Southern Missouri Bancorp
Annual Report 2017

Plain-text annual report

Southern Missouri Bancorp, Inc. | 2017 Annual Report > FINANCIAL SUMMARY < > FINANCIAL SUMMARY < 2017 2017 CHANGE (%) CHANGE (%) CHANGE (%) 8.9% -6.2% 13.6% 17.0% -9.3% 4.7% -100.0% 5.3% 8.9% -6.2% 13.6% 17.0% -9.3% 4.7% -100.0% 5.3% 8.9% -6.2% 13.6% 17.0% -9.3% 4.7% -100.0% 5.3% 1.99 1.98 15.96 23.53 0.36 4.5% 4.5% 15.3% 37.1% 11.1% 4.5% 4.5% 15.3% 37.1% 11.1% 4.5% 4.5% 15.3% 37.1% 11.1% > FINANCIAL SUMMARY < > FINANCIAL SUMMARY < > FINANCIAL SUMMARY < EARNINGS (dollars in thousands) Net interest income EARNINGS (dollars in thousands) Provision for loan losses Net interest income Noninterest income Provision for loan losses Noninterest expense Noninterest income Income taxes Noninterest expense Net income 2017 Income taxes Dividend on preferred shares 46,952 $ 46,952 Net income $ 46,952 Net income available to common stockholders 2,494 2,494 2,494 Dividend on preferred shares 9,758 9,758 9,758 32,686 Net income available to common stockholders 32,686 32,686 6,682 6,682 6,682 14,848 14,848 14,848 85 85 85 14,763 14,763 14,763 51,122 $ 2,340 11,084 38,252 6,062 15,552 - 15,552 51,122 2,340 11,084 38,252 6,062 15,552 - 15,552 51,122 2,340 11,084 38,252 6,062 15,552 - 15,552 $ $ $ 2017 2016 2017 2016 2016 EARNINGS (dollars in thousands) EARNINGS (dollars in thousands) EARNINGS (dollars in thousands) Net interest income Net interest income Net interest income Provision for loan losses Provision for loan losses Provision for loan losses Noninterest income Noninterest income Noninterest income PER COMMON SHARE Noninterest expense Noninterest expense Noninterest expense Income taxes Income taxes Net income: Income taxes Net income Net income Net income PER COMMON SHARE Basic Dividend on preferred shares Dividend on preferred shares Dividend on preferred shares Net income: Diluted Net income available to common stockholders Net income available to common stockholders Net income available to common stockholders Basic Closing market price Diluted Cash dividends declared Closing market price Cash dividends declared PER COMMON SHARE PER COMMON SHARE Net income: Net income: Basic Basic Diluted Diluted Tangible book value Tangible book value Closing market price Closing market price Cash dividends declared Cash dividends declared Net income: Basic Diluted Tangible book value Closing market price Cash dividends declared PER COMMON SHARE FINANCIAL RATIOS FINANCIAL RATIOS AT YEAR-END (dollars in thousands) AT YEAR-END (dollars in thousands) $ $ $ $ 1.99 $ 1.99 1.98 1.98 15.96 15.96 23.53 23.53 0.36 0.36 $ 2.08 2.07 18.40 32.26 0.40 2.08 $ 2.08 2.07 AT YEAR-END (dollars in thousands) 2.07 18.40 18.40 Total assets 32.26 32.26 AT YEAR-END (dollars in thousands) Loans, net of allowance 0.40 0.40 Total assets Reserves as a percent of nonperforming loans AT YEAR-END (dollars in thousands) Loans, net of allowance Deposits 1,403,910 Total assets $ Total assets Total assets $ 1,403,910 Loans, net of allowance 1,135,453 Loans, net of allowance Reserves as a percent of nonperforming loans Loans, net of allowance 1,135,453 Stockholder's equity Reserves as a percent of nonperforming loans % 244 % Reserves as a percent of nonperforming loans 244 Reserves as a percent of nonperforming loans Deposits 1,120,693 Deposits $ Deposits Deposits 1,120,693 $ 125,966 Stockholder's equity Stockholder's equity Stockholder's equity Stockholder's equity 125,966 FINANCIAL RATIOS Return on average common stockholder's equity FINANCIAL RATIOS FINANCIAL RATIOS Return on average assets Return on average common stockholder's equity 11.70 12.34 Return on average common stockholder's equity Return on average common stockholder's equity Return on average common stockholder's equity Net interest margin Return on average assets 1.05 1.11 Return on average assets Return on average assets 3.80 Net interest margin 3.74 Net interest margin Net interest margin Return on average assets Efficiency ratio 57.64 Efficiency ratio 61.49 Efficiency ratio Efficiency ratio Net interest margin Allowance for loan losses to loans 1.20 Allowance for loan losses to loans 1.10 Allowance for loan losses to loans Allowance for loan losses to loans 9.44 11.66 Equity to average assets at year-end Equity to average assets at year-end Efficiency ratio Equity to average assets at year-end Equity to average assets at year-end Allowance for loan losses to loans Equity to average assets at year-end 8,591,363 8,572,588 