UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED JUNE 30, 2004, OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 001-15215

GREAT WESTERN BANCORPORATION, INC.

(Exact name of registrant as specified in its charter)


Iowa		42 0867112
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
		(I.R.S. Employer Identification No.)

10834 Old Mill Road, Suite One, Omaha, NE 68154-2648

(Address of principal executive offices) (Zip Code)

(402) 333-8330

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
10.00% Cumulative Trust Preferred Securities of GWB Capital Trust I		American Stock Exchange
9.75% Cumulative Trust Preferred Securities of GWB Capital Trust II		American Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:

NONE

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days. YES x NO ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form10-K: x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x

All voting and non-voting common equity is held by affiliates of the registrant.

At September 10, 2004, there were 123,802 shares of registrant’s common stock outstanding.

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TABLE OF CONTENTS


		Page No.
Forward-looking Statements		3

Part I

Item 1.	Business	3

Item 2.	Properties	13

Item 3.	Legal Proceedings	14

Item 4.	Submission of Matters to a Vote of Security Holders	14

Part II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14

Item 6.	Selected Financial Data	15

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	17

Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	47

Item 8.	Financial Statements and Supplementary Data	49

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	49

Item 9A.	Controls and Procedures	50

Item 9B.	Other Information	50

Part III

Item 10.	Directors and Executive Officers of the Registrant	50

Item 11.	Executive Compensation	52

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	55

Item 13.	Certain Relationships and Related Transactions	56

Item 14.	Principal Accountant Fees and Services	58

Part IV

Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	58

	SIGNATURES	63

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FORWARD-LOOKING STATEMENTS

This report includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can include words such as “may”, “believe”, “will”, “anticipated”, “estimated”, “projected”, “could”, “should”, “plan” or similar expressions. Forward-looking statements are based on management’s current expectations. Factors that might cause future results to differ from management’s expectations include, but are not limited to: fluctuations in interest rates, inflation, the effect of regulatory or government legislative changes, expected cost savings and revenue growth not fully realized, the progress of strategic initiatives and whether realized within expected time frames, general economic conditions, adequacy of allowance for loan losses, costs or difficulties associated with restructuring initiatives, changes in accounting policies or guidelines, changes in the quality or composition of Great Western’s loans and investment portfolios, technology changes and competitive pressures in the geographic and business areas where Great Western conducts its operations.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning Great Western and its business, including other factors that could materially affect Great Western’s financial results, is included in Great Western’s filings with the Securities and Exchange Commission.

PART I

ITEM 1. BUSINESS

THE COMPANY

Great Western Bancorporation, Inc., (“Great Western”), a multi-bank holding company, offers full service community banking through 18 banking locations in Nebraska, 21 banking locations in South Dakota, 24 banking locations in southern Iowa, seven banking locations in northern Missouri and one banking location in northeastern Kansas. Its Chairman, Deryl F. Hamann, acquired Great Western in 1971; at that time it had a single bank charter in Leon, Iowa with two locations. In 1974, Mr. Hamann acquired the parent company of Great Western Bank, Watertown, South Dakota; the parent was merged into Great Western on May 31, 1999. Citizens Corporation, an affiliated bank holding company with six Iowa banking locations, was merged into Great Western on August 7, 2000. On March 23, 2001, Great Western Securities, Inc., the parent company of Great Western Bank, Omaha, Nebraska, was merged into Great Western. Acquisitions of other banks and savings institutions have been made on both strategic and opportunistic bases. Expansion also occurred through acquisition of offices of other financial institutions and de novo branching. See “Mergers and Acquisitions” for additional information.

THE BANKS

Great Western has three direct subsidiaries: Great Western Bank, Omaha, Nebraska; Great Western Bank, Watertown, South Dakota (formerly F & M Bank, Watertown, South Dakota; and Rushmore Bank & Trust, Rapid City, South Dakota); and Great Western Bank, Clive, Iowa (formerly Citizens Bank, Mt Ayr, Iowa; Citizens Bank of Princeton, Princeton,

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Missouri; and Citizens Bank, Clive, Iowa). See “Mergers and Acquisitions” for additional information. Each subsidiary bank is chartered by the state banking authorities of the state in which its headquarters is located. See “Supervision and Regulation.”

The following table sets forth information regarding Great Western’s banks as of June 30, 2004:


	Common Stock Ownership		Assets		Net Loans		Deposits
	(dollars in thousands)
Great Western Bank, Watertown	96.1	%	$	973,257	$	750,286	$	791,400
Great Western Bank, Omaha	100.0	%		898,326		701,161		727,310
Great Western Bank, Clive	100.0	%		517,814		380,768		433,088

GREAT WESTERN SERVICE CORPORATION

Subsidiary banks (excluding Great Western Bank, Omaha) own 100% of Great Western Service Corporation (formerly Spectrum Banc Service Corporation), which provides data processing and related services to its bank owners. See “Mergers and Acquisitions” for additional information.

STRATEGIES

Growth. Great Western intends to grow within its existing markets, to branch into or acquire financial institutions in existing markets, and to branch into or acquire financial institutions in other markets consistent with its capital requirements and management abilities.

Great Western seeks opportunities to acquire banks at acceptable prices. Great Western’s operating strategy is to provide high quality community banking services to its customers and increase market share through solicitation of new business, repeat business and referrals from customers, and selected promotional strategies.

Branch Activity. In December 2003, Great Western Bank, Omaha opened a branch at 17929 Welch Plaza, Omaha; and in April 2004 opened an in-store branch in the Super Wal-Mart at 6304 North 99th Street. On November 17, 2003 Great Western Bank, Clive opened a branch at 320 8^th Street, Altoona, Iowa. On February 23, 2004 Great Western Bank, Clive acquired six branches in Missouri. One of these branches was combined with an existing Great Western, Clive branch in Milan, Missouri. The acquired branches had $123,133,000 in deposits, $31,972,000 in loans and $123,590,000 in total assets. On August 15, 2003, Great Western Bank, Clive opened a new branch in Bedford, Iowa. On December 13, 2002, Great Western Bank, Omaha acquired Peoples Bank, Overland Park, Kansas. Peoples Bank had $24,847,000 in total assets, $2,910,000 in net loans and $24,739,000 in deposits. Peoples Bank has one location, which at closing became a branch of Great Western Bank, Omaha. Should Great Western be unable to acquire existing banks or other financial institutions at acceptable prices, it will continue to seek expansion through new branches or possibly by chartering new banks.

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LENDING ACTIVITIES

Great Western provides a broad range of commercial and retail lending services. Each of Great Western’s subsidiary banks has a written credit policy that addresses the needs of its market. All of the credit policies contain underwriting and loan administration criteria, including levels of loan commitment, loan types, credit criteria, concentration limits, loan administration, loan review and grading and related matters.

Great Western is able to facilitate substantial credit requests through the purchase and sale of participations among its subsidiary banks, as well as unaffiliated banks or other financial institutions. As of June 30, 2004, approximately 84% of all loans and leases were to customers within Great Western’s market area.

Real Estate Loans. These include various types of loans for which Great Western’s banks hold real property as collateral. The risks of real estate loans include the borrower’s inability to pay and deterioration in value of the real estate collateral. Real estate loans include primarily one to four family residences and one to four family residences under construction. Construction loans for one to four family residences are primarily made to builders that construct the residences. The construction loans typically have maturities of 6 to 12 months, have rates that are adjustable and are subject to origination fees. Terms for one to four family residences that are not construction loans primarily have maturities of 25 years or less and have rates fixed from one to five years.

Commercial and Agricultural Loans. These consist primarily of secured loans to businesses for various purposes, including revolving lines of credit, agricultural operating lines, term loans and equipment financing. Equipment, accounts receivable, inventory, business assets, agricultural assets or commercial real estate secure the loans. Revolving lines and agricultural operating lines, in most cases mature in one year and are secured by accounts receivable, inventory, business assets or agricultural assets. Loans to purchase equipment including farm equipment usually have maturities between three and six years and have fixed rates of interest for one year or more. Commercial real estate loans typically have maturities between three and 10 years with fixed rates of interest for at least one year. Loans to build commercial buildings usually have maturities between one and two years and have adjustable rates of interest.

Loans to Individuals. Loans to individuals, which are not secured by real estate, generally have maturities of two to six years and bear fixed interest rates. These loans are generally secured by motor vehicles, investment securities, or other personal assets and in some instances are unsecured.

Great Western Bank, Clive has regional and local loan committees that meet at least weekly, subject to loan volume. Great Western Bank, Omaha has a senior loan committee and loan committee that meet weekly. Great Western Bank, Watertown has regional loan committee meetings bi-weekly and an Executive Board Committee that meets as required by loan volume.

Interest rates charged on loans vary with the degree of risk, maturity, underwriting and servicing costs, loan amount and extent of other banking relationships maintained with customers and are further subject to competitive pressures, money market rates, availability of funds and government regulations.

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Great Western’s banks issue letters of credit. See Note 18 to Consolidated Financial Statements. Great Western’s banks apply the same credit standards to those commitments as they use in direct lending activities and have included these commitments in their lending risk evaluations. Great Western’s exposure to credit loss under letters of credit is represented by the amount of those commitments.

Under applicable federal and state law, permissible loans to one borrower after June 30, 2004 were limited to $12,703,329 for Great Western Bank, Watertown, South Dakota; $12,362,116 for Great Western Bank, Omaha, Nebraska; and $8,973,038 for Great Western Bank, Clive, Iowa. Certain exceptions, depending on the laws of the applicable state, increase the loan limit to one borrower for loans secured by readily marketable securities and certain readily marketable agricultural assets.

COMPETITION

The banking and financial services industry is highly competitive and undergoing rapid consolidation. Within the market area of Great Western’s banks, numerous commercial banks, savings and loan associations, mortgage brokers, finance companies, credit unions, investment firms and private lenders compete with the banks for deposits and loans. Many of these competitors have significantly greater resources than Great Western, including higher lending limits and more extensive financial, technical and marketing resources.

The Financial Modernization Act, also known as the Gramm-Leach-Bliley Act, enacted in November 1999, affects competition between financial institutions. This act significantly revised the laws regulating banks and bank holding companies and other providers of financial services, enabling bank holding companies and foreign banks that meet applicable statutory requirements—defined as financial holding companies—to engage in a broader range of services and to compete more efficiently in existing business lines. The Gramm-Leach-Bliley Act authorizes financial holding companies to engage in securities, insurance, and other activities that are financial in nature or that do not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally. As of August 31, 2004, Great Western had not elected to convert to a financial holding company, but reserves this right under the rule.

EMPLOYEES

As of September 10, 2004, Great Western had approximately 793 full-time equivalent employees. Great Western provides its employees with a comprehensive benefit program, including major medical insurance, dental insurance, life and accidental death and dismemberment insurance, long-term disability coverage and a 401(k) plan. Great Western also offers a tuition reimbursement program. Management considers its relationship with its employees to be good.

SUPERVISION AND REGULATION

Great Western and its subsidiary banks are extensively regulated under federal and state laws. These laws and regulations are primarily intended to protect depositors and the deposit insurance fund of the FDIC, not securities holders of Great Western. The following information is qualified in its entirety by reference to the particular statutory and regulatory provisions. Any change in applicable laws, regulations or regulatory policies may have a material effect on the business, operations and prospects of Great Western and its banks. Great Western is unable to predict the nature or extent of the effects that fiscal or monetary

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policies, economic controls or new federal or state legislation may have on its business and earnings in the future.

The Gramm-Leach-Bliley Act preserves the role of the Federal Reserve as the umbrella supervisor for holding companies while at the same time incorporating a system of functional regulation designed to take advantage of the strengths of the various federal and state regulators. In particular, the Act replaces the broad exemption from Securities and Exchange Commission regulation that banks previously enjoyed with more limited exemptions, and it reaffirms that states are the regulators for the insurance activities of all persons, including federally chartered banks. The Gramm-Leach-Bliley Act also establishes a minimum federal standard of financial privacy. In general, the applicable federal regulations prohibit affected financial institutions (including banks, insurance agencies and broker/dealers) from sharing information about their customers with non-affiliated third parties unless: (1) the financial institution has first provided a privacy notice to the customer; (2) the financial institution has given the customer an opportunity to opt out of the disclosure; and (3) the customer has not opted out after being given a reasonable opportunity to do so. Compliance with the notice and other requirements under the regulations was required by July 1, 2001.

Recent regulatory developments. On October 26, 2001, President Bush signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”). Among its other provisions, the USA PATRIOT Act requires each financial institution: (i) to establish an anti-money laundering program; (ii) to establish due diligence policies, procedures and controls with respect to its private banking accounts involving foreign individuals and certain foreign banks; and (iii) to avoid establishing, maintaining, administering, or managing correspondent accounts in the United States for, or on behalf of, foreign banks that do not have a physical presence in any country. The USA PATRIOT Act also requires the Secretary of the Treasury to prescribe minimum standards that financial institutions must follow to verify the identity of customers, both foreign and domestic, when a customer opens an account. In addition, the USA PATRIOT Act contains a provision encouraging cooperation among financial institutions, regulatory authorities and law enforcement authorities with respect to individuals, entities and organizations engaged in, or reasonably suspected of engaging in, terrorist acts or money laundering activities. Most specific provisions took effect October 1, 2003. At this time, the provisions of the USA PATRIOT Act will not have a material impact on the business of Great Western and its subsidiaries.

On July 30, 2002, the President signed into law the Sarbanes-Oxley Act of 2002 (the “Act”), which mandated a variety of reforms intended to address corporate and accounting fraud. The Act provides for the establishment of a new Public Company Accounting Oversight Board (“PCAOB”), which will enforce auditing, quality control and independence standards for firms that audit SEC reporting companies and will be funded by fees from all SEC reporting companies. The Act imposes higher standards for auditor independence and restricts provision of consulting services by auditing firms to companies they audit and in addition, certain audit partners must be rotated periodically. The Act requires chief executive officers and chief financial officers, or their equivalents, to certify to the accuracy of periodic reports filed with the SEC, subject to civil and criminal penalties if they knowingly or willfully violate this certification requirement. In addition, under the Act, counsel will be required to report specific violations; directors and officers of issuer, and persons who directly or indirectly are beneficial owners of more than 10 percent of any class of equity security which is registered pursuant to Section 12 must report changes in their ownership of a company’s registered securities; and executives will have restrictions on trading, and loans. The Act also increases the oversight and authority of audit committees of publicly traded companies. Although Great Western anticipates it will incur

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additional expense in complying with the provisions of the Act and the related rules, management does not expect that such compliance will have a material impact on Great Western’s financial condition or results of operation. Certain provisions of the Act were effective immediately upon passage or at various times in fiscal 2003 and 2004. Other provisions of the Act will be effective after fiscal 2004.

The Check Clearing for the 21^st Century Act, also known as Check 21, which becomes effective on October 28, 2004 is expected to revamp the way banks process checks. Check 21 will facilitate check truncation, a process which eliminates the original paper check from the clearing process. Instead, many checks will be processed electronically. Under Check 21, as a bank processes a check, funds from the check writer’s account are transferred to the check depositor’s account, and an electronic image of the check, a processable printout known as a substitute check or Image Replacement Document (IRD), will be considered the legal equivalent of the original check. Banks can choose to send substitute checks as electronic files to be printed on-site or in close proximity to the paying bank. For financial institutions and their clients, these changes have the potential to reduce costs, improve efficiency in check collections and accelerate funds availability, while alleviating dependence on the national transportation system.

GREAT WESTERN

General. Great Western is a bank holding company registered under the Bank Holding Company Act of 1956 and is subject to regulation, supervision and examination by the Federal Reserve. Great Western is required to file an annual report and other reports as the Federal Reserve now requires or may require.

Acquisitions. As a bank holding company, Great Western is required to obtain the prior approval of the Federal Reserve before acquiring direct or indirect ownership or control of more than 5% of the voting shares of a bank or bank holding company. The Federal Reserve will not approve any acquisition, merger or consolidation that would have a substantial anti-competitive result, unless the anti-competitive effects of the proposed transaction are outweighed by a greater public interest in meeting the needs and convenience of the public. The Federal Reserve also considers managerial, capital and other financial factors in acting on acquisition or merger applications.

Permissible Activities. Subject to limited exceptions, a bank holding company may not engage in, or acquire direct or indirect control of more than 5% of the voting shares of any company engaged in a non-banking activity, unless this activity has been determined by the Federal Reserve to be closely related to banking or managing banks. The Federal Reserve has identified specific non-banking activities in which a bank holding company may engage with notice to, or prior approval by, the Federal Reserve.

Capital Adequacy. The Federal Reserve monitors the regulatory capital adequacy of bank holding companies. As discussed below, Great Western’s banks are also subject to the regulatory capital adequacy requirements of the FDIC and Nebraska, South Dakota, and Iowa regulations, as applicable. The Federal Reserve uses a combination of risk-based guidelines and leverage ratios to evaluate the regulatory capital adequacy of Great Western.

The Federal Reserve has adopted a system using risk-based capital adequacy guidelines to evaluate the regulatory capital adequacy of bank holding companies on a consolidated basis. Under the risk-based capital guidelines, different categories of assets are assigned different risk weights, based generally on the perceived credit risk of the asset. These risk weights are

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multiplied by corresponding asset balances to determine a risk-weighted asset base. Some off balance sheet items, such as loan commitments in excess of one year, mortgage loans sold with recourse and letters of credit, are added to the risk-weighted asset base by converting them to a balance sheet equivalent and assigning to them the appropriate risk weight. For purposes of the regulatory risk-based capital guidelines, total capital is defined as the sum of core and supplementary capital elements, with supplementary capital being limited to 100% of core capital. For bank holding companies, core capital, also known as Tier I capital, generally includes common stockholders’ equity, perpetual preferred stock and minority interests in consolidated subsidiaries less the unamortized balance of intangible assets. No more than 25% of core capital may be comprised of cumulative preferred stock including the Trust Preferred Securities of its subsidiaries. Supplementary capital, also known as Tier II capital, generally includes certain forms of perpetual preferred stock and cumulative preferred stock not included in core capital, as well as maturing capital instruments, and the allowance for loan losses limited to 1.25% of risk-weighted assets. The regulatory guidelines require a minimum ratio of total capital to risk-weighted assets of 8% to be adequately capitalized, of which at least 4% should be in the form of core capital.

At June 30, 2004, Great Western’s Tier I capital was $140,099,000.

In addition to the risk-based capital guidelines, the Federal Reserve and the FDIC use a leverage ratio as an additional tool to evaluate the capital adequacy of banks and bank holding companies. The leverage ratio is defined to be a company’s core capital divided by its average tangible assets for the preceding quarter. Based upon the current capital status of Great Western, the applicable minimum required leverage ratio is 4%. Great Western’s leverage ratio at June 30, 2004 was 5.90%.

The table below presents Great Western’s applicable regulatory capital ratios at June 30, 2004:


Ratio	Actual		Minimum Required
Tier I Capital to Average Assets	5.90	%	4.00	%
Tier I Capital to Risk-Weighted Assets	7.21	%	4.00	%
Total Capital to Risk-Weighted Assets	13.20	%	8.00	%

Failure to meet the regulatory capital guidelines may result in the initiation by the Federal Reserve of appropriate supervisory or enforcement actions. All three of Great Western’s capital ratios were above the minimum required as of June 30, 2004.

THE BANKS

General. Great Western owns three banks: Great Western Bank, Omaha, Nebraska, a Nebraska banking corporation with 17 banking locations; Great Western Bank, Watertown, South Dakota, a South Dakota banking corporation with 23 banking locations; and Great Western Bank, Clive, Iowa, an Iowa corporation with 31 banking locations. The FDIC insures the deposits of each bank and the banks are subject to supervision and regulation by the FDIC. In addition, Great Western Bank, Omaha is regulated by the Nebraska Department of Banking and Finance; the South Dakota Division of Banking regulates Great Western Bank, Watertown; and the Iowa Division of Banking regulates Great Western Bank, Clive.

Permissible Activities. No state bank may engage in any activity not permitted for national banks, unless the institution complies with applicable capital requirements and the FDIC

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determines that the activity poses no significant risk to its Bank Insurance Fund. None of Great Western’s banks is presently involved in the types of activities covered by this limitation. Under the Financial Modernization Act and rules adopted pursuant thereto, banks may create financial subsidiaries to engage in activities that are “financial in nature.” None of Great Western’s bank subsidiaries have elected to do so, but may do so in the future.

Community Reinvestment Act. Enacted in 1977, the federal Community Reinvestment Act (“CRA”) has become important to financial institutions, including their holding companies. This allows regulators to turn down an applicant seeking to make an acquisition or establish a branch unless it has performed satisfactorily under CRA. Satisfactory performance means meeting adequately the credit needs of the communities the applicant serves. The applicable federal regulators regularly conduct examinations to assess the performance of financial institutions. During their most recent examinations, ratings of satisfactory were received by each of Great Western’s banks. As a result, management believes that the banks’ performance under CRA will not impede regulatory approvals of any proposed acquisitions or branches.

Examinations. The FDIC examines Great Western’s banks from time to time. Based upon an evaluation, the examining regulator may revalue the assets of an insured institution and require that it establish specific reserves to compensate for the difference between the value determined by the regulator and the book value of Great Western’s assets. The state bank regulators also conduct examinations of state-chartered banks. State bank regulators may accept the results of a federal examination in lieu of conducting an independent examination. South Dakota, Iowa and Nebraska regulators have the authority to revalue the assets of a state-chartered institution and require it to establish reserves.

Capital Adequacy. The FDIC has adopted regulations establishing minimum requirements for the capital adequacy of insured institutions. The requirements address both risk-based capital and leverage capital, with risk-based assets and core and supplementary capital being determined in essentially the same manner as described above for bank holding companies. The FDIC may establish higher minimum requirements if, for example, a bank has previously received special attention or has a high susceptibility to interest rate risk.

The FDIC risk-based capital guidelines require state non-member banks to have a minimum ratio of core capital to total risk-weighted assets of 4% and a minimum ratio of total capital to total risk-weighted assets of 8%.

The FDIC leverage guidelines require that state banks maintain core capital of no less than 3% and up to 5% of total tangible assets. The applicable guideline for Great Western’s banks is estimated to be 4%. Banks with regulatory capital ratios below the required minimum are subject to administrative actions, including the termination of deposit insurance upon notice and hearing, or a temporary suspension of insurance without a hearing in the event the institution has no tangible capital.

