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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 24, 1997
WESTERFED FINANCIAL CORPORATION
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(Exact name of Registrant as specified in its Charter)
Delaware 0-22772 81-0487794
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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 24, 1997 the Registrant issued the press
releases attached as Exhibit 99.6.
Item 7. Financial Statements and Exhibits
(a) Exhibits
99.6 Press releases, dated October 24, 1997
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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
By: /s/ Lyle R. Grimes
Date: October 31, 1997 ---------------------------------
- ----------------------- Lyle R. Grimes
President/Chief Executive Officer
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Index to Exhibits
Sequentially
Numbered Page
Where Attached
Exhibit Exhibits
Number are located
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99.6 Press Releases dated October 24, 1997 5
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WESTERFED FINANCIAL CORPORATION ANNOUNCES
FIRST QUARTER EARNINGS
Missoula, Montana -- October 24, 1997 -- WesterFed Financial
Corporation (the "Company") (NASDAQ - WSTR), the holding company for Western
Federal Savings Bank of Montana (the "Bank"), announced earnings for the first
quarter ended September 30, 1997 of $1.8 million, or $0.32 per share, as
compared to a net loss of $179,000 or $(0.04) per share for the same period last
year. The earnings for the first quarter ended September 30, 1996 included a one
time after-tax charge to earnings of $1.4 million, or $0.33 per share, for a
special assessment to recapitalize the Federal Deposit Insurance Corporation
("FDIC") Savings Association Insurance Fund ("SAIF").
The Company also announced it will pay a regular cash dividend of
$0.115 per share for the quarter ended September 30, 1997 payable on November
21, 1997 to stockholders of record on November 7, 1997. The regular quarterly
cash dividend of $0.115 was increased 4.6% over the prior quarter's regular cash
dividend of $0.11 per share. The Company has increased regular cash dividends
every quarter since becoming a public company.
The Company has previously announced a plan to repurchase up to 5.0% of
its outstanding shares of common stock in the open market during a twelve month
period depending upon market conditions.
President/Chief Executive Officer Lyle R. Grimes stated, "Although
pretax earnings increased over last quarter, the results still reflect pressure
on earnings related to the integration of the Security Bank acquisition and the
process of converting to a single, commercial bank oriented, data processing
system. This will allow the Bank to continue its emphasis on adding commercial
banking to its traditional thrift business. The Bank will continue to incur
significant conversion costs and the inefficiencies of operating dual data
systems until the conversion is completed in February, 1998. In addition, adding
two new branches, developing commercial lending centers in the Bank's markets
and marketing the consolidated services to Montana markets, will further
increase operating costs. These expenditures are being made to capitalize on the
combined Bank's expanded market areas with expanded services and to enable
consolidation of data services and operations in the Billings, Missoula,
Lewistown and Bozeman market areas."
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Total assets increased to $999.2 million at September 30, 1997 as
compared to $955.6 million at June 30, 1997. Total loans increased to $655.6
million at June 30, 1997 as compared to $630.3 million at June 30, 1997 while
total deposits decreased slightly to $630.6 million at September 30, 1997 as
compared to $630.9 million at June 30, 1997. Total stockholders' equity
increased by 1.8% to $106.1 million, or 10.6% of assets.
Net income increased to $1.8 million for the quarter ended September
30, 1997 from a loss of $179,000 for the same period last year. The $179,00 loss
included a $1.4 million after tax charge for the recapitalization of the "SAIF"
fund. Income before taxes increased 7.4% to $2.9 million for the quarter ended
September 30, 1997 from $2.7 million for the quarter ended June 30, 1997.
However, the income tax accrual for the quarter ended June 30, 1997 was $592,000
less than for the quarter ended September 30, 1997 due primarily to a change in
employee life insurance policy agreements that resulted in a reduction to income
tax expense of $489,000 related to an adjustment of a permanent deferral of
income taxes. This is the primary reason the after tax income for the quarter
ended September 30, 1997 was $300,000 lower at $1.8 million than the income of
$2.1 million for the quarter ended June 30, 1997.
Net interest income before provision for loan losses for the quarter
ended September 30, 1997 was $8.0 million, an increase of $3.4 million, or
73.9%, over the same quarter last year due primarily to the acquisition of
Security Bank. Net interest income before provisions for loan losses of $8.0
million during the quarter ended September 30, 1997 was $200,000, or 2.6% over
the preceding quarter of $7.8 million at June 30, 1997.
Total non-interest income increased $100,000 to $2.0 million during the
quarter ended September 30, 1997 from $1.9 million during the quarter ended June
30, 1997, which included $75,000 in gains on sale of mortgage-backed securities
available for sale.
Non-interest expenses increased 1.5% to $6.9 million for the quarter
ended September 30, 1997 from $6.8 million for the quarter ended June 30, 1997.
Both the June 30, 1997 and the September 30, 1997 quarters' included
professional fees and other expenses in excess of $200,000 related to
consolidation of Western Federal and Security Bank operations.
Non-performing assets totaled $4.1 million at September 30, 1997, up
from $2.4 million at June 30, 1997, due primarily to increases of $1.0 million
in one-to-four family non-performing loan balances. Non-performing
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assets as a percentage of total assets increased to 0.41% at September 30, 1997
from 0.25% at June 30, 1997. The 0.41% is substantially less than the Bank's
peer group average of 0.87% at June 30, 1997, which is the latest available
information as reported by the Office of Thrift Supervision. The ratio of
allowance for loan losses to non-performing assets decreased to 118.7% at
September 30, 1997 as compared to 191.01% at June 30, 1997.
