SOUTHERN MISSOURI BANCORP, INC. (Form: 8-K/A, Received: 05/09/2023 17:07:05)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 20, 2023

SOUTHERN MISSOURI BANCORP, INC.

(Exact name of registrant as specified in its charter)


Missouri	000-23406	43-1665523
(State or other	(Commission File No.)	(IRS Employer
jurisdiction of incorporation)		Identification Number)


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

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SMBC	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as deﬁned in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Explanatory Note

As previously disclosed, effective January 20, 2023, Southern Missouri Bancorp, Inc. (“Southern Missouri”) acquired Citizens Bancshares Co. (“Citizens”) pursuant to the Agreement and Plan of Merger, dated as of September 20, 2022, by and among Southern Missouri, Southern Missouri Acquisition VI Corp (“Merger Sub”) and Citizens. At closing, Citizens merged with and into Merger Sub, followed by the merger of Merger Sub with and into Southern Missouri (collectively, the “Merger”). This Amendment on Form 8-K/A (“Form 8-K/A”) is being filed to amend Item 9.01 of Southern Missouri’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 23, 2023 (the “Original Form 8-K”) in order to include the historical financial statements of Citizens required by Item 9.01(a) of Form 8-K and the pro forma financial information required by Item 9.01(b) of Form 8-K. Except as described in this Form 8-K/A, all other information in the Original Form 8-K remains unchanged.

Item 9.01 Financial Statements and Exhibits

(a)

The audited consolidated balance sheets of Citizens as of December 31, 2021 and 2020 and audited consolidated statements of income, comprehensive income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes to such financial statements are included as Exhibit 99.2 to this report and incorporated by reference from the amendment to Southern Missouri’s Registration Statement on S-4 filed with the Securities and Exchange Commission on November 4, 2022.

The unaudited consolidated balance sheets of Citizens as of September 30, 2022 and December 31, 2021, the unaudited consolidated statements of income and comprehensive income of Citizens for the nine months ended September 30, 2022 and 2021, the unaudited consolidated statements of changes in stockholders' equity of Citizens for the nine months ended September 30, 2022 and 2021, and the unaudited consolidated statements of cash flows of Citizens for the nine months ended September 30, 2022 and 2021 are included as Exhibit 99.3 to this report and incorporated herein by reference.

(b)

The unaudited pro forma condensed combined consolidated balance sheet of Southern Missouri as of September 30, 2022, the unaudited pro forma condensed combined consolidated statement of income for the three month period ended September 30, 2022, giving effect to the Merger as if it had occurred on July 1, 2022, and the unaudited pro forma condensed combined statement of income of Southern Missouri for the year ended June 30, 2022, giving effect to the Merger as if it had occurred on July 1, 2021, as well as the accompanying notes thereto, are included as Exhibit 99.4 to this report, and incorporated herein by reference.

(c)

Not applicable.

(d)

The following exhibits are included with this report:

Exhibit No.		Description

23.2		Consent of RSM US LLP

99.3		Unaudited consolidated balance sheets of Citizens as of September 30, 2022 and December 31, 2021 and unaudited consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows of Citizens for the nine months ended September 30, 2022 and 2021

99.4		Unaudited pro forma condensed combined balance sheet of Southern Missouri as of September 30, 2022 and unaudited pro forma condensed combined statements of income of Southern Missouri for the three months ended September 30, 2022 and year ended June 30, 2022

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SOUTHERN MISSOURI BANCORP, INC.

Date: May 9, 2023	By:	/s/ Greg A. Steffens
		Greg A. Steffens
		Chairman and Chief Executive Officer

Exhibit 23.2

Consent of Independent Auditor

We consent to the inclusion in this Current Report on Form 8-K/A of Southern Missouri Bancorp, Inc. of our report dated March 23, 2022, relating to the consolidated financial statements of Citizens Bancshares Company.

