FBNW Firstbank NW

Highlights for the First Fiscal Quarter 2006: CLARKSTON, Wash., Aug. 12 /PRNewswire-FirstCall/ -- FirstBank NW Corp. (the Company) (NASDAQ:FBNW) today announced another quarter of strong financial results driven by the ongoing economic strength in its market areas. For the quarter ended June 30, 2005, diluted earnings per share increased 19.2% to $0.62 compared to $0.52 for the same quarter a year ago. Net income for the quarter was up 19.3% to $1.9 million compared to $1.6 million for the same quarter a year ago. At June 30, 2005, net loans receivable was 23.6% higher than a year ago, and grew at a 29% linked-quarter pace (annualized) during the first fiscal quarter. Similarly, deposit balances as of June 30, 2005 were 17.7% higher than the quarter ended June 30, 2004 and increased at a 33% linked-quarter pace (annualized). For the first fiscal quarter of 2006 the Company's return on average tangible equity was 13.7% compared to 12.8% for the quarter ended June 30, 2004, while the return on average assets for the current quarter and the comparable quarter in 2004 remained relatively unchanged at 0.9%. The net interest margin was higher for the quarter ended June 30, 2005, at 4.47% compared to 4.43% in the quarter ended June 30, 2004. "While we continue to realize excellent loan demand throughout our market area, the loan growth during the quarter was primarily driven by construction lending in the Boise, Idaho market, and commercial real estate in the Boise and Coeur d'Alene, Idaho and Spokane, Washington markets," said Clyde E. Conklin, President and Chief Executive Officer. LOAN GROWTH AND CREDIT QUALITY: At June 30, 2005, net loans receivable grew to $603.0 million, up $115.1 million from $487.9 million a year ago. Loan growth on a linked-quarter basis was $40.9 million, a 29% (annualized) pace. Loan growth was well distributed by region and by loan type, as commercial, construction, and commercial real estate lending were strong. The credit quality of the Company's loan portfolio remained good with total non-performing assets of $2.4 million, or 0.28% of total assets at June 30, 2005 compared to $2.5 million, or 0.35% of total assets at June 30, 2004, and $2.8 million, or 0.35% of total assets at March 31, 2005. Net loan charge-offs for the first fiscal quarter were $151,000 compared to the quarter a year ago of $269,000, and $151,000 for the quarter ended March 31, 2005. The reserve for losses on loans and loan commitments at June 30, 2005 remained unchanged at 1.32% of net loans at June 30, 2004, and essentially unchanged from 1.29% at March 31, 2005. In keeping with the quarter's strong loan growth, loan loss provision expense was $868,000 for the quarter ended June 30, 2005, up from $376,000 for the quarter ended June 30, 2004, and $488,000 for the quarter ended March 31, 2005. The increase in the loan loss provision expense reflects the increase in the Company's loan portfolio during the quarter. Management believes the reserve is at an appropriate level considering the credit quality demonstrated, loan loss histories, and prevailing economic conditions. FUNDING: At June 30, 2005, total branch deposits were $502.3 million, consisting of $311.5 million, or 62.0% in core deposits and $190.8 million, or 38.0% in time deposits compared with the comparable period a year ago of $453.4 million in total branch deposits, which consisted of $279.6 million, or 61.7% in core deposits and $173.8 million, or 38.3% in time deposits. Brokered deposits at June 30, 2005 totaled $59.4 million as compared to $23.8 million a year ago, an increase of $35.6 million. Federal Home Loan Bank (FHLB) and other borrowings at June 30, 2005 totaled $193.8 million as compared to $168.2 million a year ago, an increase of $25.6 million. "Branch deposit growth with an emphasis on core deposit growth remains essential to long term funding and earnings," noted Conklin. NET INTEREST MARGIN AND INTEREST RATE RISK: The Company's net interest margin was 4.47% for the first fiscal quarter of 2006 compared to 4.43% for the quarter ended June 30, 2004. 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 27 basis points during the current quarter to 6.82% compared to 6.31% for the quarter ended June 30, 2004. Meanwhile, the average rates paid on interest-bearing liabilities increased 19 basis points during the current quarter to 2.33% compared to1.90% for the quarter ended June 30, 2004. The yield curve continues to fluctuate with the economy with the net interest margin remaining under pressure. Attainment of branch deposit growth objectives as opposed to continued reliance on high cost of FHLB borrowings is essential to maintenance of the net interest margin. NON INTEREST INCOME AND EXPENSE: Non-interest income for the quarters ended June 30, 2005 and 2004 remained unchanged at $1.7 million. Non-interest income is driven by gain on sales of loans and transaction account fees. Non-interest expense for the quarter ended June 30, 2005 was $6.0 million, or 4.6% above the quarter ended June 30, 2004 of $5.7 million. Non-interest expenses are expected to increase as the Company invests in new branches and complies with increased regulatory and audit requirements. CAPITAL: At June 30, 2005, Tier 1 capital (leverage ratio based on average assets) was $53.2 million, or 6.6%, and total risk capital (to risk-weighted assets) was $63.7 million, or 10.6%. Risk capital for the current quarter was enhanced by issuance of $3.0 million in subordinated debt by the Company's subsidiary, FirstBank Northwest, to US Bank. 