Southern Missouri Bancorp updates executive severance agreements

Southern Missouri Bancorp, Inc. (NASDAQ:SMBC), a $662 million market cap financial institution headquartered in Missouri, has updated severance agreements for key executives, as per a recent SEC filing. The bank, which has maintained dividend payments for 31 consecutive years and boasts a healthy P/E ratio of 12.7, continues to demonstrate strong financial management. According to InvestingPro data, the company currently trades near its Fair Value, suggesting appropriate market pricing. The changes, effective as of Monday, involve the company’s Chief Financial Officer, Stefan Chkautovich, and Chief Credit Officer, Mark Hecker.

The revised agreements, which are set to initially expire on December 31, 2025, include provisions that extend the terms for an additional year unless either party opts out with a 60-day notice prior to the annual renewal date. This move comes as the company maintains strong operational performance, with revenue growing at 8.4% and three analysts recently revising their earnings expectations upward, as reported by InvestingPro. Notably, if a change in control occurs, the agreements will automatically extend until one year after the change in control is completed.

In the event of a termination connected to a change in control, or within one year following such an event, Chkautovich will be entitled to a lump sum severance payment equal to his annual cash compensation. Hecker’s severance payment will be equivalent to two times his annual cash compensation, an increase from the previous one and a half times. Both executives will also continue to receive company-provided insurance benefits for twelve or twenty-four months, respectively, or until they secure full-time employment elsewhere.

The agreements stipulate that if the benefits trigger an excise tax under the Internal Revenue Code, the bank will either provide alternative benefits or pay a lump sum equal to the projected cost of the benefits.

Furthermore, the executives are required to refrain from soliciting the bank’s employees or customers for a specified period following their termination.

In related news, the bank also entered into an amended and restated change in control severance agreement with its Chief Risk Officer, Lance Greunke, superseding the previous agreement dated February 21, 2023.

These executive compensation arrangements reflect the bank’s efforts to maintain stability and retain key leadership in the event of significant corporate changes. The information is based on a press release statement filed with the SEC.

In other recent news, Southern Missouri Bancorp reported second-quarter fiscal year 2025 earnings per share of $1.30, surpassing analyst expectations of $1.28. The company also exceeded revenue forecasts, posting $45.01 million against the anticipated $44.61 million. This performance was bolstered by a 4% increase in net interest income quarter-over-quarter. Keefe, Bruyette & Woods recently adjusted their outlook on Southern Missouri Bancorp, reducing the stock target from $70 to $68 while maintaining a Market Perform rating. The firm noted the bank’s strong asset quality and stable net interest margin despite excess liquidity. Analysts revised the fiscal year 2025 earnings estimate upward by 4% but decreased the 2026 forecast by 3% due to expected higher credit loss provisions and lower fee income. Southern Missouri Bancorp’s loan balances grew by $60 million during the quarter, contributing to an 8% year-over-year increase. The company’s management expressed optimism for continued earnings growth, driven by a favorable yield curve and strong business activity.

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