Great Southern Bancorp, Inc. (GSBC) Bundle
Understanding Great Southern Bancorp, Inc. (GSBC) Revenue Streams
Understanding Great Southern Bancorp, Inc.’s Revenue Streams
The primary revenue sources for Great Southern Bancorp, Inc. consist mainly of net interest income from loans and investment securities, alongside non-interest income derived from various banking services.
Breakdown of Primary Revenue Sources
- Net Interest Income: This is the most significant component, primarily from loans and investment securities.
- Non-Interest Income: Includes fees from banking services, investment services, and other revenue streams.
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, total interest income increased by $21.8 million, or 9.9%, compared to the same period in 2023. This growth was largely driven by a $20 million increase in interest income on loans and a $1.7 million increase from investment securities.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | 2024 (9 Months) | 2023 (9 Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Interest Income on Loans | $220.3 million | $200.3 million | $20.0 million | 9.9% |
| Interest Income on Investment Securities | $20.0 million | $18.3 million | $1.7 million | 9.3% |
| Non-Interest Income | $25.6 million | $25.2 million | $0.4 million | 1.6% |
| Total Revenue | $266.0 million | $243.8 million | $22.2 million | 9.1% |
Analysis of Significant Changes in Revenue Streams
The increase in interest income on loans was primarily attributed to higher average interest rates, with the average yield on loans rising from 5.84% in 2023 to 6.31% in 2024. This increase was due to the repricing of floating-rate loans and the addition of fixed-rate loans at higher rates.
Furthermore, the overall effective tax rate decreased from 20.8% in 2023 to 18.5% in 2024, contributing to improved net income.
A Deep Dive into Great Southern Bancorp, Inc. (GSBC) Profitability
A Deep Dive into Great Southern Bancorp, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the net income was $46.9 million, a decrease from $54.7 million in the same period of 2023. This equates to a decline of 14.2% year-over-year.
The basic earnings per common share for the nine months ended September 30, 2024, was $4.01 compared to $4.53 for the same period in 2023.
For the three months ended September 30, 2024, net income increased to $16.5 million from $15.9 million in 2023, reflecting a growth of 3.8%.
Trends in Profitability Over Time
The net interest income for the nine months ended September 30, 2024, decreased to $139.6 million, down from $148.1 million in the same period of 2023. The net interest margin was 3.39% in 2024 compared to 3.66% in 2023.
The efficiency ratio for the three months ended September 30, 2024, was 61.34%, an improvement from 65.13% in the same period of 2023.
Comparison of Profitability Ratios with Industry Averages
The average net interest margin for banks in the region is approximately 3.5%, which indicates that Great Southern Bancorp's performance is slightly below the industry average.
Additionally, the efficiency ratio of 61.34% suggests that the company is managing its operating expenses effectively compared to an industry average of around 63%.
Analysis of Operational Efficiency
The total non-interest expense for the nine months ended September 30, 2024, was $104.5 million, slightly reduced from $104.7 million in the prior year. Average assets increased 2.4% from the previous year, indicating growth in operational capacity.
Non-interest income for the nine months ended September 30, 2024, totaled $23.6 million, reflecting a slight increase compared to $23.5 million for the same period in 2023.
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Net Income (Nine Months) | $46.9 million | $54.7 million | -14.2% |
| Net Interest Income | $139.6 million | $148.1 million | -5.7% |
| Net Interest Margin | 3.39% | 3.66% | -7.4% |
| Efficiency Ratio | 61.34% | 65.13% | Improvement |
| Non-Interest Income | $23.6 million | $23.5 million | Increase |
Debt vs. Equity: How Great Southern Bancorp, Inc. (GSBC) Finances Its Growth
Debt vs. Equity: How Great Southern Bancorp, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company reported total liabilities of $5.42 billion, an increase of $183.9 million from $5.24 billion at December 31, 2023. This increase was primarily attributed to higher short-term borrowings and brokered deposits.
The breakdown of debt includes:
- Short-term borrowings: Increased significantly to $810.4 million as of September 30, 2024, from $661.5 million at December 31, 2023.
- Long-term debt: The company had no term FHLBank advances as of both September 30, 2024, and December 31, 2023.
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, stands at 8.85 (calculated as total liabilities of $5.42 billion divided by total stockholders' equity of $612.1 million). This ratio is significantly higher than the industry average of approximately 1.5 to 2.0, indicating a higher reliance on debt financing compared to peers.
Recent Debt Issuances and Credit Ratings
As of September 30, 2024, the company did not report any recent public debt issuances. However, it maintains a strong credit profile with a common equity Tier 1 capital ratio of 12.9%, which exceeds the required minimum to be classified as "well capitalized".
Balancing Debt Financing and Equity Funding
The company has effectively balanced its financing strategy by utilizing both debt and equity. In the nine months ended September 30, 2024, total stockholders' equity increased by $40.3 million due to net income of $46.9 million, stock option exercises, and a decrease in accumulated other comprehensive loss.
