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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): July 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 July 26, 2018, Great Western Bancorp, Inc. ("Great Western" and, together with its consolidated subsidiaries, the “Company”) announced its earnings for the third fiscal quarter ended June 30, 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 nine months ended June 30, 2018. The Company intends to use this presentation for any investor meetings or related interactions through the third 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 July 26, 2018, containing financial information for the quarter ended June 30, 2018.
 
 
99.2
Slide presentation for conference call for investors and analysts on July 26, 2018.
 
 
99.3
Quarterly Investor Relations Presentation for the third 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: July 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 July 26, 2018, containing financial information for the quarter ended June 30, 2018.
 
 
Slide presentation for conference call for investors and analysts on July 26, 2018.
 
 
Quarterly Investor Relations Presentation for the third quarter of fiscal year 2018.




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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

394368167_greatwesternbancorpa23.jpg

Great Western Bancorp, Inc. Announces Fiscal Year 2018 Third Quarter Financial Results
Highlights for the Third Quarter of Fiscal Year 2018 (all comparisons in this document refer to the second quarter of fiscal year 2018, except as noted)
Net income was $45.9 million, or $0.78 per diluted share, for the quarter, compared to net income of $40.5 million, or $0.69 per diluted share
Net interest margin and adjusted net interest margin1, 2 were 3.97% and 3.94%, increases of 5 and 8 basis points, respectively
The efficiency ratio1 was reduced to 45.8% for the quarter and 46.7% for fiscal year-to-date
Total loans increased $41.5 million, or 0.4%, to $9.38 billion, bringing fiscal year-to-date growth to $411.3 million, or 4.6%
Total deposits grew to $9.59 billion, an increase of $198.4 million, or 2.1%, for the quarter and $607.7 million, or 6.8%, for fiscal year-to-date
Key asset quality metrics including nonaccrual loans, watch loans and other repossessed property improved during the quarter, while net charge-offs remained stable and substandard loans grew slightly

Sioux Falls, SD - July 26, 2018 - Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $45.9 million, or $0.78 per diluted share, for the third quarter of fiscal year 2018, compared to net income of $40.5 million, or $0.69 per diluted share.
"It is pleasing to see another quarter of solid earnings, stable asset quality and strong profitability," said Ken Karels, Chairman, President and Chief Executive Officer. "Our efficiency ratio remains strong at 45.8% for the quarter, and also our return on tangible common equity1, has improved to 17.7%."
Net Interest Income and Net Interest Margin2 
Net interest income was $106.4 million for the quarter, an increase of $4.2 million, or 4.1%. Higher loan interest income, driven by 1.7% growth in average loans outstanding and a 15 basis point increase in the yield on loans, was partially offset by higher interest expense associated with a 13 basis point increase in the cost of deposits.
Net interest margin was 3.97% and 3.92%, respectively, for the quarters ended June 30, 2018 and March 31, 2018. Adjusted net interest margin1, which adjusts for the realized gain (loss) on interest rate swaps, was 3.94% and 3.86%, respectively, for the same periods. The yield on interest-earning assets increased by 15 basis points and the cost of interest-bearing liabilities increased by 11 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 interest margin1 compared to net interest margin.
Total loans outstanding were $9.38 billion as of June 30, 2018, an increase of $41.5 million, or 0.4%, for the quarter. The majority of the growth during the quarter occurred in the commercial real estate ("CRE") category of the portfolio, across both non-owner and owner occupied segments, which increased by $61.7 million, partially offset by a decrease of $16.8 million in the commercial non-real estate category of the portfolio.
Total deposits grew to $9.59 billion as of June 30, 2018, an increase of $198.4 million, or 2.1%, during the quarter. Noninterest-bearing deposits were $1.79 billion, a 3.3% decrease, for the quarter and interest-bearing deposits were $7.79 billion, a 3.4% increase for the quarter. FHLB and other borrowings decreased by $216.0 million, or 39.2%, as a result of deposit funding being more cost effective during the June quarter.
Provision for Loan and Lease Losses and Asset Quality
Provision for loan and lease losses was $3.5 million for the quarter, a decrease of $1.4 million, or 28.3%. Net charge-offs for the quarter were $4.0 million, or 0.17% of average total loans on an annualized basis, with the majority of net charge-offs concentrated in the CRE and agriculture segments of the loan portfolio. The ratio of allowance for loan and lease losses ("ALLL") to total loans was 0.69% at June 30, 2018, a decrease from 0.70%.

