Preliminary Financial Results and Other
Matters for the Quarter Ended March 31, 2019:
Great Southern Bancorp, Inc. (NASDAQ:GSBC), the holding company for
Great Southern Bank, today reported that preliminary earnings for
the three months ended March 31, 2019, were $1.23 per diluted
common share ($17.6 million available to common shareholders)
compared to $0.95 per diluted common share ($13.5 million available
to common shareholders) for the three months ended March 31,
2018.
For the quarter ended March 31, 2019, annualized return on
average common equity was 13.12%, return on average assets was
1.49%, and net interest margin was 4.06%, compared to 11.22%, 1.23%
and 3.93%, respectively, for the quarter ended March 31,
2018.
President and CEO Joseph W. Turner commented, “We are pleased
with our first quarter financial results. Return on average assets
and return on average common equity were strong at 1.49% and
13.12%, respectively. Our efficiency ratio was 54.74% and reflected
continued expense containment along with increased income from loan
and investment growth. Net interest margin was 4.06%, which was an
increase of 13 basis points from the first quarter of last year and
a decrease of one basis point compared to the linked quarter.
Core net interest margin was 3.93%, which was an increase of 12
basis points from the year ago quarter and flat compared to the
linked quarter. Credit quality metrics during the quarter remained
stable with low levels of classified assets.
“From the end of 2018, outstanding net loan receivable balances
increased by $61 million. Total gross loan balances, which include
unfunded loans, decreased $11 million from the end of 2018, with
reductions in construction loans and consumer loans. We saw
increases in outstanding balances for multi-family loans and
commercial real estate loans. Consumer automobile loan balances
were down $24 million during the quarter and are expected to
continue decreasing in future periods.”
Turner continued, “The Company’s capital levels are strong and
remain well in excess of regulatory capital requirements. The
strength of our capital position enabled us during the first
quarter to pay our stockholders a special cash dividend of $0.75
per common share and, separately, a regular quarterly cash dividend
of $0.32 per common share. Even after these dividends, both our
common equity to total assets ratio and tangible common equity to
tangible assets ratio were unchanged from year-end 2018
levels.”
Selected Financial Data:
(In
thousands, except per share data) |
Three Months Ended March
31, |
|
|
2019 |
|
2018 |
Net
interest income |
$ |
44,605 |
$ |
39,438 |
Provision
for loan losses |
|
1,950 |
|
1,950 |
Non-interest income |
|
7,450 |
|
6,935 |
Non-interest expense |
|
28,495 |
|
28,312 |
Provision
for income taxes |
|
3,998 |
|
2,645 |
Net
income and net income available to common shareholders |
$ |
17,612 |
$ |
13,466 |
|
|
|
Earnings
per diluted common share |
$ |
1.23 |
$ |
0.95 |
|
|
|
NET INTEREST INCOME
Net interest income for the first quarter of 2019 increased $5.2
million to $44.6 million compared to $39.4 million for the first
quarter of 2018. Net interest margin was 4.06% in the first
quarter of 2019, compared to 3.93% in the same period of 2018, an
increase of 13 basis points. For the three months ended March
31, 2019, the net interest margin decreased one basis point
compared to the net interest margin of 4.07% in the three months
ended December 31, 2018. The increase in the margin from the
prior year first 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
other borrowings. The average interest rate spread was 3.75%
for the three months ended March 31, 2019, compared to 3.74% for
the three months ended March 31, 2018 and 3.79% for the three
months ended December 31, 2018.
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 related to
this swap transaction of $513,000 in the three months ended March
31, 2019.
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 $1.7 million
were recorded in the three months ended March 31, 2019, 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 |
|
|
March 31, 2019 |
|
March 31, 2018 |
|
|
(In thousands, except basis points data) |
Impact on net interest
income/ net interest margin (in basis points) |
$ |
1,512 |
13 bps |
|
$ |
1,157 |
12 bps |
|
Non-interest
income |
|
— |
|
|
|
— |
|
|
Net
impact to pre-tax income |
$ |
1,512 |
|
|
$ |
1,157 |
|
|
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 $2.8 million. Of the remaining
adjustments affecting interest income, we expect to recognize $1.7
million of interest income during the remainder of 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 ended March 31, 2019,
increased 12 basis points when compared to the year-ago
period. The increase in net interest margin in the three
month period 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 rates on deposits and
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 March 31, 2019, non-interest income
increased $515,000 to $7.5 million when compared to the quarter
ended March 31, 2018, primarily as a result of the following
items:
- Other income: Other income increased $1.0 million
compared to the prior year quarter. This increase was
primarily due to gains totaling $677,000 from the sale of, or
recovery of, receivables and assets that were acquired several
years ago in FDIC-assisted transactions. In addition, the
Company recognized approximately $293,000 more in income from new
debit card contracts than was recognized in the prior year
period.
- Service charges and ATM fees: Service charges and ATM
fees decreased $286,000 compared to the prior year quarter.
This decrease was primarily due to a decrease in overdraft and
insufficient funds fees on customer accounts.
- Net gains on loan sales: Net gains on loan sales
decreased $214,000 compared to the prior year quarter. The
decrease was due to a decrease in originations of fixed-rate loans
during the 2019 period compared to the 2018 period. Fixed
rate single-family mortgage loans originated are generally
subsequently sold in the secondary market. In 2019, the
Company has originated more fixed-to-variable-rate single-family
mortgage loans, which have been retained in the Company’s
portfolio.
