an increase in compensation and benefits expense, reflecting annual merit increases, higher team member headcount, and lower deferred compensation costs related to loan originations. In addition, other noninterest expense increased primarily due to higher costs associated with deposit operations and card fraud, as well as loan collection and other lending-related activities. Occupancy and equipment expense increased due to equipment purchases, maintenance and repairs, and insurance costs, while data processing expense increased as a result of higher software, digital banking, and information security-related costs. These increases were partially offset by lower legal and professional fees, as the prior-year period included $572,000 of consulting costs associated with the negotiation of a new contract with a key vendor, with no similar activity in the current quarter, and lower intangible amortization expense following the full amortization of a core deposit intangible in the second quarter of fiscal 2026.
Current report
Cash and cash equivalents were $97.1 million at September 30, 2026, an increase of $6.2 million, or 6.8%, compared to June 30, 2026. AFS securities were $454.1 million at September 30, 2026, an increase of $3.3 million, or 0.7%, compared to June 30, 2026.
Current report
Nonperforming loans (NPLs) were $26.7 million, or 0.60% of gross loans, at September 30, 2026, compared to $27.7 million, or 0.63% of gross loans, at June 30, 2026, a decrease of $996,000, or 3.6%. Nonperforming assets (NPAs) were $32.4 million, or 0.61% of total assets, at September 30, 2026, compared to $33.5 million, or 0.64% of total assets, at June 30, 2026, a decrease of $1.1 million, or 3.3%, primarily due to lower NPLs. Performing loan modifications to borrowers experiencing financial difficulty totaled $51.1 million at September 30, 2026, compared to $31.0 million at
Current report
June 30, 2026. The increase was primarily attributable to an interest rate reduction on one commercial and industrial loan.
Current report
Total liabilities were $4.7 billion at September 30, 2026, an increase of $62.4 million, or 1.3%, compared to June 30, 2026. Increases in total deposits and securities sold under agreements to repurchase were partially offset by a reduction in FHLB advances.
Current report
Noninterest Income. Noninterest income for the three-month period ended September 30, 2026, was $7.1 million, an increase of $573,000, or 8.7%, as compared to the same period of the prior fiscal year. The increase was primarily driven by higher other noninterest income, reflecting increased merchant program income and a gain on sale of membership interest in a tax credit investment, and higher deposit account charges and related fees, driven by a higher volume of nonsufficient funds charges. Noninterest income also benefited from increased earnings on bank-owned life insurance, including a $150,000 mortality benefit recognized in the first quarter of fiscal 2027, and higher bank card interchange income. These increases were partially offset by lower other loan fees, as swap fees were recognized in the prior-year period but not in the current period.
Current report
Noninterest Expense. Noninterest expense for the three-month period ended September 30, 2026, was $26.6 million, an increase of $1.5 million, or 6.1%, as compared to the same period of the prior fiscal year. The increase was driven primarily by an increase in compensation and benefits expense, reflecting annual merit increases, higher team member headcount, and lower compensation costs deferred related to loan originations. In addition, other operating expense increased primarily due to higher costs associated with deposit operations and card fraud, as well as loan collection and other lending-related activities. Occupancy and equipment expense increased due to equipment purchases, maintenance and repairs, and insurance costs, while data processing expense increased as a result of higher software, digital banking, and information security-related costs. These increases were partially offset by lower legal and professional fees, as the prior-year period included $572,000 of consulting costs associated with the negotiation of a new contract with a key vendor, with no similar activity in the current quarter, and lower intangible amortization expense following the full amortization of a core deposit intangible in the second quarter of fiscal 2026.
Current report
•Quantified supported model assumptions and general imprecision adjustments
Current report
The ACL totaled $58.3 million at September 30, 2026, representing 1.31% of gross loans and 218.6% of nonperforming loans, compared to $54.9 million, or 1.25% of gross loans and 198.6% of nonperforming loans, at June 30, 2026. The Company has estimated its expected credit losses as of September 30, 2026, under ASC 326-20, and management believes the ACL as of that date was adequate based on that estimate. Economic uncertainty remains, including the potential effects of elevated and uncertain interest rates, as inflation remains above the Federal Reserve's long-term target, and evolving labor market and broader economic conditions. The increase in the ACL was primarily attributable to management’s assessment of reserve adequacy amid the economic uncertainty and to support loan growth. This was partially offset by net charge-offs of $494,000 in the three-month period ended September 30, 2026. As a percentage of
Removed paragraphs (18)
Previous report
and FHLB term advances of $2.0 million. Equity increased $28.8 million, or 5.3%, attributable primarily to earnings retained after cash dividends paid, in combination with a $2.3 million reduction in 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 re-purchase of Company stock totaling $18.3 million. For more information, see “Comparison of Financial Condition at March 31, 2026, and June 30, 2025.”
Previous report
Interest rates during the first nine months of fiscal 2026 remained relatively stable at the mid-point of the curve and moved lower at the shorter end of the curve as employment slowed somewhat and inflation remained relatively stable but above target. Market expectations are for the Federal Reserve to maintain the federal funds rate for the near term with potential modest easing later in 2026 or early 2027, 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 March 31, 2026, the yield curve had a 34 basis point positive slope between the two-year and ten-year treasury rates, compared to 52 basis point positive slope at June 30, 2025.
