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 20, 1999
WESTERFED FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(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 October 20, 1999 the Registrant issued the press release
attached as Exhibit 99.
Item 7. Financial Statements and Exhibits
(a) Exhibits
99 Press release, dated October 20, 1999
<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: October 20, 1999 By: /s/Lyle R. Grimes
---------------- ---------------------------------
Lyle R. Grimes
President/Chief Executive Officer
<PAGE>
WESTERFED FINANCIAL CORPORATION ANNOUNCES
RECORD QUARTERLY EARNINGS PER SHARE
Missoula, Montana - October 20, 1999 - WesterFed Financial Corporation
(the "Company") (NASDAQ -WSTR), the holding company for Western Security Bank
(the "Bank"), announced record earnings per share for the first quarter ended
September 30, 1999 of $2.0 million, or $0.44 per share diluted (cash earnings of
$0.52 per share), as compared to $1.8 million, or $0.31 per share diluted (cash
earnings of $0.39 per share) for the same period last year. Cash earnings, which
represent the amount by which tangible equity changes each period due to
operating results, include reported earnings plus the non-cash charges for
goodwill amortization and amortization relating to core deposit intangible and
certain employee stock plans and related tax benefit.
The Company previously announced on September 30, 1999 that it will pay
a regular cash dividend of $0.155 per share for the quarter ended September 30,
1999. The cash dividend of $0.155 represents an increase of 3.3% over the prior
quarter's regular cash dividend of $0.15 per share. The Company has increased
regular cash dividends every quarter since becoming a public company.
The Board of Directors of the Company also previously announced a plan
to repurchase up to 5.0% of its 4,538,557 outstanding shares of common stock at
June 30, 1999 in the open market during a twelve month period depending upon
market conditions. The program is being conducted through the use of certain
registered broker-dealers with repurchases being made from time-to-time at
market prices. In addition, the Company previously announced its Annual Meeting
of Stockholders will be held at 9:00 a.m. on October 26, 1999 at the Missoula
Southgate Branch of Western Security Bank located at 2601 Garfield Street,
Missoula, Montana.
Western Security Bank President Ralph Holliday stated, "I am pleased to
announce that the Company is reporting record earnings per share of $0.44. This
is a 12.8% increase over the $0.39 per share reported for the prior quarter
ended June 30, 1999 and a 41.9% increase over the $0.31 per share reported for
the same period last year. We have been aggressively attempting to improve on
the Company's efficiency ratio, (the ratio of non-interest expense to net
interest income and non-interest income) which was 63.5% for the quarter ended
September 30, 1999 as compared to 68.4% for the same period last year. The
efficiency ratio without intangibles amortization was 60.3% for the quarter
ended September 30, 1999 as compared to 64.8% for the same period last year. The
increasing interest rate environment has resulted in lower fee income as loan
refinance activity has slowed. Until this trend is reversed, we must be diligent
in our efforts to improve on our efficiency ratio. In addition, because of
<PAGE>
our stock repurchase programs and increased earnings per share, our return on
equity has increased 39.4% to 8.81% at September 30, 1999 as compared to 6.32%
at September 30, 1998."
Total assets increased $6.7 million to $1.014 billion at September 30,
1999 as compared to $1.007 billion at June 30, 1999. This increase was primarily
the result of increases in investment securities, Federal Home Loan Bank stock
and all other interest earning assets of $3.9 million and mortgage-backed
securities of $11.8 million, partially offset by decreases in loans receivable
and loans available-for-sale of $1.5 million and $6.9 million in cash and due
from banks. Repurchase agreements and borrowed funds increased $6.3 million
while total deposits decreased $2.5 million.
Net income increased $254,000 to $2.0 million for the quarter ended
September 30, 1999 from $1.8 million for the same period last year. Net interest
income before provision for loan losses for the quarter ended September 30, 1999
increased $224,000 to $8.1 million as compared to $7.9 million over the same
period last year. The net interest margin (net interest income divided by
average interest earning assets) increased to 3.47% during the quarter ending
September 30, 1999 from 3.40% during the same period last year.
The provision for loan losses increased $205,000 to $445,000 for the
quarter ended September 30, 1999 from $240,000 for the same period last year.
