Preliminary Financial Results and Other
Matters for the Second Quarter and First Six Months of
2018:
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, 2018, were $0.97 per diluted common
share ($13.8 million available to common shareholders) compared to
$1.14 per diluted common share ($16.2 million available to common
shareholders) for the three months ended June 30, 2017.
Preliminary earnings for the six months ended June 30, 2018,
were $1.91 per diluted common share ($27.3 million available to
common shareholders) compared to $1.95 per diluted common share
($27.7 million available to common shareholders) for the six months
ended June 30, 2017.
For the quarter ended June 30, 2018, annualized return on
average common equity was 11.32%, annualized return on average
assets was 1.23%, and net interest margin was 3.94%, compared to
14.37%, 1.45% and 3.68%, respectively, for the quarter ended June
30, 2017. For the six months ended June 30, 2018, annualized
return on average common equity was 11.27%; annualized return on
average assets was 1.23%; and net interest margin was 3.93%
compared to 12.46%, 1.24% and 3.73%, respectively, for the six
months ended June 30, 2017.
President and CEO Joseph W. Turner commented, “Second quarter
results were very strong, driven by an expanding core net interest
margin, loan growth and expense containment. Core net
interest margin for the second quarter 2018 expanded to 3.84%,
which was an increase of 28 and three basis points from the year
ago quarter and most recent quarter, respectively. The primary
driver of the margin expansion was increased yields in most of our
loan categories, partially offset by a gradual, but steady,
increase in deposit costs. As in the first quarter of this
year, our income tax expense was lower than the year-ago quarter
due to enactment of the federal tax legislation last December.
“Commercial real estate and construction loan production was
strong during the second quarter and our level of loan commitments
and unfunded balances increased. Total gross loans, including the
undisbursed portion of loans and excluding FDIC-assisted acquired
loans and mortgages held for sale, have increased $274.5 million,
or 6.3%, from the end of 2017. Credit quality during the quarter
was stable with decreased net charge-offs ($704,000) and decreases
in non-performing loans and foreclosed assets and
repossessions. During the quarter we reduced the list prices
for several of our foreclosed land assets, resulting in a pre-tax
net write-down of $2.1 million.”
Turner continued, “As noted, loan growth has been good in the
first half of this year; however, there is strong competition for
these loans and we did receive some significant loan repayments in
late June. While we are experiencing good production throughout our
nine-state franchise, we look for strategic opportunities to expand
our reach into other markets by adding quality lenders in loan
production offices. As such, we are pleased to announce that
we expect to open loan production offices in Atlanta and Denver
during the third quarter of 2018. Local and
highly-experienced commercial lenders have been hired to manage
these offices, which will be modeled similar to our current offices
in Chicago, Dallas, Omaha and Tulsa.
“Lastly, we expect to close on the sale of the four Omaha-area
banking centers on July 20, 2018. As we noted in previous
regulatory filings, this transaction will result in a significant
gain being recorded in the third quarter.”
Selected Financial Data:
(In
thousands, except per share data) |
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
Net
interest income |
$ |
41,212 |
$ |
37,901 |
|
$ |
80,651 |
$ |
76,602 |
Provision
for loan losses |
|
1,950 |
|
1,950 |
|
|
3,900 |
|
4,200 |
Non-interest income |
|
7,459 |
|
15,800 |
|
|
14,394 |
|
23,496 |
Non-interest expense |
|
29,915 |
|
28,371 |
|
|
58,228 |
|
56,941 |
Provision
for income taxes |
|
2,967 |
|
7,204 |
|
|
5,612 |
|
11,262 |
Net
income and net income available to common shareholders |
$ |
13,839 |
$ |
16,176 |
|
$ |
27,305 |
$ |
27,695 |
|
|
|
|
|
|
Earnings
per diluted common share |
$ |
0.97 |
$ |
1.14 |
|
$ |
1.91 |
$ |
1.95 |
|
|
|
|
|
|
NET INTEREST INCOME
Net interest income for the second quarter of 2018 increased
$3.3 million to $41.2 million compared to $37.9 million for the
second quarter of 2017. Net interest margin was 3.94% in the
second quarter of 2018, compared to 3.68% in the same period of
2017, an increase of 26 basis points. For the three months
ended June 30, 2018, the net interest margin increased one basis
point compared to the net interest margin of 3.93% in the three
months ended March 31, 2018. The increase in the margin from
the prior year second quarter was primarily the result of increased
yields in most loan categories and higher overall yields on
investments and interest-earning deposits at the Federal Reserve
Bank, partially offset by an increase in the average interest rate
on deposits and a reduction in the additional yield accretion
recognized in conjunction with updated estimates of the fair value
of the acquired loan pools compared to the prior year period.
The average interest rate spread was 3.72% for the three months
ended June 30, 2018, compared to 3.53% for the three months ended
June 30, 2017 and 3.74% for the three months ended March 31,
2018.
Net interest income for the six months ended June 30, 2018
increased $4.1 million to $80.7 million compared to $76.6 million
for the six months ended June 30, 2017. Net interest margin
was 3.93% in the six months ended June 30, 2018, compared to 3.73%
in the same period of 2017, an increase of 20 basis points.
The average interest rate spread was 3.73% for the six months ended
June 30, 2018, compared to 3.58% for the six months ended June 30,
2017.
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. On an on-going basis, the
Company estimates the cash flows expected to be collected from the
acquired loan pools. 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). In the
prior year six month period, the increases in expected cash flows
also reduced the amount of expected reimbursements under the loss
sharing agreements with the FDIC (when such agreements were in
place), which were recorded as indemnification assets, with such
reductions amortized on a comparable basis over the remainder of
the terms of the loss sharing agreements or the remaining expected
lives of the loan pools, whichever was shorter. Additional
estimated cash flows totaling approximately $725,000 and $2.5
million were recorded in the three and six months ended June 30,
2018, respectively, related to all of these loan pools.
The impact of adjustments on all portfolios acquired in
FDIC-assisted transactions for the reporting periods presented is
shown below:
|
|
|
|
Three Months Ended |
|
|
June 30, 2018 |
|
June 30, 2017 |
|
|
(In thousands, except basis points data) |
Impact on net interest
income/net interest margin (in basis points) |
$ |
1,070 |
10 bps |
|
$ |
1,282 |
12 bps |
|
Non-interest
income |
|
— |
|
|
|
— |
|
|
Net
impact to pre-tax income |
$ |
1,070 |
|
|
$ |
1,282 |
|
|
|
Six Months Ended |
|
|
June 30, 2018 |
|
June 30, 2017 |
|
|
(In thousands, except basis points data) |
Impact on net interest
income/net interest margin (in basis points) |
$ |
2,227 |
11 bps |
|
$ |
3,262 |
|
16 bps |
|
Non-interest
income |
|
— |
|
|
|
(634 |
) |
|
|
Net
impact to pre-tax income |
$ |
2,227 |
|
|
$ |
2,628 |
|
|
|
|
Because 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 $2.9 million. Of the remaining
adjustments affecting interest income, we expect to recognize $1.4
million of interest income during the remainder of 2018.
Additional adjustments may be recorded in future periods from the
FDIC-assisted transactions, as the Company continues to estimate
expected cash flows from the acquired loan pools.
Excluding the impact of the additional yield accretion, net
interest margin for the three and six months ended June 30, 2018,
increased 28 and 25 basis points, respectively, when compared to
the year-ago periods. The increase in net interest margin in
the three and six month periods is primarily due to increased
yields in most loan categories and higher overall yields on
investments and interest-earning deposits at the Federal Reserve
Bank, partially offset by an increase in the average interest rate
on deposits.
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, 2018, non-interest income
decreased $8.3 million to $7.5 million when compared to the quarter
ended June 30, 2017, primarily as a result of the following
items:
- 2017 gain on early termination of FDIC loss sharing agreement
for Inter Savings Bank: In the quarter ended June 30, 2017,
the Company recognized a one-time gross gain of $7.7 million from
the termination of the loss sharing agreement for Inter Savings
Bank, which was recorded in the accretion of income related to
business acquisitions line item of the consolidated statements of
income for the three months ended June 30, 2017.
