| July 20, 2006 | FOR IMMEDIATE RELEASE |
CONTACT: Kelly Polonus, Great Southern, 1.417.895.5242
kpolonus@greatsouthernbank.com
Great Southern Bancorp, Inc. Reports Quarterly Earnings of $.54 Per Share
Quarterly earnings up 8% over prior year quarter excluding derivatives accounting change
Financial Highlights for the Quarter:
- Loans increased $143 million, or 9%, from December 31, 2005.
- Total deposits (excluding brokered and national certificates of deposit) increased $54 million, or 6%, from December 31, 2005.
- Net interest income increased in the second quarter and for the first six months of 2006 over the comparable periods in 2005.
- Commission revenue from investment, insurance and travel divisions increased 7% in the second quarter and rose 10% for the first six months of 2006 compared to the same periods in 2005.
- Deposit service charges and ATM fees increased 9% in the second quarter and grew 10% for the first half of 2006 compared to the same periods in 2005.
Springfield, Mo. -- Great Southern Bancorp, Inc. (NASDAQ:GSBC), the holding company for Great Southern Bank, today reported preliminary earnings for the quarter ended June 30, 2006, were $.54 per diluted share ($7,524,000) compared to the $.74 per diluted share ($10,294,000 as restated) the Company earned during the same quarter in the prior year. Excluding the effects of the Company's accounting change for certain interest rate swaps on prior year results, earnings for the quarter ended June 30, 2005, were $.50 per diluted share ($6,940,000). In addition, for the three months ended June 30, 2006, accounting entries required under accounting standards governing the Company's interest rate derivatives decreased reported net income by $20,000. Thus, excluding the effects of the Company's accounting for interest rate swaps, earnings per diluted share were $.54 for the quarter ended June 30, 2006. As reported previously, the Company expects all charges related to the restatement of interest rate swaps to flow back into income (perhaps unevenly) over the remaining terms of the swaps.
Preliminary earnings for the six months ended June 30, 2006, were $1.06 per diluted share ($14,720,000) compared to the $.98 per diluted share ($13,677,000, as restated) the Company earned during the same period in the prior year. Excluding the effects of the Company's accounting change for certain interest rate swaps on prior year results, earnings for the six months ended June 30, 2005, were $.96 per diluted share. In addition, for the six months ended June 30, 2006, accounting entries required under accounting standards governing the Company's interest rate derivatives decreased reported net income by $326,000, or $.03 per diluted share after taxes. Thus, excluding the effects of the Company's accounting for interest rate swaps, earnings per diluted share were $1.09 for the six months ended June 30, 2006.
In future periods, the Company anticipates that its interest rate swaps will qualify for hedge accounting treatment so that the change in the fair value of the interest rate swap and the change in fair value of the related certificates of deposit will both be recorded in the financial statements. Consequently, only the net difference in the change in fair values of the swaps and the certificates of deposit will be recorded in net income. Assuming the interest rate swaps do qualify for hedge accounting treatment, previously reported earnings, adjusted to exclude the effects of the restatement, may be more useful for comparison purposes.
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"Great Southern's financial performance for the second quarter was solid in a continuing difficult business environment," said Great Southern President and CEO Joseph W. Turner. "Loan growth has been excellent for the first half of the year, with growth primarily in commercial and residential construction lending, from customers in both our primary and loan production markets. On an economic basis, our net interest margin improved in the second quarter after stabilizing somewhat during the last half of 2005. Excluding the effects of our accounting change for interest rate swaps, our margin was 3.49%, which is up 12 basis points from second quarter 2005 and seven basis points from the quarter ended March 31, 2006. Commission revenue from our investment, insurance and travel divisions grew 7% compared to the same period last year as these lines of business continued to develop and expand customer relationships. Income from account service charges and ATMs fees was also up with a 9% increase over the 2005 comparable quarter."
For the three months ended June 30, 2006, return on average equity (ROAE) was 19.02%; return on average assets (ROAA) was 1.38%; and net interest margin (NIM) was 3.35%. The non-cash amortization of the prepaid broker fee to originate certificates of deposit (which was recorded as part of the accounting change in 2005) reduced net interest margin by 14 basis points (from 3.49%).
For the six months ended June 30, 2006, return on average equity (ROAE) was 18.69%; return on average assets (ROAA) was 1.36%; and net interest margin (NIM) was 3.36%. The non-cash amortization of the prepaid broker fee to originate certificates of deposit (which was recorded as part of the accounting change in 2005) reduced net interest margin by 10 basis points (from 3.46%).
Stockholders' equity at June 30, 2006, was $159.5 million (7.1% of total assets), equivalent to a book value of $11.67 per share.
