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, 2020, were $1.28 per diluted
common share ($17.8 million available to common shareholders)
compared to $1.24 per diluted common share ($17.9 million available
to common shareholders) for the three months ended December 31,
2019.
Preliminary earnings for the year ended December 31, 2020, were
$4.21 per diluted common share ($59.3 million available to common
shareholders) compared to $5.14 per diluted common share ($73.6
million available to common shareholders) for the year ended
December 31, 2019.
For the quarter ended December 31, 2020, annualized return on
average common equity was 11.27%, annualized return on average
assets was 1.31%, and annualized net interest margin was 3.41%,
compared to 11.78%, 1.44% and 3.82%, respectively, for the quarter
ended December 31, 2019. For the year ended December 31, 2020,
return on average common equity was 9.53%, return on average assets
was 1.11%, and net interest margin was 3.49%, compared to 12.88%,
1.52% and 3.95%, respectively, for the year ended December 31,
2019.
Great Southern President and CEO Joseph W. Turner commented, “We
ended a challenging year with strong operating results in the
fourth quarter. Our performance underscores our associates’
dedication and tireless effort in taking care of our customers
during this unprecedented time. As we continue to navigate through
the pandemic, our focus remains on the well-being of our
associates, customers and communities, and to respond to needs as
they may arise. With the recent passage of the Economic Aid Act, we
are pleased to participate in the reopening of the Small Business
Administration’s PPP lending program that provides emergency
financial support through federally guaranteed loans for eligible
small business customers.
“For the fourth quarter of 2020, the Company earned $17.8
million ($1.28 per diluted common share), compared to $17.9 million
($1.24 per diluted common share) for the same period in 2019. The
earnings per share increase reflects the Company’s common stock
repurchase activities during 2020, with approximately 530,000
shares repurchased at an average price of $41.71. For the year, net
interest income decreased $3.3 million in 2020 compared to 2019.
However, for the year, non-interest income increased $4.1 million
in 2020 compared to 2019, resulting in an increase in total revenue
during a very challenging year. Net income for 2020 decreased
compared to 2019, mainly due to increased loan loss provisions and
higher non-interest expenses.
“The net interest margin for the fourth quarter of 2020 was
3.41%, an improvement of five basis points from the third quarter
of 2020. The margin increase was primarily a result of reduced
rates on deposits. The core net interest margin (which excludes
additional yield accretion on acquired loan pools) also increased
during the fourth quarter of 2020 compared to the third quarter of
2020, showing an improvement of seven basis points.”
Turner continued, “From the end of 2019, outstanding loan
balances increased by approximately $143 million, including about
$96 million in PPP loans. As expected, we experienced pay-offs and
slower production during the fourth quarter of 2020, with
outstanding loan balances decreasing by $117 million. Our pipeline
of loan commitments and unfunded portions of loans continues to be
relatively steady, and was up by about $74 million from the end of
the third quarter of 2020.
“Through the end of 2020, credit quality metrics remained very
strong. At December 31, 2020, non-performing assets were $3.8
million, a decrease of $1.7 million from September 30, 2020. Total
net charge-offs were $422,000 for the full year of 2020.
Pandemic-related loan modifications totaled $251 million at the end
of the year, down from over $1 billion at the end of the second
quarter. We are mindful of the uncertain economic conditions as we
move forward, and we continue to strengthen the allowance for loan
losses, which has increased by more than $15 million since the end
of 2019.
“Capital remained very strong at December 31, 2020, with total
stockholders’ equity growing from $603 million at the end of 2019
to $630 million at the end of 2020. Book value per share increased
from $42.29 to $45.79 during the same time period. During the
fourth quarter of 2020, we repurchased nearly 140,000 shares of our
common stock at an average price of $44.62 per share and declared a
regular quarterly cash dividend of $0.34 per share.”
COVID-19 Impact to Our Business and
Response
Great Southern is actively monitoring and responding to the
effects of the rapidly-changing COVID-19 pandemic. As always, the
health, safety and well-being of our customers, associates and
communities are the Company’s top priorities. Centers for Disease
Control and Prevention (CDC) guidelines, as well as directives from
federal, state and local officials, are being closely followed to
make informed operational decisions.
During this unprecedented time, the Company is working
diligently with its nearly 1,200 associates to enforce CDC-advised
health, hygiene and social distancing practices. A significant
number of non-frontline associates continue to work from home.
Teams in nearly every operational department have been split, with
part of each team working at an off-site disaster recovery facility
to promote social distancing and to avoid service disruptions. To
date, there have been no service disruptions or reductions in
staffing. As a token of appreciation for our employees’ dedication,
and to help support some of the needs of our associates, in March
2020 and again in August 2020, the Company rewarded all full-time
and part-time associates with special pre-tax bonuses of $1,000 and
$600, respectively. These two bonus payments and related benefit
expenses totaled $2.2 million during 2020 and were included in
Salaries and Employee Benefits in our financial statements.
Taking care of customers and providing uninterrupted access to
services are essential. As always, customers can conduct their
banking business using the banking center network, online and
mobile banking services, ATMs, Telephone Banking, and online
account opening services. As health conditions in local markets
dictate, Great Southern banking center lobbies may be open
following strict social distancing guidance from the CDC and local
government officials. At this time, all of our banking center
lobbies are closed but drive-thru service and in-person service by
appointment are available.
The Company continues its participation in the PPP, which
provides emergency financial support to small businesses by
offering federally guaranteed loans through the SBA. The first
round of the PPP ran from March to August 2020, with Great Southern
originating approximately 1,600 PPP loans totaling approximately
$120 million. During the fourth quarter of 2020, the Company began
assisting first-round PPP borrowers with the SBA loan forgiveness
process, contingent on each borrower’s eligibility.
On December 27, 2020, the Economic Aid Act authorized the
reopening of the PPP for eligible first-draw and second-draw
borrowers through March 31, 2021. The window opened on January 19,
2021, to begin taking PPP applications. First draw PPP loans are
for those borrowers who did not receive a PPP loan before August 8,
2020. Second draw PPP loans are for eligible small businesses, with
300 employees or less, that previously received a first draw PPP
loan and will use or have used the full amount only for authorized
uses, and that can demonstrate at least a 25% reduction in gross
receipts between comparable quarters in 2019 and 2020. The maximum
amount of a second draw PPP loan is $2 million.
As a resource to customers, a COVID-19 information center has
been made available on the Company’s website,
www.GreatSouthernBank.com. General information about the Company’s
pandemic response, how to receive assistance, and how to avoid
COVID-19 scams and fraud are included.
Impacts to Our Business Going Forward: The magnitude of the
impact on the Company of the COVID-19 pandemic is not yet fully
known, and will depend on the length and severity of the economic
downturn brought on by the pandemic. The Company expects that the
COVID-19 pandemic will continue to impact our business in one or
more of the following ways, among others. Each of these factors
could, individually or collectively, result in reduced net income
in future periods.
- Consistently low market interest rates for a significant period
of time may have a negative impact on our variable rate loans
indexed to LIBOR and prime
- Certain fees for deposit and loan products may be waived or
reduced
- Point-of-sale fee income may decline due to a decrease in
spending by our debit card customers as they deal with state and
local government requirements and other restrictions and may be
adversely affected by reductions in their personal income and job
losses
- Non-interest expenses may increase as we continue to deal with
the effects of the COVID-19 pandemic, including cleaning costs,
supplies, equipment and other items
- Banking center lobbies are currently closed, and will likely
remain closed until the pandemic situation improves
- Additional loan modifications may occur and borrowers may
default on their loans, which may necessitate further increases to
the allowance for credit losses
- The contraction in economic activity may reduce demand for our
loans and for our other products and services
Loan Modifications
At December 31, 2020, we had remaining 65 modified commercial
loans with an aggregate principal balance outstanding of $233
million and 581 modified consumer and mortgage loans with an
aggregate principal balance outstanding of $18 million. The loan
modifications are within the guidance provided by the Coronavirus
Aid, Relief, and Economic Security Act (CARES Act), the federal
banking regulatory agencies, the Securities and Exchange Commission
(SEC) and the Financial Accounting Standards Board (FASB);
therefore, they are not considered troubled debt restructurings. At
December 31, 2020, the modified loans were in the following
categories (dollars in millions):
|
Collateral Type |
# of LoansModified |
|
$ of LoansModified |
|
Interest Only3 Months |
|
Interest Only4-6 Months |
|
Interest Only7-12 Months |
|
Full Payment Deferral |
|
Combined Interest Only and Payment Deferral |
Weighted Average Loan to Value |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
10 |
$ |
40.1 |
$ |
3.0 |
$ |
1.1 |
$ |
29.3 |
$ |
— |
$ |
6.7 |
60 |
% |
| Multifamily |
4 |
|
24.1 |
|
7.6 |
|
10.8 |
|
5.7 |
|
— |
|
— |
69 |
% |
| Healthcare |
2 |
|
21.6 |
|
— |
|
— |
|
— |
|
— |
|
21.6 |
61 |
% |
| Hotel/Motel |
10 |
|
93.5 |
|
— |
|
8.4 |
|
24.1 |
|
— |
|
61.0 |
61 |
% |
| Office |
6 |
|
10.0 |
|
0.4 |
|
0.2 |
|
3.2 |
|
— |
|
6.2 |
49 |
% |
| Warehouse/Other |
8 |
|
9.7 |
|
— |
|
— |
|
3.3 |
|
1.1 |
|
5.3 |
72 |
% |
| Restaurants |
7 |
|
11.1 |
|
— |
|
— |
|
0.2 |
|
— |
|
10.9 |
63 |
% |
|
Commercial Business |
14 |
|
10.2 |
|
0.7 |
|
3.3 |
|
5.6 |
|
0.1 |
|
0.5 |
|
| Land |
4 |
|
12.3 |
|
11.3 |
|
— |
|
1.0 |
|
— |
|
— |
57 |
% |
| Total Commercial |
65 |
|
232.6 |
|
23.0 |
|
23.8 |
|
72.4 |
|
1.2 |
|
112.2 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential Mortgage |
59 |
|
11.5 |
|
0.2 |
|
0.2 |
|
— |
|
10.8 |
|
0.3 |
70 |
% |
| Consumer |
522 |
|
6.7 |
|
— |
|
— |
|
— |
|
6.7 |
|
— |
|
| Total Consumer |
581 |
|
18.2 |
|
0.2 |
|
0.2 |
|
— |
|
17.5 |
|
0.3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
646 |
$ |
250.8 |
$ |
23.2 |
$ |
24.0 |
$ |
72.4 |
$ |
18.7 |
$ |
112.5 |
|
During the quarter ended December 31, 2020, loans with an
aggregate principal balance outstanding of $139 million completed
the modification period and returned to their normal payment
schedule. Of the loans modified at September 30, 2020, $45.4
million in payments were received on these loans during the three
months ended December 31, 2020. An additional $38.1 million of loan
modifications were added during the three months ended December 31,
2020. A portion of the loans modified at December 31, 2020, may be
further modified, and new loans may be modified, within the
guidance provided by the CARES Act (and subsequent legislation
enacted in December 2020), the federal banking regulatory agencies,
the SEC and the FASB if a more severe or lengthier deterioration in
economic conditions occurs in future periods.
