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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, 2000.
[ ] 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
FIRSTIER CORPORATION
(Exact name of small business issuer as specified in its charter)
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<S> <C>
Colorado 47-0484682
- -------------------------------------------------------------- ---------------------------------
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>
11210 Huron, Northglenn, CO. 80234
------------------------------------------------------------
(Address of principal executive offices, including zip code)
(303) 451-1010
---------------------------
(Issuer's telephone number)
-----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
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 2, 2000, there were 7,579,667 shares of the registrant's
common stock outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
---- ----
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FIRSTIER CORPORATION
TABLE OF CONTENTS
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<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 and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRSTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2000 (Unaudited) and December 31, 1999
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks ............................................................. $ 36,501 $ 27,049
Interest bearing deposits in other banks ............................................ 113 3
Federal funds sold .................................................................. 4,000 --
Investment securities:
Available-for-sale, at fair value ................................................. 39,937 36,369
Held-to-maturity, at amortized cost, fair value of $4,660, at March 31,
2000 (unaudited) and $6,006, at December 31, 1999 .............................. 4,650 5,989
---------- ----------
Total investment securities ................................................ 44,587 42,358
---------- ----------
Loans held for sale ................................................................. 4,310 1,123
Gross loans receivable: ............................................................. 689,900 623,070
Less: unearned loan fees .......................................................... (2,399) (2,121)
allowance for loan losses ................................................... (6,014) (5,322)
---------- ----------
Net loans receivable ....................................................... 681,487 615,627
---------- ----------
Premises and equipment, net ......................................................... 11,607 11,117
Preferred securities issuance cost, net ............................................. 1,074 1,083
Other assets ........................................................................ 8,759 8,461
---------- ----------
TOTAL ASSETS ............................................................... $ 792,438 $ 706,821
========== ==========
LIABILITIES
Deposits:
Demand non-interest bearing ....................................................... $ 67,737 $ 58,648
Demand interest bearing ........................................................... 21,400 19,951
Time .............................................................................. 537,968 523,395
---------- ----------
Total deposits ............................................................. 627,105 601,994
Federal funds purchased and securities sold under agreements to repurchase .......... 10,024 8,150
Note payable ........................................................................ 23,500 11,560
Federal Home Loan Bank borrowings ................................................... 74,535 33,235
Other liabilities ................................................................... 6,390 3,178
---------- ----------
Total liabilities .......................................................... 741,554 658,117
---------- ----------
Company obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely Junior Subordinated Debentures ............................... 23,000 23,000
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, 20,000,000 shares authorized; no shares issued and
outstanding at December 31, 1999 and March 31, 2000 (unaudited) ................. -- --
Common stock, 50,000,000 shares authorized; shares issued and outstanding:
7,579,667 at December 31, 1999 and March 31, 2000 (unaudited) ................... 1,520 1,520
Retained earnings ................................................................... 26,750 24,520
Accumulated other comprehensive income (loss) ....................................... (386) (336)
---------- ----------
Total stockholders' equity ................................................. 27,884 25,704
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................. $ 792,438 $ 706,821
========== ==========
</TABLE>
These consolidated financial statements should be read only in connection with
the accompanying notes to consolidated financial statements.
