2023 An nual Report for Stockho l de rs
CORPORATE HEADQUARTERS
1451 E. Battlefield
Springfield, MO 65804
800-749-7113
MAILING ADDRESS
P.O. Box 9009
Springfield, MO 65808
DIVIDEND REINVESTMENT
For details on the automatic
reinvestment of dividends in
common stock of the Company,
call Computershare at 800-368-5948,
(outside of the U.S. 781-575-4223),
or visit computershare.com.
FORM 10-K
The Annual Report on Form 10-K filed
with the Securities and Exchange
Commission may be obtained from
the Company’s website at
GreatSouthernBank.com, the SEC
website or without charge by
request to:
Investor Relations
Great Southern Bancorp, Inc.
P.O. Box 9009
Springfield, MO 65808
INVESTOR RELATIONS
Kelly Polonus
Great Southern Bank
P.O. Box 9009
Springfield, MO 65808
AUDITORS
FORVIS, LLP
P.O. Box 1190
Springfield, MO 65801-1190
LEGAL COUNSEL
Silver, Freedman, Taff and Tiernan, LLP
3299 K St., N.W., Suite 100
Washington, DC 20007
Carnahan Evans, P.C.
P.O. Box 10009
Springfield, MO 65808
TRANSFER AGENT AND REGISTRAR
Computershare
Stockholder correspondence:
Computershare Investor Services
P.O. Box 43006
Providence, RI 02940-3006
Overnight correspondence:
Computershare Investor Services
150 Royall St., Suite 101
Canton, MA 02021
800-368-5948
781-575-4223 outside of the U.S.
Hearing Impaired # TDD: 800-952-9245
Questions and inquiries via the website,
computershare.com
35th
Annual Meeting of Stockholders
May 8, 2024 | Virtual Meeting | 10 am CDT
Corporate Profile
Great Southern Bank was founded in 1923 with
a $5,000 investment, four employees and 936
customers. Today, it has grown to $5.8 billion in
total assets, with more than 1,100 dedicated
associates serving 131,000 households.
Headquartered in Springfield, Missouri, the
Company operates offices in 12 states, including
89 retail banking centers in Missouri, Arkansas,
Iowa, Kansas, Minnesota and Nebraska and
seven loan production offices in the cities of
Atlanta, Charlotte, Chicago, Dallas, Denver,
Omaha and Phoenix.
Great Southern offers one-stop shopping with a
comprehensive lineup of financial services that
give customers more choices for their money.
Customers can choose from a wide variety of
checking accounts, savings accounts and
lending options. With the understanding that
convenient access to banking services is a top
priority, customers can access the Bank when,
where and how they prefer, whether it is through
a banking center, digital banking, an ATM/ITM or
by telephone.
Stock Information
The Company’s common stock is listed on the
NASDAQ Global Select Market under the
symbol “GSBC.”
As of December 31, 2023, there were 11,804,430
total shares of common stock outstanding.
The last sale price of the Company's Common
Stock on December 31, 2023 was $59.35.
High/Low Stock Price
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2023
High
$60. 18
56. 00
57. 72
61. 94
Low
$49. 04
45. 39
45. 66
46. 60
2022
High
$62. 70
61. 17
63. 95
64. 16
Low
$56. 94
56. 17
50. 30
57. 15
2021
High
$60. 55
58. 48
57. 01
59. 90
Low
$47. 22
52. 81
49. 53
55. 00
Regular Dividend Declarations
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2023 2022 2021
$.34
$.36
$.40
.40
.40
.40
.40
.40
.40
.34
.36
.36
At Great Southern, we firmly believe that our
associates' dedication to our customers sets us
apart in the industry. Their tireless efforts and
genuine care shine through in every interaction,
reflecting a level of engagement beyond the
ordinary. It is this extraordinary capability,
combined with an innate desire to make a
difference, that defines our corporate culture and
propels us forward. Understanding that the
caliber of our associates directly impacts our
success, we prioritize a culture where every
person feels valued, supported, and empowered.
This commitment isn't just about doing what's
right – it is an investment in our long-term
prosperity.
By nurturing a talented and engaged workforce,
we drive operational excellence and customer
satisfaction, which translates into increased
stockholder value over the long term. Their
dedication, expertise, and commitment to
excellence directly impact our operational
efficiency, customer satisfaction, and overall
financial performance. As we continue to invest
in our people and deliver new solutions to our
customers, we remain confident in our ability to
generate long-term value for all stakeholders.
2023 in Review
Going into 2023, the banking industry expected
strong headwinds with anticipated ongoing
interest rate increases by the Federal Open
Market Committee. These continued periodic
interest rate increases through July 2023, and
three large bank failures in March 2023, drove
liquidity concerns leading to mounting deposit
pricing pressure and low loan demand. Great
Southern, due to significant competition and
deposit mix changes, experienced higher deposit
costs throughout the year, with the rate of
increase tapering off in the fourth quarter. These
higher deposit costs and certain expense items
(further described in our Annual Report on Form
10-K) played key roles in our earnings of $67.8
million in 2023, down by $8.1 million from 2022.
Our net interest margin was 3.57% in 2023
compared to 3.80% for the previous year. For 2023,
our return on average assets was 1.19%, and our
return on average equity was 12.31%.
Importantly, our capital position remained strong
and significantly exceeded regulatory
well-capitalized thresholds. At the end of 2023,
total stockholders' equity was $571.8 million, or
9.8% of total assets, increasing $38.7 million from
the end of 2022. Book value increased from $43.58
per common share to $48.44 per common share
during 2023. Total dividends of $1.60 per common
share were declared during 2023. Additionally, we
Throughout 2023, we remained steadfast in our
continued to prioritize stock repurchases,
commitment to prudent risk management and
acquiring approximately 450,000 shares of our
strategic loan growth. New loan production and
common stock at an average price of $51.38 per
general lending activity were down as expected
share during the year. These initiatives highlight
during the year. Total outstanding loans,
our dedication to enhancing shareholder value
excluding mortgage loans held for sale, increased
while maintaining prudent capital management
by $83.8 million, or 1.8%, from $4.51 billion at
practices.
Amid heightened competition and evolving
market dynamics, we remained consistent in our
commitment to meeting the diverse banking
needs of our customers. Despite the interest rate
environment headwinds, we maintained a
proactive approach to managing our deposit
portfolio, strategically balancing the mix of
funding sources to maintain ample liquidity. Our
ability to adapt to changing market conditions
and effectively deploy funding resources
underscores our resilience and agility as a
financial institution. As we look to the future,
delivering value and stability to our depositors
while actively managing the competitive
landscape dynamics will continue to be a focus.
December 31, 2022, to $4.60 billion at December
31, 2023. Growth primarily came from the
multi-family loan and commercial business loan
categories, partially offset by a reduction in
construction loans and one- to four-family
residential loans. Much of the growth from the
multi-family loan segment was the movement
from unfunded construction line availability to
fund construction projects. Credit quality
remained exceptional during 2023, with
non-performing assets and delinquencies
continuing to be maintained at historically low
levels. This disciplined approach indicates our
commitment to preserving asset quality and
ensuring the long-term stability of our loan
portfolio, positioning us for sustained growth
while effectively managing risk.
William V. Turner
Chairman of the Board
Joseph W. Turner
President and
Chief Executive Officer
To our fellow
stockholders:
As we reflect on the achievements and
challenges of the past year, we are honored to
share Great Southern Bank's 2023 annual report.
The theme of this year's annual report is
"Unchanging values for a changing world."
Despite the ever-evolving landscape of the
banking industry, we remain grounded in our
values, which have been the cornerstone of our
enduring success.
As we continue our journey, our core values will
guide everything we do at Great Southern. Doing
what's right is more than just a motto; it is a
philosophy that underscores our responsibility to
be fair and respectful in all interactions. Our
dedication to teamwork fosters an environment
where collaboration and support are encouraged
and celebrated, driving us toward shared
objectives and collective success. Mutual
respect is the foundation upon which we build
relationships, valuing diversity and treating
everyone with dignity. And our uncompromising
ethical standards ensure that every decision and
action we take is grounded in honesty and
integrity. These values are not merely words on a
page but define who we are as a company and
set the standard for how we conduct ourselves in
every aspect of our business.
2
customers and support one another, embodying
the true spirit of teamwork and commitment.
Their resilience and dedication have been the
driving force behind our continued success. I am
deeply grateful for their contributions—their work
matters and goes beyond being merely a job. We
help people and institutions finance and achieve
their aspirations, lifting individuals, homeowners,
and businesses in every community we serve. Our
associates' hard work, passion, and commitment
propel us forward, even in the face of uncertainty.
We have always placed our trust in the people of
Great Southern, and we have never been
2024 and Beyond
disappointed.
As we navigate the uncertainties presented by
the economic and geopolitical landscape, we are
focused on ensuring that Great Southern is
well-positioned to weather any challenges that
may arise. We understand that the decisions we
make today will shape the future success of our
company, and we stand resolute in our
commitment to serving the long-term interests of
all our stakeholders.
We recognize that our success hinges not only on
our talented workforce but also on effective
leadership. At the end of 2024, we expect and
have planned for the retirement of a key member
of our management team, Chief Retail Banking
Officer Kris Conley. Kris has been an integral part
of our organization since 1998, assuming the role
of Director of Retail Banking in 2010. In early 2023,
Kris announced his intent to retire in December
of 2024, marking the end of nearly three decades
In the coming year, our focus is on deepening our
of invaluable contributions to our company. Kris's
relationships with our customers, providing them
unwavering dedication to excellence and keen
with innovative solutions, personalized service,
insight into retail banking operations have driven
and exceptional experiences. From assisting
growth and maximized customer satisfaction.
young families in achieving homeownership
dreams to supporting businesses in their growth
endeavors, we remain dedicated to being their
trusted financial partner every step of the way,
helping them achieve their goals and aspirations.
We are pleased to share that Laura Smith,
formerly responsible for managing Investments,
will succeed Kris Conley as the new chief retail
banking officer. Laura first joined Great Southern
Bank in 2003, and her extensive experience and
Additionally, we are deeply committed to
collaborative approach have positioned her as an
strengthening the bonds with the communities
ideal candidate to lead our banking centers,
we serve, actively engaging in initiatives that
which serve as the cornerstone of our network.
foster growth, resilience, and prosperity. By
With Laura's guidance and expertise, we are
partnering with local organizations and investing
confident in our ability to maintain operational
in community development projects, we aim to
excellence and deliver unparalleled service to our
create lasting positive change and contribute to
customers.
the well-being of our neighborhoods, ensuring
they thrive.
We extend our appreciation to our Board of
Directors for their indispensable guidance and
We owe a debt of gratitude to our more than 1,100
support. Their talents and extensive knowledge
associates who show up daily, ready to serve our
continue to enrich our company, steering us
toward continued success. In particular, we are
delighted to welcome Amelia "Amy" Counts to
our Board. Appointed as a Director in December
2023, Amy brings a wealth of experience as the
regional vice president of sales at Wise F&I in St.
Louis, Missouri. Amy's track record of surpassing
sales growth objectives and orchestrating
successful negotiations underscores her
exceptional leadership.
Finally, with a steadfast focus on delivering
sustainable long-term value for our stockholders,
we remain committed to prudent financial
management, strategic investments, and
operational excellence. We understand the trust
you have placed in us as stewards of your capital,
and we take this responsibility seriously. Your
investment allows us to drive strong performance
and deliver superior returns, and for that, we
extend our sincerest appreciation. Together, we
will continue to navigate the ever-changing
banking landscape with resilience and
determination, creating value for both our
stockholders and our communities.
From our associates to our customers, our
communities to stockholders, we are grateful for
your continued support and trust as we embark
on this journey together.
We welcome your feedback at any time.
William V. Turner
Joseph W. Turner
To our fellow
stockholders:
As we reflect on the achievements and
challenges of the past year, we are honored to
share Great Southern Bank's 2023 annual report.
The theme of this year's annual report is
"Unchanging values for a changing world."
Despite the ever-evolving landscape of the
banking industry, we remain grounded in our
values, which have been the cornerstone of our
enduring success.
As we continue our journey, our core values will
guide everything we do at Great Southern. Doing
what's right is more than just a motto; it is a
philosophy that underscores our responsibility to
be fair and respectful in all interactions. Our
dedication to teamwork fosters an environment
where collaboration and support are encouraged
and celebrated, driving us toward shared
objectives and collective success. Mutual
respect is the foundation upon which we build
relationships, valuing diversity and treating
everyone with dignity. And our uncompromising
ethical standards ensure that every decision and
action we take is grounded in honesty and
integrity. These values are not merely words on a
page but define who we are as a company and
set the standard for how we conduct ourselves in
every aspect of our business.
At Great Southern, we firmly believe that our
associates' dedication to our customers sets us
apart in the industry. Their tireless efforts and
genuine care shine through in every interaction,
reflecting a level of engagement beyond the
ordinary. It is this extraordinary capability,
combined with an innate desire to make a
difference, that defines our corporate culture
and propels us forward. Understanding that the
caliber of our associates directly impacts our
success, we prioritize a culture where every
person feels valued, supported, and empowered.
This commitment isn't just about doing what's
right – it is an investment in our long-term
prosperity.
By nurturing a talented and engaged workforce,
we drive operational excellence and customer
satisfaction, which translates into increased
stockholder value over the long term. Their
dedication, expertise, and commitment to
excellence directly impact our operational
efficiency, customer satisfaction, and overall
financial performance. As we continue to invest
in our people and deliver new solutions to our
customers, we remain confident in our ability to
generate long-term value for all stakeholders.
2023 in Review
Going into 2023, the banking industry expected
strong headwinds with anticipated ongoing
interest rate increases by the Federal Open
Market Committee. These continued periodic
interest rate increases through July 2023, and
three large bank failures in March 2023, drove
liquidity concerns leading to mounting deposit
pricing pressure and low loan demand. Great
Southern, due to significant competition and
deposit mix changes, experienced higher deposit
costs throughout the year, with the rate of
increase tapering off in the fourth quarter. These
higher deposit costs and certain expense items
(further described in our Annual Report on Form
10-K) played key roles in our earnings of
$67.8 million in 2023, down by $8.1 million from
2022. Our net interest margin was 3.57% in 2023
compared to 3.80% for the previous year. For 2023,
our return on average assets was 1.19%, and our
return on average equity was 12.31%.
Importantly, our capital position remained
strong and significantly exceeded regulatory
well-capitalized thresholds. At the end of 2023,
total stockholders' equity was $571.8 million, or
9.8% of total assets, increasing $38.7 million from
the end of 2022. Book value increased from $43.58
per common share to $48.44 per common share
during 2023. Total dividends of $1.60 per common
Doing
what’s right
Mutual
respect
Core
VALUES
Teamwork
Uncompromising
ethical standards
3
share were declared during 2023. Additionally,
Throughout 2023, we remained steadfast in our
we continued to prioritize stock repurchases,
commitment to prudent risk management and
acquiring approximately 450,000 shares of our
strategic loan growth. New loan production and
common stock at an average price of $51.38 per
general lending activity were down as expected
share during the year. These initiatives highlight
during the year. Total outstanding loans,
our dedication to enhancing shareholder value
excluding mortgage loans held for sale, increased
while maintaining prudent capital management
by $83.8 million, or 1.8%, from $4.51 billion at
practices.
Amid heightened competition and evolving
market dynamics, we remained consistent in our
commitment to meeting the diverse banking
needs of our customers. Despite the interest rate
environment headwinds, we maintained a
proactive approach to managing our deposit
portfolio, strategically balancing the mix of
funding sources to maintain ample liquidity. Our
ability to adapt to changing market conditions
and effectively deploy funding resources
underscores our resilience and agility as a
financial institution. As we look to the future,
delivering value and stability to our depositors
while actively managing the competitive
landscape dynamics will continue to be a focus.
December 31, 2022, to $4.60 billion at December
31, 2023. Growth primarily came from the
multi-family loan and commercial business loan
categories, partially offset by a reduction in
construction loans and one- to four-family
residential loans. Much of the growth from the
multi-family loan segment was the movement
from unfunded construction line availability to
fund construction projects. Credit quality
remained exceptional during 2023, with
non-performing assets and delinquencies
continuing to be maintained at historically low
levels. This disciplined approach indicates our
commitment to preserving asset quality and
ensuring the long-term stability of our loan
portfolio, positioning us for sustained growth
while effectively managing risk.
customers and support one another, embodying
the true spirit of teamwork and commitment.
Their resilience and dedication have been the
driving force behind our continued success. We
are deeply grateful for their contributions—their
work matters and goes beyond being merely a job.
We help people and institutions finance and
achieve their aspirations, lifting individuals,
homeowners, and businesses in every community
we serve. Our associates' hard work, passion, and
commitment propel us forward, even in the face
of uncertainty. We have always placed our trust in
the people of Great Southern, and we have never
2024 and Beyond
been disappointed.
As we navigate the uncertainties presented by
the economic and geopolitical landscape, we are
focused on ensuring that Great Southern is
well-positioned to weather any challenges that
may arise. We understand that the decisions we
make today will shape the future success of our
company, and we stand resolute in our
commitment to serving the long-term interests of
all our stakeholders.
We recognize that our success hinges not only on
our talented workforce but also on effective
leadership. At the end of 2024, we expect and
have planned for the retirement of a key member
of our management team, Chief Retail Banking
Officer Kris Conley. Kris has been an integral part
of our organization since 1998, assuming the role
of Director of Retail Banking in 2010. In early 2023,
Kris announced his intent to retire in December
of 2024, marking the end of nearly three decades
In the coming year, our focus is on deepening our
of invaluable contributions to our company. Kris's
relationships with our customers, providing them
unwavering dedication to excellence and keen
with innovative solutions, personalized service,
insight into retail banking operations have driven
and exceptional experiences. From assisting
growth and maximized customer satisfaction.
young families in achieving homeownership
dreams to supporting businesses in their growth
endeavors, we remain dedicated to being their
trusted financial partner every step of the way,
helping them achieve their goals and aspirations.
We are pleased to share that Laura Smith,
formerly responsible for managing Investments,
will succeed Kris Conley as the new Chief Retail
Banking Officer. Laura first joined Great Southern
Bank in 2003, and her extensive experience and
Additionally, we are deeply committed to
collaborative approach have positioned her as an
strengthening the bonds with the communities
ideal candidate to lead our banking centers,
we serve, actively engaging in initiatives that
which serve as the cornerstone of our network.
foster growth, resilience, and prosperity. By
With Laura's guidance and expertise, we are
partnering with local organizations and investing
confident in our ability to maintain operational
in community development projects, we aim to
excellence and deliver unparalleled service to
create lasting positive change and contribute to
our customers.
the well-being of our neighborhoods, ensuring
they thrive.
We extend our appreciation to our Board of
Directors for their indispensable guidance and
We owe a debt of gratitude to our more than 1,100
support. Their talents and extensive knowledge
associates who show up daily, ready to serve our
continue to enrich our company, steering us
toward continued success. In particular, we are
delighted to welcome Amelia "Amy" Counts to
our Board. Appointed as a Director in December
2023, Amy brings a wealth of experience as the
regional vice president of sales at Wise F&I in St.
Louis, Missouri. Amy's track record of surpassing
sales growth objectives and orchestrating
successful negotiations underscores her
exceptional leadership.
Finally, with a steadfast focus on delivering
sustainable long-term value for our stockholders,
we remain committed to prudent financial
management, strategic investments, and
operational excellence. We understand the trust
you have placed in us as stewards of your capital,
and we take this responsibility seriously. Your
investment allows us to drive strong performance
and deliver superior returns, and for that, we
extend our sincerest appreciation. Together, we
will continue to navigate the ever-changing
banking landscape with resilience and
determination, creating value for both our
stockholders and our communities.
From our associates to our customers, our
communities to stockholders, we are grateful for
your continued support and trust as we embark
on this journey together.
We welcome your feedback at any time.
William V. Turner
Joseph W. Turner
At Great Southern, we firmly believe that our
associates' dedication to our customers sets us
apart in the industry. Their tireless efforts and
genuine care shine through in every interaction,
reflecting a level of engagement beyond the
ordinary. It is this extraordinary capability,
combined with an innate desire to make a
difference, that defines our corporate culture
and propels us forward. Understanding that the
caliber of our associates directly impacts our
success, we prioritize a culture where every
person feels valued, supported, and empowered.
This commitment isn't just about doing what's
right – it is an investment in our long-term
prosperity.
By nurturing a talented and engaged workforce,
we drive operational excellence and customer
satisfaction, which translates into increased
stockholder value over the long term. Their
dedication, expertise, and commitment to
excellence directly impact our operational
efficiency, customer satisfaction, and overall
financial performance. As we continue to invest
in our people and deliver new solutions to our
customers, we remain confident in our ability to
generate long-term value for all stakeholders.
2023 in Review
Going into 2023, the banking industry expected
strong headwinds with anticipated ongoing
interest rate increases by the Federal Open
Market Committee. These continued periodic
interest rate increases through July 2023, and
three large bank failures in March 2023, drove
liquidity concerns leading to mounting deposit
pricing pressure and low loan demand. Great
Southern, due to significant competition and
deposit mix changes, experienced higher deposit
costs throughout the year, with the rate of
increase tapering off in the fourth quarter. These
higher deposit costs and certain expense items
(further described in our Annual Report on Form
10-K) played key roles in our earnings of
$67.8 million in 2023, down by $8.1 million from
2022. Our net interest margin was 3.57% in 2023
compared to 3.80% for the previous year. For 2023,
our return on average assets was 1.19%, and our
return on average equity was 12.31%.
Importantly, our capital position remained
strong and significantly exceeded regulatory
well-capitalized thresholds. At the end of 2023,
total stockholders' equity was $571.8 million, or
9.8% of total assets, increasing $38.7 million from
the end of 2022. Book value increased from $43.58
per common share to $48.44 per common share
during 2023. Total dividends of $1.60 per common
To our fellow
stockholders:
As we reflect on the achievements and
challenges of the past year, we are honored to
share Great Southern Bank's 2023 annual report.
The theme of this year's annual report is
"Unchanging values for a changing world."
Despite the ever-evolving landscape of the
banking industry, we remain grounded in our
values, which have been the cornerstone of our
enduring success.
As we continue our journey, our core values will
guide everything we do at Great Southern. Doing
what's right is more than just a motto; it is a
philosophy that underscores our responsibility to
be fair and respectful in all interactions. Our
dedication to teamwork fosters an environment
where collaboration and support are encouraged
and celebrated, driving us toward shared
objectives and collective success. Mutual
respect is the foundation upon which we build
relationships, valuing diversity and treating
everyone with dignity. And our uncompromising
ethical standards ensure that every decision and
action we take is grounded in honesty and
integrity. These values are not merely words on a
page but define who we are as a company and
set the standard for how we conduct ourselves in
every aspect of our business.
share were declared during 2023. Additionally,
we continued to prioritize stock repurchases,
acquiring approximately 450,000 shares of our
common stock at an average price of $51.38 per
share during the year. These initiatives highlight
our dedication to enhancing shareholder value
while maintaining prudent capital management
practices.
Amid heightened competition and evolving
market dynamics, we remained consistent in our
commitment to meeting the diverse banking
needs of our customers. Despite the interest rate
environment headwinds, we maintained a
proactive approach to managing our deposit
portfolio, strategically balancing the mix of
funding sources to maintain ample liquidity. Our
ability to adapt to changing market conditions
and effectively deploy funding resources
underscores our resilience and agility as a
financial institution. As we look to the future,
delivering value and stability to our depositors
while actively managing the competitive
landscape dynamics will continue to be a focus.
Throughout 2023, we remained steadfast in our
commitment to prudent risk management and
strategic loan growth. New loan production and
general lending activity were down as expected
during the year. Total outstanding loans,
excluding mortgage loans held for sale, increased
by $83.8 million, or 1.8%, from $4.51 billion at
December 31, 2022, to $4.60 billion at December
31, 2023. Growth primarily came from the
multi-family loan and commercial business loan
categories, partially offset by a reduction in
construction loans and one- to four-family
residential loans. Much of the growth from the
multi-family loan segment was the movement
from unfunded construction line availability to
fund construction projects. Credit quality
remained exceptional during 2023, with
non-performing assets and delinquencies
continuing to be maintained at historically low
levels. This disciplined approach indicates our
commitment to preserving asset quality and
ensuring the long-term stability of our loan
portfolio, positioning us for sustained growth
while effectively managing risk.
Total Assets
$5.81
Billion
Total Deposits
$4.72
Billion
Total Loans
$4.60
Billion
$5B
$4B
$3B
$2B
$1B
0
2019 2020 2021 2022 2023
2019 2020 2021 2022 2023
2019 2020 2021 2022 2023
4
customers and support one another, embodying
the true spirit of teamwork and commitment.
Their resilience and dedication have been the
driving force behind our continued success. We
are deeply grateful for their contributions—their
work matters and goes beyond being merely a job.
We help people and institutions finance and
achieve their aspirations, lifting individuals,
homeowners, and businesses in every community
we serve. Our associates' hard work, passion, and
commitment propel us forward, even in the face
of uncertainty. We have always placed our trust in
the people of Great Southern, and we have never
2024 and Beyond
been disappointed.
As we navigate the uncertainties presented by
the economic and geopolitical landscape, we are
focused on ensuring that Great Southern is
well-positioned to weather any challenges that
may arise. We understand that the decisions we
make today will shape the future success of our
company, and we stand resolute in our
commitment to serving the long-term interests of
all our stakeholders.
We recognize that our success hinges not only on
our talented workforce but also on effective
leadership. At the end of 2024, we expect and
have planned for the retirement of a key member
of our management team, Chief Retail Banking
Officer Kris Conley. Kris has been an integral part
of our organization since 1998, assuming the role
of Director of Retail Banking in 2010. In early 2023,
Kris announced his intent to retire in December
of 2024, marking the end of nearly three decades
In the coming year, our focus is on deepening our
of invaluable contributions to our company. Kris's
relationships with our customers, providing them
unwavering dedication to excellence and keen
with innovative solutions, personalized service,
insight into retail banking operations have driven
and exceptional experiences. From assisting
growth and maximized customer satisfaction.
young families in achieving homeownership
dreams to supporting businesses in their growth
endeavors, we remain dedicated to being their
trusted financial partner every step of the way,
helping them achieve their goals and aspirations.
We are pleased to share that Laura Smith,
formerly responsible for managing Investments,
will succeed Kris Conley as the new Chief Retail
Banking Officer. Laura first joined Great Southern
Bank in 2003, and her extensive experience and
Additionally, we are deeply committed to
collaborative approach have positioned her as an
strengthening the bonds with the communities
ideal candidate to lead our banking centers,
we serve, actively engaging in initiatives that
which serve as the cornerstone of our network.
foster growth, resilience, and prosperity. By
With Laura's guidance and expertise, we are
partnering with local organizations and investing
confident in our ability to maintain operational
in community development projects, we aim to
excellence and deliver unparalleled service to
create lasting positive change and contribute to
our customers.
the well-being of our neighborhoods, ensuring
they thrive.
We extend our appreciation to our Board of
Directors for their indispensable guidance and
We owe a debt of gratitude to our more than 1,100
support. Their talents and extensive knowledge
associates who show up daily, ready to serve our
continue to enrich our company, steering us
toward continued success. In particular, we are
delighted to welcome Amelia "Amy" Counts to
our Board. Appointed as a Director in December
2023, Amy brings a wealth of experience as the
regional vice president of sales at Wise F&I in St.
Louis, Missouri. Amy's track record of surpassing
sales growth objectives and orchestrating
successful negotiations underscores her
exceptional leadership.
Finally, with a steadfast focus on delivering
sustainable long-term value for our stockholders,
we remain committed to prudent financial
management, strategic investments, and
operational excellence. We understand the trust
you have placed in us as stewards of your capital,
and we take this responsibility seriously. Your
investment allows us to drive strong performance
and deliver superior returns, and for that, we
extend our sincerest appreciation. Together, we
will continue to navigate the ever-changing
banking landscape with resilience and
determination, creating value for both our
stockholders and our communities.
From our associates to our customers, our
communities to stockholders, we are grateful for
your continued support and trust as we embark
on this journey together.
We welcome your feedback at any time.
William V. Turner
Joseph W. Turner
At Great Southern, we firmly believe that our
associates' dedication to our customers sets us
apart in the industry. Their tireless efforts and
genuine care shine through in every interaction,
reflecting a level of engagement beyond the
ordinary. It is this extraordinary capability,
combined with an innate desire to make a
difference, that defines our corporate culture and
propels us forward. Understanding that the
caliber of our associates directly impacts our
success, we prioritize a culture where every
person feels valued, supported, and empowered.
This commitment isn't just about doing what's
right – it is an investment in our long-term
prosperity.
By nurturing a talented and engaged workforce,
we drive operational excellence and customer
satisfaction, which translates into increased
stockholder value over the long term. Their
dedication, expertise, and commitment to
excellence directly impact our operational
efficiency, customer satisfaction, and overall
financial performance. As we continue to invest
in our people and deliver new solutions to our
customers, we remain confident in our ability to
generate long-term value for all stakeholders.
2023 in Review
Going into 2023, the banking industry expected
strong headwinds with anticipated ongoing
interest rate increases by the Federal Open
Market Committee. These continued periodic
interest rate increases through July 2023, and
three large bank failures in March 2023, drove
liquidity concerns leading to mounting deposit
pricing pressure and low loan demand. Great
Southern, due to significant competition and
deposit mix changes, experienced higher deposit
costs throughout the year, with the rate of
increase tapering off in the fourth quarter. These
higher deposit costs and certain expense items
(further described in our Annual Report on Form
10-K) played key roles in our earnings of $67.8
million in 2023, down by $8.1 million from 2022.
Our net interest margin was 3.57% in 2023
compared to 3.80% for the previous year. For 2023,
our return on average assets was 1.19%, and our
return on average equity was 12.31%.
Importantly, our capital position remained strong
and significantly exceeded regulatory
well-capitalized thresholds. At the end of 2023,
total stockholders' equity was $571.8 million, or
9.8% of total assets, increasing $38.7 million from
the end of 2022. Book value increased from $43.58
per common share to $48.44 per common share
during 2023. Total dividends of $1.60 per common
share were declared during 2023. Additionally, we
Throughout 2023, we remained steadfast in our
continued to prioritize stock repurchases,
commitment to prudent risk management and
acquiring approximately 450,000 shares of our
strategic loan growth. New loan production and
common stock at an average price of $51.38 per
general lending activity were down as expected
share during the year. These initiatives highlight
during the year. Total outstanding loans,
our dedication to enhancing shareholder value
excluding mortgage loans held for sale, increased
while maintaining prudent capital management
by $83.8 million, or 1.8%, from $4.51 billion at
practices.
Amid heightened competition and evolving
market dynamics, we remained consistent in our
commitment to meeting the diverse banking
needs of our customers. Despite the interest rate
environment headwinds, we maintained a
proactive approach to managing our deposit
portfolio, strategically balancing the mix of
funding sources to maintain ample liquidity. Our
ability to adapt to changing market conditions
and effectively deploy funding resources
underscores our resilience and agility as a
financial institution. As we look to the future,
delivering value and stability to our depositors
while actively managing the competitive
landscape dynamics will continue to be a focus.
December 31, 2022, to $4.60 billion at December
31, 2023. Growth primarily came from the
multi-family loan and commercial business loan
categories, partially offset by a reduction in
construction loans and one- to four-family
residential loans. Much of the growth from the
multi-family loan segment was the movement
from unfunded construction line availability to
fund construction projects. Credit quality
remained exceptional during 2023, with
non-performing assets and delinquencies
continuing to be maintained at historically low
levels. This disciplined approach indicates our
commitment to preserving asset quality and
ensuring the long-term stability of our loan
portfolio, positioning us for sustained growth
while effectively managing risk.
To our fellow
stockholders:
As we reflect on the achievements and
challenges of the past year, we are honored to
share Great Southern Bank's 2023 annual report.
The theme of this year's annual report is
"Unchanging values for a changing world."
Despite the ever-evolving landscape of the
banking industry, we remain grounded in our
values, which have been the cornerstone of our
enduring success.
As we continue our journey, our core values will
guide everything we do at Great Southern. Doing
what's right is more than just a motto; it is a
philosophy that underscores our responsibility to
be fair and respectful in all interactions. Our
dedication to teamwork fosters an environment
where collaboration and support are encouraged
and celebrated, driving us toward shared
objectives and collective success. Mutual
respect is the foundation upon which we build
relationships, valuing diversity and treating
everyone with dignity. And our uncompromising
ethical standards ensure that every decision and
action we take is grounded in honesty and
integrity. These values are not merely words on a
page but define who we are as a company and
set the standard for how we conduct ourselves in
every aspect of our business.
$48.44
Book Value per Common Share
$67.80 Million
2023 Total Net Income
40
30
20
10
0
70
60
50
40
30
20
10
0
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
$152.77
Total Return Five Year Cumulative
Great Southern Bancorp, Inc.
NASDAQ Composite Index
S&P U.S. BMI Banks -
Midwest Region Index
250
200
150
100
0
2018
2019
2020
2021
2022
2023
The graph above compares the cumulative total stockholder return on GSBC Common Stock
to the cumulative total returns on the NASDAQ Composite Index and the S&P U.S. BMI Banks
– Midwest Region Index for the period December 31, 2018 through December 31, 2023. The
graph assumes that $100 was invested in GSBC Common Stock and in each of the indices on
December 31, 2018 and that all dividends were reinvested.
Source: S&P Global Market Intelligence © 2024
5
customers and support one another, embodying
the true spirit of teamwork and commitment.
Their resilience and dedication have been the
driving force behind our continued success. I am
deeply grateful for their contributions—their work
matters and goes beyond being merely a job. We
help people and institutions finance and achieve
their aspirations, lifting individuals, homeowners,
and businesses in every community we serve. Our
associates' hard work, passion, and commitment
propel us forward, even in the face of uncertainty.
We have always placed our trust in the people of
Great Southern, and we have never been
2024 and Beyond
disappointed.
As we navigate the uncertainties presented by
the economic and geopolitical landscape, we are
focused on ensuring that Great Southern is
well-positioned to weather any challenges that
may arise. We understand that the decisions we
make today will shape the future success of our
company, and we stand resolute in our
commitment to serving the long-term interests of
all our stakeholders.
We recognize that our success hinges not only on
our talented workforce but also on effective
leadership. At the end of 2024, we expect and
have planned for the retirement of a key member
of our management team, Chief Retail Banking
Officer Kris Conley. Kris has been an integral part
of our organization since 1998, assuming the role
of Director of Retail Banking in 2010. In early 2023,
Kris announced his intent to retire in December
of 2024, marking the end of nearly three decades
In the coming year, our focus is on deepening our
of invaluable contributions to our company. Kris's
relationships with our customers, providing them
unwavering dedication to excellence and keen
with innovative solutions, personalized service,
insight into retail banking operations have driven
and exceptional experiences. From assisting
growth and maximized customer satisfaction.
young families in achieving homeownership
dreams to supporting businesses in their growth
endeavors, we remain dedicated to being their
trusted financial partner every step of the way,
helping them achieve their goals and aspirations.
We are pleased to share that Laura Smith,
formerly responsible for managing Investments,
will succeed Kris Conley as the new chief retail
banking officer. Laura first joined Great Southern
Bank in 2003, and her extensive experience and
Additionally, we are deeply committed to
collaborative approach have positioned her as an
strengthening the bonds with the communities
ideal candidate to lead our banking centers,
we serve, actively engaging in initiatives that
which serve as the cornerstone of our network.
foster growth, resilience, and prosperity. By
With Laura's guidance and expertise, we are
partnering with local organizations and investing
confident in our ability to maintain operational
in community development projects, we aim to
excellence and deliver unparalleled service to our
create lasting positive change and contribute to
customers.
the well-being of our neighborhoods, ensuring
they thrive.
We extend our appreciation to our Board of
Directors for their indispensable guidance and
We owe a debt of gratitude to our more than 1,100
support. Their talents and extensive knowledge
associates who show up daily, ready to serve our
continue to enrich our company, steering us
toward continued success. In particular, we are
delighted to welcome Amelia "Amy" Counts to
our Board. Appointed as a Director in December
2023, Amy brings a wealth of experience as the
regional vice president of sales at Wise F&I in St.
Louis, Missouri. Amy's track record of surpassing
sales growth objectives and orchestrating
successful negotiations underscores her
exceptional leadership.
Finally, with a steadfast focus on delivering
sustainable long-term value for our stockholders,
we remain committed to prudent financial
management, strategic investments, and
operational excellence. We understand the trust
you have placed in us as stewards of your capital,
and we take this responsibility seriously. Your
investment allows us to drive strong performance
and deliver superior returns, and for that, we
extend our sincerest appreciation. Together, we
will continue to navigate the ever-changing
banking landscape with resilience and
determination, creating value for both our
stockholders and our communities.
From our associates to our customers, our
communities to stockholders, we are grateful for
your continued support and trust as we embark
on this journey together.
We welcome your feedback at any time.
William V. Turner
Joseph W. Turner
At Great Southern, we firmly believe that our
associates' dedication to our customers sets us
apart in the industry. Their tireless efforts and
genuine care shine through in every interaction,
reflecting a level of engagement beyond the
ordinary. It is this extraordinary capability,
combined with an innate desire to make a
difference, that defines our corporate culture
and propels us forward. Understanding that the
caliber of our associates directly impacts our
success, we prioritize a culture where every
person feels valued, supported, and empowered.
This commitment isn't just about doing what's
right – it is an investment in our long-term
prosperity.
By nurturing a talented and engaged workforce,
we drive operational excellence and customer
satisfaction, which translates into increased
stockholder value over the long term. Their
dedication, expertise, and commitment to
excellence directly impact our operational
efficiency, customer satisfaction, and overall
financial performance. As we continue to invest
in our people and deliver new solutions to our
customers, we remain confident in our ability to
generate long-term value for all stakeholders.
2023 in Review
Going into 2023, the banking industry expected
strong headwinds with anticipated ongoing
interest rate increases by the Federal Open
Market Committee. These continued periodic
interest rate increases through July 2023, and
three large bank failures in March 2023, drove
liquidity concerns leading to mounting deposit
pricing pressure and low loan demand. Great
Southern, due to significant competition and
deposit mix changes, experienced higher deposit
costs throughout the year, with the rate of
increase tapering off in the fourth quarter. These
higher deposit costs and certain expense items
(further described in our Annual Report on Form
10-K) played key roles in our earnings of
$67.8 million in 2023, down by $8.1 million from
2022. Our net interest margin was 3.57% in 2023
compared to 3.80% for the previous year. For 2023,
our return on average assets was 1.19%, and our
return on average equity was 12.31%.
Importantly, our capital position remained
strong and significantly exceeded regulatory
well-capitalized thresholds. At the end of 2023,
total stockholders' equity was $571.8 million, or
9.8% of total assets, increasing $38.7 million from
the end of 2022. Book value increased from $43.58
per common share to $48.44 per common share
during 2023. Total dividends of $1.60 per common
share were declared during 2023. Additionally,
Throughout 2023, we remained steadfast in our
we continued to prioritize stock repurchases,
commitment to prudent risk management and
acquiring approximately 450,000 shares of our
strategic loan growth. New loan production and
common stock at an average price of $51.38 per
general lending activity were down as expected
share during the year. These initiatives highlight
during the year. Total outstanding loans,
our dedication to enhancing shareholder value
excluding mortgage loans held for sale, increased
while maintaining prudent capital management
by $83.8 million, or 1.8%, from $4.51 billion at
practices.
Amid heightened competition and evolving
market dynamics, we remained consistent in our
commitment to meeting the diverse banking
needs of our customers. Despite the interest rate
environment headwinds, we maintained a
proactive approach to managing our deposit
portfolio, strategically balancing the mix of
funding sources to maintain ample liquidity. Our
ability to adapt to changing market conditions
and effectively deploy funding resources
underscores our resilience and agility as a
financial institution. As we look to the future,
delivering value and stability to our depositors
while actively managing the competitive
landscape dynamics will continue to be a focus.
December 31, 2022, to $4.60 billion at December
31, 2023. Growth primarily came from the
multi-family loan and commercial business loan
categories, partially offset by a reduction in
construction loans and one- to four-family
residential loans. Much of the growth from the
multi-family loan segment was the movement
from unfunded construction line availability to
fund construction projects. Credit quality
remained exceptional during 2023, with
non-performing assets and delinquencies
continuing to be maintained at historically low
levels. This disciplined approach indicates our
commitment to preserving asset quality and
ensuring the long-term stability of our loan
portfolio, positioning us for sustained growth
while effectively managing risk.
To our fellow
stockholders:
As we reflect on the achievements and
challenges of the past year, we are honored to
share Great Southern Bank's 2023 annual report.
The theme of this year's annual report is
"Unchanging values for a changing world."
Despite the ever-evolving landscape of the
banking industry, we remain grounded in our
values, which have been the cornerstone of our
enduring success.
As we continue our journey, our core values will
guide everything we do at Great Southern. Doing
what's right is more than just a motto; it is a
philosophy that underscores our responsibility to
be fair and respectful in all interactions. Our
dedication to teamwork fosters an environment
where collaboration and support are encouraged
and celebrated, driving us toward shared
objectives and collective success. Mutual
respect is the foundation upon which we build
relationships, valuing diversity and treating
everyone with dignity. And our uncompromising
ethical standards ensure that every decision and
action we take is grounded in honesty and
integrity. These values are not merely words on a
page but define who we are as a company and
set the standard for how we conduct ourselves in
every aspect of our business.
customers and support one another, embodying
the true spirit of teamwork and commitment.
Their resilience and dedication have been the
driving force behind our continued success. We
are deeply grateful for their contributions – their
work matters and goes beyond being merely a job.
We help people and institutions finance and
achieve their aspirations, lifting individuals,
homeowners, and businesses in every community
we serve. Our associates' hard work, passion, and
commitment propel us forward, even in the face
of uncertainty. We have always placed our trust in
the people of Great Southern, and we have never
been disappointed.
We recognize that our success hinges not only on
our talented workforce but also on effective
leadership. At the end of 2024, we expect and
have planned for the retirement of a key member
of our management team, Chief Retail Banking
Officer Kris Conley. Kris has been an integral part
of our organization since 1998, assuming the role
of Director of Retail Banking in 2010. In early 2023,
Kris announced his intent to retire in December
of 2024, marking the end of nearly three decades
of invaluable contributions to our company. Kris's
unwavering dedication to excellence and keen
insight into retail banking operations have driven
growth and maximized customer satisfaction.
We are pleased to share that Laura Smith,
formerly responsible for managing Investments,
will succeed Kris Conley as the new Chief Retail
Banking Officer. Laura first joined Great Southern
Bank in 2003, and her extensive experience and
collaborative approach have positioned her as an
ideal candidate to lead our banking centers,
which serve as the cornerstone of our network.
With Laura's guidance and expertise, we are
confident in our ability to maintain operational
excellence and deliver unparalleled service to
our customers.
We extend our appreciation to our Board of
Directors for their indispensable guidance and
support. Their talents and extensive knowledge
continue to enrich our company, steering us
2024 and Beyond
As we navigate the uncertainties presented by
the economic and geopolitical landscape, we are
focused on ensuring that Great Southern is
well-positioned to weather any challenges that
may arise. We understand that the decisions we
make today will shape the future success of our
company, and we stand resolute in our
commitment to serving the long-term interests of
all our stakeholders.
In the coming year, our focus is on deepening our
relationships with our customers, providing them
with innovative solutions, personalized service,
and exceptional experiences. From assisting
young families in achieving homeownership
dreams to supporting businesses in their growth
endeavors, we remain dedicated to being their
trusted financial partner every step of the way,
helping them achieve their goals and aspirations.
Additionally, we are deeply committed to
strengthening the bonds with the communities
we serve, actively engaging in initiatives that
foster growth, resilience, and prosperity. By
partnering with local organizations and investing
in community development projects, we aim to
create lasting positive change and contribute to
the well-being of our neighborhoods, ensuring
they thrive.
We owe a debt of gratitude to our more than 1,100
associates who show up daily, ready to serve our
6
toward continued success. In particular, we are
delighted to welcome Amelia "Amy" Counts to
our Board. Appointed as a Director in December
2023, Amy brings a wealth of experience as the
regional vice president of sales at Wise F&I in St.
Louis, Missouri. Amy's track record of surpassing
sales growth objectives and orchestrating
successful negotiations underscores her
exceptional leadership.
Finally, with a steadfast focus on delivering
sustainable long-term value for our stockholders,
we remain committed to prudent financial
management, strategic investments, and
operational excellence. We understand the trust
you have placed in us as stewards of your capital,
and we take this responsibility seriously. Your
investment allows us to drive strong performance
and deliver superior returns, and for that, we
extend our sincerest appreciation. Together, we
will continue to navigate the ever-changing
banking landscape with resilience and
determination, creating value for both our
stockholders and our communities.
From our associates to our customers, our
communities to stockholders, we are grateful for
your continued support and trust as we embark
on this journey together.
We welcome your feedback at any time.
William V. Turner
Joseph W. Turner
At Great Southern, we firmly believe that our
associates' dedication to our customers sets us
apart in the industry. Their tireless efforts and
genuine care shine through in every interaction,
reflecting a level of engagement beyond the
ordinary. It is this extraordinary capability,
combined with an innate desire to make a
difference, that defines our corporate culture and
propels us forward. Understanding that the
caliber of our associates directly impacts our
success, we prioritize a culture where every
person feels valued, supported, and empowered.
This commitment isn't just about doing what's
right – it is an investment in our long-term
prosperity.
By nurturing a talented and engaged workforce,
we drive operational excellence and customer
satisfaction, which translates into increased
stockholder value over the long term. Their
dedication, expertise, and commitment to
excellence directly impact our operational
efficiency, customer satisfaction, and overall
financial performance. As we continue to invest
in our people and deliver new solutions to our
customers, we remain confident in our ability to
generate long-term value for all stakeholders.
2023 in Review
Going into 2023, the banking industry expected
strong headwinds with anticipated ongoing
interest rate increases by the Federal Open
Market Committee. These continued periodic
interest rate increases through July 2023, and
three large bank failures in March 2023, drove
liquidity concerns leading to mounting deposit
pricing pressure and low loan demand. Great
Southern, due to significant competition and
deposit mix changes, experienced higher deposit
costs throughout the year, with the rate of
increase tapering off in the fourth quarter. These
higher deposit costs and certain expense items
(further described in our Annual Report on Form
10-K) played key roles in our earnings of $67.8
million in 2023, down by $8.1 million from 2022.
Our net interest margin was 3.57% in 2023
compared to 3.80% for the previous year. For 2023,
our return on average assets was 1.19%, and our
return on average equity was 12.31%.
Importantly, our capital position remained strong
and significantly exceeded regulatory
well-capitalized thresholds. At the end of 2023,
total stockholders' equity was $571.8 million, or
9.8% of total assets, increasing $38.7 million from
the end of 2022. Book value increased from $43.58
per common share to $48.44 per common share
during 2023. Total dividends of $1.60 per common
share were declared during 2023. Additionally, we
Throughout 2023, we remained steadfast in our
continued to prioritize stock repurchases,
commitment to prudent risk management and
acquiring approximately 450,000 shares of our
strategic loan growth. New loan production and
common stock at an average price of $51.38 per
general lending activity were down as expected
share during the year. These initiatives highlight
during the year. Total outstanding loans,
our dedication to enhancing shareholder value
excluding mortgage loans held for sale, increased
while maintaining prudent capital management
by $83.8 million, or 1.8%, from $4.51 billion at
practices.
Amid heightened competition and evolving
market dynamics, we remained consistent in our
commitment to meeting the diverse banking
needs of our customers. Despite the interest rate
environment headwinds, we maintained a
proactive approach to managing our deposit
portfolio, strategically balancing the mix of
funding sources to maintain ample liquidity. Our
ability to adapt to changing market conditions
and effectively deploy funding resources
underscores our resilience and agility as a
financial institution. As we look to the future,
delivering value and stability to our depositors
while actively managing the competitive
landscape dynamics will continue to be a focus.
December 31, 2022, to $4.60 billion at December
31, 2023. Growth primarily came from the
multi-family loan and commercial business loan
categories, partially offset by a reduction in
construction loans and one- to four-family
residential loans. Much of the growth from the
multi-family loan segment was the movement
from unfunded construction line availability to
fund construction projects. Credit quality
remained exceptional during 2023, with
non-performing assets and delinquencies
continuing to be maintained at historically low
levels. This disciplined approach indicates our
commitment to preserving asset quality and
ensuring the long-term stability of our loan
portfolio, positioning us for sustained growth
while effectively managing risk.
To our fellow
stockholders:
As we reflect on the achievements and
challenges of the past year, we are honored to
share Great Southern Bank's 2023 annual report.
The theme of this year's annual report is
"Unchanging values for a changing world."
Despite the ever-evolving landscape of the
banking industry, we remain grounded in our
values, which have been the cornerstone of our
enduring success.
As we continue our journey, our core values will
guide everything we do at Great Southern. Doing
what's right is more than just a motto; it is a
philosophy that underscores our responsibility to
be fair and respectful in all interactions. Our
dedication to teamwork fosters an environment
where collaboration and support are encouraged
and celebrated, driving us toward shared
objectives and collective success. Mutual
respect is the foundation upon which we build
relationships, valuing diversity and treating
everyone with dignity. And our uncompromising
ethical standards ensure that every decision and
action we take is grounded in honesty and
integrity. These values are not merely words on a
page but define who we are as a company and
set the standard for how we conduct ourselves in
every aspect of our business.
customers and support one another, embodying
the true spirit of teamwork and commitment.
Their resilience and dedication have been the
driving force behind our continued success. I am
deeply grateful for their contributions—their work
matters and goes beyond being merely a job. We
help people and institutions finance and achieve
their aspirations, lifting individuals, homeowners,
and businesses in every community we serve. Our
associates' hard work, passion, and commitment
propel us forward, even in the face of uncertainty.
We have always placed our trust in the people of
Great Southern, and we have never been
2024 and Beyond
disappointed.
As we navigate the uncertainties presented by
the economic and geopolitical landscape, we are
focused on ensuring that Great Southern is
well-positioned to weather any challenges that
may arise. We understand that the decisions we
make today will shape the future success of our
company, and we stand resolute in our
commitment to serving the long-term interests of
all our stakeholders.
We recognize that our success hinges not only on
our talented workforce but also on effective
leadership. At the end of 2024, we expect and
have planned for the retirement of a key member
of our management team, Chief Retail Banking
Officer Kris Conley. Kris has been an integral part
of our organization since 1998, assuming the role
of Director of Retail Banking in 2010. In early 2023,
Kris announced his intent to retire in December
of 2024, marking the end of nearly three decades
In the coming year, our focus is on deepening our
of invaluable contributions to our company. Kris's
relationships with our customers, providing them
unwavering dedication to excellence and keen
with innovative solutions, personalized service,
insight into retail banking operations have driven
and exceptional experiences. From assisting
growth and maximized customer satisfaction.
young families in achieving homeownership
dreams to supporting businesses in their growth
endeavors, we remain dedicated to being their
trusted financial partner every step of the way,
helping them achieve their goals and aspirations.
We are pleased to share that Laura Smith,
formerly responsible for managing Investments,
will succeed Kris Conley as the new chief retail
banking officer. Laura first joined Great Southern
Bank in 2003, and her extensive experience and
Additionally, we are deeply committed to
collaborative approach have positioned her as an
strengthening the bonds with the communities
ideal candidate to lead our banking centers,
we serve, actively engaging in initiatives that
which serve as the cornerstone of our network.
foster growth, resilience, and prosperity. By
With Laura's guidance and expertise, we are
partnering with local organizations and investing
confident in our ability to maintain operational
in community development projects, we aim to
excellence and deliver unparalleled service to our
create lasting positive change and contribute to
customers.
the well-being of our neighborhoods, ensuring
they thrive.
We extend our appreciation to our Board of
Directors for their indispensable guidance and
We owe a debt of gratitude to our more than 1,100
support. Their talents and extensive knowledge
associates who show up daily, ready to serve our
continue to enrich our company, steering us
toward continued success. In particular, we are
delighted to welcome Amelia "Amy" Counts to
our Board. Appointed as a Director in December
2023, Amy brings a wealth of experience as the
regional vice president of sales at Wise F&I in St.
Louis, Missouri. Amy's track record of surpassing
sales growth objectives and orchestrating
successful negotiations underscores her
exceptional leadership.
Finally, with a steadfast focus on delivering
sustainable long-term value for our stockholders,
we remain committed to prudent financial
management, strategic investments, and
operational excellence. We understand the trust
you have placed in us as stewards of your capital,
and we take this responsibility seriously. Your
investment allows us to drive strong performance
and deliver superior returns, and for that, we
extend our sincerest appreciation. Together, we
will continue to navigate the ever-changing
banking landscape with resilience and
determination, creating value for both our
stockholders and our communities.
From our associates to our customers, our
communities to stockholders, we are grateful for
your continued support and trust as we embark
on this journey together.
We welcome your feedback at any time.
William V. Turner
Joseph W. Turner
7
GREAT SOUTHERN BANCORP, INC. DIRECTORS
Kevin R. Ausburn
Board Member; Chairman and
CEO, SMC Packaging Group
Julie Turner Brown
Board Member; Shareholder,
Carnahan Evans, P.C.
Debra Mallonee (Shantz) Hart
Board Member; Attorney; Owner,
Housing Plus, LLC and Sustainable
Housing Solutions
Douglas M. Pitt
Board Member; Owner, Pitt Technology
Group, LLC and Pitt Development
Group, LLC and Care to Learn Founder
Thomas J. Carlson
Board Member; President,
Mid America Management, Inc.
Earl A. Steinert, Jr.
Board Member; Co-owner, EAS
Investment Enterprises, Inc.; CPA
Amelia A. Counts
Board Member; Regional
Vice President of Sales,
Wise F&I
Steven D. Edwards
Board Member; Retired –
CoxHealth
William V. Turner
Chairman of the Board
Great Southern Bancorp, Inc.
Joseph W. Turner
President and Chief Executive
Officer
Great Southern Bancorp, Inc.
GREAT SOUTHERN LEADERSHIP TEAM
Kevin Baker
Chief Credit Officer
Tammy Baurichter
Controller
John Bugh
Chief Lending Officer
Debbie Flowers
Director of Credit Risk
Administration
Jeff Patrick
Director of Physical
Operations
Laura Smith
Managing Director of
Retail Banking
Henry Heimsoth
Director of Commercial
Lending
Kelly Polonus
Chief Communications
and Marketing Officer
Matt Snyder
Chief Human Resources
Officer
Kris Conley
Chief Retail Banking Officer
Rex Copeland
Chief Financial Officer
Eric Johnson
Chief Information Officer
Mark Maples
Chief Operations Officer
Ryan Storey
Director of Loan
Operations
Bryan Tiede
Chief Risk Officer
Joseph W. Turner
President and Chief
Executive Officer
IN MEMORIUM
Larry D. Frazier
It is with great sadness that we announce that Larry D. Frazier, a
valued member of the Board of Directors, passed away on November
21, 2023. Great Southern benefited from Mr. Frazier’s knowledge,
insight and trusted guidance for more than 40 years. We are forever
grateful for his dedicated service. Mr. Frazier was elected a director of
Great Southern Financial Corporation in 1976. In 1992, he was
appointed a director of Great Southern Bank and Great Southern
Bancorp, Inc. Mr. Frazier’s legacy of integrity and wisdom will always
be remembered, leaving a lasting impact on our company. We honor
his memory and the profound influence he had on Great Southern.
8
Selected Financial Data
The following sets forth selected consolidated financial information and other financial data of the Company.
The summary statement of financial condition information and statement of income information are
derived from our consolidated financial statements, which have been audited by FORVIS, LLP. See Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8.
“Financial Statements and Supplementary Information” in the Company’s Annual Report on Form 10-K.
Results for past periods are not necessarily indicative of results that may be expected for any future period.
Summary Statement of Financial Condition Information
(Dollars in Thousands)
December 31,
Assets
Loans receivable, net
Allowance for credit losses on loans
Available-for-sale securities
Held-to-maturity securities
Other real estate and
repossessions, net
Deposits
Total borrowings and other
interest-bearing liabilities
Stockholders’ equity (retained
earnings substantially restricted)
Common stockholders’ equity
Average loans receivable
Average total assets
Average deposits
Average stockholders’ equity
Number of deposit accounts
Number of full-service offices
2023
2022
2021
2020
2019
$5,812,402
4,595,469
64,670
478,207
195,023
$5,680,702
4,511,647
63,480
490,592
202,495
$5,449,944
4,016,235
60,754
501,032
—
$5,526,420
4,314,584
55,743
414,933
—
$5,015,072
4,163,224
40,294
374,175
—
23
4,721,708
233
4,684,910
2,087
4,552,101
1,877
4,516,903
5,525
3,960,106
423,806
366,481
238,713
339,863
412,374
571,829
571,829
4,631,856
5,719,196
4,754,310
550,920
230,697
90
533,087
533,087
4,386,042
5,519,790
4,607,363
565,173
232,688
92
616,752
616,752
4,274,176
5,502,356
4,539,740
627,516
229,942
93
629,741
629,741
4,399,259
5,323,426
4,330,271
622,437
229,470
94
603,066
603,066
4,155,780
4,855,007
3,889,910
571,637
228,247
97
9
Summary Statement of Income Information
(in Thousands)
Interest income:
Loans
Investment securities and other
Interest expense:
Deposits
Securities sold under reverse repurchase agreements
Short-term borrowings, overnight FHLBank borrowings and
other interest-bearing liabilities
Subordinated debentures issued to capital trust
Subordinated notes
Net interest income
Provision (credit) for credit losses on loans
Provision (credit) for unfunded commitments
Net interest income after provision (credit) for credit losses
and provision (credit) for unfunded commitments
Non-interest income:
Commissions
Overdraft and insufficient funds fees
Point-of-sale and ATM fee income and service charges
Net gain on loan sales
Net realized gain (loss) on sales of available-for-sale securities
Late charges and fees on loans
Gain (loss) on derivative interest rate products
Other income
For the Year Ended December 31,
2023
2022
2021
2020
2019
$ 271,952 $ 205,751
$ 186,269
$ 204,964
$ 223,047
24,883
21,226
12,404
12,739
11,947
296,835
226,977
198,673
217,703
234,994
20,676
13,102
32,431
45,570
324
37
31
19
88,757
1,205
7,500
1,736
4,422
103,620
1,066
875
4,422
27,363
193,215
199,614
2,250
(5,329 )
3,000
3,187
—
448
7,165
20,752
177,921
(6,700 )
939
644
628
6,831
40,565
177,138
15,871
—
3,616
1,019
4,378
54,602
180,392
6,150
—
196,294
193,427
183,682
161,267
174,242
1,153
7,617
14,346
2,354
—
786
(337 )
4,154
30,073
1,208
7,872
15,705
2,584
(130 )
1,182
321
5,399
34,141
1,263
6,686
15,029
9,463
—
1,434
312
4,130
892
6,481
12,203
8,089
78
1,419
(264 )
6,152
889
8,249
12,649
2,607
(62 )
1,432
(104 )
5,297
38,317
35,050
30,957
Non-interest expense:
Salaries and employee benefits
Net occupancy and equipment expense
Postage
Insurance
Advertising
Office supplies and printing
Telephone
Legal, audit and other professional fees
Expense on other real estate and repossessions
Acquired deposit intangible asset amortization
78,521
30,834
75,300
28,471
70,290
29,163
3,590
4,542
3,396
1,057
2,730
7,086
311
286
3,379
3,197
3,261
867
3,170
6,330
359
768
3,164
3,061
3,072
848
3,458
6,555
627
863
Other operating expenses
8,670
8,264
6,534
70,810
27,582
3,069
2,405
2,631
1,016
3,794
2,378
2,023
1,154
6,363
63,224
26,217
3,198
2,015
2,808
1,077
3,580
2,624
2,184
1,190
7,021
Income before income taxes
Provision for income taxes
Net income
141,023
133,366
127,635
123,225
115,138
85,344
17,544
94,202
18,254
94,364
19,737
73,092
13,779
90,061
16,449
$ 67,800 $ 75,948
$ 74,627
$ 59,313
$
73,61
10
Performance Data and Ratios
(Number of shares in thousands)
Per Common Share Data:
Basic earnings per common share
Diluted earnings per common share
Cash dividends declared
Book value per common share
Average shares outstanding
Year-end actual shares outstanding
Average fully diluted shares outstanding
Earnings Performance Ratios:
Return on average assets(1)
Return on average stockholders’ equity(2)
Non-interest income to average total assets
Non-interest expense to average total assets
Average interest rate spread(3)
Year-end interest rate spread
Net interest margin(4)
Efficiency ratio(5)
Net overhead ratio(6)
Common dividend pay-out ratio(7)
Asset Quality Ratios (8):
Allowance for credit losses/year-end loans
Non-performing assets/year-end loans and foreclosed assets
Allowance for credit losses/non-performing loans
Net charge-offs/average loans
Gross non-performing assets/year end assets
Non-performing loans/year-end loans
Balance Sheet Ratios:
Loans to deposits
Average interest-earning assets as a percentage of average
interest-bearing liabilities
At or For the Year Ended December 31,
2023
2022
2021
2020
2019
$ 5.65
5.61
1.60
48.44
11,992
11,804
12,080
$ 6.07
6.02
1.56
43.58
12,517
12,231
12,607
$ 5.50
5.46
1.40
46.98
13,558
13,128
13,674
$ 4.22
4.21
2.36
45.79
14,043
13,753
14,104
$
5.18
5.14
2.07
42.29
14,201
14,261
14,330
1.19 %
12.31
0.53
2.47
2.97
2.78
3.57
63.16
1.94
28.52
1.38 %
13.44
0.62
2.42
3.59
3.63
3.80
57.05
1.80
25.91
1.36 %
11.89
0.70
2.32
3.22
3.20
3.37
59.03
1.62
25.64
1.11 %
9.53
0.66
2.31
3.23
3.08
3.49
58.07
1.66
56.06
1.52 %
12.88
0.64
2.37
3.62
3.28
3.95
54.48
1.73
40.27
1.39 %
0.25
550.48
0.02
0.20
0.25
1.39 %
0.08
1,729.69
0.01
0.07
0.08
1.49 %
0.15
1,120.31
0.00
0.11
0.13
1.32 %
0.09
1,831.86
0.01
0.07
0.07
1.00 %
0.19
891.66
0.10
0.16
0.11
97.33 %
96.30 %
88.23 %
95.52 %
105.13 %
131.11
140.32
139.94
132.49
127.50
Capital Ratios:
Average common stockholders’ equity to average assets
Year-end tangible common stockholders’ equity to tangible assets(9)
Great Southern Bancorp, Inc.:
Tier 1 capital ratio
Total capital ratio
Tier 1 leverage ratio
Common equity Tier 1 ratio
Great Southern Bank:
Tier 1 capital ratio
Total capital ratio
Tier 1 leverage ratio
Common equity Tier 1 ratio
9.6 %
9.7
10.2 %
9.2
11.4 %
11.2
11.7 %
11.3
11.8 %
11.9
12.4
15.2
11.0
11.9
13.1
14.3
11.6
13.1
11.0
13.5
10.6
10.6
11.9
13.1
11.5
11.9
13.4
16.3
11.3
12.9
14.1
15.4
11.9
14.1
12.7
17.2
10.9
12.2
13.7
14.9
11.8
13.7
12.5
15.0
11.8
12.0
13.1
14.0
12.3
13.1
(1) Net income divided by average total assets.
(2) Net income divided by average stockholders’ equity.
(3) Yield on average interest-earning assets less rate on average
(7) Cash dividends per common share divided by earnings per common
share.
(8) Prior to January 1, 2021, the ratio excluded the FDIC-assisted acquired
interest-bearing liabilities.
loans.
(4) Net interest income divided by average interest-earning assets.
(5) Non-interest expense divided by the sum of net interest income
plus non-interest income.
