UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendendment No. 1)

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2022 OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-23406


SOUTHERN MISSOURI BANCORP, INC.
(Exact name of registrant as specified in its charter)

Missouri		43-1665523
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2991 Oak Grove Road, Poplar Bluff, Missouri		63901
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (573) 778-1800

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	SMBC	The NASDAQ Stock Market, LLC

Securities Registered Pursuant to 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ◻ No ⌧

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ◻ No ⌧

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit and post such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer	¨	Accelerated filer	☒

Non-accelerated filer	¨	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ◻

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

The aggregate market value of the voting and non voting common equity held by non-affiliates of the registrant, computed by reference to the average of the high and low traded price of such stock as of the last business day of the registrant’s most recently completed second fiscal quarter, was $401.6 million. (The exclusion from such amount of the market value of the shares owned by any person shall not be deemed an admission by the registrant that such person is an affiliate of the registrant.)

As of September 9, 2022, there were issued and outstanding 9,229,151 shares of the Registrant’s common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of Form 10-K - Portions of the Proxy Statement for the 2022 Annual Meeting of Stockholders.

EXPLANATORY NOTE

The sole purpose of this Amendment No. 1 on Form 10-K/A to our Annual Report on Form 10-K for the fiscal year ended June 30, 2022, is to update the Report of the Independent Registered Public Accounting Firm contained in Item 8 to address the adoption of ASU 2016-13, “Financial Instruments – Credit Losses,” also known as the current expected credit loss (“CECL”) standard, which was effective for the Company as of July 1, 2020. Reference to the new accounting standard was inadvertently omitted from the report filed with the original Form 10-K. Other than the inclusion with this Amendment No. 1 of new certifications required by Rules 13a-14(a) and 13a-14(b) under the Securities Exchange Act of 1934, as amended, and an updated list of exhibits in Item 15, this Amendment No. 1 does not modify or update any other disclosures contained in our original Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

Item 8. Financial Statements and Supplementary Information

Report of Independent Registered Public Accounting Firm

To the Shareholders, Board of Directors, and Audit Committee

Southern Missouri Bancorp, Inc.

Poplar Bluff, Missouri

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Southern Missouri Bancorp, Inc. (the “Company”) as of June 30, 2022 and 2021 and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended June 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 13, 2022, expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Notes 1 and 3 to the consolidated financial statements, the Company has changed its method of accounting for the allowance for credit losses effective July 1, 2020 due to the adoption of Accounting Standards Codification (ASC) Topic 326, Financial Instruments-Credit Losses.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowances for Credit Losses

The Company’s loan portfolio totaled $2.7 billion as of June 30, 2022 and the associated allowance for credit losses on loans was $33.2 million. The Company’s unfunded loan commitments totaled $388.7 million, with an associated allowance for credit loss of $3.4 million. Together these amounts represent the allowances for credit losses (“ACL”). As discussed in Notes 1 and 3 to the consolidated financial statements, the allowance for credit losses related to loans is a contra-asset valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. As discussed in Notes 1 and 3 to the consolidated financial statements, the allowance for credit losses related to unfunded commitments is a liability account and is included in other liabilities. The amount of each allowance account represented management’s best estimate of current expected credit losses on these financial instruments considering all relevant available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument.

In calculating the allowance for credit losses, loans were segmented into pools based upon similar risk characteristics. For each of these loan pools, management measured expected credit losses over the life of each loan utilizing either a remaining life model or a discounted cash flow (DCF) model. The remaining life model used historical internal and peer loss rates applied to the estimated remaining life of each pool. For the DCF model, management generates cash flow projections at the instrument level adjusting payment expectations for estimated prepayment speed, curtailments, time to recovery, probability of default and loss given default. The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers while modeling lifetime probability of default and loss given default. The Company’s analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers. The models were adjusted to reflect the current impact of certain macroeconomic variables as well as their expected changes over a reasonable and supportable forecast period. After the reasonable and supportable forecast period, the forecasted macroeconomic variables were reverted to their historical mean utilizing a rational, systematic basis. Additional qualitative adjustments are applied for risk factors that are not considered within the modeling process but are relevant in assessing the expected credit losses within the loan pools. Loans that do not share risk characteristics are evaluated on an individual basis, which may be based on the fair value of the collateral or a discounted cash flow model of expected cash flows. For unfunded commitments, the Company applies expected funding percentages to the respective model loss rates based on similar risk characteristics to estimate the allowance for credit losses.

Auditing management’s estimate of the ACL and allowance for unfunded commitments involves a high degree of subjectivity due to the complexities of the key assumptions used, such as applicable loss drivers for collectively evaluated segments of the loan portfolio and the timing and amount of cash flows for individually analyzed loans. Management’s identification and measurement of the qualitative factor adjustments is highly judgmental and had a significant effect on the ACL. There was a high degree of auditor judgment involved, due to the significant judgments made by management related to significant assumptions used and related uncertainty in determining the ACL. Therefore, there was an increased level of audit effort when performing audit procedures to evaluate ACL.

How We Addressed the Matter in Our Audit

The primary procedures we performed related to this CAM included:

●

Obtained an understanding of the Company’s process for establishing the ACL, including the implementation of models and assumptions and the qualitative factor adjustments of the ACL

●

Evaluated and tested the design and operating effectiveness of related controls over the reliability and accuracy of data used to calculate and estimate the various components of the ACL including:

o

Loan data completeness and accuracy

o

Grouping of loans based on similar risk characteristics

o

Use of historical internal data and external peer data

o

Model inputs utilized

o

Approval of model assumptions selected

o

Establishment of qualitative factors

o

Loan risk ratings

●

Tested the mathematical accuracy of the calculation of the ACL

●

Performed reviews of individual credit files and internally prepared loan review reports and support to evaluate the reasonableness of loan credit risk ratings

●

Tested the completeness and accuracy, including the evaluation of the relevance and reliability, of inputs utilized in the calculation of the ACL

●

Evaluated the reasonableness of selected loss drivers utilized and loss driver forecasts for loan segments

●

Tested the reasonableness of specific allowances on individually reviewed loans

●

Tested the reasonableness of the peer group utilized for inclusion with the selected loss drivers

●

Evaluated analytically credit quality trends in delinquencies, non-accruals, charge-offs and loan risk ratings

●

Evaluated the overall reasonableness of the ACL considering trends identified within peer groups

●

Tested significant assumptions used in the estimation of the ACL of unfunded loan commitments

●

Evaluated qualitative adjustments made to the ACL, including assessing the reasonableness and basis for those adjustments in estimating the ACL

Business Combination

Description of the Matter

As described in Note 14 to the consolidated financial statements, the Company completed an acquisition with one bank holding company during the year ended June 30, 2022, resulting in the expansion of the Company’s operating footprint and additional goodwill of approximately $13 million being recognized on the Company’s consolidated balance sheet. Management determined that the acquisition qualified as a

business combination. Accordingly, all identifiable assets acquired and liabilities assumed were valued at fair value as part of the purchase price allocation as of each acquisition date. The identification and valuation of such acquired assets and assumed liabilities requires management to exercise significant judgment and consider the use of outside vendors to estimate the fair value allocations.

We identified the acquisition and the related valuation of acquired assets and assumed liabilities as a critical audit matter. Auditing the acquired net assets and acquisition-related considerations involved a high degree of subjectivity in evaluating management’s operational assumptions of the acquisitions, fair value estimates, purchase price allocations, and assessing the appropriateness of management’s valuation models.

How We Addressed the Matter in Our Audit

The primary procedures we performed to address the accounting for the business combinations included:

●

Obtained and reviewed the executed Agreement and Plan of Merger document to gain an understanding of the underlying terms of the completed acquisitions

●

Obtained and reviewed management’s business combination memos to gain an understanding of the procedures performed to identify and calculate the fair value of the acquired assets and liabilities

●

Tested management’s business combination accounting analysis, focusing on the completeness and accuracy of the assets acquired and liabilities assumed and the related fair value purchase price allocations

●

Obtained valuation estimates prepared by management internally and challenged management’s analysis of the appropriateness of the valuations allocated to assets acquired and liabilities assumed; including but not limited to, testing of critical inputs, assumptions applied, and valuation models utilized

●

Utilized FORVIS’s internal valuation specialists to assist with evaluating the related fair value purchase price allocations made to certain identified assets acquired and liabilities assumed

●

Tested the goodwill calculation resulting from the completed acquisition, which is the difference between the total net consideration paid and the fair value of the net assets acquired

●

Evaluated the accuracy and completeness of the disclosures made in the consolidated financial statements

FORVIS (Formerly BKD, LLP)

/sig/ FORVIS, LLP

We have served as the Company’s auditor since 2002.

Decatur, Illinois

September 13, 2022

> CONSOLIDATED BALANCE SHEETS <

JUNE 30, 2022 AND 2021

Southern Missouri Bancorp, Inc.


	2022		2021
(dollars in thousands)

Assets
Cash and cash equivalents	$	86,792	$	123,592
Interest-bearing time deposits		4,768		979
Available for sale securities (Note 2)		235,394		207,020
Stock in FHLB of Des Moines		5,893		5,873
Stock in Federal Reserve Bank of St. Louis		5,790		5,031
Loans receivable, net of ACL of $33,192 and $33,222 at June 30, 2022 and June 30, 2021, respectively (Note 3)		2,686,198		2,200,244
Accrued interest receivable		11,052		10,079
Premises and equipment, net (Note 4)		71,347		64,077
Bank owned life insurance – cash surrender value		48,705		43,817
Goodwill		27,288		14,089
Other intangible assets, net		8,175		7,129
Prepaid expenses and other assets		23,380		18,600
TOTAL ASSETS	$	3,214,782	$	2,700,530

Liabilities and Stockholders' Equity
Deposits (Note 5)	$	2,815,075	$	2,330,803
Advances from FHLB (Note 6)		37,957		57,529
Accounts payable and other liabilities		17,122		12,753
Accrued interest payable		801		779
Subordinated debt (Note 7)		23,055		15,243
TOTAL LIABILITIES		2,894,010		2,417,107

Commitments and contingencies (Note 12)

Common stock, $.01 par value; 25,000,000 shares authorized; 9,815,736 and 9,361,629 shares issued at June 30, 2022 and June 30, 2021, respectively		98		94
Additional paid-in capital		119,162		95,585
Retained earnings		240,115		200,140
Treasury stock of 588,625 and 456,431 shares at June 30, 2022 and June 30, 2021, respectively, at cost		(21,116)		(15,278)
Accumulated other comprehensive income (loss)		(17,487)		2,882
TOTAL STOCKHOLDERS' EQUITY		320,772		283,423
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,214,782	$	2,700,530

See accompanying notes to consolidated financial statements.

> CONSOLIDATED STATEMENTS OF INCOME <

YEARS ENDED JUNE 30, 2022, 2021 AND 2020

Southern Missouri Bancorp, Inc.


(dollars in thousands except per share data)	2022		2021		2020

Interest Income:
Loans	$	111,495	$	105,077	$	102,129
Investment securities		2,197		2,130		1,992
Mortgage-backed securities		2,738		2,042		2,802
Other interest-earning assets		437		226		129
TOTAL INTEREST INCOME		116,867		109,475		107,052
Interest Expense:
Deposits		11,822		14,889		24,084
Advances from FHLB		792		1,366		1,932
Note payable		—		—		112
Subordinated debt		686		534		788
TOTAL INTEREST EXPENSE		13,300		16,789		26,916
NET INTEREST INCOME		103,567		92,686		80,136
Provision for credit losses (Note 3)		1,487		(1,024)		6,002
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		102,080		93,710		74,134
Noninterest income:
Deposit account charges and related fees		6,450		5,254		5,680
Bank card interchange income		4,224		3,913		3,073
Loan late charges		553		587		573
Loan servicing fees		946		1,454		196
Other loan fees		2,369		1,200		1,258
Net realized gains on sale of loans		1,598		3,980		1,630
Net realized gains on sale of AFS securities		—		90		—
Earnings on bank owned life insurance		1,168		1,800		1,021
Other income		3,895		1,764		1,319
TOTAL NONINTEREST INCOME		21,203		20,042		14,750
Noninterest expense:
Compensation and benefits		35,611		31,010		29,336
Occupancy and equipment, net		9,248		7,880		7,288
Data processing expense		5,996		4,812		5,173
Telecommunications expense		1,273		1,261		1,263
Deposit insurance premiums		743		766		155
Legal and professional fees		1,362		1,093		969
Advertising		1,496		1,080		1,227
Postage and office supplies		823		796		804
Intangible amortization		1,441		1,395		1,771
Foreclosed property expenses/losses		522		142		992
Provision for off balance sheet credit exposure		—		—		648
Other operating expense		4,864		3,812		4,826
TOTAL NONINTEREST EXPENSE		63,379		54,047		54,452
INCOME BEFORE INCOME TAXES		59,904		59,705		34,432
Income Taxes (Note 9)
Current		13,352		10,844		6,890
Deferred		(617)		1,681		(3)
		12,735		12,525		6,887
NET INCOME	$	47,169	$	47,180	$	27,545

Basic earnings per share	$	5.22	$	5.22	$	3.00
Diluted earnings per share	$	5.21	$	5.22	$	2.99
Dividends paid	$	0.80	$	0.62	$	0.60

See accompanying notes to consolidated financial statements.

> CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME <

YEARS ENDED JUNE 30, 2022, 2021 AND 2020

Southern Missouri Bancorp, Inc.




(dollars in thousands)	2022		2021		2020
NET INCOME	$	47,169	$	47,180	$	27,545
Other comprehensive income (loss):
Unrealized gains (losses) on securities available-for-sale		(26,100)		(1,925)		4,095
Less: reclassification adjustment for realized gains included in net income		—		90		—
Defined benefit pension plan net gain (loss)		(11)		6		6
Tax benefit (expense)		5,742		444		(901)
Total other comprehensive income (loss)		(20,369)		(1,565)		3,200
COMPREHENSIVE INCOME	$	26,800	$	45,615	$	30,745

See accompanying notes to consolidated financial statements.

> CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY <

YEARS ENDED JUNE 30, 2022, 2021 AND 2020

Southern Missouri Bancorp, Inc.


			Additional						Accumulated Other		Total
	Common		Paid-In		Retained		Treasury		Comprehensive		Stockholders'
(dollars in thousands)	Stock		Capital		Earnings		Stock		Income (Loss)		Equity
BALANCE AS OF JUNE 30, 2019	$	93	$	94,541	$	143,677	$	(1,166)	$	1,247	$	238,392

Net Income						27,545						27,545
Change in unrealized gain on available for sale securities, net										3,194		3,194
Defined benefit pension plan net gain										6		6
Dividends paid on common stock ($.60 per share)						(5,513)						(5,513)
Stock option expense				74								74
Stock grant expense				356								356
Exercise of stock options				64								64
Treasury stock purchased								(5,771)				(5,771)
BALANCE AS OF JUNE 30, 2020		93		95,035		165,709		(6,937)		4,447		258,347

Impact of ASU 2016-13 adoption						(7,151)						(7,151)
Net Income						47,180						47,180
Change in unrealized gain on available for sale securities, net										(1,571)		(1,571)
Defined benefit pension plan net gain										6		6
Dividends paid on common stock ($.62 per share)						(5,598)						(5,598)
Stock option expense				142								142
Stock grant expense				408								408
Common stock issued		1										1
Treasury stock purchased								(8,341)				(8,341)
BALANCE AS OF JUNE 30, 2021		94		95,585		200,140		(15,278)		2,882		283,423

Net Income						47,169						47,169
Change in unrealized loss on available for sale securities, net										(20,358)		(20,358)
Defined benefit pension plan net loss										(11)		(11)
Dividends paid on common stock ($.80 per share)						(7,194)						(7,194)
Stock option expense				165								165
Stock grant expense				532								532
Common stock issued		4		22,880								22,884
Treasury stock purchased								(5,838)				(5,838)
BALANCE AS OF JUNE 30, 2022	$	98	$	119,162	$	240,115	$	(21,116)	$	(17,487)	$	320,772

See accompanying notes to consolidated financial statements.

