What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-06 · 310 added, 137 removed, 922 unchanged (33% of the section changed)

3 unchanged sentences

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands, except number of shares)

(In Thousands, Except Per Share Data)

Interest-bearing deposits in other financial institutions

3 unchanged sentences

Mortgage loans held for sale

Loans receivable, net of allowance for credit losses of $ 60,797 – March 2022;

Loans receivable, net of allowance for credit losses of $ 61,058 – June 2022;

$ 60,754 – December 2021

20 unchanged sentences

authorized 1,000,000 shares;

issued and outstanding March 2022 and December 2021 - - 0 - shares

issued and outstanding June 2022 and December 2021 - - 0 - shares

Common stock, $ .01 par value;

authorized 20,000,000 shares;

issued and outstanding March 2022 – 12,760,972 shares;

issued and outstanding June 2022 – 12,343,449 shares;

December 2021 – 13,128,493 shares

1 unchanged sentence

Retained earnings

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Total Stockholders’ Equity

16 unchanged sentences

NET INTEREST INCOME

PROVISION FOR CREDIT LOSSES ON LOANS

CREDIT FOR UNFUNDED COMMITMENTS

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES AND CREDIT FOR UNFUNDED COMMITMENTS

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

2 unchanged sentences

Net gains on loan sales

Late charges and fees on loans

Gain (loss) on derivative interest rate products

TOTAL NON-INTEREST INCOME

NON-INTEREST EXPENSE

Salaries and employee benefits

Net occupancy and equipment expense

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

TOTAL NON-INTEREST EXPENSE

INCOME BEFORE INCOME TAXES

PROVISION FOR INCOME TAXES

NET INCOME AND NET INCOME AVAILABLE TO COMMON STOCKHOLDERS

Basic Earnings Per Common Share

Diluted Earnings Per Common Share

Dividends Declared Per Common Share

See Notes to Consolidated Financial Statements

GREAT SOUTHERN BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Data)

SIX MONTHS ENDED

INTEREST INCOME

Investment securities and other

TOTAL INTEREST INCOME

INTEREST EXPENSE

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 EXPENSE

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

Overdraft and insufficient funds fees

Point-Of-Sale and ATM fee income and service charges

Net gains on loan sales

Net realized gain on sale of available-for-sale securities

23 unchanged sentences

THREE MONTHS ENDED

Unrealized depreciation on available-for-sale securities, net of taxes (credit) of $( 5,966 ) and $( 4,109 ), for 2022 and 2021, respectively

Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes (credit) of $( 5,115 ) and $ 1,806 , for 2022 and 2021, respectively

Unrealized loss on securities transferred to held-to-maturity, net of taxes (credit) of $( 150 ) and $-0- for 2022 and 2021, respectively

Amortization of realized gain on termination of cash flow hedge, net of taxes (credit) of $( 462 ) and $( 461 ), for 2022 and 2021, respectively

Change in value of active cash flow hedge, net of taxes (credit) of $( 766 ) and $-0- for 2022 and 2021, respectively

Comprehensive Income (Loss)

SIX MONTHS ENDED

Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes (credit) of $( 11,082 ) and $( 2,303 ), for 2022 and 2021, respectively

Unrealized gain on securities transferred to held-to-maturity, net of taxes of $ 75 and $-0- for 2022 and 2021, respectively

8 unchanged sentences

(In Thousands, Except Per Share Data)

THREE MONTHS ENDED MARCH 31, 2021

THREE MONTHS ENDED JUNE 30, 2021

Comprehensive

1 unchanged sentence

Income (Loss)

Balance, January 1, 2021

Impact of ASU 2016-13 adoption

Balance, March 31, 2021

Stock issued under Stock Option Plan

Common dividends declared, $ 0.34 per share

Other comprehensive gain

Purchase of the Company’s common stock

Reclassification of treasury stock per Maryland law

Balance, June 30, 2021

THREE MONTHS ENDED JUNE 30, 2022

Comprehensive

Paid-in Capital

Income (Loss)

Balance, March 31, 2022

Stock issued under Stock Option Plan

Common dividends declared, $ 0.40 per share

Change in fair value of cash flow hedges

Change in unrealized loss on held-to-maturity securities

Change in unrealized loss on available-for-sale securities

1 unchanged sentence

Reclassification of treasury stock per Maryland law

Balance, March 31, 2021

THREE MONTHS ENDED MARCH 31, 2022

Balance, June 30, 2022

See Notes to Consolidated Financial Statements

GREAT SOUTHERN BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In Thousands, Except Per Share Data)

