Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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Allowance for Credit Losses and Valuation of Foreclosed Assets

The Company believes that the determination of the allowance for credit losses involves a higher degree of judgment and complexity than its other significant accounting policies. The allowance for credit losses is calculated with the objective of maintaining an allowance level believed by management to be sufficient to absorb estimated 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 a balance of $100,000 or more, 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 represent 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, 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 using a straight-line method. 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.

See Note 6 "Loans and Allowance for Credit Losses" in the Notes to Consolidated Financial Statements included in this report for additional information regarding the allowance for credit losses. Inherent in this process is the evaluation and risk assessment of individual credit relationships. From time to time, certain credit relationships may deteriorate due to changes in payment performance, cash flow of the borrower, value of collateral, or other factors. Due to these changing circumstances, management may revise its loss estimates and assumptions for these specific credits. In some cases, losses may be realized; in other instances, the factors that led to the deterioration may improve or the credit may be refinanced elsewhere and allocated allowances may be released from the particular credit.

In addition, the Company considers that the determination of the valuation of foreclosed assets held for sale involves a high degree of judgment and complexity. The carrying value of foreclosed assets reflects management's best estimate of the amount to be realized from the sale of the assets. While the estimate is generally based on a valuation by an independent appraiser or recent sales of similar properties, the amount that the Company realizes from the sale of the assets could differ materially from the carrying value reflected in the financial statements, resulting in gains or losses that could materially impact earnings in future periods.

Goodwill and Intangible Assets

Goodwill and intangible assets that have indefinite useful lives are subject to an impairment test at least annually and more frequently if circumstances indicate their value may not be recoverable. Goodwill is tested for impairment using a process that estimates the fair value of each of the Company's reporting units compared with its carrying value. The Company defines reporting units as a level below each of its operating segments for which there is discrete financial information that is regularly reviewed. As of June 30, 2026, the Company had one reporting unit to which goodwill has been allocated - the Bank. If the fair value of a reporting unit exceeds its carrying value, then no impairment is recorded. If the carrying value exceeds the fair value of a reporting unit, further testing is completed comparing the implied fair value of the reporting unit's goodwill to its carrying value to measure the amount of impairment. Intangible assets that are not amortized are tested for impairment at least annually by comparing the fair values of those assets to their carrying values. At June 30, 2026, goodwill consisted of $5.4 million at the Bank reporting unit, which included goodwill of $4.2 million that was recorded during 2016 related to the acquisition of 12 branches and the assumption of related deposits in the St. Louis market. Other identifiable deposit intangible assets that were subject to amortization were amortized on a straight-line basis over a period of seven years and have been fully amortized.

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In April 2022, the Company, through its subsidiary Great Southern Bank, entered into a naming rights agreement with Missouri State University related to the main arena on its campus in Springfield, Missouri. The terms of the agreement provide the naming rights to Great Southern Bank for a total cost of $5.5 million, to be paid over a period of seven years. The Company has been amortizing the naming rights intangible assets through non-interest expense over a period not to exceed 15 years.

At June 30, 2026, the amortizable intangible assets included the arena naming rights of $4.0 million, which are reflected in the table below. These amortizable intangible assets are reviewed for impairment if circumstances indicate their value may not be recoverable based on a comparison of fair value. During both the three months ended June 30, 2026 and 2025, the amortization expense of the arena naming rights was $108,000. During both the six months ended June 30, 2026 and 2025, the amortization expense of the arena naming rights was $217,000.

For purposes of testing goodwill for impairment, the Company uses a market approach to value its reporting unit. The market approach applies a market multiple, based on observed purchase transactions for each reporting unit, to the metrics appropriate for the valuation of the operating unit. Significant judgment is applied when goodwill is assessed for impairment. This judgment may include developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables and incorporating general economic and market conditions.

Management does not believe any of the Company's goodwill or other intangible assets were impaired as of June 30, 2026. While management believes no impairment existed as of June 30, 2026, different conditions or assumptions used to measure fair value of the reporting unit, or changes in cash flows or profitability, if significantly negative or unfavorable, could have a material adverse effect on the outcome of the Company's impairment evaluation in the future.

A summary of goodwill and intangible assets as of the dates indicated is as follows:

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Current Economic Conditions

Changes in economic conditions could cause the values of assets and liabilities recorded in the Company's financial statements to fluctuate rapidly, resulting in material future adjustments to asset values, the allowance for credit losses, or capital that could negatively affect the Company's ability to meet regulatory capital requirements and maintain sufficient liquidity. Following the housing and mortgage crisis and correction beginning in mid-2007, the United States entered an economic downturn. Unemployment rose from 4.7% in November 2007 to peak at 10.0% in October 2009. Economic conditions improved in the subsequent years, as indicated by higher consumer confidence levels, increased economic activity and low unemployment levels. The U.S. economy continued to operate at historically strong levels until the COVID-19 pandemic in March 2020, which severely affected tourism, labor markets, business travel, immigration, and the global supply chain, among other areas. The economy plunged into recession in the first quarter of 2020, as efforts to contain the spread of the coronavirus forced all but essential business activity, or any work that could not be done from home, to stop, shuttering factories, restaurants, entertainment, sporting events, retail shops, personal services, and more.

More than 22 million jobs were lost in March and April 2020 as businesses closed their doors or reduced their operations, sending employees home on furlough or layoffs. With uncertain incomes and limited buying opportunities, consumer spending plummeted. As a result, gross domestic product (GDP), the broadest measure of the nation's economic output, plunged. The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), a fiscal relief bill passed by Congress and signed by the President in March 2020, injected approximately $3 trillion into the economy through direct payments to individuals and loans to small businesses intended to help keep employees on their payroll, fueling a historic bounce-back in economic activity.

Total fiscal support to the economy throughout the pandemic, including the CARES Act, the American Rescue Plan of March 2021, and several smaller fiscal packages, totaled well over $5 trillion. The amount of this support was equal to almost 25% of pre-pandemic 2019 GDP and approximately three times the level of support provided during the global financial crisis of 2007-2008.

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Additionally, the Federal Reserve acted decisively by slashing its benchmark interest rate to near zero and ensuring credit availability to businesses, households, and municipal governments. The Federal Reserve's efforts largely insulated the financial system from the problems in the economy, a significant difference from the financial crisis of 2007-2008. Purchases of Treasury and agency mortgage-backed securities totaling $120 billion each month by the Federal Reserve commenced shortly after the pandemic began. In November 2021, the Federal Reserve began to taper its quantitative easing (QE), winding down its bond purchases with its final open market purchase conducted on March 9, 2022. The federal government deficit was $2.8 trillion in fiscal 2021, close to $1.4 trillion in fiscal 2022, and $1.7 trillion in fiscal 2023. The Federal Reserve aggressively raised the federal funds interest rates from early 2022 through mid - 2023, pushing the federal funds rate to more than 5.50%, its highest level in 22 years. The Federal Reserve's actions were motivated by surging inflation in 2021 caused by pandemic-fueled spending, which outpaced the ability of producers to supply goods and services after having been impacted by COVID-related shutdowns and clogged transportation systems. The Federal Reserve made some headway in its attempt to force inflation down. The federal funds rate range was between 5.25% to 5.50% until mid-September 2024. The target range decreased in December 2025 to 3.50%-3.75%, which carried over to the first half of 2026.

The personal consumption expenditures (PCE) price index, the Federal Reserve's preferred measure of inflation, eased from its peak of 7.1% in June 2022 to 2.9% in December 2023. At June 30, 2026, Core PCE, which excludes food and energy prices, rose to 3.3% from 2.6% one year ago; the Federal Reserve's target is 2%.

Based on Moody's U.S. Baseline Outlook and Alternative Scenarios Analysis dated July 2026, real GDP grew in the first quarter of 2026 by 2.1% based on the third estimate from the Bureau of Economic Analysis. The July 2026 outlook on GDP growth for 2026 and 2027 is 2.2% and 1.9%, respectively, compared to April 2026's report of 2.3% for 2026 and 1.7% for 2027.

Employment

The national unemployment rate changed minimally to 4.2% for June 2026 compared to 4.3% for May 2026. The number of unemployed individuals was 7.1 million as of June 2026. Leisure and hospitality employment declined by 61,000 in June 2026, reflecting weaker than usual seasonal hiring, but employment continued to trend up in professional and business services, social assistance, and health care.

As of June 2026, the labor force participation rate (the share of working-age Americans employed or actively looking for a job) decreased by 0.3% to 61.5%. The unemployment rate for the Midwest, where the Company conducts most of its business, decreased from March 2026 at 4.2% to June 2026 at 4.0%. Unemployment rates for June 2026 in the states where the Company has a branch or a loan production office were as follows: Arizona at 4.9%, Arkansas at 4.1%, Colorado at 3.9%, Georgia at 3.4%, Illinois at 5.1%, Iowa at 3.2%, Kansas at 3.8%, Minnesota at 4.4%, Missouri at 3.7%, Nebraska at 2.9%, North Carolina at 3.6%, and Texas at 4.4%. These rates are relatively unchanged for a majority of those states compared to March 2026.

Single Family Housing

Existing-home sales decreased 2.4% in June 2026, compared to May 2026, to a seasonally adjusted annual rate of 4.09 million; year-over-year existing home sales decreased 2.8%. In the Midwest, existing-home sales decreased to 3.0% in June 2026 at an annual rate of $980,000, up 2.1% from one year earlier.

The median existing-home sales price rose 1.8% from June 2025 to $432,700 in June 2026. The median price in the Midwest in June 2026 was $346,600, up 2.7% from June 2025. The South region reported a median price increase when compared to the prior year of 0.9% and the West region reported a median price increase when compared to the prior year of 0.9%.

Total housing inventory registered at the end of June 2026 was 1.56 million units, down 0.6% from May 2026 and up 1.3% from one year ago. Unsold inventory sat at a 4.6-month supply at the end of June 2026, up from 4.5 months in May 2026 and up 4.6 months from one year ago.

New home construction dropped precipitously after the financial crisis of 2007-2008 and has yet to fully recover. Issues contributing to the country's current housing shortage include increasing labor and materials costs, availability of building materials, increased interest rates and tighter lending underwriting standards. Single-family housing starts in June 2026 were at an annual rate of 895,000, 0.2% below the revised figure for May 2026 of 897,000.

