SPRINGFIELD, Mo., Sept. 26, 2025 (GLOBE NEWSWIRE) -- Great Southern Bancorp, Inc. (NASDAQ:GSBC), the holding company for Great Southern Bank, expects to report third quarter preliminary earnings after the market closes on Wednesday, October 15, 2025, and host a conference call on Thursday, October 16, 2025, at 2:00 p.m. Central Time (3:00 p.m. Eastern Time). The call will be available live or later in a recorded version at the Company’s Investor Relations website, https://investors.greatsouthernbank.com. Pa ...

Core Points - Great Southern Bancorp, Inc. declared a dividend of $0.43 per common share for Q3 2025 [1] - The dividend will be payable on October 14, 2025, to stockholders of record on September 29, 2025 [2] - This marks a $0.03 increase from the previous quarterly dividend of $0.40 per share and is the 143rd consecutive quarterly dividend paid by the company [2] Company Overview - Great Southern Bank is headquartered in Springfield, Missouri, and offers a wide range of banking services [3] - The company operates 89 retail banking centers across Missouri, Iowa, Kansas, Minnesota, Arkansas, and Nebraska, along with commercial lending offices in several major cities [3] - Great Southern Bancorp, Inc. is listed on the Nasdaq Global Select Market under the symbol "GSBC" [3]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Great Southern Bancorp (GSBC) as a strong value stock based on its financial metrics and Zacks Rank [2][3][6] Company Metrics - GSBC has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [3] - The company's price-to-book (P/B) ratio is 1.17, which is lower than the industry average of 1.74, suggesting it may be undervalued [4] - GSBC's P/B ratio has fluctuated between 0.96 and 1.28 over the past 12 months, with a median of 1.12 [4] - The price-to-cash flow (P/CF) ratio for GSBC is 11.98, significantly lower than the industry average of 21.81, further indicating potential undervaluation [5] - The P/CF ratio has ranged from 9.73 to 15.89 in the past year, with a median of 12.04 [5] Investment Outlook - Given the strong earnings outlook and favorable valuation metrics, GSBC is positioned as a compelling value stock at the current time [6]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Great Southern Bancorp (GSBC) as a strong candidate for value investors due to its favorable metrics and earnings outlook [2][6]. Company Summary - Great Southern Bancorp (GSBC) currently holds a Zacks Rank of 2 (Buy) and has an A grade for Value, indicating it is among the best value stocks available [3]. - GSBC's price-to-book (P/B) ratio is 1.05, which is attractive compared to the industry average of 1.48. Over the past 52 weeks, GSBC's P/B has fluctuated between 0.96 and 1.28, with a median of 1.13 [4]. - The company's price-to-cash flow (P/CF) ratio stands at 10.31, significantly lower than the industry average of 18.49. In the past year, GSBC's P/CF has ranged from 9.73 to 15.89, with a median of 12.29 [5]. - The combination of these metrics suggests that GSBC is likely undervalued, making it a strong candidate for value investment [6].

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q) This section identifies the report as a Quarterly Report on Form 10-Q for Great Southern Bancorp, Inc., with key registrant details - The report is a Quarterly Report on Form 10-Q for Great Southern Bancorp, Inc. for the period ended June 30, 2025[2](index=2&type=chunk) Registrant Information | Field | Value | | :--- | :--- | | Registrant Name | GREAT SOUTHERN BANCORP, INC. | | State of Incorporation | Maryland | | IRS Employer Identification No. | 43-1524856 | | Principal Executive Offices | 1451 E. Battlefield, Springfield, Missouri 65804 | | Telephone Number | (417) 887-4400 | | Trading Symbol | GSBC | | Exchange | The NASDAQ Stock Market LLC | | Filer Status | Accelerated filer | | Common Stock Outstanding (August 5, 2025) | **11.33 million shares** | [PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents unaudited consolidated financial statements and management's discussion and analysis of financial results [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements and detailed notes for the specified periods [Consolidated Statements of Financial Condition](index=2&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets and liabilities slightly decreased from December 31, 2024, to June 30, 2025, with increased equity Consolidated Statements of Financial Condition (In Millions) | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $245.9 | $195.8 | | Available-for-sale securities | $527.5 | $533.4 | | Held-to-maturity securities | $183.1 | $187.4 | | Loans receivable, net | $4,534.3 | $4,690.4 | | Total Assets | $5,854.7 | $5,981.6 | | **LIABILITIES** | | | | Deposits | $4,684.1 | $4,605.5 | | Short-term borrowings and other interest-bearing liabilities | $369.9 | $514.2 | | Total Liabilities | $5,232.3 | $5,382.1 | | **STOCKHOLDERS' EQUITY** | | | | Total Stockholders' Equity | $622.4 | $599.6 | | Total Liabilities and Stockholders' Equity | $5,854.7 | $5,981.6 | [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) Net income increased for both the three and six months ended June 30, 2025, driven by higher net interest income and lower interest expense Consolidated Statements of Income (In Millions, Except Per Share Data) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Total Interest Income | $81.0 | $80.9 | $161.2 | $158.3 | | Total Interest Expense | $30.0 | $34.1 | $60.9 | $66.7 | | Net Interest Income | $51.0 | $46.8 | $100.3 | $91.6 | | Provision for Credit Losses on Loans | $0.0 | $0.0 | $0.0 | $0.5 | | Provision (Credit) for Unfunded Commitments | $(0.1) | $(0.6) | $(0.5) | $(0.5) | | Total Non-Interest Income | $8.2 | $9.8 | $14.8 | $16.6 | | Total Non-Interest Expense | $35.0 | $36.4 | $69.8 | $70.8 | | Income Before Income Taxes | $24.3 | $20.8 | $45.7 | $37.4 | | Provision for Income Taxes | $4.5 | $3.9 | $8.8 | $7.0 | | Net Income | $19.8 | $17.0 | $36.9 | $30.4 | | Basic Earnings Per Common Share | $1.73 | $1.46 | $3.20 | $2.60 | | Diluted Earnings Per Common Share | $1.72 | $1.45 | $3.18 | $2.58 | | Dividends Declared Per Common Share | $0.40 | $0.40 | $0.80 | $0.80 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income significantly increased for both periods ended June 30, 2025, driven by unrealized appreciation on available-for-sale securities and cash flow hedges Consolidated Statements of Comprehensive Income (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Net Income | $19.8 | $17.0 | $36.9 | $30.4 | | Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes | $1.8 | $(1.3) | $9.4 | $(6.8) | | Change in value of active cash flow hedges, net of taxes | $2.7 | $(0.0) | $6.9 | $(3.0) | | Comprehensive Income | $22.6 | $14.1 | $50.0 | $17.4 | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased for the three and six months ended June 30, 2025, primarily due to net income and positive changes in other comprehensive income Changes in Stockholders' Equity (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Balance, March 31 / January 1 | $613.3 | $565.2 | $599.6 | $571.8 | | Net income | $19.8 | $17.0 | $36.9 | $30.4 | | Common cash dividends declared | $(4.6) | $(4.6) | $(9.2) | $(9.3) | | Change in fair value of cash flow hedges | $1.1 | $(1.6) | $3.7 | $(6.1) | | Change in unrealized gain (loss) on available-for-sale securities | $1.8 | $(1.3) | $9.4 | $(6.8) | | Repurchase of common stock | $(9.8) | $(6.5) | $(20.0) | $(12.4) | | Balance, June 30 | $622.4 | $568.8 | $622.4 | $568.8 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, operating and investing activities provided cash, while financing activities used cash, leading to a net increase in cash and cash equivalents Consolidated Statements of Cash Flows (In Millions) | Item | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $54.3 | $16.6 | | Net cash provided by (used in) investing activities | $170.9 | $(144.2) | | Net cash provided by (used in) financing activities | $(175.1) | $102.8 | | INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $50.2 | $(24.9) | | CASH AND CASH EQUIVALENTS, END OF PERIOD | $245.9 | $186.5 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on the Company's accounting policies, financial instruments, loan portfolio, credit losses, and investments [NOTE 1: BASIS OF PRESENTATION](index=10&type=section&id=NOTE%201:%20BASIS%20OF%20PRESENTATION) The interim consolidated financial statements are prepared in accordance with GAAP and SEC rules, reflecting normal recurring adjustments - Unaudited interim consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC instructions to Form 10-Q and Rule 10-01 of Regulation S-X[19](index=19&type=chunk) - Operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the full year's expected results[19](index=19&type=chunk) [NOTE 2: NATURE OF OPERATIONS AND OPERATING SEGMENTS](index=10&type=section&id=NOTE%202:%20NATURE%20OF%20OPERATIONS%20AND%20OPERATING%20SEGMENTS) Great Southern Bancorp, Inc. operates as a one-bank holding company, with Great Southern Bank as its sole reportable segment, offering diverse financial services - The Company operates as a one-bank holding company, with Great Southern Bank as its only reportable segment[22](index=22&type=chunk)[23](index=23&type=chunk) - The Bank provides financial services primarily in Missouri, Iowa, Kansas, Minnesota, Nebraska, and Arkansas, and originates commercial loans from offices in several major cities[22](index=22&type=chunk) - The banking operation focuses on originating residential and commercial real estate loans, construction loans, commercial business loans, and consumer loans, funded by deposits and borrowings[23](index=23&type=chunk) [NOTE 3: RECENT ACCOUNTING PRONOUNCEMENTS](index=10&type=section&id=NOTE%203:%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The Company adopted ASU 2023-02 with an immaterial impact and notes upcoming effectiveness of ASU 2023-07, ASU 2023-09, and ASU 2024-03 - ASU 2023-02 (Investments – Equity Method and Joint Ventures) was adopted on January 1, 2024, resulting in a **$223 thousand reduction of retained earnings**, with no material impact on consolidated