GSBC - Earnings call transcript Q3 2020 | Great Southern Bancorp, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Great Southern Bancorp, Inc., Third Quarter 2020 Earnings Call. At this time all participant lines are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your host today, Kelly Polonus, Investor Relations. Please go ahead.

Kelly Polonus

Thank you, Sara. welcome. and afternoon Good is everyone well. hope I this The company's to the is for purpose the of results XXXX. quarter discuss XX, call ending September

with we statements we to course Before future financial about need that see and our I now the Rex the Please information. during forward-looking Turner; and Joe future the quarter remind third Copeland, on events of to and are President Joe in make XXXX I'll earnings may you call, performance. release CEO, me the over call call Financial turn forward-looking for Officer, disclosure statements this today. more Turner. begin, Chief

Joseph Turner

Okay, thank And thank today. I to you. hope everyone like call Good also. I would on for well us also everybody joining our afternoon. as

through month, time. believe I of tremendous the its well-being serving in through the on our manage a we difficult focused associates our now associates, and seventh of customers job are doing pandemic we customers remain our communities. As this

quarter, working As hardship pandemic. said be with caused by are financial may who last experiencing we customers this any we actively

strength are about financial a over still up our liquidity. I'll on challenges Copeland the and call remarks for by to uncertainty get then the to and lot health more questions. of brief company's about detail Rex respond performance ahead, provide do we'll And who to produced our months some with then turn during strong there the open I'll quarter. into results, will it is capital, crisis are While to we of a the position so the the ready in earnings

the loss ago earnings allowance Still compared declined loan per went the when in of had common of low year comparing over have losses. to or think grow is year ago share quarter. did driver We we of our charge $X.X so, the very our achieve attributable or or that, lower than I the but income to expected by As the though, third associates. that offs during net about the debt million the earnings good a primary included effects the half number interest were, maybe issued climate, one, decline also quarter. quarter quarter, ago a result for higher affected to of of XXX% that The operating non-interest $X.XX special the of which third to We the provision period in second sub provision, diluted very it loan XXX% had in at quarter. as $X.X quarter. end we to earnings for million expense, our which bonuses our year almost us, related the this We higher

of our job this earlier, that are and associates Many aged for times is doing children company, for we our hard our mentioned associates I associates. resulting virtual school the have know dealing they're a with unprecedented in As tremendous school.

was And but with associates some lost show boat can't that's in their the what jobs, solve do have their we we're bonus that that We spouses the and want for. to very is problems, them all of special difficult. have our which

metrics quarter performance third Our good. the for were

Our add and of annualized was on very equity equity might levels common common I return X.XX%. high

on annualized X.XX%. Our was return assets

XXX. our efficiency was net was And reported interest ratio annualized XX.XX. Our margin

the $XX net fixed production increased the the third million XX commercial rate very to bit quarter. million year little quarter in that gross result continues Retail and strong, of be of of a been we the lending did but third by end in produce. slowed. loan driven second unfunded rates. interest loans typically low sell about decline production the Outstanding XXXX, has balances the our loan the activity include being from end Total end mortgages about strong, quarter. million Our amount increased lending markets XXX.X as million increased which of majority of the very since during from We decreased a the mortgage $XXX

a pipeline the filed loan decline since I the loan June. of XX end end on The interested Our quarter you about and to September, presentation at committed commercial million, presentation XX file a information of about of million about I a our think relatively remind third more continues quarter. decrease the from loans quarter be X.X of steady last and million would unfunded portfolio $XXX is yesterday. of end of was portion we you're construction each in was our if our billion portfolio,

XXXX, loans At loans million almost as our substandard were assets were assets were strong. Through as XX, as XXXX, classification I as loan September on totals. At XX, classified classified XXXX, million during our watch Total list during mention $X.X X.X XX, quarter the the - XX.X million category quarter of classified The very X.X received payments net loans X.X loans our due September is million. watch on credit. September our our million. commercial offs and non-performing as internal XX, net portfolio. had million. We substandard watch the and indirect think, June third some very, paid - would in decreases is were are automobile other and automobile category quality non-performing were substandard said, watch $XX,XXX on was to off that the One to down two XXXX, were $XX.X Asset exclusively I recoveries, indirect thing categories. actually our charge I

will understand that will now in well. and difficulties As as the we right earlier, mentioned I difficult we're conditions economic in result likely persist fully

