IPO Report: Great Western Bancorp (GWB)

Francis Gaskins |

IPO, IPOs this week, Great Western Bancorp IPO, stocks to buy now, small-cap stocksGreat Western Bancorp ($GWB) is a full-service regional bank holding company focused on relationship-based business and agribusiness banking. It is based in Sioux Falls, SD,

Six other companies are scheduled for the week of Oct. 13, 2014. The full IPO calendar is available at IPOpremium.

The manager and co-managers are Deutsche Bank and BofA Merrill Lynch

The joint managers are Keefe Bruyette Woods, RBC Capital Markets, Sandler O'Neill, Macquarie Capital, and Sterne Agee.

GWB scheduled a $360 million IPO with a market capitalization of $1.3 billion at a price range midpoint of $22.50 for Wednesday, Oct. 15, 2014 on the NYSE. SEC filings

Great Western Bancorp IPO Report

Overview

GWB is a full-service regional bank holding company focused on relationship-based business and agribusiness banking.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price/interest income

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing June 6 mos

         

Great Western Bancorp (GWB)

$1,305

4.1

12.7

0.9

4.0

28%


Conclusion

Neutral

Net interest inc +32%

Net income +10%

Price-tangible-book of 4

Business

GWB is a full-service regional bank holding company focused on relationship-based business and agribusiness banking.

GWB serves its customers through 162 branches in attractive markets in seven states: South Dakota, Iowa, Nebraska, Colorado, Arizona, Kansas and Missouri. GWB was established more than 70 years ago and have achieved strong market positions by developing and maintaining extensive local relationships in the communities GWB serves.

By leveraging its business and agribusiness focus, presence in attractive markets, highly efficient operating model and robust approach to risk management, GWB has achieved significant and profitable growth — both organically and through disciplined acquisitions.

GWB has successfully completed eight acquisitions since 2006, including its 2010 FDIC-assisted acquisition of TierOne Bank, which represented approximately $2.5 billion in acquired assets.

Financial overview

GWB’s net income was $77.1 million for the nine months ended June 30, 2014 and $96.2 million for the twelve months ended September 30, 2013, representing a CAGR of 21% from fiscal year 2009 to fiscal year 2013 and a 32% increase from fiscal year 2012 to fiscal year 2013.

GWB’s cash net income, which is its net income excluding amortization and related tax effects associated with intangible assets, was $88.1 million for the nine months ended June 30, 2014 and $112.3 million for fiscal year 2013, representing a 26% increase from fiscal year 2012 to fiscal year 2013.

GWB’s total assets were $9.29 billion at June 30, 2014, and on an annualized basis, its net charge-offs for the nine months ended June 30, 2014 represented 14 basis points of its average total loans.

Since fiscal year 2009, GWB has also operated with efficiency ratios superior to its peer median.(1) For fiscal year 2013, GWB achieved a return on average total assets of 1.07% and a return on average tangible common equity of 17.5%.

Focus

GWB focuses on business and agribusiness banking, complemented by retail banking and wealth management services.

GWB’s loan portfolio consists primarily of business loans, comprised of C&I loans and CRE loans, and agribusiness loans.

At June 30, 2014, GWB’s business and agribusiness loans collectively accounted for 85% of its total loan portfolio.

In addition, 61% of GWB’s aggregate loan portfolio, comprising its CRE loans (representing 36% of its aggregate loan portfolio), residential real estate loans (representing 14% of its aggregate loan portfolio) and agriculture real estate loans (representing 11% of its aggregate loan portfolio), was primarily secured by interests in real estate predominantly located in the states in which GWB operates at June 30, 2014, and some of its other lending occasionally involves taking real estate as primary or secondary collateral.

GWB offers small and mid-sized businesses a focused suite of financial products and have established strong relationships across a diversified range of sectors, including key areas supporting regional growth such as agribusiness services, freight and transport, healthcare and tourism.

GWB has developed extensive expertise in agribusiness lending, which serves one of the most prominent industries across its markets, and GWB offers a variety of financial services designed to meet the specific needs of its agribusiness customers.

GWB also provides a range of deposit and loan products to its retail customers through several channels, including its branch network, online banking system, mobile banking applications and customer care centers.

In its wealth management business, GWB seeks to expand its private banking, financial planning, investment management and insurance operations to better position GWB to capture an increased share of the business of managing the private wealth of many of its business and agribusiness customers.

Dividend Policy

Following this offering, GWB intends to pay quarterly cash dividends on its common stock at an initial amount of approximately $0.12 per share, which annualized is a 2.3% yield at the price range midpoint of $22.50.

Intellectual Property

GWB owns a variety of trademarks, service marks, trade names and logos and spend time and resources maintaining this intellectual property portfolio.

GWB controls access to its intellectual property through license agreements, confidentiality procedures, non-disclosure agreements with third parties, employment agreements and other contractual rights to protect its intellectual property.

Competition

GWB competes with commercial banks, savings banks, credit unions, non-bank financial services companies and other financial institutions operating within the areas GWB serves, particularly nationwide and regional banks and larger community banks that target the same customers GWB does.

GWB also faces competition for agribusiness loans from participants in the nationwide Farm Credit System and global banks.

Recently, GWB has seen increased competitive pressures on loan rates and terms for high-quality credits, driven in part by the prolonged low-interest rate environment.

Continued loan pricing pressure may continue to affect GWB’s financial results in the future.

5% stockholders

NAB 100%

Use of proceeds

GWB will not receive any of the proceeds from the sale of the shares of common stock being sold in this offering.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
GWB Great Western Bancorp Inc. 42.02 0.95 2.31 334,190

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