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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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)
October 21, 1996
WESTERFED FINANCIAL CORPORATION
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(Exact name of Registrant as specified in its Charter)
Delaware 0-22772 81-3899950
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(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) Number)
110 East Broadway, Missoula, Montana 59802
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (406) 721-5254
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N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On October 21, 1996, the Registrant issued the press release
attached as Exhibit 100.6 announcing fourth quarter and year end
earnings and a cash dividend.
Item 7. Financial Statements and Exhibits
(a) Exhibits
100.6 Press release, dated October 21, 1996
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Signatures
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 thereunto duly authorized.
WesterFed Financial Corporation
Date: October 21, 1996 By: /s/ Lyle R. Grimes
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Lyle R. Grimes
President & Chief Executive Officer
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Index to Exhibits
Sequentially
Numbered Page
Where Attached
Exhibit Exhibits
Number are located
99.6 Press Release dated October 21, 1996 5
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WESTERFED FINANCIAL CORPORATION ANNOUNCES
FIRST QUARTER EARNINGS AND QUARTERLY DIVIDEND
Missoula, Montana -- October 21, 1996 -- WesterFed Financial
Corporation (the "Company") (NASDAQ - WSTR), holding company for Western Federal
Savings Bank of Montana (the "Bank"), announced earnings for the first quarter
ended September 30, 1996 of $1.2 million, or $0.29 per share before a one-time
after tax charge to earnings of $1.4 million, or $0.33 per share, for a special
assessment to recapitalize the Savings Association Insurance Fund ("SAIF"). The
$1.2 million reported earnings before the SAIF assessment was a 9.1% increase
over the quarter ended September 30, 1995 reported earnings of $1.1 million, or
$0.25 per share (see footnote 1). Earnings after the SAIF assessment were a net
loss of $200,000 for the quarter ended September 30, 1996.
The special SAIF assessment is the result of recently passed federal
legislation affecting all savings associations nationwide and is designed to
recapitalize the SAIF. The deposits of the Bank are presently insured by the
SAIF, which together with the Bank Insurance Fund (the "BIF") are the two
insurance funds administered by the Federal Deposit Insurance Corporation (the
"FDIC"). The legislation requires a one-time assessment of approximately 65.7
cents per $100 of SAIF insured deposits held by the Bank at March 31, 1995. The
legislation is intended to fully recapitalize the SAIF fund so that commercial
bank and thrift deposits will be charged the same FDIC premiums after the year
1999.
Management anticipates that deposit insurance premiums in future
quarters will be significantly reduced from the current premium applicable to
SAIF deposits. For calendar years 1997 through 1999, an annual assessment of
approximately 6.5 cents (versus a current annual SAIF insurance premium of 23
cents) per $100 of insured deposits, will be assessed upon SAIF insured
deposits. Accordingly, beginning January 1, 1997, the annual after tax decrease
in premiums is expected to be approximately $365,000 for the Bank based on the
June 30, 1996 SAIF assessment base.
The Company also announced it will pay a cash dividend of $0.095 per
share for the quarter ended September 30, 1996. The dividend will be payable on
November 22, 1996 to stockholders of record on November 8, 1996. The quarterly
cash dividend was increased 5.5% over the prior quarter's regular cash dividend
of $0.090 per share. WesterFed Financial Corporation has increased regular cash
dividends every quarter since becoming a public company.
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President/Chief Executive Officer Lyle R. Grimes stated, "This has been
an eventful first quarter for WesterFed Financial Corporation. On September 25,
1996 we announced the signing of a definitive agreement whereby Security Bancorp
("Security") (NASDAQ: SFBM) will be acquired by WesterFed and on September 30
the federal legislation was enacted to recapitalize the SAIF insurance fund.
While the special $2.3 million assessment significantly reduced our first
quarter earnings, the reduced premiums will add significantly to future earnings
beginning in 1997.
Total assets of the Company increased $2.2 million to $566.1 million at
September 30, 1996 from $563.9 million at June 30, 1996. This increase in assets
was primarily the result of a $3.0 million increase in loans receivable and
loans held for sale and a $3.3 million increase in investment securities,
Federal Home Loan Bank of Seattle stock and other interest earning assets,
partially offset by a $4.5 million decrease in mortgage-backed securities. The
$2.2 million increase was funded primarily by an increase of $4.6 million in
borrowed funds, a $2.9 million increase in advances from borrowers for taxes and
insurance and a $2.7 million increase in accrued expenses and other liabilities,
partially offset by a $7.2 million decrease in deposits.
Net income decreased $1.3 million from $1.1 million for the quarter
ended September 30, 1995 to a loss of $200,000 for the quarter ended September
30, 1996. The $1.3 million reduction in earnings was the result of the $2.3
million pre-tax, or $1.4 million after tax, special assessment to recapitalize
the SAIF insurance fund.
Without the $1.4 million after tax assessment, earnings would have
increased $100,000, or 9.1%, to $1.2 million for the quarter ended September 30,
1996 from $1.1 million for the quarter ended September 30, 1995. The $100,000
increase was the result of an increase in net interest income after provision
for loan losses of $400,000, non-interest expense decrease of $200,000 offset a
decrease in non-interest income of $300,000 and $200,000 income tax expense on
the related income. The increase in net interest income was primarily the result
of an increase in average net earning assets of $1.4 million to $65.8 million
during the quarter ended September 30, 1996 from $64.4 million during the
quarter ended September 30, 1995. In addition, the net interest margin (net
interest income divided by average interest earning assets) increased to 3.43%
during the quarter ended September 30, 1996 from 3.12% during the quarter ended
September 30, 1995. The $300,000 decrease in non-interest income is due
primarily to a $302,000 decrease in net gain on sale of loans and securities
available-for-sale. The $200,000 decrease in non-interest expense, before the
$2.3 million SAIF assessment, was primarily the result of a $109,000 decrease in
marketing and advertising and a $104,000 decrease in other
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non-interest expense. Non-interest expense for the quarter ended September 30,
1996 was $3.4 million without the SAIF assessment, an 8.1% reduction from the
$3.7 million reported for the quarter ended June 30, 1996 and a 5.6% decrease
from the $3.6 million reported for the quarter ended September 30, 1995.
Total loans increased $3.0 million to $371.2 million at September 30,
1996 from $368.2 million at June 30, 1996. Real estate mortgage loans decreased
$4.1 million while consumer loans increased $7.1 million. Real estate loan
originations declined to $23.9 million during the quarter ended September 30,
1996 from $28.0 million and $38.6 million for the quarters ended June 30, 1996
and September 30, 1995 respectively primarily due to a decline in refinancing
activity, slight slowdown in new construction and home sales and increased
mortgage lending competition. Consumer loan originations increased to $14.1
million during the quarter ended September 30, 1996 from $12.3 million and $6.8
million for the quarters ended June 30, 1996 and September 30, 1996
respectively.
Deposits decreased $7.2 million to $343.0 million at September 30, 1996
from $350.2 million at June 30, 1996. NOW and Money Market accounts decreased
$2.7 million, Passbook accounts decreased $1.5 million and Certificates of
Deposit decreased $3.0 million. While the Bank pays competitive interest rates,
management believes it is not prudent to pay deposit rates beyond normal
treasury spreads while the Bank's regulatory liquidity remains strong at 10.6%.
The weighted average rate paid during the quarter on deposits decreased to 4.47%
during the quarter ended September 30, 1996 from 4.49% during the quarter ended
June 30, 1996 and 4.62% during the quarter ended September 30, 1995. The
interest rate spread increased to 2.70% at September 30, 1996 from 2.67% at June
30, 1996 and 2.44% at September 30, 1995.
President Grimes stated, "Asset quality remains strong with no real
estate owned on the books for the second year in a row. While non-performing
assets increased $558,000, of which $170,000 was due to a change in the
reporting of loans secured 100% by savings account balances, total
non-performing assets as a percentage of total assets remained low at only
0.22%."
The Company announced the adoption of a Dividend Reinvestment and Stock
Purchase Plan which was implemented during the first quarter ended September 30,
1996. This plan will enable shareholders of record to apply dividends paid on
common stock toward the purchase of additional shares. An option to make
quarterly cash payments to purchase additional shares is also part of the plan.
Grimes stated, "The Plan is a convenient and economical way for shareholders to
increase their ownership of WesterFed Financial Corporation's common stock."
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WesterFed Financial Corporation's only subsidiary, Western Federal
Savings Bank of Montana, Montana's largest savings bank, operates 19 branch
offices and one loan servicing center in the following Montana cities: Missoula,
Hamilton, Helena, East Helena, Bozeman, Great Falls, Conrad, Lewistown, Miles
City, Hardin and Billings.
FOOTNOTE 1 -
1995 earnings per share have been restated to reflect the effect of a
decrease in the weighted average shares outstanding as a result of applying the
treasury stock method to common stock equivalents.
The per share earnings were previously reported at $0.24 per share for
the quarter ended September 30, 1995. This restatement did not result
in a material change to the historical earnings per share trend line.
