Southern Missouri Bancorp Q4 2025 Earnings Call Transcript

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July 24, 2025

Key Takeaways

  • Positive Sentiment: Southern Missouri Bancorp reported $1.39 diluted EPS for the June quarter, flat sequentially but up 17% year-over-year, or $1.42 on an adjusted basis excluding one-time consulting expenses.
  • Positive Sentiment: The net interest margin expanded to 3.46% from 3.39%, and management expects further margin tailwinds from higher loan origination rates and potential Fed rate cuts.
  • Positive Sentiment: Gross loans grew by 7.6% annualized and deposit balances rose 2% annualized, with a robust $224 million loan pipeline supporting guidance for mid-single-digit growth next fiscal year.
  • Negative Sentiment: Provision for credit losses increased to $2.5 million, nonperforming loans climbed and the bank took a $3.8 million charge-off on a special purpose CRE loan, highlighting emerging asset-quality pressures.
  • Neutral Sentiment: Management noted a modest uptick in M&A discussions and emphasized a strong capital position, which could enable opportunistic acquisitions though timing and targets remain uncertain.
AI Generated. May Contain Errors.
Earnings Conference Call
Southern Missouri Bancorp Q4 2025
00:00 / 00:00

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Operator

Hello, everyone. And thank you for joining the Southern Missouri Bancorp earnings conference call. My name is Sammy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by 2 to remove yourself from question queue.

Operator

I would now like to hand over to our host, Stefan Chukotovich, CFO, to begin. Please go ahead, Stefan.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

Thank you, Sammy. Good morning, everyone. This is Stefan Czkotovich, CFO with Southern Missouri Bancorp. 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, 07/23/2025, and to take your questions.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

We may make certain forward looking statements during today's call, and we refer you to our cautionary statement regarding forward looking statements contained in the press release. I'm joined on the call today by Greg Stuffins, 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 and fiscal year.

Matt Funke
Matt Funke
President and Chief Administrative Officer at Southern Missouri Bancorp

Thank you, Stefan, and good morning, everyone. This is Matt Funke.

Matt Funke
Matt Funke
President and Chief Administrative Officer at Southern Missouri Bancorp

Thanks for joining us. I'll start off with some highlights from our financial results for the June, 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 noninterest 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 twenty twenty five.

Matt Funke
Matt Funke
President and Chief Administrative Officer at Southern Missouri Bancorp

Despite problem credits moving higher during the year off the 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, which remained unchanged from the linked March, but up $0.20 from the June 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 'twenty six. Excluding these costs, we would have earned $1.42 for the quarter. For full year fiscal twenty twenty five, we earned $5.18 compared to $4.42 in fiscal twenty twenty four.

Matt Funke
Matt Funke
President and Chief Administrative Officer at Southern Missouri Bancorp

The increase year over year was predominantly driven by stronger interest income, which stemmed from almost 7% earning asset growth and net interest margin expansion as our funding costs declined and the loan portfolio adjusted up with higher market rates. With this earnings growth, tangible book value per share has increased by $5.19 or just above 14% over the last twelve months to $41.87 Due to our strong capital position, with the earnings release, we also announced a $02 or 8.7% increase in our quarterly dividend, bringing it to $0.25 a share. Net interest margin for the quarter was 3.46%, up from 3.39% reported for the third quarter of fiscal twenty twenty five, the linked quarter, as we saw some spread increases, loan yields increased, and we benefited from deploying lower yielding excess earning excess interest earning cash balances into higher yielding loans. Stefan will go over more details, but in fiscal 'twenty six, we do plan to change our reported quarterly NIM calculation to be based off the annualized day count, which should reduce the volatility in the NIM due to the differences in each quarter's total days. If we calculated the net interest margin by annualizing the day count in the fourth quarter, it would have been 3.47% as compared to 3.44% in the linked quarter if calculated similarly.

Matt Funke
Matt Funke
President and Chief Administrative Officer at Southern Missouri Bancorp

Gross loan balances increased during the quarter by $76,000,000 or 7.6% annualized and by $250,000,000 or 6.5 as compared to June 30 a year ago. Provision for credit losses was $2,500,000 up $1,600,000 over the linked 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 bit. Deposit balances as of June 3025 increased by $20,000,000 or about 2% annualized compared to the linked quarter.