2
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FIRSTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME Three months ended March 31,
2000 and 1999 (Unaudited)
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Three months ended March 31,
2000 1999
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Interest income:
Loans, including fees ......................................... $ 17,256 $ 7,975
Taxable investment securities ................................. 487 306
Nontaxable investment securities .............................. 125 152
Dividends on investment securities ............................ 14 14
Federal funds sold ............................................ 21 180
--------------- ---------------
Total interest income .................................. 17,903 8,627
=============== ===============
Interest expense:
Deposits ...................................................... 7,440 3,825
Federal funds purchased ....................................... 154 3
Securities sold under agreements to repurchase ................ 69 43
Note payable .................................................. 219 84
Trust preferred securities .................................... 539 270
Federal Home Loan Bank borrowings ............................. 879 115
--------------- ---------------
Total interest expense ................................. 9,300 4,340
--------------- ---------------
Net interest income .................................... 8,603 4,287
Provision for loan losses ....................................... 754 915
--------------- ---------------
Net interest income after provision for loan losses ............. 7,849 3,372
--------------- ---------------
Non-interest income:
Fees for other customer services .............................. 653 409
Net gains from sale of loans .................................. 113 271
Commissions and fees from brokerage activities ................ 113 67
Investment securities transactions, net ....................... -- --
Other operating income ........................................ 199 113
--------------- ---------------
Total non-interest income .............................. 1,078 860
--------------- ---------------
Non-interest expenses:
Salaries and employee benefits ................................ 2,978 1,754
Net occupancy expense of premises ............................. 848 486
Purchased services ............................................ 447 315
Office supplies ............................................... 176 110
Other operating expenses ...................................... 1,017 524
--------------- ---------------
Total non-interest expenses ............................ 5,466 3,189
--------------- ---------------
Income before income taxes ............................. 3,461 1,043
Income tax expense .............................................. 1,232 331
--------------- ---------------
NET INCOME ...................................................... $ 2,229 $ 712
=============== ===============
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period.. (79) (136)
Unrealized holding gains (losses) arising during
prior periods, realized during current period .............. -- --
Income tax (expense) benefit related to items of other
comprehensive income ....................................... 29 46
--------------- ---------------
Other comprehensive income (loss), net of tax .......... (50) (90)
--------------- ---------------
COMPREHENSIVE INCOME ............................................ $ 2,179 $ 622
=============== ===============
Income per share:
Basic and diluted earnings per share ............................ $ 0.29 $ 0.09
=============== ===============
Weighted average shares outstanding ............................. 7,579,667 7,579,667
=============== ===============
</TABLE>
These consolidated financial statements should be read only in connection with
the accompanying notes to consolidated financial statements.
3
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FIRSTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS Three months ended March 31, 2000
and 1999 (Unaudited)
(In thousands)
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<CAPTION>
Three months ended March 31,
-------------------------------
2000 1999
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................................................ $ 2,229 $ 712
Adjustments to reconcile net income to cash provided by operating
activities:
Provision for loan losses .................................................... 754 915
Depreciation and amortization ................................................ 449 253
Net gains from sale of loans ................................................. (113) (271)
Proceeds from sale of loans held for sale .................................... 5,182 8,612
Origination of loans held for sale ........................................... (8,256) (12,097)
Investment securities transactions, net ...................................... 0 (8)
Changes in deferrals and accruals:
Other assets ................................................................. (1,735) (3,814)
Other liabilities ............................................................ 4,569 3,035
------------ ------------
Net cash provided by operating activities .................................. 3,079 (2,663)
------------ ------------
Cash flows from investing activities:
Net (increase) decrease in federal funds sold .................................. (4,000) (2,770)
Net (increase) decrease in interest bearing deposits in other banks ............ (110) 3
Purchase of investment securities available-for-sale ........................... (3,655) (30,484)
Purchase of investment securities held-to-maturity ............................. -- (127)
Proceeds from maturities/paydowns of investment securities ..................... 1,339 23,193
Net increase in loans .......................................................... (66,614) (47,072)
Expenditures for bank premises and equipment ................................... (903) (596)
Proceeds from sale of real estate owned ........................................ 91 162
------------ ------------
Net cash used in investing activities ...................................... (73,852) (57,691)
------------ ------------
Cash flows from financing activities:
Net increase in deposits ....................................................... 25,111 47,471
Net increase (decrease) in securities sold under agreements to repurchase ...... 1,874 450
Advances from Federal Home Loan Bank ........................................... 41,300 --
Proceeds from note payable ..................................................... 11,940 --
Payments on note payable ....................................................... -- (8,790)
Proceeds from trust preferred securities ....................................... -- 23,000
Debt issuance cost ............................................................. -- (1,100)
------------ ------------
Net cash provided by financing activities .................................. 80,225 61,031
------------ ------------
Net increase in cash and due from banks ............................................. 9,452 677
Cash and due from banks at beginning of period ...................................... 27,049 13,892
------------ ------------
Cash and due from banks at end of period ............................................ $ 36,501 $ 14,569
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ..................................................................... $ 8,974 $ 5,182
Income taxes ................................................................. 165 --
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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FIRSTIER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three month period ended March 31, 2000 and 1998 (Unaudited)
1. Summary of significant accounting policies
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 of the Company included in
the Company's annual report on form 10KSB for the year end December 31,
1999.
