SIOUX FALLS, S.D.--(BUSINESS WIRE)--
Great Western Bancorp, Inc. (NYSE:GWB):
Highlights for the Fourth Quarter and Full Year Fiscal Year 2016
- Fourth quarter net income was $33.8 million, or $0.57 per diluted share, while adjusted net income1, which excludes the effect of one-time acquisition expenses related to the HF Financial Corp. ("HF") acquisition, was $35.5 million, or $0.60 per diluted share
- Net income for fiscal year 2016 was $121.3 million, an increase of 11.2% over fiscal year 2015, and adjusted net income1 for fiscal year 2016 was $131.0 million, an increase of 20.1% over the same period
- The efficiency ratio1 continues to be a key differentiator from peers at 48.5% for the quarter and 49.6% for the fiscal year 2016, each of which would have been lower if one-time acquisition expenses related to the HF acquisition were excluded
- Net interest margin and adjusted net interest margin1 were 3.92% and 3.73% for the fourth quarter, respectively, decreases of 3 basis points and 1 basis point from the previous quarter, respectively
- The Board of Directors authorized an increase in the quarterly dividend per common share to $0.17, a 21.4% increase compared to most recent dividend, and authorized a $100.0 million share repurchase program
- Asset quality trends remain stable with net charge-offs as a percentage of average total loans of 12 basis points for fiscal year 2016
- Total loans grew $75.7 million, or 0.9%, during the quarter, bringing non-acquired loan growth to $493.7 million, or 6.7%, for the fiscal year, while deposits grew $124.6 million, or 1.5%, during the quarter, bringing non-acquired deposit growth to $354.6 million, or 4.8%, for the fiscal year
Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $33.8 million, or $0.57 per diluted share, for the quarter ended September 30, 2016, compared to net income of $33.8 million, or $0.60 per diluted share, for the same quarter of fiscal year 2015. Adjusted net income1, which excludes $2.7 million of acquisition expenses related to the HF acquisition, was $35.5 million, or $0.60 per diluted share, equal to the comparable period in fiscal year 2015. Net income for fiscal year 2016 was $121.3 million, or $2.14 per diluted share, compared to $109.1 million, or $1.90 per diluted share, for fiscal year 2015, while adjusted net income1 increased to $131.0 million, or $2.31 per diluted share. The year-over -year increase was driven by increased net interest income resulting from organic and inorganic balance sheet growth and higher noninterest income, only partially offset by increased noninterest expenses.
"I am very happy with our results for the most recent quarter and, more importantly, with fiscal year 2016 as a whole," said Ken Karels, President and Chief Executive Officer. "We were able to deliver significant year-over-year growth including an 11.2% increase in net income, a 12.6% increase in diluted earnings per share and 13.8% increase in tangible book value per share while maintaining a peer-leading efficiency ratio, all against the backdrop of successfully completing our first acquisition since becoming a public company. I want to thank all of our employees for an excellent job over the course of the year. We also announced today that we have increased our quarterly dividend by 21.4%, to $0.17 per share, a level that we believe is reflective of our commitment to actively managing capital and overall shareholder return. We have also announced a $100.0 million share repurchase program which reflects our intent to proactively manage capital."
Net Interest Income and Net Interest Margin2
Net interest income was $100.2 million for the fourth quarter of fiscal year 2016, an increase of $13.0 million, or 14.9%, compared to the same quarter in fiscal year 2015. The increase was primarily attributable to higher loan interest income driven by 19.2% growth in average loans outstanding between the periods, partially offset by an 8 basis point decrease in the yield on total loans.
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.
Net interest margin was 3.92%, 3.95% and 3.98%, respectively, for the quarters ended September 30, 2016, June 30, 2016 and September 30, 2015. Adjusted net interest margin1, which adjusts for the realized gain (loss) on interest rate swaps, was 3.73%, 3.74% and 3.72%, respectively, for the same periods. Net interest margin and adjusted net interest margin1 were 6 basis points lower and 1 basis point higher, respectively, compared to the same quarter of fiscal year 2015. The decline in net interest margin was primarily driven by a 2 basis point decline in the yield on interest-earning assets and a 4 basis point increase in the cost of interest-bearing liabilities, which included a 3 basis point increase in the cost of deposits. The increase in the adjusted net interest margin1 was driven by the fact that the realized loss on interest rate swaps decreased by 13.2%, despite the notional amount outstanding remaining similar, as a result of increases in short-term LIBOR rates. On a sequential quarter basis, the yield on total loans decreased 2 basis points to 4.77%, the cost of deposits increased 1 basis point to 0.33%, the yield on investment securities decreased by 6 basis points and cost of borrowings increased 1 basis point to 0.99%.
Loan growth during the quarter ended September 30, 2016 was $75.7 million, or 0.9%, bringing fiscal year-to-date growth to $1.36 billion, or 18.5%, which included $863.7 million of loans at fair value acquired in the HF acquisition in the third quarter of 2016. Excluding the acquired loans, net growth for the fiscal year was $493.7 million, or 6.7%. The net growth during the quarter was primarily driven by $97.1 million of commercial real estate ("CRE") loan growth and $67.3 million of agriculture loan growth, partially offset by a $70.0 million reduction in commercial non-real estate ("C&I") loans outstanding.
Total deposits grew by $124.6 million during the quarter and by $1.22 billion, or 16.5%, including $863.1 million of deposits acquired in the HF acquisition, compared to September 30, 2015. Excluding the acquired deposits, net deposit growth for the year was $354.6 million, or 4.8%. Organic deposit growth was driven by growth in both commercial deposits and consumer deposits, where growth in checking and savings balances outpaced the continued runoff of time deposit accounts. FHLB and other borrowings were reduced by $42.3 million, or 4.6%, as a result of deposit growth during the quarter exceeding net loan growth.
Provision for Loan and Lease Losses and Asset Quality
Provision for loan and lease losses was $5.1 million for the quarter ended September 30, 2016, compared to $1.6 million in the same quarter of fiscal year 2015. Net charge-offs for the quarter were $4.7 million, or 21 basis points of average total loans on an annualized basis, and $9.5 million, or 12 basis points of average total loans, for fiscal year 2016. For the comparable quarter in fiscal year 2015, net charge-offs were $0.4 million, or 2 basis points of average total loans on an annualized basis, and $9.4 million, or 13 basis points of average total loans, for fiscal year 2015. The ratio of allowance for loan and lease losses ("ALLL") to total loans was 0.74% at September 30, 2016, a slight decrease from 0.75% at June 30, 2016. The balance of the ALLL increased from $64.2 million to $64.6 million over the same period.
Included within total loans are approximately $1.13 billion 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 $7.4 million of the fair value adjustment for these loans relates to credit risk, translating to an additional 0.09% of total loans. Additionally, the Company assigned a net purchase discount of $28.5 million to the loans acquired in the HF acquisition during the third quarter of 2016, which was consistent with due diligence expectations and equated to approximately 3.2% of the gross acquired loans. Total purchase discount remaining on all acquired loans at September 30, 2016 was 0.46% of total loans.
