Southern Missouri Bancorp | research notes

Southern Missouri Bancorp: A Cornerstone of Regional Banking

Southern Missouri Bancorp, Inc. (SMBC) is a publicly traded financial holding company headquartered in Poplar Bluff, Missouri. The company operates through its wholly-owned subsidiary, Southern Bank, which provides a comprehensive range of banking and financial services to individuals, businesses, and municipalities in Southern Missouri, Northern Arkansas, and Western Kentucky.

History and Growth

Southern Missouri Bancorp was founded in 1973 as a savings and loan association. Over the years, it has expanded its operations through acquisitions and organic growth. In 2006, the company became a bank holding company and converted its savings and loan subsidiary to a commercial bank.

Today, Southern Bank operates 25 full-service banking centers and three loan production offices across its three-state footprint. The bank has approximately $2.4 billion in assets and employs over 300 employees.

Products and Services

Southern Bank offers a wide range of financial products and services, including:

• Commercial and consumer lending
• Deposit accounts (checking, savings, money market)
• Mortgage lending
• Wealth management
• Insurance
• Online and mobile banking

The bank is known for its strong focus on customer service and its commitment to supporting the communities it serves.

Financial Performance

Southern Missouri Bancorp has consistently delivered strong financial performance. In 2022, the company reported net income of $27.8 million, up 16% from the previous year. Its return on assets (ROA) and return on equity (ROE) have also been consistently above industry averages.

Corporate Culture

Southern Missouri Bancorp is committed to creating a positive and inclusive work environment. The company has been recognized for its employee benefits, training programs, and commitment to diversity and inclusion.

Community Involvement

Southern Bank is actively involved in giving back to the communities it serves. The bank supports numerous local organizations through sponsorships, donations, and employee volunteerism.

Key Executives

Southern Missouri Bancorp's executive leadership team includes:

• Jeff W. Beussink (CEO and President)
• Laura L. Bryan (CFO and Treasurer)
• Steve Wagner (Chief Lending Officer)
• Joe Gardner (Chief Operating Officer)

Future Outlook

Southern Missouri Bancorp is well-positioned for continued growth and success. The company's strong financial performance, experienced management team, and commitment to customer service make it a valuable banking partner for individuals and businesses in its markets.

Business Model of Southern Missouri Bancorp

Southern Missouri Bancorp, Inc. (SMBC) is a bank holding company that operates primarily in the southern region of Missouri. Its main subsidiaries are Southern Bank, a state-chartered commercial bank, and Southern Investments, Inc., which provides investment services.

SMBC's business model focuses on:

• Community banking: Providing a range of financial services to individuals, families, businesses, and community organizations in its local market.
• Diversification: Generating revenue from a variety of sources, including interest income from loans, fees from deposit accounts, and income from investment and insurance products.
• Technology investment: Utilizing advanced technology to improve customer service, streamline operations, and enhance security.
• Employee engagement: Creating a positive and supportive work environment to attract and retain skilled employees.

Advantages to Competitors

SMBC has several advantages over its competitors, including:

• Local focus: SMBC has a deep understanding of its local market and can tailor its products and services to meet the specific needs of its customers.
• Strong customer relationships: SMBC has built strong relationships with customers through its personalized service and commitment to the community.
• Diversified revenue streams: SMBC's diversified revenue streams reduce its dependence on any single business line and provide financial stability.
• Efficient operations: SMBC's investment in technology has streamlined its operations, resulting in cost savings and improved customer service.
• Employee retention: SMBC has a high employee retention rate due to its focus on employee engagement and professional development.
• Community involvement: SMBC actively supports its local communities through sponsorships, volunteerism, and financial assistance, which enhances its reputation and customer loyalty.

By leveraging these advantages, Southern Missouri Bancorp is able to effectively compete in its market and maintain a strong financial position.

Southern Missouri Bancorp, Inc. (SMBC)

Business Overview:

Southern Missouri Bancorp is a bank holding company based in Sikeston, Missouri. It operates 10 banking offices in Southeast Missouri, offering a range of financial services including deposit accounts, loans, and investment products.

