Great Southern Bancorp, Inc. Reports Preliminary Second Quarter Earnings of $0.93 Per Diluted Common Share
Great Southern Bancorp (NASDAQ: GSBC) reported preliminary financial results for Q2 2020, with earnings of $0.93 per diluted share, down from $1.28 a year earlier. Total gross loans rose by $241 million (4.9%) to $4.4 billion, driven mainly by residential and commercial loans. However, net interest income decreased by 3.3% to $43.5 million, attributed to lower yields and increased cash equivalents. Asset quality remained strong with non-performing assets at $7.6 million (0.14% of total assets). The company's capital position is robust, bolstered by $75 million in subordinated notes, maintaining regulatory compliance.
- Total gross loans increased by $241 million (4.9%) to $4.4 billion from the end of 2019.
- Non-performing assets reduced to $7.6 million (0.14% of total assets), indicating improved asset quality.
- Solid capital ratios: Tier 1 Leverage Ratio at 11.4%, Common Equity Tier 1 Capital Ratio at 12.5%.
- Earnings per share declined to $0.93, down from $1.28 year-over-year.
- Net interest income decreased by $1.4 million (3.3%) compared to Q2 2019.
- Increased loan loss provisions by $4.4 million compared to the previous year, indicating potential future credit risks.
Preliminary Financial Results and Other Matters for the Quarter and Six Months Ended June 30, 2020:
- Total Loans: Total gross loans (including the undisbursed portion of loans), excluding FDIC-assisted acquired loans and mortgage loans held for sale, increased
$241.0 million , or4.9% , from December 31, 2019, to June 30, 2020. This increase was primarily in other residential (multi-family) loans, commercial business loans, one- to four-family residential loans and commercial real estate loans. These increases were partially offset by decreases in construction loans and consumer auto loans. Total gross loans increased$186.5 million during the three months ended June 30, 2020, approximately$120 million of which were loans pursuant to the Paycheck Protection Program (PPP). The FDIC-assisted acquired loan portfolios decreased$16.5 million during the six months ended June 30, 2020. Outstanding net loan receivable balances increased$245.7 million , from$4.15 billion at December 31, 2019 to$4.40 billion at June 30, 2020. - Asset Quality: Non-performing assets and potential problem loans, excluding those acquired in FDIC-assisted transactions (which are accounted for and analyzed as loan pools rather than individual loans), totaled
$11.6 million at June 30, 2020, a decrease of$613,000 from$12.2 million at March 31, 2020 and a decrease of$929,000 from$12.6 million at December 31, 2019. Non-performing assets at June 30, 2020 were$7.6 million (0.14% of total assets), a decrease of$423,000 from$8.1 million (0.16% of total assets) at March 31, 2020 and a decrease of$542,000 from$8.2 million at December 31, 2019. - Net Interest Income: Net interest income for the second quarter of 2020 decreased
$1.4 million (or approximately3.3% ) to$43.5 million compared to$44.9 million for the second quarter of 2019. Net interest income was also$44.9 million for the first quarter of 2020. Net interest margin was3.39% for the quarter ended June 30, 2020, compared to3.97% for the second quarter of 2019 and3.84% for the quarter ended March 31, 2020. The decrease in net interest margin compared to both the first quarter of 2020 and the second quarter of 2019 was approximately equally the result of: (1) decreases in the average yield on loans and other interest-earning assets, due to significant decreases in market interest rates (primarily one-month LIBOR rates) compared to a year ago and compared to the first quarter of 2020 and (2) significant increases in cash equivalents, investment securities and PPP loans, all of which have much lower yields compared to the overall loan portfolio. The positive impact on net interest margin from the additional yield accretion on acquired loan pools that was recorded during the periods was 12 basis points for the each of the quarters ended June 30, 2020 and June 30, 2019, and 16 basis points for the quarter ended March 31, 2020. For further discussion of the additional yield accretion of the discount on acquired loan pools, see “Net Interest Income.” - Capital: The capital position of the Company continues to be strong, significantly exceeding the thresholds established by regulators. During the quarter ended June 30, 2020, the Company further enhanced its regulatory capital position with the issuance of
$75.0 million of subordinated notes. On a preliminary basis, as of June 30, 2020, the Company’s Tier 1 Leverage Ratio was11.4% , Common Equity Tier 1 Capital Ratio was12.5% , Tier 1 Capital Ratio was13.0% , and Total Capital Ratio was17.2% .
SPRINGFIELD, Mo., July 20, 2020 (GLOBE NEWSWIRE) -- Great Southern Bancorp, Inc. (NASDAQ:GSBC), the holding company for Great Southern Bank, today reported that preliminary earnings for the three months ended June 30, 2020, were
Preliminary earnings for the six months ended June 30, 2020, were
For the quarter ended June 30, 2020, annualized return on average common equity was
Great Southern President and CEO Joseph W. Turner commented, “As we continue to manage through the pandemic, our primary concern is for the well-being of our associates, customers and communities. Our thoughts are with those directly affected by COVID-19. We remain steadfast in following CDC health guidelines, while providing our customers ready access to our products and services. Some of our customers unfortunately are facing financial hardships, and we are actively working with them to assist with whatever difficulty they may be experiencing.
“The duration and severity of the pandemic remains unknown, creating great uncertainty and challenges to the U. S. economy. As when the crisis started, we remain ready to respond to the challenges produced by these uncertain times and are in a position of strength regarding capital, earnings and liquidity.
“As expected in this operating climate, our earnings declined in the second quarter as compared to the year ago quarter, and such decline was primarily driven by loan loss provision expense, which was
Turner continued, “Total gross loans (including the undisbursed portion of loans), increased
“Through June 30, 2020, credit quality metrics remained very strong. In the second quarter, our net charge-offs were
“Loans with pandemic-related modifications totaled
“Capital remained very strong at June 30, 2020, and our book value per share continued to grow. In spite of the obvious economic challenges caused by the COVID-19 pandemic, we expect that we will continue to operate profitably, albeit not at 2019 levels, and we currently anticipate that our regular quarterly dividend can be maintained for the foreseeable future.”
Turner concluded, “Our nearly 1,200 associates continue to amaze me with their dedication and resilience. Their extraordinary effort and show of compassion are deeply appreciated as we traverse this uncertain and challenging time together. With our great team, I remain confident that we’ll emerge an even stronger company as we focus on building winning long-term relationships with our customers and communities.”
COVID-19 Impact to Our Business and Response
Great Southern is actively monitoring and responding to the effects of the rapidly-changing COVID-19 pandemic. As always, the health, safety and well-being of our customers, associates and communities are the Company’s top priorities. Centers for Disease Control and Prevention (CDC) guidelines, as well as directives from federal, state and local officials, are being closely followed to make informed operational decisions.
In January 2020, the Company activated its long-established Pandemic Response Plan. This plan promotes the health and safety of the Company’s constituents and specifies responsive actions to support continuous service for customers. A summary of the Company’s major COVID-19 responses and actions are highlighted below.
