SIOUX FALLS, S.D.--(BUSINESS WIRE)--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,
|
June 30,
|
|
June 30,
|
March 31,
|
June 30,
|
||||||||||||||
|
|
(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,
|
June 30,
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
June 30,
|
|||||||||||||||
|
(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,
|
June 30,
|
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
June 30,
|
|||||||||||||||||||||
|
(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,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
|
(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,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
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,
|
June 30,
|
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
June 30,
|
||||||||||||||
|
(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.
