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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 25, 2019

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 25, 2019, 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, 2019. 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, 2019. The Company intends to use this presentation for any investor meetings or related interactions through the third quarter of fiscal year 2019. 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 25, 2019, containing financial information for the quarter ended March 31, 2019.
 
 
99.2
Slide presentation for conference call for investors and analysts on April 25, 2019.
 
 
99.3
Quarterly Investor Relations Presentation for the second quarter of fiscal year 2019.

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 25, 2019
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 25, 2019, containing financial information for the quarter ended March 31, 2019.
 
 
Slide presentation for conference call for investors and analysts on April 25, 2019.
 
 
Quarterly Investor Relations Presentation for the second quarter of fiscal year 2019.




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

397646840_greatwesternbancorpa28.jpg
Great Western Bancorp, Inc. Announces 13% Increase in EPS in Fiscal Year 2019 Second Quarter Financial Results; Raises Dividend
Highlights for the Second Quarter of Fiscal Year 2019 (all quarterly comparisons in this document refer to the first quarter of fiscal year 2019, except as noted)
Net income was $44.5 million, or $0.78 per diluted share, compared to $45.8 million, or $0.79 per diluted share, for the prior quarter and $40.5 million, or $0.69 per diluted share, for the second quarter of fiscal year 2018, a 13.0% increase
Net interest margin and adjusted net interest margin1, 2 were 3.75% and 3.76%, decreases of 6 and 5 basis points, respectively
Expense control remained strong with the efficiency ratio1 at 45.6% for the quarter and 45.8% for fiscal year-to-date
Total loans remained steady at $9.77 billion, with fiscal year-to-date growth at $355.0 million, or 3.8%
Total deposits grew to $10.47 billion, an increase of $355.1 million, or 3.5%, for the quarter and $734.9 million, or 7.6%, for fiscal year-to-date
Key asset quality metrics including nonaccrual loans and watch-rated loans improved during the quarter, while net charge-offs and substandard loans grew modestly
The Company's Board of Directors declared a quarterly dividend of $0.30 per share, an increase of 20% compared to the most recent quarterly dividend
Sioux Falls, SD - April 25, 2019 - Great Western Bancorp, Inc. (NYSE: GWB) today reported net income of $44.5 million, or $0.78 per diluted share, for the second quarter of fiscal year 2019, compared to net income of $45.8 million, or $0.79 per diluted share, for the first quarter of fiscal year 2019 and $40.5 million, or $0.69 per diluted share, for the second quarter of fiscal year 2018, a 13.0% increase.
"We are pleased with the progress we have made this quarter. Our earnings increased over the prior year, and our return on assets and equity remained strong," said Ken Karels, Chief Executive Officer and Chairperson of the Board. "In addition, asset quality metrics continue to trend in line with expectations during the quarter and our agriculture loan portfolio remaining steady."
Net Interest Income and Net Interest Margin2 
Net interest income was $104.9 million for the quarter, a decrease of $1.5 million, or 1.4%. The decrease resulted from higher interest expense associated with the cost of deposits, partially offset by a higher yield on loans and investments.
Net interest margin was 3.75% and 3.81%, respectively, for the quarters ended March 31, 2019 and December 31, 2018. Adjusted net interest margin1, which adjusts for the realized gain (loss) on interest rate swaps, was 3.76% and 3.81%, respectively, for the same periods. The lower margins were primarily driven by the cost of deposits, which increased 13 basis points to 1.08%, partially offset by the yield on loans, which increased 6 basis points to 5.23%, and the yield on the investment portfolio, which increased 8 basis points to 2.52%. In addition, an increase in balance sheet liquidity and reversal of interest income on nonaccrual loans reduced adjusted net interest margin1 by 3 basis points during the quarter.
Total loans outstanding were $9.77 billion as of March 31, 2019, a marginal increase from the prior quarter, and growth of $355.0 million, or 3.8%, for fiscal year-to-date. During the quarter the commercial real estate ("CRE") category of the portfolio grew by $139.5 million, or 2.8%, mainly in the non-owner-occupied segment, partially offset by a reduction of $112.9 million, or 5.1%, in the agriculture category of the portfolio, which reflected the seasonal draws that were repaid in the second quarter of 2019 and one relationship moving into other repossessed property.
Total deposits grew to $10.47 billion as of March 31, 2019, an increase of $355.1 million, or 3.5%, for the quarter and $734.9 million, or 7.6%, for fiscal year-to-date. During the quarter, deposit inflows were driven by seasonal inflows. Interest-bearing deposits were $8.64 billion, a 5.0% increase for the quarter, and noninterest-bearing deposits were $1.82 billion, a 2.9% decrease for the quarter. FHLB and other borrowings decreased by $135.0 million, or 32.9%, for the quarter.



