Preliminary Financial Results and Other
Matters for the Quarter and Year Ended December 31,
2018:
Great Southern Bancorp, Inc. (NASDAQ:GSBC), the holding company for
Great Southern Bank, today reported that preliminary earnings for
the three months ended December 31, 2018, were $1.21 per diluted
common share ($17.3 million available to common shareholders)
compared to $0.86 per diluted common share ($12.2 million available
to common shareholders) for the three months ended December 31,
2017.
Preliminary earnings for the year ended December 31, 2018, were
$4.71 per diluted common share ($67.1 million available to common
shareholders) compared to $3.64 per diluted common share ($51.6
million available to common shareholders) for the year ended
December 31, 2017.
For the quarter ended December 31, 2018, annualized return on
average common equity was 13.34%, annualized return on average
assets was 1.50%, and net interest margin was 4.07%, compared to
10.37%, 1.10% and 3.75%, respectively, for the quarter ended
December 31, 2017. For the year ended December 31, 2018,
return on average common equity was 13.46%; return on average
assets was 1.49%; and net interest margin was 3.99% compared to
11.32%, 1.16% and 3.74%, respectively, for the year ended December
31, 2017.
President and CEO Joseph W. Turner commented, “We continued this
year’s solid performance in the fourth quarter. Core earnings were
strong, driven by loan growth, a stable margin and expense
containment. Core net interest margin for the fourth quarter 2018
was 3.93%, which was 25 and five basis points higher than the year
ago quarter and the linked quarter, respectively. The primary
driver of the core margin expansion versus the linked quarter was
interest income related to the interest rate swap we initiated in
October 2018, equating to approximately six basis points.
Non-interest expenses were lower than fourth quarter 2017 and
slightly higher than third quarter 2018 as we continue focusing on
efficiencies and cost containment. The efficiency ratio was 55.6%
for the fourth quarter.
“Commercial real estate and construction loan production was
strong, with outstanding net loan balances for all categories
increasing by $46 million during the quarter. From the end of 2017,
outstanding net loan balances increased $263 million, or 7%.
Healthy loan demand continues throughout the franchise’s footprint
amid fierce competition. Our newest loan production offices, in
Atlanta and Denver, are now open and are expected to add
opportunities for quality loan growth.”
Turner continued, “During the fourth quarter 2018, we
experienced further improvement in the non-performing assets
category, primarily due to the sale of $3.9 million in foreclosed
real estate assets. Non-performing assets decreased by $16 million
during 2018 and were $11.8 million at December 31, 2018. The level
of problem assets remained very low at the end of
2018.”
Selected Financial Data:
(In
thousands, except per share data) |
Three Months Ended December
31, |
|
Year Ended December
31, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
Net
interest income |
$ |
44,556 |
|
$ |
39,273 |
|
$ |
168,192 |
|
$ |
155,156 |
Provision
for loan losses |
|
1,950 |
|
|
1,950 |
|
|
7,150 |
|
|
9,100 |
Non-interest income |
|
7,220 |
|
|
7,374 |
|
|
36,218 |
|
|
38,527 |
Non-interest expense |
|
28,773 |
|
|
29,284 |
|
|
115,310 |
|
|
114,261 |
Provision
for income taxes |
|
3,765 |
|
|
3,207 |
|
|
14,841 |
|
|
18,758 |
Net
income and net income available to common shareholders |
$ |
17,288 |
|
$ |
12,206 |
|
$ |
67,109 |
|
$ |
51,564 |
|
|
|
|
|
|
Earnings
per diluted common share |
$ |
1.21 |
|
$ |
0.86 |
|
$ |
4.71 |
|
$ |
3.64 |
|
|
|
|
|
|
NET INTEREST INCOME
Net interest income for the fourth quarter of 2018 increased
$5.3 million to $44.6 million compared to $39.3 million for the
fourth quarter of 2017. Net interest margin was 4.07% in the
fourth quarter of 2018, compared to 3.75% in the same period of
2017, an increase of 32 basis points. For the three months
ended December 31, 2018, the net interest margin increased five
basis points compared to the net interest margin of 4.02% in the
three months ended September 30, 2018, primarily as a 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 borrowings. The increase in the margin from the
prior year fourth 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 and an increase 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, partially
offset by an increase in the average interest rate on deposits and
borrowings. The average interest rate spread was 3.79% for
the three months ended December 31, 2018, compared to 3.58% for the
three months ended December 31, 2017 and 3.76% for the three months
ended September 30, 2018.
Net interest income for the year ended December 31, 2018
increased $13.0 million to $168.2 million compared to $155.2
million for the year ended December 31, 2017. Net interest
margin was 3.99% in the year ended December 31, 2018, compared to
3.74% in the year ended December 31, 2017, an increase of 25 basis
points. The average interest rate spread was 3.75% for the
year ended December 31, 2018, compared to 3.59% for the year ended
December 31, 2017.
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 is $400 million with a termination date
in October 2025. Under the terms of the swap, the Company
receives a fixed rate of interest of 3.018% and pays a floating
rate of interest equal to one-month USD-LIBOR. The floating
rate resets monthly and net settlements of interest due to/from the
counterparty also occur monthly. The initial floating rate of
interest was set at 2.277%, with monthly adjustments to the
floating rate occurring after that time. To the extent that
the fixed rate continues to exceed one-month USD-LIBOR, the Company
will receive net interest settlements, which will be recorded as
loan interest income. If one-month USD-LIBOR exceeds the
fixed rate of interest in future periods, the Company will be
required to pay net settlements to the counterparty and will record
those net payments as a reduction of interest income on
loans. The Company recorded loan interest income of $673,000
in the three months ended December 31, 2018.
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).
Additional estimated cash flows (reclassification of discounts from
non-accretable to accretable) totaling approximately $1.2 million
and $5.2 million were recorded in the three months and year ended
December 31, 2018, respectively, related to these acquired 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 |
|
|
|
|
|
December 31, 2018 |
|
December 31, 2017 |
|
|
|
(In thousands, except basis points data) |
Impact on net interest
income/ |
|
|
|
|
|
|
|
net
interest margin (in basis points) |
$ |
1,482 |
14 bps |
|
$ |
776 |
7 bps |
Non-interest
income |
|
— |
|
|
|
— |
|
Net
impact to pre-tax income |
$ |
1,482 |
|
|
$ |
776 |
|
|
Year Ended |
|
December 31, 2018 |
|
December 31, 2017 |
|
|
|
(In thousands, except basis points data) |
Impact on net interest
income/ |
|
|
|
|
|
|
|
|
net
interest margin (in basis points) |
$ |
5,134 |
12 bps |
|
$ |
5,014 |
|
12 bps |
Non-interest
income |
|
— |
|
|
|
(634 |
) |
|
Net
impact to pre-tax income |
$ |
5,134 |
|
|
$ |
4,380 |
|
|
|
|
|
|
|
|
|
|
|
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 $2.7 million. Of the remaining
adjustments affecting interest income, we expect to recognize $2.0
million of interest income during 2019. 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 months and year ended December 31,
2018, increased 25 and 25 basis points, respectively, when compared
to the year-ago periods. The increase in net interest margin
in the three month and annual 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 and FHLB advances and short-term borrowings.
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 December 31, 2018, non-interest income
decreased $154,000 to $7.2 million when compared to the quarter
ended December 31, 2017, primarily as a result of the following
item:
- Net gains on loan sales: Net gains on loan sales
decreased $458,000 compared to the prior year quarter. 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
originated more variable-rate single-family mortgage loans, which
have been retained in the Company’s portfolio.
