Announcement PDF 19 August 2024 Not for release to US wire services or distribution in the United States Unaudited FY24 results, Merger with MyState, Acquisition of Selfco and Equity Raising Auswide Bank Ltd (ASX: ABA) (Auswide) announces the following: • • Unaudited FY24 results; Execution of a binding Scheme Implementation Agreement (SIA) to merge with MyState Limited (ASX: MYS) (MyState) (the Proposed Merger) to combine two high-quality banks, significantly enhance scale and which has the potential to create shareholder value through synergy realisation1; Entry into an agreement to acquire 100% of Specialist Equipment Leasing Finance Company Pty Ltd (Selfco), an established non-bank small-to-medium enterprise (SME) asset finance lender (the Acquisition); and Fully underwritten $12.0 million Institutional Placement (Placement) and $3.0 million non-underwritten Share Purchase Plan (SPP and, together with the Placement, the Offer) to fund Auswide’s immediate regulatory Common Equity Tier 1 (CET1) capital requirements upon the acquisition of Selfco, Selfco’s expected asset growth for ~12 months and transaction costs relating to the acquisition of Selfco and the Offer • • Key highlights Unaudited FY24 results         Net interest margin of 142bps, down 46bps on FY23 NPAT impacted by margin pressure in loan and funding markets with FY24 statutory NPAT down 55.2% on FY23 to $11.231 million Conservative loan book growth of $26 million, or 0.6%, to $4.429 billion Credit quality and low arrears, with arrears at 0.20% of loan book Customer deposits up 8.0% to $3.686 billion, comprising 75.3% of total funding (FY23: 72.4%) Balance sheet remains strong with capital adequacy ratio of 14.78%, in excess of Board target Statutory ROE of 3.9%, down from 8.7% in FY23 Final dividend expected to be 11.0c2, reflecting a payout ratio of 96.3%3 (subject to the completion of the Acquisition and the Offer). Auswide expects to maintain the Dividend Reinvestment Plan (DRP) in respect of the final dividend. It is intended shares issued under the DRP will be issued at a discount of 2.5% Transformational Proposed Merger between Auswide and MyState to create a stronger, diversified business   1 MyState is a diversified financial services group listed on the ASX providing banking, trustee and wealth management solutions to customers across Australia The Proposed Merger will be effected by way of a Scheme of Arrangement (Scheme), where Auswide shareholders will receive 1.112 MyState shares per Auswide share, implying a ~34% pro forma ownership of For further information (including relevant assumptions) refer to page 33 of the Investor Presentation 2 The amount of any dividend paid will be at the discretion of the Auswide Board and will depend on several factors, including: (a) the recognition of profits and availability of cash for distributions; (b) the anticipated future earnings of Auswide; and (c) when the forecast timeframe for capital demands of the business allows for a prudent distribution to shareholders 3 Should the Acquisition and the Offer not complete, the dividend payout ratio is expected to be 91.1%   the merged group (MergeCo) for Auswide shareholders upon completion of the Proposed Merger (including the shares to be issued in relation to the acquisition of Selfco) The Proposed Merger combines two complementary businesses with strong operational alignment via a merger of equals, with potential estimated pre-tax cost synergies of $20 million to $25 million per annum1, representing approximately 13.0% to 16.0% of the combined cost base2 The Proposed Merger is expected to deliver significant value for shareholders with greater than 20% EPS accretion in FY253, assuming full run-rate synergies and including shares issued in relation to the acquisition of Selfco Acquisition of Selfco     Auswide announces that it has concurrently entered a binding agreement to acquire 100% of Selfco, an established non-bank SME asset finance lender The strategically compelling acquisition facilitates Auswide’s entry into asset finance, providing further portfolio diversification for MergeCo and driving scale by expanding MergeCo’s service offering into the large addressable SME funding market Total consideration of up to $6.5 million, comprising an initial consideration of $5.0 million (in Auswide scrip) and performance based contingent earn-out payments of up to $1.5 million Key employees, including the Managing Director, Operations Manager and Head of Programs, will enter into agreements to remain with Selfco following the Acquisition (subject to and with effect from Acquisition completion), to provide continuity and support for the ongoing success of Selfco Fully underwritten $12.0 million Placement and $3.0 million non-underwritten SPP   Fully underwritten $12.0 million Placement to eligible institutional, sophisticated and professional investors and