SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 14, 1999
COWLITZ BANCORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 0-23881 91-152984
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
927 Commerce Avenue, Longview, Washington 98632
(Address of principal executive office)
(360) 423-9800
(Registrant's telephone number including area code)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Press Release dated September 14, 1999 regarding transaction with
Northern Bank of Commerce.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COWLITZ BANCORPORATION
By: /s/ Charles Jarrett
Charles Jarrett
President
Len Cereghino & Co.
CORPORATE INVESTOR RELATIONS
2605 Western Ave., Seattle, WA 98121
(206) 448-1996
CLIENT: COWLITZ BANCORPORATION
CONTACTS: Charles W. Jarrett, Pres. & COO (360) 423-9800
Don P. Kiser, CFO
NORTHERN BANK OF COMMERCE
William Spicer, Chairman (503) 230-1610
Michelle Castano Garcia (503) 222-9164
NEWS RELEASE
COWLITZ BANCORPORATION TO ACQUIRE NORTHERN BANK OF COMMERCE;
SOLIDIFIES STRATEGY TO SERVE NORTHWEST MARKETS FROM SEATTLE TO PORTLAND
LONGVIEW, WA and PORTLAND, OR - September 14, 1999 - Cowlitz Bancorporation
(Nasdaq: CWLZ), the holding company for Cowlitz Bank and Business Finance
Corporation, today announced it has signed a definitive agreement to acquire
Northern Bank of Commerce (Nasdaq: NBOC) for cash and stock. The acquisition,
which Cowlitz will account for as a purchase transaction, is expected to close
during the first quarter of 2000 and is subject to approval by regulators and
shareholders of both companies. Northern Bank of Commerce will operate as a
division of Cowlitz Bank and will continue to conduct business under its current
name.
Northern Bank of Commerce, founded in 1994, specializes in middle market
lending and financial services. Since opening in September of 1994, the bank has
grown approximately 30% per year, establishing a niche in Portland's small and
medium-sized business market. Northern is also noted for its service to
retirement communities. It currently operates branches in eight retirement
communities throughout the Portland area. At June 30, 1999, assets had risen 38%
over the prior year to $71.7 million, loans had increased 31% to $54.6 million
and deposits had grown 43% to $66.7 million.
"Entering the Portland market has been a long-held strategic goal for
Cowlitz, and we are excited about this opportunity," said Charles W. Jarrett,
President and Chief Operating Officer. "This acquisition gives us an opportunity
to expand into Oregon and establishes Cowlitz Bancorporation as a regional
financial institution serving the high-growth markets from Seattle to the
Portland metropolitan area."
"This combination brings financial strength and management experience to
our customers and our shareholders," stated William Spicer, Northern Bank of
Commerce Chairman. "We have grown rapidly, especially during the past 18 months,
and we can only benefit from the resources Cowlitz Bank will bring to our
community. Their management team is outstanding and knows what it takes to grow
in a competitive and demanding market such as ours. With a capital base that is
more than six times our own, the combination of management and financial
resources will give our customers a tremendous boost in both service and the
variety of financial products that we can offer." Spicer will join the Cowlitz
Bank Board of Directors.
According to the terms of the definitive agreement, Northern Bank of
Commerce shareholders will receive approximately .82584 shares of CWLZ common
stock for each share of NBOC stock and a prorata share of a $2 million escrowed
cash account. The number of CWLZ shares exchanged is subject to an adjustment
based on a valuation of the NBOC loan portfolio prior to closing. The exchange
ratio is also subject to adjustment in the event that additional shares of NBOC
stock are issued. NBOC has approximately 1.2 million shares outstanding and had
a book value of $3.77 per share at June 30, 1999. Its shares currently trade on
Nasdaq's Small Cap market.
"The structure of this transaction was established to indemnify Cowlitz
shareholders from potential loan losses in NBOC's portfolio over the next few
years and provide fair value for Northern Bank of Commerce shareholders," said
Jarrett. "We believe we have reached an agreement that is fair to all of the
participants and will be in the long-term interest of all shareholders. "
As part of the total consideration, Cowlitz will pay $2 million in cash to
NBOC shareholders, which will be placed in escrow to reimburse Cowlitz for
potential losses on certain loans should those losses exceed established
reserves. Two years following the closing of the merger, the proceeds from the
escrow account, minus the portion required to cover losses on certain NBOC
loans, will be paid to NBOC shareholders.
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Cowlitz Bancorporation Acquires Northern Bank of Commerce
Page Two
September 14, 1999
If the acquisition is terminated, Cowlitz has the right under certain
circumstances to either receive a $425,000 break-up fee or to exercise an option
to purchase up to 19.9% of NBOC's common stock.
As of September 20, 1999, Jim Wills, Executive Vice President of Cowlitz
Bank, will be named acting President of Northern Bank of Commerce. Wills brings
over 30 years of corporate and community banking experience with a reputation
for business development, establishing lending policies, and expertise in credit
and loan management. Wills has worked in several capacities for Cowlitz Bank,
including overseeing their entire loan portfolio before being promoted to
Executive Vice President in 1995.
