Highlights for the Second Fiscal Quarter 2007:
* Diluted earnings per share growth of 29.7% to $0.48 per common share
compared to the second fiscal quarter one year ago.
* Pro forma diluted earnings per share growth of 37.8% to $0.51 per common
share before merger related expenses compared to the second fiscal quarter
one year ago.
* Net loans receivable growth of 12.7% year over year.
* Deposit growth of 12.8% year over year.
* Net interest margin increased 20 basis points to 4.78% compared to the
second fiscal quarter one year ago.
CLARKSTON, Wash., Nov. 6 /PRNewswire-FirstCall/ -- FirstBank NW Corp.
(the Company) (Nasdaq: FBNW) today announced another quarter of strong
financial results. On June 5, 2006, FirstBank NW Corp. announced the
signing of a definitive agreement in connection with the proposed merger of
FirstBank NW Corp. and Sterling Financial Corporation. Merger related
expenses of $145,000, tax effected, are reflected in the Statement of
Income for the quarter ended September 30, 2006. For the quarter ended
September 30, 2006, diluted earnings per share increased 29.7% to $0.48
compared to $0.37 for the same quarter last year. Net income for the
quarter increased 31.7% to $3.0 million compared to $2.3 million for the
same quarter a year ago. At September 30, 2006, net average loans
receivable was 12.2% higher than a year ago, and grew at a 14.6%
linked-quarter pace (annualized) during the second fiscal quarter of 2007.
Similarly, average deposit balances as of September 30, 2006 were 11.4%
higher than the quarter ended September 30, 2005 and increased at a 29.6%
linked-quarter pace (annualized) during the second fiscal quarter of 2007.
For the second fiscal quarter of 2007, the Company's return on average
tangible equity was 18.64% compared to 16.06% for the quarter ended
September 30, 2005, while the return on average assets was 1.35% for the
current quarter compared to 1.07% for same quarter one year ago. Pro forma
return on average tangible equity was 19.55% and pro forma return on
average assets was 1.41% for the quarter ended September 30, 2006, which
reflects performance before merger related expenses (tax effected) incurred
during the quarter. The net interest margin was higher for the quarter
ended September 30, 2006, at 4.78% compared to 4.58% for the quarter ended
September 30, 2005.
In addition to results presented in accordance with generally accepted
accounting principles in the United States of America (GAAP), this press
release contains certain non-GAAP financial measures. FirstBank believes
that providing non-GAAP financial measures provides investors with
information useful in understanding our financial performance. FirstBank
provides measures based on "Pro forma net income," which exclude merger
related expenses. Pro forma net income per basic and diluted share is
calculated by dividing pro forma net income by the same basic and diluted
share total used in determining basic and diluted earnings per share.
A reconciliation of these non-GAAP measures to the most comparable GAAP
equivalent is included in the following financial table or where the non-GAAP
measure is presented.
Three Months Three Months
Ended Ended
September 30, September 30,
2006 2005
(Dollars in thousands,
except per share data)
Net income $2,964 $2,250
Add back: Merger related expenses, net of tax 145 0
Pro forma net income $3,109 $2,250
Earnings per share - basic:
Net income $0.50 $0.38
Pro forma net income $0.52 $0.38
Earnings per share - diluted:
Net income $0.48 $0.37
Pro forma net income $0.51 $0.37
LOAN GROWTH AND CREDIT QUALITY:
At September 30, 2006, net loans receivable totaled $671.2 million, up
$75.5 million, or 12.7%, from $595.7 million a year ago and up $38.7
million from $632.5 million at our fiscal year ended March 31, 2006.
Non-performing assets totaled $1.6 million, or 0.18% of total assets,
at September 30, 2006 compared to $2.1 million, or 0.26% of total assets,
at September 30, 2005, and $1.2 million, or 0.14% of total assets, at our
fiscal year ended March 31, 2006. Net loan charge-offs for the second
fiscal quarter were $67,000 compared to the same quarter a year ago of
$57,000, and $618,000 for the quarter ended March 31, 2006.
