SPRINGFIELD, Mo., Jan. 20, 2016 /PRNewswire/ --
Preliminary Financial Results for the Quarter and Year Ended December 31, 2015:
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, 2015, were $0.82 per diluted common share ($11.5 million available to common shareholders) compared to $0.86 per diluted common share ($11.9 million available to common shareholders) for the three months ended December 31, 2014.
Preliminary earnings for the year ended December 31, 2015, were $3.28 per diluted common share ($45.9 million available to common shareholders) compared to $3.10 per diluted common share ($43.0 million available to common shareholders) for the year ended December 31, 2014.
For the quarter ended December 31, 2015, annualized return on average common equity was 11.74%, annualized return on average assets was 1.15%, and net interest margin was 4.34%, compared to 13.43%, 1.23% and 5.08%, respectively, for the quarter ended December 31, 2014. For the year ended December 31, 2015, return on average common equity was 12.13%; return on average assets was 1.14%; and net interest margin was 4.53% compared to 12.63%, 1.14% and 4.84%, respectively, for the year ended December 31, 2014.
President and CEO Joseph W. Turner commented, "We were pleased with the Company's performance in the fourth quarter. Earnings were primarily driven by continued loan growth throughout the Company's market areas and in most loan types. Total loans, excluding acquired covered and non-covered loans and mortgage loans held for sale, increased $93 million from the end of the third quarter of 2015, and increased $397 million in 2015 (15%). A large portion of this quarter's loan growth occurred in December, so we did not get the full benefit of this growth for the entire quarter. The reported net interest margin was 4.34% for the quarter ended December 31, 2015. The net interest margin, excluding the effects of yield accretion on acquired loans, remained stable at 3.74% for the fourth quarter as compared to the third quarter. With the increase in the Federal Funds rate in December, a portion of our loan portfolio experienced a rate increase which helped relieve some pressure on average loan yields. Deposit costs have trended slightly higher because of increased competition and the impact of the Federal Funds rate increase on non-core funds. Non-performing loans increased significantly in the fourth quarter primarily because of two unrelated relationships which totaled $10.2 million. These two relationships have each been with the Bank for over 15 years and were previously included in classified assets as potential problem loans. Total classified assets were down nearly $6 million from September 30, 2015, and down nearly $12 million from the end of 2014. We remain focused on credit quality and are pleased that our level of classified assets decreased in 2015. Also of note in the fourth quarter, the Company exited the U.S. Treasury's Small Business Lending Fund by redeeming all $57.9 million of associated preferred stock. The Company used internally-generated funds to complete this redemption."
Turner continued, "We are preparing to finalize the purchase of 12 branches and related deposits and certain loans from Fifth Third Bank in the St. Louis-area market. The completion of the transaction and systems conversions to transfer related acquired accounts to Great Southern is anticipated to occur after close of business on January 29, 2016. This transaction will more than double our banking center network and double our customer deposit base in the St. Louis area. As previously announced, we consolidated operations of 14 banking centers on January 8, 2016, as part of our ongoing performance analysis of the entire banking center network. In addition, agreements to sell two banking centers and related deposits to separate bank purchasers have been signed and these transactions should be completed in the first quarter of 2016."
Selected Financial Data: |
|||||
(In thousands, except per share data) |
Three Months Ended December 31, |
Year Ended December 31, |
|||
2015 |
2014 |
2015 |
2014 |
||
Net interest income |
$ 40,695 |
$ 45,519 |
$ 168,354 |
$ 167,561 |
|
Provision for loan losses |
1,216 |
52 |
5,519 |
4,151 |
|
Non-interest income |
5,059 |
1,397 |
13,581 |
14,731 |
|
Non-interest expense |
29,144 |
31,169 |
114,350 |
120,859 |
|
Provision for income taxes |
3,744 |
3,628 |
15,564 |
13,753 |
|
Net income |
$ 11,650 |
$ 12,067 |
$ 46,502 |
$ 43,529 |
|
Net income available to common shareholders |
$ 11,531 |
$ 11,922 |
$ 45,948 |
$ 42,950 |
|
Earnings per diluted common share |
$ 0.82 |
$ 0.86 |
$ 3.28 |
$ 3.10 |
|
NET INTEREST INCOME
Net interest income for the fourth quarter of 2015 decreased $4.8 million to $40.7 million compared to $45.5 million for the fourth quarter of 2014. Net interest margin was 4.34% in the fourth quarter of 2015, compared to 5.08% in the same period of 2014, a decrease of 74 basis points. Net interest income for the year ended December 31, 2015 increased $0.8 million to $168.4 million compared to $167.6 million for the year ended December 31, 2014. Net interest margin was 4.53% in the year ended December 31, 2015, compared to 4.84% in the year ended December 31, 2014, a decrease of 31 basis points. For the three months ended December 31, 2015, the net interest margin decreased nine basis points compared to the net interest margin of 4.43% in the three months ended September 30, 2015. The average interest rate spread was 4.24% and 4.44% for the three months and year ended December 31, 2015, compared to 4.99% and 4.74% for the three months and year ended December 31, 2014. For the three months ended December 31, 2015, the average interest rate spread decreased nine basis points compared to the average interest rate spread of 4.33% in the three months ended September 30, 2015.
The Company's net interest margin has been significantly impacted by additional yield accretion recognized in conjunction with updated estimates of the fair value of the loan pools acquired in the 2009, 2011 and 2012 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 have increased, based on payment histories and reduced loss expectations of the loan pools. This resulted in increased income that was spread on a level-yield basis over the remaining expected lives of the loan pools. The increases in expected cash flows also reduced the amount of expected reimbursements under the loss sharing agreements with the FDIC, which are recorded as indemnification assets. Therefore, the expected indemnification assets have also been reduced each quarter since the fourth quarter of 2010, resulting in adjustments to be amortized on a comparable basis over the remainder of the loss sharing agreements or the remaining expected lives of the loan pools, whichever is shorter. Additional estimated cash flows totaling approximately $875,000 were recorded in the quarter ended December 31, 2015, related to these loan pools.
In addition, the Company's net interest margin has been impacted by additional yield accretion recognized in conjunction with updated estimates of the fair value of the loan pools acquired in the June 2014 Valley Bank FDIC-assisted transaction. Beginning with the quarter ended December 31, 2014, the cash flow estimates have increased for certain of the Valley Bank loan pools primarily based on significant loan repayments and also due to collection of certain loans, thereby reducing loss expectations on certain of the loan pools. This resulted in increased income that was spread on a level-yield basis over the remaining expected lives of these loan pools. The Valley Bank transaction did not include a loss sharing agreement with the FDIC. Therefore, there is no related indemnification asset. The entire amount of the discount adjustment will be accreted to interest income over time with no offsetting impact to non-interest income. The amount of the Valley Bank discount adjustment accreted to interest income for the three months and year ended December 31, 2015 was $1.8 million and $5.7 million, respectively, and is included in the impact on net interest income/net interest margin amount in the table below. Based on current estimates, we anticipate recording additional interest income accretion of $3.0 million during 2016 related to these Valley Bank loan pools.