/s/ RSM US LLP

Kansas City, Missouri

May 9, 2023

Exhibit 99.3

CITIZENS BANCSHARES COMPANY

UNAUDITED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

(Dollars in thousands)


		September 30, 2022		December 31, 2021


Assets
Cash and due from banks	$	257,081	$	248,448
Securities available for sale		228,710		208,759
Loans, net		453,069		465,348
Cash surrender value of life insurance		21,622		21,295
Premises and equipment, net		14,135		14,705
Accrued interest receivable		2,896		2,116
Other real estate owned		6,428		7,383
Federal Home Loan Bank stock		1,174		1,183
Deferred income taxes, net		6,849		5,047
Other assets		6,930		6,832
TOTAL ASSETS	$	998,894	$	981,116

Liabilities and Stockholders' Equity
Deposits
Non-interest bearing	$	211,366	$	251,586
NOW, money market, and savings		535,285		456,384
Certificates of deposit		122,052		135,492
Total deposits		868,703		843,462
Securities sold under agreement to repurchase		29,444		27,621
Accrued interest payable		67		80
Other liabilities		5,673		6,304
TOTAL LIABILITIES		903,887		877,467


Common stock, $0.01 par value; 5,000,000 shares authorized; 2,561,600 shares issued; 2,346,915 shares outstanding September 30, 2022 and December 31, 2021, respectively		26		26
Additional paid-in capital		8,832		8,832
Retained earnings		101,510		97,798
Treasury stock, at cost (September 30, 2022 and December 31, 2021, 214,685 shares)		(4,900)		(4,900)
Accumulated other comprehensive (loss) income		(10,461)		1,893
TOTAL STOCKHOLDERS' EQUITY		95,007		103,649
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	998,894	$	981,116

CITIZENS BANCSHARES COMPANY

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2022 AND SEPTEMBER 30, 2021

(Dollars in thousands)


		Nine Months ended
		September 30, 2022		September 30, 2021

Interest Income:
Loans, including fees	$	16,100	$	16,799
Securities		3,937		2,340
Federal funds sold and other		1,771		232
TOTAL INTEREST INCOME		21,808		19,371
Interest Expense:
Deposits		1,414		1,280
Securities sold under agreement to repurchase and federal funds purchased		99		28
Other borrowings		9		473
TOTAL INTEREST EXPENSE		1,522		1,781
NET INTEREST INCOME		20,286		17,590
Provision for loan losses		51		(1,927)
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		20,235		19,517
Noninterest income:
Service charges and fees		2,210		1,912
Wealth Management fees		1,613		1,730
Net gain on sale of securities		-		1,835
Net gain on sale of premises and equipment		72		35
Net gain on sale of other real estate		43		-
Increase in cash surrender value of life insurance		327		827
Other income		3,381		2,782
TOTAL NONINTEREST INCOME		7,646		9,121
Noninterest expense:
Salaries and employee benefits		10,743		10,624
Occupancy		3,590		3,826
FDIC assessments		235		310
Expenses on other real estate owned		132		502
Professional fees		527		377
Telephone, postage, and delivery		583		675
Advertising and marketing		283		225
Office supplies		93		107
Other operating expense		3,894		4,422
TOTAL NONINTEREST EXPENSE		20,080		21,068
INCOME BEFORE INCOME TAXES		7,801		7,570
Income Taxes		1,743		1,572
NET INCOME	$	6,058	$	5,998

CITIZENS BANCSHARES COMPANY

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2022 AND SEPTEMBER 30, 2021

(Dollars in thousands)


		Nine months ended
		September 30, 2022		September 30, 2021

Net Income	$	6,058	$	5,998
Other comprehensive income (loss):
Unrealized holding losses arising during the period before tax		(16,448)		(3,476)
Tax benefit related to other comprehensive loss		4,094		865
Other comprehensive loss, net of tax		(12,354)		(2,611)
Comprehensive (Loss) Income	$	(6,296)	$	3,387

CITIZENS BANCSHARES COMPANY

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2022 AND SEPTEMBER 30, 2021

(Dollars in thousands)


		For the nine months ended September 30, 2021
				Additional						Accumulated Other		Total
		Common		Paid-In		Retained		Treasury		Comprehensive		Stockholders'
		Stock		Capital		Earnings		Stock		Income (Loss)		Equity

BALANCE AS OF DECEMBER 31, 2020	$	26	$	8,832	$	91,083	$	(4,900)	$	5,578	$	100,619
Net Income		-		-		5,998		-		-		5,998
Other comprehensive loss		-		-		-		-		(2,611)		(2,611)
BALANCE AS OF SEPTEMBER 30, 2021	$	26	$	8,832	$	97,081	$	(4,900)	$	2,967	$	104,006


		For the nine months ended September 30, 2022
				Additional						Accumulated Other		Total
		Common		Paid-In		Retained		Treasury		Comprehensive		Stockholders'
		Stock		Capital		Earnings		Stock		Income (Loss)		Equity