financial statements[24](index=24&type=chunk) - ASU 2023-07 (Segment Reporting) became effective for the Company's annual financial statements in 2024, expanding disclosure requirements for significant segment expenses[25](index=25&type=chunk) - ASU 2023-09 (Income Taxes) is effective for the fiscal year ending December 31, 2025, requiring additional income tax disclosures[26](index=26&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for annual periods beginning after December 15, 2026, and is not expected to materially impact financial statements but will affect disclosures[27](index=27&type=chunk) [NOTE 4: EARNINGS PER SHARE](index=12&type=section&id=NOTE%204:%20EARNINGS%20PER%20SHARE) Basic and diluted earnings per common share increased for both the three and six months ended June 30, 2025, reflecting higher net income Earnings Per Common Share (In Millions, Except Per Share Data) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Net income | $19.8 | $17.0 | $36.9 | $30.4 | | Basic Earnings Per Common Share | $1.73 | $1.46 | $3.20 | $2.60 | | Diluted Earnings Per Common Share | $1.72 | $1.45 | $3.18 | $2.58 | | Average common shares outstanding (Basic) | 11.46 | 11.64 | 11.55 | 11.70 | | Diluted common shares | 11.52 | 11.70 | 11.60 | 11.76 | - Options to purchase **835,549 shares** (2025) and **741,708 shares** (2024) were excluded from diluted EPS calculation as their exercise prices exceeded the average market price[28](index=28&type=chunk) [NOTE 5: INVESTMENT SECURITIES](index=14&type=section&id=NOTE%205:%20INVESTMENT%20SECURITIES) The investment securities portfolio, comprising AFS and HTM securities, saw a slight decrease in total value, with most unrealized losses on government-sponsored entity securities not considered credit-related - Available-for-sale (AFS) securities are carried at fair value, with unrealized gains and losses recorded in stockholders' equity, net of taxes[29](index=29&type=chunk) - Held-to-maturity (HTM) securities are carried at historical cost, adjusted for amortization of premiums and accretion of discounts[30](index=30&type=chunk) Investment Securities (In Millions) | Category | June 30, 2025 (Fair Value, Millions) | December 31, 2024 (Fair Value, Millions) | | :--- | :--- | :--- | | Available-for-sale securities | $527.5 | $533.4 | | Held-to-maturity securities | $163.8 | $162.8 | | Total Unrealized Losses (AFS) | $(49.8) | $(61.3) | | Total Unrealized Losses (HTM) | $(19.3) | $(24.7) | - A high percentage of unrealized losses are related to mortgage-backed, collateralized mortgage, and SBA securities issued and guaranteed by U.S. government-sponsored entities, which management believes are not credit-related[33](index=33&type=chunk)[35](index=35&type=chunk)[38](index=38&type=chunk) [NOTE 6: LOANS AND ALLOWANCE FOR CREDIT LOSSES](index=18&type=section&id=NOTE%206:%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) The Company uses the CECL methodology for credit losses, with total loans receivable and nonaccruing loans decreasing, and no provision expense recorded for loans in the current period - The Company measures the allowance for credit losses using the CECL methodology, applicable to financial assets at amortized cost and off-balance sheet credit exposures[41](index=41&type=chunk) Loans Receivable and Allowance for Credit Losses (In Millions) | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Loans receivable | $4,604.9 | $4,761.8 | | Allowance for credit losses | $(64.8) | $(64.8) | | Loans receivable, net | $4,534.3 | $4,690.4 | | Total nonaccruing loans | $2.0 | $3.6 | | Provision for credit losses on loans (3 months ended June 30) | $0.0 | $0.0 | | Provision for credit losses on loans (6 months ended June 30) | $0.0 | $0.5 | - Nonaccruing loans decreased from **$3.57 million** at December 31, 2024, to **$2.04 million** at June 30, 2025, with no allowance required for certain collateral-dependent loans[45](index=45&type=chunk)[46](index=46&type=chunk) - The Company uses an internal risk rating system (Satisfactory, Watch, Special Mention, Substandard, Doubtful, Loss) to categorize loans based on perceived risk[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) [NOTE 7: INVESTMENTS IN LIMITED PARTNERSHIPS](index=27&type=section&id=NOTE%207:%20INVESTMENTS%20IN%20LIMITED%20PARTNERSHIPS) The Company invests in Affordable Housing Partnerships and Community Development Entities, with increased federal tax credit usage and investment amortization for affordable housing - The Company had **21 Affordable Housing Partnerships** with a net carrying value of **$100.9 million** at June 30, 2025, and expects to utilize **$99.7 million** in federal tax credits through 2034[67](index=67&type=chunk)[68](index=68&type=chunk) Tax Credit Usage and Investment Amortization (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Federal affordable housing tax credits usage | $3.2 | $2.8 | $6.4 | $5.6 | | Affordable housing investment amortization | $2.7 | $2.5 | $5.6 | $5.1 | | Federal new market tax credits usage | $0.0 | $0.0 | $0.1 | $0.1 | | New market investment amortization | $0.0 | $0.0 | $0.1 | $0.1 | | Federal rehabilitation/historic tax credits usage | $0.0 | $0.1 | $0.0 | $0.2 | | Rehabilitation/historic investment amortization | $0.0 | $0.1 | $0.0 | $0.1 | - The Company had one Community Development Entity investment with a net carrying value of **$149 thousand** at June 30, 2025[71](index=71&type=chunk) [NOTE 8: OTHER REAL ESTATE OWNED AND REPOSSESSIONS](index=29&type=section&id=NOTE%208:%20OTHER%20REAL%20ESTATE%20OWNED%20AND%20REPOSSESSIONS) Other real estate owned and repossessions remained stable at **$6.04 million**, generating income in 2025 compared to expenses in the prior year, primarily from rental income Other Real Estate Owned and Repossessions (In Millions) | Category | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Commercial real estate | $6.0 | $6.0 | | Consumer | $0.0 | $0.0 | | Total | $6.0 | $6.0 | Expenses (Income) on Other Real Estate Owned and Repossessions (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Net loss (gain) on sales | $0.0 | $0.0 | $0.0 | $0.0 | | Operating expenses (income), net of rental income | $(0.2) | $0.3 | $(0.2) | $0.4 | | Total | $(0.2) | $0.3 | $(0.2) | $0.3 | - Residential mortgage loans totaling **$70 thousand** were in foreclosure process at June 30, 2025[79](index=79&type=chunk) [NOTE 9: PREMISES AND EQUIPMENT](index=30&type=section&id=NOTE%209:%20PREMISES%20AND%20EQUIPMENT) Premises and equipment, net, increased to **$134.3 million**, with operating lease costs decreasing and income from owned leased facilities increasing Premises and Equipment, Net (In Millions) | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Land | $39.4 | $39.3 | | Buildings and improvements | $108.6 | $107.5 | | Furniture, fixtures and equipment | $73.1 | $69.9 | | Operating leases right of use asset | $5.9 | $6.4 | | Less: accumulated depreciation | $(92.6) | $(90.7) | | Total Premises and Equipment, net | $134.3 | $132.5 | Operating Lease Costs and Income (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Operating lease costs | $0.4 | $0.4 | $0.8 | $0.9 | | Income from owned leased facilities | $0.4 | $0.3 | $0.7 | $0.7 | - At June 30, 2025, the weighted-average lease term was **6.5 years** with a weighted-average discount rate of **3.99%**[82](index=82&type=chunk) [NOTE 10: DEPOSITS](index=32&type=section&id=NOTE%2010:%20DEPOSITS) Total deposits increased to **$4.68 billion** at June 30, 2025, driven by brokered deposits and interest-bearing accounts, with approximately **35%** of total deposits uninsured Deposits (In Millions, Except Interest Rates) | Category | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Non-interest-bearing accounts | $859.9 | $842.9 | | Interest-bearing checking and savings accounts | $2,233.2 | $2,214.7 | | Certificate accounts | $757.7 | $775.8 | | Brokered deposits | $833.3 | $772.1 | | Total Deposits | $4,684.1 | $4,605.5 | | Weighted Average Interest Rate (Interest-bearing checking and savings) | 1.41% | 1.39% | | Weighted Average Interest Rate (Brokered deposits) | 4.44% | 4.61% | - Approximately **35%** of total deposits were uninsured at June 30, 2025 (including consolidated subsidiaries), or **15%** excluding them[87](index=87&type=chunk) - Brokered deposits included **$300 million** of purchased funds through the IntraFi Financial network, with a daily floating interest rate[87](index=87&type=chunk) [NOTE 11: ADVANCES FROM FEDERAL HOME LOAN BANK](index=32&type=section&id=NOTE%2011:%20ADVANCES%20FROM%20FEDERAL%20HOME%20LOAN%20BANK) The Company had no outstanding term advances from the FHLBank but maintained overnight borrowings, with significant collateral pledged and a substantial line of credit available - No outstanding term advances from the Federal Home Loan Bank (FHLB) of Des Moines at June 30, 2025, or December 31, 2024[88](index=88&type=chunk) - Investment securities (**$292.5 million**) and loans (**$2.17 billion**) were pledged as collateral for FHLB borrowings at June 30, 2025[89](index=89&type=chunk) - The Bank had **$1.22 billion** remaining available on its line of credit with the FHLB of Des Moines at June 30, 2025[89](index=89&type=chunk) [NOTE 12: SECURITIES SOLD UNDER REVERSE REPURCHASE AGREEMENTS AND SHORT-TERM BORROWINGS](index=32&type=section&id=NOTE%2012:%20SECURITIES%20SOLD%20UNDER%20REVERSE%20REPURCHASE%20AGREEMENTS%20AND%20SHORT-TERM%20BORROWINGS) Short-term borrowings and securities sold under reverse repurchase agreements decreased significantly, primarily due to the repayment of Federal Reserve Bank BTFP borrowings Securities Sold Under Reverse Repurchase Agreements and Short-Term Borrowings (In Millions) | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Notes payable – Community Development Equity Funds | $0.9 | $1.2 | | Securities sold under reverse repurchase agreements | $54.8 | $64.4 | | Short-term borrowings from Federal Reserve Bank | $0.0 | $180.0 | | Overnight borrowings from the Federal Home Loan Bank | $369.0 | $333.0 | | Total | $424.7 | $578.7 | - The **$180 million** borrowing under the Federal Reserve Bank's Bank Term Funding Program (BTFP) was repaid in full