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
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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 |
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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
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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.