Thank you, Al.

Good morning, everyone, and thank you for joining us to discuss Southern Missouri Bancorp's results for the first quarter of fiscal 2027. This is Stefan Chkautovich, CFO of 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 by Greg Steffens, our chairman and CEO, and Matt Funke, our president and chief administrative officer. Matt will begin with an overview of the quarter.

Well, thank you, Stefan, and good morning, everyone. We reported another quarter of strong profitability with diluted earnings per share of $1.73 compared with $1.83 in the linked June quarter. Return on average assets was 1.44%, return on average common equity was 12.7%, and tangible book value per share increased 2.3% during the quarter to $48.52. Net interest margin expanded three basis points to 3.70%, while net interest income increased 3.5% from the linked quarter. Provision for credit losses was $3 million, down $240,000 from the June quarter. Gross loans increased $64 million, or 1.5% during the quarter. Growth remained solid but moderated from last year as we maintained our focus on appropriate credit spreads and full banking relationships. Growth was led by 1-4 family residential real estate, ag production, commercial and industrial, ag real estate, and construction and land development loans, partially offset by declines in multifamily and commercial real estate categories. Our 90-day loan pipeline was little changed at $185 million at quarter end, up from $182 million at June 30. Quarterly loan originations were approximately $296 million down from $335 million in the June quarter. This was largely driven by a decrease in owner-occupied CRE originations as we prioritized opportunities that met our return and relationship objectives, in addition to decreases in ag real estate and ag production originations due to normal seasonality, with total volume roughly in line with the September of 25 quarter. We continue to expect mid-single-digit loan growth for fiscal 27, although quarterly results will reflect our normal seasonality. We have begun to see some ag operating line paydowns in October, and we expect that net loan growth will be softer in the second quarter, the December quarter. As a reminder, our third fiscal quarter, or the March quarter, is historically our softest quarter for net loan growth, reflecting both ag seasonality and the seasonal slowing in residential and commercial real estate lending, typically followed by a seasonal ramp-up in the fourth quarter. Deposits increased 66 million, or 1.5% during the quarter. Certificates of deposit led the increase, driven by 95 million of growth in core CDs, partially offset by a $35 million reduction in brokered CDs. 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. Non-maturity deposits grew modestly by approximately 6 million. And again, our September quarter is generally one of our toughest from a transaction account balance standpoint. Our new business deposit accounts continued to gain traction reaching $42 million at September 30. However, that growth was partially offset by the expected runoff of short-term, seasonal, and transaction-related non-interest-bearing balances held by several larger clients at the end of June. Our stockholders' equity increased just over $10 million, or 1.8% during the quarter, despite about a $5 million increase in accumulated other comprehensive loss. We also repurchased approximately 19,000 shares for $1.4 million during the quarter while maintaining our quarterly dividend at $0.27 per share. I'll turn it over now to Greg for a discussion on credit.

Thanks, Matt, and good morning, everyone. Credit metrics improved modestly during the quarter. Adversely classified loans declined nearly $1 million from the linked quarter to $53 million fall remaining stable at approximately 1.2% of gross loans. Non-performing loans also declined by a million to 27 million or 0.6% of gross loans from 0.63% at June 30. Non-performing assets declined just over 1 million to 32 million or 0.61% of total assets from 0.64% at June 30. We are continuing to work through the agricultural production relationship downgraded to non-accrual in last year's fourth quarter. And overall, we see positive progress toward resolution on several of our larger non-performing loans. Against that backdrop, generally improving credit, performing modifications increased approximately $20 million during the quarter to $51 million, primarily due to the modification of a commercial industrial loan totaling approximately $21 million. The modification included a modest interest rate concession to support the borrower's working capital needs associated with a new contract. The loan remains performing, is watch rated, and no individual reserve has been established. Given our long-standing relationship with this borrower and our current expectations for its performance, we anticipate the modification will be resolved by the end of fiscal 27. Our non-owner-occupied commercial real estate concentration declined during the quarter as Tier 1 capital growth outpaced CRE growth. At quarter end, the concentration was approximately 278% at the bank and 266% on a consolidated basis. Agriculture represents approximately 12% of gross loans. Our agricultural customers generally appear to be having a better year. In early planting season and dry fall weather, accelerated harvest activity. Rice and corn harvests are complete. Early soybeans are approximately 70% harvested. Double crop soybeans are approximately 50% harvested. Cotton is also approximately 50% harvested. 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. Higher seed, fuel, fertilizer, chemical, interest, and equipment costs continue to pressure farm profitability, but stronger yields and commodity pricing should support improved repayment capacity compared with last year. Our loan officers are not currently reporting projected shortfalls for the 26 crop year. And most customers appear well positioned to pay as agreed, although working capital positions will remain an important focus through year end. We continue to monitor watch list ag credits closely, and our lenders are completing crop and livestock inspection summaries and preparing for the upcoming renewal cycle. Stefan, would you provide additional details on our financial performance?

