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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): October 27, 2016

GREAT WESTERN BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

001-36688
 
47-1308512
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
225 South Main Avenue
 
 
Sioux Falls, South Dakota
 
57104
(Address of Principal Executive Offices)
 
 (Zip Code)


(605) 334-2548
(Registrant’s Telephone Number, Including Area Code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))














Item 2.02.
Results of Operations and Financial Condition.

On October 27, 2016, Great Western Bancorp, Inc. ("Great Western" and, together with its consolidated subsidiaries, the “Company”) announced its earnings for the fourth fiscal quarter ended September 30, 2016. A copy of Great Western's press release containing this information is attached as Exhibit 99.1 to this report on Form 8-K and is incorporated herein by reference.

Item 7.01.
Regulation FD Disclosure.

A copy of the slide presentation relating to the Company’s earnings results for use on the conference call being held for investors and analysts is being furnished as Exhibit 99.2 to this report on Form 8-K and is incorporated herein by reference.

The Company is also furnishing via this report on Form 8-K a copy of its Quarterly Investor Relations Presentation which includes financial data as of and for the three and twelve months ended September 30, 2016. The Company intends to use this presentation for any investor meetings or related interactions through the first quarter of fiscal year 2017. A copy of the presentation will also be available in the Investor Relations section of the Company’s website, www.greatwesternbank.com. A copy of the presentation is furnished as Exhibit 99.3 to this Form 8-K and is incorporated herein by reference.
Item 9.01.
Financial Statements and Exhibits.

(d)
Exhibits.

Exhibit No.
Description
 
 
99.1
Press release of Great Western dated October 27, 2016, containing financial information for the quarter ended September 30, 2016.
 
 
99.2
Slide presentation for conference call for investors and analysts on October 27, 2016.
 
 
99.3
Quarterly Investor Relations Presentation for the fourth quarter of fiscal year 2016.


All information provided in this report on Form 8-K, including Exhibits 99.1, 99.2 and 99.3, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Great Western under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such a filing.






Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
GREAT WESTERN BANCORP, INC.
 
 
Date: October 27, 2016
By:          /s/ Peter Chapman
 
Name:          Peter Chapman    
 
Title:          Chief Financial Officer and Executive Vice President











INDEX TO EXHIBITS


Exhibit No.
Description
 
 
99.1
Press release of the registrant dated October 27, 2016, containing financial information for the quarter ended September 30, 2016.
 
 
99.2
Slide presentation for conference call for investors and analysts on October 27, 2016.
 
 
99.3
Quarterly Investor Relations Presentation for the fourth quarter of fiscal year 2016.





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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


36420631_greatwesternbancorpa07.jpg

Great Western Bancorp, Inc. Announces Fiscal Year 2016 Fourth Quarter Financial Results; Raises Dividend and Announces Share Repurchase Authorization
Highlights for the Fourth Quarter and Full Year Fiscal Year 2016
Fourth quarter net income was $33.8 million, or $0.57 per diluted share, while adjusted net income1, which excludes the effect of one-time acquisition expenses related to the HF Financial Corp. ("HF") acquisition, was $35.5 million, or $0.60 per diluted share
Net income for fiscal year 2016 was $121.3 million, an increase of 11.2% over fiscal year 2015, and adjusted net income1 for fiscal year 2016 was $131.0 million, an increase of 20.1% over the same period
The efficiency ratio1 continues to be a key differentiator from peers at 48.5% for the quarter and 49.6% for the fiscal year 2016, each of which would have been lower if one-time acquisition expenses related to the HF acquisition were excluded
Net interest margin and adjusted net interest margin1 were 3.92% and 3.73% for the fourth quarter, respectively, decreases of 3 basis points and 1 basis point from the previous quarter, respectively
The Board of Directors authorized an increase in the quarterly dividend per common share to $0.17, a 21.4% increase compared to most recent dividend, and authorized a $100.0 million share repurchase program
Asset quality trends remain stable with net charge-offs as a percentage of average total loans of 12 basis points for fiscal year 2016
Total loans grew $75.7 million, or 0.9%, during the quarter, bringing non-acquired loan growth to $493.7 million, or 6.7%, for the fiscal year, while deposits grew $124.6 million, or 1.5%, during the quarter, bringing non-acquired deposit growth to $354.6 million, or 4.8%, for the fiscal year

