Preliminary Financial Results and Business Update for the Quarter Ended March 31, 2025
SPRINGFIELD, Mo., April 16, 2025 (GLOBE NEWSWIRE) -- Great Southern Bancorp, Inc. (NASDAQ:GSBC), the holding company for Great Southern Bank, today reported that preliminary earnings for the three months ended March 31, 2025, were $1.47 per diluted common share ($17.2 million net income) compared to $1.13 per diluted common share ($13.4 million net income) for the three months ended March 31, 2024.
For the quarter ended March 31, 2025, annualized return on average common equity was 11.30%, annualized return on average assets was 1.15%, and annualized net interest margin was 3.57%, compared to 9.36%, 0.93% and 3.32%, respectively, for the quarter ended March 31, 2024.
First Quarter 2025 Key Results:
- Net Interest Income: Net interest income for the first quarter of 2025 increased $4.5 million (or approximately 10.1%) to $49.3 million compared to $44.8 million for the first quarter of 2024, largely driven by higher interest income on loans and lower interest expense on deposit accounts. Annualized net interest margin was 3.57% for the quarter ended March 31, 2025, compared to 3.32% for the quarter ended March 31, 2024, and 3.49% for the quarter ended December 31, 2024. During the quarter ended March 31, 2025, the Company recorded additional interest income of $744,000 related to recoveries on cash-basis loans and other assets, positively affecting net interest income and net interest margin.
- Asset Quality: Non-performing assets and potential problem loans totaled $17.0 million at March 31, 2025, an increase of $342,000 from $16.6 million at December 31, 2024. At March 31, 2025, non-performing assets were $9.5 million (0.16% of total assets), a decrease of $48,000 from $9.6 million (0.16% of total assets) at December 31, 2024.
- Liquidity: The Company had secured borrowing line availability at the FHLBank and Federal Reserve Bank of $1.17 billion and $370.5 million, respectively, at March 31, 2025. In addition, at March 31, 2025, the Company had unpledged securities with a market value totaling $337.4 million, which could be pledged as collateral for additional borrowing capacity at either the FHLBank or Federal Reserve Bank.
- Capital: The Company's capital position remained strong as of March 31, 2025, significantly exceeding the thresholds established by regulators. On a preliminary basis, as of March 31, 2025, the Company's Tier 1 Leverage Ratio was 11.3%, Common Equity Tier 1 Capital Ratio was 12.4%, Tier 1 Capital Ratio was 12.9%, and Total Capital Ratio was 15.6%. The Company's tangible common equity to tangible assets ratio was 10.1% at March 31, 2025.
- Significant Item: In the quarter ended March 31, 2025, the Company received an annual marketing and card expense reimbursement for qualifying expenditures from its debit card brand provider of $433,000, which offset marketing and advertising costs that included this branding.
- Stock Purchase Authorization: In April 2025, the Company's Board of Directors approved a new stock repurchase program of up to one million additional shares of the Company's common stock, which will succeed the existing repurchase program (authorized in November 2022) following the repurchase of the existing program's remaining available shares, which were approximately 270,000 shares at March 31, 2025.
| Three Months Ended | |||||||||||
| March 31, | March 31,
| December 31, | |||||||||
| 2025 | 2024 | 2024
| |||||||||
| (Dollars in thousands, except per share data) | |||||||||||
| Net interest income | $ | 49,334 | $ | 44,816 | $ | 49,534 | |||||
| Provision (credit) for credit losses on loans and unfunded commitments | (348 | ) | 630 | 1,556 | |||||||
| Non-interest income | 6,590 | 6,806 | 6,934 | ||||||||
| Non-interest expense | 34,822 | 34,422 | 36,947 | ||||||||
| Provision for income taxes | 4,290 | 3,163 | 3,043 | ||||||||
| Net income | $ | 17,160 | $ | 13,407 | $ | 14,922 | |||||
| Earnings per diluted common share | $ | 1.47 | $ | 1.13 | $ | 1.27 | |||||
He noted, "Despite external economic pressures, our core operations remained strong. Total interest income for the first quarter of 2025 was $80.2 million, reflecting higher earning asset levels and loan yields. Net interest income for the quarter remained healthy at $49.3 million, supported by disciplined asset-liability management and a deliberate strategy to control funding costs through management of our funding mix and duration amid persistent deposit competition. Importantly, we saw no material deterioration in our core non-time deposit balances, reflecting customer stability and the durability of our franchise.”