1,707,712 $ $ 1,707,712 1,397,730 1,397,730 % 482 482 1,455,597 $ 1,455,597 $ 173,083 173,083 $ 1,707,712 1,397,730 482 % $ 1,455,597 173,083 % 12.34 1.11 3.80 57.64 1.20 9.44 % 11.70 1.05 3.74 61.49 1.10 11.66 11.70 % 1.05 3.74 61.49 1.10 11.66 $ % 1,403,910 1,135,453 244 % 1,120,693 125,966 12.34 % 1.11 3.80 57.64 1.20 9.44 OTHER DATA(1) OTHER DATA(1) shares outstanding shares outstanding 8,591,363 8,572,588 8,591,363 8,572,588 7,437,616 7,400,816 Common shares outstanding Common shares outstanding for book value calculation(2) Average common and dilutive OTHER DATA(1) Common shares outstanding Common shares outstanding for book value calculation(2) Average common and dilutive Common shares outstanding Common shares outstanding for book value calculation(2) Average common and dilutive shares outstanding OTHER DATA(1) Common shares outstanding OTHER DATA(1) Common shares outstanding for book value calculation(2) 7,458,759 7,510,880 7,458,759 7,458,759 7,510,880 Common shares outstanding Average common and dilutive shares outstanding 250 ??? 250 250 ??? Common shares outstanding for book value calculation(2) 321 356 321 Common stockholders of record 321 356 4,374 4,797 $ $ 4,374 4,374 4,797 $ $ Average common and dilutive shares outstanding Full-time equivalent employees 36 42 36 36 42 Common stockholders of record Assets per employee (in thousands) (1) Other data is as of year-end, except for average shares. (1) Other data is as of year-end, except for average shares. (1) Other data is as of year-end, except for average shares. Full-time equivalent employees Banking offices (2) Excludes unvested restricted stock award shares. (2) Excludes unvested restricted stock award shares. (2) Excludes unvested restricted stock award shares. Assets per employee (in thousands) Banking offices Common stockholders record Full-time equivalent employees Assets per employee (in thousands) Banking offices Common stockholders record Full-time equivalent employees Assets per employee (in thousands) Banking offices Common stockholders record Full-time equivalent employees Assets per employee (in thousands) Banking offices 7,510,880 ??? 356 $ 4,797 42 7,437,616 7,400,816 7,437,616 7,400,816 $ % % $1.44 $1.44 $1.45 $1.44 $1.45 $1.79 $1.45 $1.79 $1.98 $1.79 $1.98 $2.07 $1.98 $2.07 $2.07 $0.30 $0.30 $0.32 $0.30 $0.32 $0.34 $0.32 $0.34 $0.36 $0.34 $0.36 2017 $ 51,122 2,340 $ 51,122 11,084 2,340 38,252 11,084 6,062 38,252 15,552 6,062 - 15,552 15,552 - 15,552 $ 2.08 $ 2.07 32.26 0.40 $ 2.08 2.07 32.26 0.40 $ $ 1,707,712 1,397,730 $ 1,707,712 482 % 482% 1,397,730 $ 1,455,597 $ 482 % 173,083 11.70 % 11.70% 1.05 11.70 % 3.74 1.05 61.49 3.74 1.10 61.49 11.66 1.10 11.66 8,591,363 8,572,588 7,510,880 243 375 $ $ 4,554 42 8,591,363 8,572,588 7,510,880 243 375 $ 4,554 42 $0.40 $0.40 $0.40 $0.36 2016 2016 CHANGE (%) 2016 $ $ 46,952 2,494 $ 46,952 9,758 2,494 32,686 9,758 6,682 32,686 14,848 6,682 85 14,848 14,763 85 85 14,763 CHANGE (%) 8.9% -6.2% 8.9% 13.6% -6.2% 17.0% 13.6% -9.3% 17.0% 4.7% -9.3% -100.0% 4.7% 5.3% -100.0% 5.3% $ $ 1.99 1.98 23.53 0.36 $ 1.99 1.98 23.53 0.36 $ 1,403,910 $ 1,135,453 $ 1,403,910 244 % 244% 1,135,453 $ 1,120,693 $ 244 % 125,966 $ 1,120,693 125,966 12.34 % 12.34% 1.11 12.34 % 3.80 1.11 57.64 3.80 1.20 57.64 9.44 1.20 9.44 0.116639 173,083 4.5% 4.5% 4.5% 37.1% 4.5% 11.1% 37.1% 11.1% 21.6% 23.1% 21.6% 23.1% 29.9% 37.4% 29.9% 37.4% 0.094368 0.094368 0.094368 0.116639 0.116639 173,083 173,083 1483918 1483918 125,966 1483918 125,966 125,966 1334843 1334843 1334843 7,437,616 7,400,816 7,437,616 7,458,759 7,400,816 250 7,458,759 321 250 $ 4,374 321 36 $ 4,374 36 $12.55 $13.79 $15.30 $17.02 $ $12.55 $13.79 $15.30 $17.02 $12.55 $13.79 $15.30 $17.02 $20.19 $20.19 $20.19 21.6% 23.1% 21.6% 23.1% 21.6% 23.1% 29.9% 37.4% 29.9% 37.4% 29.9% 37.4% $ 1,455,597 173,083 2013 2013 2014 2013 2014 2015 2014 2015 2016 2015 2016 2017 2016 2017 2017 DILUTED EARNINGS PER SHARE 2013 2013 2017 2016 2015 2014 2013 2016 2015 2014 CASH DIVIDENDS PER SHARE CASH DIVIDENDS PER SHARE 2015 2014 CASH DIVIDENDS PER SHARE CASH DIVIDENDS PER SHARE 2016 2017 2017 2013 2013 2013 2016 2015 2014 2015 2016 2014 2016 2015 2014 BOOK VALUE PER SHARE BOOK VALUE PER SHARE BOOK VALUE PER SHARE BOOK VALUE PER SHARE 2017 2017 2017 DILUTED EARNINGS PER SHARE DILUTED EARNINGS PER SHARE DILUTED EARNINGS PER SHARE (1) Other data is as of year-end, except for average shares. (2) Excludes unvested restricted stock award shares. 