BALANCE AS OF DECEMBER 31, 2021	$	26	$	8,832	$	97,798	$	(4,900)	$	1,893	$	103,649
Net Income		-		-		6,058		-		-		6,058
Other comprehensive loss		-		-		-		-		(12,354)		(12,354)
Dividend		-		-		(2,346)		-		-		(2,346)
BALANCE AS OF SEPTEMBER 30, 2022	$	26	$	8,832	$	101,510	$	(4,900)	$	(10,461)	$	95,007

CITIZENS BANCSHARES COMPANY

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW

NINE MONTHS ENDED SEPTEMBER 30, 2022 AND SEPTEMBER 30, 2021

(Dollars in thousands)


		Nine months ended
		September 30,
		2022		2021

Cash Flows From Operating Activities:
Net Income	$	6,058	$	5,998
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		966		1,084
Provision for loan losses		51		(1,927)
Net gain on sale of other real estate		(43)		-
Write down on other real estate		-		350
Amortization of core deposit intangible		44		44
Net gain on sale of premises and equipment		(72)		(35)
Amortization of deferred loan origination costs, net of fees		(40)		(946)
Net amortization of securities		521		267
Net gain on sale of securities		-		(1,835)
Increase in cash surrender value of life insurance		(327)		(326)
Gain on redemption of life insurance		-		822
Deferred income taxes		2,292		954
Net increase in accrued interest receivable and other assets		(922)		(1,308)
Net decrease in accrued interest payable and other liabilities		(644)		(380)
Net cash provided by operating activities		7,884		2,762

Cash flows from investing activities:
Securities available for sale:
Purchases		(55,651)		-
Maturities, prepayments, and calls		18,731		22,393
Proceeds from sales		-		21,790
Net decrease in loans		12,270		32,309
Proceeds from sales of other real estate		998		-
Net change in Federal Home Loan Bank stock		9		(109)
Purchase of premises and equipment		(470)		(590)
Proceeds from sale of premises and equipment		144		2,867
Net cash (used in) provided by investing activities		(23,969)		78,660

Cash flows from financing activities:
Net increase in deposits		25,241		33,887
Net increase in securities sold under agreement to repurchase		1,823		823

Repayment of note payable		-		(12,500)
Dividends paid on common stock		(2,346)		-
Net cash provided by financing activities		24,718		22,210

Net increase in cash and due from banks	$	8,633	$	103,632


Beginning cash and due from banks		248,448		196,163

Ending cash and due from banks	$	257,081	$	299,795




Supplemental Information
Interest paid	$	1,535	$	1,697
Income taxes paid, net		828		228

Exhibit 99.4

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On January 20, 2023, Southern Missouri Bancorp, Inc. (“Southern Missouri”) completed its previously announced acquisition of Citizens Bancshares Co. (“Citizens”) pursuant to the Agreement and Plan of Merger, dated September 20, 2022 (the “Merger Agreement”), by and among Southern Missouri, Southern Missouri Acquisition VI Corp (“Merger Sub”), a wholly owned subsidiary of Southern Missouri, and Citizens under which Citizens merged with and into Merger Sub, followed by the merger of Merger Sub with and into Southern Missouri (collectively, the “Merger”). Citizens was the parent company of Citizens Bank & Trust Company, which became a wholly owned subsidiary of Southern Missouri upon completion of the Merger and was subsequently merged with and into Southern Bank, a wholly owned subsidiary of Southern Missouri.

As a result of the Merger, each share of Citizens common stock held immediately prior to completion of the Merger was exchanged for 1.1755 shares of Southern Missouri common stock or $54.93 in cash (as adjusted based on Citizens’ capital and the total number of shares outstanding immediately prior to closing) at the election of the Citizens’ shareholders, subject to the proration and allocation procedures set forth in the Merger Agreement. Southern Missouri paid approximately $133.2 million in Merger consideration, inclusive of cash settlement of Citizens stock options, comprised of stock and cash at a 74:26 ratio.

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of Southern Missouri and Citizens and has been prepared to illustrate the financial effect of the Merger. The following unaudited pro forma condensed combined financial information combines the historical consolidated financial position and results of operations of Southern Missouri and its subsidiaries and Citizens and its subsidiaries, as an acquisition by Southern Missouri of Citizens using the acquisition method of accounting and giving effect to the related pro forma adjustments described in the accompanying notes. Under the acquisition method of accounting, the assets and liabilities of Citizens will be recorded by Southern Missouri at their respective fair values as of the date the Merger was completed.