NON-INTEREST EXPENSE
For the quarter ended March 31, 2019, non-interest expense
increased $183,000 to $28.5 million when compared to the quarter
ended March 31, 2018, primarily as a result of the following
items:
- Salaries and employee benefits: Salaries and employee
benefits increased $1.0 million from the prior year quarter.
The increase was due to staffing additions in the new loan
production offices opened in Atlanta and Denver in late 2018, and
due to annual employee compensation increases.
- Expense on foreclosed assets: Expense on foreclosed
assets decreased $521,000 compared to the prior year period
primarily due to higher valuation write-downs of certain foreclosed
assets during the prior year period and higher levels of expense
related to consumer repossessions in the prior year period.
During the 2018 quarter, valuation write-downs of certain
foreclosed assets totaled approximately $617,000, while valuation
write-downs in the 2019 quarter totaled approximately
$247,000.
- Partnership tax credit: Partnership tax credit expense
decreased $211,000 in the quarter ended March 31, 2019 compared to
the prior year quarter. 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 2018; therefore, the final
amortization of the investment in those credits also ended in
2018.
The Company’s efficiency ratio for the quarter ended March 31,
2019, was 54.74% compared to 61.05% for the same quarter in 2018.
The improvement in the ratio in the 2019 three month period
was primarily due to an increase in net interest income. The
Company’s ratio of non-interest expense to average assets decreased
from 2.59% for the three months ended March 31, 2018, to 2.41% for
the three months ended March 31, 2019. The decrease in the
current three month period ratio was due to an increase in average
assets in the 2019 period compared to the 2018 period.
Average assets for the quarter ended March 31, 2019, increased
$354.1 million, or 8.1%, from the quarter ended March 31, 2018,
primarily due to increases in loans receivable and investment
securities.
INCOME TAXES
On December 22, 2017, H.R.1, originally known as
the Tax Cuts and Jobs Act (the “TCJ Act”), was signed into law.
Among other things, the TCJ Act permanently lowered 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 be approximately 17.0% to 18.5% in
2019 and future years, mainly as a result of the TCJ Act.
For the three months ended March 31, 2019 and
2018, the Company's effective tax rate was 18.5% and 16.4%,
respectively. These effective rates were lower than the
statutory federal tax rates of 21%, 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 March 31, 2019, total stockholders’ equity and common
stockholders’ equity were $543.6 million (11.4% of total assets),
equivalent to a book value of $38.36 per common share. Total
stockholders’ equity and common stockholders’ equity at December
31, 2018, were $532.0 million (11.4% of total assets), equivalent
to a book value of $37.59 per common share. At March 31,
2019, the Company’s tangible common equity to tangible assets ratio
was 11.2%, compared to 11.2% at December 31, 2018.
On a preliminary basis, as of March 31, 2019, the Company’s Tier
1 Leverage Ratio was 11.5%, Common Equity Tier 1 Capital Ratio was
11.3%, Tier 1 Capital Ratio was 11.8%, and Total Capital Ratio was
14.3%. On March 31, 2019, and on a preliminary basis, the
Bank’s Tier 1 Leverage Ratio was 12.1%, Common Equity Tier 1
Capital Ratio was 12.5%, Tier 1 Capital Ratio was 12.5%, and Total
Capital Ratio was 13.4%.
In January 2019, the Company declared a special cash dividend of
$0.75 per common share. Along with the regular cash dividend
declared in March 2019, the Company declared total dividends of
$1.07 per common share in the three months ended March 31,
2019.
During the three months ended March 31, 2019, the Company
repurchased 16,040 shares of its common stock at an average price
of $52.93 per share.
LOANS
Total gross loans (including the undisbursed portion of loans),
excluding FDIC-assisted acquired loans and mortgage loans held for
sale, decreased $11.4 million, or 0.2%, from December 31, 2018, to
March 31, 2019. This decrease was primarily in construction
loans ($87 million) and consumer auto loans ($24 million).
These decreases were partially offset by increases in other
residential (multi-family) loans ($80 million) and commercial real
estate loans ($17 million). The FDIC-acquired loan portfolios
had net decreases totaling $6.5 million during the three months
ended March 31, 2019. Outstanding net loan receivable
balances increased $61.3 million, from $3.99 billion at December
31, 2018 to $4.05 billion at March 31, 2019.