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The table below presents the regulatory capital ratios of the Great Western banks at June 30, 2004:


Ratio	Great Western Bank, Watertown		Great Western Bank, Omaha		Great Western Bank, Clive		Minimum Required
Tier I capital to average assets	8.40	%	8.23	%	7.89	%	4.00	%
Tier I capital to risk-weighted assets	10.52	%	9.37	%	10.47	%	4.00	%
Total capital to risk-weighted assets	11.55	%	10.52	%	11.72	%	8.00	%

The Federal Deposit Insurance Corporation Improvement Act of 1991 established five regulatory capital categories: well capitalized, adequately capitalized, undercapitalized, severely undercapitalized and critically undercapitalized. An institution is critically undercapitalized if it has a tangible equity to total assets ratio that is equal to or less than 2%. An institution is well capitalized if it has a total risk-based capital ratio of 10% or greater, Tier I risk-based capital ratio of 6% or greater, and a Tier I leverage capital ratio of 5% or greater, and the institution is not subject to an order, written agreement, capital directive, or prompt corrective action directive to meet and maintain a specific capital level for any capital measure. An institution is adequately capitalized if it has a total risk-based capital ratio of not less than 8%, a Tier I risk-based capital ratio not less than 4% and a leverage ratio of not less than 4%. Under these regulations, as of June 30, 2004, the Great Western banks were well capitalized.

The Basel Committee on Banking Supervision continues to evaluate certain aspects of the proposed New Basel Capital Accord. The New Basel Capital Accord incorporates three pillars that address: (a) minimum capital requirements, (b) supervisory review, which relates to an institution’s capital adequacy and internal assessment process, and (c) market discipline, through effective disclosure to encourage safe and sound banking practices. Embodied within these pillars are aspects of risk assessment that relate to credit risk, interest rate risk, operational risk, among others, and certain proposed approaches by the Basel Committee to complete such assessments may be considered complex. The Company continues to monitor the status of the New Basel Capital Accord.

Federal regulations require the federal banking regulators to take prompt corrective action to resolve the problems of depository institutions, including capital-deficient institutions. In addition to requiring the submission of a capital restoration plan, the regulations contain broad limits on activities of institutions which are less than adequately capitalized, involving asset growth, acquisitions, branch establishment, and expansion into new lines of business. With limited exceptions, an insured depository institution is prohibited from making capital distributions, including dividends, and is prohibited from paying management fees to control persons if the institution would be undercapitalized after any distribution or payment.

As an institution’s capital decreases, the powers of the federal regulators become greater. An undercapitalized or severely undercapitalized institution is subject to mandated capital raising activities, restrictions on interest rates paid and transactions with affiliates, removal of management, and other restrictions. The regulators have limited discretion in dealing with a critically undercapitalized institution and are virtually required to appoint a receiver or conservator if the capital deficiency is not corrected promptly.

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Real Estate Lending Evaluations. The federal regulators have adopted uniform standards for evaluations of loans secured by real estate or made to finance improvements to real estate. Banks are required to establish and maintain written internal real estate lending policies consistent with safe and sound banking practices and appropriate to the size of the institution and the nature and scope of its operations. The regulations establish loan to value ratio limitations on real estate loans. Great Western’s banks’ loan policies establish limits on loan to value ratios that are equal to or less than those established in such regulations.

Interstate Banking Legislation. Federal legislation effective September 1995 eliminated many of the historical barriers to the acquisition of banks by out-of-state bank holding companies. This law facilitates the interstate expansion and consolidation of banking organizations by permitting: (1) bank holding companies, that are adequately capitalized and managed, to acquire banks located in states outside their home states regardless of whether acquisitions are authorized under the laws of the host state; (2) the interstate merger of banks, subject to the right of individual states either to pass legislation providing for earlier effectiveness of mergers or to opt out of this authority after June 1, 1997; (3) banks to establish new branches on an interstate basis provided that this action is specifically authorized by the law of the host state; (4) foreign banks to establish, with approval of the appropriate regulators in the United States, branches outside their home states to the same extent that national or state banks located in that state would be authorized to do so; and (5) banks to receive deposits, renew time deposits, close loans, service loans and receive payments on loans and other obligations as agent for any bank or thrift affiliate, whether the affiliate is located in the same or different state. In August 2001, each of Great Western’s subsidiary banks executed an agency agreement appointing each of the other subsidiary banks as its agent to receive deposits, renew time deposits, close loans, service loans and receive payments on loans and other obligations to the full extent permitted by applicable law and regulation.

Financial Modernization Act (Gramm-Leach-Bliley Act). Banks that elect to create “financial subsidiaries” may engage in activities that are financial in nature, including:

•

Lending, exchanging, transferring, investing for others, or safeguarding money or securities;

•

Engaging as agent or broker in any state for purposes of insuring, guaranteeing, or indemnifying against loss, harm, damage, illness, disability, death, defects in title, or providing annuities as agent or broker.

•

Providing financial, investment, or economic advisory services, including advising an investment company;

•

Issuing or selling annuities representing interests in pools of assets permissible for a bank to hold directly;

•

Underwriting, dealing in, or making a market in securities;

•

Engaging in activities that the Federal Reserve has determined to be so closely related to banking or managing or controlling banks as to be a proper incident thereto;

•

Activities that the Federal Reserve has found to be usual in connection with the transaction of banking or other financial operations abroad;

•

Additional activities that the Secretary of the Treasury in consultation with the Federal Reserve determines to be financial in nature or incidental to a financial activity; and

•

Activities that may be conducted by an operating subsidiary.

None of Great Western’s bank subsidiaries have elected to create financial subsidiaries.

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CHANGING REGULATORY STRUCTURE

Various legislation, including proposals to change substantially the financial institution regulatory system is from time to time introduced in Congress. This legislation may change banking statues and the operating environment of the Company in substantial and unpredictable ways. If enacted, this legislation could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. The Company cannot predict whether any of this potential legislation will be enacted and, if enacted, the effect that it or any implementing regulations, would have on the Company’s business, results of operations or financial condition.

One of the major additional requirements imposed on the banking industry is the increased authority of federal agencies to regulate the activities of federal and state banks and their holding companies. The Federal Reserve, the Comptroller of the Currency and the FDIC have extensive authority to police unsafe or unsound practices and violations of applicable laws and regulations by depository institutions and their holding companies. These agencies can assess civil money penalties. Other laws such as the Sarbanes-Oxley Act of 2002 have expanded the agencies’ authority in recent years, and the agencies have not yet fully tested the limits of their powers. In addition, the South Dakota Division of Banking, Iowa Division of Banking and Nebraska Department of Banking and Finance, possess broad enforcement powers to address violations of their banking laws by banks chartered in their respective states.

ECONOMIC ENVIRONMENT

The policies of regulatory authorities, including the monetary policy of the Federal Reserve, have a significant effect on the operating results of bank holding companies and their subsidiaries. Among the means available to the Federal Reserve to affect the money supply are open market operations in U.S. Government securities, changes in the discount rate on member bank borrowings, and changes in reserve requirements against member bank deposits. These means are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may affect interest rates charged on loans or paid on deposits.

The Federal Reserve’s monetary policies have materially affected the operating results of commercial banks in the past and are expected to continue to do so in the future. The nature of future monetary policies and the effect of these policies on the business and earnings of Great Western and its subsidiaries cannot be predicted.

In their strategic plan, management states that the Company’s goal over the next three years is to achieve profitable growth of 10% each year in asset size and after-tax net earnings, while maintaining safe and sound operations in compliance with all relevant laws and regulations. Great Western will also remain alert to acquisition opportunities, and uses its capital to make acquisitions of community banks, charter new institutions and establish new branches.

ITEM 2. PROPERTIES

The offices of Great Western are located in a leased one-story building located at 10834 Old Mill Road, Suite One, Omaha, Nebraska 68154. Great Western, through its subsidiaries, currently operates 71 banking offices.

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At June 30, 2004, Great Western, through its subsidiaries, owned the buildings for 55 of its branch offices and leased the remaining 16 offices. All leased properties are leased from unaffiliated third parties. We believe each of our facilities is in good condition, adequately covered by insurance and sufficient to meet the needs at that location for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

Great Western and its subsidiary banks are from time to time parties to various legal actions arising in the normal course of business. Management of Great Western believes there is no proceeding threatened or pending against Great Western or its subsidiary banks, which, if determined adversely, would have a material adverse effect on the financial condition or results of operations of Great Western.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders, through solicitation of proxies or otherwise, during the quarter ended June 30, 2004.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION AND HOLDERS

There is no established public trading market for any class of common equity of Great Western Bancorporation, Inc. or any of its subsidiaries.

As of August 31, 2004, there were 123,802 shares of common stock issued and outstanding that were held by 23 shareholders of record.

DIVIDENDS

Common stock dividends declared for fiscal year 2004 totaled $820,000, or $6.60 per common share, compared to $751,000 or $6.00 per common share in fiscal year 2003. In 2002, dividends of $751,000, or $6.00 per common share were declared.

Frequency (quarterly) and amount of cash dividends per common share declared were as follows:


	Year ended June 30, 2004
	First		Second		Third		Fourth
Cash dividends declared	$	1.65	$	1.65	$	1.65	$	1.65


	Year ended June 30, 2003
	First		Second		Third		Fourth
Cash dividends declared	$	1.50	$	1.50	$	1.50	$	1.50

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Dividend Restrictions. Dividends paid by Great Western’s banks provide substantially all of the operating and investing cash flow of Great Western. Great Western’s banks are subject to legal limitations on the frequency and amount of dividends that may be paid to Great Western. Under South Dakota and Nebraska law, the approval of the principal regulator is required prior to the declaration of any dividend by a bank if the total of all dividends declared in any calendar year exceeds the total of its net profits of that year to date combined with its retained net profits for the preceding two years. Under Iowa law, a bank may declare and pay dividends only out of undivided profits and only if not restricted by the principal regulator. The Iowa principal regulator requires that Iowa state banks maintain an adjusted equity capital ratio of not less than 6.5% of adjusted assets plus a fully funded allowance for loan losses unless the principal regulator approves a lower ratio. An Iowa state bank operating below the minimum requirement would be subject to immediate dividend restriction; a request for immediate capital injection and/or a possible cease and desist order. The Nebraska principal regulator requires a total capital to asset ratio of 6%, excluding intangibles other than purchased mortgage servicing rights. At least 5.5% must be primary capital, which includes all equity capital accounts plus allowances for loan and lease losses. In addition, either the applicable state banking regulator or the FDIC has the power to prohibit Great Western’s banks from paying dividends if such payments would constitute unsafe or unsound banking practices or cause the bank to be undercapitalized. See Note 12 to the Consolidated Financial Statements.

ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected consolidated financial data for Great Western for each of the years in the five-year period ended June 30, 2004. The data set forth below includes the accounts of Iowa State Bank, Hamburg, Iowa and United National Bank of Iowa, Sidney, Iowa from August 1, 2000, the effective date of acquisition of those banking subsidiaries of Hamburg Financial, Inc., the accounts of Great Western Bank, Omaha, Nebraska from March 23, 2001, the effective date of acquisition of that banking subsidiary of Great Western Securities, the accounts of Founders Trust National Bank, Sioux Falls, South Dakota (“Founders”) from March 31, 2001, the date of acquisition of Founders, the accounts of First Western Bank, N.A., Atkinson, Nebraska (“First Western”) and Marquette Bank Nebraska, N.A., O’Neill, Nebraska (“Marquette”) from February 28, 2002, the date of acquisition of First Western and Marquette, the accounts of Peoples Bank, Overland Park, Kansas (“Peoples”) from December 13, 2002, the date of acquisition of Peoples and the accounts of six branches of Bank Midwest, N.A. from February 23, 2004, the date of their acquisition by Great Western Bank, Clive. The completed acquisitions were accounted for under the purchase method of accounting.

The following table should be read in conjunction with the consolidated financial statements of Great Western and the notes thereto appearing elsewhere in this report and the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

The merger of Great Western and Citizens Corporation on August 7, 2000 has been accounted for at historical cost and, accordingly, the consolidated financial statements prior to the combination have been restated to include the accounts and results of operations of Great Western and Citizens Corporation. See “Certain Relationships and Related Party Transactions.” The selected consolidated financial data below takes into account this restatement.

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	At or for the year ended June 30,
	2004			2003			2002			2001			2000
	(dollars in thousands, except per common share data)
Consolidated statements of income:
Interest income	$	123,485		$	125,070		$	127,915		$	91,669		$	61,363
Interest expense		42,063			48,205			60,181			51,825			31,515
Net interest income		81,422			76,865			67,734			39,844			29,848
Provision for loan losses		4,324			4,371			6,067			2,618			2,036
Other income		31,258			31,354			21,897			11,467			7,233
Other expenses		68,360			77,460			62,318			33,831			21,057
Income taxes		14,085			9,839			7,393			4,922			4,440
Minority interest in earnings of subsidiaries		580			618			636			522			404
Net income		25,331			15,931			13,217			9,418			9,144
Per common share data:
Basic earnings per share	$	198.18		$	121.61		$	98.36		$	101.16		$	113.62
Dividends		6.60			6.00			6.00			18.01			12.45
Tangible book value per share⁽¹⁾		587.03			523.18			393.63			306.56			483.05
Consolidated balance sheets:
Assets	$	2,429,909		$	2,148,069		$	2,012,157		$	1,782,122		$	850,776
Loans, net of unearned income⁽²⁾		1,854,858			1,621,212			1,496,200			1,303,049			634,757
Allowance for loan losses		22,643			21,251			20,344			18,955			8,197
Deposits		1,914,064			1,735,030			1,635,967			1,421,090			691,535
Long term notes payable		140,794			140,175			123,157			116,646			50,932
Company obligated mandatorily redeemable preferred securities of subsidiary trust holding solely subordinated debentures		—			58,000			48,000			48,000			20,400
Subordinated debentures		108,862			—			—			—			—
Nonperforming assets		16,972			14,667			19,960			21,164			9,567
Stockholders’ equity		139,120			126,374			110,163			96,926			47,822
Key ratios:
Net interest margin⁽³⁾		3.97	%		4.06	%		4.01	%		3.79	%		4.21	%
Return on average assets		1.11			0.76			0.71			0.82			1.19
Return on average stockholders’ equity		19.51			13.45			12.76			14.53			19.67
Nonperforming loans to loans, net of unearned income		0.77			0.77			1.17			1.53			1.49
Net loans charged-off to average loans, net of unearned income		0.17			0.22			0.41			0.27			0.10
Dividend payout ratio		3.33			4.93			6.10			17.80			10.96
Allowance for loan losses to loans, net of unearned income		1.22			1.31			1.36			1.45			1.29
Allowance for loan losses to nonperforming loans		157.86			170.57			116.49			94.85			86.70
Tier I risk-based capital		7.21			6.76			6.21			6.06			9.80
Total risk-based capital		13.20			11.19			10.56			11.17			11.60
Tier I leverage ratio		5.90			5.55			5.00			4.88			7.20
Stockholders’ equity to assets		5.73			5.88			5.47			5.44			5.62
Ratio of earnings to fixed charges⁽⁴⁾:
Including interest on deposits		1.90x			1.51x			1.32x			1.28x			1.43x
Excluding interest on deposits		3.77x			2.86x			2.33x			2.50x			3.32x

⁽¹⁾	Stockholders’ equity less preferred stock less goodwill and core deposit and other intangibles, divided by period end shares of common stock outstanding.

⁽²⁾	Before allowance for loan losses.

⁽³⁾	On a tax equivalent basis.

⁽⁴⁾

The ratio of earnings to combined fixed charges and preference security dividends is computed by dividing (x) the sum of income before income taxes and fixed charges by (y) fixed charges and dividends on Great Western’s series 1, 2, 3, 4 and 5 Preferred Securities. Fixed charges consist of interest on borrowings, amortization of debt issuance expense, and implicit interest on leases.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following is management’s discussion and analysis of the financial condition and results of the operation of Great Western. It is intended to explain certain financial information regarding Great Western and should be read in conjunction with the Consolidated Financial Statements, related Notes, and the Five Year Summary of Selected Financial Data included in this report.

Great Western Bancorporation, Inc., is a multi-bank holding company, with locations in Nebraska, South Dakota, southern Iowa, northern Missouri and northeastern Kansas. To serve its customers, Great Western’s banks conduct community banking operations through their branch networks. Operations focus on offering deposits, making loans and providing customers with a full array of financial products and a high level of customer service. In addition to these services, Great Western’s banks provide insurance, securities brokerage and other retail financial services.

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CRITICAL ACCOUNTING POLICIES

The “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and disclosures included within this Form 10-K Annual Report, are based on Great Western’s audited consolidated financial statements. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, management evaluates the estimates used, including the adequacy of the allowance for loan losses, and a valuation of mortgage servicing rights and intangibles. Estimates are based upon historical experience, current economic conditions and other factors that management considers reasonable under the circumstances. These estimates result in judgments regarding the carrying values of assets and liabilities where these values are not readily available from other sources, as well as assessing and identifying the accounting treatments of commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions. Great Western’s significant accounting policies are described in the “Notes to Consolidated Financial Statements” under “Nature of Operations and Summary of Significant Accounting Policies.” Three of Great Western’s more critical accounting policies involve the more significant judgments and assumptions used in the preparation of the consolidated financial statements; these are related to the allowance for loan losses, mortgage servicing rights and intangibles.

Provision and allowance for loan losses. The allowance for loan losses is established through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Great Western has policies and procedures for evaluating the overall credit quality of its loan portfolio including timely identification of potential problem credits. On a quarterly or more frequent basis, management reviews the allowance for loan losses to determine it is adequate. This review and analysis is based on:

•

Internal monitoring and reporting system

•

Economic conditions, including duration of the current cycle

•

Past experience, including recent loss experience

•

Credit quality trends

•

Collateral values

•

Volume, composition, and growth of the loan portfolio

•

Specific credits and industry conditions

•

Results of bank regulatory and internal credit exams

•

Actions by the Federal Reserve Board

•

Existence and effects of concentrations of credit

•

Delay in receipt of information to evaluate loans or confirm existing credit deterioration

To the extent actual results differ from forecasts and management’s judgment, the allowance for loan losses may be greater or less than future charge-offs.

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Mortgage servicing rights. Mortgage servicing rights are established based on the cost of acquiring the right to service mortgage loans. These costs are initially capitalized and then amortized over the period of estimated future net servicing income based on the ratio of net servicing income received in the current period to total net servicing income projected to be realized from the mortgage servicing rights. Projected net servicing income is determined on the basis of the future projected balances of loans after scheduled loan amortization and estimated prepayments. Great Western has retained an independent outside company to estimate future prepayment rates based on relevant characteristics of the servicing portfolio, such as loan types, interest rate stratification and recent prepayment experience, as well as current rate levels, market forecasts and other economic conditions.

Great Western reports mortgage servicing rights at the lower of amortized cost or fair value. The carrying value of mortgage servicing rights is adjusted by estimated impairment losses. The fair value of mortgage servicing rights is determined based on the present value of estimated expected future cash flows, using assumptions as to current market discount rates and prepayment speeds. Mortgage servicing rights are stratified by loan type and interest rate for purposes of impairment measurement. Loan types include fixed-rate, balloon, government, conventional and adjustable-rate mortgage loans. See Note 8 to the Consolidated Financial Statements. Impairment losses are recognized in the following manner:

The mortgage servicing assets are stratified based on predominant risk characteristics.

Impairment losses are recorded as reductions in the carrying value of the asset through a valuation allowance for each individual stratum with a corresponding increase to amortization expense. The amount of impairment equals the carrying amount for a particular stratum minus its fair market value.

The valuation allowance is adjusted to reflect changes in the measurement of impairment after the initial measurement of impairment, based on market conditions.

Intangibles. Intangible assets consist of goodwill, core deposit intangibles, an unidentifiable intangible asset related to a branch acquisition, and client listing and franchise costs. Goodwill represents the excess of the acquisition cost over the fair value of the net assets acquired in the purchase of subsidiaries. Core deposit intangibles represent the identifiable intangible value assigned to core deposit bases arising from purchase acquisitions. The unidentifiable intangible asset represents the excess of liabilities assumed over the fair value of net assets acquired in a purchase of a failed financial institution. This unidentifiable asset was reclassified to goodwill on July 1, 2002 in applying Financial Accounting Standards Board (FASB) Statement No.147. Client listing intangible represents the identifiable intangible value assigned to a client listing arising from a purchase acquisition. Franchise intangible represents a contractual arrangement under which the franchiser grants the franchisee the right to perform certain functions within a designated geographical area.

Goodwill is tested for impairment at least annually. Other intangible assets are reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset is not recoverable.

MERGERS AND ACQUISITIONS

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Peoples Bank had one location, which at closing became a branch of Great Western Bank, Omaha. The results of operation of Peoples Bank after the date of acquisition are included in the consolidated financial statements.

A summary of the fair value of net assets acquired and net cash and cash equivalents received (in thousands) on the date of acquisition is as follows:


	Peoples Bank
Assets acquired:
Securities	$	390
Loans receivable		2,910
Other assets		22
Premises and equipment		65
Goodwill		2,017
Intangible assets		304
Liabilities assumed:
Deposits		(24,379	)
Other liabilities		(108	)

Net cash and cash equivalents received	$	(19,139	)

On September 30, 2002, Great Western acquired 1,688 shares (4.76%) of the common stock of Great Western Bank, Clive for $673,288 in cash from a minority shareholder. The transaction was accounted for as a purchase.

In October 2002, Great Western purchased a total of 24 shares of common stock of Great Western Bank, Watertown, from two minority shareholders for $90,765. This transaction was accounted for as a purchase.

On January 24, 2003, Great Western purchased from minority shareholders 180 shares of common stock and 1,800 shares of preferred stock in its subsidiary Great Western Bank, Rapid City (formerly Rushmore Bank & Trust), for $2,111,492. This transaction was accounted for as a purchase.

On February 21, 2003, Citizens Bank, Mt. Ayr, Iowa and Citizens Bank of Princeton, Princeton, Missouri merged with and into Citizens Bank, Clive, Iowa. All three banks were 100.0% owned subsidiaries of Great Western. In addition, on March 29, 2003, the surviving bank was renamed Great Western Bank (“Great Western Bank, Clive”). Management of Great Western does not expect the merger to have a material effect on the business or earnings of Great Western. The merger was accounted for at historical cost and, accordingly, the merger did not require any restatement of financial statements on a consolidated basis.

On March 3, 2003, Rushmore Bank and Trust, Rapid City, South Dakota and F & M Bank, Watertown, South Dakota were renamed Great Western Bank.

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On March 17, 2003, Spectrum Banc Service Corporation was renamed Great Western Service Corporation.

On May 29, 2003, Spectrum Bancorporation, Inc. was renamed Great Western Bancorporation, Inc. (“Great Western”). In addition, on May 29, 2003, Spectrum Capital Trust I and Spectrum Capital Trust II were renamed GWB Capital Trust I and GWB Capital Trust II, respectively. Spectrum Capital Trust III was renamed GWB Capital Trust III on August 7, 2003.

