SOUTHERN MISSOURI BANCORP, INC.

Previous wording

Allowance for Credit Losses. The Company's allowance for credit losses (ACL) is its estimate of credit losses expected in the loan portfolio, on unfunded lending commitments, and held-to maturity securities over the expected life of those assets or in securities available-for-sale when credit loss is identified, which is limited to the difference in fair value and cost. While these estimates are based on substantive methods for determining the required allowance, actual outcomes may differ significantly from estimated results, especially when determining required allowances for larger, complex commercial credits or unfunded lending commitments to commercial borrowers. Consumer loans, including single family residential real estate, are individually smaller and generally behave in a similar manner, and loss estimates for these credits are considered more predictable. Additionally, the Company estimates the allowance for credit losses as a calculation of expected lifetime credit losses utilizing a forward-looking forecast of macroeconomic conditions, which may differ significantly from actual results. Further discussion of the methodology used in establishing the allowance is provided in Note 1 and Note 3 to the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K, and in the “Financial Condition – Loans” and “Allowance for Credit Losses” sections of this Item 7.

Current wording

Allowance for Credit Losses. The Company's ACL is its estimate of credit losses expected in the loan portfolio, on unfunded lending commitments, and held-to maturity securities over the expected life of those assets or in securities available-for-sale when credit loss is identified, which is limited to the difference in fair value and cost. While these estimates are based on substantive methods for determining the required allowance, actual outcomes may differ significantly from estimated results, especially when determining required allowances for larger, complex commercial credits or unfunded lending commitments to commercial borrowers. Consumer loans, including single family residential real estate, are individually smaller and generally behave in a similar manner, and loss estimates for these credits are considered more predictable. Additionally, the Company estimates the ACL as a calculation of expected lifetime credit losses utilizing a forward-looking forecast of macroeconomic conditions, which may differ significantly from actual results. Further discussion of the methodology used in establishing the allowance is provided in Note 1 and Note 3 to the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K, and in the “Financial Condition – Loans” and “Allowance for Credit Losses” sections of this Item 7.

Previous wording

*General.*The Company experienced balance sheet growth in fiscal 2024, with total assets of $4.6 billion at June 30, 2024, reflecting an increase of $244.1 million, or 5.6%, as compared to June 30, 2023. Asset growth was attributable mainly to increases in loans, available-for-sale (“AFS”) securities, and cash equivalents.

Current wording

*General.*The Company experienced balance sheet growth in fiscal 2025, with total assets of $5.0 billion at June 30, 2025, reflecting an increase of $415.3 million, or 9.0%, as compared to June 30, 2024. Asset growth was attributable mainly to increases in loans, cash and cash equivalents, and available-for-sale (AFS) securities.

Previous wording

Cash and equivalents. Cash and cash equivalents were $61.4 million at June 30, 2024, an increase of $6.2 million, or 11.2%, as compared to June 30, 2023. The increase was primarily a result of organic deposit growth during the period, partially offset by the funding of loan growth. Total deposits were $4.0 billion at June 30, 2024, an increase of $226.9 million, or 6.1% as compared to June 30, 2023.

Current wording

Cash and cash equivalents. Cash and cash equivalents were $192.9 million at June 30, 2025, an increase of $132.0 million, or 216.7%, as compared to June 30, 2024. The increase was primarily a result of organic deposit growth, in addition to growth in brokered certificates of deposits, during the period, partially offset by the funding of loan growth. Total deposits were $4.3 billion at June 30, 2025, an increase of $338.3 million, or 8.6% as compared to June 30, 2024.

Previous wording

*Investments.*AFS securities were $427.9 million at June 30, 2024, an increase of $10.3 million, or 2.5%, as compared to June 30, 2023. The increase was primarily attributable to increased holdings of residential MBS and CMOs.

Current wording

*Investments.*AFS securities were $460.8 million at June 30, 2025, an increase of $32.9 million, or 7.7%, as compared to June 30, 2024. The increase was primarily attributable to increased holdings of residential and commercial mortgage-backed securities.

Previous wording

Loans. Loans, net of the ACL, were $3.8 billion at June 30, 2024, an increase of $226.2 million, or 6.3%, as compared to June 30, 2023. Gross loans increased by $230.9 million, while the ACL attributable to outstanding loan balances increased $4.7 million, or 9.8%, as compared to June 30, 2023.

Current wording

Loans. Loans, net of the ACL, were $4.0 billion at June 30, 2025, an increase of $251.7 million, or 6.6%, as compared to June 30, 2024. Gross loans increased by $250.7 million, while the ACL attributable to outstanding loan balances decreased $887,000, or 1.7%, as compared to June 30, 2024. See, “Allowance for Credit Losses” below.

Previous wording

The increase of $230.9 million in loan balances, net of fair value adjustments, was attributable to growth in non-owner occupied commercial real estate loans, residential real estate loans, agricultural revolving lines of credit, and drawn construction loan balances. This was partially offset by payoffs and paydowns in owner-occupied commercial real estate, commercial and industrial, multi-family, and agriculture real estate loans.