At September 30, 2016, loans graded "Watch" were $327.6 million, a decrease of $68.3 million, or 17.2%, compared to June 30, 2016, and loans graded "Substandard" were $241.6 million, an increase of $4.0 million, or 1.7%, over the same period. The reduction in loans graded "Watch" was primarily driven by the upgrade of a number of CRE loans to "Pass" status and the downgrade of one larger C&I exposure that is heavily dependent on the agriculture industry. The small increase in loans graded "Substandard" was primarily driven by the previously mentioned C&I downgrade, partially offset by the net charge-offs recorded during the quarter, loans upgraded to "Watch" or better and loan principal payments received. Within the agriculture loan segment, individual loan relationships were both upgraded and downgraded during the quarter but overall levels of "Watch" and "Substandard" loans improved slightly.
Nonaccrual loans were $126.4 million as of September 30, 2016, with $4.1 million of the balance covered by FDIC loss-sharing arrangements. Total nonaccrual loans increased by $18.2 million during the quarter and increased by $58.1 million compared to same quarter in fiscal year 2015. The most significant driver of the increase in nonaccrual loans was the C&I loan that was downgraded to "Substandard" and placed on nonaccrual. Total OREO balances were $10.3 million as of September 30, 2016, a decrease of $1.4 million, or 12.1%, compared to June 30, 2016.
The Company’s grain producing customers generally harvest their crops - namely corn and soybeans - during the December quarter. While spot prices for these commodities remain suppressed compared to record high levels in recent years, customers and bankers are consistently reporting favorable crop conditions and significantly higher than average harvest volume expectations which, paired with effective forward selling strategies undertaken by many customers, should help partially offset the negative impact of current prices for a number of customers. “We expect the 2016 and 2017 operating results to be strained for many of our grain producers, but we are actively managing lending relationships to ensure the best possible outcomes and we remain comfortable with our overall exposure to this industry,” said Steve Ulenberg, Chief Risk Officer. “We are also monitoring recent declines in beef and hog prices and analyzing any potential impact to our customers that may be affected if prices continue to fall from current levels or remain lower for a longer period of time so we are able to put required action plans in place in a timely manner.”
Total credit-related charges decreased compared to the sequential quarter and to fiscal year 2015, while charges increased compared to the fourth quarter of fiscal year 2015. A summary of total credit-related charges incurred during the current, prior and comparable quarters and current and prior fiscal years is presented below:
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Summary of Credit-Related Charges (Unaudited) |
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| (Dollars in thousands) | For the twelve months ended: | For the three months ended: | |||||||||||||||||||||||
| Item | Included within F/S Line Item(s): |
September 30, |
September 30, |
September 30, |
June 30, 2016 |
September 30, |
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| Provision for loan and lease losses | Provision for loan and lease losses | $ | 16,955 | $ | 19,041 | $ | 5,063 | $ | 5,372 | $ | 1,633 | ||||||||||||||
| Net OREO charges | Net loss (recovery) on repossessed property and other related expenses | 1,263 | 5,382 | 784 | 379 | (165 | ) | ||||||||||||||||||
| (Recovery) reversal of interest income on nonaccrual loans | Interest income on loans | 1,433 | 372 | 113 | 1,505 | 117 | |||||||||||||||||||
| Loan fair value adjustment related to credit | Net increase (decrease) in fair value of loans at fair value | 1,618 | 3,703 | (678 | ) | 2,722 | 265 | ||||||||||||||||||
| Total | $ | 21,268 | $ | 28,498 | $ | 5,283 | $ | 9,978 | $ | 1,850 | |||||||||||||||
Noninterest Income
Noninterest income was $15.8 million for the quarter ended September 30, 2016, an increase of $6.8 million, or 74.6%, compared to the same quarter of fiscal year 2015. Included within noninterest income are the changes in fair value of certain loans for which the Company has elected the fair value option and the net gain (loss), realized and unrealized, of the related derivatives used to manage the interest rate risk on these loans. On a net basis, these two components of noninterest income accounted for an increase of $1.7 million, which is comprised of a lower net realized loss on derivatives and a favorable change to the loan fair value adjustment related to credit.
Noninterest income from product and service fees increased by $5.1 million over the fourth quarter of fiscal year 2015. Service charges and other fees increased by $2.9 million, accounting for the largest component of the increase. Management estimates that the impact of the opportunity to charge higher debit card interchange rates for a period of time accounted for approximately $2.6 million of the increase, while higher fee income related to commercial deposit relationships accounted for the remainder of the increase. The higher allowable interchange rates are effective through June 30, 2017. Additionally, mortgage banking income and wealth management income increased by $1.5 million and $0.5 million, respectively.
Noninterest Expense
Total noninterest expense was $57.3 million for the quarter ended September 30, 2016, an increase of $12.5 million, or 27.9%, compared to the same quarter in fiscal year 2015. Included within noninterest expense for the quarter were $2.7 million of one-time acquisition costs related to the HF acquisition. Management believes that substantially all of the costs related to the acquisition have been incurred and estimates that the integration of HF's operations has resulted in approximately $6.5 million of incremental noninterest expenses on a quarterly basis, including amortization of intangible assets related to the acquisition, reflecting substantially all expected cost synergies. Salaries and employee benefits increased by $5.4 million and professional fees increased by $0.9 million, each primarily driven by the impact of integrating HF's operations into the consolidated business. Net OREO costs also increased by $0.9 million.
The efficiency ratio1 was 48.5% for the quarter, compared to 45.8% for the same quarter of fiscal year 2015 and 49.6% for fiscal year 2016, compared to 48.0% for fiscal year 2015. Each of the ratios for fiscal year 2016 was primarily impacted by one-time acquisition expenses.
Provision for Income Taxes
The provision for income taxes for the fourth fiscal quarter ended September 30, 2016 was $17.9 million, reflecting an effective tax rate of 34.6% of income before income taxes, compared to an effective tax rate of 29.6% for the comparable quarter of fiscal year 2015, which was abnormally low. The effective tax rate for fiscal years 2016 and 2015 was 32.7% and 32.5%, respectively.
Capital
Tier 1 and total capital ratios were 11.1% and 12.2%, respectively, as of September 30, 2016, compared to 10.9% and 12.0%, respectively, as of June 30, 2016. The common equity tier 1 capital ratio was 10.2% as of September 30, 2016 and 10.0% as of June 30, 2016. The tier 1 leverage ratio was 9.5% as of September 30, 2016 and 10.0% as of June 30, 2016. All regulatory capital ratios remain above regulatory minimums to be considered "well capitalized."
On October 27, 2016, the Company’s Board of Directors declared a dividend of $0.17 per common share payable on November 23, 2016 to stockholders of record as of close of business on November 11, 2016. The aggregate dividend payment will be approximately $10.0 million. This represents an increase of 21.4% compared to recent quarterly dividends of $0.14 per common share. The Company's Board of Directors also authorized a share repurchase program of $100.0 million on October 26, 2016.
Business Outlook
"We remain very optimistic about the trajectory of our business as we look forward to our next fiscal year," added Karels. "Our people are committed to delivering on our strategy while providing outstanding service to our customers and ensuring we are an employer of choice in our communities. We believe this is a formula that will lead to outstanding returns for our stockholders over time. We know we will face challenges in the next year, including tempering loan growth slightly by focusing on profitable relationships that allow us to remain compliant with internal and external concentration limits, but we are confident we will face into these challenges as a team and deliver a successful result."