non-underwritten SPP to raise up to $3.0 million Proceeds from the Offer will be used to fund Auswide’s immediate regulatory CET1 capital requirements upon the acquisition of Selfco, Selfco’s expected asset growth for ~12 months and transaction costs relating to the acquisition of Selfco and the Offer 1 For further information (including relevant assumptions) refer to page 33 of the Investor Presentation 2 Based on FY24 combined cost base under MyState’s reporting methodology which excludes broker commissions and issuance costs from operating expenses. Under Auswide’s reporting methodology, estimated cost synergies represent approximately 10% to 13% of the FY24 combined cost base 3 Excludes transaction and integration costs Announcement of unaudited FY24 results1 Auswide announces its unaudited FY24 results and FY25 outlook. Unaudited FY24 results NPAT statutory (consolidated) NPAT underlying (consolidated)2 Loan book3 Net interest revenue Net interest margin (NIM) Final dividend per share Total dividend per share EPS statutory EPS underlying2 ROE statutory ROE underlying2 Cost to income ratio Capital adequacy ratio Deposits • • • • • • • • 1 FY24 (unaudited) $11.231m $10.283m $4.429b $71.291m 142bps 11.0c4 22.0c4 24.2c 22.2c 3.9% 3.6% 79.9% 14.78% $3.686b FY23 $25.067m $25.067m $4.403b $89.182m 188bps 21.0c 43.0c 55.6c 55.6c 8.7% 8.7% 65.0% 13.70% $3.414b Change (55.2%) (59.0%) $26m (20.1%) (46bps) (10.0c) (21.0c) (31.4c) (33.4c) (4.8%) (5.1%) 14.9% 1.08% $272m Conservative and risk-based approach to growth resulted in a steady loan book across the year increasing marginally from $4.403b at 30 June 2023 to $4.429b at 30 June 2024 Customer deposits increased 8.0% across the year from $3.414b at 30 June 2023 to $3.686b at 30 June 2024 and continue to be the largest source of funding Elevated competition and substantial increases to wholesale funding triggered a decline in the NIM, down from 188bps at 30 June 2023 to 142bps at 30 June 2024 High quality loan book reflects levels of arrears increasing from 0.10% at 30 June 2023 to 0.20% at 30 June 2024 Strong capital adequacy ratio of 14.78% (tier 1 capital ratio of 12.12%) up from 13.70% at 30 June 2023 providing capacity to grow and invest for the future NPAT impacted by margin pressure in loan and funding markets with FY24 statutory NPAT down 55.2% on FY23 to $11.231 million Statutory ROE of 3.9%, down from 8.7% in FY23 Final dividend expected to be 11.0c4, reflecting a payout ratio of 96.3% 5 (subject to the completion of the Acquisition and the Offer). Auswide expects to maintain the DRP in respect of the final dividend. It is intended shares issued under the DRP will be issued at a discount of 2.5% The financial information included in this Announcement in relation to FY24 is unaudited. Auswide currently expects to release its audited Preliminary Final Report for FY24 on 26 August 2024 2 Difference between Statutory and Underlying NPAT (unaudited) and ROE (unaudited) in FY24 arose as a result of a gain in the sale of the investment in FAMG of $1.108m and $0.160m for professional fees relating to potential M&A activities 3 Including investments in Managed Investment Schemes (MISs) reported in Financial Assets on the Balance Sheet 4 The amount of any dividend paid will be at the discretion of the Auswide Board and will depend on several factors, including: (a) the recognition of profits and availability of cash for distributions; (b) the anticipated future earnings of Auswide; and (c) when the forecast timeframe for capital demands of the business allows for a prudent distribution to shareholders 5 Should the Acquisition and the Offer not complete, the dividend payout ratio is expected to be 91.1% FY25 Outlook • • • • • • • • Home loan growth anticipated to exceed $300m in FY25 Material uplift expected in interest revenue following the maturity of the fixed loan portfolio resulting in low fixed rates converting to higher market rates Identify growth opportunities and drive new banking connections by targeting Partnerships to build deposit base Reinvigorate customer processes by evaluating construct of products to pursue simplification Effectively managing costs while balancing operational requirements Quality lending underpinned by prudent loan underwriting standards, strong governance, and robust internal controls Investment to enhance fraud management, cyber resilience, data risk and cloud governance Aligning future investments with growth opportunities and strategic initiatives Proposed Merger with MyState Auswide announces that it has entered into a binding SIA to merge with MyState in a transaction that, if implemented, will combine two high-quality banks and materially increase scale with the potential for shareholder value creation. Strategic and Commercial Rationale for the Proposed Merger • • • • • Opportunity from combining two high-quality banks: Strategic consolidation