What changed in this filing

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

2026-05-07 compared with 2025-11-06 · 26 added, 47 removed, 66 unchanged (53% of the section changed)

2 unchanged sentences

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

12 unchanged sentences

During a period of falling interest rates, the opposite would be true.

As of September 30, 2025, Great Southern’s interest rate risk models indicated 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 mostly neutral impact on net interest income.

As of March 31, 2026, Great Southern’s interest rate risk models indicated 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 mostly neutral impact on net interest income.

Any 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.

2 unchanged sentences

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 (which replaced LIBOR 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 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 recover, as renewal interest rates on maturing time deposits decrease compared to the then-current rates paid on those products.

4 unchanged sentences

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 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 2023 and much of 2024.

As of September 30, 2025, time deposit maturities over the next 12 months were as follows:

While market interest rate increases are expected to result in increases in 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 2023 and much of 2024.

Market interest rate decreases began in late 2024, with a short series of Federal Funds rate cuts.

Another short series of Federal Funds rate cuts followed in late 2025.

These rate cuts have not had a material negative impact on our net interest margin through March 31, 2026.

As of March 31, 2026, time deposit maturities (including brokered time deposits) over the next 12 months were as follows:

within three months — $647.0 million, with a weighted-average rate of 3.48%;

1 unchanged sentence

and within six to twelve months — $29.2 million, with a weighted-average rate of 1.41%.

Based on time deposit market rates in September 2025, replacement rates for these maturing time deposits are likely to be approximately 3.10-3.60%, depending on term.

The current level and shape of the interest rate yield curve poses challenges for interest rate risk management.

Based on time deposit market rates in March 2026, replacement rates for maturing time deposits originated through our retail branch system are likely to be approximately 2.70-3.10%, depending on term.

Brokered time deposit rates were generally at or above 3.75% in March 2026.

The current level and shape of the interest rate yield curve pose 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 increases of 0.25% on eight additional occasions from December 14, 2016 through December 31, 2018, with the Federal Funds rate reaching as high as 2.50%.

The FRB also implemented rate increases of 0.25% on eight additional occasions between December 2016 and December 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 3rd and a 1.00% decrease on March 16th.

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, 2020 and a 1.00% decrease on March 16, 2020.

At December 31, 2021, the Federal Funds rate was 0.25%.

5 unchanged sentences

At December 31, 2024, the Federal Funds rate was 4.50%.

In 2025, the FRB implemented a rate decrease of 0.25% in September, which brought the Federal Funds rate to 4.25% at September 30, 2025, and another rate decrease of 0.25% in October.

Great Southern’s loan portfolio includes loans ($1.54 billion at September 30, 2025) tied to various SOFR indexes that will be subject to adjustment at least once within 90 days after September 30, 2025.

All of these loans have interest rate floors at various rates.

Great Southern also has a portfolio of loans ($666.4 million at September 30, 2025) 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.

In addition, Great Southern has a portfolio of loans ($10.6 million at September 30, 2025) tied to an AMERIBOR index that will adjust immediately or within 90 days of a change to the rate of interest on this index.

All of these loans had interest rate floors at various rates.

At September 30, 2025, nearly all of these SOFR, AMERIBOR 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, and most are expected to move fully with future market interest rate decreases as many of these loans have floor rates well below their current index rate.

In 2025, the FRB implemented rate decreases of 0.25% in each of September, October and December, respectively.

At December 31, 2025, the Federal Funds rate was 3.75%, and remained there at March 31, 2026.

Financial markets now expect the possibility of further decreases in Federal Funds interest rates in 2026 to be modest, if any, with the number of potential cuts now expected to be only zero to one by the end of 2026.

Great Southern’s loan portfolio includes loans ($1.71 billion at March 31, 2026) tied to various SOFR indexes that will be subject to adjustment at least once within 90 days after March 31, 2026.

Nearly all of these loans have interest rate floors at various rates.

Great Southern also has a portfolio of loans ($601.8 million at March 31, 2026) tied to a “prime rate” of interest that will adjust immediately or within 90 days of a change to the “prime rate” of interest.

Nearly all of these loans had interest rate floors at various rates.

At March 31, 2026, nearly all of these SOFR, and “prime rate” loans had fully-indexed rates that were at or above their floor rate and in most cases well above the floor rate.

Interest rate risk exposure estimates (the sensitivity gap) are not exact measures of an institution’s actual interest rate risk.

11 unchanged sentences

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.

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.

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 loans with adjustable rates 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.

6 unchanged sentences

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 was $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, 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.

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 (as it did as of September 30, 2025), 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 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 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 recorded a market value adjustment to the brokered deposits of $163,000, which was amortized as a reduction of interest expense from January 2024 through February 2025.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk