<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
(Mark One)
( ) Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended _________________________.
( X ) Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from 7/1/99 to 9/30/99.
Commission file number 0-24151
NORTHWEST BANCORPORATION, INC.
(Exact name of small business issuer as specified in its charter)
Washington 91-1574174
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
421 West Riverside, Spokane, WA 99201-0403
(Address of principal executive offices)
(509) 456-8888
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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
The registrant has a single class of common stock, of which there are 1,243,860
shares issued and outstanding as of September 30, 1999.
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Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Part I Financial Information
Item 1. Financial Statements
Consolidated Statements of Condition - September 30, 1999
and December 31, 1998........................................................ 3
Consolidated Statements of Income - Three Months and year-to-date Ended
September 30, 1999 and 1998.................................................. 4
Consolidated Statements of Cash Flow - year-to-date ended
September 30, 1999 and 1998.................................................. 5
Consolidated Statements of Stockholders' Equity as of
September 30, 1999 and 1998.................................................. 6
Notes to Consolidated Financial Statements................................... 7
Item 2. Management's Discussion and Analysis or Plan of Operation.......................... 9
Part II Other Information
Item 2. Changes in Securities........................................................ 9
Item 6. Exhibits and Reports on Form 8-K............................................. 9
Signatures....................................................................................... 9
</TABLE>
<PAGE>
Part I Financial Information
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
September 30, 1999 and December 31, 1998
($ in thousands)
<TABLE>
<CAPTION>
September 30 December 31
1999 1998
<S> <C> <C>
Assets
Cash and due from banks $ 7,791 $ 9,445
Federal funds sold 11,172 18,674
Securities held-to-maturity (Note 2) 577 818
Securities available-for-sale (Note 2) 30,150 25,853
Federal Home Loan Bank stock, at cost 479 382
Loans, net of allowance for loan losses of $1,404 in 1999 and $1.184 in 1998 (Notes 3 & 4) 100,190 90,121
Loans held for sale 878 1,746
Accrued interest receivable 796 932
Premises and equipment, net 2,806 3,055
Foreclosed real estate, net of allowance of $10 in 1999 and $10 1998 420 203
Other assets 933 526
Goodwill 178 189
--------- --------
TOTAL ASSETS $156,369 $151,944
--------- --------
Liabilities
Noninterest bearing demand deposits 27,482 30,374
Money Market accounts 30,338 27,407
NOW accounts 7,215 10,063
Savings accounts 3,397 3,069
Time Certificates of Deposit, $100,000 and over 15,443 10,842
Time Certificates of Deposit, under $100,000 39,129 46,921
--------- --------
TOTAL DEPOSITS $123,003 $128,675
Securities sold under agreement to repurchase 17,835 8,930
Borrowed funds, Federal Home Loan Bank (Note 5) 2,985 2,205
Borrowed funds, other banks (Note 5) 561 500
Accrued interest payable and other liabilities 1,023 999
--------- --------
TOTAL LIABILITIES $ 22,404 $ 12,634
Stockholders' Equity
Common stock, no par, 5,000,000 shares authorized; issued and outstanding
1,243,860 on September 30, 1999 and 1,191,448 on December 31, 1998 (Note 6) 10,068 9,771
Retained earnings 1,249 619
Accumulated other comprehensive income, net of tax of ($192) for 1999 and $131 for 1998 (356) 244
--------- --------
TOTAL STOCKHOLDERS' EQUITY $ 10,961 $ 10,634
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $156,369 $151,944
========= ========
</TABLE>
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NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months and year-to-date ended September 30, 1999 and 1998
