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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): April 26, 2018

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).                         Emerging growth company        o

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                                                 o






Item 2.02.
Results of Operations and Financial Condition.

On April 26, 2018, Great Western Bancorp, Inc. ("Great Western" and, together with its consolidated subsidiaries, the “Company”) announced its earnings for the second fiscal quarter ended March 31, 2018. 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 six months ended March 31, 2018. The Company intends to use this presentation for any investor meetings or related interactions through the second quarter of fiscal year 2018. 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 April 26, 2018, containing financial information for the quarter ended March 31, 2018.
 
 
99.2
Slide presentation for conference call for investors and analysts on April 26, 2018.
 
 
99.3
Quarterly Investor Relations Presentation for the second quarter of fiscal year 2018.

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: April 26, 2018
By:          /s/ Peter Chapman
 
Name:          Peter Chapman    
 
Title:          Chief Financial Officer and Executive Vice President











INDEX TO EXHIBITS


Exhibit No.
Description
 
 
Press release of the registrant dated April 26, 2018, containing financial information for the quarter ended March 31, 2018.
 
 
Slide presentation for conference call for investors and analysts on April 26, 2018.
 
 
Quarterly Investor Relations Presentation for the second quarter of fiscal year 2018.




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1


393189842_greatwesternbancorpa21.jpg

Great Western Bancorp, Inc. Announces Fiscal Year 2018 Second Quarter Financial Results; Raises Dividend
Highlights for the Second Quarter of Fiscal Year 2018 (all comparisons in this document refer to the first quarter of fiscal year 2018, except as noted)
Net income and adjusted net income1 were both $40.5 million, or $0.69 per diluted share, for the second quarter, compared to net income of $29.2 million, or $0.49 per diluted share, and adjusted net income1 of $42.8 million, or $0.72 per diluted share, which excludes a nonrecurring charge to provision for income taxes related to the Tax Cuts and Jobs Act of 2017
Net interest margin and adjusted net interest margin1, 2 were 3.92% and 3.86%, increases of 3 and 6 basis points, respectively
The Company's Board of Directors declared a quarterly dividend of $0.25 per share, an increase of 25.0% compared to the most recent quarterly dividend, which reflects the benefits of the federal tax reform and our strong 1.40% return on assets
The efficiency ratio1 was 48.6% for the quarter and 47.2% for fiscal year-to-date
Total loans increased $172.9 million, or 1.9%, to $9.34 billion while total deposits grew by $362.8 million, or 4.0%, to $9.39 billion
Net charge-offs recognized during the quarter were 0.17% of average total loans on an annualized basis, a reduction compared to the previous five quarters

Sioux Falls, SD - April 26, 2018 - Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $40.5 million, or $0.69 per diluted share, for the second quarter of fiscal year 2018, compared to net income of $29.2 million, or $0.49 per diluted share. Adjusted net income1, which excludes the deferred tax revaluation triggered by the Tax Cuts and Jobs Act of 2017, was $40.5 million, or $0.69 per diluted share, compared to $42.8 million, or $0.72 per diluted share.
"The second quarter of fiscal year 2018 was another solid quarter for Great Western," said Ken Karels, Chairman, President and Chief Executive Officer. "We continued to see good demand from our loan portfolio, mitigated the rising cost of deposits through increasing loan yields pricing, continued to manage expenses well and increased our dividend due to the peer leading return on capital from our business."
Net Interest Income and Net Interest Margin 2 
Net interest income was steady at $102.2 million for both the second quarter of fiscal year 2018 and the prior quarter. Higher loan interest income, driven by 2.4% growth in average loans outstanding and a 10 basis point increase in the yield on loans, was offset by higher interest expense associated with a 9 basis point increase in the cost of deposits and a 12 basis point increase in the cost of borrowings.
Net interest margin was 3.92% and 3.89%, respectively, for the quarters ended March 31, 2018 and December 31, 2017. Adjusted net interest margin1, which adjusts for the realized gain (loss) on interest rate swaps, was 3.86% and 3.80%, respectively, for the same periods. The yield on interest-earning assets increased by 12 basis points and the cost of interest-bearing liabilities increased by 10 basis points. A $0.8 million reduction in the cost of interest rate swaps was the primary driver of a more pronounced increase in adjusted net margin1 compared to net interest margin.
Total loans outstanding were $9.34 billion as of March 31, 2018, an increase of $172.9 million, or 1.9%, for the quarter, and 7.7% on an annualized basis. The majority of the growth during the quarter occurred in the commercial real estate ("CRE") segment of the portfolio, which increased by $172.1 million, including strong growth in non-owner-occupied CRE and construction loans. Commercial non-real estate loans increased by $71.9 million, which was partially offset by a decrease of $57.5 million in residential real estate.
Total deposits grew to $9.39 billion as of March 31, 2018, an increase of $362.8 million, or 4.0%, during the quarter. Noninterest-bearing deposits were $1.85 billion, a 4.0% decrease, for the quarter and interest-bearing deposits were $7.53 billion, a 6.2% increase for the quarter. FHLB and other borrowings decreased by $170.0 million, or 23.6%, as a result of deposit growth.