1 This is a non-GAAP financial measure management believes is helpful to understanding trends in the business that may not be fully apparent based only on the most comparable GAAP financial measure. Further information on this financial measure and a reconciliation to the most comparable GAAP financial 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 $7.7 million for the quarter, an increase of $2.5 million. Net charge-offs for the quarter were $5.9 million, or 0.25% of average total loans on an annualized basis, with the majority of net charge-offs concentrated in the agriculture segment of the loan portfolio. The ratio of allowance for loan and lease losses ("ALLL") to total loans increased to 0.70% as of March 31, 2019 from 0.68% as of the prior quarter.
Included within total loans are approximately $835.8 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 $6.4 million of the fair value adjustment for these loans relates to credit risk, or 0.07% of total loans. Finally, total purchase discount remaining on all acquired loans equates to 0.16% of total loans.
Nonaccrual loans were $121.6 million as of March 31, 2019, representing a decrease of $17.3 million for the quarter. Loans graded "Watch" decreased $20.5 million, or 6.4%, for the quarter, while loans graded "Substandard" increased $6.4 million, or 2.5%. Total other repossessed property balances were $32.5 million as of March 31, 2019, an increase of $10.2 million, or 46.0%, due to one relationship moving into other repossessed property during the quarter. In March and early April 2019 there were isolated areas of flooding reported within parts of the Midwest in which certain of our agricultural borrowers conduct their operations. We have reviewed loan exposures in these areas as part of our normal quarterly review process and at this time have not identified a material decline in asset quality or losses associated with these loans. We will continue to monitor our loans in these flood affected areas.
Total credit-related charges increased compared to the comparable quarter and the first six months of fiscal year 2018 and decreased compared to the previous quarter . A summary of total credit-related charges incurred during the current and comparable six month periods and current, prior and comparable quarters 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, 2019
March 31, 2018
 
March 31, 2019
December 31, 2018
March 31, 2018
 
 
(dollars in thousands)
Provision for loan and lease losses
Provision for loan and lease losses
$
12,888

$
9,457

 
$
7,673

$
5,215

$
4,900

Net other repossessed property charges
Net loss on repossessed property and other related expenses
3,467

1,214

 
404

3,063

1,000

Reversal (recovery) of interest income on nonaccrual loans
Interest income on loans
296

911

 
337

(41
)
(157
)
Loan fair value adjustment related to credit
Net increase (decrease) in fair value of loans at fair value
762

320

 
(422
)
1,184

1,358

Total
 
$
17,413

$
11,902

 
$
7,992

$
9,421

$
7,101

Noninterest Income
Noninterest income was $18.2 million, an increase of $1.5 million, or 9.0%, for the quarter. Included within noninterest income is the net change in fair value of loans for which the Company has elected the fair value option and the net realized and unrealized gain (loss) of the related derivatives which generated a $2.1 million favorable change over the prior quarter. This was partially offset by a $1.5 million decrease in service charges and other fees. The decrease in service charges and other fees was predominately due to a decrease in net overdraft and non-sufficient funds fee income. 
Noninterest Expense
Total noninterest expense was $56.6 million, a decrease of $0.5 million, or 0.9%, for the quarter. The majority of the decrease was driven by a $2.7 million decrease in net loss on repossessed property and other related expenses, partially offset by an increase of $0.7 million in data processing and communication expense and an increase of $0.7 million in professional fees.
The efficiency ratio1 was 45.6% for the quarter, a decrease from 46.1%.
Provision for Income Taxes
The provision for income taxes for the quarter ended March 31, 2019 was $12.9 million, reflecting an effective tax rate of 22.5%, compared to an effective tax rate of 22.8%.
Capital
Tier 1 and total capital ratios were 11.4% and 12.4%, respectively, as of March 31, 2019, compared to 11.1% and 12.1%. The common equity tier 1 capital ratio and tier 1 leverage ratio were 10.7% and 10.2%, respectively, as of March 31, 2019 compared to 10.4% and 10.1%. All regulatory capital ratios remain above regulatory minimums to be considered "well capitalized."