2014 2014 (1) Other data is as of year-end, except for average shares. 1.45 $ $ 1.45 (2) Excludes unvested restricted stock award shares. 2013 2013 1.44 $ $ 1.44 2014 $ 1.44 2013 $ 2015 $ 1.45 2015 2015 1.79 $ $ 1.79 2016 $ 1.79 2016 2016 1.98 $ $ 1.98 2017 $ 1.98 2017 2017 2.07 $ $ 2.07 2.07 CASH DIVIDENDS PER SHARE CASH DIVIDENDS PER SHARE CASH DIVIDENDS PER SHARE BOOK VALUE PER SHARE BOOK VALUE PER SHARE BOOK VALUE PER SHARE Total Assets Dollars in millions Total Assets Dollars in millions Total Assets Dollars in millions 2013 $ 2013 2013 0.30 $ $ 0.30 2014 $ 0.30 2014 2014 0.32 $ $ 0.32 2015 $ 0.32 2015 2015 0.34 $ $ 0.34 2016 $ 0.34 2016 2016 0.36 $ $ 0.36 2017 $ 0.36 2017 2017 0.40 $ $ 0.40 0.40 2013 $ 2013 2013 12.55 $ $ 12.55 2014 $ 2014 2014 13.79 $ $ 13.79 12.55 2015 $ 2015 2015 15.30 $ $ 15.30 2016 $ 2016 2016 17.02 $ $ 17.02 15.30 13.79 2017 $ 2017 2017 20.19 $ $ 20.19 17.02 20.19 18.6% 18.6% 18.6% $1,300 $1,300 $1,300 $1,404 $1,404 $1,708 $1,404 $1,708 $1,708 $1,021 $1,021 $1,021 Total Loans, net of allowance for loan losses Dollars in millions Total Loans, net of allowance for loan losses Dollars in millions Total Loans, net of allowance for loan losses Dollars in millions Total Deposits Dollars in millions Total Deposits Dollars in millions Total Deposits Dollars in millions $1,053 $1,053 $1,135 $1,053 $1,135 $1,135 $1,398 $1,398 $1,398 $1,055 $1,055 $1,121 $1,055 $1,121 $1,121 $1,456 $1,456 $1,456 $796 $796 $796 $647 $647 $647 $801 $801 $801 $632 $632 $632 $785 $785 $785 13 13 13 14 14 14 15 15 15 16 16 16 17 17 17 13 13 13 14 14 14 15 15 15 16 16 16 17 17 17 13 13 13 14 14 14 15 15 15 16 16 16 17 17 17 Assets Assets Assets $ 10 $ 552 $ 552 10 552 $ 11 $ 688 $ 688 11 688 $ 12 $ 739 $ 739 12 739 $ 13 $ 796 $ 796 13 796 $ 14 1,021 $ $ 1,021 14 1,021 $ 15 1,300 $ $ 1,300 15 1,300 $ 16 1,404 $ $ 1,404 16 1,404 $ 17 1,708 $ $ 1,708 17 1,708 Loans Loans Loans $ 10 $ 419 $ 419 10 419 $ 11 $ 557 $ 557 11 557 $ 12 $ 583 $ 583 12 583 $ 13 $ 647 $ 647 13 647 $ 14 $ 801 $ 801 14 801 $ 15 1,053 $ $ 1,053 15 1,053 $ 16 1,135 $ $ 1,135 16 1,135 $ 17 1,398 $ $ 1,398 17 1,398 10 11 12 13 14 15 16 17 10 11 12 13 14 15 16 17 Dear Shareholder, Fiscal 2017 saw Southern Missouri Bancorp complete a moderately sized acquisition in an adjacent market offering opportunities for additional growth, raise capital to support continuing growth, post solid organic loan and deposit growth, maintain solid core profitability, and improve on our already sound asset quality. peer 9.1% 11.7% Inc. return on average common equity SMBC Southern Missouri Bancorp, (the Company), was pleased to report net income available to common shareholders of $15.6 million for fiscal 2017, an increase of $789,000, or 5.3%, over fiscal 2016. The Company’s return on average common equity was 11.7%, and its return on average assets was 1.05% for 6/30/2017 fiscal 2017, as compared to 12.3% and 1.11%, 12/31/2016 6/30/2016 respectively, for fiscal 2016. 12/31/2015 6/30/2015 Purchase accounting benefits reported on the 12/31/2014 acquired loan and deposit portfolios from 6/30/2014 the fiscal 2015 acquisition of Peoples Bank of 12/31/2013 6/30/2013 the Ozarks (“Peoples”) increased net interest 12/31/2012 income (pre-tax) by $1.5 million in fiscal 2017, as compared to $1.7 million in the prior fiscal year. Fiscal 2017 results included $685,000 (pre-tax) in charges related to the acquisition efficiency ratio of Capaha Bank, with no comparable charges in the prior fiscal year. 11.5% 12.3% 12.5% 12.3% SMBC 8.7% 9.6% 9.8% 7.6% peer 61.5% 68.9% Return on common equity exceeds that of peer1 banks Returns decreased slightly for fiscal 2016, but still compare favorably to peer banks. Return on Average Common Equity 12.3% 11.5% 12.5% 12.3% 11.7% 7.6% 8.7% 9.6% 9.8% 9.1% Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 RETURN ON AVERAGE COMMON EQUITY SMBC peer Southern Missouri Bancorp, Inc. Peer Companies Efficiency Ratio 65.9% 69.4% 70.0% 71.3% 68.9% 6/30/2017 12/31/2016 6/30/2016 12/31/2015 6/30/2015 12/31/2014 6/30/2014 12/31/2013 6/30/2013 12/31/2012 6/30/2017 12/31/2016 6/30/2016 12/31/2015 6/30/2015 12/31/2014 6/30/2014 12/31/2013 6/30/2013 12/31/2012 Net interest income improved 8.9%, as our average earning asset balances increased by 10.5%, while net interest margin declined by six basis points. Purchase accounting benefits from the Peoples acquisition contributed eleven basis points to net 71.3% interest margin in the 2017 fiscal year, as compared to 14 basis points in the prior year. 70.0% 58.5% 57.6% 61.5% 57.6% 52.7% 60.6% 58.5% Noninterest income increased 13.6%, attributed primarily to loan origination fees, bank card interchange income, deposit account service charges, loan servicing fees, increases in the cash value of bank-owned life insurance (BOLI), and net gains realized on the sale of residential loans originated for sale into the secondary market. 