Today’s 2014 Top Picks update is a Midwestern bank that is making some shrewd acquisitions. The stock was recently upgraded to Strong Buy by Zack’s.
Great Southern Bancorp Inc. (GSBC)
from Positive Patterns
Great Southern Bancorp Inc. (GSBC) is a fine small bank with branches mostly in SW Missouri that is finally getting some earnings traction, and just might see some big earnings gains in 2015 and beyond. The stock is still cheap enough to buy, selling for about 13+ times earnings at around $33.
GSBC has been building for the future and has a pretty good story to tell. Last month, GSBC acquired yet another bank—its fifth in the last five years—and all ‘wards-of-the-state’. There is no dilution or loading up the balance sheet with debt.
While others have cut back, sold, and paid down sins, GSBC has plowed forward like the proverbial Missouri mule it represents (a less graceful tortoise?), building and expanding its franchise on the cheap. Now 5 years later GSBC emerges with 50% more branches, and the bank is tanned, rested, and ready—with no legacy hang-ups.
The largest shareholders (the Turner family) run a tight ship. GSBC did better than its peer group during the banking smash, and the FDIC / FEDS ‘favored’ the good banks, allowing them to swallow up the failed banks. The FEDS picked up the ‘tab’ for the over-partying, and the good banks like GSBC were allowed (because of their good behavior) to buy up banks on the cheap.
I think investors should be looking at the banks that did it right in the past, not the messy losers who look like what they are—lousy banks. GSBC is a good, steady bank and I think it will see much higher earnings over the next few years. I would not chase GSBC past $34.
Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, July 5, 2014