Investor Presentation | June 30, 2021

KEY DEVELOPMENTS

Bolster Credit Risk Management

Measured Actions

Organizational Alignment for

Increased Specialization

  • Nonaccrual loans reduced by $74.4 million or 26% (down 35% YTD)
  • Criticized loans down $199.2 million, or 17%
  • Loans on payment deferral down to just $0.2 million
  • Increased dividend to $0.05 per share
  • Strong capital levels with total capital ratio of 16%
  • ACL is 3.33% of total loans excluding PPP loans
  • Momentum building with small business platform
  • Macala Carter appointed as first Director of Diversity, Equity and Inclusion

2

EARNINGS OVERVIEW

2QFY21

3QFY21

Net Interest Income-GAAP

$102.9

$97.5

Noninterest Income (excl FVO Credit Adj)

$17.1

$15.2

Noninterest Expense

$59.1

$60.5

PTPP 1

$60.9

$52.2

Provision for (recapture of) Credit Losses

$(5.0)

$(20.7)

FVO Credit Adj

$0.0

$4.1

Tax

$14.6

$18.3

Net Income

$51.3

$58.7

Strong quarter of net income supported by lower credit costs

  • Net interest income benefited from nonaccrual interest recoveries and focus on reducing funding costs helping to counter lower PPP fees and the impact from reduced loan volume
  • Noninterest income benefited from improvements in service charges, wealth management, and BOLI income helping to offset slower mortgage income and a lower derivative credit adjustment
  • Expenses benefiting from favorable OREO trends and lower base salary costs, helping to fund strategic technology upgrades and business development
  • Provision recapture driven by reduced loans and economic forecasts, and positive credit adjustment from improved credit risk on FVO loan portfolio
  • PTPP1 decreased $8.7 million from the prior quarter primarily due to lower NII from a decrease in PPP income and reduced volumes related to problem loan exits
  • PTPP1 decreased slightly by $0.3 million from the comparable quarter prior year with a 9.8% expense reduction offsetting lower NII
  • Near term focus centers on continuing asset quality momentum progress, optimizing loan production, and managing spread income given excess liquidity
  • See Non-GAAP table in appendix for reconciliation

Pre-taxPre-provision Income¹ (PTPP)

$66.3

$60.9

$52.5

$51.8

$52.2

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

3

NET INTEREST INCOME

  • Net interest income was $99.1 million for the quarter, a decrease of $5.3 million; adjusted net interest income1 was $95.9 million, a decrease of $5.3 million
    • Loan interest reflects a $3.2 million decrease in PPP interest and fees and a $5.5 million decrease largely due to lower loan volumes, partially offset by a $1.8 million increase in nonaccrual interest recoveries
    • Interest expense lower by $1.0 million, driven by a $0.4 million decrease in time deposit interest and $0.6 million decrease in other interest bearing deposits
  • Net interest margin was 3.23%, a 28 basis point decrease from 3.51%; adjusted net interest margin1 was 3.13%, a 27 basis point decrease from 3.40%

Net Interest Income ($MM) and NIM

NIM Analysis

$426.6

$425.6

3.51%

3.74%

3.59%

3.57%

3.63%

3.51%

3.51%

3.40%

3.23%

3.74%

3.52%

3.51%

3.47%

3.40%

3.40%

3.23%

0.07%

0.03%

(0.18)%

$107.9

$107.5

$109.5

$104.4

3.13%

(0.07)%

(0.05)%

(0.07)%

3.13%

$99.1

FY19

FY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

Net Interest Income (FTE)

NIM (FTE)

Adjusted NIM (FTE)¹

2QFY21

Liquidity

Increased

Loans

Accretion

Recoveries

PPP

Funding

3QFY21

Loan

Nonaccrual

  • Non-GAAPmeasures, see appendix for reconciliations.

NOTE: All references to net interest income and net interest margin are presented on a fully-tax equivalent basis unless otherwise noted.

NIM (FTE)

Adjusted NIM (FTE)¹

4

NET INTEREST INCOME (cont'd)

  • PPP loan income was $6.6 million for the quarter, with $1.3 million of interest and $5.3 million of amortized fees
    • Remaining unamortized PPP fee income to be recognized is $14.2 million
    • Outstanding PPP loans of $364.9 million following $612.0 million of PPP loans forgiven and $249.5 million originated in the second round
  • Loans that are fixed, are at their rate floors, or reprice beyond 90 days are providing yield support on approximately 80% of the loan portfolio
    • $3.8 billion of fixed loans with a yield of 4.18%
    • $1.7 billion of variable loans have reached their floors with a yield of 4.03%
    • $1.1 billion of variable loans repricing after 90 days with a yield of 4.29%

Rate Floor Summary¹

PPP Summary ($MM)

Round 1

Round 2

Original

Current

# Loans

Original

Current

# Loans

Under $150k

$137.9

$21.0

723

$88.6

$80.0

3,410

$150k to $350k

$105.2

$17.9

85

$38.2

$38.2

176

$350k to $2MM

$323.1

$38.6

54

$110.7

$110.7

140

$2MM+

$161.1

$46.5

13

$12.0

$12.0

6

Total

$727.3

$124.0

875

$249.5

$240.9

3,732

Jun20

Sep20

Dec20

Mar21

Jun21

Remain

Fee Schedule ($MM)

$2.6

$4.4

$3.7

$8.1

$5.3

$14.2

$3.8B, 4.18%

$0.2B, 3.50%

$0.3B, 4.12%

$1.3B, 2.66%

$1.7B, 4.03%

$0.8B, 4.35%

Fixed

Variable - Floor

Variable - No Floor

Fixed or At Floor

Reprice After 90 Days

Reprice Within 90 Days

• Chart shows volumes and yields at the quarter end

• Variable/Adjustable: 34% Prime, 27% 5 yr Treasury, 26% 1 mo LIBOR, 13% all other

  • Excludes PPP loans

5

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Great Western Bancorporation Inc. published this content on 29 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 July 2021 14:28:08 UTC.