Selected Financial Data:
| (In thousands, except per
share data) |
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
| Net interest income |
$ |
44,578 |
|
$ |
44,943 |
|
$ |
177,138 |
|
$ |
180,392 |
|
| Provision for loan losses |
|
1,500 |
|
|
650 |
|
|
15,871 |
|
|
6,150 |
|
| Non-interest income |
|
9,957 |
|
|
7,694 |
|
|
35,050 |
|
|
30,957 |
|
| Non-interest expense |
|
31,076 |
|
|
29,536 |
|
|
123,225 |
|
|
115,138 |
|
| Provision for income
taxes |
|
4,172 |
|
|
4,559 |
|
|
13,779 |
|
|
16,449 |
|
| Net income and net income
available to common shareholders |
$ |
17,787 |
|
$ |
17,892 |
|
$ |
59,313 |
|
$ |
73,612 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per diluted common
share |
$ |
1.28 |
|
$ |
1.24 |
|
$ |
4.21 |
|
$ |
5.14 |
|
NET INTEREST INCOME
Net interest income for the fourth quarter of 2020 decreased
$365,000 to $44.6 million compared to $44.9 million for the fourth
quarter of 2019. Net interest margin was 3.41% in the
fourth quarter of 2020, compared to 3.82% in the same period of
2019, a decrease of 41 basis points. For the three months ended
December 31, 2020, the net interest margin increased five basis
points compared to the net interest margin of 3.36% in the three
months ended September 30, 2020. In comparing the 2020 and 2019
fourth quarter periods, the average yield on loans decreased 82
basis points while the average rate on deposits declined 77 basis
points. Most of the margin compression resulted from changes in the
asset mix, with average cash equivalents increasing $212 million
and average investment securities increasing $63 million. The
average yield on cash equivalents decreased 153 basis points
between the two periods. This change in asset mix represents about
16 basis points of the decrease, with the additional subordinated
notes issued in June 2020 representing eight basis points. In
addition, the yield accretion on FDIC-acquired loans was 12 basis
points lower during the fourth quarter of 2020 compared to the
fourth quarter of 2019. The increase in the margin from the three
months ended September 30, 2020, was primarily due to reduced rates
on deposits. The average interest rate spread was 3.20% for the
three months ended December 31, 2020, compared to 3.49% for the
three months ended December 31, 2019 and 3.12% for the three months
ended September 30, 2020.
Net interest income for the year ended December 31, 2020
decreased $3.3 million to $177.1 million compared to $180.4 million
for the year ended December 31, 2019. Net interest margin was 3.49%
for the year ended December 31, 2020, compared to 3.95% for the
year ended December 31, 2019, a decrease of 46 basis points. The
decrease in margin comparing the year ended December 31, 2020 to
the year ended December 31, 2019, was primarily due to the same
factors as discussed above for the comparison of the current year
fourth quarter margin to the prior year fourth quarter margin. The
average yield on loans decreased 71 basis points while the average
rate on deposits declined 48 basis points. Another significant
portion of the margin compression resulted from changes in the
asset mix, with average cash equivalents increasing $158 million
and average investment securities increasing $100 million. The
average yield on cash equivalents decreased 195 basis points
between the two periods. In addition, the yield accretion on
FDIC-acquired loans was five basis points lower during the year
ended December 31, 2020 compared to the year ended December 31,
2019. The average interest rate spread was 3.23% for the year ended
December 31, 2020, compared to 3.62% for the year ended December
31, 2019.
Additionally, the Company’s net interest income included
accretion of the net deferred fees related to PPP loans originated
earlier in 2020. The amount of deferred fees recognized in interest
income was $1.0 million and $2.0 million in the three months and
year ended December 31, 2020, respectively.
In October 2018, the Company entered into an interest rate swap
transaction as part of its ongoing interest rate management
strategies to hedge the risk of its floating rate loans. The
notional amount of the swap was $400 million with a contractual
termination date in October 2025. As previously disclosed by the
Company, on March 2, 2020, the Company and its swap counterparty
mutually agreed to terminate the swap, effective immediately. The
Company received a payment of $45.9 million, including accrued but
unpaid interest, from its swap counterparty as a result of this
termination. This $45.9 million, less the accrued interest portion
and net of deferred income taxes, is reflected in the Company’s
stockholders’ equity as Accumulated Other Comprehensive Income and
a portion of it is being accreted to interest income on loans
monthly through the original contractual termination date of
October 6, 2025. The Company recorded interest income related to
the swap of $2.0 million and $7.7 million, respectively, in the
three months and year ended December 31, 2020.
The Company’s net interest margin has been positively impacted
by significant additional yield accretion recognized in conjunction
with updated estimates of the fair value of the loan pools acquired
in the FDIC-assisted transactions. For each of the loan portfolios
acquired, the cash flow estimates increased during the current and
prior periods presented below, based on payment histories and
reduced credit loss expectations. This resulted in increased income
that has been spread, on a level-yield basis, over the remaining
expected lives of the loan pools (and, therefore, has decreased
over time). Because the balance of these adjustments will be
recognized generally over the remaining lives of the loan pools,
they will impact future periods as well. The remaining accretable
yield adjustment that will affect interest income is $2.0 million.
Of the remaining adjustments affecting interest income, we expect
to recognize $1.5 million of interest income during 2021.
The impact to income of adjustments on all portfolios acquired
in FDIC-assisted transactions for the reporting periods presented
is shown below:
|
|
Three Months Ended |
|
|
|
December 31, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except basis points data) |
|
Impact on net interest income/net interest margin (in basis
points) |
$ |
942 |
|
7 bps |
|
$ |
2,271 |
|
19 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
December 31, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except basis points data) |
|
Impact on net interest income/net interest margin (in basis
points) |
$ |
5,574 |
|
11 bps |
|
$ |
7,433 |
|
16 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding the impact of the additional yield accretion, net
interest margin for the three months and year ended December 31,
2020, was 3.34% and 3.38%, respectively. This was a decrease of 29
and 41 basis points, respectively, when compared to the year-ago
periods. Excluding the impact of the additional yield accretion,
net interest margin for the three months ended September 30, 2020,
was 3.27%. The December 31, 2020 three-month period also includes
the full effect of the interest expense on the subordinated notes
issued in June 2020, as does the September 30, 2020 three-month
period. The compression in our margin excluding the impact of the
additional yield accretion during the three months and year ended
December 31, 2020 compared to the same periods in 2019 is primarily
due to the same items as noted above.
For additional information on net interest income components,
see the “Average Balances, Interest Rates and Yields” tables in
this release.
NON-INTEREST INCOME
For the quarter ended December 31, 2020, non-interest income
increased $2.3 million to $10.0 million when compared to the
quarter ended December 31, 2019, primarily as a result of the
following items:
- Net gains on loan sales: Net gains on loan sales increased $1.8
million compared to the prior year quarter. The increase was due to
an increase in originations of fixed-rate loans during the 2020
period compared to the 2019 period. Fixed rate single-family
mortgage loans originated are generally subsequently sold in the
secondary market.
- Other income: Other income increased $404,000 compared to the
prior year quarter. In the 2019 period, the Company recognized a
loss of $101,000 in sales and disposals of fixed assets compared to
a $56,000 net gain on the sale and disposal of fixed assets and
ATMs in the 2020 period. In the 2020 period, the Company recognized
an additional $76,000 in income related to interest rate swaps in
the Company’s back-to-back swap program with loan customers and
swap counterparties when compared to the prior year
period. The Company also recognized an additional
$58,000 in income related to scheduled payments and exit fees of
certain tax credit partnerships when compared to the prior year
period.
For the year ended December 31, 2020, non-interest income
increased $4.1 million to $35.1 million when compared to the year
ended December 31, 2019, primarily as a result of the following
items:
- Net gains on loan sales: Net gains on loan sales increased $5.5
million compared to the prior year period. The increase was due to
an increase in originations of fixed-rate loans during the 2020
period compared to the 2019 period. As noted above, fixed rate
single-family mortgage loans originated are generally subsequently
sold in the secondary market.
- Other income: Other income increased $855,000 compared to the
prior year period. In the 2020 period, the Company recognized
approximately $734,000 of additional fee income related to
newly-originated interest rate swaps in the Company’s back-to-back
swap program with loan customers and swap counterparties when
compared to 2019. The Company also recognized approximately
$784,000 in income related to scheduled payments and exit fees of
certain tax credit partnerships during the 2020 period, compared to
$525,000 during the 2019 period. In the 2019
period, the Company recognized gains totaling $677,000 from the
sale of, or recovery of, receivables and assets that were acquired
several years prior in FDIC-assisted transactions, with no similar
sales or recoveries in the current year.
