Great Western Bancorp sets terms for $360 million IPO

Great Western Bancorp, a Midwestern bank owned by National Australia Bank with 162 branches, announced terms for its IPO on Friday. The Sioux Falls, SD-based company plans to raise $360 million by offering 16 million shares (100% insider) at a price range of $21 to $24. At the midpoint of the proposed range, Great Western Bancorp would command a fully diluted market value of $1.3 billion.

Great Western Bank (GWB) is being spun out of National Australia Bank (ASX: NAB), one of the world's top 20 largest banks by market cap. GWB's $6.7 billion loan portfolio consists of commercial real estate (36%), commercial non real estate (24%), agriculture (25%) and residential real estate (14%). Aside from its business, agribusiness and retail banking segments, GWB also offers wealth management services ($1.2 billion AUM). Its retail branches are concentrated in Nebraska, Iowa and South Dakota. The company has expanded its footprint through acquisitions in Arizona, Colorado and Nebraska, including the purchase of Nebraska-based TierOne Bank in 2010 ($2.5 billion in acquired assets). 

Great Western's IPO follows that of Citizen's Financial (CFG), another commercial bank spun out of a major multinational foreign bank. Citizen's has gained about 8% since its September IPO, though the banking sector has generally underperformed the broader IPO market.

For the nine months ended June 30, 2014, Great Western Bancorp's net interest and noninterest income grew 22% to $293 million, driven by a 3% increase in interest-earning assets (primarily originated loans) and a 75 bps increase in average yield. Its net income grew 10% to $77 million. During the nine months ended June 30, its efficiency ratio rose 100 bps to 51% and ROA increased 8 bps to 1.1%. GWB had $9.3 billion of total assets on its balance sheet at quarter-end.

Great Western Bancorp, which was founded in 1935 and booked $376 million in net interest and noninterest income for the 12 months ended June 30, 2014, plans to list on the NYSE under the symbol GWB. Deutsche Bank and BofA Merrill Lynch are the joint bookrunners on the deal. It is expected to price during the week of October 13, 2014.