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 20, 2000
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 April 20, 2000 the Registrant issued the press release attached
as Exhibit 99.1.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Exhibits
99.1 Press Release dated April 20, 2000.
2
<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 20, 2000 By: /s/ Ralph K. Holliday
----------------- ---------------------------------
Ralph K. Holliday
President/Chief Executive Officer
3
<PAGE>
EXHIBIT 99.1
WESTERFED FINANCIAL CORPORATION ANNOUNCES
FIRST QUARTER EARNINGS
Missoula, Montana -- April 20, 2000 -- WesterFed Financial Corporation
(the "Company") (NASDAQ -WSTR), the holding company for Western Security Bank
(the "Bank"), announced earnings for the first quarter ended March 31, 2000 of
$1.9 million, or $0.45 per share diluted (cash earnings of $0.53 per share), as
compared to $1.6 million, or $0.35 per share diluted (cash earnings of $0.43 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 April 3, 2000 that it will pay a
regular cash dividend of $0.165 per share for the quarter ended March 31, 2000.
The cash dividend of $0.165 represents an increase of 3.1% over the prior
quarter's regular cash dividend of $0.16 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 7.5% of the then 4,351,404 outstanding shares of common
stock at December 31, 1999. At March 31, 2000, all but 62,000 shares have been
repurchased at an average price of $14.16 per share. In addition, the Company
previously announced its Annual Meeting of Stockholders will be held at 9:00
a.m. on April 25, 2000 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 per share earnings of $0.45. While this
is the same per share earnings announced for the prior quarter, it does
represent a 28.6% increase over the $0.35 reported for the same period last
year. In addition, the $1.9 million in earnings this quarter is an 18.8 %
increase over the $1.6 million reported for the same period last year. The
Federal Reserve has continued to raise short-term interest rates with additional
interest rate increases projected. The increases in interest rates has reduced
our interest rate spread to 3.00% at March 31, 2000 from 3.10% at December 31,
1999 and 3.14% at March 31, 1999. In an attempt to offset the potential decline
in net interest income, we must continue to aggressively attempt to improve the
Company's efficiency ratio, (the ratio of non-interest expense to net interest
income and non-interest income) which was 63.6% for the quarter ended March 31,
2000 as compared to 70.9% for the same period last year. The efficiency ratio
without intangibles amortization was 60.2% for the quarter ended March 31, 2000
as compared to 67.1% for the same period last year. The increasing interest rate
environment has continued to result in lower loan 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 our stock
repurchase programs and increased earnings, our return on equity has increased
22.3% to 8.49% at March 31, 2000 as compared to 6.94% at March 31, 1999. In
addition, our previously announced sale of six branches, with current deposits
of $53.7 million, has been approved by the regulatory authorities and is
expected to close in May 2000."
<PAGE>
Total assets decreased $4.6 million to $996.4 million at March 31, 2000
as compared to $1.0 billion at December 31, 1999. This decrease was primarily
the result of decreases in loans receivable and loans available-for-sale of $3.3
million and decreases in investment securities, Federal Home Loan Bank stock,
all other interest earning investments and mortgage-backed securities of
$400,000. The $3.3 million decrease in loans was primarily comprised of
decreases of $3.9 million and $6.1 million in residential and consumer dealer
finance loans, respectively, while other consumer loans increased $3.5 million
and commercial related loans increased $3.4 million. Repurchase agreements and
borrowed funds decreased $9.4 million while total deposits increased $2.8
million. Commercial and Agriculture related loans comprised 26.0% of gross loans
at March 31, 2000 as compared to 22.3% at March 31, 1999.
Net income increased $276,000 to $1.9 million for the quarter ended
March 31, 2000 from $1.6 million for the same period last year. Net interest
income before provision for loan losses for the quarter ended March 31, 2000
increased $34,000. The net interest margin (net interest income divided by
average interest earning assets) decreased to 3.34% during the quarter ending
March 31, 2000 from 3.39% during the same period last year.
