By Dave DeWitte
As Great Western Bancorp has gained independence from its former Australian parent, the momentum of the company’s Eastern Iowa banking operations has continued, according to Eastern Iowa President Bart Floyd.
Great Western Bancorp, the corporate parent of Great Western Bank, became independent of National Australia Bank in an initial public offering Oct. 20 on the New York Stock Exchange. It is based in Sioux Falls, S.D.
Since arriving in the Eastern Iowa market in December 2011, Great Western Bank has grown its assets by an average of 69 percent per year, and growth is expected to exceed 70 percent this year, according to Mr. Floyd.
On a national level, Great Western is known as an agricultural lender. It has $9 billion in assets concentrated mainly in agriculture. Even though Eastern Iowa is heavily agricultural, Mr. Floyd said it has not depended on ag loans for its growth. Less than 5 percent of Great Western’s portfolio in Eastern Iowa is in agricultural lending.
“My contacts and the team we attracted tend to be more commercial-based bankers,” Mr. Floyd said. As a result, most of Great Western’s accounts in Eastern Iowa are business accounts, although ag remains a strong opportunity for the bank, he noted.
The market development approach utilized by Great Western is a point of pride for Mr. Floyd. Great Western hires experienced banking veterans who are well-regarded in their communities, he said, and only after they have developed a good customer base does Great Western decide to open a branch.
“When you enter a new market and have the right individuals, they have their personal brand, and that personal brand is going to be what the corporate brand becomes,” Mr. Floyd said.
Great Western opened its branch in North Liberty in June 2012, when it acquired and integrated four branches of First Federal Savings Bank of Fort Dodge. That branch is now up to 10 employees.
“In North Liberty, we have over 100 years of local banking experience,” Mr. Floyd said. “People don’t bank with banks. They bank with people. The North Liberty office became profitable within the first year.”
The same strategy is being pursued in the Cedar Falls-Waterloo market. Two experienced loan officers who joined the bank are booking loans, with the idea that a branch will open in that market when the need dictates, Mr. Floyd explained.
“Our next opportunity would be to try to find the right banker, and follow that strategy into the Quad Cities market,” he said.
The bank employs 31 in Eastern Iowa. Outside North Liberty, most of them, 18, are at branches in Burlington and Mount Pleasant.
The initial public offering of Great Western Bancorp in October 2014 hasn’t changed the bank’s approach.
“Our operating model is pushed down to the local level and our people are empowered to act as the experienced bankers they are,” Mr. Floyd said. The fact that Great Western is on the New York Stock Exchange has no negative connotations and raises the profile of the bank, Mr. Floyd added.
Since going public, Great Western has reported only one full quarter of earnings as an independent company. The company posted net income of $19.7 million, or 34 cents per share, on revenue of $87.6 million for the quarter ended March 31.
After hitting the market at $18, the price of Great Western shares has gone as high as $24.59 per share. The stock pays a dividend of 48 cents, or 2.1 percent. Great Western named an Iowan, Meredith Corp. Board Chairman Steve Lacy, to its board of directors effective April 30.
After a second public offering of Great Western shares formerly held by National Australia Bank in May at $21.50, National Australia’s ownership stake is now down to 28.5 percent.
Great Western’s market concentration in seven highly-agricultural Midwestern states has been part of its appeal with investors, who have become more wary of banks since the 2008 financial meltdown. Because demand for food and other ag products isn’t heavily dependent on economic cycles, Great Western says its market has been more resilient to downturns than other parts of the country.
Banks have faced a tougher regulatory climate since the 2008 recession, but continue to enjoy strong interest margins due to the Federal Reserve Bank’s stimulus policies that have kept interest rates low. While most analysts expect interest rates to begin their ascent back to more normal levels later this year, Mr. Floyd believes Great Western Bank will continue to grow and perform well.
“We’ve been able to attract successful clients,” Mr. Floyd said. “Successful clients are able to thrive whether business conditions are good or bad.”