The reserve for losses on loans and loan commitments to total loans
decreased to 1.28% of net loans at September 30, 2006 from 1.37% at
September 30, 2005, and was essentially unchanged from 1.29% at March 31,
2006. The decrease in the percentage reserve for losses on loans and loan
commitments to total loans was primarily the result of the charge off of a
larger agricultural loan during the fourth quarter of fiscal 2006 and the
growth in our loan portfolio, partially offset by additions to the reserve.
Loan loss provision expense was $165,000 for the quarter ended September
30, 2006, $272,000 for the quarter ended September 30, 2005, and $237,000
for the quarter ended March 31, 2006. Management believes the reserve is at
an appropriate level considering the credit quality demonstrated, loan loss
histories, and prevailing economic conditions.
FUNDING:
Deposit balances as of September 30, 2006 increased $72.0 million, or
12.8%, to $633.4 million from $561.4 million at September 30, 2005. At
September 30, 2006, total branch deposits were $587.6 million, consisting
of $354.6 million, or 60.3% in core deposits and $233.0 million, or 39.7%
in time deposits. At September 30, 2005, there were $519.3 million in total
branch deposits, which consisted of $321.1 million, or 61.8% in core
deposits and $198.2 million, or 38.2% in time deposits. Brokered deposits
at September 30, 2006 totaled $45.8 million as compared to $42.1 million a
year ago, an increase of $3.7 million. Federal Home Loan Bank (FHLB) and
other borrowings at September 30, 2006 totaled $151.2 million compared to
$160.6 million a year ago, a decrease of $9.4 million.
NET INTEREST MARGIN AND INTEREST RATE RISK:
The Company's net interest margin was 4.78% for the second fiscal
quarter of 2007 compared to 4.58% for the quarter ended September 30, 2005.
The flattening of the yield curve continues to pressure the net interest
margin, however, the Company's asset sensitivity continues to accommodate
timely market pricing as the cost of deposits and borrowed funds continues
to increase. Yields on earning assets increased by 95 basis points to 8.06%
compared to 7.11% for the quarter ended September 30, 2005. Meanwhile, the
average rate paid on total deposits and borrowed funds increased 87 basis
points to 3.39% compared to 2.52% for the quarter ended September 30, 2005.
NON-INTEREST INCOME AND EXPENSE:
Non-interest income for the quarter ended September 30, 2006 was $1.7
million compared to $1.8 million for the quarter ended September 30, 2005.
Non-interest income is primarily the result of gain on sale of loans and
transaction account fees.
Non-interest expense for the quarter ended September 30, 2006 compared
to the quarter ended September 30, 2005 remained unchanged at $6.4 million.
Total non-interest expense related to merger activities was $239,000, or
$145,000 tax effected, for the quarter ended September 30, 2006.
CAPITAL:
At September 30, 2006, the Tier 1 capital of FirstBank Northwest,
FirstBank's wholly-owned subsidiary, was $63.1 million, or 7.4% leverage
ratio based on average assets, and total risk-based capital was $74.3
million, or 11.3% risk-based capital ratio based on risk-weighted assets.
PROPOSED MERGER:
FirstBank NW Corp. and Sterling Financial Corporation announced on June
5, 2006 that they have entered into a definitive agreement to merge
FirstBank NW Corp. into Sterling Financial Corporation. The transaction is
expected to close in the last calendar quarter of 2006 (pending FirstBank
shareholder and regulatory approval and the satisfaction of certain other
conditions). Under the terms of the Merger Agreement, which was unanimously
approved by the Boards of Directors of both companies, each share of
FirstBank common stock will be converted into the right to receive 0.789
shares of Sterling common stock and $2.55 in cash, subject to certain
conditions.
CASH DIVIDEND:
On September 13, 2006, FirstBank NW Corp. announced that its Board of
Directors declared a quarterly cash dividend of $0.10 per share. The
dividend was paid on October 11, 2006 to shareholders of record as of the
close of business on September 27, 2006.