Current wording

The increase of $250.7 million in gross loan balances, net of fair value adjustments, was attributable to growth in residential real estate loans, commercial and industrial loans, drawn construction loan balances, multi-family real estate loans, and agricultural production draws. This was partially offset by payoffs and paydowns in non-owner occupied commercial real estate and consumer loans.

Previous wording

Nonperforming loans were $6.7 million, or 0.17% of gross loans, at June 30, 2024, as compared to $7.7 million, or 0.21% of gross loans, at June 30, 2023. Nonperforming assets were $10.6 million, or 0.23% of total assets, at June 30, 2024, as compared to $11.3 million, or 0.26% of total assets, at June 30, 2023.

Current wording

Nonperforming loans (NPLs) were $23.0 million, or 0.56% of gross loans, at June 30, 2025, as compared to $6.7 million, or 0.17% of gross loans, at June 30, 2024. Nonperforming assets (NPAs) were $23.7 million, or 0.47% of total assets, at June 30, 2025, as compared to $10.6 million, or 0.23% of total assets, at June 30, 2024.

Previous wording

Allowance for Credit Losses. ACL at June 30, 2024, totaled $52.5 million, representing 1.36% of gross loans and 786% of nonperforming loans, as compared to an ACL of $47.8 million, representing 1.32% of gross loans and 625% of nonperforming loans, at June 30, 2023. The Company has estimated its expected credit losses as of June 30, 2024, under ASC 326-20, and management believes the ACL as of that date is adequate based on that estimate. There remains, however, significant uncertainty as the Federal Reserve has tightened monetary policy to address inflation risks. Management continues to closely monitor, in particular, borrowers in the hotel industry that were slow to recover from

Current wording

Allowance for Credit Losses. ACL at June 30, 2025, totaled $51.6 million, representing 1.26% of gross loans and 224% of nonperforming loans, as compared to an ACL of $52.5 million, representing 1.36% of gross loans and 786% of nonperforming loans, at June 30, 2024. The Company has estimated its expected credit losses as of June 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 uncertainty as borrowers adjust to relatively high market interest rates, although the

Previous wording

the COVID-19 pandemic. See also, “Provision for Credit Losses, under Comparison of Operating Results for the Years Ended June 30, 2024 and 2023”.

Current wording

Federal Reserve has reduced short-term rates somewhat during this fiscal year. The decrease in the ACL was primarily attributable to net charge-offs, which reduced the required reserves for individually evaluated loans, as well as a decline in certain qualitative adjustments relevant to assessing expected credit losses. This decrease was partially offset by higher required reserves for pooled loans, reflecting management’s updated view of a deteriorating economic outlook and an increase in modeled loss drivers compared to the prior assessment as of June 30, 2024. Additional provisions were also recorded to support loan growth and overdraft exposures during fiscal year 2025. For fiscal year 2025, net charge offs totaled $6.7 million, or 0.18% as a percentage of average loans, as compared to $1.9 million, or 0.05% as a percentage of average loans, for fiscal year 2024. The increase in net charge offs in fiscal 2025 were primarily attributable to a $3.8 million special-purpose CRE loan, a $987,000 agricultural credit relationship with suspected fraudulent activity, and a $742,000 commercial and industrial charge off related to a commercial contractor. See also, “Provision for Credit Losses, under Comparison of Operating Results for the Years Ended June 30, 2025 and 2024” and Note 1 and Note 3 of the Notes to Consolidated Financial Statements, “Critical Accounting Policies”, “Financial Condition – Allowance for Credit Losses” in this Item 7, and “Asset Quality” in Item 1 of this Form 10-K.

Previous wording

*Premises and Equipment.*Premises and equipment increased to $96.0 million, up $3.6 million, or 3.8%, as compared to June 30, 2023. The increase was due primarily to an increase in premises, right-of-use assets, and furniture, fixtures, equipment, and software, partially offset by increased depreciation.

Current wording

*Premises and Equipment.*Premises and equipment remained unchanged at $96.0 million, as compared to June 30, 2024. Increases primarily in premises, furniture, fixtures, equipment, and right-of-use assets, were offset by depreciation.

Previous wording

*BOLI.*The Bank has purchased “key person” life insurance policies (BOLI) on employees at various times since fiscal 2003, and has acquired additional BOLI in connection with certain mergers. At June 30, 2024, the cash surrender value of all such policies was $73.6 million, up $1.9 million, or 2.7%, as compared to June 30, 2023.

Current wording

*BOLI.*The Bank has purchased “key person” life insurance policies (BOLI) on employees at various times since fiscal 2003, and has acquired additional BOLI in connection with certain mergers. At June 30, 2025, the cash surrender value of all such policies was $75.7 million, up $2.1 million, or 2.8%, as compared to June 30, 2024.