- Other income: Other income decreased $348,000 compared to
the prior year quarter. This decrease was primarily due to
fee income totaling approximately $275,000 related to interest rate
swaps entered into in the prior year quarter, which was not
repeated in the current year quarter.
- Late charges and fees on loans: Late charges and fees on
loans decreased $223,000 compared to the prior year quarter.
The decrease was primarily due to fees totaling $130,000 on loan
payoffs received on two commercial loan relationships during the
2017 quarter, with no similar large fees in the current year
quarter.
For the six months ended June 30, 2018, non-interest income
decreased $9.1 million to $14.4 million when compared to the six
months ended June 30, 2017, primarily as a result of the following
items:
- 2017 gain on early termination of FDIC loss sharing agreement
for Inter Savings Bank: In 2017, the Company recognized a
one-time gross gain of $7.7 million from the termination of the
loss sharing agreement for Inter Savings Bank, which was recorded
in the accretion of income related to business acquisitions line
item of the consolidated statements of income for the six months
ended June 30, 2017.
- Amortization of income related to business acquisitions:
Because of the termination of the loss sharing agreements in
previous years, the net amortization expense related to business
acquisitions was $-0- for the six months ended June 30, 2018,
compared to $485,000 for the six months ended June 30, 2017, which
reduced non-interest income by that amount in the previous year
period.
- Late charges and fees on loans: Late charges and fees on
loans decreased $711,000 compared to the prior year period.
The decrease was primarily due to fees totaling $632,000 on loan
payoffs received on four loan relationships in the 2017 period
which were not repeated in the 2018 period.
- Other income: Other income decreased $687,000 compared to
the prior year period. The decrease was primarily due to the
interest rate swap income in 2017 noted above and the receipt of
approximately $212,000 related to the exit of certain tax credit
partnerships in 2017.
- Net gains on loan sales: Net gains on loan sales
decreased $603,000 compared to the prior year period. The
decrease was due to a decrease in originations of fixed-rate loans
during the 2018 period compared to the 2017 period. Fixed
rate single-family mortgage loans originated are generally
subsequently sold in the secondary market. In 2018, the Company has
originated more variable-rate single-family mortgage loans, which
have been retained in the Company’s portfolio.
NON-INTEREST EXPENSE
For the quarter ended June 30, 2018, non-interest expense
increased $1.5 million to $29.9 million when compared to the
quarter ended June 30, 2017, primarily as a result of the following
items:
- Expense on foreclosed assets and repossessions: Expense
on foreclosed assets increased $2.1 million compared to the prior
year period primarily due to net write-downs of certain foreclosed
assets during the current period, totaling approximately $2.1
million. These write-downs resulted from management’s
decision to reduce the asking price for several parcels of land
(subdivision ground, residential lots and commercial lots and
undeveloped ground).
- Salaries and employee benefits: Salaries and employee
benefits increased $449,000 from the prior year quarter. This
increase is approximately 3% over the prior year expense total and
is primarily attributable to normal annual raises for employees and
increases in costs for health insurance and retirement
benefits.
- Legal, audit and other professional fees: Legal, audit
and other professional fees decreased $372,000 in the quarter ended
June 30, 2018 compared to the same period in 2017. The
decrease was primarily due to the recovery of previously expensed
legal fees and lower collection costs for problem loans and
foreclosed assets.
- Other operating expenses: Other operating expenses
decreased $650,000 in the quarter ended June 30, 2018 compared to
the same period in 2017. During the 2017 quarter, the Company
incurred a $340,000 prepayment penalty when FHLB advances totaling
$31.4 million were repaid prior to maturity, which was not repeated
in the 2018 quarter.
For the six months ended June 30, 2018, non-interest expense
increased $1.3 million to $58.2 million when compared to the six
months ended June 30, 2017, primarily as a result of the following
items:
- Expense on foreclosed assets and repossessions: Expense
on foreclosed assets increased $2.6 million compared to the prior
year period primarily due to the write-down of certain foreclosed
assets during the current period, totaling approximately $2.1
million, as discussed above.
- Office supplies and printing expense: Office supplies and
printing expense decreased $396,000 in the six months ended June
30, 2018 compared to the same period in 2017. During the 2017
period the Bank incurred printing and other costs totaling $373,000
related to the replacement of a portion of customer debit cards
with chip-enabled cards, which was not repeated in the current year
period.
- Other operating expenses: Other operating expenses
decreased $855,000 in the six months ended June 30, 2018 compared
to the same period in 2017. During the 2017 period, the
Company incurred a $340,000 prepayment penalty when FHLB advances
totaling $31.4 million were repaid prior to maturity, which was not
repeated in the 2018 period. In addition, the Company
experienced significantly lower debit card and check fraud losses
in the 2018 period compared to the 2017 period.
The Company’s efficiency ratio for the quarter ended June 30,
2018, was 61.46% compared to 52.83% for the same quarter in 2017.
The efficiency ratio for the six months ended June 30, 2018,
was 61.26% compared to 56.89% for the same period in 2017.
The increase in the ratio in both the 2018 three and six month
periods was primarily due to a decrease in non-interest income and
an increase in non-interest expense, partially offset by an
increase in net interest income. In the 2017 periods, the
Company’s efficiency ratio was positively impacted by the
significant gain recorded related to the termination of the
InterSavings Bank loss sharing agreements. In the 2018
periods, the Company’s efficiency ratio was negatively impacted by
the significant write-down of foreclosed assets. Excluding
these items, the Company’s efficiency ratio would have improved in
the 2018 periods compared to the 2017 periods. The Company’s
ratio of non-interest expense to average assets was 2.66% and 2.63%
for the three and six months ended June 30, 2018, respectively,
compared to 2.55% and 2.55% for the three and six months ended June
30, 2017, respectively. The increase in the current period
ratios was due to an increase in non-interest expense in the 2018
periods compared to the 2017 periods, primarily related to the
previously discussed write-down of foreclosed assets in 2018.
Average assets for the quarter ended June 30, 2018, increased $43.6
million, or 1.0%, from the quarter ended June 30, 2017, primarily
due to an increase in loans receivable, partially offset by a
decrease in investment securities. Average assets for the six
months ended June 30, 2018, decreased $35.4 million, or 0.8%, from
the six months ended June 30, 2017, primarily due to decreases in
investment securities and other interest-earning assets, partially
offset by organic loan growth.
INCOME TAXES
On December 22, 2017, H.R.1, originally known as
the Tax Cuts and Jobs Act (the “Act”), was signed into law. Among
other things, the Act permanently lowers the corporate federal
income tax rate to 21% from the prior maximum rate of 35%,
effective for tax years including or commencing January 1,
2018. The Company currently expects its effective tax rate
(combined federal and state) to decrease from approximately 26.7%
in 2017 to approximately 16.5% to 18.5% in 2018, mainly as a
result of the Act.
For the three months ended June 30, 2018 and
2017, the Company's effective tax rate was 17.6% and 30.8%,
respectively. For the six months ended June 30, 2018 and
2017, the Company's effective tax rate was 17.0% and 28.9%,
respectively. These effective rates were lower than the
statutory federal tax rates of 21% (2018) and 35% (2017), due
primarily to the utilization of certain investment tax credits and
to tax-exempt investments and tax-exempt loans which reduced the
Company’s effective tax rate. The Company’s effective tax
rate may fluctuate in future periods as it is impacted by the level
and timing of the Company’s utilization of tax credits and the
level of tax-exempt investments and loans and the overall level of
pre-tax income. The Company's effective income tax rate is
currently expected to continue to be less than the statutory rate
due primarily to the factors noted above.
CAPITAL
As of June 30, 2018, total stockholders’ equity and common
stockholders’ equity were $490.3 million (10.7% of total assets),
equivalent to a book value of $34.69 per common share. Total
stockholders’ equity and common stockholders’ equity at December
31, 2017, were $471.7 million (10.7% of total assets), equivalent
to a book value of $33.48 per common share. At June 30, 2018,
the Company’s tangible common equity to tangible assets ratio was
10.5%, compared to 10.5% at December 31, 2017.