Sales of new single‐family houses in June 2026 were at a seasonally adjusted annual rate of 628,000 according to the U.S. Census Bureau and the Department of Housing and Urban Development. This was 1.6% above the May 2026 rate of 618,000 and 5.6% below the June 2025 rate of 665,000.

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The median sales price of new houses sold in June 2026 was $398,300, which was 3.3% below the May 2026 median of $412,000. The seasonally adjusted estimate of new houses for sale at the end of June 2026 represented a supply of 9.3 months at the current sales rate.

According to Freddie Mac, the average commitment rate for a 30-year, fixed-rate mortgage was 6.55% as of July 22, 2026, down from 6.75% one year ago.

Other Residential (Multi-Family) Housing and Commercial Real Estate

According to CoStar, the U.S. apartment market is moving toward improved supply-demand balance, but conditions remain soft. Net deliveries in the second quarter of 2026 slowed to 113,000 units, which is down 25% from a year earlier. Construction starts have dropped to their lowest level in more than a decade, reflecting declining rent trends, longer lease-up timelines, higher capital costs, and tighter lending standards. Deliveries are reducing from their peak, yet supply is still projected to run above normal absorption, pushing vacancy higher through the second half of 2026. Vacancy rates overall decreased to 8.1% in the second quarter of 2026, with vacancy of 10.1% for 4- & 5-star buildings, at 8.1% among 3-star buildings, and 6.2% for 1- & 2-star buildings. Geographic variation remains a distinguishing feature of multifamily performance. Vacancies are rising most in the South and Mountain regions, where new supply has been concentrated, while Midwest and Northeast markets remain more balanced. Among the 50 largest markets, vacancy is among the highest in San Antonio, Memphis, and Austin.

Per CoStar, developers pushed supply to a 40-year high in 2024, with annual net deliveries peaking above 690,000 units in the fourth quarter of the year. Annual supply fell by 24% by year-end 2025, to approximately 529,000 units, and is projected to decline by more than 27% in 2026 to approximately 385,000 units at year-end 2026, the lowest level since 2019. The effect of the slowdown is uneven across the nation. Phoenix, Denver, and Austin are forecasting significant delivery/supply cuts. Under-construction volumes also fell sharply in the first half of 2026, including declines of more than 6,700 units in Dallas-Fort Worth, 4,200 units in Houston, and notable reductions in Charlotte as well. If sustained, this pullback in new supply would support excess inventory absorption in overbuilt Sun Belt markets, helping stabilize vacancy and support a return to stronger rent growth by early 2027.

Sale transaction activity continued to expand in the second quarter of 2026, albeit slower than the first quarter of 2026, at 3,600 transactions versus 18,000 properties in the first quarter. The change in pace stems from a combination of meager rent growth and a modest repricing of interest rate expectations. Activity remains concentrated in large, liquid markets where asset quality is consistent. Those markets include Atlanta, Chicago, and Phoenix to name a few. Cap rates have also stabilized for 4- and 5-star assets, between 5% and 5.5%, with premier assets occasionally dipping into the upper 4% territory. Comparatively, 3-Star properties are more likely to trade between 5.75% to 6.25%.

Our market areas reflected the following apartment vacancy levels as of June 2026: Springfield, Missouri at 8.7%, St. Louis 10.0%, Kansas City 8.5%, Minneapolis at 6.1%, Dallas-Fort Worth 11.6%, Chicago 5.2%, Atlanta 10.9%, Phoenix 11.2%, Denver 10.3% and Charlotte, North Carolina 11.7%.

The office sector continued to see demand rebound in the first half of 2026, with growth in the last four consecutive quarters. The national vacancy rate fell to 13.9% as of June 30, 2026 from a record high of 14.2% at midyear 2025. Given the overall improvement in performance, the forecast anticipates a continued high level of vacancy through the remainder of 2026, followed by a gradual decrease, driven primarily by an ongoing supply-side adjustment. This has all occurred despite an overall lack of hiring by firms in the traditional office-using powerhouse industries of information, finance, and professional services. Collectively, organizations in these knowledge-based economic sectors have shed roughly 675,000 jobs since early 2023. The long-term projections are still uncertain on how much recovery the office market will see.

The demand recovery is complex and variable both across and within the country's major cities according to CoStar. Only about half of major metro areas have posted occupancy gains in the past 12 months, a historically unique occurrence which indicates the fragmented nature of the market. Leasing volumes remain depressed in many markets, including Atlanta, Chicago, Los Angeles, Seattle, and Washington, DC. Furthermore, the composition of tenants in the market has shifted. The number of lease deals executed in the first half of 2026 was the most in a decade. However, per CoStar, the average size remains roughly 15% smaller than in the late 2010s, a geographically broad trend that has persisted for the past two years.

Office asking rents have risen little since early 2020, while effective rents have fallen significantly. Class A prime location rents have increased sharply in some submarkets, with demand concentrating in premium buildings. Meanwhile, Class A buildings in non-premium buildings have struggled until recently to maintain steady rents. Constricting availability has helped to stabilize rents in this tier of buildings in some markets, but not all. In certain submarkets, highly amenitized and/or transit-oriented areas, asking rents have resumed growth at or above the rate of inflation.

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Second quarter 2026 sales volume dipped slightly from the first quarter of 2026. After five years of negative net absorption, demand was positive in each of the last four quarters as new construction came to a halt and headline vacancy ticked slightly lower. While the overall fundamental picture for office space remains persistent in the near term, the acceleration in trades suggests capital is increasingly positioning ahead of what could be a turning point for the sector. The broadening of buyer activity continues to support improving liquidity, even as underwriting practices remain tempered and business plans rely more on asset-level execution than market-driven rent growth. If absorption continues to improve as it has done in the last four quarters and pricing momentum continues, transaction activity is likely to remain on an upward path.

As of June 2026, national office vacancy rates remained stable at 13.9%, while our market areas reflected the following vacancy levels: Springfield, Missouri at 3.9%, St. Louis at 11%, Kansas City 9.9%, Minneapolis 12.5%, Dallas-Fort Worth at 17.4%, Chicago at 17.0%, Atlanta at 16.4%, Denver at 18.5%, Phoenix at 15.8% and Charlotte, North Carolina at 13.1%.

The U.S. retail market leveled out in the second quarter of 2026. While discretionary spending has slowed and operating costs have risen, the impact on overall market health has been contained. Strong backfill demand and limited new supply helped keep availability stable, emphasizing the sector's ongoing supply-constrained nature. While downside risks remain, including renewed closure pressure tied to discretionary spending, refinancing challenges for mid-tier retailers and broader macro uncertainty amid higher energy prices, the market's low supply base positions the retail sector to remain in relative balance through the remainder of 2026.

Leasing activity remained a key point of strength in 2025 and in the first half of 2026. Estimated leasing volume exceeded 54 million SF in the second quarter of 2026, marking the strongest pace recorded since early 2024 and reinforcing the depth of tenant demand for well-located space. Market participants continue to report rapid backfilling of second-generation vacancies, particularly in centers with strong traffic and visibility. The median time to lease remains near historic lows, and the share of available space leased each quarter continues to run above historical norms, reflecting sustained competition for high-quality inventory.

Retail rent growth continued to moderate through the second quarter of 2026, with the national average asking rent hovering around 2.0% year-over year. While near term rent growth has slowed, longer term spreads remain elevated, providing landlords with meaningful rent roll-up on lease resets. Rent performance continues to vary widely across markets. Several Sun Belt metros, including Phoenix, Orlando, Atlanta, and Charlotte, continue to post annual rent gains of 3-5%. This is supported by population growth as well as tenant demand. Simultaneously, multiple Midwestern markets have emerged as relative outperformers, posting above-average gains as rent growth broadens geographically. Looking ahead, rent growth is expected to remain restrained, but stable, over the next several quarters. However, much of this space is expected to backfill quickly given the persistent shortage of quality inventory and minimal new construction. As a result, rent growth is forecast to remain subdued but stable over the next several quarters. Smaller, well-located spaces and fast-growing metros are expected to continue outperforming, while assets in slower-growth markets face ongoing challenges.

During the second quarter of 2026, national retail vacancy rates remained steady at 4.3% while our market areas reflected the following vacancy levels: Springfield, Missouri at 2.5%, St. Louis at 3.9%, Kansas City at 4.7%, Minneapolis at 2.6%, Dallas-Fort Worth at 5.1%, Chicago at 4.9%, Atlanta at 4.4%, Phoenix at 4.8%, Denver at 4.4%, and Charlotte, North Carolina at 3.3%.

Current U.S. industrial market performance continues to favor the tenant, reporting a decade-long high vacancy rate of 7.4% at June 30, 2026. While net absorption has recovered from soft activity, a supply overhang remains. Assuming the economy continues to expand, albeit at a reduced sub-2% real GDP growth rate, according to Oxford Economics, vacancy is forecast to increase through the remainder of 2026, peaking below 8%, and to begin declining in 2027 as deliveries moderate. Going forward, continued trade uncertainty remains a drag on demand, specifically for national and regional logistics distribution hubs. Consumer spending on goods could weaken due to inflationary shocks and a reduction in real household incomes.

Due to elevated vacancy rates and slower leasing, year-over-year rent growth slowed to 1.2% for June 2026, its lowest rate since 2012. Annual asking rent growth has pulled back across various size groups, declining roughly 2.7% for spaces larger than 50,000 square feet, remaining flat for leases between 25,000 and 50,000 square feet, and rising less than 1% for smaller spaces. Competitive lease-up of new supply and elevated availability in older buildings continue to pressure landlord pricing power. While small-bay space remains the most liquid segment of the market, rising availability across most size ranges points to continued near-term softness in rent growth across markets and property types. However, due to record rent growth from 2021 through 2023, owners in many markets are still able to raise in-place rents when their tenants' long-term leases expire. In the near term, rents for big-box logistics buildings of up to 500,000 SF are likely to remain soft due to elevated supply availability in most markets. Large industrial buildings in markets with the most saturated speculative development, such as Austin, Indianapolis, Phoenix, and San Antonio, are most at risk.

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Sales volume increased to approximately $26 billion in the second quarter of 2026. This drive was carried forward from 2025, when total sales surpassed $80 billion, making it the third strongest year on record. Deal flow continues to skew toward the extremes. Transactions under $10 million remain the most active segment, while the $10 million to $50 million range has not progressed as far. Meanwhile, institutional capital has returned to the high end of the market, with sales over $50 million gaining share and showing renewed traction. Cap rates have expanded roughly 150 basis points and now typically hover in the mid-5% to 6% range. Pricing risk remains level as construction deliveries continue to slow.

