8-K: Great Southern Bancorp Reports Strong Q3 Earnings

Great Southern Bancorp, Inc. announced preliminary third-quarter 2025 earnings of $1.56 per diluted common share, an increase from $1.41 in the prior year, driven by improved net interest income and asset quality.

Summary

• Net income for the third quarter of 2025 was $17.8 million ($1.56 per diluted common share), an increase from $16.5 million ($1.41 per diluted common share) for the third quarter of 2024.
• Annualized return on average common equity was 11.30%, annualized return on average assets was 1.23%, and annualized net interest margin was 3.72% for the quarter ended September 30, 2025.
• Net interest income increased by $2.8 million (5.8%) to $50.8 million in Q3 2025, primarily driven by lower interest expense on deposit accounts and other borrowings.
• Non-performing assets and potential problem loans totaled $9.2 million at September 30, 2025, a decrease of $7.4 million from $16.6 million at December 31, 2024.
• Total net loans, excluding mortgage loans held for sale, decreased $222.7 million (4.7%) from $4.69 billion at December 31, 2024, to $4.47 billion at September 30, 2025.
• The company repurchased 165,116 shares of its common stock at an average price of $60.33 during the third quarter of 2025.

Sentiment

Score: 8

Explanation: The company reported strong earnings growth, improved net interest margin, and excellent asset quality with reduced non-performing assets and minimal charge-offs. Capital ratios remain robust and increased. While loan balances decreased and a significant source of interest income from a terminated swap has ceased, the overall financial health and disciplined management indicate a very positive performance.

Positives

• Net income increased to $17.8 million ($1.56 per diluted share) in Q3 2025, up 7.7% from $16.5 million ($1.41 per diluted share) in Q3 2024.
• Net interest income increased by $2.8 million (5.8%) to $50.8 million in Q3 2025, driven by lower interest expense.
• Annualized net interest margin improved to 3.72% in Q3 2025 from 3.42% in Q3 2024.
• Non-performing assets decreased by $1.8 million to $7.8 million (0.14% of total assets) at September 30, 2025, from $9.6 million (0.16% of total assets) at December 31, 2024.
• No provision expense for credit losses on outstanding loans was recorded in Q3 2025 or year-to-date 2025.
• Total net charge-offs were only $66,000 for Q3 2025, a significant decrease from $1.5 million in Q3 2024.
• Capital position remained strong, with Tier 1 Leverage Ratio at 11.9%, Common Equity Tier 1 Capital Ratio at 13.3%, Tier 1 Capital Ratio at 13.8%, and Total Capital Ratio at 15.1% as of September 30, 2025, all significantly exceeding regulatory thresholds.
• Tangible common equity to tangible assets ratio increased to 10.9% at September 30, 2025, from 9.9% at December 31, 2024.
• Stockholders' equity increased by $33.4 million to $632.9 million at September 30, 2025, from $599.6 million at December 31, 2024.
• The company repurchased 165,116 shares of its common stock in Q3 2025, demonstrating a commitment to long-term tangible book value per share growth.
• Core deposits remained stable during the quarter, underscoring strong customer relationships.

Negatives

• Interest income from the company's terminated interest rate swap ceased on October 6, 2025, which had been providing approximately $2.0 million of interest income per quarter.
• Total net loans decreased $222.7 million (4.7%) from December 31, 2024, primarily due to decreases in construction loans, other residential (multi-family) loans, and oneto four-family residential loans.
• Non-interest expense increased $2.4 million to $36.1 million in Q3 2025, driven by higher legal and professional fees and upgrades of the Bank's core technology systems.
• The company's efficiency ratio for Q3 2025 was 62.45%, an increase from 61.34% for the same quarter in 2024.
• Average assets for Q3 2025 decreased $185.3 million (3.1%) compared to Q3 2024, primarily due to the decline in the average balance of net loans.
• Total deposits decreased $156.1 million during Q3 2025, with $153.3 million of this decrease attributed to brokered deposits.

Risks

• The company's ability to predict results or the actual effects of future plans or strategies is inherently uncertain, and actual results could differ materially from forward-looking statements.
• Expected revenues, cost savings, earnings accretion, synergies, and other benefits from merger and acquisition activities might not be realized within anticipated time frames or at all, and integration costs or difficulties might be greater than expected.
• Changes in economic conditions, either nationally or in the company's market areas, could adversely affect financial performance.
• The effects of any new or continuing public health issues on general economic and financial market conditions.
• Fluctuations in interest rates, the effects of inflation or a potential recession, whether caused by Federal Reserve actions or otherwise.
• The impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment.
• Slower or negative economic growth caused by tariffs, changes in energy prices, supply chain disruptions, or other factors.
• Risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses.
• The possibility of realized or unrealized losses on securities held in the company's investment portfolio.
• The company's ability to access cost-effective funding and maintain sufficient liquidity.
• Fluctuations in real estate values and both residential and commercial real estate market conditions.
• The ability to adapt successfully to technological changes to meet customers' needs and developments in the marketplace.
• The possibility that security measures implemented might not be sufficient to mitigate the risk of a cyber-attack or cyber theft, and that such security measures might not protect against systems failures or interruptions.
• Legislative or regulatory changes that adversely affect the company's business.
• Changes in accounting policies and practices or accounting standards.
• Results of examinations of the company and the Bank by their regulators, including the possibility that regulators may require the company to limit business activities, change business mix, increase its allowance for credit losses, write-down assets, or increase its capital levels, or affect its ability to borrow funds or maintain or increase deposits, which could adversely affect its liquidity and earnings.
• Costs and effects of litigation, including settlements and judgments.
• Competition from other financial institutions.
• Natural disasters, war, terrorist activities, or civil unrest and their effects on economic and business environments in which the company operates.
• If challenging economic conditions persist or worsen, or if management's assessment of the loan portfolio changes, additional provisions for credit losses may be required, which could adversely impact the company's future financial performance.