The unaudited pro forma condensed combined balance sheet gives effect to the transaction as if the transaction had occurred on September 30, 2022. The unaudited pro forma condensed combined income statements for the three-month period ended September 30, 2022, give effect to the transaction as if the transaction had become effective at July 1, 2022. The unaudited pro forma condensed combined income statement for the year ended June 30, 2022, gives effect to the transaction as if the transaction had become effective at July 1, 2021.

This unaudited pro forma condensed combined financial information reflects the Merger based upon estimated acquisition accounting adjustments. Actual adjustments will be made as of the effective date of the Merger and, therefore, may differ from those reflected in the unaudited pro forma condensed combined financial information.

Southern Missouri and Citizens have different fiscal years. Citizens’ fiscal year ends on December 31 of each year and Southern Missouri’s fiscal year ends on June 30 of each year. As the fiscal years differed by more than 93 days, pursuant to the rules of the Securities and Exchange Commission, Citizens’ financial information was adjusted for the purpose of preparing the unaudited pro forma condensed combined statements of income for the year ended June 30, 2022. The historical income statement information of Citizens used in the unaudited pro forma condensed combined statements of income for the year ended June 30, 2022, was prepared by taking the audited condensed combined income statement for the year ended December 31, 2021, subtracting the unaudited condensed combined income statement for the six months ended June 30, 2021, and adding the unaudited condensed combined income statement for the six months ended June 30, 2022.

The determination of the fair values of Citizens’ assets and liabilities has been based on the net tangible and intangible assets of Citizens that existed as of the date of completion of the transaction. The value of the final purchase price of the Merger was based on the closing price of Southern Missouri common stock on the closing date of the Merger, with respect to the stock portion of the merger consideration. The closing price of Southern Missouri common stock of $47.32 on January 20, 2023, was used for purposes of presenting the unaudited pro forma condensed combined consolidated balance sheet at September 30, 2022.

The unaudited pro forma condensed combined financial information includes estimated adjustments to record Citizens’ assets and liabilities at their respective fair values based on Southern Missouri’s management’s best estimate using the information available at this time. The pro forma adjustments may be revised as additional information becomes available and as additional analyses are performed. Increases or decreases in the fair value of certain balance sheet amounts and other items of Citizens as compared to the information presented in this document may change the amount of the purchase price allocated to goodwill and other assets and liabilities and may impact the statement of income due to adjustments in yield and/or amortization of adjusted assets and liabilities.

FASB issued ASU 2016-13, Financial Instruments – Credit Losses, also known as the current expected credit loss (“CECL”) standard, which requires that the measurement of all expected credit losses for financial assets reported at amortized cost and held at the reporting date be based on historical experience, current conditions, and reasonable and supportable forecasts. This standard requires financial institutions and other organizations to use forward-looking information to better inform their credit loss estimates. The standard was effective for Southern Missouri as of July 1, 2020, however it did not become effective for Citizens until January 1, 2023. Subsequent to its adoption, Southern Missouri ceased to maintain the incurred loss model framework. The pro forma balance sheet reflects an adjustment to estimate the impact of the application of ASU 2016-13 to the combined allowance for loan/credit losses as of September 30, 2022. The pro forma income statements reflect an adjustment as of the beginning of each period presented, to estimate the impact of the application of ASU 2016-13 to the combined provision for credit/loan losses.

Further, in addition to ASU 2016-13 noted above, Southern Missouri has not identified all adjustments necessary to conform Citizens accounting policies to Southern Missouri’s accounting policies. As more information becomes available, Southern Missouri will perform a more detailed review of Citizens’ accounting policies. As a result of that review, differences could be identified between the accounting policies of the two companies that, when conformed, could have a material impact on the combined company’s financial information.

The unaudited pro forma condensed combined financial information included are presented for informational purposes only and do not necessarily reflect the financial results of the combined company had the companies actually been combined at the beginning of each period presented. The adjustments included in this unaudited pro forma condensed combined financial information are preliminary and may be revised. This information also does not reflect the benefits of the expected cost savings and expense efficiencies, opportunities to earn additional revenue, potential impacts of current market conditions on revenues or asset dispositions, among other factors, and includes various preliminary estimates and may not necessarily be indicative of the financial position or results of operations that would have occurred if the Merger had been consummated on the date or at the beginning of the period indicated or which may be attained in the future. The following unaudited pro forma condensed combined consolidated financial information and related notes have been derived from and should be read in conjunction with the historical consolidated financial statements and the related notes of Southern Missouri contained in its Annual Report on Form 10-K for the fiscal year ended June 30, 2022 and its Quarterly Report on Form 10-K for the quarterly period ended September 30, 2022, filed with the Securities and Exchange Commission, and the historical consolidated financial statements and related notes of Citizens included in this Current Report on Form 8-K/A.