Sioux Falls, SD - October 27, 2016 - Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $33.8 million, or $0.57 per diluted share, for the quarter ended September 30, 2016, compared to net income of $33.8 million, or $0.60 per diluted share, for the same quarter of fiscal year 2015. Adjusted net income1, which excludes $2.7 million of acquisition expenses related to the HF acquisition, was $35.5 million, or $0.60 per diluted share, equal to the comparable period in fiscal year 2015. Net income for fiscal year 2016 was $121.3 million, or $2.14 per diluted share, compared to $109.1 million, or $1.90 per diluted share, for fiscal year 2015, while adjusted net income1 increased to $131.0 million, or $2.31 per diluted share. The year-over -year increase was driven by increased net interest income resulting from organic and inorganic balance sheet growth and higher noninterest income, only partially offset by increased noninterest expenses.
"I am very happy with our results for the most recent quarter and, more importantly, with fiscal year 2016 as a whole," said Ken Karels, President and Chief Executive Officer. "We were able to deliver significant year-over-year growth including an 11.2% increase in net income, a 12.6% increase in diluted earnings per share and 13.8% increase in tangible book value per share while maintaining a peer-leading efficiency ratio, all against the backdrop of successfully completing our first acquisition since becoming a public company. I want to thank all of our employees for an excellent job over the course of the year. We also announced today that we have increased our quarterly dividend by 21.4%, to $0.17 per share, a level that we believe is reflective of our commitment to actively managing capital and overall shareholder return. We have also announced a $100.0 million share repurchase program which reflects our intent to proactively manage capital."
Net Interest Income and Net Interest Margin2 
Net interest income was $100.2 million for the fourth quarter of fiscal year 2016, an increase of $13.0 million, or 14.9%, compared to the same quarter in fiscal year 2015. The increase was primarily attributable to higher loan interest income driven by 19.2% growth in average loans outstanding between the periods, partially offset by an 8 basis point decrease in the yield on total loans.
Net interest margin was 3.92%, 3.95% and 3.98%, respectively, for the quarters ended September 30, 2016, June 30, 2016 and September 30, 2015. Adjusted net interest margin1, which adjusts for the realized gain (loss) on interest rate swaps, was 3.73%, 3.74% and 3.72%, respectively, for the same periods. Net interest margin and adjusted net interest margin1 were 6 basis points lower and 1 basis point higher, respectively, compared to the same quarter of fiscal year 2015. The decline in net interest margin was primarily driven by a 2 basis point decline in the yield on interest-earning assets and a 4 basis point increase in the cost of

1 This is a non-GAAP measure management believes is helpful to understanding trends in the business that may not be fully apparent based only on the most comparable GAAP measure. Further information on this measure and a reconciliation to the most comparable GAAP measure is provided at the end of this release.
2 All references to net interest income and net interest margin are presented on a fully-tax equivalent basis unless otherwise noted.





interest-bearing liabilities, which included a 3 basis point increase in the cost of deposits. The increase in the adjusted net interest margin1 was driven by the fact that the realized loss on interest rate swaps decreased by 13.2%, despite the notional amount outstanding remaining similar, as a result of increases in short-term LIBOR rates. On a sequential quarter basis, the yield on total loans decreased 2 basis points to 4.77%, the cost of deposits increased 1 basis point to 0.33%, the yield on investment securities decreased by 6 basis points and cost of borrowings increased 1 basis point to 0.99%.
Loan growth during the quarter ended September 30, 2016 was $75.7 million, or 0.9%, bringing fiscal year-to-date growth to $1.36 billion, or 18.5%, which included $863.7 million of loans at fair value acquired in the HF acquisition in the third quarter of 2016. Excluding the acquired loans, net growth for the fiscal year was $493.7 million, or 6.7%. The net growth during the quarter was primarily driven by $97.1 million of commercial real estate ("CRE") loan growth and $67.3 million of agriculture loan growth, partially offset by a $70.0 million reduction in commercial non-real estate ("C&I") loans outstanding.
Total deposits grew by $124.6 million during the quarter and by $1.22 billion, or 16.5%, including $863.1 million of deposits acquired in the HF acquisition, compared to September 30, 2015. Excluding the acquired deposits, net deposit growth for the year was $354.6 million, or 4.8%. Organic deposit growth was driven by growth in both commercial deposits and consumer deposits, where growth in checking and savings balances outpaced the continued runoff of time deposit accounts. FHLB and other borrowings were reduced by $42.3 million, or 4.6%, as a result of deposit growth during the quarter exceeding net loan growth.
Provision for Loan and Lease Losses and Asset Quality
Provision for loan and lease losses was $5.1 million for the quarter ended September 30, 2016, compared to $1.6 million in the same quarter of fiscal year 2015. Net charge-offs for the quarter were $4.7 million, or 21 basis points of average total loans on an annualized basis, and $9.5 million, or 12 basis points of average total loans, for fiscal year 2016. For the comparable quarter in fiscal year 2015, net charge-offs were $0.4 million, or 2 basis points of average total loans on an annualized basis, and $9.4 million, or 13 basis points of average total loans, for fiscal year 2015. The ratio of allowance for loan and lease losses ("ALLL") to total loans was 0.74% at September 30, 2016, a slight decrease from 0.75% at June 30, 2016. The balance of the ALLL increased from $64.2 million to $64.6 million over the same period.
Included within total loans are approximately $1.13 billion of loans for which management has elected the fair value option. These loans are excluded from the ALLL process, but management has estimated that approximately $7.4 million of the fair value adjustment for these loans relates to credit risk, translating to an additional 0.09% of total loans. Additionally, the Company assigned a net purchase discount of $28.5 million to the loans acquired in the HF acquisition during the third quarter of 2016, which was consistent with due diligence expectations and equated to approximately 3.2% of the gross acquired loans. Total purchase discount remaining on all acquired loans at September 30, 2016 was 0.46% of total loans.
At September 30, 2016, loans graded "Watch" were $327.6 million, a decrease of $68.3 million, or 17.2%, compared to June 30, 2016, and loans graded "Substandard" were $241.6 million, an increase of $4.0 million, or 1.7%, over the same period. The reduction in loans graded "Watch" was primarily driven by the upgrade of a number of CRE loans to "Pass" status and the downgrade of one larger C&I exposure that is heavily dependent on the agriculture industry. The small increase in loans graded "Substandard" was primarily driven by the previously mentioned C&I downgrade, partially offset by the net charge-offs recorded during the quarter, loans upgraded to "Watch" or better and loan principal payments received. Within the agriculture loan segment, individual loan relationships were both upgraded and downgraded during the quarter but overall levels of "Watch" and "Substandard" loans improved slightly.
Nonaccrual loans were $126.4 million as of September 30, 2016, with $4.1 million of the balance covered by FDIC loss-sharing arrangements. Total nonaccrual loans increased by $18.2 million during the quarter and increased by $58.1 million compared to same quarter in fiscal year 2015. The most significant driver of the increase in nonaccrual loans was the C&I loan that was downgraded to "Substandard" and placed on nonaccrual. Total OREO balances were $10.3 million as of September 30, 2016, a decrease of $1.4 million, or 12.1%, compared to June 30, 2016.
The Company’s grain producing customers generally harvest their crops - namely corn and soybeans - during the December quarter.  While spot prices for these commodities remain suppressed compared to record high levels in recent years, customers and bankers are consistently reporting favorable crop conditions and significantly higher than average harvest volume expectations which, paired with effective forward selling strategies undertaken by many customers, should help partially offset the negative impact of current prices for a number of customers.  “We expect the 2016 and 2017 operating results to be strained for many of our grain producers, but we are actively managing lending relationships to ensure the best possible outcomes and we remain comfortable with our overall exposure to this industry,” said Steve Ulenberg, Chief Risk Officer. “We are also monitoring recent declines in beef and hog prices and analyzing any potential impact to our customers that may be affected if prices continue to fall from current levels or remain lower for a longer period of time so we are able to put required action plans in place in a timely manner.”