The impact of these adjustments on the Company's financial results for the reporting periods presented is shown below:
Three Months Ended |
|||||
December 31, 2015 |
December 31, 2014 |
||||
(In thousands, except basis points data) |
|||||
Impact on net interest income/ |
$ 5,649 |
60 bps |
$ 9,137 |
102 bps |
|
Non-interest income |
(3,343) |
(6,825) |
|||
Net impact to pre-tax income |
$ 2,306 |
$ 2,312 |
|||
Year Ended |
|||||
December 31, 2015 |
December 31, 2014 |
||||
(In thousands, except basis points data) |
|||||
Impact on net interest income/ |
$ 28,531 |
77 bps |
$ 34,974 |
101 bps |
|
Non-interest income |
(19,534) |
(28,740) |
|||
Net impact to pre-tax income |
$ 8,997 |
$ 6,234 |
Because these adjustments will be recognized over the remaining lives of the loan pools and the remainder of the loss sharing agreements, respectively, they will impact future periods as well. The remaining accretable yield adjustment that will affect interest income is $12.0 million and the remaining adjustment to the indemnification assets, including the effects of the clawback liability related to InterBank, that will affect non-interest income (expense) is $(8.6) million. Of the remaining adjustments, we expect to recognize $9.1 million of interest income and $(6.0) million of non-interest income (expense) during 2016. Additional adjustments may be recorded in future periods from the FDIC-assisted transactions, as the Company continues to evaluate its estimate of expected cash flows from the acquired loan pools.
Excluding the impact of the additional yield accretion, net interest margin for the three months ended December 31, 2015 decreased 32 basis points when compared to the year-ago quarter. Excluding the impact of the additional yield accretion, net interest margin for the year ended December 31, 2015 decreased 7 basis points when compared to the year ended December 31, 2014. The decrease in net interest margin is primarily due to a decrease in the average interest rate on loans and an increase in the average interest rate on deposits. In addition, during the three months ended December 31, 2014, the Company collected $1.9 million from customers with loans which had previously not been expected to be collectible. In accordance with the Company's accounting methodology, these collections were accounted for as increases in estimated cash flows and were recorded as interest income, thereby increasing net interest income and net interest margin. The positive impact on net interest margin in the three months ended December 31, 2014 (annualized), was approximately 20 basis points. These collections related to acquired loans which were subject to loss sharing agreements with the FDIC; therefore, 80% of the amounts collected, or $1.5 million, was owed to the FDIC. This $1.5 million of expense was included in non-interest income under "accretion (amortization) of income related to business acquisitions" in the 2014 period.
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, 2015, non-interest income increased $3.7 million to $5.1 million when compared to the quarter ended December 31, 2014, primarily as a result of the following increases and decreases:
For the year ended December 31, 2015, non-interest income decreased $1.1 million to $13.6 million when compared to the year ended December 31, 2014, primarily as a result of the following:
Excluding the gain referenced above, non-interest income increased $9.7 million when compared to the year ended December 31, 2014, primarily as a result of the following items:
NON-INTEREST EXPENSE
For the quarter ended December 31, 2015, non-interest expense decreased $2.1 million to $29.1 million when compared to the quarter ended December 31, 2014, primarily as a result of the following items:
For the year ended December 31, 2015, non-interest expense decreased $6.5 million to $114.4 million when compared to the year ended December 31, 2014, primarily as a result of the following items:
Partially offsetting the decrease in non-interest expense was an increase in the following items:
The Company's efficiency ratio for the quarter ended December 31, 2015, was 63.70% compared to 66.44% for the same quarter in 2014. The efficiency ratio for the year ended December 31, 2015, was 62.85% compared to 66.30% for 2014. The decrease in the ratio in the 2015 three month period was primarily due to the decrease in non-interest expense and the increase in non-interest income, partially offset by decreases in net interest income. The improvement in the ratio in the 2015 year was primarily due to the decrease in non-interest expense and the increase in net interest income, partially offset by decreases in non-interest income. The Company's ratio of non-interest expense to average assets decreased from 3.18% and 3.16% for the three months and year ended December 31, 2014, respectively, to 2.87% and 2.81% for the three months and year ended December 31, 2015, respectively. The decrease in the current three and twelve month period ratios was due to both the increase in average assets and the decrease in non-interest expense in the 2015 period compared to the 2014 period. Average assets for the quarter ended December 31, 2015, increased $139.1 million, or 3.6%, from the quarter ended December 31, 2014, primarily due to organic loan growth, partially offset by decreases in investment securities and FDIC indemnification assets. Average assets for the year ended December 31, 2015, increased $242.9 million, or 6.4%, from the year ended December 31, 2014, due to the Valley Bank acquisition, which occurred in June 2014 and the other reasons noted for the three month period.
INCOME TAXES
For the three months ended December 31, 2015 and 2014, the Company's effective tax rate was 24.3% and 23.1%, respectively, which was lower than the statutory federal tax rate of 35%, due primarily to the effects of certain investment tax credits utilized and to tax-exempt investments and tax-exempt loans which reduced the Company's effective tax rate. For the year ended December 31, 2015 and 2014, the Company's effective tax rate was 25.1% and 24.0%, respectively, which was lower than the statutory federal tax rate of 35%, due primarily to the effects of certain investment tax credits utilized and to tax-exempt investments and tax-exempt loans which reduced the Company's effective tax rate. In future periods, the Company expects its effective tax rate typically will be 24-26% of pre-tax net income, assuming it continues to maintain or increase its use of investment tax credits. The Company's effective tax rate may fluctuate 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 pretax income.
CAPITAL
As of December 31, 2015, total stockholders' equity and common stockholders' equity were $398.2 million (9.7% of total assets), equivalent to a book value of $28.67 per common share. Total stockholders' equity at December 31, 2014, was $419.7 million (10.6% of total assets). As of December 31, 2014, common stockholders' equity was $361.8 million (9.2% of total assets), equivalent to a book value of $26.30 per common share. At December 31, 2015, the Company's tangible common equity to total assets ratio was 9.6%, compared to 9.0% at December 31, 2014. The tangible common equity to total risk-weighted assets ratio was 10.9% and 10.9% at December 31, 2015, and December 31, 2014, respectively.
On a preliminary basis, as of December 31, 2015, the Company's Tier 1 Leverage Ratio was 10.2%, Common Equity Tier 1 Capital Ratio was 10.8%, Tier 1 Capital Ratio was 11.5%, and Total Capital Ratio was 12.6%. On December 31, 2015, and on a preliminary basis, the Bank's Tier 1 Leverage Ratio was 9.8%, Common Equity Tier 1 Capital Ratio was 11.0%, Tier 1 Capital Ratio was 11.0%, and Total Capital Ratio was 12.1%.
