What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-07 compared with 2024-11-06 · 221 added, 406 removed, 901 unchanged (41% of the section changed)

3 unchanged sentences

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In Thousands, Except Per Share Data)

SEPTEMBER 30,

(In Thousands, Except Number of Shares)

Interest-bearing deposits in other financial institutions

3 unchanged sentences

Mortgage loans held for sale

Loans receivable, net of allowance for credit losses of $ 64,915 – September 2024;

Loans receivable, net of allowance for credit losses of $ 64,704 – March 2025;

$ 64,760 – December 2024

20 unchanged sentences

authorized 1,000,000 shares;

issued and outstanding September 2024 and December 2023 - - 0 - shares

issued and outstanding March 2025 and December 2024 - - 0 - shares

Common stock, $ .01 par value;

authorized 20,000,000 shares;

issued and outstanding September 2024 – 11,680,968 shares;

issued and outstanding March 2025 – 11,565,211 shares;

December 2024 – 11,723,548 shares

10 unchanged sentences

THREE MONTHS ENDED

SEPTEMBER 30,

INTEREST INCOME

9 unchanged sentences

PROVISION FOR CREDIT LOSSES ON LOANS

CREDIT FOR UNFUNDED COMMITMENTS

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES ON LOANS AND 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

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 (income) on other real estate and repossessions

Acquired intangible asset amortization

Other operating expenses

TOTAL NON-INTEREST EXPENSE

INCOME BEFORE INCOME TAXES

PROVISION FOR INCOME TAXES

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)

NINE MONTHS ENDED

SEPTEMBER 30,

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 FOR CREDIT LOSSES ON LOANS

CREDIT FOR UNFUNDED COMMITMENTS

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

PROVISION (CREDIT) FOR UNFUNDED COMMITMENTS

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES ON LOANS AND PROVISION (CREDIT) FOR UNFUNDED COMMITMENTS

NON-INTEREST INCOME

23 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands, Except Per Share Data)

(In Thousands)

THREE MONTHS ENDED

SEPTEMBER 30,

Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes (credit) of $ 2,490 and $( 1,782 ), for 2025 and 2024, respectively

Unrealized loss on securities transferred to held-to-maturity, net of taxes of $( 10 ) and $( 13 ) for 2024 and 2023, respectively

Amortization of realized loss on termination of cash flow hedge, net of taxes of $( 467 ) and $( 468 ), for 2024 and 2023, respectively

Change in value of active cash flow hedges, net of taxes (credit) of $ 3,123 and $( 832 ) for 2024 and 2023, respectively

Comprehensive Income (Loss)

NINE MONTHS ENDED

SEPTEMBER 30,

Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes (credit) of $ 3,699 and $( 5,327 ), for 2024 and 2023, respectively

Unrealized loss on securities transferred to held-to-maturity, net of taxes of $( 35 ) and $( 30 ) for 2024 and 2023, respectively

Amortization of realized loss on termination of cash flow hedge, net of taxes of $( 1,391 ) and $( 1,387 ), for 2024 and 2023, respectively

Unrealized loss on securities transferred to held-to-maturity, net of taxes (credit) of $( 15 ) and $( 12 ) for 2025 and 2024, respectively

Amortization of realized loss on termination of cash flow hedge, net of taxes (credit) of $( 457 ) and $( 461 ), for 2025 and 2024, respectively

Change in value of active cash flow hedges, net of taxes (credit) of $ 1,364 and $( 969 ) for 2025 and 2024, respectively

5 unchanged sentences

(In Thousands, Except Per Share Data)

THREE MONTHS ENDED SEPTEMBER 30, 2024

Comprehensive

Paid-in Capital

Income (Loss)

Balance, June 30, 2024

Stock issued under Stock Option Plan

Common cash 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 gain on available-for-sale securities

Repurchase of the Company’s common stock

Reclassification of treasury stock per Maryland law

Balance, September 30, 2024

THREE MONTHS ENDED SEPTEMBER 30, 2023

Comprehensive

Paid-in Capital

Income (Loss)

Balance, June 30, 2023

Stock issued under Stock Option Plan

Common cash 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

Repurchase of the Company’s common stock

Reclassification of treasury stock per Maryland law

Balance, September 30, 2023

See Notes to Consolidated Financial Statements

GREAT SOUTHERN BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In Thousands, Except Per Share Data)

NINE MONTHS ENDED SEPTEMBER 30, 2024

THREE MONTHS ENDED MARCH 31, 2025

Comprehensive

4 unchanged sentences

Common cash dividends declared, $ 0.40 per share

Retained Earnings effect of ASU 2023-02 adoption

Change in fair value of cash flow hedges

3 unchanged sentences

Reclassification of treasury stock per Maryland law

Balance, September 30, 2024

NINE MONTHS ENDED SEPTEMBER 30, 2023

Balance, March 31, 2025

THREE MONTHS ENDED MARCH 31, 2024

Comprehensive

4 unchanged sentences

Common cash dividends declared, $ 0.40 per share

Retained Earnings effect of ASU 2023-02 adoption

Change in fair value of cash flow hedges

3 unchanged sentences

Reclassification of treasury stock per Maryland law

Balance, September 30, 2023

Balance, March 31, 2024

See Notes to Consolidated Financial Statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands, Except Per Share Data)

NINE MONTHS ENDED

SEPTEMBER 30,

(In Thousands)

