<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 1/1/00 to 3/31/00.
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 1,576,008
shares issued and outstanding as of March 31, 2000.
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Table of Contents
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Page
<S> <C>
Part I Financial Information
Item 1. Financial Statements
Consolidated Statements of Condition - March 31, 2000 and December
31, 1999........................................................................ 3
Consolidated Statements of Income - Three Months and year-to-date Ended
March 31, 2000 and 1999......................................................... 4
Consolidated Statements of Cash Flow - year-to-date ended March 31,
2000 and 1999................................................................... 5
Consolidated Statements of Stockholders' Equity as of March 31, 2000
and 1999........................................................................ 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
</TABLE>
<PAGE>
Part I Financial Information
Item 1. Financial Statements
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
March 31, 2000 and December 31, 1999
($ in thousands)
<TABLE>
<CAPTION>
March 31 December 31
2000 1999
<S> <C> <C>
Assets
Cash and due from banks $ 7,162 $ 8,475
Federal funds sold 8,200 7,333
Securities held-to-maturity (Note 2) 525 526
Securities available-for-sale (Note 2) 32,729 30,982
Federal Home Loan Bank stock, at cost 496 479
Loans, net of allowance for loan losses of $1,606 in 2000 and $1,480 in 1999 (Notes 3 & 4) 108,175 106,350
Loans held for sale 1,150 981
Accrued interest receivable 884 1,092
Premises and equipment, net 2,862 2,788
Foreclosed real estate 315 853
Other assets 995 1,145
Goodwill, net of accumulated amortization of $28 in 2000 and $24 in 1999 171 174
----------- -----------
TOTAL ASSETS $ 163,665 $ 161,178
=========== ===========
Liabilities
Noninterest bearing demand deposits 27,339 28,759
Money Market accounts 29,302 31,363
NOW accounts 6,546 4,900
Savings accounts 3,709 3,590
Time Certificates of Deposit, $100,000 and over 14,813 16,335
Time Certificates of Deposit, under $100,000 42,964 39,183
----------- -----------
TOTAL DEPOSITS $ 124,673 $ 124,130
Securities sold under agreement to repurchase 18,310 17,928
Borrowed funds, Federal Home Loan Bank (Note 5) 5,936 5,955
Borrowed funds, other banks (Note 5) 1,121 1,030
Accrued interest payable and other liabilities 965 990
----------- -----------
TOTAL LIABILITIES $ 26,332 $ 25,902
Stockholders' Equity
Common stock, no par, 5,000,000 shares authorized; issued and outstanding
1,576,008 on March 31, 2000 and 1,290,453 on December 31, 1999 (Notes 6 & 7) 11,784 10,312
Retained earnings 1,685 1,535
Accumulated other comprehensive income, net of tax of ($417) for 2000 and ($362) for 1999 (809) (702)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY $ 12,660 $ 11,146
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 163,665 $ 161,178
=========== ===========
</TABLE>
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<PAGE>
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months (year-to-date) ended March 31, 2000 and 1999
($ in thousands, except number of shares and per share information)
<TABLE>
<CAPTION>
Three Months Ended Year-to-date
03/31/00 03/31/99 2000 1999
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans $ 2,613 $ 2,198 $ 2,613 $ 2,198
Interest on securities 553 448 553 448
Interest on federal funds sold 90 136 90 136
---------- ---------- ---------- ----------
TOTAL INTEREST INCOME $ 3,256 $ 2,782 $ 3,256 $ 2,782
Interest Expense
Interest on deposits 1,091 1,052 1,091 1,052
Interest on securities sold under agreement to repurchase 216 95 216 95
Interest on borrowed funds 122 41 122 41
---------- ---------- ---------- ----------
TOTAL INTEREST EXPENSE $ 1,429 $ 1,188 $ 1,429 $ 1,188
NET INTEREST INCOME 1,827 1,594 1,827 1,594
Provision for loan losses 135 135 135 135
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES $ 1,692 $ 1,459 $ 1,692 $ 1,459
Noninterest Income
Fees and service charges 180 170 180 170
Net gain from sale of loans 155 329 155 329
Other noninterest income 103 79 103 79
---------- ---------- ---------- ----------
TOTAL NONINTEREST INCOME $ 438 $ 578 $ 438 $ 578
Noninterest Expense
Salaries and employee benefits 1,075 1,016 1,075 1,016
Occupancy/FF&E expense 172 159 172 159
Depreciation and amortization expense 116 112 116 112
Other operating expense 541 428 541 428
---------- ---------- ---------- ----------
TOTAL NONINTEREST EXPENSE $ 1,904 $ 1,715 $ 1,904 $ 1,715
INCOME BEFORE TAXES 226 321 226 321
Federal income tax expense 76 114 76 114
---------- ---------- ---------- ----------
NET INCOME $ 150 $ 208 $ 150 $ 208
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Year-to-date Year-to-date
03/31/00 03/31/99 03/31/00 03/31/99
<S> <C> <C> <C> <C>
Weighted average shares outstanding (Note 7) 1,548,609 1,201,996 1,548,609 1,201,996