> CONSOLIDATED STATEMENTS OF CASH FLOWS <

YEARS ENDED JUNE 30, 2022, 2021 AND 2020

Southern Missouri Bancorp, Inc.




(dollars in thousands)	2022		2021		2020

Cash Flows From Operating Activities:
NET INCOME	$	47,169	$	47,180	$	27,545
Items not requiring (providing) cash:
Depreciation		4,480		4,029		3,783
Loss on disposal of fixed assets		3		80		482
Stock option and stock grant expense		697		550		430
Loss on sale/write-down of REO		460		55		802
Amortization of intangible assets		1,441		1,395		1,771
Accretion of purchase accounting adjustments		(1,565)		(1,502)		(1,403)
Increase in cash surrender value of bank owned life insurance (BOLI)		(1,168)		(1,800)		(1,022)
Provision for credit losses		1,487		(1,024)		6,002
Gains realized on sale of AFS securities		—		(90)		—
Net amortization of premiums and discounts on securities		1,198		1,633		1,295
Bargain purchase gain		—		—		(123)
Originations of loans held for sale		(42,808)		(151,171)		(72,165)
Proceeds from sales of loans held for sale		44,004		151,813		70,929
Gain on sales of loans held for sale		(1,598)		(3,980)		(1,630)
Changes in:
Accrued interest receivable		(391)		2,037		(1,758)
Prepaid expenses and other assets		9,681		1,790		4,566
Accounts payable and other liabilities		5,016		(47)		1,224
Deferred income taxes		(617)		1,681		26
Accrued interest payable		(147)		(867)		(453)
NET CASH PROVIDED BY OPERATING ACTIVITIES		67,342		51,762		40,301
Cash flows from investing activities:
Net increase in loans		(281,544)		(62,864)		(246,930)
Net change in interest-bearing deposits		(1,488)		(7)		(2)
Proceeds from maturities of available for sale securities		40,474		57,723		51,649
Proceeds from sales of available for sale securities		—		16,284		—
Net (purchases) redemptions of Federal Home Loan Bank stock		691		517		(1,072)
Net purchases of Federal Reserve Bank of St. Louis stock		(759)		(668)		(13)
Purchases of available-for-sale securities		(96,144)		(108,057)		(55,486)
Purchases of long-term investment		(383)		(40)		—
Purchases of premises and equipment		(4,617)		(2,856)		(4,304)
Purchases of BOLI		—		—		(4,000)
Net cash paid (received) for acquisition		48,767		—		(9,080)
Investments in state & federal tax credits		(11,276)		(5,325)		(5,103)
Proceeds from sale of fixed assets		928		580		349
Proceeds from sale of foreclosed assets		1,423		1,444		1,632
Proceeds from BOLI claim		—		1,351		—
NET CASH USED IN INVESTING ACTIVITIES		(303,928)		(101,918)		(272,360)
Cash flows from financing activities:
Net increase in demand deposits and savings accounts		273,356		257,876		249,285
Net decrease in certificates of deposits		(31,221)		(111,885)		(4,788)
Net decrease in securities sold under agreements to repurchase		—		—		(4,376)
Proceeds from Federal Home Loan Bank advances		—		110,100		640,900
Repayments of Federal Home Loan Bank advances		(29,300)		(122,649)		(615,897)
Repayments of long term debt		—		—		(3,000)
Exercise of stock options		—		—		64
Purchase of treasury stock		(5,838)		(8,341)		(5,771)
Dividends paid on common stock		(7,194)		(5,598)		(5,513)
NET CASH PROVIDED BY FINANCING ACTIVITIES		199,803		119,503		250,904
(Decrease) increase in cash and cash equivalents		(36,783)		69,347		18,845
Cash and cash equivalents at beginning of period		123,592		54,245		35,400
Cash and cash equivalents at end of period	$	86,809	$	123,592	$	54,245
Supplemental disclosures of cash flow information:

Noncash investing and financing activities:
Conversion of loans to foreclosed real estate	$	127	$	748	$	1,057
Conversion of loans to repossessed assets		26		461		210
Right of use assets obtained in exchange for lease obligations: Operating Leases		95		804		2,004

The Company purchased all of the Fortune Financial Corporation on February 25, 2022.
In conjunction with the acquisition, liabilities were assumed as follows:
Fair value of assets acquired	$	267,913
Less: common stock issued		22,885
Cash received		12,663
Liabilities assumed		232,365

The Company assumed the liabilities and purchased associated assets of the First National Bank -Cairo branch on December 15, 2021.
In conjunction with the acquisition, liabilities were assumed as follows:
Fair value of assets acquired	$	1,707
Cash paid		27,151
Liabilities assumed		28,859

The Company purchased all of the capital stock of Central Federal for $21,942 on May 22, 2020.
In conjunction with the acquisitions, liabilities were assumed as follows:
Fair value of assets acquired					$	70,570
Cash paid for the capital stock						21,942
Liabilities assumed						48,504

Cash paid during the period for:
Interest (net of interest credited)	$	2,057	$	2,654	$	3,813
Income taxes		361		9,240		2,437

See accompanying notes to consolidated financial statements.

NOTE 1: Organization and Summary of Significant Accounting Policies

Organization. Southern Missouri Bancorp, Inc., a Missouri corporation (the Company) was organized in 1994 and is the parent company of Southern Bank (the Bank). Substantially all of the Company’s consolidated revenues are derived from the operations of the Bank, and the Bank represents substantially all of the Company’s consolidated assets and liabilities. SB Real Estate Investments, LLC is a wholly-owned subsidiary of the Bank formed to hold Southern Bank Real Estate Investments, LLC. Southern Bank Real Estate Investments, LLC is a real estate investment trust (REIT) which is controlled by SB Real Estate Investments, LLC, and has other preferred shareholders in order to meet the requirements to be a REIT. At June 30, 2022, assets of the REIT were approximately $1.3 billion, and consisted primarily of real estate loan participations acquired from the Bank.

The Bank is primarily engaged in providing a full range of banking and financial services to individuals and corporate customers in its market areas. The Bank and Company are subject to competition from other financial institutions. The Bank and Company are subject to the regulation of certain federal and state agencies and undergo periodic examinations by those regulatory authorities.

Basis of Financial Statement Presentation. The consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America and general practices within the banking industry. In the normal course of business, the Company encounters two significant types of risk: economic and regulatory. Economic risk is comprised of interest rate risk, credit risk, and market risk. The Company is subject to interest rate risk to the degree that its interest-bearing liabilities reprice on a different basis than its interest-earning assets. Credit risk is the risk of default on the Company’s investment or loan portfolios resulting from the borrowers’ inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of the investment portfolio, collateral underlying loans receivable, and the value of the Company’s investments in real estate.

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

On July 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses, also known as the current expected credit loss (“CECL”) standard, which created material changes to the existing critical accounting policy that existed at June 30, 2020. Effective July 1, 2020, the significant accounting policy which was considered to be the most critical in preparing the Company’s consolidated financial statements is the determination of the allowance for credit losses (“ACL”) on loans.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, and estimated fair values of purchased loans.

Cash and Cash Equivalents. For purposes of reporting cash flows, cash and cash equivalents includes cash, due from depository institutions and interest-bearing deposits in other depository institutions with original maturities of three months or less. Interest-bearing deposits in other depository institutions were $47.3 million and $83.2 million at June 30, 2022 and 2021, respectively. The deposits are held in various commercial banks with a total of $5.8 million and $1.8 million exceeding the FDIC deposit insurance limits at June 30, 2022 and 2021, respectively, as well as at the Federal Reserve and the Federal Home Loan Bank of Des Moines and Chicago.

Interest-bearing Time Deposits. Interest bearing deposits in banks mature within seven years and are carried at cost.

Available for Sale Securities. Available for sale securities (“AFS”), which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Unrealized gains and losses, net of tax, are reported in accumulated other comprehensive income (loss), a component of stockholders’ equity. All securities have been classified as available for sale.

Premiums and discounts on debt securities are amortized or accreted as adjustments to income over the estimated life of the security using the level yield method. Realized gains or losses on the sale of securities is based on the specific identification method. The fair value of securities is based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

The Company does not invest in collateralized mortgage obligations that are considered high risk.

For AFS securities with fair value less than amortized cost that management has no intent to sell and believes that it more likely than not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the noncredit loss is recognized in accumulated other comprehensive income (loss). The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security as projected based on cash flow projections, and is recorded to the ACL, by a charge to provision for credit losses. Accrued interest receivable is excluded from the estimate of credit losses. Both the ACL and the adjustment to net income may be reversed if conditions change. However, if the Company intends to sell an impaired AFS security, or, if it is more likely than not the Company will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value, there is no ACL in this situation.

At adoption of ASU 2016-13, no impairment on AFS securities was attributable to credit. The Company evaluates impaired AFS securities at the individual level on a quarterly basis, and considers such factors including, but not limited to: the extent to which the fair value of the security is less than the amortized cost basis; adverse conditions specifically related to the security, an industry, or geographic area; the payment structure of the security and likelihood of the issuer to be able to make payments that may increase in the future; failure of the issuer to make scheduled interest or principal payments; any changes to the rating of the security by a rating agency; and the ability and intent to hold the security until maturity. A qualitative determination as to whether any portion of the impairment is attributable to credit risk is acceptable. There were no credit related factors underlying unrealized losses on AFS securities at June 30, 2022, and June 30, 2021.

Changes in the ACL are recorded as expense. Losses are charged against the ACL when management believes the uncollectability of an AFS debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Federal Reserve Bank and Federal Home Loan Bank Stock. The Bank is a member of the Federal Reserve and the Federal Home Loan Bank (FHLB) systems. Capital stock of the Federal Reserve and the FHLB is a required investment based upon a predetermined formula and is carried at cost.

Loans. Loans are generally stated at unpaid principal balances, less the ACL, any net deferred loan origination fees, and unamortized premiums or discounts on purchased loans.

Interest on loans is accrued based upon the principal amount outstanding. The accrual of interest on loans is discontinued when, in management’s judgment, the collectability of interest or principal in the normal course of business is doubtful. The Company complies with regulatory guidance which indicates that loans should be placed in nonaccrual status when 90 days past due, unless the loan is both well-secured and in the process of collection. A loan that is “in the

process of collection” may be subject to legal action or, in appropriate circumstances, through other collection efforts reasonably expected to result in repayment or restoration to current status in the near future. A loan is considered delinquent when a payment has not been made by the contractual due date. Interest income previously accrued but not collected at the date a loan is placed on nonaccrual status is reversed against interest income. Cash receipts on a nonaccrual loan are applied to principal and interest in accordance with its contractual terms unless full payment of principal is not expected, in which case cash receipts, whether designated as principal or interest, are applied as a reduction of the carrying value of the loan. A nonaccrual loan is generally returned to accrual status when principal and interest payments are current, full collectability of principal and interest is reasonably assured, and a consistent record of performance has been demonstrated.

The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans, and is established through provision for credit losses charged to current earnings. The ACL is increased by the provision for losses on loans charged to expense and reduced by loans charged off, net of recoveries. Loans are charged off in the period deemed uncollectible, based on management’s analysis of expected cash flows (for non-collateral dependent loans) or collateral value (for collateral-dependent loans). Subsequent recoveries of loans previously charged off, if any, are credited to the allowance when received.

Management estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Adjustments may be made to historical loss information for differences identified in current loan-specific risk characteristics, such as differences in underwriting standards or terms; lending review systems; experience, ability, or depth of lending management and staff; portfolio growth and mix; delinquency levels and trends; as well as for changes in environmental conditions, such as changes in economic activity or employment, agricultural economic conditions, property values, or other relevant factors. The Company generally incorporates a reasonable and supportable forecast period of four quarters, and a four-quarter, straight-line reversion period to return to long-term historical averages.

The ACL is measured on a collective (pool) basis when similar risk characteristics exist. For loans that do not share general risk characteristics with the collectively evaluated pools, the Company estimates credit losses on an individual loan basis, and these loans are excluded from the collectively evaluated pools. An ACL for an individually evaluated loan is recorded when the amortized cost basis of the loan exceeds the discounted estimated cash flows using the loan’s initial effective interest rate or the fair value, less estimated costs to sell, of the collateral for certain collateral dependent loans. For the collectively evaluated pools, the Company segments the loan portfolio primarily by loan purpose and collateral into 24 pools, which are homogeneous groups of loans that possess similar loss potential characteristics. The Company primarily utilizes the discounted cash flow (“DCF”) methodology for measurement of the required ACL. For a limited number of pools with a relatively small balance of unpaid principal balance, the Company utilized the remaining life method. The DCF model implements probability of default (“PD”) and loss given default (“LGD”) calculations at the instrument level. PD and LGD are determined based on statistical analysis and correlation of historical losses with various economic factors over time. In general, the Company’s losses have not correlated well with economic factors, and the Company has utilized peer data where more appropriate. The Company defines a default as an event of charge off, an adverse (substandard or worse) internal credit rating, becoming delinquent 90 days or more, or

being placed on nonaccrual status. A PD/LGD estimate is applied to a projected model of the loan’s cashflow, including principal and interest payments, with consideration for prepayment speeds, principal curtailments, and recovery lag.

Subsequent to the July 1, 2020, adoption of ASU 2016-13, loans acquired in a business combination that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans. At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics. This initial ACL is allocated to individual PCD loans and added to the purchase price or acquisition date fair values to establish the initial amortized cost basis of the PCD loans. As the initial ACL is added to the purchase price, there is no credit loss expense recognized upon acquisition of a PCD loan. Any difference between the unpaid principal balance of PCD loans and the amortized cost basis is considered to relate to non-credit factors and results in a discount or premium. Discounts and premiums are recognized through interest income on a level-yield method over the life of the loans.

Upon adoption of ASU 2016-13, the amortized cost basis of the PCD assets were adjusted to reflect the addition of $434,000 to the ACL. The remaining noncredit discount, based on the adjusted amortized cost basis, will be accreted into interest income at the effective interest rate as of July 1, 2020.

Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income using the interest method over the contractual life of the loans.

Off-Balance Sheet Credit Exposures. Off-balance sheet credit instruments include commitments to make loans, and commercial letters of credit, issued to meet customer financing needs. The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The ACL on off-balance sheet credit exposures is estimated by loan pool on a quarterly basis under the current CECL model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur and is included in other liabilities on the Company’s consolidated balance sheets. The Company records an ACL on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable. In prior periods the charge for credit loss expense for off-balance sheet credit exposures was included in other non-interest expense in the Company’s consolidated statements of income, whereas under updated regulatory accounting guidelines, that figure is combined with the provision for credit losses beginning July 1, 2020.

Foreclosed Real Estate. Real estate acquired by foreclosure or by deed in lieu of foreclosure is initially recorded at fair value less estimated selling costs, establishing a new cost basis. Costs for development and improvement of the property are capitalized.

Valuations are periodically performed by management, and an allowance for losses is established by a charge to operations if the carrying value of a property exceeds its estimated fair value, less estimated selling costs.

Loans to facilitate the sale of real estate acquired in foreclosure are discounted if made at less than market rates. Discounts are amortized over the fixed interest period of each loan using the interest method.

Premises and Equipment. Premises and equipment are stated at cost less accumulated depreciation and include expenditures for major betterments and renewals. Maintenance, repairs, and minor renewals are expensed as incurred. When property is retired or sold, the retired asset and related accumulated depreciation are removed from the accounts and the resulting gain or loss taken into income. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment loss recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets.

Depreciation is computed by use of straight-line method over the estimated useful lives of the assets. Estimated lives are generally seven to forty years for premises, three to seven years for equipment, and three years for software.

Bank Owned Life Insurance. Bank owned life insurance policies are reflected in the consolidated balance sheets at the estimated cash surrender value. Changes in the cash surrender value of these policies, as well as a portion of the insurance proceeds received, are recorded in noninterest income in the consolidated statements of income.

