SMBC Stock Forecast & Price Target

Southern Missouri Bancorp Inc. has demonstrated strong financial performance, evidenced by a notable growth in Tangible Book Value (TBV) and Tangible Common Equity (TCE), increasing by 4% and 30 basis points quarter-over-quarter to $43.16 and 9.82%, respectively, bolstered by robust profitability metrics of return on assets (ROA) of 1.23% and return on tangible common equity (ROTCE) of 12.9%. The forecast anticipates a steady improvement in the efficiency ratio, projected to reach 49% by FY4Q27, driven by a strong outlook for net interest income (NII) growth, supported by upward repricing of fixed-rate loans and lower funding costs. Additionally, expected expansion in the projected average asset yield (PAA) by 19-20 basis points to 3.50% and 3.69% in FY4Q26 and FY4Q27, respectively, reflects a favorable loan and deposit growth environment at net interest margin accretive spreads, with substantial fixed-rate loans set for repricing, further enhancing the financial prospects for the bank.

Southern Missouri Bancorp is experiencing a decline in operating performance, with reported operating expenses of $25.1 million being 4% below expectations, driven primarily by reduced salaries and employee benefits. The company's outlook indicates a projected 5% decline in fiscal year 2026, coupled with risks stemming from slower-than-expected growth in loans, core deposits, and fee income, as well as potential credit quality deterioration. Furthermore, the allowance for credit losses (ACL) remains concerning, with a slight decrease to 1.24% of loans, amid underlying pressures on growth and increased operational costs.