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

Included within total loans are approximately $888.2 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 $7.4 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 0.21% of total loans.
At June 30, 2018, loans graded "Watch" decreased $18.9 million, or 6.4% while loans graded "Substandard" increased $16.7 million, or 6.6%. Nonaccrual loans were $127.3 million as of June 30, 2018, representing a decrease of $4.0 million during the quarter. Total other repossessed property balances were $10.2 million as of June 30, 2018, a decrease of $6.5 million, or 38.9%, due to four larger holdings sold during the quarter.
Total credit-related charges decreased compared to the previous quarter and the first nine months of fiscal year 2017. A summary of total credit-related charges incurred during the current, prior and comparable quarters and current and prior nine-month periods is presented below:
GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
Summary of Credit-Related Charges (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the nine months ended:
 
For the three months ended:
Item
Included within F/S Line Item(s):
June 30, 2018
 
June 30, 2017
 
June 30, 2018
 
March 31, 2018
 
June 30, 2017
 
 
(dollars in thousands)
Provision for loan and lease losses
Provision for loan and lease losses
$
12,972

 
$
16,854

 
$
3,515

 
$
4,900

 
$
5,796

Net other repossessed property charges
Net loss on repossessed property and other related expenses
1,519

 
1,208

 
305

 
1,000

 
152

Reversal (recovery) of interest income on nonaccrual loans
Interest income on loans
1,126

 
233

 
216

 
(157
)
 
332

Loan fair value adjustment related to credit
Net increase (decrease) in fair value of loans at fair value
197

 
(4
)
 
(123
)
 
1,358

 
(293
)
Total
 
$
15,814

 
$
18,291

 
$
3,913

 
$
7,101

 
$
5,987

Noninterest Income
Noninterest income was $18.9 million for the third quarter of fiscal year 2018, an increase of $0.2 million, or 1.1%. 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 $1.3 million favorable change over the prior quarter. Service charges and other fees increased by $0.6 million primarily related to increases in credit card interchange income and net overdraft and non-sufficient funds income. Other income declined by $1.8 million due to a nonrecurring $2.6 million sign on bonus for a new contract recognized in the prior quarter, partially offset by a $0.9 million gain on the sale of stock shares held in the current quarter.
Noninterest Expense
Total noninterest expense was $57.9 million for the third quarter of fiscal year 2018, a decrease of $1.3 million, or 2.2%. In the prior quarter, noninterest expense included an estimated one time breakage cost on a prior contract of $2.3 million. Excluding this item, noninterest expenses increased $1.0 million, or 1.7% during the quarter. This increase was driven by a $1.5 million increase in salaries and employee benefits due to increases in health care costs of $0.4 million, pension expense of $0.3 million and employee related consulting fees of $0.4 million, partially offset by a $0.7 million decrease in net loss on repossessed property.
The efficiency ratio1 was 45.8% for the quarter, a decrease from 48.6%, as a result of a nonrecurring sign on bonus for a new contract recognized in the prior quarter offset by an estimated one time breakage cost on a prior contract as discussed in noninterest income and expense above.
Provision for Income Taxes
The provision for income taxes for the quarter ended June 30, 2018 was $16.4 million, reflecting an effective tax rate of 26.3%, compared to an effective tax rate of 26.6% for the prior quarter.
Capital
Tier 1 and total capital ratios were 11.8% and 12.8%, respectively, as of June 30, 2018, compared to 11.5% and 12.5%. The common equity tier 1 capital ratio and tier 1 leverage ratio were 11.0% and 10.6% as of June 30, 2018 compared to 10.7% and 10.4%, respectively. All regulatory capital ratios remain above regulatory minimums to be considered "well capitalized."

