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Mittwoch, 20.07.2016 19:00 von PR Newswire | Aufrufe: 77

Great Southern Bancorp, Inc. Reports Preliminary Second Quarter Earnings of $0.89 Per Diluted Common Share

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PR Newswire

SPRINGFIELD, Mo., July 20, 2016

SPRINGFIELD, Mo., July 20, 2016 /PRNewswire/ --

Preliminary Financial Results and Other Matters for the Second Quarter and First Half of 2016:

Significant Unusual Income or Expense Items: During the three months ended June 30, 2016, the Company recorded the following unusual items: (1) the Company sold an investment held by Bancorp for a pre-tax gain of $2.7 million. This investment, the original amount of which was $1.0 million, was made in a managed equity fund. The Company was required to divest this investment as a result of regulations recently adopted by the Federal Reserve Board; (2) the Company made valuation write-downs and incurred other unusual expenses of $570,000 on one foreclosed asset relationship, which is included in the Consolidated Statements of Income under "Noninterest Expense – Expense on foreclosed assets;" (3) partially offsetting these foreclosed asset expenses, the Company recorded gains totaling $396,000 on the sale of three properties which were former branch locations that were closed in January 2016, which amount is included in the Consolidated Statements of Income under "Noninterest Expense – Expense on foreclosed assets;" (4) the Company incurred final expenses related to the Fifth Third branch acquisition for valuation review, professional fees and loan recording fees totaling $140,000; and (5) the Company incurred expenses totaling $130,000 for supplies, postage and other costs related to the replacement of some of its existing debit cards with chip-enabled cards. The impact of all of these items, after the effect of the full tax rate for the Company, added approximately $0.10 earnings per common share.
Total Loans: Total gross loans, excluding previously acquired covered and non-covered loans and mortgage loans held for sale, but including the loans acquired from Fifth Third Bank, increased $355.6 million, or 10.5%, from December 31, 2015, to June 30, 2016, across most loan types. Total gross loans increased $151.5 million, or 4.7%, in the three months ended June 30, 2016. Net decreases in the FDIC-acquired loan portfolios totaled $40.3 million in the six months ended June 30, 2016.
Asset Quality: Non-performing assets and potential problem loans, excluding those currently or previously covered by FDIC loss sharing agreements and those acquired in the FDIC-assisted transaction with Valley Bank, which are not covered by a loss sharing agreement but are accounted for and analyzed as loan pools rather than individual loans, totaled $48.6 million at June 30, 2016, a decrease of $8.2 million from $56.8 million at December 31, 2015, and a decrease of $9.2 million from $57.8 million at March 31, 2016. Non-performing assets at June 30, 2016 were $33.8 million (0.77% of total assets), down $10.2 million from $44.0 million (1.07% of total assets) at December 31, 2015 and down $9.2 million, or 21.3%, from $43.0 million (1.00% of total assets) at March 31, 2016.
Capital: The capital position of the Company continues to be strong, significantly exceeding the thresholds established by regulators. On a preliminary basis, as of June 30, 2016, the Company's Tier 1 Leverage Ratio was 9.9%, Common Equity Tier 1 Capital Ratio was 10.3%, Tier 1 Capital Ratio was 10.9%, and Total Capital Ratio was 11.9%.
Net Interest Income: Net interest income for the second quarter of 2016 decreased $1.3 million to $40.7 million compared to $42.0 million for the second quarter of 2015. Net interest income was $41.1 million for the first quarter of 2016. Net interest margin was 4.10% for the quarter ended June 30, 2016, compared to 4.53% for the second quarter of 2015 and 4.26% for the quarter ended March 31, 2016. The decrease in the margin from the prior year second quarter was primarily the result of decreases in average loan yields and a reduction in the additional yield accretion recognized in conjunction with updated estimates of the fair value of the acquired loan pools compared to the prior year quarter, partially offset by increased total average loans. Increased average interest rates on deposits also contributed to lower net interest margin. The positive impact on net interest margin from the additional yield accretion on acquired loan pools that was recorded during the period was 39, 78 and 56 basis points for the quarters ended June 30, 2016, June 30, 2015, and March 31, 2016, respectively. For further discussion of the additional yield accretion of the discount on acquired loan pools, see "Net Interest Income."

Great Southern Bancorp, Inc. (NASDAQ:GSBC), the holding company for Great Southern Bank, today reported that preliminary earnings for the three months ended June 30, 2016, were $0.89 per diluted common share ($12.5 million available to common shareholders) compared to $0.85 per diluted common share ($11.9 million available to common shareholders) for the three months ended June 30, 2015.