Great Southern Bancorp, Inc. was a participant in the U.S. Treasury's Small Business Lending Fund (SBLF) program. Through the SBLF, in August 2011, the Company issued a new series of preferred stock with an aggregate liquidation amount totaling $57.9 million to the Treasury. The dividend rate on the SBLF preferred stock for the fourth quarter of 2015 was 1.0%. On December 15, 2015, the Company redeemed all 57,943 shares of this preferred stock. These shares were redeemed at their liquidation amount of $1,000 per share plus accrued but unpaid dividends to the redemption date. The redemption was completed using internally available funds and the Registrant continues to have capital in excess of the levels necessary to be deemed well-capitalized under applicable regulatory standards.
PROVISION FOR LOAN LOSSES AND ALLOWANCE FOR LOAN LOSSES
Management records a provision for loan losses in an amount it believes sufficient to result in an allowance for loan losses that will cover current net charge-offs as well as risks believed to be inherent in the loan portfolio of the Bank. The amount of provision charged against current income is based on several factors, including, but not limited to, past loss experience, current portfolio mix, actual and potential losses identified in the loan portfolio, economic conditions, and internal as well as external reviews. However, 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 a 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, 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, 2015, increased $1.1 million to $1.2 million when compared with the quarter ended December 31, 2014. The provision for loan losses for the year ended December 31, 2015, increased $1.4 million to $5.5 million when compared with the year ended December 31, 2014. At December 31, 2015, the allowance for loan losses was $38.1 million, a decrease of $286,000 from December 31, 2014. Total net charge-offs (recoveries) were $2.9 million and $(302,000) for the quarters ended December 31, 2015, and 2014, respectively. Two relationships (discussed under "Asset Quality") make up $1.4 million of the net charge-off total for the quarter ended December 31, 2015. Total net charge-offs were $5.8 million and $5.8 million for the years ended December 31, 2015 and 2014, respectively. Excluding those related to loans covered by loss sharing agreements, for the year ended December 31, 2015, five relationships made up $2.6 million of the total $5.8 million in net charge-offs. General market conditions, and more specifically, real estate absorption rates and unique circumstances related to individual borrowers and projects also contributed to the level of provisions and charge-offs. As properties 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.
The Bank's allowance for loan losses as a percentage of total loans, excluding loans covered by the FDIC loss sharing agreements, was 1.20%, 1.34% and 1.29% at December 31, 2015, December 31, 2014 and September 30, 2015, respectively. Management considers the allowance for loan losses adequate to cover losses inherent in the Company's loan portfolio at December 31, 2015, based on recent reviews of the Company'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 and InterBank 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 as they are, or were, subject to loss sharing agreements with the FDIC, which cover at least 80% of principal losses that may be incurred in these portfolios for the applicable terms under the agreements. At December 31, 2015, there were no material non-performing assets or potential problem loans that were previously covered, and are now not covered, under the TeamBank or Vantus Bank non-single-family loss sharing agreements. In addition, FDIC-supported TeamBank, Vantus Bank, Sun Security Bank and InterBank assets were initially recorded at their estimated fair values as of their acquisition dates of March 20, 2009, September 4, 2009, October 7, 2011, and April 27, 2012, respectively. The overall performance of the FDIC-covered loan pools acquired in 2009, 2011 and 2012 has been better than original expectations as of the acquisition dates. Former Valley Bank loans are also excluded from the totals and the discussion of non-performing loans, potential problem loans and foreclosed assets below, although they are not covered by a loss sharing agreement. Former Valley Bank loans are accounted for in pools and were recorded at their fair value at the time of the acquisition as of June 20, 2014; therefore, these loan pools are analyzed rather than the individual loans.
The loss sharing agreement for the non-single-family portion of the loans acquired in the TeamBank transaction ended on March 31, 2014. Any additional losses in that non-single-family portfolio will not be eligible for loss sharing coverage. At this time, the Company does not expect any material losses in this non-single-family loan portfolio, which totaled $16.2 million, net of discounts, at December 31, 2015.
The loss sharing agreement for the non-single-family portion of the loans acquired in the Vantus Bank transaction ended on September 30, 2014. Any additional losses in that non-single-family portfolio will not be eligible for loss sharing coverage. At this time, the Company does not expect any material losses in this non-single-family loan portfolio, which totaled $17.1 million, net of discounts, at December 31, 2015.
As a result of changes in balances and composition of the loan portfolio, changes in economic and market conditions that occur from time to time and other factors specific to a borrower's circumstances, the level of non-performing assets will fluctuate.
Non-performing assets, excluding FDIC-covered non-performing assets and other FDIC-assisted acquired assets, at December 31, 2015, were $44.0 million, an increase of $272,000 from $43.7 million at December 31, 2014, and an increase of $7.5 million from $36.5 million at September 30, 2015. Non-performing assets, excluding FDIC-covered non-performing assets and other FDIC-assisted acquired assets, as a percentage of total assets were 1.07% at December 31, 2015, compared to 1.11% at December 31, 2014 and 0.90% at September 30, 2015.
Compared to December 31, 2014, non-performing loans increased $8.5 million to $16.6 million at December 31, 2015, and foreclosed assets decreased $8.1 million to $27.4 million at December 31, 2015. Compared to September 30, 2015, non-performing loans increased $9.5 million to $16.6 million at December 31, 2015, and foreclosed assets decreased $2.0 million to $27.4 million at December 31, 2015. Non-performing commercial real estate loans comprised $13.5 million, or 81.4%, of the total of $16.6 million of non-performing loans at December 31, 2015, an increase of $9.5 million from September 30, 2015. The majority of the increase was due to the addition of two relationships which were transferred from potential problem loans. These relationships are discussed below. Non-performing one-to four-family residential loans comprised $1.4 million, or 8.2%, of the total non-performing loans at December 31, 2015, a decrease of $232,000 from September 30, 2015. Non-performing consumer loans increased $137,000 in the three months ended December 31, 2015, and were $1.3 million, or 7.8%, of total non-performing loans at December 31, 2015.
Compared to December 31, 2014, potential problem loans decreased $12.2 million to $12.8 million at December 31, 2015. Compared to September 30, 2015, potential problem loans decreased $13.2 million. This decrease was due to $10.4 million in loans transferred to non-performing loans, $5.2 million in loans removed from potential problem loans, $1.4 million in charge-offs and $454,000 in payments, partially offset by the addition of $4.2 million of loans to potential problem loans.