In May 2003, Great Western Bank, Watertown purchased a total of 40 shares of common stock of Great Western Bank, Watertown from minority shareholders for $155,412. This transaction was accounted for as a purchase.

In May 2003, Great Western Bank, Watertown sold a total of 200 shares of common stock of Great Western Bank, Watertown to a minority shareholder for $1,165,587.

On May 30, 2003, Great Western Bank, Rapid City, South Dakota merged with and into Great Western Bank, Watertown, South Dakota. Management of Great Western does not expect the merger to have a material effect on the business or earnings of Great Western. The merger was accounted for at historical cost and, accordingly, the merger did not require any restatement of financial statements on a consolidated basis.

On February 23, 2004, Great Western Bank, Clive acquired six branches located in Albany, Bethany, Grant City, Milan, Sheridan, and Unionville, Missouri from Bank Midwest N.A. The results of operation of the six branches after the date of acquisition are included in the consolidated financial statements. The average amortization period for the core deposit and other intangible assets is five years.

A summary of the fair value of net assets acquired and net cash and cash equivalents received (in thousands) on the date of acquisition is as follows:


	Bank Midwest N.A.
Assets acquired:
Loans receivable	$	31,972
Other assets		249
Premises and equipment		1,870
Goodwill		5,917
Intangible assets		1,184
Liabilities assumed:
Deposits		(123,133	)
Other liabilities		(457	)

Net cash and cash equivalents received	$	(82,398	)

Great Western entered into an Agreement and Plan of Merger on June 28, 2004 with First State Bancorp, Inc., a Missouri corporation and Farmers Bank of Portageville, (“Farmers”) a Missouri banking corporation. Great Western also entered into a Purchase and Assumption Agreement dated June 28, 2004 with First State Bank & Trust Company, Inc., and First State Bancorp, Inc. Farmers, is expected to merge into Great Western Bank, Omaha so that Great Western Bank can open a Missouri branch in metropolitan Kansas City immediately upon consummation of the merger.

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At no time will Great Western actually operate the banking offices of Farmers acquired in the merger. The transaction is subject to final agreement and regulatory approval. If regulatory approval is received, Great Western contemplates a closing not later than October 31, 2004.

SUBSEQUENT EVENTS

On July 27, 2004, Great Western entered into a contract to acquire all of the outstanding stock of Oak Bancorporation and its subsidiaries. Oak Bancorporation owns two banks, Security State Bank, Red Oak, Iowa and Oakland State Bank, Oakland, Iowa. Approximately $88,500,000 in assets, $55,800,000 in loans and $77,700,000 in deposits will be acquired or assumed. Great Western expects to record approximately $2,100,000 of intangible assets at closing. If regulatory approval is received, Great Western expects the acquisition to close in the quarter ending December 31, 2004.

On August 18, 2004, Great Western redeemed $21,031,000 of Debentures from GWB Capital Trust I and GWB Capital Trust I redeemed all outstanding Preferred Securities (2,040,000 shares) at the $10 par value plus accumulated and unpaid Distributions. The total distribution for the redemption was $20,587,000 and was made from cash on hand. The redemption will slightly reduce liquidity, and total capital for regulatory capital ratios in the future.

RESULTS OF OPERATION

GENERAL

Net income for the year ended June 30, 2004 was $25,331,000, an increase of $9,400,000 when compared to net income of $15,931,000 for the year ended June 30, 2003. The increase in net income was a result of net interest income after provision for loan losses increasing $4,604,000, a decrease in non-interest expense of $9,100,000 and an increase in the provision for income taxes of $4,246,000. The decrease in non-interest expense was primarily due to the decreased expense of amortization of mortgage servicing rights, which includes a partial recovery of the mortgage servicing rights valuation allowance, of $13,735,000 offset by a $2,237,000 increase in salary and benefits. Net income for the year ended June 30, 2003 was $15,931,000, an increase of $2,714,000 when compared to net income of $13,217,000 for the year ended June 30, 2002. The increase in net income was a result of net interest income after provision for loan losses increasing $10,827,000 and non-interest income increasing $9,457,000; offset by an increase in non-interest expense of $15,142,000 and an increase in the provision for income taxes of $2,446,000.

Great Western’s return on average assets was 1.11% for the year ended June 30, 2004 compared to 0.76% for the year ended June 30, 2003. This increase is due to fiscal net income increasing 59.00% compared to an 8.26% increase in average assets. The net income increase was substantially affected by the reduction in amortization and valuation adjustment expense for mortgage servicing rights to $1,623,000 for the year ended June 30, 2004 compared to $15,358,000 for the year ended June 30, 2003. Great Western’s return on average assets was 0.76% for the year ended June 30, 2003 compared to 0.71% for the year ended June 30, 2002. This increase is due to fiscal net income increasing 20.53% compared to an 11.83% increase in average assets.

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NET INTEREST INCOME

Net interest income represents the amount by which interest income on interest-earning assets, including loans and securities, exceeds interest paid on interest-bearing liabilities, including deposits and other borrowed funds. Net interest income is the principal source of Great Western’s revenue. Interest rate fluctuations, as well as changes in the amount and type of interest-earning assets and interest-bearing liabilities, combine to affect net interest income.

The following table presents the average balances of Great Western for each of the last three fiscal years and indicates the interest earned or paid on each major category of interest-earning assets and interest-bearing liabilities on a tax-equivalent basis, assuming a 35% tax rate for years ended June 30, 2004 and 2003 and a 34% tax rate for the year ended June 30, 2002, and the average rates earned or paid on each major category. This analysis details the contribution of interest-earning assets and the overall impact of the cost of funds on net interest income.


	Year Ended June 30,
	2004							2003							2002
	Average Balance			Interest Income/ Expense		Yield/ Rate		Average Balance			Interest Income/ Expense		Yield/ Rate		Average Balance			Interest Income/ Expense		Yield/ Rate
	(dollars in thousands)
Interest-earning assets:
Loans, net of un-earned fees⁽¹⁾⁽²⁾	$	1,718,450		$	110,641	6.44	%	$	1,550,457		$	109,877	7.09	%	$	1,368,931		$	110,101	8.04	%
Investment securities:
Taxable		306,466			10,835	3.54	%		266,329			12,657	4.75	%		254,493			15,256	5.99	%
Tax exempt (tax equivalent)		33,359			2,542	5.95	%		42,338			2,788	6.58	%		27,545			1,956	7.10	%
Federal funds sold and other		28,902			277	0.96	%		57,083			724	1.27	%		52,755			1,267	2.40	%
Subordinated debentures		815			80	9.82	%		—			—	—			—			—	—

Total interest-earning assets	$	2,087,992		$	124,375	5.96	%	$	1,916,207		$	126,046	6.58	%	$	1,703,724		$	128,580	7.55	%

Interest-bearing liabilities:
Demand, savings and money market deposits	$	676,786		$	4,641	0.69	%	$	601,694		$	6,318	1.05	%	$	522,953		$	12,736	2.44	%
Time deposits		870,107			24,387	2.80	%		850,483			29,475	3.47	%		794,661			33,884	4.26	%

Total interest-bearing deposits		1,546,893			29,028	1.88	%		1,452,177			35,793	2.46	%		1,317,614			46,620	3.54	%
Federal Home Loan Bank borrowings, federal funds purchased and securities sold under agreements to repurchase		205,800			5,028	2.44	%		130,850			4,947	3.78	%		140,218			5,866	4.18	%
Notes payable		40,638			1,969	4.85	%		46,200			2,397	5.19	%		49,835			2,955	5.93	%
Company obligated mandatorily redeemable preferred securities		29,224			2,602	8.90	%		55,500			5,068	9.13	%		48,000			4,740	9.88	%
Subordinated debentures		46,220			3,436	7.43	%		—			—	—			—			—	—

Total interest-bearing liabilities	$	1,868,774		$	42,063	2.25	%	$	1,684,727		$	48,205	2.86	%	$	1,555,667		$	60,181	3.87	%

Net interest income				$	82,312						$	77,841						$	68,399

Interest rate spread⁽³⁾						3.68	%						3.72	%						3.68	%
Net interest margin⁽⁴⁾						3.92	%						4.06	%						4.01	%
Ratio of average interest-bearing liabilities to average interest-earning assets		89.10	%						87.92	%						91.31	%

⁽¹⁾

The data includes the accounts of Peoples Bank from December 28, 2002, the date of its acquisition, those of First Western, and Marquette from February 28, 2002, the date of their acquisition and the branches of Bank Midwest, N.A. from February 23, 2004, the date of their acquisition. The acquisitions were accounted for under the purchase method of accounting.

⁽²⁾	Nonaccrual loans are included in the Average Balance columns and income recognized on these loans, if any, is included in the Interest Income/Expense columns.

⁽³⁾	The interest rate spread is the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

⁽⁴⁾	The net interest margin is equal to net interest income (on a tax equivalent basis) divided by average interest-earning assets.

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Net interest income, on a tax-equivalent basis, was $82,312,000 for the year ended June 30, 2004, an increase of $4,471,000 from $77,841,000 in 2003. This increase resulted from an increase of $171,785,000 in average interest-earning assets to $2,087,992,000 for the year ended June 30, 2004, from $1,916,207,000 in 2003. The majority of the asset growth occurred in the loans and securities portfolios, both from acquisitions and internal growth. Average loans increased $167,993,000 to $1,718,450,000 for the year ended June 30, 2004, from $1,550,457,000 in 2003.

Interest expense decreased $6,142,000 to $42,063,000 for the year ended June 30, 2004, from $48,205,000 in 2003. The cost of interest-bearing liabilities for the year ended June 30, 2004, was 2.25% compared to 2.86% in 2003. When combined with noninterest-bearing deposits, the cost of funds was 1.98% for the year ended June 30, 2004, compared to 2.51% in 2003. The average balance of Federal Home Loan Bank borrowings, federal funds purchased, and securities sold under agreements to repurchase increased to $205,800,000 in 2004, a increase of $74,950,000 from $130,850,000 in 2003.

As a result of these factors, net interest margin, on a tax-equivalent basis, decreased to 3.92% for the year ended June 30, 2004, from 4.06% for the year ended June 30, 2003.

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Net interest income, on a tax-equivalent basis, was $77,841,000 for the year ended June 30, 2003, an increase of $9,442,000 from $68,399,000 in 2002. This increase resulted from an increase of $212,483,000 in average interest-earning assets to $1,916,207,000 for the year ended June 30, 2003, from $1,703,724,000 in 2002. The majority of the asset growth occurred in the loans and securities portfolios, both from acquisitions and internal growth. Average loans increased $181,526,000 to $1,550,457,000 for the year ended June 30, 2003, from $1,368,931,000 in 2002.

Interest expense decreased $11,976,000 to $48,205,000 for the year ended June 30, 2003, from $60,181,000 in 2002. The cost of interest-bearing liabilities for the year ended June 30, 2003, was 2.86% compared to 3.87% in 2002. When combined with noninterest-bearing deposits, the cost of funds was 2.51% for the year ended June 30, 2003, compared to 3.47% in 2002. The average balance of Federal Home Loan Bank borrowings, federal funds purchased, and securities sold under agreements to repurchase decreased to $130,850,000 in 2003, a decrease of $9,368,000 from $140,218,000 in 2002.

As a result of these factors, net interest margin, on a tax-equivalent basis, increased to 4.06% for the year ended June 30, 2003, from 4.01% for the year ended June 30, 2002.

The following table presents the changes in the components of net interest income and identifies the portion of each change due to differences in the average volume of interest-earning assets and interest-bearing liabilities and the portion of each change due to the average rate on those assets and liabilities. The changes in interest due to both volume and rate changes in the table have been allocated to volume or rate change in proportion to the absolute dollar amounts of the change in each.


	2004 vs. 2003									2003 vs. 2002
	Increase (Decrease) Due to Changes In:									Increase (Decrease) Due to Changes In:
	Volume			Rate			Total			Volume			Rate			Total
	(dollars in thousands)
Interest-earning assets:
Loans, net of unearned fees	$	11,315		$	(10,551	)	$	764		$	13,685		$	(13,909	)	$	(224	)
Investment securities: Taxable		1,726			(3,548	)		(1,822	)		683			(3,282	)		(2,599	)
Tax exempt (tax equivalent)		(645	)		399			(246	)		983			(151	)		832
Common Securities		80			—			80			—			—			—

Federal funds sold and other		(299	)		(148	)		(447	)		97			(640	)		(543	)

Total interest income		12,177			(13,848	)		(1,671	)		15,448			(17,982	)		(2,534	)

Interest-bearing liabilities:
Demand, savings and money market deposits		716			(2,393	)		(1,677	)		1,690			(8,108	)		(6,418	)
Time deposits		666			(5,754	)		(5,088	)		2,259			(6,668	)		(4,409	)

Total interest-bearing deposit expense		1,382			(8,147	)		(6,765	)		3,949			(14,776	)		(10,827	)
Federal Home Loan Bank borrowings, federal funds purchased and securities sold under agreements to repurchase		2,214			(2,133	)		81			(376	)		(543	)		(919	)
Notes payable		(277	)		(151	)		(428	)		(206	)		(352	)		(558	)
Company obligated mandatorily redeemable preferred securities		(577	)		(1,889	)		(2,466	)		703			(375	)		328
Subordinated debentures		3,436			—			3,436			—			—			—

Total interest expense		6,178			(12,320	)		(6,142	)		4,070			(16,046	)		(11,976	)

Increase (decrease) in net interest income	$	5,999		$	(1,529	)	$	4,470		$	11,378		$	(1,936	)	$	9,442

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PROVISION FOR LOAN LOSSES

The amount of the provision for loan losses is based on a quarterly or a more frequent evaluation of the loan portfolio, especially non-performing and other potential problem loans. During these evaluations, consideration is given to such factors as: management’s evaluation of specific loans; the level and composition of non-performing loans; historical loss experience; results of examinations by regulatory agencies; expectations of current economic conditions and their impact on particular industries and individual borrowers; the market value of collateral; the strength of available guarantees; concentrations of credits; and other judgmental factors. In addition, the chief credit officer of Great Western, assisted by personnel of affiliated banks performs loan review services on a periodic basis.

The provision for loan losses for the year ended June 30, 2004, was $4,324,000 compared to $4,371,000 for the year ended June 30, 2003. This represents a decrease of $47,000, or 1.08%. The decrease is due to a decline in charge offs, an increase in recoveries; and management’s assessment of risk in the loan portfolio resulting in a slight increase in the loan loss reserve. The provision for loan losses for the year ended June 30, 2003, was $4,371,000 compared to $6,067,000 for the year ended June 30, 2002. This represents a decrease of $1,696,000, or 27.95%. This decrease is due to management assessing less risk in the loan portfolio. See “Non-performing Loans” and “Allowance for Loan Losses”.

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OTHER INCOME

The following table presents Great Western’s other income for the indicated periods.


	Year Ended June 30,
	2004		2003		2002
	(dollars in thousands)
Service charges and other fees	$	14,541	$	13,080	$	10,134
Net gains from sale of loans		5,902		6,770		2,917
Loan servicing fees		3,451		3,404		3,524
Gain on securities, net		1,255		1,862		215
Trust department income		2,109		1,684		1,610
Net gains (loss) from sale of other real estate owned and other assets		296		1,206		(96	)
Other income		3,704		3,348		3,593

Total other income	$	31,258	$	31,354	$	21,897

During the year ended June 30, 2004, total other income decreased to $31,258,000 from $31,354,000 for the year ended June 30, 2003, due primarily to the decrease in net gains from sale of loans, net gain on securities and net gains from sale of other real estate owned and other assets offset by an increase in other income. Net gains from the sale of loans decreased due to the increase in long-term mortgage rates. During the year ended June 30, 2003, total other income increased to $31,354,000 from $21,897,000 for the year ended June 30, 2002, due primarily to increased service charges and other fees and net gains from sale of loans. Great Western Bank, Omaha is the only Great Western bank that services mortgage loans, pursuant to purchased and retained mortgage servicing rights.

OTHER EXPENSES

The following table presents Great Western’s other expenses for the indicated periods.


	Year Ended June 30,
	2004		2003		2002
	(dollars in thousands)
Salaries and employee benefits	$	35,560	$	33,323	$	28,851
Occupancy expense, net		4,478		4,227		3,770
Amortization and valuation adjustment for mortgage servicing rights		1,623		15,358		9,049
Data processing		3,705		3,676		3,091
Equipment expenses		2,977		2,757		2,510
Advertising		4,667		3,743		2,180
Communication expenses		2,191		2,042		1,858
Professional fees		4,092		3,165		2,711
Amortization of core deposit intangible and other intangibles		1,595		1,901		2,629
Other expenses		7,472		7,268		5,669

Total other expenses	$	68,360	$	77,460	$	62,318

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Other expenses decreased $9,100,000 or 11.75%, to $68,360,000 during the year ended June 30, 2004, from $77,460,000 for the year ended June 30, 2003. This decrease is primarily the result of a decrease in amortization and valuation adjustment of mortgage servicing rights acquired offset by an increase in salaries and employee benefits. Other expenses increased $15,142,000 or 24.30%, to $77,460,000 during the year ended June 30, 2003, from $62,318,000 for the year ended June 30, 2002. This increase is primarily the result of an increase in amortization and valuation adjustment of mortgage servicing rights acquired and an increase in salaries and employee benefits.

Salaries and employee benefits rose $2,237,000 or 6.71%, to $35,560,000 for the year ended June 30, 2004, from $33,323,000 for the corresponding period of 2003. Contributing to the increase in salaries and employee benefits were staffing increases due to acquisitions and internal growth. Salaries and employee benefits rose $4,472,000 or 15.50%, to $33,323,000 for the year ended June 30, 2003, from $28,851,000 for the corresponding period of 2002. Contributing to the increase in salaries and employee benefits were general staffing increases concurrent with internal growth.

Net occupancy expense increased $251,000, or 5.94%, to $4,478,000 for the year ended June 30, 2004, from $4,227,000 for the year ended June 30, 2003. Net occupancy costs increased due to acquisitions and internal growth. Net occupancy expense increased $457,000, or 12.12%, to $4,227,000 for the year ended June 30, 2003, from $3,770,000 for the year ended June 30, 2002. Net occupancy costs increased due to internal growth.

Amortization and valuation adjustments of mortgage servicing rights decreased $13,735,000, to $1,623,000 for the year ended June 30, 2004, from $15,358,000 for the previous year. Mortgage servicing rights amortization of $1,623,000 includes the recognition of a valuation allowance due to a change in the estimated future prepayment rates of the servicing portfolio, caused by an increasing interest rate environment in the twelve months ended June 30, 2004. A valuation allowance recovery of ($4,818,000) was recognized in the fiscal year ended June 30, 2004. Amortization and valuation adjustments of mortgage servicing rights increased $6,309,000, to $15,358,000 for the year ended June 30, 2003, from $9,049,000 for the previous year. Mortgage servicing rights amortization of $15,358,000 includes the recognition of a valuation allowance due to a change in the estimated future prepayment rates of the servicing portfolio, caused by a declining interest rate environment in the twelve months ended June 30, 2003. A valuation allowance of $4,208,000 was recognized in the fiscal year ended June 30, 2003. Great Western Bank, Omaha is currently the only Great Western bank that services mortgage loans pursuant to purchased or retained mortgage servicing rights. A decline in mortgage interest rates in future periods may result in further changes in prepayment rates and further acceleration in amortization expenses, the result of which will be estimated at the end of each quarter.

Data processing costs increased $29,000, or 0.79% to $3,705,000 for the year ended June 30, 2004, from $3,676,000 during the year ended June 30, 2003. The increase was due to acquisitions and internal growth. Data processing costs increased $585,000, or 18.93% to $3,676,000 for the year ended June 30, 2003, from $3,091,000 during the year ended June 30, 2002. The increase was due to internal growth and bank merger cost.

Equipment costs increased $220,000, or 7.98% to $2,977,000 for the year ended June 30, 2004, from $2,757,000 during the year ended June 30, 2003. The increase was due to acquisitions and internal growth. Equipment costs increased $247,000, or 9.84% to $2,757,000 for the year ended June 30, 2003, from $2,510,000 during the year ended June 30, 2002. The increase was due to internal growth.

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Advertising costs increased to $4,667,000, an increase of $924,000 or 24.69% for the year ended June 30, 2004, from $3,743,000 during the year ended June 30, 2003. The increase was due to internal growth and an increase in bank advertising. Advertising costs increased to $3,743,000, an increase of $1,563,000 or 71.70% for the year ended June 30, 2003, from $2,180,000 during the year ended June 30, 2002. The increase was due to internal growth and one time cost of marketing related to bank mergers and bank name changes.

Communication expenses increased $149,000, or 7.30%, to $2,191,000 for the year ended June 30, 2004, from $2,042,000 for the year ended June 30, 2003. Communication expenses increased for this period due to Great Western’s growth and acquisitions. These expenses increased $184,000, or 9.90%, to $2,042,000 for the year ended June 30, 2003, from $1,858,000 for the year ended June 30, 2002. These expenses increased due to internal growth.

Amortization of core deposit intangible and other intangibles was $1,595,000 for the year ended June 30, 2004 compared to $1,901,000 for the year ended June 30, 2003, and $2,629,000 for the year ended June 30, 2002. The decrease in both years is due primarily to a decrease in the amortization of the core deposit intangible asset from the acquisition of Great Western Bank, Omaha. This core deposit intangible is being amortized on an accelerated method over 5 years. See Note 1 and Note 7 to the Consolidated Financial Statements.

Professional fees increased $927,000, or 29.29%, to $4,092,000 for the year ended June 30, 2004, from $3,165,000 for the year ended June 30, 2003. Professional fees increased $454,000, or 16.75%, to $3,165,000 for the year ended June 30, 2003, from $2,711,000 for the year ended June 30, 2002. Professional fees expenses increased due to Great Western’s growth and acquisitions.

Other operating expenses include, among many other items, armored car, supplies, correspondent bank service charges, travel and entertainment, and dues and subscriptions. These expenses increased $353,000, or 3.79%, to $9,663,000 for the year ended June 30, 2004, from $9,310,000 for the year ended June 30, 2003. Other operating expenses increased for this period due to Great Western’s growth and acquisitions. These expenses increased $1,783,000, or 23.69%, to $9,310,000 for the year ended June 30, 2003, from $7,527,000 for the year ended June 30, 2002. These expenses increased due to internal growth.

FEDERAL INCOME TAX

Great Western’s consolidated income tax rate varies from statutory rates principally due to interest income from tax-exempt securities. The provision for income taxes increased by $4,246,000 to $14,085,000 for the year ended June 30, 2004, from $9,839,000 for the year ended June 30, 2003, reflecting the increase of income before taxes for the period. The provision for income taxes increased by $2,446,000 to $9,839,000 for the year ended June 30, 2003, from $7,393,000 for the year ended June 30, 2002, reflecting the increase of income before taxes for the period.