(6) Non-interest expense less non-interest income divided by
(9) Non-GAAP Financial Measure. For additional information, including
a reconciliation to GAAP, see “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Non-GAAP
Financial Measures” in the Company’s Annual Report on Form 10-K.
average total assets.
11
NEW PHOTO
TO COME
35 years
as a public company
Great Southern Bancorp has maintained its
status as a publicly traded company since our
successful initial public offering in 1989. For over
three decades, our shares have been listed on
the NASDAQ Global Select Market, allowing
investors to participate in our company's growth
and success. As a publicly traded entity, we are
dedicated to upholding rigorous standards of
transparency, accountability, and corporate
governance, ensuring the trust and confidence
of our shareholders in our operations and
financial stewardship.
19,952%*
total return since
initial public offering
For stockholders who invested in a share of Great
Southern stock in the 1989 initial public offering,
the total return was 19,952% at the end of 2023.
One of our guiding principles is to manage Great
Southern with a long-term perspective. Our
objective is to run our company based on solid
banking fundamentals. We adhered to these
fundamentals when we went public in 1989 and
are just as steadfast today in how we manage our
company. This steady, long-term approach has
served us well.
*Total return of GSBC from December 14, 1989 to December 31,
2023, including price appreciation and the reinvestment of
dividends. Source: S&P Global Market Intelligence
2
top bank rankings
In the Bank Director’s “RankingBanking” study,
which evaluates the top 300 largest publicly
traded banks, Great Southern Bancorp secured
the sixth spot among the top 25 banks overall and
achieved an outstanding third-place ranking
within the $5 billion to $50 billion asset category
in 2023. These rankings reflect our consistent
delivery of exceptional results across key metrics
such as return on average equity, return on
average assets, capital adequacy, asset quality,
and total shareholder return. Additionally, our
commitment to excellence has been recognized
globally as Great Southern Bank was featured on
Forbes’ World’s Best Banks list for the fourth
consecutive year.
12
Paying it
Forward
In commemorating our centennial milestone
in 2023, Great Southern Bank embarked on a
heartfelt initiative to empower and uplift the
communities we proudly serve. Demonstrating
our unwavering commitment to nurturing a
brighter future for generations to come, we
provided each of our offices with $1,000
to donate to a charity of their choice, with a
special focus on organizations
benefitting children.
Nutrition
Connection
Opportunity
Advocacy
Self-esteem
100
DAYS
of g iving
Careers
Education
Sports
Mentors
Joy
Understanding
the Need
We entrusted our associates, who know their
communities intimately, to select nonprofits
that reflect their diverse needs. The impact of
100 Days of Giving was far-reaching, as the
receiving nonprofits ranged from
organizations providing essential resources
and educational opportunities to those
breaking down racial barriers and facilitating
life-changing experiences. Through this
collective effort, we reinforced our dedication
to making a meaningful difference in the lives
of those we are privileged to serve.
The customer
The customer
Experience
Experience
We are dedicated to continuously enhancing
customer satisfaction through our Customer
Experience program, which includes our annual
Retail Banking Satisfaction Study in collaboration
with industry-leading research firm JD Power. For
several years, we've conducted these
comprehensive surveys, leveraging JD Power's
expertise to gather invaluable insights and refine
our services. In our 2023 Retail Banking
Satisfaction Study, our net promoter score, a
crucial indicator of customer loyalty and
satisfaction, was more than double the average
for our peer set. Additionally, we surpassed peer
set averages across several metrics, including the
customization of account offerings to meet
customer needs, flexibility in banking options, the
expertise of our associates, efficiency in saving
time and money, and the level of trust our
customers have in us. Our performance
underscores our dedication to providing
exceptional service and building winning
relationships with our customers.
Mobile
banking improved
Our mobile banking app
received an upgrade in 2023.
This enhanced version brings
new features and improvements,
including streamlined navigation
and enhanced security. Our goal
is to provide our customers with
a seamless and secure banking
experience anytime, anywhere.
We're committed to delivering
innovative solutions that meet
the evolving needs of our
customers and reinforce our position as a trusted
partner in their financial journey.
14
Express
banking launched
In September, we proudly welcomed customers to
Great Southern Bank Express, a first-of-its-kind
facility in Springfield, Mo. This unique facility
features four Interactive Teller Machine (ITM)
lanes, providing customers with direct access to
live tellers. Combining virtual technology with
personalized service, our ITM tellers offer
extended hours from 7 a.m. to 7 p.m., seven days a
week, ensuring greater flexibility for one-on-one
assistance. Customers can expect the same level
of convenience and support they've come to rely
on from our drive-thru lanes. The Express Center
represents our commitment to enhancing the
banking experience through innovation and
accessibility.
2023
Financial Information
CONTENTS
16 Management’s Discussion and Analysis of Financial Condition
and Results of Operations
52 Quantitative and Qualitative Disclosures About Market Risk
60 Report of Independent Registered Public Accounting Firm
63 Consolidated Statements of Financial Condition
65 Consolidated Statements of Income
67 Consolidated Statements of Comprehensive Income
68 Consolidated Statements of Stockholders’ Equity
70 Consolidated Statements of Cash Flows
72 Notes to Consolidated Financial Statements
15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking Statements
When used in this Annual Report and in other documents filed or furnished by Great Southern Bancorp, Inc. (the “Company”) with
the Securities and Exchange Commission (the “SEC”), in the Company’s press releases or other public or stockholder
communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases “may,”
“might,” “could,” “should,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “believe,” “estimate,” “project,”
“intends” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements also include, but are not limited to, statements regarding plans, objectives,
expectations or consequences of announced transactions, known trends and statements about future performance, operations, products
and services of the Company. The Company’s ability to predict results or the actual effects of future plans or strategies is inherently
uncertain, and the Company’s actual results could differ materially from those contained in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not limited to: (i) expected revenues, cost savings, earnings
accretion, synergies and other benefits from the Company’s merger and acquisition activities might not be realized within the
anticipated time frames or at all, and costs or difficulties relating to integration matters, including but not limited to customer and
employee retention, might be greater than expected; (ii) changes in economic conditions, either nationally or in the Company’s market
areas; (iii) the remaining effects of the COVID-19 pandemic on general economic and financial market conditions and on public
health; (iv) fluctuations in interest rates, the effects of inflation or a potential recession, whether caused by Federal Reserve actions or
otherwise; (v) the impact of bank failures or adverse developments at other banks and related negative press about the banking
industry in general on investor and depositor sentiment; (vi) slower economic growth caused by changes in energy prices, supply
chain disruptions or other factors; (vii) the risks of lending and investing activities, including changes in the level and direction of loan
delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; (viii) the possibility of
realized or unrealized losses on securities held in the Company’s investment portfolio; (ix) the Company’s ability to access cost-
effective funding and maintain sufficient liquidity; (x) fluctuations in real estate values and both residential and commercial real estate
market conditions; (xi) the ability to adapt successfully to technological changes to meet customers’ needs and developments in the
marketplace; (xii) the possibility that security measures implemented might not be sufficient to mitigate the risk of a cyber-attack or
cyber theft, and that such security measures might not protect against systems failures or interruptions; (xiii) legislative or regulatory
changes that adversely affect the Company’s business; (xiv) changes in accounting policies and practices or accounting standards; (xv)
results of examinations of the Company and Great Southern Bank by their regulators, including the possibility that the regulators may,
among other things, require the Company to limit its business activities, change its business mix, increase its allowance for credit
losses, write-down assets or increase its capital levels, or affect its ability to borrow funds or maintain or increase deposits, which
could adversely affect its liquidity and earnings; (xvi) costs and effects of litigation, including settlements and judgments; (xvii)
competition; and (xviii) natural disasters, war, terrorist activities or civil unrest and their effects on economic and business
environments in which the Company operates. The Company wishes to advise readers that the factors listed above and other risks
described in this report, including, without limitation, those described under “Item 1A. Risk Factors,” subsequent Quarterly Reports on
Form 10-Q and other documents filed or furnished from time to time by the Company with the SEC (which are available on our
website at www.greatsouthernbank.com and the SEC’s website at www.sec.gov), could affect the Company’s financial performance
and cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect
to future periods in any current statements.
The Company does not undertake-and specifically declines any obligation- to publicly release the result of any revisions which may
be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.
16
Critical Accounting Policies, Judgments and Estimates
The accounting and reporting policies of the Company conform with accounting principles generally accepted in the United States and
general practices within the financial services industry. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.
Allowance for Credit Losses
On January 1, 2021, the Company adopted the new accounting standard related to the allowance for credit losses. This standard
eliminates the probable initial recognition threshold in GAAP and, instead, requires an entity to reflect its current estimate of all
expected credit losses. See Note 3 to the accompanying financial statements for additional information.
The Company believes that the determination of the allowance for credit losses involves a higher degree of judgment and complexity
than its other significant accounting policies. The allowance for credit losses is calculated with the objective of maintaining an
allowance level believed by management to be sufficient to absorb estimated credit losses. The allowance for credit losses is measured
using an average historical loss model that incorporates relevant information about past events (including historical credit loss
experience on loans with similar risk characteristics), current conditions, and reasonable and supportable forecasts that affect the
collectability of the remaining cash flows over the contractual term of the loans. The allowance for credit losses is measured on a
collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics, including borrower type, collateral and
repayment types and expected credit loss patterns. Loans that do not share similar risk characteristics, primarily classified loans with a
balance greater than or equal to $100,000, are evaluated on an individual basis.
For loans evaluated for credit losses on a collective basis, average historical loss rates are calculated for each pool using the
Company’s historical net charge-offs (combined charge-offs and recoveries by observable historical reporting period) and outstanding
loan balances during a lookback period. Lookback periods can be different based on the individual pool and represent management’s
credit expectations for the pool of loans over the remaining contractual life. In certain loan pools, if the Company’s own historical loss
rate is not reflective of the loss expectations, the historical loss rate is augmented by industry and peer data. The calculated average net
charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts. These adjustments increase or
decrease the average historical loss rate to reflect expectations of future losses given economic forecasts of key macroeconomic
variables including, but not limited to, unemployment rate, GDP, disposable income and market volatility. The adjustments are based
on results from various regression models projecting the impact of the macroeconomic variables to loss rates. The forecast is used for
a reasonable and supportable period before reverting to historical averages using a straight-line method. The forecast-adjusted loss rate
is applied to the principal balance over the remaining contractual lives, adjusted for expected prepayments. The contractual term
excludes expected extensions, renewals and modifications. Additionally, the allowance for credit losses considers other qualitative
factors not included in historical loss rates or macroeconomic forecasts such as changes in portfolio composition, underwriting
practices, or significant unique events or conditions.
See Note 3 “Loans and Allowance for Credit Losses” to the accompanying financial statements for additional information regarding
the allowance for credit losses. Inherent in this process is the evaluation of individual significant credit relationships. From time to
time, certain credit relationships may deteriorate due to payment performance, cash flow of the borrower, value of collateral, or other
factors. In these instances, management may revise its loss estimates and assumptions for these specific credits due to changing
circumstances. In some cases, additional losses may be realized; in other instances, the factors that led to the deterioration may
improve or the credit may be refinanced elsewhere and allocated allowances may be released from the particular credit.
Goodwill and Intangible Assets
Goodwill and intangible assets that have indefinite useful lives are subject to an impairment test at least annually and more frequently,
if circumstances indicate their value may not be recoverable. Goodwill is tested for impairment using a process that estimates the fair
value of each of the Company’s reporting units compared with its carrying value. The Company defines reporting units as a level
below each of its operating segments for which there is discrete financial information that is regularly reviewed. As of December 31,
2023, the Company has one reporting unit to which goodwill has been allocated – the Bank. If the fair value of a reporting unit
exceeds its carrying value, then no impairment is recorded. If the carrying value amount exceeds the fair value of a reporting unit,
further testing is completed comparing the implied fair value of the reporting unit’s goodwill to its carrying value to measure the
17
amount of impairment. Intangible assets that are not amortized will be tested for impairment at least annually by comparing the fair
values of those assets to their carrying values. At December 31, 2023, goodwill consisted of $5.4 million at the Bank reporting unit,
which included goodwill of $4.2 million that was recorded during 2016 related to the acquisition of 12 branches and related deposits
in the St. Louis market. Other identifiable deposit intangible assets that are subject to amortization are amortized on a straight-line
basis over a period of seven years. In April 2022, the Company, through its subsidiary Great Southern Bank, entered into a naming
rights agreement with Missouri State University related to the main arena on the university’s campus in Springfield, Missouri. The
terms of the agreement provide the naming rights to Great Southern Bank for a total cost of $5.5 million, to be paid over a period of
seven years. The Company expects to amortize the naming rights intangible assets through non-interest expense over a period not to
exceed 15 years. At December 31, 2023, the amortizable intangible assets consisted of the arena naming rights of $5.1 million. The
amortizable intangible assets are reviewed for impairment if circumstances indicate their value may not be recoverable based on a
comparison of fair value. See Note 1 to the accompanying audited financial statements for additional information.
Based on the Company’s qualitative goodwill impairment testing, management does not believe any of the Company’s goodwill or
other intangible assets were impaired as of December 31, 2023. While management believes no impairment existed at December 31,
2023, different conditions or assumptions used to measure fair value of the reporting unit, or changes in cash flows or profitability, if
significantly negative or unfavorable, could have a material adverse effect on the outcome of the Company’s impairment evaluation in
the future.
Current Economic Conditions
Changes in economic conditions could cause the values of assets and liabilities recorded in the Company’s financial statements to
change rapidly, resulting in material future adjustments to asset values, the allowance for credit losses, or capital that could negatively
affect the Company’s ability to meet regulatory capital requirements and maintain sufficient liquidity. Following the housing and
mortgage crisis and correction beginning in mid-2007, the United States entered an economic downturn. Unemployment rose from
4.7% in November 2007 to peak at 10.0% in October 2009. Economic conditions improved in the subsequent years, as indicated by
higher consumer confidence levels, increased economic activity and low unemployment levels. The U.S. economy continued to
operate at historically strong levels until the COVID-19 pandemic in March 2020, which severely affected tourism, labor markets,
business travel, immigration and the global supply chain, among other areas. The economy plunged into recession in the first quarter
of 2020, as efforts to contain the spread of the coronavirus forced all but essential business activity, or any work that could not be done
from home, to stop, shuttering factories, restaurants, entertainment, sporting events, retail shops, personal services, and more.
More than 22 million jobs were lost in March and April 2020 as businesses closed their doors or reduced their operations, sending
employees home on furlough or layoffs. With uncertain incomes and limited buying opportunities, consumer spending plummeted. As
a result, gross domestic product (GDP), the broadest measure of the nation’s economic output, plunged. The Coronavirus Aid, Relief,
and Economic Security Act (“CARES Act”), a fiscal relief bill passed by Congress and signed by the President in March 2020,
injected approximately $3 trillion into the economy through direct payments to individuals and loans to small businesses intended to
help keep employees on their payroll, fueling a historic bounce-back in economic activity.
Total fiscal support to the economy throughout the pandemic, including the CARES Act, the American Rescue Plan of March 2021,
and several smaller fiscal packages, totaled well over $5 trillion. The amount of this support was equal to almost 25% of pre-pandemic
2019 GDP and approximately three times the level of support provided during the global financial crisis of 2007-2008.
Additionally, the Federal Reserve acted decisively by slashing its benchmark interest rate to near zero and ensuring credit availability
to businesses, households, and municipal governments. The Federal Reserve’s efforts largely insulated the financial system from the
problems in the economy, a significant difference from the financial crisis of 2007-2008. Purchases of Treasury and agency mortgage-
backed securities totaling $120 billion each month by the Federal Reserve commenced shortly after the pandemic began. In November
2021, the Federal Reserve began to taper its quantitative easing (QE), winding down its bond purchases with its final open market
purchase conducted on March 9, 2022. The federal government deficit was $2.8 trillion in fiscal 2021, close to $1.38 trillion in fiscal
2022, and was expected to increase slightly to $1.4 trillion in fiscal 2023.
The Federal Reserve aggressively raised the federal funds interest rate from early 2022 through mid-2023, pushing the federal funds
rate to more than 5.50%, its highest level in 22 years. The Fed's actions were motivated by surging inflation in 2021 caused by
pandemic-fueled spending, which outpaced the ability of producers to supply goods and services after having been impacted by
COVID-related shutdowns and clogged transportation systems. The Fed has made some headway in its attempt to force inflation
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down. The personal consumption expenditures (PCE) price index, the Federal Reserve's preferred measure of inflation, eased from its
peak of 7.1% in June 2022 to 2.6% in November 2023, but core PCE, which excludes food and energy prices, has been slower to
retreat and still sat at 3.2% at December 2023, well above the Federal Reserve's target of 2.0%.
Moody’s is projecting real GDP in 2024 to be slightly higher than previously forecast, but the persistence of high interest rates may
slow economic growth. Real GDP is projected to rise 1.9% in 2024 on an annual average basis, an upward revision of 0.2%, and is
projected to grow 1.6% in 2025 and 2.1% in 2026.
Employment
The national unemployment rate remained unchanged for the month at 3.7% as of December 2023, ranging from 3.4% to 3.8% since
March 2022. The number of unemployed individuals also remained steady at 6.3 million as of December 2023, with 216,000 jobs
added in December 2023. In December 2023, employment in leisure and hospitality and professional changed little, with government,
health care, construction and social assistance rising minimally. While the labor market remains strong, there are signs of softening.
Wage growth has been moderating and, while layoffs are not rising, departure rates are down to pre-pandemic levels. Employers are
cutting back on hours and are hiring fewer temporary workers, an early sign that demand for labor is pulling back.
As of December 2023, the labor force participation rate (the share of working-age Americans employed or actively looking for a job)
remained stable at 62.5%. The unemployment rate for the Midwest, where the Company conducts most of its business, increased from
3.5% in December 2022 to 3.7% in December 2023. Unemployment rates for December 2023 in the states where the Company has a
branch or loan production office were Arizona at 4.3%, Arkansas at 3.4%, Colorado at 3.4%, Georgia at 3.4%, Illinois at 4.8%, Iowa
at 3.2%, Kansas at 2.8%, Minnesota at 2.9%, Missouri at 3.3%, Nebraska at 2.3%, North Carolina at 3.5%, Oklahoma at 3.4%, and
Texas at 4.0%. Of the metropolitan areas in which the Company does business, most were below the national unemployment rate for
December 2023 of 3.7%, except for Chicago at 4.3%.
Single Family Housing
Existing home sales decreased 1.0% in December 2023 to a seasonally adjusted annual rate of 3.78 million, down 6.2% from the
previous year. In the Midwest, existing-home sales retracted 4.3% from November 2023 to an annual rate of 900,000 in December
2023, down 10.9% from one year ago.
The median existing-home sales price rose 4.4% from December 2022 to $382,600 in December 2023 – the sixth consecutive month
of year-over-year price increases. Among the four major U.S. regions, sales slipped in the Midwest and South, rose in the West and
were unchanged in the Northeast. The median price in the Midwest in December 2023 was $275,600, up 5.9% from December 2022.
On an annual basis, existing-home sales in 2023 of 4.09 million dropped to the lowest level since 1995, while the median price
reached a record high of $389,800 in 2023.
Total housing inventory registered at the end of December 2023 was 1.0 million units, down 11.5% from November 2023 and up
4.2% from one year ago of 960,000. Unsold inventory sat at a 3.2 month supply in December 2023, down from 3.5 months in
November 2023 but up from 2.9 months in December 2022.
Nationally, properties on average remained on the market for 29 days in December 2023, up from 25 days in November 2023 and 26
days in December 2022. Fifty-six percent of homes sold in December 2023 were on the market for less than a month. New home
construction dropped precipitously after the financial crisis of 2007-2008 and has yet to fully recover. Issues contributing to the
country’s current housing shortage include increasing labor and materials costs, availability of building materials, increased interest
rates and tighter lending underwriting standards.
Sales of new single‐family houses in December 2023 were at a seasonally adjusted annual rate of 664,000, according to the U.S.
Census Bureau and the Department of Housing and Urban Development. This is 8.0% above the revised November 2023 rate of
615,000 and 4.4% above the December 2022 rate of 636,000.
The median sales price of new houses sold in December 2023 was $413,200, down from $479,500 in December 2022. The average
sales price in December 2023 of $487,300 was down from $568,700 in December 2022. The seasonally‐adjusted estimate of new
houses for sale at the end of December 2023 was 453,000. This represents a supply of 8.2 months at the current sales rate.
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First-time buyers accounted for 29% of sales in December 2023, down from 31% in November 2023 and 31% in December 2022.
According to Freddie Mac, the average commitment rate for a 30-year, fixed-rate mortgage was 6.60% as of January 18, 2024 which
is down from 6.66% the previous week and up from 6.15% one year ago.
Multi-Family Housing and Commercial Real Estate
Demand has been solid for three consecutive quarters in the multi-family market. Current projections put 2023 new deliveries at a 40-
year high of almost 573,000 units, with an additional 443,000 units expected to deliver in 2024. The dramatic rise in Sun Belt
development has left the nation with almost one million units under construction, the largest pipeline since the early 1970s. The
majority of these units are expected to be delivered at the 4 and 5 Star price points. With supply outpacing demand, the national
vacancy rate ended 2023 at 7.6%, which is 100 basis points higher than the pre-pandemic average. The rising interest rate
environment, combined with a pullback in construction lending, has seen some developers unable to move forward on proposed
projects, suggesting the beginning of a meaningful pause in deliveries towards the end of 2024 and into 2025.
Midwest markets have avoided the sharp reversal of rent growth seen in Sun Belt locations as their construction pipelines remained
modest during the pandemic. Deliveries in the Midwest in 2023 were only 5,500 units higher than what was delivered in 2019. That
limited increase in new supply for the Midwest allowed those markets to be better balanced and avoid the dramatic surge and now
pullback in rent growth as experienced in Sun Belt locations.
Although factors such as declining household formations, rising supply deliveries, and weakening demand may present temporary
obstacles, the long-term issue of a major housing shortage remains in our nation. Thus, rent growth is anticipated to eventually
rebound above historical averages.
As noted above, as of December 31, 2023, national multi-family market vacancy rates increased to 7.6%. Our market areas reflected
the following apartment vacancy levels as of December 2023: Springfield, Missouri at 4.8%, St. Louis at 10.3%, Kansas City at 8.5%,
Minneapolis at 7.6%, Tulsa, Oklahoma at 8.3%, Dallas-Fort Worth at 10.4%, Chicago at 5.7%, Atlanta at 11.7%, Phoenix at 10.8%,
Denver at 8.3% and Charlotte, North Carolina at 11.6%.
The office sector remained weak in 2023 with office vacancy rates continuing their climb to a record 13.6% nationally. Occupiers
gave back 65 million of square footage (SF) in 2023, bringing the total to over 180 million since the beginning of 2020. A little over
53 million SF in new office inventory was completed in 2023 with about 15 million SF in obsolete stock being demolished or
converted. The resulting 37 million SF in net deliveries was the lowest amount since 2014, though the expected 56 million in 2024
would be the second most over the same period. Thus, with demand still faltering, new supply may exacerbate vacancy rates in the
near term.
Leasing volume is down nearly 20% from its average in the late 2010s. Office-using employment peaked in May 2023 and has stalled
out ever since. Looking ahead, the forecast from Oxford Economics suggests an average growth rate of only 0.4% through 2031, less
than half its average since 2000. All these factors are likely contributing to more conservative leasing behavior amid the expiration of
leases that were executed at the high rates of the mid- to late 2010s. Should tenants continue adjusting their footprints as expected in
the next 24 months, the result would be a further 190 million SF in negative absorption, with vacancy rising to 17.2% by early 2026.
As of December 31, 2023, national office vacancy rates increased to 13.6% from 12.7% as of December 31, 2022, while our market
areas reflected the following vacancy levels at December 31, 2023: Springfield, Missouri at 4.2%, St. Louis at 10.6%, Kansas City at
12.0%, Minneapolis at 11.2%, Tulsa, Oklahoma at 10.7%, Dallas-Fort Worth at 17.8%, Chicago at 16.6%, Atlanta at 15.7%, Denver
at 16.3%, Phoenix at 16.0% and Charlotte, North Carolina at 13.7%.
Demand from a diverse array of sectors, coupled with a below-average pace of store closures, and minimal new supply resulted in a
resilient year for the U.S. retail sector in 2023.
Although a pullback in leasing activity has occurred, a significant slowdown in move-outs has contributed to consistent demand
growth across the U.S. retail sector. A near historic low of approximately 52 million SF of new retail space was delivered in 2023, a
level that is over 40% lower than the sector's historical average. New construction has primarily focused on build-to-suits, grocery-
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anchored centers, or smaller retail spaces in large mixed-use projects, which helps explain the above-average leasing rates for new
retail properties, as less than 20% of space delivered over the past year was available for lease at the end of 2023.
Availabilities are now at record-low levels within small to mid-sized centers and freestanding single-tenant properties. On the other
hand, availabilities within the mall segment (which consists of regional and super-regional malls as well as lifestyle centers) have
continued to increase since the pandemic. However, there is significant variation in performance across the mall segment, with 4 and 5
Star malls and lifestyle centers seeing fundamentals improve over the past year, while malls rated 3 Star and below continue to see
vacancies rise. This difference is likely to persist, as numerous mall-based retailers such as Bath and Body Works, Victoria's Secret,
and Macy's have announced plans to move more stores out of the mall and into open-air neighborhood and community centers with
stronger foot traffic.
Despite longstanding concerns of a softening economy and eventual pullback in consumer spending, retail fundamentals should
remain balanced for the near future, as minimal availability and a further pullback in new deliveries offset a minor pullback in demand
formation.
During the fourth quarter of 2023, national retail vacancy rates remained steady at 4.1% while our market areas reflected the following
vacancy levels: Springfield, Missouri at 3.2%, St. Louis at 4.6%, Kansas City at 4.1%, Minneapolis at 2.9%, Tulsa, Oklahoma at
2.8%, Dallas-Fort Worth at 4.5%, Chicago at 4.9%, Atlanta at 3.5%, Phoenix at 4.5%, Denver at 4.0%, and Charlotte, North Carolina
at 2.7%.
U.S. industrial market performance continues to downshift as 2024 kicks off. Accelerating completions of new industrial
developments have caused the U.S. industrial vacancy rate to inch up from a record low of 3.9% in mid-2022, to 5.9% as of fourth
quarter 2023. Net absorption has remained positive but continued to lose steam over the past 12 months, with the second half of 2023
registering the lowest third and fourth quarter absorption tallies in 13 years.
Overall growth in real consumer goods spending has been re-accelerating since last spring as inflation has subsided and strong wage
growth has persisted. If the U.S. economy resilience continues, business inventories will likely soon resume their long-term upward
trend as major retailers including Walmart, Target, and Costco have worked through excess merchandise and now have inventory to
sales ratios in line with pre-pandemic levels. Sales of warehouse space intensive retail categories like furniture and building materials
still remains low.
While a potential stagnation in consumer spending poses downside risks in CoStar's absorption forecast for the next 12 months, high-
tech manufacturing will likely be a key driver of leasing from 2024–26. The 2022 passage of the CHIPS and Science Act and the
Inflation Reduction Act approved over $400 billion worth of incentives for growth in U.S. based high-tech manufacturing. CoStar is
tracking more than 30 planned semiconductor, electric vehicle, and battery plants with estimated payrolls of more than 1,000
employees. The majority of these plants are targeting 2024–25 to begin production, with Arizona, Texas, Georgia, and the Carolinas
securing the most new operations.
New deliveries will likely remain elevated for the next six to nine months, driving the national vacancy rate higher. Higher interest
rates have caused construction starts on new industrial projects to halt. Given the average construction time of 14 months for large
industrial projects, this recent pullback in starts suggests that by late 2024, the number of new projects completing construction may
begin to decline. This may set the stage for vacancies to stabilize or begin tightening again in late 2024, and for rent growth to
accelerate thereafter.
For the fourth quarter of 2023, national industrial vacancy rates increased to 5.9% from 4.2% as of December 31, 2022. Our market
areas reflected the following industrial vacancy levels at December 31, 2023: Springfield, Missouri at 1.8%, St. Louis at 4.7%, Kansas
City at 5.2%, Minneapolis at 3.9%, Tulsa, Oklahoma at 2.9%, Dallas-Fort Worth at 8.9%, Chicago at 5.1%, Atlanta at 6.4%, Phoenix
at 8.6%, Denver at 7.1% and Charlotte, North Carolina at 6.7%.
Our management will continue to monitor regional, national, and global economic indicators such as unemployment, GDP, housing
starts and prices, consumer sentiment, commercial real estate price index and commercial real estate occupancy, absorption and rental
rates, as these could significantly affect customers in each of our market area.
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For discussion of the risk factors associated with multi-family and commercial real estate loans, see “Risk Factors – Risks Relating to
Lending Activities – Our loan portfolio possesses increased risk due to our relatively high concentration of commercial and residential
construction, commercial real estate, other residential (multi-family) and other commercial loans” and “Risk Factors – Risks Relating
to Regulation – We currently exceed thresholds defined in interagency guidance on commercial real estate concentrations, and as
such, we may incur additional expense or slow the growth of certain categories of commercial real estate lending.”
General
The profitability of the Company and, more specifically, the profitability of its primary subsidiary, the Bank, depend primarily on its
net interest income, as well as provisions for credit losses and the level of non-interest income and non-interest expense. Net interest
income is the difference between the interest income the Bank earns on its loans and investment portfolios, and the interest it pays on
interest-bearing liabilities, which consists mainly of interest paid on deposits and borrowings. Net interest income is affected by the
relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on these balances. When
interest-earning assets approximate or exceed interest-bearing liabilities, any positive interest rate spread will generate net interest
income.
The Company’s total assets increased $131.7 million, or 2.3%, from $5.68 billion at December 31, 2022, to $5.81 billion at December
31, 2023. Full details of the current year changes in total assets are provided below, under “Comparison of Financial Condition at
December 31, 2023 and December 31, 2022.”
Loans. In the year ended December 31, 2023, the Company’s net loans increased $82.8 million, or 1.8%, from $4.51 billion at
December 31, 2022, to $4.59 billion at December 31, 2023. This increase was primarily in other residential (multi-family) loans ($160
million increase) and commercial business loans ($25 million increase). These increases were partially offset by decreases in
construction loans ($61 million decrease) and one- to four- family residential loans ($13 million decrease). The pipeline of loan
commitments and the unfunded portion of construction loans remained strong at the end of 2023, but decreased significantly
compared to the end of 2022. As construction projects were completed, the related loans were either paid off or moved from the
construction category to the appropriate permanent loan categories. As loan demand is affected by a variety of factors, including
general economic conditions, and because of the competition we face and our focus on pricing discipline and credit quality, we cannot
be assured that our loan growth will match or exceed the average level of growth achieved in prior years. The Company’s strategy
continues to be focused on maintaining credit risk and interest rate risk at appropriate levels.
Recent growth has occurred in some loan types, primarily other residential (multi-family) and commercial business, and in most of
Great Southern’s primary lending locations, including Springfield, St. Louis, Kansas City, Des Moines and Minneapolis, as well as
our loan production offices in Atlanta, Charlotte, Chicago, Dallas, Denver, Omaha, Phoenix and Tulsa. Certain minimum underwriting
standards and monitoring help assure the Company’s portfolio quality. Great Southern’s loan committee reviews and approves all new
loan originations in excess of lender approval authorities. Generally, the Company considers commercial construction, consumer,
other residential (multi-family) and commercial real estate loans to involve a higher degree of risk compared to some other types of
loans, such as first mortgage loans on one- to four-family, owner-occupied residential properties. For other residential (multi-family),
commercial real estate, commercial business and construction loans, the credits are subject to an analysis of the borrower’s and
guarantor’s financial condition, credit history, verification of liquid assets, collateral, market analysis and repayment ability. It has
been, and continues to be, Great Southern’s practice to verify information from potential borrowers regarding assets, income or
payment ability and credit ratings as applicable and as required by the authority approving the loan. To minimize construction risk,
projects are monitored as construction draws are requested by comparison to budget and with progress verified through property
inspections. The geographic and product diversity of collateral, equity requirements and limitations on speculative construction
projects help to mitigate overall risk in these loans. Underwriting standards for all loans also include loan-to-value ratio limitations
which vary depending on collateral type, debt service coverage ratios or debt payment to income ratio guidelines, where applicable,
credit histories, use of guaranties and other recommended terms relating to equity requirements, amortization, and maturity. Consumer
loans, other than home equity loans, are primarily secured by new and used motor vehicles and these loans are also subject to certain
minimum underwriting standards to assure portfolio quality. In 2019, the Company discontinued indirect auto loan originations.
Of the total loan portfolio at December 31, 2023 and 2022, 89.5% and 89.4%, respectively, was secured by real estate, as this is the
Bank’s primary focus in its lending efforts. At December 31, 2023 and 2022, commercial real estate and commercial construction
loans (excluding multi-family loans) were 36.8% and 39.4% of the Bank’s total loan portfolio, respectively. Commercial real estate
and commercial construction loans generally afford the Bank an opportunity to increase the yield on, and the proportion of interest
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rate sensitive loans in, its portfolio. They do, however, present somewhat greater risk to the Bank because they may be more adversely
affected by conditions in the real estate markets or in the economy generally. At December 31, 2023, loans made in the Springfield,
Missouri metropolitan statistical area (Springfield MSA) comprised 8% of the Bank’s total loan portfolio, compared to 7% at
December 31, 2022. The Company’s headquarters are located in Springfield and we have operated in this market since 1923. Loans
made in the St. Louis metropolitan statistical area (St. Louis MSA) comprised 17% of the Bank’s total loan portfolio at December 31,
2023, compared to 18% at December 31, 2022. The Company’s expansion into the St. Louis MSA beginning in May 2009 has
provided an opportunity to not only diversify from the Springfield MSA, but also has provided access to a larger economy with
increased lending opportunities despite higher levels of competition. Loans made in the St. Louis MSA are primarily commercial real
estate, commercial business and other residential (multi-family) loans, which are less likely to be impacted by the higher levels of
unemployment rates, as mentioned above under “Current Economic Conditions,” than if the focus were on one- to four-family
residential and consumer loans. For further discussions of the Bank’s loan portfolio, and specifically, commercial real estate and
commercial construction loans, see “Item 1. Business – Lending Activities.”
The percentage of fixed-rate loans in our loan portfolio has been as much as 40% in recent years and was 39% as of December 31,
2023. The majority of the increase in fixed rate loans over the past few years was in commercial real estate, which typically has short
durations within our portfolio. Of the total amount of fixed rate loans in our portfolio as of December 31, 2023, approximately 86%
mature within the next five years and therefore are not considered to create significant long-term interest rate risk for the Company.
Fixed rate loans make up only a portion of our balance sheet and our overall interest rate risk strategy. As of December 31, 2023, our
interest rate risk models indicated a one-year interest rate earnings sensitivity position that is modestly positive in an increasing rate
environment. For further discussion of our interest rate sensitivity gap and the processes used to manage our exposure to interest rate
risk, see “Quantitative and Qualitative Disclosures About Market Risk – How We Measure the Risks to Us Associated with Interest
Rate Changes.” For discussion of the risk factors associated with interest rate changes, see “Risk Factors – We may be adversely
affected by interest rate changes.”
While our policy allows us to lend up to 95% of the appraised value on one-to four-family residential properties, originations of loans
with loan-to-value ratios at that level are minimal. Private mortgage insurance is typically required for loan amounts above the 80%
level. Few exceptions occur and would be based on analyses which determined minimal transactional risk to be involved. We consider
these lending practices to be consistent with or more conservative than what we believe to be the norm for banks our size. At
December 31, 2023 and 2022, 0.2% of our owner occupied one- to four-family residential loans had loan-to-value ratios above 100%
at origination. At December 31, 2023 and 2022, an estimated 0.4% and 0.2%, respectively, of total non-owner occupied one- to four-
family residential loans had loan-to-value ratios above 100% at origination.
The level of non-performing loans and foreclosed assets affects our net interest income and net income. We generally do not accrue
interest income on these loans and do not recognize interest income until the loans are repaid or interest payments have been made for
a period of time sufficient to provide evidence of performance on the loans. Generally, the higher the level of non-performing assets,
the greater the negative impact on interest income and net income.
The Company prepared for discontinuation of the use of interest rates such as LIBOR. LIBOR is a benchmark interest rate referenced
in a variety of agreements used by the Company, but by far the most significant area impacted by LIBOR is related to commercial and
residential mortgage loans. With the cessation of all remaining LIBOR indices as of June 30, 2023, the Company implemented its
LIBOR fallback plan for all remaining LIBOR-based loans, replacing the LIBOR indices with various SOFR-based indices consistent
with the regulations of the Board of Governors of the Federal Reserve System implementing the Adjustable Interest Rate (LIBOR)
Act. All impacted customers were notified and the Company’s systems were updated with the applicable indices as of July 1, 2023.
Available-for-sale Securities. Available-for-sale securities decreased $12.4 million, or 2.5%, from $490.6 million at December 31,
2022, to $478.2 million at December 31, 2023. For further information on investment securities, see Note 2 to the accompanying
audited financial statements contained in this Report.
Held-to-maturity Securities. Held-to-maturity securities decreased $7.5 million, or 3.7%, from $202.5 million at December 31, 2022,
to $195.0 million at December 31, 2023.
Deposits. The Company attracts deposit accounts through its retail branch network, correspondent banking and corporate services
areas, internet channels and brokered deposits. The Company then utilizes these deposit funds, along with FHLBank advances and
other borrowings, to meet loan demand or otherwise fund its activities. In the year ended December 31, 2023, total deposit balances
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increased $36.8 million, or 0.8%. Transaction account balances decreased $140.1 million and retail certificates of deposit decreased
$73.1 million compared to December 31, 2022. The decrease in transaction accounts was primarily a result of decreased balances in
non-interest accounts and certain NOW account types. In addition, holders of some accounts that carried higher balances may have
chosen to move funds into different checking account types or time deposits that now have a higher rate of interest. Retail certificates
of deposit decreased due to a decrease in retail certificates generated through the banking center network and time deposits initiated
through internet channels, which experienced a planned decrease as part of the Company’s balance sheet management between
funding sources. Brokered deposits, including IntraFi program purchased funds, were $661.5 million at December 31, 2023, an
increase of $250.0 million from $411.5 million at December 31, 2022. The Company uses brokered deposits of select maturities and
interest rate characteristics from time to time to supplement its various funding channels and to manage interest rate risk.
Our deposit balances may fluctuate depending on customer preferences and our relative need for funding. We do not consider our
retail certificates of deposit to be guaranteed long-term funding because customers can withdraw their funds at any time with minimal
interest penalty. When loan demand trends upward, we can increase rates paid on deposits to attract more deposits and utilize brokered
deposits to provide additional funding. The level of competition for deposits in our markets is high. It is our goal to gain deposit
market share, particularly checking accounts, in our branch footprint. To accomplish this goal, increasing rates to attract deposits may
be necessary, which could negatively impact the Company’s net interest margin.
Our ability to fund growth in future periods may also depend on our ability to continue to access brokered deposits and FHLBank
advances. In times when our loan demand has outpaced our generation of new deposits, we have utilized brokered deposits and
FHLBank advances to fund these loans. These funding sources have been attractive to us because we can create either fixed or
variable rate funding, as desired, which more closely matches the interest rate nature of much of our loan portfolio. It also gives us
greater flexibility in increasing or decreasing the duration of our funding. While we do not currently anticipate that our ability to
access these sources will be reduced or eliminated in future periods, if this should happen, the limitation on our ability to fund
additional loans could have a material adverse effect on our business, financial condition and results of operations.
Securities sold under reverse repurchase agreements with customers. Securities sold under reverse repurchase agreements with
customers decreased $106.0 million from $176.8 million at December 31, 2022 to $70.8 million at December 31, 2023. These
balances fluctuate over time based on customer demand for this product.
Short-Term Borrowings and Other Interest-bearing Liabilities. The Company’s FHLBank term advances were $-0- at both
December 31, 2023 and December 31, 2022. At December 31, 2023 and 2022, overnight borrowings from the FHLBank were $251.0
million and $88.5 million, respectively, which are included in short-term borrowings.
Short-term borrowings and other interest-bearing liabilities increased $163.0 million from $89.6 million at December 31, 2022 to
$252.6 million at December 31, 2023. The Company may utilize overnight borrowings, short-term FHLBank advances, and BTFP
borrowings from FRBSTL depending on relative interest rates.
Net Interest Income and Interest Rate Risk Management. Our net interest income may be affected positively or negatively by
changes in market interest rates. A large portion of our loan portfolio is tied to one-month SOFR, three-month SOFR or the “prime
rate” and adjusts immediately or shortly after the index rate adjusts (subject to the effect of contractual interest rate floors on some of
the loans, which are discussed below). We monitor our sensitivity to interest rate changes on an ongoing basis (see “Quantitative and
Qualitative Disclosures About Market Risk”).
The current level and shape of the interest rate yield curve poses challenges for interest rate risk management. Prior to its increase of
0.25% on December 16, 2015, the FRB had last changed interest rates on December 16, 2008. This was the first rate increase since
September 29, 2006. The FRB also implemented rate change increases of 0.25% on eight additional occasions beginning December
14, 2016 and through December 31, 2018, with the Federal Funds rate reaching as high as 2.50%. After December 2018, the FRB
paused its rate increases and, in July, September and October 2019, implemented rate decreases of 0.25% on each of those occasions.
At December 31, 2019, the Federal Funds rate stood at 1.75%. In response to the COVID-19 pandemic, the FRB decreased interest
rates on two occasions in March 2020, a 0.50% decrease on March 3 and a 1.00% decrease on March 16. At December 31, 2021, the
Federal Funds rate was 0.25%. In 2022, the FRB implemented rate increases of 0.25%, 0.50%, 0.75%, 0.75%, 0.75%, 0.75% and
0.50% in March, May, June, July, September, November and December 2022, respectively. At December 31, 2022, the Federal Funds
rate was 4.50%. In 2023, the FRB implemented rate increases of 0.25%, 0.25%, 0.25% and 0.25% in February, March, May and July
2023, respectively. At December 31, 2023 the Federal Funds rate was 5.50%. Financial markets now expect the possibility of
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significant further increases in Federal Funds interest rates in early 2024 to be unlikely, with interest rate decisions being made at each
FRB meeting based on economic data available at the time. However, the FRB has further indicated, and financial markets now have
begun to price in, that it is likely that the Federal Funds interest rate will remain near this peak level for several months before any rate
cuts occur. Great Southern’s loan portfolio includes loans ($1.29 billion at December 31, 2023) tied to various SOFR indices that will
be subject to adjustment at least once within 90 days after December 31, 2023. All of these loans have interest rate floors at various
rates. Great Southern also has a portfolio of loans ($788.9 million at December 31, 2023) tied to a “prime rate” of interest that will
adjust immediately or within 90 days of a change to the “prime rate” of interest. All of these loans had interest rate floors at various
rates. Great Southern also has a portfolio of loans ($6.7 million at December 31, 2023) tied to an AMERIBOR index that will adjust
immediately or within 90 days of a change to the “prime rate” of interest. All of these loans had interest rate floors at various rates. At
December 31, 2023, nearly all of these SOFR and “prime rate” loans had fully indexed rates that were at or above their floor rate and
so are expected to move fully with future market interest rate increases.
A rate cut by the FRB generally would have an anticipated immediate negative impact on the Company’s net interest income due to
the large total balance of loans tied to the SOFR indices or the “prime rate” index and will be subject to adjustment at least once
within 90 days or loans which generally adjust immediately as the Federal Funds rate adjusts. Interest rate floors may at least partially
mitigate the negative impact of interest rate decreases. Loans at their floor rates are, however, subject to the risk that borrowers will
seek to refinance elsewhere at the lower market rate. There may also be a negative impact on the Company’s net interest income if the
Company is unable to significantly lower its funding costs due to a highly competitive rate environment, although interest rates on
assets may decline further. Conversely, market interest rate increases would normally result in increased interest rates on our SOFR-
based, AMERIBOR-based and prime-based loans.
As of December 31, 2023, Great Southern’s interest rate risk models indicate that, generally, rising interest rates are expected to have
a modestly positive impact on the Company’s net interest income, while declining interest rates are expected to have a modestly
negative impact on net interest income. We model various interest rate scenarios for rising and falling rates, including both parallel
and non-parallel shifts in rates. The results of our modeling indicate that net interest income is not likely to be significantly affected
either positively or negatively in the first twelve months following relatively minor changes in market interest rates because our
portfolios are relatively well-matched in a twelve-month horizon.
In a situation where market interest rates increase significantly in a short period of time, our net interest margin increase may be more
pronounced in the very near term (first one to three months), due to fairly rapid increases in SOFR interest rates and “prime” interest
rates. In a situation where market interest rates decrease significantly in a short period of time, as they did in March 2020, our net
interest margin decrease may be more pronounced in the very near term (first one to three months), due to fairly rapid decreases in
SOFR interest rates and “prime” interest rates. In the subsequent months, we would expect that net interest margin would stabilize and
begin to improve, as renewal interest rates on maturing time deposits decrease.
During 2020, we experienced some compression of our net interest margin percentage due to Federal Fund rate cuts during the nine-
month period of July 2019 through March 2020. Margin compression primarily resulted from changes in the asset mix; mainly the
addition of lower-yielding assets and the issuance of subordinated notes during 2020, and net interest margin remained lower than our
historical average in 2021. LIBOR interest rates decreased significantly in 2020 and remained very low in 2021, putting pressure on
loan yields, and strong pricing competition for loans and deposits remained in most of our markets.
Beginning in March 2022, market interest rates, including LIBOR interest rates, SOFR interest rates and “prime” interest rates, began
to increase rapidly. This resulted in increasing loan yields and expansion of our net interest income and net interest margin throughout
2022 and into the first three months of 2023. In 2023, market interest rate increases moderated and loan yield increases moderated in
line with market rates. However, there has been increased competition for deposits and other sources of funding, resulting in higher
costs for those funds. This has been especially true since early March 2023. For further discussion of the processes used to manage our
exposure to interest rate risk, see “Quantitative and Qualitative Disclosures About Market Risk – How We Measure the Risks to Us
Associated with Interest Rate Changes.”
Non-Interest Income and Operating Expenses. The Company’s profitability is also affected by the level of its non-interest income
and operating expenses. Non-interest income consists primarily of service charges and ATM fees, POS interchange fees, late charges
and prepayment fees on loans, gains on sales of loans and available-for-sale investments and other general operating income.
Operating expenses consist primarily of salaries and employee benefits, occupancy-related expenses, expenses related to foreclosed
assets, postage, FDIC deposit insurance, advertising and public relations, telephone, professional fees, office expenses and other
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general operating expenses. Details of the current period changes in non-interest income and non-interest expense are provided under
“Results of Operations and Comparison for the Years Ended December 31, 2023 and 2022.”
Business Initiatives
The Company’s banking centers and loan production offices are consistently reviewed to measure performance and ensure
responsiveness to changing customer needs and preferences. As such, the Company may open banking centers and loan production
offices and invest resources where customer demand leads, and from time to time, consolidate offices or even exit markets when
conditions dictate.
The following changes were initiated in 2023 and early 2024:
In March 2023, a leased retail banking center office at 1232 S. Rangeline Road in Joplin, Missouri, was consolidated into a
nearby office at 2801 E. 32nd Street. One banking center now serves the Joplin market.
In September 2023, in Springfield, Missouri, the Company opened Great Southern Express, a modern four-lane drive-through
center using only interactive teller machine (ITM) technology to serve customers. This new facility at 1615 W. Sunshine replaced
a small banking center on the same property. ITMs, also known as video remote tellers, offer an ATM-like interface, but with the
enhancement of a video screen that allows customers to speak directly to a service representative in real time and in a highly
personal manner during extended business hours seven days a week. Nearly any teller transaction that can be performed in the
traditional drive-thru can be performed at an ITM, including cashing a check to the penny. ITMs provide convenience and
enhanced access for customers, while creating greater operational efficiencies for the Bank.
In January 2024, in Springfield, Missouri, a retail banking center at 600 W. Republic Road was consolidated into another banking
center at 2945 W. Republic Road, a short distance away. For customers’ convenience, an on-site ITM is currently available at the
closed facility.
Effective February 16, 2024, the Company closed its loan production office in Tulsa, Oklahoma after an analysis of lending
priorities and operational efficiencies. Loan clients served through this office have been reassigned to other relationship
managers.
In November 2023, the Company launched a new and improved digital mobile banking application for its customers, available
through the Apple App Store and Google Play Store. With more than 54,000 active mobile banking users, the application upgrade
provides an improvement in overall functionality, including a better user experience, additional layers of security and faster loading
times.
Since early 2022, Great Southern has been preparing to convert to a new core banking platform (New System) to be delivered by a
third-party vendor. As previously disclosed, the migration to the New System, originally scheduled for the third quarter of 2023, has
been delayed to mid-2024. As also previously disclosed, certain contractual disputes have arisen between Great Southern and the
third-party vendor. While discussions are ongoing between the parties, to date, there has been no meaningful progress in resolving the
contractual disputes. There is no assurance that a resolution with the vendor will be achieved, or that a migration to the New System
can be successfully completed, which may prompt Great Southern to take action to protect its interests. In the meantime, Great
Southern expects to continue operations with its current core banking provider, which will allow Great Southern to offer its full array
of products and services.
Effect of Federal Laws and Regulations
General. Federal legislation and regulation significantly affect the operations of the Company and the Bank, and have increased
competition among commercial banks, savings institutions, mortgage banking enterprises and other financial institutions. In particular,
the capital requirements and operations of regulated banking organizations such as the Company and the Bank have been and will be
subject to changes in applicable statutes and regulations from time to time, which changes could, under certain circumstances,
adversely affect the Company or the Bank.
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Dodd-Frank Act. In 2010, sweeping financial regulatory reform legislation entitled the “Dodd-Frank Wall Street Reform and
Consumer Protection Act” (the “Dodd-Frank Act”) was signed into law. The Dodd-Frank Act implemented far-reaching changes
across the financial regulatory landscape. Certain aspects of the Dodd-Frank Act have been affected by the more recently enacted
Economic Growth Act, as defined and discussed below under “-Economic Growth Act.”
Capital Rules. The federal banking agencies have adopted regulatory capital rules that substantially amend the risk-based capital
rules applicable to the Bank and the Company. The rules implement the “Basel III” regulatory capital reforms and changes required by
the Dodd-Frank Act. “Basel III” refers to various documents released by the Basel Committee on Banking Supervision. For the
Company and the Bank, the general effective date of the rules was January 1, 2015, and, for certain provisions, various phase-in
periods and later effective dates apply. The chief features of these rules are summarized below.
The rules refine the definitions of what constitutes regulatory capital and add a new regulatory capital element, common equity Tier 1
capital. The minimum capital ratios are (i) a common equity Tier 1 (“CET1”) risk-based capital ratio of 4.5%; (ii) a Tier 1 risk-based
capital ratio of 6%; (iii) a total risk-based capital ratio of 8%; and (iv) a Tier 1 leverage ratio of 4%. In addition to the minimum
capital ratios, the rules include a capital conservation buffer, under which a banking organization must have CET1 more than 2.5%
above each of its minimum risk-based capital ratios in order to avoid restrictions on paying dividends, repurchasing shares, and paying
certain discretionary bonuses. The capital conservation buffer became fully implemented on January 1, 2019.
These rules also revised the prompt corrective action framework, which is designed to place restrictions on insured depository
institutions if their capital levels show signs of weakness. Under the revised prompt corrective action requirements, insured depository
institutions are required to meet the following in order to qualify as “well capitalized:” (i) a common equity Tier 1 risk-based capital
ratio of at least 6.5%, (ii) a Tier 1 risk-based capital ratio of at least 8%, (iii) a total risk-based capital ratio of at least 10% and (iv) a
Tier 1 leverage ratio of 5%, and must not be subject to an order, agreement or directive mandating a specific capital level.
Economic Growth Act. In May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth
Act”), was enacted to modify or eliminate certain financial reform rules and regulations, including some implemented under the Dodd-
Frank Act. While the Economic Growth Act maintains most of the regulatory structure established by the Dodd-Frank Act, it amends
certain aspects of the regulatory framework for small depository institutions with assets of less than $10 billion and for large banks
with assets of more than $50 billion. Many of these amendments could result in meaningful regulatory changes.
The Economic Growth Act, among other matters, expands the definition of qualified mortgages which may be held by a financial
institution and simplifies the regulatory capital rules for financial institutions and their holding companies with total consolidated
assets of less than $10 billion by instructing the federal banking regulators to establish a single “Community Bank Leverage Ratio”
(“CBLR”) of between 8 and 10 percent. Upon election, any qualifying depository institution or its holding company that exceeds the
CBLR will be considered to have met generally applicable leverage and risk-based regulatory capital requirements and any qualifying
depository institution that exceeds the new ratio will be considered “well-capitalized” under the prompt corrective action rules.
Currently, the CBLR is 9.0%. The Company and the Bank have chosen to not utilize the new CBLR due to the Company’s size and
complexity, including its commercial real estate and construction lending concentrations and significant off-balance sheet funding
commitments.
In addition, the Economic Growth Act includes regulatory relief in the areas of examination cycles, call reports, mortgage disclosures
and risk weights for certain high-risk commercial real estate loans.
Recent Accounting Pronouncements
See Note 1 to the accompanying audited financial statements for a description of recent accounting pronouncements including the
respective dates of adoption and expected effects on the Company’s financial position and results of operations.
Comparison of Financial Condition at December 31, 2023 and December 31, 2022
During the year ended December 31, 2023, total assets increased by $131.7 million, or 2.3%, to $5.81 billion. The increase was
primarily attributable to increases in loans receivable and cash and cash equivalents, partially offset by decreases in investment
securities.
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Cash and cash equivalents were $211.3 million at December 31, 2023, an increase of $42.8 million, or 25.4%, from $168.5 million at
December 31, 2022. This increase was primarily due to a $43.5 million increase in interest-bearing deposits in the FRBSTL.
The Company’s available-for-sale securities decreased $12.4 million, or 2.5%, compared to December 31, 2022. The decrease was
primarily due to normal monthly payments received related to the portfolio of mortgage-backed securities and collateralized mortgage
obligations. The available-for-sale securities portfolio was 8.2% and 8.6% of total assets at December 31, 2023 and December 31,
2022, respectively.
The Company’s held-to-maturity securities decreased $7.5 million, or 3.7%, compared to December 31, 2022. The decrease was
primarily due to normal monthly payments received related to the portfolio of mortgage-backed securities and collateralized mortgage
obligations. The held-to-maturity securities portfolio was 3.4% and 3.6% of total assets at December 31, 2023 and December 31,
2022, respectively.
Net loans increased $82.8 million, or 1.8%, from December 31, 2022, to $4.59 billion at December 31, 2023. This increase was
primarily in other residential (multi-family) loans ($160 million increase) and commercial business loans ($25 million increase).
These increases were partially offset by decreases in construction loans ($61 million decrease) and one- to four- family residential
loans ($13 million decrease). The pipeline of loan commitments and the unfunded portion of construction loans remained strong in the
fourth quarter of 2023, but decreased significantly compared to the end of 2022. As construction projects were completed, the related
loans were either paid off or moved from the construction category to the appropriate permanent loan categories.
Total liabilities increased $93.0 million from $5.15 billion at December 31, 2022 to $5.24 billion at December 31, 2023. The increase
was primarily due to increases in short-term borrowings from FHLBank and increases in brokered deposits, partially offset by the
decrease in reverse repurchase agreements with customers.
Total deposits increased $36.8 million, or 0.8%, from $4.68 billion at December 31, 2022 to $4.72 billion at December 31, 2023.
Transaction account balances decreased $140.1 million, from $3.25 billion at December 31, 2022 to $3.11 billion at December 31,
2023. Retail certificates of deposit decreased $73.1 million compared to December 31, 2022, to $948.2 million at December 31, 2023.
Decreases in transaction account balances were primarily in certain NOW account types and non-interest-bearing checking accounts.
Total interest-bearing checking increased $27.9 million and non-interest-bearing demand deposit accounts decreased $168.1 million,
respectively. Customer retail time deposits initiated through our banking center network decreased $34.6 million and time deposits
initiated through our national internet network decreased $34.9 million. Customer deposits at December 31, 2023 and December 31,
2022 totaling $8.8 million and $12.4 million, respectively, were part of the IntraFi Network Deposits program, which allows
customers to maintain balances in an insured manner that would otherwise exceed the FDIC deposit insurance limit. Brokered deposits
increased $250.0 million to $661.5 million at December 31, 2023, compared to $411.5 million at December 31, 2022. Brokered
deposits were utilized to fund growth in outstanding loans and to offset reductions in balances in other deposit categories. The
Company has the capacity to further expand its use of brokered deposits if it chooses to do so. Of the total brokered deposits at
December 31, 2023, $300.0 million were floating rate deposits which adjust daily based on the effective federal funds rate index.
The Company’s term Federal Home Loan Bank advances were $-0- at both December 31, 2023 and 2022. At December 31, 2023 and
2022, there were no borrowings from the FHLBank, other than overnight borrowings, which are included in the short-term borrowings
category. The Company maintains the flexibility to utilize both overnight borrowings and short-term FHLBank advances depending
on relative interest rates.
Short-term borrowings and other interest-bearing liabilities increased $163.0 million, or 182.0%, from $89.6 million at December 31,
2022 to $252.6 million at December 31, 2023. The short-term borrowings included overnight FHLBank borrowings of $251.0 million
at December 31, 2023, compared to $88.5 million at December 31, 2022. In January 2024, the Bank borrowed $180.0 million under
the Federal Reserve Bank’s Bank Term Funding Program (BTFP). The borrowing, which matures in January 2025 and has a fixed
interest rate of 4.83%, may be repaid in full or in part without penalty prior to its stated maturity date. The line is secured primarily by
the Bank’s held-to-maturity investment securities, with total amount of assets pledged totaling approximately $191 million. These
funds were primarily used to repay a portion of the Bank’s overnight borrowings from the FHLBank.
Securities sold under reverse repurchase agreements with customers decreased $106.0 million, or 59.9%, from $176.8 million at
December 31, 2022 to $70.8 million at December 31, 2023. These balances fluctuate over time based on customer demand for this
product.
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Total stockholders’ equity increased $38.7 million, or 7.3%, from $533.1 million at December 31, 2022 to $571.8 million at December
31, 2023. The Company recorded net income of $67.8 million for the year ended December 31, 2023. In addition, total stockholders’
equity increased $2.5 million due to the issuance of the Company’s common stock upon stock option exercises. Accumulated other
comprehensive income increased $10.9 million due to increases in the fair value of investment securities and the fair value of cash
flow hedges, as a result of decreased market interest rate expectations. Total stockholders’ equity decreased $23.3 million due to
repurchases of the Company’s common stock. Dividends declared on common stock, which also decreased total stockholders’ equity,
were $19.1 million.
Results of Operations and Comparison for the Years Ended December 31, 2023 and 2022
General
Net income decreased $8.1 million, or 10.7%, during the year ended December 31, 2023, compared to the year ended December 31,
2022. Net income was $67.8 million for the year ended December 31, 2023 compared to $75.9 million for the year ended December
31, 2022. This decrease was primarily due to an increase in non-interest expense of $7.7 million, or 5.7%, a decrease in net interest
income of $6.4 million, or 3.2%, and a decrease in non-interest income of $4.1 million, or 11.9%, partially offset by a decrease in
provision for credit losses on loans and unfunded commitments of $9.3 million, and a decrease in provision for income taxes of
$710,000, or 3.9%.
Total Interest Income
Total interest income increased $69.9 million, or 30.8%, during the year ended December 31, 2023 compared to the year ended
December 31, 2022. The increase was due to a $66.2 million increase in interest income on loans and a $3.7 million increase in
interest income on investment securities and other interest-earning assets. Interest income on loans increased for the year ended
December 31, 2023 compared to the year ended December 31, 2022, primarily due to higher average rates of interest on loans and
higher average loan balances. Interest income from investment securities and other interest-earning assets increased during the year
ended December 31, 2023 compared to the year ended December 31, 2022, due to higher average balances of investment securities
combined with higher average rates of interest on investment securities and other interest-earning assets, partially offset by a decrease
in the average balance on other interest-earning assets.
Interest Income – Loans
During the year ended December 31, 2023 compared to the year ended December 31, 2022, interest income on loans increased $54.1
million as the result of higher average interest rates on loans. The average yield on loans increased from 4.69% during the year ended
December 31, 2022 to 5.87% during the year ended December 31, 2023. This increase was primarily due to the repricing of floating
rate loans in 2023 as market interest rates increased significantly and the origination of new fixed-rate loans at higher market interest
rates. In addition, interest income on loans increased $12.1 million as a result of higher average loan balances, which increased from
$4.39 billion during the year ended December 31, 2022, to $4.63 billion during the year ended December 31, 2023. The Company
continued to originate loans at a pace similar to prior periods through the end of 2022, and overall loan repayments slowed in 2022
and 2023 compared to the level of repayments in 2021. Since the end of 2022, loan originations and net loan growth have been muted;
however, some loan growth has come as a result of the funding of previously approved but unfunded balances on construction loans
and the slowed loan repayments in 2023.
In October 2018, the Company entered into an interest rate swap transaction as part of its ongoing interest rate management strategies
to hedge the risk of its floating rate loans. The notional amount of the swap was $400 million with a contractual termination date in
October 2025. As previously disclosed by the Company, on March 2, 2020, the Company and its swap counterparty mutually agreed
to terminate this swap, effective immediately. The Company was paid $45.9 million, including accrued but unpaid interest, from its
swap counterparty as a result of this termination. This $45.9 million, less the accrued to date interest portion and net of deferred
income taxes, is reflected in the Company’s stockholders’ equity as Accumulated Other Comprehensive Income and is being accreted
to interest income on loans monthly through the original contractual termination date of October 6, 2025. This has had the effect of
reducing Accumulated Other Comprehensive Income and increasing Net Interest Income and Retained Earnings over the periods. The
Company recorded interest income related to the interest rate swap of $8.1 million in each of the years ended December 31, 2023 and
December 31, 2022. At December 31, 2023, the Company expected to have a sufficient amount of eligible variable rate loans to
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continue to accrete this interest income ratably in future periods. If this expectation changes and the amount of eligible variable rate
loans decreases significantly, the Company may be required to recognize this interest income more rapidly.
In March 2022, the Company entered into another interest rate swap transaction as part of its ongoing interest rate management
strategies to hedge the risk of its floating rate loans. The notional amount of the swap is $300 million with a contractual termination
date of March 1, 2024. Under the terms of the swap, the Company received a fixed rate of interest of 1.6725% and paid a floating rate
of interest equal to one-month USD-LIBOR (now the equivalent replacement USD-SOFR rate since USD-LIBOR rate is no longer
available). The floating rate reset monthly and net settlements of interest due to/from the counterparty also occurred monthly. To the
extent that the fixed rate exceeded one-month USD-SOFR, the Company received net interest settlements, which were recorded as
loan interest income. If one-month USD-SOFR exceeded the fixed rate of interest, the Company paid net settlements to the
counterparty and recorded those net payments as a reduction of interest income on loans. The Company recorded a reduction of loan
interest income related to this swap transaction of $10.4 million in the year ended December 31, 2023, compared to a reduction of loan
interest income related to this swap transaction of $941,000 in the year ended December 31, 2022. Based on market rates of interest in
January 2024, the Company expects to record a reduction of loan interest income related to this swap of $1.9 million in the three
months ending March 31, 2024, prior to the contractual termination date of March 1, 2024.