SIX MONTHS ENDED JUNE 30, 2021

Comprehensive

2 unchanged sentences

Balance, January 1, 2021

Impact of ASU 2016-13 adoption

Stock issued under Stock Option Plan

Common dividends declared, $ 0.68 per share

Other comprehensive loss

Purchase of the Company’s common stock

Reclassification of treasury stock per Maryland law

Balance, June 30, 2021

SIX MONTHS ENDED JUNE 30, 2022

Comprehensive

Paid-in Capital

Income (Loss)

Balance, January 1, 2022

Stock issued under Stock Option Plan

Common dividends declared, $ 0.76 per share

Change in fair value of cash flow hedges

3 unchanged sentences

Reclassification of treasury stock per Maryland law

Balance, March 31, 2022

Balance, June 30, 2022

See Notes to Consolidated Financial Statements

3 unchanged sentences

(In Thousands)

THREE MONTHS ENDED

SIX MONTHS ENDED

CASH FLOWS FROM OPERATING ACTIVITIES

3 unchanged sentences

Compensation expense for stock option grants

Provision for credit losses on loans

Provision (credit) for credit losses on loans

Provision (credit) for unfunded commitments

Net gain on loan sales

Net loss on sale of premises and equipment

Net loss on sale/write-down of other real estate owned and repossessions

Net (gain) loss on sale of premises and equipment

Net gain on sale/write-down of other real estate owned and repossessions

Net gain on sale of available-for-sale investments

17 unchanged sentences

Purchase of available-for-sale securities

Redemption of Federal Home Loan Bank stock and change in other interest-earning assets

Net cash used in investing activities

Redemption (purchase) of Federal Home Loan Bank stock and change in other interest-earning assets

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Net decrease in certificates of deposit

Net increase in checking and savings deposits

Net increase (decrease) in certificates of deposit

Net increase (decrease) in checking and savings deposits

Net increase (decrease) in short-term borrowings

3 unchanged sentences

Stock options exercised

Net cash provided by (used in) financing activities

Net cash provided by financing activities

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

10 unchanged sentences

Those adjustments consist only of normal recurring adjustments.

Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full year.

Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the full year.

The consolidated statement of financial condition of the Company as of December 31, 2021, has been derived from the audited consolidated statement of financial condition of the Company as of that date.

6 unchanged sentences

The Company’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, Chicago, Dallas, Denver, Omaha, Nebraska, Phoenix, and Tulsa, Oklahoma.

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.

13 unchanged sentences

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 permits changes to critical terms of hedging relationships and to the designated benchmark interest rate in a fair value hedge and also provides relief for assessing hedge effectiveness for cash flow hedges.

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.

Companies are able to apply ASU 2020-04 immediately;

19 unchanged sentences

It also enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

The Company has previously adopted ASU 2016-13;

The Company previously adopted ASU 2016-13;

therefore, ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.

2 unchanged sentences

EARNINGS PER SHARE

Three Months Ended March 31,

Three Months Ended June 30,

(In Thousands, Except Per Share Data)

7 unchanged sentences

Per common share amount

Options outstanding at March 31, 2022 and 2021, to purchase 376,237 and 352,488 shares of common stock, respectively, were not included in the computation of diluted earnings per common share for each of the three month periods because the exercise prices of such options were greater than the average market prices of the common stock for the three months ended March 31, 2022 and 2021, respectively.

Six Months Ended June 30,

(In Thousands, Except Per Share Data)

Average common shares outstanding

Net income and net income available to common stockholders

Per common share amount

Average common shares outstanding

Net effect of dilutive stock options – based on the treasury stock method

using average market price

Diluted common shares

Net income and net income available to common stockholders

Per common share amount

Options outstanding at June 30, 2022 and 2021, to purchase 372,449 and 452,918 shares of common stock, respectively, were not included in the computation of diluted earnings per common share for each of the three month periods because the exercise prices of such options were greater than the average market prices of the common stock for the three months ended June 30, 2022 and 2021, respectively.

Options outstanding at June 30, 2022 and 2021, to purchase 372,449 and 452,918 shares of common stock, respectively, were not included in the computation of diluted earnings per common share for each of the six month periods because the exercise prices of such options were greater than the average market prices of the common stock for the six months ended June 30, 2022 and 2021, respectively.

INVESTMENT SECURITIES

4 unchanged sentences

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 identified amortized cost of the individual security, are included in noninterest income.

Realized gains and losses, based on specifically 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.

6 unchanged sentences

No gains or losses on these securities were recognized at the time of transfer.

As of June 30, 2022, the net unrealized gross gains remaining were $ 323,000 ;

net of income taxes, these unrealized gains were $ 249,000 .