On a preliminary basis, as of June 30, 2018, the Company’s Tier
1 Leverage Ratio was 11.3%, Common Equity Tier 1 Capital Ratio was
10.9%, Tier 1 Capital Ratio was 11.5%, and Total Capital Ratio was
14.1%. On June 30, 2018, and on a preliminary basis, the
Bank’s Tier 1 Leverage Ratio was 12.1%, Common Equity Tier 1
Capital Ratio was 12.3%, Tier 1 Capital Ratio was 12.3%, and Total
Capital Ratio was 13.2%.
Effective April 18, 2018, the Company approved a new common
stock repurchase plan. The plan authorizes the repurchase of up to
500,000 shares of its common stock, representing approximately 3.5%
of outstanding shares. The new plan replaces and terminates the
Company’s repurchase plan that was approved November 15,
2006. No shares were repurchased by the Company during the
three months ended June 30, 2018.
The Company has historically utilized stock buy-back programs
from time to time as long as management believed that repurchasing
the stock would contribute to the overall growth of shareholder
value. The number of shares of stock that will be repurchased at
any particular time and the prices that will be paid are subject to
many factors, several of which are outside the control of the
Company. The primary factors, however, are the number of shares
available in the market from sellers at any given time, the price
of the stock within the market as determined by the market, and the
projected impact on the Company’s earnings per share and
capital.
LOANS
Total gross loans (including the undisbursed portion of loans),
excluding FDIC-assisted acquired loans and mortgage loans held for
sale, increased $274.5 million, or 6.3%, from December 31, 2017, to
June 30, 2018. This increase was primarily in construction
loans ($202 million), commercial real estate loans ($73 million),
other residential (multi-family) loans ($40 million) and one- to
four-family residential mortgage loans ($31 million). These
increases were partially offset by decreases in consumer auto loans
($58 million). The FDIC-acquired loan portfolios had net
decreases totaling $25.5 million during the six months ended June
30, 2018.
Loan commitments and the unfunded portion of loans at the dates
indicated were as follows (in thousands):
|
|
|
|
|
|
|
June 30,
2018 |
March
31, 2018 |
December 31,2017 |
December 31,2016 |
December 31,2015 |
Closed loans
with unused available lines |
|
|
|
|
|
Secured
by real estate (one- to four-family) |
$ |
144,994 |
$ |
138,375 |
$ |
133,587 |
$ |
123,433 |
$ |
105,390 |
Secured
by real estate (not one- to four-family) |
|
15,306 |
|
12,382 |
|
10,836 |
|
26,062 |
|
21,857 |
Not
secured by real estate - commercial business |
|
104,749 |
|
108,262 |
|
113,317 |
|
79,937 |
|
63,865 |
|
|
|
|
|
|
Closed
construction loans with unused available
lines |
|
|
|
|
|
Secured
by real estate (one-to four-family) |
|
31,221 |
|
29,757 |
|
20,919 |
|
10,047 |
|
14,242 |
Secured
by real estate (not one-to four-family) |
|
830,592 |
|
749,926 |
|
718,277 |
|
542,326 |
|
385,969 |
|
|
|
|
|
|
Loan
Commitments not closed |
|
|
|
|
|
Secured
by real estate (one-to four-family) |
|
47,040 |
|
37,144 |
|
23,340 |
|
15,884 |
|
13,411 |
Secured
by real estate (not one-to four-family) |
|
128,200 |
|
200,192 |
|
156,658 |
|
119,126 |
|
120,817 |
Not
secured by real estate - commercial business |
|
— |
|
12,995 |
|
4,870 |
|
7,022 |
|
— |
|
|
|
|
|
|
|
$ |
1,302,102 |
$ |
1,289,033 |
$ |
1,181,804 |
$ |
923,837 |
$ |
725,551 |
|
|
|
|
|
|
|
|
|
|
|
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
Management records a provision for loan losses in an amount it
believes 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.
Weak economic conditions, 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,
2018 was $2.0 million, unchanged from the quarter ended June 30,
2017. At June 30, 2018 and December 31, 2017, the allowance
for loan losses was $37.6 million and $36.5 million,
respectively. Total net charge-offs were $704,000 and $2.4
million for the quarters ended June 30, 2018 and 2017,
respectively. During the quarter ended June 30, 2018,
$748,000 of net charge-offs were in the consumer auto
category. Total net charge-offs were $2.8 million and $5.1
million for the six months ended June 30, 2018 and 2017,
respectively. During the six months ended June 30, 2018, $2.0
million of the $2.8 million of net charge-offs were in the consumer
auto category. In response to a more challenging consumer
credit environment, the Company tightened its underwriting
guidelines on automobile lending in the latter part of 2016.
Management took this step in an effort to improve credit quality in
the portfolio and reduce delinquencies and charge-offs. This
action also resulted in a lower level of origination volume and, as
such, the outstanding balance of the Company's automobile loans
declined approximately $58 million in the six months ended June 30,
2018. We expect to see further declines in the automobile
loan outstanding balance through the remainder of 2018. In
addition, one commercial loan relationship amounted to $245,000 of
the total net charge-offs during the current quarter.
Charge-offs were partially offset by recoveries on multiple loans
during the quarter. Four commercial loan relationships
amounted to $871,000 of the total charge-offs during the six months
ended June 30, 2018. General market conditions and unique
circumstances related to individual borrowers and projects
contributed to the level of provisions and charge-offs. As
assets were categorized as potential problem loans, non-performing
loans or foreclosed assets, evaluations were made of the values of
these assets with corresponding charge-offs as appropriate.
In June 2017, the loss sharing agreements for Inter Savings Bank
were terminated. In April 2016, the loss sharing agreements
for Team Bank, Vantus Bank and Sun Security Bank were
terminated. Loans acquired from the FDIC related to Valley
Bank did not have a loss sharing agreement. All 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 the larger loan relationships and
those loan pools which exhibit higher risk characteristics.
Review of the acquired loan portfolio also includes review of
financial information, collateral valuations and customer
interaction to determine if additional reserves are warranted.
The Bank’s allowance for loan losses as a percentage of total
loans, excluding FDIC-acquired loans, was 1.02%, 1.01% and 1.02% at
June 30, 2018, December 31, 2017 and March 31, 2018, respectively.
Management considers the allowance for loan losses adequate
to cover losses inherent in the Bank’s loan portfolio at June 30,
2018, based on recent reviews of the Bank’s loan portfolio and
current economic conditions. If economic conditions were to
deteriorate or management’s assessment of the loan portfolio were
to change, it is possible that additional loan loss provisions
would be required, thereby adversely affecting future results of
operations and financial condition.
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 that occur
from time to time 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, 2018 were $21.5 million, a decrease of $6.3
million from $27.8 million at December 31, 2017 and a decrease of
$5.9 million from $27.4 million at March 31, 2018.
Non-performing assets, excluding all FDIC-assisted acquired
assets, as a percentage of total assets were 0.47% at June 30,
2018, compared to 0.63% at December 31, 2017 and 0.62% of total
assets at March 31, 2018.
Compared to December 31, 2017, non-performing loans decreased
$3.1 million to $8.1 million at June 30, 2018, and foreclosed
assets decreased $3.2 million to $13.4 million at June 30, 2018.
Compared to March 31, 2018, non-performing loans decreased
$1.2 million and foreclosed assets decreased $4.7 million at June
30, 2018. Non-performing commercial business loans comprised
$2.9 million, or 35.1%, of the total $8.1 million of non-performing
loans at June 30, 2018, a decrease of $408,000 from March 31,
2018. Non-performing one- to four-family residential loans
comprised $2.6 million, or 31.9%, of the total non-performing loans
at June 30, 2018, a decrease of $193,000 from March 31, 2018.
Non-performing consumer loans comprised $2.2 million, or 27.6%, of
the total non-performing loans at June 30, 2018, a decrease of
$597,000 from March 31, 2018. Non-performing commercial real
estate loans comprised $352,000, or 4.3%, of the total
non-performing loans at June 30, 2018, a decrease of $8,000 from
March 31, 2018. Non-performing construction and land
development loans comprised $91,000, or 1.1%, of the total
non-performing loans at June 30, 2018, a decrease of $5,000 from
March 31, 2018.
Compared to March 31, 2018, potential problem loans increased
$945,000 to $8.7 million at June 30, 2018. The increase
during the quarter was due to the addition of $2.1 million of loans
to potential problem loans, partially offset by $672,000 in
payments, $443,000 in loans moved to non-performing loans and
$3,000 in charge-offs.
