Great Western Bancorp, Inc. Announces Fourth Quarter and Fiscal Year 2019 Financial Results; 9.4% Increase in Diluted EPS and 10.5% Increase in TBV for Fiscal Year 2019

Highlights for the Fourth Quarter of Fiscal Year 2019 (all quarterly comparisons in this document refer to the third quarter of fiscal year 2019, except as noted)

  • Net income was $50.3 million, or $0.89 per diluted share, compared to $26.8 million, or $0.47 per diluted share
  • Net interest margin remained stable at 3.70% while adjusted net interest margin1, 2 decreased 2 basis points to 3.69%
  • Noninterest expenses were well controlled during the quarter contributing to an efficiency ratio1 of 44.5%
  • Total loans declined $180.2 million, or 1.8%, for the quarter
  • Total deposits increased $64.4 million, or 0.6%, for the quarter
  • Credit-related charges were substantially reduced from the prior quarter to $4.2 million
  • Approximately 0.7 million shares of common stock were repurchased and retired during the quarter under the authorized stock repurchase program, bringing total common stock repurchased to 2.7 million shares for fiscal year 2019

Highlights for Fiscal Year 2019 (all fiscal year comparisons refer to fiscal year 2018, except as noted)

  • Net income was $167.4 million, or $2.92 per diluted share, compared to $157.9 million, or $2.67 per diluted share, a 9.4% increase
  • Net interest margin and adjusted net interest margin1, 2 were 3.74%, a decrease from the prior fiscal year of 15 and 10 basis points, respectively
  • Efficiency ratio1 was 45.8% for fiscal year 2019 compared to 47.1% for fiscal year 2018
  • Total loans were $9.71 billion, an increase of $290.8 million, or 3.1%, and total deposits increased $566.8 million, or 5.8%, to $10.30 billion
  • Profitability remains strong with return on tangible common equity1 of 15.3% and tangible book value1 increased 10.5% for the fiscal year

SIOUX FALLS, S.D.--()--Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $50.3 million, or $0.89 per diluted share, for the fourth quarter of fiscal year 2019, compared to net income of $26.8 million, or $0.47 per diluted share, for the third quarter of fiscal year 2019. Net income for fiscal year 2019 was $167.4 million, or $2.92 per diluted share, compared to $157.9 million, or $2.67 per diluted share for fiscal year 2018.

"Overall we are pleased with the performance of the Company for the 2019 fiscal year, with an increase in tangible book value per share over 10% for the year," said Ken Karels, Chairperson of the Board, President and Chief Executive Officer. "I am confident that while asset quality metrics have deteriorated through the latter half of 2019, the team has a good plan to manage these metrics during 2020."

Net Interest Income and Net Interest Margin2
Net interest income was $108.2 million for the quarter, an increase of $1.1 million, or 1.1%. The increase was primarily attributable to a slightly higher interest-bearing bank deposits yield during the quarter combined with a decrease in the cost of deposits. The cost of deposits modestly decreased 5 basis points during the quarter, compared to an increase of 3 basis points in the previous quarter.

Net interest margin was 3.70% each of the quarters ended September 30, 2019 and June 30, 2019. Adjusted net interest margin1, which adjusts for the realized gain (loss) on interest rate swaps, was 3.69% and 3.71%, respectively, for the same periods. The lower margins were primarily driven by the yield on loans, which decreased 3 basis points to 5.22%, offset by the cost of deposits, which had a moderate decrease of 5 basis points to 1.06%.

Total loans outstanding were $9.71 billion as of September 30, 2019, a decrease of $180.2 million, or 1.8%, during the quarter, and an increase of $290.8 million, or 3.1%, for the fiscal year. The decline in loans during the quarter was mainly attributable to commercial loans refinancing to other lenders in this competitive rate environment. The majority of the growth for the fiscal year occurred in the commercial real estate ("CRE") segment of the portfolio, which grew by $463.1 million, or 10.0%, mainly in the non-owner-occupied category, partially offset by a reduction in the agriculture segment of $174.0 million, or 8.0%.

————————————————————————————————————————————————————

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.

Total deposits were $10.30 billion as of September 30, 2019, increases of $64.4 million, or 0.6%, for the quarter and $566.8 million, or 5.8%, for the fiscal year. During the quarter, deposit increases were driven by an increase in brokered deposits as a cost effective source of funding. Interest-bearing deposits were $8.34 billion, a 0.5% increase for the quarter, and noninterest-bearing deposits were $1.96 billion, a 1.0% increase for the quarter. FHLB and other borrowings decreased by $265.0 million, or 43.8%, for the quarter as a result of deposit funding being more cost effective.

Provision for Loan and Lease Losses and Asset Quality
Provision for loan and lease losses was $2.0 million for the quarter, a decrease of $24.1 million. Net charge-offs for the quarter were $7.8 million, or 0.31% of average total loans on an annualized basis, with the majority of net charge-offs concentrated in the agriculture and commercial non-real estate segments of the loan portfolio. The ratio of allowance for loan and lease losses ("ALLL") to total loans decreased to 0.73% as of September 30, 2019 from 0.77% as of the prior quarter.

Included within total loans are approximately $813.0 million of loans for which management has elected the fair value option. These loans are excluded from the ALLL process, but management has estimated that approximately $6.8 million of the fair value adjustment for these loans relates to credit risk, or 0.07% of total loans. Finally, total purchase discount remaining on all acquired loans equates to 0.14% of total loans.

