GREAT SOUTHERN BANCORP, INC. 
By SPRINGFIELD, Mo., Jan. 23, 2014 /PRNewswire/ --
-- Asset Quality: Non-performing assets and potential problem loans,
excluding those covered by FDIC loss sharing agreements, totaled $89.3
million at December 31, 2013, a decrease of $32.8 million from December
31, 2012, and a decrease of $8.5 million from September 30, 2013.
Non-performing assets, excluding FDIC-covered non-performing assets, at
December 31, 2013, were $62.3 million, a decrease of $10.3 million from
$72.6 million at December 31, 2012, and a decrease of $887,000 from
$63.2 million at September 30, 2013. Non-performing assets were 1.75% of
total assets at December 31, 2013, compared to 1.84% at December 31,
2012, and 1.75% at September 30, 2013. Net charge-offs were $2.2 million
for the three months ended December 31, 2013, compared to $3.4 million
for the three months ended September 30, 2013, and $7.4 million for the
three months ended December 31, 2012.
-- Total Loans: Total gross loans, including FDIC-covered loans, increased
$120.2 million from December 31, 2012, to December 31, 2013, mainly due
to the acquisition on October 25, 2013, of loans with an aggregate
principal amount totaling $86.1 million, which were being sold by an
unrelated FDIC-insured financial institution. Decreases in the
FDIC-covered loan portfolios totaled $137.7 million. Excluding covered
loans and mortgage loans held for sale, total loans increased $257.9
million from December 31, 2012, to December 31, 2013, primarily in the
areas of commercial real estate loans, other residential loans, other
consumer loans, and commercial business loans.
-- Net Interest Income: Net interest income for the fourth quarter of 2013
decreased $4.1 million to $40.5 million compared to $44.6 million for
the fourth quarter of 2012. Net interest margin was 5.02% for the
quarter ended December 31, 2013, compared to 5.01% for the fourth
quarter in 2012 and 4.64% for the quarter ended September 30, 2013.
These changes were primarily the result of variations in the yield
accretion on acquired loans due to improvements in expected cash flows
in the 2013 period when compared to the fourth quarter 2012 period. The
positive impact on net interest margin from the additional yield
accretion on acquired loan pools that was recorded during the period was
108 basis points for the quarter ended December 31, 2013, 135 basis
points for the quarter ended December 31, 2012, and 101 basis points for
the quarter ended September 30, 2013. For further discussion on the
additional yield accretion of the discount on acquired loan pools, see
the "Net Interest Income" section of this release.
-- Capital: The capital position of the Company continues to be strong,
significantly exceeding the "well capitalized" thresholds established by
regulators. On a preliminary basis, as of December 31, 2013, the
Company's Tier 1 leverage ratio was 10.7%, Tier 1 risk-based capital
ratio was 15.6%, and total risk-based capital ratio was 16.9%.
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, 2013, were $0.62 per diluted common share ($8.5 million available to common shareholders) compared to $0.90 per diluted common share ($12.3 million available to common shareholders) for the three months ended December 31, 2012. Earnings from continuing operations for the quarter ended December 31, 2012, were $0.60 per diluted common share ($8.2 million available to common shareholders).
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Preliminary earnings for the year ended December 31, 2013, were $2.42 per diluted common share ($33.2 million available to common shareholders) compared to $3.54 per diluted common share ($48.1 million available to common shareholders) for the year ended December 31, 2012. Earnings from continuing operations for the year ended December 31, 2012, were $3.20 per diluted common share ($43.5 million available to common shareholders).
For the quarter ended December 31, 2013, annualized return on average common equity was 10.75%; annualized return on average assets was 0.97%; and net interest margin was 5.02% compared to 16.03%, 1.25% and 5.01%, respectively, for the quarter ended December 31, 2012. For the year ended December 31, 2013, return on average common equity was 10.52%; return on average assets was 0.89%; and net interest margin was 4.70% compared to 16.55%, 1.22% and 4.61%, respectively, for the year ended December 31, 2012.
President and CEO Joseph W. Turner commented, "In looking back on 2013, we had several key accomplishments for the year, including improved credit quality, reduced charge-offs and net loan growth. Since the end of 2012, overall credit quality improved with a $32.8 million, or 27%, decrease in non-performing assets and potential problem loans. Net charge-offs were $2.2 million in the fourth quarter of 2013, which included a recovery on a previously charged off loan of approximately $1.2 million. For the year ended December 31, 2013, total loans, excluding covered loans and mortgages held for sale, increased $257.9 million.
"Our capital and earnings remained positions of strength as we ended 2013. As of December 31, 2013, total stockholders' equity was $380.7 million, or 10.7% of assets. Fourth quarter and annual earnings were $0.62 and $2.42 per diluted common share, respectively."
Turner continued, "In 2014, we'll continue to look for strategic opportunities for our Company as we did in 2013 with the acquisition of the $86 million multi-family real estate portfolio. Already in 2014, we announced, pending regulatory approval, the purchase of two Neosho, Mo., branches from Boulevard Bank representing approximately $65 million of deposits and $6 million of loans. We expect that this purchase will allow us to significantly strengthen our presence in a market we have served for two decades. In addition, regulatory approval was recently granted for the Company to operate commercial loan production offices in Tulsa, Okla., and Dallas, Texas. Expected to open before the end of the first quarter of 2014, both offices will be managed by seasoned commercial lenders."
Selected Financial Data:
(In thousands, except per
share data) Three Months Ended Year Ended
December 31, December 31,
2013 2012 2013 2012
---- ----
Net interest income $40,494 $44,627 $159,592 $165,131
Provision for loan losses 2,813 7,786 17,386 43,863
Non-interest income (864) 1,981 5,315 46,002
Non-interest expense 28,651 30,267 110,389 112,560
Provision (credit) for
income taxes (507) 176 3,403 10,623
---- --- ----- ------
Net income from
continuing operations 8,673 8,379 33,729 44,087
Income from discontinued
operations, net of tax - 4,070 - 4,619
--- ----- --- -----
Net income $8,673 $12,449 $33,729 $48,706
====== ======= ======= =======
Net income available to
common shareholders $8,528 $12,281 $33,150 $48,098
====== ======= ======= =======
Earnings per diluted
common share $0.62 $0.90 $2.42 $3.54
===== ===== ===== =====
Earnings from continuing
operations per diluted
common share $0.62 $0.60 $2.42 $3.20
===== ===== ===== =====
NET INTEREST INCOME
Net interest income for the fourth quarter of 2013 decreased $4.1 million to $40.5 million compared to $44.6 million for the fourth quarter of 2012. Net interest margin was 5.02% in the fourth quarter of 2013, compared to 5.01% in the same period of 2012, an increase of one basis point. Net interest income for the year ended December 31, 2013 decreased $5.5 million to $159.6 million compared to $165.1 million in the year ended December 31, 2012. Net interest margin was 4.70% in the year ended December 31, 2013, compared to 4.61% in the year ended December 31, 2012, an increase of nine basis points. The average interest rate spread was 4.90% and 4.60% for the three months and year ended December 31, 2013, compared to 4.95% and 4.53% for the three months and year ended December 31, 2012. For the three months ended December 31, 2013, the average interest rate spread increased 37 basis points compared to the average interest rate spread of 4.53% in the three months ended September 30, 2013. This increase was primarily due to an increase in average yield on loans receivable and investment securities.