Conference Call
Great Western Bancorp, Inc. will host a conference call to discuss its financial results for the fourth quarter of fiscal year 2016 on Thursday, October 27, 2016 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 10, 2016. To access the replay, dial (877) 344-7529 (U.S.) and use conference ID 10093381. International callers should dial (412) 317-0088 and enter the same conference ID number.
Annual Stockholder Meeting
The Company's Board of Directors has set the Great Western Bancorp, Inc. Annual Stockholder Meeting for Monday, February 27, 2017. The meeting will commence at 9:00 AM Mountain Standard Time at the Hyatt Regency Scottsdale Resort and Spa at Gainey Ranch, 7500 East Doubletree Ranch Road, Scottsdale, Arizona. The record date for determination of stockholders entitled to notice of, and to vote at, the Annual Stockholder Meeting is January 6, 2017.
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 174 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,” “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, beyond fiscal year 2016 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, including those related to the integration of the recently-completed acquisition of HF Financial Corp., 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 fiscal year ended September 30, 2015, and other periodic filings with the SEC, including its Quarterly Reports on Form 10-Q for the periods ended December 31, 2015, March 31, 2016, and June 30, 2016 and all risk factors associated with the recently completed acquisition of HF Financial Corp. 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.
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| Consolidated Financial Data (Unaudited) | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands except share and per share amounts) | |||||||||||||||||||||||||||||||||||
| At or for the twelve months ended: | At or for the three months ended: | ||||||||||||||||||||||||||||||||||
| September 30, | September 30, | September 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||||||||||
| 2016 | 2015 | 2016 | June 30, 2016 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||||||
| Operating Data: | |||||||||||||||||||||||||||||||||||
| Interest and dividend income (FTE) | $ | 403,232 | $ | 369,957 | $ | 109,730 | $ | 102,094 | $ | 96,098 | $ | 95,310 | $ | 94,499 | |||||||||||||||||||||
| Interest expense | 33,524 | 29,884 | 9,491 | 8,537 | 7,969 | 7,527 | 7,296 | ||||||||||||||||||||||||||||
| Noninterest income | 42,537 | 33,890 | 15,798 | 9,097 | 8,999 | 8,644 | 9,049 | ||||||||||||||||||||||||||||
| Noninterest expense | 207,640 | 186,794 | 57,342 | 61,222 | 44,855 | 44,220 | 44,835 | ||||||||||||||||||||||||||||
| Provision for loan and lease losses | 16,955 | 19,041 | 5,063 | 5,372 | 2,631 | 3,889 | 1,633 | ||||||||||||||||||||||||||||
| Net income | 121,253 | 109,065 | 33,758 | 26,360 | 30,674 | 30,461 | 33,812 | ||||||||||||||||||||||||||||
| Adjusted net income 1 | $ | 130,982 | $ | 109,065 | $ | 35,458 | $ | 33,911 | $ | 31,152 | $ | 30,461 | $ | 33,812 | |||||||||||||||||||||
| Common shares outstanding | 58,693,304 | 55,219,596 | 58,693,304 | 58,693,499 | 55,245,177 | 55,244,569 | 55,219,596 | ||||||||||||||||||||||||||||
| Weighted average diluted common shares outstanding | 56,729,350 | 57,500,878 | 58,938,367 | 57,176,705 | 55,408,876 | 55,393,452 | 56,215,947 | ||||||||||||||||||||||||||||
| Earnings per common share - diluted | $ | 2.14 | $ | 1.90 | $ | 0.57 | $ | 0.46 | $ | 0.55 | $ | 0.55 | $ | 0.60 | |||||||||||||||||||||
| Adjusted earnings per common share - diluted 1 | $ | 2.31 | $ | 1.90 | $ | 0.60 | $ | 0.59 | $ | 0.56 | $ | 0.55 | $ | 0.60 | |||||||||||||||||||||
| Performance Ratios: | |||||||||||||||||||||||||||||||||||
| Net interest margin (FTE)2 | 3.96 | % | 3.94 | % | 3.92 | % | 3.95 | % | 3.99 | % | 3.98 | % | 3.98 | % | |||||||||||||||||||||
| Adjusted net interest margin (FTE)1 2 | 3.74 | % | 3.68 | % | 3.73 | % | 3.74 | % | 3.75 | % | 3.73 | % | 3.72 | % | |||||||||||||||||||||
| Return on average total assets2 | 1.16 | % | 1.12 | % | 1.19 | % | 1.00 | % | 1.24 | % | 1.23 | % | 1.38 | % | |||||||||||||||||||||
| Return on average common equity2 | 7.9 | % | 7.5 | % | 8.2 | % | 6.8 | % | 8.3 | % | 8.3 | % | 9.2 | % | |||||||||||||||||||||
| Return on average tangible common equity1 2 | 15.1 | % | 15.4 | % | 15.3 | % | 12.9 | % | 16.0 | % | 16.2 | % | 18.1 | % | |||||||||||||||||||||
| Efficiency ratio1 | 49.6 | % | 48.0 | % | 48.5 | % | 58.8 | % | 45.5 | % | 45.1 | % | 45.8 | % | |||||||||||||||||||||
| Capital: | |||||||||||||||||||||||||||||||||||
| Tier 1 capital ratio | 11.1 | % | 10.9 | % | 11.1 | % | 10.9 | % | 11.1 | % | 10.9 | % | 10.9 | % | |||||||||||||||||||||
| Total capital ratio | 12.2 | % | 12.1 | % | 12.2 | % | 12.0 | % | 12.4 | % | 12.2 | % | 12.1 | % | |||||||||||||||||||||
| Tier 1 leverage ratio | 9.5 | % | 9.1 | % | 9.5 | % | 10.0 | % | 9.5 | % | 9.4 | % | 9.1 | % | |||||||||||||||||||||
| Common equity tier 1 ratio | 10.2 | % | 10.1 | % | 10.2 | % | 10.0 | % | 10.4 | % | 10.2 | % | 10.1 | % | |||||||||||||||||||||
| Tangible common equity / tangible assets1 | 8.5 | % | 8.3 | % | 8.5 | % | 8.3 | % | 8.7 | % | 8.3 | % | 8.3 | % | |||||||||||||||||||||
| Book value per share - GAAP | $ | 28.34 | $ | 26.43 | $ | 28.34 | $ | 27.95 | $ | 27.32 | $ | 26.71 | $ | 26.43 | |||||||||||||||||||||
| Tangible book value per share1 | $ | 15.55 | $ | 13.66 | $ | 15.55 | $ | 15.15 | $ | 14.58 | $ | 13.96 | $ | 13.66 | |||||||||||||||||||||
| Asset Quality: | |||||||||||||||||||||||||||||||||||
| Nonaccrual loans | $ | 126,395 | $ | 68,289 | $ | 126,395 | $ | 108,207 | $ | 54,988 | $ | 54,351 | $ | 68,289 | |||||||||||||||||||||
