<PAGE>
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)
April 21, 1998
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)
<PAGE>
Item 5. Other Events
On April 21, 1998 the Registrant issued the press
releases attached as Exhibit 99.6.
Item 7. Financial Statements and Exhibits
(a) Exhibits
99.6 Press releases, dated April 21, 1998
<PAGE>
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: April 28, 1998 By: /s/ Lyle R. Grimes
- -------------------------- ----------------------------------------
Lyle R. Grimes
President/Chief Executive Officer
<PAGE>
Index to Exhibits
Sequentially
Numbered Page
Where Attached
Exhibit Exhibits
Number are located
------ ------------
99.6 Press Releases dated April 21, 1998 5
<PAGE>
WESTERFED FINANCIAL CORPORATION ANNOUNCES
THIRD QUARTER EARNINGS
Missoula, Montana -- April 21, 1998 -- WesterFed Financial Corporation
(the "Company") (NASDAQ - WSTR), the holding company for Western Security Bank
(the "Bank"), announced earnings for the third quarter ended March 31, 1998 of
$1.4 million, or $0.24 per share, as compared to $1.2 million , or $0.27 per
share for the same period last year. Earnings for the nine month period ended
March 31, 1998 were $5.3 million, or $0.94 per share as compared to $2.4
million, or $0.54 per share, for the same nine month period last year. The
earnings for the nine month period ended March 31, 1997 included a one time
after-tax charge to earnings of $1.4 million, or $0.32 per share, for a special
assessment to recapitalize the Federal Deposit Insurance Corporation ("FDIC")
Savings Association Insurance Fund ("SAIF"). All per share amounts are diluted
earnings per share as calculated under SFAS No. 128.
The Company also announced it will pay a regular cash dividend of
$0.125 per share for the quarter ended March 31, 1998 payable on May 21, 1998 to
stockholders of record on May 7, 1998. The regular quarterly cash dividend of
$0.125 represents an increase of 4.2% over the prior quarter's regular cash
dividend of $0.12 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, "The earnings
for the quarter just ended reflect the substantial costs incurred in completing
the conversion of its wholly owned subsidiary, Western Federal Savings Bank of
Montana and Security Bank Division to a single, commercial bank oriented, data
processing system that allows the Bank to continue its emphasis on adding
commercial banking to its traditional thrift business. The new system will also
provide the Bank with Year 2000 compliance in its primary data system. The
single data system allows our customers to access their accounts at any of our
34 branches. As a result, in February, the Bank changed its name at all
locations to 'Western Security Bank.' The Bank incurred significant one-time
charges and expenses estimated to be approximately $900,000 during the quarter
as these statewide
<PAGE>
changes were completed and announced with new signs and extensive advertising
programs. In Bozeman and Lewistown, operations were consolidated allowing the
sale of one building in each community."
Grimes further stated, "The Company continues to attain growth in the
net loans receivable portfolio which increased to $670.6 million at March 31,
1998 from $630.3 million at June 30, 1997. In addition, the Company's goal of
increasing the commercial and consumer loan portfolios is being achieved. The
percentage of gross consumer loans, commercial and agricultural loans and
residential real estate loans to total gross loans has changed to 24.4%, 18.4%
and 57.2% respectively at March 31, 1998 from 20.6% , 16.2% and 63.2%
respectively at June 30, 1997."
Total assets increased to $1.0 billion at March 31, 1998 as compared
to $955.6 million at June 30, 1997. Total deposits increased to $644.6 million
at March 31, 1998 as compared to $630.9 million at June 30, 1997 and total
stockholders' equity increased to $108.7 million at March 31, 1998, or 10.6% of
assets from $104.3 million at June 30, 1997.
Net income increased to $1.4 million for the quarter ended March 31,
1998 from $1.2 million for the same period last year. Net interest income before
provision for loan losses for the quarter ended March 31, 1998 increased $2.3
million, or 40.4%, to $8.0 million as compared to $5.7 million over the same
period last year. Total non-interest income increased $1.1 million to $2.1
million during the quarter ended March 31, 1998 from $1.0 million during the
same period last year. Non-interest expenses increased $3.0 million to $7.6
million for the quarter ended March 31, 1998 from $4.6 million for the same
period last year. The increases in income and expenses were primarily the result
of the acquisition of Security Bancorp in February 1997. Included in the
expenses for the quarter ended March 31, 1998 were professional fees and other
expenses in excess of $700,000 related to consolidation of the Western Federal
and Security Bank operations and the data center conversion.
Net income increased $2.9 million to $5.3 million for the nine month
period ended March 31, 1998 from $2.4 million for the same period last year.