- Service charges, debit card and ATM fees: Service charges,
debit card and ATM fees decreased $2.2 million compared to the
prior year period. This decrease was primarily due to a decrease in
overdraft and insufficient funds fees on customer accounts. This
was due to both a reduction in usage by customers and a decision
near the end of the first quarter of 2020 to waive (through August
31, 2020) certain fees for customers in response to the COVID-19
pandemic. The effects of that decision were felt during the second
and third quarters of 2020. In addition, the Company recorded less
in debit card and ATM fees due to a reduction in debit card and ATM
usage between the periods. Also during the first quarter of 2020,
$200,000 in additional expenses were netted against ATM fee income
due to the conversion to a new debit card processing system.
NON-INTEREST EXPENSE
For the quarter ended December 31, 2020, non-interest expense
increased $1.6 million to $31.1 million when compared to the
quarter ended December 31, 2019, primarily as a result of the
following items:
- Salaries and employee benefits: Salaries and employee benefits
increased $782,000 from the prior year quarter. The
increase was primarily due to annual employee compensation merit
increases and increased incentives in the mortgage division, where
we have added staff and variable compensation increased due to
significant increases in new mortgage loan originations, much of
which is sold in the secondary market as noted above. Total
salaries and benefits expense in the mortgage lending area
increased $220,000 compared to the previous year period.
- Insurance: Insurance expense increased $389,000 compared to the
prior year quarter. This increase was primarily due to an increase
in FDIC deposit insurance premiums. In the 2019 period, the Bank
had a credit with the FDIC for a portion of premiums previously
paid to the deposit insurance fund. The deposit insurance fund
balance was sufficient to cause no premium to be due for the three
months ended December 31, 2019.
- Expense on other real estate owned and repossessions: Expense
on other real estate owned and repossessions increased $535,000
compared to the prior year period primarily due to higher valuation
write-downs of certain foreclosed assets, partially offset by lower
levels of expense related to consumer repossessions compared to the
prior year period. During the three months ended December 31, 2019,
valuation write-downs of certain foreclosed assets totaled
approximately $59,000, while valuation write-downs in the three
months ended December 31, 2020 totaled approximately $839,000.
For the year ended December 31, 2020, non-interest expense
increased $8.1 million to $123.2 million when compared to the year
ended December 31, 2019, primarily as a result of the following
items:
- Salaries and employee benefits: Salaries and employee benefits
increased $7.6 million in the year ended December 31, 2020 compared
to the prior year. The increase was primarily due to annual
employee compensation merit increases and increased incentives in
lending, including mortgage lending activities as noted above, and
operations areas. Total salaries and benefits expense in the
mortgage lending area increased $2.4 million compared to the
previous year. Additionally, in March 2020, the Company approved a
special cash bonus to all employees totaling $1.1 million in
response to the COVID-19 pandemic. In August 2020, the Company paid
a second special cash bonus to all employees totaling $1.1 million
in response to the pandemic.
- Net occupancy expense: Net occupancy expense increased $1.4
million in the year ended December 31, 2020 compared to the year
ended December 31, 2019. This was primarily related to increased
depreciation on new ATM/ITMs and ATM operating software upgrades
implemented during the fourth quarter of 2019. Also included in net
occupancy expense for 2020 are COVID-19-related expenses for
various items such as cleaning services, equipment, costs to set up
remote work sites and other items.
- Insurance: Insurance expense increased $390,000 in 2020
compared to the prior year. This increase was primarily due to a
decrease in FDIC deposit insurance premiums for the last six months
of 2019, as described above.
- Partnership tax credit: Partnership tax credit expense
decreased $285,000 in the year ended December 31, 2020 compared to
2019. 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 2020 and so the final amortization of the investment in those
credits also ended in 2020.
The Company’s efficiency ratio for the quarter ended December
31, 2020, was 56.98% compared to 56.11% for the same quarter in
2019. The efficiency ratio for the year ended December 31, 2020,
was 58.07% compared to 54.48% for the year ended December 31, 2019.
The higher efficiency ratios in the three months and year ended
December 31, 2020 were due to an increase in non-interest expense,
partially offset by an increase in total revenue. Despite this
increase in non-interest expense, the Company’s ratio of
non-interest expense to average assets was 2.29% and 2.31% for the
three months and year ended December 31, 2020, respectively,
compared to 2.38% and 2.37% for the three months and year ended
December 31, 2019. The decreases in the current three month and one
year period ratios were primarily due to increases in average
assets, generally offset by increases in non-interest expense.
Average assets for the three months ended December 31, 2020,
increased $480.2 million, or 9.7%, from the three months ended
December 31, 2019, primarily due to increases in loans receivable,
investment securities and interest bearing cash equivalents.
Average assets for the year ended December 31, 2020, increased
$468.4 million, or 9.6%, from the year ended December 31, 2019,
primarily due to increases in loans receivable, investment
securities and interest bearing cash equivalents.
INCOME TAXES
For the three months ended December 31, 2020 and 2019, the
Company's effective tax rate was 19.0% and 20.3%, respectively. For
the years ended December 31, 2020 and 2019, the Company's effective
tax rate was 18.9% and 18.3%, respectively. These effective rates
were lower than the statutory federal tax rate 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, 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
generally expected to remain below the statutory rate due primarily
to the factors noted above. The Company currently expects its
effective tax rate (combined federal and state) to be approximately
18.5% to 19.5% in future periods.
CAPITAL
As of December 31, 2020, total stockholders’ equity and common
stockholders’ equity were each $629.7 million (11.4% of total
assets), equivalent to a book value of $45.79 per common share.
Total stockholders’ equity and common stockholders’ equity at
December 31, 2019, were each $603.1 million (12.0% of total
assets), equivalent to a book value of $42.29 per common share. At
December 31, 2020, the Company’s tangible common equity to tangible
assets ratio was 11.3%, compared to 11.9% at December 31, 2019. The
reductions in the ratios of stockholders’ equity to total assets
and tangible common equity to tangible assets were due to higher
asset balances from increased levels of cash equivalents,
investment securities and PPP and other loans and repurchases of
the Company’s common stock. Included in stockholders’ equity at
December 31, 2020 and 2019, were unrealized gains (net of taxes) on
the Company’s available-for-sale investment securities totaling
$23.3 million and $9.0 million, respectively. This increase in
unrealized gains primarily resulted from lower market interest
rates, which increased the fair value of the investment
securities.
Also included in stockholders’ equity at December 31, 2020, were
realized gains (net of taxes) on the Company’s cash flow hedge
(interest rate swap), which was terminated in March 2020, totaling
$29.9 million. This amount, plus associated deferred taxes, is
expected to be accreted to interest income over the remaining term
of the original interest rate swap contract, which was to end in
October 2025. At December 31, 2020, the remaining pre-tax amount to
be recorded in interest income was $38.7 million. The net effect on
total stockholders’ equity over time will be no impact as the
reduction of this realized gain will be offset by an increase in
retained earnings (as the interest income flows through pre-tax
income).
On a preliminary basis, as of December 31, 2020, the Company’s
Tier 1 Leverage Ratio was 10.9%, Common Equity Tier 1 Capital Ratio
was 12.2%, Tier 1 Capital Ratio was 12.7%, and Total Capital Ratio
was 17.2%. On December 31, 2020, and on a preliminary basis, the
Bank’s Tier 1 Leverage Ratio was 11.8%, Common Equity Tier 1
Capital Ratio was 13.7%, Tier 1 Capital Ratio was 13.7%, and Total
Capital Ratio was 14.9%.
During the three months ended December 31, 2020, the Company
repurchased 139,776 shares of its common stock at an average price
of $44.62 and declared a regular quarterly cash dividend of $0.34
per common share. During the year ended December 31, 2020, the
Company repurchased 529,883 shares of its common stock at an
average price of $41.71 and declared regular quarterly cash
dividends totaling $1.36 per common share. In January 2020, the
Company also declared a special cash dividend of $1.00 per common
share.
LOANS
Total gross loans (including the undisbursed portion of loans),
excluding FDIC-assisted acquired loans and mortgage loans held for
sale, increased $202.0 million, or 4.1%, from $4.9 billion at
December 31, 2019, to $5.1 billion at December 31, 2020. This
increase was primarily in other residential (multi-family) loans
($155 million), one- to four-family residential loans ($78
million), commercial real estate loans ($60 million), and
commercial business loans ($58 million, including $95 million of
PPP loans). These increases were partially offset by decreases in
construction loans ($73 million) and consumer auto loans ($66
million). Total gross loans decreased $27.6 million from September
30, 2020. The FDIC-assisted acquired loan portfolios had net
decreases totaling $7.5 million and $28.6 million, respectively,
during the three months and year ended December 31, 2020.
Outstanding net loan receivable balances increased $142.8 million,
from $4.15 billion at December 31, 2019 to $4.30 billion at
December 31, 2020, and decreased $117.0 million from September 30,
2020.
Loan commitments and the unfunded portion of loans at the dates
indicated were as follows (in thousands):
|
|
|
December2020 |
|
September2020 |
|
June2020 |
|
March2020 |
|
December2019 |
|
December2018 |
| Closed
non-construction loans with unused available lines |
|
|
|
|
|
|
|
|
|
|
|
|
| Secured by real estate (one-
to four-family) |
$ |
164,480 |
$ |
160,409 |
$ |
158,687 |
$ |
156,381 |
$ |
155,831 |
$ |
150,948 |
| Secured by real estate (not
one- to four-family) |
|
22,273 |
|
19,295 |
|
16,124 |
|
16,832 |
|
19,512 |
|
11,063 |
| Not secured by real estate -
commercial business |
|
77,411 |
|
114,519 |
|
105,071 |
|
79,117 |
|
83,782 |
|
87,480 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Closed construction
loans with unused available lines |
|
|
|
|
|
|
|
|
|
|
|
|
| Secured by real estate (one-to
four-family) |
|
42,162 |
|
33,359 |
|
37,789 |
|
50,101 |
|
48,213 |
|
37,162 |
| Secured by real estate (not
one-to four-family) |
|
823,106 |
|
714,566 |
|
753,589 |
|
809,436 |
|
798,810 |
|
906,006 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loan commitments not
closed |
|
|
|
|
|
|
|
|
|
|
|
|
| Secured by real estate (one-to
four-family) |
|
85,917 |
|
94,203 |
|
112,769 |
|
141,432 |
|
69,295 |
|
24,253 |
| Secured by real estate (not
one-to four-family) |
|
45,860 |
|
50,264 |
|
73,103 |
|
95,652 |
|
92,434 |
|
104,871 |
| Not secured by real estate -
commercial business |
|
699 |
|
800 |
|
800 |
|
— |
|
— |
|
405 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
$ |
1,261,908 |
$ |
1,187,415 |
$ |
1,257,932 |
$ |
1,348,951 |
$ |
1,267,877 |
$ |
1,322,188 |
For further information about the Company’s loan portfolio,
please see the quarterly loan portfolio presentation available on
the Company’s Investor Relations website under “Presentations.”