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the
financial position of the Company at March 31, 2000 and December 31,
1999, and the results of operations and cash flows for the three month
periods ended March 31, 2000 and 1999.
The consolidated financial statements include the accounts of the
Company's respective subsidiaries. All material intercompany
transactions have been eliminated in consolidation.
2. Nature of Operations
FirsTier Corporation (the "Company" or "FirsTier"), a multibank holding
company, offers full service community banking through 15 banking
locations in metropolitan Denver and northern Colorado, and two banking
locations in western and central Nebraska. FirsTier's Colorado bank
opened six new branches during 1999.
3. Corporate Restructuring
On September 14, 1999 the Company changed its state of incorporation to
Colorado and changed its name to FirsTier Corporation from First
Western Corp. As a result of the re-incorporation, the Company's common
stock and surplus accounts have been combined. Also, the Company
effected a 52.48 for one common stock split. All share and per share
amounts contained in these financial statements have been restated for
this reorganization.
4. 1999 Stock Incentive Plan
As of September 15, 1999 the Company adopted the 1999 Stock Incentive
Plan to provide incentives for eligible persons including employees,
non-employee directors and consultants to the company and its
subsidiaries. The number of shares of common stock of the Company to be
issued under this plan will not exceed 1,700,000. To date, all stock
options granted permit the holder to purchase, under certain
limitations, the Company's common stock at a price not less than 100%
of the market value of the stock on the date the option was granted.
These options terminate, contingent upon continued employment and other
factors, approximately 10 years from the date of grant. At the time of
the initial adoption of the plan, an option for 500,000 shares was
granted under this plan to an executive officer at an exercise price of
$12.00 per share.
5
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5. Acquisition
In the first quarter of 1999, the Company exchanged 232,994 shares of
its common stock for the 8.6% of Firstate Bank (Kimball, NE) that it
did not own. Individuals already affiliated with the Company owned
these minority shares. 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 persons who were affiliated with 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.
6. 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 is paid by the Company
to the Trust. This interest is 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 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.
7. 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 Stockholder Equity as "Unrealized gains
on securities available for sale, net of taxes", are now reflected as
"Accumulated other comprehensive income (loss)".
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the Consolidated
Financial Statements and related notes. FirsTier's future operating results may
be affected by various trends and factors, which are beyond FirsTier's control.
These include the factors set forth in "Risk Factors" and "Cautionary
Statements" included in the registration statement of the Company declared
effective on February 10, 1999 SEC File Nos. 333-67197 and 333-67197-01.
Accordingly, past results and trends may not be reliable indicators of future
results or trends. With the exception of historical information, the matters
discussed below include forward-looking statements that involve risks and
uncertainties. FirsTier cautions readers that a number of important factors
could affect FirsTier's actual results and cause actual results to differ
materially from those in the forward-looking statements.
RESULTS OF OPERATIONS
Net interest income for the Company increased $4.3 million (101%) from $4.3
million for the three month period ended March 31, 1999, to $8.6 million for the
three month period ended March 31, 2000. The major components of this increase
were:
1. Interest income increased $9.3 million (108%) from $8.6 million for
the three month period ended March 31, 1999 to $17.9 million for the
three month period ended March 31, 2000. Approximately $9.1 million of
this increase is a result of average earning assets increasing $346.7
million (96%) from $362.1 million for the three month period ended
March 31, 1999 to $708.9 million for the three month period ended
March 31, 2000. Most of the Company's earning assets (94% at March 31,
2000) are loans, a large portion of which have floating rates and are
tied to the prime rate.
2. Interest expense increased $5.0 million (114%) from $4.3 million for
the three month period ended March 31, 1999 to $9.3 million for the
three month period ended March 31, 2000. Approximately $4.8 million of
this increase is a result of average interest bearing liabilities
increasing $333.8 million (105%) from $318.6 million for the three
month period ended March 31, 1999 to $652.4 million for the three
month period ended March 31, 2000.