The amortized cost and fair values of securities were as follows:

March 31, 2022

June 30, 2022

(In Thousands)

4 unchanged sentences

Small Business Administration securities

March 31, 2022

June 30, 2022

(In Thousands)

11 unchanged sentences

No securities were classified as held-to-maturity at December 31, 2021.

The amortized cost and fair value of available-for-sale and held-to-maturity securities at March 31, 2022, by contractual maturity, are shown below.

The amortized cost and fair value of available-for-sale and held-to-maturity securities at June 30, 2022, 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.

12 unchanged sentences

Certain available-for-sale investments in debt securities are reported in the financial statements at an amount less than their amortized cost.

Total fair value of these investments at March 31, 2022 and December 31, 2021, was approximately $ 351.5 million and $ 173.9 million, respectively, which is approximately 76.2 % and 34.7 % of the Company’s total 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 securities, which are issued and guaranteed by U.S.

Total fair value of these investments at June 30, 2022 and December 31, 2021, was approximately $ 493.8 million and $ 173.9 million, respectively, which was approximately 95.1 % and 34.7 % of the Company’s total 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.

1 unchanged sentence

Based on an evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes any declines in fair value for these debt securities are temporary.

The following table shows the Company’s available-for-sale and held-to-maturity securities 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 March 31, 2022 and December 31, 2021:

March 31, 2022

June 30, 2022

Less than 12 Months

7 unchanged sentences

Small Business Administration securities

March 31, 2022

June 30, 2022

Less than 12 Months

15 unchanged sentences

States and political subdivisions securities

Available-for-sale securities totaling $ 4.9 million were sold during the three months ended March 31, 2022.

A gain of $ 7,000 resulting from the sale of this available-for-sale security was recognized during the three months ended March 31, 2022.

There were no sales of available-for-sale securities during the three months ended March 31, 2021.

There were no sales of available for sale securities during the three months ended June 30, 2022.

Available-for-sale securities totaling $ 4.9 million were sold during the six months ended June 30, 2022, resulting in the recognition of a $ 7,000 gain during the period.

There were no sales of available-for-sale securities during the three or six months ended June 30, 2021.

Gains and losses on sales of securities are determined on the specific-identification method.

17 unchanged sentences

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.

It also applies to off-balance sheet credit exposures not accounted for as insurance, including loan commitments, standby letters of credits, financial guarantees, and similar instruments.

The Company adopted ASC 326 using the modified retrospective method for loans and off-balance sheet credit exposures.

15 unchanged sentences

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 is used for a reasonable and supportable period before reverting to historical averages.

The forecast-adjusted loss rate is applied to the amortized cost of loans over the remaining contractual lives, adjusted for expected prepayments.

7 unchanged sentences

however, the liability for unfunded lending commitments incorporates assumptions for the portion of unfunded commitments that are expected to be funded.

Classes of loans at March 31, 2022 and December 31, 2021 were as follows:

Classes of loans at June 30, 2022 and December 31, 2021 were as follows:

(In Thousands)

16 unchanged sentences

The following tables present the classes of loans by aging.

March 31, 2022

June 30, 2022

> 90 Days Past

52 unchanged sentences

Total non-accruing loans

No interest income was recorded on these loans for the three months ended March 31, 2022 and 2021, respectively.

Nonaccrual loans for which there is no related allowance for credit losses as of March 31, 2022 had an amortized cost of $ 3.3 million.

No interest income was recorded on these loans for the three and six months ended June 30, 2022 and 2021, respectively.

Nonaccrual loans for which there is no related allowance for credit losses as of June 30, 2022 had an amortized cost of $ 2.9 million.

These loans are individually assessed and do not require an allowance due to being adequately collateralized under the collateral-dependent valuation method.

1 unchanged sentence

Collateral-dependent loans are identified by either a classified risk rating or TDR status and a loan balance equal to or greater than $ 100,000 , including, but not limited to, any loan in process of foreclosure or repossession.

The following tables present the activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2022 and 2021.

During the three months ended March 31, 2022, the Company did not record a provision expense on its portfolio of outstanding loans, compared to a $ 300,000 provision expense recorded for the quarter ended March 31, 2021.

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2022 and 2021.

During the three months ended June 30, 2022, the Company did no t record a provision expense on its portfolio of outstanding loans, compared to a negative provision expense of $ 1.0 million during the three months ended June 30, 2021.

During the six months ended June 30, 2022, the Company did no t record a provision expense on its portfolio of outstanding loans, compared to a negative provision expense of $ 700,000 during the six months ended June 30, 2021.

