<PAGE> 1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999.
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______________ to _________________.
Commission file number 000-25295
FIRST WESTERN CORP.
-------------------
(Exact name of small business issuer as specified in its charter)
Nebraska 47-0484682
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
11210 Huron, Northglenn, CO. 80234
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(Address of principal executive offices, including zip code)
(303) 451-1010
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
As of May 5, 1999, there were 144,440 shares of the registrant's common
stock outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
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FIRST WESTERN CORP.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NO.
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Item 1. Financial Statements 2
Item 2. Management's Discussion and Analysis of Financial
Condition or Plan of Operation 7
PART II. OTHER INFORMATION
-----------------
Item 2. Changes in Securities and Use of Proceeds 10
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST WESTERN CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1999 (Unaudited) and December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31
1999 1998
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks .......................................................... $ 14,569 $ 13,892
Interest bearing deposits in other banks ......................................... -- 3
Federal funds sold ............................................................... 16,040 13,270
Investment securities:
Available-for-sale, at fair value .............................................. 34,854 27,082
Held-to-maturity, at amortized cost, fair value of $6,805, in 1999 and
$7,249, in 1998 ............................................................. 6,689 7,146
--------- ---------
Total investment securities ............................................. 41,543 34,228
Loans held for sale .............................................................. 8,949 5,193
Gross loans receivable: .......................................................... 338,134 290,875
Less: unearned loan fees ....................................................... (1,020) (886)
allowance for loan losses ................................................ (3,095) (2,187)
--------- ---------
Net loans receivable .................................................... 334,019 287,802
Premises and equipment, net ...................................................... 8,667 8,308
Preferred securities issuance cost, net .......................................... 1,100 --
Other assets ..................................................................... 5,051 4,511
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TOTAL ASSETS ............................................................ $ 429,938 $ 367,207
========= =========
LIABILITIES
Deposits:
Demand non-interest bearing .................................................... $ 43,137 $ 44,653
Demand interest bearing ........................................................ 15,167 14,919
Time ........................................................................... 308,647 259,908
--------- ---------
Total deposits .......................................................... 366,951 319,480
Securities sold under agreements to repurchase ................................... 5,530 5,080
Note payable ..................................................................... -- 8,790
Federal Home Loan Bank borrowings ................................................ 8,650 8,650
Other liabilities ................................................................ 3,796 3,818
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Total liabilities ....................................................... 384,927 345,818
Minority interest in consolidated subsidiaries ................................... -- 683
Company obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely Junior Subordinated Debentures ............................ 23,000 --
STOCKHOLDERS' EQUITY
Common stock $1.00 par value; 500,000 shares authorized;
shares issued and outstanding ................................................ 144 140
Surplus .......................................................................... 1,376 697
Retained earnings ................................................................ 20,166 19,454
Accumulated other comprehensive income ........................................... 325 415
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Total stockholders' equity .............................................. 22,011 20,706
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .............................. $ 429,938 $ 367,207
========= =========
</TABLE>
These consolidated financial statements should be read only in connection with
the accompanying notes to consolidated financial statements.
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FIRST WESTERN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three months ended March 31, 1999 and 1998 (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1999 1998
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(Unaudited) (Unaudited)
<S> <C> <C>
Interest income:
Loans, including fees .................................................. $ 7,975 $ 4,860
Taxable investment securities .......................................... 306 226
Nontaxable investment securities ....................................... 152 119
Dividends on investment securities ..................................... 14 23
Federal funds sold ..................................................... 180 119
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Total interest income ........................................... 8,627 5,347
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Interest expense:
Deposits ............................................................... 3,825 2,277
Federal funds purchased ................................................ 3 1
Securities sold under agreements to repurchase ......................... 43 17
Note payable ........................................................... 84 49
Trust preferred securities ............................................. 270 --
Federal Home Loan Bank borrowings ...................................... 115 82
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Total interest expense .......................................... 4,340 2,426
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Net interest income ............................................. 4,287 2,921
Provision for loan losses ................................................ 915 60
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Net interest income after provision for loan losses ...................... 3,372 2,861
--------- ---------
Other income:
Fees for other customer services ....................................... 409 231
Net gains from sale of loans ........................................... 271 263
Commissions and fees from brokerage activities ......................... 67 33
Investment securities transactions, net ................................ -- (4)
Other operating income ................................................. 113 75
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Total other income .............................................. 860 598
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Other expenses:
Salaries and employee benefits ......................................... 1,754 969
Net occupancy expense of premises ...................................... 486 246
Purchased services ..................................................... 315 218
Office supplies ........................................................ 110 65
Minority interest in income of consolidated subsidiaries ............... -- 67
Other operating expenses ............................................... 524 322
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Total other expenses ............................................ 3,189 1,887
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Income before income taxes ...................................... 1,043 1,572
Income tax expense ....................................................... 331 402
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NET INCOME ............................................................... $ 712 $ 1,170
========= =========
Other comprehensive income, net of tax
Unrealized gains on securities
Unrealized holding gains (losses) arising during the period ........ (136) 22
Income tax benefit related to items of other comprehensive income ...... (46) 8
--------- ---------
Other comprehensive income, net of tax .......................... (90) 14
--------- ---------
COMPREHENSIVE INCOME ..................................................... $ 622 $ 1,184
========= =========
Income per share:
Basic and diluted earnings per share ..................................... $ 4.93 $ 8.36
========= =========
Weighted average shares outstanding .................................. 144,440 140,000
========= =========
</TABLE>
These consolidated financial statements should be read only in connection with
the accompanying notes to consolidated financial statements.