Goodwill. The Company’s goodwill is evaluated annually for impairment or more frequently if impairment indicators are present. A qualitative assessment is performed to determine whether the existence of events or circumstances leads to a determination that it is more likely than not the fair value is less than the carrying amount, including goodwill. If, based on the evaluation, it is determined to be more likely than not that the fair value is less than the carrying value, then goodwill is tested further for impairment. If the implied fair value of goodwill is lower than its carrying amount, a goodwill impairment is indicated and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the financial statements. As of June 30, 2022, there was no impairment indicated, based on a qualitative assessment of goodwill, which considered: the market value of the Company’s common stock, concentrations of credit; profitability; nonperforming assets; capital levels; and results of recent regulatory examinations. The Company believes there is no impairment of goodwill at June 30, 2022.

Intangible Assets. The Company’s intangible assets at June 30, 2022 included gross core deposit intangibles of $17.0 million with $11.5 million accumulated amortization, gross other identifiable intangibles of $3.8 million with accumulated amortization of $3.8 million, and mortgage and SBA servicing rights of $2.7 million. At June 30, 2021, the Company’s intangible assets included gross core deposit intangibles of $15.3 million with $10.1 million accumulated amortization, gross other identifiable intangibles of $3.8 million with accumulated amortization of $3.8 million, and mortgage servicing rights of $1.9 million. The Company’s core deposit intangible assets are being amortized using the straight line method, over periods ranging from five to seven years, with amortization expense expected to be approximately $1.6 million in fiscal 2023, $1.6 million in fiscal 2024, $1.1 million in fiscal 2025, $581,000 in fiscal 2026, $253,000 in fiscal 2027, and $417,000 thereafter. As of June 30, 2022, and June 30, 2021, there was no impairment indicated.

Income Taxes. The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to the management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company recognizes interest and penalties on income taxes as a component of income tax expense.

The Company files consolidated income tax returns with its subsidiaries, the Bank and SB Real Estate Investments, LLC, with a tax year ended June 30. Southern Bank Real Estate Investments, LLC files a separate REIT return for federal tax purposes, and also files state income tax returns with a tax year ended December 31.

Incentive Plans. The Company accounts for its Equity Incentive Plan (EIP), and Omnibus Incentive Plan (OIP) in accordance with ASC 718, “Share-Based Payment.” Compensation expense is based on the market price of the Company’s stock on the date the shares are granted and is recorded over the vesting period. The difference between the grant-date fair value and the fair value on the date the shares are considered earned represents a tax benefit to the Company that is recorded as an adjustment to income tax expense.

Outside Directors’ Retirement. The Bank adopted a directors’ retirement plan in April 1994 for outside directors. The directors’ retirement plan provides that each non-employee director (participant) shall receive, upon termination of service on the Board on or after age 60, other than termination for cause, a benefit in equal annual installments over a five year period. The benefit will be based upon the product of the participant’s vesting percentage and the total Board fees paid to the participant during the calendar year preceding termination of service on the Board. The vesting percentage shall be determined based upon the participant’s years of service on the Board, whether before or after the reorganization date.

In the event that the participant dies before collecting any or all of the benefits, the Bank shall pay the participant’s beneficiary. Benefits shall not be payable to anyone other than the beneficiary, and shall terminate on the death of the beneficiary.

Stock Options. Compensation cost is measured based on the grant-date fair value of the equity instruments issued, and recognized over the vesting period during which an employee provides service in exchange for the award.

Earnings Per Share. Basic earnings per share available to common stockholders is computed using the weighted-average number of common shares outstanding. Diluted earnings per share available to common stockholders includes the effect of all weighted-average dilutive potential common shares (stock options and restricted stock grants) outstanding during each period.

Comprehensive Income. Comprehensive income consists of net income and other comprehensive income (loss), net of applicable income taxes. Other comprehensive income (loss) includes unrealized appreciation (depreciation) on available-for-sale securities, unrealized appreciation (depreciation) on available-for-sale securities for which a portion of an other-than-temporary impairment has been recognized in income, and changes in the funded status of defined benefit pension plans.

Transfers Between Fair Value Hierarchy Levels. Transfers in and out of Level 1 (quoted market prices), Level 2 (other significant observable inputs) and Level 3 (significant unobservable inputs) are recognized on the period ending date.

The following paragraphs summarize the impact of new accounting pronouncements:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which the Company adopted July 1, 2020. The Update amended guidance on reporting credit losses for financial assets held at amortized cost basis and available for sale debt securities. For financial assets held at amortized cost basis, Topic 326 eliminated the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The Update affects loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, and any other financial assets not excluded from the scope that have the contractual right to receive cash. Adoption was applied on a modified retrospective basis, through a cumulative-effect adjustment to retained earnings. Adoption resulted in an increase to the ACL of $8.9 million, related to the transition from the incurred loss model to the CECL ACL model, and an increase of $434,000 related to the transition from PCI to PCD methodology, relative to the ALLL as of June 30, 2020. The Company also recorded an adjustment to the reserve for unfunded commitments recorded in other liabilities of $268,000. The impact at adoption was reflected as an adjustment to beginning retained earnings, net of income taxes, in the amount of $7.2 million. In accordance with the new standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. The adoption of ASU 2016-13 in fiscal 2021 could also impact the Company’s future earnings, perhaps materially.

The following table illustrates the impact of adoption of ASU 2016-13:


	July 1, 2020
	As reported		As reported		Impact of
	under		prior to		adoption
(dollars in thousands)	ASU 2016-13		ASU 2016-13		ASU 2016-13

Loans receivable	$	2,142,363	$	2,141,929	$	434
Allowance for credit losses on loans:
Real Estate Loans:
Residential		8,396		4,875		3,521
Construction		1,889		2,010		(121)
Commercial		15,988		12,132		3,856
Consumer loans		2,247		1,182		1,065
Commercial loans		5,952		4,940		1,012
Total allowance for credit losses on loans	$	34,472	$	25,139	$	9,333
Total allowance for credit losses on off-balance sheet credit exposures	$	2,227	$	1,959	$	268

The above table includes the impact of ASU 2016-13 adoption for PCD assets previously classified as PCI. The change in the ACL includes $434,000 attributable to residential and commercial real estate loans, and the amortized cost basis of loans receivable was increased for those loans by that total amount.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), that removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. ASU 2019-12 introduces the following new guidance: i) guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction and ii) a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2020. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated operations, financial position or disclosures.

In March 2020, the CARES Act was signed into law, creating a forbearance program for federally backed mortgage loans, protects borrowers from negative credit reporting due to loan accommodations related to the National Emergency, and provides financial institutions the option to temporarily suspend certain requirements under U.S. GAAP related to troubled debt restructurings (TDR) for a limited period of time to account for the effects of COVID-19. The Company has elected to not apply ASC Subtopic 310-40 for loans eligible under the CARES Act, based on the modification’s (1) relation to COVID-19, (2) execution for a loan that was not more than 30-days past due as of December 31, 2019, and (3) execution between March 1, 2020, and the earlier of the date that falls 60 days following the termination of the declared National Emergency, or December 31, 2020. The 2021 Consolidated Appropriations Act, signed into law in December 2020, extended the window during which loans may be modified without classification as TDRs under ASC Subtopic 310-40, to the earlier of January 1, 2022, or 60 days following the termination of the declared National Emergency.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): “Facilitation of the Effects of Reference Rate Reform on Financial Reporting,”. The amendments in this update provide optional guidance for a limited period to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. It provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. Pursuant to the Interagency Statement on LIBOR Transition issued in November 2020, the Company will not enter into any new LIBOR-based credit agreements after December 31, 2021. The adoption of ASU 2020-04 is not expected to have a material impact on the Company’s consolidated financial statements.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. ASU 2021-01 clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU 2021-01 also amends the expedients and exceptions in ASC 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. ASU 2021-01 was effective upon issuance and generally can be applied through December 31, 2022. ASU 2021-01 is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2022, the FASB issued ASU No. 2022-02, “Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the accounting guidance for TDRs in ASC 310-40, “Receivables – Troubled Debt Restructurings by Creditors” for entities that have adopted the CECL model introduced by ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2022-02 also requires that public business entities disclose current-period gross charge offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Cost.” ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, for entities that have adopted the amendments in Update 2016-13, and is not expected to have a material impact on the Company’s consolidated financial statements.

NOTE 2: Available for Sale Securities

The amortized cost, gross unrealized gains, gross unrealized losses and approximate fair value of securities available for sale consisted of the following:


	June 30, 2022
			Gross		Gross		Allowance		Estimated
	Amortized		Unrealized		Unrealized		for		Fair
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Value
Debt and equity securities:
Obligations of states and political subdivisions	$	47,383	$	77	$	(2,981)	$	—	$	44,479
Corporate obligations		20,818		32		(963)		—		19,887
Other securities		486		—		(43)		—		443
Total debt and equity securities		68,687		109		(3,987)		—		64,809

Mortgage-backed securities (MBS) and collateralized mortgage obligations (CMOs):
Residential MBS issued by governmental sponsored enterprises (GSEs)		76,345		—		(7,177)		—		69,168
Commercial MBS issued by GSEs		51,435		—		(5,705)		—		45,730
CMOs issued by GSEs		61,293		—		(5,606)		—		55,687
Total MBS and CMOs		189,073		—		(18,488)		—		170,585
Total AFS securities	$	257,760	$	109	$	(22,475)	$	—	$	235,394


	June 30, 2021
			Gross		Gross		Allowance		Estimated
	Amortized		Unrealized		Unrealized		for		Fair
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Value

Debt and equity securities:
Obligations of states and political subdivisions	$	46,257	$	1,479	$	(40)	$	—		47,696
Corporate obligations		20,356		290		(335)		—		20,311
Other securities		647		25		—		—		672
Total debt and equity securities		67,260		1,794		(375)		—		68,679

Mortgage-backed securities (MBS) and collateralized mortgage obligations (CMOs):
Residential MBS issued by governmental sponsored enterprises (GSEs)		64,400		932		(379)		—		64,953
Commercial MBS issued by GSEs		35,425		1,394		(338)		—		36,481
CMOs issued by GSEs		36,201		755		(49)		—		36,907
Total MBS and CMOs		136,026		3,081		(766)		—		138,341
Total AFS securities	$	203,286	$	4,875	$	(1,141)	$	—	$	207,020

The amortized cost and fair value of available-for-sale securities, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	June 30, 2022
	Amortized		Estimated
(dollars in thousands)	Cost		Fair Value
Within one year	$	868	$	869
After one year but less than five years		10,485		10,258
After five years but less than ten years		32,161		30,340
After ten years		25,173		23,342
Total investment securities		68,687		64,809
MBS and CMOs		189,073		170,585
Total AFS securities	$	257,760	$	235,394

The carrying value of investment and mortgage-backed securities pledged as collateral to secure public deposits and securities sold under agreements to repurchase amounted to $198.3 million and $155.6 million at June 30, 2022 and 2021, respectively. The securities pledged consist of marketable securities, including $126.3 million and $95.4 million of Mortgage-Backed Securities, $27.3 million and $18.8 million of Collateralized Mortgage Obligations, $42.3 million and $41.4 million of State and Political Subdivisions Obligations, and $2.4 million and $0 of Other Securities at June 30, 2022 and 2021, respectively.

There were no gains or losses recognized from sales of available-for-sale securities in fiscal 2022. Gains of $138,000 and losses of $48,000 were recognized from sales of securities from sales of available-for-sale securities in fiscal 2021.

The Company did not hold any securities of a single issuer, payable from and secured by the same source of revenue or taxing authority, the book value of which exceeded 10% of stockholders’ equity at June 30, 2022.

Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. Total fair value of these investments at June 30, 2022, was $219.3 million, which is approximately 93.2% of the Company’s available for sale investment portfolio, as compared to $67.2 million or approximately 32.5% of the Company’s available for sale investment portfolio at June 30, 2021. Management believes the declines in fair value for these securities to be temporary.

The following tables below show the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for which ACL has not been recorded at June 30, 2022 and 2021.


	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
(dollars in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
For the year ended June 30, 2022
Obligations of state and political subdivisions	$	31,985	$	2,639	$	1,600	$	342	$	33,585	$	2,981
Corporate obligations		10,944		420		6,911		543		17,855		963
Other securities		418		43		—		—		418		43
MBS and CMOs		137,590		12,482		29,834		6,006		167,424		18,488
Total AFS securities	$	180,937	$	15,584	$	38,345	$	6,891	$	219,282	$	22,475


	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
(dollars in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
For the year ended June 30, 2021
Obligations of state and political subdivisions	$	3,177	$	40	$	—	$	—	$	3,177	$	40
Corporate obligations		9,331		79		720		256		10,051		335
MBS and CMOs		53,893		764		70		2		53,963		766
Total AFS securities	$	66,401	$	883	$	790	$	258	$	67,191	$	1,141

Obligations of state and political subdivisions. The unrealized losses on the Company’s investments in obligations of state and political subdivisions include 65 individual securities which have been in an unrealized loss position for less than 12 months and three individual securities which have been in an unrealized loss position for more than 12 months. The securities are performing and are of high credit quality. The unrealized losses were caused by variations in market interest rates since purchase or acquisition. Because the Company does not intend to sell these securities and it is likely that the Company will not be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company has not recorded an ACL on these securities.

Corporate Obligations. The unrealized losses on the Company’s investments in corporate obligations include eight individual securities which have been in an unrealized loss position for less than 12 months and seven individual securities which have been in an unrealized loss position for more than 12 months. The securities are performing and are of high credit quality. The unrealized losses were caused by variations in market interest rates since purchase or acquisition. Because the Company does not intend to sell these securities and it likely that the Company will not be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company has not recorded an ACL on these securities.

At June 30, 2022, corporate obligations included two pooled trust preferred securities with an estimated fair value of $794,000 and unrealized losses of $184,000 in a continuous unrealized loss position for twelve months or more. These unrealized losses were primarily due to the long-term nature of the pooled trust preferred securities and a reduced demand for these securities, and concerns regarding the issuers of the underlying trust preferred securities.

A cash flow analysis performed as of June 30, 2022, for these two securities indicated it is probable the Company will receive all contracted principal and related interest projected. The cash flow analysis used in making this determination was based on anticipated default, recovery, and prepayment rates, and the resulting cash flows were discounted based on the yield spread anticipated at the time the securities were purchased. Because the Company does not intend to sell these securities and it is likely that the Company will not be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company has not recorded an ACL on these securities.

Other securities. The unrealized losses on the Company’s investments in other securities includes two individual securities which has been in an unrealized loss position for less than 12 months and no individual securities which have been in an unrealized loss position for more than 12 months. The securities are performing and are of high credit quality. The unrealized loss was caused by variations in market interest rates since purchase or acquisition. Because the Company does not intend to sell these securities and it likely that the Company will not be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company has not recorded an ACL on these securities.

MBS and CMOs. As of June 30, 2022, the unrealized losses on the Company’s investments in MBS and CMOs include 106 individual securities which have been in an unrealized loss position for less than 12 months, and 16 individual securities which have been in an unrealized loss position for 12 months or more. The securities are performing and are of high credit quality. The unrealized losses were caused by variations in market interest rates since purchase or acquisition. Because the Company does not intend to sell these securities and it is likely that the Company will not be

required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company has not recorded an ACL on these securities.

The Company does not believe that any individual unrealized loss as of June 30, 2022, is the result of a credit loss. However, the Company could be required to recognize an ACL in future periods with respect to its available for sale investment securities portfolio.

Credit losses recognized on investments. There were no credit losses recognized in income and other losses or recorded in other comprehensive income for the periods ended June 30, 2022 and 2021.

NOTE 3: Loans and Allowance for Credit Losses

Classes of loans are summarized as follows:


(dollars in thousands)	June 30, 2022		June 30, 2021
Real Estate Loans:
Residential	$	904,160	$	721,216
Construction		258,072		208,824
Commercial		1,146,673		889,793
Consumer loans		92,996		77,674
Commercial loans		441,598		414,124
		2,843,499		2,311,631
Loans in process		(123,656)		(74,540)
Deferred loan fees, net		(453)		(3,625)
Allowance for credit losses		(33,192)		(33,222)
Total loans	$	2,686,198	$	2,200,244

The Company’s lending activities consist of origination of loans secured by mortgages on one- to four-family residences and commercial and agricultural real estate, construction loans on residential and commercial properties, commercial and agricultural business loans and consumer loans. At June 30, 2022, the Bank had purchased participations in 31 loans totaling $70.0 million, as compared to 23 loans totaling $83.0 million at June 30, 2021.

