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Section 1: 8-K (8-K)

gwb-20200430
0001613665false00016136652020-04-302020-04-30

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 30, 2020

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

Delaware
(State or Other Jurisdiction of Incorporation)
001-3668847-1308512
(Commission File Number)(IRS Employer
Identification Number)
225 South Main Avenue57104
Sioux Falls,South Dakota
(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:
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per share
GWBNew York Stock Exchange
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  
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. ☐



Item 2.02.  Results of Operations and Financial Condition.

On April 30, 2020, 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, 2020. 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, 2020. The Company intends to use this presentation for any investor meetings or related interactions through the third quarter of fiscal year 2020. 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 30, 2020, containing financial information for the quarter ended March 31, 2020.
99.2  
Slide presentation for conference call for investors and analysts on April 30, 2020.
99.3  Quarterly Investor Relations Presentation for the second quarter of fiscal year 2020.

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 filed on its behalf by the undersigned hereunto duly authorized.


GREAT WESTERN BANCORP, INC.
Date: April 30, 2020
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 30, 2020, containing financial information for the quarter ended March 31, 2020.
Slide presentation for conference call for investors and analysts on April 30, 2020.
Quarterly Investor Relations Presentation for the second quarter of fiscal year 2020.


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Section 2: EX-99.1 (EX-99.1)