Selected Financial Data and Non-GAAP Reconciliation:
(Dollars in thousands)
| Three Months Ended June 30, 2006
| Six Months Ended June 30, 2006
|
| As Reported | Effect of
Hedge Accounting
Entries Recorded | Excluding
Hedge Accounting
Entries Recorded | As Reported | Effect of
Hedge Accounting
Entries Recorded | Excluding
Hedge Accounting
Entries Recorded |
| Net interest income | $17,123 | $ (720) | $17,843 | $33,755 | $ (983) | $34,738 |
| Provision for loan losses | 1,425 | -- | 1,425 | 2,750 | -- | 2,750 |
| Non-interest income | 7,441 | 690 | 6,751 | 14,564 | 482 | 14,082 |
| Non-interest expense | 12,115 | -- | 12,115 | 23,865 | -- | 23,865 |
| Provision for income taxes | 3,500
| 10
| 3,510
| 6,984
| 175
| 7,159
|
| Net income | $ 7,524
| $ (20)
| $ 7,544
| $14,720
| $ (326)
| $15,046
|
| Three Months Ended June 30, 2005
| Six Months Ended June 30, 2005
|
| As Reported | Effect of
Accounting Change
for Int. Rate Swaps | Excluding
Accounting Change
for Int. Rate Swaps | As Reported | Effect of
Accounting Change
for Int. Rate Swaps | Excluding
Accounting Change
for Int. Rate Swaps |
| Net interest income | $14,014 | $(1,510) | $15,524 | $27,343 | $(3,311) | $30,654 |
| Provision for loan losses | 975 | -- | 975 | 1,875 | -- | 1,875 |
| Non-interest income | 13,096 | 6,670 | 6,426 | 15,993 | 3,709 | 12,284 |
| Non-interest expense | 10,770 | -- | 10,770 | 21,332 | -- | 21,332 |
| Provision for income taxes | 5,071
| (1,806)
| 3,265
| 6,452
| (139)
| 6,313
|
| Net income | $10,294
| $ 3,354
| $ 6,940
| $13,677
| $ 259
| $13,418
|
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Selected Financial Data and Non-GAAP Reconciliation:
(Dollars in thousands)
| Three Months Ended June 30,
| Six Months Ended June 30,
|
| 2006
| 2005
| 2006
| 2005
|
| Dollars
(000)
| Earnings
Per Share
| Dollars
(000)
| Earnings
Per Share
| Dollars
(000)
| Earnings
Per Share
| Dollars
(000)
| Earnings
Per Share
|
| Reported Earnings | $7,524 | $.54 | $10,294 | $.74 | $14,720 | $1.06 | $13,677 | $.98 |
Amortization of deposit broker
origination fees (net of taxes) | 468 | .03 | 237 | .02 | 639 | .05 | 379 | .03 |
Net change in fair value of interest
rate swaps and related deposits
(net of taxes) |
(448)
|
(.03)
|
(3,591)
|
(.26)
|
(313)
|
(.02)
|
(638)
|
(.05)
|
Earnings excluding impact
of hedge accounting entries |
$7,544
|
$.54
|
$6,940
|
$.50
|
$15,046
|
$1.09
|
$13,418
|
$.96
|
| | | | | | | | |
NET INTEREST INCOME
Including the impact of the accounting change for certain interest rate swaps (2005 results restated), net interest income for the second quarter of 2006 increased $3.1 million to $17.1 million compared to $14.0 million for the second quarter of 2005. Net interest margin was 3.35% in the quarter ended June 30, 2006, compared to 3.04% in the same period in 2005, an increase of 31 basis points.
Excluding the impact of the accounting change for certain interest rate swaps, economically, net interest income for the second quarter of 2006 increased $2.3 million to $17.8 million compared to $15.5 million for the second quarter of 2005. Net interest margin excluding the effects of the accounting change was 3.49% in the quarter ended June 30, 2006, compared to 3.37% in the quarter ended June 30, 2005.
Including the impact of the accounting change for certain interest rate swaps (2005 results restated), net interest income for the first six months of 2006 increased $6.4 million to $33.8 million compared to $27.3 million for the first six months of 2005. Net interest margin was 3.36% in the six months ended June 30, 2006, compared to 3.04% in the same period in 2005, an increase of 32 basis points.
Excluding the impact of the accounting change for certain interest rate swaps, economically, net interest income for the first six months of 2006 increased $4.1 million to $34.7 million compared to $30.7 million for the first six months of 2005. Net interest margin excluding the effects of the accounting change was 3.46% in the six months ended June 30, 2006, compared to 3.41% in the six months ended June 30, 2005.
Non-GAAP Reconciliation
| Three Months Ended June 30,
| Six Months Ended June 30,
|
| 2006
| 2005
| 2006
| 2005
|
| Dollars
(000)
| %
| Dollars
(000)
| %
| Dollars
(000)
| %
| Dollars
(000)
| %
|
| Net Interest Margin | $17,123 | 3.35% | $14,014 | 3.04% | $33,755 | 3.36% | $27,343 | 3.04% |
Amortization of deposit broker
origination fees | 720 | .14 | 365 | .08 | 983 | .10 | 584 | .07 |
| Interest rate swap net settlements | --
| --
| 1,145
| .25
| --
| --
| 2,727
| .30
|
Net interest margin excluding
impact of hedge accounting entries |
$17,843
|
3.49%
|
$15,524
|
3.37%
|
$34,738
|
3.46%
|
$30,654
|
3.41%
|
| | | | | | | | |
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For additional information on net interest income components, refer to "Average Balances, Interest Rates and Yields" table in this release. This table is prepared including the impact of the accounting changes for interest rate swaps.