3
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FIRST WESTERN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 1999 and 1998 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
---------------------------
1999 1998
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(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................................ $ 712 $ 1,170
Adjustments to reconcile net income to cash provided by operating
activities:
Provision for loan losses ............................................ 915 60
Provision for losses on other real estate owned ...................... -- --
Depreciation and amortization ........................................ 253 104
Net gains from sale of loans ......................................... (271) (263)
Proceeds from sale of loans held for sale ............................ 8,612 15,014
Origination of loans held for sale ................................... (12,097) (12,996)
Investment securities transactions, net .............................. (8) (18)
Increase in minority interest in consolidated subsidiaries ........... -- (26)
Changes in deferrals and accruals:
Other assets ......................................................... (3,814) (1,772)
Other liabilities .................................................... 3,035 2,731
-------- --------
Net cash provided by operating activities .......................... (2,663) 4,004
-------- --------
Cash flows from investing activities:
Net (increase) decrease in federal funds sold .......................... (2,770) 510
Net (increase) decrease in interest bearing deposits in other banks .... 3 50
Purchase of investment securities available-for-sale ................... (30,484) (100)
Purchase of investment securities held-to-maturity ..................... (127) (100)
Proceeds from sale of investment securities available-for-sale ......... -- 500
Proceeds from maturities/paydowns of investment securities ............. 23,193 5,866
Net increase in loans .................................................. (47,072) (20,200)
Expenditures for bank premises and equipment ........................... (596) (1,322)
Proceeds from sale of real estate owned ................................ 162 --
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Net cash used in investing activities .............................. (57,691) (14,796)
-------- --------
Cash flows from financing activities:
Net increase in deposits ............................................... 47,471 7,585
Net increase (decrease) in securities sold under agreements to
repurchase ........................................................... 450 (586)
Advances from Federal Home Loan Bank ................................... -- 7,500
Payments on note payable ............................................... (8,790) (980)
Proceeds from trust preferred securities ............................... 23,000 --
Debt issuance cost ..................................................... (1,100) --
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Net cash provided by financing activities .......................... 61,031 13,519
-------- --------
Net increase in cash and due from banks ..................................... 677 2,727
Cash and due from banks at beginning of period .............................. 13,892 10,427
======== ========
Cash and due from banks at end of period .................................... $ 14,569 $ 13,154
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ............................................................. $ 5,182 $ 2,390
Income taxes ......................................................... -- --
Noncash transactions:
Issuance of shares for minority interest of Firstate Bank .............. 683 --
</TABLE>
These consolidated financial statements should be read only in connection with
the accompanying notes to consolidated financial statements.
4
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FIRST WESTERN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three month period ended March 31, 1999 and 1998
(Unaudited)
1. Unaudited Financial Statements
The accompanying unaudited interim financial statements have been
prepared in accordance with the instructions for Form 10-QSB and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. All
adjustments that are, in the opinion of management, of a normal
recurring nature necessary for a fair statement of results for the
interim periods presented have been made. The results of operations for
such interim periods are not necessarily indicative of results of
operations for a full year. The statements should be read in
conjunction with the summary of significant accounting policies and
notes to consolidated financial statements included in the registration
statement of the Company declared effective on February 10, 1999 SEC
File Nos.333-67197 and 333-67197-01.