Loan commitments and the unfunded portion of loans at the dates
indicated were as follows (in thousands):
|
March 31, 2019 |
December 31,2018 |
December 31,2017 |
December 31,2016 |
Closed loans
with unused available lines |
|
|
|
|
Secured by real
estate (one- to four-family) |
$ |
154,400 |
$ |
150,948 |
$ |
133,587 |
$ |
123,433 |
Secured by real
estate (not one- to four-family) |
|
10,450 |
|
11,063 |
|
10,836 |
|
26,062 |
Not secured by
real estate - commercial business |
|
83,520 |
|
87,480 |
|
113,317 |
|
79,937 |
|
|
|
|
|
Closed
construction loans with unused available
lines |
|
|
|
|
Secured by real
estate (one-to four-family) |
|
33,818 |
|
37,162 |
|
20,919 |
|
10,047 |
Secured by real
estate (not one-to four-family) |
|
831,155 |
|
906,006 |
|
718,277 |
|
542,326 |
|
|
|
|
|
Loan
Commitments not closed |
|
|
|
|
Secured by real
estate (one-to four-family) |
|
36,945 |
|
24,253 |
|
23,340 |
|
15,884 |
Secured by real
estate (not one-to four-family) |
|
134,607 |
|
104,871 |
|
156,658 |
|
119,126 |
Not secured by
real estate - commercial business |
|
— |
|
405 |
|
4,870 |
|
7,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,284,895 |
$ |
1,322,188 |
$ |
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 March 31,
2019, was unchanged at $2.0 million compared with $2.0 million for
the quarter ended March 31, 2018. At March 31, 2019 and
December 31, 2018, the allowance for loan losses was $38.7 million
and $38.4 million, respectively. Total net charge-offs were
$1.7 million and $2.1 million for the quarters ended March 31, 2019
and 2018, respectively. During the quarter ended March 31,
2019, $934,000 of the $1.7 million of net charge-offs were in the
consumer auto category. In addition, one commercial loan
relationship amounted to $371,000 of the total charge-offs during
the 2019 first quarter. 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 lower 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
continued to decline in the three months ended March 31,
2019. We expect to see more rapid reductions in the
automobile loan outstanding balance as we determined in February
2019 to cease providing indirect lending services to automobile
dealerships. At March 31, 2019, indirect automobile loans
totaled approximately $184 million. We expect this total
balance will be largely paid off in the next two to four
years. 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 0.97% and 0.98% at March
31, 2019 and December 31, 2018, respectively. Management
considers the allowance for loan losses adequate to cover losses
inherent in the Bank’s loan portfolio at March 31, 2019, 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 March 31, 2019 were $10.3 million, a decrease of $1.5
million from $11.8 million at December 31, 2018.
Non-performing assets, excluding all FDIC-assisted acquired
assets, as a percentage of total assets were 0.22% at March 31,
2019, compared to 0.25% at December 31, 2018.
Compared to December 31, 2018, non-performing loans decreased
$1.7 million to $4.6 million at March 31, 2019, and foreclosed
assets increased $214,000 to $5.7 million at March 31, 2019.
Non-performing commercial business loans comprised $1.4
million, or 30.3%, of the total $4.6 million of non-performing
loans at March 31, 2019, a decrease of $32,000 from December 31,
2018. Non-performing consumer loans comprised $1.3 million,
or 27.0%, of the total non-performing loans at March 31, 2019, a
decrease of $562,000 from December 31, 2018. Non-performing
one- to four-family residential loans comprised $1.1 million, or
24.0%, of the total non-performing loans at March 31, 2019, a
decrease of $1.6 million from December 31, 2018. The decrease
in this category was primarily due to the transfer to foreclosed
assets and related charge-downs of one relationship consisting of
multiple properties previously in this category of non-performing
loans. Non-performing commercial real estate loans comprised
$847,000, or 18.2%, of the total non-performing loans at March 31,
2019, an increase of $513,000 from December 31, 2018.
Non-performing construction and land development loans comprised
$18,000, or 0.4%, of the total non-performing loans at March 31,
2019, a decrease of $31,000 from December 31, 2018.
Compared to December 31, 2018, potential problem loans increased
$1.8 million to $5.1 million at March 31, 2019. The increase
during the quarter was due to the addition of $2.0 million of loans
to potential problem loans, partially offset by $154,000 in
payments and $69,000 in loans transferred to non-performing
loans.
Activity in the non-performing loans category during the quarter
ended March 31, 2019, was as follows:
|
Beginning Balance,
January 1 |
Additions toNon-Performing |
Removedfrom Non-Performing |
Transfers to PotentialProblem
Loans |
Transfers toForeclosedAssets
andRepossessions |
Charge-Offs |
Payments |
EndingBalance, March 31 |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
One- to four-family
construction |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Subdivision
construction |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Land development |
|
49 |
|
— |
|
— |
|
— |
|
|
— |
|
|
(31 |
) |
|
— |
|
|
18 |
Commercial
construction |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
One- to four-family
residential |
|
2,664 |
|
334 |
|
— |
|
— |
|
|
(1,250 |
) |
|
(454 |
) |
|
(181 |
) |
|
1,113 |
Other residential |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Commercial real
estate |
|
334 |
|
621 |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(108 |
) |
|
847 |
Commercial business |
|
1,437 |
|
50 |
|
— |
|
— |
|
|
— |
|
|
(24 |
) |
|
(58 |
) |
|
1,405 |
Consumer |
|
1,816 |
|
604 |
|
— |
|
(84 |
) |
|
(117 |
) |
|
(705 |
) |
|
(260 |
) |
|
1,254 |
|
|
|
|
|
|
|
|
|
Total |
$ |
6,300 |
$ |
1,609 |
$ |
— |
$ |
(84 |
) |
$ |
(1,367 |
) |
$ |
(1,214 |
) |
$ |
(607 |
) |
$ |
4,637 |
At March 31, 2019, the non-performing commercial business
category included six loans, one of which was added during the
current quarter. The largest relationship in this category,
which was added during 2018, totaled $1.1 million, or 78.7% of the
total category. This relationship is collateralized by an
assignment of an interest in a real estate project. The
non-performing one- to four-family residential category included 17
loans, three of which were added during the current quarter.