Total credit-related charges decreased compared to the sequential quarter and to fiscal year 2015, while charges increased compared to the fourth quarter of fiscal year 2015. A summary of total credit-related charges incurred during the current, prior and comparable quarters and current and prior fiscal years is presented below:
GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
Summary of Credit-Related Charges (Unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
For the twelve months ended:
 
For the three months ended:
Item
Included within F/S Line Item(s):
September 30, 2016
 
September 30, 2015
 
September 30, 2016
 
June 30, 2016
 
September 30, 2015
Provision for loan and lease losses
Provision for loan and lease losses
$
16,955

 
$
19,041

 
$
5,063

 
$
5,372

 
$
1,633

Net OREO charges
Net loss (recovery) on repossessed property and other related expenses
1,263

 
5,382

 
784

 
379

 
(165
)
(Recovery) reversal of interest income on nonaccrual loans
Interest income on loans
1,433

 
372

 
113

 
1,505

 
117

Loan fair value adjustment related to credit
Net increase (decrease) in fair value of loans at fair value
1,618

 
3,703

 
(678
)
 
2,722

 
265

Total
 
$
21,268

 
$
28,498

 
$
5,283

 
$
9,978

 
$
1,850

Noninterest Income
Noninterest income was $15.8 million for the quarter ended September 30, 2016, an increase of $6.8 million, or 74.6%, compared to the same quarter of fiscal year 2015. Included within noninterest income are the changes in fair value of certain loans for which the Company has elected the fair value option and the net gain (loss), realized and unrealized, of the related derivatives used to manage the interest rate risk on these loans. On a net basis, these two components of noninterest income accounted for an increase of $1.7 million, which is comprised of a lower net realized loss on derivatives and a favorable change to the loan fair value adjustment related to credit.
Noninterest income from product and service fees increased by $5.1 million over the fourth quarter of fiscal year 2015. Service charges and other fees increased by $2.9 million, accounting for the largest component of the increase. Management estimates that the impact of the opportunity to charge higher debit card interchange rates for a period of time accounted for approximately $2.6 million of the increase, while higher fee income related to commercial deposit relationships accounted for the remainder of the increase. The higher allowable interchange rates are effective through June 30, 2017. Additionally, mortgage banking income and wealth management income increased by $1.5 million and $0.5 million, respectively.
Noninterest Expense
Total noninterest expense was $57.3 million for the quarter ended September 30, 2016, an increase of $12.5 million, or 27.9%, compared to the same quarter in fiscal year 2015. Included within noninterest expense for the quarter were $2.7 million of one-time acquisition costs related to the HF acquisition. Management believes that substantially all of the costs related to the acquisition have been incurred and estimates that the integration of HF's operations has resulted in approximately $6.5 million of incremental noninterest expenses on a quarterly basis, including amortization of intangible assets related to the acquisition, reflecting substantially all expected cost synergies. Salaries and employee benefits increased by $5.4 million and professional fees increased by $0.9 million, each primarily driven by the impact of integrating HF's operations into the consolidated business. Net OREO costs also increased by $0.9 million.
The efficiency ratio1 was 48.5% for the quarter, compared to 45.8% for the same quarter of fiscal year 2015 and 49.6% for fiscal year 2016, compared to 48.0% for fiscal year 2015. Each of the ratios for fiscal year 2016 was primarily impacted by one-time acquisition expenses.
Provision for Income Taxes
The provision for income taxes for the fourth fiscal quarter ended September 30, 2016 was $17.9 million, reflecting an effective tax rate of 34.6% of income before income taxes, compared to an effective tax rate of 29.6% for the comparable quarter of fiscal year 2015, which was abnormally low. The effective tax rate for fiscal years 2016 and 2015 was 32.7% and 32.5%, respectively.
Capital
Tier 1 and total capital ratios were 11.1% and 12.2%, respectively, as of September 30, 2016, compared to 10.9% and 12.0%, respectively, as of June 30, 2016. The common equity tier 1 capital ratio was 10.2% as of September 30, 2016 and 10.0% as of June 30, 2016. The tier 1 leverage ratio was 9.5% as of September 30, 2016 and 10.0% as of June 30, 2016. All regulatory capital ratios remain above regulatory minimums to be considered "well capitalized."





