Great Southern Bancorp(US:GSBC)2023-03-13 16:53Financial Position and Assets - Total consolidated assets of Bancorp were $5.68 billion, with net loans of $4.51 billion, deposits of $4.68 billion, and total stockholders' equity of $533.1 million as of December 31, 2022[9] - Great Southern Bank had total assets of $5.68 billion, net loans of $4.51 billion, deposits of $4.71 billion, and equity capital of $608.4 million (10.7% of total assets) as of December 31, 2022[12] - Total loans receivable, net increased to $4,511,647 thousand in 2022 from $4,016,235 thousand in 2021, reflecting growth in the loan portfolio[54] - Total loans receivable as of December 31, 2021, amounted to $4,077,552 thousand, with total past due loans of $8,130 thousand[104] - FDIC-assisted acquired loans included in the total loans receivable amounted to $74,170 thousand as of December 31, 2021[104] Loan Portfolio Composition - Commercial real estate loans accounted for 34% of the total outstanding portfolio, while other residential (multi-family) and multi-family and commercial construction loans each accounted for 17% at December 31, 2022[42] - One- to four-family residential loans accounted for approximately 20% of the total outstanding portfolio at December 31, 2022[42] - Loans secured by second liens on residential properties were $82.3 million, or 1.8%, of the total loan portfolio at December 31, 2022[45] - Total real estate loans accounted for 89.4% of the total loan portfolio at December 31, 2022, with one- to four-family residential loans making up 19.8%[50] - Consumer loans accounted for 4.2% of the total loan portfolio at December 31, 2022, with home equity and improvement loans making up 2.7%[50] - Residential real estate loans totaled $1.7 billion in 2022, representing 36.8% of the total loan portfolio, up from $1.4 billion (34.0%) in 2021[63] - The one- to four-family residential real estate loan portfolio increased in 2022 due to organic growth, with a significant portion of new originations being adjustable-rate loans[63] - Other residential (multi-family) loan portfolio increased by approximately 12.0% in 2022, partly due to slower refinancings and early pay-offs as interest rates rose[63] - Commercial real estate loans stabilized and diversified, with the portfolio composition shifting away from speculative construction and land development loans[60] - Consumer lending for automobiles and boats decreased significantly, with indirect automobile and boat lending being eliminated[60] - Loans secured by commercial real estate totaled $1.5 billion at December 31, 2022, representing 33.7% of the total loan portfolio, while construction loans aggregated $865.2 million, or 18.9% of the portfolio[67] - The Bank's commercial real estate and construction loan portfolios include diverse collateral types, with retail projects, warehouses, and healthcare facilities being the top three, representing 7.2%, 6.7%, and 6.2% of the total loan portfolio, respectively[71] - Other commercial loans outstanding totaled $293 million at December 31, 2022, representing 6.4% of the total loan portfolio[74] - Consumer loans totaled $194 million at December 31, 2022, or 4.2% of the total loan portfolio, with secured loans including automobile, boat, and home equity loans[80] - The Bank had $70.2 million in direct and indirect auto, boat, modular home, and recreational vehicle loans at December 31, 2022, with indirect consumer loans totaling $16 million[84] - Consumer loans carry higher risk due to potential depreciation of collateral and borrower financial instability, limiting recovery amounts[85] Loan Performance and Credit Quality - The allowance for credit losses was $63.48 million at December 31, 2022, compared to $60.75 million at December 31, 2021[50] - Total past due loans as of December 31, 2022, amounted to $7.775 million, with $3.394 million in 30-59 days past due, $711,000 in 60-89 days past due, and $3.670 million over 90 days past due[102] - FDIC-assisted acquired loans included $685,000 in past due amounts and $57.923 million in current amounts as of December 31, 2022[102] - Non-performing assets as of December 31, 2022, totaled $3,720 thousand, representing 0.07% of average total assets[112] - Gross collateral-dependent loans decreased from $5.2 million in 2021 to $4.5 million in 2022[114] - Total classified assets as of December 31, 2022, were $5,296 thousand, with an allowance for losses of $245 thousand[106] - Non-accruing loans as of December 31, 2022, totaled $3,670 thousand, a decrease from $5,423 thousand in 2021[112] - Gross interest income that would have been recorded on non-accruing loans in 2022 was $292,000, down from $432,000 in 2021[115] - Total foreclosed assets as of December 31, 2022, were $50 thousand, a significant decrease from $498 thousand in 2021[112] - Loans classified as "substandard" increased from $4,666 thousand in 2021 to $5,246 thousand in 2022[106][108] - Total gross non-performing loans decreased from $5,423 thousand in 2021 to $3,670 thousand in 2022[112] - Total TDR Loans