Activity in the non-performing loans category during the quarter ended December 31, 2015, was as follows:
Beginning Balance, October 1 |
Additions to Non-Performing |
Removed from Non-Performing |
Transfers to Potential Problem Loans |
Transfers to Foreclosed Assets |
Charge-Offs |
Payments |
Ending Balance, |
|
(In thousands) |
||||||||
One- to four-family construction |
$ — |
$ — |
$ — |
$ — |
$ — |
$ — |
$ — |
$ — |
Subdivision construction |
— |
30 |
— |
— |
— |
— |
— |
30 |
Land development |
113 |
— |
— |
— |
— |
— |
(4) |
109 |
Commercial construction |
— |
— |
— |
— |
— |
— |
— |
— |
One- to four-family residential |
1,589 |
244 |
(119) |
(251) |
— |
(20) |
(86) |
1,357 |
Other residential |
— |
— |
— |
— |
— |
— |
— |
— |
Commercial real estate |
3,955 |
11,400 |
(1,281) |
— |
(395) |
(20) |
(171) |
13,488 |
Commercial business |
287 |
128 |
— |
— |
— |
(85) |
(42) |
288 |
Consumer |
1,160 |
825 |
(11) |
— |
(77) |
(267) |
(333) |
1,297 |
Total |
$ 7,104 |
$ 12,627 |
$ (1,411) |
$ (251) |
$ (472) |
$ (392) |
$ (636) |
$ 16,569 |
At December 31, 2015, the non-performing commercial real estate category included nine loans, six of which were added during the current period. The largest relationship in this category, which was transferred from potential problem loans to non-performing loans during the quarter, totaled $6.5 million, or 48.1% of the total category, and is collateralized by three operating long-term health care facilities in Missouri. This relationship with the Bank began in 2000 and has performed adequately until recently. A receiver was recently appointed to manage and stabilize the facilities. The second largest relationship in this category, which was also transferred from potential problem loans during the quarter, totaled $3.7 million, or 27.6%, of the total category, and is collateralized by property in the Branson, Mo., area, including a lakefront resort, marina and related amenities, condominiums and lots. This borrower has been in business for over 30 years and a bank customer since 1992. The $1.3 million removed from non-performing commercial real estate loans during the quarter was related to one loan, and was removed due to improvement in the credit and payment performance. The non-performing one- to four-family residential category included 27 loans, seven of which were added during the current quarter. The non-performing consumer category included 101 loans, 56 of which were added during the current quarter.
Activity in the potential problem loans category during the quarter ended December 31, 2015, was as follows:
Beginning Balance, October 1 |
Additions to Potential Problem |
Removed from Potential Problem |
Transfers to Non-Performing |
Transfers to Foreclosed Assets |
Charge-Offs |
Payments |
Ending Balance, |
||
(In thousands) |
|||||||||
One- to four-family construction |
$ 712 |
$ 54 |
$ (683) |
$ — |
$ — |
$ — |
$ (83) |
$ — |
|
Subdivision construction |
1,891 |
429 |
(1,642) |
(30) |
— |
— |
(72) |
576 |
|
Land development |
5,524 |
— |
(1,682) |
— |
— |
— |
— |
3,842 |
|
Commercial construction |
— |
— |
— |
— |
— |
— |
— |
— |
|
One- to four-family residential |
1,495 |
311 |
(679) |
(95) |
— |
— |
(188) |
844 |
|
Other residential |
1,956 |
— |
— |
— |
— |
— |
— |
1,956 |
|
Commercial real estate |
13,624 |
3,398 |
— |
(10,215) |
— |
(1,433) |
(88) |
5,286 |
|
Commercial business |
471 |
— |
(285) |
— |
— |
— |
(5) |
181 |
|
Consumer |
369 |
— |
(199) |
(17) |
— |
(1) |
(18) |
134 |
|
Total |
$ 26,042 |
$ 4,192 |
$ (5,170) |
$ (10,357) |
$ — |
$ (1,434) |
$ (454) |
$ 12,819 |
|
At December 31, 2015, the commercial real estate category of potential problem loans included 10 loans, five of which were added during the current quarter. The largest relationship in this category, which was made up of the five new loans added during the quarter, had a balance of $2.9 million, or 55.7% of the total category, and is collateralized by various properties in the Branson Mo., area, including commercial buildings, commercial land, residential lots and undeveloped land with clubhouse and amenities and entertainment attractions. This relationship has been with the Bank for over 30 years. The charge-offs and the transfers to non-performing in the commercial real estate category were related to two relationships, which were discussed above in the non-performing loans section. The land development category of potential problem loans included one loan, which was added during a previous period and is collateralized by property in the Branson, Mo., area. The other residential category of potential problem loans included one loan which was added in a previous period, and is collateralized by properties located in the Branson, Mo., area. This loan was also to the same borrower that was referenced above in the land development category. The one- to four-family residential category of potential problem loans included 12 loans, two of which were added during the current quarter. The subdivision construction category of potential problem loans included three loans, two of which were added during the current quarter. Four loans in this category, all of which were to the same borrower, were removed from potential problem loans during the quarter due to improvement in financial performance. The one-to four-family construction category of potential problem loans is zero at December 31, 2015, and three loans in this category, all of which were to the same borrower, were removed from potential problem loans during the quarter due to improvement in the borrower's financial performance. These loans were also to the same borrower that was referenced above in the loans which were removed from potential problem loans in the subdivision construction category.
Activity in foreclosed assets, excluding $1.8 million in foreclosed assets covered by FDIC loss sharing agreements, $460,000 in foreclosed assets previously covered by FDIC loss sharing agreements, $995,000 in foreclosed assets related to Valley Bank and not covered by loss sharing agreements, $25,000 of other assets related to acquired loans and $1.2 million in properties which were not acquired through foreclosure, during the quarter ended December 31, 2015, was as follows:
Beginning Balance, October 1 |
Additions |
ORE Sales |
Capitalized Costs |
ORE Write-Downs |
Ending Balance, |
|
(In thousands) |
||||||
One-to four-family construction |
$ — |
$ — |
$ — |
$ — |
$ — |
$ — |
Subdivision construction |
7,514 |
— |
(198) |
— |
(300) |
7,016 |
Land development |
13,411 |
— |
(1,250) |
— |
(28) |
12,133 |
Commercial construction |
— |
— |
— |
— |
— |
— |
One- to four-family residential |
1,863 |
— |
(488) |
— |
— |
1,375 |
Other residential |
2,150 |
— |
— |
— |
— |
2,150 |
Commercial real estate |
3,551 |
395 |
(308) |
— |
(30) |
3,608 |
Commercial business |
48 |
— |
(48) |
— |
— |
— |
Consumer |
905 |
1,505 |
(1,301) |
— |
— |
1,109 |
Total |
$ 29,442 |
$ 1,900 |
$ (3,593) |
$ — |
$ (358) |
$ 27,391 |
At December 31, 2015, the land development category of foreclosed assets included 26 properties, the largest of which was located in northwest Arkansas and had a balance of $1.4 million, or 11.3% of the total category. Of the total dollar amount in the land development category of foreclosed assets, 35.4% and 36.2% was located in northwest Arkansas and in the Branson, Mo., area, respectively, including the largest property previously mentioned. The $1.3 million in sales in this category was almost entirely related to sales from a property located in northwest Arkansas, which had a balance of $2.3 million at the beginning of the quarter before a portion of the property was sold. The subdivision construction category of foreclosed assets included 25 properties, the largest of which was located in the Springfield, Mo. metropolitan area and had a balance of $1.2 million, or 17.6% of the total category. Of the total dollar amount in the subdivision construction category of foreclosed assets, 32.2% and 16.4% is located in Branson, Mo. and Springfield, Mo., respectively. The commercial real estate category of foreclosed assets included eight properties, three of which were added during the quarter and related to the same borrower. The largest property in the commercial real estate category of foreclosed assets, which was located in southeast Missouri and was added during the quarter ended March 31, 2015, totaled $2.0 million, or 56.0% of the total category. The other residential category of foreclosed assets included 11 properties, 10 of which were part of the same condominium community, located in Branson, Mo. and had a balance of $1.8 million, or 83.7% of the total category. The one-to four-family residential category of foreclosed assets included seven properties, of which the largest relationship, with two properties in the Southwest Missouri area, had a balance of $554,000, or 40.3% of the total category. Of the total dollar amount in the one-to- four-family category of foreclosed assets, 38.2% is located in Branson, Mo.