by nearly since losses, So million of we have been we've allowance XXXX. loan increasing the end $XX our increased for

so to a at $Xbillion XX% allowance. we At XXX.X loan loss to of will a all only, those provision accounting was through the a and Had credit the three six to then pay interest end to expectation be to to end remove million. year, that September, XX our into be are equity and on in million the won't of put of be period that paying to allowance the times, will as a the X, methodology. a is effect adopted in modification modifications, that currently months put CECL current some would down million January think June, similar earnings $XX time. incurred the amount And a up months. direct our of losses would our our requirement debit seven but we of end modifications to months, really would we I over time under the have of loan for principle had that's reminder, of year, we a at and $XX And reminder, that for cumulative Loan a principal maybe at allowance. a flow change As different our the

our of share $X.XX. end about continued Our capital to value as increased very increased by I total value, mentioned. equity From million stockholders' common strong by $XX book and per our be the XXXX, tangible book

$XX, book of $XX.XX to $XX the from end third $XX.XX increased the at was second the Our quarter, quarter. it value the end of at

equity assets well strong common at as tangible tangible very XX.X%. is Our to

quarter, $XX.XX we did repurchase XXX,XXX of per the price an During shares of at common share. stock average

albeit spite future. dividend that $X.XX by we the continue economic dividend. operate that levels, be not quarterly anticipate Additionally, profitably, at we our challenges currently the COVID, In share obvious we per will XXXX and expect regular we've can foreseeable caused to paid maintained a of for

overall may up of the communications next determined capital X to approved our warrant. levels, regulators. to Directors we of stock company million sort of maintain new in has have stock regarding holding by those of we stock. repurchase of and purchase over with earnings credit holding and quarters company repurchases plans if light our always metrics The stock program Board continue our repurchase with did conversations the and will re-commencing and conditions our a stock amount several regulators. shares Our and common prior the timing bank open market quality for our And company And we'll program, to be

two about we they weeks, the it. we order we're not And that three repurchasing them stock, know permission of our the to doing end wanted but doing. of they course of said required the we objection seek the Reserve manner no in at the us to conversations, were those repurchase our Over had in Federal what stock to were to or

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

Rex Copeland

Joe. today net by about start income bit a to going interest you, little speaking I'm and Thank margin.

about Our was Federal of quarter net interest million to quarter rate about decreased million. income significant Reserve by XX.X course third $X.X income the XX.X That of for to March. compares XXXX happened in cuts net of the interest affected negatively the third for XXXX. million that The

the our in you cash annualized that thing - this assets, issued balances year June. and about did the cost quarter eight quarter more the margin have investment pools debt as basis a and that the program basis, debt in decrease third also we same to QX talked X.XX% the earning to this for Federal by of mid second June. I year. also an previously. recently The were we when compares sub the then also was paycheck that cash the purchases the Reserve hold compare at third interest we quarter is loan about XXXX some in little where result things equivalents for SBA, accretion lower we QX, loans, quarter That this one and to on is the cost X.XX% we increased and some acquired and related yield about a The We if exclude security of same have is protection in the of different The you that core to X.XX% of in of from points sub XXXX. issued our additional late

we basis in headwind on So costs. we of that the sub QX, if XXX at look QX, debt had the were at XXX but eight in comparison, from core points you

the filings of the and term, have affect we on income So are indexed interest that rank over to that margin and last and course But would are we've because of quarter been test we and of few in months what our several liabilities or loans deposits, our a lot two. would that previous fact said lower LIBOR. the discussions in deposits net some the lot negatively near in of non-time a quarters, is and a time the seeing our next re-price

were XX our look of we cost in quarter were quarter we of second If see deposits compared third in were points quarter, we quarter below the our and and back points than third where XX was second XXXX. the was lower interest-bearing to where quarter number basis fourth basis you

anticipate see should continue maybe - reduce down couple deposit our based on to the costs, we next will to quarters we of we couple assuming So we able we they quite right coming continue continue of now, some on right as the side. that costs but the and are there and in that stay where maturities come those are will rapidly in of up improvement last not to funds cost able as deposit we quarters, be to did still be