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.

1

Exhibit 99.1


Provision for Loan and Lease Losses and Asset Quality
Provision for loan and lease losses was $4.9 million for the second quarter of fiscal year 2018, an increase of $0.3 million, or 7.5%. Net charge-offs for the second quarter were $3.8 million, a decrease of $0.2 million, or 0.17% of average total loans on an annualized basis, with the majority of net charge-offs concentrated in the CRE, commercial non-real estate and agriculture segments of the loan portfolio. The ratio of allowance for loan and lease losses ("ALLL") to total loans remained stable at 0.70% at both March 31, 2018 and December 31, 2017.
Included within total loans are approximately $921.0 million 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 $7.5 million of the fair value adjustment for these loans relates to credit risk, or 0.08% of total loans. Finally, total purchase discount remaining on all acquired loans equates to 0.25% of total loans.
At March 31, 2018, loans graded "Watch" and "Substandard" were relatively stable with modest increases of $7.4 million, or 2.6% and $3.7 million, or 1.5%, respectively. Nonaccrual loans were $131.3 million as of March 31, 2018, representing a decrease of $16.1 million during the quarter primarily driven by charge offs and transfers to other repossessed property. Total other repossessed property balances were $16.7 million as of March 31, 2018, an increase of $6.2 million, or 59.5% from historically low levels, due to three larger relationships moving into other repossessed property during the quarter.
Total credit-related charges increased compared to the previous quarter and decreased compared to the first six months of fiscal year 2017. A summary of total credit-related charges incurred during the current, prior and comparable quarters and current and prior six-month periods is presented below:
GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
Summary of Credit-Related Charges (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the six months ended:
 
For the three months ended:
Item
Included within F/S Line Item(s):
March 31, 2018
 
March 31, 2017
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
 
 
(dollars in thousands)
Provision for loan and lease losses
Provision for loan and lease losses
$
9,457

 
$
11,058

 
$
4,900

 
$
4,557

 
$
4,009

Net other repossessed property charges
Net loss on repossessed property and other related expenses
1,214

 
1,056

 
1,000

 
214

 
397

Reversal (recovery) of interest income on nonaccrual loans
Interest income on loans
911

 
(99
)
 
(157
)
 
1,068

 
(25
)
Loan fair value adjustment related to credit
Net increase (decrease) in fair value of loans at fair value
320

 
289

 
1,358

 
(1,038
)
 
(251
)
Total
 
$
11,902

 
$
12,304

 
$
7,101

 
$
4,801

 
$
4,130

Noninterest Income
Noninterest income was $18.7 million for the second quarter of fiscal year 2018, an increase of $2.1 million, or 12.4%. Other noninterest income increased by $2.7 million, with the majority of this increase generated by a sign on bonus for a new contract offset by an estimated breakage cost on a prior contract included in noninterest expense as discussed below, partially offset by a $1.1 million reduction in service charges and other fees related to seasonality declines in net overdraft and non-sufficient funds income and crop insurance income in the current quarter. Also included within noninterest income is the net effect of the change in fair value loans for which the Company has elected the fair value option and the net gain (loss), realized and unrealized, of the related derivatives which generated a $0.8 million favorable change over the prior quarter.
Noninterest Expense
Total noninterest expense was $59.1 million for the second quarter of fiscal year 2018, an increase of $4.3 million, or 7.8%. Within noninterest expense is the estimated breakage cost of $2.3 million, offset by a sign on bonus for a new contract within noninterest income. Excluding this item, noninterest expenses were $56.9 million, an increase of $2.0 million, or 3.7%. This increase was driven by salaries and employee benefits, which increased $0.8 million due to the previously announced living wage increases brought on by federal tax reform and annual merit increases in the current quarter, and a net loss on repossessed property and other related expenses, which were $0.8 million higher due to the settlement of a single other repossessed property.
The efficiency ratio1 was 48.6% for the quarter, an increase from 45.8%, as a result of a sign on bonus for a new contract offset by a one time breakage cost on a prior contract as discussed in noninterest revenue and expense above. This added approximately 0.8% to the efficiency ratio during the quarter.

