GREAT WESTERN BANCORPORATION INC - 10-Q Quarterly Report

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 September 30, 2004

¨	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 October 29, 2004
Common Stock, $1.00 par value		123,802 shares

GREAT WESTERN BANCORPORATION, INC.

INDEX TO FORM 10-Q FOR THE QUARTERLY

PERIOD ENDED SEPTEMBER 30, 2004


			PAGE
FORWARD-LOOKING STATEMENTS			3

PART I:	FINANCIAL INFORMATION

	ITEM 1:	FINANCIAL STATEMENTS

	Consolidated Balance Sheets at September 30, 2004 (unaudited) and June 30, 2004		4

	Consolidated Statements of Income - Three months ended September 30, 2004 and September 30, 2003 (unaudited)		5

	Consolidated Statements of Cash Flows - Three months ended September 30, 2004 and September 30, 2003 (unaudited)		6

	Notes to Consolidated Financial Statements		7

	ITEM 2:	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	8

	ITEM 3:	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	10

	ITEM 4:	CONTROLS AND PROCEDURES	11

PART II:	OTHER INFORMATION

	ITEM 1:	LEGAL PROCEEDINGS	12

	ITEM 2:	CHANGES IN SECURITIES AND USE OF PROCEEDS	12

	ITEM 3:	DEFAULTS UPON SENIOR SECURITIES	12

	ITEM 4:	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	12

	ITEM 5:	OTHER INFORMATION	12

	ITEM 6:	EXHIBITS AND REPORTS ON FORM 8-K	12

		SIGNATURES	13

FORWARD-LOOKING STATEMENTS

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.

PART I

FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

GREAT WESTERN BANCORPORATION, INC.

Consolidated Balance Sheets

(In thousands, except share data)


	September 30, 2004		June 30, 2004
	(unaudited)
Assets
Cash and due from banks	$	50,999	$	49,768
Federal funds sold and FHLB overnight deposits		21,941		26,642

Cash and cash equivalents		72,940		76,410

Certificates of deposit		—		99
Securities available for sale		383,451		364,847
Investment in affiliates		2,631		3,262
Loans, net of allowance for loan losses of $23,150 and $22,643		1,891,866		1,832,215
Premises and equipment, net		49,896		47,890
Accrued interest receivable		16,505		14,309
Core deposit intangible and other, net		2,547		2,897
Goodwill, net		51,847		51,847
Mortgage servicing rights, net		15,958		14,557
Other assets		18,419		21,576

Total assets	$	2,506,060	$	2,429,909

Liabilities and Stockholders’ Equity
Liabilities
Deposits
Noninterest bearing	$	253,686	$	252,759
Interest bearing		1,682,813		1,661,305

Total deposits		1,936,499		1,914,064
Federal funds purchased and securities sold under agreements to repurchase		113,646		95,810
FHLB advances and other borrowings		158,338		115,355
Notes payable		36,700		36,700
Subordinated debentures		87,631		108,662
Accrued interest and other liabilities		18,246		16,124

Total liabilities		2,351,060		2,286,715

Minority interests		4,275		4,074

Stockholders’ equity
Preferred stock, $100 par value; authorized 500,000 shares; 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 123,802 shares		124		124
Additional paid-in capital		2,032		2,032
Retained earnings		135,749		129,106
Accumulated other comprehensive income (loss)		1,120		(3,842	)

Total stockholders’ equity		150,725		139,120

Total liabilities and stockholders’ equity	$	2,506,060	$	2,429,909

See Notes to Consolidated Financial Statements.

GREAT WESTERN BANCORPORATION, INC.

Consolidated Statements of Income

For The Three Months Ended

(In thousands, except share and per share data)

(unaudited)


	September 30, 2004		September 30, 2003
Interest and Dividend Income
Loans	$	29,975	$	27,190
Taxable securities		2,939		2,440
Nontaxable securities		382		442
Dividends on securities		79		63
Federal funds sold and other		59		70
Trust common securities		49		40

Total interest and dividend income		33,483		30,245

Interest Expense
Deposits		7,660		7,643
Federal funds purchased and securities sold under agreements to repurchase		283		177
FHLB advances and other borrowings		1,087		1,022
Notes payable		493		521
Subordinated debentures		1,647		1,301

