GREAT SOUTHERN BANCORP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

Forward-looking Statements

When used in this Quarterly Report and in other documents filed or furnished by
Great Southern Bancorp, Inc. (the "Company") with the Securities and Exchange
Commission (the "SEC"), in the Company's press releases or other public or
stockholder communications, and in oral statements made with the approval of an
authorized executive officer, the words or phrases "may," "might," "could,"
"should," "will likely result," "are expected to," "will continue," "is
anticipated," "believe," "estimate," "project," "intends" or similar expressions
are intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
also include, but are not limited to, statements regarding plans, objectives,
expectations or consequences of announced transactions, known trends and
statements about future performance, operations, products and services of the
Company. The Company's ability to predict results or the actual effects of
future plans or strategies is inherently uncertain, and the Company's actual
results could differ materially from those contained in the forward-looking
statements. The novel coronavirus disease, or COVID-19, pandemic has adversely
affected the Company, its customers, counterparties, employees, and third-party
service providers, and the ultimate extent of the impacts on the Company's
business, financial position, results of operations, liquidity, and prospects is
uncertain. While general business and economic conditions have recently
improved, increases in unemployment rates, or turbulence in domestic or global
financial markets could adversely affect the Company's revenues and the values
of its assets and liabilities, reduce the availability of funding, lead to a
tightening of credit, and further increase stock price volatility. In addition,
changes to statutes, regulations, or regulatory policies or practices as a
result of, or in response to, COVID-19, could affect the Company in substantial
and unpredictable ways.

Other factors that could cause or contribute to such differences include, but
are not limited to: (i) expected revenues, cost savings, earnings accretion,
synergies and other benefits from the Company's merger and acquisition
activities might not be realized within the anticipated time frames or at all,
and costs or difficulties relating to integration matters, including but not
limited to customer and employee retention, might be greater than expected;
(ii) changes in economic conditions, either nationally or in the Company's
market areas; (iii) fluctuations in interest rates; (iv) the risks of lending
and investing activities, including changes in the level and direction of loan
delinquencies and write-offs and changes in estimates of the adequacy of the
allowance for credit losses; (v) the possibility of realized or unrealized
losses on securities held in the Company's investment portfolio; (vi) the
Company's ability to access cost-effective funding; (vii) fluctuations in real
estate values and both residential and commercial real estate market conditions;
(viii) the ability to adapt successfully to technological changes to meet
customers' needs and developments in the marketplace; (ix) the possibility that
security measures implemented might not be sufficient to mitigate the risk of a
cyber-attack or cyber theft, and that such security measures might not protect
against systems failures or interruptions; (x) legislative or regulatory changes
that adversely affect the Company's business, including, without limitation, the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and its
implementing regulations, the overdraft protection regulations and customers'
responses thereto and the Tax Cut and Jobs Act; (xi) changes in accounting
policies and practices or accounting standards; (xii) monetary and fiscal
policies of the Federal Reserve Board and the U.S. Government and other
governmental initiatives affecting the financial services industry; (xiii)
results of examinations of the Company and Great Southern Bank by their
regulators, including the possibility that the regulators may, among other
things, require the Company to limit its business activities, change its
business mix, increase its allowance for credit losses, write-down assets or
increase its capital levels, or affect its ability to borrow funds or maintain
or increase deposits, which could adversely affect its liquidity and earnings;
(xiv) costs and effects of litigation, including settlements and judgments; (xv)
competition; (xvi) uncertainty regarding the future of LIBOR and potential
replacement indexes; and (xvii) natural disasters, war, terrorist activities or
civil unrest and their effects on economic and business environments in which
the Company operates. The Company wishes to advise readers that the factors
listed above and other risks described from time to time in documents filed or
furnished by the Company with the SEC could affect the Company's financial
performance and could cause the Company's actual results for future periods to
differ materially from any opinions or statements expressed with respect to
future periods in any current statements.

The Company does not undertake-and specifically declines any obligation- to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.

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Critical Accounting Policies, Judgments and Estimates

The accounting and reporting policies of the Company conform to accounting
principles generally accepted in the United States of America and general
practices within the financial services industry. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.

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 which 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 and/or TDR loans with a balance greater
than or equal to $100,000 which are classified or restructured troubled debt,
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,
disposable income and market volatility. 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 back to historical averages using a straight-line
method. The forecast adjusted loss rate is applied to the amortized cost of
loans over the remaining contractual lives, adjusted for expected prepayments.
The contractual term excludes expected extensions, renewals and modifications
unless there is a reasonable expectation that a troubled debt restructuring will
be executed. Additionally, the allowance for credit losses considers other
qualitative factors not included in historical loss rates or macroeconomic
forecast such as changes in portfolio composition, underwriting practices, or
significant unique events or conditions.

See Note 6 "Loans and Allowance for Credit Losses" included in Item 1 for
additional information regarding the allowance for credit losses. Inherent in
this process is the evaluation of individual significant credit relationships.
From time to time certain credit relationships may deteriorate due to payment
performance, cash flow of the borrower, value of collateral, or other factors.
In these instances, management may revise its loss estimates and assumptions for
these specific credits due to changing circumstances. In some cases, additional
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. Significant
changes were made to management's overall methodology for evaluating the
allowance for credit losses during the periods presented in the financial
statements of this report due to the adoption of ASU 2016-13.

On January 1, 2021, the Company adopted the new accounting standard related to
the Allowance for Credit Losses. For assets held at amortized cost basis, this
standard eliminates the probable initial recognition threshold in GAAP and,
instead, requires an entity to reflect its current estimate of all expected
credit losses. See Note 6 of the accompanying financial statements for
additional information.

In addition, the Company considers that the determination of the valuations 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 sales 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 sales
of the assets could differ materially from the carrying value reflected in the
financial statements, resulting in losses that could adversely impact earnings
in future periods.

                                       40

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 September 30, 2021, 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, if
any. Intangible assets that are not amortized will be tested for impairment at
least annually by comparing the fair values of those assets to their carrying
values. At September 30, 2021, 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 related deposits in the St.
Louis, Mo., market. Other identifiable intangible assets that are subject to
amortization are amortized on a straight-line basis over a period of
seven years. At September 30, 2021, the amortizable intangible assets consisted
of core deposit intangibles of $843,000, 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.

Our regular annual impairment assessment occurs in the third quarter of each
year. At September 30, 2021, the Company performed this annual review and
concluded that no impairment of its goodwill or intangible assets had occurred
at September 30, 2021. While the Company believes no impairment of its goodwill
or other intangible assets existed at September 30, 2021, different conditions
or assumptions used to measure fair value of reporting units, 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.

For purposes of testing goodwill for impairment, the Company used 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.

A summary of goodwill and intangible assets is as follows:

September 30,     December 31,
                                        2021              2020

                                            (In Thousands)

Goodwill - Branch acquisitions $ 5,396 $ 5,396 Deposit intangibles Boulevard Bank (March 2014)

                      -               31
Valley Bank (June 2014)                          -              200
Fifth Third Bank (January 2016)                843            1,317
                                               843            1,548
                                   $         6,239    $       6,944




Current Economic Conditions

Changes in economic conditions could cause the values of assets and liabilities
recorded in the financial statements to change rapidly, resulting in material
future adjustments in asset values, the allowance for credit losses, or capital
that could negatively impact 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
lower unemployment levels. The U.S. economy continued to operate at historically
strong levels until the impact of the COVID-19 pandemic began to take its toll
in March 2020. While U.S. economic trends later rebounded, a new COVID variant
emerged and the severity and extent of the coronavirus on the global, national
and regional economies is still uncertain. Any long-term impact on the
performance of the financial sector remains indeterminable.

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, sports events, retail shops, hotels, personal services, and more.

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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. Hunkered down at home 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.
Improvements in consumer spending, GDP, and employment have occurred since then,
significantly supported by the actions discussed below.

The CARES Act, a fiscal relief bill passed by Congress in March 2020, injected
approximately $3 trillion into the economy through direct payments to
individuals and grants to small businesses that would keep employees on their
payrolls, fueling a historic bounce-back in economic activity.

The "American Rescue Plan," an economic relief fiscal measure of approximately
$1.9 trillion with an emphasis on vaccination, individual and small business
relief, was passed early in 2021. The "Build Back Better" recovery package is
being pursued with an emphasis on infrastructure, research and development,
education and green energy transition.

Also, as the crisis unfolded, the Federal Reserve acted decisively, employing a
wide arsenal of tools including slashing its benchmark interest rate to zero and
ensuring credit availability to businesses, households, and municipal
governments. The Fed's efforts have largely insulated the financial system from
the problems in the economy, a significant difference from the financial crisis
of 2007-2008. The Federal Reserve continues to maintain a highly accommodative
monetary policy by maintaining short-term rates firmly at the zero lower bound
and purchasing Treasury and agency mortgage-backed securities to keep long-term
interest rates down. With consumer interest rates at record lows and 30-year
fixed-rate mortgages below 3%, the housing market has boomed. Home sales have
been above their pre-pandemic levels, and construction activity has picked up in
response.

The Fed's quantitative easing is expected to begin tapering in early 2022, while
the zero-interest-rate policy is expected to remain in place until the economy
is near full employment and inflation is firmly above the Fed's 2% inflation
target, which is currently not expected until early 2023.

To help our customers navigate through the pandemic situation, we offered and
supplied Paycheck Protection Program (PPP) loans and short-term modifications to
loan terms. PPP loans and modifications were made in accordance with guidance
from banking regulatory authorities. These modifications did not result in loans
being classified as troubled debt restructurings, potential problem loans or
non-performing loans. More severely impacted industries in our loan portfolio
included retail, hotel and restaurants.

While the U.S. economic recovery began with a robust rebound from the pandemic-induced recession, challenges remain with the emergence of the new COVID-19 variant, which caused a resurgence of cases and renewed pressure on the healthcare industry. With the increase in cases, the re-instatement of mask mandates and social distancing occurred in a number of areas of the country.

Employment

September 2021 saw just 194,000 jobs added in the U.S., down from 366,000 in
August 2021 and far below the increase of more than one million in July 2021,
before the Delta variant led to a spike in COVID-19 cases across much of the
country. Leisure and hospitality business, added fewer than 100,000 jobs for the
second straight month. The national unemployment rate edged down to 4.8%, or 7.7
million unemployed individuals. These measures are down considerably from their
highs in April 2020 but remain well above their levels prior to the COVID-19
pandemic (3.5% unemployment rate and 5.7 million unemployed individuals in

February 2020).

                                       42



Employment in professional and business services, retail trade, transportation
and warehousing, information, social assistance, manufacturing, construction,
mining, and wholesale trade industries rose as well; however, the employment
rates in these industries are still below February 2020 levels with the
exception of transportation and warehousing, which is up 72,000 from its
pre-pandemic level. The number of persons not in the labor force who currently
want a job was 6.0 million in September 2021, little changed from previous
numbers.

In September 2021, the U.S. labor force participation rate (the share of
working-age Americans employed or actively looking for a job) was unchanged from
the previous quarter at 61.6% and has remained within a range of 61.4% to 61.7%
since September 2020. The unemployment rate for the Midwest, where the Company
conducts most of its business, decreased from 5.7% in December 2020 to 4.7% in
September 2021. Unemployment rates for September 2021 in the states where the
Company has branch or loan production offices were Arkansas at 4.0%, Colorado at
5.9%, Georgia at 3.2%, Illinois at 6.8%, Iowa at 4.0%, Kansas at 3.9%, Minnesota
at 3.7%, Missouri at 3.8%, Nebraska at 2.0%, Oklahoma at 3.0%, and Texas at
5.6%. Of the metropolitan areas in which the Company does business, most are
below the national unemployment rate of 4.8% for September 2021. Chicago leads
our markets with a higher unemployment rate of 7.1%, followed by Denver and
Dallas at 5.6% and 4.7% respectively as of the end of August 2021.

Housing

Sales of new single-family homes in September 2021 were at a seasonally adjusted
annual rate of 800,000, according to U.S. Census Bureau and Department of
Housing and Urban Development estimates. This is 17.6 percent below the
September 2020 estimate of 971,000. The median sales price of new houses sold in
September 2021 was $408,800, up from $344,400 a year earlier, and the average
sales price of $451,700 was up from $405,100 a year ago in September 2020. The
inventory of new homes for sale, at an estimate of 379,000 at the end of
September 2021, would support a 5.7 months' supply at the current sales rate, up
from 3.5 months at the end of September 2020.

Existing-home sales rebounded in September 2021 after seeing sales wane the previous month, according to the National Association of Realtors. Total existing-home sales grew 7% from August 2021 to a seasonally adjusted annual rate of 6.29 million in September 2021.

The median existing home price for all housing types in September 2021 was
$352,800, up 13.3% from $311,500 in September 2020, as prices increased in every
region of the U.S. September's national price jump marks the 115th straight
month of year-over-year increases. Existing home sales in the Midwest rose 5.1%
to an annual rate of 1,440,000 in September 2021, a 2.7% drop from a year ago.
The median price in the Midwest in September 2021 was $265,300, a 9.1% increase
from September 2020. First-time buyers accounted for 28% of sales in September
2021, down from 29% in August 2021 and 31% in September 2020.

Nationally, the inventory of homes actively for sale in September 2021 decreased
by 22.2% over the past year, Homes are being quickly snapped up as demand
remains elevated. Underbuilding over the last 20 years and a shrinking inventory
of existing homes for sales has led to a significant housing shortage. At the
same time, industry-wide materials scarcity, price increases and labor shortages
have hit builders hard and made them struggle to finish projects on time and as
planned.

According to Freddie Mac, the average commitment rate for a 30-year,
conventional, fixed-rate mortgage was 2.90% in September 2021, up slightly from
2.84% in August 2021. The average commitment rate for all of 2020 was 3.11%,
down from 4.54% for 2018.

Commercial Real Estate Other Than Housing

CoStar indicates demand for apartments totaled roughly 600,000 units through the
first nine months of 2021, nearly matching full-year totals for both 2020 and
2019 with the national apartment vacancy rate plummeting to a two-decade low of
4.5%. Both suburban and downtown areas are recording strong gains across a wide
range of diverse markets. Apartment rents rose nearly 7% in the first half of
the year. The use of concessions has come back down to normal levels, although
many downtown properties continue to utilize them to attract tenants. With
demand and rent growth indicators surging, investors have renewed confidence in
the sector, and sales volume has returned to more normal levels. Values are back
on the rise with investors gravitating toward Sun Belt markets and increased
sales volume observed in metros like Dallas-Fort Worth, Atlanta, and Phoenix.