Included in the net income for the nine month period ended March 31, 1997 was a
one time after-tax special assessment of $1.4 million to recapitalize the SAIF.
Net interest income before provision for loan losses for the nine month period
ended March 31, 1998 increased $9.1 million to $24.1 million, from $15.0 million
for the same period last year. Total non-interest income increased $3.3 million
to $6.1 million during the nine month period ended March 31, 1998 from $2.8
million during the same
<PAGE>
period last year. Non-interest expenses increased $7.0 million to $20.8 million
for the nine month period ended March 31, 1998 from $13.8 million for the same
period last year. The increases in income and expenses were primarily the result
of the acquisition of Security Bancorp effective March 1, 1997. Included in the
expenses for the nine month period just ended were professional fees and other
expenses in excess of $1.0 million related to consolidation of the Western
Federal and Security Bank operations and the data center conversion.
Non-performing assets totaled $6.6 million at March 31, 1998, as
compared to $2.4 million at June 30, 1997. The $4.2 million increase from June
30, 1997 to March 31, 1998 was due primarily to an increase in non-performing
one - to four-family, construction, consumer and foreclosed assets of $2.2
million, $400,000, $977,000 and $407,000 respectively. In the merger conversion
of Security, and in conjunction with the data center conversion the Bank adopted
Western's more conservative methodology as to the classification of assets for
non-performing loan classification. This change in classification accounted for
approximately $960,000 in the preceding increases in one-to four-family loans.
One- to four- family loans are considered non-accruing after 120 days and all
other loans are automatically placed on non-accrue status after 90 days. As a
result of this change, interest income decreased approximately $125,000 because
additional loans were considered to be non accruing. Non-performing assets as a
percentage of total assets increased to 0.64% at March 31, 1998 from 0.25% at
June 30, 1997. The national composite for thrifts was 1.00% at December 31,
1997, which is the latest available information as reported by the Office of
Thrift Supervision.
WesterFed Financial Corporation's only subsidiary, Western Security
Bank of Montana, which is Montana's largest savings bank, operates thirty-four
offices in twenty Montana communities.
CONTACT: Dale W. Brevik, Senior Vice President/Marketing
James A. Salisbury, Treasurer/Chief Financial Officer
(406) 721-5254
<PAGE>
CONSOLIDATED BALANCE SHEETS
WESTERFED FINANCIAL CORPORATION AND SUBSIDIARIES
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
(Unaudited)
March 31, June 30,
ASSETS 1998 1997
----------------- ---------------
<S> <C> <C>
Cash and due from banks $ 16,994 $ 16,999
Interest-bearing due from banks 17,199 160
----------------- ---------------
Cash and cash equivalents 34,193 17,159
Interest-bearing deposits 100 2,000
Investment securities available-for-sale 80,623 51,683
Investment securities, at amortized cost
(estimated market value of $17,270 at
Mar. 31, 1998 and $27,728 at June 30, 1997) 16,881 27,466
Stock in Federal Home Loan Bank, at cost 13,303 11,456
Mortgage-backed securities available-for-sale 28,209 31,388
Mortgage-backed securities, at amortized
cost (estimated market value of $110,844 at
Mar. 31, 1998 and $119,193 at June 30, 1997) 107,768 117,781
Loans available-for-sale 9,008 3,700
Loans receivable, net 661,642 626,577
Accrued interest receivable 7,537 6,957
Premises and equipment, net 30,735 29,291
Core deposit intangible 4,725 5,276
Goodwill 16,833 15,562
Cash surrender value of life insurance
policies 6,633 6,120
Other assets 4,984 3,223
----------------- ---------------
Total assets $ 1,023,174 $ 955,639
================= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 644,560 $ 630,869
Repurchase agreements 9,017 7,786
Borrowed funds 236,848 191,450
Advances from borrowers for taxes
and insurance 4,806 3,753
Income taxes - current and deferred 2,492 3,504