Previous report
The Company’s noninterest income for the nine-month period ended March 31, 2026, was $20.4 million, a decrease of $265,000, or 1.3%, 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 report
Nonrefundable Fees and Other Costs”, and a reduced amount of realized gains on sales of loans, partially offset by increases in deposit account charges and related fees, bank card interchange income, earnings on bank owned life insurance, wealth management fees, insurance brokerage income, and a gain on sale of a membership interest in a tax credit investment.
Previous report
Noninterest expense for the nine-month period ended March 31, 2026, was $76.5 million, an increase of $436,000, or 0.6%, as compared to the same period of the prior fiscal year. The increase was attributable primarily to higher data processing expense, occupancy expense, advertising, and various minor increases across other expense categories, partially offset by 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 nine months of fiscal 2026, legal and professional fees did include $572,000 of consulting costs associated with the negotiation of a new contract with a key vendor.
Previous report
Cash equivalents and time deposits were a combined $93.3 million at March 31, 2026, a decrease of $99.8 million, or 51.7%, as compared to June 30, 2025. The decrease was primarily the result of loan generation that outpaced deposit growth during the period. AFS securities were $439.1 million at March 31, 2026, down $21.7 million, or 4.7%, as compared to June 30, 2025.
Previous report
Total liabilities were $4.6 billion at March 31, 2026, an increase of $93.0 million, or 2.1%, as compared to June 30, 2025. Growth primarily reflected an increase in total deposits; other liabilities, attributable to recognition of future capital contributions related to tax credit investments; and securities sold under agreements to repurchase.
Previous report
Noninterest Income. Noninterest income for the three-month period ended March 31, 2026, was $7.1 million, an increase of $424,000, or 6.4%, as compared to the same period of the prior fiscal year. The increase was primarily attributable to an increase in other noninterest income, deposit account charges and related fees, bank card interchange income, earnings on bank owned life insurance (BOLI), and net realized gains on sale of loans driven by residential mortgage banking. The increase in other non-interest income was primarily attributable to the gain on sale of membership interest in a tax credit investment. Deposit account charges and related fees benefited from increased frequency of charges for non-sufficient funds and increased wire fee income from an increase of our wire fee rates and elevated wire activity. Bank card interchange income benefited from a previously noted new contract with our card processor. Lastly, the increase in earnings on BOLI was mainly due to a mortality benefit recognized in the third quarter of 2026. These increases were partially offset by the decrease in 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.
Previous report
Noninterest Expense. Noninterest expense for the three-month period ended March 31, 2026, was $26.2 million, an increase of $832,000, or 3.3%, as compared to the same period of the prior fiscal year. The increase as compared to the year-ago period was primarily attributable to increases in data processing expense, other noninterest expense, compensation and benefits, and occupancy and equipment expenses. Data processing costs increased due to higher transaction volumes and increased software licensing costs. Other noninterest expense increased largely due to loan product expense associated with expenses for lending activities, loan collection, and management of foreclosed real
Previous report
estate. The increase in compensation and benefits expense was primarily due to annual merit increases, as well as a trend increase in employee headcount. The majority of the merit increases took effect during the current quarter. This was partially offset by a decrease in compensation expense recognized in recent periods as a result of our refined accounting for loan origination expenses under ASC 310-20. Occupancy and equipment expense growth was primarily driven by elevated maintenance and repair costs, remodel projects, and equipment purchases. Partially offsetting these increases from the prior year period were decreases to intangible amortization, as the core deposit intangible recognized in an older merger was fully amortized in the second quarter of fiscal 2026, along with a decrease in deposit insurance premiums.
Previous report
Results of Operations – Comparison of the nine-month periods ended March 31, 2026, and 2025
Previous report
General. Net income for the nine-month period ended March 31, 2026, was $51.6 million, an increase of $8.8 million or 20.5%, 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, noninterest expense and provision for income taxes, and a decrease in noninterest income.
Previous report
For the nine-month period ended March 31, 2026, fully-diluted net income per share available to common stockholders was $4.59, up $0.80, or 21.1%, as compared to the same quarter a year ago. Annualized return on average assets for the nine-month period ended March 31, 2026, was 1.35%, as compared to 1.19% for the same period of the prior fiscal year. Annualized return on average common stockholders’ equity for the nine-month period ended March 31, 2026, was 12.2%, as compared to 11.2% in the same period of the prior fiscal year.
Previous report
Net Interest Income. Net interest income for the nine-month period ended March 31, 2026, was $128.4 million, an increase of $14.2 million, or 12.4%, as compared to the same period of the prior fiscal year. The increase was attributable to a 5.2% increase in the average balance of interest-earning assets in the current nine-month period, as compared to the same period a year ago, and a 23 basis point increase in net interest margin, from 3.37% to 3.60%, as the cost of interest-bearing liabilities decreased by 31 basis points, and the yield earned on interest earning assets decreased by three basis points.