Previous wording

Intangible Assets. The July 2009 acquisition of the Southern Bank of Commerce resulted in goodwill of $126,000. The October 2013 acquisition of Ozarks Legacy Community Financial, Inc., resulted in goodwill of $1.5 million. The August 2014 acquisition of Peoples Service Company, Inc., and its subsidiary, Peoples Bank of the Ozarks (the “Peoples Acquisition”) resulted in goodwill of $3.0 million. The June 2017 acquisition of Tammcorp, Inc., and its subsidiary, Capaha Bank (the “Capaha Acquisition”) resulted in goodwill of $4.1 million and a $3.4 million core deposit intangible which is being amortized over a seven-year period using the straight-line method. The SMB-Marshfield Acquisition resulted in goodwill of $4.4 million and a $1.3 million core deposit intangible which is being amortized over a seven-year period using the straight-line method. The Gideon Acquisition resulted in goodwill of $1.0 million and a $4.1 million core deposit intangible which is being amortized over a seven-year period using the straight-line method. The May 2020 Central Federal Acquisition resulted in a bargain purchase gain of $123,000 and a $540,000 core deposit intangible which is being amortized over a six-year period using the straight-line method. The December 2021 Cairo acquisition resulted in goodwill of $442,000 and a $168,000 core deposit intangible which is being amortized over a seven-year period using the straight-line method. The February 2022 Fortune acquisition resulted in goodwill of $12.8 million and a $1.6 million core deposit intangible which is being amortized over a seven-year period using the straight-line method. The January 2023 Citizens merger resulted in goodwill of $23.5 million, as well as a $22.1 million core deposit intangible which is being amortized over a ten year period using the straight-line method, and a $2.6 million intangible related to the acquired trust and wealth management business line which is being amortized over a ten year

Current wording

Intangible Assets. The July 2009 acquisition of the Southern Bank of Commerce resulted in goodwill of $126,000. The October 2013 acquisition of Ozarks Legacy Community Financial, Inc., resulted in goodwill of $1.5 million. The August 2014 acquisition of Peoples Service Company, Inc., and its subsidiary, Peoples Bank of the Ozarks (the “Peoples Acquisition”) resulted in goodwill of $3.0 million. The June 2017 acquisition of Tammcorp, Inc., and its subsidiary, Capaha Bank (the “Capaha Acquisition”) resulted in goodwill of $4.1 million and a $3.4 million core deposit intangible which was amortized over a seven-year period using the straight-line method. The February 2018 acquisition of SMB-Marshfield resulted in goodwill of $4.4 million and a $1.3 million core deposit intangible which was amortized over a seven-year period using the straight-line method. The November 2019 Gideon acquisition resulted in goodwill of $1.0 million and a $4.1 million core deposit intangible which is being amortized over a seven-year period using the straight-line method. The May 2020 Central Federal Acquisition resulted in a bargain purchase gain of $123,000 and a $540,000 core deposit intangible which is being amortized over a six-year period using the straight-line method. The December 2021 Cairo acquisition resulted in goodwill of $442,000 and a $168,000 core deposit intangible which is being amortized over a seven-year period using the straight-line method. The February 2022 Fortune acquisition resulted in goodwill of $12.8 million and a $1.6 million core deposit intangible which is being amortized over a seven-year period using the straight-line method. The January 2023 Citizens merger resulted in goodwill of $23.5 million, as well as a $22.1 million core deposit intangible which is being amortized over a ten-year period using the straight-line method, and a $2.6 million intangible related to the acquired trust and wealth management business line which is being amortized over a ten-year period using the straight-line method. Goodwill from these acquisitions is not being amortized, but is tested for impairment at least annually.

Previous wording

*Deposits.*Deposits were $4.0 billion at June 30, 2024, an increase of $226.9 million, or 6.1%, as compared to June 30, 2023. The deposit portfolio saw increases in certificates of deposit and savings accounts, which were partially offset by decreases in money market deposit accounts, interest-bearing transaction accounts, and noninterest bearing transaction accounts.

Current wording

*Deposits.*Deposits were $4.3 billion at June 30, 2025, an increase of $338.3 million, or 8.6%, as compared to June 30, 2024. The deposit portfolio saw increases in certificates of deposit and savings accounts, which were partially offset by decreases in interest bearing transaction accounts, noninterest-bearing transaction accounts, and money market deposit accounts.

Previous wording

Public unit balances totaled $594.6 million at June 30, 2024, an increase of $16.1 million compared to June 30, 2023. Brokered deposits, comprised of certificates and money market deposits, totaled $173.8 million at June 30, 2024, an increase of $14.2 million compared to June 30, 2023. Our discussion of brokered deposits excludes those deposits originated through reciprocal arrangements. We continued to utilize reciprocal deposit programs, and at June 30, 2024, we had placed deposits of $575.3 million through reciprocal programs, up from $524.1 million a year earlier. At June 30, 2024, $361.0 million of this total reflected deposits we had placed on behalf of our public unit depositors, up from $331.3 million a year ago. The average loan-to-deposit ratio for the fourth quarter of fiscal 2024 was 96.1%, as compared to 95.8% for the same period of the prior fiscal year.