2

Exhibit 99.1


Provision for Income Taxes
The provision for income taxes for the second fiscal quarter ended March 31, 2018 was $14.7 million, reflecting an effective tax rate of 26.6%, compared to an effective tax rate of 49.5% for the prior quarter. Excluding the nonrecurring deferred taxes adjustment related to federal tax reform, the prior quarter effective tax rate was 26.0%.
Capital
Tier 1 and total capital ratios were 11.5% and 12.5%, respectively, as of March 31, 2018, compared to 11.3% and 12.3%, respectively. The common equity tier 1 capital ratio was 10.7% as of March 31, 2018 compared to 10.5%. The tier 1 leverage ratio was 10.4% and 10.3% as of March 31, 2018 and December 31, 2017, respectively. All regulatory capital ratios remain above regulatory minimums to be considered "well capitalized."
On April 26, 2018, the Company’s Board of Directors declared a dividend of $0.25 per common share payable on May 23, 2018 to stockholders of record as of close of business on May 11, 2018. This represents a 25.0% increase compared to $0.20 the dividend declared in January 2018, which the Board of Directors felt was appropriate based on the impact of tax reform on earnings. The aggregate dividend payment will be approximately $14.7 million.
Business Outlook
"We remain very satisfied with the performance of our business and confident on performance for the remainder of the fiscal year," added Karels. "We see good loan pipelines and loan demand post the tax stimulus. We expect to see increased pressure on deposit pricing but will continue to mitigate this through increased asset pricing. We remain confident that we will see loan growth in the mid to high single digit range for the fiscal year."
Conference Call
Great Western Bancorp, Inc. will host a conference call to discuss its financial results for the second quarter of fiscal year 2018 on Thursday, April 26, 2018 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 May 10, 2018. To access the replay, dial (877) 344-7529 (U.S.) and use conference ID 10118626. International callers should dial (412) 317-0088 and enter the same conference ID number.
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 more than 170 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,” “views,” “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 effects of tax reform, the outlook for its agricultural lending segment and the interest rate environment 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 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, 2017. 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.

3

Exhibit 99.1



GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Financial Data (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At or for the six months ended:
 
At or for the three months ended:
 
 
March 31, 2018
 
March 31, 2017
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
 
(dollars in thousands, except share and per share amounts)
Operating Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income (FTE)
 
