UNITED STATES SECURITIESTable ANDof EXCHANGE COMMISSIONContents

~~Washington, D.C. 20549~~UNITED STATES

~~Form~~SECURITIES ~~10-K~~AND EXCHANGE COMMISSION

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2003, OR
o	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.)
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)

Washington, D.C. 20549

~~Indicate~~Form by10-K 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 ý NO o

~~Indicate~~x byANNUAL ~~check~~REPORT ~~mark~~PURSUANT ifTO ~~disclosure~~SECTION of13 ~~delinquent~~OR ~~filers~~15(D) ~~pursuant~~OF ~~to Item~~THE ~~405~~SECURITIES ofEXCHANGE ~~Regulation~~ACT ~~S-K~~OF 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: ý1934

~~Indicate~~FOR byTHE ~~check~~FISCAL ~~mark~~YEAR ~~whether~~ENDED ~~the~~JUNE ~~registrant~~30, is2004, ~~an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o No ý~~OR

~~All~~¨ ~~voting~~TRANSITION ~~and~~REPORT ~~non-voting~~PURSUANT ~~common~~TO ~~equity~~SECTION is13 ~~held~~OR by15(D) ~~affiliates~~OF ofTHE ~~the registrant.~~SECURITIES EXCHANGE ACT OF 1934

AtFOR ~~September 18,~~THE ~~2003,~~TRANSITION ~~there~~PERIOD ~~were~~FROM ~~124,952 shares of registrant’s common stock outstanding.~~TO

~~TABLE~~COMMISSION OFFILE ~~CONTENTS~~NUMBER: 001-15215

Forward-looking Statements
Part I
	Item 1.	Business
	Item 2.	Properties
	Item 3.	Legal Proceedings
	Item 4.	Submission of Matters to a Vote of Security Holders
Part II
	Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters
	Item 6.	Selected Financial Data
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk
	Item 8.	Financial Statements and Supplementary Data
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
	Item 9A.	Controls and Procedures
Part III
	Item 10.	Directors and Executive Officers of the Registrant
	Item 11.	Executive Compensation
	Item 12.	Security Ownership of Certain Beneficial Owners and Management
	Item 13.	Certain Relationships and Related Transactions
Part IV
	Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K
SIGNATURES

GREAT WESTERN BANCORPORATION, INC.

2(Exact name of registrant as specified in its charter)

FORWARD-LOOKING STATEMENTS


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

~~This~~10834 ~~report~~Old ~~includes~~Mill ~~certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can include words such as “may”~~Road, ~~“believe”,~~Suite ~~“will”~~One, ~~“anticipated”~~Omaha, ~~“estimated”, “projected”,~~NE ~~“could”, “should”, “plan” or similar expressions. Forward~~68154-~~looking~~2648 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~~(Address ~~risks~~of ~~and~~principal ~~uncertainties~~executive ~~should~~offices) be(Zip ~~considered~~Code) 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~~(402) I333-8330

~~ITEM~~(Registrant’s ~~1. BUSINESS~~telephone number, including area code)

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

Great Western Bancorporation, Inc., (“Great Western”), formerly Spectrum Bancorporation, Inc., a multi-bank holding company, offers full service community banking through 16 banking locations in Nebraska, 21 banking locations in South Dakota, 23 banking locations in southern Iowa, two banking locations in northern Missouri and one banking location in northeastern Kansas. Its Chairman, Deryl F. Hamann, acquired Great Western (formerly Spectrum) 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 (formerly F&M Bank); 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 by each of the holding companies 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.


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

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

~~Great Western has three direct subsidiaries: Great Western Bank, Omaha, Nebraska; Great Western Bank, Watertown,~~NONE 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, 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.”

3(Title of class)

~~The~~Indicate ~~following~~by ~~table~~check ~~sets~~mark ~~forth~~whether ~~information~~the registrant ~~regarding~~(1) ~~Great~~has ~~Western’s banks~~filed asall reports required to be filed by Section 13 or 15(d) of ~~June 30,~~the ~~2003:~~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 ¨

	Common Stock Ownership		Assets		Net Loans		Deposits
	(dollars in thousands)
Great Western Bank, Watertown	96.1	%	$	876,465	$	654,122	$	727,004
Great Western Bank, Omaha	100.0	%	828,326		611,228		683,906
Great Western Bank, Clive	100.0	%	404,738		334,368		329,956

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

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

~~Subsidiary~~All ~~banks~~voting ~~(excluding Great Western Bank, Omaha) own 100% of Great Western Service Corporation (formerly Spectrum Banc Service Corporation), which provides data processing~~ and ~~related~~non-voting ~~services~~common toequity ~~its~~is ~~bank~~held ~~owners. See~~by ~~“Mergers~~affiliates ~~and~~of ~~Acquisitions” for~~the ~~additional information~~registrant.

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

~~Growth. Great~~-1- 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.

GreatTable 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.Contents

~~Branch Activity. On December 13, 2002, Great Western~~ ~~Bank,~~TABLE ~~Omaha~~OF ~~acquired~~CONTENTS 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. On August 15, 2003, Great Western Bank, Clive opened a new branch in Bedford, Iowa. 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.

LENDING ACTIVITIES


		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

~~Great~~-2- 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.

GreatTable 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, 2003, approximately 85% of all loans and leases were to customers within Great Western’s market area.Contents

4 FORWARD-LOOKING STATEMENTS

~~Real~~This report ~~Estate~~includes ~~Loans. These~~certain ~~include~~forward-looking ~~various~~statements ~~types~~within the meaning of ~~loans~~the ~~for~~Private ~~which~~Securities ~~Great~~Litigation ~~Western’s~~Reform ~~banks~~Act ~~hold~~of ~~real property~~1995. Such statements can include words such as ~~collateral. The~~“may”, ~~risks~~“believe”, of“will”, “anticipated”, ~~real~~“estimated”, ~~estate~~“projected”, ~~loans~~“could”, ~~include~~“should”, ~~the~~“plan” ~~borrower’s~~or ~~inability~~similar toexpressions. ~~pay~~Forward-looking ~~and~~statements ~~deterioration~~are ~~in value~~based ofon ~~the~~management’s ~~real~~current ~~estate collateral~~expectations. Factors that might cause future results to ~~Real~~differ ~~estate~~from ~~loans~~management’s expectations include, ~~primarily~~but ~~one~~are not limited to: ~~four~~fluctuations ~~family~~in ~~residences~~interest ~~and one~~rates, toinflation, ~~four~~the ~~family~~effect ~~residences~~of ~~under~~regulatory ~~construction. Construction~~or ~~loans~~government ~~for~~legislative ~~one~~changes, toexpected ~~four~~cost ~~family~~savings ~~residences~~and ~~are~~revenue growth not fully realized, the ~~primarily~~progress ~~made~~of tostrategic ~~builders~~initiatives ~~that~~and ~~construct~~whether ~~the~~realized ~~residences. The~~within ~~construction~~expected ~~loans~~time ~~typically~~frames, ~~have maturities~~general economic conditions, adequacy of 6allowance tofor 12loan ~~months~~losses, ~~have~~costs ~~rates~~or ~~that~~difficulties ~~are~~associated ~~adjustable~~with ~~daily~~restructuring ~~and~~initiatives, ~~are subject~~changes toin ~~origination~~accounting ~~fees. Terms for~~policies ~~one~~or toguidelines, ~~four~~changes ~~family~~in ~~residences~~the ~~that~~quality ~~are~~or ~~not~~composition ~~construction~~of Great Western’s loans ~~primarily~~and ~~have maturities~~investment ~~between~~portfolios, 5technology tochanges 10and ~~years~~competitive pressures in the geographic and ~~have~~business ~~rates~~areas ~~fixed~~where ~~for~~Great aWestern ~~year~~conducts orits ~~more~~operations.

~~Commercial and Agricultural Loans.~~ These ~~consist~~risks ~~primarily~~and ofuncertainties ~~secured~~should ~~loans~~be toconsidered ~~businesses~~in ~~for various purposes,~~evaluating ~~including~~forward-looking ~~revolving~~statements ~~lines of credit, agricultural operating lines, term loans~~ and ~~equipment~~undue ~~financing. Equipment, accounts~~reliance ~~receivable,~~should ~~inventory,~~not ~~business~~be ~~assets,~~placed ~~agricultural~~on ~~assets~~such ~~or commercial real estate secure the loans~~statements. ~~Revolving~~ ~~lines~~Additional ~~and~~information ~~agricultural~~concerning ~~operating~~Great ~~lines,~~Western ~~in most cases mature in one year~~ and ~~are~~its ~~secured by accounts receivable~~business, ~~inventory, business assets or agricultural assets. Loans to purchase equipment~~ including ~~farm~~other ~~equipment~~factors ~~usually~~that ~~have~~could ~~maturities~~materially ~~between three~~affect ~~and~~Great ~~six~~Western’s ~~years~~financial ~~and~~results, ~~have fixed rates of interest for one year or more. Commercial real estate loans typically have~~is ~~maturities~~included ~~between~~in ~~three~~Great ~~and~~Western’s 10filings ~~years~~ with ~~fixed~~the ~~rates~~Securities ~~of interest for at least one year. Loans to build commercial buildings usually have maturities between one~~ and ~~two~~Exchange ~~years and have adjustable rates of interest~~Commission.

~~Loans~~PART toI 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 local loan committees that meet~~ atITEM ~~least weekly, subject to loan volume~~1. ~~Great~~ ~~Western~~BUSINESS 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~~THE ~~rates~~COMPANY 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.

Great Western’s ~~banks~~Bancorporation, ~~issue~~Inc., ~~letters~~(“Great ofWestern”), ~~credit. See~~a multi-bank ~~Note~~holding company, offers full service community banking through 18 tobanking ~~Consolidated~~locations ~~Financial~~in Nebraska, 21 banking locations in South Dakota, 24 banking locations in southern Iowa, seven banking locations in northern Missouri and one banking ~~Statements~~location in northeastern Kansas. Its Chairman, Deryl F. Hamann, acquired Great Western’s ~~banks~~in ~~apply the~~1971; ~~same~~at ~~credit~~that ~~standards~~time toit ~~those~~had ~~commitments~~a assingle ~~they~~bank ~~use~~charter in ~~direct~~Leon, ~~lending activities~~Iowa ~~and~~with ~~have~~two ~~included~~locations. ~~these~~In ~~commitments~~1974, inMr. ~~their~~Hamann ~~lending~~acquired ~~risk~~the parent company of Great Western Bank, ~~evaluations~~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’s ~~exposure~~on August 7, 2000. On March 23, 2001, Great toWestern ~~credit~~Securities, ~~loss~~Inc., ~~under~~the ~~letters~~parent company of ~~credit~~Great isWestern ~~represented~~Bank, byOmaha, ~~the~~Nebraska, ~~amount~~was merged into Great Western. Acquisitions of ~~those~~other banks and savings institutions have been made on both strategic and opportunistic bases. Expansion also ~~commitments~~occurred through acquisition of offices of other financial institutions and de novo branching. See “Mergers and Acquisitions” for additional information.

~~Under~~THE ~~applicable~~BANKS federal and state law, permissible loans to one borrower after June 30, 2003, were limited to $11,752,368 for Great Western Bank, Watertown, South Dakota; $10,630,846 for Great Western Bank, Omaha, Nebraska; and $6,886,446 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.

5Great 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,

~~COMPETITION~~-3-

TheTable 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.Contents

~~The~~ Missouri; ~~Financial~~and ~~Modernization~~Citizens ~~Act~~Bank, ~~also known as the Gramm-Leach-Bliley Act~~Clive, ~~enacted in November 1999, affects competition between financial institutions~~Iowa). ~~This~~ ~~act~~See ~~significantly revised~~“Mergers ~~the laws regulating banks~~ and ~~bank~~Acquisitions” ~~holding~~for ~~companies~~additional ~~and~~information. ~~other providers~~Each ofsubsidiary ~~financial services, enabling~~ bank ~~holding~~is ~~companies~~chartered ~~and~~by ~~foreign~~the ~~banks~~state ~~that~~banking ~~meet~~authorities ~~applicable~~of ~~statutory~~the ~~requirements—defined~~state ~~as financial holding companies—to engage~~ in awhich ~~broader~~its ~~range~~headquarters ofis ~~services and to compete more efficiently in existing business lines~~located. ~~The~~ ~~Gramm-Leach-Bliley~~See ~~Act~~“Supervision ~~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~~Regulation. As” ~~of August 31, 2003, Great Western had not elected to convert to a financial holding company, but reserves this right under the new rule.~~

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

As of August 31, 2003, Great Western had approximately 735 full-time equivalent employees. Management considers its relationship with its employees to be good.


	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

~~SUPERVISION~~GREAT ~~AND~~WESTERN ~~REGULATION~~SERVICE CORPORATION

~~Great~~Subsidiary ~~Western and its subsidiary~~ banks ~~are~~(excluding ~~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~~Bank, ~~regulations or regulatory policies may have a material effect on the~~Omaha) ~~business,~~own ~~operations~~100% ~~and prospects~~ of Great Western ~~and~~Service ~~its~~Corporation ~~banks. Great~~(formerly ~~Western~~Spectrum isBanc ~~unable~~Service ~~to predict the nature or extent of the effects that fiscal or monetary policies~~Corporation), ~~economic controls~~which orprovides ~~new~~data ~~federal~~processing orand ~~state~~related ~~legislation~~services ~~may~~to ~~have~~its onbank ~~its~~owners. ~~business~~See “Mergers and ~~earnings~~ inAcquisitions” ~~the~~for ~~future~~additional information.

~~The~~STRATEGIES 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.

6Growth. 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.

~~Recent~~Great ~~regulatory~~Western ~~developments. On~~seeks ~~October 26,~~opportunities ~~2001, President Bush signed into law the Uniting and Strengthening America by Providing Appropriate Tools Required~~ to ~~Intercept~~acquire ~~and~~banks ~~Obstruct~~at ~~Terrorism~~acceptable ~~Act of 2001 (the “USA PATRIOT Act”)~~prices. ~~Among~~ ~~its~~Great ~~other provisions,~~Western’s ~~the~~operating ~~USA~~strategy ~~PATRIOT~~is ~~Act requires each financial institution: (i)~~ to ~~establish~~ anprovide ~~anti-money~~high ~~laundering~~quality ~~program; (ii) to establish due diligence~~community ~~policies,~~banking ~~procedures~~services ~~and controls with respect~~ to its ~~private~~customers ~~banking accounts involving foreign individuals~~ and ~~certain~~increase ~~foreign~~market ~~banks;~~share ~~and~~through ~~(iii)~~solicitation ~~to avoid establishing, maintaining, administering, or managing correspondent accounts in the United States for, or on behalf~~ of, ~~foreign~~new ~~banks that do not have a physical presence in any country. The USA PATRIOT Act also requires the Secretary of the Treasury to prescribe~~business, ~~by regulations~~repeat tobusiness ~~be issued jointly with the federal banking regulators~~ and ~~certain~~ ~~other~~referrals ~~agencies,~~from ~~minimum standards that financial institutions must follow to verify the identity of~~ customers, ~~both foreign~~ and ~~domestic,~~selected ~~when~~promotional ~~a customer opens an account~~strategies. 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 changes are to take 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.

OnBranch ~~July 30,~~Activity. ~~2002,~~In ~~the~~December ~~President~~2003, ~~signed into~~Great ~~law~~Western ~~the Sarbanes-Oxley Act of 2002 (the “Act”)~~Bank, ~~which~~Omaha ~~mandated~~opened a ~~variety of~~branch ~~reforms~~at ~~intended~~17929 toWelch ~~address~~Plaza, ~~corporate~~Omaha; and ~~accounting~~in April ~~fraud. The~~2004 ~~Act~~opened ~~provides~~an ~~for~~in-store ~~the~~branch ~~establishment~~in ofthe ~~a new~~Super ~~Public~~Wal-Mart ~~Company~~at ~~Accounting~~6304 ~~Oversight~~North ~~Board~~99th ~~(“PCAOB”),~~Street. ~~which~~On ~~will~~November ~~enforce auditing~~17, ~~quality~~2003 ~~control~~Great ~~and~~Western ~~independence~~Bank, ~~standards~~Clive ~~for~~opened ~~firms~~a ~~that~~branch ~~audit~~at ~~SEC reporting~~320 ~~companies~~8th ~~and~~Street, ~~will~~Altoona, beIowa. ~~funded~~On byFebruary ~~fees~~23, ~~from~~2004 ~~all~~Great ~~SEC~~Western ~~reporting companies. The~~Bank, ~~Act~~Clive ~~imposes~~acquired ~~higher standards~~six ~~for~~branches ~~auditor~~in ~~independence~~Missouri. ~~and~~One ~~restricts~~of ~~provision~~these ofbranches ~~consulting services~~was bycombined ~~auditing~~with ~~firms~~an toexisting ~~companies~~Great ~~they~~Western, ~~audit~~Clive ~~and~~branch in ~~addition~~Milan, ~~certain~~ ~~audit~~Missouri. ~~partners~~The ~~must~~acquired bebranches ~~rotated~~had ~~periodically. The~~$123,133,000 ~~Act~~in ~~requires~~deposits, ~~chief~~$31,972,000 ~~executive~~in ~~officers~~loans and ~~chief financial officers~~$123, ~~or their equivalents~~590,000 toin ~~certify~~total toassets. ~~the~~On ~~accuracy~~August of15, ~~periodic~~2003, ~~reports~~Great ~~filed~~Western ~~with the SEC~~Bank, ~~subject~~Clive toopened ~~civil~~a ~~and~~new ~~criminal~~branch ~~penalties~~in ifBedford, ~~they~~Iowa. ~~knowingly~~On orDecember ~~willfully violate~~13, ~~this~~2002, ~~certification~~Great ~~requirement. In~~Western ~~addition~~Bank, ~~under~~Omaha acquired ~~the~~Peoples ~~Act~~Bank, ~~counsel~~Overland ~~will~~Park, beKansas. ~~required~~Peoples toBank ~~report~~had ~~specific violations~~$24,847,000 ~~directors~~in ~~and~~total ~~executive~~assets, ~~officers~~$2,910,000 ~~must report most changes~~ in ~~their ownership~~net ofloans ~~a company’s securities~~ and ~~executives will have restrictions on trading~~$24,739,000 ~~and~~in ~~loans~~deposits. ~~The~~Peoples ~~Act~~Bank ~~also~~has ~~increases~~one ~~the~~location, ~~oversight~~which ~~and~~at ~~authority~~closing ofbecame ~~audit committees~~a branch of ~~publicly traded companies. Although~~ Great Western ~~anticipates it will incur additional expense in complying with the provisions of the Act and the related rules~~Bank, ~~management~~Omaha. ~~does~~Should ~~not~~Great ~~expect~~Western ~~that~~be ~~such~~unable ~~compliance~~to ~~will~~acquire ~~have~~existing abanks ~~material~~or ~~impact~~other ~~on Great Western’s~~ financial ~~condition~~institutions orat ~~results~~acceptable ofprices, ~~operation. Certain~~it ~~provisions~~will ofcontinue ~~the~~to ~~Act~~seek ~~were~~expansion ~~effective~~through ~~immediately~~new ~~upon~~branches ~~passage~~ or at ~~various~~possibly ~~times~~by inchartering ~~fiscal~~new ~~2003~~banks. ~~Other provisions~~ ~~of the Act will be effective through fiscal 2004 and after.~~

~~GREAT~~-4- ~~WESTERN~~

General. GreatTable 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.Contents

~~Acquisitions. As~~LENDING aACTIVITIES 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

7Great 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.

~~result,~~Great ~~unless~~Western ~~the~~is ~~anti-competitive~~able ~~effects~~to facilitate ofsubstantial credit requests through the ~~proposed~~purchase ~~transaction are~~and ~~outweighed~~sale byof aparticipations ~~greater~~among ~~public~~its ~~interest~~subsidiary inbanks, ~~meeting~~as ~~the~~well ~~needs~~as ~~and convenience~~unaffiliated ofbanks ~~the~~or ~~public~~other financial institutions. ~~The~~ ~~Federal Reserve~~As ~~also~~of ~~considers~~June ~~managerial~~30, ~~capital~~2004, ~~and~~approximately ~~other~~84% ~~financial~~of ~~factors~~all inloans and leases were to ~~acting~~customers onwithin ~~acquisition~~Great orWestern’s ~~merger~~market ~~applications~~area.

~~Permissible~~Real Estate ~~Activities~~Loans. ~~Subject~~ toThese ~~limited~~include ~~exceptions,~~various atypes ~~bank holding~~of ~~company~~loans ~~may~~for ~~not~~which ~~engage~~Great ~~in,~~Western’s orbanks ~~acquire~~hold ~~direct~~real orproperty ~~indirect~~as ~~control~~collateral. The risks of ~~more~~ ~~than~~real 5%estate ofloans include the ~~voting~~borrower’s ~~shares~~inability ofto ~~any~~pay ~~company~~and ~~engaged~~deterioration in avalue ~~non-banking~~of the real estate ~~activity,~~collateral. ~~unless~~Real ~~this~~estate ~~activity~~loans ~~has~~include ~~been~~primarily ~~determined~~one byto ~~the~~four ~~Federal~~family ~~Reserve~~residences and one to ~~be closely~~four ~~related~~family residences under construction. Construction loans for one to ~~banking~~four orfamily ~~managing~~residences ~~banks~~are primarily made to builders that construct the residences. The ~~Federal~~construction ~~Reserve~~loans ~~has~~typically ~~identified~~have ~~specific~~maturities ~~non-banking~~of ~~activities~~6 ~~in which~~to a12 ~~bank~~months, ~~holding~~have ~~company~~rates ~~may~~that ~~engage~~are ~~with~~adjustable ~~notice~~and are subject to, ororigination ~~prior~~fees. ~~approval~~Terms ~~by,~~for one to four family residences that are not construction loans primarily have maturities of 25 years or ~~the~~less ~~Federal~~and ~~Reserve~~have rates fixed from one to five years.

~~Capital~~Commercial ~~Adequacy~~and Agricultural Loans. ~~The~~ ~~Federal~~These ~~Reserve~~consist ~~monitors~~primarily ~~the~~of ~~regulatory capital~~secured ~~adequacy~~loans to businesses for various purposes, including revolving lines of ~~bank~~credit, ~~holding~~agricultural ~~companies~~operating lines, term loans and equipment financing. Equipment, Asaccounts ~~discussed~~receivable, ~~below~~inventory, ~~Great~~business ~~Western’s~~assets, ~~banks~~agricultural ~~are~~assets ~~also~~or ~~subject~~commercial toreal estate secure the ~~regulatory~~ ~~capital~~loans. ~~adequacy~~Revolving ~~requirements~~lines ofand ~~the~~agricultural ~~FDIC~~operating lines, in most cases mature in one year and ~~Nebraska,~~are ~~South~~secured ~~Dakota~~by accounts receivable, inventory, business assets or agricultural assets. Loans to purchase equipment including farm equipment usually have maturities between three and ~~Iowa~~six ~~regulations,~~years asand ~~applicable~~have fixed rates of interest for one year or more. Commercial real estate loans typically have ~~The~~maturities ~~Federal~~between ~~Reserve~~three ~~uses~~and a10 ~~combination~~years with fixed rates of ~~risk-based~~interest ~~guidelines~~for ~~and leverage~~at ~~ratios~~least one year. Loans to ~~evaluate~~build ~~the~~commercial ~~regulatory~~buildings ~~capital~~usually ~~adequacy~~have ofmaturities ~~Great~~between ~~Western~~one and two years and have adjustable rates of interest.

~~The~~Loans ~~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~~Individuals. ~~Under~~ ~~the~~Loans 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 multiplied by corresponding asset balances to ~~determine a risk-weighted asset base. Some off balance sheet items~~individuals, ~~such~~which ~~as loan commitments in excess of one year, mortgage loans sold with recourse and letters of credit,~~ are ~~added~~not tosecured ~~the risk-weighted asset base~~ by ~~converting them to a balance sheet equivalent and~~ ~~assigning~~real ~~to them the appropriate risk weight. For purposes of the regulatory risk-based capital guidelines~~estate, ~~total capital~~generally ishave ~~defined~~maturities ~~as the sum~~ of ~~core~~two ~~and supplementary capital elements, with supplementary capital being limited~~ to ~~100%~~six ofyears ~~core capital. For bank holding companies, core capital, also known as Tier I capital, generally includes common stockholders’ equity, perpetual preferred stock~~ and ~~minority~~bear ~~interests~~fixed ininterest ~~consolidated subsidiaries less the unamortized balance of intangible assets~~rates. No ~~more~~These ~~than~~loans ~~25%~~are ~~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~~secured ~~certain~~by ~~forms~~motor ~~of perpetual preferred stock and cumulative preferred stock not included in core capital~~vehicles, ~~as well~~investment ~~as maturing capital instruments~~securities, ~~and~~or ~~the~~other ~~allowance~~personal ~~for loan losses limited to 1.25% of risk-weighted~~ assets~~. The regulatory~~ ~~guidelines~~and ~~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~~some ofinstances ~~core~~are ~~capital~~unsecured.

AtGreat ~~June 30~~Western Bank, ~~2003~~Clive has regional and local loan committees that meet at least weekly, subject to loan volume. Great Western’s ~~Tier~~Bank, ~~I capital~~Omaha ~~was~~has ~~$115~~a senior loan committee and loan committee that meet weekly. Great Western Bank,~~058,000~~ Watertown has regional loan committee meetings bi-weekly and an Executive Board Committee that meets as required by loan volume.

InInterest ~~addition~~rates tocharged ~~the~~on ~~risk-based capital~~loans ~~guidelines,~~vary with the ~~Federal~~degree ~~Reserve~~of ~~and~~risk, ~~the~~maturity, ~~FDIC~~underwriting ~~use~~and aservicing ~~leverage~~costs, ~~ratio~~loan asamount ~~an additional~~and ~~tool~~extent toof ~~evaluate~~other ~~the~~banking ~~capital~~relationships ~~adequacy~~maintained ofwith ~~banks~~customers and ~~bank~~are ~~holding companies. The~~further ~~leverage~~subject ~~ratio is defined~~ to becompetitive apressures, ~~company’s~~money ~~core~~market ~~capital~~rates, ~~divided~~availability ~~by its average tangible assets for the preceding quarter. Based upon the current capital status~~ of ~~Great~~funds ~~Western, the applicable minimum required~~and ~~leverage~~government ~~ratio is 4%~~regulations.