For the year ended December 31, 2018, non-interest income
decreased $2.3 million to $36.2 million when compared to the year
ended December 31, 2017, primarily as a result of the following
items:
- 2017 gain on early termination of FDIC loss sharing agreements
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 agreements for Inter Savings Bank, which was recorded
in the gain on termination of loss sharing agreements line item of
the consolidated statements of income for the year ended December
31, 2017.
- Net gains on loan sales: Net gains on loan sales
decreased $1.4 million compared to the prior year. The
decrease was due to a decrease in originations of fixed-rate loans
during 2018 compared to 2017. Fixed rate single-family
mortgage loans originated are generally subsequently sold in the
secondary market. In 2018, the Company originated more
variable-rate single-family mortgage loans, which have been
retained in the Company’s portfolio.
- Late charges and fees on loans: Late charges and fees on
loans decreased $609,000 compared to the prior year. The
decrease was primarily due to fees totaling $632,000 on loan
payoffs received on four loan relationships in 2017 which were not
repeated in 2018.
- Other income: Other income decreased $695,000 compared to
the prior year period. The decrease was primarily due to
income from interest rate swaps entered into in 2017, the receipt
of approximately $260,000 more income related to the exit of
certain tax credit partnerships in 2017 compared to 2018 and
$250,000 less in merchant card services fees compared to
2017.
- Sale of Omaha-area banking centers: On July 20, 2018, the
Company closed on the sale of four banking centers in the Omaha,
Neb., metropolitan market. The Bank sold branch deposits of
approximately $56 million and sold substantially all branch-related
real estate, fixed assets and ATMs. The Company
recorded a pre-tax gain of $7.4 million on the sale during the year
ended December 31, 2018.
- Amortization of income related to business acquisitions:
Because of the termination of the remaining loss sharing agreements
in June 2017, the net amortization expense related to business
acquisitions was $-0- for the year ended December 31, 2018,
compared to $486,000 for the year ended December 31, 2017, which
reduced non-interest income by that amount in the previous
year.
NON-INTEREST EXPENSE
For the quarter ended December 31, 2018, non-interest expense
decreased $511,000 to $28.8 million when compared to the quarter
ended December 31, 2017, primarily as a result of the following
item:
- Expense on foreclosed assets and repossessions: Expense
on foreclosed assets decreased $791,000 compared to the prior year
quarter primarily due to increased net gains on sales of foreclosed
assets and repossessions in the 2018 period and lower repossession
and collection expenses.
For the year ended December 31, 2018, non-interest expense
increased $1.0 million to $115.3 million when compared to the year
ended December 31, 2017, primarily as a result of the following
items:
- Net occupancy and equipment expense: Net occupancy
expense increased $1.0 million in the year ended December 31, 2018
compared to the year ended December 31, 2017. This increase
was primarily due to increased expenses related to hardware and
software costs for loan loss accounting and commercial loan systems
and data servers at the Company’s disaster recovery site, increased
depreciation expense for upgraded ATM/ITM machines, deconversion
expenses related to the sale of the Omaha-area banking centers and
repairs and maintenance costs for various banking centers.
- Expense on foreclosed assets and repossessions: Expense
on foreclosed assets increased $990,000 compared to the prior year
primarily due to the valuation write-down of certain foreclosed
assets during the second quarter 2018, totaling approximately $2.1
million, partially offset by gains on sales of foreclosed assets
and repossession in 2018 and lower repossession and collection
expenses in 2018.
- Legal, audit and other professional fees: Legal, audit
and other professional fees increased $561,000 in the year ended
December 31, 2018 compared to the 2017 year. The increase was
primarily due to fees for professional services related to process
improvement initiatives, fees paid to advisors for the negotiation
and implementation of derivative transactions, consulting fees
related to the ongoing implementation of an accounting system which
will be utilized for the new loan loss accounting standard and
legal costs related to the sale of the Omaha-area banking
centers.
- Other operating expenses: Other operating expenses
decreased $691,000 in the year ended December 31, 2018 compared to
the 2017 year. During 2017, 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 2018 compared to
2017.
- Office supplies and printing expense: Office supplies and
printing expense decreased $399,000 in the year ended December 31,
2018 compared to the 2017 year. During 2017 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.
- Partnership tax credit: Partnership tax credit expense
decreased $355,000 in the year ended December 31, 2018 compared to
the 2017 year. The Company periodically invests in certain
tax credits and amortizes those investments over the period that
the tax credits are used. The tax credit period for certain
of these credits ended in 2017 and so the final amortization of the
investment in those credits also ended in 2017.
The Company’s efficiency ratio for the quarter ended December
31, 2018, was 55.57% compared to 62.78% for the same quarter in
2017. The improvement in the ratio in the 2018 three month
period was primarily due to an increase in net interest income,
along with a decrease in non-interest expense. The Company’s
ratio of non-interest expense to average assets decreased from
2.63% for the three months ended December 31, 2017, to 2.49% for
the three months ended December 31, 2018. The decrease in the
current three month period ratio was due to the decrease in
non-interest expense in the 2018 period compared to the 2017
period. Average assets for the quarter ended December 31,
2018, increased $156.8 million, or 3.5%, from the quarter ended
December 31, 2017, primarily due to organic loan growth and
increases in investment securities. The Company’s efficiency
ratio for the year ended December 31, 2018, was 56.41% compared to
58.99% for 2017. The improvement in the ratio in 2018 was
primarily due to an increase in net interest income, partially
offset by a decrease in non-interest income and an increase in
non-interest expense. In the year ended December 31, 2018,
the Company’s efficiency ratio was positively impacted by the
significant gain recorded related to the sale of the Bank’s
branches and related deposits in Omaha, Neb. In the year
ended December 31, 2017, the Company’s efficiency ratio was
positively impacted by the significant gain recorded related to the
termination of the Inter Savings Bank loss sharing
agreements. The Company’s ratio of non-interest expense to
average assets was 2.56% for each of the years ended December 31,
2018 and 2017. Average assets for the year ended December 31,
2018, increased $43.1 million, or 1.0%, from the year ended
December 31, 2017, primarily due to organic loan growth, partially
offset by decreases in investment securities and other
interest-earning assets.
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 17.0% to 18.5% in 2018 and future periods,
mainly as a result of the Act.
For the three months ended December 31, 2018 and
2017, the Company's effective tax rate was 17.9% and 20.8%,
respectively. For the years ended December 31, 2018 and 2017,
the Company's effective tax rate was 18.1% and 26.7%,
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 December 31, 2018, total stockholders’ equity and common
stockholders’ equity were $532.0 million (11.4% of total assets),
equivalent to a book value of $37.59 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 December 31,
2018, the Company’s tangible common equity to tangible assets ratio
was 11.2%, compared to 10.5% at December 31, 2017.
On a preliminary basis, as of December 31, 2018, the Company’s
Tier 1 Leverage Ratio was 11.7%, Common Equity Tier 1 Capital Ratio
was 11.4%, Tier 1 Capital Ratio was 11.9%, and Total Capital Ratio
was 14.4%. On December 31, 2018, and on a preliminary basis,
the Bank’s Tier 1 Leverage Ratio was 12.2%, Common Equity Tier 1
Capital Ratio was 12.4%, Tier 1 Capital Ratio was 12.4%, and Total
Capital Ratio was 13.3%.
During the three months and year ended December 31, 2018, the
Company repurchased 17,542 shares of its common stock at an average
price of $51.52 per share.