Thanks, Greg. Net interest margin was $370, up three basis points from the linked quarter. Fair value accretion and liability premium amortization contributed five basis points to margin, compared to three basis points in the June quarter. The increase in fair value accretion was primarily caused by the payoff of a loan carrying about a $500,000 credit mark. We would expect in the coming quarters for the accretion to return to around three basis points and slowly decrease from there. The September quarter also included approximately $200,000 of interest recovery on a non-accrual ag relationship. Excluding both the larger fair value accretion and the noted interest recovery, adjusted net interest margin would have been $365,000, representing modest compression from the linked quarter. Looking ahead, we could see some near-term pressure on net interest margin following the recent increase in rates, reflecting the liability-sensitive nature of our balance sheet. Based on our current interest rate risk model and assuming a static balance sheet, a 100 basis point parallel increase in rates is estimated to reduce net interest income by about 1% over the next 12 months. 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. Non-interest income was $7.1 million, down $212,000 or 2.9% from the one quarter. Deposit account charges and other non-interest income increased, with other non-interest incomes benefiting from a $189,000 revenue guarantee payment from a merchant services provider. and an $85,000 gain on sale of a membership interest and a tax credit investment. These increases were more than offset by lower wealth management fees, insurance commission, gain on sale of loans, bank card interchange income and bowling income. Bowling income included a $150,000 mortality benefit in the current quarter compared with a $231,000 mortality benefit in June. Non-interest expense was $26.6 million, up 1 million or 4% from the one quarter. The full increase was attributable to three categories. Compensation and benefits increased $460,000, primarily due to higher salaries and bonus accruals, and lower deferred loan origination costs, partially offset by lower employee benefit expense. Other non-interest expense increased $345,000, largely reflecting higher loan collection and payoff fees, as well as deposit operation and card fraud costs. Occupancy and equipment expense increased $223,000, primarily due to seasonally higher utilities, security costs, and one-time facility setup costs. Advertising expense also included a one-time $100,000 charitable contribution through the FHLB Member Impact Fund. Lower legal and professional fees and postage and office supplies provided the largest offsets. The allowance for credit losses increased $3.4 million to $58.3 million, or 1.31% of gross loans and 219% of non-performing loans. Net charge-offs were $494,000 or four basis points of average loans on an annualized basis. The increase in the allowance primarily reflected management's assessment of reserve adequacy amid an evolving economic environment and to support loan growth. The current quarter provision included a $3.9 million provision for outstanding loan balances and a $902,000 negative provision for off-balance sheet credit exposures. primarily reflecting a lower required reserve rate on unfunded commitments. With that, Greg, I'll turn it back to you for some closing comments.

Thanks, Stefan. We are pleased with our strong profitability and solid loan growth during the quarter, which allow us to continue investing in the people and capabilities needed to support our long-term growth. That includes our new Kansas City branch, which opened at the beginning of October and replaced our existing nearby facility, which was truly in need of an upgrade. Initial customer feedback has been positive and we're excited for the new branch to serve as a flagship location for us in the Kansas City market. We also continued supporting our communities through the FHLB Member Impact Fund. Our contribution generated an additional $300,000 match bringing the total distributed to 22 charitable organizations to $400,000. Turning to capital deployment, 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. As we evaluate these opportunities, we remain focused on disciplined organic growth, prudent risk management, deepening customer relationships, and thoughtful capital deployment. Stefan?

Thank you, Greg. At this time, Al, we're ready to take questions. Please remind participants how to enter the queue.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Brendan Nosal from Hovde Group. Your line is now open. Please go ahead.

Hey, good morning, everybody. Hope you're doing well. Good morning. Morning. Starting off here on kind of the expense base, I guess costs were a little bit heavier than I was expecting for the quarter. Can you just kind of talk about how we should think about the run rate on the core expense base as we move through the balance of the year?