The provision for loan losses increased $105,000 to $450,000 for the
quarter ended March 31, 2000 from $345,000 for the same period last year. The
increased provision for loan losses is primarily related to charge-offs in the
consumer loan dealer finance program and other consumer loans and the growth in
commercial loans. At March 31, 2000, the Company had $2.7 million of
non-performing assets (representing 0.27% of total assets) as compared to $3.1
million at December 31, 1999 (representing 0.39% of total assets). The 0.27% is
substantially less than the national composite for thrifts of 0.62% at December
31, 1999, which is the latest available information reported by the Office of
Thrift Supervision. At March 31, 2000, the Company had allowances for loan
losses to non-performing assets of 201.87% as compared to 127.39% at December
31, 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
$450,000 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 $132,000 to $1.8 million during the
quarter ended March 31, 2000 from $1.9 million during the same period last year.
The $132,000 decrease was primarily the result of loan origination income
decreasing $284,000 to $461,000 due to reduced loan refinancing and related
sales activity. Service fee income increased $117,000. Non-interest expenses
decreased $765,000, or 11.5%, to $6.1 million for the quarter ended March 31,
2000 from $6.8 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. The
$765,000 decrease was comprised primarily of decreases in compensation and
employee benefits, equipment and furnishings and other expenses of $296,000,
$115,000 and $369,000 respectively.
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 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 share and per share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------- ----------
ASSETS
<S> <C> <C>
Cash and due from banks $ 20,642 $ 20,233
Interest-bearing due from banks 1,080 5,910
-------- ----------
Cash and cash equivalents 21,722 26,143
Interest-bearing deposits 100 100
Investment securities available-for-sale 103,967 106,212
Investment securities, at amortized cost (estimated fair value
of $6,200 at March 31, 2000 and $9,195 at December 31, 1999) 6,210 9,205
Stock in Federal Home Loan Bank of Seattle, at cost 15,399 15,154
Mortgage-backed securities available-for-sale 92,164 81,276
Mortgage-backed securities, at amortized cost (estimated fair value
of $76,321 at March 31, 2000 and $77,926 at December 31, 1999) 76,091 77,672
Loans available-for-sale 3,523 4,470
Loans receivable, net 613,929 616,281
Interest receivable 7,135 7,492
Premises and equipment, net 26,970 27,477
Core deposit intangible 3,241 3,401
Goodwill 14,596 14,763
Cash surrender value of life insurance policies 8,245 8,164
Other assets 3,124 3,075
-------- ----------
Total assets $996,416 $1,000,885
======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $661,229 $ 658,404
Repurchase agreements 6,444 7,731
Borrowed funds 218,928 227,078
Advances from borrowers for taxes and insurance 6,508 3,296
Income taxes - current and deferred 1,382 597
Accrued interest payable 6,634 6,476
Accrued expenses and other liabilities 8,675 7,778
-------- ----------
Total liabilities 909,800 911,360
-------- ----------
Stockholders' Equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized;
none outstanding -- --
Common stock, $.01 par value, 10,000,000 shares authorized;
4,079,846 shares outstanding at March 31, 2000, and
4,351,404 outstanding at December 31, 1999 56 56
Paid-in capital 70,073 70,040
Common stock acquired by ESOP/RRP (2,024) (2,090)
Treasury stock, at cost (32,629) (28,974)
Accumulated other comprehensive loss (3,497) (2,930)
Retained earnings 54,637 53,423
-------- ----------
Total stockholders' equity 86,616 89,525
-------- ----------
Total liabilities and stockholders' equity $996,416 $1,000,885
