Great Southern Bancorp(GSBC) - 2023 Q1 - Quarterly Report

FORM 10-Q Cover Page Registrant Information This section provides key identifying information for Great Southern Bancorp, Inc., including its SEC filing status, stock trading symbol, and shares outstanding as of May 4, 2023 - Great Southern Bancorp, Inc. is an accelerated filer and has filed all required reports during the preceding 12 months[4][5] | Metric | Value | | :--- | :--- | | Trading Symbol | GSBC | | Exchange | The NASDAQ Stock Market LLC | | Shares Outstanding (May 4, 2023) | 12,043,886 | | Filer Status | Accelerated filer | PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. This section presents the unaudited consolidated financial statements of Great Southern Bancorp, Inc. and its subsidiaries for the quarter ended March 31, 2023, including statements of financial condition, income, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items Consolidated Statements of Financial Condition The Company's total assets increased by $88.0 million to $5.77 billion at March 31, 2023, primarily driven by increases in loans receivable and interest-bearing deposits, while total liabilities and stockholders' equity also increased | Metric (In Thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $5,768,720 | $5,680,702 | | Cash and cash equivalents | $184,676 | $168,520 | | Loans receivable, net | $4,569,328 | $4,506,836 | | Total Liabilities | $5,213,209 | $5,147,615 | | Deposits | $4,799,107 | $4,684,910 | | Total Stockholders' Equity | $555,511 | $533,087 | - Total Assets increased by $88.0 million (1.5%) from December 31, 2022, to March 31, 2023[8] - Loans receivable, net, increased by $62.5 million (1.4%) from December 31, 2022, to March 31, 2023[8] Consolidated Statements of Income Net income for the three months ended March 31, 2023, increased by 20.4% year-over-year to $20.5 million, primarily driven by a significant rise in net interest income, despite increases in provision for credit losses and non-interest expenses | Metric (In Thousands, Except Per Share Data) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Total Interest Income | $71,463 | $46,673 | | Total Interest Expense | $18,271 | $3,407 | | Net Interest Income | $53,192 | $43,266 | | Provision for Credit Losses on Loans | $1,500 | $— | | Total Non-Interest Income | $7,889 | $9,176 | | Total Non-Interest Expense | $34,463 | $31,268 | | Net Income | $20,456 | $16,987 | | Basic Earnings Per Common Share | $1.68 | $1.31 | | Diluted Earnings Per Common Share | $1.67 | $1.30 | | Dividends Declared Per Common Share | $0.40 | $0.36 | - Net Income increased by $3.5 million (20.4%) year-over-year[10] - Net Interest Income increased by $9.9 million (22.9%) year-over-year[10] Consolidated Statements of Comprehensive Income (Loss) Comprehensive income for the three months ended March 31, 2023, was $32.4 million, a significant improvement from a comprehensive loss of $7.1 million in the prior-year period, primarily due to unrealized appreciation on available-for-sale securities and changes in the value of active cash flow hedges | Metric (In Thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Income | $20,456 | $16,987 | | Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes | $6,915 | $(20,200) | | Change in value of active cash flow hedges, net of taxes | $6,575 | $(3,083) | | Comprehensive Income (Loss) | $32,383 | $(7,089) | - Comprehensive Income (Loss) improved from a loss of $7.1 million in Q1 2022 to an income of $32.4 million in Q1 2023[12] Consolidated Statements of Stockholders' Equity Total stockholders' equity increased by $22.4 million to $555.5 million at March 31, 2023, driven by net income, stock option exercises, and a decrease in accumulated other comprehensive loss, partially offset by common stock repurchases and dividends | Metric (In Thousands) | March 31, 2023 | January 1, 2023 | | :--- | :--- | :--- | | Total Stockholders' Equity | $555,511 | $533,087 | | Net income | $20,456 | N/A | | Stock issued under Stock Option Plan | $470 | N/A | | Common cash dividends declared | $(4,854) | N/A | | Purchase of the Company's common stock | $(5,575) | N/A | | Accumulated Other Comprehensive Income (Loss) | $(41,428) | $(53,355) | - Total Stockholders' Equity increased by $22.4 million from January 1, 2023, to March 31, 2023[13] - Accumulated Other Comprehensive Income (Loss) improved from $(53,355) thousand to $(41,428) thousand[13] Consolidated Statements of Cash Flows Cash and cash equivalents increased by $16.2 million to $184.7 million at March 31, 2023, with operating activities providing $5.4 million, investing activities using $53.4 million, and financing activities