NON-INTEREST INCOME
Including the effects of the Company's restatement in 2005 for certain interest rate swaps, non-interest income for the second quarter of 2006 was $7.4 million compared with $13.1 million for the second quarter 2005. The $5.7 million decrease in non-interest income is primarily attributable to the effects of the accounting change for interest rate swaps on the prior period results. Non-interest income increased $5.5 million in the three months ended June 30, 2005, and increased $690,000 in the three months ended June 30, 2006, as a result of the change in the fair value of certain interest rate swaps. In addition, non-interest income for the second quarter of 2005 was also impacted by the reclassification of the net interest settlements on these swaps from net interest income to non-interest income. While this had no effect on total net income, non-interest income was increased by $1.1 million in the three months ended June 30, 2005. There was no reclassification of net interest settlements in the three months ended June 30, 2006. Excluding the effects of interest rate swap-related entries, non-interest income increased $325,000, or 5%, in the three months ended June 30, 2006, compared to June 30, 2005.
Second quarter 2006 income from commissions from the Company's travel, insurance and investment divisions increased $167,000, or 7%, compared to the same period in 2005. Service charges on deposit accounts and ATM fees increased $296,000, or 9%, compared to the same period in 2005.
Including the effects of the Company's restatement in 2005, non-interest income for the six months ended June 30, 2006 was $14.6 million compared with $16.0 million for the six months ended June 30, 2005. The $1.4 million decrease in non-interest income is primarily attributable to the effects of the accounting change for interest rate swaps on the prior period results. Non-interest income increased $982,000 in the six months ended June 30, 2005, and increased $482,000 in the six months ended June 30, 2006, as a result of the change in the fair value of certain interest rate swaps. In addition, non-interest income for the first six months of 2005 was also impacted by the reclassification of the net interest settlements on these swaps from net interest income to non-interest income. While this had no effect on total net income, non-interest income was increased by $2.7 million in the six months ended June 30, 2005. There was no reclassification of net interest settlements in the six months ended June 30, 2006. Excluding the effects of interest rate swap-related entries, non-interest income increased $1.8 million, or 15%, in the six months ended June 30, 2006, compared to June 30, 2005.
For the six months ended June 30, 2006, income from commissions from the Company's travel, insurance and investment divisions increased $464,000, or 10%, compared to the same period in 2005. Service charges on deposit accounts and ATM fees increased $617,000, or 10%, compared to the same period in 2005. Also in the six months ended June 30, 2006, the Company experienced an increase in late charges and prepayment fees on loans of $563,000 compared to the same period in 2005. This was primarily the result of the early repayment of five unrelated loans during the quarter ended March 31, 2006. Although the Company does receive prepayment fees from time to time, it is difficult to forecast when and in what amounts fees will be collected.
NON-INTEREST EXPENSE
Non-interest expense for the quarter ended June 30, 2006 was $12.1 million compared with $10.8 million for the second quarter of 2005. Non-interest expense increased $365,000 when comparing the second quarter 2006 to first quarter 2006 expenses of $11.8 million. The Company's efficiency ratio for the quarter ended June 30, 2006, was 49.32% compared to 39.73% in the same quarter in 2005. These efficiency ratios include the
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impact of the accounting change for certain interest rate swaps. Excluding the effects of accounting for interest rate swaps, the efficiency ratio for the second quarter 2006 was 49.26% compared to 49.07% in the same period in 2005. The Company's ratio of non-interest expense to average assets has remained very constant over these recent periods at approximately 2.20%.
Non-interest expense for the first six months of 2006 was $23.9 million compared with $21.3 million for the first six months of 2005. The Company's efficiency ratio for the six months ended June 30, 2006, was 49.39% compared to 49.22% in the same period in 2005. These efficiency ratios include the impact of the accounting change for certain interest rate swaps. Excluding the effects of accounting for interest rate swaps, the efficiency ratio for the first six months of 2006 was 48.88% compared to 49.68% in the same period in 2005.
Non-GAAP Reconciliation
| Three Months Ended June 30,
|
| 2006
| 2005
|
| Non-Interest
Expense
(000)
| Revenue
Dollars*
(000)
| %
| Non-Interest
Expense
(000)
| Revenue
Dollars*
(000)
| %
|
| Efficiency Ratio | $12,115 | $24,564 | 49.32% | $10,770 | $27,110 | 39.73% |
Amortization of deposit broker
origination fees | -- | 720 | (1.46) | -- | 1,510 | (2.38) |
Net change in fair value of interest
rate swaps and related deposits |
--
|
(690)
|
1.40
|
--
|
(6,670)
|
11.72
|
Efficiency ratio excluding impact
of hedge accounting entries |
$12,115
|
$24,594
|
49.26%
|
$10,770
|
$21,950
|
49.07%
|
| | | | | | |
| Six Months Ended June 30,
|
| 2006
| 2005
|
| Non-Interest
Expense
(000)
| Revenue
Dollars*
(000)
| %
| Non-Interest
Expense
(000)
| Revenue
Dollars*
(000)
| %
|
| Efficiency Ratio | $23,865 | $48,319 | 49.39% | $21,332 | $43,336 | 49.22% |
Amortization of deposit broker
origination fees | -- | 983 | (1.04) | -- | 3,311 | (3.80) |
Net change in fair value of interest
rate swaps and related deposits |
--
|
(482)
|
.53
|
--
|
(3,709)
|
4.26
|
Efficiency ratio excluding impact
of hedge accounting entries |
$23,865
|
$48,820
|
48.88%
|
$21,332
|
$42,938
|
49.68%
|
| | | | | | |
* Net interest income plus non-interest income.