| OREO | $ | 10,282 | $ | 15,892 | $ | 10,282 | $ | 11,701 | $ | 12,204 | $ | 15,503 | $ | 15,892 | |||||||||||||||||||||
| Nonaccrual loans / total loans | 1.46 | % | 0.93 | % | 1.46 | % | 1.26 | % | 0.73 | % | 0.72 | % | 0.93 | % | |||||||||||||||||||||
| Net charge-offs (recoveries) | $ | 9,513 | $ | 9,359 | $ | 4,654 | $ | 3,046 | $ | 1,852 | $ | (39 | ) | $ | 363 | ||||||||||||||||||||
| Net charge-offs (recoveries) / average total loans2 | 0.12 | % | 0.13 | % | 0.21 | % | 0.15 | % | 0.10 | % | — | % | 0.02 | % | |||||||||||||||||||||
| Allowance for loan and lease losses / total loans | 0.74 | % | 0.78 | % | 0.74 | % | 0.75 | % | 0.82 | % | 0.81 | % | 0.78 | % | |||||||||||||||||||||
| Watch-rated loans | $ | 327,608 | $ | 310,378 | $ | 327,608 | $ | 395,893 | $ | 333,597 | $ | 298,620 | $ | 310,379 | |||||||||||||||||||||
| 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. | |||||||||||||||||||||||||||||||||||
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2 Annualized for all partial-year periods. |
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| Consolidated Income Statement (Unaudited) | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| At or for the twelve months ended: | At or for the three months ended: | ||||||||||||||||||||||||||||||||||
| September 30, | September 30, | September 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||||||||||
| 2016 | 2015 | 2016 | June 30, 2016 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||||||
| Interest and dividend income | |||||||||||||||||||||||||||||||||||
| Loans | $ | 370,444 | $ | 338,458 | $ | 101,307 | $ | 93,749 | $ | 88,192 | $ | 87,197 | $ | 86,480 | |||||||||||||||||||||
| Taxable securities | 23,249 | 22,973 | 5,649 | 5,826 | 5,787 | 5,987 | 5,923 | ||||||||||||||||||||||||||||
| Nontaxable securities | 230 | 51 | 145 | 61 | 12 | 12 | 15 | ||||||||||||||||||||||||||||
| Dividends on securities | 1,201 | 1,247 | 369 | 396 | 222 | 213 | 250 | ||||||||||||||||||||||||||||
| Federal funds sold and other | 574 | 652 | 248 | 157 | 94 | 75 | 53 | ||||||||||||||||||||||||||||
| Total interest and dividend income | 395,698 | 363,381 | 107,718 | 100,189 | 94,307 | 93,484 | 92,721 | ||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||
| Deposits | 25,114 | 23,362 | 6,968 | 6,451 | 6,029 | 5,665 | 5,587 | ||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | 519 | 563 | 125 | 124 | 132 | 139 | 133 | ||||||||||||||||||||||||||||
| FHLB advances and other borrowings | 4,154 | 3,631 | 1,323 | 986 | 929 | 916 | 925 | ||||||||||||||||||||||||||||
| Related party notes payable | — | 771 | — | — | — | — | 79 | ||||||||||||||||||||||||||||
| Subordinated debentures and subordinated notes payable | 3,737 | 1,557 | 1,075 | 976 | 879 | 807 | 572 | ||||||||||||||||||||||||||||
| Total interest expense | 33,524 | 29,884 | 9,491 | 8,537 | 7,969 | 7,527 | 7,296 | ||||||||||||||||||||||||||||
| Net interest income | 362,174 | 333,497 | 98,227 | 91,652 | 86,338 | 85,957 | 85,425 | ||||||||||||||||||||||||||||
| Provision for loan and lease losses | 16,955 | 19,041 | 5,063 | 5,372 | 2,631 | 3,889 | 1,633 | ||||||||||||||||||||||||||||
| Net interest income after provision for loan and lease losses | 345,219 | 314,456 | 93,164 | 86,280 | 83,707 | 82,068 | 83,792 | ||||||||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||||||||||
| Service charges and other fees | 46,209 | 39,134 | 13,111 | 12,316 | 10,316 | 10,467 | 10,238 | ||||||||||||||||||||||||||||
| Wealth management fees | 7,283 | 7,412 | 2,196 | 1,807 | 1,668 | 1,612 | 1,658 | ||||||||||||||||||||||||||||
| Mortgage banking income, net | 7,261 | 6,694 | 3,119 | 1,669 | 1,204 | 1,270 | 1,667 | ||||||||||||||||||||||||||||
| Net gain (loss) on sale of securities | 160 | 310 | 356 | 134 | 24 | (354 | ) | 259 | |||||||||||||||||||||||||||
| Net increase (decrease) in fair value of loans at fair value | 26,314 | 36,742 | (8,939 | ) | 14,198 | 35,955 | (14,901 | ) | 28,828 | ||||||||||||||||||||||||||
| Net realized and unrealized gain (loss) on derivatives | (48,658 | ) | (62,088 | ) | 4,721 | (21,925 | ) | (40,893 | ) | 9,439 | (34,731 | ) | |||||||||||||||||||||||
| Other | 3,968 | 5,686 | 1,234 | 898 | 725 | 1,111 | 1,130 | ||||||||||||||||||||||||||||
| Total noninterest income | 42,537 | 33,890 | 15,798 | 9,097 | 8,999 | 8,644 | 9,049 | ||||||||||||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 109,055 | 100,646 | 30,638 | 28,352 | 24,769 | 25,296 | 25,273 | ||||||||||||||||||||||||||||
| Data processing | 21,719 | 19,531 | 5,896 | 5,625 | 4,950 | 5,246 | 5,338 | ||||||||||||||||||||||||||||
| Occupancy expenses | 15,759 | 14,809 | 4,323 | 4,002 | 3,843 | 3,591 | 3,640 | ||||||||||||||||||||||||||||
| Professional fees | 13,572 | 14,024 | 4,485 | 3,327 | 2,652 | 3,108 | 3,560 | ||||||||||||||||||||||||||||
| Communication expenses | 3,721 | 4,455 | 1,072 | 788 | 928 | 934 | 1,026 | ||||||||||||||||||||||||||||
| Advertising | 4,267 | 3,940 | 1,252 | 1,047 | 1,048 | 920 | 1,070 | ||||||||||||||||||||||||||||
| Equipment expenses | 3,795 | 3,905 | 1,001 | 959 | 931 | 904 | 949 | ||||||||||||||||||||||||||||
| Net loss (gain) on repossessed property and other related expenses | 1,263 | 5,382 | 784 | 379 | 210 | (110 | ) | (165 | ) | ||||||||||||||||||||||||||
| Amortization of core deposits and other intangibles | 3,264 | 7,110 | 1,024 | 822 | 708 | 709 | 708 | ||||||||||||||||||||||||||||
| Acquisition expenses | 15,692 | — | 2,742 | 12,179 | 771 | — | — | ||||||||||||||||||||||||||||
| Other | 15,533 | 12,992 | 4,125 | 3,742 | 4,045 | 3,622 | 3,436 | ||||||||||||||||||||||||||||
| Total noninterest expense | 207,640 | 186,794 | 57,342 | 61,222 | 44,855 | 44,220 | 44,835 | ||||||||||||||||||||||||||||