Residential Mortgage Lending. The Company actively originates loans for the acquisition or refinance of one- to four-family residences. This category includes both fixed-rate and adjustable-rate mortgage (“ARM”) loans amortizing over periods of up to 30 years, and the properties securing such loans may be owner-occupied or non-owner-occupied. Single-family residential loans do not generally exceed 90% of the lower of the appraised value or purchase price of the secured property. Substantially all of the one- to four-family residential mortgage originations in the Company’s portfolio are located within the Company’s primary lending area. General risks related to one- to four-family residential lending include stability of borrower income and collateral values.

The Company also originates loans secured by multi-family residential properties that are often located outside the Company’s primary lending area but made to borrowers who operate within our primary market area. The majority of the multi-family residential loans that are originated by the Company are amortized over periods generally up to 25 years, with balloon maturities typically up to ten years. Both fixed and adjustable interest rates are offered and it is typical for the Company to include an interest rate “floor” and “ceiling” in the loan agreement. Generally, multi-family residential loans do not exceed 85% of the lower of the appraised value or purchase price of the secured property. General risks related to multi-family residential lending include rental demand and supply, rental rates, and vacancies, as well as collateral values and borrower leverage.

Commercial Real Estate Lending. The Company actively originates loans secured by owner- and non-owner-occupied commercial real estate including farmland, single- and multi-tenant retail properties, restaurants, hotels, land (improved and unimproved), nursing homes and other healthcare facilities, warehouses and distribution centers, convenience stores, automobile dealerships and other automotive-related services, and other businesses. These properties are typically owned and operated by borrowers headquartered within the Company’s primary lending area, however, the property may be located outside our primary lending area. Approximately $459.9 million of the Company’s $1.1 billion in commercial real estate loans are secured by properties located outside our primary lending area. Risks to owner-occupied commercial real estate lending generally include the continued profitable operation of the borrower’s enterprise, as well as general collateral values, and may be heightened by unique, specific uses of the property serving as collateral. Non-owner-occupied commercial real estate lending risks include tenant demand and performance, lease rates, and vacancies, as well as collateral values and borrower leverage. These factors may be influenced by general economic conditions in the region, or in the United States generally. Risks to lending on farmland include unique factors such as commodity prices, yields, input costs, and weather, as well as farmland values.

Most commercial real estate loans originated by the Company generally are based on amortization schedules of up to 25 years with monthly principal and interest payments. Generally, the interest rate received on these loans is fixed for a maturity for up to ten years, with a balloon payment due at maturity. Alternatively, for some loans, the interest rate adjusts at least annually after an initial period up to seven years. The Company typically includes an interest rate “floor” in the loan agreement. Generally, improved commercial real estate loan amounts do not exceed 80% of the lower of the appraised value or the purchase price of the secured property. Agricultural real estate terms offered differ slightly, with amortization schedules of up to 25 years with an 80% loan-to-value ratio, or 30 years with a 75% loan-to-value ratio.

Construction Lending. The Company originates real estate loans secured by property or land that is under construction or development. Construction loans originated by the Company are generally to finance the construction of owner occupied residential real estate, or to finance speculative construction of residential real estate, land development, or owner-operated or non-owner occupied commercial real estate. During construction, these loans typically require monthly interest-only payments, with single-family residential construction loans having maturities ranging from six to twelve months, while multi-family or commercial construction loans typically mature in 12 to 36 months. Once construction is completed, permanent construction loans may be converted to monthly payments using amortization schedules of up to 30 years on residential and generally up to 25 years on commercial real estate. Construction and development lending risks generally include successful timely and on-budget completion of the project, followed by the sale of the property in the case of land development or non-owner-occupied real estate, or the long-term occupancy of the property by the builder in the case of owner-occupied construction. Changes in real estate values or other economic conditions may impact the ability of a borrower to sell property developed for that purpose.

While the Company typically utilizes relatively short maturity periods to closely monitor the inherent risks associated with construction loans for these loans, weather conditions, change orders, availability of materials and/or labor, and other factors may contribute to the lengthening of a project, thus necessitating the need to renew the construction loan at the balloon maturity. Such extensions are typically executed in incremental three month periods to facilitate project completion. The Company’s average term of construction loans is approximately 12 months. During construction, loans typically require monthly interest only payments which may allow the Company an opportunity to monitor for early signs of financial difficulty should the borrower fail to make a required monthly payment. Additionally, during the construction phase, the Company typically performs interim inspections which further allow the Company opportunity to assess risk. At June 30, 2022, construction loans outstanding included 57 loans, totaling $13.8 million, for which a modification had been agreed to. At June 30, 2021, construction loans outstanding included 48 loans, totaling $28.5 million, for which a modification had been agreed to. In general, these modifications were solely for the purpose of extending the maturity date due to conditions described above, pursuant to the Company’s normal underwriting and monitoring procedures. As these modifications were not executed due to financial difficulty on the part of the borrower, they were not accounted for as troubled debt restructurings (TDRs); nor were they made pursuant to exemptions provided under the CARES Act. Under the CARES Act, financial institutions had the option to temporarily suspend certain requirements under U.S. GAAP related to TDRs for a limited period of time to account for the effects of

COVID-19. Loans modified under the CARES Act did not include any construction loans with drawn balances at June 30, 2022.

Consumer Lending. The Company offers a variety of secured consumer loans, including home equity, direct and indirect automobile loans, second mortgages, mobile home loans and loans secured by deposits. The Company originates substantially all of its consumer loans in its primary lending area. Usually, consumer loans are originated with fixed rates for terms of up to 66 months, with the exception of home equity lines of credit, which are variable, tied to the prime rate of interest and are for a period of ten years.

Home equity lines of credit (HELOCs) are secured with a deed of trust and are issued up to 100% of the appraised or assessed value of the property securing the line of credit, less the outstanding balance on the first mortgage and are typically issued for a term of ten years. Interest rates on the HELOCs are generally adjustable. Interest rates are based upon the loan-to-value ratio of the property with better rates given to borrowers with more equity. Risks related to HELOC lending generally include the stability of borrower income and collateral values.

Automobile loans originated by the Company include both direct loans and a smaller amount of loans originated by auto dealers. The Company generally pays a negotiated fee back to the dealer for indirect loans. Typically, automobile loans are made for terms of up to 66 months for new and used vehicles. Loans secured by automobiles have fixed rates and are generally made in amounts up to 100% of the purchase price of the vehicle. Risks to automobile and other consumer lending generally include the stability of borrower income and borrower willingness to repay.

Commercial Business Lending. The Company’s commercial business lending activities encompass loans with a variety of purposes and security, including loans to finance accounts receivable, inventory, equipment and operating lines of credit, including agricultural production and equipment loans. The Company offers both fixed and adjustable rate commercial business loans. Generally, commercial loans secured by fixed assets are amortized over periods up to five years, while commercial operating lines of credit or agricultural production lines are generally for a one year period. Commercial lending risk is primarily driven by the borrower’s successful generation of cash flow from their business enterprise sufficient to service debt, and may be influenced by factors specific to the borrower and industry, or by general economic conditions in the region or in the United States generally. Agricultural production or equipment lending includes unique risk factors such as commodity prices, yields, input costs, and weather, as well as farm equipment values.

Allowance for Credit Losses. The provision for credit losses or loan losses for the fiscal years ended June 30, 2022, 2021, and 2020, was a charge of $1.5 million, a recovery of $1.0 million, and a charge of $6.0 million, respectively. During the fiscal year ended June 30, 2022, the allowance for credit losses (ACL) required for purchased credit deteriorated (PCD) loans acquired in the Fortune acquisition was $120,000, and was funded through purchase accounting adjustments, while the ACL required for non-PCD loans acquired in the Fortune acquisition was $1.9 million, and was funded through a charge to provision for credit losses (PCL). Additionally, the allowance for off-balance sheet credit exposures was increased by $120,000 due to the Fortune acquisition and funded through a charge to PCL. Exclusive of the charges required as a result of the Fortune acquisition, the Company would have recorded a negative PCL of approximately $533,000 in the current year. The recovery was based on the estimated required ACL, reflecting management’s estimate of the current expected credit losses in the Company’s loan portfolio at June 30, 2022, and as of that date the Company’s ACL was $33.2 million. Negative provisioning, exclusive of the impact of the Fortune acquisition, in the year ended June 30, 2022, was attributed primarily to an improved outlook regarding the economic environment resulting as the economy recovers from the effects of the COVID-19 pandemic, and the Company notes less uncertainty regarding the potential adverse impact on its borrowers, generally low and consistent levels of net charge offs, and a reduction in delinquent or adversely classified credits, and nonperforming loans. While the Company assesses that the economic outlook has continued to improve during the current year as compared to the year ended June 30, 2021, there remains significant uncertainty as economic activity recovers from the COVID-19 pandemic and the Federal Reserve withdraws accommodative monetary policy that was put into effect to respond to the pandemic and its economic impact. Specifically, management considered the following:

● economic conditions and projections as provided by Moody’s Analytics, including baseline and downside scenarios were utilized in the Company’s estimate at June 30, 2022. Economic factors considered in the projections included national and state levels of unemployment, and national and state rates of inflation-adjusted growth in the gross domestic product. Economic conditions are considered to be a moderate and stable risk factor;

● the pace of growth of the Company’s loan portfolio, exclusive of acquisitions or government guaranteed loans, relative to overall economic growth. This measure is considered to be a moderate and increasing risk factor;

● levels and trends for loan delinquencies nationally and in the region. This measure as reported remains relatively stable, and the level of uncertainty about loan delinquencies is considered to be diminishing. This is considered to be a moderate and declining risk factor;

● exposure to the hotel industry, in particular, metropolitan area hotels which were negatively impacted by activity restrictions and a lack of business or convention-related travel. This is considered to be an elevated and stable risk factor.

PCD Loans. In connection with the acquisition of Fortune on February 25, 2022, the Company acquired loans both with and without evidence of credit quality deterioration since origination. Acquired loans are recorded at their fair value at the time of acquisition with no carryover from the acquired institution’s previously recorded allowance for loan and lease losses. Acquired loans are accounted for under ASC 326, Financial Instruments – Credit Losses.

The fair value of acquired loans recorded at the time of acquisition is based upon several factors, including the timing and payment of expected cash flows, as adjusted for estimated credit losses and prepayments, and then discounting these cash flows using comparable market rates. The resulting fair value adjustment is recorded in the form of a premium or discount to the unpaid principal balance of the respective loans. As it relates to acquired loans that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination (“PCD”), the net premium or net discount is adjusted to reflect the Company’s allowance for credit losses recorded for PCD loans at the time of acquisition, and the remaining fair value adjustment is accreted or amortized into interest income over the remaining life of the respective loans. As it relates to loans not classified as PCD (“non-PCD”) loans, the credit loss and yield components of their fair value adjustment are aggregated, and the resulting net premium or net discount is accreted or amortized into interest income over the remaining life of the respective loans. The Company records an ACL for non-PCD loans at the time of acquisition through provision expense, and therefore, no further adjustments are made to the net premium or net discount for non-PCD loans.

Loans that the Company acquired from Fortune that, at the time of acquisition, had more-than-insignificant deterioration of credit quality since origination are classified as PCD loans and presented in the table below at acquisition carrying value:


(dollars in thousands)	June 30, 2022
PCD Loans:
Purchase price of PCD loans at acquisition	$	15,055
Allowance for credit losses at acquisition		(120)
Fair value of PCD loans at acquisition	$	14,935

The following tables present the balance in the ACL and the recorded investment in loans (excluding loans in process and deferred loan fees) based on portfolio segment as of June 30, 2022 and 2021, and activity in the ACL and ALLL for the fiscal years ended June 30, 2022, 2021, and 2020:


(dollars in thousands)	Residential			Construction		Commercial
June 30, 2022	Real Estate		Real Estate		Real Estate		Consumer		Commercial		Total
Allowance for credit losses:
Balance, beginning of period	$	11,192	$	2,170	$	14,535	$	916	$	4,409	$	33,222
Initial ACL on PCD loans		23		4		52		—		41		120
Provision (benefit) charged to expense		(2,238)		46		2,251		(205)		80		(66)
Losses charged off		(72)		—		—		(65)		(16)		(153)
Recoveries		3		—		—		64		2		69
Balance, end of period	$	8,908	$	2,220	$	16,838	$	710	$	4,516	$	33,192


(dollars in thousands)	Residential		Construction		Commercial
June 30, 2021	Real Estate		Real Estate		Real Estate		Consumer		Commercial		Total
Allowance for credit losses:
Balance, beginning of period	$	4,875	$	2,010	$	12,132	$	1,182	$	4,940	$	25,139
Impact of CECL adoption		3,521		(121)		3,856		1,065		1,012		9,333
Provision charged to expense		2,973		281		(1,364)		(1,232)		(1,260)		(602)
Losses charged off		(180)		—		(90)		(146)		(318)		(734)
Recoveries		3		—		1		47		35		86
Balance, end of period	$	11,192	$	2,170	$	14,535	$	916	$	4,409	$	33,222


(dollars in thousands)	Residential		Construction		Commercial
June 30, 2020	Real Estate		Real Estate		Real Estate		Consumer		Commercial		Total
Allowance for loan losses:
Balance, beginning of period	$	3,706	$	1,365	$	9,399	$	1,046	$	4,387	$	19,903
Provision charged to expense		1,529		645		2,730		300		798		6,002
Losses charged off		(379)		—		(12)		(189)		(273)		(853)
Recoveries		19		—		15		25		28		87
Balance, end of period	$	4,875	$	2,010	$	12,132	$	1,182	$	4,940	$	25,139

The following tables present the balance in the allowance for off-balance credit exposure based on portfolio segment as of June 30, 2022 and 2021, and activity in allowance for the fiscal yeasr ended June 30, 2022 and 2021:


(dollars in thousands)	Residential			Construction		Commercial
June 30, 2022	Real Estate		Real Estate		Real Estate		Consumer		Commercial		Total
Allowance for off-balance sheet credit exposure:
Balance, beginning of period	$	37	$	502	$	188	$	218	$	860	$	1,805
Provision (benefit) charged to expense		21		1,676		233		(157)		(220)		1,553
Balance, end of period	$	58	$	2,178	$	421	$	61	$	640	$	3,358


(dollars in thousands)	Residential			Construction		Commercial
June 30, 2021	Real Estate		Real Estate		Real Estate		Consumer		Commercial		Total
Allowance for off-balance sheet credit exposure:
Balance, beginning of period period	$	19	$	769	$	172	$	153	$	846	$	1,959
Impact of CECL adoption		35		(167)		95		197		108		268
Provision (benefit) charged to expense		(17)		(100)		(79)		(132)		(94)		(422)
Balance, end of period	$	37	$	502	$	188	$	218	$	860	$	1,805

Credit Quality Indicators. The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on all loans at origination, and is updated on a quarterly basis for loans risk rated Watch, Special Mention, Substandard, or Doubtful. In addition, lending relationships of $3 million or more, exclusive of any consumer or owner-occupied residential loan, are subject to an annual credit analysis which is prepared by the loan administration department and presented to a loan committee with appropriate lending authority. A sample of lending relationships in excess of $1 million (exclusive of single-family residential real estate loans) are subject to an independent loan review annually, in order to verify risk ratings. The Company uses the following definitions for risk ratings:

Watch – Loans classified as watch exhibit weaknesses that require more than usual monitoring. Issues may include deteriorating financial condition, payments made after due date but within 30 days, adverse industry conditions or management problems.

Special Mention – Loans classified as special mention exhibit signs of further deterioration but still generally make payments within 30 days. This is a transitional rating and loans should typically not be rated Special Mention for more than 12 months.