Future Outlook

Management's priorities remain unchanged: maintaining strong capital and liquidity positions, supporting customers, and continuing to generate value for shareholders. The company expects its effective tax rate (combined federal and state) to be approximately 18.5% to 20.0% in future periods. However, the company will no longer have the benefit of approximately $2.0 million of quarterly interest income from the terminated interest rate swap in future periods. Replacement rates for maturing time deposits are likely to be approximately 3.10-3.60%, depending on term.

Management Comments

• "Our third quarter results reflect continued stability in our core operations and disciplined execution of our long-term strategy to sustain profitability, protect credit quality, and enhance shareholder value." Joseph W. Turner, President and CEO.
• "Core performance remained solid, with consistent net interest income, strong asset quality, and prudent expense management despite a continued competitive funding environment." Joseph W. Turner, President and CEO.
• "Despite continued economic pressures, our core operations have been strong." Joseph W. Turner, President and CEO.
• "The funding costs of deposits and other borrowings continued to decrease, bolstering net interest income." Joseph W. Turner, President and CEO.
• "Core deposits remained stable during the quarter, underscoring the strength of our customer relationships and the enduring value of our community banking franchise." Joseph W. Turner, President and CEO.
• "Our balance sheet remains well-positioned, with total assets of approximately $5.74 billion at September 30, 2025, reflecting modest contraction due to elevated net loan payoffs during the quarter and throughout much of 2025." Joseph W. Turner, President and CEO.
• "Credit quality remains a key strength, with low levels of non-performing assets and no provision expense recorded this quarter or year to date on the portfolio of outstanding loan balances, reflecting the soundness of our underwriting and portfolio management practices." Joseph W. Turner, President and CEO.
• "On the expense side, operating discipline remains a primary focus." Joseph W. Turner, President and CEO.
• "Looking ahead, our priorities remain unchanged: maintaining strong capital and liquidity positions, supporting our customers, and continuing to generate value for our shareholders." Joseph W. Turner, President and CEO.
• "Great Southern’s third-quarter 2025 results underscore the durability of our franchise and the consistency of our performance across economic cycles." Joseph W. Turner, President and CEO.

Industry Context

The company operates within a competitive funding environment, with market interest rates declining and federal funds rate cuts occurring in late 2024 and Q3 2025. This decline has helped reduce funding costs for deposits and borrowings, bolstering net interest income, but also impacted average yields on loans. The industry continues to experience high competition for deposits, and the lingering effects of liquidity events at several banks in March and April 2023 are still noted as impacting deposit costs. The company's strategic management of maturing deposits and utilization of derivative financial instruments reflect efforts to navigate this volatile interest rate landscape.

Stakeholder Impact

• Shareholders: Positive impact due to increased net income, higher earnings per diluted share, strong capital position, increased book value per share, and ongoing share repurchase program.
• Customers: Improved customer-facing online services and a full overhaul of the company's treasury management services platform are moving to trial phase, and a new next-generation banking center is opening.
• Employees: Salaries and employee benefits increased due to annual merit increases in various lending and operations areas.

Next Steps

• Host a conference call on Thursday, October 16, 2025, at 2:00 p.m. Central Time to discuss third quarter 2025 preliminary earnings.
• Conduct a grand opening for the new banking center at 723 N. Benton in Springfield, Missouri, scheduled for late October.
• Continue to focus on maintaining strong capital and liquidity positions, supporting customers, and generating value for shareholders.
• Monitor potential further federal funds rate cuts that may occur in the fourth quarter of 2025.

Key Dates

Recommendation

The company delivered robust third-quarter results, showcasing significant earnings growth, an expanded net interest margin, and exceptional asset quality with a notable reduction in non-performing assets and minimal charge-offs. Its capital position is strong and improving, well above regulatory thresholds. Strategic share repurchases further underscore management's commitment to shareholder value. While the cessation of interest income from a terminated swap is a headwind, the overall disciplined management, stable core deposits, and ongoing technology investments position the company for continued strong performance in a competitive environment. These factors collectively suggest a compelling investment opportunity.

Keywords

Banking, Financial Services, Regional Bank, Community Bank, Net Interest Income, Asset Quality, Capital Ratios, Loan Portfolio, Deposits, Share Repurchase, Earnings, SEC Filing, GSBC, Great Southern Bancorp