$
235,368

 
$
217,217

 
$
118,849

 
$
116,519

 
$
115,185

 
$
110,713

 
$
108,420

Interest expense
 
31,011

 
20,257

 
16,680

 
14,332

 
13,391

 
11,671

 
10,494

Noninterest income
 
35,416

 
31,146

 
18,742

 
16,674

 
14,740

 
17,327

 
15,489

Noninterest expense
 
114,012

 
106,389

 
59,144

 
54,868

 
55,332

 
54,922

 
53,852

Provision for loan and lease losses
 
9,457

 
11,058

 
4,900

 
4,557

 
4,685

 
5,796

 
4,009

Net income
 
69,762

 
72,065

 
40,532

 
29,230

 
37,662

 
35,060

 
35,162

Adjusted net income ¹
 
$
83,348

 
$
72,505

 
$
40,532

 
$
42,816

 
$
37,662

 
$
35,060

 
$
35,162

Common shares outstanding
 
58,896,189
 
58,760,517
 
58,896,189

 
58,896,189

 
58,834,066

 
58,761,597

 
58,760,517

Weighted average diluted common shares outstanding
 
59,116,923
 
59,032,787
 
59,146,117

 
59,087,729

 
58,914,144

 
59,130,632

 
59,073,669

Earnings per common share - diluted
 
$
1.18

 
$
1.22

 
$
0.69

 
$
0.49

 
$
0.64

 
$
0.59

 
$
0.60

Adjusted earnings per common share - diluted ¹
 
$
1.41

 
$
1.23

 
$
0.69

 
$
0.72

 
$
0.64

 
$
0.59

 
$
0.60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin (FTE) ¹ ²
 
3.91
%
 
3.87
%
 
3.92
%
 
3.89
%
 
3.93
%
 
3.92
%
 
3.91
%
Adjusted net interest margin (FTE) ¹ ²
 
3.83
%
 
3.70
%
 
3.86
%
 
3.80
%
 
3.82
%
 
3.79
%
 
3.76
%
Return on average total assets ²
 
1.20
%
 
1.27
%
 
1.40
%
 
1.00
%
 
1.30
%
 
1.25
%
 
1.26
%
Return on average common equity ²
 
7.9
%
 
8.6
%
 
9.3
%
 
6.6
%
 
8.6
%
 
8.2
%
 
8.5
%
Return on average tangible common equity ¹ ²
 
13.9
%
 
15.9
%
 
16.2
%
 
11.6
%
 
15.2
%
 
14.8
%
 
15.4
%
Efficiency ratio ¹
 
47.2
%
 
46.0
%
 
48.6
%
 
45.8
%
 
47.1
%
 
46.7
%
 
47.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital ratio
 
11.5
%
 
11.6
%
 
11.5
%
 
11.3
%
 
11.4
%
 
11.5
%
 
11.6
%
Total capital ratio
 
12.5
%
 
12.7
%
 
12.5
%
 
12.3
%
 
12.5
%
 
12.6
%
 
12.7
%
Tier 1 leverage ratio
 
10.4
%
 
10.0
%
 
10.4
%
 
10.3
%
 
10.3
%
 
10.3
%
 
10.0
%
Common equity tier 1 ratio
 
10.7
%
 
10.8
%
 
10.7
%
 
10.5
%
 
10.7
%
 
10.7
%
 
10.8
%
Tangible common equity / tangible assets ¹
 
9.3
%
 
9.0
%
 
9.3
%
 
9.2
%
 
9.2
%
 
9.2
%
 
9.0
%
Book value per share - GAAP
 
$
30.37

 
$
29.05

 
$
30.37

 
$
30.02

 
$
29.83

 
$
29.49

 
$
29.05

Tangible book value per share ¹
 
$
17.68

 
$
16.29

 
$
17.68

 
$
17.32

 
$
17.11

 
$
16.75

 
$
16.29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Quality:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans
 
$
131,274

 
$
127,675

 
$
131,274

 
$
147,325

 
$
138,312

 
$
123,641

 
$
127,675

Other repossessed property
 
$
16,726

 
$
6,994

 
$
16,726

 
$
10,486

 
$
8,985

 
$
9,051

 
$
6,994

Nonaccrual loans / total loans
 
1.41
%
 
1.47
%
 
1.41
%
 
1.61
%
 
1.54
%
 
1.41
%
 
1.47
%
Net charge-offs (recoveries)
 
$
7,821

 
$
13,015

 
$
3,784

 
$
4,037

 
$
5,394

 
$
4,267

 
$
8,091

Net charge-offs (recoveries) / average total loans ²
 
0.17
%
 
0.30
%
 
0.17
%
 
0.18
%
 
0.24
%
 
0.20
%
 
0.38
%
Allowance for loan and lease losses / total loans
 
0.70
%
 
0.72
%
 
0.70
%
 
0.70
%
 
0.71
%
 
0.73
%
 
0.72
%
Watch-rated loans
 
$
294,873

 
$
324,457

 
$
294,873

 
$
287,468

 
$
311,611

 
$
298,963

 
$
324,457

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.


4

Exhibit 99.1


GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Income Statement (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At or for the six months ended:
 
At or for the three months ended:
 
 
March 31, 2018
 
March 31, 2017
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
 
(dollars in thousands)
Interest income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
$
217,674

 
$
199,413

 
$
109,993

 
$
107,680

 
$
106,277

 
$
101,593

 
$
99,481

Investment securities
 
14,055

 
12,916

 
7,013

 
7,043

 
6,592

 
6,803

 
6,538

Federal funds sold and other
 
458

 
565

 
227

 
231

 
194

 
163

 
219

Total interest income
 
232,187

 
212,894

 
117,233

 
114,954

 
113,063

 
108,559

 
106,238

Interest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits
 
23,656

 
15,118

 
12,658

 
10,998

 
10,439

 
9,478

 
7,829

FHLB advances and other borrowings
 
4,978

 
2,953

 
2,815

 
2,164

 
1,787

 
1,080

 
1,567

Subordinated debentures and subordinated notes payable
 
2,377

 
2,186

 
1,207

 
1,170

 
1,165

 
1,113

 
1,098

Total interest expense
 
31,011

 
20,257

 
16,680

 
14,332

 
13,391

 
11,671

 
10,494

Net interest income
 
201,176

 
192,637

 
100,553

 
100,622

 
99,672

 
96,888

 
95,744

Provision for loan and lease losses
 
9,457

 
11,058

 
4,900

 
4,557

 
4,685

 
5,796

 
4,009

Net interest income after provision for loan and lease losses
 
191,719

 
181,579

 
95,653

 
96,065

 
94,987

 
91,092

 
91,735

Noninterest income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges and other fees
 
25,224

 
27,410

 
12,047

 
13,178

 
13,742

 
14,572

 
13,574

Wealth management fees
 
4,519

 
4,683

 
2,335

 
2,185

 
2,002

 
2,433

 
2,429

Mortgage banking income, net
 
2,826

 
4,302

 
1,166

 
1,660

 
1,798

 
1,828

 
1,640

Net (loss) gain on sale of securities
 
(9
)
 
44

 
(8
)
 
(1
)
 
32

 

 
44

Net (decrease) increase in fair value of loans at fair value
 
(23,502
)
 
(69,218
)
 
(14,838
)
 