Great Southern Associates: During this unprecedented time, the Company is working diligently with its nearly 1,200 associates to enforce CDC-advised health, hygiene and social distancing practices. Approximately
Paid time off and other benefits were enhanced and implemented to support Great Southern associates. Part-time associates were awarded paid sick benefits for the first time. Any full-time or part-time associate will receive full pay if placed under a restrictive quarantine due to COVID-19 infection or direct exposure to an infected individual. The Company’s Employee Assistance Program (EAP) was enhanced at no cost to associates and family members seeking counseling services for mental health and emotional support needs.
Great Southern Communities: To support local COVID-19 relief efforts, in March 2020, Great Southern committed up to
Great Southern Customers: During the COVID-19 pandemic, taking care of customers and providing uninterrupted access to services are top priorities. As always, customers can conduct their banking business using the banking center network, online and mobile banking services, ATMs, Telephone Banking, and online account opening services. As health conditions in local markets dictate, Great Southern banking center lobbies are open following strict social distancing guidance from the CDC and local government officials. If customer lobbies are closed in a market area, then drive-thru service and in-person service by appointment are available.
The COVID-19 pandemic is causing a growing number of customers to experience financial uncertainty and hardships. The Company has been reaching out to customers and is strongly encouraging customers to call for assistance. Certain account maintenance and service fees are being waived or refunded for depository customers. Payment relief options and loan modifications for consumer and commercial loan customers are available on a case-by-case basis. See Loan Modifications below for further details of loan modifications to date.
The Company has been actively utilizing the CARES Act stimulus package to assist consumers and businesses. The CARES Act made available Small Business Administration (SBA) lending programs that offer relief for small businesses, including the Paycheck Protection Program (PPP). Great Southern is participating in the PPP, which provides emergency financial support to small businesses (primarily those with less than 500 employees) by offering federally guaranteed loans through the SBA. These loans may be eligible for forgiveness contingent upon how the loan proceeds are used by the borrower. Through June 30, 2020, Great Southern has originated nearly 1,600 PPP loans totaling approximately
As a resource to customers, a COVID-19 information center has been made available on the Company’s website, www.GreatSouthernBank.com. General information about the Company’s pandemic response, how to receive assistance, and how to avoid COVID-19 scams and fraud are included.
Impacts to Our Business Going Forward: The magnitude of the impact on the Company of the COVID-19 pandemic is not yet fully known, and will depend on the length and severity of the economic downturn brought on by the pandemic. The Company expects that the COVID-19 pandemic will impact our business in future periods in one or more of the following ways, among others. Each of these factors could, individually or collectively, result in reduced net income in future periods.
- Significantly lower market interest rates will have a negative impact on our variable rate loans indexed to LIBOR and prime
- Certain fees for deposit and loan products may be waived or reduced
- Point-of-sale fee income may decline due to a decrease in spending by our debit card customers as they may be adversely affected by reductions in their personal income and job losses
- Non-interest expenses may increase to deal with the effects of the COVID-19 pandemic, including cleaning costs, supplies, equipment and other items
- Banking center lobbies have now reopened, but could be closed again if the pandemic situation worsens
- Additional loan modifications may occur and borrowers may default on their loans, which may necessitate further increases to the allowance for loan losses
- The contraction in economic activity may reduce demand for our loans and for our other products and services
Loan Modifications
Through June 30, 2020, we have modified 431 commercial loans with an aggregate principal balance outstanding of
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| Multifamily | 52 | 190.5 | 166.1 | 24.4 | — | — | — | ||||||||
| Healthcare | 24 | 143.1 | 96.5 | 11.3 | — | — | 35.3 | ||||||||
| Hotel/Motel | 23 | 129.8 | 88.4 | — | — | 10.2 | 31.2 | ||||||||
| Office | 40 | 80.4 | 77.4 | — | 0.3 | — | 2.7 | ||||||||
| Warehouse/Other | 45 | 54.3 | 38.7 | 0.3 | 7.8 | 0.3 | 7.2 | ||||||||
| Restaurants | 36 | 36.9 | 20.6 | — | — | 1.8 | 14.5 | ||||||||
| Commercial Business | 92 | 27.9 | 14.3 | 2.0 | 5.5 | — | 6.1 | ||||||||
| Land | 16 | 6.7 | 4.3 | — | 1.0 | — | 1.4 | ||||||||
| Total Commercial | 431 | 930.9 | 745.3 | 42.3 | 23.5 | 17.9 | 101.9 | ||||||||
| Residential Mortgage | 273 | 62.5 | 24.2 | 1.5 | — | 36.8 | — | ||||||||
| Consumer | 1,429 | 17.4 | — | — | — | 17.4 | — | ||||||||
| Total Consumer | 1,702 | 79.9 | 24.2 | 1.5 | — | 54.2 | — | ||||||||
| Total | 2,133 | $ | 1,010.8 | $ | 769.5 | $ | 43.8 | $ | 23.5 | $ | 72.1 | $ | 101.9 |
In July and August 2020, loans with an aggregate principal balance outstanding of
Selected Financial Data:
| (In thousands, except per share data) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||
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| Net interest income | $ | 43,455 | $ | 44,921 | $ | 88,393 | $ | 89,526 |
| Provision for loan losses | 6,000 | 1,600 | 9,871 | 3,550 | ||||
| Non-interest income | 8,261 | 7,157 | 15,627 | 14,607 | ||||
| Non-interest expense | 29,349 | 28,383 | 60,163 | 56,877 | ||||
| Provision for income taxes | 3,164 | 3,720 | 5,915 | 7,718 | ||||
| Net income and net income available to common shareholders | $ | 13,203 | $ | 18,375 | $ | 28,071 | $ | 35,988 |
| Earnings per diluted common share | $ | 0.93 | $ | 1.28 | $ | 1.98 | $ | 2.52 |
NET INTEREST INCOME
Net interest income for the second quarter of 2020 decreased
Net interest income for the six months ended June 30, 2020 decreased
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
The Company’s net interest margin has been positively impacted by significant additional yield accretion recognized in conjunction with updated estimates of the fair value of the loan pools acquired in the FDIC-assisted transactions. For each of the loan portfolios acquired, the cash flow estimates increased during the current and prior periods presented below, based on payment histories and reduced credit loss expectations. This resulted in increased income that has been spread, on a level-yield basis, over the remaining expected lives of the loan pools (and, therefore, has decreased over time). Because the balance of these adjustments will be recognized generally over the remaining lives of the loan pools, they will impact future periods as well. The remaining accretable yield adjustment that will affect interest income is
The impact to income of adjustments on all portfolios acquired in FDIC-assisted transactions for the reporting periods presented is shown below:
| Three Months Ended | |||||||||
| June 30, 2020 | June 30, 2019 | ||||||||
| (In thousands, except basis points data) | |||||||||
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| Six Months Ended | |||||||||
| June 30, 2020 | June 30, 2019 | ||||||||
| (In thousands, except basis points data) | |||||||||
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Excluding the impact of the additional yield accretion, net interest margin for the three and six months ended June 30, 2020, decreased 58 and 42 basis points when compared to the year-ago periods. The compression in our margin excluding the impact of the additional yield accretion during the three and six months ended June 30, 2020 is primarily due to the same items as noted above.
