Good afternoon, and thank you for joining Great Southern Bank second quarter 26 earnings call. Today, we will be discussing the company's results for the quarter ended 06/30/2026.

Before we begin, I would like to remind everyone that during this call, forward looking statements may be made regarding the company's future events and financial performance. These statements are subject to various factors that could cause actual results to differ materially from those anticipated or projected.

For a list of these factors, please refer to the forward looking statements disclosure in the earnings release and other public filings. Joining me today are President and CEO, Joe Turner and chief financial officer, Rex A.

Copeland. I will now turn the call over to Joe.

Okay. Thanks, Christina, and good afternoon to everyone on the call.

We appreciate you joining us today. Our second quarter 26 results reflect the strength and resilience of our core banking franchise despite what remains a highly competitive operating environment.

Our operating metrics remain sound supported by disciplined expense management, careful balance sheet positioning, and our ongoing emphasis on relationship based banking. In the second quarter of 2026, we reported preliminary net income of $15.8 million or $1.43 per diluted common share compared to $19.8 million or $1.72 per diluted common share in the previous year quarter.

These results were negatively impacted by several onetime expenses related to the planned consolidation of 9 banking centers and staffing reductions in other operational areas. Which Rex and I will discuss further.

For the first half of 2026, preliminary net income totaled 33.3 million or $2.99 per diluted common share compared to $36.9 million or $3.18 per share in the first half of 2025. Net interest income in the second quarter totaled $49.5 million down from 51 million in the year ago quarter.

This change from the prior year period was driven primarily by the absence in 2026. Of $2 million of interest income from a previously terminated swap.

Despite this headwind, disciplined funding cost management allowed for the expansion of our margin to 76 from the year ago quarter when it was 3.68. In terms of lending, net loan balances decreased $149 million in the second quarter of 26 This decline is largely reflected of elevated loan payoff activity.

The decline was most pronounced in the commercial real estate and construction categories compared to December 3.13 thousand net loan balances decreased $49.1 million to $4.31 billion. As emphasized in previous communications, period to period loan trends are heavily influenced by borrower repayment and remain difficult to forecast.

Our focus remains on disciplined originations and by conservative underwriting standards. Our broader lending pipeline remains robust with total commitments standing at $1.07 billion at June 30, including $532 million in unfunded portion of closed construction loans.

On the funding side, total deposits decreased $181 million in the first 6 months of 2026 The majority of this decline, about 88 million was within broker deposits. Reflecting a strategic choice to utilize FHLB borrowing given the pricing pressures within the brokered market.

Interest bearing checking, balances decreased about $92 million in the first 6 months of the year with most of this being in the higher end of the rate of those type of accounts. Increases in noninterest bearing checking balances roughly offset decreases in our retail time deposit portfolio.

From a credit quality standpoint, our metrics remain excellent. Total nonperforming assets at the end of the second quarter were 0.17% of total assets compared to 0.15%.

At the end of the year. We did have a charge off of $909 thousand on a multifamily loan transferred to foreclosed assets in the second quarter.

Which Rex will discuss further. We view this as a sort of idiosyncratic situation.

The borrower had certain circumstances, and that related just to them, and we do not view it as a migration of any portion of our portfolio. Expense management remains a top priority for our bank.

This focus is evident in our decision to consolidate 9 banking centers and eliminate a total of 66 positions across various divisions. Ultimately, we believe this will allow for better alignment with our customers' banking preferences along with our pursuit of operational efficiencies as technology services evolve.

Noninterest expense for the quarter was $38.2 million However, when excluding the onetime costs associated with the branch consolidation and workforce reduction, Noninterest expense was $36.1 million. These onetime costs consist of $1.4 million in asset valuations allowance on 4 owned locations and $561 thousand in severance cost and $163 thousand in remaining lease expense for a loan production office.

Which will close at the end of July. As we move through the balance of 2026, we remain focused on protecting assets quality executing thoughtful operational improvements, and consistently building long term value for our stockholders.

The lending and funding environments remain competitive but we are navigating this landscape from a position of strength. With that, I will turn the call over to Rex for a more detailed discussion of the financials.

All right. Thank you, Joe, and good afternoon, everyone.

I will now provide a little more detail on our second quarter 26 financial performance and how it compares to both the prior year quarter and the previous linked quarter. As we mentioned for the quarter ended 06/30/2026, we reported preliminary net income of $15.8 million or $1.43 per diluted common share compared to $19.8 million or $1.72 per diluted common share in the second quarter of 25 and $17.5 million or $1.58 per diluted common share in the first quarter of 26.