One relationship in this category, which included nine loans which
were collateralized by residential rental homes in the Springfield,
Mo. area, was charged down $371,000 during the current quarter and
the remaining balance of $793,000 was transferred to foreclosed
assets. The non-performing consumer category included 129 loans, 39
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 March
31, 2019, was as follows:
|
Beginning Balance,
January 1 |
Additions toPotential Problem |
RemovedfromPotential Problem |
Transfers toNon-Performing |
Transfers toForeclosedAssets
andRepossessions |
Charge-Offs |
Payments |
EndingBalance, March 31 |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
One- to four-family
construction |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
|
$ |
— |
$ |
— |
$ |
— |
|
$ |
— |
Subdivision
construction |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
|
— |
Land development |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
|
— |
Commercial
construction |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
|
— |
One- to four-family
residential |
|
1,044 |
|
— |
|
— |
|
(67 |
) |
|
— |
|
— |
|
(128 |
) |
|
849 |
Other residential |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
|
— |
Commercial real
estate |
|
2,053 |
|
1,931 |
|
— |
|
— |
|
|
— |
|
— |
|
(12 |
) |
|
3,972 |
Commercial business |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
|
— |
Consumer |
|
206 |
|
98 |
|
— |
|
(2 |
) |
|
— |
|
— |
|
(14 |
) |
|
288 |
|
|
|
|
|
|
|
|
|
Total |
$ |
3,303 |
$ |
2,029 |
$ |
— |
$ |
(69 |
) |
$ |
— |
$ |
— |
$ |
(154 |
) |
$ |
5,109 |
|
|
|
|
|
|
|
|
|
At March 31, 2019, the commercial real estate category of
potential problem loans included three loans, one of which was
added during the current quarter. The largest relationship in
the category (added during the current quarter), which totaled $1.9
million, or 48.6% of the total category, is collateralized by a
commercial retail building. Payments became past due during
the first quarter of 2019 but were current in April 2019. The
second largest relationship in this category, which totaled $1.9
million, or 48.3% 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 16 loans,
all of which were added in prior periods. The consumer category of
potential problem loans included 29 loans, 12 of which were added
during the current quarter.
Activity in foreclosed assets and repossessions during the
quarter ended March 31, 2019, excluding $1.6 million in foreclosed
assets related to loans acquired in FDIC-assisted transactions and
$1.5 million in properties which were not acquired through
foreclosure, was as follows:
|
BeginningBalance, January
1 |
Additions |
ORE andRepossessionSales |
CapitalizedCosts |
ORE andRepossessionWrite-Downs |
EndingBalance, March
31 |
|
(In thousands) |
|
|
|
|
|
|
|
One-to four-family
construction |
$ |
— |
$ |
— |
$ |
— |
|
$ |
— |
$ |
— |
|
$ |
— |
Subdivision
construction |
|
1,092 |
|
— |
|
(68 |
) |
|
— |
|
(53 |
) |
|
971 |
Land development |
|
3,191 |
|
— |
|
— |
|
|
— |
|
(150 |
) |
|
3,041 |
Commercial
construction |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
One- to four-family
residential |
|
269 |
|
1,286 |
|
(570 |
) |
|
— |
|
— |
|
|
985 |
Other residential |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
Commercial real
estate |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
Commercial business |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
Consumer |
|
928 |
|
1,181 |
|
(1,412 |
) |
|
— |
|
— |
|
|
697 |
|
|
|
|
|
|
|
Total |
$ |
5,480 |
$ |
2,467 |
$ |
(2,050 |
) |
$ |
— |
$ |
(203 |
) |
$ |
5,694 |
At March 31, 2019, 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 30.0% of
the total category. Of the total dollar amount in the land
development category of foreclosed assets, 65.1% was located in the
Branson, Mo. area, including the largest property previously
mentioned. The subdivision construction category of
foreclosed assets included six properties, the largest of which was
located in the Branson, Mo. area and had a balance of $350,000, or
36.0% of the total category. Of the total dollar amount in
the subdivision construction category of foreclosed assets, 65.1%
is located in Branson, Mo., including the largest property
previously mentioned. The one- to four-family category of
foreclosed assets included 14 properties. Thirteen properties were
added in the current quarter, with 10 of those being related to
each other and remaining at March 31, 2019. The largest
relationship in this category, this newly added relationship,
consisted of 10 properties in the Springfield, Mo., area and had a
balance of $675,000, or 65.8% of the total category. 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 and to date in 2019.
BUSINESS INITIATIVES
During the first quarter of 2019, the Company upgraded its
online account opening platform to provide a faster and easier
customer experience. The online platform, available on
GreatSouthernBank.com, allows customers within and beyond the
Company’s geographic footprint to conveniently open certain
depository accounts.
As part of the Company’s ongoing performance evaluation, the
Company determined that it would cease operating its indirect
automobile financing unit, effective March 31, 2019. Market forces,
including strong rate competition for well-qualified borrowers,
made indirect lending through automobile dealerships a significant
challenge to efficient and profitable operations over the long
term. Indirect loan balances have significantly declined in the
last two years since tightened underwriting guidelines were
implemented in the latter part of 2016, in response to more
challenging consumer credit conditions. The Company will continue
servicing indirect automobile loans made before March 31, 2019,
until each loan agreement is satisfied. The Company continues to
offer direct consumer loans as normal through its extensive banking
center network.
The Company’s retail banking center network continues to evolve.
In April 2019, the Company consolidated its Fayetteville, Ark.,
location into its Rogers, Ark., banking center, approximately 20
miles away. The Fayetteville office opened in 2014 and did not meet
performance expectations. The Company now operates one banking
center in Arkansas.