The Company had no real estate owned at September 30, 1997.
WesterFed Financial Corporation's only subsidiary, Western Federal
Savings Bank of Montana, which is Montana's largest savings bank, operates
nineteen Western Federal offices and seventeen Security Bank Division offices in
twenty Montana communities.
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)
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
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ASSETS
<S> <C> <C>
Cash and due from banks $ 17,132 $ 16,999
Interest-bearing due from banks 4,160 160
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Cash and cash equivalents 21,292 17,159
Interest-bearing deposits 2,000 2,000
Investment securities available-for-sale 57,166 51,683
Investment securities, at amortized cost (estimated market value
of $32,248 at September 30, 1997 and $27,728 at June 30, 1997) 31,945 27,466
Stock in Federal Home Loan Bank of Seattle, at cost 11,687 11,456
Mortgage-backed securities available-for-sale 34,451 31,388
Mortgage-backed securities, at amortized cost (estimated market value
of $117,423 at September 30, 1997 and $119,193 at June 30, 1997) 114,833 117,781
Loans available-for-sale 8,260 3,700
Loans receivable, net 647,381 626,577
Accrued interest receivable 7,789 6,957
Premises and equipment, net 30,777 29,291
Core deposit intangible 5,095 5,276
Goodwill 15,421 15,562
Cash surrender value of life insurance policies 6,474 6,120
Other assets 4,632 3,223
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Total assets $ 999,203 $ 955,639
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 630,638 $ 630,869
Repurchase agreements 7,481 7,786
Borrowed funds 230,462 191,450
Advances from borrowers for taxes and insurance 7,227 3,753
Income taxes 4,539 3,504
Accrued interest payable 3,836 3,593
Accrued expenses and other liabilities 8,872 10,425
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Total liabilities 893,055 851,380
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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;
5,577,127 shares outstanding at September 30, 1997, and
5,564,904 outstanding at June 30, 1997 56 56
Additional paid-in capital 68,482 67,941
Common stock acquired by ESOP/RRP (2,756) (2,936)
Treasury stock, at cost (3,461) (3,081)
Net unrealized gain (loss) on securities available-for-sale 318 (35)
Retained earnings, substantially restricted 43,509 42,314
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Total stockholders' equity 106,148 104,259
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Total liabilities and stockholders' equity $ 999,203 $ 955,639
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Book value per share $ 19.0 $ 18.74
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CONSOLIDATED STATEMENTS OF INCOME
WESTERFED FINANCIAL CORPORATION AND SUBSIDIARIES
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1997 1996
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<S> <C> <C>
Interest income:
Loans receivable $ 13,807 $ 7,710
Mortgage-backed securities available-for-sale 579 729
Mortgage-backed securities 1,990 1,037
Investment securities available-for-sale 1,218 690
Investment securities 515 153
Interest-bearing deposits 143 228
Other 77 46
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Total interest income 18,329 10,593
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Interest expense:
NOW and money market demand 817 382
Savings 690 474
Certificates of deposit 5,391 3,009
Advances from FHLB - Seattle and other borrowed funds 3,434 2,085
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Total interest expense 10,332 5,950
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Net interest income 7,997 4,643
Provision for loan losses 164 15
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Net interest income after provision for loan losses 7,833 4,628
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Non-interest income:
Loan origination fees 529 125
Service fees 1,125 566
Net gain on sale of loans and securities available-for-sale 221 109
Other 88 35
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Total non-interest income 1,963 835
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Non-interest expenses:
Compensation and employee benefits 3,469 1,887
Net occupancy expense of premises 532 223
Equipment and furnishings expense 389 192
Data processing expenses 380 165
Federal insurance premium 90 211
SAIF special assessment -- 2,297
Intangibles amortization 331 --
Marketing and advertising 257 36
Other 1,405 720
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Total non-interest expense 6,853 5,731
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Income (loss) before income taxes 2,943 (268)
Income taxes 1,134 (89)
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Net income (loss) (1) $ 1,809 $ (179)
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Net income per share $ 0.32 $(0.04)
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Dividends per share $ 0.11 $0.095
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Dividend payout ratio before SAIF assessment 35.94% 28.88%
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Weighted average common shares outstanding for earnings per share 5,622,429 4,260,452
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</TABLE>
(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:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
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1997 1996
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Performance Ratios:
<S> <C> <C>
Return on assets (ratio of net income to average total assets) (1) 0.73% (0.13)%
Return on assets before SAIF special assessment (1) 0.73 0.87
Return on equity (ratio of net income to average equity)(1) 6.84 (0.91)
Return on equity before SAIF special assessment (1) 6.84 6.25
Interest rate spread information:
Average during period 3.23 2.83
End of period 3.15 2.70
Net interest margin (1) (2) 3.50 3.43
Ratio of non-interest expense to average total assets (1) 2.75 4.04
Ratio of non-interest expense without SAIF special assessment
to average total assets (1) 2.75 2.52
Asset Quality Ratios:
Non-performing assets to total assets, at end of period 0.41 0.23
Total allowance for loan losses to total non-performing
assets (3) 116.74 155.72
Capital Ratios:
Stockholders' equity to total assets, at end of period 10.62 13.83
Tangible stockholders' equity to tangible assets, at end of period 10.62 13.83
Average equity to average assets 10.63 13.91
Ratio of average interest-earning assets to average
interest-bearing liabilities 106.03 113.82
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(1) Annualized
(2) Net interest income divided by average interest-earning assets
(3) Includes non-performing and foreclosed assets
