UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2003
| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT |
For the transition period from to
Commission File Number: 001-15215
GREAT WESTERN BANCORPORATION, INC.
(Exact name of registrant as specified in its charter)
| Iowa | 42-0867112 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
10834 Old Mill Road, Suite One, Omaha, NE 68154
(Address of principal executive office) (Zip code)
(402) 333-8330
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.
| Class |
Outstanding at February 3, 2004 | |
| Common Stock, $1.00 par value | 123,802 shares |
1
GREAT WESTERN BANCORPORATION, INC.
INDEX TO FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED DECEMBER 31, 2003
| PAGE | ||||||
| FORWARD-LOOKING STATEMENTS | 3 | |||||
| PART I: FINANCIAL INFORMATION | ||||||
| ITEM 1: | FINANCIAL STATEMENTS | |||||
| Consolidated Balance Sheets at December 31, 2003 (unaudited) and June 30, 2003 |
4 | |||||
| 5 | ||||||
| 6 | ||||||
| 7 | ||||||
| 8 | ||||||
| ITEM 2: | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION | 11 | ||||
| ITEM 3: | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. | 14 | ||||
| ITEM 4: | DISCLOSURE CONTROLS AND PROCEDURES | 14 | ||||
| PART II: OTHER INFORMATION | ||||||
| ITEM 1: | LEGAL PROCEEDINGS | 15 | ||||
| ITEM 2: | CHANGES IN SECURITIES AND USE OF PROCEEDS | 15 | ||||
| ITEM 3: | DEFAULTS UPON SENIOR SECURITIES | 15 | ||||
| ITEM 4: | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 15 | ||||
| ITEM 5: | OTHER INFORMATION | 15 | ||||
| ITEM 6: | EXHIBITS AND REPORTS ON FORM 8-K | 15 | ||||
| SIGNATURES | 16 | |||||
| CERTIFICATION BY CHIEF EXECUTIVE OFFICER | 17 | |||||
| CERTIFICATION BY CHIEF FINANCIAL OFFICER | 18 | |||||
| CERTIFICATION BY CHIEF EXECUTIVE OFFICER | 19 | |||||
| CERTIFICATION BY CHIEF FINANCIAL OFFICER | 20 | |||||
2
This report includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can include words such as “may”, “believe”, “will”, “anticipated”, “estimated”, “projected”, “could”, “should”, “plan” or similar expressions. Forward-looking statements are based on management’s current expectations. Factors that might cause future results to differ from management’s expectations include, but are not limited to: fluctuations in interest rates, inflation, the effect of regulatory or government legislative changes, expected cost savings and revenue growth not fully realized, the progress of strategic initiatives and whether realized within expected time frames, general economic conditions, adequacy of allowance for loan losses, costs or difficulties associated with restructuring initiatives, changes in accounting policies or guidelines, changes in the quality or composition of Great Western’s loans and investment portfolios, technology changes and competitive pressures in the geographic and business areas where Great Western Bancorporation, Inc. (“Great Western”) conducts its operations.
These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning Great Western and its business, including other factors that could materially affect Great Western’s financial results, is included in Great Western’s filings with the Securities and Exchange Commission.
3
PART I
FINANCIAL INFORMATION
| ITEM 1: | FINANCIAL STATEMENTS |
GREAT WESTERN BANCORPORATION, INC.
