Great Western Bancorp, Inc. Announces Earnings for First Quarter Fiscal Year 2021
Highlights for the First Quarter of Fiscal Year 2021 (all quarterly comparisons in this document refer to the fourth quarter of fiscal year 2020, except as noted)
•Net income of $41.3 million, or $0.75 per diluted share, up from $11.1 million, or $0.20 per diluted share
•Net interest income1 of $109.5 million, up from $107.5 million, with net interest margin1 of 3.63%, up from 3.51%
•Noninterest income of $14.1 million, up from a loss of $4.0 million
•Noninterest expense of $57.4 million, down from $74.9 million
•Average total loans of $9.57 billion, a decrease of $0.45 billion
◦Includes the sale of $208.8 million of loans secured by hotels, reducing the hotel (excluding casino hotels) portfolio size by 20.2%
•Average deposits of $11.13 billion, an increase of $0.10 billion
•Allowance for credit losses ("ACL") of $308.8 million of total loans, up $158.9 million
◦ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent related ASUs, ("CECL") adoption on October 1, 2020 resulted in a Day 1 increase of $177.3 million in the ACL and a cumulative effect adjustment decrease of $132.9 million (after-tax) to retained earnings.
•Net charge-offs of $30.4 million, or 1.22% of average total loans (annualized), up from $15.1 million and 0.59%, respectively
◦Excluding the impact from the hotel loan portfolio sales, net charge-offs were $4.8 million, or 0.19% of average total loans (annualized)
•Total capital ratio of 14.3%, up from 13.3%; tier 1 capital of 12.7%, up from 11.8%; common equity tier 1 capital of 12.0%, up from 11.0%
•The Company's Board of Directors declared a quarterly dividend of $0.01 per share
Sioux Falls, SD - January 27, 2021 - Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $41.3 million, or $0.75 per diluted share, for the first quarter of fiscal year 2021, compared to net income of $11.1 million, or $0.20 per diluted share, for the fourth quarter of fiscal year 2020.
"Our quarterly results reflect the meaningful progress in key areas over the past several months," said Mark Borrecco, President and Chief Executive Officer. "Our focus on credit risk management resulted in a 10.0% decrease in nonaccrual loans. We reduced our hotel (excluding casino hotels) portfolio by 20.2% through multiple sales at a 12.0% discount to loan value, and our deferrals tracked lower to 1.29% of loans excluding Paycheck Protection Program ("PPP") loans. Our adoption of CECL allowed us to build an ACL to total loans ratio of 3.50% (excluding PPP loans), and we managed funding and noninterest cost savings leading to $66.3 million of pre-tax pre-provision income2. Our conservative and measured actions helped further strengthen our total capital position to 14.3%."
"We have taken multiple steps to reshape our small business and treasury management functions, and I am excited that we saw progress this past quarter. While in the near term we will continue to focus on improving asset quality and de-risking the balance sheet, we are implementing initiatives to simplify processes and improve client experience."
Impact and Response to COVID-19 Pandemic
We remain focused on keeping our employees safe and our bank running effectively to serve our customers. We are managing branch access and occupancy levels in relation to cases and close contact scenarios, encouraging remote work and supporting our employees with paid time off and following CDC guidelines for those working in the office. For our customers, we are supporting PPP, having provided $727.3 million in loans to over 4,800 customers and now having processed $27.8 million of loans through the forgiveness pathway. We are prepared to provide additional PPP lending as part of the recently enacted Economic Aid to Hard Hit Small Businesses, Non-Profits, and Ventures Act.
Net Interest Income and Net Interest Margin1
Net interest income was $109.5 million for the quarter, an increase of $2.0 million, while net interest margin was 3.63%, a 12 basis point increase from 3.51%. Adjusted net interest income2 was $106.1 million, an increase of $2.1 million, and adjusted net interest
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, January 27, 2021 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.