providing $64.1 million, a significant shift from the prior year's negative financing cash flow | Metric (In Thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,442 | $31,389 | | Net cash used in investing activities | $(53,408) | $(318,443) | | Net cash provided by (used in) financing activities | $64,122 | $(77,175) | | Increase (Decrease) in Cash and Cash Equivalents | $16,156 | $(364,229) | | Cash and Cash Equivalents, End of Period | $184,676 | $353,038 | - Cash and cash equivalents increased by $16.2 million in Q1 2023, a reversal from a $364.2 million decrease in Q1 2022[16] - Financing activities provided $64.1 million in cash in Q1 2023, compared to using $77.2 million in Q1 2022[16] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS These notes provide detailed disclosures on the Company's financial statements, covering accounting policies, segment information, recent accounting pronouncements, earnings per share, investment securities, loans and credit losses, FDIC-assisted acquisitions, real estate owned, premises and equipment, deposits, borrowings, income taxes, fair value measurements, and derivative activities NOTE 1: BASIS OF PRESENTATION The unaudited interim consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations, reflecting normal recurring adjustments, and should be read in conjunction with the Company's 2022 Annual Report on Form 10-K - Financial statements are unaudited and prepared in accordance with GAAP for interim financial information and SEC Form 10-Q instructions[18] - Operating results for the three months ended March 31, 2023, are not necessarily indicative of full-year results[18] NOTE 2: NATURE OF OPERATIONS AND OPERATING SEGMENTS Great Southern Bancorp, Inc. operates as a one-bank holding company, with Great Southern Bank providing financial services primarily in the Midwest and originating commercial loans from various lending offices, and the banking operation is the Company's sole reportable segment - The Company operates as a one-bank holding company, with Great Southern Bank as its primary operation[20] - The Bank provides financial services in Missouri, Iowa, Kansas, Minnesota, Nebraska, and Arkansas, and originates commercial loans from offices in Atlanta, Charlotte, Chicago, Dallas, Denver, Omaha, Phoenix, and Tulsa[20] - The banking operation is the Company's only sole reportable segment, engaged in originating various loans and funding them through deposits and borrowings[21] NOTE 3: RECENT ACCOUNTING PRONOUNCEMENTS This note details recent FASB Accounting Standards Updates (ASUs) related to Reference Rate Reform (ASU 2020-04, 2021-01, 2022-06), Derivatives and Hedging (ASU 2022-01), and Financial Instruments – Credit Losses (ASU 2022-02), most of which have not had a material impact on the Company's financial statements, though ASU 2022-02 required changes in disclosures for loan modifications - ASU 2020-04, 2021-01, and 2022-06 (Reference Rate Reform) provide optional expedients for contracts and hedging relationships affected by LIBOR discontinuation, extended through December 31, 2024, with no material impact on financial statements[22][23][25][28] - ASU 2022-01 (Derivatives and Hedging) expands the portfolio layer method for fair value hedging, effective January 1, 2023, with no material impact on financial statements[26] - ASU 2022-02 (Financial Instruments – Credit Losses) eliminates troubled debt restructuring guidance and enhances disclosures for loan modifications to borrowers experiencing financial difficulty, effective January 1, 2023, with no material impact on financial statements, but required disclosure changes[27] NOTE 4: EARNINGS PER SHARE Basic and diluted earnings per common share increased year-over-year for the three months ended March 31, 2023, reflecting higher net income, with the number of dilutive stock options decreasing, while a significant number of options were excluded from diluted EPS calculation due to exercise prices exceeding market prices | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Basic Earnings Per Common Share | $1.68 | $1.31 | | Diluted Earnings Per Common Share | $1.67 | $1.30 | | Average common shares outstanding (Basic) | 12,201 | 12,971 | | Diluted common shares | 12,271 | 13,088 | - Basic EPS increased by $0.37 (28.2%) and Diluted EPS increased by $0.37 (28.5%) year-over-year[29] - Options to purchase 672,368 shares (2023) and 376,237 shares (2022) were excluded from diluted EPS calculation as their exercise prices were greater than average market prices[29] NOTE 5: INVESTMENT SECURITIES The Company holds both available-for-sale (AFS) and held-to-maturity (HTM) securities; AFS securities are carried at fair