Great Southern Bancorp, Inc. (NASDAQ:GSBC), the holding company for
Great Southern Bank, today reported that preliminary earnings for
the three months ended March 31, 2023, were $1.67 per diluted
common share ($20.5 million net income) compared to $1.30 per
diluted common share ($17.0 million net income) for the three
months ended March 31, 2022.
For the quarter ended March 31, 2023, annualized return on
average common equity was 14.88%, annualized return on average
assets was 1.43%, and annualized net interest margin was 3.99%,
compared to 11.14%, 1.27% and 3.43%, respectively, for the quarter
ended March 31, 2022.
Great Southern President and CEO Joseph W. Turner said, “Our
first quarter performance was solid as we navigated through a
rather tumultuous time for the banking industry, especially during
the last month of the quarter. The bank failures that occurred on
the east and west coasts created turmoil and understandably focused
attention on certain operational situations in those banks and
others. Key contributors to these failures were significant rapid
growth of the institutions, exceptionally high levels of uninsured
deposits, high concentrations of deposits in certain customer
segments, and the effects of elevated unrealized losses on
investment securities that were significant as a percentage of the
institutions’ total capital. We believe these failed banks were
operational outliers and did not represent the typical community
bank.
“During the intense media focus on these failures and worry
about potential deposit run-off in the banking system, operating
conditions were stable for Great Southern and the majority of other
banks in our market areas. The strength of our Company’s deposit
base was underscored in terms of diversification by customer type
and geography, and the significantly lower level of uninsured
deposits, which is currently approximately 14% of total deposits.
From February 28, 2023, to March 31, 2023, our total deposits
increased by nearly $75 million, primarily in retail time deposits
and interest-bearing checking accounts. Total interest-bearing
checking accounts increased $63 million (about 3%).”
Turner continued, “During the first quarter, we remained focused
on taking care of our customers and worked diligently to fight the
many headwinds of the current economic and social climate. I’m
proud of the Great Southern team and appreciate their efforts that
culminated into our first quarter results, earning $20.5 million
($1.67 per diluted common share), compared to $17.0 million ($1.30
per diluted common share) in the same period in 2022. Earnings
performance ratios in the first quarter of 2023 were again very
good, with an annualized return on average assets of 1.43% and
annualized return on average equity of 14.88%. Net interest income
and net interest margin increased by $9.9 million to $53.2 million
and 56 basis points to 3.99%, respectively, when comparing first
quarters in 2023 and 2022. In the fourth quarter of 2022, net
interest income was $54.6 million and the net interest margin was
3.99%. Two fewer calendar days and increased deposit costs due to
significant marketplace competition for funding drove the moderate
decline in net interest income from the fourth quarter of 2022 to
the first quarter of 2023. We anticipate further increases in
funding costs in the next several quarters as fixed rate time
deposits mature and reprice higher. Non-interest expenses were up
from the year ago first quarter, but relatively stable compared to
expenses in the fourth quarter of 2022. Further details on income
and expense items can be found in this news release.
“During the first quarter of 2023, new loan production and
general activity was down compared to the first quarter of 2022, as
expected. Total net loans, excluding mortgage loans held for sale,
increased $62.5 million, or 1.4% since the end of 2022. The
pipeline of loan commitments decreased and the unfunded portion of
construction loans also decreased, but remained significant at $1.3
billion as of March 31, 2023, a $111 million decrease from the end
of 2022. Credit quality metrics remained excellent during the first
quarter of 2023. Non-performing assets to period-end assets were
0.05% at March 31, 2023, compared to 0.07% at the end of 2022, and
loan delinquencies in our portfolio remained at historically low
levels.
The Company’s capital and liquidity levels remain strong. We
continue to be substantially above regulatory well-capitalized
thresholds and our tangible common equity ratio was 9.5% at March
31, 2023, up from 9.2% at December 31, 2022. Total stockholders’
equity increased $22.4 million in the three months ended March 31,
2023, with retained earnings increasing $10.0 million and AOCI
increasing $11.9 million. At March 31, 2023, our AOCI loss was
about 6.9% of our total gross stockholders’ equity. If the
held-to-maturity unrealized losses were also included in
stockholders’ equity (net of taxes), it would have decreased total
stockholder’s equity by $15.5 million at March 31, 2023. This
amount was 2.8% of total stockholders’ equity of $555.5 million.
Our liquidity position, which is a measure of the Company’s ability
to generate cash to meet present and future obligations in a timely
manner, is resilient with readily-available funding sources. At the
end of March 2023, available secured funding lines through the
FHLBank and Federal Reserve Bank and on-balance sheet liquidity
exceeded $1.8 billion.”
Selected Financial Data:
(In thousands, except per
share data) |
Three Months EndedMarch 31, |
|
|
|
2023 |
|
|
2022 |
|
|
Net interest income |
$ |
53,192 |
|
$ |
43,266 |
|
|
Provision (credit) for credit
losses on loans and unfunded commitments |
|
674 |
|
|
(193 |
) |
|
Non-interest income |
|
7,889 |
|
|
9,176 |
|
|
Non-interest expense |
|
34,463 |
|
|
31,268 |
|
|
Provision for income
taxes |
|
5,488 |
|
|
4,380 |
|
|
Net income |
$ |
20,456 |
|
$ |
16,987 |
|
|
|
|
|
|
|
|
|
Earnings per diluted common
share |
$ |
1.67 |
|
$ |
1.30 |
|
|
NET INTEREST INCOME
Net interest income for the first quarter of 2023 increased $9.9
million to $53.2 million, compared to $43.3 million for the first
quarter of 2022. Net interest margin was 3.99% in the first quarter
of 2023, compared to 3.43% in the same period of 2022, an increase
of 56 basis points. Net interest margin was also 3.99% in the
fourth quarter of 2022. In comparing the 2023 and 2022 first
quarter periods, the average yield on loans increased 153 basis
points while the average rate on interest-bearing deposits
increased 135 basis points. The margin expansion primarily resulted
from increasing market interest rates and changes in the asset mix,
with average loans increasing $484 million and average investment
securities increasing $173 million. The average interest rate
spread was 3.53% for the three months ended March 31, 2023,
compared to 3.31% for the three months ended March 31, 2022 and
3.66% for the three months ended December 31, 2022.
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. As previously disclosed by the
Company, on March 2, 2020, the Company and its swap counterparty
mutually agreed to terminate this swap, effective immediately. The
Company was paid $45.9 million, including accrued but unpaid
interest, 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. The Company recorded $2.0 million of interest income related
to the swap in both the three months ended March 31, 2023 and the
three months ended March 31, 2022. The Company currently expects to
have a sufficient amount of eligible variable rate loans to
continue to accrete this interest income ratably 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.
