<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 4/1/99 to 6/30/99.
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 1,221,160
shares issued and outstanding as of June 30, 1999.
<PAGE>
Table of Contents
Page
Part I Financial Information
Item 1. Financial Statements
Consolidated Statements of Condition - June 30, 1999
and December 31, 1998....................................... 3
Consolidated Statements of Income - Three Months and
year-to-date Ended June 30, 1999 and 1998................... 4
Consolidated Statements of Cash Flow - year-to-date ended
June 30, 1999 and 1998...................................... 5
Consolidated Statements of Stockholders' Equity as of
June 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................................................................. 10
2
<PAGE>
Part 1 Financial Information
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
June 30, 1999 and December 31, 1998
($ in thousands)
<TABLE>
<CAPTION>
June 30 December 31
1999 1998
Assets
<S> <C> <C>
Cash and due from banks $ 8,452 $ 9,445
Federal funds sold 11,585 18,674
Securities held-to-maturity (Note 2) 577 818
Securities available-for-sale (Note 2) 24,212 25,853
Federal Home Loan Bank stock, at cost 463 382
Loans, net of allowance for loan losses of $1,328 in 1999 and $1,184 in 1998 (Notes 3 & 4) 94,665 90,121
Loans held for sale 74 1,746
Accrued interest receivable 944 932
Premises and equipment, net 2,881 3,055
Foreclosed real estate, net of allowance of $10 in 1999 and $10 in 1998 467 203
Other assets 878 526
Goodwill 181 189
-------- --------
TOTAL ASSETS $145,378 $151,944
-------- --------
Liabilities
Noninterest bearing demand deposits 28,405 30,374
Money Market accounts 27,755 27,407
NOW accounts 6,052 10,063
Savings accounts 3,301 3,069
Time Certificates of Deposit, $100,000 and over 14,617 10,842
Time Certificates of Deposit, under $100,000 36,615 46,921
-------- --------
TOTAL DEPOSITS $116,746 $128,675
Securities sold under agreement to repurchase 14,709 8,930
Borrowed funds, Federal Home Loan Bank (Note 5) 1,996 2,205
Borrowed funds, other banks (Note 5) 500 500
Accrued interest payable and other liabilities 796 999
-------- --------
TOTAL LIABILITIES $ 18,001 $ 12,634
Stockholders' Equity
Common stock, no par, 5,000,000 shares authorized; issued and outstanding
1,221,160 on June 30, 1999 and 1,191,448 on December 31, 1998 (Note 6) 9,952 9,771
Retained earnings 1,068 619
Accumulated other comprehensive income, net of tax of ($209) for 1999 and $131 for 1998 (388) 244
-------- --------
TOTAL STOCKHOLDERS' EQUITY $ 10,632 $ 10,634
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $145,378 $151,944
======== ========
</TABLE>
3
<PAGE>
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months and year-to-date ended June 30, 1999 and 1998
($ in thousands, except number of shares and per share information)
<TABLE>
<CAPTION>
Three Months Ended Year-to-date
06/30/99 06/30/98 1999 1998
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $2,337 $2,240 $4,535 $4,280
Interest on securities 458 444 906 898
Interest on federal funds sold 78 249 214 353
------ ------ ------ ------
TOTAL INTEREST INCOME $2,873 $2,933 $5,656 $5,531
Interest Expense
Interest on deposits 950 1,214 2,002 2,219
Interest on securities sold under agreement to repurchase 114 107 209 201
Interest on borrowed funds 40 21 81 21
------ ------ ------ ------
TOTAL INTEREST EXPENSE $1,104 $1,342 $2,292 $2,442
NET INTEREST INCOME 1,769 1,591 3,363 3,089
Provision for loan losses 135 130 270 220
------ ------ ------ ------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES $1,634 $1,461 $3,093 $2,869
Noninterest Income
Fees and service charges 173 135 343 259
Net gain from sale of loans 260 128 589 155
Other noninterest income 96 72 174 129
------ ------ ------ ------
TOTAL NONINTEREST INCOME $ 529 $ 335 $1,106 $ 543
Noninterest Expense
Salaries and employee benefits 1,026 827 2,042 1,603
Occupancy expense 116 121 232 225
Furniture, fixtures and equipment expense 47 23 90 57
Depreciation and amortization expense 111 94 224 182
Other operating expense 510 479 938 834
------ ------ ------ ------
TOTAL NONINTEREST EXPENSE $1,810 $1,544 $3,526 $2,901
INCOME BEFORE TAXES 353 252 674 511
Federal income tax expense 111 125 224 233
------ ------ ------ ------
NET INCOME $ 242 $ 127 $ 450 $ 278
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Year-to-date Year-to-date