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 residential 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. 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 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-K for the fiscal year ended March 31, 2005. FIRSTBANK NW CORP FINANCIAL HIGHLIGHTS (unaudited) (dollars in thousands except share and per share data) Three Months Ended Three Months Ended June 30, June 30, 2005 2004 Interest Income $12,140 $9,510 Interest Expense 4,328 2,982 Provision for Loan Losses 868 376 Net Interest Income After Provision for Loan Losses 6,944 6,152 Non-Interest Income Gain on Sale of Loans (1) 338 504 Service Fees and Charges 1,217 1,181 Commission and Other 102 33 Total Non-Interest Income 1,657 1,718 Non-Interest Expenses Compensation and Related Expenses 3,639 3,418 Occupancy 706 744 Other 1,605 1,528 Total Non-Interest Expense 5,950 5,690 Income Tax Expense 799 628 Net Income $1,852 $1,552 Basic Earnings per Share $0.63 $0.54 Diluted Earnings per Share $0.62 $0.52 Weighted Average Shares Outstanding- Basic 2,928,855 2,866,090 Weighted Average Shares Outstanding- Diluted 2,990,800 2,996,698 Actual Shares Issued 2,998,695 2,965,268 FINANCIAL STATISTICS (ratios annualized) June 30, 2005 June 30, 2004 Total Assets $843,961 $732,662 Cash and Cash Equivalents $43,994 $37,007 Loans Receivable, net $602,997 $487,861 Loans Held for Sale $8,383 $5,285 Mortgage-Backed Securities $59,401 $71,180 Investment Securities $48,325 $49,326 Equity Securities, at cost $12,789 $12,628 Deposits $561,655 $477,233 FHLB Advances and Other Borrowings $193,823 $168,197 Stockholders' Equity $73,960 $69,671 Tangible Book Value per Share (2) $18.61 $16.92 Tangible Equity/ Total Tangible Assets 6.61% 6.86% Number of Full-time Equivalent Employees (3) 262 257 Three Months Ended Three Months Ended June 30, June 30, 2005 2004 Return on Average Assets 0.90% 0.88% Return on Average Tangible Equity 13.67% 12.76% Return on Average Equity 10.05% 8.92% Average Equity/Average Assets 8.94% 9.88% Efficiency Ratio (4) 60.10% 65.16% Non-Interest Expenses / Average Assets 2.89% 3.23% Net Interest Margin (5) 4.47% 4.43% LOANS June 30, 2005 June 30, 2004 (unaudited) (dollars in thousands except share and per share data) LOAN PORTFOLIO ANALYSIS: Amount Percent Amount Percent Real Estate Loans: Residential $117,565 19.16 % $117,436 23.68 % Construction 86,023 14.02 47,594 9.59 Agricultural 20,204 3.29 19,648 3.96 Commercial 191,347 31.18 126,590 25.52 Total Real Estate Loans 415,139 67.65 311,268 62.75 Consumer and Other Loans: Home Equity 40,265 6.56 31,430 6.34 Agricultural Operating 26,739 4.36 29,079 5.86 Commercial 90,860 14.81 81,551 16.44 Other Consumer 40,634 6.62 42,693 8.61 Total Consumer and Other Loans 198,498 32.35 184,753 37.25 Total Loans Receivable $613,637 100.00 % $496,021 100.00 % ALLOWANCE FOR LOAN LOSSES Three Months Ended Three Months Ended June 30, 2005 June 30, 2004 Balance at Beginning of Period $7,254 $6,314 Provision for Loan Losses 868 376 Charge Offs (Net of Recoveries) (151) (269) Balance at End of Period $7,971 $6,421 Loan Loss Allowance / Net Loans 1.32% 1.32% Loan Loss Allowance / Non-Performing Loans 825.16% 554.01% NON-PERFORMING ASSETS June 30, 2005 June 30, 2004 Accruing Loans - 90 Days Past Due $272 $0 Non-accrual Loans 694 1,159 Total Non-performing Loans 966 1,159 Restructured Loans on Accrual 1,345 827 Real Estate Owned (REO) 0 525 Repossessed Assets 93 28 Total Non-performing Assets $2,404 $2,539 Total Non-performing Assets/Total Assets 0.28% 0.35% Loan and REO Loss Allowance as a Percentage of Non- Performing Assets 331.57% 252.89% AVERAGE BALANCES AND AVERAGE YIELDS/COSTS Three Months Ended Three Months Ended June 30, June 30, 2005 2004 Total Average Interest-Earning Assets $737,425 $634,028 Total Average Assets 824,707 704,761 Average Deposits and Other Borrowed Funds 743,171 627,699 Average Total Tangible Equity 54,178 48,643 (1) Gain on sale of loans includes recovery of mortgage servicing rights of $19 at June 30, 2005 and $134 at June 30, 2004. (2) Calculation excludes unallocated shares in the employee stock ownership plan (ESOP) June 30, 2005 -- 68,704 and June 30, 2004 -- 77,060 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 total interest-earning assets. DATASOURCE: FirstBank NW Corp. CONTACT: Larry K. Moxley of FirstBank, +1-509-295-5100 Web site: http://www.fbnw.com/

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