Business
Great Southern Bancorp, Inc. Reports Preliminary Third Quarter Earnings of $1.49 Per Diluted Common Share
Preliminary Financial Results and Other Matters for the Quarter and Nine Months Ended September 30, 2021: CECL Adoption: As previously disclosed, effective
About this update from Great Southern Bancorp, Inc.
[{"type":"text","content":"Preliminary Financial Results and Other Matters for the Quarter and Nine Months Ended September 30, 2021: CECL Adoption: As previously disclosed, effective January 1, 2021, Great Southern Bancorp, Inc. (the Company) adopted the Current Expected Credit Loss (CECL) accounting standard. The Company’s financial statements for periods prior to January 1, 2021, were prepared under the incurred loss accounting standard. The adoption of the CECL accounting standard during the first quarter of 2021 required us to recognize a one-time cumulative adjustment to our allowance for credit losses and a liability for potential losses related to the unfunded portion of our loans and commitments in order to fully transition from the incurred loss model to the CECL model.Significant Income and Expense Items: During the three months ended September 30, 2021, the Company recorded interest income of $1.6 million related to net deferred fee income accretion on Paycheck Protection Program (PPP) loans. Net fees are accreted over the loan term with remaining deferred fees recorded in interest income when the loans pay off by the borrower or by the Small Business Administration (SBA) when they are forgiven. During the first and second quarter of 2021, almost all of the remaining loans from the original round of PPP were repaid by the SBA in accordance with the borrower forgiveness terms of the PPP. We expect more PPP loans from the most recent round of PPP will repay in full during the fourth quarter of 2021. At September 30, 2021, remaining net deferred fees related to PPP loans totaled $2.1 million. In addition, for the three months ended September 30, 2021, based upon the Company’s assumptions, estimates and CECL credit loss methodology, the Company recorded a negative provision for credit losses of $3.0 million related to its outstanding loans. This negative provision was mainly the result of declining outstanding loan balances, continued low levels of net charge-offs and an improving economic outlook. The Company also recorded a provision expense for unfunded commitments of $643,000. The after-tax effect of these net credit provision items on earnings was $0.13 per diluted share.Total Loans: Total gross loans (including the undisbursed portion of loans), excluding FDIC-assisted acquired loans and mortgage loans held for sale, decreased $210.0 million,...