Great Southern Bancorp (NASDAQ:GSBC), Inc. disclosed its third-quarter earnings for 2023, reporting a decrease in net interest margin and earnings per share compared to the previous year. The company’s earnings declined to $1.33 per diluted common share or $15.9 million from $1.46 per diluted common share or $18.1 million in Q3 2022. The net interest margin dropped to 3.43% from 3.96% over the same period, primarily due to increasing deposit interest rates and the impact of interest rate swaps.
Key takeaways from the call:
- The company’s liquidity and capital positions remain robust, with available funding lines of roughly $2.2 billion.
- Total outstanding loan balances grew by approximately $58 million since the end of 2022, largely driven by growth in the multi-family loan segment.
- Non-performing assets to total assets stood at 0.19% at the end of September 2023, indicating strong credit quality metrics.
- The company declared a $0.40 per share common dividend and repurchased shares of common stock during the quarter.
- Interest rate swaps are expected to negatively impact net interest income by about $2.9 million in Q4 2023 and $1.9 million in Q1 2024.
- Non-interest income decreased by $132,000 compared to Q3 2022, while non-interest expense rose by $799,000 to $35.6 million.
- The effective tax rate was 21.5% in Q3 2023, and the margin is expected to stabilize in the future.
During the earnings call, Joseph Turner and Rex Copeland discussed the narrowing repricing gap and the yet-to-be-realized benefits from the Fed’s rate hikes on fixed-rate assets. They also highlighted the rates at which construction loans are funded and the anticipated modest loan growth. The duo expressed confidence in their credit portfolio and mentioned that they would continue to be strategic about share buybacks.
The executives also addressed some contract disputes and stated that expenses for the fourth quarter should remain at current levels, except for deposit insurance and legal and professional fees, which are expected to decrease. They concluded the call by announcing the Q4 earnings release in January 2024.
