Great Western Bancorp, Inc. Announces Earnings for Fourth Quarter & Full Fiscal Year 2020
Highlights for the Fourth Quarter of Fiscal Year 2020 (all quarterly comparisons in this document refer to the third quarter of fiscal year 2020, except as noted)
•Net income of $11.1 million, or $0.20 per diluted share, compared to net income of $5.4 million, or $0.10 per diluted share
•Net interest income of $107.5 million, compared to $107.9 million, with net interest margin 1 of 3.51%, down from 3.57%
•Noninterest loss of $4.0 million, compared to a loss of $11.7 million
•Average net loans of $10.02 billion, flat with prior quarter
•Average deposits of $11.03 billion, an increase of $0.21 billion
•Allowance for loan and lease losses of 1.49% of total loans, up 5 basis points; net chargeoffs of $15.1 million and 0.59% of average total loans (annualized), up $5.7 million and 22 basis points, respectively
•Capital ratios increased to 11.8% and 13.3% for Tier 1 and total capital, respectively, and 11.0% for common equity tier one capital
•The Company's Board of Directors declared a quarterly dividend of $0.01 per share
Sioux Falls, SD - October 28, 2020 - Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $11.1 million, or $0.20 per diluted share, for the fourth quarter of fiscal year 2020, compared to net income of $5.4 million, or $0.10 per diluted share, for the third quarter of fiscal year 2020. Net loss for fiscal year 2020 was $680.8 million, or $12.24 per diluted share. Adjusted net income 2 which excludes the COVID-19 pandemic impact on goodwill, certain intangible assets and credit and other related charges, was $88.9 million, or $1.60 per diluted share, compared to net income of $167.4 million, or $2.92 per diluted share for fiscal year 2019.
"This quarter's results bring to a close what has been a challenging fiscal year," said Mark Borrecco, President and Chief Executive Officer. "Our underlying earnings were again offset with increased credit charges and costs from strategic actions to improve the position of the bank. This includes the closure of our Wichita LPO, a reduction of FTEs to align with current market conditions, payoff of $205.0 million in FHLB borrowings to right-size the balance sheet and improve future earnings, and a commitment to a new platform to support our small business initiative. Asset quality continues to be our primary focus resulting in higher frequency monitoring and proactive issue identification. We used a third party to complete a supplemental review of critical areas of the loan portfolio this quarter, confirming the risk ratings of our portfolio. As a result of the actions we have taken, including the dividend reductions, we saw an improvement of our capital ratios as we remain above well-capitalized regulatory limits."
"The COVID-19 pandemic is still running its course, and the uncertainty of its continued impact on the economy and on families and individuals is not something we are taking lightly. As we work through these difficult times, we continue to seek to make conservative decisions as we pivot and optimize our resources in this time of disruption. I continue to be proud of the contributions made by our employees as we maintain our focus on serving our customers and supporting our communities."
Impact and Response to COVID-19 Pandemic
Through this time of disruption we remain committed to keeping our employees safe and our bank running effectively to serve our customers. We have reopened all of our branches and are continuing shut down protocols according to CDC guidelines when we become aware of a possible close contact scenario, and a majority of our employees who can work outside of our offices are doing so. Social distancing, restrictions on in-person meetings and conferences, company travel restrictions and increased sanitary protocols all remain in place and are all intended to offer the best protection for our employees and customers and enhance our ability to provide our banking services. We are supporting our employees with paid time off, work from home flexibility and paid time for volunteering. Finally, we supported the Paycheck Protection Program, having provided $727.3 million in loans to over 4,800 customers, improved engagement with customers in impacted segments, and remained committed to working with customers for solutions as we transition through loan deferral expirations and new requests.
Net Interest Income and Net Interest Margin 1
Net interest income was $107.5 million for the quarter, a decrease of $0.3 million, or 0.3%, from the prior quarter. Interest income was lower by $3.0 million as a result of decreases in loan interest of $1.8 million and securities interest of $1.2 million, primarily as a result of repricing in a lower rate environment. The decrease in interest income was offset with a $2.7 million reduction in interest expense as a result of a $2.2 million decrease in deposit interest due to lower rates on interest-bearing deposits combined with time deposit runoff, and a $0.5 million decrease in interest as a result of a reduction in higher interest borrowings.
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 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.
The following information was filed by Great Western Bancorp, Inc. (GWB) on Wednesday, October 28, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.