Southern Missouri Bancorp Shines in Q3 2026 Despite Seasonal Challenges
Southern Missouri Bancorp recently reported its quarterly earnings for the third quarter of fiscal year 2026, and while the company faced some seasonal challenges, it managed to achieve impressive results. According to Matt Funke, President and Chief Administrative Officer, the March quarter is typically the weakest quarter from a profitability perspective, but Southern Missouri Bancorp was able to maintain an ROA above 1.40% for the second consecutive quarter.
The company's earnings were down slightly compared to the previous quarter due to an increase in operating expenses and a modest uptick in provision for credit losses, primarily driven by loan growth and higher reserve for pooled loans. However, this was partially offset by a lower provision for income taxes, better non-interest income, and slightly higher levels of net interest income.
Despite these challenges, Southern Missouri Bancorp reported a net interest margin of 3.67% for the quarter, up from 3.44% in the year-ago period and 3.57% in the second quarter of fiscal 2026. Net interest income was up just under 1% quarter-over-quarter and over 9% year-over-year, driven by the increase in average earning asset balances and net interest margin expansion.
The company's loan growth continued to be a highlight, with gross loan balances increasing by $96 million during the third quarter and reaching $300 million or 7.4% compared to March 31st of the prior year. Loan originations were strong, generating about $282 million in the quarter, up from $188 million in the same period last year.
Southern Missouri Bancorp's deposit balances also increased, with a rise of about $33 million in the third quarter and $80 million or approximately 2% year-over-year. While brokered deposits decreased slightly compared to the previous year, they increased by $36 million compared to the linked quarter-end as local deposit rate competition was stiff and wholesale sources offered more cost-effective funding.
The company is optimistic about continuing its trend of strong earnings and loan growth into the final quarter of fiscal 2026. With a healthy expected loan pipeline for the next 90 days and a good position to reach the higher end of its anticipated mid-single-digit loan growth range, Southern Missouri Bancorp is poised for continued success.
In addition to its financial results, the company announced plans to launch a new business account in the coming quarter, which could help increase lower-cost operating balances at the bank. With tweaks to its team member incentives also on the horizon, Southern Missouri Bancorp is taking steps to further improve its performance and drive growth.
