FBNW Firstbank NW

FirstBank NW Corp. Reports Strong Second Quarter Earnings and Declares Regular Quarterly Cash Dividend of $0.17 Per Share CLARKSTON, Wash., Oct. 26 /PRNewswire-FirstCall/ -- FirstBank NW Corp. (NASDAQ:FBNW), the holding company for FirstBank Northwest, today reported solid growth as net income improved to $1.63 million, or $0.54 per diluted share, in its second fiscal quarter ended September 30, 2004. This compares to net income of $694,000, or $0.51 per diluted share, in the comparable quarter a year ago. FirstBank also announced that its Board of Directors has declared a regular quarterly cash dividend of $0.17 per common share. The dividend will be paid on December 3, 2004 to shareholders of record as of the close of business on November 18, 2004. This marks the Company's 29th regular quarterly cash dividend since it became a publicly traded company in July 1997. "The increase in net income is attributable to loan growth and the acquisition of Pioneer Bank during the past year with net loans increasing to $504.5 million as of September 30, 2004 compared to $256.3 million at September 30, 2003, and an improved net interest margin of 4.23% for the three months ended September 30, 2004," said Clyde E. Conklin, President and Chief Executive Officer. "The Company's net interest income also was affected by reserve allocations driven by new loan growth," noted Larry K. Moxley, Executive Vice President and Chief Financial Officer. The provision for loan losses for the quarter ended September 30, 2004 was $193,400, compared to $78,000 in the comparable quarter a year ago. The increase in the provision for loan losses is attributable to loan growth during the year. Non-interest income was $1.43 million for the second fiscal quarter, compared to $1.16 million in the comparable quarter a year ago. "Increases in service charges and fee income contributed to the increase in non-interest income over last year," said Moxley. "Gain on sale of loans decreased to $288,000, excluding impairment, for the quarter ending September 30, 2004 compared to $590,000 in the same quarter last year, due to reduced refinancings and a slowing purchase market." Non-interest expense, or operating expense increased $2.6 million to $5.7 million for the quarter ended September 30, 2004, compared to $3.1 million a year ago, which reflects the increase in non-interest expenses related to the acquisition of Pioneer Bank. FirstBank's efficiency ratio was 68.5% in its second fiscal quarter of 2004, compared to 73.6% for the like quarter a year ago. Non-interest expenses are expected to remain at this level reflecting the addition of staff for the loan production offices in Boise, Idaho and Spokane, Washington, the new branches in Hayden and Boise, Idaho, and the additional fixed cost of branch remodels and construction of the new Clarkston, Washington branch facility. Additionally, a new Loan Production Office in Nampa, Idaho has been authorized and is scheduled to open during the next fiscal quarter of 2004. "The staff has been hired and offices are being identified. The Nampa, Idaho market is adjacent to the Boise, Idaho market and is a logical expansion of our presence in Idaho," said Conklin. Total assets were $735.3 million at September 30, 2004, an increase of $392.2 million, or 114%, from total assets of $343.1 million at September 30, 2003. Conklin noted that, "in addition to growth through the acquisition of Pioneer Bank, FirstBank is also continuing to produce target asset growth through new loan originations. Total assets at September 30, 2004 increased $35.1 million, or 5%, from total assets at March 31, 2004 of $700.2 million. Total loans receivable for the same period grew $46.0 million, or 9.3% from $496.3 million at March 31, 2004 to $542.3 million at September 30, 2004." Total branch deposits increased $279.2 million, or 135.7%, to $484.9 million at September 30, 2004 compared with $205.7 million at September 30, 2003. Other funding for the quarter ended September 30, 2004 included Federal Home Loan Bank borrowings and brokered deposits totaling $173.5 million compared to $100.7 million on September 30, 2003, an increase of $72.8 million, or 72.3%. The allowance for loan and lease losses increased $3.0 million, or 82.4%, to $6.6 million on September 30, 2004 from $3.6 million on September 30, 2003. Total reserves represent 1.31% of net loans and 440.8% of non-performing loans. "It is essential that our provisions adequately reflect the credit risk in the portfolio and the non-performing assets identified, therefore we continue to add to reserves," said Moxley. "Charge-offs, net of recoveries, for the quarter totaled $21,000 compared to $51,000 for the comparable quarter a year ago. Of the $289,000 net charge offs for the six months