($ in thousands, except number of shares and per share information)
<TABLE>
<CAPTION>
Three Months Ended Year-to-date
09/30/99 09/30/98 1999 1998
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $2,331 $2,444 $6,866 $6,724
Interest on securities 457 431 1,363 1,329
Interest on federal funds sold 141 234 356 587
------ ------ ------ ------
TOTAL INTEREST INCOME $2,930 $3,109 $8,585 $8,640
Interest Expense
Interest on deposits 1,001 1,196 3,003 3,415
Interest on securities sold under agreement to repurchase 169 106 378 307
Interest on borrowed funds 41 41 122 63
------ ------ ------ ------
TOTAL INTEREST EXPENSE $1,211 $1,343 $3,503 $3,785
NET INTEREST INCOME 1,719 1,766 5,082 4,855
Provision for loan losses 135 135 405 355
------ ------ ------ ------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES $1,584 $1,631 $4,677 $4,500
Noninterest Income
Fees and service charges 187 138 530 397
Net gain from sale of loans 196 219 785 375
Other noninterest income 100 99 275 228
------ ------ ------ ------
TOTAL NONINTEREST INCOME $ 484 $ 456 $1,590 $ 999
Noninterest Expense
Salaries and employee benefits 1,010 931 3,051 2,534
Occupancy expense 121 112 354 336
Furniture, fixtures and equipment expense 49 34 139 91
Depreciation and amortization expense 109 96 333 278
Other operating expense 502 462 1,439 1,296
------ ------ ------ ------
TOTAL NONINTEREST EXPENSE $1,791 $1,634 $5,316 $4,535
INCOME BEFORE TAXES 277 453 951 964
Federal income tax expense 96 206 320 439
------ ------ ------ ------
NET INCOME $ 181 $ 247 $ 630 $ 525
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Year-to-date Year-to-date
09/30/99 09/30/98 09/30/99 09/30/98
<S> <C> <C> <C> <C>
Weighted average shares outstanding 1,218,337 1,128,942 1,239,128 1,185,613
Basic earnings per share $ 0.15 $ 0.22 $ 0.51 $ 0.44
----------- ----------- ----------- -----------
Weighted average shares outstanding 1,218,337 1,128,942 1,239,128 1,185,613
Effect of dilutive securities 232,429 268,756 244,984 268,756
Weighted average shares outstanding, adjusted for dilutive securtities 1,450,766 1,397,698 1,484,112 1,454,369
Earnings per share assuming full dilution $ 0.12 $ 0.18 $ 0.42 $ 0.36
----------- ----------- ----------- -----------
</TABLE>
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NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
Year-to-date ended September 30, 1999 and 1998
($ in thousands)
<TABLE>
<CAPTION>
Year-to-date
1999 1998
<S> <C> <C>
Net income $ 630 $ 525
Adjustments to reconcile net income to cash provided by operating activities:
Provision for loan losses 405 355
Depreciation and amortization 333 278
Increase/decrease in assets and liabilities:
Accrued interest receivable 136 (143)
Other assets (79) (1,517)
Accrued interest payable & other liabilities 24 669
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,449 $ 167
Cash flows from investing activities:
Net (increase)/decrease in federal funds sold 7,502 (6,765)
Net (increase)/decrease in investment securities (5,077) (2,917)
Net (increase)/decrease in loans (10,474) (13,748)
Net (increase)/decrease in loans held for sale 868 0
Purchase of premises and equipment net of gain or loss on asset disposal (75) (761)
Foreclosed real estate activity (net) (218) 219
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NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES ($ 7,474) ($23,973)
Cash flows from financing activities:
Net increase/(decrease) in deposits (5,672) 22,166
Net increase/(decrease) in securities sold under agreement to repurchase 8,905 975
Net proceeds/(payments) from borrowed funds 841 2,484
Cash received from stock sales (net) 297 35
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NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES $ 4,371 $25,660
Net increase/(decrease) in cash and cash equivalents ($ 1,654) $ 1,854
Cash and cash equivalents, beginning of year $ 9,445 $ 7,405
CASH AND CASH EQUIVALENTS, END OF QUARTER $ 7,791 $ 9,259
Supplemental noncash financing activities:
Goodwill recognized in association with stock issued for acquisition
of mortgage subsidiary - ($ 66)