65.9% 52.7% 69.4% Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Dec-12 Jun-13 Dec-13 Jun-17 60.6% _________________________________________________________________________________________ SMBC peer non-performing assets ratio SMBC peer 0.37% 0.49% 2.22% Non-performing Assets Ratio (1) Peer data is based on the median year-end figures (December) reported by S&P Global Market Intelligence (formerly, SNL Financial) for publicly-traded commercial banks and thrifts with assets of $1 billion to $2 billion as of December 31, 2016, headquartered in Missouri, Arkansas, Illinois, Iowa, Kansas, Kentucky, Nebraska, Oklahoma, and Tennessee. SMBC data is as of fiscal year-end (June). 0.64% 0.72% 1.50% 1.18% 0.64% 1.18% 0.43% 0.58% 1.50% 2.22% 0.58% 0.43% 0.72% 0.49% 0.64% 0.64% 0.37% Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 SMBC peer return on average common equity SMBC peer 9.1% 9.8% 9.6% 8.7% 7.6% efficiency ratio SMBC peer 68.9% 71.3% 70.0% 69.4% 65.9% non-performing assets ratio SMBC peer 0.49% 0.72% 1.18% 1.50% 2.22% 6/30/2017 12/31/2016 6/30/2016 12/31/2015 6/30/2015 12/31/2014 6/30/2014 12/31/2013 6/30/2013 12/31/2012 6/30/2017 12/31/2016 6/30/2016 12/31/2015 6/30/2015 12/31/2014 6/30/2014 12/31/2013 6/30/2013 12/31/2012 6/30/2017 12/31/2016 6/30/2016 12/31/2015 6/30/2015 12/31/2014 6/30/2014 12/31/2013 6/30/2013 12/31/2012 11.7% 12.3% 12.5% 11.5% 12.3% 61.5% 57.6% 58.5% 60.6% 52.7% 0.37% 0.64% 0.64% 0.43% 0.58% Return on Average Common Equity 12.3% Noninterest expense increased 17.0%, due to increased compensation, occupancy, legal and professional fees, charges to recognize the impairment of fixed assets, expenses attributable to the prepayment of FHLB advances, provisioning for off- balance sheet credit exposures, losses on foreclosed real estate, bank card network expenses, and expenses related to providing debit cards, internet banking, and other deposit service to new and existing customers. The increase included the $685,000 in 9.1% merger-related charges noted above. 11.5% 12.5% 11.7% 12.3% 9.6% 8.7% 9.8% 7.6% peer SMBC Jun-13 Jun-14 Jun-15 Jun-17 Jun-16 Dec-12 Dec-14 Dec-13 Dec-15 Dec-16 Efficiency deteriorates, but remains ahead of peers Management remains committed to lowering the ratio as we integrate recent acquisitions Efficiency Ratio While exclusion of the M&A expenses and other, smaller non-recurring items results in a core efficiency ratio we measure internally that is somewhat lower, our noninterest expense results have not been what we would want for the long term. Because operating efficiently remains a key long-term strategy for the Company, we are focused on lowering the measure. Our effective tax rate improved primarily due to our formation of a real estate investment trust (REIT) subsidiary to hold certain qualified assets in order to minimize the Company’s state tax liability. The formation of the REIT did require some legal and accounting expenditures, which contributed a relatively small amount to the annual increase in noninterest expense. 69.4% 60.6% 58.5% 70.0% 52.7% 65.9% 57.6% 61.5% 68.9% 71.3% SMBC Jun-13 Jun-16 Jun-14 Jun-15 Dec-13 Dec-14 Dec-15 Dec-12 EFFICIENCY RATIO Southern Bank’s logo is a depiction of our vision to be an organization that is accessible, dynamic, innovative, competitive, rooted, and involved. Each attribute is one we believe to be key to developing as a Company that has strong roots and strong branches. Since our last shareholder letter, we’ve been pleased to continue to expand those roots, announcing two acquisitions, and we remain focused on further opportunities to dynamically grow. Non-performing Assets Ratio Southern Missouri Bancorp, Inc. Peer Companies Dec-16 Jun-17 2.22% peer 1.50% 1.18% Dec-12 0.64% 0.37% 0.49% 0.58% 0.64% 0.43% Jun-16 Jun-14 Jun-15 Jun-13 Dec-13 Dec-14 Dec-15 0.72% In January, we reported that we’d reached an agreement to add Capaha Bank to our organization, with locations in Cape Girardeau and Jackson, Missouri, as well as locations in Anna, Cairo, and Tamms, Illinois, providing access to the only Metropolitan Statistical