Highlights for the Third Quarter of Fiscal Year 2021 (all
quarterly comparisons in this document refer to the second quarter
of fiscal year 2021, except as noted)
- Net income of $58.7 million, or $1.06 per diluted share, up
from $51.3 million, or $0.93 per diluted share
- Net interest income1 of $99.1 million, down from $104.4
million, with net interest margin1 of 3.23%, down from 3.51%
- Noninterest income of $19.4 million, up from $17.2 million
- Noninterest expense of $60.5 million, up from $59.1
million
- Total loans of $8.48 billion, down $533.6 million, including a
reduction of $201.9 million in Paycheck Protection Program ("PPP")
loans
- Total deposits of $11.54 billion, down $26.3 million, and
average deposits up $292.9 million
- Allowance for credit losses ("ACL") of $270.3 million, down
from $296.0 million, and a ratio of ACL to total loans of 3.19%,
down from 3.28%
- Nonaccrual loans of $210.1 million, down $74.4 million, or
26.2%
- Net charge-offs of $5.2 million, or 0.24% of average total
loans (annualized), down from $7.8 million and 0.34%,
respectively
- Total capital ratio of 16.0%, up from 15.1%; tier 1 capital
ratio of 14.5%, up from 13.5%; common equity tier 1 capital ratio
of 13.7%, up from 12.8%
- Return on average common equity of 21.2%, up from 19.8%
- The Company's Board of Directors declared a quarterly dividend
of $0.05 per share
Great Western Bancorp, Inc. (NYSE:
GWB) today reported net income of $58.7 million, or $1.06
per diluted share, for the third quarter of fiscal year 2021,
compared to net income of $51.3 million, or $0.93 per diluted
share, for the second quarter of fiscal year 2021.
"I am excited about our continued momentum this quarter," said
Mark Borrecco, President and Chief Executive Officer. "We made
significant progress in improving our asset quality, reflected in
our $74.4 million reduction of nonaccrual loans. This brings our
year to date nonaccrual reduction to $114.8 million, a 35.3%
decrease. Net charge-offs of $5.2 million for the quarter highlight
we are effectively managing the tradeoffs between loan workouts and
loss avoidance. Criticized loans also decreased $199.2 million this
quarter. Our allowance for credit losses remains appropriate at
3.19% of total loans following a $20.7 million release this
quarter. Our capital levels improved once again, and I am very
pleased we are able to increase the dividend this quarter from
$0.01 to $0.05.
"In parallel we are investing in our people and processes. Our
Small Business Center roll out continues on track, and we expect to
have all of our markets on the new platform by the end of
September. This enhancement will free up significant banker
capacity and make it easier for our commercial and ag bankers to
grow their mid-size relationship base, driving better portfolio
diversity and revenue. Our Treasury Management improvements are
progressing as well as our upgrades to our lending process that
will accelerate our commercial and ag growth plans."
Impact and Response to COVID-19 Pandemic
We remain focused on keeping our employees safe and our bank
running effectively to serve our customers and continue to monitor
the continued spread of COVID-19 and its Delta variant. Our
branches have been reopened across our footprint, and we are
targeting a full return to work on September 7th that still
provides for flexible remote work optionality and adherence to CDC
guidelines in the office. For our customers, we have supported PPP,
having provided over 4,800 loans for $727.3 million in the first
round followed by over 4,100 loans for $249.5 million in the second
round. We have processed over 4,300 loans totaling $612.0 million
related to PPP forgiveness, resulting in an outstanding balance of
$364.9 million as of June 30, 2021. Additionally, we granted both
full and partial payment deferrals to help provide relief from
COVID-19, which resulted in a peak of $1.69 billion of loans on
deferral as of the third quarter of fiscal year 2020 that decreased
to $19.7 million as of April 16, 2021 and to $0.2 million as of
July 16, 2021.
Net Interest Income and Net Interest Margin1
Net interest income was $99.1 million for the quarter, a
decrease of $5.3 million, while net interest margin was 3.23%, a 28
basis point decrease from 3.51%. Adjusted net interest income2,
which includes derivative interest expense recognized in
noninterest income, was $95.9 million, a decrease of $5.3 million,
and adjusted net interest margin2 was 3.13%, a 27 basis point
decrease from 3.40%. Interest income was lower by $6.4 million as
loan interest decreased by $6.9 million while securities and other
interest income increased by $0.5 million. Loan interest reflects a
$3.2 million decrease in PPP interest and fees and a $5.5 million
decrease largely due to lower loan volumes, partially offset by a
$1.8 million increase in recoveries of interest on nonaccrual
loans. The decrease in interest income was partially offset by a
$0.4 million decrease in time deposit interest combined with a net
$0.6 million decrease in interest on other interest bearing
deposits. The decrease in time deposit interest resulted from a
decrease in volumes and an 11 basis point decrease in yield to
0.41%, while the decrease in interest on other interest bearing
deposits was driven primarily by a 4 basis point decrease in yield
of interest bearing deposits to 0.13%. The 27 basis point decrease
in adjusted net interest margin2 was driven by a 21 basis point
decrease from excess liquidity and a net 10 basis point decrease
from loans related to lower PPP income, lower portfolio yields, and
higher recoveries of interest on nonaccrual loans, all partially
offset by a 4 basis point decrease in total deposit yield.
Noninterest Income
Noninterest income was $19.4 million for the quarter, an
increase of $2.2 million from the prior quarter. The increase was
driven by a $0.4 million increase in service charges from increases
in account activity and interchange fees, a $0.8 million increase
from the additional investments in bank owned life insurance
purchased, and a net $2.3 million benefit from loans and
derivatives accounted for at fair value related to credit risk, all
partially offset by a $1.5 million decrease in mortgage revenue
from slower refinancing activity.
Noninterest Expense
Noninterest expense was $60.5 million for the quarter, an
increase of $1.4 million from the prior quarter. The increase was
driven by a $1.1 million increase in salaries and benefits due to
accrued incentives, a $0.5 million increase in data processing
costs related to software maintenance and upgrades, and a $0.5
million increase in consulting and business development costs.
These were partially offset by a $0.7 million decrease in other
real estate owned operating costs due the sale of an OREO
property.