of two complementary banks to create a trusted organisation of choice with a national footprint Significantly enhanced scale: Significant increase in scale with combined lending assets of $12.5 billion 1 and customer deposits of $9.6 billion1 Increased portfolio diversification of lending and deposit books: Combination of two banks with complementary and distinct regional areas to create an expanded national presence in every state and territory in Australia Strong operational alignment between both banks: Similar operating models, technology roadmap and growth strategy opens opportunities to deliver simplification, harmonisation and scale efficiencies Potential for shareholder value creation: Potential estimated pre-tax cost synergies of $20 million to $25 million per annum2 (representing approximately 13.0% to 16.0% of the combined cost base 3), expected to be realised across governance and people, technology and other The Proposed Merger is expected to deliver significant value accretion and result in greater than 20% EPS accretion in FY254, assuming full run-rate synergies and including shares issued in relation to the acquisition of Selfco. Auswide Chair Sandra Birkensleigh: “The Proposed Merger is a step-change event for Auswide. Through combining two high-quality banks with strong operational alignment, we intend to unlock a range of efficiencies, synergies and growth opportunities and deliver value for our shareholders. We look forward to the next chapter of success for Auswide’s customers, staff and shareholders.” MyState Chair Vaughn Richtor: “We look forward to the value creation arising from merging two sound customer focussed businesses with long histories of serving their local communities.” 1 As at 30 June 2024 (unaudited for Auswide; audited for MyState) 2 Refer to page 33 of the Investor Presentation for assumptions 3 Based on FY24 combined cost base under MyState’s reporting methodology which excludes broker commissions and issuance costs from operating expenses. Under Auswide’s reporting methodology, estimated cost synergies represent approximately 10% to 13% of the FY24 combined cost base 4 Excludes transaction and integration costs Transaction Details Under the terms of the SIA, MyState has agreed to acquire 100% of the issued shares in Auswide via a Scheme. A copy of the SIA is attached to this announcement. • • If implemented, Auswide shareholders will receive 1.112 MyState shares per Auswide share, implying ~34% pro forma ownership of MergeCo for Auswide shareholders upon completion of the Proposed Merger (including shares to be issued in relation to the acquisition of Selfco) The Proposed Merger is subject to a number of conditions set out in the SIA, including: o Auswide shareholder approval and court approval of the Scheme o Regulatory approvals (including APRA and Federal Treasurer approvals) o An Independent Expert concluding that the Scheme is in the best interests of Auswide shareholders o No material adverse effects (including no unauthorised waiver of a Selfco material adverse effect), prescribed events, breach of representations and warranties, litigation or enforcement action occurring in relation to either Auswide or MyState o Confirmation from the ATO regarding the availability of scrip for scrip roll-over relief for qualifying Australian resident Auswide Shareholders o Other conditions customary for a transaction of this nature as set out in the SIA A full list of conditions is sent out in the SIA (a copy of the SIA is attached to this announcement). The SIA includes reciprocal exclusivity arrangements and deal protection mechanisms including ‘no shop’, ‘no talk’ and ‘no due diligence’ restrictions, notification and matching rights and a ‘fiduciary out’ in the event of competing proposal(s). A break fee and of $2.0 million is payable by Auswide and a reverse break fee of $2.0 million is payable by MyState in certain circumstances (as detailed in the SIA). Subject to regulatory and other customary approvals, and the satisfaction (or waiver) of the other conditions under the SIA, the Proposed Merger is targeted to complete in December 2024. In the event the Proposed Merger does not proceed (including as a result of conditions not being satisfied), Auswide will continue to operate as a standalone company. Investors should take into account this uncertainty in deciding whether or not to buy or sell Auswide securities. MergeCo Board and Management Post completion of the Proposed Merger, MergeCo will benefit from the combined skills and experience of the Boards and management teams of both Auswide and MyState. Sandra Birkensleigh will be appointed the Chair of the MyState Board and Chair of MyState Bank Limited. Brett Morgan will be the Managing Director and Chief Executive Officer of MergeCo. Warren Lee will be the Chair of TPT Wealth Limited. Post completion of the Proposed Merger, the MergeCo