Nonaccrual loans were $107.2 million as of September 30, 2019, representing a decrease of $10.9 million for the quarter. Loans graded "Watch" increased $184.7 million, or 83.6%, to $405.5 million for the quarter, while loans graded "Substandard" decreased $3.5 million, or 0.7%, to $472.5 million for the quarter. The increase in loans graded "Watch" was primarily due to a deterioration during the quarter of a small number of dairy relationships and a commercial non-real estate relationship. Total other repossessed property balances were $36.8 million as of September 30, 2019, an increase of $0.4 million, or 1.0%.

Total credit-related charges for the current fiscal year increased compared to fiscal year 2018, while the current quarter decreased compared to the previous quarter and the comparable quarter of fiscal year 2018. A summary of total credit-related charges incurred during the current and comparable fiscal year and current, previous and comparable quarters is presented below:

GREAT WESTERN BANCORP, INC.

Summary of Credit-Related Charges (Unaudited)

 

 

 

 

 

 

 

 

 

 

For the twelve months ended:

 

For the three months ended:

Item

Included within F/S Line Item(s):

September 30,
2019

September 30,
2018

 

September 30,
2019

  June 30,  
2019

September 30,
2018

 

 

(dollars in thousands)

Provision for loan and lease losses

Provision for loan and lease losses

$

40,947

$

17,986

 

$

1,982

$

26,077

$

5,015

Net other repossessed property charges

Net loss on repossessed property and other related expenses

4,367

4,369

 

305

595

2,850

Reversal (recovery) of interest income on nonaccrual loans

Interest income on loans

312

1,901

 

(157)

173

774

Loan fair value adjustment related to credit

Net increase (decrease) in fair value of loans at fair value

7,664

194

 

2,085

4,817

(3)

Total

 

$

53,290

$

24,450

 

$

4,215

$

31,662

$

8,636

Noninterest Income
Noninterest income was $15.0 million, an increase of $4.3 million, or 39.5%, for the quarter. Included within noninterest income is the net change in fair value of loans for which the Company has elected the fair value option and the net realized and unrealized gain (loss) of the related derivatives which generated a $3.0 million favorable change over the prior quarter. The increase in this line item was mainly due to a $2.7 million reduction in credit charges on loans held at fair value and a $0.4 million decrease in the counterparty credit valuation adjustment on the derivative portfolio. The remainder of the increase was due to a $1.4 million increase in service charges and other fees. The increase in service charges and other fees was due to an increase in interchange income and net overdraft and non-sufficient funds fee income.

Noninterest Expense
Total noninterest expense was $55.2 million, a decrease of $0.8 million, or 1.4%, for the quarter. Substantially all of the decrease was driven by a $0.8 million decrease in salaries and employee benefits due to a decrease in incentive compensation expense during the quarter.

The efficiency ratio1 was 44.5% for the quarter, a decrease from 47.2%, mainly due to lower incentive compensation in addition to higher total revenue driven by lower cost of deposits.

Provision for Income Taxes
The provision for income taxes for the quarter ended September 30, 2019 was $14.3 million, reflecting an effective tax rate of 22.1%, compared to an effective tax rate of 22.0% in the prior quarter.

Capital
Tier 1 and total capital ratios were 11.7% and 12.7%, respectively, as of September 30, 2019, compared to 11.3% and 12.4% as of June 30, 2019. The common equity tier 1 capital ratio and tier 1 leverage ratio were 11.0% and 10.1%, respectively, as of September 30, 2019 compared to 10.6% and 10.0% as of June 30, 2019. All regulatory capital ratios remain above regulatory minimums to be considered "well capitalized."

During the quarter, $19.7 million was deployed to repurchase and retire approximately 0.7 million shares of Company's common stock under the repurchase program authorized by the Board of Directors at an average price of $30.01.

On October 24, 2019, the Company’s Board of Directors declared a dividend of $0.30 per common share payable on November 29, 2019 to stockholders of record as of close of business on November 15, 2019. The aggregate dividend payment will be approximately $16.9 million.

Business Outlook
"We are pleased with how the Company is positioned as the interest rate yield curve provides a more uncertain outlook into our fiscal 2020 year. We will continue to remain disciplined on loan pricing and structure to ensure we keep the bank safe," added Karels. "During fiscal year 2020, we will look to improve our asset quality metrics; if this results in lower balance sheet growth we feel it is the right thing to do for the long term perspective of the Company."

Conference Call
Great Western Bancorp, Inc. will host a conference call to discuss its financial results for the fourth quarter of fiscal year 2019 on Thursday, October 24, 2019 at 7:30 AM (CT). The call can be accessed by dialing (855) 238-8837 approximately 10 minutes prior to the start time. Please ask to be joined into the Great Western Bancorp, Inc. (GWB) call. International callers should dial (412) 542-4114. The call will also be broadcast live over the Internet and can be accessed in the Investor Relations section of Great Western’s website at www.greatwesternbank.com. A replay will be available beginning one hour following the conference call and ending on November 7, 2019. To access the replay, dial (877) 344-7529 (U.S.) and use conference ID 10135148. International callers should dial (412) 317-0088 and enter the same conference ID number.

About Great Western Bancorp, Inc.
Great Western Bancorp, Inc. is the holding company for Great Western Bank, a full-service regional bank focused on relationship-based business and agribusiness banking. Great Western Bank offers small and mid-sized businesses a focused suite of financial products and a range of deposit and loan products to retail customers through several channels, including the branch network, online banking system, mobile banking applications and customer care centers. The bank services its customers through more than 170 branches in nine states: Arizona, Colorado, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota. To learn more about Great Western Bank visit www.greatwesternbank.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements about Great Western Bancorp, Inc.’s expectations, beliefs, plans, strategies, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “views,” “intends” and similar words or phrases. In particular, the statements included in this press release concerning Great Western Bancorp, Inc.’s expected performance and strategy, the outlook for its agricultural lending segment and the interest rate environment are not historical facts and are forward-looking. Accordingly, the forward-looking statements in this press release are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed. All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Any forward-looking statements are qualified in their entirety by reference to the factors discussed in the sections titled “Item 1A. Risk Factors” and "Cautionary Note Regarding Forward-Looking Statements" in Great Western Bancorp, Inc.’s Annual Report on Form 10-K for the most recently ended fiscal year, and in other periodic filings with the Securities and Exchange Commission. Further, any forward-looking statement speaks only as of the date on which it is made, and Great Western Bancorp, Inc. undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

GREAT WESTERN BANCORP, INC.