The increased provision for loan losses is primarily related to the consumer
loan dealer finance program and management's goal to reduce the amount of
fixed-rate residential loans held in portfolio while attempting to increase the
amount of consumer and commercial loans held in portfolio. At September 30,
1999, the Company had $4.1 million of non-performing assets (representing 0.41%
of total assets) as compared to $4.2 million at June 30, 1999 (representing
0.42% of total assets) and $5.2 million at September 30, 1998 (representing
0.52% of total assets). The 0.41% is substantially less than the national
composite for thrifts of 0.65% at June 30, 1999, which is the latest available
information reported by the Office of Thrift Supervision. At September 30, 1999,
the Company had allowances for loan losses to non-performing assets of 128.8% as
compared to 121.13% at June 30, 1999. Management's evaluation of the adequacy of
its loan loss reserves, the quality of the loan portfolio and economic
conditions in Montana resulted in the $445,000 provision for loan losses. Future
additions to the Company's allowance for loan losses and any change in the
related ratio of the allowance for loan losses to non-performing loans are
dependent upon the performance and composition of the Company's loan portfolio,
the economy, inflation, changes in real estate values and interest rates and the
view of the regulatory authorities toward adequate reserve levels.
<PAGE>
Total non-interest income decreased $143,000 to $2.2 million during the
quarter ended September 30, 1999 from $2.3 million during the same period last
year. The $143,000 decrease was primarily the result of loan origination fees on
loans sold and net gain on sale of loans available-for-sale decreasing $261,000
to $682,000 for the quarter ended September 30, 1999 from $943,000 for the same
period last year due to reduced loan refinancing activity. Non-interest expenses
decreased $447,000, or 7.1%, to $6.5 million for the quarter ended September 30,
1999 from $7.0 million for the same period last year as a result of cost cutting
employed by the Company in an effort to improve the efficiency ratio.
FORWARD LOOKING STATEMENTS
When used in this press release or other public shareholder
communications, or in oral statements made with the approval of an authorized
executive officer, the words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated," "estimate," "project," "significantly" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. The Company
wishes to caution readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made, and to advise readers that
various factors including regional and national economic conditions, changes in
levels of market interest rates, credit risks of lending activities, competitive
and regulatory factors and unforseen business risks related to Year 2000
computer issues could affect the Bank's financial performance and could cause
the Company's actual results for future periods to differ materially from those
anticipated or projected.
The Company does not undertake, and specifically disclaims, any
obligation to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
WesterFed Financial Corporation's only subsidiary, Western Security
Bank, which is Montana's largest savings bank, operates thirty-four offices in
twenty Montana communities.
CONTACT: James A. Salisbury, Executive Vice President/
Treasurer/Chief Financial Officer
(406) 721-5254
<PAGE>
CONSOLIDATED BALANCE SHEETS
WESTERFED FINANCIAL CORPORATION AND SUBSIDIARIES
(Dollars in thousands, except per share data)
(Unaudited)
September 30, June 30,
1999 1999
------------- ------------
ASSETS
Cash and due from banks $ 18,967 $ 25,867
Interest-bearing due from banks 2,368 3,079
---------- ----------
Cash and cash equivalents 21,335 28,946
Interest-bearing deposits 1,985 1,985
Investment securities available-for-sale 106,876 103,441
Investment securities, at amortized cost
(estimated fair value of $9,246 at September
30, 1999 and $9,255 at June 30, 1999) 9,239 9,235
Stock in Federal Home Loan Bank of Seattle,
at cost 14,882 14,615
Mortgage-backed securities available-for-sale 83,976 68,029
Mortgage-backed securities, at amortized cost
(estimated fair value of $80,923 at September
30, 1999 and $85,252 at June 30, 1999) 79,604 83,720
Loans available-for-sale 3,389 3,740
Loans receivable, net 626,434 627,631
Interest receivable 7,935 7,635