PROVISION FOR LOAN LOSSES AND ALLOWANCE FOR LOAN LOSSES
In the first quarter of 2020, pursuant to the CARES Act and
guidance from the SEC and FASB, we elected to delay adoption of the
new accounting standard (CECL) related to accounting for credit
losses. Our 2020 financial statements are prepared under the
existing incurred loss methodology standard for accounting for loan
losses. Based on new legislation enacted in December 2020, and
pursuant to guidance from the SEC and FASB, we elected to adopt
CECL on January 1, 2021. The effect of the adoption of CECL will
not impact the Company’s results of operations, as the initial
adoption financial statement entries will flow through retained
earnings as a cumulative change in accounting.
Management records a provision for loan losses in an amount it
believes is sufficient to result in an allowance for loan losses
that will cover current net charge-offs as well as risks believed
to be inherent in the loan portfolio of the Bank. The amount of
provision charged against current income is based on several
factors, including, but not limited to, past loss experience,
current portfolio mix, actual and potential losses identified in
the loan portfolio, economic conditions, and internal as well as
external reviews. The levels of non-performing assets, potential
problem loans, loan loss provisions and net charge-offs fluctuate
from period to period and are difficult to predict.
Worsening economic conditions from the COVID-19 pandemic or
continued poor economic conditions for an extended period of time,
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,
2020 was $1.5 million compared with $650,000 for the quarter ended
December 31, 2019. The provision for loan losses for the year ended
December 31, 2020 was $15.9 million compared with $6.2 million for
the year ended December 31, 2019. In the quarter ended December 31,
2020, the Company experienced net recoveries of $5,000. Total net
charge-offs were $762,000 for the three months ended December 31,
2019. During the quarter ended December 31, 2020, a substantial
portion of the gross charge-offs were in the consumer category.
Total net charge-offs were $422,000 and $4.3 million for years
ended December 31, 2020 and 2019, respectively. During the year
ended December 31, 2020, a substantial portion of the $422,000 of
net charge-offs were in the consumer category. We have seen and
expect to continue to see rapid reductions in the automobile loan
outstanding balance as we determined in February 2019 to cease
providing indirect lending services to automobile dealerships. At
December 31, 2020, indirect automobile loans totaled approximately
$48 million. We expect this balance will be largely paid off in the
next year. General market conditions and unique circumstances
related to specific industries and individual projects contributed
to the level of provisions and charge-offs. In 2020, due to the
COVID-19 pandemic and its effects on the overall economy and
unemployment, the Company increased its provisions for loan losses
and increased its allowance for loan losses, even though actual
realized net charge-offs were very low. Collateral and repayment
evaluations of all assets categorized as potential problem loans,
non-performing loans or foreclosed assets were completed with
corresponding charge-offs or reserve allocations made as
appropriate.
All FDIC-acquired loans were grouped into pools based on common
characteristics and were recorded at their estimated fair values,
which incorporated estimated credit losses at the acquisition
date. These loan pools have been systematically reviewed by
the Company to determine the risk of losses that may exceed those
identified at the time of the acquisition. Techniques used in
determining risk of loss are similar to those used to determine the
risk of loss for the legacy Great Southern Bank portfolio, with
most focus being placed on those loan pools which include larger
loan relationships and those loan pools which exhibit higher risk
characteristics. Review of the acquired loan portfolio also
includes a review of financial information, collateral valuations
and customer interaction to determine if additional reserves are
warranted.
The Bank’s allowance for loan losses as a percentage of total
loans, excluding FDIC-assisted acquired loans, was 1.32%, 1.00% and
1.24% at December 31, 2020, December 31, 2019 and September 30,
2020, respectively. Management considers the allowance for loan
losses adequate to cover losses inherent in the Bank’s loan
portfolio at December 31, 2020, based on recent reviews of the
Bank’s loan portfolio and current economic conditions. If current
economic conditions were to last longer than anticipated or
deteriorate further or management’s assessment of the loan
portfolio were to change, additional loan loss provisions could be
required, thereby adversely affecting the Company’s future results
of operations and financial condition. Beginning in 2021,
management will evaluate the adequacy of its allowance for credit
losses under CECL instead of under the incurred loss accounting
standards.
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, 2020 were $3.8 million, a decrease of $4.4
million from $8.2 million at December 31, 2019, and a decrease of
$1.7 million from $5.5 million at September 30, 2020.
Non-performing assets, excluding all FDIC-assisted acquired assets,
as a percentage of total assets were 0.07% at December 31, 2020,
compared to 0.16% at December 31, 2019 and 0.10% at September,
2020.
Compared to December 31, 2019 and September 30, 2020,
non-performing loans decreased $1.5 million and $794,000,
respectively, to $3.0 million at December 31, 2020, and foreclosed
assets decreased $2.9 million and $844,000, respectively, to
$777,000 at December 31, 2020. Non-performing one- to four-family
residential loans comprised $1.6 million, or 51.6%, of the total
non-performing loans at December 31, 2020, a decrease of $589,000
from September 30, 2020. Non-performing consumer loans comprised
$771,000, or 25.3%, of the total non-performing loans at December
31, 2020, a decrease of $65,000 from September 30, 2020.
Non-performing commercial real estate loans comprised $587,000, or
19.3%, of the total non-performing loans at December 31, 2020, a
decrease of $114,000 from September 30, 2020. Non-performing
commercial business loans comprised $114,000, or 3.8%, of the total
non-performing loans at December 31, 2020, a decrease of $26,000
from September 30, 2020.
Compared to December 31, 2019 and September 30, 2020, potential
problem loans decreased $58,000 and increased $695,000,
respectively, to $4.3 million at December 31, 2020. Due to the
impact on economic conditions from COVID-19, however, it is
possible that we could experience an increase in potential problem
loans in 2021. As noted, we experienced an increased level of loan
modifications in late March through June 2020; however, total loan
modifications were much lower at September 30, 2020 and decreased
further at December 31, 2020. In accordance with guidance from the
banking regulatory agencies, we made certain short-term
modifications to loan terms to help our customers navigate through
the current pandemic situation. Although loan modifications were
made, they did not automatically result in these loans being
classified as troubled debt restructurings, potential problem loans
or non-performing loans. If more severe or lengthier negative
impacts of the COVID-19 pandemic occur or the effects of
the SBA loan programs and other loan and stimulus programs do
not enable companies and individuals to completely recover
financially, this could result in longer-term
modifications, which may be deemed to be troubled debt
restructurings, additional potential problem loans and/or
additional non-performing loans. Further actions on our part,
including additions to the allowance for loan losses, could
result.
Activity in the non-performing loans categories during the
quarter ended December 31, 2020, was as follows:
| |
|
BeginningBalance,October
1 |
|
|
Additionsto
Non-Performing |
|
|
Removedfrom
Non-Performing |
|
|
Transfersto
PotentialProblemLoans |
|
|
Transfers
toForeclosedAssets
andRepossessions |
|
|
Charge-Offs |
|
|
Payments |
|
|
EndingBalance,December
31 |
| |
|
(In thousands) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family construction |
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
| Subdivision construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
| Land development |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
| Commercial construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
| One- to four-family
residential |
|
2,160 |
|
|
121 |
|
|
(284 |
) |
|
|
(161 |
) |
|
|
(134 |
) |
|
|
(29 |
) |
|
|
(102 |
) |
|
|
1,571 |
| Other residential |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
| Commercial real estate |
|
701 |
|
|
— |
|
|
(94 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(20 |
) |
|
|
587 |
| Commercial business |
|
140 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26 |
) |
|
|
114 |
| Consumer |
|
836 |
|
|
126 |
|
|
(39 |
) |
|
|
(28 |
) |
|
|
(7 |
) |
|
|
(29 |
) |
|
|
(88 |
) |
|
|
771 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
$ |
3,837 |
|
$ |
247 |
|
$ |
(417 |
) |
|
$ |
(189 |
) |
|
$ |
(141 |
) |
|
$ |
(58 |
) |
|
$ |
(236 |
) |
|
$ |
3,043 |
At December 31, 2020, the non-performing one- to four-family
residential category included 23 loans, one of which was added
during the current quarter. The largest relationship in the
category totaled $274,000, or 17.5% of the total category. The
non-performing commercial real estate category included three
loans, none of which were added during the current quarter. The
largest relationship in the category totaled $495,000, or 84.4% of
the total category. The non-performing commercial business category
included two loans, neither of which was added during the current
quarter. The non-performing consumer category included 65 loans,
eight of which were added during the current quarter, and the
majority of which are indirect and used automobile loans.