3. Net interest margin increased 0.08% (2% change) from 4.81% for the
three month period ended March 31, 1999 to 4.89% for the three month
period ended March 31, 2000. The sources of these changes are:
a) Yields on earning assets increased 0.53% (6% change) from 9.61%
for the three month period ended March 31, 1999 to 10.14% for the
three month period ended March 31, 2000. This reflects the impact
of an average 1.00% increase in the prime lending rate on the
Company's variable rate loans.
b) Costs of interest bearing liabilities increased 0.25% (5% change)
from 5.45% for the three month period ended March 31, 1999 to
5.70% for the three month period ended March 31, 2000. This is
the result of an increase in rates paid for fixed rate time
deposits, an average increase of 0.10% from 5.78% in 1999 to
5.88% in 2000, as well as the impact of $23.0 million of trust
preferred securities at 9.375% included in the liability mix.
Provision for loan losses decreased by $161,000 (18%) from $915,000 for the
three month period ended March 31, 1999 to $754,000 for the three month period
ended March 31, 2000. In response to a sustained significant growth rate in the
Company's loan portfolio, management reviewed and revised the methodology for
estimating the adequacy of the allowance for loan losses in the fourth quarter
of 1998. The methodology was further revised in the first quarter of 1999 which
resulted in special loan provisions during the three month period ended March
31, 1999. Management believes that the revised methodology permits a closer
match between period loan loss provisions and period loan originations.
Non-interest income increased $218,000 (25%) from $860,000 for the three month
period ended March 31, 1999 to $1.1 million for the three month period ended
March 31, 2000. The two major components of the increase were:
1. Fees for other customer services increased $244,000 (60%) from
$409,000 for the three month period ended March 31, 1999 to $653,000
for the three month period ended March 31, 2000. This increase
resulted from additional customer accounts at our branch locations.
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2. Net gains from sale of loans decreased $158,000 (58%) from $271,000
for the three month period ended March 31, 1999 to $113,000 for the
three month period ended March 31, 2000. The Company has experienced a
slowing of mortgage loans originated, which management attributes to
an increase in market interest rates, and to bringing new staff
members up to full production capacity.
Non-interest expense increased $2.3 million (71%) from $3.2 million for the
three month period ended March 31, 1999, to $5.5 million for the three month
period ended March 31, 2000. The major components of the increase were:
1. Salaries and employee benefits increased $1.2 million (70%) from $1.8
million for the three month period ended March 31, 1999 to $3.0
million for the three month period ended March 31, 2000. The increase
is the result of staffing four additional branch locations and a loan
production office.
2. Net occupancy expense of premises increased $362,000 (75%) from
$486,000 for the three month period ended March 31, 1999 to $848,000
for the three month period ended March 31, 2000. The increase
represents the cost of adding five additional banking facilities
during 1999.
3. Purchased services increased $132,000 (42%) from $315,000 for the
three month period ended March 31, 1999 to $447,000 for the three
month period ended March 31, 2000. The majority of this increase is
related to data processing services for new branches and the increased
operating costs of using year 2000 compliant data processing services.
4. Other non-interest expenses increased $493,000 (94%) from $524,000 for
the three month period ended March 31, 1999 to $1.0 million for the
three month period ended March 31, 2000. This increase resulted from
additional expenses relating to telephone, marketing, and FDIC
insurance, and was attributable to the increase in banking facilities.
Net income increased $1.4 million (200%) from $712,000 for the three month
period ended March 31, 1999 to $2.1 million for the three month period ended
March 31, 2000
FINANCIAL CONDITION
Total assets increased $85.6 million (12%) from $706.8 million as of December
31, 1999, to $792.4 million at March 31, 2000. This growth was the result of:
1. Cash and due from banks increased $9.5 million (35%), increasing from
$27.0 million at December 31, 1999 to $36.5 million at March 31, 2000.
This resulted from an increase in the balance due from correspondent
banks representing checks presented for payment but not yet available.
2. Federal funds sold increased $4.0 million , from $0 at December 31,
1999 to $4.0 million at March 31, 2000. This is the short term
investment vehicle for excess liquidity generated from deposit
promotions prior to final investment in longer term assets.
3. Investment securities increased by $2.2 million (5%), increasing from
$42.4 million at December 31, 1999 to $44.6 million at March 31, 2000.