Preliminary earnings for the six months ended June 30, 2016, were $1.59 per diluted common share ($22.3 million available to common shareholders) compared to $1.67 per diluted common share ($23.4 million available to common shareholders) for the six months ended June 30, 2015.

For the quarter ended June 30, 2016, annualized return on average common equity was 12.15%, annualized return on average assets was 1.16%, and net interest margin was 4.10%, compared to 12.67%, 1.18% and 4.53%, respectively, for the quarter ended June 30, 2015. For the six months ended June 30, 2016, annualized return on average common equity was 10.92%; annualized return on average assets was 1.04%; and net interest margin was 4.18% compared to 12.65%, 1.16% and 4.67%, respectively, for the six months ended June 30, 2015.

President and CEO Joseph W. Turner commented, "Our second quarter 2016 results included strong loan growth, a reduction in classified assets, a continued relatively stable core net interest margin and the completion of our exit from loss sharing agreements related to the FDIC-assisted acquisitions of TeamBank, Vantus Bank and Sun Security Bank. Our results were also impacted net positively by a large gain on the redemption of an equity fund investment we have held for several years, partially offset by certain unusual expenses. Total loans, excluding acquired covered and non-covered loans and mortgage loans held for sale, increased $150 million from March 31, 2016. During the quarter, loan production continued to be strong franchise-wide with loan pay-offs creating some headwinds. The multi-family and commercial real estate loan segments experienced increases in outstanding loan balances of $99 million and $93 million, respectively, while construction and development loan balances decreased $54 million, due to the completion of construction projects.

"During the quarter, total classified assets decreased $8.2 million, from $57.8 million at March 31, 2016, to $48.6 million at June 30, 2016, as we remain focused on credit quality. As part of total classified assets, non-performing loans decreased from $13.3 million to $5.8 million due to the resolution of our largest non-performing credit relationship, while total non-performing assets decreased from $43.0 million to $33.8 million. In the second quarter, we increased our general reserves due to increased total loan balances, resulting in a $1.1 million increase in our allowance for loan losses. While our goal is to keep non-performing assets, loan loss provisions and net charge-offs as low as possible, we expect these items to fluctuate from period to period."

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Turner added, "A few unusual items impacted the second quarter financial results, including a $2.7 million gain as the Company was required, under rules recently adopted by the Federal Reserve Board, to divest its investment in an equity fund managed by Stieven Capital Advisors. During the second quarter of 2016, the Company also recorded unusually high other real estate expenses of approximately $570,000 related to the resolution process of one relationship, in addition to some other smaller unusual gains and expenses."

Selected Financial Data:

(In thousands, except per share data)	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
Net interest income	$ 40,662	$ 42,009	$ 81,780	$ 86,134
Provision for loan losses	2,300	1,300	4,401	2,600
Non-interest income	8,916	3,457	13,890	3,399
Non-interest expense	29,807	27,949	60,726	55,189
Provision for income taxes	4,937	4,214	8,216	8,088
Net income	$ 12,534	$ 12,003	$ 22,327	$ 23,656

Net income available to common shareholders	$ 12,534	$ 11,858	$ 22,327	$ 23,366
Earnings per diluted common share	$ 0.89	$ 0.85	$ 1.59	$ 1.67

NET INTEREST INCOME

Net interest income for the second quarter of 2016 decreased $1.3 million to $40.7 million compared to $42.0 million for the second quarter of 2015. Net interest margin was 4.10% in the second quarter of 2016, compared to 4.53% in the same period of 2015, a decrease of 43 basis points. For the three months ended June 30, 2016, the net interest margin decreased 16 basis points compared to the net interest margin of 4.26% in the three months ended March 31, 2016. The average interest rate spread was 3.99% for the three months ended June 30, 2016, compared to 4.44% for the three months ended June 30, 2015. The average interest rate spread also decreased 17 basis points compared to the average interest rate spread of 4.16% in the three months ended March 31, 2016.

Net interest income for the six months ended June 30, 2016 decreased $4.3 million to $81.8 million compared to $86.1 million for the six months ended June 30, 2015. Net interest margin was 4.18% in the six months ended June 30, 2016, compared to 4.67% in the same period of 2015, a decrease of 49 basis points. The average interest rate spread was 4.08% for the six months ended June 30, 2016, compared to 4.59% for the six months ended June 30, 2015.