Activity in the non-performing loans category during the quarter
ended June 30, 2018, was as follows:
|
|
|
|
|
|
|
|
|
|
BeginningBalance,April
1 |
Additions to Non-Performing |
Removed from Non-Performing |
Transfers to Potential Problem
Loans |
Transfers to Foreclosed Assets and
Repossessions |
Charge-Offs |
Payments |
Ending Balance, June 30 |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
One- to four-family
construction |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Subdivision
construction |
|
96 |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(5 |
) |
|
91 |
Land development |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Commercial
construction |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
One- to four-family
residential |
|
2,784 |
|
160 |
|
— |
|
(67 |
) |
|
(202 |
) |
|
(14 |
) |
|
(70 |
) |
|
2,591 |
Other residential |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Commercial real
estate |
|
360 |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(8 |
) |
|
352 |
Commercial
business |
|
3,260 |
|
407 |
|
— |
|
— |
|
|
— |
|
|
(457 |
) |
|
(358 |
) |
|
2,852 |
Consumer |
|
2,836 |
|
502 |
|
— |
|
(24 |
) |
|
(266 |
) |
|
(500 |
) |
|
(309 |
) |
|
2,239 |
|
|
|
|
|
|
|
|
|
Total |
$ |
9,336 |
$ |
1,069 |
$ |
— |
$ |
(91 |
) |
$ |
(468 |
) |
$ |
(971 |
) |
$ |
(750 |
) |
$ |
8,125 |
|
|
|
|
|
|
|
|
|
At June 30, 2018, the non-performing commercial business
category included 10 loans, one of which was transferred from
potential problem loans during the current quarter. The
largest relationship in this category, which was added during the
first quarter of 2018, totaled $1.2 million, or 41.6% of the total
category. This relationship is collateralized by an
assignment of an interest in a real estate project. The
second largest relationship in the commercial business category
included 2 loans and totaled $900,000, or 31.6% of the total
category. This relationship was previously collateralized by
commercial real estate which has been foreclosed upon and
subsequently sold. Collection efforts are currently being
pursued against the guarantors of the credit relationship.
The non-performing one- to four-family residential category
included 27 loans, two of which were added during the current
quarter. The largest relationship in this category was added
in 2017 and included nine loans totaling $1.3 million, or 51.1% of
the total category, which are collateralized by residential rental
homes in the Springfield, Mo. area. The non-performing consumer
category included 183 loans, 47 of which were added during the
current quarter, and the majority of which are indirect used
automobile loans.
Activity in the potential problem loans category during the
quarter ended June 30, 2018, was as follows:
|
|
|
|
|
|
|
|
|
|
Beginning Balance, April
1 |
Additions to Potential Problem |
Removed from Potential Problem |
Transfers to Non-Performing |
Transfers to Foreclosed Assets and
Repossessions |
Charge-Offs |
Payments |
Ending Balance, June 30 |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
One- to four-family
construction |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
|
$ |
— |
$ |
— |
|
$ |
— |
|
$ |
— |
Subdivision
construction |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
Land development |
|
4 |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
4 |
Commercial
construction |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
One- to four-family
residential |
|
1,148 |
|
67 |
|
— |
|
— |
|
|
— |
|
— |
|
|
(12 |
) |
|
1,203 |
Other residential |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
Commercial real
estate |
|
5,303 |
|
1,961 |
|
— |
|
— |
|
|
— |
|
— |
|
|
(594 |
) |
|
6,670 |
Commercial
business |
|
486 |
|
— |
|
— |
|
(407 |
) |
|
— |
|
— |
|
|
(11 |
) |
|
68 |
Consumer |
|
789 |
|
35 |
|
— |
|
(36 |
) |
|
— |
|
(3 |
) |
|
(55 |
) |
|
730 |
|
|
|
|
|
|
|
|
|
Total |
$ |
7,730 |
$ |
2,063 |
$ |
— |
$ |
(443 |
) |
$ |
— |
$ |
(3 |
) |
$ |
(672 |
) |
$ |
8,675 |
|
|
|
|
|
|
|
|
|
At June 30, 2018, the commercial real estate category of
potential problem loans included four loans, one of which was added
during the current quarter. The largest relationship in this
category, which is made up of three loans totaling $4.7 million, or
70.6% of the total category, is collateralized by theatre and
retail property in Branson, Mo. This is a long-term customer
of the Bank and these loans were all originated prior to
2008. The borrower experienced cash flow issues due to
vacancies in some of the properties and the loans were added to
potential problem loans during the third quarter of 2017.
Payments of $500,000 were received on these loans during the
quarter ended June 30, 2018. The second largest loan in the
commercial real estate category, which was added during the current
quarter, totaled $2.0 million, or 29.4% of the total category, and
is collateralized by a mixed use commercial retail building.
The one- to four-family residential category of potential problem
loans included 20 loans, one of which was added during the current
quarter. The consumer category of potential problem loans included
60 loans, four of which were added during the current
quarter. The commercial business category of potential
problem loans included three loans, with the largest previous loan
in this category, totaling $407,000, being transferred to
non-performing loans during the current quarter.
Activity in foreclosed assets and repossessions during the
quarter ended June 30, 2018, excluding $3.3 million in foreclosed
assets related to loans acquired in FDIC-assisted transactions and
$1.6 million in properties which were not acquired through
foreclosure, was as follows:
|
|
|
|
|
|
|
|
BeginningBalance,April
1 |
Additions |
ORE and Repossession Sales |
Capitalized Costs |
ORE andRepossession Write-Downs |
EndingBalance, June
30 |
|
(In thousands) |
|
|
|
|
|
|
|
One-to four-family
construction |
$ |
— |
$ |
— |
$ |
— |
|
$ |
— |
$ |
— |
|
$ |
— |
Subdivision
construction |
|
4,836 |
|
— |
|
(1,039 |
) |
|
— |
|
(1,082 |
) |
|
2,715 |
Land development |
|
7,684 |
|
— |
|
(941 |
) |
|
— |
|
(1,675 |
) |
|
5,068 |
Commercial
construction |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
One- to four-family
residential |
|
91 |
|
565 |
|
(34 |
) |
|
— |
|
— |
|
|
622 |
Other residential |
|
1,601 |
|
— |
|
— |
|
|
143 |
|
— |
|
|
1,744 |
Commercial real
estate |
|
2,088 |
|
— |
|
(343 |
) |
|
— |
|
— |
|
|
1,745 |
Commercial
business |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
Consumer |
|
1,722 |
|
1,986 |
|
(2,238 |
) |
|
— |
|
— |
|
|
1,470 |
|
|
|
|
|
|
|
Total |
$ |
18,022 |
$ |
2,551 |
$ |
(4,595 |
) |
$ |
143 |
$ |
(2,757 |
) |
$ |
13,364 |
|
|
|
|
|
|
|
At June 30, 2018, the land development category of foreclosed
assets included 17 properties, the largest of which was located in
the northwest Arkansas area and had a balance of $1.1 million, or
20.8% of the total category. Of the total dollar amount in
the land development category of foreclosed assets, 42.7% and 20.8%
was located in the Branson, Mo. and the northwest Arkansas areas,
respectively, including the largest property previously
mentioned. The subdivision construction category of
foreclosed assets included 11 properties, the largest of which was
located in the Springfield, Mo. metropolitan area and had a balance
of $1.0 million, or 36.5% of the total category. Of the total
dollar amount in the subdivision construction category of
foreclosed assets, 46.3% and 36.5% is located in Branson, Mo. and
Springfield, Mo., respectively, including the largest property
previously mentioned. The write-downs in the land development
and subdivision construction categories resulted from management’s
decision, after marketing these assets for an extended period, to
reduce the asking price for several parcels of land. The
commercial real estate category of foreclosed assets included five
properties, the largest of which was recreational property in the
St. Louis area and had a balance of $646,000, or 37.0% of the total
category. The other residential category of foreclosed assets
included one property totaling $1.7 million, and is an apartment
building in central Missouri. The larger amount of additions
and sales under consumer loans are due to a higher volume of
repossessions of automobiles, which generally are subject to a
shorter repossession process. The Company experienced
increased levels of delinquencies and repossessions in indirect and
used automobile loans throughout 2016 and 2017. The level of
delinquencies and repossessions in indirect and used automobile
loans has decreased in 2018.