RECENT ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2003, the initial recognition and measurement provisions of FASB Interpretation No. 45 “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Guarantees of Indebtedness of Others” applied to Great Western. This Interpretation elaborates on the disclosures to be made by a guarantor about its obligations under certain guarantees issued.

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It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The Interpretation also identifies several situations where the recognition of a liability at inception for a guarantor’s obligation is not required. The Interpretation expands on the accounting guidance of FASB No. 5 “Accounting for Contingencies,” FASB No. 57 “Related Party Disclosures” and FASB No. 107 “Disclosures about Indirect Guarantees of Indebtedness of Others” which it supersedes. The adoption of this Interpretation did not have a material effect on Great Western’s financial position, liquidity or results of operation. See Note 18 to the Consolidated Financial Statements.

In January 2003, the FASB issued Interpretation No. 46 “Consolidation of Variable Interest Entities”(“FIN 46”). This Interpretation was issued in an effort to expand upon and strengthen existing accounting guidance that addresses when a company should include in its financial statements the assets, liabilities and activities of another entity. In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (i) does not have equity investors with voting rights or (ii) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property. To further assist financial statement users in assessing a company’s risks, the Interpretation also requires disclosures about variable interest entities that the company is not required to consolidate but in which it has a significant variable interest. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. Great Western adopted FIN 46 beginning with the quarter ended December 31, 2003. Great Western has disclosed the investment in Great Western Statutory Trust IV and GWB Capital Trust V on a deconsolidated basis. Adoption of FIN 46 did not have a significant impact on Great Western’s financial position, cash flows or results of operation.

The requirements of FIN 46 are applied by the end of the first interim or annual period ending after March 15, 2004 for entities created before February 1, 2003. At its October 8, 2003 meeting, the FASB agreed to defer the effective date of FIN 46 for variable interests held by public companies in all entities that were acquired prior to February 1, 2003. The deferral required that public companies adopt the provisions of FIN 46 for periods ending after December 31, 2003. In the quarter ended March 31, 2004, Great Western implemented the requirement for its investments in GWB Capital Trust I, GWB Capital Trust II, and GWB Capital Trust III. The primary impact of this change was to report Great Western’s subordinated debt to the Trusts on the face of the accompanying balance sheet rather than the minority interest in the Trusts, as previously presented.

The Financial Accounting Standards Board has published a revision to Interpretation 46 (“FIN 46R”) to clarify provisions of FIN 46, and to exempt certain entities from its requirements. Application of FIN 46R (or FIN 46) is required in financial statements of public entities that have interests in structures that are commonly referred to as special-purpose entities for periods ending after December 15, 2003. Great Western adopted FIN 46R in the quarter ended December 31, 2003. Adoption of FIN 46R did not have a significant impact on Great Western’s financial position, cash flows or results of operation.

In May 2003, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“FASB No. 150”). This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.

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FASB No. 150 requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. The adoption of SFAS No. 150 did not have a material effect on Great Western’s financial position, liquidity or results of operation.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. This Statement improves financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. In particular, this Statement (1) clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative discussed in paragraph 6(b) of Statement 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying to conform it to language used in FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others,” and (4) amends certain other existing pronouncements. These changes will result in more consistent reporting on contracts and hedging relationships entered into or modified after June 30, 2003. Management does not believe the above pronouncements had a material effect on Great Western’s financial position, liquidity or results of operation.

On March 9, 2004 Securities and Exchange Commission Staff Accounting Bulletin 105 (“SAB105”), “Application of Accounting Principles to Loan Commitments”, was issued. SAB 105 summarizes the views of the Staff regarding the application of generally accepted accounting principles to loan commitments accounted for as derivative instruments. It is anticipated that the adoption of the guidance in SAB 105 for all new loan commitments signed after April 1, 2004, will not have a material effect on Great Western’s financial position, liquidity or results of operation

ANALYSIS OF FINANCIAL CONDITION

LOAN PORTFOLIO

Total loans, net of unearned fees, increased $233,646,000, or 14.41% to $1,854,858,000 at June 30 2004, from $1,621,212,000 at June 30, 2003. The increase was due to acquisitions and internal growth. Total loans, net of unearned fees, increased $125,012,000, or 8.36%, to $1,621,212,000 at June 30, 2003, from $1,496,200,000 at June 30, 2002. The increase was due to internal growth.

Great Western’s subsidiary banks primarily make commercial loans to small and medium-sized businesses and professionals and installment loans to individuals. The subsidiary banks offer a variety of commercial lending products including revolving lines of credit, letters of credit, working capital loans and loans to finance accounts receivable, inventory and equipment. See “Business-Loans.” Typically, the subsidiary banks’ commercial loans have floating rates of interest, are for varying terms (generally not exceeding five years), are personally guaranteed by principals of the borrowing company, and are collateralized by accounts receivable, inventory or other business assets.

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The following tables present Great Western’s loan balances at the dates indicated categorized by loan type:


	June 30, 2004					June 30, 2003					June 30, 2002
	(dollars in thousands)
Loans to individuals	$	204,510		11.16	%	$	190,579		11.91	%	$	199,896		13.55	%
Real estate loans		169,559		9.25			194,367		12.15			164,812		11.17
Commercial and agricultural		1,480,893		80.83			1,235,406		77.22			1,126,417		76.32
Other loans		2,286		0.12			2,576		0.16			6,241		0.42

Total face amount of loans		1,857,248		101.36			1,622,928		101.44			1,497,366		101.46
Unearned loan Fees		(2,390	)	(0.13	)		(1,716	)	(0.11	)		(1,166	)	(0.08	)

Loans		1,854,858		101.23			1,621,212		101.33			1,496,200		101.38
Less allowance for loan losses		(22,643	)	(1.23	)		(21,251	)	(1.33	)		(20,344	)	(1.38	)

Net Loans	$	1,832,215		100.00	%	$	1,599,961		100.00	%	$	1,475,856		100.00	%

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	June 30, 2001					June 30, 2000
	(dollars in thousands)
Loans to individuals	$	215,071		16.75	%	$	106,499		17.00	%
Real estate loans		172,786		13.46			135,033		21.55
Commercial and agricultural		912,611		71.07			388,615		62.03
Other loans		3,242		0.25			4,910		0.78

Total face amount of loans		1,303,710		101.53			635,057		101.36
Unearned loan fees		(661	)	(0.05	)		(300	)	(0.05	)

Loans		1,303,049		101.48	%		634,757		101.31	%
Less allowance for loan losses		(18,955	)	(1.48	)		(8,197	)	(1.31	)

Net loans	$	1,284,094		100.00	%	$	626,560		100.00	%

Great Western’s primary category of loans, commercial and agricultural loans, constituting over three-fourths of loans as of June 30, 2004, trended upward as indicated at the stated dates. At June 30, 2004, agricultural loans totaled $201,573,000. Of this amount, $89,080,000 comprised loans secured by agricultural real estate, and $112,493,000 comprised loans secured by agricultural operating assets. At June 30, 2003, agricultural loans totaled $182,079,000. Of this amount, $78,897,000 comprised loans secured by agricultural real estate, and $103,182,000 comprised loans secured by agricultural operating assets.

Commercial and agricultural loans were $1,480,893,000 as of June 30, 2004, an increase of $245,487,000 over the $1,235,406,000 balance as of June 30, 2003. This increase is due to acquisitions and internal growth. Commercial and agricultural loans were $1,235,406,000 as of June 30, 2003, an increase of $108,989,000 over the $1,126,417,000 balance as of June 30, 2002. This increase is due to internal growth.

Loan concentrations are considered to exist when there are amounts loaned to multiple borrowers engaged in similar activities, or loans secured by similar collateral, that would cause them to be similarly impacted by economic or other conditions. Great Western had loans secured by real estate amounting to $1,058,887,000 as of June 30, 2004, an increase of $116,286,000 over the $942,601,000 balance as of June 30, 2003. Other than loans secured by real estate and the loan categories set forth in the above table, Great Western had no concentrations of loans at June 30, 2004. Great Western did not have loans outstanding to foreign countries or borrowers headquartered in foreign countries at June 30, 2004.

Management of Great Western’s subsidiary banks may renew loans at maturity, when requested by a customer whose financial strength appears to support such renewal or when such renewal appears to be in Great Western’s best interest. Great Western requires payment of accrued interest in such instances and may adjust the rate of interest, require a principal reduction or modify other terms of the loan at the time of renewal.

Although the risk of non-payment exists for a variety of reasons relating to all loans, other more specific risks are associated with each type of loan. Risks associated with real estate mortgage loans include the borrower’s inability to pay and deterioration in

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value of real estate held as collateral. Several risks are present in construction loans, including economic conditions in the building industry, fluctuating land values, failure of the contractor to complete work and the borrower’s inability to repay. As of June 30, 2004, construction loans were $188,052,000 or 10.14% of total loans, an increase of $38,074,000 over the $149,978,000 or 9.25% of the total loan balance as of June 30, 2003. Risks associated with commercial and agricultural loans are the quality of the borrower’s management and the impact of local economic factors as well as prices received for products and services. Loans to individuals face the risk of a borrower’s unemployment as a result of deteriorating economic conditions as well as the personal circumstances of the borrower. Management believes that risk levels associated with the various types of loans are dependent upon the existence of the risks at any particular time, for example, economic conditions in the building industry.

LOAN MATURITIES

The following tables present, at June 30, 2004, and June 30, 2003, loans, net of unearned fees, by maturity in each major category of Great Western’s portfolio based on contractual repricing schedules. Actual maturities may differ from the contractual repricing maturities shown below as a result of renewals and prepayments. Great Western’s management evaluates loan renewals in the same manner as new credit applications. If loans are not repaid upon maturity, these loans are subject to the same credit evaluation and other underwriting criteria as new loan applications, and are subject to new terms and conditions as deemed appropriate by Great Western’s lending personnel.


			At June 30, 2004
			Over One Year Through Five Years						Over Five Years
	One Year or less		Fixed Rate		Floating Rate		Fixed Rate		Floating Rate		Total
	(dollars in thousands)
Loans to individuals	$	79,185	$	99,677	$	3,509	$	22,704	$	0	$	205,075
Real estate loans		65,165		22,261		58,635		20,390		2,965		169,416
Commercial and agricultural		795,936		422,072		223,084		36,521		663		1,478,276
Other loans		1,795		219		0		0		77		2,091

Total loans	$	942,081	$	544,229	$	285,228	$	79,615	$	3,705	$	1,854,858


			At June 30, 2003
			Over One Year Through Five Years						Over Five Years
	One Year or less		Fixed Rate		Floating Rate		Fixed Rate		Floating Rate		Total
	(dollars in thousands)
Loans to individuals	$	58,926	$	110,060	$	2,069	$	18,620	$	14	$	189,689
Real estate loans		59,050		26,513		68,293		35,861		1,309		191,026
Commercial and agricultural		673,385		343,657		189,822		26,971		2,802		1,236,637
Other loans		2,868		904		0		88		0		3,860

Total loans	$	794,229	$	481,134	$	260,184	$	81,540	$	4,125	$	1,621,212

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LOAN REVIEW PROCESS

Great Western’s banks follow both internal and external loan review programs to evaluate the credit risk in their loan portfolios and assess the adequacy of the allowance for loan losses.

Internally, each bank maintains a classified loan list that, along with the list of non-performing loans discussed below, helps Great Western’s management assess the overall quality of the loan portfolio and the adequacy of the allowance for loan losses. The classification categories of substandard, doubtful and loss correspond with those of state and FDIC examiners. Loans classified as “substandard” are those loans with clear and defined weaknesses such as highly leveraged positions, unfavorable financial ratios, uncertain repayment sources or poor financial condition, which may jeopardize repayment. Loans classified as “doubtful” are those loans that have characteristics similar to substandard loans, but also have an increased risk of loss or would require a partial write-off in liquidation. Although loans classified as substandard do not duplicate loans classified as doubtful, both substandard and doubtful loans may include some loans that are past due at least 90 days, are on nonaccrual status or have been restructured. Loans classified as “loss” are those loans that are in the process of being charged off.

In addition to the internally classified loans, each subsidiary bank has a “watch list” of loans that further assists monitoring of its loan portfolios. A loan is included on the watch list if it demonstrates one or more deficiencies requiring attention in the near term. Such loans do not have all the characteristics of a classified loan (substandard, doubtful or loss), but do have elements of weakness as compared with those of a satisfactory credit. Management of the subsidiary banks reviews these loans to assist in assessing the adequacy of the allowance for loan losses. Substantially all of the loans on the watch list at June 30, 2004 were current and paying in accordance with loan terms.

Great Western’s external loan review process consists of an intensive on-site review of more than 40% of dollar value of loans at each subsidiary bank (other than Great Western Bank, Omaha) during twelve to twenty-four month periods, depending on conditions. The chief credit officer and loan officers of subsidiary banks perform the Great Western Bank, Watertown and Great Western Bank, Clive reviews. Great Western’s chief credit officer and its President are responsible for determining the frequency and scope of external loan reviews and evaluating the results of those reviews. The report of the chief credit officer is presented to each bank’s management and board of directors for review.

Great Western Bank, Omaha is Great Western’s only bank with an internal loan review staff. Forty percent of the dollar values of Great Western Bank’s loans are reviewed in a 24-month cycle. The chief credit officer of Great Western works with Great Western Bank’s internal review staff.

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NON-PERFORMING LOANS

Non-performing loans consist of nonaccrual, past due and restructured loans. A past due loan is an accruing loan that is contractually past due 90 days or more as to principal and/or interest payments. Loans on which management does not expect to collect interest in the normal course of business are placed on nonaccrual or are restructured. When a loan is placed on nonaccrual, any interest previously accrued but not yet collected is reversed against current income unless, in the opinion of management, the outstanding interest remains collectible. Thereafter, interest is generally included in income only to the extent of cash received. A loan is restored to accrual status when all interest and principal payments are current and the borrower has demonstrated to management the ability to make payments of principal and interest as scheduled.

A restructured loan is one upon which interest accrues at a below market rate or upon which certain principal has been forgiven so as to aid the borrower in the final repayment of the loan, with any interest previously accrued, but not yet collected, being reversed against current income. Interest is accrued based upon the new loan terms.

Assets fully or substantially collateralize non-performing loans. In general, the excess of loan balances over collateral values is allocated in the allowance. Assets acquired through foreclosure are carried at the lower of cost or estimated fair value, net of estimated costs of disposal, if any.

The following table lists nonaccrual, over 90 days past due and restructured loans, other real estate and other repossessed assets at June 30, 2004, and for each of the prior four years.


	At June 30
	2004			2003			2002			2001			2000
	(dollars in thousands)
Nonaccrual loans	$	13,242		$	9,561		$	11,592		$	4,703		$	1,920
Accruing loans past due over 90 days		154			2,130			1,895			1,772			2,370
Restructured loans		955			768			3,977			13,510			5,164

Total non-performing loans		14,351			12,459			17,464			19,985			9,454
Other real estate and other repossessed assets		2,628			2,208			2,496			1,179			113

Total non-performing assets	$	16,979		$	14,667		$	19,960		$	21,164		$	9,567

Ratio of total nonperforming loans to loans, net of unearned fees		0.77	%		0.77	%		1.17	%		1.53	%		1.49	%
Ratio of total non-performing assets to total loans plus other real estate and other repossessed assets		0.91			0.90			1.33			1.62			1.51
Ratio of non-performing assets to total assets		0.70			0.68			0.99			1.19			1.12

Nonaccrual loans were $13,242,000 as of June 30, 2004, an increase of $3,681,000 over $9,561,000 as of June 20, 2003. The increase is primarily due to four real estate development loans totaling $2,600,000 being placed on non-accrual. Nonaccrual loans were $9,561,000 as of June 30, 2003, a decrease of $2,031,000 over the balance of $11,592,000 as of June 30, 2002.

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This decrease was primarily due to one commercial borrower whose $1,400,000 loan was reclassified to other real estate owned and one commercial borrower, which had a $500,000 principal reduction.

Accruing loans past due over 90 days were $154,000 and $2,130,000 at June 30, 2004 and 2003, respectively. A $2,000,000 loan was added in March 2003 and paid current soon after being added. The balance of the decrease can be attributed to working down the balances on the loan. As a rule, loans that are in the 90-day still accruing category are well secured and Great Western believes that they will collect all payments due.

Restructured loans were $955,000 and $768,000 at June 30, 2004 and 2003, respectively. Restructured loans were $768,000 and $3,977,000 at June 30, 2003 and 2002, respectively. The decrease is primarily due to a single commercial borrower refinancing a $3,100,000 loan, which resulted in this loan being reclassified. Restructured loans were $3,977,000 and $13,510,000 at June 30, 2002, and 2001, respectively. A single commercial borrower paid off a total of $7,379,543 of restructured loans in February 2002. This primarily caused the decrease in restructured loans and non-performing loans and assets in fiscal year 2002.

A potential problem loan is defined as a loan where information about possible credit problems of the borrower is known, causing management to have serious doubts as to the ability of the borrower to comply with the present loan repayment terms and which may result in the inclusion of such loan in one of the nonperforming asset categories. Great Western does not believe it has any material potential problem loans other than those reported in the above table.

Foreclosures on defaulted loans result in Great Western acquiring other real estate and other repossessed assets. Accordingly, Great Western incurs other expenses, specifically net costs applicable to other real estate and other repossessed assets, in maintaining, insuring and selling such assets. Great Western’s subsidiary banks attempt to convert nonperforming loans into interest-earning assets either through liquidation of the collateral securing the loan or through intensified collection efforts.

ALLOWANCE FOR LOAN LOSSES

Implicit in Great Western’s lending activities is the fact that loan losses will be incurred and that the risk of loss will vary with the type of loan being made and the creditworthiness of the borrower over the term of the loan. To reflect the currently perceived risk of loss associated with Great Western’s loan portfolio, provisions are made to the allowance for loan losses. The allowance is created by direct charges of the provision against income and the allowance is available to absorb realized loan losses.

The allowance for loan losses is maintained to absorb probable losses inherent in the loan portfolio. Great Western’s allowance was $22,643,000 or 1.22% of loans, net of unearned fees, at June 30, 2004 compared to $21,251,000 or 1.31% of loans, net of unearned fees, at June 30, 2003, and $20,344,000 or 1.36% of loans, net of unearned fees, at June 30, 2002. The increase in the total allowance is primarily due to growth in the loan portfolio.

Management performs regular monthly assessments of these estimated losses by utilizing a methodology that relies on several key elements. Larger-balance, non-homogeneous loans representing significant individual credit exposures are evaluated based upon the borrower’s overall financial condition, resources and payment record; the prospects for support from any financially responsible guarantors and, if appropriate, the realizable value of the collateral.

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The allowance on these loans is calculated by applying loss factors to outstanding loans and certain unused commitments. Loss factors include management’s assessment of current economic conditions and the potential impact on various industries, and the financial conditions of the borrowers.

Net loans charged off for the year ended June 30, 2004 were $2,932,000 compared with $3,464,000 in 2003 and $5,677,000 in 2002. One borrower accounted for $2,653,000 of the loans charged-off for the fiscal year 2002.

Specific allowances are maintained for larger-balance, non-homogeneous loans that have been individually determined to be impaired as prescribed by FASB No. 114, “Accounting by Creditors for Impairment of a Loan.” Impairment is measured on a loan-by-loan basis for these loans by either the present value of the expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the method predominantly used, which is the fair value of the collateral.

Each portfolio of smaller balance, homogeneous loans, including individual installment, consumer and residential loans, is collectively evaluated for impairment. The allowance for loan losses attributed to these loans is established from an estimate of probable losses inherent in the portfolio. Loss factors are applied to outstanding loans based upon historical credit losses, trends in volumes and terms of loans, and consideration of economic, geographical, product and other factors.

The allowance for loan losses is based upon estimates, and actual charge-offs can vary significantly from the estimated amounts. By assessing the probable estimated losses inherent in the loan portfolio on a quarterly or more frequent basis, adjustments are made to specific and inherent loss estimates based upon the most recent information available.

The following table presents the provisions, loans charged off and recoveries of loans previously charged off, the amount of the allowance, average loans outstanding and certain pertinent ratios for the year ended June 30, 2004, and for each of the prior four years.


	At June 30,
	2004			2003			2002			2001			2000
	(dollars in thousands)
Average loans outstanding⁽¹⁾	$	1,718,450		$	1,550,457		$	1,368,931		$	844,280		$	567,658

Total loans at end of period⁽¹⁾	$	1,854,858		$	1,621,212		$	1,496,200		$	1,303,049		$	634,757

Allowance at beginning of period	$	21,251		$	20,344		$	18,955		$	8,197		$	6,701
Loans charged off:
Loans to individuals		842			858			1,197			828			399
Real estate loans		75			292			288			402			68
Commercial and agricultural		2,657			2,729			5,046			899			217
Other loans		31			181			(80	)		498			198

Total charge-offs		3,605			4,060			6,451			2,627			882

Recoveries of loans previously charged off:
Loans to individuals		307			221			190			223			110
Real estate loans		17			116			104			12			46
Commercial and agricultural		341			233			446			72			115
Other loans		8			26			34			24			71

Total recoveries		673			596			774			331			342

Net loans charged off		2,932			3,464			5,677			2,296			540
Provision for loan losses		4,324			4,371			6,067			2,618			2,036
Business acquisition⁽²⁾		0			0			999			10,436			0

Allowance at end of period	$	22,643		$	21,251		$	20,344		$	18,955		$	8,197

Net loans charged off to average loans, net unearned income		0.17	%		0.22	%		0.41	%		0.27	%		0.10	%
Allowance for loan losses to loans, net unearned income		1.22	%		1.31	%		1.36	%		1.45	%		1.29	%

⁽¹⁾	Net of unearned fees.

⁽²⁾

The allowance for loan losses includes the allowance related to Iowa State Bank, Hamburg, Iowa and United National Bank, Sidney, Iowa (collectively) for their merger into Great Western Bank, Clive of $2,153,000, the allowance related to Founders Trust National Bank, Sioux Falls, South Dakota for its merger into Great Western Bank, Watertown of $304,000, the allowance related to the acquisition of Great Western Bank, Omaha, Nebraska of $7,979,000 and the allowance of $999,000 related to the acquisition of First Western and Marquette banks (collectively) for their merger into Great Western Bank, Watertown. See “Nonperforming Loans.”