2

Exhibit 99.1

On April 25, 2019, the Company’s Board of Directors declared a dividend of $0.30 per common share payable on May 24, 2019 to stockholders of record as of close of business on May 10, 2019. This represents an increase of 20% compared to the most recent quarterly dividend of $0.25 per common share. The aggregate dividend payment will be approximately $17.1 million.
Business Outlook
"We are positive about the second half of our fiscal year and remain confident that loan pipelines support our full year forecast of mid single digit loan growth," added Karels. "The current yield curve provides some challenge to new loan pricing, but we will continue to balance this with pursuing quality credits with strong underwriting criteria and managing our cost of deposits."
Conference Call
Great Western Bancorp, Inc. will host a conference call to discuss its financial results for the second quarter of fiscal year 2019 on Thursday, April 25, 2019 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 9, 2019. To access the replay, dial (877) 344-7529 (U.S.) and use conference ID 10130047. 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 most recently ended fiscal year, and in other periodic filings with the Securities and Exchange Commission. 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, 2019
March 31, 2018
 
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
March 31, 2018
 
(dollars in thousands, except share and per share amounts)
Operating Data:
 
 
 
 
 
 
 
 
Interest income (FTE)
$
268,879

$
235,368

 
$
135,328

$
133,551

$
126,921

$
126,146

$
118,849

Interest expense
57,578

31,011

 
30,411

27,167

23,244

19,745

16,680

Noninterest income
34,943

35,416

 
18,223

16,720

19,255

18,939

18,742

Noninterest expense
113,686

114,012

 
56,580

57,106

59,550

57,863

59,144

Provision for loan and lease losses
12,888

9,457

 
7,673

5,215

5,015

3,515

4,900

Net income
90,297

69,762

 
44,511

45,786

42,281

45,874

40,532

Adjusted net income ¹
$
90,297

$
83,348

 
$
44,511

$
45,786

$
42,281

$
45,874

$
40,532

Common shares outstanding
56,938,435
58,896,189
 
56,938,435
56,938,435

58,917,147

58,911,563

58,896,189

Weighted average diluted common shares outstanding
57,556,984
59,116,923
 
57,074,674
58,039,292

59,122,699

59,170,058

59,146,117

Earnings per common share - diluted
$
1.57

$
1.18

 
$
0.78

$
0.79

$
0.72

$
0.78

$
0.69

Adjusted earnings per common share - diluted ¹
$
1.57

$
1.41

 
$
0.78

$
0.79

$
0.72

$
0.78

$
0.69

Performance Ratios:
 
 
 
 
 
 
 
 
Net interest margin (FTE) ¹ ²
3.78
%
3.91
%
 
3.75
%
3.81
%
3.79
%
3.97
%
3.92
%
Adjusted net interest margin (FTE) ¹ ²
3.79
%
3.83
%
 
3.76
%
3.81
%
3.77
%
3.94
%
3.86
%
Return on average total assets ²
1.46
%
1.20
%
 
1.44
%
1.48
%
1.40
%
1.55
%
1.40
%
Return on average common equity ²
10.0
%
7.9
%
 
9.9
%
10.0
%
9.2
%
10.2
%
9.3
%
Return on average tangible common equity ¹ ²
17.0
%
13.9
%
 
16.9
%
17.1
%
15.7
%
17.7
%
16.2
%
Efficiency ratio ¹
45.8
%
47.2
%
 
45.6
%
46.1
%
48.1
%
45.8
%
48.6
%
Capital:
 
 
 
 
 
 
 
 
Tier 1 capital ratio
11.4
%
11.5
%
 
11.4
%
11.1
%
12.0
%
11.8
%
11.5
%
Total capital ratio
12.4
%
12.5
%
 
12.4
%
12.1
%
13.0
%
12.8
%
12.5
%
Tier 1 leverage ratio
10.2
%
10.4
%
 
10.2
%
10.1
%
10.7
%
10.6
%
10.4
%
Common equity tier 1 ratio
10.7
%
10.7
%
 
10.7
%
10.4
%
11.3
%
11.0
%
10.7
%
Tangible common equity / tangible assets ¹
9.2
%
9.3
%
 
9.2
%
9.0
%
9.6
%
9.5
%
9.3
%
Book value per share - GAAP
$
32.53

$
30.37

 
$
32.53

$
31.82

$
31.24

$
30.84

$
30.37

Tangible book value per share ¹
$
19.43

$
17.68

 
$
19.43

$
18.72

$
18.57

$
18.16

$
17.68

Asset Quality:
 
 
 
 
 
 
 
 
Nonaccrual loans
$
121,616

$
131,274

 
$
121,616

$
138,944

$
143,206

$
127,315

$
131,274

Other repossessed property
$
32,450

$
16,726

 
$
32,450

$
22,224

$
23,074

$
10,221

$
16,726

Nonaccrual loans / total loans
1.24
%
1.41
%
 
1.24
%
1.42
%
1.52
%
1.36
%
1.41
%
Net charge-offs (recoveries)
$
9,425

$
7,821

 
$
5,863

$
3,562

$
5,163

$
3,966

$
3,784

Net charge-offs (recoveries) / average total loans ²
0.20
%
0.17
%
 
0.25
%
0.15
%
0.22
%
0.17
%
0.17
%
Allowance for loan and lease losses / total loans
0.70
%
0.70
%
 