THREE MONTHS ENDED

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Provision for credit losses on loans

Credit for unfunded commitments

Provision (credit) for unfunded commitments

Net gain on loan sales

3 unchanged sentences

Loss on derivative interest rate products

Net non-cash gain recorded on contract termination

Deferred income taxes

3 unchanged sentences

Income taxes refundable/payable

Net cash provided by operating activities

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

9 unchanged sentences

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

Net cash used in investing activities

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Net increase (decrease) in certificates of deposit

Net increase (decrease) in checking and savings deposits

Net increase in checking and savings deposits

Net increase (decrease) in short-term borrowings

Proceeds from borrowing under Federal Reserve Bank Term Funding Program

Repayment of borrowing under Federal Reserve Bank Term Funding Program

Advances from borrowers for taxes and insurance

2 unchanged sentences

Stock options exercised

Net cash provided by financing activities

Net cash used in 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 and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the full year.

Operating results for the three months ended March 31, 2025 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, 2024, has been derived from the audited consolidated statement of financial condition of the Company as of that date.

3 unchanged sentences

Prior period consolidated financial statements are reclassified whenever necessary to conform to the current period presentation.

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 Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 within this Quarterly Report on Form 10-Q 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 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 these changes 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 nine months ended September 30, 2023 in this Quarterly Report on Form 10-Q.

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 Nine Months Ended September 30, 2023

As Previously

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 (used in) investing activities

NATURE OF OPERATIONS AND OPERATING SEGMENTS

10 unchanged sentences

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 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):

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 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):

4 unchanged sentences

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 adoption of ASU 2023-02 did not have a material impact on the Company’s consolidated financial statements and resulted in a reduction of retained earnings of $ 223,000 upon adoption on January 1, 2024.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

1 unchanged sentence

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 2023-09, Income Taxes (Topic 740):

ASU 2023-07 became effective for the Company for our annual financial statements in 2024 and is effective for interim periods within fiscal years beginning in 2025.

See Note 17 – Operating Segments for application of this ASU.

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 not expected to have a material impact on the Company’s consolidated financial statements.

ASU 2023-09 became effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024.

The adoption of ASU 2023-09 in the three months ended March 31, 2025 did not have a material impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities.

ASU 2024-03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption.

The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization.

Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

ASU 2024-03 is effective for us, on a prospective basis, for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, although early adoption and retrospective application is permitted.

ASU 2024-03 is currently not expected to have a material impact on the Company’s consolidated financial statements, but will impact disclosures.

EARNINGS PER SHARE

Three Months Ended September 30,

(In Thousands, Except Per Share Data)

Average common shares outstanding

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

Per common share amount

Nine Months Ended September 30,

Three Months Ended March 31,

(In Thousands, Except Per Share Data)

5 unchanged sentences

Per common share amount

Options outstanding at September 30, 2024 and 2023, to purchase 712,403 and 758,129 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 price of the common stock for the three months ended September 30, 2024 and 2023, respectively.

Options outstanding at September 30, 2024 and 2023, to purchase 712,403 and 675,768 shares of common stock, respectively, were not included in the computation of diluted earnings per common share for each of the nine month periods because the exercise prices of such options were greater than the average market price of the common stock for the nine months ended September 30, 2024 and 2023, respectively.

Options outstanding at March 31, 2025 and 2024, to purchase 854,813 and 871,587 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 price of the common stock for the three months ended March 31, 2025 and 2024, respectively.

INVESTMENT SECURITIES

10 unchanged sentences

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

September 30, 2024

March 31, 2025

(In Thousands)

4 unchanged sentences

Small Business Administration securities

September 30, 2024

March 31, 2025

(In Thousands)

16 unchanged sentences

States and political subdivisions

The amortized cost and fair value of available-for-sale and held-to-maturity securities at September 30, 2024, by contractual maturity, are shown below.

The amortized cost and fair value of available-for-sale and held-to-maturity securities at March 31, 2025, 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 September 30, 2024 and December 31, 2023, was approximately $ 432.9 million and $ 456.9 million, respectively, which was approximately 76.6 % and 95.5 % of the Company’s total available-for-sale investment portfolio at those dates.

Total fair value of these investments at March 31, 2025 and December 31, 2024, was approximately $ 458.2 million and $ 523.9 million, respectively, which was approximately 85.5 % and 98.2 % of the Company’s total available-for-sale investment portfolio at those dates.

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.

1 unchanged sentence

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 carrying value at September 30, 2024 and December 31, 2023, which was $ 189.3 million and $ 195.0 million, respectively.

Total fair value of these investments at September 30, 2024 and December 31, 2023 was approximately $ 170.0 million and $ 171.2 million, respectively.

Held-to-maturity investment securities are evaluated for potential credit losses under ASU 2016-13.

The Company continually assesses its liquidity sources, both on-balance sheet and off-balance sheet, and believes that at September 30, 2024, it had ample liquidity sources to fund its ongoing operations without selling investment securities in its portfolio.

Held-to-maturity investments in debt securities are reported in the financial statements at their amortized carrying value at March 31, 2025 and December 31, 2024, which was $ 185.9 million and $ 187.4 million, respectively.

Total fair value of these investments at March 31, 2025 and December 31, 2024 was approximately $ 165.2 million and $ 162.8 million, respectively, 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.

