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Great Southern Bancorp(GSBC) - 2019 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported earnings of $1.23 per share, totaling $17.6 million for the quarter [7] - Annualized return on equity was 13.12%, and annualized return on assets was 1.49% [9] - The stated net interest margin was 4.06%, with a core margin of 3.93% [12][21] - Nonperforming assets decreased by $1.5 million, indicating improved asset quality [10] Business Line Data and Key Metrics Changes - The loan portfolio grew by $61 million, although growth in unfunded amounts on the construction portfolio was slightly down [9] - The company completely exited the indirect business, expecting the $180 million portfolio to run off over the next two to four years [10] - Noninterest income increased by approximately $515,000 compared to the first quarter of the previous year, primarily due to one-time income from FDIC acquisitions [16] Market Data and Key Metrics Changes - The company experienced growth in internet CDs and interest-bearing checking accounts, contributing to deposit growth [32] - The efficiency ratio improved to 54.74%, down from about 61% in the first quarter of the previous year [21] Company Strategy and Development Direction - The company is focusing on growing its loan portfolio while maintaining strong capital ratios, which allows for flexibility in share repurchases and dividends [11] - The company is preparing for the new CECL accounting standard for loan losses, set to take effect in the first quarter of 2020 [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth, particularly in new office locations, while acknowledging ongoing challenges in consumer loans [31] - The company anticipates some pressure on liability costs due to maturing CDs and rising deposit rates [15] Other Important Information - The company has been actively working on process improvements to enhance efficiency and customer service [52] - A consolidation of banking centers in Arkansas was completed, which is expected to yield minor cost savings [22][51] Q&A Session Summary Question: What is the outlook for loan growth? - Management indicated that while they do not project loan growth, the current pipeline remains strong, and they expect growth in specific regions [30][31] Question: What drove the deposit growth this quarter? - The growth was attributed to internet CDs, interest-bearing checking accounts, and a reduction in borrowings from the home loan bank [32] Question: Are there notable cost savings related to the exit from the auto business? - Management confirmed that there will be cost savings over time, although no immediate savings were realized in the first quarter [41][42] Question: Can you elaborate on the yield on the investment book? - The yield on new investments was noted to be in the range of 3.40% to 3.70%, with some securities being replaced to improve yield [43] Question: Are there any new initiatives regarding expenses? - Management stated there are no major initiatives but emphasized ongoing efforts to improve efficiency through process improvements [50][52]