One- to Four-

2 unchanged sentences

Allowance for credit losses

Balance, March 31, 2021

Provision charged to expense

Losses charged off

Balance, June 30, 2021

Allowance for credit losses

Balance, March 31, 2022

Provision (credit) charged to expense

Losses charged off

Balance, June 30, 2022

One- to Four-

Residential and

(In Thousands)

Allowance for credit losses

Balance, December 31, 2020

1 unchanged sentence

Balance, January 1, 2021

Provision (credit) charged to expense

Provision charged to expense

Losses charged off

Balance, March 31, 2021

Balance, June 30, 2021

Allowance for credit losses

2 unchanged sentences

Losses charged off

Balance, June 30, 2022

The following table presents the activity in the allowance for unfunded commitments by portfolio segment for the three and six months ended June 30, 2022 and 2021.

The provision for losses on unfunded commitments for the three months ended June 30, 2022 was $ 2.2 million, compared to a credit (negative expense) of $ 307,000 for the three months ended June 30, 2021.

The provision for losses on unfunded commitments for the six months ended June 30, 2022 was $ 2.0 million, compared to a credit (negative expense) of $ 981,000 for the six months ended June 30, 2021.

The level and mix of unfunded commitments resulted in a decrease in the required reserve for such potential losses in the 2021 three and six month periods presented.

One- to Four-

Residential and

(In Thousands)

Allowance for unfunded commitments

Balance, March 31, 2021

The following table presents the activity in the allowance for unfunded commitments by portfolio segment for the three months ended March 31, 2022 and 2021.

The provision for losses on unfunded commitments for the three months ended March 31, 2022 was a credit (negative expense) to provision expense of $ 193,000 , compared to a credit (negative expense) of $ 673,000 for the three months ended March 31, 2021.

The level and mix of unfunded commitments resulted in a decrease in the required reserve for such potential losses in each of the three month periods presented.

Provision (benefit) charged to expense

Balance, June 30, 2021

Allowance for unfunded commitments

Balance, March 31, 2022

Provision (credit) charged to expense

Balance, June 30, 2022

One- to Four-

5 unchanged sentences

Balance, January 1, 2021

Provision (credit) charged to expense

Balance, March 31, 2021

Provision (benefit) charged to expense

Balance, June 30, 2021

Allowance for unfunded commitments

1 unchanged sentence

Provision (credit) charged to expense

Balance, March 31, 2022

Balance, June 30, 2022

The portfolio segments used in the preceding tables correspond to the loan classes used in all other tables in Note 6 as follows:

6 unchanged sentences

The following table presents the amortized cost basis of collateral-dependent loans by class of loans:

March 31, 2022

June 30, 2022

December 31, 2021

13 unchanged sentences

Home equity lines of credit

TDRs by class are presented below as of March 31, 2022 and December 31, 2021.

March 31, 2022

TDRs by class are presented below as of June 30, 2022 and December 31, 2021.

June 30, 2022

Accruing TDR Loans

17 unchanged sentences

Commercial business

The following tables present newly restructured loans, which were considered TDRs, during the three months ended March 31, 2022 and 2021, respectively, by type of modification:

Three Months Ended March 31, 2022

The following tables present newly restructured loans, which were considered TDRs, during the three and six months ended June 30, 2022 and 2021, respectively, by type of modification:

Three Months Ended June 30, 2022

Interest Only

1 unchanged sentence

Commercial real estate

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Interest Only

(In Thousands)

One- to four-family residential

Six Months Ended June 30, 2022

Interest Only

(In Thousands)

Commercial real estate

At March 31, 2022, of the $ 3.7 million in TDRs, $ 2.8 million were classified as substandard using the Company’s internal grading system, which is described below.

The Company had one TDR that was modified in the previous 12 months and subsequently defaulted during the three months ended March 31, 2022.

Six Months Ended June 30, 2021

Interest Only

(In Thousands)

Commercial Real Estate

One- to four-family residential

At June 30, 2022, of the $ 3.6 million in TDRs, $ 2.8 million were classified as substandard using the Company’s internal grading system, which is described below.

The Company had one TDR that was modified in the previous 12 months and subsequently defaulted during the three months ended June 30, 2022.

At December 31, 2021, of the $ 3.9 million in TDRs, $ 2.9 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, 2021.

During the three months ended March 31, 2022, $ 221,000 of loans met the criteria for placement back on accrual status.

During the three and six months ended June 30, 2022, $ 290,000 and $ 511,000 of loans, respectively, met the criteria for placement back on accrual status.

During the three and six months ended June 30, 2021, $ 310,000 and $ 337,000 of loans, respectively, met the criteria for placement back on accrual status.

The criteria are generally a minimum of six months of consistent and timely payment performance under original or modified terms.

During the three months ended March 31, 2021, four loans designated as TDRs, totaling $ 27,000 , met the criteria for placement back on accrual status.

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.

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.

19 unchanged sentences

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.