Financial Performance:

• Total Assets: $1.6 billion as of December 2022
• Net Income: $19.9 million for 2022
• Return on Average Assets (ROAA): 1.24% as of December 2022
• Return on Average Equity (ROAE): 10.73% as of December 2022

Outlook:

Positive Factors:

• Strong local market presence: SMBC has a dominant position in its Southeast Missouri market, with a large deposit base and customer loyalty.
• Conservative lending practices: The company maintains a low level of nonperforming assets, indicating prudent risk management.
• Growing loan portfolio: SMBC has been expanding its loan book, particularly in commercial lending, which is a key driver of revenue growth.
• Cost-cutting initiatives: The company has implemented cost-reduction measures to improve profitability.

Challenges:

• Competition from larger banks: SMBC faces competition from larger regional and national banks that offer a wider range of financial products and services.
• Interest rate environment: Low interest rates have pressured net interest margin, which is the difference between interest income and interest expense.
• Economic conditions: The regional economy could impact SMBC's loan demand and credit quality.
• Regulatory compliance: The banking industry is heavily regulated, which can increase costs and operational complexity.

Opportunities:

• Digital banking: SMBC is investing in digital banking capabilities to provide convenience and enhance customer experience.
• Expansion into adjacent markets: The company may consider expanding its geographic footprint into neighboring areas.
• Acquisitions: SMBC could acquire smaller banks to strengthen its market position.

Analyst Ratings:

According to recent analyst reports, SMBC has received the following ratings:

• Zacks Rank: Buy
• Yahoo Finance Recommendation: Buy
• Morningstar Rating: Neutral

Conclusion:

Southern Missouri Bancorp is a stable community bank with a strong local market presence. While it faces challenges from competition and economic conditions, the company's conservative lending practices, cost-cutting initiatives, and potential growth opportunities position it favorably for the future. Analysts generally recommend buying or holding SMBC stock.

Similar Companies to Southern Missouri Bancorp:

1. Great Southern Bancorp (GSB)

• Homepage: https://www.greatsouthernbank.com/
• Customers like GSB for its strong financial performance, focus on community banking, and diversified lending portfolio.

2. First Midwest Bancorp (FMBI)

• Homepage: https://www.firstmidwest.com/
• First Midwest is known for its consistently high customer satisfaction ratings, extensive branch network, and commitment to local communities.

3. Old National Bancorp (ONB)

• Homepage: https://www.oldnational.com/
• Customers choose Old National for its innovative technology, personalized service, and strong track record of growth.

4. Fulton Financial Corporation (FULT)

• Homepage: https://www.fultonbank.com/
• Fulton Financial is valued for its stability, long-standing history, and commitment to providing tailored financial solutions.

5. Cadence Bancorporation (CADE)

• Homepage: https://www.cadencebank.com/
• Cadence Bancorporation offers a range of financial services, including commercial banking, wealth management, and private banking. Customers appreciate its focus on digital innovation and customer service.

Reasons Why Customers Like These Companies:

• Strong financial performance: These companies have consistently delivered solid financial results, providing confidence to their customers.
• Community focus: They prioritize supporting the communities they serve, providing financial services and lending support to local businesses and individuals.
• Personalized service: Customers value the personal relationships they build with bank representatives and the customized financial advice they receive.
• Innovative technology: These companies invest in digital solutions to enhance customer experience, streamline banking processes, and provide access to financial tools.
• Diversified portfolios: Their diversified lending portfolios help mitigate risk and provide steady returns for investors.

Southern Missouri Bancorp, Inc. (SMBC)

1985:

• Formed as a bank holding company in Ozark, Missouri.
• Acquired Southern Missouri Bank, a small community bank founded in 1904.

1990s:

• Expanded into neighboring counties through acquisitions and the opening of new branches.
• Became a publicly traded company (NASDAQ: SMBC).
• Established SMBC Mortgage Company and SMBC Insurance Agency as subsidiaries.

2000s:

• Continued to grow through acquisitions in Missouri and Arkansas.
• Acquired Pulaski Bank in Arkansas, gaining a foothold in a new market.
• Launched online and mobile banking services.

2010s:

• Acquired The Bank of Salem in Missouri, expanding its presence in the Ozarks.
• Opened a loan production office in Little Rock, Arkansas.
• Implemented a digital transformation plan to enhance customer experience.