For the second quarter of 2026, national industrial vacancy was 7.4% while our market areas reflected the following industrial vacancy levels: Springfield, Missouri at 1.5%, St. Louis at 5.6%, Kansas City at 5.9%, Minneapolis 4.5%, Dallas-Fort Worth at 8.2%, Chicago at 5.5%, Atlanta at 8.7%, Phoenix at 10.6%, Denver at 9.0% and Charlotte, North Carolina at 10.0%.

Our management will continue to monitor regional, national, and global economic indicators such as unemployment, GDP, housing starts and prices, consumer sentiment, commercial real estate price index and commercial real estate occupancy, absorption and rental rates, as these could significantly affect customers in each of our market areas.

For discussion of the risk factors associated with multi-family and commercial real estate loans, see "Risk Factors - Risks Relating to Lending Activities - Our loan portfolio possesses increased risk due to our relatively high concentration of commercial and residential construction, commercial real estate, other residential (multi-family) and other commercial loans" and "Risk Factors - Risks Relating to Regulation - We currently exceed thresholds defined in interagency guidance on commercial real estate concentrations, and as such, we may incur additional expense or slow the growth of certain categories of commercial real estate lending" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.

General

The profitability of the Company and, more specifically, the profitability of its primary subsidiary, the Bank, depends primarily on net interest income, as well as provisions for credit losses and the level of non-interest income and non-interest expense. Net interest income is the difference between the interest income the Bank earns on its loans and investment securities, and the interest it pays on interest-bearing liabilities, which consists mainly of interest paid on deposits and borrowings. Net interest income is affected by the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on these balances. When interest-earning assets approximate or exceed interest-bearing liabilities, any positive interest rate spread will generate net interest income.

Great Southern's total assets decreased $75.8 million, or 1.4%, from $5.60 billion at December 31, 2025, to $5.52 billion at June 30, 2026. Details of the current period changes in total assets are provided below, under "Comparison of Financial Condition at June 30, 2026 and December 31, 2025."

Loans. Net outstanding loans decreased $49.1 million from December 31, 2025, to $4.31 billion at June 30, 2026. The decrease was primarily in commercial real estate loans and other residential (multi-family) loans, partially offset by an increase in construction loans. As loan demand is affected by a variety of factors, including general economic conditions, and because of the competition we face and our focus on pricing discipline and credit quality, no assurance can be given that our loan growth will match or exceed the average level of growth achieved in prior years. The Company's strategy continues to be focused on maintaining credit risk and interest rate risk at appropriate levels.

Until 2025, the Company had experienced total loans receivable balances that were stable to growing. Total commercial real estate and commercial construction balances were fairly stable over the preceding five years. One- to four-family loan totals increased in 2022 and have since decreased each year. Recent significant growth occurred in other residential (multi-family) loans up until 2025; however, other residential (multi-family) loan balances decreased in 2025 and in the first six months of 2026. Most of Great Southern's loans are generated in its primary lending locations, including Springfield, St. Louis, Kansas City, Des Moines and Minneapolis, as well as our loan production offices in Atlanta, Charlotte, Chicago, Dallas, Denver and Phoenix. Certain minimum underwriting standards and monitoring help assure the Company's portfolio quality. All new loan originations that exceed lender approval authorities are subject to review and approval by Great Southern's loan committee. Generally, the Company considers commercial construction, consumer, other residential (multi-family) and commercial real estate loans to involve a higher degree of risk compared to some other types of loans, such as first mortgage loans on one- to four-family, owner-occupied residential properties. For other residential (multi-family), commercial real estate, commercial business and construction loans, the credits are subject to an analysis of the borrower's and guarantor's financial condition, credit history, verification of liquid assets, collateral, market analysis and repayment ability. It has been, and continues to be, Great Southern's practice to verify information from potential borrowers regarding assets, income or payment ability and credit ratings as applicable and as required by the authority approving the loan. To minimize construction risk, projects are monitored as construction draws are requested by comparison to budget and with progress

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verified through property inspections. The geographic and product diversity of collateral, equity requirements and limitations on speculative construction projects help to mitigate overall risk in these loans. Underwriting standards for all loans also include loan-to-value ratio limitations, which vary depending on collateral type, debt service coverage ratios or debt payment to income ratio guidelines, where applicable, credit histories, use of guaranties and other recommended terms relating to equity requirements, amortization, and maturity. Consumer loans, other than home equity loans, are primarily secured by new or used motor vehicles and these loans are subject to underwriting standards designed to assure portfolio quality. In 2019, the Company discontinued indirect auto loan originations.

While our policy allows us to lend up to 95% of the appraised value on one- to four-family residential properties, originations of loans with loan-to-value ratios at that level are minimal. Private mortgage insurance is typically required for loan amounts above the 80% level. Few exceptions occur and would be based on analyses which determined minimal transactional risk to be involved. We consider these lending practices to be consistent with or more conservative than what we believe to be the norm for banks our size. At both June 30, 2026 and December 31, 2025, 0.2% of our owner occupied one- to four-family residential loans had loan-to-value ratios above 100% at origination. At June 30, 2026 and December 31, 2025, 0.2% and 0.4% of our non-owner occupied one- to four-family residential loans had loan-to-value ratios above 100% at origination, respectively.

The level of non-performing loans and foreclosed assets affects our net interest income and net income. We generally do not accrue interest income on these loans and do not recognize interest income until the loans are repaid or interest payments have been made for a period of time sufficient to provide evidence of improved repayment ability on the loans. Generally, the higher the level of non-performing assets, the greater the negative impact on interest income and net income.

Available-for-sale Securities. In the six months ended June 30, 2026, available-for-sale securities decreased $20.0 million, or 3.8%, from $523.8 million at December 31, 2025, to $503.8 million at June 30, 2026 due to monthly principal payments on investment securities and decreases in market value of the available-for-sale securities. For further information on investment securities, see Note 5 to the accompanying financial statements contained in this Report.

Held-to-maturity Securities. In the six months ended June 30, 2026, held-to-maturity securities decreased $3.9 million, or 2.2%, from $179.2 million at December 31, 2025, to $175.3 million at June 30, 2026, due to principal payments on mortgage-backed securities and collateralized mortgage obligations.

Deposits. The Company attracts deposit accounts through its retail branch network, correspondent banking and corporate services areas, internet channels and brokered deposits. The Company then utilizes these deposit funds, along with FHLBank advances and other borrowings, to meet loan demand or otherwise fund its activities. In the six months ended June 30, 2026, total deposit balances decreased $180.7 million, or 4.0%. Compared to December 31, 2025, brokered deposits decreased $87.8 million, transaction account balances decreased $56.0 million, or 1.8%, to $3.07 billion, and retail certificates of deposit decreased $36.9 million, or 5.4%, to $651.5 million at June 30, 2026. The decrease in transaction accounts was primarily a result of a decrease in various money market accounts, as non-interest-bearing checking accounts increased $35.8 million. Retail time deposits decreased due to a decrease in retail certificates generated or maintained through the banking center network. Competition for time deposits has been, and remains, significant in most of our markets. Brokered deposits, including IntraFi program purchased funds, were $575.6 million and $663.4 million at June 30, 2026 and December 31, 2025, respectively. The Company uses brokered deposits of select maturities and interest rate structures from time to time to supplement its various funding channels and to manage interest rate risk.

Our deposit balances may fluctuate depending on customer preferences and our relative need for funding. We do not consider our retail certificates of deposit to be guaranteed long-term funding because customers can withdraw their funds at any time with minimal interest penalty. When loan demand trends upward, we can increase rates paid on deposits to attract more deposits and utilize brokered deposits to generate additional funding. The level of competition for deposits in our markets is high. It is our goal to gain deposit market share, particularly checking accounts, in our branch footprint. To accomplish this goal, increasing rates to attract deposits may be necessary, which could negatively impact the Company's net interest margin.

Our ability to fund growth in future periods may also depend on our ability to continue to access brokered deposits and FHLBank advances. In times when loan demand has outpaced our generation of new deposits, we have utilized brokered deposits and FHLBank advances to fund these loans. These funding sources have been attractive to us because we can create either fixed or variable rate funding, as desired, which more closely matches the interest rate nature of much of our loan portfolio. It also gives us greater flexibility in increasing or decreasing the duration of our funding. While we do not currently anticipate that our ability to access these sources will be reduced or eliminated in future periods, if this should happen, the limitation on our ability to fund additional loans could have a material adverse effect on our business, financial condition and results of operations. See "Results of Operations and Comparison for the Three and Six Months Ended June 30, 2026 and 2025 - Liquidity" below for further information on funding sources.

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Securities sold under reverse repurchase agreements with customers. Securities sold under reverse repurchase agreements with customers decreased $8.6 million from $48.5 million at December 31, 2025 to $39.9 million at June 30, 2026. These balances fluctuate over time based on customer demand for this product.

Short-term borrowings and other interest-bearing liabilities. Short term borrowings and other interest-bearing liabilities increased $114.7 million from $330.9 million at December 31, 2025 to $445.6 million at June 30, 2026. The Company's FHLBank term advances were $-0- at both June 30, 2026 and December 31, 2025. At June 30, 2026 and December 31, 2025, there were $445.0 million and $330.0 million, respectively, in overnight borrowings from the FHLBank, which were included in short term borrowings.

Net Interest Income and Interest Rate Risk Management. Our net interest income may be affected positively or negatively by changes in market interest rates. A large portion of our loan portfolio is tied to one-month SOFR, three-month SOFR or the "prime rate" and adjusts immediately or shortly after the index rate adjusts (subject to the effect of contractual interest rate floors on some of the loans, which are discussed below). We monitor our sensitivity to interest rate changes on an ongoing basis (see "Quantitative and Qualitative Disclosures About Market Risk").

