UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES ACT OF 1934

For the Quarterly Period Ended June 30, 2015

Commission File Number 0-18082

GREAT SOUTHERN BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	43-1524856
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
1451 E. Battlefield, Springfield, Missouri	65804
(Address of principal executive offices)	(Zip Code)
(417) 887-4400

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

Yes /X/     No /  /

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes/X/   No /  /

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer /  /	Accelerated filer /X/	Non-accelerated filer /  /	Smaller reporting company /  /
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes /  /   No /X/

The number of shares outstanding of each of the registrant's classes of common stock: 13,853,811 shares of common stock, par value $.01, outstanding at August 6, 2015.

1

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

GREAT SOUTHERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands, except number of shares)

	JUNE 30,		DECEMBER 31,
	2015		2014
	(Unaudited)
ASSETS
Cash	$	111,729	$	109,052
Interest-bearing deposits in other financial institutions		157,499		109,595
Cash and cash equivalents		269,228		218,647
Available-for-sale securities		326,389		365,506
Held-to-maturity securities (fair value $390  – June 2015;
$499 - December 2014)		353		450
Mortgage loans held for sale		16,567		14,579
Loans receivable, net of allowance for loan losses of
$39,698 – June 2015; $38,435 - December 2014		3,202,377		3,038,848
FDIC indemnification asset		32,177		44,334
Interest receivable		11,306		11,219
Prepaid expenses and other assets		59,127		60,452
Other real estate owned, net		39,997		45,838
Premises and equipment, net		127,627		124,841
Goodwill and other intangible assets		6,633		7,508
Investment in Federal Home Loan Bank stock		12,605		16,893
Current and deferred income taxes		6,784		2,219
Total Assets	$	4,111,170	$	3,951,334
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	3,196,318	$	2,990,840
Federal Home Loan Bank advances		193,594		271,641
Securities sold under reverse repurchase agreements with customers		216,100		168,993
Short-term borrowings		1,308		42,451
Subordinated debentures issued to capital trusts		30,929		30,929
Accrued interest payable		1,076		1,067
Advances from borrowers for taxes and insurance		7,265		4,929
Accounts payable and accrued expenses		27,000		20,739
Total Liabilities		3,673,590		3,531,589
Stockholders' Equity:
Capital stock
Serial preferred stock – $.01 par value; authorized 1,000,000 shares; issued      and outstanding June 2015 and December 2014 - 57,943 shares,      $1,000 liquidation amount		57,943		57,943
Common stock, $.01 par value; authorized 20,000,000 shares; issued and outstanding June 2015  – 13,801,109 shares;
December 2014 - 13,754,806 shares		138		138
Additional paid-in capital		23,167		22,345
Retained earnings		350,467		332,283
Accumulated other comprehensive income		5,865		7,036
Total Stockholders' Equity		437,580		419,745
Total Liabilities and Stockholders' Equity	$	4,111,170	$	3,951,334

See Notes to Consolidated Financial Statements

2

GREAT SOUTHERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

	THREE MONTHS ENDED JUNE 30,
	2015			2014
	(Unaudited)
INTEREST INCOME
Loans	$	43,947		$	41,412
Investment securities and other		1,787			2,972
TOTAL INTEREST INCOME		45,734			44,384
INTEREST EXPENSE
Deposits		3,133			2,752
Federal Home Loan Bank advances		416			1,010
Short-term borrowings and repurchase agreements		16			512
Subordinated debentures issued to capital trusts		160			139
TOTAL INTEREST EXPENSE		3,725			4,413
NET INTEREST INCOME		42,009			39,971
PROVISION FOR LOAN LOSSES		1,300			1,462
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		40,709			38,509
NON-INTEREST INCOME
Commissions		299			344
Service charges and ATM fees		5,026			4,728
Net realized gains on sales of loans		1,059			608
Net realized gains on sales of available-for-sale securities		—			569
Late charges and fees on loans		762			265
Gain (loss) on derivative interest rate products		113			(130	)
Initial gain recognized on business acquisition		—			10,805
Amortization of income/expense related to business acquisitions		(5,158	)		(7,210	)
Other income		1,356			652
TOTAL NON-INTEREST INCOME		3,457			10,631
NON-INTEREST EXPENSE
Salaries and employee benefits		14,606			13,470
Net occupancy and equipment expense		6,115			5,210
Postage		912			844
Insurance		856			953
Advertising		750			438
Office supplies and printing		378			367
Telephone		767			681
Legal, audit and other professional fees		664			908
Expense on foreclosed assets		318			1,342
Partnership tax credit investment amortization		420			427
Other operating expenses		2,163			9,759
TOTAL NON-INTEREST EXPENSE		27,949			34,399
INCOME BEFORE INCOME TAXES		16,217			14,741
PROVISION FOR INCOME TAXES		4,214			3,687
NET INCOME		12,003			11,054
Preferred stock dividends		145			145
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	11,858		$	10,909