BUSINESS INITIATIVES
Great Southern announced on September 30, 2015, that it entered into a purchase and assumption agreement to acquire 12 branches and related deposits and loans from Cincinnati-based Fifth Third Bank. The acquisition, at that time representing approximately $261 million in deposits and $155 million in loans, is expected to be completed at the close of business on January 29, 2016. This acquisition increases Great Southern's St. Louis-area banking center total from eight to 20 offices. Based on the expected amount of loans to be acquired and deposits assumed, it is anticipated that beginning in 2016 this transaction will be accretive to earnings in the range of $0.07 to $0.09 per common share annually.
In September 2015, the Company announced plans to consolidate operations of 16 banking centers into other nearby Great Southern banking center locations. As part of an ongoing performance review of its entire banking center network, Great Southern evaluated each location for a number of criteria, including access and availability of services to affected customers, the proximity of other Great Southern banking centers, profitability and transaction volumes, and market dynamics. Subsequent to this September 2015 announcement, the Bank entered into separate definitive agreements to sell two of the 16 banking centers, including all of the associated deposits. The offices (including deposits) in Thayer, Mo., and Buffalo, Mo., are expected to be sold to separate bank purchasers on or around February 19, 2016, and March 18, 2016, respectively. The closing of the remaining 14 facilities, which resulted in the transfer of approximately $127 million in deposits and banking center operations to other Great Southern locations, occurred at the close of business on January 8, 2016. Great Southern ATMs remain operational indefinitely at each of the 14 affected banking center sites.
In October 2015, customers began using a new electronic service called Debit On/Off. Available in the Mobile Banking app for smartphones, this service enables customers to remotely activate and deactivate their debit cards. This functionality allows customers to respond quickly to a potentially lost or stolen card, significantly reducing the possibility of fraudulent transactions and other inconveniences.
On December 15, 2015, the Company exited the U.S. Treasury's Small Business Lending Fund (SBLF) program. The Company began participation in the SBLF in August 2011 when it issued a new series of preferred stock with an aggregate liquidation amount totaling $57.9 million to the Treasury. The Company redeemed all 57,943 shares of this preferred stock at their liquidation amount plus accrued but unpaid dividends. The redemption was completed using internally available funds and the Company continues to have capital in excess of the levels necessary to be deemed well-capitalized under applicable regulatory standards.
Great Southern Bancorp, Inc. will hold its 27th Annual Meeting of Shareholders at 10:00 a.m. CDT on Wednesday, May 4, 2016, 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 26, 2016, 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 96 retail banking centers and more than 200 ATMs in Missouri, Arkansas, Iowa, Kansas, Minnesota and Nebraska and loan offices in Tulsa, Okla., and Dallas, Texas. The common stock of Great Southern Bancorp, Inc. is listed on the Nasdaq Global Select Market under the symbol "GSBC."
Forward-Looking Statements
When used in documents filed or furnished by the Company with the Securities and Exchange Commission (the "SEC"), in the Company's press releases or other public or stockholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "intends" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including, among other things, (i) non-interest expense reductions from Great Southern's banking center consolidations might be less than anticipated and the costs of the consolidation and impairment of the value of the affected premises might be greater than expected; (ii) expected revenues, cost savings, earnings accretion, synergies and other benefits from the Fifth Third Bank branch acquisition and the Company's other 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; (iii) changes in economic conditions, either nationally or in the Company's market areas; (iv) fluctuations in interest rates; (v) 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; (vi) the possibility of other-than-temporary impairments of securities held in the Company's securities portfolio; (vii) the Company's ability to access cost-effective funding; (viii) fluctuations in real estate values and both residential and commercial real estate market conditions; (ix) demand for loans and deposits in the Company's market areas; (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 and its implementing regulations, and the overdraft protection regulations and customers' responses thereto; (xi) monetary and fiscal policies of the Federal Reserve Board and the U.S. Government and other governmental initiatives affecting the financial services industry; (xii) results of examinations of the Company and Great Southern by their regulators, including the possibility that the regulators may, among other things, require the Company to increase its allowance for loan losses or to write-down assets; (xiii) costs and effects of litigation, including settlements and judgments; and (xiv) 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 and for the periods indicated. Financial data 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 for and at such unaudited periods have been included. The results of operations and other data for the three months and years ended December 31, 2015, and 2014, and the three months ended September 30, 2015, are not necessarily indicative of the results of operations which may be expected for any future period.
