GREAT SOUTHERN BANCORP, INC. Q1 FY2025 earnings call

• Net income was $17.2 million or $1.47 per diluted commons share, up from $13.4 million or $1.13 per share in the same quarter a year ago, driven by higher net interest income and negative provision for credit losses.
• Net interest income increased due to stronger loan and investment yields and lower funding costs. Net interest margin was solid at 3.57%.
• Loan portfolio remained essentially flat at $4.76 billion, with multifamily and commercial real estate being the largest categories. Construction lending totaled $475 million at the end of the first quarter.
• Deposits increased 3.3% from the end of 2024 to $4.76 billion, with increases in brokered and core checking balances.
• Credit quality metrics remained strong with minimal non-performing assets and negligible net charge offs. Negative provision for credit losses on unfunded commitments in the quarter.
• Non-interest expenses were essentially flat despite investments in technology, infrastructure, and personnel, with reduction in legal and professional expenses.

Net interest income totaled $49.3 million in the first quarter of 2025 compared to $44.8 million in the first quarter of 2024, an increase of about 10%. The net interest margin was 3.57%, 25 basis points higher than the year-ago quarter. Noninterest income for the quarter totaled $6.6 million, a decrease of $216,000 or 3.2% compared to the first quarter last year. Total noninterest expense for the quarter remained relatively consistent at $34.8 million, a small increase of $400,000, or 1.2%, from the first quarter of last year.

• The benefit of the terminated interest rate swap will cease after the third quarter of 2025, but we expect to continue realizing approximately $2 million per quarter in interest income from the terminated swap through the first three quarters of 2025.
• Board of Directors approved a new stock repurchase authorization of up to another 1 million shares once existing authorization is complete; approximately 270,000 shares remaining on existing program at end of March 2025.

• Economic and financial sector challenges. - Impact of termination of interest rate swap on interest income. - Deposit cost pressures. - Competition for loans leading to tepid loan growth.

Q: Hey, good morning or good afternoon, I mean. The margin rose a little bit [Technical Difficulty] the one-time benefits, how do you think it's going to -- it should react here this quarter without any changes to Fed policy? There's still room for more [Technical Difficulty] especially with benefits on the funding side?

A: I'll start off on that one. I'd say on the funding side, the non-time accounts, we've reduced rates fairly significantly on some of those. I don't know that we have, like, lots of room on that. We do have maturities of CDs coming up here and we kind of pointed that out in the earnings release that we've got several million dollars that will be coming up in the next three months, six months, etc. And sort of the replacement rates that we anticipate right now based on what we're seeing in the marketplace today. There might be a little benefit that could come our way on that, but it doesn't look like it's going to be substantial. And on the loan side or on the asset side, we've got -- we do have some fixed rate loans that continue to repay and those are typically at lower than current market rates. And so, as those repay, we are able to redeploy that into more current market yields. But I would say that's a pretty slow process. As far as repayments and maturities that occur, there are some that happen month by month, but it's not big chunks that move the needle immediately, for sure.

Q: Hey, good afternoon, guys. Hope you're both doing well. Just wanted to circle back on the margin. I think Rex you had said the benefit from the swap termination expires in the third quarter, is that correct? And you said that's about a $2 million dollar per quarter benefit?

A: It's actually at the beginning of the fourth quarter, so we'll still get the benefit through Q2 and all of Q3, and then like the first week in Q4 is when it drops off.