CONDENSED COMBINED PRO FORMA STATEMENTS OF FINANCIAL CONDITION (Unaudited)

As of September 30, 2022

(in thousands)


	Southern Missouri		Citizens Bancshares		Pro Forma
	Bancorp		Company		Adjustments			Pro Forma
ASSETS
Cash and cash equivalents	$	47,718	$	257,081	$	(34,761)	¹	$	270,038
Interest-bearing time deposits		2,018		—		—			2,018
Available-for-sale securities		235,116		228,710		—			463,826
Non-marketable securities - Federal Home Loan Bank and Federal Reserve Bank stock		19,290		1,174		—			20,464

Loans receivable		2,976,609		459,485		(13,546)	²		3,422,548
Allowance for credit losses		(37,418)		(6,416)		118	³		(43,716)
Loans receivable, net		2,939,191		453,069		(13,428)			3,378,832
Premises and equipment, net		70,550		14,135		7,039	⁴		91,724
Bank-owned life insurance - cash surrender value		49,024		21,622		—			70,646
Goodwill		27,288		2,042		22,091	⁵		51,421
Other intangible assets		7,787		490		23,839	⁶		32,116
Accrued interest receivable, prepaid expenses, and other assets		46,861		20,571		(4,926)	⁷		62,506
TOTAL ASSETS	$	3,444,843	$	998,894	$	(146)		$	4,443,591

LIABILITIES
Deposits	$	2,851,013	$	898,147	$	95	⁸	$	3,749,255
Federal Home Loan Bank (FHLB) advances		224,973		—		—			224,973
Subordinated debt		23,068		—		—			23,068
Accrued interest payable, accrued expenses, and other liabilities		19,389		5,740		8,968	⁹		34,097
TOTAL LIABILITIES		3,118,443		903,887		9,063			4,031,393

STOCKHOLDERS' EQUITY
Common stock		98		26		(26)			98
Additional paid-in capital		119,216		8,832		89,578			217,626
Retained earnings		247,780		101,510		(114,122)			235,168
Treasury Stock		(21,116)		(4,900)		4,900			(21,116)
Accumulated other comprehensive loss		(19,578)		(10,461)		10,461			(19,578)
TOTAL STOCKHOLDERS’ EQUITY		326,400		95,007		(9,209)	¹⁰		412,198
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,444,843	$	998,894	$	(146)		$	4,443,591

CONDENSED COMBINED PRO FORMA STATEMENTS OF INCOME (Unaudited)

For the three-month period ended September 30, 2022

(in thousands, except for share and per share data)


	Southern Missouri		Citizens Bancshares		Pro Forma
	Bancorp		Company		Adjustments			Pro Forma
INTEREST INCOME
Loans	$	33,180	$	6,447	$	1,718	¹¹	$	41,345
Investment securities		665		997		594	¹²		2,256
Mortgage-backed securities		990		720		—			1,710
Other interest-earning assets		162		1,250		—			1,412
TOTAL INTEREST INCOME		34,997		9,414		2,312			46,723

INTEREST EXPENSE
Deposits		5,761		837		23	¹³		6,621
Advances from FHLB Des Moines		438		—		—			438
Notes due to shareholders		—		3		—			3
Subordinated debt		290		—		—			290
TOTAL INTEREST EXPENSE		6,489		840		23			7,352

NET INTEREST INCOME		28,508		8,574		2,289			39,371
Provision for loan losses		5,056		22		6,966	¹⁴		12,044
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		23,452		8,552		(4,677)			27,327

NONINTEREST INCOME
Deposit account charges and related fees		1,777		797		—			2,574
Bank credit transaction fees		1,018		875		—			1,893
Loan late charges		122		—		—			122
Loan servicing fees		312		19		—			331
Other loan fees		882		—		—			882
Net realized gains on sale of loans		292		—		—			292
Earnings on bank owned life insurance		318		111		—			429
Other income		793		570		—			1,363
TOTAL NONINTEREST INCOME		5,514		2,372		—			7,886