BUSINESS INITIATIVES
In June 2018, the Company consolidated operations of a banking
center into a nearby office in Paola, Kan. The banking center,
located at 1 S. Pearl Street, was closed and all accounts were
automatically transferred to the banking center at 1515 Baptiste
Drive, less than a mile away. A deposit-taking ATM and interactive
teller machine are available for customers at the S. Pearl Street
building.
On July 20, 2018, the Company expects to close on the sale of
four banking centers in the Omaha, Neb., metropolitan market to
Lincoln, Neb.-based West Gate Bank. Pursuant to the purchase and
assumption agreement, the Bank will sell branch deposits of
approximately $58 million and sell substantially all branch-related
real estate, fixed assets and ATMs. Subject to deposit balances at
the time of closing, the Company estimates that it will record a
pre-tax gain of approximately $7.0 million, or $0.38 (after tax)
per diluted share, based on the expected deposit premium and the
sales price of the branch assets. As a result of this
transaction, the Company expects that non-interest income will
decrease $300,000–$350,000 annually, non-interest expense will
decrease by $1.1– $1.2 million annually, and interest expense will
increase by $400,000-$500,000 annually (based on current interest
rates for non-deposit funds). Great Southern is maintaining a
commercial loan production office in the Omaha market and will move
into a new office in July.
During the third quarter of 2018, the Company expects to open
commercial loan production offices in Atlanta, Ga., and Denver,
Colo., pending regulatory approvals. Local and
highly-experienced commercial lenders have been hired to manage
each office. The Company also operates commercial loan production
offices in Chicago, Dallas, and Tulsa, Okla.
In June 2018, an experienced lender was hired to serve as Small
Business Administration (SBA) Manager, a new role in the
Company. Based in the Dallas commercial loan production
office, the Manager and his staff will exclusively focus on
sourcing and servicing SBA 7a, SBA 504 and other commercial real
estate loan opportunities throughout Great Southern’s market
areas.
The Company will host a conference call on Thursday, July 19,
2018, at 2:00 p.m. Central Time (3:00 p.m. Eastern Time) to discuss
second quarter 2018 preliminary earnings. Individuals interested in
listening to the conference call may dial 1.833.832.5121 and enter
the passcode 7292729. 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 103
retail banking centers and more than 200 ATMs in Missouri,
Arkansas, Iowa, Kansas, Minnesota and Nebraska and commercial
lending offices in Chicago, Dallas and Tulsa, Okla. 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 StatementsWhen used in this
press release and in other documents filed or furnished by the
Company with the Securities and Exchange Commission (the "SEC"), in
the Company's press releases or other public or stockholder
communications, and in oral statements made with the approval of an
authorized executive officer, the words or phrases "will likely
result," "are expected to," "will continue," "is anticipated,"
"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.
Such statements are subject to certain risks and uncertainties,
including, among other things, (i) the possibility that the amounts
of any pre-tax gain and the changes in non-interest income,
non-interest expense and interest expense actually resulting from
the Bank's pending transaction with West Gate Bank might be
materially different from estimated amounts; (ii) the possibility
that the actual reduction in the Company’s effective tax rate
expected to result from H. R. 1, formerly known as the “Tax Cuts
and Jobs Act” (the “Tax Reform Legislation”) might be different
from the reduction estimated by the Company; (iii) 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; (iv) changes in economic
conditions, either nationally or in the Company's market areas; (v)
fluctuations in interest rates; (vi) 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; (vii) the
possibility of other-than-temporary impairments of securities held
in the Company's securities portfolio; (viii) the Company's ability
to access cost-effective funding; (ix) fluctuations in real estate
values and both residential and commercial real estate market
conditions; (x) demand for loans and deposits in the Company's
market areas; (xi) the ability to adapt successfully to
technological changes to meet customers' needs and developments in
the marketplace; (xii) 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; (xiii)
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; (xiv)
changes in accounting principles, policies or guidelines; (xv)
monetary and fiscal policies of the Federal Reserve Board and the
U.S. Government and other governmental initiatives affecting the
financial services industry; (xvi) results of examinations of the
Company and the Bank by their regulators, including the possibility
that the regulators may, among other things, require the Company to
limit its business activities, changes 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; (xvii) costs and effects of litigation, including
settlements and judgments; and (xviii) competition. 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 certain 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 accruals,
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, 2018 and 2017, and the three months ended March 31, 2018,
are not necessarily indicative of the results of operations which
may be expected for any future period.
|
|
|
|
June 30, |
December 31, |
|
2018 |
2017 |
Selected Financial Condition Data: |
(In thousands) |
|
|
|
Total
assets |
$ |
4,568,863 |
$ |
4,414,521 |
Loans
receivable, gross |
|
3,904,020 |
|
3,769,294 |
Allowance
for loan losses |
|
37,556 |
|
36,492 |
Other
real estate owned, net |
|
18,266 |
|
22,002 |
Available-for-sale securities, at fair value |
|
169,971 |
|
179,179 |
Deposits |
|
3,597,057 |
|
3,597,144 |
Total
borrowings |
|
455,443 |
|
324,097 |
Total
common stockholders’ equity |
|
490,271 |
|
471,662 |
Non-performing assets (excluding FDIC-assisted transaction
assets) |
|
21,489 |
|
27,830 |
|
|
|
|
|
|
|
Three Months Ended |
Six Months Ended |
Three Months Ended |
|
June 30, |
June 30, |
March 31, |
|
2018 |
2017 |
2018 |
2017 |
2018 |
Selected Operating Data: |
(Dollars in thousands, except per share data) |
|
|
Interest
income |
$ |
49,943 |
$ |
44,744 |
$ |
96,826 |
$ |
90,157 |
$ |
46,882 |
Interest
expense |
|
8,731 |
|
6,843 |
|
16,175 |
|
13,555 |
|
7,444 |
Net
interest income |
|
41,212 |
|
37,901 |
|
80,651 |
|
76,602 |
|
39,438 |