In March 2022, the Company entered into another 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 is $300 million, with a contractual
termination date of March 1, 2024. Under the terms of the swap, the
Company receives a fixed rate of interest of 1.6725% and pays a
floating rate of interest equal to one-month USD-LIBOR (or the
equivalent replacement rate if USD-LIBOR rate is not available).
The floating rate resets monthly and net settlements of interest
due to/from the counterparty also occur monthly. The initial
floating rate of interest was set at 0.2414%, with monthly
adjustments to the floating rate occurring after that time. To the
extent that the fixed rate exceeds one-month USD-LIBOR, the Company
will receive net interest settlements, which will be recorded as
loan interest income. If one-month USD-LIBOR exceeds the fixed rate
of interest, the Company will be required to pay net settlements to
the counterparty and will record those net payments as a reduction
of interest income on loans. The Company recorded a reduction of
loan interest income related to this swap transaction of $2.2
million in the three months ended March 31, 2023. The Company
recorded loan interest income related to this swap transaction of
$369,000 in the three months ended March 31, 2022.
In July 2022, the Company entered into two additional interest
rate swap transactions as part of its ongoing interest rate
management strategies to hedge the risk of its floating rate loans.
The notional amount of each swap is $200 million with an effective
date of May 1, 2023 and a termination date of May 1, 2028. Under
the terms of one swap, beginning in May 2023, the Company will
receive a fixed rate of interest of 2.628% and will pay a floating
rate of interest equal to one-month USD-SOFR OIS. Under the terms
of the other swap, beginning in May 2023, the Company will receive
a fixed rate of interest of 5.725% and will pay a floating rate of
interest equal to one-month USD-Prime. In each case, the floating
rate will be reset monthly and net settlements of interest due
to/from the counterparty will also occur monthly. To the extent the
fixed rate of interest exceeds the floating rate of interest, the
Company will receive net interest settlements, which will be
recorded as loan interest income. If the floating rate of interest
exceeds the fixed rate of interest, the Company will be required to
pay net settlements to the counterparty and will record those net
payments as a reduction of interest income on loans. At March 31,
2023, the USD-Prime rate was 8.00% and the one-month USD-SOFR OIS
rate was 4.62101%.
For additional information on net interest income components,
see the “Average Balances, Interest Rates and Yields” tables in
this release.
NON-INTEREST INCOME
For the quarter ended March 31, 2023, non-interest income
decreased $1.3 million to $7.9 million when compared to the quarter
ended March 31, 2022, primarily as a result of the following
items:
- Net gains on loan
sales: Net gains on loan sales decreased $745,000 compared to the
prior year quarter. The decrease was due to a decrease in
originations of fixed-rate single-family mortgage loans during the
2023 period compared to the 2022 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 and 2021. As a result of the significant volume of refinance
activity in 2020 and 2021, and as market interest rates moved
higher beginning in the second quarter of 2022, mortgage refinance
volume has decreased and fixed rate loan originations and related
gains on sales of these loans have decreased substantially. The
lower level of originations is expected to continue as long as
market rates remain elevated.
- Gain (loss) on derivative interest rate
products: In the 2023 period, the Company recognized a loss of
$291,000 on the change in fair value of its back-to-back interest
rate swaps related to commercial loans and the change in fair value
on interest rate swaps related to brokered time deposits. In the
2022 period, the Company recognized a gain of $152,000 on the
change in fair value of its back-to-back interest rate swaps
related to commercial loans.
NON-INTEREST EXPENSE
For the quarter ended March 31, 2023, non-interest expense
increased $3.2 million to $34.5 million when compared to the
quarter ended March 31, 2022, primarily as a result of the
following items:
- Legal, Audit and Other Professional Fees: Legal, audit and
other professional fees increased $1.2 million from the prior year
quarter, to $2.0 million. In the 2023 period, the Company expensed
a total of $1.3 million related to training and implementation
costs for the upcoming core systems conversion and professional
fees to consultants engaged to support the Company’s transition of
core and ancillary software and information technology
systems.
- Salaries and employee benefits: Salaries and employee benefits
increased $1.1 million from the prior year quarter. A portion of
this increase related to normal annual merit increases in various
lending and operations areas. In 2023, some of these increases were
larger than in previous years due to the current employment
environment. In addition, the Charlotte commercial loan office was
opened in the second quarter of 2022 and therefore had no expense
in the first quarter of 2022. The operation of this office added
approximately $85,000 of salaries and benefits expense in the 2023
first quarter. In addition, compensation costs related to
originated loans which are deferred under accounting rules
decreased by $350,000 in the 2023 period compared to the 2022
period.
- Net occupancy expenses: Net occupancy expenses increased
$842,000 from the prior year quarter. Various components of
computer license and support increased by $500,000 in the 2023
period compared to the 2022 period. In addition, repairs and
maintenance on various buildings and ATMs increased by $250,000 in
the 2023 period compared to the 2022 period.
The Company’s efficiency ratio for the quarter ended March 31,
2023, was 56.42% compared to 59.62% for the same quarter in 2022.
In the three-months ended March 31, 2023, the improved efficiency
ratio was primarily due to an increase in net interest income,
partially offset by an increase in non-interest expense. The
Company’s ratio of non-interest expense to average assets was 2.42%
and 2.34% for the three months ended March 31, 2023 and 2022,
respectively. Average assets for the three months ended March 31,
2023, increased $358.0 million, or 6.7%, compared to the three
months ended March 31, 2022, primarily due to an increase in net
loans receivable and investment securities, partially offset by a
decrease in interest bearing cash equivalents.
INCOME TAXES
For the three months ended March 31, 2023 and 2022, the
Company's effective tax rate was 21.2% and 20.5%, respectively.
These effective rates were near or below the statutory federal tax
rate of 21%, due primarily to the utilization of certain investment
tax credits and the Company’s 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. State tax expense estimates
continually evolve as taxable income and apportionment between
states is analyzed. The Company's effective income tax rate is
currently generally expected to remain near 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 20.5% to 21.5% in future periods.
CAPITAL
As of March 31, 2023, total stockholders’ equity and common
stockholders’ equity were each $555.5 million (9.6% of total
assets), equivalent to a book value of $45.78 per common share.