8-5-

TheTable tableof below presents Great Western’s applicable regulatory capital ratios at June 30, 2003:Contents

Ratio	Actual		Minimum Required
Tier I Capital to Average Assets	5.55	%	4.00	%
Tier I Capital to Risk-Weighted Assets	6.76	%	4.00	%
Total Capital to Risk-Weighted Assets	11.19	%	8.00	%

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.

~~Failure~~Under toapplicable ~~meet~~federal ~~the~~and ~~regulatory~~state ~~capital guidelines~~law, ~~may~~permissible ~~result~~loans into ~~the~~one ~~initiation~~borrower byafter ~~the~~June ~~Federal~~30, ~~Reserve~~2004 ofwere ~~appropriate supervisory~~limited orto ~~enforcement~~$12,703,329 ~~actions.~~for ~~All~~Great ~~three~~Western ofBank, Watertown, South Dakota; $12,362,116 for Great Western’s ~~capital~~Bank, ~~ratios~~Omaha, Nebraska; and $8,973,038 ~~were~~for ~~above~~Great ~~the~~Western ~~minimum~~Bank, ~~required~~Clive, asIowa. Certain exceptions, depending on the laws of ~~June 30~~the applicable state, ~~2003~~increase the loan limit to one borrower for loans secured by readily marketable securities and certain readily marketable agricultural assets.

~~THE~~COMPETITION ~~BANKS~~

~~General. Great~~The ~~Western~~banking ~~owns~~and ~~three~~financial ~~banks: Great~~services ~~Western~~industry ~~Bank,~~is ~~Omaha,~~highly ~~Nebraska,~~competitive aand ~~Nebraska~~undergoing ~~banking~~rapid ~~corporation~~consolidation. ~~with~~Within 15the ~~banking~~market ~~locations;~~area of Great Western’s ~~Bank~~banks, ~~Watertown,~~ ~~South~~numerous ~~Dakota~~commercial banks, asavings ~~South~~and ~~Dakota~~loan ~~banking~~associations, ~~corporation~~mortgage ~~with~~brokers, 23finance ~~banking locations;~~companies, ~~and~~credit ~~Great Western Bank~~unions, ~~Clive,~~investment ~~Iowa~~firms anand ~~Iowa~~private ~~corporation~~lenders compete with 25the ~~banking~~banks ~~locations. The~~for ~~FDIC insures the~~ deposits ~~of each bank~~ and ~~the~~loans. ~~banks~~Many ~~are~~of ~~subject~~these tocompetitors ~~supervision~~have ~~and~~significantly ~~regulation by~~greater ~~the~~resources ~~FDIC. In~~than ~~addition,~~ Great Western ~~Bank~~, ~~Omaha~~including ishigher ~~regulated~~lending bylimits ~~the Nebraska Department of Banking~~ and ~~Finance;~~more ~~the South~~extensive ~~Dakota Division of Banking regulates Great Western Bank~~financial, ~~Watertown;~~technical and ~~the~~ ~~Iowa~~marketing ~~Division of Banking regulates Great Western Bank, Clive~~resources.

~~Permissible~~The ~~Activities. No~~Financial ~~state~~Modernization ~~bank~~Act, ~~may~~also ~~engage~~known inas ~~any~~the ~~activity~~Gramm-Leach-Bliley ~~not~~Act, ~~permitted~~enacted ~~for~~in ~~national~~November ~~banks~~1999, ~~unless~~affects ~~the~~competition ~~institution~~between ~~complies~~financial ~~with~~institutions. ~~applicable capital~~This ~~requirements~~act ~~and~~significantly revised the ~~FDIC~~laws ~~determines~~regulating ~~that~~banks ~~the~~and ~~activity~~bank ~~poses~~holding ~~no significant~~companies ~~risk~~and toother ~~its~~providers ~~Bank~~of ~~Insurance~~financial ~~Fund. None~~services, ofenabling ~~Great~~bank ~~Western’s~~holding companies and foreign banks isthat ~~presently~~meet ~~involved~~applicable instatutory ~~the~~requirements—defined ~~types~~as ~~of activities~~financial ~~covered~~holding bycompanies—to ~~this~~engage ~~limitation. Under~~in ~~the~~a ~~Financial~~broader ~~Modernization~~range ~~Act~~of services and ~~rules~~to ~~adopted~~compete ~~pursuant thereto,~~more ~~banks~~efficiently ~~may~~in ~~create~~existing business lines. The Gramm-Leach-Bliley Act authorizes financial holding ~~subsidiaries~~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.~~” None~~ As of August 31, 2004, Great Western’s ~~bank~~had ~~subsidiaries~~not ~~have~~ elected to doconvert soto a financial holding company, but ~~may~~reserves dothis soright inunder the ~~future~~ rule.

~~Community~~EMPLOYEES 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.

~~Dividend~~As ~~Restrictions. Dividends~~of ~~paid~~September by10, 2004, Great Western’s ~~banks provide~~had ~~substantially~~approximately ~~all~~793 offull-time ~~the~~equivalent ~~operating~~employees. ~~and investing cash flow of~~ Great ~~Western. Great~~ Western’s ~~banks~~provides ~~are subject~~its toemployees ~~legal~~with ~~limitations~~a oncomprehensive benefit ~~the~~program, ~~frequency~~including ~~and~~major ~~amount~~medical ofinsurance, ~~dividends~~dental ~~that~~insurance, ~~may be~~life ~~paid~~and toaccidental ~~Great~~death ~~Western. Under South Dakota~~ and ~~Nebraska~~dismemberment ~~law~~insurance, ~~the~~long-term ~~approval~~disability ofcoverage ~~the~~and ~~principal~~a ~~regulator~~401(k) isplan. ~~required prior~~Great toWestern ~~the~~also ~~declaration~~offers ~~of any dividend by~~ a ~~bank~~tuition ifreimbursement ~~the~~program. ~~total of all~~Management ~~dividends~~considers ~~declared in any calendar year exceeds the total of~~ its ~~net~~relationship ~~profits of that year to date combined~~ with its ~~retained~~employees ~~net~~to ~~profits~~be ~~for the preceding two years~~good. ~~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

9SUPERVISION AND REGULATION

ofGreat ~~not~~Western ~~less~~and ~~than~~its ~~6.5%~~subsidiary ofbanks ~~adjusted assets plus a fully funded allowance~~are ~~for~~extensively ~~loan~~regulated ~~losses~~under ~~unless~~federal ~~the~~and ~~principal~~state ~~regulator approves a lower ratio~~laws. An ~~Iowa~~These ~~state~~laws ~~bank~~and ~~operating~~regulations ~~below~~are ~~the minimum~~primarily ~~requirement~~intended ~~would be subject~~ to ~~immediate~~protect ~~dividend~~depositors ~~restriction; a request for immediate capital injection~~ and~~/or~~ athe ~~possible~~deposit ~~cease~~insurance ~~and~~fund ~~desist order. Great~~of ~~Western~~the ~~Bank~~FDIC, ~~Clive~~not ~~has committed~~securities toholders ~~maintain~~of aGreat ~~ratio~~Western. ~~for~~The ~~Tier~~following Iinformation ~~capital~~is ~~to average assets of not less~~qualified ~~than~~in 8its ~~percent~~entirety ~~until~~by ~~August 1st,~~reference ~~2004, due~~ to the ~~fact~~particular ~~that~~statutory ~~the bank~~and ~~relocated~~regulatory ~~its~~provisions. ~~principal~~Any ~~place~~change ofin ~~business~~applicable ~~from Carlisle~~laws, ~~Iowa,~~regulations toor ~~Clive, Iowa.~~regulatory ~~The~~policies ~~Nebraska~~may ~~principal~~have ~~regulator requires~~ a ~~total~~material ~~capital~~effect toon ~~asset~~the ~~ratio of 6%~~business, ~~excluding~~operations ~~intangibles~~and ~~other~~prospects ~~than~~of ~~purchased~~Great ~~mortgage~~Western ~~servicing~~and its ~~rights~~banks. At ~~least~~Great ~~5.5%~~Western ~~must~~is beunable ~~primary capital,~~to ~~which~~predict ~~includes all equity capital accounts plus allowances for loan and lease losses. In addition, either~~ the ~~applicable~~nature ~~state banking regulator~~ or ~~the~~extent ~~FDIC~~of ~~has~~ the ~~power~~effects tothat ~~prohibit Great~~fiscal ~~Western’s banks from paying dividends if such payments would constitute unsafe~~ or ~~unsound~~monetary ~~banking practices or cause the bank to be undercapitalized.~~

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 state6-~~chartered~~ ~~institution and require it to establish reserves.~~

CapitalTable 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.Contents

~~The FDIC risk-based capital guidelines~~ ~~require~~policies, ~~state~~economic ~~non-member~~controls ~~banks~~or tonew ~~have~~federal aor ~~minimum~~state ~~ratio~~legislation ofmay ~~core~~have ~~capital~~on toits ~~total risk-weighted~~business ~~assets of 4%~~ and aearnings ~~minimum~~in ~~ratio~~the ~~of total capital to total risk-weighted assets of 8%~~future.

The ~~FDIC~~Gramm-Leach-Bliley ~~leverage~~Act ~~guidelines~~preserves ~~require~~the ~~that~~role of the Federal Reserve as the ~~state~~umbrella ~~banks~~supervisor ~~maintain~~for ~~core~~holding ~~capital~~companies ofwhile noat ~~less~~the ~~than~~same 3%time ~~and~~incorporating upa system of functional regulation designed to 5%take advantage of ~~total tangible~~the ~~assets~~strengths of the various federal and state regulators. ~~The~~ ~~applicable~~In particular, the Act replaces the broad ~~guideline~~exemption ~~for~~from ~~Great~~Securities ~~Western’s~~and ~~banks~~Exchange isCommission ~~estimated~~regulation tothat bebanks ~~4%.~~previously ~~Banks~~enjoyed with ~~regulatory~~ ~~capital~~more ~~ratios~~limited ~~below~~exemptions, ~~the~~and ~~required~~it ~~minimum~~reaffirms ~~are~~that ~~subject~~states ~~to administrative~~are ~~actions,~~the ~~including~~regulators for the ~~termination~~insurance activities of ~~deposit~~all ~~insurance~~persons, ~~upon~~including federally chartered ~~notice~~banks. ~~and~~The ~~hearing,~~Gramm-Leach-Bliley orAct also establishes a ~~temporary~~minimum ~~suspension~~federal standard of financial privacy. In general, the applicable federal regulations prohibit affected financial institutions (including banks, insurance ~~without~~agencies aand ~~hearing~~broker/dealers) infrom sharing information about their customers with non-affiliated third parties unless: (1) the ~~event~~financial institution has first provided a privacy notice to the customer; (2) the financial institution has nogiven ~~tangible~~the ~~capital~~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.

10Recent 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 ~~table~~Act ~~below~~provides ~~presents~~for the ~~regulatory~~establishment of a new Public Company Accounting Oversight Board (“PCAOB”), which will enforce ~~capital~~auditing, ~~ratios~~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 ~~banks~~anticipates atit ~~June 30,~~will ~~2003:~~incur

Ratio	Great Western Bank, Watertown		Great Western Bank, Omaha		Great Western Bank, Clive		Minimum Required
Tier I capital to average assets	8.33	%	7.70	%	8.55	%	4.00	%
Tier I capital to risk-weighted assets	10.44	%	9.10	%	10.36	%	4.00	%
Total capital to risk-weighted assets	11.62	%	10.30	%	11.61	%	8.00	%

-7-

BankingTable regulators have adopted regulations that define five capital levels: 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, 2003, the Great Western banks were well capitalized.Contents

~~Federal regulations require the federal~~ ~~banking~~additional ~~regulators~~expense toin ~~take~~complying ~~prompt~~with ~~corrective action to resolve~~ the ~~problems~~provisions of ~~depository~~ ~~institutions,~~the ~~including~~Act ~~capital-deficient~~and ~~institutions. In addition to requiring~~ the ~~submission~~related ofrules, ~~a capital~~management ~~restoration~~does ~~plan,~~not ~~the~~expect ~~regulations~~that ~~contain~~such ~~broad~~compliance ~~limits~~will onhave ~~activities~~a ofmaterial ~~institutions~~impact ~~which~~on ~~are~~Great ~~less~~Western’s ~~than~~financial ~~adequately~~condition ~~capitalized,~~or ~~involving~~results ~~asset growth,~~of ~~acquisitions,~~operation. ~~branch~~Certain ~~establishment,~~provisions ~~and expansion into new lines~~ of ~~business.~~ ~~With~~the ~~limited~~Act ~~exceptions,~~were aneffective ~~insured~~immediately ~~depository~~upon ~~institution~~passage ~~is prohibited~~or ~~from~~at ~~making~~various ~~capital~~times ~~distributions,~~in ~~including~~fiscal ~~dividends,~~2003 and ~~is prohibited~~2004. ~~from~~Other ~~paying~~provisions ~~management~~of ~~fees to control persons if~~ the ~~institution would~~Act will be ~~undercapitalized~~effective after ~~any distribution or payment~~fiscal 2004.

AsThe anCheck ~~institution’s~~Clearing ~~capital~~for ~~decreases~~the 21st Century Act, ~~the powers~~also ofknown ~~the~~as ~~federal~~Check ~~regulators~~21, ~~become~~which ~~greater.~~becomes Aneffective ~~undercapitalized~~on ~~or severely~~October ~~undercapitalized~~28, ~~institution~~2004 is ~~subject~~expected to ~~mandated~~revamp ~~capital~~the ~~raising~~way banks process ~~activities~~checks. Check 21 will facilitate check truncation, ~~restrictions~~a onprocess ~~interest~~which ~~rates~~eliminates ~~paid~~the ~~and~~original ~~transactions~~paper ~~with~~check ~~affiliates, removal~~from ofthe ~~management~~clearing process. Instead, ~~and~~many ~~other~~checks ~~restrictions~~will be processed electronically. ~~The~~ ~~regulators~~Under ~~have~~Check ~~limited~~21, ~~discretion~~as ina ~~dealing~~bank ~~with~~processes a ~~critically~~check, funds from the ~~undercapitalized~~check ~~institution~~writer’s ~~and~~account are ~~virtually~~transferred ~~required~~ to ~~appoint~~the check depositor’s account, and an electronic image of the check, a ~~receiver~~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 ~~conservator~~in ifclose proximity to the ~~capital~~paying ~~deficiency~~bank. isFor ~~not~~financial ~~corrected~~institutions ~~promptly~~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.

~~Real~~GREAT ~~Estate~~WESTERN 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.

11General. 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.

~~Interstate Banking Legislation~~Acquisitions. ~~Federal~~ ~~legislation~~As ~~effective September 1995,~~a ~~eliminated many of the historical barriers to the acquisition of banks by out-of-state~~ bank holding ~~companies. This~~company, ~~law~~Great ~~facilitates~~Western ~~the~~is ~~interstate expansion~~required ~~and consolidation of banking organizations by permitting: (1) bank holding companies that are adequately capitalized and managed~~ to ~~acquire~~ ~~banks~~obtain ~~located in states outside their home states regardless of whether acquisitions are authorized under~~ the ~~laws~~prior ofapproval ~~the host state; (2) the interstate merger~~ of ~~banks, subject to~~ the ~~right~~Federal ofReserve ~~individual~~before ~~states~~acquiring ~~either to~~direct ~~pass~~or ~~legislation~~indirect ~~providing~~ownership ~~for earlier effectiveness of mergers~~ or tocontrol ~~opt out~~ of ~~this~~more ~~authority~~than ~~after~~5% ~~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~~voting ~~state;~~shares ~~(4) foreign banks to establish, with approval~~ of ~~the appropriate~~a ~~regulators~~bank inor ~~the~~bank ~~United~~holding ~~States,~~company. ~~branches~~The ~~outside~~Federal ~~their~~Reserve ~~home~~will ~~states to~~not ~~the~~approve ~~same~~any ~~extent~~acquisition, ~~that~~merger ~~national~~ or ~~state~~consolidation ~~banks located in~~ that ~~state~~ would ~~be authorized~~have toa dosubstantial ~~so;~~anti-competitive ~~and (5) banks to receive deposits~~result, ~~renew~~unless ~~time deposits,~~the ~~close~~anti-competitive ~~loans,~~effects ~~service~~of ~~loans~~the ~~and~~proposed ~~receive~~transaction ~~payments~~are onoutweighed ~~loans~~by ~~and~~a ~~other~~greater ~~obligations as~~public ~~agent~~interest ~~for~~in ~~any~~meeting ~~bank or thrift affiliate, whether~~ the ~~affiliate~~needs isand ~~located~~convenience ~~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~~public. ~~subsidiary~~The ~~banks~~Federal asReserve ~~its~~also ~~agent~~considers ~~to receive deposits~~managerial, ~~renew~~ ~~time~~capital ~~deposits,~~and ~~close~~other ~~loans,~~financial ~~service~~factors ~~loans~~in ~~and~~acting ~~receive payments~~ on ~~loans~~ ~~and~~acquisition ~~other~~or ~~obligations~~merger ~~to the full extent permitted by applicable law and regulation~~applications.

~~Financial Modernization Act~~Permissible ~~(Gramm-Leach-Bliley Act)~~Activities. ~~Banks~~ ~~that~~Subject ~~elect~~ to ~~create~~limited ~~“financial~~exceptions, ~~subsidiaries”~~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 ~~activities~~determined ~~that~~by ~~are~~the ~~financial~~Federal Reserve to be closely related to banking or managing banks. The Federal Reserve has identified specific non-banking activities in ~~nature~~which a bank holding company may engage with notice to, ~~including:~~or prior approval by, the Federal Reserve.

~~• Lending,~~Capital Adequacy. The Federal Reserve monitors ~~exchanging,~~the ~~transferring~~regulatory capital adequacy of bank holding companies. As discussed below, ~~investing~~Great ~~for~~Western’s ~~others~~banks are also subject to the regulatory capital adequacy requirements of the FDIC and Nebraska, orSouth ~~safeguarding~~Dakota, ~~money~~and orIowa regulations, as applicable. ~~securities;~~The Federal Reserve uses a combination of risk-based guidelines and leverage ratios to evaluate the regulatory capital adequacy of Great Western.

~~• Engaging as~~The ~~agent~~Federal orReserve ~~broker~~has inadopted ~~any~~a ~~state~~system ~~for~~using ~~purposes~~risk-based ofcapital ~~insuring,~~adequacy ~~guaranteeing,~~guidelines orto evaluate the regulatory capital adequacy of bank holding ~~indemnifying~~companies ~~against~~on ~~loss,~~a ~~harm,~~consolidated ~~damage,~~basis. ~~illness,~~Under ~~disability,~~the ~~death~~risk-based capital guidelines, ~~defects~~different ~~in title~~categories of assets are assigned different risk weights, orbased ~~providing~~generally ~~annuities~~on asthe ~~agent~~perceived orcredit ~~broker~~risk of the asset. These risk weights are

~~• Providing financial,~~-8- ~~investment, or economic advisory services, including advising an investment company;~~

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

~~• Underwriting~~ 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 ~~dealing~~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, oralso ~~making~~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 ~~market~~minimum ratio of total capital to risk-weighted assets of 8% to be adequately capitalized, of which at least 4% should be in ~~securities;~~the form of core capital.

~~• Engaging in~~At ~~activities~~June ~~that the Federal Reserve has determined to be so closely related~~30, to2004, ~~banking~~Great orWestern’s ~~managing~~Tier orI ~~controlling~~capital ~~banks~~was as$140,099,000. ~~to be a proper incident thereto;~~

~~• Activities~~In ~~that~~addition to the risk-based capital guidelines, the Federal Reserve ~~has~~and ~~found~~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 ~~usual~~a incompany’s core ~~connection~~capital ~~with~~divided by its average tangible assets for the ~~transaction~~ preceding quarter. Based upon the current capital status of ~~banking~~Great orWestern, ~~other~~the ~~financial~~applicable ~~operations~~minimum ~~abroad;~~required leverage ratio is 4%. Great Western’s leverage ratio at June 30, 2004 was 5.90%.

~~• Additional activities~~The ~~that~~table ~~the~~below ~~Secretary~~presents ofGreat ~~the Treasury in consultation with the Federal~~Western’s ~~Reserve~~applicable ~~determines~~regulatory tocapital beratios ~~financial~~at inJune ~~nature~~30, or2004: ~~incidental to a financial activity; and~~

• Activities that may be conducted by an operating subsidiary.


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	%

~~None~~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 ~~bank~~capital ~~subsidiaries have~~ratios ~~elected~~were toabove ~~create~~the ~~financial~~minimum ~~subsidiaries~~required as of June 30, 2004.

~~CHANGING~~THE ~~REGULATORY~~BANKS ~~STRUCTURE~~

~~The~~General. ~~laws~~Great ~~and~~Western ~~regulations~~owns ~~affecting~~three banks: ~~and~~Great Western Bank, Omaha, Nebraska, a Nebraska banking corporation with 17 ~~bank~~banking ~~holding~~locations; ~~companies~~Great ~~are~~Western inBank, Watertown, South Dakota, a ~~state~~South ofDakota ~~flux~~banking corporation with 23 banking locations; and Great Western Bank, Clive, Iowa, an Iowa corporation with 31 banking locations. The ~~rules~~FDIC insures the deposits of each bank and the ~~regulatory~~banks ~~agencies~~are insubject ~~this~~to ~~area~~supervision ~~have~~and ~~changed significantly~~regulation ~~over~~by ~~recent~~the ~~years~~FDIC. In addition, ~~and~~Great ~~there~~Western Bank, Omaha is ~~reason~~regulated toby ~~expect~~the ~~that~~Nebraska ~~similar changes~~Department ~~will~~of ~~continue~~Banking inand Finance; the ~~future. It is~~South ~~not~~Dakota ~~possible~~Division toof ~~predict~~Banking regulates Great Western Bank, Watertown; and the ~~outcome~~Iowa Division of ~~these~~Banking ~~changes~~regulates Great Western Bank, Clive.

12Permissible 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

One of the major additional burdens 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~~9- 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.

ECONOMICTable ENVIRONMENTof Contents

~~The policies of regulatory authorities,~~ ~~including~~determines ~~the~~that ~~monetary policy of~~ the ~~Federal~~activity ~~Reserve,~~poses ~~have~~no a significant ~~effect on~~risk ~~the~~to ~~operating~~its ~~results~~Bank ofInsurance ~~bank~~Fund. ~~holding~~None ~~companies~~of ~~and~~Great ~~their~~Western’s ~~subsidiaries. Among~~banks ~~the~~is ~~means~~presently ~~available~~involved toin the ~~Federal~~types of ~~Reserve~~activities tocovered ~~affect~~by ~~the~~this ~~money supply are open market operations in U~~limitation.~~S. Government~~ ~~securities,~~Under ~~changes in~~ the ~~discount~~Financial ~~rate~~Modernization onAct ~~member bank borrowings,~~ and ~~changes~~rules inadopted ~~reserve~~pursuant ~~requirements~~thereto, ~~against~~banks ~~member~~may ~~bank~~create ~~deposits. These~~financial ~~means~~subsidiaries ~~are~~to ~~used~~engage in ~~varying~~activities ~~combinations to~~that ~~influence~~are ~~overall~~“financial ~~growth~~in ~~and~~nature.” ~~distribution~~None of ~~bank~~Great ~~loans, investments and~~Western’s ~~deposits,~~bank ~~and~~subsidiaries ~~their~~have ~~use~~elected ~~may~~to ~~affect~~do ~~interest~~so, ~~rates~~but ~~charged~~may ondo ~~loans~~so orin ~~paid~~the ~~on deposits~~future.

~~The~~Community ~~Federal~~Reinvestment ~~Reserve’s~~Act. ~~monetary~~Enacted ~~policies~~in ~~have materially~~1977, ~~affected~~ the ~~operating~~federal ~~results~~Community ofReinvestment ~~commercial~~Act ~~banks~~(“CRA”) inhas ~~the~~become ~~past~~important ~~and are~~to ~~expected~~financial institutions, including their holding companies. This allows regulators to ~~continue~~turn down an applicant seeking to domake soan inacquisition or establish a branch unless it has performed satisfactorily under CRA. Satisfactory performance means meeting adequately the ~~future~~credit needs of the communities the applicant serves. The ~~nature~~applicable offederal ~~future~~regulators regularly ~~monetary~~conduct ~~policies~~examinations ~~and~~to assess the ~~effect~~performance of ~~these policies~~financial oninstitutions. ~~the~~During ~~business~~their ~~and~~most ~~earnings~~recent examinations, ratings of satisfactory were received by each of Great Western’s ~~and~~banks. ~~its~~As ~~subsidiaries~~a result, management believes that the ~~cannot~~banks’ beperformance ~~predicted~~under CRA will not impede regulatory approvals of any proposed acquisitions or branches.

~~ITEM~~Examinations. 2The FDIC examines Great Western’s banks from time to time. ~~PROPERTIES~~ 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 ~~offices~~FDIC ofhas ~~Great~~adopted ~~Western~~regulations ~~are~~establishing ~~located~~minimum inrequirements ~~a leased~~for ~~one-story~~the ~~building~~capital ~~located~~adequacy atof ~~10834~~insured ~~Old~~institutions. ~~Mill~~The ~~Road,~~requirements ~~Suite~~address ~~One,~~both ~~Omaha~~risk-based capital and leverage capital, with risk-based assets and ~~Nebraska~~core ~~68154~~and supplementary capital being determined in essentially the same manner as described above for bank holding companies. ~~Great~~ ~~Western~~The FDIC may establish higher minimum requirements if, ~~through its~~for ~~subsidiaries~~example, ~~currently~~a ~~operates~~bank 63has ~~banking~~previously ~~offices~~received special attention or has a high susceptibility to interest rate risk.