The current level and shape of the interest rate yield curve poses challenges for interest rate risk management. Prior to its increase of 0.25% in December 2015, the FRB had last changed interest rates in December 2008. This was the first rate increase since September 2006. The FRB also implemented rate increases of 0.25% on eight additional occasions between December 2016 and December 2018, with the Federal Funds rate reaching as high as 2.50%. After December 2018, the FRB paused its rate increases and, in July, September and October 2019, implemented rate decreases of 0.25% on each of those occasions. At December 31, 2019, the Federal Funds rate stood at 1.75%. In response to the COVID-19 pandemic, the FRB decreased interest rates on two occasions in March 2020, a 0.50% decrease on March 3rd and a 1.00% decrease on March 16th. At December 31, 2021, the Federal Funds rate was 0.25%. In 2022, the FRB implemented rate increases of 0.25%, 0.50%, 0.75%, 0.75%, 0.75%, 0.75% and 0.50% in March, May, June, July, September, November and December 2022, respectively. At December 31, 2022, the Federal Funds rate was 4.50%. In 2023, the FRB implemented rate increases of 0.25%, 0.25%, 0.25% and 0.25% in February, March, May and July 2023, respectively. At December 31, 2023, the Federal Funds rate was 5.50%. In 2024, the FRB implemented rate decreases of 0.50%, 0.25% and 0.25% in September, November, and December, respectively. At December 31, 2024, the Federal Funds rate was 4.50%. In 2025, the FRB implemented rate decreases of 0.25% in each of September, October, and December 2025, respectively. At December 31, 2025, the Federal Funds rate was 3.75%. During the first six months of 2026, there were no changes to the Federal Funds rate. The Federal Funds rate remained at 3.75% at June 30, 2026. Financial markets no longer expect further decreases in Federal Funds interest rates in 2026, and now expect the Federal Funds interest rate to remain steady or to increase modestly by the end of 2026.

Great Southern's loan portfolio includes loans ($1.68 billion at June 30, 2026) tied to various SOFR indexes that will be subject to adjustment at least once within 90 days after June 30, 2026. Nearly all of these loans have interest rate floors at various rates. Great Southern also has a portfolio of loans ($614.3 million at June 30, 2026) tied to a "prime rate" of interest that will adjust immediately or within 90 days of a change to the "prime rate" of interest. Nearly all of these loans had interest rate floors at various rates. At June 30, 2026, nearly all of these SOFR, and "prime rate" loans had fully-indexed rates that were at or above their floor rate and in most cases well above the floor rate.

A rate cut by the FRB generally would be expected to have an immediate negative impact on the Company's interest income on loans due to the large total balance of loans tied to the SOFR indexes or the "prime rate" index that will be subject to adjustment at least once within 90 days or loans which generally adjust immediately as the Federal Funds rate adjusts. Interest rate floors may at least partially mitigate the negative impact of interest rate decreases. Loans at their floor rates are, however, subject to the risk that borrowers will seek to refinance elsewhere at the lower market rate. In the event of an FRB rate cut, the Company may be limited in its ability to significantly lower its funding costs due to a highly competitive rate environment, although interest rates on assets may decline further. Conversely, market interest rate increases would normally result in increased interest rates on our SOFR-based and prime-based loans, although funding costs may also increase.

As of June 30, 2026, Great Southern's interest rate risk models indicated that, generally, rising interest rates would be expected to have a modestly positive impact on the Company's net interest income, while declining interest rates would be expected to have a mostly neutral impact on net interest income. Any negative impact of a falling Federal Funds rate and other market interest rates also falling could be more pronounced if we are not able to decrease non-maturity deposit rates accordingly. We model various interest rate scenarios for rising and falling rates, including both parallel and non-parallel shifts in rates. The results of our modeling indicate that net interest income is not likely to be significantly affected either positively or negatively in the first twelve months following relatively minor changes in interest rates because our portfolios are relatively well matched in a twelve-month horizon.

In a situation where market interest rates increase significantly in a short period of time, our net interest margin increase may be more pronounced in the very near term (first one to three months), due to fairly rapid increases in SOFR interest rates and "prime" interest

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rates. In a situation where market interest rates decrease significantly in a short period of time, as they did in March 2020, our net interest margin decrease may be more pronounced in the very near term (first one to three months), due to fairly rapid decreases in SOFR interest rates and "prime" interest rates. In the subsequent months, we would expect that net interest margin would stabilize and begin to improve, as renewal interest rates on maturing time deposits decrease.

Beginning in March 2022, market interest rates, including LIBOR interest rates, SOFR interest rates and "prime" interest rates, began to increase rapidly. This resulted in increasing loan yields and expansion of our net interest income and net interest margin throughout 2022 and into the first three months of 2023. In 2023, market interest rate increases moderated and loan yield increases moderated in line with market rates. However, there has been increased competition for deposits and other sources of funding since March 2023, resulting in higher costs for those funds. Deposit and other funding costs moderated some in late 2024 as the FRB cut the federal funds rate. Deposit and other funding costs further moderated in late 2025 as the FRB cut the federal funds rate three times, but competition for deposits remained significant into the first six months of 2026. For further discussion of the processes used to manage our exposure to interest rate risk, see "Item 3. Quantitative and Qualitative Disclosures About Market Risk - How We Measure the Risks to Us Associated with Interest Rate Changes."

Non-Interest Income and Non-Interest (Operating) Expenses. The Company's profitability is also affected by the level of its non-interest income and operating expenses. Non-interest income consists primarily of service charges and ATM fees, POS interchange fees, late charges and prepayment fees on loans, gains on sales of loans and available-for-sale investments and other general operating income. Non-interest income may also be affected by the Company's interest rate derivative activities. See Note 16 "Derivatives and Hedging Activities" in the Notes to Consolidated Financial Statements included in this report.

Operating expenses consist primarily of salaries and employee benefits, occupancy-related expenses, expenses related to foreclosed assets, postage, FDIC deposit insurance, advertising and public relations, telephone, professional fees, office expenses and other general operating expenses. Details of the current period changes in non-interest income and non-interest expense are provided below, under "Results of Operations and Comparison for the Three and Six Months Ended June 30, 2026 and 2025."

Effect of Federal Laws and Regulations

Federal legislation and regulation significantly affect the operations of the Company and the Bank, and have increased competition among commercial banks, savings institutions, mortgage banking enterprises and other financial institutions. In particular, the capital requirements and operations of regulated banking organizations such as the Company and the Bank have been and will be subject to changes in applicable statutes and regulations from time to time, which changes could, under certain circumstances, adversely affect the Company or the Bank. For additional information, see "Item 1. Business-Government Supervision and Regulation" in our Annual Report on Form 10-K for the year ended December 31, 2025.

Business Initiatives

The Company maintains its focus on technology initiatives and advancements with its current core provider and key partners. These investments in both foundational projects and a heightened customer experience continue to foster an organizational emphasis on innovation and forward progress.

Great Southern launched a partnership with Greenlight, a debit card and financial learning app for kids and teens, in April 2026. The partnership offers a free Greenlight membership to Great Southern customers and is part of the Company's ongoing efforts to expand both technology and family banking offerings.

Also in April 2026, the Company's fully redesigned website www.GreatSouthernBank.com, launched. The website, representative of Great Southern's continued technology investments, offers customers and interested parties an improved online experience with up-to-date content, improved navigation, easier access to financial education information and more.

In June 2026, the Company decided, as part of its regular operational reviews, to consolidate nine banking centers into other existing Great Southern locations and to eliminate a total of 66 staff positions across various Company divisions, including those at the impacted banking centers. These decisions were part of routine business maintenance as the organization evaluated products, services and workforce to align with changing market dynamics. Of the nine consolidating banking centers, one is in Arkansas, one is in Kansas, two are in Iowa and five are in Missouri (three in the Springfield metro area). Affected banking centers are scheduled to close October 1, 2026, except for the Arkansas location, which is scheduled to close September 25, 2026. All staff positions to be eliminated outside of the nine banking centers have an anticipated effective date of September 30, 2026. As a result of these decisions, some related expenses were required to be recorded in the 2026 second quarter financial statements. A list of the affected banking center locations is available on our website www.GreatSouthernBank.com.

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The banking center consolidations and the workforce reductions are expected to result in approximately $2.3 - $2.7 million in annual pre-tax income improvement, beginning in the fourth quarter of 2026. This estimate incorporates compensation, facility and other non-interest expense savings, expected to be $4.4 - $4.8 million annually. These expense savings are expected to be partially offset by anticipated customer deposit attrition over time related to the branch closures, resulting in additional interest expense for alternative funding sources along with reduced non-interest income generated from these deposit accounts. If deposit account attrition is ultimately greater than our estimates, it may negatively impact our anticipated annual pre-tax income improvement. At June 30, 2026, total demand deposits at the nine impacted banking centers were approximately $170 million and retail time deposit balances were approximately $25 million.

Also, as part of the organizational evaluation of products and services, Great Southern continues to expand its Live Teller ATM network with four new locations, including its first installations in the Des Moines, Iowa market and a new Great Southern Express-branded location in Ozark, Mo.

The banking center located at 3839 Indian Hills Dr. in Sioux City, Iowa, temporarily closed July 3, 2026, for a complete remodel. This reinvestment will bring a fully refreshed banking center to the Bank's Sioux City customers, including updated and brightened interiors, updated technology, and the installation of a drive-thru Live Teller ATM offering extended banking hours for customer convenience. During the temporary closure, customers are served by six additional banking centers in the greater Sioux City area, and 15 ATM locations.

Headquartered in Springfield, Missouri, Great Southern offers a broad range of banking services to customers. The Company currently operates 87 retail banking centers in Missouri, Iowa, Kansas, Minnesota, Arkansas and Nebraska and commercial lending offices in Atlanta, Charlotte, Chicago, Dallas, Denver and Phoenix. The common stock of Great Southern Bancorp, Inc. is listed on the Nasdaq Global Select Market under the symbol "GSBC."

Comparison of Financial Condition at June 30, 2026 and December 31, 2025

During the six months ended June 30, 2026, the Company's total assets decreased by $75.8 million to $5.52 billion. The decrease was primarily due to a decreases in net loans and investment securities.

Cash and cash equivalents were $180.0 million at June 30, 2026, a decrease of $9.6 million, or 5.1%, from $189.6 million at December 31, 2025.

The Company's available-for-sale securities decreased $20.0 million, or 3.8%, compared to December 31, 2025. This decrease was related to monthly principal payments on investment securities and decreases in market value of the available-for-sale securities. The available-for-sale securities portfolio was 9.1% of total assets at June 30, 2026 and 9.4% of total assets at December 31, 2025.

The Company's held-to-maturity securities decreased $3.9 million, or 2.2%, compared to December 31, 2025. This decrease was primarily due to monthly payments received related to the portfolio of mortgage-backed securities and collateralized mortgage obligations. The held-to-maturity securities portfolio was 3.2% of total assets at June 30, 2026 and December 31, 2025.