LOANS
Total gross loans (including the undisbursed portion of loans),
excluding FDIC-assisted acquired loans and mortgage loans held for
sale, increased $472.3 million, or 10.8%, from December 31, 2017,
to December 31, 2018. This increase was primarily in
construction loans ($349 million), commercial real estate loans
($136 million), one- to four-family residential mortgage loans ($89
million) and other residential (multi-family) loans ($39
million). These increases were partially offset by decreases
in consumer auto loans ($104 million) and commercial business loans
($31 million). The FDIC-acquired loan portfolios had net
decreases totaling $42.0 million during the year ended December 31,
2018.
Loan commitments and the unfunded portion of loans at the dates
indicated were as follows (in thousands):
|
December 31,2018 |
September 30,2018 |
June 30,2018 |
March 31,2018 |
December 31,2017 |
December 31,2016 |
Closed loans
with unused available lines |
|
|
|
|
|
|
Secured by real estate
(one- to four-family) |
$ |
150,948 |
|
$ |
151,880 |
|
$ |
144,994 |
|
$ |
138,375 |
|
$ |
133,587 |
|
$ |
123,433 |
Secured
by real estate (not one- to four-family) |
|
11,063 |
|
|
13,179 |
|
|
15,306 |
|
|
12,382 |
|
|
10,836 |
|
|
26,062 |
Not
secured by real estate - commercial business |
|
87,480 |
|
|
92,229 |
|
|
104,749 |
|
|
108,262 |
|
|
113,317 |
|
|
79,937 |
|
|
|
|
|
|
|
Closed
construction loans with unused available
lines |
|
|
|
|
|
|
Secured
by real estate (one-to four-family) |
|
37,162 |
|
|
26,470 |
|
|
31,221 |
|
|
29,757 |
|
|
20,919 |
|
|
10,047 |
Secured
by real estate (not one-to four-family) |
|
906,006 |
|
|
838,962 |
|
|
830,592 |
|
|
749,926 |
|
|
718,277 |
|
|
542,326 |
|
|
|
|
|
|
|
Loan
Commitments not closed |
|
|
|
|
|
|
Secured
by real estate (one-to four-family) |
|
24,253 |
|
|
30,226 |
|
|
47,040 |
|
|
37,144 |
|
|
23,340 |
|
|
15,884 |
Secured
by real estate (not one-to four-family) |
|
104,871 |
|
|
180,552 |
|
|
128,200 |
|
|
200,192 |
|
|
156,658 |
|
|
119,126 |
Not
secured by real estate - commercial business |
|
405 |
|
|
11,521 |
|
|
— |
|
|
12,995 |
|
|
4,870 |
|
|
7,022 |
|
|
|
|
|
|
|
|
$ |
1,322,188 |
|
$ |
1,345,019 |
|
$ |
1,302,102 |
|
$ |
1,289,033 |
|
$ |
1,181,804 |
|
$ |
923,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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.
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 December 31,
2018, was unchanged at $2.0 million when compared with the quarter
ended December 31, 2017. At December 31, 2018 and December
31, 2017, the allowance for loan losses was $38.4 million and $36.5
million, respectively. Total net charge-offs were $1.0
million and $1.7 million for the quarters ended December 31, 2018
and 2017, respectively. During the quarter ended December 31,
2018, $1.0 million of the total $1.0 million of net charge-offs
were in the consumer auto category, with other loan categories
experiencing net charge-offs and recoveries which substantially
offset each other. Total net charge-offs were $5.2 million
and $10.0 million for the year ended December 31, 2018 and 2017,
respectively. During the year ended December 31, 2018, $3.9
million of the $5.2 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 reduced origination volume and, as such, the
outstanding balance of the Company's automobile loans declined
approximately $104 million in the year ended December 31,
2018. We expect further declines in the automobile loan
outstanding balance in 2019. In addition, six commercial loan
relationships amounted to $1.3 million of the total charge-offs
during the year ended December 31, 2018. Charge-offs were
partially offset by recoveries on multiple loans during the quarter
and the year. 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 0.99%, 1.01% and 1.00% at
December 31, 2018, December 31, 2017 and September 30, 2018,
respectively. Management considers the allowance for loan
losses adequate to cover losses inherent in the Bank’s loan
portfolio at December 31, 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 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 December 31, 2018 were $11.8 million, a decrease of
$16.0 million from $27.8 million at December 31, 2017 and a
decrease of $4.1 million from $15.9 million at September 30, 2018.
Non-performing assets, excluding all FDIC-assisted acquired
assets, as a percentage of total assets were 0.25% at December 31,
2018, compared to 0.63% at December 31, 2017 and 0.35% of total
assets at September 30, 2018.
Compared to December 31, 2017, non-performing loans decreased
$5.0 million to $6.3 million at December 31, 2018, and foreclosed
assets decreased $11.1 million to $5.5 million at December 31,
2018. Compared to September 30, 2018, non-performing loans
decreased $175,000 and foreclosed assets decreased $3.9 million at
December 31, 2018. Non-performing one- to four-family
residential loans comprised $2.7 million, or 42.3%, of the total
$6.3 million of non-performing loans at December 31, 2018, a
decrease of $87,000 from September 30, 2018. Non-performing
consumer loans comprised $1.8 million, or 28.8%, of the total
non-performing loans at December 31, 2018, an increase of $28,000
from September 30, 2018. Non-performing commercial business
loans comprised $1.4 million, or 22.8%, of the total non-performing
loans at December 31, 2018, a decrease of $153,000 from September
30, 2018. Non-performing commercial real estate loans
comprised $334,000, or 5.3%, of the total non-performing loans at
December 31, 2018, a decrease of $12,000 from September 30, 2018.
Compared to September 30, 2018, potential problem loans
increased $50,000 to $3.3 million at December 31, 2018. The
small increase during the quarter was due to the addition of
$131,000 of loans to potential problem loans, partially offset by
$44,000 in payments, $33,000 in loans moved to non-performing loans
and $4,000 in loans being removed from potential problem loans.