Total stockholders’ equity and common stockholders’ equity at
December 31, 2022, were each $533.1 million (9.4% of total assets),
equivalent to a book value of $43.58 per common share. At March 31,
2023, the Company’s tangible common equity to tangible assets ratio
was 9.5%, compared to 9.2% at December 31, 2022. See “Non-GAAP
Financial Measures.” Included in stockholders’ equity at March 31,
2023 and December 31, 2022, were unrealized losses (net of taxes)
on the Company’s available-for-sale investment securities totaling
$40.3 million and $47.2 million, respectively. This change in net
unrealized loss during the three months ended March 31, 2023,
primarily resulted from decreasing intermediate-term market
interest rates, which generally increased the fair value of
investment securities.
In addition, included in stockholders’ equity at March 31, 2023,
were realized gains (net of taxes) on the Company’s terminated cash
flow hedge (interest rate swap), totaling $15.8 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 March 31,
2023, the remaining pre-tax amount to be recorded in interest
income was $20.5 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).
Also included in stockholders’ equity at March 31, 2023, was an
unrealized loss (net of taxes) on the Company’s three outstanding
cash flow hedges (interest rate swaps) totaling $17.0 million.
Increases in market interest rates since the inception of these
hedges have caused their fair values to decrease. However, during
the three months ended March 31, 2023, decreasing forward swap
rates resulted in increasing fair values of these hedges.
As noted above, total stockholders' equity increased $22.4
million, from $533.1 million at December 31, 2022 to $555.5 million
at March 31, 2023. Accumulated other comprehensive loss decreased
$11.9 million during the three months ended March 31, 2023,
primarily due to increases in the fair value of available-for-sale
investment securities and the fair value of cash flow hedges.
Stockholders’ equity also increased due to net income of $20.5
million in the period and a $470,000 increase in stockholders’
equity due to stock option exercises. Partially offsetting these
increases were repurchases of the Company’s common stock totaling
$5.6 million and dividends declared on common stock of $4.9
million.
The Company also had unrealized losses on its portfolio of
held-to-maturity investment securities, which totaled $20.6 million
at March 31, 2023, that were not included in its total capital
balance. If these held-to-maturity unrealized losses were included
in capital (net of taxes) it would have decreased total
stockholder’s equity by $15.5 million at March 31, 2023. This
amount was equal to 2.8% of total stockholders’ equity of $555.5
million.
On a preliminary basis, as of March 31, 2023, the Company’s Tier
1 Leverage Ratio was 10.8%, Common Equity Tier 1 Capital Ratio was
10.9%, Tier 1 Capital Ratio was 11.3%, and Total Capital Ratio was
13.9%. On March 31, 2023, and on a preliminary basis, the Bank’s
Tier 1 Leverage Ratio was 11.7%, Common Equity Tier 1 Capital Ratio
was 12.3%, Tier 1 Capital Ratio was 12.3%, and Total Capital Ratio
was 13.5%.
In January 2022, the Company’s Board of Directors authorized the
purchase of up to one million shares of the Company’s common stock.
At March 31, 2023, there were approximately 78,000 shares which
could still be purchased under this authorization. In December
2022, the Company’s Board of Directors authorized the purchase of
an additional one million shares of the Company’s common stock,
resulting in a total of approximately 1.1 million shares currently
available in our stock repurchase authorization.
During the three months ended March 31, 2023, the Company
repurchased 99,121 shares of its common stock at an average price
of $55.70 and declared a regular quarterly cash dividend of $0.40
per common share, which, combined, reduced stockholders’ equity by
$10.5 million.
LIQUIDITY AND DEPOSITS
Liquidity is a measure of the Company’s ability to generate
sufficient cash to meet present and future financial obligations in
a timely manner. 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.
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 March 31, 2023, the Company had these available secured lines
and on-balance sheet liquidity:
|
|
|
|
|
|
March 31, 2023 |
Federal Home Loan Bank
line |
|
$ |
850.0 million |
Federal Reserve Bank line |
|
$ |
418.4 million |
Cash and cash equivalents |
|
$ |
184.7 million |
Unpledged securities –
Available-for-sale |
|
$ |
376.3 million |
Unpledged securities –
Held-to-maturity |
|
$ |
176.7 million |
During the three months ended March 31, 2023, the Company’s
total deposits increased $114 million. Brokered deposits increased
$125 million through a variety of sources. Time deposits generated
through the Company’s banking center and corporate services
networks increased $37 million, while time deposits generated
through internet channels decreased $20 million. Interest-bearing
checking balances increased $46 million (about 2.1%), primarily in
money market accounts, while non-interest-bearing checking balances
decreased $72 million (about 6.8%).
From February 28, 2023, to March 31, 2023, our total deposits
increased by $75 million, primarily in retail time deposits and
interest-bearing checking accounts. Total interest-bearing checking
accounts increased $63 million (about 3%).
LOANS
Total net loans, excluding mortgage loans held for sale,
increased $62.5 million, or 1.4%, from $4.51 billion at December
31, 2022 to $4.57 billion at March 31, 2023. This increase was
primarily in other residential (multi-family) loans ($104 million
increase) and commercial real estate loans ($30 million increase),
partially offset by a decrease in commercial construction loans
($61 million decrease). The pipeline of loan commitments declined
in the first quarter of 2023. The unfunded portion of construction
loans remained significant, but also declined, in the first quarter
of 2023. As construction projects were completed, the related loans
were either paid off or moved from the construction category to the
appropriate permanent loan categories.
For further information about the Company’s loan portfolio,
please see the quarterly loan portfolio presentation available on
the Company’s Investor Relations website under “Presentations.”
Loan commitments and the unfunded portion of loans at the dates
indicated were as follows (in thousands):
|
|
March 31, 2023 |
|
December 31, 2022 |
|
December 31, 2021 |
|
December 31, 2020 |
Closed non-construction loans with unused available
lines |
|
|
|
|
|
|
|
|
Secured by real estate (one- to four-family) |
$ |
205,517 |
$ |
199,182 |
$ |
175,682 |
$ |
164,480 |
Secured by real estate (not one- to four-family) |
|
— |
|
— |
|
23,752 |
|
22,273 |
Not secured by real estate - commercial business |
|
113,186 |
|
104,452 |
|
91,786 |
|
77,411 |
|
|
|
|
|
|
|
|
|
Closed construction
loans with unused available lines |
|
|
|
|
|
|
|
|
Secured by real estate (one-to four-family) |
|
104,045 |
|
100,669 |
|
74,501 |
|
42,162 |
Secured by real estate (not one-to four-family) |
|
1,333,596 |
|
1,444,450 |
|
1,092,029 |
|
823,106 |
|
|
|
|
|
|
|
|
|
Loan commitments not
closed |
|
|
|
|
|
|
|
|
Secured by real estate (one-to four-family) |
|
33,221 |
|
16,819 |
|
53,529 |
|
85,917 |
Secured by real estate (not one-to four-family) |
|
78,384 |
|
157,645 |
|
146,826 |
|
45,860 |
Not secured by real estate - commercial business |
|
37,477 |
|
50,145 |
|
12,920 |
|
699 |
|
|
|
|
|
|
|
|
|
|
$ |
1,905,426 |
$ |
2,073,362 |
$ |
1,671,025 |
$ |
1,261,908 |
PROVISION FOR CREDIT LOSSES 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 replaced 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.