The efficiency ratio2 was 50.9% for the quarter, compared to
48.4% for the prior quarter.
Provision for Income Taxes
Income tax expense was $18.3 million for the quarter, an
increase of $3.6 million from the prior quarter, yielding an
effective rate of 23.7% compared to 22.2%.
Asset Quality
The ACL was $270.3 million as of June 30, 2021, a decrease of
$25.7 million from $296.0 million from the prior quarter. The
provision for credit losses on loans resulted in a $20.7 million
benefit for the quarter, compared to a $5.0 million benefit in the
prior quarter, due to lower loan volumes and improved economic
factors this quarter.
The ratio of ACL to total loans was 3.19% as of June 30, 2021, a
decrease from 3.28% in the prior quarter. Excluding PPP loans, the
ratio was 3.33% for the current quarter and 3.50% for the prior
quarter.
Net charge-offs were $5.2 million, or 0.24% of average total
loans (annualized) for the quarter, down $2.6 million and 10 basis
points from the prior quarter, respectively.
Included within total loans are approximately $545.1 million of
loans with long-term, fixed rate structures for which management
has elected the fair value accounting option, down from $568.9
million in the prior quarter. These loans are excluded from CECL
and the ACL, but management has estimated that approximately $23.3
million of the fair value adjustment for these loans relates to
credit risk, which is 4.28% of the fair value option loans and
0.29% of total loans excluding PPP loans.
Nonaccrual loans were $210.1 million as of June 30, 2021, a
decrease of $74.4 million from $284.5 million in the prior quarter,
largely driven by successful workouts leading to an agricultural
relationship being upgraded to accruing status and multiple
repayments of agricultural and commercial loans.
Classified loans were $612.2 million as of June 30, 2021, a
decrease of $61.7 million from $673.9 million in the prior quarter,
commensurate with the repayment of multiple nonaccrual loans.
Total other repossessed property balances were $11.5 million as
of June 30, 2021, a decrease of $6.0 million from the prior quarter
due to the sale of an OREO property previously mentioned above.
A summary of total credit-related charges incurred during the
current and comparable nine month periods and current, previous and
comparable quarters is presented below:
GREAT WESTERN BANCORP, INC.
Summary of Credit-Related Charges
(Unaudited)
For the nine months ended:
For the three months ended:
Item
Included within F/S Line
Item(s):
June 30, 2021
June 30, 2020
June 30, 2021
March 31, 2021
June 30, 2020
(dollars in thousands)
(Reversal of) provision for credit losses
¹
(Reversal of) provision for credit losses
¹
$
(13,800
)
$
101,539
$
(20,699
)
$
(5,000
)
$
21,641
Increase provision for unfunded
commitments reserve ¹
Other noninterest expense ¹
—
2,859
—
—
2,215
Net other repossessed property charges
(income)
Net (gain) loss on repossessed property
and other related expenses
(469
)
8,508
(760
)
(54
)
2,475
Net (recovery) reversal of interest income
on nonaccrual loans
Interest income on loans
(6,134
)
4,164
(2,514
)
(707
)
1,070
Net realized credit loss on
derivatives
Change in fair value of FVO loans and
related derivatives
210
1,709
—
—
1,709
Loan fair value adjustment related to
credit
Change in fair value of FVO loans and
related derivatives
(2,674
)
35,949
(4,111
)
(27
)
23,292
Total credit-related charges
$
(22,867
)
$
154,728
$
(28,084
)
$
(5,788
)
$
52,402
1 Beginning in the first quarter of fiscal
year 2021, increase (decrease) in unfunded commitment reserve is
included in provision for credit losses.
We continue to evaluate the impact of the COVID-19 pandemic on
our loan portfolio. Industries such as hotels & resorts
(excluding casino hotels), casino hotels, restaurants, arts and
entertainment, oil & energy, retail malls, airlines and
healthcare have experienced varied business disruptions due to
COVID-19. Since the beginning of the pandemic we have been closely
monitoring the following loan segments (excluding PPP loans) given
elevated industry risk from COVID-19: hotels & resorts
(excluding casino hotels) with $709.7 million, or 8.7% of total
loans, restaurants with $121.7 million, or 1.5% of total loans,
arts and entertainment with $153.9 million, or 1.9% of total loans,
senior care with $379.7 million, or 4.7% of total loans, and
skilled nursing with $209.2 million, or 2.6% of total loans, for a
total exposure of $1.57 billion, or 19.4% of total loans (excluding
PPP loans) as of June 30, 2021, with $194.6 million of these loans
being classified as of June 30, 2021 and loan exposure in other
segments of the identified industries being either immaterial or
having not shown general distress thus far.
Loans and Deposits
Total loans outstanding were $8.48 billion as of June 30, 2021,
a decrease of $533.6 million from the prior quarter. The decrease
in loans during the quarter was driven by a $201.9 million net
decrease in PPP loans, a $54.5 million decrease in outstanding
balances of warehouse lines of credit from slowed mortgage
activity, $211.3 million of repayments on several criticized and
specialized asset loans, and paydowns across retail, commercial and
agriculture loan segments related to business sales and excess
liquidity.
Total deposits were $11.54 billion as of June 30, 2021, a
decrease of $26.3 million from the prior quarter, driven by a $86.8
million decrease in other interest-bearing deposits and a $46.1
million decrease in time deposits, partially offset by a $106.6
million increase in checking and savings balances.
Capital
Total capital and tier 1 capital ratios were 16.0% and 14.5%,
respectively, as of June 30, 2021, compared to 15.1% and 13.5% as
of March 31, 2021. The common equity tier 1 capital and tier 1
leverage ratios were 13.7% and 10.1%, respectively, as of June 30,
2021, compared to 12.8% and 10.0% as of March 31, 2021. All
regulatory capital ratios remain above regulatory minimums to be
considered "well capitalized."
On July 29, 2021, the Company's Board of Directors declared a
dividend of $0.05 per common share, payable on August 27, 2021 to
stockholders of record as of close of business on August 13,
2021.