Document
Exhibit 99.1
403809122_image11.jpg
Great Western Bancorp, Inc. Announces Earnings for Second Quarter Fiscal Year 2020
Highlights for the Second Quarter of Fiscal Year 2020 (all quarterly comparisons in this document refer to the first quarter of fiscal year 2020, except as noted)
Net loss of $740.6 million, or $(13.25) per diluted share, compared to net income of $43.3 million, or $0.77 per diluted share
Adjusted net income1, which excludes the nonrecurring COVID-19 pandemic impact on goodwill, certain intangible assets and credit and other related charges, was $29.1 million, or $0.52 per diluted share, for the quarter and $72.4 million, or $1.29 per diluted share, for the first six months of 2020
Capital ratios remain strong with Tier 1 and total capital being 11.3% and 12.9%, respectively, as of March 31, 2020, compared to 12.0% and 13.0% as of December 31, 2019
With the many uncertainties of the COVID-19 pandemic, the Board of Directors has determined to reduce the regular quarterly dividend for March 31, 2020 to $0.15 per share
Net interest margin decreased 9 basis points to 3.59% while adjusted net interest margin1, 2 decreased 10 basis points to 3.55%
Credit quality metrics remained mostly stable as substandard loans decreased $12.4 million, watch loans increased $4.0 million, and net charge-offs were 0.36% of average total loans on an annualized basis
Sioux Falls, SD - April 30, 2020 - Great Western Bancorp, Inc. (NYSE: GWB) today reported net loss of $740.6 million, or $(13.25) per diluted share, for the second quarter of fiscal year 2020, compared to net income of $43.3 million, or $0.77 per diluted share, for the first quarter of fiscal year 2020. Adjusted net income1 which excludes the COVID-19 pandemic impact on goodwill, intangible assets and credit and other related charges, was $29.1 million, or $0.52 per diluted share, compared to $43.3 million, or $0.77 per diluted share.
"While my first few weeks have coincided with the COVID-19 pandemic, I am excited to be a part of Great Western Bank. This unprecedented time has allowed me the opportunity to see the organization's strength and the team's commitment to supporting our customer base as well as ensuring the wellness and safety of our employees," said Mark Borrecco, President and Chief Executive Officer. "We believe our stable capital position along with specific actions to address the COVID-19 impact to goodwill valuation as well as our loan loss reserves appropriately reflect the current environment."
Impact and Response to COVID-19 Pandemic
Through this time of disruption we have remained open for business supporting our customers while implementing our business continuity plan to mitigate the risks of the spread of COVID-19 to our employees and customers. As of April 24th, we have more than 750 employees working remotely from home with those still in the office appropriately spaced, 97% of our branches open with limited access, increased functionality of ATM, online banking and mobile channels, and processed 2,300 applications approved for Paycheck Protection Program loans totaling over $600.0 million. We have also taken such other actions as social distancing, restrictions on in-person meetings and conferences, Company travel restrictions and increased sanitary protocols. We believe these actions offer the best protection for our employees and customers, an enhance our ability to continue providing our banking services.
Financial results this quarter included several items linked to the impact of the COVID-19 pandemic. Most significantly, we recognized an impairment included in noninterest expense of $742.4 million, of which $622.4 million stemmed from goodwill related to the acquisition of Great Western Bank in 2008 by National Australia Bank, $118.2 million from goodwill related to subsequent acquisitions and $1.8 million from certain intangible assets, which were considered impaired given the market and valuation disruption during the quarter. The expense was offset in part by a related benefit from income taxes of $29.3 million.
In addition, the COVID-19 impacts included $73.8 million in several credit and other related charges for loan and other real estate reserves, including a $59.7 million charge for collectively evaluated allowance increases in provision expense under the incurred loss model, $7.1 million and $3.3 million of charges for fair value credit risk and derivative reserves in noninterest income, respectively, a $3.3 million write down on an OREO hotel property negatively impacted by COVID-19 pandemic travel restrictions, and $0.4 million of charges for the reserve on unfunded commitments in noninterest expenses. All of these pretax expenses are offset in part by a related benefit from income taxes of $17.2 million. See also the "Non-GAAP Financial Measures and Reconciliation" section in this document for further discussion of the above items.
————————————————————————————————————————————————————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
Capital
Tier 1 and total capital ratios were 11.3% and 12.9%, respectively, as of March 31, 2020, compared to 12.0% and 13.0% as of December 31, 2019. The common equity tier 1 capital ratio and tier 1 leverage ratio were 10.6% and 9.2%, respectively, as of March 31, 2020, compared to 11.3% and 10.4% as of December 31, 2019. All regulatory capital ratios remain above regulatory minimums to be considered "well capitalized."
During the quarter, $40.0 million was deployed to repurchase and retire approximately 1.4 million shares of Company's common stock under the repurchase program authorized by the Board of Directors at an average price of $29.45. These purchases occurred prior to the onset of the COVID-19 pandemic. In early March 2020, the Company determined to indefinitely suspend additional buybacks within its remaining authorization to support the Federal Reserve Board in actions taken to moderate the impact of COVID-19 by maintaining strong capital levels and liquidity to support customers and other stakeholders.
With the many uncertainties of the COVID-19 pandemic, including the full impacts on the future financial results and operations of the Company, the Board of Directors has determined to reduce its regular quarterly dividend for the quarter ending March 31, 2020 to $0.15 per common share. The reduced dividend will help strengthen the Company's balance sheet and liquidity in light of the uncertainty surrounding the COVID-19 pandemic. The dividend will be payable on May 29, 2020 to stockholders of record as of close of business on May 15, 2020. The aggregate dividend payment will be approximately $8.3 million. The Board of Directors will continue to evaluate the impacts of the COVID-19 pandemic and the appropriateness of declaring future dividends throughout the year.
Net Interest Income and Net Interest Margin2
Net interest income was $103.5 million, a decrease of $3.2 million, or 3.0%. Interest-earning assets were higher for the quarter, while a decline in loan and securities yields were outpaced by a decline in deposit and funding yields, particularly in the last month of the quarter following the Federal Reserve's emergency rate cutting of 150 basis points, leading to a lower net interest margin.
Net interest margin was 3.59% and 3.68% for the quarters ended March 31, 2020 and December 31, 2019, respectively. Adjusted net interest margin1, which adjusts for the realized gain (loss) on interest rate swaps, was 3.55% and 3.65%, respectively, for the same periods. Deposit yields decreased 11 basis points, while securities and loan yields decreased 11 and 17 basis points, respectively, reflecting the impact of several weeks of those volumes repricing following the emergency rate cuts discussed previously.
Total loans outstanding were $9.69 billion as of March 31, 2020, an increase of $67.1 million, or 0.7%. The increase in loans during the quarter was mainly attributable to the CRE segment of the portfolio, which increased $138.1 million, a $22.8 million increase in the commercial non-real estate segment, combined with a reduction in the agriculture segment of $98.9 million. The increase in the CRE segment of the portfolio was attributable to growth from construction drawdowns and new relationships across the footprint and a $35.5 million increase in fair value of loans the Company held at fair value due to a decline in interest rates during the quarter. The increase in the commercial non-real estate segment was due to increased activity in warehouse mortgage lending to independent mortgage originators, while the decrease in the agriculture segment was due largely to a seasonal decrease related to customer tax planning and a number of relationships refinanced elsewhere.
Total deposits were $10.18 billion as of March 31, 2020, an increase of $90.6 million, or 0.9%, due to an increase of $122.1 million in consumer and $60.4 million in business checking and savings deposits along with a $87.7 million increase in competitively priced brokered deposits, largely offset with a $199.1 million decrease in time deposits. Interest-bearing deposits were $8.21 billion, a 1.8% increase, and noninterest-bearing deposits were $1.97 billion, a 2.8% decrease.
Provision for Loan and Lease Losses and Asset Quality
While "Substandard" and "Watch" loan categorizations have remained relatively stable, we have substantially increased our allowance for loan and lease losses ("ALLL") by $63.2 million, or 86.8%, to reflect increased levels of incurred losses related to the COVID-19 outbreak. The ALLL to total loans increased to 1.40% as of March 31, 2020 from 0.76% as of December 31, 2019.
Provision for loan and lease losses was $71.8 million, an increase of $63.7 million. This increase did not contemplate the potential impact of CECL implementation, which is effective for the Company October 1, 2020. Net charge-offs were $8.6 million, or 0.36% of average total loans on an annualized basis, with the majority of net charge-offs concentrated in the commercial non-real estate and CRE segments of the loan portfolio.
Included within total loans are approximately $792.1 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 $16.7 million of the fair value adjustment for these loans relates to credit risk, or 0.17% of total loans. Finally, total purchase discount remaining on all acquired loans equates to 0.11% of total loans.
2-