06/30/99 06/30/98 06/30/99 06/30/98
<S> <C> <C> <C> <C>
Weighted average shares outstanding 1,216,895 1,127,479 1,207,769 1,100,137
Basic earnings per share $0.20 $0.11 $0.37 $0.25
--------- --------- --------- ---------
Weighted average shares outstanding 1,216,895 1,127,479 1,207,769 1,100,137
Effect of dilutive securities 259,965 277,597 263,414 260,795
Weighted average shares outstanding, adjusted
for dilutive securities 1,476,860 1,405,076 1,471,183 1,360,932
Earnings per share assuming full dilution $0.16 $0.09 $0.31 $0.20
--------- --------- --------- ---------
</TABLE>
4
<PAGE>
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
Year-to-date ended June 30, 1999 and 1998
($ in thousands)
<TABLE>
<CAPTION>
Year-to-date
1999 1998
<S> <C> <C>
Net income $450 $278
Adjustments to reconcile net income to cash provided by operating activities:
Provision for loan losses 270 220
Depreciation and amortization 224 182
Increase/decrease in assets and liabilities:
Accrued interest receivable (13) (174)
Other assets (10) (1,176)
Accrued interest payable & other liabilities (204) 346
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $717 ($323)
Cash flows from investing activities:
Net (increase)/decrease in federal funds sold 7,089 (12,428)
Net (increase)/decrease in investment securities 828 (1,265)
Net (increase)/decrease in loans (4,814) (11,463)
Net (increase)/decrease in loans held for sale 1,672 0
Purchase of premises and equipment net of gain or loss on asset disposal (42) (544)
Foreclosed real estate activity (net) (264) 346
-------- --------
NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES $4,469 ($25,353)
Cash flows from financing activities:
Net increase/(decrease) in deposits (11,930) 23,052
Net increase/(decrease) in securities sold under agreement to repurchase 5,779 86
Net proceeds/(payments) from borrowed funds (209) 2,387
Cash received from stock sales (net) 181 35
-------- --------
NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES ($6,179) $25,560
Net increase/(decrease) in cash and cash equivalents ($993) ($116)
Cash and cash equivalents, beginning of year $9,445 $7,405
CASH AND CASH EQUIVALENTS, END OF QUARTER $8,452 $7,289
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>
5
<PAGE>
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
As of June 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 $278,197 278,197 $278,197
Unrealized gains (losses) $27,985 27,985 27,985
Comprehensive income $306,182
Stock issued for acquisition of
mortgage subsidiary $66,780 66,780
Proceeds from sale of stock $34,800 34,800
Fractional shares, issued in cash $0
Transfers $0 1,554,719 (1,554,719)
__________ __________ __________ _______
Balance, end-of-quarter, June 30, 1998 $9,867,984 $9,720,580 ($41,760) $189,164
__________ __________ __________ _______
Disclosure of 1998 reclassification amount:
Unrealized holding gains during period 27,985
Less reclassification adjustment for gains
reported in net income 0
__________
Net unrealized gains on securities $27,985
__________
</TABLE>
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
As of June 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 449,635 449,635 $449,635
Unrealized gains (losses) (632,064) (632,064) (632,064)
Comprehensive income ($182,429)
Stock issued for acquisition of mortgage
subsidiary 0
Proceeds from sale of stock 180,996 180,996
Fractional shares, issued in cash 0
Transfers 0
___________ ___________ __________ ________
Balance, end-of-quarter, June 30, 1999 $10,632,320 $9,952,200 $1,068,442 ($388,323)
___________ ___________ __________ ________
Disclosure of 1999 reclassification amount:
Unrealized holding gains during period ($632,064)
Less reclassification adjustment for gains
reported in net income 0
___________
Net unrealized gains on securities ($632,064)
___________
</TABLE>
6
<PAGE>
Notes to Consolidated Financial Statements
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 June 30, 1999, December 31, 1998 and June 30, 1998, as well as the
results of operations and changes in financial position for the three-month and
six-month periods ended June 30, 1999 and 1998.
Certain reclassifications of June 30 and December 31, 1998 balances have been
made to conform with the June 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 six-month periods ending June 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.