(8,665
)
 
(2,073
)
 
6,060

 
(5,216
)
Net realized and unrealized gain (loss) on derivatives
 
21,509

 
60,568

 
14,282

 
7,227

 
(1,581
)
 
(9,088
)
 
1,592

Other
 
4,849

 
3,357

 
3,758

 
1,090

 
820

 
1,522

 
1,426

Total noninterest income
 
35,416

 
31,146

 
18,742

 
16,674

 
14,740

 
17,327

 
15,489

Noninterest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
66,539

 
64,004

 
33,672

 
32,868

 
31,263

 
32,868

 
32,370

Data processing and communication
 
16,074

 
13,595

 
9,190

 
6,884

 
7,324

 
7,370

 
6,879

Occupancy and equipment
 
10,138

 
9,946

 
5,290

 
4,848

 
5,006

 
4,866

 
5,123

Professional fees
 
8,267

 
6,394

 
4,027

 
4,240

 
4,503

 
4,141

 
3,559

Advertising
 
2,181

 
1,970

 
1,121

 
1,059

 
954

 
1,059

 
995

Net loss on repossessed property and other related expenses
 
1,214

 
1,056

 
1,000

 
214

 
541

 
152

 
397

Amortization of core deposits and other intangibles
 
852

 
1,389

 
426

 
426

 
430

 
538

 
550

Acquisition expenses
 

 
710

 

 

 

 

 

Other
 
8,747

 
7,325

 
4,418

 
4,329

 
5,311

 
3,928

 
3,979

Total noninterest expense
 
114,012

 
106,389

 
59,144

 
54,868

 
55,332

 
54,922

 
53,852

Income before income taxes
 
113,123

 
106,336

 
55,251

 
57,871

 
54,395

 
53,497

 
53,372

Provision for income taxes
 
43,361

 
34,271

 
14,719

 
28,641

 
16,733

 
18,437

 
18,210

Net income
 
$
69,762

 
$
72,065

 
$
40,532

 
$
29,230

 
$
37,662

 
$
35,060

 
$
35,162


5

Exhibit 99.1


GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
Summarized Consolidated Balance Sheet (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
As of
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
(dollars in thousands)
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
371,749

 
$
297,596

 
$
360,396

 
$
327,901

 
$
335,929

Investment securities
1,307,598

 
1,366,641

 
1,367,960

 
1,366,442

 
1,350,893

Total loans
9,338,306

 
9,165,373

 
8,968,553

 
8,791,852

 
8,697,426

Allowance for loan and lease losses
(65,139
)
 
(64,023
)
 
(63,503
)
 
(64,214
)
 
(62,685
)
Loans, net
9,273,167

 
9,101,350

 
8,905,050

 
8,727,638

 
8,634,741

Goodwill
739,023

 
739,023

 
739,023

 
739,023

 
739,023

Other assets
300,780

 
301,971

 
317,582

 
305,180

 
296,255

Total assets
$
11,992,317

 
$
11,806,581

 
$
11,690,011

 
$
11,466,184

 
$
11,356,841

 
 
 
 
 
 
 
 
 
 
Liabilities and stockholders' equity
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,854,734

 
$
1,932,080

 
$
1,856,126

 
$
1,915,560

 
$
2,026,627

Interest-bearing deposits
7,532,233

 
7,092,105

 
7,121,487

 
7,043,542

 
7,065,291

Total deposits
9,386,967

 
9,024,185

 
8,977,613

 
8,959,102

 
9,091,918

Securities sold under agreements to repurchase
103,291

 
116,884

 
132,636

 
123,851

 
124,472

FHLB advances and other borrowings
551,003

 
721,009

 
643,214

 
471,719

 
264,624

Other liabilities
162,358

 
176,630

 
181,548

 
178,529

 
168,966

Total liabilities
10,203,619

 
10,038,708

 
9,935,011

 
9,733,201

 
9,649,980

Stockholders' equity
1,788,698

 
1,767,873

 
1,755,000

 
1,732,983

 
1,706,861

Total liabilities and stockholders' equity
$
11,992,317

 
$
11,806,581

 
$
11,690,011

 
$
11,466,184

 
$
11,356,841



GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
Loan Portfolio Summary (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
Fiscal year-to-date:
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
Change
($)
 
Change
(%)
 
(dollars in thousands)
Construction and development
$
721,340

 
$
622,985

 
$
538,736

 
$
182,604

 
33.9
 %
Owner-occupied CRE
1,341,034

 
1,317,585

 
1,219,523

 
121,511

 
10.0
 %
Non-owner-occupied CRE
2,077,424

 
2,035,987

 
2,025,326

 
52,098

 
2.6
 %
Multifamily residential real estate
327,980

 
319,139

 
341,220

 
(13,240
)
 