Exhibit 99.1
Loans graded "Watch" increased $4.0 million, or 1.0%, to $420.3 million, while loans graded "Substandard" decreased $12.4 million, or 1.9%, to $627.7 million. The decrease in loans graded "Substandard" was primarily due to paydowns of several agriculture and commercial loans along with a number of upgrades, all outpacing a more normalized number of downgrades to substandard. Nonaccrual loans were $213.1 million as of March 31, 2020, representing an increase of $57.0 million, or 36.5%, driven by a small number of relationships in healthcare and agriculture industries as they progress through the workout process. Total other repossessed property balances were $27.3 million as of March 31, 2020, a decrease of $12.2 million, or 30.9%.
A summary of total credit-related charges incurred during the current and comparable six month periods and current, previous 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:
ItemIncluded within F/S Line Item(s):March 31,
2020
March 31,
2019
March 31,
2020
December 31,
2019
March 31,
2019
(dollars in thousands)
Pre-COVID-19 pandemic related
Provision for loan and lease lossesProvision for loan and lease losses$20,186  $12,888  $12,083  $8,103  $7,673  
Net other repossessed property chargesNet loss on repossessed property and other related expenses2,719  3,467  2,377  342  404  
Net reversal of interest income on nonaccrual loansInterest income on loans3,094  296  1,088  2,006  337  
Loan fair value adjustment related to creditNet decrease (increase) in fair value of loans at fair value5,557  762  3,423  2,134  (422) 
Subtotal pre-COVID-19 pandemic related$31,556  $17,413  $18,971  $12,585  $7,992  
COVID-19 pandemic related
Provision for loan and lease lossesProvision for loan and lease losses$59,712  $—  $59,712  $—  $—  
Net other repossessed property chargesNet loss on repossessed property and other related expenses3,314  —  3,314  —  —  
Net reversal of interest income on nonaccrual loansInterest income on loans—  —  —  —  —  
Loan fair value adjustment related to creditNet decrease (increase) in fair value of loans at fair value7,100  —  7,100  —  —  
Subtotal COVID-19 pandemic related70,126  —  70,126  —  —  
Total credit-related charges$101,682  $17,413  $89,097  $12,585  $7,992  
In determining the credit related charges attributable to the COVID-19 pandemic, we considered the impact upon our loan portfolio. Industries such as oil & energy, hotels & resorts, restaurants, retail malls, airlines and others have been cited as being at risk for significant revenue loss. Within our portfolio at March 31, 2020, $1.14 billion, or 11.8% relates to hotels & resorts, $109.8 million, or 1.1% relates to restaurants, with exposure in such other identified industries being immaterial. At this time it is difficult to determine ultimate impact upon our portfolio, but we are of the view the credit-related adjustments reflect the best estimate of incurred losses in our portfolio as of March 31, 2020.
Noninterest Income
Noninterest loss was $0.1 million, a decrease of $15.8 million. Included within noninterest income for the current quarter is $14.7 million in net loss related to the 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, $10.4 million of which was related to the COVID-19 pandemic impact on loan fair value adjustment related to credit. Excluding this item, remaining noninterest income was $14.6 million for the quarter, compared to $17.2 million, a decrease of $2.6 million primarily related to lower deposit revenue and interchange revenue from seasonal declines combined with further declines in transaction activity from COVID-19 pandemic impacts.
Noninterest Expense
Total noninterest expense was $808.5 million, an increase of $751.5 million. Included within this amount is goodwill impairment of $740.6 million, intangible assets impairment of $1.8 million, and the COVID-19 pandemic credit related charges of a $3.3 million charge for one OREO property negatively impacted by COVID-19 travel restrictions and $0.4 million increase in reserve for unfunded commitments. Excluding these items, noninterest expense was $62.3 million for the quarter, compared to $56.9 million, an increase of $5.4 million, or 9.5%. The remaining increase was driven by an increase in salaries and employee benefits related to annual merit increases effective in January, a one-time bonus payment to retail staff of $0.5 million and elevated legal and administrative costs on OREO assets.
The efficiency ratio1 was 63.5%, an increase from 46.2%, mainly due to due to the decrease in net revenues attributable to emergency rate cuts and decreased deposit service charges from lower account activity combined with increased expense results from both one-off and recurring costs.
3-