AtThe ~~June 30, 2003, Great Western, through~~FDIC ~~its~~risk-based ~~subsidiaries,~~capital ~~owned~~guidelines ~~the~~require ~~buildings~~state ~~for~~non-member 49banks ofto ~~its~~have ~~branch~~a ~~offices~~minimum ~~and~~ratio ~~leased the~~of ~~remaining~~core 14capital ~~offices. With~~to ~~only~~total ~~one exception,~~risk-weighted aassets ~~branch~~ of ~~Great~~4% ~~Western~~and ~~Bank,~~a ~~Clive~~minimum ~~being~~ratio ~~leased from Great Western, all leased properties are leased from unaffiliated third parties. We believe each~~ of ~~our~~total ~~facilities~~capital ~~is in good condition, adequately covered by insurance and sufficient~~ to ~~meet~~total ~~the~~risk-weighted ~~needs~~assets ~~at that~~of ~~location for the foreseeable future~~8%.

~~ITEM~~The FDIC leverage guidelines require that state banks maintain core capital of no less than 3% and up to 5% of total tangible assets. ~~LEGAL~~ ~~PROCEEDINGS~~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.

~~Great~~-10- 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.

13Table of Contents

~~ITEM~~The ~~4. SUBMISSION~~table OFbelow ~~MATTERS~~presents TOthe Aregulatory ~~VOTE~~capital OFratios ~~SECURITY HOLDERS~~of the Great Western banks at June 30, 2004:

No matter was submitted to a vote of security holders, through solicitation of proxies or otherwise, during the quarter ending June 30, 2003.


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	%

~~PART~~The IIFederal 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.

~~ITEM~~The 5Basel Committee on Banking Supervision continues to evaluate certain aspects of the proposed New Basel Capital Accord. ~~MARKET~~ ~~FOR~~The New Basel Capital Accord incorporates three pillars that address: (a) minimum capital requirements, (b) supervisory review, which relates to ~~REGISTRANT~~an institution’Ss ~~COMMON~~capital ~~EQUITY~~adequacy ~~AND~~and ~~RELATED~~internal ~~STOCKHOLDER~~assessment ~~MATTERS~~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.

~~Market~~Federal ~~Information~~regulations ~~and~~require ~~Holders. There~~the isfederal nobanking regulators ~~established~~to ~~public~~take ~~trading market~~prompt ~~for~~corrective ~~any~~action ~~class~~to resolve the problems of ~~common~~depository ~~equity~~institutions, including capital-deficient institutions. In addition to requiring the submission of ~~Great~~a ~~Western~~capital ~~Bancorporation~~restoration plan, ~~Inc~~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. orWith 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 ofdistribution ~~its~~or ~~subsidiaries~~payment.

As ofan ~~August 31~~institution’s capital decreases, ~~2003~~the powers of the federal regulators become greater. An undercapitalized or severely undercapitalized institution is subject to mandated capital raising activities, ~~there~~restrictions ~~were~~on ~~124~~interest rates paid and transactions with affiliates,~~952~~ ~~shares~~removal of ~~common~~management, ~~stock~~and other ~~issued~~restrictions. The regulators have limited discretion in dealing with a critically undercapitalized institution and ~~outstanding~~are ~~that~~virtually ~~were~~required ~~held~~to byappoint 23a ~~shareholders~~receiver ofor ~~record~~conservator if the capital deficiency is not corrected promptly.

~~Common~~-11- stock dividends declared for fiscal year 2003 totaled $751,000, or $6.00 per common share, compared to $751,000 or $6.00 per common share in fiscal year 2002. In 2001 dividends of $1,493,000, or $18.01 per common share were declared. The 2001 dividend included $1,200,000 in the form of a note payable. For information regarding the payment of future dividends and any possible restrictions see “Dividend Restrictions” under Item 1.

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

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

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.

	Year ended June 30, 2002
	First	Second	Third	Fourth
Cash dividends declared	1.50	1.50	1.50	1.50

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.

OnFinancial ~~March 23,~~Modernization ~~2001,~~Act ~~Great~~(Gramm-Leach-Bliley ~~Western issued 46,319 shares of its common stock and 100,000 shares of its Series 3 variable rate nonvoting, noncumulative perpetual preferred stock in the merger of Great Western Securities, Inc~~Act). ~~into~~Banks ~~Great~~that ~~Western.~~ elect ~~Such shares of common stock were issued~~ to ~~existing~~create ~~stockholders~~“financial ~~of Great~~subsidiaries” ~~Western~~may ~~who~~engage were holders of one-half of the outstanding shares of common stock of Great Western Securities, Inc. Such shares of preferred stock were issued to Jack K. Harvey, holder of all of the outstanding preferred stock and one-half of the outstanding shares of the common stock of Great Western Securities, Inc. No underwriters were involved in ~~the~~activities ~~transaction. The~~that ~~issuance~~are ~~was~~financial ~~made~~ in ~~a transaction exempt from the requirements of Section 5 of the Securities Act of 1933~~nature, as ~~amended,~~including: ~~pursuant to Section 4 (2) thereof.~~

On• ~~August 7~~Lending, ~~2000~~exchanging, ~~Great Western issued 7~~transferring,~~584~~ ~~shares~~investing ~~of its common stock in exchange~~ for ~~all outstanding common stock of Citizens Corporation (“Citizens”) and assumption of $1~~others,~~200,000~~ ~~Capital~~or ~~Notes~~safeguarding tomoney ~~existing~~or Great Western stockholders. Citizens’ subsidiary, Citizens Bank, Mt Ayr, Iowa was merged into Great Western’s subsidiary, Great Western Bank, Clive. No cash proceeds were generated from the issuance.securities;

14• 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.

~~ITEM~~• ~~6. SELECTED~~Providing ~~FINANCIAL~~financial, ~~DATA~~investment, or economic advisory services, including advising an investment company;

~~The~~• ~~following~~Issuing ~~table~~or ~~presents~~selling ~~selected~~annuities ~~consolidated~~representing ~~financial~~interests ~~data for Great Western for each of the years~~ in ~~the~~pools ~~five-year period ended June 30, 2003. The data set forth below includes the accounts~~ of ~~Iowa~~assets ~~State~~permissible 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 and the accounts of Peoples Bank, Overland Park, Kansas (“Peoples”) from December 13, 2002, the date of acquisition of Peoples. The completed acquisitions were accounted for ~~under~~a ~~the~~bank ~~purchase~~to ~~method~~hold ~~of accounting.~~directly;

~~The~~• ~~following~~Underwriting, ~~table~~dealing ~~should be read~~ in, ~~conjunction~~or ~~with~~making ~~the~~a ~~consolidated financial~~market ~~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.”~~securities;

~~The~~• ~~merger~~Engaging ofin ~~Great~~activities ~~Western~~that ~~and~~the ~~Citizens~~Federal ~~Corporation~~Reserve ~~on August 7, 2000~~ has ~~been~~determined ~~accounted~~to ~~for~~be atso ~~historical~~closely ~~cost~~related ~~in a manner similar~~ to ~~a pooling-of-interests~~banking ~~combination~~or ~~and,~~managing ~~accordingly,~~or ~~the~~controlling ~~consolidated~~banks ~~financial statements~~as ~~prior~~ to ~~the~~be ~~combination~~a ~~have~~proper ~~been~~incident 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.thereto;

	At or for the year ended June 30,
	2003			2002			2001			2000			1999
	(dollars in thousands, except per common share data)
Consolidated statements of income:
Interest income	$	125,070		$	127,915		$	91,669		$	61,363		$	51,709
Interest expense	48,205			60,181			51,825			31,515			25,548
Net interest income	76,865			67,734			39,844			29,848			26,161
Provision for loan losses	4,371			6,067			2,618			2,036			1,563
Other income	31,354			21,897			11,467			7,233			6,662
Other expenses	77,460			62,318			33,831			21,057			18,621
Income taxes	9,839			7,393			4,922			4,440			4,089
Minority interest in earnings of subsidiaries	618			636			522			404			357
Net income	15,931			13,217			9,418			9,144			8,193
Per common share data:
Basic earnings per share	$	121.61		$	98.36		$	101.16		$	113.62		$	101.42
Dividends	6.00			6.00			18.01			12.45			11.49
Tangible book value per share(1)	523.18			393.63			306.56			483.05			472.29
Consolidated balance sheets:
Assets	$	2,148,069		$	2,012,157		$	1,782,122		$	850,776		$	684,236
Loans, net of unearned income(2)	1,621,212			1,496,200			1,303,049			634,757			522,800
Allowance for loan losses	21,251			20,344			18,955			8,197			6,838
Deposits	1,735,030			1,635,967			1,421,090			691,535			569,971
Long term notes payable	140,175			123,157			116,646			50,932			41,116
Company obligated mandatorily redeemable preferred securities of subsidiary trust holding solely subordinated debentures	58,000			48,000			48,000			20,400			—
Nonperforming assets	14,667			19,960			21,164			9,567			7,854
Stockholders’ equity	126,374			110,163			96,926			47,822			41,768
Key ratios:
Net interest margin(3)	4.06		%	4.01		%	3.79		%	4.21		%	4.34		%
Return on average assets	0.76			0.71			0.82			1.19			1.25
Return on average stockholders’ equity	13.45			12.76			14.53			19.67			20.47
Nonperforming loans to loans, net of unearned income	0.77			1.17			1.53			1.49			1.48
Net loans charged-off to average loans, net of unearned income	0.22			0.41			0.27			0.10			0.21
Dividend payout ratio	4.93			6.10			17.80			10.96			11.33
Allowance for loan losses to loans, net of unearned income	1.31			1.36			1.45			1.29			1.31
Allowance for loan losses to nonperforming loans	170.57			116.49			94.85			86.70			88.37
Tier I risk-based capital	6.76			6.21			6.06			9.80			8.10
Total risk-based capital	11.19			10.56			11.17			11.60			9.30
Tier I leverage ratio	5.55			5.00			4.88			7.20			6.40
Stockholders’ equity to assets	5.88			5.47			5.44			5.62			6.10
Ratio of earnings to fixed charges(4):
Including interest on deposits	1.51		x	1.32		x	1.28		x	1.43		x	1.48		x
Excluding interest on deposits	2.86		x	2.33		x	2.50		x	3.32		x	4.29		x

•

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

~~(1) Stockholders’~~• ~~equity~~Additional ~~less~~activities ~~preferred~~that ~~stock~~the ~~less~~Secretary ~~goodwill~~of ~~and~~the ~~core deposit~~Treasury ~~and~~in ~~other~~consultation ~~intangibles,~~with ~~divided~~the byFederal ~~period~~Reserve ~~end~~determines ~~shares~~to ofbe ~~common~~financial ~~stock outstanding.~~in nature or incidental to a financial activity; and

~~(2) Before~~• ~~allowance~~Activities ~~for~~that ~~loan~~may ~~losses~~be conducted by an operating subsidiary.

~~(3) On~~None aof ~~tax~~Great ~~equivalent~~Western’s ~~basis~~bank subsidiaries have elected to create financial subsidiaries.

~~(4) The~~-12- 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 and 3 preferred stock. Fixed charges consist of interest on borrowings, amortization of debt issuance expense, and implicit interest on leases.

15Table of Contents

~~ITEM~~CHANGING ~~7. MANAGEMENT’S DISCUSSION~~REGULATORY ~~AND~~STRUCTURE ~~ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION~~

~~The~~Various ~~following~~legislation, isincluding ~~management’s~~proposals ~~discussion~~to ~~and~~change ~~analysis~~substantially of the financial institution regulatory system is from time to ~~condition~~time introduced in Congress. This legislation may change banking statues and ~~results~~the operating environment of the ~~operation~~Company ofin ~~Great~~substantial ~~Western~~and unpredictable ways. It isIf ~~intended~~enacted, tothis ~~explain~~legislation ~~certain~~could ~~financial information~~increase ~~regarding~~or ~~Great~~decrease ~~Western~~the ~~and~~cost ~~should~~of bedoing ~~read~~business, inlimit ~~conjunction~~or expand ~~with~~permissible activities or affect the ~~Consolidated~~ ~~Financial~~competitive ~~Statements~~balance among banks, ~~related~~savings ~~Notes~~associations, credit unions, and ~~the~~other ~~Five~~financial ~~Year~~institutions. ~~Summary~~The Company cannot predict whether any of this potential legislation will be enacted and, if enacted, ~~Selected~~the ~~Financial~~effect ~~Data~~that ~~included~~it inor ~~this~~any ~~report~~implementing regulations, would have on the Company’s business, results of operations or financial condition.

~~Great~~One ~~Western~~of ~~Bancorporation,~~the ~~Inc.,~~major additional requirements imposed on the banking industry is athe ~~multi-bank~~increased ~~holding~~authority ~~company, with~~of ~~locations~~federal inagencies ~~Nebraska,~~to ~~South~~regulate ~~Dakota,~~the ~~southern~~activities ~~Iowa,~~of federal ~~northern~~and ~~Missouri~~state banks and ~~northeastern~~ ~~Kansas~~their holding companies. To ~~serve~~The ~~its customers~~Federal Reserve, ~~Great~~the ~~Western’s~~Comptroller ~~banks~~of ~~conduct~~the ~~community~~Currency ~~banking~~and ~~operations~~the ~~through~~FDIC have extensive authority to police unsafe or unsound practices and violations of applicable laws and regulations by depository institutions and their ~~branch~~holding ~~networks~~companies. ~~Operations~~ ~~focus on~~These ~~offering~~agencies ~~deposits,~~can ~~making~~assess ~~loans~~civil ~~and~~money ~~providing~~penalties. ~~customers~~Other ~~with~~laws asuch ~~full~~as ~~array~~the Sarbanes-Oxley Act of ~~financial~~ ~~products~~2002 have expanded the agencies’ authority in recent years, and athe ~~high~~agencies ~~level~~have not yet fully tested the limits of ~~customer~~their ~~service~~powers. In addition, tothe ~~these~~South ~~services~~Dakota Division of Banking, ~~Great Western’s~~Iowa ~~banks~~Division ~~provide~~of ~~insurance,~~Banking ~~securities~~and ~~brokerage~~Nebraska Department of Banking and ~~other~~Finance, ~~retail~~possess broad enforcement powers to address violations of their banking laws by banks chartered in ~~financial~~their ~~services~~respective states.

~~CRITICAL~~ECONOMIC ~~ACCOUNTING~~ENVIRONMENT ~~POLICIES~~

The ~~“Management’s~~policies ~~Discussion and Analysis~~ of ~~Financial~~regulatory ~~Condition and Results of Operations~~authorities,” ~~and~~including ~~disclosures~~the ~~included~~monetary ~~within~~policy ~~this~~of ~~Form 10-K Annual~~the ~~Report~~Federal Reserve, ~~are based on Great Western’s audited consolidated financial statements. These statements~~ have ~~been prepared~~a insignificant ~~accordance~~effect ~~with~~on ~~accounting principles generally accepted in~~ the ~~United~~ ~~States~~operating ofresults ~~America. The preparation~~ of ~~these~~bank ~~financial~~holding ~~statements~~companies ~~requires management to make estimates~~ and ~~judgments~~their ~~that~~subsidiaries. ~~affect~~Among the ~~reported~~means ~~amounts~~available ofto ~~assets, liabilities, revenues and expenses. On an ongoing basis, management evaluates~~ the ~~estimates~~Federal ~~used,~~Reserve ~~including~~to ~~the~~affect ~~adequacy of~~ the ~~allowance~~ ~~for~~money ~~loan~~supply ~~losses,~~are ~~and~~open amarket ~~valuation~~operations ofin ~~mortgage servicing rights and intangibles~~U. ~~Estimates~~S. ~~are based upon historical~~Government ~~experience~~securities, ~~current~~changes ~~economic conditions and other factors that management considers reasonable under the circumstances. These estimates result~~ in ~~judgments regarding~~ the ~~carrying~~discount ~~values~~rate ~~of assets~~on ~~and~~member ~~liabilities~~bank ~~where these values are not readily available from other sources~~borrowings, ~~as well as assessing~~ and ~~identifying~~changes ~~the~~in ~~accounting~~reserve ~~treatments~~requirements ~~of commitments~~against ~~and~~member ~~contingencies. Actual results~~bank ~~may differ from these estimates under different assumptions or conditions~~deposits. ~~Great~~ ~~Western’s~~These ~~significant accounting~~means ~~policies~~ are ~~described~~used in ~~the~~varying ~~“Notes~~combinations to ~~Consolidated~~influence ~~Financial Statements”~~overall ~~under~~growth ~~“Nature of Operations~~ and ~~Summary~~distribution of ~~Significant~~bank ~~Accounting~~loans, ~~Policies”. Three~~investments ofand ~~Great~~deposits, ~~Western’s more critical accounting policies involve the more significant judgments~~ and ~~assumptions~~ ~~used~~their inuse ~~the~~may ~~preparation~~affect ofinterest ~~the~~rates ~~consolidated~~charged ~~financial~~on ~~statements; these~~loans ~~are~~or ~~related~~paid toon ~~the allowance for loan losses, mortgage servicing rights and intangibles~~deposits.

~~Provision and allowance for loan losses.~~ The ~~allowance~~ ~~for~~Federal ~~loan~~Reserve’s ~~losses~~monetary ispolicies ~~established~~have ~~through~~materially aaffected ~~provision~~the ~~for~~operating ~~loan~~results ~~losses charged~~of tocommercial ~~expense. Loans~~banks ~~are~~in ~~charged against~~ the ~~allowance~~past ~~for~~and ~~loan~~are ~~losses~~expected ~~when~~to ~~management~~continue to ~~believes~~do ~~that collectibility~~so ofin the ~~principal~~future. isThe ~~unlikely. Great~~nature ~~Western~~of ~~has~~future monetary policies and ~~procedures for evaluating~~ the ~~overall credit~~effect ~~quality~~ of ~~its~~these ~~loan~~policies ~~portfolio~~on ~~including~~the ~~timely~~business ~~identification~~and earnings of ~~potential~~ ~~problem~~Great ~~credits. On~~Western ~~a quarterly~~and orits ~~more~~subsidiaries ~~frequent~~cannot ~~basis,~~be ~~management reviews the appropriate level for the allowance for loan losses~~predicted. ~~This review~~ ~~and analysis is based on:~~

16In 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.

~~• Internal~~ ~~monitoring~~ITEM ~~and~~2. ~~reporting~~PROPERTIES ~~system~~

~~• Economic~~The offices of ~~conditions~~Great Western are located in a leased one-story building located at 10834 Old Mill Road, ~~including~~Suite ~~duration~~One, ofOmaha, ~~the~~Nebraska ~~current~~68154. ~~cycle~~Great Western, through its subsidiaries, currently operates 71 banking offices.

~~• Past experience,~~-13- ~~including recent loss experience~~

• Credit qualityTable trendsof Contents

~~• Collateral~~At June 30, 2004, Great Western, through its subsidiaries, owned the buildings for 55 of its branch ~~values~~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.

~~• Volume,~~ ~~composition,~~ITEM ~~and~~3. ~~growth~~LEGAL ofPROCEEDINGS ~~the loan portfolio~~

~~• Specific~~Great ~~credits~~Western and ~~industry~~its ~~conditions~~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.

~~• Results~~ ofITEM ~~bank~~4. ~~regulatory~~SUBMISSION ~~and~~OF ~~internal~~MATTERS ~~credit~~TO ~~exams~~A VOTE OF SECURITY HOLDERS

~~• Actions by~~No matter was submitted to a vote of security holders, through solicitation of proxies or otherwise, during the ~~Federal~~quarter ~~Reserve~~ended ~~Board~~June 30, 2004.

~~• Existence and~~PART ~~effects~~II ~~of concentrations of credit~~

~~• Delay~~ inITEM ~~receipt~~5. ofMARKET ~~information~~FOR toREGISTRANT’S ~~evaluate~~COMMON ~~loans~~EQUITY, orRELATED ~~confirm~~STOCKHOLDER ~~existing~~MATTERS ~~credit deterioration~~AND ISSUER PURCHASES OF EQUITY SECURITIES

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

~~Mortgage~~There ~~servicing~~is ~~rights. Mortgage~~no ~~servicing rights are~~ established ~~based~~ onpublic ~~the~~trading ~~cost~~market offor ~~acquiring~~any ~~the~~class ~~right to service mortgage loans. These costs are initially capitalized and then amortized in proportion to, and proportionately over the period~~ of ~~estimated~~common ~~future~~equity ~~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 balances of loans after scheduled loan amortization and estimated prepayments. An independent outside company estimates for Great Western ~~future~~Bancorporation, ~~prepayment~~Inc. ~~rates based~~or onany ~~relevant characteristics~~ of ~~the~~its ~~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~~subsidiaries.

~~Great~~As ~~Western reports mortgage servicing rights at the lower~~ of ~~amortized~~ ~~cost~~August or31, ~~fair~~2004, ~~value. The carrying~~there ~~value~~were of123,802 ~~mortgage~~shares ~~servicing rights is adjusted by estimated impairment losses. The fair value~~ of ~~mortgage servicing~~common ~~rights~~stock ~~is determined based on the present value of estimated expected~~issued ~~future cash flows, using assumptions as to current market discount rates~~ and ~~prepayment~~ ~~speeds. Mortgage~~outstanding ~~servicing rights~~that ~~are~~were ~~stratified~~held by ~~loan~~23 ~~type~~shareholders ~~and interest rate for purposes~~ of ~~impairment measurement~~record. ~~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:

~~1. The~~DIVIDENDS ~~mortgage servicing assets are stratified based on predominant risk characteristics.~~

~~2. Impairment losses~~Common ~~are~~stock ~~recorded~~dividends asdeclared ~~reductions~~for infiscal ~~the~~year ~~carrying~~2004 totaled ~~value~~$820,000, ofor ~~the~~$6.60 ~~asset~~per ~~through~~common ~~a valuation~~share, ~~allowance~~compared ~~for~~to ~~each~~$751,000 ~~individual~~or ~~stratum~~$6.00 ~~with~~per acommon ~~corresponding~~share ~~increase to~~in ~~amortization~~fiscal ~~expense~~year 2003. ~~The~~ ~~amount~~In ~~of impairment~~2002, ~~equals~~dividends ~~the~~of ~~carrying~~$751,000, ~~amount~~or ~~for~~$6.00 aper ~~particular~~common ~~stratum~~share ~~minus~~were ~~its fair market value~~declared.

~~3. The valuation~~Frequency ~~allowance~~(quarterly) isand ~~adjusted~~amount ~~to reflect changes in the measurement~~ of ~~impairment~~ ~~after~~cash ~~the~~dividends ~~initial~~per ~~measurement~~common ofshare ~~impairment,~~declared ~~based~~were onas ~~market conditions.~~follows:

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


	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

~~assets~~-14- acquired in the purchase of subsidiaries. Core deposit intangible represents 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 SFAS 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.

GoodwillTable 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.Contents

~~MERGERS~~Dividend ~~AND~~Restrictions. ~~ACQUISITIONS~~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.

~~On March 27, 1998, Great Western Bancorporation, Inc. (“Great~~ ~~Western”)~~ITEM ~~acquired all of the outstanding shares of First Savings & Loan Association of South Dakota, Inc~~6., ~~Aberdeen,~~SELECTED ~~South~~FINANCIAL ~~Dakota. First~~DATA Savings was merged into Great Western Bank, Watertown (formerly F&M Bank), a subsidiary bank of Great Western. Assets of $16,999,000, loans, net of unearned fees of $14,016,000 and deposits of $14,085,000 were acquired in connection with the merger.

OnThe ~~May 31,~~following ~~1999,~~table ~~Decatur~~presents ~~Corporation~~selected ~~became~~consolidated financial data for Great Western for each of the ~~surviving corporation~~years in athe ~~merger~~five-year ofperiod ~~its~~ended ~~affiliated~~June ~~bank~~30, ~~holding~~2004. ~~companies~~The data set forth below includes the accounts of Iowa State Bank, ~~Spectrum Bancorporation~~Hamburg, ~~Inc.~~Iowa and United ~~Rushmore~~National ~~Financial~~Bank ~~Services~~of Iowa, ~~Inc. Decatur~~Sidney, ~~then~~Iowa ~~changed~~from ~~its~~August ~~name~~1, to2000, ~~Spectrum Bancorporation~~the effective date of acquisition of those banking subsidiaries of Hamburg Financial, Inc., ~~but~~the ~~retained~~accounts ~~its~~of ~~Iowa~~Great ~~charter~~Western toBank, ~~facilitate~~Omaha, ~~acquisitions~~Nebraska from March 23, 2001, the effective date ~~within~~of acquisition of that ~~state. The~~banking ~~merger~~subsidiary ~~has~~of ~~been accounted~~Great ~~for~~Western atSecurities, ~~historical~~the ~~cost~~accounts inof aFounders ~~manner~~Trust ~~similar~~National toBank, aSioux ~~pooling-~~Falls, South Dakota (“Founders”) from March 31, 2001, the date of~~-interests~~ acquisition of Founders, the accounts of First ~~combination~~Western Bank, N.A., Atkinson, Nebraska (“First Western”) and Marquette Bank Nebraska, ~~accordingly~~N.A., ~~the~~O’Neill, ~~consolidated~~Nebraska ~~financial~~(“Marquette”) ~~statements~~from ~~prior~~February to 28, 2002, the ~~combination~~date ~~have~~of ~~been~~acquisition ~~restated~~of toFirst ~~include~~Western and Marquette, the accounts of Peoples Bank, Overland Park, Kansas (“Peoples”) from December 13, 2002, the date of acquisition of Peoples and ~~results~~the accounts of ~~operations~~ six branches of ~~Spectrum~~Bank ~~Bancorporation~~Midwest, ~~Inc~~N. OnA. ~~May 29~~from February 23, ~~2003~~2004, ~~Spectrum~~the ~~Bancorporation,~~date ~~Inc.~~of ~~was~~their ~~renamed~~acquisition by Great Western ~~Bancorporation~~Bank, Clive. ~~Inc~~The completed acquisitions were accounted for under the purchase method of accounting.