Turner added, "Our balance sheet remains well positioned, with total assets of approximately $5.99 billion at March 31, 2025, and a loan portfolio that has been carefully managed in terms of both growth and risk composition. We continue to emphasize prudent lending practices, focusing on relationship-based lending and credit quality rather than volume. Our allowance for credit losses stood at $64.7 million at March 31, 2025, representing 1.36% of total loans. Our non-performing assets remained at minimal levels consistent with previous quarters, underscoring the strength of our underwriting standards and ongoing credit monitoring.”
He further noted, "On the expense side, we continued to demonstrate operating discipline. Noninterest expense totaled $34.8 million for the first quarter of 2025, flat from the prior-year first quarter despite inflationary pressures, with reductions in legal and professional fees offsetting modest increases in salaries, occupancy, and technology investments. Noninterest income totaled $6.6 million for the first quarter of 2025, which was generally consistent with the prior-year first quarter.”
Turner continued, "As we look ahead, our priorities remain unchanged. We will continue to manage costs tightly, safeguard credit quality, and strive to optimize our funding mix to ensure long-term financial stability. At March 31, 2025, our capital and liquidity positions were solid, with a tangible common equity ratio of 10.1% and approximately $2 billion of secured available lines and on-balance sheet liquid assets, providing us with ample flexibility to support customers, pursue strategic growth opportunities, and continue returning value to shareholders through dividends and share repurchases. In the first quarter of 2025 we repurchased nearly 175,000 shares of our common stock.”
"Great Southern's Q1 2025 results underscore the consistency of our business model and our track record of delivering sustainable returns, supported by strong core fundamentals and disciplined execution. We remain focused on long-term value creation and are confident in our ability to navigate the current environment while continuing to serve our customers, communities, and shareholders,” Turner concluded.
NET INTEREST INCOME
| Three Months Ended | |||||||||||
| March 31, | March 31, | December 31, | |||||||||
| 2025 | 2024 | 2024 | |||||||||
| (Dollars in thousands) | |||||||||||
| Interest Income | $ | 80,243 | $ | 77,390 | $ | 82,585 | |||||
| Interest Expense | 30,909 | 32,574 | 33,051 | ||||||||
| Net Interest Income | $ | 49,334 | $ | 44,816 | $ | 49,534 | |||||
| Net interest margin | 3.57% | 3.32% | 3.49% | ||||||||
| Average interest-earning assets to average interest-bearing liabilities | 125.5% | 127.4% | 127.0% | ||||||||
The average rates paid on deposits and borrowings decreased compared to the prior-year first quarter as market interest rates, primarily the federal funds rate and SOFR rates, declined in the fourth quarter of 2024. Yields on the Company's portfolio of investment securities increased compared to the prior-year first quarter due to higher-yielding securities purchased in the second quarter of 2024. While market interest rates decreased compared to the first quarter of 2024, the average yield on loans increased slightly as cash flows from lower-rate fixed rate loans were redeployed into loans with comparably higher rates of interest.
To mitigate exposure to the risk of fluctuations in future cash flows resulting from changes in interest rates (primarily related to falling interest rates), the Company has, from time to time, strategically utilized derivative financial instruments, primarily interest rate swaps, as part of its interest rate risk management strategy.