Exhibit 99.1
Provision for Income Taxes
The benefit from income taxes for the quarter ended March 31, 2020 was $37.7 million, reflecting an effective tax rate of 4.8%, compared to 22.5% in the prior quarter. The substantial drop in the effective tax rate was due to the COVID-19 pandemic impact on goodwill and intangible assets impairment and provision for loan and lease losses this quarter. A sizable portion of the goodwill impairment was related to non-tax-deductible goodwill for which no tax benefit was recorded. Excluding the COVID-19 pandemic related goodwill and intangible assets impairment and additional provision for loan and lease losses, the effective tax rate would have been 23.3% for the current quarter.
Business Outlook
"We understand many hard-working individuals and families are facing financial hardship due to the COVID-19 pandemic. Making Life Great now takes on a new, but very relevant meaning for our clients and our communities," added Borrecco. "We will continue to focus on measures that reflect this environment, such as increasing loan loss reserve adequacy, securing additional liquidity to support customers, as well as fortifying the foundations of the Bank to ensure we are prepared for the impact caused by this pandemic."
Conference Call
Great Western Bancorp, Inc. will host a conference call to discuss its financial results for the second quarter of fiscal year 2020 on Thursday, April 30, 2020 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 14, 2020. To access the replay, dial (877) 344-7529 (U.S.) and use conference ID 10141770 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, strategies for managing troubled loans, the impact on the business arising from the COVID-19 outbreak 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, Form 10-Q for the quarter ended December 31, 2019 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.
4-