BUSINESS STRATEGY:
FirstBank NW Corp. (headquartered in Clarkston, Washington) is the
holding company for FirstBank Northwest, a Washington state chartered
savings bank founded in 1920, and has a track record of consistent
above-average growth and improving profitability, operating in the rural
markets of eastern Oregon, eastern Washington and central Idaho, in
addition to the larger and growing markets of Boise and Coeur d'Alene,
Idaho and Spokane, Washington. FirstBank Northwest is focused on each
community served, striving to deliver competitive financial products and
services through exceptional customer service standards, local expertise
and leadership. FirstBank Northwest operates 20 branch locations in Idaho,
eastern Washington and eastern Oregon, in addition to loan centers in
Lewiston, Coeur d'Alene, Boise and Nampa, Idaho, Spokane, Washington, and
Baker City, Oregon. FirstBank Northwest is known as the local community
bank, offering its customers highly personalized service in the many
communities it serves.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
Sterling has filed with the Securities and Exchange Commission a
registration statement on Form S-4, and FirstBank has mailed a proxy
statement/prospectus to its security holders, containing information about
the proposed merger transaction. Investors and security holders of Sterling
and FirstBank are urged to read the proxy statement/prospectus and other
relevant materials because they contain important information about
Sterling, FirstBank and the proposed merger. In addition to the
registration statement that was filed by Sterling and the proxy
statement/prospectus that was mailed to the security holders of FirstBank,
Sterling and FirstBank file annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange
Commission. Investors and security holders may obtain a free copy of the
proxy statement/prospectus and other relevant documents (when they become
available) and any other documents filed with the Securities and Exchange
Commission at its website at http://www.sec.gov. The documents filed by Sterling
may also be obtained free of charge from Sterling by requesting them in
writing at Sterling Financial Corporation, 111 North Wall Street, Spokane,
WA 99201, or by telephone at (509) 227-5389. In addition, investors and
security holders may access copies of the documents filed with the
Securities and Exchange Commission by Sterling on its website at
http://www.sterlingfinancialcorporation-spokane.com . The documents filed by
FirstBank may also be obtained by requesting them in writing at FirstBank
NW Corp., 1300 16th Avenue, Clarkston, WA 99403 or by telephone at
509-295-5100. In addition, investors and security holders may access copies
of the documents filed with the Securities and Exchange Commission by
FirstBank on its website at http://www.fbnw.com.
Sterling, FirstBank and their respective officers and directors may be
deemed to be participants in the solicitation of proxies from the security
holders of FirstBank with respect to the transactions contemplated by the
proposed merger. Information regarding Sterling's officers and directors is
included in Sterling's proxy statement for its 2006 annual meeting of
shareholders filed with the Securities and Exchange Commission on March 24,
2006. Information regarding FirstBank's officers and directors is included
in FirstBank's proxy statement for its 2006 annual meeting of shareholders.
A description of the interests of the directors and executive officers of
Sterling and FirstBank in the merger is set forth in FirstBank's proxy
statement/prospectus and other relevant documents filed with the Securities
and Exchange Commission.
FORWARD LOOKING STATEMENTS:
Certain matters in this News Release may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements may relate to, among others,
expectations of the business environment in which the Company operates,
projections of future performance, including operating efficiencies,
perceived opportunities in the market, potential future credit experience
and statements regarding the Company's mission and vision. These
forward-looking statements are based upon current management' expectations,
and may, therefore, involve risks and uncertainties. The Company's actual
results, performance, and achievements may differ materially from those
suggested, expressed or implied by forward-looking statements due to a wide
range of factors including, but not limited to, the general business
environment, interest rates, the real estate market in Washington, Idaho
and Oregon, the demand for mortgage loans, competitive conditions between
banks and non-bank financial service providers, regulatory changes, costs
of implementing additional securities requirements, requirements of the
Sarbanes Oxley Act of 2002, the risk that the proposed merger with Sterling
may not be approved by shareholders of FirstBank or the necessary
regulatory approvals are not obtained, the risk that other closing
conditions of the proposed merger are not satisfied, and other risks
detailed in the Company's reports filed with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the fiscal year
ended March 31, 2006. Forward-looking statements are effective only as of
the date they are made and the Company assumes no obligation to update this
information.