As of the end of September 2021, national apartment vacancy rates had recovered
to pre-COVID levels at 4.6% compared to 6.2% as of December 2019. Our market
areas reflected the following vacancy levels as of September 30, 2021:
Springfield, Mo. at 3.0%, St. Louis at 6.4%, Kansas City at 6.1%, Minneapolis at
5.2%, Tulsa, Okla. at 5.8%, Dallas-Fort Worth at 5.7%, Chicago at 5.6%, Atlanta
at 5.2%, and Denver at 5.4%.

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Even before the disruption caused by the COVID-19 pandemic, the trend of slowing
growth in the market for office space was expected to continue in 2020 and
linger throughout 2021. The office demand losses that characterized much of
last year have carried into 2021. Office-using employment remained nearly one
million jobs lower than the peak level in the first quarter of 2020. Even though
tenants continue to downsize and adopt hybrid work models, typical office-using
job sectors are projected to regain their pre-pandemic peak by the end of 2021.

As of the end of September 2021, national office vacancy rates remained about
the same at 12.2% quarter-over-quarter while our market areas reflected the
following vacancy levels: Springfield, Mo. at 3.8%, St. Louis at 8.3%, Kansas
City at 9.4%, Minneapolis at 9.9%, Tulsa, Okla. at 12.0%, Dallas-Fort Worth at
17.8%, Chicago at 14.6%, Atlanta at 13.8% and Denver at 14.3%.

Retail sales activity surged in the first nine months of 2021 as focus on
coordinated vaccine distribution and supporting strong consumer confidence
bolstered leasing activity and overall economic growth. While e-commerce
continues to expand, consumers have continued to visit physical stores for both
their basic needs and discretionary purchases. Pockets of strength in the retail
industry include discounters such as Dollar General, Dollar Tree, TJ Maxx, and
Ross Dress for Less; general merchandisers such as Target and Walmart;
pharmacies such as Walgreens; pet stores; and home improvement/tool retailers.

While these essential-oriented tenant types remain a positive source of demand,
several areas of the retail sector remain under financial strain. Mall vacancy
rates rose most significantly throughout 2020. In addition, ongoing capacity
restraints for service-oriented retailers such as restaurants, together with
reduced foot traffic for various indoor malls and retailers, continues to
contribute to both bankruptcies and store closure announcements particularly
concentrated throughout the restaurant, apparel and department store subtypes.

At September 30, 2021, national retail vacancy rates remained level at 4.7%
while our market areas reflected the following vacancy levels: Springfield, Mo.
at 3.7%, St. Louis at 4.8%, Kansas City at 5.5%, Minneapolis at 3.3%, Tulsa,
Okla. at 3.7%, Dallas-Fort Worth at 5.6%, Chicago at 6.0%, Atlanta at 4.7% and
Denver at 5.0%.

The unprecedented rise in online shopping and quick delivery demands brought on by the pandemic have propelled industrial demand to all-time highs.

Leasing activity in the industrial sector improved throughout the first nine
months of 2021, primarily led by commitments from Amazon, power-grocers Walmart
and Target, smaller healthcare and medical-oriented supply companies, food and
beverage producers and manufacturers.

Strong demand from a wide variety of business types and segments was enough to
offset new supply and decreased vacancy rates. Persistent demand from e-commerce
and third-party logistics (3PLs) companies continues to drive demand. Investors
continue to aggressively pursue industrial acquisitions.

At September 30, 2021, national industrial vacancy rates decreased slightly to
4.6% while our market areas reflected the following vacancy levels: Springfield,
Mo. at 1.9%, St. Louis at 3.8%, Kansas City at 4.6%, Minneapolis at 3.5%, Tulsa,
Okla. at 3.1%, Dallas-Fort Worth at 5.7%, Chicago at 5.2%, Atlanta at 3.9% and
Denver at 6.4%.

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

COVID-19 Impact to Our Business and Response

Great Southern is actively monitoring and responding to the effects of the
COVID-19 pandemic, including the administration of vaccines in our local
markets. As always, the health, safety and well-being of our customers,
associates and communities, while maintaining uninterrupted service, are the
Company's top priorities. Centers for Disease Control and Prevention (CDC)
guidelines, as well as directives from federal, state and local officials, are
being closely followed to make informed operational decisions.

The Company continues to work diligently with its nearly 1,200 associates to
enforce the most current health, hygiene and social distancing practices. Teams
in nearly every operational department have been split, with part of each team
working at an off-site disaster recovery facility to promote social distancing
and to avoid service disruptions. To date, there have been no service
disruptions or reductions in staffing. With the advent of COVID-19 vaccinations
in the Company's markets, plans are being considered to allow associates working
from home or other sites to return to their normal workplace beginning in the
fourth quarter of 2021, dependent on health and safety conditions.

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As always, customers can conduct their banking business using the banking center
network, online and mobile banking services, ATMs, Telephone Banking, and online
account opening services. As health conditions in local markets dictate, Great
Southern banking center lobbies are open following social distancing and health
protocols. Great Southern continues to work with customers experiencing
hardships caused by the pandemic. As a resource to customers, a COVID-19
information center continues to be available on the Company's website,
www.GreatSouthernBank.com. General information about the Company's pandemic
response, how to receive assistance, and how to avoid COVID-19 scams and fraud
are included.

Impacts to Our Business Going Forward: The magnitude of the impact on the
Company of the COVID-19 pandemic continues to evolve and will ultimately depend
on the remaining length and severity of the economic downturn brought on by the
pandemic. Some positive economic signs have occurred in 2021, such as lower
unemployment rates, improving gross domestic product ("GDP") levels and other
measures of the economy and increased vaccination rates. The Company expects
that the COVID-19 pandemic could still impact our business in one or more of the
following ways, among others. Each of these factors could, individually or
collectively, result in reduced net income in future periods.

Consistently low market interest rates for a significant period of time may

? have a negative impact on our variable and fixed rate loans, resulting in

reduced net interest income

? Certain fees for deposit and loan products may be waived or reduced

Non-interest expenses may increase as we continue to deal with the effects of

? the COVID-19 pandemic, including cleaning costs, supplies, equipment and other

items

? Banking center lobbies have been closed at various times, and may close again

in future periods if the pandemic situation worsens again

Additional loan modifications may occur and borrowers may default on their

? loans, which may necessitate further increases to the allowance for credit

losses

? A contraction in economic activity may reduce demand for our loans and for our

other products and services

Paycheck Protection Program Loans

Great Southern has actively participated in the PPP through the SBA. The PPP has
been met with very high demand throughout the country, resulting in a second
round of funding in 2021 through an amendment to the Coronavirus Aid, Relief,
and Economic Security Act (CARES Act). In the first round of the PPP, we
originated approximately 1,600 PPP loans, totaling approximately $121 million.
As of September 30, 2021, full forgiveness proceeds have been received from the
SBA for almost all of these PPP loans.

On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits
and Venues Act authorized the reopening of the PPP for eligible first-draw and
second-draw borrowers which began on January 19, 2021, and had an original
expiration date of March 31, 2021. On March 30, 2021, the PPP Extension Act of
2021 was signed, extending the PPP an additional two months to May 31, 2021,
along with an additional 30-day period for the SBA to process applications that
were still pending as of May 31, 2021. In the second round of the PPP, we funded
approximately 1,650 PPP loans, totaling approximately $58 million. As of October
25, 2021, full forgiveness proceeds have been received from the SBA for 911 of
these PPP loans, totaling approximately $28 million.

Great Southern receives fees from the SBA for originating PPP loans based on the
amount of each loan. At September 30, 2021, remaining net deferred fees related
to PPP loans totaled $2.1 million. The fees, net of origination costs, are
deferred in accordance with standard accounting practices and will be accreted
to interest income on loans over the contractual life of each loan. These
remaining loans generally have a contractual maturity of up to five years from
origination date, but may be repaid or forgiven (by the SBA) sooner. If these
loans are repaid or forgiven prior to their contractual maturity date, the
remaining deferred fee for such loans will be accreted to interest income
immediately. We expect a significant portion of these remaining net deferred
fees will accrete to interest income during the remainder of 2021, with little
of this income being recognized in 2022 or beyond. In the three and nine months
ended September 30, 2021, Great Southern recorded approximately $1.6 million and
$3.9 million, respectively, of net deferred fees in interest income on PPP
loans.

Loan Modifications

At September 30, 2021, the Company had remaining eight modified commercial loans
with an aggregate principal balance outstanding of $38.2 million and 16 modified
consumer and mortgage loans with an aggregate principal balance outstanding of
$1.6 million. These balances have decreased from $232.4 million and $18.2
million, respectively, for these loan categories at December 31, 2020. The loan
modifications are within the guidance provided by the CARES Act, the federal
banking regulatory agencies, the SEC and the FASB; therefore, they are not
considered TDRs. At September 30, 2021, the largest total modified loans by
collateral type were in the following categories: healthcare - $11.6 million;
hotel/motel - $10.9 million; retail - $7.7 million; office - $6.9 million.

                                       45



A portion of the loans modified at September 30, 2021, may be further modified,
and new loans may be modified, within the guidance provided by the CARES Act
(and subsequent legislation enacted in December 2020), the federal banking
regulatory agencies, the SEC and the FASB if a more severe or lengthier
deterioration in economic conditions occurs in future periods.

General

The profitability of the Company and, more specifically, the profitability of
its primary subsidiary, the Bank, depend 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 portfolios, 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 $74.6 million, or 1.3%, from $5.53
billion at December 31, 2020, to $5.45 billion at September 30, 2021. Details of
the current period changes in total assets are provided in the "Comparison of
Financial Condition at September 30, 2021 and December 31, 2020" section of this
Quarterly Report on Form 10-Q.

Loans. Net outstanding loans decreased $271.1 million, or 6.3%, from $4.30
billion at December 31, 2020, to $4.03 billion at September 30, 2021. The net
decrease in loans included reductions of $19.1 million in the FDIC-assisted
acquired loan portfolios. The decrease was primarily in other residential
(multi-family) loans, commercial business loans, commercial real estate loans
and consumer auto loans. These decreases were partially offset by increases in
one- to four family residential loans and construction loans. Excluding
FDIC-assisted acquired loans and mortgage loans held for sale, total gross loans
decreased $210.0 million, or 4.1%, from December 31, 2020 to September 30, 2021.
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 assurances can be made regarding our future
loan growth. We currently expect minimal net loan growth for the foreseeable
future due to uncertainty resulting from the higher level of loan repayments we
have experienced in 2021. New loan origination volumes have been strong and are
consistent with levels seen in the past couple of years. The Company's strategy
continues to be focused on maintaining credit risk and interest rate risk at
appropriate levels.

Recent growth has occurred in some loan types, primarily construction loans, and
in most of Great Southern's primary lending locations, including Springfield,
St. Louis, Kansas City, Des Moines and Minneapolis, as well as our loan
production offices in Atlanta, Chicago, Dallas, Denver, Omaha and Tulsa. Certain
minimum underwriting standards and monitoring help assure the Company's
portfolio quality. Great Southern's loan committee reviews and approves all new
loan originations in excess of lender approval authorities. Generally, the
Company considers commercial construction, consumer, 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 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 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 are primarily secured
by new and used motor vehicles and these loans are also subject to certain
minimum underwriting standards to assure portfolio quality. In 2019, the Company
made the decision to discontinue 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 September 30, 2021, 0.3%
of our owner occupied one-to four-family residential loans had loan-to-value
ratios above 100% at origination. At December 31, 2020, none of our owner
occupied one- to four-family residential loans had loan-to-value ratios above
100% at origination. At September 30, 2021 and December 31, 2020, an estimated
0.6% of total non-owner occupied one- to four-family residential loans had
loan-to-value ratios above 100% at origination.

                                       46



At September 30, 2021, TDRs, including FDIC-assisted acquired loans, totaled
$3.8 million, or 0.09% of total loans, an increase of $448,000 from $3.3
million, or 0.08% of total loans, at December 31, 2020. The December 31, 2020
amount excludes $1.7 million of FDIC-assisted acquired loans accounted for under
ASC 310-30. Concessions granted to borrowers experiencing financial difficulties
may include a reduction in the interest rate on the loan, payment extensions,
forgiveness of principal, forbearance or other actions intended to maximize
collection. For TDRs occurring during the nine months ended September 30, 2021,
none were restructured into multiple new loans. For TDRs occurring during
the year ended December 31, 2020, five loans totaling $107,000 were restructured
into multiple new loans. For further information on TDRs, see Note 6 of the
Notes to Consolidated Financial Statements contained in this report. In
accordance with the CARES Act and guidance from the banking regulatory agencies,
we made certain short-term modifications to loan terms to help our customers
navigate through the current pandemic situation. Although loan modifications
were made, they did not result in these loans being classified as TDRs,
potential problem loans or non-performing loans. As of September 30, 2021, $38.2
million of commercial loans and $1.6 million of residential and consumer loans
were subject to such modifications. If more severe or lengthier negative impacts
of the COVID-19 pandemic occur or the effects of the SBA loan programs and other
loan and stimulus programs do not enable companies and individuals to completely
recover financially, this could result in more and/or longer-term modifications,
which may be deemed to be TDRs, additional potential problem loans and/or
additional non-performing loans.

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
performance on the loans. Generally, the higher the level of non-performing
assets, the greater the negative impact on interest income and net income.

The Company continues its preparation for discontinuation of use of interest
rates such as LIBOR. LIBOR is a benchmark interest rate referenced in a variety
of agreements used by the Company, but by far the most significant area impacted
by LIBOR is related to commercial and residential mortgage loans. After 2021,
certain LIBOR rates may no longer be published and it is expected to eventually
be discontinued as a reference rate. Other interest rates used globally could
also be discontinued for similar reasons.