| Income before income taxes | 180,116 | 161,552 | 51,620 | 34,155 | 47,851 | 46,492 | 48,006 | ||||||||||||||||||||||||||||
| Provision for income taxes | 58,863 | 52,487 | 17,862 | 7,795 | 17,177 | 16,031 | 14,194 | ||||||||||||||||||||||||||||
| Net income | $ | 121,253 | $ | 109,065 | $ | 33,758 | $ | 26,360 | $ | 30,674 | $ | 30,461 | $ | 33,812 | |||||||||||||||||||||
| GREAT WESTERN BANCORP, INC. | |||||||||||||||||||||||||
| Summarized Consolidated Balance Sheet (Unaudited) | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||
| As of | |||||||||||||||||||||||||
| September 30, | December 31, | September 30, | |||||||||||||||||||||||
| 2016 | June 30, 2016 | March 31, 2016 | 2015 | 2015 | |||||||||||||||||||||
| Assets | |||||||||||||||||||||||||
| Cash and due from banks | $ | 524,611 | $ | 475,785 | $ | 174,401 | $ | 212,710 | $ | 237,770 | |||||||||||||||
| Securities | 1,317,386 | 1,361,164 | 1,328,685 | 1,317,605 | 1,327,327 | ||||||||||||||||||||
| Total loans | 8,682,644 | 8,606,974 | 7,557,788 | 7,530,660 | 7,325,198 | ||||||||||||||||||||
| Allowance for loan and lease losses | (64,642 | ) | (64,243 | ) | (61,917 | ) | (61,128 | ) | (57,200 | ) | |||||||||||||||
| Loans, net | 8,618,002 | 8,542,731 | 7,495,871 | 7,469,532 | 7,267,998 | ||||||||||||||||||||
| Goodwill and other intangible assets | 750,755 | 751,217 | 703,508 | 704,217 | 704,926 | ||||||||||||||||||||
| Other assets |
320,426 |
322,325 | 239,830 | 253,151 | 260,633 | ||||||||||||||||||||
| Total assets | $ |
11,531,180 |
$ | 11,453,222 | $ | 9,942,295 | $ | 9,957,215 | $ | 9,798,654 | |||||||||||||||
| Liabilities and stockholders' equity | |||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 1,880,512 | $ | 1,802,169 | $ | 1,503,981 | $ | 1,506,868 | $ | 1,368,453 | |||||||||||||||
| Interest-bearing deposits | 6,724,278 | 6,678,040 | 6,208,748 | 6,155,750 | 6,018,612 | ||||||||||||||||||||
| Total deposits | 8,604,790 | 8,480,209 | 7,712,729 | 7,662,618 | 7,387,065 | ||||||||||||||||||||
| Securities sold under agreements to repurchase | 141,688 | 159,016 | 146,273 | 187,871 | 185,271 | ||||||||||||||||||||
| FHLB advances and other borrowings | 871,037 | 913,377 | 370,000 | 451,000 | 581,000 | ||||||||||||||||||||
| Other liabilities |
250,274 |
260,109 | 204,091 | 180,210 | 185,972 | ||||||||||||||||||||
| Total liabilities |
9,867,789 |
9,812,711 | 8,433,093 | 8,481,699 | 8,339,308 | ||||||||||||||||||||
| Stockholders' equity | 1,663,391 | 1,640,511 | 1,509,202 | 1,475,516 | 1,459,346 | ||||||||||||||||||||
| Total liabilities and stockholders' equity | $ |
11,531,180 |
$ | 11,453,222 | $ | 9,942,295 | $ | 9,957,215 | $ | 9,798,654 | |||||||||||||||
| GREAT WESTERN BANCORP, INC. | ||||||||||||||||||||||||||||||||||
| Loan Portfolio Summary (Unaudited) | ||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||
| As of | Fiscal year-to-date: | |||||||||||||||||||||||||||||||||
| September 30, | March 31, | December 31, | September 30, | Change | Change | |||||||||||||||||||||||||||||
| 2016 | June 30, 2016 | 2016 | 2015 | 2015 | ($) | (%) | ||||||||||||||||||||||||||||
| Commercial non-real estate | $ | 1,676,247 | $ | 1,746,257 | $ | 1,588,356 | $ | 1,586,501 | $ | 1,610,828 | $ | 65,419 | 4.1 | % | ||||||||||||||||||||
| Agriculture | 2,168,937 | 2,101,601 | 1,900,013 | 1,969,269 | 1,861,465 | 307,472 | 16.5 | % | ||||||||||||||||||||||||||
| Construction and development | 469,968 | 487,220 | 368,408 | 336,679 | 256,697 | 213,271 | 83.1 | % | ||||||||||||||||||||||||||
| Owner-occupied CRE | 1,167,265 | 1,207,665 | 1,107,055 | 1,081,617 | 1,122,041 | 45,224 | 4.0 | % | ||||||||||||||||||||||||||
| Non-owner-occupied CRE | 1,678,007 | 1,554,127 | 1,350,444 | 1,286,063 | 1,227,354 | 450,653 | 36.7 | % | ||||||||||||||||||||||||||
| Multifamily residential real estate | 438,867 | 408,012 | 252,121 | 257,681 | 239,656 | 199,211 | 83.1 | % | ||||||||||||||||||||||||||
| Commercial real estate | 3,754,107 | 3,657,024 | 3,078,028 | 2,962,040 | 2,845,748 | 908,359 | 31.9 | % | ||||||||||||||||||||||||||
| Residential real estate | 1,017,877 | 1,032,355 | 909,590 | 927,138 | 921,827 | 96,050 | 10.4 | % | ||||||||||||||||||||||||||
| Consumer | 76,273 | 79,814 | 64,465 | 69,787 | 73,049 | 3,224 | 4.4 | % | ||||||||||||||||||||||||||
| Other 1 | 42,477 | 45,444 | 39,510 | 40,719 | 38,371 | 4,106 | 10.7 | % | ||||||||||||||||||||||||||
| Total unpaid principal balance | 8,735,918 | 8,662,495 | 7,579,962 | 7,555,454 | 7,351,288 | 1,384,630 | 18.8 | % | ||||||||||||||||||||||||||
| Less: Unamortized discount on acquired loans and unearned net deferred fees and costs and loans in process | (53,274 | ) | (55,521 | ) | (22,174 | ) | (24,794 | ) | (26,090 | ) | (27,184 | ) | 104.2 | % | ||||||||||||||||||||
| Total loans | $ | 8,682,644 | $ | 8,606,974 | $ | 7,557,788 | $ | 7,530,660 | $ | 7,325,198 | $ | 1,357,446 | 18.5 | % | ||||||||||||||||||||
| 1 Other loans primarily include consumer and commercial credit cards and customer deposit account overdrafts. | ||||||||||||||||||||||||||||||||||
| GREAT WESTERN BANCORP, INC. | ||||||||||||||||||||||||||||||||||||||
| Net Interest Margin (FTE) (Unaudited) | ||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
| For the three months ended: | ||||||||||||||||||||||||||||||||||||||
| September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||||||||||||||||||||||||||||||||
|
Average |
Interest |
Yield / |
Average |
Interest |
Yield / |
Average |
Interest |
Yield / |
||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | 183,985 | $ | 248 | 0.54 | % | $ | 130,521 | $ | 157 | 0.48 | % | $ | 72,054 | $ | 53 | 0.29 | % | ||||||||||||||||||||
