Great Southern Bancorp, Inc. Reports Preliminary Second Quarter Earnings of $0.85 Per Diluted Common Share

SPRINGFIELD, Mo., July 21, 2015

Preliminary Financial Results for the Second Quarter and First Half of 2015:

• Total Loans: Total gross loans, excluding acquired covered loans, acquired non-covered loans and mortgage loans held for sale, increased $207.3 million, or 7.9%, from December 31, 2014, to June 30, 2015, primarily in the areas of commercial real estate loans, consumer loans, construction loans, and other residential loans. Net decreases in the acquired loan portfolios totaled $42.8 million in the six months ended June 30, 2015.
• Net Interest Income: Net interest income for the second quarter of 2015 increased $2.0 million to $42.0 million compared to $40.0 million for the second quarter of 2014. Net interest margin was 4.53% for the quarter ended June 30, 2015, compared to 4.69% for the second quarter of 2014 and 4.82% for the quarter ended March 31, 2015. 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. A decrease of approximately 20 basis points in the margin compared to the quarter ended March 31, 2015, was primarily the result of a reduction in the additional yield accretion recognized in conjunction with updated estimates of the fair value of the acquired loan pools. In addition, during the quarter ended March 31, 2015, the Company collected amounts on certain acquired loans from customers which had previously not been expected to be collectible, resulting in 10 basis points of the total net interest margin reported, which was not recurring for the quarter ended June 30, 2015. The positive impact on net interest margin from the additional yield accretion on acquired loan pools that was recorded during the period was 78 basis points for the quarter ended June 30, 2015 and 107 basis points for the quarter ended June 30, 2014. For further discussion of the additional yield accretion of the discount on acquired loan pools, see "Net Interest Income."
• 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 and are accounted for and analyzed as loan pools rather than individual loans, totaled $60.4 million at June 30, 2015, a decrease of $8.3 million from $68.7 million at December 31, 2014 and a decrease of $5.6 million from $66.0 million at March 31, 2015. Non-performing assets were $39.0 million, or 0.95% of total assets, at June 30, 2015, compared to $43.7 million, or 1.11% of total assets, at December 31, 2014 and $42.4 million, or 1.04% of total assets, at March 31, 2015. Net charge-offs were $673,000 for the three months ended June 30, 2015, compared to net charge-offs of $1.6 million for the three months ended June 30, 2014 and net charge-offs of $664,000 for the three months ended March 31, 2015.
• 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, 2015, the Company's Tier 1 Leverage Ratio was 11.3%, Common Equity Tier 1 Capital Ratio was 11.0%, Tier 1 Capital Ratio was 13.6%, and Total Capital Ratio was 14.8%.
• Significant Unusual Income or Expense Items: During the three months ended June 30, 2015, the Company sold a banking center building in Nebraska at a net gain of $671,000, which is included in the Consolidated Statements of Income under "Noninterest Income – Other Income." Currently, this banking center is still operating under a lease agreement. The Company plans to build a replacement banking center, expected to open in 2016, in a superior commercial/retail location. During the quarter, the Company sold vacant land in Iowa that was acquired as part of the Valley Bank transaction at a net gain of $327,000, which is included in the Consolidated Statements of Income under "Noninterest Expense – Expense on Foreclosed Assets."

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, 2015, were $0.85 per diluted common share ($11.9 million available to common shareholders) compared to $0.79 per diluted common share ($10.9 million available to common shareholders) for the three months ended June 30, 2014. 

Preliminary earnings for the six months ended June 30, 2015, were $1.67 per diluted common share ($23.4 million available to common shareholders) compared to $1.42 per diluted common share ($19.6 million available to common shareholders) for the six months ended June 30, 2014. 

For the quarter ended June 30, 2015, annualized return on average common equity was 12.67%, annualized return on average assets was 1.18%, and net interest margin was 4.53%, compared to 13.02%, 1.17% and 4.69%, respectively, for the quarter ended June 30, 2014.  For the six months ended June 30, 2015, annualized return on average common equity was 12.65%; annualized return on average assets was 1.16%; and net interest margin was 4.67% compared to 11.86%, 1.07% and 4.68%, respectively, for the six months ended June 30, 2014. 

President and CEO Joseph W. Turner commented, "Our earnings remained strong in the second quarter at $0.85 per diluted common share, compared to $0.79 in the same period in 2014. Continuing the trend from the first quarter, earnings were driven by strong loan growth throughout the Company's eight-state footprint and in most loan types. Total loans, excluding acquired covered and non-covered loans and mortgage loans held for sale, increased $104 million from the end of the first quarter of 2015, and increased $207 million in the first six months of 2015. The reported net interest margin was 4.53% for the quarter ended June 30, 2015, compared to 4.69% for the same period in 2014. The net interest margin, excluding the effects of yield accretion on acquired loans, was relatively stable at 3.75% for the second quarter. Like most banks, we anticipate some margin pressure going forward as average loan yields decrease and deposit costs rise slightly because of increased competition. Credit quality continued to improve from the end of the first quarter of 2015 with a decrease of $5.6 million in total non-performing assets and potential problem loans, excluding FDIC covered and non-covered loans.

"Our capital remained strong in the second quarter. As of June 30, 2015, total stockholders' equity was $437.6 million, or 10.6% of assets, and common stockholders' equity was $379.6 million, or 9.2% of assets, equivalent to a book value of $27.51 per common share and up from $26.30 at the end of 2014. We were also pleased to increase our common stockholder dividend by $0.02 to $0.22 per common share in the second quarter, reflecting the Company's solid performance."