The Company has been regularly monitoring its portfolio of loans tied to LIBOR
since 2019, with specific groups of loans identified. The Company implemented
robust LIBOR fallback language for all commercial loan transactions beginning
near the end of 2018, with such language utilized for all new originations and
renewed/modified commercial loans since that time. The Company is particularly
monitoring the remaining group of loans that were originated prior to the fourth
quarter of 2018, have not been renewed or modified, and do not mature prior to
December 31, 2021. This represented approximately 70 commercial loans totaling
approximately $249 million; however, only 31 of those loans, totaling $39
million, mature after June 2023 (the date upon which the LIBOR indices used by
the Company are expected to no longer be available). The Company also has a
portfolio of residential mortgage loans tied to LIBOR indices with standard
index replacement language included (approximately $430 million), and that
portfolio is being monitored for potential changes that may be facilitated by
the mortgage industry. As described, the vast majority of the loan portfolio
tied to LIBOR now includes robust LIBOR replacement language which identifies
appropriate "trigger" events for the cessation of LIBOR and the steps that the
Company will take upon the occurrence of one or more of those events, including
adjustments to any rate margin to ensure that the replacement interest rate on
the loan is substantially similar to the previous LIBOR-based rate.

Available-for-sale Securities. In the nine months ended September 30, 2021,
available-for-sale securities increased $18.0 million, or 4.3%, from $414.9
million at December 31, 2020, to $432.9 million at September 30, 2021. The
increase was primarily due to the purchase of U.S. Government agency fixed-rate
multi-family mortgage-backed securities and collateralized mortgage obligation
securities, partially offset by calls of municipal securities and normal monthly
payments received related to the portfolio of these U.S. Government agency
securities. The Company used increased deposits and loan repayments to fund this
increase in investment securities.

                                       47



Deposits. The Company attracts deposit accounts through its retail branch
network, correspondent banking and corporate services areas, 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 nine months ended September 30, 2021, total deposit balances
decreased $6.7 million, or 0.1%. Transaction account balances increased $328.3
million, or 10.5%, to $3.45 billion at September 30, 2021, while retail
certificates of deposit decreased $243.7 million, or 19.8%, to $988.4 million at
September 30, 2021. The increases in transaction accounts were primarily a
result of increases in various money market accounts and NOW deposit accounts.
Retail certificates of deposit decreased due to a decrease in retail
certificates generated through the banking center network and decreases in
national CDs initiated through internet channels. CDs initiated through internet
channels experienced a planned decrease due to increases in overall liquidity
levels and to reduce the Company's cost of funds. Customer deposits at September
30, 2021 and December 31, 2020, totaling $41.5 million and $39.4 million,
respectively, were part of the IntraFi Network Deposits program, which allows
customers to maintain balances in an insured manner that would otherwise exceed
the FDIC deposit insurance limit. Brokered deposits, including IntraFi Funding
deposits, were $67.4 million at September 30, 2021, a decrease of $91.3 million
from $158.7 million at December 31, 2020. The brokered deposits were allowed to
mature without replacement as other deposit categories increased and to reduce
the Company's cost of funds.

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 provide 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 our
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.

Securities sold under reverse repurchase agreements with customers. Securities
sold under reverse repurchase agreements with customers increased $3.1 million
from $164.2 million at December 31, 2020 to $167.3 million at September 30,
2021. These balances fluctuate over time based on customer demand for this
product.

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 LIBOR, three-month
LIBOR 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 "Item 3. Quantitative and Qualitative
Disclosures About Market Risk"). In addition, our net interest income has been
impacted by changes in the cash flows expected to be received from acquired loan
pools. As described in Note 7 of the Notes to the Consolidated Financial
Statements contained in this report, the Company's evaluation of cash flows
expected to be received from acquired loan pools has been on-going and increases
in cash flow expectations have been recognized as increases in accretable yield
through interest income. Decreases in cash flow expectations have been
recognized as impairments through the allowance for credit losses.

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% on December
16, 2015, the FRB had last changed interest rates on December 16, 2008. This was
the first rate increase since September 29, 2006. The FRB also implemented rate
change increases of 0.25% on eight additional occasions beginning December 14,
2016 and through December 31, 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 change 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 3 and a 1.00% decrease on
March 16. At September 30, 2021, the Federal Funds rate stood at 0.25%. The FRB
met in September 2021 and indicated they plan to keep the rates steady. A
substantial portion of Great Southern's loan portfolio ($1.80 billion at
September 30, 2021) is tied to the one-month or three-month LIBOR index and will
be subject to adjustment at least once within 90 days after September 30, 2021.
Of these loans, $1.78 billion had interest rate floors. Great Southern also has
a portfolio of loans ($533.8 million at September 30, 2021) tied to a "prime
rate" of interest and will adjust immediately with changes to the "prime rate"
of interest. Of these loans, $503.6 million had interest rate floors at various
rates. At September 30, 2021, $1.3 billion in LIBOR and "prime rate" loans were
at their floor rate. If interest rates were to

                                       48



increase 25 basis points, loans of $284.6 million would move above their floor
rate. If interest rates were to increase 50 basis points, an additional $344.8
million in loans would move above their floor rate.

A rate cut by the FRB generally would have an anticipated immediate negative
impact on the Company's net interest income due to the large total balance of
loans tied to the one-month or three-month LIBOR index and 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. Because the Federal Funds rate is
again very low, there may also be a negative impact on the Company's net
interest income due to the Company's inability to significantly lower its
funding costs in the current competitive rate environment, although interest
rates on assets may decline further. Conversely, interest rate increases would
normally result in increased interest rates on our LIBOR-based and prime-based
loans.

As of September 30, 2021, Great Southern's interest rate risk models indicate
that, generally, rising interest rates are expected to have a positive impact on
the Company's net interest income, while declining interest rates are expected
to have a negative impact on net interest income. 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 a rate change, regardless of any changes in
interest rates, because our portfolios are relatively well-matched in a
twelve-month horizon. 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 LIBOR interest rates. In the
subsequent months we expect that the net interest margin would stabilize and
begin to improve, as renewal interest rates on maturing time deposits are
expected to decrease compared to the current rates paid on those products.
During 2020, we did experience some compression of our net interest margin due
to Federal Fund rate cuts totaling 2.25% during the nine month period of July
2019 through March 2020. Margin compression primarily resulted from changes in
the asset mix, mainly the addition of lower-yielding assets and the issuance of
subordinated notes during 2020. LIBOR interest rates decreased significantly in
2020 and have remained very low so far in 2021, putting pressure on loan yields,
and strong pricing competition for loans and deposits remains in most of our
markets. 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, if the Company chooses to implement
derivatives. 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 in the "Results of Operations and Comparison for the Three and Nine
Months Ended September 30, 2021 and 2020" section of this report.

Effect of Federal Laws and Regulations

General. 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.

Dodd-Frank Act. In 2010, sweeping financial regulatory reform legislation
entitled the "Dodd-Frank Wall Street Reform and Consumer Protection Act" (the
"Dodd-Frank Act") was signed into law. The Dodd-Frank Act implemented
far-reaching changes across the financial regulatory landscape. Certain aspects
of the Dodd-Frank Act have been affected by the more recently enacted Economic
Growth Act, as defined and discussed below under "-Economic Growth Act."

Capital Rules. The federal banking agencies have adopted regulatory capital
rules that substantially amend the risk-based capital rules applicable to the
Bank and the Company. The rules implement the "Basel III" regulatory capital
reforms and changes required by the Dodd-Frank Act. "Basel III" refers to
various documents released by the Basel Committee on Banking Supervision. For
the

                                       49



Company and the Bank, the general effective date of the rules was January 1,
2015, and, for certain provisions, various phase-in periods and later effective
dates apply. The chief features of these rules are summarized below.

The rules refine the definitions of what constitutes regulatory capital and add
a new regulatory capital element, common equity Tier 1 capital. The minimum
capital ratios are (i) a common equity Tier 1 ("CET1") risk-based capital ratio
of 4.5%; (ii) a Tier 1 risk-based capital ratio of 6%; (iii) a total risk-based
capital ratio of 8%; and (iv) a Tier 1 leverage ratio of 4%. In addition to the
minimum capital ratios, the rules include a capital conservation buffer, under
which a banking organization must have CET1 more than 2.5% above each of its
minimum risk-based capital ratios in order to avoid restrictions on paying
dividends, repurchasing shares, and paying certain discretionary bonuses. The
capital conservation buffer requirement began phasing in on January 1, 2016 when
a buffer greater than 0.625% of risk-weighted assets was required, which amount
increased an equal amount each year until the buffer requirement of greater than
2.5% of risk-weighted assets became fully implemented on January 1, 2019.

Effective January 1, 2015, these rules also revised the prompt corrective action
framework, which is designed to place restrictions on insured depository
institutions if their capital levels show signs of weakness. Under the revised
prompt corrective action requirements, insured depository institutions are
required to meet the following in order to qualify as "well capitalized:" (i) a
common equity Tier 1 risk-based capital ratio of at least 6.5%, (ii) a Tier 1
risk-based capital ratio of at least 8%, (iii) a total risk-based capital ratio
of at least 10% and (iv) a Tier 1 leverage ratio of 5%, and must not be subject
to an order, agreement or directive mandating a specific capital level.

Economic Growth Act. In May 2018, the Economic Growth, Regulatory Relief, and
Consumer Protection Act (the "Economic Growth Act"), was enacted to modify or
eliminate certain financial reform rules and regulations, including some
implemented under the Dodd-Frank Act. While the Economic Growth Act maintains
most of the regulatory structure established by the Dodd-Frank Act, it amends
certain aspects of the regulatory framework for small depository institutions
with assets of less than $10 billion and for large banks with assets of more
than $50 billion. Many of these amendments could result in meaningful regulatory
changes.

The Economic Growth Act, among other matters, expands the definition of
qualified mortgages which may be held by a financial institution and simplifies
the regulatory capital rules for financial institutions and their holding
companies with total consolidated assets of less than $10 billion by instructing
the federal banking regulators to establish a single "Community Bank Leverage
Ratio" of between 8 and 10 percent. Any qualifying depository institution or its
holding company that exceeds the "Community Bank Leverage Ratio" will be
considered to have met generally applicable leverage and risk-based regulatory
capital requirements and any qualifying depository institution that exceeds the
new ratio will be considered "well-capitalized" under the prompt corrective
action rules. Effective January 1, 2020, the Community Bank Leverage Ratio was
9.0%. In April 2020, pursuant to the CARES Act, the federal bank regulatory
agencies announced the issuance of two interim final rules, effective
immediately, to provide temporary relief to community banking organizations.
Under the interim final rules, the Community Bank Leverage Ratio requirement is
a minimum of 8.5% for calendar year 2021, and 9% thereafter. The Company and the
Bank have chosen to not utilize the new Community Bank Leverage Ratio due to the
Company's size and complexity, including its commercial real estate and
construction lending concentrations and significant off-balance sheet funding
commitments.

In addition, the Economic Growth Act includes regulatory relief in the areas of examination cycles, call reports, mortgage disclosures and risk weights for certain high-risk commercial real estate loans.

                                       50



Business Initiatives

The Company's banking center network continues to evolve. In late September 2021
in the Joplin, Missouri, market, the Company opened a new banking center at 2801
E. 32nd Street, replacing a nearby leased office. The new office provides
customers more convenient access and has a fresh, modern design facilitating an
enhanced customer experience. The Company currently has two banking centers
serving the Joplin market.

After a thorough evaluation, the Company announced that it will consolidate one
banking center in the St. Louis region. The Westfall Plaza banking center
located at 8013 W. Florissant is expected to be consolidated into a nearby Great
Southern office at 10385 W. Florissant, less than three miles away. The Westfall
Plaza office is scheduled to close after business hours on November 5, 2021,
which will leave the Company with 18 banking centers serving the greater St.
Louis area.

Linton J. Thomason, Vice President and Chief Information Officer, intends to
retire at the end of 2021. Mr. Thomason is primarily responsible for information
services and technology for Great Southern. He announced his intention to retire
more than a year in advance to assure an orderly leadership transition. A
succession plan is in place. With more than 40 years in the banking industry,
Mr. Thomason joined Great Southern in 1997. He has been an integral part of the
Bank's growth and success for the last 24 years.

Comparison of Financial Condition at September 30, 2021 and December 31, 2020

During the nine months ended September 30, 2021, the Company's total assets decreased by $74.6 million to $5.45 billion. The decrease was primarily in net loans, and was partially offset by an increase in cash equivalents.

Cash and cash equivalents were $769.2 million at September 30, 2021, an increase
of $205.5 million, or 36.4%, from $563.7 million at December 31, 2020. These
additional funds were held at the Federal Reserve Bank and primarily were the
result of increases in net loan repayments throughout 2021.

The Company's available-for-sale securities increased $18.0 million, or 4.3%,
compared to December 31, 2020. The increase was primarily due to the purchase of
U.S. Government agency fixed-rate multi-family mortgage-backed securities and
collateralized mortgage obligation securities, partially offset by calls of
municipal securities and normal monthly payments received related to the
portfolio of these U.S. Government agency securities. The available-for-sale
securities portfolio was 7.9% and 7.5% of total assets at September 30, 2021 and
December 31, 2020, respectively.

Net loans decreased $271.1 million from December 31, 2020, to $4.03 billion at
September 30, 2021. Excluding FDIC-assisted acquired loans and mortgage loans
held for sale, total gross loans (including the undisbursed portion of loans)
decreased $210.0 million, or 4.1%, from December 31, 2020 to September 30, 2021.
This decrease was primarily in other residential (multi-family) loans ($233
million decrease), commercial business loans ($77 million decrease), commercial
real estate loans ($45 million decrease) and consumer auto loans ($31 million
decrease). These decreases were partially offset by increases in construction
loans ($135 million increase) and one- to four-family residential loans ($44
million increase).

Total liabilities decreased $69.5 million, from $4.90 billion at December 31,
2020 to $4.83 billion at September 30, 2021. The decrease was primarily
attributable to the redemption of $75 million of subordinated notes during the
2021 period.

Total deposits decreased $6.7 million, or 0.1%, to $4.51 billion at September
30, 2021. Transaction account balances increased $328.3 million to $3.45 billion
at September 30, 2021, while retail certificates of deposit decreased $243.7
million compared to December 31, 2020, to $988.4 million at September 30, 2021.
The increase in transaction accounts was primarily a result of increases in NOW
deposit accounts, money market accounts and IntraFi Network Deposits. Total
interest-bearing checking accounts increased $257.5 million while demand deposit
accounts increased $70.8 million. Customer retail certificates of deposit
initiated through our banking center network decreased $111.8 million and
certificates of deposit initiated through our national internet network
decreased $134.0 million. Customer deposits at September 30, 2021 and December
31, 2020 totaling $41.5 million and $39.4 million, respectively, were part of
the IntraFi Network Deposits program, which allows customers to maintain
balances in an insured manner that would otherwise exceed the FDIC deposit
insurance limit. Brokered deposits, including IntraFi Funding deposits, were
$67.4 million at September 30, 2021, a decrease of $91.3 million from $158.7
million at December 31, 2020. The brokered deposits were allowed to mature
without replacement as other deposit categories increased.