Conference Call
Great Western Bancorp, Inc. will host a conference call to
discuss its financial results for the third quarter of fiscal year
2021 on Thursday, July 29, 2021 at 7:30 AM (CT). The call can be
accessed by dialing (855) 238-8837 approximately 10 minutes prior
to the start time. Please ask to be joined into the Great Western
Bancorp, Inc. (GWB) call. International callers should dial (412)
542-4114. The call will also be broadcast live over the Internet
and can be accessed by visiting ir.greatwesternbank.com. A
replay will be available beginning one hour following the
conference call and ending on August 12, 2021. To access the
replay, dial (877) 344-7529 (U.S.) and use conference ID 10157664.
International callers should dial (412) 317-0088 and enter the same
conference ID number.
About Great Western Bancorp, Inc.
Great Western Bancorp, Inc. is the holding company for Great
Western Bank, a full-service regional bank focused on
relationship-based business banking. Great Western Bank offers
small and mid-sized businesses a focused suite of financial
products and a range of deposit and loan products to retail
customers through several channels, including the branch network,
online banking system, mobile banking applications and customer
care centers. The bank services its customers through more than 170
branches in nine states: Arizona, Colorado, Iowa, Kansas,
Minnesota, Missouri, Nebraska, North Dakota and South Dakota. To
learn more about Great Western Bank visit
www.greatwesternbank.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Statements about Great Western Bancorp, Inc.’s expectations,
beliefs, plans, strategies, predictions, forecasts, objectives,
assumptions or future events or performance are not historical
facts and may be forward-looking. These statements are often, but
not always, made through the use of words or phrases such as
“anticipates,” “believes,” “can,” “could,” “may,” “predicts,”
“potential,” “should,” “will,” “estimate,” “plans,” “projects,”
“continuing,” “ongoing,” “expects,” “views,” “intends” and similar
words or phrases. In particular, the statements included in this
press release concerning Great Western Bancorp, Inc.’s expected
performance and strategy, strategies for managing troubled loans,
the appropriateness of the ACL, the impact on the business arising
from the COVID-19 pandemic and the interest rate environment are
not historical facts and are forward-looking. Accordingly, the
forward-looking statements in this press release are only
predictions and involve estimates, known and unknown risks,
assumptions and uncertainties that could cause actual results to
differ materially from those expressed. All forward-looking
statements are necessarily only estimates of future results, and
there can be no assurance that actual results will not differ
materially from expectations, and, therefore, you are cautioned not
to place undue reliance on such statements. Any forward-looking
statements are qualified in their entirety by reference to the
factors discussed in the sections titled “Item 1A. Risk Factors”
and "Cautionary Note Regarding Forward-Looking Statements" in Great
Western Bancorp, Inc.’s Annual Report on Form 10-K for the most
recently ended fiscal year, Form 10-Q for the quarters ended March
31, 2021 and December 31, 2020 and in other periodic filings with
the Securities and Exchange Commission. Further, any
forward-looking statement speaks only as of the date on which it is
made, and Great Western Bancorp, Inc. undertakes no obligation to
update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events.
GREAT WESTERN BANCORP, INC.
Consolidated Financial Data
(Unaudited)
At and for the nine months
ended:
At and for the three months
ended:
June 30, 2021
June 30, 2020
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
(dollars in thousands, except
share and per share amounts)
Operating Data:
Interest income (FTE)
$
331,988
$
381,289
$
104,219
$
110,574
$
117,195
$
118,429
$
121,472
Interest expense
18,977
63,244
$
5,161
$
6,127
$
7,689
$
10,903
$
13,620
Noninterest income (loss)
50,712
3,967
$
19,371
$
17,193
$
14,148
$
(3,950
)
$
(11,683
)
Noninterest expense
177,057
932,432
$
60,505
$
59,103
$
57,449
$
74,936
$
67,049
(Reversal of) provision for credit losses
³
(13,800
)
101,539
$
(20,699
)
$
(5,000
)
$
11,899
$
16,853
$
21,641
Net income (loss)
151,367
(691,944
)
$
58,749
$
51,299
$
41,319
$
11,136
$
5,400
Adjusted net income ¹
$
151,367
$
77,754
$
58,749
$
51,299
$
41,319
$
11,136
$
5,400
Common shares outstanding
55,116,095
55,014,047
55,116,095
55,111,403
55,105,105
55,014,189
55,014,047
Weighted average diluted common shares
outstanding
55,409,573
55,788,751
55,524,979
55,456,399
55,247,343
55,164,548
55,145,619
Earnings per common share - diluted
$
2.74
$
(12.40
)
$
1.06
$
0.93
$
0.75
$
0.20
$
0.10
Adjusted earnings per common share -
diluted ¹
$
2.74
$
1.39
$
1.06
$
0.93
$
0.75
$
0.20
$
0.10
Performance Ratios:
Net interest margin (FTE) ¹ ²
3.46
%
3.61
%
3.23
%
3.51
%
3.63
%
3.51
%
3.57
%
Adjusted net interest margin (FTE) ¹ ²
3.35
%
3.55
%
3.13
%
3.40
%
3.52
%
3.40
%
3.47
%
Return on average total assets ²
1.59
%
(7.22
)%
1.81
%
1.64
%
1.30
%
0.35
%
0.17
%
Return on average common equity ²
18.7
%
(55.6
)%
21.2
%
19.8
%
15.2
%
3.8
%
1.9
%
Return on average tangible common equity ¹
²
18.9
%
2.5
%
21.4
%
20.0
%
15.3
%
3.9
%
2.0
%
Efficiency ratio ¹
48.5
%
58.7
%
50.9
%
48.4
%
46.2
%
72.1