payables. as that the X.X kind to lot We quarters, having higher still to the was gain about in acquired or originated there remaining XXX,XXX basis positive into charges, XXX,XXX variety income compared ago, quarter $XXX,XXX debit sold as quite typically there that million of on the to they're increased in a that's the of the prior that and same sell in are in quarter income XXXX. year, a card net it fees on fees, our in compared We've for We're to loans this next income originations quarter. going year. a lot this in our the see about of our - lower we of increase impact income about those And loans. That of to over margin came this impact, was of accreted services several portion year on those in earlier form same on lot a family quarter impact interest QX you yield We the year year funding gain $X.X come little - million on mentioned of secondary loans year of customers compared in much decrease insufficient fixed derived X.X quarter to third the million FDIC related A across sale should got ago about those and a quarter compared this the accretion quarter a opted continue income loans. the things. rate we using bit to were. Overdraft, Non-interest not when nine Joe Service fourth the points. the loans. come to that about seeing of ATM market. as from they to to so single have fees, about we

things A also we So or part third the I of for this the the during pretty as fees that that and quarter bit of of and And as now in that probably in second utilization little we waiving is proactive in would many say were going things like earlier on late were probably quarter, year, our down. as of pandemic. in customers not we fees and were the part third waiving middle year. things were like

toward So little amount usage our quarter picked again Other We larger expand were loan quarter third originations of tend bit the compared we where I of bit debit too, little Those ATM may year Also, fees. of deals actually up about a ago from that seen quarter that. bit ago income income be middle interest in to in year end rate bit with there our for income year of and the but in a year. card the customers little sporadic. we we've saw start the this to a lull decreased the kind there. $XXX,XXX. compared think of That little had a of swap to the fee a a to from less of sort

of them the year million $X.X Non-interest this throughout the in quarter. but year, increased XX this at - the magnitude of was compared XXXX. quarter million each that at have at time portion not largest always quarter. was, to We same quarter, same The compared the expense were to Joe was same that to increase. as about largest pay an that we up billion the year mentioned, salary prior increase bonus increase of our and the part in elected to The million employee employees. benefits X.X That to the $X.X

area. year compared so probably and last XXX,XXX higher mortgage had about incentive in of or the people salary also additional We and compensation, level to both

at few people that. exposure area. a they've form offset ago, a people like the in that that. So regards because in servicers things we that out and talked continuing to to about to had we're some I income minute home, as quarantining COVID compensation that they're part have had that and also or pay did to to producers of the in They're, the We've

have quarantine, them. part –they're to some in, we with normally so And people do to associated necessarily but continue people we - off costs fill because with paying, time that people we having of we wouldn't that, pay be

so that of relates couple a there's So or there. that. in Maybe hundred more a thousand little to dollars probably

year the of increases X% those the drivers. that then So are And is main of then it and from and of rest to married normal a it, probably things just ago nature. X%

Joseph Turner

I have credit think because costs our have additional FDIC no insurance. Rex, we we insurance the too And on longer did

Rex Copeland

full we credit this a then to Right, had partial had year we a had amount and think have the again credit start last this we and full paying year, I year.

expense why was it higher. about that's Occupancy was ago, $XXX,XXX. cost insurance also year a was than So the higher

in we've some new the things rolled another Also so depreciation. was quarter the that higher got We in it. $XXX,XXX in And ATM, and the the third on out last were ITM fourth or it's quarter year. those just and this of repairs year. maintenance that - occurred Some or of depreciation units late

level by So line. - we of I much just expense, would estate owned have working than assets that we've One been are repossessions about have, a the those we last have good the repossessed last to We the was couple autos on doing that years. just job, the lowered they period. non-interest foreclosed compared expense occupancy we're on down think been - lower and and that thing year - that costs prior real other were increased $XXX,XXX

less the just and portfolio. cost real with we repossession autos with got of associated foreclosed auto estate and So

The we As before, decrease income Also quarter higher, was efficiency just our that in but small net higher third Non-interest That year. was I bit reasons was that mentioned quarter higher in a the total income the talked I of this for and ratio little a mentioned for efficiency some of revenue. lower. expense of the XX.XX%. about. interest to XX.XX% had ratio due to mainly was non-interest compared level last

So year. the despite to quarter our assets quarter at this increases these for remained last X.XX% costs non-interest versus expense average the in year