Premises and equipment, net 27,868 28,269
Core deposit intangible 3,571 3,741
Goodwill 14,929 15,096
Cash surrender value of life insurance policies 7,837 6,916
Other assets 4,189 4,350
---------- ----------
Total assets $1,014,049 $1,007,349
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 642,994 $ 645,549
Repurchase agreements 7,607 6,702
Borrowed funds 249,884 244,483
Advances from borrowers for taxes
and insurance 6,270 3,302
Income taxes - current and deferred 2,381 1,552
Accrued interest payable 6,113 6,156
Accrued expenses and other liabilities 8,377 8,456
---------- ----------
Total liabilities 923,626 916,200
---------- ----------
Stockholders' Equity:
Preferred stock, $.01 par value,
5,000,000 shares authorized; none outstanding -- --
Common stock, $.01 par value, 10,000,000
shares authorized; 4,429,678 shares
outstanding at September 30, 1999, and
4,538,557 outstanding at June 30, 1999 57 56
Paid-in capital 70,008 69,572
Common stock acquired by ESOP/RRP (2,153) (2,216)
Treasury stock, at cost (27,694) (25,319)
Accumulated other comprehensive income (loss) (1,918) (1,717)
Retained earnings 52,123 50,773
---------- ----------
Total stockholders' equity 90,423 91,149
---------- ----------
Total liabilities and stockholders' equity $1,014,049 $1,007,349
========== ==========
Book value per common share outstanding $20.41 $20.08
========== ==========
Tangible book value per common
share outstanding $16.24 $15.93
========== ==========
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
WESTERFED FINANCIAL CORPORATION AND SUBSIDIARIES
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
September 30,
------------------
1999 1998
--------- --------
Interest income:
Loans receivable $12,935 $14,066
Mortgage-backed securities 2,624 2,061
Investment securities 1,985 2,126
Interest-bearing deposits 96 87
Other 90 80
------- -------
Total interest income 17,730 18,420
------- -------
Interest expense:
NOW and money market demand 935 881
Savings 545 646
Certificates of deposit 4,634 5,400
------- -------
6,114 6,927
Borrowed funds and repurchase agreements 3,537 3,638
------- -------
Total interest expense 9,651 10,565
------- -------
Net interest income 8,079 7,855
Provision for loan losses 445 240
------- -------
Net interest income after provision
for loan losses 7,634 7,615
------- -------
Non-interest income:
Loan origination fees on loans sold 526 687
Service fees 1,349 1,212
Net gain on sale of loans available-for-sale 156 256
Net gain on sale of securities available-for-sale 5 --
Other 148 172
------- -------
Total non-interest income 2,184 2,327
------- -------
Non-interest expenses:
Compensation and employee benefits 3,137 3,357
Net occupancy expense of premises 451 516
Equipment and furnishings 500 553
Data processing 407 413
Deposit insurance premium 84 88
Intangibles amortization 337 373
Marketing and advertising 181 154
Other 1,425 1,515
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Total non-interest expense 6,522 6,969
------- -------
Income before income taxes 3,296 2,973
Income taxes 1,288 1,219
------- -------
Net income $ 2,008 $ 1,754
======= =======
Net income per common share:
Basic $ 0.46 $ 0.33
======= =======
Diluted $ 0.44 $ 0.31
======= =======
Dividends per share $ 0.155 $ 0.135
======= =======
Dividend payout ratio = basic 33.70% 40.91%
======= =======
Average common and common equivalent
shares outstanding:
Basic 4,354,871 5,369,521
========= =========
Diluted 4,516,508 5,674,227
========= =========
<PAGE>
Selected Financial Ratios and Other Data:
(Unaudited)
Three Months Ended
September 30,
----------------------
1999 1998
----------- ----------
Performance Ratios:
Return on assets (ratio of net income
to average total assets) (1) 0.79% 0.70%
Return on equity (ratio of net income
to average equity) (1) 8.81 6.32
Interest rate spread information:
Average during period 3.31 3.12
End of period 3.17 3.07
Net interest margin (1) (2) 3.47 3.40
Ratio of non-interest expense to
average total assets (1) 2.58 2.77
Asset Quality Ratios:
Non-performing assets to total assets,
at end of period 0.41 0.52
Total allowance for loan losses to
total non-performing assets (3) 128.80 94.24
Capital Ratios:
Stockholders' equity to total assets,
at end of period 8.92 11.15
Tangible stockholders' equity to
tangible assets, at end of period 7.22 9.34
Ratio of average interest-earning assets
to average interest-bearing liabilities 103.76 106.07