The following table presents the effect of cash flow hedge accounting included in interest income in the consolidated statements of income:
| Three Months Ended | |||||||||||
| March 31, | March 31, | December 31, | |||||||||
| 2025 | 2024 | 2024 | |||||||||
| (In thousands) | |||||||||||
| Terminated interest rate swaps | $ | 2,003 | $ | 2,025 | $ | 2,047 | |||||
| Active interest rate swaps | (1,742 | ) | (4,653 | ) | (2,116 | ) | |||||
| Increase (decrease) to interest income | $ | 261 | $ | (2,628 | ) | $ | (69 | ) | |||
The Company's net interest income in the first quarter of 2025 increased 10.1% compared to net interest income in the first quarter of 2024. The cost of deposits has been negatively impacted over several quarters by the high level of competition for deposits across the industry and the lingering effects of liquidity events at several banks in March and April 2023. After the second quarter of 2023, the Company had a significant amount of time deposits maturing at relatively low interest rates. These deposits were either renewed at higher rates or withdrawn, requiring the Company to replace the withdrawn deposits with other funding sources at the prevailing higher market rates. Market rates for time deposits for much of 2024 remained elevated, but have recently declined as the FOMC cut the federal funds rate by 100 basis points in late 2024 and signaled that further rate cuts may occur in 2025. As of March 31, 2025, time deposit maturities over the next 12 months were as follows: within three months -- $669 million, with a weighted-average rate of 4.10%; within three to six months -- $495 million, with a weighted-average rate of 3.74%; and within six to twelve months -- $133 million, with a weighted-average rate of 3.23%. Based on time deposit market rates in March 2025, replacement rates for these maturing time deposits are likely to be approximately 3.50-4.00%.
NON-INTEREST INCOME
For the quarter ended March 31, 2025, non-interest income decreased $216,000 to $6.6 million when compared to the quarter ended March 31, 2024. None of the components of non-interest income experienced increases or decreases exceeding $200,000 in comparing the two periods.
NON-INTEREST EXPENSE
For the quarter ended March 31, 2025, non-interest expense increased $400,000 to $34.8 million when compared to the quarter ended March 31, 2024, primarily as a result of the following items:
- Net occupancy and equipment expenses: Net occupancy and equipment expenses increased $694,000, or 8.9%, from the prior-year quarter. Various components of computer license and support expenses related to upgrades of core systems capabilities collectively increased by $322,000 in the first quarter of 2025 compared to the first quarter of 2024. Parking lot maintenance expenses, primarily related to above normal snow removal activity, collectively increased by $232,000 in the first quarter of 2025 compared to the first quarter of 2024.
- Salaries and employee benefits: Salaries and employee benefits increased $473,000, or 2.4%, from the prior-year quarter. Much of this increase related to normal annual merit increases in various lending and operations areas.
- Legal, audit and other professional fees: Legal, audit and other professional fees decreased $687,000 from the prior-year quarter, to $1.0 million. In the quarter ended March 31, 2024, the Company expensed a total of $929,000 related to training and implementation costs for the intended core systems conversion and professional fees to consultants engaged to support the Company's proposed transition of core and ancillary software and information technology systems, with no such costs expensed in the quarter ended March 31, 2025.
INCOME TAXES
For the three months ended March 31, 2025 and 2024, the Company's effective tax rate was 20.0% and 19.1%, respectively. These effective rates were below the statutory federal tax rate of 21%, due primarily to the utilization of certain investment tax credits and the Company's tax-exempt investments and tax-exempt loans, which reduced the Company's effective tax rate. The Company's effective tax rate may fluctuate in future periods as it is impacted by the level and timing of the Company's utilization of tax credits, the level of tax-exempt investments and loans, the amount of taxable income in various state jurisdictions and the overall level of pre-tax income. State tax expense estimates continually evolve as taxable income and apportionment between states are analyzed. The Company currently expects its effective tax rate (combined federal and state) will be approximately 18.0% to 20.0% in future periods.