Board will compromise three non-executive directors (including Sandra Birkensleigh as Chair of MergeCo) from the Auswide Board and four non-executive directors from the MyState Board. Board Recommendations Auswide’s Board of Directors believes the Proposed Merger represents a significant and compelling opportunity for Auswide shareholders. The Auswide Board unanimously recommends that Auswide shareholders vote in favour of the resolutions that require the approval of Auswide’s shareholders for the Proposed Merger, in the absence of a superior proposal for Auswide and subject to the independent expert concluding, and continuing to conclude, that the Proposed Merger is in the best interests of Auswide shareholders. Each Auswide director intends to vote all of the Auswide shares they hold or control in favour of all the resolutions that require the approval of Auswide’s shareholders for the Proposed Merger, subject to those same qualifications. The MyState Board of Directors also unanimously supports the Proposed Merger. Overview of MyState MyState is the non-operating holding company of a diversified financial services group listed on the ASX providing banking, trustee and wealth management services to customers across the country through its retail brands (MyState Bank and TPT Wealth). MyState Bank delivers home lending, savings and transactional banking solutions through digital and branch channels, an Australia-based contact centre, mobile lenders and mortgage brokers. TPT Wealth delivers asset management and trustee services through relationship managers, digital channels and an Australian-based estate planning, trust administration and support team. MyState Limited was formed in September 2009 following the merger of MyState Financial, an authorised deposit-taking institution, and TPT Wealth, a trustee and wealth management company. On 1 December 2011, MyState Limited acquired The Rock Building Society (The Rock) based in Central Queensland. On October 6, 2014, following authorisation from the Australian Prudential Regulation Authority (APRA) MyState Financial changed its name to MyState Bank (MyState). On 30 September 2015, MyState Bank received regulatory approval to fully transfer all of the business undertakings of The Rock into MyState. Key Dates for the Proposed Merger Event Date Lodge regulatory applications August 2024 Lodge Scheme Booklet with ASIC September 2024 First Court Date application served on ASIC October 2024 First Court Date October 2024 Despatch Scheme Booklet October 2024 Scheme Meeting held (Auswide shareholder vote) November / December 2024 Second Court Date December 2024 Record date December 2024 Implementation date December 2024 The above timetable is indicative only and subject to change without notice. Acquisition of Selfco Auswide also announces the 100% acquisition of Selfco, an established non-bank SME lender. Selfco represents a compelling acquisition opportunity for Auswide, offering an entry point into the SME funding market. Strategic and Commercial Rationale for the Acquisition • • • • Expansion in service offerings: Facilitates Auswide’s entry into asset finance, driving scale by expanding Auswide’s service offering into the large addressable SME funding market Portfolio diversification: Further diversifies Auswide’s loan portfolio, reducing concentration in home loans and key geographies Access to quality loan book: The Acquisition delivers Auswide exposure to a loan portfolio with a demonstrable history of low arrears and negligible losses since warehouse implementation Revenue growth opportunities: Provides substantial revenue growth opportunities for Selfco through synergies with Auswide’s lower wholesale funding costs, as well as strong structural tailwinds in Selfco’s key end markets Auswide will pay a total consideration of up to $6.5 million for Selfco, comprising an initial consideration of $5.0 million and potential earn-out payments of up to $1.5 million based on the achievement of profit-related performance hurdles. The initial $5.0 million consideration is payable in the form of Auswide scrip, which will be issued to Selfco shareholders at the VWAP of Auswide shares in respect of the last five trading days prior to signing. All Auswide scrip issued to Selfco shareholders will be subject to voluntary escrow, with 40% to be released 12 months post-Acquisition completion and 60% to be released 36 months post-Acquisition completion. Key employees of Selfco, including the Managing Director, Operations Manager and Head of Programs, have entered into agreements to remain with Selfco following the Acquisition (subject to and with effect from Acquisition completion), to provide continuity and support for Selfco. Overview of the Offer Auswide announces the launch of a fully underwritten $12.0 million Placement and non-underwritten $3.0 million SPP with proceeds from the Offer to be