Activity in the potential problem loans category during the
quarter ended December 31, 2020, was as follows:
| |
|
BeginningBalance,October
1 |
|
|
Additions
toPotentialProblem |
|
|
RemovedfromPotentialProblem |
|
|
Transfersto
Non-Performing |
|
|
Transfers
toForeclosedAssets
andRepossessions |
|
|
Charge-Offs |
|
|
Payments |
|
|
EndingBalance,December
31 |
| |
|
(In thousands) |
|
One- to four-family construction |
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
| Subdivision construction |
|
22 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
21 |
| Land development |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
| Commercial construction |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
| One- to four-family
residential |
|
713 |
|
|
161 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11 |
) |
|
|
863 |
| Other residential |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
| Commercial real estate |
|
2,355 |
|
|
522 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26 |
) |
|
|
2,851 |
| Commercial business |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
| Consumer |
|
538 |
|
|
171 |
|
|
(34 |
) |
|
|
(4 |
) |
|
|
(12 |
) |
|
|
(22 |
) |
|
|
(49 |
) |
|
|
588 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
$ |
3,628 |
|
$ |
854 |
|
$ |
(34 |
) |
|
$ |
(4 |
) |
|
$ |
(12 |
) |
|
$ |
(22 |
) |
|
$ |
(87 |
) |
|
$ |
4,323 |
At December 31, 2020, 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 this
category (added during 2018), which totaled $1.8 million, or 62.3%
of the total category, is collateralized by a mixed use commercial
retail building. Payments were current on this relationship at
December 31, 2020. 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 52 loans, 14 of which were added during the
current quarter, and the majority of which are indirect and used
automobile loans.
Activity in foreclosed assets and repossessions during the
quarter ended December 31, 2020, excluding $446,000 in foreclosed
assets related to loans acquired in FDIC-assisted transactions and
$654,000 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 |
|
350 |
|
|
— |
|
|
(10 |
) |
|
— |
|
|
(77 |
) |
|
263 |
|
Land development |
|
1,075 |
|
|
— |
|
|
(350 |
) |
|
— |
|
|
(475 |
) |
|
250 |
|
Commercial construction |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
One- to four-family residential |
|
— |
|
|
134 |
|
|
(23 |
) |
|
— |
|
|
— |
|
|
111 |
|
Other residential |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Commercial real estate |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Commercial business |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Consumer |
|
196 |
|
|
186 |
|
|
(229 |
) |
|
— |
|
|
— |
|
|
153 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
1,621 |
|
$ |
320 |
|
$ |
(612 |
) |
$ |
— |
|
$ |
(552 |
) |
$ |
777 |
At December 31, 2020, the land development category of
foreclosed assets included one property in the Camdenton, Mo. area
and had a balance of $250,000. One land development property in the
Branson, Mo. area incurred a valuation write-down and price
reduction and was sold during the quarter. The subdivision
construction category of foreclosed assets included one property,
located in the Branson, Mo. area, and had a balance of $263,000
after a valuation write-down. The one- to four-family residential
category of foreclosed assets included one property in western
Missouri. Two properties were added during the three months ended
December 31, 2020, one of which was also sold during the period.
The amount of additions and sales in the consumer category are due
to the 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 generally decreased in 2018 through 2020.
BUSINESS INITIATIVES
Great Southern is actively monitoring and responding to the
effects of the evolving COVID-19 pandemic. As always, the health,
safety and well-being of our customers, associates and communities
while maintaining uninterrupted service are the Company’s top
priorities. Please see the “COVID-19 Business Impact and Response”
section of this news release for further information, including the
Company’s participation in the reopening of the SBA’s PPP for small
businesses.
The Company’s banking center network continues to evolve. In the
Joplin, Missouri, market, the Company purchased a banking facility
in the fourth quarter of 2019 vacated by another financial
institution, which included a contractual black-out period ending
in April 2021. A third party vendor has been engaged by the Company
to redesign this facility as a “bank of the future” prototype to
incorporate evolving customer preferences. Variations of this
prototype design may be utilized in other select banking centers in
the Company’s footprint in the future. The Company expects the new
office in Joplin to be completed in the third quarter of 2021,
whereupon the nearby leased banking center at 1710 E. 32nd Street
will be consolidated into this new office. We have two banking
centers currently serving the Joplin market.
The Company will host a conference call on Tuesday, January 26,
2021, at 2:00 p.m. Central Time to discuss fourth quarter 2020
preliminary earnings. Individuals interested in listening to the
conference call may dial 1.833.832.5121 and enter the passcode
8688194. 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 94
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
SEC, in the Company's other press releases or other public or
stockholder communications, and in oral statements made with the
approval of an authorized executive officer, the words or phrases
“may,” “might,” “could,” “should,” "will likely result," "are
expected to," "will continue," "is anticipated," “believe,”
"estimate," "project," "intends" or similar expressions are
intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements also include, but are not limited to,
statements regarding plans, objectives, expectations or
consequences of announced transactions, known trends and statements
about future performance, operations, products and services of the
Company. The Company’s ability to predict results or the actual
effects of future plans or strategies is inherently uncertain, and
the Company’s actual results could differ materially from those
contained in the forward-looking statements. The novel coronavirus
disease, or COVID-19, pandemic is adversely affecting the Company,
its customers, counterparties, employees, and third-party service
providers, and the ultimate extent of the impacts on the Company’s
business, financial position, results of operations, liquidity, and
prospects is uncertain. Continued deterioration in general business
and economic conditions, including further increases in
unemployment rates, or turbulence in domestic or global financial
markets could adversely affect the Company’s revenues and the
values of its assets and liabilities, reduce the availability of
funding, lead to a tightening of credit, and further increase stock
price volatility. In addition, changes to statutes, regulations, or
regulatory policies or practices as a result of, or in response to,
COVID-19, could affect the Company in substantial and unpredictable
ways.
Other factors that could cause or contribute to such differences
include, but are not limited to: (i) expected revenues, cost
savings, earnings accretion, synergies and other benefits from the
Company's merger and acquisition activities might not be realized
within the anticipated time frames or at all, and costs or
difficulties relating to integration matters, including but not
limited to customer and employee retention, might be greater than
expected; (ii) changes in economic conditions, either nationally or
in the Company's market areas; (iii) fluctuations in interest
rates; (iv) the risks of lending and investing activities,
including changes in the level and direction of loan delinquencies
and write-offs and changes in estimates of the adequacy of the
allowance for loan losses; (v) the possibility of
other-than-temporary impairments of securities held in the
Company's securities portfolio; (vi) the Company's ability to
access cost-effective funding; (vii) fluctuations in real estate
values and both residential and commercial real estate market
conditions; (viii) the ability to adapt successfully to
technological changes to meet customers' needs and developments in
the marketplace; (ix) the possibility that security measures
implemented might not be sufficient to mitigate the risk of a
cyber-attack or cyber theft, and that such security measures might
not protect against systems failures or interruptions; (x)
legislative or regulatory changes that adversely affect the
Company's business, including, without limitation, the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010 and its
implementing regulations, the overdraft protection regulations and
customers' responses thereto and the Tax Cut and Jobs Act; (xi)
changes in accounting policies and practices or accounting
standards, including Accounting Standards Update 2016-13, Credit
Losses (Topic 326), “Measurement of Credit Losses on Financial
Instruments,” commonly referenced as the Current Expected Credit
Loss model, which, upon adoption, is expected to result in an
increase in the Company’s allowance for credit losses; (xii)
monetary and fiscal policies of the Federal Reserve Board and the
U.S. Government and other governmental initiatives affecting the
financial services industry; (xiii) results of examinations of the
Company and Great Southern Bank by their regulators, including the
possibility that the regulators may, among other things, require
the Company to limit its business activities, change its business
mix, increase its allowance for loan losses, write-down assets or
increase its capital levels, or affect its ability to borrow funds
or maintain or increase deposits, which could adversely affect its
liquidity and earnings; (xiv) costs and effects of litigation,
including settlements and judgments; (xv) competition; (xvi)
uncertainty regarding the future of LIBOR; and (xvii) natural
disasters, war, terrorist activities or civil unrest and their
effects on economic and business environments in which the Company
operates. The Company wishes to advise readers that the factors
listed above and other risks described from time to time in
documents filed or furnished by the Company with the SEC could
affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially
from any opinions or statements expressed with respect to future
periods in any current statements.
The Company does not undertake-and specifically declines any
obligation- to publicly release the result of any revisions which
may be made to any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.The following
tables set forth selected consolidated financial information of the
Company at the dates and for the periods indicated. Financial data
at all dates and for all periods is unaudited. In the opinion of
management, all adjustments, which consist only of normal recurring
accrual adjustments, necessary for a fair presentation of the
results at and for such unaudited dates and periods have been
included. The results of operations and other data for the three
months and years ended December 31, 2020 and 2019, and the three
months ended September 30, 2020, are not necessarily indicative of
the results of operations which may be expected for any future
period.