Activity in the non-performing loans category during the quarter
ended December 31, 2018, was as follows:
|
Beginning
Balance,October 1 |
Additions toNon-Performing |
Removedfrom Non-Performing |
Transfers to
PotentialProblemLoans |
Transfers toForeclosedAssets
andRepossessions |
Charge-Offs |
Payments |
EndingBalance, December 31 |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
One- to four-family
construction |
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
Subdivision
construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
Land development |
|
— |
|
|
49 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
49 |
Commercial
construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
One- to four-family
residential |
|
2,751 |
|
|
109 |
|
|
(81 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
(112 |
) |
|
|
2,664 |
Other residential |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
Commercial real
estate |
|
346 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(12 |
) |
|
|
334 |
Commercial
business |
|
1,590 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(153 |
) |
|
|
1,437 |
Consumer |
|
1,788 |
|
|
639 |
|
|
— |
|
|
|
(6 |
) |
|
|
(86 |
) |
|
|
(320 |
) |
|
|
(199 |
) |
|
|
1,816 |
|
|
|
|
|
|
|
|
|
Total |
$ |
6,475 |
|
$ |
797 |
|
$ |
(81 |
) |
|
$ |
(6 |
) |
|
$ |
(86 |
) |
|
$ |
(323 |
) |
|
$ |
(476 |
) |
|
$ |
6,300 |
|
|
|
|
|
|
|
|
|
At December 31, 2018, the non-performing one- to four-family
residential category included 28 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 48.4% of the total category, which are collateralized
by residential rental homes in the Springfield, Mo. area. The
non-performing commercial business category included five
loans. The largest relationship in this category, which was
added during the first quarter of 2018, totaled $1.1 million, or
78.6% of the total category. This relationship is
collateralized by an assignment of an interest in a real estate
project. The non-performing consumer category included 176
loans, 56 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 December 31, 2018, was as follows:
|
BeginningBalance,October
1 |
Additions toPotentialProblem |
RemovedfromPotential Problem |
Transfers toNon-Performing |
Transfers toForeclosedAssets
andRepossessions |
Charge-Offs |
Payments |
EndingBalance,December 31 |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
One- to four-family
construction |
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
Subdivision
construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
Land development |
|
4 |
|
|
— |
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
Commercial
construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
One- to four-family
residential |
|
1,054 |
|
|
3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
(13 |
) |
|
|
1,044 |
Other residential |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
Commercial real
estate |
|
1,945 |
|
|
124 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
(16 |
) |
|
|
2,053 |
Commercial
business |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
Consumer |
|
250 |
|
|
4 |
|
|
— |
|
|
|
(33 |
) |
|
|
— |
|
|
— |
|
|
(15 |
) |
|
|
206 |
|
|
|
|
|
|
|
|
|
Total |
$ |
3,253 |
|
$ |
131 |
|
$ |
(4 |
) |
|
$ |
(33 |
) |
|
$ |
— |
|
$ |
— |
|
$ |
(44 |
) |
|
$ |
3,303 |
|
|
|
|
|
|
|
|
|
At December 31, 2018, the commercial real estate category of
potential problem loans included two loans, one of which was added
during the current quarter. The largest relationship in this
category, which totaled $1.9 million, or 93.9% of the total
category, is collateralized by a mixed use commercial retail
building. The one- to four-family residential category of
potential problem loans included 18 loans, one of which was added
during the current quarter. The consumer category of potential
problem loans included 18 loans, two of which were added during the
current quarter.
Activity in foreclosed assets and repossessions during the
quarter ended December 31, 2018, excluding $1.4 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,October
1 |
Additions |
ORE andRepossessionSales |
CapitalizedCosts |
ORE andRepossessionWrite-Downs |
EndingBalance,December
31 |
|
(In thousands) |
|
|
|
|
|
|
|
One-to four-family
construction |
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
Subdivision
construction |
|
2,264 |
|
|
— |
|
|
(1,129 |
) |
|
|
— |
|
|
(43 |
) |
|
|
1,092 |
Land development |
|
4,495 |
|
|
— |
|
|
(1,258 |
) |
|
|
— |
|
|
(46 |
) |
|
|
3,191 |
Commercial
construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
One- to four-family
residential |
|
657 |
|
|
— |
|
|
(388 |
) |
|
|
— |
|
|
— |
|
|
|
269 |
Other residential |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Commercial real
estate |
|
1,002 |
|
|
— |
|
|
(886 |
) |
|
|
— |
|
|
(116 |
) |
|
|
— |
Commercial
business |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
Consumer |
|
1,020 |
|
|
1,615 |
|
|
(1,707 |
) |
|
|
— |
|
|
— |
|
|
|
928 |
|
|
|
|
|
|
|
Total |
$ |
9,438 |
|
$ |
1,615 |
|
$ |
(5,368 |
) |
|
$ |
— |
|
$ |
(205 |
) |
|
$ |
5,480 |
|
|
|
|
|
|
|
Excluding the consumer category, during the three months ended
December 31, 2018, the Company reduced its foreclosed assets by
$3.7 million through asset sales. At December 31, 2018, the
land development category of foreclosed assets included seven
properties, the largest of which was located in the Branson, Mo.
area and had a balance of $913,000, or 28.6% of the total
category. Of the total dollar amount in the land development
category of foreclosed assets, 66.8% was located in the Branson,
Mo. area, including the largest property previously
mentioned. The subdivision construction category of
foreclosed assets included seven properties, the largest of which
was located in the Branson, Mo. area and had a balance of $350,000,
or 32.1% of the total category. Of the total dollar amount in
the subdivision construction category of foreclosed assets, 65.0%
is located in Branson, Mo., including the largest property
previously mentioned. The 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 decreased
in 2018. The commercial real estate category of foreclosed
assets had a zero balance at December 31, 2018. The two
previously remaining properties, which totaled $1.0 million, were
sold during the current quarter, and a write-down of $116,000 was
recorded on one of the sold properties.
BUSINESS INITIATIVES
During the fourth quarter 2018, the Company opened a commercial
loan production office in Atlanta, Ga., and Denver, Colo. Each
office is managed by a local and highly-experienced commercial
lender. The Company also operates commercial loan production
offices in Chicago, Dallas, Omaha, Neb., and Tulsa, Okla.
As part of the Company’s ongoing performance evaluation, the
retail banking center network continues to evolve. In April 2019,
the Company expects to consolidate its Fayetteville, Ark., banking
center into its Rogers, Ark., office, approximately 20 miles away.
The Fayetteville office opened in 2014 and has not met
expectations. After this consolidation, the Company will operate
one Arkansas banking center, in Rogers.
The Company will host a conference call on Wednesday, January
23, 2019, at 2:00 p.m. Central Time (3:00 p.m. Eastern Time) to
discuss fourth quarter and annual 2018 preliminary earnings.
Individuals interested in listening to the conference call may dial
1.833.832.5121 and enter the passcode 9867369. 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 99
retail banking centers in Missouri, Arkansas, Iowa, Kansas,
Minnesota 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."
www.GreatSouthernBank.com
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
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 changes in non-interest
income, non-interest expense and interest expense actually
resulting from Great Southern Bank's recently completed 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 Great
Southern 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 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 months and years ended December 31, 2018
and 2017, and the three months ended September 30, 2018, are not
necessarily indicative of the results of operations which may be
expected for any future period.