(3.9
)%
Commercial real estate
4,467,778

 
4,295,696

 
4,124,805

 
342,973

 
8.3
 %
Agriculture
2,177,020

 
2,177,383

 
2,122,138

 
54,882

 
2.6
 %
Commercial non-real estate
1,767,587

 
1,695,731

 
1,718,914

 
48,673

 
2.8
 %
Residential real estate
866,982

 
924,439

 
932,892

 
(65,910
)
 
(7.1
)%
Consumer
55,190

 
62,872

 
66,559

 
(11,369
)
 
(17.1
)%
Other ¹
41,816

 
45,805

 
43,207

 
(1,391
)
 
(3.2
)%
Total unpaid principal balance
9,376,373

 
9,201,926

 
9,008,515

 
367,858

 
4.1
 %
Less: Unamortized discount on acquired loans and unearned net deferred fees and costs and loans in process
(38,067
)
 
(36,553
)
 
(39,962
)
 
1,895

 
4.7
 %
Total loans
$
9,338,306

 
$
9,165,373

 
$
8,968,553

 
$
369,753

 
4.1
 %
 
 
 
 
 
 
 
 
 
 
1 Other loans primarily include consumer and commercial credit cards, customer deposit account overdrafts, and lease receivables.


6

Exhibit 99.1


GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Interest Margin (FTE) (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended:
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
 
Average Balance
 
Interest (FTE)
 
Yield / Cost ¹
 
Average Balance
 
Interest (FTE)
 
Yield / Cost ¹
 
Average Balance
 
Interest (FTE)
 
Yield / Cost ¹
 
(dollars in thousands)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing bank deposits
$
58,943

 
$
227

 
1.56
%
 
$
65,935

 
$
231

 
1.39
%
 
$
109,737

 
$
219

 
0.81
%
Investment securities
1,365,152

 
7,013

 
2.08
%
 
1,416,179

 
7,043

 
1.97
%
 
1,382,743

 
6,538

 
1.92
%
Non ASC 310-30 loans, net ²
9,064,899

 
108,427

 
4.85
%
 
8,840,929

 
106,500

 
4.78
%
 
8,531,652

 
99,352

 
4.72
%
ASC 310-30 loans, net
82,306

 
3,182

 
15.68
%
 
89,839

 
2,745

 
12.12
%
 
120,743

 
2,311

 
7.76
%
Loans, net
9,147,205

 
111,609

 
4.95
%
 
8,930,768

 
109,245

 
4.85
%
 
8,652,395

 
101,663

 
4.77
%
Total interest-earning assets
10,571,300

 
118,849

 
4.56
%
 
10,412,882

 
116,519

 
4.44
%
 
10,144,875

 
108,420

 
4.33
%
Noninterest-earning assets
1,155,481

 
 
 
 
 
1,176,658

 
 
 
 
 
1,146,196

 
 
 
 
Total assets
$
11,726,781

 
$
118,849

 
4.11
%
 
$
11,589,540

 
$
116,519

 
3.99
%
 
$
11,291,071

 
$
108,420

 
3.89
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,786,059

 
 
 
 
 
$
1,844,490

 
 
 
 
 
$
1,825,174

 
 
 
 
Interest-bearing deposits
5,929,757

 
$
9,490

 
0.65
%
 
5,887,195

 
$
8,291

 
0.56
%
 
5,623,676

 
$
5,759

 
0.42
%
Time deposits
1,315,209

 
3,168

 
0.98
%
 
1,267,300

 
2,707

 
0.85
%
 
1,286,203

 
2,070

 
0.65
%
Total deposits
9,031,025

 
12,658

 
0.57
%
 
8,998,985

 
10,998

 
0.48
%
 
8,735,053

 
7,829

 
0.36
%
Securities sold under agreements to repurchase
107,921

 
83

 
0.31
%
 
125,060

 
95

 
0.30
%
 
117,970

 
98

 
0.34
%
FHLB advances and other borrowings
652,787

 
2,732

 
1.70
%
 
519,575

 
2,069

 
1.58
%
 
571,338

 
1,469

 
1.04
%
Subordinated debentures and subordinated notes payable
108,358

 
1,207

 
4.52
%
 
108,316

 
1,170

 
4.28
%
 
108,196

 
1,098

 
4.12
%
Total borrowings
869,066

 
4,022

 
1.88
%
 
752,951

 
3,334

 
1.76
%
 
797,504

 
2,665

 
1.36
%
Total interest-bearing liabilities
9,900,091

 
$
16,680

 
0.68
%
 
9,751,936

 
$
14,332

 
0.58
%
 
9,532,557

 
$
10,494

 
0.45
%
Noninterest-bearing liabilities
56,573

 
 
