GREAT SOUTHERN BANCORP, INC. Q3 FY2024 earnings call

• Financial performance: Earned $16.5 million in net income for Q3 2024, with annualized return on average assets at 1.11% and return on average equity at 11.1%. Net interest income increased by 2.6%.
• Loan growth: Maintained moderate loan growth, up $121.7 million for the year, primarily driven by expansion in the other residential loan segment. Pipeline of loan commitments and unfunded lines solid at $1.04 billion at end of September 2024.
• Credit quality: Nonperforming assets decreased by $12.7 million, total nonperforming assets at $7.7 million or 0.13% of total assets. Net charge-offs for the quarter were $1.5 million. Provision for credit losses $1.2 million.
• Capital position: Stockholders' equity increased by $40.3 million since December 31, 2023, TCE ratio at 10%. Repurchased 2,971 shares during the quarter and declared quarterly dividend of $0.40 per share.
• Economic environment: Complex economic environment with fluctuating interest rates and macroeconomic pressures, but well-prepared with disciplined asset and liability management.

In the third quarter of 2024, Great Southern Bank had a net income of $16.5 million or $1.41 per diluted common share. Net interest income increased by $1.2 million or 2.6% to $48 million compared to the year-ago quarter. Net interest margin remained steady at 3.42%. Non-interest income for the third quarter was $7.0 million, down $860,000 from the same period in 2023. Non-interest expense totaled $33.7 million, down $1.8 million compared to the prior year quarter. The efficiency ratio improved to 61.34% during the quarter.

• Anticipate margin trend to moderate slightly as Fed rate cuts take effect, though full impact will be felt over time.
• Expect to replace maturing time deposits at lower rates, possibly between 3.50% and 4.20%.
• Loan growth projection uncertain as much is beyond control, but nine-month growth can be used as a reference for year-end projection.

• Macro-economic pressures including fluctuating interest rates.
• Elevated deposit costs due to competitive landscape and higher interest rate environment.
• Credit risk with potential impact from economic uncertainties, though credit quality currently good.
• Impact of rate cuts on deposit pricing and loan demand taking time to materialize.

Q: Touch on the margin and funding side stabilization; any opportunity for expansion in Q4 or 2025?

A: Got things more matched off, fairly neutral in near term at least.

Q: On expense front, is the $33.7 million run rate good going forward?

A: Expenses were lower than expected, with certain one-time costs no longer incurred, but likely on low side in Q3.

Q: Regarding credit reserve and loan growth pipeline?

A: Reserve ratio fairly consistent, loan growth projection uncertain as much is beyond control.

Q: On buyback, was it price-related?

A: Price was higher this quarter, and book value has moved up, with opportunity to buyback more forward.

Q: Thoughts on new markets or M&A?

A: No immediate plans for loan production offices, selective on M&A if right situation arises