Area peer (MSA) in southeast Missouri. The merger was completed in June, with Capaha Bank being merged with and into Southern Bank, providing a solid core deposit franchise and a loan portfolio with a positive credit outlook. We look forward to the opportunity to grow both sides of the balance sheet in that market, as access to new products and higher lending limits will help the bankers who joined us from Capaha to serve their customers. Dec-16 Jun-17 SMBC Following our 2017 fiscal year end, in August, we reported that we will enter an adjacent market in Marshfield, Missouri, as Southern Missouri Bank of Marshfield agreed to merge with our Company. We’re targeting closing for the first quarter of calendar year 2018, and look forward to expanding our presence in the Springfield, Missouri, MSA, through this addition of two locations in Webster County. > FINANCIAL SUMMARY < > FINANCIAL SUMMARY < > FINANCIAL SUMMARY < EARNINGS (dollars in thousands) EARNINGS (dollars in thousands) EARNINGS (dollars in thousands) Net interest income Net interest income Net interest income Provision for loan losses Provision for loan losses Provision for loan losses Noninterest income Noninterest income Noninterest income Noninterest expense Noninterest expense Noninterest expense Income taxes Income taxes Income taxes Net income Net income Net income Dividend on preferred shares Dividend on preferred shares Dividend on preferred shares PER COMMON SHARE PER COMMON SHARE PER COMMON SHARE Net income: Net income: Net income: Basic Basic Basic Diluted Diluted Diluted Tangible book value Tangible book value Tangible book value Closing market price Closing market price Closing market price Cash dividends declared Cash dividends declared Cash dividends declared AT YEAR-END (dollars in thousands) AT YEAR-END (dollars in thousands) AT YEAR-END (dollars in thousands) 2017 2017 2017 2016 2016 CHANGE (%) 2016 CHANGE (%) CHANGE (%) $ 51,122 $ 51,122 $ $ 51,122 46,952 $ 46,952 $ 46,952 8.9% 8.9% 8.9% 2,340 2,340 2,340 2,494 11,084 11,084 11,084 9,758 2,494 9,758 2,494 -6.2% -6.2% -6.2% 9,758 13.6% 13.6% 13.6% 38,252 38,252 38,252 32,686 32,686 32,686 17.0% 17.0% 17.0% 6,062 6,062 6,062 6,682 6,682 6,682 -9.3% -9.3% -9.3% 15,552 15,552 15,552 14,848 14,848 14,848 4.7% 4.7% 4.7% - - - 85 85 -100.0% 85 -100.0% -100.0% $ $ 2.08 $ $ 2.08 2.08 $ 1.99 $ 1.99 1.99 4.5% 2.07 18.40 32.26 0.40 2.07 18.40 32.26 0.40 2.07 1.98 18.40 15.96 32.26 23.53 0.40 0.36 1.98 15.96 23.53 0.36 1.98 4.5% 4.5% 4.5% 4.5% 4.5% 15.96 15.3% 15.3% 15.3% 23.53 37.1% 37.1% 37.1% 0.36 11.1% 11.1% 11.1% Net income available to common stockholders Net income available to common stockholders Net income available to common stockholders 15,552 15,552 15,552 14,763 14,763 14,763 5.3% 5.3% 5.3% Total assets Total assets Total assets $ 1,707,712 $ 1,707,712 $ 1,707,712 1,403,910 $ $ 1,403,910 $ 1,403,910 21.6% 21.6% 21.6% Loans, net of allowance Loans, net of allowance Loans, net of allowance 1,397,730 1,397,730 1,397,730 1,135,453 1,135,453 1,135,453 23.1% 23.1% 23.1% Reserves as a percent of nonperforming loans Reserves as a percent of nonperforming loans Reserves as a percent of nonperforming loans 482 % 482 % 482 244 % % 244 % 244 % Deposits Deposits Deposits Stockholder's equity Stockholder's equity Stockholder's equity $ 1,455,597 $ 1,455,597 $ 1,455,597 1,120,693 $ $ 1,120,693 $ 1,120,693 29.9% 29.9% 29.9% 173,083 173,083 173,083 125,966 125,966 125,966 37.4% 37.4% 37.4% FINANCIAL RATIOS FINANCIAL RATIOS FINANCIAL RATIOS Return on average common stockholder's equity Return on average common stockholder's equity Return on average common stockholder's equity % 11.70 % 11.70 12.34 % % 12.34 % 12.34 % Return on average assets Net interest margin Efficiency ratio Allowance for loan losses to loans Equity to average assets at year-end Return on average assets Net interest margin Efficiency ratio Allowance for loan losses to loans Equity to average assets at year-end Return on average assets Net interest margin Efficiency ratio Allowance for loan losses to loans Equity to average assets at year-end 11.70 1.05 3.74 61.49 1.10 11.66 1.05 3.74 61.49 1.10 11.66 1.05 3.74 61.49 1.10 11.66 1.11 3.80 57.64 1.20 9.44 1.11 3.80 57.64 1.20 9.44 1.11 3.80 57.64 1.20 9.44 0.116639 0.116639 0.116639 0.094368 0.094368 0.094368 173,083 173,083 1483918 173,083 1483918 125,966 1483918 125,966 1334843 125,966 1334843 1334843 OTHER DATA(1) OTHER DATA(1) OTHER DATA(1) Common shares outstanding