The Company will host a conference call on Thursday, April 18,
2019, at 2:00 p.m. Central Time (3:00 p.m. Eastern Time) to discuss
first quarter 2019 preliminary earnings. Individuals interested in
listening to the conference call may dial 1.833.832.5121 and enter
the passcode 9985317. The call will be available live or in a
recorded version at the Company’s Investor Relations website,
http://investors.greatsouthernbank.com.
Great Southern Bancorp, Inc. will hold its 30th Annual Meeting
of Shareholders at 10:00 a.m. CDT on Wednesday, May 8, 2019, at the
Great Southern Operations Center, 218 S. Glenstone, Springfield,
Mo. Holders of Great Southern Bancorp, Inc. common stock at
the close of business on the record date, February 28, 2019, can
vote at the annual meeting, either in person or by proxy.
Headquartered in Springfield, Mo., Great Southern offers a broad
range of banking services to customers. The Company operates 98
retail banking centers in Missouri, Iowa, Kansas, Minnesota,
Arkansas and Nebraska and commercial lending offices in Atlanta,
Chicago, Dallas, Denver, Omaha, Neb., and Tulsa, Okla. The common
stock of Great Southern Bancorp, Inc. is listed on the Nasdaq
Global Select Market under the symbol "GSBC."
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 certain selected consolidated
financial information of the Company at the dates and for the
periods indicated. Financial data at all the 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 ended March 31,
2019 and 2018, and the three months ended December 31, 2018, are
not necessarily indicative of the results of operations which may
be expected for any future period.
|
March 31,2019 |
December 31,2018 |
Selected Financial Condition Data: |
(In thousands) |
|
|
|
Total
assets |
$ |
4,778,220 |
$ |
4,676,200 |
Loans
receivable, gross |
|
4,095,835 |
|
4,034,810 |
Allowance
for loan losses |
|
38,651 |
|
38,409 |
Other real
estate owned, net |
|
8,772 |
|
8,440 |
Available-for-sale securities, at fair value |
|
277,750 |
|
243,968 |
Deposits |
|
3,956,091 |
|
3,725,007 |
Total
borrowings |
|
240,562 |
|
397,594 |
Total common
stockholders’ equity |
|
543,635 |
|
531,977 |
Non-performing assets (excluding FDIC-assistedtransaction
assets) |
|
10,331 |
|
11,780 |
|
Three Months Ended |
Three Months Ended |
|
March 31, |
December 31, |
|
|
2019 |
|
2018 |
|
2018 |
Selected Operating Data: |
(In thousands) |
|
|
|
|
Interest
income |
$ |
57,358 |
$ |
46,882 |
$ |
56,142 |
Interest
expense |
|
12,753 |
|
7,444 |
|
11,585 |
Net
interest income |
|
44,605 |
|
39,438 |
|
44,557 |
Provision
for loan losses |
|
1,950 |
|
1,950 |
|
1,950 |
Non-interest income |
|
7,450 |
|
6,935 |
|
7,220 |
Non-interest expense |
|
28,495 |
|
28,312 |
|
28,774 |
Provision
for income taxes |
|
3,998 |
|
2,645 |
|
3,765 |
Net
income and net income available to common shareholders |
$ |
17,612 |
$ |
13,466 |
$ |
17,288 |
|
|
|
|
|
At or For theThree Months Ended |
At or For theThree Months Ended |
|
March 31, |
December 31, |
|
|
2019 |
|
|
2018 |
|
|
2018 |
|
Per Common Share: |
|
|
|
|
|
Net
income (fully diluted) |
$ |
1.23 |
|
$ |
0.95 |
|
$ |
1.21 |
|
Book
value |
$ |
38.36 |
|
$ |
34.02 |
|
$ |
37.59 |
|
|
|
|
|
Earnings Performance Ratios: |
|
|
|
Annualized return on average assets |
|
1.49 |
% |
|
1.23 |
% |
|
1.50 |
% |
Annualized return on average common stockholders’ equity |
|
13.12 |
% |
|
11.22 |
% |
|
13.34 |
% |
Net
interest margin |
|
4.06 |
% |
|
3.93 |
% |
|
4.07 |
% |
Average
interest rate spread |
|
3.75 |
% |
|
3.74 |
% |
|
3.79 |
% |
Efficiency ratio |
|
54.74 |
% |
|
61.05 |
% |
|
55.57 |
% |
Non-interest expense to average total assets |
|
2.41 |
% |
|
2.59 |
% |
|
2.49 |
% |
|
Asset Quality Ratios: |
Allowance
for loan losses to period-end loans (excluding FDIC-acquired
loans) |
|
0.97 |
% |
|
1.02 |
% |
|
0.98 |
% |
Non-performing assets to period-end assets |
|
0.22 |
% |
|
0.62 |
% |
|
0.25 |
% |
Non-performing loans to period-end loans |
|
0.11 |
% |
|
0.25 |
% |
|
0.16 |
% |
Annualized net charge-offs to average loans |
|
0.17 |
% |
|
0.23 |
% |
|
0.10 |
% |
Great Southern Bancorp, Inc. and
SubsidiariesConsolidated Statements of Financial
Condition(In thousands, except number of
shares)
|
March 31,2019 |