OnThe ~~January 14,~~following ~~2000,~~table ~~Great~~should ~~Western~~be ~~chartered~~read Citizens Bank, Carlisle, Iowa (now known as Great Western Bank, Clive), which purchased certain assets and assumed certain deposits of the failed Hartford-Carlisle Savings Bank. In addition to the main office in ~~Carlisle,~~conjunction ~~the~~with ~~bank acquired facilities in Hartford and Runnells, Iowa. On December 26, 2000,~~ the ~~bank~~ ~~moved~~consolidated ~~its~~financial ~~main~~statements ~~office from Carlisle to Clive, Iowa, a suburb~~ of Des Moines. In August 2002, the bank closed the Hartford office. Liquid assets of $4,800,000; loans, net of unearned fees of $34,539,000, and deposits of $70,465,000 were acquired in connection with the purchase and assumption. Great Western ~~owned~~and ~~95.24% of~~ the ~~stock~~notes ofthereto ~~this~~appearing ~~bank. The~~elsewhere ~~newly chartered state bank was capitalized with $10,500,000~~ in ~~capital;~~this ~~the~~report ~~purchase included a $5,500,000 premium paid to the FDIC. The acquisition was accounted for in a manner similar to a purchase~~ and the ~~deposit~~information ~~premium~~contained ~~was allocated to unidentifiable intangible asset. This unidentifiable asset was reclassified to goodwill on July 1, 2002~~ in ~~applying SFAS 147. A major reason for this acquisition was the~~ ~~proximity of this bank~~“Management’s ~~offices~~Discussion toand ~~the~~Analysis ~~Des~~of ~~Moines~~Financial ~~market,~~Condition and ~~the~~Results ~~ability~~of ~~to branch~~Operation.”

OnThe ~~July 13,~~merger ~~2000,~~of Great Western’s ~~subsidiary~~and Citizens Corporation on August 7, ~~Great~~2000 ~~Western~~has ~~Bank~~been accounted for at historical cost and, ~~Clive~~ ~~(successor~~accordingly, bythe ~~merger~~consolidated financial statements prior to ~~Citizens~~the ~~Bank,~~combination ~~Mt.~~have ~~Ayr)~~been ~~purchased~~restated to include the ~~assets~~accounts and ~~assumed~~ ~~the~~results ~~liabilities~~of operations of ~~the~~Great ~~branch~~Western ofand ~~Commercial~~Citizens ~~Federal~~Corporation. ~~Bank,~~See ~~FSB~~“Certain ~~located in~~Relationships ~~Kellerton,~~and ~~Iowa~~Related Party Transactions. A” ~~premium~~The ofselected ~~approximately~~consolidated ~~$175,000~~financial ~~was~~data ~~paid~~below totakes ~~acquire~~into ~~deposits~~account ofthis ~~approximately $3,300,000~~restatement.

18-15-

AsTable of August 7, 2000, Great Western acquired all of the outstanding shares of Hamburg Financial, Inc. (“HFI”), an unaffiliated holding company that owned two banks in southwestern Iowa. Great Western paid $8,730,995 in cash which included a premium of $2,236,123 to acquire HFI and its subsidiaries; Thurman State Corporation, a second-tier holding company which owned the United National Bank of Iowa, headquartered in Sidney, Iowa; and Iowa State Bank, headquartered in Hamburg, Iowa. Deposits of $56,196,000 and loans of $48,989,000 were acquired. The transaction was accounted for as a purchase. HFI and Thurman State Corporation were merged into Great Western. HFI’s bank subsidiaries were merged into Great Western’s subsidiary bank, Great Western Bank, Clive (successor by merger to Citizens Bank, Mt. Ayr).Contents

On August 7, 2000, Great Western acquired all of the outstanding shares of Citizens Corporation (“Citizens”), an affiliated one-bank holding company that owned Citizens Bank, Chariton, Iowa. Great Western exchanged 7,584 newly issued shares of common stock for all 4,628 outstanding shares of Citizens, and assumed a $1,200,000, 10.00% capital note payable. Citizens Bank, Chariton, Iowa was merged into Great Western’s subsidiary, Citizens Bank, Mt Ayr (which later was merged into Great Western Bank, Clive). Deposits of $60,382,514 and loans of $52,472,988 were acquired. Since the entities were under common control, the merger has been accounted for at historical cost in a manner similar to pooling-of-interests and, accordingly, the consolidated financial statements for periods prior to the combination have been restated to include the accounts and results of both entities.


	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

~~On March 23, 2001, Great Western acquired Great Western Securities~~ (~~“GWS”~~1) ~~for~~Stockholders’ ~~$58,348,384~~equity inless ~~cash and by issuing 46,319 shares of common stock and $10,000,000 in nonvoting, non-cumulative perpetual~~ preferred stock~~. The~~ ~~common~~less ~~stock~~goodwill was issued to existing shareholders in Great Western for their 50% interest in GWS. The remaining portion was purchased from an unrelated party. The acquisition has been accounted for as a purchase and results of operation of GWS since the date of acquisition are included in the consolidated financial statements. Deposits of $507,207,856 and loans of $511,415,557 were acquired. The net assets previously attributed to the ownership of Great Western’s shareholders were recorded at predecessor cost, due to the shareholders’ continuing interests. The remaining net assets were recorded at fair value. As a result of the merger, a core deposit ~~intangible~~and ofother $6intangibles,~~775,000~~ ~~was~~divided ~~recognized and is being amortized over five years~~ by anperiod ~~accelerated~~end ~~method. In~~shares ~~addition, the intangible cost in excess~~ of ~~net~~common ~~assets~~stock ~~acquired, other than purchased mortgage servicing rights, has been allocated to goodwill~~outstanding.

19(2) Before allowance for loan losses.

~~Unaudited pro forma consolidated results of operations as though GWS had been acquired as of July 1, 2000~~ (in3) ~~thousands~~On ~~except~~a ~~share~~tax ~~data)~~equivalent ~~are summarized below~~basis.

	For the Year Ended June 30, 2001
Total interest income	$	130,785
Net interest income	66,243
Net income	10,156
Basic earnings per common share	72.68
Weighted average shares outstanding	125,354

⁽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.

~~The~~-16- ~~above amounts reflect adjustments for amortization of intangible assets, additional depreciation and amortization on revalued purchased assets and deposits, and preferred stock dividend requirements.~~

AsTable of March 31, 2001, Great Western Bank, Watertown (formerly F&M Bank) acquired Founders Trust National Bank, Sioux Falls, South Dakota (“Founders”) for $2,501,000, subject to adjustment for certain contingencies. At March 31, 2001 Founders had assets of $34,644,000, deposits of $31,588,000, net loans of $17,762,000 and stockholders’ equity of $2,183,000. The acquisition has been accounted for as a purchase and results of operations of Founders after the date of acquisition are included in the consolidated financial statements.Contents

~~As of February 28, 2002 Great Western~~ ~~Bank,~~ITEM ~~Watertown (formerly F&M Bank) acquired by merger First Western Bank, N~~7.~~A.,~~ ~~Atkinson, Nebraska (“First Western”) and Marquette Bank Nebraska, N.A., O~~MANAGEMENT’~~Neill,~~S ~~Nebraska~~DISCUSSION ~~(“Marquette”)~~AND ~~for~~ANALYSIS ~~$17,484,000. At~~OF ~~February 28,~~FINANCIAL ~~2002~~CONDITION ~~First~~AND ~~Western~~RESULTS ~~and~~OF ~~Marquette~~OPERATION 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 operation of First Western and Marquette after the date of acquisition are included in the consolidated financial statements.

OnThe ~~December 13,~~following ~~2002,~~is ~~Great~~management’s ~~Western Bank,~~discussion ~~Omaha~~and ~~acquired~~analysis ~~Peoples~~of ~~Bank,~~the ~~Overland~~financial ~~Park,~~condition ~~Kansas~~and byresults ~~cash~~of ~~merger. At~~the ~~December 13,~~operation ~~2002,~~of ~~Peoples~~Great ~~Bank~~Western. ~~had $24,847,000~~It inis ~~total~~intended ~~assets,~~to explain ~~$2,910,000~~certain infinancial ~~net~~information ~~loans~~regarding ~~and~~Great ~~$24,739,000~~Western ~~in deposits. Peoples~~and ~~Bank~~should ~~has~~be ~~one location,~~read ~~which~~in atconjunction ~~closing~~with ~~became~~the aConsolidated ~~branch~~Financial ofStatements, ~~Great~~related ~~Western Bank~~Notes, ~~Omaha.~~and ~~The results~~the ofFive ~~operation~~Year ofSummary ~~Peoples Bank after the date~~ of ~~acquisition~~Selected ~~are~~Financial Data included in ~~the~~this ~~consolidated financial statements~~report.

20Great 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.

A-17- ~~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	(24,739		)
Other liabilities	(108		)
Net cash and cash equivalents (received)	$	(19,139	)

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

InThe ~~October 2002~~“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 ~~purchased a~~audited ~~total~~consolidated financial statements. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America. 24The ~~shares~~preparation of ~~common~~these ~~stock~~financial statements requires management to make estimates and judgments that affect the reported amounts of ~~Great~~assets, ~~Western~~liabilities, ~~Bank~~revenues and expenses. On an ongoing basis, ~~Watertown~~management ~~(formerly F~~evaluates &the Mestimates ~~Bank)~~used, including ~~from~~the ~~two~~adequacy ~~minority~~of ~~shareholders~~the allowance for ~~$90~~loan losses,~~765~~ and a valuation of mortgage servicing rights and intangibles. ~~This~~ ~~transaction~~Estimates ~~was~~are ~~accounted~~based ~~for~~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 awell as assessing and identifying the accounting treatments of ~~purchase~~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.

~~Great~~Provision ~~Western~~and ~~issued~~allowance ~~10,000~~for ~~shares,~~loan ~~$1,000 par~~losses. ~~value,~~The ofallowance ~~company~~for ~~obligated~~loan ~~mandatorily~~losses ~~redeemable~~is ~~preferred~~established ~~securities of GWB Capital Trust III (formerly Spectrum Capital Trust III) on October 29, 2002~~ through a ~~private~~provision ~~placement. The distribution~~for ~~rate~~loan islosses ~~set~~charged ~~quarterly~~to atincome. ~~three~~Loan losses ~~month~~are ~~LIBOR~~charged ~~plus~~against ~~345~~the ~~basis~~allowance ~~points, which~~when ~~was~~management ~~set~~believes onthe ~~October 25,~~uncollectibility ~~2002~~of ~~at 5.27%, with~~ a ~~maximum~~loan ~~rate~~balance ofis 12confirmed.~~50% through~~ ~~November 7,~~Subsequent ~~2007. Distribution payment dates are February 7~~recoveries, ~~May 7, August 7~~if ~~and November 7 of each year~~any, ~~beginning February 7, 2003 and~~ are ~~payable~~credited ~~in arrears. Great Western may, at one or more times, defer interest payments on the capital securities for up~~ to ~~20 consecutive quarters following suspension of dividends on all other capital stock. At~~ the ~~end of any deferral period, all accumulated and unpaid distributions will be paid~~allowance. ~~The~~ ~~securities will be redeemed thirty years from the issuance date; however,~~ Great Western has ~~the~~policies ~~option~~and toprocedures ~~accelerate~~for ~~the~~evaluating ~~maturity date not earlier than five years from~~ the ~~issue date. The~~overall ~~redemption~~credit ~~price~~quality isof ~~$1,000~~its ~~per~~loan ~~capital~~portfolio ~~security~~including ~~plus~~timely ~~any~~identification ~~accrued and unpaid distributions to the date~~ of ~~redemption. Holders~~potential ofproblem ~~the Preferred Securities have no voting rights~~credits. ~~The~~ ~~Preferred~~On ~~Securities~~a ~~are~~quarterly ~~unsecured~~or ~~and rank~~more ~~junior~~frequent inbasis, ~~priority~~management ofreviews ~~payment~~the toallowance ~~all~~for ofloan ~~Great~~losses ~~Western’s senior indebtedness and senior~~ to ~~Great~~determine ~~Western’s~~it ~~common~~is ~~and preferred stock~~adequate. ~~The~~ ~~Preferred~~This ~~Securities~~review ~~rank~~and ~~equal~~analysis ~~in priority~~is ~~of payment to Great Western’s other two issues of Preferred~~based ~~Securities,~~on: ~~GWB Capital Trust I and GWB Capital Trust II.~~

~~The~~• ~~sole~~Internal ~~asset~~monitoring ~~of the trust is junior subordinated deferrable interest debentures issued by Great Western with interest~~ and ~~maturity~~reporting ~~provisions similar in term to the respective Preferred Securities. The trust’s ability to pay amounts due on the Preferred Securities is solely~~system

21• Economic conditions, including duration of the current cycle

~~dependent~~• ~~upon~~Past ~~Great Western making payment on the related junior subordinated debentures. Great Western’s obligation under the debentures and relevant trust agreement constitute a full~~experience, ~~irrevocable~~including ~~and~~recent ~~unconditional~~loss ~~guarantee on a subordinated basis by it of the obligations of the trust under the Preferred Securities.~~experience

~~The~~• ~~Preferred~~Credit ~~Securities~~quality are classified as debt in the accompanying consolidated financial statements. For regulatory purposes the Preferred Securities qualify as elements of capital. Proceeds from the issue were used for general corporate purposes.trends

On• ~~January 24,~~Collateral 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.values

On• ~~February 21~~Volume, ~~2003~~composition, ~~Citizens Bank, Mt Ayr, Iowa~~ and ~~Citizens~~growth ~~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~~loan 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 in a manner similar to a pooling-of-interests combination and, accordingly, the merger did not require any restatement of financial statements on a consolidated basis.portfolio

On• ~~March 3,~~Specific ~~2003,~~credits ~~Rushmore Bank~~ and ~~Trust,~~ ~~Rapid~~industry ~~City, South Dakota and F & M Bank, Watertown, South Dakota were renamed Great Western Bank.~~conditions

On• ~~March 17,~~Results ~~2003,~~of ~~Spectrum~~bank ~~Banc~~regulatory ~~Service Corporation~~and ~~was~~internal ~~renamed~~credit ~~Great Western Service Corporation.~~exams

On• ~~May 29,~~Actions ~~2003,~~by ~~Spectrum Bancorporation,~~the ~~Inc.~~Federal ~~was~~Reserve 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.Board

In• ~~May~~Existence ~~2003,~~and ~~Great~~effects ~~Western Bank, Watertown (formerly F&M Bank) purchased a total~~ of 40concentrations ~~shares~~ of ~~common stock of Great Western Bank, Watertown from minority shareholders for $155,412. This transaction was accounted for as a purchase.~~credit

In• ~~May~~Delay ~~2003,~~in ~~Great~~receipt ~~Western Bank, Watertown (formerly F&M Bank) sold a total~~ of ~~200~~information ~~shares~~to ofevaluate ~~common~~loans ~~stock~~or ofconfirm ~~Great Western~~existing ~~Bank,~~credit ~~Watertown to a minority shareholder for $1,165,587.~~deterioration

OnTo ~~May 30,~~the ~~2003,~~extent ~~Great~~actual ~~Western~~results ~~Bank, Rapid~~differ ~~City,~~from ~~South~~forecasts ~~Dakota merged with~~ and ~~into~~management’s ~~Great Western Bank~~judgment, ~~Watertown, South Dakota. Management of Great Western Bancorporation, Inc. does not expect~~ the ~~merger~~allowance ~~to have a material effect on the business or earnings of Great Western. The merger was accounted~~ for atloan ~~historical~~losses ~~cost~~may ~~in a manner similar to a~~be ~~pooling-of-interests~~greater ~~combination~~or ~~and,~~less ~~accordingly,~~than ~~the~~future ~~merger did require any restatement of financial statements on a consolidated basis~~charge-offs.

~~RESULTS~~-18- ~~OF OPERATION~~

GENERALTable of Contents

~~Net~~Mortgage ~~income~~servicing ~~for~~rights. ~~the~~Mortgage ~~year~~servicing ~~ended~~rights ~~June 30,~~are ~~2003~~established ~~was~~based ~~$15,931,000,~~on ~~an increase~~the cost of acquiring ~~$2,714,000~~the ~~when~~right ~~compared~~ to ~~net~~service ~~income~~mortgage ofloans. ~~$13,217,000~~These ~~for~~costs ~~the~~are ~~year ended~~initially ~~June 30,~~capitalized ~~2002. The~~and ~~increase in~~then ~~net~~amortized ~~income~~over ~~was~~the aperiod ~~result~~ of estimated future net ~~interest~~servicing income ~~after~~based ~~provision~~on ~~for~~the ~~loan losses~~ratio ~~increasing~~of ~~$10,827,000~~net ~~and~~servicing ~~non interest~~ income ~~increasing~~received ~~$9,457,000; offset~~in bythe ancurrent ~~increase~~period into ~~non~~total ~~interest~~net servicing ~~expense~~income ofprojected ~~$15,142,000~~to ~~and~~be anrealized ~~increase~~from in the ~~provision~~mortgage ~~for~~servicing ~~income~~rights. ~~taxes~~Projected ofnet ~~$2,446,000. Net~~servicing income ~~for~~is ~~the~~determined ~~year~~on ~~ended~~the ~~June 30,~~basis ~~2002~~of ~~was~~the ~~$13,217,000,~~future anprojected ~~increase~~ balances of ~~$3,799,000~~loans ~~when~~after ~~compared~~scheduled toloan ~~net~~amortization ~~income~~and ofestimated ~~$9,418,000~~prepayments. ~~for~~Great Western ~~the~~has ~~year~~retained ~~ended June 30,~~an ~~2001. The~~independent ~~increase~~outside incompany ~~net income~~to ~~was~~estimate ~~due~~future ~~primarily~~prepayment torates ~~the~~based ~~acquisition~~on ofrelevant ~~Great~~characteristics ~~Western~~of ~~Securities~~the ~~and~~servicing ~~its subsidiary~~portfolio, ~~Great~~such ~~Western~~as ~~Bank~~loan types, ~~Omaha~~interest inrate ~~the~~stratification ~~third~~and ~~quarter~~recent ofprepayment ~~fiscal~~experience, ~~2001~~as ~~and~~well as tocurrent ~~Great~~rate ~~Western’s~~levels, ~~internal~~market ~~growth~~forecasts and other economic conditions. ~~The~~

22Great 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:

~~contribution~~1. ofThe ~~Great~~mortgage ~~Western~~servicing ~~Bank,~~assets ~~Omaha’s~~are ~~net~~stratified ~~income~~based toon ~~the~~predominant ~~net income~~risk ~~of Great Western was $7,369,000 in fiscal 2002 compared with $2,266,000 in fiscal 2001~~characteristics.

~~Great~~2. ~~Western’s~~Impairment ~~return~~losses onare ~~average~~recorded ~~assets~~as ~~was~~reductions ~~0.76%~~in ~~for~~ the ~~year~~carrying ~~ended June 30,~~value ~~2003~~of ~~compared to 0.71% for~~ the ~~year~~asset ~~ended~~through ~~June 30, 2002. This~~a ~~increase~~valuation isallowance ~~due~~for toeach ~~fiscal net~~individual ~~income~~stratum ~~increasing~~with ~~20.53%~~a ~~compared~~corresponding ~~to an 11.83%~~ increase into ~~average~~amortization ~~assets~~expense. ~~Great~~ ~~Western’s~~The ~~return~~amount onof ~~average~~impairment ~~assets~~equals ~~was 0.71% for~~ the ~~year~~carrying ~~ended June 30,~~amount ~~2002 compared to 0.82%~~ for ~~the~~a ~~year~~particular ~~ended~~stratum ~~June 30, 2001. This~~minus ~~decrease~~its ~~was~~fair ~~due~~market ~~to average assets increasing 61~~value.~~99% compared to fiscal net income increasing only 40.34% during 2002.~~

~~NET~~3. ~~INTEREST~~The ~~INCOME~~valuation allowance is adjusted to reflect changes in the measurement of impairment after the initial measurement of impairment, based on market conditions.

~~Net~~Intangibles. ~~interest~~Intangible ~~income~~assets ~~represents~~consist ~~the~~of goodwill, ~~amount~~core bydeposit ~~which~~intangibles, ~~interest~~an ~~income~~unidentifiable ~~on interest-earning~~intangible ~~assets~~asset related to a branch acquisition, ~~including~~and ~~loans~~client listing and ~~securities,~~franchise ~~exceeds~~costs. ~~interest~~Goodwill ~~paid on~~represents ~~interest-bearing~~the ~~liabilities,~~excess ~~including~~of ~~deposits~~the ~~and~~acquisition ~~other~~cost ~~borrowed~~over the fair value of the net assets acquired in ~~funds~~the purchase of subsidiaries. ~~Net~~ ~~interest~~Core ~~income~~deposit isintangibles represent the identifiable intangible value assigned to core deposit bases arising from purchase acquisitions. The unidentifiable intangible asset represents the excess of liabilities assumed ~~principal~~over ~~source~~the fair value of ~~Great~~net ~~Western’s~~assets ~~revenue~~acquired in a purchase of a failed financial institution. ~~Interest~~ ~~rate~~This ~~fluctuations,~~unidentifiable asasset ~~well~~was asreclassified ~~changes~~to goodwill on July 1, 2002 in ~~the~~applying ~~amount~~Financial ~~and~~Accounting ~~type~~Standards ofBoard (FASB) Statement No.147. Client ~~interest-earning~~listing ~~assets~~intangible ~~and~~represents ~~interest-bearing~~the ~~liabilities,~~identifiable ~~combine~~intangible value assigned to ~~affect~~a ~~net~~client listing arising from a purchase acquisition. Franchise intangible represents a contractual arrangement under which the franchiser grants the franchisee the right to ~~interest~~perform ~~income~~certain functions within a designated geographical area.

~~The~~Goodwill ~~following~~is ~~table~~tested ~~presents the average balances of Great Western~~ for ~~each~~ ofimpairment ~~the~~at ~~last~~least ~~three~~annually. ~~fiscal~~Other ~~years~~intangible ~~and indicates the interest earned or paid on each major category of interest-earning~~ assets ~~and~~are ~~interest-bearing liabilities~~reviewed ~~on a fully taxable-equivalent basis, assuming a 35% tax rate~~ for ~~year~~ ~~ended~~impairment ~~June 30,~~whenever ~~2003~~events ~~and a 34% tax rate for years ended June 30, 2002 and 2001, and the average rates earned~~ or ~~paid~~circumstances onindicate ~~each~~that ~~major category. This analysis details~~ the ~~contribution~~ ofcarrying ~~interest-earning~~amount ~~assets and the overall impact~~ of ~~the~~an ~~cost~~asset ~~of funds~~is onnot ~~net interest income~~recoverable.

	Year Ended June 30,
	2003							2002							2001
	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 unearned fees(1)(2)	$	1,550,457		$	109,877	7.09	%	$	1,368,931		$	110,101	8.04	%	$	844,280		$	77,622	9.19	%
Investment securities:
Taxable	266,329			12,657		4.75	%	254,493			15,256		5.99	%	155,832			10,416		6.68	%
Tax exempt (tax equivalent)	42,338			2,788		6.58	%	27,545			1,956		7.10	%	21,310			1,530		7.18	%
Federal funds sold and other	57,083			724		1.27	%	52,755			1,267		2.40	%	44,796			2,621		5.85	%
Total interest-earning assets	$	1,916,207		$	126,046	6.58	%	$	1,703,724		$	128,580	7.55	%	$	1,066,218		$	92,189	8.65	%
Interest-bearing liabilities:
Demand, savings and money market deposits	$	601,694		$	6,318	1.05	%	$	522,953		$	12,736	2.44	%	$	290,984		$	8,520	2.93	%
Time deposits	850,483			29,475		3.47	%	794,661			33,884		4.26	%	558,319			33,785		6.05	%
Total interest- bearing deposits	1,452,177			35,793		2.46	%	1,317,614			46,620		3.54	%	849,303			42,305		4.98	%
Federal Home Loan Bank borrowings, federal funds purchased and securities sold under agreements to repurchase	130,850			4,947		3.78	%	140,218			5,866		4.18	%	86,784			4,801		5.53	%
Notes payable	46,200			2,397		5.19	%	49,835			2,955		5.93	%	21,474			1,909		8.89	%
Company obligated mandatorily redeemable preferred securities	55,500			5,068		9.13	%	48,000			4,740		9.88	%	28,456			2,810		9.88	%
Total interest-bearing liabilities	$	1,684,727		$	48,205	2.86	%	$	1,555,667		$	60,181	3.87	%	$	986,017		$	51,825	5.26	%
Net interest income				$	77,841						$	68,399						$	40,364
Interest rate spread(3)						3.72	%						3.68	%						3.39	%
Net interest margin(4)						4.06	%						4.01	%						3.79	%
Ratio of average interest-bearing liabilities to average interest-earning assets	87.92		%					91.31		%					92.48		%

MERGERS AND ACQUISITIONS

~~(1) The~~On ~~data~~December ~~includes~~13, ~~the accounts~~2002, ofGreat ~~Peoples~~Western Bank ~~from December 28~~, ~~2002,~~Omaha ~~the~~acquired ~~date~~Peoples ~~of its~~Bank, ~~acquisition~~Overland Park, ~~those~~Kansas ofby ~~First~~cash ~~Western~~merger. ~~and~~At ~~Marquette~~December ~~from February 28~~13, 2002, ~~the~~ ~~date~~Peoples ofBank ~~their~~had ~~acquisition~~$24,847,000 ~~those~~in oftotal ~~Founders from March 31~~assets, ~~2001~~$2,910,000 ~~the date~~in ofnet ~~its~~loans ~~acquisition~~ and ~~those of Great Western Bank~~$24, ~~Omaha from March 23~~739,000 ~~2001~~in deposits. ~~The~~ ~~acquisitions~~ ~~were accounted for under the purchase method of accounting.~~

~~(2) Nonaccrual~~-19- ~~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) TheTable interest rate spread is the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.Contents

~~(4) The~~ Peoples ~~net~~Bank ~~interest~~had ~~margin~~one ~~is equal~~location, towhich ~~net~~at ~~interest~~closing ~~income~~became ~~(on~~ a ~~tax~~branch ~~equivalent~~of ~~basis)~~Great ~~divided~~Western byBank, ~~average~~Omaha. The results of operation of Peoples Bank after the date of ~~interest-earning~~acquisition ~~assets~~are included in the consolidated financial statements.

23A 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:

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.