Exhibit 99.1
GREAT WESTERN BANCORP, INC.
Consolidated Financial Data (Unaudited)
At and for the six months ended:At and for the three months ended:
March 31,
2020
March 31,
2019
March 31,
2020
December 31,
2019
September 30,
2019
June 30,
2019
March 31,
2019
(dollars in thousands, except share and per share amounts)
Operating Data:
Interest income (FTE)$259,817  $268,879  $126,757  $133,060  $140,257  $139,623  $135,328  
Interest expense49,624  57,578  23,260  26,364  32,061  32,570  30,411  
Noninterest income15,650  34,943  (83) 15,733  15,023  10,766  18,223  
Noninterest expense865,383  113,686  808,453  56,930  55,212  56,000  56,580  
Provision for loan and lease losses79,898  12,888  71,795  8,103  1,982  26,077  7,673  
Net income(697,344) 90,297  (740,618) 43,274  50,285  26,783  44,511  
Adjusted net income ¹$72,354  $90,297  $29,080  $43,274  $50,285  $26,783  $44,511  
Common shares outstanding55,013,928  56,938,435  55,013,928  56,382,915  56,283,659  56,939,032  56,938,435  
Weighted average diluted common shares outstanding56,141,816  57,556,984  55,906,002  56,457,967  56,804,172  57,110,103  57,074,674  
Earnings per common share - diluted$(12.42) $1.57  $(13.25) $0.77  $0.89  $0.47  $0.78  
Adjusted earnings per common share - diluted ¹$1.29  $1.57  $0.52  $0.77  $0.89  $0.47  $0.78  
Performance Ratios:
Net interest margin (FTE) ¹ ²3.63 %3.78 %3.59 %3.68 %3.70 %3.70 %3.75 %
Adjusted net interest margin (FTE) ¹ ²3.60 %3.79 %3.55 %3.65 %3.69 %3.71 %3.76 %
Return on average total assets ²(10.86)%1.46 %(23.16)%1.34 %1.55 %0.84 %1.44 %
Return on average common equity ²(72.9)%10.0 %(155.3)%9.0 %10.6 %5.8 %9.9 %
Return on average tangible common equity ¹ ²2.8 %17.0 %(9.3)%15.0 %17.6 %9.7 %16.9 %
Efficiency ratio ¹54.1 %45.8 %63.5 %46.2 %44.5 %47.2 %45.6 %
Capital:
Tier 1 capital ratio11.3 %11.4 %11.3 %12.0 %11.7 %11.3 %11.4 %
Total capital ratio12.9 %12.4 %12.9 %13.0 %12.7 %12.4 %12.4 %
Tier 1 leverage ratio9.2 %10.2 %9.2 %10.4 %10.1 %10.0 %10.2 %
Common equity tier 1 ratio10.6 %10.7 %10.6 %11.3 %11.0 %10.6 %10.7 %
Tangible common equity / tangible assets ¹9.3 %9.2 %9.3 %9.7 %9.6 %9.3 %9.2 %
Book value per share - GAAP$20.97  $32.53  $20.97  $34.06  $33.76  $33.04  $32.53  
Tangible book value per share ¹$20.84  $19.43  $20.84  $20.77  $20.52  $19.94  $19.43  
Asset Quality:
Nonaccrual loans$213,075  $121,616  $213,075  $156,113  $107,191  $118,060  $121,616  
Other repossessed property$27,289  $32,450  $27,289  $39,490  $36,764  $36,393  $32,450  
Nonaccrual loans / total loans2.20 %1.24 %2.20 %1.62 %1.10 %1.19 %1.24 %
Net charge-offs (recoveries)$14,722  $9,425  $8,626  $6,096  $7,754  $17,534  $5,863  
Net charge-offs (recoveries) / average total loans ²0.31 %0.20 %0.36 %0.25 %0.31 %0.72 %0.25 %
Allowance for loan and lease losses / total loans1.40 %0.70 %1.40 %0.76 %0.73 %0.77 %0.70 %
Watch-rated loans$420,252  $301,099  $420,252  $416,259  $405,549  $220,883  $301,099  
Substandard loans$627,720  $258,946  $627,720  $640,121  $472,497  $475,999  $258,946  
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.

5-

Exhibit 99.1
GREAT WESTERN BANCORP, INC.
Consolidated Income Statement (Unaudited)
At and for the six months ended:At and for the three months ended:
March 31,
2020
March 31,
2019
March 31,
2020
December 31,
2019
September 30,
2019
June 30,
2019
March 31,
2019
(dollars in thousands)
Interest income
Loans$232,787  $245,763  $113,356  $119,431  $126,779  $126,392  $123,432  
Investment securities22,827  19,145  11,329  11,498  10,935  11,430  9,957  
Federal funds sold and other1,166  1,039  558  608  1,056  377  497  
Total interest income256,780  265,947  125,243  131,537  138,770  138,199  133,886  
Interest expense
Deposits40,807  50,892  18,867  21,940  27,211  28,615  27,098  
FHLB advances and other borrowings6,268  3,926  3,155  3,113  3,487  2,538  1,923  
Subordinated debentures and subordinated notes payable2,549  2,760  1,238  1,311  1,363  1,417  1,390  
Total interest expense49,624  57,578  23,260  26,364  32,061  32,570  30,411  
Net interest income207,156  208,369  101,983  105,173  106,709  105,629  103,475  
Provision for loan and lease losses79,898  12,888  71,795  8,103  1,982  26,077  7,673  
Net interest income after provision for loan and lease losses127,258  195,481  30,188  97,070  104,727  79,552  95,802  
Noninterest income
Service charges and other fees20,597  21,897  9,188  11,409  11,674  10,321  10,209  
Wealth management fees6,086  4,358  3,122  2,964  2,322  2,234  2,117  
Mortgage banking income, net2,757  2,311  1,145  1,612  1,482  1,055  991  
Net gain (loss) on sale of securities—  (513) —  —  13  322  —  
Net increase (decrease) in fair value of loans at fair value20,608  33,234  35,541  (14,933) 11,749  16,429  14,018  
Net realized and unrealized (loss) gain on derivatives(36,698) (29,348) (50,214) 13,516  (13,191) (20,904) (11,032) 
Other2,300  3,004  1,135  1,165  974  1,309  1,920  
Total noninterest income15,650  34,943  (83) 15,733  15,023  10,766  18,223  
Noninterest expense
Salaries and employee benefits73,217  69,307  37,312  35,905  33,099  33,899  34,537  
Data processing and communication11,896  11,242  6,123  5,773  6,602  6,234  5,964  
Occupancy and equipment10,690  10,665  5,597  5,093  5,185  4,934  5,539  
Professional fees9,027  7,258  5,263  3,764  3,398  3,923  3,970  
Advertising1,823  2,154  958  865  1,194  1,145  1,216  
Net loss on repossessed property and other related expenses6,033  3,467  5,691  342  305  595  404  
Goodwill and intangible assets impairment742,352  —  742,352  —  —  —  —  
Other10,345  9,593  5,157  5,188  5,429  5,270  4,950  
Total noninterest expense865,383  113,686  808,453  56,930  55,212  56,000  56,580  
(Loss) income before income taxes(722,475) 116,738  (778,348) 55,873  64,538  34,318  57,445  
(Benefit from) provision for income taxes(25,131) 26,441  (37,730) 12,599  14,253  7,535  12,934  
Net (loss) income$(697,344) $90,297  $(740,618) $43,274  $50,285  $26,783  $44,511  