(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)
-------------------------------------------------------
SEPTEMBER 30, 1999 - QTD SEPTEMBER 30, 1998 - QTD
--------------------------- ---------------------------
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance (5) Paid Rate Balance (5) Paid Rate
----------- -------- ------ ----------- -------- ------
(Dollars in Thousands)
INTEREST EARNING ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Loans receivable (1) (2) $627,064 $12,935 8.25% $657,497 $14,066 8.56%
Mortgage-backed securities (2) 163,439 2,624 6.42% 121,277 2,061 6.80%
Investments (2) 128,318 1,985 6.19% 132,634 2,126 6.41%
Other interest-earning assets (3) 5,844 96 6.57% 5,084 87 6.85%
Cash surrender value of life insurance 7,530 90 4.78% 6,753 80 4.74%
-------- ------- ---- -------- ------- ----
Total Interest-Earning Assets 932,195 17,730 7.61% 923,245 18,420 7.98%
======== ======= ==== ======== ======= ====
INTEREST-BEARING LIABILITIES:
Certificates of deposits 360,496 4,634 5.14% 378,038 5,400 5.71%
Savings accounts 90,300 545 2.41% 91,526 646 2.82%
Demand and now accounts 116,908 198 0.68% 109,213 286 1.05%
Money market accounts 75,397 737 3.91% 57,662 595 4.13%
-------- ------- ---- -------- ------- ----
Total deposits 643,101 6,114 3.80% 636,439 6,927 4.35%
FHLB advances and other borrowed money 255,298 3,537 5.54% 233,968 3,638 6.22%
-------- ------- ---- -------- ------- ----
Total Interest-Bearing Liabilities 898,399 9,651 4.30% 870,407 10,565 4.86%
======== ======= ==== ======== ======= ====
Net interest income $ 8,079 $ 7,855
======= =======
Net interest rate spread 3.31% 3.12%
==== ====
Net interest earning assets $ 33,796 $ 52,838
======== ========
Net interest margin (4) 3.47% 3.40%
==== ====
Average interest-earning assets
to average interest-bearing liabilities 103.76% 106.07%
====== ======
<FN>
(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 assets
(5) Based on average monthly balances
</FN>
</TABLE>
<PAGE>
WESTERFED FINANCIAL CORPORATION
Non-Performing Assets
(Unaudited)
September 30, June 30,
1999 1999
------------- -----------
(In Thousands)
Non-accruing loans:
Real Estate:
One-to-four family $ 384 $ 521
Multi-family - -
Nonresidential property (except land) 149 -
Land - -
Construction 324 112
Agriculture 1,421 1,098
Commercial - non real estate 51 106
Consumer 749 1,212
------ ------
Total 3,078 3,049
------ ------
Accruing loans delinquent
90 days or more:
Real Estate:
One-to-four family 411 426
Multi-family - -
Nonresidential property (except land) - -
Construction - 344
Agriculture - -
Commercial - non real estate - -
Consumer 51 5
------ ------
Total 462 775
------ ------
Foreclosed assets:
Real Estate:
One-to-four family 465 238
Multi-family - -
Commercial - -
Land 26 26
Construction - -
Consumer 84 106
------ ------
Total 575 370
------ ------
Total non-performing assets $4,115 $4,194
====== ======
<PAGE>
WESTERFED FINANCIAL CORPORATION
Allowance for Loan Losses
(Unaudited)
For the Three Month
Period Ended
September 30,
-------------------
1999 1998
--------- ---------
(In Thousands)
Balance at beginning of period............................... $5,080 $4,907
Charge-Offs:
Real Estate:
One- to four-family.................................. (4) --
Commerical........................................... -- --
Other:
Commerical........................................... (45) (3)
Consumer............................................. (212) (286)
------ ------
Total charge-offs............................................ (261) (289)
------ ------
Recoveries:
Other:
Commerical........................................... -- --
Consumer............................................. 36 22
------ ------
Total recoveries............................................. 36 22
------ ------
Net charge-offs.............................................. (225) (267)
Provisions charged to operations............................. 445 240
------ ------
Balance at end of period..................................... $5,300 $4,880
====== ======
Ratio of net charge-offs during the period to average loans
outstanding during the period........................ 0.04% 0.04%
====== ======
Ratio of net charge-offs during the period to average non-
performing assets during the period.................. 5.42% 5.23%
====== ======
Ratio of allowance for loan losses to net loans before
allowance............................................ 0.83% 0.74%
====== ======
