Great Southern Bancorp Inc. (GSBC) reached a new 52-week high on July 25 after reporting strong second-quarter results, which included a 209.8% earnings surprise. Shares of this Zacks #1 Rank (Strong Buy) regional bank gained 25% since the beginning of this year.
Second Quarter EPS Soars
On July 24, Great Southern Bancorp reported second quarter 2012 earnings of $1.58 per share, substantially topping the Zacks Consensus Estimate of 51 cents as well as year-ago earnings of 37 cents. The performance was aided by a one-time pre-tax gain of $31.3 million related to a FDIC-assisted acquisition in April 2012 and an improved top-line. However, escalated non-interest expenses and provision for credit losses partially offset the increase.
Net interest income increased marginally to $40.5 million. Non-interest income climbed to $38 million from a non-interest loss of $2.2 million in the year-ago quarter. However, net interest margin contracted 85 basis points (bps) to 4.36%. Additionally, the company’s non-interest expenses jumped 36.2% to $30.1 million over the same period.
Credit metrics deteriorated at Great Southern Bancorp. The provision for credit losses was $17.6 million, up 109.5% from $8.4 million in the prior-year quarter with net charge-offs showing an increasing trend. Net charge-offs were $18.4 million, up 88% year over year.
Earnings Estimates on the Move
One of three estimates has moved higher over the last 30 days for 2012 and 2013 each. The Zacks Consensus Estimate for this year is up 6.3% to $2.02, while the Zacks Consensus Estimate for the next year gained 3.9% to $2.15.
Additionally, the Zacks Consensus Estimate for 2012 reflects a year-over-year improvement of about 4.8%, while 2013 indicates a growth of 6.3% year-over-year.
Valuation Looks Reasonable
Shares of Great Southern Bancorp currently trade at 14.6x 12-month forward earnings, a 9% discount to the peer group average of 16.0x. Its price to book ratio of 1.4 is at a 40% premium to the industry average of 1.0.
The company has a trailing 12-month ROE of 12.1%, compared with the peer group average of 5.8%. This implies that the company reinvests its earnings more efficiently than its peer group.
Chart Shows Strength
Great Southern Bancorp has witnessed strong price momentum since June 25, with the expectation of improved second-quarter earnings. Moreover, the company has been continuously outperforming its 200-day moving average since mid-November 2011. The year-to-date return for the stock came in at 24.8% compared with the S&P 500’s return of 6.4%.
Headquartered in Springfield, Missouri, Great Southern Bancorp provides various banking products and services. The company was founded in 1923 and conducted business through 107 retail banking centers as of April 27, 2012. It operates in Missouri, Iowa, Kansas, Nebraska, Arkansas and Minnesota. With a market capital of about $395 million, Great Southern Bancorp competes with Flagstar Bancorp Inc. (FBC) among others.
GREAT SOUTH BCP (GSBC): Free Stock Analysis Report
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