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Good day, and thank you for standing by. Welcome to the Great Southern Bancorp, Inc. Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today,

Good afternoon, and thank you for joining Great Southern Bank's fourth quarter 2024 earnings call. Today, we'll be discussing the Company's results for the quarter and full year ending December 31, 2024. Before we begin, I'd like to remind everyone that during this call, forward-looking statements may be made regarding the Company's future events and financial performance. These statements are subject to various factors that could cause actual results to differ materially from those anticipated or projected filings of these refer to the forward-looking statements assessments disclosure in the fourth quarter earnings release and other public filings. Joining me today are President and CEO, Joe Turner; and Chief Financial Officer, Rex Copeland. I'll now turn the call over to Joe.

All right. Thanks,

Thank you, Joe, and good afternoon, everyone. I'll provide a little deeper dive into some of our financial performance metrics here for the fourth quarter and the full year. I'll start with net interest income and margin. For the fourth quarter, we delivered net interest income of $49.5 million, a 9.7% increase compared to $45.1 million in the same quarter of 2023 and a 3.2% increase from $47.9 million in the third quarter of 2024. This improvement was primarily driven by higher loan income and yields as well as strategic management of funding costs. For the full year, our net interest income totaled $189.1 million, reflecting a slight decline of 2.1% compared to the previous year. This decline reflects the impact of ongoing elevated deposit costs which continued increasing until the latter part of 2024, but have now begun to decline. Our net interest margin for the fourth quarter increased to 3.49% compared to 3.30% in the same period last year and 3.42% in the third quarter of '24. Our margin stability despite the challenging deposit rate environment underscores our disciplined approach to balance sheet management and strategic actions to effectively manage funding costs. For the full year, the margin stood at 3.42%, down from 3.57% in 2023, reflecting the impact of elevated funding costs. Average loan yields rose to 6.30% for the year while the cost of interest-bearing liabilities increased to 3.11%. We do not currently see any significant catalyst to drive the net interest margin significantly higher or lower from the fourth quarter level in the coming two to three quarters. We have a significant amount of time deposits maturing in the first quarter of 2025, which we expect will renew at slightly lower rates than their current rate. However, as a reminder, we will lose the benefit of the terminated interest rate swap after the third quarter of 2025. We expect to continue realizing approximately $2 million per quarter in interest income from the terminated swap through the first three quarters of 2025, after which the benefit to interest income will cease. Total deposits at December 31, 2024, were $4.61 billion, down $91.9 million from the previous quarter. The decline was driven by reductions across multiple deposit categories, including interest-bearing checking, brokered deposits and retail time deposits. These changes reflect the ongoing competitive environment for deposits, which we monitor closely to ensure stability and growth. Our liquidity position remains strong. With $195.8 million in cash and cash equivalents and access to additional funding lines through the Federal Home Loan Bank and the Federal Reserve totaling $1.60 billion. We remain well positioned to address both current and future funding needs. We have successfully replaced brokered deposits as they mature and expect this trend to continue for upcoming maturities. We've actively managed our funding sources to optimize costs and support long-term stability. Earlier in the rate cycle as interest rates were rising, we replaced maturing lower rate time deposits with higher rate time deposits to remain competitive. However, with recent rate cuts in 2024, we are now replacing maturing higher rate time deposits with funding at comparatively lower rates. This transition reflects an important shift in the interest rate environment, allowing us to reduce overall funding costs. Time deposit market rates have begun to decline following the Federal Reserve's rate cut in late 2024, which we anticipate will ease funding cost pressures somewhat moving forward. As mentioned before, loan growth remained strong with total net loans increasing over $100 million or 2.2% year-over-year to $4.69 billion at year-end. This growth was driven by $607.2 million increase in multifamily residential loans, which offset declines in other categories, including a $358.7 million decrease in outstanding construction loan balances as primarily multifamily projects and construction transition to completion. Importantly, our loan pipeline expanded in the fourth quarter, particularly in construction, signaling continued future demand. Asset quality mentioned somewhat previously before, but nonperforming assets declined $2.2 million during the year to $9.6 million or 0.16% of total assets at year-end 2024. We mentioned the net charge-off levels already. And for the quarter and then for the year, net charge-offs in 2024 were $1.6 million, up a little bit from $1.1 million in 2023. And we also mentioned the allowance for credit losses was 1.36% of total loans. Foreclosed assets increased $6 million from the end of 2023 as a single office real estate asset accounted for 100% of the total foreclosed real estate asset balance at December 31, 2024. A little bit more on noninterest income and expenses. For the full year, noninterest income totaled $30.6 million largely unchanged from the prior year. In the fourth quarter, noninterest income was $6.9 million, up $371,000 compared to the prior year's fourth quarter. This increase was primarily driven by increased net gains on loan sales and other income, partially offset by decreased overdraft fees. On the expense side, noninterest expenses for the year were $141.5 million, which was consistent with 2023. For the fourth quarter, noninterest expenses totaled $36.9 million which included the $2.0 million expense that was mentioned previously. Excluding that item, our expenses reflected disciplined cost management and continued investment in technology and operational areas. For the years ended December 31, '24 and '23, the Company's effective tax rate was 18.1% and 20.6%, respectively. These effective rates were below the statutory federal rate of 21%, primarily due to the utilization of certain investment tax credits and the Company's tax-exempt investments and loans, which reduced the Company's effective tax rate. The Company's current effective tax rate, both combined federal and state is expected to range from approximately 18% to 20% in future periods, primarily due to the aforementioned investment tax credits that we began utilizing additional portions of in 2024. And I'll conclude with capital and stockholders' return. From a capital perspective, our stockholders' equity increased by $27.7 million to $599.6 million at year-end, which represents 10% of our total assets. This increase was primarily driven by net income of $61.8 million and stock option exercise is adding $11.9 million to equity, partially offset by $18.7 million in declared cash dividends and $15.2 million in share repurchases. Our realized losses on investment securities and interest rate swaps decreased stockholders' equity by another $11.9 million in 2024. Our tangible common equity ratio at the end of the year was 9.9%. That concludes my remarks. At this time, we are now ready for questions.