	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	)

~~Interest~~On ~~expense~~September ~~decreased~~30, ~~$11~~2002,~~976,000~~ Great toWestern ~~$48~~acquired 1,~~205,000~~688 ~~for~~shares (4.76%) of the ~~year ended~~common ~~June 30,~~stock ~~2003~~of Great Western Bank, ~~from~~Clive for $60673,~~181,000~~288 in ~~2002~~cash from a minority shareholder. The ~~cost~~transaction ofwas ~~interest-bearing~~accounted ~~liabilities~~ for ~~the~~as ~~year~~a ~~ended June 30,~~purchase. ~~2003,~~

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.

~~was~~On ~~2.86%~~January ~~compared~~24, to2003, ~~3.87%~~Great ~~in 2002. When~~Western ~~combined~~purchased ~~with noninterest-bearing~~from ~~deposits,~~minority ~~the~~shareholders ~~cost~~180 shares of ~~funds~~common ~~was~~stock ~~2.51%~~and ~~for the year ended June 30~~1,800 ~~2003,~~shares ~~compared~~of topreferred ~~3.47%~~stock in ~~2002.~~ its subsidiary ~~The~~Great ~~average~~Western ~~balance~~Bank, ofRapid ~~Federal~~City ~~Home~~(formerly ~~Loan~~Rushmore Bank ~~borrowings,~~& ~~federal funds purchased~~Trust), ~~and~~for ~~securities sold under agreements to repurchase decreased to~~ $~~130~~2,~~850~~111,~~000~~492. inThis ~~2003,~~transaction awas ~~decrease~~accounted offor ~~$9,368,000~~as ~~from~~a ~~$140,218,000 in 2002~~purchase.

AsOn aFebruary ~~result~~21, of2003, ~~these~~Citizens ~~factors~~Bank, ~~net~~Mt. ~~interest~~Ayr, ~~margin~~Iowa and Citizens Bank of Princeton, onPrinceton, aMissouri ~~tax-equivalent basis~~merged with and into Citizens Bank, ~~increased~~Clive, toIowa. All 4three banks were 100.060% ~~for~~owned ~~the~~subsidiaries ~~year~~of ~~ended~~Great ~~June 30~~Western. In addition, on March 29, 2003, ~~from~~the 4surviving bank was renamed Great Western Bank (“Great Western Bank, Clive”).~~01%~~ ~~for~~Management of Great Western does not expect the merger to have a material effect on the ~~year~~business ~~ended~~or ~~June 30~~earnings of Great Western. The merger was accounted for at historical cost and, ~~2002~~accordingly, the merger did not require any restatement of financial statements on a consolidated basis.

~~Net~~On ~~interest~~March ~~income~~3, ~~on a tax-equivalent basis~~2003, ~~was~~Rushmore ~~$68,399,000~~Bank ~~for~~and ~~the year ended June 30~~Trust, ~~2002,~~Rapid ~~an increase of $28~~City,~~035,000~~ ~~from~~South ~~$40,364,000~~Dakota in 2001. This increase resulted from an increase of $637,506,000 in average interest-earning assets to $1,703,724,000 for the year ended June 30, 2002, from $1,066,218,000 in 2001. The majority of the asset growth occurred in the loans and ~~securities portfolios,~~F ~~both~~& ~~from acquisitions~~M ~~and internal growth. Average loans increased $524~~Bank,~~651,000~~ ~~to $1~~Watertown,~~368,931,000~~ ~~for~~South ~~the~~Dakota ~~year~~were ~~ended~~renamed ~~June 30,~~Great ~~2002, from~~Western ~~$844,280,000 in 2001~~Bank.

~~Interest expense increased $8,356,000 to $60,181,000 for the year ended June 30, 2002, from $51,825,000 in 2001. The cost of interest~~-~~bearing liabilities for the year ended June 30, 2002, was 3.87% compared to 5.26% in 2001. When combined with noninterest~~20-~~bearing deposits,~~ the cost of funds was 3.47% for the year ended June 30, 2002, compared to 4.79% in 2001. The average balance of Federal Home Loan Bank borrowings, federal funds purchased, and securities sold under agreements to repurchase increased to $140,218,000 in 2002, an increase of $53,434,000 from $86,784,000 in 2001. This source was used to supplement core deposits in funding the loan growth.

AsTable a result of these factors, net interest margin, on a tax-equivalent basis, increased to 4.01% for the year ended June 30, 2002, from 3.79% for the year ended June 30, 2001.Contents

~~The~~On ~~following~~March ~~table~~17, ~~presents~~2003, ~~the~~Spectrum ~~changes~~Banc inService ~~the~~Corporation ~~components~~was ofrenamed ~~net interest~~Great ~~income~~Western ~~and~~Service 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 liabilitiesCorporation. ~~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.~~

	2003 vs. 2002										2002 vs. 2001									2001 vs. 2000
	Increase (Decrease) Due to Changes In:										Increase (Decrease) Due to Changes In:									Increase (Decrease) Due to Changes In:
	Volume			Rate				Total			Volume		Rate				Total			Volume		Rate			Total
	(dollars in thousands)
Interest-earning assets:
Loans, net of unearned fees	$	13,685		$	(13,909		)	$	(224	)	$	43,210	$	(10,731		)	$	32,479		$	25,423	$	690		$	26,113
Investment securities:
Taxable	683			(3,282			)	(2,599		)	6,009		(1,169			)	4,840			3,324		(129		)	3,195
Tax exempt (tax equivalent)	983			(151			)	832			443		(17			)	426			259		(38		)	221
Federal funds sold and other	97			(640			)	(543		)	402		(1,756			)	(1,354		)	982		(130		)	852
Total interest income	15,448			(17,982			)	(2,534		)	50,064		(13,673			)	36,391			29,988		393			30,381
Interest-bearing liabilities:
Demand, savings and money market deposits	1,690			(8,108			)	(6,418		)	5,848		(1,632			)	4,216			2,947		(216		)	2,731
Time deposits	2,259			(6,668			)	(4,409		)	11,814		(11,715			)	99			10,460		3,298			13,758
Total interest-bearing deposit expense	3,949			(14,776			)	(10,827		)	17,662		(13,347			)	4,315			13,407		3,082			16,489
Federal Home Loan Bank borrowings, federal funds purchased and securities sold under agreements to repurchase	(376		)	(543			)	(919		)	2,439		(1,374			)	1,065			1,510		(366		)	1,144
Notes payable	(206		)	(352			)	(558		)	1,851		(805			)	1,046			1,618		60			1,678
Company obligated mandatorily redeemable preferred securities	703			(375			)	328			1,930		(0			)	1,930			1,022		(23		)	999
Total interest expense	4,070			(16,046			)	(11,976		)	23,882		(15,526			)	8,356			17,557		2,753			20,310
Increase (decrease) in net interest income	$	11,378		$		(1,936	)	$	9,442		$	26,182	$		1,853		$	28,035		$	12,431	$	(2,360	)	$	10,071

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.

25In 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.

~~PROVISION~~In ~~FOR~~May ~~LOAN~~2003, ~~LOSSES~~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.

~~The~~On ~~amount~~May of30, ~~the~~2003, ~~provision~~Great ~~for~~Western ~~loan~~Bank, ~~losses~~Rapid isCity, ~~based~~South onDakota amerged ~~quarterly~~with ~~or a~~and ~~more~~into ~~frequent~~Great ~~evaluation~~Western ofBank, ~~the loan portfolio~~Watertown, ~~especially~~South ~~non-performing and other potential problem loans~~Dakota. ~~During these~~ ~~evaluations,~~Management ~~consideration~~of isGreat ~~given~~Western todoes ~~such~~not ~~factors~~expect ~~as: management’s evaluation of specific loans;~~ the ~~level~~merger ~~and~~to ~~composition~~have ofa ~~non-performing loans;~~material ~~historical~~effect ~~loss experience; results of examinations by regulatory agencies; expectations of current economic conditions and their impact~~ on ~~particular~~ ~~industries and individual borrowers;~~ the business ~~market~~or ~~value~~earnings of ~~collateral; the~~Great ~~strength~~Western. ofThe ~~available~~merger ~~guarantees;~~was ~~concentrations~~accounted offor ~~credits;~~at ~~and~~historical ~~other judgmental~~cost ~~factors. In~~and, ~~addition~~accordingly, the ~~chief~~ ~~credit~~merger ~~officer~~did ofnot ~~Great~~require ~~Western,~~any ~~assisted~~restatement ~~by personnel~~ of ~~affiliated~~financial ~~banks and~~statements ~~an unaffiliated company performs loan review services~~ on a ~~periodic~~consolidated basis.

~~The~~On ~~provision~~February ~~for~~23, ~~loan~~2004, ~~losses~~Great ~~for~~Western ~~the~~Bank, ~~year~~Clive ~~ended~~acquired ~~June 30,~~six ~~2003,~~branches located ~~was~~in $4Albany,~~371~~ Bethany,~~000~~ ~~compared~~Grant toCity, $6Milan,~~067~~ Sheridan,~~000~~ ~~for~~and ~~the year ended June 30~~Unionville, ~~2002. This~~ ~~represents~~Missouri afrom ~~decrease~~Bank ~~of $1,696,000,~~Midwest ~~or 27~~N.~~95%~~A. ~~This~~ ~~decrease~~The ~~is due~~results toof ~~management~~operation ~~assessing~~of ~~less~~the ~~risk~~six inbranches after the ~~loan~~date ~~portfolio. See~~of “acquisition ~~Non-performing~~are ~~Loans”~~included ~~and~~in “the ~~Allowance for~~consolidated ~~Loan~~financial ~~Losses”~~statements. The ~~provision for~~average ~~loan~~amortization ~~losses~~period for the ~~year~~core ~~ended~~deposit ~~June 30,~~and ~~2002~~other ~~increased~~intangible ~~$3,449,000~~assets ~~when compared~~is tofive ~~$2,618,000 for year ended June 30, 2001~~years. ~~This~~ ~~increase was due to increases in net charge-offs and acquisitions.~~

26A 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:

OTHER INCOME


	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	)

~~The~~Great ~~following~~Western ~~table~~entered into ~~presents~~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’s ~~other~~also ~~income~~entered ~~for~~into ~~the~~a ~~indicated~~Purchase and ~~periods~~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.

	Year Ended June 30,
	2003		2002			2001
	(dollars in thousands)
Service charges and other fees	$	13,080	$	10,134		$	6,297
Net gains from sale of loans	6,770		2,917			1,152
Loan servicing fees	3,404		3,524			240
Gain on securities, net	1,862		215			133
Trust department income	1,684		1,610			617
Net gains (loss) from sale of other real estate owned and other assets	1,206		(96		)	158
Other income	3,348		3,593			2,870
Total other income	$	31,354	$	21,897		$	11,467

-21-

DuringTable 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. With the recent increase in long-term mortgage rates, net gains from sale of loans is expected to decline. During the year ended June 30, 2002, total other income increased to $21,897,000 from $11,467,000 for the year ended June 30, 2001, due primarily to increased service charges and other fees and loan servicing fees. Increases in these fees for fiscal 2002 resulted from the acquisition of Great Western Bank, Omaha at the end of the third quarter of fiscal 2001. Great Western, Omaha had $4,411,000 and $1,060,000 service charges and other fees for fiscal years ended June 30, 2002 and June 30, 2001, respectively and $3,527,000 and $240,000 loan servicing fees for the fiscal years ended June 30, 2002 and June 30, 2001, respectively. Great Western Bank, Omaha is the only Great Western bank that services mortgage loans, pursuant to purchased mortgage servicing rights.Contents

~~OTHER~~ At ~~EXPENSES~~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.

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

	Year Ended June 30,
	2003		2002		2001
	(dollars in thousands)
Salaries and employee benefits	$	33,323	$	28,851	$	17,569
Occupancy expense, net	4,227		3,770		2,268
Amortization and valuation adjustment for mortgage servicing rights	15,358		9,049		304
Data processing	3,676		3,091		2,115
Equipment expenses	2,757		2,510		1,519
Advertising	3,743		2,180		1,270
Professional fees	3,165		2,711		1,894
Communication expenses	2,042		1,858		1,210
Amortization of goodwill	0		0		728
Amortization of core deposit intangible and other intangibles	1,901		2,629		960
Other expenses	7,268		5,669		3,994
Total other expenses	$	77,460	$	62,318	$	33,831

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.

27On 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.

~~Other~~RESULTS ~~expenses~~OF ~~increased~~OPERATION $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 salary and employee benefits. Other expenses increased $28,487,000 or 84.20%, to $62,318,000 during the year ended June 30, 2002, from $33,831,000 for the year ended June 30, 2001. This increase is primarily the result of an increase in salary and employee benefits and an increase in amortization of mortgage servicing rights acquired.

~~Salaries~~GENERAL 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. Salaries and employee benefits rose $11,282,000 or 64.22%, to $28,851,000 for the year ended June 30, 2002, from $17,569,000 for the corresponding period of 2001. This increase is due to acquisitions in fiscal 2002 and 2001; including the acquisition of Great Western Bank, Omaha. At the time of the acquisition on March 23, 2001, Great Western Bank, Omaha had approximately 241 full-time equivalent employees. Also contributing to the increase in salaries and employee benefits were general staffing increases concurrent with expansion of offices and business lines.

Net ~~occupancy~~income ~~expense~~for the ~~increased~~year ended June 30, 2004 was $~~457~~25,331,000, oran ~~12.12%~~increase of $9,400,000 when compared to net income of $415,~~227~~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, ~~from~~a decrease in non-interest expense of $39,~~770~~100,000 ~~for~~and an increase in the ~~year~~provision ~~ended June 30,~~for ~~2002~~income taxes of $4,246,000. ~~Net~~ ~~occupancy costs~~The ~~increased~~decrease in non-interest expense was primarily due to ~~internal~~the ~~growth.~~ decreased expense of amortization of mortgage ~~Net~~servicing ~~occupancy~~rights, ~~expense~~which ~~increased~~includes a partial recovery of the mortgage servicing rights valuation allowance, of $113,~~502~~735,000, oroffset ~~66.23%,~~by toa $32,~~770~~237,000 increase in salary and benefits. Net income for the year ended June 30, ~~2002~~2003 was $15,931,000, ~~from~~an increase of $2,~~268~~714,000 when compared to net income of $13,217,000 for the year ended June 30, ~~2001~~2002. ~~Net~~ ~~occupancy costs~~The ~~increased~~increase ~~due~~in tonet ~~the~~income ~~acquisitions~~was ina ~~fiscal~~result ~~2002~~of ~~and~~net ~~2001~~interest income after provision for loan losses increasing $10,827,000 and ~~internal~~non-interest income increasing ~~growth~~$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.

~~Amortization and~~Great ~~valuation~~Western’s ~~adjustments~~return ofon ~~mortgage~~average ~~servicing~~assets ~~rights~~was ~~acquired~~1.11% ~~increased $6,309,000, to $15,358,000~~ for the year ended June 30, ~~2003,~~2004 ~~from $9,049,000~~compared to 0.76% for the ~~previous~~ year~~. Mortgage~~ ~~servicing~~ended ~~rights~~June ~~amortization of $15~~30,~~358,000~~ ~~includes~~2003. ~~the~~This increase ~~recognition~~is ~~of a valuation allowance~~ due to afiscal ~~change~~net inincome ~~the~~increasing ~~estimated~~59.00% ~~future prepayment~~compared ~~rates~~to ofan ~~the~~8.26% ~~servicing~~increase ~~portfolio, caused by a declining interest rate environment~~ in ~~the~~average ~~twelve~~assets. ~~months~~The ~~ended~~net ~~June 30,~~income ~~2003.~~increase Awas ~~valuation allowance~~substantially ofaffected ~~$4,208,000~~by ~~was~~the ~~recognized~~reduction in ~~the~~amortization ~~fiscal~~and ~~year~~valuation ~~ended~~adjustment ~~June 30, 2003. Amortization~~expense offor mortgage servicing rights ~~acquired increased $8,745,000,~~ to $91,~~049~~623,000 for the year ended June ~~30,~~ ~~2002, from $304,000 for June~~ 30, ~~2001. Mortgage~~2004 ~~servicing~~compared ~~rights~~to ~~amortization of~~ $915,~~049~~358,000 ~~includes~~for the ~~recognition~~year ofended aJune ~~valuation~~30, ~~allowance~~2003. ~~due~~Great toWestern’s areturn ~~change~~on ~~in the~~average ~~estimated~~assets ~~future~~was ~~prepayment~~0.76% ~~rates~~for of the ~~servicing~~year ~~portfolio, caused by a declining interest rate environment in the twelve months~~ ended June 30, ~~2002.~~ A2003 ~~valuation~~compared ~~allowance~~to of0.71% ~~$5,233,000~~for ~~was recognized in~~ the ~~fiscal~~ year ended June 30, 2002. ~~Great~~ ~~Western~~This ~~Bank,~~increase ~~Omaha~~ is ~~currently~~due ~~the~~to ~~only~~fiscal ~~Great~~net ~~Western~~income ~~bank~~increasing ~~that~~20.53% ~~services~~compared ~~mortgage loans pursuant~~ to ~~purchased~~an ~~mortgage servicing rights~~11.83% Aincrease ~~decline~~ in ~~mortgage interest~~average ~~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~~assets.

~~Data processing~~-22- 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 recent bank merger cost. Data processing costs increased $976,000, or 46.15% to $3,091,000 for the year ended June 30, 2002, from $2,115,000 during the year ended June 30, 2001. The increase was due to acquisitions and internal growth.

28Table of Contents

~~Equipment~~NET ~~costs~~INTEREST ~~increased~~INCOME $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. Equipment costs increased $991,000, or 65.24% to $2,510,000 for the year ended June 30, 2002, from $1,519,000 during the year ended June 30, 2001. The increase was due to acquisitions and internal growth.

~~Advertising~~Net ~~costs~~interest ~~increased~~income torepresents ~~$3,743,000,~~the anamount ~~increase~~by ofwhich ~~$1,563,000~~interest ~~or 71.70%~~income ~~for~~on ~~the~~interest-earning ~~year ended June 30~~assets, ~~2003,~~including ~~from~~loans $2and securities,~~180,000~~ ~~during~~exceeds ~~the~~interest ~~year~~paid on ~~ended~~interest-bearing ~~June 30~~liabilities, ~~2002.~~including ~~The~~deposits ~~increase was due to internal growth~~ and ~~one~~other ~~time cost~~borrowed offunds. ~~marketing~~Net ~~related~~interest toincome ~~recent~~is ~~bank~~the ~~mergers~~principal ~~and~~source ~~bank~~of ~~name~~Great ~~changes~~Western’s revenue. ~~Advertising~~ ~~costs~~Interest ~~increased~~rate ~~$910~~fluctuations,~~000,~~ oras ~~71.65% to~~well ~~$2,180,000~~as ~~for~~changes in the ~~year~~amount ~~ended~~and ~~June 30,~~type ~~2002,~~of ~~from~~interest-earning ~~$1,270,000 during the~~assets ~~year~~and ~~ended~~interest-bearing ~~June 30~~liabilities, ~~2001.~~combine ~~The~~to ~~increase~~affect ~~was~~net ~~due~~interest ~~to internal growth~~income.

~~Amortization~~The offollowing ~~goodwill~~table ~~was~~presents ~~zero for~~ the ~~years~~average ~~ended~~balances ~~June 30, 2003~~of ~~and~~Great ~~June 30,~~Western ~~2002,~~for ~~compared~~each toof ~~$728,000 for~~ the ~~year~~last ~~ended June 30,~~three ~~2001. This~~fiscal ~~decrease~~years ~~is due~~and toindicates the ~~early~~interest ~~adoption~~earned ofor ~~Statement~~paid ofon ~~Financial~~each ~~Accounting~~major ~~Standard~~category ~~(SFAS) No.~~of ~~142~~interest-earning ~~“Goodwill~~assets and ~~Other Intangible~~ ~~Assets”~~interest-bearing ~~(“Statement~~liabilities ~~142”)~~on ata ~~the~~tax-equivalent ~~beginning~~basis, ofassuming ~~fiscal~~a ~~year~~35% ~~2002. Beginning~~tax inrate ~~2002,~~for ~~goodwill~~years ~~was~~ended noJune ~~longer amortized~~30, ~~but~~2004 ~~will~~and be2003 ~~evaluated~~and ata ~~least~~34% ontax anrate ~~annual basis~~ for ~~impairment. For~~ the ~~years~~year ended June 30, ~~2003 and~~ 2002, ~~goodwill totaling $45,930,000~~ and ~~$39,315,000, respectively,~~the ~~was~~average ~~not~~rates ~~amortized~~earned ~~against~~or ~~current~~paid ~~years~~on ~~operations~~each ~~pursuant~~major ~~to Statement 142~~category. ~~See~~ “This ~~Recent Accounting~~analysis ~~Pronouncement”~~details ~~section for~~the ~~further~~contribution ~~details. See~~of ~~Note~~interest-earning 1assets and ~~Note~~the ~~7 “Intangible~~overall ~~Assets”~~impact toof the ~~Consolidated~~cost ~~Financial~~of ~~Statements~~funds on net interest income.

Amortization of core deposit intangible and other intangibles was $1,901,000 for the year ended June 30, 2003 compared to $2,629,000 for the year ended June 30, 2002. This decrease is due primarily to a decrease in the amortization of the core deposit intangible asset from the acquisition of Great Western Bank, Omaha. Amortization of core deposit intangible and other intangibles was $2,629,000 for the year ended June 30, 2002 compared to $960,000 for the year ended June 30, 2001. This increase is due to a full year’s amortization of the core deposit intangible asset, $2,145,000, from the acquisition of Great Western Bank, Omaha in the third quarter of fiscal 2001. This accounted for 81.59% of the total amortization of core deposit intangible and other intangibles for the fiscal year 2003. This core deposit intangible is being amortized on an accelerated method over 5 years. See Note 1 and Note 7 “Intangible Assets” to the Consolidated Financial Statements.


	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	%

~~Professional~~(1) ~~fees~~The ~~increased~~data ~~$454,000,~~includes orthe ~~16.75%,~~accounts toof ~~$3,165,000~~Peoples ~~for~~Bank ~~the year~~from ~~ended~~December ~~June 30~~28, ~~2003~~2002, ~~from $2,711,000 for~~ the ~~year~~date ~~ended~~of ~~June 30~~its acquisition, ~~2002.~~ ~~These~~those ~~expenses~~of ~~increased~~First ~~due~~Western, toand ~~internal~~Marquette ~~growth. Professional~~from ~~fees~~February ~~increased $817~~28,~~000,~~ ~~or 43.14%~~2002, tothe ~~$2,711,000~~date ~~for~~of their acquisition and the ~~year~~branches ~~ended~~of ~~June 30,~~Bank ~~2002~~Midwest, N.A. from $1February 23,~~894~~ 2004,~~000 for~~ the ~~year~~date ~~ended~~of ~~June 30,~~their ~~2001~~acquisition. ~~Professional~~ ~~fees~~The ~~expenses~~acquisitions ~~increased~~were accounted for ~~this~~under ~~period~~the ~~due~~purchase tomethod ~~Great Western’s~~of ~~growth and acquisitions~~accounting.

~~Communication expenses increased $184,000, or 9.90%, to $~~(2~~,042,000~~) ~~for~~Nonaccrual ~~the~~loans ~~year~~are ~~ended June 30,~~included ~~2003,~~in ~~from $1,858,000 for~~ the ~~year~~Average ~~ended~~Balance ~~June 30,~~columns ~~2002. These~~and ~~expenses~~income ~~increased~~recognized ~~due~~on tothese ~~internal growth. These expenses increased $648~~loans,~~000,~~ orif ~~53.55%~~any, tois ~~$1,858,000~~included ~~for the~~in ~~year ended June 30, 2002, from $1,210,000 for~~ the ~~year~~Interest ~~ended June 30,~~Income/Expense ~~2001~~columns. ~~Communication expenses increased for this period due to Great Western’s growth and acquisitions.~~

~~Other~~(3) ~~operating~~The ~~expenses~~interest ~~include,~~rate ~~among~~spread ~~many~~is ~~other~~the ~~items,~~difference ~~armored~~between ~~car, supplies,~~the ~~correspondent~~average ~~bank~~yield ~~service~~on ~~charges,~~interest-earning ~~travel~~assets and ~~entertainment, and dues and subscriptions. These expenses increased $1,599,000, or 28.21%, to $7,268,000 for~~ the ~~year~~average ~~ended~~cost ~~June 30, 2003,~~of ~~from~~interest-bearing ~~$5,669,000 for the year ended June 30, 2002~~liabilities. ~~These expenses increased due to~~

29(4) The net interest margin is equal to net interest income (on a tax equivalent basis) divided by average interest-earning assets.

~~internal~~-23- growth. These expenses increased $1,675,000, or 41.94%, to $5,669,000 for the year ended June 30, 2002, from $3,994,000 for the year ended June 30, 2001. Other operating expenses increased for this period due to Great Western’s growth and acquisitions.

FEDERALTable INCOMEof TAXContents

~~Great~~Net ~~Western’s~~interest ~~consolidated~~ income, on a tax-equivalent ~~rate~~basis, ~~varies~~was ~~from~~$82,312,000 ~~statutory rates~~for ~~principally~~the ~~due~~year toended ~~interest~~June ~~income~~30, 2004, an increase of $4,471,000 from ~~tax-exempt~~$77,841,000 ~~securities~~in 2003. ~~The~~ ~~provision~~This ~~for~~increase ~~income~~resulted ~~taxes~~from ~~increased~~an by increase of $2171,~~446~~785,000 in average interest-earning assets to $92,~~839~~087,992,000 for the year ended June 30, ~~2003~~2004, from $71,~~393~~916,207,000 ~~for~~ ~~the~~in ~~year~~2003. ~~ended~~The ~~June 30,~~majority ~~2002,~~of ~~reflecting~~the asset growth occurred in the ~~increase~~loans ofand ~~income~~securities ~~before taxes~~portfolios, ~~for~~both ~~the~~from ~~period. The~~acquisitions ~~provision~~and ~~for income~~internal ~~taxes~~growth. ~~increased~~Average byloans increased $2167,~~471~~993,000 to $71,~~393~~718,450,000 for the year ended June 30, ~~2002~~2004, from $41,~~922~~550,457,000 ~~for~~in ~~the year ended June 30, 2001, reflecting the increase of income before taxes for the period~~2003.

