Year in Review
Letter from the President
President & Chief Executive Officer
Focusing on What Matters
As a locally-focused community bank, our company has always been about building meaningful relationships with the individuals and businesses we serve. Simply put, our mission is to Make Life Great. We do that by living our values of putting the customer first and doing the right thing. Making Life Great is part of our culture and our employees live up to those values every day. In FY16, Making Life Great was defined in a number of new and exciting ways.
Our financial performance for the most recent fiscal year was once again strong. Net income grew by 20.1% year-over-year and fully-diluted EPS increased by 21.6%. Each of these measures are calculated excluding the impact of non-recurring costs we incurred related to the acquisition of HF Financial Corp. Our return on average tangible common equity was an impressive 15.1%, driven largely by our outstanding efficiency ratio of 49.6%. Finally, we increased our quarterly dividend to $0.17 per share, an increase of 21%.
Driving performance and results has always been a part of Making Life Great, but in FY16 our company delivered under pressure. Four months after National Australia Bank, Ltd. completed its divestiture of GWB, we returned to the acquisition arena and announced our agreement to acquire HF Financial Corp., a strong South Dakota-based organization with $1.2 billion in total assets. The acquisition, valued at $142 million, signaled a clear indication to the market that we were returning to our acquisitive roots. The transaction added a presence in two key markets, Fargo, ND and Minneapolis, MN, and boosted our company over $10 billion in consolidated total assets, a key regulatory threshold, which will subject us to greater regulatory scrutiny and governance requirements. We have been working on a number of projects to prepare to meet these requirements for some time now and I am confident we will be up to the challenge.
Understanding that we can’t be successful with growth through acquisitions alone, we grew organically by focusing on existing and new markets, including establishing a branch presence in Waterloo, IA and Scottsdale, AZ. Making Life Great in FY16 also meant we grew our products and service lines by offering our customers improvements to our digital banking platform, our business cash management offering and by improving the way we communicate in our increasingly technological world.
We have been managing credit risk resulting from lower commodity prices for some time now. There is no doubt our customers in the agriculture industry are under pressure and will likely continue to be for the next couple of years. But I believe we will manage through this downturn in part because of our diversified loan portfolio and because of our experience in the agriculture arena. We stand ready to manage the future of banking with the challenges in net interest margin, cost and regulatory compliance as we have navigated these successfully in the past.
We want to be a part of the solution to challenges facing our communities. In FY16, Making Life Great meant creating a new program at Great Western Bank to help our neighbors. Our Making Life Great Grants initiative grew out of a desire to help solve many of the complex issues facing our communities. We’re excited to see how we can grow our commitment to corporate responsibility in the areas aligned with our strategic priorities of affordable housing, financial literacy, economic development and more.
We know that in order to be successful as a company our people must first be successful. We are fortunate to have capable, engaged, dedicated and empowered employees and I would like to thank them for their contributions to our success.
We welcomed a couple of new directors to our board over the past year. Jim Brannen joined our board in October 2015. Jim brings a wealth of banking experience as well as valuable expertise in public company governance as CEO of Iowa-based FBL Financial. In October 2016, we welcomed Jim Israel to our board. We value his financial and risk management expertise as past president of Deere & Company Worldwide Financial Services Division. We also want to recognize outgoing board chairman Andrew “Skip” Hove who will be leaving us in February. Skip has provided many years of dedicated service. I want to thank our entire board for their guidance over these past 12 eventful months of Making Life Great.
President & Chief Executive Officer