The Company continually assesses its liquidity sources, both on-balance sheet and off-balance sheet, and believes that at March 31, 2025, it had ample liquidity sources to fund its ongoing operations without selling investment securities in its portfolio.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings of issuers, management believes the declines in fair value for the Company’s available-for-sale debt securities are not credit related.

The following table shows the Company’s available-for-sale and held-to-maturity securities’ gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2024 and December 31, 2023:

September 30, 2024

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 March 31, 2025 and December 31, 2024:

March 31, 2025

Less than 12 Months

25 unchanged sentences

States and political subdivisions securities

There were no sales of available-for-sale securities during the three or nine months ended September 30, 2024 and 2023, respectively.

There were no sales of available-for-sale securities during the three months ended March 31, 2025 or March 31, 2024, respectively.

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 as of September 30, 2024 were issued by U.S.

All of the mortgage-backed, collateralized mortgage, and SBA securities held by the Company as of March 31, 2025 were issued by U.S.

government-sponsored entities and agencies.

5 unchanged sentences

(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 generally highly rated by major rating agencies and have a long history of no credit losses.

Likewise, the Company has not historically experienced losses on these types of securities.

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.

LOANS AND 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 balances 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 reflect 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, the Company is required to record an allowance for off balance sheet credit exposures, including unfunded lines of credit, undisbursed portions of loans, written residential and commercial loan 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.

Classes of loans at September 30, 2024 and December 31, 2023 were as follows:

September 30,

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.

Classes of loans at March 31, 2025 and December 31, 2024 were as follows:

(In Thousands)

8 unchanged sentences

Commercial business

Industrial revenue bonds

Consumer auto

4 unchanged sentences

Weighted average interest rate

The following tables present the classes of loans by aging as of the dates indicated.

September 30, 2024

Classes of loans by aging were as follows as of the dates indicated.

March 31, 2025

> 90 Days Past

10 unchanged sentences

Commercial business

Industrial revenue bonds

Consumer auto

14 unchanged sentences

Commercial business

Industrial revenue bonds

Consumer auto

7 unchanged sentences

Nonaccruing loans are summarized as follows:

September 30,

(In Thousands)

8 unchanged sentences

Commercial business

Industrial revenue bonds

Consumer auto

2 unchanged sentences

Total nonaccruing loans

No interest income was recorded on nonaccrual loans for the three or nine months ended September 30, 2024 and 2023, respectively.

Nonaccrual loans for which there is no related allowance for credit losses as of September 30, 2024 and December 31, 2023, had an amortized cost of $ 6.7 million and $ 792,000 , respectively.

No interest income was recorded on nonaccrual loans for the three months ended March 31, 2025 and 2024, respectively.

Nonaccrual loans for which there is no related allowance for credit losses as of March 31, 2025 and December 31, 2024, had an amortized cost of $ 3.3 million and $ 2.2 million, respectively.

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 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.

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2024 and 2023.

During the three months ended September 30, 2024, the Company recorded provision expense of $ 1.2 million on its portfolio of outstanding loans and during the nine months ended September 30, 2024, recorded provision expense of $ 1.7 million on its portfolio of outstanding loans.

During the three months ended September 30, 2023, the Company did no t record a provision expense on its portfolio of outstanding loans and during the nine months ended September 30, 2023, recorded provision expense of $ 1.5 million on its portfolio of outstanding loans.

One- to Four-

Residential and

(In Thousands)

Allowance for credit losses

Balance, July 1, 2023

Provision (credit) charged to expense

Losses charged off

Balance, September 30, 2023

Allowance for credit losses

Balance, July 1, 2024

Provision (credit) charged to expense

Losses charged off

Balance, September 30, 2024

The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2025 and 2024.

During the three months ended March 31, 2025, the Company did no t record a provision expense on its portfolio of outstanding loans.

During the three months ended March 31, 2024, the Company recorded provision expense of $ 500,000 on its portfolio of outstanding loans.

One- to Four-

5 unchanged sentences

Losses charged off

Balance, September 30, 2023

Balance, March 31, 2024

Allowance for credit losses

2 unchanged sentences

Losses charged off

Balance, September 30, 2024

The following tables present the activity in the allowance for unfunded commitments by portfolio segment for the three and nine months ended September 30, 2024 and 2023.

The provision for losses on unfunded commitments for the three months ended September 30, 2024 was a credit (negative expense) of $ 63,000 , compared to a credit (negative expense) of $ 1.2 million for the three months ended September 30, 2023.

The provision for losses on unfunded commitments for the nine months ended September 30, 2024 was a credit (negative expense) of $ 540,000 , compared to a credit (negative expense) of $ 3.6 million for the nine months ended September 30, 2023.

One- to Four-

Residential and

(In Thousands)

Allowance for unfunded commitments

Balance, July 1, 2023

Provision (credit) charged to expense

Balance, September 30, 2023

Allowance for unfunded commitments

Balance, July 1, 2024

Provision (credit) charged to expense

Balance, September 30, 2024

Balance, March 31, 2025

The following table presents the activity in the allowance for unfunded commitments by portfolio segment for the three months ended March 31, 2025 and 2024.

The provision for losses on unfunded commitments for the three months ended March 31, 2025 was a credit (negative expense) of $ 348,000 , compared to a provision expense of $ 130,000 for the three months ended March 31, 2024.

