Given the late-quarter payoffs and robust pipeline, do you foresee a slowing of payoffs and positive loan growth in the second half?

Joe stated it's difficult to project loan growth due to unpredictable borrower repayments, despite a strong lending pipeline. He emphasized the high quality of their loan portfolio and the competitive environment. “It's just hard to project. You're talking about, you know, the people that are in the community, the people that are in the community I mean, like we said, we have a high quality loan portfolio and customers do have other options.”

What was the thought process behind consolidating nine locations and reducing headcount? Is this an ongoing strategy?

Joe explained that branch consolidation and operational improvements are an ongoing process, driven by constant evaluation of cost, customer traffic patterns, and technology's impact on delivery channels. He noted they have closed many branches historically. “we're constantly kind of analyzing cost analyzing customer traffic patterns you know and looking at those so you know we've done that for historically I think probably in the last 15 years we probably closed 50 or more banking centers”

If the margin remains stable but loans continue to decline, will NII dollars likely trend down from Q2 levels?

Rex confirmed that if loan balances continue to trend down, there would likely be some pressure on the dollar amount of NII, even with a stable margin. He noted they would reduce wholesale funding to offset loan reductions. “I mean, if we do have net reduction in loan balances, that would probably start to be that way. We'll reduce, we've got a lot of, you know, wholesale funding through either through brokerage or through home loan bank advances.”

GSBC

Great Southern Bancorp (GSBC) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 16, 2026

Source: earnings call transcript

Executive summary

Great Southern Bancorp Q2 FY26 — NIM Expansion and Expense Management Amidst Loan Declines

Great Southern Bancorp reported Q2 FY26 results reflecting a resilient core banking franchise, with net interest margin expanding and strong expense management efforts underway. These positives helped to offset a decline in net loan balances and total deposits, as well as one-time costs associated with operational streamlining. Management emphasized a focus on asset quality and long-term value creation in a competitive environment.

Highlights

Net interest margin expanded to 3.76% in Q2 FY26 from 3.71% in Q1 FY26.
Non-performing assets decreased sequentially to $9.4 million, or 0.17% of total assets, in Q2 FY26.
Capital position remained strong with total stockholders' equity at $641.6 million, representing 11.6% of total assets.
Branch consolidations and workforce reductions are expected to result in $2.3 million to $2.7 million in annual pre-tax income improvement starting Q4 FY26.

Concerns

Net income decreased to $15.8 million ($1.43 EPS) in Q2 FY26 from $19.8 million ($1.72 EPS) in Q2 FY25.
Net loan balances decreased by $148.9 million QoQ in Q2 FY26, driven by elevated payoff activity.
Total deposits decreased by $143.1 million QoQ in Q2 FY26, including an $88 million decline in brokered deposits.
Non-interest expense included $2.1 million in one-time costs related to branch consolidation and workforce reduction.

Guidance & targets

Category	Target	Timeline	Confidence
Effective tax rate	18% to 19.5% medium materiality	Future periods	High
Non-interest expense savings from consolidation	$4.4 million to $4.8 million high materiality	Q4 · FY26	High
Annual pre-tax income improvement from consolidation	$2.3 million to $2.7 million high materiality	Q4 · FY26	High
Quarterly non-interest expenses	Moving a little bit higher low materiality	Future quarters	Medium

Risks & headwinds

Competitive operating environment Ongoing

Not quantified

Mitigation:Disciplined expense management, careful balance sheet positioning, relationship-based banking.

Elevated loan payoff activity Q2 FY26, potentially ongoing

Net loan balances decreased by $148.9 million QoQ

Mitigation:Focus on disciplined originations anchored by conservative underwriting standards; difficulty in forecasting.

Customer deposit attrition from branch closures Beginning Q4 FY26

Expected to be partially offset by higher cost alternative funding

Mitigation:Strategic choice to utilize FHLB borrowing given pricing pressures in brokered market.

Ongoing increases in non-interest expenses Ongoing

Computer license and support costs up $333,000; smaller increases in other categories

Mitigation:Continued investment in core system enhancements and data security projects.

Q&A highlights

How do you view the margin trajectory for the back half of the year, considering CD repricing and potential benefits?

Rex expects the margin to remain stable, noting that while some CD maturities are coming, they have mostly repriced since the last rate cut, limiting substantial benefit. He also mentioned continued competition on both loans and funding.

“I probably lean more towards stable, um, and, and, and where I'm kind of looking at right now. Uh. We're going to try to do what we can to reduce some of our funding costs, but the competition on both loans and funding is pretty significant right now.”

asked by Damon Del Monte · answered by Rex Copeland

2 min read 5 chapters

Detailed narrative

Net Interest Income and Margin Dynamics

Net interest income for Q2 FY26 totaled $49.5 million, a decline from $51 million in the prior year quarter, primarily due to a $2 million reduction from a terminated interest rate swap. Despite this headwind, the annualized net interest margin expanded to 3.76% from 3.68% in Q2 FY25 and 3.71% in Q1 FY26, driven by disciplined funding cost management.

The quarter also included approximately $393,000 of interest income from the collection of previously unbooked interest on a single relationship.

Loan Portfolio Trends and Pipeline

Net loan balances decreased by $148.9 million from March 31, 2026, to $4.31 billion at June 30, 2026, largely due to elevated payoff activity. This decline was most pronounced in commercial real estate and multifamily categories, partially offset by a $53.2 million expansion in construction balances during the first half of the year.

Management noted that period-to-period loan trends are heavily influenced by borrower repayments and remain difficult to forecast, despite a robust lending pipeline of $1.07 billion in total commitments.

Deposit and Funding Strategy

Total deposits ended Q2 FY26 at $4.30 billion, down $143.1 million from Q1 FY26. This decrease included a strategic reduction of $88 million in brokered deposits, as the company opted to utilize FHLB borrowings given pricing pressures in the brokered market.

Interest-bearing checking balances also decreased by $92 million in the first six months of the year, with increases in non-interest-bearing checking balances offsetting declines in the retail time deposit portfolio.

Expense Management and Operational Efficiency

The company is actively managing expenses through the consolidation of nine banking centers and the elimination of 66 positions across various divisions. These actions resulted in $2.1 million in one-time costs in Q2 FY26, including a $1.4 million asset valuation allowance and $561,000 in severance.

However, these initiatives are expected to generate $4.4 million to $4.8 million in annual non-interest expense savings and $2.3 million to $2.7 million in annual pre-tax income improvement starting in Q4 FY26.

Credit Quality and Capital Position

Credit quality metrics remain strong, with total non-performing assets at 0.17% of total assets at quarter-end, a sequential decrease from 0.18% in Q1 FY26. The allowance for credit losses remained stable at 1.46% of total loans, and no provision expense was recorded for the loan portfolio in Q2 FY26.

The bank's capital position is robust, with total stockholders' equity at $641.6 million, representing 11.6% of total assets, and a book value of $58.95 per common share.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.