Assets three-month or were we grow, the XX% about continued higher than average for million about have to as about the last assets and this talked $XXX were in of higher period quarter they year. third

compared various had tax We've than Just bit some little a in higher is a going a that higher the to interest and couple normal be our than rate that years the and little to bit a which had of that as earlier those terminated were things little this higher in of have last in we're of flowing year-to-date. income income taxes, third bit wrap year we probably creating swap effective year taxable got in in higher paying higher XXXX rates previous states, quarter this we up, certain we when is some mention rate states taxes the future, state bit I'll little others. a taxes we where tax gain we're through and and state

And higher just much effective rates state by The little same. various effective so rate rates. really seeing really pretty being we're a It's there. driven the bit Federal

full one CECL. mentioned in the back little fourth be based the bit anticipate that XXXX. rate. now normal on right basically that as that they about tax then a and fourth effective know I CECL higher, be a retroactive our continue beginning today So think effective in at adoption to refining year our anticipate for that, we're be the our information. nine-month the to that expect occur back looking the would impacts numbers. like lower, And like our year little the But what with bit throughout estimates before we little of have case It'll we discussed this go we just previously finalize And flow we financials. going Joe our CECL then our that year. we more would Joe rate last a through Again, already filings. And we for then we year bit will more quarter our CECL But said quarter adopt previous presumably may thing,

we've our than most there. If don't you we the now anything look about think talked XX-Q, before. And information that's right what June recent, think there's at different I materially

on color That additional provide entertain operator we'll again we and we ask quarter queue So attendees enduring remarks our This like once time will have. questions, the how information. prepared in fourth concludes that the the to I'd to for questions. remind to

Operator

with Thank Liesh you. [Operator the first from question comes of Andrew Piper Instructions] Our Sandler. line

line Your open. now is

Andrew Liesch

Hey, How everyone. afternoon, good are you?

Joseph Turner

Andrew. Hi,

Andrew Liesch

Hi.

just focus this now to So I was a quarter want right on forecasting. bit higher little than expenses

guys quarter. you million. rate be should we It $XX a good this of level? by below million mortgage that maybe You seems this there But pretty like affected or was rate XX using in think still the run probably new had it's like some it is the business run do

Joseph Turner

Well, you and - bonus X.X I one to need so this that was was out. of special this it mean, million - back that

related that quarter made from with probably The that costs continue costs two where then it the did we of during and X.X while. was could get other think our that of XXX,XXX adjust And adjust employees. to I will stuff. compensation seems from there's we quarter Rex cleaning Those relate that XXX,XXX, as costs were going other our is I be us I the up that equipment - the cost, that's to [indiscernible] out and XXXX. kind quarantine and COVID things me to of XXX,XXX, other supplies mean, third of mean, that I or the said until payments during - the is for probably mortgage a the million will pandemic. think to some and

continues but the you strong. at yeah, mortgage back off X.X or our volume back and numbers So be two you the to normalize those you XX and mortgage you are million, million

as So long you to mortgage changing don't it's as that strong. remains - hard see volume our

Andrew Liesch

what opportunities seeing good on there. is yield benefit the to more now? side now? like What Okay, actually sounds are still the And seeing right some some costs helpful. the That's funding thanks. that you pressures on on the than And then side cost around you're margin, funding improve - right is yield

Rex Copeland

are Probably, I I think down more. bit costs a mean, funding coming the little

lot on. than are new a of of had typically higher little those are have rates maybe loans We bit coming loans our at that repay, the a

and seen we look So have in release, yield on X/XX. rates can work. loans. the at column press the Page there, yield see And you then we little a end, in - our as for quarter, XX, cost average our I toward I decline what the of you on costs if the think a our yields bit of first mean, you and give

in the numbers. classes. of be So liability deposits And different the and of is are are side, those deposits And on kind there XX point you on X/XX you from the see then going to time asset yields our see basis where points. can cost on can

For the was points. XX quarter basis it

costs anticipate notes, is come change and much. - the probably see to those areas rate. around to I So to been LIBOR sub but the subordinated too LIBOR clearly, we're a debt And moving going we not fixed tied bit hasn't mean, the it's more, those blooming, other down are much. going

on is So - that the yield only don't the that on the And the the side give the on does loan exclude loans exclude at yield time that thing - on the there does come to in side, the point going then we accretion. reduction in funding on see the you the deposits. you

we show third will going in a but is the it still you bit bit - of to come we basis that were a the quarter was nine say kind and where benefit, what from here down can that probably analyze maybe higher be, that well, or little points that in than of yields little So so

Joseph Turner

in September The the time. the months ended XX nine in basis three points number, point in but is not it's

Rex Copeland

and of are have of deposits think mean, TD, to rate weighted time those XXX we'll million - see So continue probably and or I month have been maturing somewhere a XXX we've like that - XXX something around I probably of that. between -

replacing XXX rates got lower said, we So takes we've substantially XXX a so to time little at of kind work to got and for it that probably already like But months those the down. able roll deposits just six - nine a will of six we've it we're it time that at of than through and more re-price stuff month, months through, off pipeline, to million that. that will be

Andrew Liesch

helpful That's, it. Okay. very will commentary. really I I appreciate that's step back. But Thank you.