3

	THREE MONTHS ENDED JUNE 30,
	2015		2014
BASIC EARNINGS PER COMMON SHARE	$	0.86	$	0.80
DILUTED EARNINGS PER COMMON SHARE	$	0.85	$	0.79
DIVIDENDS DECLARED PER COMMON SHARE	$	0.22	$	0.20

See Notes to Consolidated Financial Statements

4

GREAT SOUTHERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

	SIX MONTHS ENDED JUNE 30,
	2015			2014
	(Unaudited)
INTEREST INCOME
Loans	$	89,896		$	80,721
Investment securities and other		3,744			5,958
TOTAL INTEREST INCOME		93,640			86,679
INTEREST EXPENSE
Deposits		6,294			5,413
Federal Home Loan Bank advances		863			1,984
Short-term borrowings and repurchase agreements		37			1,069
Subordinated debentures issued to capital trusts		312			275
TOTAL INTEREST EXPENSE		7,506			8,741
NET INTEREST INCOME		86,134			77,938
PROVISION FOR LOAN LOSSES		2,600			3,154
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		83,534			74,784
NON-INTEREST INCOME
Commissions		580			626
Service charges and ATM fees		9,670			8,896
Net realized gains on sales of loans		1,999			1,157
Net realized gains on sales of available-for-sale securities		—			642
Late charges and fees on loans		1,110			579
Gain (loss) on derivative interest rate products		20			(233	)
Initial gain recognized on business acquisition		—			10,805
Amortization of income/expense related to business acquisitions		(12,054	)		(13,598	)
Other income		2,074			2,681
TOTAL NON-INTEREST INCOME		3,399			11,555
NON-INTEREST EXPENSE
Salaries and employee benefits		29,183			26,487
Net occupancy and equipment expense		12,169			10,614
Postage		1,801			1,637
Insurance		1,835			1,879
Advertising		1,182			1,169
Office supplies and printing		715			657
Telephone		1,532			1,417
Legal, audit and other professional fees		1,287			1,841
Expense on foreclosed assets		703			2,192
Partnership tax credit investment amortization		840			880
Other operating expenses		3,942			11,520
TOTAL NON-INTEREST EXPENSE		55,189			60,293
INCOME BEFORE INCOME TAXES		31,744			26,046
PROVISION FOR INCOME TAXES		8,088			6,174
NET INCOME		23,656			19,872
Preferred stock dividends		290			290
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	23,366		$	19,582

5

	SIX MONTHS ENDED JUNE 30,
	2015		2014
BASIC EARNINGS PER COMMON SHARE	$	1.69	$	1.43
DILUTED EARNINGS PER COMMON SHARE	$	1.67	$	1.42
DIVIDENDS DECLARED PER COMMON SHARE	$	0.42	$	0.40

See Notes to Consolidated Financial Statements

6

GREAT SOUTHERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	THREE MONTHS ENDED JUNE 30,
	2015			2014
	(Unaudited)
Net Income	$	12,003		$	11,054
Unrealized appreciation (depreciation) on available-for-sale securities, net
of taxes (credit) of $(329) and $1,145, for 2015 and 2014, respectively		(968	)		2,126
Reclassification adjustment for gains included in net income,
net of taxes (credit) of $0 and $(199), for 2015 and 2014, respectively		—			(370	)
Change in fair value of cash flow hedge, net of taxes (credit) of $(13)
and $(54), for 2015 and 2014, respectively		(9	)		(101	)
Comprehensive Income	$	11,026		$	12,709