On October 27, 2016, the Company’s Board of Directors declared a dividend of $0.17 per common share payable on November 23, 2016 to stockholders of record as of close of business on November 11, 2016. The aggregate dividend payment will be approximately $10.0 million. This represents an increase of 21.4% compared to recent quarterly dividends of $0.14 per common share. The Company's Board of Directors also authorized a share repurchase program of $100.0 million on October 26, 2016.
Business Outlook
"We remain very optimistic about the trajectory of our business as we look forward to our next fiscal year," added Karels. "Our people are committed to delivering on our strategy while providing outstanding service to our customers and ensuring we are an employer of choice in our communities. We believe this is a formula that will lead to outstanding returns for our stockholders over time. We know we will face challenges in the next year, including tempering loan growth slightly by focusing on profitable relationships that allow us to remain compliant with internal and external concentration limits, but we are confident we will face into these challenges as a team and deliver a successful result."
Conference Call
Great Western Bancorp, Inc. will host a conference call to discuss its financial results for the fourth quarter of fiscal year 2016 on Thursday, October 27, 2016 at 7:30 AM (CT). The call can be accessed by dialing (855) 238-8837 approximately 10 minutes prior to the start time. Please ask to be joined into the Great Western Bancorp, Inc. (GWB) call. International callers should dial (412) 542-4114. The call will also be broadcast live over the Internet and can be accessed in the Investor Relations section of Great Western’s website at www.greatwesternbank.com. A replay will be available beginning one hour following the conference call and ending on November 10, 2016. To access the replay, dial (877) 344-7529 (U.S.) and use conference ID 10093381. International callers should dial (412) 317-0088 and enter the same conference ID number.
Annual Stockholder Meeting
The Company's Board of Directors has set the Great Western Bancorp, Inc. Annual Stockholder Meeting for Monday, February 27, 2017. The meeting will commence at 9:00 AM Mountain Standard Time at the Hyatt Regency Scottsdale Resort and Spa at Gainey Ranch, 7500 East Doubletree Ranch Road, Scottsdale, Arizona. The record date for determination of stockholders entitled to notice of, and to vote at, the Annual Stockholder Meeting is January 6, 2017.
About Great Western Bancorp, Inc.
Great Western Bancorp, Inc. is the holding company for Great Western Bank, a full-service regional bank focused on relationship-based business and agribusiness banking. Great Western Bank offers small and mid-sized businesses a focused suite of financial products and a range of deposit and loan products to retail customers through several channels, including the branch network, online banking system, mobile banking applications and customer care centers. The bank services its customers through 174 branches in nine states: Arizona, Colorado, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota. To learn more about Great Western Bank visit www.greatwesternbank.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements about Great Western Bancorp, Inc.’s expectations, beliefs, plans, strategies, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. In particular, the statements included in this press release concerning Great Western Bancorp, Inc.’s expected performance and strategy, the outlook for its agricultural lending segment and the interest rate environment, beyond fiscal year 2016 are not historical facts and are forward-looking. Accordingly, the forward-looking statements in this press release are only predictions and involve estimates, known and unknown risks, assumptions and uncertainties, including those related to the integration of the recently-completed acquisition of HF Financial Corp., that could cause actual results to differ materially from those expressed. All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Any forward-looking statements are qualified in their entirety by reference to the factors discussed in the sections titled “Item 1A. Risk Factors” and "Cautionary Note Regarding Forward-Looking Statements" in Great Western Bancorp, Inc.’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015, and other periodic filings with the SEC, including its Quarterly Reports on Form 10-Q for the periods ended December 31, 2015, March 31, 2016, and June 30, 2016 and all risk factors associated with the recently completed acquisition of HF Financial Corp. Further, any forward-looking statement speaks only as of the date on which





it is made, and Great Western Bancorp, Inc. undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.     
GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Financial Data (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands except share and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At or for the twelve months ended:
 
At or for the three months ended:
 
 
September 30, 2016
 
September 30, 2015
 
September 30, 2016
 
June 30, 2016
 
March 31, 2016
 
December 31, 2015
 
September 30, 2015
Operating Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and dividend income (FTE)
 