ended September 30, 2004, $193,000 consists of two commercial loans that were totally written off; both were previously classified assets. Asset quality remains stable." Total non-performing assets on September 30, 2004 were $2.3 million, or 0.32% of total assets compared with $3.7 million, or 0.52% of total assets on March 31, 2004. "We continue to focus on credit risk on a quarterly basis through the asset review committee and on an on-going basis through executive management loan committee and credit administration," said Conklin. "New growth in the quarter ending September 30, 2004 met operational expectations, and loan demands are strong in our Boise and Coeur d'Alene, Idaho and Spokane, Washington markets," noted Conklin. "Additionally, net income growth is expected to remain strong as compared to year ago levels primarily because of the acquisition of Oregon Trail Financial Corp. completed on October 31, 2003, however, earnings per share growth is expected to be moderate reflecting our investments in technology, infrastructure and staff. The core processing system conversion will take place during the next fiscal quarter ending December 31, 2004. The one time expenses related to the conversion will impact earnings in the quarter." 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 northern Idaho along the Idaho/Washington border and in eastern Oregon, in addition to residential loan centers in Lewiston, Coeur d'Alene, and Boise, Idaho, and Baker City, Oregon. Salomon Smith Barney has investment centers in FirstBank's Coeur d'Alene, Idaho, Clarkston and Liberty Lake, Washington, and Baker City, LaGrande, Pendleton 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 FirstBank operates, projections of future performance, including operating efficiencies, perceived opportunities in the market, potential future credit experience and statements regarding FirstBank's mission and vision. These forward-looking statements are based upon current management expectations, and may, therefore, involve risks and uncertainties. FirstBank'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, FirstBank's ability to successfully integrate the business of Oregon Trail, the realization of expected cost savings or accretion to earnings because of the acquisition of Oregon Trail, competitive conditions between banks and non-bank financial service providers, regulatory changes, and other risks detailed in the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on From 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 Six Months Ended September 30, September 30, 2004 2003 2004 2003 Interest Income $9,912 $5,007 $19,422 $10,105 Interest Expense 3,194 2,015 6,176 4,071 Provision for Loan Losses 193 78 569 256 Net Interest Income After Provision for Loan Losses 6,525 2,914 12,677 5,778 Non-Interest Income Gain on Sale of Loans 178 590 682 1,370 Service Fees and Charges 1,183 535 2,364 1,112 Commission and Other 67 33 100 67 Total Non-Interest Income 1,428 1,158 3,146 2,549 Non-Interest Expenses Compensation and Related Expenses 3,424 1,956 6,842 3,876 Occupancy 715 347 1,459 698 Other 1,568 843 3,097 1,720 Total Non-Interest Expenses 5,707 3,146 11,398 6,294 Income Tax Expense 620 232 1,248 560 Net Income $1,626 $694 $3,177 $1,473 Basic Earnings per Share $0.56 $0.54 $1.10 $1.14 Diluted Earnings per Share $0.54 $0.51 $1.06 $1.09 Weighted Average Shares Outstanding- Basic 2,893,817 1,294,267 2,880,018 1,287,650 Weighted Average Shares Outstanding- Diluted 3,006,158 1,366,142 3,002,147 1,353,745 Actual Shares Issued 2,962,208 1,390,492 2,962,208 1,390,492 September 30, March 31, September 30, 2004 2004 2003 Total Assets $735,277 $700,232 $343,116 Cash and Cash Equivalents $31,040 $38,397 $34,282 Loans Receivable, net $504,535 $464,368 $256,269 Mortgage-Backed Securities $68,217 $77,027 $7,669 Investment Securities $49,164 $38,787 $17,250 Stock in FHLB, at cost $12,737 $12,506 $5,882 Deposits $508,581 $491,035 $229,515 FHLB Advances & Other Borrowings $149,820 $132,056 $76,972 Stockholders' Equity $70,169 $69,332 $31,393 Tangible Book Value per Share (1) $17.33 $17.33 $24.20 FASB 115 Adjustment after Taxes $748 $1,268 $816 Tangible Equity/ Total Tangible Assets 7.00% 7.57% 9.15% Tier 1 Capital to Average Assets 6.66% 6.51% 8.36% Risk-based Capital to Risk-Weighted Assets 10.69% 10.50% 13.55% Number of full-time equivalent Employees 259 247 140 (1) 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) 9/04--74,971 shares, 3/04 -- 79,149 shares, 9/03 -- 83,330 shares. FINANCIAL STATISTICS (ratios annualized) Three Months Ended Fiscal Six Months Ended September 30, Year Ended September 30, 2004 2003 March 31, 2004 2003 2004 Return on Average Assets 0.89% 0.81% 0.90% 0.88% 0.87% Return on Average Tangible Equity 13.02% 8.88% 11.17% 12.89% 