Current wording

Public unit balances totaled $550.8 million at June 30, 2025, a decrease of $43.8 million compared to June 30, 2024. Brokered deposits, comprised of certificates and money market deposits, totaled $235.1 million at June 30, 2025, an increase of $61.3 million compared to June 30, 2024. Our discussion of brokered deposits excludes those deposits originated through reciprocal arrangements. We continued to utilize reciprocal deposit programs, and at June 30, 2025, we had placed deposits of $517.4 million through reciprocal programs, down from $575.3 million a year earlier. At June 30, 2025, $260.0 million of this total reflected deposits we had placed on behalf of our public unit depositors, down from $361.0 million a year ago. The average loan-to-deposit ratio for the fourth quarter of fiscal 2025 was 94.5%, as compared to 96.3% for the same period of the prior fiscal year.

Previous wording

*Subordinated Debt.*In March 2004, $7.0 million of Floating Rate Capital Securities of Southern Missouri Statutory Trust I, with a liquidation value of $1,000 per share were issued. The securities bear interest at a floating rate based on SOFR, are now redeemable at par, and mature in 2034. In connection with its October 2013 acquisition of Ozarks Legacy, the Company assumed $3.1 million in floating rate junior subordinated debt securities. The debt securities had been issued in June 2005 by Ozarks Legacy in connection with the sale of trust preferred securities, bear interest at a floating rate based on SOFR, are redeemable at par, and mature in 2035. The carrying value of these debt securities was approximately $2.8 million at June 30, 2024, as compared to $2.7 million at June 30, 2023. In connection with the Peoples Acquisition, the Company assumed $6.5 million in floating rate junior subordinated debt securities. The debt securities had been issued in 2005 by Peoples, in connection with the sale of trust preferred securities, bear interest at a floating rate based on SOFR, are redeemable at par, and mature in 2035. The carrying value of these debt securities was approximately $5.6 million at June 30, 2024, as compared to $5.5 million at June 30, 2023. In connection with the Fortune acquisition, the Company assumed $7.5 million in fixed-to-floating rate subordinated notes. The notes had been issued in May 2021 by Fortune to a multi-lender group, bear interest through May 2026 at a fixed rate of 4.5%, and will bear interest thereafter at SOFR plus 3.77%. The notes will be redeemable at par beginning in May 2026, and mature in May 2031. The carrying value of the notes was approximately $7.6 million at June 30, 2024, as compared to $7.7 million at June 30, 2023.

Current wording

securities had been issued in June 2005 by Ozarks Legacy in connection with the sale of trust preferred securities, bear interest at a floating rate based on SOFR, are redeemable at par, and mature in 2035. The carrying value of these debt securities was approximately $2.8 million at June 30, 2025 and at June 30, 2024. In connection with the Peoples Acquisition, the Company assumed $6.5 million in floating rate junior subordinated debt securities. The debt securities had been issued in 2005 by Peoples, in connection with the sale of trust preferred securities, bear interest at a floating rate based on SOFR, are redeemable at par, and mature in 2035. The carrying value of these debt securities was approximately $5.6 million at June 30, 2025 and at June 30, 2024. In connection with the Fortune acquisition, the Company assumed $7.5 million in fixed-to-floating rate subordinated notes. The notes had been issued in May 2021 by Fortune to a multi-lender group, bear interest through May 2026 at a fixed rate of 4.5%, and will bear interest thereafter at SOFR plus 3.77%. The notes will be redeemable at par beginning in May 2026, and mature in May 2031. The carrying value of the notes was approximately $7.5 million at June 30, 2025, as compared to $7.6 million at June 30, 2024.

Previous wording

*Stockholders’ Equity.*The Company’s stockholders’ equity was $488.7 million at June 30, 2024, an increase of $42.7 million, or 9.6%, as compared to June 30, 2023. The increase was attributable primarily to earnings retained after cash dividends paid, in combination with a $4.5 million reduction in accumulated other comprehensive losses (“AOCL”) primarily as a result of the market value of the Company’s investments appreciating during the fiscal year due to the decrease in market interest rates. The reduction in AOCL was also partially due to losses of $1.5 million which were recognized during the fiscal year on the sale of AFS securities. The AOCL totaled $17.4 million at June 30, 2024, as compared to $21.9 million at June 30, 2023. The Company does not hold any securities classified as held-to-maturity. The increase in stockholders’ equity was partially offset by $3.9 million being utilized to repurchase 92,795 shares of the Company’s common stock during fiscal 2024 at an average price of $41.56 per share.

Current wording

*Stockholders’ Equity.*The Company’s stockholders’ equity was $544.7 million at June 30, 2025, an increase of $55.9 million, or 11.4%, as compared to June 30, 2024. The increase was attributable primarily to earnings retained after cash dividends paid, in combination with a $6.1 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 $11.4 million at June 30, 2025, as compared to $17.5 million at June 30, 2024. The Company does not hold any securities classified as held-to-maturity.