increased from $3.851 million in 2021 to $2.949 million in 2022, with a significant decrease in One- to four-family residential loans from $1.638 million to $1.126 million[117] - The allowance for credit losses increased from $60.8 million in 2021 to $63.5 million in 2022, with specific loan allocations decreasing from $495,000 to $245,000[124] - The ratio of allowance for credit losses to total loans decreased from 1.49% in 2021 to 1.39% in 2022[128] - Non-performing loans decreased from $5.423 million in 2021 to $3.670 million in 2022, with the ratio to total loans dropping from 0.13% to 0.08%[128] - The ratio of allowance for credit losses to non-performing loans increased significantly from 1,120.31% in 2021 to 1,729.69% in 2022[128] - One- to four-family residential and construction loans increased from $9.364 million (18.4% of total loans) in 2021 to $11.171 million (21.6% of total loans) in 2022[125] - Commercial real estate loans decreased from $28.604 million (36.5% of total loans) in 2021 to $27.096 million (33.7% of total loans) in 2022[125] - Consumer and overdrafts loans decreased from $5.345 million (5.0% of total loans) in 2021 to $4.416 million (4.2% of total loans) in 2022[125] - The company adopted a new accounting standard (ASU 2016-13) on January 1, 2021, which requires reflecting current estimates of all expected credit losses[122] - The allowance for credit losses is calculated using an average historical loss model, adjusted for current conditions and reasonable forecasts[118][119] - The company's balance at the end of the period increased to $63.48 million in 2022, up from $60.75 million in 2021[130] - Total charge-offs decreased to $2.17 million in 2022 from $2.62 million in 2021, with consumer, overdrafts, and other loans accounting for the majority at $1.95 million[130] - Net charge-offs were $274,000 in 2022, compared to a net recovery of $116,000 in 2021[130] - The provision for losses on loans was $3 million in 2022, a significant increase from a credit of $6.7 million in 2021[130] Deposit and Funding Activities - Total deposits as of December 31, 2022, were $4.68 billion, with $3.40 billion in Missouri, including $1.44 billion in Springfield and $708 million in St. Louis[37] - Non-interest-bearing demand deposits decreased by $146 million in 2022, while interest-bearing demand and savings deposits decreased by $193 million[146] - Total time deposits increased by $322 million in 2022, with retail time deposits increasing by $280 million[146] - Time deposits with interest rates between 2.00% - 2.99% increased to $452.12 million in 2022, up from $55.51 million in 2021[148] - Total deposits as of December 31, 2022, were $4.68 billion, with interest-bearing demand and savings deposits accounting for $2.34 billion[148] - The bank's deposit mix has shifted to a smaller percentage of time deposits, making it more susceptible to short-term fluctuations in deposit flows[149] - The bank manages deposit pricing in alignment with its asset/liability management and profitability objectives[149] - Total time deposits as of December 31, 2022, amounted to $1,282.8 million, with $236.8 million maturing in 3 months or less, $496.5 million maturing over 3 to 6 months, $337.7 million maturing over 6 to 12 months, and $211.8 million maturing over 12 months[152] - Uninsured time deposits as of December 31, 2022, totaled $200.2 million, compared to $108.4 million in 2021, with $33.9 million maturing in 3 months or less, $90.4 million maturing over 3 to 6 months, and $69.9 million maturing over 6 to 12 months[154] - Brokered deposits increased significantly to $411.5 million in 2022 from $67.4 million in 2021, with $150.0 million in IntraFi Funding accounts included in 2022[155][156] - IntraFi Network Deposits decreased to $12.4 million in 2022 from $41.7 million in 2021[158] - The company had outstanding overnight borrowings of $88.5 million from the FHLBank at December 31, 2022, compared to none in 2021[162] - The company's subordinated notes issued in 2020 have a fixed interest rate of 5.50% until June 15, 2025, after which it becomes floating at a rate expected to be equal to three-month term SOFR plus 5.325%[169] - Amortization of debt issuance costs for subordinated notes totaled $293,000 in 2022, $587,000 in 2021, and $608,000 in 2020, resulting in an imputed interest rate of 5.95% at December 31, 2022[170] - The maximum month-end balance of other borrowings in 2022 was $351.5 million, with a weighted average interest rate of 0.77%[171] - Total other borrowings increased to $266,426 thousand in 2022, with a weighted average interest rate of 2.16%, compared to $138,955 thousand at 0.02% in 2021[173] - Subordinated debentures maintained a maximum balance of $25,774 thousand in 2022, with a weighted average interest rate of 6.04%, up from 1.73% in 2021[176] - Subordinated notes had a maximum balance of $74,281 thousand in 2022, with a weighted average interest rate of 5.95%, slightly down from 5.97% in 2021[178] Investments and Securities - The company held $202.5 million in