in January 2025[91](index=91&type=chunk) - Securities sold under reverse repurchase agreements are treated as financings, with underlying securities held by the Bank and agreements typically maturing in one month or less[92](index=92&type=chunk) [NOTE 13: SUBORDINATED NOTES](index=34&type=section&id=NOTE%2013:%20SUBORDINATED%20NOTES) The Company redeemed all **$75.0 million** of its subordinated notes on June 15, 2025, resulting in no outstanding subordinated notes at period end - On June 15, 2025, the Company redeemed all **$75.0 million** aggregate principal amount of its subordinated notes at **100%** of their principal amount plus accrued interest[96](index=96&type=chunk) Subordinated Notes (In Millions) | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Subordinated notes | $0.0 | $75.0 | | Less: unamortized debt issuance costs | $0.0 | $0.1 | | Net subordinated notes | $0.0 | $74.9 | - Amortization of debt issuance costs totaled **$50 thousand** for the three months and **$124 thousand** for the six months ended June 30, 2025[97](index=97&type=chunk) [NOTE 14: INCOME TAXES](index=34&type=section&id=NOTE%2014:%20INCOME%20TAXES) The Company's effective tax rate remained stable for the three months and increased slightly for the six months ended June 30, 2025, remaining below the statutory federal rate due to tax credits and tax-exempt investments Effective Tax Rates and Provision for Income Taxes (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Provision for Income Taxes | $4.5 | $3.9 | $8.8 | $7.0 | | Effective Tax Rate | 18.5% | 18.5% | 19.2% | 18.8% | | Tax at statutory rate (21.0%) | $5.1 | $4.4 | $9.6 | $7.9 | | U.S. federal tax credits (primarily low-income housing) | $(0.9) | $(0.8) | $(1.7) | $(1.7) | - The effective tax rates are below the statutory federal tax rate of **21%** primarily due to U.S. federal tax credits (e.g., low-income housing) and nontaxable interest and dividends[100](index=100&type=chunk)[303](index=303&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, and the Company is currently assessing its expected impact on consolidated financial statements[99](index=99&type=chunk) [NOTE 15: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS](index=35&type=section&id=NOTE%2015:%20DISCLOSURES%20ABOUT%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) The Company categorizes fair value measurements into a three-level hierarchy, with recurring measurements primarily Level 2 and nonrecurring measurements including Level 3 collateral-dependent loans - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (other observable inputs), and Level 3 (significant unobservable inputs)[104](index=104&type=chunk) Fair Value Measurements of Assets and Liabilities (Recurring, In Millions) | Item | June 30, 2025 (Fair Value, Millions) | Level | | :--- | :--- | :--- | | Agency mortgage-backed securities | $302.2 | 2 | | Agency collateralized mortgage obligations | $116.0 | 2 | | States and political subdivisions securities | $51.8 | 2 | | Small Business Administration securities | $57.6 | 2 | | Interest rate derivative asset | $6.2 | 2 | | Interest rate derivative liability | $(14.1) | 2 | - Collateral-dependent loans are classified as Nonrecurring Level 3, while mortgage loans held for sale are Nonrecurring Level 2[110](index=110&type=chunk)[111](index=111&type=chunk) Estimated Fair Values of Financial Instruments Not Recorded at Fair Value (In Millions) | Item | June 30, 2025 (Carrying Amount, Millions) | June 30, 2025 (Fair Value, Millions) | Hierarchy Level | | :--- | :--- | :--- | :--- | | Held-to-maturity securities | $183.1 | $163.8 | 2 | | Loans, net of allowance for credit losses | $4,534.3 | $4,403.9 | 3 | | Deposits | $4,684.1 | $4,681.2 | 3 | | Subordinated notes | $0.0 | $0.0 | 2 | [NOTE 16: DERIVATIVES AND HEDGING ACTIVITIES](index=41&type=section&id=NOTE%2016:%20DERIVATIVES%20AND%20HEDGING%20ACTIVITIES) The Company uses interest rate derivatives for risk management, including nondesignated hedges and cash flow hedges, which impacted AOCI and net interest income - The Company uses derivative financial instruments (primarily interest rate swaps) for interest rate risk management and as a service to qualifying loan customers[122](index=122&type=chunk) - Nondesignated hedges (customer swaps and offsetting swaps) resulted in net losses of **$28 thousand** (three months) and **$52 thousand** (six months) recognized in non-interest income for June 30, 2025[124](index=124&type=chunk) Effect of Cash Flow Hedge Accounting on Statements of Comprehensive Income (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Terminated interest rate swap, net of income taxes | $(1.6) | $(1.6) | $(3.1) | $(3.1) | | Active interest rate swaps, net of income taxes | $2.7 | $(0.0) | $6.9 | $(3.0) | | Total | $1.1 | $(1.6) | $3.7 | $(6.1) | - Active cash flow hedges (two **$200 million** swaps) resulted in a reduction of loan interest income of **$1.8 million** (three months) and **$3.5 million** (six months) for June 30, 2025, as floating rates exceeded fixed rates[130](index=130&type=chunk) [NOTE 17: OPERATING SEGMENTS](index=46&type=section&id=NOTE%2017:%20OPERATING%20SEGMENTS) The Company's sole operating segment is its banking operation, providing a full range of financial services and loan products, with performance assessed by the chief executive officer - The Company's banking operation is its only operating segment, engaged in originating various loans and funding them through deposits and borrowings[139](index=139&type=chunk) - The chief executive officer, as the chief operating decision maker, reviews actual net income versus budgeted net income and comparable periods to assess performance and make resource allocation decisions[140](index=140&type=chunk) Banking Segment Financial Results (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $51.0 | $46.8 | $100.3 | $91.6 | | Non-interest Income | $8.2 | $9.8 | $14.8 | $16.6 | | Non-interest Expense | $35.0 | $36.4 | $69.8 | $70.8 | | Net Income | $19.8 | $17.0 | $36.9 | $30.4 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, including forward-looking statements, critical accounting policies, economic conditions, and performance comparisons [Forward-looking Statements](index=49&type=section&id=Forward-looking%20Statements) This section identifies forward-looking statements, cautioning that actual results may differ materially due to various factors, and the Company declines any obligation to update them - Forward-looking statements are identified by words like 'may,' 'might,' 'could,' 'should,' 'will likely result,' 'are expected to,' 'will continue,' 'is anticipated,' 'believe,' 'estimate,' 'project,' 'intends' or similar expressions[144](index=144&type=chunk) - Actual results could differ materially from forward-looking statements due to factors such as changes in economic conditions, interest rate fluctuations, bank failures, lending risks, liquidity access, real estate values, technological changes, cyber-attacks, legislative/regulatory changes, and competition[145](index=145&type=chunk) - The Company does not undertake any obligation to publicly release revisions to forward-looking statements[146](index=146&type=chunk) [Critical Accounting Policies, Judgments and Estimates](index=49&type=section&id=Critical%20Accounting%20Policies,%20Judgments%20and%20Estimates) Management highlights the allowance for credit losses and valuation of foreclosed assets as critical accounting policies, with goodwill and intangible assets tested annually for impairment - The allowance for credit losses and valuation of foreclosed assets are considered critical accounting policies due to the high degree of judgment and complexity involved[149](index=149&type=chunk)[152](index=152&type=chunk) - The CECL methodology for credit losses uses average historical loss rates, adjusted for current conditions and reasonable and supportable forecasts of macroeconomic variables (e.g., unemployment, GDP, real estate price index)[150](index=150&type=chunk) - Goodwill and intangible assets are tested for impairment at least annually; as of June 30, 2025, management believes no impairment existed[153](index=153&type=chunk)[157](index=157&type=chunk) Goodwill and Intangible Assets (In Millions) | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Goodwill – Branch acquisitions | $5.4 | $5.4 | | Arena Naming Rights | $4.5 | $4.7 | | Total | $9.9 | $10.1 | [Current Economic Conditions](index=52&type=section&id=Current%20Economic%20Conditions) The U.S. economy shows moderate real GDP growth, easing inflation, stable employment, and mixed housing market signals, while commercial real estate faces varying conditions - Real GDP in 2025 is projected to rise **1.5%** annually, an increase from prior forecasts, with 2026 and 2027 projections slightly decreasing[164](index=164&type=chunk) - The national unemployment rate slightly decreased to **4.1%** in June 2025, with **147 thousand jobs** added, primarily in healthcare, social assistance, and government[165](index=165&type=chunk) - Existing-home sales decreased **2.7%** in June 2025, with total housing inventory up **15.9%** year-over-year, and the median existing-home sales price rose **2%** to **$435.3 thousand**[167](index=167&type=chunk)[168](index=168&type=chunk) - U.S. multi-family market experienced strong demand recovery in H1 2025, with overall vacancy at **8.2%** in June 2025[174](index=174&type=chunk)[177](index=177&type=chunk) - Office market vacancy rose slightly to **14.1%**, while retail market vacancy remained steady at **4.3%**[184](index=184&type=chunk)[185](index=185&type=chunk) - Industrial market vacancy reached a decade-long high of **7.4%**[188](index=188&type=chunk) [General (Overview of Financial Performance)](index=59&type=section&id=General) The Company's profitability is driven by net interest income, credit loss provisions, and non-interest income/expense, with total assets decreasing by **2.1%** to **$5.85 billion** due to reduced net outstanding loans - Profitability depends primarily on net interest income, provisions for credit losses, and the level of non-interest income and non-interest expense[191](index=191&type=chunk) - Total