2

Exhibit 99.1

On July 26, 2018, the Company’s Board of Directors declared a dividend of $0.25 per common share payable on August 22, 2018 to stockholders of record as of close of business on August 10, 2018. The aggregate dividend payment will be approximately $14.7 million.
Business Outlook
"We remain positive looking ahead to the last quarter of our 2018 fiscal year. Loan demand is solid and we remain confident loan growth will be in the mid to high single digit range for the full fiscal year," added Karels. "We also have had continued success in recruiting new talent to the company and look forward to entering a number of new markets during the next twelve months."
Conference Call
Great Western Bancorp, Inc. will host a conference call to discuss its financial results for the third quarter of fiscal year 2018 on Thursday, July 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 August 9, 2018. To access the replay, dial (877) 344-7529 (U.S.) and use conference ID 10121658. 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 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, and in the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018. 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 nine months ended:
 
At or for the three months ended:
 
June 30, 2018
 
June 30, 2017
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
(dollars in thousands, except share and per share amounts)
Operating Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income (FTE)
$
361,514

 
$
327,929

 
$
126,146

 
$
118,849

 
$
116,519

 
$
115,185

 
$
110,713

Interest expense
50,756

 
31,928

 
19,745

 
16,680

 
14,332

 
13,391

 
11,671

Noninterest income
54,355

 
48,474

 
18,939

 
18,742

 
16,674

 
14,740

 
17,327

Noninterest expense
171,875

 
161,312

 
57,863

 
59,144

 
54,868

 
55,332

 
54,922

Provision for loan and lease losses
12,972

 
16,854

 
3,515

 
4,900

 
4,557

 
4,685

 
5,796

Net income
115,636

 
107,125

 
45,874

 
40,532

 
29,230

 
37,662

 
35,060

Adjusted net income ¹
$
129,222

 
$
107,565

 
$
45,874

 
$
40,532

 
$
42,816

 
$
37,662

 
$
35,060

Common shares outstanding
58,911,563
 
58,761,597
 
58,911,563

 
58,896,189

 
58,896,189

 
58,834,066

 
58,761,597

Weighted average diluted common shares outstanding
59,134,635
 
59,065,402
 
59,170,058

 
59,146,117

 
59,087,729

 
59,914,144

 
59,130,632

Earnings per common share - diluted
$
1.96

 
$
1.81

 
$
0.78

 
$
0.69

 
$
0.49

 
$
0.64

 
$
0.59

Adjusted earnings per common share - diluted ¹
$
2.19

 
$
1.82

 
$
0.78

 
$
0.69

 
$
0.72

 
$
0.64

 
$
0.59

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin (FTE) ¹ ²
3.93
%
 
3.89
%
 
3.97
%
 
3.92
%
 
3.89
%
 
3.93
%
 
3.92
%
Adjusted net interest margin (FTE) ¹ ²
3.87
%
 
3.73
%
 
3.94
%
 
3.86
%
 
3.80
%
 
3.82
%
 
3.79
%
Return on average total assets ²
1.32
%
 
1.26
%
 
1.55
%
 
1.40
%
 
1.00
%
 
1.30
%
 
1.25
%
Return on average common equity ²
8.7
%
 
8.5
%
 
10.2
%
 
9.3
%
 
6.6
%
 
8.6
%
 
8.2
%
Return on average tangible common equity ¹ ²
15.2
%
 
15.5
%
 
17.7
%
 
16.2
%
 
11.6
%
 
15.2
%
 
14.8
%
Efficiency ratio ¹
46.7
%
 
46.3
%
 
45.8
%
 
48.6
%
 
45.8
%
 
47.1
%
 
46.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital:
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital ratio
11.8
%
 