(In thousands, except share data)
| December 31, 2003 |
June 30, 2003 | |||||
| (unaudited) | ||||||
| Assets | ||||||
| Cash and due from banks |
$ | 63,905 | $ | 64,637 | ||
| Federal funds sold and FHLB overnight deposits |
982 | 42,522 | ||||
| Cash and cash equivalents |
64,887 | 107,159 | ||||
| Certificates of deposit |
99 | 99 | ||||
| Securities available for sale |
364,472 | 313,136 | ||||
| Investment in affiliate |
693 | 0 | ||||
| Loans, net of allowance for loan losses of $22,496 and $21,251 |
1,691,249 | 1,599,961 | ||||
| Premises and equipment, net |
45,355 | 43,675 | ||||
| Accrued interest receivable |
14,151 | 13,679 | ||||
| Core deposit intangible and other, net |
2,575 | 3,371 | ||||
| Goodwill, net |
45,930 | 45,930 | ||||
| Mortgage servicing rights, net |
8,615 | 5,274 | ||||
| Other assets |
17,610 | 15,785 | ||||
| Total assets |
$ | 2,255,636 | $ | 2,148,069 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Liabilities |
||||||
| Deposits |
||||||
| Noninterest bearing |
$ | 261,360 | $ | 262,161 | ||
| Interest bearing |
1,463,066 | 1,472,869 | ||||
| Total deposits |
1,724,426 | 1,735,030 | ||||
| Federal funds purchased and securities sold under agreements to repurchase |
79,681 | 60,163 | ||||
| FHLB advances and other borrowings |
179,581 | 103,380 | ||||
| Notes payable |
36,700 | 43,700 | ||||
| Company obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures |
58,000 | 58,000 | ||||
| Subordinated debentures |
23,093 | 0 | ||||
| Accrued interest and other liabilities |
16,292 | 17,558 | ||||
| Total liabilities |
2,117,773 | 2,017,831 | ||||
| Minority interest in subsidiaries |
4,012 | 3,864 | ||||
| Stockholders’ equity |
||||||
| Preferred stock, $100 par value; 500,000 shares authorized; issued and outstanding: 9,000 shares of 8% cumulative, nonvoting; 8,000 shares of 10% noncumulative, nonvoting; 100,000 shares of variable rate, noncumulative, nonvoting |
11,700 | 11,700 | ||||
| Common stock, $1.00 par value, authorized 1,000,000 shares, issued and outstanding 124,952 shares |
125 | 125 | ||||
| Additional paid-in capital |
2,051 | 2,051 | ||||
| Retained earnings |
118,068 | 106,433 | ||||
| Accumulated other comprehensive income |
1,907 | 6,065 | ||||
| Total stockholders’ equity |
133,851 | 126,374 | ||||
| Total liabilities and stockholders’ equity |
$ | 2,255,636 | $ | 2,148,069 | ||
See Notes to Consolidated Financial Statements.
4
GREAT WESTERN BANCORPORATION, INC.
Consolidated Statements of Income
For The Three Months Ended
(In thousands, except share and per share data)
(unaudited)
| December 31, 2003 |
December 31, 2002 | |||||
| Interest and Dividend Income |
||||||
| Loans |
$ | 27,267 | $ | 27,807 | ||
| Taxable securities |
2,442 | 3,103 | ||||
| Nontaxable securities |
421 | 457 | ||||
| Dividends on securities |
81 | 59 | ||||
| Federal funds sold and other |
37 | 265 | ||||
| Total interest and dividend income |
30,248 | 31,691 | ||||
| Interest Expense |
||||||
| Deposits |
7,136 | 9,260 | ||||
| Federal funds purchased and securities sold under agreements to repurchase |
271 | 220 | ||||
| FHLB advances and other borrowings |
976 | 1,071 | ||||
| Notes payable |
500 | 616 | ||||
| Company obligated mandatorily redeemable preferred securities |
1,301 | 1,278 | ||||
| Subordinated debentures |
39 | 0 | ||||
| Total interest expense |
10,223 | 12,445 | ||||
| Net Interest Income |
20,025 | 19,246 | ||||
| Provision for Loan Losses |
1,332 | 1,288 | ||||
| Net Interest Income After Provision for Loan Losses |
18,693 | 17,958 | ||||
| Noninterest Income |
||||||
| Service charges and other fees |
3,560 | 3,431 | ||||
| Net gains from sale of loans |
1,094 | 1,701 | ||||
| Loan servicing fees, net |
781 | 916 | ||||
| Gain on securities, net |
0 | 6 | ||||
| Trust department income |
489 | 477 | ||||
| Other |
922 | 793 | ||||
| Total noninterest income |
6,846 | 7,324 | ||||
| Noninterest Expense |
||||||
| Salaries and employee benefits |
8,678 | 8,151 | ||||
| Occupancy expenses, net |
1,062 | 1,026 | ||||
| Data processing |
1,021 | 1,008 | ||||
| Equipment expenses |
692 | 714 | ||||
| Advertising |
932 | 1,169 | ||||
| Professional fees |
751 | 844 | ||||
| Amortization of core deposits and other intangibles |
362 | 465 | ||||
| Amortization and valuation adjustments of mortgage servicing rights acquired |
710 | 2,285 | ||||
| Other |
2,392 | 2,442 | ||||
| Total noninterest expense |
16,600 | 18,104 | ||||
| Income Before Income Taxes and Minority Interest |
8,939 | 7,178 | ||||
| Income Taxes |
3,236 | 2,643 | ||||
| Income Before Minority Interest |
5,703 | 4,535 | ||||
| Minority Interest in Net Income of Subsidiaries |
135 | 190 | ||||
| Net Income |
$ | 5,568 | $ | 4,345 | ||
| Basic Earnings Per Common Share |
$ | 44.26 | $ | 34.42 | ||
| Cash Dividends Per Share Declared on Common Stock |
$ | 1.65 | $ | 1.50 | ||
| Weighted Average Shares Outstanding |
124,952 | 125,132 | ||||
See Notes to Consolidated Financial Statements.
