Great Western Bancorp, Inc. Announces Fiscal Year 2018 Second Quarter Financial Results; Raises Dividend
Highlights for the Second Quarter of Fiscal Year 2018 (all comparisons in this document refer to the first quarter of fiscal year 2018, except as noted)
Net income and adjusted net income1 were both $40.5 million, or $0.69 per diluted share, for the second quarter, compared to net income of $29.2 million, or $0.49 per diluted share, and adjusted net income1 of $42.8 million, or $0.72 per diluted share, which excludes a nonrecurring charge to provision for income taxes related to the Tax Cuts and Jobs Act of 2017
Net interest margin and adjusted net interest margin1, 2 were 3.92% and 3.86%, increases of 3 and 6 basis points, respectively
The Company's Board of Directors declared a quarterly dividend of $0.25 per share, an increase of 25.0% compared to the most recent quarterly dividend, which reflects the benefits of the federal tax reform and our strong 1.40% return on assets
The efficiency ratio1 was 48.6% for the quarter and 47.2% for fiscal year-to-date
Total loans increased $172.9 million, or 1.9%, to $9.34 billion while total deposits grew by $362.8 million, or 4.0%, to $9.39 billion
Net charge-offs recognized during the quarter were 0.17% of average total loans on an annualized basis, a reduction compared to the previous five quarters
Sioux Falls, SD - April 26, 2018 - Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $40.5 million, or $0.69 per diluted share, for the second quarter of fiscal year 2018, compared to net income of $29.2 million, or $0.49 per diluted share. Adjusted net income1, which excludes the deferred tax revaluation triggered by the Tax Cuts and Jobs Act of 2017, was $40.5 million, or $0.69 per diluted share, compared to $42.8 million, or $0.72 per diluted share.
"The second quarter of fiscal year 2018 was another solid quarter for Great Western," said Ken Karels, Chairman, President and Chief Executive Officer. "We continued to see good demand from our loan portfolio, mitigated the rising cost of deposits through increasing loan yields pricing, continued to manage expenses well and increased our dividend due to the peer leading return on capital from our business."
Net Interest Income and Net Interest Margin 2
Net interest income was steady at $102.2 million for both the second quarter of fiscal year 2018 and the prior quarter. Higher loan interest income, driven by 2.4% growth in average loans outstanding and a 10 basis point increase in the yield on loans, was offset by higher interest expense associated with a 9 basis point increase in the cost of deposits and a 12 basis point increase in the cost of borrowings.
Net interest margin was 3.92% and 3.89%, respectively, for the quarters ended March 31, 2018 and December 31, 2017. Adjusted net interest margin1, which adjusts for the realized gain (loss) on interest rate swaps, was 3.86% and 3.80%, respectively, for the same periods. The yield on interest-earning assets increased by 12 basis points and the cost of interest-bearing liabilities increased by 10 basis points. A $0.8 million reduction in the cost of interest rate swaps was the primary driver of a more pronounced increase in adjusted net margin1 compared to net interest margin.
Total loans outstanding were $9.34 billion as of March 31, 2018, an increase of $172.9 million, or 1.9%, for the quarter, and 7.7% on an annualized basis. The majority of the growth during the quarter occurred in the commercial real estate ("CRE") segment of the portfolio, which increased by $172.1 million, including strong growth in non-owner-occupied CRE and construction loans. Commercial non-real estate loans increased by $71.9 million, which was partially offset by a decrease of $57.5 million in residential real estate.
Total deposits grew to $9.39 billion as of March 31, 2018, an increase of $362.8 million, or 4.0%, during the quarter. Noninterest-bearing deposits were $1.85 billion, a 4.0% decrease, for the quarter and interest-bearing deposits were $7.53 billion, a 6.2% increase for the quarter. FHLB and other borrowings decreased by $170.0 million, or 23.6%, as a result of deposit growth.
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, April 26, 2018 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.