11.5
%
 
11.8
%
 
11.5
%
 
11.3
%
 
11.4
%
 
11.5
%
Total capital ratio
12.8
%
 
12.6
%
 
12.8
%
 
12.5
%
 
12.3
%
 
12.5
%
 
12.6
%
Tier 1 leverage ratio
10.6
%
 
10.3
%
 
10.6
%
 
10.4
%
 
10.3
%
 
10.3
%
 
10.3
%
Common equity tier 1 ratio
11.0
%
 
10.7
%
 
11.0
%
 
10.7
%
 
10.5
%
 
10.7
%
 
10.7
%
Tangible common equity / tangible assets ¹
9.5
%
 
9.2
%
 
9.5
%
 
9.3
%
 
9.2
%
 
9.2
%
 
9.2
%
Book value per share - GAAP
$
30.84

 
$
29.49

 
$
30.84

 
$
30.37

 
$
30.02

 
$
29.83

 
$
29.49

Tangible book value per share ¹
$
18.16

 
$
16.75

 
$
18.16

 
$
17.68

 
$
17.32

 
$
17.11

 
$
16.75

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Quality:
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans
$
127,315

 
$
123,641

 
$
127,315

 
$
131,274

 
$
147,325

 
$
138,312

 
$
123,641

Other repossessed property
$
10,221

 
$
9,051

 
$
10,221

 
$
16,726

 
$
10,486

 
$
8,985

 
$
9,051

Nonaccrual loans / total loans
1.36
%
 
1.41
%
 
1.36
%
 
1.41
%
 
1.61
%
 
1.54
%
 
1.41
%
Net charge-offs (recoveries)
$
11,787

 
$
17,282

 
$
3,966

 
$
3,784

 
$
4,037

 
$
5,394

 
$
4,267

Net charge-offs (recoveries) / average total loans ²
0.17
%
 
0.27
%
 
0.17
%
 
0.17
%
 
0.18
%
 
0.24
%
 
0.20
%
Allowance for loan and lease losses / total loans
0.69
%
 
0.73
%
 
0.69
%
 
0.70
%
 
0.70
%
 
0.71
%
 
0.73
%
Watch-rated loans
$
276,001

 
$
298,963

 
$
276,001

 
$
294,873

 
$
287,468

 
$
311,611

 
$
298,963

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 nine months ended:
 
At or for the three months ended:
 
June 30, 2018
 
June 30, 2017
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
(dollars in thousands)
Interest income
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
$
334,196

 
$
301,005

 
$
116,522

 
$
109,993

 
$
107,680

 
$
106,277

 
$
101,593

Investment securities
21,526

 
19,719

 
7,471

 
7,013

 
7,043

 
6,592

 
6,803

Federal funds sold and other
882

 
728

 
424

 
227

 
231

 
194

 
163

Total interest income
356,604

 
321,452

 
124,417

 
117,233

 
114,954

 
113,063

 
108,559

Interest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits
40,116

 
24,596

 
16,460

 
12,658

 
10,998

 
10,439

 
9,478

FHLB advances and other borrowings
6,941

 
4,033

 
1,963

 
2,815

 
2,164

 
1,787

 
1,080

Subordinated debentures and subordinated notes payable
3,699

 
3,299

 
1,322

 
1,207

 
1,170

 
1,165

 
1,113

Total interest expense
50,756

 
31,928

 
19,745

 
16,680

 
14,332

 
13,391

 
11,671

Net interest income
305,848

 
289,524

 
104,672

 
100,553

 
100,622

 
99,672

 
96,888

Provision for loan and lease losses
12,972

 
16,854

 
3,515

 
4,900

 
4,557

 
4,685

 
5,796

Net interest income after provision for loan and lease losses
292,876

 
272,670

 
101,157

 
95,653

 
96,065

 
94,987

 
91,092

Noninterest income
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges and other fees
37,879