 
 
 
76,477

 
 
 
 
 
71,744

 
 
 
 
Stockholders' equity
1,770,117

 
 
 
 
 
1,761,127

 
 
 
 
 
1,686,770

 
 
 
 
Total liabilities and stockholders' equity
$
11,726,781

 
 
 
 
 
$
11,589,540

 
 
 
 
 
$
11,291,071

 
 
 
 
Net interest spread
 
 
 
 
3.43
%
 
 
 
 
 
3.41
%
 
 
 
 
 
3.44
%
Net interest income and net interest margin (FTE)
 
 
$
102,169

 
3.92
%
 
 
 
$
102,187

 
3.89
%
 
 
 
$
97,926

 
3.91
%
Less: Tax equivalent adjustment
 
 
1,616

 
 
 
 
 
1,565

 
 
 
 
 
2,182

 
 
Net interest income and net interest margin - ties to Statements of Comprehensive Income
 
 
$
100,553

 
3.86
%
 
 
 
$
100,622

 
3.83
%
 
 
 
$
95,744

 
3.83
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Annualized for all partial-year periods.
2 Interest income includes $0.6 million and $1.0 million for the second quarter of fiscal year 2018 and 2017, respectively, resulting from accretion of purchase accounting discount associated with acquired loans.

7

Exhibit 99.1


GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
Net Interest Margin (FTE) (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the six months ended:
 
March 31, 2018
 
March 31, 2017
 
Average Balance
 
Interest (FTE) ¹
 
Yield / Cost ²
 
Average Balance
 
Interest (FTE) ¹
 
Yield / Cost ²
 
(dollars in thousands)
Assets
 
 
 
 
 
 
 
 
 
 
 
Interest bearing bank deposits
$
62,439

 
$
458

 
1.47
%
 
$
188,221

 
$
565

 
0.60
%
Investment securities
1,390,665

 
14,055

 
2.03
%
 
1,380,101

 
12,916

 
1.88
%
Non ASC 310-30 loans, net ³
8,952,914

 
214,927

 
4.81
%
 
8,523,800

 
199,083

 
4.68
%
ASC 310-30 loans, net
86,073

 
5,928

 
13.81
%
 
123,458

 
4,653

 
7.56
%
Loans, net
9,038,987

 
220,855

 
4.90
%
 
8,647,258

 
203,736

 
4.73
%
Total interest-earning assets
10,492,091

 
235,368

 
4.50
%
 
10,215,580

 
217,217

 
4.26
%
Noninterest-earning assets
1,166,069

 
 
 
 
 
1,149,109

 
 
 
 
Total assets
$
11,658,160

 
$
235,368

 
4.05
%
 
$
11,364,689

 
$
217,217

 
3.83
%
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,815,274

 
 
 
 
 
$
1,808,617

 
 
 
 
Interest-bearing deposits
5,908,476

 
$
17,781

 
0.60
%
 
5,585,894

 
$
10,888

 
0.39
%
Time deposits
1,291,255

 
5,875

 
0.91
%
 
1,317,161

 
4,230

 
0.64
%
Total deposits
9,015,005

 
23,656

 
0.53
%
 
8,711,672

 
15,118

 
0.35
%
Securities sold under agreements to repurchase
116,490

 
178

 
0.31
%
 
127,188

 
212

 
0.33
%
FHLB advances and other borrowings
586,181

 
4,800

 
1.64
%
 
644,079

 
2,741

 
0.85
%
Subordinated debentures and subordinated notes payable
108,337

 
2,377

 
4.40
%
 
109,579

 
2,186

 
4.00
%
Total borrowings
811,008

 
7,355

 
1.82
%
 
880,846

 
5,139

 
1.17
%
Total interest-bearing liabilities
9,826,013

 
$
31,011

 
0.63
%
 
9,592,518

 
$
20,257

 
0.42
%
Noninterest-bearing liabilities
66,525

 
 
 
 
 
95,665

 
 
 
 
Stockholders' equity
1,765,622

 
 
 
 
 
1,676,506

 
 
 
 
Total liabilities and stockholders' equity
$
11,658,160

 
 
 
 
 
$
11,364,689

 
 
 
 
Net interest spread
 
 
 
 
3.42
%
 
 
 
 
 
3.41
%
Net interest income and net interest margin (FTE) ¹
 
 
$
204,357

 
3.91
%
 
 
 
$
196,960

 
3.87
%
Less: Tax equivalent adjustment
 
 
3,181

 
 
 
 
 
4,323

 
 
Net interest income and net interest margin - ties to Statements of Comprehensive Income
 
 
$
201,176

 
3.85
%
 
 
 
$
192,637

 
3.78
%
 
 
 
 
 
 
 
 
 
 
 
 
1 Annualized for all partial-year periods.
2 Interest income includes $1.2 million and $2.3 million for the first six months of fiscal year 2018 and 2017, respectively, resulting from accretion of purchase accounting discount associated with acquired loans.