Accrued interest payable 4,212 3,593
Accrued expenses and other liabilities 12,545 10,425
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Total liabilities 914,480 851,380
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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;
5,583,968 shares issued at Mar. 31,
1998 and 5,564,904 shares issued
at June 30, 1997 56 56
Paid-in capital 68,730 67,941
Common stock acquired by ESOP/RRP (2,522) (2,936)
Treasury stock, at cost (3,461) (3,081)
Net unrealized gain (loss) on securities
available-for-sale 238 (35)
Retained earnings 45,653 42,314
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Total stockholders' equity 108,694 104,259
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Total liabilities and stockholders'
equity $ 1,023,174 $ 955,639
================= ===============
Book value per share $ 19.47 $ 18.74
================= ===============
Tangible book value per share $ 15.60 $ 14.99
================= ===============
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
WESTERFED FINANCIAL CORPORATION AND SUBSIDIARIES
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income:
Loans receivable $ 14,171 $ 9,288 $ 42,189 $ 24,832
Mortgage-backed securities
available-for-sale 476 748 1,595 2,145
Mortgage-backed securities 1,891 1,308 5,831 3,346
Investment securities
available-for-sale 1,699 694 4,120 2,141
Investment securities 325 134 1,452 348
Interest-bearing deposits 210 357 520 846
Other 94 56 252 148
---------- ---------- ---------- ----------
Total interest income 18,866 12,585 55,959 33,806
---------- ---------- ---------- ----------
Interest expense:
NOW and money market
demand 817 488 2,481 1,237
Savings 651 553 2,012 1,492
Certificates of deposit 5,489 3,763 16,348 9,766
Advances from FHLB-Seattle
and other borrowed funds 3,886 2,125 10,985 6,289
---------- ---------- ---------- ----------
Total interest expense 10,843 6,929 31,826 18,784
---------- ---------- ---------- ----------
Net interest income 8,023 5,656 24,133 15,022
Provision for loan losses 210 61 630 103
---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 7,813 5,595 23,503 14,919
---------- ---------- ---------- ----------
Non-interest income:
Loan origination fees 598 121 1,602 345
Service fees 1,096 761 3,382 1,891
Net gain on sale of loans
and securities available-
for-sale 212 86 701 400
Other 217 52 396 122
---------- ---------- ---------- ----------
Total non-interest
income 2,123 1,020 6,081 2,758
---------- ---------- ---------- ----------
Non-interest expenses:
Compensation and employee
benefits 3,538 2,357 9,985 5,951
Net occupancy expense
of premises 541 356 1,605 834
Equipment and furnishings
expense 478 257 1,248 622
Data processing expense 441 241 1,218 574
Federal insurance premium 88 60 268 425
SAIF special assessment -- -- -- 2,297
Intangibles amortization 356 123 1,018 123
Marketing and advertising 264 129 626 361
Other 1,875 1,083 4,881 2,601
---------- ---------- ---------- ----------
Total non-interest expense 7,581 4,606 20,849 13,788
---------- ---------- ---------- ----------
Income before income taxes 2,355 2,009 8,735 3,889
Income taxes 995 814 3,468 1,521
---------- ---------- ---------- ----------
Net income (1) 1,360 $ 1,195 $ 5,267 $ 2,368
========== ========== ========== ==========
Net income per share
Basic $ 0.26 $ 0.27 $ 0.99 $ 0.57
========== ========== ========== ==========
Diluted $ 0.24 $ 0.25 $ 0.94 $ 0.54
========== ========== ========== ==========
Dividends per share $ 0.125 $ 0.105 $ 0.360 $ 0.300
========== ========== ========== ==========
Dividend payout ratio before
SAIF assessment - diluted 52.08% 42.00% 38.30% 34.88%
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Average common and common
equivalent shares outstanding:
Basic 5,323,395 4,450,880 5,302,875 4,189,856
========== ========== ========== ==========
Diluted 5,627,401 4,702,738 5,613,335 4,398,688
========== ========== ========== ==========
</TABLE>
(1) The nine months ended March 31, 1997 includes approximately
$1,414, or $0.32 per share diluted, special SAIF assessment net
of tax at 38.5%.