~~RECENT~~Interest ~~ACCOUNTING~~expense ~~PRONOUNCEMENT~~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.

InAs ~~July 2001,~~a ~~the~~result ~~Financial~~of ~~Accounting~~these ~~Standards~~factors, ~~Board~~net ~~(“FASB”)~~interest ~~issued~~margin, ~~two~~on ~~statements~~a tax-~~Statement~~equivalent ~~141~~basis, ~~Business Combinations,~~decreased ~~and~~to ~~Statement~~3.92% ~~142,~~for ~~Goodwill and~~the ~~Other~~year ~~Intangible~~ended ~~Assets~~June 30, ~~which~~2004, ~~affected~~from ~~Great~~4.06% ~~Western’s accounting~~ for ~~its~~the ~~reported~~year ~~goodwill~~ended June 30, 2003.

~~Statement~~-24- ~~141:~~

• Eliminates theTable poolingof method for accounting for business combinations.Contents

~~• Requires~~Net interest income, on a tax-equivalent basis, was $77,841,000 for the year ended June 30, 2003, an ~~that~~increase ~~intangible~~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 ~~that~~to ~~meet~~$1,916,207,000 ~~certain~~for ~~criteria~~the beyear ~~reported~~ended ~~separately~~June 30, 2003, from $1,703,724,000 in 2002. The majority of the asset ~~goodwill~~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.

~~• Requires negative~~Interest ~~goodwill~~expense ~~arising~~decreased $11,976,000 to $48,205,000 for the year ended June 30, 2003, from a$60,181,000 ~~business~~in ~~combination~~2002. The cost of interest-bearing liabilities for the year ended June 30, 2003, was 2.86% compared to be3.87% ~~recorded~~in as2002. anWhen combined with noninterest-bearing deposits, the cost of funds was 2.51% for the year ended June ~~extraordinary~~30, ~~gain~~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.

~~Statement~~As ~~142:~~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.

~~• Eliminates~~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 ~~amortization~~average volume of ~~goodwill~~interest-earning assets and ~~other~~interest-bearing ~~intangibles~~liabilities ~~that~~and ~~are~~the ~~determined~~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 anbeen ~~indefinite~~allocated ~~life~~to volume or rate change in proportion to the absolute dollar amounts of the change in each.

• Requires, at a minimum, annual impairment tests of goodwill and other intangible assets that are determined to have an indefinite life.


	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

~~• Requires that~~-25- ~~carrying value of goodwill that exceeds its implied fair value be recognized as an impairment loss.~~

UponTable adoption of these Statements, Great Western is required to:Contents

~~• Evaluate its~~PROVISION ~~existing~~FOR ~~intangible~~LOAN ~~assets~~LOSSES ~~and goodwill that were acquired in prior business combinations and make any necessary reclassifications in order to conform to the new criteria.~~

~~• Reassess~~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 ~~useful~~level ~~lives~~and composition of ~~intangible~~non-performing ~~assets~~loans; historical loss experience; results of examinations by regulatory agencies; expectations of current economic conditions and ~~adjust~~their impact on particular industries and individual borrowers; the ~~remaining~~market ~~amortization~~value of collateral; the strength of available guarantees; ~~periods~~concentrations ~~accordingly~~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 ~~provisions~~provision offor ~~Statement~~loan ~~141~~losses ~~apply~~for tothe ~~all~~year ~~business~~ended ~~combinations initiated after~~ June 30, ~~2002~~2004, ~~and~~was $4,324,000 ~~all~~compared ~~business~~to ~~combinations~~$4,371,000 ~~accounted~~ for by the ~~purchase~~year ~~method~~ended ~~for~~June ~~which~~30, ~~the~~2003. ~~date~~This ofrepresents ~~acquisition~~a isdecrease ~~July 1,~~of ~~2001~~$47, 000, or ~~later~~1. 08%. The ~~provisions~~decrease is due to a decline in charge offs, an increase in recoveries; and management’s assessment of ~~Statement~~risk in the loan ~~142~~portfolio ~~were~~resulting ~~required~~in toa beslight ~~implemented~~increase byin ~~Great~~the ~~Western~~loan byloss reserve. The provision for loan losses for the ~~first~~year ~~quarter~~ended ~~of its~~June 30, 2003, ~~fiscal~~was $4,371,000 compared to $6,067,000 for the year. ~~Great~~ended ~~Western~~June ~~has~~30, ~~elected~~2002. ~~early~~This ~~adoption~~represents ~~and~~a ~~implemented~~decrease of $1,696,000, or ~~Statement~~27.95%. ~~142~~This decrease is due to management assessing less risk in the ~~first~~loan ~~quarter~~portfolio. ofSee ~~fiscal~~“Non-performing ~~2002~~Loans” and “Allowance for Loan Losses”. ~~The~~

30-26-

impactTable of adopting Statement 142 was to eliminate the amortization of goodwill and other intangibles that are determined to have an indefinite life and subject goodwill and other intangibles to annual impairment tests. See Note 1 “Intangible Assets” to the consolidated financial statements.Contents

InOTHER ~~October 2002,~~INCOME the FASB issued SFAS No. 147, “Acquisitions of Certain Financial Institutions, An Amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9.” Statement 147 provides guidance for the accounting and reporting for the acquisition of all or part of a financial institution and accounting for the impairment or disposal of acquired long-term customer-relationship intangible assets of financial institutions. Statement 147 is effective for acquisitions dated on or after October 1, 2002. Management does not believe this Statement will have a material effect on Great Western’s financial position, liquidity or results of operation.

~~Effective~~The ~~January 1,~~following ~~2003,~~table ~~the~~presents 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. 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~~other isincome ~~not required. The Interpretation expands on the accounting guidance of SFAS No. 5 “Accounting~~ for Contingencies,” SFAS No. 57 “Related Party Disclosures” and SFAS No. 107 “Disclosures about Indirect Guarantees of Indebtedness of Others. “ which it supersedes. The adoption of this Interpretation did not have material effect on Great Western’s financial position, liquidity or results of operation. See Note 18 “Commitments and Contingencies” to the ~~Consolidated~~ ~~Financial~~indicated ~~Statements~~periods.

In January 2003, the FASB issued Interpretation No. 46 “Consolidation of Variable Interest Entities.” 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 consolidated requirements of Interpretation No. 46 apply immediately to period interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period regardless of when the variable interest entity was established. Management does not believe that this Interpretation will have a material effect on Great Western’s financial position, liquidity or results of operation, however, management continues to review guidance from the FASB and Federal Reserve.


	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

InDuring ~~April 2003~~the year ended June 30, ~~FASB~~2004, ~~issued~~total ~~SFAS~~other ~~No.~~income ~~149,~~decreased ~~“Amendment~~to of$31,258,000 ~~Statement 133~~from on$31,354,000 ~~Derivative~~for ~~Instruments~~the ~~and~~year ~~Hedging~~ended ~~Activities”. This~~June ~~Statement~~30, ~~improves~~2003, ~~financial~~due ~~reporting by~~primarily ~~requiring~~to ~~that~~the ~~contracts~~decrease ~~with~~in ~~comparable~~net ~~characteristics~~gains befrom ~~accounted~~sale ~~for similarly. In~~of ~~particular~~loans, ~~this Statement~~net ~~(1)~~gain ~~clarifies~~on ~~under~~securities ~~what~~and ~~circumstances~~net agains ~~contract~~from ~~with~~sale anof ~~initial~~other ~~net~~real estate owned ~~investment~~and ~~meets~~other assets offset by an increase in other income. Net gains from the ~~characteristics~~sale of aloans ~~derivative~~decreased ~~discussed~~due to the increase in ~~paragraph 6(b)~~long-term ofmortgage ~~Statement~~rates. ~~133,~~During ~~(2)~~the ~~clarifies~~year ~~when~~ended aJune ~~derivative~~30, ~~contains~~2003, atotal ~~financing component~~other income increased to $31,354,000 ~~(3)~~from ~~amends~~$21,897,000 for the ~~definition~~year ofended anJune ~~underlying~~30, to2002, ~~conform~~due itprimarily to ~~language used~~increased inservice ~~FASB~~charges ~~Interpretation~~and Noother fees and net gains from sale of loans. 45Great Western Bank, ~~“Guarantor’s~~Omaha ~~Accounting~~is the only Great Western bank that services mortgage loans, pursuant to purchased and retained mortgage servicing rights.

31OTHER EXPENSES

~~Disclosure~~The ~~Requirements~~following ~~for Guarantees,~~table ~~Including~~presents Indirect Guarantees of Indebtedness of Others”, and (4) amends certain other existing pronouncements. Those 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 will have a material effect on Great Western’s ~~financial position,~~other ~~liquidity~~expenses orfor ~~results~~the indicated ~~of operation~~periods.

In May 2003, FASB issued Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It 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. Management does not believe the above pronouncements will have a material effect on Great Western’s financial position, liquidity or results of operation, however, management continues to review guidance from the FASB and Federal Reserve.


	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

~~ANALYSIS~~-27- ~~OF FINANCIAL CONDITION~~

LOANTable PORTFOLIOof Contents

~~Total~~Other ~~loans,~~expenses ~~net~~decreased ~~of unearned fees, increased~~ $~~125~~9,~~012~~100,000, or 811.3675%, to $168,~~621~~360,~~212,~~000 atduring the year ended June 30, ~~2003~~ 2004, from $177,~~496~~460,~~200,~~000 atfor the year ended June 30, ~~2002~~2003. ~~The~~ ~~increase~~This ~~was~~decrease ~~due~~is toprimarily ~~normal~~the ~~internal~~result ~~growth. Total loans,~~of ~~net~~a decrease in amortization and valuation adjustment of ~~unearned~~mortgage ~~fees,~~servicing rights acquired offset by an increase in salaries and employee benefits. Other expenses increased $~~193~~15,~~151~~142,000, or 1424.8230%, to $177,~~496~~460,~~200,~~000 atduring the year ended June 30, ~~2002~~2003, from $162,~~303~~318,~~049,~~000 atfor the year ended June 30, ~~2001~~ 2002. ~~The~~ This increase ~~was~~is primarily ~~due to~~ the ~~acquisitions~~result of ~~First~~an ~~Western~~increase ~~and~~in ~~Marquette~~amortization ~~that~~and ~~accounted~~valuation ~~for~~adjustment ~~32.61%~~ of mortgage ~~the~~servicing rights acquired and an increase in salaries and ~~internal~~employee ~~growth~~benefits.

~~Great~~Salaries ~~Western’s~~and ~~subsidiary banks~~employee ~~primarily~~benefits ~~make~~rose ~~commercial~~$2,237,000 ~~loans~~or 6.71%, to ~~small~~$35,560,000 ~~and~~for ~~medium-sized~~the ~~businesses~~year ~~and professionals~~ended ~~and~~June ~~installment~~30, ~~loans~~2004, tofrom ~~individuals. The~~$33,323,000 ~~subsidiary~~for ~~banks~~the ~~offer~~corresponding aperiod ~~variety~~ of ~~commercial~~2003. ~~lending products~~Contributing ~~including~~to ~~revolving~~the ~~lines~~increase ofin ~~credit,~~salaries ~~letters~~and ~~of credit, working~~employee ~~capital~~benefits ~~loans~~were ~~and~~staffing ~~loans~~increases due to ~~finance~~acquisitions ~~accounts~~and ~~receivable,~~internal ~~inventory and equipment~~growth. ~~See~~ ~~“Business-Loans.” Typically,~~Salaries ~~the~~and ~~subsidiary~~employee ~~banks’~~benefits ~~commercial loans~~rose ~~have~~$4,472,000 ~~floating~~or ~~rates~~15.50%, ofto ~~interest~~$33,323,000 ~~are~~ for ~~varying~~the ~~terms,~~year ~~(generally~~ended ~~not exceeding~~June ~~five~~30, ~~years)~~2003, ~~are~~from ~~personally~~$28,851,000 ~~guaranteed~~for bythe ~~principals~~corresponding period of 2002. Contributing to the ~~borrowing company,~~increase in salaries and ~~are~~employee ~~collateralized~~benefits bywere ~~accounts~~general ~~receivable,~~staffing ~~inventory~~increases orconcurrent ~~other business~~with ~~assets~~internal growth.

~~The~~Net ~~following~~occupancy ~~tables~~expense ~~present~~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 ~~Great~~occupancy ~~Western’s~~costs ~~loan~~increased ~~balances~~due atto acquisitions and internal growth. Net occupancy expense increased $457,000, or 12.12%, to $4,227,000 for the ~~dates~~year ~~indicated~~ended ~~categorized~~June by30, ~~loan~~2003, ~~type:~~from $3,770,000 for the year ended June 30, 2002. Net occupancy costs increased due to internal growth.

	June 30, 2003					June 30, 2002					June 30, 2001
	(dollars in thousands)
Loans to individuals	$	190,579		11.91	%	$	199,896		13.55	%	$	215,071		16.75	%
Real estate loans	194,367			12.15		164,812			11.17		172,786			13.46
Commercial and agricultural	1,235,406			77.22		1,126,417			76.32		912,611			71.07
Other loans	2,576			0.16		6,241			0.42		3,242			0.25
Total face amount of loans	1,622,928			101.44		1,497,366			101.46		1,303,710			101.53
Unearned loan fees	(1,716		)	(0.11	)	(1,166		)	(0.08	)	(661		)	(0.05	)
Loans	1,621,212			101.33		1,496,200			101.38		1,303,049			101.48	%
Less allowance for loan losses	(21,251		)	(1.33	)	(20,344		)	(1.38	)	(18,955		)	(1.48	)
Net Loans	$	1,599,961		100.00	%	$	1,475,856		100.00	%	$	1,284,094		100.00	%

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.

32Data 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.

	June 30, 2000					June 30, 1999
	(dollars in thousands)
Loans to individuals	$	106,499		17.00	%	$	86,243		16.71	%
Real estate loans	135,033			21.55		107,944			20.92
Commercial and agricultural	388,615			62.03		326,515			63.28
Other loans	4,910			0.78		2,563			0.50
Total face amount of loans	635,057			101.36		523,265			101.41
Unearned loan fees	(300		)	(0.05	)	(465		)	(0.09	)
Loans	634,757			101.31	%	522,800			101.32	%
Less allowance for loan losses	(8,197		)	(1.31	)	(6,838		)	(1.32	)
Net loans	$	626,560		100.00	%	$	515,962		100.00	%

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.

~~Great Western’s primary category of loans, commercial and agricultural loans, constituting over three~~-~~fourths~~28- of loans as of June 30, 2003, trended upward as indicated at the stated dates. 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. At June 30, 2002, agricultural loans totaled $174,076,000. Of this amount, $65,215,000 comprised loans secured by agricultural real estate, and $108,861,000 comprised loans secured by agricultural operating assets.

CommercialTable 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. Commercial and agricultural loans were $1,126,417,000 as of June 30, 2002, an increase of $213,806,000 over the $912,611,000 balance as of June 30, 2001. This increase is primarily due to internal growth, which accounted for 62.63% of the growth for these loan types. The acquisition of First Western and Marquette accounted for 37.37% of the increase.Contents

~~Loan~~Advertising ~~concentrations~~costs ~~are considered~~increased to ~~exist~~$4,667,000, ~~when~~an ~~there~~increase ~~are~~of ~~amounts~~$924,000 ~~loaned~~or to24.69% afor ~~multiple~~the ~~number~~year ~~of borrowers~~ended ~~engaged~~June in30, 2004, ~~similar~~from ~~activities~~$3,743,000 orduring ~~loans~~the ~~secured~~year byended ~~similar collateral~~June 30, ~~that~~2003. ~~would~~The ~~cause~~increase ~~them~~was due to beinternal ~~similarly~~growth ~~impacted~~and byan ~~economic~~increase orin ~~other conditions~~bank advertising. ~~Great~~Advertising ~~Western~~costs ~~had~~increased ~~loans secured by real estate amounting~~ to $~~942~~3,~~601~~743,000 ~~as of June 30~~, ~~2003,~~ an increase of $~~174~~1,~~715~~563,000 ~~over~~or ~~the $767,886,000~~71.70% ~~balance~~for asthe ofyear ended June 30,~~2002.~~ 2003, ~~Other~~from ~~than~~$2,180,000 ~~loans~~during ~~secured by real estate and~~ the ~~loan~~year ~~categories~~ended ~~set forth~~June ~~in the above table~~30, ~~Great~~2002. ~~Western~~The ~~had~~increase nowas ~~concentrations~~due ofto ~~loans~~internal ~~at June 30,~~growth ~~2003.~~and ~~Great~~one ~~Western~~time ~~had~~cost noof ~~loans~~marketing ~~outstanding~~related to ~~foreign~~bank ~~countries or~~mergers ~~borrowers~~and ~~headquartered~~bank inname ~~foreign countries at June 30, 2003~~changes.

33Communication 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.

~~Management~~Amortization of ~~Great Western’s~~core ~~subsidiary~~deposit ~~banks~~intangible ~~may~~and ~~renew~~other ~~loans~~intangibles atwas ~~maturity~~$1,595,000 ~~when~~for ~~requested~~the byyear ~~a customer~~ended ~~whose~~June ~~financial~~30, ~~strength~~2004 ~~appears~~compared to ~~support~~$1,901,000 ~~such~~for ~~renewal~~the oryear ~~when~~ended ~~such renewal~~June ~~appears~~30, to2003, beand in$2,629,000 ~~Great~~for ~~Western’s~~the ~~best~~year ~~interest~~ended June 30, 2002. ~~Great~~ ~~Western~~The decrease ~~requires~~in ~~payment~~both ofyears ~~accrued interest~~is due primarily to a decrease in ~~such~~the ~~instances~~amortization ~~and~~of ~~may~~the ~~adjust~~core deposit intangible asset from the ~~rate~~acquisition of ~~interest~~Great Western Bank, ~~require~~Omaha. ~~a principal~~This ~~reduction~~core ordeposit ~~modify~~intangible ~~other~~is ~~terms~~being ofamortized ~~the~~on ~~loan~~an ataccelerated method over 5 years. See Note 1 and Note 7 to the ~~time~~Consolidated ofFinancial ~~renewal~~Statements.

~~Although~~Professional ~~the~~fees ~~risk~~increased ~~of non-payment~~$927,000, ~~exists~~or ~~for~~29.29%, ~~a variety of reasons relating~~ to ~~all loans~~$4,092,000 ~~other~~for ~~more specific risks are associated with each type of loan. Risks associated with real estate mortgage loans include~~ the ~~borrower’s inability~~year toended ~~pay~~June ~~and deterioration in value of real estate held as collateral. Several risks are present in construction loans~~30, ~~including economic conditions in the building industry~~2004, ~~fluctuating~~ ~~land~~from ~~values~~$3,165,000 ~~failure~~for of the ~~contractor~~year toended ~~complete work and the borrower’s inability to repay. As of~~ June 30, 2003,. ~~construction~~Professional ~~loans~~fees ~~were~~increased $~~149~~454,~~978,~~000, or 916.2575% ~~of total loans~~, anto ~~increase of~~ $333,~~345~~165,000 ~~over~~for the year ended June 30, 2003, from $~~116~~2,~~633~~711,000 orfor ~~7.8% of~~ the ~~total loan~~year ~~balance~~ended ~~as of~~ June 30, 2002. ~~Risks~~Professional ~~associated~~fees ~~with~~expenses ~~commercial~~increased ~~and agricultural~~due ~~loans~~to ~~are~~Great ~~the quality of the borrower~~Western’s ~~management~~growth and ~~the impact of local economic factors as well as prices received for products and services~~acquisitions. 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~~Other ~~MATURITIES~~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.

~~The~~FEDERAL ~~following~~INCOME ~~tables present,~~TAX at June 30, 2003, and June 30, 2002, 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, 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

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.

34RECENT ACCOUNTING PRONOUNCEMENTS

	At June 30, 2002
	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	$	46,265	$	135,510	$	447	$	17,360	$	0	$	199,582
Real estate loans	48,696		31,909		56,362		26,314		2,252		165,533
Commercial and agricultural	567,255		344,316		189,480		23,384		246		1,124,681
Other loans	2,723		3,584		0		97		0		6,404
Total loans	$	664,939	$	515,319	$	246,289	$	67,155	$	2,498	$	1,496,200

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.

~~LOAN~~-29- ~~REVIEW PROCESS~~

GreatTable 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.Contents

~~Internally,~~ It ~~each~~also ~~bank maintains~~clarifies that a ~~classified~~guarantor ~~loan~~is ~~list~~required ~~that~~to recognize, ~~along~~at ~~with~~ the ~~list~~inception of ~~non-performing loans~~a ~~discussed below~~guarantee, ~~helps~~a ~~Great~~liability ~~Western’s~~for ~~management assess~~ the ~~overall quality~~fair value of the ~~loan~~obligation ~~portfolio~~undertaken ~~and~~in issuing the ~~adequacy of the allowance for loan losses~~guarantee. The ~~classification~~Interpretation ~~categories of~~also ~~substandard,~~identifies ~~doubtful~~several ~~and~~situations ~~loss~~where ~~correspond~~the ~~with~~recognition ~~those~~ of ~~state~~a ~~and~~liability ~~FDIC examiners. Loans~~at ~~classified~~inception ~~as “substandard”~~for ~~are~~a ~~those~~guarantor’s ~~loans~~obligation ~~with~~is ~~clear~~not ~~and~~required. ~~defined~~The ~~weaknesses~~Interpretation ~~such~~expands ason ~~highly leveraged~~the ~~positions,~~accounting ~~unfavorable~~guidance ~~financial~~of ~~ratios,~~FASB ~~uncertain~~No. ~~repayment sources~~5 or“Accounting ~~poor~~for ~~financial condition~~Contingencies,” ~~which~~FASB ~~may jeopardize repayment~~No. ~~Loans~~ ~~classified~~57 as “~~doubtful”~~Related ~~are~~Party ~~those loans~~Disclosures” ~~that~~and ~~have~~FASB ~~characteristics~~No. ~~similar~~107 to“Disclosures ~~substandard~~about ~~loans,~~Indirect ~~but~~Guarantees ~~also~~of ~~have~~Indebtedness ~~an increased risk~~ of ~~loss~~Others” orwhich ~~would~~it ~~require a partial write-off in liquidation~~supersedes. ~~Although~~ ~~loans~~The ~~classified as~~adoption ~~substandard~~of dothis ~~not~~Interpretation ~~duplicate~~did ~~loans classified as doubtful, both substandard~~not ~~and~~have ~~doubtful~~a ~~loans~~material ~~may~~effect ~~include~~on ~~some~~Great ~~loans~~Western’s ~~that~~financial ~~are past due at least 90 days~~position, ~~are~~ onliquidity ~~nonaccrual status~~ or ~~have~~results ~~been~~of ~~restructured~~operation. ~~Loans~~ ~~classified~~See asNote ~~“loss”~~18 ~~are~~to ~~those loans that are in~~ the ~~process~~ ofConsolidated ~~being~~Financial ~~charged off~~Statements.

In ~~addition~~January to2003, the ~~internally~~ ~~classified~~FASB ~~loans,~~issued ~~each~~Interpretation ~~subsidiary~~No. ~~bank~~46 ~~has~~“Consolidation aof Variable Interest Entities”(“~~watch~~FIN ~~list~~46”). ofThis ~~loans~~Interpretation was issued in an effort to expand upon and strengthen existing accounting guidance that ~~further~~addresses ~~assists~~when ~~monitoring~~a ofcompany should include in its ~~loan~~financial ~~portfolios. A~~statements ~~loan~~the isassets, ~~included~~liabilities onand ~~the~~activities ~~watch~~of ~~list~~another ifentity. itIn general, a variable interest ~~demonstrates~~entity ~~one~~is a corporation, partnership, trust, or ~~more~~any ~~deficiencies~~other ~~requiring~~legal ~~attention~~structure inused ~~the~~for ~~near~~business ~~term. Such~~purposes ~~loans~~that doeither (i) does not have ~~all~~equity ~~the characteristics~~investors ofwith avoting ~~classified~~rights ~~loan~~or (~~substandard,~~ii) ~~doubtful~~has orequity ~~loss),~~investors ~~but~~that do ~~have~~ ~~elements~~not ofprovide ~~weakness~~sufficient asfinancial ~~compared~~resources for ~~with~~the ~~those~~entity ofto asupport ~~satisfactory~~its ~~credit~~activities. ~~Management~~ ofA ~~the~~variable ~~subsidiary~~interest ~~banks~~entity ~~reviews these~~often holds financial assets, including loans toor receivables, real estate or other property. To further assist financial statement users in assessing a company’s risks, the Interpretation ~~adequacy~~also ofrequires disclosures about variable interest entities that the ~~allowance~~company ~~for~~is ~~loan losses~~not required to consolidate but in which it has a significant variable interest. ~~Substantially~~ ~~all~~The consolidation requirements of ~~the~~FIN ~~loans~~46 apply immediately to variable oninterest entities created after January 31, 2003. Great Western adopted FIN 46 beginning with the ~~watch~~quarter ~~list~~ended atDecember ~~June 30~~31, 2003. ~~were~~Great ~~current~~Western ~~and~~has ~~paying~~disclosed the investment in ~~accordance~~Great Western Statutory Trust IV and GWB Capital Trust V on a ~~with~~deconsolidated ~~loan~~basis. ~~terms~~Adoption of FIN 46 did not have a significant impact on Great Western’s financial position, cash flows or results of operation.