In July 2022, the Company entered into two additional interest rate swap transactions as part of its ongoing interest rate management
strategies to hedge the risk of its floating rate loans. The notional amount of each swap is $200 million with an effective date of May
1, 2023 and a termination date of May 1, 2028. Under the terms of one swap, the Company receives a fixed rate of interest of 2.628%
and pays a floating rate of interest equal to one-month USD-SOFR OIS. Under the terms of the other swap, the Company receives a
fixed rate of interest of 5.725% and pays a floating rate of interest equal to one-month USD-Prime. In each case, the floating rate
resets monthly and net settlements of interest due to/from the counterparty also occur monthly. To the extent the fixed rate of interest
exceeds the floating rate of interest, the Company receives net interest settlements, which are recorded as loan interest income. If the
floating rate of interest exceeds the fixed rate of interest, the Company pays net settlements to the counterparty and records those net
payments as a reduction of interest income on loans. The Company recorded a reduction of loan interest income related to these swap
transactions of $7.2 million in the year ended December 31, 2023. At December 31, 2023, the USD-Prime rate was 8.50% and the
one-month USD-SOFR OIS rate was 5.34446%.
If market interest rates remain near their current levels, the Company’s interest rate swaps will continue to have a negative impact on
net interest income.
Interest Income – Investments and Other Interest-earning Assets
Interest income on investments increased $772,000 in the year ended December 31, 2023 compared to the year ended December 31,
2022. Interest income increased $488,000 due to an increase in average interest rates from 2.84% during the year ended December 31,
2022 to 2.91% during the year ended December 31, 2023. At December 31, 2023, the investment portfolio did not include a material
amount of adjustable rate securities. Interest income increased $284,000 as a result of an increase in average balances from $675.6
million during the year ended December 31, 2022, to $685.5 million during the year ended December 31, 2023. Average balances of
securities increased primarily due to purchases of agency multi-family mortgage-backed securities that have a fixed rate of interest
with expected lives of four to ten years, which fits with the Company’s current asset/liability management strategies, partially offset
by normal monthly payments received related to the portfolio of U.S. Government agency mortgage-backed securities and
collateralized mortgage obligations.
Interest income on other interest-earning assets increased $2.9 million in the year ended December 31, 2023 compared to the year
ended December 31, 2022. Interest income increased $3.3 million as a result of higher average interest rates from 1.05% during the
year ended December 31, 2022, to 5.04% during the year ended December 31, 2023. Partially offsetting that increase, interest income
decreased $436,000 as a result of a decrease in average balances from $195.8 million during the year ended December 31, 2022, to
$98.0 million during the year ended December 31, 2023. The increase in average interest rates was due to the increase in the rate paid
on funds held at the Federal Reserve Bank. This rate was increased multiple times in 2022 and 2023 in conjunction with the increase
in the Federal Funds target interest rate. The decrease in average balances was due to utilization of these funds in loan originations and
securities purchases.
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Total Interest Expense
Total interest expense increased $76.3 million, or 278.7%, during the year ended December 31, 2023, when compared with the year
ended December 31, 2022, due to an increase in interest expense on deposits of $68.1 million, or 329.3%, an increase in interest
expense on short-term borrowings of $6.4 million, or 603.6%, an increase in interest expense on securities sold under reverse
repurchase agreements of $881,000, or 271.9%, and an increase in interest expense on subordinated debentures issued to capital trusts
of $861,000, or 98.4%.
Interest Expense – Deposits
Interest expense on demand deposits increased $22.9 million due to an increase in average rates from 0.26% during the year ended
December 31, 2022, to 1.30% during the year ended December 31, 2023. Interest rates paid on demand deposits were higher in 2023
due to significant increases in overall market rates in the latter half of 2022 and all of 2023. Partially offsetting that increase, interest
on demand deposits decreased $293,000 due to a decrease in average balances from $2.32 billion in the year ended December 31,
2022, to $2.20 billion in the year ended December 31, 2023. The Company also experienced decreased balances in certain types of
NOW accounts and IntraFi Network Reciprocal Deposits, mostly offset by increases in money market accounts, which generally have
higher rates of interest than NOW accounts.
Interest expense on time deposits increased $19.8 million as a result of an increase in average rates of interest from 0.96% during the
year ended December 31, 2022, to 2.97% during the year ended December 31, 2023. Interest expense on time deposits increased $1.1
million due to an increase in the average balance of time deposits from $890.5 million during the year ended December 31, 2022, to
$991.2 million during the year ended December 31, 2023. A large portion of the Company’s certificate of deposit portfolio matures
within six to twelve months and therefore reprices fairly quickly; this is consistent with the portfolio over the past several years. Older
certificates of deposit that renewed or were replaced with new deposits generally resulted in the Company paying a higher rate of
interest due to increases in market interest rates in the latter half of 2022 and throughout 2023 and targeted rate promotions during
2023.
Interest expense on brokered deposits increased $14.1 million, due to an increase in average balances from $252.3 million during the
year ended December 31, 2022 to $611.8 million during the year ended December 31, 2023. Interest expense on brokered deposits
also increased $10.4 million due to average rates of interest that increased from 2.44% in the year ended December 31, 2022 to 5.02%
in the year ended December 31, 2023. Brokered deposits added during 2023 were at higher market rates than brokered deposits
previously issued. The Company uses brokered deposits of select maturities and interest rate structures from time to time to
supplement its various funding channels and to manage interest rate risk.
The Company may use interest rate swaps from time to time to manage its interest rate risks from recorded financial liabilities,
primarily brokered deposits. These interest rate swaps have allowed the Company to create funding of varying maturities at a variable
rate that in the past has approximated three-month SOFR. In February 2023, the Company entered into five new interest rate swap
transactions. At December 31, 2023, the Company had $95.0 million in interest rate swaps on brokered deposits, which were
accounted for as fair value hedges. Subsequent to December 31, 2023, the Company elected to terminate these swaps prior to their
contractual termination date in 2025. The Company received a net settlement payment from the swap counterparty totaling $26,500
upon termination. The Company did not utilize these types of interest rate swaps on brokered deposits in 2022 or 2021.
The Company’s net interest income was negatively impacted in 2023 by the high level of competition for deposits due to asset growth
across the industry and the lingering effects of liquidity events at several banks in March 2023. The Company also had a substantial
amount of time deposits maturing at relatively low rates in the second quarter of 2023, and these time deposits either renewed at
higher rates or left the Company, in turn requiring their replacement with other funding sources at then-current, higher market rates. In
addition, sporadically throughout 2023, the Company experienced a higher-than-normal reduction in balances of non-interest-bearing
deposits. Customer balances in both non-interest-bearing checking and interest-bearing checking accounts fluctuated during the year
ended December 31, 2023. As market interest rates for certain checking account types and time deposit accounts have increased, some
customers have chosen to reallocate funds into higher-rate accounts. As of December 31, 2023, time deposit maturities over the next
12 months were as follows: within three months -- $394 million with a weighted-average rate of 3.82%; within three to six months --
$324 million with a weighted-average rate of 4.32%; and within six to twelve months -- $371 million with a weighted-average rate of
4.08%. Based on time deposit market rates in January 2024, replacement rates for these maturing time deposits are likely to be
approximately 4.00-4.50%.
31
Interest Expense – FHLBank Advances; Short-term Borrowings, Repurchase Agreements and Other Interest-bearing
Liabilities; Subordinated Debentures Issued to Capital Trust and Subordinated Notes
FHLBank term advances were not utilized during the years ended December 31, 2023 and 2022. FHLBank overnight borrowings were
utilized in 2023 and 2022.
Interest expense on reverse repurchase agreements increased $953,000 due to an increase in average rates during the year ended
December 31, 2023 when compared to the year ended December 31, 2022. The average rate of interest was 1.47% for the year ended
December 31, 2023, compared to 0.24% during the year ended December 31, 2022. The average balance of repurchase agreements
decreased $50.4 million from $132.6 million in the year ended December 31, 2022 to $82.2 million in the year ended December 31,
2023, which was due to changes in customers’ desire for this product, which can fluctuate.
Interest expense on short-term borrowings (including overnight borrowings from the FHLBank) and other interest-bearing liabilities
increased $3.8 million due to an increase in average balances from $48.5 million during the year ended December 31, 2022, to $142.9
million during the year ended December 31, 2023, which was primarily due to changes in the Company’s funding needs and the mix
of funding, which can fluctuate. Most of this increase was due to the increased utilization of overnight borrowings from the FHLBank.
In addition to this increase, interest expense on short-term borrowings, overnight FHLBank borrowings and other interest-bearing
liabilities increased $2.7 million due to average rates that increased from 2.20% in the year ended December 31, 2022, to 5.25% in the
year ended December 31, 2023. Short-term market interest rates increased sharply in the latter half of 2022 and throughout 2023.
During the year ended December 31, 2023, compared to the year ended December 31, 2022, interest expense on subordinated
debentures issued to capital trusts increased $861,000 due to higher average interest rates. The average interest rate was 3.40% in
2022, compared to 6.74% in 2023. The subordinated debentures are variable-rate debentures, as stated above. There was no change in
the average balance of the subordinated debentures between 2022 and 2023.
In June 2020, the Company issued $75.0 million of 5.50% fixed-to-floating rate subordinated notes due June 15, 2030. The notes were
sold at par, resulting in net proceeds, after underwriting discounts and commissions and other issuance costs, of approximately $73.5
million. These issuance costs are amortized over the expected life of the notes, which is five years from the issuance date, impacting
the overall interest expense on the notes. Interest expense on subordinated notes increased $18,000 due to an increase in average
balances from $74.1 million during the year ended December 31, 2022 to $74.4 million during the year ended December 31, 2023 due
to this issuance cost amortization.
Net Interest Income
Net interest income for the year ended December 31, 2023 decreased $6.4 million, or 3.2%, to $193.2 million, compared to $199.6
million for the year ended December 31, 2022. Net interest margin was 3.57% for the year ended December 31, 2023, compared to
3.80% for the year ended December 31, 2022, a decrease of 23 basis points. The Company experienced increases in interest income on
both loans and investment securities. The Company experienced increases in interest expense on deposits, short-term borrowings,
subordinated debentures issued to capital trust and repurchase agreements.
The Company’s overall interest rate spread decreased 62 basis points, or 17.1%, from 3.59% during the year ended December 31,
2022, to 2.97% during the year ended December 31, 2023. The decrease was due to a 178 basis point increase in the weighted average
rate paid on interest-bearing liabilities, partially offset by a 116 basis point increase in the weighted average yield on interest-earning
assets. In comparing the two years, the yield on loans increased 118 basis points, the yield on investment securities increased 7 basis
points and the yield on other interest-earning assets increased 399 basis points. The rate paid on deposits increased 173 basis points,
the rate paid on short-term borrowings and other interest-bearing liabilities increased 305 basis points, the rate paid on subordinated
debentures issued to capital trusts increased 334 basis points and the rate paid on reverse repurchase agreements increased 123 basis
points. Interest rates earned on loans and paid on deposits are affected by the mix of the loan and deposit portfolios, the stated maturity
of loans and time deposits, the amount of fixed-rate and variable-rate loans and other repricing characteristics. Throughout 2022,
competition for deposits was not as intense and market rates on deposits moved higher at a slower pace. In 2023, overall competition
for deposits intensified as a few banks experienced significant liquidity issues in March 2023 and market rates moved higher more
rapidly. Also, as market interest rates moved higher, some deposit holders chose to move funds into non-deposit investment products.
32
For additional information on net interest income components, refer to the “Average Balances, Interest Rates and Yields” table in this
Report.
Provision for and Allowance for Credit Losses
The Company adopted ASU 2016 13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments, effective January 1, 2021. The CECL methodology replaced the incurred loss methodology with a lifetime “expected
credit loss” measurement objective for loans, held-to-maturity debt securities and other receivables measured at amortized cost at the
time the financial asset is originated or acquired. This standard requires the consideration of historical loss experience and current
conditions adjusted for reasonable and supportable economic forecasts.
Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past
events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the
estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk
characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term, as well as for changes in
economic conditions, including but not limited to, changes in the national unemployment rate, commercial real estate price index,
housing price index, consumer sentiment, gross domestic product (GDP) and construction spending.
Challenging or worsening economic conditions from higher inflation or interest rates, COVID-19 and subsequent variant outbreaks or
similar events, global unrest or other factors may lead to increased losses in the portfolio and/or requirements for an increase in
provision expense. Management maintains various controls in an attempt to identify and limit future losses, such as a watch list of
problem loans and potential problem loans, documented loan administration policies and loan review staff to review the quality and
anticipated collectability of the portfolio. Additional procedures provide for frequent management review of the loan portfolio based
on loan size, loan type, delinquencies, financial analysis, ongoing correspondence with borrowers and problem loan workouts.
Management determines which loans are collateral-dependent, evaluates risk of loss and makes additional provisions to expense, if
necessary, to maintain the allowance at a satisfactory level.
During the year ended December 31, 2023, the Company recorded a provision expense of $2.3 million on its portfolio of outstanding
loans, compared to a provision expense of $3.0 million for the year ended December 31, 2022. The Company experienced net charge
offs of $1.1 million for the year ended December 31, 2023 compared to net charge offs of $274,000 for the year ended December 31,
2022. The Company recorded a negative provision for losses on unfunded commitments of $5.3 million for the year ended December
31, 2023, compared to provision expense of $3.2 million for the year ended December 31, 2022. General market conditions and
unique circumstances related to specific industries and individual projects contribute to the level of provisions and charge-offs.
The Bank’s allowance for credit losses as a percentage of total loans was 1.39% at both December 31, 2023 and 2022. Management
considers the allowance for credit losses adequate to cover losses inherent in the Bank’s loan portfolio at December 31, 2023, based
on recent reviews of the Bank’s loan portfolio and current economic conditions. If challenging economic conditions were to last
longer than anticipated or deteriorate further or management’s assessment of the loan portfolio were to change, additional credit loss
provisions could be required, thereby adversely affecting the Company’s future results of operations and financial condition.
Non-performing Assets
As a result of changes in balances and composition of the loan portfolio, changes in economic and market conditions and other factors
specific to a borrower’s circumstances, the level of non-performing assets will fluctuate.
Non-performing assets at December 31, 2023, were $11.8 million, an increase of $8.1 million from $3.7 million at December 31,
2022. Non-performing assets as a percentage of total assets were 0.20% at December 31, 2023, compared to 0.07% at December 31,
2022.
Compared to December 31, 2022, non-performing loans increased $8.1 million to $11.7 million at December 31, 2023, and foreclosed
assets decreased $27,000, to $23,000 at December 31, 2023. The majority of the increase in non-performing loans was in the non-
performing commercial real estate loans category, which increased $9.0 million from December 31, 2022, primarily due to one loan
relationship being added to the category in 2023.
33
Non-performing Loans. Activity in the non-performing loans category during the year ended December 31, 2023, was as follows:
Removed
Beginning Additions
Balance,
from Non-
to Non-
January 1 Performing Performing
Transfers to Transfers to
Foreclosed
Assets and
Repossessions
Potential
Problem
Loans
(In Thousands)
Charge-
Offs
Ending
Balance,
Payments December 31
One- to four-family construction
Subdivision construction
Land development
Commercial construction
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
Total non-performing loans
$
— $
—
384
—
722
—
1,579
586
399
— $
—
—
—
716
—
10,991
47
204
$ 3,670 $ 11,958 $
— $
—
—
—
—
—
—
—
(11)
(11) $
— $
—
—
—
—
—
—
—
—
— $
—
— $ — $
—
—
384
—
—
—
722
(21)
—
—
10,552
—
31
—
—
59
(21) $ (154) $ (3,694) $ 11,748
— $
—
—
—
(664)
—
(2,018)
(602)
(410)
—
—
—
(31)
—
—
—
(123)
FDIC-assisted acquired loans included
above
$
428 $ 2,298 $
— $
— $
(21) $ (31) $ (412) $
2,262
At December 31, 2023, the non-performing commercial real estate category included four loans, two of which were added during the
year ended December 31, 2023. The largest relationship in this category, which totaled $8.1 million, or 76.4% of the total category,
was added to non-performing loans during the three months ended June 30, 2023 and is collateralized by an office building in
Missouri. The loan was classified due to a decline in occupancy resulting in a stressed cash flow. Occupancy has improved somewhat
and lease income from the building has continued, and the Company has received some principal paydowns from the borrower.
Another significant relationship was added to the commercial real estate category in the three months ended December 31, 2023. This
relationship totaled $2.2 million and is collateralized by an assisted living facility in Wisconsin. The non-performing one- to four-
family residential category included three loans. The largest relationship in this category, which was added during 2023 and is
collateralized by a single-family home in the Kansas City metro area, totaled $543,000, or 75.2% of the total category. The non-
performing land development category consisted of one loan added in 2021, which totaled $384,000 and is collateralized by
unimproved zoned vacant ground in southern Illinois. The non-performing commercial business category consisted of two loans that
totaled $31,000 to a single borrower, both of which were added during 2023. The non-performing consumer category included six
loans, three of which were added during 2023.
Other Real Estate Owned and Repossessions. All of the total $23,000 of other real estate owned and repossessions at December 31,
2023 were acquired through foreclosure.
34
Activity in foreclosed assets and repossessions during the year ended December 31, 2023, was as follows:
One- to four-family construction
Subdivision construction
Land development
Commercial construction
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
Total foreclosed assets and repossessions
FDIC-assisted acquired assets included above
Beginning
Balance,
January 1
Additions
Sales
Capitalized
Costs
Write-
Downs
(In Thousands)
Ending
Balance,
December 31
$
$
$
— $
—
—
—
—
—
—
—
50
50 $
— $
—
—
—
21
—
—
—
88
109 $
— $
—
—
—
(21)
—
—
—
(115)
(136) $
— $
—
—
—
—
—
—
—
—
— $
— $
—
—
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
—
23
23
— $
21 $
(21) $
— $
— $
—
The additions and sales in the consumer category were due to the volume of repossessions of automobiles, which generally are subject
to a shorter repossession process.
Potential Problem Loans. Potential problem loans increased $5.8 million during the year ended December 31, 2023, from $1.6 million
at December 31, 2022 to $7.4 million at December 31, 2023. Potential problem loans are loans which management has identified
through routine internal review procedures as having possible credit problems that may cause the borrowers difficulty in complying
with current repayment terms. These loans are not reflected in non-performing assets.
Activity in the potential problem loans category during the year ended December 31, 2023, was as follows:
Beginning Additions
Balance,
to Potential
Problem
January 1
Removed
from
Potential
Problem
Transfers to
Non-
Transfers to
Foreclosed
Assets and
Performing Repossessions
(In Thousands)
Charge-
Offs
Ending
Balance,
Payments December 31
One- to four-family construction
Subdivision construction
Land development
Commercial construction
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
Total potential problem loans
$ — $ — $ — $
—
—
—
167
7,162
—
—
60
$ 1,578 $ 7,389 $ (1,159) $
—
—
—
(1,016)
—
—
—
(143)
—
—
—
1,348
—
—
—
230
— $
—
—
—
(105)
—
—
—
(6)
(111) $
— $
—
—
—
—
—
—
—
(15)
— $
—
—
—
—
—
—
—
(5)
(5) $ (15) $ (303) $
— $
—
—
—
(236)
—
—
—
(67)
—
—
—
—
158
7,162
—
—
54
7,374
FDIC-assisted acquired loans included
above
$ 743 $
— $
(639) $
— $
— $ — $
(4) $
100
At December 31, 2023, the other residential (multi-family) category of potential problem loans included one loan, which totaled $7.2
million, and was added in 2023. This loan is collateralized by an apartment and retail project in Oklahoma City, OK. This loan was
added to potential problems loans due to a decline in occupancy resulting in a stressed cash flow. The borrower continues to make
schedule interest payments. At December 31, 2023, the one- to four-family residential category of potential problem loans included
35
two loans. The largest relationship in this category totaled $99,000, or 62.5% of the total category. The consumer category of potential
problem loans included six loans.
Loans Categorized as “Watch” and “Special Mention”
The Company reviews the credit quality of its loan portfolio using an internal grading system that classifies loans as “Satisfactory,”
“Watch,” “Special Mention,” “Substandard” and “Doubtful.” Multiple loan reviews take place on a continuous basis by credit risk and
lending management. Reviews are focused on financial performance, occupancy trends, delinquency status, covenant compliance,
collateral support, economic considerations and various other factors. Loans classified as “Watch” are being monitored due to
indications of potential weaknesses or deficiencies that may require future reclassification as special mention or substandard. Loans
classified as “Watch” decreased $20.4 million, from $28.7 million at December 31, 2022 to $8.3 million at December 31, 2023,
primarily due to the combination of one large loan being upgraded to “Satisfactory,” one unrelated large loan being downgraded to
“Substandard” and added to non-performing loans, and one unrelated loan being downgraded to “Special Mention.” While loans
classified as “Special Mention” are not adversely classified, they are deserving of management’s close attention to ensure repayment
prospects or the credit position of the assets does not deteriorate and expose the institution to elevated risk to warrant adverse
classification at a future date. In the year ended December 31, 2023, loans classified as “Special Mention” increased $26.7 million as
four loan relationships were downgraded from “Satisfactory.” In the year ended December 31, 2023, four loan relationships were
downgraded from “Satisfactory.” The largest relationship consisted of four commercial business loans totaling $9.9 million at
December 31, 2023 and is secured by business assets, equipment, accounts receivable and real estate. The relationship was added to
the “Special Mention” category during 2023 due to stressed cash flow associated with business expansion. Since that time, the
borrower has reduced debt by restructuring business operations, resulting in improved business cash flow and collateral margins.
Monthly payments continue to amortize the loan balance. At December 31, 2023, a $9.6 million relationship was also included in the
“Special Mention” category. The balance represents a participation in a loan collateralized by a student housing project in Texas. The
Company is not the lead lender for this relationship. The project has suffered from rising debt service requirements and a decline in
occupancy. A relationship totaling $4.4 million at December 31, 2023 was added to the “Special Mention” category in 2023. This
relationship is collateralized by three assisted care facilities located in southwest Missouri. Business cash flow was negatively
impacted by a labor shortage and a decrease in Medicaid reimbursement during 2022-2023. Monthly payments continue to amortize
the loan balance. See Note 3 to the accompanying audited financial statements for further discussion of the Company’s loan grading
system.
Non-Interest Income
Non-interest income for the year ended December 31, 2023 was $30.1 million compared to $34.1 million for the year ended December
31, 2022. The decrease of $4.0 million, or 11.9%, was primarily as a result of the following items:
Point-of-sale and ATM fees: Point-of-sale and ATM fees decreased $1.4 million compared to the prior year. This decrease was
primarily due to a portion of these transactions now being routed through channels with lower fees to the Company, which is expected
to continue in future periods, and certain increases in related processing costs during the transition to a new debit card processor.
Other income: Other income decreased $1.2 million compared to the prior year. In 2022, a gain of $1.1 million was recognized on
sales of fixed assets, with no similar transactions occurring in the current year.
Gain (loss) on derivative interest rate products: In 2023, the Company recognized a loss of $337,000 on the change in fair value of its
back-to-back interest rate swaps related to commercial loans and the change in fair value on interest rate swaps related to brokered
time deposits. In 2022, the Company recognized a gain of $321,000 on the change in fair value of its back-to-back interest rate swaps
related to commercial loans.
Non-Interest Expense
Total non-interest expense increased $7.6 million, or 5.7%, from $133.4 million in the year ended December 31, 2022, to $141.0
million in the year ended December 31, 2023. The Company’s efficiency ratio for the year ended December 31, 2023 was 63.16%,
compared to 57.05% for 2022. In the year ended December 31, 2023, the change in the efficiency ratio was primarily due to an
increase in non-interest expense, and decreases non-interest income and net interest income. The Company’s ratio of non-interest
expense to average assets was 2.47% for the year ended December 31, 2023 compared to 2.42% for the year ended December 31,
36
2022. Average assets for the year ended December 31, 2023, increased $199.4 million, or 3.6%, from the year ended December 31,
2022, primarily due to increases in average net loans receivable.
The following were significant items related to the increase in non-interest expense for the year ended December 31, 2023 as
compared to the year ended December 31, 2022:
Salaries and employee benefits: Salaries and employee benefits increased $3.2 million from the prior year. A portion of this increase
related to normal annual merit increases in various lending and operations areas. In 2023, some of these increases were larger than in
previous years due to the current employment environment. Also, in the fourth quarter of 2023, the Company recorded expense
totaling $441,000 related to discretionary bonuses awarded to various associates who have been involved significantly in the software
and systems transition. In addition, compensation costs related to originated loans that are deferred under accounting rules decreased
by $1.3 million in 2023 compared to 2022 (resulting in higher expense in 2023), as the volume of loans originated in 2023 decreased
substantially compared to 2022.
Net occupancy expenses: Net occupancy expenses increased $2.4 million from the prior year. Various components of computer
license and support expenses increased by $1.4 million in 2023 compared to 2022. In addition, various repairs and maintenance
expenses increased by $252,000 in 2023 compared to 2022.
Insurance: Insurance expense increased $1.3 million from the prior year. The increase was primarily due to previously announced
increases in deposit insurance rates for the FDIC’s Deposit Insurance Fund.
Legal, Audit and Other Professional Fees: Legal, audit and other professional fees increased $756,000 from the prior year, to $7.1
million. In 2023, the Company expensed a total of $4.0 million, primarily related to training and implementation costs for the
upcoming core systems conversion and professional fees to consultants engaged to support the Company’s transition of core and
ancillary software and information technology systems, compared to $3.1 million expensed in 2022. In addition, in 2022, the
Company expensed $372,000 in fees related to the interest rate swaps initiated in July 2022, which was not repeated in 2023.
Provision for Income Taxes
For the years ended December 31, 2023 and 2022, the Company’s effective tax rate was 20.6% and 19.4%, respectively. These
effective rates were near or below the statutory federal tax rate of 21%, due primarily to the utilization of certain investment tax
credits and the Company’s tax-exempt investments and tax-exempt loans, which reduced the Company’s effective tax rate. The
Company’s effective tax rate may fluctuate in future periods as it is impacted by the level and timing of the Company’s utilization of
tax credits, the level of tax-exempt investments and loans, the amount of taxable income in various state jurisdictions and the overall
level of pre-tax income. State tax expense estimates continually evolve as taxable income and apportionment between states are
analyzed. The Company’s effective income tax rate is currently generally expected to remain near the statutory federal tax rate due
primarily to the factors noted above. The Company currently expects its effective tax rate (combined federal and state) will be
approximately 20.5% to 21.5% in future periods.
Average Balances, Interest Rates and Yields
The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets
and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and
the net interest margin. Average balances of loans receivable include the average balances of non-accrual loans for each period.
Interest income on loans includes interest received on non-accrual loans on a cash basis. Interest income on loans includes the
amortization of net loan fees, which were deferred in accordance with accounting standards. Net fees included in interest income were
$5.7 million, $6.3 million and $11.2 million for 2023, 2022 and 2021, respectively. Tax-exempt income was not calculated on a tax
equivalent basis. The table does not reflect any effect of income taxes.
37
Interest-earning assets:
Loans receivable:
One- to four-family residential
Other residential
Commercial real estate
Construction
Commercial business
Other loans
Industrial revenue bonds (1)
Dec. 31,
2023
Yield/
Rate
Year Ended
December 31, 2023
Year Ended
December 31, 2022
Year Ended
December 31, 2021
Average
Balance
Interest
Yield/
Rate
Average
Balance
Interest
Yield/
Rate
Average
Balance
Interest
Yield/
Rate
(Dollars In Thousands)
3.88 % $
7.15
6.10
7.90
6.50
6.70
6.10
905,102
822,955
1,493,130
908,558
308,049
181,649
12,413
$ 33,693
56,274
87,670
65,999
18,310
9,125
881
3.72 % $
6.84
5.87
7.26
5.94
5.02
7.10
811,896
837,582
1,551,541
679,524
292,825
199,336
13,338
$ 27,853
43,174
73,164
37,370
14,615
8,864
711
3.43 % $ 678,900
922,739
5.15
1,541,095
4.72
616,899
5.50
279,232
4.99
220,783
4.45
14,528
5.33
$ 25,251
40,998
65,811
27,696
15,403
10,347
763
3.72 %
4.44
4.27
4.49
5.52
4.69
5.25
Total loans receivable
6.25
4,631,856
271,952
5.87
4,386,042
205,751
4.69
4,274,176
186,269
4.36
Investment securities (1)
Interest-earning deposits in other banks
2.77
5.34
685,496
98,049
19,942
4,941
2.91
5.04
675,571
195,817
19,170
2,056
2.84
1.05
447,943
552,094
11,689
715
2.61
0.13
Total interest-earning assets
Non-interest-earning assets:
Cash and cash equivalents
Other non-earning assets
Total assets
Interest-bearing liabilities:
Interest-bearing demand and savings
Time deposits
Brokered deposits
Total deposits
Securities sold under reverse repurchase agreements
Short-term borrowings, overnight FHLBank borrowings
and other interest-bearing liabilities
Subordinated debentures issued to capital trust
Subordinated notes
Total interest-bearing liabilities
Non-interest-bearing liabilities:
Demand deposits
Other liabilities
Total liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
Net interest income:
Interest rate spread
Net interest margin*
Average interest-earning assets to average interest-
bearing liabilities
5.81
5,415,401
296,835
5.48
5,257,430
226,977
4.32
5,274,213
198,673
3.77
90,881
212,914
$ 5,719,196
$ 2,202,242
991,202
611,821
3,805,265
82,218
142,866
25,774
74,430
1.67
3.79
5.20
2.80
1.66
5.64
7.24
5.92
96,353
166,007
$ 5,519,790
$ 2,322,915
890,507
252,281
3,465,703
132,595
48,530
25,774
74,131
28,579
29,459
30,719
88,757
1,205
7,500
1,736
4,422
1.30
2.97
5.02
2.33
1.47
5.25
6.74
5.94
96,989
131,154
$ 5,502,356
5,968
8,546
6,162
20,676
324
1,066
875
4,422
0.26 $ 2,316,890
1,076,446
0.96
84,688
2.44
3,478,024
0.60
143,757
0.24
2.20
3.40
5.97
1,529
25,774
119,780
4,023
8,090
989
13,102
37
—
448
7,165
0.17
0.75
1.17
0.38
0.03
—
1.74
5.98
3.03
4,130,553
103,620
2.51
3,746,733
27,363
0.73
3,768,864
20,752
0.55
949,045
88,678
5,168,276
550,920
$ 5,719,196
1,141,660
66,224
4,954,617
565,173
$ 5,519,790
1,061,716
44,260
4,874,840
627,516
$ 5,502,356
2.78 %
$ 193,215
2.97 %
3.57 %
$ 199,614
3.59 %
3.80 %
$ 177,921
3.22 %
3.37 %
131.1 %
140.3 %
139.9 %
* Defined as the Company’s net interest income divided by total interest-earning assets.
(1)
Of the total average balance of investment securities, average tax-exempt investment securities were $56.0 million, $54.0
million and $42.3 million for 2023, 2022 and 2021, respectively. In addition, average tax-exempt industrial revenue bonds
were $13.9 million, $16.4 million and $17.9 million in 2023, 2022 and 2021, respectively. Interest income on tax-exempt
assets included in this table was $2.4 million, $2.2 million and $1.6 million for 2023, 2022 and 2021, respectively. Interest
income net of disallowed interest expense related to tax-exempt assets was $2.1 million, $2.1 million and $1.6 million for
2023, 2022 and 2021, respectively.
38
Rate/Volume Analysis
The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-
earning assets and interest-bearing liabilities for the periods shown. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (i) changes in rate (i.e., changes in rate multiplied by old volume) and (ii)
changes in volume (i.e., changes in volume multiplied by old rate). For purposes of this table, changes attributable to both rate and
volume, which cannot be segregated, have been allocated proportionately to volume and rate. Tax-exempt income was not calculated
on a tax equivalent basis.
Interest-earning assets:
Loans receivable
Investment securities
Interest-earning deposits in other banks
Total interest-earning assets
Interest-bearing liabilities:
Demand deposits
Time deposits
Brokered Deposits
Total deposits
Securities sold under reverse repurchase agreements
Short-term borrowings, overnight FHLBank borrowings and other
interest-bearing liabilities
Subordinated debentures issued to capital trust
Subordinated notes
Total interest-bearing liabilities
Net interest income
Year Ended
December 31, 2023 vs.
December 31, 2022
Year Ended
December 31, 2022 vs.
December 31, 2021
Increase (Decrease)
Due to
Rate
Volume
Total
Increase
(Decrease)
Increase (Decrease)
Due to
Rate
Volume
Total
Increase
(Decrease)
(In Thousands)
$
$
54,141
488
3,321
57,950
22,904
19,843
10,449
53,196
953
2,684
861
(18)
57,676
274
$
$
12,060
284
(436)
11,908
(293)
1,070
14,108
14,885
(72)
3,750
—
18
18,581
(6,673)
$
$
66,201
772
2,885
69,858
22,611
20,913
24,557
68,081
881
6,434
861
—
76,257
(6,399)
$
$
14,512
1,098
1,475
17,085
1,935
1,212
1,839
4,986
290
390
427
(20)
6,073
11,012
$
$
4,970
6,383
(134)
11,219
10
(756)
3,334
2,588
(3)
676
—
(2,723)
538
10,681
$
$
19,482
7,481
1,341
28,304
1,945
456
5,173
7,574
287
1,066
427
(2,743)
6,611
21,693
Results of Operations and Comparison for the Years Ended December 31, 2022 and 2021
General
Net income increased $1.3 million, or 1.8%, during the year ended December 31, 2022, compared to the year ended December 31,
2021. Net income was $75.9 million for the year ended December 31, 2022 compared to $74.6 million for the year ended December
31, 2021. This increase was primarily due to an increase in net interest income of $21.7 million, or 12.2%, and a decrease in income
tax expense of $1.5 million, or 7.5%, partially offset by an increase in provision for credit losses on loans and unfunded commitments
of $11.9 million, or 207.4%, an increase in non-interest expense of $5.7 million, or 4.5%, and a decrease in non-interest income of
$4.2 million, or 10.9%.
Total Interest Income
Total interest income increased $28.3 million, or 14.2%, during the year ended December 31, 2022 compared to the year ended
December 31, 2021. The increase was due to a $19.5 million increase in interest income on loans and an $8.8 million increase in
interest income on investment securities and other interest-earning assets. Interest income on loans increased for the year ended
December 31, 2022 compared to the year ended December 31, 2021, primarily due to higher average rates of interest on loans and
higher average loan balances. Interest income from investment securities and other interest-earning assets increased during the year
ended December 31, 2022 compared to the year ended December 31, 2021, due to higher average balances of investment securities
combined with higher average rates of interest on investment securities and other interest-earning assets.
Interest Income – Loans
During the year ended December 31, 2022 compared to the year ended December 31, 2021, interest income on loans increased due to
higher average balances and average interest rates. Interest income increased $14.5 million as the result of higher average interest rates
on loans. The average yield on loans increased from 4.36% during the year ended December 31, 2021 to 4.69% during the year ended
December 31, 2022. This increase was primarily due to the repricing of floating rates and the origination of new loans at current
39
market rates in 2022 as market interest rates began to increase significantly. In addition, interest income on loans increased $5.0
million as a result of higher average loan balances, which increased from $4.27 billion during the year ended December 31, 2021, to
$4.39 billion during the year ended December 31, 2022. The Company continued to originate loans at a pace similar to prior periods,
but overall loan repayments slowed in 2022 compared to the level of repayments in 2021.
Additionally, the Company’s interest income on loans included accretion of net deferred fees related to Paycheck Protection Program
(PPP) loans originated in 2020 and 2021. Net deferred fees recognized in interest income were $502,000 and $5.5 million in the years
ended December 31, 2022 and December 31, 2021, respectively.
In October 2018, the Company entered into an interest rate swap transaction as part of its ongoing interest rate management strategies
to hedge the risk of its floating rate loans. The notional amount of the swap was $400 million with a contractual termination date in
October 2025. As previously disclosed by the Company, in March 2020, the Company and its swap counterparty mutually agreed to
terminate this swap prior to its contractual maturity. The Company was paid $45.9 million from its swap counterparty as a result of
this termination. This $45.9 million, less the accrued to date interest portion and net of deferred income taxes, is reflected in the
Company’s stockholders’ equity as Accumulated Other Comprehensive Income and is being accreted to interest income on loans
monthly through the original contractual termination date of October 6, 2025. This has the effect of reducing Accumulated Other
Comprehensive Income and increasing Net Interest Income and Retained Earnings over the periods. The Company recorded interest
income related to the interest rate swap of $8.1 million in each of the years ended December 31, 2022 and December 31, 2021. At
December 31, 2022, the Company expected to have a sufficient amount of eligible variable rate loans to continue to accrete this
interest income ratably in future periods. If this expectation changes and the amount of eligible variable rate loans decreases
significantly, the Company may be required to recognize this interest income more rapidly.
In March 2022, the Company entered into an interest rate swap transaction as part of its ongoing interest rate management strategies to
hedge the risk of its floating rate loans. The notional amount of the swap is $300 million with a contractual termination date of March
1, 2024. Under the terms of the swap, the Company received a fixed rate of interest of 1.6725% and paid a floating rate of interest
equal to one-month USD-LIBOR (or the equivalent replacement rate if USD-LIBOR rate is not available). The floating rate reset
monthly and net settlements of interest due to/from the counterparty also occurred monthly. The initial floating rate of interest was set
at 0.2414%. To the extent that the fixed rate of interest exceeded one-month USD-LIBOR, the Company received net interest
settlements, which were recorded as loan interest income. If one-month USD-LIBOR exceeded the fixed rate of interest, the Company
was required to pay net settlements to the counterparty and recorded those net payments as a reduction of interest income on loans.
The Company recorded a reduction of loan interest income related to this swap transaction of $941,000 in the year ended December
31, 2022.
In July 2022, the Company entered into two additional interest rate swap transactions as part of its ongoing interest rate management
strategies to hedge the risk of its floating rate loans. The notional amount of each swap is $200 million with an effective date of May
1, 2023 and a termination date of May 1, 2028. Under the terms of one swap, beginning in May 2023, the Company will receive a
fixed rate of interest of 2.628% and will pay a floating rate of interest equal to one-month USD-SOFR OIS. Under the terms of the
other swap, beginning in May 2023, the Company will receive a fixed rate of interest of 5.725% and will pay a floating rate of interest
equal to one-month USD-Prime. In each case, the floating rate will be reset monthly and net settlements of interest due to/from the
counterparty will also occur monthly. To the extent the fixed rate of interest exceeds the floating rate of interest, the Company will
receive net interest settlements, which will be recorded as loan interest income. If the floating rate of interest exceeds the fixed rate of
interest, the Company will be required to pay net settlements to the counterparty and will record those net payments as a reduction of
interest income on loans. At December 31, 2022, the USD-Prime rate was 7.50% and the one-month USD-SOFR OIS rate was
4.06173%.
Interest Income – Investments and Other Interest-earning Assets
Interest income on investments increased $7.5 million in the year ended December 31, 2022 compared to the year ended December
31, 2021. Interest income increased $6.4 million as a result of an increase in average balances from $447.9 million during the year
ended December 31, 2021, to $675.6 million during the year ended December 31, 2022. Interest income increased $1.1 million due to
an increase in average interest rates from 2.61% during the year ended December 31, 2021 to 2.84% during the year ended December
31, 2022, due to higher market rates of interest on investment securities purchased during 2022 compared to securities already in the
portfolio. At December 31, 2022, the investment portfolio did not include a material amount of adjustable rate securities.
40
Interest income on other interest-earning assets increased $1.3 million in the year ended December 31, 2022 compared to the year
ended December 31, 2021. Interest income increased $1.5 million as a result of higher average interest rates from 0.13% during the
year ended December 31, 2021, to 1.05% during the year ended December 31, 2022. Interest income decreased $134,000 as a result of
a decrease in average balances from $552.1 million during the year ended December 31, 2021, to $195.8 million during the year ended
December 31, 2022. The increase in the average interest rate was primarily due to the increase in the rate paid on funds held at the
Federal Reserve Bank. This rate was increased multiple times in 2022 in conjunction with the increase in the Federal Funds target
interest rate.
Total Interest Expense
Total interest expense increased $6.6 million, or 31.9%, during the year ended December 31, 2022, when compared with the year
ended December 31, 2021, due to an increase in interest expense on deposits of $7.6 million, or 57.8%, an increase in interest expense
on short-term borrowings of $1.1 million, or 100.0%, an increase in interest expense on subordinated debentures issued to capital
trusts of $427,000, or 95.3%, and an increase in interest expense on securities sold under reverse repurchase agreements of $287,000,
or 775.7%, partially offset by a decrease in interest expense on subordinated notes of $2.7 million, or 31.9%.
Interest Expense – Deposits
Interest expense on demand deposits increased $1.9 million due to an increase in average rates from 0.17% during the year ended
December 31, 2021, to 0.26% during the year ended December 31, 2022. In addition, interest on demand deposits increased $10,000
due to an increase of $6.0 million in average balances to $2.32 billion in the year ended December 31, 2022, when compared to the
year ended December 31, 2021. Interest rates paid on demand deposits increased due to increases in the federal funds rate of interest
and other market interest rates during 2022.
Interest expense on time deposits increased $1.2 million due to an increase in average rates of interest from 0.75% during the year
ended December 31, 2021, to 0.96% during the year ended December 31, 2022. Partially offsetting that increase, interest expense on
time deposits decreased $756,000 due to a decrease in the average balance of time deposits from $1.08 billion during the year ended
December 31, 2021, to $891.5 million during the year ended December 31, 2022. A large portion of the Company’s certificate of
deposit portfolio matures within six to twelve months and therefore reprices fairly quickly; this is consistent with the portfolio over the
past several years. Older certificates of deposit that renewed or were replaced with new deposits in the latter half of 2022 generally
resulted in the Company paying a higher rate of interest due to market interest rate increases during 2022. The decrease in average
balances of time deposits was a result of decreases in retail time deposits obtained through the Company’s banking center network and
time deposits obtained through on-line channels. On-line channel time deposits were actively reduced by the Company as other
deposit sources increased. The Company reduced its rates on these types of time deposits and allowed these deposits to mature without
replacement during 2021 and 2022.
Interest expense on brokered deposits increased $3.3 million, due to an increase in average balances from $84.7 million during the
year ended December 31, 2021 to $252.3 million during the year ended December 31, 2022. Interest expense on brokered deposits
also increased $1.8 million due to average rates of interest that increased from 1.17% in the year ended December 31, 2021 to 2.44%
in the year ended December 31, 2022. Brokered deposits added during 2022 were at higher market rates than brokered deposits
previously issued. The Company uses brokered deposits of select maturities and interest rate structures from time to time to
supplement its various funding channels and to manage interest rate risk.
Interest Expense – FHLBank Advances, Short-term Borrowings, Repurchase Agreements and Other Interest-bearing
Liabilities; Subordinated Debentures Issued to Capital Trust and Subordinated Notes
FHLBank term advances were not utilized during the years ended December 31, 2022 and 2021. FHLBank overnight borrowings were
utilized in 2022, but were not utilized in 2021.
Interest expense on reverse repurchase agreements increased $290,000 due to an increase in average rates during the year ended
December 31, 2022 when compared to the year ended December 31, 2021. The average rate of interest was 0.24% for the year ended
December 31, 2022, compared to 0.03% during the year ended December 31, 2021. The average balances of repurchase agreements
decreased $11.2 million from $143.8 million in the year ended December 31, 2021, to $132.6 million in the year ended December 31,
2022, resulting in little change in interest expense.
41
Interest expense on short-term borrowings and other interest-bearing liabilities increased $676,000 due to an increase in average
balances from $1.5 million during the year ended December 31, 2021, to $48.5 million during the year ended December 31, 2022,
which was primarily due to changes in the Company’s funding needs and the mix of funding, which can fluctuate. Most of this
increase was due to the utilization of overnight borrowings from the FHLBank. In addition to this increase, interest expense on short-
term borrowings, overnight FHLBank borrowings and other interest-bearing liabilities increased $390,000 due to average rates that
increased from 0.02% in the year ended December 31, 2021, to 2.20% in the year ended December 31, 2022.
During the year ended December 31, 2022, compared to the year ended December 31, 2021, interest expense on subordinated
debentures issued to capital trusts increased $427,000 due to higher average interest rates. The average interest rate was 1.74% in
2021, compared to 3.40% in 2022. The interest rate on subordinated debentures is a floating rate indexed to the three-month LIBOR
interest rate. There was no change in the average balance of the subordinated debentures between 2022 and 2021.
In August 2016, the Company issued $75 million of 5.25% fixed-to-floating rate subordinated notes due August 15, 2026. The notes
were sold at par, resulting in net proceeds, after underwriting discounts and commissions and other issuance costs, of approximately
$73.5 million. In June 2020, the Company issued $75.0 million of 5.50% fixed-to-floating rate subordinated notes due June 15, 2030.
The notes were sold at par, resulting in net proceeds, after underwriting discounts and commissions and other issuance costs, of
approximately $73.5 million. In both cases, the issuance costs are amortized over the expected life of the notes, which is five years
from the issuance date, and therefore impact the overall interest expense on the notes. In August 2021, the Company completed the
redemption of all of its 5.25% subordinated notes due August 15, 2026. The notes were redeemed for cash by the Company at 100%
of their principal amount, plus accrued and unpaid interest. Interest expense on subordinated notes decreased $2.7 million due to a
decrease in average balances from $119.8 million during the year ended December 31, 2021 to $74.1 million during the year ended
December 31, 2022, due to lower average balances resulting from the redemption of the subordinated notes maturing in 2026.
Net Interest Income
Net interest income for the year ended December 31, 2022 increased $21.7 million, or 12.2%, to $199.6 million, compared to $177.9
million for the year ended December 31, 2021. Net interest margin was 3.80% for the year ended December 31, 2022, compared to
3.37% for the year ended December 31, 2021, an increase of 43 basis points. The Company experienced increases in interest income
on both loans and investment securities. The Company experienced increases in interest expense on deposits, short-term borrowings,
subordinated debentures issued to capital trust and repurchase agreements, partially offset by a decrease in interest expense on
subordinated notes.
The Company’s overall interest rate spread increased 37 basis points, or 11.5%, from 3.22% during the year ended December 31,
2021, to 3.59% during the year ended December 31, 2022. The increase was due to a 55 basis point increase in the weighted average
yield on interest-earning assets and an 18 basis point increase in the weighted average rate paid on interest-bearing liabilities. In
comparing the two years, the yield on loans increased 33 basis points, the yield on investment securities increased 23 basis points and
the yield on other interest-earning assets increased 92 basis points. The rate paid on deposits increased 22 basis points, the rate paid on
subordinated debentures issued to capital trusts increased 166 basis points, the rate paid on reverse repurchase agreements increased
21 basis points and the rate paid on subordinated notes decreased one basis point. In addition, the Company had outstanding overnight
borrowings in the 2022 period, which had an average interest rate of 220 basis points compared to none in the 2021 period.
During the year ended December 31, 2022, the mix of the Company’s assets shifted somewhat, with net increases in outstanding loan
balances and investment securities. The Company used excess funds that were previously held on account at the Federal Reserve Bank
to fund the increases in loans and investments. Loans increased $499.3 million and investment securities increased $192.1 million,
while cash and cash equivalents decreased $548.7 million. Also, in the latter half of 2022, the mix of deposits changed somewhat, with
non-time account balances trending lower and time deposit balances trending higher. The increased time deposits are a mix of shorter-
term retail deposits, fixed-rate brokered deposits callable at the Company’s discretion and variable-rate brokered deposits. From time
to time, the Company also utilized overnight borrowings from the FHLBank.
For additional information on net interest income components, refer to the “Average Balances, Interest Rates and Yields” table in this
Report.
42
Provision for and Allowance for Credit Losses
During the year ended December 31, 2022, the Company recorded a provision expense of $3.0 million on its portfolio of outstanding
loans, compared to a negative provision of $6.7 million for the year ended December 31, 2021. The negative provision for credit
losses in 2021 reflected decreased outstanding total loans and continued positive trends in asset quality metrics, combined with an
improved economic forecast. In 2021, the national unemployment rate continued to decrease and many measures of economic growth
improved. The Company experienced net charge offs of $274,000 for the year ended December 31, 2022 compared to net recoveries
of $116,000 for the year ended December 31, 2021. The provision for losses on unfunded commitments for the year ended December
31, 2022 was $3.2 million, compared to $939,000 for the year ended December 31, 2021. General market conditions and unique
circumstances related to specific industries and individual projects contributed to the level of provisions and charge-offs. Collateral
and repayment evaluations of all assets categorized as potential problem loans, non-performing loans or foreclosed assets were
completed with corresponding charge-offs or reserve allocations made as appropriate.
The Bank’s allowance for credit losses as a percentage of total loans was 1.39% and 1.49% at December 31, 2022 and 2021,
respectively.
Non-performing Assets
Non-performing assets at December 31, 2022, were $3.7 million, a decrease of $2.3 million from $6.0 million at December 31, 2021.
Non-performing assets as a percentage of total assets were 0.07% at December 31, 2022, compared to 0.11% at December 31, 2021.
Compared to December 31, 2021, non-performing loans decreased $1.7 million to $3.7 million at December 31, 2022, and foreclosed
assets decreased $538,000 to $50,000 at December 31, 2022. Non-performing commercial real estate loans were $1.6 million, or
43.0%, of total non-performing loans at December 31, 2022. Nonperforming one-to four-family residential loans were $722,000, or
19.6%, of the total non-performing loans at December 31, 2022. Non-performing commercial business loans were $586,000, or
16.0%, of total non-performing loans at December 31, 2022. Non-performing land development loans were $384,000, or 10.5%, of
total nonperforming loans at December 31, 2022. Non-performing consumer loans were $399,000, or 10.9%, of the total non-
performing loans at December 31, 2022.
Non-performing Loans. Activity in the non-performing loans category during the year ended December 31, 2022, was as follows:
Beginning Additions to Removed
Balance,
from Non-
Non-
Performing Performing
January 1
Transfers to Transfers to
Foreclosed
Assets and
Repossessions
Potential
Problem
Loans
Charge-
Offs
Ending
Balance,
Payments December 31
One- to four-family construction
Subdivision construction
Land development
Commercial construction
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
Total non-performing loans
$
— $
—
468
—
2,216
—
2,006
—
733
— $
—
—
—
519
—
238
586
168
$ 5,423 $ 1,511 $
— $
—
—
—
(90)
—
—
—
—
(90) $
(In Thousands)
— $
—
—
—
(279)
—
—
—
(74)
(353) $
— $ — $
—
—
—
—
—
—
—
(9)
(9) $ (213) $ (2,599) $
— $
—
—
—
(1,607)
—
(665)
—
(327)
—
(84)
—
(37)
—
—
—
(92)
—
—
384
—
722
—
1,579
586
399
3,670
FDIC-assisted acquired loans included
above
$ 1,736 $
272 $ — $
— $
— $ — $ (1,580) $
428
At December 31, 2022, the non-performing commercial real estate category included three loans, one of which was added during
2022. The largest relationship in this category, which totaled $1.3 million, or 83.3% of the total category, was transferred from
potential problem loans in 2021 and is collateralized by a mixed use commercial retail building. The non-performing one- to four-
family residential category included 23 loans, four of which were added during 2022. The largest relationship in this category, totaled
$158,000, or 21.8% of the total category. The non-performing land development category consisted of one loan, which totaled
43
$384,000 and is collateralized by unimproved zoned vacant ground in southern Illinois. The non-performing commercial business
category consisted of two loans that totaled $586,000 to a single borrower, both of which were added during the fourth quarter of 2022
and subsequently paid off with no loss in the first quarter of 2023. The non-performing consumer category included 23 loans, 11 of
which were added during 2022.
Other Real Estate Owned and Repossessions. Of the total $233,000 of other real estate owned and repossessions at December 31,
2022, $183,000 represents properties which were not acquired through foreclosure.
Activity in foreclosed assets and repossessions during the year ended December 31, 2022, was as follows:
One- to four-family construction
Subdivision construction
Land development
Commercial construction
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
Total foreclosed assets and repossessions
FDIC-assisted acquired assets included above
Beginning
Balance,
January 1
Additions
Sales
Capitalized
Costs
(In Thousands)
Ending
Balance,
Write-Downs December 31
$
$
$
— $
—
315
—
183
—
—
—
90
588 $
— $
—
—
—
—
—
—
—
344
344 $
— $
—
(300)
—
(175)
—
—
—
(384)
(859) $
— $
—
—
—
—
—
—
—
—
— $
— $
—
(15)
—
(8)
—
—
—
—
(23) $
498 $ — $
(475) $
— $
(23) $
—
—
—
—
—
—
—
—
50
50
—
The Company sold its three remaining foreclosed real estate properties in 2022. The additions and sales in the consumer category were
due to the volume of repossessions of automobiles, which generally are subject to a shorter repossession process.
Potential Problem Loans. Potential problem loans decreased $402,000 during the year ended December 31, 2022, from $2.0 million at
December 31, 2021 to $1.6 million at December 31, 2022. Potential problem loans are loans which management has identified
through routine internal review procedures as having possible credit problems that may cause the borrowers difficulty in complying
with current repayment terms. These loans are not reflected in non-performing assets.
44
Activity in the potential problem loans category during the year ended December 31, 2022, was as follows:
Beginning Additions
Balance,
January 1
Problem
to Potential Potential
Problem
Removed
from
Transfers
to Non-
Performing
Transfers to
Foreclosed
Assets and
Ending
Balance,
Repossessions Charge-Offs Payments December 31
(In Thousands)
One- to four-family construction
Subdivision construction
Land development
Commercial construction
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
Total potential problem loans
$
— $
15
—
—
1,432
—
210
—
323
$ 1,980 $
— $
—
—
—
279
—
—
—
161
440 $
— $
—
—
—
(275)
—
—
—
(58)
(333) $
— $
—
—
—
—
—
—
—
(37)
(37) $
— $
—
—
—
—
—
—
—
(27)
(27) $
— $
(15)
—
—
(88)
—
(166)
—
(123)
— $
—
—
—
—
—
(44)
—
(9)
(53) $ (392) $
—
—
—
—
1,348
—
—
—
230
1,578
FDIC-assisted acquired loans included
above
$ 1,004 $ — $ — $
— $
— $
(44) $ (217) $
743
At December 31, 2022, the one- to four-family residential category of potential problem loans included 22 loans, one of which was
added during the year ended December 31, 2022. The largest relationship in this category totaled $159,000, or 11.8% of the total
category. The consumer category of potential problem loans included 26 loans, 17 of which were added during the year ended
December 31, 2022.
Loans Classified “Watch”
The Company reviews the credit quality of its loan portfolio using an internal grading system that classifies loans as “Satisfactory,”
“Watch,” “Special Mention,” “Substandard” and “Doubtful.” Loans classified as “Watch” are being monitored because of indications
of potential weaknesses or deficiencies that may require future classification as special mention or substandard. In the year ended
December 31, 2022, loans classified as “Watch” decreased $2.0 million, from $30.7 million at December 31, 2021 to $28.7 million at
December 31, 2022 primarily due to loans being upgraded out of the “Watch” category, partially offset by loans being downgraded to
the “Watch” category. See Note 3 to the accompanying audited financial statements for further discussion of the Company’s loan
grading system.
Non-Interest Income
Non-interest income for the year ended December 31, 2022 was $34.1 million compared with $38.3 million for the year ended
December 31, 2021. The decrease of $4.2 million, or 10.9%, was primarily as a result of the following items:
Net gains on loan sales: Net gains on loan sales decreased $6.9 million compared to the prior year. The decrease was due to a decrease
in originations of fixed-rate single-family mortgage loans during 2022 compared to 2021. Fixed-rate single-family mortgage loans
originated are generally subsequently sold in the secondary market. These loan originations increased substantially when market
interest rates decreased to historically low levels in 2020 and 2021. As a result of the significant volume of refinance activity in 2022
and 2021, and as market interest rates moved higher beginning in the second quarter of 2022, mortgage refinance volume decreased
and fixed rate loan originations and related gains on sales of these loans decreased substantially.
Other income: Other income increased $1.3 million compared to the prior year. In 2022, a gain of $1.0 million was recognized on
sales of fixed assets. Also in 2022, the Company recorded a one-time bonus of $500,000 from its card processor for achieving certain
benchmarks related to debit card activity.
Overdraft and Insufficient funds fees: Overdraft and Insufficient funds fees increased $1.2 million compared to the prior year. It
appears that consumers continued to spend significantly in 2022, but some may have lower account balances as prices for goods and
services increased and government stimulus payments received by consumers in 2020 and 2021 were exhausted.
45
Point-of-sale and ATM fees: Point-of-sale and ATM fees increased $676,000 compared to the prior year. This increase was mainly
due to increased customer debit card transactions in 2022 compared to 2021. In the latter half of 2021 and through 2022, debit card
usage by customers rebounded and was back to historical levels, and in many cases, increased levels of activity. However, during the
three months ended December 31, 2022, debit card usage and revenue to Great Southern decreased a bit compared to recent quarterly
periods. It appears that debit card transaction volumes may have decreased and customers may be using credit cards for more
transactions instead.
Non-Interest Expense
Total non-interest expense increased $5.7 million, or 4.5%, from $127.7 million in the year ended December 31, 2021, to $133.4
million in the year ended December 31, 2022. The Company’s efficiency ratio for the year ended December 31, 2022 was 57.05%,
compared to 59.03% for 2021. The higher efficiency ratio in 2021 was primarily due to an increase in non-interest expense (primarily
from the significant IT consulting expense and related contract termination liability incurred in December 2021), partially offset by an
increase in total revenue. Excluding this consulting expense and contract termination liability, the Company’s efficiency ratio was
56.57% in 2021. In the year ended December 31, 2022, the improvement in the efficiency ratio was primarily due to an increase in net
interest income, as a result of increased loan and investment balances and increased market interest rates compared to the year ended
December 31, 2021, partially offset by increased non-interest expense. The Company’s ratio of non-interest expense to average assets
was 2.42% for the year ended December 31, 2022 compared to 2.32% for the year ended December 31, 2021. Average assets for the
year ended December 31, 2022, increased $17.4 million, or 0.3%, from the year ended December 31, 2021, primarily due to increases
in net loans receivable and investment securities, partially offset by a decrease interest-bearing cash equivalents.
The following were key items related to the increase in non-interest expense for the year ended December 31, 2022 as compared to the
year ended December 31, 2021:
Salaries and employee benefits: Salaries and employee benefits increased $5.0 million from the prior year. A portion of this increase
related to normal annual merit increases in various lending and operations areas. In 2022, many of these increases were larger than in
previous years due to the employment environment. Also, in the second quarter of 2022, the Company paid a special cash bonus to all
employees totaling $1.1 million in response to the rapid and significant increases in prices for many goods and services. In addition,
the Phoenix and Charlotte, North Carolina loan offices were opened in 2022, with the operation of these offices adding approximately
$727,000 of salaries and benefits expense in the 2022 year.
Other operating expenses: Other operating expenses increased $1.7 million from the prior year, to $8.3 million. Of this increase,
$443,000 related to deposit account fraud losses and $219,000 related to charitable contributions.
Provision for Income Taxes
For the years ended December 31, 2022 and 2021, the Company’s effective tax rate was 19.4% and 20.9%, respectively. These
effective rates were at or below the statutory federal tax rate of 21%, due primarily to the utilization of certain investment tax credits
and the Company’s tax-exempt investments and tax-exempt loans, which reduced the Company’s effective tax rate.
Liquidity
Liquidity is a measure of the Company’s ability to generate sufficient cash to meet present and future financial obligations in a timely
manner through either the sale or maturity of existing assets or the acquisition of additional funds through liability management. These
obligations include the credit needs of customers, funding deposit withdrawals, and the day-to-day operations of the Company. Liquid
assets include cash, interest-bearing deposits with financial institutions and certain investment securities and loans. As a result of the
Company’s management of the ability to generate liquidity primarily through liability funding, management believes that the
Company maintains overall liquidity sufficient to satisfy its depositors’ requirements and meet its borrowers’ credit needs. At
December 31, 2023, the Company had commitments of approximately $14.0 million to fund loan originations, $1.21 billion of unused
lines of credit and unadvanced loans, and $16.5 million of outstanding letters of credit.
46
Loan commitments and the unfunded portion of loans at the dates indicated were as follows (in thousands):
December 31,
2023
December 31,
2022
December 31,
2021
December 31,
2020
December 31,
2019
Closed non-construction loans with unused available lines
Secured by real estate (one- to four-family)
Secured by real estate (not one- to four-family)
Not secured by real estate - commercial business
Closed construction loans with unused available lines
Secured by real estate (one-to four-family)
Secured by real estate (not one-to four-family)
Loan commitments not closed
Secured by real estate (one-to four-family)
Secured by real estate (not one-to four-family)
Not secured by real estate - commercial business
$ 203,964 $ 199,182 $ 175,682 $ 164,480 $ 155,831
19,512
83,782
—
104,452
23,752
91,786
22,273
77,411
—
82,435
101,545
719,039
100,669
1,444,450
74,501
1,092,029
42,162
823,106
48,213
798,810
12,347
48,153
11,763
16,819
157,645
50,145
53,529
146,826
12,920
85,917
45,860
699
69,295
92,434
—
$ 1,179,246 $ 2,073,362 $ 1,671,025 $ 1,261,908 $ 1,267,877
The following table summarizes the Company’s fixed and determinable contractual obligations by payment date as of December 31,
2023. Additional information regarding these contractual obligations is discussed further in Notes 6, 8, 9, 10, 11, 12, 13 and 18 of the
accompanying audited financial statements.
Deposits without a stated maturity
Time and brokered certificates of deposit
Short-term borrowings
Subordinated debentures
Subordinated notes
Operating leases
Dividends declared but not paid
Payments Due In:
One Year or
Less
Over One to
Five Years
Over Five
Years
Total
(In Thousands)
$ 3,111,978
1,188,266
323,453
—
—
1,313
4,722
$
—
420,406
—
—
—
4,610
—
$
—
1,058
—
25,774
74,579
1,899
—
$ 3,111,978
1,609,730
323,453
25,774
74,579
7,822
4,722
$ 4,629,732
$ 425,016
$ 103,310
$ 5,158,058
The Company’s primary sources of funds are customer deposits, brokered deposits, short-term borrowings at the FHLBank, other
borrowings, loan repayments, unpledged securities, proceeds from sales of loans and available-for-sale securities, and funds provided
from operations. The Company utilizes various sources of funds based on the comparative costs and availability at the time. The
Company has from time to time chosen not to pay rates on deposits as high as the rates paid by certain of its competitors and, when
believed to be appropriate, supplements deposits with less expensive alternative sources of funds. Since mid-2022, the Company has
increased the interest rates it pays on many deposit products. The Company has also utilized both fixed-rate and floating-rate brokered
deposits of varying terms, as well as overnight FHLBank borrowings.
At December 31, 2023 and 2022, the Company had these available secured lines and on-balance sheet liquidity:
Federal Home Loan Bank line
Federal Reserve Bank line
Cash and cash equivalents
Unpledged securities – Available-for-sale
Unpledged securities – Held-to-maturity
$
December 31, 2023
919.1 million
448.7 million
211.3 million
352.8 million
191.7 million
December 31, 2022
$ 1,005.1 million
397.0 million
168.5 million
371.8 million
202.5 million
47
Statements of Cash Flows. During the years ended December 31, 2023, 2022 and 2021, the Company had positive cash flows from
operating activities. The Company experienced negative cash flows from investing activities during the years ended December 31,
2023 and 2022, and positive cash flows from investing activities during the year ended December 31, 2021. The Company
experienced positive cash flows from financing activities during the years ended December 31, 2023 and 2022, and negative cash
flows from financing activities during the year ended December 31, 2021.
Cash flows from operating activities for the periods covered by the Statements of Cash Flows have been primarily related to changes
in accrued and deferred assets, credits and other liabilities, the provision for credit losses, realized gains on the sale of investment
securities and loans, depreciation and amortization and the amortization of deferred loan origination fees and discounts (premiums) on
loans and investments, all of which are non-cash or non-operating adjustments to operating cash flows. Net income adjusted for non-
cash and non-operating items and the origination and sale of loans held-for-sale were the primary sources of cash flows from operating
activities. Operating activities provided cash flows of $80.7 million, $84.8 million and $93.7 million during the years ended December
31, 2023, 2022 and 2021, respectively.
