Release Date: April 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Great Southern Bancorp Inc (GSBC, Financial) reported a significant increase in net income to $17.2 million, or $1.47 per diluted share, up from $13.4 million, or $1.13 per share, in the same quarter last year.
- Net interest income rose by approximately 10% to $49.3 million, driven by higher loan and investment yields and lower funding costs.
- The company recorded a negative provision for credit losses of $348,000, indicating strong credit quality across its portfolio.
- Deposits increased by 3.3% to $4.76 billion, with growth in both brokered and core checking balances.
- The efficiency ratio improved to 62.27% from 66.68% in the previous year, reflecting effective cost management and operational efficiency.
Negative Points
- Non-interest income decreased by 3.2% compared to the first quarter of last year, with declines in commissions, overdraft fees, and net gains on mortgage loan sales.
- Interest expense on short-term borrowings increased by $1.4 million due to changes in the funding mix.
- The benefit from a terminated interest rate swap, contributing approximately $2 million per quarter to interest income, will cease after the third quarter of 2025.
- Loan portfolio growth was minimal, with the portfolio remaining essentially flat, indicating a challenging lending environment.
- There is significant competition among banks for loans, which may limit growth opportunities in the lending segment.
Q & A Highlights
Q: How do you expect the net interest margin to react in the upcoming quarter without changes to Fed policy?
A: Rex Copeland, CFO, mentioned that while there might be some benefit from maturing CDs and redeploying repaid fixed-rate loans into higher yields, the impact is expected to be minimal. Joseph Turner, CEO, added that the 10-K provides insights into loan repricing, which can help estimate future margin movements.
Q: How will the balance sheet react if there are rate cuts from the Fed in the second half of the year?
A: Joseph Turner, CEO, stated that the company's interest rate risk posture is neutral. A 50 basis point rate cut might have a slightly negative immediate impact, but the balance should recover quickly. Rex Copeland, CFO, noted that a significant portion of loans and interest rate swaps would adjust promptly to rate changes.
Q: Has there been any change in customer behavior or loan demand due to economic uncertainty?
A: Joseph Turner, CEO, observed that activity is slightly down, with significant competition among banks for available loans. The lending environment does not currently support substantial growth.
Q: Can you clarify the impact of the swap termination on the margin, and when does this benefit expire?
A: Rex Copeland, CFO, confirmed that the benefit from the swap termination, approximately $2 million per quarter, will continue through the second and third quarters of 2025, ending in the first week of the fourth quarter.
Q: With slow growth and strong capital, what are your plans regarding stock buybacks?
A: Joseph Turner, CEO, indicated that the company plans to remain active with buybacks, similar to current levels, depending on share price and availability. Rex Copeland, CFO, added that the current trading price is close to book value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