Issuance of common stock for acquisition of mortgage subsidiary - $ 66
</TABLE>
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NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
As of September 30, 1998
<TABLE>
<CAPTION>
Accumulated
Common Retained Comprehensive Comprehensive
Total Stock Earnings Income Income
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 6,548,259 $6,113,286 $ 408,441 $ 26,532
Net income 1997 829,404 829,404 $829,404
Unrealized gains (losses) 134,647 134,647 134,647
--------
Comprehensive income $964,051
Proceeds from sale of stock 1,950,995 1,950,995
Fractional shares, issued in cash (3,083) (3,083)
Transfers 0
------------ ---------- ---------- --------
Balance December 31, 1997 $ 9,460,222 $8,064,281 $1,234,762 $161,179
Net income, 1998, year-to-date $ 524,774 524,774 $524,774
Unrealized gains (losses) $ 251,274 251,274 251,274
--------
Comprehensive income $776,048
Stock issued for acquisition of mortgage subsidiary $ 66,780 66,780
Proceeds from sale of stock $ 39,643 39,643
Fractional shares, issued in cash $ (4,843) (4,843)
Transfers $ 0 1,563,042 (1,563,042)
------------ ---------- ---------- --------
Balance, end-of-quarter, September 30, 1998 $ 10,337,850 9,733,746 $ 191,651 $412,453
------------ ---------- ---------- --------
Disclosure of 1998 reclassification amount:
Unrealized holding gains during period 251,274
Less reclassification adjustment for gains reported
in net income 0
------------
Net unrealized gains on securities $ 251,274
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</TABLE>
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
As of September 30, 1999
<TABLE>
<CAPTION>
Accumulated
Common Retained Comprehensive Comprehensive
Total Stock Earnings Income Income
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $ 9,460,222 $ 8,064,281 $ 1,234,762 $161,179
Net income 1998 947,087 947,087 $ 947,087
Unrealized gains (losses) 82,562 82,562 82,562
----------
Comprehensive income $1,029,649
Stock issued for acquisition of mortgage
subsidiary (Note 6) 66,780 66,780
Proceeds from sale of stock 81,944 81,944
Fractional shares, issued in cash (4,843) (4,843)
Transfers 0 1,558,199 (1,558,199)
----------- ----------- ----------- ----------
Balance December 31, 1998 $10,633,752 $ 9,771,204 $ 618,807 $ 243,741
Net income, 1999, year-to-date 630,362 630,362 $ 630,362
Unrealized gains (losses) (600,168) (600,168) (600,168)
----------
Comprehensive income $ 30,194
Stock issued for acquisition of mortgage subsidiary 0
Proceeds from sale of stock 297,270 297,270
Fractional shares, issued in cash 0
Transfers 0
----------- ----------- ----------- ----------
Balance, end-of-quarter, September 30, 1999 $10,961,216 $10,068,474 $ 1,249,169 $ (356,427)
----------- ----------- ----------- ----------
Disclosure of 1999 reclassification amount:
Unrealized holding gains during period $ (600,168)
Less reclassification adjustment for gains reported
in net income 0
-----------
Net unrealized gains on securities $ (600,168)
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</TABLE>
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Notes to Consolidated Financial Statements
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NOTE 1. Management Statement
In the opinion of the Company, the accompanying audited and unaudited
Consolidated Financial Statements present fairly the financial position of the
Company as of September 30, 1999, December 31, 1998 and September 30, 1998, as
well as the results of operations and changes in financial position for the
three-month and nine-month periods ended September 30, 1999 and 1998.
Certain reclassifications of September 30 and December 31, 1998 balances have
been made to conform with the September 30, 1999 presentation; there was no
impact on net income or stockholders' equity. Shares outstanding and calculation
of earnings per share have been restated for the three and nine-month periods
ending September 30, 1998 to reflect the effect of a two-for-one stock split
effective for shareholders of record as of May 28, 1999.