Net loans decreased $49.1 million from December 31, 2025, to $4.31 billion at June 30, 2026. This decrease was primarily in commercial real estate loans ($73.3 million decrease) and other residential (multi-family) loans ($39.9 million decrease), partially offset by an increase in construction loans ($53.2 million increase). The net increase in construction loans primarily related to draws to fund work in progress on existing multi-family and commercial real estate projects. The net decrease in other residential (multi-family) loans and commercial real estate loans was primarily related to a few large loan prepayments in 2026. The pipeline of the unfunded portion of loans and formal loan commitments remained strong at June 30, 2026, with the largest portion of these unfunded balances represented by the unfunded portion of outstanding construction loans ($531.5 million).

Total liabilities decreased $81.3 million from December 31, 2025, to $4.88 billion at June 30, 2026. This decrease was primarily due to a decrease in the balance of brokered deposits and interest-bearing transaction deposit accounts, partially offset by an increase in overnight borrowings from the Federal Home Loan Bank.

Total deposits decreased $180.7 million, or 4.0%, from $4.48 billion at December 31, 2025 to $4.30 billion at June 30, 2026. Transaction account balances decreased $56.0 million, from $3.13 billion at December 31, 2025 to $3.07 billion at June 30, 2026. Total interest-bearing checking accounts decreased $91.8 million while total non-interest-bearing checking accounts increased $35.8 million. Retail certificates of deposit decreased $36.9 million compared to December 31, 2025, to $651.5 million at June 30, 2026, due to increased competition for these types of deposits.

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Brokered deposits decreased $87.8 million to $575.6 million at June 30, 2026, compared to $663.4 million at December 31, 2025. The Company elected to utilize FHLBank borrowings as interest rates on new brokered deposits increased because of a high level of competition for those funds. The Company has the capacity to further expand its use of brokered deposits if it chooses to do so. Of the total brokered deposits at June 30, 2026, $300.0 million were floating rate deposits, which adjust daily, based on the effective federal funds rate index. The Company has also utilized brokered deposits with maturities within six months as part of its interest rate risk management strategies.

The Company's term FHLBank advances were $-0- at both June 30, 2026 and December 31, 2025. At June 30, 2026 and December 31, 2025, there were no borrowings from the FHLBank, other than overnight borrowings, which are included in the short-term borrowings category. The Company may utilize both overnight borrowings and short-term FHLBank advances depending on relative interest rates.

Short-term borrowings and other interest-bearing liabilities increased $114.7 million from $330.9 million at December 31, 2025 to $445.6 million at June 30, 2026. At June 30, 2026, $445.0 million of this total represented overnight borrowings from the FHLBank, which were used to fund loans and to offset decreases in time deposits and brokered deposits, compared to $330.0 million of overnight borrowings from the FHLBank at December 31, 2025.

Securities sold under reverse repurchase agreements with customers decreased $8.6 million, or 17.6%, from $48.5 million at December 31, 2025 to $39.9 million at June 30, 2026. These balances fluctuate over time based on customer demand for this product.

Total stockholders' equity increased $5.5 million, or 0.9%, from $636.1 million at December 31, 2025 to $641.6 million at June 30, 2026. Stockholders' equity increased due to net income of $33.3 million for the six months ended June 30, 2026 and an $11.9 million increase in stockholders' equity due to stock option exercises during the period. Partially offsetting these changes were repurchases of the Company's common stock totaling $24.8 million and dividends declared on common stock of $9.4 million. Additionally, accumulated other comprehensive loss (a reduction in equity) increased $5.5 million during the six months ended June 30, 2026 (thereby decreasing total stockholders' equity), primarily due to decreases in the fair value of available-for-sale investment securities and the fair value of cash flow hedges, as a result of increased market interest rates.

Comparison of Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

General

Net income was $15.8 million for the three months ended June 30, 2026 compared to $19.8 million for the three months ended June 30, 2025. This decrease of $4.0 million, or 20.2%, was primarily due to an increase in non-interest expense of $3.2 million, or 9.2%, a decrease in net interest income of $1.5 million, or 2.9%, a decrease in non-interest income of $837,000, or 10.2%, and an increase in provision for credit losses on unfunded commitments of $118,000, or 107.3%, partially offset by a decrease in income tax expense of $1.7 million, or 36.7%.

Net income was $33.3 million for the six months ended June 30, 2026 compared to $36.9 million for the six months ended June 30, 2025. This decrease of $3.6 million, or 9.9%, was primarily due to an increase in non-interest expense of $3.2 million, or 4.6%, a decrease in net interest income of $2.5 million, or 2.5%, and a decrease in non-interest income of $398,000, or 2.7%, partially offset by an increase in negative provision for credit losses on unfunded commitments of $465,000, or 101.5%, and a decrease in income tax expense of $1.9 million, or 21.9%.

The 2026 results were negatively impacted by non-recurring expenses recorded in the three months ended June 30, 2026, related to the consolidation of nine banking centers and other operational areas. In June 2026, the Company decided to consolidate operations of nine banking centers into other nearby Great Southern banking center locations. See "Business Initiatives" above. Accounting rules require that related costs and expected losses be recorded immediately, while any expected gains are not recorded until realized. Upon evaluating the carrying value and estimated market value of each affected location (all of which are owned facilities), a valuation allowance of $1.4 million was recognized in the three months ended June 30, 2026 related to four of the locations. The Company currently does not expect to ultimately realize losses on the sale of the other five properties and expects the eventual aggregate selling price of all affected properties will exceed the combined carrying value of the affected locations (approximately $12.6 million at June 30, 2026). In addition to the valuation allowance, severance expense of $234,000 was recognized in the three months ended June 30, 2026 related to the termination of 39 employees due to the closure of the nine banking centers.

The Company also announced a limited number of other operational workforce reductions, including the closure of two commercial lending locations. These reductions resulted in the recognition of $327,000 in severance costs related to 27 employees along with $163,000 in remaining lease expense associated with one of the commercial lending locations.

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The $2.1 million of expenses outlined above are included in the Consolidated Statements of Income under "Noninterest Expense - Net Occupancy and Equipment Expense" and "Noninterest Expenses - Salaries and employee benefits," respectively.

For the three months ended June 30, 2026, the Company reported that annualized return on average common equity was 9.83%, annualized return on average assets was 1.12%, annualized net interest margin was 3.76% and the efficiency ratio was 67.21%, compared to 12.81%, 1.34%, 3.68% and 59.16%, respectively, for the quarter ended June 30, 2025.

Excluding the non-recurring expenses referenced above, for the three months ended June 30, 2026, net income was $17.4 million, earnings per diluted common share were $1.57, annualized return on average common equity was 10.82%, annualized return on average assets was 1.24%, and the efficiency ratio was 63.47%. A reconciliation of these non-GAAP calculations is detailed in "Non-GAAP Financial Measures" below.

Total Interest Income

Total interest income decreased $8.5 million, or 10.5%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was due to an $8.1 million, or 11.0%, decrease in interest income on loans and a $370,000, or 5.2%, decrease in interest income on investment securities and other interest-earning assets. Interest income from loans, investment securities and other interest-earning assets decreased during the three months ended June 30, 2026 compared to the same period in 2025 due to lower average balances and average rates of interest.

Total interest income decreased $17.6 million, or 10.9%, during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was due to a $16.6 million, or 11.3%, decrease in interest income on loans and a $1.0 million, or 7.2%, decrease in interest income on investment securities and other interest-earning assets. Interest income from loans, investment securities and other interest-earning assets decreased during the six months ended June 30, 2026 compared to the same period in 2025 due to lower average balances and average rates of interest.

Interest Income - Loans

During the three months ended June 30, 2026 compared to the three months ended June 30, 2025, interest income on loans decreased $8.1 million. Of the $8.1 million decrease in interest income on loans, $4.2 million was due to a decrease in average yield on loans, from 6.26% during the three months ended June 30, 2025 to 5.89% during the three months ended June 30, 2026. This decrease was primarily because of a reduction in the federal funds rate in the latter portion of 2025, along with the completion of recognition of income from a terminated interest rate swap. The remaining decrease in interest income on loans of $3.9 million was due to lower average loan balances, which fell from $4.73 billion during the three months ended June 30, 2025, to $4.47 billion during the three months ended June 30, 2026. In the first half of 2026, loan originations were somewhat muted, and since June 30, 2025, net loan payoffs were elevated, resulting in a lower average balance of loans receivable compared to the three months ended June 30, 2025.

During the six months ended June 30, 2026 compared to the six months ended June 30, 2025, interest income on loans decreased $16.6 million. Of the $16.6 million decrease in interest income on loans, $8.4 million was due to a decrease in average yield on loans, from 6.24% during the six months ended June 30, 2025 to 5.88% during the six months ended June 30, 2026. This decrease was primarily because of a reduction in the federal funds rate in the latter portion of 2025, along with the completion of recognition of income from a terminated interest rate swap. The remaining decrease in interest income on loans of $8.1 million was due to lower average loan balances, which fell from $4.74 billion during the six months ended June 30, 2025, to $4.47 billion during the six months ended June 30, 2026. The reasons for this decrease are the same as those noted above.

In October 2018, the Company entered into an interest rate swap transaction, which was terminated early, at the Company's election, in March 2020. Upon termination, the Company received $45.9 million, inclusive of accrued but unpaid interest, from its swap counterparty. The net amount, after deducting accrued interest and deferred income taxes, was accreted to interest income on loans monthly until the originally scheduled termination date of October 6, 2025, at which point these accretions ceased. There was no further interest income impact related to this swap after that date. The Company recorded interest income related to the interest rate swap of $2.0 million and $4.0 million in the three and six months ended June 30, 2025, respectively.

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. The notional amount of each swap is $200 million with an effective date of May 1, 2023 and a termination date of May 1, 2028. Under the terms of one swap, the Company receives a fixed rate of interest of 2.628% and pays a floating rate of interest equal to one-month USD-SOFR OIS. Under the terms of the other swap, the Company receives a fixed rate of interest of 5.725% and pays a floating rate of interest equal to one-month USD-Prime. In each case, the floating rate resets monthly and net settlements of interest due to/from the counterparty also occur monthly. To the extent the fixed rate of interest

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exceeds the floating rate of interest, the Company receives net interest settlements, which are recorded as loan interest income. 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. The Company recorded a reduction of loan interest income related to these swap transactions of $1.0 million and $1.8 million in the three months ended June 30, 2026 and 2025, respectively. The Company recorded a reduction of loan interest income related to these swap transactions of $2.1 million and $3.5 million in the six months ended June 30, 2026 and 2025, respectively. At June 30, 2026, the USD-Prime rate was 6.75% and the one-month USD-SOFR OIS rate was 3.63179%.