Provision
for loan losses |
|
1,950 |
|
1,950 |
|
3,900 |
|
4,200 |
|
1,950 |
Non-interest income |
|
7,459 |
|
15,800 |
|
14,394 |
|
23,496 |
|
6,935 |
Non-interest expense |
|
29,915 |
|
28,371 |
|
58,228 |
|
56,941 |
|
28,312 |
Provision
for income taxes |
|
2,967 |
|
7,204 |
|
5,612 |
|
11,262 |
|
2,645 |
Net
income and net income available to common shareholders |
$ |
13,839 |
$ |
16,176 |
$ |
27,305 |
$ |
27,695 |
$ |
13,466 |
|
|
|
|
|
|
|
|
|
|
|
At or For the Three Months Ended |
At or For the Six Months
Ended |
At or For the Three MonthsEnded |
|
June 30, |
June 30, |
March 31, |
|
2018 |
2017 |
2018 |
2017 |
2018 |
Per Common Share: |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
Net
income (fully diluted) |
$ |
0.97 |
|
$ |
1.14 |
|
$ |
1.91 |
|
$ |
1.95 |
|
$ |
0.95 |
|
Book
value |
$ |
34.69 |
|
$ |
32.32 |
|
$ |
34.69 |
|
$ |
32.32 |
|
$ |
34.02 |
|
|
|
|
|
|
|
Earnings Performance Ratios: |
|
|
|
|
|
Annualized return on average assets |
|
1.23 |
% |
|
1.45 |
% |
|
1.23 |
% |
|
1.24 |
% |
|
1.23 |
% |
Annualized return on average common stockholders’ equity |
|
11.32 |
% |
|
14.37 |
% |
|
11.27 |
% |
|
12.46 |
% |
|
11.22 |
% |
Net
interest margin |
|
3.94 |
% |
|
3.68 |
% |
|
3.93 |
% |
|
3.73 |
% |
|
3.93 |
% |
Average
interest rate spread |
|
3.72 |
% |
|
3.53 |
% |
|
3.73 |
% |
|
3.58 |
% |
|
3.74 |
% |
Efficiency ratio |
|
61.46 |
% |
|
52.83 |
% |
|
61.26 |
% |
|
56.89 |
% |
|
61.05 |
% |
Non-interest expense to average total assets |
|
2.66 |
% |
|
2.55 |
% |
|
2.63 |
% |
|
2.55 |
% |
|
2.59 |
% |
|
|
|
|
|
|
Asset Quality Ratios: |
Allowance
for loan losses to period-end loans (excludingcovered/previously
covered loans) |
|
1.02 |
% |
|
1.01 |
% |
|
1.02 |
% |
|
1.01 |
% |
|
1.02 |
% |
Non-performing assets to period-end assets |
|
0.47 |
% |
|
0.79 |
% |
|
0.47 |
% |
|
0.79 |
% |
|
0.62 |
% |
Non-performing loans to period-end loans |
|
0.21 |
% |
|
0.35 |
% |
|
0.21 |
% |
|
0.35 |
% |
|
0.25 |
% |
Annualized net charge-offs to average loans |
|
0.07 |
% |
|
0.27 |
% |
|
0.15 |
% |
|
0.28 |
% |
|
0.23 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Southern Bancorp, Inc. and
SubsidiariesConsolidated Statements of Financial
Condition(In thousands, except number of
shares)
|
June 30,2018 |
December 31,2017 |
March 31,2018 |
Assets |
|
|
|
Cash |
$ |
107,554 |
|
$ |
115,600 |
$ |
99,443 |
|
Interest-bearing deposits in other financial institutions |
|
172,931 |
|
|
126,653 |
|
120,539 |
|
Cash and
cash equivalents |
|
280,485 |
|
|
242,253 |
|
219,982 |
|
|
|
|
|
Available-for-sale securities |
|
169,971 |
|
|
179,179 |
|
171,621 |
|
Held-to-maturity securities |
|
— |
|
|
130 |
|
130 |
|
Mortgage
loans held for sale |
|
5,087 |
|
|
8,203 |
|
5,058 |
|
Loans
receivable (1), net of allowance for loan losses of $37,556 –
June 2018; $36,492 – December 2017; $36,310 – March 2018 |
|
3,859,801 |
|
|
3,726,302 |
|
3,761,714 |
|
Interest
receivable |
|
12,449 |
|
|
12,338 |
|
12,144 |
|
Prepaid
expenses and other assets |
|
40,937 |
|
|
47,122 |
|
38,691 |
|
Other
real estate owned and repossessions (2), net |
|
18,266 |
|
|
22,002 |
|
22,982 |
|
Premises
and equipment, net |
|
139,386 |
|
|
138,018 |
|
140,035 |
|
Goodwill
and other intangible assets |
|
10,025 |
|
|
10,850 |
|
10,438 |
|
Federal
Home Loan Bank stock |
|
15,678 |
|
|
11,182 |
|
10,678 |
|
Current
and deferred income taxes |
|
16,778 |
|
|
16,942 |
|
17,966 |
|
|
|
|
|
Total
Assets |
$ |
4,568,863 |
|
$ |
4,414,521 |
$ |
4,411,439 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
Liabilities |
|
|
|
Deposits |
$ |
3,597,057 |
|
$ |
3,597,144 |
$ |
3,562,177 |
|
Federal
Home Loan Bank advances |
|
259,000 |
|
|
127,500 |
|
134,000 |
|
Securities sold under reverse repurchase agreements with
customers |
|
95,543 |
|
|
80,531 |
|
110,082 |
|
Short-term borrowings |
|
1,360 |
|
|
16,604 |
|
1,392 |
|
Subordinated debentures issued to capital trust |
|
25,774 |
|
|
25,774 |
|
25,774 |
|
Subordinated notes |
|
73,766 |
|
|
73,688 |
|
73,728 |
|
Accrued
interest payable |
|
3,394 |
|
|
2,904 |
|
2,000 |
|
Advances
from borrowers for taxes and insurance |
|
7,957 |
|
|
5,319 |
|
7,055 |
|
Accounts
payable and accrued expenses |
|
14,741 |
|
|
13,395 |
|
15,231 |
|
Total
Liabilities |
|
4,078,592 |
|
|
3,942,859 |
|
3,931,439 |
|
|
|
|
|
Stockholders’ Equity |
|
|
|
Capital
stock |
|
|
|
Preferred
stock, $.01 par value; authorized 1,000,000 shares; issued and
outstanding June 2018, December 2017 and March 2018 –
-0- shares |
|
— |
|
|
— |
|
— |
|
Common
stock, $.01 par value; authorized 20,000,000 shares; issued and
outstanding June 2018 – 14,133,823 shares; December 2017 –
14,087,533 shares; March 2018 – 14,111,142 shares |
|
141 |
|
|
141 |
|
141 |
|
Additional paid-in capital |
|
29,134 |
|
|
28,203 |
|
28,624 |
|
Retained
earnings |
|
461,784 |
|
|
442,077 |
|
451,603 |
|
Accumulated other comprehensive gain (loss) |
|
(788 |
) |
|
1,241 |
|
(368 |
) |
Total
Stockholders’ Equity |
|
490,271 |
|
|
471,662 |
|
480,000 |
|
|
|
|
|
Total
Liabilities and Stockholders’ Equity |
$ |
4,568,863 |
|
$ |
4,414,521 |
$ |
4,411,439 |
|
- At June 30, 2018, December 31, 2017 and March 31, 2018,
includes loans, net of discounts, totaling $184.1 million, $209.7
million and $197.5 million, respectively, which were acquired in
FDIC-assisted transactions and are accounted for under ASC
310-30.
- At June 30, 2018, December 31, 2017 and March 31, 2018,
includes foreclosed assets, net of discounts, totaling $3.3
million, $3.8 million and $3.3 million, respectively, which were
acquired in FDIC-assisted transactions. In addition, at each
of June 30, 2018, December 31, 2017 and March 31, 2018, includes
$1.6 million 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 |
|
Six Months Ended |
|
Three Months Ended |
|
|
June 30, |
|
June 30, |
|
March 31, |
|
2018 |
2017 |
|
2018 |
2017 |
|
2018 |
Interest Income |
|
|
|
|
|
|
|
Loans |
$ |
48,219 |
$ |
43,166 |
|
|
$ |
93,384 |
$ |
86,910 |
|
|
$ |
45,165 |
Investment securities and other |
|
1,724 |
|
1,578 |
|
|
|
3,442 |
|
3,247 |
|
|
|
1,717 |
|
|
49,943 |
|
44,744 |
|
|
|
96,826 |
|
90,157 |
|
|
|
46,882 |
Interest Expense |
|
|
|
|
|
|
|
Deposits |
|
6,123 |
|
5,004 |
|
|
|
11,706 |
|
9,969 |
|
|
|
5,584 |
Federal Home Loan Bank advances |
|
1,166 |
|
244 |
|
|
|
1,772 |
|
499 |
|
|
|
605 |
Short-term borrowings and repurchase agreements |
|
180 |
|
318 |
|
|
|
208 |
|
544 |
|
|
|
28 |
Subordinated debentures issued to capital trust |
|
238 |
|
252 |
|
|
|
440 |
|
493 |
|
|
|
202 |
Subordinated notes |
|
1,024 |
|
1,025 |
|
|
|
2,049 |
|
2,050 |
|
|
|
1,025 |
|
|
8,731 |
|
6,843 |
|
|
|
16,175 |
|
13,555 |
|
|
|
7,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Interest Income |
