Great Southern Bancorp (GSBC) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 diluted EPS was $1.45 ($17.0M net income), down from $1.52 ($18.33M) year-over-year but up from $1.13 ($13.4M) in Q1 2024; significant items increased EPS by $0.08 in Q2 2024.

• Six-month 2024 diluted EPS was $2.58 ($30.4M net income), down from $3.19 ($38.8M) in the same period of 2023.

• Gross loans increased to $4.72B as of June 30, 2024, led by commercial and multifamily segments.

• Non-performing loans declined to $10.98M from $21.27M sequentially, but non-performing assets rose to $20.4M (0.34% of assets) at June 30, 2024, mainly due to a student housing loan.

• Results reflect higher funding costs, strong capital and liquidity, and continued competition for deposits.

Financial highlights

• Net interest income for Q2 2024 was $46.8M, down $1.3M (2.7%) year-over-year, but up $2.0M sequentially from Q1 2024.

• Net interest margin was 3.43% in Q2 2024, down from 3.56% in Q2 2023, but up from 3.32% in Q1 2024.

• Non-interest income rose $2.1M to $9.8M in Q2 2024, mainly due to a $2.7M gain from the termination of a core banking system contract.

• Non-interest expense increased $1.7M to $36.4M in Q2 2024, driven by compliance, occupancy, and technology costs.

• Efficiency ratio was 64.27% in Q2 2024, up from 62.10% in Q2 2023.

Outlook and guidance

• Management expects the effective tax rate to remain between 18.5%-20% due to investment tax credits and tax-exempt income.

• Margin is expected to be stable or slightly pressured in the near term, with potential improvement if rate cuts occur.

• Expense run rate should decline by about $1M next quarter as non-recurring conversion and compliance costs subside, though some incremental costs for new products/services are anticipated.

• Net interest income is projected to be modestly sensitive to rate changes, with rising rates having a slight positive effect and falling rates a modest negative effect.

• Deposit competition remains high, and funding costs are expected to stay elevated.