	SIX MONTHS ENDED JUNE 30,
	2015			2014
	(Unaudited)
Net Income	$	23,656		$	19,872
Unrealized appreciation (depreciation) on available-for-sale securities, net
of taxes (credit) of $(381) and $2,678, for 2015 and 2014, respectively		(1,066	)		4,973
Reclassification adjustment for gains included in net income,
net of taxes (credit) of $0 and $(225), for 2015 and 2014, respectively		—			(417	)
Change in fair value of cash flow hedge, net of taxes (credit) of $(66)
and $(77), for 2015 and 2014, respectively		(105	)		(143	)
Comprehensive Income	$	22,485		$	24,285

See Notes to Consolidated Financial Statements

7

GREAT SOUTHERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	SIX MONTHS ENDED JUNE 30,
	2015			2014
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	23,656		$	19,872
Proceeds from sales of loans held for sale		80,302			47,922
Originations of loans held for sale		(83,449	)		(49,089	)
Items not requiring (providing) cash:
Depreciation		4,596			4,220
Amortization of other assets		1,715			1,525
Compensation expense for stock option grants		263			273
Provision for loan losses		2,600			3,154
Net gains on loan sales		(1,999	)		(1,157	)
Net gains on sale of available-for-sale investment securities		—			(642	)
Net gains on sale of premises and equipment		(631	)		(41	)
(Gain) loss on sale of foreclosed assets		(489	)		790
Initial gain recognized on business acquisition		—			(10,805	)
Amortization of deferred income, premiums, discounts
and fair value adjustments		5,473			11,605
(Gain) loss on derivative interest rate products		(20	)		233
Deferred income taxes		(6,209	)		(371	)
Changes in:
Interest receivable		(87	)		761
Prepaid expenses and other assets		4,566			(288	)
Accounts payable and accrued expenses		5,926			(3,492	)
Income taxes refundable/payable		2,093			—
Net cash provided by operating activities		38,306			24,470
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans		(121,360	)		(143,068	)
Purchase of loans		(44,194	)		(39,926	)
Cash received from acquisitions		—			189,437
Cash received from FDIC loss sharing reimbursements		1,490			5,894
Purchase of premises and equipment		(8,655	)		(7,170	)
Proceeds from sale of premises and equipment		1,904			197
Proceeds from sale of foreclosed assets		11,111			12,362
Capitalized costs on foreclosed assets		(20	)		(40	)
Proceeds from sales of available-for-sale investment securities		—			41,312
Proceeds from maturing investment securities		110			110
Proceeds from called investment securities		5,143			4,535
Principal reductions on mortgage-backed securities		32,448			53,996
Purchase of available-for-sale securities		(1,410	)		(19,914	)
Redemption of Federal Home Loan Bank stock		4,288			1,768
Net cash provided by (used in) investing activities		(119,145	)		99,493
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in certificates of deposit		167,179			(102,932	)
Net increase in checking and savings deposits		38,601			37,138
Proceeds from Federal Home Loan Bank advances		3,316,500			245,000
Repayments of Federal Home Loan Bank advances		(3,394,532	)		(277,284	)
Net increase in short-term borrowings		5,964			22,165
Repayments of structured repurchase agreements		—			(50,000	)
Advances from borrowers for taxes and insurance		2,336			2,677
Dividends paid		(5,796	)		(5,490	)
Purchase of company stock		—			(481	)
Stock options exercised		1,168			545
Net cash provided by (used in) financing activities		131,420			(128,662	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		50,581			(4,699	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		218,647			227,925
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	269,228		$	223,226

See Notes to Consolidated Financial Statements

8

GREAT SOUTHERN BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements of Great Southern Bancorp, Inc. (the "Company" or "Great Southern") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The financial statements presented herein reflect all adjustments which are, in the opinion of management, necessary to fairly present the financial condition, results of operations and cash flows of the Company for the periods presented. Those adjustments consist only of normal recurring adjustments. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the full year. The consolidated statement of financial condition of the Company as of December 31, 2014, has been derived from the audited consolidated statement of financial condition of the Company as of that date.   Certain prior period amounts have been reclassified to conform to the current period presentation.  These reclassifications had no effect on net income.

Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for 2014 filed with the Securities and Exchange Commission.