Substandard – Loans classified as substandard possess weaknesses that jeopardize the ultimate collection of the principal and interest outstanding. These loans exhibit continued financial losses, ongoing delinquency, overall poor financial condition, and insufficient collateral.

Doubtful – Loans classified as doubtful have all the weaknesses of substandard loans, and have deteriorated to the level that there is a high probability of substantial loss.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.

A periodic review of selected credits (based on loan size and type) is conducted to identify loans with heightened risk or probable losses and to assign risk grades. The primary responsibility for this review rests with loan administration personnel. This review is supplemented with periodic examinations of both selected credits and the credit review process by the Company’s internal audit function and applicable regulatory agencies. The information from these reviews assists management in the timely identification of problems and potential problems and provides a basis for deciding whether the credit continues to share similar risk characteristics with collectively evaluated loan pools, or whether credit losses for the loan should be evaluated on an individual loan basis.

The following tables presents the credit risk profile of the Company’s loan portfolio (excluding loans in process and deferred loan fees) based on rating category and year of origination as of June 30, 2022. This tables includes PCD loans, which are reported according to risk categorization after acquisition based on the Company’s standards for such classification:


(dollars in thousands)													Revolving
June 30,	2022		2021		2020		2019		2018		Prior		loans		Total
Residential Real Estate
Pass	$	380,502	$	295,260	$	118,464	$	19,383	$	22,143	$	58,545	$	6,074	$	900,371
Watch		44		242		1,083		56		—		30		—		1,455
Special Mention		—		—		—		—		—		—		—		—
Substandard		266		918		87		440		18		605		—		2,334
Doubtful		—		—		—		—		—		—		—		—
Total Residential Real Estate	$	380,812	$	296,420	$	119,634	$	19,879	$	22,161	$	59,180	$	6,074	$	904,160

Construction Real Estate
Pass	$	100,114	$	34,082	$	—	$	—	$	—	$	—	$	220	$	134,416
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total Construction Real Estate	$	100,114	$	34,082	$	—	$	—	$	—	$	—	$	220	$	134,416

Commercial Real Estate
Pass	$	487,486	$	284,736	$	105,893	$	71,380	$	51,804	$	78,115	$	23,669	$	1,103,083
Watch		4,763		769		1,818		—		668		2,000		548		10,566
Special Mention		9,297		—		—		—		—		—		—		9,297
Substandard		22,086		481		140		13		22		93		65		22,900
Doubtful		827		—		—		—		—		—		—		827
Total Commercial Real Estate	$	524,459	$	285,986	$	107,851	$	71,393	$	52,494	$	80,208	$	24,282	$	1,146,673

Consumer
Pass	$	28,519	$	10,989	$	3,662	$	1,524	$	916	$	676	$	46,521	$	92,807
Watch		21		71		—		—		—		—		—		92
Special Mention		—		—		—		—		—		—		—		—
Substandard		23		6		4		—		10		31		23		97
Doubtful		—		—		—		—		—		—		—		—
Total Consumer	$	28,563	$	11,066	$	3,666	$	1,524	$	926	$	707	$	46,544	$	92,996

Commercial
Pass	$	111,370	$	93,906	$	20,795	$	10,496	$	3,253	$	7,612	$	190,235	$	437,667
Watch		1,319		194		38		6		—		186		1,206		2,949
Special Mention		—		—		—		—		—		—		—		—
Substandard		295		11		—		186		—		167		323		982
Doubtful		—		—		—		—		—		—		—		—
Total Commercial	$	112,984	$	94,111	$	20,833	$	10,688	$	3,253	$	7,965	$	191,764	$	441,598

Total Loans
Pass	$	1,107,991	$	718,973	$	248,814	$	102,783	$	78,116	$	144,948	$	266,719	$	2,668,344
Watch		6,147		1,276		2,939		62		668		2,216		1,754		15,062
Special Mention		9,297		—		—		—		—		—		—		9,297
Substandard		22,670		1,416		231		639		50		896		411		26,313
Doubtful		827		—		—		—		—		—		—		827
Total	$	1,146,932	$	721,665	$	251,984	$	103,484	$	78,834	$	148,060	$	268,884	$	2,719,843

At June 30, 2022, PCD loans comprised $23.1 million of credits rated “Pass”; $4.7 million of credits rated “Watch”; none rated “Special Mention”; $1.1 million of credits rated “Substandard”; and none rated “Doubtful”.

The following tables presents the credit risk profile of the Company’s loan portfolio (excluding loans in process and deferred loan fees) based on rating category and year of origination as of June 30, 2021. This tables includes PCD loans, which are reported according to risk categorization after acquisition based on the Company’s standards for such classification:


(dollars in thousands)													Revolving
June 30,	2021		2020		2019		2018		2017		Prior		loans		Total
Residential Real Estate
Pass	$	361,876	$	175,772	$	43,576	$	32,929	$	23,267	$	71,592	$	5,557	$	714,569
Watch		328		70		410		—		89		809		—		1,706
Special Mention		—		—		—		—		—		—		—		—
Substandard		4,288		89		—		92		—		472		—		4,941
Doubtful		—		—		—		—		—		—		—		—
Total Residential Real Estate	$	366,492	$	175,931	$	43,986	$	33,021	$	23,356	$	72,873	$	5,557	$	721,216

Construction Real Estate
Pass	$	88,371	$	45,866	$	—	$	—	$	—	$	—	$	—	$	134,237
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		—		—
Substandard		47		—		—		—		—		—		—		47
Doubtful		—		—		—		—		—		—		—		—
Total Construction Real Estate	$	88,418	$	45,866	$	—	$	—	$	—	$	—	$	—	$	134,284

Commercial Real Estate
Pass	$	351,732	$	147,670	$	104,746	$	75,967	$	70,927	$	61,194	$	23,699	$	835,935
Watch		4,456		2,365		9,502		1,377		726		10		810		19,246
Special Mention		—		8,806		—		1,793		12,826		—		300		23,725
Substandard		8,191		1,137		505		31		5		99		69		10,037
Doubtful		—		—		850		—		—		—		—		850
Total Commercial Real Estate	$	364,379	$	159,978	$	115,603	$	79,168	$	84,484	$	61,303	$	24,878	$	889,793

Consumer
Pass	$	23,858	$	8,626	$	3,597	$	1,126	$	534	$	650	$	39,071	$	77,462
Watch		80		—		—		—		—		—		48		128
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		30		30		—		24		84
Doubtful		—		—		—		—		—		—		—		—
Total Consumer	$	23,938	$	8,626	$	3,597	$	1,156	$	564	$	650	$	39,143	$	77,674

Commercial
Pass	$	189,280	$	42,549	$	17,960	$	5,591	$	7,265	$	9,120	$	136,603	$	408,368
Watch		1,551		262		1,323		22		—		—		463		3,621
Special Mention		—		—		—		—		—		—		—		—
Substandard		594		81		305		—		176		—		979		2,135
Doubtful		—		—		—		—		—		—		—		—
Total Commercial	$	191,425	$	42,892	$	19,588	$	5,613	$	7,441	$	9,120	$	138,045	$	414,124

Total Loans
Pass	$	1,015,117	$	420,483	$	169,879	$	115,613	$	101,993	$	142,556	$	204,930	$	2,170,571
Watch		6,415		2,697		11,235		1,399		815		819		1,321		24,701
Special Mention		—		8,806		—		1,793		12,826		—		300		23,725
Substandard		13,120		1,307		810		153		211		571		1,072		17,244
Doubtful		—		—		850		—		—		—		—		850
Total	$	1,034,652	$	433,293	$	182,774	$	118,958	$	115,845	$	143,946	$	207,623	$	2,237,091

At June 30, 2021, PCD loans comprised $3.2 million of credits rated “Pass”; $9.0 million of credits rated “Watch”; none rated “Special Mention”; $2.7 million of credits rated “Substandard”; and none rated “Doubtful”.

Past Due Loans. The following tables present the Company’s loan portfolio aging analysis (excluding loans in process and deferred loan fees) as of June 30, 2022 and 2021. These tables include PCD loans, which are reported according to aging analysis after acquisition based on the Company’s standards for such classification:


					Greater Than								Greater Than 90
	30-59 Days		60-89 Days		90 Days		Total				Total Loans		Days Past Due
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable		and Accruing
June 30, 2022
Real Estate Loans:
Residential	$	1,402	$	—	$	1,064	$	2,466	$	901,694	$	904,160	$	—
Construction		—		—		—		—		134,416		134,416		—
Commercial		416		615		288		1,319		1,145,354		1,146,673		—
Consumer loans		340		45		57		442		92,554		92,996		—
Commercial loans		274		72		13		359		441,239		441,598		—
Total loans	$	2,432	$	732	$	1,422	$	4,586	$	2,715,257	$	2,719,843	$	—


					Greater Than								Greater Than 90
	30-59 Days		60-89 Days		90 Days		Total				Total Loans		Days Past Due
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable		and Accruing
June 30, 2021
Real Estate Loans:
Residential	$	312	$	364	$	613	$	1,289	$	719,927	$	721,216	$	—
Construction		—		—		30		30		134,254		134,284		—
Commercial		363		—		374		737		889,056		889,793		—
Consumer loans		195		66		84		345		77,329		77,674		—
Commercial loans		368		939		110		1,417		412,707		414,124		—
Total loans	$	1,238	$	1,369	$	1,211	$	3,818	$	2,233,273	$	2,237,091	$	—

Under the CARES Act, financial institutions had the option to temporarily suspend certain requirements under U.S. GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. Loans with such modifications in effect at June 30, 2021, included $23.9 million in loans reported as current in the above table, while none were reported as past due.

At June 30, 2022 and 2021 there were no PCD loans that were greater than 90 days past due.

Loans that experience insignificant payment delays and payment shortfalls generally are not adversely classified or determined to not share similar risk characteristics with collectively evaluated pools of loans for determination of the ACL estimate. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Significant payment delays or shortfalls may lead to a determination that a loan should be individually evaluated for estimated credit losses.

Collateral-dependent Loans. The following table presents the Company’s collateral dependent loans and related ACL at June 30, 2022 and 2021:



	Amortized cost basis of
(dollars in thousands)	loans determined to be		Related allowance
June 30, 2022	collateral dependent		for credit losses
Residential real estate loans
1- to 4-family residential loans	$	864	$	193
Total loans	$	864	$	193



	Amortized cost basis of
(dollars in thousands)	loans determined to be		Related allowance
June 30, 2021	collateral dependent		for credit losses
Residential real estate loans
1- to 4-family residential loans	$	895	$	223
Total loans	$	895	$	223

Nonaccrual Loans. The following table presents the Company’s amortized cost basis of nonaccrual loans segmented by class of loans at June 30, 2022 and 2021. The table excludes performing TDRs.


	June 30,
(dollars in thousands)	2022		2021
Residential real estate	$	1,647	$	3,235
Construction real estate		—		30
Commercial real estate		2,259		1,914
Consumer loans		73		100
Commercial loans		139		589
Total loans	$	4,118	$	5,868

At June 30, 2022, there were no nonaccrual loans individually evaluated for which no ACL was recorded. Interest income recognized on nonaccrual loans in the periods ended June 30, 2022 and 2021, was immaterial.

Troubled Debt Restructurings. TDRs are evaluated to determine whether they share similar risk characteristics with collectively evaluated loan pools, or must be individually evaluated. These concessions typically result from our loss mitigation activities, and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. In general, the Company’s loans that have been subject to classification as TDRs are the result of guidance under ASU No. 2011-02, which indicates that the Company may not consider the borrower’s effective borrowing rate on the old debt immediately before the restructuring in determining whether a concession has been granted. Certain TDRs are classified as nonperforming at the time of restructuring and typically are returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period of at least six months.

During fiscal 2022, there were six loans modified as TDRs totaling $24.5 million. During fiscal 2021, there were three loans modified as TDRs totaling $894,000.

Performing loans classified as TDRs at June 30, 2022 and June 30, 2021 segregated by class, are shown in the table below. Nonperforming TDRs are shown in nonaccrual loans.


	June 30, 2022			June 30, 2021
	Number of	Recorded		Number of	Recorded
(dollars in thousands)	modifications	Investment		modifications	Investment
Residential real estate	11	$	3,625	1	$	895
Construction real estate	—		—	—		—
Commercial real estate	8		25,132	4		949
Consumer loans	—		—	—		—
Commercial loans	8		1,849	7		1,397
Total	27	$	30,606	12	$	3,241

Real Estate Foreclosures. The Company may obtain physical possession of real estate collateralizing a residential mortgage loan or home equity loan via foreclosure or in-substance repossession. As of June 30, 2022 and June 30, 2021, the carrying value of foreclosed residential real estate properties as a result of obtaining physical possession was $580,000 and $622,000, respectively. In addition, as of June 30, 2022 and June 30, 2021, the Company had residential mortgage loans and home equity loans with a carrying value of $486,000 and $533,000, respectively, collateralized by residential real estate property for which formal foreclosure proceedings were in process.

Following is a summary of loans to executive officers, directors, significant shareholders and their affiliates held by the Company at June 30, 2022 and 2021, respectively:


	June 30,
(dollars in thousands)	2022		2021
Beginning Balance	$	10,624	$	8,603
Additions		6,393		8,474
Repayments		(6,403)		(6,453)
Ending Balance	$	10,614	$	10,624

NOTE 4: Premises and Equipment

Following is a summary of premises and equipment:


	June 30,
(dollars in thousands)	2022		2021
Land	$	13,532	$	12,452
Buildings and improvements		64,730		56,422
Construction in progress		142		1,158
Furniture, fixtures, equipment and software		20,838		18,985
Automobiles		120		120
Operating leases ROU asset		3,849		2,770
		103,211		91,907
Less accumulated depreciation		31,864		27,830
	$	71,347	$	64,077

Leases. The Company elected certain relief options under ASU 2016-02, Leases (Topic 842), including the option not to recognize right of use asset and lease liabilities that arise from short-term leases (leases with terms of twelve months or less). The Company has five leased properties and numerous office equipment lease agreements in which it is the lessee, with lease terms exceeding twelve months.

The Company leases facilities it owns or portions of facilities it owns to other third parties. The Company has determined that all of these lease agreements, in terms of being the lessor, are classified as operating leases. For the years ended June 30, 2022 and 2021, income recognized from these lessor agreements was $279,000 and $307,000, respectively. Income from lessor agreements was included in net occupancy and equipment expense. The operating leases are now included as a ROU asset in the premises and equipment line item on the Company’s consolidated balance sheets. The corresponding lease liability is included in the accounts payable and other liabilities line item on the Company’s consolidated balance sheets.

In the February 2022 acquisition of Fortune, the Company assumed a ground lease with an entity that is controlled by a Company insider. This property is in St. Louis County, MO and is in its third year of a twenty year term.

ASU 2016-02 also requires certain other accounting elections. The Company elected the short-term lease recognition exemption for all leases that qualify, meaning those with terms under twelve months. ROU assets or lease liabilities are not to be recognized for short-term leases. The calculated amount of the ROU assets and lease liabilities in the table below are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, the ASU requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception over a similar term. The discount rate utilized was 5%. The expected lease terms range from 18 months to 20 years.


	At or For the		At or For the
	Twelve Months Ended		Twelve Months Ended
	June 30, 2022		June 30, 2021
Consolidated Balance Sheet
Operating leases right of use asset	$	3,849	$	2,770
Operating leases liability	$	3,849	$	2,770

Consolidated Statement of Income
Operating lease costs classified as occupancy and equipment expense	$	451	$	340
(includes short-term lease costs)

Supplemental disclosures of cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	382	$	282
ROU assets obtained in exchange for operating lease obligations:	$	—	$	804

For the years ended June 30, 2022 and 2021, lease expense was $451,000 and $340,000, respectively. At June 30, 2022, future expected lease payments for leases with terms exceeding one year were as follows:


(dollars in thousands)
2023	$	442
2024		443
2025		439
2026		434
2027		418
Thereafter		4,074
Future lease payments expected	$	6,250

NOTE 5: Deposits

Deposits are summarized as follows:


	June 30,
(dollars in thousands)	2022		2021
Non-interest bearing accounts	$	426,929	$	358,418
NOW accounts		1,171,620		925,280
Money market deposit accounts		303,612		253,614
Savings accounts		274,283		230,905
TOTAL NON-MATURITY DEPOSITS		2,176,444		1,768,217
Certificates
0.00-0.99%		408,479		332,958
1.00-1.99%		171,997		155,078
2.00-2.99%		51,692		63,777
3.00-3.99%		6,298		10,606
4.00-4.99%		165		167
TOTAL CERTIFICATES		638,631		562,586
TOTAL DEPOSITS	$	2,815,075	$	2,330,803

The aggregate amount of deposits with a minimum denomination of $250,000 was $848.9 million and $668.8 million at June 30, 2022 and 2021, respectively.