0.70
%
0.68
%
0.69
%
0.69
%
0.70
%
Watch-rated loans
$
301,099

$
294,873

 
$
301,099

$
321,593

$
343,288

$
276,001

$
294,873

Substandard loans
$
258,946

$
251,354

 
$
258,946

$
252,521

$
252,660

$
268,017

$
251,354

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, 2019
March 31, 2018
 
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
March 31, 2018
 
(dollars in thousands)
Interest income
 
 
 
 
 
 
 
 
Loans
$
245,763

$
217,674

 
$
123,432

$
122,331

$
117,095

$
116,522

$
109,993

Investment securities
19,145

14,055

 
9,957

9,189

7,645

7,471

7,013

Federal funds sold and other
1,039

458

 
497

541

494

424

227

Total interest income
265,947

232,187

 
133,886

132,061

125,234

124,417

117,233

Interest expense
 
 
 
 
 
 
 
 
Deposits
50,892

23,656

 
27,098

23,794

19,996

16,460

12,658

FHLB advances and other borrowings
3,926

4,978

 
1,923

2,003

1,907

1,963

2,815

Subordinated debentures and subordinated notes payable
2,760

2,377

 
1,390

1,370

1,341

1,322

1,207

Total interest expense
57,578

31,011

 
30,411

27,167

23,244

19,745

16,680

Net interest income
208,369

201,176

 
103,475

104,894

101,990

104,672

100,553

Provision for loan and lease losses
12,888

9,457

 
7,673

5,215

5,015

3,515

4,900

Net interest income after provision for loan and lease losses
195,481

191,719

 
95,802

99,679

96,975

101,157

95,653

Noninterest income
 
 
 
 
 
 
 
 
Service charges and other fees
21,897

25,224

 
10,209

11,689

13,198

12,655

12,047

Wealth management fees
4,358

4,519

 
2,117

2,241

2,458

2,242

2,335

Mortgage banking income, net
2,311

2,826

 
991

1,320

1,664

1,352

1,166

Net (loss) gain on sale of securities
(513
)
(9
)
 

(513
)

15

(8
)
Net increase (decrease) in fair value of loans at fair value
33,234

(23,502
)
 
14,018

19,216

(14,534
)
(7,370
)
(14,838
)
Net realized and unrealized (loss) gain on derivatives
(29,348
)
21,509

 
(11,032
)
(18,317
)
14,994

8,093

14,282

Other
3,004

4,849

 
1,920

1,084

1,475

1,952

3,758

Total noninterest income
34,943

35,416

 
18,223

16,720

19,255

18,939

18,742

Noninterest expense
 
 
 
 
 
 
 
 
Salaries and employee benefits
69,307

66,539

 
34,537

34,770

33,691

35,122

33,672

Data processing and communication
11,242

16,074

 
5,964

5,278

6,554

7,177

9,190

Occupancy and equipment
10,665

10,138

 
5,539

5,126

5,219

4,974

5,290

Professional fees
7,258

8,267

 
3,970

3,288

5,326

4,297

4,027

Advertising
2,154

2,181

 
1,216

938

1,066

1,260

1,121

Net loss on repossessed property and other related expenses
3,467

1,214

 
404

3,063

2,850

305

1,000

Other
9,593

9,599

 
4,950

4,643

4,844

4,728

4,844

Total noninterest expense
113,686

114,012

 
56,580

57,106

59,550

57,863

59,144

Income before income taxes
116,738

113,123

 
57,445

59,293

56,680

62,233

55,251

Provision for income taxes
26,441

43,361

 
12,934

13,507

14,399

16,359

14,719

Net income
$
90,297

$
69,762

 
$
44,511

$
45,786

$
42,281

$
45,874

$
40,532


5

Exhibit 99.1

GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
Summarized Consolidated Balance Sheet (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
As of
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
(dollars in thousands)
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
282,638

 
$
276,760

 
$
298,696

 
$
294,614

 
$
371,749

Investment securities
1,763,305

 
1,531,916

 
1,385,650

 
1,372,711

 
1,307,598

Total loans
9,770,911

 
9,767,476

 
9,415,924

 
9,379,819

 
9,338,306

Allowance for loan and lease losses
(68,003
)
 
(66,193
)
 
(64,540
)
 
(64,688
)
 
(65,139
)
Loans, net
9,702,908

 
9,701,283

 
9,351,384

 
9,315,131

 
9,273,167

Goodwill
739,023

 
739,023

 
739,023

 
739,023

 
739,023

Other assets
342,289

 
324,659

 
342,055

 
287,569

 
300,780

Total assets
$
12,830,162

 
$
12,573,641

 
$
12,116,808

 
$
12,009,048

 
$
11,992,317

Liabilities and stockholders' equity
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,824,507