used to fund Auswide’s immediate regulatory CET1 capital requirements upon the acquisition of Selfco, Selfco’s expected asset growth for ~12 months and transaction costs relating to the acquisition of Selfco and the Offer. Details of the equity raising are as follows: Placement The underwritten Placement will comprise the issue of approximately 3.0m new fully paid ordinary shares in Auswide (New Shares), representing approximately 6.43% of Auswide’s issued capital as at Friday, 16 August 2024, at a price of $4.00 per New Share (the Offer Price). The Offer Price of $4.00 per New Share represents a: • • 8.05% discount to the last close share price of $4.35 per share on Friday, 16 August 2024; and 6.01% discount to the 5-day VWAP of $4.26 per share up to and including Friday, 16 August 2024 The Placement will be undertaken within Auswide’s existing placement capacity under ASX Listing Rule 7.1. New Shares issued under the Placement will rank equally with the Company’s existing fully paid ordinary shares on issue. Settlement of New Shares is expected to occur on Thursday, 22 August 2024 with allotment and normal trading of New Shares to occur the following day on Friday, 23 August 2024. The Placement is fully underwritten. Share Purchase Plan Following completion of the Placement, Auswide will offer the opportunity for eligible shareholders to participate in a non-underwritten SPP, subject to an aggregate cap of $3.0 million. New shares issued under the SPP will be issued at the same price as the Placement of $4.00 per share. Under the SPP, eligible Auswide shareholders, being shareholders who at 7.00pm (AEST) on Friday, 16 August 2024 were registered holds of shares in Auswide and who had a registered address in Australia or New Zealand, will have the opportunity to apply for up to A$30,000 of new shares free of any brokerage, commission, and transaction costs. New shares issued under the SPP will rank equally with existing Auswide shares from their date of issue and it is intended that new shares issued under the Placement and the SPP will be issued prior to the record date for the FY24 final dividend. Full details of the SPP will be set out in the SPP Offer Booklet, which is expected to be released to the ASX and sent to eligible shareholders on or around Monday, 26 August 2024. Key Dates for the Offer Event Date Record date for eligibility to participate in the SPP 7:00pm, Friday, 16 August 2024 Trading halt and announcement of the Proposed Merger, Acquisition, Placement and SPP Monday, 19 August 2024 Placement bookbuild Monday, 19 August 2024 Announcement of results of Placement and trading halt lifted – trading resumes on ASX Tuesday, 20 August 2024 Settlement of Placement shares Thursday, 22 August 2024 Allotment and normal trading of Placement shares and dispatch of holding statements Friday, 23 August 2024 SPP offer opens and SPP offer booklet dispatched Monday, 26 August 2024 SPP offer closes 5:00pm, Wednesday, 11 September 2024 Announcement of results of SPP Monday, 16 September 2024 Settlement and allotment of SPP shares Wednesday, 18 September 2024 Normal trading of SPP shares and dispatch of holding statements Thursday, 19 September 2024 Dividend Record Date Friday, 20 September 2024 The above timetable is indicative only and subject to change. The commencement of trading and quotation of New Shares issued under the Placement and the SPP is subject to confirmation from ASX. Subject to the requirements of the Corporations Act, the ASX Listing Rules and other applicable rules, Auswide and the Lead Manager reserve the right to amend this timetable at any time, including extending the period for the SPP or accepting late applications, either generally or in particular cases, without notice. All dates and times are Australian Eastern Standard Time (AEST). Conference Call Auswide will host an investor call at 11:00am (AEST) today, 19 August 2024. To participate in the live teleconference, investors and media are invited to register at https://s1.c-conf.com/diamondpass/10041507-ade965.html. Advisers Flagstaff Partners and Ord Minnett are acting as financial advisers to Auswide in relation to the Proposed Merger. Ord Minnett is acting as sole lead Manager, underwriter and bookrunner to the Placement. King & Wood Mallesons is acting as legal adviser to Auswide in relation to the Proposed Merger and the Offer. This announcement is authorised by the Board. For more information contact: Doug Snell Managing Director +61 0414 887 659 dnsell@auswidebank.com.au Bill Schafer BCom CA Chief Financial Officer and Company Secretary +61 7 4150 4075 bschafer@auswidebank.com.au About Auswide Bank Ltd Auswide Bank became Australia’s tenth and Queensland’s third Australian owned bank, listed and trading on the ASX, on April 1, 2015. The company had operated as a building society since 1966. Auswide Bank has an Australian Credit Licence and