|
December 31, |
December 31, |
|
2018 |
2017 |
Selected Financial Condition Data: |
(In thousands) |
|
|
|
Total assets |
$ |
4,676,200 |
$ |
4,414,521 |
Loans
receivable, gross |
|
4,034,810 |
|
3,769,294 |
Allowance
for loan losses |
|
38,409 |
|
36,492 |
Other
real estate owned, net |
|
8,440 |
|
22,002 |
Available-for-sale securities, at fair value |
|
243,968 |
|
179,179 |
Deposits |
|
3,738,107 |
|
3,597,144 |
Total
borrowings |
|
384,494 |
|
324,097 |
Total
common stockholders’ equity |
|
531,977 |
|
471,662 |
Non-performing assets (excluding FDIC-assisted transaction
assets) |
|
11,780 |
|
27,830 |
|
|
|
|
|
|
Three Months Ended |
Year Ended |
Three MonthsEnded |
|
December 31, |
December 31, |
September 30, |
|
2018 |
2017 |
2018 |
2017 |
2018 |
Selected Operating Data: |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
Interest income |
$ |
56,140 |
|
$ |
46,537 |
|
$ |
205,949 |
|
$ |
183,061 |
|
$ |
52,982 |
Interest
expense |
|
11,584 |
|
|
7,264 |
|
|
37,757 |
|
|
27,905 |
|
|
9,997 |
Net
interest income |
|
44,556 |
|
|
39,273 |
|
|
168,192 |
|
|
155,156 |
|
|
42,985 |
Provision
for loan losses |
|
1,950 |
|
|
1,950 |
|
|
7,150 |
|
|
9,100 |
|
|
1,300 |
Non-interest income |
|
7,220 |
|
|
7,374 |
|
|
36,218 |
|
|
38,527 |
|
|
14,604 |
Non-interest expense |
|
28,773 |
|
|
29,284 |
|
|
115,310 |
|
|
114,261 |
|
|
28,309 |
Provision
for income taxes |
|
3,765 |
|
|
3,207 |
|
|
14,841 |
|
|
18,758 |
|
|
5,464 |
Net
income and net income available to common shareholders |
$ |
17,288 |
|
$ |
12,206 |
|
$ |
67,109 |
|
$ |
51,564 |
|
$ |
22,516 |
|
|
|
|
|
|
|
At or For the ThreeMonths Ended |
At or For theYear
Ended |
At or For theThree Months Ended |
|
December 31, |
December 31, |
September 30, |
|
2018 |
2017 |
2018 |
2017 |
2018 |
Per Common Share: |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
Net income (fully
diluted) |
$ |
1.21 |
|
|
$ |
0.86 |
|
|
$ |
4.71 |
|
|
$ |
3.64 |
|
|
$ |
1.57 |
|
Book
value |
$ |
37.59 |
|
|
$ |
33.48 |
|
|
$ |
37.59 |
|
|
$ |
33.48 |
|
|
$ |
35.90 |
|
|
|
|
|
|
|
Earnings Performance Ratios: |
|
|
|
|
|
Annualized return on average assets |
|
1.50 |
% |
|
|
1.10 |
% |
|
|
1.49 |
% |
|
|
1.16 |
% |
|
|
1.99 |
% |
Annualized return on average common stockholders’ equity |
|
13.34 |
% |
|
|
10.37 |
% |
|
|
13.46 |
% |
|
|
11.32 |
% |
|
|
17.80 |
% |
Net
interest margin |
|
4.07 |
% |
|
|
3.75 |
% |
|
|
3.99 |
% |
|
|
3.74 |
% |
|
|
4.02 |
% |
Average
interest rate spread |
|
3.79 |
% |
|
|
3.58 |
% |
|
|
3.75 |
% |
|
|
3.59 |
% |
|
|
3.76 |
% |
Efficiency ratio |
|
55.57 |
% |
|
|
62.78 |
% |
|
|
56.41 |
% |
|
|
58.99 |
% |
|
|
49.16 |
% |
Non-interest expense to average total assets |
|
2.49 |
% |
|
|
2.63 |
% |
|
|
2.56 |
% |
|
|
2.56 |
% |
|
|
2.50 |
% |
|
|
|
|
|
|
Asset Quality Ratios: |
Allowance
for loan losses to period-end loans (excluding
covered/previously covered loans) |
|
0.99 |
% |
|
|
1.01 |
% |
|
|
0.99 |
% |
|
|
1.01 |
% |
|
|
1.00 |
% |
Non-performing assets to period-end assets |
|
0.25 |
% |
|
|
0.63 |
% |
|
|
0.25 |
% |
|
|
0.63 |
% |
|
|
0.35 |
% |
Non-performing loans to period-end loans |
|
0.16 |
% |
|
|
0.30 |
% |
|
|
0.16 |
% |
|
|
0.30 |
% |
|
|
0.16 |
% |
Annualized net charge-offs to average loans |
|
0.10 |
% |
|
|
0.18 |
% |
|
|
0.13 |
% |
|
|
0.26 |
% |
|
|
0.14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Southern Bancorp, Inc. and
Subsidiaries |
Consolidated Statements of Financial
Condition |
(In thousands, except number of
shares) |
|
|
December 31,2018 |
December 31,2017 |
September
30,2018 |
Assets |
|
|
|
Cash |
$ |
110,108 |
|
$ |
115,600 |
|
$ |
99,044 |
|
Interest-bearing deposits in other financial institutions |
|
92,634 |
|
|
126,653 |
|
|
109,777 |
|
Cash and
cash equivalents |
|
202,742 |
|
|
242,253 |
|
|
208,821 |
|
|
|
|
|
Available-for-sale securities |
|
243,968 |
|
|
179,179 |
|
|
191,251 |
|
Held-to-maturity securities |
|
— |
|
|
130 |
|
|
— |
|
Mortgage
loans held for sale |
|
1,650 |
|
|
8,203 |
|
|
3,474 |
|
Loans
receivable (1), net of allowance for loan losses of $38,409 –
December 2018; $36,492 – December 2017; $37,497 – September
2018 |
|
3,989,001 |
|
|
3,726,302 |
|
|
3,942,766 |
|
Interest
receivable |
|
13,448 |
|
|
12,338 |
|
|
13,008 |
|
Prepaid
expenses and other assets |
|
55,336 |
|
|
47,122 |
|
|
41,116 |
|
Other
real estate owned and repossessions (2), net |
|
8,440 |
|
|
22,002 |
|
|
12,844 |
|
Premises
and equipment, net |
|
132,424 |
|
|
138,018 |
|
|
133,319 |
|
Goodwill
and other intangible assets |
|
9,288 |
|
|
10,850 |
|
|
9,613 |
|
Federal
Home Loan Bank stock |
|
12,438 |
|
|
11,182 |
|
|
14,918 |
|
Current
and deferred income taxes |
|
7,465 |
|
|
16,942 |
|
|
12,956 |
|
|
|
|
|
Total
Assets |
$ |
4,676,200 |
|
$ |
4,414,521 |
|
$ |
4,584,086 |
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
Liabilities |
|
|
|
Deposits |
$ |
3,738,107 |
|
$ |
3,597,144 |
|
$ |
3,595,665 |
|
Federal
Home Loan Bank advances |
|
— |
|
|
127,500 |
|
|
240,000 |
|
Securities sold under reverse repurchase agreements with
customers |
|
105,253 |
|
|
80,531 |
|
|
112,184 |
|
Short-term borrowings |
|
179,625 |
|
|
16,604 |
|
|
1,360 |
|
Subordinated debentures issued to capital trust |
|
25,774 |
|
|
25,774 |
|
|
25,774 |
|
Subordinated notes |
|
73,842 |
|
|
73,688 |
|
|
73,804 |
|
Accrued
interest payable |
|
3,570 |
|
|
2,904 |
|
|
3,013 |
|
Advances
from borrowers for taxes and insurance |
|
5,092 |
|
|
5,319 |
|
|
8,858 |
|
Accounts
payable and accrued expenses |
|
12,960 |
|
|
13,395 |
|
|
15,301 |
|
Total
Liabilities |
|
4,144,223 |
|
|
3,942,859 |
|
|
4,075,959 |
|
|
|
|
|
Stockholders’ Equity |
|
|
|
Capital
stock |
|
|
|
Preferred
stock, $.01 par value; authorized 1,000,000 shares; issued and
outstanding December 2018, December 2017 and September 2018 – -0-
shares |
|
— |
|
|
— |
|
|
— |
|
Common
stock, $.01 par value; authorized 20,000,000 shares; issued and
outstanding December 2018 – 14,151,198 shares; December 2017 –
14,087,533 shares; September 2018 – 14,153,290 shares |
|
142 |
|
|
141 |
|
|
142 |
|
Additional paid-in capital |
|
30,121 |
|
|
28,203 |
|
|
29,553 |
|
Retained
earnings |
|
492,087 |
|
|
442,077 |
|
|
480,027 |
|
Accumulated other comprehensive gain (loss) |
|
9,627 |
|
|
1,241 |
|
|
(1,595 |
) |
Total
Stockholders’ Equity |
|
531,977 |
|
|
471,662 |
|
|
508,127 |
|
|
|
|
|
Total
Liabilities and Stockholders’ Equity |
$ |
4,676,200 |
|
$ |
4,414,521 |
|
$ |
4,584,086 |
|
|
|
|
|
|
|
|
|
|
|
- At December 31, 2018, December 31, 2017 and September 30, 2018,
includes loans, net of discounts, totaling $167.6 million, $209.7
million and $177.1 million, respectively, which were acquired in
FDIC-assisted transactions and are accounted for under ASC
310-30.