Previous wording

Net Income. The Company’s net income for the fiscal year ended June 30, 2023, was $39.2 million, a decrease of $7.9 million, or 16.8%, as compared to the prior fiscal year.

Current wording

Net Income. The Company’s net income for the fiscal year ended June 30, 2025, was $58.6 million, an increase of $8.4 million, or 16.7%, as compared to the prior fiscal year.

Previous wording

Net Interest Income. Net interest income for fiscal 2023 was $126.7 million, an increase of $23.2 million, or 22.4%, when compared to the prior fiscal year. The increase, as compared to the prior fiscal year, was attributable to a 28.5% increase in the average balance of interest-earning assets, partially offset by a decrease in the net interest margin, from 3.72% to 3.54%. Average earning asset balance growth was due primarily to loan growth and increases in investment securities, attributable in part to the Citizens merger. Lower average cash and cash equivalent balances partially offset increases in other categories of average earning assets, and the change in the interest-earning asset mix also partially offset the decline in interest margin.

Current wording

Net Interest Income. Net interest income for fiscal 2025 was $154.6 million, an increase of $15.1 million, or 10.8%, when compared to the prior fiscal year. The increase was attributable to a 6.7% increase in the average balance of interest-earning assets, and an increase in the net interest margin, from 3.27% to 3.40%. Average earning asset balance growth was due primarily to loan growth, increases in investment securities, and funds held with correspondent banks. The increase in earning asset yields, primarily attributable to the increase in loan yields, more than offset the increase in average cost of funding, contributed to the expansion in net interest margin as compared to 2024.

Previous wording

Interest Income. Interest income for fiscal 2023 was $176.4 million, an increase of $59.5 million, or 51.0%, when compared to the prior fiscal year. The increase was due to an increase of $794.0 million, or 28.5%, in the average balance of interest-earning assets, combined with a 73 basis point increase in the average yield earned on interest-earning assets, from 4.20% in fiscal 2022, to 4.93% in fiscal 2023.

Current wording

Interest Income. Interest income for fiscal 2025 was $277.4 million, an increase of $29.0 million, or 11.7%, when compared to the prior fiscal year. The increase was due to an increase of $286.1 million, or 6.7%, in the average balance of interest-earning assets, combined with a 27-basis point increase in the average yield earned on interest-earning assets, from 5.82% in fiscal 2024, to 6.09% in fiscal 2025.

Previous wording

Interest income on loans receivable for fiscal 2023 was $162.2 million, an increase of $50.7 million, or 45.5%, when compared to the prior fiscal year. The increase was due to a $749.9 million, or 30.9%, increase in the average balance of loans receivable, combined with a 51 basis point increase in the average yield earned on loans receivable. The increase in the average yield was attributed to origination and repricing of loans and borrower refinancing as average market interest rates increased over the course of the fiscal year, combined with the partial-year impact of the Citizens merger, in which the acquired loan portfolio was valued based on current market interest rates at the date of merger.

Current wording

Interest income on loans receivable for fiscal 2025 was $250.8 million, an increase of $28.3 million, or 12.7%, when compared to the prior fiscal year. The increase was due to a $257.3 million, or 6.9%, increase in the average balance of loans receivable, combined with a 33-basis point increase in the average yield earned on loans receivable. The increase in the average yield was attributed to originations and repricing of loans and borrower refinancings at current higher market interest rates compared to the average loan portfolio rates of the prior fiscal year.

Previous wording

Interest Expense. Interest expense was $49.7 million for fiscal 2023, an increase of $36.4 million, or 273.5%, when compared to the prior fiscal year. The increase was due to a 113-basis point increase in the average rate paid on interest-bearing liabilities, to 1.72% in fiscal 2023, from 0.59% in fiscal 2022, combined with an increase of $654.0 million, or 29.2%, in the average balance of interest-bearing liabilities.

Current wording

Interest Expense. Interest expense was $122.7 million for fiscal 2025, an increase of $13.9 million, or 12.7%, when compared to the prior fiscal year. The increase was due to a 14-basis point increase in the average rate paid on

Previous wording

Interest expense on deposits was $44.4 million for fiscal 2023, an increase of $32.6 million, or 275.5%, as compared to the prior fiscal year. The increase was due to a 107-basis point increase in the average rate paid on interest-bearing deposits, combined with the $580.5 million, or 26.6%, increase in the average balance of those deposits. The increase in the average rate paid on deposits was attributable primarily to higher market interest rates over the course of fiscal 2023.

Current wording

Interest expense on deposits was $115.8 million for fiscal 2025, an increase of $14.1 million, or 13.8%, as compared to the prior fiscal year. The increase was due to a 15-basis point increase in the average rate paid on interest-bearing deposits, combined with the $282.2 million, or 8.4%, increase in the average balance of those deposits. The increase in the average rate paid on deposits was attributable primarily to deposits rates, particularly certificates of deposits and savings accounts, adjusting up to higher market interest rates over the course of fiscal 2025, when compared to average rates in fiscal 2024.