[Operator Instructions] Our first question today will be coming from the line of Andrew Liesch.

Just want to talk on the margin commentary here. Kind of surprised that it's not a little more optimistic just given that we had a couple of rate cuts, and it's not just the CDs where you saw improvement in cost of funding. So, do you think maybe the bias could be slightly higher for the next couple of quarters before the swap benefit rolls away?

There's a couple of things going on with it. I don't know that -- like I said, I think we said in here, we don't really see a big catalyst moving the number tremendously from the fourth quarter number. We will have some benefit, we believe, from CD maturities, and we should have a little bit of benefit although it's not a large volume of fixed rate loans that will probably reprice and a lot of those should reprice a little bit higher for the most part as they do reprice. It's going to depend a lot, I think, Andrew, on the deposit and funding mix and whether or not we have any runoff in noninterest-bearing checking and things of that nature. So, I don't know that I've got a big bias in moving off the number a whole lot either way, frankly, but...

Got it. I guess what are you seeing locally in deposit competition for interest-bearing like demand and savings and money market accounts because the rates on those accounts came down nicely this last quarter and with some more cuts in the fourth quarter. I was curious if there's any market improvement there with demand?

I think -- I mean, most of our markets are remaining fairly competitive. And it's not like every bank across the board, but there's enough banks within each market that are moving rates a little bit or keeping rates a little bit higher. We've been able to reduce some of those rates. And I think we have done so fairly prudently with additional -- any additional rate cuts from the Fed we do have some negotiated rates in there that we should be able to reduce. Absent that, we may be able to reduce a little, but not necessarily significantly and some of the other products that are in there, they are just our more normal rates. We have been working those rates down a little bit, but some of the competition is kind of dictating a slow go on that.

Got you. All right. That's helpful. And then just a quick question on expenses here, if I take out that $2 million or right around $35 million for the quarter. Is that a good jumping off point for the first quarter and maybe with some seasonally higher payroll taxes and bonus accruals than an uptick in the second quarter for merit increases. Is that the right way to look at the overall expense base?

Yes. I mean, there was nothing else that we called out in that -- in the earnings release. So, I think that's reasonable. And then, we will have a fair amount of just normal -- like you said, there's going to be the seasonal payroll tax matters and maybe some incentives and bonus things. But there will also be -- we have a lot of people that are on an annual merit increase and a lot of those occur at the beginning of the year. So, there will be some things that will flow in the first quarter for that as well.

[Operator Instructions] And our next question will be coming from the line of Damon DelMonte.

I hope you're all doing well. Just I wanted to start off a little bit about loan growth. There was no provision for loans this quarter, it was for unfunded commitments. So just wondering if you could talk a little bit about the closing activity during the quarter and kind of how you see that funding over the next four quarters or so?

You're talking about how the unfunded will fund?