assets decreased **$127.0 million** (**2.1%**) from **$5.98 billion** at December 31, 2024, to **$5.85 billion** at June 30, 2025[192](index=192&type=chunk) - Net outstanding loans decreased **$156.1 million** to **$4.53 billion** at June 30, 2025, primarily in construction, commercial real estate, commercial business, and one- to four-family residential loans, partially offset by other residential (multi-family) loans[192](index=192&type=chunk) - The Company's strategy focuses on maintaining credit risk and interest rate risk at appropriate levels through underwriting standards, monitoring, and geographic/product diversity[193](index=193&type=chunk) [Comparison of Financial Condition at June 30, 2025 and December 31, 2024](index=67&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030,%202025%20and%20December%2031,%202024) Total assets decreased by **$127.0 million**, primarily due to reduced net loans and short-term borrowings, while stockholders' equity increased due to net income and improved fair values of securities and hedges - Total assets decreased by **$127.0 million** to **$5.85 billion** at June 30, 2025, primarily due to a decrease in loans[226](index=226&type=chunk) Key Balance Sheet Changes (June 30, 2025 vs. December 31, 2024, In Millions) | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $245.9 | $195.8 | $50.1 | 25.6% | | Available-for-sale securities | $527.5 | $533.3 | $(5.8) | (1.1%) | | Held-to-maturity securities | $183.1 | $187.4 | $(4.3) | (2.3%) | | Net loans | $4,534.3 | $4,690.4 | $(156.1) | (3.3%) | | Total deposits | $4,684.1 | $4,605.5 | $78.6 | 1.7% | | Short-term borrowings and other interest-bearing liabilities | $369.9 | $514.2 | $(144.3) | (28.1%) | | Total stockholders' equity | $622.4 | $599.6 | $22.8 | 3.8% | - The decrease in short-term borrowings was primarily due to the repayment of BTFP borrowings in January 2025 and subordinated notes in June 2025, partially offset by an increase in brokered deposits[231](index=231&type=chunk)[235](index=235&type=chunk) - Stockholders' equity increased due to net income, stock option exercises, and a decrease in accumulated other comprehensive loss (driven by increased fair value of AFS securities and cash flow hedges), partially offset by common stock repurchases and dividends[237](index=237&type=chunk) [Comparison of Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024](index=69&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) Net income increased for both the three and six months ended June 30, 2025, driven by higher net interest income and lower non-interest expenses, despite a decrease in non-interest income [Total Interest Income](index=71&type=section&id=Total%20Interest%20Income) Total interest income remained stable for the three months ended June 30, 2025, but increased for the six-month period, driven by higher interest income from investment securities and other interest-earning assets Total Interest Income (In Millions) | Period | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $81.0 | $80.9 | $0.0 | 0.1% | | Six Months Ended June 30 | $161.2 | $158.3 | $2.9 | 1.8% | - The increase in interest income on investment securities and other interest-earning assets was due to higher average balances and average rates[240](index=240&type=chunk)[241](index=241&type=chunk) - Interest income from loans decreased for the three-month period due to lower average rates, partially offset by higher average balances[240](index=240&type=chunk) [Interest Income – Loans](index=71&type=section&id=Interest%20Income%20–%20Loans) Loan interest income decreased for the three months ended June 30, 2025, due to lower average yields, but increased for the six-month period due to higher average loan balances, with active interest rate swaps reducing income Interest Income on Loans (In Millions) | Period | 2025 (Millions) | 2024 (Millions) | Change (Millions) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $73.8 | $74.3 | $(0.5) | | Six Months Ended June 30 | $146.9 | $145.4 | $1.5 | - Average yield on loans decreased from **6.37%** (Q2 2024) to **6.26%** (Q2 2025), primarily due to a reduction in the federal funds rate in late 2024[242](index=242&type=chunk) - A terminated interest rate swap (March 2020) contributed **$2.0 million** (three months) and **$4.0 million** (six months) to interest income in 2025, expected to continue until October 2025[244](index=244&type=chunk) - Active interest rate swaps (July 2022) reduced loan interest income by **$1.8 million** (three months) and **$3.5 million** (six months) in 2025, as floating rates exceeded fixed rates[247](index=247&type=chunk) [Interest Income – Investments and Other Interest-earning Assets](index=73&type=section&id=Interest%20Income%20–%20Investments%20and%20Other%20Interest-earning%20Assets) Interest income from investments increased due to higher average balances and rates, while interest income from other interest-earning assets decreased due to lower average interest rates Interest Income on Investments and Other Interest-earning Assets (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Investment securities | $6.1 | $5.3 | $12.2 | $10.4 | | Interest-earning deposits in other banks | $1.0 | $1.3 | $2.1 | $2.6 | | Total | $7.1 | $6.6 | $14.3 | $12.9 | - Interest income on investments increased by **$752 thousand** (three months) and **$1.8 million** (six months) in 2025, driven by higher average balances and rates from new purchases[249](index=249&type=chunk)[250](index=250&type=chunk) - Interest income on other interest-earning assets decreased by **$239 thousand** (three months) and **$445 thousand** (six months) in 2025, primarily due to a decline in average interest rates following federal funds rate cuts[251](index=251&type=chunk)[252](index=252&type=chunk) [Total Interest Expense](index=74&type=section&id=Total%20Interest%20Expense) Total interest expense decreased for both the three and six months ended June 30, 2025, primarily due to lower interest expense on deposits and subordinated notes Total Interest Expense (In Millions) | Period | 2025 (Millions) | 2024 (Millions) | Change (Millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $30.0 | $34.1 | $(4.1) | (12.0%) | | Six Months Ended June 30 | $60.9 | $66.7 | $(5.8) | (8.6%) | - Interest expense on deposits decreased by **$3.4 million** (three months) and **$6.5 million** (six months) in 2025[253](index=253&type=chunk)[254](index=254&type=chunk) - Interest expense on subordinated notes decreased by **$196 thousand** for both periods due to redemption[253](index=253&type=chunk)[254](index=254&type=chunk) [Interest Expense – Deposits](index=74&type=section&id=Interest%20Expense%20–%20Deposits) Interest expense on demand, savings, and time deposits decreased due to lower average rates and balances, while brokered deposits interest expense increased due to higher average balances Interest Expense on Deposits (In Millions) | Category | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Demand and savings deposits | $7.8 | $9.8 | $15.6 | $19.3 | | Time deposits | $6.5 | $9.1 | $13.2 | $18.2 | | Brokered deposits | $10.1 | $8.9 | $20.1 | $17.9 | | Total Deposits | $24.4 | $27.8 | $49.0 | $55.4 | - Interest expense on demand and savings deposits decreased by **$2.0 million** (three months) and **$3.7 million** (six months) in 2025 due to lower average rates[255](index=255&type=chunk)[256](index=256&type=chunk) - Interest expense on time deposits decreased by **$2.6 million** (three months) and **$5.0 million** (six months) in 2025, driven by lower average balances and rates as older CDs repriced[257](index=257&type=chunk)[258](index=258&type=chunk) - Interest expense on brokered deposits increased by **$1.1 million** (three months) and **$2.2 million** (six months) in 2025, primarily due to higher average balances, despite lower average rates on newly issued brokered deposits[259](index=259&type=chunk)[261](index=261&type=chunk) [Interest Expense – FHLBank Advances; Short-term Borrowings, Repurchase Agreements and Other Interest-bearing Liabilities; Subordinated Debentures Issued to Capital Trusts and Subordinated Notes](index=76&type=section&id=Interest%20Expense%20–%20FHLBank%20Advances;%20Short-term%20Borrowings,%20Repurchase%20Agreements%20and%20Other%20Interest-bearing%20Liabilities;%20Subordinated%20Debentures%20Issued%20to%20Capital%20Trusts%20and%20Subordinated%20Notes) FHLBank term advances were not utilized, while interest expense on short-term borrowings and reverse repurchase agreements showed mixed changes, and subordinated debentures and notes interest expense decreased - FHLBank term advances were not utilized during the three or six months ended June 30, 2025 and 2024[262](index=262&type=chunk) - Interest expense on short-term borrowings (including overnight FHLBank and BTFP borrowings) decreased by **$399 thousand** (three months) but increased by **$1.0 million** (six months) in 2025, reflecting lower average rates but higher average balances for the six-month period[265](index=265&type=chunk)[266](index=266&type=chunk) - Interest expense on subordinated debentures decreased by **$65 thousand** (three months) and **$137 thousand** (six months) in 2025 due to lower average interest rates[267](index=267&type=chunk)[268](index=268&type=chunk) - Interest expense on subordinated notes decreased by **$196 thousand** for both periods due to the redemption of the **$75.0 million** notes on June 15, 2025[269](index=269&type=chunk) [Net Interest Income](index=77&type=section&id=Net%20Interest%20Income) Net interest income increased for both the three and six months ended June 30, 2025, driven by an expanded net interest margin Net Interest Income and Margin | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest income (Millions) | $51.0 | $46.8 | $100.3 | $91.6 | | Net interest margin | 3.68% | 3.43% | 3.63% | 3.38% | | Interest rate spread | 3.09% | 2.77% | 3.05% | 2.71% | - The net interest margin increased by **25 basis points** for both the three-month and six-month periods[270](index=270&type=chunk)[271](index=271&type=chunk) - The overall average interest rate spread increased by **32 basis points** (three