One- to Four-

4 unchanged sentences

Provision (credit) charged to expense

Balance, September 30, 2023

Balance, March 31, 2024

Allowance for unfunded commitments

1 unchanged sentence

Provision (credit) charged to expense

Balance, September 30, 2024

Balance, March 31, 2025

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:

September 30, 2024

March 31, 2025

December 31, 2024

9 unchanged sentences

Commercial business

Industrial revenue bonds

Consumer auto

14 unchanged sentences

If necessary, the loan is charged down to fair market value less estimated sales costs.

The following tables show, as of the dates indicated, the composition of modifications made to loans to borrowers experiencing financial difficulty, by loan class and type of concession granted.

Each of the types of concessions granted comprised 1.0 % or less of their respective loan classes at September 30, 2024.

During the three and nine months ended September 30, 2024, principal forgiveness of $ 20,000 and $ 275,000 , respectively, was completed on consumer loans and a land development loan.

During the three and nine months ended September 30, 2023, principal forgiveness of $ 13,000 and $ 52,000 , respectively, was completed on consumer loans.

Amortized Cost Basis at September 30, 2024

The following tables show, as of the dates indicated, the composition of modifications made to loans to borrowers experiencing financial difficulty, by the loan class and type of concession granted.

During the three months ended March 31, 2025, principal forgiveness of $ 7,000 was completed on consumer loans.

During the three ended March 31, 2024, principal forgiveness of $ 14,000 was completed on consumer loans.

Amortized Cost Basis at March 31, 2025

Interest Rate

16 unchanged sentences

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 tables depict the performance of loans (under modified terms) at September 30, 2024 and at December 31, 2023, respectively:

September 30, 2024

The following tables depict the performance of loans (under modified terms) at March 31, 2025 and at December 31, 2024, respectively:

March 31, 2025

(In Thousands)

35 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 category and risk rating separated by origination and loan class as of September 30, 2024 and December 31, 2023.

The following tables present a summary of loans by category and risk rating separated by origination and loan class as of March 31, 2025 and December 31, 2024.

Term Loans by Origination Year

September 30, 2024

March 31, 2025

(In Thousands)

100 unchanged sentences

Investments in Affordable Housing Partnerships

From time to time, 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 (“Affordable Housing Partnerships”).

At September 30, 2024, the Company had 23 such investments, with a net carrying value of $ 101.2 million.

Periodically, 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 (“Affordable Housing Partnerships”).

At March 31, 2025, the Company had 22 such investments, with a net carrying value of $ 96.1 million.

At December 31, 2024, the Company had 23 such investments, with a net carrying value of $ 98.8 million.

2 unchanged sentences

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 $ 108.9 million as of September 30, 2024, assuming no tax credit recapture events occur and all projects currently under construction are completed as planned.

The remaining federal affordable housing tax credits to be utilized through 2034 were $ 102.9 million as of March 31, 2025, 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 $ 92.2 million, assuming all projects currently under construction are completed and funded as planned.

The Company’s usage of federal affordable housing tax credits approximated $ 2.8 million and $ 1.9 million during the three months ended September 30, 2024 and September 30, 2023, respectively.

Investment amortization was $ 2.5 million for the three months ended September 30, 2024, compared to $ 1.7 million for the three months ended September 30, 2023.

The Company’s usage of federal affordable housing tax credits approximated $ 8.4 million and $ 5.7 million during the nine months ended September 30, 2024 and September 30, 2023, respectively.

Investment amortization was $ 7.6 million for the nine months ended September 30, 2024, compared to $ 5.2 million for the nine months ended September 30, 2023.

The Company’s usage of federal affordable housing tax credits approximated $ 3.2 million and $ 2.8 million during the three months ended March 31, 2025 and 2024, respectively.

Investment amortization was $ 2.9 million for the three months ended March 31, 2025, compared to $ 2.6 million for the three months ended March 31, 2024.

Investments in Community Development Entities

From time to time, 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 September 30, 2024, the Company had one such investment, with a net carrying value of $ 224,000 .

At March 31, 2025, the Company had one such investment, with a net carrying value of $ 174,000 .

At December 31, 2024, the Company had one such investment, with a net carrying value of $ 199,000 .

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 proportional amortization method.

Due to the Company’s inability to exercise any significant influence over any of the investments in qualified community development entities, they are accounted for using the proportional amortization method.

Each of the partnerships provides federal new market tax credits over a seven-year credit allowance period.

3 unchanged sentences

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 $ 30,000 and $ 25,000 during the three months ended September 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 25,000 and $ 21,000 for the three months ended September 30, 2024 and 2023, respectively.

The Company’s usage of federal New Market Tax Credits approximated $ 90,000 and $ 75,000 during the nine months ended September 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 50,000 and $ 62,000 for the nine months ended September 30, 2024 and 2023, respectively.

The Company’s usage of federal new market tax credits approximated $ 30,000 during both the three months ended March 31, 2025 and the three months ended March 31, 2024.

Investment amortization amounted to $ 25,000 for both the three months ended March 31, 2025 and the three months ended March 31, 2024.

Upon adoption of ASU 2023-02 on January 1, 2024, the Company recorded a reduction in the investment in these new market tax credits, with a corresponding reduction in retained earnings, of $ 62,000 .

1 unchanged sentence

From time to time, the Company has invested in certain limited partnerships that were formed to provide certain federal rehabilitation/historic tax credits.