The Company's increase in non-interest expense in the second quarter of 2006 compared to the same period in 2005 related to the continued growth of the Company.During the latter half of 2005, Great Southern completed its acquisition of three bank branches in central Missouri, acquired a Columbia, Mo.-based travel agency, and opened a banking center in Republic, Mo. In the first quarter 2006, Great Southern acquired a travel agency in Lee's Summit, Mo., and established a new loan production office in Columbia, Mo. As a result, in the three months ended June 30, 2006, compared to the three months ended June 30, 2005, non-interest expenses increased $475,000 related to the ongoing operations of these entities. For the six months ended June 30, 2006, compared to the six months ended June 30, 2005, expenses for these offices increased $873,000. In addition to these acquisitions and new office, the Company expanded the loan production offices in St. Louis and Rogers, Ark., and added lending and lending support personnel in the Springfield market. Consistent with many other employers, the cost of health insurance premiums and other benefits for the Company continues to rise and added $285,000 in expenses in the second quarter of 2006 compared to the
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same quarter in 2005. In the first six months of 2006, these benefit-related expenses increased by $585,000 compared to the same period in 2005.
During the quarter ended June 30, 2006, the Company also recorded expenses of $114,000, or $.01 per diluted share, related to the cost of stock options previously granted by the Company. During the six months ended June 30, 2006, this recorded expense was $229,000, or $.02 per diluted share.
ASSET QUALITY
As a result of continued growth in 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 at June 30, 2006, were $26.2 million, up $9.4 million from December 31, 2005, and up $3.0 million from March 31, 2006. Non-performing assets as a percentage of total assets were 1.17% at June 30, 2006. Compared to December 31, 2005, non-performing loans increased $8.9 million to $25.1 million while foreclosed assets increased $486,000 to $1.1 million. Commercial real estate, construction and business loans comprised $24.0 million, or 95%, of the total $25.1 million of non-performing loans at June 30, 2006. The increase in non-performing loans during the quarter ended June 30, 2006, was primarily due to the addition of one $1.3 million loan relationship and the increase by $1.6 million of one loan relationship (now totaling $5.3 million) to the non-performing category. Other increases in non-performing loans during the six months ended June 30, 2006, were primarily due to the addition of one $3.1 million loan relationship and the increase by $3.9 million of one loan relationship (now totaling $5.3 million) to the non-performing category. This increase was partially offset by the repayment of one $640,000 relationship which was included in non-performing assets at December 31, 2005, and the reduction of another relationship by $1.1 million through the sale of a portion of the assets securing the debt, resulting in a remaining relationship total of $946,000 at June 30, 2006. Five additional significant loan relationships were previously included inNon-performing Loansand remained there at June 30, 2006. These relationships are described more fully in the December 31, 2005, Annual Report on Form 10-K.
The $1.3 million loan relationship was placed in theNon-performing Loans category during the quarter ended June 30, 2006. This relationship is primarily secured by subdivision lots, houses under construction and commercial real estate lots in the Lake of the Ozarks, Mo., area.
Originally included in non-performing loans as $3.7 million (now totaling $5.3 million), $1.6 million was added to theNon-performing Loanscategory from thePotential Loans category during the three months ended June 30, 2006. The $3.7 million portion of this relationship is secured by a nursing home in Missouri that has had cash flow problems. The additional $1.6 million is secured by a second nursing home in the Springfield, Mo., area. This second nursing home has performed satisfactorily; however, due to the performance issues of the other property, the entire relationship has now been categorized as non-performing.
The $3.1 million loan relationship was placed in theNon-performing Loans category during the quarter ended March 31, 2006. At December 31, 2005, this relationship was included in thePotential Problem Loans category and was described more fully in the December 31, 2005, Annual Report on Form 10-K. This relationship is secured by a motel and additional real estate collateral.
The $5.3 million relationship was discussed in the December 31, 2005 Annual Report on Form 10-K, where $1.5 million was included in theNon-performing Loans category and $6.2 million was included in thePotential Problem Loans category. This relationship is secured by an office building, vacant land, developed and undeveloped residential subdivisions, houses under construction and houses used as rental property. The Company determined that the transfer of this portion of the relationship to theNon-performing Loanscategory was warranted due to continued deterioration of payment performance. During the three months ended
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March 31, 2006, the Company recorded a charge-off of $283,000 on this relationship. In addition, during the three months ended June 30, 2006, the borrower sold some of the commercial real estate and subdivision lots. The proceeds of these sales were used to reduce loan balances from $6.2 million to $5.3 million.
Potential problem loans decreased $8.7 million during the six months ended June 30, 2006, from $18.4 million at December 31, 2005, to $9.7 million at June 30, 2006. Potential problem loans are loans which management has identified through routine internal review procedures as having possible credit problems which may cause the borrowers difficulty in complying with current repayment terms. These loans are not reflected in the non-performing assets. Potential problem loans decreased primarily due to the transfer to the non-performing loan category of the four unrelated loan relationships previously described.