2020s:

• Acquired Vantage Bank in Missouri, increasing its market share in the St. Louis metropolitan area.
• Became the largest community bank in Southwest Missouri and Northwest Arkansas.
• Listed on the Russell 2000 Small-Cap Index.

Present:

• Southern Missouri Bancorp is a publicly traded bank holding company with approximately $4 billion in assets.
• Operates 49 branches in Missouri and Arkansas, and offers a full range of banking, financial, and insurance services.
• Known for its strong community focus, financial stability, and customer service.

2021

• January: Southern Missouri Bancorp acquires Bank of Advance.
• July: The company raises $125 million in a public stock offering.
• October: Southern Missouri Bancorp acquires Community State Bank.

2022

• January: The company opens a new branch in Cape Girardeau, Missouri.
• April: Southern Missouri Bancorp announces a partnership with Finastra to implement a new core banking system.
• December: The company acquires First Bank in St. Louis, Missouri.

2023

• January: Southern Missouri Bancorp announces plans to merge with Commerce Bancshares in Kansas City, Missouri.

Recent Timelines

• March 1, 2023: Southern Missouri Bancorp announces a definitive agreement to acquire Home State Bank in Independence, Missouri. The acquisition is expected to close in the second quarter of 2023.
• March 8, 2023: The company completes its merger with Commerce Bancshares. The combined company has over $10 billion in assets and operates 120 branches in Missouri, Kansas, Oklahoma, and Illinois.

Five Stars for Southern Missouri Bancorp: A Banking Partner You Can Trust

As a valued customer of Southern Missouri Bancorp, I am delighted to share my overwhelmingly positive experience with this exceptional financial institution.

Exceptional Customer Service

From the moment I opened my account, I was greeted with warm and professional service. The staff is knowledgeable, responsive, and always willing to go the extra mile. Their personalized approach makes me feel like more than just a customer; I am a valued member of their community.

Innovative Banking Solutions

Southern Missouri Bancorp consistently exceeds my expectations with their cutting-edge banking solutions. They offer a wide range of products and services that meet my evolving financial needs, including mobile banking, online bill pay, and competitive interest rates on savings accounts. Their technology is user-friendly and makes banking a breeze.

Community Involvement

I am particularly impressed by Southern Missouri Bancorp's commitment to the local community. They actively support numerous charities and organizations, demonstrating their unwavering dedication to making a positive impact in our region. Their involvement strengthens the community and creates a sense of belonging.

Financial Security and Stability

As a financially stable and well-capitalized bank, Southern Missouri Bancorp provides peace of mind knowing that my funds are safe and secure. Their conservative lending practices and sound financial management inspire confidence and trust.

Conclusion

Without hesitation, I highly recommend Southern Missouri Bancorp to anyone seeking a banking partner they can rely on. Their exceptional customer service, innovative solutions, community involvement, and financial security make them the best choice for my banking needs. If you are looking for a trusted and supportive financial institution, look no further than Southern Missouri Bancorp. They will exceed your expectations and help you achieve your financial goals.

Unlock Your Financial Potential with Southern Missouri Bancorp

https://www.smbcmo.com

Southern Missouri Bancorp is the go-to financial partner for individuals, families, and businesses in the heart of Southern Missouri. With our commitment to customer satisfaction, innovative financial solutions, and a deep understanding of our local communities, we empower you to achieve your financial goals.

Why Choose Southern Missouri Bancorp?

• Customer-Centric Approach: We prioritize building long-lasting relationships with our customers. Our knowledgeable staff is dedicated to providing personalized guidance and exceptional service.
• Comprehensive Financial Services: From checking and savings accounts to loans, investments, and wealth management, we offer a wide range of financial products to meet your every need.
• Advanced Technology: Our cutting-edge online and mobile banking platforms provide convenient and secure access to your finances anytime, anywhere.
• Local Expertise: With deep roots in our communities, we understand the unique challenges and opportunities faced by businesses and residents in Southern Missouri. Our local decision-making ensures prompt and responsive service.
• Financial Stability: As a locally owned and operated bank, we are committed to the stability and growth of our region. Our strong financial foundation provides peace of mind for our customers.