Total interest expense		11,170		10,664

Net Interest Income		22,313		19,581
Provision for Loan Losses		856		955

Net Interest Income After Provision for Loan Losses		21,457		18,626

Noninterest Income
Service charges and other fees		4,352		3,493
Net gain from sale of loans		966		2,592
Loan servicing fees		1,010		744
Gains on sale of securities, net		20		1,067
Trust department income		496		468
Other		681		948

Total noninterest income		7,525		9,312

Noninterest Expense
Salaries and employee benefits		9,419		8,851
Occupancy expenses, net		1,181		1,083
Data processing		1,020		771
Equipment expenses		808		776
Advertising		1,046		1,117
Professional fees		945		900
Communication expense		566		549
Amortization of core deposit and other intangibles		350		370
Amortization and valuation adjustments of mortgage servicing rights		668		717
Other		1,683		1,819

Total noninterest expense		17,686		16,953

Income Before Income Taxes and Minority Interests		11,296		10,985
Provision for Income Taxes		3,977		4,025

Income Before Minority Interests		7,319		6,960
Minority Interests		159		144

Net Income	$	7,160	$	6,816

Basic Earnings Per Common Share	$	55.51	$	52.15

Cash Dividends Per Share Declared on Common Stock	$	1.85	$	1.65

Weighted Average Shares Outstanding		123,802		124,952

See Notes to Consolidated Financial Statements.

GREAT WESTERN BANCORPORATION, INC.

Consolidated Statements of Cash Flows

For The Three Months Ended

(In thousands)

(unaudited)


	September 30, 2004			September 30, 2003
Net Cash Provided By (Used In) Operating Activities	$	6,925		$	(670	)

Investing Activities
Proceeds from maturities of certificates of deposit		99			—
Proceeds from sales and maturities of securities available for sale		30,776			38,466
Purchase of securities available for sale		(41,546	)		(55,151	)
Proceeds from sale of other real estate owned		448			1,982
Proceeds from redemption of trust common securities		631			—
Net increase in loans		(56,821	)		(22,808	)
Proceeds from sale of premises and equipment		43			62
Purchase of premises and equipment		(3,071	)		(1,963	)
Purchase of mortgage servicing rights		(42	)		(973	)

Net cash used in investing activities		(69,483	)		(40,385	)

Financing Activities
Retirement of subordinated debentures		(21,031	)		—
Net increase (decrease) in deposits		22,435			(13,245	)
Net increase in federal funds purchased and securities sold under agreements to repurchase		17,836			11,682
Net increase in FHLB advances and other borrowings		42,983			8,236
Payment of other liabilities		(2,555	)		(1,125	)
Dividends paid, including ($63) and ($44) paid to minority interests, respectively		(580	)		(547	)

Net cash provided by financing activities		59,088			5,001

Net decrease in cash and cash equivalents		(3,470	)		(36,054	)

Cash and cash equivalents:
Cash and Cash Equivalents – Beginning of Quarter		76,410			107,159

Cash and Cash Equivalents – End of Quarter	$	72,940		$	71,105

Supplemental Disclosures of Cash Flow Information:
Cash payments for interest	$	11,252		$	11,379
Cash payments for income taxes		637			1,065
Supplemental Schedules of Noncash Investing and Financing Activities:
Net change in unrealized gain (loss) on securities available for sale, net of deferred income taxes		4,961			(4,529	)
Purchase of mortgage servicing rights for other liabilities		2,031			1,053
Loans transferred to other real estate owned and other assets		242			435

See Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation.

The consolidated financial statements include the accounts of Great Western Bancorporation, Inc. (“Great Western”) and its subsidiaries. All material intercompany accounts and transactions with subsidiaries are eliminated in consolidation.

The consolidated subsidiaries are as follows: Great Western Bank (100.0% owned), which is chartered in Omaha, Nebraska; Great Western Bank, (96.1% owned), which is chartered in Watertown, South Dakota; Great Western Bank, (100.0% owned), which is chartered in Clive, Iowa; Great Western Service Corporation, (100.0% owned by bank subsidiaries, excluding Great Western Bank, Omaha), a data processing organization. Great Western Bank, Omaha also owns 100.0% of GW Leasing, Inc., a leasing company.

The June 30, 2004 consolidated balance sheet has been derived from Great Western’s audited balance sheet as of that date. The consolidated financial statements as of September 30, 2004 and for the

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