BUSINESS INITIATIVES
In the third quarter, the Company expects to expand its retail banking center network from 35 to 37 offices. Great Southern intends to open a banking center in late August in Lee's Summit, Mo., a growing Kansas City-area community. This banking center will mark the Company's first retail banking presence in the region and complements services already provided in the area: a Great Southern Travel office in Lee's Summit and an Overland Park, Kan.-based loan production office serving the metropolitan Kansas City market. In early September, the company also intends to open a banking center near Springfield in Ozark, Mo., the second Great Southern location in this growing southwest Missouri community.
Loan production offices (LPO) in Overland Park, Kan., Rogers, Ark., St. Louis and Columbia, Mo., continued to grow in the first half of 2006. The Overland Park LPO originated $35.0 million in loans with outstanding loan balances of $193.5 million; the Rogers LPO had $36.7 million in loan originations and $134.2 in outstanding loan balances; and St. Louis had loan originations of $161.4 million and $172.0 in outstanding loan balances. The Columbia LPO, which began operating in March 2006 and serves the Columbia, Jefferson City, and Lake of the Ozarks, Mo., region, originated $1.3 million with additional loans in various pre-closing stages.
The common stock of Great Southern Bancorp, Inc., is quoted on the Nasdaq Global Select Market System under the symbol "GSBC". The last sale of GSBC stock in the quarter ended June 30, 2006, was $30.53.
Great Southern offers a broad range of banking, investment, insurance and travel services to customers and clients. Headquartered in Springfield, Mo., Great Southern operates 35 banking centers and 170 ATMs throughout southwest and central Missouri. The Company also serves lending needs through loan production offices in Overland Park, Kan., Rogers, Ark., Columbia, Mo., and St. Louis.
www.greatsouthernbank.com
When used in this press release, the words or phrases "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, changes in economic conditions in Great Southern Bancorp's ("Company") market area, changes in policies by regulatory agencies, fluctuations in interest rates, the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses, the Company's ability to access cost-effective funding, demand for loans and deposits in the Company's market area and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to advise readers that the factors listed above 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.
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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 six months ended June 30, 2006 and 2005 are not necessarily indicative of the results of operations, which may be expected for any future period.
| Selected Financial Condition Data: | June 30,
2006
| | December 31,
2005
|
| (Dollars in thousands) |
| Total assets | $2,244,160 | | $2,081,155 |
| Loans receivable, gross | 1,676,978 | | 1,536,595 |
| Allowance for loan losses | 25,531 | | 24,549 |
| Foreclosed assets, net | 1,081 | | 595 |
| Available-for-sale securities, at fair value | 367,686 | | 369,316 |
| Held-to-maturity securities, at amortized cost | 1,470 | | 1,510 |
| Deposits | 1,709,331 | | 1,550,253 |
| Total borrowings | 342,733 | | 355,052 |
| Stockholders' equity | 159,477 | | 152,802 |
| Non-performing assets | 26,194 | | 16,805 |
| Three Months Ended
June 30, | Six Months Ended
June 30, | Three Months Ended
March 31, |
| 2006
| 2005
| 2006
| 2005
| 2006
|
| Selected Operating Data: | (Dollars in thousands) |
| Interest income | $37,228 | $27,538 | $71,425 | $52,539 | $34,197 |
| Interest expense | 20,105
| 13,524
| 37,670
| 25,196
| 17,565
|
| Net interest income | 17,123 | 14,014 | 33,755 | 27,343 | 16,632 |
| Provision for loan losses | 1,425 | 975 | 2,750 | 1,875 | 1,325 |
| Non-interest income | 7,441 | 13,096 | 14,564 | 15,993 | 7,123 |
| Non-interest expense | 12,115 | 10,770 | 23,865 | 21,332 | 11,750 |
| Provision for income taxes | 3,500
| 5,071
| 6,984
| 6,452
| 3,484
|
| Net income | $7,524
| $10,294
| $14,720
| $13,677
| $7,196
|
| | | | | |
| Three Months Ended