During the years ended December 31, 2023, 2022 and 2021, investing activities used cash of $88.2 million, used cash of $819.5
million and provided cash of $181.9 million, respectively, primarily due to the net increases and purchases of loans (2023 and 2022)
and investment securities (2022 and 2021), partially offset by cash received from the proceeds of repayments from investment
securities in each year. During 2021, investing activities provided cash as net loan repayments exceeded the purchase of loans and
investment securities.
Changes in cash flows from financing activities during the periods covered by the Statements of Cash Flows are primarily due to
changes in deposits after interest credited, changes in short-term borrowings, redemption of subordinated notes, purchases of the
Company’s common stock and dividend payments to stockholders. Financing activities provided cash flows of $50.3 million and
$186.0 million during the years ended December 31, 2023 and 2022, respectively, primarily due to net increases in customer deposit
balances and net increases or decreases in various borrowings, partially offset by dividend payments to stockholders and purchases of
the Company’s common stock. Financing activities used cash flows of $122.2 million during the year ended December 31, 2021, as
dividend payments to stockholders, redemption of subordinated notes and purchases of the Company’s common stock exceeded the
net increase in deposits.
Capital Resources
Management continuously reviews the capital position of the Company and the Bank to ensure compliance with minimum regulatory
requirements, as well as to explore ways to increase capital either by retained earnings or other means.
As of December 31, 2023, total stockholders’ equity and common stockholders’ equity were each $571.8 million, or 9.8% of total
assets, equivalent to a book value of $48.44 per common share. As of December 31, 2022, total stockholders’ equity and common
stockholders’ equity were each $533.1 million, or 9.4% of total assets, equivalent to a book value of $43.58 per common share. At
December 31, 2023, the Company’s tangible common equity to tangible assets ratio was 9.7%, compared to 9.2% at December 31,
2022. Included in stockholders’ equity at December 31, 2023 and 2022, were unrealized losses (net of taxes) on the Company’s
available-for-sale investment securities totaling $40.5 million and $47.2 million, respectively. This change in net unrealized loss
during 2023 primarily resulted from decreasing intermediate-term market interest rates (which generally increased the fair value of
investment securities) during the first three months of 2023, followed by increasing intermediate-term market interest rates (which
generally decreased the fair value of investment securities) during the period from March 31, 2023 through September 30, 2023. In the
three months ended December 31, 2023, intermediate-term market interest rates decreased significantly (which once again generally
increased the fair value of investment securities).
In addition, included in stockholders’ equity at December 31, 2023, were realized gains (net of taxes) on the Company’s cash flow
hedge (interest rate swap), which was terminated in March 2020, totaling $11.1 million. This amount, plus associated deferred taxes,
is expected to be accreted to interest income over the remaining term of the original interest rate swap contract, which was to end in
October 2025. At December 31, 2023, the remaining pre-tax amount to be recorded in interest income was $14.4 million. The net
effect on total stockholders’ equity over time will be no impact as the reduction of this realized gain will be offset by an increase in
retained earnings (as the interest income flows through pre-tax income).
48
Also included in stockholders’ equity at December 31, 2023, were unrealized losses (net of taxes) on the Company’s three outstanding
cash flow hedges (three interest rate swaps) totaling $13.0 million. Significant increases in market interest rates since the inception of
these hedges have caused their fair values to decrease; however, market interest rates decreased in the three months ended December
31, 2023, causing the fair values of these swaps to increase in that period.
As noted above, total stockholders' equity increased $38.7 million, from $533.1 million at December 31, 2022 to $571.8 million at
December 31, 2023. Stockholders’ equity increased due to the Company recording net income of $67.8 million for the year ended
December 31, 2023 and increased by $2.5 million due to stock option exercises during 2023. AOCI (loss) decreased $10.9 million
(increase to stockholders’ equity) during the year ended December 31, 2023, primarily due to changes in the market value of
available-for-sale securities and changes in the fair value of cash flow hedges. Partially offsetting these increases were repurchases of
the Company’s common stock totaling $23.3 million and dividends declared on common stock of $19.1 million.
The Company also had unrealized losses on its portfolio of held-to-maturity investment securities, which totaled $23.8 million at
December 31, 2023, that were not included in its total capital balance. If these held-to-maturity unrealized losses were included in
capital (net of taxes), this would have decreased total stockholder’s equity by $18.0 million at December 31, 2023. This amount was
equal to 3.1% of total stockholders’ equity of $571.8 million at that date.
Banks are required to maintain minimum risk-based capital ratios. These ratios compare capital, as defined by the risk-based
regulations, to assets adjusted for their relative risk as defined by the regulations. Under current guidelines, which became effective
January 1, 2015, banks must have a minimum common equity Tier 1 capital ratio of 4.50%, a minimum Tier 1 risk-based capital ratio
of 6.00%, a minimum total risk-based capital ratio of 8.00%, and a minimum Tier 1 leverage ratio of 4.00%. To be considered “well
capitalized,” banks must have a minimum common equity Tier 1 capital ratio of 6.50%, a minimum Tier 1 risk-based capital ratio of
8.00%, a minimum total risk-based capital ratio of 10.00%, and a minimum Tier 1 leverage ratio of 5.00%. On December 31, 2023,
the Bank’s common equity Tier 1 capital ratio was 13.1%, its Tier 1 capital ratio was 13.1%, its total capital ratio was 14.3% and its
Tier 1 leverage ratio was 11.6%. As a result, as of December 31, 2023, the Bank was well capitalized, with capital ratios in excess of
those required to qualify as such. On December 31, 2022, the Bank’s common equity Tier 1 capital ratio was 11.9%, its Tier 1 capital
ratio was 11.9%, its total capital ratio was 13.1% and its Tier 1 leverage ratio was 11.5%. As a result, as of December 31, 2022, the
Bank was well capitalized, with capital ratios in excess of those required to qualify as such.
The FRB has established capital regulations for bank holding companies that generally parallel the capital regulations for banks. On
December 31, 2023, the Company’s common equity Tier 1 capital ratio was 11.9%, its Tier 1 capital ratio was 12.4%, its total capital
ratio was 15.2% and its Tier 1 leverage ratio was 11.0%. On December 31, 2022, the Company’s common equity Tier 1 capital ratio
was 10.6%, its Tier 1 capital ratio was 11.0%, its total capital ratio was 13.5% and its Tier 1 leverage ratio was 10.6%.
In addition to the minimum common equity Tier 1 capital ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio, the
Company and the Bank have to maintain a capital conservation buffer consisting of additional common equity Tier 1 capital greater
than 2.5% of risk-weighted assets above the required minimum levels in order to avoid limitations on paying dividends, repurchasing
shares, and paying discretionary bonuses. Both the Company and the Bank had a capital conservation buffer that exceeded the
required minimum levels at December 31, 2023 and 2022.
Dividends. During the year ended December 31, 2023, the Company declared common stock cash dividends of $1.60 per share
(28.5% of net income per common share) and paid common stock cash dividends of $1.60 per share. During the year ended December
31, 2022, the Company declared common stock cash dividends of $1.56 per share (25.9% of net income per common share) and paid
common stock cash dividends of $1.52 per share. The Board of Directors meets regularly to consider the level and the timing of
dividend payments. The $0.40 per share dividend declared but unpaid as of December 31, 2023, was paid to stockholders in January
2024.
49
Common Stock Repurchases and Issuances. The Company has been in various buy-back programs since May 1990. During the years
ended December 31, 2023 and 2022, the Company repurchased 449,622 shares of its common stock at an average price of $51.38 per
share and 1,043,804 shares of its common stock at an average price of $59.25 per share, respectively. During the years ended
December 31, 2023 and 2022, the Company issued 22,762 shares of stock at an average price of $38.83 per share and 146,601 shares
of stock at an average price of $42.69 per share, respectively, to cover stock option exercises.
In December 2022, the Company’s Board of Directors authorized the purchase of up to one million shares of the Company’s
outstanding common stock, under a program of open market purchases or privately negotiated transactions. As of December 31, 2023,
a total of approximately 728,000 shares remained available in the Company’s stock repurchase authorization.
Management has historically utilized stock buy-back programs from time to time as long as management believed that repurchasing
the Company’s common stock would contribute to the overall growth of stockholder value. The number of shares that will be
repurchased at any particular time and the prices that will be paid are subject to many factors, several of which are outside of the
control of the Company. The primary factors typically include the number of shares available in the market from sellers at any given
time, the market price of the stock and the projected impact on the Company’s earnings per share and capital.
Non-GAAP Financial Measures
This document contains certain financial information determined by methods other than in accordance with accounting principles
generally accepted in the United State (“GAAP”). These non-GAAP financial measures include the efficiency ratio excluding
consulting expense and related contract termination liability and the tangible common equity to tangible assets ratio.
We calculate the efficiency ratio excluding consulting expense and related contract termination liability by subtracting from the non-
interest expense component of the ratio the consulting expense and contract termination fee we incurred during 2021 in connection
with the evaluation of our core and ancillary software and information technology systems. We had no such expenses or fees during
2022 or 2023. Management believes the efficiency ratio calculated in this manner better reflects our core operating performance and
makes this ratio more meaningful when comparing our operating results to different periods.
In calculating the ratio of tangible common equity to tangible assets, we subtract period-end intangible assets from common equity
and from total assets. Management believes that the presentation of this measure excluding the impact of intangible assets provides
useful supplemental information that is helpful in understanding our financial condition and results of operations, as it provides a
method to assess management’s success in utilizing our tangible capital as well as our capital strength. Management also believes that
providing a measure that excludes balances of intangible assets, which are subjective components of valuation, facilitates the
comparison of our performance with the performance of our peers. In addition, management believes that this is a standard financial
measure used in the banking industry to evaluate performance.
These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures.
Because not all companies use the same calculation of non-GAAP measures, this presentation may not be comparable to other
similarly titled measures as calculated by other companies.
Non-GAAP Reconciliation: Efficiency Ratio Excluding Consulting Expense and Related Contract Termination Liability
Reported non-interest expense/ efficiency ratio
Less: Impact of one-time consulting expense and related contract termination liability
Core non-interest expense/ efficiency ratio
$
$
127,635
5,318
122,317
59.03 %
2.46
56.57 %
There were no non-GAAP adjustments to the efficiency ratio for years other than 2021.
Year Ended
December 31, 2021
(Dollars in Thousands)
50
Non-GAAP Reconciliation: Ratio of Tangible Common Equity to Tangible Assets
December 31, December 31, December 31, December 31, December 31,
2021
(Dollars In Thousands)
2022
2023
2019
2020
Common equity at period end
Less: Intangible assets at period end
Tangible common equity at period end (a)
$ 571,829
10,527
$ 561,302
$ 533,087
10,813
$ 522,274
$ 616,752
6,081
$ 610,671
$ 629,741
6,944
$ 622,797
$ 603,066
8,098
$ 594,968
Total assets at period end
Less: Intangible assets at period end
Tangible assets at period end (b)
$ 5,812,402
10,527
$ 5,801,875
$ 5,680,702
10,813
$ 5,669,889
$ 5,449,944
6,081
$ 5,443,863
$ 5,526,420
6,944
$ 5,519,476
$ 5,015,072
8,098
$ 5,006,974
Tangible common equity to tangible assets (a) / (b)
9.67 %
9.21 %
11.22 %
11.28 %
11.88 %
51
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Asset and Liability Management and Market Risk
A principal operating objective of the Company is to produce stable earnings by achieving a favorable interest rate spread that can be
sustained during fluctuations in prevailing interest rates. The Company has sought to reduce its exposure to adverse changes in interest
rates by attempting to achieve a closer match between the periods in which its interest-bearing liabilities and interest-earning assets
can be expected to reprice through the origination of adjustable-rate mortgages and loans with shorter terms to maturity and the
purchase of other shorter term interest-earning assets.
Our Risk When Interest Rates Change
The rates of interest we earn on assets and pay on liabilities generally are established contractually for a period of time. Market
interest rates change over time. Accordingly, our results of operations, like those of other financial institutions, are impacted by
changes in interest rates and the interest rate sensitivity of our assets and liabilities. The risk associated with changes in interest rates
and our ability to adapt to these changes is known as interest rate risk and is our most significant market risk.
How We Measure the Risk to Us Associated with Interest Rate Changes
In an attempt to manage our exposure to changes in interest rates and comply with applicable regulations, we monitor Great
Southern’s interest rate risk. In monitoring interest rate risk, we regularly analyze and manage assets and liabilities based on their
payment streams and interest rates, the timing of their maturities and their sensitivity to actual or potential changes in market interest
rates.
The ability to maximize net interest income is largely dependent upon the achievement of a positive interest rate spread that can be
sustained despite fluctuations in prevailing interest rates. Interest rate sensitivity is a measure of the difference between amounts of
interest-earning assets and interest-bearing liabilities which either reprice or mature within a given period of time. The difference, or
the interest rate repricing “gap,” provides an indication of the extent to which an institution’s interest rate spread will be affected by
changes in interest rates. A gap is considered positive when the amount of interest-rate sensitive assets exceeds the amount of interest-
rate sensitive liabilities repricing during the same period, and is considered negative when the amount of interest-rate sensitive
liabilities exceeds the amount of interest-rate sensitive assets during the same period. Generally, during a period of rising interest rates,
a negative gap within shorter repricing periods would adversely affect net interest income, while a positive gap within shorter
repricing periods would result in an increase in net interest income. During a period of falling interest rates, the opposite would be
true. As of December 31, 2023, Great Southern’s interest rate risk models indicate that, generally, rising interest rates are expected to
have a modestly positive impact on the Company’s net interest income within the next twelve months, while declining interest rates
are expected to have a slightly negative impact on net interest income within the next twelve months. The negative impact of a falling
Federal Funds rate and other market interest rates also falling could be more pronounced if we are not able to decrease non-maturity
deposit rates accordingly. We model various interest rate scenarios for rising and falling rates, including both parallel and non-parallel
shifts in rates. The results of our modeling indicate that net interest income is not likely to be significantly affected either positively or
negatively in the first twelve months following relatively minor changes in interest rates because our portfolios are relatively well
matched in a twelve-month horizon. In a situation where market interest rates increase significantly in a short period of time, our net
interest margin increase may be more pronounced in the very near term (first one to three months), due to fairly rapid increases in
SOFR interest rates (or their replacement rates) and “prime” interest rates. In a situation where market interest rates decrease
significantly in a short period of time, as they did in March 2020, our net interest margin decrease may be more pronounced in the
very near term (first one to three months), due to fairly rapid decreases in SOFR interest rates (or their replacement rates) and “prime”
interest rates. In the subsequent months we would expect that net interest margin would stabilize and begin to improve, as renewal
interest rates on maturing time deposits decrease compared to the then-current rates paid on those products. During 2020, we
experienced some compression of our net interest margin percentage due to the Federal Fund rate being cut by a total of 2.25% from
July 2019 through March 2020. Margin compression primarily resulted from changes in the asset mix, mainly the addition of lower-
yielding assets and the issuance of subordinated notes during 2020 and net interest margin remained lower than our historical average
in 2021. LIBOR/SOFR interest rates decreased significantly in 2020 and remained very low in 2021 and into the first three months of
2022, putting pressure on loan yields, and strong pricing competition for loans and deposits remained in most of our markets. Since
March 2022, market interest rates have increased fairly rapidly. This increased loan yields and expanded our net interest income and
net interest margin in the latter half of 2022 and the first three months of 2023. While market interest rate increases are expected to
52
result in increases to loan yields, we expect that much of this benefit will be offset by increased funding costs, including changes in
the funding mix, as experienced in the year ended December 31, 2023. As of December 31, 2023, time deposit maturities over the next
12 months are as follows: within three months -- $394 million with a weighted-average rate of 3.82%; within three to six months --
$324 million with a weighted-average rate of 4.32%; and within six to twelve months -- $371 million with a weighted-average rate of
4.08%. Based on time deposit market rates in January 2024, replacement rates for these maturing time deposits are likely to be
approximately 4.00-4.50%.
The current level and shape of the interest rate yield curve poses challenges for interest rate risk management. Prior to its increase of
0.25% on December 16, 2015, the FRB had last changed interest rates on December 16, 2008. This was the first rate increase since
September 29, 2006. The FRB also implemented rate change increases of 0.25% on eight additional occasions beginning December
14, 2016 and through December 31, 2018, with the Federal Funds rate reaching as high as 2.50%. After December 2018, the FRB
paused its rate increases and, in July, September and October 2019, implemented rate decreases of 0.25% on each of those occasions.
At December 31, 2019, the Federal Funds rate stood at 1.75%. In response to the COVID-19 pandemic, the FRB decreased interest
rates on two occasions in March 2020, a 0.50% decrease on March 3 and a 1.00% decrease on March 16. At December 31, 2021, the
Federal Funds rate was 0.25%. In 2022, the FRB implemented rate increases of 0.25%, 0.50%, 0.75%, 0.75%, 0.75%, 0.75% and
0.50% in March, May, June, July, September, November and December 2022, respectively. At December 31, 2022, the Federal Funds
rate was 4.50%. In 2023, the FRB implemented rate increases of 0.25%, 0.25%, 0.25% and 0.25% in February, March, May and July
2023, respectively. At December 31, 2023 the Federal Funds rate was 5.50%. Financial markets now expect the possibility of
significant further increases in Federal Funds interest rates in 2024 to be unlikely, with interest rate decisions being made at each FRB
meeting based on economic data available at the time. However, the FRB has further indicated, and financial markets now have begun
to price in, that it is likely that the Federal Funds interest rate will remain near this peak level for several months before any rate cuts
occur. Great Southern’s loan portfolio includes loans ($1.29 billion at December 31, 2023) tied to various SOFR indices that will be
subject to adjustment at least once within 90 days after December 31, 2023. These loans had interest rate floors at various rates. Great
Southern also has a portfolio of loans ($788.9 million at December 31, 2023) tied to a “prime rate” of interest that will adjust
immediately or within 90 days of a change to the “prime rate” of interest. These loans had interest rate floors at various rates. Great
Southern also has a portfolio of loans ($6.7 million at December 31, 2023) tied to an AMERIBOR index that will adjust immediately
or within 90 days of a change to the “prime rate” of interest. These loans had interest rate floors at various rates. At December 31,
2023, nearly all of these SOFR and “prime rate” loans had fully indexed rates that were at or above their floor rate and so are expected
to move fully if there are future market interest rate increases.
Interest rate risk exposure estimates (the sensitivity gap) are not exact measures of an institution’s actual interest rate risk. They are
only indicators of interest rate risk exposure produced in a simplified modeling environment designed to allow management to gauge
the Bank’s sensitivity to changes in interest rates. They do not necessarily indicate the impact of general interest rate movements on
the Bank’s net interest income because the repricing of certain categories of assets and liabilities is subject to competitive and other
factors beyond the Bank’s control. As a result, certain assets and liabilities indicated as maturing or otherwise repricing within a stated
period may in fact mature or reprice at different times and in different amounts and cause a change, which potentially could be
material, in the Bank’s interest rate risk.
In order to minimize the potential for adverse effects of material and prolonged increases and decreases in interest rates on Great
Southern’s results of operations, Great Southern has adopted asset and liability management policies to better match the maturities and
repricing terms of Great Southern’s interest-earning assets and interest-bearing liabilities. Management recommends and the Board of
Directors sets the asset and liability policies of Great Southern which are implemented by the Asset and Liability Committee. The
Asset and Liability Committee is chaired by the Chief Financial Officer and is comprised of members of Great Southern’s senior
management. The purpose of the Asset and Liability Committee is to communicate, coordinate and control asset/liability management
consistent with Great Southern’s business plan and board-approved policies. The Asset and Liability Committee establishes and
monitors the volume and mix of assets and funding sources taking into account relative costs and spreads, interest rate sensitivity and
liquidity needs. The objectives are to manage assets and funding sources to produce results that are consistent with liquidity, capital
adequacy, growth, risk and profitability goals. The Asset and Liability Committee meets on a monthly basis to review, among other
things, economic conditions and interest rate outlook, current and projected liquidity needs and capital positions and anticipated
changes in the volume and mix of assets and liabilities. At each meeting, the Asset and Liability Committee recommends appropriate
strategy changes based on this review. The Chief Financial Officer or his designee is responsible for reviewing and reporting on the
effects of the policy implementations and strategies to the Board of Directors at their monthly meetings.
53
In order to manage its assets and liabilities and achieve the desired liquidity, credit quality, interest rate risk, profitability and capital
targets, Great Southern has focused its strategies on originating adjustable rate loans or loans with fixed rates that mature in less than
five years, and managing its deposits and borrowings to establish stable relationships with both retail customers and wholesale funding
sources.
At times, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market
conditions and competitive factors, we may determine to increase our interest rate risk position somewhat in order to maintain or
increase our net interest margin.
The Asset and Liability Committee regularly reviews interest rate risk by forecasting the impact of alternative interest rate
environments on net interest income and market value of portfolio equity, which is defined as the net present value of an institution’s
existing assets, liabilities and off-balance sheet instruments, and evaluating such impacts against the maximum potential changes in
net interest income and market value of portfolio equity that are authorized by the Board of Directors of Great Southern.
In the normal course of business, the Company may use derivative financial instruments (primarily interest rate swaps) from time to
time to assist in its interest rate risk management. In 2011, the Company began executing interest rate swaps with commercial banking
customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting
interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from
such transactions. Because the interest rate swaps associated with this program do not meet the strict hedge accounting requirements,
changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. These interest rate
derivatives result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in
the Company’s assets or liabilities. The Company manages a matched book with respect to its derivative instruments in order to
minimize its net risk exposure resulting from such transactions.
In October 2018, the Company entered into an interest rate swap transaction as part of its ongoing interest rate management strategies
to hedge the risk of its floating rate loans. The notional amount of the swap was $400 million with a contractual termination date of
October 6, 2025. Under the terms of the swap, the Company received a fixed rate of interest of 3.018% and paid a floating rate of
interest equal to one-month USD-LIBOR (now SOFR). The floating rate reset monthly and net settlements of interest due to/from the
counterparty also occurred monthly. Due to lower market interest rates, the Company received net interest settlements which were
recorded as loan interest income. If USD-SOFR exceeded the fixed rate of interest, the Company was required to pay net settlements
to the counterparty and record those net payments as a reduction of interest income on loans. The effective portion of the gain or loss
on the derivative was reported as a component of other comprehensive income and reclassified into earnings in the same period or
periods during which the hedged transaction affected earnings. Gains and losses on the derivative representing either hedge
ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.
In March 2020, the Company and its swap counterparty mutually agreed to terminate the $400 million interest rate swap prior to its
contractual maturity. The Company was paid $45.9 million from its swap counterparty as a result of this termination.
In March 2022, the Company entered into another interest rate swap transaction as part of its ongoing interest rate management
strategies to hedge the risk of its floating rate loans. The notional amount of the swap is $300 million with an effective date of March
1, 2022 and a termination date of March 1, 2024. Under the terms of the swap, the Company received a fixed rate of interest of
1.6725% and paid a floating rate of interest equal to one-month USD-LIBOR (now SOFR). The floating rate reset monthly and net
settlements of interest due to/from the counterparty also occurred monthly. The initial floating rate of interest was set at 0.24143%.
The Company received net interest settlements, which were recorded as loan interest income, to the extent that the fixed rate of
interest exceeded one-month USD-SOFR. If the USD-SOFR rate exceeded the fixed rate of interest (as it does currently), the
Company paid net settlements to the counterparty and recorded those net payments as a reduction of interest income on loans.
In July 2022, the Company entered into two interest rate swap transactions as part of its ongoing interest rate management strategies to
hedge the risk of its floating rate loans. The notional amount of each swap is $200 million with an effective date of May 1, 2023 and a
termination date of May 1, 2028. Under the terms of one swap, beginning in May 2023, the Company receives a fixed rate of interest
of 2.628% and pays a floating rate of interest equal to one-month USD-SOFR OIS. Under the terms of the other swap, beginning in
May 2023, the Company receives a fixed rate of interest of 5.725% and pays a floating rate of interest equal to one-month USD-
Prime. In each case, the floating rate resets monthly and net settlements of interest due to/from the counterparty also occur monthly.
To the extent the fixed rate of interest exceeds the floating rate of interest, the Company receives net interest settlements, which are
54
recorded as loan interest income. If the floating rate of interest exceeds the fixed rate of interest (as it does currently), the Company
pays net settlements to the counterparty and records those net payments as a reduction of interest income on loans.
In February 2023, the Company entered into interest rate swap transactions as part of its ongoing interest rate management strategies
to hedge the risk of certain of its fixed rate brokered deposits. The total notional amount of the swaps was $95 million with a
termination date of February 28, 2025. Under the terms of the swaps, the Company received a fixed rate of interest of 4.65% and paid
a floating rate of interest equal to USD-SOFR-COMPOUND plus a spread. The floating rate reset monthly and net settlements of
interest due to/from the counterparty also occurred monthly. To the extent that the fixed rate of interest exceeded USD-SOFR-
COMPOUND plus the spread, the Company received net interest settlements which were recorded as a reduction of deposit interest
expense. If USD-SOFR-COMPOUND plus the spread exceeded the fixed rate of interest, the Company was required to pay net
settlements to the counterparty and record those net payments as interest expense on deposits.
In January 2024, the Company elected to terminate the swaps related to brokered deposits prior to their contractual termination date in
2025. The Company received a net settlement payment from the swap counterparty totaling $26,500 upon termination. At the time of
the early termination, the Company had recorded a market value adjustment to the brokered deposit of $163,000, which will be
amortized as a reduction of interest expense from January 2024 through February 2025.
The Company’s interest rate derivatives and hedging activities are discussed further in Note 16 of the accompanying audited financial
statements.
55
Federal Home Loan Bank stock and other interest earning assets
Federal Home Loan Bank stock and other interest earning assets
$
$
26,313
26,313
6.39 %
6.39 %
—
—
—
—
—
—
—
—
$
$
26,313
26,313
$
$
26,313
26,313
64.39 %
64.39 %
$
$
2,621,489
2,621,489
$
$
396,652
396,652
$
$
453,565
453,565
$
$
384,530
384,530
$
$
316,266
316,266
$
$
938,653
938,653
$
$
364,389
364,389
$ 5,475,544
$ 5,475,544
Financial Assets:
Financial Assets:
Interest bearing deposits
Interest bearing deposits
Weighted average rate
Weighted average rate
Available-for-sale debt securities(1)
Available-for-sale debt securities(1)
Weighted average rate
Weighted average rate
Held-to-maturity securities (2)
Held-to-maturity securities (2)
Weighted average rate
Weighted average rate
Adjustable rate loans
Adjustable rate loans
Weighted average rate
Weighted average rate
Fixed rate loans
Fixed rate loans
Weighted average rate
Weighted average rate
Weighted average rate
Weighted average rate
Total financial assets
Total financial assets
Financial Liabilities:
Financial Liabilities:
Time deposits
Time deposits
Weighted average rate
Weighted average rate
Brokered funds
Brokered funds
Weighted average rate
Weighted average rate
Interest-bearing demand
Interest-bearing demand
Weighted average rate
Weighted average rate
Weighted average rate
Weighted average rate
Weighted average rate
Weighted average rate
Subordinated notes
Subordinated notes
Weighted average rate
Weighted average rate
Subordinated debentures
Subordinated debentures
Weighted average rate
Weighted average rate
Total financial liabilities
Total financial liabilities
Periodic repricing GAP
Periodic repricing GAP
2024
2024
2025
2025
2026
2026
2027
2027
2028
2028
2029-2038
2029-2038
Thereafter
Thereafter
Total
Total
Fair Value
Fair Value
(Dollars In Thousands)
(Dollars In Thousands)
December 31,
December 31,
December 31,
December 31,
2023
2023
$
$
108,804
108,804
$
$
5.35 %
5.35 %
1,247
1,247
$
$
5.87 %
5.87 %
—
—
—
—
—
—
—
—
7,053
7,053
$
$
4.13 %
4.13 %
$
$
—
—
—
—
—
—
—
—
1.99 %
1.99 %
523
523
1.58 %
1.58 %
—
—
—
—
—
—
—
—
—
—
$
$
108,804
108,804
$
$
108,804
108,804
—
—
5.35 %
5.35 %
3,007
3,007
$
$
19,909
19,909
$
$
9,835
9,835
$
$
196,806
196,806
$
$
240,350
240,350
$
$
478,207
478,207
$
$
478,207
478,207
1.48 %
1.48 %
3.73 %
3.73 %
2.76 %
2.76 %
2.74 %
2.74 %
2.74 %
2.74 %
$
$
32,594
32,594
$
$
73,839
73,839
$
$
88,067
88,067
$
$
195,023
195,023
$
$
171,193
171,193
3.51 %
3.51 %
2.50 %
2.50 %
2.42 %
2.42 %
2.63 %
2.63 %
$
$
2,223,657
2,223,657
$
$
42,062
42,062
$
$
27,934
27,934
$
$
63,170
63,170
$
$
49,042
49,042
$
$
444,081
444,081
$ 2,849,946
$ 2,849,946
$ 2,764,145
$ 2,764,145
8.00 %
8.00 %
3.93 %
3.93 %
3.33 %
3.33 %
3.79 %
3.79 %
3.99 %
3.99 %
3.72 %
3.72 %
7.06 %
7.06 %
$
$
261,468
261,468
$
$
347,537
347,537
$
$
422,101
422,101
$
$
301,451
301,451
$
$
224,795
224,795
$
$
223,927
223,927
$
$
35,972
35,972
$ 1,817,251
$ 1,817,251
$ 1,713,626
$ 1,713,626
5.00 %
5.00 %
4.83 %
4.83 %
4.54 %
4.54 %
4.63 %
4.63 %
5.12 %
5.12 %
4.04 %
4.04 %
4.53 %
4.53 %
4.69 %
4.69 %
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
895,496
895,496
$
$
895,496
895,496
$
$
895,496
895,496
$
$
948,202
948,202
$
$
948,202
948,202
$
$
661,528
661,528
$
$
661,528
661,528
$ 2,216,482
$ 2,216,482
$ 2,216,482
$ 2,216,482
3.79 %
3.79 %
5.20 %
5.20 %
1.67 %
1.67 %
—
—
1.66 %
1.66 %
5.64 %
5.64 %
5.92 %
5.92 %
7.24 %
7.24 %
$
$
70,843
70,843
$
$
70,843
70,843
$
$
252,610
252,610
$
$
252,610
252,610
$
$
75,000
75,000
$
$
71,625
71,625
$
$
25,774
25,774
$
$
25,774
25,774
$
$
921,485
921,485
$
$
19,250
19,250
$
$
3,067
3,067
$
$
2,394
2,394
$
$
3.87 %
3.87 %
0.94 %
0.94 %
0.69 %
0.69 %
0.76 %
0.76 %
948
948
$
$
0.68 %
0.68 %
1,058
1,058
1.51 %
1.51 %
$
$
466,781
466,781
$
$
146,552
146,552
$
$
48,195
48,195
5.42 %
5.42 %
4.59 %
4.59 %
4.90 %
4.90 %
$
$
2,216,482
2,216,482
1.67 %
1.67 %
—
—
—
—
1.66 %
1.66 %
5.64 %
5.64 %
—
—
—
—
7.24 %
7.24 %
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
75,000
75,000
5.92 %
5.92 %
$
$
25,774
25,774
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
3,953,975
3,953,975
$
$
240,802
240,802
$
$
51,262
51,262
$
$
2,394
2,394
$
$
948
948
$
$
1,058
1,058
$
$
895,496
895,496
$ 5,145,935
$ 5,145,935
$ (1,332,486)
$ (1,332,486)
$
$
155,850
155,850
$
$
402,303
402,303
$
$
382,136
382,136
$
$
315,318
315,318
$
$
937,595
937,595
$
$
(531,107)
(531,107)
$
$
329,609
329,609
The following tables illustrate the expected maturities and repricing, respectively, of the Bank’s financial instruments at December 31,
2023. These schedules do not reflect the effects of possible prepayments or enforcement of due-on-sale clauses. The tables are based
on information prepared in accordance with generally accepted accounting principles.
Repricing
Repricing
Maturities
Financial Assets:
Interest bearing deposits
Weighted average rate
Available-for-sale debt securities (1)
Weighted average rate
Held-to-maturity securities (2)
Weighted average rate
Adjustable rate loans
Weighted average rate
Fixed rate loans
Weighted average rate
Federal Home Loan Bank stock and other interest earning assets
Weighted average rate
December 31,
2024
2025
2026
2027
2028
2029-2038
Thereafter
Total
(Dollars In Thousands)
December 31,
2023
Fair Value
$
108,804
5.35 %
1,247
5.87 %
—
—
775,311
$
$
$
—
—
7,053
$
4.13 %
—
$
—
$ 595,740
8.36 %
8.23 %
5.00 %
$
11,590
5.33 %
4.83 %
—
—
—
—
3,007
$
1.99 %
523
1.58 %
$
8.18 %
$
4.54 %
—
—
—
—
19,909
$
1.48 %
$
—
—
210,012
$
8.02 %
4.63 %
—
—
32,594
—
—
9,835
$
3.73 %
$
3.51 %
$
8.07 %
$
5.12 %
—
—
56,111
—
—
196,806
—
—
240,350
$
$
$
108,804
$
108,804
5.35 %
478,207
$
478,207
2.76 %
2.74 %
2.74 %
73,839
$
88,067
$
195,023
$
171,193
2.50 %
2.42 %
2.63 %
194,308
$
670,565
$ 2,849,946
$ 2,764,145
7.03 %
3.57 %
7.06 %
223,927
$
35,972
$ 1,817,251
$ 1,713,626
4.04 %
—
—
$
4.53 %
4.69 %
14,723
$
26,313
$
26,313
7.23 %
6.39 %
$
261,468
$ 347,537
$ 422,101
301,451
$ 224,795
$ 347,899
Total financial assets
$ 1,158,420
$ 950,330
$ 773,530
$
531,372
$ 323,335
$
688,880
$ 1,049,677
$ 5,475,544
921,485
$
3.87 %
19,250
266,781
$ 296,552
5.28 %
$ 2,216,482
$
$
Financial Liabilities:
Time deposits
Weighted average rate
Brokered funds
Weighted average rate
Interest-bearing demand
Weighted average rate
Non-interest-bearing demand
Weighted average rate
Securities sold under reverse repurchase agreements
Weighted average rate
Short-term borrowings, overnight FHLB borrowings, and other liabilities $
Weighted average rate
Subordinated notes
Weighted average rate
Subordinated debentures
Weighted average rate
$
$
1.67 %
895,496
—
70,843
1.66 %
252,610
5.64 %
—
—
—
—
$
0.94 %
$
5.11 %
—
—
—
—
—
—
—
—
—
—
—
—
3,067
$
0.69 %
98,195
5.25 %
—
—
—
—
—
—
—
—
—
—
—
—
2,394
$
0.76 %
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
948
0.68 %
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
1,058
1.51 %
—
—
—
—
—
—
—
—
—
—
75,000
5.92 %
—
—
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
25,774
$
$
948,202
$
948,202
3.79 %
661,528
$
661,528
5.20 %
$ 2,216,482
$ 2,216,482
Non-interest-bearing demand (3)
Non-interest-bearing demand (3)
Weighted average rate
Weighted average rate
Securities sold under reverse repurchase agreements
Securities sold under reverse repurchase agreements
$
$
70,843
70,843
Short-term borrowings, overnight FHLB borrowings, and other liabilities
Short-term borrowings, overnight FHLB borrowings, and other liabilities
$
$
252,610
252,610
1.67 %
895,496
—
70,843
$
$
1.66 %
252,610
5.64 %
75,000
$
$
5.92 %
895,496
70,843
252,610
71,625
25,774
$
25,774
Cumulative repricing GAP
Cumulative repricing GAP
$
$
$
$
$
7.24 %
7.24 %
$ (1,332,486)
$ (1,332,486)
$ (1,176,636)
$ (1,176,636)
$
$
(774,333)
(774,333)
$ (392,197)
$ (392,197)
$
$
(76,879)
(76,879)
$
$
860,716
860,716
$
$
329,609
329,609
Total financial liabilities
$ 4,623,697
$ 315,802
$ 101,262
$
2,394
$
948
$
76,058
$
25,774
$ 5,145,935
(1) Available-for-sale debt securities include approximately $420.1 million of mortgage-backed securities and collateralized
mortgage obligations which pay interest and principal monthly to the Company. This table does not show the effect of these
monthly repayments of principal.
(2) Held-to-maturity debt securities include approximately $188.8 million of mortgage-backed securities and collateralized mortgage
obligations which pay interest and principal monthly to the Company. This table does not show the effect of these monthly
repayments of principal.
(1) Available-for-sale debt securities include approximately $420.1 million of mortgage-backed securities and collateralized
(1) Available-for-sale debt securities include approximately $420.1 million of mortgage-backed securities and collateralized
mortgage obligations which pay interest and principal monthly to the Company. This table does not show the effect of these
mortgage obligations which pay interest and principal monthly to the Company. This table does not show the effect of these
(2) Held-to-maturity debt securities include approximately $188.8 million of mortgage-backed securities and collateralized mortgage
(2) Held-to-maturity debt securities include approximately $188.8 million of mortgage-backed securities and collateralized mortgage
obligations which pay interest and principal monthly to the Company. This table does not show the effect of these monthly
obligations which pay interest and principal monthly to the Company. This table does not show the effect of these monthly
monthly repayments of principal.
monthly repayments of principal.
repayments of principal.
repayments of principal.
(3) Non-interest-bearing demand deposits are included in this table in the column labeled “Thereafter” since there is no interest rate
(3) Non-interest-bearing demand deposits are included in this table in the column labeled “Thereafter” since there is no interest rate
related to these liabilities and therefore there is nothing to reprice.
related to these liabilities and therefore there is nothing to reprice.
56
57
57
Repricing
Repricing
Financial Assets:
Financial Assets:
Interest bearing deposits
Interest bearing deposits
Weighted average rate
Weighted average rate
Available-for-sale debt securities(1)
Available-for-sale debt securities(1)
Weighted average rate
Weighted average rate
Held-to-maturity securities (2)
Held-to-maturity securities (2)
Weighted average rate
Weighted average rate
Adjustable rate loans
Adjustable rate loans
Weighted average rate
Weighted average rate
Fixed rate loans
Fixed rate loans
Weighted average rate
Weighted average rate
Federal Home Loan Bank stock and other interest earning assets
Federal Home Loan Bank stock and other interest earning assets
Weighted average rate
Weighted average rate
December 31,
December 31,
2024
2024
2025
2025
2026
2026
2027
2027
2028
2028
(Dollars In Thousands)
(Dollars In Thousands)
2029-2038
2029-2038
Thereafter
Thereafter
Total
Total
December 31,
December 31,
2023
2023
Fair Value
Fair Value
$
$
108,804
108,804
$
$
$
$
$
$
5.35 %
5.35 %
1,247
$
1,247
$
5.87 %
5.87 %
—
—
—
—
2,223,657
2,223,657
$
$
8.00 %
8.00 %
$
$
5.00 %
5.00 %
261,468
261,468
$
$
26,313
26,313
6.39 %
6.39 %
—
—
—
—
7,053
$
$
7,053
4.13 %
4.13 %
$
—
—
$
—
—
42,062
42,062
$
$
3.93 %
3.93 %
347,537
347,537
$
$
4.83 %
4.83 %
—
—
—
—
—
—
—
—
3,007
3,007
1.99 %
1.99 %
523
523
1.58 %
1.58 %
$
$
27,934
27,934
$
$
3.33 %
3.33 %
422,101
422,101
$
$
4.54 %
4.54 %
—
—
—
—
—
—
—
—
19,909
19,909
$
$
1.48 %
1.48 %
$
$
—
—
—
—
63,170
63,170
$
$
3.79 %
3.79 %
301,451
301,451
$
$
4.63 %
4.63 %
—
—
—
—
32,594
32,594
—
—
—
—
$
$
9,835
9,835
3.73 %
3.73 %
$
$
3.51 %
3.51 %
$
$
3.99 %
3.99 %
$
$
5.12 %
5.12 %
—
—
—
—
49,042
49,042
224,795
224,795
—
—
—
—
196,806
196,806
$
$
2.76 %
2.76 %
$
$
2.50 %
2.50 %
73,839
73,839
444,081
444,081
223,927
223,927
3.72 %
3.72 %
$
$
4.04 %
4.04 %
—
—
—
—
—
—
—
—
240,350
240,350
88,067
88,067
$
2.74 %
2.74 %
$
2.42 %
2.42 %
—
—
—
—
35,972
35,972
$
$
$
478,207
108,804
$
5.35 %
$
2.74 %
$
2.63 %
108,804
5.35 %
478,207
2.74 %
195,023
2.63 %
$ 2,849,946
195,023
$ 2,849,946
$
$
$
$
7.06 %
7.06 %
4.53 %
4.53 %
—
—
$
—
—
$ 1,817,251
$ 1,817,251
4.69 %
4.69 %
26,313
26,313
$
64.39 %
64.39 %
$
$
108,804
108,804
478,207
478,207
171,193
171,193
$ 2,764,145
$ 2,764,145
$ 1,713,626
$ 1,713,626
$ 2,216,482
$ 2,216,482
26,313
26,313
948,202
948,202
661,528
661,528
895,496
895,496
70,843
70,843
252,610
252,610
71,625
71,625
25,774
25,774
Total financial assets
Total financial assets
$
$
2,621,489
2,621,489
$
$
396,652
396,652
$
$
453,565
453,565
$
$
384,530
384,530
$
$
316,266
316,266
$
$
938,653
938,653
$
$
364,389
364,389
$ 5,475,544
$ 5,475,544
Financial Liabilities:
Financial Liabilities:
Time deposits
Time deposits
Weighted average rate
Weighted average rate
Brokered funds
Brokered funds
Weighted average rate
Weighted average rate
Interest-bearing demand
Interest-bearing demand
Weighted average rate
Weighted average rate
Non-interest-bearing demand (3)
Non-interest-bearing demand (3)
Weighted average rate
Weighted average rate
Securities sold under reverse repurchase agreements
Securities sold under reverse repurchase agreements
Weighted average rate
Weighted average rate
Short-term borrowings, overnight FHLB borrowings, and other liabilities
Short-term borrowings, overnight FHLB borrowings, and other liabilities
Weighted average rate
Weighted average rate
Subordinated notes
Subordinated notes
Weighted average rate
Weighted average rate
Subordinated debentures
Subordinated debentures
Weighted average rate
Weighted average rate
Total financial liabilities
Total financial liabilities
$
$
$
$
$
$
$
$
$
$
921,485
921,485
$
$
3.87 %
3.87 %
$
$
5.42 %
5.42 %
466,781
466,781
$
$
2,216,482
2,216,482
1.67 %
1.67 %
—
—
—
—
70,843
70,843
1.66 %
1.66 %
252,610
252,610
5.64 %
5.64 %
—
$
—
$
—
—
25,774
25,774
7.24 %
7.24 %
146,552
146,552
19,250
19,250
$
$
0.94 %
0.94 %
$
$
4.59 %
4.59 %
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
75,000
75,000
5.92 %
5.92 %
—
—
—
—
3,067
3,067
0.69 %
0.69 %
$
$
48,195
48,195
4.90 %
4.90 %
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
2,394
2,394
0.76 %
0.76 %
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
948
$
$
948
0.68 %
0.68 %
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
1,058
1,058
1.51 %
1.51 %
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
895,496
895,496
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$ 2,216,482
$
$
661,528
948,202
$
3.79 %
$
5.20 %
948,202
3.79 %
661,528
5.20 %
$ 2,216,482
1.67 %
895,496
895,496
—
—
70,843
70,843
1.66 %
252,610
1.67 %
$
252,610
$
$
$
$
$
$
$
$
1.66 %
$
$
5.64 %
5.64 %
$
75,000
$
5.92 %
5.92 %
25,774
$
7.24 %
7.24 %
$
25,774
75,000
$
$
$
$
Periodic repricing GAP
Periodic repricing GAP
Cumulative repricing GAP
Cumulative repricing GAP
$
$
3,953,975
3,953,975
$
$
240,802
240,802
$
$
51,262
51,262
$
$
2,394
2,394
$
$
948
948
$
$
1,058
1,058
$
$
895,496
895,496
$ 5,145,935
$ 5,145,935
$ (1,332,486)
$ (1,332,486)
$
$
155,850
155,850
$
$
402,303
402,303
$
$
382,136
382,136
$
$
315,318
315,318
$
$
937,595
937,595
$
$
(531,107)
(531,107)
$
$
329,609
329,609
$ (1,332,486)
$ (1,332,486)
$ (1,176,636)
$ (1,176,636)
$
$
(774,333)
(774,333)
$ (392,197)
$ (392,197)
$
$
(76,879)
(76,879)
$
$
860,716
860,716
$
$
329,609
329,609
(1) Available-for-sale debt securities include approximately $420.1 million of mortgage-backed securities and collateralized
(1) Available-for-sale debt securities include approximately $420.1 million of mortgage-backed securities and collateralized
mortgage obligations which pay interest and principal monthly to the Company. This table does not show the effect of these
mortgage obligations which pay interest and principal monthly to the Company. This table does not show the effect of these
monthly repayments of principal.
monthly repayments of principal.
(2) Held-to-maturity debt securities include approximately $188.8 million of mortgage-backed securities and collateralized mortgage
(2) Held-to-maturity debt securities include approximately $188.8 million of mortgage-backed securities and collateralized mortgage
obligations which pay interest and principal monthly to the Company. This table does not show the effect of these monthly
obligations which pay interest and principal monthly to the Company. This table does not show the effect of these monthly
repayments of principal.
repayments of principal.
(3) Non-interest-bearing demand deposits are included in this table in the column labeled “Thereafter” since there is no interest rate
(3) Non-interest-bearing demand deposits are included in this table in the column labeled “Thereafter” since there is no interest rate
related to these liabilities and therefore there is nothing to reprice.
related to these liabilities and therefore there is nothing to reprice.
57
5757
Great Southern Bancorp, Inc.
Auditor’s Report and Consolidated Financial Statements
December 31, 2023 and 2022
58
Great Southern Bancorp, Inc.
Auditor’s Report and Consolidated Financial Statements
December 31, 2023 and 2022
59
Stockholders, Board of Directors, and Audit Committee
Great Southern Bancorp, Inc.
Page 2
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2) involves our especially
challenging, subjective, or complex judgments. The communication of this critical audit matter does not alter
in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
Allowance for Credit Losses on Loans
The Company’s loan portfolio totaled $4.7 billion as of December 31, 2023, and the allowance for credit
losses (ACL) on loans was $64.7 million.
The ACL on loans as defined by Topic 326 is an estimate of lifetime expected credit losses on loans. The
ACL on loans is measured on a collective basis based on pools of loans with similar risk characteristics.
Average historical loss rates over a defined lookback period are analyzed for the segmented loan pools, and
adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions
and reasonable and supportable forecasts. Qualitative factors such as changes in economic conditions,
concentrations of risk, and changes in portfolio risk are considered in determining the adequacy of the level
of the ACL on loans. The Company discloses that this determination involves a high degree of judgment and
complexity and is inherently subjective.
We identified the valuation of the ACL on loans as a critical audit matter. Auditing the ACL on loans involves
a high degree of subjectivity in evaluating management’s estimates, such as evaluating management’s
assessment of economic conditions and other qualitative or environmental factors, evaluating the adequacy
of specifically identified losses on individually evaluated loans, and assessing the appropriateness of loan
credit ratings.
The primary procedures we performed to address this critical audit matter included:
Obtaining an understanding of the Company’s process for establishing the ACL on loans;
Testing the design and operating effectiveness of controls, including those related to technology,
over the ACL on loans including data completeness and accuracy, classifications of loans by loan
segment, verification of historical net loss data and calculated net loss rates, the establishment of
qualitative adjustments, credit ratings, and risk classification of loans and establishment of specific
reserves on individually evaluated loans, and management’s review and disclosure controls over the
ACL on loans;
Testing of completeness and accuracy of the information utilized in the ACL on loans;
Testing the mathematical accuracy of the calculation of the ACL on loans;
Evaluating the qualitative adjustments, including assessing the basis for the adjustments and the
reasonableness of significant assumptions;
Testing the loan review function and evaluating the accuracy of loan credit ratings;
Report of Independent Registered Public Accounting Firm
Stockholders, Board of Directors, and Audit Committee
Great Southern Bancorp, Inc.
Springfield, Missouri
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial condition of Great Southern
Bancorp, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of
income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year
period ended December 31, 2023, and the related notes (collectively referred to as the “financial
statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results
of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023,
in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States)
reporting as of
December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated
March 11, 2024, expressed an unqualified opinion thereon.
internal control over
the Company’s
(“PCAOB”),
financial
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect
to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
60
Stockholders, Board of Directors, and Audit Committee
Great Southern Bancorp, Inc.
Page 2
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2) involves our especially
challenging, subjective, or complex judgments. The communication of this critical audit matter does not alter
in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
Allowance for Credit Losses on Loans
The Company’s loan portfolio totaled $4.7 billion as of December 31, 2023, and the allowance for credit
losses (ACL) on loans was $64.7 million.
The ACL on loans as defined by Topic 326 is an estimate of lifetime expected credit losses on loans. The
ACL on loans is measured on a collective basis based on pools of loans with similar risk characteristics.
Average historical loss rates over a defined lookback period are analyzed for the segmented loan pools, and
adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions
and reasonable and supportable forecasts. Qualitative factors such as changes in economic conditions,
concentrations of risk, and changes in portfolio risk are considered in determining the adequacy of the level
of the ACL on loans. The Company discloses that this determination involves a high degree of judgment and
complexity and is inherently subjective.
We identified the valuation of the ACL on loans as a critical audit matter. Auditing the ACL on loans involves
a high degree of subjectivity in evaluating management’s estimates, such as evaluating management’s
assessment of economic conditions and other qualitative or environmental factors, evaluating the adequacy
of specifically identified losses on individually evaluated loans, and assessing the appropriateness of loan
credit ratings.
The primary procedures we performed to address this critical audit matter included:
Obtaining an understanding of the Company’s process for establishing the ACL on loans;
Testing the design and operating effectiveness of controls, including those related to technology,
over the ACL on loans including data completeness and accuracy, classifications of loans by loan
segment, verification of historical net loss data and calculated net loss rates, the establishment of
qualitative adjustments, credit ratings, and risk classification of loans and establishment of specific
reserves on individually evaluated loans, and management’s review and disclosure controls over the
ACL on loans;
Testing of completeness and accuracy of the information utilized in the ACL on loans;
Testing the mathematical accuracy of the calculation of the ACL on loans;
Evaluating the qualitative adjustments, including assessing the basis for the adjustments and the
reasonableness of significant assumptions;
Testing the loan review function and evaluating the accuracy of loan credit ratings;
61
Stockholders, Board of Directors, and Audit Committee
Great Southern Bancorp, Inc.
Page 3
Evaluating the reasonableness of specific allowances on individually evaluated loans;
Evaluating the overall reasonableness of assumptions used by management considering the past
performance of the Company and evaluating trends identified within peer groups;
Evaluating the disclosures in the consolidated financial statements.
FORVIS, LLP
We have served as the Company’s auditor since 1975.
Interest-bearing deposits in other financial institutions
Interest-bearing deposits in other financial institutions
108,804
108,804
63,258
63,258
Springfield, Missouri
March 11, 2024
Cash and cash equivalents
Cash and cash equivalents
211,333
211,333
168,520
168,520
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Consolidated Statements of Financial Condition
Consolidated Statements of Financial Condition
December 31, 2023 and 2022
December 31, 2023 and 2022
(In Thousands, Except Per Share Data)
(In Thousands, Except Per Share Data)
Assets
Assets
Cash
Cash
Available-for-sale securities
Available-for-sale securities
Held-to-maturity securities
Held-to-maturity securities
Mortgage loans held for sale
Mortgage loans held for sale
Interest receivable
Interest receivable
Prepaid expenses and other assets
Prepaid expenses and other assets
Other real estate owned and repossessions, net
Other real estate owned and repossessions, net
Premises and equipment, net
Premises and equipment, net
Goodwill and other intangible assets
Goodwill and other intangible assets
2023
2023
2022
2022
$
$
102,529
102,529
$
$
105,262
105,262
478,207
478,207
490,592
490,592
195,023
195,023
202,495
202,495
5,849
5,849
4,811
4,811
21,206
21,206
19,107
19,107
106,225
106,225
69,461
69,461
23
23
233
233
138,591
138,591
141,070
141,070
10,527
10,527
10,813
10,813
Loans receivable, net of allowance for credit losses of $64,670 and $63,480 at
Loans receivable, net of allowance for credit losses of $64,670 and $63,480 at
December 31, 2023 and 2022, respectively
December 31, 2023 and 2022, respectively
4,589,620
4,589,620
4,506,836
4,506,836
Federal Home Loan Bank stock and other interest earning assets
Federal Home Loan Bank stock and other interest earning assets
26,313
26,313
30,814
30,814
Current and deferred income taxes
Current and deferred income taxes
29,485
29,485
35,950
35,950
Total assets
Total assets
$
$
5,812,402
5,812,402
$
$
5,680,702
5,680,702
62
See Notes to Consolidated Financial Statements
See Notes to Consolidated Financial Statements
Stockholders, Board of Directors, and Audit Committee
Great Southern Bancorp, Inc.
Page 3
Evaluating the reasonableness of specific allowances on individually evaluated loans;
Evaluating the overall reasonableness of assumptions used by management considering the past
performance of the Company and evaluating trends identified within peer groups;
Evaluating the disclosures in the consolidated financial statements.
FORVIS, LLP
Springfield, Missouri
March 11, 2024
We have served as the Company’s auditor since 1975.
Interest-bearing deposits in other financial institutions
Interest-bearing deposits in other financial institutions
108,804
108,804
63,258
63,258
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Consolidated Statements of Financial Condition
Consolidated Statements of Financial Condition
December 31, 2023 and 2022
December 31, 2023 and 2022
(In Thousands, Except Per Share Data)
(In Thousands, Except Per Share Data)
Assets
Assets
Cash
Cash
2023
2023
2022
2022
$
$
102,529
102,529
$
$
105,262
105,262
Cash and cash equivalents
Cash and cash equivalents
211,333
211,333
168,520
168,520
Available-for-sale securities
Available-for-sale securities
Held-to-maturity securities
Held-to-maturity securities
Mortgage loans held for sale
Mortgage loans held for sale
478,207
478,207
490,592
490,592
195,023
195,023
202,495
202,495
5,849
5,849
4,811
4,811
Loans receivable, net of allowance for credit losses of $64,670 and $63,480 at
Loans receivable, net of allowance for credit losses of $64,670 and $63,480 at
December 31, 2023 and 2022, respectively
December 31, 2023 and 2022, respectively
4,589,620
4,589,620
4,506,836
4,506,836
Interest receivable
Interest receivable
Prepaid expenses and other assets
Prepaid expenses and other assets
Other real estate owned and repossessions, net
Other real estate owned and repossessions, net
Premises and equipment, net
Premises and equipment, net
Goodwill and other intangible assets
Goodwill and other intangible assets
21,206
21,206
19,107
19,107
106,225
106,225
69,461
69,461
23
23
233
233
138,591
138,591
141,070
141,070
10,527
10,527
10,813
10,813
Federal Home Loan Bank stock and other interest earning assets
Federal Home Loan Bank stock and other interest earning assets
26,313
26,313
30,814
30,814
Current and deferred income taxes
Current and deferred income taxes
29,485
29,485
35,950
35,950
Total assets
Total assets
$
$
5,812,402
5,812,402
$
$
5,680,702
5,680,702
See Notes to Consolidated Financial Statements
See Notes to Consolidated Financial Statements
63
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Consolidated Statements of Financial Condition
Consolidated Statements of Financial Condition
December 31, 2023 and 2022
December 31, 2023 and 2022
(In Thousands, Except Per Share Data)
(In Thousands, Except Per Share Data)
Great Southern Bancorp, Inc.
Consolidated Statements of Income
Years Ended December 31, 2023, 2022 and 2021
(In Thousands, Except Per Share Data)
Liabilities and Stockholders’ Equity
Liabilities and Stockholders’ Equity
Liabilities
Liabilities
Deposits
Deposits
Securities sold under reverse repurchase agreements with customers
Securities sold under reverse repurchase agreements with customers
Short-term borrowings and other interest-bearing liabilities
Short-term borrowings and other interest-bearing liabilities
Subordinated debentures issued to capital trust
Subordinated debentures issued to capital trust
Subordinated notes
Subordinated notes
Accrued interest payable
Accrued interest payable
Advances from borrowers for taxes and insurance
Advances from borrowers for taxes and insurance
Accrued expenses and other liabilities
Accrued expenses and other liabilities
Liability of unfunded commitments
Liability of unfunded commitments
Total liabilities
Total liabilities
Commitments and Contingencies
Commitments and Contingencies
$
$
2023
2023
2022
2022
$
$
4,721,708
4,721,708
70,843
70,843
252,610
252,610
25,774
25,774
74,579
74,579
6,225
6,225
4,946
4,946
76,401
76,401
7,487
7,487
4,684,910
4,684,910
176,843
176,843
89,583
89,583
25,774
25,774
74,281
74,281
3,010
3,010
6,590
6,590
73,808
73,808
12,816
12,816
5,240,573
5,240,573
5,147,615
5,147,615
—
—
—
—
Stockholders’ Equity
Stockholders’ Equity
Capital stock
Capital stock
Serial preferred stock, $.01 par value; authorized 1,000,000 shares;
Serial preferred stock, $.01 par value; authorized 1,000,000 shares;
issued and outstanding 2023 and 2022 – -0- shares
issued and outstanding 2023 and 2022 – -0- shares
Common stock, $.01 par value; authorized 20,000,000 shares;
Common stock, $.01 par value; authorized 20,000,000 shares;
issued and outstanding 2023 – 11,804,430 shares,
2022 – 12,231,290 shares
issued and outstanding 2023 – 11,804,430 shares,
2022 – 12,231,290 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss), net of income taxes
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss), net of income taxes
—
—
—
—
118
118
44,320
44,320
569,872
569,872
122
122
42,445
42,445
543,875
543,875
of $(14,211) and $(17,948) at December 31, 2023 and 2022, respectively
of $(14,211) and $(17,948) at December 31, 2023 and 2022, respectively
(42,481)
(42,481)
(53,355)
(53,355)
Total stockholders’ equity
Total stockholders’ equity
571,829
571,829
533,087
533,087
Total liabilities and stockholders’ equity
Total liabilities and stockholders’ equity
$
$
5,812,402
5,812,402
$
$
5,680,702
5,680,702
See Notes to Consolidated Financial Statements
See Notes to Consolidated Financial Statements
See Notes to Consolidated Financial Statements
64
Losses and Provision (Credit) for Unfunded Commitments
196,294
193,427
183,682
Interest Income
Loans
Investment securities and other
Interest Expense
Deposits
Securities sold under reverse repurchase agreements
Short-term borrowings, overnight FHLBank borrowings and
other interest-bearing liabilities
Subordinated debentures issued to capital trust
Subordinated notes
Net Interest Income
Provision (Credit) for Credit Losses on Loans
Provision (Credit) for Unfunded Commitments
Net Interest Income After Provision (Credit) for Credit
Non-interest Income
Commissions
Overdraft and insufficient funds fees
Point-of-sale and ATM fee income and service charges
Net gain on loan sales
Net realized loss on sales of available-for-sale securities
Late charges and fees on loans
Gain (loss) on derivative interest rate products
Other income
Non-interest Expense
Salaries and employee benefits
Net occupancy and equipment expense
Postage
Insurance
Advertising
Telephone
Office supplies and printing
Legal, audit and other professional fees
Expense on other real estate and repossessions
Acquired deposit intangible asset amortization
Other operating expenses
2023
2022
2021
$
$
$
205,751
21,226
226,977
186,269
12,404
198,673
271,952
24,883
296,835
88,757
1,205
7,500
1,736
4,422
103,620
193,215
2,250
(5,329)
1,153
7,617
14,346
2,354
—
786
(337)
4,154
30,073
78,521
30,834
3,590
4,542
3,396
1,057
2,730
7,086
311
286
8,670
141,023
20,676
324
1,066
875
4,422
27,363
199,614
3,000
3,187
1,208
7,872
15,705
2,584
(130)
1,182
321
5,399
34,141
75,300
28,471
3,379
3,197
3,261
867
3,170
6,330
359
768
8,264
133,366
13,102
37
—
448
7,165
20,752
177,921
(6,700)
939
1,263
6,686
15,029
9,463
—
1,434
312
4,130
38,317
70,290
29,163
3,164
3,061
3,072
848
3,458
6,555
627
863
6,534
127,635
Great Southern Bancorp, Inc.
Consolidated Statements of Income
Years Ended December 31, 2023, 2022 and 2021
(In Thousands, Except Per Share Data)
Interest Income
Loans
Investment securities and other
Interest Expense
Deposits
Securities sold under reverse repurchase agreements
Short-term borrowings, overnight FHLBank borrowings and
other interest-bearing liabilities
Subordinated debentures issued to capital trust
Subordinated notes
Net Interest Income
Provision (Credit) for Credit Losses on Loans
Provision (Credit) for Unfunded Commitments
Net Interest Income After Provision (Credit) for Credit
2023
2022
2021
$
271,952
24,883
296,835
88,757
1,205
7,500
1,736
4,422
103,620
193,215
2,250
(5,329)
$
$
205,751
21,226
226,977
186,269
12,404
198,673
20,676
324
1,066
875
4,422
27,363
199,614
3,000
3,187
13,102
37
—
448
7,165
20,752
177,921
(6,700)
939
Losses and Provision (Credit) for Unfunded Commitments
196,294
193,427
183,682
Non-interest Income
Commissions
Overdraft and insufficient funds fees
Point-of-sale and ATM fee income and service charges
Net gain on loan sales
Net realized loss on sales of available-for-sale securities
Late charges and fees on loans
Gain (loss) on derivative interest rate products
Other income
Non-interest Expense
Salaries and employee benefits
Net occupancy and equipment expense
Postage
Insurance
Advertising
Office supplies and printing
Telephone
Legal, audit and other professional fees
Expense on other real estate and repossessions
Acquired deposit intangible asset amortization
Other operating expenses
1,153
7,617
14,346
2,354
—
786
(337)
4,154
30,073
78,521
30,834
3,590
4,542
3,396
1,057
2,730
7,086
311
286
8,670
141,023
1,208
7,872
15,705
2,584
(130)
1,182
321
5,399
34,141
75,300
28,471
3,379
3,197
3,261
867
3,170
6,330
359
768
8,264
133,366
1,263
6,686
15,029
9,463
—
1,434
312
4,130
38,317
70,290
29,163
3,164
3,061
3,072
848
3,458
6,555
627
863
6,534
127,635
See Notes to Consolidated Financial Statements
65
Great Southern Bancorp, Inc.
Consolidated Statements of Income
Years Ended December 31, 2023, 2022 and 2021
(In Thousands, Except Per Share Data)
Great Southern Bancorp, Inc.
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2023, 2022 and 2021
(In Thousands)
Income Before Income Taxes
$
85,344 $
94,202 $
94,364
Net Income
$
67,800
$
75,948
$
74,627
2023
2022
2021
2023
2022
2021
Provision for Income Taxes
17,544
18,254
19,737
Net Income
Earnings Per Common Share
Basic
Diluted
$
$
$
67,800 $
75,948 $
74,627
5.65 $
6.07 $
5.61 $
6.02 $
5.50
5.46
Unrealized appreciation (depreciation) on available-for-
sale securities, net of taxes (credit) of $2,199,
$(18,106) and $(4,171) for 2023, 2022 and 2021,
respectively
Unrealized loss (gain) on securities transferred to held-
to-maturity, net of taxes (credit) of $(45), $29 and
$-0- for 2023, 2022 and 2021, respectively
Less: reclassification adjustment for loss included in net
income, net of taxes (credit) of $-0-, $32 and $-0- for
2023, 2022 and 2021, respectively
Amortization of realized gain on termination of cash
flow hedge, net of taxes (credit) of $(1,855), $(1,852)
and $(1,852), for 2023, 2022, and 2021, respectively
Change in value of active cash flow hedges, net of taxes
(credit) of $3,441, $(7,695) and $-0- for 2023, 2022
and 2021, respectively
6,738
(56,448)
(14,121)
(138)
—
89
98
—
—
(6,267)
(6,271)
(6,271)
10,541
(23,582)
—
Other comprehensive income (loss)
10,874
(86,114)
(20,392)
Comprehensive Income (Loss)
$
78,674
$
(10,166) $
54,235
See Notes to Consolidated Financial Statements
See Notes to Consolidated Financial Statements
66
Great Southern Bancorp, Inc.