~~Great~~The ~~Western’s~~requirements ~~external loan~~of ~~review~~FIN ~~process~~46 ~~consists~~are ofapplied anby ~~intensive~~the ~~on-site~~end ~~review~~ of ~~more~~the ~~than~~first ~~40%~~interim ~~of dollar~~or ~~value~~annual ofperiod ~~loans~~ending atafter ~~each~~March ~~subsidiary~~15, ~~bank~~2004 ~~(other~~for ~~than~~entities ~~Great~~created ~~Western~~before ~~Bank,~~February ~~Omaha)~~1, ~~during~~2003. ~~twelve~~At toits ~~twenty-four~~October ~~month~~8, ~~periods~~2003 meeting, ~~depending~~the ~~on conditions. Reviews~~FASB ~~are~~agreed ~~performed~~to bydefer ~~a regional~~the ~~consulting~~effective ~~firm~~date ~~and~~of FIN 46 for variable interests held by ~~loan~~public ~~officers~~companies ofin ~~Great~~all ~~Western’s~~entities ~~subsidiary banks~~that ~~for~~were ~~Great~~acquired ~~Western~~prior ~~Bank~~to February 1, ~~Clive~~2003. The ~~chief~~deferral ~~credit~~required ~~officer~~that ~~and~~public ~~loan~~companies adopt ~~officers~~the provisions of ~~subsidiary~~FIN ~~banks~~46 ~~perform~~ for periods ending after December 31, 2003. In the ~~Great~~quarter ~~Western~~ended ~~Bank~~March 31, ~~Watertown~~2004, ~~reviews.~~ Great Western’s ~~chief~~implemented ~~credit~~the ~~officer~~requirement ~~and~~for its ~~President~~investments ~~are~~in ~~responsible for~~GWB ~~determining~~Capital ~~the~~Trust ~~frequency~~I, ~~and~~GWB ~~scope~~Capital ofTrust ~~external~~II, ~~loan~~and ~~reviews~~GWB ~~and~~Capital ~~evaluating~~Trust III. ~~the~~The ~~results~~primary impact of ~~those~~this ~~reviews. The~~ change was to report ofGreat Western’s subordinated debt to the ~~consulting~~Trusts ~~firm~~on ~~and~~the ~~chief~~face ~~credit~~of ~~officer~~the isaccompanying ~~presented~~balance tosheet ~~each bank’s~~rather ~~management~~than ~~and~~the ~~board~~minority ofinterest ~~directors~~in ~~for~~the ~~review~~Trusts, as previously presented.

35The 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.

~~The~~In ~~external~~May ~~review~~2003, isthe ~~used~~FASB toissued ~~supplement~~Statement of Financial Accounting Standards (SFAS) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and ~~provide~~Equity” a(“FASB ~~check~~No. on150”). ~~the~~This Statement ~~internal~~establishes ~~review~~standards ~~conducted~~for byhow ~~subsidiary~~an ~~bank~~issuer ~~management~~classifies and measures certain financial instruments with characteristics of both liabilities and equity.

~~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~~30- ~~cycle. The chief credit officer of Great Western works with Great Western Bank’s internal review staff.~~

NON-PERFORMINGTable LOANSof Contents

~~Non-performing~~FASB ~~loans~~No. ~~consist of~~150 ~~nonaccrual,~~requires ~~past~~that ~~due~~an ~~and~~issuer ~~restructured~~classify ~~loans. A~~a ~~past~~financial ~~due~~instrument ~~loan~~that is anwithin ~~accruing~~its ~~loan~~scope ~~that~~as ~~is contractually past~~a ~~due~~liability ~~90 days~~ (or ~~more~~an asasset toin ~~principal~~some ~~and/or interest payments~~circumstances). ~~Loans~~ onThis ~~which~~Statement ~~management~~is ~~does~~effective ~~not~~for ~~expect~~financial ~~to collect~~instruments ~~interest~~entered ininto ~~the normal course of business are placed on nonaccrual~~ or ~~are~~ ~~restructured. When~~modified aafter ~~loan~~May is31, ~~placed on nonaccrual~~2003, ~~any~~and ~~interest~~otherwise ~~previously accrued but not yet collected~~ is ~~reversed~~ ~~against~~effective ~~current~~at ~~income unless, in~~ the ~~opinion~~beginning of ~~management,~~ the ~~outstanding~~ ~~interest~~first ~~remains~~interim ~~collectible. Thereafter,~~period ~~interest~~beginning isafter ~~generally~~June ~~included~~15, in2003, except ~~income~~for ~~only~~mandatorily toredeemable ~~the~~financial ~~extent~~ instruments of ~~cash~~nonpublic ~~received~~entities. A ~~loan~~The isadoption ~~restored~~of ~~to accrual~~SFAS ~~status~~No. ~~when~~150 ~~all~~did ~~interest~~not ~~and~~have ~~principal~~a ~~payments~~material ~~are~~effect ~~current~~on ~~and~~Great ~~the borrower~~Western’s ~~has~~financial ~~demonstrated~~position, toliquidity ~~management~~or ~~the~~results ~~ability to make payments~~ of ~~principal~~ ~~and interest as scheduled~~operation.

AIn ~~restructured~~April ~~loan~~2003, isthe ~~one~~FASB issued SFAS No. 149, “Amendment of Statement 133 ~~upon~~on ~~which~~Derivative ~~interest~~Instruments ~~accrues~~and atHedging aActivities”. ~~below~~This ~~market~~Statement ~~rate~~improves orfinancial ~~upon~~reporting ~~which~~by ~~certain~~requiring that contracts with comparable characteristics be accounted for similarly. In particular, this Statement (1) clarifies under what ~~principal~~circumstances ~~has~~a ~~been~~contract ~~forgiven~~with soan asinitial tonet ~~aid~~investment meets the ~~borrower~~characteristics of a derivative discussed in ~~the~~paragraph ~~final~~6(b) ~~repayment~~of Statement 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an ~~the~~underlying ~~loan~~to conform it to language used in FASB Interpretation No. 45, ~~with~~“Guarantor’s ~~any~~Accounting ~~interest~~and ~~previously~~Disclosure ~~accrued~~Requirements for Guarantees, ~~but~~Including ~~not~~Indirect ~~yet~~Guarantees ~~collected~~of Indebtedness of Others,” ~~being~~and (4) amends certain other ~~reversed~~existing ~~against~~pronouncements. ~~current~~These ~~income~~changes will result in more consistent reporting on contracts and hedging relationships entered into or modified after June 30, 2003. ~~Interest~~ isManagement ~~accrued~~does ~~based~~not ~~upon~~believe the ~~new~~above ~~loan~~pronouncements ~~terms~~had a material effect on Great Western’s financial position, liquidity or results of operation.

~~Assets~~On ~~fully~~March ~~or substantially~~9, ~~collateralize~~2004 ~~non-performing~~Securities ~~loans. In~~and ~~general~~Exchange Commission Staff Accounting Bulletin 105 (“SAB105”), “Application of Accounting Principles to Loan Commitments”, was issued. SAB 105 summarizes the ~~excess~~views of the Staff regarding the application of generally accepted accounting principles to loan ~~balances~~commitments ~~over~~accounted ~~collateral~~for ~~values~~as derivative instruments. It is ~~allocated~~ inanticipated that the ~~allowance. Assets acquired~~adoption ~~through~~of ~~foreclosure~~the ~~are~~guidance ~~carried~~in atSAB ~~the~~105 ~~lower~~for ofall ~~cost~~new orloan ~~estimated~~commitments ~~fair value~~signed after April 1, ~~net~~2004, ofwill ~~estimated~~not have ~~costs~~a ofmaterial ~~disposal~~effect on Great Western’s financial position, ifliquidity ~~any.~~or results of operation

~~The~~ANALYSIS ~~following~~OF ~~table~~FINANCIAL ~~lists nonaccrual,~~CONDITION ~~over 90 days past due and restructured loans, other real estate and other repossessed assets at June 30, 2003, and for each of the prior four years.~~

	At June 30,
	2003			2002			2001			2000			1999
	(dollars in thousands)
Nonaccrual loans	$	9,561		$	11,592		$	4,703		$	1,920		$	1,503
Accruing loans past due over 90 days	2,130			1,895			1,772			2,370			1,082
Restructured loans	768			3,977			13,510			5,164			5,153
Total non-performing loans	12,459			17,464			19,985			9,454			7,738
Other real estate and other repossessed assets	2,208			2,496			1,179			113			116
Total non-performing assets	$	14,667		$	19,960		$	21,164		$	9,567		$	7,854
Ratio of total nonperforming loans to loans, net of unearned fees	0.77		%	1.17		%	1.53		%	1.49		%	1.48		%
Ratio of total non-performing assets to total loans plus other real estate and other repossessed assets	0.90			1.33			1.62			1.51			1.50
Ratio of non-performing assets to total assets	0.68			0.99			1.19			1.12			1.15

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.

~~Nonaccrual~~Great ~~loans~~Western’s ~~were $9,561,000~~subsidiary asbanks ofprimarily ~~June 30,~~make ~~2003,~~commercial aloans ~~decrease~~to ofsmall ~~$2,031,000~~and ~~over~~medium-sized ~~the~~businesses ~~balance of~~and ~~$11,592,000~~professionals asand ofinstallment ~~June 30,~~loans ~~2002. This decrease is primarily due~~ to ~~one~~individuals. ~~commercial~~The ~~borrower~~subsidiary ~~whose~~banks ~~$1,400,000~~offer ~~loan~~a ~~was~~variety ~~reclassified~~of tocommercial ~~other~~lending ~~real estate~~products ~~owned~~including ~~and~~revolving ~~one~~lines ~~commercial~~of ~~borrower~~credit, ~~which~~letters ~~had~~of ~~a $500~~credit,~~000~~ ~~principal reduction.~~working ~~Nonaccrual~~capital loans ~~were~~and ~~$11,592,000~~loans asto offinance ~~June 30,~~accounts ~~2002~~receivable, ~~an increase~~inventory ofand ~~$6,889,000~~equipment. ~~over~~See “Business-Loans.” Typically, the ~~balance~~subsidiary ofbanks’ ~~$4,703,000~~commercial asloans ofhave ~~June 30,~~floating ~~2001. This increase~~rates isof ~~primarily~~interest, ~~due~~are tofor ~~internal~~varying ~~growth~~terms ~~and~~(generally ~~acquisitions~~not inexceeding ~~fiscal~~five ~~2002. Two~~years), ~~loans~~are ~~accounted~~personally ~~for~~guaranteed ~~14.6%~~by principals of the ~~increase~~borrowing ~~and~~company, ~~acquisition of Marquette~~ and are ~~First~~collateralized ~~Western~~by ~~Banks~~accounts ~~accounted~~receivable, ~~for~~inventory ~~13.8%~~or ofother ~~the~~business ~~increase~~assets.

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~~31- ~~loans and assets in fiscal year 2002.~~

ATable 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 potential problem loans other than those reported in the above table.Contents

~~Foreclosures~~The onfollowing ~~defaulted loans~~tables ~~result~~present 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~~loan ~~attempt~~balances toat ~~convert nonperforming loans into interest-earning assets either through liquidation of~~ the ~~collateral~~dates ~~securing~~indicated ~~the~~categorized by loan ortype: ~~through intensified collection efforts.~~

ALLOWANCE FOR LOAN LOSSES


	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	%

~~Implicit~~-32- 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.

TheTable allowance for loan losses is maintained to absorb probable losses inherent in the loan portfolio. Great Western’s allowance was $21,251,000 or 1.31% of loans, net of unearned fees, at June 30, 2003 compared to $20,344,000 or 1.36% of loans, net of unearned fees, at June 30, 2002, and $18,955,000 or 1.45% of loans, net of unearned fees, at June 30, 2001. The increase in fiscal year 2003 compared to 2002 is due primarily to loan growth. The increase in the total allowance is due to acquisitions and internal growth when comparing fiscal 2002 to 2001.Contents


	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	%

~~Management~~Great ~~performs regular~~Western’s ~~monthly~~primary ~~assessments~~category of ~~these~~loans, ~~estimated~~commercial ~~losses~~and byagricultural ~~utilizing~~loans, aconstituting ~~methodology~~over ~~that relies~~three-fourths onof ~~several~~loans ~~key~~as ~~elements. Larger-balance,~~of ~~non-homogeneous~~June ~~loans~~30, ~~representing~~2004, ~~significant individual~~trended ~~credit~~upward ~~exposures~~as ~~are~~indicated ~~evaluated~~at ~~based~~the ~~upon~~stated ~~the~~dates. ~~borrower’s~~At ~~overall~~June ~~financial condition~~30, ~~resources~~2004, ~~and~~agricultural ~~payment~~loans ~~record;~~totaled ~~the~~$201,573,000. ~~prospects~~Of ~~for~~this ~~support~~amount, $89,080,000 ~~from~~comprised ~~any financially~~loans ~~responsible~~secured ~~guarantors~~by ~~and,~~agricultural ifreal ~~appropriate~~estate, ~~the~~and ~~realizable~~$112,493,000 ~~value~~comprised ~~of the~~loans ~~collateral. The~~secured ~~allowance~~by onagricultural ~~these loans~~operating isassets. ~~calculated~~At byJune ~~applying~~30, ~~loss~~2003, ~~factors~~agricultural ~~to outstanding~~ loans ~~and~~totaled ~~certain unused commitments~~$182,079,000. ~~Loss~~ ~~factors include~~Of ~~management’s~~this ~~assessment~~amount, of$78,897,000 ~~current~~comprised ~~economic conditions and the~~loans ~~potential~~secured ~~impact~~by onagricultural ~~various~~real ~~industries~~estate, and ~~the~~$103,182,000 ~~financial~~comprised ~~conditions~~loans ofsecured ~~the borrowers~~by agricultural operating assets.

~~Net~~Commercial ~~loans~~and ~~charged~~agricultural ~~off~~loans ~~for the~~were ~~year~~$1,480,893,000 ~~ended~~as of June 30, ~~2003~~2004, ~~was~~an increase of $3245,~~464~~487,000 ~~compared~~over ~~with~~the $51,~~677~~235,406,000 inbalance as of June 30, ~~2002~~2003. This increase is due to acquisitions and internal growth. Commercial and agricultural loans were $21,~~296~~235,406,000 inas ~~2001. One borrower~~of ~~accounted~~June ~~for~~30, 2003, an increase of $2108,~~653~~989,000 ofover the ~~loans~~$1,126,417,000 ~~charged-off~~balance ~~for~~as ~~the~~of ~~fiscal~~June ~~year~~ 30, 2002. This increase is due to internal growth.

~~Specific~~Loan ~~allowances~~concentrations are considered to exist ~~maintained~~when ~~for~~there ~~larger-balance~~are amounts loaned to multiple borrowers engaged in similar activities, ~~non-homogeneous~~or loans secured by similar collateral, that ~~have~~would ~~been individually~~cause ~~determined~~them to be ~~impaired~~similarly asimpacted ~~prescribed~~ by ~~Statement~~economic ofor ~~Financial Accounting~~other ~~Standard No~~conditions. ~~114,~~Great ~~“Accounting~~Western byhad ~~Creditors~~loans ~~for~~secured ~~Impairment~~by ofreal aestate ~~Loan.” Impairment~~amounting isto ~~measured~~$1,058,887,000 onas ~~a loan-by-loan~~of ~~basis~~June ~~for~~30, ~~these~~2004, ~~loans~~an byincrease ~~either~~of $116,286,000 over the ~~present~~$942,601,000 ~~value~~balance as of ~~the~~June ~~expected future~~30, ~~cash~~2003. ~~flows~~Other ~~discounted~~than atloans ~~the~~secured ~~loan’s~~by ~~effective~~real ~~interest~~estate ~~rate,~~and the loan~~’s obtainable~~ ~~market~~categories ~~price,~~set orforth in the ~~method~~above ~~predominantly used~~table, ~~which~~Great isWestern ~~the~~had ~~fair~~no ~~value~~concentrations of ~~the~~loans ~~collateral~~at June 30, 2004. Great Western did not have loans outstanding to foreign countries or borrowers headquartered in foreign countries at June 30, 2004.

~~Each~~Management ~~portfolio~~ of ~~smaller balance,~~Great ~~homogeneous~~Western’s ~~loans,~~subsidiary ~~including~~banks ~~individual~~may ~~installment,~~renew ~~consumer~~loans ~~and residential~~at ~~loans~~maturity, iswhen ~~collectively~~requested ~~evaluated~~by ~~for~~a ~~impairment. The~~customer ~~allowance~~whose financial ~~for~~strength ~~loan~~appears ~~losses attributed~~ to ~~these~~ ~~loans~~support issuch ~~established~~renewal ~~from~~or anwhen ~~estimate~~such ofrenewal ~~probable~~appears ~~losses~~to ~~inherent~~be in ~~the portfolio. Loss~~Great ~~factors~~Western’s ~~are~~best ~~applied~~interest. ~~to outstanding~~Great ~~loans~~Western ~~based~~requires ~~upon~~payment ~~historical~~of ~~credit~~accrued ~~losses,~~interest ~~trends~~ in ~~volumes~~such instances and ~~terms~~ ofmay ~~loans,~~adjust ~~and~~the ~~consideration~~rate of ~~economic~~interest, ~~geographical,~~require ~~product~~a principal ~~and~~reduction or modify other ~~factors~~ terms of the loan at the time of renewal.

~~The~~Although ~~allowance~~the ~~for~~risk ~~loan losses~~of isnon-payment ~~based~~exists ~~upon~~for ~~estimates,~~a ~~and~~variety ~~actual~~of ~~charge-offs~~reasons ~~can~~relating ~~vary~~to ~~significantly from~~all ~~the~~loans, ~~estimated~~other ~~amounts. By assessing~~more ~~the~~specific ~~probable~~risks ~~estimated~~are ~~losses~~associated ~~inherent~~with ineach ~~the~~type of loan. ~~portfolio~~Risks onassociated ~~a quarterly~~with orreal ~~more~~estate ~~frequent~~mortgage ~~basis,~~loans ~~adjustments~~include ~~are~~the borrower’s ~~made~~inability to ~~specific~~pay and ~~inherent loss~~deterioration ~~estimates~~in ~~based upon the most recent information available.~~

~~The~~-33- 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, 2003, and for each of the prior four years.

	At June 30,
	2003			2002			2001			2000			1999
	(dollars in thousands)
Average loans outstanding(1)	$	1,550,457		$	1,368,931		$	844,280		$	567,658		$	479,533
Total loans at end of period(1)	$	1,621,212		$	1,496,200		$	1,303,049		$	634,757		$	522,800
Allowance at beginning of period	$	20,344		$	18,955		$	8,197		$	6,701	(2)	$	6,276
Loans charged off:
Loans to individuals	858			1,197			828			399			216
Real estate loans	292			288			402			68			57
Commercial and agricultural	2,729			5,046			899			217			855
Other loans	181			(80		)	498			198			106
Total charge-offs	4,060			6,451			2,627			882			1,234
Recoveries of loans previously charged off:
Loans to individuals	221			190			223			110			89
Real estate loans	116			104			12			46			9
Commercial and agricultural	233			446			72			115			133
Other loans	26			34			24			71			2
Total recoveries	596			774			331			342			233
Net loans charged off	3,464			5,677			2,296			540			1,001
Provision for loan losses	4,371			6,067			2,618			2,036			1,563
Business acquisition(3)	0			999			10,436			0			0
Allowance at end of period	$	21,251		$	20,344		$	18,955		$	8,197		$	6,838	(2)
Net loans charged off to average loans, net unearned income	0.22		%	0.41		%	0.27		%	0.10		%	0.21		%
Allowance for loan losses to loans, net unearned income	1.31		%	1.36		%	1.45		%	1.29		%	1.31		%

~~(1) Net~~ value of ~~unearned~~real ~~fees~~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.

~~(2) Restated balance~~LOAN atMATURITIES ~~end of 1999 does not equal the 2000 beginning due to a change in reporting periods.~~

~~(3)~~ The ~~allowance~~ ~~for~~following ~~loan~~tables ~~losses~~present, ~~includes~~at ~~the~~June ~~allowance~~30, ~~related~~2004, toand ~~Iowa~~June ~~State~~30, ~~Bank~~2003, ~~Hamburg~~ loans, ~~Iowa~~net ~~and~~of ~~United~~unearned ~~National Bank~~fees, ~~Sidney,~~by ~~Iowa~~maturity ~~(collectively)~~in ~~for~~each ~~their merger~~major ~~into~~category of Great Western’s portfolio ~~Bank,~~based ~~Clive~~on ~~(successor~~contractual byrepricing ~~merger~~schedules. toActual ~~Citizens~~maturities ~~Bank, Mt.~~may ~~Ayr,~~differ ~~Iowa)~~from ofthe ~~$2,153,000,~~contractual ~~the~~repricing ~~allowance~~maturities ~~related~~shown tobelow ~~Founders~~as ~~Trust~~a ~~National Bank,~~result ~~Sioux~~of ~~Falls,~~renewals ~~South~~and ~~Dakota~~prepayments. ~~for~~Great ~~its~~Western’s ~~merger~~management ~~into~~evaluates ~~Great~~loan ~~Western~~renewals ~~Bank, Watertown~~in ~~(formerly~~the ~~F&M~~same manner ~~Bank)~~as ofnew ~~$304,000,~~credit ~~allowance~~applications. ~~related~~If toloans ~~acquisition of~~are ~~Great~~not ~~Western~~repaid ~~Bank,~~upon ~~Omaha~~maturity, ~~Nebraska~~these ofloans ~~$7,979,000~~are ~~and~~subject to the ~~allowance~~same ~~of $999,000~~credit ~~related~~evaluation toand ~~the~~other ~~acquisition~~underwriting ofcriteria ~~First~~as ~~Western~~new ~~and~~loan ~~Marquette~~applications, ~~banks (collectively)~~and ~~for~~are ~~their~~subject ~~merger~~to ~~into~~new ~~Great~~terms ~~Western~~and ~~Bank,~~conditions ~~Watertown~~as ~~(formerly~~deemed ~~F&M~~appropriate ~~Bank). See~~by ~~“Nonperforming Loans~~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

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 $4,060,000 during the year ended June 30, 2003 and $6,451,000 for June 30, 2002. Recoveries during fiscal year 2003 were $596,000 when compared to $774,000 for fiscal year June 30, 2002. 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


			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

39-34-

comparedTable 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”.Contents

~~The~~LOAN ~~following~~REVIEW ~~table~~PROCESS shows the allocations in the allowance and the respective percentages of each loan category to total loans at June 30, 2003, 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.

	At June 30, 2003				At June 30, 2002				At June 30, 2001
	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	$	2,003	11.74	%	$	2,401	13.35	%	$	4,023	16.50	%
Real estate loans	2,109		11.98		1,999		11.05		1,719		13.25
Commercial and agricultural	16,481		76.12		15,554		75.17		13,034		70.00
Other loans	658		0.16		390		0.43		179		0.25
Total allowance for loan losses	$	21,251	100.00	%	$	20,344	100.00	%	$	18,955	100.00	%

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.

	At June 30, 2000				At June 30, 1999
	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	$	1,383	16.77	%	$	877	16.48	%
Real estate loans	1,288		21.26		980		20.63
Commercial and agricultural	5,266		61.20		4,876		62.40
Other loans	260		0.77		105		0.49
Total allowance for loan losses	$	8,197	100.00	%	$	6,838	100.00	%

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.

40In 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.

~~SECURITIES~~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.

~~Securities,~~Great ~~all~~Western ofBank, ~~which~~Omaha ~~are classified~~is asGreat ~~available-for-sale,~~Western’s ~~decreased~~only ~~$20,923,000,~~bank orwith ~~6.26%,~~an tointernal ~~$313,136,000~~loan atreview ~~June 30,~~staff. ~~2003,~~Forty ~~from~~percent ~~$334,059,000~~of atthe ~~June 30, 2002. The~~dollar ~~decrease~~values ~~was~~of ~~due~~Great toWestern ~~funding the~~Bank’s ~~growth in~~ loans ~~versus~~are ~~reinvesting~~reviewed in ~~securities. Securities~~a ~~increased~~24-month ~~$69,049,000, or 26~~cycle.~~06%,~~ toThe ~~$334,059,000~~chief ~~at June 30,~~credit ~~2002,~~officer ~~from~~of ~~$265,010,000~~Great atWestern ~~June 30,~~works ~~2001. The~~with ~~increase~~Great ~~was~~Western ~~due~~Bank’s to internal ~~growth~~review ~~and acquisitions~~staff.

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, 2003, 96.03% of Great Western’s securities with defined maturities mature in less than ten years. Mortgage-~~backed~~35- ~~securities are deemed not to have defined maturities for purposes of this analysis.~~

AsTable of June 30, 2003, 88.80% 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 and state and local political subdivisions totaled $238,586,000, or 76.19% of the portfolio and corporate debt totaled $30,873,000, or 9.86% of the portfolio. Mortgage-backed securities totaled $35,061,000 or 11.20% of Great Western’s investment portfolio. The remaining $8,616,000 or 2.75% 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 totaled $7,503,000 as of June 30, 2003.Contents

~~Certain~~NON-PERFORMING ofLOANS 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, 2003, the face value of U.S. Government and other securities so pledged amounted to $197,528,000, or 63.08% of the total securities portfolio.

~~The~~Non-performing ~~following~~loans ~~table~~consist ~~provides~~of nonaccrual, past due and restructured loans. A past due loan is an accruing loan that is contractually past due 90 days or ~~the~~more ~~maturity~~as ~~distribution~~to principal and/or ~~weighted~~interest ~~average~~payments. Loans on which management does not expect to collect interest ~~rates~~in the normal course of ~~Great Western’s~~business ~~securities~~are ~~portfolio~~placed aton ~~June 30,~~nonaccrual ~~2003~~or are restructured. ~~The~~ ~~yield~~When ~~has~~a ~~been~~loan ~~computed~~is byplaced ~~dividing~~on ~~the~~nonaccrual, ~~forward~~any ~~annualized~~interest previously accrued but not yet collected is reversed against current income ~~stream~~unless, onin the ~~securities~~opinion of management, ~~plus~~the oroutstanding ~~minus~~interest ~~the~~remains ~~anticipated~~collectible. ~~amortization~~Thereafter, interest is generally included in income only to the extent of cash received. A loan is ~~premium~~restored orto ~~accretion~~accrual ofstatus ~~discount,~~when byall interest and principal payments are current and the ~~book~~borrower ~~value~~has ofdemonstrated to management the ~~securities~~ability to make payments of principal and interest as scheduled. ~~The~~ ~~book~~

41A 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.