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
economic conditions, such as changes in the national unemployment
rate, commercial real estate price index, housing price index,
commercial real estate price index, consumer sentiment, gross
domestic product (GDP) and construction spending.
Continued challenging or worsening economic conditions from
COVID-19 and subsequent variant outbreaks or similar events, 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 identify and limit future losses, such as a watch list
of problem loans and potential problem loans, documented loan
administration policies and loan review staff to review the quality
and anticipated collectability of the portfolio. Additional
procedures provide for frequent management review of the loan
portfolio based on loan size, loan type, delinquencies, financial
analysis, on-going correspondence with borrowers and problem loan
work-outs. Management determines which loans are
collateral-dependent, evaluates risk of loss and makes additional
provisions to expense, if necessary, to maintain the allowance at a
satisfactory level.
During the quarter ended March 31, 2023, the Company recorded
provision expense of $1.5 million on its portfolio of outstanding
loans. During the quarter ended March 31, 2022, the Company did not
record a provision expense on its portfolio of outstanding loans.
Total net recoveries were $7,000 for the three months ended March
31, 2023, compared to net recoveries of $43,000 in the three months
ended March 31, 2022. For the three months ended March 31, 2023,
the Company recorded a negative provision for losses on unfunded
commitments of $826,000, compared to a negative provision of
$193,000 for the three months ended March 31, 2022. General market
conditions and unique circumstances related to specific industries
and individual projects contribute to the level of provisions and
charge-offs.
The Bank’s allowance for credit losses as a percentage of total
loans was 1.40% and 1.39% at March 31, 2023 and December 31, 2022,
respectively. Management considers the allowance for credit losses
adequate to cover losses inherent in the Bank’s loan portfolio at
March 31, 2023, 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 credit loss provisions could be required,
thereby adversely affecting the Company’s future results of
operations and financial condition.
ASSET QUALITY
At March 31, 2023, non-performing assets were $3.0 million, a
decrease of $693,000 from $3.7 million at December 31, 2022.
Non-performing assets as a percentage of total assets were 0.05% at
March 31, 2023, compared to 0.07% at December 31, 2022. 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.
Compared to December 31, 2022, non-performing loans decreased
$688,000 to $3.0 million at March 31, 2023. The majority of this
decrease was in the non-performing commercial business loans
category, which decreased $570,000 from December 31, 2022.
Activity in the non-performing loans categories during the
quarter ended March 31, 2023, was as follows:
|
|
BeginningBalance,January
1 |
|
|
Additionsto
Non-Performing |
|
|
Removedfrom
Non-Performing |
|
|
Transfersto
PotentialProblemLoans |
|
|
Transfers
toForeclosedAssets
andRepossessions |
|
|
Charge-Offs |
|
|
Payments |
|
|
EndingBalance,March
31 |
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family construction |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
Subdivision construction |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
Land development |
|
384 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
384 |
Commercial construction |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
One- to four-family
residential |
|
722 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(30 |
) |
|
|
(67 |
) |
|
|
625 |
Other residential |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
Commercial real estate |
|
1,579 |
|
|
38 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
(91 |
) |
|
|
1,526 |
Commercial business |
|
586 |
|
|
16 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
(586 |
) |
|
|
16 |
Consumer |
|
399 |
|
|
89 |
|
|
— |
|
|
— |
|
|
— |
|
|
(23 |
) |
|
|
(34 |
) |
|
|
431 |
Total non-performing loans |
$ |
3,670 |
|
$ |
143 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
(53 |
) |
|
$ |
(778 |
) |
|
$ |
2,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FDIC-assisted acquired loans
included above |
$ |
428 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
(31 |
) |
|
$ |
(50 |
) |
|
$ |
347 |
At March 31, 2023, the non-performing commercial real estate
category included three loans, none of which were added during the
current quarter. The largest relationship in the category, which
totaled $1.3 million, or 82.8% of the total category, was
transferred from potential problem loans during the fourth quarter
of 2021, and is collateralized by a mixed-use commercial retail
building. Although considered non-performing, periodic payments
have been received on this relationship. The non-performing one- to
four-family residential category included 20 loans, none of which
were added during the current quarter. The largest relationship in
the category totaled $155,000, or 24.8% of the category. The
non-performing land development category consisted of one loan
added during the first quarter of 2021, which totaled $384,000 and
is collateralized by unimproved zoned vacant ground in southern
Illinois. The non-performing commercial business category consisted
of one loan, which was added during the current quarter. The
balance in this category was reduced by $586,000 due to the
repayment of the one existing relationship at the beginning of the
current quarter, with no loss in that quarter. The non-performing
consumer category included 21 loans, five of which were added
during the current quarter.
Compared to December 31, 2022, potential problem loans decreased
$961,000 to $617,000 at March 31, 2023. The decrease during the
quarter was primarily due to multiple loans totaling $1.0 million
that were upgraded to a satisfactory risk rating, $117,000 in loan
payments and $12,000 in charge offs, partially offset by $174,000
in loans added to potential problem loans.
Activity in the potential problem loans category during the
quarter ended March 31, 2023, was as follows:
|
|
BeginningBalance,January
1 |
|
|
Additions
toPotentialProblem |
|
|
RemovedfromPotentialProblem |
|
|
Transfersto
Non-Performing |
|
|
Transfers
toForeclosedAssets
andRepossessions |
|
|
Charge-Offs |
|
|
Loan Advances (Payments) |
|
|
EndingBalance,March
31 |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family construction |
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Subdivision construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Land development |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Commercial construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
One- to four-family
residential |
|
1,348 |
|
|
167 |
|
|
(939 |
) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(86 |
) |
|
|
490 |
|
Other residential |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Commercial real estate |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Commercial business |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Consumer |
|
230 |
|
|
7 |
|
|
(64 |
) |
|
|
(3 |
) |
|
|
— |
|
|
(12 |
) |
|
|
(31 |
) |
|
|
127 |
|
Total potential problem loans |
$ |
1,578 |
|
$ |
174 |
|
$ |
(1,003 |
) |
|
$ |
(3 |
) |
|
$ |
— |
|
$ |
(12 |
) |
|
$ |
(117 |
) |
|
$ |
617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FDIC-assisted acquired loans
included above |
$ |
743 |
|
$ |
— |
|
$ |
(562 |
) |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
(1 |
) |
|
$ |
180 |
|
At March 31, 2023, the one- to four-family residential category
of potential problem loans included five loans, two of which were
added during the current quarter. The largest relationship in this
category totaled $143,000, or 29.2% of the total category. During
the quarter ending March 31, 2023, 17 loans, totaling $939,000, met
the criteria to be upgraded to a satisfactory risk rating. The
consumer category of potential problem loans included 13 loans, one
of which was added during the current quarter.