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Management and the boards of directors of the subsidiary banks make credit and loan decisions in conformity with loan policies established by their boards of directors. The subsidiary banks’ practices are to charge off any loan or portion of a loan when the loan is determined by management to be uncollectable due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, the loan’s classification as a loss by regulatory examiners or for other reasons. Great Western charged off $3,605,000 during the year ended June 30, 2004 and $4,060,000 for June 30, 2003. Recoveries during fiscal year 2004 were $673,000 when compared to $596,000 for fiscal year June 30, 2003. Great Western charged off $6,451,000 during the year ended June 30, 2002 and $2,627,000 for June 30, 2001. One borrower accounted for $2,653,000 or 41.10% of the total charged off loans for the fiscal year 2002 as discussed earlier in this section. Recoveries during fiscal year 2002 were $774,000 when compared to $331,000 for fiscal year June 30, 2001. One commercial borrower accounted for $316,000 or 40.8% of the total recoveries in fiscal year 2002. See “Non-Performing Loans”.

The following table shows the allocations in the allowance and the respective percentages of each loan category to total loans at June 30, 2004, and at year-end for each of the prior four years. Portions of the allowance have been allocated to categories based on an analysis of the status of particular loans and homogenous pools of loans. The allocation table should not be interpreted as an indication of the specific amounts, by loan classification, to be charged to the allowance. Management believes that the table may be useful information for assessing the adequacy of the allowance as a whole. The table has been derived in part by applying historical loan loss ratios to both internally classified loans and the portfolio as a whole in determining the allocation of the loan losses attributable to each category of loans.

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	At June 30, 2004				At June 30, 2003				At June 30, 2002
	Amount of Allowance		Percent of Loans by Category to Loans		Amount of Allowance		Percent of Loans by Category to Loans		Amount of Allowance		Percent of Loans by Category to Loans
	(dollars in thousands)
Loans to individuals	$	1,399	11.06	%	$	2,003	11.74	%	$	2,401	13.35	%
Real estate loans		1,958	9.13			2,109	11.98			1,999	11.05
Commercial and agricultural		19,234	79.70			16,481	76.12			15,554	75.17
Other loans		52	0.11			658	0.16			390	0.43

Total allowance for loan losses	$	22,643	100.00	%	$	21,251	100.00	%	$	20,344	100.00	%


	At June 30, 2001				At June 30, 2000
	Amount of Allowance		Percent of Loans by Category to Loans		Amount of Allowance		Percent of Loans by Category to Loans
	(dollars in thousands)
Loans to individuals	$	4,023	16.50	%	$	1,383	16.77	%
Real estate loans		1,719	13.25			1,288	21.26
Commercial and agricultural		13,034	70.00			5,266	61.20
Other loans		179	0.25			260	0.77

Total allowance for loan losses	$	18,955	100.00	%	$	8,197	100.00	%

SECURITIES

Securities, all of which are classified as available-for-sale, increased $51,711,000, or 16.51%, to $364,847,000 at June 30, 2004, from $313,136,000 at June 30, 2003. The increase was due to internal growth and acquisitions. Securities decreased $20,923,000 or 6.26%, to $313,136,000 at June 30, 2003, from $334,059,000 at June 30, 2002. The decrease was due to funding the growth in loans versus reinvesting in securities.

The board of directors of each subsidiary bank reviews all securities transactions at each board meeting and the securities portfolio periodically. For obligations of U.S. Government agencies and corporation, state, county, municipal and other securities, Great Western’s investment policy allows for the purchase of securities with maturities in excess of ten years. As of June 30, 2004, 97.46% of Great Western’s securities with defined maturities mature in less than ten years. Mortgage-backed securities are deemed not to have defined maturities for purposes of this analysis.

As of June 30, 2004, 88.65% of Great Western’s investment portfolio had defined maturities. The investment portfolio with defined maturities was concentrated in the following categories: obligations of the U.S. Treasury, U.S. government agencies, corporations, state and local political subdivisions totaled $313,363,000, or 85.89% of the portfolio and corporate debt totaled $10,082,000, or 2.76% of the portfolio. Mortgage-backed securities totaled $29,231,000 or 8.01% of Great Western’s investment portfolio. The remaining $12,171,000 or 3.34% of Great Western’s investment portfolio is in equity securities, which primarily are stock in the Federal Home Loan Banks of Des Moines and Topeka totaling $10,327,000 as of June 30, 2004.

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Certain of Great Western’s securities are pledged to secure public and trust fund deposits and for other purposes required or permitted by law. At June 30, 2004 the face value of U.S. Government and other securities so pledged amounted to $240,737,000, or 65.98% of the total securities portfolio.

The following table provides the maturity distribution and weighted average interest rates of Great Western’s securities portfolio at June 30, 2004. The yield has been computed by dividing the forward annualized income stream on the securities, plus or minus the anticipated amortization of premium or accretion of discount, by the book value of the securities. The book value of available-for-sale securities is their fair value. All securities are classified as available-for-sale. The restatement of the yields on tax-exempt securities to a fully taxable-equivalent basis has been computed assuming a tax rate of 35%. The equity securities are primarily composed of stock in the Federal Home Loan Banks of Des Moines and Topeka. The yield is set quarterly by each Federal Home Loan Bank’s board of directors. For the quarter ended June 30, 2004, the yields were 1.79% and 3.50% at Federal Home Loan Banks of Des Moines and Topeka, respectively.


	At June 30, 2004
Type and Maturity	Principal Amount		Amortized Cost		Estimated Fair Value		Weighted Average Yield
	(dollars in thousands)
U.S. Treasury securities:
Within one year	$	0	$	0	$	0	0	%
After one but within five years		19,000		19,167		18,437	2.54
After five but within 10 years		5,000		5,062		4,647	3.46

Total U.S. Treasury securities		24,000		24,229		23,084	2.73

Obligations of other U.S. Government agencies and corporations:
Within one year		14,580		14,560		14,794	4.77
After one but within five years		199,100		198,735		194,567	3.46
After five but within ten years		38,000		38,058		37,140	3.98
After ten years		5,000		4,989		4,614	4.31

Total obligations of U.S. Government agencies and corporations		256,680		256,342		251,115	3.63

Obligations of states and political subdivisions:
Within one year		2,707		2,712		2,730	3.87
After one but within five years		17,322		17,522		17,822	3.83
After five but within ten years		14,687		14,747		15,020	5.30
After ten years		3,501		3,547		3,592	6.05

Total obligations of states and political subdivisions		38,217		38,528		39,164	4.60

Other securities:
Within one year		1,500		1,499		1,539	7.53
After one but within five years		8,310		8,507		8,543	3.73
After five but within ten years		0		0		0
After ten years		0		0		0

Total other securities		9,810		10,006		10,082	4.31

Total securities with defined maturities		328,707		329,105		323,445	3.70
Mortgage-Backed Securities		29,451		30,057		29,231	2.82
Equity securities		11,921		11,921		12,171	2.96

Total securities	$	370,079	$	371,083	$	364,847	3.60	%

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DEPOSITS

Total deposits increased $179,034,000 or 10.32%, to $1,914,064,000 at June 30, 2004, from $1,735,030,000 at June 30, 2003. Total deposits increased $99,063,000, or 6.06%, to $1,735,030,000 at June 30, 2003, from $1,635,967,000 at June 30, 2002. The increase in deposits is primarily due to acquisitions and internal growth.

The following table presents the average amounts and the average rates paid on deposits of Great Western for the year ended June 30, 2004, and for each of the prior two years:


	Year Ended June 30,
	2004				2003				2002
	Average Amount		Average Rate		Average Amount		Average Rate		Average Amount		Average Rate
Interest-bearing demand, savings and money market deposits	$	676,786	0.69	%	$	601,694	1.05	%	$	522,953	2.44	%
Time deposits of less than $100,000		604,089	2.84			593,428	3.48			564,126	4.32
Time deposits of $100,000 or more		266,018	2.73			257,055	3.42			230,535	4.13

Total interest-bearing deposits		1,546,893	1.88			1,452,177	2.46			1,317,614	3.54
Noninterest-bearing demand deposits		260,296	0.00			233,594	0.00			177,411	0.00

Total deposits	$	1,807,189	1.61	%	$	1,685,771	2.12	%	$	1,495,025	3.12	%

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The maturity distribution of time deposits of $100,000 or more at June 30, 2004 is presented below:


	At June 30, 2004
	(in thousands)
3 months or less	$	64,093
Over 3 through 6 months		39,186
Over 6 through 12 months		78,688
Over 12 months		105,534

Total time deposits of $100,000 or more	$	287,501

The subsidiary banks rely to a limited extent on time deposits of $100,000 or more. Time deposits of $100,000 or more are a more volatile funding source than other deposits and are more likely to affect Great Western’s future earnings because of interest rate sensitivity.

SHORT-TERM BORROWINGS

Short-term borrowings include Federal Funds purchased and securities sold under agreements to repurchase. See Note 10 to the Consolidated Financial Statements.

FEDERAL HOME LOAN BANK BORROWINGS

All of the subsidiary banks are members of the Federal Home Loan Bank. Due to the competitive rates available, each subsidiary bank has utilized Federal Home Loan Bank advances as a source of funding. At June 30, 2004, the subsidiary banks had $114,802,000 in Federal Home Loan Bank advances compared to $102,162,000 at June 30, 2003 and $69,337,000 at June 30, 2002. At June 30, 2004, based on its Federal Home Loan Bank stockholdings, the aggregate unused borrowing capacity of Great Western was $136,527,000.

A variety of borrowing terms and maturities can be chosen from the Federal Home Loan Bank. Maturities available range generally from one day to 10 years. Interest rates can be either fixed or variable and prepayment options are available if desired. The Federal Home Loan Bank offers both amortizing and non-amortizing advances. Historically, Federal Home Loan Bank stock has been redeemable at the preset price of $100 per share, its current carrying value, but there can be no assurance that this policy will continue.

NOTES PAYABLE TO BANK

Great Western has notes payable to an unaffiliated bank of $500,000 at June 30, 2004 compared to $7,500,000 at June 30, 2003 and $17,500,000 at June 30, 2002. The decrease when comparing June 30, 2004 to June 30, 2003 is due to a note payoff. The source of funds for the payoff came from Great Western issuing company obligated mandatorily redeemable preferred securities of a subsidiary trust. The decrease when comparing June 30, 2003 to June 30, 2002 is due to a note payoff; the source of funds for the payoff came from Great Western issuing company obligated mandatorily redeemable preferred securities of a subsidiary trust. (Terms of these notes are discussed in “Sources of Liquidity” below.)

Great Western has committed to maintain specific covenants each quarter and year-end with the unaffiliated bank as stated in the March 23, 2001 loan agreement and as amended on October 31, 2002 and March 23, 2004. For the quarter ending June 30, 2004 Great Western satisfied all covenants.

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CAPITAL NOTES

Capital Investors (See “Certain Relationships and Related Transactions”) negotiated a loan from an unaffiliated bank of $35,000,000 to purchase Great Western’s subordinated capital notes. The loan has the following terms: the option to either fix the rate of interest at the five-year treasury rate plus 350 basis points but not less than the lender’s cost of funds plus 250 basis points at the date the loan is closed, or to select a rate of interest at LIBOR plus 215 basis points fixed at intervals ranging from 30 days to 180 days. Interest is payable quarterly and principal due March 23, 2006, but expected to be payable in equal installments annually in each year beginning 2007 through 2011. Capital Investors collateralized its borrowing by pledging the subordinated capital notes to the unaffiliated bank. In addition, the stockholders of Great Western pledged their common stock as additional collateral for Capital Investors’ loan.

LINE OF CREDIT

Great Western has a $5,000,000 revolving line of credit from the unaffiliated bank, to be used by Great Western as a short-term liquidity facility. Great Western entered into a covenant with the unaffiliated lender not to pledge the stock of its subsidiary banks except to the lender as collateral for Great Western’s loans.

LIQUIDITY

SOURCES OF LIQUIDITY

Liquidity with respect to a financial institution is the ability to meet its short-term needs for cash without suffering an unfavorable impact on its on-going operations. The need for the subsidiary banks to maintain funds on hand arises principally from maturities of short-term borrowings, deposit withdrawals, customers’ borrowing needs and the maintenance of reserve requirements. Liquidity with respect to a financial institution can be met from either assets or liabilities. On the asset side of the balance sheet, the primary sources of liquidity are cash and due from banks, federal funds sold, maturities of securities and scheduled repayments and maturities of loans. The subsidiary banks maintain adequate levels of cash and near-cash investments to meet their day-to-day needs. Cash and due from banks averaged $55,987,000 and $52,070,000 during the years ended June 30, 2004 and 2003. These amounts comprised 2.46% and 2.50% of average total assets during the years ended June 30, 2004 and 2003. The average level of securities and federal funds sold was $368,727,000 and $365,750,000 during the years ended June 30, 2004 and 2003.

At June 30, 2004, $19,063,000, or 5.89%, of Great Western’s securities portfolio, excluding mortgage-backed securities and equity securities, is scheduled to mature within one year and $239,369,000 or 74.01%, excluding mortgage-backed securities, matures after one but within five years. The subsidiary banks’ commercial lending activities are concentrated in loans with maturities of less than five years and with both fixed and adjustable interest rates. Its installment lending activities are concentrated in loans with maturities of three to six years and with generally fixed interest rates. At June 30, 2004, approximately $942,081,000, or 50.79%, of Great Western’s loans, net of unearned fees, mature within one year. See “Loan Maturities.”

On the liability side of the balance sheet, the principal sources of liquidity are deposits, borrowed funds and accessibility to money and capital markets. Great Western attracts its deposits primarily from individuals and businesses located within the market areas served by the subsidiary banks, and to lesser extent, on brokered deposits.

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Borrowed funds come primarily from three sources, Federal Home Loan Bank borrowings, Great Western’s notes payable to an unaffiliated bank and the sale of subordinated capital notes to an affiliate. Interest is due quarterly to the unaffiliated bank at either the lender’s cost of funds plus 1.75% per annum or the LIBOR rate plus 1.50% (fixed for periods of up to 180 days) per annum, at the option of Great Western. The maturity date of the outstanding debt with the unaffiliated bank is March 23, 2006; and the maturity dates of the subordinated capital notes to an affiliate are March 23, 2011. On August 12, 1999, Great Western caused to be issued $20,400,000 of company obligated mandatorily redeemable preferred securities of a subsidiary trust, with interest due at 10% per annum payable quarterly. The maturity date of the securities is August 18, 2029, however Great Western redeemed the securities on August 18, 2004. On March 19, 2001 Great Western caused to be issued $27,600,000 of company obligated mandatorily redeemable preferred securities of a subsidiary trust, with interest due at 9.75% per annum payable quarterly. The maturity date of the securities is March 19, 2031. On October 29, 2002, Great Western caused to be issued $10,000,000 of company obligated mandatorily redeemable preferred securities of a subsidiary trust, with interest payable quarterly at three month LIBOR plus 345 basis points, set quarterly. On December 17, 2003, Great Western caused to be issued $22,400,000 of company obligated mandatorily redeemable preferred securities of a subsidiary trust, with interest payable quarterly at three month LIBOR plus 285 basis points, set quarterly. On March 31, 2004, Great Western caused to be issued $25,000,000 of company obligated mandatorily redeemable preferred securities of a subsidiary trust, with interest payable quarterly at three month LIBOR plus 270 basis points, set quarterly.

CAPITAL RESOURCES

Great Western monitors compliance with bank and bank holding company regulatory capital requirements, focusing primarily on risk-based capital guidelines. As indicated in the table immediately below, at June 30, 2004, Great Western was above the total capital minimum requirements. Under the risk-based capital method of capital measurement, the ratio computed is dependent upon the amount and composition of assets recorded on the balance sheet, and the amount and composition of off-balance sheet items, in addition to the level of capital. Included in the risk-based capital method are two measures of capital adequacy, core capital and total capital, which consist of core and supplementary capital.

The following tables present Great Western’s capital ratios as of the indicated dates.


	Risk-Based Capital Ratios
	June 30, 2004				June 30, 2003
	Amount		Ratio		Amount		Ratio
	(dollars in thousands)
Core (Tier I) capital	$	140,099	7.21	%	$	115,058	6.76	%
Minimum requirement		77,722	4.00			68,037	4.00

Excess	$	62,377	3.21	%	$	47,021	2.76	%

Total capital	$	256,535	13.20	%	$	190,323	11.19	%
Minimum requirement		155,444	8.00			136,074	8.00

Excess	$	101,091	5.20	%	$	54,249	3.19	%

Total risk-weighted assets	$	1,943,048			$	1,700,925

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	Leverage Ratios
	June 30, 2004				June 30, 2003
	Amount		Ratio		Amount		Ratio
	(dollars in thousands)
Core capital	$	140,099	5.90	%	$	115,058	5.55	%
Minimum requirement		95,036	4.00			82,905	4.00

Excess	$	45,063	1.90	%	$	32,153	1.55	%

Average total adjusted assets	$	2,375,904			$	2,072,625

OFF-BALANCE SHEET ARRANGEMENTS

Great Western is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. They involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheets. Great Western’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. A summary of Great Western’s commitments (in thousands) is as follows:


	June 30,
	2004		2003
Commitments to extend credit	$	381,151	$	394,032
Letters of credit		14,464		10,879

Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Letters of credit are conditional commitments issued by Great Western to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Great Western evaluates each customer’s credit worthiness on a case-by-case basis. The credit and collateral policy for commitments and letters of credit is comparable to that for granting loans.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

Through the normal course of operations, Great Western enters into certain contractual obligations and other commitments. These obligations generally relate to funding of operations through debt issuances as well as leases for premises and equipment. As a financial institution, Great Western enters into off-balance sheet agreements including commitments to extend credit, standby letters of credit and financial guarantees on loans sold with recourse and other contingent obligations. See Note 18 to the Consolidated Financial Statements.

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The following presents Great Western’s other contractual obligations at June 30, 2004:


	Payments Due by Period
	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
	(In Thousands)
Long-term debt ^(a)	$	30,097	$	43,000	$	23,058	$	55,900	$	152,055
Subordinated debentures ^(b)		—		—		—		108,662		108,662
Certificates of deposit ^(c)		426,928		359,203		106,171		41,616		933,918
Operating lease obligations		1,196		1,446		586		1,048		4,276
Purchase obligations		7,972		46		—		—		8,018

Totals	$	466,193	$	403,695	$	129,815	$	207,226	$	1,206,929

^(a)	See Note 11 to the Consolidated Financial Statements.

^(b)	See Note 12 to the Consolidated Financial Statements.

^(c)	See Note 9 to the Consolidated Financial Statements.

IMPACT OF INFLATION

The effects of inflation on the local economy and on Great Western’s operating results have been relatively modest for the past several years. Because substantially all of Great Western’s assets and liabilities are monetary in nature, such as cash, securities, loans and deposits, their values are less sensitive to the effects of inflation than to changes in interest rates, which do not necessarily change in accordance with inflation rates. Great Western attempts to control the impact of interest rate fluctuations by managing the relationship between its interest rate sensitive assets and liabilities.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk arises when an interest-earning asset matures, is called, is prepaid or when such asset’s rate of interest changes in a time frame different from that of the supporting interest-bearing liability. Great Western seeks to control the risk of significant adverse effects on Great Western’s net interest income caused by interest rate changes.

Great Western does not attempt to match each interest-earning asset with a specific interest-bearing liability. Instead, as shown in the table below, it aggregates all of its interest-earning assets and interest-bearing liabilities to determine the difference between the two in specific time frames. This difference is known as the rate-sensitivity gap. A positive gap indicates that more interest-earning assets than interest-bearing liabilities mature in a time frame, and a negative gap indicates the opposite. Maintaining a balanced rate-sensitivity gap will reduce the risk associated with interest rate changes, but it will not guarantee a stable interest rate spread since various rates within a particular time frame may change by differing amounts and in different directions. Management regularly monitors the rate-sensitivity gap and considers this position in its decisions with regards to interest rates and maturities for interest-earning assets acquired and interest-bearing liabilities issued or accepted.

The following table shows the ratio of the cumulative gap to total assets to be (2.95)% at the less than three-month interval, (14.15)% at the three-month to less than one-year interval and 8.12% at the one to five year interval at June 30, 2004. Currently, Great Western is in a liability-sensitive position in the near term. Great Western had $727,387,000 of interest-bearing

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demand, savings and money market deposits at June 30, 2004 that are somewhat less rate-sensitive. Excluding these deposits, Great Western’s interest-sensitive ratio would have been 9.43% at the less than three-month interval, 7.21% at the three month to less than one-year interval and 35.06% at the one to five year interval at June 30, 2004. The interest sensitivity position is presented as of a point in time and can be modified to some extent by management as changing conditions dictate.

The following table shows the interest rate sensitivity position of Great Western at June 30, 2004:


	Estimated Maturity or Repricing at June 30, 2004
	Less Than Three Months			Three Months to Less Than One Year			One to Five Years			Over Five Years			Total
	(dollars in thousands)
Interest-earning assets:
Loans, net of unearned fees	$	599,005		$	290,068		$	873,310		$	92,475		$	1,854,858
Investment securities:
Taxable		11,873			11,276			244,209			58,324			325,682
Tax exempt		241			2,489			17,974			18,461			39,165
Federal funds sold and other		26,643			—			99			—			26,742

Total interest-earning assets		637,762			303,833			1,135,592			169,260			2,246,447
Interest-bearing liabilities:
Deposits:
Demand, savings and money market deposits	$	300,843		$	218,216		$	135,589		$	72,739		$	727,387
Time deposits		175,316			350,366			406,128			2,108			933,918
Federal funds purchased and securities sold under agreements to repurchase		94,955			723			132			—			95,810
Federal Home Loan Bank Advances and other		21,442			6,655			52,558			34,700			115,355
Notes payable		36,700			—			—			—			36,700
Subordinated debentures		80,207			—			—			28,455			108,662

Total interest-bearing liabilities	$	709,463		$	575,960		$	594,407		$	138,002		$	2,017,832
Interest rate gap	$	(71,701	)	$	(272,127	)	$	541,185		$	31,258		$	228,615
Cumulative interest rate gap at June 30, 2004	$	(71,701	)	$	(343,828	)	$	197,357		$	228,615

Cumulative interest rate gap to total assets		(2.95	)%		(14.15	)%		8.12	%		9.41	%

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The following table indicates that at June 30, 2004, if there had been a sudden and sustained increase or decrease in prevailing market interest rates, Great Western’s 2004 interest income would be expected to increase with an increase in rates and decrease with a decrease in rates.


	Net interest income		(Decrease) Increase		Percent Change
	(dollars in thousands)
Changes in Interest Rates
200 basis point rise	$	86,459	843		.98	%
100 basis point rise		86,037	421		.49
Base rate scenario		85,616	0		0.00
100 basis point decline		83,387	(2,229	)	(2.60	)
200 basis point decline		78,876	(6,740	)	(7.87	)

The following table indicates that at June 30, 2003, if there had been a sudden and sustained increase in prevailing market interest rates, Great Western’s 2003 net interest income would be expected to decrease, while a decrease in rates would indicate an increase in income.