John Holloway, a founder of Northern Bank of Commerce, board member and
current CEO, will remain on Northern's board pending the merger and is expected
to remain with the merged organization as Director of Marketing. "Since we
started the bank five years ago, I have devoted a great deal of my time
introducing our bank to Portland's business community. Cowlitz is an exceptional
institution and is dedicated to the same mission of customer service that we
are," Holloway stated. "I am looking forward to devoting my time to what I enjoy
most - meeting with Portland's businesses and telling them how we can help
them."
On July 29, 1999, Northern Bank of Commerce entered into a Stipulation and
Consent to the Issuance of an Order to Cease and Desist with the Federal Deposit
Insurance Corporation (FDIC). The FDIC cited specific "unsafe and unsound
banking practices" related primarily to administration of its loans and the
potential consequences thereof. "Since the FDIC completed its exam in January
1999, Northern Bank of Commerce has increased its loan-loss reserve by $531,000
to total approximately $1.63 million," Spicer said. "Our loan portfolio grew 24%
in 1998, and following an internal loan review, we elected to strengthen our
balance sheet and increase reserves to 2.96% of gross loans."
"Cowlitz has been aggressively seeking new markets where we can leverage
our capital into solid, long-term, investments for our shareholders," Jarrett
noted. "We are confident that NBOC, along with our other recent acquisitions,
offers opportunities for growth that can provide substantial future returns.
"Formerly, Cowlitz was a one-bank holding company with five branches in
Southwest Washington State," Jarrett continued. "Since August 1998, we have
started up a new Puget Sound business hub through two acquisitions each in both
Bellevue and Seattle, opened a loan office outside Portland in Vancouver, are
about to open Bay Bank in Bellevue, and now have the beginnings of a business
hub in Portland.
"Clearly, all this growth incurs costs," he added. "While the recent
acquisitions of mortgage companies in Bellevue and Seattle would be accretive to
our earnings on their own, the costs related to other ventures will temporarily
offset their contributions. We expect to see overall benefits to earnings from
this newly-developing regional financial network late next year.
"In the meantime, we intend to focus on bringing all our business
components together and to improve productivity throughout our company. We are
working to build a highly-profitable organization that meets the needs of our
shareholders and customers," Jarrett concluded.
"Because this acquisition will be occurring over the transition to the year
2000, we are paying close attention to any special challenges that could arise,"
noted Don P. Kiser, Cowlitz Chief Financial Officer. "Cowlitz has devoted
significant resources to the Y2K issue over the last two years, and our systems
are already fully compliant. Northern Bank also is current on its Y2K
requirements and since the merger will not be completed until after the first of
the year, we believe the transition will be relatively smooth."
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Cowlitz Bancorporation Acquires Northern Bank of Commerce
Page Three
September 14, 1999
Cowlitz Bancorporation's assets were $168.9 million at June 30, 1999.
Shareholders' equity increased to $31.2 million, reflecting capital raised in
its March 1998 public offering, and tangible book value equaled $7.08 per common
share. The Bancorporation has substantially broadened its products, services and
geographic reach through a series of acquisitions during the past year. Its
wholly-owned Cowlitz Bank subsidiary is the largest community bank headquartered
in Cowlitz County - 40 miles north of Portland, Oregon - and offers commercial
banking services primarily to small and medium-sized businesses, professionals
and retail customers.
Cowlitz Bank recently announced formation of a Bay Bank division, stemming
from its July 1999 acquisition of Bay Mortgage in Bellevue, Washington. Bay Bank
is expected to open in Bellevue later this month. Although the bank has greatly
increased its involvement in residential lending, management remains committed
to providing commercial banking services to small and medium-sized businesses,
professionals and retail customers.
Cowlitz Bank also provides mortgage lending services through its current
branch system and to the metropolitan Portland, Oregon market through its
Vancouver, Washington, Mortgage Loan Office. Cowlitz' other subsidiary, Business
Finance Corporation, was acquired in September 1998 and provides asset based
financing to companies throughout the Western US (California, Nevada, Hawaii,
Oregon and Washington).
Forward Looking Statement Disclaimer
This report contains certain forward-looking statements that are subject to
risks and uncertainties that could cause actual results to differ materially
from those reflected in those statements, which are representative only on the
date hereof. These forward-looking statements are based on management's
assumptions and projections, and are sometimes identifiable by the use of the
words, "expect to," "plan," "will," "believe" and words of a similar predictive
nature. Because management's assumptions and projections are based on their
anticipation of future events, you should not place undue emphasis on
forward-looking statements. You should anticipate that our actual performance
may vary from these projections, and these variations may be material and
adverse. Risks and uncertainties include the ability of Cowlitz to: effectively
integrate NBOC as well as its recent acquisitions, retain key employees, improve
service, continue growing, reduce expenses at NBOC, improve profitability
throughout the Cowlitz network and to insure smooth computer operations in 2000.
Therefore, you should not rely solely on the forward-looking statements in
evaluating an investment or prospective investment, and you should consider all
uncertainties and risks in the institutions' filings with the Securities and
Exchange Commission and the Federal Deposit Insurance Corporation. Respective
annual reports on Form 10-K for the year ended December 31, 1998 discuss a
number of factors that may contribute to variances from our expectations. The
corporations undertake no obligation to update any forward-looking statements
contained herein.
NOTE: Transmitted on PR Newswire at 5:00 p.m. PDT, September 14, 1999.