months) and **34 basis points** (six months), primarily due to a decrease in the weighted average rate paid on interest-bearing liabilities[272](index=272&type=chunk)[273](index=273&type=chunk) [Provision for and Allowance for Credit Losses](index=79&type=section&id=Provision%20for%20and%20Allowance%20for%20Credit%20Losses) No provision expense for outstanding loans was recorded for the three or six months ended June 30, 2025, with the allowance for credit losses remaining stable and deemed adequate - No provision expense was recorded on the portfolio of outstanding loans for the three or six months ended June 30, 2025[278](index=278&type=chunk) - Net recoveries were **$111 thousand** (three months) and **$55 thousand** (six months) for June 30, 2025, lower than the prior year[278](index=278&type=chunk) - The allowance for credit losses as a percentage of total loans was **1.41%** at June 30, 2025, compared to **1.36%** at December 31, 2024, and is considered adequate by management[279](index=279&type=chunk) [Non-performing Assets](index=79&type=section&id=Non-performing%20Assets) Non-performing assets decreased to **$8.1 million** at June 30, 2025, primarily due to a decrease in non-performing loans, while potential problem loans slightly increased Non-performing Assets (In Millions) | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Non-performing assets | $8.1 | $9.6 | | Non-performing loans | $2.0 | $3.5 | | Foreclosed assets | $6.0 | $6.0 | - Non-performing assets as a percentage of total assets decreased to **0.14%** at June 30, 2025, from **0.16%** at December 31, 2024[280](index=280&type=chunk) - Potential problem loans increased slightly to **$7.2 million** at June 30, 2025, from **$7.1 million** at December 31, 2024[283](index=283&type=chunk) - Loans classified as 'Watch' increased to **$26.4 million** at June 30, 2025, primarily due to one **$11.0 million** loan secured by a nursing care facility[289](index=289&type=chunk) [Non-interest Income](index=82&type=section&id=Non-interest%20Income) Non-interest income decreased for both the three and six months ended June 30, 2025, primarily due to a reduction in 'other income' and lower net gains on loan sales Non-interest Income (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Total Non-Interest Income | $8.2 | $9.8 | $14.8 | $16.6 | | Other income | $1.9 | $3.5 | $2.9 | $4.6 | | Net gains on loan sales | $0.9 | $1.1 | $1.5 | $1.8 | | Late charges and fees on loans | $0.3 | $0.1 | $0.6 | $0.3 | - Other income decreased by **$1.6 million** (three months) and **$1.7 million** (six months) in 2025, mainly because the prior year included a **$2.7 million** gain from a terminated software vendor agreement[290](index=290&type=chunk)[292](index=292&type=chunk) - Net gains on loan sales decreased by **$234 thousand** (three months) and **$310 thousand** (six months) due to fewer fixed-rate single-family mortgage loans originated and sold[291](index=291&type=chunk)[293](index=293&type=chunk) - Late charges and fees on loans increased by **$204 thousand** (three months) and **$280 thousand** (six months), primarily due to prepayment fees on a large commercial real estate loan[292](index=292&type=chunk)[293](index=293&type=chunk) [Non-interest Expense](index=84&type=section&id=Non-interest%20Expense) Non-interest expense decreased for both the three and six months ended June 30, 2025, driven by reductions in legal, audit, and other professional fees, and a shift to income in other real estate owned Non-interest Expense (In Millions) | Item | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Six Months Ended June 30, 2025 (Millions) | Six Months Ended June 30, 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Total Non-Interest Expense | $35.0 | $36.4 | $69.8 | $70.8 | | Legal, audit and other professional fees | $0.9 | $1.9 | $2.0 | $3.6 | | Expense (income) on other real estate owned | $(0.2) | $0.3 | $(0.2) | $0.3 | | Other operating expenses | $2.1 | $2.6 | $3.9 | $4.3 | | Net occupancy and equipment expense | $8.4 | $7.8 | $17.0 | $15.7 | | Salaries and employee benefits | $20.0 | $19.9 | $40.1 | $39.5 | - Legal, audit and other professional fees decreased by **$935 thousand** (three months) and **$1.6 million** (six months) in 2025, due to lower costs related to core systems conversion[294](index=294&type=chunk)[298](index=298&type=chunk) - Expense on other real estate owned shifted to income of **$168 thousand** (three months) and **$238 thousand** (six months) in 2025, primarily due to rental income from a newly acquired office building[295](index=295&type=chunk)[299](index=299&type=chunk) - Net occupancy and equipment expenses increased by **$594 thousand** (three months) and **$1.3 million** (six months) in 2025, mainly due to computer license and support expenses for core systems upgrades[297](index=297&type=chunk)[301](index=301&type=chunk) [Provision for Income Taxes](index=85&type=section&id=Provision%20for%20Income%20Taxes) The Company's effective tax rate remained stable for the three months and increased slightly for the six months ended June 30, 2025, staying below the statutory federal rate due to tax credits and tax-exempt investments Effective Tax Rates | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | 18.5% | 18.5% | | Six Months Ended June 30 | 19.2% | 18.8% | - Effective tax rates are below the **21%** statutory federal tax rate due to utilization of investment tax credits and tax-exempt investments/loans[303](index=303&type=chunk) - The Company expects its effective tax rate (combined federal and state) to be approximately **18.0% to 20.0%** in future periods[303](index=303&type=chunk) [Average Balances, Interest Rates and Yields](index=86&type=section&id=Average%20Balances,%20Interest%20Rates%20and%20Yields) This section details average balances, interest income/expense, and yields/rates for interest-earning assets and interest-bearing liabilities, showing an increase in net interest income and margin Average Balances, Interest Income/Expense, and Yields/Rates (Three Months Ended June 30, In Millions) | Item | Average Balance (2025, Millions) | Interest (2025, Millions) | Yield/Rate (2025) | Average Balance (2024, Millions) | Interest (2024, Millions) | Yield/Rate (2024) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total loans receivable | $4,732.7 | $73.8 | 6.26% | $4,690.2 | $74.3 | 6.37% | | Total interest-earning assets | $5,557.5 | $81.0 | 5.84% | $5,483.7 | $80.9 | 5.94% | | Total deposits | $3,878.9 | $24.4 | 2.52% | $3,812.6 | $27.8 | 2.93% | | Total interest-bearing liabilities | $4,380.2 | $30.0 | 2.75% | $4,329.3 | $34.1 | 3.17% | | Net interest income | | $51.0 | | | $46.8 | | | Net interest margin | | | 3.68% | | | 3.43% | Average Balances, Interest Income/Expense, and Yields/Rates (Six Months Ended June 30, In Millions) | Item | Average Balance (2025, Millions) | Interest (2025, Millions) | Yield/Rate (2025) | Average Balance (2024, Millions) | Interest (2024, Millions) | Yield/Rate (2024) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total loans receivable | $4,744.3 | $146.9 | 6.24% | $4,678.0 | $145.4 | 6.25% | | Total interest-earning assets | $5,578.2 | $161.2 | 5.83% | $5,459.9 | $158.3 | 5.83% | | Total deposits | $3,882.5 | $49.0 | 2.54% | $3,831.5 | $55.4 | 2.91% | | Total interest-bearing liabilities | $4,420.8 | $60.9 | 2.78% | $4,298.1 | $66.7 | 3.12% | | Net interest income | | $100.3 | | | $91.6 | | | Net interest margin | | | 3.63% | | | 3.38% | - Net loan fees included in interest income were **$1.1 million** for both three-month periods and **$2.1 million** (2025) vs. **$2.3 million** (2024) for the six-month periods[305](index=305&type=chunk) [Rate/Volume Analysis](index=88&type=section&id=Rate/Volume%20Analysis) This analysis attributes changes in net interest income primarily to changes in interest rates for both the three and six months ended June 30, 2025 Rate/Volume Analysis (Three Months Ended June 30, 2025 vs. 2024, In Millions) | Item | Change Due to Rate (Millions) | Change Due to Volume (Millions) | Total Increase (Decrease) (Millions) | | :--- | :--- | :--- | :--- | | Loans receivable | $(0.9) | $0.5 | $(0.5) | | Investment securities | $0.5 | $0.3 | $0.8 | | Total interest-earning assets | $(0.7) | $0.7 | $0.0 | | Total deposits | $(4.2) | $0.8 | $(3.4) | | Total interest-bearing liabilities | $(4.7) | $0.6 | $(4.1) | | Net interest income | $4.1 | $0.1 | $4.1 | Rate/Volume Analysis (Six Months Ended June 30, 2025 vs. 2024, In Millions) | Item | Change Due to Rate (Millions) | Change Due to Volume (Millions) | Total Increase (Decrease) (Millions) | | :--- | :--- | :--- | :--- | | Loans receivable | $(0.1) | $1.6 | $1.5 | | Investment securities | $1.0 | $0.8 | $1.8 | | Total interest-earning assets | $0.4 | $2.5 | $2.9 | | Total deposits | $(7.6) | $1.2 | $(6.5) | | Total interest-bearing liabilities | $(8.4) | $2.6 | $(5.8) | | Net interest income | $8.8 | $(0.2) | $8.7 | [Liquidity](index=89&type=section&id=Liquidity) The Company maintains strong liquidity through diverse funding sources, with significant cash provided by operating and investing activities, while financing activities used cash for debt repayments and stock repurchases - Primary sources of funds include customer deposits, brokered deposits, FHLBank advances, other borrowings, loan repayments, and unpledged securities[313](index=313&type=chunk) Available Secured Lines and On-Balance Sheet Liquidity (In Millions) | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Federal Home Loan Bank line | $1,216.1 | $1,058.8 | | Federal Reserve Bank line | $338.9 | $346.4 | | Cash and cash equivalents | $245.9 | $195.8 | | Unpledged securities – Available-for-sale | $325.3 | $329.9 | | Unpledged securities – Held-to-maturity | $24.0 | $25.0 | - Operating activities provided **$54.3 million** (2025) and **$16.6 million** (2024) in cash for the six months ended June 30[316](index=316&type=chunk) - Financing activities used **$175.1 million** in cash (2025) primarily due to repayments of FRB borrowings and subordinated notes, and stock repurchases[318](index=318&type=chunk) [Capital Resources](index=91&type=section&id=Capital%20Resources) The