Excess liquidity at the bank subsidiary level was used for the
purchase of US agency bonds.
4. Loans held for sale increased $3.2 million (284%), from $1.1 million
at December 31, 1999 to $4.3 million at March 31, 2000. As a result of
staff turnover in the second half of 1999, reduced production levels
resulted in a lower level of loans outstanding in the loans held for
sale category at December 31, 1999. The new employees increased their
production activities in the first quarter of 2000 leading to a higher
level of loans held for sale outstanding at March 31, 2000.
5. Net loans receivable increased $65.8 million (11%), increasing from
$615.6 million at December 31, 1999 to $681.5 million at March 31,
2000. This resulted from an increase in loan demand in the Company's
market areas and the continued growth of the Company's branches.
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Total deposits increased $25.1 million (4%) from $602.0 million as of December
31, 1999 to $627.1 million at March 31, 2000. The change was the result of:
1. Demand non-interest bearing deposits increased $9.1 million (16%),
from $58.6 million at December 31, 1999 to $67.7 million at March 31,
2000. This increase was attributable to the continued growth of the
Company's branches and the addition of a cash management function.
2. Demand interest bearing deposits increased $1.4 million (7%),
increasing from $20.0 million at December 31, 1999 to $21.4 million at
March 31, 2000. This resulted primarily from the addition of several
seasoned bankers who focus on cash management services, and servicing
high net worth customers.
3. Time deposits increased $14.6 million (3%), increasing from $523.4
million at December 31, 1999 to $538.0 million at March 31, 2000. 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.
Federal funds purchased and securities sold under agreements to repurchase
increased $1.9 million (23%) from $8.2 million as of December 31, 1999 to $10.0
million at March 31, 2000. The increase was attributable to federal funds
purchased at March 31, 2000 to support uncollected deposits at correspondent
banks.
Note payable increased $11.9 million (103%) from $11.6 million as of December
31, 1999 to $23.5 million at March 31, 2000. In March 2000, the Company drew
$11.9 million on its line of credit to fund capital needs of its Colorado bank.
Allowance for loan losses increased $692,000 (13%) from $5.3 million as of
December 31, 1999 to $6.0 million at March 31, 2000. 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, 2000 March 31, 1999
--------------- ---------------
(in thousands)
<S> <C> <C>
Balance beginning of period .............................. $ 5,322 $ 2,187
Provision for loan losses ................................ 754 915
Net charge offs .......................................... (62) (7)
--------------- ---------------
Balance end of period .................................... $ 6,014 $ 3,095
=============== ===============
Ratios:
Allowance for loan losses to total loans ................. 0.87% 0.92%
Allowance for loan losses to non-performing loans ........ 154% 337%
</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.
The following table presents information and ratios of the Company's
non-performing assets as of the dates indicated:
<TABLE>
<CAPTION>
March 31,
------------------------------
2000 1999
------------- -------------
(in thousands)
<S> <C> <C>
Loans 90 days or more delinquent and still accruing interest ....... $ 592 $ 525
Non-accrual loans .................................................. 3,323 394
Restructured loans ................................................. -- --
------------- -------------
Total non-performing loans .................................... 3,915 919
Real estate acquired by foreclosure ................................ -- 10
------------- -------------
Total non-performing assets ................................... $ 3,915 $ 929
============= =============
Ratios:
Non-performing assets to total assets .............................. 0.49% 0.22%
Non-performing loans to total loans ................................ 0.57% 0.27%
</TABLE>
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LIQUIDITY
FirsTier continuously forecasts and manages its liquidity in order to satisfy
cash flow requirements of depositors and borrowers and to allow FirsTier to meet
its own cash flow needs. Management has identified two major categories of
liquidity:
1) Ongoing business cash flows:
The Company's major source of cash flows is provided by financing
activities, $80.2 million for the three-month period ended March 31,
2000 and $61.0 million for the three-month period ended March 31,
1999. Cash provided consisted primarily of an increase in deposits,
advances from the Federal Home Loan Bank and proceeds from the note
payable for the three-month period ended March 31, 2000. For the
three-month period ended March 31, 1999 the major components were the
issuance of trust preferred securities, deposit growth and advances
from the Federal Home Loan Bank.