If market interest rates remain near or above their current levels, the Company's interest rate swaps will continue to have a negative impact on net interest income. Market interest rate decreases will reduce the negative impact of these swaps.

Interest Income - Investments and Other Interest-earning Assets

Interest income on investments decreased $122,000 in the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease in interest income on investments was primarily due to a $155,000 decrease in average balances from $727.3 million during the three months ended June 30, 2025, to $709.0 million during the three months ended June 30, 2026. Average balances of securities decreased primarily due to normal monthly payments received related to the portfolio of U.S. Government agency mortgage-backed securities and collateralized mortgage obligations. Partially offsetting this decrease, interest income on investments increased $33,000 as a result of slightly higher average interest rates, from 3.36% during the three months ended June 30, 2025, to 3.38% during the three months ended June 30, 2026.

Interest income on investments decreased $464,000 in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Of the $464,000 decrease in interest income on investments, $277,000 was due to a decrease in average balances from $732.7 million during the six months ended June 30, 2025, to $715.9 million during the six months ended June 30, 2026. Average balances of securities decreased primarily due to normal monthly payments received related to the portfolio of U.S. Government agency mortgage-backed securities and collateralized mortgage obligations. Additionally, interest income on investments decreased $187,000 as a result of slightly lower average interest rates, from 3.35% during the six months ended June 30, 2025, to 3.30% during the six months ended June 30, 2026.

Interest income on other interest-earning assets decreased $248,000 in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. Of the $248,000 decrease, $186,000 was due to a decrease in average interest rates from 4.30% during the three months ended June 30, 2025, to 3.50% during the three months ended June 30, 2026. The decline in the average interest rate was directly attributable to the decrease in the federal funds rate in the latter portion of 2025. Additionally, interest income decreased $62,000 as a result of a decrease in average balances from $97.5 million during the three months ended June 30, 2025, to $91.4 million during the three months ended June 30, 2026, mainly due to the Company's maintaining modestly lower average balances in its account at the Federal Reserve Bank.

Interest income on other interest-earning assets decreased $573,000 in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. Of the $573,000 decrease in interest income on other interest-earnings assets, $360,000 was due to a decrease in average interest rates from 4.27% during the six months ended June 30, 2025, to 3.50% during the six months ended June 30, 2026. The decline in the average interest rate was directly attributable to the decrease in the federal funds rate in the latter portion of 2025. Additionally, interest income decreased $213,000 as a result of a decrease in average balances from $101.2 million during the six months ended June 30, 2025, to $90.4 million during the six months ended June 30, 2026, due mainly to the Company's maintaining modestly lower average balances in its account at the Federal Reserve Bank.

Total Interest Expense

Total interest expense decreased $7.0 million, or 23.5%, during the three months ended June 30, 2026, when compared with the three months ended June 30, 2025. Interest expense on deposits decreased $6.5 million, or 26.7%, interest expense on securities sold under reverse repurchase agreements decreased $239,000, or 64.2%, and interest expense on subordinated debentures issued to capital trusts decreased $35,000, or 9.0%. In addition, interest expense on subordinated notes decreased $909,000, or 100.0%, as the notes were fully redeemed in June 2025. Partially offsetting these decreases, interest expense on short-term borrowings increased $646,000, or 16.3%.

Total interest expense decreased $15.1 million, or 24.8%, during the six months ended June 30, 2026, when compared with the six months ended June 30, 2025. Interest expense on deposits decreased $12.8 million, or 26.1%, interest expense on securities sold under reverse repurchase agreements decreased $514,000, or 69.2%, and interest expense on subordinated debentures issued to capital trusts decreased $75,000, or 9.7%. In addition, interest expense on subordinated notes decreased $2.0 million, or 100.0%, as the notes were

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fully redeemed in June 2025. Partially offsetting these decreases, interest expense on short-term borrowings increased $258,000, or 3.1%.

Interest Expense - Deposits

Interest expense on demand and savings deposits decreased $1.4 million during the three months ended June 30, 2026, when compared to the three months ended June 30, 2025. Of the $1.4 million decrease in interest expense on demand and savings deposits, $1.2 million was due to a decrease in average rates of interest from 1.40% in the three months ended June 30, 2025 to 1.18% in the three months ended June 30, 2026. Interest rates paid on demand and savings deposits were lower in the 2026 period due to the Company strategically lowering rates throughout the second half of 2025, as market rates decreased. Additionally, the average balance of demand and savings deposits decreased from $2.23 billion in the three months ended June 30, 2025 to $2.18 billion in the three months ended June 30, 2026, resulting in a decrease in interest expense on demand and savings deposits of $149,000.

Interest expense on demand and savings deposits decreased $2.4 million during the six months ended June 30, 2026, when compared to the six months ended June 30, 2025. Average rates of interest decreased from 1.41% in the six months ended June 30, 2025 to 1.20% in the six months ended June 30, 2026, resulting in a $2.4 million decrease in interest expense. In addition, the average balance of demand and savings deposits ($2.22 billion) decreased $7.2 million in the six months ended June 30, 2025 compared to the six months ended June 30, 2026, resulting in a decrease in interest expense on demand and savings deposits of $50,000.

Interest expense on time deposits decreased $1.7 million during the three months ended June 30, 2026 when compared to the three months ended June 30, 2025. Of the $1.7 million decrease in interest expense on time deposits, $936,000 was due to the decrease in average rate from 3.45% in the three months ended June 30, 2025, to 2.92% in the three months ended June 30, 2026. Time deposits renewed or originated at lower rates in 2026 due to decreases in market interest rates in the latter portion of 2025. The average balance of time deposits decreased from $757.6 million during the three months ended June 30, 2025 to $659.7 million in the three months ended June 30, 2026, resulting in a decrease in interest expense of $783,000. A large portion of the Company's certificate of deposit portfolio matures within six months and therefore reprices fairly quickly; this is consistent with the portfolio term over the past several years. Competition for time deposits remains significant in our market areas, and upon maturity, a portion of these deposits may be redeemed by customers.

Interest expense on time deposits decreased $3.3 million during the six months ended June 30, 2026 when compared to the six months ended June 30, 2025. The average rate of interest on time deposits decreased from 3.49% in the six months ended June 30, 2025, to 2.96% in the six months ended June 30, 2026, resulting in a decrease in interest expense of $1.9 million. The average balance of time deposits decreased from $764.8 million during the six months ended June 30, 2025 to $673.4 million in the six months ended June 30, 2026, resulting in a decrease in interest expense of $1.5 million. As noted above, a large portion of the Company's certificate of deposit portfolio matures within six months and therefore reprices fairly quickly. Older certificates of deposit that renewed or were replaced with new deposits generally resulted in the Company paying a lower rate of interest compared to the year-ago period.

Interest expense on brokered deposits decreased $3.4 million during the three months ended June 30, 2026 when compared to the three months ended June 30, 2025. The average balance of brokered deposits decreased from $895.3 million during the three months ended June 30, 2025 to $684.5 million during the three months ended June 30, 2026, resulting in a decrease in interest expense of $2.2 million during the period. The Company elected to utilize FHLBank borrowings as interest rates on new brokered deposits increased because of a high level of competition for those funds. Interest expense on brokered deposits decreased $1.3 million due to average rates of interest that decreased from 4.50% in the three months ended June 30, 2025 to 3.89% in the three months ended June 30, 2026. The Company uses brokered deposits of select maturities and interest rate structures from time to time to supplement its various funding channels and to manage interest rate risk. A portion of the Company's brokered deposits are floating rate, and the rate resets with changes to the effective federal funds rate.

Interest expense on brokered deposits decreased $7.0 million during the six months ended June 30, 2026 when compared to the six months ended June 30, 2025. The average balance of brokered deposits decreased from $894.0 million during the six months ended June 30, 2025 to $682.8 million during the six months ended June 30, 2026, resulting in a decrease in interest expense of $4.3 million during the period. Interest expense on brokered deposits decreased $2.7 million due to average rates of interest that decreased from 4.54% in the six months ended June 30, 2025 to 3.88% in the six months ended June 30, 2026. Brokered deposits added in the second half of 2025 were at lower market rates than brokered deposits previously issued.

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Interest Expense - FHLBank Advances; Short-term Borrowings, Repurchase Agreements and Other Interest-bearing Liabilities; Subordinated Debentures Issued to Capital Trusts and Subordinated Notes

FHLBank term advances were not utilized during the three or six months ended June 30, 2026 and 2025. FHLBank overnight borrowings were utilized in both the three and six months ended June 30, 2026 and 2025 and are included in short-term borrowings.

Interest expense on reverse repurchase agreements decreased $239,000 during the three months ended June 30, 2026 when compared to the three months ended June 30, 2025. The average balance of repurchase agreements decreased from $65.6 million in the three months ended June 30, 2025 to $34.9 million in the three months ended June 30, 2026, due to lower interest rates on this product and fluctuations in customers' desire for this product, resulting in a decrease in interest expense of $141,000 during the period. Interest expense on reverse repurchase agreements decreased $98,000 due to lower average interest rates during the three months ended June 30, 2026 when compared to the three months ended June 30, 2025. The average rate of interest was 2.27% for the three months ended June 30, 2025 compared to 1.53% for the three months ended June 30, 2026, due to changes in the mix of customer balances in these products and overall reductions in market interest rates.

Interest expense on reverse repurchase agreements decreased $514,000 during the six months ended June 30, 2026 when compared to the six months ended June 30, 2025. Interest expense on reverse repurchase agreements decreased $306,000 due to lower average interest rates during the six months ended June 30, 2026 when compared to the six months ended June 30, 2025. The average rate of interest was 2.03% for the six months ended June 30, 2025 compared to 1.26% for the six months ended June 30, 2026, due to changes in the mix of customer balances in these products and overall reductions in market interest rates. The average balance of repurchase agreements decreased from $74.0 million in the six months ended June 30, 2025 to $36.5 million in the six months ended June 30, 2026, due to fluctuations in customers' desire for this product, resulting in a decrease in interest expense of $208,000 during the period.