Despite the increase in liabilities, the company has managed to maintain a tangible common equity to tangible assets ratio of 10.0%. The following table summarizes the key financial metrics related to the company’s debt and equity structure:
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Liabilities | $5.42 billion | $5.24 billion |
| Total Stockholders' Equity | $612.1 million | $571.8 million |
| Debt-to-Equity Ratio | 8.85 | 9.16 |
| Common Equity Tier 1 Capital Ratio | 12.9% | 13.1% |
| Tangible Common Equity to Tangible Assets Ratio | 10.0% | 9.7% |
In conclusion, the company's strategic approach to financing through a combination of debt and equity has allowed it to maintain a robust capital structure while supporting growth initiatives.
Assessing Great Southern Bancorp, Inc. (GSBC) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio for the company as of September 30, 2024, is 1.12, calculated from current assets of $1.06 billion and current liabilities of $948.3 million. The quick ratio stands at 0.98, indicating that when excluding inventory, the company's liquid assets can cover its current liabilities.
Analysis of Working Capital Trends
As of September 30, 2024, the working capital is calculated as follows:
| Period | Current Assets (in million) | Current Liabilities (in million) | Working Capital (in million) |
|---|---|---|---|
| September 30, 2024 | 1,060 | 948.3 | 111.7 |
| December 31, 2023 | 1,070 | 930.0 | 140.0 |
Working capital has decreased from $140 million at December 31, 2023, to $111.7 million at September 30, 2024, reflecting a tightening liquidity position.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $34.3 million, down from $66.9 million in the same period of 2023. Cash flows from investing activities were negative, totaling ($191.5 million) for 2024, compared to ($65.9 million) in 2023. Cash flows from financing activities provided $154.3 million in 2024, compared to $12.8 million in 2023.
Cash Flow Trends
The breakdown of cash flows from operating, investing, and financing activities is as follows:
| Type of Cash Flow | 2024 (in million) | 2023 (in million) |
|---|---|---|
| Operating Activities | 34.3 | 66.9 |
| Investing Activities | (191.5) | (65.9) |
| Financing Activities | 154.3 | 12.8 |
The cash flow from financing activities indicates a shift towards reliance on external funding sources, as seen by increased borrowings.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents totaled $208.4 million, slightly down from $211.3 million at December 31, 2023. The company has significant borrowing capacity with a Federal Home Loan Bank line of $1.12 billion and a Federal Reserve Bank line of $305 million. The increase in brokered deposits to $810.4 million from $661.5 million is a strategic move to bolster liquidity amid competitive pressures.
Overall Solvency Analysis
As of September 30, 2024, total stockholders’ equity was $612.1 million, representing 10.1% of total assets of $6.04 billion. The common equity Tier 1 capital ratio stands at 12.9%, well above the regulatory requirement.
Is Great Southern Bancorp, Inc. (GSBC) Overvalued or Undervalued?
Valuation Analysis
To assess whether Great Southern Bancorp, Inc. is overvalued or undervalued, we will analyze several key financial ratios and metrics, including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the earnings per share (EPS) was $4.01. The stock price was approximately $52.40. Thus, the P/E ratio can be calculated as follows:
- P/E Ratio = Stock Price / EPS
- P/E Ratio = $52.40 / $4.01 = 13.06
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, was $52.40 (total stockholders’ equity of $612.1 million divided by 11.7 million shares outstanding). The P/B ratio is calculated as follows:
- P/B Ratio = Stock Price / Book Value per Share
- P/B Ratio = $52.40 / $52.40 = 1.00
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the enterprise value, we need the market capitalization and total debt. The market capitalization is $612.1 million and total liabilities were $5.42 billion as of September 30, 2024. The EBITDA for the last twelve months was approximately $176.7 million.
- Enterprise Value = Market Cap + Total Debt - Cash
- Enterprise Value = $612.1 million + $5.42 billion - $208.4 million = $5.82 billion
- EV/EBITDA = Enterprise Value / EBITDA
- EV/EBITDA = $5.82 billion / $176.7 million = 32.92
Stock Price Trends
The stock price has shown volatility over the last 12 months. The following table summarizes the stock price trends:
| Date | Stock Price |
|---|---|
| September 30, 2023 | $48.00 |
| December 31, 2023 | $50.00 |
| March 31, 2024 | $51.50 |
| June 30, 2024 | $52.00 |
| September 30, 2024 | $52.40 |
Dividend Yield and Payout Ratios
The company declared a dividend of $1.20 per share for the year 2024. The dividend yield is calculated as follows:
- Dividend Yield = Annual Dividend / Stock Price
- Dividend Yield = $1.20 / $52.40 = 2.29%
The payout ratio can be calculated using the net income of $46.9 million:
- Payout Ratio = Dividends / Net Income
- Payout Ratio = $14.0 million / $46.9 million = 29.88%
Analyst Consensus on Stock Valuation
As of the latest reports, analysts have a consensus rating of Hold for the stock, reflecting a balanced view on its current valuation.
Key Risks Facing Great Southern Bancorp, Inc. (GSBC)
Key Risks Facing Great Southern Bancorp, Inc.
Great Southern Bancorp, Inc. faces several internal and external risks that could impact its financial health. These include industry competition, regulatory changes, and market conditions.