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
Selected Financial Condition Data: |
(In thousands) |
| |
|
|
|
|
|
| Total assets |
$ |
5,526,420 |
|
$ |
5,015,072 |
| Loans receivable, gross |
|
4,361,807 |
|
|
4,201,380 |
| Allowance for loan losses |
|
55,743 |
|
|
40,294 |
| Other real estate owned, net |
|
1,877 |
|
|
5,525 |
| Available-for-sale securities, at
fair value |
|
414,933 |
|
|
374,175 |
| Deposits |
|
4,516,903 |
|
|
3,960,106 |
| Total borrowings |
|
339,863 |
|
|
412,374 |
| Total common stockholders’
equity |
|
629,741 |
|
|
603,066 |
|
Non-performing assets (excluding FDIC-assisted transaction
assets) |
|
3,820 |
|
|
8,170 |
| |
|
Three Months Ended |
|
Year Ended |
|
|
Three MonthsEnded |
| |
|
December 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
| |
(In thousands) |
| Selected Operating
Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
$ |
52,619 |
|
$ |
58,726 |
|
$ |
217,703 |
|
$ |
234,994 |
|
$ |
53,599 |
|
Interest expense |
|
8,041 |
|
|
13,783 |
|
|
40,565 |
|
|
54,602 |
|
|
9,431 |
|
Net interest income |
|
44,578 |
|
|
44,943 |
|
|
177,138 |
|
|
180,392 |
|
|
44,168 |
|
Provision for loan losses |
|
1,500 |
|
|
650 |
|
|
15,871 |
|
|
6,150 |
|
|
4,500 |
|
Non-interest income |
|
9,957 |
|
|
7,694 |
|
|
35,050 |
|
|
30,957 |
|
|
9,466 |
|
Non-interest expense |
|
31,076 |
|
|
29,536 |
|
|
123,225 |
|
|
115,138 |
|
|
31,988 |
|
Provision for income taxes |
|
4,172 |
|
|
4,559 |
|
|
13,779 |
|
|
16,449 |
|
|
3,692 |
|
Net income and net income available to common shareholders |
$ |
17,787 |
|
$ |
17,892 |
|
$ |
59,313 |
|
$ |
73,612 |
|
$ |
13,454 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or For the ThreeMonths
Ended |
|
At or For theYear Ended |
|
At or For the Three Months Ended |
| |
December 31, |
|
December 31, |
|
September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
| |
(Dollars in thousands, except per share data) |
| Per Common
Share: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (fully diluted) |
$ |
1.28 |
|
$ |
1.24 |
|
|
$ |
4.21 |
|
$ |
5.14 |
|
|
$ |
0.96 |
|
|
Book value |
$ |
45.79 |
|
$ |
42.29 |
|
|
$ |
45.79 |
|
$ |
42.29 |
|
|
$ |
45.00 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Performance Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average assets |
|
1.31 |
% |
|
1.44 |
% |
|
|
1.11 |
% |
|
1.52 |
% |
|
|
0.98 |
% |
|
Annualized return on average common stockholders’ equity |
|
11.27 |
% |
|
11.78 |
% |
|
|
9.53 |
% |
|
12.88 |
% |
|
|
8.48 |
% |
|
Net interest margin |
|
3.41 |
% |
|
3.82 |
% |
|
|
3.49 |
% |
|
3.95 |
% |
|
|
3.36 |
% |
|
Average interest rate spread |
|
3.20 |
% |
|
3.49 |
% |
|
|
3.23 |
% |
|
3.62 |
% |
|
|
3.12 |
% |
|
Efficiency ratio |
|
56.98 |
% |
|
56.11 |
% |
|
|
58.07 |
% |
|
54.48 |
% |
|
|
59.64 |
% |
|
Non-interest expense to average total assets |
|
2.29 |
% |
|
2.38 |
% |
|
|
2.31 |
% |
|
2.37 |
% |
|
|
2.34 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset Quality
Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to period-end loans (excluding
covered/previously covered loans) |
|
1.32 |
% |
|
1.00 |
% |
|
|
1.32 |
% |
|
1.00 |
% |
|
|
1.24 |
% |
|
Non-performing assets to period-end assets |
|
0.07 |
% |
|
0.16 |
% |
|
|
0.07 |
% |
|
0.16 |
% |
|
|
0.10 |
% |
|
Non-performing loans to period-end loans |
|
0.07 |
% |
|
0.11 |
% |
|
|
0.07 |
% |
|
0.11 |
% |
|
|
0.09 |
% |
|
Annualized net charge-offs to average loans |
|
0.00 |
% |
|
0.07 |
% |
|
|
0.01 |
% |
|
0.10 |
% |
|
|
0.01 |
% |
Great Southern Bancorp, Inc. and
SubsidiariesConsolidated Statements of Financial
Condition(In thousands, except number of
shares)
|
|
|
December 31,2020 |
|
|
December 31,2019 |
|
|
September 30,2020 |
|
| |
|
(In thousands) |
|
| Assets |
|
|
|
|
|
|
|
|
|
| Cash |
$ |
92,403 |
|
$ |
99,299 |
|
$ |
91,098 |
|
| Interest-bearing deposits in
other financial institutions |
|
471,326 |
|
|
120,856 |
|
|
247,168 |
|
|
Cash and cash equivalents |
|
563,729 |
|
|
220,155 |
|
|
338,266 |
|
| |
|
|
|
|
|
|
|
|
|
| Available-for-sale
securities |
|
414,933 |
|
|
374,175 |
|
|
445,940 |
|
| Mortgage loans held for
sale |
|
17,780 |
|
|
9,242 |
|
|
23,973 |
|
| Loans receivable (1), net of
allowance for loan losses of $55,743 – December 2020; $40,294 –
December 2019; $54,238 – September 2020 |
|
4,296,804 |
|
|
4,153,982 |
|
|
4,413,764 |
|
| Interest receivable |
|
12,793 |
|
|
13,530 |
|
|
14,139 |
|
| Prepaid expenses and other
assets |
|
58,889 |
|
|
74,984 |
|
|
44,671 |
|
| Other real estate owned and
repossessions (2), net |
|
1,877 |
|
|
5,525 |
|
|
3,007 |
|
| Premises and equipment,
net |
|
139,170 |
|
|
141,908 |
|
|
140,502 |
|
| Goodwill and other intangible
assets |
|
6,944 |
|
|
8,098 |
|
|
7,232 |
|
| Federal Home Loan Bank stock
and other interest earning assets |
|
9,806 |
|
|
13,473 |
|
|
11,036 |
|
| Current and deferred income
taxes |
|
3,695 |
|
|
— |
|
|
480 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total Assets |
$ |
5,526,420 |
|
$ |
5,015,072 |
|
$ |
5,443,010 |
|
| |
|
|
|
|
|
|
|
|
|
| Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
| Deposits |
$ |
4,516,903 |
|
$ |
3,960,106 |
|
$ |
4,443,757 |
|
| Securities sold under reverse
repurchase agreements with customers |
|
164,174 |
|
|
84,167 |
|
|
155,042 |
|
| Short-term borrowings |
|
1,518 |
|
|
228,157 |
|
|
1,218 |
|
| Subordinated debentures issued
to capital trust |
|
25,774 |
|
|
25,774 |
|
|
25,774 |
|
| Subordinated notes |
|
148,397 |
|
|
74,276 |
|
|
148,217 |
|
| Accrued interest payable |
|
2,594 |
|
|
4,250 |
|
|
2,859 |
|
| Advances from borrowers for
taxes and insurance |
|
7,536 |
|
|
7,484 |
|
|
11,841 |
|
| Accounts payable and accrued
expenses |
|
29,783 |
|
|
24,904 |
|
|
29,659 |
|
| Current and deferred income
taxes |
|
— |
|
|
2,888 |
|
|
— |
|
|
Total Liabilities |
|
4,896,679 |
|
|
4,412,006 |
|
|
4,818,367 |
|
| |
|
|
|
|
|
|
|
|
|
| Stockholders’
Equity |
|
|
|
|
|
|
|
|
|
| Capital stock |
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value; authorized 1,000,000 shares;
issued and outstanding December 2020, December 2019 and September
2020 -0- shares |
|
— |
|
|
— |
|
|
— |
|
|
Common stock, $.01 par value; authorized 20,000,000 shares; issued
and outstanding December 2020 – 13,752,605 shares; December 2019 –
14,261,052 shares; September 2020 – 13,880,570 shares |
|
138 |
|
|
143 |
|
|
139 |
|
| Additional paid-in
capital |
|
35,004 |
|
|
33,510 |
|
|
34,539 |
|
| Retained earnings |
|
541,448 |
|
|
537,167 |
|
|
534,331 |
|
| Accumulated other
comprehensive gain |
|
53,151 |
|
|
32,246 |
|
|
55,634 |
|
|
Total Stockholders’ Equity |
|
629,741 |
|
|
603,066 |
|
|
624,643 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’
Equity |
$ |
5,526,420 |
|
$ |
5,015,072 |
|
$ |
5,443,010 |
|
(1) At December 31, 2020, December 31, 2019 and September 30,
2020, includes loans, net of discounts, totaling $98.6 million,
$127.2 million and $106.1 million, respectively, which were
acquired in FDIC-assisted transactions and are accounted for under
ASC 310-30.(2) At December 31, 2020, December 31, 2019 and
September 30, 2020, includes foreclosed assets, net of discounts,
totaling $446,000, $1.0 million and $446,000, respectively, which
were acquired in FDIC-assisted transactions. In addition, December
31, 2020, December 31, 2019 and September 30, 2020, includes
$654,000, $871,000 and $940,000 of properties which were not
acquired through foreclosure, but are held for sale.