December 31, 2018 |
|
Assets |
|
|
|
Cash |
$ |
95,347 |
$ |
110,108 |
|
Interest-bearing deposits in other financial institutions |
|
110,743 |
|
92,634 |
|
Cash and
cash equivalents |
|
206,090 |
|
202,742 |
|
|
|
|
|
Available-for-sale securities |
|
277,750 |
|
243,968 |
|
Mortgage
loans held for sale |
|
1,892 |
|
1,650 |
|
Loans
receivable (1), net of allowance for loan losses of $38,651 –
March 2019; $38,409 – December 2018 |
|
4,050,336 |
|
3,989,001 |
|
Interest
receivable |
|
14,550 |
|
13,448 |
|
Prepaid
expenses and other assets |
|
59,383 |
|
55,336 |
|
Other
real estate owned and repossessions (2), net |
|
8,772 |
|
8,440 |
|
Premises
and equipment, net |
|
141,754 |
|
132,424 |
|
Goodwill
and other intangible assets |
|
8,963 |
|
9,288 |
|
Federal
Home Loan Bank stock |
|
5,633 |
|
12,438 |
|
Current
and deferred income taxes |
|
3,097 |
|
7,465 |
|
|
|
|
|
Total
Assets |
$ |
4,778,220 |
$ |
4,676,200 |
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
Liabilities |
|
|
|
Deposits |
$ |
3,956,091 |
$ |
3,725,007 |
|
Federal
Home Loan Bank advances |
|
— |
|
— |
|
Securities sold under reverse repurchase agreements with
customers |
|
118,618 |
|
105,253 |
|
Short-term borrowings |
|
22,219 |
|
192,725 |
|
Subordinated debentures issued to capital trust |
|
25,774 |
|
25,774 |
|
Subordinated notes |
|
73,951 |
|
73,842 |
|
Accrued
interest payable |
|
2,933 |
|
3,570 |
|
Advances
from borrowers for taxes and insurance |
|
7,864 |
|
5,092 |
|
Accounts
payable and accrued expenses |
|
27,135 |
|
12,960 |
|
Total
Liabilities |
|
4,234,585 |
|
4,144,223 |
|
|
|
|
|
Stockholders’ Equity |
|
|
|
Capital
stock |
|
|
|
Preferred
stock, $.01 par value; authorized 1,000,000 shares; issued and
outstanding March 2019 and December 2018 – -0- shares |
|
— |
|
— |
|
Common
stock, $.01 par value; authorized 20,000,000 shares; issued and
outstanding March 2019 – 14,170,758 shares; December 2018 –
14,151,198 shares |
|
142 |
|
142 |
|
Additional paid-in capital |
|
30,916 |
|
30,121 |
|
Retained
earnings |
|
494,181 |
|
492,087 |
|
Accumulated other comprehensive gain |
|
18,396 |
|
9,627 |
|
Total
Stockholders’ Equity |
|
543,635 |
|
531,977 |
|
|
|
|
|
Total
Liabilities and Stockholders’ Equity |
$ |
4,778,220 |
$ |
4,676,200 |
|
- At March 31, 2019 and December 31, 2018, includes loans, net of
discounts, totaling $161.1 million and $167.6 million,
respectively, which were acquired in FDIC-assisted transactions and
are accounted for under ASC 310-30.
- At March 31, 2019 and December 31, 2018, includes foreclosed
assets, net of discounts, totaling $1.6 million and $1.4 million,
respectively, which were acquired in FDIC-assisted
transactions. In addition, at March 31, 2019 and December 31,
2018, includes $1.5 million and $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 |
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
|
2019 |
|
|
2018 |
|
|
2018 |
|
Interest Income |
|
|
|
|
Loans |
$ |
54,556 |
|
$ |
45,165 |
|
$ |
53,780 |
|
Investment securities and other |
|
2,802 |
|
|
1,717 |
|
|
2,362 |
|
|
|
57,358 |
|
|
46,882 |
|
|
56,142 |
|
Interest Expense |
|
|
|
|
Deposits |
|
10,470 |
|
|
5,584 |
|
|
8,900 |
|
Federal Home Loan Bank advances |
|
— |
|
|
605 |
|
|
1,021 |
|
Short-term borrowings and repurchase agreements |
|
922 |
|
|
28 |
|
|
380 |
|
Subordinated debentures issued to capital trust |
|
267 |
|
|
202 |
|
|
260 |
|
Subordinated notes |
|
1,094 |
|
|
1,025 |
|
|
1,024 |
|
|
|
12,753 |
|
|
7,444 |
|
|
11,585 |
|
|
|
|
|
|
Net
Interest Income |
|
44,605 |
|
|
39,438 |
|
|
44,557 |
|
Provision for Loan Losses |
|
1,950 |
|
|
1,950 |
|
|
1,950 |
|
Net
Interest Income After Provision for Loan
Losses |
|
42,655 |
|
|
37,488 |
|
|
42,607 |
|
|
|
|
|
|
Noninterest Income |
|
|
|
|
Commissions |
|
334 |
|
|
248 |
|
|
269 |
|
Service charges and ATM fees |
|
4,958 |
|
|
5,244 |
|
|
5,505 |
|
Net gains on loan sales |
|
248 |
|
|
462 |
|
|
350 |
|
Net realized gains on sales of available-for-sale
securities |
|
10 |
|
|
— |
|
|
— |
|
Late charges and fees on loans |
|
346 |
|
|
389 |
|
|
382 |
|
Gain (loss) on derivative interest rate products |
|
(25 |
) |
|
37 |
|
|
(28 |
) |
Other income |
|
1,579 |
|
|
555 |
|
|
742 |
|
|
|
7,450 |
|
|
6,935 |
|
|