NOTE 2: NATURE OF OPERATIONS AND OPERATING SEGMENTS

The Company operates as a one-bank holding company.  The Company's business primarily consists of the operations of Great Southern Bank (the "Bank"), which provides a full range of financial services to customers primarily located in Missouri, Iowa, Kansas, Minnesota, Nebraska and Arkansas.  In addition, the Company operates commercial loan production offices in Dallas, Texas and Tulsa, Oklahoma.  The Company and the Bank are subject to the regulation of certain federal and state agencies and undergo periodic examinations by those regulatory agencies.

The Company's banking operation is its only reportable segment.  The banking operation is principally engaged in the business of originating residential and commercial real estate loans, construction loans, commercial business loans and consumer loans and funding these loans through attracting deposits from the general public, accepting brokered deposits and borrowing from the Federal Home Loan Bank and others.  The operating results of this segment are regularly reviewed by management to make decisions about resource allocations and to assess performance.  Selected information is not presented separately for the Company's reportable segment, as there is no material difference between that information and the corresponding information in the consolidated financial statements.

NOTE 3: RECENT ACCOUNTING PRONOUNCEMENTS

In January 2014, the FASB issued ASU No. 2014-04 to amend FASB ASC Topic 310, Receivables – Troubled Debt Restructurings by Creditors.  The objective of the amendments in this Update is to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized.  The amendments in this Update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.  The Update was effective for the Company beginning January 1, 2015, and did not have a material impact on the Company's financial position or results of operations.

9

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 660): Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40). The guidance in this Update supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the codification. For public companies, this Update will be effective for interim and annual periods beginning after December 15, 2016 and early application is not permitted for public companies. The Company is currently assessing the impact that this guidance will have on its consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The guidance in this Update changes the accounting for repurchase-to-maturity transactions and repurchase financing arrangements. It also requires enhanced disclosures about repurchase agreements and similar transactions. The accounting changes in this Update are effective for public companies for the first interim or annual period beginning after December 15, 2014. In addition, for public companies, the disclosure for certain transactions accounted for as a sale is effective for the first interim or annual period beginning on or after December 15, 2014, and the disclosure for transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. Early application is not permitted for public companies. The adoption of this Update did not have a material effect on the Company's consolidated financial statements.

In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities that Calculate Net Asset Value Per Share.  The guidance in this update removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2015 and is not expected to have a material effect on the Company's consolidated financial statements.

NOTE 4: STOCKHOLDERS' EQUITY

Previously, the Company's stockholders approved the Company's reincorporation to the State of Maryland. Under Maryland law, there is no concept of "Treasury Shares." Instead, shares purchased by the Company constitute authorized but unissued shares under Maryland law. Accounting principles generally accepted in the United States of America state that accounting for treasury stock shall conform to state law. The cost of shares purchased by the Company has been allocated to Common Stock and Retained Earnings balances.

NOTE 5: EARNINGS PER SHARE

	Three Months Ended June 30,
	2015		2014
	(In Thousands, Except Per Share Data)
Basic:
Average shares outstanding		13,790		13,685
Net income available to common stockholders	$	11,858	$	10,909
Per common share amount	$	0.86	$	0.80
Diluted:
Average shares outstanding		13,790		13,685
Net effect of dilutive stock options – based on the treasury
stock method using average market price		189		95
Diluted shares		13,979		13,780
Net income available to common stockholders	$	11,858	$	10,909
Per common share amount	$	0.85	$	0.79

10

	Six Months Ended June 30,
	2015		2014
	(In Thousands, Except Per Share Data)
Basic:
Average shares outstanding		13,790		13,685
Net income available to common stockholders	$	23,366	$	19,582
Per common share amount	$	1.69	$	1.43
Diluted:
Average shares outstanding		13,790		13,685
Net effect of dilutive stock options – based on the treasury
stock method using average market price		189		95
Diluted shares		13,979		13,780
Net income available to common stockholders	$	23,366	$	19,582
Per common share amount	$	1.67	$	1.42

Options outstanding at June 30, 2015 and 2014, to purchase 12,750 and 182,275 shares of common stock, respectively, were  not included in the computation of diluted earnings per common share for each of the three and six month periods because such options' exercise prices were greater than the average market prices of the common shares for the three and six months ended June 30, 2015 and 2014, respectively.