held-to-maturity securities as of December 31, 2022, compared to $0 in 2021[132] - Available-for-sale securities decreased to $490.6 million in 2022 from $501 million in 2021[133] - The company transferred $226.5 million of securities from available-for-sale to held-to-maturity in 2022[133] - Agency mortgage-backed securities in the available-for-sale portfolio had a fair value of $286.5 million in 2022, all with fixed interest rates[137] - The total amortized cost of available-for-sale securities was $553.2 million in 2022, with a weighted average tax-equivalent yield of 2.70%[139] - Held-to-maturity securities had a total amortized cost of $202.5 million in 2022, with a weighted average tax-equivalent yield of 2.63%[139] - Available-for-sale securities total $490.59 million, with agency mortgage-backed securities accounting for $286.48 million[140] - Held-to-maturity securities total $202.50 million, including $119.36 million in agency collateralized mortgage obligations[140] - Unrealized losses on available-for-sale securities amount to $62.74 million, with agency mortgage-backed securities contributing $40.78 million[140] - Unrealized losses on held-to-maturity securities total $24.73 million, with agency collateralized mortgage obligations accounting for $14.13 million[140] Subsidiaries and Investments - Great Southern's total investment in subsidiaries reached $170.4 million in 2022, with significant investments in GSLLC ($35.0 million) and GSTCLLC ($19.4 million)[179] - GSB Two, L.L.C. reported net income of $58.3 million in 2022, up from $57.4 million in 2021, driven by real estate mortgage holdings[190] - GSLLC recorded a net loss of $86,000 in 2022, compared to net income of $203,000 in 2021, primarily due to tax credit utilization[183] - GSSCLLC reported a net loss of $2,000 in 2022, down from net income of $41,000 in 2021, reflecting reduced state tax credit sales[184] - GSTCLLC incurred a net loss of $32,000 in 2022, improving from a net loss of $86,000 in 2021, due to reduced tax credit utilization[188] - VFP Conclusion Holding, L.L.C. and VFP Conclusion Holding II, L.L.C. held cash assets totaling $6.4 million in 2022, with no significant real estate holdings[191][192] Market Competition and Strategy - The company faces intense competition from large banking organizations, community banks, and fintech companies, emphasizing the need for competitive pricing and customer service[193][194] - 72.1% of the company's total deposit franchise dollars are located in Missouri, with a market share of 1.4% as of June 30, 2022[195] - The company's market share in Springfield, MO is 12.0%, ranking first among competitors[195] - The company has 92 branch offices, with 19 located in Springfield, MO and 17 in St. Louis, MO-IL[195] - The company's deposit franchise dollars are distributed as follows: Iowa (16.3%), Kansas (6.4%), Minnesota (4.0%), Arkansas (0.8%), and Nebraska (0.5%)[195] - The company competes for deposits by offering competitive rates, convenient services, and accessible branch, online, mobile, and ATM services[195] - The company's competition for real estate loans comes from commercial banks, savings institutions, and mortgage bankers, with competition based on interest rates, loan fees, and service quality[197] - The company increased interest rates on many deposit products since mid-2022 and utilized brokered deposits and FHLBank borrowings[199] Regulatory Compliance and Capital - The company is subject to regulatory capital rules under Basel III and the Dodd-Frank Act, with a Community Bank Leverage Ratio (CBLR) of 9.0%[206][208] Employee and Community Engagement - The company has 1,124 employees, including 210 part-time employees, as of December 31, 2022[201] - Great Southern associates donated nearly 4,000 volunteer hours and $70,000 in monetary donations to over 200 organizations in 2022[204] Geographic Expansion and Operations - The company operates 92 full-service retail banking offices, serving nearly 134,000 households across six states: Missouri, Iowa, Kansas, Minnesota, Arkansas, and Nebraska[34] - The company expanded its geographic footprint through five FDIC-assisted acquisitions, significantly increasing its presence in Iowa, Kansas, and Minnesota[36] - In 2022, the company opened two commercial loan production offices in Phoenix and Charlotte, focusing on commercial real estate, business, and construction loans[29] - The company consolidated several banking centers in 2022, including one in St. Louis and another in Kimberling City, Missouri, while opening a new banking center in Kimberling City[28] - The company ceased its indirect automobile financing unit in March 2019 due to market challenges and declining loan balances[23] - The company assumed deposits totaling $228 million and acquired loans of $159 million in the St. Louis area through a 2016 acquisition[19] - The company's largest deposit and loan concentrations are in the Springfield and St. Louis market areas, with significant diversification due to FDIC-assisted acquisitions and organic growth[36]