Certificate maturities are summarized as follows:


(dollars in thousands)
July 1, 2022 to June 30, 2023	$	377,842
July 1, 2023 to June 30, 2024		91,429
July 1, 2024 to June 30, 2025		71,706
July 1, 2025 to June 30, 2026		54,057
July 1, 2026 to June 30, 2027		42,844
Thereafter		753
TOTAL	$	638,631

Brokered certificates totaled $10.8 million and $5.0 million at June 30, 2022 and 2021, respectively. Deposits from executive officers, directors, significant shareholders and their affiliates (related parties) held by the Company at June 30, 2022 and 2021 totaled approximately $6.0 million and $4.3 million, respectively.

NOTE 6: Advances from Federal Home Loan Bank

Advances from Federal Home Loan Bank are summarized as follows:


	Interest		June 30,
Maturity	Rate		2022			2021

			(dollars in thousands)
09/07/21	2.81	%		—			9,000
09/09/21	2.28	%		—			1,994
10/01/21	2.53	%		—			5,000
11/16/21	2.43	%		—			5,000
03/07/22	0.95	%		—			3,000
03/31/22	1.91	%		—			248
08/15/22	1.89	%		3,000			3,000
11/16/22	0.51	%		1,994			—
03/6/23	0.99	%		3,000			3,000
07/24/23	0.59	%		987			—
11/15/23	0.57	%		980			—
03/6/24	0.95	%		3,000			3,000
03/28/24	2.56	%		8,000			8,000
07/24/24	0.66	%		1,940			—
08/13/24	1.88	%		3,000			3,000
02/21/25	1.28	%		—			5,000
02/21/25	1.53	%		5,000			5,000
03/6/25	1.01	%		3,000			3,000
07/15/25	0.77	%		1,913			—
07/22/26	1.10	%		1,909			—
12/14/26	2.65	%		234			287
	TOTAL		$	37,957		$	57,529
Weighted-average rate				1.47	%		1.97	%

Of the advances outstanding at June 30, 2022, one advance totaling $5.0 million is callable by the FHLB prior to maturity. In addition to the above advance, the Bank had additional available credit amounting to $500.6 million and $383.0 million with the FHLB at June 30, 2022 and 2021, respectively.

Advances from FHLB of Des Moines are secured by FHLB stock and commercial real estate and one- to four-family mortgage loans pledged. To secure outstanding advances and the Bank’s line of credit, loans totaling $889.7 million and $769.8 million were pledged to the FHLB at June 32, 2022 and 2021, respectively. The principal maturities of FHLB advances at June 30, 2022, are below:


	June 30, 2022
FHLB Advance Maturities	(dollars in thousands)
July 1, 2022 to June 30, 2023	$	7,994
July 1, 2023 to June 30, 2024		12,967
July 1, 2024 to June 30, 2025		12,940
July 1, 2025 to June 30, 2026		1,913
July 1, 2026 to June 30, 2027		2,143
TOTAL	$	37,957

NOTE 7: Subordinated Debt

In March 2004, the Company established Southern Missouri Statutory Trust I as a statutory business trust, to issue Floating Rate Capital Securities (the “Trust Preferred Securities”). The securities mature in 2034, became redeemable after five years, and bear interest at a floating rate based on LIBOR. The securities represent undivided beneficial interests in the trust, which was established by the Company for the purpose of issuing the securities. The Trust Preferred Securities were sold in a private transaction exempt from registration under the Securities Act of 1933, as amended (the “Act”) and have not been registered under the Act. The securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Southern Missouri Statutory Trust I used the proceeds from the sale of the Trust Preferred Securities to purchase Junior Subordinated Debentures (the “Debentures”) of the Company which have terms identical to the Trust Preferred Securities. At June 30, 2022, the Debentures carried an interest rate of 4.78%. The balance of the Debentures outstanding was $7.2 million at June 30, 2022 and June 30, 2021. The Company used its net proceeds for working capital and investment in its subsidiaries.

In connection with its October 2013 acquisition of Ozarks Legacy Community Financial, Inc. (OLCF), the Company assumed $3.1 million in floating rate junior subordinated debt securities. The debt securities had been issued in June 2005 by OLCF in connection with the sale of trust preferred securities, bear interest at a floating rate based on LIBOR, are now redeemable at par, and mature in 2035. At June 30, 2022, the current rate was 4.28%. The carrying value of the debt securities was approximately $2.7 million at June 30, 2022 and 2021.

In connection with its August 2014 acquisition of Peoples Service Company, Inc. (PSC), the Company assumed $6.5 million in floating rate junior subordinated debt securities. The debt securities had been issued in 2005 by PSC’s subsidiary bank holding company, Peoples Banking Company, in connection with the sale of trust preferred securities, bear interest at a floating rate based on LIBOR, are now redeemable at par, and mature in 2035. At June 30, 2022, the current rate was 3.63%. The carrying value of the debt securities was approximately $5.4 million and $5.3 million at June 30, 2022 and 2021, respectively.

The Company’s investment at a face amount of $505,000 in these trusts is included with Prepaid Expenses and Other Assets in the consolidated balance sheets, and is carried at a value of $461,000 at June 30, 2022.

In connection with its February 2022 acquisition of Fortune Financial Corporation (Fortune), the Company assumed $7.5 million in fixed-to-floating rate subordinated notes. The notes had been issued in May 2021 by Fortune to a multi-lender group, bear interest through May 2026 at a fixed rate of 4.5%, and will bear interest thereafter at SOFR plus 3.77%. The notes will be redeemable at par beginning in May 2026, and mature in May 2031. The carrying value of the notes was approximately $7.7 million at June 30, 2022.

NOTE 8: Employee Benefits

401(k) Retirement Plan. The Bank has a 401(k) retirement plan that covers substantially all eligible employees. The Bank makes “safe harbor” matching contributions of up to 4% of eligible compensation, depending upon the percentage of eligible pay deferred into the plan by the employee. Additional profit-sharing contributions of 5% of eligible salary have been accrued for the plan year ended June 30, 2022, which the board of directors authorizes based on management recommendations and financial performance for fiscal 2022. Total 401(k) expense for fiscal 2022, 2021, and 2020, was $1.9 million, $1.7 million, and $1.5 million, respectively. At June 30, 2022, 401(k) plan participants held approximately 398,000 shares of the Company’s stock in the plan. Employee deferrals and safe harbor contributions are fully vested. Profit-sharing or other contributions vest over a period of five years.

2008 Equity Incentive Plan. The Company adopted an Equity Incentive Plan (the EIP) in 2008, reserving for award 132,000 shares (split-adjusted). EIP shares were available for award to directors, officers, and employees of the Company and its affiliates by a committee of outside directors. The committee held the power to set vesting requirements for each award under the EIP. At the 2017 annual meeting, shareholders approved the 2017 Omnibus Incentive Plan, which provided that no further awards would be made under the EIP. From fiscal 2012 through fiscal

2017, the Company awarded 122,803 shares, and no awards were made under the plan since fiscal 2017. All EIP awards were in the form of either restricted stock vesting at the rate of 20% of such shares per year, or performance-based restricted stock vesting at up to of 20% of such shares per year, contingent on the achievement of specified profitability targets over a three-year period. During fiscal 2022, 2021, and 2020, there were 2,250, 2,700, and 2,825 EIP shares (split-adjusted) vested each year, respectively. Compensation expense, in the amount of the fair market value of the common stock at the date of grant, is recognized pro-rata over the five years during which the shares vest. The EIP expense for fiscal 2022, 2021, and 2020 was $46,000, $84,000, and $88,000, respectively. At June 30, 2022, no awards remained outstanding, and there was no unvested compensation expense related to the EIP.

2003 Stock Option Plan. The Company adopted a stock option plan in October 2003 (the 2003 Plan). Under the plan, the Company granted options to purchase 242,000 shares (split-adjusted) to employees and directors, of which, options to purchase 187,000 shares (split-adjusted) have been exercised, options to purchase 45,000 shares (split-adjusted) have been forfeited, and 10,000 remain outstanding. Under the 2003 Plan, exercised options may be issued from either authorized but unissued shares, or treasury shares. At the 2017 annual meeting, shareholders approved the 2017 Omnibus Incentive Plan, which provided that no further awards would be made under the 2003 Plan.

As of June 30, 2022, there was no remaining unrecognized compensation expense related to unvested stock options under the 2003 Plan. The aggregate intrinsic value of stock options outstanding, all of which were exercisable, at June 30, 2022, was $277,000. During fiscal 2020, options to purchase 10,000 shares were exercised; no options to purchase shares were exercised in fiscal 2022 or 2021. The intrinsic value of options vested in fiscal 2020 was $14,000, and no options vested in fiscal 2022 or 2021.

2017 Omnibus Incentive Plan. The Company adopted an equity-based incentive plan in October 2017 (the 2017 Plan). Under the 2017 plan, the Company reserved for issuance 500,000 shares of common stock for awards to employees and directors, against which full value awards (stock-based awards other than stock options and stock appreciation rights) are to be counted on a 2.5-for-1 basis. The 2017 Plan authorized awards to be made to employees, officers, and directors by a committee of outside directors. The committee held the power to set vesting requirements for each award under the 2017 Plan. Under the 2017 Plan, stock awards and shares issued pursuant to exercised options may be issued from either authorized but unissued shares, or treasury shares.

Under the 2017 Plan, options to purchase 94,000 shares have been issued to employees, of which none have been exercised or forfeited, and 94,000 remain outstanding. As of June 30, 2022, there was $561,000 in remaining unrecognized compensation expense related to unvested stock options under the 2017 Plan, which will be recognized over the remaining weighted average vesting period. The aggregate intrinsic value of in-the-money stock options outstanding under the 2017 Plan at June 30, 2022, was $752,000, and no options were exercisable at June 30, 2022, at a strike price in excess of the market price. The intrinsic value of options vested in fiscal 2022 and 2021 was $150,000, and $87,000, respectively. No in-the-money options were vested in fiscal 2020.

Full value awards totaling 22,350, 18,925, and 15,525 shares, respectively, were issued to employees and directors in fiscal 2022, 2021, and 2020. All full value awards were in the form of either:

●

restricted stock vesting at the rate of 20% of such shares per year,

●

performance-based restricted stock vesting at up to 20% of such shares per year, contingent on the achievement of specified profitability targets over a trailing three-year period, or

●

restricted stock vesting after a three-year service requirement.

During fiscal 2022, 2021, and 2020, full value awards of 12,860, 9,770, and 7,080 shares were vested, respectively. Compensation expense, in the amount of the fair market value of the common stock at the date of grant, is recognized pro-rata over the vesting period. Compensation expense for full value awards under the 2017 Plan for fiscal 2022, 2021, and 2020 was $548,000, $351,000, and $293,000, respectively. At June 30, 2022, unvested compensation expense related to full value awards under the 2017 Plan was approximately $1.9 million.

Changes in options outstanding under the 2003 Plan and the 2017 Plan were as follows:


	2022			2021			2020
	Weighted			Weighted			Weighted
	Average			Average			Average
	Price		Number	Price		Number	Price		Number
Outstanding at beginning of year	$	33.77	89,500	$	33.22	60,500	$	26.35	51,000
Granted		53.82	14,500		34.91	29,000		37.40	19,500
Exercised		—	—		—	—		6.38	(10,000)
Forfeited		—	—		—	—		—	—
Outstanding at year-end	$	36.56	104,000	$	33.77	89,500	$	33.22	60,500
Options exercisable at year-end	$	31.92	44,900	$	29.79	29,000	$	26.31	18,900

The following is a summary of the assumptions used in the Black-Scholes pricing model in determining the fair values of options granted during fiscal years 2022, 2021, and 2020:


	2022			2021			2020
Assumptions:
Expected dividend yield		1.49	%		1.83	%		1.60	%
Expected volatility		28.02	%		27.72	%		22.55	%
Risk-free interest rate		1.82	%		1.14	%		1.55	%
Weighted-average expected life (years)		10.00			10.00			10.00
Weighted-average fair value of options granted during the year	$	16.38		$	9.19		$	8.81

The table below summarizes information about stock options outstanding under the 2003 Plan and 2017 Plan at June 30, 2022:


Weighted	Options Outstanding			Options Exercisable
Average		Weighted			Weighted
Remaining		Average			Average
Contractual	Number	Exercise		Number	Exercise
Life	Outstanding	Price		Exercisable	Price
26 mo.	10,000	$	17.55	10,000	$	17.55
67 mo.	13,500		37.31	10,800		37.31
78 mo.	17,500		34.35	10,500		34.35
92 mo.	19,500		37.40	7,800		37.40
103 mo.	29,000		34.91	5,800		34.91
115 mo.	14,500		53.82	—		53.82

NOTE 9: Income Taxes

The Company and its subsidiary files income tax returns in the U.S. Federal jurisdiction and various states. The Company is no longer subject to federal and state tax examinations by tax authorities for tax years ending June 30, 2017 and before. The Company’s Missouri income tax returns for the fiscal years ending June 30, 2016 through 2018 are under audit by the Missouri Department of Revenue. The Company recognized no interest or penalties related to income taxes for the periods presented.

The components of net deferred tax assets (included in other assets on the condensed consolidated balance sheet) are summarized as follows:


(dollars in thousands)	June 30, 2022		June 30, 2021
Deferred tax assets:
Provision for losses on loans	$	7,761	$	7,626
Accrued compensation and benefits		828		826
NOL carry forwards acquired		57		147
Unrealized loss on other real estate		72		180
Unrealized loss on available for sale securities		4,921		—
Other		—		182
Total deferred tax assets		13,639		8,961

Deferred tax liabilities:
Purchase accounting adjustments		224		210
Depreciation		1,974		1,842
FHLB stock dividends		120		120
Prepaid expenses		415		283
Unrealized gain on available for sale securities		—		821
Other		181		1,193
Total deferred tax liabilities		2,914		4,469
Net deferred tax asset	$	10,725	$	4,492

As of June 30, 2022, the Company had approximately $261,000 and $0 in federal and state net operating loss carryforwards, respectively, which were acquired in the July 2009 acquisition of Southern Bank of Commerce, the February 2014 acquisition of Citizens State Bankshares of Bald Knob, Inc., and the April 2020 acquisition of Central Federal Savings and Loan. The amount reported is net of the IRC Sec. 382 limitation, or state equivalent, related to utilization of net operating loss carryforwards of acquired corporations. Unless otherwise utilized, the net operating losses will begin to expire in 2027.

A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is shown below:


	For the year ended June 30
(dollars in thousands)	2022		2021		2020
Tax at statutory rate	$	12,580	$	12,538	$	7,231
Increase (reduction) in taxes resulting from:
Nontaxable municipal income		(349)		(453)		(444)
State tax, net of Federal benefit		812		1,018		299
Cash surrender value of Bank-owned life insurance		(245)		(378)		(214)
Tax credit benefits		(45)		(11)		(48)
Other, net		(18)		(189)		63
Actual provision	$	12,735	$	12,525	$	6,887

For the years ended June 30, 2022, 2021, and 2020, income tax expense at the statutory rate was calculated using a 21% annual effective tax rate (AETR). Tax credit benefits are recognized under the deferral method of accounting for investments in tax credits.

