Great Western Bancorp, Inc. Announces Fiscal Year 2017 Fourth Quarter Financial Results; Strong Net Income Growth in Fiscal Year 2017
Highlights for the Fourth Quarter and Full Fiscal Year 2017 (all comparisons in this document refer to the third quarter of fiscal year 2017, except as noted)
Fourth quarter net income was $37.7 million, or $0.64 per diluted share, compared to $33.8 million, or $0.57 per diluted share, for the same period in fiscal year 2016, an 11.6% increase
Net income for fiscal year 2017 was $144.8 million, or $2.45 per diluted share, compared to $121.3 million, or $2.14 per diluted share for fiscal year 2016, a 14.5% increase
Net interest margin and adjusted net interest margin1, 2 were 4.00% and 3.90%, respectively, for the fourth quarter of fiscal year 2017 compared to 4.00% and 3.87%, respectively, for the prior quarter
The efficiency ratio1 remains attractive at 47.1% for the quarter compared to 46.7%
Approximately 200 thousand shares of common stock were repurchased and retired during the quarter under the authorized stock repurchase program
Total loans grew $176.7 million, or 2.0%, during the fourth quarter of fiscal year 2017
Sioux Falls, SD - October 26, 2017 - Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $37.7 million, or $0.64 per diluted share, for the fourth quarter of fiscal year 2017, compared to net income of $35.1 million, or $0.59 per diluted share, for the third quarter of fiscal year 2017. Net income for fiscal year 2017 was $144.8 million, or $2.45 per diluted share, compared to $121.3 million, or $2.14 per diluted share, for fiscal year 2016.
"I am glad to report today that we continued our long-standing trend of growing annual net income and earnings per share again in fiscal year 2017," said Ken Karels, Chairman, President and Chief Executive Officer. "We were able to deliver significant year-over-year growth including a 19.4% increase in net income, a 14.5% increase in diluted earnings per share and 10.0% increase in tangible book value per share while maintaining a peer-leading efficiency ratio. These financial outcomes are the result of the hard work of all of our employees to do what is right for our customers and the organization and I want to thank everyone for that hard work and dedication throughout the year."
Net Interest Income and Net Interest Margin2
Net interest income was $103.7 million for the fourth quarter of fiscal year 2017, compared to $100.9 million, an increase of $2.8 million, or 2.8%. The increase was primarily attributable to higher loan interest income driven by growth of 1.9% in average loans outstanding between the periods combined with a 7 basis point increase in the yield on total loans, partially offset by a 5 basis point increase in the cost of deposits. The yield on non-ASC 310-30 loans increased by 4 basis points between the two periods, while the yield on ASC 310-30 loans, which are purchased credit impaired loans with a different income recognition model, increased as a result of accelerated accretion on an acquired loan pool.
Net interest margin was 4.00% for each of the quarters ended September 30, 2017 and June 30, 2017. Adjusted net interest margin1, which adjusts for the realized gain (loss) on interest rate swaps, was 3.90% and 3.87%, respectively, for the same periods, representing a 3 basis point increase. Net interest margin remained stable primarily due to a 6 basis point rise in the yield on interest-earning assets, offset by a 6 basis point rise in the cost of interest-bearing liabilities. The growth in the adjusted net interest margin1 was driven by a reduction in the cost of interest rate swaps of $0.6 million, as a result of increases in short-term LIBOR rates.
Total loan growth during the fourth quarter of fiscal year 2017 was $176.7 million, or 2.0%. The net growth during the quarter was primarily driven by $159.2 million of commercial real estate ("CRE") loan growth and $35.0 million of agriculture loan growth, partially offset by a $20.4 million reduction in residential real estate loans outstanding.
Total loans increased by $285.9 million compared to September 30, 2016. Loan growth for the year was impacted by a $64.3 million reduction to the fair value of the $1.02 billion segment of the loan portfolio carried at fair value resulting from changes in market interest rates, which primarily occurred in our first fiscal quarter. Aside from this change, which was offset by the changes in the fair value of the related derivatives hedging the interest rate risk in this portfolio, and which had no impact to net income, customer loan balances increased by $350.2 million, or 4.1%.
1 This is a non-GAAP measure management believes is helpful to understanding trends in the business that may not be fully apparent based only on the most comparable GAAP measure. Further information on this measure and a reconciliation to the most comparable GAAP measure is provided at the end of this release.
2 All references to net interest income and net interest margin are presented on a fully-tax equivalent basis unless otherwise noted.
The following information was filed by Great Western Bancorp, Inc. (GWB) on Thursday, October 26, 2017 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.