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2023, 2022 and 2021
(In Thousands)
Net Income
$
67,800
$
75,948
$
74,627
2023
2022
2021
Unrealized appreciation (depreciation) on available-for-
sale securities, net of taxes (credit) of $2,199,
$(18,106) and $(4,171) for 2023, 2022 and 2021,
respectively
Unrealized loss (gain) on securities transferred to held-
to-maturity, net of taxes (credit) of $(45), $29 and
$-0- for 2023, 2022 and 2021, respectively
Less: reclassification adjustment for loss included in net
income, net of taxes (credit) of $-0-, $32 and $-0- for
2023, 2022 and 2021, respectively
Amortization of realized gain on termination of cash
flow hedge, net of taxes (credit) of $(1,855), $(1,852)
and $(1,852), for 2023, 2022, and 2021, respectively
Change in value of active cash flow hedges, net of taxes
(credit) of $3,441, $(7,695) and $-0- for 2023, 2022
and 2021, respectively
6,738
(56,448)
(14,121)
(138)
—
89
98
—
—
(6,267)
(6,271)
(6,271)
10,541
(23,582)
—
Other comprehensive income (loss)
10,874
(86,114)
(20,392)
Comprehensive Income (Loss)
$
78,674
$
(10,166) $
54,235
See Notes to Consolidated Financial Statements
67
Great Southern Bancorp, Inc.
Consolidated Statements of Stockholders’ Equity
Years Ended December 31, 2023, 2022 and 2021
(In Thousands, Except Per Share Data)
Common
Stock
Balance, January 1, 2021
$
Net income
Stock issued under Stock Option Plan
Common dividends declared, $1.40 per share
Impact of ASU 2016-13 adoption
Purchase of the Company’s common stock
Other comprehensive loss
Reclassification of treasury stock per Maryland law
Balance, December 31, 2021
Net income
Stock issued under Stock Option Plan
Common dividends declared, $1.56 per share
Purchase of the Company’s common stock
Other comprehensive loss
Reclassification of treasury stock per Maryland law
Balance, December 31, 2022
Net income
Stock issued under Stock Option Plan
Common dividends declared, $1.60 per share
Purchase of the Company’s common stock
Other comprehensive income
Reclassification of treasury stock per Maryland law
Balance, December 31, 2023
$
138
—
—
—
—
—
—
(7)
131
—
—
—
—
—
(9)
122
—
—
—
—
—
(4)
118
See Notes to Consolidated Financial Statements
68
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total
$
35,004
$
$
53,151
$
$
629,741
—
3,310
—
—
—
—
—
—
—
—
—
—
—
—
—
38,314
—
4,131
42,445
—
1,875
541,448
74,627
—
(18,851)
(14,175)
—
—
(37,501)
545,548
75,948
(19,347)
—
—
—
(58,274)
543,875
67,800
(19,111)
—
—
—
(22,692)
(20,392)
32,759
(86,114)
(53,355)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10,874
1,615
—
—
—
—
—
(39,123)
37,508
—
—
3,564
—
(61,847)
—
58,283
—
—
630
—
(23,326)
—
22,696
74,627
4,925
(18,851)
(14,175)
(39,123)
(20,392)
—
616,752
75,948
7,695
(19,347)
(61,847)
(86,114)
—
533,087
67,800
2,505
(19,111)
(23,326)
10,874
—
$
44,320
$
569,872
$
(42,481)
$
—
$ 571,829
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total
$
$
$
35,004
—
3,310
—
—
—
—
—
38,314
—
4,131
—
—
—
—
42,445
—
1,875
—
—
—
—
541,448
74,627
—
(18,851)
(14,175)
—
—
(37,501)
545,548
75,948
—
(19,347)
—
—
(58,274)
543,875
67,800
—
(19,111)
—
—
(22,692)
$
53,151
—
—
—
—
—
(20,392)
—
32,759
—
—
—
—
(86,114)
—
(53,355)
—
—
—
—
10,874
—
$
—
—
1,615
—
—
(39,123)
—
37,508
—
—
3,564
—
(61,847)
—
58,283
—
—
630
—
(23,326)
—
22,696
629,741
74,627
4,925
(18,851)
(14,175)
(39,123)
(20,392)
—
616,752
75,948
7,695
(19,347)
(61,847)
(86,114)
—
533,087
67,800
2,505
(19,111)
(23,326)
10,874
—
$
44,320
$
569,872
$
(42,481)
$
—
$ 571,829
69
Great Southern Bancorp, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31, 2023, 2022 and 2021
(In Thousands)
Great Southern Bancorp, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31, 2023, 2022 and 2021
(In Thousands)
2023
2022
2021
2023
2022
2021
Operating Activities
Net income
Proceeds from sales of loans held for sale
Originations of loans held for sale
Items not requiring (providing) cash
Depreciation
Amortization
Compensation expense for stock option grants
Provision (credit) for credit losses
Provision (credit) for unfunded commitments
Net gain on loan sales
Net realized (gain) loss on available-for-sale securities
Loss (gain) on sale of premises and equipment
Loss (gain) on sale/write-down of other real estate
and repossessions
Accretion of deferred income, premiums, discounts
and other
Loss (gain) on derivative interest rate products
Deferred income taxes
Changes in
Interest receivable
Prepaid expenses and other assets
Accrued expenses and other liabilities
Income taxes refundable/payable
$
67,800
157,213
(155,995)
$
75,948
103,347
(95,007)
$
74,627
351,391
(332,289)
8,723
589
1,621
2,250
(5,329)
(2,354)
—
26
39
(13,774)
337
2,985
(2,099)
(4,543)
23,470
(259)
8,498
1,179
1,437
3,000
3,187
(2,584)
130
(1,023)
(126)
(15,842)
(321)
2,485
(8,402)
2,141
5,637
1,162
9,555
1,583
1,225
(6,700)
939
(9,463)
—
(1)
(71)
(18,385)
(312)
3,712
2,088
20,146
(2,495)
(1,808)
Net cash provided by operating activities
80,700
84,846
93,742
Net cash provided by (used in) investing activities
(88,208)
(819,546)
181,947
4,501
(24,159)
3,151
Investing Activities
Net change in loans
Purchase of loans
Purchase of premises and equipment
Proceeds from sale of premises and equipment
Proceeds from sale of other real estate and repossessions
Proceeds from sale of available-for-sale securities
Proceeds from repayments of held-to-maturity securities
Proceeds from maturities, calls and repayments of
available-for-sale securities
Purchase of available-for-sale securities
Investment in tax credit partnerships
Redemption (purchase) of Federal Home Loan Bank stock
and other interest-earning assets
Financing Activities
Net increase (decrease) in certificates of deposit
Net increase (decrease) in checking and savings accounts
Net increase (decrease) in short-term borrowings and
other interest-bearing liabilities
Advances from (to) borrowers for taxes and insurance
Redemption of subordinated notes
Purchase of the company’s common stock
Dividends paid
Stock options exercised
$
(79,096)
$
$
(134,344)
(361,817)
(20,110)
3,980
2,351
18,375
23,821
51,348
(360,725)
(18,266)
448,599
(152,797)
(5,739)
586
2,230
72,149
(177,466)
(8,766)
—
—
321,718
(188,909)
127,471
443
(61,847)
(19,181)
6,258
(429,723)
464,921
(26,737)
(1,389)
(75,000)
(39,123)
(18,800)
3,700
(400)
(7,300)
254
313
—
7,228
26,888
(5,436)
(35,160)
26,806
9,856
57,027
(1,644)
(23,326)
(19,282)
884
50,321
42,813
—
—
Net cash provided by (used in) financing activities
185,953
(122,151)
Increase (Decrease) in Cash and Cash Equivalents
(548,747)
153,538
Cash and Cash Equivalents, Beginning of Year
168,520
717,267
563,729
Cash and Cash Equivalents, End of Year
$
211,333
$
168,520
$
717,267
See Notes to Consolidated Financial Statements
See Notes to Consolidated Financial Statements
70
Great Southern Bancorp, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31, 2023, 2022 and 2021
(In Thousands)
Investing Activities
Net change in loans
Purchase of loans
Purchase of premises and equipment
Proceeds from sale of premises and equipment
Proceeds from sale of other real estate and repossessions
Proceeds from sale of available-for-sale securities
Proceeds from repayments of held-to-maturity securities
Proceeds from maturities, calls and repayments of
available-for-sale securities
Purchase of available-for-sale securities
Investment in tax credit partnerships
Redemption (purchase) of Federal Home Loan Bank stock
and other interest-earning assets
2023
2022
2021
$
$
(79,096)
(400)
(7,300)
254
313
—
7,228
26,888
(5,436)
(35,160)
(134,344)
(361,817)
(20,110)
3,980
2,351
18,375
23,821
51,348
(360,725)
(18,266)
$
448,599
(152,797)
(5,739)
586
2,230
—
—
72,149
(177,466)
(8,766)
4,501
(24,159)
3,151
Net cash provided by (used in) investing activities
(88,208)
(819,546)
181,947
Financing Activities
Net increase (decrease) in certificates of deposit
Net increase (decrease) in checking and savings accounts
Net increase (decrease) in short-term borrowings and
other interest-bearing liabilities
Advances from (to) borrowers for taxes and insurance
Redemption of subordinated notes
Purchase of the company’s common stock
Dividends paid
Stock options exercised
26,806
9,856
321,718
(188,909)
57,027
(1,644)
—
(23,326)
(19,282)
884
127,471
443
—
(61,847)
(19,181)
6,258
(429,723)
464,921
(26,737)
(1,389)
(75,000)
(39,123)
(18,800)
3,700
Net cash provided by (used in) financing activities
Increase (Decrease) in Cash and Cash Equivalents
50,321
42,813
185,953
(122,151)
(548,747)
153,538
Cash and Cash Equivalents, Beginning of Year
168,520
717,267
563,729
Cash and Cash Equivalents, End of Year
$
211,333
$
168,520
$
717,267
See Notes to Consolidated Financial Statements
71
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Note 1: Nature of Operations and Summary of Significant Accounting Policies
Securities
Nature of Operations and Operating Segments
Great Southern Bancorp, Inc. (“GSBC” or the “Company”) operates as a one-bank holding company. GSBC’s
business primarily consists of the operations of Great Southern Bank (the “Bank”), which provides a full range of
financial services to customers primarily located in Missouri, Iowa, Kansas, Minnesota, Nebraska and Arkansas.
The Bank also originates commercial loans from lending offices in Atlanta; Charlotte, North Carolina; Chicago;
Dallas; Denver; Omaha, Nebraska; Phoenix; and Tulsa, Oklahoma. The Company and the Bank are subject to
regulation by certain federal and state agencies and undergo periodic examinations by those regulatory agencies.
The Company’s banking operation is its only reportable segment. The banking operation is principally engaged in
the business of originating residential and commercial real estate loans, construction loans, commercial business
loans and consumer loans and funding these loans by attracting deposits from the general public, accepting
brokered deposits and borrowing from the Federal Home Loan Bank and others. The operating results of this
segment are regularly reviewed by management to make decisions about resource allocations and to assess
performance. Selected information is not presented separately for the Company’s reportable segment, as there is
no material difference between that information and the corresponding information in the consolidated financial
statements.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Material estimates that are particularly susceptible to significant change relate to the determination of the
allowance for credit losses and the valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans and fair values of financial instruments. In connection with the determination of the
allowance for credit losses and the valuation of foreclosed assets held for sale, management obtains independent
appraisals for significant properties. In addition, the Company considers that the determination of the carrying
value of goodwill and intangible assets involves a high degree of judgment and complexity.
Principles of Consolidation
The consolidated financial statements include the accounts of Great Southern Bancorp, Inc., its wholly owned
subsidiary, the Bank, and the Bank’s wholly owned subsidiaries, Great Southern Real Estate Development
Corporation, GSB One LLC (including its wholly owned subsidiary, GSB Two LLC), Great Southern Financial
Corporation, Great Southern Community Development Company, LLC (including its wholly owned subsidiary,
Great Southern CDE, LLC), GS, LLC, GSSC, LLC, GSTC Investments, LLC, GS-RE Holding, LLC (including
its wholly owned subsidiary, GS RE Management, LLC), GS-RE Holding II, LLC, GS-RE Holding III, LLC, VFP
Conclusion Holding, LLC and VFP Conclusion Holding II, LLC. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Federal Home Loan Bank Stock
Federal Home Loan Bank common stock is a required investment for institutions that are members of the Federal
Home Loan Bank system. The required investment in common stock is based on a predetermined formula, carried
at cost and evaluated for impairment.
72
Available-for-sale securities, which include any security for which the Company has no immediate plan to sell but
which may be sold in the future, are carried at fair value. Unrealized gains and losses are recorded, net of related
income tax effects, in other comprehensive income.
Held-to-maturity securities, which include any security for which the Company has the positive intent and ability to
hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts.
Amortization of premiums and accretion of discounts are recorded as interest income from securities. Realized gains
and losses are recorded as net security gains (losses). Gains and losses on sales of securities are determined on the
specific-identification method.
The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for
credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments. The Company’s
consolidated statements of income reflect the full impairment (that is, the difference between the security’s amortized
cost basis and fair value) on debt securities that the Company intends to sell or would more likely than not be required
to sell before the expected recovery of the amortized cost basis. For available-for-sale and held-to-maturity debt
securities that management has no intent to sell and believes that it more likely than not will not be required to sell
prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the noncredit loss
is recognized in accumulated other comprehensive income for available-for-sale securities. The credit loss component
recognized in earnings through a provision for credit loss is identified as the amount of principal cash flows not
expected to be received over the remaining term of the security based on cash flow projections.
Mortgage Loans Held for Sale
Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value in
the aggregate. Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs.
Nonbinding forward commitments to sell individual mortgage loans are generally obtained to reduce market risk on
mortgage loans in the process of origination and mortgage loans held for sale. Gains and losses resulting from sales of
mortgage loans are recognized when the respective loans are sold to investors. Fees received from borrowers to
guarantee the funding of mortgage loans held for sale and fees paid to investors to ensure the ultimate sale of such
mortgage loans are recognized as income or expense when the loans are sold or when it becomes evident that the
commitment will not be used.
Loans Originated by the Company
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are
reported at their outstanding principal balances adjusted for any charge-offs, the allowance for credit losses, any
deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. Interest income
is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. Past
due status is based on the contractual terms of a loan. Generally, loans are placed on nonaccrual status at 90 days past
due and interest is considered a loss, unless the loan is well secured and in the process of collection. Payments received
on nonaccrual loans are applied to principal until the loans are returned to accrual status. Loans are returned to accrual
status when all payments contractually due are brought current, payment performance is sustained for a period of time,
generally six months, and future payments are reasonably assured. With the exception of consumer loans, charge-offs
on loans are recorded when available information indicates a loan is not fully collectible and the loss is reasonably
quantifiable. Consumer loans are charged-off at specified delinquency dates consistent with regulatory guidelines.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Securities
Available-for-sale securities, which include any security for which the Company has no immediate plan to sell but
which may be sold in the future, are carried at fair value. Unrealized gains and losses are recorded, net of related
income tax effects, in other comprehensive income.
Held-to-maturity securities, which include any security for which the Company has the positive intent and ability to
hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts.
Amortization of premiums and accretion of discounts are recorded as interest income from securities. Realized gains
and losses are recorded as net security gains (losses). Gains and losses on sales of securities are determined on the
specific-identification method.
The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for
credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments. The Company’s
consolidated statements of income reflect the full impairment (that is, the difference between the security’s amortized
cost basis and fair value) on debt securities that the Company intends to sell or would more likely than not be required
to sell before the expected recovery of the amortized cost basis. For available-for-sale and held-to-maturity debt
securities that management has no intent to sell and believes that it more likely than not will not be required to sell
prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the noncredit loss
is recognized in accumulated other comprehensive income for available-for-sale securities. The credit loss component
recognized in earnings through a provision for credit loss is identified as the amount of principal cash flows not
expected to be received over the remaining term of the security based on cash flow projections.
Mortgage Loans Held for Sale
Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value in
the aggregate. Write-downs to fair value are recognized as a charge to earnings at the time the decline in value occurs.
Nonbinding forward commitments to sell individual mortgage loans are generally obtained to reduce market risk on
mortgage loans in the process of origination and mortgage loans held for sale. Gains and losses resulting from sales of
mortgage loans are recognized when the respective loans are sold to investors. Fees received from borrowers to
guarantee the funding of mortgage loans held for sale and fees paid to investors to ensure the ultimate sale of such
mortgage loans are recognized as income or expense when the loans are sold or when it becomes evident that the
commitment will not be used.
Loans Originated by the Company
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are
reported at their outstanding principal balances adjusted for any charge-offs, the allowance for credit losses, any
deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. Interest income
is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. Past
due status is based on the contractual terms of a loan. Generally, loans are placed on nonaccrual status at 90 days past
due and interest is considered a loss, unless the loan is well secured and in the process of collection. Payments received
on nonaccrual loans are applied to principal until the loans are returned to accrual status. Loans are returned to accrual
status when all payments contractually due are brought current, payment performance is sustained for a period of time,
generally six months, and future payments are reasonably assured. With the exception of consumer loans, charge-offs
on loans are recorded when available information indicates a loan is not fully collectible and the loss is reasonably
quantifiable. Consumer loans are charged-off at specified delinquency dates consistent with regulatory guidelines.
73
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Allowance for Credit Losses
The allowance for credit losses is measured using an average historical loss model that incorporates relevant
information about past events (including historical credit loss experience on loans with similar risk characteristics),
current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows
over the contractual term of the loans. The allowance for credit losses is measured on a collective (pool) basis. Loans
are aggregated into pools based on similar risk characteristics, including borrower type, collateral and repayment types
and expected credit loss patterns. Loans that do not share similar risk characteristics, primarily classified loans with a
balance greater than or equal to $100,000, are evaluated on an individual basis.
For loans evaluated for credit losses on a collective basis, average historical loss rates are calculated for each pool
using the Company’s historical net charge-offs (combined charge-offs and recoveries by observable historical
reporting period) and outstanding loan balances during a lookback period. Lookback periods can be different based on
the individual pool and represent management’s credit expectations for the pool of loans over the remaining
contractual life. In certain loan pools, if the Company’s own historical loss rate is not reflective of the loss
expectations, the historical loss rate is augmented by industry and peer data. The calculated average net charge-off rate
is then adjusted for current conditions and reasonable and supportable forecasts. These adjustments increase or
decrease the average historical loss rate to reflect expectations of future losses given economic forecasts of key
macroeconomic variables including, but not limited to, unemployment rate, gross domestic product (“GDP”),
commercial real estate price index, consumer sentiment and construction spending. The adjustments are based on
results from various regression models projecting the impact of the macroeconomic variables to loss rates. The
forecast is used for a reasonable and supportable period before reverting to historical averages. The forecast-adjusted
loss rate is applied to the principal balance over the remaining contractual lives, adjusted for expected prepayments.
The contractual term excludes expected extensions, renewals and modifications. Additionally, the allowance for credit
losses considers other qualitative factors not included in historical loss rates or macroeconomic forecasts such as
changes in portfolio composition, underwriting practices, or significant unique events or conditions.
In addition, ASU 2016-13 requires an allowance for off balance sheet credit exposures: unfunded lines of credit,
undisbursed portions of loans, written residential and commercial commitments, and letters of credit. To determine the
amount needed for allowance purposes, a utilization rate is determined either by the model or internally for each pool.
Our loss model calculates the reserve on unfunded commitments based upon the utilization rate multiplied by the
average loss rate factors in each pool with unfunded and committed balances. The liability for unfunded lending
commitments utilizes the same model as the allowance for credit losses on loans; however, the liability for unfunded
lending commitments incorporates assumptions for the portion of unfunded commitments that are expected to be
funded.
Loans Acquired in Business Combinations
Loans acquired in business combinations under ASC Topic 805, Business Combinations, required the use of the
acquisition method of accounting. Therefore, such loans were initially recorded at fair value in accordance with the
fair value methodology prescribed in ASC Topic 820, Fair Value Measurements and Disclosures. The Company’s
historical acquisitions all occurred under previous US GAAP prior to the Company’s adoption of ASU 2016-13. No
allowance for credit losses related to the acquired loans was recorded on the acquisition date as the fair value of the
loans acquired incorporates assumptions regarding credit risk. Loans acquired are recorded at fair value in accordance
with the fair value methodology prescribed in ASC Topic 820. The fair value estimates associated with the loans
include estimates related to expected prepayments and the amount and timing of undiscounted expected principal,
interest and other cash flows.
For acquired loans not acquired in conjunction with an FDIC-assisted transaction that were not considered to be
purchased credit-impaired loans, the Company evaluated those loans acquired in accordance with the provisions of
ASC Topic 310-20, Nonrefundable Fees and Other Costs. The fair value discount on these loans is accreted into
interest income over the weighted average life of the loans using a constant yield method. These loans are not
74
considered impaired loans. The Company’s historical acquisitions all occurred under previous US GAAP prior to the
Company’s adoption of ASU 2016-13. The Company evaluated purchased credit-impaired loans in accordance with
the provisions of ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. Loans
acquired in business combinations with evidence of credit deterioration since origination and for which it is probable
that all contractually required payments will not be collected were considered to be credit impaired. Evidence of credit
quality deterioration as of the purchase dates may include information such as past-due and nonaccrual status,
borrower credit scores and recent loan to value percentages. Acquired credit-impaired loans that are accounted for
under the accounting guidance for loans acquired with deteriorated credit quality are initially measured at fair value,
which includes estimated future credit losses expected to be incurred over the life of the loans. At the date of CECL
adoption, the Company did not reassess whether purchased credit impaired (PCI) loans met the criteria of purchased
with credit deterioration (PCD) loans.
The Company evaluated all of its loans acquired in conjunction with its FDIC-assisted transactions in accordance with
the provisions of ASC Topic 310-30. For purposes of applying ASC 310-30, loans acquired in FDIC-assisted business
combinations are aggregated into pools of loans with common risk characteristics. All loans acquired in the FDIC
transactions, both covered and not covered by loss sharing agreements, were deemed to be purchased credit-impaired
loans as there is general evidence of credit deterioration since origination in the pools and there is some probability
that not all contractually required payments will be collected. As a result, related discounts are recognized
subsequently through accretion based on changes in the expected cash flows of these acquired loans.
Prior to the adoption of ASU 2016-13, the expected cash flows of the acquired loan pools in excess of the fair values
recorded, referred to as the accretable yield, was recognized in interest income over the remaining estimated lives of
the loan pools for impaired loans accounted for under ASC Topic 310-30. Subsequent to acquisition date, the
Company estimated cash flows expected to be collected on pools of loans sharing common risk characteristics, which
are treated in the aggregate when applying various valuation techniques. Increases in the Company’s cash flow
expectations have been recognized as increases to the accretable yield while decreases have been recognized as
impairments through the allowance for credit losses.
Other Real Estate Owned and Repossessions
Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less
estimated cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure,
valuations are periodically performed by management and the assets are carried at the lower of carrying amount or
fair value less estimated cost to sell. Revenue and expenses from operations and changes in the valuation
allowance are included in net expense on foreclosed assets. Other real estate owned also includes bank premises
formerly, but no longer, used for banking activities, as well as property originally acquired for future expansion
but no longer intended to be used for that purpose.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation. Depreciation is charged to expense using
the straight-line and accelerated methods over the estimated useful lives of the assets. Leasehold improvements
are capitalized and amortized using the straight-line and accelerated methods over the terms of the respective
leases or the estimated useful lives of the improvements, whichever is shorter.
Material lease obligations consist of leases for various loan offices and banking centers. All of our leases are
classified as operating leases (as they were prior to January 1, 2019), and therefore were previously not recognized
on the Company’s consolidated statements of financial condition. With the adoption of ASU 2016-02, these
operating leases are now included as a right of use asset in the premises and equipment line item on the
Company’s consolidated statements of financial condition. The corresponding lease liability is included in the
accrued expenses and other liabilities line item on the Company’s consolidated statements of financial condition.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
considered impaired loans. The Company’s historical acquisitions all occurred under previous US GAAP prior to the
Company’s adoption of ASU 2016-13. The Company evaluated purchased credit-impaired loans in accordance with
the provisions of ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. Loans
acquired in business combinations with evidence of credit deterioration since origination and for which it is probable
that all contractually required payments will not be collected were considered to be credit impaired. Evidence of credit
quality deterioration as of the purchase dates may include information such as past-due and nonaccrual status,
borrower credit scores and recent loan to value percentages. Acquired credit-impaired loans that are accounted for
under the accounting guidance for loans acquired with deteriorated credit quality are initially measured at fair value,
which includes estimated future credit losses expected to be incurred over the life of the loans. At the date of CECL
adoption, the Company did not reassess whether purchased credit impaired (PCI) loans met the criteria of purchased
with credit deterioration (PCD) loans.
The Company evaluated all of its loans acquired in conjunction with its FDIC-assisted transactions in accordance with
the provisions of ASC Topic 310-30. For purposes of applying ASC 310-30, loans acquired in FDIC-assisted business
combinations are aggregated into pools of loans with common risk characteristics. All loans acquired in the FDIC
transactions, both covered and not covered by loss sharing agreements, were deemed to be purchased credit-impaired
loans as there is general evidence of credit deterioration since origination in the pools and there is some probability
that not all contractually required payments will be collected. As a result, related discounts are recognized
subsequently through accretion based on changes in the expected cash flows of these acquired loans.
Prior to the adoption of ASU 2016-13, the expected cash flows of the acquired loan pools in excess of the fair values
recorded, referred to as the accretable yield, was recognized in interest income over the remaining estimated lives of
the loan pools for impaired loans accounted for under ASC Topic 310-30. Subsequent to acquisition date, the
Company estimated cash flows expected to be collected on pools of loans sharing common risk characteristics, which
are treated in the aggregate when applying various valuation techniques. Increases in the Company’s cash flow
expectations have been recognized as increases to the accretable yield while decreases have been recognized as
impairments through the allowance for credit losses.
Other Real Estate Owned and Repossessions
Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less
estimated cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure,
valuations are periodically performed by management and the assets are carried at the lower of carrying amount or
fair value less estimated cost to sell. Revenue and expenses from operations and changes in the valuation
allowance are included in net expense on foreclosed assets. Other real estate owned also includes bank premises
formerly, but no longer, used for banking activities, as well as property originally acquired for future expansion
but no longer intended to be used for that purpose.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation. Depreciation is charged to expense using
the straight-line and accelerated methods over the estimated useful lives of the assets. Leasehold improvements
are capitalized and amortized using the straight-line and accelerated methods over the terms of the respective
leases or the estimated useful lives of the improvements, whichever is shorter.
Material lease obligations consist of leases for various loan offices and banking centers. All of our leases are
classified as operating leases (as they were prior to January 1, 2019), and therefore were previously not recognized
on the Company’s consolidated statements of financial condition. With the adoption of ASU 2016-02, these
operating leases are now included as a right of use asset in the premises and equipment line item on the
Company’s consolidated statements of financial condition. The corresponding lease liability is included in the
accrued expenses and other liabilities line item on the Company’s consolidated statements of financial condition.
75
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The calculated amounts of the right of use assets and lease liabilities are impacted by the length of the lease term
and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often
include one or more options to renew for an extended term in the calculation of the right of use asset and lease
liability. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain,
the Company will include the extended term in the calculation of the right of use asset and lease liability.
Regarding the discount rate, the Company uses the rate implicit in the lease whenever this rate is readily
determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease
inception over a similar term. The discount rate utilized is the FHLBank borrowing rate for the term
corresponding to the expected term of the lease.
Long-Lived Asset Impairment
The Company evaluates the recoverability of the carrying value of long-lived assets whenever events or
circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for
recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual
disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an
impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair
value.
No material asset impairment was recognized during the years ended December 31, 2023, 2022 and 2021.
Goodwill and Intangible Assets
Goodwill is evaluated annually for impairment or more frequently if impairment indicators are present. The
annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its
carrying amount and an impairment charge is recognized for the amount by which the carrying amount exceeds
the reporting unit’s fair value. The Company still may perform a qualitative assessment for a reporting unit to
determine if the quantitative impairment test is necessary.
Deposit intangible assets are amortized on the straight-line basis generally over a period of seven years. Arena
naming rights intangible assets are being amortized on the straight-line basis generally over a period of fifteen
years. Such assets are periodically evaluated as to the recoverability of their carrying value.
A summary of goodwill and intangible assets is as follows:
December 31,
2023
2022
(In Thousands)
$
5,396 $
5,396
—
5,131
5,131
53
5,364
5,417
$
10,527 $
10,813
Goodwill – Branch acquisitions
Deposit intangibles
Fifth Third Bank (January 2016)
Arena Naming Rights (April 2022)
76
Loan Servicing and Origination Fee Income
Loan servicing income represents fees earned for servicing real estate mortgage loans owned by various investors.
The fees are generally calculated on the outstanding principal balances of the loans serviced and are recorded as
income when earned. Loan origination fees, net of direct loan origination costs, are recognized as income using
the level-yield method over the contractual life of the loan.
The Company is incorporated in the State of Maryland. Under Maryland law, there is no concept of “Treasury
Shares.” Instead, shares purchased by the Company constitute authorized but unissued shares under Maryland
law. Accounting principles generally accepted in the United States of America state that accounting for treasury
stock shall conform to state law. The cost of shares purchased by the Company has been allocated to common
Stockholders’ Equity
stock and retained earnings balances.
Earnings Per Common Share
Basic earnings per common share are computed based on the weighted average number of common shares
outstanding during each year. Diluted earnings per common share are computed using the weighted average
common shares and all potential dilutive common shares outstanding during the year.
Earnings per common share (EPS) were computed as follows:
2023
2022
2021
(In Thousands, Except Per Share Data)
Net income and net income available to common shareholders
$
67,800
$
75,948
$
74,627
Average common shares outstanding
11,992
12,516
13,558
Average common share stock options outstanding
88
91
116
Average diluted common shares
12,080
12,607
13,674
Earnings per common share – basic
Earnings per common share – diluted
$
$
5.65
5.61
$
$
6.07
6.02
$
$
5.50
5.46
Options outstanding at December 31, 2023, 2022 and 2021, to purchase 749,833, 559,484 and 383,338 shares of
common stock, respectively, were not included in the computation of diluted earnings per common share for each
of the years because the exercise prices of such options were greater than the average market prices of the
common stock for the years ended December 31, 2023, 2022 and 2021, respectively.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Loan Servicing and Origination Fee Income
Loan servicing income represents fees earned for servicing real estate mortgage loans owned by various investors.
The fees are generally calculated on the outstanding principal balances of the loans serviced and are recorded as
income when earned. Loan origination fees, net of direct loan origination costs, are recognized as income using
the level-yield method over the contractual life of the loan.
Stockholders’ Equity
The Company is incorporated in the State of Maryland. Under Maryland law, there is no concept of “Treasury
Shares.” Instead, shares purchased by the Company constitute authorized but unissued shares under Maryland
law. Accounting principles generally accepted in the United States of America state that accounting for treasury
stock shall conform to state law. The cost of shares purchased by the Company has been allocated to common
stock and retained earnings balances.
Earnings Per Common Share
Basic earnings per common share are computed based on the weighted average number of common shares
outstanding during each year. Diluted earnings per common share are computed using the weighted average
common shares and all potential dilutive common shares outstanding during the year.
Earnings per common share (EPS) were computed as follows:
2021
2022
2023
(In Thousands, Except Per Share Data)
Net income and net income available to common shareholders
$
67,800
$
75,948
$
74,627
Average common shares outstanding
11,992
12,516
13,558
Average common share stock options outstanding
88
91
116
Average diluted common shares
12,080
12,607
13,674
Earnings per common share – basic
Earnings per common share – diluted
$
$
5.65
5.61
$
$
6.07
6.02
$
$
5.50
5.46
Options outstanding at December 31, 2023, 2022 and 2021, to purchase 749,833, 559,484 and 383,338 shares of
common stock, respectively, were not included in the computation of diluted earnings per common share for each
of the years because the exercise prices of such options were greater than the average market prices of the
common stock for the years ended December 31, 2023, 2022 and 2021, respectively.
77
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Stock Compensation Plans
The Company has stock-based employee compensation plans, which are described more fully in Note 20. In
accordance with FASB ASC 718, Compensation – Stock Compensation, compensation cost related to share-based
payment transactions is recognized in the Company’s consolidated financial statements based on the grant-date fair
value of the award using the modified prospective transition method. For the years ended December 31, 2023, 2022
and 2021, share-based compensation expense totaling $1.6 million, $1.4 million and $1.2 million, respectively, was
included in salaries and employee benefits expense in the consolidated statements of income.
Cash Equivalents
The Company considers all liquid investments with original maturities of three months or less to be cash
equivalents. At December 31, 2023 and 2022, cash equivalents consisted of interest-bearing deposits in other
financial institutions. At December 31, 2023, nearly all of the interest-bearing deposits were uninsured and held at
the Federal Home Loan Bank or the Federal Reserve Bank.
Income Taxes
The Company accounts for income taxes in accordance with income tax accounting guidance (FASB
ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense:
current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by
applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The
Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net
deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and
liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.
Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax
assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or
sustained upon examination. The term “more likely than not” means a likelihood of more than 50 percent; the terms
examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax
position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest
amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing
authority that has full knowledge of all relevant information. The determination of whether or not a tax position has
met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the
reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if,
based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will
not be realized. At December 31, 2023 and 2022, no valuation allowance was established.
The Company recognizes interest and penalties on income taxes as a component of income tax expense.
The Company files consolidated income tax returns with its subsidiaries.
Derivatives and Hedging Activities
FASB ASC 815, Derivatives and Hedging, provides the disclosure requirements for derivatives and hedging activities
with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity
uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items and (c) how
derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash
flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using
derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative instruments. For detailed disclosures on derivatives
and hedging activities, see Note 16.
78
As required by FASB ASC 815, the Company records all derivatives in the statement of financial condition at fair
value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative,
whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting
and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting. ASU 2020-04 provides relief for companies preparing for
discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”). LIBOR is a benchmark
interest rate referenced in a variety of agreements that are used by numerous entities. After 2021, certain LIBOR rates
may no longer be published. As a result, LIBOR is expected to be discontinued as a reference rate. Other interest rates
used globally could also be discontinued for similar reasons. ASU 2020-04 provides optional expedients and
exceptions to contracts, hedging relationships and other transactions affected by reference rate reform. The main
provisions for contract modifications include optional relief by allowing the modification as a continuation of the
existing contract without additional analysis and other optional expedients regarding embedded features. Optional
expedients for hedge accounting permit changes to critical terms of hedging relationships and to the designated
benchmark interest rate in a fair value hedge and also provide relief for assessing hedge effectiveness for cash flow
hedges. ASU 2020-04 was effective upon issuance; however, the guidance was originally only available generally
through December 31, 2022. Based upon amendments provided in ASU 2022-06 discussed below, provisions of ASU
2020-04 can now generally be applied through December 31, 2024. The application of ASU 2020-04 has not had, and
is not expected to have, a material impact on the Company’s consolidated financial statements.
In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. ASU 2021-01 clarifies
that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to
derivatives that are affected by the discounting transition. ASU 2021-01 also amends the expedients and exceptions in
ASC 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to
derivative instruments affected by the discounting transition. ASU 2021-01 was effective upon issuance; however, the
guidance was originally only available generally through December 31, 2022. Based upon amendments provided in
ASU 2022-06 discussed below, provisions of ASU 2021-01 can now generally be applied through December 31,
2024. ASU 2021-01 has not had, and is not expected to have, a material impact on the Company’s consolidated
financial statements.
In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging –
Portfolio Layer Method. ASU 2022-01 further clarifies certain targeted improvements to the optional hedge
accounting model that were made under ASU 2017-12. ASU 2022-01 expands the last-of-layer method and renames
this method to portfolio layer method to reflect this expansion, as well as expanding the scope of the portfolio layer
method to include nonprepayable financial assets. It also specifies eligible hedging instruments and provides additional
guidance on the accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer
method. ASU 2022-01 permits an entity to apply the same portfolio hedging method to both prepayable and
nonprepayable financial assets, thereby allowing consistent accounting for similar hedges. ASU 2022-01 became
effective for the Company on January 1, 2023. The adoption of ASU 2022-01 did not have a material impact on the
Company’s consolidated financial statements.
In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt
Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the troubled debt restructuring recognition and
measurement guidance and, instead, requires that an entity evaluate whether a loan modification represents a new loan
or a continuation of an existing loan. It also enhances existing disclosure requirements and introduces new
requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. ASU
2022-02 became effective for the Company on January 1, 2023. The adoption of ASU 2022-02 did not have a material
impact on the Company’s consolidated financial statements. The adoption of this ASU does, however, require changes
in disclosures related to certain loan modifications.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
As required by FASB ASC 815, the Company records all derivatives in the statement of financial condition at fair
value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative,
whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting
and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting. ASU 2020-04 provides relief for companies preparing for
discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”). LIBOR is a benchmark
interest rate referenced in a variety of agreements that are used by numerous entities. After 2021, certain LIBOR rates
may no longer be published. As a result, LIBOR is expected to be discontinued as a reference rate. Other interest rates
used globally could also be discontinued for similar reasons. ASU 2020-04 provides optional expedients and
exceptions to contracts, hedging relationships and other transactions affected by reference rate reform. The main
provisions for contract modifications include optional relief by allowing the modification as a continuation of the
existing contract without additional analysis and other optional expedients regarding embedded features. Optional
expedients for hedge accounting permit changes to critical terms of hedging relationships and to the designated
benchmark interest rate in a fair value hedge and also provide relief for assessing hedge effectiveness for cash flow
hedges. ASU 2020-04 was effective upon issuance; however, the guidance was originally only available generally
through December 31, 2022. Based upon amendments provided in ASU 2022-06 discussed below, provisions of ASU
2020-04 can now generally be applied through December 31, 2024. The application of ASU 2020-04 has not had, and
is not expected to have, a material impact on the Company’s consolidated financial statements.
In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. ASU 2021-01 clarifies
that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to
derivatives that are affected by the discounting transition. ASU 2021-01 also amends the expedients and exceptions in
ASC 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to
derivative instruments affected by the discounting transition. ASU 2021-01 was effective upon issuance; however, the
guidance was originally only available generally through December 31, 2022. Based upon amendments provided in
ASU 2022-06 discussed below, provisions of ASU 2021-01 can now generally be applied through December 31,
2024. ASU 2021-01 has not had, and is not expected to have, a material impact on the Company’s consolidated
financial statements.
In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging –
Portfolio Layer Method. ASU 2022-01 further clarifies certain targeted improvements to the optional hedge
accounting model that were made under ASU 2017-12. ASU 2022-01 expands the last-of-layer method and renames
this method to portfolio layer method to reflect this expansion, as well as expanding the scope of the portfolio layer
method to include nonprepayable financial assets. It also specifies eligible hedging instruments and provides additional
guidance on the accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer
method. ASU 2022-01 permits an entity to apply the same portfolio hedging method to both prepayable and
nonprepayable financial assets, thereby allowing consistent accounting for similar hedges. ASU 2022-01 became
effective for the Company on January 1, 2023. The adoption of ASU 2022-01 did not have a material impact on the
Company’s consolidated financial statements.
In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt
Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the troubled debt restructuring recognition and
measurement guidance and, instead, requires that an entity evaluate whether a loan modification represents a new loan
or a continuation of an existing loan. It also enhances existing disclosure requirements and introduces new
requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. ASU
2022-02 became effective for the Company on January 1, 2023. The adoption of ASU 2022-02 did not have a material
impact on the Company’s consolidated financial statements. The adoption of this ASU does, however, require changes
in disclosures related to certain loan modifications.
79
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date
of Topic 848. ASU 2022-06 extends the period of time entities can utilize the reference rate reform relief guidance
provided by ASU 2020-04 and ASU 2021-01, which are discussed above. ASU 2022-06 was effective upon issuance
and defers the sunset date of this prior guidance to December 31, 2024, after which entities will no longer be permitted
to apply the relief guidance in Topic 848. ASU 2022-06 has not had, and is not expected to have, a material impact on
the Company’s consolidated financial statements.
In March 2023, the FASB issued ASU 2023-02, Investments – Equity Method and Joint Ventures (Topic 323):
Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. ASU 2023-02 is
intended to improve the accounting and disclosures for investments in tax credit structures. ASU 2023-02 allows
entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless
of the program giving rise to the related income tax credits. Previously, this method was only available for qualifying
tax equity investments in low-income housing tax credit structures. Currently, the Company does not have a material
amount of tax credit structures, other than low-income housing tax credit structures. ASU 2023-02 became effective
for the Company on January 1, 2024. The early adoption of ASU 2023-02 did not have a material impact on the
Company’s consolidated financial statements.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures. ASU 2023-07 expands reportable segment disclosure requirements through enhanced
disclosures about significant segment expenses. ASU 2023-07 implements a new requirement to disclose significant
segment expenses regularly provided to the chief operating decision maker, expands certain annual disclosures to
interim periods, clarifies that single reportable segment entities must apply Topic 280 in its entirety and permits more
than one measure of segment profit or loss to be reported under certain conditions. ASU 2023-07 is effective for the
Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after
December 15, 2024, with early adoption permitted. The Company is evaluating the requirements of the expanded
segment disclosures but does not currently expect the additional disclosures to have a material impact on the
Company’s consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax
Disclosures. ASU 2023-09 is focused on additional income tax disclosures and requires public business entities, on an
annual basis, to disclose specific categories in the rate reconciliation and provide additional information for reconciling
items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of
the amount computed by multiplying pretax income by the applicable statutory income tax rate). ASU 2023-09 is
effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15,
2024, with early adoption permitted. While the Company is currently assessing the impact applying this standard will
have on its income tax disclosures, the adoption of ASU 2023-09 is currently not expected to have a material impact
on the Company’s consolidated financial statements.
Correction of an Immaterial Error in Prior Period Financial Statements
Certain prior period amounts in the Consolidated Statements of Cash Flows have been corrected as discussed
below. No other financial statements or notes thereto were impacted by these corrections.
The Company has corrected its 2022 and 2021 Consolidated Statements of Cash Flows presentation for an error in
classification within the operating activities section of the statements of cash flows regarding amortization of
terminated hedging transactions and for an error in classification regarding investments in tax credit partnerships
between the operating activities and investing activities sections of the statements of cash flows.
For the item related to the terminated hedging transactions, the Company is now including the amortization from
accumulated other comprehensive income and related deferred taxes recognized in interest income as an item not
providing cash in accretion of deferred income, premiums, discounts and other. This was previously included in
net changes in prepaid expenses and other assets. For the item related to investments in tax credit partnerships, the
80
Company is now including the amounts invested as an item using cash in the investing activities section. This was
previously included in net changes in prepaid expenses and other assets in the operating activities section.
The Company assessed the materiality of this change in presentation on prior period consolidated financial
statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” (ASC Topic 250, Accounting
Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections
in its statements of cash flows are not material to any previously presented financial statements. The corrections
had no impact on the Consolidated Statements of Financial Condition, Consolidated Statements of Income,
Consolidated Statements of Comprehensive Income or Consolidated Statements of Stockholders’ Equity, or notes
to these financial statements, for any previously presented interim or annual financial statements. Accordingly, the
Company corrected the previously reported immaterial errors for the years ended December 31, 2022 and 2021.
A summary of corrections reflecting the prior period impacts to the Company’s Consolidated Statements of Cash
Flows are shown below (in thousands of dollars):
For the Year Ended December 31, 2022
As Previously
Presented
Net Change
As Corrected
$
(7,719)
$
(8,123)
$
(24,248)
66,580
26,389
18,266
(15,842)
2,141
84,846
—
(801,280)
(18,266)
(18,266)
(18,266)
(819,546)
For the Year Ended December 31, 2021
As Previously
Presented
Net Change
As Corrected
$
(10,262)
$
(8,123)
$
3,257
84,976
—
190,713
16,889
8,766
(8,766)
(8,766)
(18,385)
20,146
93,742
(8,766)
181,947
Operating Activities
Accretion of deferred income, premiums,
discounts and other
Prepaid expenses and other assets
Net cash provided by operating activities
Investing Activities
Investment in tax credit partnerships
Net cash used in investing activities
Operating Activities
Accretion of deferred income, premiums,
discounts and other
Prepaid expenses and other assets
Net cash provided by operating activities
Investing Activities
Investment in tax credit partnerships
Net cash provided by investing activities
Reclassifications
presentation.
Prior period consolidated financial statements are reclassified whenever necessary to conform to the current period
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Company is now including the amounts invested as an item using cash in the investing activities section. This was
previously included in net changes in prepaid expenses and other assets in the operating activities section.
The Company assessed the materiality of this change in presentation on prior period consolidated financial
statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” (ASC Topic 250, Accounting
Changes and Error Corrections). Based on this assessment, the Company concluded that these error corrections
in its statements of cash flows are not material to any previously presented financial statements. The corrections
had no impact on the Consolidated Statements of Financial Condition, Consolidated Statements of Income,
Consolidated Statements of Comprehensive Income or Consolidated Statements of Stockholders’ Equity, or notes
to these financial statements, for any previously presented interim or annual financial statements. Accordingly, the
Company corrected the previously reported immaterial errors for the years ended December 31, 2022 and 2021.
A summary of corrections reflecting the prior period impacts to the Company’s Consolidated Statements of Cash
Flows are shown below (in thousands of dollars):
Operating Activities
Accretion of deferred income, premiums,
discounts and other
Prepaid expenses and other assets
Net cash provided by operating activities
Investing Activities
Investment in tax credit partnerships
Net cash used in investing activities
Operating Activities
Accretion of deferred income, premiums,
discounts and other
Prepaid expenses and other assets
Net cash provided by operating activities
Investing Activities
For the Year Ended December 31, 2022
As Previously
Presented
Net Change
As Corrected
$
$
(7,719)
(24,248)
66,580
$
(8,123)
26,389
18,266
(15,842)
2,141
84,846
—
(801,280)
(18,266)
(18,266)
(18,266)
(819,546)
For the Year Ended December 31, 2021
As Previously
Presented
Net Change
As Corrected
$
$
(10,262)
3,257
84,976
$
(8,123)
16,889
8,766
(18,385)
20,146
93,742
Investment in tax credit partnerships
Net cash provided by investing activities
—
190,713
(8,766)
(8,766)
(8,766)
181,947
Reclassifications
Prior period consolidated financial statements are reclassified whenever necessary to conform to the current period
presentation.
81
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Note 2: Investments in Securities
Note 2: Investments in Securities
Held-to-maturity securities (“HTM”), which include any security for which the Company has both the positive intent
Held-to-maturity securities (“HTM”), which include any security for which the Company has both the positive intent
and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of
and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of
discounts. Premiums and discounts are amortized and accreted, respectively, to interest income over the security’s
discounts. Premiums and discounts are amortized and accreted, respectively, to interest income over the security’s
estimated life. Prepayments are anticipated for certain mortgage-backed securities. Premiums on callable securities are
estimated life. Prepayments are anticipated for certain mortgage-backed securities. Premiums on callable securities are
amortized to their earliest call date.
amortized to their earliest call date.
Available-for-sale securities (“AFS”), which include any security for which the Company has no immediate plan to
Available-for-sale securities (“AFS”), which include any security for which the Company has no immediate plan to
sell but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically
sell but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically
identified amortized cost of the individual security, are included in non-interest income. Unrealized gains and losses
identified amortized cost of the individual security, are included in non-interest income. Unrealized gains and losses
are recorded, net of related income tax effects, in stockholders’ equity. Premiums and discounts are amortized and
are recorded, net of related income tax effects, in stockholders’ equity. Premiums and discounts are amortized and
accreted, respectively, to interest income over the estimated life of the security. Prepayments are anticipated for certain
accreted, respectively, to interest income over the estimated life of the security. Prepayments are anticipated for certain
mortgage-backed and Small Business Administration (SBA) securities. Premiums on callable securities are amortized
mortgage-backed and Small Business Administration (SBA) securities. Premiums on callable securities are amortized
to their earliest call date.
to their earliest call date.
During the three months ended March 31, 2022, the Company transferred, at fair value, $226.5 million of
During the three months ended March 31, 2022, the Company transferred, at fair value, $226.5 million of
securities from the available-for-sale portfolio to the held-to-maturity portfolio. The related net unrealized gross
securities from the available-for-sale portfolio to the held-to-maturity portfolio. The related net unrealized gross
gains were $1.0 million; $775,000 (net of income taxes) remained in accumulated other comprehensive income
gains were $1.0 million; $775,000 (net of income taxes) remained in accumulated other comprehensive income
are being amortized over the remaining life of the securities. No gains or losses on these securities were
are being amortized over the remaining life of the securities. No gains or losses on these securities were
recognized at the time of transfer. As of December 31, 2023, the net unrealized gross losses remaining were
recognized at the time of transfer. As of December 31, 2023, the net unrealized gross losses remaining were
$65,000; net of income taxes, these unrealized losses were $49,000.
$65,000; net of income taxes, these unrealized losses were $49,000.
The amortized cost and fair values of securities were as follows:
The amortized cost and fair values of securities were as follows:
Amortized
Cost
Amortized
Cost
December 31, 2023
December 31, 2023
Gross
Gross
Unrealized
Unrealized
Gains
Gains
Gross
Gross
Unrealized
Unrealized
Losses
Losses
(In Thousands)
(In Thousands)
Fair
Fair
Value
Value
AVAILABLE-FOR-SALE SECURITIES:
AVAILABLE-FOR-SALE SECURITIES:
Agency mortgage-backed securities
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Agency collateralized mortgage obligations
States and political subdivisions securities
States and political subdivisions securities
Small Business Administration securities
Small Business Administration securities
$
$
316,114
316,114
85,989
85,989
59,141
59,141
70,648
70,648
$
$
7
7
—
—
527
527
—
—
$
$
35,890
35,890
10,043
10,043
1,531
1,531
6,755
6,755
$
$
280,231
280,231
75,946
75,946
58,137
58,137
63,893
63,893
$
$
531,892
531,892
$
$
534
534
$
$
54,219
54,219
$
$
478,207
478,207
Amortized
Cost
Amortized
Cost
Fair Value
Fair Value
Adjustment
Adjustment
December 31, 2023
December 31, 2023
Gross
Gross
Unrealized
Unrealized
Gains
Gains
Amortized
Amortized
Cost
Cost
(In Thousands)
(In Thousands)
Gross
Gross
Unrealized
Unrealized
Losses
Losses
Fair
Fair
Value
Value
HELD-TO-MATURITY SECURITIES:
HELD-TO-MATURITY SECURITIES:
Agency mortgage-backed securities
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Agency collateralized mortgage obligations
States and political subdivisions securities
States and political subdivisions securities
$ 72,495
$ 72,495
116,405
116,405
6,188
6,188
$
$
2,436
2,436
(2,502)
(2,502)
1
1
$ 74,931
$ 74,931
113,903
113,903
6,189
6,189
$
$
—
—
—
—
—
—
$ 8,686
$ 8,686
14,662
14,662
482
482
$ 66,245
$ 66,245
99,241
99,241
5,707
5,707
$ 195,088
$ 195,088
$
$
(65)
(65)
$ 195,023
$ 195,023
$
$
$ 23,830
$ 23,830
$ 171,193
$ 171,193
82
December 31, 2022
December 31, 2022
Gross
Gross
Gross
Gross
Amortized
Amortized
Unrealized
Unrealized
Unrealized
Unrealized
Cost
Cost
Gains
Gains
Losses
Losses
Fair
Fair
Value
Value
(In Thousands)
(In Thousands)
AVAILABLE-FOR-SALE SECURITIES:
AVAILABLE-FOR-SALE SECURITIES:
Agency mortgage-backed securities
Agency mortgage-backed securities
$
$
327,266
327,266
$
$
$
$
40,784
40,784
$
$
286,482
286,482
Agency collateralized mortgage obligations
Agency collateralized mortgage obligations
States and political subdivisions securities
States and political subdivisions securities
Small Business Administration securities
Small Business Administration securities
90,205
90,205
60,667
60,667
75,076
75,076
—
—
—
—
119
119
—
—
11,731
11,731
3,291
3,291
6,935
6,935
78,474
78,474
57,495
57,495
68,141
68,141
$
$
553,214
553,214
$
$
119
119
$
$
62,741
62,741
$ 490,592
$ 490,592
December 31, 2022
December 31, 2022
Gross
Gross
Gross
Gross
Amortized
Amortized
Fair Value
Fair Value
Amortized Unrealized
Amortized Unrealized
Unrealized
Unrealized
Cost
Cost
Adjustment
Adjustment
Cost
Cost
Gains
Gains
Losses
Losses
Fair
Fair
Value
Value
(In Thousands)
(In Thousands)
HELD-TO-MATURITY SECURITIES:
HELD-TO-MATURITY SECURITIES:
Agency mortgage-backed securities
Agency mortgage-backed securities
$ 73,891
$ 73,891
$
$
3,015
3,015
$ 76,906
$ 76,906
$
$
Agency collateralized mortgage obligations 122,247
Agency collateralized mortgage obligations 122,247
States and political subdivisions securities
States and political subdivisions securities
6,239
6,239
(2,885) 119,362
(2,885) 119,362
(12)
(12)
6,227
6,227
—
—
—
—
—
—
$ 9,820
$ 9,820
$ 67,086
$ 67,086
14,129
14,129
105,233
105,233
781
781
5,446
5,446
$ 202,377
$ 202,377
$
$
118
118
$ 202,495
$ 202,495
$
$
$ 24,730
$ 24,730
$ 177,765
$ 177,765
At December 31, 2023, the Company’s available-for-sale agency mortgage-backed securities portfolio consisted
At December 31, 2023, the Company’s available-for-sale agency mortgage-backed securities portfolio consisted
of FNMA securities totaling $190.9 million, FHLMC securities totaling $86.4 million and GNMA securities
of FNMA securities totaling $190.9 million, FHLMC securities totaling $86.4 million and GNMA securities
totaling $2.9 million. At December 31, 2022, available-for-sale agency mortgage-backed securities portfolio
totaling $2.9 million. At December 31, 2022, available-for-sale agency mortgage-backed securities portfolio
consisted of FNMA securities totaling $196.4 million, FHLMC securities totaling $90.1 million and GNMA
consisted of FNMA securities totaling $196.4 million, FHLMC securities totaling $90.1 million and GNMA
securities totaling $78.5 million. At December 31, 2023 and 2022, all of the Company’s agency mortgage-backed
securities totaling $78.5 million. At December 31, 2023 and 2022, all of the Company’s agency mortgage-backed
securities totaled $280.2 million and $286.5 million, respectively, and had fixed rates of interest.
securities totaled $280.2 million and $286.5 million, respectively, and had fixed rates of interest.
At December 31, 2023, the Company’s available-for-sale agency collateralized mortgage-backed securities
At December 31, 2023, the Company’s available-for-sale agency collateralized mortgage-backed securities
portfolio consisted of FNMA securities totaling $4.1 million, FHLMC securities totaling $66.5 million and
portfolio consisted of FNMA securities totaling $4.1 million, FHLMC securities totaling $66.5 million and
GNMA securities totaling $5.3 million. At December 31, 2022, available-for-sale agency collateralized mortgage-
GNMA securities totaling $5.3 million. At December 31, 2022, available-for-sale agency collateralized mortgage-
backed securities portfolio consisted of FNMA securities totaling $3.9 million, FHLMC securities totaling $67.8
backed securities portfolio consisted of FNMA securities totaling $3.9 million, FHLMC securities totaling $67.8
million and GNMA securities totaling $6.7 million. At December 31, 2023 and 2022, all of the Company’s
million and GNMA securities totaling $6.7 million. At December 31, 2023 and 2022, all of the Company’s
agency collateralized mortgage-backed securities totaled $75.9 million and $78.4 million, respectively, and had
agency collateralized mortgage-backed securities totaled $75.9 million and $78.4 million, respectively, and had
fixed rates of interest.
fixed rates of interest.
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Amortized
Cost
Amortized
Cost
December 31, 2022
December 31, 2022
Gross
Gross
Unrealized
Unrealized
Gains
Gains
Gross
Gross
Unrealized
Unrealized
Losses
Losses
(In Thousands)
(In Thousands)
Fair
Fair
Value
Value
AVAILABLE-FOR-SALE SECURITIES:
AVAILABLE-FOR-SALE SECURITIES:
Agency mortgage-backed securities
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Agency collateralized mortgage obligations
States and political subdivisions securities
States and political subdivisions securities
Small Business Administration securities
Small Business Administration securities
$
$
327,266
327,266
90,205
90,205
60,667
60,667
75,076
75,076
$
$
$
$
—
—
—
—
119
119
—
—
$
$
40,784
40,784
11,731
11,731
3,291
3,291
6,935
6,935
286,482
286,482
78,474
78,474
57,495
57,495
68,141
68,141
$
$
553,214
553,214
$
$
119
119
$
$
62,741
62,741
$ 490,592
$ 490,592
Amortized
Cost
Amortized
Cost
Fair Value
Fair Value
Adjustment
Adjustment
December 31, 2022
December 31, 2022
Gross
Gross
Amortized Unrealized
Amortized Unrealized
Cost
Cost
(In Thousands)
(In Thousands)
Gains
Gains
Gross
Gross
Unrealized
Unrealized
Losses
Losses
Fair
Fair
Value
Value
HELD-TO-MATURITY SECURITIES:
HELD-TO-MATURITY SECURITIES:
$ 73,891
$ 73,891
Agency mortgage-backed securities
Agency mortgage-backed securities
Agency collateralized mortgage obligations 122,247
Agency collateralized mortgage obligations 122,247
6,239
6,239
States and political subdivisions securities
States and political subdivisions securities
$
$
$ 76,906
$ 76,906
3,015
3,015
(2,885) 119,362
(2,885) 119,362
6,227
6,227
(12)
(12)
$
$
—
—
—
—
—
—
$ 9,820
$ 9,820
14,129
14,129
781
781
$ 67,086
$ 67,086
105,233
105,233
5,446
5,446
$ 202,377
$ 202,377
$
$
118
118
$ 202,495
$ 202,495
$
$
$ 24,730
$ 24,730
$ 177,765
$ 177,765
At December 31, 2023, the Company’s available-for-sale agency mortgage-backed securities portfolio consisted
At December 31, 2023, the Company’s available-for-sale agency mortgage-backed securities portfolio consisted
of FNMA securities totaling $190.9 million, FHLMC securities totaling $86.4 million and GNMA securities
of FNMA securities totaling $190.9 million, FHLMC securities totaling $86.4 million and GNMA securities
totaling $2.9 million. At December 31, 2022, available-for-sale agency mortgage-backed securities portfolio
totaling $2.9 million. At December 31, 2022, available-for-sale agency mortgage-backed securities portfolio
consisted of FNMA securities totaling $196.4 million, FHLMC securities totaling $90.1 million and GNMA
consisted of FNMA securities totaling $196.4 million, FHLMC securities totaling $90.1 million and GNMA
securities totaling $78.5 million. At December 31, 2023 and 2022, all of the Company’s agency mortgage-backed
securities totaling $78.5 million. At December 31, 2023 and 2022, all of the Company’s agency mortgage-backed
securities totaled $280.2 million and $286.5 million, respectively, and had fixed rates of interest.
securities totaled $280.2 million and $286.5 million, respectively, and had fixed rates of interest.
At December 31, 2023, the Company’s available-for-sale agency collateralized mortgage-backed securities
At December 31, 2023, the Company’s available-for-sale agency collateralized mortgage-backed securities
portfolio consisted of FNMA securities totaling $4.1 million, FHLMC securities totaling $66.5 million and
portfolio consisted of FNMA securities totaling $4.1 million, FHLMC securities totaling $66.5 million and
GNMA securities totaling $5.3 million. At December 31, 2022, available-for-sale agency collateralized mortgage-
GNMA securities totaling $5.3 million. At December 31, 2022, available-for-sale agency collateralized mortgage-
backed securities portfolio consisted of FNMA securities totaling $3.9 million, FHLMC securities totaling $67.8
backed securities portfolio consisted of FNMA securities totaling $3.9 million, FHLMC securities totaling $67.8
million and GNMA securities totaling $6.7 million. At December 31, 2023 and 2022, all of the Company’s
million and GNMA securities totaling $6.7 million. At December 31, 2023 and 2022, all of the Company’s
agency collateralized mortgage-backed securities totaled $75.9 million and $78.4 million, respectively, and had
agency collateralized mortgage-backed securities totaled $75.9 million and $78.4 million, respectively, and had
fixed rates of interest.
fixed rates of interest.
83
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The amortized cost and fair value of available-for-sale and held-to-maturity securities at December 31, 2023, by
contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers
may have the right to call or prepay obligations with or without call or prepayment penalties.
Based on evaluation of available evidence, including recent changes in market interest rates, credit rating
information and information obtained from regulatory filings, management believes the declines in fair value for
these available-for-sale debt securities are not credit related.
The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment
category and length of time that individual securities have been in a continuous unrealized loss position at
December 31, 2023 and 2022:
Less than 12 Months
12 Months or More
Total
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
2023
(In Thousands)
securities
$
4,318
$
(9)
$ 274,801
$ (35,881)
$ 279,119
$
(35,890)
(216)
66,866
(9,827)
75,946
(10,043)
(133)
56,111
(6,622)
63,893
(6,755)
—
37,969
(1,531)
37,969
(1,531)
$ 21,180
$
(358)
$ 435,747
$ (53,861)
$ 456,927
$
(54,219)
Description of Securities
AVAILABLE-FOR-SALE
SECURITIES:
Agency mortgage-backed
Agency collateralized
mortgage obligations
Small Business
Administration securities
States and political
subdivisions securities
HELD-TO-MATURITY
SECURITIES:
Agency mortgage-backed
securities
Agency collateralized
mortgage obligations
States and political
subdivisions securities
9,080
7,782
—
—
—
—
$
$
—
$ 66,245
$ (8,686)
$ 66,245
$
(8,686)
—
—
99,241
(14,662)
99,241
(14,662)
5,707
(482)
5,707
(482)
$
—
$
—
$ 171,193
$ (23,830)
$ 171,193
$
(23,830)
Available-for-Sale
Held-to-Maturity
Amortized
Cost
Fair
Value
Amortized
Carrying Value
Fair
Value
(In Thousands)
$
One year or less
After one through two years
After two through three years
After three through four years
After four through five years
After five through fifteen years
After fifteen years
Securities not due on a single maturity date
—
—
—
245
952
9,682
48,262
472,751
$
—
—
—
245
981
9,634
47,277
420,070
$
—
—
—
—
—
3,247
2,942
188,834
$
—
—
—
—
—
2,986
2,721
165,486
$
531,892
$
478,207
$
195,023
$
171,193
The amortized cost and fair values of securities pledged as collateral were as follows at December 31, 2023
and 2022:
2023
2022
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
(In Thousands)
Public deposits
Collateralized borrowing accounts
Other
$
17,412
123,220
3,815
$
15,225
109,660
3,507
$
15,402
210,330
4,018
$
13,489
186,170
3,764
$
144,447
$
128,392
$
229,750
$
203,423
Available-for-sale investments in debt securities are reported in the financial statements at their fair value, which
was $478.2 million and $490.6 million at December 31, 2023 and 2022, respectively. Total fair value of these
investments for which the amortized cost exceeded the fair value at December 31, 2023 and 2022, was $456.9
million and $472.0 million, respectively, which is approximately 95.5% and 96.2%, respectively, of the
Company’s available-for-sale investment portfolio. A high percentage of the unrealized losses were related to the
Company’s mortgage-backed securities, collateralized mortgage obligations and Small Business Administration
(SBA) securities, which are issued and guaranteed by U.S. government-sponsored entities and agencies. The
Company’s state and political subdivisions securities are investments in insured fixed rate municipal bonds for
which the issuers continue to make timely principal and interest payments under the contractual terms of the
securities. Held-to-maturity investments in debt securities are reported in the financial statements at their
amortized cost, which was $195.0 million and $202.5 million at December 31, 2023 and 2022, respectively. Total
fair value of these investments at December 31, 2023 and 2022 was approximately $171.2 million and $177.8
million, respectively. Total fair value of these investments for which the amortized cost exceeded the fair value at
December 31, 2023 and 2022, was $171.2 million and $177.8 million, which is 100.0% of the Company’s held-to-
maturity investment portfolio. Held-to-maturity investment securities are evaluated for potential losses under ASU
2016-13.