NOTE 6: INVESTMENT SECURITIES

	June 30, 2015
			Gross		Gross				Tax
	Amortized		Unrealized		Unrealized		Fair		Equivalent
	Cost		Gains		Losses		Value		Yield
	(In Thousands)
AVAILABLE-FOR-SALE SECURITIES:
U.S. government agencies	$	20,000	$	—	$	197	$	19,803		2.00	%
Mortgage-backed securities		221,842		3,544		526		224,860		1.79
States and political subdivisions		74,018		4,388		39		78,367		5.72
Equity securities		847		2,512		—		3,359		—
	$	316,707	$	10,444	$	762	$	326,389		2.72	%
HELD-TO-MATURITY SECURITIES:
States and political subdivisions	$	353	$	37	$	—	$	390		7.37	%

	December 31, 2014
			Gross		Gross				Tax
	Amortized		Unrealized		Unrealized		Fair		Equivalent
	Cost		Gains		Losses		Value		Yield
	(In Thousands)
AVAILABLE-FOR-SALE SECURITIES:
U.S. government agencies	$	20,000	$	—	$	486	$	19,514		2.00	%
Mortgage-backed securities		254,294		4,325		821		257,798		1.97
States and political subdivisions		79,237		5,810		7		85,040		5.76
Equity securities		847		2,307		—		3,154		—
	$	354,378	$	12,442	$	1,314	$	365,506		2.82	%
HELD-TO-MATURITY SECURITIES:
States and political subdivisions	$	450	$	49	$	—	$	499		7.37	%

11

The amortized cost and fair value of available-for-sale securities at June 30, 2015, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
	Cost		Value
	(In Thousands)
One year or less	$	—	$	—
After one through five years		254		266
After five through ten years		3,643		3,842
After ten years		90,121		94,062
Securities not due on a single maturity date		221,842		224,860
Equity securities		847		3,359
	$	316,707	$	326,389

The held-to-maturity securities at June 30, 2015, by contractual maturity, are shown below.  Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
	Cost		Value
	(In Thousands)
After one through five years	$	353	$	390

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at June 30, 2015 and December 31, 2014, respectively, was approximately $85.8 million and $106.0 million, which is approximately 26.3% and 29.0% of the Company's available-for-sale and held-to-maturity investment portfolio, respectively.

Based on an evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these debt securities are temporary at June 30, 2015.

The following table shows the Company's gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2015 and December 31, 2014:

	June 30, 2015
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Losses			Value		Losses			Value		Losses
	(In Thousands)
U.S. government agencies	$	—	$	—		$	20,000	$	(197	)	$	20,000	$	(197	)
Mortgage-backed securities		19,004		(93	)		43,333		(433	)		62,337		(526	)
State and political
subdivisions		2,555		(25	)		917		(14	)		3,472		(39	)
	$	21,559	$	(118	)	$	64,250	$	(644	)	$	85,809	$	(762	)

12

	December 31, 2014
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Losses			Value		Losses			Value		Losses
	(In Thousands)
U.S. government agencies	$	—		—		$	20,000	$	(486	)	$	20,000	$	(486	)
Mortgage-backed securities		40,042		(328	)		45,056		(493	)		85,098		(821	)
State and political
subdivisions		—		—			925		(7	)		925		(7	)
	$	40,042	$	(328	)	$	65,981	$	(986	)	$	106,023	$	(1,314	)

Gross gains of $-0- and $-0- and gross losses of $-0- and $-0- resulting from sales of available-for-sale securities were realized for the three and six months ended June 30, 2015.  Gross gains of $569,000 and $642,000 and gross losses of $-0- and $-0- resulting from sales of available-for-sale securities were realized for the three and six months ended June 30, 2014.  Gains and losses on sales of securities are determined on the specific-identification method.

Other-than-temporary Impairment.  Upon acquisition of a security, the Company decides whether it is within the scope of the accounting guidance for beneficial interests in securitized financial assets or will be evaluated for impairment under the accounting guidance for investments in debt and equity securities.

