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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)
January 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)
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Item 5. Other Events
On January 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 January 21, 1998
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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: January 29, 1998 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
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99.6 Press Releases dated January 21, 1998 5
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WESTERFED FINANCIAL CORPORATION ANNOUNCES
SECOND QUARTER EARNINGS, ASSETS EXCEED
$1 BILLION AND CHANGE IN SUBSIDIARY BANK NAME
Missoula, Montana -- January 21, 1998 -- WesterFed Financial
Corporation (the "Company") (NASDAQ - WSTR), the holding company for Western
Federal Savings Bank of Montana (the "Bank"), announced earnings for the
second quarter ended December 31, 1997 of $2.1 million, or $0.37 per share, a
per share increase of 15.6% from the $1.4 million, or $0.32 per share for the
same period last year. Earnings for the six month period ended December 31,
1997 were $3.9 million, or $0.69 per share as compared to $1.2 million, or
$0.28 per share, for the same six month period last year. The earnings for the
six month period ended December 31, 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"). 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
$0.12 per share for the quarter ended December 31, 1997 payable on February
20, 1998 to stockholders of record on February 6, 1998. The regular quarterly
cash dividend of $0.12 represents an increase of 4.4% over the prior quarter's
regular cash dividend of $0.115 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, "In February
the Company will complete the conversion of its wholly owned subsidiary,
Western Federal Savings Bank of Montana and Security Bank Division ("the
Bank") to a single, commercial bank oriented, data processing system that will
allow 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 will
allow customers to access their accounts at any of our 36 branches. As a
result, in February, the Bank will change its name at all locations to
'Western Security Bank.' The Bank expects to incur significant one-time
charges and expenses during the third quarter as these statewide changes are
completed and announced with new signs
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and advertising programs. In Bozeman and Lewistown, operations will be
consolidated allowing the sale of one building in each community."
On December 8, 1997 in Billings, the Rimrock Mall Office was closed
and a new office was opened at 2675 King Avenue West. Relocation to the new
office will give the Rimrock Mall customers added banking services and four
drive-in lanes while providing new banking service to this rapidly growing
retail area in South West Billings.
Grimes further stated, "The Company continues to attain growth in the
net loans receivable portfolio which increased to $673.0 million at December
31, 1997 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 residential real estate loans, consumer loans and
commercial and agricultural loans to total gross loans has changed to 59.2%,
23.0% and 17.8% respectively at December 31, 1997 from 63.2%, 20.6% and 16.2%
respectively at June 30, 1997. "
Total assets increased to $1.0 billion at December 31, 1997 as
compared to $955.6 million at June 30, 1997. Total deposits increased to
$644.8 million at December 31, 1997 as compared to $630.9 million at June 30,
1997 and total stockholders' equity increased to $107.7 million, or 10.4% of
assets from $104.3 million at June 30, 1997.
Net income increased to $2.1 million for the quarter ended December
31, 1997 from $1.4 million for the same period last year. Net interest income
before provision for loan losses for the quarter ended December 31, 1997
increased $3.4 million, or 72.3%, to $8.1 million as compared to $4.7 million
over the same period last year. Total non-interest income increased $1.1
million to $2.0 million during the quarter ended December 31, 1997 from
$903,000 during the same period last year. Non-interest expenses increased
$2.9 million to $6.4 million for the quarter ended December 31, 1997 from $3.5
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 December 31, 1997 were
professional fees and other expenses in excess of $150,000 related to
consolidation of the Western Federal and Security Bank operations.
Net income increased $2.7 million to $3.9 million for the six month
period ended December 31, 1997 from $1.2 million for the same period last
year. Included in the net income for the six month period ended
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December 31, 1996 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 six month period ended December 31, 1997 increased $6.7 million to
$16.1 million, from $9.4 million for the same period last year. Total
non-interest income increased $2.3 million to $4.0 million during the six
month period ended December 31, 1997 from $1.7 million during the same period
last year. Non-interest expenses increased $4.1 million to $13.3 million for
the six month period ended December 31, 1997 from $9.2 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 six month period just ended were professional
fees and other expenses in excess of $240,000 related to consolidation of the
Western Federal and Security Bank operations.