 
$
1,879,883

 
$
1,842,704

 
$
1,793,293

 
$
1,854,734

Interest-bearing deposits
8,643,876

 
8,233,364

 
7,890,795

 
7,792,025

 
7,532,233

Total deposits
10,468,383

 
10,113,247

 
9,733,499

 
9,585,318

 
9,386,967

Securities sold under agreements to repurchase
62,537

 
56,649

 
90,907

 
105,478

 
103,291

FHLB advances and other borrowings
275,000

 
410,000

 
275,000

 
335,000

 
551,003

Other liabilities
171,848

 
181,737

 
176,851

 
166,511

 
162,358

Total liabilities
10,977,768

 
10,761,633

 
10,276,257

 
10,192,307

 
10,203,619

Stockholders' equity
1,852,394

 
1,812,008

 
1,840,551

 
1,816,741

 
1,788,698

Total liabilities and stockholders' equity
$
12,830,162

 
$
12,573,641

 
$
12,116,808

 
$
12,009,048

 
$
11,992,317

GREAT WESTERN BANCORP, INC.
 
 
 
 
 
 
 
 
 
Loan Portfolio Summary (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
Fiscal year-to-date:
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
Change
($)
 
Change
(%)
 
(dollars in thousands)
Construction and development
$
607,757

 
$
579,941

 
$
637,693

 
$
(29,936
)
 
(4.7
)%
Owner-occupied CRE
1,366,844

 
1,359,979

 
1,334,480

 
32,364

 
2.4
 %
Non-owner-occupied CRE
2,681,686

 
2,577,158

 
2,347,237

 
334,449

 
14.2
 %
Multifamily residential real estate
393,505

 
393,223

 
309,920

 
83,585

 
27.0
 %
Commercial real estate
5,049,792

 
4,910,301

 
4,629,330

 
420,462

 
9.1
 %
Agriculture
2,121,872

 
2,234,735

 
2,182,688

 
(60,816
)
 
(2.8
)%
Commercial non-real estate
1,721,095

 
1,713,760

 
1,699,987

 
21,108

 
1.2
 %
Residential real estate
815,212

 
845,262

 
837,569

 
(22,357
)
 
(2.7
)%
Consumer
44,504

 
47,704

 
49,689

 
(5,185
)
 
(10.4
)%
Other ¹
46,163

 
44,130

 
46,487

 
(324
)
 
(0.7
)%
Total unpaid principal balance
9,798,638

 
9,795,892

 
9,445,750

 
352,888

 
3.7
 %
Less: Unamortized discount on acquired loans and unearned net deferred fees and costs and loans in process
(27,727
)
 
(28,416
)
 
(29,826
)
 
2,099

 
(7.0
)%
Total loans
$
9,770,911

 
$
9,767,476

 
$
9,415,924

 
$
354,987

 
3.8
 %
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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
 
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
$
63,546

$
497

3.17
%
 
$
91,780

$
541

2.34
%
 
$
58,943

$
227

1.56
%
Investment securities
1,603,038

9,957

2.52
%
 
1,491,285

9,189

2.44
%
 
1,365,152

7,013

2.08
%
Non-ASC 310-30 loans, net ²
9,615,096

122,970

5.19
%
 
9,435,901

121,851

5.12
%
 
9,064,899

108,427

4.85
%
ASC 310-30 loans, net
63,879

1,904

12.09
%
 
67,834

1,970

11.52
%
 
82,306

3,182

15.68
%
Loans, net
9,678,975

124,874

5.23
%
 
9,503,735

123,821

5.17
%
 
9,147,205

111,609

4.95
%
Total interest-earning assets
11,345,559

135,328

4.84
%
 
11,086,800

133,551

4.78
%
 
10,571,300

118,849

4.56
%
Noninterest-earning assets
1,186,286

 
 
 
1,186,821

 
 
 
1,155,481

 
 
Total assets
$
12,531,845

$
135,328

4.38
%
 
$
12,273,621

$
133,551

4.32
%
 
$
11,726,781

$
118,849

4.11
%
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,800,307

 
 
 
$
1,865,295

 
 
 
$
1,786,059

 
 