The Company's net interest margin was 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. The impact to net interest income and net interest margin was not significantly different in the quarter ended December 31, 2013 compared to the quarter ended September 30, 2013. Higher additional estimated cash flows, primarily related to the Sun Security Bank and InterBank loan portfolios, were recorded in the quarter ended December 31, 2013 and throughout 2013. The impact of these adjustments on the Company's financial results for the reporting periods presented is shown below:
Three Months Ended
December December 31,
31, 2013 2012
--------- -------------
(In thousands, except
basis points data)
Impact on net
interest
income/ $8,703 108 bps $12,050 135 bps
net interest
margin (in
basis points)
Non-interest
income (7,414) (10,545)
------ -------
Net impact to
pre-tax
income $1,289 $1,505
====== ======
Year Ended
December December 31,
31, 2013 2012
--------- -------------
(In thousands, except
basis points data)
Impact on net
interest
income/ $35,211 104 bps $36,186
net interest
margin (in
basis points)
101 bps
=======
Non-interest
income (29,451) (29,864)
------- -------
Net impact to
pre-tax
income $5,760 $6,322
====== ======
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 $30.4 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 $(24.6) million. Of the remaining adjustments, we expect to recognize $19.0 million of interest income and $(14.7) million of non-interest income (expense) during 2014. Additional adjustments may be recorded in future periods from the FDIC-assisted transactions, as the Company continues to estimate expected cash flows from the acquired loan pools.
Excluding the impact of the additional yield accretion, net interest margin increased 28 basis points when compared to the year-ago quarter, and increased 31 basis points when compared to the third quarter of 2013. This increase is generally attributable to the changing earning asset mix between loans and investments and a recovery of previously charged off interest in the amount of $1.2 million in the quarter ended December 31, 2013. This interest recovery positively impacted net interest margin by approximately 15 basis points. The Company generally continues to experience slightly decreasing yields on loans and investments, excluding the yield accretion income discussed above. In many cases, new loans originated are at rates which are lower than the rates on existing loans and loans being paid down or paid off. Deposit costs have decreased slightly as some time deposits continue to mature and renew at lower rates, but the positive impact of this has diminished as market rates for such deposits have increased in the past few months.
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, 2013, non-interest income decreased $2.8 million when compared to the quarter ended December 31, 2012, primarily as a result of the following items:
-- Gains on sales of single-family loans: Gains on sales of single-family
loans decreased $1.2 million compared to the prior year quarter. This
was due to a decrease in originations of fixed-rate loans, which were
then sold in the secondary market, due to higher fixed rates on these
loans in the 2013 period.
-- Amortization of income related to business acquisitions: The net
amortization expense related to business acquisitions was $7.4 million
for the quarter ended December 31, 2013, compared to $6.5 million for
the quarter ended December 31, 2012. The amortization expense for the
quarter ended December 31, 2013 was made up of the following items: $7.4
million of amortization expense related to the changes in cash flows
expected to be collected from the FDIC-covered loan portfolios, $219,000
of amortization of the clawback liability and $373,000 of other loss
share items. Offsetting the expense was income from the accretion of the
discount related to the indemnification assets for all of the
acquisitions of $647,000. The amortization expense for the quarter ended
December 31, 2012 was made up of the following items: $10.5 million of
amortization expense related to the changes in cash flows expected to be
collected from the FDIC-covered loan portfolios, $103,000 of
amortization of the clawback liability and $1.2 million of other loss
share items. Offsetting the expense was income from the accretion of the
discount related to the indemnification assets for all of the
acquisitions of $5.3 million.
-- Net realized gains on sales of available-for-sale securities: Net
realized gains on sales of available-for-sale securities decreased
$616,000 for the quarter ended December 31, 2013, when compared to the
quarter ended December 31, 2012, partially offset by a decrease in
recognized impairment of available-for-sale securities of $418,000. No
impairment loss was recognized in the 2013 quarter. The decrease in
realized gains on sales was due to no securities being sold during the
2013 quarter.
For the year ended December 31, 2013, non-interest income decreased $40.7 million when compared to the year ended December 31, 2012, primarily as a result of the following items:
-- InterBank FDIC-assisted acquisition: During the year ended December 31,
2012, the Bank recognized a one-time gain on the FDIC-assisted
acquisition of InterBank of $31.3 million (pre-tax).
-- Amortization of income related to business acquisitions: The net
amortization expense related to business acquisitions was $25.3 million
for the year ended December 31, 2013, compared to $18.7 million for the
year ended December 31, 2012. The amortization expense for the year
ended December 31, 2013 was made up of the following items: $29.5
million of amortization expense related to the changes in cash flows
expected to be collected from the FDIC-covered loan portfolios and
$712,000 of amortization of the clawback liability. Offsetting the
expense was income from the accretion of the discount related to the
indemnification assets for all of the acquisitions of $2.7 million and
$2.2 million of other loss share items. The amortization expense for the
year ended December 31, 2012 was made up of the following items: $29.9
million of amortization expense related to the changes in cash flows
expected to be collected from the FDIC-covered loan portfolios and
$103,000 of amortization of the clawback liability. Offsetting the
expense was income from the accretion of the discount related to the
indemnification assets for all of the acquisitions of $9.5 million and
$1.8 million of income from other loss share items.
-- Net realized gains on sales of available-for-sale securities: Net
realized gains on sales of available-for-sale securities decreased $2.4
million for the year ended December 31, 2013, when compared to the year
ended December 31, 2012, partially offset by a decrease in recognized
impairment of available-for-sale securities of $680,000. No impairment
loss was recognized during the 2013 period. The Company realized
significant gains on the sale of $78 million of certain mortgage-backed
and municipal securities in the 2012 period.
-- Service charges and ATM fees: Service charges and ATM fees decreased
$860,000 in the year ended December 31, 2013, when compared to the year
ended December 31, 2012, primarily due to a decrease in overdraft
activity, and therefore overdraft charges, in the current period
compared to the prior period.