Non-performing assets totaled $3.6 million at December 31, 1997, as
compared to $2.4 million at June 30, 1997. The $1.2 million increase from June
30, 1997 to December 31, 1997 was due primarily to an increase of $1.0 million
in consumer non-performing loan balances. Non-performing assets as a
percentage of total assets increased to 0.35% at December 31, 1997 from 0.25%
at June 30, 1997. The 0.35% is substantially less than the Bank's peer group
average of 0.81% at September 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 was 136.97% at December 31,
1997 as compared to 118.72% at September 30, 1997 and 191.01% at June 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, Senior 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>
(Unaudited)
December 31, June 30,
1997 1997
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<S> <C> <C>
ASSETS
Cash and due from banks $ 22,382 $ 16,999
Interest-bearing due from banks 6,297 160
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Cash and cash equivalents 28,679 17,159
Interest-bearing deposits 100 2,000
Investment securities available-for-sale 88,332 51,683
Investment securities, at amortized cost
(estimated market value of $18,241 at
Dec. 31, 1997 and $27,728 at June 30, 1997) 18,061 27,466
Stock in Federal Home Loan Bank, at cost 12,915 11,456
Mortgage-backed securities available-for-sale 31,649 31,388
Mortgage-backed securities, at amortized
cost (estimated market value of $114,375 at
Dec. 31, 1997 and $119,193 at June 30, 1997) 111,448 117,781
Loans available-for-sale 8,584 3,700
Loans receivable, net 664,426 626,577
Accrued interest receivable 7,775 6,957
Premises and equipment, net 31,551 29,291
Core deposit intangible 4,914 5,276
Goodwill 15,274 15,562
Cash surrender value of life insurance
policies 6,546 6,120
Other assets 4,842 3,223
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Total assets $ 1,035,096 $ 955,639
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 644,807 $ 630,869
Repurchase agreements 7,670 7,786
Borrowed funds 254,482 191,450
Advances from borrowers for taxes
and insurance 3,569 3,753
Income taxes 3,573 3,504
Accrued interest payable 4,165 3,593
Accrued expenses and other liabilities 9,145 10,425
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Total liabilities 927,411 851,380
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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;
5,577,052 shares outstanding at
Dec. 31, 1997 and 5,564,904 shares
outstanding at June 30, 1997 56 56
Additional paid-in capital 68,530 67,941
Common stock acquired by ESOP/RRP (2,650) (2,936)
Treasury stock, at cost (3,461) (3,081)
Net unrealized gain (loss) on securities
available-for-sale 247 (35)
Retained earnings, substantially restricted 44,963 42,314
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Total stockholders' equity 107,685 104,259
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Total liabilities and stockholders'
equity $ 1,035,096 $ 955,639
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Book value per share $ 19.31 $ 18.74
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Book value per share - tangible $ 15.69 $ 14.99
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</TABLE>
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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 Six Months Ended
December 31, December 31,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Interest Income:
Loans receivable $ 14,211 $ 7,834 $ 28,018 $ 15,544
Mortgage-backed securities
available-for-sale 540 668 1,119 1,396
Mortgage-backed securities 1,950 1,001 3,940 2,038
Investment securities
available-for-sale 1,203 757 2,421 1,448
Investment securities 612 61 1,127 214
Interest-bearing deposits 167 261 310 489
Other 81 46 158 92
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Total interest income 18,764 10,628 37,093 21,221
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Interest expense:
NOW and money market
demand 847 367 1,664 749
Savings 671 465 1,361 939
Certificates of deposit 5,468 2,994 10,859 6,003
Advances from FHLB-Seattle
and other borrowed funds 3,665 2,079 7,099 4,164
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Total interest expense 10,651 5,905 20,983 11,855
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Net interest income 8,113 4,723 16,110 9,366
Provision for loan losses 256 27 420 42
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Net interest income
after provision for
loan losses 7,857 4,696 15,690 9,324
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Non-interest income:
Loan origination fees 476 98 1,004 223
Service fees 1,161 565 2,286 1,131
Net gain on sale of loans
and securities available-
for-sale 267 205 489 314
Other 91 35 179 70
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Total non-interest
income 1,995 903 3,958 1,738
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Non-interest expenses:
Compensation and employee
benefits 2,978 1,706 6,448 3,593
Net occupancy expense
of premises 532 256 1,064 478
Equipment and furnishings
expense 381 173 770 364
Data processing expense 396 168 776 333
Federal insurance premium 90 155 180 366
SAIF special assessment -- -- -- 2,297
Intangibles amortization 331 -- 662 --
Marketing and advertising 106 196 362 232
Other 1,601 797 3,006 1,519
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Total non-interest expense 6,415 3,451 13,268 9,182
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Income before income taxes 3,437 2,148 6,380 1,880
Income taxes 1,339 796 2,473 707
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Net income (loss)(1) $ 2,098 $ 1,352 $ 3,907 $ 1,173
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Net income per share
Basic $ 0.39 $ 0.33 $ 0.73 $ 0.29
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Diluted $ 0.37 $ 0.32 $ 0.69 $ 0.28
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Dividends per share $ 0.120 $ 0.100 $ 0.235 $ 0.195
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Dividend payout ratio before
SAIF assessment - diluted 32.43% 31.25% 34.06% 32.50%
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Average common and common
equivalent shares outstanding:
Basic 5,337,769 4,108,137 5,326,303 4,094,760
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Diluted 5,635,991 4,289,160 5,625,636 4,252,499
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</TABLE>
(1) The six months ended December 31, 1996 includes approximately $1,414, or
$0.33 per share diluted, special SAIF assessment net of tax at 38.5%.
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Selected Financial Ratios and Other Data:
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
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1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Performance Ratios:
Return on assets (ratio of
net income to average total
assets)(1) 0.83% 0.95% 0.78% 0.41%
Return on assets before SAIF
special assessment(1) 0.83 0.95 0.78 0.91
Return on equity (ratio of
net income to average
equity)(1) 7.81 6.83 7.33 2.97
Return on equity before SAIF
special assessment(1) 7.81 6.83 7.33 6.47
Interest rate spread information:
Average during period 3.22 2.88 3.23 2.85
End of period 3.14 2.65 3.14 2.65
Net interest margin(1)(2) 3.48 3.50 3.49 3.47
Ratio of non-interest expense
to avg. total assets(1) 2.52 2.44 2.64 3.24
Ratio of non-interest expense
without SAIF special assessment
to average assets(1) 2.52 2.44 2.64 2.42
Asset Quality Ratios:
Non-performing assets to total
assets, at end of period 0.35 0.25 0.35 0.25
Total allowance for loan losses
to total non-performing
assets(3) 136.97 139.93 136.97 139.93
Capital Ratios:
Stockholders' equity to total
assets, at end of period 10.40 14.11 10.40 14.11
Tangible stockholders' equity
to tangible assets, at end
of period 10.40 14.11 10.40 14.11
Average equity to average
assets 10.56 13.96 10.60 13.94
Ratio of average interest-earning
assets to average interest-
bearing liabilities 105.67 114.37 105.85 114.10
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</TABLE>
(1) Annualized
(2) Net interest income divided by average interest-earning assets
(3) Includes non-performing and foreclosed assets
