Great Southern Bancorp, Inc. Q3 FY2025 earnings call

• Core banking fundamentals remained strong with consistent earnings performance. - Net interest income increased due to improved net interest margin, stable loan yields, and effective funding cost control. - Loan growth was impacted by elevated payoffs but construction lending showed momentum. - Deposit base was affected by competitive deposit market with decline in broker deposits. - Asset quality remained exceptional with negligible loan charge-offs. - Expense management was a priority with noninterest expense increase due to various factors like legal fees and technology upgrades.

Net income for the quarter was $17.8 million or $1.56 per diluted common share, up from $16.5 million or $1.41 in the same period a year ago. Net interest income totaled $50.8 million for the third quarter, an increase of $2.8 million or 5.8% compared to the same period a year ago, with the annualized net interest margin improving to 3.72% from 3.42% a year ago. Gross loans totaled $4.54 billion, a decline of $223 million or 4.7% from December 31, 2024. Total deposits decreased $77.5 million, almost exclusively in the broker deposit area. Noninterest expense for the third quarter of 2025 was $36.1 million, up from $33.7 million in the year ago quarter, and the efficiency ratio was 62.45%.

• Remain focused on maintaining strong positions related to credit quality, capital, and liquidity amidst competition and elevated funding costs. - Committed to delivering consistent long-term value for shareholders. - The Board approved a new stock repurchase authorization, with shares available for purchase and repurchases made in the third quarter.

• Deposit market is highly competitive with sustained rate pressure in core and broker deposit segments. - Future repricing opportunities need to be closely monitored as market rates and deposit competition evolve. - There could be idiosyncratic issues with specific projects like slowly leasing multifamily or retail properties, though no broad-based weakness in the portfolio identified.

Q: Kind of on the loan growth outlook and where opportunities are?

A: There's opportunity across the footprint, with key markets like Texas, Atlanta, St. Louis, Kansas City, and origination requests across the franchise though payoffs are elevated.

Q: Any segments of portfolio showing weakness?

A: No broad-based weakness seen, some idiosyncratic issues with specific projects but not general weakness.

Q: On provision with modest loan growth outlook?

A: Minimal provision expected, and would cover any net charge-offs if occur.

Q: Thoughts on rate sensitivity with rate cuts?

A: Feels well positioned, minor and spaced out rate cuts shouldn't be harmful, and the $2 million per quarter benefit from the terminated swap is concluded.

Q: On operating expenses, can keep them around $36 million level?

A: Some items like occupancy and equipment expenses are built in, legal and professional fees hopefully peak and come down, and normal merit increases for employees.

Q: On commission line item in fee income?

A: It's not a huge amount, elevated in recent quarters, hard to tell if sustained as it's customer-related idiosyncratic