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 June 30, 2020, non-interest income increased
- Net gains on loan sales: Net gains on loan sales increased
$1.5 million compared to the prior year quarter. The increase was due to an increase in originations of fixed-rate loans during the 2020 period compared to the 2019 period. Fixed rate single-family mortgage loans originated are generally subsequently sold in the secondary market. - Other income: Other income increased
$667,000 compared to the prior year quarter. In the 2020 period, the Company recognized approximately$823,000 of fee income related to newly-originated interest rate swaps in the Company’s back-to-back swap program with loan customers and swap counterparties. - Service charges and ATM fees: Service charges and ATM fees decreased
$1.2 million compared to the prior year period. This decrease was primarily due to a decrease in overdraft and insufficient funds fees on customer accounts. This was due to both a reduction in usage by customers and a decision near the end of the first quarter of 2020 to waive certain fees for customers in response to the COVID-19 pandemic, with the effects of that decision felt primarily during the second quarter of 2020.
For the six months ended June 30, 2020, non-interest income increased
- Net gains on loan sales: Net gains on loan sales increased
$1.8 million compared to the prior year period. The increase was due to an increase in originations of fixed-rate loans during the 2020 period compared to the 2019 period. As noted above, fixed rate single-family mortgage loans originated are generally subsequently sold in the secondary market. - Other income: Other income increased
$894,000 compared to the prior year period. In the 2020 period, the Company recognized approximately$1.3 million of fee income related to newly-originated interest rate swaps in the Company’s back-to-back swap program with loan customers and swap counterparties. The Company also recognized approximately$441,000 in income related to the exit of certain tax credit partnerships during the six months ended June 30, 2020. In the 2019 period, the Company recognized gains totaling$677,000 from the sale of, or recovery of, receivables and assets that were acquired several years prior in FDIC-assisted transactions, with no similar sales or recoveries in the current period. - Service charges and ATM fees: Service charges and ATM fees decreased
$1.4 million compared to the prior year period. This decrease was primarily due to a decrease in overdraft and insufficient funds fees on customer accounts. As noted above, a decision to waive certain fees for customers was made in response to the COVID-19 pandemic during the first quarter 2020 and customer usage decreased in the 2020 period. Also during the first quarter 2020,$200,000 in additional expenses netted into ATM fee income during the conversion to a new debit card processing system. - Gain (loss) on derivative interest rate products: The net loss on derivative interest rate products increased
$446,000 compared to the net loss in the prior year quarter. In the 2020 period, the Company recognized a$514,000 decrease in the net fair value related to interest rate swaps in the Company’s back-to-back swap program with loan customers and swap counterparties. As market interest rates fall this generally decreases the net fair value of these back-to-back swaps. This is a non-cash item as there was no required settlement of this amount between the Company and its swap counterparties.
NON-INTEREST EXPENSE
For the quarter ended June 30, 2020, non-interest expense increased
- Salaries and employee benefits: Salaries and employee benefits increased
$1.4 million from the prior year quarter. The increase was primarily due to annual employee compensation merit increases and increased incentives in lending and operations areas. Approximately half of the compensation increase was in the mortgage division where we have added staff and variable compensation increased due to significant increases in new mortgage loan originations, much of which is sold in the secondary market as noted above. - Net occupancy expense: Net occupancy expense increased
$258,000 compared to the prior year quarter. This was primarily related to increased depreciation on new ATM/ITMs and ATM operating software upgrades implemented during the fourth quarter of 2019. Also included in net occupancy expense for the 2020 quarter are COVID-19-related expenses for various items such as cleaning services, equipment, costs to set up remote work sites and other items. - Advertising: Advertising expense decreased
$405,000 compared to the prior year quarter. This decrease was primarily due to activities related to sponsorship agreements being halted as a result of the COVID-19 pandemic. - Other operating expenses: Other operating expenses decreased
$187,000 from the prior year quarter. This decrease was primarily due to travel restrictions during the 2020 period. Total travel and entertainment for the three months ended June 30, 2020 was$77,000 compared to$462,000 during the prior year period. This decrease was partially offset with small increases in other expense categories. In response to the COVID-19 pandemic, the Company made contributions of$48,000 during the current year quarter to various organizations that assist the communities the Company serves. - Insurance: Insurance expense decreased
$128,000 compared to the prior year quarter. This decrease was primarily due to a decrease in FDIC deposit insurance premiums. The Bank had a credit with the FDIC for a portion of premiums previously paid to the deposit insurance fund. The remaining credit offset a portion of the deposit insurance premium due for the three months ended June 30, 2020.
For the six months ended June 30, 2020, non-interest expense increased
- Salaries and employee benefits: Salaries and employee benefits increased
$3.9 million in the six months ended June 30, 2020 compared to the prior year period. The increase was primarily due to annual employee compensation merit increases and increased incentives in lending, including mortgage lending activities as noted above, and operations areas. Additionally, in March 2020, the Company approved a special cash bonus to all employees totaling$1.1 million in response to the COVID-19 pandemic. - Net occupancy expense: Net occupancy expense increased
$623,000 in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. This was primarily related to increased depreciation on new ATM/ITMs and ATM operating software upgrades implemented during the fourth quarter of 2019. Also included in net occupancy expense for the 2020 period are COVID-19-related expenses for various items such as cleaning services, equipment, costs to set up remote work sites and other items. - Insurance: Insurance expense decreased
$412,000 compared to the prior year period. This decrease was primarily due to a decrease in FDIC deposit insurance premiums. The Bank had a credit with the FDIC for a portion of premiums previously paid to the deposit insurance fund leaving no premium being due for the three months ended March 31, 2020. The remaining credit offset the deposit insurance premium due during the three months ended June 30, 2020. - Advertising: Advertising expense decreased
$311,000 compared to the prior year period. This decrease was primarily due to activities related to sponsorship agreements being halted as a result of the COVID-19 pandemic. - Expense on other real estate owned and repossessions: Expense on other real estate owned and repossessions decreased
$292,000 compared to the prior year period primarily due to sales on other assets and higher valuation write-downs of certain foreclosed assets during the prior year period. During the 2019 period, valuation write-downs of certain foreclosed assets totaled approximately$444,000 , while valuation write-downs in the 2020 period totaled approximately$213,000.
The Company’s efficiency ratio for the quarter ended June 30, 2020, was
INCOME TAXES
For the three months ended June 30, 2020 and 2019, the Company's effective tax rate was
CAPITAL
As of June 30, 2020, total stockholders’ equity and common stockholders’ equity were each
Also included in stockholders’ equity at June 30, 2020, were realized gains (net of taxes) on the Company’s cash flow hedge (interest rate swap), which was terminated in March 2020, totaling
On a preliminary basis, as of June 30, 2020, the Company’s Tier 1 Leverage Ratio was
During the quarter ended June 30, 2020, the Company further enhanced its regulatory capital position with the issuance of
During the three months ended June 30, 2020, the Company did not repurchase any shares of its common stock and declared a regular cash dividend of
LOANS
Total gross loans (including the undisbursed portion of loans), excluding FDIC-assisted acquired loans and mortgage loans held for sale, increased
Loan commitments and the unfunded portion of loans at the dates indicated were as follows (in thousands):
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| Closed non-construction loans with unused available lines | ||||||||||
| Secured by real estate (one- to four-family) | $ | 158,687 | $ | 156,381 | $ | 155,831 | $ | 150,948 | $ | 133,587 |
| Secured by real estate (not one- to four-family) | 16,124 | 16,832 | 19,512 | 11,063 | 10,836 | |||||
| Not secured by real estate - commercial business | 105,071 | 79,117 | 83,782 | 87,480 | 113,317 | |||||
| Closed construction loans with unused available lines | ||||||||||
| Secured by real estate (one-to four-family) | 37,789 | 50,101 | 48,213 | 37,162 | 20,919 | |||||
| Secured by real estate (not one-to four-family) | 753,589 | 809,436 | 798,810 | 906,006 | 718,277 | |||||
| Loan commitments not closed | ||||||||||
| Secured by real estate (one-to four-family) | 112,769 | 141,432 | 69,295 | 24,253 | 23,340 | |||||
| Secured by real estate (not one-to four-family) | 73,103 | 95,652 | 92,434 | 104,871 | 156,658 | |||||
| Not secured by real estate - commercial business | 800 | — | — | 405 | 4,870 | |||||
| $ | 1,257,932 | $ | 1,348,951 | $ | 1,267,877 | $ | 1,322,188 | $ | 1,181,804 |
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.”