~~value~~Assets offully ~~available-for-sale~~or ~~securities~~substantially ~~is their fair value. All securities are classified as~~collateralize ~~available~~non-~~for-sale~~performing loans. ~~The~~ ~~restatement~~In of general, the ~~yields~~excess ~~on tax-exempt securities to a fully taxable-equivalent basis has been computed assuming a tax rate~~ of ~~35%. The~~loan ~~equity~~balances ~~securities~~over ~~are~~collateral ~~primarily~~values ~~composed~~is ofallocated ~~stock~~ in the ~~Federal Home Loan Banks of Des Moines and Topeka~~allowance. ~~The~~ ~~yield~~Assets isacquired ~~set~~through ~~quarterly~~foreclosure byare ~~each~~carried ~~Federal~~at ~~Home~~the ~~Loan~~lower ~~Bank’s~~of ~~board~~cost ~~of directors. For~~or ~~the~~estimated ~~quarter~~fair ~~ended June 30~~value, ~~2003,~~net ~~the~~of ~~yields~~estimated ~~were~~costs ~~3.00% and 3.50% at Federal Home Loan Banks~~ of ~~Des Moines and Topeka~~disposal, if ~~respectively~~any.

	At June 30, 2003
Type and Maturity	Principal Amount		Amortized Cost		Estimated Fair Value		Weighted Average Yield
	(dollars in thousands)
U.S. Treasury securities:
Within one year	$	2,500	$	2,492	$	2,531	5.71	%
After one but within five years	16,000		16,225		16,419		2.44
After five but within 10 years	10,000		10,078		10,300		3.53
Total U.S. Treasury securities	28,500		28,795		29,250		3.10
Obligations of other U.S. Government agencies and corporations:
Within one year	23,150		23,195		23,610		4.22
After one but within five years	118,079		118,390		122,035		3.52
After five but within ten years	12,000		12,013		12,260		3.82
After ten years	5,000		4,988		4,989		4.30
Total obligations of U.S. Government agencies and corporations	158,229		158,586		162,894		3.67
Obligations of states and political subdivisions:
Within one year	3,582		3,602		3,658		7.42
After one but within five years	21,598		21,954		22,982		5.82
After five but within ten years	14,833		14,920		15,923		7.45
After ten years	3,580		3,591		3,879		7.44
Total obligations of states and political subdivisions	43,593		44,067		46,442		6.60
Other securities:
Within one year	1,000		1,000		1,010		2.37
After one but within five years	22,096		22,402		23,614		5.39
After five but within ten years	4,000		4,081		4,424		6.30
After ten years	2,000		1,950		1,825		2.34
Total other securities	29,096		29,433		30,873		5.06
Total securities with defined maturities	259,418		260,881		269,459		4.02
Mortgage-Backed Securities	33,690		34,052		35,061		5.34
Equity securities	8,505		8,505		8,616		3.03
Total securities	$	301,613	$	303,438	$	313,136	4.09	%

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

~~DEPOSITS~~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.

~~Total~~-36- 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 internal growth. Total deposits increased $214,877,000, or 15.12%, to $1,635,967,000 at June 30, 2002, from $1,421,090,000 at June 30, 2001. The increase in deposits is due to internal growth and the purchase of First Western and Marquette Banks, which account for 46.37% of the increase. See “Mergers and Acquisitions”.

TheTable following table presents the average amounts and the average rates paid on deposits of Great Western for the year ended June 30, 2003, and for each of the prior two years:Contents

	Year Ended June 30,
	2003				2002				2001
	Average Amount		Average Rate		Average Amount		Average Rate		Average Amount		Average Rate
	(dollars in thousands)
Interest-bearing demand, savings and money market deposits	$	601,694	1.05	%	$	522,953	2.44	%	$	290,984	2.93	%
Time deposits of less than $100,000	593,428		3.48		564,126		4.32		412,866		6.05
Time deposits of $100,000 or more	257,055		3.42		230,535		4.13		145,453		6.05
Total interest-bearing deposits	1,452,177		2.46		1,317,614		3.54		849,303		4.98
Noninterest-bearing demand deposits	233,594		0.00		177,411		0.00		95,070		0.00
Total deposits	$	1,685,771	2.12	%	$	1,495,025	3.12	%	$	944,373	4.48	%

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.

~~The~~Accruing loans ~~maturity~~past ~~distribution~~due ~~of time~~over ~~deposits~~90 ofdays were $~~100~~154,000 orand ~~more~~$2,130,000 at June 30, 2004 and 2003, isrespectively. ~~presented~~A ~~below:~~$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.

	At June 30, 2003
	(in thousands)
3 months or less	$	66,486
Over 3 through 6 months	51,876
Over 6 through 12 months	71,171
Over 12 months	75,777
Total time deposits of $100,000 or more	$	265,310

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.

43A 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.

~~The~~Foreclosures ~~subsidiary~~on ~~banks~~defaulted ~~rely~~loans ~~to a~~result ~~limited~~in ~~extent~~Great onWestern ~~time~~acquiring ~~deposits~~other ofreal estate ~~$100,000~~and orother ~~more~~repossessed assets. ~~Time~~ ~~deposits~~Accordingly, ofGreat ~~$100,000~~Western orincurs ~~more~~other ~~are~~expenses, aspecifically ~~more volatile~~net ~~funding~~costs ~~source~~applicable ~~than~~to other ~~deposits~~real estate and ~~are~~other ~~more~~repossessed ~~likely~~assets, toin ~~affect~~maintaining, insuring and selling such assets. Great Western’s subsidiary ~~future~~banks ~~earnings~~attempt ~~because~~to ofconvert nonperforming loans into interest-earning ~~rate~~assets ~~sensitivity~~either through liquidation of the collateral securing the loan or through intensified collection efforts.

~~SHORT-TERM~~ALLOWANCE ~~BORROWINGS~~FOR LOAN LOSSES

~~Short-term~~Implicit ~~borrowings~~in Great Western’s lending activities is the fact that loan ~~include~~losses ~~Federal~~will ~~Funds~~be ~~purchased~~incurred and ~~securities~~that ~~sold~~the ~~under~~risk ~~agreement~~of ~~to repurchase. See~~loss ~~Note~~will 10vary towith the ~~“Notes~~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 toloan ~~Consolidated~~portfolio, ~~Financial~~provisions ~~Statements”~~are made to the allowance for ~~additional~~loan ~~information~~losses. ~~regarding short-term~~The ~~borrowings~~allowance is created by direct charges of the provision against income and the allowance is available to absorb realized loan losses.

~~FEDERAL~~The ~~HOME~~allowance ~~LOAN~~for ~~BANK~~loan ~~BORROWINGS~~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.

~~All~~Management ofperforms ~~the~~regular ~~subsidiary~~monthly ~~banks are~~assessments ~~members~~ of ~~the~~these ~~Federal~~estimated ~~Home~~losses ~~Loan~~by ~~Bank. Due~~utilizing toa ~~the~~methodology ~~competitive~~that ~~rates~~relies ~~available,~~on ~~each~~several ~~subsidiary~~key ~~bank~~elements. ~~has~~Larger-balance, ~~utilized~~non-homogeneous ~~Federal~~loans ~~Home~~representing ~~Loan~~significant ~~Bank~~individual ~~advances~~credit asexposures aare ~~source~~evaluated ofbased ~~funding. At~~upon ~~June 30, 2003,~~ the ~~subsidiary~~borrower’s ~~banks had~~overall ~~$102,162,000~~financial ~~in Federal Home Loan Bank advances compared to $69~~condition,~~337,000~~ ~~at June 30,~~resources ~~2002~~ and ~~$70,696,000~~payment atrecord; ~~June 30,~~the ~~2001. At~~prospects ~~June 30,~~for ~~2003,~~support ~~based~~from onany ~~its~~financially ~~Federal~~responsible guarantors ~~Home~~and, ~~Loan~~if ~~Bank stockholdings~~appropriate, the ~~aggregate~~realizable ~~unused~~value ~~borrowing capacity~~ of ~~Great Western~~the ~~was $97,793,000~~collateral.

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~~37- 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.

NOTESTable PAYABLEof TO BANKContents

~~Great Western has notes~~ ~~payable~~The toallowance anon ~~unaffiliated~~these ~~bank~~loans ofis ~~$7,500,000~~calculated atby ~~June 30,~~applying ~~2003~~loss ~~compared~~factors to ~~$17,500,000~~ atoutstanding ~~June 30,~~loans ~~2002~~ and ~~$9,750,000~~certain atunused ~~June 30, 2001~~commitments. ~~The~~ ~~decrease~~Loss ~~when~~factors ~~comparing June 30,~~include ~~2003~~management’s toassessment ~~June 30,~~of ~~2002~~current iseconomic ~~due~~conditions toand ~~a note payoff;~~ the ~~source~~potential ofimpact ~~funds~~on ~~for~~various ~~the payoff came from Great Western issuing $10~~industries,~~000,000~~ ofand ~~company~~the ~~obligated mandatorily~~financial ~~redeemable~~conditions ~~preferred securities~~ of ~~a subsidiary trust. The increase when comparing June 30, 2002 to June 30, 2001 is due to~~ the ~~Marquette and First Western Bank acquisitions in fiscal 2002 and the Great Western Bank, Omaha acquisition in fiscal 2001~~borrowers.

~~Great~~Net ~~Western~~loans ~~has~~charged ~~committed to~~off ~~maintain~~for ~~specific~~the ~~covenants~~year ~~each~~ended ~~quarter~~June ~~and~~30, ~~year-end~~2004 ~~with~~were ~~the~~$2,932,000 ~~unaffiliated bank~~compared aswith ~~stated~~$3,464,000 in ~~the~~2003 ~~March 23~~and $5,677,000 ~~2001~~in ~~loan agreement~~2002. ~~For~~ ~~the~~One ~~period~~borrower ~~ended~~accounted ~~June 30~~for $2, ~~2003~~653, ~~Great~~000 ~~Western satisfies all covenants. Terms~~ of ~~these~~the ~~notes~~loans ~~are~~charged-off ~~discussed~~for ~~in “Sources~~the offiscal ~~Liquidity”~~year ~~below~~2002.

~~CAPITAL~~Specific ~~NOTES~~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.

~~Capital~~Each ~~Investors~~portfolio ~~(See~~of smaller ~~“Certain~~balance, ~~Relationships~~homogeneous ~~and~~loans, ~~Related~~including ~~Transactions”)~~individual ~~negotiated~~installment, aconsumer ~~loan~~and ~~from~~residential ~~an unaffiliated bank of $35~~loans,~~000,000~~ tois ~~purchase~~collectively ~~Great~~evaluated ~~Western’s~~for ~~subordinated capital notes~~impairment. The ~~loan~~allowance ~~has~~for ~~the following~~loan ~~terms:~~losses ~~the~~attributed ~~option~~ to ~~either~~these ~~fix~~loans ~~the~~is ~~rate~~established offrom ~~interest~~an atestimate ~~the~~of ~~five-year treasury~~probable ~~rate plus 350 basis points but not less than the lender’s cost of~~losses ~~funds~~inherent ~~plus~~in ~~250 basis points at~~ the ~~date~~portfolio. ~~the~~Loss ~~loan~~factors isare ~~closed,~~applied or to ~~select~~outstanding aloans ~~rate of~~based ~~interest~~upon athistorical ~~LIBOR~~credit ~~plus 215 basis points fixed at intervals ranging from 30 days to 180 days. Interest is payable quarterly and principal due March 23~~losses, ~~2006,~~trends ~~but expected to be payable~~ in ~~equal~~ ~~installments~~volumes ~~annually~~and interms ~~each~~of ~~year beginning 2007 through 2011. Capital Investors collateralized its borrowing by pledging the subordinated capital notes to the unaffiliated bank. In addition~~loans, ~~the~~and ~~stockholders~~consideration of ~~Great~~ ~~Western~~economic, ~~pledged~~geographical, ~~their~~product ~~common~~and ~~stock~~other ~~as additional collateral for Capital Investors’ loan~~factors.

44The 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.

~~LINE~~The OFfollowing ~~CREDIT~~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.

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.


	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	%

~~LIQUIDITY~~(1) Net of unearned fees.

~~SOURCES~~(2) OFThe ~~LIQUIDITY~~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.”

~~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~~38-~~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 $52,070,000 and $46,285,000 during the years ended June 30, 2003 and 2002. These amounts comprised 2.50% and 2.48% of average total assets during the years ended June 30, 2003 and 2002. The average level of securities and federal funds sold was $364,232,000 and $334,296,000 during the years ended June 30, 2003 and 2002.

AtTable June 30, 2003, $30,809,000, or 11.43%, of Great Western’s securities portfolio, excluding mortgage-backed securities and equity securities, is scheduled to mature within one year and $185,050,000 or 68.67%, excluding mortgage-backed securities, matured 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, 2003, approximately $794,229,000, or 48.99%, of Great Western’s loans, net of unearned fees, matures within one year. See “Loan Maturities.”Contents

OnManagement and the ~~liability~~boards ~~side~~ of ~~the balance~~directors ~~sheet,~~of the ~~principal~~subsidiary ~~sources~~banks ofmake ~~liquidity~~credit ~~are~~and ~~deposits,~~loan ~~borrowed~~decisions ~~funds~~in ~~and~~conformity ~~accessibility~~with toloan ~~money~~policies ~~and~~established ~~capital~~by ~~markets. Great~~their ~~Western~~boards ~~attracts~~of ~~its~~directors. ~~deposits~~The ~~primarily~~subsidiary ~~from~~banks’ ~~individuals and~~practices ~~businesses~~are ~~located~~to ~~within~~charge ~~the~~off ~~market~~any ~~areas~~loan ~~served~~or byportion ~~the~~of ~~subsidiary~~a ~~banks, and~~loan towhen ~~lesser~~the ~~extent,~~loan onis ~~brokered~~determined ~~deposits. Borrowed~~by ~~funds~~management ~~come~~to ~~primarily~~be ~~from~~uncollectable ~~three~~due ~~sources,~~to ~~Federal~~the ~~Home Loan Bank borrowings, Great Western~~borrower’s failure ~~notes payable~~ to anmeet ~~unaffiliated~~repayment ~~bank~~terms, ~~and~~ the ~~sale of~~borrower’s ~~subordinated~~deteriorating ~~capital~~or ~~notes~~deteriorated tofinancial ancondition, ~~affiliate. Interest~~the isdepreciation ~~due~~of ~~quarterly to~~ the ~~unaffiliated~~underlying ~~bank~~collateral, ~~at either~~ the ~~lender~~ loan’s ~~cost~~classification ofas ~~funds~~a ~~plus~~loss ~~1.75%~~by ~~per~~regulatory ~~annum~~examiners or ~~the~~for ~~LIBOR~~other ~~rate plus 1~~reasons.~~50%~~ ~~(fixed~~Great ~~for~~Western ~~periods~~charged ofoff up$3,605,000 toduring ~~180~~the ~~days)~~year ~~per~~ended ~~annum~~June 30, at2004 ~~the~~and ~~option~~$4,060,000 offor ~~Great~~June ~~Western~~30, 2003. ~~The~~ ~~maturity~~Recoveries ~~dates~~during offiscal ~~these~~year ~~outstanding debts~~2004 ~~are~~were ~~March 23~~$673,000 ~~2006. On August 12,~~when ~~1999,~~compared ~~Great~~to ~~Western issued~~ $20596,~~400,~~000 offor ~~company~~fiscal ~~obligated mandatorily~~year ~~redeemable~~June ~~preferred~~30, ~~securities~~2003. ofGreat aWestern ~~subsidiary~~charged ~~trust,~~off ~~with~~$6,451,000 ~~interest~~during ~~due~~the atyear ~~10%~~ended ~~per~~June ~~annum~~30, ~~payable~~2002 ~~quarterly. The~~and ~~maturity~~$2,627,000 ~~date~~for ofJune ~~the securities is August 18~~30, ~~2029~~2001. On ~~March 19,~~One ~~2001~~borrower ~~Great~~accounted ~~Western~~for ~~issued~~ $272,~~600~~653,000 ofor ~~company~~41.10% ~~obligated~~of ~~mandatorily~~the ~~redeemable~~total ~~preferred~~charged ~~securities~~off ~~of a~~loans ~~subsidiary~~for ~~trust,~~the ~~with~~fiscal ~~interest~~year ~~due~~2002 atas ~~9.75%~~discussed ~~per~~earlier ~~annum~~in ~~payable quarterly~~this section. ~~The~~ ~~maturity~~Recoveries ~~date~~during offiscal ~~the~~year ~~securities~~2002 iswere ~~March 19~~$774,000 ~~2031. On~~when ~~October 29,~~compared ~~2002,~~to ~~Great Western issued~~ $10331,000~~,000~~ offor ~~company~~fiscal ~~obligated~~year ~~mandatorily~~June ~~redeemable preferred~~30, ~~securities~~2001. ofOne acommercial ~~subsidiary~~borrower ~~trust~~accounted for $316,000 ~~with~~or ~~interest~~40.8% ~~payable~~of ~~quarterly~~the ~~at three~~total ~~month~~recoveries ~~LIBOR~~in ~~plus~~fiscal ~~345~~year ~~basis~~2002. ~~points,~~See ~~set~~“Non-Performing ~~quarterly~~Loans”.

45The 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.

~~CAPITAL~~-39- ~~RESOURCES~~

GreatTable 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, 2003, 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.Contents

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


	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	%

	Risk-Based Capital Ratios
	At June 30, 2001					At June 30, 2000
	June 30, 2003				June 30, 2002
	Amount of Allowance		Percent of Loans by Category to Loans			Amount of Allowance			Percent of Loans by Category to Loans
	Amount		Ratio		Amount			Ratio
	(dollars in thousands)
	(dollars in thousands)
Loans to individuals	$	4,023	16.50	%		$	1,383		16.77	%
Core (Tier I) capital	$	115,058	6.76	%	$	96,618		6.21	%
Real estate loans		1,719	13.25				1,288		21.26
Minimum requirement	68,037		4.00		62,257			4.00
Commercial and agricultural		13,034	70.00				5,266		61.20
Excess	$	47,021	2.76	%	$	34,361		2.21	%
Other loans		179	0.25				260		0.77
Total capital	$	190,323	11.19	%	$	164,356		10.56	%
Total allowance for loan losses	$	18,955	100.00	%		$	8,197		100.00	%
Minimum requirement	136,074		8.00		124,515			8.00
Excess	$	54,249	3.19	%	$	39,841		2.56	%
Total risk-weighted assets	$	1,700,925			$	1,556,435
	Leverage Ratios
	June 30, 2003				June 30, 2002
	Amount		Ratio		Amount			Ratio
	(dollars in thousands)
Core capital	$	115,058	5.55	%	$	96,618		5.00	%
Minimum requirement	82,905		4.00		77,313			4.00
Excess	$	32,153	1.55	%	$	19,305		1.00	%
Average total adjusted assets	$	2,072,625			$	1,932,825

~~IMPACT~~SECURITIES ~~OF INFLATION~~

~~The~~Securities, ~~effects~~all of ~~inflation~~which onare classified as available-for-sale, increased ~~the~~$51,711,000, ~~local~~or ~~economy~~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 onacquisitions. ~~Great~~Securities ~~Western’s~~decreased ~~operating~~$20,923,000 ~~results~~or ~~have~~6.26%, ~~been~~to ~~relatively~~$313,136,000 at June 30, 2003, from $334,059,000 at ~~modest~~June ~~for~~30, 2002. The decrease was due to funding the ~~past~~growth ~~several~~in ~~years. Because~~loans ~~substantially~~versus ~~all~~reinvesting ofin ~~Great~~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 ~~assets~~investment ~~and~~portfolio ~~liabilities~~had defined ~~are~~maturities. ~~monetary~~The investment portfolio with defined maturities was concentrated in ~~nature,~~the ~~such~~following ascategories: ~~cash~~obligations of the U.S. Treasury, ~~securities,~~ ~~loans~~U.S. ~~and~~government ~~deposits~~agencies, ~~their~~corporations, ~~values~~state ~~are~~and ~~less~~local ~~sensitive~~political tosubdivisions ~~the~~totaled ~~effects~~$313,363,000, or 85.89% of ~~inflation~~the ~~than~~portfolio toand ~~changes~~corporate indebt ~~interest~~totaled ~~rates~~$10,082,000, ~~which~~or do2.76% ~~not~~of ~~necessarily~~the ~~change in~~portfolio. ~~accordance~~Mortgage-backed ~~with~~securities ~~inflation~~totaled ~~rates~~$29,231,000 or 8. 01% of Great Western’s ~~attempts~~investment toportfolio. ~~control~~The ~~the~~remaining ~~impact~~$12,171,000 ofor ~~interest~~3.34% ~~rate~~of Great ~~fluctuations~~Western’s byinvestment ~~managing~~portfolio is in equity securities, which primarily are stock in the ~~relationship~~Federal ~~between~~Home ~~its~~Loan ~~interest~~Banks ~~rate~~of ~~sensitive assets~~Des Moines and ~~liabilities~~Topeka totaling $10,327,000 as of June 30, 2004.

~~ITEM~~-40- ~~7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

InterestTable 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.Contents

Certain of Great Western’s ~~does~~securities ~~not attempt~~are pledged to ~~match~~secure ~~each~~public ~~interest-earning~~and ~~asset~~trust ~~with~~fund adeposits ~~specific~~and ~~interest-bearing~~for ~~liability.~~other ~~Instead,~~purposes asrequired ~~shown~~or inpermitted ~~the~~by ~~table~~law. ~~below,~~At itJune ~~aggregates~~30, ~~all~~2004 ~~of its interest-earning assets and interest-bearing liabilities to determine~~ the ~~difference~~ ~~between~~face ~~the~~value ~~two~~of ~~in specific time frames~~U. ~~This difference is known as the rate-sensitivity gap~~S. A ~~positive gap~~Government ~~indicates that more interest-earning assets than interest-bearing liabilities mature in a time frame,~~ and aother ~~negative~~securities ~~gap~~so ~~indicates~~pledged ~~the~~amounted ~~opposite. Maintaining~~to ~~a balanced rate-sensitivity gap will reduce the risk associated with interest rate changes~~$240,737,000, ~~but~~or ~~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~~65.98% ~~Management~~of ~~regularly monitors~~ the ~~rate-sensitivity~~total ~~gap~~securities ~~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~~portfolio.

The following table ~~shows~~ provides the ~~ratio~~maturity ofdistribution ~~the~~and ~~cumulative~~weighted ~~gap~~average interest torates ~~total~~of ~~assets~~Great toWestern’s besecurities ~~1.65%~~portfolio at ~~the~~June ~~less than three-month interval~~30, ~~(11~~2004.~~72)%~~ atThe ~~the~~yield ~~three~~has ~~month~~been tocomputed ~~less~~by ~~than~~dividing ~~one-year interval~~the ~~and~~forward ~~10.12%~~annualized atincome stream on the ~~one~~securities, toplus ~~five~~or ~~year~~minus ~~intervals~~the atanticipated ~~June 30, 2003. Currently,~~amortization ~~Great~~of ~~Western~~premium isor inaccretion aof ~~liability-sensitive~~discount, ~~position~~by in the ~~near~~book ~~term~~value of the securities. ~~Great~~ ~~Western~~The ~~had~~book ~~$613,367,000~~value of ~~interest~~available-~~bearing~~for-sale ~~demand,~~securities ~~savings~~is ~~and money~~their ~~market~~fair ~~deposits~~value. atAll ~~June 30,~~securities ~~2003 that~~ are ~~somewhat~~classified ~~less rate~~as available-~~sensitive~~for-sale. ~~Excluding~~ ~~these deposits,~~The ~~Great~~restatement ~~Western’s~~of ~~interest~~the yields on tax-~~sensitive~~exempt ~~ratio~~securities ~~would~~to ~~have~~a fully taxable-equivalent basis has been ~~13.27%~~computed ~~at the~~assuming ~~less~~a ~~than~~tax ~~three-month~~rate ~~interval,~~of ~~8.47~~35%. atThe equity securities are primarily composed of stock in the ~~three~~Federal ~~month~~Home toLoan ~~less~~Banks ~~than one-year~~of ~~interval~~Des Moines and 35Topeka.~~82%~~ atThe ~~the~~yield ~~one~~is toset ~~five~~quarterly ~~year~~by ~~intervals~~each atFederal ~~June 30,~~Home Loan Bank’s ~~2003~~board of directors. ~~The~~ ~~interest~~For ~~sensitivity~~the ~~position is~~quarter ~~presented~~ended asJune of30, a2004, ~~point~~the inyields ~~time~~were 1.79% and ~~can~~3.50% beat ~~modified~~Federal toHome ~~some~~Loan ~~extent~~Banks ~~by management~~of asDes ~~changing~~Moines ~~conditions~~and ~~dictate~~Topeka, respectively.

The following table shows the interest rate sensitivity position of Great Western at June 30, 2003:


	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	%

47-41-

	Estimated Maturity or Repricing at June 30, 2003
	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	$	534,431		$	258,503		$	737,465		$	90,813		$	1,621,212
Investment securities:
Taxable	11,288			33,357			180,157			41,892			266,694
Tax exempt	401			3,257			22,982			19,802			46,442
Federal funds sold and other	43,373			—			99			—			43,472
Total interest-earning assets	589,493			295,117			940,703			152,507			1,977,820
Interest-bearing liabilities:
Deposits:
Demand, savings and money market deposits	249,691			184,010			118,329			61,337			613,367
Time deposits	178,514			382,686			298,004			298			859,502
Federal funds purchased and securities sold under agreements to repurchase	60,163			—			—			—			60,163
Federal Home Loan Advances and other	12,004			15,562			55,337			20,477			103,380
Notes payable	43,700			—			—			—			43,700
Company obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated debentures	$	10,000		$	—		$	—		$	48,000		$	58,000
Total interest-bearing liabilities	$	554,072		$	582,258		$	471,670		$	130,112		$	1,738,112
Interest rate gap	$	35,421		$	(287,141	)	$	469,033		$	22,395		$	239,708
Cumulative interest rate gap at June 30, 2003	$	35,421		$	(251,720	)	$	217,313		$	239,708		$	479,416
Cumulative interest rate gap to total assets	1.65		%	(11.72		)%	10.12		%	11.16		%	22.32		%

~~The~~DEPOSITS 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 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

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.

48The 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:

The following table indicates that at June 30, 2002, 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. Great Western’s interest rate risk profile was slightly less sensitive to changes in interest rates at June 30, 2003 versus June 30, 2002.


	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

Filing Compare · GREAT WESTERN BANCORPORATION INC