Matt Funke
Matt Funke
President and Chief Administrative Officer at Southern Missouri Bancorp

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.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Thanks,

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Matt, and good morning, everyone. I'd like to start off talking about credit quality. Consistent with our discussions last quarter, credit quality has deteriorated somewhat from the very low levels of the last several years. It remains relatively strong at June 30 with adversely classified loans totaling $50,000,000 or 1.2% of total loans, an increase of about 830,000 and flat as a percentage of total loans during the quarter. Nonperforming loans were 23,000,000 at June 30, which increased 1,100,000.0 compared to last quarter and totaled point $5.06 percent of gross loans.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

In comparison to June 24, NPLs were up about 16,000,000 or 39 basis points higher as a percentage of total loans. Nonperforming assets were about a 100,000 lower compared to a year ago as we sold a parcel of other real estate in the fourth quarter. But the other real estate reduction was mostly offset by additional nonperforming loans. The increase in NPL this quarter was mostly due to a participation that we originated, of which our balance is 5,700,000.0 on the construction loan related to the development of senior living facility in Kansas, which was placed on non accrual status. This loan was acquired through the Citizens merger, and we're currently working through the foreclosure process.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

We are still having discussions with the borrower with the hopes to avoid foreclosure 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 non owner occupied CRE properties in different states with guarantors in common and originally leased to a single tenant that has since become installed. Last quarter, these balances totaled 10,000,000 and were placed on nonaccrual. But based on updated appraisals, we took a $3,800,000 debt charge in the quarter on one of the three loans, taking the balance to 6,200,000.0 as of June 30. As of year end in total, we have about 45% specific reserves remaining on the balance of these loans.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Loans past due thirty to eighty nine days were 6,100,000.0, down 9,000,000 from March and 15 basis points on gross profit. This is a decrease of 23 basis points compared to the linked quarter and in line compared to a year ago. Total delinquent loans were 25,600,000.0, up 1,200,000.0 from the March and up 16,400,000.0 from the June 2024. The decrease in loan thirty to eighty nine days past due was primarily due to the special purpose CRE loans mentioned earlier with a partial charge off of migration to ninety days or more past due. Despite the increase in problem loans, these issues remain at modest levels, and asset quality compares favorably to the industry.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

In combination with strong underwriting 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 wanna give the impression that we're accepting these trends, and we're redoubling efforts to improve our credit quality results. This quarter, Aggie real estate balances totaled 245,000,000 or 6% of gross loans, and ag production and equipment loans totaled 206,000,000 or 5% of gross loans. As compared to the prior quarter end, ag real estate balances were down 2,000,000, but they were up 12,500,000.0 compared to June 30 a year ago. Ag production loan balances were up 20,000,000 quarter over quarter due to normal seasonality and higher operating costs and up 30,000,000 year over year.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Our ag customers began 2025 with an early planting window due to mild weather. The heavy spring rains soon delayed progress, especially from cotton and soybeans requiring some replanting. Early planted corn and soybeans are progressing well with early corn harvest likely to begin in August and early soybeans in September, both earlier than normal. Later planted crops have improved over the past month. Overall, nearly all of our farmers' acreage were planted.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Crop mix projections for 2025 are 30% soybeans, 30% corn, 20% cotton, 15% rice, and 5% specialty crops. Corn acreage is up slightly and may yield well, but weak pricing could prompt farmers to store grain again this year. Soybean acres rose modestly as pervert producers diverted acres from other crops, especially in rice crops are in good condition, though price pressure is lowering expected returns. Cotton is showing average progress with improvement tied 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.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Dry weather is also pushing up fuel and chemical usage for irrigation and weed control and press. Farmers are drawing more heavily on credit lines with some tapping into preapproved contingency lines. About 95% of our 2,024 profits have been sold and applied to debt. The lower commodity prices this spring have reduced expected profitability for this year. Economic commodity assisted program payments from the government has helped.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Many farmers are anticipating a difficult margin here this year. Future pricing for key crops remains soft relative to underwriting assumptions. Corn rice, soybeans, and cotton, and wheat are each down six to 8%, and many producers remain pessimistic about positive returns for '25 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 profitability outlook. Farm equipment prices fell this spring as dealers moved to clear inventory with lower rates.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