Basic earnings per share $0.10 $0.17 $0.10 $0.17
----------- ---------- ----------- ------------
Weighted average shares outstanding (Note 7) 1,548,609 1,201,996 1,548,609 1,201,996
Effect of dilutive securities 57,104 257,320 57,104 257,320
Weighted average shares outstanding, adjusted for dilutive securities 1,605,713 1,459,316 1,605,713 1,459,316
Earnings per share assuming full dilution $0.09 $0.14 $0.09 $0.14
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</TABLE>
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<PAGE>
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
Year-to-date ended March 31, 2000 and 1999
($ in thousands)
<TABLE>
<CAPTION>
Year-to-date
2000 1999
<S> <C> <C>
Net income $ 150 $ 208
Adjustments to reconcile net income to cash provided by operating activities:
Provision for loan losses 135 135
Depreciation and amortization 116 112
Increase/decrease in assets and liabilities:
Accrued interest receivable 207 80
Other assets 204 88
Accrued interest payable & other liabilities (25) (119)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 787 $ 504
Cash flows from investing activities:
Net (increase)/decrease in federal funds sold (867) 11,605
Net (increase)/decrease in investment securities (1,925) (3,396)
Net (increase)/decrease in loans (1,960) (1,531)
Net (increase)/decrease in loans held for sale (169) 354
Purchase of premises and equipment net of gain or loss on asset disposal (186) (30)
Foreclosed real estate activity (net) 538 0
-------- --------
NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES $ (4,569) $ 7,002
Cash flows from financing activities:
Net increase/(decrease) in deposits 543 (10,880)
Net increase/(decrease) in securities sold under agreement to repurchase 382 1,174
Net proceeds/(payments) from borrowed funds 73 (192)
Cash received from stock sales (net) 1,471 79
-------- --------
NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES $ 2,469 ($9,819)
Net increase/(decrease) in cash and cash equivalents ($1,313) ($2,314)
Cash and cash equivalents, beginning of year $ 8,475 $ 9,445
CASH AND CASH EQUIVALENTS, END OF QUARTER $ 7,162 $ 7,131
</TABLE>
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<PAGE>
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
As of March 31, 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 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 207,643 207,643 $ 207,643
Unrealized gains (losses) (227,145) (227,145) (227,145)
Comprehensive income ($19,502)
Stock issued for acquisition of mortgage subsidiary 0
Proceeds from sale of stock 78,877 78,877
Fractional shares, issued in cash 0
Transfers 0
------------ ----------- ----------- -----------
Balance, end-of-quarter, March 31, 1999 $ 10,693,127 $ 9,850,081 $ 826,450 $ 16,596
============ =========== =========== ===========
Disclosure of 1999 reclassification amount:
Unrealized holding gains during period ($164,805)
Less reclassification adjustment for gains reported in net
income (62,340)
------------
Net unrealized gains on securities ($227,145)
============
</TABLE>
NORTHWEST BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
As of March 31, 2000
<TABLE>
<CAPTION>
Accumulated
Common Retained Comprehensive Comprehensive
Total Stock Earnings Income Income
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 $10,633,752 $ 9,771,204 $ 618,807 $ 243,741
Net income 1999 916,547 916,547 $ 916,547
Unrealized gains (losses) (945,484) (945,484) (945,484)
Comprehensive income ($28,937)
Stock issued for acquisition of mortgage subsidiary 0 0
Proceeds from sale of stock 541,104 541,104
Fractional shares, issued in cash 0
Transfers 0
----------- ----------- ----------- -----------
Balance December 31, 1999 $11,145,919 $10,312,308 $ 1,535,354 ($701,743)
Net income, 2000, year-to-date 149,798 149,798 $ 149,798
Unrealized gains (losses) (107,067) (107,067) (107,067)
Comprehensive income $ 42,731
Stock issued for acquisition of mortgage subsidiary 0
Proceeds from sale of stock 1,471,351 1,471,351
Fractional shares, issued in cash 0
Transfers 0
----------- ----------- ----------- -----------
Balance, end-of-quarter, March 31, 2000 $12,660,001 $11,783,659 $ 1,685,152 ($808,810)
----------- ----------- ----------- -----------
Disclosure of 2000 reclassification amount:
Unrealized holding gains during period ($107,067)
Less reclassification adjustment for gains reported
in net income 0
___________
Net unrealized gains on securities ($107,067)
===========
</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 March 31, 2000 and December 31, 1999, as well as the results of
operations and changes in financial position for the three-month periods ended
March 31, 2000 and March 31, 1999. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is suggested
that these condensed statements be read in conjunction with the Independent
Auditor's Report and Financial Statements contained in the Company's most recent
10-KSB as of December 31, 1999.