June 30, | Six Months Ended
June 30, | Three Months Ended
March 31, |
| 2006
| 2005
| 2006
| 2005
| 2006
|
| Per Common Share: | |
| Net income (fully diluted) | $.54 | $.74 | $1.06 | $.98 | $.52 |
Book value | $11.67 | $10.99 | $11.67 | $10.99 | $11.51 | Earnings Performance Ratios: | | | | | | Annualized return on average assets | 1.38% | 2.09% | 1.36% | 1.42% | 1.34% | Annualized return on average
stockholders' equity |
19.02% |
27.95% |
18.69% |
18.82% |
17.84% | Net interest margin | 3.35% | 3.04% | 3.36% | 3.04% | 3.37% | Average interest rate spread | 2.82% | 2.68% | 2.86% | 2.69% | 2.91% | Efficiency ratio | 49.32% | 39.73% | 49.39% | 49.22% | 49.46% | Non-interest expense to average
total assets |
2.21% |
2.17% |
2.21% |
2.19% |
2.20% | Asset Quality Ratios: | | | | | | Allowance for loan losses to
period-end loans |
1.52% |
1.66% |
1.52% |
1.66% |
1.54% | Non-performing assets to
period-end assets |
1.17% |
.72% |
1.17% |
.72% |
1.06% | Non-performing loans to
period-end loans |
1.50% |
.83% |
1.50% |
.83% |
1.35% | Annualized net charge-offs
to average loans |
.27% |
.19% |
.22% |
.15% |
.16% | | | | | | |
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GREAT SOUTHERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except number of shares)
| June 30,
2006
(Unaudited) | December 31,
2005
| March 31,
2006
(Unaudited) |
ASSETS
| | | |
| Cash | $137,349 | $116,578 | $113,111 |
| Interest-bearing deposits in other financial institutions | 1,634
| 1,154
| 747
|
| Cash and cash equivalents | 138,983 | 117,732 | 113,858 |
| Available-for-sale securities | 367,686 | 369,316 | 383,979 |
Held-to-maturity securities
(fair value $1,530 - June 2006;
$1,603 - December 2005) | 1,470 | 1,510 | 1,510 |
| Mortgage loans held for sale | 2,469 | 2,124 | 1,215 |
Loans receivable, net of allowance
for loan losses of $25,531 -
June 2006; $24,549 - December 2005 | 1,651,447 | 1,512,046 | 1,607,091 |
| Interest receivable | 12,263 | 10,841 | 12,177 |
| Prepaid expenses and other assets | 13,759 | 13,266 | 14,316 |
| Foreclosed assets held for sale, net | 1,081 | 595 | 1,125 |
| Premises and equipment, net | 25,887 | 27,265 | 27,528 |
| Goodwill and other intangible assets | 1,353 | 1,402 | 1,390 |
| Investment in Federal Home Loan Bank stock | 12,772 | 11,857 | 12,732 |
| Deferred income taxes | 14,990
| 13,201
| 13,567
|
| Total Assets | $2,244,160
| $2,081,155
| $2,190,488
|
LIABILITIES AND STOCKHOLDERS' EQUITY
| | | |
| Liabilities: | | | |
| Deposits | $1,709,331 | $1,550,253 | $1,606,817 |
| Federal Home Loan Bank advances | 192,754 | 203,435 | 193,098 |
| Short-term borrowings | 132,316 | 133,558 | 186,688 |
| Subordinated debentures issued to capital trust | 17,663 | 18,059 | 17,805 |
| Accrued interest payable | 5,287 | 4,615 | 5,032 |
| Advances from borrowers for taxes and insurance | 877 | 233 | 530 |
| Accounts payable and accrued expenses | 25,626 | 17,494 | 22,024 |
| Income taxes payable | 829
| 706
| 539
|
| Total Liabilities | 2,084,683
| 1,928,353
| 2,032,533
|
| Stockholders' Equity: | | | |
| Capital stock | | | |
Serial preferred stock, $.01 par value;
authorized 1,000,000 shares; none issued | -- | -- | -- |
Common stock, $.01 par value; authorized
20,000,000 shares; issued and
outstanding June 2006 - 13,667,175 shares;
December 2005 - 13,722,801 shares | 137 | 137 | 137 |
| Additional paid-in capital | 18,076 | 17,781 | 17,968 |
| Retained earnings | 147,531 | 138,921 | 143,919 |
| Accumulated other comprehensive income (loss) | (6,267)
| (4,037)
| (4,069)
|
| Total Stockholders' Equity | 159,477
| 152,802
| 157,955
|
| Total Liabilities and Stockholders' Equity | $2,244,160
| $2,081,155
| $2,190,488
|
GREAT SOUTHERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)| | THREE MONTHS ENDED
June 30, | SIX MONTHS ENDED
June 30, | THREE MONTHS ENDED
March 31, |
| | 2006
| 2005
| 2006
| 2005
| 2006
|
| | (Unaudited) | (Unaudited) | (Unaudited) |
| INTEREST INCOME | | | |
| Loans | $32,914 | $23,236 | $62,715 | $44,181 | $29,801 |
| Investment securities and other | 4,314
| 4,302
| 8,710
| 8,358
| 4,396
|
| TOTAL INTEREST INCOME | 37,228
| 27,538
| 71,425
| 52,539
| 34,197
|
| INTEREST EXPENSE | | | | | |