Securities sold under reverse repurchase agreements with customers increased
$3.1 million from $164.2 million at December 31, 2020 to $167.3 million at
September 30, 2021. These balances fluctuate over time based on customer demand
for this product.

                                       51



Total stockholders' equity decreased $5.1 million from $629.7 million at
December 31, 2020 to $624.6 million at September 30, 2021. The Company recorded
net income of $59.3 million for the nine months ended September 30, 2021. In
addition, stockholders' equity increased $3.5 million due to stock option
exercises. Accumulated other comprehensive income decreased $15.9 million due to
decreases in the fair value of available-for-sale investment securities and the
termination value of the cash flow interest rate swap. Stockholders' equity also
decreased due to dividends declared on common stock of $14.1 million and
repurchases of the Company's common stock totaling $23.8 million. In addition,
the initial adoption of the CECL accounting standard for credit losses on
January 1, 2021, resulted in a decrease in stockholders' equity of $14.2
million.

Results of Operations and Comparison for the Three and Nine Months Ended September 30, 2021 and 2020

General

Net income was $20.4 million for the three months ended September 30, 2021
compared to $13.5 million for the three months ended September 30, 2020. This
increase of $6.9 million, or 51.4%, was primarily due to a decrease in the
provision for credit losses on loans and unfunded commitments of $6.9 million,
or 152.4%, an increase in net interest income of $755,000, or 1.7%, an increase
in noninterest income of $332,000, or 3.5%, and a decrease in noninterest
expense of $649,000, or 2.0%, partially offset by an increase in income tax
expense of $1.7 million, or 45.6%.

Net income was $59.3 million for the nine months ended September 30, 2021
compared to $41.5 million for the nine months ended September 30, 2020. This
increase of $17.8 million, or 42.9%, was primarily due to a decrease in the
provision for credit losses on loans and unfunded commitments of $18.4 million,
or 128.1%, an increase in net interest income of $1.1 million, or 0.9%, an
increase in noninterest income of $4.0 million, or 16.0%, and a decrease in
noninterest expense of $299,000, or 0.3%, partially offset by an increase in
income tax expense of $6.0 million, or 63.0%.

Total Interest Income

Total interest income decreased $4.0 million, or 7.4%, during the three months
ended September 30, 2021 compared to the three months ended September 30, 2020.
The decrease was due to a $3.9 million decrease in interest income on loans and
a $19,000 decrease in interest income on investment securities and other
interest-earning assets. Interest income on loans decreased for the three months
ended September 30, 2021 compared to the same period in 2020, primarily due to
lower average loan balances, but also due to lower average rates of interest.
Interest income from investment securities and other interest-earning assets
decreased during the three months ended September 30, 2021 compared to the same
period in 2020 primarily due to lower average rates of interest, partially
offset by higher average balances of investment securities and other
interest-earning assets.

Total interest income decreased $14.4 million, or 8.7%, during the nine months
ended September 30, 2021 compared to the nine months ended September 30, 2020.
The decrease was due to a $13.8 million decrease in interest income on loans and
a $511,000 decrease in interest income on investment securities and other
interest-earning assets. Interest income on loans decreased for the nine months
ended September 30, 2021 compared to the same period in 2020, due primarily to
lower average rates of interest on loans. Interest income from investment
securities and other interest-earning assets decreased during the nine months
ended September 30, 2021 compared to the same period in 2020 primarily due to
lower average rates of interest, partially offset by higher average balances of
investment securities and other interest-earning assets.

                                       52



Interest Income - Loans

During the three months ended September 30, 2021 compared to the three months
ended September 30, 2020, interest income on loans decreased $2.8 million as the
result of lower average loan balances, which decreased from $4.51 billion during
the three months ended September 30, 2020, to $4.24 billion during the three
months ended September 30, 2021. The lower average balances were primarily due
to higher loan repayments during the 2021 period. Interest income on loans also
decreased $1.1 million as a result of lower average interest rates on loans. The
average yield on loans decreased from 4.46% during the three months ended
September 30, 2020, to 4.35% during the three months ended September 30, 2021.
This decrease was primarily due to decreased yields in most loan categories as a
result of decreased LIBOR and Federal Funds interest rates. In addition, new
loans (excluding one- to four-family mortgage loans) originated in the three
months ended September 30, 2021, had an average contractual interest rate of
3.87%, compared to an average contractual interest rate of about 3.89% for the
portfolio (excluding one- to four-family mortgage loans) at September 30, 2021.
Commercial real estate loans (including multifamily loans and construction
loans) originated in the three months ended September 30, 2021, had contractual
interest rates averaging 3.65-3.75%, compared to an average contractual interest
rate of about 3.85% for the portfolio of these loan types at September 30, 2021.

During the nine months ended September 30, 2021 compared to the nine months
ended September 30, 2020, interest income on loans decreased $12.6 million as a
result of lower average interest rates on loans. The average yield on loans
decreased from 4.74% during the nine months ended September 30, 2020, to 4.36%
during the nine months ended September 30, 2021. This decrease was primarily due
to decreased yields in most loan categories as a result of decreased LIBOR and
Federal Funds interest rates. Interest income on loans also decreased $1.3
million as the result of lower average loan balances, which decreased from $4.38
billion during the nine months ended September 30, 2020, to $4.34 billion during
the nine months ended September 30, 2021. The lower average balances were
primarily due to higher loan repayments during the 2021 period.

On an on-going basis, the Company has estimated the cash flows expected to be
collected from FDIC-assisted acquired loan pools. For each of the loan
portfolios acquired, the cash flow estimates have increased, based on the
payment histories and the collection of certain loans, thereby reducing loss
expectations of certain loan pools, resulting in adjustments to be spread on a
level-yield basis over the remaining expected lives of the loan pools. The
entire amount of the discount adjustment has been and will be accreted to
interest income over time. For the three months ended September 30, 2021 and
2020, the adjustments increased interest income by $279,000 and $1.2 million,
respectively. For the nine months ended September 30, 2021 and 2020, the
adjustments increased interest income by $1.4 million and $4.6 million,
respectively.

As of September 30, 2021, the remaining accretable yield adjustment that will
affect interest income was $606,000. Of the remaining adjustments affecting
interest income, we expect to recognize approximately $178,000 of interest
income during the fourth quarter of 2021. As discussed in Note 6 of the Notes to
Consolidated Financial Statements contained in this report, we adopted the new
accounting standard related to accounting for credit losses as of January 1,
2021. With the adoption of this standard, there is no further reclassification
of discounts from non-accretable to accretable subsequent to December 31, 2020.
All adjustments made prior to January 1, 2021, will continue to be accreted to
interest income. Apart from the yield accretion, the average yield on loans was
4.33% during the three months ended September 30, 2021, compared to 4.35% during
the three months ended September 30, 2020. Apart from the yield accretion, the
average yield on loans was 4.32% during the nine months ended September 30,
2021, compared to 4.60% during the nine months ended September 30, 2020, as a
result of lower current market rates on adjustable rate loans and new loans
originated during the past year.

In October 2018, the Company entered into an interest rate swap transaction as
part of its ongoing interest rate management strategies to hedge the risk of its
floating rate loans. The notional amount of the swap was $400 million with a
contractual termination date in October 2025. Under the terms of the swap, the
Company received a fixed rate of interest of 3.018% and paid a floating rate of
interest equal to one-month USD-LIBOR. The floating rate reset monthly and net
settlements of interest due to/from the counterparty also occurred monthly. To
the extent that the fixed rate exceeded one-month USD-LIBOR, the Company
received net interest settlements, which were recorded as interest income on
loans. If one-month USD-LIBOR exceeded the fixed rate of interest, the Company
was required to pay net settlements to the counterparty and record those net
payments as a reduction of interest income on loans.

In March 2020, the Company and its swap counterparty mutually agreed to
terminate the $400 million interest rate swap prior to its contractual maturity.
The Company received a payment of $45.9 million from its swap counterparty as a
result of this termination. This $45.9 million, less the accrued to date
interest portion and net of deferred income taxes, is reflected in the Company's
stockholders' equity as Accumulated Other Comprehensive Income and is being
accreted to interest income on loans monthly through the original contractual
termination date of October 6, 2025. This has the effect of reducing Accumulated
Other Comprehensive Income and increasing Net Interest Income and Retained
Earnings over the period. In each quarterly period, until the original contract
termination date, the Company expects to record loan interest income related to
this swap transaction of approximately $2.0 million,

                                       53



based on the termination values of the swap. The Company recorded interest
income related to the interest rate swap of $2.0 million and $2.0 million,
respectively, in the three months ended September 30, 2021 and 2020. The Company
recorded interest income related to the interest rate swap of $6.1 million and
$5.6 million, respectively, in the nine months ended September 30, 2021 and
2020. The Company currently expects to have a sufficient amount of eligible
variable rate loans to continue to accrete this interest income in future
periods. If this expectation changes and the amount of eligible variable rate
loans decreases significantly, the Company may be required to recognize this
interest income more rapidly.

Interest Income - Investments and Other Interest-earning Assets

Interest income on investments decreased $183,000 in the three months ended
September 30, 2021 compared to the three months ended September 30, 2020.
Interest income decreased $210,000 as a result of lower average interest rates
from 2.71% during the three months ended September 30, 2020, to 2.52% during the
three month period ended September 30, 2021. Partially offsetting that decrease
was an increase in interest income of $27,000 as a result of an increase in
average balances from $449.4 million during the three months ended September 30,
2020, to $453.3 million during the three months ended September 30, 2021.
Average balances of securities increased primarily due to purchases of agency
multi-family mortgage-backed securities which have a fixed rate of interest with
expected lives of four to ten years. These purchased securities fit with the
Company's current asset/liability management strategies.

Interest income on investments decreased $571,000 in the nine months ended
September 30, 2021 compared to the nine months ended September 30, 2020.
Interest income decreased $992,000 as a result of lower average interest rates
from 2.92% during the nine months ended September 30, 2020, to 2.61% during the
nine month period ended September 30, 2021. Partially offsetting that decrease
was an increase in interest income of $421,000 as a result of an increase in
average balances from $422.7 million during the nine months ended September 30,
2020, to $442.8 million during the nine months ended September 30, 2021. Average
balances of securities increased primarily due to the investment purchases
described above.

Interest income on other interest-earning assets increased $164,000 in the three
months ended September 30, 2021 compared to the three months ended September 30,
2020. Interest income increased $110,000 as a result of an increase in average
balances from $270.5 million during the three months ended September 30, 2020,
to $604.0 million during the three months ended September 30, 2021. Excess
liquidity, after repayment of FHLBank borrowings, has been maintained at the
Federal Reserve Bank as a result of the significant increase in deposits since
March 31, 2020 and significant loan repayments in 2021. Interest income
increased $54,000 as a result of higher average interest rates from 0.09% during
the three months ended September 30, 2020, to 0.15% during the three month
period ended September 30, 2021.

Interest income on other interest-earning assets increased $60,000 in the nine
months ended September 30, 2021 compared to the nine months ended September 30,
2020. Interest income increased $329,000 as a result of an increase in average
balances from $227.5 million during the nine months ended September 30, 2020, to
$513.4 million during the nine months ended September 30, 2021. Excess
liquidity, after repayment of FHLBank borrowings, has been maintained at the
Federal Reserve Bank as a result of the significant increase in deposits since
March 31, 2020 and significant loan repayments in 2021. Partially offsetting
this increase, interest income decreased $269,000 as a result of a decrease in
average interest rates to 0.12% during the nine months ended September 30, 2021
compared to 0.24% during the nine months ended September 30, 2020. Market
interest rates earned on balances held at the Federal Reserve Bank were
significantly lower in the 2021 period due to significant reductions in the
federal funds rate of interest.

Total Interest Expense

Total interest expense decreased $4.7 million, or 50.0%, during the three months
ended September 30, 2021, when compared with the three months ended September
30, 2020, due to a decrease in interest expense on deposits of $4.2 million, or
58.8%, a decrease in interest expense on subordinated notes of $530,000, or
24.1% and a decrease in interest expense on subordinated debentures issued to
capital trust of $17,000, or 13.3%.

Total interest expense decreased $15.5 million, or 47.6%, during the nine months
ended September 30, 2021, when compared with the nine months ended September 30,
2020, due to a decrease in interest expense on deposits of $16.1 million, or
60.3%, a decrease in interest expense on short-term borrowings and repurchase
agreements of $638,000, or 95.7%, and a decrease in interest expense on
subordinated debentures issued to capital trust of $174,000, or 34.1%, partially
offset by an increase in interest expense on subordinated notes of $1.4 million,
or 30.8%.

                                       54



Interest Expense - Deposits

Interest expense on demand deposits decreased $1.0 million due to average rates
of interest that decreased from 0.33% in the three months ended September 30,
2020 to 0.15% in the three months ended September 30, 2021. Interest rates paid
on demand deposits were significantly lower in the 2021 period due to
significant reductions in the federal funds rate of interest and other market
interest rates. Partially offsetting this decrease, interest expense on demand
deposits increased $288,000, due to an increase in average balances from $1.96
billion during the three months ended September 30, 2020 to $2.36 billion during
the three months ended September 30, 2021. The Company experienced increased
balances in various types of money market accounts and certain types of NOW
accounts.

Interest expense on demand deposits decreased $3.7 million due to average rates
of interest that decreased from 0.42% in the nine months ended September 30,
2020 to 0.18% in the nine months ended September 30, 2021. Interest rates paid
on demand deposits were significantly lower in the 2021 period due to
significant reductions in the federal funds rate of interest and other market
interest rates. Partially offsetting this decrease, interest expense on demand
deposits increased $1.3 million due to an increase in average balances from
$1.79 billion during the nine months ended September 30, 2020 to $2.29 billion
during the nine months ended September 30, 2021. The Company experienced
increased balances in various types of money market accounts and certain types
of NOW accounts.