Previous wording

subordinated debt. The increase in the average rate paid was attributable primarily to higher market interest rates over the course of the fiscal year, which impacted adjustable rate debt, while the increase in the average balance was attributable primarily to the mid-fiscal 2022 assumption of subordinated debt in the Fortune merger.

Current wording

Interest expense on subordinated debt was $1.6 million for fiscal year 2025, a decrease of $114,000, or 6.5%, when compared to the prior fiscal year. The decrease was due primarily to a 51-basis point decrease in the average rate paid on subordinated debt. The decrease in the average rate paid was attributable primarily to lower market interest rates over the course of the fiscal year, which impacted adjustable-rate debt.

Previous wording

Provision for Income Taxes. The Company recorded an income tax provision of $10.2 million for fiscal 2023, a decrease of $2.5 million, or 19.7%, as compared to the prior fiscal year, which was attributable to lower pre-tax income and a decrease in the effective tax rate to 20.7% for fiscal 2023, as compared to 21.3% for fiscal 2022.

Current wording

Provision for Income Taxes. The Company recorded an income tax provision of $15.4 million for fiscal 2025, an increase of $2.5 million, or 19.2%, as compared to the prior fiscal year, which was attributable to higher pre-tax income and an adjustment of tax accruals of $650,000 attributable to completed merger activity. This was partially offset by the change in accounting for recognition of tax credits accounted for under proportional amortization, as mentioned above. The effective tax rate was 20.8% for fiscal 2025, as compared to 20.5% for fiscal 2024.

Previous wording

Interest expense on deposits was $102.2 million for fiscal 2024, an increase of $57.8 million, or 130.1%, as compared to the prior fiscal year. The increase was due to a 144-basis point increase in the average rate paid on interest-bearing deposits, combined with the $592.1 million, or 21.5%, increase in the average balance of those deposits. The increase in the average rate paid on deposits was attributable primarily to higher market interest rates and a more competitive deposit environment over the course of fiscal 2024.

Current wording

Interest expense on deposits was $101.7 million for fiscal 2024, an increase of $57.3 million, or 129.1%, as compared to the prior fiscal year. The increase was due to a 143-basis point increase in the average rate paid on interest-bearing deposits, combined with the $582.7 million, or 21.1%, increase in the average balance of those deposits. The increase in the average rate paid on deposits was attributable primarily to higher market interest rates and a more competitive deposit environment over the course of fiscal 2024.

Previous wording

Southern Missouri’s primary potential sources of funds include deposit growth, FHLB advances, amortization and prepayment of loan principal, investment maturities and sales, and capital generated from ongoing operations. While scheduled repayments on loans and securities as well as the maturity of short-term investments are a relatively predictable source of funding, deposit flows, FHLB advance redemptions and loan and security prepayment rates are

Current wording

The Bank’s primary potential sources of funds include deposit growth, FHLB advances, amortization and prepayment of loan principal, investment maturities and sales, and capital generated from ongoing operations. While scheduled repayments on loans and securities as well as the maturity of short-term investments are a relatively predictable source of funding, deposit flows and loan and security prepayment rates are significantly influenced by factors outside of the Bank’s control, including general economic conditions and market competition. The Bank has relied on FHLB advances as a stable source for funding cash or liquidity needs, particularly for longer maturities.

Previous wording

Southern Missouri uses its liquid assets as well as other funding sources to meet ongoing commitments, to fund loan demand, to repay maturing certificates of deposit and FHLB advances, to make investments, to fund other deposit withdrawals, and to meet operating expenses. At June 30, 2024, the Bank had outstanding commitments to extend credit of $898.6 million (including $689.6 million in unused lines of credit). Total commitments to originate fixed-rate loans with terms in excess of one year were $159.3 million at rates ranging from 4.95% to 9.0%, with a weighted-average rate of 7.04%. Management anticipates that current funding sources will be adequate to meet foreseeable liquidity needs.

Current wording

The Bank uses its liquid assets as well as other funding sources to meet ongoing commitments, to fund loan demand, to repay maturing certificates of deposit and FHLB advances, to make investments, to fund other deposit withdrawals, and to meet operating expenses. At June 30, 2025, the Bank had outstanding commitments to extend credit of $944.0 million (including $596.9 million in unused lines of credit). Total commitments to originate fixed-rate loans with terms in excess of one year were $200.2 million at rates ranging from 4.75% to 8.28%, with a weighted-average rate of 6.96%. Management anticipates that current funding sources will be adequate to meet foreseeable liquidity needs.

