RankingBanking 24 Digital (1) - Flipbook - Page 22
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Atlanta, Charlotte, North Carolina, Chicago, Dal-
However, those costs have been rising as deposit
las, Denver, Omaha, Nebraska and Phoenix.
customers demand higher rates, which meant the
Bankers can set the stage for disaster by open-
bank’s cost of funds rose to change to 2.6% in the
ing offices in highly competitive markets when they
second quarter of 2024, according to S&P Global
don’t know what they’re doing. But Great Southern
Market Intelligence.
does it in “a very diligent way,” says Damon Del-
That impacted margins in the second quarter,
Monte, a managing director at Keefe, Bruyette &
which fell to 3.4%. Great Southern enjoyed a mar-
Woods. “They don’t rush into markets so they can
gin as high as 4% a year prior. The industry’s net
get growth.” He explains the strategy is to hire good
interest margin (NIM) declined 10 basis points to
lenders when they can find them and then open an
3.17% in the first quarter, while community banks
office when they do. “They start with someone who
saw a slightly higher margin at 3.23%, according
is familiar with that market,” he says.
to the latest statistics from the FDIC.
The bank has closed about 25% of its branches
in the last seven years, some of them overlapping
locations from the failed bank acquisitions. “It’s
difficult though, and it’s getting more difficult to
find low-hanging fruit in that regard, because our
“When the opportunities are there, they execute.
And when they’re not there, they don’t.”
banking centers are our best source of new accounts,” Joe Turner says. “And the banking centers
we have left are all very productive.”
Despite the cuts, Turner says the bank is focused
on taking care of employees. For him, that means
Andrew Liesch / Piper Sandler & Co.
paying average or above-average compensation
and not micromanaging, except in loan underwriting, which has strict standards. When the bank
faces a difficult quarter, investors and analysts ask
whether the bank is going to cut costs, and that
When asked if the bank is conservative, Joe re-
usually means cutting employees, Joe Turner says.
flects a moment. He says the bank has been en-
“We feel like we need to operate a company effi-
trepreneurial while staying focused on its roots.
ciently all the time, but our people are our greatest
“When we see opportunities, we’re willing to cap-
asset,” he says. “We’re not going to let go of some
italize on those,” he says. Great Southern has 97
of our greatest assets in response to a relatively
locations in 12 states and has maintained retail
short-term phenomenon. We’re going to manage
branches, a common theme for banks that did well
for the long term. We talk about this a lot.”
during the last two years. “They use the core deposits from markets where they have a physical
A Battle-Tested Asset Class
presence,” says DelMonte. “They get consumers
Its long history as a mortgage and commercial
or business relationships that stick with the bank
real estate lender means it rarely diverges from
and don’t jump around from bank to bank.” Be-
those roots, including in the current environment.
cause of that, Great Southern has enjoyed a low
That position has worried some investors, includ-
cost of funds. In 2022, for example, its cost of
ing the fact that the bank reduced provisioning last
funds as a percentage of earning assets was 0.6%.
year. CFO Copeland explains that unfunded com-