December 31, |
December 31, |
|
2015 |
2014 |
|
Selected Financial Condition Data: |
(In thousands) |
|
Total assets |
$ 4,104,189 |
$ 3,951,334 |
Loans receivable, gross |
3,382,213 |
3,080,559 |
Allowance for loan losses |
38,149 |
38,435 |
Other real estate owned, net |
31,893 |
45,838 |
Available-for-sale securities, at fair value |
262,856 |
365,506 |
Deposits |
3,268,626 |
2,990,840 |
Total borrowings |
406,797 |
514,014 |
Total stockholders' equity |
398,227 |
419,745 |
Common stockholders' equity |
398,227 |
361,802 |
Non-performing assets (excluding FDIC-assisted transaction assets) |
43,960 |
43,688 |
Three Months Ended |
Year Ended |
Three Months Ended |
|||
December 31, |
December 31, |
September 30, |
|||
2015 |
2014 |
2015 |
2014 |
2015 |
|
Selected Operating Data: |
(Dollars in thousands, except per share data) |
||||
Interest income |
$ 44,956 |
$ 49,077 |
$ 184,351 |
$ 183,362 |
$ 45,755 |
Interest expense |
4,261 |
3,558 |
15,997 |
15,801 |
4,230 |
Net interest income |
40,695 |
45,519 |
168,354 |
167,561 |
41,525 |
Provision for loan losses |
1,216 |
52 |
5,519 |
4,151 |
1,703 |
Non-interest income |
5,059 |
1,397 |
13,581 |
14,731 |
5,120 |
Non-interest expense |
29,144 |
31,169 |
114,350 |
120,859 |
30,014 |
Provision for income taxes |
3,744 |
3,628 |
15,564 |
13,753 |
3,732 |
Net income |
$ 11,650 |
$ 12,067 |
$ 46,502 |
$ 43,529 |
$ 11,196 |
Net income available to common shareholders |
$ 11,531 |
$ 11,922 |
$ 45,948 |
$ 42,950 |
$ 11,051 |
At or For the Three |
At or For the Year Ended |
At or For the Three Months Ended |
|||
December 31, |
December 31, |
September 30, |
|||
2015 |
2014 |
2015 |
2014 |
2015 |
|
Per Common Share: |
(Dollars in thousands, except per share data) |
||||
Net income (fully diluted) |
$ 0.82 |
$ 0.86 |
$ 3.28 |
$ 3.10 |
$ 0.79 |
Book value |
$ 28.67 |
$ 26.30 |
$ 28.67 |
$ 26.30 |
$ 28.11 |
Earnings Performance Ratios: |
|||||
Annualized return on average assets |
1.15% |
1.23% |
1.14% |
1.14% |
1.10% |
Annualized return on average common stockholders' equity |
11.74% |
13.43% |
12.13% |
12.63% |
11.53% |
Net interest margin |
4.34% |
5.08% |
4.53% |
4.84% |
4.43% |
Average interest rate spread |
4.24% |
4.99% |
4.44% |
4.74% |
4.33% |
Efficiency ratio |
63.70% |
66.44% |
62.85% |
66.30% |
64.35% |
Non-interest expense to average total assets |
2.87% |
3.18% |
2.81% |
3.16% |
2.95% |
Asset Quality Ratios: |
|||||
Allowance for loan losses to period-end loans (excluding covered loans) |
1.20% |
1.34% |
1.20% |
1.34% |
1.29% |
Non-performing assets to period-end assets |
1.07% |
1.11% |
1.07% |
1.11% |
0.90% |
Non-performing loans to period-end loans |
0.49% |
0.26% |
0.49% |
0.26% |
0.21% |
Annualized net charge-offs to average loans |
0.38% |
(0.04)% |
0.20% |
0.24% |
0.20% |
Great Southern Bancorp, Inc. and Subsidiaries |
|||
Consolidated Statements of Financial Condition |
|||
(In thousands, except number of shares) |
|||
December 31, 2015 |
December 31, 2014 |
September 30, 2015 |
|
Assets |
|||
Cash |
$ 115,198 |
$ 109,052 |
$ 107,194 |
Interest-bearing deposits in other financial institutions |
83,985 |
109,595 |
125,450 |
Cash and cash equivalents |
199,183 |
218,647 |
232,644 |
Available-for-sale securities |
262,856 |
365,506 |
273,245 |
Held-to-maturity securities |
353 |
450 |
353 |
Mortgage loans held for sale |
12,261 |
14,579 |
9,806 |
Loans receivable (1), net of allowance for loan losses of $38,149 – December 2015; $38,435 - December 2014; $39,878 – September 2015 |
3,340,536 |
3,038,848 |
3,269,963 |
FDIC indemnification asset |
24,082 |
44,334 |
27,572 |
Interest receivable |
10,930 |
11,219 |
11,041 |
Prepaid expenses and other assets |
59,322 |
60,452 |
56,151 |
Other real estate owned (2), net |
31,893 |
45,838 |
35,125 |
Premises and equipment, net |
129,655 |
124,841 |
127,948 |
Goodwill and other intangible assets |
5,758 |
7,508 |
6,196 |
Federal Home Loan Bank stock |
15,303 |
16,893 |
11,444 |
Current and deferred income taxes |
12,057 |
2,219 |
9,150 |
Total Assets |
$ 4,104,189 |
$ 3,951,334 |
$ 4,070,638 |
Liabilities and Stockholders' Equity |
|||
Liabilities |
|||
Deposits |
$ 3,268,626 |
$ 2,990,840 |
$ 3,246,740 |
Federal Home Loan Bank advances |
263,546 |
271,641 |
164,569 |
Securities sold under reverse repurchase agreements with customers |
116,182 |
168,993 |
148,117 |
Short-term borrowings |
1,295 |
42,451 |
1,307 |
Subordinated debentures issued to capital trust |
25,774 |
30,929 |
25,774 |
Accrued interest payable |
1,080 |
1,067 |
961 |
Advances from borrowers for taxes and insurance |
4,681 |
4,929 |
8,007 |
Accounts payable and accrued expenses |
24,778 |
20,739 |
27,566 |
Total Liabilities |
3,705,962 |
3,531,589 |
3,623,041 |
Stockholders' Equity |
|||
Capital stock |
|||
Serial preferred stock - SBLF, $.01 par value; authorized 1,000,000 shares; issued and outstanding December 2015 – -0- shares; December 2014 and September 2015 – 57,943 shares |
— |
57,943 |
57,943 |
Common stock, $.01 par value; authorized 20,000,000 shares; issued and outstanding December 2015 – 13,887,932 shares; December 2014 – 13,754,806 shares; September 2015 – 13,861,037 shares |
139 |
138 |
139 |
Additional paid-in capital |
24,371 |
22,345 |
24,136 |
Retained earnings |
368,053 |
332,283 |
359,224 |
Accumulated other comprehensive gain |
5,664 |
7,036 |
6,155 |
Total Stockholders' Equity |
398,227 |
419,745 |
447,597 |
Total Liabilities and Stockholders' Equity |
$ 4,104,189 |
$ 3,951,334 |
$ 4,070,638 |
(1) |
