10-K: Great Southern Bancorp Posts Strong 2025 Earnings Growth

Great Southern Bancorp, Inc. reported a 14.8% increase in net income for 2025, driven by higher net interest income and reduced credit loss provisions, despite a decrease in total assets and deposits.

Summary

• Net income increased by $9.2 million, or 14.8%, to $71.0 million for the year ended December 31, 2025, compared to $61.8 million in 2024.
• Net interest income rose by $11.1 million, or 5.9%, to $200.2 million in 2025, with the net interest margin expanding by 25 basis points to 3.67%.
• The provision for credit losses on loans was $0 in 2025, a decrease from $1.7 million in 2024, and the company experienced net recoveries of $11,000 on loans.
• Total assets decreased by $383.0 million, or 6.4%, to $5.60 billion at December 31, 2025.
• Net loans receivable decreased by $333.5 million, or 7.1%, to $4.36 billion, primarily due to reductions in other residential (multi-family), construction, oneto four-family residential, and commercial business loans.
• Total deposits decreased by $122.8 million, or 2.7%, to $4.48 billion, with retail time deposits declining due to migration to higher-yielding money market accounts and a strategic decision not to replace some brokered deposits.
• Total stockholders' equity increased by $36.5 million, or 6.1%, to $636.1 million, benefiting from net income, stock option exercises, and an increase in accumulated other comprehensive income.
• Non-performing assets decreased by $1.5 million to $8.1 million, representing 0.15% of total assets at year-end 2025.
• The company redeemed all $75.0 million aggregate principal amount of its subordinated notes on June 15, 2025.
• A new stock repurchase program was authorized in April 2025 for up to 1,000,000 additional shares, with approximately 687,000 shares remaining available at year-end 2025.
• The Federal Reserve implemented three rate decreases of 0.25% each in September, October, and December 2025, bringing the Federal Funds rate to 3.75% at year-end.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report, reflecting robust profitability, excellent asset quality management, and a very healthy capital position. While loan and deposit balances saw a slight decline, this appears to be a managed outcome in a competitive environment, and the overall financial health is solid.

Positives

• Net income increased significantly by 14.8% year-over-year.
• Net interest income grew by 5.9%, and the net interest margin expanded by 25 basis points.
• The provision for credit losses on loans was $0, indicating strong asset quality and favorable credit conditions, with net recoveries of $11,000.
• Non-performing assets decreased by $1.5 million, and the ratio of allowance for credit losses to non-performing loans significantly improved to 3,093.15%.
• The company maintained a 'well-capitalized' status with strong capital ratios (Bank CET1 13.0%, Tier 1 13.0%, Total 14.3%, Leverage 11.3%).
• The redemption of $75.0 million in subordinated notes reduced the company's debt obligations.
• An active stock repurchase program demonstrates management's confidence and commitment to shareholder value.

Negatives

• Total assets decreased by 6.4% and net loans receivable decreased by 7.1% in 2025.
• Total deposits declined by 2.7%, driven by decreases in retail time deposits and brokered deposits.
• Non-interest income decreased by 5.0%, partly due to a non-recurring gain in 2024 related to a terminated core banking platform agreement.
• The company's interest rate swaps designated as cash flow hedges resulted in a reduction of loan interest income by $6.6 million in 2025.
• High office and industrial vacancy rates persist in several of the company's market areas, indicating potential headwinds for commercial real estate lending.