Net interest income for the quarter totaled $49.5 million compared to $51 million in the second quarter of 25, and $48.3 million in the first quarter of 26. The $1.5 million or 2.9% decline from the second quarter of 25 was driven primarily by the $2 million reduction in quarterly interest income associated with the previously terminated interest rate swap, which we mentioned and which that, amortization ended in, October 2025.

Compared to the prior year quarter, interest income was also affected lower loan balances and lower market interest rate. Which primarily impacted variable rate loans and newer fixed rate originations.

Those items were partially offset by lower interest expense on deposit accounts and borrowings due to disciplined funding cost management and the ongoing downward repricing of rates on liabilities. In addition, there was no interest expense on subordinated notes in the quarter ended 06/30/2026 as those notes were redeemed in June 2025.

Compared to the first quarter of 26, net interest income increased $1.2 million A portion of the increase was due to 1 additional calendar day in the second quarter along with modest increases in interest income on loans and investments. And interest expense which was nearly unchanged compared to the 2026 first quarter.

Also during this 26 second quarter, we did record approximately $393 thousand of interest income related to the collection of previously unbooked interest on a single relationship. Though this relationship has recently provided interest payments semiannually the timing and amount of this income may vary going forward.

Our annualized net interest margin for the second quarter of 26 expanded to 3.76% compared to 3.68% in the second quarter of 25. And 3.71% in the first quarter of 26.

Noninterest income for the quarter was $7.4 million compared to $8.2 million in the second quarter of 25 and $7 million in the first quarter of 26. The year over year decrease of $837 thousand was driven by an $897 thousand decline in other income primarily due to $1.1 million in onetime income relating to our tax credit partnership investments that we recorded in the 2025 period.

Partially offsetting the decline in other income was a $230 thousand increase in commissions income compared to the prior year quarter. Favorable yields on annuity offerings have increased demand from our customer base for this product.

Total noninterest expense for the quarter was $38.2 million compared to $35 million in the second quarter 25 and $34.8 million in the first quarter of 26. And just as a reminder, in the first quarter of 26, we did have about $700 thousand of items that reduced expense in that first quarter.

As Joe mentioned, our noninterest expense in the quarter is impacted significantly by onetime expenses, related to the consolidation of the 9 branches and severance costs related to worse workforce reductions in those branches in another operational areas. Excluding these onetime costs, noninterest expense was $36.1 million or $1.1 million higher than the year ago quarter.

This increase is was partially due to a $333 thousand increase in computer license and support costs given the company's continued investment in core system enhancements and data security projects. Along with smaller increases in various other expense categories such as postage and advertising.

The onetime branch consolidation and severance costs totaled $2.1 million. Specifically, include a $1.4 million valuation allowance, $561 thousand in severance costs representing the 66 plan position eliminations, and a 163 thousand in lease expense obligations for the closing loan production office.

Accounting rules require that certain costs and expected losses be recorded immediately, while any expected gains are not recorded until realized. The $1.4 million valuation allowance is based upon our evaluation of the estimated market value of each affected location relative to their carrying values.

We believe 4 of the 9 owned locations may result in a loss on sale. Though we do not expect to realize losses on the sale of the other 5 properties.

Further, we expect the eventual aggregate selling price of all affected properties will exceed the combined carrying value of the affected locations. The banking center consolidations and the workforce reductions are expected to result in approximately $4.4 to $4.8 million in noninterest expense savings beginning in the fourth quarter of 26.

This savings is expected to be partially offset by a projected amount of customer deposit attrition in the affected locations over time which will likely be replaced by higher cost alternative funding. These actions combined are expected to result in approximately $2.3 to $2.7 million in annual pretax income improvement.

Again, beginning in Q4 of this year. For income taxes, the company's effective tax rate for the 3 months ended 06/30/2026 was approximately 15.3% compared to 18.5% in the same period for 2025.

For the 6 months ended 06/30/2026, the effective tax rate was 17.1% compared to 19.2% in the prior year period. The lower effective tax rate in the second quarter 26 was driven by our usual tax credits and tax exempt income sources, and also by higher allowable tax deductions resulting from increased levels of employee stock option exercises.

Going forward, we continue to expect our combined federal and state effective tax rate range from approximately 18% to 19.5% in future periods. Turning to the balance sheet.