Yeah, thanks for the question. So I guess bigger picture, things are still progressing through the years. We originally expected the life guidance we gave last quarter was sort of the mid single digits to high single digit expense growth for the fiscal year. We're still on track for that. And one of the sort of larger contributions to that is going to be the salary and benefits line. There's a little bit of stuff up there we have sequentially. We'll see a bigger pickup in March quarter with our annual merit increases from there. But another sort of newer contributor is the loan origination factor. One of the items I mentioned in the comments was a little bit of the increase from expenses was actually derived from the lower originations. so we have lower deferred expenses on that front.

Okay, all right, that's helpful, thank you. pivoting to kind of this quarter's provision expense and reserve coverage. I think you took reserve coverage up six basis points to like a buck 31. I know last quarter you were talking about, you know, 125 to 135 coverage range. Let me just kind of walk through like why specifically you wanted to bring that up this quarter. Is it just kind of, you know, reflecting the environment or is it perhaps an advance of any potential deterioration that you might see coming down the road?

Nothing specific on potential deterioration. Of course, you know, we do want to always take a more conservative stance with our provisioning and really just the way the numbers showed in the calculation. We had some availability to take some additional provision and decided to do that.

Yeah, we feel comfortable with the 131. We feel like that is an attractive place to be. Okay.

That's helpful. Thanks for taking my questions.

Your next question comes from the line of Jordan Ghent from Stevens. Your line is now open. Please go ahead.

Hey, good morning. Thanks for taking my question. I just kind of wanted to talk more about the margin. I know Stephanie kind of talked about it. You guys are expecting some margin compression from here, given your liability sensitivity. Could you talk more about the fixed asset repricing? kind of when you expect that to start coming in?

Yeah, so I guess at a high level, we have about $815 million in loans repricing over the next 12 months. That sort of average roll-off rate is just at about 6.5% versus right now where our average loan renewal on the fixed side is around 7%. So there's some pickup there, which is sort of partially offset by the CD front. We have about 1.4 billion in CDs renewing over the next 12 months at an average rate of 382. And that sort of average current renewal and renewed rate is about 408. Got it.

Going back to the deposit growth, it looks like the past two quarters you guys have seen some good growth in the non-interest bearing. It looks like it's a little bit bigger than normal seasonal stuff. Can you talk about what's driving that and where you see that going from here? Will it continue to go through the rest of the year or should it slow down?

We are emphasizing more deposits. carrying balances in non-interest bearing with our new deposit products. I think we may be a little early to say whether what we're seeing so far is maybe just some noise in the overall number versus true movement on that. It is something that we expect to focus on on an ongoing basis. But, you know, just looking at the averages, we think we've got decent trends there, but the quarter over quarter numbers may just have a little noise in them.

Anything additionally? Okay, and then just maybe one more question. Could you talk a little bit more, Greg, I know you mentioned about the modified C&I loan. Is this kind of like idiosyncratic or do you guys, is there potential for additional rate concessions on other loans as we move into the higher rate cycle?

No, I would say this is a... One-off, as far as what we have out there, is somebody that we've dealt with for 20 years. Their business is actually expanding, and we're just trying to help facilitate some of the front-end cost on working capital of the expansion they have to their business. But they are a watch-rated credit, so we are watching them. But our interest rate concession was, you know, they are at prime, so they're not significant.

Got it. Okay, thanks for taking my questions.

Your next question comes from the line of Andrew Leisch with Stonex Financial. Your line is now open. Please go ahead.

Greg, our morning team. Question on M&A. I guess, where are you looking? Like, where, if you look at your footprint right now and where prospective deals are taking, or deal conversations are taking place, where do you think is the most attractive place for you to expand to right now through M&A?

Yeah, we're really looking at more in-market activity. You know, we're interested more in the, you know, most, More of the people we're talking with are Missouri-oriented instead of outlying. But our footprint continues to, we're targeting Kansas City to St. Louis to Memphis to Little Rock. So it's basically that geographic area we're adjacent there to. We're having several different conversations. I would say everything is more on the preliminary basis. but, you know, several of the companies, they're Missouri-based.

Got you. You have asked, or you've covered all my other questions, so I'll step back. Thanks.

Thanks, Andrew. Thanks, Andrew. Good hearing from you again.

Your next question comes from the line of Nicholas Holoco with Raymond James. Your line is now open. Please go ahead.

Hey guys, good morning. Thanks for taking my questions. So maybe just to start, congrats on the new Kansas City branch. Maybe you could just update us on some of the momentum from the hires you made there and how that kind of ties into your expectations for growth over the next year or so.