value with unrealized gains/losses in equity, while HTM securities are at amortized cost, and both portfolios showed significant unrealized losses at March 31, 2023, primarily in mortgage-backed and collateralized mortgage obligations, which management believes are temporary, with no allowance for credit losses recorded for these securities - AFS securities are carried at fair value, with unrealized gains/losses recorded in stockholders' equity[30][32] - HTM securities are carried at amortized cost[30][32] | Metric (In Thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | AFS Securities Fair Value | $493,330 | $490,592 | | AFS Gross Unrealized Losses | $53,961 | $62,741 | | HTM Securities Amortized Cost | $200,427 | $202,495 | | HTM Securities Fair Value | $179,853 | $177,765 | | HTM Gross Unrealized Losses | $20,574 | $24,730 | - A high percentage of unrealized losses in both AFS and HTM portfolios are related to U.S. government-sponsored mortgage-backed, collateralized mortgage, and SBA securities; management believes these declines are temporary[35][36] - No allowance for credit losses has been recorded for any securities, as they are issued by U.S. government-sponsored entities or are highly-rated municipal bonds with no historical credit losses[39][40] NOTE 6: LOANS AND ALLOWANCE FOR CREDIT LOSSES The Company adopted ASU 2016-13 (CECL) for credit loss measurement, using historical loss rates adjusted for current conditions and forecasts; loans receivable increased to $4.64 billion at March 31, 2023, with a corresponding increase in the allowance for credit losses, while non-accruing loans decreased and loan modifications were disclosed - The allowance for credit losses is measured using an average historical loss model under CECL, incorporating past events, current conditions, and reasonable and supportable forecasts[41][42][43][44] | Loan Class (In Thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Loans Receivable | $4,644,650 | $4,581,381 | | Allowance for credit losses | $(64,987) | $(63,480) | | Loans receivable, net | $4,569,328 | $4,506,836 | | Weighted average interest rate | 5.81% | 5.54% | - Non-accruing loans decreased from $3.67 million at December 31, 2022, to $2.98 million at March 31, 2023[49] | Allowance for Credit Losses (In Thousands) | Balance, Jan 1, 2023 | Provision (credit) | Losses charged off | Recoveries | Balance, Mar 31, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total | $63,480 | $1,500 | $(465) | $472 | $64,987 | - Loan modifications for borrowers experiencing financial difficulty totaled $44.3 million in amortized cost basis at March 31, 2023, primarily through term extensions and combinations[58] NOTE 7: FDIC-ASSISTED ACQUIRED LOANS This note outlines the Company's past acquisitions of loans and assets through FDIC-assisted transactions, with related loss-sharing agreements now terminated, and the carrying value of these acquired loans has decreased from December 31, 2022, to March 31, 2023 - Great Southern Bank acquired assets from several banks (TeamBank, Vantus Bank, Sun Security Bank, Inter Savings Bank, Valley Bank) through FDIC-assisted transactions between 2009 and 2014[74][75][76][77][78] - Loss-sharing agreements related to these acquisitions were terminated early by mutual agreement with the FDIC[74][75][76][77] | Acquired Loans (In Thousands) | March 31, 2023 (Carrying Value) | December 31, 2022 (Carrying Value) | | :--- | :--- | :--- | | TeamBank | $2,617 | $2,703 | | Vantus Bank | $3,638 | $3,983 | | Sun Security Bank | $6,874 | $7,221 | | InterBank | $23,099 | $24,402 | | Valley Bank | $12,426 | $12,750 | NOTE 8: OTHER REAL ESTATE OWNED AND REPOSSESSIONS Other real estate owned (OREO) and repossessions decreased to $154,000 at March 31, 2023, primarily consisting of properties not acquired through foreclosure and consumer repossessions, with related expenses including valuation write-downs and operating expenses | Metric (In Thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Foreclosed assets held for sale and repossessions | $45 | $50 | | Other real estate owned not acquired through foreclosure | $109 | $183 | | Total OREO and Repossessions | $154 | $233 | - OREO not acquired through foreclosure included two closed branch locations held for sale[81] | Expenses (In Thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net loss (gains) on sales | $3 | $(6) | | Valuation write-downs | $74 | $15 | | Operating expenses, net of rental income | $77 | $154 | | Total Expenses | $154 | $163 | NOTE 9: PREMISES AND EQUIPMENT Net premises and equipment increased slightly to $141.5 million at March 31, 2023, with operating lease right-of-use assets and liabilities