7,220 |
|
|
|
|
|
|
Noninterest Expense |
|
|
|
|
Salaries and employee benefits |
|
15,640 |
|
|
14,623 |
|
|
15,484 |
|
Net occupancy expense |
|
6,401 |
|
|
6,384 |
|
|
6,394 |
|
Postage |
|
767 |
|
|
866 |
|
|
804 |
|
Insurance |
|
666 |
|
|
670 |
|
|
672 |
|
Advertising |
|
527 |
|
|
671 |
|
|
568 |
|
Office supplies and printing |
|
259 |
|
|
233 |
|
|
258 |
|
Telephone |
|
903 |
|
|
719 |
|
|
934 |
|
Legal, audit and other professional fees |
|
712 |
|
|
809 |
|
|
1,050 |
|
Expense on other real estate and repossessions |
|
620 |
|
|
1,141 |
|
|
543 |
|
Partnership tax credit investment amortization |
|
91 |
|
|
302 |
|
|
91 |
|
Acquired deposit intangible asset amortization |
|
325 |
|
|
412 |
|
|
325 |
|
Other operating expenses |
|
1,584 |
|
|
1,482 |
|
|
1,651 |
|
|
|
28,495 |
|
|
28,312 |
|
|
28,774 |
|
|
|
|
|
|
Income Before Income Taxes |
|
21,610 |
|
|
16,111 |
|
|
21,053 |
|
Provision for Income Taxes |
|
3,998 |
|
|
2,645 |
|
|
3,765 |
|
|
|
|
|
|
Net
Income and Net Income Available to Common
Shareholders |
$ |
17,612 |
|
$ |
13,466 |
|
$ |
17,288 |
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Common Share |
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.24 |
|
$ |
0.95 |
|
$ |
1.22 |
|
Diluted |
$ |
1.23 |
|
$ |
0.95 |
|
$ |
1.21 |
|
|
|
|
|
|
|
|
|
|
|
Dividends Declared Per Common Share |
$ |
1.07 |
|
$ |
0.28 |
|
$ |
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 $0.8 million for the three months ended March 31, 2019
and 2018, respectively. Tax-exempt income was not calculated
on a tax equivalent basis. The table does not reflect any effect of
income taxes.
|
March 31, 2019(1) |
Three Months Ended March 31, 2019 |
|
Three Months Ended March 31,
2018 |
|
|
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 |
4.26 |
% |
$ |
497,129 |
|
$ |
6,388 |
|
5.21 |
% |
|
$ |
431,121 |
|
$ |
5,183 |
|
4.88 |
% |
Other
residential |
5.15 |
|
|
811,084 |
|
|
10,990 |
|
5.50 |
|
|
|
738,722 |
|
|
8,839 |
|
4.85 |
|
Commercial real
estate |
4.97 |
|
|
1,387,423 |
|
|
17,696 |
|
5.17 |
|
|
|
1,245,462 |
|
|
14,358 |
|
4.68 |
|
Construction |
5.49 |
|
|
667,625 |
|
|
10,173 |
|
6.18 |
|
|
|
518,976 |
|
|
6,488 |
|
5.07 |
|
Commercial
business |
5.26 |
|
|
264,179 |
|
|
3,392 |
|
5.21 |
|
|
|
284,736 |
|
|
3,343 |
|
4.76 |
|
Other loans |
5.99 |
|
|
436,979 |
|
|
5,704 |
|
5.29 |
|
|
|
541,449 |
|
|
6,597 |
|
4.94 |
|
Industrial
revenue bonds |
4.92 |
|
|
15,205 |
|
|
213 |
|
5.68 |
|
|
|
23,715 |
|
|
|
|
357 |
|
6.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
receivable |
5.23 |
|
|
4,079,624 |
|
|
54,556 |
|
5.42 |
|
|
|
3,784,181 |
|
|
45,165 |
|
4.84 |
|
|
|
|
|
|
|
|
|
|
Investment
securities |
3.41 |
|
|
278,536 |
|
|
2,251 |
|
3.28 |
|
|
|
187,007 |
|
|
1,309 |
|
2.84 |
|
Other interest-earning
assets |
2.49 |
|
|
94,374 |
|
|
551 |
|
2.37 |
|
|
|
99,080 |
|
|
408 |
|
1.67 |
|
|
|
|
|
|
|
|
|
|
Total
interest-earning assets |
5.04 |
|
|
4,452,534 |
|
|
57,358 |
|
5.22 |
|
|
|
4,070,268 |
|
|
46,882 |
|
4.67 |
|
Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
90,804 |
|
|
|
|
|
102,368 |
|
|
|
Other
non-earning assets |
|
|
180,876 |
|
|
|
|
|
197,441 |
|
|
|
Total
assets |
|
$ |
4,724,214 |
|
|
|
|
$ |
4,370,077 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
Interest-bearing
demand and |
|
|
|
|
|
|
|
|
savings |
0.50 |
|
$ |
1,472,959 |
|
|
1,763 |
|
0.49 |
|
|
$ |
1,564,610 |
|
|
1,310 |
|
0.34 |
|
Time
deposits |
2.18 |
|
|
1,672,677 |
|
|
8,707 |
|
2.11 |
|
|
|
1,331,474 |
|
|
4,274 |
|
1.30 |
|
Total
deposits |
1.40 |
|
|
3,145,636 |
|
|
10,470 |
|
1.35 |
|
|
|
2,896,084 |
|
|
5,584 |
|
0.78 |
|
Short-term
borrowings and repurchase agreements |
0.37 |
|
|
258,183 |
|
|
922 |
|
1.45 |
|
|
|
99,489 |
|
|
28 |
|
0.11 |
|
Subordinated
debentures issued to capital trust |
4.34 |
|
|
25,774 |
|
|
267 |
|
4.20 |
|
|
|
25,774 |
|
|
202 |
|
3.18 |
|
Subordinated
notes |
5.92 |
|
|
73,900 |
|
|
1,094 |
|
6.00 |
|
|
|
73,713 |
|
|
1,025 |
|
5.64 |
|
FHLB
advances |
— |
|
|
— |
|
|
— |
|
— |
|
|
|
145,517 |
|
|
605 |
|
1.69 |
|
|
|
|
|
|
|
|
|
|
Total
interest-bearing liabilities |
1.47 |
|
|
3,503,493 |
|
|
12,753 |
|
1.47 |
|
|
|
3,240,577 |
|
|
7,444 |
|
0.93 |
|
Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