Consolidated Financial Data (Unaudited)

 

 

 

 

 

 

At and for the twelve months ended:

 

At and for the three months ended:

 

September 30,
2019

September 30,
2018

 

September 30,
2019

June 30,
2019

March 31,
2019

December 31,
2018

September 30,
2018

 

(dollars in thousands, except share and per share amounts)

Operating Data:

 

 

 

 

 

 

 

 

Interest income (FTE)

$

548,760

$

488,434

 

$

140,257

$

139,623

$

135,328

$

133,551

$

126,921

Interest expense

122,209

74,000

 

32,061

32,570

30,411

27,167

23,244

Noninterest income

60,732

73,609

 

15,023

10,766

18,223

16,720

19,255

Noninterest expense

224,898

231,425

 

55,212

56,000

56,580

57,106

59,550

Provision for loan and lease losses

40,947

17,986

 

1,982

26,077

7,673

5,215

5,015

Net income

167,365

157,916

 

50,285

26,783

44,511

45,786

42,281

Adjusted net income ¹

$

167,365

$

171,502

 

$

50,285

$

26,783

$

44,511

$

45,786

$

42,281

Common shares outstanding

56,283,659

58,917,147

 

56,283,659

56,939,032

56,938,435

56,938,435

58,917,147

Weighted average diluted common shares outstanding

57,257,061

59,131,650

 

56,804,172

57,110,103

57,074,674

58,039,292

59,122,699

Earnings per common share - diluted

$

2.92

$

2.67

 

$

0.89

$

0.47

$

0.78

$

0.79

$

0.72

Adjusted earnings per common share - diluted ¹

$

2.92

$

2.90

 

$

0.89

$

0.47

$

0.78

$

0.79

$

0.72

Performance Ratios:

 

 

 

 

 

 

 

 

Net interest margin (FTE) ¹ ²

3.74

%

3.89

%

 

3.70

%

3.70

%

3.75

%

3.81

%

3.79

%

Adjusted net interest margin (FTE) ¹ ²

3.74

%

3.84

%

 

3.69

%

3.71

%

3.76

%

3.81

%

3.77

%

Return on average total assets ²

1.33

%

1.34

%

 

1.55

%

0.84

%

1.44

%

1.48

%

1.40

%

Return on average common equity ²

9.1

%

8.8

%

 

10.6

%

5.8

%

9.9

%

10.0

%

9.2

%

Return on average tangible common equity ¹ ²

15.3

%

15.3

%

 

17.6

%

9.7

%

16.9

%

17.1

%

15.7

%

Efficiency ratio ¹

45.8

%

47.1

%

 

44.5

%

47.2

%

45.6

%

46.1

%

48.1

%

Capital:

 

 

 

 

 

 

 

 

Tier 1 capital ratio

11.7

%

12.0

%

 

11.7

%

11.3

%

11.4

%

11.1

%

12.0

%

Total capital ratio

12.7

%

13.0

%

 

12.7

%

12.4

%

12.4

%

12.1

%

13.0

%

Tier 1 leverage ratio

10.1

%

10.7

%

 

10.1

%

10.0

%

10.2

%

10.1

%

10.7

%

Common equity tier 1 ratio

11.0

%

11.3

%

 

11.0

%

10.6

%

10.7

%

10.4

%

11.3

%

Tangible common equity / tangible assets ¹

9.6

%

9.6

%

 

9.6

%

9.3

%

9.2

%

9.0

%

9.6

%

Book value per share - GAAP

$

33.76

$

31.24

 

$

33.76

$

33.04

$

32.53

$

31.82

$

31.24

Tangible book value per share ¹

$

20.52

$

18.57

 

$

20.52

$

19.94

$

19.43

$

18.72

$

18.57

Asset Quality:

 

 

 

 

 

 

 

 

Nonaccrual loans

$

107,191

$

143,206

 

$

107,191

$

118,060

$

121,616

$

138,944

$

143,206

Other repossessed property

$

36,764

$

23,074

 

$

36,764

$

36,393

$

32,450

$

22,224

$

23,074

Nonaccrual loans / total loans

1.10

%

1.52

%

 

1.10

%

1.19

%

1.24

%

1.42

%

1.52

%

Net charge-offs (recoveries)

$

34,713

$

16,949

 

$

7,754

$

17,534

$

5,863

$

3,562

$

5,163

Net charge-offs (recoveries) / average total loans ²

0.36

%

0.18

%

 

0.31

%

0.72

%

0.25

%

0.15

%

0.22

%

Allowance for loan and lease losses / total loans

0.73

%

0.69

%

 

0.73

%

0.77

%

0.70

%

0.68

%

0.69

%

Watch-rated loans

$

405,549

$

343,288

 

$

405,549

$

220,883

$

301,099

$

321,593

$

343,288

Substandard loans

$

472,497

$

252,660

 

$

472,497

$

475,999

$

258,946

$

252,521

$

252,660

 

 

 

 

 

 

 

 

 

1 This is a non-GAAP financial measure management believes is helpful to interpreting our financial results. See the tables at the end of this document for the calculation of the measure and reconciliation to the most comparable GAAP measure.