CAPITAL
| March 31, | December 31, | |||||
| 2025 | 2024 | |||||
| Consolidated Regulatory Capital Ratios | (Preliminary) | |||||
| Tier 1 Leverage Ratio | 11.3 | % | 11.4 | % | ||
| Common Equity Tier 1 Capital Ratio | 12.4 | % | 12.3 | % | ||
| Tier 1 Capital Ratio | 12.9 | % | 12.8 | % | ||
| Total Capital Ratio | 15.6 | % | 15.4 | % | ||
| Tangible Common Equity Ratio | 10.1 | % | 9.9 | % | ||
Decreased unrealized losses on the Company's available-for-sale investment securities and interest rate swaps, which totaled $44.1 million (net of taxes) at March 31, 2025, also increased stockholders' equity by $10.2 million during the quarter. These net unrealized losses primarily resulted from increased intermediate-term market interest rates in prior periods, which generally decreased the fair value of the investment securities and interest rate swaps.
The Company had unrealized losses on its portfolio of held-to-maturity investment securities, which totaled $20.6 million and $24.7 million at March 31, 2025 and December 31, 2024, respectively, that were not included in its total capital balance. If held-to-maturity unrealized losses were included in capital (net of taxes) at March 31, 2025, they would have decreased total stockholder's equity at that date by $15.6 million. This amount was equal to 2.5% of total stockholders' equity of $613.3 million at March 31, 2025, compared to 3.1% of total stockholders' equity at December 31, 2024.
In November 2022, the Company's Board of Directors authorized the purchase of an additional one million shares of the Company's common stock. As of March 31, 2025, approximately 270,000 shares remained available in this stock repurchase authorization.
In April 2025, the Company's Board of Directors approved a new stock repurchase program, which will succeed the existing repurchase program (authorized in November 2022) following the repurchase of the existing program's remaining available shares. The new stock repurchase program authorizes the purchase, from time to time, of up to one million additional shares of the Company's common stock.
During the three months ended March 31, 2025, the Company repurchased 173,344 shares of its common stock at an average price of $58.38, and the Company's Board of Directors declared a regular quarterly cash dividend of $0.40 per common share, which, combined, reduced stockholders' equity by $14.8 million.
LIQUIDITY AND DEPOSITS
Liquidity is a measure of the Company's ability to generate sufficient cash to meet present and future financial obligations in a timely manner. The Company's primary sources of funds are customer deposits, FHLBank advances, other borrowings, loan repayments, unpledged securities, proceeds from sales of loans and available-for-sale securities and funds provided from operations. The Company utilizes some or all of these sources of funds depending on the comparative costs and availability at the time. The Company has from time to time chosen not to pay rates on deposits as high as the rates paid by certain of its competitors and, when believed to be appropriate, supplements deposits with less expensive alternative sources of funds. Management believes that the Company maintains overall liquidity sufficient to satisfy its depositors' requirements and meet its borrowers' credit needs.
At March 31, 2025, the Company had the following available secured lines and on-balance sheet liquidity:
| March 31, 2025 | |
| Federal Home Loan Bank line | $1,172.6 million |
| Federal Reserve Bank line | 370.5 million |
| Cash and cash equivalents | 217.2 million |
| Unpledged securities - Available-for-sale | 312.9 million |
| Unpledged securities - Held-to-maturity | 24.5 million |
At March 31, 2025, the Company had the following deposit balances:
| March 31, 2025 | |
| Interest-bearing checking | $2,248.3 million |
| Non-interest-bearing checking | 852.7 million |
| Time deposits | 761.7 million |
| Brokered deposits | 895.4 million |
LOANS
Total net loans, excluding mortgage loans held for sale, were generally flat at $4.69 billion at March 31, 2025 compared to December 31, 2024. Increases in other residential (multi-family) loans of $43.2 million and construction loans of $29.1 million were offset by decreases in commercial real estate loans and one- to four-family residential loans of $54.4 million and $10.3 million, respectively.
The pipeline of unfunded loan commitments decreased in the first quarter of 2025, primarily due to a decline related to construction loans. The unfunded portion of construction loans remained significant, notwithstanding this decline.
For additional details about the Company's loan portfolio, please refer to the quarterly loan portfolio presentation available on the Company's Investor Relations website under "Presentations.”
Loan commitments and the unfunded portion of loans at the dates indicated were as follows (in thousands):
| March 31, 2025 | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
|