======== ==========
Book value per common share outstanding $ 21.23 $ 20.57
======== ==========
Tangible book value per common share outstanding $ 16.86 $ 16.40
======== ==========
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME WESTERFED FINANCIAL CORPORATION AND
SUBSIDIARIES (Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
March 31,
-------------------------
2000 1999
------------ ----------
<S> <C> <C>
Interest income:
Loans receivable $12,816 $12,988
Mortgage-backed securities 2,717 1,864
Investment securities 1,992 1,995
Interest-bearing deposits 45 145
Other 90 90
------- -------
Total interest income 17,660 17,082
------- -------
Interest expense:
NOW and money market demand 992 837
Savings 529 518
Certificates of deposit 4,965 4,985
------- -------
6,486 6,340
Borrowed funds and repurchase agreements 3,429 3,031
------- -------
Total interest expense 9,915 9,371
------- -------
Net interest income 7,745 7,711
Provision for loan losses 450 345
------- -------
Net interest income after provision for loan losses 7,295 7,366
------- -------
Non-interest income:
Loan origination income 461 745
Service fees 1,207 1,090
Net gain on sale of securities available-for-sale 3 25
Other 122 65
------- -------
Total non-interest income 1,793 1,925
------- -------
Non-interest expenses:
Compensation and employee benefits 2,957 3,253
Net occupancy expense of premises 392 380
Equipment and furnishings 478 593
Data processing 458 409
Deposit insurance premium 34 87
Intangibles amortization 326 361
Marketing and advertising 161 119
Other 1,258 1,627
------- -------
Total non-interest expense 6,064 6,829
------- -------
Income before income taxes 3,024 2,462
Income taxes 1,164 878
------- -------
Net income $ 1,860 $ 1,584
======= =======
Net income per common share:
Basic $ 0.46 $ 0.37
======= =======
Diluted $ 0.45 $ 0.35
======= =======
Dividends per share $ 0.165 $ 0.145
======= =======
Dividend payout ratio - basic 35.87% 39.19%
======= =======
Average common and common equivalent shares outstanding:
Basic 4,059,084 4,308,744
========= =========
Diluted 4,174,548 4,568,287
========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Selected Financial Ratios and Other Data: (Unaudited)
Three Months Ended
March 31,
------------------
2000 1999
-------- --------
<S> <C> <C>
Performance Ratios:
Return on assets (ratio of net income to average total assets) (1) 0.75% 0.65%
Return on equity (ratio of net income to average equity) (1) 8.49 6.94
Interest rate spread information:
Average during period 3.14 3.17
End of period 3.00 3.14
Net interest margin (1) (4) 3.34 3.39
Ratio of non-interest expense to average total assets (1) 2.44 2.79
Efficiency ratio (2) 63.58 70.87
Efficiency ratio without intangibles (3) 60.15 67.12
Asset Quality Ratios:
Non-performing assets to total assets, at end of period 0.27 0.39
Total allowance for loan losses to total non-performing
assets (5) 201.87 127.39
Capital Ratios:
Stockholders' equity to total assets, at end of period 8.69 9.17
Tangible stockholders' equity to tangible assets, at end of period 7.03 7.39
Ratio of average interest-earning assets to average
interest-bearing liabilities 104.64 105.31
<FN>
(1) Annualized
(2) Ratio of non-interest expense to net interest income and non-interest
income
(3) Ratio of non-interest expense without intangibles to net interest
income and non-interest income
(4) Net interest income divided by average interest-earning assets
(5) Includes non-performing and foreclosed assets
</FN>
</TABLE>
<PAGE>
WESTERFED FINANCIAL CORPORATION
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
MARCH 31, 2000 MARCH 31, 1999
------------------------------ -------------------------------
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance (1) Paid Rate Balance (1) Paid Rate
--------- ------- ---- --------- ------- ----