The accounting guidance for beneficial interests in securitized financial assets provides incremental impairment guidance for a subset of the debt securities within the scope of the guidance for investments in debt and equity securities.  Where the security is a beneficial interest in securitized financial assets, the Company uses the beneficial interests in securitized financial asset impairment model.  Where the security is not a beneficial interest in securitized financial assets, the Company uses the debt and equity securities impairment model.  The Company does not currently have securities within the scope of this guidance for beneficial interests in securitized financial assets.

The Company conducts periodic reviews to identify and evaluate each investment security to determine whether an other-than-temporary impairment has occurred.  The Company considers the length of time a security has been in an unrealized loss position, the relative amount of the unrealized loss compared to the carrying value of the security, the type of security and other factors.  If certain criteria are met, the Company performs additional review and evaluation using observable market values or various inputs in economic models to determine if an unrealized loss is other-than-temporary.  The Company uses quoted market prices for marketable equity securities and uses broker pricing quotes based on observable inputs for equity investments that are not traded on a stock exchange.  For non-agency collateralized mortgage obligations, to determine if the unrealized loss is other-than-temporary, the Company projects total estimated defaults of the underlying assets (mortgages) and multiplies that calculated amount by an estimate of realizable value upon sale in the marketplace (severity) in order to determine the projected collateral loss.  The Company also evaluates any current credit enhancement underlying these securities to determine the impact on cash flows.  If the Company determines that a given security position will be subject to a write-down or loss, the Company records the expected credit loss as a charge to earnings.

During the three and six months ended June 30, 2015, no securities were determined to have impairment that was other than temporary.

Credit Losses Recognized on Investments.  There were no debt securities that have experienced fair value deterioration due to credit losses, as well as due to other market factors, but are not otherwise other-than-temporarily impaired.

13

Amounts Reclassified Out of Accumulated Other Comprehensive Income.  Amounts reclassified from accumulated other comprehensive income and the affected line items in the statements of income during the three and six months ended June 30, 2015 and 2014, were as follows:

	Amounts Reclassified from Other Comprehensive Income Three Months Ended June 30,					Affected Line Item in the Statements of Income
	2015		2014
	(In Thousands)
Unrealized gains (losses) on available-						Net realized gains on available-
for-sale securities	$	—	$	569		for-sale securities
						(Total reclassified amount before tax)
Income Taxes		—		(199	)	Provision for income taxes
Total reclassifications out of accumulated
other comprehensive income	$	—	$	370

	Amounts Reclassified from Other Comprehensive Income Six Months Ended June 30,					Affected Line Item in the Statements of Income
	2015		2014
	(In Thousands)
Unrealized gains (losses) on available-						Net realized gains on available-
for-sale securities	$	—	$	642		for-sale securities
						(Total reclassified amount before tax)
Income Taxes		—		(225	)	Provision for income taxes
Total reclassifications out of accumulated
other comprehensive income	$	—	$	417

14

NOTE 7: LOANS AND ALLOWANCE FOR LOAN LOSSES

	June 30,			December 31,
	2015			2014
	(In Thousands)
One- to four-family residential construction	$	38,476		$	40,361
Subdivision construction		34,253			28,593
Land development		48,574			52,096
Commercial construction		459,907			392,929
Owner occupied one- to four-family residential		94,024			87,549
Non-owner occupied one- to four-family residential		146,480			143,051
Commercial real estate		1,015,454			945,876
Other residential		385,901			392,414
Commercial business		391,674			354,012
Industrial revenue bonds		39,532			41,061
Consumer auto		371,271			323,353
Consumer other		76,581			78,029
Home equity lines of credit		70,515			66,272
Acquired FDIC-covered loans, net of discounts		266,371			286,608
Acquired loans no longer covered by FDIC loss sharing agreements,
net of discounts		38,482			49,945
Acquired non-covered loans, net of discounts		110,865			121,982
		3,588,360			3,404,131
Undisbursed portion of loans in process		(343,276	)		(323,572	)
Allowance for loan losses		(39,698	)		(38,435	)
Deferred loan fees and gains, net		(3,009	)		(3,276	)
	$	3,202,377		$	3,038,848
Weighted average interest rate		4.59	%		4.66	%

15

Classes of loans by aging were as follows:

