Great Southern earnings down 89% in 3Q

Springfield-based Great Southern Bancorp Inc., the holding company for Great Southern Bank, today reported that third-quarter per-share earnings fell 89 percent, largely due to the company's write-down of Fannie Mae and Freddie Mac stock.

Preliminary earnings were 6 cents per diluted share, or $824,000, for the quarter ended Sept. 30, compared to 54 cents per diluted share, or $7.3 million, in the same quarter of 2007, according to a news release.

The write-down of Great Southern's investment in perpetual preferred stock of Fannie Mae and Freddie Mac, amounted to $3.5 million. The holding company has not sold the investment, and it carried the securities on its books at the end of the quarter with a value of $483,000, based on the value of the shares determined by recent market trades at that time.

"The third-quarter write-down of the Fannie Mae and Freddie Mac preferred stock impacted third-quarter earnings by approximately 26 cents per diluted share," said Great Southern President and CEO Joseph W. Turner in the release. "While we are disappointed with our earnings results, we are pleased with our fundamental progress during this difficult economic cycle. Our capital and liquidity levels continue to increase. We continue to diligently work through problem assets, increase our allowance for loan losses and contain core operating expenses."

For the first nine months of the year, preliminary results were a loss of 60 cents per diluted share, or an $8 million loss, compared to the $1.67 per diluted share, or $22.9 million, the company earned in the first nine months of 2007.

In addition to the third-quarter Fannie Mae/Freddie Mac write-down, year-to-date earnings were negatively affected by the company's first-quarter $35 million charge-off, equal to $1.70 per share after tax. The charge-off was related to a $30 million stock loan to Arkansas-based ANB Financial, which failed, and the under-collateralized portion of associated loans totaling $5 million.

Also during the quarter, net loans decreased $46.8 million, or 3 percent, from year-end 2007, largely due to a reduction in outstanding construction and land development loan balances, which were down $84.4 million from year-end 2007. Unfunded balances of such loans decreased to $95.7 million from $266.4 million in the third quarter.

Turner said the decline in construction and land development loans wasn't unexpected, but the bank has seen increases in other areas, including single-family residential loans, consumer loans and commercial real estate loans.

Great Southern shares (Nasdaq: GSBC) closed Wednesday at $8.99, compared to a 52-week range of $7.73 to $24.54.[[In-content Ad]]