- At December 31, 2018, December 31, 2017 and September 30, 2018,
includes foreclosed assets, net of discounts, totaling $1.4
million, $3.8 million and $1.8 million, respectively, which were
acquired in FDIC-assisted transactions. In addition, at each
of December 31, 2018, December 31, 2017 and September 30, 2018,
includes $1.6 million of properties which were not acquired through
foreclosure, but are held for sale.
Great Southern Bancorp, Inc. and
Subsidiaries |
Consolidated Statements of
Income |
(In thousands, except per share
data) |
|
|
|
Three Months Ended |
|
Year Ended |
|
Three MonthsEnded |
|
|
December 31, |
|
December 31, |
|
September 30, |
|
2018 |
|
2017 |
|
2018 |
2017 |
|
2018 |
Interest Income |
|
|
|
|
|
|
|
Loans |
$ |
53,779 |
|
|
$ |
44,920 |
|
|
$ |
198,226 |
|
$ |
176,654 |
|
|
$ |
51,063 |
Investment securities and other |
|
2,361 |
|
|
|
1,617 |
|
|
|
7,723 |
|
|
6,407 |
|
|
|
1,919 |
|
|
56,140 |
|
|
|
46,537 |
|
|
|
205,949 |
|
|
183,061 |
|
|
|
52,982 |
|
|
|
|
|
|
|
|
Interest Expense |
|
|
|
|
|
|
|
Deposits |
|
8,899 |
|
|
|
5,495 |
|
|
|
27,957 |
|
|
20,595 |
|
|
|
7,352 |
Federal Home Loan Bank advances |
|
1,021 |
|
|
|
471 |
|
|
|
3,985 |
|
|
1,516 |
|
|
|
1,192 |
Short-term borrowings and repurchase agreements |
|
380 |
|
|
|
85 |
|
|
|
765 |
|
|
747 |
|
|
|
177 |
Subordinated debentures issued to capital trust |
|
260 |
|
|
|
189 |
|
|
|
953 |
|
|
949 |
|
|
|
252 |
Subordinated notes |
|
1,024 |
|
|
|
1,024 |
|
|
|
4,097 |
|
|
4,098 |
|
|
|
1,024 |
|
|
11,584 |
|
|
|
7,264 |
|
|
|
37,757 |
|
|
27,905 |
|
|
|
9,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Interest Income |
|
44,556 |
|
|
|
39,273 |
|
|
|
168,192 |
|
|
155,156 |
|
|
|
42,985 |
Provision for Loan Losses |
|
1,950 |
|
|
|
1,950 |
|
|
|
7,150 |
|
|
9,100 |
|
|
|
1,300 |
Net
Interest Income After Provision for Loan
Losses |
|
42,606 |
|
|
|
37,323 |
|
|
|
161,042 |
|
|
146,056 |
|
|
|
41,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income |
|
|
|
|
|
|
|
Commissions |
|
269 |
|
|
|
190 |
|
|
|
1,137 |
|
|
1,041 |
|
|
|
309 |
Service charges and ATM fees |
|
5,505 |
|
|
|
5,432 |
|
|
|
21,695 |
|
|
21,628 |
|
|
|
5,458 |
Net gains on loan sales |
|
350 |
|
|
|
808 |
|
|
|
1,788 |
|
|
3,150 |
|
|
|
417 |
Late charges and fees on loans |
|
382 |
|
|
|
308 |
|
|
|
1,622 |
|
|
2,231 |
|
|
|
466 |
Gain on sales of securities |
|
— |
|
|
|
— |
|
|
|
2 |
|
|
— |
|
|
|
2 |
Gain (loss) on derivative interest rate products |
|
(28 |
) |
|
|
32 |
|
|
|
25 |
|
|
28 |
|
|
|
5 |
Gain on termination of loss sharing agreements |
|
— |
|
|
|
— |
|
|
|
— |
|
|
7,705 |
|
|
|
— |
Amortization of income/expense related to business
acquisitions |
|
— |
|
|
|
— |
|
|
|
— |
|
|
(486 |
) |
|
|
— |
Gain on sale of business units |
|
— |
|
|
|
— |
|
|
|
7,414 |
|
|
— |
|
|
|
7,414 |
Other income |
|
742 |
|
|
|
604 |
|
|
|
2,535 |
|
|
3,230 |
|
|
|
533 |
|
|
7,220 |
|
|
|
7,374 |
|
|
|
36,218 |
|
|
38,527 |
|
|
|
14,604 |
|
|
|
|
|
|
|
|
Noninterest Expense |
|
|
|
|
|
|
|
Salaries and employee benefits |
|
15,484 |
|
|
|
15,539 |
|
|
|
60,215 |
|
|
60,034 |
|
|
|
15,162 |
Net occupancy expense |
|
6,394 |
|
|
|
6,194 |
|
|
|
25,628 |
|
|
24,613 |
|
|
|
6,551 |
Postage |
|
804 |
|
|
|
810 |
|
|
|
3,348 |
|
|
3,461 |
|
|
|
843 |
Insurance |
|
672 |
|
|
|
659 |
|
|
|
2,674 |
|
|
2,959 |
|
|
|
682 |
Advertising |
|
568 |
|
|
|
654 |
|
|
|
2,460 |
|
|
2,311 |
|
|
|
589 |
Office supplies and printing |
|
258 |
|
|
|
237 |
|
|
|
1,047 |
|
|
1,446 |
|
|
|
255 |
Telephone |
|
934 |
|
|
|
799 |
|
|
|
3,272 |
|
|
3,188 |
|
|
|
827 |
Legal, audit and other professional fees |
|
1,050 |
|
|
|
872 |
|
|
|
3,423 |
|
|
2,862 |
|
|
|
875 |
Expense on foreclosed assets and repossessions |
|
543 |
|
|
|
1,334 |
|
|
|
4,919 |
|
|
3,929 |
|
|
|
498 |
Partnership tax credit |
|
91 |
|
|
|
217 |
|
|
|
575 |
|
|
930 |
|
|
|
91 |
Acquired deposit intangible asset amortization |
|
325 |
|
|
|
412 |
|
|
|
1,562 |
|
|
1,650 |
|
|
|
412 |
Other operating expenses |
|
1,650 |
|
|
|
1,557 |
|
|
|
6,187 |
|
|
6,878 |
|
|
|
1,524 |
|
|
28,773 |
|
|
|
29,284 |
|
|
|
115,310 |
|
|
114,261 |
|
|
|
28,309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
21,053 |
|
|
|
15,413 |
|
|
|
81,950 |
|
|
70,322 |
|
|
|
27,980 |
Provision for Income Taxes |
|
3,765 |
|
|
|
3,207 |
|
|
|
14,841 |
|
|
18,758 |
|
|
|
5,464 |
|
|
|
|
|
|
|
|
|
|
|
Net
Income and Net Income Available to Common
Shareholders |
$ |
17,288 |
|
|
$ |
12,206 |
|
|
$ |
67,109 |
|
$ |
51,564 |
|
|
$ |
22,516 |
Earnings Per
Common Share |
|
|
|
|
|
|
|
Basic |
$ |
1.22 |
|
$ |
0.87 |
|
|
$ |
4.75 |
|
$ |
3.67 |
|
|
$ |
1.59 |
Diluted |
$ |
1.21 |
|
$ |
0.86 |
|
|
$ |
4.71 |
|
$ |
3.64 |
|
|
$ |
1.57 |
|
|
|
|
|
|
|
|
Dividends Declared Per Common Share |
$ |
0.32 |
|
$ |
0.24 |
|
|
$ |
1.24 |
|
$ |
0.94 |
|
|
$ |
0.32 |
|
|
|
|
|
|
|
|
Average Balances, Interest Rates and
Yields
The following table presents, for the periods indicated, the
total dollar amounts of interest income from average
interest-earning assets and the resulting yields, as well as the
interest expense on average interest-bearing liabilities, expressed
both in dollars and rates, and the net interest margin.
