FBNW Firstbank NW

FirstBank NW Corp. Reports Fiscal Year End Net Income Up 44.1%, Asset Growth of 14.4% to $801.1 Million CLARKSTON, Wash., May 27 /PRNewswire-FirstCall/ -- FirstBank NW Corp. (NASDAQ:FBNW), the holding company for FirstBank Northwest, today reported fiscal year 2005 net income of $6.28 million and total assets of $801.1 million, representing an increase of 44.1% in net income and 14.4% in total assets. "The year was highlighted by exceptional growth from the markets in Boise and Coeur d'Alene, Idaho and Spokane, Washington, which are our targeted growth markets," said Clyde E. Conklin, President and Chief Executive Officer. Total loans receivable grew 22.4%, from $459.1 million at March 31, 2004 to $562.1 million at March 31, 2005. "Additionally," Conklin noted, "the core processing system conversion was completed in December 2004, and the network and other systems were fully integrated during the year, which essentially completed the systems integration of Oregon Trail Financial Corp., and its subsidiary, Pioneer Bank, with FirstBank NW Corp., and its subsidiary, FirstBank Northwest." The merger closed on October 31, 2003. Conklin went on to note "the merger was large and complex, which required substantial dedication of resources for a successful execution. We have essentially rebuilt the Bank's systems, policies and processes in order to facilitate future growth. Our major compliance initiative for fiscal year 2006 are the provisions regarding internal control over financial reporting in the Sarbanes-Oxley Act of 2002. We will also reinforce our compliance with Bank Secrecy Act (BSA) and Customer Identification Program (CIP) regulations." It is expected that FirstBank will become an accelerated filer as of March 31, 2006. "We will remain focused on earnings growth and balance sheet growth as we continue to implement these new requirements," stated Conklin. Income was enhanced through increased net interest income from a growing loan portfolio and a full year of combined operations after the October 31, 2003 merger of Pioneer Bank. Net interest income, after provision for loans losses, was $25.8 million for the year ended March 31, 2005, compared to $17.1 million for the year ended March 31, 2004. Income was also enhanced by a stable net interest margin of 4.38% on March 31, 2005, compared to 4.28% on March 31, 2004. Non-interest income was $6.0 million for the year ended March 31, 2005, compared to $5.5 million for the year ended March 31, 2004. "While gain on sale of loans was down from $2.2 million for the year ended March 31, 2004 to $1.1 million for the year ended March 31, 2005, we did increase other fees, service charges, and other non-interest income from $3.3 million for the year ended March 31, 2004 to $4.9 million for the year ended March 31, 2005," said Larry K. Moxley, Chief Financial Officer. Non-interest expenses increased $6.4 million, or 38.1%, from $16.8 million for fiscal year 2004 to $23.1 million for fiscal year 2005. Compensation and benefits totaled $14.0 million, or 60.7% of total non-interest expense for the fiscal year ended March 31, 2005 as compared to $10.1 million, or 60.2% of total non-interest expense for the fiscal year ended March 31, 2004. FirstBank's efficiency ratio improved from 68.9% for the year ended March 31, 2004 to 65.9% for the year ended March 31, 2005 because net interest income and non-interest income increased faster than non-interest expense. Net income, after tax, for the year ended March 31, 2005 was $6.28 million, or $2.09 per share on 2,997,630 diluted shares outstanding, compared to net income of $4.36 million, or $2.12 per share on 2,055,635 diluted shares for the year ended March 31, 2004. "We continue to make significant progress towards a balance sheet structure typical to commercial banking," said Conklin. "The total loan portfolio, including loans held for sale, is $575.8 million in which commercial loans represent 46.3%, agricultural loans 7.3%, construction loans 12.0%, consumer loans 13.3%, residential real estate loans 