Activity in foreclosed assets and repossessions during the
quarter ended March 31, 2023, excluding $109,000 in properties
which were not acquired through foreclosure, was as follows:
|
|
BeginningBalance,January
1 |
|
|
Additions |
|
|
ORE
andRepossessionSales |
|
|
CapitalizedCosts |
|
|
ORE
andRepossessionWrite-Downs |
|
|
EndingBalance,March
31 |
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family construction |
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
Subdivision construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
Land development |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
Commercial construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
One- to four-family
residential |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
Other residential |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
Commercial real estate |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
Commercial business |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
Consumer |
|
50 |
|
|
28 |
|
|
(33 |
) |
|
|
— |
|
|
— |
|
|
45 |
Total foreclosed assets and repossessions |
$ |
50 |
|
$ |
28 |
|
$ |
(33 |
) |
|
$ |
— |
|
$ |
— |
|
$ |
45 |
The additions and sales in the consumer category were due to the
volume of repossessions of automobiles, which generally are subject
to a shorter repossession process.
BUSINESS INITIATIVES
In January 2023, a high-transaction-volume banking center
located at 1615 West Sunshine Street in Springfield, Missouri, was
razed to make way for a new Express Center, which will use only
interactive teller machine (ITM) technology to serve customers. The
modern four-lane drive-up center is expected to open during the
third quarter of 2023 and will be the first-of-its-kind in the
Springfield market. ITMs, also known as video remote tellers, offer
an ATM-like interface, but with the enhancement of a video screen
that allows customers to speak directly to a service representative
in real time and in a highly personal manner. Nearly any teller
transaction that can be performed in the traditional drive-thru can
be performed at an ITM, including cashing a check to the penny.
ITMs provide convenience and enhanced access for customers, while
creating greater operational efficiencies for the Bank.
A leased banking center office at 1232 S. Rangeline Road in
Joplin, Missouri, was consolidated into a nearby office at 2801 E.
32nd Street. The leased office was closed at the end of the
business day on March 17, 2023, leaving one banking center serving
the Joplin market.
During 2023, the Great Southern team is preparing to convert to
a new core banking platform and ancillary systems, delivered by a
third party vendor. This upgrade in the operational platform is
expected to provide new and advanced tools and access to more
meaningful information to better serve customers. The migration to
the new system is expected to occur in mid-2024. As significant
preliminary work was completed in 2022 and early 2023, it was
determined to extend the conversion timeline from third quarter
2023 to allow for further system testing related to some of our
more highly-customized applications and products and to accommodate
certain functionality enhancements to the platform.
The Company announced that its 2023 Annual Meeting of
Stockholders, to be held at 10 a.m. Central Time on May 10, 2023,
will be a virtual meeting over the internet and will not be held at
a physical location. Stockholders will be able to attend the Annual
Meeting via a live webcast. Holders of record of Great Southern
Bancorp, Inc. common stock at the close of business on the record
date, March 1, 2023, may vote during the live webcast of the Annual
Meeting or by proxy. Please see the Company’s Notice of Annual
Meeting and Proxy Statement available on the Company’s website,
www.GreatSouthernBank.com, (click “About” then “Investor
Relations”) for additional information about the virtual
meeting.
The Company will host a conference call on Thursday, April 20,
2023, at 2:00 p.m. Central Time to discuss first quarter 2023
preliminary earnings. The call will be available live or in a
recorded version at the Company’s Investor Relations website,
http://investors.greatsouthernbank.com. Participants may register
for the call here.
Headquartered in Springfield, Missouri, Great Southern offers a
broad range of banking services to customers. The Company operates
91 retail banking centers in Missouri, Iowa, Kansas, Minnesota,
Arkansas and Nebraska and commercial lending offices in Atlanta;
Charlotte, North Carolina; Chicago; Dallas; Denver; Omaha,
Nebraska; Phoenix and Tulsa, Oklahoma. The common stock of Great
Southern Bancorp, Inc. is listed on the Nasdaq Global Select Market
under the symbol "GSBC."
www.GreatSouthernBank.com
Forward-Looking Statements
When used in this press release and in documents filed or
furnished by Great Southern Bancorp, Inc. (the “Company”) with the
Securities and Exchange Commission (the “SEC”), in the Company's
other 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.
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, and labor shortages
might be greater than expected; (ii) changes in economic
conditions, either nationally or in the Company's market areas;
(iii) the remaining effects of the COVID-19 pandemic, including on
our credit quality and business operations, as well as its impact
on general economic and financial market conditions and other
uncertainties resulting from the COVID-19 pandemic; (iv)
fluctuations in interest rates and the effects of inflation, a
potential recession or slower economic growth caused by changes in
energy prices or supply chain disruptions; (v) 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; (vi)
the possibility of realized or unrealized losses on securities held
in the Company's investment portfolio; (vii) the Company's ability
to access cost-effective funding; (viii) fluctuations in real
estate values and both residential and commercial real estate
market conditions; (ix) the ability to adapt successfully to
technological changes to meet customers' needs and developments in
the marketplace; (x) 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; (xi)
legislative or regulatory changes that adversely affect the
Company's business; (xii) changes in accounting policies and
practices or accounting standards; (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 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.The following
tables set forth selected consolidated financial information of the
Company at the dates and for the periods indicated. Financial data
at all dates and for all periods is unaudited. In the opinion of
management, all adjustments, which consist only of normal recurring
accrual adjustments, necessary for a fair presentation of the
results at and for such unaudited dates and periods have been
included. The results of operations and other data for the three
months ended March 31, 2023 and 2022, and the three months ended
December 31, 2022, are not necessarily indicative of the results of
operations which may be expected for any future period.