%
69.4
%
Capital:
Tier 1 capital ratio
14.5
%
11.3
%
14.5
%
13.5
%
12.7
%
11.8
%
11.3
%
Total capital ratio
16.0
%
12.9
%
16.0
%
15.1
%
14.3
%
13.3
%
12.9
%
Tier 1 leverage ratio
10.1
%
9.3
%
10.1
%
10.0
%
9.7
%
9.4
%
9.3
%
Common equity tier 1 ratio
13.7
%
10.6
%
13.7
%
12.8
%
12.0
%
11.0
%
10.6
%
Tangible common equity / tangible assets
¹
8.8
%
8.9
%
8.8
%
8.4
%
8.3
%
9.2
%
8.9
%
Book value per share - GAAP
$
21.07
$
21.10
$
21.07
$
19.85
$
19.39
$
21.14
$
21.10
Tangible book value per share ¹
$
20.97
$
20.98
$
20.97
$
19.75
$
19.28
$
21.03
$
20.98
Asset Quality:
Nonaccrual loans
$
210,083
$
274,475
$
210,083
$
284,541
$
292,357
$
324,946
$
274,475
Other repossessed property
$
11,498
$
19,231
$
11,498
$
17,529
$
18,086
$
20,034
$
19,231
Nonaccrual loans / total loans
2.48
%
2.66
%
2.48
%
3.16
%
3.07
%
3.22
%
2.66
%
Net charge-offs (recoveries)
$
43,410
$
24,155
$
5,211
$
7,841
$
30,358
$
15,124
$
9,433
Net charge-offs (recoveries) / average
total loans ²
0.62
%
0.33
%
0.24
%
0.34
%
1.22
%
0.59
%
0.37
%
Allowance for credit losses / total
loans
3.19
%
1.44
%
3.19
%
3.28
%
3.24
%
1.49
%
1.44
%
Watch-rated loans (under former risk
rating system) ⁴
n/a
$
477,128
n/a
n/a
n/a
$
982,841
$
477,128
Special mention loans ⁴
$
374,782
n/a
$
374,782
$
512,320
$
453,484
n/a
n/a
Classified loans (substandard or
worse)
$
612,175
$
702,795
$
612,175
$
673,854
$
716,948
$
769,515
$
702,795
Criticized loans (special mention or
worse) ⁴
$
986,957
n/a
$
986,957
$
1,186,174
$
1,170,432
n/a
n/a
1 This is a non-GAAP financial measure
management believes is helpful to interpreting our financial
results. See the tables at the end of this document for the
calculation of the measure and reconciliation to the most
comparable GAAP measure.
2 Annualized for all partial-year
periods.
3 Prior to the adoption of ASU 2016-13,
Financial Instruments-Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments, and subsequent related
ASUs, on October 1, 2020, this line represented the provision for
loan and lease losses under the incurred model.
4 Upon implementation of the new risk
rating system on October 1, 2020, the reported Watch rating was
retired and new Special Mention loans and Criticized loans ratings
were introduced for monitoring and reporting purposes.
GREAT WESTERN BANCORP, INC.
Consolidated Income Statement
(Unaudited)
At and for the nine months
ended:
At and for the three months
ended:
June 30, 2021
June 30, 2020
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
(dollars in thousands)
Interest income
Loans
$
300,925
$
342,014
$
93,328
$
100,274
$
107,323
$
107,522
$
109,227
Investment securities
25,079
33,359
8,642
8,318
8,119
9,294
10,532
Federal funds sold and other
1,214
1,278
654
405
155
105
112
Total interest income
327,218
376,651
102,624
108,997
115,597
116,921
119,871
Interest expense
Deposits
13,976
50,818
3,505
4,479
5,992
7,785
10,011
FHLB advances and other borrowings
2,603
8,807
867
856
880
2,221
2,539
Subordinated debentures and subordinated
notes payable
2,398
3,619
789
792
817
897
1,070
Total interest expense
18,977
63,244
5,161
6,127
7,689
10,903
13,620
Net interest income
308,241
313,407
97,463
102,870
107,908
106,018
106,251
(Reversal of) provision for credit
losses ¹
(13,800
)
101,539
(20,699
)
(5,000
)
11,899
16,853
21,641
Net interest income after provision for
loan and lease losses
322,041
211,868
118,162
107,870
96,009
89,165
84,610
Noninterest income
Service charges and other fees
27,228
28,328
9,005
8,599
9,624
9,413
7,731
Wealth management fees
9,688
8,859
3,477
3,182
3,029
2,913
2,773
Mortgage banking income, net
9,937
5,179
2,157
3,690
4,090
3,780
2,422
Net gain (loss) on sale of securities and
other assets
247
—
—
(1
)
248
7,890
—
Derivative interest expense
(9,692
)
(5,181
)
(3,117
)
(3,182
)
(3,393
)
(3,541
)
(3,040
)
Change in fair value of FVO loans and
related derivatives
2,480
(37,658
)
4,110
42
(1,672
)
(24,648
)
(25,001
)
Other derivative income (loss)
5,683
950
1,530
3,255
898
(890
)
2,242
Other
5,141
3,490
2,209
1,608
1,324
1,133
1,190
Total noninterest income (loss)
50,712
3,967
19,371
17,193
14,148
(3,950
)
(11,683
)
Noninterest expense
Salaries and employee benefits
116,918
112,259
40,239
39,125
37,554
37,182
39,042
Data processing and communication
19,825
17,713
7,054
6,545
6,226
6,742
5,817
Occupancy and equipment
15,829
15,941
5,105
5,511
5,213
5,332
5,251
Professional fees
12,293
16,409
4,644
3,734
3,915
5,552
7,382
Advertising
1,635
2,573
602
477
556
823
750
Net (gain) loss on repossessed property
and other related expenses
(469
)
8,508
(760
)
(54
)
345
4,350
2,475
Goodwill and intangible assets
impairment
—
742,352
—
—
—
—
—
Other ¹
11,026
16,677
3,621
3,765
3,640
14,955
6,332
Total noninterest expense
177,057
932,432
60,505
59,103
57,449
74,936
67,049
Income (loss) before income
taxes
195,696
(716,597
)
77,028
65,960
52,708
10,279
5,878
Provision for (benefit from) income
taxes
44,329
(24,653
)
18,279
14,661
11,389
(857
)
478
Net income (loss)
$
151,367
$
(691,944
)
$
58,749
$
51,299
$
41,319
$
11,136
$
5,400
1 For the three and nine months ended June
30, 2021, this line includes a $0.2 million and $0.3 million
decrease in provision for unfunded commitments reserve,
respectively. For the three and nine months ended June 30, 2020,
increase in provision for unfunded commitments reserve of $2.2
million and $2.9 million, respectively, were recorded in other
noninterest expense in the consolidated income statement.