Company and Bank maintain strong capital positions, exceeding regulatory minimums, with total stockholders' equity increasing to **$622.4 million** due to net income and improved fair values of securities and hedges Capital Ratios (June 30, 2025) | Ratio | Bank | Company | | :--- | :--- | :--- | | Common equity Tier 1 capital ratio | 13.1% | 13.0% | | Tier 1 capital ratio | 13.1% | 13.5% | | Total capital ratio | 14.4% | 14.7% | | Tier 1 leverage ratio | 11.2% | 11.5% | - Both the Company and the Bank were 'well capitalized' at June 30, 2025, exceeding all minimum regulatory capital ratios[326](index=326&type=chunk) - Total stockholders' equity increased **$22.8 million** to **$622.4 million** at June 30, 2025, due to net income, stock option exercises, and a **$13.0 million** decrease in accumulated other comprehensive loss[324](index=324&type=chunk) - The Company redeemed **$75.0 million** of subordinated notes on June 15, 2025, using FHLB overnight borrowings for replacement funds[329](index=329&type=chunk) [Non-GAAP Financial Measures](index=95&type=section&id=Non-GAAP%20Financial%20Measures) This section presents the non-GAAP tangible common equity to tangible assets ratio, used by management to assess capital strength and facilitate peer comparison by excluding intangible assets - The tangible common equity to tangible assets ratio is a non-GAAP financial measure used to assess capital strength and facilitate peer comparison by excluding intangible assets[338](index=338&type=chunk) Non-GAAP Reconciliation: Ratio of Tangible Common Equity to Tangible Assets (In Millions) | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Common equity at period end | $622.4 | $599.6 | | Less: Intangible assets at period end | $9.9 | $10.1 | | Tangible common equity at period end (a) | $612.5 | $589.5 | | Total assets at period end | $5,854.7 | $5,981.6 | | Less: Intangible assets at period end | $9.9 | $10.1 | | Tangible assets at period end (b) | $5,844.8 | $5,971.5 | | Tangible common equity to tangible assets (a) / (b) | 10.48% | 9.87% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=97&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's management of interest rate risk, its most significant market risk, using models and interest rate swaps to forecast impacts on net interest income and market value of portfolio equity - Interest rate risk is the Company's most significant market risk, managed by monitoring asset and liability sensitivity to market interest rate changes[342](index=342&type=chunk)[343](index=343&type=chunk) - Models indicate that rising interest rates are expected to have a modestly positive impact on net interest income, while declining rates are expected to have a mostly neutral impact in the first twelve months following minor changes[344](index=344&type=chunk) - The Federal Funds rate was **4.50%** at June 30, 2025, after decreases in late 2024, with expectations of further methodical decreases in 2025[345](index=345&type=chunk) - The loan portfolio includes **$1.60 billion** tied to SOFR indexes, **$731.1 million** to prime rate, and **$10.3 million** to AMERIBOR, nearly all of which are at or above their floor rates and expected to move with future market rate changes[346](index=346&type=chunk) - The Company uses interest rate swaps for interest rate risk management, including customer-facing swaps hedged by offsetting third-party swaps, and cash flow hedges for floating rate loans[353](index=353&type=chunk)[354](index=354&type=chunk)[356](index=356&type=chunk)[357](index=357&type=chunk) [Item 4. Controls and Procedures](index=102&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2025, the Company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were effective as of June 30, 2025, ensuring accurate and timely reporting of information required under the Exchange Act[361](index=361&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[362](index=362&type=chunk) - Internal control over financial reporting provides only reasonable, not absolute, assurance against errors and fraud due to inherent limitations such as faulty judgments, breakdowns, circumvention by individuals, or management override[363](index=363&type=chunk) [PART II. OTHER INFORMATION](index=102&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=102&type=section&id=Item%201.%20Legal%20Proceedings) The Company and its subsidiaries are subject to various legal actions in the normal course of business, with management believing current litigation will not have a material adverse effect - The Company is subject to pending and threatened legal actions in the normal course of business[364](index=364&type=chunk) - Management believes the outcome of current litigation will not have a material adverse effect on the Company's business, financial condition, or results of operations[364](index=364&type=chunk) - One litigation matter alleging breach of fiduciary duty is set for trial in Q3 2025, where the Bank believes it will prevail or be indemnified[365](index=365&type=chunk) [Item 1A. Risk Factors](index=102&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors set forth in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2024[366](index=366&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=103&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company continued its common stock repurchase program, repurchasing **175,998 shares** during the three months ended June 30, 2025, and approved a new program for up to **one million additional shares** - The Company repurchased **175,998 shares** of common stock at an average price of **$55.11 per share** during the three months ended June 30, 2025[371](index=371&type=chunk) - Approximately **94 thousand shares** remained available under the November 2022 stock repurchase authorization at June 30, 2025[334](index=334&type=chunk) - A new stock repurchase program authorizing the purchase of up to **one million additional shares** was approved in April 2025, to become effective upon completion of the existing program[335](index=335&type=chunk)[368](index=368&type=chunk) [Item 3. Defaults Upon Senior Securities](index=103&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reported period - None[372](index=372&type=chunk) [Item 4. Mine Safety Disclosures](index=103&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[373](index=373&type=chunk) [Item 5. Other Information](index=103&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[373](index=373&type=chunk) [Item 6. Exhibits](index=104&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including plans of acquisition, articles of incorporation, bylaws, material contracts, certifications, and XBRL financial statements - Exhibits include plans of acquisition, articles of incorporation, bylaws, instruments defining security holders' rights, material contracts, certifications (CEO, Treasurer, Sarbanes-Oxley Act), and XBRL financial statements[374](index=374&type=chunk)[375](index=375&type=chunk)[376](index=376&type=chunk)[378](index=378&type=chunk) [SIGNATURES](index=109&type=section&id=SIGNATURES) - The report was signed on August 7, 2025, by Joseph W. Turner, President and Chief Executive Officer, and Rex A. Copeland, Treasurer[382](index=382&type=chunk)

Financial Data and Key Metrics Changes - The company reported net income of $19,800,000 for Q2 2025, an increase from $17,000,000 in the same quarter last year, translating to earnings per share of $1.72 compared to $1.45 a year ago [6][13] - Net interest income rose to $51,000,000, an improvement of approximately 8.9% from $46,800,000 in the previous year [8][14] - The annualized net interest margin improved to 3.68%, up 25 basis points from the previous year and 11 basis points higher than Q1 2025 [8][14] Business Line Data and Key Metrics Changes - Gross loans totaled $4,600,000,000, a decline of $157,000,000 or 3.3% from the end of the previous year [8][20] - The largest loan categories were multifamily and commercial real estate lending, with balances of 1.58 billion and 1.49 billion respectively [9] - Non-interest income for the quarter was $8,200,000, a decrease of $1,600,000 or 16.5% compared to the same quarter last year [16][17] Market Data and Key Metrics Changes - Total deposits decreased by $73,900,000 or 1.6% from the end of Q1 2025, totaling $4,680,000,000 [9][21] - Non-performing assets were $8,100,000, representing 0.14% of total assets, a decrease from the previous quarter [10][22] - The allowance for credit losses as a percentage of total loans stood at 1.41%, slightly up from 1.36% at the end of Q1 2025 [22] Company Strategy and Development Direction - The company remains focused on prudent risk management and disciplined expense management to support long-term shareholder value [7][12] - There is an emphasis on balancing loan growth with appropriate pricing and loan structure, reflecting a conservative credit posture [9][20] - The company is committed to maintaining strong capital levels and delivering consistent value for shareholders amidst ongoing market uncertainty [12][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for long-term growth but noted a competitive environment with fewer opportunities in the loan market [29] - The company does not expect significant changes in origination activities in the near term, similar to the first half of 2025 [30] - Management indicated that while there may be slight increases in expenses due to technology investments, overall expense control remains a priority [32][34] Other Important Information - The company redeemed all outstanding subordinated notes totaling $75,000,000, saving future interest costs [24] - A new stock repurchase authorization for an additional 1,000,000 shares was approved, with nearly 176,000 shares repurchased in Q2 2025 [25] - Cash and cash equivalents totaled $245,900,000, with access to additional funding lines totaling $1,550,000,000 [21] Q&A Session Summary Question: Loan growth outlook for the second half of the year - Management is optimistic long-term but notes a competitive environment with fewer opportunities, expecting origination activities to remain similar to the first half of 2025 [29][30] Question: Visibility on expected loan payoffs - Management indicated that loan payoffs are unpredictable and difficult to forecast, with some expected payoffs potentially being pushed back [31] Question: Expense control outlook - Management expects expenses to remain consistent, with some potential increases related to technology and compensation adjustments, but nothing significant anticipated [32][34]