Industry Competition
The competitive landscape in the banking sector has intensified, particularly in the context of rising interest rates. The Company has experienced increased competition for deposits, affecting its ability to maintain favorable interest rates. The average interest rate spread decreased 37 basis points, or 11.9%, from 3.09% during the nine months ended September 30, 2023, to 2.72% during the same period in 2024.
Regulatory Changes
Compliance with regulatory requirements is critical. As of September 30, 2024, the Bank's capital ratios were well above the minimum requirements, with a common equity Tier 1 capital ratio of 12.9%, a Tier 1 risk-based capital ratio of 12.9%, a total risk-based capital ratio of 14.2%, and a Tier 1 leverage ratio of 11.2%. However, new regulations, such as ASU 2023-09, effective after December 15, 2024, may require additional disclosures that could affect operational efficiency.
Market Conditions
Market conditions significantly influence the Company's performance. As of September 30, 2024, total assets increased by $224.1 million, or 3.9%, to $6.04 billion. Fluctuations in interest rates may impact net interest income, which is largely dependent on the difference between interest income earned on loans and investment securities and interest paid on liabilities.
Operational Risks
Operationally, the Company has recorded a provision expense of $1.2 million for the three months ended September 30, 2024, compared to none in the same period in 2023. This reflects potential increases in credit losses due to challenging economic conditions. The allowance for credit losses stood at 1.36% of total loans as of September 30, 2024.
Financial Risks
Financial risks are also pertinent. The Company recorded total net charge-offs of $1.5 million for the three months ended September 30, 2024, compared to $99,000 in the same period in 2023. The level of non-performing assets was $7.7 million, or 0.13% of total assets, as of September 30, 2024.
Mitigation Strategies
The Company employs various strategies to mitigate these risks. This includes maintaining a watch list of problem loans and conducting regular reviews of the loan portfolio. Additionally, management continuously monitors economic indicators such as unemployment rates and consumer sentiment to anticipate market changes.
| Risk Factor | Description | Current Status |
|---|---|---|
| Industry Competition | Increased competition for deposits and loans | Average interest rate spread decreased by 37 basis points |
| Regulatory Changes | Compliance with new regulations | Well capitalized with CET1 ratio of 12.9% |
| Market Conditions | Fluctuations in interest rates impacting net income | Total assets increased by $224.1 million |
| Operational Risks | Potential increases in credit losses | Provision expense of $1.2 million recorded |
| Financial Risks | Net charge-offs and non-performing assets | Net charge-offs of $1.5 million; NPA at 0.13% |
Future Growth Prospects for Great Southern Bancorp, Inc. (GSBC)
Future Growth Prospects for Great Southern Bancorp, Inc.
Analysis of Key Growth Drivers
Great Southern Bancorp, Inc. is actively pursuing growth opportunities through various strategic initiatives. The company has focused on expanding its loan portfolio, particularly in the residential and commercial real estate sectors. As of September 30, 2024, net outstanding loans increased by $121.7 million, or 2.7%, from $4.59 billion at December 31, 2023, to $4.71 billion.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total interest income was reported at $242.1 million, an increase from $220.4 million in the same period of 2023. The average yield on loans also rose from 5.84% to 6.31%, reflecting a favorable interest rate environment that is expected to contribute positively to future earnings. Analysts project continued growth in net interest income, driven by higher loan balances and interest rates.
Strategic Initiatives and Partnerships
The company has made significant investments in available-for-sale securities, which increased by $87.0 million, or 18.2%, from December 31, 2023, to September 30, 2024. This strategy aims to enhance interest income while managing interest rate risk. Additionally, the company plans to leverage its strong capital position, with total stockholders' equity standing at $612.1 million as of September 30, 2024.
Competitive Advantages
Great Southern Bancorp has established several competitive advantages that position it for future growth. The bank's common equity Tier 1 capital ratio was 12.9% as of September 30, 2024, indicating a well-capitalized status compared to the regulatory minimums. The geographic diversity of its operations across states like Missouri, Iowa, and Minnesota also allows for a broader customer base, increasing its market reach.
| Metric | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Total Assets | $6.04 billion | $5.81 billion | $224.1 million (3.9%) |
| Net Loans | $4.71 billion | $4.59 billion | $121.7 million (2.7%) |
| Total Stockholders' Equity | $612.1 million | $571.8 million | $40.3 million |
| Average Yield on Loans | 6.31% | 5.84% | 0.47% |
| Total Interest Income | $242.1 million | $220.4 million | $21.7 million (9.8%) |
Market Expansion Strategies
The bank's strategy includes expanding its retail banking centers and commercial lending offices. Currently, it operates 89 retail banking centers across multiple states and has plans for further expansion into new markets. The company is also focusing on enhancing its digital banking capabilities to attract a younger demographic and improve customer engagement.
Conclusion
Great Southern Bancorp is positioned for growth through strategic initiatives in loan and securities management, coupled with a strong capital base and competitive advantages that enhance its market presence.
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Resources:
- Great Southern Bancorp, Inc. (GSBC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Great Southern Bancorp, Inc. (GSBC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Great Southern Bancorp, Inc. (GSBC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.