At September 30, 2024, the Company had one such investment, with a net carrying value of $ 64,000 .

At December 31, 2023, the Company had one such investment, with a net carrying value of $ 415,000 .

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 was not material.

Currently, such partnerships provide federal rehabilitation/historic tax credits over a five-year credit allowance period.

The Company’s usage of certain federal rehabilitation/historic tax credits approximated $ 76,000 and $ 64,000 during the three months ended September 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 64,000 and $ 53,000 for the three months ended September 30, 2024 and 2023, respectively.

The Company’s usage of certain federal rehabilitation/historic tax credits approximated $ 228,000 and $ 193,000 during the nine months ended September 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 191,000 and $ 160,000 for the nine months ended September 30, 2024 and 2023, respectively.

At March 31, 2025 and December 31, 2024, the Company had no such investments, with the previous investment fully amortizing during 2024.

Under current tax law, such partnerships provide federal rehabilitation/historic tax credits over a five-year credit allowance period.

The Company’s usage of certain federal rehabilitation/historic tax credits approximated $- 0 - and $ 76,000 during the three months ended March 31, 2025 and 2024, respectively.

Investment amortization amounted to $- 0 - and $ 64,000 for the three months ended March 31, 2025 and 2024, respectively.

Upon adoption of ASU 2023-02 on January 1, 2024, the Company recorded a reduction in the investment in these rehabilitation/historic tax credits, with a corresponding reduction in retained earnings, of $ 161,000 .

Investments in Limited Partnerships for State Tax Credits

From time to time, the Company has invested in certain limited partnerships that were formed to provide certain state tax credits.

On occasion, the Company has invested in 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.

1 unchanged sentence

Major classifications of other real estate owned were as follows:

September 30,

(In Thousands)

5 unchanged sentences

One- to four-family residential

Other residential

Other residential (multi-family)

Commercial real estate

3 unchanged sentences

Other real estate owned and repossessions

At September 30, 2024 and December 31, 2023, no residential mortgage loans were in the process of foreclosure.

Expenses applicable to other real estate owned and repossessions included the following:

At March 31, 2025 and December 31, 2024, there was no other real estate owned not acquired through foreclosure.

At both March 31, 2025 and December 31, 2024, residential mortgage loans totaling $ 12,000 were in the process of foreclosure.

Expenses (income) applicable to other real estate owned and repossessions included the following:

Three Months Ended

September 30,

(In Thousands)

Net (gains) on sales of other real estate owned and repossessions

Valuation write-downs

Operating expenses, net of rental income

Nine Months Ended

September 30,

(In Thousands)

Net (gains) on sales of other real estate owned and repossessions

Net loss on sales of other real estate owned and repossessions

Valuation write-downs

2 unchanged sentences

Major classifications of premises and equipment, stated at cost, were as follows:

September 30,

(In Thousands)

6 unchanged sentences

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 September 30, 2024, the lease right of use asset value was $6.6 million and the corresponding lease liability was $ 6.9 million.

As of March 31, 2025, the lease right of use asset value was $ 6.1 million and the corresponding lease liability was $ 6.4 million.

As of December 31, 2024, the lease right of use asset value was $ 6.4 million and the corresponding lease liability was $ 6.6 million.

At September 30, 2024, expected lease terms ranged from 2.8 years to 14.2 years with a weighted-average lease term of 7.1 years.

The weighted-average discount rate at September 30, 2024 was 4.03 %.

For the three months ended September 30, 2024 and 2023, lease expense was $ 408,000 and $ 446,000 , respectively.

For the nine months ended September 30, 2024 and 2023, lease expense was $ 1.3 million and $ 1.3 million, respectively.

At March 31, 2025, expected lease terms ranged from 2.3 years to 13.7 years with a weighted-average lease term of 6.7 years.

The weighted-average discount rate at March 31, 2025 was 4.03 %.

For the three months ended March 31, 2025 and 2024, lease expense was $ 419,000 and $ 483,000 , 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.

The total lease expense related to ATMs for the three months ended September 30, 2024 and 2023 was $ 87,000 and $ 84,000 , respectively.

The total lease expense related to ATMs for the nine months ended September 30, 2024 and 2023 was $ 258,000 and $ 234,000 , respectively.

The variable portion of these lease payments is not material and the total lease expense related to ATMs for the three months ended March 31, 2025 and 2024 was $ 76,000 and $ 81,000 , 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 September 30, 2024 and 2023, income recognized from these lease agreements was $ 303,000 and $ 326,000 , respectively, and was included in occupancy and equipment expense.

In the nine months ended September 30, 2024 and 2023, income recognized from these lease agreements was $ 984,000 and $ 975,000 , respectively, and was included in occupancy and equipment expense.

September 30, 2024

In the three months ended March 31, 2025 and 2024, income recognized from these lease agreements was $ 321,000 and $ 341,000 , respectively, and was included in occupancy and equipment expense.

March 31, 2025

December 31, 2024

4 unchanged sentences

For the Three Months Ended

September 30, 2024

September 30, 2023

(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

For the Nine Months Ended

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

(In Thousands)

6 unchanged sentences

Operating leases

At September 30, 2024, future expected lease payments for leases with terms exceeding one year were as follows (In Thousands):

At March 31, 2025, future expected lease payments for leases with terms exceeding one year were as follows (in thousands):

Future lease payments expected

2 unchanged sentences

Weighted Average

September 30,

Interest Rate

13 unchanged sentences

The Bank utilizes brokered deposits as an additional funding source.

