Great Southern Bancorp, Inc. (NASDAQ:GSBC), a leading regional bank holding company, has demonstrated its ability to adapt and thrive in the ever-changing financial landscape. With a strong presence across the Midwest, the company has consistently delivered solid financial performance, showcasing its resilience and strategic acumen.

Financials

For the fiscal year ended December 31, 2023, Great Southern Bancorp reported annual net income of $67.8 million, annual revenue of $462.88 million, annual operating cash flow of $80.7 million, and annual free cash flow of $73.4 million. These impressive figures underscore the company's ability to generate sustainable earnings and maintain a healthy financial position.

In the second quarter of 2024, the company reported net income of $17 million, or $1.45 per diluted common share, compared to $18.3 million, or $1.52 per diluted common share, in the same period of 2023. Excluding non-recurring items, the company's earnings per diluted common share were $1.37 for the second quarter of 2024. This performance reflects the company's ability to navigate the challenging economic environment and maintain profitability.

Loan Portfolio

Great Southern Bancorp's diverse loan portfolio has been a key driver of its success. As of June 30, 2024, the company's loan portfolio stood at $4.63 billion, with a mix of residential, commercial, and consumer loans. The company has seen modest growth in its loan portfolio, with an increase of approximately $44 million since the end of 2023, primarily in the multifamily category as construction loans were completed and transitioned to the permanent multifamily category.

Net Interest Income and Margin

The company's net interest income for the second quarter of 2024 was $46.8 million, compared to $48.1 million in the same period of 2023. This decrease was primarily due to higher funding costs, as the average rate on interest-bearing demand and savings deposits, time deposits, and brokered deposits increased by 51 basis points, 123 basis points, and 28 basis points, respectively, in the three months ended June 30, 2024, compared to the same period in 2023. The company's net interest margin was 3.43% in the second quarter of 2024, compared to 3.56% in the same period of 2023.

Non-Interest Income and Expense

Great Southern Bancorp's non-interest income for the second quarter of 2024 increased to $9.8 million, up from $7.7 million in the same period of 2023. This increase was primarily driven by a $2.6 million increase in other income, which included $2.7 million related to the termination of the company's master agreement with a third-party software vendor for the conversion of the company's core banking platform.

The company's non-interest expense for the second quarter of 2024 increased to $36.4 million, up from $34.7 million in the same period of 2023. This increase was primarily due to higher other operating expenses, which included $600,000 related to ongoing compliance matters, as well as increases in net occupancy expense and various components of computer license and support expenses.

Credit Quality

Great Southern Bancorp's credit quality metrics remained strong during the second quarter of 2024. The company did not record a provision for credit losses on its loan portfolio, and total net recoveries were $168,000 for the quarter. The allowance for credit losses as a percentage of total loans was 1.39% at the end of the second quarter.

Liquidity

The company's capital and liquidity positions remain robust. As of June 30, 2024, total stockholders' equity was $568.8 million, and the company's tangible common equity to tangible assets ratio was 9.4%. The company had available secured funding lines through the Federal Home Loan Bank and Federal Reserve, along with on-balance sheet liquidity totaling approximately $2 billion.

Outlook

Looking ahead, Great Southern Bancorp's management team remains cautiously optimistic about the company's future. The company has not provided specific guidance for the remainder of 2024, but management has indicated that they are closely monitoring economic conditions and adjusting their strategies accordingly.

Deposit Management

One area of focus for the company is the ongoing management of its deposit base. The company has seen some modest declines in deposit balances, particularly in interest-bearing checking accounts and time deposits. Management is actively working to maintain a competitive deposit offering and attract new customers to offset these declines.

Interest Rate Risk Management

Another key area of attention is the company's interest rate risk management. With the Federal Reserve's recent interest rate hikes and the potential for future rate cuts, Great Southern Bancorp is closely monitoring its asset-liability management and making adjustments to its balance sheet as needed to mitigate interest rate risk.

Conclusion

Despite the challenges posed by the evolving banking landscape, Great Southern Bancorp remains well-positioned to navigate the future. The company's diversified loan portfolio, strong capital and liquidity positions, and experienced management team provide a solid foundation for continued success.

As the banking industry continues to evolve, Great Southern Bancorp's ability to adapt and capitalize on emerging opportunities will be crucial. The company's commitment to serving its customers, communities, and shareholders will undoubtedly be a driving force behind its future growth and prosperity.