| Deposits | 16,022 | 10,010 | 29,779 | 18,635 | 13,757 |
| Federal Home Loan Bank advances | 2,352 | 2,100 | 4,384 | 3,856 | 2,032 |
| Short-term borrowings | 1,414 | 1,179 | 2,905 | 2,260 | 1,491 |
Subordinated debentures issued
to capital trust |
317
|
235
|
602
|
445
|
285
|
| TOTAL INTEREST EXPENSE | 20,105
| 13,524
| 37,670
| 25,196
| 17,565
|
| NET INTEREST INCOME | 17,123 | 14,014 | 33,755 | 27,343 | 16,632 |
| PROVISION FOR LOAN LOSSES | 1,425
| 975
| 2,750
| 1,875
| 1,325
|
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES |
15,698
|
13,039
|
31,005
|
25,468
|
15,307
|
| NONINTEREST INCOME | | | | | |
| Commissions | 2,482 | 2,315 | 5,024 | 4,560 | 2,542 |
| Service charges and ATM fees | 3,720 | 3,424 | 7,033 | 6,416 | 3,312 |
| Net realized gains on sales of loans | 260 | 263 | 473 | 438 | 213 |
Net realized gains (losses) on sales of
available-for-sale securities |
(29) |
(3) |
(29) |
(23) |
-- |
| Net gain (loss) on sales of fixed assets | 8 | 2 | 157 | (10) | 149 |
| Late charges and fees on loans | 237 | 209 | 1,016 | 453 | 779 |
Change in interest rate swap fair value
net of change in hedged deposit
fair value |
460 |
-- |
282 |
-- |
(177) |
| Change in interest rate swap fair value | -- | 5,525 | -- | 982 | -- |
| Interest rate swap net settlements | -- | 1,145 | -- | 2,727 | -- |
| Other income | 303
| 216
| 608
| 450
| 305
|
| TOTAL NONINTEREST INCOME | 7,441
| 13,096
| 14,564
| 15,993
| 7,123
|
| NONINTEREST EXPENSE | | | | | |
| Salaries and employee benefits | 7,169 | 6,206 | 14,150 | 12,355 | 6,981 |
Net occupancy and equipment
expense |
1,888 |
1,823 |
3,819 |
3,466 |
1,931 |
| Postage | 552 | 485 | 1,079 | 943 | 527 |
| Insurance | 222 | 219 | 434 | 443 | 212 |
| Advertising | 273 | 293 | 526 | 549 | 253 |
| Office supplies and printing | 215 | 225 | 428 | 435 | 213 |
| Telephone | 316 | 259 | 656 | 523 | 340 |
Legal, audit and other
professional fees | 328 | 344 | 569 | 678 | 241 |
Expense (income) on foreclosed
assets | 56 | 99 | 21 | 248 | (35) |
| Other operating expenses | 1,096
| 817
| 2,183
| 1,692
| 1,087
|
| TOTAL NONINTEREST EXPENSE | 12,115
| 10,770
| 23,865
| 21,332
| 11,750
|
| INCOME BEFORE INCOME TAXES | 11,024 | 15,365 | 21,704 | 20,129 | 10,680 |
| PROVISION FOR INCOME TAXES | 3,500
| 5,071
| 6,984
| 6,452
| 3,484
|
| NET INCOME | $7,524
| $10,294
| $14,720
| $13,677
| $7,196
|
BASIC EARNINGS PER COMMON
SHARE |
$.55
|
$.75
|
$1.08
|
$1.00
|
$.52
|
DILUTED EARNINGS PER COMMON
SHARE |
$.54
|
$.74
|
$1.06
|
$.98
|
$.52
|
DIVIDENDS DECLARED PER
COMMON SHARE |
$.15
|
$.13
|
$.29
|
$.25
|
$.14
|
Average Balances, Interest Rates and Yields
The following table presents, for the periods indicated, the total dollar amount 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 interest received on non-accrual loans on a cash basis. 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 $703,000 and $485,000 for the three months ended June 30, 2006 and 2005, respectively. Fees included in interest income were $1.3 million and $870,000 for the six months ended June 30, 2006 and 2005, respectively. Tax-exempt income was not calculated on a tax equivalent basis. The table does not reflect any effect of income taxes.
| Three Months Ended
June 30, 2006
| Three Months Ended
June 30, 2005
|
| Average
Balance
| Interest
| Yield/
Rate
| Average
Balance
| Interest
| Yield/
Rate
|
| (Dollars in thousands) |
| Interest-earning assets: | | | | | | |
| Loans receivable: | | | | | | |
One- to four-family
residential | $176,921 | $2,997 | 6.79% | $184,003 | $2,486 | 5.42% |
| Other residential | 94,151 | 1,913 | 8.15 | 118,837 | 2,063 | 6.96 |
| Commercial real estate | 463,615 | 9,297 | 8.04 | 462,113 | 7,733 | 6.71 |
| Construction | 593,175 | 12,339 | 8.34 | 371,513 | 6,133 | 6.69 |
| Commercial business | 112,882 | 2,439 | 8.66 | 100,163 | 1,670 | 6.62 |
| Other loans | 139,108 | 2,602 | 7.50 | 136,285 | 2,339 | 6.88 |
| Industrial revenue bonds | 73,166
| 1,327
| 7.27
| 53,103
| 812
| 6.14
|
Total loans receivable
| 1,653,018 | 32,914 | 7.99 | 1,426,017 | 23,236 | 6.55 |
Investment securities and other
interest-earning assets |
396,959
|
4,314
|
4.36
|
421,249
|
4,302
|
4.10
|
| | | | | | |
| Total interest-earning assets | 2,049,977 | 37,228