20.4%, and loans held for sale 0.7%. The construction loan portfolio increased from $44.5 million at March 31, 2004 to $69.1 million at March 31, 2005. Total construction loans originated during fiscal year 2005 were $171.6 million. Additionally, commercial/agricultural loan production remained strong, with the Spokane loan production office originating $22.4 million in new loans, the Coeur d'Alene Loan Center originating $33.7 million, the Baker City Loan Center originating $18.1 million, the Lewiston Loan Center originating $49.5 million, and the Boise Loan Center originating $57.4 million. The Boise Commercial Loan Center completed its first full year of operation on March 31, 2005. Total new commercial/agricultural loan origination for fiscal year 2005 was $181.1 million. The commercial and agricultural loan portfolio increased from $241.5 million at March 31, 2004 to $308.6 million at March 31, 2005, an increase of 27.8%. The residential real estate loan portfolio increased $4.5 million, or 4.0%, from March 31, 2004 to March 31, 2005. Total residential real estate term loan originations were $102.2 million during fiscal year 2005. "FirstBank has added to its loan portfolio all 10-year and 15-year first mortgage loans that it originated this past year," noted Moxley. "Deposit growth was $38.1 million for the year ended March 31, 2005, an increase of 7.9% since last year, and funding from core deposits continues to increase," said Moxley. Core deposits grew from $279.9 million at March 31, 2004 to $301.5 million at March 31, 2005, while certificates of deposit increased from $200.6 million to $217.2 million over the same period. "Core deposits represent 58.1% of our total branch deposits," said Moxley. "Additionally, it is important to note that deposit growth is focused on core demand deposits related primarily to commercial customers," Moxley continued. Other funding sources include Federal Home Loan Bank borrowings, as well as brokered deposit markets. Allowance for loan loss reserves increased from $6.3 million at March 31, 2004 to $7.3 million at March 31, 2005. Total reserves are now 1.29% of net loans as of March 31, 2005 compared to 1.38% as of March 31, 2004. "Reserves appropriately reflect portfolio loan allocations and the credit risk associated with the current economy," said Conklin. "Asset quality is good and remains a high priority for FirstBank," continued Conklin. Total non-performing assets at March 31, 2005 were $2.8 million, or 0.35% of total assets, compared with $3.7 million, or 0.50% of total assets, at March 31, 2004. The ratio of loan loss allowances to non-performing assets was 258.1% at March 31, 2005 compared with 172.7% at March 31, 2004. "Workout of non-performing assets and improvement in economies throughout our market area has contributed to this improvement," said Conklin. Net charge-offs for the year ended March 31, 2005 were $588,000 compared with $358,000 for the year ended March 31, 2004. "We continue to scrutinize our loan portfolio on a regular basis to assure that we maintain credit quality," said Conklin. FirstBank NW Corp.'s total assets increased 14.4% to $801.1 million on March 31, 2005 compared to $700.2 million on March 31, 2004. Stockholders' equity on March 31, 2005 was $72.3 million compared with $69.3 million on March 31, 2004. Tangible stockholder equity, which excludes goodwill and other intangible assets, was $52.7 million on March 31, 2005 compared with $48.3 million on March 31, 2004. The ratio of tangible equity to tangible assets was 6.7% at March 31, 2005 compared to 7.1% a year earlier. Tangible book value increased to $18.00 per share on March 31, 2005 compared to $16.88 per share last year. Reported net income for the fourth quarter ended March 31, 2005 was $1.6 million compared to $1.6 million for the same period one year ago. Earnings per share (diluted) for the fourth quarter ended March 31, 2005 was $0.52 per share compared to $0.55 per share for the same period last year. "Earnings growth for the period ending March 31, 2005 was