GSBC - Earnings call transcript Q2 2018 | Great Southern Bancorp, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Great Southern Bancorp Incorporated Second Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference maybe recorded. I would now like to turn the conference over to Ms. Kelly Polonus, Investor Relations. Ma’am, you may begin.

Kelly Polonus

welcome. and afternoon Good Polonus, for Kelly Southern Investor is Great Relations Bancorp. This is of ending the this purpose to June call XXXX. quarter The the today discuss for company’s XX, results

the need forward-looking make about future financial you begin, we future statements to and we this call, I that Before during performance. course events of may remind

cause as are not they could are date place any results subject You factors the a actual reliance should of forward-looking statements, materially results These statements differ of on undue which to number speak from only or anticipated to made. that the projected.

here of these Turner; me. disclosure Joe earnings the turn For some a to I’ll forward-looking quarter President the release. please and statements Chief list now our XXXX with second over of are call factors, Financial CEO, see Joe. Officer, and in Copeland, Rex

Joe Turner

statement. Thanks, Thank there. will it quarter general you've detail to least little All We then then very in glance quarter, a quarter our everybody good did our you income bit talk call. all and for And the remarks I’ll right. to second Copeland, us it he provide to some And Rex questions chance for the the about open have earnings afternoon of out a course end. hopefully and earnings release. strong had up for a more of we'll Kelly. at about over at joining at turn

earned that a million noticed you or we the $X.XX have, probably you've If quarter. during share, $XX.X

or return our the metrics annualized during XX.XX% common performance equity equity. return common quarter annualized on were with good on Our

X.XX% was was assets margin on X.XX%. return our Our and

I were earnings really things think. quarter second driven by Our two

in At containment. quarter good was our which loan the we by $X.XX end sticky outstanding that in an quarter. expense resulted the of declines item an growth expense the million during have per earnings. core and the First, did the expense ORE unusual a or aided $X.X to of some reduce on reduced parts our quarter during expanded certainly prices then portfolio. share second We margins discussion made our That item

We quarter particularly because seen we but obviously preliminary the have on portfolio reduced ORE parcels only the have third into prices. really where though and three good our it's on weeks activity very we we're

right we we there. think So, did the thing

continue quality our portfolio, really feel We to loan for good both and the about production portfolio. of the

our end you the release, the outstanding increased commercial in $XXX family estate, second primarily multifamily loan about one the was loans. and real have from $XXX of As million about in our mortgage the of year quarter. increase saw balances to beginning from four and earnings million The residential

of it's Our pipeline $XXX from also continues to the million end XXXX. about grow, up

assets, that. we to again good continues ORE assets and the relatively million problem million. decreased think $X.X loans really I $X.X $X.X minor but low by So, so from levels quality feel of did coming our the is decrease by improve the improvement Nonperforming and slow. quarter. decreased relatively we're nonperforming But Overall, of really million during about asset level by

the good our nonperforming levels in loans. So, improvement of

XXX,XXX of increased earnings March mainly the from million by the driven a loans that Our problem addition our release. end was levels which of potential in described relationship of briefly $X was

total that's is to $XX.X $XXX per now the of Capital has was the assets, the continues year. - the it June value improve. of from XX at XX.XX was the position at About share end end year. book increased capital to Our higher end million, at of million of XX.XX than XX.X%

do close million we expect tomorrow transaction, that's to initiatives, to business our as going Omaha gain. and $X result in far As a

more where managerial resources sort to the in it's going having we're think of I us luck. our markets to allow marshal

about keeping production to us Board. keeping and loan extremely is folks which Omaha are excited office We though we're important on an those

will the you when from during that we an you we sale, - perspective earnings expected as told point. closer slightly and be announced breakeven they Rex, probably but told and positive would interest breakeven is proposition rates was, an that we I this on the to increase it we at to closer say, at a get probably time closer ongoing basis As to

So, the still with pleased transaction. that parameters but we're of

in We lenders Colorado, also things August, out by or And the will of those probably we year offices in loan those expect each folks. have XX staffed and in Georgia, will first production markets. of veteran be open open kind week of Atlanta both lenders those good of Denver

Rex I'll to So, Copeland. that turn time, concludes this At the over prepared call my remarks.