Common shares outstanding Common shares outstanding Common shares outstanding for book value calculation(2) Common shares outstanding for book value calculation(2) Common shares outstanding for book value calculation(2) 8,591,363 8,572,588 8,591,363 8,572,588 8,591,363 8,572,588 7,437,616 7,400,816 7,437,616 7,400,816 7,437,616 7,400,816 shares outstanding Average common and dilutive Average common and dilutive Average common and dilutive shares outstanding shares outstanding Common stockholders record Common stockholders record Common stockholders record Full-time equivalent employees Full-time equivalent employees Full-time equivalent employees Assets per employee (in thousands) Assets per employee (in thousands) Assets per employee (in thousands) Banking offices Banking offices Banking offices 7,510,880 7,510,880 ??? ??? 356 356 $ $ 4,797 4,797 $ 42 42 7,458,759 7,510,880 ??? 250 356 321 4,797 $ 4,374 42 36 7,458,759 250 321 $ 4,374 36 7,458,759 250 321 4,374 36 $ (1) Other data is as of year-end, except for average shares. (1) Other data is as of year-end, except for average shares. (2) Excludes unvested restricted stock award shares. (2) Excludes unvested restricted stock award shares. (1) Other data is as of year-end, except for average shares. (2) Excludes unvested restricted stock award shares. We continue to evaluate new opportunities to grow through mergers and acquisitions, as a range of prospects appear to be in play across our footprint and beyond. As we consider each, we’ll continue to focus on the growth of an institution built to serve our customers through an effective community banking business model providing a valued service to our market area and a solid return to our $2.07 $1.98 $1.98 $1.98 $0.36 shareholders. $12.55 $13.79 $15.30 $17.02 $12.55 $13.79 $15.30 $17.02 $12.55 $13.79 $15.30 $17.02 $20.19 $20.19 $20.19 $1.79 $2.07 $2.07 $0.30 $0.30 $0.30 $0.32 $0.34 $0.32 $0.34 $0.36 $0.40 $0.40 $0.32 $0.34 $0.36 $0.40 $1.44 $1.44 $1.45 $1.44 $1.45 $1.45 $1.79 $1.79 2013 2013 2015 2014 2016 2013 2014 2015 2016 2015 We saw strong loan growth in fiscal 2017 totaling $262.3 million, or 23.1%. The mid-June Capaha Bank acquisition 2014 2014 2015 CASH DIVIDENDS PER SHARE added their $152.2 million loan portfolio to our organic growth for the year. In total, loan growth consisted primarily of increases in commercial real estate loans, residential real estate loans, and commercial loans. 2014 2015 CASH DIVIDENDS PER SHARE 2014 2015 CASH DIVIDENDS PER SHARE 2016 2015 2014 BOOK VALUE PER SHARE 2016 2015 2014 BOOK VALUE PER SHARE 2015 2016 2014 BOOK VALUE PER SHARE Return on Average Common Equity return on average common equity SMBC 2017 2017 2017 2017 2013 2016 2017 2017 2013 2013 2017 2016 2013 2017 2016 2013 2017 2016 2013 peer DILUTED EARNINGS PER SHARE DILUTED EARNINGS PER SHARE DILUTED EARNINGS PER SHARE CASH DIVIDENDS PER SHARE CASH DIVIDENDS PER SHARE CASH DIVIDENDS PER SHARE BOOK VALUE PER SHARE BOOK VALUE PER SHARE BOOK VALUE PER SHARE 12.5% 12.3% 11.7% 6/30/2017 12/31/2016 6/30/2016 12/31/2015 6/30/2015 12/31/2014 6/30/2014 TOTAL ASSETS 12/31/2013 Dollars in Millions 6/30/2013 Total Assets Dollars in millions 12/31/2012 $1,404 $1,300 $1,404 Total Assets Dollars in millions Total Assets Dollars in millions $1,300 $1,300 11.7% 2013 $ 1.44 12.3% 2013 $ 2014 2013 $ 1.44 1.44 $ 2014 9.1% $ 1.45 2015 2014 $ 1.45 1.45 $ 2015 $ 1.79 12.3% 2016 2015 $ 1.79 1.79 $ 2016 $ 1.98 2016 2017 2017 11.5% $ 1.98 1.98 $ $ 2.07 2017 $ 2.07 2.07 9.8% 2014 2013 $ 0.30 0.30 $ Further growth in loans, deposits, and total assets Organic originations were supplemented by the Capaha Bank acquisition 2016 2015 2013 2013 12.5% $ 0.34 0.34 $ $ $ 0.30 to result in an outstanding year for loan and deposit growth. 2017 2016 2016 2015 2017 2015 2014 2013 11.5% TOTAL LOANS, NET OF ALLOWANCE $ 17.02 17.02 $ 15.30 15.30 $ $ $ 20.19 $ 15.30 $ $ 12.55 13.79 8.7% FOR LOAN LOSSES Total Loans, net of allowance for loan losses Total Loans, net of allowance for loan losses Total Loans, net of allowance for loan losses Dollars in Millions Dollars in millions Dollars in millions Dollars in millions 2014 $ 0.32 9.6% 2017 2016 8.7% $ 0.36 $ 0.36 2015 2014 $ 13.79 13.79 $ 2014 2013 $ 12.55 12.55 $ 2015 $ 0.34 7.6% 2015 2014 $ 0.32 0.32 $ 2017 $ 20.19 2017 9.6% $ 0.40 2017 $ 0.40 2016 $ 0.36 2016 $ 17.02 2013 $ 12.3% 18.6% 18.6% 9.8% 20.19 0.40 $1,708 $1,404 $1,708 $1,708 7.6% 9.1% TOTAL DEPOSITS 18.6% Dollars in Millions Total Deposits