PROVISION FOR LOAN LOSSES AND ALLOWANCE FOR LOAN LOSSES
In the first quarter of 2020, pursuant to the recently-enacted CARES Act and guidance from the SEC and FASB, we elected to delay adoption of the new accounting standard (CECL) related to accounting for credit losses. Our first and second quarter financial statements are prepared under the existing incurred loss methodology standard for accounting for loan losses.
Management records a provision for loan losses in an amount it believes is sufficient to result in an allowance for loan losses that will cover current net charge-offs as well as risks believed to be inherent in the loan portfolio of the Bank. The amount of provision charged against current income is based on several factors, including, but not limited to, past loss experience, current portfolio mix, actual and potential losses identified in the loan portfolio, economic conditions, and internal as well as external reviews. The levels of non-performing assets, potential problem loans, loan loss provisions and net charge-offs fluctuate from period to period and are difficult to predict.
Worsening economic conditions from the COVID-19 pandemic, higher inflation or interest rates, or other factors may lead to increased losses in the portfolio and/or requirements for an increase in loan loss provision expense. Management maintains various controls in an attempt to limit future losses, such as a watch list of possible problem loans, documented loan administration policies and loan review staff, to review the quality and anticipated collectability of the portfolio. Additional procedures provide for frequent management review of the loan portfolio based on loan size, loan type, delinquencies, financial analysis, on-going correspondence with borrowers and problem loan work-outs. Management determines which loans are potentially uncollectible, or represent a greater risk of loss, and makes additional provisions to expense, if necessary, to maintain the allowance at a satisfactory level.
The provision for loan losses for the quarter ended June 30, 2020 was
All FDIC-acquired loans were grouped into pools based on common characteristics and were recorded at their estimated fair values, which incorporated estimated credit losses at the acquisition date. These loan pools are systematically reviewed by the Company to determine the risk of losses that may exceed those identified at the time of the acquisition. Techniques used in determining risk of loss are similar to those used to determine the risk of loss for the legacy Great Southern Bank portfolio, with most focus being placed on those loan pools which include larger loan relationships and those loan pools which exhibit higher risk characteristics. Review of the acquired loan portfolio also includes review of financial information, collateral valuations and customer interaction to determine if additional reserves are warranted.
The Bank’s allowance for loan losses as a percentage of total loans, excluding FDIC-assisted acquired loans, was
ASSET QUALITY
Former TeamBank, Vantus Bank, Sun Security Bank, InterBank and Valley Bank non-performing assets, including foreclosed assets and potential problem loans, are not included in the totals or in the discussion of non-performing loans, potential problem loans and foreclosed assets below. These assets were initially recorded at their estimated fair values as of their acquisition dates and are accounted for in pools. Therefore, these loan pools are analyzed rather than the individual loans. The performance of the loan pools acquired in each of the five transactions has been better than expectations as of the acquisition dates. 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.
Non-performing assets, excluding all FDIC-assisted acquired assets, at June 30, 2020 were
Compared to December 31, 2019 and March 31, 2020, non-performing loans increased
Compared to December 31, 2019 and March 31, 2020, potential problem loans decreased
Activity in the non-performing loans categories during the quarter ended June 30, 2020, was as follows:
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| (In thousands) | ||||||||||||||||
| One- to four-family construction | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
| Subdivision construction | — | — | — | — | — | — | — | — | ||||||||
| Land development | — | — | — | — | — | — | — | — | ||||||||
| Commercial construction | — | — | — | — | — | — | — | — | ||||||||
| One- to four-family residential | 2,299 | 143 | — | — | — | — | (54) | 2,388 | ||||||||
| Other residential | — | — | — | — | — | — | — | — | ||||||||
| Commercial real estate | 737 | — | — | — | — | — | (10) | 727 | ||||||||
| Commercial business | 1,199 | — | — | — | — | — | (17) | 1,182 | ||||||||
| Consumer | 1,044 | 87 | — | — | (14) | (24) | (101) | 992 | ||||||||
| Total | $ | 5,279 | $ | 230 | $ | — | $ | — | $ | (14) | $ | (24) | $ | (182) | $ | 5,289 |
At June 30, 2020, the non-performing commercial business category included three loans, none of which were added during the current quarter. The largest relationship in this category, which was added during 2018, totaled
Activity in the potential problem loans category during the quarter ended June 30, 2020, was as follows:
| 20%; width: | 2%; width: | 8%; width: Balance, April 1 | 2%; width: | 8%; width: Potential Problem | 2%; width: | 8%; width: from Potential Problem | 2%; width: | 8%; width: to Non- Performing | 2%; width: | 8%; width: Foreclosed Assets and Repossessions | 2%; width: | 8%; width: Offs | 2%; width: | 8%; width: | 2%; width: | 8%; width: Balance, June 30 |
| (In thousands) | ||||||||||||||||
| One- to four-family construction | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
| Subdivision construction | — | 24 | — | — | — | — | — | 24 | ||||||||
| Land development | — | — | — | — | — | — | — | — | ||||||||
| Commercial construction | — | — | — | — | — | — | — | — | ||||||||
| One- to four-family residential | 590 | — | — | — | — | — | (10) | 580 | ||||||||
| Other residential | — | — | — | — | — | — | — | — | ||||||||
| Commercial real estate | 3,067 | — | — | — | — | — | (120) | 2,947 | ||||||||
| Commercial business | — | — | — | — | — | — | — | — | ||||||||
| Consumer | 527 | 25 | — | — | (30) | (23) | (56) | 443 | ||||||||
| Total | $ | 4,184 | $ | 49 | $ | — | $ | — | $ | (30) | $ | (23) | $ | (186) | $ | 3,994 |
At June 30, 2020, the commercial real estate category of potential problem loans included two loans, neither of which was added during the current quarter. The largest relationship in this category (added during 2018), which totaled
Activity in foreclosed assets and repossessions during the quarter ended June 30, 2020, excluding
| 28%; width: | 2%; width: | 10%; width: Balance, April 1 | 2%; width: | 10%; width: | 2%; width: | 10%; width: Repossession Sales | 2%; width: | 10%; width: Costs | 2%; width: | 10%; width: Repossession Write-Downs | 2%; width: | 10%; width: Balance, June 30 |
| (In thousands) | ||||||||||||
| One-to four-family construction | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
| Subdivision construction | 610 | — | (260) | — | — | 350 | ||||||
| Land development | 1,358 | — | — | — | — | 1,358 | ||||||
| Commercial construction | — | — | — | — | — | — | ||||||
| One- to four-family residential | 291 | — | — | — | — | 291 | ||||||
| Other residential | — | — | — | — | — | — | ||||||
| Commercial real estate | — | — | — | — | — | — | ||||||
| Commercial business | — | — | — | — | — | — | ||||||
| Consumer | 513 | 173 | (346) | — | — | 340 | ||||||
| Total | $ | 2,772 | $ | 173 | $ | (606) | $ | — | $ | — | $ | 2,339 |
At June 30, 2020, the land development category of foreclosed assets included three properties, the largest of which is located in the Branson, Mo. area and had a balance of
BUSINESS INITIATIVES
The banking center network continues to evolve. In early April 2020, the Company was notified by its landlord that the Great Southern banking centers located inside the Hy-Vee stores at 2900 Devils Glen Rd in Bettendorf, Iowa, and 2351 W. Locust St. in Davenport, Iowa, must permanently cease operations due to store infrastructure changes. These offices have been closed to the public since late March 2020 due to the COVID-19 pandemic. Bank customers have been informed that the Hy-Vee banking centers will permanently close on July 21, 2020, with customer accounts transferring to nearby offices. Great Southern will ultimately operate three banking centers in the Quad Cities market area – two in Davenport and one in Bettendorf.