Certain reclassifications of March 31, 1999 balances have been made to conform
with the March 31, 2000 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-month period ending March 31, 1999 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 ($62,340 after adjustment for tax effect) are included in the
operating results for the three-month period ending March 31, 1999. Carrying
amount and fair values at March 31, 2000 and December 31, 1999 were as follows:
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<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
Amortized Fair Amortized Fair
Cost Value Cost Value
<S> <C> <C> <C> <C>
Securities available-for-sale:
US Treasury securities $ 3,509 $ 3,451 $ 3,510 $ 3,451
Obligations of federal government agencies 23,123 22,196 20,987 20,168
Mortgage backed securities 7,323 7,082 7,549 7,364
Corporate debt obligations 0 0 0 0
------- ------- ------- -------
TOTAL $33,955 $32,729 $32,046 $30,983
======= ======= ======= =======
Securities held-to-maturity:
Obligations of states, municipalities and political subdivisions $ 525 $ 525 $ 526 $ 527
======= ======= ======= =======
</TABLE>
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NOTE 3. Loans
Loan detail by category as of March 31, 2000 and December 31, 1999 were as
follows:
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<TABLE>
<CAPTION>
March 31 December 31
2000 1999
<S> <C> <C>
Commercial loans $ 76,918 $ 72,379
Real estate loans 23,989 25,802
Installment loans 5,045 5,204
Consumer and other loans 4,126 4,736
-------- --------
TOTAL LOANS $110,077 $108,121
-------- --------
Allowance for loan losses (1,606) (1,480)
Deferred loan fees, net of deferred costs (297) (291)
-------- --------
NET LOANS $108,174 $106,350
======== ========
</TABLE>
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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 periods ended March 31, 2000 and 1999 were as
follows:
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<TABLE>
<CAPTION>
Three Months Ended Year-to-date
12/31/00 12/31/99 2000 1999
<S> <C> <C> <C> <C>
Balance, beginning of period $ 1,480 $ 1,184 $ 1,480 $ 1,184
Provision for loan losses 135 135 135 135
Loan Charge-offs 11 13 11 13
Loan Recoveries 1 2 1 2
--------- --------- -------- --------
Balance, end of period $ 1,606 $ 1,308 $ 1,606 $ 1,308
========= ========= ======== ========
</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 $400,000 on
March 31, 2000 and $500,000 on December 31 and March 31, 1999. 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 $2,600,000, US Bank for $1,500,000,
Zions Bank for $1,500,000 and Federal Home Loan Bank (FHLB) for approximately
$8,275,000 (5.0% of bank assets.) There were no balances outstanding on any of
the lines on March 31, 2000 or on December 31 or March 31, 1999. The bank also
has access to an equal (5.0%) amount of long-term funding through the FHLB (that
is, an additional $8,275,000) and has taken advances to fund Community
Investment Program and other loans utilizing these funds. Approximately
$4,000,000 was advanced against the long-term facility in late 1999 as a Year
2000 liquidity hedge; $3,000,000 was repaid subsequent to quarter-end (in April
2000) with the remaining $1,000,000 due later in the year. Long-term notes
payable to the FHLB were $5,936,441 on March 31, 2000; $5,954,793 on December
31, 1999; and, $2,013,365 on March 31, 1999.
