Great Western Bancorp, Inc. Announces 13% Increase in EPS in Fiscal Year 2019 Second Quarter Financial Results; Raises Dividend
Highlights for the Second Quarter of Fiscal Year 2019 (all quarterly comparisons in this document refer to the first quarter of fiscal year 2019, except as noted)
Net income was $44.5 million, or $0.78 per diluted share, compared to $45.8 million, or $0.79 per diluted share, for the prior quarter and $40.5 million, or $0.69 per diluted share, for the second quarter of fiscal year 2018, a 13.0% increase
Net interest margin and adjusted net interest margin1, 2 were 3.75% and 3.76%, decreases of 6 and 5 basis points, respectively
Expense control remained strong with the efficiency ratio1 at 45.6% for the quarter and 45.8% for fiscal year-to-date
Total loans remained steady at $9.77 billion, with fiscal year-to-date growth at $355.0 million, or 3.8%
Total deposits grew to $10.47 billion, an increase of $355.1 million, or 3.5%, for the quarter and $734.9 million, or 7.6%, for fiscal year-to-date
Key asset quality metrics including nonaccrual loans and watch-rated loans improved during the quarter, while net charge-offs and substandard loans grew modestly
The Company's Board of Directors declared a quarterly dividend of $0.30 per share, an increase of 20% compared to the most recent quarterly dividend
Sioux Falls, SD - April 25, 2019 - Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $44.5 million, or $0.78 per diluted share, for the second quarter of fiscal year 2019, compared to net income of $45.8 million, or $0.79 per diluted share, for the first quarter of fiscal year 2019 and $40.5 million, or $0.69 per diluted share, for the second quarter of fiscal year 2018, a 13.0% increase.
"We are pleased with the progress we have made this quarter. Our earnings increased over the prior year, and our return on assets and equity remained strong," said Ken Karels, Chief Executive Officer and Chairperson of the Board. "In addition, asset quality metrics continue to trend in line with expectations during the quarter and our agriculture loan portfolio remaining steady."
Net Interest Income and Net Interest Margin2
Net interest income was $104.9 million for the quarter, a decrease of $1.5 million, or 1.4%. The decrease resulted from higher interest expense associated with the cost of deposits, partially offset by a higher yield on loans and investments.
Net interest margin was 3.75% and 3.81%, respectively, for the quarters ended March 31, 2019 and December 31, 2018. Adjusted net interest margin1, which adjusts for the realized gain (loss) on interest rate swaps, was 3.76% and 3.81%, respectively, for the same periods. The lower margins were primarily driven by the cost of deposits, which increased 13 basis points to 1.08%, partially offset by the yield on loans, which increased 6 basis points to 5.23%, and the yield on the investment portfolio, which increased 8 basis points to 2.52%. In addition, an increase in balance sheet liquidity and reversal of interest income on nonaccrual loans reduced adjusted net interest margin1 by 3 basis points during the quarter.
Total loans outstanding were $9.77 billion as of March 31, 2019, a marginal increase from the prior quarter, and growth of $355.0 million, or 3.8%, for fiscal year-to-date. During the quarter the commercial real estate ("CRE") category of the portfolio grew by $139.5 million, or 2.8%, mainly in the non-owner-occupied segment, partially offset by a reduction of $112.9 million, or 5.1%, in the agriculture category of the portfolio, which reflected the seasonal draws that were repaid in the second quarter of 2019 and one relationship moving into other repossessed property.
Total deposits grew to $10.47 billion as of March 31, 2019, an increase of $355.1 million, or 3.5%, for the quarter and $734.9 million, or 7.6%, for fiscal year-to-date. During the quarter, deposit inflows were driven by seasonal inflows. Interest-bearing deposits were $8.64 billion, a 5.0% increase for the quarter, and noninterest-bearing deposits were $1.82 billion, a 2.9% decrease for the quarter. FHLB and other borrowings decreased by $135.0 million, or 32.9%, for the quarter.
1 This is a non-GAAP financial measure management believes is helpful to understanding trends in the 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.
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 25, 2019 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.