Average balances of loans receivable include the average balances
of non-accrual loans for each period. Interest income on
loans includes interest received on non-accrual loans on a cash
basis. Interest income on loans includes the amortization of
net loan fees, which were deferred in accordance with accounting
standards. Net fees included in interest income were $1.0
million and $0.6 million for the three months ended December 31,
2018 and 2017, respectively. Net fees included in interest
income were $3.5 million and $2.9 million for the years ended
December 31, 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.
|
December 31,2018(1) |
Three Months Ended December 31,
2018 |
|
Three Months Ended December 31,
2017 |
|
Yield/ |
Average |
|
Yield/ |
|
Average |
|
Yield/ |
|
Rate |
Balance |
Interest |
Rate |
|
Balance |
Interest |
Rate |
|
(Dollars in thousands) |
Interest-earning
assets: |
|
|
|
|
|
|
|
|
Loans receivable: |
|
|
|
|
|
|
|
|
One- to four-family
residential |
4.23 |
% |
|
$ |
477,064 |
|
|
$ |
6,379 |
|
5.31 |
% |
|
$ |
441,726 |
|
|
$ |
5,217 |
|
4.69 |
% |
Other
residential |
5.13 |
|
|
|
777,669 |
|
|
|
10,514 |
|
5.36 |
|
|
|
745,501 |
|
|
|
8,593 |
|
4.57 |
|
Commercial real estate |
4.91 |
|
|
|
1,392,042 |
|
|
|
17,852 |
|
5.09 |
|
|
|
1,246,065 |
|
|
|
13,957 |
|
4.44 |
|
Construction |
5.35 |
|
|
|
610,704 |
|
|
|
9,192 |
|
5.97 |
|
|
|
510,241 |
|
|
|
6,197 |
|
4.82 |
|
Commercial business |
5.22 |
|
|
|
274,874 |
|
|
|
3,512 |
|
5.07 |
|
|
|
293,668 |
|
|
|
3,507 |
|
4.74 |
|
Other
loans |
6.01 |
|
|
|
461,730 |
|
|
|
6,080 |
|
5.22 |
|
|
|
576,211 |
|
|
|
7,059 |
|
4.86 |
|
Industrial revenue bonds |
4.82 |
|
|
|
16,133 |
|
|
|
250 |
|
6.15 |
|
|
|
24,482 |
|
|
|
390 |
|
6.32 |
|
|
|
|
|
|
|
|
|
|
Total
loans receivable |
5.16 |
|
|
|
4,010,216 |
|
|
|
53,779 |
|
5.32 |
|
|
|
3,837,894 |
|
|
|
44,920 |
|
4.64 |
|
|
|
|
|
|
|
|
|
|
Investment
securities |
3.36 |
|
|
|
235,885 |
|
|
|
1,809 |
|
3.04 |
|
|
|
194,570 |
|
|
|
1,239 |
|
2.53 |
|
Other interest-earning
assets |
2.50 |
|
|
|
99,437 |
|
|
|
552 |
|
2.20 |
|
|
|
118,055 |
|
|
|
378 |
|
1.27 |
|
|
|
|
|
|
|
|
|
|
Total
interest-earning assets |
5.00 |
|
|
|
4,345,538 |
|
|
|
56,140 |
|
5.13 |
|
|
|
4,150,519 |
|
|
|
46,537 |
|
4.45 |
|
Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
|
94,584 |
|
|
|
|
|
104,465 |
|
|
|
Other
non-earning assets |
|
|
|
173,490 |
|
|
|
|
|
201,793 |
|
|
|
Total
assets |
|
|
$ |
4,613,612 |
|
|
|
|
$ |
4,456,777 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
Interest-bearing demand and savings |
0.48 |
|
|
$ |
1,485,174 |
|
|
|
1,715 |
|
0.46 |
|
|
$ |
1,567,416 |
|
|
|
1,281 |
|
0.32 |
|
Time
deposits |
1.98 |
|
|
|
1,507,287 |
|
|
|
7,184 |
|
1.89 |
|
|
|
1,379,022 |
|
|
|
4,214 |
|
1.21 |
|
Total
deposits |
1.25 |
|
|
|
2,992,461 |
|
|
|
8,899 |
|
1.18 |
|
|
|
2,946,438 |
|
|
|
5,495 |
|
0.74 |
|
Short-term borrowings and repurchase agreements |
1.66 |
|
|
|
161,691 |
|
|
|
380 |
|
0.93 |
|
|
|
127,798 |
|
|
|
85 |
|
0.26 |
|
Subordinated debentures issued to capital trust |
4.14 |
|
|
|
25,774 |
|
|
|
260 |
|
4.00 |
|
|
|
25,774 |
|
|
|
189 |
|
2.91 |
|
Subordinated notes |
5.55 |
|
|
|
73,829 |
|
|
|
1,024 |
|
5.50 |
|
|
|
73,670 |
|
|
|
1,024 |
|
5.51 |
|
FHLB
advances |
0.00 |
|
|
|
164,924 |
|
|
|
1,021 |
|
2.46 |
|
|
|
138,516 |
|
|
|
471 |
|
1.35 |
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities |
1.40 |
|
|
|
3,418,679 |
|
|
|
11,584 |
|
1.34 |
|
|
|
3,312,196 |
|
|
|
7,264 |
|
0.87 |
|
Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
Demand
deposits |
|
|
|
652,621 |
|
|
|
|
|
648,788 |
|
|
|
Other
liabilities |
|
|
|
24,056 |
|
|
|
|
|
24,782 |
|
|
|
Total
liabilities |
|
|
|
4,095,356 |
|
|
|
|
|
3,985,766 |
|
|
|
Stockholders’
equity |
|
|
|
518,256 |
|
|
|
|
|
471,011 |
|
|
|
Total
liabilities and stockholders’ equity |
|
|
$ |
4,613,612 |
|
|
|
|
$ |
4,456,777 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income: |
|
|
|
|
|
|
|
|
Interest rate
spread |
3.60 |
% |
|
|
$ |
44,556 |
|
3.79 |
% |
|
|
|
$ |
39,273 |
|
3.58 |
% |
Net interest
margin* |
|
|
|
|
4.07 |
% |
|
|
|
|
3.75 |
% |
Average
interest-earning assets to average interest-bearing
liabilities |
|
|
|
127.1 |
% |
|
|
|
|
125.3 |
% |
|
|
______________*Defined as the Company’s net interest income
divided by average total interest-earning assets.(1)
The yield on loans at December 31, 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 December 31, 2018.
