Great Southern Bancorp signals stable loan balances and margin resilience amid competitive environment

Earnings Call Insights: Great Southern Bancorp, Inc. (GSBC) Q3 2025

MANAGEMENT VIEW

* Joe Turner, President and CEO, stated that "our third quarter results reflect the continued strength and consistency of our core banking fundamentals and a solid earnings performance in what remains a competitive and dynamic environment." He highlighted net income of $17.8 million for the quarter or $1.56 per diluted common share. Turner pointed to improved net interest income, no provision for credit losses, and continued management of noninterest expense as key drivers of year-over-year profit growth. He reported net interest income of $50.8 million for the quarter and noted, "Our annualized net interest margin improved to 3.72% from 3.42% a year ago, reflecting stable loan yields, disciplined asset liability management and effective funding cost control." Turner also shared that gross loans totaled $4.54 billion, a decline due to elevated commercial real estate and multifamily loan payoffs, and a reduction in construction loans as projects completed. He emphasized, "We remain focused on maintaining sound underwriting standards and disciplined credit practices... which have resulted in exceptional asset quality and negligible loan charge-offs."
* Turner reported that total deposits decreased $77.5 million in the quarter, primarily in broker deposits, noting, "The deposit market remains highly competitive with sustained rate pressure in both core and broker deposit segments."
* Turner underscored a continued focus on expense management, with noninterest expense at $36.1 million, and an efficiency ratio of 62.45%. He said, "We remain focused on maintaining strong positions related to credit quality, capital and liquidity."
* Rex Copeland, Treasurer, provided further detail, stating, "We reported net income of $17.8 million or $1.56 per diluted common share in the third quarter of this year compared to $16.5 million or $1.41 per diluted common share in the third quarter of 2024 and $19.8 million or $1.72 per diluted common share in the second quarter of 2025." Copeland highlighted that the quarter-over-quarter decline was due to lower noninterest income and a modest increase in noninterest expense, with Q2 including significant nonrecurring income.

OUTLOOK

* Management expects overall loan balances to remain relatively stable through year-end, as stated by Copeland: "While overall loan balances are expected to remain relatively stable through year-end, the unfunded portion of construction and commercial loan commitments remain strong and reflecting steady borrower activity within our markets."
* Turner indicated a focus on balancing loan growth with appropriate pricing and structure, saying, "Given our emphasis on balancing loan growth with appropriate pricing and loan structure, loan production in the quarter only partially offset the heightened payoff activity."
* Copeland noted, "Future repricing opportunities will be closely monitored as market rates and deposit competition continue to evolve."

FINANCIAL RESULTS

* Net interest income was $50.8 million for the third quarter, compared to $51.0 million in Q2 2025 and $48 million in Q3 2024. Annualized net interest margin stood at 3.72%.
* Total assets ended the quarter at $5.74 billion, down from $5.85 billion at June 30, 2025.
* Total net loans, excluding mortgage loans held for sale, decreased to $4.47 billion at September 30, 2025, from $4.53 billion at June 30, 2025.
* Noninterest income was $7.1 million for the quarter, compared to $8.2 million in the previous quarter, with commission income increasing by $206,000 year-over-year.
* Noninterest expense totaled $36.1 million, up from $35.0 million in the previous quarter, driven by higher occupancy, equipment, salaries, professional fees, and other real estate owned expenses.
* The efficiency ratio increased to 62.45% from 59.16% in Q2 2025.
* The allowance for credit losses as a percentage of total loans was 1.43% at September 30, 2025, up from 1.41% at June 30, 2025.
* Stockholders’ equity rose to $632.9 million, with a book value of $56.18 per common share.
* The company repurchased 165,000 shares during the quarter and declared a quarterly cash dividend of $0.43 per common share.