The aggregate amount of brokered deposits was approximately $ 810.4 million and $ 661.5 million at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024 and December 31, 2023, brokered deposits included $ 300.0 million of purchased funds through the IntraFi Financial network.

The aggregate amount of brokered deposits was approximately $ 895.4 million and $ 772.1 million at March 31, 2025 and December 31, 2024, respectively.

At both March 31, 2025 and December 31, 2024, brokered deposits included $ 300.0 million 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 September 30, 2024, there were brokered deposits totaling $ 185.0 million that had fixed rates of interest but were callable at the Bank’s discretion.

At September 30, 2024, approximately 32 % 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 14 % of the Company’s total deposits were uninsured at September 30, 2024.

At March 31, 2025, there were brokered deposits totaling $ 99.7 million that had fixed rates of interest but were callable at the Bank’s discretion.

At March 31, 2025, approximately 35 % 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 14 % of the Company’s total deposits were uninsured at March 31, 2025.

ADVANCES FROM FEDERAL HOME LOAN BANK

At September 30, 2024 and December 31, 2023, there were no outstanding term advances from the Federal Home Loan Bank of Des Moines.

At September 30, 2024 and December 31, 2023, there were outstanding overnight borrowings from the Federal Home Loan Bank of Des Moines, which are included in Note 12 below.

At March 31, 2025 and December 31, 2024, there were no outstanding term advances from the Federal Home Loan Bank of Des Moines.

At March 31, 2025 and December 31, 2024, there were outstanding overnight borrowings from the Federal Home Loan Bank of Des Moines, which are included in Note 12 below.

The Bank has pledged FHLB stock, investment securities and first mortgage loans free of other pledges, liens and encumbrances as collateral for outstanding advances or borrowings.

At March 31, 2025, investment securities with carrying values of approximately $ 295.7 million and loans with carrying values of approximately $ 2.10 billion were pledged as collateral for FHLB borrowings, which equates to an advance equivalent of $ 1.53 billion.

At December 31, 2024 investment securities with carrying values of approximately $ 110.4 million and loans with carrying values of approximately $ 2.12 billion were pledged as collateral for outstanding advances or borrowings, which equates to an advance equivalent of $ 1.39 billion.

The Bank had $ 1.17 billion remaining available on its line of credit under a borrowing arrangement with the FHLB of Des Moines at March 31, 2025.

SECURITIES SOLD UNDER REVERSE REPURCHASE AGREEMENTS AND SHORT-TERM BORROWINGS

September 30,

(In Thousands)

3 unchanged sentences

Overnight borrowings from the Federal Home Loan Bank

Short-term borrowings from the Federal Reserve Bank at September 30, 2024, were part of the Federal Reserve Bank’s Bank Term Funding Program (BTFP).

The BTFP 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 assets pledged totaling approximately $ 189.5 million as of September 30, 2024.

Short-term borrowings from the Federal Reserve Bank at December 31, 2024, were part of the Federal Reserve Bank’s Bank Term Funding Program (BTFP).

The BTFP borrowing matured and was repaid in January 2025 and had a fixed interest rate of 4.83 %.

The line was secured primarily by the Bank’s held-to-maturity investment securities, with assets pledged totaling approximately $ 187.7 million as of December 31, 2024.

As of March 31, 2025, the Company had no outstanding borrowings from the Federal Reserve Bank.

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

3 unchanged sentences

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

The following table reflects the Company’s securities sold under reverse repurchase agreements, by collateral type.

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

These securities contractually mature daily.

September 30, 2024

December 31, 2023

(In Thousands)

6 unchanged sentences

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 September 30, 2024 and 2023, totaled $ 74,000 and $ 74,000 , respectively.

Amortization of the debt issuance costs during the nine months ended September 30, 2024 and 2023, totaled $ 223,000 and $ 223,000 , respectively.

Amortization of the debt issuance costs during the three months ended March 31, 2025 and 2024, totaled $ 74,000 and $ 74,000 , 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 5.90 %.

At September 30, 2024 and December 31, 2023, subordinated notes were as follows:

September 30, 2024

December 31, 2023

At March 31, 2025 and December 31, 2024, subordinated notes were as follows:

(In Thousands)

1 unchanged sentence

unamortized debt issuance costs

As discussed in Note 18 - Subsequent Events, the subordinated notes will be redeemed in full on June 15, 2025.

As discussed in Note 3 – Recent Accounting Pronouncements, in January 2025, the Company adopted ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This ASU requires additional income tax disclosures, including specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold.

The Company has elected to adopt this ASU on a prospective basis.

All of the Company’s activities are within the United States of America;

therefore, the Company does not have any foreign tax items.

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

Three Months Ended September 30,

Tax at statutory rate

Nontaxable interest and dividends

Nine Months Ended September 30,

Three Months Ended

(In Thousands)

Tax at statutory rate

Nontaxable interest and dividends

federal tax credits (primarily low-income housing)

State income or franchise taxes

During the three months ended March 31, 2025, the Company paid no U.S.

federal income taxes and paid taxes to various state jurisdictions totaling $ 35,000 .

There were no payments to any individual state jurisdiction exceeding five percent of taxable income.

