Thank you for standing by, and welcome to the Great Southern Bancorp's Fourth Quarter 2022 Earnings 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] As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program Kelly Polonus, Investor Relations. Please go ahead.

Thank you, Jonathan. Good afternoon and welcome. The purpose of this call is to discuss the company's results for the quarter ending December 31, 2022. Before we begin today, I need to remind you that during this call, we may make forward-looking statements about future events and financial performance. Please do not place undue reliance on any forward-looking statements, which speak only as of the date they are made. Please use our forward-looking statements disclosure in our fourth quarter 2022 earnings release for more information. President and CEO, Joe Turner; and Chief Financial Officer. Rex Copeland are on the phone -- are on the call with me today. I'll now turn the call over to, Joe.

All right. Thanks, Kelly. Good afternoon to everybody. We appreciate you joining us today for earnings call. Our fourth quarter results reflected another strong quarter for Great Southern. We benefited of course from rising market interest rates and our 2022 net income and earnings per share were exceptional. On a macro basis, 2023 appears to be a year that will be marked by a great deal of uncertainty. We're focused on ensuring that our company is positioned for this uncertainty as we move forward in light of the changing interest rate environment and other macro headwinds that are forecasted for 2023. As usual, I'll provide some brief remarks about the company's performance and then turn the call over to Rex Copeland, who will get into more detail on our financial results. Then of course, we'll open it up for questions. In the fourth quarter 2022, we earned $22.6 million or $1.84 per diluted common share, compared to $15.3 million or $1.14 per diluted common share in the same period in 2021. The 2021 period did include some large non-recurring interest -- non-interest expense items, which reduced our net income and EPS. We had a few significant income and expense items during the fourth quarter of '22 as well. First of all, Legal and Professional fees, we told you that for the remainder of 2022, and then probably the first-three quarters of 2023, we would be having between, the $21.1 million and $1.3 million of quarterly expense related to professional services for helping us with our conversion and we did have actually a little more than that $1.4 million of those expenses during the quarter. We had an investment sale loss of $168,000 during the quarter and we had an income tax adjustment, which reduced income tax expense by $1.1 million,…

Thank you, Joe. I will talk first little bit about net interest income and margin. Joe mentioned some of the highlights there and I'll just give a little bit more detail. Our net interest income for the fourth quarter of 2022 increased about $10.4 million or 23.5% compared to the previous year quarter, it was $54.6 million in fourth quarter '22 versus $44.2 million in the fourth quarter of 2021. And then, net interest income for the third quarter of '22 was $52.9 million, so we increased a bit from that as well. As Joe mentioned, increasing market interest rates and some loan growth throughout 2022 and some investment balances growing as well, contributed to the higher level of net interest income in '22. The net interest margin of 3.99% as we said earlier compared favorably to a year ago at 3.37% and then third quarter it was 3.96%. The average yield on loans increased about 98 basis points when you look at Q4 '22 versus Q4 2021. And then the rate on our interest-bearing deposits, the average rate on that increased about 89 basis points in that same timeframe, so looking back to the year ago quarter. And, again, margin expansion was really kind of based on the increasing market rates and also changes in the asset mix, where we had more cash and cash equivalents at the beginning of the year and changed those over into loans and investments throughout the year. As we've stated before and as you've seen through the numbers, generally a rising interest rate environment, particularly in the short-term rates should have a positive impact on net interest income as those are floating-rate loans repriced upwards. We anticipate this will still be the case if the Federal Reserve rate raises rates further. But like…

Certainly. [Operator Instructions] And our first question comes from the line of Andrew Liesch from Piper Sandler. Your question please.

Hey, everyone. Good afternoon. Question on the margin. It sounds like the certainly some upward pressure on funding costs. So do you think the margin is topped out here at 3.99% or do you think there might be a little more opportunities for expansion before the flaps (ph) kick in?

I'd say, it's pretty close to the topped out, so be my guest. I mean, obviously, when the swaps kick in, as Rex mentioned though well they get tick down. So, no I think it's kind of out topped out.

Got you. And then on the -- just my back of the envelope numbers, maybe I'm off here but please direct me otherwise, I'm coming up with maybe 12 basis points of reduction to the margin on the swaps or am I calculating this wrong?

I think, is it about $600,000 a month?

Yeah. Something like that.

So, that leaves $7.2 million and our margin was $220 million. That sounds -- now you are saying 12 basis points -- that probably is about right. Our interest-bearing assets are how much, Rex?

5 points. In the fourth quarter, they were $5.4 million.

Yeah. So $7 million would be a little over 12 basis points, something like that. Yeah.

Got you. All right. Thank you. And then Joe, just on your comment in the release about net interest income plateauing or possibly declining that sounds like the fourth quarter run rate, is that correct not the full year 2022 number.