	June 30, 2015
													Total Loans
					Past Due								> 90 Days
	30-59 Days		60-89 Days		90 Days		Total Past				Total Loans		Past Due and
	Past Due		Past Due		or More		Due		Current		Receivable		Still Accruing
	(In Thousands)
One- to four-family
residential construction	$	—	$	—	$	—	$	—	$	38,476	$	38,476	$	—
Subdivision construction		306		—		56		362		33,891		34,253		—
Land development		34		106		11		151		48,423		48,574		—
Commercial construction		—		—		—		—		459,907		459,907		—
Owner occupied one- to four-
family residential		68		120		760		948		93,076		94,024		—
Non-owner occupied one- to
four-family residential		—		101		212		313		146,167		146,480		—
Commercial real estate		2,349		87		2,670		5,106		1,010,348		1,015,454		—
Other residential		—		—		—		—		385,901		385,901		—
Commercial business		190		—		215		405		391,269		391,674		—
Industrial revenue bonds		—		—		—		—		39,532		39,532		—
Consumer auto		1,773		397		476		2,646		368,625		371,271		4
Consumer other		659		235		515		1,409		75,172		76,581		222
Home equity lines of credit		128		105		194		427		70,088		70,515		—
Acquired FDIC-covered
loans, net of discounts		1,173		1,661		14,753		17,587		248,784		266,371		747
Acquired loans no longer
covered by loss sharing
agreements, net of
discounts		16		—		91		107		38,375		38,482		—
Acquired non-covered loans,
net of discounts		786		304		8,956		10,046		100,819		110,865		—
		7,482		3,116		28,909		39,507		3,548,853		3,588,360		973
Less FDIC-supported loans,
and acquired non-covered
loans, net of discounts		1,975		1,965		23,800		27,740		387,978		415,718		747
Total	$	5,507	$	1,151	$	5,109	$	11,767	$	3,160,875	$	3,172,642	$	226

16

	December 31, 2014
													Total Loans
											Total		> 90 Days Past
	30-59 Days		60-89 Days		Over 90		Total Past				Loans		Due and
	Past Due		Past Due		Days		Due		Current		Receivable		Still Accruing
	(In Thousands)
One- to four-family
residential construction	$	—	$	—	$	—	$	—	$	40,361	$	40,361	$	—
Subdivision construction		109		—		—		109		28,484		28,593		—
Land development		110		—		255		365		51,731		52,096		—
Commercial construction		—		—		—		—		392,929		392,929		—
Owner occupied one- to four-
family residential		2,037		441		1,029		3,507		84,042		87,549		170
Non-owner occupied one- to
four-family residential		583		—		296		879		142,172		143,051		—
Commercial real estate		6,887		—		4,699		11,586		934,290		945,876		187
Other residential		—		—		—		—		392,414		392,414		—
Commercial business		59		—		411		470		353,542		354,012		—
Industrial revenue bonds		—		—		—		—		41,061		41,061		—
Consumer auto		1,801		244		316		2,361		320,992		323,353		—
Consumer other		1,301		260		801		2,362		75,667		78,029		397
Home equity lines of credit		89		—		340		429		65,843		66,272		22
Acquired FDIC-covered loans, net of discounts		6,236		1,062		16,419		23,717		262,891		286,608		194
Acquired loans no longer covered by FDIC loss sharing agreements,
net of discounts		754		46		243		1,043		48,902		49,945		—
Acquired non-covered loans, net of discounts		2,638		640		11,248		14,526		107,456		121,982		—
		22,604		2,693		36,057		61,354		3,342,777		3,404,131		970
Less FDIC-supported loans,
and acquired non-covered loans, net of discounts		9,628		1,748		27,910		39,286		419,249		458,535		194
Total	$	12,976	$	945	$	8,147	$	22,068	$	2,923,528	$	2,945,596	$	776

Nonaccruing loans (excluding FDIC-supported loans, net of discount and acquired non-covered loans, net of discount) are summarized as follows:

	June 30,		December 31,
	2015		2014
	(In Thousands)
One- to four-family residential construction	$	—	$	—
Subdivision construction		56		—
Land development		11		255
Commercial construction		—		—
Owner occupied one- to four-family residential		760		859
Non-owner occupied one- to four-family residential		212		296
Commercial real estate		2,670		4,512
Other residential		—		—
Commercial business		215		411
Industrial revenue bonds		—		—
Consumer auto		472		316
Consumer other		293		404
Home equity lines of credit		194		318
Total	$	4,883	$	7,371