Join the Growing Community of Satisfied Customers:

• "Southern Missouri Bancorp has been my trusted financial advisor for years. Their team's expertise and personalized service have helped me grow my business and achieve my financial goals." - John Smith, Business Owner
• "The online banking system is so user-friendly and secure. I can easily manage my finances from the comfort of my own home." - Mary Jones, Individual Customer
• "Southern Missouri Bancorp has played a vital role in our community by supporting local businesses and organizations. They truly care about our region." - Nonprofit Organization

Take the Next Step Today:

Visit our website at https://www.smbcmo.com to explore our financial services, learn more about our commitment to customer satisfaction, and connect with our experienced team. At Southern Missouri Bancorp, we believe in empowering you to reach your financial dreams. Let us partner with you on your journey to financial success.

Main Supplier (or Upstream Service Provider) of Southern Missouri Bancorp

Name: Jack Henry & Associates, Inc.

Website: https://www.jackhenry.com/

Services Provided:

• Core banking solutions
• Lending and credit services
• Payment processing and electronic banking
• Risk management and compliance solutions
• Treasury management and liquidity solutions
• Wealth management and investment services
• Data processing and analytics
• IT infrastructure and support

Detailed Information:

Jack Henry & Associates is a leading provider of technology solutions and services for financial institutions of all sizes. The company has been serving the banking industry for over 40 years and has a deep understanding of the challenges and opportunities facing financial institutions.

Southern Missouri Bancorp is a community bank holding company that operates several banks in Missouri. The company has been a customer of Jack Henry & Associates for many years and relies on the company's technology solutions to provide a wide range of banking services to its customers.

Jack Henry & Associates' technology solutions are used by more than 8,500 financial institutions in the United States and around the world. The company's solutions are designed to help financial institutions automate their operations, improve their efficiency, and reduce their costs.

Southern Missouri Bancorp has benefited from Jack Henry & Associates' technology solutions in a number of ways. The company has been able to:

• Improve its customer service by providing faster and more accurate services.
• Reduce its operating costs by automating its operations and streamlining its processes.
• Increase its revenue by offering new products and services to its customers.

Jack Henry & Associates is a vital partner for Southern Missouri Bancorp. The company's technology solutions help Southern Missouri Bancorp to provide a high level of service to its customers and to operate its business efficiently and profitably.

Main Customer (Downstream Company) of Southern Missouri Bancorp

Southern Missouri Bancorp's primary customer is Peoples Bank & Trust Company, a wholly-owned subsidiary. Peoples Bank & Trust Company is a community bank serving the needs of individuals and businesses in Southeast and Central Missouri.

Peoples Bank & Trust Company

• Website: https://www.peoplesbt.com/

Products and Services Offered to Main Customer

Peoples Bank & Trust Company offers a wide range of financial products and services to its customers, including:

• Retail Banking: Checking and savings accounts, debit cards, online banking, mobile banking
• Commercial Banking: Business loans, lines of credit, equipment financing, cash management
• Mortgage Lending: Home loans, refinancing, construction loans
• Wealth Management: Investment management, retirement planning, trust services
• Insurance Services: Life insurance, health insurance, property and casualty insurance

Geographic Reach

Peoples Bank & Trust Company operates 16 banking centers in the following counties in Missouri:

• Bollinger
• Butler
• Cape Girardeau
• Carter
• Iron
• Madison
• Reynolds
• Ripley
• St. Francois
• Wayne

Other Key Points

• Market Share: Peoples Bank & Trust Company has a significant market share in the Southeast and Central Missouri region.
• Community Involvement: The bank is actively involved in its local communities, supporting various non-profit organizations and events.
• Customer Satisfaction: Peoples Bank & Trust Company has a strong reputation for customer service and satisfaction.

Key Revenue Streams of Southern Missouri Bancorp

Southern Missouri Bancorp, Inc. (SMBC) is a bank holding company headquartered in West Plains, Missouri. The company generates revenue through various streams, including:

1. Net Interest Income:

• Estimated Annual Revenue: $125.6 million (2022)
• This income is derived from the spread between interest earned on loans and investments and interest paid on deposits.

2. Non-Interest Income:

• Estimated Annual Revenue: $30.2 million (2022)
• This income includes revenue from service charges, fees, commissions, and other non-interest-based activities.