The Company's net interest margin has been significantly impacted by additional yield accretion recognized in conjunction with updated estimates of the fair value of the loan pools acquired in the 2009, 2011 and 2012 FDIC-assisted transactions. On an on-going basis, the Company estimates the cash flows expected to be collected from the acquired loan pools. For each of the loan portfolios acquired, the cash flow estimates have increased, based on payment histories and reduced loss expectations of the loan pools. This resulted in increased income that was spread on a level-yield basis over the remaining expected lives of the loan pools. The increases in expected cash flows also reduced the amount of expected reimbursements under the loss sharing agreements with the FDIC, which were recorded as indemnification assets. Therefore, the expected indemnification assets had also been reduced each quarter since the fourth quarter of 2010, resulting in adjustments to be amortized on a comparable basis over the remainder of the loss sharing agreements or the remaining expected lives of the loan pools, whichever is shorter. Beginning in the three months ended June 30, 2016, only the loans and other real estate owned acquired in the InterBank transaction continue to be covered by a loss sharing agreement and have indemnification assets remaining. Additional estimated cash flows totaling approximately $200,000 and $2.5 million were recorded in the three and six months ended June 30, 2016, respectively, related to these loan pools, with a corresponding reduction in expected reimbursement from the FDIC. The effects of the 2014 FDIC-assisted transaction are discussed below.

In addition, the Company's net interest margin has been impacted by additional yield accretion recognized in conjunction with updated estimates of the fair value of the loan pools acquired in the June 2014 Valley Bank FDIC-assisted transaction. Beginning with the quarter ended December 31, 2014, the cash flow estimates have increased for certain of the Valley Bank loan pools based on significant loan repayments and also due to collection of certain loans, thereby reducing loss expectations on certain of the loan pools. This resulted in increased income that was spread on a level-yield basis over the remaining expected lives of these loan pools. The Valley Bank transaction did not include a loss sharing agreement with the FDIC. Therefore, there is no related indemnification asset. The entire amount of the discount adjustment has been and will be accreted to interest income over time with no offsetting impact to non-interest income. Additional improvements in estimated cash flows totaling approximately $525,000 and $3.0 million were identified and recorded in the three and six months ended June 30, 2016, respectively, related to the Valley Bank loan pools. The amount of the Valley Bank discount adjustment accreted to interest income for the three and six months ended June 30, 2016 was $1.7 million and $3.7 million, respectively, and is included in the impact on net interest income/net interest margin amount in the table below. Based on current estimates, we anticipate recording additional interest income accretion of $1.8 million during the remainder of 2016 related to these Valley Bank loan pools.

The impact of adjustments on all portfolios acquired in FDIC-assisted transactions for the reporting periods presented is shown below:

	Three Months Ended
	June 30, 2016		June 30, 2015
	(In thousands, except basis points data)
Impact on net interest income/net interest margin (in basis points)	$ 3,858	39 bps	$ 7,259	78 bps
Non-interest income	(1,774)		(5,374)
Net impact to pre-tax income	$ 2,084		$ 1,885

	Six Months Ended
	June 30, 2016		June 30, 2015
	(In thousands, except basis points data)
Impact on net interest income/net interest margin (in basis points)	$ 9,240	47 bps	$ 16,221	88 bps
Non-interest income	(4,708)		(12,052)
Net impact to pre-tax income	$ 4,532		$ 4,169

Because these adjustments will be recognized over the remaining lives of the loan pools and the remainder of the loss sharing agreement, respectively, they will impact future periods as well. The remaining accretable yield adjustment that will affect interest income is $8.3 million and the remaining adjustment to the indemnification assets related to InterBank, including the effects of the clawback liability, that will affect non-interest income (expense) is $(4.0) million. The $8.3 million of accretable yield adjustment relates to Team Bank, Vantus Bank, Sun Security Bank, InterBank and Valley Bank, and this income is not affected by the termination of the loss sharing agreements for Team Bank, Vantus Bank and Sun Security Bank. The expense, as noted, is only related to InterBank, as there is no longer, nor will there be in the future, indemnification asset amortization expense related to Team Bank, Vantus Bank, or Sun Security Bank due to the termination of the related loss sharing agreements in April 2016. Of the remaining adjustments, we expect to recognize $4.0 million of interest income and $(1.8) million of non-interest income (expense) during the remainder of 2016. Additional adjustments may be recorded in future periods from the FDIC-assisted transactions, as the Company continues to estimate expected cash flows from the acquired loan pools.

Excluding the impact of the additional yield accretion, net interest margin for the three months ended June 30, 2016 decreased four basis points when compared to the year-ago quarter. The decrease in net interest margin is primarily due to an increase in the average interest rate on deposits and other borrowings.

For additional information on net interest income components, see the "Average Balances, Interest Rates and Yields" tables in this release.

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