|
41,212 |
|
37,901 |
|
|
|
80,651 |
|
76,602 |
|
|
|
39,438 |
Provision for Loan Losses |
|
1,950 |
|
1,950 |
|
|
|
3,900 |
|
4,200 |
|
|
|
1,950 |
Net
Interest Income After Provision for Loan
Losses |
|
39,262 |
|
35,951 |
|
|
|
76,751 |
|
72,402 |
|
|
|
37,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income |
|
|
|
|
|
|
|
Commissions |
|
312 |
|
306 |
|
|
|
560 |
|
572 |
|
|
|
248 |
Service charges and ATM fees |
|
5,488 |
|
5,394 |
|
|
|
10,732 |
|
10,662 |
|
|
|
5,244 |
Net gains on loan sales |
|
559 |
|
752 |
|
|
|
1,021 |
|
1,624 |
|
|
|
462 |
Late charges and fees on loans |
|
385 |
|
608 |
|
|
|
774 |
|
1,486 |
|
|
|
389 |
Gain (loss) on derivative interest rate products |
|
11 |
|
(20 |
) |
|
|
48 |
|
(13 |
) |
|
|
37 |
Accretion (amortization) of income related to business
acquisitions |
|
— |
|
7,708 |
|
|
|
— |
|
7,219 |
|
|
|
— |
Other income |
|
704 |
|
1,052 |
|
|
|
1,259 |
|
1,946 |
|
|
|
555 |
|
|
7,459 |
|
15,800 |
|
|
|
14,394 |
|
23,496 |
|
|
|
6,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense |
|
|
|
|
|
|
|
Salaries and employee benefits |
|
14,947 |
|
14,498 |
|
|
|
29,570 |
|
29,831 |
|
|
|
14,623 |
Net occupancy expense |
|
6,298 |
|
6,025 |
|
|
|
12,683 |
|
12,341 |
|
|
|
6,384 |
Postage |
|
834 |
|
874 |
|
|
|
1,700 |
|
1,807 |
|
|
|
866 |
Insurance |
|
650 |
|
747 |
|
|
|
1,321 |
|
1,545 |
|
|
|
670 |
Advertising |
|
632 |
|
656 |
|
|
|
1,303 |
|
1,069 |
|
|
|
671 |
Office supplies and printing |
|
301 |
|
233 |
|
|
|
534 |
|
930 |
|
|
|
233 |
Telephone |
|
792 |
|
789 |
|
|
|
1,511 |
|
1,599 |
|
|
|
719 |
Legal, audit and other professional fees |
|
689 |
|
1,061 |
|
|
|
1,498 |
|
1,381 |
|
|
|
809 |
Expense on foreclosed assets and repossessions |
|
2,737 |
|
677 |
|
|
|
3,878 |
|
1,251 |
|
|
|
1,141 |
Partnership tax credit |
|
91 |
|
217 |
|
|
|
393 |
|
495 |
|
|
|
302 |
Acquired deposit intangible asset amortization |
|
412 |
|
412 |
|
|
|
825 |
|
825 |
|
|
|
412 |
Other operating expenses |
|
1,532 |
|
2,182 |
|
|
|
3,012 |
|
3,867 |
|
|
|
1,482 |
|
|
29,915 |
|
28,371 |
|
|
|
58,228 |
|
56,941 |
|
|
|
28,312 |
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
16,806 |
|
23,380 |
|
|
|
32,917 |
|
38,957 |
|
|
|
16,111 |
Provision for Income Taxes |
|
2,967 |
|
7,204 |
|
|
|
5,612 |
|
11,262 |
|
|
|
2,645 |
|
|
|
|
|
|
|
|
Net
Income and Net Income Available to Common
Shareholders |
$ |
13,839 |
$ |
16,176 |
|
|
$ |
27,305 |
$ |
27,695 |
|
|
$ |
13,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.98 |
$ |
1.15 |
|
|
$ |
1.93 |
$ |
1.98 |
|
|
$ |
0.95 |
Diluted |
$ |
0.97 |
$ |
1.14 |
|
|
$ |
1.91 |
$ |
1.95 |
|
|
$ |
0.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Declared Per Common Share |
$ |
0.28 |
$ |
0.24 |
|
|
$ |
0.56 |
$ |
0.46 |
|
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 $0.8
million and $0.5 million for the three months ended June 30, 2018
and 2017, respectively. Net fees included in interest income
were $1.6 million and $1.7 million for the six months ended June
30, 2018 and 2017, respectively. Tax-exempt income was not
calculated on a tax equivalent basis. The table does not reflect
any effect of income taxes.
|
|
|
|
|
|
June 30,2018(1) |
Three Months Ended June 30, 2018 |
|
Three Months Ended June 30, 2017 |
|
|
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 |
4.15 |
% |
$ |
437,856 |
|
$ |
5,422 |
|
4.97 |
% |
|
$ |
461,321 |
|
$ |
5,528 |
|
4.81 |
% |
Other
residential |
4.88 |
|
|
744,809 |
|
|
9,347 |
|
5.03 |
|
|
|
690,405 |
|
|
7,717 |
|
4.48 |
|
Commercial real estate |
4.67 |
|
|
1,332,339 |
|
|
15,968 |
|
4.81 |
|
|
|
1,247,830 |
|
|
13,556 |
|
4.36 |
|
Construction |
4.94 |
|
|
553,787 |
|
|
7,246 |
|
5.25 |
|
|
|
422,683 |
|
|
4,756 |
|
4.51 |
|
Commercial business |
4.95 |
|
|
289,895 |
|
|
3,560 |
|
4.93 |
|
|
|
293,411 |
|
|
3,566 |
|
4.87 |
|
Other
loans |
6.00 |
|
|
508,722 |
|
|
6,291 |
|
4.96 |
|
|
|
652,293 |
|
|
7,630 |
|
4.69 |
|
Industrial revenue bonds |
5.39 |
|
|
22,667 |
|
|
385 |
|
6.81 |
|
|
|
26,144 |
|
|
413 |
|
6.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
loans receivable |
4.96 |
|
|
3,890,075 |
|
|
48,219 |
|
4.97 |
|
|
|
3,794,087 |
|
|
43,166 |
|
4.56 |
|
|
|
|
|
|
|
|
|
|
Investment
securities |
3.18 |
|
|
188,589 |
|
|
1,291 |
|
2.75 |
|
|
|
211,944 |
|
|
1,327 |
|
2.51 |
|
Other interest-earning
assets |
1.90 |
|
|
120,688 |
|
|
433 |
|
1.44 |
|
|
|
120,125 |
|
|
251 |
|
0.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-earning assets |
4.76 |
|
|
4,199,352 |
|
|
49,943 |
|
4.77 |
|
|
|
4,126,156 |
|
|
44,744 |
|
4.35 |
|
Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
97,295 |
|
|
|
|
|
108,131 |
|
|
|
Other
non-earning assets |
|
|
199,003 |
|
|
|
|
|
217,764 |
|
|
|
Total
assets |
|
$ |
4,495,650 |
|
|
|
|
$ |
4,452,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
Interest-bearing demand and savings |
0.37 |
|
$ |
1,573,936 |
|
|
1,435 |
|
0.37 |
|
|
$ |
1,569,069 |
|
|
1,137 |
|
0.29 |
|
Time
deposits |
1.61 |
|
|
1,284,414 |
|
|
4,688 |
|
1.46 |
|
|
|
1,419,996 |
|
|
3,867 |
|
1.09 |
|
Total
deposits |
0.95 |
|
|
2,858,350 |
|
|
6,123 |
|
0.86 |
|
|
|
2,989,065 |
|
|
5,004 |
|
0.67 |
|
Short-term borrowings and repurchase agreements |
0.04 |
|
|
141,268 |
|
|
180 |
|
0.51 |
|
|
|
234,655 |
|
|
318 |
|
0.54 |
|
Subordinated debentures issued to capital trust |
3.96 |
|
|
25,774 |
|
|
238 |
|
3.70 |
|
|
|
25,774 |
|
|
252 |
|
3.92 |
|
Subordinated notes |
5.56 |
|
|
73,752 |
|
|
1,024 |
|
5.57 |
|
|
|
73,594 |
|
|
1,025 |
|
5.59 |
|
FHLB
advances |
2.06 |
|
|
233,363 |
|
|
1,166 |
|
2.00 |
|
|
|
30,378 |
|
|
244 |
|
3.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities |
1.14 |
|
|
3,332,507 |
|
|
8,731 |
|
1.05 |
|
|
|
3,353,466 |
|
|
6,843 |
|
0.82 |
|
Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
deposits |
|
|
653,281 |
|
|
|
|
|
621,429 |
|
|
|
Other
liabilities |
|
|
20,744 |
|
|
|
|
|
26,984 |
|
|
|
Total
liabilities |
|
|
4,006,532 |
|
|
|
|
|
4,001,879 |
|
|
|
Stockholders’
equity |
|
|
489,118 |
|
|
|
|
|
450,172 |
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
4,495,650 |
|
|
|
|
$ |
4,452,051 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income: |
|
|
|
|
|
|
|
|
Interest rate
spread |
3.62 |
% |
|
$ |
41,212 |
|
3.72 |
% |
|
|
$ |
37,901 |
|
3.53 |
% |
Net interest
margin* |
|
|
|
|
|
|
|
|
3.94 |
% |
|
|
|
|
|
|
|
|
3.68 |
% |
Average
interest-earning assets to average interest-bearing
liabilities |
|
|
|
126.0 |
% |
|
|
|
|
|
|
|
123.0 |
% |
|
|
|
|
|
|
______________*Defined as the Company’s net interest income
divided by average total interest-earning assets.(1)
The yield on loans at June 30, 2018, 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, 2018.