|
December 31,2018(1) |
Year Ended December 31, 2018 |
|
Year Ended December 31, 2017 |
|
Yield/ |
|
Average |
|
|
Yield/ |
|
Average |
|
|
Yield/ |
|
Rate |
|
Balance |
|
Interest |
Rate |
|
Balance |
|
Interest |
Rate |
|
(Dollars in thousands) |
Interest-earning
assets: |
|
|
|
|
|
|
|
|
Loans receivable: |
|
|
|
|
|
|
|
|
One- to four-family
residential |
4.23 |
% |
|
$ |
449,917 |
|
|
$ |
22,924 |
|
5.10 |
% |
|
$ |
459,227 |
|
|
$ |
22,102 |
|
4.81 |
% |
Other
residential |
5.13 |
|
|
|
761,115 |
|
|
|
38,863 |
|
5.11 |
|
|
|
706,217 |
|
|
|
31,970 |
|
4.53 |
|
Commercial real estate |
4.91 |
|
|
|
1,325,398 |
|
|
|
64,605 |
|
4.87 |
|
|
|
1,240,017 |
|
|
|
54,911 |
|
4.43 |
|
Construction |
5.35 |
|
|
|
569,570 |
|
|
|
31,198 |
|
5.48 |
|
|
|
454,907 |
|
|
|
21,099 |
|
4.64 |
|
Commercial business |
5.22 |
|
|
|
285,125 |
|
|
|
14,104 |
|
4.95 |
|
|
|
295,379 |
|
|
|
14,666 |
|
4.97 |
|
Other
loans |
6.01 |
|
|
|
499,131 |
|
|
|
25,250 |
|
5.06 |
|
|
|
632,968 |
|
|
|
30,356 |
|
4.80 |
|
Industrial revenue bonds |
4.82 |
|
|
|
20,563 |
|
|
|
1,282 |
|
6.23 |
|
|
|
25,845 |
|
|
|
1,550 |
|
6.00 |
|
|
|
|
|
|
|
|
|
|
Total
loans receivable |
5.16 |
|
|
|
3,910,819 |
|
|
|
198,226 |
|
5.07 |
|
|
|
3,814,560 |
|
|
|
176,654 |
|
4.63 |
|
|
|
|
|
|
|
|
|
|
Investment
securities |
3.36 |
|
|
|
201,330 |
|
|
|
5,835 |
|
2.90 |
|
|
|
207,803 |
|
|
|
5,195 |
|
2.50 |
|
Other interest-earning
assets |
2.50 |
|
|
|
104,220 |
|
|
|
1,888 |
|
1.81 |
|
|
|
121,604 |
|
|
|
1,212 |
|
1.00 |
|
|
|
|
|
|
|
|
|
|
Total
interest-earning assets |
5.00 |
|
|
|
4,216,369 |
|
|
|
205,949 |
|
4.88 |
|
|
|
4,143,967 |
|
|
|
183,061 |
|
4.42 |
|
Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
|
97,796 |
|
|
|
|
|
103,505 |
|
|
|
Other
non-earning assets |
|
|
|
189,161 |
|
|
|
|
|
212,724 |
|
|
|
Total
assets |
|
|
$ |
4,503,326 |
|
|
|
|
$ |
4,460,196 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
Interest-bearing demand and savings |
0.48 |
|
|
$ |
1,532,368 |
|
|
|
5,982 |
|
0.39 |
|
|
$ |
1,555,375 |
|
|
|
4,698 |
|
0.30 |
|
Time
deposits |
1.98 |
|
|
|
1,375,508 |
|
|
|
21,975 |
|
1.60 |
|
|
|
1,414,189 |
|
|
|
15,897 |
|
1.12 |
|
Total
deposits |
1.25 |
|
|
|
2,907,876 |
|
|
|
27,957 |
|
0.96 |
|
|
|
2,969,564 |
|
|
|
20,595 |
|
0.69 |
|
Short-term borrowings and repurchase agreements |
1.66 |
|
|
|
136,264 |
|
|
|
765 |
|
0.56 |
|
|
|
186,364 |
|
|
|
747 |
|
0.40 |
|
Subordinated debentures issued to capital trust |
4.14 |
|
|
|
25,774 |
|
|
|
953 |
|
3.70 |
|
|
|
25,774 |
|
|
|
949 |
|
3.68 |
|
Subordinated notes |
5.55 |
|
|
|
73,772 |
|
|
|
4,097 |
|
5.55 |
|
|
|
73,613 |
|
|
|
4,098 |
|
5.57 |
|
FHLB
advances |
0.00 |
|
|
|
190,245 |
|
|
|
3,985 |
|
2.09 |
|
|
|
93,524 |
|
|
|
1,516 |
|
1.62 |
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities |
1.40 |
|
|
|
3,333,931 |
|
|
|
37,757 |
|
1.13 |
|
|
|
3,348,839 |
|
|
|
27,905 |
|
0.83 |
|
Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
Demand
deposits |
|
|
|
649,357 |
|
|
|
|
|
629,015 |
|
|
|
Other
liabilities |
|
|
|
21,530 |
|
|
|
|
|
26,638 |
|
|
|
Total
liabilities |
|
|
|
4,004,818 |
|
|
|
|
|
4,004,492 |
|
|
|
Stockholders’
equity |
|
|
|
498,508 |
|
|
|
|
|
455,704 |
|
|
|
Total
liabilities and stockholders’ equity |
|
|
$ |
4,503,326 |
|
|
|
|
$ |
4,460,196 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income: |
|
|
|
|
|
|
|
|
Interest rate
spread |
3.60 |
% |
|
|
$ |
168,192 |
|
3.75 |
% |
|
|
|
$ |
155,156 |
|
3.59 |
% |
Net interest
margin* |
|
|
|
|
3.99 |
% |
|
|
|
|
3.74 |
% |
Average
interest-earning assets to average interest-bearing
liabilities |
|
|
|
126.5 |
% |
|
|
|
|
123.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
______________*Defined as the Company’s net interest income
divided by average total interest-earning assets.(1)
The yield on loans at December 31, 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 year ended December 31, 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 |
Year Ended |
|
December 31, |
December 31, |
|
2018 |
2017 |
2018 |
2017 |
|
(Dollars in thousands) |
(Dollars in thousands) |
Reported net interest
income / margin |
$ |
44,556 |
|
4.07 |
% |
|
$ |
39,273 |
|
3.75 |
% |
|
$ |
168,192 |
|
3.99 |
% |
|
$ |
155,156 |
|
3.74 |
% |
Less: Impact of loss share adjustments |
|
1,482 |
|
0.14 |
|
|
|
776 |
|
0.07 |
|
|
|
5,134 |
|
0.12 |
|
|
|
5,014 |
|
0.12 |
|
Core net
interest income / margin |
$ |
43,074 |
|
3.93 |
% |
|
$ |
38,497 |
|
3.68 |
% |
|
$ |
163,058 |
|
3.87 |
% |
|
$ |
150,142 |
|
3.62 |
% |
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation: Ratio of Tangible Common
Equity to Tangible
Assets
|
December 31, |
December 31, |
|
2018 |
2017 |
|
(Dollars in thousands) |
Common equity at period
end |
$ |
531,977 |
|
|
$ |
471,662 |
|
Less:
Intangible assets at period end |
|
9,288 |
|
|
|
10,850 |
|
Tangible
common equity at period end (a) |
$ |
522,689 |
|
|
$ |
460,812 |
|
|
|
|
Total
assets at period end |
$ |
4,676,200 |
|
|
$ |
4,414,521 |
|
Less:
Intangible assets at period end |
|
9,288 |
|
|
|
10,850 |
|
Tangible
assets at period end (b) |
$ |
4,666,912 |
|
|
$ |
4,403,671 |
|
|
|
|
Tangible
common equity to tangible assets (a) / (b) |
|
11.20 |
% |
|
|
10.46 |
% |
|
|
|
|
|
|
|
|
CONTACT: Kelly Polonus, Great Southern, (417)
895-5242kpolonus@greatsouthernbank.com
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