NONINTEREST EXPENSE
Compensation and benefits		9,752		3,453		—			13,205
Occupancy and equipment, net		2,447		1,200		59	¹⁵		3,706
Data processing expense		1,445		258		—			1,703
Telecommunication expense		331		137		—			468
Deposit insurance premiums		215		75		—			290
Legal and professional fees		411		314		—			725
Advertising		449		105		—			554
Postage and office supplies		213		96		—			309
Intangible amortization		402		15		699	¹⁶		1,116
Foreclosure property expenses/losses		(41)		57		—			16
Other operating expense		1,296		980		—			2,276
Merger-related expense		—		—		8,748	¹⁷		8,748
TOTAL NONINTEREST EXPENSE		16,920		6,690		9,506			33,116

INCOME BEFORE INCOME TAXES		12,046		4,234		(14,183)			2,097

PROVISION FOR INCOME TAXES		2,443		994		(2,765)	¹⁸		672

NET INCOME		9,603		3,240		(11,418)			1,425

Less: distributed and undistributed earnings allocated to participating securities		(43)		-		-			(43)

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	9,560	$	3,240	$	(11,418)		$	1,382

Basic earnings per share available to common stockholders	$	1.04	$	1.38				$	0.12
Diluted earnings per share available to common stockholders	$	1.04	$	1.38				$	0.12

Average shares outstanding - Basic		9,187,857		2,346,915		2,079,678			11,267,535
Average shares outstanding - Diluted		9,210,467		2,346,915		2,079,678			11,290,145

CONDENSED COMBINED PRO FORMA STATEMENTS OF INCOME (Unaudited)

For the Year Ended June 30, 2022

(in thousands, except for share and per share data)


	Southern Missouri		Citizens Bancshares		Pro Forma
	Bancorp		Company		Adjustments			Pro Forma
INTEREST INCOME
Loans	$	111,495	$	20,387	$	5,521	¹¹	$	137,403
Investment securities		2,197		2,280		2,378	¹²		6,855
Mortgage-backed securities		2,738		1,262		—			4,000
Other interest-earning assets		437		745		—			1,182
TOTAL INTEREST INCOME		116,867		24,674		7,899			149,440

INTEREST EXPENSE
Deposits		11,822		1,308		37	¹³		13,167
Advances from FHLB Des Moines		792		—		—			792
Notes due to shareholders		—		13		—			13
Subordinated debt		686		—		—			686
TOTAL INTEREST EXPENSE		13,300		1,321		37			14,658

NET INTEREST INCOME		103,567		23,353		7,862			134,782
Provision for loan losses		1,487		(1,456)		6,966	¹⁴		6,997
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		102,080		24,809		896			127,785

NONINTEREST INCOME
Deposit account charges and related fees		6,450		2,851		—			9,301
Bank credit transaction fees		4,224		3,124		—			7,348
Net realized gains on sale of loans		1,598		348		—			1,946
Net realized gains on sale of available for sale securities		—		—		—			—
Earnings on bank owned life insurance		1,168		438		—			1,606
Other income		7,763		3,223		—			10,986
TOTAL NONINTEREST INCOME		21,203		9,984		—			31,187

NONINTEREST EXPENSE
Compensation and benefits		35,611		14,940		—			50,551
Occupancy and equipment, net		9,248		4,924		235	¹⁵		14,407
Data processing expense		5,996		1,008		—			7,004
Telecommunication expense		1,273		593		—			1,866
Deposit insurance premiums		743		375		—			1,118
Legal and professional fees		1,362		809		—			2,171
Advertising		1,496		411		—			1,907
Postage and office supplies		823		390		—			1,213
Intangible amortization		1,441		59		2,796	¹⁶		4,296
Foreclosure property expenses/losses		522		506		—			1,028
Other operating expense		4,864		4,318		—			9,182
Merger-related expense		—		—		8,748	¹⁷		8,748
TOTAL NONINTEREST EXPENSE		63,379		28,333		11,779			103,491

INCOME BEFORE INCOME TAXES		59,904		6,460		(10,883)			55,481

PROVISION FOR INCOME TAXES		12,735		1,369		(2,039)	¹⁸		12,065

NET INCOME		47,169		5,091		(8,844)			43,416

Less: distributed and undistributed earnings allocated to participating securities		195		-		-			195

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	46,974	$	5,091	$	(8,844)		$	43,221

Basic earnings per share available to common stockholders	$	5.22	$	2.17				$	3.93
Diluted earnings per share available to common stockholders	$	5.21	$	2.17				$	3.92

Average shares outstanding - Basic		8,994,022		2,346,915		2,015,061			11,009,083
Average shares outstanding - Diluted		9,011,144		2,346,915		2,015,061			11,026,205

Notes to Pro Forma Condensed Combined Financial Information (Unaudited)

Represents cash paid for 25% of outstanding common stock and all outstanding stock options.