Rex Copeland

right. mentioned you, margin was second margin, about quarter. X.XX% the in reported talk I'll first All net as interest Joe. Thank earlier the

Our core additional yield going on accretion impact to FDIC to is to loan our X.XX%, in net was of be of most an interest and acquired recognized we quarter, in loans, margin XX increase increase that was exclude was increased the ago drive that a yields driver points year that December. increased basis the that's margin our the on information passed based you respectively. points earnings tax that X primary the of expense, costs basis some most in we categories the the provided partially and that's offset of legislation the that but lower year which from lower recent continues could The deposit expansion experienced in gradual this earnings now year Also income release. see income ago rates helped the by thing in in been that steady tax one and versus the of quarter

so and borne out before, the increases interest you interest Reserve. Federal rates margin, filings seen our from So, told rising and we've may that positive we've the modest rate been as in previous that's a net have on far indicated income effect

for costs forward. on costs continuing us. moving for We've likely competition portfolio loan does remain we'll about month expansion. now I at a increased also affect And borrowing significant had and of similar we're talked very loan somewhat those That on to reduction anticipated expect are put that the consumer runoff while other We really. pressure our deposit bit consumer that headwinds quite each by and as expansion our net see We've margin said, in margin portfolio. and to

repayments continue originating loans to are but We originations. the exceed the

during from are $X.X good, rates Noninterest ended noninterest ago lot in cost of And speaking think quarter the on first we affected million in deposits, changes on quarter the XX, as the other increase increase; our as more deposit our year a see experienced home the bank. short-term so second an in far of income LIBOR year quarter. we generally we loan be the decreased percentages. borrowings cost by income quarter than did as generally this will to June we compared do Also rate our borrowing

agreement. recognized related and some income, quarter had recall the last year second some quarter some late swaps significant we the termination last that may this of gain we ago had versus quarter. also then charges not - of income year. Bank, higher fairly in million which the in loss we We year the quarter which or to year this $X.X You rate second into payoffs year larger entered prepayment was was some FDIC on InterSavings that items, the some largest sharing about second gross year noninterest Other of income interest repeated that last penalties the on

efficiency, related much expense expenses we loss remain I second of think the to year we of took this line that job quarter. quarters think focus with of and remove and did reported Joe versus ago the the first containment on second good our second as of The expense in this number last quarter some we said second a $X.X of a and that is that, operational have quarter of a very run our the company, the been Obviously the write-down higher million things sharing quarter those mentioned biggest year. When last that earlier and the were in on this containment, year. rate. year were the being mentioned. foreclosed item Joe of that see agreement what gain unusual, our of sort also you seeing So the I kind was assets of the quarter I some driver our termination few we

other remained identified we That related I noninterest core time. think a in at our had smaller that release remarks items the also earnings but expense, our stable. feel few like this concludes operating has We level again we to that expense

will now. we questions so entertain And

Operator

And from of Instructions] come line Andrew the first the question will O’Neill. Liesch [Operator with Sandler

line Your now is open.

Andrew Liesch

the follow-up margins. here on a Just

funding a it again lower X.XX, a like and on from sounds core kind like higher, bit continue And it are maybe reported basis basis going level drift steady? costs plateau the to a a kind here. So top that of at on and hold that march with is will this a similarly the X.XX to of is so

Rex Copeland

the what exactly, on say depends of to hard It’s Fed does. kind

going not I is will September. the basis consensus raise in anticipation to but rates in with is think probably August XX along raise Fed points that Our

a we our of of tied get late that lot loans benefit but until are won’t to So the LIBOR. the in quarter,

And do some as that on LIBOR basis that three so generally anticipates and reset every loans monthly have a we months.

say going as of that. deposits we’re we can. balancing up rise our percentage sources the selectively markets say maybe and I had going that of of to in not utilize rates funding or little beta cost those we our So of would see anticipated could of I’d we from cost and seeing trying act we - when I some way benefit and it certainly on are But the to to to competition see raising deposits advantageous most what costs the do high just more. as the we’re been borrowing in bit sort has a we kind walk start trying on be. the need and think the to various

that we continuing to manage So best we're increase can. as to try

question to for specifically it’s concretely, So but. answer hard me or that

Joe Turner

loans only would the do in said quickly cost. the interest that - does more that - like than comes benefit the is to think rate add income I I when seem what on little deposit it the increase thing Rex increase

you have a while So rates I can’t some catch fair generally it’s thereafter. think yes, even then to once deposit will up increasing stops we raising the rates, say probably stops Fed LIBOR think say once I for little on

Andrew Liesch

just the including some done new stable you’ve on foreclosed recognizing a good the around job just million that here. XX.X that kind markets. build these in would expenses hired keeping here expenses folks then asset imagine not of I the expense And to from side costs

think run operating for a where of kind good just you rate I’m cost? be might curious So

Rex Copeland

again start people I are model and opening mean aren’t you those give then with space. to you some would office Well LPOs. have through think guidance would mind I extremely in rented we total encourage think those of four keep a things expensive, forward to you as the staff I don't be maybe But your some there really of

I generally expensive expenses. aren’t of But sort We there that and then leverage. think extremely annual our our we feel have able beyond like So we increases operating like growth to in grow without those feel proposition should our company for operating is be going to we’re commensurate people.