Demand
deposits |
|
|
658,409 |
|
|
|
|
|
630,530 |
|
|
|
Other
liabilities |
|
|
25,467 |
|
|
|
|
|
18,820 |
|
|
|
Total
liabilities |
|
|
4,187,369 |
|
|
|
|
|
3,889,927 |
|
|
|
Stockholders’
equity |
|
|
536,845 |
|
|
|
|
|
480,150 |
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
4,724,214 |
|
|
|
|
$ |
4,370,077 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income: |
|
|
|
|
|
|
|
|
Interest rate
spread |
3.57 |
% |
|
$ |
44,605 |
|
3.75 |
% |
|
|
$ |
39,438 |
|
3.74 |
% |
Net interest
margin* |
|
|
|
|
4.06 |
% |
|
|
|
|
3.93 |
% |
Average
interest-earning assets to average interest-bearing
liabilities |
|
|
127.1 |
% |
|
|
|
|
125.6 |
% |
|
|
______________*Defined as the Company’s net interest income
divided by average total interest-earning assets.(1)
The yield on loans at March 31, 2019, 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 March 31, 2019.
NON-GAAP FINANCIAL MEASURES
This document contains certain financial information determined
by methods other than in accordance with accounting principles
generally accepted in the United States (“GAAP”). These non-GAAP
financial measures include core net interest income, core net
interest margin and the tangible common equity to tangible assets
ratio.
We calculate core net interest income and core net interest
margin by subtracting the impact of adjustments regarding changes
in expected cash flows related to pools of loans we acquired
through FDIC-assisted transactions from reported net interest
income and net interest margin. Management believes that core net
interest income and core net interest margin are useful in
assessing the Company’s core performance and trends, in light of
the fluctuations that can occur related to updated estimates of the
fair value of the loan pools acquired in the 2009, 2011, 2012 and
2014 FDIC-assisted transactions.
In calculating the ratio of tangible common equity to tangible
assets, we subtract period-end intangible assets from common equity
and from total assets. Management believes that the
presentation of this measure excluding the impact of intangible
assets provides useful supplemental information that is helpful in
understanding our financial condition and results of operations, as
it provides a method to assess management’s success in utilizing
our tangible capital as well as our capital strength.
Management also believes that providing a measure that excludes
balances of intangible assets, which are subjective components of
valuation, facilitates the comparison of our performance with the
performance of our peers. In addition, management believes
that this is a standard financial measure used in the banking
industry to evaluate performance.
These non-GAAP financial measures are supplemental and are not a
substitute for any analysis based on GAAP financial measures.
Because not all companies use the same calculation of non-GAAP
measures, this presentation may not be comparable to other
similarly titled measures as calculated by other companies.
Non-GAAP Reconciliation: Core Net Interest Income
and Core Net Interest Margin
|
Three Months Ended |
|
March 31, |
|
|
2019 |
|
|
2018 |
|
|
(Dollars in thousands) |
Reported net interest
income/ margin |
$ |
44,605 |
|
4.06 |
% |
$ |
39,438 |
|
3.93 |
% |
Less: Impact of loss share adjustments |
|
1,512 |
|
0.13 |
|
|
1,157 |
|
0.12 |
|
Core net
interest income/ margin |
$ |
43,093 |
|
3.93 |
% |
$ |
38,281 |
|
3.81 |
% |
|
|
|
|
|
Non-GAAP Reconciliation: Ratio of Tangible Common
Equity to Tangible
Assets
|
March 31, |
December 31, |
|
|
2019 |
|
|
2018 |
|
|
(Dollars in thousands) |
Common
equity at period end |
$ |
543,635 |
|
$ |
531,977 |
|
Less: Intangible assets at period end |
|
8,963 |
|
|
9,288 |
|
Tangible
common equity at period end (a) |
$ |
534,672 |
|
$ |
522,689 |
|
|
|
|
Total
assets at period end |
$ |
4,778,220 |
|
$ |
4,676,200 |
|
Less: Intangible assets at period end |
|
8,963 |
|
|
9,288 |
|
Tangible
assets at period end (b) |
$ |
4,769,257 |
|
$ |
4,666,912 |
|
|
|
|
Tangible
common equity to tangible assets (a) / (b) |
|
11.21 |
% |
|
11.20 |
% |
|
CONTACT: Kelly Polonus, Great Southern, (417) 895-5242
kpolonus@greatsouthernbank.com
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