3. Other Income:

• Estimated Annual Revenue: $4.6 million (2022)
• This income includes gains or losses on investments and other miscellaneous income.

Details of Each Revenue Stream:

1. Net Interest Income:

• SMBC primarily generates net interest income through its lending activities, including commercial loans, consumer loans, and residential mortgages.
• The company's loan portfolio consists of a diversified mix of loans with varying risk profiles.
• SMBC also invests in securities, such as U.S. Treasury bonds and agency securities, which contribute to net interest income.

2. Non-Interest Income:

• Service charges: Fees charged for various banking services, such as ATM withdrawals, wire transfers, and account maintenance.
• Fees: Fees for loan origination, document preparation, and other financial services.
• Commissions: Income earned from selling third-party financial products, such as insurance and investment products.
• Other non-interest income: Includes revenue from credit card interchange fees, overdraft protection fees, and other ancillary services.

3. Other Income:

• Gains on investments: Profits realized from the sale of investments at a higher price than their acquisition cost.
• Loan loss recoveries: Income recovered from previously charged-off loans that are subsequently collected.
• Other miscellaneous income: Includes income from fixed asset sales, operating lease income, and other non-core activities.

Impact of Revenue Streams on Net Income:

The combined revenue streams of Southern Missouri Bancorp drive its overall net income. Net income is calculated by subtracting operating expenses and other deductions from total revenue. In 2022, SMBC reported a net income of $24.4 million, reflecting the contributions from each revenue source.

Key Partners of Southern Missouri Bancorp, Inc.

Southern Missouri Bancorp, Inc. (SMBC) has established strategic partnerships with several key organizations to enhance its business operations and provide value to its customers. These partnerships include:

1. Jack Henry & Associates, Inc. (JHA)

• Website: https://www.jackhenry.com/
• Description: JHA is a leading provider of technology solutions for financial institutions, including core processing, digital banking, payments processing, and wealth management. SMBC utilizes JHA's SilverLake System for its core banking operations.

2. Fiserv, Inc.

• Website: https://www.fiserv.com/
• Description: Fiserv is a global provider of financial technology solutions, including payments, risk management, and customer engagement. SMBC leverages Fiserv's DNA platform for its debit card processing and account monitoring services.

3. Cardtronics, Inc.

• Website: https://www.cardtronics.com/
• Description: Cardtronics is the largest non-bank ATM operator in the United States, with a network of over 27,000 ATMs. SMBC has partnered with Cardtronics to provide its customers with convenient access to cash withdrawals and other ATM services.

4. CheckFree Payment Processing LLC

• Website: https://www.checkfree.com/
• Description: CheckFree is a leading provider of electronic payment services, including ACH processing, electronic bill presentment and payment, and remote deposit capture. SMBC utilizes CheckFree's services to process electronic payments and automate check processing.

5. Wolters Kluwer Financial Services, Inc.

• Website: https://www.wolterskluwerfs.com/
• Description: Wolters Kluwer provides compliance, risk management, and legal solutions for financial institutions. SMBC utilizes Wolters Kluwer's ComplianceOne platform to ensure compliance with regulatory requirements and mitigate risk.

6. Crowe LLP

• Website: https://www.crowe.com/
• Description: Crowe is a public accounting, consulting, and technology firm. SMBC retains Crowe for audit, tax, and consulting services.

7. Porter Wright Morris & Arthur LLP

• Website: https://www.porterwright.com/
• Description: Porter Wright Morris & Arthur is a national law firm with offices in several major markets. SMBC utilizes Porter Wright's legal services for corporate governance, regulatory compliance, and other legal matters.

These key partnerships enable SMBC to offer its customers a comprehensive range of banking services, leverage advanced technology solutions, and maintain compliance with industry regulations. The relationships with these partners are essential to SMBC's success and contribute to its ability to deliver value to its stakeholders.

Key Cost Structure of Southern Missouri Bancorp

Interest Expense

• Estimated annual cost: $110 million

Interest expense is the cost of borrowing money from depositors and other lenders. It is the largest expense for Southern Missouri Bancorp, accounting for approximately 60% of total operating expenses. The company's interest expense has been increasing in recent years due to rising interest rates.

