Great Southern Bancorp (NASDAQ:GSBC) reported lower second-quarter earnings as one-time costs tied to branch consolidations and workforce reductions weighed on results, while management said the company’s core banking metrics remained sound in a competitive lending and funding environment.
The Springfield, Missouri-based bank reported preliminary net income of $15.8 million, or $1.43 per diluted common share, for the quarter ended June 30, 2026. That compared with $19.8 million, or $1.72 per diluted common share, in the year-ago quarter, and $17.5 million, or $1.58 per diluted share, in the first quarter of 2026.
President and Chief Executive Officer Joe Turner said the quarter reflected “the strength and resilience” of the company’s core banking franchise, despite a “highly competitive operating environment.” He said results were negatively affected by one-time expenses related to the planned consolidation of nine banking centers and staffing reductions in other operational areas.
Net Interest Margin Expands Despite Lower Interest Income
Net interest income totaled $49.5 million in the second quarter, down from $51.0 million in the same period last year but up from $48.3 million in the first quarter of 2026.
Chief Financial Officer Rex Copeland said the year-over-year decline was primarily due to a $2.0 million reduction in quarterly interest income associated with a previously terminated interest rate swap. The amortization tied to that swap ended in October 2025. Copeland also cited lower loan balances and lower market interest rates, which affected variable-rate loans and newer fixed-rate originations.
Those pressures were partly offset by lower interest expense on deposit accounts and borrowings, which management attributed to funding cost discipline and the repricing of liabilities. The company also had no interest expense on subordinated notes in the quarter because those notes were redeemed in June 2025.
The annualized net interest margin rose to 3.76% in the second quarter, compared with 3.68% a year earlier and 3.71% in the first quarter. Copeland noted that the second-quarter figure included about $393,000 of interest income related to the collection of previously unbooked interest on a single relationship.
During the question-and-answer portion of the call, Copeland said he currently leans toward a stable margin outlook, citing intense competition for both loans and funding. He said some certificates of deposit are scheduled to mature in the third quarter, but because those balances have repriced multiple times, he does not expect a substantial benefit.
Loan Balances Decline as Payoffs Rise
Net loan balances decreased by $148.9 million during the second quarter, a decline management attributed largely to elevated loan payoff activity. Turner said the decline was most pronounced in commercial real estate and construction categories.
Compared with Dec. 31, 2025, net loans decreased $49.1 million to $4.31 billion. Copeland said gross loans receivable stood at $4.38 billion at quarter-end. Over the first six months, repayments in commercial real estate and multifamily loans were partially offset by growth in construction balances.
Turner said loan trends remain difficult to forecast because borrower repayments can significantly influence period-to-period results. He said the company’s broader lending pipeline remained “robust,” with total commitments of $1.07 billion at June 30, including $531.5 million in the unfunded portion of closed construction loans.
Asked by KBW analyst Damon DelMonte whether loan growth could turn positive in the back half of the year, Turner declined to provide guidance. “It’s really, really difficult to predict,” Turner said, adding that Great Southern continues to compete to retain and win business while maintaining conservative underwriting standards.
In response to a question from Brean Capital analyst John Rodis, Turner said origination activity in the second quarter was lower than in the first quarter and possibly lower than over the last year, while payoff activity was “substantially higher” than in the first quarter.
Deposits Fall as Bank Lets Brokered Balances Run Off
Total deposits ended the quarter at approximately $4.30 billion, down $143.1 million from March 31 and down $180.7 million over the first six months of 2026. Turner said about $88 million of the first-half decline came from brokered deposits, reflecting a strategic choice to use Federal Home Loan Bank borrowing given pricing pressures in the brokered market.
Interest-bearing checking balances decreased by about $92 million in the first six months, mostly in higher-rate accounts, while increases in non-interest-bearing checking balances roughly offset declines in the retail time deposit portfolio.
At June 30, the company’s deposit mix included:
- $2.20 billion in interest-bearing checking accounts;
- $877.4 million in non-interest-bearing checking accounts;
- $651.5 million in time deposits; and
- $575.6 million in brokered deposits.
Copeland said uninsured deposits were estimated at $665 million, or 15.5% of total deposits. The company also reported secured borrowing line availability of $1.23 billion at the Federal Home Loan Bank and $319.6 million at the Federal Reserve Bank, along with $180 million in cash and cash equivalents.
Branch Consolidations Drive One-Time Expenses
Non-interest expense rose to $38.2 million from $35.0 million in the prior-year quarter and $34.8 million in the first quarter. Excluding one-time costs tied to branch consolidation and workforce reductions, non-interest expense was $36.1 million.
The one-time costs totaled $2.1 million and included a $1.4 million valuation allowance on four owned locations, $561,000 in severance costs and $163,000 in remaining lease expense for a loan production office expected to close at the end of July. Copeland said the severance costs related to 66 planned position eliminations.
Management said the consolidations and workforce reductions are expected to produce approximately $4.4 million to $4.8 million in annual non-interest expense savings beginning in the fourth quarter of 2026. After factoring in expected customer deposit attrition and replacement funding costs, the actions are expected to improve annual pre-tax income by approximately $2.3 million to $2.7 million beginning in the fourth quarter.
Turner said the bank continually evaluates its branch network based on costs and customer traffic patterns. He said Great Southern has closed 50 or more banking centers over roughly the past 15 years and will continue evaluating opportunities as customer behavior and technology evolve.
Credit Quality and Capital Remain Strong
Management described credit quality as strong. Non-performing assets totaled $9.4 million, or 0.17% of total assets, at June 30, compared with $10.1 million, or 0.18%, at March 31 and $8.1 million, or 0.15%, at Dec. 31, 2025. Non-performing assets and potential problem loans combined totaled $10.6 million.
The company recorded a $909,000 charge-off on a multifamily loan transferred to foreclosed assets during the quarter, resulting in net charge-offs of $819,000. Turner described the matter as an “idiosyncratic situation” tied to borrower-specific circumstances and said management does not view it as signaling broader migration in the portfolio.
Great Southern did not record a provision expense on its outstanding loan portfolio during the three or six months ended June 30, though it recognized an $8,000 provision for unfunded commitments in the second quarter. The allowance for credit losses remained stable at 1.46% of total loans.
Total stockholders’ equity was $641.6 million at quarter-end, equal to 11.6% of total assets. Book value was $58.95 per common share, up from $57.50 at Dec. 31, 2025. During the quarter, the company repurchased 114,000 shares at an average price of $68.39 and had approximately 304,000 shares remaining under its repurchase authorization.
Turner said capital allocation will remain an important topic for the board, noting that the company is generating capital and already has high capital ratios. He said the most likely uses include continued share repurchases, increasing the quarterly dividend or paying a special dividend.
About Great Southern Bancorp (NASDAQ:GSBC)
Great Southern Bancorp, Inc (NASDAQ: GSBC) is the bank holding company for Great Southern Bank, a full-service commercial bank headquartered in Springfield, Missouri. Through its subsidiary, the company provides a broad spectrum of financial products and services designed to meet the needs of individuals, small and mid-sized businesses, and professional clients across its regional footprint.
Great Southern Bank’s core business activities include deposit-taking, lending and treasury management.
