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FDIC-Acquired Loans and Loss Sharing Agreements | 12 Months Ended
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Dec. 31, 2020
FDIC-Acquired Loans and Loss Sharing Agreements |
FDIC-Acquired Loans and Loss Sharing Agreements | Note 4: FDIC-Acquired Loans and Loss Sharing Agreements On March 20, 2009, Great Southern Bank entered into a purchase and assumption agreement with loss share with the Federal Deposit Insurance Corporation (FDIC) to assume all of the deposits (excluding brokered deposits) and acquire certain assets of TeamBank, N.A., a full service commercial bank headquartered in Paola, Kansas. The related loss sharing agreement was terminated early, effective April 26, 2016, by mutual agreement of Great Southern Bank and the FDIC. Based upon the acquisition date fair values of the net assets acquired, no goodwill was recorded. On September 4, 2009, Great Southern Bank entered into a purchase and assumption agreement with loss share with the FDIC to assume all of the deposits and acquire certain assets of Vantus Bank, a full service thrift headquartered in Sioux City, Iowa. The related loss sharing agreement was terminated early, effective April 26, 2016, by mutual agreement of Great Southern Bank and the FDIC. Based upon the acquisition date fair values of the net assets acquired, no goodwill was recorded. On October 7, 2011, Great Southern Bank entered into a purchase and assumption agreement with loss share with the FDIC to assume all of the deposits and acquire certain assets of Sun Security Bank, a full service bank headquartered in Ellington, Missouri. The related loss sharing agreement was terminated early, effective April 26, 2016, by mutual agreement of Great Southern Bank and the FDIC. Based upon the acquisition date fair values of the net assets acquired, no goodwill was recorded. On April 27, 2012, Great Southern Bank entered into a purchase and assumption agreement with loss share with the FDIC to assume all of the deposits and acquire certain assets of Inter Savings Bank, FSB (“InterBank”), a full service bank headquartered in Maple Grove, Minnesota. The related loss sharing agreement was terminated early, effective June 9, 2017, by mutual agreement of Great Southern Bank and the FDIC. Based upon the acquisition date fair values of the net assets acquired, no goodwill was recorded. On June 20, 2014, Great Southern Bank entered into a purchase and assumption agreement with the FDIC to purchase a substantial portion of the loans and investment securities, as well as certain other assets, and assume all of the deposits, as well as certain other liabilities, of Valley Bank, a full-service bank headquartered in Moline, Illinois, with significant operations in Iowa. This transaction did not include a loss sharing agreement. Based upon the acquisition date fair values of the net assets acquired, no goodwill was recorded. The following table presents the balances of the acquired loans related to the various FDIC-assisted transactions at December 31, 2020 and December 31, 2019. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Sun Security | ​ | ​ | ​ | ​ | ​ | ​
​ |  | TeamBank |  | Vantus Bank |  | Bank |  | InterBank |  | Valley Bank
​ | ​ | (In Thousands)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2020 |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Gross loans receivable | ​ | $ | 5,393 | ​ | $ | 8,052 | ​ | $ | 13,395 | ​ | $ | 44,215 | ​ | $ | 31,515
Balance of accretable discount due to change in expected losses | ​ |  | (97) | ​ |  | (35) | ​ |  | (180) | ​ |  | (1,079) | ​ |  | (612)
Net carrying value of loans receivable | ​ |  | (5,266) | ​ |  | (8,004) | ​ |  | (13,111) | ​ |  | (42,057) | ​ |  | (30,204)
Expected loss remaining | ​ | $ | 30 | ​ | $ | 13 | ​ | $ | 104 | ​ | $ | 1,079 | ​ | $ | 699
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2019 | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Gross loans receivable | ​ | $ | 7,304 | ​ | $ | 9,899 | ​ | $ | 17,906 | ​ | $ | 60,430 | ​ | $ | 41,032
Balance of accretable discount due to change in expected losses | ​ |  | (159) | ​ |  | (89) | ​ |  | (374) | ​ |  | (5,143) | ​ |  | (1,803)
Net carrying value of loans receivable | ​ |  | (7,118) | ​ |  | (9,797) | ​ |  | (17,392) | ​ |  | (54,442) | ​ |  | (38,452)
Expected loss remaining | ​ | $ | 27 | ​ | $ | 13 | ​ | $ | 140 | ​ | $ | 845 | ​ | $ | 777
​ Fair Value and Expected Cash Flows At the time of these acquisitions, the Company determined the fair value of the loan portfolios based on several assumptions. Factors considered in the valuations were projected cash flows for the loans, type of loan and related collateral, classification status, fixed or variable interest rate, term of loan, current discount rates and whether or not the loan was amortizing. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. Management also estimated the amount of credit losses that were expected to be realized for the loan portfolios. The discounted cash flow approach was used to value each pool of loans. For non-performing loans, fair value was estimated by calculating the present value of the recoverable cash flows using a discount rate based on comparable corporate bond rates. This valuation of the acquired loans is a significant component leading to the valuation of the loss sharing assets recorded. The amount of the estimated cash flows expected to be received from the acquired loan pools in excess of the fair values recorded for the loan pools is referred to as the accretable yield. The accretable yield is recognized as interest income over the estimated lives of the loans. On an ongoing basis, the Company has evaluated the fair value of the loans including cash flows expected to be collected. Increases in the Company’s cash flow expectations are recognized as increases to the accretable yield while decreases are recognized as impairments through the allowance for loan losses. Improvements in expected cash flows related to the acquired loan portfolios have resulted in adjustments to the accretable yield to be spread over the estimated remaining lives of the loans on a level-yield basis. The amounts of these adjustments during the years ended December 31, 2020, 2019, and 2018 were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31,
​ |  | 2020 |  | 2019 |  | 2018
​ | ​ | (In Thousands)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Increase in accretable yield due to increased cash flow expectations | ​ | $ | — | ​ | $ | 12,323 | ​ | $ | 5,202
​ The adjustments, along with those made in previous years, impacted the Company’s Consolidated Statements of Income as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31,
​ |  | 2020 |  | 2019 |  | 2018
​ | ​ | (In Thousands)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest income and net impact to pre-tax income | ​ | $ | 5,574 | ​ | $ | 7,431 | ​ | $ | 5,134
​ On an on-going basis the Company has estimated the cash flows expected to be collected from the acquired loan pools. For each of the loan portfolios acquired, the cash flow estimates have increased, based on payment histories and reduced credit loss expectations. This resulted in increased income that has been spread, on a level-yield basis, over the remaining expected lives of the loan pools (and, therefore, has decreased over time). Because these adjustments to accretable yield will be recognized generally over the remaining lives of the loan pools, they will impact future periods as well. As of December 31, 2020, the remaining accretable yield adjustment that will affect interest income was $2.0 million. Of the remaining adjustments affecting interest income, we expect to recognize $1.5 million of interest income during 2021. As of January 1, 2021, we have adopted the new accounting standard related to accounting for credit losses. With the adoption of this standard, there will be no further reclassification of discounts from non-accretable to accretable subsequent to December 31, 2020. All adjustments made prior to January 1, 2021 will continue to be accreted to interest income. Changes in the accretable yield for acquired loan pools were as follows for the years ended December 31, 2020, 2019 and 2018: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Sun | ​ | ​ | ​ | ​ | ​ | ​
​ |  | TeamBank |  | Vantus Bank |  | Security Bank |  | InterBank |  | Valley Bank
​ | ​ | (In Thousands)
Balance, January 1, 2018 | ​ | ​ | 2,071 | ​ | ​ | 1,850 | ​ | ​ | 2,901 | ​ | ​ | 5,074 | ​ | ​ | 2,695
Accretion | ​ |  | (1,042) | ​ |  | (1,196) | ​ |  | (1,667) | ​ |  | (8,349) | ​ |  | (3,892)
Reclassification from nonaccretable difference(1) | ​ |  | 327 | ​ |  | 778 | ​ |  | 1,008 | ​ |  | 8,269 | ​ |  | 4,260
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Balance, December 31, 2018 | ​ |  | 1,356 | ​ |  | 1,432 | ​ |  | 2,242 | ​ |  | 4,994 | ​ |  | 3,063
Accretion | ​ |  | (955) | ​ |  | (1,006) | ​ |  | (1,562) | ​ |  | (8,798) | ​ |  | (4,302)
Reclassification from nonaccretable difference(1) | ​ |  | 756 | ​ |  | 697 | ​ |  | 1,268 | ​ |  | 12,081 | ​ |  | 5,817
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Balance, December 31, 2019 | ​ | $ | 1,157 | ​ | $ | 1,123 | ​ | $ | 1,948 | ​ | $ | 8,277 | ​ | $ | 4,578
Accretion | ​ |  | (479) | ​ |  | (831) | ​ |  | (1,046) | ​ |  | (6,791) | ​ |  | (3,005)
Reclassification from nonaccretable difference(1) | ​ |  | 198 | ​ |  | 451 | ​ |  | 493 | ​ |  | 2,219 | ​ |  | 2,764
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Balance, December 31, 2020 | ​ | $ | 876 | ​ | $ | 743 | ​ | $ | 1,395 | ​ | $ | 3,705 | ​ | $ | 4,337
(1) | Represents increases in estimated cash flows expected to be received from the acquired loan pools, primarily due to lower estimated credit losses. The numbers also include changes in expected accretion of the loan pools for TeamBank, Vantus Bank, Sun Security Bank, InterBank and Valley Bank for the year ended December 31, 2020, totaling $198,000, $451,000, $493,000, $2.2 million and $2.8 million, respectively; TeamBank, Vantus Bank, Sun Security Bank, InterBank and Valley Bank for the year ended December 31, 2019, totaling $667,000, $480,000, $810,000, $3.9 million and $2.5 million, respectively; for TeamBank, Vantus Bank, Sun Security Bank, InterBank and Valley Bank for the year ended December 31, 2018, totaling $312,000, $778,000, $756,000, $4.1 million and $3.5 million, respectively.

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