NON-INTEREST EXPENSE
For the quarter ended December 31, 2013, non-interest expense decreased $1.6 million to $28.7 million, when compared to the quarter ended December 31, 2012. The decrease was primarily due to the following items:
-- Foreclosure-related expenses: Expenses on foreclosed assets decreased
$3.9 million for the quarter ended December 31, 2013, when compared to
the quarter ended December 31, 2012, due primarily to large write-downs
of carrying values of foreclosed assets and losses on sales of assets in
the 2012 quarter.
Partially offsetting the decrease in non-interest expense was an increase in the following items:
-- Salaries and employee benefits: Salaries and employee benefits increased
$715,000 for the quarter ended December 31, 2013, when compared to the
quarter ended December 31, 2012, primarily due to the internal growth of
the Company and the increased number of employees, and salary increases
for existing employees.
-- Legal, audit and other professional fees: Legal, audit and other
professional fees increased $456,000 compared to the quarter ended
December 31, 2012, primarily due to expenses related to loan collection,
foreclosed assets and ongoing legal matters.
-- Partnership tax credit: The partnership tax credit expense increased
$396,000 from the prior year quarter. The Company has invested in
certain federal low-income housing tax credits and federal new market
tax credits. These credits are typically purchased at 70-90% of the
amount of the credit and are generally utilized to offset taxes payable
over ten-year and seven-year periods, respectively. During the quarter
ended December 31, 2013, tax credits used to reduce the Company's tax
expense totaled $3.3 million, up $700,000 from $2.6 million for the
quarter ended December 31, 2012. These tax credits resulted in
corresponding amortization expense of $2.4 million during the quarter
ended December 31, 2013, up $400,000 from $2.0 million for the quarter
ended December 31, 2012. The net result of these transactions was an
increase to non-interest expense and a decrease to income tax expense,
which positively impacted the Company's effective tax rate, but
negatively impacted the Company's non-interest expense and efficiency
ratio.
-- Other non-interest expense: Other non-interest expense increased
$396,000 for the quarter ended December 31, 2013, when compared to the
quarter ended December 31, 2012, due primarily to $700,000 of expenses
related to various non-recurring matters.
For the year ended December 31, 2013, non-interest expense decreased $2.2 million to $110.4 million, when compared to the year ended December 31, 2012. The decrease was primarily due to the following items:
-- Foreclosure-related expenses: Expenses on foreclosed assets decreased
$4.7 for the year ended December 31, 2013, when compared to the year
ended December 31, 2012, due primarily to large write-downs of carrying
values of foreclosed assets and losses on sales of assets in 2012.
-- Other non-interest expense: Other non-interest expense decreased
$632,000 for the year ended December 31, 2013, when compared to the year
ended December 31, 2012, due primarily to InterBank one-time acquisition
related expenses incurred in 2012.
Partially offsetting the decrease in non-interest expense was an increase in the following items:
-- Salaries and employee benefits: Salaries and employee benefits increased
$1.2 million for the year ended December 31, 2013, when compared to the
year ended December 31, 2012, primarily due to the internal growth of
the Company and the increased number of employees, and salary increases
for existing employees.
-- Partnership tax credit: The partnership tax credit expense increased
$1.1 million from the prior year period. The Company has invested in
certain federal low-income housing tax credits and federal new market
tax credits. These credits are typically purchased at 70-90% of the
amount of the credit and are generally utilized to offset taxes payable
over ten-year and seven-year periods, respectively. During the year
ended December 31, 2013, tax credits used to reduce the Company's tax
expense totaled $9.5 million, up $2.1 million from $7.4 million for the
year ended December 31, 2012. These tax credits resulted in
corresponding amortization expense of $6.9 million during the year ended
December 31, 2013, up $1.1 million from $5.8 million for the year ended
December 31, 2012. The net result of these transactions was an increase
to non-interest expense and a decrease to income tax expense, which
positively impacted the Company's effective tax rate, but negatively
impacted the Company's non-interest expense and efficiency ratio.
-- Advertising: Advertising expense increased $593,000 for the year ended
December 31, 2013, when compared to the year ended December 31, 2012,
due to additional marketing campaigns across the franchise in the
current year period, including business banking and mobile banking
promotions, and loan campaigns.
The Company's efficiency ratio for the quarter ended December 31, 2013, was 72.30% compared to 58.30% for the same quarter in 2012. The efficiency ratio for the year ended December 31, 2013, was 66.94% compared to 53.03% for the year ended December 31, 2012. The increase in the ratio in the 2013 three-month period was primarily due to decreases in net interest income and decreases in non-interest income resulting from decreased gains on sales of single-family loans and increased amortization expense related to business acquisitions. Additionally, as discussed above, the Company recorded $700,000 of non-recurring expenses. The increase in the ratio in the 2013 twelve-month period was primarily due to the same factors as the three-month period, as well as decreases in non-interest income resulting from the acquisition gain in 2012. The Company's ratio of non-interest expense to average assets increased from 3.17% for the three months ended December 31, 2012 to 3.20% for the three months ended December 31, 2013. The increase in the current period ratio was due to a decrease in average assets in the 2013 period compared to the 2012 period. The Company's ratio of non-interest expense to average assets decreased from 2.98% for the year ended December 31, 2012 to 2.91% for the year ended December 31, 2013. The decrease in the current period ratio was due to a decrease in non-interest expense in the 2013 period compared to the 2012 period. Average assets for the quarter ended December 31, 2013 decreased $406 million, or 10.2%, from the quarter ended December 31, 2012. Average assets for the year ended December 31, 2013, decreased $216 million, or 5.4%, from the year ended December 31, 2012.
INCOME TAXES
For the three months and year ended December 31, 2013, the Company's effective tax (benefit) rates were (6.2)% and 9.2%, respectively, which were lower than the statutory federal tax rate of 35%, due primarily to the effects of the tax credits discussed above 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 less than 12% 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. At this time, the Company expects to utilize a larger amount of tax credits in 2014 than it did in 2013.
CAPITAL
As of December 31, 2013, total stockholders' equity was $380.7 million (10.7% of total assets). As of December 31, 2013, common stockholders' equity was $322.8 million (9.1% of total assets), equivalent to a book value of $23.60 per common share. Total stockholders' equity at December 31, 2012, was $369.9 million (9.4% of total assets). As of December 31, 2012, common stockholders' equity was $311.9 million (7.9% of total assets), equivalent to a book value of $22.94 per common share. At December 31, 2013, the Company's tangible common equity to total assets ratio was 8.9%, compared to 7.7% at December 31, 2012. The tangible common equity to total risk-weighted assets ratio was 12.3% at December 31, 2013, compared to 12.7% at December 31, 2012.