|
|
March 31, |
|
|
December 31, |
|
|
2023 |
|
|
2022 |
Selected Financial Condition Data: |
(In thousands) |
|
|
|
|
|
|
Total
assets |
$ |
5,768,720 |
|
$ |
5,680,702 |
Loans
receivable, gross |
|
4,644,650 |
|
|
4,581,381 |
Allowance for credit losses |
|
64,987 |
|
|
63,480 |
Other
real estate owned, net |
|
154 |
|
|
233 |
Available-for-sale securities, at fair value |
|
493,330 |
|
|
490,592 |
Held-to-maturity securities, at amortized cost |
|
200,427 |
|
|
202,495 |
Deposits |
|
4,799,107 |
|
|
4,684,910 |
Total
borrowings |
|
326,494 |
|
|
366,481 |
Total
stockholders’ equity |
|
555,511 |
|
|
533,087 |
Non-performing assets |
|
3,027 |
|
|
3,720 |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three MonthsEnded |
|
|
March 31, |
|
|
December 31, |
|
|
2023 |
|
|
2022 |
|
|
|
2022 |
|
|
(In thousands) |
Selected Operating
Data: |
|
|
|
|
|
|
|
|
Interest income |
$ |
71,463 |
|
$ |
46,673 |
|
|
$ |
67,949 |
Interest expense |
|
18,271 |
|
|
3,407 |
|
|
|
13,330 |
Net interest income |
|
53,192 |
|
|
43,266 |
|
|
|
54,619 |
Provision (credit) for credit losses on loans and unfunded
commitments |
|
674 |
|
|
(193 |
) |
|
|
841 |
Non-interest income |
|
7,889 |
|
|
9,176 |
|
|
|
7,661 |
Non-interest expense |
|
34,463 |
|
|
31,268 |
|
|
|
34,336 |
Provision for income taxes |
|
5,488 |
|
|
4,380 |
|
|
|
4,499 |
Net income |
$ |
20,456 |
|
$ |
16,987 |
|
|
$ |
22,604 |
|
|
|
|
|
|
|
|
|
|
At or For the ThreeMonths
Ended |
|
At or For the Three Months Ended |
|
March 31, |
|
December 31, |
|
|
2023 |
|
|
2022 |
|
|
|
2022 |
|
|
(Dollars in thousands, except per share data) |
Per Common
Share: |
|
|
|
|
Net income (fully diluted) |
$ |
1.67 |
|
$ |
1.30 |
|
|
$ |
1.84 |
|
Book value |
$ |
45.78 |
|
$ |
45.65 |
|
|
$ |
43.58 |
|
|
|
|
|
|
Earnings Performance Ratios: |
|
|
|
|
Annualized return on average assets |
|
1.43% |
|
|
1.27% |
|
|
|
1.58% |
|
Annualized return on average common stockholders’ equity |
|
14.88% |
|
|
11.14% |
|
|
|
17.34% |
|
Net interest margin |
|
3.99% |
|
|
3.43% |
|
|
|
3.99% |
|
Average interest rate spread |
|
3.53% |
|
|
3.31% |
|
|
|
3.66% |
|
Efficiency ratio |
|
56.42% |
|
|
59.62% |
|
|
|
55.13% |
|
Non-interest expense to average total assets |
|
2.42% |
|
|
2.34% |
|
|
|
2.40% |
|
|
|
|
|
|
Asset Quality
Ratios: |
|
|
|
|
Allowance for credit losses to period-end loans |
|
1.40% |
|
|
1.46% |
|
|
|
1.39% |
|
Non-performing assets to period-end assets |
|
0.05% |
|
|
0.10% |
|
|
|
0.07% |
|
Non-performing loans to period-end loans |
|
0.06% |
|
|
0.12% |
|
|
|
0.08% |
|
Annualized net charge-offs (recoveries) to average loans |
|
0.00% |
|
|
0.00% |
|
|
|
0.02% |
|
|
|
|
|
|
Great Southern Bancorp, Inc. and
SubsidiariesConsolidated Statements of Financial
Condition(In thousands, except number of
shares)
|
|
March 31,2023 |
|
December 31,2022 |
|
|
|
|
|
Assets |
|
|
|
|
Cash |
$ |
89,682 |
|
$ |
105,262 |
|
Interest-bearing deposits in other financial institutions |
|
94,994 |
|
|
63,258 |
|
Cash and cash equivalents |
|
184,676 |
|
|
168,520 |
|
|
|
|
|
|
Available-for-sale securities |
|
493,330 |
|
|
490,592 |
|
Held-to-maturity securities |
|
200,427 |
|
|
202,495 |
|
Mortgage loans held for sale |
|
6,099 |
|
|
4,811 |
|
Loans receivable, net of allowance for credit losses of $64,987 –
March 2023; $63,480 – December 2022 |
|
4,569,328 |
|
|
4,506,836 |
|
Interest receivable |
|
17,484 |
|
|
19,107 |
|
Prepaid expenses and other assets |
|
89,055 |
|
|
69,461 |
|
Other real estate owned and repossessions (1), net |
|
154 |
|
|
233 |
|
Premises and equipment, net |
|
141,485 |
|
|
141,070 |
|
Goodwill and other intangible assets |
|
10,702 |
|
|
10,813 |
|
Federal Home Loan Bank stock and other interest-earning assets |
|
27,658 |
|
|
30,814 |
|
Current and deferred income taxes |
|
28,322 |
|
|
35,950 |
|
|
|
|
|
|
Total Assets |
$ |
5,768,720 |
|
$ |
5,680,702 |
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
Liabilities |
|
|
|
|
Deposits |
$ |
4,799,107 |
|
$ |
4,684,910 |
|
Securities sold under reverse repurchase agreements with
customers |
|
70,654 |
|
|
176,843 |
|
Short-term borrowings |
|
155,710 |
|
|
89,583 |
|
Subordinated debentures issued to capital trust |
|
25,774 |
|
|
25,774 |
|
Subordinated notes |
|
74,356 |
|
|
74,281 |
|
Accrued interest payable |
|
4,671 |
|
|
3,010 |
|
Advances from borrowers for taxes and insurance |
|
8,086 |
|
|
6,590 |
|
Accounts payable and accrued expenses |
|
62,862 |
|
|
73,808 |
|
Liability for unfunded commitments |
|
11,989 |
|
|
12,816 |
|
Total Liabilities |
|
5,213,209 |
|
|
5,147,615 |
|
|
|
|
|
|
Stockholders’
Equity |