During the second quarter 2020, remodeling of the downtown office at 1900 Main in Parsons, Kansas, continued, which includes the addition of drive-thru banking lanes. Remodeling is expected to be completed in mid-August, whereupon the nearby drive-thru facility will be consolidated into the downtown office, leaving one location serving the Parsons market.
In June 2020, the Company completed the public offering and sale of
On June 17, 2020, the Company announced that Douglas Marrs, Vice President and Director of Operations of the Bank and Secretary of the Company, intends to retire in June 2021. Marrs is primarily responsible for general bank operations and facilities management. He announced his intention to retire well in advance to assure an orderly leadership transition over the next year. With more than 40 years in the banking industry, Marrs joined Great Southern in 1996. He has been an integral part of the Bank’s growth and success for the last 24 years. During that time period, the Bank has grown from approximately
Great Southern Bank has been recognized as part of Forbes’ annual list of the World’s Best Banks 2020. Great Southern was ranked as the sixth best bank in the United States. The World’s Best Banks list is comprised of the financial institutions that differentiate their services and build trustworthy relationships with their customers. 450 banks around the world are featured on the list, which was announced online on May 14, 2020, and can currently be viewed on the Forbes website. The study involved 40,000 bank customers from 23 countries to rate banks they are involved with on general satisfaction and key attributes like trust, fees, digital services and financial advice.
The Company will host a conference call on Tuesday, July 21, 2020, at 2:00 p.m. Central Time to discuss second quarter 2020 preliminary earnings. Individuals interested in listening to the conference call may dial 1.833.832.5121 and enter the passcode 8373048. The call will be available live or in a recorded version at the Company’s Investor Relations website, http://investors.greatsouthernbank.com.
Headquartered in Springfield, Mo., Great Southern offers a broad range of banking services to customers. The Company operates 95 retail banking centers in Missouri, Iowa, Kansas, Minnesota, Arkansas and Nebraska and commercial lending offices in Atlanta, Chicago, Dallas, Denver, Omaha, Neb., and Tulsa, Okla. The common stock of Great Southern Bancorp, Inc. is listed on the Nasdaq Global Select Market under the symbol "GSBC."
Forward-Looking Statements
When used in this press release and in other documents filed or furnished by Great Southern Bancorp, Inc. (the “Company”) with the Securities and Exchange Commission (the "SEC"), in the Company's 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. The novel coronavirus disease, or COVID-19, pandemic is adversely affecting the Company, its customers, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on the Company’s business, financial position, results of operations, liquidity, and prospects is uncertain. Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect the Company’s revenues and the values of its assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to, COVID-19, could affect the Company in substantial and unpredictable ways.
Other factors that could cause or contribute to such differences include, but are not limited to: (i) expected revenues, cost savings, earnings accretion, synergies and other benefits from the Company's merger and acquisition activities might not be realized within the anticipated time frames or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; (ii) changes in economic conditions, either nationally or in the Company's market areas; (iii) fluctuations in interest rates; (iv) the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; (v) the possibility of other-than-temporary impairments of securities held in the Company's securities portfolio; (vi) the Company's ability to access cost-effective funding; (vii) fluctuations in real estate values and both residential and commercial real estate market conditions; (viii) the ability to adapt successfully to technological changes to meet customers' needs and developments in the marketplace; (ix) the possibility that security measures implemented might not be sufficient to mitigate the risk of a cyber-attack or cyber theft, and that such security measures might not protect against systems failures or interruptions; (x) legislative or regulatory changes that adversely affect the Company's business, including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and its implementing regulations, the overdraft protection regulations and customers' responses thereto and the Tax Reform Legislation; (xi) changes in accounting policies and practices or accounting standards, including Accounting Standards Update 2016-13, Credit Losses (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the Current Expected Credit Loss model, which, upon adoption, is expected to result in an increase in the Company’s allowance for credit losses; (xii) monetary and fiscal policies of the Federal Reserve Board and the U.S. Government and other governmental initiatives affecting the financial services industry; (xiii) results of examinations of the Company and Great Southern Bank by their regulators, including the possibility that the regulators may, among other things, require the Company to limit its business activities, change its business mix, increase its allowance for loan 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 (xvii) natural disasters, war, terrorist activities or civil unrest and their effects on economic and business environments in which the Company operates. The Company wishes to advise readers that the factors listed above and other risks described from time to time in documents filed or furnished by the Company with the SEC could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.
The Company does not undertake-and specifically declines any obligation- to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
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 and six months ended June 30, 2020 and 2019, and the three months ended March 31, 2020, are not necessarily indicative of the results of operations which may be expected for any future period.