remaining stable, and lease expense of $411,000 for the quarter with a 7.4 years weighted-average lease term | Metric (In Thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Land | $39,617 | $39,622 | | Buildings and improvements | $105,572 | $105,096 | | Furniture, fixtures and equipment | $68,493 | $67,505 | | Operating leases right of use asset | $7,452 | $7,397 | | Less: accumulated depreciation | $(79,649) | $(78,550) | | Net Premises and Equipment | $141,485 | $141,070 | - Operating lease right-of-use asset was $7.5 million and corresponding lease liability was $7.7 million at March 31, 2023[85] - Lease expense for the three months ended March 31, 2023, was $411,000, with a weighted-average lease term of 7.4 years[86] NOTE 10: DEPOSITS Total deposits increased by $114.2 million to $4.80 billion at March 31, 2023, primarily driven by brokered deposits and interest-bearing demand/savings deposits, while non-interest-bearing demand deposits decreased and the weighted average rate on total deposits increased significantly | Deposit Type (In Thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Time Deposits | $1,036,228 | $1,021,296 | | Non-interest-bearing demand deposits | $991,527 | $1,063,588 | | Interest-bearing demand and savings deposits | $2,234,323 | $2,188,535 | | Brokered deposits | $537,029 | $411,491 | | Total Deposits | $4,799,107 | $4,684,910 | | Weighted average rate (Total time deposits) | 2.31% | 1.93% | | Weighted average rate (Interest-bearing demand and savings) | 1.09% | 0.65% | | Weighted average rate (Brokered deposits) | 4.69% | 4.03% | - Total deposits increased by $114.2 million (2.4%) from December 31, 2022, to March 31, 2023[89] - Brokered deposits increased by $125.5 million, representing approximately 11.2% of total deposits at March 31, 2023[89] - Approximately 14% of total deposits were uninsured at March 31, 2023[89] NOTE 11: ADVANCES FROM FEDERAL HOME LOAN BANK The Company had no outstanding term advances from the Federal Home Loan Bank (FHLBank) at March 31, 2023, or December 31, 2022, but overnight borrowings from FHLBank were outstanding and included in short-term borrowings - No outstanding term advances from FHLBank at March 31, 2023, or December 31, 2022[90] - Overnight borrowings from FHLBank were outstanding and classified under short-term borrowings[90] NOTE 12: SECURITIES SOLD UNDER REVERSE REPURCHASE AGREEMENTS AND SHORT-TERM BORROWINGS Securities sold under reverse repurchase agreements decreased significantly to $70.7 million at March 31, 2023, while overnight borrowings from FHLBank increased to $154.5 million, contributing to a total of $226.4 million in these liabilities | Metric (In Thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Securities sold under reverse repurchase agreements | $70,654 | $176,843 | | Overnight borrowings from the Federal Home Loan Bank | $154,500 | $88,500 | | Total (including Notes payable – Community Development Equity Funds) | $226,364 | $266,426 | - Securities sold under reverse repurchase agreements decreased by $106.2 million (60.1%) from December 31, 2022, to March 31, 2023[91] - Overnight borrowings from FHLBank increased by $66.0 million (74.6%) over the same period[91] NOTE 13: SUBORDINATED NOTES The Company has $75.0 million in subordinated notes due June 15, 2030, with a fixed interest rate of 5.50% until June 15, 2025, then floating, and an imputed interest rate of 5.95% for Q1 2023 due to amortized debt issuance costs - The Company issued $75.0 million of subordinated notes due June 15, 2030, with a fixed rate of 5.50% until June 15, 2025, then floating[94] - Debt issuance costs of approximately $1.5 million are amortized over five years, resulting in an imputed interest rate of 5.95% for Q1 2023[94][95] | Metric (In Thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Subordinated notes | $75,000 | $75,000 | | Less: unamortized debt issuance costs | $(644) | $(719) | | Net Subordinated notes | $74,356 | $74,281 | NOTE 14: INCOME TAXES The Company's effective tax rate for Q1 2023 was 21.2%, slightly above the statutory federal rate due to state taxes and other factors, partially offset by non-taxable interest and tax credits, while a formal protest regarding a $4.0 million tax obligation for 2014 and 2015 is ongoing | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Tax at statutory rate | 21.0% | 21.0% | | Nontaxable interest and dividends | (0.5)% | (0.4)% | | Tax credits | (2.2)% | (1.7)% | | State taxes | 1.7% | 1.5% | | Other | 1.2% | 0.1% | | Effective tax rate | 21.2% | 20.5% | - The Company is defending a formal protest with the Missouri Administrative Hearing Commission regarding a potential $4.0 