Total assets ended the quarter at approximately $5.52 billion compared to $5.6 billion at the end of December 25. Gross loans receivable stood at $4.38 billion.

Over the first 6 months of the year, net loans decreased by $49.1 million or 1.1% driven by repayments in commercial real estate, which was down $73.3 million and multi family, which was down $39.9 million partially offset by a $53.2 million expansion in construction balances. Compared to the linked quarter, net loans contracted by $149 million from Mark 31.

Due to elevated repayments. As Joe highlighted, these repayments are difficult to predict and may continue to drive volatility in our loan balances in future quarters.

On the funding side, total deposits ended the quarter at approximately $4.3 billion down $143 million from 03/31/2026. Given the loan balance decline, we electively allowed higher cost brokerage balances to mature without replacement.

Our deposit mix consisted of $2.2 billion in interest bearing checking $877 million in noninterest bearing checking, $152 million in time deposits, and $576 million in brokered deposits at June 30. Uninsured deposits are estimated at $665 million or 15.5% of total deposits.

At 06/30/2026, secured borrowing line availability of Federal Home Loan Bank and Federal Reserve Bank was $1.23 billion and $320 million respectively, alongside cash equivalents of $180 million. From an asset quality perspective, overall performance remained strong.

Nonperforming assets and potential problem loans combined $10.6 million Nonperforming assets decreased sequentially by $700 thousand to $9.4 million or 0.17% of total assets compared to $10.1 million or 0.18% in the first quarter of 26, but up from $8.1 million or 0.15% of total assets 12/31/2025. Potential problem loans were $1.16 million at the end of the 2026 second quarter.

During the quarter, we moved a single $1.8 million multifamily for non performing loans through transfer to foreclosed assets with a charge off on this loan of $909 thousand bringing our net charge offs in the second quarter to $819 thousand. During both the 3 and 6 months ended 06/30/2026, we did not record a provision expense for our outstanding loan portfolio but recognized the provision for unfunded commitments of $8 thousand in the second quarter of 26.

The bank's allowance for credit losses was stable at 1.46% of total loans. Overall, our core credit metrics continue to reflect our long standing focus on disciplined risk management a portfolio that is performing well.

Our capital position remained a key strength. Total stockholders' equity at 06/30/2026 was $642 million representing 11.6% of total assets and a book value of $58.95 per common share up from $6$36.1 million or $57.50 per common share at 12/31/2025.

Capital increased in the 6-month period by $33.3 million of net income and $11.9 million from stock issued for option exercises which was mostly offset those were mostly offset by $9.4 million in dividends declared on common stock $24.8 million in common stock buybacks, and a $5.5 million increase in unrealized AOCI losses, which would have been a decrease to our capital. In the second quarter, we increased capital by $7.3 million by 125 thousand option exercises at an average price of $54.17 while decreasing capital by $7.8 million by repurchasing 114 thousand shares of common stock at an average price of $68.39.

Leaving approximately 304 thousand shares remaining available under our current repurchase authorization. Overall, our second quarter results reflect solid execution throughout our business.

Our net interest margin expanded our core deposit mix remained stable, our asset quality trends remain solid. Our capital benchmarks sit at strong levels.

We are well positioned for continued operational success meaningful growth in tangible book value per share. That concludes my remarks, and we are now ready to take your questions.

Hey. Good afternoon, guys.

Hope everybody's doing well. First question, just wanted to talk a little bit about the margin Rex, kind of how you think about the back half of the year.

I know you called out some CDs that are repricing in the next 3 months. And kind of just wondering, do you expect that kind of benefit on the lower repricing kind of help keep margin stable at a current level?

Or I guess, how are you feeling about it directionally from this point?

Yeah. So when you look at the first quarter and the second quarter this year, we did expand the margin a little bit.

I think we do have some more CD. You know, obviously, we have got some CD maturities coming up here in the third quarter, a fairly sizable amount.

Those are at rates though that you know, are probably not where we are going to see a lot of benefit. They have repriced multiple times, I would say, since the last, rate cut.

So, you know, maybe some benefit there, but it is not going to be substantial, I would not think. I think we are going to continue to see, you know, repayment in different loan categories, potentially, maybe in some of our, you know, fixed rate 1-to-4 family that may be a little bit lower rate.

And we can redeploy that into higher. But that is not a large volume typically of monthly payments coming back in.

So I think I would kinda characterize what we have done in the first half of the year I mean, generally, I think, is going to continue to kind of flow through I do not really see anything too different at the moment on that.