Yes. Yes, exactly.

I think, generally, our unfunded funds may be between $50 million and $70 million a month. So, there will be $150 million or so of that fund, but we generally will have repayments at that level or pretty close to it. So, I don't know that our loan portfolio will necessarily grow a ton in 2025. And some of the more recent loans that we've closed that there are construction deals or things like that, they won't start funding for a little while. But Joe, we've got stuff in the pipeline that is funding at some clip every month, but the more recent stuff may take couple of quarters maybe, maybe at least one or one and half years.

Yes. I mean, like the borrowers have to fund their equity first. So, on most construction deals, we're getting enough equity that it takes maybe seven to nine months of borrowers funding their equity before we'll fund anything on our loan.

Got it. Okay. So, I mean, this last year, you guys had around 2% -- a little bit over 2% annualized growth. I mean do you think you could at least get to that level in '25 of net...

Yes. I mean we don't give -- as you know, Damon, we don't give forward guidance as to loan growth. But I think that -- I think we aren't telling you anything any different this year about growth in our loan portfolio than we were telling you last year.

And it will just depend also on if there's a big uptick in early repayments and things like that, where people are refinancing projects or selling projects or things. So, as you guys -- we talked before, you guys know in 2024, that wasn't particularly robust. It was kind of slow for repayment stuff like that. But depending on how people view 2025, if they want to get something done with their projects, there may be a little bit more of that. But right now, we don't -- I mean we don't have any clarity on that right now.

Got you. Okay. And then, as far as kind of circling back to the margin. I think you had mentioned, Rex, about some fixed rate loans that would be repricing during the course of the year. Roughly, how much in the way of fixed rate loans would be repricing? And what's kind of the pickup between current yields on those and then the reprice levels?

Some of it will be repriced. I don't really have a good breakdown of the dollar amount on that off the top of my head.

Damon, we do have a good table on that. And I know in the 10-K, and do we have it in the Qs as well. Okay, it's not in it. But there should be a good table with exactly what you're looking for. coming out at the beginning of March.

And if you look at last year's 10-K, there's two tables, there's a maturity table and a repricing table in there. The repricing table is probably what you want to look at mostly because that will show you what is projected to reprice in each of these coming years.

And it tells you what the current rate is on it and you can sort of estimate what will reprice.

So, some of it is going to be that the loans will stay on the books and just reprice. Other pieces of it will be that they'll pay off or pay down and we'll take those funds and either put them back into new loans, their fixed rate at a higher rate or put them into variable rate loans. So, it's hard to tell you exactly what the net rate change would be depending on where we place those funds. But it should be -- for the most part, I would say, I think that overall fixed rate portfolio is the overall rate on that in its entirety is probably a little over 4% or something there.

It should definitely be positive.

And our next question will be coming from the line of John Rodis.

I guess most of my questions have been asked and answered. But just on the fee income side, the other line item was up, I guess, $200,000, $300,000 linked quarter. Anything unusual in that other line item?

Yes, John, I think we mentioned in there that we had a -- we do some program where we have back-to-back swaps with loan customers. In some of those cases, if we do those, and the customer wants to do a swap that we initiate that and then we get an upfront fee on that. And so that was the lion's share of that increase in the fourth quarter is about $268,000, I believe.

Okay. I see that in the text now. Sorry about that.

That's a part of our business, but it's not something that happens all the time.

And then either Joe or Rex, just can you add any more color the one property here in Missouri that went to other real estate OREO, what market, anything like that?

Yes. We've covered that before, haven't we?

I can't remember for sure if we have, but...

Yes. I mean it's an office property in saying, well, it's specifically in Clayton. So, it's -- although office generally is not strong, Clayton is probably the strongest in St. Louis. And it's a decent property, but I would think, John, it's going to take us a little while to sell it.

Okay. Okay. Have you marketed it yet or probably not?

Yes, we're starting to market it. We're more getting our arms around the property and trying to figure out when is going to be the best time. I mean we're not in a huge hurry to sell it. It's actually producing fair cash flow for us right now. So, it's not a terrible problem at all. So, we're trying -- it's kind of figuring out, okay, is this the right time to strike or should we wait and let things in office improve a little bit?

Yes. No, you're right. Clayton is obviously a good market, so it makes sense.

There are no more questions in the queue, and I would like to go ahead and turn the call back over to Joseph Turner for closing remarks. Please go ahead.

All right. Well, thanks very much for joining us, and we look forward to talking to you after our first quarter 2015 results come out. Thank you.