Previous report
Noninterest Income. Noninterest income for the nine-month period ended March 31, 2026, was $20.4 million, a decrease of $265,000, or 1.3%, 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, earnings on bank owned life insurance, wealth management fees, insurance brokerage income, and other noninterest income. Other noninterest income increased primarily due to a gain on sale of membership interest in a tax credit investment in the current period, and the recognition of modest losses on the disposal of fixed assets in the year ago period, attributable to various equipment disposals.
Previous report
Noninterest Expense. Noninterest expense for the nine-month period ended March 31, 2026, was $76.5 million, an increase of $436,000, or 0.6%, as compared to the same period of the prior fiscal year. The increase was attributable primarily to higher data processing expense, occupancy expense, advertising, and various minor increases across other expense categories, partially offset by 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 application 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 nine 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.
Previous report
Income Taxes. The income tax provision for the nine-month period ended March 31, 2026, was $12.5 million, an increase of $453,000, or 3.8%, 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 19.5%, compared to 22.0% 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 report
In August 2020, the Federal banking agencies adopted a final rule updating a December 2018 rule regarding the impact on regulatory capital of adoption of the CECL standard. The rule allows institutions that adopted the CECL standard in 2020 a five-year transition period to recognize the estimated impact of adoption on regulatory capital. The Company and the Bank elected to exercise the option to recognize the impact of adoption over the five-year period.
Reworded paragraphs (30)
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 March 31, 2026, and results of operations for the three- and nine-month periods ended March 31, 2026, and 2025.
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 September 30, 2026, and results of operations for the three-month periods ended September 30, 2026, and 2025.
Previous wording
During the first nine months of fiscal 2026, total assets increased by $121.9 million, or 2.4%. 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 $217.5 million; cash equivalents decreased by $99.8 million; and AFS securities decreased $21.7 million. Liabilities increased $93.0 million, or 2.1%, primarily attributable to increases in deposits of $59.5 million, accounts payable and other liabilities of $30.0 million (including a $23.7 million increase in future capital contributions for investment tax credits), securities sold under agreements to repurchase of $5.0 million, and FHLB overnight advances of $3.0 million, partially offset by decreases in accrued interest payable of $2.5 million
Current wording
During the first three months of fiscal 2027, total assets increased by $72.9 million, or 1.4%. The increase was primarily attributable to increases in net loans receivable, other assets, cash and cash equivalents, and AFS securities. Loans, net of the ACL, increased $60.5 million; cash equivalents increased by $6.2 million; and AFS securities increased $3.3 million. Liabilities increased $62.4 million, or 1.3%, primarily attributable to increases in deposits of $66.1 million, and securities sold under agreements to repurchase of $5.0 million, partially offset by decreases in FHLB termed advances of $7.0 million and overnight advances of $700,000. Equity increased $10.5 million, or 1.8%, attributable primarily to earnings retained after cash dividends paid, partially offset by a $4.7 million increase in accumulated other
Previous wording
Net income for the first nine months of fiscal 2026 was $51.6 million, an increase of $8.8 million, or 20.5% as compared to the same period of the prior fiscal year. The increase was due primarily to an increase in net interest income, partially offset by increases in PCL, provision for income taxes, and noninterest expenses, and a decrease in noninterest income. For the nine-month period ended March 31, 2026, fully-diluted net income per share available to common stockholders was $4.59, up $0.80, or 21.1%, as compared to the same period a year ago. Our annualized return on average assets for the nine-month period ended March 31, 2026, was 1.35%, as compared to 1.19% for the same period of the prior fiscal year. Our annualized return on average common stockholders’ equity for the nine-month period ended March 31, 2026, was 12.2%, as compared to 11.2% in the same period of the prior fiscal year. For the first nine months of fiscal 2026, as compared to the same period of the prior fiscal year, net interest income increased $14.2 million, or 12.4%, partially offset by an increase in PCL of $4.2 million, or 105.3%, an increase in provision for income taxes of $453,000, or 3.8%, an increase in noninterest expense of $436,000, or 0.6%, and a decrease in noninterest income of $265,000, or 1.3%. For more information see “Results of Operations – Comparison of the nine-month periods ended March 31, 2026, and 2025”.
Current wording
Net income for the first three months of fiscal 2027 was $19.1 million, an increase of $3.4 million, or 22.0% as compared to the same period of the prior fiscal year. The increase was due primarily to higher net interest income, lower PCL, and higher noninterest income, partially offset by higher noninterest expense and higher provision for income taxes. For the three-month period ended September 30, 2026, fully-diluted net income per share available to common stockholders was $1.73, up $0.35, or 25.4%, as compared to the same period a year ago. Our annualized return on average assets for the three-month period ended September 30, 2026, was 1.44%, as compared to 1.24% for the same period of the prior fiscal year. Our annualized return on average common stockholders’ equity for the three-month period ended September 30, 2026, was 12.7%, as compared to 11.3% in the same period of the prior fiscal year. For the first three months of fiscal 2027, as compared to the same period of the prior fiscal year, net interest income increased $3.5 million, or 8.3%, PCL decreased $1.5 million or 34.4%, and noninterest income increased $573,000 or 8.7%, partially offset by increases in noninterest expense of $1.5 million, or 6.1%, and provision for income taxes of $678,000, or 17.9%. For more information see “Results of Operations – Comparison of the three-month periods ended September 30, 2026, and 2025”.