6-

Exhibit 99.1
GREAT WESTERN BANCORP, INC.
Summarized Consolidated Balance Sheet (Unaudited)
As of
March 31,
2020
December 31,
2019
September 30,
2019
June 30,
2019
March 31,
2019
(dollars in thousands)
Assets
Cash and cash equivalents$347,486  $247,421  $243,474  $225,356  $282,638  
Investment securities1,990,027  1,904,291  1,783,208  1,799,430  1,763,305  
Total loans9,693,295  9,626,224  9,706,763  9,886,971  9,770,911  
Allowance for loan and lease losses(135,950) (72,781) (70,774) (76,546) (68,003) 
Loans, net9,557,345  9,553,443  9,635,989  9,810,425  9,702,908  
Goodwill—  740,562  739,023  739,023  739,023  
Other assets492,950  405,948  386,607  380,662  342,288  
Total assets$12,387,808  $12,851,665  $12,788,301  $12,954,896  $12,830,162  
Liabilities and stockholders' equity
Noninterest-bearing deposits$1,973,629  $2,029,872  $1,956,025  $1,936,986  $1,824,507  
Interest-bearing deposits8,205,486  8,058,656  8,344,314  8,298,958  8,643,876  
Total deposits10,179,115  10,088,528  10,300,339  10,235,944  10,468,383  
Securities sold under agreements to repurchase64,809  66,289  68,992  56,925  62,537  
FHLB advances and other borrowings800,000  575,000  340,000  605,000  275,000  
Other liabilities190,420  201,179  178,721  175,899  171,848  
Total liabilities11,234,344  10,930,996  10,888,052  11,073,768  10,977,768  
Stockholders' equity1,153,464  1,920,669  1,900,249  1,881,128  1,852,394  
Total liabilities and stockholders' equity$12,387,808  $12,851,665  $12,788,301  $12,954,896  $12,830,162  

GREAT WESTERN BANCORP, INC.
Loan Portfolio Summary (Unaudited)
As ofFiscal year-to-date:
March 31,
2020
December 31,
2019
September 30,
2019
Change
($)
Change
(%)
(dollars in thousands)
Construction and development$434,264  $496,156  $463,757  $(29,493) (6.4)%
Owner-occupied CRE1,414,476  1,380,773  1,411,199  3,277  0.2 %
Non-owner-occupied CRE2,910,516  2,827,484  2,853,131  57,385  2.0 %
Multifamily residential real estate463,563  380,301  364,323  99,240  27.2 %
Commercial real estate5,222,819  5,084,714  5,092,410  130,409  2.6 %
Agriculture1,881,792  1,980,678  2,008,644  (126,852) (6.3)%
Commercial non-real estate1,699,197  1,676,426  1,719,956  (20,759) (1.2)%
Residential real estate820,759  811,735  812,208  8,551  1.1 %
Consumer52,640  50,697  51,925  715  1.4 %
Other ¹39,908  46,875  47,541  (7,633) (16.1)%
Total unpaid principal balance9,717,115  9,651,125  9,732,684  (15,569) (0.2)%
Less: Unamortized discount on acquired loans and unearned net deferred fees and costs and loans in process(23,820) (24,901) (25,921) 2,101  (8.1)%
Total loans$9,693,295  $9,626,224  $9,706,763  $(13,468) (0.1)%
1 Other loans primarily include consumer and commercial credit cards, customer deposit account overdrafts, and lease receivables.

