Great Southern Bancorp, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Great Southern Bancorp, Inc., first quarter 2020 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star then 1 on your telephone. If you require any further assistance, please press star then 0. At this time, I would like to hand the conference over to your host today, Ms. Kelly Polonis. Ma'am, please begin.

Thank you, Howard. Good afternoon and thank you for joining us for our first quarter earnings call. The purpose of this call is to discuss the company's results for the quarter ending March 31st, 2020. Before we begin, I need to remind you that during the course of this call, we may make forward-looking statements about future events and financial performance. You should not place undue reliance on any forward-looking statements which speak only as of the date they are made. These statements are subject to a number of factors that could cause actual results to differ materially from the results anticipated or projected. For a list of some of these factors, please see the forward-looking statements disclosure in our earnings release. President and CEO Joe Turner and Chief Financial Officer Rex Copeland are on the call with me today. Before I turn the call over to Joe, though, to discuss our first quarter performance, we want to take some time to recognize that this is an extremely difficult time for everyone. And our thoughts are with those who are most affected by COVID-19, especially those on the front lines of this crisis. This afternoon, we'd like to take just a few minutes to share some of the ways our company has responded to the COVID-19 pandemic. As we manage through this very uncertain and challenging time, we are highly focused on ensuring the health and well-being of our associates, providing safe and uninterrupted service for our customers, and supporting the communities in which we live and serve. In January, we activated our pandemic response plan and, of course, continued to monitor and respond to the effects of the rapidly changing environment that we're all in. By the end of the first quarter, the majority of our markets were under a stay-at-home mandate, resulting in a sharp reduction in economic activity. To protect our associates and customers, we followed CDC guidelines and governmental directives and instituted social distancing practices, including drive-thru service only in our banking centers, department team splitting with portions of each team working from disaster recovery sites, and we have about half of our non-banking center associates working from home at this time. We are extremely proud of our associates and how they have responded to this crisis. Their resilience, their can-do attitude and compassion are greatly appreciated and so evident each and every day as we're serving our customers. To support our associates during this time, paid time off and other benefits were enhanced and implemented A few of these include that for our part-time associates for the first time, we are awarding them paid sick benefits. Any associates that's placed under restricted quarantine due to the coronavirus will receive full pay. A few weeks ago, the company rewarded all full-time and part-time associates with special pre-tax bonuses of $1,600, respectively, to show our support. For our customers, we are as focused as ever to serve their needs and provide uninterrupted service. Our banking center drive-throughs are open normal hours, and our customers have ready access to online and mobile banking services, our ATMs and ITMs, telephone banking, and online account opening. We understand that some of our customers are experiencing financial hardships due to the pandemic. We are actively reaching out to our customers and assisting them with loan payment relief and loan modification options. For our depository customers, certain account maintenance and service fees are being waived or refunded. The company has been actively utilizing the CARES Act stimulus package to assist consumers and businesses. For instance, our team sprang into action very quickly a couple of weeks ago to participate in the SBA-administered Paycheck Protection Program, or PPP, which provides emergency financial support to small businesses using federally guaranteed loans. Due to the overwhelming national demand by small businesses, the SBA announced just last Thursday, as we all know, that funds available in the PPP were exhausted. At the time of that announcement, Great Southern had secured SBA funding for 860 small businesses representing more than 12,000 employees totaling approximately $104 million. Regrettably, we had several hundred more PPP applications being prepared for SBA approval at the time the funds ran out. Based on recent news reports, we are encouraged that Congress will authorize more PPP funding. If and when this does occur, we will promptly submit these applications to the SBA for approval and hopefully have the opportunity to help additional small businesses in our markets. To help with the negative impact of COVID-19 in our communities, in March, we quickly committed up to $300,000 to address food insecurity and other critical health and human services needs. The funds have been distributed already to agencies serving great southern local markets across our 11 state franchise. In the coming months, we know there will be many more challenges. coming our way. Our company will continue to respond with the same resolve and deep commitment to our associates, customers, and communities. With that, it's my privilege to turn the call over now to Joe Turner.

Okay. Well, thank you, Kelly. As Kelly said, as we navigate the uncertain and unprecedented COVID-19 times, our company is highly focused on ensuring the safety and well-being of our associates and customers. We also want to provide our customers with uninterrupted and quality service. I want to publicly thank our nearly 1,200 great southern associates for their tireless work and resilience during this time. I'm so proud of our team and their response to this crisis. As always, I'll provide some brief remarks about the company's performance during the quarter. and then I'll turn the call over to Rex Copeland who will get into a little more detail on the income statement and the impact of COVID-19 and other activities. Our underlying earnings for the first quarter were sound. We earned a dollar for a share or almost $15 million. The impact of the COVID-19 pandemic did cost us about eight cents per common share in the quarter. In addition, our earnings were negatively impacted by additional loan loss provision, which I think could also be attributed to COVID-19. Performance metrics from the quarter. Annualized return on common equity was 9.93. Annualized return on average assets was 1.2. Our margin was 384, and our efficiency ratio was 58.91%. As far as loans, our loans did grow by $41 million during the quarter, an annualized rate of I think pretty close to 4%. Our committed pipeline also grew during the quarter by about $81 million. I would say though that loan activity, particularly in the second part of the quarter, maybe that loan activity which occurs before a loan becomes committed and shows up in our pipeline, that kind of activity has slowed. Talking about, you know, customers requesting loans, loan officers bringing requests into the loan committee, that definitely has slowed. Through March 31 of 2020, credit quality remained very, very solid, continues to be solid. Chargeouts were 237,000 and we have historically low levels continue with historically low levels of classified and nonperforming assets. With the likelihood of difficult economic conditions ahead, though, we did increase our allowance for loan losses by $3.7 million. We have modified the number of credits since the impact of COVID-19 has been felt. We've modified 257 commercial loans. with a total principal balance of $608 million and 1,163 consumer loans and consumer and mortgage loans with balances of $48 million. About 70% of those modifications were just relieving the customer the responsibility of making a principal payment for three months. So that's primarily what we've done. Those modifications, the categories they relate to, and kind of generally what the modification was, there's a pretty good description of that activity in our earnings release. Our capital continues to be strong. Our capital did increase, our stockholders' equity did increase by $11 million to $614 million during the quarter, 12.1% of total assets. I think our tangible equity to tangible, our tangible common equity to tangible assets is about 12%. And during the first quarter, we did repurchase about 184,000 shares of common stock. Those of you that are very familiar with our company know that that, you know, repurchasing our common stock at opportune times or at the right time has been an important part of our strategy since we went public in 1989. While we haven't formally rescinded or stopped our stock purchase program, I think our activity in that area will be very low, if any at all, during the second quarter. Finally, before I turn the call over to Rex, I want to make a brief comment on the company's near-term outlook. In spite of the obvious economic challenges posed by COVID-19, we expect that we will continue to operate profitably, maybe not at the level we saw in 2019, but continue to be profitable and also continue to pay our quarterly dividend for the foreseeable future. We have built a very strong capital position over the past several years, and we've built it for times just like these. Times like these are why we've got the capital we do because we think it will enable us to operate very well during a difficult environment. We certainly understand that we are facing a number of challenges. The entire banking industry, I think, is facing a number of challenges, many that we don't even recognize yet maybe. but we think like in other tumultuous times, we have the financial flexibility, the technological capability, and the human resource capability so that we are positioned and ready to work through whatever comes our way. That concludes my prepared remarks. I'll turn the call over to Rex Copeland at this time.