Previous wording
As compared to the first nine 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 cash, while the percentage of earning assets in AFS securities declined and yields on loans receivable were unchanged. The cost of interest-bearing liabilities decreased by 31 basis points due primarily to lower market rates. Driven by average interest-bearing liabilities repricing lower, the net interest spread increased by 28 basis points, from 2.81% to 3.09%, and the net interest margin increased by 23 basis points, from 3.37% to 3.60%, during the first nine months of fiscal 2026, as compared to the same period in fiscal 2025. In addition, net interest income benefitted from a 5.2% increase in average earnings assets, compared to the prior fiscal year period.
Current wording
As compared to the first three months of the prior fiscal year, our average yield on earning assets decreased by four basis points, primarily attributable to decreased yields on loans receivable and AFS securities, while the percentage of earning assets in AFS securities and cash declined. The cost of interest-bearing liabilities decreased by 19 basis points due primarily to lower market rates. Driven by average interest-bearing liabilities repricing lower, the net interest spread increased by 15 basis points, from 3.02% to 3.17%, and the net interest margin increased by 13 basis points, from 3.57% to 3.70%, during the first three months of fiscal 2027, as compared to the same period in fiscal 2026. In addition, net interest income benefited from a 4.5% increase in average earning assets, compared to the prior fiscal year period.
Previous wording
The Company experienced balance sheet growth in the first nine months of fiscal 2026, with total assets of $5.1 billion at March 31, 2026, reflecting an increase of $121.9 million, or 2.4%, as compared to June 30, 2025. Growth primarily reflected increases in net loans receivable and investments in tax credits in the other assets category, partially offset by decreases in cash equivalents and time deposits and available for sale (AFS) securities.
Current wording
The Company experienced balance sheet growth during the first quarter of fiscal 2027, with total assets of $5.3 billion at September 30, 2026, an increase of $72.9 million, or 1.4%, compared to June 30, 2026. Growth was driven primarily by increases in net loans receivable, other assets, cash and cash equivalents, and available-for-sale (AFS) securities. The increase in other assets was primarily driven by an increase in accrued interest receivable.
Previous wording
Loans, net of the allowance for credit losses (ACL), were $4.3 billion at March 31, 2026, an increase of $217.5 million, or 5.4%, as compared to June 30, 2025. Gross loans increased by $221.8 million, while the ACL attributable to outstanding loan balances increased $4.3 million, as compared to June 30, 2025. The Company noted growth primarily in 1-4 family residential real estate, non-owner occupied commercial real estate, multi-family real estate, commercial and industrial, owner occupied commercial real estate, and agriculture real estate loan balances. This was partially offset by decreases in construction and land development, consumer, and agricultural production loan balances.
Current wording
Loans, net of the allowance for credit losses (ACL), were $4.4 billion at September 30, 2026, increasing by $60.5 million, or 1.4%, compared to June 30, 2026. Gross loans increased by $63.9 million, or 1.5%, to $4.5 billion, while the ACL increased by $3.4 million, compared to June 30, 2026. The Company noted growth primarily in loans collateralized by 1-4 family residential real estate, agriculture production, commercial and industrial, agriculture real estate, and construction and land development. This growth was partially offset by decreases in loans collateralized by multi-family real estate, non-owner occupied commercial real estate, and owner occupied commercial real estate.
Previous wording
Loans anticipated to fund in the next 90 days totaled $177.7 million at March 31, 2026, as compared to $159.1 million at December 31, 2025, and $163.3 million at March 31, 2025.
Current wording
Loans anticipated to fund in the next 90 days totaled $184.8 million at September 30, 2026, as compared to $181.7 million at June 30, 2026, and $194.5 million at September 30, 2025.
Previous wording
The Bank’s concentration in non-owner occupied commercial real estate loans is estimated at 291.2% of Tier 1 capital and ACL on March 31, 2026, as compared to 301.9% as of June 30, 2025, with these loans representing 39.2% of total loans at March 31, 2026. Multi-family 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 Bank’s multi-family 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 that can be defined as non-mall shopping centers with a variety of tenants. Non-owner occupied office property types included 35 loans totaling $14.6 million, or 0.34% of gross loans at March 31, 2026, 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.
Current wording
The Bank’s concentration in non-owner occupied commercial real estate loans, as defined by banking regulatory guidance and including multi-family and construction and land development loans, was estimated at 277.7% of Tier 1 capital and ACL at September 30, 2026, as compared to 287.7% as of June 30, 2026, the linked quarter end, with these loans representing 37.9% of total loans at September 30, 2026. The largest component of this concentration at September 30, 2026, was non-owner occupied commercial real estate, which is primarily comprised of loans secured by hospitality (hotels and restaurants), care facilities, strip centers, retail stand-alone properties, and storage units. Within this portfolio, the hospitality and retail stand-alone segments consist primarily of franchised businesses; care facilities consist mainly of skilled nursing and assisted living centers; and strip centers are generally non-mall shopping centers with a variety of tenants. The Bank’s multi-family real estate loan portfolio includes loans secured by properties currently participating in the low-income housing tax credit (LIHTC) program or that have exited the program. The largest component of the construction and land development portfolio is commercial construction, consisting primarily of loans collateralized by multi-family real estate and industrial warehouse developments. The Company continues to monitor its commercial real estate concentration and each of its individual segments closely.