2 Annualized for all partial-year periods.

 

GREAT WESTERN BANCORP, INC.

Consolidated Income Statement (Unaudited)

 

 

 

 

 

 

At and for the twelve months ended:

 

At and for the three months ended:

 

September 30,
2019

September 30,
2018

 

September 30,
2019

June 30,
2019

March 31,
2019

December 31,
2018

September 30,
2018

 

(dollars in thousands)

Interest income

 

 

 

 

 

 

 

 

Loans

$

498,935

$

451,290

 

$

126,779

$

126,392

$

123,432

$

122,331

$

117,095

Investment securities

41,510

29,171

 

10,935

11,430

9,957

9,189

7,645

Federal funds sold and other

2,472

1,376

 

1,056

377

497

541

494

Total interest income

542,917

481,837

 

138,770

138,199

133,886

132,061

125,234

Interest expense

 

 

 

 

 

 

 

 

Deposits

106,718

60,112

 

27,211

28,615

27,098

23,794

19,996

FHLB advances and other borrowings

9,951

8,848

 

3,487

2,538

1,923

2,003

1,907

Subordinated debentures and subordinated notes payable

5,540

5,040

 

1,363

1,417

1,390

1,370

1,341

Total interest expense

122,209

74,000

 

32,061

32,570

30,411

27,167

23,244

Net interest income

420,708

407,837

 

106,709

105,629

103,475

104,894

101,990

Provision for loan and lease losses

40,947

17,986

 

1,982

26,077

7,673

5,215

5,015

Net interest income after provision for loan and lease losses

379,761

389,851

 

104,727

79,552

95,802

99,679

96,975

Noninterest income

 

 

 

 

 

 

 

 

Service charges and other fees

43,893

51,077

 

11,674

10,321

10,209

11,689

13,198

Wealth management fees

8,914

9,219

 

2,322

2,234

2,117

2,241

2,458

Mortgage banking income, net

4,848

5,842

 

1,482

1,055

991

1,320

1,664

Net (loss) gain on sale of securities

(178)

6

 

13

322

(513)

Net increase (decrease) in fair value of loans at fair value

61,412

(45,407)

 

11,749

16,429

14,018

19,216

(14,535)

Net realized and unrealized (loss) gain on derivatives

(63,444)

44,596

 

(13,191)

(20,904)

(11,032)

(18,317)

14,995

Other

5,287

8,276

 

974

1,309

1,920

1,084

1,475

Total noninterest income

60,732

73,609

 

15,023

10,766

18,223

16,720

19,255

Noninterest expense

 

 

 

 

 

 

 

 

Salaries and employee benefits

136,305

135,352

 

33,099

33,899

34,537

34,770

33,691

Data processing and communication

24,077

29,805

 

6,602

6,234

5,964

5,278

6,554

Occupancy and equipment

20,784

20,330

 

5,185

4,934

5,539

5,126

5,219

Professional fees

14,579

17,891

 

3,398

3,923

3,970

3,288

5,326

Advertising

4,493

4,507

 

1,194

1,145

1,216

938

1,066

Net loss on repossessed property and other related expenses

4,367

4,369

 

305

595

404

3,063

2,850

Other

20,293

19,171

 

5,429

5,270

4,950

4,643

4,844

Total noninterest expense

224,898

231,425

 

55,212

56,000

56,580

57,106

59,550

Income before income taxes

215,595

232,035

 

64,538

34,318

57,445

59,293

56,680

Provision for income taxes

48,230

74,119

 

14,253

7,535

12,934

13,507

14,399

Net income

$

167,365

$

157,916

 

$

50,285

$

26,783

$

44,511

$

45,786

$

42,281

GREAT WESTERN BANCORP, INC.

Summarized Consolidated Balance Sheet (Unaudited)

 

 

 

As of

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

September 30,
2018

 

(dollars in thousands)

Assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

243,474

 

$

225,356

 

$

282,638

 

$

276,760

 

$

298,696

Investment securities

1,783,208

 

1,799,430

 

1,763,305

 

1,531,916

 

1,385,650

Total loans

9,706,763

 

9,886,971

 

9,770,911

 

9,767,476

 

9,415,924

Allowance for loan and lease losses

(70,774)

 

(76,546)

 

(68,003)

 

(66,193)

 

(64,540)

Loans, net

9,635,989

 

9,810,425

 

9,702,908

 

9,701,283

 

9,351,384

Goodwill

739,023

 

739,023

 

739,023

 

739,023

 

739,023

Other assets

386,607

 

380,662

 

342,288

 

324,659

 

342,055

Total assets

$

12,788,301

 

$

12,954,896

 

$

12,830,162

 

$

12,573,641

 

$

12,116,808

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,956,025

 

$

1,936,986

 

$

1,824,507

 

$

1,879,883

 

$

1,842,704

Interest-bearing deposits

8,344,314

 

8,298,958

 

8,643,876

 

8,233,364

 

7,890,795

Total deposits

10,300,339

 

10,235,944

 

10,468,383

 

10,113,247

 

9,733,499

Securities sold under agreements to repurchase

68,992

 

56,925

 

62,537

 

56,649

 

90,907

FHLB advances and other borrowings

340,000

 

605,000

 

275,000

 

410,000

 

275,000

Other liabilities

178,721

 

175,899

 

171,848

 

181,737

 

176,851

Total liabilities

10,888,052

 

11,073,768

 

10,977,768

 

10,761,633

 

10,276,257

Stockholders' equity

1,900,249

 