Interest expense on time deposits decreased $2.1 million as a result of a
decrease in average rates of interest from 1.35% during the three months ended
September 30, 2020, to 0.71% during the three months ended September 30, 2021.
Interest expense on time deposits also decreased $1.3 million due to a decrease
in average balances of time deposits from $1.60 billion during the three months
ended September 30, 2020 to $1.11 billion in the three months ended September
30, 2021. A large portion of the Company's certificate of deposit portfolio
matures within six to twelve months and therefore reprices fairly quickly; this
is consistent with the portfolio over the past several years. Older certificates
of deposit that renewed or were replaced with new deposits generally resulted in
the Company paying a lower rate of interest due to market interest rate
decreases throughout 2020. Market interest rates remained low during the first
nine months of 2021. The decrease in average balances of time deposits was a
result of decreases in retail customer time deposits obtained through the
banking center network, retail customer time deposits obtained through on-line
channels and decreases in brokered deposits. Brokered and on-line channel
deposits were actively reduced by the Company as other deposit sources
increased.

Interest expense on time deposits decreased $8.6 million as a result of a
decrease in average rates of interest from 1.66% during the nine months ended
September 30, 2020, to 0.82% during the nine months ended September 30, 2021.
Interest expense on time deposits also decreased $5.0 million due to a decrease
in average balances of time deposits from $1.70 billion during the nine months
ended September 30, 2020 to $1.21 billion in the nine months ended September 30,
2021.

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

FHLBank advances and overnight borrowings from the FHLBank were not utilized during the three or nine months ended September 30, 2021 and 2020.

Interest expense on short-term borrowings and repurchase agreements increased
$2,000 during the three months ended September 30, 2021 when compared to the
three months ended September 30, 2020. The average rate of interest was 0.02%
for both the three months ended September 30, 2021 and September 30, 2020. The
average balance of short-term borrowings and repurchase agreements decreased
$8.1 million from $159.4 million in the three months ended September 30, 2020 to
$151.3 million in the three months ended September 30, 2021, which was primarily
due to changes in the Company's funding needs and the mix of funding, which can
fluctuate.

Interest expense on short-term borrowings and repurchase agreements decreased
$638,000 during the nine months ended September 30, 2021 compared to the nine
months ended September 30, 2020. Interest expense decreased $505,000 due to a
decrease in average rates from 0.46% in the nine months ended September 30, 2020
to 0.03% in the nine months ended September 30, 2021. The decrease was due to a
decrease in market interest rates during the period. Interest expense on
short-term borrowings and repurchase agreements also decreased $133,000 due to a
decrease in average balances from $195.5 million during the nine months ended
September 30, 2020 to $147.0 million during the nine months ended September 30,
2021, which was primarily due to changes in the Company's funding needs and the
mix of funding.

During the three months ended September 30, 2021, compared to the three months
ended September 30, 2020, interest expense on subordinated debentures issued to
capital trusts decreased $17,000 due to lower average interest rates. The
average interest rate was

                                       55

1.71% in the three months ended September 30, 2021 compared to 1.98% in the
three months ended September 30, 2020. The subordinated debentures are
variable-rate debentures which bear interest at an average rate of three-month
LIBOR plus 1.60%, adjusting quarterly, which was 1.73% at September 30, 2021.
There was no change in the average balance of the subordinated debentures
between the 2020 and 2021 periods.

During the nine months ended September 30, 2021, compared to the nine months
ended September 30, 2020, interest expense on subordinated debentures issued to
capital trusts decreased $174,000 due to lower average interest rates. The
average interest rate was 1.75% in the nine months ended September 30, 2021
compared to 2.65% in the nine months ended September 30, 2020. There was no
change in the average balance of the subordinated debentures between the 2020
and 2021 periods.

In August 2016, the Company issued $75.0 million of 5.25% fixed-to-floating rate
subordinated notes due August 15, 2026. The notes were sold at par, resulting in
net proceeds, after underwriting discounts and commissions and other issuance
costs, of approximately $73.5 million. 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. In both cases, these issuance costs are amortized over the expected
life of the notes, which is five years from the issuance date, impacting the
overall interest expense on the notes. On August 15, 2021, the Company completed
the redemption of $75.0 million aggregate principal amount of its 5.25%
subordinated notes due August 15, 2026. The notes were redeemed for cash by the
Company at 100% of their principal amount, plus accrued and unpaid interest.
During the three months ended September 30, 2021, compared to the three months
ended September 30, 2020, interest expense on subordinated notes decreased
$597,000 due to lower average balances during the three months ended September
30, 2021 resulting from the redemption of the 5.25% subordinated notes due
August 15, 2026. The average balance of subordinated notes was $148.1 million in
the three months ended September 30, 2020 compared to $108.9 million in the
three months ended September 30, 2021. Interest expense on subordinated notes
increased $67,000 due to slightly higher weighted average interest rates. The
average interest rate was 6.09% in the three months ended September 30, 2021
compared to 5.91% in the three months ended September 30, 2020.

During the nine months ended September 30, 2021, compared to the nine months
ended September 30, 2020, interest expense on subordinated notes increased $1.4
million due to higher average balances resulting from the issuance of new notes
in the three months ended June 30, 2020, slightly offset by the redemption of
the subordinated notes maturing in 2026 during the three months ended September
30, 2021. The average interest rate increased slightly from 5.94% in the nine
months ended September 30, 2020 to 5.99% in the nine months ended September 30,
2021. Interest expense on subordinated notes increased $44,000 due to higher
average balances. The average balance was $104.3 million in the nine months
ended September 30, 2020 compared to $135.2 million in the nine months ended
September 30, 2021.

Net Interest Income

Net interest income for the three months ended September 30, 2021 increased
$755,000 to $44.9 million compared to $44.2 million for the three months ended
September 30, 2020. Net interest margin was 3.36% in both the three months ended
September 30, 2021 and the three months ended September 30, 2020. In both three
month periods, the Company's net interest income and margin were positively
impacted by the increases in expected cash flows from the FDIC-assisted acquired
loan pools and the resulting increase to accretable yield, which were previously
discussed in Note 7 of the Notes to Consolidated Financial Statements. The
positive impact of these changes in the three months ended September 30, 2021
and 2020 were increases in interest income of $279,000 and $1.2 million,
respectively, and increases in net interest margin of two basis points and nine
basis points, respectively. Excluding the positive impact of the additional
yield accretion, net interest margin was 3.34% in the three months ended
September 30, 2021 compared to 3.27% in the three months ended September 30,
2020.

Net interest income for the nine months ended September 30, 2021 increased $1.1
million to $133.7 million compared to $132.6 million for the nine months ended
September 30, 2020. Net interest margin was 3.37% in the nine months ended
September 30, 2021, compared to 3.52% in the nine months ended September 30,
2020, a decrease of 15 basis points, or 4.3%. In both nine month periods, the
Company's net interest income and margin were positively impacted by the
increases in expected cash flows from the FDIC-assisted acquired loan pools and
the resulting increase to accretable yield, which were previously discussed in
Note 7 of the Notes to Consolidated Financial Statements. The positive impact of
these changes in the nine months ended September 30, 2021 and 2020 were
increases in interest income of $1.4 million and $4.6 million, respectively, and
increases in net interest margin of three basis points and 12 basis points,
respectively. Excluding the positive impact of the additional yield accretion,
in the nine months ended September 30, 2021, net interest margin decreased six
basis points when compared to the year-ago nine-month period. Excluding the
positive impact of the additional yield accretion, net interest margin was 3.34%
in the nine months ended September 30, 2021 compared to 3.40% in the nine months
ended September 30, 2020. Most of the net interest margin decrease resulted from
changes in the asset mix, with average other interest earning assets increasing
$286 million and average investment securities increasing $20 million. The
average yield on other interest earning assets decreased 12 basis points between
the 2021 and 2020 nine-month periods. Also in

                                       56

comparing the 2021 and 2020 nine-month periods, the average yield on loans decreased 38 basis points while the average rate on deposits declined 61 basis points.

The Company's overall average interest rate spread increased 10 basis points, or
3.2%, from 3.12% during the three months ended September 30, 2020 to 3.22%
during the three months ended September 30, 2021. The increase was due to a 46
basis point decrease in the weighted average rate paid on interest-bearing
liabilities, partially offset by a 36 basis point decrease in the weighted
average yield on interest-earning assets. In comparing the two periods, the
yield on loans decreased 11 basis points and the yield on investment securities
decreased 19 basis points. The rate paid on deposits decreased 46 basis points,
the rate paid on subordinated debentures issued to capital trusts decreased 27
basis points, and the rate paid on subordinated notes increased 18 basis points.

The Company's overall average interest rate spread decreased four basis points,
or 1.2%, from 3.24% during the nine months ended September 30, 2020 to 3.20%
during the nine months ended September 30, 2021. The decrease was due to a 58
basis point decrease in the weighted average yield on interest-earning assets,
partially offset by a 54 basis point decrease in the weighted average rate paid
on interest-bearing liabilities. In comparing the two periods, the yield on
loans decreased 38 basis points, the yield on investment securities decreased 31
basis points and the yield on other interest-earning assets decreased 12 basis
points. The rate paid on deposits decreased 61 basis points, the rate paid on
short-term borrowings and repurchase agreements decreased 43 basis points, and
the rate paid on subordinated debentures issued to capital trusts decreased 90
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

The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic
326): Measurement of Credit Losses on Financial Instruments, effective January
1, 2021. The CECL methodology replaces the incurred loss methodology with a
lifetime "expected credit loss" measurement objective for loans,
held-to-maturity debt securities and other receivables measured at amortized
cost at the time the financial asset is originated or acquired. This standard
requires the consideration of historical loss experience and current conditions
adjusted for reasonable and supportable economic forecasts. Our 2020 financial
statements were prepared under the incurred loss methodology standard. Upon
adoption of the CECL accounting standard, we increased the balance of our
allowance for credit losses related to outstanding loans by $11.6 million and
created a liability for potential losses related to the unfunded portion of our
loans and commitments of approximately $8.7 million. The after-tax effect
reduced our retained earnings by approximately $14.2 million. The adjustment was
based upon the Company's analysis of current conditions, assumptions and
economic forecasts at January 1, 2021. ASC 326 requires enhanced disclosures
related to the significant estimates and judgments used in estimating credit
losses as well as the credit quality and underwriting standards of a company's
portfolio.

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 differences in underwriting standards, portfolio
mix, delinquency level, or term as well as for changes in environmental
conditions, such as changes in the national unemployment rate, commercial real
estate price index, housing price index and national retail sales index.

Worsening economic conditions from the COVID-19 pandemic, higher inflation or
interest rates, 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 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, on-going correspondence with borrowers and
problem loan work-outs. Management determines which loans are potentially
uncollectible, or represent a greater risk of loss, and makes additional
provisions to expense, if necessary, to maintain the allowance at a satisfactory
level.

During the three months ended September 30, 2021, the Company recorded a
negative provision expense of $3.0 million on its portfolio of outstanding
loans, compared to a $4.5 million provision expense recorded for the three
months ended September 30, 2020. During the nine months ended September 30,
2021, the Company recorded a negative provision expense of $3.7 million on its
portfolio of outstanding loans, compared to a $14.4 million provision expense
recorded for the nine months ended September 30, 2020. The negative provision
for credit losses in the 2021 periods reflected decreased outstanding total
loans and continued positive trends in asset quality metrics, combined with an
improved economic forecast. During the three months ended September 30, 2021,
the national unemployment rate continued to decrease and many measures of
economic growth improved. In the three months ended

                                       57



September 30, 2021 and 2020, the Company experienced net recoveries of $27,000
and net charge-offs of $63,000, respectively. Total net charge-offs were $9,000
and $427,000 for the nine months ended September 30, 2021 and 2020,
respectively. The provision for losses on unfunded commitments for the three
months ended September 30, 2021 was $643,000 compared to a negative provision
expense of $338,000 for the nine months ended September 30, 2021. In the
nine-month period, the level and mix of unfunded commitments resulted in a
decrease in the required reserve for such potential losses. General market
conditions and unique circumstances related to specific industries and
individual projects contributed to the level of provisions and charge-offs.
Collateral and repayment evaluations of all assets categorized as potential
problem loans, non-performing loans or foreclosed assets were completed with
corresponding charge-offs or reserve allocations made as appropriate. In 2020,
due to the COVID-19 pandemic and its effects on the overall economy and
unemployment, the Company increased its provision for credit losses and
increased its allowance for credit losses, even though actual realized net
charge-offs were very low.

All FDIC-assisted acquired loans were grouped into pools based on common
characteristics and were recorded at their estimated fair values, which
incorporated estimated credit losses at the acquisition date. These loan pools
have been systematically reviewed by the Company to determine the risk of losses
that may exceed those identified at the time of the acquisition. Techniques used
in determining risk of loss are similar to those used to determine the risk of
loss for the legacy Great Southern Bank portfolio, with most focus being placed
on those loan pools which include the larger loan relationships and those loan
pools which exhibit higher risk characteristics. Review of the acquired loan
portfolio also includes review of financial information, collateral valuations
and customer interaction to determine if additional reserves are warranted.

The Bank's allowance for credit losses as a percentage of total loans was 1.56%
and 1.32% at September 30, 2021 and December 31, 2020, respectively. Prior to
January 1, 2021, the ratio excluded the FDIC-assisted acquired loans. Management
considers the allowance for credit losses adequate to cover losses inherent in
the Bank's loan portfolio at September 30, 2021, based on recent reviews of the
Bank's loan portfolio and current economic conditions. If challenging economic
conditions were to last longer than anticipated or deteriorate further or
management's assessment of the loan portfolio were to change, additional loan
loss provisions could be required, thereby adversely affecting the Company's
future results of operations and financial condition.

Non-performing Assets

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

Prior to adoption of the CECL accounting standard on January 1, 2021,
FDIC-assisted acquired non-performing assets, including foreclosed assets and
potential problem loans, were not included in the totals or in the discussion of
non-performing loans, potential problem loans and foreclosed assets. These
assets were initially recorded at their estimated fair values as of their
acquisition dates and accounted for in pools. The loan pools were analyzed
rather than the individual loans. The performance of the loan pools acquired in
each of the Company's five FDIC-assisted transactions has been better than
expectations as of the acquisition dates. In the tables below, FDIC-assisted
acquired assets are included in their particular collateral categories and then
the total FDIC-assisted acquired assets are subtracted from the total balances.