Risks

• Economic conditions, including potential downturns, sustained high unemployment, or stock market volatility, could adversely affect financial performance, loan repayments, and collateral values.
• Inflationary pressures and rising or sustained high prices could increase operating costs and negatively impact business customers' ability to repay loans.
• New or continuing public health issues could adversely affect demand for products, increase loan losses, decline collateral values, and lead to employee unavailability or increased cybersecurity risks.
• Severe weather, natural disasters, acts of war or terrorism, or other adverse external events could disrupt business operations, affect the deposit base, and impact loan collateral values.
• The loan portfolio has a relatively high concentration (78.3% at Dec 31, 2025) in commercial and residential construction, commercial real estate, other residential (multi-family), and other commercial loans, which carry higher risks.
• A slowdown in residential or commercial real estate markets could adversely affect earnings and liquidity, increasing loan delinquencies and credit losses.
• The allowance for credit losses may prove insufficient to absorb potential losses in the loan portfolio, and regulatory reviews could require increases in provisions.
• Adverse changes in interest rates could negatively impact net interest income, especially if rates paid on deposits increase faster than rates earned on loans, or if borrowers refinance adjustable-rate loans at lower market rates.
• The fair value of investment securities can fluctuate due to market conditions, potentially leading to impairment charges.
• Conditions in financial markets may limit access to additional funding sources like brokered deposits and FHLBank advances, which are crucial for liquidity.
• The strategy of pursuing acquisitions exposes the company to financial, execution, and operational risks, including asset quality issues, integration challenges, and dilution of existing stockholders.
• Future growth may require additional capital, which may not be available on acceptable terms or could dilute existing stockholders' interests.
• Intense competition from various financial institutions, including larger banks and online competitors, could impact market share and profitability.
• The highly regulated banking environment, including capital adequacy guidelines and commercial real estate concentration guidance, may increase costs or limit growth.
• Climate change and related legislative/regulatory initiatives may affect the company's business and results of operations, including damage to collateral and adverse impacts on regional economies.
• Evolving ESG expectations from stakeholders may impose additional costs or reputational risks.
• Exposure to operational risks, including fraud, data breaches, and system failures, could have material adverse consequences.
• Reliance on technology and potential risks from Artificial Intelligence (AI) adoption, including model risk, cybersecurity threats, and ethical concerns, could impact operations and trust.
• Future sales of additional common stock or other equity dilution could adversely affect the market price of common stock.
• Regulatory and contractual restrictions, such as those related to junior subordinated debt securities, may limit or prevent dividend payments and stock repurchases.
• The voting limitation provision in the charter could limit voting rights for holders of more than 10% of outstanding shares.
• Anti-takeover provisions in the charter and bylaws could delay or prevent a third party from acquiring the company.
• Three members of the Turner family, holding board and management positions and collectively owning approximately 18.9% of common stock (subject to a 10% voting limit), may exert substantial influence over the company's direction.

Future Outlook

The company expects the possibility of further modest decreases in Federal Funds interest rates in 2026, with potential cuts of only 0.25% at a methodical pace, dependent on economic data. The effective tax rate (combined federal and state) is expected to be approximately 18.5% to 19.5% in future periods. The U.S. apartment market is rebalancing with declining supply, while office vacancy is expected to plateau through 2026 before a gradual decrease. The retail market shows signs of stabilization, and the industrial market faces high vacancy rates with moderating supply growth.

Management Comments

• Management believes the company will continue to be competitive due to its strong commitment to quality customer service, competitive products and pricing, convenient local branches, online and mobile capabilities, and active community involvement.
• The company's strategy continues to be focused on maintaining credit risk and interest rate risk at appropriate levels.
• Management considers the allowance for credit losses adequate to cover losses inherent in the Bank's loan portfolio at December 31, 2025.
• Management has historically utilized stock buy-back programs from time to time as long as repurchasing common stock would contribute to the overall growth of stockholder value.

Industry Context

StockSavvy.ai notes that Great Southern Bancorp's strong net income and net interest margin expansion in 2025, despite a decrease in loan and deposit balances, reflects effective balance sheet management in a dynamic interest rate environment. The strategic decision to allow some brokered deposits to mature without replacement, coupled with a migration to higher-yielding money market accounts, aligns with broader industry efforts to optimize funding costs as the Federal Reserve began cutting rates. The improved asset quality, evidenced by zero provision for credit losses on loans and net recoveries, positions the company favorably compared to peers potentially still grappling with credit cycle challenges. However, the persistent high vacancy rates in the office and industrial real estate sectors in some of its key markets indicate ongoing industry-wide headwinds that could impact future commercial real estate loan performance.