8

Exhibit 99.1


Non-GAAP Measures and Reconciliation
We rely on certain non-GAAP measures in making financial and operational decisions about our business. We believe that each of the non-GAAP measures presented is helpful in highlighting trends in our business, financial condition and results of operations which might not otherwise be apparent when relying solely on our financial results calculated in accordance with U.S. generally accepted accounting principles, or GAAP. We disclose net interest income and related ratios and analysis on a taxable-equivalent basis, which may also be considered non-GAAP financial measures. We believe this presentation to be the preferred industry measurement of net interest income as it provides a relevant comparison of net interest income arising from taxable and tax-exempt sources. In addition, certain performance measures, including the efficiency ratio and net interest margin utilize net interest income on a taxable-equivalent basis.
In particular, we evaluate our profitability and performance based on our adjusted net income, adjusted earnings per common share, tangible net income and return on average tangible common equity. Our adjusted net income and adjusted earnings per common share exclude the after-tax effect of items with a significant impact to net income that we do not believe to be recurring in nature, (e.g., one-time acquisition expenses as well as the effect of revaluation of deferred taxes). Our tangible net income and return on average tangible common equity exclude the effects of amortization expense relating to intangible assets and related tax effects from the acquisition of us by National Australia Bank Limited ("NAB") and our acquisitions of other institutions. We believe these measures help highlight trends associated with our financial condition and results of operations by providing net income and return information excluding significant nonrecurring items (for adjusted net income and adjusted earnings per share) and based on our cash payments and receipts during the applicable period (for tangible net income and return on average tangible common equity).
We also evaluate our profitability and performance based on our adjusted net interest income, adjusted net interest margin, adjusted interest income on non ASC 310-30 loans and adjusted yield on non ASC 310-30 loans. We adjust each of these four measures to include the current realized gain (loss) of derivatives we use to manage interest rate risk on certain of our loans, which we believe economically offsets the interest income earned on the loans. Similarly, we evaluate our operational efficiency based on our efficiency ratio, which excludes the effect of amortization of core deposit and other intangibles (a non-cash expense item) and includes the tax benefit associated with our tax-advantaged loans.
We evaluate our financial condition based on the ratio of our tangible common equity to our tangible assets and the ratio of our tangible common equity to common shares outstanding. Our calculation of this ratio excludes the effect of our goodwill and other intangible assets. We believe this measure is helpful in highlighting the common equity component of our capital and because of its focus by federal bank regulators when reviewing the health and strength of financial institutions in recent years and when considering regulatory approvals for certain actions, including capital actions. We also believe the ratio of our tangible common equity to common shares outstanding is helpful in understanding our stockholders’ relative ownership position as we undertake various actions to issue and retire common shares outstanding.
Reconciliations for each of these non-GAAP financial measures to the closest GAAP financial measures are included in the tables below. Each of the non-GAAP measures presented should be considered in context with our GAAP financial results included in this release.
GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Non-GAAP Measures (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At or for the six months ended:
 
At or for the three months ended:
 
March 31, 2018
 
March 31, 2017
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
(dollars in thousands except share and per share amounts)
Adjusted net income and adjusted earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income - GAAP
$
69,762

 
$
72,065

 
$
40,532

 
$
29,230

 
$
37,662

 
$
35,060

 
$
35,162

Add: Acquisition expenses, net of tax

 
440

 

 

 

 

 

Add: Deferred taxes revaluation
13,586

 

 

 
13,586

 

 

 

Adjusted net income
$
83,348

 
$
72,505

 
$
40,532

 
$
42,816

 
$
37,662

 
$
35,060

 
$
35,162

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares outstanding
59,116,923

 
59,032,787

 
59,146,117

 
59,087,729

 
58,914,144

 
59,130,632

 
59,073,669

Earnings per common share - diluted
$
1.18

 
$
1.22

 
$
0.69

 
$
0.49

 
$
0.64

 
$
0.59

 
$
0.60

Adjusted earnings per common share - diluted
$
1.41

 
$
1.23

 
$
0.69

 
$
0.72

 
$
0.64

 
$
0.59

 
$
0.60

 
 
 
 
 
 
 
 
 
 
 
 
 
 

9

Exhibit 99.1


GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Non-GAAP Measures (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At or for the six months ended:
 
At or for the three months ended:
 
March 31, 2018
 
March 31, 2017
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
(dollars in thousands except share and per share amounts)
Tangible net income and return on average tangible common equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income - GAAP
$
69,762

 
$
72,065

 
$
40,532