| Investment securities | 1,379,971 | 6,163 | 1.78 | % | 1,373,451 | 6,283 | 1.84 | % | 1,400,485 | 6,188 | 1.75 | % | ||||||||||||||||||||||||||
| Non ASC 310-30 loans, net 3 | 8,477,214 | 101,070 | 4.74 | % | 7,903,860 | 93,733 | 4.77 | % | 7,108,598 | 86,613 | 4.83 | % | ||||||||||||||||||||||||||
| ASC 310-30 loans, net | 132,573 | 2,249 | 6.75 | % | 120,744 | 1,921 | 6.40 | % | 112,334 | 1,645 | 5.81 | % | ||||||||||||||||||||||||||
| Loans, net | 8,609,787 | 103,319 | 4.77 | % | 8,024,604 | 95,654 | 4.79 | % | 7,220,932 | 88,258 | 4.85 | % | ||||||||||||||||||||||||||
| Total interest-earning assets | 10,173,743 | 109,730 | 4.29 | % | 9,528,576 | 102,094 | 4.31 | % | 8,693,471 | 94,499 | 4.31 | % | ||||||||||||||||||||||||||
| Noninterest-earning assets | 1,152,995 | 1,085,961 | 1,048,844 | |||||||||||||||||||||||||||||||||||
| Total assets | $ | 11,326,738 | $ | 109,730 | 3.85 | % | $ | 10,614,537 | $ | 102,094 | 3.87 | % | $ | 9,742,315 | $ | 94,499 | 3.85 | % | ||||||||||||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 1,710,901 | $ | 1,497,567 | $ | 1,315,345 | ||||||||||||||||||||||||||||||||
| NOW, MMDA and savings deposits | 5,405,798 | $ | 4,709 | 0.35 | % | 5,236,443 | $ | 4,270 | 0.33 | % | 4,626,315 | $ | 3,185 | 0.27 | % | |||||||||||||||||||||||
| CDs | 1,402,427 | 2,259 | 0.64 | % | 1,340,460 | 2,182 | 0.65 | % | 1,408,155 | 2,402 | 0.68 | % | ||||||||||||||||||||||||||
| Total deposits | 8,519,126 | 6,968 | 0.33 | % | 8,074,470 | 6,452 | 0.32 | % | 7,349,815 | 5,587 | 0.30 | % | ||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | 152,412 | 125 | 0.33 | % | 152,615 | 124 | 0.33 | % | 164,843 | 133 | 0.32 | % | ||||||||||||||||||||||||||
| FHLB advances and other borrowings | 749,122 | 1,323 | 0.70 | % | 600,477 | 986 | 0.66 | % | 597,758 | 925 | 0.61 | % | ||||||||||||||||||||||||||
| Related party notes payable | — | — | — | % | — | — | — | % | 13,321 | 79 | 2.35 | % | ||||||||||||||||||||||||||
| Subordinated debentures and subordinated notes payable | 111,840 | 1,075 | 3.82 | % | 101,419 | 975 | 3.87 | % | 79,756 | 572 | 2.85 | % | ||||||||||||||||||||||||||
| Total borrowings | 1,013,374 | 2,523 | 0.99 | % | 854,511 | 2,085 | 0.98 | % | 855,678 | 1,709 | 0.79 | % | ||||||||||||||||||||||||||
| Total interest-bearing liabilities | 9,532,500 | $ | 9,491 | 0.39 | % | 8,928,981 | $ | 8,537 | 0.38 | % | 8,205,493 | $ | 7,296 | 0.35 | % | |||||||||||||||||||||||
| Noninterest-bearing liabilities | 147,083 | 118,184 | 80,450 | |||||||||||||||||||||||||||||||||||
| Stockholders' equity | 1,647,155 | 1,567,372 | 1,456,372 | |||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 11,326,738 | $ | 10,614,537 | $ | 9,742,315 | ||||||||||||||||||||||||||||||||
| Net interest spread | 3.46 | % | 3.48 | % | 3.50 | % | ||||||||||||||||||||||||||||||||
| Net interest income and net interest margin (FTE) 1 | $ | 100,239 | 3.92 | % | $ | 93,557 | 3.95 | % | $ | 87,203 | 3.98 | % | ||||||||||||||||||||||||||
| Less: Tax equivalent adjustment | 2,012 | 1,905 | 1,778 | |||||||||||||||||||||||||||||||||||
| Net interest income and net interest margin - ties to Statements of Comprehensive Income | $ | 98,227 | 3.84 | % | $ | 91,652 | 3.87 | % | $ | 85,425 | 3.90 | % | ||||||||||||||||||||||||||
| 1 These are non-GAAP financial measures management believes are helpful to interpreting our financial results. See the tables at the end of this document for the calculation of the measures and reconciliation to the most comparable GAAP measure. | ||||||||||||||||||||||||||||||||||||||
| 2 Annualized for all partial-year periods. | ||||||||||||||||||||||||||||||||||||||
| 3 Interest income includes $1.7 million and $0.1 million for the fourth quarter of fiscal year 2016 and 2015, respectively, resulting from accretion of purchase accounting discount associated with acquired loans. | ||||||||||||||||||||||||||||||||||||||
| GREAT WESTERN BANCORP, INC. | ||||||||||||||||||||||||
| Net Interest Margin (FTE) (Unaudited) | ||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| For the twelve months ended: | ||||||||||||||||||||||||
| September 30, 2016 | September 30, 2015 | |||||||||||||||||||||||
|
Average |
Interest |
Yield / |
Average |
Interest |
Yield / |
|||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Cash and due from banks | $ | 122,651 | $ | 574 | 0.47 | % | $ | 244,850 | $ | 652 | 0.27 | % | ||||||||||||
| Investment securities | 1,366,925 | 24,680 | 1.81 | % | 1,377,718 | 24,271 | 1.76 | % | ||||||||||||||||
| Non ASC 310-30 loans, net 3 | 7,736,454 | 370,521 | 4.79 | % | 6,889,738 | 336,194 | 4.88 | % | ||||||||||||||||
| ASC 310-30 loans, net | 113,828 | 7,457 | 6.55 | % | 129,413 | 8,840 | 6.83 | % | ||||||||||||||||
| Loans, net | 7,850,282 | 377,978 | 4.81 | % | 7,019,151 | 345,034 | 4.92 | % | ||||||||||||||||
| Total interest-earning assets | 9,339,858 | 403,232 | 4.32 | % | 8,641,719 | 369,957 | 4.28 | % | ||||||||||||||||
| Noninterest-earning assets | 1,079,503 | 1,079,201 | ||||||||||||||||||||||
| Total assets | $ | 10,419,361 | $ | 403,232 | 3.87 | % | $ | 9,720,920 | $ | 369,957 | 3.81 | % | ||||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 1,493,287 | $ | 1,350,749 | ||||||||||||||||||||
| NOW, MMDA and savings deposits | 5,081,401 | $ | 16,206 | 0.32 | % | 4,472,223 | $ | 12,374 | 0.28 | % | ||||||||||||||
| CDs | 1,345,693 | 8,908 | 0.66 | % | 1,539,863 | 10,988 | 0.71 | % | ||||||||||||||||
| Total deposits | 7,920,381 | 25,114 | 0.32 | % | 7,362,835 | 23,362 | 0.32 | % | ||||||||||||||||
| Securities sold under agreements to repurchase | 160,820 | 519 | 0.32 | % | 168,455 | 563 | 0.33 | % | ||||||||||||||||
| FHLB advances and other borrowings | 580,283 | 4,154 | 0.72 | % | 554,127 | 3,631 | 0.66 | % | ||||||||||||||||