GREAT WESTERN BANCORP, INC.
Summarized Consolidated Balance Sheet
(Unaudited)
As of
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
(dollars in thousands)
Assets
Cash and cash equivalents
$
1,756,345
$
1,383,071
$
1,061,796
$
432,887
$
311,585
Investment securities
2,383,959
2,265,261
2,059,615
1,774,626
1,972,626
Total loans
8,477,783
9,011,352
9,517,876
10,076,142
10,313,999
Allowance for credit losses ¹
(270,298
)
(295,953
)
(308,794
)
(149,887
)
(148,158
)
Loans, net
8,207,485
8,715,399
9,209,082
9,926,255
10,165,841
Other assets
722,440
650,008
483,890
470,671
484,276
Total assets
$
13,070,229
$
13,013,739
$
12,814,383
$
12,604,439
$
12,934,328
Liabilities and stockholders'
equity
Noninterest-bearing deposits
$
2,958,488
$
2,845,309
$
2,858,455
$
2,586,743
$
2,592,376
Interest-bearing deposits
8,579,289
8,718,745
8,514,863
8,422,036
8,558,238
Total deposits
11,537,777
11,564,054
11,373,318
11,008,779
11,150,614
Securities sold under agreements to
repurchase
80,167
63,153
80,355
65,506
70,362
FHLB advances and other borrowings
120,000
120,000
120,000
195,000
355,000
Other liabilities
171,216
172,613
172,209
172,221
197,708
Total liabilities
11,909,160
11,919,820
11,745,882
11,441,506
11,773,684
Stockholders' equity
1,161,069
1,093,919
1,068,501
1,162,933
1,160,644
Total liabilities and stockholders'
equity
$
13,070,229
$
13,013,739
$
12,814,383
$
12,604,439
$
12,934,328
1 Prior to the adoption of ASU 2016-13,
Financial Instruments-Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments, and subsequent related
ASUs, on October 1, 2020, this line represented the allowance for
loan and lease losses under the incurred loss model.
GREAT WESTERN BANCORP, INC.
Loan Portfolio Summary (Unaudited)
As of
Fiscal year-to-date:
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
Change
($)
Change
(%)
(dollars in thousands)
Construction and development
$
433,293
$
472,939
$
482,462
$
415,440
$
17,853
4.3
%
Owner-occupied CRE
1,318,196
1,381,693
1,411,558
1,411,894
(93,698
)
(6.6
)%
Non-owner-occupied CRE
2,244,335
2,340,206
2,660,682
2,910,965
(666,630
)
(22.9
)%
Multifamily residential real estate
592,544
619,353
476,159
536,642
55,902
10.4
%
Total commercial real estate
4,588,368
4,814,191
5,030,861
5,274,941
(686,573
)
(13.0
)%
Agriculture
1,438,499
1,549,926
1,635,952
1,724,350
(285,851
)
(16.6
)%
Commercial non-real estate
1,710,938
1,897,569
2,054,478
2,181,656
(470,718
)
(21.6
)%
Residential real estate
631,688
660,450
708,086
830,102
(198,414
)
(23.9
)%
Consumer and other ¹
108,290
89,216
88,499
100,553
7,737
7.7
%
Total loans
8,477,783
9,011,352
9,517,876
10,111,602
(1,633,819
)
(16.2
)%
Less: Unamortized discount on acquired
loans and unearned net deferred fees and costs and loans in process
²
—
—
—
(35,460
)
35,460
(100.0
)%
Total loans
$
8,477,783
$
9,011,352
$
9,517,876
$
10,076,142
$
(1,598,359
)
(15.9
)%
1 Other loans primarily include consumer
and commercial credit cards, customer deposit account overdrafts,
leases. Loans in process are included in this category beginning
first quarter of fiscal year 2021.
2 Beginning in the first quarter of fiscal
year 2021, loan segments are presented based on amortized cost,
which includes unpaid principal balance, unamortized discount on
acquired loans, and unearned net deferred fees and costs, as a part
of the adoption of ASU 2016-13, Financial Instruments-Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments,
and subsequent related ASUs.
GREAT WESTERN BANCORP, INC.
Net Interest Margin (FTE) (Unaudited)
Three Months Ended
June 30, 2021
March 31, 2021
June 30, 2020
Average Balance
Interest (FTE)
Yield / Cost ¹
Average Balance
Interest (FTE)
Yield / Cost ¹
Average Balance
Interest (FTE)
Yield / Cost ¹
(dollars in thousands)
Assets
Interest-bearing bank deposits ²
$
1,357,821
$
306
0.09
%
$
818,162
$
213
0.11
%
$
144,805
$
112
0.31
%
Other interest-earning assets
121,981
348
1.14
%
71,330
192
1.09
%
—
—
—
%
Investment securities
2,318,325
8,642
1.50
%
2,167,784
8,318
1.56
%
1,987,648
10,532
2.13
%
Non-ASC 310-30 loans, net ³
8,500,919
94,923
4.48
%
9,016,221
101,851
4.58
%
9,974,802
109,326
4.41
%
ASC 310-30 loans, net ⁴
—
—
—
%
—
—
—
%
49,250
1,502
12.27
%
Loans, net
8,500,919
94,923
4.48
%
9,016,221
101,851
4.58
%
10,024,052
110,828
4.45
%
Total interest-earning assets
12,299,046
104,219
3.40
%
12,073,497
110,574
3.71
%
12,156,505
121,472
4.02
%
Noninterest-earning assets
743,109
602,004
598,159
Total assets
$
13,042,155
$
104,219
3.21
%
$
12,675,501
$
110,574
3.54
%
$
12,754,664
$
121,472
3.83
%
Liabilities and Stockholders'
Equity
Noninterest-bearing deposits
$
2,863,176
$
2,713,360
$
2,414,567
Interest-bearing deposits
7,834,032
$
2,618
0.13
%
7,550,507
$
3,196
0.17
%
6,974,915
$
5,604
0.32
%
Time deposits
863,923
887
0.41
%
1,004,405
1,283
0.52
%
1,430,246
4,407
1.24
%
Total deposits
11,561,131
3,505
0.12
%
11,268,272
4,479
0.16
%
10,819,728
10,011
0.37
%
Securities sold under agreements to
repurchase
74,785
14
0.08
%
69,282
13
0.08
%
64,645
15
0.09
%
FHLB advances and other borrowings
120,000
853
2.85
%
120,000
843
2.85
%
500,248
2,524
2.03
%
Subordinated debentures and subordinated
notes payable
108,913
789
2.91
%
108,879
792
2.95
%
108,766
1,070
3.96
%
Total borrowings
303,698
1,656
2.19
%
298,161
1,648
2.24
%
673,659
3,609
2.15
%
Total interest-bearing liabilities
11,864,829
$
5,161
0.17
%
11,566,433
$
6,127
0.21
%
11,493,387
$
13,620
0.48
%
Noninterest-bearing liabilities
63,535
59,680
97,553
Stockholders' equity
1,113,791
1,049,388
1,163,724
Total liabilities and stockholders'
equity
$
13,042,155
$
12,675,501
$
12,754,664
Net interest spread
3.04
%
3.33
%
3.35
%
Net interest income and net interest
margin (FTE)
$
99,058
3.23
%
$
104,447
3.51
%
$
107,852
3.57
%
Less: Tax equivalent adjustment
1,595
1,577
1,601
Net interest income and net interest
margin - ties to Statements of Comprehensive Income
$
97,463
3.18
%
$
102,870
3.46
%
$
106,251
3.52
%
1 Annualized for all partial-year
periods.