| 64%; width: | 2%; width: | 16%; width: | 2%; width: | 16%; width: |
| 2020 | 2019 | |||
| Selected Financial Condition Data: | (In thousands) | |||
| Total assets | $ | 5,566,650 | $ | 5,015,072 |
| Loans receivable, gross | 4,459,724 | 4,201,380 | ||
| Allowance for loan losses | 49,801 | 40,294 | ||
| Other real estate owned, net | 4,435 | 5,525 | ||
| Available-for-sale securities, at fair value | 446,935 | 374,175 | ||
| Deposits | 4,512,158 | 3,960,106 | ||
| Total borrowings | 366,709 | 412,374 | ||
| Total common stockholders’ equity | 626,728 | 603,066 | ||
| Non-performing assets (excluding FDIC-assisted transaction assets) | 7,628 | 8,170 |
| Three Months Ended | Six Months Ended | Three Months Ended | ||||||||||||
| June 30, | June 30, | March 31, | ||||||||||||
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| (In thousands) | ||||||||||||||
| Selected Operating Data: | ||||||||||||||
| Interest income | $ | 54,011 | $ | 58,723 | $ | 111,485 | $ | 116,081 | $ | 57,474 | ||||
| Interest expense | 10,556 | 13,802 | 23,092 | 26,555 | 12,536 | |||||||||
| Net interest income | 43,455 | 44,921 | 88,393 | 89,526 | 44,938 | |||||||||
| Provision for loan losses | 6,000 | 1,600 | 9,871 | 3,550 | 3,871 | |||||||||
| Non-interest income | 8,261 | 7,157 | 15,627 | 14,607 | 7,367 | |||||||||
| Non-interest expense | 29,349 | 28,383 | 60,163 | 56,877 | 30,815 | |||||||||
| Provision for income taxes | 3,164 | 3,720 | 5,915 | 7,718 | 2,751 | |||||||||
| Net income and net income available to common shareholders | $ | 13,203 | $ | 18,375 | $ | 28,071 | $ | 35,988 | $ | 14,868 | ||||
| At or For the Three Months Ended | At or For the Six Months Ended | At or For the Three Months Ended | |||||||||
| June 30, | June 30, | March 31, | |||||||||
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| (Dollars in thousands, except per share data) | |||||||||||
| Per Common Share: | |||||||||||
| Net income (fully diluted) | $ | 0.93 | $ | 1.28 | $ | 1.98 | $ | 2.52 | $ | 1.04 | |
| Book value | $ | 44.50 | $ | 40.30 | $ | 44.50 | $ | 40.30 | $ | 43.61 | |
| Earnings Performance Ratios: | |||||||||||
| Annualized return on average assets | | | |||||||||
| Annualized return on average common stockholders’ equity | | ||||||||||
| Net interest margin | | | |||||||||
| Average interest rate spread | | | |||||||||
| Efficiency ratio | |||||||||||
| Non-interest expense to average total assets | | | |||||||||
| Asset Quality Ratios: | |||||||||||
| Allowance for loan losses to period-end loans (excluding covered/previously covered loans) | | | |||||||||
| Non-performing assets to period-end assets | | | |||||||||
| Non-performing loans to period-end loans | | | |||||||||
| Annualized net charge-offs to average loans | | | |||||||||
Great Southern Bancorp, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(In thousands, except number of shares)
| 58%; width: | 2%; width: | 12%; width: 2020 | 2%; width: | 12%; width: 2019 | 2%; width: | 12%; width: 2020 |
| (In thousands) | ||||||
| Assets | ||||||
| Cash | $ | 97,208 | $ | 99,299 | $ | 104,142 |
| Interest-bearing deposits in other financial institutions | 376,437 | 120,856 | 136,352 | |||
| Cash and cash equivalents | 473,645 | 220,155 | 240,494 | |||
| Available-for-sale securities | 446,935 | 374,175 | 395,799 | |||
| Mortgage loans held for sale | 20,188 | 9,242 | 16,160 | |||
| Loans receivable (1), net of allowance for loan losses of | 4,399,645 | 4,153,982 | 4,195,035 | |||
| Interest receivable | 14,759 | 13,530 | 13,437 | |||
| Prepaid expenses and other assets | 47,688 | 74,984 | 47,712 | |||
| Other real estate owned and repossessions (2), net | 4,435 | 5,525 | 4,979 | |||
| Premises and equipment, net | 140,558 | 141,908 | 141,699 | |||
| Goodwill and other intangible assets | 7,521 | 8,098 | 7,809 | |||
| Federal Home Loan Bank stock and other interest earning assets | 11,276 | 13,473 | 9,896 | |||
| Total Assets | $ | 5,566,650 | $ | 5,015,072 | $ | 5,073,020 |
| Liabilities and Stockholders’ Equity | ||||||
| Liabilities | ||||||
| Deposits | $ | 4,512,158 | $ | 3,960,106 | $ | 4,178,918 |
| Securities sold under reverse repurchase agreements with customers | 191,624 | 84,167 | 124,484 | |||
| Short-term borrowings | 1,279 | 228,157 | 1,312 | |||
| Subordinated debentures issued to capital trust | 25,774 | 25,774 | 25,774 | |||
| Subordinated notes | 148,032 | 74,276 | 74,385 | |||
| Accrued interest payable | 3,464 | 4,250 | 2,747 | |||
| Advances from borrowers for taxes and insurance | 10,729 | 7,484 | 9,195 | |||
| Accounts payable and accrued expenses | 33,520 | 24,904 | 31,019 | |||
| Current and deferred income taxes | 13,342 | 2,888 | 10,954 | |||
| Total Liabilities | 4,939,922 | 4,412,006 | 4,458,788 | |||
| Stockholders’ Equity | ||||||
| Capital stock | ||||||
| Preferred stock, $.01 par value; authorized 1,000,000 shares; issued and outstanding June 2020, December 2019 and March 2020 -0- shares | — | — | — | |||
| Common stock, $.01 par value; authorized 20,000,000 shares; issued and outstanding June 2020 – 14,084,420 shares; December 2019 – 14,261,052 shares; March 2020 – 14,083,820 shares | 141 | 143 | 141 | |||
| Additional paid-in capital | 34,230 | 33,510 | 33,958 | |||
| Retained earnings | 533,346 | 537,167 | 524,922 | |||
| Accumulated other comprehensive gain | 59,011 | 32,246 | 55,211 | |||
| Total Stockholders’ Equity | 626,728 | 603,066 | 614,232 | |||
| Total Liabilities and Stockholders’ Equity | $ | 5,566,650 | $ | 5,015,072 | $ | 5,073,020 |
| 5%; width: | 95%; width: |
| (2) | At June 30, 2020, December 31, 2019 and March 31, 2020, includes foreclosed assets, net of discounts, totaling |
Great Southern Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share data)
| Three Months Ended | Six Months Ended | Three Months Ended | |||||||||||||
| June 30, | June 30, | March 31, | |||||||||||||
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| Loans | $ | 50,848 | $ | 55,771 | $ | 104,978 | $ | 110,327 | $ | 54,130 | |||||
| Investment securities and other | 3,163 | 2,952 | 6,507 | 5,754 | 3,344 | ||||||||||
| 54,011 | 58,723 | 111,485 | 116,081 | 57,474 | |||||||||||
| Interest Expense | |||||||||||||||