Interest-bearing deposits
6,363,730

$
17,865

1.14
%
 
6,148,755

$
15,736

1.02
%
 
5,929,757

$
9,490

0.65
%
Time deposits
2,039,208

9,233

1.84
%
 
1,937,295

8,058

1.65
%
 
1,315,209

3,168

0.98
%
Total deposits
10,203,245

27,098

1.08
%
 
9,951,345

23,794

0.95
%
 
9,031,025

12,658

0.57
%
Securities sold under agreements to repurchase
63,237

43

0.28
%
 
79,849

57

0.28
%
 
107,921

83

0.31
%
FHLB advances and other borrowings
264,347

1,880

2.88
%
 
242,495

1,946

3.18
%
 
652,787

2,732

1.70
%
Subordinated debentures and subordinated notes payable
108,522

1,390

5.19
%
 
108,483

1,370

5.01
%
 
108,358

1,207

4.52
%
Total borrowings
436,106

3,313

3.08
%
 
430,827

3,373

3.11
%
 
869,066

4,022

1.88
%
Total interest-bearing liabilities
10,639,351

$
30,411

1.16
%
 
10,382,172

$
27,167

1.04
%
 
9,900,091

$
16,680

0.68
%
Noninterest-bearing liabilities
69,554

 
 
 
74,397

 
 
 
56,573

 
 
Stockholders' equity
1,822,940

 
 
 
1,817,052

 
 
 
1,770,117

 
 
Total liabilities and stockholders' equity
$
12,531,845

 
 
 
$
12,273,621

 
 
 
$
11,726,781

 
 
Net interest spread
 
 
3.22
%
 
 
 
3.28
%
 
 
 
3.43
%
Net interest income and net interest margin (FTE)
 
$
104,917

3.75
%
 
 
$
106,384

3.81
%
 
 
$
102,169

3.92
%
Less: Tax equivalent adjustment
 
1,442

 
 
 
1,490

 
 
 
1,616

 
Net interest income and net interest margin - ties to Statements of Comprehensive Income
 
$
103,475

3.70
%
 
 
$
104,894

3.75
%
 
 
$
100,553

3.86
%
1 Annualized for all partial-year periods.
2 Interest income includes $0.4 million and $0.6 million for the second quarter of fiscal years 2019 and 2018, 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
March 31, 2019
 
March 31, 2018
 
Average Balance
Interest (FTE)
Yield / Cost ¹
 
Average Balance
Interest (FTE)
Yield / Cost ¹
 
(dollars in thousands)
Assets
 
 
 
 
 
 
 
Interest-bearing bank deposits
$
77,663

$
1,039

2.68
%
 
$
62,439

$
458

1.47
%
Investment securities
1,547,161

19,145

2.48
%
 
1,390,665

14,055

2.03
%
Non-ASC 310-30 loans, net ²
9,525,498

244,821

5.15
%
 
8,952,914

214,927

4.81
%
ASC 310-30 loans, net
65,857

3,874

11.80
%
 
86,073

5,928

13.81
%
Loans, net
9,591,355

248,695

5.20
%
 
9,038,987

220,855

4.90
%
Total interest-earning assets
11,216,179

268,879

4.81
%
 
10,492,091

235,368

4.50
%
Noninterest-earning assets
1,186,554

 
 
 
1,166,069

 
 
Total assets
$
12,402,733

$
268,879

4.35
%
 
$
11,658,160

$
235,368

4.05
%
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
Noninterest-bearing deposits
$
1,831,877

 
 
 
$
1,815,274

 
 
Interest-bearing deposits
6,257,167

$
33,601

1.08
%
 
5,908,476

$
17,781

0.60
%
Time deposits
1,988,251

17,291

1.74
%
 
1,291,255

5,875

0.91
%
Total deposits
10,077,295

50,892

1.01
%
 
9,015,005

23,656

0.53
%
Securities sold under agreements to repurchase
71,543

99

0.28
%
 
116,490

178

0.31
%
FHLB advances and other borrowings
253,421

3,827

3.03
%
 
586,181

4,800

1.64
%
Subordinated debentures and subordinated notes payable
108,503

2,760

5.10
%
 
108,337

2,377

4.40
%
Total borrowings
433,467

6,686

3.09
%
 
811,008

7,355

1.82
%
Total interest-bearing liabilities
10,510,762

$
57,578

1.10
%
 
9,826,013

$
31,011

0.63
%
Noninterest-bearing liabilities
71,975

 
 
 
66,525

 
 
Stockholders' equity
1,819,996

 
 
 
1,765,622

 
 
Total liabilities and stockholders' equity
$
12,402,733

 
 
 
$
11,658,160

 
 
Net interest spread
 
 
3.25
%
 
 
 
3.42
%
Net interest income and net interest margin (FTE) ¹
 
$
211,301

3.78
%
 
 
$
204,357

3.91
%
Less: Tax equivalent adjustment
 
2,932

 
 
 
3,181

 
Net interest income and net interest margin - ties to Statements of Comprehensive Income
 
$
208,369

3.73
%
 
 
$
201,176

3.85
%
1 Annualized for all partial-year periods.
2 Interest income includes $0.7 million and $1.2 million for the first six months of fiscal years 2019 and 2018, respectively, resulting from accretion of purchase accounting discount associated with acquired loans.