| 7.28
| 1,847,266 | 27,538
| 5.98
|
| Noninterest-earning assets: | | | | | | |
| Cash and cash equivalents | 97,739 | | | 95,877 | | |
| Other non-earning assets | 39,733
| | | 24,351
| | |
| Total assets | $2,187,449
| | | $1,967,494
| | |
| | | | | | |
| Interest-bearing liabilities: | | | | | | |
Interest-bearing demand and
savings | $422,964 | 3,087 | 2.93 | $383,774 | 1,901 | 1.99 |
| Time deposits | 1,019,418
| 12,935
| 5.09
| 852,028
| 8,109
| 3.82
|
| Total deposits | 1,442,382 | 16,022 | 4.46 | 1,235,802 | 10,010 | 3.25 |
| Short-term borrowings | 132,196 | 1,414 | 4.29 | 163,562 | 1,179 | 2.89 |
Subordinated debentures issued
to capital trust | 17,788 | 317 | 7.15 | 18,378 | 235 | 5.13 |
| FHLB advances | 215,057
| 2,352
| 4.39
| 225,292
| 2,100
| 3.74
|
| | | | | | |
Total interest-bearing
liabilities | 1,807,423 | 20,105
| 4.46
| 1,643,034 | 13,524
| 3.30
|
| Noninterest-bearing liabilities: | | | | | | |
Demand deposits | 190,802 | | | 166,571 | | |
| Other liabilities | 30,986
| | | 10,580
| | |
| Total liabilities | 2,029,211 | | | 1,820,185 | | |
| Stockholders' equity | 158,238
| | | 147,309
| | |
Total liabilities and
stockholders' equity | $2,187,449
| | | $1,967,494
| | |
| | | | | | |
| Net interest income: | | | | | | |
| Interest rate spread | | $17,123
| 2.82%
| | $14,014
| 2.68%
|
| Net interest margin* | | | 3.35%
| | | 3.04%
|
Average interest-earning assets
to average interest-bearing
liabilities | 113.4%
| | | 112.4%
| | |
_______________
*Defined as the Company's net interest income divided by total interest-earning assets.
| Six Months Ended
June 30, 2006
| Six Months Ended
June 30, 2005
|
| Average
Balance
| Interest
| Yield/
Rate
| Average
Balance
| Interest
| Yield/
Rate
|
| (Dollars in thousands) |
| Interest-earning assets: | | | | | | |
| Loans receivable: | | | | | | |
One- to four-family
residential | $176,648 | $5,873 | 6.70% | $178,386 | $4,766 | 5.39% |
| Other residential | 96,529 | 3,910 | 8.17 | 118,770 | 4,066 | 6.90 |
| Commercial real estate | 460,796 | 17,887 | 7.83 | 463,447 | 14,801 | 6.44 |
| Construction | 568,458 | 23,073 | 8.19 | 350,448 | 11,146 | 6.52 |
| Commercial business | 106,308 | 4,435 | 8.41 | 102,224 | 3,304 | 6.41 |
| Other loans | 139,316 | 5,089 | 7.37 | 133,227 | 4,545 | 6.88 |
| Industrial revenue bonds | 70,385
| 2,448
| 7.01
| 49,875
| 1,553
| 6.28
|
Total loans receivable
| 1,618,440 | 62,715 | 7.81 | 1,396,377 | 44,181 | 6.38 |
Investment securities and other
interest-earning assets |
408,606
|
8,710
|
4.30
|
416,448
|
8,358
|
4.05
|
| | | | | | |
| Total interest-earning assets | 2,027,046 | 71,425
| 7.10
| 1,812,825 | 52,539
| 5.84
|
| Noninterest-earning assets: | | | | | | |
| Cash and cash equivalents | 99,147 | | | 90,349 | | |
| Other non-earning assets | 36,471
| | | 23,931
| | |
| Total assets | $2,162,664
| | | $1,927,105
| | |
| | | | | | |
| Interest-bearing liabilities: | | | | | | |
Interest-bearing demand and
savings | $435,888 | 6,278 | 2.90 | $380,123 | 3,503 | 1.86 |
| Time deposits | 992,716
| 23,501
| 4.77
| 829,424
| 15,132
| 3.68
|
| Total deposits | 1,428,604 | 29,779 | 4.20 | 1,209,547 | 18,635 | 3.11 |
| Short-term borrowings | 140,303 | 2,905 | 4.18 | 166,935 | 2,260 | 2.73 |
Subordinated debentures issued
to capital trust | 17,888 | 602 | 6.79 | 18,468 | 445 | 4.86 |
| FHLB advances | 204,469
| 4,384
| 4.32
| 215,715
| 3,856
| 3.60
|
| | | | | | |
Total interest-bearing
liabilities | 1,791,264 | 37,670
| 4.24
| 1,610,665 | 25,196
| 3.15
|
| Noninterest-bearing liabilities: | | | | | | |
Demand deposits | 186,180 | | | 159,890 | | |
| Other liabilities | 27,688
| | | 11,234
| | |
| Total liabilities | 2,005,132 | | | 1,781,789 | | |
| Stockholders' equity | 157,532
| | | 145,316
| | |
Total liabilities and
stockholders' equity | $2,162,664
| | | $1,927,105
| | |
| | | | | | |
| Net interest income: | | | | | | |
| Interest rate spread | | $33,755
| 2.86%
| | $27,343
| 2.69%
|
| Net interest margin* | | | 3.36%
| | | 3.04%
|
Average interest-earning assets
to average interest-bearing
liabilities | 113.2%
| | | 112.6%
| | |
_______________
*Defined as the Company's net interest income divided by total interest-earning assets.