|
|
|
|
Capital stock |
|
|
|
|
Preferred stock, $.01 par value; authorized 1,000,000 shares;
issued and outstanding March 2023 and December 2022 -0- shares |
|
— |
|
|
— |
|
Common stock, $.01 par value; authorized 20,000,000 shares; issued
and outstanding March 2023 – 12,133,886 shares; December 2022 –
12,231,290 shares |
|
121 |
|
|
122 |
|
Additional paid-in capital |
|
42,870 |
|
|
42,445 |
|
Retained earnings |
|
553,948 |
|
|
543,875 |
|
Accumulated other comprehensive gain (loss) |
|
(41,428 |
) |
|
(53,355 |
) |
Total Stockholders’ Equity |
|
555,511 |
|
|
533,087 |
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity |
$ |
5,768,720 |
|
$ |
5,680,702 |
|
(1) |
At March 31, 2023 and December 31, 2022 includes $109,000 and
$183,000 of properties which were not acquired through foreclosure,
but are held for sale. |
Great Southern Bancorp, Inc. and
SubsidiariesConsolidated Statements of
Income(In thousands, except per share
data)
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
March 31, |
|
December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
Interest Income |
|
|
|
|
|
|
|
|
Loans |
$ |
65,438 |
|
|
$ |
43,065 |
|
|
$ |
61,845 |
|
Investment securities and other |
|
6,025 |
|
|
|
3,608 |
|
|
|
6,104 |
|
|
|
71,463 |
|
|
|
46,673 |
|
|
|
67,949 |
|
Interest Expense |
|
|
|
|
|
|
|
|
Deposits |
|
14,650 |
|
|
|
2,173 |
|
|
|
11,160 |
|
Securities sold under reverse repurchase agreements |
|
342 |
|
|
|
10 |
|
|
|
262 |
|
Short-term borrowings, overnight FHLBank borrowings and other
interest-bearing liabilities |
|
1,780 |
|
|
|
1 |
|
|
|
452 |
|
Subordinated debentures issued to capital trust |
|
393 |
|
|
|
118 |
|
|
|
350 |
|
Subordinated notes |
|
1,106 |
|
|
|
1,105 |
|
|
|
1,106 |
|
|
|
18,271 |
|
|
|
3,407 |
|
|
|
13,330 |
|
|
|
|
|
|
|
|
|
|
Net Interest Income |
|
53,192 |
|
|
|
43,266 |
|
|
|
54,619 |
|
Provision for Credit Losses on Loans |
|
1,500 |
|
|
|
— |
|
|
|
1,000 |
|
Provision (Credit) for Unfunded Commitments |
|
(826 |
) |
|
|
(193 |
) |
|
|
(159 |
) |
Net Interest Income After Provision for Credit Losses and
Provision (Credit) for Unfunded Commitments |
|
52,518 |
|
|
|
43,459 |
|
|
|
53,778 |
|
|
|
|
|
|
|
|
|
|
Noninterest Income |
|
|
|
|
|
|
|
|
Commissions |
|
427 |
|
|
|
297 |
|
|
|
296 |
|
Overdraft and Insufficient funds fees |
|
1,896 |
|
|
|
1,865 |
|
|
|
2,042 |
|
POS and ATM fee income and service charges |
|
3,701 |
|
|
|
3,964 |
|
|
|
3,763 |
|
Net gains on loan sales |
|
389 |
|
|
|
1,134 |
|
|
|
351 |
|
Net realized gain (loss) on sale of available-for-sale
securities |
|
— |
|
|
|
7 |
|
|
|
(168 |
) |
Late charges and fees on loans |
|
180 |
|
|
|
313 |
|
|
|
303 |
|
Gain (loss) on derivative interest rate products |
|
(291 |
) |
|
|
152 |
|
|
|
(64 |
) |
Other income |
|
1,587 |
|
|
|
1,444 |
|
|
|
1,138 |
|
|
|
7,889 |
|
|
|
9,176 |
|
|
|
7,661 |
|
|
|
|
|
|
|
|
|
|
Noninterest Expense |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
19,203 |
|
|
|
18,080 |
|
|
|
18,812 |
|
Net occupancy and equipment expense |
|
7,720 |
|
|
|
6,878 |
|
|
|
7,587 |
|
Postage |
|
828 |
|
|
|
787 |
|
|
|
888 |
|
Insurance |
|
867 |
|
|
|
794 |
|
|
|
814 |
|
Advertising |
|
647 |
|
|
|
555 |
|
|
|
878 |
|
Office supplies and printing |
|
268 |
|
|
|
218 |
|
|
|
205 |
|
Telephone |
|
703 |
|
|
|
850 |
|
|
|
657 |
|
Legal, audit and other professional fees |
|
1,981 |
|
|
|
805 |
|
|
|
2,090 |
|
Expense on other real estate and repossessions |
|
154 |
|
|
|
163 |
|
|
|
46 |
|
Acquired intangible asset amortization |
|
111 |
|
|
|
158 |
|
|
|
216 |
|
Other operating expenses |
|
1,981 |
|
|
|
1,980 |
|
|
|
2,143 |
|
|
|
34,463 |
|
|
|
31,268 |
|
|
|
34,336 |
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
25,944 |
|
|
|
21,367 |
|
|
|
27,103 |
|
Provision for Income Taxes |
|
5,488 |
|
|
|
4,380 |
|
|
|
4,499 |
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
20,456 |
|
|
$ |
16,987 |
|
|
$ |
22,604 |
|
|
|
|
|
|
|
|
|
|
Earnings Per Common Share |
|
|
|
|
|
|
|
|
Basic |
$ |
1.68 |
|
|
$ |
1.31 |
|
|
$ |
1.85 |
|
Diluted |
$ |
1.67 |
|
|
$ |
1.30 |
|
|
$ |
1.84 |
|
|
|
|
|
|
|
|
|
|
Dividends Declared Per Common Share |
$ |
0.40 |
|
|
$ |
0.36 |
|
|
$ |
0.40 |
|
|
|
|
|
|
|
|
|
|
Average Balances, Interest Rates and
Yields
The following table presents, for the periods indicated, the
total dollar amounts 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 $1.3 million and $1.7
million for the three months ended March 31, 2023 and 2022,
respectively. Tax-exempt income was not calculated on a tax
equivalent basis. The table does not reflect any effect of income
taxes.