Non-GAAP Financial Measures and Reconciliation
We rely on certain non-GAAP financial measures in making financial and operational decisions about our business. We believe that each of the non-GAAP financial 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. 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 common share) and based on our cash payments and receipts during the applicable period (for tangible net income and return on average tangible common equity).

8

Exhibit 99.1

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 financial 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, 2019
March 31, 2018
 
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
March 31, 2018
 
(dollars in thousands except share and per share amounts)
Adjusted net income and adjusted earnings per common share:
 
 
 
 
 
 
 
 
Net income - GAAP
$
90,297

$
69,762

 
$
44,511

$
45,786

$
42,281

$
45,874

$
40,532

Add: Deferred taxes revaluation due to Tax Reform Act

13,586

 





Adjusted net income
$
90,297

$
83,348

 
$
44,511

$
45,786

$
42,281

$
45,874

$
40,532

 
 
 
 
 
 
 
 
 
Weighted average diluted common shares outstanding
57,556,984

59,116,923

 
57,074,674

58,039,292

59,122,699

59,170,058

59,146,117

Earnings per common share - diluted
$
1.57

$
1.18

 
$
0.78

$
0.79

$
0.72

$
0.78

$
0.69

Adjusted earnings per common share - diluted
$
1.57

$
1.41

 
$
0.78

$
0.79

$
0.72

$
0.78

$
0.69

 
 
 
 
 
 
 
 
 
Tangible net income and return on average tangible common equity:
 
 
 
 
 
 
 
 
Net income - GAAP
$
90,297

$
69,762

 
$
44,511

$
45,786

$
42,281

$
45,874

$
40,532

Add: Amortization of intangible assets, net of tax
687

751

 
343

344

343

366

376

Tangible net income
$
90,984

$
70,513

 
$
44,854

$
46,130

$
42,624

$
46,240

$
40,908

 
 
 
 
 
 
 
 
 
Average common equity
$
1,819,996

$
1,765,622

 
$
1,822,940

$
1,817,052

$
1,825,312

$
1,796,066

$
1,770,117

Less: Average goodwill and other intangible assets
746,305

747,930

 
746,107

746,503

746,900

747,294

747,716

Average tangible common equity
$
1,073,691

$
1,017,692

 
$
1,076,833

$
1,070,549

$
1,078,412

$
1,048,772

$
1,022,401

 
 
 
 
 
 
 
 
 
Return on average common equity *
10.0
%
7.9
%
 
9.9
%
10.0
%
9.2
%
10.2
%
9.3
%
Return on average tangible common equity **
17.0
%
13.9
%
 
16.9
%
17.1
%
15.7
%
17.7
%
16.2
%
* Calculated as net income - GAAP divided by average common equity. Annualized for partial-year periods.
** Calculated as tangible net income divided by average tangible common equity. Annualized for partial-year periods.
 
 
 
 
 
 
 
 
 
Adjusted net interest income and adjusted net interest margin (fully-tax equivalent basis):
 
 
 
 
 
 
 
 
Net interest income - GAAP
$
208,369

$
201,176

 
$
103,475

$
104,894

$
101,990

$
104,672

$
100,553

Add: Tax equivalent adjustment
2,932

3,181

 
1,442

1,490

1,687

1,729

1,616

Net interest income (FTE)
211,301

204,357

 
104,917

106,384

103,677

106,401

102,169

Add: Current realized derivative gain (loss)
426

(4,116
)
 
405

21

(419
)
(830
)
(1,640
)
Adjusted net interest income (FTE)
$
211,727

$
200,241

 
$
105,322

$
106,405

$
103,258

$
105,571

$
100,529

 
 
 
 
 
 
 
 
 
Average interest-earning assets
$
11,216,179

$
10,492,091

 
$
11,345,559

$
11,086,800

$
10,857,168

$
10,748,078

$
10,571,300

Net interest margin (FTE) *
3.78
%
3.91
%
 
3.75
%
3.81
%
3.79
%
3.97
%
3.92
%
Adjusted net interest margin (FTE) **
3.79
%
3.83
%
 
3.76
%
3.81
%
3.77
%
3.94
%
3.86
%
* Calculated as net interest income (FTE) divided by average interest earning assets. Annualized for partial-year periods.
** Calculated as adjusted net interest income (FTE) divided by average interest earning assets. Annualized for partial-year periods.
 