Got it. Okay.

that is helpful. Thanks.

And then on the kind of the outlook for loans, you know, if you look at the average balances versus the end of period, it appears that a lot of these payoffs came in late in the quarter. To just kind of, you know, Joe, I heard the comment on the size of the pipeline and the unfunded commitments that have yet to fund on the construction side.

But I guess as you look out into the back half of the year, do you foresee pace of the payoffs slowing and you think you can kind of get to a positive growth rate like we saw in the first quarter?

it is just hard to I mean, that, you know, and that is why we do not give guidance statement. it is just hard to project.

You know? You are talking about I mean, we like we have said, we have high quality loan portfolio in and customers do have other options.

You know, and we will compete to keep you know, a lot of it and have been competing people out of it. Competing for new business as well.

But, you know, it is it is just it is really, really difficult to predict, and that is why we just do not do that.

Got it. Okay.

And if I could just squeeze 1 more in. You know, the announcement to consolidate the 9 locations and have some headcount reduction, I guess what was the thought there?

Was there like an evaluation done on these branches and they were kind of underperforming? Or was this just the way to kind of manage, the overall you know, earnings outlook for the company with growth being slower, you found some areas where you can maybe make some cost saves.

So just kind of curious in the thought process behind that. And, you know, do we expect additional closures going forward at some point?

Maybe I can kind of answer both those at the same time. Damon.

I mean, I think you guys have before, you know, are there any programs for operational improvement for those sorts of things? And we have told you, you know, that is kind of an ongoing thing with And you know, we are constantly evaluating our system of banking center that is a highly important delivery channel for us.

But also very, very expensive. So you know, we are constantly kind of analyzing cost, analyzing customer traffic patterns, you know, and looking at those.

So you know, we have done that. For historically.

I think probably in the last, you know, 15 years, we probably closed 50 or more banking centers. I mean, you know, maybe 30% or 40% of our you know, portfolio.

So, you know, as customer patterns change, we will continue to do that. So that will be ongoing.

And you know, as well as technology affects other parts of our business too, we will continue to evaluate and try to make our operation as efficient as we possibly can. Got it.

Okay. Great.

that is helpful. Thank you very much.

Hi, John. Hey.

Rex, Rex, just following back up on your on the margin discussion with Damon.

I guess, you sort of implying that do you think you can grow the margin from here? Or do you think it is sort of stable with the second quarter level?

And if I look at the second quarter, if I back out that interest recovery, it looks like the margins maybe closer to 3.73. So were you sort of implying that you think you could maybe hold the margins stable?

Or do you think you could still grow it a little bit? Probably lean more towards stable.

And where I am kind of looking at right now. We are going to try to do what we can to, you know, reduce some of our funding cost.

But the competition on both loans and funding is pretty significant right now. And so we are continuing to see it both in local markets and in more of the national brokered markets where you can get funding but, if there is just a lot of competition on pricing to get it.

Yeah. As far as if you hold the margin steady, but with loans continuing to decline or obviously continued volatility there, even if you hold the margin steady, net interest income dollars probably trend down from the second quarter level.

Is that correct?

I mean, if we if we do have net reduction in loan balance that would probably start to be that way. We will reduce--we have got a lot of you know, wholesale funding through either through brokered or through home loan bank advances.

So if we have reductions on the loan side, we would reduce our borrowings there. Which there is some spread still in that.

So we would reduce some spread. We will keep know, trying to do everything we can to, you know, manage the funding mix.

But yeah. I mean, that we will have 1 more actual calendar day in the first quarter versus second quarter.

So we do have 1 more day of net interest income that we would book from a dollar standpoint. But, yeah, I mean, you are I think, you are thinking correctly that if our loan balances do on net continue to trend down, then, you know, we would have some pressure on the dollar amount there in the in the quarter.

Yeah. Okay.

Joe, just back to you on loans, and I it is hard to predict. And a lot of volatility.

But can you maybe just talk a little bit about origination activity this quarter versus payoff activity? And how that compares to you know, recent past quarters?

You know, I think I think origination activity in the second quarter was maybe a little lower than, you know, say, the last year. I think, certainly, it was it was definitely lower than the first quarter.

I believe. You know?

So you know, so there was that. I mean, I think our you know, we are continuing to we are we are continuing to get looks at things and you know, we are taking our shot.