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 six-month period
ending June 30, 1999. Carrying amount and fair values at June 30, 1999 and
December 31, 1998 were as follows
<TABLE>
<CAPTION>
June 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 $ 2,003 $ 2,023 $ 5,019 $ 5,209
Obligations of federal government agencies 20,231 19,717 18,248 18,424
Mortgage backed securities 2,575 2,473 1,960 1,970
Corporate debt obligations 0 0 250 250
TOTAL $24,810 $24,212 $25,477 $25,853
------- ------- ------- -------
Securities held-to-maturity:
Obligations of states, municipalities and
political subdivisions $ 577 $ 582 $ 818 $ 832
------- ------- ------- -------
</TABLE>
NOTE 3. Loans
Loan detail by category as of June 30, 1999 and December 31, 1998 were as
follows
<TABLE>
<CAPTION>
June 30 December 31
1999 1998
<S> <C> <C>
Commercial loans $ 64,413 $ 58,779
Real estate loans 21,715 24,024
Installment loans 5,462 4,227
Consumer and other loans 4,657 4,531
-------- --------
TOTAL LOANS $ 96,246 $ 91,561
Allowance for loan losses (1,328) (1,184)
Deferred loan fees, net of deferred costs (254) (256)
NET LOANS $ 94,665 $ 90,121
-------- --------
</TABLE>
7
<PAGE>
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 six-month periods ended June 30, 1999 and
1998 were as follows
<TABLE>
<CAPTION>
Three Months Ended Year-to-date
06/30/99 06/30/98 1999 1998
<S> <C> <C> <C> <C>
Balance, beginning of period $1,308 $1,163 $1,184 $1,085
Provision for loan losses 135 130 270 220
Loan Charge-offs 118 9 131 21
Loan Recoveries 3 0 5 0
Balance, end of period $1,328 $1,284 $1,328 $1,284
</TABLE>
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 June
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 $1,996,225 on June 30,
1999 and $2,030,158 on December 31, 1998.
NOTE 6. Common Stock
On March 16, 1999, the Board of Directors authorized a two-for-one stock split
for shareholders of record as of May 21, 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.
8
<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.
A two-for-one stock split declared by the directors on March 16, 1999
became effective on May 21, 1999. During the second quarter of the 1999 fiscal
year, the Registrant issued a total of 10,004 shares of common stock to three
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 also issued 200 shares to each non-
employee director pursuant to the Registrant's compensation plan for non-
employee directors; this plan provides for the issuance of 200 shares annually
to each non-employee director completing a period of twelve months of service
prior to the annual shareholder meeting.
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 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders of the Registrant was held on Monday,
May 17, 1999. In addition to the re-election of the directors described in the
proxy material furnished to the shareholders pursuant to Regulation 14A, the
shareholders approved a proposal to amend Article VII of the Articles of
Incorporation to increase the authorized number of shares of common stock from
1,000,000 shares to 5,000,000 shares. The number of shares cast in favor of this
proposal was 414,168; 118,948 shares were cast against or withheld, including
abstentions and broker non-votes. The shareholders also ratified the selection
of Moss Adams, LLP as independent public accountants for the Registrant for the
fiscal year ending December 31, 1999. 419,664 shares were voted in favor of the
ratification with 113,502 shares being voted against or withheld, including
abstentions and broker non-votes.
Item 5. Other Information
The name of the Registrant was changed to Northwest Bancorporation, Inc.,
effective May 20, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Ex 27 Financial Data Schedule
9
<PAGE>
(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: August 10 ,1999
------
By /s/ Frederick M. Schunter
--------------------------------------
Frederick M. Schunter, President and
Chief Executive Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF NORTHWEST BANCORPORATION, INC. AS OF AND FOR THE SIX
MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 8,452
<INT-BEARING-DEPOSITS> 108
<FED-FUNDS-SOLD> 11,585
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,212
<INVESTMENTS-CARRYING> 577
<INVESTMENTS-MARKET> 582
<LOANS> 96,246
<ALLOWANCE> 1,328
<TOTAL-ASSETS> 145,378
<DEPOSITS> 116,746
<SHORT-TERM> 14,709
<LIABILITIES-OTHER> 796
<LONG-TERM> 2,496
0
0
<COMMON> 9,952
<OTHER-SE> 680
<TOTAL-LIABILITIES-AND-EQUITY> 10,632
<INTEREST-LOAN> 4,535
<INTEREST-INVEST> 906
<INTEREST-OTHER> 214
<INTEREST-TOTAL> 5,656
<INTEREST-DEPOSIT> 2,002
<INTEREST-EXPENSE> 2,292
<INTEREST-INCOME-NET> 3,363
<LOAN-LOSSES> 270
<SECURITIES-GAINS> 94
<EXPENSE-OTHER> 3,526
<INCOME-PRETAX> 674
<INCOME-PRE-EXTRAORDINARY> 674
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 450
<EPS-BASIC> 0.37
<EPS-DILUTED> 0.31
<YIELD-ACTUAL> 5.40
<LOANS-NON> 299
<LOANS-PAST> 1,240
<LOANS-TROUBLED> 235
<LOANS-PROBLEM> 2,267
<ALLOWANCE-OPEN> 1,184
<CHARGE-OFFS> 131
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 1,328
<ALLOWANCE-DOMESTIC> 1,328
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