Great Southern Bancorp, Inc. and
SubsidiariesConsolidated Statements of
Income(In thousands, except per share
data)
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
Three Months Ended |
|
|
|
|
December 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
Interest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
$ |
49,510 |
|
$ |
55,495 |
|
$ |
204,964 |
|
$ |
223,047 |
|
$ |
50,476 |
|
|
Investment securities and other |
|
3,109 |
|
|
3,231 |
|
|
12,739 |
|
|
11,947 |
|
|
3,123 |
|
|
|
|
52,619 |
|
|
58,726 |
|
|
217,703 |
|
|
234,994 |
|
|
53,599 |
|
|
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
5,719 |
|
|
11,725 |
|
|
32,431 |
|
|
45,570 |
|
|
7,094 |
|
|
Short-term borrowings and repurchase agreements |
|
7 |
|
|
732 |
|
|
675 |
|
|
3,635 |
|
|
8 |
|
|
Subordinated debentures issued to capital trust |
|
117 |
|
|
232 |
|
|
628 |
|
|
1,019 |
|
|
128 |
|
|
Subordinated notes |
|
2,198 |
|
|
1,094 |
|
|
6,831 |
|
|
4,378 |
|
|
2,201 |
|
|
|
|
8,041 |
|
|
13,783 |
|
|
40,565 |
|
|
54,602 |
|
|
9,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income |
|
44,578 |
|
|
44,943 |
|
|
177,138 |
|
|
180,392 |
|
|
44,168 |
|
|
Provision for Loan Losses |
|
1,500 |
|
|
650 |
|
|
15,871 |
|
|
6,150 |
|
|
4,500 |
|
|
Net Interest Income After Provision for Loan
Losses |
|
43,078 |
|
|
44,293 |
|
|
161,267 |
|
|
174,242 |
|
|
39,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions |
|
132 |
|
|
219 |
|
|
892 |
|
|
889 |
|
|
318 |
|
|
Service charges, debit card and ATM fees |
|
5,094 |
|
|
5,011 |
|
|
18,684 |
|
|
20,898 |
|
|
4,692 |
|
|
Net gains on loan sales |
|
2,781 |
|
|
962 |
|
|
8,089 |
|
|
2,607 |
|
|
2,878 |
|
|
Late charges and fees on loans |
|
244 |
|
|
367 |
|
|
1,419 |
|
|
1,432 |
|
|
352 |
|
|
Net realized gains (losses) on sales of available-for-sale
securities |
|
— |
|
|
(72 |
) |
|
78 |
|
|
(62 |
) |
|
— |
|
|
Gain (loss) on derivative interest rate products |
|
160 |
|
|
65 |
|
|
(264 |
) |
|
(104 |
) |
|
89 |
|
|
Other income |
|
1,546 |
|
|
1,142 |
|
|
6,152 |
|
|
5,297 |
|
|
1,137 |
|
|
|
|
9,957 |
|
|
7,694 |
|
|
35,050 |
|
|
30,957 |
|
|
9,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
17,111 |
|
|
16,329 |
|
|
70,810 |
|
|
63,224 |
|
|
18,701 |
|
|
Net occupancy and equipment expense |
|
6,963 |
|
|
6,755 |
|
|
27,582 |
|
|
26,217 |
|
|
7,147 |
|
|
Postage |
|
775 |
|
|
855 |
|
|
3,069 |
|
|
3,198 |
|
|
748 |
|
|
Insurance |
|
737 |
|
|
348 |
|
|
2,405 |
|
|
2,015 |
|
|
753 |
|
|
Advertising |
|
817 |
|
|
645 |
|
|
2,631 |
|
|
2,808 |
|
|
757 |
|
|
Office supplies and printing |
|
210 |
|
|
334 |
|
|
1,016 |
|
|
1,077 |
|
|
271 |
|
|
Telephone |
|
890 |
|
|
934 |
|
|
3,794 |
|
|
3,580 |
|
|
987 |
|
|
Legal, audit and other professional fees |
|
533 |
|
|
601 |
|
|
2,378 |
|
|
2,624 |
|
|
582 |
|
|
Expense on other real estate and repossessions |
|
1,077 |
|
|
542 |
|
|
2,023 |
|
|
2,184 |
|
|
199 |
|
|
Partnership tax credit investment amortization |
|
80 |
|
|
91 |
|
|
80 |
|
|
365 |
|
|
— |
|
|
Acquired deposit intangible asset amortization |
|
289 |
|
|
289 |
|
|
1,154 |
|
|
1,190 |
|
|
289 |
|
|
Other operating expenses |
|
1,594 |
|
|
1,813 |
|
|
6,283 |
|
|
6,656 |
|
|
1,554 |
|
|
|
|
31,076 |
|
|
29,536 |
|
|
123,225 |
|
|
115,138 |
|
|
31,988 |
|
|
Income Before Income Taxes |
|
21,959 |
|
|
22,451 |
|
|
73,092 |
|
|
90,061 |
|
|
17,146 |
|
|
Provision for Income Taxes |
|
4,172 |
|
|
4,559 |
|
|
13,779 |
|
|
16,449 |
|
|
3,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income and Net Income Available to
Common Shareholders |
$ |
17,787 |
|
$ |
17,892 |
|
$ |
59,313 |
|
$ |
73,612 |
|
$ |
13,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.29 |
|
$ |
1.26 |
|
$ |
4.22 |
|
$ |
5.18 |
|
$ |
0.96 |
|
|
Diluted |
$ |
1.28 |
|
$ |
1.24 |
|
$ |
4.21 |
|
$ |
5.14 |
|
$ |
0.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Declared Per Common Share |
$ |
0.34 |
|
$ |
0.34 |
|
$ |
2.36 |
|
$ |
2.07 |
|
$ |
0.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances, Interest Rates and
Yields
The following table presents, for the periods indicated, the
total dollar amounts of interest income from average
interest-earning assets and the resulting yields, as well as the
interest expense on average interest-bearing liabilities, expressed
both in dollars and rates, and the net interest margin. Average
balances of loans receivable include the average balances of
non-accrual loans for each period. Interest income on loans
includes interest received on non-accrual loans on a cash basis.
Interest income on loans includes the amortization of net loan
fees, which were deferred in accordance with accounting standards.
Net fees included in interest income were $2.2 million and $921,000
for the three months ended December 31, 2020 and 2019,
respectively. Net fees included in interest income were $6.6
million and $4.0 million for the year ended December 31, 2020 and
2019, respectively. Tax-exempt income was not calculated on a tax
equivalent basis. The table does not reflect any effect of income
taxes.
| |
December 31, 2020(1) |
|
|
|
Three Months EndedDecember 31,
2020 |
|
|
|
Three Months EndedDecember 31,
2019 |
|
|
|
|
|
|
|
Average |
|
|
|
|
|
Yield/ |
|
|
|
Average |
|
|
|
|
Yield/ |
|
| |
Yield/Rate |
|
|
|
Balance |
|
|
|
Interest |
|
Rate |
|
|
|
Balance |
|
|
Interest |
|
Rate |
|
| |
(Dollars in thousands) |
|
| Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family residential |
3.62 |
% |
|
$ |
671,257 |
|
|
$ |
7,150 |
|
4.24 |
% |
|
$ |
571,496 |
|
$ |
7,353 |
|
5.10 |
% |
|
Other residential |
4.18 |
|
|
|
968,507 |
|
|
|
10,905 |
|
4.48 |
|
|
|
804,712 |
|
|
10,597 |
|
5.22 |
|
|
Commercial real estate |
4.14 |
|
|
|
1,537,916 |
|
|
|
16,617 |
|
4.30 |
|
|
|
1,499,340 |
|
|
19,021 |
|
5.03 |
|
|
Construction |
4.34 |
|
|
|
665,482 |
|
|
|
7,658 |
|
4.58 |
|
|
|
714,021 |
|
|
10,194 |
|
5.66 |
|
|
Commercial business |
3.89 |
|
|
|
345,472 |
|
|
|
3,855 |
|
4.44 |
|
|
|
257,375 |
|
|
3,168 |
|
4.88 |
|
|
Other loans |
5.14 |
|
|
|
254,179 |
|
|
|
3,116 |
|
4.88 |
|
|
|
342,387 |
|
|
4,935 |
|
5.72 |
|
|
Industrial revenue bonds |
4.43 |
|
|
|
15,223 |
|
|
|
209 |
|
5.47 |
|
|
|
14,458 |
|
|
227 |
|
6.23 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable |
4.29 |
|
|
|
4,458,036 |
|
|
|
49,510 |
|
4.42 |
|
|
|
4,203,789 |
|
|
55,495 |
|
5.24 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment securities |
2.98 |
|
|
|
437,363 |
|
|
|
3,038 |
|
2.76 |
|
|
|
374,587 |
|
|
2,865 |
|
3.03 |
|
| Other interest-earning
assets |
0.25 |
|
|
|
301,517 |
|
|
|
71 |
|
0.09 |
|
|
|
89,471 |
|
|
366 |
|
1.62 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
3.80 |
|
|
|
5,196,916 |
|
|
|
52,619 |
|
4.03 |
|
|
|
4,667,847 |
|
|
58,726 |
|
4.99 |
|
| Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
94,842 |
|
|
|
|
|
|
|
|
|
92,633 |
|
|
|
|
|
|
|
Other non-earning assets |
|
|
|
|
145,763 |
|
|
|
|
|
|
|
|
|
196,844 |
|
|
|
|
|
|
|
Total assets |
|
|
|
$ |
5,437,521 |
|
|
|
|
|
|
|
|
$ |
4,957,324 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand and savings |
0.22 |
|
|
$ |
2,089,566 |
|
|
|
1,467 |
|
0.28 |
|
|
$ |
1,555,775 |
|
|
2,248 |
|
0.57 |
|
|
Time deposits |
1.00 |
|
|
|
1,442,088 |
|
|
|
4,252 |
|
1.17 |
|
|
|
1,731,904 |
|
|
9,477 |
|
2.17 |
|
|
Total deposits |
0.53 |
|
|
|
3,531,654 |
|
|
|
5,719 |
|
0.64 |
|
|
|
3,287,679 |
|
|
11,725 |
|
1.41 |
|
|
Short-term borrowings and repurchase agreements |
0.02 |
|
|
|
147,875 |
|
|
|
7 |
|
0.02 |
|
|
|
247,898 |
|
|
732 |
|
1.17 |
|
|
Subordinated debentures issued to capital trust |
1.81 |
|
|
|
25,774 |
|
|
|
117 |
|
1.81 |
|
|
|
25,774 |
|
|
232 |
|
3.57 |
|
|
Subordinated notes |
5.84 |
|
|
|
148,332 |
|
|
|
2,198 |
|
5.90 |
|
|
|
74,239 |
|
|
1,094 |
|
5.85 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
0.72 |
|
|
|
3,853,635 |
|
|
|
8,041 |
|
0.83 |
|
|
|
3,635,590 |
|
|
13,783 |
|
1.50 |
|
| Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
|
|
|
908,226 |
|
|
|
|
|
|
|
|
|
677,952 |
|
|
|
|
|
|
|
Other liabilities |
|
|
|
|
44,511 |
|
|
|
|
|
|
|
|
|
36,474 |
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
4,806,372 |
|
|
|
|
|
|
|
|
|
4,350,016 |
|
|
|
|
|
|
| Stockholders’ equity |
|
|
|
|
631,149 |
|
|
|
|
|
|
|
|
|
607,308 |
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
|
|
$ |
5,437,521 |
|
|
|
|
|
|
|
|
$ |
4,957,324 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest rate spread |
3.08 |
% |
|
|
|
|
|
$ |
44,578 |
|
3.20 |
% |
|
|
|
|
$ |
44,943 |
|
3.49 |
% |
| Net interest margin* |
|
|
|
|
|
|
|
|
|
|
3.41 |
% |
|
|
|
|
|
|
|
3.82 |
% |
|
Average interest-earning assets to average interest-bearing
liabilities |
|
|
|
|
134.9 |
% |
|
|
|
|
|
|
|
|
128.4 |
% |
|
|
|
|
|
______________*Defined as the Company’s net interest income
divided by average total interest-earning assets.(1) The yield on
loans at December 31, 2020, does not include the impact of the
adjustments to the accretable yield (income) on loans acquired in
the FDIC-assisted transactions. See “Net Interest Income” for a
discussion of the effect on results of operations for the three
months ended December 31, 2020.