The major use of cash flows for the Company is in investing activities
$73.9 million for the three-month period ended March 31, 2000 and
$57.8 million for the three-month period ended March 31, 1999. For the
three-month period ended March 31, 2000, the major components of this
use were a $66.6 million increase in net loans, a $4.0 million
increase in federal funds sold and a net increase of $2.3 million in
investment securities. For the three-month period ended March 31,
1999, the major components of this use were a $47.1 million increase
in net loans, and a net increase of $7.3 million in investment
securities.
2) Backup sources of liquidity
Management believes it has developed sufficient backup 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
2. Maturity of overnight federal funds sold ($4 million available as
of March 31, 2000)
3. Sale of unpledged available-for-sale securities ($24 million
available as of March 31, 2000)
4. Available borrowing lines ($21 million available as of March 31,
2000)
10
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(i) Exhibits filed with this Form 10-QSB:
Exhibit No. Description
27 Financial Data Schedule.
(ii) Exhibits previously filed and incorporated herein by reference:
Exhibit No. Description
2 Articles of merger merging First Western Corp. into FIRSTIER
CORPORATION(1)
3i Articles of Incorporation of FIRSTIER CORPORATION(1)
3ii Bylaws of of FIRSTIER CORPORATION(1)
4.1 Form of Subordinated Indenture dated February 15, 1999 between
the Registrant and Wilmington Trust Company, as Indenture
Trustee(2).
4.2 Form of Junior Subordinated Debenture (included as an exhibit
to Exhibit 4.1).
4.5 Form of Amended and Restated Trust Agreement of FW Capital I
(2).
4.7 Form of Preferred Securities Guarantee Agreement(2).
10.14 1999 FirsTier Corporation Stock Incentive Plan adopted as of
September 15, 1999(1).
10.15 Agreement concerning the sale of FIRSTIER mark, dated
September 17, 1999, by and between U.S. Bancorp, U.S. Bank
National Association and Firstate Bank of Colorado(1).
99 Risk Factors incorporated by reference from First Western's
Rule 424(b) Prospectus filed on February 10, 1999(3).
- ------------
(1) Filed with the 10-QSB on November 3, 1999
(2) Filed with the Registration Statement on Form SB-2, SEC File No. 333-67107,
on November 13, 1998.
(3) Filed with the 10-QSB on August 12, 1999.
11
<PAGE> 13
(b) Reports on Form 8-K -- None
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.
FIRSTIER CORPORATION
Date: May 2, 2000 By: /s/ Timothy D. Wiens
----------- -----------------------------------------------
President
Date: May 2, 2000 By: /s/ Ronald B. James
----------- -----------------------------------------------
Ronald B. James, Chief Financial Officer
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-Q
DATED MAY 2, 2000 FOR THE PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 36,501
<INT-BEARING-DEPOSITS> 113
<FED-FUNDS-SOLD> 4,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 39,937
<INVESTMENTS-CARRYING> 4,650
<INVESTMENTS-MARKET> 4,660
<LOANS> 691,811
<ALLOWANCE> 6,014
<TOTAL-ASSETS> 792,438
<DEPOSITS> 627,105
<SHORT-TERM> 10,024
<LIABILITIES-OTHER> 6,390
<LONG-TERM> 98,035
23,000
0
<COMMON> 1,520
<OTHER-SE> 26,268
<TOTAL-LIABILITIES-AND-EQUITY> 792,438
<INTEREST-LOAN> 17,256
<INTEREST-INVEST> 626
<INTEREST-OTHER> 21
<INTEREST-TOTAL> 17,903
<INTEREST-DEPOSIT> 7,440
<INTEREST-EXPENSE> 9,300
<INTEREST-INCOME-NET> 8,603
<LOAN-LOSSES> 754
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,466
<INCOME-PRETAX> 3,461
<INCOME-PRE-EXTRAORDINARY> 2,133
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,133
<EPS-BASIC> 0.28
<EPS-DILUTED> 0.28
<YIELD-ACTUAL> 4.89
<LOANS-NON> 3,323
<LOANS-PAST> 592
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,322
<CHARGE-OFFS> 65
<RECOVERIES> 3
<ALLOWANCE-CLOSE> 6,014
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 6,014
</TABLE>