84
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Based on evaluation of available evidence, including recent changes in market interest rates, credit rating
information and information obtained from regulatory filings, management believes the declines in fair value for
these available-for-sale debt securities are not credit related.
The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment
category and length of time that individual securities have been in a continuous unrealized loss position at
December 31, 2023 and 2022:
Less than 12 Months
Fair
Value
Unrealized
Losses
2023
12 Months or More
Fair
Value
Unrealized
Losses
(In Thousands)
Total
Fair
Value
Unrealized
Losses
Description of Securities
AVAILABLE-FOR-SALE
SECURITIES:
Agency mortgage-backed
securities
$
4,318
$
(9)
$ 274,801
$ (35,881)
$ 279,119
$
(35,890)
Agency collateralized
mortgage obligations
Small Business
Administration securities
States and political
subdivisions securities
9,080
7,782
—
(216)
66,866
(9,827)
75,946
(10,043)
(133)
56,111
(6,622)
63,893
(6,755)
—
37,969
(1,531)
37,969
(1,531)
$ 21,180
$
(358)
$ 435,747
$ (53,861)
$ 456,927
$
(54,219)
HELD-TO-MATURITY
SECURITIES:
Agency mortgage-backed
securities
Agency collateralized
mortgage obligations
States and political
subdivisions securities
$
—
—
—
$
—
$ 66,245
$ (8,686)
$ 66,245
$
(8,686)
—
—
99,241
(14,662)
99,241
(14,662)
5,707
(482)
5,707
(482)
$
—
$
—
$ 171,193
$ (23,830)
$ 171,193
$
(23,830)
85
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Note 3: Loans and Allowance for Credit Losses
The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments, effective January 1, 2021. The guidance replaces the incurred loss methodology
with an expected loss methodology that is referred to as the CECL methodology. The measurement of expected
credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including
loan receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance, including
loan commitments, standby letters of credits, financial guarantees, and other similar instruments. The Company
adopted ASC 326 using the modified retrospective method for loans and off-balance sheet credit exposures. The
Company recorded a one-time cumulative-effect adjustment to the allowance for credit losses on loans of $11.6
million. This adjustment brought the balance of the allowance for credit losses on loans to $67.3 million as of
January 1, 2021. In addition, the Company recorded an $8.7 million liability for unfunded commitments as of
January 1, 2021. The after-tax effect decreased retained earnings by $14.2 million. The adjustment was based
upon the Company’s analysis of then-current conditions, assumptions and economic forecasts at January 1, 2021.
Classes of loans at December 31, 2023 and 2022, included:
One- to four-family residential construction
$
$
Owner occupied one- to four-family residential
Non-owner occupied one- to four-family residential
1,521,032
1,530,663
Subdivision construction
Land development
Commercial construction
Commercial real estate
Other residential
Commercial business
Industrial revenue bonds
Consumer auto
Consumer other
Home equity lines of credit
Allowance for credit losses
Deferred loan fees and gains, net
2023
2022
(In Thousands)
29,628
23,359
48,015
703,407
769,260
121,275
942,071
318,050
12,047
28,343
28,978
33,849
32,067
41,613
757,690
778,533
124,870
781,761
293,228
12,852
37,281
33,732
123,242
115,883
4,661,348
(64,670)
(7,058)
4,581,381
(63,480)
(11,065)
$
4,589,620
$
4,506,836
Description of Securities
AVAILABLE-FOR-SALE
SECURITIES:
Agency mortgage-backed
securities
Agency collateralized
mortgage obligations
Small Business
Less than 12 Months
Fair
Value
Unrealized
Losses
2022
12 Months or More
Fair
Value
Unrealized
Losses
(In Thousands)
Total
Fair
Value
Unrealized
Losses
$ 221,562
$ (27,597)
$ 64,918
$ (13,187)
$ 286,480
$ (40,784)
28,537
(3,262)
40,642
(8,469)
69,179
(11,731)
Administration securities
60,473
(5,224)
States and political
subdivisions securities
44,455
(2,913)
7,667
3,753
(1,711)
68,140
(6,935)
(378)
48,208
(3,291)
$ 355,027
$ (38,996)
$ 116,980
$ (23,745)
$ 472,007
$ (62,741)
HELD-TO-MATURITY
SECURITIES:
Agency mortgage-backed
securities
Agency collateralized
mortgage obligations
States and political
subdivisions securities
$ 59,218
$
(7,766)
$ 7,868
$ (2,054)
$ 67,086
$
(9,820)
61,055
(6,411)
44,178
(7,718)
105,233
(14,129)
900
(101)
4,546
(680)
5,446
(781)
$ 121,173
$ (14,278)
$ 56,592
$ (10,452)
$ 177,765
$ (24,730)
Allowance for Credit Losses
On January 1, 2021, the Company began evaluating all securities quarterly to determine if any securities in a loss
position require a provision for credit losses in accordance with ASC 326, Measurement of Credit Losses on
Financial Instruments. All of the mortgage-backed, collateralized mortgage, and SBA securities held by the
Company are issued by U.S. government-sponsored entities and agencies. These securities are either explicitly or
implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of
no credit losses. Likewise, the Company has not experienced historical losses on these types of securities.
Accordingly, no allowance for credit losses has been recorded for these securities.
Regarding securities issued by state and political subdivisions, management considers the following when
evaluating these securities: (i) current issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii)
whether issuers continue to make timely principal and interest payments under the contractual terms of the
securities, (iv) updated financial information of the issuer, (v) internal forecasts and (vi) whether such securities
provide insurance or other credit enhancement or are pre-refunded by the issuers. These securities are highly rated
by major rating agencies and have a long history of no credit losses. Likewise, the Company has not experienced
historical losses on these types of securities. Accordingly, no allowance for credit losses has been recorded for
these securities.
86
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Note 3: Loans and Allowance for Credit Losses
The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments, effective January 1, 2021. The guidance replaces the incurred loss methodology
with an expected loss methodology that is referred to as the CECL methodology. The measurement of expected
credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including
loan receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance, including
loan commitments, standby letters of credits, financial guarantees, and other similar instruments. The Company
adopted ASC 326 using the modified retrospective method for loans and off-balance sheet credit exposures. The
Company recorded a one-time cumulative-effect adjustment to the allowance for credit losses on loans of $11.6
million. This adjustment brought the balance of the allowance for credit losses on loans to $67.3 million as of
January 1, 2021. In addition, the Company recorded an $8.7 million liability for unfunded commitments as of
January 1, 2021. The after-tax effect decreased retained earnings by $14.2 million. The adjustment was based
upon the Company’s analysis of then-current conditions, assumptions and economic forecasts at January 1, 2021.
Classes of loans at December 31, 2023 and 2022, included:
2023
2022
(In Thousands)
$
33,849
32,067
41,613
757,690
778,533
124,870
1,530,663
781,761
293,228
12,852
37,281
33,732
123,242
4,581,381
(63,480)
(11,065)
4,506,836
$
$
29,628
23,359
48,015
703,407
769,260
121,275
1,521,032
942,071
318,050
12,047
28,343
28,978
115,883
4,661,348
(64,670)
(7,058)
4,589,620
$
One- to four-family residential construction
Subdivision construction
Land development
Commercial construction
Owner occupied one- to four-family residential
Non-owner occupied one- to four-family residential
Commercial real estate
Other residential
Commercial business
Industrial revenue bonds
Consumer auto
Consumer other
Home equity lines of credit
Allowance for credit losses
Deferred loan fees and gains, net
87
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2022
30-59 Days 60-89 Days
Days
Total Past
Over 90
Past Due Past Due Past Due
Due
Current Receivable Still Accruing
(In Thousands)
Total
Loans
Total Loans
> 90 Days Past
Due and
$
$
$
$
—
$
33,849 $
33,849 $
2,568
—
—
—
—
—
196
—
8
—
100
288
234
—
—
—
—
462
63
—
—
—
—
34
114
38
—
—
384
—
722
—
—
586
—
14
111
274
—
384
—
32,067
41,229
32,067
41,613
757,690
757,690
3,752
774,781
778,533
1,579
1,775
1,528,888
1,530,663
63
124,807
124,870
—
594
—
148
513
546
781,761
781,761
292,634
293,228
12,852
37,133
33,219
12,852
37,281
33,732
122,696
123,242
—
—
—
—
—
—
—
—
—
—
—
—
—
—
One- to four-family
residential construction
Subdivision construction
Land development
Commercial construction
Owner occupied one- to four-
family residential
Non-owner occupied one- to
four-family residential
Commercial real estate
Other residential
Commercial business
Industrial revenue bonds
Consumer auto
Consumer other
Home equity lines of credit
Total
$
3,394
$
711
$ 3,670
$
7,775
$ 4,573,606 $ 4,581,381 $
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Classes of loans by aging were as follows as of the dates indicated:
Classes of loans by aging were as follows as of the dates indicated:
December 31, 2023
December 31, 2023
30-59 Days 60-89 Days
30-59 Days 60-89 Days
Past Due Past Due Past Due
Past Due Past Due Past Due
Over 90
Over 90
Days
Days
Total Past
Total Past
Due
Due
Total Loans
Total Loans
> 90 Days Past
Total
> 90 Days Past
Total
Due and
Loans
Due and
Loans
Current Receivable Still Accruing
Current Receivable Still Accruing
One- to four-family
One- to four-family
residential construction
residential construction
Subdivision construction
Subdivision construction
Land development
Land development
Commercial construction
Commercial construction
Owner occupied one- to four-
Owner occupied one- to four-
family residential
family residential
Non-owner occupied one- to
Non-owner occupied one- to
four-family residential
four-family residential
Commercial real estate
Commercial real estate
Other residential
Other residential
Commercial business
Commercial business
Industrial revenue bonds
Industrial revenue bonds
Consumer auto
Consumer auto
Consumer other
Consumer other
Home equity lines of credit
Home equity lines of credit
Total
Total
$
$
$
$
—
—
—
—
—
—
—
—
$
$
—
—
—
—
—
—
—
—
2,778
2,778
125
125
—
—
—
—
384
384
—
—
722
722
—
—
187
187
9,572
9,572
—
—
—
—
116
116
137
137
335
335
—
92
—
—
—
65
—
26
—
92
—
—
—
65
—
26
—
—
10,552
10,552
—
—
31
31
—
—
8
8
42
42
9
9
(In Thousands)
(In Thousands)
$
$
$
$
—
—
—
—
384
384
—
—
29,628 $
29,628 $
23,359
23,359
47,631
47,631
703,407
703,407
29,628 $
29,628 $
23,359
23,359
48,015
48,015
703,407
703,407
3,625
3,625
—
—
10,831
10,831
9,572
9,572
31
31
—
—
189
189
179
179
370
370
765,635
765,635
769,260
769,260
121,275
121,275
1,510,201
1,510,201
932,499
932,499
318,019
318,019
12,047
12,047
28,154
28,154
28,799
28,799
115,513
115,513
121,275
121,275
1,521,032
1,521,032
942,071
942,071
318,050
318,050
12,047
12,047
28,343
28,343
28,978
28,978
115,883
115,883
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$ 13,125
$ 13,125
$
$
308
308
$ 11,748
$ 11,748
$ 25,181
$ 25,181
$ 4,636,167 $ 4,661,348 $
$ 4,636,167 $ 4,661,348 $
—
—
88
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
December 31, 2022
December 31, 2022
30-59 Days 60-89 Days
30-59 Days 60-89 Days
Past Due Past Due Past Due
Past Due Past Due Past Due
Over 90
Over 90
Days
Days
Total Past
Total Past
Due
Due
Total Loans
Total Loans
> 90 Days Past
Total
> 90 Days Past
Total
Due and
Loans
Loans
Due and
Current Receivable Still Accruing
Current Receivable Still Accruing
One- to four-family
One- to four-family
residential construction
residential construction
Subdivision construction
Subdivision construction
Land development
Land development
Commercial construction
Commercial construction
Owner occupied one- to four-
Owner occupied one- to four-
family residential
family residential
Non-owner occupied one- to
Non-owner occupied one- to
four-family residential
four-family residential
Commercial real estate
Commercial real estate
Other residential
Other residential
Commercial business
Commercial business
Industrial revenue bonds
Industrial revenue bonds
Consumer auto
Consumer auto
Consumer other
Consumer other
Home equity lines of credit
Home equity lines of credit
$
$
$
$
—
—
—
—
—
—
—
—
$
$
—
—
—
—
—
—
—
—
2,568
2,568
462
462
—
—
—
—
384
384
—
—
722
722
—
196
—
8
—
100
288
234
—
196
—
8
—
100
288
234
63
63
—
—
—
—
—
—
—
—
34
34
114
114
38
38
—
—
1,579
1,579
—
—
586
586
—
—
14
14
111
111
274
274
(In Thousands)
(In Thousands)
$
$
$
$
—
—
—
—
384
384
—
—
33,849 $
33,849 $
32,067
32,067
41,229
41,229
757,690
757,690
33,849 $
33,849 $
32,067
32,067
41,613
41,613
757,690
757,690
3,752
3,752
63
63
1,775
1,775
—
—
594
594
—
—
148
148
513
513
546
546
774,781
774,781
778,533
778,533
124,807
124,807
1,528,888
1,528,888
781,761
781,761
292,634
292,634
12,852
12,852
37,133
37,133
33,219
33,219
122,696
122,696
124,870
124,870
1,530,663
1,530,663
781,761
781,761
293,228
293,228
12,852
12,852
37,281
37,281
33,732
33,732
123,242
123,242
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
Total
$
$
3,394
3,394
$
$
711
711
$ 3,670
$ 3,670
$
$
7,775
7,775
$ 4,573,606 $ 4,581,381 $
$ 4,573,606 $ 4,581,381 $
—
—
89
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Loans are placed on nonaccrual status at 90 days past due and interest is considered a loss unless the loan is well
secured and in the process of collection. Payments received on nonaccrual loans are applied to principal until the
loans are returned to accrual status. Loans are returned to accrual status when all payments contractually due are
brought current, payment performance is sustained for a period of time, generally six months, and future payments
are reasonably assured. With the exception of consumer loans, charge-offs on loans are recorded when available
information indicates a loan is not fully collectible and the loss is reasonably quantifiable. Consumer loans are
charged-off at specified delinquency dates consistent with regulatory guidelines.
Non-accruing loans are summarized as follows:
December 31,
2023
2022
(In Thousands)
$
One- to four-family residential construction
Subdivision construction
Land development
Commercial construction
Owner occupied one- to four-family residential
Non-owner occupied one- to four-family residential
Commercial real estate
Other residential
Commercial business
Industrial revenue bonds
Consumer auto
Consumer other
Home equity lines of credit
$
—
—
384
—
722
—
10,552
—
31
—
8
42
9
—
—
384
—
722
—
1,579
—
586
—
14
111
274
Total non-accruing loans
$
11,748
$
3,670
No interest income was recorded on these loans for the years ended December 31, 2023 and 2022, respectively.
Nonaccrual loans for which there is no related allowance for credit losses as of December 31, 2023 had an amortized
cost of $792,000. These loans are individually assessed and do not require an allowance due to being adequately
collateralized under the collateral-dependent valuation method. A collateral-dependent loan is a financial asset for
which the repayment is expected to be provided substantially through the operation or sale of the collateral when the
borrower is experiencing financial difficulty based on the Company’s assessment as of the reporting date. Collateral-
dependent loans are identified primarily by a classified risk rating with a loan balance equal to or greater than
$100,000, including, but not limited to, any loan in process of foreclosure or repossession.
90
The following table presents the activity in the allowance for credit losses by portfolio segment for the years
ended December 31, 2023, 2022 and 2021. On January 1, 2021, the Company adopted the CECL methodology,
which added $11.6 million to the total Allowance for Credit Loss, including $1.9 million of remaining discount on
loans that were previously accounted for as PCI.
One- to Four-
Family
Residential
December 31, 2023
and
Other
Commercial Commercial Commercial
Construction Residential Real Estate Construction Business
Consumer
Total
(In Thousands)
Balance, January 1, 2023
$
11,171
$ 12,110
$ 27,096
$
2,865
$
5,822
$
4,416
$
63,480
(1,390)
(31)
70
1,260
—
—
930
—
145
(27)
—
6
1,909
(1,037)
241
(432)
(1,754)
1,300
2,250
(2,822)
1,762
Allowance for Credit Losses
Provision (credit) charged
to expense
Losses charged off
Recoveries
Balance,
December 31, 2023
$
9,820
$ 13,370
$ 28,171
$
2,844
$
6,935
$
3,530
$
64,670
One- to Four-
Family
Residential
December 31, 2022
and
Other
Commercial Commercial Commercial
Construction Residential Real Estate Construction Business
Consumer
Total
(In Thousands)
Balance, January 1, 2022
$
9,364
$ 10,502
$
28,604
$
2,797
$
4,142
$
5,345
$
60,754
1,652
(40)
195
1,498
—
110
(1,465)
152
(44)
1
(84)
—
1,491
(51)
240
(328)
(1,950)
1,349
3,000
(2,169)
1,895
Allowance for Credit Losses
Provision (credit) charged
to expense
Losses charged off
Recoveries
Balance,
December 31, 2022
$
11,171
$ 12,110
$ 27,096
$
2,865
$
5,822
$
4,416
$
63,480
One- to Four-
Family
Residential
December 31, 2021
and
Other
Commercial Commercial Commercial
Construction Residential Real Estate Construction Business
Consumer
Total
(In Thousands)
4,536
4,533
9,069
$
9,375
5,832
$
15,207
$
33,707
(2,531)
31,176
$
3,521
(1,165)
2,356
$
2,390
1,499
3,889
$
2,214
3,427
5,641
55,743
11,595
67,338
—
(190)
485
(4,797)
(2,478)
575
—
92
(142)
48
(154)
20
—
(81)
334
—
(2,054)
1,758
(6,700)
(2,621)
2,737
Allowance for Credit Losses
Balance, December 31, 2020 $
CECL adoption
Balance, January 1, 2021
Provision (credit) charged
to expense
Losses charged off
Recoveries
Balance,
December 31, 2021
$
9,364
$ 10,502
$ 28,604
$
2,797
$
4,142
$
5,345
$
60,754
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
The following table presents the activity in the allowance for credit losses by portfolio segment for the years
The following table presents the activity in the allowance for credit losses by portfolio segment for the years
ended December 31, 2023, 2022 and 2021. On January 1, 2021, the Company adopted the CECL methodology,
ended December 31, 2023, 2022 and 2021. On January 1, 2021, the Company adopted the CECL methodology,
which added $11.6 million to the total Allowance for Credit Loss, including $1.9 million of remaining discount on
which added $11.6 million to the total Allowance for Credit Loss, including $1.9 million of remaining discount on
loans that were previously accounted for as PCI.
loans that were previously accounted for as PCI.
December 31, 2023
December 31, 2023
One- to Four-
One- to Four-
Family
Family
Residential
Residential
and
and
Other
Other
Commercial Commercial Commercial
Commercial Commercial Commercial
Construction Residential Real Estate Construction Business
Construction Residential Real Estate Construction Business
Consumer
Consumer
Total
Total
(In Thousands)
(In Thousands)
Allowance for Credit Losses
Allowance for Credit Losses
Balance, January 1, 2023
Balance, January 1, 2023
Provision (credit) charged
Provision (credit) charged
to expense
to expense
Losses charged off
Losses charged off
Recoveries
Recoveries
$
$
11,171
11,171
$ 12,110
$ 12,110
$ 27,096
$ 27,096
$
$
2,865
2,865
$
$
5,822
5,822
$
$
4,416
4,416
$
$
63,480
63,480
(1,390)
(1,390)
(31)
(31)
70
70
1,260
1,260
—
—
—
—
930
930
—
—
145
145
(27)
(27)
—
—
6
6
1,909
1,909
(1,037)
(1,037)
241
241
(432)
(432)
(1,754)
(1,754)
1,300
1,300
2,250
2,250
(2,822)
(2,822)
1,762
1,762
Balance,
December 31, 2023
Balance,
December 31, 2023
$
$
9,820
9,820
$ 13,370
$ 13,370
$ 28,171
$ 28,171
$
$
2,844
2,844
$
$
6,935
6,935
$
$
3,530
3,530
$
$
64,670
64,670
December 31, 2022
December 31, 2022
One- to Four-
One- to Four-
Family
Family
Residential
Residential
and
and
Other
Other
Commercial Commercial Commercial
Commercial Commercial Commercial
Construction Residential Real Estate Construction Business
Construction Residential Real Estate Construction Business
Consumer
Consumer
Total
Total
(In Thousands)
(In Thousands)
Allowance for Credit Losses
Allowance for Credit Losses
Balance, January 1, 2022
Balance, January 1, 2022
Provision (credit) charged
Provision (credit) charged
to expense
to expense
Losses charged off
Losses charged off
Recoveries
Recoveries
$
$
9,364
9,364
$ 10,502
$ 10,502
$
$
28,604
28,604
$
$
2,797
2,797
$
$
4,142
4,142
$
$
5,345
5,345
$
$
60,754
60,754
1,652
1,652
(40)
(40)
195
195
1,498
1,498
—
—
110
110
(1,465)
(1,465)
(44)
(44)
1
1
152
152
(84)
(84)
—
—
1,491
1,491
(51)
(51)
240
240
(328)
(328)
(1,950)
(1,950)
1,349
1,349
3,000
3,000
(2,169)
(2,169)
1,895
1,895
Balance,
December 31, 2022
Balance,
December 31, 2022
$
$
11,171
11,171
$ 12,110
$ 12,110
$ 27,096
$ 27,096
$
$
2,865
2,865
$
$
5,822
5,822
$
$
4,416
4,416
$
$
63,480
63,480
December 31, 2021
December 31, 2021
One- to Four-
One- to Four-
Family
Family
Residential
Residential
and
and
Other
Other
Commercial Commercial Commercial
Commercial Commercial Commercial
Construction Residential Real Estate Construction Business
Construction Residential Real Estate Construction Business
Consumer
Consumer
Total
Total
(In Thousands)
(In Thousands)
Allowance for Credit Losses
Allowance for Credit Losses
Balance, December 31, 2020 $
Balance, December 31, 2020 $
CECL adoption
CECL adoption
Balance, January 1, 2021
Balance, January 1, 2021
Provision (credit) charged
Provision (credit) charged
to expense
to expense
Losses charged off
Losses charged off
Recoveries
Recoveries
4,536
4,533
9,069
4,536
4,533
9,069
—
—
(190)
(190)
485
485
$
$
9,375
9,375
5,832
5,832
15,207
15,207
$
$
$
$
33,707
33,707
(2,531)
(2,531)
31,176
31,176
3,521
3,521
(1,165)
(1,165)
2,356
2,356
$
$
$
$
2,390
2,390
1,499
1,499
3,889
3,889
$
$
2,214
2,214
3,427
3,427
5,641
5,641
55,743
55,743
11,595
11,595
67,338
67,338
(4,797)
(4,797)
—
—
92
92
(2,478)
(2,478)
(142)
(142)
48
48
575
575
(154)
(154)
20
20
—
—
(81)
(81)
334
334
—
—
(2,054)
(2,054)
1,758
1,758
(6,700)
(6,700)
(2,621)
(2,621)
2,737
2,737
Balance,
December 31, 2021
Balance,
December 31, 2021
$
$
9,364
9,364
$ 10,502
$ 10,502
$ 28,604
$ 28,604
$
$
2,797
2,797
$
$
4,142
4,142
$
$
5,345
5,345
$
$
60,754
60,754
91
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The following table presents the activity in the allowance for unfunded commitments by portfolio segment for the
The following table presents the activity in the allowance for unfunded commitments by portfolio segment for the
years ended December 31, 2023, 2022 and 2021. On January 1, 2021, the Company adopted the CECL
years ended December 31, 2023, 2022 and 2021. On January 1, 2021, the Company adopted the CECL
methodology, which created an $8.7 million allowance for unfunded commitments.
methodology, which created an $8.7 million allowance for unfunded commitments.
December 31, 2023
December 31, 2023
One- to Four-
One- to Four-
Family
Family
Residential
Residential
and
and
Commercial Commercial Commercial
Commercial Commercial Commercial
Construction Residential Real Estate Construction Business
Construction Residential Real Estate Construction Business
Other
Other
Consumer
Consumer
Total
Total
classes.
Allowance for Unfunded
Commitments
Balance, January 1, 2023
Allowance for Unfunded
Commitments
Balance, January 1, 2023
Provision (credit) charged
Provision (credit) charged
to expense
to expense
(In Thousands)
(In Thousands)
$
$
736
736
$
$
8,624
8,624
$ 416
$ 416
$
$
802
802
$
$
1,734
1,734
$
$
504
504
$
$
12,816
12,816
(30)
(30)
(4,618)
(4,618)
203
203
(61)
(61)
(775)
(775)
(48)
(48)
(5,329)
(5,329)
respectively.
Balance,
December 31, 2023
Balance,
December 31, 2023
$
$
706
706
$
$
4,006
4,006
$ 619
$ 619
$
$
741
741
$
$
959
959
$
$
456
456
$
$
7,487
7,487
December 31, 2022
December 31, 2022
The portfolio segments used in the preceding tables correspond to the loan classes used in all other tables in Note 3
as follows:
The one- to four-family residential and construction segment includes the one- to four-family residential
construction, subdivision construction, owner occupied one- to four-family residential and non-owner
occupied one- to four-family residential classes.
The other residential (multi-family) segment corresponds to the other residential (multi-family) class.
The commercial real estate segment includes the commercial real estate and industrial revenue bonds
The commercial construction segment includes the land development and commercial construction classes.
The commercial business segment corresponds to the commercial business class.
The consumer segment includes the consumer auto, consumer other and home equity lines of credit classes.
The weighted average interest rate on loans receivable at December 31, 2023 and 2022, was 6.25% and 5.54%,
Loans serviced for others are not included in the accompanying consolidated statements of financial condition. The
unpaid principal balance of loans serviced for others at December 31, 2023, was $439.9 million, consisting of
$334.6 million of commercial loan participations sold to other financial institutions and $105.3 million of residential
mortgage loans sold. The unpaid principal balance of loans serviced for others at December 31, 2022, was $540.2
million, consisting of $422.3 million of commercial loan participations sold to other financial institutions and $117.9
million of residential mortgage loans sold. In addition, available lines of credit on these loans were $123.6 million
and $104.1 million at December 31, 2023 and 2022, respectively.
One- to Four-
One- to Four-
Family
Family
Residential
Residential
and
and
Commercial Commercial Commercial
Commercial Commercial Commercial
Construction Residential Real Estate Construction Business
Construction Residential Real Estate Construction Business
Other
Other
Consumer
Consumer
Total
Total
Allowance for Unfunded
Commitments
Balance, January 1, 2022
Allowance for Unfunded
Commitments
Balance, January 1, 2022
Provision (credit) charged
Provision (credit) charged
to expense
to expense
(In Thousands)
(In Thousands)
$
$
687
687
$
$
5,703
5,703
$
$
367
367
$
$
908
908
$
$
1,582
1,582
$
$
382
382
$
$
9,629
9,629
49
49
2,921
2,921
49
49
(106)
(106)
152
152
122
122
3,187
3,187
Balance,
December 31, 2022
Balance,
December 31, 2022
$
$
736
736
$
$
8,624
8,624
$ 416
$ 416
$
$
802
802
$
$
1,734
1,734
$
$
504
504
$
$
12,816
12,816
December 31, 2021
December 31, 2021
One- to Four-
One- to Four-
Family
Family
Residential
Residential
and
and
Commercial Commercial Commercial
Commercial Commercial Commercial
Construction Residential Real Estate Construction Business
Construction Residential Real Estate Construction Business
Other
Other
Consumer
Consumer
Total
Total
Allowance for Unfunded
Commitments
Allowance for Unfunded
Commitments
Balance, December 31, 2020 $
Balance, December 31, 2020 $
CECL adoption
CECL adoption
Balance, January 1, 2021
Balance, January 1, 2021
Provision (credit) charged
Provision (credit) charged
to expense
to expense
(In Thousands)
(In Thousands)
$
$
—
—
917
917
917
917
—
—
5,227
5,227
5,227
5,227
$
$
(230)
(230)
476
476
$
$
—
—
354
354
354
354
13
13
$
$
—
—
910
910
910
910
(2)
(2)
$
$
—
—
935
935
935
935
647
647
$
$
—
—
347
347
347
347
35
35
—
—
8,690
8,690
8,690
8,690
939
939
Balance,
December 31, 2021
Balance,
December 31, 2021
$
$
687
687
$
$
5,703
5,703
$ 367
$ 367
$
$
908
908
$
$
1,582
1,582
$
$
382
382
$
$
9,629
9,629
92
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The portfolio segments used in the preceding tables correspond to the loan classes used in all other tables in Note 3
as follows:
The one- to four-family residential and construction segment includes the one- to four-family residential
construction, subdivision construction, owner occupied one- to four-family residential and non-owner
occupied one- to four-family residential classes.
The other residential (multi-family) segment corresponds to the other residential (multi-family) class.
The commercial real estate segment includes the commercial real estate and industrial revenue bonds
classes.
The commercial construction segment includes the land development and commercial construction classes.
The commercial business segment corresponds to the commercial business class.
The consumer segment includes the consumer auto, consumer other and home equity lines of credit classes.
The weighted average interest rate on loans receivable at December 31, 2023 and 2022, was 6.25% and 5.54%,
respectively.
Loans serviced for others are not included in the accompanying consolidated statements of financial condition. The
unpaid principal balance of loans serviced for others at December 31, 2023, was $439.9 million, consisting of
$334.6 million of commercial loan participations sold to other financial institutions and $105.3 million of residential
mortgage loans sold. The unpaid principal balance of loans serviced for others at December 31, 2022, was $540.2
million, consisting of $422.3 million of commercial loan participations sold to other financial institutions and $117.9
million of residential mortgage loans sold. In addition, available lines of credit on these loans were $123.6 million
and $104.1 million at December 31, 2023 and 2022, respectively.
93
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The following tables present the amortized cost basis of collateral-dependent loans by class of loans at the dates
indicated:
Modified Loans
December 31, 2023
Principal
Balance
Specific
Allowance
(In Thousands)
$
$
One- to four-family residential construction
Subdivision construction
Land development
Commercial construction
Owner occupied one- to four-family residential
Non-owner occupied one- to four-family residential
Commercial real estate
Other residential
Commercial business
Industrial revenue bonds
Consumer auto
Consumer other
Home equity lines of credit
—
—
384
—
691
—
10,548
7,162
—
—
—
—
—
—
—
—
—
29
—
1,200
—
—
—
—
—
—
Total
$
18,785
$
1,229
December 31, 2022
Principal
Balance
Specific
Allowance
(In Thousands)
$
$
One- to four-family residential construction
Subdivision construction
Land development
Commercial construction
Owner occupied one- to four-family residential
Non-owner occupied one- to four-family residential
Commercial real estate
Other residential
Commercial business
Industrial revenue bonds
Consumer auto
Consumer other
Home equity lines of credit
—
—
384
—
1,637
—
1,571
—
586
—
—
160
135
Total
$
4,473
$
—
—
—
—
40
—
—
—
125
—
—
80
—
245
For loans that were non-accruing, interest of approximately $509,000, $292,000 and $432,000 would have been
recognized on an accrual basis during the years ended December 31, 2023, 2022 and 2021, respectively.
94
As indicated in Note 1, in March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic
326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the troubled debt restructuring
(TDR) recognition and measurement guidance and, instead, requires that an entity evaluate whether the loan
modification represents a new loan or a continuation of an existing loan. It also enhances existing disclosure
requirements and introduces new disclosure requirements related to certain modifications of receivables made to
borrowers experiencing financial difficulty. ASU 2022-02 became effective for the Company on January 1, 2023.
Adoption of this ASU did not have a material impact on the Company’s results of operations, financial position or
liquidity, but resulted in additional disclosure requirements related to gross charge offs by vintage year and the
removal of TDR disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers
experiencing financial difficulties. The Company has adopted this update prospectively.
Under ASU 2022-02, loan modifications are reported if concessions have been granted to borrowers that are
experiencing financial difficulty. Information on these loan modifications originated after the effective date is
presented according to the new accounting guidance. Reporting periods prior to the adoption of ASU 2022-02 present
information on TDRs under the previous disclosure requirements.
The estimate of lifetime expected losses utilized in the allowance for credit losses model is developed using average
historical loss on loans with similar risk characteristics, which includes losses from modifications of loans to
borrowers experiencing financial difficulty. As a result, a change to the allowance for credit losses is generally not
recorded upon modification. For modifications to loans made to borrowers experiencing financial difficulty that are
adversely classified, the Company determines the allowance for credit losses on an individual basis, using the same
process that it utilizes for other adversely classified loans. If collection efforts have begun and the modified loan is
subsequently deemed collateral-dependent, the loan is placed on non-accrual status and the allowance for credit losses
is determined based on an individual evaluation. If necessary, the loan is charged down to fair market value less
estimated sales costs.
The following table shows the composition of loan modifications made to borrowers experiencing financial
difficulty by the loan portfolio and type of concessions granted during the year ended December 31, 2023. Each of
the types of concessions granted comprised 2% or less of their respective classes of loan portfolios at December
31, 2023. During the year ended December 31, 2023, principal forgiveness of $563,000 was completed on
commercial business loans and consumer loans
Construction and land development
$
$
$
1,553
$
Year Ended December 31, 2023
Interest Rate
Term
Total
Reduction
Extension
Combination
Modifications
(In Thousands)
2,750
—
—
77
—
7
20,365
—
—
—
—
1,553
—
2,750
20,442
—
12
—
—
—
—
—
5
5
$
$
2,834
$
21,918
$
24,757
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Modified Loans
As indicated in Note 1, in March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic
326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the troubled debt restructuring
(TDR) recognition and measurement guidance and, instead, requires that an entity evaluate whether the loan
modification represents a new loan or a continuation of an existing loan. It also enhances existing disclosure
requirements and introduces new disclosure requirements related to certain modifications of receivables made to
borrowers experiencing financial difficulty. ASU 2022-02 became effective for the Company on January 1, 2023.
Adoption of this ASU did not have a material impact on the Company’s results of operations, financial position or
liquidity, but resulted in additional disclosure requirements related to gross charge offs by vintage year and the
removal of TDR disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers
experiencing financial difficulties. The Company has adopted this update prospectively.
Under ASU 2022-02, loan modifications are reported if concessions have been granted to borrowers that are
experiencing financial difficulty. Information on these loan modifications originated after the effective date is
presented according to the new accounting guidance. Reporting periods prior to the adoption of ASU 2022-02 present
information on TDRs under the previous disclosure requirements.
The estimate of lifetime expected losses utilized in the allowance for credit losses model is developed using average
historical loss on loans with similar risk characteristics, which includes losses from modifications of loans to
borrowers experiencing financial difficulty. As a result, a change to the allowance for credit losses is generally not
recorded upon modification. For modifications to loans made to borrowers experiencing financial difficulty that are
adversely classified, the Company determines the allowance for credit losses on an individual basis, using the same
process that it utilizes for other adversely classified loans. If collection efforts have begun and the modified loan is
subsequently deemed collateral-dependent, the loan is placed on non-accrual status and the allowance for credit losses
is determined based on an individual evaluation. If necessary, the loan is charged down to fair market value less
estimated sales costs.
The following table shows the composition of loan modifications made to borrowers experiencing financial
difficulty by the loan portfolio and type of concessions granted during the year ended December 31, 2023. Each of
the types of concessions granted comprised 2% or less of their respective classes of loan portfolios at December
31, 2023. During the year ended December 31, 2023, principal forgiveness of $563,000 was completed on
commercial business loans and consumer loans
Year Ended December 31, 2023
Interest Rate
Reduction
Term
Extension
Combination
Total
Modifications
Construction and land development
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
$
$
—
—
—
—
—
5
5
(In Thousands)
—
—
2,750
77
—
7
2,834
$
$
1,553
—
—
20,365
—
—
21,918
$
$
1,553
—
2,750
20,442
—
12
24,757
$
$
95
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The Company closely monitors the performance of loans to borrowers experiencing financial difficulty that are
modified to understand the effectiveness of its modification efforts. The following table depicts the performance
(under modified terms) at December 31, 2023 of loans that were modified during the year ended December 31,
2023:
Construction and land development
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
Current
$
$
1,553
—
2,750
12,384
—
12
16,699
December 31, 2023
30-89 Days
Past Due
Over 90 Days
Past Due
(In Thousands)
$
$
—
—
—
—
—
—
—
$
$
—
—
—
8,058
—
—
8,058
Total
1,553
—
2,750
20,442
—
12
24,757
$
$
TDRs by class are presented below as of December 31, 2022.
December 31, 2022
The following tables present newly restructured loans during the years ended December 31, 2022 and 2021 by type
of modification:
Interest Only
Term
Combination
Modification
Residential one-to-four family
Commercial real estate
Commercial business
Consumer
$
$
—
—
—
—
—
$
$
Interest Only
Term
Combination
Modification
Residential one-to-four family
$
31
$
Commercial real estate
Commercial business
Consumer
1,768
—
—
$
1,799
$
At December 31, 2022, of the $2.9 million in TDRs, $1.7 million were classified as substandard using the
Company’s internal grading system. The Company had no TDRs that were modified in the previous 12 months
and subsequently defaulted during the year ended December 31, 2022.
2022
(In Thousands)
—
—
—
4
4
202
—
—
259
461
$
$
$
$
2021
(In Thousands)
32
247
—
3
282
$
$
Total
32
247
—
7
286
Total
134
$
—
—
11
145
$
367
1,768
—
270
2,405
Accruing TDR Loans Non-accruing TDR Loans
Number Balance
Balance
Number
Total TDR Loans
Number Balance
—
16
—
2
—
18
36
$
$
—
1,126
—
1,571
—
252
2,949
Construction and land development
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
—
13
—
—
—
13
26
$
$
—
1,028
—
—
—
210
1,238
(In Thousands)
—
3
—
2
—
5
10
$
$
—
98
—
1,571
—
42
1,711
96
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The following tables present newly restructured loans during the years ended December 31, 2022 and 2021 by type
of modification:
2022
Interest Only
Term
Combination
(In Thousands)
Total
Modification
Residential one-to-four family
Commercial real estate
Commercial business
Consumer
$
$
—
—
—
—
—
$
$
32
247
—
3
282
$
$
32
247
—
7
286
—
—
—
4
4
$
$
2021
Interest Only
Term
Combination
(In Thousands)
Total
Modification
Residential one-to-four family
Commercial real estate
Commercial business
Consumer
$
$
31
1,768
—
—
1,799
$
$
202
—
—
259
461
$
$
134
—
—
11
145
$
$
367
1,768
—
270
2,405
At December 31, 2022, of the $2.9 million in TDRs, $1.7 million were classified as substandard using the
Company’s internal grading system. The Company had no TDRs that were modified in the previous 12 months
and subsequently defaulted during the year ended December 31, 2022.
97
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Loan Risk Ratings
The nature and extent of impairments of modified loans, including those which have experienced a subsequent
payment default, are considered in the determination of an appropriate level of the allowance for credit losses. The
Company utilizes an internal risk rating system comprised of a series of grades to categorize loans according to
perceived risk associated with the expectation of debt repayment. The analysis of the borrower’s ability to repay
considers specific information, including but not limited to current financial information, historical payment
experience, industry information, collateral levels and collateral types. A risk rating is assigned at loan origination and
then monitored throughout the contractual term for possible risk rating changes.
Satisfactory loans range from Excellent to Moderate Risk, but generally are loans supported by strong recent financial
statements. The character and capacity of the borrower are strong, including reasonable project performance, good
industry experience, liquidity and/or net worth. The probability of financial deterioration seems unlikely. Repayment is
expected from approved sources over a reasonable period of time.
Watch loans are identified when the borrower has capacity to perform according to terms; however, elements of
uncertainty exist. Margins of debt service coverage may be narrow, historical patterns of financial performance may be
erratic, collateral margins may be diminished and the borrower may be a new and/or thinly capitalized company. Some
management weakness may also exist, the borrower may have somewhat limited access to other financial institutions,
and that access may diminish in difficult economic times.
Special Mention loans have weaknesses that deserve management’s close attention. If left uncorrected, these potential
weaknesses may result in deterioration of repayment prospects or the Bank’s credit position at some future date. It is a
transitional grade that is closely monitored for improvement or deterioration.
The Substandard rating is applied to loans where the borrower exhibits well-defined weaknesses that jeopardize its
continued performance and are of a severity that the distinct possibility of default exists. Loans are placed on “non-
accrual” when management does not expect to collect payments consistent with acceptable and agreed upon terms of
repayment.
Doubtful loans have all the weaknesses inherent to those classified Substandard with the added characteristic that the
weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and
improbable.
The Loss category is used when loans are considered uncollectable and no longer included as an asset.
All loans are analyzed for risk rating updates regularly. For larger loans, rating assessments may be more frequent if
relevant information is obtained earlier through debt covenant monitoring or overall relationship management. Smaller
loans are monitored as identified by the loan officer based on the risk profile of the individual borrower or if the loan
becomes past due related to credit issues. Loans rated Watch, Special Mention, Substandard or Doubtful are subject to
quarterly review and monitoring processes. In addition to the regular monitoring performed by the lending personnel
and credit committees, loans are subject to review by the credit review department, which verifies the appropriateness
of the risk ratings for the loans chosen as part of its risk-based review plan.
98
The following tables present a summary of loans by category and risk rating separated by origination and loan
class as of December 31, 2023 and 2022.
Term Loans by Origination Year
2023
2022
2021
2020
2019
Prior
Loans
Total
Revolving
(In Thousands)
$
12,528 $
9,878 $
41 $
— $
— $
— $
7,181 $
29,628
Current Period Gross Charge Offs
14,860
12,564
14,860
12,564
5,658
3,682
5,458
4,531
—
—
—
3,682
—
—
—
—
5,458
—
—
—
—
4,531
—
One- to four-family residential
construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
Subdivision construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
Construction and land development
—
—
—
—
12,528
532
—
—
—
532
—
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Other construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
One- to four-family residential
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Other residential
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,022
21,333
—
—
—
9,878
—
—
—
—
1,022
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
41
—
—
—
—
—
21,333
—
—
—
5,658
—
—
—
—
—
—
—
543
—
—
—
—
—
—
—
—
—
—
43
—
—
—
43
—
—
—
—
—
—
—
148
—
—
—
—
—
—
—
—
—
—
64
—
—
—
64
—
—
—
—
—
—
—
171
—
—
—
—
—
—
—
—
—
—
—
—
365
—
—
—
365
—
—
—
—
—
—
—
862
—
189
11
—
—
—
7,181
—
—
—
—
—
—
—
878
—
—
384
1,262
—
—
—
—
—
—
—
483
46
—
—
529
20
—
12,322
7,163
130,947
—
—
—
—
3,335
—
—
—
—
29,628
—
23,359
—
—
—
23,359
—
47,631
—
—
384
48,015
—
703,407
—
—
—
—
703,407
888,576
1,079
—
880
890,535
31
—
12,322
7,163
942,071
—
60,895
422,727
203,918
15,867
60,895
422,727
203,918
15,867
66,733
330,489
203,781
108,232
60,288
118,570
Current Period Gross Charge Offs
66,733
330,489
204,324
108,380
60,459
119,621
18,795
108,389
391,516
180,916
108,173
111,462
3,335
922,586
Current Period Gross Charge Offs
18,795
108,389
391,516
180,916
108,173
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
The following tables present a summary of loans by category and risk rating separated by origination and loan
class as of December 31, 2023 and 2022.
The following tables present a summary of loans by category and risk rating separated by origination and loan
class as of December 31, 2023 and 2022.
Term Loans by Origination Year
Term Loans by Origination Year
2023
2023
2022
2022
2021
2021
2020
2019
2019
2020
(In Thousands)
(In Thousands)
Prior
Prior
Revolving
Revolving
Loans
Loans
Total
Total
One- to four-family residential
One- to four-family residential
construction
construction
Satisfactory (1-4)
Satisfactory (1-4)
Watch (5)
Watch (5)
Special Mention (6)
Special Mention (6)
Classified (7-9)
Classified (7-9)
Total
Total
$
Current Period Gross Charge Offs
Current Period Gross Charge Offs
Subdivision construction
Subdivision construction
Satisfactory (1-4)
Satisfactory (1-4)
Watch (5)
Watch (5)
Special Mention (6)
Special Mention (6)
Classified (7-9)
Classified (7-9)
Total
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
$
12,528 $
12,528 $
—
—
—
—
—
—
12,528
12,528
—
—
9,878 $
9,878 $
—
—
—
—
—
—
9,878
9,878
—
—
41 $
41 $
—
—
—
—
—
—
41
41
—
—
532
—
—
—
532
—
532
—
—
—
532
—
1,022
1,022
—
—
—
—
—
—
1,022
1,022
—
—
Construction and land development
Construction and land development
Satisfactory (1-4)
Satisfactory (1-4)
Watch (5)
Watch (5)
Special Mention (6)
Special Mention (6)
Classified (7-9)
Classified (7-9)
Total
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
14,860
14,860
—
—
—
—
—
—
14,860
14,860
—
—
12,564
12,564
—
—
—
—
—
—
12,564
12,564
—
—
Other construction
Other construction
Satisfactory (1-4)
Satisfactory (1-4)
Watch (5)
Watch (5)
Special Mention (6)
Special Mention (6)
Classified (7-9)
Classified (7-9)
Total
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
One- to four-family residential
One- to four-family residential
Satisfactory (1-4)
Satisfactory (1-4)
Watch (5)
Watch (5)
Special Mention (6)
Special Mention (6)
Classified (7-9)
Classified (7-9)
Total
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
Other residential
Other residential
Satisfactory (1-4)
Satisfactory (1-4)
Watch (5)
Watch (5)
Special Mention (6)
Special Mention (6)
Classified (7-9)
Classified (7-9)
Total
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
60,895
60,895
—
—
—
—
—
—
60,895
60,895
—
—
422,727
422,727
—
—
—
—
—
—
422,727
422,727
—
—
66,733
66,733
—
—
—
—
—
—
66,733
66,733
—
—
330,489
330,489
—
—
—
—
—
—
330,489
330,489
—
—
18,795
18,795
—
—
—
—
—
—
18,795
18,795
—
—
108,389
108,389
—
—
—
—
—
—
108,389
108,389
—
—
(Table continues on page 100)
21,333
21,333
—
—
—
—
—
—
21,333
21,333
—
—
5,658
5,658
—
—
—
—
—
—
5,658
5,658
—
—
203,918
203,918
—
—
—
—
—
—
203,918
203,918
—
—
203,781
203,781
—
—
—
—
543
543
204,324
204,324
—
—
391,516
391,516
—
—
—
—
—
—
391,516
391,516
—
—
99
— $
— $
—
—
—
—
—
—
—
—
—
—
43
43
—
—
—
—
—
—
43
43
—
—
3,682
3,682
—
—
—
—
—
—
3,682
3,682
—
—
15,867
15,867
—
—
—
—
—
—
15,867
15,867
—
—
108,232
108,232
—
—
—
—
148
148
108,380
108,380
—
—
180,916
180,916
—
—
—
—
—
—
180,916
180,916
—
—
— $
— $
—
—
—
—
—
—
—
—
—
—
— $
— $
—
—
—
—
—
—
—
—
—
—
7,181 $
7,181 $
—
—
—
—
—
—
7,181
7,181
—
—
29,628
29,628
—
—
—
—
—
—
29,628
29,628
—
—
64
64
—
—
—
—
—
—
64
64
—
—
5,458
5,458
—
—
—
—
—
—
5,458
5,458
—
—
—
—
—
—
—
—
—
—
—
—
—
—
365
365
—
—
—
—
—
—
365
365
—
—
—
—
—
—
—
—
—
—
—
—
—
—
23,359
23,359
—
—
—
—
—
—
23,359
23,359
—
—
4,531
4,531
—
—
—
—
—
—
4,531
4,531
—
—
878
878
—
—
—
—
384
384
1,262
1,262
—
—
47,631
47,631
—
—
—
—
384
384
48,015
48,015
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
703,407
703,407
—
—
—
—
—
—
703,407
703,407
—
—
60,288
60,288
171
171
—
—
—
—
60,459
60,459
—
—
118,570
118,570
862
862
—
—
189
189
119,621
119,621
11
11
483
46
—
—
529
20
483
46
—
—
529
20
888,576
888,576
1,079
1,079
—
—
880
880
890,535
890,535
31
31
108,173
108,173
—
—
—
—
—
—
108,173
108,173
—
—
111,462
111,462
—
—
12,322
12,322
7,163
7,163
130,947
130,947
—
—
3,335
3,335
—
—
—
—
—
—
3,335
3,335
—
—
922,586
922,586
—
—
12,322
12,322
7,163
7,163
942,071
942,071
—
—
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Revolving
Loans
2019
Total
Total
Prior
Term Loans by Origination Year
(Table continued from page 99)
624,515
5,348
4,396
10,552
644,811
—
624,515
5,348
— $
4,396
55,044
—
10,552
1,369
—
—
644,811
—
—
—
—
56,413
—
1,030
Commercial real estate
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Commercial real estate
Current Period Gross Charge Offs
One- to four-family residential
Satisfactory (1-4)
construction
Commercial business
Watch (5)
Satisfactory (1-4)
Special Mention (6)
Satisfactory (1-4)
Watch (5)
Classified (7-9)
Watch (5)
Special Mention (6)
Special Mention (6)
Total
Classified (7-9)
Classified (7-9)
Current Period Gross Charge Offs
Total
Current Period Gross Charge Offs
The following tables present a summary of loans by category and risk rating separated by origination and loan
Great Southern Bancorp, Inc.
class as of December 31, 2023 and 2022.
53,158
161,680
237,822
284,738
Notes to Consolidated Financial Statements
154
—
—
—
December 31, 2023, 2022 and 2021
—
—
—
—
—
—
—
—
2021
2022
2023
237,822
284,738
161,834
53,158
—
—
—
—
53,158
161,680
284,738
154
—
—
$
— $
9,878 $
12,528 $
—
—
—
58,551
10,043
92,224
—
—
—
—
—
—
—
—
—
—
—
—
—
1,186
—
161,834
284,738
53,158
—
—
—
—
—
—
—
—
—
—
9,878
12,528
10,043
93,410
58,551
—
—
—
—
7
—
58,551
10,043
92,224
—
—
—
532
64
1,022
—
1,186
—
828
12,010
16,629
—
—
—
—
—
—
3
3
—
—
—
—
—
—
—
10,043
93,410
58,551
—
—
—
—
42
—
—
7
—
64
1,022
532
831
12,055
16,629
—
—
—
18
135
4
828
12,010
16,629
3
3
—
5,458
12,564
14,860
—
—
—
346,534
1,274,041
302,681
—
—
—
—
42
—
328
3
—
—
—
—
—
1,186
—
831
12,055
16,629
—
—
—
—
42
—
18
135
4
5,458
12,564
14,860
346,862 $
1,275,272 $
$ 302,681 $
—
—
—
18 $
142 $
4 $
1,274,041
302,681
3
—
422,727
60,895
1,186
—
—
—
42
—
—
—
1,275,272 $
$ 302,681 $
—
—
422,727
60,895
142 $
4 $
—
—
103,393
—
—
—
2020
103,393
(In Thousands)
—
103,393
—
— $
—
15,371
—
—
—
—
—
103,393
—
27
—
—
15,398
—
—
15,371
—
43
—
2,811
—
27
6
—
—
15,398
—
—
—
43
2,817
—
3
2,811
6
3,682
—
430,315
—
—
6
—
—
2,817
—
175
3
3,682
430,496 $
—
3 $
237,822
—
41 $
—
30,361
—
—
—
—
3,840
237,822
—
4
—
41
34,205
—
—
30,361
—
21,333
3,840
6,163
—
4
21
—
—
34,205
—
12
—
21,333
6,196
—
24
6,163
21
5,658
—
1,100,593
—
12
21
—
3,840
6,196
—
559
24
5,658
1,105,013 $
—
24 $
Commercial business
Current Period Gross Charge Offs
Satisfactory (1-4)
Subdivision construction
Watch (5)
Consumer
Satisfactory (1-4)
Special Mention (6)
Satisfactory (1-4)
Watch (5)
Classified (7-9)
Watch (5)
Special Mention (6)
Special Mention (6)
Total
Classified (7-9)
Classified (7-9)
Current Period Gross Charge Offs
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
Consumer
Satisfactory (1-4)
Watch (5)
Combined
Satisfactory (1-4)
Special Mention (6)
Satisfactory (1-4)
Watch (5)
Classified (7-9)
Watch (5)
Special Mention (6)
Special Mention (6)
Total
Classified (7-9)
Classified (7-9)
Current Period Gross Charge Offs
Total
Current Period Gross Charge Offs
Combined
Satisfactory (1-4)
Other construction
Watch (5)
Satisfactory (1-4)
Special Mention (6)
Watch (5)
Classified (7-9)
Special Mention (6)
Classified (7-9)
Current Period Gross Charge Offs $
Current Period Gross Charge Offs
12,089
201
4,531
—
926,576
—
49
7,780
—
16,718
12,339
—
17,953
1,493
4,531
969,027 $
—
2,534 $
1,100,593
21
203,918
3,840
—
559
—
1,105,013 $
—
203,918
24 $
—
346,534
328
—
—
—
—
—
346,862 $
—
—
18 $
—
430,315
6
15,867
—
—
175
—
430,496 $
—
15,867
3 $
—
926,576
7,780
—
16,718
—
17,953
—
969,027 $
—
—
2,534 $
—
55,044
1,369
365
—
12,089
—
—
201
—
—
56,413
—
49
1,030
365
12,339
—
1,493
Current Period Gross Charge Offs $
Construction and land development
Total
Total
Total
Total
35,276
—
—
—
35,276
—
35,276
—
7,181 $
—
57,177
—
—
—
—
4,900
35,276
—
—
—
7,181
62,077
—
—
57,177
—
—
4,900
122,166
—
—
154
—
8
62,077
—
9
—
—
122,337
—
97
172,696
122,166
388
154
47,631
878
8
8
4,607,236
226,496
—
—
112
9
8,338
200
—
—
26,652
4,908
173,204
122,337
384
384
19,122
393
1,754
97
48,015
1,262
231,997 $ 4,661,348
—
—
2,822
97 $
226,496
200
—
4,908
—
393
—
—
—
97 $
—
4,607,236
8,338
703,407
26,652
—
19,122
—
231,997 $ 4,661,348
—
703,407
2,822
—
1,500,582
5,502
4,396
10,552
1,521,032
—
Total
1,500,582
5,502
29,628
4,396
318,771
—
10,552
1,369
—
9,926
1,521,032
—
31
—
29,628
330,097
—
1,037
318,771
1,369
23,359
9,926
172,696
—
31
388
—
8
330,097
—
112
1,037
23,359
173,204
—
1,754
One- to four-family residential
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
Other residential
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
66,733
—
—
—
66,733
—
18,795
—
—
—
18,795
—
330,489
—
—
—
330,489
—
108,389
—
—
—
108,389
—
203,781
—
—
543
204,324
—
391,516
—
—
—
391,516
—
100
108,232
—
—
148
108,380
—
180,916
—
—
—
180,916
—
60,288
171
—
—
60,459
—
108,173
—
—
—
108,173
—
118,570
862
—
189
119,621
11
111,462
—
12,322
7,163
130,947
—
483
46
—
—
529
20
3,335
—
—
—
3,335
—
888,576
1,079
—
880
890,535
31
922,586
—
12,322
7,163
942,071
—
One- to four-family residential
construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
Subdivision construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
Construction and land development
Current Period Gross Charge Offs
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Other construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
One- to four-family residential
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Other residential
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Term Loans by Origination Year
2022
2021
2020
2019
2018
Prior
Loans
Total
Revolving
(In Thousands)
$
21,885 $
7,265 $
1,391 $
— $
3,308 $
33,849
—
—
—
21,885
—
—
—
—
7,265
—
—
—
—
1,391
—
4,478
25,864
—
—
—
4,478
—
—
—
—
25,864
—
800
—
—
—
800
—
— $
—
—
—
—
—
203
—
—
—
203
—
—
—
—
—
—
588
—
—
—
588
—
3,308
33,849
—
—
—
—
—
—
—
—
—
—
—
—
—
—
32,067
—
—
—
32,067
—
16,746
6,914
4,866
7,338
3,990
613
41,229
—
—
—
16,746
—
—
—
—
6,914
—
—
—
—
4,866
—
—
—
—
7,338
—
—
—
—
3,990
—
—
—
384
997
84
—
—
384
41,613
84
340,886
219,504
128,509
73,162
39,685
113,512
446,125
176,340
21,713
113,512
446,125
176,340
—
—
—
—
—
—
—
—
—
—
—
83,822
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
158
—
—
—
—
—
—
—
—
21,713
—
179
—
—
73,341
—
—
—
—
—
—
—
—
—
—
—
97,236
1,341
—
1,832
39
123,538
3,338
—
—
—
—
—
—
—
—
—
687
57
—
79
823
1
—
—
—
—
757,690
—
—
—
—
757,690
899,669
1,665
—
2,069
903,403
40
3,338
—
—
—
83,822
133,648
168,232
142,630
122,614
3,939
778,423
— $
—
—
—
—
—
134
—
—
—
134
—
762
—
—
—
762
—
—
—
—
—
—
—
88
—
—
—
—
—
—
—
Current Period Gross Charge Offs
133,648
168,232
142,630
122,614
126,876
3,939
781,761
Current Period Gross Charge Offs
340,886
219,504
128,667
39,773
100,409
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Term Loans by Origination Year
Term Loans by Origination Year
2022
2022
2021
2021
2020
2020
2019
2019
(In Thousands)
(In Thousands)
2018
2018
Prior
Prior
Revolving
Revolving
Loans
Loans
Total
Total
One- to four-family residential
One- to four-family residential
construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
$
Total
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
21,885 $
$
21,885 $
—
—
—
—
—
—
21,885
21,885
—
—
7,265 $
7,265 $
—
—
—
—
—
—
7,265
7,265
—
—
1,391 $
1,391 $
—
—
—
—
—
—
1,391
1,391
—
—
Subdivision construction
Subdivision construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
4,478
4,478
—
—
—
—
—
—
4,478
4,478
—
—
25,864
25,864
—
—
—
—
—
—
25,864
25,864
—
—
800
800
—
—
—
—
—
—
800
800
—
—
Construction and land development
Construction and land development
— $
— $
—
—
—
—
—
—
—
—
—
—
203
203
—
—
—
—
—
—
203
203
—
—
Current Period Gross Charge Offs
Current Period Gross Charge Offs
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Total
Other construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Other construction
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
One- to four-family residential
One- to four-family residential
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
16,746
16,746
—
—
—
—
—
—
16,746
16,746
—
—
113,512
113,512
—
—
—
—
—
—
113,512
113,512
—
—
340,886
340,886
—
—
—
—
—
—
340,886
340,886
—
—
6,914
6,914
—
—
—
—
—
—
6,914
6,914
—
—
4,866
4,866
—
—
—
—
—
—
4,866
4,866
—
—
7,338
7,338
—
—
—
—
—
—
7,338
7,338
—
—
446,125
446,125
—
—
—
—
—
—
446,125
446,125
—
—
176,340
176,340
—
—
—
—
—
—
176,340
176,340
—
—
219,504
219,504
—
—
—
—
—
—
219,504
219,504
—
—
128,509
128,509
—
—
—
—
158
158
128,667
128,667
—
—
21,713
21,713
—
—
—
—
—
—
21,713
21,713
—
—
73,162
73,162
179
179
—
—
—
—
73,341
73,341
—
—
— $
— $
—
—
—
—
—
—
—
—
—
—
— $
—
—
—
—
—
— $
—
—
—
—
—
3,308 $
3,308 $
—
—
—
—
—
—
3,308
3,308
—
—
33,849
33,849
—
—
—
—
—
—
33,849
33,849
—
—
134
134
—
—
—
—
—
—
134
134
—
—
762
762
—
—
—
—
—
—
762
762
—
—
—
—
—
—
—
—
—
—
—
—
—
—
588
588
—
—
—
—
—
—
588
588
—
—
—
—
—
—
—
—
—
—
—
—
—
—
32,067
32,067
—
—
—
—
—
—
32,067
32,067
—
—
3,990
3,990
—
—
—
—
—
—
3,990
3,990
—
—
—
—
—
—
—
—
—
—
—
—
—
—
613
—
—
384
997
84
613
—
—
384
997
84
41,229
41,229
—
—
—
—
384
384
41,613
41,613
84
84
—
—
—
—
—
—
—
—
—
—
—
—
757,690
757,690
—
—
—
—
—
—
757,690
757,690
—
—
39,685
39,685
88
88
—
—
—
—
39,773
39,773
—
—
97,236
97,236
1,341
1,341
—
—
1,832
1,832
100,409
100,409
39
39
687
687
57
57
—
—
79
79
823
823
1
1
899,669
899,669
1,665
1,665
—
—
2,069
2,069
903,403
903,403
40
40
Other residential
Other residential
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Total
Current Period Gross Charge Offs
Current Period Gross Charge Offs
83,822
83,822
—
—
—
—
—
—
83,822
83,822
—
—
133,648
133,648
—
—
—
—
—
—
133,648
133,648
—
—
168,232
168,232
—
—
—
—
—
—
168,232
168,232
—
—
142,630
142,630
—
—
—
—
—
—
142,630
142,630
—
—
122,614
122,614
—
—
—
—
—
—
122,614
122,614
—
—
123,538
123,538
3,338
3,338
—
—
—
—
126,876
126,876
—
—
3,939
3,939
—
—
—
—
—
—
3,939
3,939
—
—
778,423
778,423
3,338
3,338
—
—
—
—
781,761
781,761
—
—
(Table continues on page 102)
101
(Table continued from page 101)
2018
Term Loans by Origination Year
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Great Southern Bancorp, Inc.