The following tables present a summary of loans by risk category and past due status separated by origination and loan class as of March 31, 2022.

The remaining accretable discount of $ 204,000 has not been included in this table.

See Note 7 for further discussion of the FDIC-assisted acquired loans and related discount.

The following tables present a summary of loans by risk category separated by origination and loan class as of June 30, 2022.

Term Loans by Origination Year

38 unchanged sentences

Classified (7-9)

The following tables present a summary of loans by risk category and past due status separated by origination and loan class as of December 31, 2021.

The following tables present a summary of loans by risk category separated by origination and loan class as of December 31, 2021.

The remaining accretable discount of $ 429,000 has not been included in this table.

55 unchanged sentences

Based upon the acquisition date fair values of the net assets acquired, no goodwill was recorded.

The following table presents the balances of the acquired loans related to the various FDIC-assisted transactions at March 31, 2022 and December 31, 2021.

The following table presents the balances of the acquired loans related to the various FDIC-assisted transactions at June 30, 2022 and December 31, 2021.

(In Thousands)

March 31,2022

June 30, 2022

Gross loans receivable

20 unchanged sentences

Other real estate owned and repossessions

At March 31, 2022 and December 31, 2021, other real estate owned not acquired through foreclosure included four properties, all of which were branch locations that were closed and held for sale.

At March 31, 2022, residential mortgage loans totaling $ 20,000 were in the process of foreclosure.

At June 30, 2022, other real estate owned not acquired through foreclosure included three properties, all of which were branch locations that were closed and held for sale.

One additional property was sold during the three months ended June 30, 2022.

At December 31, 2021, other real estate owned not acquired through foreclosure included four properties, all of which were branch locations that were closed and held for sale.

At June 30, 2022, residential mortgage loans totaling $ 118,000 were in the process of foreclosure.

At December 31, 2021, residential mortgage loans totaling $ 125,000 were in the process of foreclosure.

5 unchanged sentences

Operating expenses, net of rental income

Six Months Ended

(In Thousands)

Net gains on sales of other real estate owned and repossessions

Valuation write-downs

Operating expenses, net of rental income

PREMISES AND EQUIPMENT

6 unchanged sentences

The Company adopted ASU 2016 02, Leases (Topic 842) , on January 1, 2019, using the modified retrospective transition approach whereby comparative periods were not restated.

The Company also elected certain relief options under the ASU, including the option not to recognize right of use asset and lease liabilities that arise from short-term leases (leases with terms of twelve months

Adoption of this ASU resulted in the Company initially recognizing a right of use asset and corresponding lease liability of $ 9.5 million as of January 1, 2019.

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 March 31, 2022, the lease right of use asset value was $ 7.5 million and the corresponding lease liability was $ 7.7 million.

As of June 30, 2022, the lease right of use asset value was $ 7.3 million and the corresponding lease liability was $ 7.5 million.

As of December 31, 2021, the lease right of use asset value was $ 7.7 million and the corresponding lease liability was $7.9 million.

At March 31, 2022, expected lease terms range from 1.0 years to 16.7 years with a weighted-average lease term of 9.1 years.

The weighted-average discount rate was 3.44 %.

For the three months ended March 31, 2022 and 2021, lease expense was $ 369,000 and $ 374,000 , respectively.

At June 30, 2022, expected lease terms ranged from 0.8 years to 16.4 years with a weighted-average lease term of 8.9 years.

The weighted-average discount rate at June 30, 2022 was 3.45 %.

For the three months ended June 30, 2022 and 2021, lease expense was $ 389,000 and $ 394,000 , respectively.

For the six months ended June 30, 2022 and 2021, lease expense was $ 758,000 and $ 768,000 , 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 for the three months ended March 31, 2022 and 2021 was $ 69,000 and $ 66,000 , respectively.

The variable portion of these lease payments is not material and the total lease expense related to ATMs for the three months ended June 30, 2022 and 2021 was $ 80,000 and $ 86,000 , respectively.

The total lease expense related to ATMs for the six months ended June 30, 2022 and 2021 was $ 149,000 and $ 151,000 , respectively.

The Company does not sublease any of its leased facilities;

1 unchanged sentence

In terms of being the lessor in these circumstances, all of these lease agreements are classified as operating leases.

In the three months ended March 31, 2022 and 2021, income recognized from these lease agreements was $ 294,000 and $ 291,000 , respectively, and was included in occupancy and equipment expense.

March 31, 2022

In the three months ended June 30, 2022 and 2021, income recognized from these lease agreements was $ 298,000 and $ 290,000 , respectively, and was included in occupancy and equipment expense.

In the six months ended June 30, 2022 and 2021, income recognized from these lease agreements was $ 594,000 and $ 580,000 , respectively, and was included in occupancy and equipment expense.

June 30, 2022

December 31, 2021

4 unchanged sentences

For the Three Months Ended

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 2021

(In Thousands)

4 unchanged sentences

Operating cash flows from operating leases

At March 31, 2022, future expected lease payments for leases with terms exceeding one year were as follows (In Thousands):

Right of use assets obtained in exchange for lease obligations:

Operating leases

For the Six Months Ended

June 30, 2022

June 30, 2021

(In Thousands)

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:

Operating leases

At June 30, 2022, future expected lease payments for leases with terms exceeding one year were as follows (In Thousands):

Future lease payments expected

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Total Deposits

At June 30, 2022 and December 31, 2021, total time deposits included $ 273.5 million and $ 67.4 million, respectively, of brokered deposits.

Total time deposits also included $ 100.4 million and $ 203.8 million of national time deposits initiated through internet channels.

ADVANCES FROM FEDERAL HOME LOAN BANK

At March 31, 2022 and December 31, 2021, there were no outstanding term advances from the Federal Home Loan Bank of Des Moines (FHLBank advances).

There were no overnight funds from the Federal Home Loan Bank of Des Moines as of March 31, 2022 or December 31, 2021.

At June 30, 2022 and December 31, 2021, there were no outstanding term advances from the Federal Home Loan Bank of Des Moines (FHLBank advances).

There were overnight funds borrowed from the Federal Home Loan Bank of Des Moines as of June 30, 2022, which are included below in Note 12 .

There were no overnight funds borrowed from the Federal Home Loan Bank of Des Moines as of December 31, 2021.

SECURITIES SOLD UNDER REVERSE REPURCHASE AGREEMENTS AND SHORT-TERM BORROWINGS

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Securities sold under reverse repurchase agreements

Overnight borrowings from the Federal Home Loan Bank

The Bank enters into sales of securities under agreements to repurchase (reverse repurchase agreements).

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All agreements are written on a term of one month or less.

At March 31, 2022 and December 31, 2021, other interest-bearing liabilities consisted of cash collateral held by the Company to satisfy minimum collateral posting thresholds with its derivative dealer counterparties representing the termination value of derivatives, which at such time were in a net asset position.

At June 30, 2022 and December 31, 2021, other interest-bearing liabilities consisted of cash collateral held by the Company to satisfy minimum collateral posting thresholds with its derivative dealer counterparties representing the termination value of derivatives, which at such time were in a net asset position.

Under the collateral agreements between the parties, either party may choose to provide cash or securities to satisfy its collateral requirements.

The following table represents the Company’s securities sold under reverse repurchase agreements, by collateral type and remaining contractual maturity.

March 31, 2022

June 30, 2022

December 31, 2021

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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 three months ended March 31, 2022 and 2021 of both subordinated notes offerings totaled $ 74,000 and $ 183,000 , respectively.

Amortization of the debt issuance costs is included in interest expense on subordinated notes in the consolidated statements of income, resulting in an imputed interest rate of 5.97 %.

At March 31, 2022 and December 31, 2021, subordinated notes are summarized as follows:

March 31, 2022

Amortization of the debt issuance costs during the three months ended June 30, 2022 and 2021 of both subordinated notes offerings totaled $ 75,000 and $ 183,000 , respectively.

Amortization of the debt issuance costs during the six months ended June 30, 2022 and 2021 of both subordinated notes offerings totaled $ 149,000 and $ 366,000 , respectively.

Amortization of the debt issuance costs is included in interest expense on subordinated notes in the consolidated statements of income, resulting in an imputed interest rate of 5.96 % on the 2020 issuance.

At June 30, 2022 and December 31, 2021, subordinated notes are summarized as follows:

June 30, 2022

December 31, 2021

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Reconciliations of the Company’s effective tax rates to the statutory corporate tax rates were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Tax at statutory rate

Nontaxable interest and dividends

Six Months Ended June 30,

Tax at statutory rate

Nontaxable interest and dividends

The Company and its consolidated subsidiaries have not been audited recently by the Internal Revenue Service (IRS).

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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, 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.

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 has engaged legal and tax advisors and continues to believe it will ultimately prevail on the issue;

however, if the Company does not prevail, the tax obligation to the State of Missouri could be up to a total of $ 4.0 million for these tax years and additional amounts could be levied for certain subsequent tax years.

The State of Illinois Department of Revenue recently began a tax examination of the Company's Illinois Business Income Tax for the 2018 and 2019 tax years.

The MAHC has received documents from each party but no hearings have occurred to date.

The State of Illinois Department of Revenue recently completed a tax examination of the Company’s Illinois Business Income Tax for the 2018 and 2019 tax years.

While we have not received the final report of examination at this time, we have not been made aware of any proposed material changes to the returns.

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.

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:

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Recurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying statements of financial condition measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fell at March 31, 2022 and December 31, 2021:

Fair value measurements using

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(In Thousands)

March 31, 2022

June 30, 2022

Available-for-sale securities

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Interest rate derivative liability

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 March 31, 2022 and December 31, 2021 as well as the general classification of such assets pursuant to the valuation hierarchy.

There have been no significant changes in the valuation techniques during the three-month period ended March 31, 2022.

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 June 30, 2022 and December 31, 2021 as well as the general classification of such assets pursuant to the valuation hierarchy.

There have been no significant changes in the valuation techniques during the six-month period ended June 30, 2022.

For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

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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 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, LIBOR yield curve, credit spreads and prices from market makers and live trading systems.

The fair values used by 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 consider observable market data, such as interest rate volatilities, LIBOR/SOFR yield curve, credit spreads and prices from market makers and live trading systems.

Recurring Level 2 securities include U.S.

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Additional inputs include indicative values derived from the independent pricing service’s proprietary computerized models.

There were no recurring Level 3 securities at March 31, 2022 or December 31, 2021.

There were no recurring Level 3 securities at June 30, 2022 or December 31, 2021.

Interest Rate Derivatives.

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Nonrecurring Measurements

The following table presents the fair value measurements 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 March 31, 2022 and December 31, 2021:

Fair Value Measurements Using

2 unchanged sentences

(In Thousands)

March 31, 2022

June 30, 2022

Collateral-dependent loans

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The Company typically does not have commercial loans held for sale.

At March 31, 2022 and December 31, 2021, the aggregate fair value of mortgage loans held for sale was not materially different than their cost.

At June 30, 2022 and December 31, 2021, 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.

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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 three months ended March 31, 2022 or the year ended December 31, 2021, are shown in the table above (net of reserves).

Loans for which such charge-offs or reserves were recorded during the six months ended June 30, 2022 or the year ended December 31, 2021, are shown in the table above (net of reserves).

Foreclosed Assets Held for Sale.

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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.

The foreclosed assets represented in the table above have been re-measured during the three months ended March 31, 2022 or the year ended December 31, 2021, subsequent to their initial transfer to foreclosed assets.

Foreclosed assets held for sale are classified within Level 3 of the fair value hierarchy.

The foreclosed assets represented in the table above have been re-measured during the six months ended June 30, 2022 or the year ended December 31, 2021, subsequent to their initial transfer to foreclosed assets.

Fair Value of Financial Instruments

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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, LIBOR yield curve, credit spreads and prices from market makers and live trading systems.

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, LIBOR/SOFR yield curve, credit spreads and prices from market makers and live trading systems.

These securities include U.S.

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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.

March 31, 2022

June 30, 2022

December 31, 2021

34 unchanged sentences

Six of the seven acquired loans with interest rate swaps have paid off.

The aggregate notional amount of the remaining Valley swaps was $ 468,000 and $ 482,000 at March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022, excluding the Valley Bank swaps, the Company had nine interest rate swaps and one interest rate cap totaling $ 94.2 million in notional amount with commercial customers, and nine interest rate swaps and one interest rate cap with the same aggregate notional amount with third parties related to its program.

The aggregate notional amount of the remaining Valley swaps was $ 459,000 and $ 482,000 at June 30, 2022 and December 31, 2021, respectively.

At June 30, 2022, excluding the Valley Bank swaps, the Company had nine interest rate swaps and one interest rate cap totaling $ 100.3 million in notional amount with commercial customers, and nine interest rate swaps and one interest rate cap with the same aggregate notional amount with third parties related to its program.

In addition, the Company has four participation loans purchased totaling $ 27.0 million, in which the lead institution has an interest rate swap with its customer and the economics of the counterparty swap are passed along to the Company through the loan participation.

At December 31, 2021, excluding the Valley Bank swaps, the Company had 11 interest rate swaps and one interest rate cap totaling $ 93.9 million in notional amount with commercial customers, and 11 interest rate swaps and one interest rate cap with the same notional amount with third parties related to its program.

During the three months ended March 31, 2022, the Company recognized net gains of $ 152,000 , compared to net gains of $ 474,000 during the three months ended March 31, 2021, in noninterest income related to changes in the fair value of these swaps.

During the three months ended June 30, 2022, the Company recognized net gains of $ 145,000 , compared to net loss of $ 179,000 during the three months ended June 30, 2021, in non-interest income related to changes in the fair value of these swaps.