million tax obligation for 2014 and 2015, plus additional amounts for subsequent years[98] NOTE 15: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS This note details fair value measurements of financial instruments categorized into a three-level hierarchy, with recurring measurements for available-for-sale securities and interest rate derivatives primarily Level 2, and nonrecurring measurements for collateral-dependent loans classified as Level 3 - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (other observable inputs), and Level 3 (significant unobservable inputs)[99][101] | Recurring Fair Value Measurements (In Thousands) | March 31, 2023 (Fair Value) | Level | | :--- | :--- | :--- | | Available-for-sale securities | $493,330 | Level 2 | | Interest rate derivative asset | $9,992 | Level 2 | | Interest rate derivative liability | $(31,469) | Level 2 | - Collateral-dependent loans are measured on a nonrecurring basis and classified as Level 3, with a fair value of $194 thousand at March 31, 2023[105][107] | Financial Instrument (In Thousands) | March 31, 2023 (Carrying Amount) | March 31, 2023 (Fair Value) | Hierarchy Level | | :--- | :--- | :--- | :--- | | Loans, net of allowance for credit losses | $4,569,328 | $4,440,904 | 3 | | Deposits | $4,799,107 | $4,784,469 | 3 | | Subordinated notes | $74,356 | $70,500 | 2 | NOTE 16: DERIVATIVES AND HEDGING ACTIVITIES The Company uses derivative financial instruments, primarily interest rate swaps, for risk management, including nondesignated hedges, fair value hedges for fixed-rate brokered deposits, and cash flow hedges for floating-rate loans, with fair value changes recognized in earnings or AOCI - The Company uses interest rate swaps for interest rate risk management, including nondesignated hedges for customer services and designated fair value/cash flow hedges[119][120] - Nondesignated hedges (back-to-back swaps) resulted in net losses of $291,000 in Q1 2023, recognized directly in non-interest income[121] - A new fair value hedge was entered in February 2023 ($95 million notional) to hedge fixed-rate brokered deposits, receiving fixed 4.65% and paying floating USD-SOFR-COMPOUND plus spread[122] - Cash flow hedges for floating-rate loans include a terminated $400 million swap (accreting $2.0 million interest income in Q1 2023) and active swaps totaling $700 million notional (resulting in negative loan interest income of $2.2 million in Q1 2023)[124][125][127] | Derivative Fair Value (In Thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Active interest rate swap (Liability) | $22,557 | $31,277 | | Interest rate products (Asset) | $9,992 | $11,061 | | Interest rate products (Liability) | $8,912 | $10,820 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the Company's financial condition and results of operations for the three months ended March 31, 2023, compared to the prior year, covering critical accounting policies, economic conditions, business initiatives, detailed financial comparisons, liquidity, capital resources, and non-GAAP financial measures, highlighting key drivers of performance and future outlook Forward-looking Statements This section identifies forward-looking statements within the report, cautioning readers that actual results may differ materially due to various factors, including economic conditions, interest rate fluctuations, credit risks, regulatory changes, and competition, and the Company disclaims any obligation to update these statements - Statements using words like 'may,' 'might,' 'could,' 'should,' 'will likely result,' 'are expected to,' 'will continue,' 'is anticipated,' 'believe,' 'estimate,' 'project,' 'intends' are forward-looking[134] - Actual results could differ materially due to factors such as economic conditions, interest rate fluctuations, credit risks, regulatory changes, cyber-attacks, and competition[135] - The Company does not undertake to publicly release revisions to forward-looking statements[136] Critical Accounting Policies, Judgments and Estimates This section highlights the Company's critical accounting policies, particularly the allowance for credit losses (ACL) and the valuation of foreclosed assets, which involve significant management judgment and estimates, and also discusses the impairment testing for goodwill and intangible assets - The determination of the allowance for credit losses (ACL) involves a high degree of judgment and complexity, aiming to absorb estimated credit losses[138] - ACL is measured using an average historical loss model, adjusted for current conditions and reasonable and supportable forecasts of macroeconomic variables (e.g., unemployment, GDP)[140][141] - Goodwill and intangible assets are tested for impairment annually or more frequently if circumstances indicate value may not be recoverable, using a market approach for valuation[145][149] - Management does not believe any goodwill or other intangible assets were impaired as of March 31, 2023[150] Current Economic Conditions This section provides an overview of the current economic landscape, including the Federal Reserve's aggressive monetary tightening to combat high inflation, resilient job growth, and the impact on housing and commercial real estate markets, noting slowing rent growth in multi-family housing and declining demand for office space, while retail and industrial markets show resilience - The Federal Reserve continues aggressive monetary tightening, increasing the fed funds rate to 5.00% by March 31, 2023, to combat high inflation[159][210] - The national unemployment rate remained at 3.5% in March 2023, with total employment increasing by 236,000[163] - New single-family home sales increased 9.6% in March 2023 (YoY decrease of 3.4%), with the median price at $449,800; existing-home sales fell 2.4% nationally (YoY decrease of 22.0%)[167][168][169][170] - Multi-family housing experienced slowing rent growth (2.2% at March 2023) and increased national vacancy rates (6.7%) due to supply outpacing demand[173][175] - Office market demand continues to decline, pushing vacancy to a record 12.9% nationally, while retail (4.2% vacancy) and industrial (4.5% vacancy) markets show resilience despite slowing growth[182][186][189] COVID-19 Impact to Our Business and Response The Company continues to monitor and respond to the effects of the COVID-19 pandemic, prioritizing customer and associate safety, with current infection rates low, business operations returned to normal, most restrictions relaxed, and the Company remaining prepared for future challenges - Great Southern continues to monitor and respond to COVID-19 effects, prioritizing health, safety, and uninterrupted service[191] - Current COVID-19 infection rates are relatively low in the Company's markets, and most restrictions have been relaxed[193] - Business operations are currently normal, similar to pre-pandemic levels, but the Company remains prepared for future challenges[193] General (MD&A Overview) The Company's profitability is primarily driven by net interest income, credit loss provisions, non-interest income, and non-interest expenses, with total assets increasing by $88.0 million to $5.77 billion and net outstanding loans growing by $62.5 million - Profitability depends primarily on net interest income, provisions for credit losses, and the level of non-interest income and expense[194] - Total assets increased $88.0 million (1.5%) to $5.77 billion at March 31, 2023[195] - Net outstanding loans increased $62.5 million (1.4%) to $4.57 billion, primarily in other residential (multi-family) and commercial real estate loans[195] Comparison of Financial Condition at March 31, 2023 and December 31, 2022 The Company's total assets increased by $88.0 million to $5.77 billion, driven by growth in loans and interest-bearing deposits, while total liabilities rose due to increased brokered deposits and FHLBank borrowings, and stockholders' equity improved from net income and a decrease in accumulated other comprehensive loss - Total assets increased by $88.0 million to $5.77 billion, primarily from loans and interest-bearing deposits[230] - Net loans increased $62.5 million to $4.57 billion, with significant growth in other residential (multi-family) and commercial real estate loans, partially offset by a decrease in commercial construction loans[233] - Total deposits increased $114.2 million (2.4%) to $4.80 billion, with brokered deposits rising $125.5 million[235] - Total stockholders' equity increased $22.4 million to $555.5 million, benefiting from net income and a decrease in accumulated other comprehensive loss[239] Results of Operations and Comparison for the Three Months Ended March 31, 2023 and 2022 Net income increased by 20.4% to $20.5 million, primarily due to a $9.9 million increase in net interest income driven by higher interest income on loans and investments, partially offset by a significant rise in interest expense and increased non-interest expenses - Net income increased by $3.5 million (20.4%) to $20.5 million[240] - Net interest income increased $9.9 million (22.9%) to $53.2 million[240] - Total interest income increased $24.8 million (53.1%) due to higher average balances and rates on loans and investments[241] - Total interest expense increased $14.9 million (436.3%) due to higher interest expense on deposits and short-term borrowings[250](index=25