 
41,983

 
12,655

 
12,047

 
13,178

 
13,742

 
14,572

Wealth management fees
6,761

 
7,116

 
2,242

 
2,335

 
2,185

 
2,002

 
2,433

Mortgage banking income, net
4,178

 
6,130

 
1,352

 
1,166

 
1,660

 
1,798

 
1,828

Net gain (loss) on sale of securities
6

 
44

 
15

 
(8
)
 
(1
)
 
32

 

Net (decrease) increase in fair value of loans at fair value
(30,872
)
 
(63,158
)
 
(7,370
)
 
(14,838
)
 
(8,665
)
 
(2,073
)
 
6,060

Net realized and unrealized gain (loss) on derivatives
29,602

 
51,481

 
8,093

 
14,282

 
7,227

 
(1,581
)
 
(9,088
)
Other
6,801

 
4,878

 
1,952

 
3,758

 
1,090

 
820

 
1,522

Total noninterest income
54,355

 
48,474

 
18,939

 
18,742

 
16,674

 
14,740

 
17,327

Noninterest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
101,661

 
96,872

 
35,122

 
33,672

 
32,868

 
31,263

 
32,868

Data processing and communication
23,251

 
20,965

 
7,177

 
9,190

 
6,884

 
7,324

 
7,370

Occupancy and equipment
15,112

 
14,812

 
4,974

 
5,290

 
4,848

 
5,006

 
4,866

Professional fees
12,564

 
10,535

 
4,297

 
4,027

 
4,240

 
4,503

 
4,141

Advertising
3,441

 
3,029

 
1,260

 
1,121

 
1,059

 
954

 
1,059

Net loss on repossessed property and other related expenses
1,519

 
1,208

 
305

 
1,000

 
214

 
541

 
152

Amortization of core deposits and other intangibles
1,268

 
1,927

 
416

 
426

 
426

 
430

 
538

Acquisition expenses

 
710

 

 

 

 

 

Other
13,059

 
11,254

 
4,312

 
4,418

 
4,329

 
5,311

 
3,928

Total noninterest expense
171,875

 
161,312

 
57,863

 
59,144

 
54,868

 
55,332

 
54,922

Income before income taxes
175,356

 
159,832

 
62,233

 
55,251

 
57,871

 
54,395

 
53,497

Provision for income taxes
59,720

 
52,707

 
16,359

 
14,719

 
28,641

 
16,733

 
18,437

Net income
$
115,636

 
$
107,125

 
$
45,874

 
$
40,532

 
$
29,230

 
$
37,662

 
$
35,060


5

Exhibit 99.1

GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
Summarized Consolidated Balance Sheet (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
As of
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
(dollars in thousands)
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
294,614

 
$
371,749

 
$
297,596

 
$
360,396

 
$
327,901

Investment securities
1,372,711

 
1,307,598

 
1,366,641

 
1,367,960

 
1,366,442

Total loans
9,379,819

 
9,338,306

 
9,165,373

 
8,968,553

 
8,791,852

Allowance for loan and lease losses
(64,688
)
 
(65,139
)
 
(64,023
)
 
(63,503
)
 
(64,214
)
Loans, net
9,315,131

 
9,273,167

 
9,101,350

 
8,905,050

 
8,727,638

Goodwill
739,023

 
739,023

 
739,023

 
739,023

 
739,023

Other assets
287,569

 
300,780

 
301,971

 
317,582

 
305,180

Total assets
$
12,009,048

 
$
11,992,317

 
$
11,806,581

 
$
11,690,011

 
$
11,466,184

 
 
 
 
 
 
 
 
 
 
Liabilities and stockholders' equity
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,793,293