5
GREAT WESTERN BANCORPORATION, INC.
Consolidated Statements of Income
For The Six Months Ended
(In thousands, except share and per share data)
(unaudited)
| December 31, 2003 |
December 31, 2002 | |||||
| Interest and Dividend Income |
||||||
| Loans |
$ | 54,457 | $ | 55,996 | ||
| Taxable securities |
4,882 | 6,834 | ||||
| Nontaxable securities |
864 | 879 | ||||
| Dividends on securities |
144 | 120 | ||||
| Federal funds sold and other |
146 | 421 | ||||
| Total interest and dividend income |
60,493 | 64,250 | ||||
| Interest Expense |
||||||
| Deposits |
14,779 | 19,418 | ||||
| Federal funds purchased and securities sold under agreements to repurchase |
448 | 477 | ||||
| FHLB advances & other borrowings |
1,997 | 2,088 | ||||
| Notes payable |
1,021 | 1,297 | ||||
| Company obligated mandatorily redeemable preferred securities |
2,602 | 2,461 | ||||
| Subordinated debentures |
39 | 0 | ||||
| Total interest expense |
20,886 | 25,741 | ||||
| Net Interest Income |
39,607 | 38,509 | ||||
| Provision for Loan Losses |
2,287 | 2,529 | ||||
| Net Interest Income After Provision for Loan Losses |
37,320 | 35,980 | ||||
| Noninterest Income |
||||||
| Service charges and other fees |
7,052 | 6,643 | ||||
| Net gains from sale of loans |
3,686 | 3,046 | ||||
| Loan servicing fees, net |
1,525 | 1,832 | ||||
| Gain on securities, net |
1,067 | 90 | ||||
| Trust department income |
957 | 889 | ||||
| Other |
1,870 | 1,577 | ||||
| Total noninterest income |
16,157 | 14,077 | ||||
| Noninterest Expense |
||||||
| Salaries and employee benefits |
17,529 | 15,778 | ||||
| Occupancy expenses, net |
2,145 | 2,085 | ||||
| Data processing |
1,791 | 1,775 | ||||
| Equipment expenses |
1,469 | 1,408 | ||||
| Advertising |
2,050 | 2,078 | ||||
| Professional fees |
1,651 | 1,602 | ||||
| Amortization of core deposits and other intangibles |
732 | 940 | ||||
| Amortization and valuation adjustments of mortgage servicing rights acquired |
1,426 | 6,688 | ||||
| Other |
4,759 | 4,769 | ||||
| Total noninterest expense |
33,552 | 37,123 | ||||
| Income Before Income Taxes and Minority Interest |
19,925 | 12,934 | ||||
| Income Taxes |
7,261 | 4,885 | ||||
| Income Before Minority Interest |
12,664 | 8,049 | ||||
| Minority Interest in Net Income of Subsidiaries |
279 | 386 | ||||
| Net Income |
$ | 12,385 | $ | 7,663 | ||
| Basic Earnings Per Common Share |
||||||