| |
December 31, 2020(1) |
|
|
|
Year EndedDecember 31, 2020 |
|
|
|
Year EndedDecember 31, 2019 |
|
|
|
|
|
|
|
Average |
|
|
|
|
|
Yield/ |
|
|
|
Average |
|
|
|
|
Yield/ |
|
| |
Yield/Rate |
|
|
|
Balance |
|
|
|
Interest |
|
Rate |
|
|
|
Balance |
|
|
Interest |
|
Rate |
|
| |
(Dollars in thousands) |
|
| Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans receivable: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| One- to four-family
residential |
3.62 |
% |
|
$ |
652,096 |
|
|
$ |
29,099 |
|
4.46 |
% |
|
$ |
532,051 |
|
$ |
27,450 |
|
5.16 |
% |
| Other residential |
4.18 |
|
|
|
930,529 |
|
|
|
43,902 |
|
4.72 |
|
|
|
812,412 |
|
|
43,931 |
|
5.41 |
|
| Commercial real estate |
4.14 |
|
|
|
1,526,618 |
|
|
|
69,437 |
|
4.55 |
|
|
|
1,443,435 |
|
|
74,256 |
|
5.14 |
|
| Construction |
4.34 |
|
|
|
665,546 |
|
|
|
32,443 |
|
4.87 |
|
|
|
706,581 |
|
|
41,767 |
|
5.91 |
|
| Commercial business |
3.89 |
|
|
|
325,397 |
|
|
|
14,070 |
|
4.32 |
|
|
|
258,606 |
|
|
13,234 |
|
5.12 |
|
| Other loans |
5.14 |
|
|
|
283,678 |
|
|
|
15,184 |
|
5.35 |
|
|
|
387,854 |
|
|
21,511 |
|
5.55 |
|
| Industrial revenue bonds |
4.43 |
|
|
|
15,395 |
|
|
|
829 |
|
5.38 |
|
|
|
14,841 |
|
|
898 |
|
6.05 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans receivable |
4.29 |
|
|
|
4,399,259 |
|
|
|
204,964 |
|
4.66 |
|
|
|
4,155,780 |
|
|
223,047 |
|
5.37 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment securities |
2.98 |
|
|
|
426,383 |
|
|
|
12,262 |
|
2.88 |
|
|
|
326,450 |
|
|
10,066 |
|
3.08 |
|
| Other interest-earning
assets |
0.25 |
|
|
|
246,110 |
|
|
|
477 |
|
0.19 |
|
|
|
87,767 |
|
|
1,881 |
|
2.14 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest-earning
assets |
3.80 |
|
|
|
5,071,752 |
|
|
|
217,703 |
|
4.29 |
|
|
|
4,569,997 |
|
|
234,994 |
|
5.14 |
|
| Non-interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
|
|
93,832 |
|
|
|
|
|
|
|
|
|
92,315 |
|
|
|
|
|
|
| Other non-earning assets |
|
|
|
|
157,842 |
|
|
|
|
|
|
|
|
|
192,695 |
|
|
|
|
|
|
| Total assets |
|
|
|
$ |
5,323,426 |
|
|
|
|
|
|
|
|
$ |
4,855,007 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand and savings |
0.22 |
|
|
$ |
1,867,166 |
|
|
|
7,096 |
|
0.38 |
|
|
$ |
1,507,518 |
|
|
7,971 |
|
0.53 |
|
|
Time deposits |
1.00 |
|
|
|
1,636,205 |
|
|
|
25,335 |
|
1.55 |
|
|
|
1,716,786 |
|
|
37,599 |
|
2.19 |
|
|
Total deposits |
0.53 |
|
|
|
3,503,371 |
|
|
|
32,431 |
|
0.93 |
|
|
|
3,224,304 |
|
|
45,570 |
|
1.41 |
|
|
Short-term borrowings and repurchase agreements |
0.02 |
|
|
|
183,498 |
|
|
|
675 |
|
0.37 |
|
|
|
260,024 |
|
|
3,635 |
|
1.40 |
|
|
Subordinated debentures issued to capital trust |
1.81 |
|
|
|
25,774 |
|
|
|
628 |
|
2.44 |
|
|
|
25,774 |
|
|
1,019 |
|
3.95 |
|
|
Subordinated notes |
5.84 |
|
|
|
115,335 |
|
|
|
6,831 |
|
5.92 |
|
|
|
74,070 |
|
|
4,378 |
|
5.91 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest-bearing
liabilities |
0.72 |
|
|
|
3,827,978 |
|
|
|
40,565 |
|
1.06 |
|
|
|
3,584,172 |
|
|
54,602 |
|
1.52 |
|
| Non-interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Demand deposits |
|
|
|
|
826,900 |
|
|
|
|
|
|
|
|
|
665,606 |
|
|
|
|
|
|
| Other liabilities |
|
|
|
|
46,111 |
|
|
|
|
|
|
|
|
|
33,592 |
|
|
|
|
|
|
| Total liabilities |
|
|
|
|
4,700,989 |
|
|
|
|
|
|
|
|
|
4,283,370 |
|
|
|
|
|
|
| Stockholders’ equity |
|
|
|
|
622,437 |
|
|
|
|
|
|
|
|
|
571,637 |
|
|
|
|
|
|
| Total liabilities and
stockholders’ equity |
|
|
|
$ |
5,323,426 |
|
|
|
|
|
|
|
|
$ |
4,855,007 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest rate spread |
3.08 |
% |
|
|
|
|
|
$ |
177,138 |
|
3.23 |
% |
|
|
|
|
$ |
180,392 |
|
3.62 |
% |
| Net interest margin* |
|
|
|
|
|
|
|
|
|
|
3.49 |
% |
|
|
|
|
|
|
|
3.95 |
% |
|
Average interest-earning assets to average interest-bearing
liabilities |
|
|
|
|
132.5 |
% |
|
|
|
|
|
|
|
|
127.5 |
% |
|
|
|
|
|
______________*Defined as the Company’s net interest income
divided by average total interest-earning assets.(1) The yield on
loans at December 31, 2020, does not include the impact of the
adjustments to the accretable yield (income) on loans acquired in
the FDIC-assisted transactions. See “Net Interest Income” for a
discussion of the effect on results of operations for the year
ended December 31, 2020.
NON-GAAP FINANCIAL MEASURES
This document contains certain financial information determined
by methods other than in accordance with accounting principles
generally accepted in the United States (“GAAP”). These non-GAAP
financial measures include core net interest income, core net
interest margin and the tangible common equity to tangible assets
ratio.
We calculate core net interest income and core net interest
margin by subtracting the impact of adjustments regarding changes
in expected cash flows related to pools of loans we acquired
through FDIC-assisted transactions from reported net interest
income and net interest margin. Management believes that core net
interest income and core net interest margin are useful in
assessing the Company’s core performance and trends, in light of
the fluctuations that can occur related to updated estimates of the
fair value of the loan pools acquired in the 2009, 2011, 2012 and
2014 FDIC-assisted transactions.
In calculating the ratio of tangible common equity to tangible
assets, we subtract period-end intangible assets from common equity
and from total assets. Management believes that the presentation of
this measure excluding the impact of intangible assets provides
useful supplemental information that is helpful in understanding
our financial condition and results of operations, as it provides a
method to assess management’s success in utilizing our tangible
capital as well as our capital strength. Management also believes
that providing a measure that excludes balances of intangible
assets, which are subjective components of valuation, facilitates
the comparison of our performance with the performance of our
peers. In addition, management believes that this is a standard
financial measure used in the banking industry to evaluate
performance.
These non-GAAP financial measures are supplemental and are not a
substitute for any analysis based on GAAP financial measures.
Because not all companies use the same calculation of non-GAAP
measures, this presentation may not be comparable to other
similarly titled measures as calculated by other companies.
Non-GAAP Reconciliation: Core Net Interest Income and
Core Net Interest Margin
| |
|
Three Months Ended |
|
|
|
Year Ended |
|
| |
|
December 31, |
|
|
|
December 31, |
|
| |
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
| |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reported net interest
income/margin |
$ |
44,578 |
|
3.41 |
% |
|
$ |
44,943 |
|
3.82 |
% |
|
$ |
177,138 |
|
3.49 |
% |
|
$ |
180,392 |
|
3.95 |
% |
|
Less: Impact of FDIC-assisted acquired loan accretion
adjustments |
|
942 |
|
0.07 |
|
|
|
2,271 |
|
0.19 |
|
|
|
5,574 |
|
0.11 |
|
|
|
7,433 |
|
0.16 |
|
| Core net interest
income/margin |
$ |
43,636 |
|
3.34 |
% |
|
$ |
42,672 |
|
3.63 |
% |
|
$ |
171,564 |
|
3.38 |
% |
|
$ |
172,959 |
|
3.79 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation: Ratio of Tangible Common Equity
to Tangible
Assets
|
|
|
December 31, |
|
|
|
December 31, |
|
| |
|
2020 |
|
|
|
2019 |
|
| |
|
(Dollars in thousands) |
|
| Common equity at period
end |
$ |
629,741 |
|
|
$ |
603,066 |
|
| Less: Intangible assets at
period end |
|
6,944 |
|
|
|
8,098 |
|
| Tangible common equity at
period end (a) |
$ |
622,797 |
|
|
$ |
594,968 |
|
| |
|
|
|
|
|
|
|
| Total assets at period
end |
$ |
5,526,420 |
|
|
$ |
5,015,072 |
|
| Less: Intangible assets at
period end |
|
6,944 |
|
|
|
8,098 |
|
| Tangible assets at period end
(b) |
$ |
5,519,476 |
|
|
$ |
5,006,974 |
|
| |
|
|
|
|
|
|
|
| Tangible common equity to
tangible assets (a) / (b) |
|
11.28 |
% |
|
|
11.88 |
% |
CONTACT: Kelly Polonus, Great Southern, (417) 895-5242
kpolonus@greatsouthernbank.com
Great Southern Bancorp (NASDAQ:GSBC)
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