Right.

Yeah. And in the half of 2022, obviously, our net interest income was lower than it was in the second half, because rates didn't rise immediately in the year. And so we got a lot more benefit in the third and fourth quarters last year. So, that's what we're talking about compared to fourth quarter.

Got you. All right. That covers my questions. Thanks so much. I'll step back.

Thanks, Andrew.

Thank you. [Operator Instructions] And our next question comes from the line of Damon DelMonte from KBW. Your question please?

Hey. Good afternoon, guys. Hope you're both doing well today. So just a quick question on loan growth. Can you just give a little perspective on kind of how you're feeling about your pipelines in the early part of this year and kind of what your expectations might be in the coming quarters for the like-for-like growth.

Well, I mean I think -- I think, Damon, the thing to -- the first part of our loan growth comes from our un-funded construction commitments, which I think we’re like $1.44 billion or something at the end of the year. So, and that's substantially higher than they were at the end of the year, so that's going to continue to fund and that's going to be some that's going to be some loan growth now. I will tell you loan origination have definitely slowed down, I think what the Fed has done, at least as far as commercial real estate goes, there is not nearly as much activity as there was. So, that's probably a little bit more of an issue for as far as -- I mean I think what we could see is, is we could see the unfunded commitment line drop, because we're not booking new construction loans and adding to that unfunded commitment line, but we are going to be funding loans off the commitment line. But again, we don't forecast I mean you guys have to sort of come up with your own numbers, but I would say this, it's not going to be loan growth in year like we had in 2022.

Got it. Okay.

The other thing that you got to factor in, I mean, I do think payouts have slowed the projects are staying with us longer, which is positive thing.

Got it. Okay. That's helpful. Thank you. And then with respect to credit in kind of trying to figure out the provision here, obviously very strong underlying credit trends minimal net charge-offs. You had a couple of quarters in the middle of 2022, where you had like $2.2 million and $3.3 million for 2Q and 3Q and then it kind of tailed off here in the fourth quarter. How do we kind of think about like where the reserve level is today at 1.39 and how are you viewing kind of the more macro picture and maybe they need to build reserves or do you feel like you're comfortable at this level?

Well, I mean I think we're comfortable at this level if the economy were to take a turn, we would have to address that. But based on what we're seeing right now, we're comfortable.

Okay.

I think the provision -- the provisioning that you saw last in 2022 early on like the second and third quarter timeframe was a lot of based on loan growth that was going on. So we were adding to our reserves at that point and now we're -- like Joe said we didn't grow as much our outstanding balances in the fourth quarter, but we're looking at economic factors now as we kind of move forward into 2023 to see if it starts to look like recession. And if so how bad and how that might impact.

Got it. Okay. And then, just to circle back on the margin and the impact of the swaps. Could you just repeat when do those -- I know you said they are forward swaps, but when do those kick in, in May or June?

I believe it's -- May of '23, I believe is the first month that we would have a settlement on those.

Okay. And if those were to happen like today, right? Then the margin would get hit by 12 basis points, based on the math that was being thrown around?

Yeah. I think that's -- I think that's pretty close. I think when we calculated it then a few weeks ago, I think it was about 600,000 a month.

Somewhere in that ballpark.

Okay. And what's the duration of those swaps?

Out to 2028.

Okay. That's all that I had. Thank you.

Thank you. [Operator Instructions] And our next question comes from the line of John Rodis from Janney. Your question please?

Hey, guys. Good afternoon.

Hi, John.

Hope you're doing well. Just, Joe, maybe just one quick question on the buyback. You guys were obviously fairly active in 2022 and you announced a new plan, but you did slow the pace in the fourth quarter. How should we sort of think about buyback activity for '23?

It sort of depends on the price. We obviously have been -- I mean, we bought at a higher price than where we're trading right now, so we kind of like it, we think it makes sense, I don't think will probably be -- may be quite as aggressive, certainly don't think it makes sense.

Okay. But not as aggressive, but you still think you'll probably be somewhat active?

Not as aggressive as we were in the -- during the full year 2022. So, we definitely still buyback makes sense and we feel like we're well capitalized and plenty able to handle it.

It depends a little bit on what kind of turn the economy takes, obviously, too. So we got to factor that into.

Yeah.

As we look at it.

Just as far as you know, capital management, Joe any -- or Rex. Any other than the dividend, any other thoughts on sort of read redeploying our capital and so forth?

No, not really, I mean, it would be dividend or stock buyback.

Okay. I guess where I'm going is just M&A or anything like that your thoughts today.

Nothing really on the horizon.

Okay. Thank you.

All right. Thanks, John.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Joe Turner for any further remarks.

All right. Well, we appreciate everybody being on the call and we'll look forward to talking to you in April. Have a good day. Thank you.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.