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Jun 30, 2020
Great Southern Q2 2020 Earnings Report
Great Southern's earnings declined due to higher loan loss provision expense and lower net interest income.
Key Takeaways
Great Southern Bancorp reported preliminary earnings of $0.93 per diluted common share for the three months ended June 30, 2020. The decline was primarily driven by loan loss provision expense, which was $4.4 million higher than the second quarter a year ago. Net interest income was affected by the Federal Reserve’s significant interest rate cuts in March, additional lower earning assets, and interest expense related to the subordinated debt offering completed in mid-June.
Earnings per diluted common share were $0.93, compared to $1.28 for the same period last year.
Net interest income decreased to $43.5 million from $44.9 million in the second quarter of 2019.
Total gross loans increased by $186.5 million during the quarter, including approximately $120 million in Paycheck Protection Program (PPP) loans.
Loans with pandemic-related modifications totaled $1.0 billion at June 30, 2020.
Forward Guidance
The magnitude of the impact on the Company of the COVID-19 pandemic is not yet fully known, and will depend on the length and severity of the economic downturn brought on by the pandemic.
Positive Outlook
- The Company expects that it will continue to operate profitably.
- The Company expects that its regular quarterly dividend can be maintained for the foreseeable future.
- The Company is in a position of strength regarding capital, earnings and liquidity.
- A large portion of loans with pandemic-related modifications are expected to return to normal principal and interest payments by the end of August 2020.
- The Company is actively monitoring and responding to the effects of the rapidly-changing COVID-19 pandemic.
Challenges Ahead
- Significantly lower market interest rates will have a negative impact on the variable rate loans indexed to LIBOR and prime.
- Certain fees for deposit and loan products may be waived or reduced.
- Point-of-sale fee income may decline due to a decrease in spending by debit card customers.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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