CONTACT: Dale W. Brevik, Vice President/Marketing
James A. Salisbury, Treasurer/Chief Financial Officer
(406) 721-5254
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CONSOLIDATED BALANCE SHEETS
WESTERFED FINANCIAL CORPORATION AND SUBSIDIARIES
(Dollars in thousands, except share and per share data)
September 30, June 30,
ASSETS 1996 1995
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Cash and due from banks $ 6,256 $ 7,829
Interest-bearing due from banks 6,030 5,470
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Cash and cash equivalents 12,286 13,299
Interest-bearing deposits 5,103 3,000
Investment securities available-for-sale 40,223 35,637
Investment securities, at amortized cost
(estimated market value of $6,897 at
Sept. 30, 1996 and $9,399 at June 30, 1996) 6,851 9,347
Stock in Federal Home Loan Bank, at cost 7,622 7,471
Mortgage-backed securities available-for-sale 42,386 44,909
Mortgage-backed securities, at amortized
cost (estimated market value of $57,913 at
Sept. 30, 1996 and $59,361 at June 30, 1996) 58,023 60,038
Loans available-for-sale 4,768 3,967
Loans receivable, net 366,460 364,226
Accrued interest receivable 3,733 3,695
Premises and equipment, net 13,995 13,758
Cash surrender value of life insurance
policies 3,220 3,183
Other assets 1,439 1,401
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Total assets $ 566,109 $ 563,931
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 342,986 $ 350,212
Borrowed funds 130,351 125,838
Advances from borrowers for taxes
and insurance 6,217 3,255
Income taxes 1,899 1,961
Accrued interest payable 1,195 1,219
Accrued expenses and other liabilities 5,172 2,839
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Total liabilities 487,820 485,324
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Stockholders' Equity:
Preferred stock, $.01 par value:
5,000,000 shares authorized-
none outstanding -- --
Common stock, $.01 par value:
10,000,000 shares authorized-
4,395,108 shares outstanding at
Sept. 30, 1996 and 4,395,204 shares
outstanding at June 30, 1996 46 46
Additional paid-in capital 45,499 45,451
Common stock acquired by ESOP/RRP (3,382) (3,558)
Treasury stock, at cost (3,080) (3,079)
Net unrealized gain on securities
available-for-sale (196) (226)
Retained earnings, substantially restricted 39,402 39,973
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Total stockholders' equity 78,289 78,607
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Total liabilities and stockholders'
equity $ 566,109 $ 563,931
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Book value per share $ 17.81 $ 17.88
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CONSOLIDATED STATEMENTS OF INCOME
WESTERFED FINANCIAL CORPORATION AND SUBSIDIARIES
(Dollars in thousands, except share and per share data)
(Unaudited)
Three Months Ended
September 30,
1996 1995
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Interest Income:
Loans receivable $ 7,710 $ 6,624
Mortgage-backed securities available-for-sale 729 1,015
Mortgage-backed securities 1,037 1,368
Investment securities available-for-sale 690 858
Investment securities 153 232
Interest-bearing deposits 228 265
Other 46 44
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Total interest income 10,593 10,406
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Interest expense:
NOW and money market demand 382 446
Savings 474 494
Certificates of deposit 3,009 3,061
Advances from FHLB-Seattle and other borrowed
funds 2,085 2,157
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Total interest expense 5,950 6,158
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Net interest income 4,643 4,248
Provision for loan losses 15 --
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Net interest income after provision for
loan losses 4,628 4,248
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Non-interest income:
Loan origination fees 125 133
Service fees 566 509
Net gain on sale of loans and securities
available-for-sale 109 411
Other 35 36
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Total non-interest income 835 1,089
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Non-interest expenses:
Compensation and employee benefits 1,887 1,884
Net occupancy expense of premises 223 213
Equipment and furnishings expense 192 138
Data processing expense 165 150
Federal insurance premium 211 201
SAIF special assessment 2,297 --
Marketing and advertising 36 145
Net expense (income) from operation of real
estate owned -- --
Other 720 868
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Total non-interest expense 5,731 3,599
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(Loss) income before income taxes (268) 1,738
Income taxes 89 (670)
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Net (loss) income (1) $ (179) $ 1,068
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Net (loss) income per share $ (0.04) $ 0.25
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Dividends per share 0.095 $ 0.075
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Dividend payout ratio before SAIF
assessment 28.88% 30.00%
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Weighted average common shares outstanding for
earnings per share 4,260,452 4,254,029
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(1) September 1996 includes approximately $1,414 special SAIF assessment net of
tax at 38.5%
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Selected Financial Ratios and Other Data:
(Unaudited)
Three Months Ended
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September 30,
1996 1995
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Performance Ratios:
Return on assets (ratio of net income to average total
assets) (1) (0.13)% 0.75%
Return on assets before SAIF special assessment (1) 0.87 0.75
Return on equity (ratio of net income to average
equity) (1) (0.91) 5.64
Return on equity before SAIF special assessment (1) 6.25 5.64
Interest rate spread information:
Average during period 2.83 2.51
End of period 2.70 2.44
Net interest margin(1)(2) 3.43 3.12
Ratio of non-interest expense to avg. total assets (1) 4.14 2.64
Ratio of non-interest expense without SAIF special
assessment to avg. total assest (1) 2.52 2.64
Asset Quality Ratios:
Non-performing assets to total assets, at end of period 0.22 0.06
Total allowance for loan losses to total
non-performing assets (3) 157.19 552.47
Capital Ratios:
Stockholders' equity to total assets, at end of period 13.83 13.36
Average equity to average assets 13.91 13.33
Ratio of average interest-earning
assets to average interest-bearing liabilities 113.82 113.43
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(1) Annualized
(2) Net interest income divided by average interest-earning assets
(3) Includes non-performing and foreclosed assets