FIRSTBANK NW CORP
(unaudited) (dollars in thousands except per share data)
FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
September 30, September 30,
2006 2005 2006 2005
Interest Income $16,004 $12,998 $31,088 $25,138
Interest Expense 6,696 4,765 12,835 9,093
Provision for Loan Losses 165 272 537 1,140
Net Interest Income After
Provision for Loan Losses 9,143 7,961 17,716 14,905
Non-Interest Income
Gain on Sale of Loans (1) 264 448 671 786
Service Fees and Charges 1,384 1,266 2,599 2,483
Commission and Other 70 52 112 154
Total Non-Interest Income 1,718 1,766 3,382 3,423
Non-Interest Expense
Compensation and Related
Expenses 3,737 3,729 7,891 7,368
Occupancy 718 763 1,450 1,469
Other 1,906 1,944 4,352 3,549
Total Non-Interest Expense 6,361 6,436 13,693 12,386
Income Tax Expense 1,536 1,041 2,440 1,840
Net Income $2,964 $2,250 $4,965 $4,102
Basic Earnings per Share (2)(6) $0.50 $0.38 $0.84 $0.70
Diluted Earnings per Share (2)(6) $0.48 $0.37 $0.81 $0.68
Weighted Average Shares
Outstanding- Basic (2)(6) 5,943,579 5,867,066 5,939,604 5,862,414
Weighted Average Shares
Outstanding- Diluted (2)(6) 6,126,446 5,999,644 6,113,303 5,990,800
Actual Shares Issued (6) 6,062,186 6,007,294 6,062,186 6,007,294
FINANCIAL STATISTICS
(ratios annualized)
At September 30, 2006 At September 30, 2005
Total Assets $884,167 $812,983
Cash and Cash Equivalents $26,965 $24,140
Loans Receivable, net $671,157 $595,743
Loans Held for Sale $4,337 $6,776
Mortgage-Backed Securities $50,155 $56,152
Investment Securities $47,869 $48,057
Equity Securities, at cost $12,789 $12,789
Deposits $633,418 $561,403
FHLB Advances & Other
Borrowings $151,202 $160,554
Stockholders' Equity $82,764 $75,712
Tangible Book Value per Share
(2)(6) $10.82 $9.62
Tangible Equity/Total Tangible
Assets 7.43% 7.12%
Number of full-time equivalent
Employees (3) 247 269
Three Months Ended Six Months Ended
September 30, September 30,
2006 2005 2006 2005
Return on Average Assets 1.35% 1.07% 1.14% 0.99%
Pro Forma Return on Average Assets
(7) 1.41% 1.07% 1.26% 0.99%
Return on Average Tangible Equity 18.64% 16.06% 15.83% 14.89%
Pro Forma Return on Average
Tangible Equity (7) 19.55% 16.06% 17.57% 14.89%
Return on Average Equity 14.43% 11.94% 12.20% 11.01%
Pro Forma Return on Average
Equity (7) 15.14% 11.94% 13.55% 11.01%
Average Equity/Average Assets 9.34% 8.98% 9.33% 8.96%
Efficiency Ratio (4) 55.43% 61.73% 60.81% 60.95%
Pro Forma Efficiency Ratio (7) 53.35% 61.73% 56.82% 60.95%
Non-Interest Expenses/Average
Assets 2.89% 3.07% 3.14% 2.98%
Pro Forma Non-Interest
Expenses/Average Assets (7) 2.78% 3.07% 2.93% 2.98%
Net Interest Margin (5) 4.78% 4.58% 4.75% 4.53%
LOANS At September 30, 2006 At September 30, 2005
LOAN PORTFOLIO ANALYSIS: Amount Percent Amount Percent
Real Estate Loans:
Residential $129,775 19.04% $116,292 19.18%
Construction 113,859 16.71 92,486 15.26
Agricultural 19,193 2.82 20,824 3.43
Commercial 208,064 30.53 178,144 29.39
Total Real Estate Loans 470,891 69.10 407,746 67.26
Other Loans:
Home Equity 42,996 6.31 40,901 6.75
Agricultural Operating 24,806 3.64 27,384 4.52
Commercial 104,972 15.40 88,258 14.56
Other Consumer 37,809 5.55 41,928 6.91
Total Other Loans 210,583 30.90 198,471 32.74
Total Loans Receivable $681,474 100.00% $606,217 100.00%
ALLOWANCE FOR LOAN LOSSES Six Months Ended Six Months Ended
September 30, 2006 September 30, 2005
Balance at Beginning of Period $8,138 $7,254
Provision for Loan Losses 537 1,140
Net Charge-Offs (114) (208)