Previous wording
The ACL at March 31, 2026, totaled $55.9 million, representing 1.29% of gross loans and 186% 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 March 31, 2026, 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, and inflation remains above target. The increase in the ACL was primarily attributable to higher reserves required for pooled loans, driven largely by increased reserves on agriculture loans reflecting ongoing pressure in the agricultural sector, and loan growth. This was partially offset by net charge-offs. As a percentage of average loans outstanding, the Company recorded net charge-offs of 0.04% (annualized) during the current quarter, as compared to net charge-offs of 0.11% for the same quarter of the prior fiscal year. For the nine-month period ended March 31, 2026, year-to-date net charge-offs were 0.11% (annualized), as compared to 0.05% for the same period in the prior fiscal year. In the nine-month period ended March 31, 2026, net charge offs were $3.4 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.
Current wording
The ACL totaled $58.3 million at September 30, 2026, representing 1.31% of gross loans and 218.6% of nonperforming loans, compared to $54.9 million, or 1.25% of gross loans and 198.6% of nonperforming loans, at June 30, 2026. The Company has estimated its expected credit losses as of September 30, 2026, under ASC 326-20, and management believes the ACL as of that date was adequate based on that estimate. Economic uncertainty remains, including the potential effects of elevated and uncertain interest rates, as inflation remains above the Federal Reserve's long-term target, and evolving labor market and broader economic conditions. The increase in the ACL was primarily attributable to management’s assessment of reserve adequacy amid the economic uncertainty and to support loan growth. This was partially offset by net charge-offs of $494,000 in the three-month period ended September 30, 2026. As a percentage of average loans outstanding, the Company recorded net charge offs of 0.04% (annualized) during the current quarter, as compared to 0.36% for the same quarter of the prior fiscal year, and 0.40% during the linked quarter.
Previous wording
Deposits were $4.3 billion at March 31, 2026, an increase of $59.5 million, or 1.4%, as compared to June 30, 2025. The deposit portfolio saw year-to-date increases in nonmaturity deposit accounts, which was partially offset by a decrease in certificates of deposit. Nonmaturity deposit growth was primarily driven by savings, NOW, non-interest bearing, and brokered money market deposit accounts. The decrease in certificates of deposit was largely driven by a $28.3 million reduction in brokered certificates compared to June 30, 2025. Brokered deposits totaled $226.4 million at March 31, 2026, a decrease of $8.7 million as compared to June 30, 2025. Public unit balances totaled $564.7 million at March 31, 2026, an increase of $13.9 million compared to June 30, 2025, primarily due to seasonal inflows. The average loan-to-deposit ratio for the third quarter of fiscal 2026 was 98.0%, as compared to 94.5% for the quarter ended June 30, 2025, and 94.2% for the same period of the prior fiscal year.
Current wording
Deposits were $4.5 billion at September 30, 2026, an increase of $66.1 million, or 1.5%, compared to June 30, 2026. Certificate of deposit growth was primarily driven by non-brokered certificates of deposit and was partially offset by a decrease in brokered certificates of deposit. Nonmaturity deposit growth was primarily attributable to increases in non-brokered and brokered money market deposit accounts. This was partially offset by declines in non-interest bearing deposits, NOW accounts, and savings accounts. Public unit balances totaled $475.4 million at September 30, 2026, a decrease of $42.4 million compared to June 30, 2026, primarily due to competitive pricing dynamics on certain time deposits and normal fluctuations in operating account balances. Brokered deposits totaled $271.4 million at September 30, 2026, a decrease of $19.3 million as compared to June 30, 2026, attributable to a decrease in brokered certificates of deposit, which was partially offset by an increase in brokered money market deposit accounts. The average loan-to-deposit ratio for the first quarter of fiscal 2027 was 98.8%, as compared to 99.7% for the linked quarter, and 96.3% for the same period of the prior fiscal year.
Previous wording
FHLB advances were $105.0 million at March 31, 2026, an increase of $981,000, or 0.94%, as compared to June 30, 2025. Outstanding FHLB overnight borrowings were $3.0 million as of March 31, 2026, as compared to no FHLB overnight borrowings as of June 30, 2025.
Current wording
FHLB advances were $122.7 million at September 30, 2026, a decrease of $7.7 million, or 5.9%, from June 30, 2026. Outstanding FHLB daily reset borrowings were $27.7 million as of September 30, 2026, as compared to $28.4 million outstanding as of June 30, 2026.
Previous wording
The Company’s stockholders’ equity was $573.5 million at March 31, 2026, an increase of $28.8 million, or 5.3%, as compared to June 30, 2025. The increase was attributable primarily to earnings retained after cash dividends paid, in combination with a $2.3 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 $9.1 million at March 31, 2026 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 $18.3 million utilized to repurchase 313,000 shares of the Company’s common stock year-to-date at an average price of $58.45 per share.