NOTE 10: Accumulated Other Comprehensive Income (AOCI)

The components of AOCI, included in stockholders’ equity, are as follows:


	June 30,
(dollars in thousands)	2022		2021
Net unrealized gain (loss) on securities available-for-sale	$	(22,366)	$	3,734
Net unrealized gain on securities available-for-sale securities for which a portion of an other-than-temporary impairment has been recognized in income		(1)		(1)
Unrealized gain from defined benefit pension plan		(37)		(26)
		(22,404)		3,707
Tax effect		4,917		(825)
Net of tax amount	$	(17,487)	$	2,882

Amounts reclassified from AOCI and the affected line items in the consolidated statements of income during the years ended June 30, 2022 and 2021, were as follows:


	Amounts Reclassified From AOCI
(dollars in thousands)					Affected Line Item in the Condensed
	2022		2021		Consolidated Statements of Income
Unrealized gain on securities available-for-sale	$	—	$	90		Net realized gains on sale of AFS securities
Amortization of defined benefit pension items:		(11)		6		Compensation and benefits (included in computation of net periodic pension costs)
Total reclassified amount before tax		(11)		96
Tax benefit		(2)		20		Provision for income tax
Total reclassification out of AOCI	$	(9)	$	76		Net Income

NOTE 11: Stockholders’ Equity and Regulatory Capital

The Company and Bank are subject to various regulatory capital requirements administered by the Federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory – and possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under U.S. GAAP, regulatory reporting requirements and regulatory capital standards. The Company and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Furthermore, the Company and Bank’s regulators could require adjustments to regulatory capital not reflected in the consolidated financial statements.

Quantitative measures established by regulatory capital standards to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital, Tier 1 capital (as defined), and common equity Tier 1 capital (as defined) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average total assets (as defined). Additionally, to make distributions or discretionary bonus

payments, the Company and Bank must maintain a capital conservation buffer of 2.5% of risk-weighted assets. Management believes, as of June 30, 2022 and 2021, that the Company and the Bank met all capital adequacy requirements to which they are subject.

Effective January 1, 2020, depository institutions and depository institution holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a tier 1 leverage ratio of greater than 9 percent, are considered qualifying community banking organizations and are eligible to opt into an alternative, simplified regulatory capital framework, which utilizes a newly-defined “Community Bank Leverage Ratio” (CBLR). The CBLR framework is an optional framework that is designed to reduce burden by removing the requirements for calculating and reporting risk-based capital ratios for qualifying community banking organizations that opt into the framework. Qualifying community banking organizations that elect to use the CBLR framework and that maintain a leverage ratio of greater than 9 percent are considered to have satisfied the risk-based and leverage capital requirements in the agencies’ generally applicable capital rule. In April 2020, the federal bank regulatory agencies announced the issuance of two interim final rules to provide temporary relief to community banking organizations. Under the rules, CBLR requirement was a minimum of 8.5% for calendar year 2021, and 9% thereafter. The Company and the Bank have not made an election to utilize the CBLR framework, but will continue to monitor the available option, and could do so in the future.

In August 2020, the Federal banking agencies adopted a final rule updating a December 2018 rule regarding the impact on regulatory capital of adoption of the CECL standard. The rule now allows institutions that adopt the CECL standard in 2020 a five-year transition period to recognize the estimated impact of adoption on regulatory capital. The Company and the Bank elected to exercise the option to recognize the impact of adoption over the five-year period.

As of June 30, 2022, the most recent notification from the Federal banking agencies categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The tables below summarize the Company and Bank’s actual and required regulatory capital:


									To Be Well Capitalized Under
									Prompt Corrective Action
	Actual				For Capital Adequacy Purposes				Provisions
As of June 30, 2022	Amount		Ratio		Amount		Ratio		Amount		Ratio
(dollars in thousands)
Total Capital (to Risk-Weighted Assets)
Consolidated	$	370,013	13.42	%	$	220,558	8.00	%		n/a	n/a
Southern Bank		352,169	12.90	%		218,397	8.00	%		272,996	10.00	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated		335,316	12.16	%		165,418	6.00	%		n/a	n/a
Southern Bank		325,183	11.91	%		163,797	6.00	%		218,397	8.00	%
Tier I Capital (to Average Assets)
Consolidated		335,316	10.41	%		128,822	4.00	%		n/a	n/a
Southern Bank		325,183	10.22	%		127,333	4.00	%		159,167	5.00	%
Common Equity Tier I Capital (to Risk-Weighted Assets)
Consolidated		319,971	11.61	%		124,064	4.50	%		n/a	n/a
Southern Bank		325,183	11.91	%		122,848	4.50	%		177,447	6.50	%


									To Be Well Capitalized Under
									Prompt Corrective Action
	Actual				For Capital Adequacy Purposes				Provisions
As of June 30, 2021	Amount		Ratio		Amount		Ratio		Amount		Ratio
(dollars in thousands)
Total Capital (to Risk-Weighted Assets)
Consolidated	$	315,490	14.18	%	$	177,938	8.00	%		n/a	n/a
Southern Bank		308,482	13.96	%		176,816	8.00	%		221,019	10.00	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated		287,701	12.93	%		133,453	6.00	%		n/a	n/a
Southern Bank		282,638	12.79	%		132,612	6.00	%		176,816	8.00	%
Tier I Capital (to Average Assets)
Consolidated		287,701	10.61	%		108,505	4.00	%		n/a	n/a
Southern Bank		282,638	10.43	%		108,369	4.00	%		135,461	5.00	%
Common Equity Tier I Capital (to Risk-Weighted Assets)
Consolidated		272,458	12.25	%		100,090	4.50	%		n/a	n/a
Southern Bank		282,638	12.79	%		99,459	4.50	%		143,663	6.50	%

The Bank’s ability to pay dividends on its common stock to the Company is restricted to maintain adequate capital as shown in the above tables. Additionally, prior regulatory approval is required for the declaration of any dividends generally in excess of the sum of net income for that calendar year and retained net income for the preceding two calendar years. At June 30, 2022, approximately $38.0 million of the equity of the Bank was available for distribution as dividends to the Company without prior regulatory approval.

NOTE 12: Commitments and Contengencies

Standby Letters of Credit. In the normal course of business, the Company issues various financial standby, performance standby, and commercial letters of credit for its customers. As consideration for the letters of credit, the institution charges letter of credit fees based on the face amount of the letters and the creditworthiness of the counterparties. These letters of credit are standalone agreements, and are unrelated to any obligation the depositor has to the Company.

Standby letters of credit are irrevocable conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Financial standby letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. Performance standby letters of credit are issued to guarantee performance of certain customers under non-financial contractual obligations. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers.

The Company had total outstanding standby letters of credit amounting to $3.7 million at June 30, 2022, and $4.0 million at June 30, 2021, with terms ranging from 12 to 24 months. At June 30, 2022, the Company’s deferred revenue under standby letters of credit agreements was nominal.

Off-balance-sheet and Credit Risk. The Company’s Consolidated Financial Statements do not reflect various financial instruments to extend credit to meet the financing needs of its customers.

These financial instruments include commitments to extend credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a

case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on balance sheet instruments.

The Company had $707.7 million in commitments to extend credit at June 30, 2022, and $491.6 million at June 30, 2021.

At June 30, 2022, total commitments to originate fixed-rate loans with terms in excess of one year were $240.0 million at rates ranging from 2.19% to 6.75%, with a weighted-average rate of 4.66%. Commitments to extend credit and standby letters of credit include exposure to some credit loss in the event of nonperformance of the customer. The Company’s policies for credit commitments and financial guarantees are the same as those for extension of credit that are recorded in the balance sheet. The commitments extend over varying periods of time with the majority being disbursed within a thirty-day period.

The Company originates collateralized commercial, real estate, and consumer loans to customers in Missouri, Arkansas, and Illinois. Although the Company has a diversified portfolio, loans aggregating $1.0 billion at June 30, 2022, are secured by single and multi-family residential real estate generally located in the Company’s primary lending area.

Legal proceedings. In the opinion of management, the Company and its Bank subsidiary are not parties to any pending claims or lawsuits that are expected to have a material effect on the Company’s financial condition or operations. Periodically, there have been various claims and lawsuits involving the Company or the Bank, mainly as defendants, such as claims to enforce liens, condemnation proceedings on properties in which the Company or the Bank holds security interests, claims involving the making and servicing of real property loans and other activities incident to the Company’s or the Bank’s business. Aside from such pending claims and lawsuits, which are incident to the conduct of the Company’s or the Bank’s ordinary business, the Company and the Bank are not parties to any material pending legal proceedings that are expected to have a material effect on the financial condition or operations of the Company.

NOTE 13: Earnings Per Share

The following table sets forth the computations of basic and diluted earnings per common share:



	June 30,
(dollars in thousands except per share data)	2022		2021		2020


Net income	$	47,169	$	47,180	$	27,545
Less: distributed earnings allocated to participating securities		(30)		(18)		—
Less: undistributed earnings allocated to participating securities		(165)		(135)		—
Net income available to common shareholders	$	46,974	$	47,027	$	27,545

Denominator for basic earnings per share -
Weighted-average shares outstanding		8,994,022		9,007,814		9,189,876
Effect of dilutive securities stock options or awards		17,122		2,923		9,293
Denominator for diluted earnings per share		9,011,144		9,010,737		9,199,169

Basic earnings per share available to common stockholders	$	5.22	$	5.22	$	3.00
Diluted earnings per share available to common stockholders	$	5.21	$	5.22	$	2.99

Certain option and restricted stock awards were excluded from the computation of diluted earnings per share because they were anti-dilutive, based on the average market prices of the Company’s common stock for these periods. Outstanding options and shares of restricted stock totaling 22,750, 99,825, and 50,500 were excluded from the computation of diluted earnings per share for the fiscal years ended June 30, 2022, 2021, and 2020, respectively.

NOTE 14: Acquisitions

On February 25, 2022, the Company completed its acquisition of Fortune Financial Corporation (“Fortune”), and its wholly owned subsidiary, FortuneBank (“FB”), in a stock and cash transaction valued at approximately $35.5 million. The acquired financial institution was merged with and into Southern Bank simultaneously with the acquisition of Fortune. For the fiscal year ended June 30, 2022, the Company incurred $1.4 million of third party acquisition-related costs, included in noninterest expense in the Company’s consolidated statements of income.

Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, the purchase price for the Fortune acquisition is detailed in the following table.


Fortune Financial Corporation
Fair Value of Consideration Transferred
(dollars in thousands)
Cash	$	12,664
Common stock, at fair value		22,884
Total consideration	$	35,548

Recognized amounts of identifiable assets acquired and liabilities assumed

Cash and cash equivalents	$	34,280
Interest bearing time deposits		2,300
Loans		202,053
Premises and equipment		7,690
BOLI		3,720
Identifiable intangible assets		1,602
Miscellaneous other assets		3,512

Deposits		(213,670)
FHLB Advances		(9,681)
Subordinated debt		(7,800)
Miscellaneous other liabilities		(1,214)
Total identifiable net assets		22,792
Goodwill	$	12,756

Of the total purchase price, $1.6 million has been allocated to core deposit intangible, and will be amortized over seven years on a straight line basis. Additionally, $12.8 million has been allocated to goodwill, and none of the purchase price is deductible. Goodwill is attributable to synergies and economies of scale expected from combining the operations of the Bank and Fortune. To the extent that management revises any of the fair value of the above fair value adjustments as a result of continuing evaluation, the amount of goodwill recorded in the acquisition will change.

The Company acquired the $204.1 million loan portfolio at an estimated fair value discount of $2.1 million. The excess of expected cash flows above the fair value of the performing portion of loans will be accreted to interest income over the remaining lives of the loans in accordance with ASC 310-30. Loans acquired that were not subject to guidance relating to purchase credit deteriorated (PCD) loans include loans with a fair value and gross contractual amounts receivable of $187.0 million and $211.0 million at the date of acquisition. Management identified 31 PCD loans, with a book balance of $15.1 million, associated with the Fortune acquisition (ASC 310-30).

On December 15, 2021, the Company completed its acquisition of the Cairo, Illinois, branch (“Cairo”) of First National Bank, Oldham, South Dakota. The deal resulted in Southern Bank relocating its facility from its prior location to the First National Bank location in Cairo. The Company views the acquisition and updates to the new facility as an expression of its continuing commitment to the Cairo community. For the fiscal year ended June 30, 2022, the Company incurred $50,000 of third-party acquisition-related costs, included in noninterest expense in the Company’s consolidated statements of income.

Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, the purchase price for the Cairo acquisition is detailed in the following table.


First National Bank - Cairo Branch
Fair Value of Consideration Transferred
(dollars in thousands)
Cash received	$	(26,932)
Common stock, at fair value		—
Total consideration	$	(26,932)

Recognized amounts of identifiable assets acquired and liabilities assumed

Cash and cash equivalents	$	220
Loans		408
Premises and equipment		468
Identifiable intangible assets		168
Miscellaneous other assets		1

Deposits		(28,540)
Miscellaneous other liabilities		(99)
Total identifiable net liabilities		(27,374)
Goodwill	$	442

On May 22, 2020 the Company completed its acquisition of Central Federal Bancshares, Inc. (“Central”), and its wholly owned subsidiary, Central Federal Savings and Loan Association (“Central Federal”), in an all-cash transaction valued at approximately $21.9 million. Net cash paid for the acquisition totaled approximately $9.1 million. The conversion of data systems took place on June 7, 2020. The Company incurred $1.2 million of third-party acquisition-related costs with $1.2 million being included in noninterest expense in the Company’s consolidated statement of income for the year ended June 30, 2020.

Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition. Based on valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, the purchase price for the Central acquisition is detailed in the following table.


Central Federal Bancshares
Fair Value of Consideration Transferred
(dollars in thousands)
Cash	$	21,942


Recognized amounts of identifiable assets acquired and liabilities assumed

Cash and cash equivalents	$	12,862
Investment securities		4,355
Loans		51,449
Premises and equipment		723
Identifiable intangible assets		540
Miscellaneous other assets		639

Deposits		(46,720)
Miscellaneous other liabilities		(1,783)
Total identifiable net assets		22,065
Bargain Purchase Gain	$	(123)

Of the total purchase price of $21.9 million, $540,000 has been allocated to core deposit intangible. None of the purchase price was allocated to goodwill, as the acquisition resulted in a bargain purchase gain of $123,000. The core deposit intangible will be amortized over six years on a straight line basis.

The Company acquired the $52.1 million loan portfolio at an estimated fair value discount of $662,000. The excess of expected cash flows above the fair value of the performing portion of loans will be accreted to interest income over the remaining lives of the loans in accordance with ASC 310-30. Management identified no purchased credit-impaired loans associated with the Central acquisition (ASC 310-30).

NOTE 15: Fair Value Measurements

ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 – Unobservable inputs supported by little or no market activity and significant to the fair value of the assets or liabilities

Recurring Measurements. The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2022 and 2021:


	Fair Value Measurements at June 30, 2022, Using:
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
(dollars in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
Obligations of state and political subdivisions	$	44,479	$	—	$	44,479	$	—
Corporate obligations		19,887		—		19,887		—
Other securities		443		—		443		—
MBS and CMOs		170,585		—		170,585		—


	Fair Value Measurements at June 30, 2021, Using:
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
(dollars in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
Obligations of state and political subdivisions	$	47,696	$	—	$	47,696	$	—
Corporate obligations		20,311		—		20,311		—
Other securities		672		—		672		—
MBS and CMOs		138,341		—		138,341		—

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the year ended June 30, 2022.