Joe Turner

on just $X close having reducing expense said a we brand, going will cost be that some to here $X think operating about to there be million the we I with I tomorrow. two. it’s Yes, that section, mean, the yes we And year four million one

we the will So - assets. the probably paying that funding our expenses what and and net as deposits versus the because by of income our said in reduce income for fixed difference we noninterest bit us the noninterest the then reduce operating of generate premium just a reduce they're little bit it do little will cost but a also

Operator

the And the with will Michael line come from KBW. of next question Perito

is Your line open. now

Michael Perito

offices to I form guess guys versus expanding cost already is of I current guess I maybe is opportunity strong markets that the kind Joe team for team maybe of in in? themselves start the do measure spending or something the in want moving franchise you, there. high-level some - maybe have Denver a new markets But the new and kind question both and there the you specifically Atlanta how markets impact resources of it’s the the and on whether that I’m sure you two you’re on to - obviously of that

Joe Turner

And our that Atlanta going are two the for opportunity we as marketplaces growth. that Most could the staffed, of least we a are at and we really finding not and soon are think Atlanta grow existing endeavors hired in it’s Denver course opportunity I allow and seasoned don't you’re you new both offices mutually an that’s have Atlanta about I strong very us have lenders And think of probably into us exclusive it’s because them. point my it’s people and all, more well that and by both think do matured you more I we Tulsa market very hiring Dallas, to a it's maybe like very wouldn’t are vibrant about think portfolio right lenders I add markets if found in Well people most they your Dallas people we opportunity. not market. the that to in person and are guess as will we've Denver of new think of we production and find existing Denver opposed the bigger good have profitable are expect and and we Tulsa, Chicago Omaha. loan for things of those well. out there, loan

Michael Perito

help maybe maybe there. you Chicago scale Texas reach And seen in Tulsa that’s it’s at Or mentioned? thoughts obviously on specifically particular maybe as you're be you any LPO Is any that to trying some more market have seen maybe level there just to recently. greater aggressive on a examples or disruption as that opportunity the you’re to

Joe Turner

hiring front. mean the by being by or on just You people aggressive more more leading

Michael Perito

Yes obviously was competitor a markets. in I major the mid mean there market that struggled acquired that's a regional - large historically by was

market? from could that to I have that see do any fallout your build to So and you more maybe you that accelerate basic expect out guess - or question, started in

Joe Turner

to We would we've certainly Mike certainly yet but don’t would be really open take that to like I that. we that. of advantage think seen

of markets favorable in competitors advantage institutions. been hopefully really, similar a and institutions, well. in that taken as have really, thing true has Chicago certainly We competitors our of generally combined That’s regarded in have be into situations larger Springfield out Missouri have well will when town

Michael Perito

terms these broadens kind loan you side on side? competition to maybe the is but on to geography, markets I think quarter Rex on pricing these to I of pricing on with on newer the side asset the is structure, able envision much term kind you’re you one mean you or that I'm just both it hope deposit competitive is they hearing the the do the of in how mean I of And lot of broadening without the term by hope mentioned thing side. pool just bringing that this the getting of that too team credit credits sacrifice entering more be your the close having to the a

Rex Copeland

better that’s have more our Right, XXX%. always deals our look that's pricing chance at so company to grow we’re and absolutely the going we We’ve maintaining credit the it. said to while discipline

Michael Perito

But share well And quarter. shares year-to-date of one also with if the share you point guys very you just I'm a which options accelerating then you know the looking on you of still Thank thought, question around the know at actually curious capital deployment presumably there. at helpful? stock guess plenty any dividend thoughts the auto was And just - is of any capital, this especially secondly kind attractive this any is up your chart good. obviously you. your And in is two is the rundown to policy have current like no then slowing thoughts the and mean at payout isn’t would that level I done I here there or be purchases repurchase with those thoughts there two-part items and it growth fairly picking there seems

Rex Copeland

right buying numbers can't at than I share slightly And a you numbers think another share less now trading was I earned whatever obviously at there as less get or Yes, you $XX $XX I we’re company maybe think a or those would our differently price become Mike share back favorable. and remember attractive. obviously like up a repurchase but analyze relatively repurchases back something. would sometime a $XX the did level I goes five-year mean I at

earnings core very Our that about. and were strong earnings feel good earnings, we

in will And so earnings dividend need continue strong to we and of capital our position. a to examine very light strong

Operator

next come Our Instructions] [Operator of the line FIG will Partners. with Rodis question John from

open. now is line Your

John Rodis

were quarter? the to questions asked expenses lot SBA of any of new offices a with in answered, of Denver guys those second the are Atlanta but and those hired expenses, guess I were my the and respect any

Rex Copeland

think No, don’t I so.