Current wording
The Company’s stockholders’ equity was $601.1 million at September 30, 2026, an increase of $10.5 million, or 1.8%, compared to June 30, 2026. The increase was attributable primarily to earnings retained after cash dividends paid. This increase was partially offset by a $4.7 million increase in accumulated other comprehensive loss (AOCL), as the market value of the Company’s investments declined due to higher market interest rates, and $1.4 million used to repurchase 19,000 shares of the Company’s common stock during the first quarter of fiscal 2027 at an average price of $72.63 per share. AOCL totaled $14.4 million at September 30, 2026, as compared to $9.8 million at June 30, 2026. The Company does not hold any securities classified as held-to-maturity.
Previous wording
Average Balance Sheet, Interest, and Average Yields and Rates for the Three- and Nine-Month Periods Ended
Current wording
Average Balance Sheet, Interest, and Average Yields and Rates for the Three-Month Periods Ended
Previous wording
The table below presents certain information regarding our financial condition and net interest income for the three- and nine-month periods ended March 31, 2026, and 2025. 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-month periods ended September 30, 2026, and 2025. 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- and nine-month periods ended March 31, 2026, compared to the three- and nine-month periods ended March 31, 2025. 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-month period ended September 30, 2026, compared to the three-month period ended September 30, 2025. 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
General. Net income for the three-month period ended March 31, 2026, was $17.8 million, an increase of $2.1 million or 13.3%, as compared to the same period of the prior fiscal year. The increase was primarily attributable to an increase in net interest income and an increase in noninterest income, partially offset by increases in PCL, noninterest expense, and provision for income taxes.
Current wording
General. Net income for the three-month period ended September 30, 2026, was $19.1 million, an increase of $3.4 million or 22.0%, as compared to the same period of the prior fiscal year. The increase was primarily attributable to an increase in net interest income, lower PCL and an increase in noninterest income, partially offset by higher noninterest expense and provision for income taxes.
Previous wording
For the three-month period ended March 31, 2026, fully-diluted net income per share available to common stockholders was $1.60, up $0.21, or 15.1%, as compared to the same quarter a year ago. Our annualized return on average assets for the three-month period ended March 31, 2026 was 1.41%, as compared to 1.29% for the same period of the prior fiscal year. Our annualized return on average common stockholders’ equity for the three-month period ended March 31, 2026, was 12.6%, as compared to 12.2% in the same period of the prior fiscal year.
Current wording
For the three-month period ended September 30, 2026, fully-diluted net income per share available to common stockholders was $1.73, up $0.35, or 25.4%, as compared to the same quarter a year ago. Our annualized return on average assets for the three-month period ended September 30, 2026 was 1.44%, as compared to 1.24% for the same period of the prior fiscal year. Our annualized return on average common stockholders’ equity for the three-month period ended September 30, 2026, was 12.7%, as compared to 11.3% in the same period of the prior fiscal year.
Previous wording
Net Interest Income. Net interest income for the three-month period ended March 31, 2026, was $43.2 million, an increase of $3.7 million, or 9.3%, as compared to the same period of the prior fiscal year. The increase, as compared to the same period a year ago, was attributable to an increase of 23 basis points in the net interest margin, from 3.44% to 3.67%, coupled with a 2.5% increase in the average balance of interest-earning assets. The primary driver of the net interest margin expansion, compared to the year ago period, was a decrease in the cost of interest-bearing liabilities of 32 basis points, partially offset by a decrease of six basis points in the yield on interest-earning assets.
Current wording
Net Interest Income. Net interest income for the three-month period ended September 30, 2026, was $45.9 million, an increase of $3.5 million, or 8.3%, as compared to the same period of the prior fiscal year. The increase reflected a 4.5% increase in the average balance of interest-earning assets and a 13-basis point increase in net interest margin, from 3.57% to 3.70%. The primary driver of the net interest margin expansion, compared to the year ago period, was a decrease in the cost of interest-bearing liabilities of 19 basis points, partially offset by a decrease of four basis points in the yield on interest-earning assets.
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 $352,000 in net interest income for the three-month period ended March 31, 2026, as compared to $1.5 million in net interest income for the same period a year ago. Combined, this component of net interest income contributed three basis points to net interest margin in the three-month period ended March 31, 2026, as compared to a 13-basis point contribution for the same period of the prior fiscal year, and as compared to a five-basis point contribution in the linked quarter, ended December 31, 2025, when the net interest margin was 3.57%.
Current wording
interest income for the three-month period ended September 30, 2026, as compared to $876,000 in net interest income for the same period a year ago. Combined, this component of net interest income contributed approximately five basis points to net interest margin in the three-month period ended September 30, 2026, as compared to approximately seven basis points for the same period of the prior fiscal year and approximately three basis points in the linked quarter ended June 30, 2026, when net interest margin was 3.67%.
Previous wording
Provision for Credit Losses. The Company recorded a PCL of $2.1 million in the three-month period ended March 31, 2026, as compared to a PCL of $932,000 in the same period of the prior fiscal year. The current period PCL was the result of a $1.8 million provision attributable to the ACL for loan balances outstanding and a $234,000 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 above in the “Allowance for Credit Loss Activity”.