	Net interest income		(Decrease) Increase		Percent Change
	(dollars in thousands)
Changes in Interest Rates
200 basis point rise	$	73,896	(2,969	)	(3.86	)%
100 basis point rise		75,380	(1,485	)	(1.93	)
Base rate scenario		76,865	0		0.00
100 basis point decline		78,350	1,485		1.93
200 basis point decline		79,834	2,969		3.86

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of Great Western at June 30, 2004 and 2003, together with the Independent Auditor’s Report, are included in this Form 10-K below.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Great Western filed a current report on Form 8-K (Item 4) during the quarter ended March 31, 2003. The Form 8-K was filed on March 3, 2003, and reported the Audit Committee of the Board of Directors of Great Western Bancorporation, Inc., notified McGladrey & Pullen, LLP that they were dismissed as Great Western’s independent auditor, effective February 27, 2003. The report included a letter from McGladrey & Pullen, LLP regarding its concurrence with a Great Western Bancorporation, Inc. statement regarding change of accountants.

Great Western filed a current report on Form 8-K (Item 4) subsequent to the quarter ended March 31, 2003. The Form 8-K was filed on April 1, 2003, and reported the Audit Committee of the Board of Directors of Great Western Bancorporation, Inc, engaged BKD, LLP, as its new auditor and BKD, LLP accepted such appointment.

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ITEM 9A. CONTROLS AND PROCEDURES

Based upon their evaluation of the effectiveness of Great Western’s disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)), Deryl F. Hamann, Chairman of the Board, Chief Executive Officer, and James R. Clark, Chief Financial Officer, believe that Great Western’s disclosure controls and procedures were effective as of June 30, 2004.

There were no significant changes in Great Western’s internal controls or in other factors that could significantly affect these controls subsequent to June 30, 2004 through the date of this Annual Report on Form 10-K, including any corrective actions with regard to significant deficiencies and material weaknesses.

ITEM 9B. OTHER INFORMATION

During the fourth quarter of the year covered by this Form 10-K, Great Western properly disclosed all reportable information required to be disclosed on Form 8-K.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers and directors of Great Western and their respective ages and positions as of the date of this report are as follows:


Name	Age	Position with Great Western	Position with Subsidiary
Deryl F. Hamann	71	Chairman of the Board, CEO and Director	Chairman and Director of Great Western Bank, Watertown and Great Western Bank, Omaha

Daniel A. Hamann	46	President, COO and Director	Chairman and Director of Great Western Bank, Clive; Vice Chairman and Director of Great Western Bank, Watertown and Great Western Bank, Omaha; Chairman and Director of Great Western Service Corporation

Daniel J. Brabec	45	Executive Vice President and Director	President, CEO and Director of Great Western Bank, Omaha

Jeffory A. Erickson	46	Director	President, CEO and Director of Great Western Bank, Watertown, Director of Great Western Service Corporation

Thomas B. Fischer	57	Senior Vice President, Assistant Secretary and Director	None

Art N. Burtscher	53	Director	Director of Great Western Bank, Omaha

Andrew C. Hove, Jr.	69	Director	None

Robert W. Murray	69	Director	None

Leo W. Smith II	68	Director	Director of Great Western Bank, Omaha

James R. Clark	53	CFO, Secretary and Treasurer	Vice President of Great Western Service Corporation

John L. Hendren	49	None	President, CEO & Director of Great Western Bank, Clive, Iowa, Director of Great Western Service Corporation

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Deryl F. Hamann is the father of Daniel A. Hamann and the father-in-law of Daniel J. Brabec. All directors of Great Western hold office until the next meeting of stockholders or until their successors are elected and qualified.

Deryl F. Hamann. Mr. Hamann has been Chairman or President and CEO of Great Western since 1971. He is Chairman and Director of the affiliated Spectrum Financial Services, Inc. He is a Senior Counsel to the Omaha, Nebraska law firm of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim LLP. The law firm is counsel to Great Western.

Daniel A. Hamann. Mr. Daniel Hamann has been President of Great Western since 1996 and served as Vice President of Great Western from 1992 to 1996. He is Chairman and Director of Great Western Bank, Clive; Vice Chairman and Director of Great Western Bank, Watertown and Great Western Bank, Omaha. He is Chairman and Director of Great Western’s banks’ subsidiary, Great Western Service Corporation. He is Chairman, President and Director of the affiliated Spectrum Life Insurance Company. He is Vice Chairman, Executive Vice President and Director of Spectrum Financial Services, Inc., an affiliate of Great Western.

Daniel J. Brabec. Mr. Brabec has served as Vice President of Great Western since 1992 and as Executive Vice President since 1999. Mr. Brabec served as Executive Vice President and Director of Great Western Bank, Watertown (successor by merger to Rushmore Bank & Trust) from 1993 until 1999, when he was named CFO, Secretary and Treasurer of Great Western. Mr. Brabec became President and CEO of Great Western Bank, Omaha in January 2001. He is an Executive Vice President and Director of the affiliated Spectrum Life Insurance Company. He is a Director of Spectrum Financial Services, Inc., an affiliate of Great Western.

Jeffory A. Erickson. Mr. Erickson has served as President and CEO of Great Western Bank, Watertown since 1995. He was elected a Director of Great Western in January 2002. Since July 2002 he has served as Vice Chairman and Chief Executive Officer of Rushmore Bank & Trust until its merger into Great Western Bank, Watertown in May 2003.

Thomas B. Fischer. Mr. Fischer has been President and Director of Spectrum Financial Services, Inc. an affiliate of Great Western since 1996. He was elected Senior Vice President, Assistant Secretary and Director of Great Western in 1997. From 1992 to 1996, Mr. Fischer was Vice President, General Counsel, and Secretary of FirsTier Financial, Inc., a multi-bank holding company headquartered in Omaha, Nebraska.

Art N. Burtscher. Mr. Burtscher is Chairmen of McCarthy Group Advisors in Omaha. He has been a Director of Great Western since 2001. He is Director of Great Western Bank, Omaha, where he served as President from 1988 to 2001.

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Andrew C. Hove, Jr. Mr. Hove (retired) was Vice Chairman and Acting Chairman of the Federal Deposit Insurance Corporation in Washington, DC, from 1990 to 2001. He is the former Chairman and CEO of the Minden Exchange Bank & Trust Company, Minden, Nebraska, where he had served for 30 years. Mr. Hove became a Director of Great Western in 2001.

Robert W. Murray. Mr. Murray is a Director of EMC National Life Company, Urbandale, Iowa. He is the former Vice Chairman of National Travelers Life Insurance Company, former Chairman and CEO of Mercantile Bank Iowa and former Chairman and CEO of Hawkeye Bancorporation. Mr. Murray became a Director of Great Western in 2001.

Leo W. Smith II. General Smith is Acting Director of the Durham Western Heritage Museum. He has been Director of Great Western Bank, Omaha since September 1998 and Director of Great Western since May 2001. Prior to his service as a Director with United Way of the Midlands in Omaha, Nebraska, General Smith was the last Vice Commander-In-Chief of the Strategic Air Command.

James R. Clark. Mr. Clark joined Great Western as Chief Financial Officer, Treasurer, and Secretary in August 2001. He is Vice President of Great Western’s banks’ subsidiary, Great Western Service Corporation. He is Secretary and Treasurer of the affiliated Spectrum Life Insurance Company. He is Vice President, Secretary and Treasurer of Spectrum Financial Services, Inc., an affiliate of Great Western. From 1994 to 1999, he was Vice President of Finance and Administration of (i)Structure, Inc. From 1977 to 1994, he held financial positions with Peter Kiewit Sons’, Inc., Omaha, Nebraska.

John L. Hendren. Mr. Hendren has served as President and CEO of Great Western Bank, Clive since August 2002. Since August 1986 he has served as President and CEO of Citizens Bank, Mt Ayr until its merger into Great Western Bank, Clive in February 2003. He served as a Director and Vice President of the former Citizens Bank of Princeton, Princeton, Missouri, since 1986 which merged into Great Western Bank, Clive in February 2003.

ITEM 11. EXECUTIVE COMPENSATION

The following table presents the cash compensation paid by Great Western and its subsidiaries to certain executive officers for the fiscal years 2002 through 2004. No other executive officer of Great Western received compensation from Great Western exceeding $100,000 for these years.


Name and Principal Position	Year	Salary		Bonus		All Other Compensation⁽¹⁾
Deryl F. Hamann, Chairman and Chief Executive Officer	2004 2003 2002	$	548,039 533,891 527,312	$	163,908 159,135 154,500	$	13,625 20,300 29,733
Daniel A. Hamann, President and Chief Operating Officer	2004 2003 2002	$	246,750 240,500 170,000	$	121,750 118,750 0	$	34,412 47,231 16,914
Daniel J. Brabec, Executive Vice President and Director	2004 2003 2002	$	246,719 240,469 181,245	$	163,359 93,750 0	$	49,476 45,925 18,009
James R. Clark, Chief Financial Officer, Secretary, Treasurer	2004 2003	$	152,500 112,333	$	24,333 28,000	$	11,825 1,719

⁽¹⁾	Amounts represent 401(k) Plan employer contributions, a portion of “Split-Dollar” insurance premiums prior to 2003, and amounts allocated under Phantom Stock Agreements. (See “Phantom Stock Agreements.”)

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Great Western does not have any compensatory stock option plan for its executive officers and directors. None of the directors or officers of Great Western have any options, warrants or other similar rights to purchase securities of Great Western.

Great Western has no board committees at the holding company level except an audit committee and an executive committee. Great Western has an Audit Committee Charter in compliance with SEC and American Stock Exchange rules. Great Western has four independent directors to serve on its audit committee.

INDEMNIFICATION

The articles of incorporation of Great Western provide that the board of directors is authorized to indemnify, in the manner and to the extent provided by the Iowa Business Corporation Act, any person entitled to indemnification there under. Generally under Iowa law, any individual who is made a party to a proceeding because the individual is or was a director may be indemnified if the individual acted in good faith and had reasonable basis to believe that: (1) in the case of conduct in the individual’s official capacity with the corporation, that the individual’s conduct was in the corporation’s best interests; and (2) in all other cases, that the individual’s conduct was at least not opposed to the corporation’s best interest; and regarding any criminal proceedings, the individual had no reasonable cause to believe the individual’s conduct was unlawful. Iowa law also extends such indemnification to officers, employees, and agents of the corporation and further provides that an Iowa corporation may advance expenses to a director, officer, employee, or agent of the corporation. Great Western has adopted resolutions to implement such indemnity.

Iowa law also provides that an Iowa corporation may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, against liability asserted against or incurred by that individual in that capacity or arising from the individual’s status as a director, officer, employee, or agent. Great Western has not purchased such insurance.

The indemnification and advancement of expenses provided by Iowa law are not exclusive of any other rights to which persons seeking indemnification or advancement of expenses are entitled under a provision in the articles of incorporation or bylaws, agreements, vote of stockholders or disinterested directors, or otherwise, both as to action in a person’s official capacity and as to action in another capacity while holding office. However, such provisions, agreements, votes or other actions shall not provide indemnification for a breach of a director’s duty of loyalty to the corporation or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of the law, for a transaction from which the person seeking indemnification derives an improper personal benefit, or for liability for unlawful distributions.

Iowa law provides that a director is not liable for any action taken as a director, or any failure to take any action, as long as the director discharged his or her duties (1) in good faith, (2) with the care of an ordinarily prudent person in a like position would exercise under similar circumstances, and (3) in a manner the director reasonably believes to be in the best interests of the corporation.

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Great Western is not aware of any other threatened litigation that may result in claims for indemnification by any director, officer, employee or other agent.

PHANTOM STOCK AGREEMENTS

Great Western’s subsidiary banks have phantom stock agreements with several senior bank officers, including Daniel A. Hamann, Chairman of Great Western Bank, Clive, Jeffory A. Erickson, President and CEO of Great Western Bank, Watertown, Daniel J. Brabec, President and CEO of Great Western Bank, Omaha, and John L. Hendren, President and CEO of Great Western Bank, Clive. Amounts are accrued for the officers based on their bank’s performance, 50% by achieving certain annual growth rates in net income and 50% by achieving certain annual rates of return on assets. Accumulated amounts are payable to the officers over ten years beginning at age 65 or prior due to death or permanent disability.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table presents information regarding beneficial ownership of common stock of Great Western as of August 31, 2004 by (1) each shareholder known by Great Western to be the beneficial owner of more than 5% of its outstanding common stock and (2) each director of Great Western and each named executive officer and (3) all directors and executive officers as a group. Based on information furnished by the owners, management believes that the stockholders listed below have sole investment and voting power regarding their shares, except that co-trustees share investment and voting power.


Name and Address of Beneficial Owner	Shares Beneficially Owned		Percentage of Class
Deryl F. Hamann 1500 Woodmen Tower Omaha, NE 68102	27,479	⁽¹⁾	22.20	%
Daniel A. Hamann 10834 Old Mill Road, Suite One Omaha, NE 68154	54,725.50	⁽²⁾⁽⁶⁾	44.20	%
Esther Hamann Brabec 10834 Old Mill Road, Suite One Omaha, NE 68154	57,027.50	⁽³⁾⁽⁶⁾	46.06	%
Daniel J. Brabec 14545 West Center Road Omaha, NE 68144	505	⁽⁴⁾	*
Julie Hamann Hodgson 10834 Old Mill Road, Suite One Omaha, NE 68154	59,967.50	⁽⁵⁾⁽⁶⁾	48.44	%
Art N. Burtscher 1125 So. 103^rd St., Suite 450 Omaha, NE 68124	-0-		-0-
Jeffory A. Erickson 35 First Ave NE Watertown, SD 57201	-0-		-0-
Andrew C. Hove, Jr. 6610 Blue Ridge Lane Lincoln, NE 68516	-0-		-0-
Robert W. Murray 1716 So. 42^nd St. West Des Moines, IA 50265	-0-		-0-
Leo W. Smith II 509 Windsor Drive Papillion, NE 68046	-0-		-0-
Thomas B. Fischer 10834 Old Mill Road, Suite One Omaha, NE 68154	-0-		-0-
James R. Clark 10834 Old Mill Road, Suite One Omaha, NE 68154	-0-		-0-
All executive officers and directors as a group (ten persons)	82,709.50		66.40	%

⁽¹⁾

Of this amount, an aggregate of 24,315 shares are held by five separate trusts for which Mr. Hamann serves as trustee for the benefit of his children, Daniel A. Hamann, Esther Hamann Brabec, and Julie Hamann Hodgson. Mr. Hamann as trustee owns an additional 454 shares held by an affiliated company. In addition, Mr. Hamann owns 2,710 shares individually.

⁽²⁾

Of this amount, 2,151 shares are owned by his revocable trust for which he serves as sole trustee, 261 shares are owned by his spouse, and an aggregate of 37,017.75 shares are held by various Hamann family trusts for which he serves as co-trustee with Esther Hamann Brabec and Julie Hamann Hodgson and 14,841.75 shares are owned by him as trustee for Esther Hamann Brabec.

⁽³⁾

Of this amount, 1,841 shares are owned by her revocable trust for which she serves as sole trustee, 505 shares are owned by her spouse, an aggregate of 37,017.75 shares are held by various Hamann family trusts for which she serves as co-trustee with Daniel A. Hamann and Julie Hamann Hodgson, and 17,209.75 shares are owned by her as trustee for Julie Hamann Hodgson and her issue.

⁽⁴⁾	Does not include shares beneficially owned by his spouse. Mr. Brabec disclaims beneficial ownership of such shares.

⁽⁵⁾

Of this amount, 2,074 shares are owned by her revocable trust for which she serves as sole trustee, an aggregate of 37,017.75 shares are held by various Hamann family trusts for which she serves as co-trustee with Daniel A. Hamann and Esther Hamann Brabec, 3,075 shares are owned by her as trustee for Esther Hamann Brabec’s issue and 17,346.75 shares are owned by her as trustee for Daniel A. Hamann and his issue.

⁽⁶⁾	Mr. Hamann, Daniel A. Hamann, Esther Hamann Brabec and Julie Hamann Hodgson as trustee own an additional 454 shares held by an affiliated company.

*	Less than 1%.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Spectrum Life Insurance Company and Spectrum Financial Services, Inc. are affiliates of Great Western. Deryl F. Hamann and his children own them, directly or indirectly, individually or as trustee. Spectrum Life Insurance Company reinsures certain credit life, accident and health insurance policies sold by Great Western’s subsidiary banks and unaffiliated banks as agents for an unaffiliated insurance company. Spectrum Life Insurance Company reinsures certain of the mortality and morbidity risks under such policies in accordance with separate treaties with the unaffiliated insurance company, and received compensation from such insurance company of $1,057,464 during Great Western’s fiscal year ended June 30, 2004, $1,074,368 for the year ended June 30, 2003, and $945,665 for the year ended June 30, 2002, for assuming such reinsurance risks with respect to credit insurance originated by Great Western’s subsidiary banks. Great Western’s subsidiary banks receive a commission on such sales of credit insurance as permitted by applicable state law.

In addition, Spectrum Financial Services, Inc. receives a commission as general agent from the unaffiliated insurance company on such sales of credit insurance where permitted by law. Such commissions on credit life insurance originated by Great Western’s subsidiary banks was $26,834 during the fiscal year ended June 30, 2004, $54,157 during the fiscal year ended June 30, 2003, and $17,091 during the fiscal year ended June 30, 2002. Great Western believes that the foregoing arrangements are on terms similar to those which would be obtained with an unaffiliated party.

Spectrum Financial Services, Inc., until the sale of its subsidiary broker-dealer, Spectrum Capital Inc., on July 15, 2003, placed investment centers in banks, including the Great Western’s subsidiary banks and unaffiliated banks. The investment centers engaged in the sale of life insurance, annuities, mutual funds and certain other securities on the premises of the banks under lease arrangements and with joint or common employees. Spectrum Financial Services, Inc. paid Great Western’s subsidiary banks lease rentals based on commissions generated. Gross commissions originated from Great Western’s banks were $762,000 during fiscal year ended June 30, 2003, and $764,097 during the fiscal year ended June 30, 2002. Gross commissions originated after June 30, 2003 and prior to the sale of Spectrum Capital, Inc. on July 15, 2003 were immaterial. Each of Great Western’s subsidiary banks received approximately 75% of the amount of gross commissions generated from its leased space as rental. Great Western believes that these arrangements were on terms similar to those that would be obtained with an unaffiliated party.

On August 7, 2000, Great Western became the surviving corporation in a merger with the affiliated Citizens Corporation, which owned Citizens Bank, Chariton, Iowa. The Hamann family or their interests owned beneficially all of the stock to all parties to the merger. In the merger, the Hamann family or their interests received a total of 7,584 shares of common stock of Great Western. Shortly prior to the merger the Hamann family or their interests received 10% subordinated capital notes of Citizens Corporation, having a face amount of $1,200,000 due December 31, 2010, as a distribution of income received while Citizens Corporation was an “S” corporation. Great Western assumed the liability on the capital notes in the merger.

The common stockholders of Great Western formed Capital Investors, LLC in March 2001. Capital Investors, LLC is owned by common stockholders of Great Western for the purpose of financing the purchase of Great Western’s subordinated capital notes. This structure was designed to meet requirements of the third party lender to Capital Investors and to qualify Great Western’s subordinated capital notes as Tier II capital for regulatory purposes. The subordinated capital notes bear interest at a floating rate of one percent

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per annum over prime rate and will be due March 23, 2011 with interest payable quarterly. Great Western has the right to prepay the subordinated capital notes without penalty. Depending upon the availability of funds and Great Western’s capital requirements, Great Western intends to prepay the subordinated capital notes at the rate of 20% of the original principal amount each year beginning in 2007 through 2011. Great Western’s obligations under its preferred securities guarantee and the junior subordinated debentures are unsecured and rank junior to Great Western’s obligations under its subordinated capital notes.

Capital Investors negotiated a loan from an unaffiliated bank of $35,000,000 to purchase Great Western’s subordinated capital notes. The loan terms include the option to either fix the rate of interest at the one to five-year treasury rate plus 350 basis points but not less than the lender’s cost of funds plus 250 basis points, or to select a rate of interest at LIBOR plus 215 basis points fixed at intervals ranging from 30 days to 180 days. Interest is payable quarterly on the loan and principal due March 23, 2006, but expected to be payable in equal installments annually in each year beginning 2007 through 2011. Capital Investors collateralized its borrowing by pledging the subordinated capital notes to the unaffiliated bank. In addition, the stockholders of Great Western pledged their common stock as additional collateral for Capital Investors’ loan.

Daniel A. Hamann, Esther Hamann Brabec and Julie Hamann Hodgson, children of Deryl F. Hamann were parties to a Split Dollar Agreement dated July 12, 1995 pursuant to which Great Western paid premiums for insurance on the life of Deryl F. Hamann which are to be repaid upon maturity of the policy. See Exhibit Document 10.7. On August 14, 2003, the owners assigned sole ownership of the policy to Great Western and made Great Western sole beneficiary of the policy.

Deryl F. Hamann is Senior Counsel to the law firm of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim LLP, Omaha, Nebraska. The law firm is counsel to Great Western. See “Legal Proceedings.” Mr. Hamann devotes approximately 5% of his time to law firm matters, 90% to Great Western matters, and the remaining 5% to other interests.

Great Western and its subsidiaries have had, and may be expected to have in the future, banking transactions in the ordinary course of business with directors, executive officers, their immediate families and affiliated companies in which they have 10% or more beneficial ownership (commonly referred to as related parties). These transactions (1) were made in the ordinary course of business, (2) were made on substantially the same terms, including interest rates, and collateral, as those prevailing at the time for comparable transactions with other persons, and (3) did not involve more than the normal risk of collectibility or present other unfavorable features.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table represents aggregate fees billed to Great Western for fiscal year ended June 30, 2004 and June 30, 2003 by BKD, LLP, Great Western’s principal accounting firm.


	Year Ended June 30,
	2004		2003
	(In thousands)
Audit Fees	$	102	$8
Audit related Fees ^(a)		12	0
Tax Fees		12	0
All other fees		0	0

Total Fees	$	126	$8

^(a)	Research and discussions on new accounting pronouncements.

Auditor Fees Pre-approval Policy. In 2003, the Audit Committee adopted a formal policy concerning approval of audit and non-audit services to be provided by the independent auditor to Great Western. The policy requires that all services BKD, LLP, Great Western’s independent auditor, may provide to Great Western, including audit services and permitted audit-related and non-audit services, be approved by the Audit Committee. The Committee approved all audit and non-audit services provided by BKD, LLP during fiscal 2004.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)

Documents filed with this report.