We feel really good about the team that we've assembled up there, continuing to see good presentations out of that group and expect that momentum to continue. We got a really good team focused on both sides of the balance sheet.

Awesome. And then, you know, I know you've highlighted the new business deposit account that you had talked a little bit about last quarter. Sounds like that's starting to gain some traction. Any expectations for that to kind of continue to ramp up over the near term here or more of a longer term horizon there? Maybe just how that's performing relative to your initial expectations.

I'd say it's at least meeting our expectations in the early going. There can be a lot of noise with the rollout of that and of course our seasonality will probably overwhelm some of that over the next couple of quarters, but we do still feel good about it from a long-term perspective.

Awesome. And maybe just the last question for me, hear the comments around M&A. Hopefully something can come to fruition on that front. Maybe just with, as we think about capital and, you know, valuation has come in a little bit. How are you thinking about potential further buybacks at this point, your sensitivity to be earned back at this point in time?

With the valuation coming back in a little, that increases the attractiveness of us buying stock back. We did buy shares back at the $1.5 of tangible book value. As that value has become more attractive for repurchases, we'd expect some modest improvement in repurchase activity.

Great. Thanks for taking my questions.

Your next question comes from the line of Nathan Race from Piper Sandler. Your line is now open. Please go ahead.

Hey, guys. Good morning. Thanks for taking the questions. Good morning. Just thinking maybe a little bigger picture on the margin. You know, if we do get, you know, two more Fed rate hikes over the next few months, you know, Stefan, just maybe any thoughts on what we could expect in terms of kind of an exit margin coming out of this year? You know, is it something kind of the low 360s range, just given some of the index deposits you have and your other comments around kind of the headwind on time deposits maturing?

Yeah, that seems in the range of possibilities. So in the near term, like I said, we'll see some compression just from the rates, but also another factor to consider is on the margin front over the coming two quarters, we'll start seeing some compression there just from the buildup in deposits. As Matt mentioned earlier, we'll start getting in some ag paydowns, so that will bring down the loan book a little bit on that portfolio, and that also brings in the deposit side of that. And then in the March quarter, we get a larger pickup from public units. So we'll have a larger balance sheet ramp up that will compress the margin a little bit from there. On top of a little bit of compression just from the rate side, we'll also see some from the mix of the balance sheet. But that exit range is a fair possibility, and we'll see that tick back up in 4Q as we loan up the balance sheet a little bit more and at higher spreads and rates as we're seeing right now.

Okay, great. And then just within that context, you know, just given some of the seasonality you have in your deposit base and some of the episodic deposit flows you have within the agricultural arena, you know, is there more opportunities to kind of work down kind of wholesale funding just given some of the treasury management deposit growth items that you guys laid out? It's obviously nice to see, you know, some of the borrowings come down by $30 million or so sequentially.

Yeah, we definitely expect in the near term to be a little less reliant on wholesale. And then that would be a longer term objective as well to stay down into the mid single digits on wholesale reliance.

Yeah, there'll be no real need in the near term for wholesale deposits with core deposits ramping up seasonally. In addition, we're sort of limited on the FHLB side from that side of the wholesale equation. until some more maturities as far as what we would prepay. Yes, sir. So we're sort of in a little bit of a lull there for maturities. I don't think the next one pops up until the spring.

Okay, got it. And if I could just ask one more for Greg, I think you hit on it earlier a bit, but just in terms of some of the timing around some of the resolutions with non-performers, they're obviously still somewhat elevated relative to where we're used to seeing MPAs at your bank. So, you know, just curious if you can kind of speak to, you know, when we can expect, you know, non-performers to come down close to kind of the more historical levels we're used to seeing it.

I wish my crystal ball was totally clear on that. Workouts do take time. We have several larger relationships that are non-performing. that were at various stages of working out. We really don't know how soon those workouts could happen. Some could happen in this quarter. We're just really not certain. It's a fluid process that we're going through, but we do expect non-performing assets to be meaningful lower by the end of this fiscal year.

Okay, great. But generally, it sounds like you're pretty comfortable with kind of the carrying values as you're having discussions to resolve these MPAs. We do at this time. Okay, great. I appreciate all the color. Thanks, guys.

Thank you. There are no further questions at this time. I will now turn the call back to Chief Financial Officer Stefan Chkautovich for closing remarks.

Thank you all for your time, and we look forward to updating you on our financials next quarter. Have a great day, all.

This concludes today's call. Thank you for attending. You may now disconnect.