(Dollars in Thousands)
INTEREST EARNING ASSETS:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loans receivable (2) (3) $622,672 $12,816 8.23% $633,746 $12,988 8.20%
Mortgage-backed securities 164,027 2,717 6.63% 125,787 1,864 5.93%
Investments 128,867 1,992 6.18% 133,149 1,995 5.99%
Other interest-earning assets (4) 2,674 45 6.73% 11,400 145 5.09%
Cash surrender value of life insurance 8,218 90 4.38% 6,902 90 5.22%
-------- ------- ---- -------- ------- ----
Total Interest-Earning Assets $926,458 $17,660 7.62% $910,984 $17,082 7.50%
======== ======= ==== ======== ======= ====
INTEREST-BEARING LIABILITIES:
Certificates of deposits $371,923 $ 4,965 5.34% $373,402 $ 4,985 5.34%
Savings accounts 85,588 529 2.47% 90,543 518 2.29%
Demand and NOW accounts 116,617 196 0.67% 110,970 190 0.68%
Money market accounts 78,466 796 4.06% 68,449 647 3.78%
-------- ------- ---- -------- ------- ----
Total deposits 652,594 6,486 3.98% 643,364 6,340 3.94%
FHLB advances and other borrowed money 232,789 3,429 5.89% 221,663 3,031 5.47%
-------- ------- ---- -------- ------- ----
Total Interest-Bearing Liabilities $885,383 $ 9,915 4.48% $865,027 $ 9,371 4.33%
======== ======= ==== ======== ======= ====
Net interest income $ 7,745 $ 7,711
======= =======
Net interest rate spread 3.14% 3.17%
==== ====
Net interest earning assets $ 41,075 $ 45,957
======== ========
Net interest margin (5) 3.34% 3.39%
==== ====
Average interest-earning assets
to average interest-bearing liabilities 104.64% 105.31%
====== ======
<FN>
(1) Based on average monthly balances.
(2) Calculated net of deferred loan fees, loan discounts and loans in process.
(3) Includes loans held for sale.
(4) Includes primarily short term liquid assets.
(5) Net interest income divided by average interest-earning assets.
</FN>
</TABLE>
<PAGE>
WESTERFED FINANCIAL CORPORATION
Non-Performing Assets
(Unaudited)
March 31, December 31,
2000 1999
------ ------
(In Thousands)
Non-accruing loans:
Real Estate:
One-to-four family $ 472 $ 549
Multi-family - -
Nonresidential property (except land) 145 348
Land - -
Construction 245 324
Agriculture (non-real estate) 1,118 1,113
Commercial (non-real estate) 89 51
Consumer 241 508
------ ------
Total 2,310 2,893
------ ------
Accruing loans delinquent 90 days or more:
Real Estate:
One-to-four family - 40
Multi-family - -
Nonresidential property (except land) - -
Construction - -
Agriculture (non-real estate) - -
Commercial (non-real estate) - -
Consumer - 20
------ ------
Total 0 60
------ ------
Foreclosed assets:
Real Estate:
One-to-four family 272 94
Multi-family - -
Commercial - -
Land 26 26
Construction - -
Consumer 67 48
------ ------
Total 365 168
------ ------
Total non-performing assets $2,675 $3,121
====== ======
<PAGE>
WESTERFED FINANCIAL CORPORATION
Allowance for Loan Losses
<TABLE>
<CAPTION>
(Unaudited)
For the Three Month
Period Ended
March 31,
---------------------------
2000 1999
------------ ------------
(In Thousands)
<S> <C> <C>
Balance at beginning of period $5,161 $4,846
------ ------
Charge-Offs:
Real Estate:
One- to four-family (17) --
Commercial -- --
Other:
Commercial (10) (1)
Consumer (312) (199)
------ ------
Total charge-offs (339) (200)
------ ------
Recoveries:
Real Estate:
One- to four-family -- --
Commercial -- --
Other:
Commercial 5 4
Consumer 123 14
------ ------
Total recoveries 128 18
------ ------
Net charge-offs (211) (182)
Provisions charged to operations 450 345
------ ------
Balance at end of period $5,400 $5,009
====== ======
Ratio of net charge-offs during the period to average loans
outstanding during the period 0.03% 0.03%
====== ======
Ratio of net charge-offs during the period to average non-
performing assets during the period 7.28% 4.28%
====== ======
Ratio of allowance for loan losses to net loans before
allowance 0.87% 0.79%
====== ======
</TABLE>