| Related party notes payable | — | — | — | % | 34,301 | 771 | 2.25 | % | ||||||||||||||||
| Subordinated debentures and subordinated notes payable | 98,689 | 3,737 | 3.79 | % | 62,001 | 1,557 | 2.51 | % | ||||||||||||||||
| Total borrowings | 839,792 | 8,410 | 1.00 | % | 818,884 | 6,522 | 0.80 | % | ||||||||||||||||
| Total interest-bearing liabilities | 8,760,173 | $ | 33,524 | 0.38 | % | 8,181,719 | $ | 29,884 | 0.37 | % | ||||||||||||||
| Noninterest-bearing liabilities | 117,344 | 82,978 | ||||||||||||||||||||||
| Stockholders' equity | 1,541,844 | 1,456,223 | ||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 10,419,361 | $ | 9,720,920 | ||||||||||||||||||||
| Net interest spread | 3.49 | % | 3.44 | % | ||||||||||||||||||||
| Net interest income and net interest margin (FTE) 1 | $ | 369,708 | 3.96 | % | $ | 340,073 | 3.94 | % | ||||||||||||||||
| Less: Tax equivalent adjustment | 7,534 | 6,576 | ||||||||||||||||||||||
| Net interest income and net interest margin - ties to Statements of Comprehensive Income | $ | 362,174 | 3.88 | % | $ | 333,497 | 3.86 | % | ||||||||||||||||
| 1 These are non-GAAP financial measures management believes are helpful to interpreting our financial results. See the tables at the end of this document for the calculation of the measures and reconciliation to the most comparable GAAP measure. | ||||||||||||||||||||||||
| 2 Annualized for all partial-year periods. | ||||||||||||||||||||||||
| 3 Interest income includes $3.7 million and $0.2 million for the twelve months ended 2016 and 2015, respectively, resulting from accretion of purchase accounting discount associated with acquired loans. | ||||||||||||||||||||||||
Non-GAAP Measures and Reconciliation
We rely on certain non-GAAP measures in making financial and operational decisions about our business. We believe that each of the non-GAAP 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. generally accepted accounting principles, or GAAP.
In particular, we evaluate our profitability and performance based on our adjusted net income, adjusted earnings per share, cash net income and return on average tangible common equity. Our adjusted net income and adjusted earnings per 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. Our cash net income and return on tangible common equity exclude the effects of amortization expense relating to intangible assets and related tax effects from the acquisition of us by 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 share) and based on our cash payments and receipts during the period (for cash 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 calculations of these ratios exclude the effect of 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 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) | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands except share and per share amounts) | |||||||||||||||||||||||||||||||||||
| At or for the twelve months ended: | At or for the three months ended: | ||||||||||||||||||||||||||||||||||
| September 30, | September 30, | September 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||||||||||||
| 2016 | 2015 | 2016 | June 30, 2016 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||||||
| Adjusted net income and adjusted earnings per common share: | |||||||||||||||||||||||||||||||||||
| Net income - GAAP | $ | 121,253 | $ | 109,065 | $ | 33,758 | $ | 26,360 | $ | 30,674 | $ | 30,461 | $ | 33,812 | |||||||||||||||||||||
| Add: Acquisition expenses | 15,692 | — | 2,742 | 12,179 | 771 | — | — | ||||||||||||||||||||||||||||
| Add: tax effect at 38% | (5,963 | ) | — | (1,042 | ) | (4,628 | ) | (293 | ) | — | — | ||||||||||||||||||||||||
| Adjusted net income | $ | 130,982 | $ | 109,065 | $ | 35,458 | $ | 33,911 | $ | 31,152 | $ | 30,461 | $ | 33,812 | |||||||||||||||||||||
| Weighted average diluted common shares outstanding | 56,729,350 | 57,500,878 | 58,938,367 | 57,176,705 | 55,408,876 | 55,393,452 | 56,215,947 | ||||||||||||||||||||||||||||
| Earnings per common share - diluted | $ | 2.14 | $ | 1.90 | $ | 0.57 | $ | 0.46 | $ | 0.55 | $ | 0.55 | $ | 0.60 | |||||||||||||||||||||
| Adjusted earnings per common share - diluted | $ | 2.31 | $ | 1.90 | $ | 0.60 | $ | 0.59 | $ | 0.56 | $ | 0.55 | $ | 0.60 | |||||||||||||||||||||
| Tangible net income and return on average tangible common equity: | |||||||||||||||||||||||||||||||||||
| Net income - GAAP | $ | 121,253 | $ | 109,065 | $ | 33,758 | $ | 26,360 | $ | 30,674 | $ | 30,461 | $ | 33,812 | |||||||||||||||||||||
| Add: Amortization of intangible assets | 3,264 | 7,110 | 1,024 | 822 | 708 | 709 | 708 | ||||||||||||||||||||||||||||
| Add: Tax on amortization of intangible assets | (880 | ) | (880 | ) | (220 | ) | (220 | ) | (220 | ) | (220 | ) | (220 | ) | |||||||||||||||||||||
| Tangible net income | $ | 123,637 | $ | 115,295 | $ | 34,562 | $ | 26,962 | $ | 31,162 | $ | 30,950 | $ | 34,300 | |||||||||||||||||||||
| Average common equity | $ | 1,541,844 | $ | 1,456,223 | $ | 1,647,155 | $ | 1,567,372 | $ | 1,488,398 | $ | 1,464,450 | $ | 1,456,372 | |||||||||||||||||||||
| Less: Average goodwill and other intangible assets | 721,726 | 707,920 | 750,756 | 727,707 | 703,866 | 704,576 | 705,284 | ||||||||||||||||||||||||||||
| Average tangible common equity | $ | 820,118 | $ | 748,303 | $ | 896,399 | $ | 839,665 | $ | 784,532 | $ | 759,874 | $ | 751,088 | |||||||||||||||||||||
| Return on average common equity * | 7.9 | % | 7.5 | % | 8.2 | % | 6.8 | % | 8.3 | % | 8.3 | % | 9.2 | % | |||||||||||||||||||||
| Return on average tangible common equity * | 15.1 | % | 15.4 | % | 15.3 | % | 12.9 | % | 16.0 | % | 16.2 | % | 18.1 | % | |||||||||||||||||||||