December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
221,341
185,682
109,939
Notes to Consolidated Financial Statements
—
—
—
—
—
—
December 31, 2023, 2022 and 2021
—
—
—
2020
2022
109,939
185,682
221,341
—
—
—
221,341
185,682
109,939
—
—
—
— $
1,391 $
21,885 $
$
45,349
9,309
39,645
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
185,682
109,939
221,341
—
—
—
—
—
—
—
1,391
21,885
9,309
39,645
45,349
—
—
—
—
—
—
45,349
9,309
39,645
—
—
—
134
800
4,478
3,263
5,711
21,309
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
45,349
9,309
39,645
—
2
9
—
—
—
134
800
4,478
3,265
5,720
21,309
—
—
—
59
7
19
3,263
5,711
21,309
—
—
—
762
4,866
16,746
361,449
635,433
869,328
—
—
—
—
—
—
88
—
—
—
9
2
—
—
—
—
—
—
5,720
21,309
3,265
—
—
—
2
167
—
59
7
19
762
4,866
16,746
361,539 $
635,600 $
$ 869,328 $
—
—
—
59 $
7 $
19 $
869,328
—
113,512
—
—
—
—
—
$ 869,328 $
113,512
19 $
—
171,484
—
—
—
2021
171,484
—
171,484
—
7,265 $
66,258
—
—
—
—
—
—
—
171,484
—
—
7,265
66,258
—
—
66,258
—
25,864
11,168
—
—
28
—
—
—
—
66,258
11
—
25,864
11,207
—
66
11,168
28
6,914
1,088,230
—
—
28
11
—
—
11,207
—
11
66
6,914
1,088,269 $
—
66 $
1,088,230
28
446,125
—
—
11
—
—
1,088,269 $
446,125
66 $
—
203,426
—
—
—
2019
203,426
(In Thousands)
—
203,426
—
— $
15,505
—
—
—
—
—
—
—
203,426
—
—
—
15,505
—
—
15,505
—
203
2,708
—
—
7
—
—
—
—
15,505
—
—
203
2,715
—
49
2,708
7
7,338
466,685
—
—
186
—
—
—
2,715
—
—
49
7,338
466,871 $
—
49 $
361,449
88
—
—
—
2
—
—
361,539 $
—
59 $
—
635,433
—
176,340
—
—
167
—
—
635,600 $
176,340
7 $
—
466,685
186
21,713
—
—
—
—
—
466,871 $
21,713
49 $
—
Commercial real estate
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
Commercial real estate
One- to four-family residential
Satisfactory (1-4)
construction
Commercial business
Watch (5)
Satisfactory (1-4)
Satisfactory (1-4)
Special Mention (6)
Watch (5)
Watch (5)
Classified (7-9)
Special Mention (6)
Special Mention (6)
Classified (7-9)
Total
Classified (7-9)
Current Period Gross Charge Offs
Total
Current Period Gross Charge Offs
Total
Total
Current Period Gross Charge Offs
Construction and land development
Consumer
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Total
Classified (7-9)
Total
Current Period Gross Charge Offs
Commercial business
Satisfactory (1-4)
Subdivision construction
Watch (5)
Satisfactory (1-4)
Special Mention (6)
Watch (5)
Classified (7-9)
Special Mention (6)
Classified (7-9)
Current Period Gross Charge Offs
Current Period Gross Charge Offs
Consumer
Satisfactory (1-4)
Watch (5)
Satisfactory (1-4)
Special Mention (6)
Watch (5)
Classified (7-9)
Special Mention (6)
Classified (7-9)
Current Period Gross Charge Offs
Current Period Gross Charge Offs
Combined
Satisfactory (1-4)
Other construction
Watch (5)
Satisfactory (1-4)
Special Mention (6)
Watch (5)
Classified (7-9)
Special Mention (6)
Classified (7-9)
Current Period Gross Charge Offs $
Current Period Gross Charge Offs
Combined
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Total
Classified (7-9)
Total
Current Period Gross Charge Offs $
Total
Total
Total
577,216
23,338
—
1,579
602,133
44
36,658
—
—
Revolving
—
Loans
36,658
—
1,505,746
23,338
—
1,579
1,530,663
44
Total
Prior
577,216
23,338
— $
65,307
—
—
34
1,579
—
—
—
602,133
394
44
—
65,735
—
—
65,307
34
588
16,380
—
—
160
394
—
—
—
65,735
248
—
588
16,788
—
1,594
36,658
—
3,308 $
64,088
—
—
—
—
—
—
—
36,658
191
—
3,308
64,279
—
51
1,505,746
23,338
33,849
305,461
—
—
34
1,579
—
—
—
1,530,663
585
44
33,849
306,080
—
51
64,088
—
—
132,792
—
—
100
191
—
—
—
64,279
359
51
—
133,251
—
156
305,461
34
32,067
193,331
—
—
295
585
—
—
—
306,080
629
51
32,067
194,255
—
1,950
193,331
16,380
132,792
295
100
160
41,229
613
3,990
4,547,465
242,085
884,255
—
—
—
—
—
—
28,670
157
28,211
629
359
248
—
—
—
—
—
—
194,255
16,788
133,251
384
384
—
4,053
5,246
1,013
1,950
156
1,594
41,613
997
3,990
916,519 $ 243,255 $ 4,581,381
84
84
—
2,169
1,677 $
292 $
884,255
28,211
—
—
—
4,053
—
—
—
1,677 $
—
4,547,465
242,085
28,670
157
757,690
—
—
—
—
—
5,246
1,013
—
—
—
—
916,519 $ 243,255 $ 4,581,381
757,690
—
292 $
2,169
—
—
One- to four-family residential
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
340,886
—
—
—
340,886
—
Other residential
Satisfactory (1-4)
Watch (5)
Special Mention (6)
Classified (7-9)
Total
Current Period Gross Charge Offs
83,822
—
—
—
83,822
—
219,504
—
—
—
219,504
—
133,648
—
—
—
133,648
—
128,509
—
—
158
128,667
—
168,232
—
—
—
168,232
—
73,162
179
—
—
73,341
—
142,630
—
—
—
142,630
—
39,685
88
—
—
39,773
—
122,614
—
—
—
122,614
—
97,236
1,341
—
1,832
100,409
39
123,538
3,338
—
—
126,876
—
687
57
—
79
823
1
3,939
—
—
—
3,939
—
899,669
1,665
—
2,069
903,403
40
778,423
3,338
—
—
781,761
—
102
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Certain of the Bank’s real estate loans are pledged as collateral for borrowings as set forth in Notes 9 and 11.
Certain directors and executive officers of the Company and the Bank, and their affiliates, are customers of and
had transactions with the Bank in the ordinary course of business. Except for the interest rates on loans secured by
personal residences, in the opinion of management, all loans included in such transactions were made on
substantially the same terms as those prevailing at the time for comparable transactions with unrelated parties.
Generally, residential first mortgage loans and home equity lines of credit to all employees and directors have
been granted at interest rates equal to the Bank’s cost of funds, subject to annual adjustments in the case of
residential first mortgage loans and monthly adjustments in the case of home equity lines of credit. At December
31, 2023 and 2022, loans outstanding to these directors and executive officers, and their related interests, are
summarized as follows:
2023
2022
(In Thousands)
Balance, beginning of year
New loans
Payments
Balance, end of year
$
$
7,950
10,694
(2,618)
16,026
$
$
10,097
3,079
(5,226)
7,950
Note 4:
FDIC-Assisted Acquired Loans
On March 20, 2009, Great Southern Bank entered into a purchase and assumption agreement with loss share with
the Federal Deposit Insurance Corporation (FDIC) to assume all of the deposits (excluding brokered deposits) and
acquire certain assets of TeamBank, N.A., a full service commercial bank headquartered in Paola, Kansas. The
related loss sharing agreement was terminated early, effective April 26, 2016, by mutual agreement of Great
Southern Bank and the FDIC. Based upon the acquisition date fair values of the net assets acquired, no goodwill
was recorded.
On September 4, 2009, Great Southern Bank entered into a purchase and assumption agreement with loss share
with the FDIC to assume all of the deposits and acquire certain assets of Vantus Bank, a full service thrift
headquartered in Sioux City, Iowa. The related loss sharing agreement was terminated early, effective April 26,
2016, by mutual agreement of Great Southern Bank and the FDIC. Based upon the acquisition date fair values of
the net assets acquired, no goodwill was recorded.
On October 7, 2011, Great Southern Bank entered into a purchase and assumption agreement with loss share with
the FDIC to assume all of the deposits and acquire certain assets of Sun Security Bank, a full service bank
headquartered in Ellington, Missouri. The related loss sharing agreement was terminated early, effective April 26,
2016, by mutual agreement of Great Southern Bank and the FDIC. Based upon the acquisition date fair values of
the net assets acquired, no goodwill was recorded.
On April 27, 2012, Great Southern Bank entered into a purchase and assumption agreement with loss share with
the FDIC to assume all of the deposits and acquire certain assets of Inter Savings Bank, FSB (“InterBank”), a full
service bank headquartered in Maple Grove, Minnesota. The related loss sharing agreement was terminated early,
effective June 9, 2017, by mutual agreement of Great Southern Bank and the FDIC. Based upon the acquisition
date fair values of the net assets acquired, no goodwill was recorded.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Certain of the Bank’s real estate loans are pledged as collateral for borrowings as set forth in Notes 9 and 11.
Certain directors and executive officers of the Company and the Bank, and their affiliates, are customers of and
had transactions with the Bank in the ordinary course of business. Except for the interest rates on loans secured by
personal residences, in the opinion of management, all loans included in such transactions were made on
substantially the same terms as those prevailing at the time for comparable transactions with unrelated parties.
Generally, residential first mortgage loans and home equity lines of credit to all employees and directors have
been granted at interest rates equal to the Bank’s cost of funds, subject to annual adjustments in the case of
residential first mortgage loans and monthly adjustments in the case of home equity lines of credit. At December
31, 2023 and 2022, loans outstanding to these directors and executive officers, and their related interests, are
summarized as follows:
2023
2022
(In Thousands)
Balance, beginning of year
New loans
Payments
Balance, end of year
$
$
7,950
10,694
(2,618)
16,026
$
$
10,097
3,079
(5,226)
7,950
Note 4:
FDIC-Assisted Acquired Loans
On March 20, 2009, Great Southern Bank entered into a purchase and assumption agreement with loss share with
the Federal Deposit Insurance Corporation (FDIC) to assume all of the deposits (excluding brokered deposits) and
acquire certain assets of TeamBank, N.A., a full service commercial bank headquartered in Paola, Kansas. The
related loss sharing agreement was terminated early, effective April 26, 2016, by mutual agreement of Great
Southern Bank and the FDIC. Based upon the acquisition date fair values of the net assets acquired, no goodwill
was recorded.
On September 4, 2009, Great Southern Bank entered into a purchase and assumption agreement with loss share
with the FDIC to assume all of the deposits and acquire certain assets of Vantus Bank, a full service thrift
headquartered in Sioux City, Iowa. The related loss sharing agreement was terminated early, effective April 26,
2016, by mutual agreement of Great Southern Bank and the FDIC. Based upon the acquisition date fair values of
the net assets acquired, no goodwill was recorded.
On October 7, 2011, Great Southern Bank entered into a purchase and assumption agreement with loss share with
the FDIC to assume all of the deposits and acquire certain assets of Sun Security Bank, a full service bank
headquartered in Ellington, Missouri. The related loss sharing agreement was terminated early, effective April 26,
2016, by mutual agreement of Great Southern Bank and the FDIC. Based upon the acquisition date fair values of
the net assets acquired, no goodwill was recorded.
On April 27, 2012, Great Southern Bank entered into a purchase and assumption agreement with loss share with
the FDIC to assume all of the deposits and acquire certain assets of Inter Savings Bank, FSB (“InterBank”), a full
service bank headquartered in Maple Grove, Minnesota. The related loss sharing agreement was terminated early,
effective June 9, 2017, by mutual agreement of Great Southern Bank and the FDIC. Based upon the acquisition
date fair values of the net assets acquired, no goodwill was recorded.
103
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
On June 20, 2014, Great Southern Bank entered into a purchase and assumption agreement with the FDIC to
purchase a substantial portion of the loans and investment securities, as well as certain other assets, and assume all
of the deposits, as well as certain other liabilities, of Valley Bank, a full-service bank headquartered in Moline,
Illinois, with significant operations in Iowa. This transaction did not include a loss sharing agreement. Based upon
the acquisition date fair values of the net assets acquired, no goodwill was recorded.
At December 31, 2022, other real estate owned not acquired through foreclosure included two properties, both of
which were branch locations that were closed and held for sale; these were sold during the year ended December
31, 2023, as indicated above. During the year ended December 31, 2022, two former branch location were sold.
During the year ended December 31, 2022, no additional valuation write-downs were recorded on branch
locations that were closed and held for sale.
The following table presents the balances of the acquired loans related to the various FDIC-assisted transactions at
December 31, 2023 and 2022.
At December 31, 2023 and 2022, residential mortgage loans totaling $-0- and $173,000, respectively, were in the
process of foreclosure.
TeamBank
Vantus
Bank
Sun
Security
Bank
(In Thousands)
InterBank
Valley
Bank
Expenses applicable to other real estate owned and repossessions for the years ended December 31, 2023, 2022
and 2021, included the following:
December 31, 2023
Carrying value of loans receivable
December 31, 2022
Carrying value of loans receivable
$
2,191
$
3,052
$ 6,263
$ 19,727
$ 10,323
Net gains on sales of other real estate owned and repossessions
$
(42) $
(149) $
Valuation write-downs
Operating expenses, net of rental income
$
2,703
$
3,983
$ 7,221
$ 24,402
$ 12,750
Note 5:
Other Real Estate Owned and Repossessions
Note 6:
Premises and Equipment
Major classifications of other real estate owned at December 31, 2023 and 2022, were as follows:
Major classifications of premises and equipment at December 31, 2023 and 2022, stated at cost, were as follows:
Foreclosed assets held for sale and repossessions
One- to four-family construction
Subdivision construction
Land development
Commercial construction
One- to four-family residential
Other residential
Commercial real estate
Commercial business
Consumer
Foreclosed assets held for sale and repossessions
Other real estate owned not acquired through foreclosure
Other real estate owned and repossessions
2023
2022
(In Thousands)
—
—
—
—
—
—
—
—
23
23
—
23
$
$
—
—
—
—
—
—
—
—
50
50
183
233
$
$
At December 31, 2023, there was no other real estate owned not acquired through foreclosure, as two former
branch locations were sold during the year.
104
2023
2022
2021
(In Thousands)
81
272
23
485
(282)
211
698
$
311
$
359
$
627
2023
2022
(In Thousands)
$
$
39,617
107,602
70,162
6,621
224,002
85,411
39,622
105,096
67,505
7,397
219,620
78,550
$
138,591
$
141,070
Land
Buildings and improvements
Furniture, fixtures and equipment
Operating leases right of use asset
Less accumulated depreciation
Leases. In 2019, the Company adopted ASU 2016-02, Leases (Topic 842). Adoption of this ASU resulted in the
Company initially recognizing a right of use asset and corresponding lease liability of $9.5 million. The amount of
the right of use asset and corresponding lease liability will fluctuate based on the Company’s lease terminations,
new leases and lease modifications and renewals. As of December 31, 2023, the lease right of use asset value was
$6.6 million and the corresponding lease liability was $6.9 million. As of December 31, 2022, the lease right of
use asset value was $7.4 million and the corresponding lease liability was $7.6 million. At December 31, 2023,
expected lease terms ranged from 0.3 years to 14.9 years with a weighted-average lease term of 6.9 years. The
weighted-average discount rate was 3.79%.
For the years ended December 31, 2023, 2022 and 2021, lease expense was $1.7 million, $1.6 million and $1.5
million, respectively. The Company’s short-term leases related to offsite ATMs have both fixed and variable lease
payment components, based on the number of transactions at the various ATMs. The variable portion of these lease
payments is not material and the total lease expense related to ATMs was $ 317,000, $ 307,000 and $ 307,000 for
the years ended December 31, 2023, 2022 and 2021, respectively.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
At December 31, 2022, other real estate owned not acquired through foreclosure included two properties, both of
which were branch locations that were closed and held for sale; these were sold during the year ended December
31, 2023, as indicated above. During the year ended December 31, 2022, two former branch location were sold.
During the year ended December 31, 2022, no additional valuation write-downs were recorded on branch
locations that were closed and held for sale.
At December 31, 2023 and 2022, residential mortgage loans totaling $-0- and $173,000, respectively, were in the
process of foreclosure.
Expenses applicable to other real estate owned and repossessions for the years ended December 31, 2023, 2022
and 2021, included the following:
2023
2022
(In Thousands)
2021
Net gains on sales of other real estate owned and repossessions
Valuation write-downs
Operating expenses, net of rental income
$
(42) $
81
272
(149) $
23
485
(282)
211
698
$
311
$
359
$
627
Note 6:
Premises and Equipment
Major classifications of premises and equipment at December 31, 2023 and 2022, stated at cost, were as follows:
Land
Buildings and improvements
Furniture, fixtures and equipment
Operating leases right of use asset
Less accumulated depreciation
2023
2022
(In Thousands)
$
$
39,617
107,602
70,162
6,621
224,002
85,411
39,622
105,096
67,505
7,397
219,620
78,550
$
138,591
$
141,070
Leases. In 2019, the Company adopted ASU 2016-02, Leases (Topic 842). Adoption of this ASU resulted in the
Company initially recognizing a right of use asset and corresponding lease liability of $9.5 million. The amount of
the right of use asset and corresponding lease liability will fluctuate based on the Company’s lease terminations,
new leases and lease modifications and renewals. As of December 31, 2023, the lease right of use asset value was
$6.6 million and the corresponding lease liability was $6.9 million. As of December 31, 2022, the lease right of
use asset value was $7.4 million and the corresponding lease liability was $7.6 million. At December 31, 2023,
expected lease terms ranged from 0.3 years to 14.9 years with a weighted-average lease term of 6.9 years. The
weighted-average discount rate was 3.79%.
For the years ended December 31, 2023, 2022 and 2021, lease expense was $1.7 million, $1.6 million and $1.5
million, respectively. The Company’s short-term leases related to offsite ATMs have both fixed and variable lease
payment components, based on the number of transactions at the various ATMs. The variable portion of these lease
payments is not material and the total lease expense related to ATMs was $ 317,000, $ 307,000 and $ 307,000 for
the years ended December 31, 2023, 2022 and 2021, respectively.
105
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The Company does not sublease any of its leased facilities; however, it does lease to other third parties portions of
facilities that it owns. In terms of being the lessor in these circumstances, all of these lease agreements are classified as
operating leases. In the years ended December 31, 2023, 2022 and 2021, income recognized from these lease
agreements was $1.3 million, $1.2 million, and $1.2 million respectively, and was included in occupancy and
equipment expense.
Note 7: Investments in Limited Partnerships
Investments in Affordable Housing Partnerships
Statement of Financial Condition
Operating leases right of use asset
Operating leases liability
Statement of Income
Operating lease costs classified as occupancy and equipment expense
(includes short-term lease costs and amortization of right of use asset)
Supplemental Cash Flow Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Right of use assets obtained in exchange for lease obligations:
At or For the Year Ended
December 31, 2023 December 31, 2022
(In Thousands)
$
$
6,621
6,870
$
$
7,397
7,599
$
1,740
$
1,579
$
1,681
$
1,547
Operating leases
$
296
$
618
At December 31, 2023, future expected lease payments for leases with terms exceeding one year were as follows (in
thousands):
2024
2025
2026
2027
2028
Thereafter
Future lease payments expected
$
1,313
1,297
1,241
1,172
900
1,899
7,822
Less interest portion of lease payments
(952)
Lease liability
$
6,870
106
The Company has invested in certain limited partnerships that were formed to develop and operate apartments and
single-family houses designed as high-quality affordable housing for lower income tenants throughout Missouri and
contiguous states. At December 31, 2023, the Company had 22 such investments, with a net carrying value of $66.3
million. At December 31, 2022, the Company had 19 such investments, with a net carrying value of $38.4 million.
Due to the Company’s inability to exercise any significant influence over any of the investments in Affordable
Housing Partnerships, they all are accounted for using the proportional amortization method. Each of the partnerships
must meet the regulatory requirements for affordable housing for a minimum 15-year compliance period to fully
utilize the tax credits. If the partnerships cease to qualify during the compliance period, the credits may be denied for
any period in which the projects are not in compliance and a portion of the credits previously taken may be subject to
recapture with interest.
The remaining federal affordable housing tax credits to be utilized through 2034 were $75.9 million as of December
31, 2023, assuming no tax credit recapture events occur and all projects currently under construction are completed as
planned. Amortization of the investments in partnerships is expected to be approximately $68.9 million, assuming all
projects currently under construction are completed and funded as planned. The Company’s usage of federal
affordable housing tax credits approximated $7.7 million, $4.9 million and $4.9 million during 2023, 2022 and 2021,
respectively. Investment amortization was $7.2 million, $4.4 million and $4.2 million for the years ended December
31, 2023, 2022 and 2021, respectively.
Investments in Community Development Entities
The Company has invested in certain limited partnerships that were formed to develop and operate business and
real estate projects located in low-income communities. At December 31, 2023 the Company had one such
investment, with a net carrying value of $361,000. At December 31, 2022, the Company had one such investment,
with a net carrying value of $465,000. Due to the Company’s inability to exercise any significant influence over
any of the investments in qualified Community Development Entities, they are all accounted for using the cost
method. Each of the partnerships provides federal New Market Tax Credits over a seven-year credit allowance
period. In each of the first three years, credits totaling five percent of the original investment are allowed on the
credit allowance dates and for the final four years, credits totaling six percent of the original investment are
allowed on the credit allowance dates. Each of the partnerships must be invested in a qualified Community
Development Entity on each of the credit allowance dates during the seven-year period to utilize the tax credits. If
the Community Development Entities cease to qualify during the seven-year period, the credits may be denied for
any credit allowance date and a portion of the credits previously taken may be subject to recapture with interest.
The investments in the Community Development Entities cannot be redeemed before the end of the seven-year
period.
The Company’s usage of federal New Market Tax Credits approximated $100,000, $100,000 and $100,000 during
2023, 2022 and 2021, respectively. Investment amortization amounted to $83,000, $83,000 and $86,000 for the
years ended December 31, 2023, 2022 and 2021, respectively.
Investments in Limited Partnerships for Federal Rehabilitation/Historic Tax Credits
From time to time, the Company has invested in certain limited partnerships that were formed to provide certain
federal rehabilitation/historic tax credits. At December 31, 2023 the Company had one such investment, with a net
carrying value of $415,000. At December 31, 2022 the Company had one such investment, with a net carrying
value of $629,000. Under prior tax law, the Company utilized these credits in their entirety in the year the project
was placed in service and the impact to the Consolidated Statements of Income has not been material. Currently,
such partnerships provide federal rehabilitation/historic tax credits over a five-year credit allowance period.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Note 7: Investments in Limited Partnerships
Investments in Affordable Housing Partnerships
The Company has invested in certain limited partnerships that were formed to develop and operate apartments and
single-family houses designed as high-quality affordable housing for lower income tenants throughout Missouri and
contiguous states. At December 31, 2023, the Company had 22 such investments, with a net carrying value of $66.3
million. At December 31, 2022, the Company had 19 such investments, with a net carrying value of $38.4 million.
Due to the Company’s inability to exercise any significant influence over any of the investments in Affordable
Housing Partnerships, they all are accounted for using the proportional amortization method. Each of the partnerships
must meet the regulatory requirements for affordable housing for a minimum 15-year compliance period to fully
utilize the tax credits. If the partnerships cease to qualify during the compliance period, the credits may be denied for
any period in which the projects are not in compliance and a portion of the credits previously taken may be subject to
recapture with interest.
The remaining federal affordable housing tax credits to be utilized through 2034 were $75.9 million as of December
31, 2023, assuming no tax credit recapture events occur and all projects currently under construction are completed as
planned. Amortization of the investments in partnerships is expected to be approximately $68.9 million, assuming all
projects currently under construction are completed and funded as planned. The Company’s usage of federal
affordable housing tax credits approximated $7.7 million, $4.9 million and $4.9 million during 2023, 2022 and 2021,
respectively. Investment amortization was $7.2 million, $4.4 million and $4.2 million for the years ended December
31, 2023, 2022 and 2021, respectively.
Investments in Community Development Entities
The Company has invested in certain limited partnerships that were formed to develop and operate business and
real estate projects located in low-income communities. At December 31, 2023 the Company had one such
investment, with a net carrying value of $361,000. At December 31, 2022, the Company had one such investment,
with a net carrying value of $465,000. Due to the Company’s inability to exercise any significant influence over
any of the investments in qualified Community Development Entities, they are all accounted for using the cost
method. Each of the partnerships provides federal New Market Tax Credits over a seven-year credit allowance
period. In each of the first three years, credits totaling five percent of the original investment are allowed on the
credit allowance dates and for the final four years, credits totaling six percent of the original investment are
allowed on the credit allowance dates. Each of the partnerships must be invested in a qualified Community
Development Entity on each of the credit allowance dates during the seven-year period to utilize the tax credits. If
the Community Development Entities cease to qualify during the seven-year period, the credits may be denied for
any credit allowance date and a portion of the credits previously taken may be subject to recapture with interest.
The investments in the Community Development Entities cannot be redeemed before the end of the seven-year
period.
The Company’s usage of federal New Market Tax Credits approximated $100,000, $100,000 and $100,000 during
2023, 2022 and 2021, respectively. Investment amortization amounted to $83,000, $83,000 and $86,000 for the
years ended December 31, 2023, 2022 and 2021, respectively.
Investments in Limited Partnerships for Federal Rehabilitation/Historic Tax Credits
From time to time, the Company has invested in certain limited partnerships that were formed to provide certain
federal rehabilitation/historic tax credits. At December 31, 2023 the Company had one such investment, with a net
carrying value of $415,000. At December 31, 2022 the Company had one such investment, with a net carrying
value of $629,000. Under prior tax law, the Company utilized these credits in their entirety in the year the project
was placed in service and the impact to the Consolidated Statements of Income has not been material. Currently,
such partnerships provide federal rehabilitation/historic tax credits over a five-year credit allowance period.
107
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Investments in Limited Partnerships for State Tax Credits
At December 31, 2023, scheduled maturities of certificates of deposit and brokered deposits were as follows:
From time to time, the Company has invested in certain limited partnerships that were formed to provide certain
state tax credits. The Company has primarily syndicated these tax credits and the impact to the Consolidated
Statements of Income has not been material.
Note 8: Deposits
Deposits at December 31, 2023 and 2022, are summarized as follows:
Weighted Average
Interest Rate
2023
2022
(In Thousands, Except Interest Rates)
—
$
895,496
$
1,063,588
Non-interest-bearing accounts
Interest-bearing checking and
savings accounts
1.67% and 0.65%
Certificate accounts
0% - 0.99%
1% - 1.99%
2% - 2.99%
3% - 3.99%
4% - 4.99%
5% and above
Brokered deposits
5.20% and 4.03%
2,216,482
3,111,978
86,831
22,485
44,354
46,304
739,645
8,583
948,202
661,528
661,528
2,188,535
3,252,123
280,784
125,951
381,547
228,131
4,883
—
1,021,296
411,491
411,491
$
4,721,708
$
4,684,910
The weighted average interest rate on certificates of deposit was 3.79% and 1.93% at December 31, 2023 and 2022,
respectively.
The Bank utilizes brokered deposits as an additional funding source. The aggregate amount of brokered deposits was
approximately $661.5 million and $411.5 million at December 31, 2023 and December 31, 2022, respectively. At
December 31, 2023 and December 31, 2022, brokered deposits included $300.0 million and $150.0 million,
respectively, of purchased funds through the IntraFi Financial network. These IntraFi Financial deposits have a rate
of interest that floats daily with an index of effective federal funds rate plus a spread. At December 31, 2023, there
were additional brokered deposits totaling $95.0 million that had variable rates of interest that reset monthly or
quarterly and there were other brokered deposits totaling $185.3 million that had fixed rates of interest but are
callable at the Bank’s discretion. At December 31, 2023, approximately 28% of the Company’s total deposits were
uninsured, when including deposit accounts of consolidated subsidiaries of the Company and collateralized deposits
of unaffiliated entities. Excluding deposit accounts of the Company’s consolidated subsidiaries, approximately 13%
of the Company’s total deposits were uninsured at December 31, 2023.
108
2024
2025
2026
2027
2028
Thereafter
Retail
Brokered
(In Thousands)
Total
$
$
$
1,188,266
921,485
19,250
3,067
2,394
948
1,058
266,781
296,552
98,195
—
—
—
315,802
101,262
2,394
948
1,058
$
948,202
$
661,528
$
1,609,730
A summary of interest expense on deposits for the years ended December 31, 2023, 2022 and 2021, is as follows:
Checking and savings accounts
$
$
$
Certificate accounts
Brokered deposits
Early withdrawal penalties
2023
2022
(In Thousands)
2021
28,579
29,796
30,719
(337)
5,968
8,788
6,162
(242)
4,023
8,150
989
(60)
$
88,757
$
20,676
$
13,102
Note 9: Advances From Federal Home Loan Bank
At December 31, 2023 and 2022, there were no outstanding term advances from the Federal Home Loan Bank of
Des Moines. At December 31, 2023, there were outstanding overnight borrowings from the Federal Home Loan
Bank of Des Moines, which are included in Short-Term Borrowings.
The Bank has pledged FHLB stock, investment securities and first mortgage loans free of other pledges, liens and
encumbrances as collateral for outstanding advances. No investment securities were specifically pledged as
collateral for FHLB borrowings at December 31, 2023 and 2022. Loans with carrying values of approximately
$1.74 billion and $1.62 billion were pledged as collateral for outstanding advances at December 31, 2023 and
2022, respectively. The Bank had $919.1 million remaining available on its line of credit under a borrowing
arrangement with the FHLB of Des Moines at December 31, 2023.
Note 10: Short-Term Borrowings
Short-term borrowings at December 31, 2023 and 2022, are summarized as follows:
Notes payable – Community Development Equity Funds
$
$
Securities sold under reverse repurchase agreements
Overnight borrowings from the Federal Home Loan Bank
2023
2022
(In Thousands)
1,610
70,843
251,000
1,083
176,843
88,500
$
323,453
$
266,426
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
At December 31, 2023, scheduled maturities of certificates of deposit and brokered deposits were as follows:
2024
2025
2026
2027
2028
Thereafter
Retail
Brokered
(In Thousands)
Total
$
921,485
19,250
3,067
2,394
948
1,058
$
266,781
296,552
98,195
—
—
—
$
1,188,266
315,802
101,262
2,394
948
1,058
$
948,202
$
661,528
$
1,609,730
A summary of interest expense on deposits for the years ended December 31, 2023, 2022 and 2021, is as follows:
2023
2022
(In Thousands)
2021
Checking and savings accounts
Certificate accounts
Brokered deposits
Early withdrawal penalties
$
$
28,579
29,796
30,719
(337)
$
5,968
8,788
6,162
(242)
4,023
8,150
989
(60)
$
88,757
$
20,676
$
13,102
Note 9: Advances From Federal Home Loan Bank
At December 31, 2023 and 2022, there were no outstanding term advances from the Federal Home Loan Bank of
Des Moines. At December 31, 2023, there were outstanding overnight borrowings from the Federal Home Loan
Bank of Des Moines, which are included in Short-Term Borrowings.
The Bank has pledged FHLB stock, investment securities and first mortgage loans free of other pledges, liens and
encumbrances as collateral for outstanding advances. No investment securities were specifically pledged as
collateral for FHLB borrowings at December 31, 2023 and 2022. Loans with carrying values of approximately
$1.74 billion and $1.62 billion were pledged as collateral for outstanding advances at December 31, 2023 and
2022, respectively. The Bank had $919.1 million remaining available on its line of credit under a borrowing
arrangement with the FHLB of Des Moines at December 31, 2023.
Note 10: Short-Term Borrowings
Short-term borrowings at December 31, 2023 and 2022, are summarized as follows:
2023
2022
(In Thousands)
Notes payable – Community Development Equity Funds
Securities sold under reverse repurchase agreements
Overnight borrowings from the Federal Home Loan Bank
$
$
1,610
70,843
251,000
1,083
176,843
88,500
$
323,453
$
266,426
109
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The Bank enters into sales of securities under agreements to repurchase (reverse repurchase agreements). Reverse
repurchase agreements are treated as financings, and the obligations to repurchase securities sold are reflected as a
liability in the statements of financial condition. The dollar amount of securities underlying the agreements remains
in the asset accounts. Securities underlying the agreements are being held by the Bank during the agreement period.
All agreements are written on a term of one-month or less.
Short-term borrowings had weighted average interest rates of 4.76% at December 31, 2023, compared to 2.16% at
December 31, 2022. Short-term borrowings averaged approximately $225.1 million and $181.1 million for the years
ended December 31, 2023 and 2022, respectively. The maximum amounts outstanding at any month end were
$410.6 million and $317.7 million, respectively, during those same years.
The following table represents the Company’s securities sold under reverse repurchase agreements, which
contractually mature daily, at December 31, 2023 and 2022:
2023
2022
(In Thousands)
Mortgage-backed securities – GNMA, FNMA, FHLMC
$
70,843
$
176,843
Note 11: Federal Reserve Bank Borrowings
At December 31, 2023 and 2022, the Bank had $452.0 million and $397.0 million, respectively, available under a
primary line-of-credit borrowing arrangement with the Federal Reserve Bank. The line is secured primarily by
consumer and commercial loans. There were no amounts borrowed under this arrangement at December 31, 2023
or 2022.
Subsequent to December 31, 2023, in January 2024 the Bank borrowed $180.0 million under the Federal Reserve
Bank’s Bank Term Funding Program (BTFP). The borrowing, which matures in January 2025 and has a fixed
interest rate of 4.83%, may be repaid in full or in part without penalty prior to its stated maturity date. The line is
secured primarily by the Bank’s held-to-maturity investment securities, with total amount of assets pledged
totaling approximately $191 million. These funds were primarily used to repay a portion of the Bank’s overnight
borrowings from the FHLB.
Note 12: Subordinated Debentures Issued to Capital Trusts
In November 2006, Great Southern Capital Trust II (Trust II), a statutory trust formed by the Company for the
purpose of issuing the securities, issued a $25.0 million aggregate liquidation amount of floating rate cumulative
trust preferred securities. The Trust II securities bore a floating distribution rate equal to 90-day LIBOR plus
1.60% through June 30, 2023. After June 30, 2023, the Trust II securities bear a floating distribution rate equal to
three-month CME Term SOFR, plus a spread adjustment for the change from LIBOR, plus 1.60%. The Trust II
securities became redeemable at the Company’s option in February 2012, and if not sooner redeemed, mature on
February 1, 2037. The Trust II securities were sold in a private transaction exempt from registration under the
Securities Act of 1933, as amended. The gross proceeds of the offering were used to purchase Junior
Subordinated Debentures from the Company totaling $25.8 million and bearing an interest rate identical to the
distribution rate on the Trust II securities. The initial interest rate on the Trust II debentures was 6.98%. The
interest rate was 7.24% and 6.04% at December 31, 2023 and 2022, respectively.
110
At December 31, 2023 and 2022, subordinated debentures issued to capital trusts were as follows:
2023
2022
(In Thousands)
Subordinated debentures
$ 25,774
$ 25,774
Note 13: Subordinated Notes
On June 10, 2020, the Company completed the public offering and sale of $75.0 million of its subordinated notes.
The notes are due June 15, 2030, and have a fixed interest rate of 5.50% until June 15, 2025, at which time the
rate becomes floating at a rate expected to be equal to three-month term Secured Overnight Financing Rate
(SOFR) plus 5.325%. The Company may call the notes at par beginning on June 15, 2025, and on any scheduled
interest payment date thereafter. The notes were sold at par, resulting in net proceeds, after underwriting
discounts and commissions, legal, accounting and other professional fees, of approximately $73.5 million. Total
debt issuance costs of approximately $1.5 million were deferred and are being amortized over the expected life of
the notes, which is five years.
Amortization of the debt issuance costs during the years ended December 31, 2023 and 2022, totaled $297,000
and $293,000, respectively, and is included in interest expense on subordinated notes in the consolidated
statements of income, resulting in an imputed interest rate of 5.92% and 5.95%, respectively.
At December 31, 2023 and 2022, subordinated notes are summarized as follows:
Subordinated notes
Less: unamortized debt issuance costs
Note 14: Income Taxes
2023
2022
(In Thousands)
$
$
75,000
421
74,579
$
$
75,000
719
74,281
The Company files a consolidated federal income tax return. As of December 31, 2023 and 2022, retained
earnings included approximately $17.5 million for which no deferred income tax liability had been recognized.
This amount represents an allocation of income to bad debt deductions for tax purposes only for tax years prior to
1988. If the Bank were to liquidate, the entire amount would have to be recaptured and would create income for
tax purposes only, which would be subject to the then-current corporate income tax rate. The unrecorded deferred
income tax liability on the above amount was approximately $4.3 million and $4.3 million at December 31, 2023
and 2022, respectively.
components:
During the years ended December 31, 2023, 2022 and 2021, the provision for income taxes included these
2023
2022
(In Thousands)
2021
Taxes currently payable
Deferred income taxes
14,559
2,985
$
15,769
2,485
$
16,025
3,712
Income taxes
17,544
$
18,254
$
19,737
$
$
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
At December 31, 2023 and 2022, subordinated debentures issued to capital trusts were as follows:
2023
2022
(In Thousands)
Subordinated debentures
$ 25,774
$ 25,774
Note 13: Subordinated Notes
On June 10, 2020, the Company completed the public offering and sale of $75.0 million of its subordinated notes.
The notes are due June 15, 2030, and have a fixed interest rate of 5.50% until June 15, 2025, at which time the
rate becomes floating at a rate expected to be equal to three-month term Secured Overnight Financing Rate
(SOFR) plus 5.325%. The Company may call the notes at par beginning on June 15, 2025, and on any scheduled
interest payment date thereafter. The notes were sold at par, resulting in net proceeds, after underwriting
discounts and commissions, legal, accounting and other professional fees, of approximately $73.5 million. Total
debt issuance costs of approximately $1.5 million were deferred and are being amortized over the expected life of
the notes, which is five years.
Amortization of the debt issuance costs during the years ended December 31, 2023 and 2022, totaled $297,000
and $293,000, respectively, and is included in interest expense on subordinated notes in the consolidated
statements of income, resulting in an imputed interest rate of 5.92% and 5.95%, respectively.
At December 31, 2023 and 2022, subordinated notes are summarized as follows:
Subordinated notes
Less: unamortized debt issuance costs
Note 14: Income Taxes
2023
2022
(In Thousands)
$
$
75,000
421
74,579
$
$
75,000
719
74,281
The Company files a consolidated federal income tax return. As of December 31, 2023 and 2022, retained
earnings included approximately $17.5 million for which no deferred income tax liability had been recognized.
This amount represents an allocation of income to bad debt deductions for tax purposes only for tax years prior to
1988. If the Bank were to liquidate, the entire amount would have to be recaptured and would create income for
tax purposes only, which would be subject to the then-current corporate income tax rate. The unrecorded deferred
income tax liability on the above amount was approximately $4.3 million and $4.3 million at December 31, 2023
and 2022, respectively.
During the years ended December 31, 2023, 2022 and 2021, the provision for income taxes included these
components:
2023
2022
(In Thousands)
2021
Taxes currently payable
Deferred income taxes
Income taxes
14,559
2,985
$
15,769
2,485
$
16,025
3,712
17,544
$
18,254
$
19,737
$
$
111
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The tax effects of temporary differences related to deferred taxes shown on the statements of financial condition
were:
$
Deferred tax assets
Allowance for credit losses
Liability for unfunded commitments
Interest on nonperforming loans
Accrued expenses and other
Capital loss carryforward
Unrealized loss on available-for-sale securities
Unrealized loss on securities transferred to held-to-
maturity securities
Unrealized loss on active cash flow derivatives
Income recognized for tax in excess of book related to
terminated cash flow derivatives
Deferred income
Difference in basis for acquired assets and liabilities
Deferred tax liabilities
Tax depreciation in excess of book depreciation
FHLB stock dividends
Partnership tax credits
Prepaid expenses
Unrealized gain on securities transferred to held-to-
maturity securities
Unrealized gain on terminated cash flow derivatives
Other
December 31,
2023
2022
(In Thousands)
15,911
1,842
71
1,676
150
13,208
16
4,255
3,532
124
353
41,138
(7,697)
(337)
(998)
(1,373)
—
(3,532)
(277)
(14,214)
$
15,618
3,153
66
1,341
67
15,407
—
7,695
5,530
290
686
49,853
(8,210)
(337)
(668)
(1,196)
(29)
(5,530)
(235)
(16,205)
Net deferred tax asset
$
26,924
$
33,648
Reconciliations of the Company’s effective tax rates, for the years indicated, from continuing operations to
the statutory corporate tax rates were as follows:
Tax at statutory rate
Nontaxable interest and dividends
Tax credits
State taxes
Deferred tax rate change benefit
Other
2023
2022
2021
21.0%
(0.5)
(2.7)
1.7
—
1.1
20.6%
21.0%
(0.5)
(1.6)
1.8
(0.6)
(0.7)
19.4%
21.0%
(0.3)
(1.8)
1.3
—
0.7
20.9%
The Company and its consolidated subsidiaries have not been audited recently by the Internal Revenue Service (IRS).
As a result, federal tax years through December 31, 2019 are now closed.
112
The Company was previously under State of Missouri income and franchise tax examinations for its 2014 and
2015 tax years. The examinations concluded with one unresolved issue related to the exclusion of certain income
in the calculation of Missouri income tax. The Missouri Department of Revenue denied the Company’s
administrative protest regarding the 2014 and 2015 tax years’ examinations. In June 2021, the Company filed a
formal protest with the Missouri Administrative Hearing Commission (MAHC), which has special jurisdiction to
hear tax matters and is similar to a trial court, to continue defending the Company’s rights and associated tax
position. The Company previously filed a motion for summary decision with the MAHC and, on January 26,
2024, the MAHC granted the motion in favor of the Company, upholding its position related to the exclusion of
certain income in the calculation of Missouri income tax. In February 2024, the Missouri Department of Revenue
confirmed to the Company in writing that it would not exercise its right to appeal the decision to the Missouri
State Supreme Court.
Note 15: Disclosures About Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820
also specifies a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be
used to measure fair value:
Quoted prices in active markets for identical assets or liabilities (Level 1): Inputs that are quoted
unadjusted prices in active markets for identical assets that the Company has the ability to access at the
measurement date. An active market for the asset is a market in which transactions for the asset or
liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Other observable inputs (Level 2): Inputs that reflect the assumptions market participants would use in
pricing the asset or liability developed based on market data obtained from sources independent of the
reporting entity including quoted prices for similar assets, quoted prices for securities in inactive markets
and inputs derived principally from or corroborated by observable market data by correlation or other
means.
Significant unobservable inputs (Level 3): Inputs that reflect assumptions of a source independent of the
reporting entity or the reporting entity’s own assumptions that are supported by little or no market
activity or observable inputs.
Financial instruments are broken down by recurring or nonrecurring measurement status. Recurring assets are initially
measured at fair value and are required to be remeasured at fair value in the financial statements at each reporting date.
Assets measured on a nonrecurring basis are assets that, due to an event or circumstance, were required to be
remeasured at fair value after initial recognition in the financial statements at some time during the reporting period.
The Company considers transfers between the levels of the hierarchy to be recognized at the end of related reporting
periods.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The Company was previously under State of Missouri income and franchise tax examinations for its 2014 and
2015 tax years. The examinations concluded with one unresolved issue related to the exclusion of certain income
in the calculation of Missouri income tax. The Missouri Department of Revenue denied the Company’s
administrative protest regarding the 2014 and 2015 tax years’ examinations. In June 2021, the Company filed a
formal protest with the Missouri Administrative Hearing Commission (MAHC), which has special jurisdiction to
hear tax matters and is similar to a trial court, to continue defending the Company’s rights and associated tax
position. The Company previously filed a motion for summary decision with the MAHC and, on January 26,
2024, the MAHC granted the motion in favor of the Company, upholding its position related to the exclusion of
certain income in the calculation of Missouri income tax. In February 2024, the Missouri Department of Revenue
confirmed to the Company in writing that it would not exercise its right to appeal the decision to the Missouri
State Supreme Court.
Note 15: Disclosures About Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820
also specifies a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be
used to measure fair value:
Quoted prices in active markets for identical assets or liabilities (Level 1): Inputs that are quoted
unadjusted prices in active markets for identical assets that the Company has the ability to access at the
measurement date. An active market for the asset is a market in which transactions for the asset or
liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Other observable inputs (Level 2): Inputs that reflect the assumptions market participants would use in
pricing the asset or liability developed based on market data obtained from sources independent of the
reporting entity including quoted prices for similar assets, quoted prices for securities in inactive markets
and inputs derived principally from or corroborated by observable market data by correlation or other
means.
Significant unobservable inputs (Level 3): Inputs that reflect assumptions of a source independent of the
reporting entity or the reporting entity’s own assumptions that are supported by little or no market
activity or observable inputs.
Financial instruments are broken down by recurring or nonrecurring measurement status. Recurring assets are initially
measured at fair value and are required to be remeasured at fair value in the financial statements at each reporting date.
Assets measured on a nonrecurring basis are assets that, due to an event or circumstance, were required to be
remeasured at fair value after initial recognition in the financial statements at some time during the reporting period.
The Company considers transfers between the levels of the hierarchy to be recognized at the end of related reporting
periods.
113
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Recurring Measurements
Recurring Measurements
Recurring Measurements
The following table presents the fair value measurements of assets recognized in the accompanying balance sheets
The following table presents the fair value measurements of assets recognized in the accompanying balance sheets
The following table presents the fair value measurements of assets recognized in the accompanying balance sheets
measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value
measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value
measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value
measurements fall at December 31, 2023 and 2022:
measurements fall at December 31, 2023 and 2022:
measurements fall at December 31, 2023 and 2022:
Fair Value Measurements Using
Fair Value Measurements Using
Fair Value Measurements Using
Quoted Prices
Quoted Prices
Quoted Prices
in Active
in Active
in Active
Markets
Markets
Markets
for Identical
for Identical
for Identical
Assets
Assets
Assets
(Level 1)
(Level 1)
(Level 1)
Other
Other
Other
Observable
Observable
Observable
Inputs
Inputs
Inputs
(Level 2)
(Level 2)
(Level 2)
Significant
Significant
Significant
Unobservable
Unobservable
Unobservable
Inputs
Inputs
Inputs
(Level 3)
(Level 3)
(Level 3)
(In Thousands)
(In Thousands)
(In Thousands)
Fair Value
Fair Value
Fair Value
December 31, 2023
December 31, 2023
December 31, 2023
Available-for-sale securities
Available-for-sale securities
Available-for-sale securities
Agency mortgage-backed securities
Agency mortgage-backed securities
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Agency collateralized mortgage obligations
Agency collateralized mortgage obligations
States and political subdivisions securities
States and political subdivisions securities
States and political subdivisions securities
Small Business Administration securities
Small Business Administration securities
Small Business Administration securities
Interest rate derivative asset
Interest rate derivative asset
Interest rate derivative asset
Interest rate derivative liability
Interest rate derivative liability
Interest rate derivative liability
December 31, 2022
December 31, 2022
December 31, 2022
Available-for-sale securities
Available-for-sale securities
Available-for-sale securities
$
$
$
$ 280,231
$ 280,231
$ 280,231
75,946
75,946
75,946
58,137
58,137
58,137
63,893
63,893
63,893
8,205
8,205
8,205
(25,336)
(25,336)
(25,336)
Agency mortgage-backed securities
Agency mortgage-backed securities
Agency mortgage-backed securities
Agency collateralized mortgage obligations
Agency collateralized mortgage obligations
Agency collateralized mortgage obligations
States and political subdivisions securities
States and political subdivisions securities
States and political subdivisions securities
Small Business Administration securities
Small Business Administration securities
Small Business Administration securities
Interest rate derivative asset
Interest rate derivative asset
Interest rate derivative asset
Interest rate derivative liability
Interest rate derivative liability
Interest rate derivative liability
$
$
$
$ 286,482
$ 286,482
$ 286,482
78,474
78,474
78,474
57,495
57,495
57,495
68,141
68,141
68,141
11,061
11,061
11,061
(42,097)
(42,097)
(42,097)
$
$
$
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
$
280,231
280,231
280,231
75,946
75,946
75,946
58,137
58,137
58,137
63,893
63,893
63,893
8,205
8,205
8,205
(25,336)
(25,336)
(25,336)
$
$
$
286,482
286,482
286,482
78,474
78,474
78,474
57,495
57,495
57,495
68,141
68,141
68,141
11,061
11,061
11,061
(42,097)
(42,097)
(42,097)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
The following is a description of inputs and valuation methodologies used for assets recorded at fair value on a
The following is a description of inputs and valuation methodologies used for assets recorded at fair value on a
The following is a description of inputs and valuation methodologies used for assets recorded at fair value on a
recurring basis and recognized in the accompanying statements of financial condition at December 31, 2023 and
recurring basis and recognized in the accompanying statements of financial condition at December 31, 2023 and
recurring basis and recognized in the accompanying statements of financial condition at December 31, 2023 and
2022, as well as the general classification of such assets pursuant to the valuation hierarchy. There were no
2022, as well as the general classification of such assets pursuant to the valuation hierarchy. There were no
2022, as well as the general classification of such assets pursuant to the valuation hierarchy. There were no
significant changes in the valuation techniques during the year ended December 31, 2023.
significant changes in the valuation techniques during the year ended December 31, 2023.
significant changes in the valuation techniques during the year ended December 31, 2023.
Available-for-Sale Securities
Available-for-Sale Securities
Available-for-Sale Securities
Investment securities available-for-sale are recorded at fair value on a recurring basis. The fair values used by the
Investment securities available-for-sale are recorded at fair value on a recurring basis. The fair values used by the
Investment securities available-for-sale are recorded at fair value on a recurring basis. The fair values used by the
Company are obtained from an independent pricing service, which represent either quoted market prices for the
Company are obtained from an independent pricing service, which represent either quoted market prices for the
Company are obtained from an independent pricing service, which represent either quoted market prices for the
identical asset or fair values determined by pricing models, or other model-based valuation techniques, that
identical asset or fair values determined by pricing models, or other model-based valuation techniques, that
identical asset or fair values determined by pricing models, or other model-based valuation techniques, that
consider observable market data, such as interest rate volatilities, SOFR yield curve, credit spreads and prices
consider observable market data, such as interest rate volatilities, SOFR yield curve, credit spreads and prices
consider observable market data, such as interest rate volatilities, SOFR yield curve, credit spreads and prices
from market makers and live trading systems. Recurring Level 2 securities include U.S. government agency
from market makers and live trading systems. Recurring Level 2 securities include U.S. government agency
from market makers and live trading systems. Recurring Level 2 securities include U.S. government agency
securities, mortgage-backed securities, state and municipal bonds and certain other investments. Inputs used for
securities, mortgage-backed securities, state and municipal bonds and certain other investments. Inputs used for
securities, mortgage-backed securities, state and municipal bonds and certain other investments. Inputs used for
valuing Level 2 securities include observable data that may include dealer quotes, benchmark yields, market
valuing Level 2 securities include observable data that may include dealer quotes, benchmark yields, market
valuing Level 2 securities include observable data that may include dealer quotes, benchmark yields, market
spreads, live trading levels and market consensus prepayment speeds, among other things. Additional inputs
include indicative values derived from the independent pricing service’s proprietary computerized models. There
spreads, live trading levels and market consensus prepayment speeds, among other things. Additional inputs
spreads, live trading levels and market consensus prepayment speeds, among other things. Additional inputs
were no recurring Level 3 securities at December 31, 2023 or December 31, 2022.
include indicative values derived from the independent pricing service’s proprietary computerized models. There
include indicative values derived from the independent pricing service’s proprietary computerized models. There
were no recurring Level 3 securities at December 31, 2023 or December 31, 2022.
were no recurring Level 3 securities at December 31, 2023 or December 31, 2022.
114
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The fair value is estimated using forward-looking interest rate curves and is determined using observable market
rates and, therefore, are classified within Level 2 of the valuation hierarchy.
Interest Rate Derivatives
Nonrecurring Measurements
The following tables present the fair value measurement of assets measured at fair value on a nonrecurring basis
and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2023 and
2022:
Fair Value Measurements Using
Quoted
Prices
in Active
Markets
Assets
(Level 1)
Fair Value
for Identical
Observable
Unobservable
Other
Significant
Inputs
(Level 2)
Inputs
(Level 3)
(In Thousands)
7,372
$
—
$
—
$
7,372
785
$
—
$
—
$
785
December 31, 2023
Collateral-dependent loans
December 31, 2022
Collateral-dependent loans
$
$
Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring
basis and recognized in the accompanying statements of financial condition, as well as the general classification
of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy,
the process used to develop the reported fair value is described below.
Loans Held for Sale
Mortgage loans held for sale are recorded at the lower of carrying value or fair value. The fair value of mortgage
loans held for sale is based on what secondary markets are currently offering for portfolios with similar
characteristics. As such, the Company classifies mortgage loans held for sale as Nonrecurring Level 2. Write-
downs to fair value typically do not occur as the Company generally enters into commitments to sell individual
mortgage loans at the time the loan is originated to reduce market risk. The Company typically does not have
commercial loans held for sale. At December 31, 2023 and 2022, the aggregate fair value of mortgage loans held
for sale was not materially different than their cost. Accordingly, no mortgage loans held for sale were marked
down and reported at fair value.
Collateral-Dependent Loans
The Company records collateral-dependent loans as Nonrecurring Level 3. If a loan’s fair value as estimated by
the Company is less than its carrying value, the Company either records a charge-off of the portion of the loan that
exceeds the fair value or establishes a reserve within the allowance for credit losses specific to the loan. Loans for
which such charge-offs or reserves were recorded during the years ended December 31, 2023 and December 31,
2022, are shown in the table above (net of reserves).
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Interest Rate Derivatives
The fair value is estimated using forward-looking interest rate curves and is determined using observable market
rates and, therefore, are classified within Level 2 of the valuation hierarchy.
Nonrecurring Measurements
The following tables present the fair value measurement of assets measured at fair value on a nonrecurring basis
and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2023 and
2022:
Fair Value Measurements Using
Quoted
Prices
in Active
Markets
for Identical
Assets
(Level 1)
Fair Value
Other
Significant
Observable
Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
(In Thousands)
7,372
$
—
$
—
$
7,372
785
$
—
$
—
$
785
December 31, 2023
Collateral-dependent loans
December 31, 2022
Collateral-dependent loans
$
$
Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring
basis and recognized in the accompanying statements of financial condition, as well as the general classification
of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy,
the process used to develop the reported fair value is described below.
Loans Held for Sale
Mortgage loans held for sale are recorded at the lower of carrying value or fair value. The fair value of mortgage
loans held for sale is based on what secondary markets are currently offering for portfolios with similar
characteristics. As such, the Company classifies mortgage loans held for sale as Nonrecurring Level 2. Write-
downs to fair value typically do not occur as the Company generally enters into commitments to sell individual
mortgage loans at the time the loan is originated to reduce market risk. The Company typically does not have
commercial loans held for sale. At December 31, 2023 and 2022, the aggregate fair value of mortgage loans held
for sale was not materially different than their cost. Accordingly, no mortgage loans held for sale were marked
down and reported at fair value.
Collateral-Dependent Loans
The Company records collateral-dependent loans as Nonrecurring Level 3. If a loan’s fair value as estimated by
the Company is less than its carrying value, the Company either records a charge-off of the portion of the loan that
exceeds the fair value or establishes a reserve within the allowance for credit losses specific to the loan. Loans for
which such charge-offs or reserves were recorded during the years ended December 31, 2023 and December 31,
2022, are shown in the table above (net of reserves).
115
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Foreclosed Assets Held for Sale
Foreclosed assets held for sale are initially recorded at fair value less estimated cost to sell at the date of
foreclosure. Subsequent to foreclosure, valuations are periodically performed by management and the assets are
carried at the lower of carrying amount or fair value less estimated cost to sell. Foreclosed assets held for sale are
classified within Level 3 of the fair value hierarchy. There were no foreclosed assets held for sale at December 31,
2023 or 2022.
Fair Value of Financial Instruments
The following methods were used to estimate the fair value of all other financial instruments recognized in the
accompanying statements of financial condition at amounts other than fair value.
Cash and Cash Equivalents and Federal Home Loan Bank Stock
the reporting date.
The carrying amount approximates fair value.
Held-to-Maturity Securities
Fair values for held-to-maturity securities are estimated based on quoted market prices of similar securities. For
these securities, the Company obtains fair value measurements from an independent pricing service, which
represent either quoted market prices for the identical asset or fair values determined by pricing models, or other
model-based valuation techniques, that consider observable market data, such as interest rate volatilities, SOFR
yield curve, credit spreads and prices from market makers and live trading systems. These securities include U.S.
government agency securities, mortgage-backed securities, state and municipal bonds and certain other
investments.
Loans and Interest Receivable
The fair value of loans is estimated on an exit price basis incorporating contractual cash flows, prepayment
discount spreads, credit loss and liquidity premiums. Loans with similar characteristics are aggregated for
purposes of the calculations. The carrying amount of accrued interest receivable approximates its fair value.
Deposits and Accrued Interest Payable
The fair value of demand deposits and savings accounts is the amount payable on demand at the reporting date,
i.e., their carrying amounts. The fair value of fixed maturity certificates of deposit is estimated based on a
discounted cash flow calculation using the average advances yield curve from 11 districts of the FHLB for the as
of date. The carrying amount of accrued interest payable approximates its fair value.
Short-Term Borrowings
The carrying amount approximates fair value.
Subordinated Debentures Issued to Capital Trusts
The subordinated debentures have floating rates that reset quarterly. The carrying amount of these debentures
approximates their fair value.
116
Subordinated Notes
similar characteristics.
The fair values used by the Company are obtained from independent sources and are derived from quoted market
prices of the Company’s subordinated notes and quoted market prices of other subordinated debt instruments with
Commitments to Originate Loans, Letters of Credit and Lines of Credit
The fair value of commitments is estimated using the fees currently charged to enter into similar agreements,
taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties.
For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates
and the committed rates. The fair value of letters of credit is based on fees currently charged for similar
agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at
The following table presents estimated fair values of the Company’s financial instruments not recorded at fair
value in the financial statements. The fair values of certain of these instruments were calculated by discounting
expected cash flows, which method involves significant judgments by management and uncertainties. Fair value is
the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. Because no market exists for certain of these financial
instruments and because management does not intend to sell these financial instruments, the Company does not
know whether the fair values shown below represent values at which the respective financial instruments could be
sold individually or in the aggregate.
December 31, 2023
December 31, 2022
Carrying
Amount
Fair
Value
Hierarchy
Level
Carrying
Amount
Fair
Value
Hierarchy
Level
(Dollars in Thousands)
Financial assets
Cash and cash equivalents
Held-to-maturity securities
Mortgage loans held for sale
Loans, net of allowance for
credit losses
Interest receivable
Investment in FHLB stock and
other assets
Financial liabilities
Deposits
Short-term borrowings
Subordinated debentures
Subordinated notes
Interest payable
Unrecognized financial instruments
(net of contractual value)
Commitments to originate loans
Letters of credit
Lines of credit
$
211,333
$
211,333
$
168,520
$
168,520
195,023
5,849
171,193
5,849
202,495
4,811
177,765
4,811
4,589,620
21,206
4,402,314
21,206
4,506,836
19,107
4,391,084
19,107
26,313
26,313
30,814
30,814
4,721,708
4,714,624
4,684,910
4,672,913
323,453
25,774
74,579
6,225
323,453
25,774
71,625
6,225
266,426
25,774
74,281
3,010
266,426
25,774
72,000
3,010
—
78
—
—
78
—
—
73
—
—
73
—
1
2
2
3
3
3
3
3
3
2
3
3
3
3
1
2
2
3
3
3
3
3
3
2
3
3
3
3
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Subordinated Notes
The fair values used by the Company are obtained from independent sources and are derived from quoted market
prices of the Company’s subordinated notes and quoted market prices of other subordinated debt instruments with
similar characteristics.
Commitments to Originate Loans, Letters of Credit and Lines of Credit
The fair value of commitments is estimated using the fees currently charged to enter into similar agreements,
taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties.
For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates
and the committed rates. The fair value of letters of credit is based on fees currently charged for similar
agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at
the reporting date.
The following table presents estimated fair values of the Company’s financial instruments not recorded at fair
value in the financial statements. The fair values of certain of these instruments were calculated by discounting
expected cash flows, which method involves significant judgments by management and uncertainties. Fair value is
the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. Because no market exists for certain of these financial
instruments and because management does not intend to sell these financial instruments, the Company does not
know whether the fair values shown below represent values at which the respective financial instruments could be
sold individually or in the aggregate.
December 31, 2023
December 31, 2022
Carrying
Amount
Fair
Value
Hierarchy
Level
(Dollars in Thousands)
Carrying
Amount
Fair
Value
Hierarchy
Level
Financial assets
Cash and cash equivalents
Held-to-maturity securities
Mortgage loans held for sale
Loans, net of allowance for
credit losses
Interest receivable
Investment in FHLB stock and
other assets
$
211,333
195,023
5,849
$
211,333
171,193
5,849
4,589,620
21,206
4,402,314
21,206
26,313
26,313
Financial liabilities
Deposits
Short-term borrowings
Subordinated debentures
Subordinated notes
Interest payable
4,721,708
323,453
25,774
74,579
6,225
4,714,624
323,453
25,774
71,625
6,225
Unrecognized financial instruments
(net of contractual value)
Commitments to originate loans
Letters of credit
Lines of credit
—
78
—
—
78
—
117
1
2
2
3
3
3
3
3
3
2
3
3
3
3
$
168,520
202,495
4,811
$
168,520
177,765
4,811
4,506,836
19,107
4,391,084
19,107
30,814
30,814
4,684,910
266,426
25,774
74,281
3,010
4,672,913
266,426
25,774
72,000
3,010
—
73
—
—
73
—
1
2
2
3
3
3
3
3
3
2
3
3
3
3
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Note 16: Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The
Company principally manages its exposures to a wide variety of business and operational risks through
management of its core business activities. The Company manages economic risks, including interest rate,
liquidity and credit risk, primarily by managing the amount, sources and duration of its assets and liabilities. In the
normal course of business, the Company may use derivative financial instruments (primarily interest rate swaps)
from time to time to assist in its interest rate risk management. The Company has interest rate derivatives that
result from a service provided to certain qualifying loan customers that are not used to manage interest rate risk in
the Company’s assets or liabilities and are not designated in a qualifying hedging relationship. The Company
manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure
resulting from such transactions. In addition, the Company has interest rate derivatives that were designated in a
qualified hedging relationship.
Nondesignated Hedges
The Company has interest rate swaps that are not designated in a qualifying hedging relationship. Derivatives not
designated as hedges are not speculative and result from a service the Company provides to certain loan
customers. The Company executes interest rate swaps with commercial banking customers to facilitate their
respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest
rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure
resulting from such transactions. As the interest rate swaps associated with this program do not meet the strict
hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are
recognized directly in earnings.
At December 31, 2023, the Company had six interest rate swaps, totaling $82.2 million in notional amount, with
commercial customers, and six interest rate swaps with the same notional amount with third parties related to its
program. In addition, at December 31, 2023, the Company had one participation loan purchased totaling $8.6
million, in which the lead institution has an interest rate swap with their customer and the economics of the
counterparty swap are passed along to the Company through the loan participation. At December 31, 2022, the
Company had six interest rate swaps and one interest rate cap totaling $107.0 million in notional amount with
commercial customers, and six interest rate swaps and one interest rate cap with the same notional amount with
third parties related to its program. In addition, at December 31, 2022, the Company had one participation loan
purchased totaling $8.8 million, in which the lead institution has an interest rate swap with their customer and the
economics of the counterparty swap are passed along to the Company through the loan participation. During the
years ended December 31, 2023, 2022 and 2021, the Company recognized net gains (losses) of $(337,000),
$321,000 and $312,000, respectively, in non-interest income related to changes in the fair value of these swaps.
Fair Value Hedges
Interest Rate Swaps. As a strategy to maintain acceptable levels of exposure to the risk of changes in future cash flows
due to interest rate fluctuations, in February 2023, the Company entered into interest rate swap transactions as part of
its ongoing interest rate management strategies to hedge the risk of certain of its fixed rate brokered deposits. The total
notional amount of the swaps was $95 million with a termination date of February 28, 2025. Under the terms of the
swaps, the Company receives a fixed rate of interest of 4.65% and pays a floating rate of interest equal to USD-SOFR-
COMPOUND plus a spread. The floating rate resets monthly and net settlements of interest due to/from the
counterparty also occurs monthly. To the extent that the fixed rate of interest exceeds USD-SOFR-COMPOUND plus
the spread, the Company receives net interest settlements which are recorded as a reduction of deposit interest
expense. If USD-SOFR-COMPOUND plus the spread exceeds the fixed rate of interest, the Company is required to
pay net settlements to the counterparty and record those net payments as interest expense on deposits.