Rex Copeland

you. Thank

Operator

Thank you. Instructions] [Operator

Our with next comes line a question from KBW. Michael of Schiavone

is open. line Your now

Michael Schiavone

afternoon. good Hi, everyone How's doing?

Joseph Turner

Thank Good. you.

Rex Copeland

Good. Thank you.

Michael Schiavone

Good.

were particular the for in outlook So just as income going pipeline general? as in the on share quarter. fee some mortgage strong sales in your fee well forward really Can you income mortgage color

Rex Copeland

I and quite loans quite out a mean, got still lot mortgage we've commitments originating we're a I of few there. think

Joseph Turner

mortgage in we pipeline pipeline the numbers? our Do have

Rex Copeland

the like it's I'm Trying a commitments. million very loan fourth in if than sorry. that, closed. to to here. bit to about but were heard be new It's mortgage in the mean, two than we've a It's ends of less than And No, and We've - quite commitments lower back that - couple bit haven't commitment I they're a higher substantially were it busy end, in producing it's that in doing previous see but don't quarter. quarter look not got is well, think anything third I little I leads the And we're number - or quarter that still going Yeah, think me $XX had seen year are group. still here. the higher than that that lower quarter we still was I ago. Yes. in much I mean, think still or I

get know, we for So that. end the I year, the to mean, a maybe around the very down holidays, bit little don't slow I of it'll

we may but late not really quarter, little so bit first the change. much part slow the down in far, of the see a So quarter,

Michael Schiavone

and and you, space. thank some further When toward the scale helps. right, offices rationalization review release branch you your see making a consolidating the footprint, bank for office modernizing And or opportunity you then initiatives overall is All like noted branches? of that larger

Joseph Turner

there what really - in branches or four last XX% closed of think may I keep don't I five our we've be so. probably mean, over mind, years. the

Rex Copeland

XX branches.

Joseph Turner

more be so further that, or kind there. maybe will be centers maybe of one large don't two or yeah, banking could think than changes. XX% be or But I there something, consolidation. wholesale it Yeah, would there here

behavior change customer they as and with but start XXXX, of in to accounts, to big accessing transactions, person. in but if found for it sorts things, banks do they those money, continues a borrowing in is ways, that's do Now, we of number that deposit opening people that - that access, for and come like different in

know is long so be that rationalization. scale will don't And the case, there I that large

Michael Schiavone

just talk refresh priorities your capital you so program, can share question, organic been about but Last pretty levels you and you. capital of growth, et buybacks, allocation cetera? thank healthy you is Okay, and M&A, guys in actively dividend, have shares terms repurchase buying back

Joseph Turner

see to lot Well, and our can think can impact a to not continue I We - certainly we're grow going to to that dividend. ability mean, we we our pay ability want I grow. would the Obviously, we to think, to pay we extent our the dividend. grow,

be our stock multiple XX% book XX% priority buying at book, stock third I we some certainly our at would of those else's book. think among back The rather and somebody end than buy or would stock I of buy back above

prioritize. that's would of how we So kind

Michael Schiavone

Great, thank for my question. you. Thanks taking

Rex Copeland

you. Thank

Operator

Thank you.

Mr. back Turner for to closing now We the further in this call time. remarks. have at like queue to would I the questions turn Joe no

Joseph Turner

a be everybody earlier, will you. have holiday and we months. you after have Well, end has in we being hope And hopefully appreciate, and talk President season. vaccine on three certainly about will look you a the appreciate looking up. as a hopefully the of to Thank said talking we'll everybody and the wonderful we things I year to healthy I to call forward today. We'll and

Operator

Ladies call. conference and gentlemen, this concludes today's for participation. your Thank you

now may You disconnect.

Great Southern Bancorp (GSBC) 22 Oct 202020 Q3 Earnings call transcript