2 Interest income includes $0.1 million
for the third quarter of fiscal year 2020 resulting from interest
earned on derivative collateral included in other assets on the
consolidated balance sheets. For the third quarter of fiscal year
2021, all amounts were included in other interesting-earning
assets.
3 Interest income includes $0.0 million
and $0.2 million for the third quarter of fiscal years 2021 and
2020, respectively, resulting from accretion of purchase accounting
discount associated with acquired loans.
4 Beginning in the first quarter of fiscal
year 2021, ASC 310-30 loans began being reported with non-ASC
310-30 loans. Upon adoption of ASU 2016-13, Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments, and subsequent related ASUs, discounts on
ASC 310-30 loans related to noncredit factors accreted to interest
income were immaterial.
GREAT WESTERN BANCORP, INC.
Net Interest Margin (FTE) (Unaudited)
Nine Months Ended
June 30, 2021
June 30, 2020
Average Balance
Interest (FTE)
Yield / Cost ¹
Average Balance
Interest (FTE)
Yield / Cost ¹
(dollars in thousands)
Assets
Interest-bearing bank deposits ²
$
889,362
$
622
0.09
%
$
78,164
$
1,278
2.18
%
Other interest-earning assets
71,085
592
1.11
%
—
—
—
%
Investment securities
2,123,979
25,079
1.58
%
1,959,681
33,359
2.27
%
Non-ASC 310-30 loans, net ³
9,028,273
305,695
4.53
%
9,675,039
342,042
4.72
%
ASC 310-30 loans, net ⁴
—
—
—
%
50,639
4,610
12.16
%
Loans, net
9,028,273
305,695
4.53
%
9,725,678
346,652
4.76
%
Total interest-earning assets
12,112,699
331,988
3.66
%
11,763,523
381,289
4.33
%
Noninterest-earning assets
653,353
1,046,576
Total assets
$
12,766,052
$
331,988
3.48
%
$
12,810,099
$
381,289
3.98
%
Liabilities and Stockholders'
Equity
Noninterest-bearing deposits
$
2,746,884
$
2,111,445
Interest-bearing deposits
7,554,204
$
9,780
0.17
%
6,585,100
$
31,060
0.63
%
Time deposits
1,018,492
4,196
0.55
%
1,655,059
19,758
1.59
%
Total deposits
11,319,580
13,976
0.17
%
10,351,604
50,818
0.66
%
Securities sold under agreements to
repurchase
74,235
45
0.08
%
62,513
70
0.15
%
FHLB advances and other borrowings
120,000
2,558
2.85
%
526,372
8,737
2.22
%
Subordinated debentures and subordinated
notes payable
108,880
2,398
2.94
%
108,715
3,619
4.45
%
Total borrowings
303,115
5,001
2.21
%
697,600
12,426
2.38
%
Total interest-bearing liabilities
11,622,695
$
18,977
0.22
%
11,049,204
$
63,244
0.76
%
Noninterest-bearing liabilities
61,605
97,475
Stockholders' equity
1,081,752
1,663,420
Total liabilities and stockholders'
equity
$
12,766,052
$
12,810,099
Net interest spread
3.26
%
3.22
%
Net interest income and net interest
margin (FTE)
$
313,011
3.46
%
$
318,045
3.61
%
Less: Tax equivalent adjustment
4,770
4,638
Net interest income and net interest
margin - ties to Statements of Comprehensive Income
$
308,241
3.40
%
$
313,407
3.56
%
1 Annualized for all partial-year
periods.
2 Interest income includes $0.8 million
for fiscal year 2020 resulting from interest earned on derivative
collateral included in other assets on the consolidated balance
sheets. For fiscal year 2021, all amounts were included in other
interest-earning assets.
3 Interest income includes $0.0 million
and $1.2 million for the fiscal years 2021 and 2020, respectively,
resulting from accretion of purchase accounting discount associated
with acquired loans.
4 Beginning in the first quarter of fiscal
year 2021, ASC 310-30 loans began being reported with non-ASC
310-30 loans. Upon adoption of ASU 2016-13, Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments, and subsequent related ASUs, discounts on
ASC 310-30 loans related to noncredit factors accreted to interest
income were immaterial.
Non-GAAP Financial Measures and Reconciliation
We rely on certain non-GAAP financial measures in making
financial and operational decisions about our business. We believe
that each of the non-GAAP financial measures presented is helpful
in highlighting trends in our business, financial condition and
results of operations which might not otherwise be apparent when
relying solely on our financial results calculated in accordance
with GAAP. We disclose net interest income and related ratios and
analysis on a taxable-equivalent basis, which may also be
considered non-GAAP financial measures. We believe this
presentation to be the preferred industry measurement of net
interest income as it provides a relevant comparison of net
interest income arising from taxable and tax-exempt sources. In
addition, certain performance measures, including the efficiency
ratio and net interest margin utilize net interest income on a
taxable-equivalent basis.