In addition, the Company received a refund of $ 19,000 from one state jurisdiction and a federal income tax refund of $ 49,000 .

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, 2020 are now closed.

In addition, there are no pending audits by any state jurisdiction at September 30, 2024.

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 the Company’s position related to the exclusion of certain income from 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.

In addition, there are no pending audits by any state jurisdiction at March 31, 2025.

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

14 unchanged sentences

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 September 30, 2024 and December 31, 2023:

Fair value measurements using

2 unchanged sentences

(In Thousands)

September 30, 2024

March 31, 2025

Available-for-sale securities

13 unchanged sentences

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 September 30, 2024 and December 31, 2023 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 nine-month period ended September 30, 2024.

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

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, 2025 and December 31, 2024 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 three-month period ended March 31, 2025.

Available-for-Sale Securities.

5 unchanged sentences

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

There were no recurring Level 3 securities at September 30, 2024 or December 31, 2023.

There were no recurring Level 3 securities at March 31, 2025 or December 31, 2024.

Interest Rate Derivatives.

1 unchanged sentence

Nonrecurring Measurements

The following table presents the measurements of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the measurements fell at September 30, 2024 and December 31, 2023:

The following tables present 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 measurements fell at March 31, 2025 and December 31, 2024:

Fair Value Measurements Using

2 unchanged sentences

(In Thousands)

September 30, 2024

March 31, 2025

Collateral-dependent loans

9 unchanged sentences

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

At September 30, 2024 and December 31, 2023, the aggregate fair value of mortgage loans held for sale was not materially different than their cost.

At March 31, 2025 and December 31, 2024, 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.

2 unchanged sentences

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 are shown in the table above (net of reserves) at September 30, 2024 and December 31, 2023.

Loans for which such charge-offs or reserves were recorded during the three months ended March 31, 2025 and the year ended December 31, 2024, are shown in the table above (net of reserves).

Foreclosed Assets Held for Sale.

2 unchanged sentences

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

There were no foreclosed assets held for sale at September 30, 2024 or December 31, 2023 which had valuation write-downs subsequent to the initial recording of the assets.

There were no foreclosed assets held for sale at March 31, 2025 or December 31, 2024 which had valuation write-downs subsequent to the initial recording of the assets.

Fair Value of Financial Instruments

27 unchanged sentences

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.

The fair values of certain of these instruments were calculated by discounting expected cash flows, which 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.

September 30, 2024

March 31, 2025

December 31, 2024

31 unchanged sentences

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 September 30, 2024, the Company had four interest rate swaps totaling $ 68.0 million in notional amount with commercial customers, and four interest rate swaps with the same aggregate notional amount with third parties related to its program.

In addition, the Company has one participation loan purchased totaling $ 8.5 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, 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.

At March 31, 2025, the Company had five interest rate swaps totaling $ 86.2 million in notional amount with commercial customers, and five interest rate swaps with the same aggregate notional amount with third parties related to its program.

In addition, at March 31, 2025, the Company had one participation loan purchased totaling $ 8.4 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, 2024, the Company had five interest rate swaps totaling $ 86.7 million in notional amount with commercial customers, and five interest rate swaps with the same notional amount with third parties related to its program.

In addition, at December 31, 2024, the Company had one participation loan purchased totaling $ 8.4 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.

During the three months ended September 30, 2024 and 2023, the Company recognized net losses of $ 37,000 and net gains of $ 55,000 , respectively, in non-interest income related to changes in the fair value of these swaps.

During the nine months ended September 30, 2024 and 2023, the Company recognized net losses of $ 57,000 and net losses of $ 234,000 , respectively, in non-interest income related to changes in the fair value of these swaps.

During the three months ended March 31, 2025 and 2024, the Company recognized net losses of $ 24,000 and $ 13,000 , respectively, in non-interest income related to changes in the fair value of these swaps.

Fair Value Hedges

8 unchanged sentences

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 is being amortized as a reduction of interest expense from January 2024 through February 2025.

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.

Cash Flow Hedges

8 unchanged sentences

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.

At September 30, 2024, the Company expected to have a sufficient amount of eligible variable rate loans to continue to accrete this interest income on the terminated swap in future periods.

This $ 45.9 million, less the accrued interest portion and net of deferred income taxes, has been 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 had the effect of reducing Accumulated Other Comprehensive Income and increasing Net Interest Income and Retained Earnings over the period.

At March 31, 2025, the Company expected to have a sufficient amount of eligible variable rate loans to continue to accrete this interest income on the terminated swap 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.

The Company recorded $ 2.0 million of interest income related to this terminated swap in each of the three-month periods ended September 30, 2024 and 2023.

The Company recorded $ 6.1 million of interest income related to the swap in each of the nine-month periods ended September 30, 2024 and 2023.

The Company recorded $ 2.0 million of interest income related to this terminated swap in each of the three-month periods ended March 31, 2025 and 2024.

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.

4 unchanged sentences

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.

As this interest rate swap reached its contractual termination date of March 1, 2024, there has been no further interest income impact related to this swap after the three months ended March 31, 2024.

The Company recorded a reduction of loan interest income related to this swap transaction of $ 1.9 million in the nine months ended September 30, 2024.

The Company recorded a reduction of loan interest income related to this swap transaction of $ 2.8 million and $ 7.5 million, respectively, in the three and nine months ended September 30, 2023.