Interest expense on short-term borrowings (including overnight borrowings from the FHLBank) and other interest-bearing liabilities increased $646,000 during the three months ended June 30, 2026 when compared to the three months ended June 30, 2025. Interest expense on short-term borrowings (including overnight borrowings from the FHLBank) and other interest-bearing liabilities increased $1.1 million due to a higher average balance during the three months ended June 30, 2026 when compared to the three months ended June 30, 2025. The average balance of short-term borrowings and other interest-bearing liabilities increased from $347.3 million in the three months ended June 30, 2025 to $472.6 million in the three months ended June 30, 2026. The Company chose to utilize more short-term borrowings versus brokered deposits in the 2026 period. Partially offsetting this increase, interest expense on short-term borrowings (including overnight borrowings from the FHLBank) and other interest-bearing liabilities decreased $437,000 due to lower average rates of interest. The average rate of interest on short-term borrowings and other interest-bearing liabilities decreased from 4.59% for the three months ended June 30, 2025 to 3.92% for the three months ended June 30, 2026. Interest rates on borrowings decreased after the federal funds rate was cut by 75 basis points from September to December 2025.

Interest expense on short-term borrowings (including overnight borrowings from the FHLBank) and other interest-bearing liabilities increased $258,000 during the six months ended June 30, 2026 when compared to the six months ended June 30, 2025. Interest expense on short-term borrowings (including overnight borrowings from the FHLBank) and other interest-bearing liabilities increased $877,000 due to a higher average balance during the six months ended June 30, 2026 when compared to the six months ended June 30, 2025. The average balance of short-term borrowings and other interest-bearing liabilities increased from $369.8 million in the six months ended June 30, 2025 to $446.0 million in the six months ended June 30, 2026. The Company chose to utilize more short-term borrowings versus brokered deposits in the 2026 period. Partially offsetting this increase, interest expense on short-term borrowings (including overnight borrowings from the FHLBank) and other interest-bearing liabilities decreased $619,000 due to a lower average rate of interest. The average rate of interest on short-term borrowings and other interest-bearing liabilities decreased from 4.59% for the six months ended June 30, 2025 to 3.93% for the six months ended June 30, 2026, primarily due to reductions in the federal funds rate noted above.

During the three months ended June 30, 2026, compared to the three months ended June 30, 2025, interest expense on subordinated debentures issued to capital trusts decreased $35,000 due to lower average interest rates. The average interest rate was 6.05% in the three months ended June 30, 2025, compared to 5.51% in the three months ended June 30, 2026. The subordinated debentures are variable-rate debentures bearing interest at a rate of three-month SOFR (originally LIBOR), plus 1.60%, adjusted quarterly, which was 5.52% at June 30, 2026. There was no change in the average balance of the subordinated debentures between the 2025 and 2026 three-month periods.

During the six months ended June 30, 2026, compared to the six months ended June 30, 2025, interest expense on subordinated debentures issued to capital trusts decreased $75,000 due to lower average interest rates. The average interest rate was 6.03% in the six months ended June 30, 2025, compared to 5.45% in the six months ended June 30, 2026. The subordinated debentures are variable-

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rate debentures, as stated above. There was no change in the average balance of the subordinated debentures between the 2025 and 2026 six-month periods.

In June 2020, the Company issued $75.0 million of 5.50% fixed-to-floating rate subordinated notes due June 15, 2030. The notes were sold at par, resulting in net proceeds, after underwriting discounts and commissions and other issuance costs, of approximately $73.5 million. These issuance costs were amortized over the expected life of the notes, which was five years from the issuance date, impacting the overall interest expense on the notes. On June 15, 2025, the Company redeemed all $75.0 million aggregate principal amount of these subordinated notes. Interest expense on subordinated notes decreased $909,000 and $2.0 million, when compared to the prior-year three- and six-month periods, respectively, due to the redemption of the subordinated notes.

Net Interest Income

Net interest income for the three months ended June 30, 2026 decreased $1.5 million to $49.5 million, compared to $51.0 million for the three months ended June 30, 2025. Net interest margin was 3.76% in the three months ended June 30, 2026, compared to 3.68% in the three months ended June 30, 2025, an increase of eight basis points, or 2.2%. The Company experienced decreases in nearly all interest income and interest expense categories as market interest rates decreased compared to the prior period. Interest income primarily decreased $2.0 million due to the terminated interest rate swap income, which impacted interest income positively in the 2025 period but did not impact the 2026 period.

Net interest income for the six months ended June 30, 2026 decreased $2.5 million to $97.8 million, compared to $100.3 million for the six months ended June 30, 2025. Net interest margin was 3.74% in the six months ended June 30, 2026, compared to 3.63% in the six months ended June 30, 2025, an increase of 11 basis points, or 3.0%. The Company experienced decreases in nearly all interest income and interest expense categories as market interest rates decreased compared to the prior year period. Interest income primarily decreased $4.0 million due to the terminated interest rate swap income, which impacted interest income positively in the 2025 period but did not impact the 2026 period.

The Company's overall average interest rate spread increased 15 basis points, or 5.0%, from 3.09% during the three months ended June 30, 2025 to 3.24% during the three months ended June 30, 2026, due to a 48 basis point decrease in the weighted average rate paid on interest-bearing liabilities, partially offset by a 33 basis point decrease in the weighted average yield earned on interest-earning assets. In comparing the two periods, the yield on loans decreased 37 basis points, the yield on investment securities increased two basis points and the yield on other interest-earning assets decreased 80 basis points. The rate paid on deposits decreased 49 basis points, the rate paid on reverse repurchase agreements decreased 74 basis points, the rate paid on short-term borrowings and other interest-bearing liabilities decreased 67 basis points and the rate paid on subordinated debentures issued to capital trust decreased 54 basis points. Average interest rates earned on loans and paid on deposits are affected by the mix of the loan and deposit portfolios, the duration of loans and time deposits, the amount of fixed-rate and variable-rate loans and other repricing characteristics.

The Company's overall average interest rate spread increased 17 basis points, or 5.7%, from 3.05% during the six months ended June 30, 2025 to 3.22% during the six months ended June 30, 2026, due to a 52 basis point decrease in the weighted average rate paid on interest-bearing liabilities, partially offset by a 35 basis point decrease in the weighted average yield earned on interest-earning assets. In comparing the two periods, the yield on loans decreased 36 basis points, the yield on investment securities decreased five basis points and the yield on other interest-earning assets decreased 77 basis points. The rate paid on deposits decreased 50 basis points, the rate paid on reverse repurchase agreements decreased 77 basis points, the rate paid on short-term borrowings and other interest-bearing liabilities decreased 66 basis points and the rate paid on subordinated debentures issued to capital trust decreased 58 basis points.

For additional information on net interest income components, refer to the "Average Balances, Interest Rates and Yields" tables in this Quarterly Report on Form 10-Q.

Provision for and Allowance for Credit Losses

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as changes in underwriting standards, portfolio mix and delinquency level or term, as well as for changes in economic conditions, including but not limited to, changes in the national unemployment rate, commercial real estate price index, consumer sentiment, gross domestic product (GDP) and construction spending.

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Challenging or worsening economic conditions from higher inflation or interest rates, COVID-19 and subsequent variant outbreaks or similar events, global unrest or other factors may lead to increased losses in the portfolio and/or requirements for an increase in provision expense. Management maintains various controls in an attempt to identify and limit future losses, such as a watch list of problem loans and potential problem loans, documented loan administration policies and loan review staff to review the quality and anticipated collectability of the portfolio. Additional procedures provide for frequent management review of the loan portfolio based on loan size, loan type, delinquencies, financial analysis, ongoing correspondence with borrowers and problem loan workouts. Management determines which loans are non-homogeneous or collateral-dependent, evaluates risk of loss and makes additional provisions to expense, if necessary, to maintain the allowance at a satisfactory level.

During each of the three and six months ended June 30, 2026 and 2025, the Company did not record a provision expense on its portfolio of outstanding loans. Total net charge offs were $819,000 for the three months ended June 30, 2026, compared to total net recoveries of $111,000 in the three months ended June 30, 2025. Total net charge offs were $806,000 for the six months ended June 30, 2026, compared to total net recoveries of $55,000 in the six months ended June 30, 2025. The provision for losses on unfunded commitments for the three months ended June 30, 2026 was a provision of $8,000, compared to a negative provision of $110,000 for the three months ended June 30, 2025. The provision for losses on unfunded commitments for the six months ended June 30, 2026 was a negative provision of $923,000, compared to a negative provision of $458,000 for the six months ended June 30, 2025. General market conditions and unique circumstances related to specific industries and individual projects contribute to the determination of the levels of provisions and charge-offs in each period.

The Bank's allowance for credit losses as a percentage of total loans was 1.46% at both June 30, 2026 and December 31, 2025. Management considers the allowance for credit losses adequate to cover losses inherent in the Bank's loan portfolio at June 30, 2026, based on recent reviews of the Bank's loan portfolio and current economic conditions. However, if challenging economic conditions persist or worsen, or if management's assessment of the loan portfolio changes, additional provisions for credit loss may be required, which could adversely impact the Company's future financial performance.

Non-performing Assets

As a result of changes in loan portfolio composition, changes in economic and market conditions and other factors specific to a borrower's circumstances, the level of non-performing assets will fluctuate.

At June 30, 2026, non-performing assets were $9.4 million, an increase of $1.3 million from $8.1 million at December 31, 2025. Non-performing assets as a percentage of total assets were 0.17% and 0.15% at June 30, 2026 and December 31, 2025, respectively.

Compared to December 31, 2025, non-performing loans decreased $1.1 million, to $1.0 million at June 30, 2026. Compared to December 31, 2025, foreclosed assets increased $2.4 million to $8.4 million at June 30, 2026.

Non-performing Loans. Activity in the non-performing loans category during the six months ended June 30, 2026 was as follows:

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At June 30, 2026, the non-performing one- to four-family residential category included seven loans, five of which were added in the six months ended June 30, 2026. The largest relationship in the one- to four-family residential category totaled $386,000, or 39.0% of the category, at June 30, 2026. This relationship was added to non-performing loans in 2024 and is collateralized by a single-family residential property in southern Iowa. During the six months ended June 30, 2026, non-performing one- to four-family residential loans experienced a loan pay-off of $821,000, and one relationship totaling $643,000 was transferred to foreclosed assets. During the six months ended June 30, 2026, a single loan totaling $1.8 million which had been collateralized by an apartment in eastern Iowa was also transferred from the non-performing other residential (multi-family) category to foreclosed assets. Prior to the transfer to foreclosed assets, the Company recorded a loan charge-off of $909,000, based upon an updated independent appraisal of the asset. The non-performing consumer category included two loans at June 30, 2026.