In particular, we evaluate our profitability and performance
based on our adjusted net income, adjusted earnings per common
share, pre-tax pre-provision income ("PTPP"), tangible net income
and return on average tangible common equity. Our adjusted net
income and adjusted earnings per common share exclude the after-tax
effect of items with a significant impact to net income that we do
not believe to be recurring in nature, (e.g., one-time acquisition
expenses as well as the second quarter of fiscal year 2020 COVID-19
impact on credit and other related charges and the impairment of
goodwill and certain intangible assets). Our PTPP income excludes
total provision for credit losses, credit gains/losses on loans
held for investment measured at fair value and goodwill impairment.
Our tangible net income and return on average tangible common
equity exclude the effects of amortization expense relating to
intangible assets and our acquisitions of other institutions. We
believe these measures help highlight trends associated with our
financial condition and results of operations by providing net
income and return information excluding significant nonrecurring
items (for adjusted net income and adjusted earnings per common
share), measure our ability to generate capital by providing net
income excluding credit losses (for PTPP income) and measure net
income based on our cash payments and receipts during the
applicable period (for tangible net income and return on average
tangible common equity).
We also evaluate our profitability and performance based on our
adjusted net interest income, adjusted net interest margin,
adjusted interest income on loans and adjusted yield on loans. We
adjust each of these four measures to include the derivative
interest expense we use to manage interest rate risk on certain of
our loans, which we believe economically offsets the interest
income earned on the loans. Similarly, we evaluate our operational
efficiency based on our efficiency ratio, which excludes the effect
of amortization of core deposit and other intangibles (a non-cash
expense item) and includes the tax benefit associated with our
tax-advantaged loans.
We evaluate our financial condition based on the ratio of our
tangible common equity to our tangible assets and the ratio of our
tangible common equity to common shares outstanding. Our
calculation of this ratio excludes the effect of our goodwill and
other intangible assets. We believe this measure is helpful in
highlighting the common equity component of our capital and because
of its focus by federal bank regulators when reviewing the health
and strength of financial institutions in recent years and when
considering regulatory approvals for certain actions, including
capital actions. We also believe the ratio of our tangible common
equity to common shares outstanding is helpful in understanding our
stockholders’ relative ownership position as we undertake various
actions to issue and retire common shares outstanding.
Reconciliations for each of these non-GAAP financial measures to
the closest GAAP financial measures are included in the tables
below. Each of the non-GAAP financial measures presented should be
considered in context with our GAAP financial results included in
this release.
GREAT WESTERN BANCORP, INC.
Reconciliation of Non-GAAP Measures
(Unaudited)
At and for the nine months
ended:
At and for the three months
ended:
June 30, 2021
June 30, 2020
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
(dollars in thousands except
share and per share amounts)
Adjusted net income and adjusted
earnings per common share:
Net income (loss) - GAAP
$
151,367
$
(691,944
)
$
58,749
$
51,299
$
41,319
$
11,136
$
5,400
Add: COVID-19 related impairment of
goodwill and certain intangible assets, net of tax
—
713,013
—
—
—
—
—
Add: COVID-19 impact on credit and other
related charges, net of tax
—
56,685
—
—
—
—
—
Adjusted net income
$
151,367
$
77,754
$
58,749
$
51,299
$
41,319
$
11,136
$
5,400
Weighted average diluted common shares
outstanding
55,409,573
55,788,751
55,524,979
55,456,399
55,247,343
55,164,548
55,145,619
Earnings per common share - diluted
$
2.74
$
(12.40
)
$
1.06
$
0.93
$
0.75
$
0.20
$
0.10
Adjusted earnings per common share -
diluted
$
2.74
$
1.39
$
1.06
$
0.93
$
0.75
$
0.20
$
0.10
Pre-tax pre-provision income
("PTPP"):
Income (loss) before income taxes -
GAAP
$
195,696
$
(716,597
)
$
77,028
$
65,960
$
52,708
$
10,279
$
5,878
Add: Provision for credit losses -
GAAP
(13,800
)
101,539
(20,699
)
(5,000
)
11,899
16,853
21,641
Add: Change in fair value of FVO loans and
related derivatives - GAAP
(2,480
)
37,658
(4,110
)
(42
)
1,672
24,648
25,001
Add: Goodwill impairment - GAAP
—
742,352
—
—
—
—
—
Pre-tax pre-provision income
$
179,416
$
164,952
$
52,219
$
60,918
$
66,279
$
51,780
$
52,520
Tangible net income and return on
average tangible common equity:
Net income (loss) - GAAP
$
151,367
$
(691,944
)
$
58,749
$
51,299
$
41,319
$
11,136
$
5,400
Add: Amortization of intangible assets and
COVID-19 related impairment of goodwill and certain intangible
assets, net of tax
775
714,078
253
261
261
261
261
Tangible net income (loss)
$
152,142
$
22,134
$
59,002
$
51,560
$
41,580
$
11,397
$
5,661
Average common equity
$
1,081,752
$
1,663,420
$
1,113,791
$
1,049,388
$
1,082,077
$
1,174,996
$
1,163,724
Less: Average goodwill and other
intangible assets
5,744
498,644
5,485
5,742
6,004
6,265
6,527
Average tangible common equity
$
1,076,008
$
1,164,776
$
1,108,306
$
1,043,646
$
1,076,073
$
1,168,731
$
1,157,197
Return on average common equity *
18.7
%
(55.6
)%
21.2
%
19.8
%
15.2
%
3.8
%
1.9
%
Return on average tangible common equity
**
18.9
%
2.5
%
21.4
%
20.0
%
15.3
%
3.9
%
2.0
%
* Calculated as net income - GAAP divided
by average common equity. Annualized for partial-year periods.
** Calculated as tangible net income
divided by average tangible common equity. Annualized for
partial-year periods.