So most producers are deferring purchases of equipment. While 2024 was a strong production year, high cost of weak prices left many borrowers with lower working capital positions or in some instances needing restructure. Farmland values remain firm, particularly for irrigated acres. So investor demand, not farmer demand, is driving the market. With equipment values falling and cash flow tight, collateral coverage is weaker.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Lenders are actively inspecting 2025 crop progress and will deliver yield and collateral analysis by October to get an early understanding of the outlook for our borrowers as they enter 02/1926. 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 guaranteed programs or restructuring loans. Despite these challenges, our disciplined lending practices, stress testing of farm flow, cash flows, and deep customer relationships should ensure satisfactory performance of these trends. In addition, due to the prolonged weakness in the agricultural segment, we've heard some increased reserves for watch list bank borrowers in the March in our calculation for our allowance for credit losses.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Looking at the loan portfolio as a whole, gross loans increased 76,000,000 during the quarter. The quarter was led by growth in c and I, multifamily, and ag production loans, with stronger growth out of our Southwest and East regions. It 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, a. Our pipeline for loans to fund in the next ninety days is strong and totaled 224,000,000 as compared to 163,000,000 in the March and 157,000,000 a year ago.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Despite the strong near term origination pipeline, we expect to have a higher than usual first quarter of prepayment activity that could slow some of the net loan growth. Although there remains some uncertainty surrounding the economy due to our strong pipeline as we look into fiscal twenty six, we feel optimistic about achieving another year of mid single digit loan growth for the upcoming year. Our non owner occupied CRE concentrations at bank level was approximately 302% of tier one capital and allowance at June 30, down about two percentage points compared to the March due to almost 9,000,000 in net pay downs of non owner occupied CRE and growth into account. On a consolidated basis, our c rate CRE ratio was 291% at the end of the fourth. During the year, we would expect our CRE ratio to increase somewhat, but should stay in the 300 to 325% range. Stefan?

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

Thanks, Greg. Matt hit some of the key financial items already, but I wanted to share a few details. Looking at this quarter's net interest margin of 3.46% included about five basis points of fair value discount accretion on acquired loan portfolios and premium amortization on assumed deposits compared to the linked quarter of 13 basis points and 10 basis points in the prior year's June. The net interest margin expanded as the yield on interest earning assets increased four basis points, primarily due to loan yield expansion, while the cost of interest bearing liabilities decreased one basis point.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

Although the Fed funds rate hasn't been reduced further this calendar year, we are seeing opportunities to lower our CD specials as local deposit competition eased during the fourth quarter. With this, in addition to our loan portfolio still repricing up to current market rates and originating loans at a higher than the portfolio rate, we're optimistic we could see more margin expansion in fiscal twenty twenty six. As of June, our average loan origination rate was about 7.3% compared to the average loans we have maturing over the next twelve months of 6.3%. If the FOMC does cut rates later this year, we believe there is further opportunity for net interest margin expansion as our deposit pricing strategy leaves us well positioned to reduce funding costs if further rate cuts do occur. Looking at noninterest income, we're up about 9.2% compared to the linked quarter.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

This increase was largely driven by an additional card network bonus, which is based on annual buying incentives. The total bonus received in the fourth quarter was 537,000. In fiscal twenty twenty six, the estimated fee income for these annual bonuses will be accrued through the year. This item was partially offset by a $108,000 charge to reduce the fair value of our mortgage servicing rights, which stems from the decrease in market rates and associated expectations of increased prepayments. As noted in the release, we have adopted ASU 2020 three-two to now account for renewable energy tax credit benefits through a direct reduction to income taxes.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

This has resulted in lower fee income for fiscal twenty twenty five of $701,000 as it was moved to reduce tax provisions. Noninterest expense was up 2.3% compared to the linked quarter. This was primarily attributable to 425,000 consulting expense captured in legal and professional fees to negotiate a new contract with our debit card network. In addition, we saw increased expenses in data processing due to third party ancillary product expense. This is an area where we're trying to manage to stay commensurate with our earnings growth.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

Investment in new systems could be a net benefit in the longer term as we work to create more efficient processes and manage the growing complexities of the business and customer expectations. The ACL of 06/30/2025 totaled 51,600,000.0, representing 1.26% of gross loans and 224% of nonperforming loans as compared to an ACL of 54,900,000.0 or $1.37 of gross loans and 250% of nonperforming $5,300,000 of net charge offs were realized in the quarter, with $4,200,000 of the increase from the linked quarter primarily due to the special purpose CRE relationship mentioned previously and $742,000 C and I credit related to a commercial contractor. Despite the increase in charge offs for the quarter and overall year, our net charge off ratio for fiscal twenty twenty five was only 17 basis points and still compares well versus bank under $10,000,000,000 The decrease in the ACL was primarily attributable to net charge offs, which reduced the required reserve for individually evaluated loans as well as a decline in current qualitative adjustments relative to assessing expected credit losses. This decrease was partially offset by higher model losses following our annual methodology update for pooled loans, reflecting management's updated view of a deteriorating economic outlook compared to the linked quarter's assessment.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

Due to these drivers, the company recorded a provision for credit losses of 2,500,000.0 compared to 932,000 in the March. Given where we see the economic cycle and our asset quality trends, we would expect to see an uptick in the normal quarterly provision. Despite some additional credit charges during fiscal twenty twenty five, we delivered strong earnings growth for the year, increasing profitability to a 1.21% return on average assets and 11.4% return on average equity. Looking back over the past five years, even with the margin pressure experienced in 2024, we have compounded tangible book value by 10% annually while returning an average of 17% of earnings to shareholders through cash dividends. With this track record, we remain focused on driving continued growth in fiscal twenty twenty six and sustaining long term value creation for our shareholders. Craig, any closing thoughts?