Salaries and Benefits

• Estimated annual cost: $50 million

Salaries and benefits are the second-largest expense for Southern Missouri Bancorp, accounting for approximately 27% of total operating expenses. The company's salaries and benefits expense has been increasing in recent years due to higher wages and benefits costs.

Occupancy and Equipment

• Estimated annual cost: $15 million

Occupancy and equipment costs include the cost of rent, utilities, and equipment. These costs have been relatively stable in recent years.

Other Expenses

• Estimated annual cost: $25 million

Other expenses include a variety of costs, such as marketing, insurance, and professional fees. These costs have been increasing in recent years due to the company's expansion.

Total Operating Expenses

• Estimated annual cost: $200 million

Total operating expenses are the sum of interest expense, salaries and benefits, occupancy and equipment, and other expenses. Total operating expenses have been increasing in recent years due to rising interest rates and higher wages and benefits costs.

Net Income

• Estimated annual net income: $50 million

Net income is the difference between total revenue and total operating expenses. Net income has been declining in recent years due to rising interest rates and higher wages and benefits costs.

Sales Channels:

Southern Missouri Bancorp primarily generates revenue through the following sales channels:

• Community Banking:
  • Brick-and-mortar branches
  • Online banking and mobile applications
  • Relationship managers
• Mortgage Lending:
  • Loan officers at branches and loan production offices
  • Mortgage brokers and independent mortgage companies
• Wealth Management:
  • Financial advisors and investment representatives
  • Trust and estate planning services
• Other Financial Services:
  • Credit cards
  • Insurance products
  • Merchant services

Estimated Annual Sales:

Financial data for Southern Missouri Bancorp is not readily available as the company is a privately held, community bank. However, based on industry benchmarks and the company's market share in its operating region, the estimated annual sales are as follows:

• Community Banking: $150 million - $200 million
• Mortgage Lending: $50 million - $75 million
• Wealth Management: $20 million - $30 million
• Other Financial Services: $10 million - $15 million

Total Estimated Annual Sales: $230 million - $320 million

Additional Notes:

• The sales estimates are based on publicly available information about the company's operations and the financial performance of similar community banks in the region.
• The actual sales figures may vary depending on economic conditions, competitive factors, and other business variables.
• Southern Missouri Bancorp does not disclose detailed sales information in its financial statements or other public filings.

Customer Segments of Southern Missouri Bancorp

Southern Missouri Bancorp primarily serves the Greater Springfield Metropolitan Statistical Area (MSA) and surrounding counties in southwestern Missouri. Its customer base comprises various segments with distinct characteristics and financial needs.

1. Retail Banking Customers

• Individuals and Families: Southern Missouri Bancorp provides a wide range of banking services to individual consumers, including checking and savings accounts, loans, mortgages, and investment management.
• Estimated Annual Sales: $100 million

2. Business Banking Customers

• Small Businesses: The bank offers a suite of financial products and services tailored to the needs of small and medium-sized businesses, such as business loans, lines of credit, cash management services, and equipment financing.
• Estimated Annual Sales: $150 million

3. Commercial Banking Customers

• Middle-Market Companies: Southern Missouri Bancorp serves commercial businesses with annual revenues typically between $5 million and $50 million. It provides customized lending solutions, cash management services, and advisory services.
• Estimated Annual Sales: $200 million

4. Wealth Management Clients

• High-Net-Worth Individuals and Families: The bank offers comprehensive wealth management and investment advisory services to affluent clients. Its services include portfolio management, estate planning, and tax optimization.
• Estimated Annual Sales: $50 million

5. Government and Public Sector Entities

• Local Governments and Agencies: Southern Missouri Bancorp provides financial services to local governments, school districts, and other public entities in its service area.
• Estimated Annual Sales: $25 million

6. Other Customer Segments

• Non-Profit Organizations: The bank offers tailored banking and lending solutions to non-profit organizations in the community.
• Estimated Annual Sales: $10 million
• Real Estate Investors: Southern Missouri Bancorp provides financing options for real estate investors and developers.
• Estimated Annual Sales: $15 million

Total Estimated Annual Sales: $550 million

Value Proposition of Southern Missouri Bancorp, Inc.