As of December 31, 2013, the Company's and the Bank's regulatory capital levels were categorized as "well capitalized" as defined by the Federal banking agencies' capital-related regulations. On a preliminary basis, as of December 31, 2013, the Company's Tier 1 leverage ratio was 10.7%, Tier 1 risk-based capital ratio was 15.6%, and total risk-based capital ratio was 16.9%. On December 31, 2013, and on a preliminary basis, the Bank's Tier 1 leverage ratio was 10.2%, Tier 1 risk-based capital ratio was 14.2%, and total risk-based capital ratio was 15.4%.
Great Southern Bancorp, Inc. is a participant in the U.S. Treasury's Small Business Lending Fund (SBLF). Through the SBLF, in August 2011, the Company issued a new series of preferred stock totaling $57.9 million to the Treasury. The dividend rate on the SBLF preferred stock for the fourth quarter of 2013 was 1.0% and the Company currently expects the dividend rate will remain at 1.0% until the first quarter of 2016.
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.
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, including 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, 2013, decreased $5.0 million to $2.8 million when compared with the quarter ended December 31, 2012. The provision for loan losses for the year ended December 31, 2013, decreased $26.5 million to $17.4 million when compared with the year ended December 31, 2012. At December 31, 2013, the allowance for loan losses was $40.1 million, a decrease of $533,000 from December 31, 2012. Total net charge-offs were $2.2 million (net of a $1.0 million recovery of a loan previously charged off) and $7.4 million for the quarters ended December 31, 2013 and 2012, respectively. Total net charge-offs were $17.9 million and $44.4 million for the years ended December 31, 2013 and 2012, respectively. One relationship made up $2.4 million of the net charge-off total for the quarter ended December 31, 2013. Included in the net charge-off total for the year ended December 31, 2013 were charge-offs of $2.2 million and net recoveries of $1.1 million related to loans covered by the loss sharing agreements with the FDIC. In the first quarter of 2013, the Bank recorded $2.2 million in net charge-offs (with a corresponding provision for loan losses) related to the covered loans. Under these agreements, the FDIC will reimburse the Bank for 80% of the losses, so the Bank expected reimbursement of $1.8 million of this charge-off and recorded income of this amount in the first quarter of 2013. During the second quarter of 2013, these covered loans were resolved more favorably than originally anticipated, with the Bank experiencing a recovery of $1.1 million of the previously recorded charge-off. The Bank expected to reimburse the FDIC $0.9 million of this recovery and recorded expense of this amount in the second quarter of 2013. 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 1.92%, 2.01% and 2.21% at December 31, 2013, September 30, 2013, and December 31, 2012, respectively. Management considers the allowance for loan losses adequate to cover losses inherent in the Company's loan portfolio at December 31, 2013, 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, are not included in the totals or in the discussion of non-performing loans, potential problem loans and foreclosed assets below due to the respective 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 agreement. 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 has been better than original expectations as of the acquisition dates.
As a result of changes in balances and composition of the loan portfolio, changes in economic and market conditions that occur from time to time, and other factors specific to a borrower's circumstances, the level of non-performing assets will fluctuate.
Non-performing assets, excluding FDIC-covered non-performing assets, at December 31, 2013, were $62.3 million, a decrease of $10.3 million from $72.6 million at December 31, 2012. Non-performing assets, excluding FDIC-covered non-performing assets, as a percentage of total assets were 1.75% at December 31, 2013, compared to 1.84% at December 31, 2012.
Compared to September 30, 2013, non-performing loans decreased $1.5 million to $19.9 million and foreclosed assets increased $595,000 to $42.4 million. Commercial real estate loans comprised $6.2 million, or 31.2%, of the total $19.9 million of non-performing loans at December 31, 2013, a decrease of $3.6 million from September 30, 2013. Non-performing other commercial loans increased $2.4 million in the three months ended December 31, 2013, and were $7.2 million, or 36.3%, of total non-performing loans at December 31, 2013. Non-performing one-to four-family residential loans comprised $4.4 million, or 21.9%, of total non-performing loans at December 31, 2013, an increase of $303,000 from September 30, 2013.
Compared to September 30, 2013, potential problem loans decreased $7.6 million, or 22.1%. This decrease was due to $5.1 million in loans transferred to non-performing, $3.1 million in loans being removed from potential problem loans, $1.4 million in loans transferred to foreclosed assets, $1.1 million in charge-offs and $840,000 in payments on potential problem loans, partially offset by the addition of $4.0 million of loans to potential problem loans.
Activity in the non-performing loans category during the quarter ended December 31, 2013, was as follows:
Beginning Balance, Additions to Non- Removed from Non-
Performing Performing Transfers Transfers to Foreclosed Assets Charge-Offs Payments Ending Balance,
December 31
October 1 to Potential Problem Loans
--------- --------------------------
(In thousands)
One- to
four-
family
construction $ - $ - $ - $ - $ - $ - $ - $ -
Subdivision
construction 879 - - - - - (8) 871
Land
development 260 109 - - (6) (12) (13) 338
Commercial
construction - - - - - - - -
One- to
four-
family
residential 4,058 1,337 - (184) (326) (354) (170) 4,361
Other
residential 713 - - - (350) (361) (2) -
Commercial
real
estate 9,765 2,619 - (1,939) (2,400) (802) (1,038) 6,205
Other
commercial 4,878 2,398 - - - (8) (37) 7,231
Consumer 835 330 - (46) - (99) (120) 900
--- --- --- --- --- --- ---- ---
Total $21,388 $6,793 $ - $(2,169) $(3,082) $(1,636) $(1,388) $19,906
======= ====== ================== ======= ======= ======= ======= =======
At December 31, 2013, the non-performing other commercial category included nine loans, one of which was added during the quarter, totaling $2.4 million, or 33.2% of the total category. The largest relationship in this category is comprised of three loans totaling $2.7 million, or 37.2% of the total category, and is collateralized by inventory and assets of a business. The non-performing commercial real estate category included five loans, one of which was added during the quarter and totaled $1.9 million. It is collateralized by a theater in Branson, Mo. The largest relationship in this category, which was added in previous quarters, is comprised of two loans totaling $4.1 million, or 66.0%, of the total category, and is collateralized by two hotel buildings. The non-performing one- to four-family residential category included 58 loans, 19 of which were added during the quarter.