Current wording
Provision for Credit Losses. The Company recorded a PCL of $3.0 million in the three-month period ended September 30, 2026, as compared to a PCL of $4.5 million in the same period of the prior fiscal year. The current period PCL was the result of a $3.9 million provision attributable to the ACL for outstanding loan balances and a $902,000 negative provision attributable to the allowance for off-balance sheet credit exposures, primarily reflecting a decrease in unfunded balances combined with a lower required reserve rate on unfunded commitments. The factors considered when estimating a required ACL and PCL for loan balances outstanding are detailed below in the “Allowance for Credit Loss Activity”.
Previous wording
Income Taxes. The income tax provision for the three-month period ended March 31, 2026, was $4.2 million, an increase of 1.0% as compared to the same period of the prior fiscal year, primarily due to the increase in net income before income taxes, partially offset by a lower effective tax rate. The effective tax rate was 19.1% as compared to 20.9% in the same quarter of the prior fiscal year. The current period benefited from lower state tax rates and a revised apportionment methodology, as well as ongoing benefits from the recognition of tax credits under the proportional amortization method in accordance with ASC 2023-02, and a catch up in recognition of tax-exempt interest income.
Current wording
Income Taxes. The income tax provision for the three-month period ended September 30, 2026, was $4.5 million, an increase of $678,000, or 17.9%, 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 19.0%, compared to 19.5% in the same quarter of the prior fiscal year.
Previous wording
The following table summarizes changes in the ACL over the three- and nine-month periods ended March 31, 2026, and 2025:
Current wording
The following table summarizes changes in the ACL over the three-month periods ended September 30, 2026, and 2025:
Previous wording
At March 31, 2026, the Company had accrued within other liabilities an allowance for off-balance sheet credit exposures of $4.5 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 $593,000 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
At September 30, 2026, the Company had accrued within other liabilities an allowance for off-balance sheet credit exposures of $3.5 million, as compared to $4.4 million at June 30, 2026. The decrease 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 $902,000 decrease in the estimated allowance for off-balance sheet credit exposures was primarily the result of a decrease in unfunded balances combined with a lower required reserve rate.
Previous wording
At March 31, 2026, the Company had adversely classified loans of $55.5 million, or 1.28% of total loans, ($54.9 million classified “substandard”; $594,000 classified “doubtful”), as compared to adversely classified loans of $49.6 million, or 1.21% of total loans, ($49.6 million classified “substandard”; none classified “doubtful”) at June 30, 2025, and $48.8 million, or 1.21% of total loans, adversely classified ($48.8 million classified “substandard”; none classified “doubtful”), at March 31, 2025. 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 $27.1 million at March 31, 2026. The Company’s total past due loans increased from $25.6 million at June 30, 2025, to $32.0 million at March 31, 2026. The increase in classified loans was primarily attributable to three borrower relationships: one commercial relationship consisting of two related loans collateralized by commercial real estate; one consisting of multiple loans collateralized by commercial real estate and equipment; and one consisting of two related agricultural production loans secured by crops and equipment. These increases were partially offset by improvement in previously nonperforming loans and net charge-offs. All relationships noted were placed on nonaccrual status prior to the third 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.
Current wording
At September 30, 2026, the Company had adversely classified loans of $52.7 million, or 1.18% of total loans, ($52.7 million classified “substandard”; none classified “doubtful”), as compared to adversely classified loans of $53.7 million, or 1.22% of total loans, ($53.7 million classified “substandard”; none classified “doubtful”) at June 30, 2026, and $55.1 million, or 1.31% of total loans, adversely classified ($54.5 million classified “substandard”; $603,000 classified “doubtful”), at September 30, 2025. 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 $23.0 million at September 30, 2026. The Company’s total past due loans increased from $27.6 million at June 30, 2026, to $34.1 million at September 30, 2026. Loans 30-59 days past due increased $7.7 million compared to June 30, 2026, primarily due to several commercial and industrial loans in one borrower relationship that were past due primarily resulting from delays in expected grant proceeds and related liquidity constraints, with the guarantors continuing to support loan payments from personal funds. Loans greater than 90 days past due increased $4.3 million, while loans 60-89 days past due decreased $5.5 million, as two agriculture production, nonaccrual loans, from one borrower relationship migrated from 60-89 days past due at June 30, 2026, to 90 days past due at September 30, 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 March 31, 2026, modifications to borrowers experiencing financial difficulty totaled $32.4 million, of which $770,000 was considered nonperforming and included in the nonaccrual loan total above. The remaining $31.7 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, $24.9 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
Current wording
At September 30, 2026, modifications to borrowers experiencing financial difficulty totaled $51.9 million, of which $771,000 was considered nonperforming and included in the nonaccrual loan total above. The remaining $51.1 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, $46.0 million of these loans were subject to classification as modifications due to interest rate reductions, $4.8 million due to payment delays, and $283,000 due to term extensions given to borrowers experiencing financial difficulty at September 30, 2026. At June 30, 2026, these modifications totaled $31.8 million, of which $769,000 was considered nonperforming and included in the
Previous 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.