Effective May 20, 1999, the name of the Company was changed from Inland
Northwest Bancorporation, Inc. to Northwest Bancorporation, Inc. The former name
was determined to be too geographically limiting for expansion opportunities
that might arise in the future. No such opportunities have currently been
identified.
At its annual meeting of shareholders, May 17, 1999, shareholders approved an
increase in the number of authorized shares from 1,000,000 to 5,000,000. The
increase in shares was to accomodate the two-for-one stock split and to
facilitate future capital offerings. No such offerings are currently planned
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NOTE 2. Securities
Most of the securities are classified as available-for-sale and are stated at
fair value, and unrealized holding gains and losses, net of related deferred
taxes, are reported as a separate component of stockholders' equity. Gains or
losses on available-for-sale securities sales are reported as part of
noninterest income based on the net proceeds and the adjusted carrying amount of
the securities sold, using the specific identification method. Net realized
gains of $94,455 are included in operating results for the nine-month period
ending September 30, 1999. Carrying amount and fair values at September 30, 1999
and December 31, 1998 were as follows
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<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
Amortized Fair Amortized Fair
Cost Value Cost Value
<S> <C> <C> <C> <C>
Securities available-for-sale:
US Treasury securities $ 4,011 $ 4,023 $ 5,019 $ 5,209
Obligations of federal government agencies 21,983 21,482 18,248 18,424
Mortgage backed securities 4,704 4,645 1,960 1,970
Corporate debt obligations 0 0 250 250
-------- -------- --------- -------
TOTAL $ 30,698 $ 30,150 $ 25,477 $25,853
======== ======== ========= =======
Securities held-to-maturity:
Obligations of states, municipalities and political subdivisions $ 577 $ 580 $ 818 $ 832
======== ======== ======== =======
</TABLE>
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NOTE 3. Loans
Loan detail by category as of September 30, 1999 and December 31, 1998 were as
follows
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<TABLE>
<CAPTION>
September 30 December 31
1999 1998
<S> <C> <C>
Commercial loans $ 68,055 $ 58,779
Real estate loans 23,611 24,024
Installment loans 5,535 4,227
Consumer and other loans 4,647 4,531
-------- --------
TOTAL LOANS $101,847 $ 91,561
-------- --------
Allowance for loan losses (1,404) (1,184)
Deferred loan fees, net of deferred costs (253) (256)
-------- --------
NET LOANS $100,190 $ 90,121
======== ========
</TABLE>
<PAGE>
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NOTE 4. Allowance for Loan Losses
The allowance for loan loss is maintained at levels considered adequate by
management to provide for possible loan losses. The allowance is based on
management's assessment of various factors affecting the loan portfolio,
including problem loans, business conditions and loss experience, and an overall
evaluation of the quality of underlying collateral. Changes in the allowance for
loan loss during the three-month and nine-month periods ended September 30, 1999
and 1998 were as follows
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<TABLE>
<CAPTION>
Three Months Ended Year-to-date
09/30/99 09/30/98 1999 1998
<S> <C> <C> <C> <C>
Balance, beginning of period $1,328 $1,284 $1,184 $1,085
Provision for loan losses 135 135 405 355
Loan Charge-offs 60 127 191 148
Loan Recoveries 1 0 6 0
------ ------ ------ ------
Balance, end of period $1,404 $1,292 $1,404 $1,292
</TABLE>
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NOTE 5. Borrowed Funds
Borrowed funds include a non-revolving $500,000 line of credit payable from the
Company to Key Bank of Washington with a balance outstanding of $500,000 on
September 30, 1999 and December 31, 1998. Proceeds were used to fund the
purchase and capitalization of INB Mortgage Company.