118
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Subsequent to December 31, 2023, the Company elected to terminate these swaps prior to their contractual termination
date in 2025. The Company received a net settlement payment from the swap counterparty totaling $26,500 upon
termination. At the time of the early termination, the Company had recorded a market value adjustment to the brokered
deposit of $163,000, which will now be amortized as a reduction of interest expense beginning in January 2024
through February 2025.
Cash Flow Hedges
Interest Rate Swap. As a strategy to maintain acceptable levels of exposure to the risk of changes in future cash flows
due to interest rate fluctuations, in October 2018, the Company entered into an interest rate swap transaction as part of
its ongoing interest rate management strategies to hedge the risk of its floating rate loans. The notional amount of the
swap was $400 million with a termination date of October 6, 2025. Under the terms of the swap, the Company
received a fixed rate of interest of 3.018% and paid a floating rate of interest equal to one-month USD-LIBOR. The
floating rate was reset monthly and net settlements of interest due to/from the counterparty also occurred monthly. To
the extent that the fixed rate of interest exceeded one-month USD-LIBOR, the Company received net interest
settlements which were recorded as loan interest income. If USD-LIBOR exceeded the fixed rate of interest, the
Company was required to pay net settlements to the counterparty and record those net payments as a reduction of
interest income on loans.
In March 2020, the Company and its swap counterparty mutually agreed to terminate the $400 million interest rate
swap prior to its contractual maturity. The Company was paid $45.9 million from its swap counterparty as a result of
this termination. This $45.9 million, less the accrued interest portion and net of deferred income taxes, was reflected
in the Company’s stockholders’ equity as part of Accumulated Other Comprehensive Income (AOCI) and a portion of
it is being accreted to interest income on loans monthly through the original contractual termination date of October 6,
2025. This has the effect of reducing Accumulated Other Comprehensive Income and increasing Net Interest Income
and Retained Earnings over the period. The Company recorded interest income of $8.1 million, $8.1 million and $8.1
million on this interest rate swap during the years ended December 31, 2023, 2022 and 2021, respectively. At
December 31, 2023, the Company expected to have a sufficient amount of eligible variable rate loans to continue to
accrete this interest income in future periods. If this expectation changes and the amount of eligible variable rate loans
decreases significantly, the Company may be required to recognize this interest income more rapidly.
In March 2022, the Company entered into an interest rate swap transaction as part of its ongoing interest rate
management strategies to hedge the risk of its floating rate loans. The notional amount of the swap was $300 million,
with a termination date of March 1, 2024. Under the terms of the swap, the Company received a fixed rate of interest
of 1.6725% and paid a floating rate of interest equal to one-month USD-LIBOR (or the equivalent replacement rate if
USD-LIBOR rate is not available). The floating rate reset monthly and net settlements of interest due to/from the
counterparty also occurred monthly. The floating rate of interest was 5.456% as of December 31, 2023. To the extent
the floating rate of interest exceeded the fixed rate of interest, the Company was required to pay net settlements to the
counterparty and record those net payments as a reduction of interest income on loans. If the fixed rate of interest
exceeded the floating rate of interest, the Company received net interest settlements, which were recorded as loan
interest income. The Company recorded a reduction of loan interest income related to this swap transaction of $10.4
million and $941,000 for the years ended December 31, 2023 and December 31, 2022, respectively.
In July 2022, the Company entered into two additional interest rate swap transactions as part of its ongoing interest
rate management strategies to hedge the risk of its floating rate loans. The notional amount of each swap is $200
million with an effective date of May 1, 2023 and a termination date of May 1, 2028. Under the terms of one swap, the
Company receives a fixed rate of interest of 2.628% and pays a floating rate of interest equal to one-month USD-
SOFR OIS. Under the terms of the other swap, beginning in May 2023, the Company receives a fixed rate of interest
of 5.725% and pays a floating rate of interest equal to one-month USD-Prime. In each case, the floating rate is reset
monthly and net settlements of interest due to/from the counterparty also occur monthly. To the extent the fixed rate of
interest exceeds the floating rate of interest, the Company receives net interest settlements, which is recorded as loan
interest income. If the floating rate of interest exceeds the fixed rate of interest, the Company pays net settlements to
the counterparty and records those net payments as a reduction of interest income on loans. At December 31, 2023, the
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Subsequent to December 31, 2023, the Company elected to terminate these swaps prior to their contractual termination
date in 2025. The Company received a net settlement payment from the swap counterparty totaling $26,500 upon
termination. At the time of the early termination, the Company had recorded a market value adjustment to the brokered
deposit of $163,000, which will now be amortized as a reduction of interest expense beginning in January 2024
through February 2025.
Cash Flow Hedges
Interest Rate Swap. As a strategy to maintain acceptable levels of exposure to the risk of changes in future cash flows
due to interest rate fluctuations, in October 2018, the Company entered into an interest rate swap transaction as part of
its ongoing interest rate management strategies to hedge the risk of its floating rate loans. The notional amount of the
swap was $400 million with a termination date of October 6, 2025. Under the terms of the swap, the Company
received a fixed rate of interest of 3.018% and paid a floating rate of interest equal to one-month USD-LIBOR. The
floating rate was reset monthly and net settlements of interest due to/from the counterparty also occurred monthly. To
the extent that the fixed rate of interest exceeded one-month USD-LIBOR, the Company received net interest
settlements which were recorded as loan interest income. If USD-LIBOR exceeded the fixed rate of interest, the
Company was required to pay net settlements to the counterparty and record those net payments as a reduction of
interest income on loans.
In March 2020, the Company and its swap counterparty mutually agreed to terminate the $400 million interest rate
swap prior to its contractual maturity. The Company was paid $45.9 million from its swap counterparty as a result of
this termination. This $45.9 million, less the accrued interest portion and net of deferred income taxes, was reflected
in the Company’s stockholders’ equity as part of Accumulated Other Comprehensive Income (AOCI) and a portion of
it is being accreted to interest income on loans monthly through the original contractual termination date of October 6,
2025. This has the effect of reducing Accumulated Other Comprehensive Income and increasing Net Interest Income
and Retained Earnings over the period. The Company recorded interest income of $8.1 million, $8.1 million and $8.1
million on this interest rate swap during the years ended December 31, 2023, 2022 and 2021, respectively. At
December 31, 2023, the Company expected to have a sufficient amount of eligible variable rate loans to continue to
accrete this interest income in future periods. If this expectation changes and the amount of eligible variable rate loans
decreases significantly, the Company may be required to recognize this interest income more rapidly.
In March 2022, the Company entered into an interest rate swap transaction as part of its ongoing interest rate
management strategies to hedge the risk of its floating rate loans. The notional amount of the swap was $300 million,
with a termination date of March 1, 2024. Under the terms of the swap, the Company received a fixed rate of interest
of 1.6725% and paid a floating rate of interest equal to one-month USD-LIBOR (or the equivalent replacement rate if
USD-LIBOR rate is not available). The floating rate reset monthly and net settlements of interest due to/from the
counterparty also occurred monthly. The floating rate of interest was 5.456% as of December 31, 2023. To the extent
the floating rate of interest exceeded the fixed rate of interest, the Company was required to pay net settlements to the
counterparty and record those net payments as a reduction of interest income on loans. If the fixed rate of interest
exceeded the floating rate of interest, the Company received net interest settlements, which were recorded as loan
interest income. The Company recorded a reduction of loan interest income related to this swap transaction of $10.4
million and $941,000 for the years ended December 31, 2023 and December 31, 2022, respectively.
In July 2022, the Company entered into two additional interest rate swap transactions as part of its ongoing interest
rate management strategies to hedge the risk of its floating rate loans. The notional amount of each swap is $200
million with an effective date of May 1, 2023 and a termination date of May 1, 2028. Under the terms of one swap, the
Company receives a fixed rate of interest of 2.628% and pays a floating rate of interest equal to one-month USD-
SOFR OIS. Under the terms of the other swap, beginning in May 2023, the Company receives a fixed rate of interest
of 5.725% and pays a floating rate of interest equal to one-month USD-Prime. In each case, the floating rate is reset
monthly and net settlements of interest due to/from the counterparty also occur monthly. To the extent the fixed rate of
interest exceeds the floating rate of interest, the Company receives net interest settlements, which is recorded as loan
interest income. If the floating rate of interest exceeds the fixed rate of interest, the Company pays net settlements to
the counterparty and records those net payments as a reduction of interest income on loans. At December 31, 2023, the
119
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
USD-Prime rate was 8.50% and the one-month USD-SOFR OIS rate was 5.34446%. The Company recorded a
reduction of loan interest income related to the two July 2022 interest rate swaps of $7.2 million for the year ended
December 31, 2023. Net settlements on these two interest rate swaps began in May 2023.
The effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income
and reclassified into earnings in the same period or periods during which the hedged transaction affected earnings.
Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the
assessment of effectiveness are recognized in current earnings. During each of the three months and year ended
December 31, 2023 and 2022, the Company recognized no non-interest income related to changes in the fair value of
these derivatives.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification
on the Consolidated Statements of Financial Condition:
Location in
Consolidated Statements
of Financial Condition
Fair Value
December 31,
December 31,
2023
2022
(In Thousands)
Derivatives designated
as hedging instruments
Derivative Liability
Active interest rate swap
Accrued expenses and other liabilities
$
17,296
$
31,277
Total derivatives designated
as hedging instruments
Derivatives not designated
as hedging instruments
Derivative Assets
Interest rate products
Total derivatives not designated
as hedging instruments
Derivative Liabilities
Interest rate products
Total derivatives not designated
as hedging instruments
$
17,296
$
31,277
Agreements with Derivative Counterparties
Prepaid expenses and other assets
$
8,205
$
11,061
$
8,205
$
11,061
Accrued expenses and other liabilities
$
8,040
$
10,820
$
8,040
$
10,820
120
The following table presents the effect of cash flow hedge accounting on the statements of comprehensive
income:
Cash Flow Hedges
2023
2022
2021
Amount of Gain (Loss)
Recognized in AOCI
Year Ended December 31
(In Thousands)
Terminated interest rate swaps, net of income taxes
Active interest rate swaps, net of income taxes
$
$
(6,267)
10,541
4,274
$
$
(6,271)
(23,582)
(29,853)
$
$
(6,271)
—
(6,271)
The following table presents the effect of cash flow hedge accounting on the statements of income:
Cash Flow Hedges
2023
2022
2021
Year Ended December 31
Interest
Income
Interest
Expense
Interest
Income
Interest
Expense
Interest
Income
Interest
Expense
(In Thousands)
Terminated interest rate swaps
Active interest rate swaps
$ 8,122 $ — $ 8,123 $ — $ 8,123 $ —
(17,618) — (941) — — —
$ (9,496) $ — $ 7,182 $ — $ 8,123 $ —
The Company has agreements with its derivative counterparties. If the Company defaults on any of its
indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender,
then the Company could also be declared in default on its derivative obligations. If the Bank fails to maintain its
status as a well-capitalized institution, then the counterparty could terminate the derivative positions and the
Company would be required to settle its obligations under the agreements. Similarly, the Company could be
required to settle its obligations under certain of its agreements if certain regulatory events occur, such as the
issuance of a formal directive, or if the Company’s credit rating is downgraded below a specified level.
At December 31, 2023, the termination value of derivatives with our derivative dealer counterparties (related to
loan level swaps with commercial lending customers and an active interest rate swap to hedge risk related to the
Company’s variable rate loans) in an overall net asset position, which included accrued interest but excluded any
adjustment for nonperformance risk, related to these agreements was $137,000. The Company has minimum
collateral posting thresholds with its derivative dealer counterparties. At December 31, 2023, the Company had
given cash collateral to one derivative counterparty of $11.6 million to cover its net fair value position. This
counterparty position included collateral from the counterparty of $8.2 million for commercial lending swaps,
collateral from the Company of $19.2 million for interest rate swaps related to variable rate loans and collateral
from the Company of $44,000 for swaps related to brokered deposits.
At December 31, 2022, the termination value of derivatives with our derivative dealer counterparties (related to
loan level swaps with commercial lending customers) in a net asset position, which included accrued interest but
excluded any adjustment for nonperformance risk, related to these agreements was $242,000. Additionally, the
Company’s activity with one of its derivative counterparties met the level at which the minimum collateral posting
thresholds take effect (collateral to be given by the Company) and the Company had posted collateral of $20.7
million to the derivative counterparty.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The following table presents the effect of cash flow hedge accounting on the statements of comprehensive
income:
Cash Flow Hedges
2023
Amount of Gain (Loss)
Recognized in AOCI
Year Ended December 31
2022
(In Thousands)
2021
Terminated interest rate swaps, net of income taxes
Active interest rate swaps, net of income taxes
$
$
(6,267)
10,541
4,274
$
$
(6,271)
(23,582)
(29,853)
$
$
(6,271)
—
(6,271)
The following table presents the effect of cash flow hedge accounting on the statements of income:
Cash Flow Hedges
2023
Year Ended December 31
2022
2021
Interest
Income
Interest
Expense
Interest
Income
(In Thousands)
Interest
Expense
Interest
Income
Interest
Expense
Terminated interest rate swaps
Active interest rate swaps
$ 8,122 $ — $ 8,123 $ — $ 8,123 $ —
(17,618) — (941) — — —
$ (9,496) $ — $ 7,182 $ — $ 8,123 $ —
Agreements with Derivative Counterparties
The Company has agreements with its derivative counterparties. If the Company defaults on any of its
indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender,
then the Company could also be declared in default on its derivative obligations. If the Bank fails to maintain its
status as a well-capitalized institution, then the counterparty could terminate the derivative positions and the
Company would be required to settle its obligations under the agreements. Similarly, the Company could be
required to settle its obligations under certain of its agreements if certain regulatory events occur, such as the
issuance of a formal directive, or if the Company’s credit rating is downgraded below a specified level.
At December 31, 2023, the termination value of derivatives with our derivative dealer counterparties (related to
loan level swaps with commercial lending customers and an active interest rate swap to hedge risk related to the
Company’s variable rate loans) in an overall net asset position, which included accrued interest but excluded any
adjustment for nonperformance risk, related to these agreements was $137,000. The Company has minimum
collateral posting thresholds with its derivative dealer counterparties. At December 31, 2023, the Company had
given cash collateral to one derivative counterparty of $11.6 million to cover its net fair value position. This
counterparty position included collateral from the counterparty of $8.2 million for commercial lending swaps,
collateral from the Company of $19.2 million for interest rate swaps related to variable rate loans and collateral
from the Company of $44,000 for swaps related to brokered deposits.
At December 31, 2022, the termination value of derivatives with our derivative dealer counterparties (related to
loan level swaps with commercial lending customers) in a net asset position, which included accrued interest but
excluded any adjustment for nonperformance risk, related to these agreements was $242,000. Additionally, the
Company’s activity with one of its derivative counterparties met the level at which the minimum collateral posting
thresholds take effect (collateral to be given by the Company) and the Company had posted collateral of $20.7
million to the derivative counterparty.
121
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
If the Company had breached any of these provisions at December 31, 2023 or December 31, 2022, it could have
been required to settle its obligations under the agreements at the termination value. Under the collateral
agreements between the parties, either party may choose to provide cash or securities to satisfy its collateral
requirements.
At December 31, 2023, the Bank had granted unused lines of credit to borrowers aggregating approximately $1.0
billion and $204.0 million for commercial lines and open-end consumer lines, respectively. At December 31,
2022, the Bank had granted unused lines of credit to borrowers aggregating approximately $1.8 billion and $199.2
million for commercial lines and open-end consumer lines, respectively.
Note 17: Commitments and Credit Risk
Commitments to Originate Loans
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since a significant portion of the commitments may expire without
being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank
evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the counterparty.
Collateral held varies but may include accounts receivable, inventory, property and equipment, commercial real
estate and residential real estate.
At December 31, 2023 and 2022, the Bank had outstanding commitments to originate loans and fund commercial
construction loans aggregating approximately $1.6 million and $97.1 million, respectively. The commitments
extend over varying periods of time with the majority being disbursed within a 30- to 180-day period.
Mortgage loans in the process of origination represent amounts that the Bank plans to fund within a normal period
of 60 to 90 days, many of which are intended for sale to investors in the secondary market. Total mortgage loans
in the process of origination amounted to approximately $12.3 million and $16.8 million at December 31, 2023
and 2022, respectively.
Letters of Credit
Standby letters of credit are irrevocable conditional commitments issued by the Bank to guarantee the
performance of a customer to a third party. Financial standby letters of credit are primarily issued to support
public and private borrowing arrangements, including commercial paper, bond financing and similar transactions.
Performance standby letters of credit are issued to guarantee performance of certain customers under nonfinancial
contractual obligations. The credit risk involved in issuing standby letters of credit is essentially the same as that
involved in extending loans to customers. Fees for letters of credit issued are initially recorded by the Bank as
deferred revenue and are included in earnings at the termination of the respective agreements. Should the Bank be
obligated to perform under the standby letters of credit, the Bank may seek recourse from the customer for
reimbursement of amounts paid.
The Company had total outstanding standby letters of credit amounting to approximately $16.5 million and $16.7
million at December 31, 2023 and 2022, respectively, with no letters of credit having terms over five years.
Lines of Credit
Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in
the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without
being drawn upon, the total unused lines do not necessarily represent future cash requirements. The Bank
evaluates each customer’s creditworthiness on a case by case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the counterparty.
Collateral held varies but may include accounts receivable, inventory, property and equipment, commercial real
estate and residential real estate. The Bank uses the same credit policies in granting lines of credit as it does for
on-balance-sheet instruments.
122
Credit Risk
The Bank grants collateralized commercial, real estate and consumer loans primarily to customers in its market
areas. Although the Bank has a diversified portfolio, loans (including FDIC-assisted acquired loans) aggregating
approximately $788.6 million and $814.1 million at December 31, 2023 and 2022, respectively, were secured
primarily by apartments, condominiums, residential and commercial land developments, industrial revenue bonds
and other types of commercial properties in the St. Louis area.
Note 18: Additional Cash Flow Information
Noncash Investing and Financing Activities
Real estate acquired in settlement of loans
Transfer of available-for-sale securities to held-to-maturity
Conversion of premises and equipment to foreclosed assets
Dividends declared but not paid
Additional Cash Payment Information
Interest paid
Income taxes paid
Note 19: Employee Benefits
Year Ended December 31,
2023
2022
2021
(In Thousands)
$ 142
—
—
4,722
$ 371
226,500
—
4,893
$ 1,154
—
1,215
4,727
100,405
7,888
24,999
10,258
22,700
12,959
The Company participates in the Pentegra Defined Benefit Plan for Financial Institutions (Pentegra DB Plan), a
multiemployer defined benefit pension plan covering all employees who have met minimum service requirements.
Effective July 1, 2006, this plan was closed to new participants. Employees already in the plan continue to accrue
benefits. The Pentegra DB Plan’s Employer Identification Number is 13-5645888 and the Plan Number is 333.
The Company’s policy is to fund pension cost accrued. Employer contributions charged to expense for this plan
for the years ended December 31, 2023, 2022 and 2021, were approximately $1.7 million, $1.5 million and $2.1
million, respectively. The Company’s contributions to the Pentegra DB Plan were not more than 5% of the total
contributions to the plan. The funded status of the plan as of July 1, 2023 and 2022, was 94.4% and 100.0%,
respectively. The funded status was calculated by taking the market value of plan assets, which reflected
contributions received through June 30, 2023 and 2022, respectively, divided by the funding target. No collective
bargaining agreements are in place that require contributions to the Pentegra DB Plan.
The Company has a defined contribution retirement plan covering substantially all employees. The Company
matches 100% of the employee’s contribution on the first 3% of the employee’s compensation and also matches
an additional 50% of the employee’s contribution on the next 2% of the employee’s compensation. Employer
contributions charged to expense for this plan for the years ended December 31, 2023, 2022 and 2021, were
approximately $1.8 million, $1.7 million and $1.7 million, respectively.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
At December 31, 2023, the Bank had granted unused lines of credit to borrowers aggregating approximately $1.0
billion and $204.0 million for commercial lines and open-end consumer lines, respectively. At December 31,
2022, the Bank had granted unused lines of credit to borrowers aggregating approximately $1.8 billion and $199.2
million for commercial lines and open-end consumer lines, respectively.
Credit Risk
The Bank grants collateralized commercial, real estate and consumer loans primarily to customers in its market
areas. Although the Bank has a diversified portfolio, loans (including FDIC-assisted acquired loans) aggregating
approximately $788.6 million and $814.1 million at December 31, 2023 and 2022, respectively, were secured
primarily by apartments, condominiums, residential and commercial land developments, industrial revenue bonds
and other types of commercial properties in the St. Louis area.
Note 18: Additional Cash Flow Information
2023
Year Ended December 31,
2022
(In Thousands)
2021
Noncash Investing and Financing Activities
Real estate acquired in settlement of loans
Transfer of available-for-sale securities to held-to-maturity
Conversion of premises and equipment to foreclosed assets
Dividends declared but not paid
$ 142
—
—
4,722
$ 371
226,500
—
4,893
$ 1,154
—
1,215
4,727
Additional Cash Payment Information
Interest paid
Income taxes paid
Note 19: Employee Benefits
100,405
7,888
24,999
10,258
22,700
12,959
The Company participates in the Pentegra Defined Benefit Plan for Financial Institutions (Pentegra DB Plan), a
multiemployer defined benefit pension plan covering all employees who have met minimum service requirements.
Effective July 1, 2006, this plan was closed to new participants. Employees already in the plan continue to accrue
benefits. The Pentegra DB Plan’s Employer Identification Number is 13-5645888 and the Plan Number is 333.
The Company’s policy is to fund pension cost accrued. Employer contributions charged to expense for this plan
for the years ended December 31, 2023, 2022 and 2021, were approximately $1.7 million, $1.5 million and $2.1
million, respectively. The Company’s contributions to the Pentegra DB Plan were not more than 5% of the total
contributions to the plan. The funded status of the plan as of July 1, 2023 and 2022, was 94.4% and 100.0%,
respectively. The funded status was calculated by taking the market value of plan assets, which reflected
contributions received through June 30, 2023 and 2022, respectively, divided by the funding target. No collective
bargaining agreements are in place that require contributions to the Pentegra DB Plan.
The Company has a defined contribution retirement plan covering substantially all employees. The Company
matches 100% of the employee’s contribution on the first 3% of the employee’s compensation and also matches
an additional 50% of the employee’s contribution on the next 2% of the employee’s compensation. Employer
contributions charged to expense for this plan for the years ended December 31, 2023, 2022 and 2021, were
approximately $1.8 million, $1.7 million and $1.7 million, respectively.
123
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Note 20: Stock Compensation Plans
The table below summarizes transactions under the Company’s stock compensation plans, all of which related to
stock options granted under such plans:
The Company established the 2013 Equity Incentive Plan (the “2013 Plan”) for employees and directors of the
Company and its subsidiaries. Under the plan, stock options or other awards could be granted with respect to
700,000 shares of common stock. On May 9, 2018, the Company’s stockholders approved the Great Southern
Bancorp, Inc. 2018 Omnibus Incentive Plan (the “2018 Plan”). Upon the stockholders’ approval of the 2018 Plan,
the 2013 Plan was frozen. As a result, no new stock options or other awards may be granted under the 2013 Plan;
however, existing outstanding awards under the 2013 Plan were not affected. At December 31, 2023, 215,394
options were outstanding under the 2013 Plan.
The Company established the 2018 Plan for employees and directors of the Company and its subsidiaries. Under
the plan, stock options or other awards could be granted with respect to 800,000 shares of common stock. On
May 11, 2022, the Company’s stockholders approved the Great Southern Bancorp, Inc. 2022 Omnibus Incentive
Plan (the “2022 Plan”). Upon the stockholders’ approval of the 2022 Plan, the 2018 Plan was frozen. As a result,
no new stock options or other awards may be granted under the 2018 Plan; however, existing outstanding awards
under the 2018 Plan were not affected. At December 31, 2023, 612,511 options were outstanding under the 2018
Plan.
The 2022 Plan provides for the grant from time to time to directors, emeritus directors, officers, employees and
advisory directors of stock options, stock appreciation rights, restricted stock, restricted stock units, performance
shares and performance units. The number of shares of common stock available for awards under the 2022 Plan is
900,000 (the “2022 Plan Limit”). Shares utilized for awards other than stock options and stock appreciation rights
will be counted against the 2022 Plan Limit on a 2.5-to-1 basis. At December 31, 2023, 412,400 options were
outstanding under the 2022 Plan.
Stock options may be either incentive stock options or nonqualified stock options, and the option price must be at
least equal to the fair value of the Company’s common stock on the date of grant. Options generally are granted
for a 10-year term and generally become exercisable in four cumulative annual installments of 25% commencing
two years from the date of grant. The Compensation Committee has discretion to accelerate a participant’s right
to exercise an option.
Stock awards may be granted upon terms and conditions determined solely at the discretion of the Compensation
Committee.
124
Available to
Shares Under
Average
Grant
Option
Exercise Price
Weighted
Balance, January 1, 2021
Granted from 2018 Plan
Exercised
Forfeited from terminated plan(s)
Forfeited from current plan(s)
Balance, December 31, 2021
Granted from 2018 Plan
Forfeited from terminated plan(s)
Termination of 2018 Plan
Available to Grant from 2022 Plan
Granted from 2022 Plan
Exercised
245,350
(202,700 )
—
—
971,107 $
202,700
(91,285 )
(5,197 )
44,022
(44,022 )
86,672
1,033,303
(2,500 )
39,235
(123,407 )
900,000
(205,900 )
—
2,500
(39,235 )
—
—
205,900
(136,801 )
Forfeited from current plan(s)
750
(750 )
Balance, December 31, 2022
Forfeited from terminated plan(s)
Granted from 2022 Plan
Exercised
694,850
1,064,917
(210,300 )
—
—
(9,100 )
210,300
(22,762 )
Forfeited from current plan(s)
3,050
(3,050 )
Balance, December 31, 2023
487,600
1,240,305 $
48.079
57.980
40.532
44.563
52.256
50.528
61.550
52.523
—
—
61.505
42.149
61.550
53.671
51.123
53.166
38.830
61.550
53.857
The Company’s stock option grants contain terms that provide for a graded vesting schedule whereby portions of
the options vest in increments over the requisite service period. These options typically vest one-fourth at the end
of each of years two, three, four and five from the grant date. As provided for under FASB ASC 718, the
Company has elected to recognize compensation expense for options with graded vesting schedules on a straight-
line basis over the requisite service period for the entire option grant. In addition, ASC 718 requires companies to
recognize compensation expense based on the estimated number of stock options for which service is expected to
be rendered. The Company’s historical forfeitures of its share-based awards have not been significant. Forfeitures
are estimated annually based on historical information.
The fair value of each option award is estimated on the date of the grant using the Black-Scholes option pricing
model with the following assumptions for the years ended December 31, 2023, 2022 and 2021:
Expected dividends per share
Risk-free interest rate
Expected life of options
Expected volatility
Weighted average fair value of
options granted during year
2023
2022
2021
$ 1.60
4.51%
6 years
23.69%
$ 1.60
3.77%
6 years
23.70%
$ 1.44
1.24%
5 years
28.33%
$ 11.69
$ 13.46
$ 11.56
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
The table below summarizes transactions under the Company’s stock compensation plans, all of which related to
stock options granted under such plans:
Available to
Grant
Shares Under
Option
Weighted
Average
Exercise Price
Balance, January 1, 2021
Granted from 2018 Plan
Exercised
Forfeited from terminated plan(s)
Forfeited from current plan(s)
Balance, December 31, 2021
Granted from 2018 Plan
Forfeited from terminated plan(s)
Termination of 2018 Plan
Available to Grant from 2022 Plan
Granted from 2022 Plan
Exercised
Forfeited from current plan(s)
Balance, December 31, 2022
Forfeited from terminated plan(s)
Granted from 2022 Plan
Exercised
Forfeited from current plan(s)
245,350
(202,700 )
—
—
44,022
86,672
(2,500 )
39,235
(123,407 )
900,000
(205,900 )
—
750
694,850
—
(210,300 )
—
3,050
971,107 $
202,700
(91,285 )
(5,197 )
(44,022 )
1,033,303
2,500
(39,235 )
—
—
205,900
(136,801 )
(750 )
1,064,917
(9,100 )
210,300
(22,762 )
(3,050 )
Balance, December 31, 2023
487,600
1,240,305 $
48.079
57.980
40.532
44.563
52.256
50.528
61.550
52.523
—
—
61.505
42.149
61.550
53.671
51.123
53.166
38.830
61.550
53.857
The Company’s stock option grants contain terms that provide for a graded vesting schedule whereby portions of
the options vest in increments over the requisite service period. These options typically vest one-fourth at the end
of each of years two, three, four and five from the grant date. As provided for under FASB ASC 718, the
Company has elected to recognize compensation expense for options with graded vesting schedules on a straight-
line basis over the requisite service period for the entire option grant. In addition, ASC 718 requires companies to
recognize compensation expense based on the estimated number of stock options for which service is expected to
be rendered. The Company’s historical forfeitures of its share-based awards have not been significant. Forfeitures
are estimated annually based on historical information.
The fair value of each option award is estimated on the date of the grant using the Black-Scholes option pricing
model with the following assumptions for the years ended December 31, 2023, 2022 and 2021:
Expected dividends per share
Risk-free interest rate
Expected life of options
Expected volatility
Weighted average fair value of
options granted during year
2023
2022
$ 1.60
4.51%
6 years
23.69%
$ 1.60
3.77%
6 years
23.70%
2021
$ 1.44
1.24%
5 years
28.33%
$ 11.69
$ 13.46
$ 11.56
125
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Expected volatilities are based on the historical volatility of the Company’s stock price over the measured period.
The expected life of options granted is based on actual historical exercise behavior of all employees and directors
and approximates the graded vesting period of the options. Expected dividends are based on the annualized
dividends declared at the time of the option grant. For 2023 and 2022, the risk-free interest rate is based on the
average of the five-year treasury rate and the seven-year treasury rate on the grant date of the options. For 2021,
the risk-free interest rate is based on the five-year treasury rate on the grant date of the options.
The following table presents the activity related to options under all plans for the year ended December 31, 2023:
Options outstanding, January 1, 2023
Granted
Exercised
Forfeited
Options outstanding, December 31, 2023
Weighted
Average
Exercise
Price
$ 53.671
53.166
38.830
53.741
53.857
Options
1,064,917
210,300
(22,762)
(12,150)
1,240,305
Options exercisable, December 31, 2023
571,490
$ 51.688
Weighted
Average
Remaining
Contractual
Term
7.13 years
6.74 years
4.64 years
For the years ended December 31, 2023, 2022 and 2021, options granted were 210,300, 208,400, and 202,700,
respectively. The total intrinsic value (amount by which the fair value of the underlying stock exceeds the
exercise price of an option on exercise date) of options exercised during the years ended December 31, 2023, 2022
and 2021, was $354,000, $2.6 million and $1.4 million, respectively. Cash received from the exercise of options
for the years ended December 31, 2023, 2022 and 2021, was $884,000, $6.3 million and $3.7 million,
respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $212,000
million, $2.3 million and $1.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. The
total intrinsic value of options outstanding at December 31, 2023, 2022 and 2021, was $7.4 million, $6.7 million
and $9.2 million, respectively. The total intrinsic value of options exercisable at December 31, 2023, 2022 and
2021, was $4.5 million, $4.1 million and $5.3 million, respectively.
The following table presents the activity related to nonvested options under all plans for the year ended December
31, 2023.
Nonvested options, January 1, 2023
Granted
Vested this period
Nonvested options forfeited
Weighted
Average
Exercise
Price
$ 56.073
53.166
53.882
56.347
Weighted
Average
Grant Date
Fair Value
$ 11.117
11.681
9.755
11.299
Options
636,844
210,300
(169,592)
(8,737)
For the years ended December 31, 2023, 2022 and 2021, compensation expense for stock option grants was $1.6
million, $1.4 million and $1.2 million, respectively. At December 31, 2023, there was $7.0 million of total
unrecognized compensation cost related to nonvested options granted under the Company’s plans. This
compensation cost is expected to be recognized through 2029, with the majority of this expense recognized in
2024 and 2025.
The following table further summarizes information about stock options outstanding at December 31, 2023:
Options Outstanding
Weighted
Average
Weighted
Remaining
Average
Options Exercisable
Weighted
Average
Exercise
Range of
Number
Contractual
Exercise
Number
Exercise Prices
Outstanding
Term
Price
Exercisable
Price
$32.590 to 38.610
$41.300 to 41.740
$50.250 to 59.750
$60.150 to 62.010
26,906
200,538
668,327
344,534
0.96 years
5.71 years
6.87 years
7.55 years
$ 33.317
41.628
54.686
60.971
26,906
119,930
316,725
107,929
$ 33.317
41.552
54.194
60.176
1,240,305
6.74 years
$ 53.857
571,490
$ 51.688
Note 21: Significant Estimates and Concentrations
GAAP requires disclosure of certain significant estimates and current vulnerabilities due to certain concentrations.
Estimates related to the allowance for credit losses are reflected in Note 3. Current vulnerabilities due to certain
concentrations of credit risk are discussed in the footnotes on loans, deposits and on commitments and credit risk.
Note 22: Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income (AOCI), included in stockholders’ equity, are as
follows:
2023
2022
(In Thousands)
Net unrealized gain (loss) on available-for-sale securities
$
(53,685) $
(62,622)
Net unrealized gain (loss) on held-to-maturity securities
(65)
118
Net unrealized gain (loss) on active derivatives used for cash flow hedges
(17,296)
(31,277)
Net unrealized gain on terminated derivatives used for cash flow hedges
14,354
(56,692)
22,478
(71,303)
14,211
17,948
Tax effect
Nonvested options, December 31, 2023
668,815
$ 55.711
$ 11.640
Net-of-tax amount
$
(42,481) $
(53,355)
126
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
For the years ended December 31, 2023, 2022 and 2021, compensation expense for stock option grants was $1.6
million, $1.4 million and $1.2 million, respectively. At December 31, 2023, there was $7.0 million of total
unrecognized compensation cost related to nonvested options granted under the Company’s plans. This
compensation cost is expected to be recognized through 2029, with the majority of this expense recognized in
2024 and 2025.
The following table further summarizes information about stock options outstanding at December 31, 2023:
Range of
Exercise Prices
Number
Outstanding
Remaining
Contractual
Term
Options Outstanding
Weighted
Average
Weighted
Average
Exercise
Options Exercisable
Weighted
Average
Exercise
Number
Price
Exercisable
Price
$32.590 to 38.610
$41.300 to 41.740
$50.250 to 59.750
$60.150 to 62.010
26,906
200,538
668,327
344,534
0.96 years
5.71 years
6.87 years
7.55 years
$ 33.317
41.628
54.686
60.971
26,906
119,930
316,725
107,929
$ 33.317
41.552
54.194
60.176
1,240,305
6.74 years
$ 53.857
571,490
$ 51.688
Note 21: Significant Estimates and Concentrations
GAAP requires disclosure of certain significant estimates and current vulnerabilities due to certain concentrations.
Estimates related to the allowance for credit losses are reflected in Note 3. Current vulnerabilities due to certain
concentrations of credit risk are discussed in the footnotes on loans, deposits and on commitments and credit risk.
Note 22: Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income (AOCI), included in stockholders’ equity, are as
follows:
2023
2022
(In Thousands)
Net unrealized gain (loss) on available-for-sale securities
$
(53,685) $
(62,622)
Net unrealized gain (loss) on held-to-maturity securities
(65)
118
Net unrealized gain (loss) on active derivatives used for cash flow hedges
(17,296)
(31,277)
Net unrealized gain on terminated derivatives used for cash flow hedges
Tax effect
14,354
(56,692)
22,478
(71,303)
14,211
17,948
Net-of-tax amount
$
(42,481) $
(53,355)
127
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Amounts reclassified from AOCI and the affected line items in the statements of income during the years ended
Amounts reclassified from AOCI and the affected line items in the statements of income during the years ended
December 31, 2023, 2022 and 2021, were as follows:
December 31, 2023, 2022 and 2021, were as follows:
Amounts reclassified from AOCI and the affected line items in the statements of income during the years ended
December 31, 2023, 2022 and 2021, were as follows:
The Company’s and the Bank’s actual capital amounts and ratios are presented in the following table. No amount
was deducted from capital for interest-rate risk.
Amounts Reclassified
Amounts Reclassified
Amounts Reclassified
from AOCI
from AOCI
from AOCI
2022
2022
2022
(In Thousands)
(In Thousands)
(In Thousands)
2023
2023
2023
2021
2021
2021
Affected Line Item in the
Affected Line Item in the
Affected Line Item in the
Statements of Income
Statements of Income
Statements of Income
Unrealized loss on available-for-sale
Unrealized loss on available-for-sale
Unrealized loss on available-for-sale
securities
securities
securities
$
$
$
—
—
—
$
$
$
(130) $
(130) $
(130) $
—
—
—
Net realized gains (losses) on available-
Net realized gains (losses) on available-
Net realized gains (losses) on available-
for-sale securities (total reclassified
for-sale securities (total reclassified
for-sale securities (total reclassified
amount before tax)
amount before tax)
amount before tax)
Change in fair value of cash
Change in fair value of cash
Change in fair value of cash
flow hedge
flow hedge
flow hedge
8,122
8,122
8,122
8,123
8,123
8,123
8,123
8,123
8,123
Amortization of realized gain on
Amortization of realized gain on
Amortization of realized gain on
termination of cash flow hedge (total
termination of cash flow hedge (total
termination of cash flow hedge (total
reclassification amount before tax)
reclassification amount before tax)
reclassification amount before tax)
Income taxes
Income taxes
Income taxes
(1,855)
(1,855)
(1,855)
(1,820)
(1,820)
(1,820)
(1,852) Tax (expense) benefit
(1,852) Tax (expense) benefit
(1,852) Tax (expense) benefit
Total reclassifications out of AOCI
Total reclassifications out of AOCI
Total reclassifications out of AOCI
$
$
$
6,267
6,267
6,267
$
$
$
6,173
6,173
6,173
$
$
$
6,271
6,271
6,271
Note 23: Regulatory Matters
Note 23: Regulatory Matters
Note 23: Regulatory Matters
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking
agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional
agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional
agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct and material effect on the Company’s
discretionary actions by regulators that, if undertaken, could have a direct and material effect on the Company’s
discretionary actions by regulators that, if undertaken, could have a direct and material effect on the Company’s
financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the
financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the
financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the
Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and
Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and
Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and
the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under GAAP, regulatory reporting
the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under GAAP, regulatory reporting
the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under GAAP, regulatory reporting
practices, and regulatory capital standards. The Company’s and the Bank’s capital amounts and classification are also
practices, and regulatory capital standards. The Company’s and the Bank’s capital amounts and classification are also
practices, and regulatory capital standards. The Company’s and the Bank’s capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk weightings and other factors.
subject to qualitative judgments by the regulators about components, risk weightings and other factors.
subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulatory reporting standards to ensure capital adequacy require the Bank to
Quantitative measures established by regulatory reporting standards to ensure capital adequacy require the Bank to
Quantitative measures established by regulatory reporting standards to ensure capital adequacy require the Bank to
maintain minimum amounts and ratios (set forth in the table below as of December 31, 2023) of Total and Tier I
maintain minimum amounts and ratios (set forth in the table below as of December 31, 2023) of Total and Tier I
maintain minimum amounts and ratios (set forth in the table below as of December 31, 2023) of Total and Tier I
Capital (as defined) to risk-weighted assets (as defined), of Tier I Capital (as defined) to adjusted tangible assets (as
Capital (as defined) to risk-weighted assets (as defined), of Tier I Capital (as defined) to adjusted tangible assets (as
Capital (as defined) to risk-weighted assets (as defined), of Tier I Capital (as defined) to adjusted tangible assets (as
defined) and of Common Equity Tier 1 Capital (as defined) to risk-weighted assets (as defined). Management
defined) and of Common Equity Tier 1 Capital (as defined) to risk-weighted assets (as defined). Management
defined) and of Common Equity Tier 1 Capital (as defined) to risk-weighted assets (as defined). Management
believes, as of December 31, 2023, that the Bank met all capital adequacy requirements to which it was then subject.
believes, as of December 31, 2023, that the Bank met all capital adequacy requirements to which it was then subject.
believes, as of December 31, 2023, that the Bank met all capital adequacy requirements to which it was then subject.
As of December 31, 2023, the most recent notification from the Bank’s regulators categorized the Bank as well
As of December 31, 2023, the most recent notification from the Bank’s regulators categorized the Bank as well
As of December 31, 2023, the most recent notification from the Bank’s regulators categorized the Bank as well
capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized as of
capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized as of
capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized as of
December 31, 2023, the Bank must have maintained minimum Total capital, Tier I capital, Tier 1 Leverage capital and
December 31, 2023, the Bank must have maintained minimum Total capital, Tier I capital, Tier 1 Leverage capital and
December 31, 2023, the Bank must have maintained minimum Total capital, Tier I capital, Tier 1 Leverage capital and
Common Equity Tier 1 capital ratios as set forth in the table. There are no conditions or events since that notification
Common Equity Tier 1 capital ratios as set forth in the table. There are no conditions or events since that notification
Common Equity Tier 1 capital ratios as set forth in the table. There are no conditions or events since that notification
that management believes have changed the Bank’s category.
that management believes have changed the Bank’s category.
that management believes have changed the Bank’s category.
The Company and the Bank are subject to certain restrictions on the amount of dividends that may be declared
The Company and the Bank are subject to certain restrictions on the amount of dividends that may be declared
The Company and the Bank are subject to certain restrictions on the amount of dividends that may be declared
without prior regulatory approval. At December 31, 2023 and 2022, the Company and the Bank exceeded their
without prior regulatory approval. At December 31, 2023 and 2022, the Company and the Bank exceeded their
without prior regulatory approval. At December 31, 2023 and 2022, the Company and the Bank exceeded their
minimum capital requirements then in effect. The entities may not pay dividends which would reduce capital
minimum capital requirements then in effect. The entities may not pay dividends which would reduce capital
minimum capital requirements then in effect. The entities may not pay dividends which would reduce capital
below the minimum requirements shown below. In addition to the minimum capital ratios, the capital rules
below the minimum requirements shown below. In addition to the minimum capital ratios, the capital rules
below the minimum requirements shown below. In addition to the minimum capital ratios, the capital rules
include a capital conservation buffer, under which a banking organization must have Common Equity Tier 1
include a capital conservation buffer, under which a banking organization must have Common Equity Tier 1
include a capital conservation buffer, under which a banking organization must have Common Equity Tier 1
capital more than 2.5% above each of its minimum risk-based capital ratios in order to avoid restrictions on
capital more than 2.5% above each of its minimum risk-based capital ratios in order to avoid restrictions on
capital more than 2.5% above each of its minimum risk-based capital ratios in order to avoid restrictions on
paying dividends, repurchasing shares, and paying certain discretionary bonuses. The net unrealized gain or loss
paying dividends, repurchasing shares, and paying certain discretionary bonuses. The net unrealized gain or loss
paying dividends, repurchasing shares, and paying certain discretionary bonuses. The net unrealized gain or loss
on securities is not included in computing regulatory capital.
on securities is not included in computing regulatory capital.
on securities is not included in computing regulatory capital.
128
Actual
Adequacy Purposes
Amount Ratio
Amount
Ratio
For Capital
(Dollars In Thousands)
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
Amount Ratio
As of December 31, 2023
Total capital
Tier I capital
Tier I leverage capital
Common equity Tier I capital
Great Southern Bancorp, Inc.
Great Southern Bank
As of December 31, 2022
Total capital
Tier I capital
Tier I leverage capital
Great Southern Bancorp, Inc.
Great Southern Bank
$ 770,885 15.2% $
$ 728,113 14.3% $
406,994
406,744
8.0%
N/A
N/A
8.0% $
508,430
10.0%
Great Southern Bancorp, Inc.
Great Southern Bank
$ 632,279 12.4% $
$ 664,545 13.1% $
305,246
305,058
6.0%
N/A
6.0% $
406,744
N/A
8.0%
Great Southern Bancorp, Inc.
Great Southern Bank
$ 632,279 11.0% $
$ 664,545 11.6% $
229,992
229,692
4.0%
N/A
4.0% $
287,115
N/A
5.0%
$ 607,279 11.9% $
$ 664,545 13.1% $
228,934
228,794
4.5%
N/A
4.5% $
330,480
N/A
6.5%
Great Southern Bancorp, Inc.
Great Southern Bank
$ 746,287 13.5% $
$ 721,616 13.1% $
440,767
440,683
8.0%
N/A
N/A
8.0% $
550,854
10.0%
Great Southern Bancorp, Inc.
Great Southern Bank
$ 607,807 11.0% $
$ 658,136 11.9% $
330,575
330,512
6.0%
N/A
6.0% $
440,683
N/A
8.0%
Great Southern Bancorp, Inc.
Great Southern Bank
$ 607,807 10.6% $
$ 658,136 11.5% $
228,673
228,511
4.0%
N/A
4.0% $
285,638
N/A
5.0%
Common equity Tier I capital
Great Southern Bancorp, Inc.
Great Southern Bank
$ 582,807 10.6% $
$ 658,136 11.9% $
247,932
247,884
4.5%
N/A
4.5% $
358,055
N/A
6.5%
Note 24: Litigation Matters
In the normal course of business, the Company and its subsidiaries are subject to pending and threatened legal
actions, some of which seek substantial relief or damages. While the ultimate outcome of such legal proceedings
cannot be predicted with certainty, after reviewing pending and threatened litigation with counsel, management
believes at this time that the outcome of such litigation will not have a material adverse effect on the Company’s
business, financial condition or results of operations.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Amounts reclassified from AOCI and the affected line items in the statements of income during the years ended
December 31, 2023, 2022 and 2021, were as follows:
The Company’s and the Bank’s actual capital amounts and ratios are presented in the following table. No amount
was deducted from capital for interest-rate risk.
Amounts Reclassified
from AOCI
2023
2022
2021
(In Thousands)
Affected Line Item in the
Statements of Income
Unrealized loss on available-for-sale
securities
$
—
$
(130) $
—
amount before tax)
Net realized gains (losses) on available-
for-sale securities (total reclassified
Change in fair value of cash
flow hedge
8,122
8,123
8,123
reclassification amount before tax)
Amortization of realized gain on
termination of cash flow hedge (total
Income taxes
(1,855)
(1,820)
(1,852) Tax (expense) benefit
Total reclassifications out of AOCI
$
6,267
$
6,173
$
6,271
Note 23: Regulatory Matters
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking
agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct and material effect on the Company’s
financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the
Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and
the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under GAAP, regulatory reporting
practices, and regulatory capital standards. The Company’s and the Bank’s capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulatory reporting standards to ensure capital adequacy require the Bank to
maintain minimum amounts and ratios (set forth in the table below as of December 31, 2023) of Total and Tier I
Capital (as defined) to risk-weighted assets (as defined), of Tier I Capital (as defined) to adjusted tangible assets (as
defined) and of Common Equity Tier 1 Capital (as defined) to risk-weighted assets (as defined). Management
believes, as of December 31, 2023, that the Bank met all capital adequacy requirements to which it was then subject.
As of December 31, 2023, the most recent notification from the Bank’s regulators categorized the Bank as well
capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized as of
December 31, 2023, the Bank must have maintained minimum Total capital, Tier I capital, Tier 1 Leverage capital and
Common Equity Tier 1 capital ratios as set forth in the table. There are no conditions or events since that notification
that management believes have changed the Bank’s category.
The Company and the Bank are subject to certain restrictions on the amount of dividends that may be declared
without prior regulatory approval. At December 31, 2023 and 2022, the Company and the Bank exceeded their
minimum capital requirements then in effect. The entities may not pay dividends which would reduce capital
below the minimum requirements shown below. In addition to the minimum capital ratios, the capital rules
include a capital conservation buffer, under which a banking organization must have Common Equity Tier 1
capital more than 2.5% above each of its minimum risk-based capital ratios in order to avoid restrictions on
paying dividends, repurchasing shares, and paying certain discretionary bonuses. The net unrealized gain or loss
on securities is not included in computing regulatory capital.
Actual
Amount Ratio
Adequacy Purposes
Ratio
Amount
For Capital
(Dollars In Thousands)
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
Amount Ratio
As of December 31, 2023
Total capital
Great Southern Bancorp, Inc.
Great Southern Bank
$ 770,885 15.2% $
$ 728,113 14.3% $
406,994
406,744
8.0%
8.0% $
N/A
508,430
N/A
10.0%
Tier I capital
Great Southern Bancorp, Inc.
Great Southern Bank
$ 632,279 12.4% $
$ 664,545 13.1% $
305,246
305,058
6.0%
6.0% $
N/A
406,744
N/A
8.0%
Tier I leverage capital
Great Southern Bancorp, Inc.
Great Southern Bank
$ 632,279 11.0% $
$ 664,545 11.6% $
229,992
229,692
4.0%
4.0% $
N/A
287,115
N/A
5.0%
Common equity Tier I capital
Great Southern Bancorp, Inc.
Great Southern Bank
As of December 31, 2022
Total capital
$ 607,279 11.9% $
$ 664,545 13.1% $
228,934
228,794
4.5%
4.5% $
N/A
330,480
N/A
6.5%
Great Southern Bancorp, Inc.
Great Southern Bank
$ 746,287 13.5% $
$ 721,616 13.1% $
440,767
440,683
8.0%
8.0% $
N/A
550,854
N/A
10.0%
Tier I capital
Great Southern Bancorp, Inc.
Great Southern Bank
$ 607,807 11.0% $
$ 658,136 11.9% $
330,575
330,512
6.0%
6.0% $
N/A
440,683
N/A
8.0%
Tier I leverage capital
Great Southern Bancorp, Inc.
Great Southern Bank
$ 607,807 10.6% $
$ 658,136 11.5% $
228,673
228,511
4.0%
4.0% $
N/A
285,638
N/A
5.0%
Common equity Tier I capital
Great Southern Bancorp, Inc.
Great Southern Bank
$ 582,807 10.6% $
$ 658,136 11.9% $
247,932
247,884
4.5%
4.5% $
N/A
358,055
N/A
6.5%
Note 24: Litigation Matters
In the normal course of business, the Company and its subsidiaries are subject to pending and threatened legal
actions, some of which seek substantial relief or damages. While the ultimate outcome of such legal proceedings
cannot be predicted with certainty, after reviewing pending and threatened litigation with counsel, management
believes at this time that the outcome of such litigation will not have a material adverse effect on the Company’s
business, financial condition or results of operations.
129
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Note 25: Summary of Unaudited Quarterly Operating Results
Note 26: Condensed Parent Company Statements
Note 26: Condensed Parent Company Statements
Following is a summary of unaudited quarterly operating results for the years 2023, 2022 and 2021:
2023
Three Months Ended
March 31
June 30
September 30 December 31
(In Thousands, Except Per Share Data)
Interest income
Interest expense
Provision for credit losses on loans
Provision (credit) for unfunded commitments
Net realized gain (loss) on available-for-sale securities
Non-interest income
Non-interest expense
Provision for income taxes
Net income available to common shareholders
Earnings per common share – diluted
$ 71,463
18,271
1,500
(826)
—
7,889
34,463
5,488
20,456
1.67
$ 73,618
25,480
—
(1,619)
—
7,769
34,718
4,488
18,320
1.52
$ 75,272
28,534
—
(1,195)
—
7,852
35,557
4,349
15,879
1.33
$ 76,482
31,335
750
(1,689)
—
6,563
36,285
3,219
13,145
1.11
2022
Three Months Ended
March 31
June 30
September 30 December 31
(In Thousands, Except Per Share Data)
Interest income
Interest expense
Provision for credit losses on loans
Provision (credit) for unfunded commitments
Net realized gain (loss) on available-for-sale securities
Non-interest income
Non-interest expense
Provision for income taxes
Net income available to common shareholders
Earnings per common share – diluted
$ 46,673
3,407
—
(193)
7
9,176
31,268
4,380
16,987
1.30
$ 52,698
3,687
—
2,223
—
9,319
33,004
4,699
18,224
1.44
$ 59,657
6,759
2,000
1,315
31
7,984
34,758
4,676
18,133
1.46
$ 67,949
13,330
1,000
(159)
(168)
7,661
34,336
4,499
22,604
1.84
2021
Three Months Ended
March 31
June 30
September 30 December 31
(In Thousands, Except Per Share Data)
Interest income
Interest expense
Provision (credit) for credit losses on loans
Provision (credit) for unfunded commitments
Net realized gain (loss) on available-for-sale securities
Non-interest income
Non-interest expense
Provision for income taxes
Net income available to common shareholders
Earnings per common share – diluted
$ 50,633
6,544
300
—
(674)
9,736
30,321
5,010
18,868
1.36
130
$ 50,452
5,768
(1,000)
—
(307)
9,585
30,191
5,271
20,114
1.46
$ 49,640
4,717
(3,000)
—
643
9,798
31,339
5,375
20,364
1.49
$ 47,948
3,723
(3,000)
—
1,277
9,198
35,784
4,081
15,281
1.14
The condensed statements of financial condition at December 31, 2023 and 2022, and statements of income,
The condensed statements of financial condition at December 31, 2023 and 2022, and statements of income,
comprehensive income and cash flows for the years ended December 31, 2023, 2022 and 2021, for the parent
comprehensive income and cash flows for the years ended December 31, 2023, 2022 and 2021, for the parent
company, Great Southern Bancorp, Inc., were as follows:
company, Great Southern Bancorp, Inc., were as follows:
Statements of Financial Condition
Statements of Financial Condition
Assets
Assets
Cash
Cash
Investment in subsidiary bank
Investment in subsidiary bank
Deferred and accrued income taxes
Deferred and accrued income taxes
Prepaid expenses and other assets
Prepaid expenses and other assets
Liabilities and Stockholders’ Equity
Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses
Accounts payable and accrued expenses
Subordinated debentures issued to capital trust
Subordinated debentures issued to capital trust
Subordinated notes
Subordinated notes
Common stock
Common stock
Additional paid-in capital
Additional paid-in capital
Retained earnings
Retained earnings
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss)
December 31,
December 31,
2023
2023
2022
2022
(In Thousands)
(In Thousands)
$
$
$
$
47,048
47,048
629,096
629,096
641
641
877
877
29,097
29,097
608,416
608,416
148
148
882
882
$
$
677,662
677,662
$
$
638,543
638,543
$
$
$
$
5,480
5,480
25,774
25,774
74,579
74,579
118
118
44,320
44,320
569,872
569,872
(42,481)
(42,481)
5,401
5,401
25,774
25,774
74,281
74,281
122
122
42,445
42,445
543,875
543,875
(53,355)
(53,355)
$
$
677,662
677,662
$
$
638,543
638,543
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Note 26: Condensed Parent Company Statements
Note 26: Condensed Parent Company Statements
The condensed statements of financial condition at December 31, 2023 and 2022, and statements of income,
The condensed statements of financial condition at December 31, 2023 and 2022, and statements of income,
comprehensive income and cash flows for the years ended December 31, 2023, 2022 and 2021, for the parent
comprehensive income and cash flows for the years ended December 31, 2023, 2022 and 2021, for the parent
company, Great Southern Bancorp, Inc., were as follows:
company, Great Southern Bancorp, Inc., were as follows:
Statements of Financial Condition
Statements of Financial Condition
Assets
Assets
Cash
Cash
Investment in subsidiary bank
Investment in subsidiary bank
Deferred and accrued income taxes
Deferred and accrued income taxes
Prepaid expenses and other assets
Prepaid expenses and other assets
Liabilities and Stockholders’ Equity
Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses
Accounts payable and accrued expenses
Subordinated debentures issued to capital trust
Subordinated debentures issued to capital trust
Subordinated notes
Subordinated notes
Common stock
Common stock
Additional paid-in capital
Additional paid-in capital
Retained earnings
Retained earnings
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss)
December 31,
December 31,
2023
2023
2022
2022
(In Thousands)
(In Thousands)
$
$
$
$
47,048
47,048
629,096
629,096
641
641
877
877
29,097
29,097
608,416
608,416
148
148
882
882
$
$
677,662
677,662
$
$
638,543
638,543
$
$
$
$
5,480
5,480
25,774
25,774
74,579
74,579
118
118
44,320
44,320
569,872
569,872
(42,481)
(42,481)
5,401
5,401
25,774
25,774
74,281
74,281
122
122
42,445
42,445
543,875
543,875
(53,355)
(53,355)
$
$
677,662
677,662
$
$
638,543
638,543
131
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Statements of Income
Income
Dividends from subsidiary bank
Other income
$
Expense
Operating expenses
Interest expense
Income before income tax and
equity in undistributed earnings
of subsidiaries
Credit for income taxes
Income before equity in earnings
of subsidiaries
Equity in undistributed earnings of
subsidiaries
Net income
2023
2022
(In Thousands)
2021
65,000
—
65,000
2,780
6,158
8,938
$
60,000
—
60,000
2,550
5,298
7,848
$
74,000
—
74,000
2,121
7,613
9,734
56,062
(1,932)
52,152
(1,608)
64,266
(1,850)
57,994
53,760
66,116
2023
2023
2022
2022
(In Thousands)
(In Thousands)
2021
2021
Statements of Cash Flows
Statements of Cash Flows
Operating Activities
Operating Activities
Net income
Net income
Items not requiring (providing) cash
Items not requiring (providing) cash
Equity in undistributed earnings of subsidiary
Equity in undistributed earnings of subsidiary
Compensation expense for stock option grants
Compensation expense for stock option grants
Amortization of interest rate derivative and deferred
Amortization of interest rate derivative and deferred
costs on subordinated notes
costs on subordinated notes
Changes in
Changes in
Prepaid expenses and other assets
Prepaid expenses and other assets
Accounts payable and accrued expenses
Accounts payable and accrued expenses
Income taxes
Income taxes
Net cash provided by operating activities
Net cash provided by operating activities
$
$
67,800
67,800
$
$
75,948
75,948
$
$
74,627
74,627
(9,806)
(9,806)
1,621
1,621
298
298
5
5
250
250
(493)
(493)
59,675
59,675
(22,188)
(22,188)
1,437
1,437
297
297
(14)
(14)
69
69
(54)
(54)
55,495
55,495
(8,511)
(8,511)
1,225
1,225
587
587
15
15
(1,661)
(1,661)
63
63
66,345
66,345
Investing Activities
Investing Activities
Net cash provided by investing activities
Net cash provided by investing activities
—
—
—
—
—
—
Financing Activities
Financing Activities
Purchases of the Company’s common stock
Purchases of the Company’s common stock
Redemption of subordinated notes
Redemption of subordinated notes
Dividends paid
Dividends paid
Stock options exercised
Stock options exercised
(23,326)
(23,326)
—
—
(19,282)
(19,282)
884
884
(41,724)
(41,724)
(61,847)
(61,847)
—
—
(19,181)
(19,181)
6,258
6,258
(74,770)
(74,770)
(39,123)
(39,123)
(75,000)
(75,000)
(18,800)
(18,800)
3,700
3,700
(129,223)
(129,223)
Cash, Beginning of Year
Cash, Beginning of Year
Cash, End of Year
Cash, End of Year
Additional Cash Payment Information
Additional Cash Payment Information
Interest paid
Interest paid
29,097
29,097
48,372
48,372
111,250
111,250
$
$
47,048
47,048
$
$
29,097
29,097
$
$
48,372
48,372
$
$
6,107
6,107
$
$
5,115
5,115
$
$
9,103
9,103
Statements of Comprehensive Income
Statements of Comprehensive Income
2023
2023
2022
2022
2021
2021
(In Thousands)
(In Thousands)
Net Income
Net Income
$ 67,800
$ 67,800
$ 75,948
$ 75,948
$ 74,627
$ 74,627
Comprehensive income (loss) of subsidiaries
Comprehensive income (loss) of subsidiaries
10,874
10,874
(86,114)
(86,114)
(20,392)
(20,392)
Comprehensive Income
Comprehensive Income
$
$
78,674
78,674
$
$
(10,166)
(10,166)
$
$
54,235
54,235
9,806
22,188
8,511
Net cash used in financing activities
Net cash used in financing activities
$
67,800
$
75,948
$
74,627
Increase (Decrease) in Cash
Increase (Decrease) in Cash
(17,951)
(17,951)
(19,275)
(19,275)
(62,878)
(62,878)
132
Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
December 31, 2023, 2022 and 2021
December 31, 2023, 2022 and 2021
Statements of Cash Flows
Statements of Cash Flows
Operating Activities
Operating Activities
Net income
Items not requiring (providing) cash
Net income
Items not requiring (providing) cash
Equity in undistributed earnings of subsidiary
Equity in undistributed earnings of subsidiary
Compensation expense for stock option grants
Compensation expense for stock option grants
Amortization of interest rate derivative and deferred
Amortization of interest rate derivative and deferred
costs on subordinated notes
costs on subordinated notes
Changes in
Changes in
Prepaid expenses and other assets
Accounts payable and accrued expenses
Income taxes
Prepaid expenses and other assets
Accounts payable and accrued expenses
Income taxes
Net cash provided by operating activities
Net cash provided by operating activities
Investing Activities
Investing Activities
2023
2023
2022
(In Thousands)
2022
(In Thousands)
2021
2021
$
$
67,800
67,800
$
$
75,948
75,948
$
$
74,627
74,627
(9,806)
1,621
(9,806)
1,621
298
298
5
5
250
250
(493)
(493)
59,675
59,675
(22,188)
(22,188)
1,437
1,437
297
297
(14)
(14)
69
69
(54)
(54)
55,495
55,495
(8,511)
1,225
(8,511)
1,225
587
587
15
15
(1,661)
(1,661)
63
63
66,345
66,345
Net cash provided by investing activities
Net cash provided by investing activities
—
—
—
—
—
—
Financing Activities
Financing Activities
Purchases of the Company’s common stock
Redemption of subordinated notes
Dividends paid
Stock options exercised
Purchases of the Company’s common stock
Redemption of subordinated notes
Dividends paid
Stock options exercised
Net cash used in financing activities
Net cash used in financing activities
(23,326)
(23,326)
—
—
(19,282)
(19,282)
884
884
(41,724)
(41,724)
(61,847)
(61,847)
—
—
(19,181)
(19,181)
6,258
6,258
(74,770)
(74,770)
(39,123)
(39,123)
(75,000)
(75,000)
(18,800)
(18,800)
3,700
3,700
(129,223)
(129,223)
Increase (Decrease) in Cash
Increase (Decrease) in Cash
(17,951)
(17,951)
(19,275)
(19,275)
(62,878)
(62,878)
Cash, Beginning of Year
Cash, Beginning of Year
Cash, End of Year
Cash, End of Year
29,097
29,097
48,372
48,372
111,250
111,250
$
$
47,048
47,048
$
$
29,097
29,097
$
$
48,372
48,372
Additional Cash Payment Information
Additional Cash Payment Information
Interest paid
Interest paid
$
$
6,107
6,107
$
$
5,115
5,115
$
$
9,103
9,103
2023
2023
2022
(In Thousands)
2022
(In Thousands)
2021
2021
Statements of Comprehensive Income
Statements of Comprehensive Income
Net Income
Net Income
$ 67,800
$ 67,800
$ 75,948
$ 75,948
$ 74,627
$ 74,627
Comprehensive income (loss) of subsidiaries
Comprehensive income (loss) of subsidiaries
10,874
10,874
(86,114)
(86,114)
(20,392)
(20,392)
Comprehensive Income
Comprehensive Income
$
$
78,674
78,674
$
$
(10,166)
(10,166)
$
$
54,235
54,235
133
134
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002CSNE681 Annual Report