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Yes, sir. We're proud of our accomplishments in fiscal twenty five, highlighted by the progress on our performance and improvement initiatives, a key project that is already beginning to show positive results. Thanks to the dedication of our exceptional team. We have continued to reinvest in the company, adding new talent to support our legacy of growth with the goal of translating these investments into sustained earnings strength and improved profitability in the years ahead.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Since the last quarter, we've seen a modest uptick in M and A discussions, while market conditions have stabilized somewhat. We remain optimistic about the potential for attractive opportunities with our solid capital base and proven financial performance. Believe we are well positioned to act when the right transaction rises. Notably, there are approximately 50 banks headquartered in Missouri and 24 in Arkansas with assets between 500,000,000 and 2,000,000,000, along with a meaningful number of others in adjacent markets, providing a broad landscape for potential for potential partnerships.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

Thank you, Greg.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

At this time, Sammy, we're ready to take questions from our participants. So if you would, please remind folks that they may queue for questions at this time.

Operator

Thank you very much. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by 2. And preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Matt Olney from Stephens. Your line is open. Please go ahead.

Matt Olney
Managing Director at Stephens Inc

Hey. Great. Thanks.

Matt Olney
Managing Director at Stephens Inc

Good morning. Appreciate you taking my question. Wanna start on the loan growth. Really good results we just saw. I'm curious just as the loan growth developed throughout the quarter, did it strengthen throughout the quarter?

Matt Olney
Managing Director at Stephens Inc

Or was it steady? Just trying to get a better idea about the momentum you guys have into the upcoming October. And then Greg mentioned, I think, potentially higher prepayments in the near term. Just wanna dig into that statement. And is that something that you're already seeing early on in the quarter or something that borrowers have indicated that they could do? Just give me any color. Thanks.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Our loan growth was pretty steady over the entire quarter, and loans in the pipeline were steadily added over the quarter. In regard to prepayment expectations, they have not occurred yet, but we do have several larger credits that have indicated that they plan to pay off in the very near term, which would increase our prepayment activity, and they're primarily in our non owner occupied commercial real estate.

Matt Olney
Managing Director at Stephens Inc

Okay. So I missed that thing.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Right.

Matt Olney
Managing Director at Stephens Inc

No. I think you hit on that. I appreciate it.

Matt Olney
Managing Director at Stephens Inc

And I guess changing gears over towards the margin, it sounds like, Steph, in the margin got some nice tailwinds from here. More color you can provide about kind of expectations more near term within the margin? And then if we do get those Fed cuts that you mentioned, kind of what the impact should look like for the bank?

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

Yeah. I guess starting with the Fed cuts, we are a bit more neutral to rate movements right now due to the higher levels of excess cash compared to prior years.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

But as that cash is deployed through loan growth, we do become a little more liability sensitive again. And part of the sort of driving forces is on just the natural NIM expansion that we could see is just from the loan origination activity on renewals repricing at higher rates than our current portfolio.

Matt Olney
Managing Director at Stephens Inc

Yeah. Okay. And it sounds like within the deposit competition, it sounds like you have you felt good enough this quarter.

Matt Olney
Managing Director at Stephens Inc

I think you've mentioned you recently took down some promotional offerings. So it sounds like the overall competitive levels on the deposit side remain remains reasonable.

Matt Funke
Matt Funke
President and Chief Administrative Officer at Southern Missouri Bancorp

It's it's been more reasonable over the last, you know, six to nine months. We did see a little bit of a tick up in competition in July, so that might might stall out a bit, but it's still not at the relatively high level compared to Fed funds that we were seeing a year ago at this time.

Matt Olney
Managing Director at Stephens Inc

Okay.

Matt Olney
Managing Director at Stephens Inc

And then on on the credit front, I think you covered the the charge off this quarter, and it sounds like that's the same loan that we discussed on the last quarter. And I think I heard on the prepared remarks that the appraisal on one of the properties came in came in lower. Just wanna dig in on that appraisal and just trying to appreciate just the the collateral behind that and and just kinda why it experienced the deterioration that it did. And then I think you mentioned that was just one of the appraisals. Are there still other appraisals on the other remaining loans from the same borrower that we're still we're still waiting on?