In the opinion of management, the accompanying financial statements
contain all adjustments necessary to present fairly the financial
position of the Company at March 31, 1999, and the results of
operations and cash flows for the periods ended March 31, 1999 and
1998.
The consolidated financial statements include the accounts of the
Company's respective subsidiaries. All material intercompany
transactions have been eliminated.
2. Nature of Operations
First Western, a multibank holding company, offers full service
community banking through 12 banking locations in metropolitan Denver
and northern Colorado, and two banking locations in western and central
Nebraska. First Western has opened two new branches in Colorado in the
first quarter of 1999.
First Western's growth strategy is to establish startup branches at
reasonable costs and staff them with experienced bankers. Consolidation
within the Colorado banking community has resulted in the availability
of highly capable bankers with existing customer relationships who
prefer to work in a community banking environment. Consequently, since
1995, First Western has opened nine branches with highly qualified
personnel who have strong customer contacts and who initiate immediate
banking business. First Western has implemented its Colorado branch
expansion through a central operating system, and believes that its
existing management, systems and facilities are capable of supporting
additional growth without proportionate increases in operating costs.
3. Acquisition
In the first quarter of 1999, the Company exchanged 4,440 shares of its
common stock for the 0.86% of Firstate Bank (Kimball, NE) that it did
not own. Such minority shares were owned by individuals already
affiliated with the Company. As the Company and its four shareholders
at the time of the exchange owned 99.6% of the Nebraska bank and the
remaining 0.4% was owned by other members of the company, it was
determined by the boards of both entities that a book value exchange
ratio represented a fair value for all parties. The fair value
determined for this transaction was $683,000. No goodwill was
recognized in connection with this transaction.
4. Offering of Trust Preferred Securities by FW Capital I
On February 16, 1999 the Company and its wholly owned subsidiary FW
Capital I (the "Trust"), completed the sale of $23.0 million of 9.375%
Cumulative Trust Preferred Securities of the Trust. Net proceeds were
approximately $21.9 million after payment of sales commissions and
other offering costs, and were invested in Junior Subordinated
Debentures maturing February 16, 2029, issued by the Company to the
Trust in connection with the public offering.
Interest on the Junior Subordinated Debentures will be paid by the
Company to the Trust. This interest will be the sole revenue of the
Trust and the source for distributions by the Trust to the holders of
the Trust Preferred Securities.
For financial reporting purposes, the Trust is treated as a subsidiary
of the Company, and accordingly, the accounts
5
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of the Trust are included in the consolidated financial statements of
the Company. The Trust Preferred Securities are presented as a separate
line item in the consolidated balance sheet under the caption "Company
obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely Junior Subordinated Debentures." For financial
reporting purposes, the Company records distributions payable on the
Trust Preferred Securities as interest expense in the consolidated
statements of income.
The Junior Subordinated Debentures are unsecured and rank junior and
are subordinate to all senior debt of the Company and constitute a full
and unconditional guarantee on a subordinated basis by the Company of
the obligations of the Trust under the Preferred Securities.
5. Comprehensive Income
The Financial Accounting Standards Board (FASB) has issued SFAS No.
130, "Reporting Comprehensive Income", which is effective for the
fiscal years beginning after December 15, 1997. This statement
establishes standards for reporting and display of comprehensive income
and its components (revenue, expenses, gains and losses) in a full set
of general purpose financial statements. This statement requires that
all items that are required to be recognized under accounting standards
as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. The Company adopted SFAS No. 130 on January 1, 1998.
Amounts formerly presented in Shareholder Equity as "Unrealized gains
on securities available for sale, net of taxes", are now reflected as
"Accumulated other comprehensive income".
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN
OF OPERATION.
FINANCIAL CONDITION
Total assets increased $62.7 million (17%) from $367.2 million as of December
31, 1998, to $429.9 million at March 31, 1999. This growth was the result of:
1. Net loans receivable increased $46.2 million (16%) increasing from
$287.8 million at December 31, 1998 to $334.0 million at March 31,
1999. This resulted from an increase in loan demand in the Company's
market areas, the continued growth of several of the Company's newer
branches, and the opening of two new branches by the Company during the
first quarter of 1999.
2. Investment securities increased by $7.3 million (21%), increasing from
$34.2 million at December 31, 1998 to $41.5 million at March 31, 1999.
Excess liquidity at the bank subsidiary level was used for the purchase
of callable US agency bonds with above market coupon rates, short term
to call maturities, and 5 year or less final maturities.