 
 
 
 
 
 
 
 

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, 2019
March 31, 2018
 
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
March 31, 2018
 
(dollars in thousands except share and per share amounts)
Adjusted interest income and adjusted yield (fully-tax equivalent basis), on non-ASC 310-30 loans:
 
 
 
 
 
 
 
 
Interest income - GAAP
$
241,889

$
211,746

 
$
121,528

$
120,361

$
115,284

$
112,760

$
106,811

Add: Tax equivalent adjustment
2,932

3,181

 
1,442

1,490

1,687

1,729

1,616

Interest income (FTE)
244,821

214,927

 
122,970

121,851

116,971

114,489

108,427

Add: Current realized derivative gain (loss)
426

(4,116
)
 
405

21

(419
)
(830
)
(1,640
)
Adjusted interest income (FTE)
$
245,247

$
210,811

 
$
123,375

$
121,872

$
116,552

$
113,659

$
106,787

 
 
 
 
 
 
 
 
 
Average non-ASC 310-30 loans
$9,525,498
$8,952,914
 
$
9,615,096

$
9,435,901

$
9,299,318

$
9,220,931

$
9,064,899

Yield (FTE) *
5.15
%
4.81
%
 
5.19
%
5.12
%
4.99
%
4.98
%
4.85
%
Adjusted yield (FTE) **
5.16
%
4.72
%
 
5.20
%
5.12
%
4.97
%
4.94
%
4.78
%
* Calculated as interest income (FTE) divided by average loans. Annualized for partial-year periods.
** Calculated as adjusted interest income (FTE) divided by average loans. Annualized for partial-year periods.
 
 
 
 
 
 
 
 
 
Efficiency ratio:
 
 
 
 
 
 
 
 
Total revenue - GAAP
$
243,312

$
236,592

 
$
121,698

$
121,614

$
121,245

$
123,611

$
119,295

Add: Tax equivalent adjustment
2,932

3,181

 
1,442

1,490

1,687

1,729

1,616

Total revenue (FTE)
$
246,244

$
239,773

 
$
123,140

$
123,104

$
122,932

$
125,340

$
120,911

 
 
 
 
 
 
 
 
 
Noninterest expense
$
113,686

$
114,012

 
$
56,580

$
57,106

$
59,550

$
57,863

$
59,144

Less: Amortization of intangible assets
788

852

 
394

394

394

416

426

Tangible noninterest expense
$
112,898

$
113,160

 
$
56,186

$
56,712

$
59,156

$
57,447

$
58,718

 
 
 
 
 
 
 
 
 
Efficiency ratio *
45.8
%
47.2
%
 
45.6
%
46.1
%
48.1
%
45.8
%
48.6
%
* Calculated as the ratio of tangible noninterest expense to total revenue (FTE).
 
 
 
 
 
 
 
 
 
Tangible common equity and tangible common equity to tangible assets:
 
 
 
 
 
 
 
 
Total stockholders' equity
$
1,852,394

$
1,788,698

 
$
1,852,394

$
1,812,008

$
1,840,551

$
1,816,741

$
1,788,698

Less: Goodwill and other intangible assets
745,947

747,545

 
745,947

746,341

746,735

747,129

747,545

Tangible common equity
$
1,106,447

$
1,041,153

 
$
1,106,447

$
1,065,667

$
1,093,816

$
1,069,612

$
1,041,153

 
 
 
 
 
 
 
 
 
Total assets
$
12,830,162

$
11,992,317

 
$
12,830,162

$
12,573,641

$
12,116,808

$
12,009,048

$
11,992,317

Less: Goodwill and other intangible assets
745,947

747,545

 
745,947

746,341

746,735

747,129

747,545

Tangible assets
$
12,084,215

$
11,244,772

 
$
12,084,215

$
11,827,300

$
11,370,073

$
11,261,919

$
11,244,772

 
 
 
 
 
 
 
 
 
Tangible common equity to tangible assets
9.2
%
9.3
%
 
9.2
%
9.0
%
9.6
%
9.5
%
9.3
%
 
 
 
 
 
 
 
 
 
Tangible book value per share:
 
 
 
 
 
 
 
 
Total stockholders' equity
$
1,852,394

$
1,788,698

 
$
1,852,394

$
1,812,008

$
1,840,551

$
1,816,741

$
1,788,698

Less: Goodwill and other intangible assets
745,947

747,545

 
745,947

746,341

746,735

747,129

747,545

Tangible common equity
$
1,106,447

$
1,041,153

 
$
1,106,447

$
1,065,667

$
1,093,816

$
1,069,612

$
1,041,153

 
 
 
 
 
 
 
 
 
Common shares outstanding
56,938,435
58,896,189
 
56,938,435

56,938,435

58,917,147

58,911,563

58,896,189

Book value per share - GAAP
$
32.53

$
30.37

 
$
32.53

$