Activity in the potential problem loans category during the quarter ended December 31, 2013, was as follows:
Beginning Balance, Additions to Potential Removed from Potential Transfers to Non- Transfers to Foreclosed
Problem Problem Performing Assets Charge-Offs Payments Ending Balance,
December 31
October 1
---------
(In thousands)
One- to
four-
family
construction $ - $ - $ - $ - $ - $ - $ - $ -
Subdivision
construction 2,315 36 - (40) - - (110) 2,201
Land
development 13,637 - - - (1,436) (1,089) (255) 10,857
Commercial
construction - - - - - - - -
One- to
four-
family
residential 1,957 314 (33) (35) - (1) (9) 2,193
Other
residential 1,459 497 - - - - - 1,956
Commercial
real
estate 11,931 3,036 (3,022) (2,619) - - (446) 8,880
Other
commercial 3,186 14 (73) (2,398) - - (12) 717
Consumer 140 69 - (15) - (3) (8) 183
--- --- --- --- --- --- --- ---
Total $34,625 $3,966 $(3,128) $(5,107) $(1,436) $(1,093) $(840) $26,987
======= ====== ======= ======= ======= ======= ===== =======
At December 31, 2013, the land development category included four loans, all of which were added during previous quarters. The largest relationship in this category totaled $5.0 million, or 46.1% of the total category, and was collateralized by property located in the Lake of the Ozarks, Mo. area. The second largest relationship in this category totaled $3.8 million, or 35.4% of the total category, and was collateralized by property in the Branson, Mo. area. The commercial real estate category of potential problem loans included 11 loans, three of which were added during the current quarter. The largest relationship in this category, which was added during a previous quarter, had a balance of $5.0 million, or 55.8% of the total category. The relationship was collateralized by properties located near Branson, Missouri. The one- to four-family residential category of potential problem loans included 21 loans, five of which were added during the current quarter. The subdivision construction category of potential problem loans included six loans, one of which was added during the current quarter. The largest relationship in this category, which was added during a previous quarter, had a balance of $1.8 million, or 80.2% of the total category, and was collateralized by properties in the Branson, Mo., area. The other residential category of potential problem loans included one loan which was added in a previous quarter, and was collateralized by properties located in the Branson, Mo., area. The other commercial category of potential problem loans included four loans, one of which was added in the current quarter. The largest relationship in this category, which was added during a previous current quarter, had a balance of $660,000, or 92.1% of the total category, and was collateralized by collector automobiles.
Activity in other real estate owned, excluding $9.0 million in foreclosed assets covered by FDIC loss sharing agreements and $2.1 million in properties which were not acquired through foreclosure, during the quarter ended December 31, 2013, was as follows:
Beginning Balance, Additions ORE Sales Capitalized Costs ORE Write-Downs Ending Balance,
December 31
October 1
---------
(In thousands)
One-to
four-
family
construction $ - $600 $ - $ - $ - $600
Subdivision
construction 13,092 500 (1,421) (19) - 12,152
Land
development 15,293 1,442 (39) - (8) 16,688
Commercial
construction 2,245 - (87) - (26) 2,132
One- to
four-
family
residential 1,070 326 (652) - - 744
Other
residential 5,632 350 (264) 182 - 5,900
Commercial
real
estate 3,239 1,400 (1,504) - - 3,135
Commercial
business 98 - (19) - - 79
Consumer 1,132 1,027 (1,192) - - 967
----- ----- ------ --- --- ---
Total $41,801 $5,645 $(5,178) $163 $(34) $42,397
======= ====== ======= ==== ==== =======
At December 31, 2013, the land development category of foreclosed assets included 29 properties, the largest of which was located in northwest Arkansas and had a balance of $2.3 million, or 13.7% of the total category. Of the total dollar amount in the land development category of foreclosed assets, 35.1% and 36.9% was located in northwest Arkansas and in the Branson, Mo., area, respectively, including the largest property previously mentioned. The subdivision construction category of foreclosed assets included 35 properties, the largest of which was located in the St. Louis, Mo. metropolitan area and had a balance of $3.2 million, or 26.5% of the total category. Of the total dollar amount in the subdivision construction category of foreclosed assets, 16.4% and 14.9% is located in Branson, Mo., and Springfield, Mo., respectively. The other residential category of foreclosed assets included 17 properties, 13 of which were all part of the same condominium community, which was located in Branson, Mo. and had a balance of $2.4 million, or 40.7% of the total category. Of the total dollar amount in the other residential category of foreclosed assets, 88.1% was located in the Branson, Mo., area, including the largest properties previously mentioned.
BRANCH ACQUISITION
On January 14, 2014, the Company announced that it signed a definitive agreement to purchase two branches in Neosho, Mo., from Boulevard Bank. The branches are located at 111 E. Main St. and 713 S. Neosho Blvd. The acquisition, representing approximately $65 million of deposits and $6 million of loans, is expected to be complete in the first quarter of 2014, pending regulatory approval. Great Southern currently operates one banking center in Neosho at 714 S. Neosho Blvd. Subject to separate regulatory approval and after conversion of all Neosho locations to one operating system, the Bank expects to relocate this office into the Boulevard Bank branch directly across the street at 713 S. Neosho Blvd. This transaction will ultimately represent a net increase of one banking center to the Great Southern franchise.
Terms of the agreement call for Great Southern to acquire the loans at par and pay a two percent premium on approximately $55 million of the deposits. The Company will pay book value of approximately $700,000 for the real and personal property associated with these two branches. The Company anticipates that the effects of this transaction, including the consolidation of its existing banking center in Neosho, will be slightly accretive to earnings.
BUSINESS INITIATIVES
During 2013, the Company reduced its banking center network from 107 to 96 banking centers. A total of 12 offices were consolidated into other Great Southern banking centers, including 11 facilities in southeast and central Missouri in October and one drive-thru facility in Sioux City, Iowa, in December. The Sioux City drive-thru was consolidated into the nearby Downtown Sioux City banking center, which was remodeled to include drive-thru services for customers. A full-service banking center in Omaha, Neb., was opened in October, adding to the network total. The Company also relocated three existing banking centers to nearby sites - one each in Springfield, Mo., Ava, Mo., and Maple Grove, Minn. Information pertaining to the above initiatives can be found in the Company's previous filings.
As announced as a "Subsequent Event" in the Company's Quarterly Report on Form 10-Q for September 30, 2013, the Company completed an acquisition of loans with an aggregate principal amount totaling $86.1 million on October 25, 2013. The acquired loan portfolio, which was auctioned by an unrelated FDIC-insured financial institution, included 119 loans with collateral securing the notes consisting primarily of multi-family real estate in Minnesota, Michigan, Wisconsin, Illinois and Indiana. The Bank paid $87.9 million for the loans, which resulted in a 2.125% premium over the principal balances of the portfolio. The process of bidding on the portfolio was competitive in nature with numerous institutions bidding on all or a portion of the loans. The Bank estimates the average yield of the portfolio to be approximately 4.3% based on the weighted average maturity of the portfolio (less than four years), with an average yield potentially as high as 4.7% if loan balances are retained beyond the initial maturity dates.