Q&A

* Damon Del Monte, Keefe, Bruyette, & Woods, Inc., asked about loan growth outlook and regional opportunities. Turner responded, "I think there's opportunity really in kind of every pocket of our footprint... It's just that payoffs are elevated as well."
* Del Monte inquired about credit quality and potential portfolio weaknesses. Turner replied, "I couldn't say that we're seeing anything that broadly enough that you would say we're seeing general weakness... I would call that more idiosyncratic to that specific project as opposed to broader weakness."
* Del Monte questioned the outlook for provision. Turner agreed with the analyst's assumption of minimal provision barring net charge-offs.
* On rate sensitivity, Del Monte asked about further rate cuts' impact. Copeland said, "The rate cut that happened in September has not so far really impacted us... minor and spaced out rate cuts would really be too impactful probably."
* John Rodis, Janney Montgomery Scott LLC, queried about operating expenses. Copeland said, "Some of the things in the occupancy category and equipment category... are probably kind of built in now as we've made some enhancements to systems and things of that nature." Turner added, "I think it was a pretty normal quarter from a noninterest expense standpoint."
* Rodis also inquired about commission income levels. Copeland responded, "It's not a huge dollar amount... it's, what, $566,000 in the quarter... So I would say we're sort of at a higher level, like you said, than we've been for a while and whether that can be sustained, I can't honestly tell you for sure."

SENTIMENT ANALYSIS

* Analysts maintained a neutral tone, focusing on clarifying outlook for loan growth, credit quality, interest rate impacts, and expense trends.
* Management’s tone during prepared remarks was confident, emphasizing sound credit and capital, but in Q&A, Turner and Copeland provided cautious, factual responses without overpromising on growth or income sustainability. Turner said, "I couldn't say that we're seeing anything that broadly enough that you would say we're seeing general weakness," reflecting steady but guarded confidence.
* Compared to the previous quarter, management's tone was similarly steady, with slightly more emphasis on expense increases and competitive pressures. Analysts’ tone remained neutral, probing for sustainability and risk but not pressing aggressively.

QUARTER-OVER-QUARTER COMPARISON

* Net income declined from $19.8 million in Q2 2025 to $17.8 million in Q3 2025, reflecting lower noninterest income and higher expenses.
* Net interest margin improved to 3.72% from 3.68% in the previous quarter.
* Noninterest expense increased by $1.1 million quarter-over-quarter, with the efficiency ratio rising accordingly.
* Loan balances continued to contract, with ongoing elevated payoff activity noted in both quarters.
* Management’s confidence in credit quality and capital strength persisted, but the end of benefit from the terminated swap was noted as a headwind for future quarters.
* Analysts continued to focus on loan growth visibility, expense control, and margin sustainability, repeating questions from prior quarters about drivers and risks.

RISKS AND CONCERNS

* Turner cited a highly competitive deposit market with sustained rate pressure as a challenge.
* Copeland noted the loss of $2 million per quarter in interest income from the terminated swap as a factor for Q4 and beyond.
* Elevated legal and professional fees, as well as increasing occupancy and technology expenses, contributed to higher noninterest expense.
* Management highlighted continued monitoring of funding costs and repricing opportunities as market dynamics evolve.
* No broad-based credit weaknesses were identified, though idiosyncratic risk in specific projects was acknowledged.

FINAL TAKEAWAY

Management communicated continued stability in core banking performance, disciplined expense management, and strong asset quality despite a challenging and competitive deposit landscape. The company expects loan balances to remain stable through year-end, with careful attention to funding costs and margin preservation as the benefit from the terminated swap ends. Investors were reassured by consistent capital strength, prudent underwriting, and a continued commitment to operational efficiency, while also being cautioned about expense pressures and the evolving rate environment.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/gsbc/earnings/transcripts]

MORE ON GREAT SOUTHERN BANCORP

* Great Southern Bancorp, Inc. (GSBC) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4830578-great-southern-bancorp-inc-gsbc-q3-2025-earnings-call-transcript]
* Great Southern Bancorp: Strong Credit Quality But Limited Upside [https://seekingalpha.com/article/4802474-great-southern-bancorp-strong-credit-quality-but-limited-upside]
* Seeking Alpha’s Quant Rating on Great Southern Bancorp [https://seekingalpha.com/symbol/GSBC/ratings/quant-ratings]
* Historical earnings data for Great Southern Bancorp [https://seekingalpha.com/symbol/GSBC/earnings]
* Dividend scorecard for Great Southern Bancorp [https://seekingalpha.com/symbol/GSBC/dividends/scorecard]