3. Loans held for sale increased $3.7 million (72%) increasing from $5.2
million at December 31, 1998 to $8.9 million at March 31, 1999. The
Company continued to originate single family mortgages as a result of
continued strong demand for home mortgages in the Company's Colorado
market area.
4. Federal funds sold increased $2.7 million (21%) increasing from $13.3
million at December 31, 1998 to $16.0 million at March 31, 1999.
Deposits increased $47.5 million (15%) from $319.5 as of December 31, 1998 to
$367.0 at March 31, 1999. The change was the result of:
1. An increase in time deposits of $48.7 million (19%) increasing from
$259.9 million at December 31, 1998 to $308.6 million at March 31,
1999. The Company utilized promotional campaigns, designed to generate
an increase in certificates of deposit with balances of less than
$100,000, to achieve this growth..
2. From December 31, 1998 to March 31, 1999 the Company realized a shift
of $1.5 million from non-interest bearing demand deposits to interest
bearing demand deposits.
On February 16, 1999, the Company and its wholly owned subsidiary, FW Capital 1
(the "Trust"), completed the sale of $23.0 million of 9.375% Cumulative Trust
Preferred Securities of the Trust. Net proceeds were approximately $21.9 million
after payment of sales commissions and other offering costs, and were invested
in Junior Subordinated Debentures issued by the Company to the Trust in
connection with the public offering. Interest on the Junior Subordinated
Debentures will be paid by the Company to the Trust. This interest will be the
sole revenue of the trust and the source for distributions by the Trust to the
holders of the Trust Preferred Securities.
The following table presents, for the periods indicated, an analysis of the
allowance for loan loses and related ratios:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
March 31, 1999 March 31, 1998
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<S> <C> <C>
Balance beginning of period $ 2,187 $ 1,321
Provision for loan losses 915 60
Net charge offs 7 (6)
------- -------
Balance end of period $ 3,095 $ 1,387
======= =======
Ratios:
Allowance for loan losses to total loans 0.92% 0.75%
Allowance for loan losses to non-performing loans 337% 79%
</TABLE>
The allowance for loan losses represents management's recognition of the risks
of extending credit and its evaluation of the quality of the loan portfolio. The
allowance for loan losses is maintained at a level that is considered adequate
to provide for anticipated loan losses, based on various factors affecting the
loan portfolio, including a review of problem loans, business conditions,
historical loss experience, evaluation of the underlying collateral and holding
and disposal costs. The allowance is increased by additional charges to
operating income and reduced by loans charged off, net of recoveries.
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The following table presents information and ratios of the Company's
non-performing assets as of the dates indicated:
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
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<S> <C> <C>
Loans 90 days or more delinquent and still
accruing interest
$ 525 $1,297
Non-accrual loans 394 460
Restructured loans -- --
------ ------
Total non-performing loans 919 1,757
Real estate acquired by foreclosure 10 141
====== ======
Total non-performing assets $ 929 $1,898
====== ======
Ratios:
Non-performing assets to total assets 0.22% 0.78%
Non-performing loans to total loans 0.27% 0.95%
</TABLE>
RESULTS OF OPERATIONS
Net revenue for the company increased $1.6 million (46%) from $3.5 million for
the three month period ended March 31, 1998, to $5.1 million for the three month
period ended March 31, 1999. The major components of this increase were:
1. Net interest margin increased $ 1.4 million (88% of the total increase)
from $2.9 million for the three month period ended March 31, 1998 to
$4.3 million for the three month period ended March 31, 1999. This is a
direct result of assets increasing $187.1 million (77%) from $242.8
million at March 31, 1998 to $429.9 at March 31, 1999.
2. Fees for other customer services increased $0.2 million (12% of the
total increase) from $0.2 million for the three month period ended
March 31, 1998 to $0.4 million for the three month period ended March
31, 1999. This is a result of increased branch activity, and additional
branches.
Operating expenses increased $1.3 million (69%) from $1.9 million for the three
month period ended March31, 1998, to $3.2 million for the three month period
ended March 31, 1999. The two major components of the increase were:
1. Salaries and employee benefits increased $0.8 million (61% of the total
increase) from $1.0 million for the three month period ended March 31,
1998, to $1.8 million for the three month period ended March 31, 1999.
2. Net occupancy expense of premises increased $0.3 million (23% of the
total increase) from $0.2 million for the three month period ended
March 31, 1998 to $0.5 million for the three month period ended March
31, 1999.
The majority of the operating expense increase is related to the costs of
opening and operating five additional Colorado de novo branch locations (the
Company operated nine branch locations at March 31, 1998, and fourteen branch
locations at March 31, 1999.)
Income before taxes and provision for loan losses increased $0.3 million (19%)
from $1.6 million for the three month period ended March 31, 1998, to $1.9
million for the three month period ended March 31, 1999.
The provision for loan losses increased by $0.8 million from $0.1 million for
the three month period ended March 31,1998, to $0.9 million for the three month
period ended March 31, 1999. This is a result of a $15l.9 million (82%) increase
in gross loans from $186.2 million at March 31, 1998 to $338.1 million at March
31, 1999. In recognition of this dramatic increase in loans, the Company
enhanced its systematic methodology for determining the allowance for loan
losses.
Net income decreased $.5 million, from $1.2 million for the three month period
ended March 31, 1998, to $0.7 million for the three month period ended March 31,
1999, primarily as a result of the increased provision for loan losses.
LIQUIDITY AND CAPITAL RESOURCES
First Western continuously forecasts and manages its liquidity in order to
satisfy cash flow requirements of depositors and borrowers and allow First
Western to meet its own cash flow needs. Management believes it has developed
sufficient sources of liquidity to meet the Company's needs for the foreseeable
future. These internal and external sources include, but are not limited to:
1. The ability to raise deposits through branch promotional campaigns
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2. Maturity of overnight federal funds sold ($16 million available as of March
31, 1999)
3. Sale of available for sale securities ($35 million available as of March 31,
1999)
4. Available borrowing lines ($34 million available as of March 31, 1999)
5. Increased borrowing lines available at the Federal Home Loan Bank with the
purchase of additional Federal Home Loan Bank stock ($9.7 million available
as of March 31, 1999)
6. Participation and/or sale of portions of the loan portfolio
7. Sale of fixed assets of First Western.
DATA PROCESSING SYSTEMS AND YEAR 2000 COMPLIANCE
As the year 2000 approaches, a significant business issue has emerged regarding
how existing software programs and operating systems can accommodate the date
value for the year 2000. First Western presently believes that with
modifications to existing software and conversion to new software, the year 2000
issue will not pose significant operational problems for First Western's
business operations. Substantially all data processing services for First
Western are provided by First Commerce Technologies, an affiliate of the
National Bank of Commerce, Lincoln, Nebraska. First Commerce Technologies has
been engaged by First Western to ensure First Western's systems are fully 2000
compliant by the second quarter of 1999. An agreement has been entered into, and
it is augmented by First Commerce Technologies with written status reports on a
monthly basis. Reports to date indicate that First Commerce Technologies has met
all target dates and is prepared to meet all future target dates for completion
of the project. Management believes that, to date, the Nebraska Bank and its
non-active Nebraska subsidiary, First Mortgage Bancorp, are completely
converted, tested and compliant. The Colorado Bank is in the conversion and
testing phase with completion expected in the second quarter of 1999. Based on
the results of the Nebraska Bank implementation, management believes that the
project is on time and the commitment of First Commerce Technologies appears
adequate. Management is not aware of limitations on any legal remedies of First
Western as a result of year 2000 damages it may suffer should damages be
incurred. Additionally, implementation of First Western's plan to test in-house
and outsourced software has been underway since the first quarter of 1998.
Applications considered to be mission critical were tested during the first
quarter of 1999, with successful results. Total compliance for all systems,
including First Western's outsourced computer systems, is expected by management
to be completed by the third quarter of 1999. Compliance audits performed to
date on First Western's subsidiaries have been positive and no specific items of
improvement were noted.
In conjunction with the implementation of the Year 2000 plan, the Company
has also made substantial investments in computer hardware and software that
will keep its banks competitive in the marketplace. With the majority of the
expenditures completed management estimates that First Western has spent a total
of $1.0 million on technology upgrades, with approximately $160 thousand being
spent directly on year 2000 compliance. The plan implementation team is
responsible for progress and will continue to provide a status report to the
board of directors on a monthly basis through December 31, 2000. However, if the
modifications and conversions are not made, or are not completed timely, the
year 2000 issue could have a material adverse impact on the operations of First
Western. Because of the factors discussed below, management cannot estimate with
any reasonable degree of certainty the magnitude of lost revenues should
management's reasonable worst case scenario develop in which First Western would
need to use an alternate vendor to become year 2000 compliant and non-compliant
customers were unable to repay their loans.
