Key Points
Gross loans grew by $64 million during the quarter.
Core certificates of deposit increased by $95 million.
Tangible book value per share rose to $48.52.
On its first quarter of fiscal 2027 earnings call, held on Oct. 22, 2026, Southern Missouri Bancorp (NASDAQ:SMBC) announced diluted earnings per share of $1.73. For bank investors, steady deposit growth and healthy farm crop yields protect net interest margin, the profit spread earned between loan returns and deposit costs.
Three things management said stand out.
1. Higher Crop Yields Support Agricultural Borrowers and Loan Quality
Agriculture represents 12% of the overall loan portfolio, so farmer cash flows directly shape credit risk. Favorable harvest weather and crop yields that exceeded spring underwriting assumptions helped farm clients offset rising fuel and fertilizer expenses.
Lenders are reporting average to above average yields on many of our crops, particularly irrigated acreage and current or contracted prices for corn, soybeans, rice and cotton are generally above the assumptions we used under spring underwriting.
-- Greg Steffens, Chairman and Chief Executive Officer
2. Local Time Deposits Provide More Cost-Effective Funding Than Brokered Markets
To fund loan expansion without squeezing margins, the bank shifted away from wholesale funding sources to local certificates of deposit, which are fixed-term savings accounts offering a guaranteed interest rate. Core local certificates of deposit grew by $95 million during the quarter, replacing $35 million in costlier brokered balances.
Given the meaningful increase in brokered CD rates, Local CDs provided a more cost-effective source of funding. We remain focused on funding loan growth with core customer deposits and deepening full banking relationships.
-- Matthew Funke, President and Chief Administrative Officer
3. Capital Strength Creates Flexibility for Regional Bank Acquisitions
With a tangible book value per share of $48.52, the balance sheet can support selective corporate deals without stalling share repurchases. Management is evaluating acquisition candidates in Missouri to expand its geographic reach from Kansas City to St. Louis.
M&A conversations have become somewhat more active and our strong capital position gives us the flexibility to pursue the right strategic partner while also returning capital to shareholders through share repurchases.
-- Greg Steffens, Chairman and Chief Executive Officer
Looking Ahead
Seasonal agricultural paydowns and public deposit inflows create near-term balance sheet shifts over the next two quarters. Fixed-rate loans repricing at prevailing market rates provide structural support for profitability, while leadership focuses on pricing discipline and customer retention.
Over time, however, we believe the positively sloped yield curve should be supportive of margin as fixed rate loans mature and reprice at current market rates.
-- Stefan Chkautovich, Chief Financial Officer
Disciplined execution across regional markets remains the core anchor as capital deployment options widen.
As we evaluate these opportunities, we remain focused on disciplined organic growth, prudent risk management, deepening customer relationships and thoughtful capital deployment.
-- Greg Steffens, Chairman and Chief Executive Officer
The Motley Fool recommends Southern Missouri Bancorp. The Motley Fool has a disclosure policy.