an Australian Financial Services Licence issued by ASIC and is an Authorised Deposit-taking Institution prudentially supervised by the Australian Prudential Regulation Authority. Auswide Bank offers Australians an extensive range of personal and business banking products & services issued directly or in partnership with leading service providers via an omni-channel distribution strategy which includes branches, strategic relationships and online & digital channels. Important Notices: Summary information and not an offer, advice or recommendation This announcement should be read subject to the disclaimer in the investor presentation released by Auswide to the ASX today (as if references in that disclaimer to “this Presentation” were to “this announcement”). This announcement is for information purposes only and is not financial product or investment advice, or financial, accounting, legal or tax advice. This announcement is not an invitation, offer, solicitation, inducement or recommendation to subscribe for, buy or sell shares in Auswide in any jurisdiction and neither this announcement nor anything in it shall form any part of any contract or commitment for the acquisition or sale of shares in Auswide. The information in this announcement does not contain all the information necessary to fully evaluate an investment in Auswide. It should be read in conjunction with the other materials lodged with ASX in relation to the Acquisition, the Proposed Merger and the Offer (including the investor presentation and the key risks set out therein), and Auswide’s other periodic and continuous disclosure announcements. This announcement has been prepared without taking into account the objectives, financial or tax situation or needs of individuals. Before making an investment decision, prospective investors should consider the information in this announcement and in the investor presentation in relation to the Acquisition, the Proposed Merger and the Offer having regard to their own objectives, financial and tax situation and needs, and should seek legal, tax and other professional advice. Auswide is not licensed to provide financial product advice in respect of an investment in shares. This announcement has been prepared for release in Australia. This announcement does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to persons acting for the account or benefit of persons in the United States, or in any jurisdiction in which such an offer would be illegal. The New Shares have not been, nor will be, registered under the U.S. Securities Act of 1933 or the securities laws of any state or other jurisdiction of the United States. Accordingly, the New Shares may not be offered or sold, directly or indirectly, to persons in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. The New Shares will not be offered and sold, directly or indirectly, to any person in the United States. Forward looking information This announcement contains certain forward-looking statements, opinions or estimates or statements about future events or matters. These statements can be identified by the use of words such as “will”, “may”, “expect”, “indicative”, “guidance”, “intend”, “seek”, “would”, “should”, “could”, “continue”, “plan”, “probability”, “risk”, “forecast”, “likely”, “estimate”, “anticipate”, “believe”, “target”, “aim” and similar expressions and include, without limitation, statements regarding the intention, belief, expectation, strategy or objectives of Auswide and/or its management, the Acquisition and/or other potential acquisitions, the Proposed Merger, MergeCo, the financial condition, results of operations and business of Auswide and MergeCo, market conditions, the outcome of each of the Placement and SPP and the use of proceeds therefrom, Auswide’s expected final dividend for FY24, and Auswide’s FY25 outlook and priorities. Forward-looking statements, opinions and estimates provided in this announcement are based on assumptions and contingencies that are subject to change without notice and involve known and unknown risks and uncertainties and other factors that are beyond the control of Auswide, its directors and management. This includes statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Actual results, performance or achievements may differ materially from those expressed or implied in such statements and any projections and assumptions on which these statements are based. These statements may assume the success of Auswide’s business strategies. The success of any of those strategies will be realised in the period for which the forward-looking statement may have been prepared or otherwise. Readers are cautioned not to place undue reliance on forward-looking statements and except as required by law or regulation, none of Auswide, its representatives or advisers assumes any obligation to update these forward-looking statements. No repre