Previous wording

For the fiscal year ended June 30, 2024, Southern Missouri increased deposits by $226.9 million, and decreased FHLB advances by $31.5 million. During the prior fiscal year, Southern Missouri increased deposits by $910.5 million, and increased FHLB advances by $95.6 million. The deposit increase in 2023 was primarily attributable to the Citizens merger increasing deposits by $851.1 million, net of fair value adjustments. At June 30, 2024, the Bank reported $1.4 billion of its single-family residential and commercial real estate loan portfolios as eligible collateral to the FHLB for available credit of approximately $845.1 million, of which $102.1 million was advanced, while $461,000 was encumbered in relation to residential real estate loans sold onto the secondary market through the FHLB. The Bank had also pledged $383.6 million of its agricultural real estate and agricultural operating and equipment loans to the Federal Reserve Bank of St. Louis’s discount window for available credit of approximately $323.4 million, as of June 30, 2024, none of which was advanced. In addition, as of June 30, 2024, the Bank had other assets available to pledge to the FHLB and Federal Reserve to access additional liquidity. In total, FHLB borrowings are limited to 45% of Bank assets, or approximately $2.1 billion as most recently reported by the FHLB as of June 30, 2024, which means that an amount up to $2.0 billion may still be eligible to be borrowed from the FHLB, subject to available collateral. Along with the ability to borrow from the FHLB and Federal Reserve Bank of St. Louis, management believes its liquid resources will be sufficient to meet the Company’s liquidity needs.

Current wording

For the fiscal year ended June 30, 2025, Southern Missouri increased deposits by $338.3 million and FHLB advances by $2.0 million. During the prior fiscal year, the Bank increased deposits by $226.9 million, and decreased FHLB advances by $31.5 million. At June 30, 2025, the Bank reported $1.5 billion of its single-family residential, home equity, and commercial real estate loan portfolios as eligible collateral to the FHLB for available credit of approximately $857.3 million, of which $104.1 million was advanced, while $612,000 was encumbered in relation to residential real estate loans sold onto the secondary market through the FHLB. The Bank had also pledged $386.2 million of its agricultural real estate and agricultural operating and equipment loans to the Federal Reserve Bank of St. Louis’s discount window for available credit of approximately $334.8 million, as of June 30, 2025, none of which was advanced. In addition, as of June 30, 2025, the Bank had other assets available to pledge to the FHLB and Federal Reserve to access additional liquidity. In total, FHLB borrowings are limited to 45% of Bank assets, or approximately $2.2 billion as most recently reported by the FHLB as of June 30, 2025, which means that an amount up to $2.1 billion may still be eligible to be borrowed from the FHLB, subject to available collateral. Along with the ability to borrow from the FHLB and Federal Reserve Bank of St. Louis, management believes its liquid resources will be sufficient to meet the Company’s liquidity needs.

Previous wording

At June 30, 2024, the Bank had $1.1 billion in CDs maturing within one year and $2.6 billion in non-maturity deposits, as compared to $690.5 million in CDs maturing within one year and $2.7 billion in non-maturity deposits as of June 30, 2023. Management believes that most maturing interest-bearing liabilities will be retained or replaced by new interest-bearing liabilities. Also, at June 30, 2024, the Bank had no overnight advances from the FHLB, $8.0 million in term FHLB advances maturing within one year, and $94.1 million in FHLB advances with a maturity date in excess of one year. Of the advances with maturity dates in excess of one year, none was eligible for early redemption by the lender within one year.

Current wording

interest-bearing liabilities. Also, at June 30, 2025, the Bank had no overnight advances from the FHLB, $17.0 million in term FHLB advances maturing within one year, and $87.1 million in FHLB advances with a maturity date in excess of one year. Of the advances with maturity dates in excess of one year, none was eligible for early redemption by the lender within one year.

Previous wording

We also incur capital expenditures on an ongoing basis to expand and improve our product offerings, enhance and modernize our technology infrastructure, and to introduce new technology-based products to compete effectively in our markets. We evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and customer retention) and our expected return on investment. The amount of capital investment is influenced by, among other things, current and projected demand for our services and products, cash flow generated by operating activities, cash required for other purposes and regulatory considerations. At June 30, 2024, we had other future obligations and accrued expenses of $19.9 million. Based on our current capital allocation objectives, during fiscal 2025 we project expending approximately $7.0 million to $10.0 million of cash for capital investment in technology, property, plant and equipment. In addition, for the fiscal year ending June 30, 2025, we project that our fixed commitments will include (i) $1.5 million of operating and finance lease and other fixed payments and (ii) $1.7 million of scheduled interest payments on subordinate notes. We believe that our liquid assets combined with the available lines of credit provide adequate liquidity to meet our current financial obligations for at least the next 12 months.