1,881,128

 

1,852,394

 

1,812,008

 

1,840,551

Total liabilities and stockholders' equity

$

12,788,301

 

$

12,954,896

 

$

12,830,162

 

$

12,573,641

 

$

12,116,808

GREAT WESTERN BANCORP, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan Portfolio Summary (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

Fiscal year-to-date:

 

September 30,
2019

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

September 30,
2018

 

Change
($)

 

Change
(%)

 

(dollars in thousands)

Construction and development

$

463,757

 

$

626,671

 

$

607,757

 

$

579,941

 

$

637,693

 

$

(173,936)

 

(27.3)

%

Owner-occupied CRE

1,411,199

 

1,375,235

 

1,366,844

 

1,359,979

 

1,334,480

 

76,719

 

5.7

%

Non-owner-occupied CRE

2,853,131

 

2,784,030

 

2,681,686

 

2,577,158

 

2,347,237

 

505,894

 

21.6

%

Multifamily residential real estate

364,323

 

413,806

 

393,505

 

393,223

 

309,920

 

54,403

 

17.6

%

Commercial real estate

5,092,410

 

5,199,742

 

5,049,792

 

4,910,301

 

4,629,330

 

463,080

 

10.0

%

Agriculture

2,008,644

 

2,049,395

 

2,121,872

 

2,234,735

 

2,182,688

 

(174,044)

 

(8.0)

%

Commercial non-real estate

1,719,956

 

1,747,501

 

1,721,095

 

1,713,760

 

1,699,987

 

19,969

 

1.2

%

Residential real estate

812,208

 

816,751

 

815,212

 

845,262

 

837,569

 

(25,361)

 

(3.0)

%

Consumer

51,925

 

53,277

 

44,504

 

47,704

 

49,689

 

2,236

 

4.5

%

Other ¹

47,541

 

48,406

 

46,163

 

44,130

 

46,487

 

1,054

 

2.3

%

Total unpaid principal balance

9,732,684

 

9,915,072

 

9,798,638

 

9,795,892

 

9,445,750

 

286,934

 

3.0

%

Less: Unamortized discount on acquired loans and unearned net deferred fees and costs and loans in process

(25,921)

 

(28,101)

 

(27,727)

 

(28,416)

 

(29,826)

 

3,905

 

(13.1)

%

Total loans

$

9,706,763

 

$

9,886,971

 

$

9,770,911

 

$

9,767,476

 

$

9,415,924

 

$

290,839

 

3.1

%

1 Other loans primarily include consumer and commercial credit cards, customer deposit account overdrafts, and lease receivables.

GREAT WESTERN BANCORP, INC.

 

 

 

 

 

 

 

 

 

 

Net Interest Margin (FTE) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

September 30, 2019

 

June 30, 2019

 

September 30, 2018

 

Average Balance

Interest (FTE)

Yield / Cost ¹

 

Average Balance

Interest (FTE)

Yield / Cost ¹

 

Average Balance

Interest (FTE)

Yield / Cost ¹

 

(dollars in thousands)

Assets

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing bank deposits ²

$

39,617

$

1,056

10.58

%

 

$

51,640

$

377

2.93

%

 

$

84,659

$

494

2.32

%

Investment securities

1,822,670

10,935

2.38

%

 

1,807,747

11,430

2.54

%

 

1,399,389

7,645

2.17

%

Non-ASC 310-30 loans, net ³

9,693,395

126,410

5.17

%

 

9,699,433

125,522

5.19

%

 

9,299,318

116,971

4.99

%

ASC 310-30 loans, net

54,141

1,856

13.60

%

 

58,701

2,294

15.67

%

 

73,802

1,811

9.74

%

Loans, net

9,747,536

128,266

5.22

%

 

9,758,134

127,816

5.25

%

 

9,373,120

118,782

5.03

%

Total interest-earning assets

11,609,823

140,257

4.79

%

 

11,617,521

139,623

4.82

%

 

10,857,168

126,921

4.64

%

Noninterest-earning assets

1,238,412

 

 

 

1,213,087

 

 

 

1,158,351

 

 

Total assets

$

12,848,235

$

140,257

4.33

%

 

$

12,830,608

$

139,623

4.36

%

 

$

12,015,519

$

126,921

4.19

%

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,903,177

 

 

 

$

1,875,649

 

 

 

$

1,813,547

 

 

Interest-bearing deposits

6,241,782

$

17,211

1.09

%

 

6,391,396

$

18,493

1.16

%

 

6,042,096

$

13,606

0.89

%

Time deposits

2,054,370

10,000

1.93

%

 

2,091,603

10,122

1.94

%

 

1,774,277

6,390

1.43

%

Total deposits

10,199,329

27,211

1.06

%

 

10,358,648

28,615

1.11

%

 

9,629,920

19,996

0.82

%

Securities sold under agreements to repurchase

62,302

40

0.25

%

 

60,551

41

0.27

%

 

101,519

82

0.32

%

FHLB advances and other borrowings

512,924

3,447

2.67

%

 

361,736

2,497

2.77

%

 

280,823

1,825

2.58

%

Subordinated debentures and subordinated notes payable

108,622

1,363

4.98

%

 

108,584

1,417

5.23

%

 

108,440

1,341

4.91

%

Total borrowings

683,848

4,850

2.81

%

 

530,871

3,955

2.99

%

 

490,782

3,248

2.63

%

Total interest-bearing liabilities

10,883,177

$

32,061

1.17

%

 

10,889,519

$

32,570

1.20

%

 

10,120,702

$

23,244

0.91

%

Noninterest-bearing liabilities

79,273

 

 

 

