Southern Missouri Bancorp, Inc.

My name is Sammy and I'll be coordinating the call today. During the presentation you can register a question by pressing star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2 to remove yourself from the question key. I'll now like to hand over to our host, Stefan Shkotovich, CFO to begin. Please go ahead Stefan.

Thank you so much. Good morning everyone. This is Stefan Shkotovich, CFO with Southern Missouri Bank Group. Thank you for joining us. The purpose of this call is to review the information and data presented in our quarterly earnings release, dated Wednesday, July 23, 2025, and to take your questions. We may make certain forward-looking statements during today's call, and we refer you to our cost-higher statement regarding forward-looking statements contained in the press release. Joining on the call today is my Greg Stubbins, our Chairman and CEO, and Matt Funke, President and Chief Administrative Officer. Matt will lead off the conversation today with some highlights from our most recent quarter of fiscal year. Thank you Stefan. Good morning everyone. This is Matt Funke. Thanks for joining us. I'll start off with some highlights from our financial results for the June quarter, the final quarter of our fiscal year. Quarter over quarter earnings were up slightly as we saw our net interest margin and net interest income move higher, along with an increase in non-interest income and a lower provision for income tax expense. This was partially offset by an increase in provision for credit losses. We have seen improvement in the net interest margin this year with continued loan growth and moderate operating expense growth, which improved overall earnings and profitability in fiscal 25. Despite problem credits moving higher here in the year off to very low levels we've seen across the industry in the last few years, we do feel we have good momentum and see positive trends going into the next fiscal year. We earned $1.39 diluted in the June quarter, which remained unchanged from the late March quarter, but up 20 cents from the June 2024 quarter, or about 17% growth year over year. During the quarter we realized $425,000 in consulting expenses associated with the negotiation of a large long-term business contract, which will begin benefiting results in fiscal 26. Excluding these costs we would have earned $1.42 for the quarter. For full year fiscal 25 we earned $5.18 compared to $4.42 in fiscal 24. The increase year over year was predominantly driven by stronger net interest income, which stemmed from almost 7% earning asset growth and net interest margin expansion as our funding cost declined, and the loan portfolio adjusted up with higher market rates. With this earnings growth, cancel book value per share increased by $5.19 for just above 14% over the last 12 months to $41.87. Due to our strong capital position, with the earnings release we also announced a 2 cents or 8 cents 7% increase and our quarterly dividend bringing it to 25 cents a share. Net interest margin for the quarter was .46% up from .39% reported for the third quarter of fiscal 25, the next quarter. As we saw some spread increases, loan yields increased and we benefited from deploying lower yielding excess earnings, excess interest earnings cash balances into higher yielding loans. Stefan will go over more details in fiscal 26. We do plan to change our reported quarterly NIMM calculation to be based off the annualized day count, which should reduce the volatility in the NIMM due to the differences in each quarter's double day. If we calculated the net interest margin by annualizing the day count in the fourth quarter, it would have been .47% as compared to .44% in the late quarter if calculated similarly. Growth loan balances increased during the quarter by 76 million or .6% annualized and by 250 million or .5% as compared to 30 years ago. Prediction for credit losses was 2.5 million up 1.6 million over the late quarter. The increase was primarily attributable to providing for net charge-offs and to support loan growth in addition to an increase in available balances and an increase in the expected funding rate on those available balances. Greg will go into more detail on credit and Stefan will talk about the allowance for credit losses in a minute. Deposit balances as of June 30, 2025 increased by 20 million or about 2% annualized compared to the late quarter. This is a seasonally slower period for deposits due to seasonal outflows from our public units and as our agricultural clients deploy funds for the crop year. I'll hand it over now to Greg for some additional discussion.