Financial Data and Key Metrics Changes - The company reported net income of $19,800,000 for Q2 2025, an increase from $17,000,000 in the same quarter last year, translating to $1.72 per share compared to $1.45 per share previously [5][12] - Net interest income rose to $51,000,000, an 8.9% increase from $46,800,000 a year ago, with an annualized net interest margin improving to 3.68%, up 25 basis points from the previous year [7][12] - Non-interest income decreased to $8,200,000, down 16.5% from the prior year, primarily due to unusual items affecting both periods [14][15] Business Line Data and Key Metrics Changes - Gross loans totaled $4,600,000,000, a decline of 3.3% from the previous year, with significant payoffs impacting the loan portfolio [7][8] - The largest loan categories remained multifamily and commercial real estate lending, with outstanding construction loans at $367,000,000 [8] - Non-performing assets were $8,100,000, representing 0.14% of total assets, with no provision for credit losses recorded [9][20] Market Data and Key Metrics Changes - Total deposits decreased by $73,900,000 or 1.6% from the previous quarter, but increased by $78,600,000 or 1.7% compared to the end of 2024 [8][19] - The company experienced a reduction in brokered deposits, which contributed to the overall decrease in total deposits [8][19] Company Strategy and Development Direction - The company emphasized maintaining strong credit quality while pursuing relationship-driven loan growth to support long-term stability [11][21] - There is a focus on prudent risk management and disciplined expense management to enhance financial resilience [6][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for long-term growth but acknowledged a competitive lending environment with limited opportunities [26] - The company plans to continue managing expenses carefully, with some potential increases in technology-related costs anticipated [31][32] Other Important Information - The company redeemed $75,000,000 in subordinated notes to save on future interest costs [21] - A new stock repurchase authorization for an additional 1,000,000 shares was approved, with nearly 176,000 shares repurchased in Q2 2025 [22] Q&A Session Summary Question: Loan growth outlook for the second half of the year - Management is optimistic long-term but noted a competitive environment with limited origination opportunities in the near term [26][27] Question: Expected loan payoffs - Payoffs are unpredictable, and while there was a significant payoff in Q2, future payoffs are difficult to forecast [28][29] Question: Expense control for the second half of the year - Management expects expenses to remain consistent, with some minor increases due to technology investments and potential adjustments in compensation costs [30][31] Question: Rental income expectations - Rental income increased due to a larger OREO balance, and similar levels are expected unless leases expire [39][42] Question: Margin sustainability - Management indicated that while there may be slight improvements in margin, the termination of the interest rate swap in Q4 will present challenges [43][46]

Financial Performance Overview [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) The company reported strong Q2 2025 results with net income rising to $19.8 million, driven by higher net interest income and improved asset quality Q2 2025 vs. Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $19.8 million | $17.0 million | | Diluted EPS | $1.72 | $1.45 | | Annualized ROA | 1.34% | 1.17% | | Annualized ROE | 12.81% | 12.03% | | Annualized Net Interest Margin | 3.68% | 3.43% | - Net interest income for Q2 2025 increased by **$4.2 million (8.9%)** year-over-year to **$51.0 million**, mainly due to reduced interest expense on deposits and borrowings[3](index=3&type=chunk) - Asset quality improved, with non-performing assets decreasing to **$8.1 million (0.14% of total assets)** at June 30, 2025, down from $9.6 million at the end of 2024[3](index=3&type=chunk) - The company recorded an unusually large income of **$1.1 million** from its investments in tax credit partnerships during the quarter[3](index=3&type=chunk) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) The CEO attributed strong performance to core banking fundamentals and outlined future priorities including cost control, credit quality, and funding mix optimization - The increase in net income was driven by strong growth in net interest income, which rose **$4.2 million (8.9%) YoY**, and a decrease in non-interest expense[4](index=4&type=chunk) - The loan portfolio saw a net reduction of **$156 million** in the quarter, partly due to a $30 million loan payoff, reflecting a balanced approach to growth and risk management[4](index=4&type=chunk) - Future priorities remain consistent: **control costs, safeguard credit quality, and optimize the funding mix**[5](index=5&type=chunk) - In Q2 2025, the company repurchased nearly **176,000 shares** and redeemed all **$75 million** of its outstanding subordinated notes to avoid higher interest costs[5](index=5&type=chunk) Detailed Financial Analysis [Net Interest Income](index=4&type=section&id=NET%20INTEREST%20INCOME) Net interest income grew 8.9% YoY to $51.0 million, with the net interest margin expanding to 3.68% due to lower liability costs Net Interest Income and Margin | Metric | Q2 2025 | Q2 2024 | Q1 2025 | | :--- | :--- | :--- | :--- | | Net Interest Income | $50,963k | $46,818k | $49,334k | | Net Interest Margin | 3.68% | 3.43% | 3.57% | - The average rate paid on total interest-bearing liabilities decreased to **2.75%** in Q2 2025 from 3.17% in Q2 2024, as market interest rates declined from late 2024[8](index=8&type=chunk) - The company will no longer benefit from income related to a terminated interest rate swap after Q3 2025, which contributed approximately **$2.0 million** to interest income in Q2 2025[10](index=10&type=chunk) - The company has significant time deposits maturing in the next 12 months, with replacement rates likely to be between **3.35% and 3.85%** based on current market conditions[11](index=11&type=chunk) [Non-Interest Income](index=6&type=section&id=NON-INTEREST%20INCOME) Non-interest income decreased to $8.2 million, primarily due to a non-recurring gain from a terminated agreement in the prior-year quarter - Other income decreased by **$1.6 million YoY**, mainly because Q2 2024 included a **$2.7 million gain** from the termination of a core banking platform conversion agreement[12](index=12&type=chunk) - In Q2 2025, the company recorded **$1.1 million** in income related to exits from its investments in tax credit partnerships[12](index=12&type=chunk) - Net gains on loan sales decreased by **$234,000** due to a lower volume of fixed-rate single-family mortgage loans originated and sold[12](index=12&type=chunk) [Non-Interest Expense](index=7&type=section&id=NON-INTEREST%20EXPENSE) Non-interest expense decreased by $1.4 million YoY to $35.0 million, significantly improving the efficiency ratio to 59.16% - The efficiency ratio improved to **59.16%** for Q2 2025, compared to 64.27% for the same quarter in 2024[13](index=13&type=chunk) - Legal, audit, and other professional fees decreased by **$935,000**, as Q2 2024 included $902,000 in costs for a planned (but not completed) core systems conversion[16](index=16&type=chunk) - Net occupancy and equipment expenses increased by **$594,000**, primarily due to a $502,000 increase in computer license and support expenses for system upgrades[16](index=16&type=chunk) [Income Taxes](index=7&type=section&id=INCOME%20TAXES) The effective tax rate remained stable at 18.5%, below the statutory rate, due to tax-advantaged investments and credits - The effective tax rate for Q2 2025 was **18.5%**, the same as in Q2 2024[14](index=14&type=chunk) - The company expects its future effective tax rate to be approximately **18.0% to 20.0%**[14](index=14&type=chunk) Balance Sheet and Asset Quality [Loans](index=9&type=section&id=LOANS) Total net loans decreased by $156.1 million to $4.53 billion, though the unfunded commitment pipeline remains strong at over $1.1 billion - Total net loans decreased by **$156.1 million (3.3%)** to **$4.53 billion** at June 30, 2025, compared to year-end 2024[28](index=28&type=chunk) - The decrease was mainly driven by reductions in construction loans (-$79.1M), commercial real estate loans (-$56.1M), and one- to four-family residential loans (-$23.0M)[28](index=28&type=chunk) - The pipeline of unfunded loans and formal commitments was **$1.11 billion** at June 30, 2025, with the largest portion being $626.0 million in unfunded construction loans[29](index=29&type=chunk)[30](index=30&type=chunk) [Provision for Credit Losses and Allowance for Credit Losses](index=10&type=section&id=PROVISION%20FOR%20CREDIT%20LOSSES%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) The company recorded no provision expense for its loan portfolio in Q2 2025, with the ACL ratio increasing to 1.41% of total loans - **No provision expense** was recorded on the outstanding loan portfolio during Q2 2025[31](index=31&type=chunk) - The allowance for credit losses as a percentage of total loans was **1.41%** at June 30, 2025, an increase from 1.36% at December 31, 2024[32](index=32&type=chunk) - A negative provision (credit) for losses on unfunded commitments of **$110,000** was recorded for Q2 2025[31](index=31&type=chunk) [Asset Quality](index=10&type=section&id=ASSET%20QUALITY) Asset quality improved as non-performing assets decreased to $8.1 million, representing just 0.14% of total assets Asset Quality Metrics | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Non-performing assets | $8.1 million | $9.6 million | | NPAs as % of total assets | 0.14% | 