Great Southern Bancorp, Inc. (GSBC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents mixed signals. Strong net income growth and shareholder returns, like dividend increases and share repurchases, are positive. However, challenges such as declining loan balances, uncertain loan growth, and nonperforming asset increases raise concerns. The Q&A reveals management's cautious outlook on margins and expenses, with limited guidance on future loan growth. These factors balance each other, suggesting a neutral stock price reaction over the next two weeks.
Key Financial Performance
Net Income (Q4 2025) $16.3 million or $1.45 per diluted common share, up from $14.9 million or $1.27 per diluted common share in Q4 2024. The increase was attributed to resilient net interest income, strong asset quality, and prudent asset liability management.
Net Income (Full Year 2025) $71 million or $6.19 per diluted common share, compared to $61.8 million or $5.26 per diluted common share in 2024. The growth was driven by resilient net interest income and strong asset quality.
Net Interest Income (Q4 2025) $49.2 million, a decrease of $371,000 or 0.7% compared to Q4 2024. The decline was primarily due to the loss of income from a terminated swap and lower loan balances, partially offset by effective management of funding costs.
Net Loans Receivable (Year-End 2025) $4.36 billion, a decline of $333.5 million or 7.1% from 2024. The decrease was due to elevated payoff activity and a conservative underwriting posture.
Total Deposits (Year-End 2025) $4.48 billion, a decrease of $122.8 million or 2.7% from 2024. The reduction was primarily driven by a decrease in brokered deposits and time deposits, partially offset by an increase in interest-bearing checking deposits.
Noninterest Expense (Q4 2025) $36 million, down $947,000 or 2.6% from Q4 2024. The decline was due to the absence of a $2 million charge from a contract settlement in Q4 2024, partially offset by higher occupancy and equipment expenses.
Nonperforming Assets (Q4 2025) $8.1 million, representing 0.15% of assets, an increase of $319,000 compared to the linked quarter. This reflects stable borrower performance and effective underwriting practices.
Efficiency Ratio (Q4 2025) 63.89%, an improvement from 65.43% in Q4 2024. The improvement was due to reductions in noninterest expenses.
Stockholders' Equity (Year-End 2025) $636.1 million, an increase of $36.6 million from 2024. The growth was driven by full-year earnings, improved market valuations, and proceeds from stock option exercises.
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Operating Highlights
Net Income: For Q4 2025, net income was $16.3 million ($1.45 per diluted share), up from $14.9 million ($1.27 per diluted share) in Q4 2024. Full-year net income was $71 million ($6.19 per diluted share), compared to $61.8 million ($5.26 per diluted share) in 2024.
Net Interest Margin: Net interest margin expanded to 3.70% in Q4 2025 from 3.49% in Q4 2024, despite a slight decline in net interest income due to lower loan balances and the termination of a swap.
Loan Portfolio: Net loans receivable declined by $333.5 million (7.1%) year-over-year, primarily due to elevated payoff activity and a conservative underwriting approach.
Deposits: Total deposits decreased by $122.8 million (2.7%) year-over-year, driven by declines in brokered deposits and time deposits, partially offset by growth in interest-bearing checking accounts.
Noninterest Expense: Noninterest expense for Q4 2025 was $36 million, down 2.6% year-over-year, primarily due to the absence of a $2 million charge from a contract settlement in the prior year.
Credit Quality: Nonperforming assets were 0.15% of total assets at year-end 2025, with net recoveries of $22,000 in Q4 2025 compared to net charge-offs of $155,000 in Q4 2024.
Capital Management: Repurchased 241,000 shares in Q4 2025 at an average price of $59.33. For the full year, repurchased 755,000 shares at an average price of $58.35. Declared quarterly cash dividends totaling $1.66 per share for 2025.
Liquidity and Capital Levels: Maintained strong liquidity with $189.6 million in cash and equivalents and $1.63 billion in additional borrowing capacity. Tangible common equity increased to 11.2% at year-end 2025 from 9.9% in 2024.
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Risk or Challenges
Net Interest Income: Net interest income decreased by $371,000 (0.7%) compared to the prior year quarter due to the loss of income from a terminated swap and lower loan balances, which could impact profitability.
Loan Balances: Net loans receivable declined by $333.5 million (7.1%) year-over-year, driven by elevated payoff activity and conservative underwriting, which may limit future loan growth.
Deposit Levels: Total deposits decreased by $122.8 million (2.7%), primarily in brokered deposits and time deposits, reflecting competitive deposit markets and potential challenges in maintaining funding levels.
Economic Conditions: Volatile economic conditions and fluid market dynamics pose challenges to loan growth and overall financial performance.
Interest Rate Swap Termination: The termination of an interest rate swap resulted in a $2 million quarterly income loss, reducing interest income and impacting financial results.
Noninterest Expense: Higher net occupancy and equipment expenses, driven by technology investments and facility upgrades, could pressure operating costs.
Unfunded Loan Commitments: Increased unfunded loan commitments required a provision of $882,000 in the fourth quarter, indicating potential future liabilities.
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Guidance & Outlook
Loan Growth: Loan growth may remain challenging due to fluid economic conditions, but the company plans to maintain a conservative approach and sound balance sheet management to deliver long-term value for stockholders.
Capital and Liquidity: The company aims to maintain strong capital and liquidity levels, supporting customers and communities while navigating changing economic conditions.
Credit Quality: The company expects to maintain strong credit metrics, reflecting stable borrower performance and effective underwriting practices.