First Western has in place a contingency plan in the event its outsourced
computer systems are not year 2000 compliant on a timely basis. Management
believes that the alternate vendor has the ability to provide the service to
meet First Western's needs because this vendor has software that is year 2000
compliant which is installed with other parties and would provide a warranty to
First Western as to year 2000 compliance. In the event First Western were to use
the alternate vendor, management believes that the monthly processing costs of
First Western could increase marginally, and a one-time conversion cost in the
range of $50,000 to $100,000 would probably be incurred.
First Western's bank subsidiaries have sent direct mail to their customers
regarding the year 2000 issue and the need for readiness, pursuant to guidelines
of the banking industry regulators. However, response to these inquiries has
been low. Management intends to continue to solicit customer response on this
matter. Failure of First Western's customers to prepare for year 2000
compatibility could have a significant adverse effect on customers' operations
and profitability, thus inhibiting their ability to repay loans and adversely
affecting First Western's operations. First Western does not have sufficient
information accumulated from customers to enable First Western to assess the
degree to which customers' operations are susceptible to potential problems
relating to the year 2000 issue or, further, to quantify the potential lost
revenue to First Western in this case.
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On February 10, 1999 a registration statement on Form SB2 relating to the public
offering and sale of 2.3 million shares, $23.0 million aggregate offering
amount, of 9.375% Cumulative Trust Preferred Securities (SEC file number
333-67197 and 333-67197-01) by the Company and its wholly owned subsidiary, FW
Capital 1 (the "Trust"), was declared effective. The offering was completed on
February 16, 1999. No direct or indirect payments were made to directors or
officers of the Company or its associates, to persons owning 10% or more of any
class of equity securities of the Company, or to any affiliate of the Company.
Net proceeds were approximately $21.9 million after payment of sales commissions
and other offering costs of $1.1 million. Net proceeds of the offering have been
used to pay off the Company's note payable ($8.8 million) and to contribute
capital to the Firstate Bank of Colorado ($11.0.) Pending application, the
remainder has been placed in short term interest bearing investments ($3.1
million.)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27-Financial Data Schedule
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST WESTERN CORP.
Date: May 11, 1999 By: /s/ Timothy D. Wiens
------------ -----------------------------------
Vice President and Vice Chairman
Date: May 11, 1999 By: /s/ Ron James
------------ -----------------------------------
Ron James, Chief Financial Officer
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
Exhibit 27 - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> MAR-31-1999 MAR-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 MAR-31-1998
<CASH> 14,569 13,892
<INT-BEARING-DEPOSITS> 0 3
<FED-FUNDS-SOLD> 16,040 13,270
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 34,854 27,082
<INVESTMENTS-CARRYING> 6,689 7,146
<INVESTMENTS-MARKET> 6,805 7,249
<LOANS> 346,063 295,182
<ALLOWANCE> 3,095 2,187
<TOTAL-ASSETS> 429,938 367,207
<DEPOSITS> 366,951 319,480
<SHORT-TERM> 5,530 5,080
<LIABILITIES-OTHER> 3,796 3,818
<LONG-TERM> 8,650 17,440
23,000 0
0 0
<COMMON> 144 140
<OTHER-SE> 21,867 20,566
<TOTAL-LIABILITIES-AND-EQUITY> 429,938 367,207
<INTEREST-LOAN> 7,975 4,860
<INTEREST-INVEST> 472 368
<INTEREST-OTHER> 180 119
<INTEREST-TOTAL> 8,627 5,347
<INTEREST-DEPOSIT> 3,825 2,277
<INTEREST-EXPENSE> 4,340 2,426
<INTEREST-INCOME-NET> 4,287 2,921
<LOAN-LOSSES> 915 60
<SECURITIES-GAINS> 0 (4)
<EXPENSE-OTHER> 3,189 1,887
<INCOME-PRETAX> 1,043 1,572
<INCOME-PRE-EXTRAORDINARY> 712 1,170
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 712 1,170
<EPS-PRIMARY> 4.93 8.36
<EPS-DILUTED> 4.93 8.36
<YIELD-ACTUAL> 0 0
<LOANS-NON> 394 460
<LOANS-PAST> 525 1,297
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 2,187 1,321
<CHARGE-OFFS> 20 12
<RECOVERIES> 13 18
<ALLOWANCE-CLOSE> 3,095 1,387
<ALLOWANCE-DOMESTIC> 0 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 3,095 1,387
</TABLE>