Current wording
nonaccrual loan total above. The remaining $31.0 million in modifications at June 30, 2026, 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 March 31, 2026, nonperforming assets totaled $31.7 million, as compared to $23.7 million at June 30, 2025, and $23.8 million at March 31, 2025. 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.
Current wording
At September 30, 2026, nonperforming assets totaled $32.4 million, as compared to $33.5 million at June 30, 2026, and $27.1 million at September 30, 2025. The decrease in nonperforming assets, compared to June 30, 2026, primarily reflects a decrease in NPLs. The decrease in NPLs compared to June 30, 2026, was due to the previously mentioned decrease in classified loans.
Previous wording
The term “liquidity” refers to our ability to generate adequate amounts of cash to fund loan originations, loans purchases, deposit withdrawals and operating expenses. Our primary sources of funds include deposit growth, FHLB advances, brokered deposits, amortization and prepayment of loan principal and interest, investment maturities and sales, and funds provided by our operations. While the scheduled loan repayments and maturing investments are relatively predictable, deposit flows, FHLB advance redemptions, and loan and security prepayment rates are significantly influenced by factors outside of the Bank’s control, including interest rates, general and local economic conditions and competition in the marketplace. The Bank relies on FHLB advances and brokered deposits as additional sources for funding cash or liquidity needs.
Current wording
The term “liquidity” refers to our ability to generate adequate amounts of cash to fund loan originations, loan purchases, deposit withdrawals and operating expenses. Our primary sources of funds include deposit growth, FHLB advances, brokered deposits, amortization and prepayment of loan principal and interest, investment maturities and sales, and funds provided by our operations. While the scheduled loan repayments and maturing investments are relatively predictable, deposit flows, FHLB advance redemptions, and loan and security prepayment rates are significantly influenced by factors outside of the Bank’s control, including interest rates, general and local economic conditions and competition in the marketplace. The Bank relies on FHLB advances and brokered deposits as additional sources for funding cash or liquidity needs.
Previous wording
At March 31, 2026, the Company had outstanding commitments and approvals to extend credit of approximately $1.0 billion (including $682.5 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 March 31, 2026, the Bank had pledged $1.5 billion of its single-family residential, home equity, and commercial real estate loan portfolios to the FHLB for available credit of approximately $974.2 million, of which $102.0 million was advanced, while $630,000 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 $2.3 billion, subject to available collateral. Also, at March 31, 2026, the Bank had pledged a total of $356.4 million in loans secured by farmland and agricultural production loans to the Federal Reserve, providing access to $307.7 million in primary credit borrowings from the Federal Reserve’s discount window, none of which was advanced at March 31, 2026. 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 September 30, 2026, the Company had outstanding commitments and approvals to extend credit of approximately $884.9 million (including $648.9 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, 2026, the Bank had pledged $1.6 billion of its single-family residential, home equity, multi-family, and commercial real estate loan portfolios to the FHLB for available credit of approximately $1.0 billion, of which $122.7 million was advanced, while $731,000 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 $2.3 billion, subject to available collateral. Also, at September 30, 2026, the Bank had pledged a total of $448.6 million in loans secured by farmland and agricultural production loans to the Federal Reserve, providing access to $386.1 million in primary credit borrowings from the Federal Reserve’s discount window, none of which was advanced at September 30, 2026. 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.
Previous wording
Quantitative measures established by regulatory capital standards to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital, Tier 1 capital (as defined), and common equity Tier 1 capital (as defined) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average total assets (as defined). Additionally, to make distributions or discretionary bonus payments, the Company and Bank must maintain a capital conservation buffer of 2.5% of risk-weighted assets. Management believes, as of March 31, 2026, and June 30, 2025, that the Company and the Bank met all capital adequacy requirements to which they are subject.
Current wording
defined), and common equity Tier 1 capital (as defined) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average total assets (as defined). Additionally, to make distributions or discretionary bonus payments, the Company and Bank must maintain a capital conservation buffer of 2.5% of risk-weighted assets. Management believes, as of September 30, 2026, and June 30, 2026, that the Company and the Bank met all capital adequacy requirements to which they are subject.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
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, which, together, resulted in $682,000 in net
Current report — wording carried from elsewhere
average loans outstanding, the Company recorded net charge offs of 0.04% (annualized) during the current quarter, as compared to 0.36% for the same quarter of the prior fiscal year, and 0.40% during the linked quarter.
Current report — wording carried from elsewhere
Quantitative measures established by regulatory capital standards to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital, Tier 1 capital (as
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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 $1.9 million of net interest income for the nine-month period ended March 31, 2026, as compared to $3.5 million of 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 nine-month period ended March 31, 2026, as compared to a ten-basis point contribution for the same period of the prior fiscal year.
Previous report — wording carried elsewhere
Provision for Credit Losses. The Company recorded a PCL of $8.3 million in the nine-month period ended March 31, 2026, as compared to a PCL of $4.0 million in the same period of the prior fiscal year. The current period PCL was the result of a $7.7 million provision attributable to the ACL for loan balances outstanding and a $593,000 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.