In the first quarter of 2014, the Company expects to open commercial loan production offices in Tulsa, Okla., and Dallas, Texas, pending regulatory approval. The Tulsa office is located in southeast Tulsa at 4200 E. Skelly Dr. and the Dallas office is in Preston Center (north Dallas) at 8201 Preston Rd.
In addition, the Company expects to add two new full-service banking centers to its network in the second quarter of 2014: a north St. Louis office and a Fayetteville, Ark., facility.
The common stock of Great Southern Bancorp, Inc., is listed on the Nasdaq Global Select Market under the symbol "GSBC". The last reported sale price of GSBC common stock in the quarter ended December 31, 2013, was $30.41. 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.
www.GreatSouthernBank.com
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 "expects," "anticipates," "will be," "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 the Great Southern banking center consolidation 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 cost savings, 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; (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 writeoffs 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) the uncertainties arising from the Company's participation in the Small Business Lending Fund program, including uncertainties concerning the potential future redemption by us of the U.S. Treasury's preferred stock investment under the program, including the timing of, regulatory approvals for, and conditions placed upon, any such redemption; (xiv) costs and effects of litigation, including settlements and judgments; and (xv) competition. The Company wishes to advise readers that the factors listed above and other risks described from time to time in the Company's other filings 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 and twelve months ended December 31, 2013, and 2012, are not necessarily indicative of the results of operations which may be expected for any future period.
December 31, December 31,
2013 2012
---- ----
Selected Financial
Condition Data: (In thousands)
Total assets $3,560,250 $3,955,182
Loans receivable, gross 2,482,641 2,362,480
Allowance for loan losses 40,116 40,649
Other real estate owned,
net 53,514 68,874
Available-for-sale
securities, at fair
value 555,281 807,010
Deposits 2,808,626 3,153,193
Total borrowings 343,795 391,114
Total stockholders'
equity 380,698 369,874
Common stockholders'
equity 322,755 311,931
Non-performing assets
(excluding FDIC-covered
assets) 62,303 72,622
Three Months Ended Year Ended Three Months Ended
December 31, December 31, September 30,
2013 2012 2013 2012 2013
---- ---- ---- ---- ----
Selected
Operating
Data: (Dollars in thousands, except per share data)
Interest
income $44,939 $50,451 $178,795 $193,508 $43,019
Interest
expense 4,445 5,824 19,203 28,377 4,555
----- ----- ------ ------ -----
Net
interest
income 40,494 44,627 159,592 165,131 38,464
Provision
for loan
losses 2,813 7,786 17,386 43,863 2,677
Non-
interest
income (864) 1,981 5,315 46,002 929
Non-
interest
expense 28,651 30,267 110,389 112,560 27,178
Provision
(credit)
for
income
taxes (507) 176 3,403 10,623 1,099
---- --- ----- ------ -----
Net income
from
continuing
operations $8,673 $8,379 $33,729 $44,087 $8,439
Income
from
discontinued
operations - 4,070 - 4,619 -
--- ----- --- ----- ---
Net income $8,673 $12,449 $33,729 $48,706 $8,439
====== ======= ======= ======= ======
Net income
available-
to-
common
shareholders $8,528 $12,281 $33,150 $48,098 $8,294
====== ======= ======= ======= ======
At or For the Three At or For the Year At or For the
Months Ended Three Months Ended
Ended
December 31, December 31, September 30,
2013 2012 2013 2012 2013
---- ---- ---- ---- ----
Per Common Share: (Dollars in thousands, except per share data)
Net income (fully
diluted) $0.62 $0.90 $2.42 $3.54 $0.61
===== ===== ===== ===== =====
Net income from
continuing
operations
(fully diluted) $0.62 $0.60 $2.42 $3.20 $0.61
===== ===== ===== ===== =====
Book value $23.60 $22.94 $23.60 $22.94 $23.15
====== ====== ====== ====== ======
Earnings
Performance
Ratios:
Annualized return
on average
assets 0.97% 1.25% 0.89% 1.22% 0.92%
Annualized return
on average
stockholders'
equity 10.75% 16.03% 10.52% 16.55% 10.56%
Net interest
margin 5.02% 5.01% 4.70% 4.61% 4.64%
Average interest
rate spread 4.90% 4.95% 4.60% 4.53% 4.53%
Efficiency ratio 72.30% 58.30% 66.94% 53.03% 68.99%
Non-interest
expense to
average total
assets 3.20% 3.17% 2.91% 2.98% 2.96%
Asset Quality
Ratios:
Allowance for
loan losses to
period-end
loans 1.92% 2.21% 1.92% 2.21% 2.01%
Non-performing
assets to
period-end
assets 1.75% 1.84% 1.75% 1.84% 1.75%
Non-performing
loans to period-
end loans 0.80% 0.94% 0.80% 0.94% 0.90%
Annualized net
charge-offs to
average loans 0.42% 1.60% 0.91% 2.43% 0.70%
Great Southern Bancorp, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(In thousands, except number of shares)
December 31, December 31, September 30,
2013 2012 2013
---- ---- ----
Assets
Cash $96,167 $107,949 $109,254
Interest-bearing
deposits in
other financial
institutions 131,758 295,855 230,560
Federal funds
sold - 337 -
--- --- ---
Cash and cash
equivalents 227,925 404,141 339,814
Available-for-
sale securities 555,281 807,010 580,980
Held-to-
maturity
securities 805 920 805
Mortgage loans
held for sale 7,239 26,829 10,047
Loans receivable
(1), net of
allowance for
loan losses of
$40,116 -
December 2013;
$40,649 -
December 2012;
$39,456 -
September 2013 2,439,530 2,319,638 2,328,738
FDIC
indemnification
asset 72,705 117,263 80,554
Interest
receivable 11,408 12,755 10,932
Prepaid expenses
and other assets 72,904 79,560 76,293
Other real estate
owned (2), net 53,514 68,874 55,606
Premises and
equipment, net 104,534 102,286 104,811
Goodwill and
other intangible
assets 4,583 5,811 4,890
Federal Home Loan
Bank stock 9,822 10,095 9,855
----- ------ -----
Total Assets $3,560,250 $3,955,182 $3,603,325
========== ========== ==========
Liabilities and Stockholders' Equity
Liabilities
Deposits $2,808,626 $3,153,193 $2,852,534
Federal Home Loan
Bank advances 126,757 126,730 127,808
Securities sold
under reverse
repurchase
agreements with
customers 134,981 179,644 135,158
Structured
repurchase
agreements 50,000 53,039 50,000
Short-term
borrowings 1,128 772 633
Subordinated
debentures
issued to
capital trust 30,929 30,929 30,929
Accrued interest
payable 1,099 1,322 1,121
Advances from
borrowers for
taxes and
insurance 3,721 2,154 5,814
Accounts payable
and accrued
expenses 18,502 12,128 18,307
Current and
deferred income
taxes 3,809 25,397 5,448
----- ------ -----
Total Liabilities 3,179,552 3,585,308 3,227,752
--------- --------- ---------
Stockholders' Equity
Capital stock
Serial preferred
stock -SBLF,
$.01 par value;
authorized
1,000,000
shares; issued
and outstanding
2013 and 2012 -
57,943 shares 57,943 57,943 57,943
Common stock,
$.01 par value; shares;
authorized September 2013 -
20,000,000 13,665,706
shares; issued shares
and outstanding
December 2013 -
13,673,709
shares; December
2012 -
13,596,335 137 136 137
Additional paid-
in capital 19,567 18,394 19,407
Retained earnings 300,589 276,751 294,420
Accumulated other
comprehensive
gain 2,462 16,650 3,666
----- ------ -----
Total
Stockholders'
Equity 380,698 369,874 375,573
------- ------- -------
Total Liabilities
and
Stockholders'
Equity $3,560,250 $3,955,182 $3,603,325
========== ========== ==========
(1) At December 31, 2013,
December 31, 2012 and
September 30, 2013,
includes loans, net of
discounts, totaling
$386.2 million, $523.8
million and $413.3
million, respectively,
which are subject to FDIC
support through loss
sharing agreements.