Dollars in millions Jun-16 Total Deposits Dollars in millions Dec-15 Dec-12 Jun-13 Dec-13 $1,135 $1,053 $1,135 $1,053 $1,135 $1,398 Jun-14 $1,398 Dec-14 $1,398 Jun-15 $647 $647 $647 $801 $801 $1,053 $801 SMBC $632 peer $632 $785 $785 $632 $1,055 $1,055 $785 Total Deposits Dollars in millions Dec-16 $1,121 $1,055 Jun-17 $1,456 $1,456 $1,456 $1,121 $1,121 $796 $796 $1,021 $796 $1,021 $1,021 13 13 14 13 14 15 14 15 16 efficiency ratio 17 16 16 SMBC 15 17 17 peer 13 13 14 13 14 15 14 15 16 15 16 17 16 17 17 Efficiency Ratio 13 13 14 13 14 15 14 15 16 15 16 17 16 17 17 BOOK VALUE PER SHARE peer SMBC 68.9% 71.3% 70.0% 69.4% 65.9% 61.5% 57.6% 58.5% 60.6% 52.7% Jun-13 Jun-16 Jun-17 Jun-15 Jun-14 Dec-13 Dec-15 Dec-14 Dec-12 Dec-16 61.5% 52.7% CASH DIVIDENDS PER SHARE $ 10 $ 11 12 $ $ 13 $ 14 $ 15 $ 16 17 $ Assets $ 552 $ 688 $ 739 796 $ 1,021 $ 1,300 $ 1,404 $ $ 1,708 Assets 552 10 $ 57.6% 688 11 $ 12 $ 739 796 13 $ 58.5% 1,021 14 $ 1,300 15 $ 1,404 16 $ 60.6% 17 $ 1,708 Loans Loans $ 419 10 419 $ $ 10 $ 557 11 557 $ $ 11 $ 583 12 583 $ $ 12 $ 13 647 $ 13 647 $ 801 $ 14 801 $ 14 $ 1,053 $ 15 1,053 $ 15 $ non-performing assets ratio 1,135 1,135 $ 16 $ 16 $ SMBC peer $ 17 $ 1,398 17 $ 1,398 0.37% problem asset levels improved Nonperforming asset levels declined as a percentage of average assets, trending towards historical averages following recent mergers. DILUTED EARNINGS 6/30/2017 Assets PER SHARE 68.9% 12/31/2016 552 10 6/30/2016 688 11 739 12 71.3% 12/31/2015 796 13 6/30/2015 1,021 14 70.0% 12/31/2014 1,300 15 Deposits increased $334.9 million, or 29.9%, with the Capaha Bank acquisition contributing $166.8 million 1,404 16 6/30/2014 1,708 17 to internally-generated growth. Additionally, we utilized brokered deposits to offset Federal Home Loan Bank 69.4% 12/31/2013 6/30/2013 advance repayments, and grew public Loans 65.9% 12/31/2012 unit deposits. On a core basis, excluding 419 10 557 11 brokered and public unit deposits, and 583 12 647 13 evaluating monthly average balances, 801 14 we measured our nonmaturity deposit 1,053 15 1,135 16 growth during the 2017 fiscal year at 8.5% 1,398 17 6/30/2017 at our legacy branches, down slightly from 0.49% 12/31/2016 9.7% growth in fiscal 2016. We continue 6/30/2016 to be quite pleased with those results. 12/31/2015 0.72% 6/30/2015 1.18% 12/31/2014 We ended fiscal 2017 with improved 6/30/2014 12/31/2013 1.50% credit quality, with nonperforming assets 6/30/2013 of $6.3 million, or 0.37% of total assets, 2.22% 12/31/2012 as compared to $9.0 million, or 0.64% of total assets, at year end for fiscal 2016. Nonperforming loans were 0.23% of gross loans at June 30, 2017, as compared to 0.50%, at the prior fiscal year end. Net charge-offs for fiscal 2017 were 0.05% of average loans outstanding, as compared to 0.09% for fiscal 2016. NON-PERFORMING ASSSETS RATIO Non-performing Assets Ratio Southern Missouri Bancorp, Inc. Peer Companies 0.43% 0.64% 0.64% 0.58% Dec-16 Dec-12 Dec-15 Dec-13 Dec-14 Jun-17 Jun-13 Jun-14 Jun-15 Jun-16 0.58% 0.43% 0.64% 0.64% 0.37% 2.22% 1.50% 1.18% 0.72% 0.49% SMBC peer Our Company saw significant changes in its capital base during fiscal 2017, issuing common shares in the June closing of the Capaha Bank acquisition and completing an “at-the-market” capital raise in that same month. Absent the capital raise, the acquisition would have reduced our capital ratios compared to the prior fiscal year end. With the additional capital, however, we ended the fiscal year with a ratio of tangible common equity to tangible assets (TCE/TA) of 9.32%, as compared to 8.46% a year earlier. The additional capital raised, in addition to our normal retention, provides us with added capacity to grow organically or through acquisitions. At the same time, we are re-evaluating our targeted capital ratios, and anticipate that we’ll attempt to hold somewhat higher levels of capital over the near- to medium-term, attributable to continued expected growth opportunities, and our concentration of assets in commercial real estate loans. Book value per common share at June 30, 2017, was $20.19, an increase of 18.6% from the year prior, aided by the accretive capital raise. Tangible book value per common share, a non-GAAP measure, improved 15.3%, to $18.40 at June 30, 2017. Our closing stock price at the end of the fiscal year was $32.26, up 37.1% from $23.53 at the previous fiscal year end. Over that same period, the SNL U.S. Bank Index was up 43.2%, while the S&P 500 was up 15.5%. We