(1) See index to Consolidated Financial Statements on page F-1 of this report.

(2) All supplemental schedules are omitted because of the absence of conditions under which they are required or because the information is shown in the Consolidated Financial Statements or notes thereto.

(3) Exhibits

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(a) (3) EXHIBITS


REGULATION S-K EXHIBIT NUMBER	DOCUMENT	REFERENCE TO PRIOR FILING OR EXHIBIT NUMBER ATTACHED HERETO	SEQUENTIAL PAGE NUMBER WHERE ATTACHED EXHIBITS ARE LOCATED IN THIS FORM 10-K REPORT
2.2	Agreement and Plan of Merger dated May 25, 2000, between Great Western Bancorporation, Inc. and Citizens Corporation.	(2)	Not Applicable
2.3	Agreement dated November 14, 2000, between Jack K. Harvey and Great Western Securities, Inc.	(2)	Not Applicable
2.4	Agreement and Plan of Merger dated December 16, 2000, between Great Western Bancorporation, Inc. and Great Western Securities, Inc.	(2)	Not Applicable
3.1	Articles of Amendment to Articles of Incorporation of Great Western Bancorporation, Inc.	(1)	Not Applicable
3.2	Bylaws of Great Western Bancorporation, Inc.	(1)	Not Applicable
4.1	Form of Subordinated Indenture dated August 18, 1999, entered into between the Registrant and Wilmington Trust Company, as Indenture Trustee.	(1)	Not Applicable
4.1	Form of Subordinated Indenture dated March 19, 2001 entered into between the Registrant and Wilmington Trust Company, as Indenture Trustee.	(2)	Not Applicable
4.1	Form of Subordinate Indenture dated October 29, 2002 entered into between the Registrant and Wilmington Trust Company as Indenture Trustee.	(8)	Not Applicable
4.1	Form of Subordinated Indenture dated December 17, 2003, entered into between the Registrant and U.S. Bank National Association, as Indenture Trustee.	(9)	Not Applicable
4.1	Form of Subordinated Indenture dated March 31, 2004, entered into between the Registrant and JP Morgan Chase Bank, as Indenture Trustee.	(10)	Not Applicable
4.2	Form of Junior Subordinated Debenture.	(1)	Not Applicable
4.2	Form of Junior Subordinated Debenture.	(2)	Not Applicable
4.2	Form of Junior Subordinated Debenture.	(8)	Not Applicable
4.2	Form of Junior Subordinated Debenture.	(9)	Not Applicable
4.2	Form of Junior Subordinated Debenture.	(10)	Not Applicable
4.3	Certificate of Trust of GWB Capital Trust I.	(1)	Not Applicable
4.3	Certificate of Trust of GWB Capital Trust II.	(2)	Not Applicable
4.3	Certificate of Trust of GWB Capital Trust III.	(8)	Not Applicable
4.3	Certificate of Trust of Great Western Statutory Trust IV.	(9)	Not Applicable
4.3	Certificate of Trust of GWB Capital Trust V.	(10)	Not Applicable
4.4	Trust Agreement of GWB Capital Trust I dated as of June 11, 1999.	(1)	Not Applicable
4.4	Trust Agreement of GWB Capital Trust II dated as of January 4, 2001.	(2)	Not Applicable
4.4	Trust Agreement of GWB Capital Trust III dated as of October 15, 2002.	(8)	Not Applicable
4.4	Trust Agreement of Great Western Statutory Trust IV dated as of December 3, 2003.	(9)	Not Applicable
4.4	Trust Agreement of GWB Capital Trust V dated as of March 29, 2004.	(10)	Not Applicable
4.5	Form of Amended and Restated Trust Agreement of GWB Capital Trust I dated August 18, 1999.	(1)	Not Applicable

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4.5	Form of Amended and Restated Trust Agreement of GWB Capital Trust II dated March 19, 2001.	(2)	Not Applicable
4.5	Form of Amended and Restated Trust Agreement of GWB Capital Trust III dated October 29, 2002.	(8)	Not Applicable
4.5	Form of Amended and Restated Trust Agreement of Great Western Statutory Trust IV dated December 17, 2003.	(9)	Not Applicable
4.5	Form of Amended and Restated Trust Agreement of GWB Capital Trust V dated March 31, 2004.	(10)	Not Applicable
4.6	Form of Preferred Security Certificate of GWB Capital Trust I.	(1)	Not Applicable
4.6	Form of Preferred Security Certificate of GWB Capital Trust II.	(2)	Not Applicable
4.6	Form of Preferred Security Certificate of GWB Capital Trust III.	(8)	Not Applicable
4.6	Form of Preferred Security Certificate of Great Western Statutory Trust IV	(9)	Not Applicable
4.6	Form of Preferred Security Certificate of GWB Capital Trust V.	(10)	Not Applicable
4.7	Form of Preferred Securities Guarantee Agreement.	(1)	Not Applicable
4.7	Form of Preferred Securities Guarantee Agreement.	(2)	Not Applicable
4.7	Form of Preferred Securities Guarantee Agreement.	(8)	Not Applicable
4.7	Form of Preferred Securities Guarantee Agreement.	(9)	Not Applicable
4.7	Form of Preferred Securities Guarantee Agreement.	(10)	Not Applicable
4.8	Form of Agreement as to Expenses and Liabilities.	(1)	Not Applicable
4.8	Form of Agreement as to Expenses and Liabilities.	(2)	Not Applicable
4.8	Form of Agreement as to Expenses and Liabilities.	(8)	Not Applicable
4.8	Form of Agreement as to Expenses and Liabilities.	(9)	Not Applicable
4.8	Form of Agreement as to Expenses and Liabilities.	(10)	Not Applicable
4.9	Revised Form of Great Western’s Subordinated Capital Notes due 2011.	(3)	Not Applicable
10.1	Time Note dated July 18, 2000, between Great Western Bancorporation, Inc., as borrower, and LaSalle Bank National Association.	(2)	Not Applicable
10.3	Agreement for Advances, Pledge and Security Agreement dated September 11, 1995, between Federal Home Loan Bank of Des Moines and Rushmore Bank & Trust. (Registrant’s other subsidiary banks have identical agreements).	(1)	Not Applicable
10.4	Form of CMS^™ Agency Agreement (reverse repurchase agreement) between Great Western Bank, Watertown and its customers.	(1)	Not Applicable
10.5	Phantom Stock Long-Term Incentive Plan dated April 30, 2003, between Daniel A. Hamann and Great Western Bank, Clive.	(6)	Not Applicable
10.6	License Agreement dated September 5, 1997 between Jack Henry & Associates, Inc. and Great Western Service Corporation.	(1)	Not Applicable
10.7	Split-Dollar Agreement dated July 12, 1995 among Great Western and Daniel A. Hamann, Esther Hamann Brabec and Julie Hamann Hodgson.	(1)	Not Applicable
10.8	Phantom Stock Long-Term Incentive Plan dated January 24, 2000, between Jeffory A. Erickson and Great Western Bank, Watertown.	(5)	Not Applicable
10.9	Phantom Stock Long-Term Incentive Plan dated January 17, 2001, between Daniel J. Brabec and Great Western Bank, Omaha.	(5)	Not Applicable
12.1	Statement re Computation of Ratios.	(7)
21	Subsidiaries of Registrant.	(7)
24.1	Power of Attorney for Art N. Burtscher.	(4)	Not Applicable
24.2	Power of Attorney for Andrew C. Hove, Jr.	(4)	Not Applicable
24.3	Power of Attorney for Robert W. Murray.	(4)	Not Applicable
24.4	Power of Attorney for Leo W. Smith.	(4)	Not Applicable
24.5	Power of Attorney for Jeffory A. Erickson.	(5)	Not Applicable

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31.1	Chief Executive Officer’s Certificate Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	(7)
31.2	Chief Financial Officer’s Certificate Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	(7)
32.1	Chief Executive Officer’s Certificate Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	(7)
32.2	Chief Financial Officer’s Certificate Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	(7)

(1)	Filed as exhibits to Great Western’s Form S-1 registration statement filed on June 11, 1999, (File No. 333-80551) pursuant to Section 5 of the Securities Act of 1933.

(2)	Filed as exhibits to Great Western’s Form S-1 registration statement filed on January 12, 2001 (File No. 333-53644) pursuant to Section 5 of the Securities Act of 1933.

(3)	Filed as an exhibit to Great Western’s Form S-1 registration statement filed on February 28, 2001 (File No. 333-53644) pursuant to Section 5 of the Securities Act of 1933.

(4)	Filed as an exhibit to Great Western’s Annual Report on Form 10-K for the year ended June 30, 2001 and incorporated herein by reference.

(5)	Filed as an exhibit to Great Western’s Annual Report on Form 10-K for the year ended June 30, 2002 and incorporated herein by reference.

(6)	Filed as an exhibit to Great Western’s Annual Report on Form 10-K for the year ended June 30, 2003 and incorporated herein by reference.

(7)	Filed herewith.

(8)	Pursuant to Item 601 (b) (4) (iii) (A) of Regulation S-K, upon request of the Commission, Great Western agrees to furnish a copy of instruments defining the rights of security holders, including indentures for GWB Capital Trust III.

(9)	Pursuant to Item 601 (b) (4) (iii) (A) of Regulation S-K, upon request of the Commission, Great Western agrees to furnish a copy of instruments defining the rights of security holders, including indentures for Great Western Statutory Trust IV.

(10)	Pursuant to Item 601 (b) (4) (iii) (A) of Regulation S-K, upon request of the Commission, Great Western agrees to furnish a copy of instruments defining the rights of security holders, including indentures for GWB Capital Trust V.

All of such previously filed documents are hereby incorporated herein by reference in accordance with Item 601 of Regulation S-K.

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(b)

REPORTS ON FORM 8-K

The Company filed a current report on Form 8-K (Item 5) subsequent to the quarter ended March 31, 2004. The Form 8-K was filed on April 5, 2004, and reported the Company issued 25,000 shares, $1,000 par value, of Company Capital Trust Pass-Through Securities of GWB Capital Trust V on March 31, 2004 through a private placement. The Company owns 100% of the common securities of GWB Capital Trust V.

The Company filed an additional current report on Form 8-K (Item 5) subsequent to the quarter ended March 31, 2004. The form 8-K was filed on May 24, 2004 and reported Company has notified Wilmington Trust Company it intends to initiate an early redemption of all of its Junior Subordinated Debentures under the Subordinated Indenture dated August 18, 1999. The Company received approval from the Federal Reserve on May 19, 2004 to initiate the early redemption.

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SIGNATURES

Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


GREAT WESTERN BANCORPORATION, INC.

By		/s/ Deryl F. Hamann
		Deryl F. Hamann, Chairman and Chief Executive Officer (Duly Authorized Representative)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated.



/s/ Deryl F. Hamann				/s/ Daniel A. Hamann
Deryl F. Hamann, Chairman, Chief Executive Officer and Director (Principal Executive and Operating Officer) Date: 9/10/04				Daniel A. Hamann, President Chief Operating Officer and Director Date: 9/10/04

/s/ Thomas B. Fischer				/s/Arthur N. Burtscher *
Thomas B. Fischer, Senior Vice President and Director Date: 9/10/04				Arthur N. Burtscher Director Date: 9/10/04

/s/ Daniel J. Brabec				/s/ Andrew C. Hove, Jr. *
Daniel J. Brabec, Executive Vice President and Director Date: 9/10/04				Andrew C. Hove, Jr. Director Date: 9/10/04

/s/ James R. Clark				/s/ Robert W. Murray *
James R. Clark Chief Financial Officer and Secretary/Treasurer Date: 9/10/04				Robert W. Murray Director Date: 9/10/04

/s/ Jeffory A. Erickson *				/s/ Leo Smith II *
Jeffory A. Erickson Director Date: 9/10/04				Leo W. Smith II Director Date: 9/10/04

				*By: /s/ Deryl F. Hamann
				Deryl F. Hamann As: Attorney-in-Fact Date: 9/10/04

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Great Western Bancorporation, Inc.

Accountants’ Report and Consolidated Financial Statements

June 30, 2004, 2003 and 2002

LOGO

Great Western Bancorporation, Inc.


Contents

Report of Independent Registered Public Accounting Firm for 2004 and 2003		F-2

Report of Independent Registered Public Accounting Firm for 2002		F-3

Consolidated Financial Statements

Balance Sheets		F-4

Statements of Income		F-5

Statements of Stockholders’ Equity		F-7

Statements of Cash Flows		F-8

Notes to Financial Statements		F-10 - F-43

F-1

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders

Great Western Bancorporation, Inc.

Omaha, Nebraska

We have audited the accompanying consolidated balance sheets of Great Western Bancorporation, Inc. as of June 30, 2004 and 2003, and the related consolidated statements of income, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of Great Western Bancorporation, Inc. for the year ended June 30, 2002, were audited by other accountants whose report dated July 30, 2002, expressed an unqualified opinion on those statements.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the 2004 and 2003 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Great Western Bancorporation, Inc., and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ BKD, LLP

Lincoln, Nebraska

August 18, 2004

F-2

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders

Great Western Bancorporation, Inc.

Omaha, Nebraska

We have audited the accompanying consolidated statements of income, stockholders’ equity and cash flows of Great Western Bancorporation, Inc. for the year ended June 30, 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of Great Western Bancorporation, Inc.’s operations and its cash flows for the year ended June 30, 2002 in conformity with U.S. generally accepted accounting principles.

/s/ McGladrey & Pullen, LLP

Sioux Falls, South Dakota

July 30, 2002

McGladrey & Pullen, LLP is a member firm of RSM International,

an affiliation of separate and independent legal entities.

F-3

Great Western Bancorporation, Inc.

Consolidated Balance Sheets

June 30, 2004 and 2003

(In thousands, except share data)


	2004			2003
Assets
Cash and due from banks	$	49,768		$	64,637
Federal funds sold and FHLB overnight deposits		26,642			42,522

Cash and cash equivalents		76,410			107,159
Certificates of deposit		99			99
Securities available for sale		364,847			313,136
Investment in affiliates		3,262			—
Loans, net of allowance for loan losses of $22,643 and $21,251 in 2004 and 2003, respectively		1,832,215			1,599,961
Premises and equipment		47,890			43,675
Accrued interest receivable		14,309			13,679
Core deposits and other intangibles		2,897			3,371
Goodwill		51,847			45,930
Mortgage servicing rights		14,557			5,274
Other assets		21,576			15,785

Total assets	$	2,429,909		$	2,148,069

Liabilities and Stockholders’ Equity
Liabilities
Deposits
Noninterest bearing	$	252,759		$	262,161
Interest bearing		1,661,305			1,472,869

Total deposits		1,914,064			1,735,030
Federal funds purchased and securities sold under agreements to repurchase		95,810			60,163
FHLB advances and other borrowings		115,355			103,380
Notes payable		36,700			43,700
Company obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures		—			58,000
Subordinated debentures		108,662			—
Accrued interest and other liabilities		16,124			17,558

Total liabilities		2,286,715			2,017,831

Minority interests		4,074			3,864

Stockholders’ equity
Preferred stock, $100 par value; authorized 500,000 shares; issued and outstanding: 9,000 shares of 8% cumulative, nonvoting; 8,000 shares of 10% noncumulative, nonvoting; 100,000 shares of variable rate, noncumulative, nonvoting		11,700			11,700
Common stock, $1.00 par value, authorized 1,000,000 shares; issued and outstanding 2004 – 123,802 shares, 2003 – 124,952 shares		124			125
Additional paid-in capital		2,032			2,051
Retained earnings		129,106			106,433
Accumulated other comprehensive income (loss)		(3,842	)		6,065

Total stockholders’ equity		139,120			126,374

Total liabilities and stockholders’ equity	$	2,429,909		$	2,148,069

See Notes to Consolidated Financial Statements

F-4

Great Western Bancorporation, Inc.

Consolidated Statements of Income

Years Ended June 30, 2004, 2003 and 2002

(In thousands, except share and per share data)


	2004		2003		2002
Interest and Dividend Income
Loans	$	110,641	$	109,877	$	110,101
Taxable securities		10,545		12,415		14,966
Nontaxable securities		1,652		1,812		1,291
Dividends on securities		370		242		290
Federal funds sold and other		277		724		1,267

Total interest and dividend income		123,485		125,070		127,915

Interest Expense
Deposits		29,028		35,793		46,620
Federal funds purchased and securities sold under agreements to repurchase		960		824		1,644
FHLB advances and other borrowings		4,068		4,123		4,218
Notes payable		1,969		2,397		2,955
Company obligated mandatory redeemable preferred securities		2,602		5,068		4,744
Subordinated debentures		3,436		—		—

Total interest expense		42,063		48,205		60,181

Net Interest Income		81,422		76,865		67,734
Provision for Loan Losses		4,324		4,371		6,067

Net Interest Income After Provision for Loan Losses		77,098		72,494		61,667

Noninterest Income
Service charges and other fees		14,541		13,080		10,134
Net gains from sale of loans		5,902		6,770		2,917
Loan servicing fees		3,451		3,404		3,524
Casualty insurance commissions		1,072		995		741
Credit life and H&A insurance commissions		328		375		416
Health and life insurance commissions		84		100		136
Other insurance commissions		211		268		222
Investment center income		826		635		855
Gain on securities, net		1,255		1,862		215
Trust department income		2,109		1,684		1,610
Net gain (loss) from sale of other real estate owned and other assets		296		1,206		(96	)
Other		1,183		975		1,223

Total noninterest income		31,258		31,354		21,897

See Notes to Consolidated Financial Statements

F-5

Great Western Bancorporation, Inc.

Consolidated Statements of Income - Continued

Years Ended June 30, 2004, 2003 and 2002

(In thousands, except share and per share data)


	2004		2003		2002
Noninterest Expense
Salaries and employee benefits	$	35,560	$	33,323	$	28,851
Occupancy expenses, net		4,478		4,227		3,770
Data processing		3,705		3,676		3,091
Equipment expenses		2,977		2,757		2,510
Advertising		4,667		3,743		2,180
Communication expenses		2,191		2,042		1,858
Professional fees		4,092		3,165		2,711
Amortization and valuation adjustments of mortgage servicing rights		1,623		15,358		9,049
Amortization of core deposits and other intangibles		1,595		1,901		2,629
Other		7,472		7,268		5,669

Total noninterest expense		68,360		77,460		62,318

Income Before Income Taxes and Minority Interests		39,996		26,388		21,246
Provision for Income Taxes		14,085		9,839		7,393

Income Before Minority Interests		25,911		16,549		13,853
Minority Interests		580		618		636

Net Income	$	25,331	$	15,931	$	13,217

Basic Earnings Per Common Share	$	198.18	$	121.61	$	98.36

Weighted Average Shares Outstanding		124,408		125,071		125,221

See Notes to Consolidated Financial Statements

F-6

Great Western Bancorporation, Inc.

Consolidated Statements of Stockholders’ Equity

Years Ended June 30, 2004, 2003 and 2002

(In thousands, except for share and per share data)


	Comprehensive Income			Preferred Stock Par Value		Common Stock Par Value			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)
Balance, July 1, 2001				$	11,700	$	125		$	2,064		$	80,792		$	2,245
Net income	$	13,217			—		—			—			13,217			—
Other comprehensive income, net of tax:
Net change in unrealized gain on securities available for sale		1,750			—		—			—			—			1,750

Comprehensive income	$	14,967

Redeem 135 shares of common stock					—		—			(6	)		(73	)		—
Cash dividends paid:
Preferred stock					—		—			—			(900	)		—
Common stock, $6.00 per share					—		—			—			(751	)		—

Balance, June 30, 2002					11,700		125			2,058			92,285			3,995
Net income	$	15,931			—		—			—			15,931			—
Other comprehensive income, net of tax:
Net change in unrealized gain on securities available for sale		2,070			—		—			—			—			2,070

Comprehensive income	$	18,001

Redeem 180 shares of common stock					—		—			(7	)		(115	)		—
Deemed dividend to affiliate					—		—			—			(196	)		—
Cash dividends paid:
Preferred stock					—		—			—			(721	)		—
Common stock, $6.00 per share					—		—			—			(751	)		—

Balance, June 30, 2003					11,700		125			2,051			106,433			6,065
Net income	$	25,331			—		—			—			25,331			—
Other comprehensive income, net of tax:
Net change in unrealized gain on securities available for sale		(9,907	)		—		—			—			—			(9,907	)

Comprehensive income	$	15,424

Redeem 1,150 shares of common stock					—		(1	)		(19	)		(1,162	)		—
Cash dividends paid:
Preferred stock					—		—			—			(676	)		—
Common stock, $6.60 per share					—		—			—			(820	)		—

Balance, June 30, 2004				$	11,700	$	124		$	2,032		$	129,106		$	(3,842	)

See Notes to Consolidated Financial Statements

F-7

Great Western Bancorporation, Inc.

Consolidated Statements of Cash Flows

Years Ended June 30, 2004, 2003 and 2002

(In thousands)


	2004			2003			2002
Operating Activities
Net income	$	25,331		$	15,931		$	13,217
Items not requiring (providing) cash
Depreciation and amortization		12,319			16,973			9,713
Gain on sale of securities		(1,255	)		(1,862	)		(215	)
Gain on sale of loans		(5,902	)		(6,770	)		(2,923	)
(Gain) loss from sale of other real estate owned and other assets		(296	)		(1,206	)		96
Provision for loan losses		4,324			4,371			6,067
Provision for (recovery of) impairment of mortgage servicing rights		(4,819	)		4,208			5,233
Deferred income taxes		96			(5,335	)		(3,742	)
Minority interests		580			618			636
Loans originated for resale		(358,487	)		(405,482	)		(171,386	)
Proceeds from sale of loans originated for resale		343,426			384,476			171,601
Changes in
Accrued interest receivable		(630	)		1,422			946
Other assets		650			(2,858	)		865
Accrued interest and other liabilities		(1,161	)		(1,092	)		(4,640	)

Net cash provided by operating activities		14,176			3,394			25,468

Investing Activities
Purchase of certificates of deposit		—			—			(4,199	)
Proceeds from maturities of certificates of deposit		—			398			5,235
Purchase of trust common securities		(1,467	)		—			—
Purchase of securities available for sale		(218,544	)		(213,279	)		(169,624	)
Proceeds from sales and maturities of securities available for sale		151,369			238,555			129,521
Purchase of mortgage servicing rights		(1,789	)		(518	)		(4,939	)
Proceeds from sale of mortgage servicing rights		3			—			38
Net increase in loans		(186,836	)		(97,881	)		(132,146	)
Purchase of premises and equipment		(7,252	)		(6,147	)		(4,511	)
Proceeds from sale of premises and equipment		1,083			754			67
Purchase of other assets		—			—			(125	)
Proceeds from sale of other assets		3,516			5,120			572
Business acquisitions		82,398			19,139			83

Net cash used in investing activities		(177,519	)		(53,859	)		(180,028	)

See Notes to Consolidated Financial Statements

F-8

Great Western Bancorporation, Inc.