76,957

 

 

 

69,505

 

 

Stockholders' equity

1,885,785

 

 

 

1,864,132

 

 

 

1,825,312

 

 

Total liabilities and stockholders' equity

$

12,848,235

 

 

 

$

12,830,608

 

 

 

$

12,015,519

 

 

Net interest spread

 

 

3.16

%

 

 

 

3.16

%

 

 

 

3.28

%

Net interest income and net interest margin (FTE)

 

$

108,196

3.70

%

 

 

$

107,053

3.70

%

 

 

$

103,677

3.79

%

Less: Tax equivalent adjustment

 

1,487

 

 

 

1,424

 

 

 

1,687

 

Net interest income and net interest margin - ties to Statements of Comprehensive Income

 

$

106,709

3.65

%

 

 

$

105,629

3.65

%

 

 

$

101,990

3.73

%

1 Annualized for all partial-year periods.

2 Interest income includes $0.7 million and $0.0 million for the fourth quarter of fiscal years 2019 and 2018, respectively, resulting from interest earned on derivative collateral included in other assets on the consolidated balance sheets.

3 Interest income includes $0.3 million and $0.6 million for the fourth quarter of fiscal years 2019 and 2018, respectively, resulting from accretion of purchase accounting discount associated with acquired loans.

GREAT WESTERN BANCORP, INC.

Net Interest Margin (FTE) (Unaudited)

 

 

 

 

 

 

 

Twelve Months Ended

 

September 30, 2019

 

September 30, 2018

 

Average Balance

Interest
(FTE)

Yield /
Cost

 

Average Balance

Interest
(FTE)

Yield /
Cost

 

(dollars in thousands)

Assets

 

 

 

 

 

 

 

Interest-bearing bank deposits ¹

$

61,646

$

2,472

4.01

%

 

$

75,101

$

1,376

1.83

%

Investment securities

1,681,185

41,510

2.47

%

 

1,384,632

29,171

2.11

%

Non-ASC 310-30 loans, net ²

9,610,956

496,753

5.17

%

 

9,106,519

446,386

4.90

%

ASC 310-30 loans, net

61,139

8,025

13.13

%

 

81,105

11,501

14.18

%

Loans, net

9,672,095

504,778

5.22

%

 

9,187,624

457,887

4.98

%

Total interest-earning assets

11,414,926

548,760

4.81

%

 

10,647,357

488,434

4.59

%

Noninterest-earning assets

1,206,151

 

 

 

1,160,802

 

 

Total assets

$

12,621,077

$

548,760

4.35

%

 

$

11,808,159

$

488,434

4.14

%

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,860,645

 

 

 

$

1,809,470

 

 

Interest-bearing deposits

6,286,878

$

69,305

1.10

%

 

5,990,182

$

43,092

0.72

%

Time deposits

2,030,619

37,413

1.84

%

 

1,483,760

17,020

1.15

%

Total deposits

10,178,142

106,718

1.05

%

 

9,283,412

60,112

0.65

%

Securities sold under agreements to repurchase

66,485

180

0.27

%

 

108,599

340

0.31

%

FHLB advances and other borrowings

345,375

9,771

2.83

%

 

452,572

8,508

1.88

%

Subordinated debentures and subordinated notes payable

108,553

5,540

5.10

%

 

108,378

5,040

4.65

%

Total borrowings

520,413

15,491

2.98

%

 

669,549

13,888

2.07

%

Total interest-bearing liabilities

10,698,555

$

122,209

1.14

%

 

9,952,961

$

74,000

0.74

%

Noninterest-bearing liabilities

75,045

 

 

 

67,045

 

 

Stockholders' equity

1,847,477

 

 

 

1,788,153

 

 

Total liabilities and stockholders' equity

$

12,621,077

 

 

 

$

11,808,159

 

 

Net interest spread

 

 

3.21

%

 

 

 

3.40

%

Net interest income and net interest margin (FTE)

 

$

426,551

3.74

%

 

 

$

414,434

3.89

%

Less: Tax equivalent adjustment

 

5,843

 

 

 

6,597

 

Net interest income and net interest margin - ties to Statements of Comprehensive Income

 

$

420,708

3.69

%

 

 

$

407,837

3.83

%

Interest income includes $0.7 million and $0.0 million for fiscal years 2019 and 2018, respectively, resulting from interest earned on derivative collateral included in other assets on the consolidated balance sheets.

2 Interest income includes $1.3 million and $2.7 million for fiscal years 2019 and 2018, respectively, resulting from accretion of purchase accounting discount associated with acquired loans.

Non-GAAP Financial Measures and Reconciliation
We rely on certain non-GAAP financial measures in making financial and operational decisions about our business. We believe that each of the non-GAAP financial measures presented is helpful in highlighting trends in our business, financial condition and results of operations which might not otherwise be apparent when relying solely on our financial results calculated in accordance with U.S. GAAP. We disclose net interest income and related ratios and analysis on a taxable-equivalent basis, which may also be considered non-GAAP financial measures. We believe this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison of net interest income arising from taxable and tax-exempt sources. In addition, certain performance measures, including the efficiency ratio and net interest margin utilize net interest income on a taxable-equivalent basis.

In particular, we evaluate our profitability and performance based on our adjusted net income, adjusted earnings per common share, tangible net income and return on average tangible common equity. Our adjusted net income and adjusted earnings per common share exclude the after-tax effect of items with a significant impact to net income that we do not believe to be recurring in nature, (e.g., one-time acquisition expenses as well as the effect of revaluation of deferred taxes). Our tangible net income and return on average tangible common equity exclude the effects of amortization expense relating to intangible assets and related tax effects from the acquisition of us by National Australia Bank Limited ("NAB") and our acquisitions of other institutions. We believe these measures help highlight trends associated with our financial condition and results of operations by providing net income and return information excluding significant nonrecurring items (for adjusted net income and adjusted earnings per common share) and based on our cash payments and receipts during the applicable period (for tangible net income and return on average tangible common equity).

