Great Western Bancorp, Inc. Announces Select Estimated Financial Results for Third Quarter of Fiscal Year 2019

Great Western Bancorp, Inc. (NYSE: GWB) today announced an anticipated decline in net income for the third quarter of fiscal year 2019 compared to the second quarter of fiscal year 2019 due primarily to an increase in credit-related charges.

Given the Company's fiscal third quarter ended 17 days ago, the information that follows is preliminary and based upon information available as of today. The Company has not completed its financial close processes for the quarter and therefore actual amounts could differ from amounts the Company anticipates at this date. During the course of that process, the Company may also identify items that would require it to make adjustments, which may be material, to the information presented below. As a result, the estimates below constitute forward-looking information and are subject to risks and uncertainties, including possible adjustments to preliminary operating results. The Company will to report its full fiscal third quarter financial results on Thursday, July 25, 2019 and will hold a conference call on that date at 7:30 AM (CT) to discuss the quarterly results.

Preliminary Financial Disclosures

For the third quarter of fiscal year 2019, the Company expects to report net income in the range of $26.0 million to $27.5 million, compared to $44.5 million for the second quarter of fiscal year 2019.

The decline in net income is primarily attributable to increases in credit-related charges centered largely in the dairy and cattle loan portfolios and borrower fraud, which we expect to be between $31.0 million and $33.5 million for the quarter. The Company expects to report provision for loan and lease losses of $26.0 million to $27.5 million for the quarter, and loan fair value adjustment related to credit of $5.0 million to $6.0 million for the quarter.

Net charge-offs on loans are expected to be approximately $18.0 million compared to $6.0 million for quarter ended March 31, 2019. The agriculture segment accounted for $13.0 million of the charge-offs this quarter - $10.0 million relate to loans in the cattle industry which were based upon new and/or updated information received during the quarter, of which $4.0 million is with respect to a cattle feed operator in which the Company believes involved borrower fraud, and $3.0 million relate to loans in the grain industry. These relationships have been classified as substandard for a number of previous quarters. This quarter's charge-offs also include approximately $4.0 million to a retailer which the Company believes involved borrower fraud and the remaining $1.0 million relates to another commercial exposure. Substandard loans are expected to increase to approximately $476.0 million compared to $259.0 million at March 31, 2019. The increase in substandard loans is primarily as a result of new and/or updated information resulting in downgrades within the dairy and cattle loan portfolios. The Company believes it remains well collateralized on these lending relationships. Watch-rated categorized loans are expected to be approximately $221.0 million compared to $301.0 million at March 31, 2019.