| Deposits | 9,041 | 11,582 | 19,618 | 22,052 | 10,577 | ||||||||||
| Short-term borrowings and repurchase agreements | 10 | 859 | 659 | 1,780 | 649 | ||||||||||
| Subordinated debentures issued to capital trust | 167 | 267 | 383 | 534 | 216 | ||||||||||
| Subordinated notes | 1,338 | 1,094 | 2,432 | 2,189 | 1,094 | ||||||||||
| 10,556 | 13,802 | 23,092 | 26,555 | 12,536 | |||||||||||
| Net Interest Income | 43,455 | 44,921 | 88,393 | 89,526 | 44,938 | ||||||||||
| Provision for Loan Losses | 6,000 | 1,600 | 9,871 | 3,550 | 3,871 | ||||||||||
| Net Interest Income After Provision for Loan Losses | 37,455 | 43,321 | 78,522 | 85,976 | 41,067 | ||||||||||
| Noninterest Income | |||||||||||||||
| Commissions | 176 | 163 | 442 | 497 | 266 | ||||||||||
| Service charges and ATM fees | 4,140 | 5,309 | 8,898 | 10,268 | 4,758 | ||||||||||
| Net gains on loan sales | 1,841 | 376 | 2,430 | 623 | 590 | ||||||||||
| Late charges and fees on loans | 468 | 356 | 824 | 702 | 355 | ||||||||||
| Net realized gains on sales of available-for-sale securities | 78 | — | 78 | 10 | — | ||||||||||
| Loss on derivative interest rate products | (106 | ) | (44 | ) | (514 | ) | (68 | ) | (407 | ) | |||||
| Other income | 1,664 | 997 | 3,469 | 2,575 | 1,805 | ||||||||||
| 8,261 | 7,157 | 15,627 | 14,607 | 7,367 | |||||||||||
| Noninterest Expense | |||||||||||||||
| Salaries and employee benefits | 16,830 | 15,428 | 34,999 | 31,068 | 18,169 | ||||||||||
| Net occupancy expense | 6,707 | 6,449 | 13,473 | 12,850 | 6,766 | ||||||||||
| Postage | 777 | 784 | 1,546 | 1,550 | 769 | ||||||||||
| Insurance | 534 | 662 | 916 | 1,328 | 382 | ||||||||||
| Advertising | 437 | 842 | 1,057 | 1,368 | 620 | ||||||||||
| Office supplies and printing | 301 | 226 | 535 | 485 | 235 | ||||||||||
| Telephone | 1,005 | 839 | 1,917 | 1,742 | 912 | ||||||||||
| Legal, audit and other professional fees | 664 | 630 | 1,262 | 1,342 | 598 | ||||||||||
| Expense on other real estate and repossessions | 268 | 419 | 747 | 1,039 | 479 | ||||||||||
| Partnership tax credit investment amortization | — | 91 | — | 182 | — | ||||||||||
| Acquired deposit intangible asset amortization | 289 | 289 | 577 | 613 | 289 | ||||||||||
| Other operating expenses | 1,537 | 1,724 | 3,134 | 3,310 | 1,596 | ||||||||||
| 29,349 | 28,383 | 60,163 | 56,877 | 30,815 | |||||||||||
| Income Before Income Taxes | 16,367 | 22,095 | 33,986 | 43,706 | 17,619 | ||||||||||
| Provision for Income Taxes | 3,164 | 3,720 | 5,915 | 7,718 | 2,751 | ||||||||||
| Net Income and Net Income Available to Common Shareholders | $ | 13,203 | $ | 18,375 | $ | 28,071 | $ | 35,988 | $ | 14,868 | |||||
| Earnings Per Common Share | |||||||||||||||
| Basic | $ | 0.94 | $ | 1.29 | $ | 1.99 | $ | 2.54 | $ | 1.05 | |||||
| Diluted | $ | 0.93 | $ | 1.28 | $ | 1.98 | $ | 2.52 | $ | 1.04 | |||||
| Dividends Declared Per Common Share | $ | 0.34 | $ | 0.32 | $ | 1.68 | $ | 1.39 | $ | 1.34 | |||||
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
| June 30, 2020(1) | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | |||||||||||||||||||
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| Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||
| Loans receivable: | |||||||||||||||||||||
| One- to four-family residential | 3.84 | % | $ | 652,281 | $ | 7,432 | 4.58 | % | $ | 515,749 | $ | 6,556 | 5.10 | % | |||||||
| Other residential | 4.29 | 936,541 | 10,940 | 4.70 | 819,577 | 11,270 | 5.52 | ||||||||||||||
| Commercial real estate | 4.23 | 1,533,078 | 17,390 | 4.56 | 1,414,009 | 18,304 | 5.19 | ||||||||||||||
| Construction | 4.34 | 636,914 | 7,612 | 4.81 | 713,885 | 10,585 | 5.95 | ||||||||||||||
| Commercial business | 3.72 | 340,872 | 3,361 | 3.97 | 259,779 | 3,358 | 5.18 | ||||||||||||||
| Other loans | 5.32 | 293,432 | 3,891 | 5.33 | 403,584 | 5,450 | 5.42 | ||||||||||||||
| Industrial revenue bonds | 4.44 | 9,757 | 222 | 9.16 | 14,940 | 248 | 6.67 | ||||||||||||||
| Total loans receivable | 4.34 | 4,402,875 | 50,848 | 4.64 | 4,141,523 | 55,771 | 5.40 | ||||||||||||||
| Investment securities | 2.97 | 433,410 | 3,082 | 2.86 | 309,170 | 2,415 | 3.13 | ||||||||||||||
| Other interest-earning assets | 0.24 | 321,414 | 81 | 0.10 | 88,024 | 537 | 2.45 | ||||||||||||||
| Total interest-earning assets | 3.91 | 5,157,699 | 54,011 | 4.21 | 4,538,717 | 58,723 | 5.19 | ||||||||||||||
| Non-interest-earning assets: | |||||||||||||||||||||
| Cash and cash equivalents | 97,468 | 92,500 | |||||||||||||||||||
| Other non-earning assets | 148,031 | 190,416 | |||||||||||||||||||
| Total assets | $ | 5,403,198 | $ | 4,821,633 | |||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||
| Interest-bearing demand and savings | 0.34 | $ | 1,838,077 | 1,862 | 0.41 | $ | 1,498,795 | 1,930 | 0.52 | ||||||||||||
| Time deposits | 1.44 | 1,789,349 | 7,179 | 1.61 | 1,733,163 | 9,652 | 2.23 | ||||||||||||||
| Total deposits | 0.86 | 3,627,426 | 9,041 | 1.00 | 3,231,958 | 11,582 | 1.44 | ||||||||||||||
| Short-term borrowings and repurchase agreements | 0.02 | 162,346 | 10 | 0.03 | 244,586 | 859 | 1.41 | ||||||||||||||
| Subordinated debentures issued to capital trust | 2.29 | 25,774 | 167 | 2.60 | 25,774 | 267 | 4.16 | ||||||||||||||
| Subordinated notes | 5.86 | 89,840 | 1,338 | 5.99 | 74,015 | 1,094 | 5.93 | ||||||||||||||
| Total interest-bearing liabilities | 1.01 | 3,905,386 | 10,556 | 1.09 | 3,576,333 | 13,802 | 1.55 | ||||||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||||||||
| Demand deposits | 833,251 | 655,642 | |||||||||||||||||||
| Other liabilities | 39,824 | 34,504 | |||||||||||||||||||
| Total liabilities | 4,778,461 | 4,266,479 | |||||||||||||||||||
| Stockholders’ equity | 624,737 | 555,154 | |||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 5,403,198 | $ | 4,821,633 | |||||||||||||||||
| Net interest income: | |||||||||||||||||||||
| Interest rate spread | 2.90 | % | $ | 43,455 | 3.12 | % | $ | 44,921 | 3.64 | % | |||||||||||
| Net interest margin* | 3.39 | % | 3.97 | % | |||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 132.1 | % | 126.9 | % |
______________
*Defined as the Company’s net interest income divided by average total interest-earning assets.