(2) At December 31, 2013,
December 31, 2012 and
September 30, 2013,
includes foreclosed
assets, net of discounts,
totaling $9.0 million,
$18.7 million and $13.8
million, respectively,
which are subject to FDIC
support through loss
sharing agreements.
Great Southern Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands)
Three Months Ended Year Ended Three Months Ended
December 31, December 31, September 30,
2013 2012 2013 2012 2013
---- ---- ---- ---- ----
Interest Income
Loans $41,677 $45,591 $163,903 $170,163 $40,087
Investment
securities and
other 3,262 4,860 14,892 23,345 2,932
----- ----- ------ ------ -----
44,939 50,451 178,795 193,508 43,019
------ ------ ------- ------- ------
Interest Expense
Deposits 2,735 4,058 12,346 20,720 2,822
Federal Home
Loan Bank
advances 1,004 1,001 3,972 4,430 1,005
Short-term
borrowings and
repurchase
agreements 567 617 2,324 2,610 587
Subordinated
debentures
issued to
capital trust 139 148 561 617 141
--- --- --- --- ---
4,445 5,824 19,203 28,377 4,555
----- ----- ------ ------ -----
Net Interest
Income 40,494 44,627 159,592 165,131 38,464
Provision for
Loan Losses 2,813 7,786 17,386 43,863 2,677
----- ----- ------ ------ -----
Net Interest
Income After
Provision for
Loan Losses 37,681 36,841 142,206 121,268 35,787
------ ------ ------- ------- ------
Noninterest Income
Commissions 229 267 1,065 1,036 158
Service charges
and ATM fees 4,426 4,815 18,227 19,087 4,729
Net gains on
loan sales 679 1,855 4,915 5,505 1,179
Net realized
gains on sales
and impairments
of available-
for-sale
securities 2 618 243 2,666 110
Realized
impairments of
available-for-
sale securities - (418) - (680) -
Late charges and
fees on loans 479 422 1,264 1,028 284
Net change in
interest rate
swap fair value 11 86 295 (38) (125)
Initial gain
recognized on
business
acquisition - - - 31,312 -
Accretion
(amortization)
of income
related to
business
acquisitions (7,360) (6,546) (25,260) (18,693) (6,339)
Other income 670 882 4,566 4,779 933
--- --- ----- ----- ---
(864) 1,981 5,315 46,002 929
---- ----- ----- ------ ---
Noninterest Expense
Salaries and
employee
benefits 13,135 12,420 52,468 51,262 13,034
Net occupancy
expense 5,208 4,945 20,658 20,179 5,216
Postage 861 828 3,315 3,301 790
Insurance 985 1,155 4,189 4,476 1,083
Advertising 566 357 2,165 1,572 433
Office supplies
and printing 353 329 1,303 1,389 320
Telephone 699 681 2,868 2,768 679
Legal, audit and
other
professional
fees 1,413 957 4,348 4,323 1,186
Expense on
foreclosed
assets 589 4,545 4,068 8,748 1,068
Partnership tax
credit 2,379 1,983 6,879 5,782 1,578
Other operating
expenses 2,463 2,067 8,128 8,760 1,791
----- ----- ----- ----- -----
28,651 30,267 110,389 112,560 27,178
------ ------ ------- ------- ------
Income Before
Income Taxes 8,166 8,555 37,132 54,710 9,538
Provision
(Credit) for
Income Taxes (507) 176 3,403 10,623 1,099
---- --- ----- ------ -----
Net Income from
Continuing
Operations 8,673 8,379 33,729 44,087 8,439
Discontinued Operations
Income from discontinued operations (including
gain
on disposal in
2012 of
$6,114), net of
income taxes - 4,070 - 4,619 -
--- ----- --- ----- ---
Net Income 8,673 12,449 33,729 48,706 8,439
Preferred Stock
Dividends and
Discount
Accretion 145 168 579 608 145
--- --- --- --- ---
Net Income
Available to
Common
Shareholders $8,528 $12,281 $33,150 $48,098 $8,294
====== ======= ======= ======= ======
Three Months Ended Year Ended Three Months Ended
December 31, December 31, September 30,
2013 2012 2013 2012 2013
---- ---- ---- ---- ----
Earnings
Per
Common
Share
Basic $0.63 $0.90 $2.46 $3.55 $0.61
===== ===== ===== ===== =====
Diluted $0.62 $0.90 $2.42 $3.54 $0.61
===== ===== ===== ===== =====
Earnings
from
Continuing
Operations
Per
Common
Share
Basic $0.63 $0.60 $2.46 $3.21 $0.61
===== ===== ===== ===== =====
Diluted $0.62 $0.60 $2.42 $3.20 $0.61
===== ===== ===== ===== =====
Dividends
Declared
Per
Common
Share $0.18 $0.18 $0.72 $0.72 $0.18
===== ===== ===== ===== =====
Average Balances, Interest Rates and Yields
The following tables present, 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 the amortization of net loan fees, which were deferred in accordance with accounting standards. Fees included in interest income were $875,000 and $932,000 for the three months ended December 31, 2013 and 2012, respectively. Fees included in interest income were $3.4 million and $3.2 million for the year ended December 31, 2013 and 2012, respectively. Tax-exempt income was not calculated on a tax equivalent basis. The table does not reflect any effect of income taxes.
December 31, 2013(1) Three Months Ended Three Months Ended
December 31, 2013 December 31, 2012
----------------- -----------------
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 4.81% $445,700 $9,237 8.22% $505,632 $9,328 7.34%
Other residential 4.73 341,321 6,015 6.99 324,054 5,198 6.38
Commercial real estate 4.70 841,794 13,743 6.48 794,403 15,766 7.90
Construction 4.50 207,019 2,890 5.54 200,019 5,652 11.24
Commercial business 4.97 251,968 3,387 5.33 236,586 3,889 6.54
Other loans 6.02 316,981 5,764 7.21 285,519 5,039 7.02
Industrial revenue bonds 5.64 45,377 641 5.61 48,680 719 5.87
---- ------ --- ---- ------ --- ----
Total loans receivable 5.10 2,450,160 41,677 6.75 2,394,893 45,591 7.57
Investment securities 2.73 583,275 3,168 2.15 802,998 4,751 2.35
Other interest-earning
assets 0.22 166,578 94 0.22 344,904 109 0.13
---- ------- --- ---- ------- --- ----
Total interest-earning
assets 4.49 3,200,013 44,939 5.57 3,542,795 50,451 5.67
---- ------ ---- ------ ----
Non-interest-earning
assets:
Cash and cash equivalents 91,919 92,942
Other non-earning assets 289,064 351,636
------- -------
Total assets $3,580,996 $3,987,373
========== ==========
Interest-bearing
liabilities:
Interest-bearing demand
and savings
0.20 $1,288,091 685 0.21 $1,531,803 1,284 0.33
Time deposits 0.69 1,007,725 2,050 0.81 1,261,120 2,774 0.88
---- --------- ----- ---- --------- ----- ----
Total deposits 0.41 2,295,816 2,735 0.47 2,792,923 4,058 0.58
Short-term borrowings and
repurchase agreements 1.20 194,755 567 1.16 267,490 617 0.92
Subordinated debentures
issued to capital trust 1.81 30,929 139 1.79 30,929 148 1.90
FHLB advances 3.13 127,297 1,004 3.13 126,650 1,001 3.14
---- ------- ----- ---- ------- ----- ----
Total interest-bearing
liabilities 0.61 2,648,797 4,445 0.67 3,217,992 5,824 0.72
---- ----- ---- ----- ----
Non-interest-bearing
liabilities:
Demand deposits 521,302 368,457
Other liabilities 30,140 32,326
------ ------
Total liabilities 3,200,239 3,618,775
Stockholders' equity 380,757 368,598
------- -------
Total liabilities and
stockholders' equity $3,580,996 $3,987,373
========== ==========
Net interest income:
Interest rate spread 3.88% $40,494 4.90% $44,627 4.95%
==== ======= ==== ======= ====
Net interest margin* 5.02% 5.01%
==== ====
Average interest-earning
assets to average
interest-bearing
liabilities 120.8% 110.1%
===== =====
*Defined as the Company's net
interest income divided by average
total interest-earning assets.
(1) The yield/
rate on
loans at
December
31, 2013
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, 2013.
December 31, 2013(1) Year Ended Year Ended
December 31, 2013 December 31, 2012
----------------- -----------------
Yield/Rate Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
(Dollars in thousands)
Interest-
earning
assets:
Loans
receivable:
One- to
four-
family
residential 4.81% $472,127 $35,072 7.43% $463,096 $31,643 6.83%
Other
residential 4.73 312,362 23,963 7.67 314,630 18,807 5.98
Commercial
real
estate 4.70 813,147 51,175 6.29 785,181 56,428 7.19
Construction 4.50 208,254 14,413 6.92 219,309 20,802 9.49
Commercial
business 4.97 249,647 14,505 5.81 228,109 19,439 8.52
Other loans 6.02 297,852 21,947 7.37 259,684 19,739 7.60
Industrial
revenue
bonds 5.64 50,155 2,828 5.64 56,264 3,305 5.87
---- ------ ----- ---- ------ ----- ----
Total loans
receivable 5.10 2,403,544 163,903 6.82 2,326,273 170,163 7.31
Investment
securities 2.73 717,806 14,459 2.01 846,197 22,674 2.68
Other
interest-
earning
assets 0.22 276,394 433 0.16 413,092 671 0.16
---- ------- --- ---- ------- --- ----
Total
interest-
earning
assets 4.49 3,397,744 178,795 5.26 3,585,562 193,508 5.40
---- ------- ---- ------- ----
Non-
interest-
earning
assets:
Cash and
cash
equivalents 88,678 84,035
Other non-
earning
assets 303,454 336,016
------- -------
Total
assets $3,789,876 $4,005,613
========== ==========
Interest-
bearing
liabilities:
Interest-
bearing
demand and
savings 0.20 $1,464,029 3,551 0.24 $1,456,172 7,087 0.49
Time
deposits 0.69 1,073,110 8,795 0.82 1,357,741 13,633 1.00
---- --------- ----- ---- --------- ------ ----
Total
deposits 0.41 2,537,139 12,346 0.49 2,813,913 20,720 0.74
Short-term
borrowings
and
repurchase
agreements 1.20 232,598 2,324 1.00 265,718 2,610 0.98
Subordinated
debentures
issued to
capital
trust 1.81 30,929 561 1.81 30,929 617 1.99
FHLB
advances 3.13 127,561 3,972 3.11 145,464 4,430 3.05
---- ------- ----- ---- ------- ----- ----
Total
interest-
bearing
liabilities 0.61 2,928,227 19,203 0.66 3,256,024 28,377 0.87
---- ------ ---- ------ ----
Non-
interest-
bearing
liabilities:
Demand
deposits 459,802 385,770
Other
liabilities 23,197 11,537
------ ------
Total
liabilities 3,411,226 3,653,331
Stockholders'
equity 378,650 352,282
------- -------
Total
liabilities
and
stockholders'
equity $3,789,876 $4,005,613
========== ==========
Net
interest
income:
Interest
rate
spread 3.88% $159,592 4.60% $165,131 4.53%
==== ======== ==== ======== ====
Net
interest
margin* 4.70% 4.61%
==== ====
Average
interest-
earning
assets to
average
interest-
bearing
liabilities 116.0% 110.1%
===== =====
*Defined as the Company's net
interest income divided by average
total interest-earning assets.
(1) The yield/rate on loans at
December 31, 2013 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,
2013.
SOURCE Great Southern Bancorp, Inc.