At September 30, 2021, non-performing assets, including FDIC-assisted acquired
assets, were $7.9 million, a decrease of $171,000 from $8.1 million at December
31, 2020. Non-performing assets as a percentage of total assets were 0.15% at
both September 30, 2021 and December 31, 2020. At September 30, 2021,
non-performing assets, excluding all FDIC-assisted acquired assets, were $5.2
million, an increase of $1.4 million from $3.8 million at December 31, 2020.
Excluding all FDIC-assisted acquired assets, non-performing assets as a
percentage of total assets were 0.10% at September 30, 2021, compared to 0.07%
at December 31, 2020.

Compared to December 31, 2020, and excluding all FDIC-assisted acquired loans,
non-performing loans increased $2.0 million, to $5.0 million at September 30,
2021, and foreclosed and repossessed assets decreased $625,000, to $152,000 at
September 30, 2021. Including all FDIC-assisted acquired loans, when compared to
December 31, 2020, non-performing loans increased $95,000, to $7.0 million at
September 30, 2021, and foreclosed and repossessed assets decreased $266,000, to
$957,000 at September 30, 2021. Non-performing one- to four-family residential
loans comprised $3.0 million, or 43.0%, of the total non-performing loans at
September 30, 2021, a decrease of $1.5 million from December 31, 2020. The
majority of the non-performing FDIC-assisted acquired loans are in the one- to
four-family category. Non-performing commercial real estate loans comprised $2.6
million, or 37.2%, of the total non-performing loans at September 30, 2021, an
increase of $1.7 million from December 31, 2020. Non-performing consumer loans
comprised $799,000, or 11.5%, of the total non-performing loans at September 30,
2021, a decrease of $469,000 from December 31, 2020. Non-performing construction
and land development loans comprised $468,000, or 6.7%, of the total
non-performing loans at September 30, 2021, an increase of $468,000 from
December 31, 2020. Non-performing commercial business loans comprised $111,000,
or 1.6%, of the total non-performing loans at September 30, 2021, a decrease of
$3,000 from December 31, 2020.

                                       58

Non-performing Loans. Activity in the non-performing loans category during the nine months ended September 30, 2021 was as follows:

                                                                                Transfers to      Transfers to
                                   Beginning      Additions       Removed        Potential         Foreclosed                                   Ending
                                   Balance,        to Non-       from Non-        Problem          Assets and      Charge-                     Balance,
                                   January 1     Performing     Performing         Loans         Repossessions       Offs      Payments      September 30

                                                                                       (In Thousands)
One- to four-family
construction                      $         -    $         -    $         -    $            -    $            -    $      -    $       -    $            -
Subdivision construction                    -              -              -                 -                 -           -            -                 -
Land development                            -            622              -                 -                 -       (154)            -               468
Commercial construction                     -              -              -                 -                 -           -            -                 -
One- to four-family
residential                             4,465            908          (876)                 -             (182)        (71)      (1,239)             3,005
Other residential                         190              -          (185)                 -                 -           -          (5)                 -
Commercial real estate                    849          2,556           (88)                 -             (191)           -        (528)             2,598
Commercial business                       114             20              -                 -                 -           -         (23)               111
Consumer                                1,268            321          (232)                 -              (69)       (184)        (305)               799
Total non-performing loans              6,886          4,427        (1,381)                 -             (442)       (409)      (2,100)             6,981
Less: FDIC-assisted acquired
loans                                   3,843             85          (934)                 -             (373)        (94)        (589)             1,938

Total non-performing loans net
of FDIC-assisted acquired
loans                             $     3,043    $     4,342    $     (447)    $            -    $         (69)    $  (315)    $ (1,511)    $        5,043






At September 30, 2021, the non-performing one- to four-family residential
category included 45 loans, four of which were added during 2021. The largest
relationship in the category was added during 2021 and totaled $351,000, or
11.7% of the total category. The non-performing commercial real estate category
included three loans, two of which were added during 2021. The largest
relationship in the category was added during 2021 and totaled $2.4 million, or
90.7% of the total category. It is collateralized by an office building in the
Chicago, Ill., area. The non-performing consumer category included 38 loans,
nine of which were added in 2021. The non-performing land development category
consisted of one loan added during 2021, which totaled $468,000 and is
collateralized by unimproved zoned vacant ground in southern Illinois.

In the table above, loans that were modified under the guidance provided by the
CARES Act are not non-performing loans as they are current under their modified
terms. For additional information about these loan modifications, see the "Loan
Modifications" section of this report.

Potential Problem Loans. Compared to December 31, 2020, and excluding all
FDIC-assisted acquired loans, potential problem loans decreased $1.6 million, to
$2.8 million at September 30, 2021. Compared to December 31, 2020, potential
problem loans, including the FDIC-assisted acquired loans, decreased $2.0
million, or 35.1%, to $3.8 million at September 30, 2021. 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.

Due to the impact on economic conditions from COVID-19, it is possible that we
could experience an increase in potential problem loans in the remainder of
2021. As noted, we experienced an increased level of loan modifications in late
March through June 2020; however, total loan modifications were much lower at
December 31, 2020, and decreased further through September 30, 2021. In
accordance with the CARES Act and guidance from the banking regulatory agencies,
we made certain short-term modifications to loan terms to help our customers
navigate through the current pandemic situation. Although loan modifications
were made, they did not automatically result in these loans being classified as
TDRs, potential problem loans or non-performing loans. If more severe or
lengthier negative impacts of the COVID-19 pandemic occur or the effects of the
SBA loan programs and other loan and stimulus programs do not enable companies
and individuals to completely recover financially, this could result in
longer-term modifications, which may be deemed to be TDRs, additional potential
problem loans and/or additional non-performing loans. Further actions on our
part, including additions to the allowance for credit losses, could result.

                                       59

Activity in the potential problem loans categories during the nine months ended September 30, 2021, was as follows:

                                                                          Removed                         Transfers to
                                         Beginning       Additions          from        Transfers to       Foreclosed                                     Ending
                                         Balance,       to Potential     Potential          Non-           Assets and       Charge-                      Balance,
                                         January 1        Problem         Problem        Performing      Repossessions       Offs        Payments      September 30

                                                                                               (In Thousands)
One- to four-family construction        $         -    $            -    $ 

      -    $            -    $            -    $       -    $        -    $            -
Subdivision construction                         21                 -             -                 -                 -            -           (5)                16
Land development                                  -                 -             -                 -                 -            -             -                 -
Commercial construction                           -                 -             -                 -                 -            -             -                 -

One- to four-family residential               2,157                 -      

  (314)              (52)                 -            -         (330)             1,461
Other residential                                 -                 -             -                 -                 -            -             -                 -
Commercial real estate                        3,080                 -       (1,070)                 -                 -            -          (69)             1,941
Commercial business                               -                 -             -                 -                 -            -             -                 -
Consumer                                        588               134          (22)               (1)              (74)         (67)         (181)               377
Total potential problem loans                 5,846               134       (1,406)              (53)              (74)         (67)         (585)             3,795

Less: FDIC-assisted acquired loans            1,523                 -         (314)                 -                 -            -         (186)      

1,023

Total potential problem loans net of
FDIC-assisted acquired loans            $     4,323    $          134    $ 

(1,092)    $         (53)    $         (74)    $    (67)    $    (399)    $        2,772




At September 30, 2021, the commercial real estate category of potential problem
loans included two loans, neither of which were added during 2021. The largest
relationship in this category (added during 2018), which totaled $1.7 million,
or 88.9% of the total category, is collateralized by a mixed use commercial
retail building in St. Louis, Mo. Payments under the original loan term were
current on this relationship at September 30, 2021. Two loans that totaled $1.1
million in the commercial real estate category of potential problem loans (both
added during 2020) were upgraded and removed from the potential problem loans
category after six months of consecutive payments. The one- to four-family
residential category of potential problem loans included 27 loans, none of which
were added during 2021. The largest relationship in this category totaled
$173,000, or 11.9% of the total category. A single loan of $314,000 in the one-
to four- family residential category of potential problem loans was upgraded and
removed from the potential problem loans. The consumer category of potential
problem loans included 31 loans, six of which were added during 2021.

Other Real Estate Owned and Repossessions. Of the total $1.2 million of other
real estate owned and repossessions at September 30, 2021, $285,000 represents
properties which were not acquired through foreclosure.

Activity in other real estate owned and repossessions during the nine months ended September 30, 2021, was as follows:

                                         Beginning                                                                  Ending
                                         Balance,                                   Capitalized      Write-        Balance,
                                         January 1      Additions       Sales          Costs         Downs       September 30

                                                                            (In Thousands)

One- to four-family construction        $         -    $         -    $    

  -    $           -    $      -    $            -
Subdivision construction                        263              -        (169)                -        (94)                 -
Land development                                682              -        (250)                -           -               432
Commercial construction                           -              -            -                -           -                 -
One- to four-family residential                 125            183        (125)                -           -               183
Other residential                                 -              -            -                -           -                 -
Commercial real estate                            -            190            -                -           -               190
Commercial business                               -              -            -                -           -                 -
Consumer                                        153            611        (612)                -           -               152
Total foreclosed assets and
repossessions                                 1,223            984      (1,156)                -        (94)               957

Less: FDIC-assisted acquired assets             446            373         (14)                -           -               805

Total foreclosed assets and
repossessions net of FDIC-assisted
acquired assets                         $       777    $       611    $ (1,142)    $           -    $   (94)    $          152




                                       60



At September 30, 2021, the land development category of foreclosed assets
consisted of one property in central Iowa (this was an FDIC-assisted acquired
asset), which was added prior to 2021. The one- to four-family residential
category of foreclosed assets consisted of two properties (both of which were
FDIC-assisted acquired assets), both of which were added during 2021. The amount
of additions and sales in the consumer category are due to the volume of
repossessions of automobiles, which generally are subject to a shorter
repossession process.

Loans Classified "Watch"

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." Loans classified as "Watch" are being
monitored because of indications of potential weaknesses or deficiencies that
may require future classification as special mention or substandard. In the nine
months ended September 30, 2021, loans classified as "Watch" decreased $21.2
million, from $64.8 million at December 31, 2020 to $43.6 million at September
30, 2021. This decrease was primarily due to loans being upgraded out of the
"watch" category, which primarily included one $14.3 million relationship
collateralized by a shopping center, one $10.6 million relationship
collateralized by recreational facilities and other real estate and business
assets, and one $3.9 million relationship collateralized by a shopping center
and other real estate and business assets. One $10.3 million relationship
collateralized by a healthcare facility in the Dallas, Texas area was downgraded
and added to the "Watch" category. See Note 6 for further discussion of the
Company's loan grading system.

Non-interest Income

For the three months ended September 30, 2021, non-interest income increased
$332,000 to $9.8 million when compared to the three months ended September 30,
2020, primarily as a result of the following items:

Point-of-sale and ATM fees: Point-of-sale and ATM fees increased $657,000
compared to the prior year period. This increase was primarily due to a
reduction in customer usage in the three months ended September 30, 2020 as the
COVID-19 pandemic caused many businesses to close and large portions of the U.S.
population were required to stay at home for a period of time. In the three
months ended September 30, 2021, debit card and ATM usage by customers was back
to normal levels, and in some cases, saw increased levels of activity.

Overdraft and insufficient funds fees: Overdraft and insufficient funds fees
increased $210,000 compared to the prior year period. This increase was
primarily due to reduced fees in the 2020 period. This was due to both a
reduction in usage by customers and a decision in March 2020 to waive (through
August 31, 2020) certain fees for customers in response to the COVID-19
pandemic. The effects of that decision were felt during March through September
2020.

Net gains on loan sales: Net gains on loan sales decreased $537,000 compared to
the prior year period. The decrease was due to a decrease in originations of
fixed-rate single-family mortgage loans during the 2021 period compared to the
2020 period. Fixed-rate single-family mortgage loans originated are generally
subsequently sold in the secondary market. These loan originations increased
substantially when market interest rates decreased to historically low levels in
2020. As a result of the significant volume of refinance activity in recent
periods, and as market interest rates have moved a bit higher in the three
months ended September 30, 2021, mortgage refinance volume has decreased and
loan originations and related gains on sales of these loans have returned to
levels more similar to historic averages.

For the nine months ended September 30, 2021, non-interest income increased $4.0
million to $29.1 million when compared to the nine months ended September 30,
2020, primarily as a result of the following items:

                                       61



Net gains on loan sales: Net gains on loan sales increased $2.3 million compared
to the prior year period. The increase was due to an increase in originations of
fixed-rate single-family mortgage loans during the 2021 period compared to the
2020 period. As noted above, these loan originations increased substantially
when market interest rates decreased to historically low levels in the latter
half of 2020 and the first half of 2021.

Point-of-sale and ATM fees: Point-of-sale and ATM fees increased $2.2 million
compared to the prior year period. This increase was due to the same conditions
as noted above.

Gain (loss) on derivative interest rate products: In the 2021 period, the
Company recognized a gain of $340,000 on the change in fair value of its
back-to-back interest rate swaps related to commercial loans. In the 2020
period, the Company recognized a loss of $424,000 on the change in fair value of
its back-to-back interest rate swaps related to commercial loans. Generally, as
market interest rates increase, this creates a net increase in the fair value of
these instruments. This is a non-cash item as there was no required settlement
of this amount between the Company and its swap counterparties.

Other income: Other income decreased $1.4 million compared to the prior year
period. In the 2020 period, the Company recognized approximately $1.2 million of
fee income related to newly-originated interest rate swaps in the Company's
back-to-back swap program with loan customers and swap counterparties, with
fewer of these transactions and related fee income generated in the current
period. The Company also recognized approximately $541,000 in income related to
the exit of certain tax credit partnerships during the nine months ended
September 30, 2020, with no similar activity during the 2021 period.

Non-interest Expense

For the three months ended September 30, 2021, non-interest expense decreased
$649,000 to $31.3 million when compared to the three months ended September 30,
2020, primarily as a result of the following item:

Salaries and employee benefits: Salaries and employee benefits decreased
$867,000 from the prior year period. In the 2020 period, the Company paid a
special cash bonus to all employees totaling $1.1 million in response to the
ongoing impacts of the COVID-19 pandemic. This bonus was not repeated in the
third quarter of 2021.

For the nine months ended September 30, 2021, non-interest expense decreased
$299,000 to $91.9 million when compared to the nine months ended September 30,
2020, primarily as a result of the following items:

Salaries and employee benefits: Salaries and employee benefits decreased
$812,000 in the nine months ended September 30, 2021 compared to the prior year
period. In 2020, the Company approved two special cash bonuses to all employees
totaling $2.2 million in response to the COVID-19 pandemic. These bonuses were
not repeated in the nine months ended September 30, 2021.