Deposit Management: The company will continue to monitor repricing opportunities as interest rates and competitive dynamics develop, utilizing non-deposit funding sources when appropriate.
Construction Lending: Construction lending is expected to remain steady, supported by a solid level of unfunded commitments.
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Shareholder Return Plan
Quarterly cash dividend: The Board of Directors declared a regular quarterly cash dividend of $0.43 per common share in the fourth quarter of 2025, consistent with the previous quarter.
Annual cash dividends: For the full year ended December 31, 2025, the Board declared regular quarterly cash dividends totaling $1.66 per common share.
Share repurchase in Q4 2025: Repurchased 241,000 shares of common stock at an average price of $59.33.
Share repurchase in full year 2025: Repurchased 755,000 shares of common stock at an average price of $58.35.
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Key Q&A
Q:What contributed to the better-than-expected margin performance in the fourth quarter?
A:The company managed to bring down funding costs proactively through various funding avenues like deposits and wholesale funds. Additionally, some loans that were initially booked at lower short-term fixed rates were renewed or repaid, allowing the company to redeploy funds at higher current market rates.
Q:Will the margin experience modest compression or increase in the near future?
A:Management does not expect the margin to increase significantly. While there might be a slight bias for the loan portfolio to go higher, it is not meaningful in the overall scope of net interest income. The deposit portfolio has already been optimized, and no further improvement is expected there.
Q:What is the outlook for loan growth in 2026?
A:The loan growth market remains challenging due to elevated payoffs despite healthy production pipelines. Management highlighted that some loans, particularly in the multifamily portfolio, are being repaid, and the timing and magnitude of payoffs are hard to predict.
Q:What is the expectation for expenses in the upcoming quarter?
A:Expenses are expected to increase slightly due to annual salary and benefit adjustments, payroll tax resets, and other factors.
Q:Have loans reached the worst point of decline, or could they decrease further in 2026?
A:Management hopes the worst of the loan decline is over but cannot guarantee it due to the unpredictability of loan repayments. They continue to focus on originating new loans while maintaining pricing and credit discipline.
Q:What is the outlook for the securities portfolio in 2026?
A:The securities portfolio is expected to remain stable, with similar cash flows as in the previous year. Most of the portfolio consists of fixed-rate, agency-backed securities, and cash flows are being reinvested in loans rather than securities.
Q:Will the company continue its stock buyback program in 2026?
A:Yes, the company views its stock as a good value and plans to continue repurchasing shares, supported by its strong capital position.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or clear guidance on the following topics: 1) The exact trajectory of loan payoffs and growth in 2026, citing unpredictability and borrower decisions. 2) Specific details on margin compression or improvement, as they do not provide guidance. 3) The potential for changes in the securities portfolio, as it depends on rate movements and prepayment levels.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Bancorp Conference
CDs system
Credit quality
Deposit market
Expense focus
account Deposit
activity capital
appreciation environment
approach balance
area strength
asset provision
balance interest
banking commitment
banking model
borrower effectiveness
borrower stream
capital loan
category decline
center interest
channel pricing
charge settlement
commitment term
community credit
competition pressure
condition fluid
construction family
contract matter
core channel
credit capital
customer engagement
decline charge
decline construction
decline loan
decrease payoff
deposit category
dynamic nondeposit
effectiveness underwriting
GSBC Transcript
Great Southern Bancorp, Inc. (GSBC) Q4 2025 Earnings Call Transcript
Unknown1-22
The earnings call presents mixed signals. Strong net income growth and shareholder returns, like dividend increases and share repurchases, are positive. However, challenges such as declining loan balances, uncertain loan growth, and nonperforming asset increases raise concerns. The Q&A reveals management's cautious outlook on margins and expenses, with limited guidance on future loan growth. These factors balance each other, suggesting a neutral stock price reaction over the next two weeks.
Great Southern Bancorp, Inc. (GSBC) Q3 2025 Earnings Call Transcript
Positive10-16
The earnings call indicates a positive outlook with increased net income, a strong net interest margin, and a substantial stock repurchase program. The Q&A reveals stability in loan growth and financial health, despite some uncertainties in fee income sustainability. The company's prudent liquidity management and the additional stock repurchase authorization further enhance shareholder value. While there are minor concerns about loan payoffs and expense increases, the overall sentiment is positive, supported by optimistic regional growth opportunities and effective interest rate management strategies.
Great Southern Bancorp, Inc. (GSBC) Q2 2025 Earnings Call Transcript
Unknown7-17
The earnings call presents a mixed picture: strong net income and net interest income, improved efficiency, and a stock repurchase plan are positive. However, declining gross loans, deposit reductions, and exposure to construction lending risks present concerns. The Q&A reveals limited visibility on loan growth and rental income, with management's unclear responses contributing to uncertainty. These factors suggest a neutral sentiment, with no significant catalysts for a strong price movement.
Great Southern Bancorp, Inc. (NASDAQ:GSBC) Q1 2025 Earnings Call Transcript
Unknown4-18
The earnings call presents a mixed outlook. Strong financial performance with increased net income and EPS is positive, but the lack of specific guidance on loan growth and cautious credit posture signal uncertainty. The Q&A reveals a neutral interest rate risk posture and competitive loan market, indicating limited growth potential. Despite active buybacks, unclear management responses regarding margin and rate cuts add to uncertainty. Overall, the sentiment is neutral as strong earnings are offset by uncertainties and competitive pressures.
GSBC Report
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