7-

Exhibit 99.1
GREAT WESTERN BANCORP, INC.
Net Interest Margin (FTE) (Unaudited)
Three Months Ended
March 31, 2020December 31, 2019March 31, 2019
Average BalanceInterest (FTE)Yield / Cost ¹Average BalanceInterest (FTE)Yield / Cost ¹Average BalanceInterest (FTE)Yield / Cost ¹
(dollars in thousands)
Assets
Interest-bearing bank deposits ²$56,883  $558  3.95 %$32,803  $608  7.37 %$63,546  $497  3.17 %
Investment securities1,987,045  11,329  2.29 %1,904,350  11,498  2.40 %1,603,038  9,957  2.52 %
Non-ASC 310-30 loans, net ³9,496,153  113,484  4.81 %9,554,161  119,232  4.96 %9,615,096  122,970  5.19 %
ASC 310-30 loans, net50,372  1,386  11.07 %52,296  1,722  13.10 %63,879  1,904  12.09 %
Loans, net9,546,525  114,870  4.84 %9,606,457  120,954  5.01 %9,678,975  124,874  5.23 %
Total interest-earning assets11,590,453  126,757  4.40 %11,543,610  133,060  4.59 %11,345,559  135,328  4.84 %
Noninterest-earning assets1,273,143  1,267,983  1,186,286  
Total assets$12,863,596  $126,757  3.96 %$12,811,593  $133,060  4.13 %$12,531,845  $135,328  4.38 %
Liabilities and Stockholders' Equity
Noninterest-bearing deposits$1,942,686  $1,977,084  $1,800,307  
Interest-bearing deposits6,473,524  $12,083  0.75 %6,306,861  $13,373  0.84 %6,363,730  $17,865  1.14 %
Time deposits1,686,977  6,784  1.62 %1,847,954  8,567  1.84 %2,039,208  9,233  1.84 %
Total deposits10,103,187  18,867  0.75 %10,131,899  21,940  0.86 %10,203,245  27,098  1.08 %
Securities sold under agreements to repurchase56,369  24  0.17 %66,527  31  0.19 %63,237  43  0.28 %
FHLB advances and other borrowings581,834  3,131  2.16 %497,034  3,082  2.47 %264,347  1,880  2.88 %
Subordinated debentures and subordinated notes payable108,714  1,238  4.58 %108,663  1,311  4.80 %108,522  1,390  5.19 %
Total borrowings746,917  4,393  2.37 %672,224  4,424  2.62 %436,106  3,313  3.08 %
Total interest-bearing liabilities10,850,104  $23,260  0.86 %10,804,123  $26,364  0.97 %10,639,351  $30,411  1.16 %
Noninterest-bearing liabilities95,457  98,951  69,554  
Stockholders' equity1,918,035  1,908,519  1,822,940  
Total liabilities and stockholders' equity$12,863,596  $12,811,593  $12,531,845  
Net interest spread3.10 %3.16 %3.22 %
Net interest income and net interest margin (FTE)$103,497  3.59 %$106,696  3.68 %$104,917  3.75 %
Less: Tax equivalent adjustment1,514  1,523  1,442  
Net interest income and net interest margin - ties to Statements of Comprehensive Income$101,983  3.54 %$105,173  3.62 %$103,475  3.70 %
1 Annualized for all partial-year periods.
2 Interest income includes $0.4 million and $0.1 million for the second quarter of fiscal years 2020 and 2019, respectively, resulting from interest earned on derivative collateral included in other assets on the consolidated balance sheets.
3 Interest income includes $0.4 million and $0.4 million for the second quarter of fiscal years 2020 and 2019, respectively, resulting from accretion of purchase accounting discount associated with acquired loans.