 
$
1,854,734

 
$
1,932,080

 
$
1,856,126

 
$
1,915,560

Interest-bearing deposits
7,792,025

 
7,532,233

 
7,092,105

 
7,121,487

 
7,043,542

Total deposits
9,585,318

 
9,386,967

 
9,024,185

 
8,977,613

 
8,959,102

Securities sold under agreements to repurchase
105,478

 
103,291

 
116,884

 
132,636

 
123,851

FHLB advances and other borrowings
335,000

 
551,003

 
721,009

 
643,214

 
471,719

Other liabilities
166,511

 
162,358

 
176,630

 
181,548

 
178,529

Total liabilities
10,192,307

 
10,203,619

 
10,038,708

 
9,935,011

 
9,733,201

Stockholders' equity
1,816,741

 
1,788,698

 
1,767,873

 
1,755,000

 
1,732,983

Total liabilities and stockholders' equity
$
12,009,048

 
$
11,992,317

 
$
11,806,581

 
$
11,690,011

 
$
11,466,184



GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
Loan Portfolio Summary (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
Fiscal year-to-date:
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
Change
($)
 
Change
(%)
 
(dollars in thousands)
Construction and development
$
733,612

 
$
721,340

 
$
622,985

 
$
538,736

 
$
194,876

 
36.2
 %
Owner-occupied CRE
1,360,969

 
1,341,034

 
1,317,585

 
1,219,523

 
141,446

 
11.6
 %
Non-owner-occupied CRE
2,123,002

 
2,077,424

 
2,035,987

 
2,025,326

 
97,676

 
4.8
 %
Multifamily residential real estate
311,863

 
327,980

 
319,139

 
341,220

 
(29,357
)
 
(8.6
)%
Commercial real estate
4,529,446

 
4,467,778

 
4,295,696

 
4,124,805

 
404,641

 
9.8
 %
Agriculture
2,176,318

 
2,177,020

 
2,177,383

 
2,122,138

 
54,180

 
2.6
 %
Commercial non-real estate
1,750,827

 
1,767,587

 
1,695,731

 
1,718,914

 
31,913

 
1.9
 %
Residential real estate
857,848

 
866,982

 
924,439

 
932,892

 
(75,044
)
 
(8.0
)%
Consumer
51,417

 
55,190

 
62,872

 
66,559

 
(15,142
)
 
(22.8
)%
Other ¹
44,187

 
41,816

 
45,805

 
43,207

 
980

 
2.3
 %
Total unpaid principal balance
9,410,043

 
9,376,373

 
9,201,926

 
9,008,515

 
401,528

 
4.5
 %
Less: Unamortized discount on acquired loans and unearned net deferred fees and costs and loans in process
(30,224
)
 
(38,067
)
 
(36,553
)
 
(39,962
)
 
9,738

 
(24.4
)%
Total loans
$
9,379,819

 
$
9,338,306

 
$
9,165,373

 
$
8,968,553

 
$
411,266

 
4.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
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:
 
June 30, 2018
 
March 31, 2018
 
June 30, 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
$
90,868

 
$
424

 
1.87
%
 
$
58,943

 
$
227

 
1.56
%
 
$
62,187

 
$
163

 
1.05
%
Investment securities
1,357,808

 
7,471

 
2.21
%
 
1,365,152

 
7,013

 
2.08
%
 
1,398,370

 
6,803

 
1.95
%
Non ASC 310-30 loans, net ²
9,220,931

 
114,489

 
4.98
%
 
9,064,899

 
108,427

 
4.85
%
 
8,550,349

 
100,878

 
4.73
%
ASC 310-30 loans, net
78,471

 
3,762

 
19.23
%
 
82,306

 
3,182

 
15.68
%
 
113,498

 
2,869

 
10.14
%
Loans, net
9,299,402

 
118,251

 
5.10
%
 
9,147,205

 
111,609

 
4.95
%
 
8,663,847

 
103,747

 
4.80
%
Total interest-earning assets
10,748,078

 
126,146

 
4.71
%
 
10,571,300

 
118,849

 
4.56
%
 
10,124,404

 
110,713

 
4.39
%
Noninterest-earning assets
1,152,724

 
 