As this interest rate swap reached its contractual termination date on March 1, 2024, there has been no further interest income impact related to this swap after the three months ended March 31, 2024.

The Company recorded a reduction of loan interest income related to this swap transaction of $ 1.9 million in the three months ended March 31, 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.

5 unchanged sentences

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 September 30, 2024, the USD-Prime rate was 8.00 % and the one-month USD-SOFR OIS rate was 5.16334 %.

The Company recorded a reduction of loan interest income related to these swap transactions of $ 2.7 million in both the three months ended September 30, 2024 and the three months ended September 30, 2023.

The Company recorded a reduction of loan interest income related to these swap transactions totaling $ 8.3 million and $ 4.4 million, respectively, in the nine months ended September 30, 2024 and 2023.

At March 31, 2025, the USD-Prime rate was 7.50 % and the one-month USD-SOFR OIS rate was 4.33365 %.

The Company recorded a reduction of loan interest income related to these swap transactions of $ 1.7 million and $ 2.8 million in the three months ended March 31, 2025 and 2024, respectively.

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 and nine months ended September 30, 2024 and 2023, the Company recognized no non-interest income related to changes in the fair value of these derivatives.

During each of the three months ended March 31, 2025 and 2024, 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:

Consolidated Statements

September 30,

of Financial Condition

16 unchanged sentences

Recognized in AOCI

Three Months Ended September 30,

Cash Flow Hedges

(In Thousands)

Terminated interest rate swap, net of income taxes

Active interest rate swaps, net of income taxes

Amount of Gain (Loss)

Recognized in AOCI

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flow Hedges

3 unchanged sentences

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

Three Months Ended September 30,

Cash Flow Hedges

(In Thousands)

Total Interest Income

Total Interest Expense

Terminated interest rate swap

Active interest rate swaps

Nine Months Ended September 30,

Three Months Ended March 31,

Cash Flow Hedges

9 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 September 30, 2024, the termination value of derivatives with our derivative dealer counterparties (related to loan level swaps with commercial lending customers and interest rate swaps 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 $ 80,000 .

At March 31, 2025, the termination value of derivatives with our derivative dealer counterparties (related to loan level swaps with commercial lending customers and interest rate swaps 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 $ 55,000 .

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

At September 30, 2024, the Company had given cash collateral to one derivative counterparty of $ 2.7 million to cover its net fair value position.

At March 31, 2025, the Company had given cash collateral to one derivative counterparty of $ 6.1 million to cover its net fair value position.

This counterparty position included collateral from the counterparty of $ 6.4 million for commercial lending swaps and collateral from the Company of $ 12.1 million for interest rate swaps related to variable rate loans.

At December 31, 2024, the termination value of derivatives with our derivative dealer counterparties (related to loan level swaps with commercial lending customers and interest rate swaps 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 $ 79,000 .

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

At December 31, 2024, the Company had given cash collateral to one derivative counterparty of $ 9.9 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.

If the Company had breached any of these provisions at September 30, 2024 or December 31, 2023, it could have been required to settle its obligations under the agreements at the termination value.

This counterparty position included collateral from the counterparty of $ 8.1 million for commercial lending swaps and collateral from the Company of $ 17.7 million for interest rate swaps related to variable rate loans.

If the Company had breached any of these provisions at March 31, 2025 or December 31, 2024, 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.

OPERATING SEGMENTS

The Company’s banking operation is its only operating 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.

The parent holding company does not have any significant operations other than ownership of the Bank, and the parent holding company’s only income is equity in the earnings of the Bank.

Our chief executive officer is our chief operating decision maker.

Our chief executive officer reviews actual net income versus budgeted net income, as well as comparison to other comparable financial reporting periods, to assess performance on a monthly basis and to make decisions about allocating capital and personnel.

Financial results by operating segment (all attributed to the banking segment), including significant expense categories provided to the chief operating decision maker, are detailed below for the three months ended March 31, 2025 and 2024.

Three Months Ended March 31,

(In Thousands)

Interest income

Interest expense

Net interest income

Credit loss expense

Net interest income after credit loss expense

Non-interest Income

Overdraft and insufficient funds fees

Point-of-sale and ATM fee income and service charges

Net gain on loan sales

Late charges and fees on loans

Fees from debit card contracts

Non-interest Expense

Salaries and incentives

Employee benefits

Net occupancy expense

Technology, furniture and equipment expense

Office supplies and printing

Legal, audit and other professional fees

Expense (income) on other real estate and repossessions

Acquired intangible asset amortization

Travel meals and entertainment

Other operating expenses

Income Before Income Taxes

Provision for Income Taxes

SUBSEQUENT EVENT

On April 30, 2025, the Company notified holders that it will redeem on June 15, 2025 (the “Redemption Date”) all of the Company’s outstanding 5.50 % Fixed-to-Floating Rate Subordinated Notes due June 15, 2030, having an aggregate principal amount of $ 75.0 million (the “Subordinated Notes”), in accordance with the terms of the Subordinated Notes.

The total redemption price will be 100 % of the aggregate principal amount of the Subordinated Notes, plus accrued and unpaid interest to, but excluding, the Redemption Date.

The Company will utilize excess cash on hand for the redemption payment.

The annual combined interest expense and amortization of deferred issuance costs on the Subordinated Notes has been approximately $ 4.4 million.

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