|
|
|
|
|
|
June 30,2018(1) |
Six Months Ended June 30, 2018 |
|
Six Months Ended June 30, 2017 |
|
|
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 |
4.15 |
% |
$ |
434,507 |
|
|
$ |
10,605 |
|
4.92 |
% |
|
$ |
472,667 |
|
$ |
11,624 |
|
4.96 |
% |
Other
residential |
4.88 |
|
|
741,782 |
|
|
|
18,186 |
|
4.94 |
|
|
|
684,965 |
|
|
15,243 |
|
4.49 |
|
Commercial real estate |
4.67 |
|
|
1,289,141 |
|
|
|
30,326 |
|
4.74 |
|
|
|
1,232,317 |
|
|
27,085 |
|
4.43 |
|
Construction |
4.94 |
|
|
536,478 |
|
|
|
13,734 |
|
5.16 |
|
|
|
412,200 |
|
|
9,132 |
|
4.47 |
|
Commercial business |
4.95 |
|
|
287,329 |
|
|
|
6,904 |
|
4.85 |
|
|
|
293,984 |
|
|
7,380 |
|
5.06 |
|
Other
loans |
6.00 |
|
|
524,995 |
|
|
|
12,887 |
|
4.95 |
|
|
|
670,642 |
|
|
15,660 |
|
4.71 |
|
Industrial revenue bonds |
5.39 |
|
|
23,188 |
|
|
|
742 |
|
6.45 |
|
|
|
26,752 |
|
|
786 |
|
5.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
loans receivable |
4.96 |
|
|
3,837,420 |
|
|
|
93,384 |
|
4.91 |
|
|
|
3,793,527 |
|
|
86,910 |
|
4.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
securities |
3.18 |
|
|
187,803 |
|
|
|
2,601 |
|
2.79 |
|
|
|
216,130 |
|
|
2,742 |
|
2.56 |
|
Other interest-earning
assets |
1.90 |
|
|
109,944 |
|
|
|
841 |
|
1.54 |
|
|
|
129,826 |
|
|
505 |
|
0.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-earning assets |
4.76 |
|
|
4,135,167 |
|
|
|
96,826 |
|
4.72 |
|
|
|
4,139,483 |
|
|
90,157 |
|
4.39 |
|
Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
|
99,818 |
|
|
|
|
|
|
|
|
|
107,974 |
|
|
|
|
|
|
|
Other
non-earning assets |
|
|
|
198,226 |
|
|
|
|
|
|
|
|
|
221,130 |
|
|
|
|
|
|
|
Total
assets |
|
|
$ |
4,433,211 |
|
|
|
|
|
|
|
|
$ |
4,468,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
Interest-bearing demand and savings |
0.37 |
|
$ |
1,569,299 |
|
|
|
2,745 |
|
0.35 |
|
|
$ |
1,562,247 |
|
|
2,232 |
|
0.29 |
|
Time
deposits |
1.61 |
|
|
1,307,814 |
|
|
|
8,961 |
|
1.38 |
|
|
|
1,453,943 |
|
|
7,737 |
|
1.07 |
|
Total
deposits |
0.95 |
|
|
2,877,113 |
|
|
|
11,706 |
|
0.82 |
|
|
|
3,016,190 |
|
|
9,969 |
|
0.67 |
|
Short-term borrowings and repurchase agreements |
0.04 |
|
|
120,494 |
|
|
|
208 |
|
0.35 |
|
|
|
236,076 |
|
|
544 |
|
0.46 |
|
Subordinated debentures issued to capital trust |
3.96 |
|
|
25,774 |
|
|
|
440 |
|
3.44 |
|
|
|
25,774 |
|
|
493 |
|
3.86 |
|
Subordinated notes |
5.56 |
|
|
73,733 |
|
|
|
2,049 |
|
5.60 |
|
|
|
73,573 |
|
|
2,050 |
|
5.62 |
|
FHLB
advances |
2.06 |
|
|
189,682 |
|
|
|
1,772 |
|
1.88 |
|
|
|
30,905 |
|
|
499 |
|
3.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities |
1.14 |
|
|
3,286,796 |
|
|
|
16,175 |
|
0.99 |
|
|
|
3,382,518 |
|
|
13,555 |
|
0.81 |
|
Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
deposits |
|
|
641,969 |
|
|
|
|
|
|
614,827 |
|
|
|
Other
liabilities |
|
|
19,788 |
|
|
|
|
|
|
26,710 |
|
|
|
Total
liabilities |
|
|
3,948,553 |
|
|
|
|
|
|
4,024,055 |
|
|
|
Stockholders’
equity |
|
|
484,658 |
|
|
|
|
|
|
444,532 |
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
4,433,211 |
|
|
|
|
|
$ |
4,468,587 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income: |
|
|
|
|
|
|
|
|
Interest rate
spread |
3.62 |
% |
|
|
|
|
$ |
80,651 |
|
3.73 |
% |
|
|
|
|
$ |
76,602 |
|
3.58 |
% |
Net interest
margin* |
|
|
|
|
|
|
|
|
|
3.93 |
% |
|
|
|
|
|
|
|
|
3.73 |
% |
Average
interest-earning assets to average interest-bearing
liabilities |
|
|
|
125.8 |
% |
|
|
|
|
|
|
|
|
122.4 |
% |
|
|
|
|
|
|
______________*Defined as the Company’s net interest income
divided by average total interest-earning assets.(1)
The yield on loans at June 30, 2018, 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 six
months ended June 30, 2018.
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 values 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, |
|
2018 |
2017 |
2018 |
2017 |
|
(Dollars in thousands) |
(Dollars in thousands) |
Reported
net interest income / margin |
$ |
41,212 |
|
3.94 |
% |
$ |
37,901 |
|
3.68 |
% |
$ |
80,651 |
|
3.93 |
% |
$ |
76,602 |
|
3.73 |
% |
Less: Impact of loss share adjustments |
|
1,070 |
|
0.10 |
|
|
1,282 |
|
0.12 |
|
|
2,227 |
|
0.11 |
|
|
3,262 |
|
0.16 |
|
Core net
interest income / margin |
$ |
40,142 |
|
3.84 |
% |
$ |
36,619 |
|
3.56 |
% |
$ |
78,424 |
|
3.82 |
% |
$ |
73,340 |
|
3.57 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation: Ratio of Tangible Common
Equity to Tangible
Assets
|
June 30, |
December 31, |
|
|
2018 |
|
|
2017 |
|
|
(Dollars in thousands) |
Common
equity at period end |
$ |
490,271 |
|
$ |
471,662 |
|
Less: Intangible assets at period end |
|
10,025 |
|
|
10,850 |
|
Tangible
common equity at period end (a) |
$ |
480,246 |
|
$ |
460,812 |
|
|
|
|
|
|
|
|
Total
assets at period end |
$ |
4,568,863 |
|
$ |
4,414,521 |
|
Less: Intangible assets at period end |
|
10,025 |
|
|
10,850 |
|
Tangible
assets at period end (b) |
$ |
4,558,838 |
|
$ |
4,403,671 |
|
|
|
|
|
|
|
|
Tangible
common equity to tangible assets (a) / (b) |
|
10.53 |
% |
|
10.46 |
% |
CONTACT: Kelly Polonus, Great Southern, (417) 895-5242
kpolonus@greatsouthernbank.com
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