Balance at End of Period $8,561 $8,186
Loan Loss Allowance/Net Loans 1.28% 1.37%
Loan Loss Allowance/Non-
Performing Loans 1317.08% 713.69%
NON-PERFORMING ASSETS
At September 30, At September 30,
2006 2005
Accruing Loans - 90 Days Past Due $193 $0
Non-Accrual Loans 457 1,147
Total Non-Performing Loans 650 1,147
Restructured Loans on Accrual 888 970
Real Estate Owned (REO) 0 0
Repossessed Assets 76 7
Total Non-Performing Assets $1,614 $2,124
Total Non-Performing Assets/Total
Assets 0.18% 0.26%
Loan Loss Allowance as a
Percentage of Non-Performing
Assets 530.42% 385.40%
AVERAGE BALANCES Six Months Ended Six Months Ended
September 30, 2006 September 30, 2005
Total Average Interest Earning
Assets $806,334 $746,643
Total Average Assets 872,114 831,934
Average Deposits and Other
Borrowed Funds 783,930 749,263
Average Total Tangible Equity 62,719 55,107
(1) Gain on sale of loans includes recovery (impairment) of mortgage
servicing rights of $0 and $(44) for the three months ended September
30, 2006 and 2005, respectively. Gain on sale of loans includes
recovery (impairment) of mortgage servicing rights of $55 and $(25)
for the six months ended September 30, 2006 and 2005, respectively.
(2) Calculation excludes unallocated shares in the employee stock
ownership plan (ESOP) September 30, 2006 -- 116,518 shares and
September 30, 2005 -- 133,230 shares.
(3) Number of full-time equivalent employees is the quarterly average.
(4) Calculation is non-interest expense divided by tax equivalent
non-interest income and tax equivalent net interest income.
(5) Calculation is tax equivalent net interest income divided by average
daily balance of total interest-earning assets.
(6) The outstanding shares, weighted average shares outstanding, and
earnings per share have been adjusted to reflect the two-for-one stock
split in the form of a 100% per share stock dividend announced on
January 4, 2006.
(7) Non-GAAP Financial Measures:
In addition to results presented in accordance with generally accepted
accounting principles in the United States of America (GAAP), this press
release contains certain non-GAAP financial measures. FirstBank believes
that providing non-GAAP financial measures provides investors with
information useful in understanding our financial performance. FirstBank
provides measures based on "Pro forma net income", which exclude merger
related expenses. Pro forma net income per basic and diluted share is
calculated by dividing pro forma net income by the same basic and diluted
share total used in determining basic and diluted earnings per share.
A reconciliation of these non-GAAP measures to the most comparable GAAP
equivalent is included in the following financial table or where the
non-GAAP measure is presented.
Three Months Ended Six Months Ended
September 30, September 30,
2006 2005 2006 2005
Net income $2,964 $2,250 $4,965 $4,102
Add back: Merger related expenses,
net of tax 145 0 546 0
Pro forma net income 3,109 2,250 5,511 4,102
Earnings per share - basic:
Net income $0.50 $0.38 $0.84 $0.70
Pro forma net income $0.52 $0.38 $0.93 $0.70
Earnings per share - diluted:
Net income $0.48 $0.37 $0.81 $0.68
Pro forma net income $0.51 $0.37 $0.90 $0.68
SOURCE FirstBank NW Corp.
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Related links:
http://www.fbnw.com
CONTACT:
Larry Moxley, EVP & Chief Financial Officer
of FirstBank NW Corp., +1-509-295-5100
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