Expense on other real estate owned and repossessions: Expense on other real
estate owned and repossessions decreased $473,000 compared to the prior year
period primarily due to sales of most foreclosed assets and a smaller amount of
repossessed automobiles in the current period, plus higher valuation write-downs
of certain foreclosed assets during the prior year period. During the 2020
period, sales and valuation write-downs of certain foreclosed assets totaled a
net expense of $136,000, while sales and valuation write-downs in the 2021
period totaled a net gain of $29,000.

Insurance: Insurance expense increased $626,000 compared to the prior year
period. This increase was primarily due to an increase in FDIC deposit insurance
premiums. In 2020, the Company had a credit with the FDIC for a portion of
premiums previously paid to the deposit insurance fund. The remaining deposit
insurance fund credit was utilized in 2020 in addition to $522,000 in premiums
being due for the nine months ended September 30, 2020, while the premium
expense was $1.1 million in the nine months ended September 30, 2021.

The Company's efficiency ratio for the three months ended September 30, 2021,
was 57.27% compared to 59.64% for the same period in 2020. The Company's
efficiency ratio for the nine months ended September 30, 2021, was 56.42%
compared to 58.45% for the same period in 2020. In the three- and nine-month
periods ended September 30, 2021, the improved efficiency ratio was due to an
increase in net interest income, an increase in non-interest income and a
decrease in non-interest expense. The Company's ratio of non-interest expense to
average assets was 2.27% and 2.34% for the three months ended September 30, 2021
and 2020, respectively. The Company's ratio of non-interest expense to average
assets was 2.22% and 2.33% for the nine months ended September 30, 2021 and
2020, respectively. Average assets for the three months ended September 30,
2021, increased $62.8 million, or 1.1%, from the three months ended September
30, 2020, primarily due to increases in investment securities and interest
bearing cash equivalents, offset by a decrease in net loans receivable. Average
assets for the nine months ended September 30, 2021, increased $249.3 million,

                                       62

or 4.7%, from the nine months ended September 30, 2020, primarily due to increases in investment securities and interest bearing cash equivalents, offset by a decrease in net loans receivable.

Provision for Income Taxes

For the three months ended September 30, 2021 and 2020, the Company's effective
tax rate was 20.9% and 21.5%, respectively. For the nine months ended September
30, 2021 and 2020, the Company's effective tax rate was 20.9% and 18.8%,
respectively. These effective rates were at or below the statutory federal tax
rate of 21%, due primarily to the utilization of certain investment tax credits
and to tax-exempt investments and tax-exempt loans, which reduced the Company's
effective tax rate. 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. In 2020, the Company's state income tax expenses were higher than normal
in various states due to the recognition of income for tax purposes related to
the gain recognized on the termination of the interest rate swap. State tax
expense estimates have evolved throughout 2021 as taxable income and
apportionment between states have been analyzed. Higher effective tax rates in
the 2021 periods were due to higher overall income, lower levels of low income
housing tax credits and less tax-exempt interest income compared to prior
periods. The Company's effective income tax rate is currently generally expected
to remain at or below the statutory federal tax rate due primarily to the
factors noted above. The Company currently expects its effective tax rate
(combined federal and state) will be approximately 20.0% to 21.0% in future

periods.

                                       63

Average Balances, Interest Rates and Yields

The following tables present, 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 non-accrual loans
for each period. Interest income on loans includes interest received on
non-accrual loans on a cash basis. Interest income on loans includes the
amortization of net loan fees which were deferred in accordance with accounting
standards. Net fees included in interest income were $2.9 million and $1.7
million for the three months ended September 30, 2021 and 2020, respectively.
Net fees included in interest income were $7.9 million and $4.4 million for the
nine months ended September 30, 2021 and 2020, respectively. Tax-exempt income
was not calculated on a tax equivalent basis. The table does not reflect any
effect of income taxes.


                                         September 30,            Three Months Ended                    Three Months Ended
                                            2021(2)               September 30, 2021                    September 30, 2020
                                            Yield/          Average                   Yield/      Average                   Yield/
                                             Rate           Balance      Interest      Rate       Balance      Interest      Rate

                                                                          (Dollars in Thousands)
Interest-earning assets:
Loans receivable:
One- to four-family residential                   3.35 %  $   687,899    $   6,333      3.65 %  $   680,452    $   7,379      4.31 %
Other residential                                 4.20        934,727      

10,456 4.44 989,574 11,301 4.54 Commercial real estate

                            4.14      1,537,874       16,477      4.25      1,545,358       16,850      4.34
Construction                                      4.02        596,747        6,686      4.44        649,985        7,450      4.56
Commercial business                               4.36        257,324        3,932      6.06        356,505        3,663      4.09
Other loans                                       4.78        212,828      

2,484 4.63 270,136 3,645 5.37 Industrial revenue bonds(1)

                       4.43         14,402       

168 4.63 15,345 188 4.87

Total loans receivable                            4.30      4,241,801      

46,536 4.35 4,507,355 50,476 4.46

Investment securities(1)                          2.64        453,304      

2,877 2.52 449,383 3,060 2.71 Other interest-earning assets

                     0.15        603,956          227      0.15        270,509           63      0.09

Total interest-earning assets                     3.61      5,299,061      

49,640 3.72 5,227,247 53,599 4.08 Non-interest-earning assets: Cash and cash equivalents

                                     101,818                                92,244
Other non-earning assets                                      128,448                               147,084
Total assets                                              $ 5,529,327                           $ 5,466,575

Interest-bearing liabilities:
Interest-bearing demand and savings               0.13    $ 2,360,755

   922      0.15    $ 1,962,023        1,650      0.33
Time deposits                                     0.66      1,114,995        2,003      0.71      1,602,981        5,444      1.35
Total deposits                                    0.29      3,475,750        2,925      0.33      3,565,004        7,094      0.79
Short-term borrowings, repurchase
agreements and other interest-bearing
liabilities                                       0.02        151,260           10      0.02        159,373            8      0.02
Subordinated debentures issued to
capital trusts                                    1.73         25,774          111      1.71         25,774          128      1.98
Subordinated notes                                5.98        108,913        1,671      6.09        148,113        2,201      5.91

Total interest-bearing liabilities                0.40      3,761,697        4,717      0.50      3,898,264        9,431      0.96
Non-interest-bearing liabilities:
Demand deposits                                             1,085,781                               888,568
Other liabilities                                              46,319                                45,123
Total liabilities                                           4,893,797                             4,831,955

Stockholders' equity                                          635,530                               634,620
Total liabilities and stockholders'
equity                                                    $ 5,529,327                           $ 5,466,575

Net interest income:
Interest rate spread                              3.21 %                 $  44,923      3.22 %                 $  44,168      3.12 %
Net interest margin*                                                                    3.36 %                                3.36 %
Average interest-earning assets to
average interest- bearing liabilities                           140.9 %                               134.1 %

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

Of the total average balances of investment securities, average tax-exempt

investment securities were $40.8 million and $67.8 million for the three

months ended September 30, 2021 and 2020, respectively. In addition, average

tax-exempt loans and industrial revenue bonds were $17.6 million and $19.8 (1) million for the three months ended September 30, 2021 and 2020, respectively.

Interest income on tax-exempt assets included in this table was $397,000 and

$570,000 for the three months ended September 30, 2021 and 2020,

respectively. Interest income net of disallowed interest expense related to

    tax-exempt assets was $389,000 and $537,000 for the three months ended
    September 30, 2021 and 2020, respectively.

The yield on loans at September 30, 2021 does not include the impact of the (2) accretable yield (income) on loans acquired in the FDIC-assisted

transactions. See "Net Interest Income" for a discussion of the effect on

    results of operations for the three months ended September 30, 2021.


                                       64






                                                September 30,             Nine Months Ended                     Nine Months Ended
                                                   2021(2)                September 30, 2021                    September 30, 2020
                                                   Yield/          Average                   Yield/      Average                    Yield/
                                                     Rate           Balance      Interest     Rate        Balance      Interest      Rate

                                                                                  (Dollars in Thousands)
Interest-earning assets:
Loans receivable:
One- to four-family residential                           3.35 %  $   676,093    $  19,211      3.80 %  $   645,662    $  21,949       4.54 %
Other residential                                         4.20        983,564       32,599      4.43        917,778       32,997       4.80
Commercial real estate                                    4.14      1,560,208       49,917      4.28      1,522,825       52,820       4.63
Construction                                              4.02        593,774       19,946      4.49        665,567       24,785       4.97
Commercial business                                       4.36        290,643       11,365      5.23        318,657       10,215       4.28
Other loans                                               4.78       

224,020 8,019 4.79 293,582 12,068 5.49 Industrial revenue bonds(1)

                               4.43         14,610          548      5.02         15,453          619       5.35

Total loans receivable                                    4.30      4,342,912      141,605      4.36      4,379,524      155,453       4.74

Investment securities(1)                                  2.64        

442,794 8,655 2.61 422,696 9,226 2.92 Other interest-earning assets

                             0.15        

513,364 465 0.12 227,506 405 0.24

Total interest-earning assets                             3.61      5,299,070      150,725      3.80      5,029,726      165,084       4.38
Non-interest-earning assets:
Cash and cash equivalents                                              98,482                                93,493
Other non-earning assets                                              130,179                               155,233
Total assets                                                      $ 5,527,731                           $ 5,278,452

Interest-bearing liabilities:
Interest-bearing demand and savings                       0.13    $ 2,287,969        3,154      0.18    $ 1,792,492        5,629       0.42
Time deposits                                             0.66      1,212,605        7,450      0.82      1,701,383       21,083       1.66
Total deposits                                            0.29     

3,500,574 10,604 0.41 3,493,875 26,712 1.02 Short-term borrowings, repurchase agreements and other interest-bearing liabilities

                    0.02        147,012           29      0.03        195,459          667       0.46
Subordinated debentures issued to capital
trusts                                                    1.73         25,774          337      1.75         25,774          511       2.65
Subordinated notes                                        5.98        135,223        6,060      5.99        104,256        4,633       5.94

Total interest-bearing liabilities                        0.40      3,808,583       17,030      0.60      3,819,364       32,523       1.14
Non-interest-bearing liabilities:
Demand deposits                                                     1,047,157                               799,594
Other liabilities                                                      44,545                                39,983
Total liabilities                                                   4,900,285                             4,658,941
Stockholders' equity                                                  627,446                               619,511
Total liabilities and stockholders' equity                        $ 5,527,731                           $ 5,278,452

Net interest income:
Interest rate spread                                      3.21 %                 $ 133,695      3.20 %                 $ 132,561       3.24 %
Net interest margin*                                                                            3.37 %                                 3.52 %
Average interest-earning assets to average
interest- bearing liabilities                                           139.1 %                               131.7 %

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

Of the total average balances of investment securities, average tax-exempt

investment securities were $42.3 million and $54.8 million for the nine

months ended September 30, 2021 and 2020, respectively. In addition, average

tax-exempt loans and industrial revenue bonds were $18.1 million and $20.4 (1) million for the nine months ended September 30, 2021 and 2020, respectively.

Interest income on tax-exempt assets included in this table was $1.2 million

and $1.6 million for the nine months ended September 30, 2021 and 2020,

respectively. Interest income net of disallowed interest expense related to

tax-exempt assets was $1.2 million and $1.5 million for the nine months ended

September 30, 2021 and 2020, respectively.

The yield on loans at September 30, 2021 does not include the impact of the (2) accretable yield (income) on loans acquired in the FDIC-assisted

transactions. See "Net Interest Income" for a discussion of the effect on

results of operations for the nine months ended September 30, 2021.

Rate/Volume Analysis

The following tables present the dollar amounts of changes in interest income
and interest expense for major components of interest-earning assets and
interest-bearing liabilities for the periods shown. For each category of
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to (i) changes in rate (i.e., changes in rate
multiplied by old volume) and (ii) changes in volume (i.e., changes in volume
multiplied by old rate). For purposes of this table, changes attributable to
both rate and

                                       65



volume, which cannot be segregated, have been allocated proportionately to
volume and rate. Tax-exempt income was not calculated on a tax equivalent basis.


                                                            Three Months Ended September 30,
                                                                     2021 vs. 2020
                                                          Increase (Decrease)           Total
                                                                 Due to                Increase
                                                          Rate           Volume       (Decrease)

                                                                 (Dollars in Thousands)
Interest-earning assets:
Loans receivable                                       $   (1,107)     $  (2,833)    $    (3,940)
Investment securities                                        (210)             27           (183)

Other interest-earning assets                                   54            110             164
Total interest-earning assets                              (1,263)        (2,696)         (3,959)
Interest-bearing liabilities:
Demand deposits                                            (1,016)            288           (728)
Time deposits                                              (2,093)        (1,348)         (3,441)
Total deposits                                             (3,109)        (1,060)         (4,169)
Short-term borrowings                                            2              -               2

Subordinated debentures issued to capital trust               (17)              -            (17)
Subordinated notes                                              67          (597)           (530)
Total interest-bearing liabilities                         (3,057)        (1,657)         (4,714)
Net interest income                                    $     1,794     $  (1,039)    $        755





                                                           Nine Months Ended September 30,
                                                                    2021 vs. 2020
                                                         Increase (Decrease)          Total
                                                                Due to              Increase
                                                          Rate         Volume      (Decrease)

                                                               (Dollars in Thousands)
Interest-earning assets:
Loans receivable                                       $  (12,546)    $ (1,302)    $  (13,848)
Investment securities                                        (992)          421          (571)

Other interest-earning assets                                (269)          329             60
Total interest-earning assets                             (13,807)        (552)       (14,359)
Interest-bearing liabilities:
Demand deposits                                            (3,740)        1,265        (2,475)
Time deposits                                              (8,682)      (4,951)       (13,633)
Total deposits                                            (12,422)      (3,686)       (16,108)
Short-term borrowings                                        (505)        (133)          (638)

Subordinated debentures issued to capital trust              (174)            -          (174)
Subordinated notes                                              44        1,383          1,427
Total interest-bearing liabilities                        (13,057)      (2,436)       (15,493)
Net interest income                                    $     (750)    $   1,884    $     1,134




Liquidity

Liquidity is a measure of the Company's ability to generate sufficient cash to
meet present and future financial obligations in a timely manner through either
the sale or maturity of existing assets or the acquisition of additional funds
through liability management. These obligations include the credit needs of
customers, funding deposit withdrawals, and the day-to-day operations of the
Company. Liquid assets include cash, interest-bearing deposits with financial
institutions and certain investment securities and loans. As a result of the
Company's management of the ability to generate liquidity primarily through
liability funding, management believes that the Company maintains overall
liquidity sufficient to satisfy its depositors' requirements and meet its
borrowers' credit needs. At

                                       66

September 30, 2021, the Company had commitments of approximately $191.9 million to fund loan originations, $1.26 billion of unused lines of credit and unadvanced loans, and $15.9 million of outstanding letters of credit.