We also evaluate our profitability and performance based on our adjusted net interest income, adjusted net interest margin, adjusted interest income on non-ASC 310-30 loans and adjusted yield on non-ASC 310-30 loans. We adjust each of these four measures to include the current realized gain (loss) of derivatives we use to manage interest rate risk on certain of our loans, which we believe economically offsets the interest income earned on the loans. Similarly, we evaluate our operational efficiency based on our efficiency ratio, which excludes the effect of amortization of core deposit and other intangibles (a non-cash expense item) and includes the tax benefit associated with our tax-advantaged loans.

We evaluate our financial condition based on the ratio of our tangible common equity to our tangible assets and the ratio of our tangible common equity to common shares outstanding. Our calculation of this ratio excludes the effect of our goodwill and other intangible assets. We believe this measure is helpful in highlighting the common equity component of our capital and because of its focus by federal bank regulators when reviewing the health and strength of financial institutions in recent years and when considering regulatory approvals for certain actions, including capital actions. We also believe the ratio of our tangible common equity to common shares outstanding is helpful in understanding our stockholders’ relative ownership position as we undertake various actions to issue and retire common shares outstanding.

Reconciliations for each of these non-GAAP financial measures to the closest GAAP financial measures are included in the tables below. Each of the non-GAAP financial measures presented should be considered in context with our GAAP financial results included in this release.

GREAT WESTERN BANCORP, INC.

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Measures (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At and for the twelve months ended:

 

At and for the three months ended:

 

September 30,
2019

September 30,
2018

 

September 30,
2019

June 30,
2019

March 31,
2019

December 31,
2018

September 30,
2018

 

(dollars in thousands except share and per share amounts)

Adjusted net income and adjusted earnings per common share:

 

 

 

 

 

 

 

 

Net income - GAAP

$

167,365

$

157,916

 

$

50,285

$

26,783

$

44,511

$

45,786

$

42,281

Add: Deferred taxes revaluation due to Tax Reform Act

13,586

 

Adjusted net income

$

167,365

$

171,502

 

$

50,285

$

26,783

$

44,511

$

45,786

$

42,281

 

 

 

 

 

 

 

 

 

Weighted average diluted common shares outstanding

57,257,061

59,131,650

 

56,804,172

57,110,103

57,074,674

58,039,292

59,122,699

Earnings per common share - diluted

$

2.92

$

2.67

 

$

0.89

$

0.47

$

0.78

$

0.79

$

0.72

Adjusted earnings per common share - diluted

$

2.92

$

2.90

 

$

0.89

$

0.47

$

0.78

$

0.79

$

0.72

 

 

 

 

 

 

 

 

 

Tangible net income and return on average tangible common equity:

 

 

 

 

 

 

 

 

Net income - GAAP

$

167,365

$

157,916

 

$

50,285

$

26,783

$

44,511

$

45,786

$

42,281

Add: Amortization of intangible assets, net of tax

1,337

1,460

 

315

335

343

344

343

Tangible net income

$

168,702

$

159,376

 

$

50,600

$

27,118

$

44,854

$

46,130

$

42,624

 

 

 

 

 

 

 

 

 

Average common equity

$

1,847,477

$

1,788,153

 

$

1,885,785

$

1,864,132

$

1,822,940

$

1,817,052

$

1,825,312

Less: Average goodwill and other intangible assets

745,920

747,513

 

745,349

745,718

746,107

746,503

746,900

Average tangible common equity

$

1,101,557

$

1,040,640

 

$

1,140,436

$

1,118,414

$

1,076,833

$

1,070,549

$

1,078,412

 

 

 

 

 

 

 

 

 

Return on average common equity *

9.1

%

8.8

%

 

10.6

%

5.8

%

9.9

%

10.0

%

9.2

%

Return on average tangible common equity **

15.3

%

15.3

%

 

17.6

%

9.7

%

16.9

%

17.1

%

15.7

%

* Calculated as net income - GAAP divided by average common equity. Annualized for partial-year periods.

** Calculated as tangible net income divided by average tangible common equity. Annualized for partial-year periods.

 

 

 

 

 

 

 

 

 

Adjusted net interest income and adjusted net interest margin (fully-tax equivalent basis):

 

 

 

 

 

 

 

 

Net interest income - GAAP

$

420,708

$

407,837

 

$

106,709

$

105,629

$

103,475

$

104,894

$

101,990

Add: Tax equivalent adjustment

5,843

6,597

 

1,487

1,424

1,442

1,490

1,687

Net interest income (FTE)

426,551

414,434

 

108,196

107,053

104,917

106,384

103,677

Add: Current realized derivative gain (loss)

619

(5,365)

 

(127)

321

405

21

(419)

Adjusted net interest income (FTE)

$

427,170

$

409,069

 

$

108,069

$

107,374

$

105,322

$

106,405

$

103,258

 

 

 

 

 

 

 

 

 

Average interest-earning assets

$

11,414,926

$

10,647,357

 

$

11,609,823

$

11,617,521

$

11,345,559

$

11,086,800

$

10,857,168

Net interest margin (FTE) *

3.74

%

3.89

%

 

3.70

%

3.70

%

3.75

%

3.81

%

3.79

%

Adjusted net interest margin (FTE) **

3.74

%

3.84

%

 

3.69

%

3.71

%

3.76

%

3.81

%

3.77

%

* Calculated as net interest income (FTE) divided by average interest earning assets. Annualized for partial-year periods.