9.50% Average Tangible Equity/Average Tangible Assets 7.02% 9.17% 8.19% 7.06% 9.18% Average Equity/Average Assets 9.62% 9.17% 9.17% 9.75% 9.18% Average Tangible Equity/Average Loans 10.01% 11.83% 11.37% 10.07% 11.80% Efficiency Ratio (2) 68.54% 73.63% 70.44% 67.65% 71.24% Non-Interest Expenses / Average Assets 3.12% 3.69% 3.43% 3.17% 3.73% Net Interest Margin (3) 4.23% 4.00% 4.17% 4.27% 4.05% Average Interest Earning Assets / Average Deposits and Other Borrowed Funds 112.61% 115.75% 102.09% 113.66% 115.59% Six Months Fiscal Year Six Months Ended Ended Ended September 30, March 31, September 30, 2004 2004 2003 LOANS (unaudited) (in thousands except share and per share data) LOAN ORIGINATIONS (4): Residential loan centers $136,765 $244,456 $138,412 Consumer loan centers 26,642 16,364 3,844 Agricultural loan centers 4,548 8,048 4,600 Commercial loan centers 64,681 86,929 65,757 Total Loan Originations $232,636 $355,797 $212,613 LOAN PORTFOLIO ANALYSIS: Real estate loans: Residential $114,923 $112,312 $45,612 Construction 79,638 68,236 57,995 Agricultural 19,387 18,568 15,805 Commercial 137,336 122,132 71,095 Total real estate loans 351,284 321,248 190,507 Consumer and other loans: Home equity 33,331 25,599 15,153 Agricultural operating 30,088 24,876 13,748 Commercial 81,604 75,878 48,531 Other consumer 41,464 43,425 6,995 Total consumer and other loans 186,487 169,778 84,427 Loans held for sale- residential real estate 4,496 5,253 9,560 Total Loans Receivable $542,267 $496,279 $284,494 Six Months Fiscal Year Six Months Ended Ended Ended September 30, March 31, September 30, 2004 2004 2003 ALLOWANCE FOR LOAN LOSSES: Balance at Beginning of Period $6,314 $3,414 $3,414 Purchased 0 2,863 0 Provision for Loan Losses 569 395 256 Charge Offs (Net of Recoveries) (289) (358) (54) Balance at End of Period $6,594 $6,314 $3,616 Loan Loss Allowance / Net Loans 1.31% 1.36% 1.41% Loan Loss Allowance / Non-Performing Loans 440.78% 199.37% 204.87% (2) Calculation is non-interest expense divided by tax equivalent non-interest income and net interest income. (3) Calculation is tax equivalent net interest income divided by total interest-earning assets. (4) Loan originations are based upon new production. NON-PERFORMING ASSETS: Six Months Fiscal Year Six Months Ended Ended Ended September 30, March 31, September 30, 2004 2004 2003 Accruing Loans - 90 Days Past Due $0 $0 $0 Non-accrual Loans 1,496 2,900 1,765 Total Non-performing Loans 1,496 2,900 1,765 Restructured Loans on Accrual 306 152 284 Real Estate Owned (REO) 493 552 664 Repossessed Assets 34 52 0 Total Non-performing Assets $2,329 $3,656 $2,713 Total Non-performing Assets/Total Assets 0.32% 0.52% 0.79% Loan and REO Loss Allowance as a % of Non- Performing Assets 283.13% 160.95% 133.28% AVERAGE BALANCES, INTEREST AVERAGE YIELDS/COSTS Six Months Fiscal Year Six Months Ended Ended Ended September 30, March 31, September 30, 2004 2004 2003 Average Interest Earning Assets: Average Loans Receivable: Average Mortgage Loans Receivable $116,399 $74,416 $47,295 Average Commercial Loans Receivable 206,165 150,557 122,897 Average Construction Loans Receivable 48,958 36,356 33,559 Average Consumer Loans Receivable 73,029 43,063 24,436 Average Agricultural Loans Receivable 47,769 37,547 30,858 Average Unearned Loan Fees and Discounts, Allowance for Loan Losses, and Other (8,198) (6,350) (4,804) Total Average Loans Receivable, net 484,122 335,589 254,241 Average Loans Held for Sale 5,597 7,584 8,607 Average Mortgage- backed Securities 72,236 35,869 8,808 Average Investment Securities 44,200 24,840 17,146 Average Other Earning Assets 38,514 35,999 21,391 Total Average Interest Earning Assets 644,669 439,881 310,193 Average Non-Interest Earning Assets 74,071 44,684 27,531 Total Average Assets $718,740 $484,565 $337,724 Average Interest Bearing Liabilities: Average Passbook, NOW, and Money Market Accounts $225,390 $137,025 $74,657 Average Certificates of Deposits 196,747 149,626 112,975 Average Advances from FHLB and Other 145,040 101,106 80,732 Total Average Interest Bearing Liabilities 567,177 387,757 268,364 Average Non-Interest Bearing Deposits 74,344 43,107 32,948 Average Deposits and Other Borrowed Funds 641,521 430,864 301,312 Average Non-Interest Bearing Liabilities 7,164 6,638 5,405 Total Average Liabilities 648,685 437,502 306,717 Total Average Equity 70,055 47,064 31,007 Total Average Liabilities and Equity $718,740 $484,566 $337,724 Total Tangible Average Equity $49,310 $39,030 $31,007 Interest Rate Yield on Earning Assets 6.19% 6.41% 6.68% Interest Rate Expense on Deposits and Other Borrowed Funds 1.93% 2.31% 3.03% Interest Rate Spread 4.26% 4.10% 3.65% Net Interest Margin 4.27% 4.17% 4.05% 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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