(1) The yield on loans at June 30, 2020, does not include the impact of the adjustments to the accretable yield (income) on loans acquired in the FDIC-assisted transactions. See “Net Interest Income” for a discussion of the effect on results of operations for the three months ended June 30, 2020.
| June 30, 2020(1) | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | |||||||||||||||||||
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| Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||
| Loans receivable: | |||||||||||||||||||||
| One- to four-family residential | 3.84 | % | $ | 628,076 | $ | 14,570 | 4.67 | % | $ | 506,490 | $ | 12,944 | 5.15 | % | |||||||
| Other residential | 4.29 | 881,486 | 21,696 | 4.95 | 815,354 | 22,260 | 5.51 | ||||||||||||||
| Commercial real estate | 4.23 | 1,511,434 | 35,970 | 4.79 | 1,400,789 | 36,000 | 5.18 | ||||||||||||||
| Construction | 4.34 | 673,444 | 17,335 | 5.18 | 690,883 | 20,758 | 6.06 | ||||||||||||||
| Commercial business | 3.72 | 305,016 | 6,552 | 4.32 | 261,967 | 6,750 | 5.20 | ||||||||||||||
| Other loans | 5.32 | 305,435 | 8,424 | 5.55 | 420,190 | 11,154 | 5.35 | ||||||||||||||
| Industrial revenue bonds | 4.44 | 10,015 | 431 | 8.65 | 15,072 | 461 | 6.17 | ||||||||||||||
| Total loans receivable | 4.34 | 4,314,906 | 104,978 | 4.89 | 4,110,745 | 110,327 | 5.41 | ||||||||||||||
| Investment securities | 2.97 | 409,206 | 6,165 | 3.03 | 293,937 | 4,666 | 3.20 | ||||||||||||||
| Other interest-earning assets | 0.24 | 205,768 | 342 | 0.33 | 91,182 | 1,088 | 2.41 | ||||||||||||||
| Total interest-earning assets | 3.91 | 4,929,880 | 111,485 | 4.55 | 4,495,864 | 116,081 | 5.21 | ||||||||||||||
| Non-interest-earning assets: | |||||||||||||||||||||
| Cash and cash equivalents | 94,124 | 91,657 | |||||||||||||||||||
| Other non-earning assets | 159,353 | 185,672 | |||||||||||||||||||
| Total assets | $ | 5,183,357 | $ | 4,773,193 | |||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||
| Interest-bearing demand and savings | 0.34 | $ | 1,706,794 | 3,979 | 0.47 | $ | 1,485,948 | 3,693 | 0.50 | ||||||||||||
| Time deposits | 1.44 | 1,751,125 | 15,639 | 1.80 | 1,703,087 | 18,359 | 2.17 | ||||||||||||||
| Total deposits | 0.86 | 3,457,919 | 19,618 | 1.14 | 3,189,035 | 22,052 | 1.39 | ||||||||||||||
| Short-term borrowings and repurchase agreements | 0.02 | 213,700 | 659 | 0.62 | 251,347 | 1,780 | 1.43 | ||||||||||||||
| Subordinated debentures issued to capital trust | 2.29 | 25,774 | 383 | 2.99 | 25,774 | 534 | 4.18 | ||||||||||||||
| Subordinated notes | 5.86 | 82,087 | 2,432 | 5.96 | 73,958 | 2,189 | 5.97 | ||||||||||||||
| Total interest-bearing liabilities | 1.01 | 3,779,480 | 23,092 | 1.23 | 3,540,114 | 26,555 | 1.52 | ||||||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||||||||
| Demand deposits | 754,618 | 657,018 | |||||||||||||||||||
| Other liabilities | 37,385 | 30,011 | |||||||||||||||||||
| Total liabilities | 4,571,483 | 4,227,143 | |||||||||||||||||||
| Stockholders’ equity | 611,874 | 546,050 | |||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 5,183,357 | $ | 4,773,193 | |||||||||||||||||
| Net interest income: | |||||||||||||||||||||
| Interest rate spread | 2.90 | % | $ | 88,393 | 3.32 | % | $ | 89,526 | 3.69 | % | |||||||||||
| Net interest margin* | 3.61 | % | 4.02 | % | |||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 130.4 | % | 127.0 | % |
______________
*Defined as the Company’s net interest income divided by average total interest-earning assets.
(1) The yield on loans at June 30, 2020, does not include the impact of the adjustments to the accretable yield (income) on loans acquired in the FDIC-assisted transactions. See “Net Interest Income” for a discussion of the effect on results of operations for the three months ended June 30, 2020.
NON-GAAP FINANCIAL MEASURES
This document contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures include core net interest income, core net interest margin and the tangible common equity to tangible assets ratio.
We calculate core net interest income and core net interest margin by subtracting the impact of adjustments regarding changes in expected cash flows related to pools of loans we acquired through FDIC-assisted transactions from reported net interest income and net interest margin. Management believes that core net interest income and core net interest margin are useful in assessing the Company’s core performance and trends, in light of the fluctuations that can occur related to updated estimates of the fair value of the loan pools acquired in the 2009, 2011, 2012 and 2014 FDIC-assisted transactions.
In calculating the ratio of tangible common equity to tangible assets, we subtract period-end intangible assets from common equity and from total assets. Management believes that the presentation of this measure excluding the impact of intangible assets provides useful supplemental information that is helpful in understanding our financial condition and results of operations, as it provides a method to assess management’s success in utilizing our tangible capital as well as our capital strength. Management also believes that providing a measure that excludes balances of intangible assets, which are subjective components of valuation, facilitates the comparison of our performance with the performance of our peers. In addition, management believes that this is a standard financial measure used in the banking industry to evaluate performance.
These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Because not all companies use the same calculation of non-GAAP measures, this presentation may not be comparable to other similarly titled measures as calculated by other companies.
Non-GAAP Reconciliation: Core Net Interest Income and Core Net Interest Margin
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
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| Less: Impact of FDIC-assisted acquired loan accretion adjustments | 1,537 | 0.12 | 1,399 | 0.12 | 3,403 | 0.14 | 2,911 | 0.13 | ||||||||||||
| Core net interest income/margin | $ | 41,918 | 3.27 | % | $ | 43,522 | 3.85 | % | 84,990 | 3.47 | % | $ | 86,615 | 3.89 | % | |||||
Non-GAAP Reconciliation: Ratio of Tangible Common Equity to Tangible Assets
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| 2020 | 2019 | |||||
| (Dollars in thousands) | ||||||
| Common equity at period end | $ | 626,728 | $ | 603,066 | ||
| Less: Intangible assets at period end | 7,521 | 8,098 | ||||
| Tangible common equity at period end (a) | $ | 619,207 | $ | 594,968 | ||
| Total assets at period end | $ | 5,566,650 | $ | 5,015,072 | ||
| Less: Intangible assets at period end | 7,521 | 8,098 | ||||
| Tangible assets at period end (b) | $ | 5,559,129 | $ | 5,006,974 | ||
| Tangible common equity to tangible assets (a) / (b) | 11.14 | % | 11.88 | % | ||
CONTACT: Kelly Polonus, Great Southern, (417) 895-5242
FAQ
What are Great Southern Bancorp's earnings for Q2 2020?
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