Comparison to Industry Standards

• The company's market share in Missouri at June 30, 2025, was 1.3%, ranking tenth, significantly behind leading institutions like UMB Bank, U.S. Bank, and Bank of America, which had a combined market share of 30.2%.
• In its primary metropolitan statistical areas at June 30, 2025, Great Southern Bank held the leading market share in Springfield, MO (13.4%, rank 1), but had lower rankings in other key markets such as Sioux City, IA-NE-SD (6.8%, rank 4), Davenport/Moline/Rock Island, IA-IL (1.0%, rank 21), Des Moines/West Des Moines, IA (0.6%, rank 26), St. Louis, MO-IL (0.4%, rank 41), Kansas City, MO-KS (0.3%, rank 42), Fayetteville/Springdale/Rogers, AR-MO (0.2%, rank 32), and Minneapolis/St. Paul/Bloomington, MN-WI (0.1%, rank 86).
• The company's capital ratios (e.g., Bank CET1 13.0%, Tier 1 13.0%, Total 14.3%, Leverage 11.3%) significantly exceed the 'well-capitalized' thresholds (CET1 6.5%, Tier 1 8.0%, Total 10.0%, Leverage 5.0%), indicating a strong capital position relative to regulatory standards.
• The ratio of allowance for credit losses to non-performing loans at 3,093.15% in 2025 is exceptionally high, suggesting a very conservative and well-covered position for potential loan losses compared to many industry peers.

Corporate Governance

Legal Proceedings

• One litigation matter, where the Bank is a defendant, alleging a breach of fiduciary duty, was postponed from the third quarter of 2025 and has not yet been rescheduled. The Bank believes it will prevail and expects indemnification.
• A litigation/contract dispute related to a proposed core banking platform conversion was settled in May 2025, with the company recording a $2.0 million accrued expense in 2024 in connection with these developments.

Related Party Transactions

• Loans to directors and executive officers, and their related interests, totaled $18.47 million at December 31, 2025, compared to $8.35 million at December 31, 2024.
• All such loans were made on substantially the same terms as those prevailing for comparable transactions with unrelated parties, except for residential first mortgage loans and home equity lines of credit, which were granted at interest rates equal to the Bank's cost of funds.

Stakeholder Impact

• Shareholders: Benefited from increased net income, higher basic and diluted EPS, an increased cash dividend per share, and ongoing stock repurchase programs, which could positively influence stock price.
• Employees: Continued benefits from defined contribution retirement plans with company matching, and the 'Community Matters' program allowing paid volunteer hours, fostering engagement and well-being.
• Customers: Benefited from ongoing technology initiatives, new banking center designs, and the expansion of ITM services for extended banking hours and convenience, while facing potential changes in deposit rates due to market competition.
• Borrowers: Experienced a decrease in net loans receivable, indicating potentially tighter lending conditions or reduced demand, but the company maintains a strong loan commitment pipeline.
• Creditors: The redemption of subordinated notes reduced overall debt, and strong capital ratios provide assurance of financial stability.

Next Steps

• Transition the banking center located at 4700 Mid Rivers Mall Dr. in Cottleville, Missouri, to its second drive-thru Express Center location in the first half of 2026.
• Continue to monitor regional, national, and global economic indicators to manage asset and liability strategies.

Key Dates

Recommendation

The company's strong financial performance in 2025, marked by a significant increase in net income, expanded net interest margin, and zero provision for credit losses on loans, indicates robust operational efficiency and excellent asset quality management. The healthy capital ratios, ongoing stock repurchase program, and strategic debt reduction through subordinated note redemption further enhance shareholder value. While loan and deposit balances saw a slight decrease, this appears to be a controlled adjustment in a competitive market, and the company's strategic initiatives in technology and branch optimization position it well for future growth and profitability. These factors collectively suggest a strong investment opportunity.

Keywords

Banking, Financial Services, Regional Bank, Commercial Real Estate, Loans, Deposits, Net Interest Income, Capital Ratios, SEC Filing, 10-K, Missouri, Iowa, Kansas, Minnesota, Arkansas, Texas, Illinois, Colorado, Arizona, North Carolina, Georgia, Stock Repurchase, Subordinated Debt, Asset Quality, Interest Rate Risk, Cybersecurity