|
March 31, 2023 |
|
|
|
Three Months EndedMarch 31,
2023 |
|
Three Months EndedMarch 31,
2022 |
|
|
|
|
|
|
Average |
|
|
|
|
Yield/ |
|
|
|
Average |
|
|
|
|
Yield/ |
|
|
Yield/Rate |
|
|
|
Balance |
|
|
Interest |
|
Rate |
|
|
|
Balance |
|
|
Interest |
|
Rate |
|
|
(Dollars in thousands) |
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family residential |
3.55 |
% |
|
$ |
909,672 |
|
$ |
8,165 |
|
3.64 |
% |
|
$ |
701,330 |
|
$ |
6,041 |
|
3.49 |
% |
Other residential |
6.57 |
|
|
|
785,126 |
|
|
12,684 |
|
6.55 |
|
|
|
759,622 |
|
|
8,417 |
|
4.49 |
|
Commercial real estate |
5.83 |
|
|
|
1,510,516 |
|
|
21,535 |
|
5.78 |
|
|
|
1,489,762 |
|
|
15,346 |
|
4.18 |
|
Construction |
7.37 |
|
|
|
920,020 |
|
|
16,206 |
|
7.14 |
|
|
|
668,220 |
|
|
7,529 |
|
4.57 |
|
Commercial business |
6.01 |
|
|
|
283,251 |
|
|
4,118 |
|
5.90 |
|
|
|
289,230 |
|
|
3,326 |
|
4.66 |
|
Other loans |
6.05 |
|
|
|
189,688 |
|
|
2,506 |
|
5.36 |
|
|
|
204,510 |
|
|
2,244 |
|
4.45 |
|
Industrial revenue bonds |
5.91 |
|
|
|
12,734 |
|
|
224 |
|
7.15 |
|
|
|
13,983 |
|
|
162 |
|
4.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable |
5.81 |
|
|
|
4,611,007 |
|
|
65,438 |
|
5.76 |
|
|
|
4,126,657 |
|
|
43,065 |
|
4.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities |
2.72 |
|
|
|
706,894 |
|
|
5,004 |
|
2.87 |
|
|
|
533,976 |
|
|
3,410 |
|
2.59 |
|
Other interest-earning
assets |
4.83 |
|
|
|
91,821 |
|
|
1,021 |
|
4.51 |
|
|
|
458,643 |
|
|
198 |
|
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
5.42 |
|
|
|
5,409,722 |
|
|
71,463 |
|
5.36 |
|
|
|
5,119,276 |
|
|
46,673 |
|
3.70 |
|
Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
93,586 |
|
|
|
|
|
|
|
|
90,586 |
|
|
|
|
|
|
Other non-earning assets |
|
|
|
|
201,236 |
|
|
|
|
|
|
|
|
136,701 |
|
|
|
|
|
|
Total assets |
|
|
|
$ |
5,704,544 |
|
|
|
|
|
|
|
$ |
5,346,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand and savings |
1.09 |
|
|
$ |
2,184,966 |
|
|
4,359 |
|
0.81 |
|
|
$ |
2,375,943 |
|
|
777 |
|
0.13 |
|
Time deposits |
2.31 |
|
|
|
1,016,042 |
|
|
5,185 |
|
2.07 |
|
|
|
863,684 |
|
|
1,201 |
|
0.56 |
|
Brokered deposits |
4.69 |
|
|
|
456,817 |
|
|
5,106 |
|
4.53 |
|
|
|
67,401 |
|
|
195 |
|
1.17 |
|
Total deposits |
1.93 |
|
|
|
3,657,825 |
|
|
14,650 |
|
1.62 |
|
|
|
3,307,028 |
|
|
2,173 |
|
0.27 |
|
Securities sold under reverse
repurchase agreements |
1.32 |
|
|
|
147,025 |
|
|
342 |
|
0.94 |
|
|
|
128,264 |
|
|
10 |
|
0.03 |
|
Short-term borrowings,
overnight FHLBank borrowings and other interest-bearing
liabilities |
5.05 |
|
|
|
151,847 |
|
|
1,780 |
|
4.75 |
|
|
|
3,628 |
|
|
1 |
|
0.08 |
|
Subordinated debentures
issued to capital trust |
6.41 |
|
|
|
25,774 |
|
|
393 |
|
6.18 |
|
|
|
25,774 |
|
|
118 |
|
1.86 |
|
Subordinated notes |
5.95 |
|
|
|
74,319 |
|
|
1,106 |
|
6.04 |
|
|
|
74,019 |
|
|
1,105 |
|
6.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
2.14 |
|
|
|
4,056,790 |
|
|
18,271 |
|
1.83 |
|
|
|
3,538,713 |
|
|
3,407 |
|
0.39 |
|
Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
|
|
|
1,008,006 |
|
|
|
|
|
|
|
|
1,160,013 |
|
|
|
|
|
|
Other liabilities |
|
|
|
|
89,974 |
|
|
|
|
|
|
|
|
37,907 |
|
|
|
|
|
|
Total liabilities |
|
|
|
|
5,154,770 |
|
|
|
|
|
|
|
|
4,736,633 |
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
549,774 |
|
|
|
|
|
|
|
|
609,930 |
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
|
|
$ |
5,704,544 |
|
|
|
|
|
|
|
$ |
5,346,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate spread |
3.28 |
% |
|
|
|
|
$ |
53,192 |
|
3.53 |
% |
|
|
|
|
$ |
43,266 |
|
3.31 |
% |
Net interest margin* |
|
|
|
|
|
|
|
|
|
3.99 |
% |
|
|
|
|
|
|
|
3.43 |
% |
Average interest-earning
assets to average interest-bearing liabilities |
|
|
|
|
133.3 |
% |
|
|
|
|
|
|
|
144.7 |
% |
|
|
|
|
|
*Defined as the Company’s net interest income divided by average
total interest-earning assets. |
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”), specifically, the
tangible common equity to tangible assets ratio.
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.
This non-GAAP financial measurement is supplemental and is 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 other
similarly titled measures as calculated by other companies.
Non-GAAP Reconciliation: Ratio of Tangible Common Equity
to Tangible Assets
|
|
March 31, |
|
|
|
December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(Dollars in thousands) |
|
|
|
|
|
Common equity at period
end |
$ |
555,511 |
|
|
$ |
533,087 |
|
Less: Intangible assets at
period end |
|
10,702 |
|
|
|
10,813 |
|
Tangible common equity at
period end (a) |
$ |
544,809 |
|
|
$ |
522,274 |
|
|
|
|
|
|
|
|
|
Total assets at period
end |
$ |
5,768,720 |
|
|
$ |
5,680,702 |
|
Less: Intangible assets at
period end |
|
10,702 |
|
|
|
10,813 |
|
Tangible assets at period end
(b) |
$ |
5,758,018 |
|
|
$ |
5,669,889 |
|
|
|
|
|
|
|
|
|
Tangible common equity to
tangible assets (a) / (b) |
|
9.46 |
% |
|
|
9.21 |
% |
CONTACT: Kelly Polonus, Great Southern, (417)
895-5242kpolonus@greatsouthernbank.com
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