Available-for-sale Securities. When quoted market prices are available in an active market, securities are classified within Level 1. If quoted market prices are not available, then fair values are estimated using pricing models, or quoted prices of securities with similar characteristics. For these securities, our Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Nonrecurring Measurements. The following tables present the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the ASC 820 fair value hierarchy in which the fair value measurements fell at June 30, 2022 and 2021:

Fair Value Measurements at June 30, 2022, Using:

Quoted Prices in

Active Markets for

Significant Other

Significant

Identical Assets

Observable Inputs

Unobservable Inputs

(dollars in thousands)

Fair Value

(Level 1)

(Level 2)

(Level 3)

Foreclosed and repossessed assets held for sale

—

Fair Value Measurements at June 30, 2021, Using:

Quoted Prices in

Active Markets for

Significant Other

Significant

Identical Assets

Observable Inputs

Unobservable Inputs

(dollars in thousands)

Fair Value

(Level 1)

(Level 2)

(Level 3)

Foreclosed and repossessed assets held for sale

280

—

280

The following table presents losses recognized on assets measured on a non-recurring basis for the years ended June 30, 2022 and 2021:



(dollars in thousands)	2022		2021
Foreclosed and repossessed assets held for sale	$	(503)	$	(44)
Total losses on assets measured on a non-recurring basis	$	(503)	$	(44)

The following is a description of valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarch. For assets classified within Level 3 of fair value hierarchy, the process used to develop the reported fair value process is described below.

Foreclosed and Repossessed Assets Held for Sale. Foreclosed and repossessed assets held for sale are valued at the time the loan is foreclosed upon or collateral is repossessed and the asset is transferred to foreclosed or repossessed assets held for sale. The value of the asset is based on third party or internal appraisals, less estimated costs to sell and appropriate discounts, if any. The appraisals are generally discounted based on current and expected market conditions that may impact the sale or value of the asset and management’s knowledge and experience with similar assets. Such discounts typically may be significant and result in a Level 3 classification of the inputs for determining fair value of these assets. Foreclosed and repossessed assets held for sale are continually evaluated for additional impairment and are adjusted accordingly if impairment is identified.

Unobservable (Level 3) Inputs. The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at June 30, 2021. There were no Level 3 fair value measurements at Junr 30, 2022.

Range

Fair value at

Valuation

Unobservable

Weighted-average

(dollars in thousands)

June 30, 2021

technique

inputs

inputs applied

Nonrecurring Measurements

Foreclosed and repossessed assets

280

Third party appraisal

Marketability discount

7.2% - 80.6

37.1

Fair Value of Financial Instruments. The following table presents estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fell at June 30, 2022 and 2021:


	June 30, 2022
			Quoted Prices
			in Active				Significant
			Markets for		Significant Other		Unobservable
	Carrying		Identical Assets		Observable Inputs		Inputs
(dollars in thousands)	Amount		(Level 1)		(Level 2)		(Level 3)
Financial assets
Cash and cash equivalents	$	86,792	$	86,792	$	—	$	—
Interest-bearing time deposits		4,768		—		4,768		—
Stock in FHLB		5,893		—		5,893		—
Stock in Federal Reserve Bank of St. Louis		5,790		—		5,790		—
Loans receivable, net		2,686,198		—		—		2,655,882
Accrued interest receivable		11,052		—		11,052		—
Financial liabilities
Deposits		2,815,075		2,176,444		—		637,163
Advances from FHLB		37,957		—		35,916		—
Accrued interest payable		801		—		801		—
Subordinated debt		23,055		—		—		22,070
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans		—		—		—		—
Letters of credit		—		—		—		—
Lines of credit		—		—		—		—


	June 30, 2021
			Quoted Prices
			in Active				Significant
			Markets for		Significant Other		Unobservable
	Carrying		Identical Assets		Observable Inputs		Inputs
(dollars in thousands)	Amount		(Level 1)		(Level 2)		(Level 3)
Financial assets
Cash and cash equivalents	$	123,592	$	123,592	$	—	$	—
Interest-bearing time deposits		979		—		979		—
Stock in FHLB		5,873		—		5,873		—
Stock in Federal Reserve Bank of St. Louis		5,031		—		5,031		—
Loans receivable, net		2,200,244		—		—		2,218,762
Accrued interest receivable		10,079		—		10,079		—
Financial liabilities
Deposits		2,330,803		1,768,217		—		565,123
Advances from FHLB		57,529		—		58,587		—
Accrued interest payable		779		—		779		—
Subordinated debt		15,243		—		—		15,468
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans		—		—		—		—
Letters of credit		—		—		—		—
Lines of credit		—		—		—		—

NOTE 16: Significant Estimates

Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Estimates related to the allowance for loan losses are described in Note 1.

NOTE 17: Condensed Parent Company Only Financial Statements

The following condensed balance sheets, statements of income and comprehensive income and cash flows for Southern Missouri Bancorp, Inc. should be read in conjunction with the consolidated financial statements and the notes thereto:


	June 30,
(dollars in thousands)	2022		2021

Condensed Balance Sheets
Assets
Cash and cash equivalents	$	8,964	$	1,193
Other assets		28,691		14,380
Investment in common stock of Bank		306,549		283,500
TOTAL ASSETS	$	344,204	$	299,073

Liabilities and Stockholders' Equity
Accrued expenses and other liabilities	$	377	$	407
Subordinated debt		23,055		15,243
TOTAL LIABILITIES		23,432		15,650
Stockholders' equity		320,772		283,423
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	344,204	$	299,073


	Year ended June 30,
(dollars in thousands)	2022		2021		2020

Condensed Statements of Income
Interest income	$	14	$	13	$	27
Interest expense		686		534		899
Net interest expense		(672)		(521)		(872)
Dividends from Bank		31,000		12,000		34,000
Bargain purchase gain		—		—		123
Operating expenses		1,124		599		1,529
Income before income taxes and equity in undistributed income of the Bank		29,204		10,880		31,722
Income tax benefit		321		235		292
Income before equity in undistributed income of the Bank		29,525		11,115		32,014
Equity in undistributed income of the Bank		17,644		36,065		(4,469)
NET INCOME	$	47,169	$	47,180	$	27,545
COMPREHENSIVE INCOME	$	26,800	$	45,615	$	30,745


	Year ended June 30,
(dollars in thousands)	2022		2021		2020
Condensed Statements of Cash Flow
Cash Flows from operating activities:
Net income	$	47,169	$	47,180	$	27,545
Changes in:
Equity in undistributed income of the Bank		(17,644)		(36,065)		4,469
Other adjustments, net		(698)		(559)		(904)
NET CASH PROVIDED BY OPERATING ACTIVITES		28,827		10,556		31,110

Investments in Bank subsidiaries		(8,024)		—		(20,463)
NET CASH USED IN INVESTING ACTIVITIES		(8,024)		—		(20,463)

Cash flows from financing activities:
Dividends on common stock		(7,194)		(5,598)		(5,513)
Exercise of stock options		—		—		64
Payments to acquire treasury stock		(5,838)		(8,341)		(5,771)
Repayments of long term debt		—		—		(3,000)
NET CASH USED IN FINANCING ACTIVITIES		(13,032)		(13,939)		(14,220)

Net increase (decrease) in cash and cash equivalents		7,771		(3,383)		(3,573)
Cash and cash equivalents at beginning of year		1,193		4,576		8,149
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	8,964	$	1,193	$	4,576

NOTE 18: Quarterly Financial Data (Unaudited)

Quarterly operating data is summarized as follows (in thousands):


	June 30, 2022
	First		Second		Third		Fourth
(dollars in thousands)	Quarter		Quarter		Quarter		Quarter
Interest income	$	28,860	$	28,096	$	28,339	$	31,572
Interest expense		3,223		3,038		3,225		3,814

Net interest income		25,637		25,058		25,114		27,758

Provision for credit losses		(305)		—		1,552		240
Noninterest income		4,515		5,285		4,904		6,499
Noninterest expense		14,221		15,070		16,757		17,331
Income before income taxes		16,236		15,273		11,709		16,686
Income tax expense		3,487		3,288		2,358		3,602
NET INCOME	$	12,749	$	11,985	$	9,351	$	13,084
Basic earnings per share	$	1.43	$	1.35	$	1.03	$	1.41
Diluted earnings per share	$	1.43	$	1.34	$	1.03	$	1.41


	June 30, 2021
	First		Second		Third		Fourth
(dollars in thousands)	Quarter		Quarter		Quarter		Quarter
Interest income	$	26,972	$	27,871	$	27,100	$	27,532
Interest expense		4,908		4,344		3,951		3,586

Net interest income		22,064		23,527		23,149		23,946

Provision for loan losses		1,000		1,000		(409)		(2,615)
Noninterest income		4,941		5,720		4,524		4,857
Noninterest expense		13,272		13,046		13,528		14,201
Income before income taxes		12,733		15,201		14,554		17,217
Income tax expense		2,747		3,153		3,096		3,529
NET INCOME	$	9,986	$	12,048	$	11,458	$	13,688
Basic earnings per share	$	1.09	$	1.33	$	1.27	$	1.53
Diluted earnings per share	$	1.09	$	1.32	$	1.27	$	1.53


	June 30, 2020
	First		Second		Third		Fourth
(dollars in thousands)	Quarter		Quarter		Quarter		Quarter
Interest income	$	26,922	$	26,646	$	26,220	$	27,264
Interest expense		7,362		7,269		6,802		5,483

Net interest income		19,560		19,377		19,418		21,781

Provision for loan losses		896		388		2,850		1,868
Noninterest income		3,489		3,674		3,229		4,358
Noninterest expense		12,349		13,025		13,569		15,509
Income before income taxes		9,804		9,638		6,228		8,762
Income tax expense		1,976		1,921		1,129		1,861
NET INCOME	$	7,828	$	7,717	$	5,099	$	6,901
Basic earnings per share	$	0.85	$	0.84	$	0.55	$	0.76
Diluted earnings per share	$	0.85	$	0.84	$	0.55	$	0.76

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1)Financial Statements:

The following are contained in Part II, Item 8 of this Form 10-K/A:

Report of Independent Registered Public Accounting Firm. Forvis, LLP, Springfield, MO, Firm ID 686.

Consolidated Balance Sheets at June 30, 2022 and 2021

Consolidated Statements of Income for the Years Ended June 30, 2022, 2021, and 2020

Consolidated Statements of Stockholders’ Equity for the Years Ended June 30, 2022, 2021, and 2020

Consolidated Statements of Comprehensive Income for the Years Ended June 30, 2022, 2021, and 2020

Consolidated Statements of Cash Flows for the Years Ended June 30, 2022, 2021, and 2020

Notes to the Consolidated Financial Statements, June 30, 2022, 2021, and 2020

(a)(2)Financial Statement Schedules:

All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable.

(a)(3)Exhibits:

Exhibits incorporated by reference below are incorporated by reference pursuant to Rule 12b-32.


Regulation S-K
Exhibit Number	Document
3.1(i)	Articles of Incorporation of the Registrant (filed as an exhibit to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999 and incorporated herein by reference)
3.1(i)A	Amendment to Articles of Incorporation of Southern Missouri increasing the authorized capital stock of Southern Missouri (filed as an exhibit to Southern Missouri’s Current Report on Form 8-K filed on November 21, 2016 and incorporated herein by reference)
3.1(i)B	Amendment to Articles of Incorporation of Southern Missouri increasing the authorized capital stock of Southern Missouri(filed as an exhibit to Southern Missouri’s Current Report on Form 8-K filed on November 8, 2018 and incorporated herein by reference)
3.1(ii)	Certificate of Designation for the Registrant’s Senior Non-Cumulative Perpetual Preferred Stock, Series A (filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on July 26, 2011 and incorporated herein by reference)
3.2	Bylaws of the Registrant (filed as an exhibit to the Registrant’s Current Report on Form 8-K filed on December 6, 2007 and incorporated herein by reference)
4	Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2020 and incorporated herein by reference).
10	Material Contracts:
	1.	Registrant’s 2017 Omnibus Incentive Plan (attached to the Registrant’s definitive proxy statement filed on September 26, 2017, and incorporated herein by reference)+
	2.	2008 Equity Incentive Plan (attached to the Registrant’s definitive proxy statement filed on September 19, 2008 and incorporated herein by reference)+
	3.	2003 Stock Option and Incentive Plan (attached to the Registrant’s definitive proxy statement filed on September 17, 2003 and incorporated herein by reference)+
	4.	1994 Stock Option and Incentive Plan (attached to the Registrant’s definitive proxy statement filed on October 21, 1994 and incorporated herein by reference)+

5.	Management Recognition and Development Plan (attached to the Registrant’s definitive proxy statement filed on October 21, 1994 and incorporated herein by reference)+
6.	Employment Agreements
	(i)	Employment Agreement with Greg A. Steffens (filed as an exhibit to the Registrant’s Annual Report on Form 10-KSB for the year ended June 30, 1999)+
	(ii)	Amended and Restated Employment Agreement with Greg A. Steffens (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, and incorporated herein by reference)+
7.	Director’s Retirement Agreements
	(i)	Director’s Retirement Agreement with Sammy A. Schalk (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2000 and incorporated herein by reference)+
	(ii)	Director’s Retirement Agreement with Ronnie D. Black (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2000 and incorporated herein by reference)+
	(iii)	Director’s Retirement Agreement with L. Douglas Bagby (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2000 and incorporated herein by reference)+
	(iv)	Director’s Retirement Agreement with Rebecca McLane Brooks (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2004 and incorporated herein by reference)+
	(v)	Director’s Retirement Agreement with Charles R. Love (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2004 and incorporated herein by reference)+
	(vi)	Director’s Retirement Agreement with Charles R. Moffitt (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended December 31, 2004 and incorporated herein by reference)+
	(vii)	Director’s Retirement Agreement with Dennis C. Robison (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 and incorporated herein by reference)+
	(viii)	Director’s Retirement Agreement with David J. Tooley (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2011 and incorporated herein by reference)+
	(ix)	Director’s Retirement Agreement with Todd E. Hensley (filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2014 and incorporated herein by reference)+
8.	Tax Sharing Agreement (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 and incorporated herein by reference)
9.	Change-in-Control Agreements
	(i)	Change-in -Control Agreement with Kimberly Capps (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 and incorporated herein by reference)+
	(ii)	Change-in -Control Agreement with Matthew Funke (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 and incorporated herein by reference)+
	(iii)	Change-in -Control Agreement with Lora Daves (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 and incorporated herein by reference)+
	(iv)	Change-in -Control Agreement with Justin Cox (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 and incorporated herein by reference)+
	(v)	Change-in -Control Agreement with Rick Windes (filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 25, 2022 and incorporated herein by reference)+
	(vi)	Change-in -Control Agreement with Mark Hecker (filed as an exhibit to the Registrant’s Current Report on Form 8-K for the event on April 20, 2021 and incorporated herein by reference)+
	(vii)	Change-in -Control Agreement with Brett Dorton (filed as an exhibit to the Registrant’s Current Report on Form 8-K for the event on March 25, 2022 and incorporated herein by reference)+

		(viii)	Change-in -Control Agreement with Martin Weishaar (filed as an exhibit to the Registrant’s Current Report on Form 8-K for the event on April 20, 2021 and incorporated herein by reference)+
10.1	Named Executive Officer Salary and Bonus Agreement for fiscal 2022*
10.2	Director Fee Arrangements for 2022*
14	Code of Conduct and Ethics (filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended June 30, 2016)
21	Subsidiaries of the Registrant*
23	Consent of Auditors
31.1	Rule 13a-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a) Certification of Chief Administrative Officer
31.3	Rule 13a-14(a) Certification of Chief Financial Officer
32	Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
101	Includes the following financial and related information from Southern Missouri Bancorp, Inc.’s Annual Report on Form 10-K/A as of and for the year ended June 30, 2022, formatted in Inline Extensible Business Reporting Language (iXBRL): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Income, (3) the Consolidated Statements of Comprehensive Income, (4) the Consolidated Statements of Changes in Stockholders’ Equity, (5) the Consolidated Statements of Cash Flows, and (6) Notes to Consolidated Financial Statements.
104	The cover page from this Annual Report on Form 10-K/A, formatted in Inline XBRL. +indicates management contract or compensatory plan, contract or arrangement *Filed with original 10-K filing

SIGNATURES

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		SOUTHERN MISSOURI BANCORP, INC.

Date:	March 21, 2023	By:	/s/ Greg A. Steffens
			Greg A. Steffens
			Chairman and Chief Executive Officer
			(Duly Authorized Representative)