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

We have we wrote down the balance on one of them after the appraisal came in. And with it being a special purpose entity that was operating it, we had a much higher than normal advanced rate or lease lease rates that we advanced on that was more above market conditions with that specialty provider going away from that market, term market rents to replace that tenant are much lower than what our original balance was resulting in the large charge off. It would not surprise me if we would have additional charge off on the other remaining building. And we're still doing some negotiation with the guarantors on that on where we end up. But it would not surprise me to have an additional right.

Matt Olney
Managing Director at Stephens Inc

And, Greg, on the potential for those additional appraisals coming in, is there any specific provision or or reserve already allocated towards that, or would that be incremental from what you have now as far as the allowance?

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

We have 42% of the balance in specific reserve.

Matt Olney
Managing Director at Stephens Inc

Got it. Okay. Great. I'll step back. Thanks for your help.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

Thanks, Matt.

Greg Steffens
Greg Steffens
Chairman at Southern Missouri Bancorp

Thank you, Matt.

Operator

As a reminder, to ask a question, please press star followed by one on your telephone keypad. Our next question comes from Kelly Moffer from KBW. Alright. Your line is open. Please go ahead.

Charlie Driscoll
Equity Research Associate at Keefe, Bruyette & Woods (KBW)

Good morning. This is Charlie on for Kelly. Thanks for the question. Just high level on the funding side. I know you mentioned a seasonally slow quarter for deposits.

Charlie Driscoll
Equity Research Associate at Keefe, Bruyette & Woods (KBW)

Do you still expect to fund near term growth with CDs mainly or, like, anything you expect from clients on on the deposit list?

Matt Funke
Matt Funke
President and Chief Administrative Officer at Southern Missouri Bancorp

We wouldn't expect growth to be as heavily weighted towards CDs this year as what it's been over the last couple of years. Also, just given the strong funding position we're entering the year with, we'll probably be able to be a little less aggressive on the CD side. So that might drive a little bit slower growth on the CD side relative to the nonmaturity side.

Charlie Driscoll
Equity Research Associate at Keefe, Bruyette & Woods (KBW)

Okay.

Charlie Driscoll
Equity Research Associate at Keefe, Bruyette & Woods (KBW)

Thank you. And then could you give some specifics on the CDs you have rolling off this quarter and the rates that are gonna be replaced at?

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

Yeah. So about on average over the next twelve months, the CD rates that we have are about four twenty four. And on average, we're replacing at about 4%.

Charlie Driscoll
Equity Research Associate at Keefe, Bruyette & Woods (KBW)

Anything materially different in the next three months?

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

I guess more towards the first half of our fiscal year. We have some higher rates rolling off. And then towards the back end, those become more in line with the current market rate.

Charlie Driscoll
Equity Research Associate at Keefe, Bruyette & Woods (KBW)

Okay.

Charlie Driscoll
Equity Research Associate at Keefe, Bruyette & Woods (KBW)

Thank you. That's great. And then just on the m and a environment kind of picking up, are you guys seeing the pace of conversations increase at all? How are you viewing kind of the buyback here in this environment and then with prices where they're at?

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

We are having you know, there are more calls according to investment bankers.

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

We haven't really seen a big uptick in actual items, but I think that that that could be coming up here over the next quarter.

Charlie Driscoll
Equity Research Associate at Keefe, Bruyette & Woods (KBW)

And then buyback?

Stefan Chkautovich
Stefan Chkautovich
EVP & CFO at Southern Missouri Bancorp

And on the stock buyback, it's just going to depend upon where we are trading at relative to our tangible book value. At this time, we believe that a potential m and a transaction could have a shorter earn back period than if we were repurchasing for shares.

Charlie Driscoll
Equity Research Associate at Keefe, Bruyette & Woods (KBW)

Okay. That's great. Thank you. I'll step back.

Operator

We currently have no further questions. So I'd like to hand back to Matt Funke for closing remarks.

Matt Funke
Matt Funke
President and Chief Administrative Officer at Southern Missouri Bancorp

Thank you, Sammy, and thank you everyone for your interest and attendance today. We appreciate the chance to visit with you, and we'll talk again in three months. Have a good day.

Operator

This concludes today's call. Thank you everyone for joining. You may now disconnect your lines.

Executives
    • Stefan Chkautovich
      Stefan Chkautovich
      EVP & CFO
    • Matt Funke
      Matt Funke
      President and Chief Administrative Officer
    • Greg Steffens
      Greg Steffens
      Chairman
Analysts
    • Matt Olney
      Managing Director at Stephens Inc
    • Charlie Driscoll
      Equity Research Associate at Keefe, Bruyette & Woods (KBW)
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