INB Mortgage Company has a line of credit with Inland Northwest Bank for the
purpose of warehousing mortgage loans pending their pre-arranged sale to
mortgage investors. Because of regulatory limitations regarding the amount of
credit that can be extended by the bank to an affiliate, a portion of the line
has been sold on a non-recourse basis to Baker-Boyer National Bank. Total amount
of the line is $3,000,000 with Inland Norhtwest Bank retaining $1,000,000 of the
committment and Baker-Boyer $2,000,000. Loans payable to Inland Northwest Bank
have been eliminated from the consolidated statements, balances owing to Baker-
Boyer National Bank were $720,553 on March 31, 2000; $529,658 on December 31,
1999; and, $756,839 on March 31, 1999.
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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.
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NOTE 7. Subsequent Event
On April 18, 2000, the Board of Directors authorized a five-percent stock
dividend payable to shareholders of record as of June 1, 2000 - certificates
will be issued on or before June 15, 2000. Earnings per share and weighted
average shares outstanding for all periods presented have not been restated to
reflect the effect of the stock dividend as it will occur subsequent to the end
of the quarter.
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<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 first quarter of the 2000 fiscal year, the Registrant issued
363 shares of common stock to an employee, pursuant to the exercise of an
employee stock option. The exercise price was $9.20 per share after adjustment
of the stated exercise price of $12.25 per share for previously declared stock
dividends and the stock split effective May 28, 1999. The Registrant also issued
a total of 518 shares of common stock to the same employee at an average
exercise price of $10.80 after adjustment of the average stated exercise price
of $12.67. The employee had terminated her employment and had used stock
appreciation rights to exercise options granted in 1995, 1996 and 1997. The same
adjustments for stock dividends and the stock split were made.
The Registrant also issued a total of 284,674 shares of common stock to
twenty shareholders pursuant to the exercise of warrants granted on January 16,
1990. The exercise price was $5.12 per share. The number of shares subject to
the warrants had been increased to reflect the declaration of stock dividends
after the warrants were issued and the stock split effective May 28, 1999. The
exercise price also was adjusted to correspond with the increase in shares.
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-A
(a) Exhibits
Ex 27 Financial Data Schedule
(b) Reports on Form 8-K
Not applicable
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<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NORTHWEST BANCORPORATION, INC.
Date: May 12, 2000
/s/ Christopher C. Jurey
By______________________________________________
Christopher C. Jurey, Chief Financial Officer
<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 THREE
MONTHS ENDED MARCH 31, 2000
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,162
<INT-BEARING-DEPOSITS> 128
<FED-FUNDS-SOLD> 8,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 32,729
<INVESTMENTS-CARRYING> 525
<INVESTMENTS-MARKET> 525
<LOANS> 110,077
<ALLOWANCE> 1,606
<TOTAL-ASSETS> 163,665
<DEPOSITS> 124,673
<SHORT-TERM> 18,310
<LIABILITIES-OTHER> 965
<LONG-TERM> 7,057
0
0
<COMMON> 11,784
<OTHER-SE> 876
<TOTAL-LIABILITIES-AND-EQUITY> 12,660
<INTEREST-LOAN> 2,613
<INTEREST-INVEST> 553
<INTEREST-OTHER> 90
<INTEREST-TOTAL> 3,256
<INTEREST-DEPOSIT> 1,091
<INTEREST-EXPENSE> 1,429
<INTEREST-INCOME-NET> 1,827
<LOAN-LOSSES> 135
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,904
<INCOME-PRETAX> 226
<INCOME-PRE-EXTRAORDINARY> 226
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150
<EPS-BASIC> 0.10
<EPS-DILUTED> 0.09
<YIELD-ACTUAL> 4.90
<LOANS-NON> 1,282
<LOANS-PAST> 55
<LOANS-TROUBLED> 263
<LOANS-PROBLEM> 3,115
<ALLOWANCE-OPEN> 1,480
<CHARGE-OFFS> 11
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 1,606
<ALLOWANCE-DOMESTIC> 1,606
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