The Company's subsidiary, Inland Northwest Bank, has unsecured operating lines
of credit with Key Bank of Washington for $2,500,000, US Bank for $1,500,000,
Zions Bank for $1,500,000 and Federal Home Loan Bank (FHLB) for approximately
$7,268,000 (5.0% of bank assets.) There was a balance of $175,000 on the FHLB
line on December 31, 1998. There were no balances outstanding on any of the
lines on June 30, 1999. The bank also has access to an equal (5.0%) amount of
long-term funding through the FHLB (that is, an additional $7,268,000) and has
taken advances to fund Community Investment Program and other loans utilizing
these funds. Long-term notes payable to the FHLB were $2,996,225 on September
30, 1999 and $2,030,158 on December 31, 1998. One property acquired by the Bank
through foreclosure was encumbered by a mortgage in the amount of $61,085 as of
September 30, 1999. There was no underlying indebtedness on OREO properties on
either September 30 or December 31, 1998
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NOTE 6. Common Stock
On May 18, 1999, the Board of Directors authorized a two-for-one stock split for
shareholders of record as of May 28, 1999. All amounts per share and weighted
average shares outstanding for all periods presented have been restated to
reflect the effect of the stock split
- --------------------------------------------------------------------------------
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
The Registrant relied upon Alternative 2 in its registration statement
filed on Form 10-SB; there is no information to provide in response to Item
6(a)(3)(i) to Model B of Form 1-A.
Part II Other Information
Item 2. Changes in Securities.
During the third quarter of the 1999 fiscal year, the Registrant issued a
total of 22,700 shares of common stock to four shareholders pursuant to the
exercise of warrants granted on January 16, 1990. The exercise price was $5.12
per share after adjustment of the stated exercise price of $15.00 per share for
previously declared 10% stock dividends and the stock split described above.
The Registrant believes that the issuance of these shares of common stock
was exempt from registration pursuant to Section 4(2) of the Securities Act of
1933.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Ex 27 Financial Data Schedule
(b) Reports on Form 8-K
Not applicable
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NORTHWEST BANCORPORATION, INC.
Date: November 10, 1999
By /s/ Frederick M. Schunter
----------------------------------------
Frederick M. Schunter, President and
Chief Executive Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of income presented
above, as well as additional information relating to problem loans required by
Item 601(c) of Regulation S-B.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 7,791
<INT-BEARING-DEPOSITS> 293
<FED-FUNDS-SOLD> 11,172
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 30,150
<INVESTMENTS-CARRYING> 577
<INVESTMENTS-MARKET> 580
<LOANS> 101,847
<ALLOWANCE> 1,404
<TOTAL-ASSETS> 156,369
<DEPOSITS> 123,003
<SHORT-TERM> 17,835
<LIABILITIES-OTHER> 1,023
<LONG-TERM> 3,546
0
0
<COMMON> 10,068
<OTHER-SE> 893
<TOTAL-LIABILITIES-AND-EQUITY> 10,961
<INTEREST-LOAN> 6,866
<INTEREST-INVEST> 1,363
<INTEREST-OTHER> 356
<INTEREST-TOTAL> 8,585
<INTEREST-DEPOSIT> 3,003
<INTEREST-EXPENSE> 3,503
<INTEREST-INCOME-NET> 5,082
<LOAN-LOSSES> 405
<SECURITIES-GAINS> 94
<EXPENSE-OTHER> 5,316
<INCOME-PRETAX> 951
<INCOME-PRE-EXTRAORDINARY> 951
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 630
<EPS-BASIC> 0.51
<EPS-DILUTED> 0.42
<YIELD-ACTUAL> 4.78
<LOANS-NON> 999
<LOANS-PAST> 59
<LOANS-TROUBLED> 235
<LOANS-PROBLEM> 1,906
<ALLOWANCE-OPEN> 1,184
<CHARGE-OFFS> 191
<RECOVERIES> 6
<ALLOWANCE-CLOSE> 1,404
<ALLOWANCE-DOMESTIC> 1,404
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