impacted by system and integration expense, reduced Federal Home Loan Bank dividend income, and regulatory and audit expense," said Moxley. Asset growth for the fourth quarter was $31.6 million, or 4.1%, or an annualized rate of 16.4%. FirstBank NW Corp. is the parent of FirstBank Northwest. Founded in 1920, FirstBank Northwest is based in Clarkston, Washington. FirstBank Northwest operates 20 branch locations in Idaho, eastern Washington and eastern Oregon, in addition to residential loan centers in Lewiston, Coeur d'Alene, Boise and Nampa, Idaho, Spokane, Washington and Baker City, Oregon. Salomon Smith Barney has investment centers in the Coeur d'Alene, Idaho, Clarkston and Liberty Lake, Washington branches, and the Baker City, LaGrande and Ontario, Oregon branches. FirstBank Northwest is known as the local community bank, offering its customers highly personalized service in the many communities it serves. 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 and requirements of the Sarbanes-Oxley Act of 2002 and other risks detailed in the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-KSB for the fiscal year ended March 31, 2004. FIRSTBANK NW CORP FINANCIAL HIGHLIGHTS (unaudited) (in thousands except share and per share data) Three Months Ended Fiscal Year Ended March 31, March 31, 2005 2004 2005 2004 Interest Income $10,840 $9,299 $40,631 $27,415 Interest Expense 3,778 3,068 13,319 9,934 Provision for Loan Losses 488 (23) 1,528 395 Net Interest Income After Provision for Loan Losses 6,574 6,254 25,784 17,086 Non-Interest Income Gain on Sale of Loans 184 532 1,125 2,188 Service Fees and Charges 1,010 1,138 4,504 3,120 Commission and Other 239 72 381 208 Total Non-Interest Income 1,433 1,742 6,010 5,516 Non-Interest Expenses Compensation and Related Expenses 3,522 3,366 14,044 10,095 Occupancy 717 788 2,844 2,077 Other 1,616 1,592 6,261 4,590 Total Non-Interest Expense 5,855 5,746 23,149 16,762 Income Tax Expense 578 646 2,367 1,482 Net Income $1,574 $1,604 $6,278 $4,358 Basic Earnings per Share $0.54 $0.56 $2.17 $2.26 Diluted Earnings per Share $0.52 $0.55 $2.09 $2.12 Weighted Average Shares Outstanding - Basic 2,920,832 2,863,292 2,896,307 1,925,804 Weighted Average Shares Outstanding - Diluted 2,997,761 2,933,774 2,997,630 2,055,635 Actual Shares Issued 2,998,595 2,940,047 2,998,595 2,940,047 March 31, 2005 March 31, 2004 Total Assets $801,122 $700,232 Cash and Cash Equivalents $41,801 $38,397 Loans Receivable, net $562,101 $459,114 Loans Held for Sale $3,999 $5,254 Mortgage-Backed Securities $61,904 $77,027 Investment Securities $48,334 $38,787 Stock in FHLB, at cost $12,789 $12,506 Deposits $518,676 $480,548 FHLB Advances & Other Borrowings $185,337 $132,056 Stockholders' Equity $72,311 $69,332 Tangible Book Value per Share (A) $18.00 $16.88 FASB 115 Adjustment after Taxes $149 $1,268 Tangible Equity/ Total Tangible Assets 6.74% 7.11% Number of Full-Time Equivalent Employees 268 247 (A) Calculation is based on number of shares outstanding at the end of the period rather than weighted average shares outstanding and excludes unallocated shares in the employee stock ownership plan (ESOP) 3/05 -- 70,793 shares and 3/04 -- 79,149 shares. FINANCIAL STATISTICS (ratios annualized) Three Months Ended Fiscal Year Ended March 31, March 31, 2005 2004 2005 2004 Return on Average Assets 0.80% 0.93% 0.84% 0.90% Return on Average Tangible Equity 11.94% 12.74% 12.38% 11.17% Average Tangible Equity/ Average Tangible Assets 6.88% 7.49% 7.01% 8.19% Average Equity/Average Assets 9.21% 10.04% 9.54% 9.71% Average Tangible Equity/Average Loans 9.65% 11.13% 10.02% 11.63% Efficiency Ratio (B) 64.22% 67.41% 65.91% 68.88% Non-Interest Expenses/ Average Assets 2.98% 3.26% 3.11% 3.46% Net Interest Margin (C) 4.39% 4.36% 4.38% 4.28% Average Interest Earning Assets/Average Deposits and Other Borrowed Funds 99.06% 101.42% 99.89% 102.09% LOANS (unaudited) (in thousands except share and per share data) Fiscal Year Ended Fiscal Year Ended March 31, 2005 March 31, 2004 LOAN ORIGINATIONS (D): Residential loan centers $273,786 $244,456 Consumer loan centers 45,844 16,364 Agricultural loan centers 12,149 8,048 Commercial loan centers 168,976 86,929 Total Loan Origination $500,755 $355,797 LOAN PORTFOLIO ANALYSIS: Real estate loans: Residential 117,541 $113,016 Construction 69,148 44,536 Agricultural 19,434 18,567 Commercial 173,757 122,132 Total real estate loans 379,880 298,251 Consumer and other loans: Home equity 37,806 24,530 Agricultural operating 22,625 24,876 Commercial 92,780 75,878 Other consumer 38,724 43,425 Total consumer and other loans 191,935 168,709 Loans held for sale-residential real estate 3,999 5,254 Total Loans Receivable $575,814 $472,214 Fiscal Year Ended Fiscal Year Ended March 31, 2005 March 31, 2004 ALLOWANCE FOR LOAN LOSSES: Balance at Beginning of Period $6,314 $3,414 Purchased $0 $2,863 Provision for Loan Losses 1,528 395 Charge offs (Net of Recoveries) (588) (358) Balance at End of Period $7,254 $6,314 Loan Loss Allowance / Net Loans 1.29% 1.38% Loan Loss Allowance / Non-Performing Loans 661.86% 217.72% (B) Calculation is non-interest expense divided by non-interest income and tax equivalent net interest income. (C) Calculation is tax equivalent net interest income divided by total interest-earning assets. (D) Loan originations are based upon new production. NON-PERFORMING ASSETS: Fiscal Year Ended Fiscal Year Ended March 31, 2005 March 31, 2004 Accruing Loans - 90 Days Past Due $377 $0 Non-accrual Loans 719 2,900 Total Non-performing Loans 1,096 2,900 Restructured Loans on Accrual 1,094 152 Real Estate Owned (REO) 603 552 Repossessed Assets 18 52 Total Non-performing Assets $2,811 $3,656 Total Non-performing Assets/Total Assets 0.35% 0.50% Loan and REO Loss Allowance as a % of Non-Performing Assets 258.06% 172.70% AVERAGE BALANCES, INTEREST AVERAGE YIELDS/COSTS Three Months Ended Fiscal Year Ended March 31, March 31, 2005 2004 2005 2004 Average Interest Earning Assets: Average Loans receivable: Average Mortgage Loans receivable $119,041 $111,702 $117,016 $74,416 Average Commercial Loans receivable 253,610 192,634 223,158 150,557 Average Construction Loans receivable 64,232 42,362 53,857 36,356 Average Consumer Loans receivable 76,468 69,252 74,413 43,063 Average Agricultural Loans receivable 42,692 45,045 46,240 37,547 Average unearned loan fees and discounts, allowance for loan losses, and other (9,351) (8,610) (8,631) (6,350) Total Average Loans receivable, net 546,692 452,385 506,053 335,589 Average Loans Held for Sale 2,794 5,766 4,708 7,584 Average Mortgage-backed securities 63,666 79,542 68,761 35,869 Average Investment securities 48,495 38,462 46,438 24,840 Average Other earning assets 37,877 46,494 38,317 36,000 Total Average Interest Earning Assets 699,524 622,649 664,277 439,882 Average Non-Interest Earning Assets 86,869 68,437 78,981 44,684 Total Average Assets $786,393 $691,086 $743,258 $484,566 Average Interest Bearing Liabilities: Average Passbook, NOW, and money market accounts $237,394 $224,630 $231,963 $137,025 Average Certificate of deposits 206,811 200,091 200,980 149,626 Average Advances from FHLB and other 190,337 135,041 158,235 101,106 Total Average Interest Bearing Liabilities 634,542 559,762 591,178 387,757 Average Non-Interest Bearing Deposits 71,644 54,142 73,825 43,107 Average Deposits and Other Borrowed Funds 706,186 613,904 665,003 430,864 Average Non-Interest Bearing Liabilities 7,779 7,797 7,327 6,638 Total Average Liabilities 713,965 621,701 672,330 437,502 Total Average Equity 72,428 69,385 70,928 47,064 Total Average Liabilities and Equity $786,393 $691,086 $743,258 $484,566 Total Tangible Average Equity $52,740 $50,368 $50,693 $39,030 Interest Rate Yield on Earning Assets 6.55% 6.33% 6.38% 6.54% Interest Rate Expense on Deposits and Other Borrowed Funds 2.14% 2.00% 2.00% 2.31% Interest Rate Spread 4.41% 4.33% 4.38% 4.23% Net Interest Margin 4.39% 4.36% 4.38% 4.28% DATASOURCE: FirstBank NW Corp. CONTACT: Larry K. Moxley, Exec. VP & CFO of FIRSTBANK NW CORP., +1-509-295-5100 Web site: http://www.fbnw.com/

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