Adjusted net interest income and
adjusted net interest margin (fully-tax equivalent basis), on
non-ASC 310-30 loans:
Net interest income - GAAP
$
308,241
$
313,407
$
97,463
$
102,870
$
107,908
$
106,018
$
106,251
Add: Tax equivalent adjustment
4,770
4,638
1,595
1,577
1,598
1,508
1,601
Net interest income (FTE)
313,011
318,045
99,058
104,447
109,506
107,526
107,852
Add: Derivative interest expense
(9,692
)
(5,180
)
(3,117
)
(3,182
)
(3,393
)
(3,541
)
(3,040
)
Adjusted net interest income (FTE)
$
303,319
$
312,865
$
95,941
$
101,265
$
106,113
$
103,985
$
104,812
Average interest-earning assets
$12,112,699
$11,763,523
$12,299,046
$12,073,497
$11,965,555
$12,184,093
$12,156,505
Net interest margin (FTE) *
3.46
%
3.61
%
3.23
%
3.51
%
3.63
%
3.51
%
3.57
%
Adjusted net interest margin (FTE) **
3.35
%
3.55
%
3.13
%
3.40
%
3.52
%
3.40
%
3.47
%
* Calculated as net interest income (FTE)
divided by average interest earning assets. Annualized for
partial-year periods.
** Calculated as adjusted net interest
income (FTE) divided by average interest earning assets. Annualized
for partial-year periods.
Adjusted interest income and adjusted
yield (fully-tax equivalent basis), on non-ASC 310-30
loans:
Interest income - GAAP
$
300,925
$
337,404
$
93,328
$
100,274
$
107,323
$
106,305
$
107,725
Add: Tax equivalent adjustment
4,770
4,638
1,595
1,577
1,598
1,508
1,601
Interest income (FTE)
305,695
342,042
94,923
101,851
108,921
107,813
109,326
Add: Derivative interest expense
(9,692
)
(5,180
)
(3,117
)
(3,182
)
(3,393
)
(3,541
)
(3,040
)
Adjusted interest income (FTE)
$
296,003
$
336,862
$
91,806
$
98,669
$
105,528
$
104,272
$
106,286
Average non-ASC310-30 loans
$9,028,273
$9,675,039
$8,500,919
$9,016,221
$9,567,679
$9,977,591
$9,974,802
Yield (FTE) *
4.53
%
4.72
%
4.48
%
4.58
%
4.52
%
4.30
%
4.41
%
Adjusted yield (FTE) **
4.38
%
4.65
%
4.33
%
4.44
%
4.38
%
4.16
%
4.29
%
* Calculated as interest income (FTE)
divided by average loans. Annualized for partial-year periods.
** Calculated as adjusted interest income
(FTE) divided by average loans. Annualized for partial-year
periods.
Efficiency ratio:
Total revenue - GAAP
$
358,953
$
317,374
$
116,834
$
120,063
$
122,056
$
102,068
$
94,568
Add: Tax equivalent adjustment
4,770
4,638
1,595
1,577
1,598
1,508
1,601
Total revenue (FTE)
$
363,723
$
322,012
$
118,429
$
121,640
$
123,654
$
103,576
$
96,169
Noninterest expense
$
177,057
$
932,432
$
60,505
$
59,103
$
57,449
$
74,936
$
67,049
Less: Amortization of intangible assets
and COVID-19 related impairment of goodwill and certain intangible
assets
775
743,484
253
261
261
261
278
Tangible noninterest expense
$
176,282
$
188,948
$
60,252
$
58,842
$
57,188
$
74,675
$
66,771
Efficiency ratio *
48.5
%
58.7
%
50.9
%
48.4
%
46.2
%
72.1
%
69.4
%
* Calculated as the ratio of tangible
noninterest expense to total revenue (FTE).
Tangible common equity and tangible
common equity to tangible assets:
Total stockholders' equity
$
1,161,069
$
1,160,644
$
1,161,069
$
1,093,919
$
1,068,501
$
1,162,933
$
1,160,644
Less: Goodwill and other intangible
assets
5,390
6,425
5,390
5,643
5,904
6,164
6,425
Tangible common equity
$
1,155,679
$
1,154,219
$
1,155,679
$
1,088,276
$
1,062,597
$
1,156,769
$
1,154,219
Total assets
$
13,070,229
$
12,934,328
$
13,070,229
$
13,013,739
$
12,814,383
$
12,604,439
$
12,934,328
Less: Goodwill and other intangible
assets
5,390
6,425
5,390
5,643
5,904
6,164
6,425
Tangible assets
$
13,064,839
$
12,927,903
$
13,064,839
$
13,008,096
$
12,808,479
$
12,598,275
$
12,927,903
Tangible common equity to tangible
assets
8.8
%
8.9
%
8.8
%
8.4
%
8.3
%
9.2
%
8.9
%
Tangible book value per share:
Total stockholders' equity
$
1,161,069
$
1,160,644
$
1,161,069
$
1,093,919
$
1,068,501
$
1,162,933
$
1,160,644
Less: Goodwill and other intangible
assets
5,390
6,425
5,390
5,643
5,904
6,164
6,425
Tangible common equity
$
1,155,679
$
1,154,219
$
1,155,679
$
1,088,276
$
1,062,597
$
1,156,769
$
1,154,219
Common shares outstanding
55,116,095
55,014,047
55,116,095
55,111,403
55,105,105
55,014,189
55,014,047
Book value per share - GAAP
$
21.07
$
21.10
$
21.07
$
19.85
$
19.39
$
21.14
$
21.10
Tangible book value per share
$
20.97
$
20.98
$
20.97
$
19.75
$
19.28
$
21.03
$
20.98
1 All references to net interest income and net interest margin
are presented on a fully-tax equivalent basis unless otherwise
noted.
2 This is a non-GAAP financial measure management believes is
helpful to understanding trends in our business that may not be
fully apparent based only on the most comparable GAAP financial
measure. Further information on this financial measure and a
reconciliation to the most comparable GAAP financial measure is
provided at the end of this release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210729005174/en/
GREAT WESTERN BANCORP, INC. Investor Relations
Contact: Seth Artz, 605.988.9253
seth.artz@greatwesternbank.com
Media Contact: Lexie Feterl, 605.978.5829
alexis.feterl@greatwesternbank.com
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