Thanks Matt and good morning everyone. I'd like to start off talking about credit quality. Consistent with our discussion last quarter, credit quality has deteriorated somewhat from the very low levels of the last several years and remains relatively strong June 30 with adversely classified loans totaling $50 million or .2% of total loans, an increase of about $830,000 and flat as a percentage of total loans from this quarter. Non-performing loans were $23 million June 30 which increased $1.1 million compared to last quarter and totaled .56% of gross loans. In comparison to June 24, MPLs were up about $16 million or 39 basis points higher as a percentage of total loans. Non-performing assets were about $100,000 lower compared to a year ago as we totaled personal and other real estate in the fourth quarter. But the other real estate retest was mostly offset by additional non-performing loans. The increase in MPOs this quarter was mostly due to a participation that we originated of good car balances, $5.7 million on the construction loans related to the development of senior living facility in Kansas which was placed on our accrual tax. This loan was aspired to through the citizens merger and we're currently working through the foreclosure process. We are still having discussions with the borrower with the hopes to avoid foreclosures as the project included very significant capital investment by them actually exceeding our outstanding balance. As reported last quarter, we are continuing to work with borrowers on two specific purpose -over-occupied CRE properties in different states with parents worse in common than originally leased to a single tenant that has since become installed. Last quarter these balances totaled $10 million and were placed on non-accrual. Based on updated approvals, we took a $3.8 million debt charge in the quarter on one of the three loans taking the balance to $6.2 million as of June 30. As of year end in total, we have about 45% specific reserves remaining on the balances of these loans. Loans passed in 30 to 89 days were $6.1 million down $9 million from March and 15 basis points on growth times. This is a decrease of 23 basis points compared to the length quarter and in line compared to a year ago. Totaled the local loans for $25.6 million, up $1.2 million from the March quarter, about $16.4 million from the June 2024. The decrease in loans 30 to 89 days past due was primarily due to the special purpose hearing loans mentioned earlier, with the partial charge off for migration to 90 days for more past due. Despite increase in problem loans, these issues remain at a lot of levels and asset quality compares bravely to the industry. In combination with stronger deriding and adequate reserves, we feel comfortable with our ability to work through these credits and any potential wider deterioration that could occur as a byproduct of general economic conditions. So I don't want to give the impression that we're accepting these trends, but we're redoubling efforts to improve our credit quality results. This quarter ag real estate balances totaled $245 million with 6% of gross loans, and ag production in fiscal loans totaled $206 million with 5% of gross loans. As compared to the prior quarter in, ag real estate balances were down $2 million, but they were up $12.5 million compared to June 30th of the year ago. Ag production loan balances were up $20 million quarter over quarter due to normal seasonality and higher operating costs, and up $30 million year over year. Our access must begin 2025 with an early planting window due to mild weather. The heavy spring rains soon delay progress, especially from cotton and soybeans requiring summary planting. Early planted corn and soybeans are progressing well, with early corn harvest likely to begin in August, and early soybeans in September. Both early years as well. Later planted crops have improved over the past month. Overall nearly all of our farmers acres were planted. The crop dates projections for 2025 are 30% swingings, 30% corn, 20% cotton, 15% rice, and 5% specialty crops. Corn acreage is up slightly and may yield well, with weak pricing. Good crop farmers to score a drain again this year. Soybean acres rose modestly as producers diverted acres from other crops. Specialty in rice crops are in good condition, though price pressure is lowering expected returns. Cotton is showing average progress, with improvement ties to drier weather conditions. Across the board, farmers face rising input costs and expenses for insurance, labor, and repairs, expenses of which continue to climb. Dry weather is also pushing up fuel and chemical usage for irrigation and wheat control impresses. Farmers are growing more heavily on federal lines, with some tapping into pre-approved contingency lines. About 95% of our 2024 crop has been sold and applied to debt. The lower commodity prices this spring have reduced expected profitability for this year. Economic commodity assistance program payments from the government have helped. Many farmers are anticipating a difficult barge this year. Future pricing for key crops remains to solve relative to underwriting assumptions. Corn, rice, soybeans, and cotton, and wheat, are each down 6 to 8%, and many producers remain pessimistic about positive returns for 2025, and concerned about entering 2026 in a weakened position. We have seen some instances of farmers deciding to voluntarily wind down their operations earlier this year, and could see that trend continue as the profits over the outlook destitute. Farm equipment prices fell this spring, as dealers moved to clear inventory with lower rates, while most producers are deferring purchases of equipment. While 2024 was a strong production year, high costs and big prices left many farmers with lower working capital positions, or in some instances, needy restructure. Farmland values remain firm, particularly for irrigated acres, though inventor demand, not farmer demand, is driving the march. With equipment values falling in trans-flow type, lateral coverage is weaker. Lenders are actively inspecting 2025 crop progress, or will deliver yielding collateral analysis by October to get an early understanding of the outlook for our borrowers this May enter 2026. We are also monitoring the potential for further federal aid under the recently passed big beautiful bill of President Trump, which could be critical in supporting our farmers through what may be another financially challenging year. We are proactively working to address any potential shortfalls by leveraging FSA guarantee programs for restructuring loans. Despite these challenges, our distance-lifting practices, stress tests in the farm cash flows, and deep customer relationships should ensure satisfactory performance defense. In addition, due to the prolonged weakness in the agricultural segment, we've heard that increased reserves for watch-list ag borrowers in the March quarter in our population are allowed for federal loss. Looking at the loan portfolio as a whole, gross loans contribute $76 billion in the quarter. The quarter was led by growth in C&I, multifamily, and ag production loans. The stronger growth out of our South, West, and East regions all contributed to a great quarter for loan growth. The fourth and first quarter is seasonally the strongest part of our year for loan growth due to seasonal factors, including ag. Our pipewires are loans to fund in the next 90 days of scrolls in total $224 million, as compared to $163 million in the March quarter and $157 million a year ago. Despite the strong near-term eviction donation pipeline, we expect to have a higher than usual first quarter of prepayment activity that could slow some of the net loan rates. Although there remains some uncertainty surrounding the economy due to our strong pipeline, as we look into December 26, we feel optimistic about achieving another year of mid-single digits loan growth for the upcoming year. Our non-owner occupied TRE concentration at the bank level was approximately 302% of tier 1 capital, and our allowance at June 30, down about 2% of sports compared to the March quarter, due to almost $9 million in net paydowns of down-owner occupied CRE and growth in tier 1 capital. On a consolidated basis, our CRE ratio was 291% at the end of the fourth. In a year, we would expect our CRE ratio to increase somewhat, but should stay in the 300-325%. Stephen?