Consolidated Statements of Cash Flows - Continued

Years Ended June 30, 2004, 2003 and 2002

(In thousands)


	2004			2003			2002
Financing Activities
Net increase in deposits	$	55,901		$	74,324		$	115,288
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase		44,502			(10,373	)		8,440
Proceeds from issuance of preferred securities		—			10,000			—
Proceeds from issuance of subordinated debentures		48,867			—			—
Proceeds from notes payable		22,700			40,690			40,522
Principal payments on notes payable		(26,580	)		(17,882	)		(35,095	)
Debt issuance costs incurred		(276	)		(8	)		(38	)
Purchase of minority interests		—			(3,017	)		—
Proceeds from sale of minority interests		—			1,166			—
Purchase of common stock for retirement		(1,182	)		(122	)		(79	)
Dividends paid, including $209, $184 and $245 paid to minority interests, respectively		(1,704	)		(1,656	)		(1,896	)
Payment of other liabilities		(9,634	)		(4,776	)		(9,740	)

Net cash provided by financing activities		132,594			88,346			117,402

Increase (Decrease) in Cash and Cash Equivalents		(30,749	)		37,881			(37,158	)
Cash and Cash Equivalents, Beginning of Year		107,159			69,278			106,436

Cash and Cash Equivalents, End of Year	$	76,410		$	107,159		$	69,278

Supplemental Disclosures of Cash Flows Information
Cash payments for interest	$	42,621		$	50,205		$	63,996
Income taxes		15,162			14,032			10,353
Supplemental Schedules of Noncash Investing and Financing Activities
Net change in unrealized gain/loss on securities available for sale, net of deferred income taxes	$	9,907		$	2,070		$	1,750
Purchase of mortgage servicing rights for other liabilities		9,122			4,984			914
Loans transferred to other real estate owned and other assets		3,225			2,496			2,005

See Notes to Consolidated Financial Statements

F-9

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 1:

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Great Western Bancorporation, Inc. (“Great Western”) is a multi-bank holding company organized under the laws of Iowa whose primary business is providing the traditional functions of trust, commercial, consumer, and mortgage banking services through its Nebraska, South Dakota and Iowa based subsidiary banks. The Banks are subject to competition from other financial institutions. The Banks are subject to the regulation of certain federal and state agencies and undergo periodic examinations by those regulatory authorities. Substantially all of Great Western’s income is generated from banking operations.

Principles of Consolidation

The consolidated financial statements include the accounts of Great Western and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The consolidated subsidiaries are as follows: Great Western Bank, (Great Western Bank, Omaha, 100.0% owned), which is chartered in Omaha, Nebraska; Great Western Bank, (Great Western Bank, Watertown, 96.1% owned), which is chartered in Watertown, South Dakota; Great Western Bank, (Great Western Bank, Clive, 100.0% owned), which is chartered in Clive, Iowa; Great Western Service Corporation, (100.0% owned by bank subsidiaries, excluding Great Western Bank, Omaha), a data processing organization. Great Western Bank, Omaha also owns 100.0% of GW Leasing, Inc., a leasing company. See “Changes in Minority Interests and Business Acquisitions”. Also, as discussed at Note 12, during the year ended June 30, 2004, Great Western applied the provisions of Financial Accounting Standards Board (FASB) Interpretation 46 (Revised) to its trust preferred securities, which required that GWB Capital Trusts I, II and III no longer be consolidated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and the valuation of mortgage servicing rights.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents includes cash on hand, amounts due from banks (including cash items in process of clearing), federal funds sold and Federal Home Loan Bank (FHLB) overnight deposits.

F-10

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 1:

Nature of Operations and Summary of Significant Accounting Policies - Continued

Trust Assets

Assets (other than cash deposits) held in fiduciary or agency capacities for customers, are not included in these financial statements, since such items are not assets of Great Western.

Securities

Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and recorded at amortized cost. Securities not classified as held to maturity, including equity securities with readily determinable fair values, are classified as “available for sale” and recorded at fair value, with unrealized gains and losses, net of related income taxes, excluded from income and reported in other comprehensive income.

Purchase premiums and discounts are recognized in interest income over the terms of the securities. Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in income as realized losses. Gains and losses on the sale of the securities are recorded on the trade date and are determined using the specific identification method.

Great Western’s investments in nonmarketable equity securities are substantially all stock of the Federal Home Loan Bank and privately held equity securities. Although no ready open market exists for the stock, and they have no quoted market value, the issuers will generally repurchase the stock at par value.

Interest and dividends on investments in debt and equity securities are included in income when earned.

Loans Receivable

Loans receivable that management has the intent and ability to hold for the foreseeable future, or until maturity, or pay-off generally are reported at their outstanding unpaid principal balance, adjusted for charge-offs, the allowance for loan losses and any deferred fees or costs on originated loans.

Interest on loans is accrued daily on the outstanding balances. For impaired loans, accrual of interest is discontinued when management believes, after considering collection efforts and other factors, that the borrower’s financial condition is such that collection of interest is doubtful. For loans on which the accrual of interest has been discontinued, cash collections are credited to the loan receivable balance, and interest income is not recognized on those loans until the principal balance has been collected.

Substantial portions of loan fees charged or received on the origination of mortgage loans are related to loans sold on the secondary market with servicing released and are recognized as income when received. Certain other loan fees, net of certain direct loan origination costs, are deferred and the net amount amortized as an adjustment of the related loan’s yield. Great Western is generally

F-11

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 1:

Nature of Operations and Summary of Significant Accounting Policies - Continued

Loans Receivable - Continued

amortizing these amounts over the contractual life of the loan. Commitment fees based upon the amount of a customer’s line of credit and fees related to letters of credit are not significant and are recognized in income when received.

Great Western grants real estate, commercial, agricultural and consumer loans to customers primarily in Nebraska, South Dakota, Missouri, Kansas and Iowa and purchases loans primarily originated in those states and surrounding states. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the borrower. Collateral held varies, but includes accounts receivable, inventory, property and equipment, residential real estate, income-producing commercial and agricultural properties and government guarantees.

Loans originated and intended for sale on the secondary market are sold on a prearranged basis. Loans held for sale are included in loans receivable and are stated at the lower of cost or estimated fair value in the aggregate. Loans held for sale totaled $12,340,000 and $27,401,000 as of June 30, 2004 and 2003, respectively.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision, as more information becomes available.

A loan is considered impaired when, based on current information and events, it is probable that Great Western will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and probability of collecting scheduled payments of principal and interest when due according to contractual terms of the loan agreement. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

F-12

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 1:

Nature of Operations and Summary of Significant Accounting Policies - Continued

Allowance for Loan Losses - Continued

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, Great Western does not separately identify individual consumer and residential real estate loans for impairment disclosures.

Other Real Estate Owned

Other real estate owned (OREO) represents properties acquired through foreclosure or other proceedings and is initially recorded at fair value at the date of foreclosure, which establishes cost. After foreclosure, OREO is held for sale and is carried at the lower of cost or fair value less estimated costs of disposal. Any write-down to fair value at the time of transfer to OREO is charged to the allowance for loan losses. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value; and valuation allowances, to reduce the carrying amount to fair value less estimated costs to dispose, are recorded if necessary. OREO is included in other assets in the accompanying consolidated balance sheets.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed principally by the straight-line method over the following estimated useful lives:


		Years
Buildings and building improvements		3 – 50
Furniture and equipment		5 – 15

Intangible Assets

Intangible assets consist of goodwill, core deposits, an unidentifiable intangible asset related to a branch acquisition, client listing and franchise. Goodwill represents the excess of the acquisition cost over the fair value of the net assets acquired in the purchase of subsidiaries. Core deposits represents the identifiable intangible value assigned to core deposit bases arising from purchase acquisitions. The unidentifiable intangible asset represents the excess of fair value of liabilities assumed over the fair value of net assets acquired in a purchase of a failed financial institution in accordance with FASB Statement No. 72, “Accounting for Certain Acquisitions of Banking or Thrift Institutions.” Client listing intangible represents the identifiable intangible value assigned to a client listing arising from a purchase acquisition. Franchise intangible represents a contractual arrangement under which the franchiser grants the franchisee the right to perform certain functions within a designated geographical area.

F-13

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 1:

Nature of Operations and Summary of Significant Accounting Policies - Continued

Intangible Assets - Continued

On October 1, 2002, Great Western elected adoption of FASB Statement No. 147, “Acquisitions of Certain Financial Institutions.” This Statement addresses the financial accounting and reporting for the acquisition of all or part of a financial institution, except for a transaction between two or more mutual enterprises. This Statement removes acquisitions of financial institutions, other than transactions between two or more mutual enterprises, from the scope of FASB Statement No. 72, “Accounting for Certain Acquisitions of Banking or Thrift Institutions,” and FASB Interpretation No. 9, “Applying APB Opinions No. 16 and 17 When a Savings and Loan Association or a Similar Institution is Acquired in a Business Combination Accounted for by the Purchase Method.” Transaction provisions for previously recognized unidentifiable intangible assets were effective on October 1, 2002, with earlier application permitted. The carrying amount of an unidentifiable intangible asset shall continue to be amortized as set forth in paragraph 5 of FASB Statement No. 72 after October 1, 2002, unless the transaction in which the asset arose was a business combination. If the transaction that gave rise to the unidentifiable intangible asset was a business combination, the carrying amount of the asset shall be reclassified to goodwill as of the later of the date of acquisition or the date FASB Statement No. 142 was applied in its entirety.

Great Western has unidentifiable intangible assets that arose from a business combination. In applying FASB Statement No. 147, Great Western reclassified the carrying amount of unidentifiable intangible assets of $4,598,000 to goodwill as of July 1, 2002. As of June 30, 2004 total goodwill (including reclassified unidentifiable intangible assets of $4,598,000) was $51,847,000 and core deposit intangible and other, net was $2,897,000. The effect of this reclassification on the consolidated financial statements was not material.

On July 1, 2001, Great Western elected early adoption of FASB Statements No. 141, “Business Combinations,” and No. 142, “Goodwill and Other Intangible Assets”. FASB Statement No. 141 addresses financial accounting and reporting for business combinations and replaces APB Opinion No. 16, “Business Combinations” (APB 16). FASB Statement No. 141 no longer allows the pooling of interests method of accounting for acquisitions, provides new recognition criteria for intangible assets and carries forward without reconsideration the guidance in APB 16 related to the application of the purchase method of accounting. FASB Statement No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and replaces APB Opinion No. 17, “Intangible Assets.” FASB Statement No. 142 addresses how intangible assets should be accounted for upon their acquisition and after they have been initially recognized in the financial statements. The new standards provide specific guidance on measuring goodwill for impairment annually using a two-step process. The first step identifies potential impairment and the second step measures the amount of goodwill impairment loss to be recognized.

Great Western has identified those intangible assets that remain separable under the provisions of the new standard and those that are to be included in goodwill. In applying FASB Statement No. 142, Great Western has re-evaluated the useful lives of these separable intangible assets. The weighted average life of the remaining amortizable intangible assets is 6 years. In the year of adoption, FASB Statement No. 142 required the first step of the goodwill impairment test to be completed within the first six months and the final step to be completed within twelve months of adoption. The first step of the test was completed as of July 1, 2001 and no indications of goodwill impairment were found; therefore, step two of the goodwill impairment test was not applicable.

F-14

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 1:

Nature of Operations and Summary of Significant Accounting Policies - Continued

Intangible Assets - Continued

As of June 30, 2004 and 2003, the fair values of each reporting unit were reviewed and it was determined that the fair values were equal to or greater than the fair values as of July 1, 2002; hence no indications of goodwill impairment were found.

The methods and lives used to amortize intangible assets are as follows:


Intangible	Method	Years
Goodwill	Not amortized
Core deposit	Straight-line & accelerated	5
Unidentifiable intangible asset	Straight-line (prior to July 1, 2002)	15
Client listing	Straight-line	10 -15
Franchise	Straight-line	5 - 10

Mortgage Servicing Rights

The cost of mortgage servicing rights is amortized in proportion to, and over the period of, estimated net servicing revenues. The cost of mortgage servicing rights and the amortization thereon is periodically evaluated in relation to projected net servicing revenues. Projected net servicing revenue is in turn determined on the basis of the estimated future balance of the underlying mortgage loan portfolio. Great Western estimates future prepayment rates based on relevant characteristics of the servicing portfolio. Impairment of mortgage servicing rights is assessed based on the fair value of those rights as compared to amortized cost. For purposes of measuring impairment, the rights are stratified based on investor remittance type. Fair values are estimated using discounted cash flows based on interest rates commensurate with the risks involved. Impairment, if any, is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount of the stratum.

Income Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the dates of enactment.

Deferred Compensation

The net present value of payments expected to be made under deferred compensation agreements is being accrued over the respective employees’ expected employment service period.

F-15

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 1:

Nature of Operations and Summary of Significant Accounting Policies - Continued

Earnings Per Common Share

Earnings per common share have been computed on the basis of the weighted average number of common shares outstanding during each period presented. Dividends accumulated or declared on cumulative and noncumulative preferred stock, which totaled $676,000, $721,000 and $900,000 for the years ended June 30, 2004, 2003 and 2002, respectively, reduced the earnings available to common stockholders in the computation. Great Western has no common stock equivalents.

Operating Segments

Great Western uses the “management approach” for reporting information about segments in annual and interim financial statements. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure and any other manner in which management disaggregates a company. Based on the “management approach” model, Great Western has determined that its business is comprised of a single operating segment.

Fair Value of Financial Instruments

In estimating the fair value of its financial instruments as presented in Note 20, management used the following methods and assumptions:

Carrying amounts approximate fair values for the following instruments:

Cash and due from banks

Federal funds sold and FHLB overnight deposits

Certificates of deposit

Securities available for sale

Variable rate loans that reprice frequently where no significant change in credit risk has occurred

Accrued interest receivable

Variable rate money market and time deposit accounts and deposits payable on demand

Federal funds purchased and securities sold under agreements to repurchase

Notes payable and other obligations with variable interest rates

Accrued interest payable

F-16

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 1:

Nature of Operations and Summary of Significant Accounting Policies - Continued

Fair Value of Financial Instruments - Continued

Discounted cash flows using interest rates currently prevailing on instruments with similar terms and with similar credit quality:

All loans except variable rate loans described above

Mortgage servicing rights

Fixed rate time certificates

Notes payable and other obligations with fixed interest rates

Company obligated mandatorily redeemable preferred securities

Fees currently being charged for similar instruments, taking into account the remaining terms of the agreements and the counterparties’ credit standing:

Off-balance sheet instruments:

Letters of credit

Commitments to extend credit

Note 2:

Changes in Minority Interests and Business Acquisitions

On February 23, 2004, Great Western Bank, Clive purchased six branches located in Albany, Bethany, Grant City, Milan, Sheridan, and Unionville, Missouri from Bank Midwest, N.A., headquartered in Missouri. At February 23, 2004 the six branches had $123,590,000 in total assets, $31,972,000 in net loans and $123,133,000 in deposits. As a result of the acquisition, Great Western expects the acquisition will enhance its operating market and reduce costs through economies of scale. The results of operations of the six branches after the date of acquisition are included in the consolidated financial statements. The total amount of goodwill is expected to be deductible for tax purposes. The average amortization period for the core deposit and other intangible costs is five years.

On May 30, 2003, Great Western Bank, Rapid City (formerly Rushmore Bank & Trust) merged with and into Great Western Bank, Watertown (formerly F & M). The merger was accounted for at historical cost and, accordingly, the merger did not require any restatement of financial statements on a consolidated basis.

On May 29, 2003, Spectrum Bancorporation, Inc. was renamed Great Western Bancorporation, Inc. In addition, on May 29, 2003, Spectrum Capital Trust I and Spectrum Capital Trust II were renamed GWB Capital Trust I and GWB Capital Trust II, respectively.

On March 17, 2003, Spectrum Banc Service Corporation was renamed Great Western Service Corporation.

F-17

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 2:

Changes in Minority Interests and Business Acquisitions - Continued

On March 3, 2003, Rushmore Bank and Trust, Rapid City, South Dakota and F & M Bank, Watertown, South Dakota were renamed Great Western Bank.

On February 21, 2003, Citizens Bank, Mt Ayr, Iowa and Citizens Bank of Princeton, Princeton, Missouri merged with and into Citizens Bank, Clive, Iowa. All three banks are 100.0% owned subsidiaries of Great Western. In addition, on March 29, 2003, the surviving bank was renamed Great Western Bank. The merger was accounted for at historical cost and, accordingly, the merger did not require any restatement of financial statements on a consolidated basis.

On January 24, 2003, Great Western purchased from a minority shareholder 180 shares of common stock and 1,800 shares of preferred stock in its subsidiary, Great Western Bank, Rapid City (formerly Rushmore Bank & Trust), for $2,111,492. This transaction was accounted for as a purchase. After January 24, 2003, Great Western owned 100.0% of Great Western Bank, Rapid City.

On December 13, 2002, Great Western Bank, Omaha acquired Peoples Bank, Overland Park, Kansas by cash merger. At December 13, 2002, Peoples Bank had $24,847,000 in total assets, $2,910,000 in net loans and $24,739,000 in deposits. Peoples Bank had one location, which at closing became a branch of Great Western Bank, Omaha. The results of operations of Peoples Bank after the date of acquisition are included in the consolidated financial statements. Certain disclosures were not made due to the insignificance of this acquisition to the consolidated financial statements.

In October 2002, Great Western purchased a total of 24 shares of common stock of Great Western Bank, Watertown (formerly F & M Bank), from two minority shareholders for $90,765. This transaction was accounted for as a purchase.

On September 30, 2002, Great Western acquired 1,688 shares (4.8%) of the common stock of Great Western Bank, Clive (formerly Citizens Bank, Clive, Iowa) for $673,288 in cash from a minority shareholder. The transaction was accounted for as a purchase.

As of February 28, 2002 Great Western Bank, Watertown (formerly F&M Bank) acquired by merger First Western Bank, N.A., Atkinson, Nebraska (“First Western”) and Marquette Bank Nebraska, N.A., O’Neill, Nebraska (“Marquette”) for $17,484,000. At February 28, 2002, First Western and Marquette had assets of $110,429,000, deposits of $99,589,000, net loans of $62,981,000 and stockholders’ equity of $10,217,000. The acquisition has been accounted for as a purchase and results of operations of First Western and Marquette after the date of acquisition are included in the consolidated financial statements.

F-18

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 2:

Changes in Minority Interests and Business Acquisitions - Continued

A summary of the fair value of net assets acquired and net cash and cash equivalents received (in thousands) on the dates of acquisition is as follows:


	Fiscal 2004 Acquisition			Fiscal 2003 Acquisitions			Fiscal 2002 Acquisitions
Assets acquired
Securities	$	—		$	390		$	27,289
Loans receivable		31,972			2,910			62,981
Other assets		249			22			1,638
Premises and equipment		1,870			65			3,285
Core deposit and other intangibles		1,184			304			754
Goodwill		5,917			2,017			4,182
Liabilities assumed
Deposits		(123,133	)		(24,739	)		(99,589	)
Other liabilities		(457	)		(108	)		(623	)

Net cash and cash equivalents received	$	(82,398	)	$	(19,139	)	$	(83	)

Note 3:

Restrictions on Cash and Due from Banks

Great Western’s banking subsidiaries are required to maintain reserve balances in cash and on deposit with the Federal Reserve based on a percentage of deposits. The total requirement was approximately $1,640,000 and $1,335,000 at June 30, 2004, and 2003 respectively.

F-19

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 4:

Securities Available for Sale

Amortized cost and fair value of investments in securities, all of which are classified as available for sale according to management’s intent, are summarized as follows (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
As of June 30, 2004:
U.S. Treasury securities	$	24,228	$	10	$	(1,154	)	$	23,084
U.S. Government agencies and corporations, including mortgage-backed securities		286,399		697		(6,750	)		280,346
States and political subdivision securities		38,528		715		(79	)		39,164
Corporate debt securities		10,007		295		(220	)		10,082
Stock in Federal Home Loan Bank and other		11,921		250		—			12,171

	$	371,083	$	1,967	$	(8,203	)	$	364,847

As of June 30, 2003:
U.S. Treasury securities	$	28,795	$	455	$	—		$	29,250
U.S. Government agencies and corporations, including mortgage-backed securities		192,638		5,339		(22	)		197,955
States and political subdivision securities		44,067		2,380		(5	)		46,442
Corporate debt securities		29,433		1,457		(17	)		30,873
Stock in Federal Home Loan Bank and other		8,505		111		—			8,616

	$	303,438	$	9,742	$	(44	)	$	313,136

The amortized cost and fair value of debt securities available for sale (in thousands) as of June 30, 2004, by contractual maturity, are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties. Therefore, these securities are not included in the maturity categories in the following maturity summary.


	Amortized Cost		Fair Value
Due in one year or less	$	18,771	$	19,062
Due after one year through five years		243,931		239,370
Due after five years through ten years		57,867		56,807
Due after ten years		8,536		8,206
Mortgage-backed securities		30,057		29,231

	$	359,162	$	352,676

F-20

Great Western Bancorporation, Inc.

Notes to Consolidated Financial Statements

Note 4:

Securities Available for Sale - Continued

Proceeds from sales of securities available for sale were $52,369,000, $63,116,000, and $9,760,000 for the years ended June 30, 2004, 2003, and 2002, respectively. Gross gains of $1,296,000, $1,862,000 and $217,000 and gross losses of $41,000, $0 and $2,000 were realized on those sales for the years ended June 30, 2004, 2003, and 2002, respectively. Income taxes on net gains on sales of securities were $439,000, $652,000 and $75,000, in 2004, 2003 and 2002, respectively.

Securities with a carrying value of approximately $240,737,000 and $197,528,000 at June 30, 2004 and 2003, respectively, were pledged as collateral on public deposits, securities sold under agreements to repurchase, notes payable to Federal Home Loan Bank and for other purposes as required or permitted by law.

Certain investments in debt securities, which is approximately 76% of Great Western’s investment portfolio, are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at June 30, 2004, was $278,210,000. These declines primarily resulted from increases in market interest rates subsequent to the acquisition dates.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following table shows Great Western’s gross unrealized losses and fair value in investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2004:


	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in thousands)
U.S. Treasury securities	$	19,144	$	(1,002	)	$	2,892	$	(152	)	$	22,036	$	(1,154	)
U.S. Government agencies and corporations, including mortgage-backed securities		241,377

GREAT WESTERN BANCORPORATION INC 10-K