17

The following table presents the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2015.  Also presented is the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of June 30, 2015:

	One- to Four-
	Family
	Residential and			Other			Commercial			Commercial			Commercial
	Construction			Residential			Real Estate			Construction			Business			Consumer			Total
	(In Thousands)
Allowance for loan losses
Balance April 1, 2015	$	3,985		$	2,809		$	20,216		$	3,356		$	3,945		$	4,760		$	39,071
Provision (benefit) charged to expense		(110	)		524			(146	)		(77	)		423			686			1,300
Losses charged off		(80	)		—			(2	)		—			(551	)		(935	)		(1,568	)
Recoveries		91			9			123			9			175			488			895
Balance June 30, 2015	$	3,886		$	3,342		$	20,191		$	3,288		$	3,992		$	4,999		$	39,698
Balance January 1, 2015	$	3,455		$	2,941		$	19,773		$	3,562		$	3,679		$	5,025		$	38,435
Provision (benefit) charged to expense		446			384			239			(190	)		890			831			2,600
Losses charged off		(220	)		(2	)		(4	)		(197	)		(775	)		(2,082	)		(3,280	)
Recoveries		205			19			183			113			198			1,225			1,943
Balance June 30, 2015	$	3,886		$	3,342		$	20,191		$	3,288		$	3,992		$	4,999		$	39,698
Ending balance:
Individually evaluated for
impairment	$	663		$	—		$	2,130		$	1,411		$	261		$	243		$	4,708
Collectively evaluated for
impairment	$	3,044		$	3,323		$	16,752		$	1,671		$	3,693		$	4,352		$	32,835
Loans acquired and
accounted for under ASC
310-30	$	179		$	19		$	1,309		$	206		$	38		$	404		$	2,155
Loans
Individually evaluated for
impairment	$	9,992		$	9,729		$	25,891		$	7,334		$	1,567		$	1,558		$	56,071
Collectively evaluated for
impairment	$	303,241		$	376,172		$	989,563		$	501,147		$	429,639		$	516,809		$	3,116,571
Loans acquired and
accounted for under ASC
310-30	$	209,627		$	47,199		$	90,814		$	6,726		$	14,284		$	47,068		$	415,718

The following table presents the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2014:

	One- to Four-
	Family
	Residential and			Other			Commercial			Commercial			Commercial
	Construction			Residential			Real Estate			Construction			Business			Consumer			Total
	(In Thousands)
Allowance for loan losses
Balance April 1, 2014	$	4,638		$	1,998		$	18,443		$	7,071		$	2,341		$	3,784		$	38,275
Provision (benefit) charged to expense		915			(281	)		(1,629	)		1,110			979			368			1,462
Losses charged off		(505	)		(2	)		(338	)		(95	)		(738	)		(764	)		(2,442	)
Recoveries		25			8			—			163			—			591			787
Balance June 30, 2014	$	5,073		$	1,723		$	16,476		$	8,249		$	2,582		$	3,979		$	38,082
Balance January 1, 2014	$	6,235		$	2,678		$	16,939		$	4,464		$	6,451		$	3,349		$	40,116
Provision (benefit) charged to expense		367			(968	)		(134	)		3,693			(1,182	)		1,378			3,154
Losses charged off		(1,697	)		(2	)		(719	)		(130	)		(2,687	)		(1,784	)		(7,019	)
Recoveries		168			15			390			222			—			1,036			1,831
Balance June 30, 2014	$	5,073		$	1,723		$	16,476		$	8,249		$	2,582		$	3,979		$	38,082

18

The following table presents the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2014:

	One- to Four-
	Family
	Residential and		Other		Commercial		Commercial		Commercial
	Construction		Residential		Real Estate		Construction		Business		Consumer		Total
	(In Thousands)
Allowance for loan losses
Individually evaluated for
impairment	$	829	$	—	$	1,751	$	1,507	$	823	$	232	$	5,142
Collectively evaluated for
impairment	$	2,532	$	2,923	$	16,671	$	1,905	$	2,805	$	4,321	$	31,157
Loans acquired and
accounted for under ASC
310-30	$	94	$	18	$	1,351	$	150	$	51	$	472	$	2,136
Loans
Individually evaluated for