noted in last year’s report that the Company’s stock had been included in the Russell 2000 Index when it reconstituted in June 2016, and we have seen improved liquidity for our shareholders since then. Assuming dividends have been reinvested, our total shareholder return over the five years ended June 30, 2017, has been 229.3%, while the SNL U.S. Bank Index has returned 136.1%, and the S&P 500 has returned 97.4%. Our dividends paid during fiscal 2017 represented a 1.24% return on our closing stock price on the final day of the fiscal year, and a 1.33% return on our average closing stock price for fiscal 2017. In July 2017, the board was pleased to increase our dividend by 10%, to $0.11 per quarter, effective with the August 2017 payment. As we plan for the coming year, we will, as always, look for opportunities to drive long-term shareholder value, including through acquisition opportunities that present growth potential, stable sources of funding, or both. As this letter goes to press, we were recently pleased to have been interviewed by the publication, Bank Director, for an upcoming article in which we were identified as one of the highest performing listed banks over the last decade. This success has provided a foundation from which we can look forward with optimism to the new fiscal year and beyond, and it is the result of a remarkable effort by our team members, the opportunities afforded by our legacy communities as well as those we’ve grown into, and the outstanding relationships we’re fortunate to enjoy with the businesses and consumers we serve. Thank you for your continued confidence in our Company, and for the opportunity to serve you. Sincerely, GREG STEFFENS PRESIDENT and CHIEF EXECUTIVE OFFICER SOUTHERN MISSOURI BANCORP, INC. > DIRECTORS < L. Douglas Bagby Chairman of the Board; Retired City Manager, City of Poplar Bluff Greg A. Steffens President & CEO, Southern Missouri Bancorp, Inc. Sammy A. Schalk Vice-Chairman of the Board; President, Gamblin Lumber Company Ronnie D. Black Retired Executive Director, General Association of General Baptists Rebecca M. Brooks Financial Manager, McLane Transport Charles R. Love Certified Public Accountant, Kraft, Miles & Tatum Dennis C. Robison President, Robison Farms, Inc. David J. Tooley Retired President & CEO, Metropolitan National Bank Todd E. Hensley Investor/Former Chairman, Peoples Bank of the Ozarks John R. Abercrombie Retired President, Chairman & CEO, Capaha Bank > EXECUTIVE OFFICERS < Greg A. Steffens President & Chief Executive Officer Lora L. Daves Executive Vice President & Chief Risk Officer Kimberly A. Capps Executive Vice President & Chief Operations Officer Justin G. Cox Executive Vice President & Regional President William D. Hribovsek Executive Vice President & Regional President Mark E. Hecker Executive Vice President & Chief Credit Officer Matthew T. Funke Executive Vice President & Chief Financial Officer Christopher R. (“Robb”) Roberts Executive Vice President & Regional President PLEASE JOIN US at our 2017 Annual Meeting, where shareholders will hear management review this year’s performance in detail. ANNUAL MEETING Monday, October 30, 2017, at 9:00 AM To be held at our headquarters facility 2991 Oak Grove Road Poplar Bluff, Missouri SOUTHERN MISSOURI BANCORP, INC. offers community banking services in Missouri, Arkansas, and Illinois through its single bank subsidiary, Southern Bank. Southern Bank is… Accessible – Southern Bank is always accessible through our branches, website, mobile applications, ATMs and ITMs. Dynamic – We are charismatic and progressive. We grow and adapt to meet the ever-changing needs of our customers and communities. Innovative – We are unconventional pioneers. We offer cutting edge products, like Kasasa, to help our customers put their hard-earned money to work. Competitive – We are as ambitious and driven as the people we serve. We offer the same quality products of mega bank chains without losing personal service or outsourcing decisions. Rooted – Our culture is rooted in nearly 130 years of impeccable customer service, superior products, and philanthropy. Involved – We believe that our personal investment in the lives of our customers and in the communities we serve is just as important as our financial investments. Southern Missouri Bancorp, Inc. 2991 Oak Grove Road, Poplar Bluff, Missouri 63901 (573) 778-1800 www.bankwithsouthern.com 

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