At December 31, 2015, December 31, 2014 and September 30, 2015, includes loans, net of discounts, totaling $236.1 million, $286.6 million, and $249.5 million, respectively, which are subject to FDIC support through loss sharing agreements. As of December 31, 2015, December 31, 2014 and September 30, 2015, also includes $16.2 million, $26.9 million and $18.9 million, respectively, of non- single-family loans, net of discounts, acquired in the Team Bank transaction, which are no longer covered by the FDIC loss sharing agreement for that transaction. As of December 31, 2015, December 31, 2014 and September 30, 2015, also includes $17.1 million, $23.1 million and $17.8 million, respectively, of non- single-family loans, net of discounts, acquired in the Vantus Bank transaction, which are no longer covered by the FDIC loss sharing agreement for that transaction. In addition, as of December 31, 2015, December 31, 2014 and September 30, 2015, includes $93.4 million, $122.0 million and $100.3 million, respectively, of loans, net of discounts, acquired in the Valley Bank transaction on June 20, 2014, which are not covered by an FDIC loss sharing agreement. |
(2) |
At December 31, 2015, December 31, 2014 and September 30, 2015, includes foreclosed assets, net of discounts, totaling $1.8 million, $5.6 million and $2.5 million, respectively, which are subject to FDIC support through loss sharing agreements. At December 31, 2015, December 31, 2014 and September 30, 2015, includes $460,000, $879,000 and $478,000, respectively, net of discounts, of non- single-family foreclosed assets related to the Vantus Bank transaction, which are no longer covered by the FDIC loss sharing agreement for that transaction. At December 31, 2015, December 31, 2014 and September 30, 2015, includes $995,000, $778,000 and $1.1 million, respectively, net of discounts, of foreclosed assets related to the Valley Bank transaction, which are not covered by FDIC loss sharing agreements. In addition, at December 31, 2015, December 31, 2014 and September 30, 2015, includes $1.2 million, $2.9 million and $1.6 million, respectively, of properties which were not acquired through foreclosure, but are held for sale. |
Great Southern Bancorp, Inc. and Subsidiaries |
|||||||||||
Consolidated Statements of Income |
|||||||||||
(In thousands, except per share data) |
|||||||||||
Three Months Ended December 31, |
Year Ended |
Three Months Ended September 30, |
|||||||||
2015 |
2014 |
2015 |
2014 |
2015 |
|||||||
Interest Income |
|||||||||||
Loans |
$ 43,241 |
$ 46,901 |
$ 177,240 |
$ 172,569 |
$ 44,103 |
||||||
Investment securities and other |
1,715 |
2,176 |
7,111 |
10,793 |
1,652 |
||||||
44,956 |
49,077 |
184,351 |
183,362 |
45,755 |
|||||||
Interest Expense |
|||||||||||
Deposits |
3,717 |
2,928 |
13,511 |
11,225 |
3,500 |
||||||
Federal Home Loan Bank advances |
376 |
464 |
1,707 |
2,910 |
468 |
||||||
Short-term borrowings and repurchase agreements |
14 |
17 |
65 |
1,099 |
14 |
||||||
Subordinated debentures issued to capital trust |
154 |
149 |
714 |
567 |
248 |
||||||
4,261 |
3,558 |
15,997 |
15,801 |
4,230 |
|||||||
Net Interest Income |
40,695 |
45,519 |
168,354 |
167,561 |
41,525 |
||||||
Provision for Loan Losses |
1,216 |
52 |
5,519 |
4,151 |
1,703 |
||||||
Net Interest Income After Provision for Loan Losses |
39,479 |
45,467 |
162,835 |
163,410 |
39,822 |
||||||
Noninterest Income |
|||||||||||
Commissions |
155 |
253 |
1,136 |
1,163 |
400 |
||||||
Service charges and ATM fees |
5,008 |
5,011 |
19,841 |
19,075 |
5,162 |
||||||
Net gains on loan sales |
810 |
1,433 |
3,888 |
4,133 |
1,079 |
||||||
Net realized gains on sales of available-for-sale securities |
— |
1,176 |
2 |
2,139 |
2 |
||||||
Late charges and fees on loans |
647 |
573 |
2,129 |
1,400 |
371 |
||||||
Net change in interest rate swap fair value |
69 |
(122) |
(43) |
(345) |
(133) |
||||||
Initial gain recognized on business acquisition |
— |
— |
— |
10,805 |
— |
||||||
Accretion (amortization) of income related to business acquisitions |
(2,965) |
(7,807) |
(18,345) |
(27,868) |
(3,326) |
||||||
Other income |
1,335 |
880 |
4,973 |
4,229 |
1,565 |
||||||
5,059 |
1,397 |
13,581 |
14,731 |
5,120 |
|||||||
Noninterest Expense |
|||||||||||
Salaries and employee benefits |
14,421 |
14,661 |
58,682 |
56,032 |
15,078 |
||||||
Net occupancy expense |
6,270 |
6,755 |
25,985 |
23,541 |
7,546 |
||||||
Postage |
943 |
1,006 |
3,787 |
3,578 |
1,042 |
||||||
Insurance |
894 |
1,018 |
3,566 |
3,837 |
837 |
||||||
Advertising |
590 |
713 |
2,317 |
2,404 |
545 |
||||||
Office supplies and printing |
290 |
414 |
1,333 |
1,464 |
328 |
||||||
Telephone |
898 |
755 |
3,235 |
2,866 |
806 |
||||||
Legal, audit and other professional fees |
839 |
727 |
2,713 |
3,957 |
586 |
||||||
Expense on foreclosed assets |
1,207 |
2,462 |
2,526 |
5,636 |
616 |
||||||
Partnership tax credit |
420 |
420 |
1,680 |
1,720 |
420 |
||||||
Other operating expenses |
2,372 |
2,238 |
8,526 |
15,824 |
2,210 |
||||||
29,144 |
31,169 |
114,350 |
120,859 |
30,014 |
|||||||
Income Before Income Taxes |
15,394 |
15,695 |
62,066 |
57,282 |
14,928 |
||||||
Provision for Income Taxes |
3,744 |
3,628 |
15,564 |
13,753 |
3,732 |
||||||
Net Income |
11,650 |
12,067 |
46,502 |
43,529 |
11,196 |
||||||
Preferred Stock Dividends |
119 |
145 |
554 |
579 |
145 |
||||||
Net Income Available to Common Shareholders |
$ 11,531 |
$ 11,922 |
$ 45,948 |
$ 42,950 |
$ 11,051 |
||||||
Three Months Ended September 30, |
|||||||||
Three Months Ended December 31, |
Year Ended December 31, |
||||||||
2015 |
2014 |
2015 |
2014 |
2015 |
|||||
Earnings Per Common Share |
|||||||||
Basic |
$ 0.83 |
$ 0.87 |
$ 3.33 |
$ 3.14 |
$ 0.80 |
||||
Diluted |
$ 0.82 |
$ 0.86 |
$ 3.28 |
$ 3.10 |
$ 0.79 |
||||
Dividends Declared Per Common Share |
$ 0.22 |
$ 0.20 |
$ 0.86 |
$ 0.80 |
$ 0.22 |
||||
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. Fees included in interest income were $1.3 million and $976,000 for the three months ended December 31, 2015, and 2014, respectively. Fees included in interest income were $4.4 million and $3.2 million for the year ended December 31, 2015, and 2014, respectively. Tax-exempt income was not calculated on a tax equivalent basis. The table does not reflect any effect of income taxes.