<PAGE>
Selected Financial Ratios and Other Data:
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- ---------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Performance Ratios:
Return on assets (ratio of
net income to average total
assets) (1) 0.53% 0.70% 0.69% 0.52%
Return on assets before SAIF
special assessment (1) 0.53 0.70 0.69 0.83
Return on equity (ratio of
net income to average
equity) (1) 5.01 5.46 6.55 3.85
Return on equity before SAIF
special assessment (1) 5.01 5.46 6.55 6.16
Interest rate spread information:
Average during period 3.13 3.07 3.18 2.93
End of period 3.04 3.38 3.04 3.38
Net interest margin(1)(2) 3.38 3.54 3.45 3.49
Ratio of non-interest expense
to average total assets (1) 2.94 2.70 2.74 3.03
Ratio of non-interest expense
without SAIF special assessment
to average assets (1) 2.94 2.70 2.74 2.53
Asset Quality Ratios:
Non-performing assets to total
assets, at end of period 0.64 0.22 0.64 0.22
Total allowance for loan losses
to total non-performing
assets (3) 76.94 222.91 76.94 222.91
Capital Ratios:
Stockholders' equity to total
assets, at end of period 10.62 10.98 10.62 10.98
Tangible stockholders' equity
to tangible assets, at end
of period 8.70 8.88 8.70 8.88
Ratio of average interest-earning
assets to average interest-
bearing liabilities 105.63 110.73 105.77 112.82
___________________________________________________________________________________________________________________
</TABLE>
(1) Annualized
(2) Net interest income divided by average interest-earning assets
(3) Includes non-performing and foreclosed assets
<PAGE>
WESTERFED FINANCIAL CORP
<TABLE>
<CAPTION>
(Unaudited)
---------------------------------------------------------------
March 31, 1998 - QTD March 31, 1997 - QTD
------------------------------- ------------------------------
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance (5) Paid Rate Balance (5) Paid Rate
------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Loans receivable (1)(2) $ 674,817 $ 14,171 8.40% $ 444,314 $ 9,288 8.36%
Mortgage-backed securities (2) 138,388 2,367 6.84% 117,521 2,056 7.00%
Investments (2) 115,674 2,024 7.00% 52,087 828 6.36%
Other Interest-earning assets (3) 14,305 210 5.87% 21,641 357 6.60%
Cash surrender value of life insurance 6,599 94 5.70% 4,200 56 5.33%
------------------------------- ------------------------------
Total Interest-Earning Assets 949,783 18,866 7.95% 639,763 12,585 7.87%
=============================== ==============================
INTEREST-BEARING LIABILITIES:
Certificates of deposits 386,531 5,489 5.68% 265,287 3,732 5.63%
Savings accounts 95,469 651 2.73% 77,233 553 2.86%
Demand and now accounts 108,329 285 1.05% 66,330 214 1.29%
Money market accounts 53,513 531 3.97% 31,656 274 3.46%
------------------------------- ------------------------------
Total deposits 643,842 6,956 4.32% 440,506 4,773 4.33%
FHLB advances and notes payable 254,781 3.851 6.05% 136,360 2,120 6.22%
Collateralized mortgage obligations 566 36 25.44% 925 36 15.57%
------------------------------- ------------------------------
Total Interest-Bearing Liabilities 899,189 10,843 4.82% 577,791 6,929 4.80%
=============================== ==============================
Net interest income $8,023 $5,656
=========== ==========
Net interest rate spread 3.13% 3.07%
========= =========
Net interest earning assets $50,594 $61,972
=========== ==========
Net interest margin (4) 3.38% 3.54%
========= =========
Average interest-earning assets
to average interest-bearing liabilities 105.63% 110.73%
========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
TABLE RESTUBBED BELOW
- ---------------------------------------------------------------------------------------------------------
(Unaudited)
---------------------------------------------------------------
March 31, 1998 - YTD March 31, 1997 - YTD
------------------------------- ------------------------------
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance (5) Paid Rate Balance (5) Paid Rate
------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Loans receivable (1)(2) $ 663,273 $ 42,188 8.48% $ 395,336 $ 24,832 8.37%
Mortgage-backed securities (2) 144,836 7,426 6.84% 104,941 5,491 6.98%
Investments (2) 107,733 5,573 6.90% 52,799 2,489 6.29%
Other interest-earning assets (3) 9,771 520 7.10% 17,028 846 6.62%
Cash surrender value of life insurance 6,492 252 5.18% 3,551 148 5.56%
------------------------------- ------------------------------
Total Interest-Earning Assets 932,104 55,959 8.00% 573,655 33,806 7.86%
=============================== ==============================
INTEREST-BEARING LIABILITIES:
Certificates of deposits 380,354 16,348 5.73% 227,740 9,734 5.70%
Savings accounts 97,770 2,012 2.74% 67,966 1,493 2.93%
Demand and now accounts 106,741 925 1.16% 54,304 557 1.37%
Money market accounts 51,884 1,555 4.00% 26,274 680 3.45%
------------------------------- ------------------------------
Total deposits 636,748 20,840 4.36% 376,283 12,464 4.42%
FHLB advances and notes payable 243,810 10,886 5.95% 131,181 6,197 6.30%
Collateralized mortgage obligations 664 100 20.09% 1,009 123 16.26%
------------------------------- ------------------------------
Total Interest-Bearing Liabilities 881,222 31,826 4.82% 508,473 18,784 4.93%
=============================== ==============================
Net interest income $24,133 $15,022
========== =========
Net interest rate spread 3.18% 2.93%
======== =======
Net interest earning assets $50,882 $65,182
========== ==========
Net interest margin (4) 3.45% 3.49%
======== =======
Average interest-earning assets
to average interest-bearing liabilities 105.77% 112.82%
=========== =========
</TABLE>
(1) Calculated net of deferred loan fees, loan
discounts, loans in process and loss reserves
(2) Includes held and available for sale categories
(3) Includes primarily short term liquid assets
(4) Net interest income divided by average interest
earning assetss