 
 
 
1,155,481

 
 
 
 
 
1,154,295

 
 
 
 
Total assets
$
11,900,802

 
$
126,146

 
4.25
%
 
$
11,726,781

 
$
118,849

 
4.11
%
 
$
11,278,699

 
$
110,713

 
3.94
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,793,784

 
 
 
 
 
$
1,786,059

 
 
 
 
 
$
1,815,407

 
 
 
 
Interest-bearing deposits
6,101,679

 
$
11,705

 
0.77
%
 
5,929,757

 
$
9,490

 
0.65
%
 
5,849,998

 
$
7,172

 
0.49
%
Time deposits
1,578,253

 
4,755

 
1.21
%
 
1,315,209

 
3,168

 
0.98
%
 
1,289,402

 
2,306

 
0.72
%
Total deposits
9,473,716

 
16,460

 
0.70
%
 
9,031,025

 
12,658

 
0.57
%
 
8,954,807

 
9,478

 
0.42
%
Securities sold under agreements to repurchase
99,897

 
80

 
0.32
%
 
107,921

 
83

 
0.31
%
 
118,373

 
86

 
0.29
%
FHLB advances and other borrowings
357,102

 
1,883

 
2.11
%
 
652,787

 
2,732

 
1.70
%
 
303,846

 
994

 
1.31
%
Subordinated debentures and subordinated notes payable
108,398

 
1,322

 
4.89
%
 
108,358

 
1,207

 
4.52
%
 
108,234

 
1,113

 
4.13
%
Total borrowings
565,397

 
3,285

 
2.33
%
 
869,066

 
4,022

 
1.88
%
 
530,453

 
2,193

 
1.66
%
Total interest-bearing liabilities
10,039,113

 
$
19,745

 
0.79
%
 
9,900,091

 
$
16,680

 
0.68
%
 
9,485,260

 
$
11,671

 
0.49
%
Noninterest-bearing liabilities
65,623

 
 
 
 
 
56,573

 
 
 
 
 
77,979

 
 
 
 
Stockholders' equity
1,796,066

 
 
 
 
 
1,770,117

 
 
 
 
 
1,715,460

 
 
 
 
Total liabilities and stockholders' equity
$
11,900,802

 
 
 
 
 
$
11,726,781

 
 
 
 
 
$
11,278,699

 
 
 
 
Net interest spread
 
 
 
 
3.46
%
 
 
 
 
 
3.43
%
 
 
 
 
 
3.45
%
Net interest income and net interest margin (FTE)
 
 
$
106,401

 
3.97
%
 
 
 
$
102,169

 
3.92
%
 
 
 
$
99,042

 
3.92
%
Less: Tax equivalent adjustment
 
 
1,729

 
 
 
 
 
1,616

 
 
 
 
 
2,154

 
 
Net interest income and net interest margin - ties to Statements of Comprehensive Income
 
 
$
104,672

 
3.91
%
 
 
 
$
100,553

 
3.86
%
 
 
 
$
96,888

 
3.84
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 Annualized for all partial-year periods.
2 Interest income includes $0.9 million and $0.7 million for the third 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 nine months ended:
 
June 30, 2018
 
June 30, 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
$
71,915

 
$
882

 
1.64
%
 
$
146,209

 
$
728

 
0.67
%
Investment securities
1,379,713

 
21,526

 
2.09
%
 
1,386,190

 
19,719

 
1.90
%
Non ASC 310-30 loans, net ³
9,042,253

 
329,416

 
4.87
%
 
8,532,650

 
299,960

 
4.70
%
ASC 310-30 loans, net
83,539

 
9,690

 
15.51
%
 
120,138

 
7,522

 
8.37
%
Loans, net
9,125,792

 
339,106

 
4.97
%
 
8,652,788

 
307,482

 
4.75
%
Total interest-earning assets
10,577,420

 
361,514

 
4.57
%
 
10,185,187

 
327,929

 
4.30
%
Noninterest-earning assets
1,161,618

 
 