$
403,232

 
$
369,957

 
$
109,730

 
$
102,094

 
$
96,098

 
$
95,310

 
$
94,499

Interest expense
 
33,524

 
29,884

 
9,491

 
8,537

 
7,969

 
7,527

 
7,296

Noninterest income
 
42,537

 
33,890

 
15,798

 
9,097

 
8,999

 
8,644

 
9,049

Noninterest expense
 
207,640

 
186,794

 
57,342

 
61,222

 
44,855

 
44,220

 
44,835

Provision for loan and lease losses
 
16,955

 
19,041

 
5,063

 
5,372

 
2,631

 
3,889

 
1,633

Net income
 
121,253

 
109,065

 
33,758

 
26,360

 
30,674

 
30,461

 
33,812

Adjusted net income 1
 
$
130,982

 
$
109,065

 
$
35,458

 
$
33,911

 
$
31,152

 
$
30,461

 
$
33,812

Common shares outstanding
 
58,693,304

 
55,219,596

 
58,693,304

 
58,693,499

 
55,245,177

 
55,244,569

 
55,219,596

Weighted average diluted common shares outstanding
 
56,729,350

 
57,500,878

 
58,938,367

 
57,176,705

 
55,408,876

 
55,393,452

 
56,215,947

Earnings per common share - diluted
 
$
2.14

 
$
1.90

 
$
0.57

 
$
0.46

 
$
0.55

 
$
0.55

 
$
0.60

Adjusted earnings per common share - diluted 1
 
$
2.31

 
$
1.90

 
$
0.60

 
$
0.59

 
$
0.56

 
$
0.55

 
$
0.60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin (FTE)2
 
3.96
%
 
3.94
%
 
3.92
%
 
3.95
%
 
3.99
%
 
3.98
%
 
3.98
%
Adjusted net interest margin (FTE)1 2
 
3.74
%
 
3.68
%
 
3.73
%
 
3.74
%
 
3.75
%
 
3.73
%
 
3.72
%
Return on average total assets2
 
1.16
%
 
1.12
%
 
1.19
%
 
1.00
%
 
1.24
%
 
1.23
%
 
1.38
%
Return on average common equity2
 
7.9
%
 
7.5
%
 
8.2
%
 
6.8
%
 
8.3
%
 
8.3
%
 
9.2
%
Return on average tangible common equity1 2
 
15.1
%
 
15.4
%
 
15.3
%
 
12.9
%
 
16.0
%
 
16.2
%
 
18.1
%
Efficiency ratio1
 
49.6
%
 
48.0
%
 
48.5
%
 
58.8
%
 
45.5
%
 
45.1
%
 
45.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital ratio
 
11.1
%
 
10.9
%
 
11.1
%
 
10.9
%
 
11.1
%
 
10.9
%
 
10.9
%
Total capital ratio
 
12.2
%
 
12.1
%
 
12.2
%
 
12.0
%
 
12.4
%
 
12.2
%
 
12.1
%
Tier 1 leverage ratio
 
9.5
%
 
9.1
%
 
9.5
%
 
10.0
%
 
9.5
%
 
9.4
%
 
9.1
%
Common equity tier 1 ratio
 
10.2
%
 
10.1
%
 
10.2
%
 
10.0
%
 
10.4
%
 
10.2
%
 
10.1
%
Tangible common equity / tangible assets1
 
8.5
%
 
8.3
%
 
8.5
%
 
8.3
%
 
8.7
%
 
8.3
%
 
8.3
%
Book value per share - GAAP
 
$
28.34

 
$
26.43

 
$
28.34

 
$
27.95

 
$
27.32

 
$
26.71

 
$
26.43

Tangible book value per share1
 
$
15.55

 
$
13.66

 
$
15.55

 
$
15.15

 
$
14.58

 
$
13.96

 
$
13.66

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Quality:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans
 
$
126,395

 
$
68,289

 
$
126,395

 
$
108,207

 
$
54,988

 
$
54,351

 
$
68,289

OREO
 
$
10,282

 
$
15,892

 
$
10,282

 
$
11,701

 
$
12,204

 
$
15,503

 
$
15,892

Nonaccrual loans / total loans
 
1.46
%
 
0.93
%
 
1.46
%
 
1.26
%
 
0.73
%
 
0.72
%
 
0.93
%
Net charge-offs (recoveries)
 
$
9,513

 
$
9,359

 
$
4,654

 
$
3,046

 
$
1,852

 
$
(39
)
 
$
363

Net charge-offs (recoveries) / average total loans2
 
0.12
%
 
0.13
%
 
0.21
%
 
0.15
%
 
0.10
%
 
%
 
0.02
%
Allowance for loan and lease losses / total loans
 
0.74
%
 
0.78
%
 
0.74
%
 
0.75
%
 
0.82
%
 
0.81
%
 
0.78
%
Watch-rated loans
 
$
327,608

 
$
310,378

 
$
327,608

 
$
395,893

 
$
333,597

 
$
298,620

 
$
310,379

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 This is a non-GAAP financial measure management believes is helpful to interpreting our financial results. See the tables at the end of this document for the calculation of the measure and reconciliation to the most comparable GAAP measure.
2 Annualized for all partial-year periods.







GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Income Statement (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At or for the twelve months ended:
 
At or for the three months ended:
 
 
September 30, 2016
 
September 30, 2015
 
September 30, 2016
 
June 30, 2016
 
March 31, 2016
 
December 31, 2015
 
September 30, 2015
Interest and dividend income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
$
370,444

 
$
338,458

 
$
101,307

 
$
93,749

 
$
88,192

 
$
87,197

 
$
86,480

Taxable securities
 
23,249

 
22,973

 
5,649

 
5,826

 
5,787

 
5,987

 
5,923

Nontaxable securities
 
230

 
51

 
145

 
61

 
12

 
12

 
15

Dividends on securities
 
1,201

 
1,247

 
369

 
396

 
222

 
213

 
250

Federal funds sold and other
 
574

 
652

 
248

 
157

 
94

 
75

 
53

Total interest and dividend income
 
395,698

 
363,381

 
107,718

 
100,189

 
94,307

 
93,484

 
92,721

Interest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits
 
25,114

 
23,362

 
6,968

 
6,451

 
6,029

 
5,665

 
5,587

Securities sold under agreements to repurchase
 
519

 
563

 
125

 
124

 
132

 
139

 
133

FHLB advances and other borrowings
 
4,154

 
3,631

 
1,323

 
986

 
929

 
916

 
925

Related party notes payable
 

 
771

 

 

 

 

 
79

Subordinated debentures and subordinated notes payable
 
3,737

 
1,557

 
1,075

 
976

 
879

 
807

 
572

Total interest expense
 
33,524

 
29,884

 
9,491

 
8,537

 
7,969

 
7,527

 
7,296

Net interest income
 
362,174

 
333,497

 
98,227

 
91,652

 
86,338

 
85,957

 
85,425

Provision for loan and lease losses
 
16,955

 
19,041

 
5,063

 
5,372

 
2,631

 
3,889

 
1,633

Net interest income after provision for loan and lease losses
 
345,219

 
314,456

 
93,164

 
86,280

 
83,707

 
82,068

 
83,792

Noninterest income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges and other fees
 
46,209

 
39,134

 
13,111

 
12,316

 
10,316

 
10,467

 
10,238

Wealth management fees
 
7,283

 
7,412

 
2,196

 
1,807

 
1,668

 
1,612

 
1,658

Mortgage banking income, net
 
7,261

 
6,694

 
3,119

 
1,669

 
1,204

 
1,270

 
1,667

Net gain (loss) on sale of securities
 
160

 
310

 
356

 
134

 
24

 
(354
)
 
259

Net increase (decrease) in fair value of loans at fair value
 
26,314

 
36,742

 
(8,939
)
 
14,198

 
35,955

 
(14,901
)
 
28,828

Net realized and unrealized gain (loss) on derivatives
 
(48,658
)
 
(62,088
)
 
4,721

 
(21,925
)
 
(40,893
)
 
9,439

 
(34,731
)
Other
 
3,968

 
5,686

 
1,234

 
898

 
725

 
1,111

 
1,130

Total noninterest income
 
42,537

 
33,890

 
15,798

 
9,097

 
8,999

 
8,644

 
9,049

Noninterest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
109,055

 
100,646

 
30,638

 
28,352

 
24,769

 
25,296

 
25,273

Data processing
 
21,719

 
19,531

 
5,896

 
5,625

 
4,950

 
5,246

 
5,338

Occupancy expenses
 
15,759

 
14,809

 
4,323

 
4,002

 
3,843

 
3,591

 
3,640

Professional fees
 
13,572

 
14,024

 
4,485

 
3,327

 
2,652

 
3,108

 
3,560

Communication expenses
 
3,721

 
4,455

 
1,072

 
788

 
928

 
934

 
1,026

Advertising
 
4,267

 
3,940

 
1,252

 
1,047

 
1,048

 
920

 
1,070

Equipment expenses
 
3,795

 
3,905

 
1,001

 
959

 
931

 
904

 
949

Net loss (gain) on repossessed property and other related expenses
 
1,263

 
5,382

 
784

 
379

 
210

 
(110
)
 
(165
)
Amortization of core deposits and other intangibles
 
3,264

 
7,110

 
1,024

 
822

 
708

 
709

 
708

Acquisition expenses
 
15,692

 

 
2,742

 
12,179

 
771

 

 

Other
 
15,533

 
12,992

 
4,125

 
3,742

 
4,045

 
3,622

 
3,436

Total noninterest expense
 
207,640

 
186,794

 
57,342

 
61,222

 
44,855

 
44,220

 
44,835

Income before income taxes
 
180,116

 
161,552

 
51,620

 
34,155

 
47,851

 
46,492

 
48,006

Provision for income taxes
 
58,863

 
52,487

 
17,862

 
7,795

 
17,177

 
16,031

 
14,194

Net income
 
$
121,253

 
$
109,065

 
$
33,758

 
$
26,360

 
$
30,674

 
$
30,461

 
$
33,812






GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
Summarized Consolidated Balance Sheet (Unaudited)
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
September 30, 2016
 
June 30, 2016
 
March 31, 2016
 
December 31, 2015
 
September 30, 2015
Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
524,611

 
$
475,785

 
$
174,401

 
$
212,710

 
$
237,770

Securities
1,317,386

 
1,361,164

 
1,328,685

 
1,317,605

 
1,327,327

Total loans
8,682,644

 
8,606,974

 
7,557,788

 
7,530,660

 
7,325,198

Allowance for loan and lease losses
(64,642
)
 
(64,243
)
 
(61,917
)
 
(61,128
)
 
(57,200
)
Loans, net
8,618,002

 
8,542,731

 
7,495,871

 
7,469,532

 
7,267,998

Goodwill and other intangible assets
750,755

 
751,217

 
703,508

 
704,217

 
704,926

Other assets
320,426

 
322,325

 
239,830

 
253,151

 
260,633

Total assets
$
11,531,180

 
$
11,453,222

 
$
9,942,295

 
$
9,957,215

 
$
9,798,654

 
 
 
 
 
 
 
 
 
 
Liabilities and stockholders' equity
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,880,512

 
$
1,802,169

 
$
1,503,981

 
$
1,506,868

 
$
1,368,453

Interest-bearing deposits
6,724,278

 
6,678,040

 
6,208,748

 
6,155,750

 
6,018,612

Total deposits
8,604,790

 
8,480,209

 
7,712,729

 
7,662,618

 
7,387,065

Securities sold under agreements to repurchase
141,688

 
159,016

 
146,273

 
187,871

 
185,271

FHLB advances and other borrowings
871,037

 
913,377

 
370,000

 
451,000

 
581,000

Other liabilities
250,274

 
260,109

 
204,091

 
180,210

 
185,972

Total liabilities
9,867,789

 
9,812,711

 
8,433,093

 
8,481,699

 
8,339,308

Stockholders' equity
1,663,391

 
1,640,511

 
1,509,202

 
1,475,516

 
1,459,346

Total liabilities and stockholders' equity
$
11,531,180

 
$
11,453,222

 
$
9,942,295

 
$
9,957,215

 
$
9,798,654


GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
 
Loan Portfolio Summary (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
Fiscal year-to-date:
 