Potential Problem Loans. Potential problem loans decreased $233,000, to $1.2 million at June 30, 2026 from $1.4 million at December 31, 2025. Potential problem loans are loans which management has identified through routine internal review procedures as having possible credit problems that may cause the borrowers difficulty in complying with the current repayment terms. These loans are not reflected in non-performing assets.

Activity in the potential problem loans category during the six months ended June 30, 2026 was as follows:

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At June 30, 2026, the one- to four-family residential category of potential problem loans included 12 loans, three of which were added to potential problem loans in the six months ended June 30, 2026. The largest relationship in this category totaled $256,000, or 29.9% of the total category, and is collateralized by a single-family residential property in the St. Louis area. The consumer category of potential problem loans included 18 loans, eight of which were added during the six months ended June 30, 2026.

Other Real Estate Owned and Repossessions. All of the $8.4 million of other real estate owned and repossessions at June 30, 2026 were acquired through foreclosure.

Activity in foreclosed assets and repossessions during the six months ended June 30, 2026 was as follows:

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At June 30, 2026, the commercial real estate category of foreclosed assets consisted of one foreclosed property totaling $6.5 million, which is an office building located in Clayton, Missouri and was foreclosed upon in the fourth quarter of 2024. In the six months ended June 30, 2026, the Company capitalized $582,000 in improvements to the property. As mentioned in previous filings, the Company reported that it expected such improvements to ultimately cost approximately $3 million and take several months to complete. It is expected that these additional costs will be incurred and capitalized on this asset during the remainder of 2026. The majority of this expenditure represents the addition of fire suppression sprinklers throughout the building and other significant improvements. Based on an independent valuation (which utilized sales and current market rents in the area for similarly improved buildings), the Company does not currently anticipate any loss on this asset and decided to move forward with implementing these improvements. At June 30, 2026, the other residential (multi-family) category, totaling $1.8 million, consisted of one relationship that was transferred from non-performing loans in the current period. This asset, mentioned above in the non-performing loans discussion, consisted of an apartment complex in eastern Iowa. The borrower was no longer in compliance with their loan agreement and, ultimately, the property was placed into foreclosure. The Company expects that it will make significant repairs and improvements to this property. The improvements are expected to cost approximately $800,000 and take several months to complete. The Company expects to capitalize these expenditures, which were contemplated as part of the charge-off analysis when the asset was transferred to foreclosed assets. The one- to four-family residential category of foreclosed assets previously included one property consisting of a condominium in the Sarasota, Fla. area, which was added during the three months ended March 31, 2026. This property was sold in the three months ended June 30, 2026, with the Company realizing a small gain on the sale. The additions and sales in the consumer category were due to the volume of repossessions of automobiles, which generally are subject to a shorter repossession process.

Loans Categorized as "Watch" and "Special Mention"

The Company reviews the credit quality of its loan portfolio using an internal grading system that classifies loans as "Satisfactory," "Watch," "Special Mention," "Substandard" and "Doubtful." Multiple loan reviews take place on a continuous basis by credit risk and lending management. Reviews are focused on financial performance, occupancy trends, delinquency status, covenant compliance, collateral support, economic considerations and various other factors. See Note 6 for further discussion of the Company's loan grading system.

Loans classified as "Watch" are being monitored due to indications of potential weaknesses or deficiencies that may require future reclassification as special mention or substandard. Loans classified as "Watch" increased $178,000, from $20.5 million at December 31, 2025 to $20.6 million at June 30, 2026, primarily due to the addition of one loan totaling $3.9 million that is secured by a retail facility located in northeastern Ohio. The loan was downgraded due to vacancies in the facility. This increase was partially offset by the repayment in full of a loan relationship totaling $3.1 million. Of the total loans included in the "Watch" category at June 30, 2026, the largest relationship totaled $10.1 million and is collateralized by a senior residential healthcare facility in Florida.

While loans classified as "Special Mention" are not adversely classified, they are deserving of management's close attention to ensure repayment prospects or the credit position of the assets do not deteriorate and expose the institution to elevated risk to warrant adverse classification at a future date. In the six months ended June 30, 2026, loans classified as "Special Mention" increased $1.5 million, to $36.3 million, primarily due to the repurchase of one participated loan relationship after a significant payment was made by the borrower. The Company now holds the entire relationship balance of $31.5 million. This relationship is collateralized by a multi-family housing project in Denver, Colorado. This increase was partially offset by the repayment in full of a loan relationship totaling $5.2 million.

Non-interest Income

For the three months ended June 30, 2026, non-interest income decreased $837,000, to $7.4 million, compared to the three months ended June 30, 2025, primarily as a result of the following items:

Other income: Other income decreased $897,000, or 47.6%, compared to the prior-year period. In the three months ended June 30, 2025, the Company recorded income of $1.1 million related to exits from, and other activities of, its investments in tax credit partnerships, which was not repeated in the 2026 period.

Commissions: Commissions income increased $230,000, or 56.0%, from the prior-year period. The increase was due to annuity sales that were 94% higher in the 2026 period compared to the 2025 period. Yields on these products have been attractive to many of our customers.

For the six months ended June 30, 2026, non-interest income decreased $398,000, to $14.4 million, compared to the six months ended June 30, 2025, primarily as a result of the following items:

Other income: Other income decreased $727,000, or 24.7%, compared to the prior-year period, for the same reasons noted above.

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Commissions: Commissions income increased $583,000, or 86.6%, from the prior-year period. The increase was due to annuity sales that were higher in the 2026 period compared to the 2025 period.

Non-interest Expense

For the three months ended June 30, 2026, non-interest expense increased $3.2 million, to $38.2 million, compared to the three months ended June 30, 2025, primarily as a result of the following items:

Net occupancy and equipment expenses: Net occupancy and equipment expenses increased $2.2 million, or 26.7%, from the prior-year period. In June 2026, the Company decided to consolidate operations of nine banking centers into other nearby Great Southern banking center locations and close one leased facility which served as the Company's Omaha, Neb. loan production office. The Company evaluated the carrying value of the affected owned premises (totaling approximately $12.6 million) to determine if any impairment of the value of these premises was warranted and recorded a valuation allowance of $1.4 million related to certain affected premises, furniture, fixtures and equipment of the owned locations at June 30, 2026. During the three months ended June 30, 2026, the Company also recorded expenses totaling $163,000 related to contractual future lease payments for the Omaha leased lending facility. For additional information on these consolidations, see "Business Initiatives."

Additionally, various components of computer license and support expenses, related to upgrades of core systems capabilities and disaster recovery site, collectively increased by $333,000 in the three months ended June 30, 2026 compared to the 2025 period.

Salaries and employee benefits: Salaries and employee benefits increased $686,000, or 3.4%, from the prior-year period. The increase was primarily due to the Company recording $561,000 in expenses related to severance pay for employees affected by the consolidations in banking centers and other operational areas. See "Business Initiatives."

For the six months ended June 30, 2026, non-interest expense increased $3.2 million, to $73.0 million, compared to the six months ended June 30, 2025, primarily as a result of the following items:

Net occupancy and equipment expenses: Net occupancy and equipment expenses increased $2.6 million, or 15.2%, from the prior-year period. This increase was primarly due to the decision to consolidate operations of nine banking centers discussed above. Additionally, various components of computer license and support expenses, related to upgrades of core systems capabilities and disaster recovery site, collectively increased by $673,000 in the six months ended June 30, 2026 compared to the same period in 2025.

Salaries and employee benefits: Salaries and employee benefits increased $628,000, or 1.6%, from the prior-year period, for the same reasons noted above.

Legal, audit and other professional fees: Legal, audit and other professional fees decreased $310,000, or 15.8%, from the prior-year period, to $1.7 million. In the six months ended June 30, 2026, the Company recovered $261,000 in previously expensed legal fees pursuant to an insurance reimbursement related to a multi-family residential loan.

The Company's efficiency ratio for the three months ended June 30, 2026, was 67.21% compared to 59.16% for the same period in 2025. The Company's efficiency ratio for the six months ended June 30, 2026, was 65.06% compared to 60.67% for the same period in 2025. The Company's ratio of non-interest expense to average assets was 2.72% and 2.60% for the three and six months ended June 30, 2026, respectively, compared to 2.37% and 2.35% for the three and six months ended June 30, 2025, respectively. Average assets for the three months ended June 30, 2026, decreased $298.6 million, or 5.0%, compared to the three months ended June 30, 2025, primarily due to the decline in the average balance of net loans.

Provision for Income Taxes

For the three months ended June 30, 2026 and 2025, the Company's effective tax rate was 15.3% and 18.5%, respectively. For the six months ended June 30, 2026 and 2025, the Company's effective tax rate was 17.1% and 19.2%, respectively. These effective rates were below the statutory federal tax rate of 21.0%, due primarily to the utilization of certain investment tax credits and the Company's tax-exempt investments and tax-exempt loans. The effective rates in the 2026 periods also decreased due to a higher-than-normal level of deductions related to the significant amount of stock option exercises by the Company's employees. The Company's effective tax rate may fluctuate in future periods as it is impacted by the level and timing of the Company's utilization of tax credits, the level of tax-exempt investments and loans, the amount of taxable income in various state jurisdictions and the overall level of pre-tax income. State tax expense estimates continually evolve as taxable income and apportionment between states are analyzed. The Company currently expects its effective tax rate (combined federal and state) will be approximately 18.0% to 19.5% in future periods.

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Average Balances, Interest Rates and Yields

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The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. Average balances of loans receivable include the average balances of nonaccrual loans for each period. Interest income on loans includes interest received on nonaccrual loans on a cash basis. Interest income on loans also includes the amortization of net loan fees, which were deferred in accordance with accounting standards. Net loan fees included in interest income were $1.2 million and $1.1 million for the three months ended June 30, 2026 and 2025, respectively. Net loan fees included in interest income were $2.0 million and $2.1 million for the six months ended June 30, 2026 and 2025, respectively. Tax-exempt income was not calculated on a tax equivalent basis. The tables do not reflect any effect of income taxes.

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* Defined as the Company's net interest income divided by total average interest-earning assets.

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