Southern Missouri Bancorp, Inc. (SMBC) is a bank holding company headquartered in Poplar Bluff, Missouri. The company provides a range of financial services to individuals, businesses, and municipalities.

Value Proposition Elements:

1. Strong Local Presence:

• SMBC has a long history of serving the communities of southeastern Missouri.
• The company has 13 banking centers and loan production offices in its primary market.
• SMBC's local decision-making empowers its banking teams to tailor financial solutions to the specific needs of the region.

2. Focus on Customer Relationships:

• SMBC prides itself on building strong relationships with its customers.
• The company emphasizes personal account management and customized financial guidance.
• SMBC's community-centric approach fosters trust and loyalty among customers.

3. Comprehensive Product and Service Offerings:

• SMBC offers a diverse portfolio of financial products, including:
  • Commercial and personal banking
  • Wealth management
  • Mortgage lending
  • Electronic banking services
• The company's tailored solutions cater to the needs of individuals, businesses, and municipalities.

4. Competitive Rates and Terms:

• SMBC offers competitive interest rates and loan terms to its customers.
• The company strives to provide value-driven financial solutions that meet the specific needs of its clients.
• SMBC's competitive pricing helps customers maximize their financial returns.

5. Technology-Driven Convenience:

• SMBC invests in technology to enhance customer convenience and efficiency.
• The company's online and mobile banking services provide 24/7 access to financial accounts.
• SMBC's digital tools streamline financial management and empower customers to make informed decisions.

6. Financial Strength and Stability:

• SMBC has a strong financial track record and a solid capital position.
• The company's conservative lending practices and sound risk management contribute to its financial stability.
• SMBC's financial strength instills confidence in its customers and stakeholders.

7. Community Involvement:

• SMBC is an active participant in its communities and supports various local initiatives.
• The company's financial resources and employee volunteerism contribute to the economic and social well-being of the region.
• SMBC's community involvement fosters a sense of shared purpose and aligns with its values.

Target Customer Segments:

• Individuals and families
• Small businesses and corporations
• Municipalities and government entities
• Non-profit organizations

Credit Risk

• High concentration in commercial real estate (CRE) loans: As of September 30, 2022, CRE loans represented 51% of the bank's total loans. Concentration in a single industry sector can increase the bank's vulnerability to downturns in that sector.
• Exposure to construction loans: The bank has a significant exposure to construction loans, which are inherently risky due to the potential for cost overruns, delays, and defaults.
• Increase in non-performing loans: The bank's non-performing loans have increased from $7.8 million in September 2021 to $11.1 million in September 2022. This increase indicates potential underlying weaknesses in the bank's credit underwriting process.

Interest Rate Risk

• Asset-sensitive balance sheet: The bank's assets are more sensitive to interest rate changes than its liabilities, making it vulnerable to rising interest rates.
• Limited interest rate hedging: The bank has limited interest rate hedging in place, leaving it exposed to the full impact of interest rate fluctuations.

Liquidity Risk

• High reliance on wholesale funding: The bank relies heavily on wholesale funding, which can be volatile and difficult to access during periods of financial stress.
• Low loan-to-deposit ratio: The bank's loan-to-deposit ratio is below industry averages, indicating that it may have difficulty meeting loan demand if deposits decline.

Operational Risk

• Small size and limited diversification: Southern Missouri Bancorp is a small bank with limited geographic diversification. This makes it more susceptible to operational disruptions and local economic downturns.
• Cybersecurity threats: The bank, like all financial institutions, faces cybersecurity risks that could disrupt operations and compromise customer information.

Other Risks

• Regulatory environment: The bank is subject to regulatory oversight and compliance requirements, which can impact its operations and profitability.
• Competition: The bank operates in a competitive banking market, which could limit its growth and profitability.
• Economic downturn: An economic downturn could adversely affect the bank's loan portfolio, deposit base, and overall financial performance.

Mitigating Factors

• Strong capital position: The bank maintains a strong capital position, providing a buffer against potential losses.
• Experienced management team: The bank's management team has extensive experience in the banking industry.
• Commitment to risk management: The bank has a comprehensive risk management framework in place to identify, assess, and mitigate risks.