December 31, 2015(1) |
Three Months Ended |
Three Months Ended |
|||||||
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 |
4.38% |
$ 453,446 |
$ 7,482 |
6.55% |
$ 474,080 |
$10,634 |
8.90% |
||
Other residential |
4.27 |
424,152 |
5,220 |
4.88 |
399,037 |
5,256 |
5.23 |
||
Commercial real estate |
4.29 |
1,100,384 |
12,751 |
4.60 |
972,189 |
11,873 |
4.85 |
||
Construction |
3.65 |
368,562 |
4,185 |
4.51 |
320,617 |
4,547 |
5.63 |
||
Commercial business |
4.44 |
317,933 |
4,570 |
5.70 |
321,898 |
6,088 |
7.50 |
||
Other loans |
5.24 |
620,660 |
8,461 |
5.41 |
491,579 |
7,857 |
6.34 |
||
Industrial revenue bonds |
5.25 |
40,799 |
572 |
5.57 |
45,691 |
646 |
5.61 |
||
Total loans receivable |
4.56 |
3,325,936 |
43,241 |
5.16 |
3,025,091 |
46,901 |
6.15 |
||
Investment securities |
3.09 |
279,562 |
1,632 |
2.32 |
395,337 |
2,100 |
2.11 |
||
Other interest-earning assets |
0.25 |
111,673 |
83 |
0.29 |
136,578 |
76 |
0.22 |
||
Total interest-earning assets |
4.34 |
3,717,171 |
44,956 |
4.80 |
3,557,006 |
49,077 |
5.47 |
||
Non-interest-earning assets: |
|||||||||
Cash and cash equivalents |
106,352 |
104,864 |
|||||||
Other non-earning assets |
232,939 |
255,510 |
|||||||
Total assets |
$4,056,462 |
$3,917,380 |
|||||||
Interest-bearing liabilities: |
|||||||||
Interest-bearing demand and savings |
|||||||||
0.24 |
$1,408,673 |
864 |
0.24 |
$1,404,367 |
725 |
0.20 |
|||
Time deposits |
0.85 |
1,308,754 |
2,853 |
0.86 |
1,110,277 |
2,203 |
0.79 |
||
Total deposits |
0.53 |
2,717,427 |
3,717 |
0.54 |
2,514,644 |
2,928 |
0.46 |
||
Short-term borrowings and repurchase agreements |
0.04 |
142,201 |
14 |
0.04 |
186,120 |
17 |
0.04 |
||
Subordinated debentures issued to |
1.93 |
25,774 |
154 |
2.37 |
30,929 |
149 |
1.91 |
||
FHLB advances |
0.76 |
142,870 |
376 |
1.04 |
210,803 |
464 |
0.87 |
||
Total interest-bearing liabilities |
0.54 |
3,028,272 |
4,261 |
0.56 |
2,942,496 |
3,558 |
0.48 |
||
Non-interest-bearing liabilities: |
|||||||||
Demand deposits |
552,531 |
528,297 |
|||||||
Other liabilities |
31,569 |
29,252 |
|||||||
Total liabilities |
3,612,372 |
3,500,045 |
|||||||
Stockholders' equity |
444,090 |
417,335 |
|||||||
Total liabilities and stockholders' equity |
$4,056,462 |
$3,917,380 |
|||||||
Net interest income: |
|||||||||
Interest rate spread |
3.80% |
$40,695 |
4.24% |
$45,519 |
4.99% |
||||
Net interest margin* |
4.34% |
5.08% |
|||||||
Average interest-earning assets to average interest-bearing liabilities |
122.7% |
120.9% |
|||||||
*Defined as the Company's net interest income divided by average total interest-earning assets. |
||||||
(1) |
The yield on loans at December 31, 2015, 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, 2015. |
December 31, 2015(1) |
Year Ended |
Year Ended |
||||||||
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 |
4.38% |
$ 459,378 |
$ 34,653 |
7.54% |
$ 480,827 |
$ 41,343 |
8.60% |
|||
Other residential |
4.27 |
423,476 |
21,236 |
5.01 |
375,754 |
21,268 |
5.66 |
|||
Commercial real estate |
4.29 |
1,071,765 |
50,952 |
4.75 |
920,340 |
47,724 |
5.19 |
|||
Construction |
3.65 |
340,666 |
15,538 |
4.56 |
259,993 |
13,330 |
5.13 |
|||
Commercial business |
4.44 |
328,319 |
19,137 |
5.83 |
296,318 |
17,722 |
5.98 |
|||
Other loans |
5.24 |
569,873 |
33,377 |
5.86 |
404,375 |
28,593 |
7.07 |
|||
Industrial revenue bonds |
5.25 |
42,310 |
2,347 |
5.55 |
46,499 |
2,589 |
5.57 |
|||
Total loans receivable |
4.56 |
3,235,787 |
177,240 |
5.48 |
2,784,106 |
172,569 |
6.20 |
|||
Investment securities |
3.09 |
330,328 |
6,797 |
2.06 |
495,155 |
10,467 |
2.11 |
|||
Other interest-earning assets |
0.25 |
152,720 |
314 |
0.21 |
185,072 |
326 |
0.18 |
|||
Total interest-earning assets |
4.34 |
3,718,835 |
184,351 |
4.96 |
3,464,333 |
183,362 |
5.29 |
|||
Non-interest-earning assets: |
||||||||||
Cash and cash equivalents |
106,326 |
96,665 |
||||||||
Other non-earning assets |
242,238 |
263,495 |
||||||||
Total assets |
$4,067,399 |
$3,824,493 |
||||||||
Interest-bearing liabilities: |
||||||||||
Interest-bearing demand and savings |
||||||||||
0.24 |
$1,404,489 |
2,858 |
0.20 |
$1,429,893 |
3,088 |
0.22 |
||||
Time deposits |
0.85 |
1,257,059 |
10,653 |
0.85 |
1,042,563 |
8,137 |
0.78 |
|||
Total deposits |
0.53 |
2,661,548 |
13,511 |
0.51 |
2,472,456 |
11,225 |
0.45 |
|||
Short-term borrowings and repurchase agreements |
0.04 |
192,055 |
65 |
0.03 |
188,906 |
1,099 |
0.58 |
|||
Subordinated debentures issued to |
1.93 |
28,754 |
714 |
2.48 |
30,929 |
567 |
1.83 |
|||
FHLB advances |
0.76 |
175,873 |
1,707 |
0.97 |
171,997 |
2,910 |
1.69 |
|||
Total interest-bearing liabilities |
0.54 |
3,058,230 |
15,997 |
0.52 |
2,864,288 |
15,801 |
0.55 |
|||
Non-interest-bearing liabilities: |
||||||||||
Demand deposits |
541,714 |
535,132 |
||||||||
Other liabilities |
28,772 |
22,403 |
||||||||
Total liabilities |
3,628,716 |
3,421,823 |
||||||||
Stockholders' equity |
438,683 |
402,670 |
||||||||
Total liabilities and stockholders' equity |
$4,067,399 |
$3,824,493 |
||||||||
Net interest income: |
||||||||||
Interest rate spread |
3.80% |
$168,354 |
4.44% |
$167,561 |
4.74% |
|||||
Net interest margin* |
4.53% |
4.84% |
||||||||
Average interest-earning assets to average interest-bearing liabilities |
121.6% |
120.9% |
||||||||
*Defined as the Company's net interest income divided by average total interest-earning assets. |
||||||||
(1) |
The yield on loans at December 31, 2015, 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, 2015. |
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SOURCE Great Southern Bancorp, Inc.
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