Current wording

We also incur capital expenditures on an ongoing basis to expand and improve our product offerings, enhance and modernize our technology infrastructure, and to introduce new technology-based products to compete effectively in our markets. We evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as forecasted impact on revenue growth, productivity, expenses, service levels and customer retention) and our expected return on investment. The amount of capital investment is influenced by, among other things, current and projected demand for our services and products, cash flow generated by operating activities, cash required for other purposes and regulatory considerations. At June 30, 2025, we had other future obligations and accrued expenses of $27.3 million. Based on our current capital allocation objectives, during fiscal 2025 we project expending approximately $7.0 million to $10.0 million of cash for capital investment in technology, property, plant and equipment. In addition, for the fiscal year ending June 30, 2025, we project that our fixed commitments will include (i) $1.5 million of operating and finance lease and other fixed payments and (ii) $1.6 million of scheduled interest payments on subordinate notes. We believe that our liquid assets combined with the available lines of credit provide adequate liquidity to meet our current financial obligations for at least the next 12 months.

Previous wording

At June 30, 2024, the Bank exceeded regulatory capital requirements with tier 1 capital, total risk-based capital, and common equity tier 1 capital of $447.2 million, $496.1 million and $447.2 million, respectively. The Bank’s tier 1 capital represented 9.79% of total adjusted assets and 11.43% of total risk-weighted assets, while total risk-based capital was 12.68% of total risk-weighted assets, and common equity tier 1 capital was 11.43% of total risk-weighted assets. To be considered adequately capitalized under the FDIC Prompt Corrective Action (PCA) guidelines, the Bank must maintain tier 1 capital levels of at least 4.0% of adjusted total assets and 6.0% of risk-weighted assets, total risk-based capital of 8.0% of risk-weighted assets, and common equity tier 1 capital of 4.5% of risk-weighted assets. To be considered well capitalized, the Bank must maintain tier 1 capital levels of at least 5.0% of adjusted total assets and 8.0% of risk-weighted assets, total risk-based capital of 10.0% of risk-weighted assets, and common equity tier 1 capital of 6.5% of risk-weighted assets.

Current wording

At June 30, 2025, the Bank exceeded regulatory capital requirements with tier 1 capital, total risk-based capital, and common equity tier 1 capital of $494.2 million, $545.3 million and $494.2 million, respectively. The Bank’s tier 1 capital represented 10.05% of total adjusted assets and 12.09% of total risk-weighted assets, while total risk-based capital was 13.34% of total risk-weighted assets, and common equity tier 1 capital was 12.09% of total risk-weighted assets. To be considered adequately capitalized under the FDIC Prompt Corrective Action (PCA) guidelines, the Bank must maintain tier 1 capital levels of at least 4.0% of adjusted total assets and 6.0% of risk-weighted assets, total risk-based capital of 8.0% of risk-weighted assets, and common equity tier 1 capital of 4.5% of risk-weighted assets. To be considered well capitalized, the Bank must maintain tier 1 capital levels of at least 5.0% of adjusted total assets and 8.0% of risk-weighted assets, total risk-based capital of 10.0% of risk-weighted assets, and common equity tier 1 capital of 6.5% of risk-weighted assets.

Previous wording

At June 30, 2024, the Company exceeded regulatory capital requirements with tier 1 capital, total risk-based capital, and common equity tier 1 capital of $467.0 million, $524.0 million and $451.5 million, respectively. The Company’s tier 1 capital represented 10.19% of total adjusted assets and 11.79% of total risk-weighted assets, while total risk-based capital was 13.23% of total risk-weighted assets, and common equity tier 1 capital was 11.39% of total risk-weighted assets. Under 12 CFR Part 217 -- Capital Adequacy of Bank Holding Companies, Savings and Loan Holding Companies, and State Member Banks (Regulation Q), the Company is subject to the following minimum regulatory capital requirements: common equity tier 1 capital ratio of 4.5%, tier 1 capital ratio of 6%, total capital ratio of 8% of risk-weighted assets, and leverage ratio of 4%.

Current wording

At June 30, 2025, the Company exceeded regulatory capital requirements with tier 1 capital, total risk-based capital, and common equity tier 1 capital of $517.8 million, $577.2 million and $502.2 million, respectively. The Company’s tier 1 capital represented 10.61% of total adjusted assets and 12.51% of total risk-weighted assets, while total risk-based capital was 13.95% of total risk-weighted assets, and common equity tier 1 capital was 12.14% of total risk-weighted assets. Under 12 CFR Part 217 -- Capital Adequacy of Bank Holding Companies, Savings and Loan Holding Companies, and State Member Banks (Regulation Q), the Company is subject to the following minimum regulatory capital requirements: common equity tier 1 capital ratio of 4.5%, tier 1 capital ratio of 6%, total capital ratio of 8% of risk-weighted assets, and leverage ratio of 4%.

Previous wording

The consolidated financial statements and related data presented herein have been prepared in accordance with U.S. generally accepted accounting principles, which require the measurement of financial position and operating results in historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on the operations of the Company is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, changes in interest rates generally have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. In the current interest rate environment, liquidity and maturity structure of the Company’s assets and liabilities are critical to the maintenance of acceptable performance levels.

Current wording

The primary impact of inflation on the operations of the Company is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, changes in interest rates generally have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. In the current interest rate environment, liquidity and maturity structure of the Company’s assets and liabilities are critical to the maintenance of acceptable performance levels.