September 30, 2016
 
June 30, 2016
 
March 31, 2016
 
December 31, 2015
 
September 30, 2015
 
Change
($)
 
Change
(%)
Commercial non-real estate
$
1,676,247

 
$
1,746,257

 
$
1,588,356

 
$
1,586,501

 
$
1,610,828

 
$
65,419

 
4.1
%
Agriculture
2,168,937

 
2,101,601

 
1,900,013

 
1,969,269

 
1,861,465

 
307,472

 
16.5
%
Construction and development
469,968

 
487,220

 
368,408

 
336,679

 
256,697

 
213,271

 
83.1
%
Owner-occupied CRE
1,167,265

 
1,207,665

 
1,107,055

 
1,081,617

 
1,122,041

 
45,224

 
4.0
%
Non-owner-occupied CRE
1,678,007

 
1,554,127

 
1,350,444

 
1,286,063

 
1,227,354

 
450,653

 
36.7
%
Multifamily residential real estate
438,867

 
408,012

 
252,121

 
257,681

 
239,656

 
199,211

 
83.1
%
Commercial real estate
3,754,107

 
3,657,024

 
3,078,028

 
2,962,040

 
2,845,748

 
908,359

 
31.9
%
Residential real estate
1,017,877

 
1,032,355

 
909,590

 
927,138

 
921,827

 
96,050

 
10.4
%
Consumer
76,273

 
79,814

 
64,465

 
69,787

 
73,049

 
3,224

 
4.4
%
Other 1
42,477

 
45,444

 
39,510

 
40,719

 
38,371

 
4,106

 
10.7
%
Total unpaid principal balance
8,735,918

 
8,662,495

 
7,579,962

 
7,555,454

 
7,351,288

 
1,384,630

 
18.8
%
Less: Unamortized discount on acquired loans and unearned net deferred fees and costs and loans in process
(53,274
)
 
(55,521
)
 
(22,174
)
 
(24,794
)
 
(26,090
)
 
(27,184
)
 
104.2
%
Total loans
$
8,682,644

 
$
8,606,974

 
$
7,557,788

 
$
7,530,660

 
$
7,325,198

 
$
1,357,446

 
18.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Other loans primarily include consumer and commercial credit cards and customer deposit account overdrafts.






GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Interest Margin (FTE) (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended:
 
September 30, 2016
 
June 30, 2016
 
September 30, 2015
 
Average Balance
 
Interest (FTE) 1
 
Yield / Cost 2
 
Average Balance
 
Interest (FTE) 1
 
Yield / Cost 2
 
Average Balance
 
Interest (FTE) 1
 
Yield / Cost 2
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
183,985

 
$
248

 
0.54
%
 
$
130,521

 
$
157

 
0.48
%
 
$
72,054

 
$
53

 
0.29
%
Investment securities
1,379,971

 
6,163

 
1.78
%
 
1,373,451

 
6,283

 
1.84
%
 
1,400,485

 
6,188

 
1.75
%
Non ASC 310-30 loans, net 3
8,477,214

 
101,070

 
4.74
%
 
7,903,860

 
93,733

 
4.77
%
 
7,108,598

 
86,613

 
4.83
%
ASC 310-30 loans, net
132,573

 
2,249

 
6.75
%
 
120,744

 
1,921

 
6.40
%
 
112,334

 
1,645

 
5.81
%
Loans, net
8,609,787

 
103,319

 
4.77
%
 
8,024,604

 
95,654

 
4.79
%
 
7,220,932

 
88,258

 
4.85
%
Total interest-earning assets
10,173,743

 
109,730

 
4.29
%
 
9,528,576

 
102,094

 
4.31
%
 
8,693,471

 
94,499

 
4.31
%
Noninterest-earning assets
1,152,995

 
 
 
 
 
1,085,961

 
 
 
 
 
1,048,844

 
 
 
 
Total assets
$
11,326,738

 
$
109,730

 
3.85
%
 
$
10,614,537

 
$
102,094

 
3.87
%
 
$
9,742,315

 
$
94,499

 
3.85
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,710,901

 
 
 
 
 
$
1,497,567

 
 
 
 
 
$
1,315,345

 
 
 
 
NOW, MMDA and savings deposits
5,405,798

 
$
4,709

 
0.35
%
 
5,236,443

 
$
4,270

 
0.33
%
 
4,626,315

 
$
3,185

 
0.27
%
CDs
1,402,427

 
2,259

 
0.64
%
 
1,340,460

 
2,182

 
0.65
%
 
1,408,155

 
2,402

 
0.68
%
Total deposits
8,519,126

 
6,968

 
0.33
%
 
8,074,470

 
6,452

 
0.32
%
 
7,349,815

 
5,587

 
0.30
%
Securities sold under agreements to repurchase
152,412

 
125

 
0.33
%
 
152,615

 
124

 
0.33
%
 
164,843

 
133

 
0.32
%
FHLB advances and other borrowings
749,122

 
1,323

 
0.70
%
 
600,477

 
986

 
0.66
%
 
597,758

 
925

 
0.61
%
Related party notes payable

 

 
%
 

 