0.16% | - Non-performing loans decreased by **$1.4 million** during Q2 2025 to a balance of **$2.0 million**, primarily due to payoffs in the one- to four-family residential and land development categories[34](index=34&type=chunk)[36](index=36&type=chunk) - Potential problem loans decreased by **$246,000** during Q2 2025 to a balance of **$7.2 million**[37](index=37&type=chunk) - Foreclosed assets and repossessions remained stable at approximately **$6.0 million**, dominated by a single $6.0 million office building asset[38](index=38&type=chunk)[43](index=43&type=chunk) Capital and Liquidity Management [Capital](index=7&type=section&id=CAPITAL) The company maintained a strong capital position, with a Tangible Common Equity ratio of 10.5%, while actively managing capital through buybacks and debt redemption Preliminary Capital Ratios (June 30, 2025) | Ratio | Percentage | | :--- | :--- | | Tier 1 Leverage Ratio | 11.5% | | Common Equity Tier 1 Capital Ratio | 13.0% | | Tier 1 Capital Ratio | 13.5% | | Total Capital Ratio | 14.7% | | Tangible Common Equity Ratio | 10.5% | - On June 15, 2025, the company redeemed all of its outstanding **$75 million subordinated notes**, utilizing excess cash[20](index=20&type=chunk) - During Q2 2025, the company repurchased **175,998 shares** at an average price of $55.11, and a new stock repurchase program for up to **one million additional shares** was approved[22](index=22&type=chunk)[23](index=23&type=chunk) [Liquidity and Deposits](index=8&type=section&id=LIQUIDITY%20AND%20DEPOSITS) The company maintains sufficient liquidity with over $1.5 billion in available borrowing capacity, despite a managed decrease in total deposits Available Liquidity at June 30, 2025 | Source | Amount (millions) | | :--- | :--- | | FHLBank Line | $1,216.1 | | Federal Reserve Bank Line | $338.9 | | Cash and cash equivalents | $245.9 | | Unpledged securities | $349.3 | - Total deposits decreased by **$73.9 million** during Q2 2025, which included a **$62.1 million decrease** in brokered deposits[26](index=26&type=chunk) - As of June 30, 2025, estimated uninsured deposits were approximately **$703.6 million**, representing **15% of total deposits**[27](index=27&type=chunk) Business and Corporate Information [Business Initiatives](index=13&type=section&id=BUSINESS%20INITIATIVES) Key initiatives include ongoing technology upgrades, the installation of new ITMs, and the construction of a next-generation banking center - Technology projects with the current core provider are ongoing, with completions expected to begin in **Q3 2025** and continue into 2026[39](index=39&type=chunk) - **Ten Interactive Teller Machines (ITMs)** were installed in the St. Louis market, offering live teller services and extended banking hours[40](index=40&type=chunk) - Construction of a new, next-generation banking center in Springfield, MO, is on track for completion in **Q4 2025**[41](index=41&type=chunk) [Forward-Looking Statements](index=15&type=section&id=Forward-Looking%20Statements) The report includes forward-looking statements, with actual results subject to risks like economic changes and interest rate fluctuations - The report contains forward-looking statements as defined by the **Private Securities Litigation Reform Act of 1995**[45](index=45&type=chunk) - Factors that could cause results to differ include economic conditions, interest rate fluctuations, inflation, bank failures, credit losses, and legislative or regulatory changes[46](index=46&type=chunk) - The Company **does not undertake an obligation** to publicly release revisions to any forward-looking statements[47](index=47&type=chunk) Financial Statements and Data [Selected Financial Data](index=16&type=section&id=Selected%20Financial%20Data) This section provides a high-level summary of the company's consolidated financial condition and operating results Selected Financial Condition Data (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total assets | $5,854,672 | $5,981,628 | | Loans receivable, gross | $4,604,943 | $4,761,848 | | Deposits | $4,684,126 | $4,605,549 | | Total stockholders' equity | $622,368 | $599,568 | Selected Operating Data - Q2 2025 (in thousands) | Metric | Amount | | :--- | :--- | | Net interest income | $50,963 | | Non-interest income | $8,212 | | Non-interest expense | $35,005 | | Net income | $19,786 | [Consolidated Statements of Financial Condition](index=18&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) The detailed balance sheet shows total assets of $5.85 billion and total equity of $622.4 million as of June 30, 2025 Assets at June 30, 2025 (in thousands) | Asset Category | Amount | | :--- | :--- | | Cash and cash equivalents | $245,913 | | Available-for-sale securities | $527,543 | | Loans receivable, net | $4,534,287 | | **Total Assets** | **$5,854,672** | Liabilities and Equity at June 30, 2025 (in thousands) | Category | Amount | | :--- | :--- | | Deposits | $4,684,126 | | Total borrowings | $450,483 | | Total Liabilities | $5,232,304 | | Total Stockholders' Equity | $622,368 | | **Total Liabilities and Equity** | **$5,854,672** | [Consolidated Statements of Income](index=20&type=section&id=Consolidated%20Statements%20of%20Income) The detailed income statement shows Q2 2025 net income of $19.8 million, an increase from $17.0 million in Q2 2024 Income Statement Summary - Q2 2025 vs Q2 2024 (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $50,963 | $46,818 | | Provision for Credit Losses | $(110) | $(607) | | Non-interest Income | $8,212 | $9,833 | | Non-interest Expense | $35,005 | $36,409 | | **Net Income** | **$19,786** | **$16,988** | [Average Balances, Interest Rates and Yields](index=22&type=section&id=Average%20Balances%2C%20Interest%20Rates%20and%20Yields) The analysis shows an interest rate spread of 3.08% for Q2 2025, driven by a lower cost of funds Yield/Rate Analysis - Three Months Ended June 30 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Avg. Yield on Total Loans | 6.16% | 6.37% | | Avg. Yield on Total Interest-Earning Assets | 5.74% | 5.94% | | Avg. Rate on Total Deposits | 2.47% | 2.93% | | Avg. Rate on Total Interest-Bearing Liabilities | 2.66% | 3.17% | | Interest Rate Spread | 3.08% | 2.77% | Non-GAAP Financial Measures [Reconciliation of Tangible Common Equity to Tangible Assets](index=26&type=section&id=Non-GAAP%20Reconciliation%3A%20Ratio%20of%20Tangible%20Common%20Equity%20to%20Tangible%20Assets) This non-GAAP reconciliation shows the tangible common equity ratio improved to 10.48% at the end of Q2 2025 - Management believes this non-GAAP measure is helpful for understanding the company's financial condition, capital strength, and for comparison with peers[64](index=64&type=chunk) Tangible Common Equity to Tangible Assets Ratio | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Tangible common equity (a) | $612,491k | $589,474k | | Tangible assets (b) | $5,844,795k | $5,971,534k | | **Ratio (a) / (b)** | **10.48%** | **9.87%** |

Core Financial Performance - For the quarter ended June 30, 2025, the Company reported earnings of $1.72 per diluted common share, translating to a net income of $19.8 million, an increase from $1.45 per diluted common share and $17.0 million net income in the same quarter of 2024 [1][6] - The annualized return on average common equity was 12.81%, and the annualized return on average assets was 1.34%, both showing improvement from 12.03% and 1.17% respectively in the prior year [2] Selected Financial Data - Net interest income for the second quarter of 2025 was $50.963 million, up from $46.818 million in the same quarter of 2024, marking an increase of approximately 8.9% [4][5] - Non-interest income decreased to $8.212 million from $9.833 million year-over-year [4][13] - Non-interest expense decreased to $35.005 million from $36.409 million in the prior year [4][13] Asset Quality - Non-performing assets totaled $8.1 million at June 30, 2025, a decrease from $9.6 million at December 31, 2024, representing 0.14% of total assets [5][32] - The allowance for credit losses was 1.41% of total loans, reflecting an increase from 1.36% at the end of the previous quarter [31] Capital and Liquidity - The Company's capital ratios remained strong, with a Tier 1 Leverage Ratio of 11.5% and a Common Equity Tier 1 Capital Ratio of 13.0% as of June 30, 2025 [16] - Total stockholders' equity increased to $622.4 million, representing 10.6% of total assets, with a book value of $54.61 per common share [16] - The Company had secured borrowing line availability of $1.22 billion at the FHLBank and $338.9 million at the Federal Reserve Bank [25] Loan Portfolio - Total net loans decreased by $156.1 million, or 3.3%, from $4.69 billion at December 31, 2024, to $4.53 billion at June 30, 2025 [27] - The largest decrease was in construction loans, which fell by $79.1 million [27] Stock Repurchase and Dividends - The Company repurchased nearly 176,000 shares of common stock at an average price of $55.11 during the second quarter of 2025 [22] - A regular quarterly cash dividend of $0.40 per common share was declared, reducing stockholders' equity by $14.4 million [22]

Core Viewpoint - Great Southern Bancorp, Inc. is set to report its preliminary earnings for the second quarter of 2025 on July 16, 2025, with a conference call scheduled for July 17, 2025 [1]. Group 1: Earnings Announcement - The company will issue a news release to notify the public about the second quarter 2025 results [3]. - The earnings release will be available on the company's Investor Relations website and also filed with the SEC as an exhibit to a Current Report on Form 8-K [3]. Group 2: Conference Call Details - Participants can register for the conference call and are encouraged to join 10 minutes early [2]. - The call will be accessible live and in a recorded format on the company's Investor Relations website [1]. Group 3: Company Overview - Great Southern Bank, headquartered in Springfield, Missouri, provides a wide range of banking services and operates 89 retail banking centers across several states [4]. - The common stock of Great Southern Bancorp, Inc. is listed on the Nasdaq Global Select Market under the symbol "GSBC" [4].