Loan commitments and the unfunded portion of loans at the dates indicated were
as follows (in thousands):


                                    September 30,      June 30,       March 31,      December 31,      December 31,      December 31,
                                        2021             2021           2021             2020              2019              2018
Closed non-construction loans
with unused available lines
Secured by real estate (one- to
four-family)                       $       173,758    $   173,644    $   170,353    $      164,480    $      155,831    $      150,948
Secured by real estate (not one-
to four-family)                             23,870         20,269         25,754            22,273            19,512            11,063
Not secured by real estate -
commercial business                         76,885         75,476         71,132            77,411            83,782            87,480

Closed construction loans with
unused available lines
Secured by real estate (one-to
four-family)                                68,441         63,471         52,653            42,162            48,213            37,162
Secured by real estate (not
one-to four-family)                        866,185        847,486        812,111           823,106           798,810           906,006

Loan commitments not closed
Secured by real estate (one-to
four-family)                                62,096         66,037         93,229            85,917            69,295            24,253
Secured by real estate (not
one-to four-family)                        126,815         55,216         50,883            45,860            92,434           104,871
Not secured by real estate -
commercial business                          3,000              -         

3,119               699                 -               405

                                   $     1,401,050    $ 1,301,599    $ 1,279,234    $    1,261,908    $    1,267,877    $    1,322,188




The Company's primary sources of funds are customer deposits, FHLBank advances,
other borrowings, loan repayments, unpledged securities, proceeds from sales of
loans and available-for-sale securities and funds provided from operations. The
Company utilizes particular sources of funds based on the comparative costs and
availability at the time. The Company has from time to time chosen not to pay
rates on deposits as high as the rates paid by certain of its competitors and,
when believed to be appropriate, supplements deposits with less expensive
alternative sources of funds.

At September 30, 2021, the Company had these available secured lines and
on-balance sheet liquidity:


Federal Home Loan Bank line    $ 905.7 million
Federal Reserve Bank line      $ 396.6 million
Cash and cash equivalents      $ 769.2 million
Unpledged securities           $ 236.4 million




                                       67



Statements of Cash Flows. During the nine months ended September 30, 2021 and
2020, the Company had positive cash flows from operating activities. The Company
had positive cash flows from investing activities during the nine months ended
September 30, 2021 and negative cash flows from investing activities during the
nine months ended September 30, 2020. The Company had negative cash flows from
financing activities during the nine months ended September 30, 2021 and
positive cash flows from financing activities during the nine months ended
September 30, 2020.

Cash flows from operating activities for the periods covered by the Statements
of Cash Flows have been primarily related to changes in accrued and deferred
assets, credits and other liabilities, the provision for credit losses,
depreciation and amortization, realized gains on sales of loans and the
amortization of deferred loan origination fees and discounts (premiums) on loans
and investments, all of which are non-cash or non-operating adjustments to
operating cash flows. Net income adjusted for non-cash and non-operating items
and the origination and sale of loans held for sale were the primary source of
cash flows from operating activities. Operating activities provided cash flows
of $77.7 million and $35.8 million during the nine months ended September 30,
2021 and 2020, respectively.

During the nine months ended September 30, 2021, investing activities provided
cash of $239.9 million, primarily due to the net repayment of loans and payments
received on investment securities, partially offset by the purchase of
investment securities and the purchase of loans. Investing activities in the
2020 period used cash of $278.9 million, primarily due to the net origination of
loans, the purchase of investment securities and the purchase of equipment,
partially offset by cash proceeds from the termination of interest rate
derivatives, the sale of other real estate owned and payments received on
investment securities.

Changes in cash flows from financing activities during the periods covered by
the Statements of Cash Flows were due to changes in deposits after interest
credited and changes in short-term borrowings, as well as advances from
borrowers for taxes and insurance, dividend payments to stockholders,
repurchases of the Company's common stock and the exercise of common stock
options. Financing activities used cash of $112.2 million during the nine months
ended September 30, 2021 and provided cash of $361.2 million during the nine
months ended September 30, 2020. In the 2021 nine-month period, financing
activities used cash primarily as a result of decreases in time deposits,
redemption of subordinated notes, dividends paid to stockholders and the
repurchase of the Company's common stock, partially offset by net increases in
checking account balances. In the 2020 nine-month period, financing activities
provided cash primarily as a result of net increases in checking account
balances, partially offset by decreases in short-term borrowings, decreases in
time deposits, dividends paid to stockholders and the purchase of the Company's
common stock. Also in the 2020 period, cash was provided by the issuance of
subordinated notes.

Capital Resources

Management continuously reviews the capital position of the Company and the Bank
to ensure compliance with minimum regulatory requirements, as well as to explore
ways to increase capital either by retained earnings or other means.

At September 30, 2021, the Company's total stockholders' equity and common
stockholders' equity were each $624.6 million, or 11.5% of total assets,
equivalent to a book value of $46.73 per common share. As of December 31, 2020,
total stockholders' equity and common stockholders' equity were each $629.7
million, or 11.4% of total assets, equivalent to a book value of $45.79 per
common share. At September 30, 2021, the Company's tangible common equity to
tangible assets ratio was 11.4%, compared to 11.3% at December 31, 2020 (See
Non-GAAP Financial Measures below).

Included in stockholders' equity at September 30, 2021 and December 31, 2020,
were unrealized gains (net of taxes) on the Company's available-for-sale
investment securities totaling $12.0 million and $23.3 million, respectively.
This decrease in unrealized gains primarily resulted from rising market interest
rates, which decreased the fair value of investment securities.

Also included in stockholders' equity at September 30, 2021, were realized gains
(net of taxes) on the Company's cash flow hedge (interest rate swap), which was
terminated in March 2020, totaling $25.2 million. This amount, plus associated
deferred taxes, is expected to be accreted to interest income over the remaining
term of the original interest rate swap contract, which was to end in October
2025. At September 30, 2021, the remaining pre-tax amount to be recorded in
interest income was $32.6 million. The net effect on total stockholders' equity
over time will be no impact as the reduction of this realized gain will be
offset by an increase in retained earnings (as the interest income flows through
pre-tax income).

Banks are required to maintain minimum risk-based capital ratios. These ratios
compare capital, as defined by the risk-based regulations, to assets adjusted
for their relative risk as defined by the regulations. Under current guidelines
banks must have a minimum common equity Tier 1 capital ratio of 4.50%, a minimum
Tier 1 risk-based capital ratio of 6.00%, a minimum total risk-based capital
ratio of 8.00%, and a minimum Tier 1 leverage ratio of 4.00%. To be considered
"well capitalized," banks must have a minimum common equity Tier 1 capital ratio
of 6.50%, a minimum Tier 1 risk-based capital ratio of 8.00%, a minimum total
risk-based capital ratio of 10.00%, and a minimum Tier 1 leverage ratio of
5.00%. On September 30, 2021, the Bank's common equity Tier

                                       68



1 capital ratio was 14.7%, its Tier 1 capital ratio was 14.7%, its total capital
ratio was 15.9% and its Tier 1 leverage ratio was 11.7%. As a result, as of
September 30, 2021, the Bank was well capitalized, with capital ratios in excess
of those required to qualify as such. On December 31, 2020, the Bank's common
equity Tier 1 capital ratio was 13.7%, its Tier 1 capital ratio was 13.7%, its
total capital ratio was 14.9% and its Tier 1 leverage ratio was 11.8%. As a
result, as of December 31, 2020, the Bank was well capitalized, with capital
ratios in excess of those required to qualify as such.

The FRB has established capital regulations for bank holding companies that
generally parallel the capital regulations for banks. On September 30, 2021, the
Company's common equity Tier 1 capital ratio was 13.4%, its Tier 1 capital ratio
was 14.0%, its total capital ratio was 16.9% and its Tier 1 leverage ratio was
11.1%. To be considered well capitalized, a bank holding company must have a
Tier 1 risk-based capital ratio of at least 6.00% and a total risk-based capital
ratio of at least 10.00%. As of September 30, 2021, the Company was considered
well capitalized, with capital ratios in excess of those required to qualify as
such. On December 31, 2020, the Company's common equity Tier 1 capital ratio was
12.2%, its Tier 1 capital ratio was 12.7%, its total capital ratio was 17.2% and
its Tier 1 leverage ratio was 10.9%. As of December 31, 2020, the Company was
considered well capitalized, with capital ratios in excess of those required to
qualify as such.

In addition to the minimum common equity Tier 1 capital ratio, Tier 1 risk-based
capital ratio and total risk-based capital ratio, the Company and the Bank have
to maintain a capital conservation buffer consisting of additional common equity
Tier 1 capital greater than 2.5% of risk-weighted assets above the required
minimum levels in order to avoid limitations on paying dividends, repurchasing
shares, and paying discretionary bonuses. At September 30, 2021, the Company and
the Bank both had additional common equity Tier 1 capital in excess of the
buffer amount.

On August 15, 2021, the Company completed the redemption, at par, of all $75.0
million aggregate principal amount of its 5.25% subordinated notes due August
15, 2026. The Company utilized cash on hand for the redemption payment. The
annual combined interest expense and amortization of deferred issuance costs on
these subordinated notes was approximately $4.3 million. These subordinated
notes were included as capital in the Company's calculation of its total capital
ratio.

For additional information, see "Item 1. Business--Government Supervision and
Regulation-Capital" in the Company's Annual Report on Form 10-K for the year
ended December 31, 2020.

Dividends. During the three months ended September 30, 2021, the Company
declared a common stock cash dividend of $0.36 per share, or 24% of net income
per diluted common share for that three month period, and paid a common stock
cash dividend of $0.34 per share (which was declared in June 2021). During the
three months ended September 30, 2020, the Company declared a common stock cash
dividend of $0.34 per share, or 35% of net income per diluted common share for
that three month period, and paid a common stock cash dividend of $0.34 per
share (which was declared in June 2020). During the nine months ended September
30, 2021, the Company declared common stock cash dividends of $1.04 per share,
or 24% of net income per diluted common share for that nine month period, and
paid common stock cash dividends of $1.02 per share ($0.34 of which was declared
in December 2020). During the nine months ended September 30, 2020, the Company
declared common stock cash dividends of $2.02 per share, or 69% of net income
per diluted common share for that nine month period, and paid common stock cash
dividends of $2.02 per share ($0.34 of which was declared in December 2019). The
total dividends declared during the nine months ended September 30, 2020,
consisted of regular cash dividends of $1.02 per share and a special cash
dividend of $1.00 per share. The Board of Directors meets regularly to consider
the level and the timing of dividend payments. The $0.36 per share dividend
declared but unpaid as of September 30, 2021, was paid to stockholders in
October 2021.

Common Stock Repurchases and Issuances. The Company has been in various buy-back
programs since May 1990. During the three months ended September 30, 2021, the
Company issued 14,439 shares of stock at an average price of $37.87 per share to
cover stock option exercises and repurchased 307,059 shares of its common stock
at an average price of $53.13 per share. During the three months ended September
30, 2020, the Company issued 2,550 shares of stock at an average price of $26.53
per share to cover stock option exercises and repurchased 206,400 shares of its
common stock at an average price of $37.39 per share. During the nine months
ended September 30, 2021, the Company issued 63,570 shares of stock at an
average price of $41.57 per share to cover stock option exercises and
repurchased 449,438 shares of its common stock at an average price of $52.89 per
share. During the nine months ended September 30, 2020, the Company issued 9,625
shares of stock at an average price of $33.76 per share to cover stock option
exercises and repurchased 390,107 shares of its common stock at an average price
of $40.67 per share.

Management has historically utilized stock buy-back programs from time to time
as long as management believed that repurchasing the Company's stock would
contribute to the overall growth of shareholder value. The number of shares of
stock that will be repurchased at any particular time and the prices that will
be paid are subject to many factors, several of which are outside of the control
of the Company. The primary factors typically include the number of shares
available in the market from sellers at any given time, the market price of the
stock and the projected impact on the Company's earnings per share and capital.

                                       69

On October 21, 2020, the Company's Board of Directors authorized management to
repurchase up to one million additional shares of the Company's common stock
under a program of open market purchases or privately negotiated transactions.
The authorization of this program became effective in November 2020 and does not
have an expiration date.

Non-GAAP Financial Measures

This document contains certain financial information determined by methods other
than in accordance with accounting principles generally accepted in the United
States ("GAAP"). These non-GAAP financial measures include the ratio of tangible
common equity to tangible assets.

In calculating the ratio of tangible common equity to tangible assets, we
subtract period-end intangible assets from common equity and from total assets.
Management believes that the presentation of this measure excluding the impact
of intangible assets provides useful supplemental information that is helpful in
understanding our financial condition and results of operations, as it provides
a method to assess management's success in utilizing our tangible capital as
well as our capital strength. Management also believes that providing a measure
that excludes balances of intangible assets, which are subjective components of
valuation, facilitates the comparison of our performance with the performance of
our peers. In addition, management believes that this is a standard financial
measure used in the banking industry to evaluate performance.

These non-GAAP financial measures are supplemental and are not a substitute for
any analysis based on GAAP financial measures. Because not all companies use the
same calculation of non-GAAP measures, this presentation may not be comparable
to similarly titled measures as calculated by other companies.

Non-GAAP Reconciliation: Ratio of Tangible Common Equity to Tangible Assets

                                                 September 30, 2021      December 31, 2020

                                                          (Dollars in Thousands)

Common equity at period end                     $            624,641    $           629,741

Less: Intangible assets at period end                          6,239       

6,944

Tangible common equity at period end (a)        $            618,402    $  

622,797

Total assets at period end                      $          5,451,835    $  

5,526,420

Less: Intangible assets at period end                          6,239       

6,944

Tangible assets at period end (b)               $          5,445,596    $  

5,519,476

Tangible common equity to tangible assets
(a) / (b)                                                      11.36 %     

11.28 %

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