I can tell you it is highly competitive. Out there for, you know, the customers and the types of loans and the customers that we are competing for.

So we are we are still out there taking our shot, John. it is just it is there is a lot of other people doing the same thing.

Mhmm.

And then as for The kind of the mix of it too, John. In the first quarter this year, I think we had more loans that funded day 1.

In the second quarter, I think we had more loans that were more toward construction. Deals that are not gonna fund for a while because, you know, the customer's putting their equity in the deal first.

So Yeah.

So if origination activity was down this quarter versus first quarter, How would you characterize the level of payoffs this quarter? I think payoffs were substantially higher this quarter than last quarter.

And I would say you know, probably somewhat higher than the trend we have seen over the last year. Okay.

Okay. And then, I mean, did anything unusual happen this quarter to make them a lot higher or is this sort of-- oh, I mean, that is that is the that is the tough thing.

John. We really you know, I do not think we felt any different about, you know, from a payoff perspective or from an origination perspective?

We did not feel any different on 01/01/2026 than we did on 04/01/2026. And, you know, the results were you know, fairly different.

So, you know, that is why I am saying, I think it is a fool's errand for us to try to predict, you know, pay off and originations for that matter.

I get no. I get I get it.

Rex, shifting gears to expenses. So if you back out the $2.1 million you are roughly $36.1 million for the quarter.

And then you start to get the benefits of the consolidation in the fourth quarter. So if give or take $36 million in the second quarter is sort of a core number, a, is that the right way to look at it?

And then b, backing out the cost saves of a little bit over $1 million, you are sort of looking at a $35 million run rate in expenses starting in fourth quarter. Am I thinking about that correct?

Somewhat. I mean, that is how that part of it should flow through.

I think you are right. 36.1 in the quarter is we did not really have a lot of other noise in there.

So that is probably in line with kind of a core operating number. And then we will start to see those benefits in the fourth quarter as you said.

In the third quarter, we will not really see any benefit from it. And we are continuing to add some cost related to some technology initiatives and some other initiatives that we have going on.

So I think, like we I think we told you last quarter, you know, we will continue to see quarterly, expenses in the noninterest categories moving a little bit higher. From those initiatives as well.

So I do not I do not know that I would say we are going to save the entire million dollars a quarter as we move ahead. But there will be some portion of that, yeah, we should we should see benefit of.

Okay. So okay.

So said another way that 35 million plus added tech expenses is sort of what you said. Right?

Right. Right.

Yeah.

Okay. Okay.

Just as far as the buyback goes, you guys were not as active as what you have got roughly 300 thousand shares remaining. All things equal, the stocks had a nice move.

Are you know, at this level, does it you know, at the $80 high '70s, '80s, does it make sense? Or are you sort of on pause regarding the buyback?

Yeah. I do not know that we wanna exactly say here's what we will pay, but I mean, I would say, it still makes sense.

It probably does not make as good a sense as it did. You know, at $70 or $65 or whatever.

So I mean, it is something we are still considering for sure.

John. The you know, we have a fairly conservative window You know, like, our window will open, I think, Monday.

And we will close the last day of August. So, really, about half the quarter we are we are only buying stock back under a 10b-5 plan.

Mhmm. So and so, you know, that we sort of set our numbers when, you know, stock prices were a lot lower and did not get anything bought, really.

Yeah.

So you know, I think you know, that is part of what is going on. But we will have we will have to sit down and think about you know, I mean, I think I think you know, capital how we allocate our capital, that is something that is gonna be an important topic.

Topic of discussion. You know, at the board level.

Because we are generating a fair amount of capital, and we have high capital ratios already. So you know, there are you know, different ways we can deploy it.

And you know, we will try to make the best use of it we can.

Yeah. But just said I guess, since you just your last comment, if I mean, if you bought back the remaining 300 thousand shares at the current level, your TCE remains well above 11%.

But what other than maybe increasing the common dividend, what other alternatives would you potentially be considering? Joe?

I mean, I think there is there I mean, we are you know, you know us. We are not gonna do, like, some acquisition crazy kind of, you know, we are not going to try to lever ourselves that way.

So for us, the most likely, I think, are either continued share repurchases increasing the quarterly dividend. Or, you know, we have in the past done special dividends.

So it would be 1 of those 3 or some combination thereof.

Okay. Okay.

Makes sense, guys. Thank you.

Okay. Thanks, everybody.

We appreciate your attendance today, and we look forward to talking to you in the fall. Thank you.