8-

Exhibit 99.1
GREAT WESTERN BANCORP, INC.
Net Interest Margin (FTE) (Unaudited)
Six Months Ended
March 31, 2020March 31, 2019
Average BalanceInterest (FTE)Yield / Cost ¹Average BalanceInterest (FTE)Yield / Cost ¹
(dollars in thousands)
Assets
Interest-bearing bank deposits ²$44,843  $1,166  5.20 %$77,663  $1,039  2.68 %
Investment securities1,945,698  22,827  2.35 %1,547,161  19,145  2.48 %
Non-ASC 310-30 loans, net ³9,525,157  232,716  4.89 %9,525,498  244,821  5.15 %
ASC 310-30 loans, net51,334  3,108  12.11 %65,857  3,874  11.80 %
Loans, net9,576,491  235,824  4.93 %9,591,355  248,695  5.20 %
Total interest-earning assets11,567,032  259,817  4.49 %11,216,179  268,879  4.81 %
Noninterest-earning assets1,270,562  1,186,554  
Total assets$12,837,594  $259,817  4.05 %$12,402,733  $268,879  4.35 %
Liabilities and Stockholders' Equity
Noninterest-bearing deposits$1,959,885  $1,831,877  
Interest-bearing deposits6,390,193  $25,456  0.80 %6,257,167  $33,601  1.08 %
Time deposits1,767,465  15,351  1.74 %1,988,251  17,291  1.74 %
Total deposits10,117,543  40,807  0.81 %10,077,295  50,892  1.01 %
Securities sold under agreements to repurchase61,448  55  0.18 %71,543  99  0.28 %
FHLB advances and other borrowings539,434  6,213  2.30 %253,421  3,827  3.03 %
Subordinated debentures and subordinated notes payable108,688  2,549  4.69 %108,503  2,760  5.10 %
Total borrowings709,570  8,817  2.49 %433,467  6,686  3.09 %
Total interest-bearing liabilities10,827,113  $49,624  0.92 %10,510,762  $57,578  1.10 %
Noninterest-bearing liabilities97,204  71,975  
Stockholders' equity1,913,277  1,819,996  
Total liabilities and stockholders' equity$12,837,594  $12,402,733  
Net interest spread3.13 %3.25 %
Net interest income and net interest margin (FTE) $210,193  3.63 %$211,301  3.78 %
Less: Tax equivalent adjustment3,037  2,932  
Net interest income and net interest margin - ties to Statements of Comprehensive Income$207,156  3.58 %$208,369  3.73 %
1 Annualized for all partial-year periods.
2 Interest income includes $0.8 million and $0.1 million for the first six months of fiscal years 2020 and 2019, respectively, resulting from interest earned on derivative collateral included in other assets on the consolidated balance sheets.
3 Interest income includes $1.0 million and $0.7 million for the first six months of fiscal years 2020 and 2019, 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 COVID-19 impact on credit and other related charges and the impairment of goodwill and certain intangible assets). 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).
9-

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 and for the six months ended:At and for the three months ended:
March 31,
2020
March 31,
2019
March 31,
2020
December 31,
2019
September 30,
2019
June 30,
2019
March 31,
2019
(dollars in thousands except share and per share amounts)
Adjusted net income and adjusted earnings per common share:
Net (loss) income - GAAP$(697,344) $90,297  $(740,618) $43,274  $50,285  $26,783  $44,511  
Add: COVID-19 related impairment of goodwill and certain intangible assets, net of tax713,013  —  713,013  —  —  —  —  
Add: COVID-19 impact on credit and other related charges, net of tax56,685  —  56,685  —  —  —  —  
Adjusted net income$72,354  $90,297  $29,080  $43,274  $50,285  $26,783  $44,511  
Weighted average diluted common shares outstanding56,141,816  57,556,984  55,906,002  56,457,967  56,804,172  57,110,103  57,074,674  
Earnings per common share - diluted$(12.42) $1.57  $(13.25) $0.77  $0.89  $0.47  $0.78  
Adjusted earnings per common share - diluted$1.29  $1.57  $0.52  $0.77  $0.89  $0.47  $0.78  
Tangible net income and return on average tangible common equity:
Net (loss) income - GAAP$(697,344) $90,297  $(740,618) $43,274  $50,285  $26,783  $44,511  
Add: Amortization of intangible assets and COVID-19 related impairment of goodwill and certain intangible assets, net of tax713,817  687  713,440  377  315  335  343  
Tangible net income$16,473  $90,984  $(27,178) $43,651  $50,600  $27,118  $44,854  
Average common equity$1,913,277  $1,819,996  $1,918,035  $