Joe Turner

I already he - don't don't Very person in but I was there the either second SBA think think little onboard even quarter. he's the in was

John Rodis

sales offset branch think Do sort sort savings of you to on a the those maybe a if save with quarter. those three initiatives So you XXX,XXX basis? XXX,XXX of quarterly

Joe Turner

Yes, I mean slightly be think could I I - the don't higher, think would be lot. new programs a but it

John Rodis

of stuff. And guys - to you the put the shows sort end it page yields average on the think and of from I I are the would XX the XX basis quarter. of points down always back the margin as this your as sheet for second its spread quarter Guys far sort guess day be where balance average

So point missing does that stuff - on like margin that sort Does loan you towards side. that? about we or guys lower deposit in pricing and side and pressure talk of are what of again sort the

Joe Turner

could think thing probably John. I saw same that that I - do

includes do does think today the would $X during was I asset because the about about accretion million that’s that’s I’m basis yield XXX on it times that accretion our points yield million bearing X to And be interest not got our I XXX think annualize the more way. quarter, that about level the of with believe. that would XX which not,

Rex Copeland

yield. mix. and has higher column marks there looked is some a John the at than It time, at a would look a but was to bit It went in and - with know just the point if and that is earnings the our to do be This release you little you back previous first rate of [indiscernible].

we of of well about days on we on did because loans higher pay have that the in that project and June a each XX weeks of we had or the assets have and what of $XX on last And those million liabilities amount $XX million cash those back to the June. and out. So what rates two

our You'll average right end of quarter quarter outstanding balance up. ended than was the for higher probably see our where around

pay So, have we some did the at downs end. right significant

particular lower know Fed higher $XX million or earning more on in at are are the rate numbers day mix that. So, in and was something us that like a and you X% say around funds the million loans, $XX they that at

see So, you point mix expenses some are the look just you versus yields higher the well, the but if XX of this that to the time, do March particular but well. with can - day in that higher as had on back at as are as the

that think was I XXX So, but March, the it I bit think. higher XXX, forget in the number I what than was previous little

John Rodis

income unusual And on interest as the like in anything nothing as over so loan dollars far fees elevated core back or basis was there just net like million was a for that? to $XX.X quarter, there

Joe Turner

nonaccrual No. amount. things a loans, material I it collect on income from maybe time nonaccrual number in happen mean we has those of - I time like quarter was amount will like that loan most mean a to not may feed into large we'll that we payoffs do interest that a kind have but

John Rodis

range million you long not And are million seems sort I final question think then - of $XX I ultimate But sale $XXX a that over branch past from June the for decade. this guys covered to on guys at upper $XX the go million the above end of which obviously you in sequel end the time XXX%. that's deposits, ratio, of with so of we're the million mean be the kind sort $XXX running to comfortable you with of loan-to-deposit

Rex Copeland

things. like I of run we funding alternative is, with we sources, have CDs, thing feel The a way mean brokered kinds those lot

growth. I'm So, relatively need and that loan there we no is six of talking robust think short-term quarters by

to that along our - need and longer with plenty I our grow think the over deposits beyond term our loans runway. got we've long do of

can that our deposits to them. biggest we're advantage we're bring centers able I a have do is we think there handle if of system banking more we staffed

areas would We in that's go ability offer and franchise. We're by gangly the to repricing entire I we have do our a number and to guess year. say on one. - but think you special end offer we're going then pretty our a of the little metropolitan bit on working sort So, of of hard able a without the that higher something online portfolio, product that rate nationwide. And could we'll an I have

be loan feel we to term those though I will we don't opportunities free In pursue So, don't ratio. feel short deposit think good the our higher really strategy. constrained, aggressively longer-term loan unable because of the

remember you deposits a You've when had our third covered us long enough brokered. probably of were Johnny, we

So not second than but the necessarily to that much other get would higher again quarter. be level want could the certainly end that have that some we we million to the of at we

John Rodis

$XXX could the But loan I is to I deposit million, does of or? mean as ratio million there, it it as far it go doubt $XXX or

Joe Turner

I on Yes, found Depending core loans how our calculated deposits? to you guess. you

John Rodis

No, deposits. just total

Joe Turner

fund be our we'll We're deposits. if going probably opportunities, be loan to core deposits don't growing - to broker on grow funding

I probably sense wouldn't much yes, that in So, go number higher. mean that

Operator

to And turn questions. would call you. like Kelly remarks. any for the Ms. showing Thank I'm back now no further further I Polonus to

Kelly Polonus

concludes that Thanks with feel me, further other If our please we anyone joining visit not believe has quarter. to any will free I us. questions, if next for you contact call.

Joe Turner

Thanks, everybody.

Operator

Everyone participating program, have Ladies a concludes thank for great disconnect. you This you may conference. all today's and the day. gentlemen, in

Great Southern Bancorp (GSBC) 19 Jul 182018 Q2 Earnings call transcript