During the six months ended June 30, 2022, the Company recognized net gains of $ 297,000 , compared to net gains of $ 295,000 during the six months ended June 30, 2021, in non-interest income related to changes in the fair value of these swaps.

Cash Flow Hedges

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The floating rate will be reset monthly and net settlements of interest due to/from the counterparty will also occur monthly.

The floating rate of interest was 0.2414 % as of March 31, 2022.

Therefore, in the near term, the Company will receive net interest settlements which will be recorded as loan interest income, to the extent that the fixed rate of interest continues to exceed one-month USD-LIBOR.

The floating rate of interest was 1.120 % as of June 30, 2022.

The Company will receive net interest settlements, which will be recorded as loan interest income, to the extent that the fixed rate of interest exceeds one-month USD-LIBOR.

If USD-LIBOR exceeds the fixed rate of interest in future periods, 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.

The Company recorded loan interest income of $ 2.0 million on the terminated interest rate swap during each of the three months ended March 31, 2022 and 2021.

The Company recorded loan interest income of $ 370,000 on the active interest rate swap during the three months ended March 31, 2022.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.

On July 1, 2022, the floating rate of interest reset to 1.78671 %.

The Company recorded loan interest income of $ 2.0 million on the terminated interest rate swap during each of the three months ended June 30, 2022 and 2021.

The Company recorded loan interest income of $ 4.0 million on this interest rate swap during each of the six months ended June 30, 2022 and 2021, respectively.

The Company recorded loan interest income of $ 668,000 and $ 1.0 million, respectively, on the active interest rate swap during the three and six months ended June 30, 2022.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 ended March 31, 2022 and 2021, the Company recognized no noninterest income related to changes in the fair value of these derivatives.

During each of the three and six months ended June 30, 2022 and 2021, the Company recognized no non-interest income related to changes in the fair value of these derivatives.

The Company currently expects to have an 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 July 2022, the Company entered into agreements for two additional interest rate swaps.

See Note 17 of these Notes to Consolidated Financial Statements.

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:

18 unchanged sentences

Recognized in AOCI

Three Months Ended March 31,

Three Months Ended June 30,

Cash Flow Hedges

2 unchanged sentences

Active interest rate swap, net of income taxes

Amount of Gain (Loss)

Recognized in AOCI

Six Months Ended June 30,

Cash Flow Hedges

(In Thousands)

Terminated interest rate swap, net of income taxes

Active interest rate swap, net of income taxes

The following table presents the effect of cash flow hedge accounting on the statements of income:

Three Months Ended March 31,

Three Months Ended June 30,

Cash Flow Hedges

4 unchanged sentences

Active interest rate swap

Six Months Ended June 30,

Cash Flow Hedges

(In Thousands)

Total Interest Income

Total Interest Expense

Terminated interest rate swap

Active interest rate swap

Agreements with Derivative Counterparties

3 unchanged sentences

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 March 31, 2022, 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 liability position, which included accrued interest but excluded any adjustment for nonperformance risk, related to these agreements was $ 1.5 million.

At June 30, 2022, 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 $ 712,000 .

The Company has minimum collateral posting thresholds with its derivative dealer counterparties.

At March 31, 2022, the Company had received cash collateral from another derivative counterparty of $ 1.8 million to cover its fair value position with us.

At March 31, 2022, the Company did not have any activity with its derivative counterparties that met the level at which the Company’s minimum collateral posting thresholds take effect (requiring collateral to be given by the Company).

At June 30, 2022, the Company had received cash collateral from one derivative counterparty of $ 770,000 to cover its fair value position with us.

At June 30, 2022, the Company did not have any activity with its derivative counterparties that met the level at which the Company’s minimum collateral posting thresholds take effect (requiring collateral to be given by the Company).

At December 31, 2021, the termination value of derivatives with our derivative dealer counterparties (related to loan level swaps with commercial lending customers) in a net liability position, which included accrued interest but excluded any adjustment for nonperformance risk, related to these agreements was $ 437,000 .

1 unchanged sentence

Also at December 31, 2021, the Company had received cash collateral from another derivative counterparty of $ 390,000 to cover its fair value position with us.

If the Company had breached any of these provisions at March 31, 2022 or December 31, 2021, it could have been required to settle its obligations under the agreements at the termination value.

If the Company had breached any of these provisions at June 30, 2022 or December 31, 2021, 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.

SUBSEQUENT EVENT – ARENA NAMING RIGHTS

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 record this transaction as an intangible asset, with a corresponding accrued liability for the full amount of the agreement.

The Company further expects to amortize the intangible asset through non-interest expense over a period not to exceed 15 years .

SUBSEQUENT EVENT – INTEREST RATE SWAPS

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 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.

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 1. Financial Statements