Adjustment to reflect the preliminary estimate of fair value of acquired loans, including current interest rates and liquidity, as well as the fair value of future credit marks.


(in thousands)	September 30, 2022
Estimate of fair value: acquired non-PCD loans	$	(12,078)
Estimate of fair value: acquired PCD loans		(2,056)
Eliminate unrecognized loan origination expenses		(533)
Fair value adjustments to loans		(14,667)
Gross up of PCD loans		1,121
Total pro forma adjustment to loans	$	(13,546)

Adjustments to the allowance for credit losses include the following:


(in thousands)	September 30, 2022
Reverse Citizens’ allowance for loan losses	$	6,416
Record CECL estimate for PCD loans		(1,121)
Record CECL estimate for non-PCD loans		(5,177)
Total pro forma adjustment to allowance for credit losses		118

Reflects adjustments to acquired premises and equipment based primarily on real estate appraisals.

Adjustment to eliminate historical Citizens goodwill of $2.0 million and to establish $24.1 million of goodwill for amount of consideration paid in excess of fair value of assets received over liabilities assumed. The pro forma adjustments include the accounting entries to record the transaction under the acquisition method of accounting for business combinations. The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill. Fair value adjustments included in the pro forma financial statements are based upon available information and certain assumptions which are considered reasonable, and will be revised as additional information becomes available.

The following table summarizes the determination of the purchase price consideration based on the $47.32 closing price of Southern Missouri common stock on January 20, 2023.


Shares of Citizens outstanding		2,358,915
Shares to be exchanged for stock		1,769,186
Exchange ratio		1.1755
Southern Missouri shares to be issued		2,079,678
Price per share of Southern Missouri on January 20, 2023	$	47.32
Preliminary consideration for common stock	$	98,410,363

Shares to be exchanged for cash		587,729
Cash consideration per share	$	54.93
Cash consideration for shares outstanding		32,393,814
Cash settlement of options outstanding		2,367,350
Total cash consideration	$	34,761,164

Adjustment to reflect approximately $24.3 million of core deposit and trust services intangible at the estimated fair value and to eliminate historical Citizens’ intangible assets.

Adjustment of $(2.2) million to net deferred tax assets due to the business combination and adjustment of $(2.7) million to the estimated fair value of foreclosed real estate.

Adjustment to reflect the estimate of fair value on time deposits.

Represents CECL estimate for off-balance sheet credit exposures of $1.8 million and estimated after-tax merger costs of $7.2 million ($8.7 million, pre-tax), of which some costs will be recognized over time. These cost estimates for both Southern Missouri and Citizens are forward-looking. The type and amount of actual costs incurred could vary materially from these estimates if future developments differ from the underlying assumptions used by management in determining the current estimate of these costs.

10.

Adjustment to eliminate $95.0 million in Citizens’ stockholders’ equity, reflect issuance of $98.4 million in Southern Missouri common stock, reflect estimated merger costs of $7.2 million, net of tax, and reflect provision for credit losses on non-PCD acquired loans of $2.6 million and off-balance sheet credit exposures of $5.4 million, net of tax.

11.

Adjustment reflects the yield adjustment for interest income on loans.

12.

Adjustment reflects the yield adjustment for interest income on securities.

13.

Adjustment reflects the cost of funds adjustment for interest expense on deposits.

14.

Adjustment to record provision for credit losses on non-PCD acquired loans and off-balance sheet credit exposures.

15.

Adjustment to depreciation expense to reflect adjustment to carrying value of facilities.

16.

Adjustment reflects the net increase in amortization of core deposit intangible and other intangible assets.

17.

Adjustment reflects the combined pre-tax merger-related transaction costs.

18.

Adjustment represents income tax expense on the pro-forma adjustments at an estimated effective rate of 22%, generally. Some merger-related expense is assumed to not be tax-deductible.