** Calculated as adjusted net interest income (FTE) divided by average interest earning assets. Annualized for partial-year periods.

 

 

 

 

 

 

 

 

 

Adjusted interest income and adjusted yield (fully-tax equivalent basis), on non-ASC 310-30 loans:

 

 

 

 

 

 

 

 

Interest income - GAAP

$

490,910

$

439,789

 

$

124,923

$

124,098

$

121,528

$

120,361

$

115,284

Add: Tax equivalent adjustment

5,843

6,597

 

1,487

1,424

1,442

1,490

1,687

Interest income (FTE)

496,753

446,386

 

126,410

125,522

122,970

121,851

116,971

Add: Current realized derivative gain (loss)

619

(5,365)

 

(127)

321

405

21

(419)

Adjusted interest income (FTE)

$

497,372

$

441,021

 

$

126,283

$

125,843

$

123,375

$

121,872

$

116,552

 

 

 

 

 

 

 

 

 

Average non-ASC 310-30 loans

$9,610,956

$9,106,519

 

$

9,693,395

$9,699,433

$9,615,096

$9,435,901

$

9,299,318

Yield (FTE) *

5.17

%

4.90

%

 

5.17

%

5.19

%

5.19

%

5.12

%

4.99

%

Adjusted yield (FTE) **

5.18

%

4.84

%

 

5.17

%

5.20

%

5.20

%

5.12

%

4.97

%

* Calculated as interest income (FTE) divided by average loans. Annualized for partial-year periods.

** Calculated as adjusted interest income (FTE) divided by average loans. Annualized for partial-year periods.

 

 

 

 

 

 

 

 

 

Efficiency ratio:

 

 

 

 

 

 

 

 

Total revenue - GAAP

$

481,440

$

481,446

 

$

121,732

$

116,395

$

121,698

$

121,614

$

121,245

Add: Tax equivalent adjustment

5,843

6,597

 

1,487

1,424

1,442

1,490

1,687

Total revenue (FTE)

$

487,283

$

488,043

 

$

123,219

$

117,819

$

123,140

$

123,104

$

122,932

 

 

 

 

 

 

 

 

 

Noninterest expense

$

224,898

$

231,425

 

$

55,212

$

56,000

$

56,580

$

57,106

$

59,550

Less: Amortization of intangible assets

1,538

1,662

 

366

385

394

394

394

Tangible noninterest expense

$

223,360

$

229,763

 

$

54,846

$

55,615

$

56,186

$

56,712

$

59,156

 

 

 

 

 

 

 

 

 

Efficiency ratio *

45.8

%

47.1

%

 

44.5

%

47.2

%

45.6

%

46.1

%

48.1

%

* Calculated as the ratio of tangible noninterest expense to total revenue (FTE).

 

 

 

 

 

 

 

 

 

Tangible common equity and tangible common equity to tangible assets:

 

 

 

 

 

 

 

 

Total stockholders' equity

$

1,900,249

$

1,840,551

 

$

1,900,249

$

1,881,128

$

1,852,394

$

1,812,008

$

1,840,551

Less: Goodwill and other intangible assets

745,197

746,735

 

745,197

745,563

745,947

746,341

746,735

Tangible common equity

$

1,155,052

$

1,093,816

 

$

1,155,052

$

1,135,565

$

1,106,447

$

1,065,667

$

1,093,816

 

 

 

 

 

 

 

 

 

Total assets

$

12,788,301

$

12,116,808

 

$

12,788,301

$

12,954,896

$

12,830,162

$

12,573,641

$

12,116,808

Less: Goodwill and other intangible assets

745,197

746,735

 

745,197

745,563

745,947

746,341

746,735

Tangible assets

$

12,043,104

$

11,370,073

 

$

12,043,104

$

12,209,333

$

12,084,215

$

11,827,300

$

11,370,073

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets

9.6

%

9.6

%

 

9.6

%

9.3

%

9.2

%

9.0

%

9.6

%

 

 

 

 

 

 

 

 

 

Tangible book value per share:

 

 

 

 

 

 

 

 

Total stockholders' equity

$

1,900,249

$

1,840,551

 

$

1,900,249

$

1,881,128

$

1,852,394

$

1,812,008

$

1,840,551

Less: Goodwill and other intangible assets

745,197

746,735

 

745,197

745,563

745,947

746,341

746,735

Tangible common equity

$

1,155,052

$

1,093,816

 

$

1,155,052

$

1,135,565

$

1,106,447

$

1,065,667

$

1,093,816

 

 

 

 

 

 

 

 

 

Common shares outstanding

56,283,659

58,917,147

 

56,283,659

56,939,032

56,938,435

56,938,435

58,917,147

Book value per share - GAAP

$

33.76

$

31.24

 

$

33.76

$

33.04

$

32.53

$

31.82

$

31.24

Tangible book value per share

$

20.52

$

18.57

 

$

20.52

$

19.94

$

19.43

$

18.72

$

18.57

 

 

Contacts

GREAT WESTERN BANCORP, INC.
Investor Relations Contact:
Peter Chapman, 605-373-3198
peter.chapman@greatwesternbank.com

Release Summary

Great Western Bancorp, Inc. Announces Fourth Quarter & Fiscal Year 2019 Financial Results; 9.4% Increase in Diluted EPS & 10.5% Increase in TBV

$Cashtags

Contacts

GREAT WESTERN BANCORP, INC.
Investor Relations Contact:
Peter Chapman, 605-373-3198
peter.chapman@greatwesternbank.com