 
 
 
1,150,838

 
 
 
 
Total assets
$
11,739,038

 
$
361,514

 
4.12
%
 
$
11,336,025

 
$
327,929

 
3.87
%
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,808,110

 
 
 
 
 
$
1,810,880

 
 
 
 
Interest-bearing deposits
5,972,877

 
$
29,486

 
0.66
%
 
5,673,929

 
$
18,060

 
0.43
%
Time deposits
1,386,921

 
10,630

 
1.02
%
 
1,307,908

 
6,536

 
0.67
%
Total deposits
9,167,908

 
40,116

 
0.59
%
 
8,792,717

 
24,596

 
0.37
%
Securities sold under agreements to repurchase
110,959

 
259

 
0.31
%
 
124,249

 
298

 
0.32
%
FHLB advances and other borrowings
509,822

 
6,682

 
1.75
%
 
530,668

 
3,735

 
0.94
%
Subordinated debentures and subordinated notes payable
108,357

 
3,699

 
4.56
%
 
109,130

 
3,299

 
4.04
%
Total borrowings
729,138

 
10,640

 
1.95
%
 
764,047

 
7,332

 
1.28
%
Total interest-bearing liabilities
9,897,046

 
$
50,756

 
0.69
%
 
9,556,764

 
$
31,928

 
0.45
%
Noninterest-bearing liabilities
66,225

 
 
 
 
 
89,770

 
 
 
 
Stockholders' equity
1,775,767

 
 
 
 
 
1,689,491

 
 
 
 
Total liabilities and stockholders' equity
$
11,739,038

 
 
 
 
 
$
11,336,025

 
 
 
 
Net interest spread
 
 
 
 
3.43
%
 
 
 
 
 
3.42
%
Net interest income and net interest margin (FTE) ¹
 
 
$
310,758

 
3.93
%
 
 
 
$
296,001

 
3.89
%
Less: Tax equivalent adjustment
 
 
4,910

 
 
 
 
 
6,477

 
 
Net interest income and net interest margin - ties to Statements of Comprehensive Income
 
 
$
305,848

 
3.87
%
 
 
 
$
289,524

 
3.80
%
 
 
 
 
 
 
 
 
 
 
 
 
1 Annualized for all partial-year periods.
2 Interest income includes $2.1 million and $3.0 million for the first nine 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 nine months ended:
 
At or for the three months ended:
 
June 30, 2018
 
June 30, 2017
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
(dollars in thousands except share and per share amounts)
Adjusted net income and adjusted earnings per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income - GAAP
$
115,636

 
$
107,125

 
$
45,874

 
$
40,532

 
$
29,230

 
$
37,662

 
$
35,060

Add: Acquisition expenses, net of tax

 
440

 

 

 

 

 

Add: Deferred taxes revaluation
13,586

 

 

 

 
13,586

 

 

Adjusted net income
$
129,222

 
$
107,565

 
$
45,874

 
$
40,532

 
$
42,816

 
$
37,662

 
$
35,060

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted common shares outstanding
59,134,635

 
59,065,402

 
59,170,058

 
59,146,117

 
59,087,729

 
59,914,144

 
59,130,632

Earnings per common share - diluted
$
1.96

 
$
1.81

 
$
0.78

 
$
0.69

 
$
0.49

 
$
0.64

 
$
0.59

Adjusted earnings per common share - diluted
$
2.19

 
$
1.82

 
$
0.78

 
$
0.69

 
$
0.72

 
$
0.64

 
$
0.59

 
 
 
 
 
 
 
 
 
 
 
 
 
 

9

Exhibit 99.1

GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Non-GAAP Measures (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At or for the nine months ended:
 
At or for the three months ended: