Investor Presentation | March 31, 2021

KEY DEVELOPMENTS

Bolster Credit Risk Management

Measured Actions

Organizational Alignment for

Increased Specialization

  • Nonaccrual and classified loans reduced further
  • Loans on deferral decreased to 0.24% of total loans excluding PPP loans
  • Ag industry outlook is favorable across key sectors
  • Prudent NIM management through reduced funding cost and PPP contribution
  • Strong capital generation and improved ratios
  • ACL ratio is 3.50% of total loans excluding PPP loans
  • Launched small business platform
  • Launched the #beU campaign as we advance Diversity, Equity and Inclusion

2

EARNINGS OVERVIEW

1QFY21

2QFY21

Net Interest Income-GAAP

$107.9

$102.9

Noninterest Income (excl FVO Credit Adj)

$15.8

$17.1

Noninterest Expense

$57.4

$59.1

PTPP 1

$66.3

$60.9

Provision for (recapture of) Credit Losses

$11.9

$(5.0)

FVO Credit Adj

$(1.7)

$0.0

Tax

$11.4

$14.6

Net Income

$41.3

$51.3

Strong quarter of net income supported by lower credit costs and good PTPP results

  • Net interest income benefited from higher PPP income and prudent funding cost management helping to counter the impact from reduced loan volume
  • Noninterest income lift from a positive derivative credit adjustment, with core noninterest income benefiting from strong mortgage originations
  • Expenses continued to track below normal with minimal OREO cost and a reduction in FDIC insurance premium
  • Provision recapture driven by reduced loans and net impact from economic forecasts
  • PTPP1 decreased $5.4 million from the prior quarter primarily due to lower NII and increased $14.6 million year on year primarily due to lower expenses
  • Near term focus continues to center on asset quality, loan production and spread income
  • See Non-GAAP table in appendix for reconciliation

Pre-taxPre-provision Income¹ (PTPP)

$66.3

$60.9

$46.3

$52.5

$51.8

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3

NET INTEREST INCOME

  • Net interest income was $104.4 million for the quarter, a decrease of $5.1 million; adjusted net interest income1 was $101.3 million, a decrease of $4.8 million
    • Loan interest reflects a $2.2 million decrease in nonaccrual interest recoveries, a $4.4 million decrease driven by lower loan volumes, and a $4.7 million decrease due to lower day count and other loan fees, all partially offset with a net $4.2 million increase in PPP interest and fee income
    • Interest expense lower by $1.6 million driven by a $0.7 million decrease in time deposit interest and $0.8 million decrease in interest-bearing deposits
  • Net interest margin was 3.51%, a 12 basis point decrease from 3.63%; adjusted net interest margin1 was 3.40%, also a 12 basis point decrease from 3.52%
    • Excluding the impact of accelerated PPP fee income and one-off interest recoveries and accretion, underlying NIM was 3.18%

Net Interest Income ($MM) and NIM

NIM Analysis

$426.6

$425.6

3.74%

3.59%

3.59%

3.57%

3.63%

3.74%

3.51%

3.51%

3.51%

3.55%

3.47%

3.40%

3.52%

3.40%

$109.5

$103.5

$107.9

$107.5

$104.4

FY19

FY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

Net Interest Income (FTE)

NIM (FTE)

Adjusted NIM (FTE)¹

3.63%

3.51%

3.52%

0.17%

0.04%

3.40%

(0.16)%

(0.10)%

1QFY21

Liquidity

(0.07)%

Funding

2QFY21

Loans

Recoveries

PPP

Increased

Nonaccrual

Less

1 Non-GAAP measures, see appendix for reconciliations.

NIM (FTE)

Adjusted NIM (FTE)¹

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

4

NET INTEREST INCOME (cont'd)

  • PPP loan income was $9.7 million for the quarter, with $1.6 million of interest and $8.1 million of amortized fees
    • Remaining PPP fee income to be recognized is $13.2 million
    • Outstanding PPP loans of $566.8 million following $356.5 million of PPP loans forgiven and $196.0 million originated in the second round
  • Fixed loans, rate floors and repricing beyond 90 days are providing yield support on approximately 80% of the loan portfolio
    • $4.0 billion of fixed loans with a yield of 4.27%
    • $1.8 billion of variable loans have reached their floors with a yield of 4.11%
    • $1.2 billion of variable loans repricing after 90 days with a yield of 4.34%

Rate Floor Summary¹

PPP Summary ($MM)

Round 1

Round 2

Original

Current

# Loans

Original

# Loans

Bal

Bal

Bal

Under $150k

$137.9

$54.6

1,614

$60.1

2,248

$150k to $350k

$105.2

$40.3

185

$30.7

141

$350k to $2MM

$323.1

$118.0

156

$95.2

121

$2MM+

$161.1

$157.9

44

$10.0

5

Total

$727.3

$370.8

1,999

$196.0

2,515

Jun20

Sep20

Dec20

Mar21

Remain

Fee Schedule ($MM)

$2.6

$4.4

$3.7

$8.1

$13.2

$4.0B, 4.27%

$0.2B, 3.55%

$0.3B, 4.21%

$1.2B, 2.74%

$1.8B, 4.11%

$0.9B, 4.39%

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, 28% 5 yr Treasury, 25% 1 mo LIBOR, 13% all other

  • Excludes PPP loans

5

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Great Western Bancorporation Inc. published this content on 29 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2021 11:15:10 UTC.