Great Western Bancorp's (GWB) CEO Ken Karels on Q1 2018 Results - Earnings Call Transcript

Great Western Bancorp, Inc. (NYSE:GWB) Q1 2018 Results Earnings Conference Call January 25, 2018 8:30 AM ET

Executives

Ann Nachtigal - Director, Corporate Communications

Ken Karels - Chairman, President and CEO

Peter Chapman - CFO

Michael Gough - Chief Credit Officer

Doug Bass - Regional President

David Hinderaker - Head, IR

Analysts

Dave Rochester - Deutsche Bank

Ebrahim Poonawala - Bank of America Merrill Lynch

Steven Alexopoulos - JP Morgan

Jeff Rulis - D. A. Davidson

Jon Arfstrom - RBC Capital Markets

Nathan Race - Piper Jaffray

Erik Zwick - Stephens, Inc.

Damon DelMonte - KBW

Operator

Good morning. And welcome to the Great Western Bancorp First Quarter Fiscal Year 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

At this time, I would like to turn the conference over to Ann Nachtigal, Director of Corporate Communications. Please go ahead.

Ann Nachtigal

Thank you, Denise and good morning everyone. Joining us this morning on Great Western Bancorp’s first quarter fiscal year 2018 conference call are, Ken Karels, Chairman, President and Chief Executive Officer; Peter Chapman, Chief Financial Officer; Steve Ulenberg, Chief Risk Officer; Michael Gough, Chief Credit Officer; Doug Bass, Regional President; and David Hinderaker, Head of Investor Relations.

Before we get started, I would like to remind you that today’s presentation may contain forward-looking statements that are subject to certain risks and uncertainties that could cause the Company’s actual future results to materially differ from those discussed. Please refer to the forward-looking statement disclosures contained in the presentation that we have made available on our website, as well as our periodic SEC filings for a full discussion of the Company’s risk factors.

Additionally, today, we will be discussing certain non-GAAP financial measures on this conference call. References to non-GAAP measures are only provided to assist you in understanding Great Western’s results and performance trends and should not be relied upon as a financial measure of actual results. Reconciliations for such non-GAAP measures are appropriately referenced and included within the presentation.

And with that said, let me turn it over now to Great Western Bancorp’s Chairman, President and Chief Executive Officer, Ken Karels. Ken?

Ken Karels

Thank you, Ann, and good morning, everyone. Thank you for taking the time to join us. There were a number of unique items in the quarter that Pete will run through shortly. But before that, I want to call out a few of the highlights for the quarter.

Net income was $29.2 million or $0.49 per share, while adjusted net income excluding the revaluation of deferred tax asset was $42.8 million, or $0.72 per share. Loan growth was robust with loans increasing $197 million or 8.7% on an annualized basis. Our efficiency ratio continued to improve to 45.8% and we realized the benefit of tax reform this quarter with the September 30th fiscal year and our federal tax rate dropped to 24.5% and will drop again to 21% on October 1st.

Now, for more insight on our first quarter financial results, I would like to turn the call over to our Chief Financial Officer, Peter Chapman. Pete?

Peter Chapman

Thanks, Ken, and good morning everybody. Thank you for joining us today. As Ken mentioned, there were few unusual items in our financial results for the quarter that I would like to spend a little bit of time discussing with you.

Like many of our peers, the lower corporate tax rates made us revisit the value of deferred tax assets. We recognized the charge of $13.6 million during the quarter, reducing our tangible book value per share by approximately 1.3% and our total capital ratio by approximately 15 basis points. This item is one-time in nature and as such we treat it as the non-GAAP adjustment within our adjusted net income.