 
%
 
13,321

 
79

 
2.35
%
Subordinated debentures and subordinated notes payable
111,840

 
1,075

 
3.82
%
 
101,419

 
975

 
3.87
%
 
79,756

 
572

 
2.85
%
Total borrowings
1,013,374

 
2,523

 
0.99
%
 
854,511

 
2,085

 
0.98
%
 
855,678

 
1,709

 
0.79
%
Total interest-bearing liabilities
9,532,500

 
$
9,491

 
0.39
%
 
8,928,981

 
$
8,537

 
0.38
%
 
8,205,493

 
$
7,296

 
0.35
%
Noninterest-bearing liabilities
147,083

 
 
 
 
 
118,184

 
 
 
 
 
80,450

 
 
 
 
Stockholders' equity
1,647,155

 
 
 
 
 
1,567,372

 
 
 
 
 
1,456,372

 
 
 
 
Total liabilities and stockholders' equity
$
11,326,738

 
 
 
 
 
$
10,614,537

 
 
 
 
 
$
9,742,315

 
 
 
 
Net interest spread
 
 
 
 
3.46
%
 
 
 
 
 
3.48
%
 
 
 
 
 
3.50
%
Net interest income and net interest margin (FTE) 1
 
 
$
100,239

 
3.92
%
 
 
 
$
93,557

 
3.95
%
 
 
 
$
87,203

 
3.98
%
Less: Tax equivalent adjustment
 
 
2,012

 
 
 
 
 
1,905

 
 
 
 
 
1,778

 
 
Net interest income and net interest margin - ties to Statements of Comprehensive Income
 
 
$
98,227

 
3.84
%
 
 
 
$
91,652

 
3.87
%
 
 
 
$
85,425

 
3.90
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 These are non-GAAP financial measures management believes are helpful to interpreting our financial results. See the tables at the end of this document for the calculation of the measures and reconciliation to the most comparable GAAP measure.
2 Annualized for all partial-year periods.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 Interest income includes $1.7 million and $0.1 million for the fourth quarter of fiscal year 2016 and 2015, respectively, resulting from accretion of purchase accounting discount associated with acquired loans.






GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
Net Interest Margin (FTE) (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the twelve months ended:
 
September 30, 2016
 
September 30, 2015
 
Average Balance
 
Interest (FTE) 1
 
Yield / Cost 2
 
Average Balance
 
Interest (FTE) 1
 
Yield / Cost 2
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
122,651

 
$
574

 
0.47
%
 
$
244,850

 
$
652

 
0.27
%
Investment securities
1,366,925

 
24,680

 
1.81
%
 
1,377,718

 
24,271

 
1.76
%
Non ASC 310-30 loans, net 3
7,736,454

 
370,521

 
4.79
%
 
6,889,738

 
336,194

 
4.88
%
ASC 310-30 loans, net
113,828

 
7,457

 
6.55
%
 
129,413

 
8,840

 
6.83
%
Loans, net
7,850,282

 
377,978

 
4.81
%
 
7,019,151

 
345,034

 
4.92
%
Total interest-earning assets
9,339,858

 
403,232

 
4.32
%
 
8,641,719

 
369,957

 
4.28
%
Noninterest-earning assets
1,079,503

 
 
 
 
 
1,079,201

 
 
 
 
Total assets
$
10,419,361

 
$
403,232

 
3.87
%
 
$
9,720,920

 
$
369,957

 
3.81
%
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,493,287

 
 
 
 
 
$
1,350,749

 
 
 
 
NOW, MMDA and savings deposits
5,081,401

 
$
16,206

 
0.32
%
 
4,472,223

 
$
12,374

 
0.28
%
CDs
1,345,693

 
8,908

 
0.66
%
 
1,539,863

 
10,988

 
0.71
%
Total deposits
7,920,381

 
25,114

 
0.32
%
 
7,362,835

 
23,362

 
0.32
%
Securities sold under agreements to repurchase
160,820

 
519

 
0.32
%
 
168,455

 
563

 
0.33
%
FHLB advances and other borrowings
580,283

 
4,154

 
0.72
%
 
554,127

 
3,631

 
0.66
%
Related party notes payable

 

 
%
 
34,301

 
771

 
2.25
%
Subordinated debentures and subordinated notes payable
98,689

 
3,737

 
3.79
%
 
62,001

 
1,557

 
2.51
%
Total borrowings
839,792

 
8,410

 
1.00
%
 
818,884

 
6,522

 
0.80
%
Total interest-bearing liabilities
8,760,173

 
$
33,524

 
0.38
%
 
8,181,719

 
$
29,884

 
0.37
%
Noninterest-bearing liabilities
117,344

 
 
 
 
 
82,978

 
 
 
 
Stockholders' equity
1,541,844

 
 
 
 
 
1,456,223

 
 
 
 
Total liabilities and stockholders' equity
$
10,419,361

 
 
 
 
 
$
9,720,920

 
 
 
 
Net interest spread
 
 
 
 
3.49
%
 
 
 
 
 
3.44
%
Net interest income and net interest margin (FTE) 1
 
 
$
369,708

 
3.96
%
 
 
 
$
340,073

 
3.94
%
Less: Tax equivalent adjustment
 
 
7,534

 
 
 
 
 
6,576

 
 
Net interest income and net interest margin - ties to Statements of Comprehensive Income
 
 
$
362,174

 
3.88
%
 
 
 
$
333,497

 
3.86
%
 
 
 
 
 
 
 
 
 
 
 
 
1 These are non-GAAP financial measures management believes are helpful to interpreting our financial results. See the tables at the end of this document for the calculation of the measures and reconciliation to the most comparable GAAP measure.
2 Annualized for all partial-year periods.