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Great Western Bancorp reported a net income of $51.3 million or $0.93 per diluted share for Q2 FY 2021, up from $41.3 million or $0.75 per diluted share in Q1. For H1 FY 2021, net income reached $92.6 million and $1.68 per share, with a 17.4% return on average common equity. Nonaccrual and classified loans decreased by 12.4%, and loans in payment deferral reduced to $19.7 million. The bank launched a new small business platform to enhance client experience and reduce loan closing times significantly.
Positive
Net income for Q2 FY 2021 increased to $51.3 million from $41.3 million in the previous quarter.
Earnings per diluted share rose to $0.93 in Q2 FY 2021 from $0.75 in Q1.
Return on average common equity improved to 17.4%.
Nonaccrual and classified loans decreased by 12.4%.
Launch of a new small business platform expected to reduce loan closing times from 22 days to 3.
Negative
Net interest income decreased by $5.1 million to $104.4 million.
Net interest margin fell by 12 basis points to 3.51%.
Interest income lower by $6.6 million due to decreased loan interest.
Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $51.3 million, or $0.93 per diluted share, for the second quarter of fiscal year 2021, compared to net income of $41.3 million, or $0.75 per diluted share, for the first quarter of fiscal year 2021.
"I am proud of our continued improvement this quarter and the laser focus and dedication of the Great Western team," said Mark Borrecco, President and Chief Executive Officer. "We strengthened our capital position posting net income of $92.6 million and earnings per diluted share of $1.68 through the first half of fiscal year 2021, along with 17.4% return on average common equity. Credit quality also showed progress with both nonaccrual and classified loans down 12.4% this fiscal year, and loans with payment deferrals dropping to $19.7 million. This improvement, along with our allowance for credit loss coverage of 3.50% excluding PPP, reinforces our conservative approach on managing underwriting and risk management of the portfolio as our markets evolve into their new normal post pandemic.
In addition, we are excited to launch our new small business platform, which will transform the small business client experience while reducing our average small business loan closing time from 22 days to 3. This enhancement, along with our investments in treasury management and the improving outlook for the agricultural loan portfolio positions Great Western well for building momentum."
Impact and Response to COVID-19 Pandemic
We remain focused on keeping our employees safe and our bank running effectively to serve our customers. Our branches have been reopened across our footprint, and we are targeting 75% employee occupancy in our offices by June, with plans for return in August involving remote work optionality and adherence to CDC guidelines in the office. For our customers, we have supported PPP, having provided $727.3 million in loans to over 4,800 customers in the first round followed by $196.0 million to over 2,500 customers in the second round. Related to PPP forgiveness, we have processed $356.5 million of loans for over 2,000 customers. Additionally, we have granted both full and partial payment deferrals to help provide relief from COVID-19, which resulted in a peak of $1.69 billion of loans on deferral as of the third quarter of fiscal year 2020. As of April 16, 2021 the balance of loans with a payment deferral was $19.7 million, or 0.24% of total loans excluding PPP, compared to $113.0 million as of January 13, 2021.
Net Interest Income and Net Interest Margin1
Net interest income was $104.4 million for the quarter, a decrease of $5.1 million, while net interest margin was 3.51%, a 12 basis point decrease from 3.63%. Adjusted net interest income2 was $101.3 million, a decrease of $4.8 million, and adjusted net interest margin2 was 3.40%, also a 12 basis point decrease from 3.52%. Interest income was lower by $6.6 million as loan interest decreased by $7.1 million while securities and other interest income increased by $0.5 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. The decrease in interest income was partially offset by a $1.6 million decrease in intere
FAQ
What was Great Western Bancorp's net income for Q2 FY 2021?
Great Western Bancorp reported a net income of $51.3 million for Q2 FY 2021.
How much did earnings per share increase in Q2 FY 2021 for GWB?
Earnings per diluted share increased to $0.93 in Q2 FY 2021.
What was the return on average common equity for GWB in the first half of FY 2021?
The return on average common equity was 17.4% for the first half of FY 2021.
How did Great Western Bancorp improve its credit quality in FY 2021?
Nonaccrual and classified loans decreased by 12.4% in FY 2021.
What new platform did Great Western Bancorp launch to assist small businesses?
Great Western Bancorp launched a new small business platform to enhance client experience.
