GSBC is boring small regional bank.
It IPO'd during S&L crisis.
Survived the great recession of 2008. Well, not just survived but it thrived.
Just look at GSBC's total return since IPO 17,000%. It is amazing that no name regional bank can have such stellar returns.
A family run, regional bank with market value of about $780 million, GSBC operates in 11 states in the Midwest region.
So what's the secret to GSBC success? I believe it is because of the ownership structure and their long term view instead of chasing short term profits. Insider ownership is over 30% and Turner family owns about 25%. Here is the ownership percentages from their latest proxy:
The company is well capitalized too.In their recent annual meeting CFO Rex Copeland said "Strong capital is a priority for our Company. Winners in banking are those that have strong capital and are thus able to take advantage of the opportunities that may arise. We recognize that our common equity level of capital is very strong and might be considered almost too high by some in the industry. We prefer a somewhat higher level and how it may benefit the Company. We want to be in a position to take advantage of the opportunities that may arise during various phases of the business cycle, including the opportunity to capitalize on market dislocation that may occur, among other things."
That is the holy grail in the banking industry. Sooner or later there will be recession and banks will fail. But strong banks like GSBC will have the chance to scoop up very good assets at depressed valuations.
And the president and CEO Joe Turner about the long term view
"We are optimistic about the rest of the year and our priorities are straight-forward and consistent with previous years.
As we focus on these priorities, we do so with a long-term mindset. Someone asked me what having a long-term mindset means in practical terms. It means a number of things. For instance, we don’t get caught up in giving public guidance on what our earnings are going to be, what our asset totals are going to be, or what our loan totals are going to be. This type of thinking can influence how you make decisions since a performance bar has been set. You could quickly find yourself making short-sighted decisions just to meet next quarter’s growth goals. Instead, what we tell people is that we are going to continue doing the things that we’ve always done – to understand our current and prospective customers’ needs and then fulfill those needs whenever we can in a manner consistent with safe and sound banking.
With a long view perspective, we manage the Company with a disciplined approach and strive to be positioned for opportunities that may come our way. This means that at times we will be able to grow and expand, and there will be times when, because of competition and economic conditions, we will not be able to grow. We firmly believe that it is unrealistic to expect that growth is going to be possible and rational every single year. We’ll do the best we can do every single year, but we’re not going to force anything. For some years the best we can do may mean that our loan and deposit totals stay relatively flat. Then, in another year, we may be able to participate in an acquisition opportunity and experience measurable growth. A disciplined approach is key."
The company went though multiple cycles and never stopped paying dividends. Here is CFO again: "Since 1989, through good and bad business cycles, Great Southern has paid 117 consecutive quarterly cash dividends to our common shareholders."
Below is a financial highlights taken from GSBC website. You can access it here.
While GSBC have strong liquidity, they are not waiting for recession to come. They are expanding in new markets such as Denver CO and Atlanta GA which overtime will contribute to their loan portfolios. Kris Conley Director of Retail Banking said "In just a few months, the Denver office produced approximately $14 million and the Atlanta office produced more than $13 million."
Overall, I like this bank. I like the fact that the bank is led by family who have the majority of its net worth in the stock.
There was good article on GSBC in Bank Director magazine in August last year (here).
Would like to hear any thoughts you may have on this name.