| * Calculated as net income divided by average common equity and cash net income divided by average tangible common equity, respectively. Annualized for partial-year periods. | |||||||||||||||||||||||||||||||||||
| Adjusted net interest income and adjusted net interest margin (fully-tax equivalent basis): | |||||||||||||||||||||||||||||||||||
| Net interest income - GAAP | $ | 362,174 | $ | 333,497 | $ | 98,227 | $ | 91,652 | $ | 86,338 | $ | 85,957 | $ | 85,425 | |||||||||||||||||||||
| Add: Tax equivalent adjustment | 7,534 | 6,576 | 2,012 | 1,905 | 1,791 | 1,826 | 1,778 | ||||||||||||||||||||||||||||
| Net interest income (FTE) | 369,708 | 340,073 | 100,239 | 93,557 | 88,129 | 87,783 | 87,203 | ||||||||||||||||||||||||||||
| Add: Current realized derivative gain (loss) | (20,727 | ) | (21,642 | ) | (4,895 | ) | (5,005 | ) | (5,175 | ) | (5,652 | ) | (5,637 | ) | |||||||||||||||||||||
| Adjusted net interest income (FTE) | $ | 348,981 | $ | 318,431 | $ | 95,344 | $ | 88,552 | $ | 82,954 | $ | 82,131 | $ | 81,566 | |||||||||||||||||||||
| Average interest-earning assets | $ | 9,339,858 | $ | 8,641,719 | $ | 10,173,743 | $ | 9,528,576 | $ | 8,892,465 | $ | 8,764,649 | $ | 8,693,471 | |||||||||||||||||||||
| Net interest margin (FTE) * | 3.96 | % | 3.94 | % | 3.92 | % | 3.95 | % | 3.99 | % | 3.98 | % | 3.98 | % | |||||||||||||||||||||
| Adjusted net interest margin (FTE) ** | 3.74 | % | 3.68 | % | 3.73 | % | 3.74 | % | 3.75 | % | 3.73 | % | 3.72 | % | |||||||||||||||||||||
| * 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: | |||||||||||||||||||||||||||||||||||
| Net interest income - GAAP | $ | 362,987 | $ | 329,618 | $ | 99,058 | $ | 91,829 | $ | 86,534 | $ | 85,567 | $ | 84,835 | |||||||||||||||||||||
| Add: Tax equivalent adjustment | 7,534 | 6,576 | 2,012 | 1,905 | 1,791 | 1,826 | 1,778 | ||||||||||||||||||||||||||||
| Interest income (FTE) | 370,521 | 336,194 | 101,070 | 93,734 | 88,325 | 87,393 | 86,613 | ||||||||||||||||||||||||||||
| Add: Current realized derivative gain (loss) | (20,727 | ) | (21,642 | ) | (4,895 | ) | (5,005 | ) | (5,175 | ) | (5,652 | ) | (5,637 | ) | |||||||||||||||||||||
| Adjusted interest income (FTE) | $ | 349,794 | $ | 314,552 | $ | 96,175 | $ | 88,729 | $ | 83,150 | $ | 81,741 | $ | 80,976 | |||||||||||||||||||||
| Average non ASC 310-30 loans | $ | 7,736,454 | $ | 6,889,738 | $ | 8,477,214 | $ | 7,903,860 | $ | 7,371,600 | $ | 7,193,143 | $ | 7,108,598 | |||||||||||||||||||||
| Yield (FTE) * | 4.79 | % | 4.88 | % | 4.74 | % | 4.77 | % | 4.82 | % | 4.83 | % | 4.83 | % | |||||||||||||||||||||
| Adjusted yield (FTE) ** | 4.52 | % | 4.57 | % | 4.51 | % | 4.52 | % | 4.54 | % | 4.52 | % | 4.52 | % | |||||||||||||||||||||
| * 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 | $ | 404,711 | $ | 367,387 | $ | 114,025 | $ | 100,749 | $ | 95,339 | $ | 94,601 | $ | 94,474 | |||||||||||||||||||||
| Add: Tax equivalent adjustment | 7,534 | 6,576 | 2,012 | 1,905 | 1,791 | 1,826 | 1,778 | ||||||||||||||||||||||||||||
| Total revenue (FTE) | $ | 412,245 | $ | 373,963 | $ | 116,037 | $ | 102,654 | $ | 97,130 | $ | 96,427 | $ | 96,252 | |||||||||||||||||||||
| Noninterest expense | $ | 207,640 | $ | 186,794 | $ | 57,342 | $ | 61,222 | $ | 44,855 | $ | 44,220 | $ | 44,835 | |||||||||||||||||||||
| Less: Amortization of intangible assets | 3,264 | 7,110 | 1,024 | 822 | 708 | 709 | 708 | ||||||||||||||||||||||||||||
| Tangible noninterest expense | $ | 204,376 | $ | 179,684 | $ | 56,318 | $ | 60,400 | $ | 44,147 | $ | 43,511 | $ | 44,127 | |||||||||||||||||||||
| Efficiency ratio * | 49.6 | % | 48.0 | % | 48.5 | % | 58.8 | % | 45.5 | % | 45.1 | % | 45.8 | % | |||||||||||||||||||||
| * 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 | $ | 1,663,391 | $ | 1,459,346 | $ | 1,663,391 | $ | 1,640,511 | $ | 1,509,202 | $ | 1,475,516 | $ | 1,459,346 | |||||||||||||||||||||
| Less: Goodwill and other intangible assets | 750,755 | 704,926 | 750,755 | 751,217 | 703,508 | 704,217 | 704,926 | ||||||||||||||||||||||||||||
| Tangible common equity | $ | 912,636 | $ | 754,420 | $ | 912,636 | $ | 889,294 | $ | 805,694 | $ | 771,299 | $ | 754,420 | |||||||||||||||||||||
| Total assets | $ |
11,531,180 |
$ | 9,798,654 | $ |
11,531,180 |
$ | 11,453,222 | $ | 9,942,295 | $ | 9,957,215 | $ | 9,798,654 | |||||||||||||||||||||
| Less: Goodwill and other intangible assets | 750,755 | 704,926 | 750,755 | 751,217 | 703,508 | 704,217 | 704,926 | ||||||||||||||||||||||||||||
| Tangible assets | $ |
10,780,425 |
$ | 9,093,728 | $ |
10,780,425 |
$ | 10,702,005 | $ | 9,238,787 | $ | 9,252,998 | $ | 9,093,728 | |||||||||||||||||||||
| Tangible common equity to tangible assets | 8.5 | % | 8.3 | % | 8.5 | % | 8.3 | % | 8.7 | % | 8.3 | % | 8.3 | % | |||||||||||||||||||||
| Tangible book value per share: | |||||||||||||||||||||||||||||||||||
| Total stockholders' equity | $ | 1,663,391 | $ | 1,459,346 | $ | 1,663,391 | $ | 1,640,511 | $ | 1,509,202 | $ | 1,475,516 | $ | 1,459,346 | |||||||||||||||||||||
| Less: Goodwill and other intangible assets | 750,755 | 704,926 | 750,755 | 751,217 | 703,508 | 704,217 | 704,926 | ||||||||||||||||||||||||||||
| Tangible common equity | $ | 912,636 | $ | 754,420 | $ | 912,636 | $ | 889,294 | $ | 805,694 | $ | 771,299 | $ | 754,420 | |||||||||||||||||||||
| Common shares outstanding | 58,693,304 | 55,219,596 | 58,693,304 | 58,693,499 | 55,245,177 | 55,244,569 | 55,219,596 | ||||||||||||||||||||||||||||
| Book value per share - GAAP | $ | 28.34 | $ | 26.43 | $ | 28.34 | $ | 27.95 | $ | 27.32 | $ | 26.71 | $ | 26.43 | |||||||||||||||||||||
| Tangible book value per share | $ | 15.55 | $ | 13.66 | $ | 15.55 | $ | 15.15 | $ | 14.58 | $ | 13.96 | $ | 13.66 | |||||||||||||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20161027005266/en/
