1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000.
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_______________ to ________________.
Commission file number 000-25295
FIRSTIER CORPORATION
----------------------
(Exact name of small business issuer as specified in its charter)
Colorado 47-0484682
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
11210 Huron, Northglenn, CO 80234
---------------------------------
(Address of principal executive offices, including zip code)
(303) 451-1010
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(Issuer's telephone number)
-----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
As of August 11, 2000, there were 7,718,064 shares of the
registrant's common stock outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
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FIRSTIER CORPORATION
TABLE OF CONTENTS
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 2
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRSTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2000 (Unaudited) and December 31, 1999
(In thousands, except share data)
June 30, 2000 December 31, 1999
------------- -----------------
(Unaudited)
ASSETS
Cash and due from banks ........................................................ $ 26,174 $ 27,049
Interest bearing deposits in other bank ........................................ 174 3
Federal funds sold ............................................................. 52,884 --
Investment securities:
Available-for-sale, at fair value ............................................ 36,976 36,369
Held-to-maturity, at amortized cost, fair value of $4,660, at June 30,
2000 (unaudited) and $6,006, at December 31, 1999 ........................ 4,376 5,989
------------- -----------------
Total investment securities ........................................... 41,352 42,358
------------- -----------------
Loans held for sale ............................................................ 7,674 1,123
Gross loans receivable: ........................................................ 733,942 623,070
Less: unearned loan fees ..................................................... (2,275) (2,121)
allowance for loan losses .............................................. (7,721) (5,322)
------------- -----------------
Net loans receivable .................................................. 723,946 615,627
------------- -----------------
Premises and equipment, net .................................................... 11,462 11,117
Preferred securities issuance cost, net ........................................ 1,078 1,083
Other assets ................................................................... 9,736 8,461
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TOTAL ASSETS .......................................................... $ 874,480 $ 706,821
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LIABILITIES
Deposits:
Demand non-interest bearing .................................................. $ 79,074 $ 58,648
Demand interest bearing ...................................................... 23,132 19,951
Time ......................................................................... 672,340 523,395
------------- -----------------
Total deposits ........................................................ 774,546 601,994
Federal funds purchased and securities sold under agreements to repurchase ..... 7,859 8,150
Note payable ................................................................... 23,500 11,560
Federal Home Loan Bank borrowings .............................................. 8,477 33,235
Other liabilities .............................................................. 5,679 3,178
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Total liabilities ..................................................... 820,061 658,117
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Company obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely Junior Subordinated Debentures .......................... 23,000 23,000
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STOCKHOLDERS' EQUITY
Preferred stock, 20,000,000 shares authorized; no shares issued and
outstanding at December 31, 1999 and June 30, 2000 (unaudited) ............. -- --
Common stock, 50,000,000 shares authorized; shares issued and outstanding:
7,579,667 at December 31, 1999 and June 30, 2000 7,718,064
(unaudited) ................................................................ 2,805 1,520
Retained earnings .............................................................. 29,018 24,520
Accumulated other comprehensive income (loss) .................................. (404) (336)
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Total stockholders' equity ............................................ 31,419 25,704
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................ $ 874,480 $ 706,821
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FIRSTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three months ended June 30, 2000 and 1999 (Unaudited) and six months ended
June 30, 2000 and 1999 (Unaudited) (In thousands, except per share data)
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest income:
Loans, including fees ............................................ $ 18,971 $ 9,667 $ 36,227 $ 17,642
Taxable investment securities .................................... 500 503 987 809
Nontaxable investment securities ................................. 125 110 250 262
Dividends on investment securities ............................... 68 11 82 25
Federal funds sold ............................................... 386 234 407 414
----------- ----------- ----------- -----------
Total interest income ..................................... 20,050 10,525 37,953 19,152
----------- ----------- ----------- -----------
Interest expense:
Deposits ......................................................... 9,247 4,670 16,687 8,495
Federal funds purchased .......................................... 14 21 168 24
Securities sold under agreements to repurchase ................... 73 58 142 101
Note payable ..................................................... 494 -- 713 84
Trust preferred securities ....................................... 539 545 1,078 815
Federal Home Loan Bank borrowings ................................ 352 139 1,231 254
----------- ----------- ----------- -----------
Total interest expense .................................... 10,719 5,433 20,019 9,773
----------- ----------- ----------- -----------
Net interest income ....................................... 9,331 5,092 17,934 9,379
Provision for loan losses .......................................... 2,176 514 2,930 1,429
----------- ----------- ----------- -----------
Net interest income after provision for loan losses ................ 7,155 4,578 15,004 7,950
----------- ----------- ----------- -----------
Non-interest income:
Fees for other customer services ................................. 723 463 1,376 872
Net gains from sale of loans ..................................... 288 323 401 594
Commissions and fees from brokerage activities ................... 123 114 236 181
Investment securities transactions, net .......................... -- -- -- --
Other operating income ........................................... 1,267 139 1,466 252
----------- ----------- ----------- -----------
Total non-interest income ................................. 2,401 1,039 3,479 1,899
----------- ----------- ----------- -----------
Non-interest expenses:
Salaries and employee benefits ................................... 3,197 1,922 6,175 3,676
Net occupancy expense of premises ................................ 926 544 1,774 1,030
Purchased services ............................................... 452 440 899 755
Office supplies .................................................. 165 119 341 229
Other operating expenses ......................................... 1,259 725 2,276 1,249
----------- ----------- ----------- -----------
Total non-interest expenses ............................... 5,999 3,750 11,465 6,939
----------- ----------- ----------- -----------
Income before income taxes ................................ 3,557 1,867 7,018 2,910
Income tax expense ................................................. 1,287 626 2,519 957
----------- ----------- ----------- -----------
NET INCOME ......................................................... $ 2,270 $ 1,241 $ 4,499 $ 1,953
=========== =========== =========== ===========
Other comprehensive income:
Unrealized holding gains (losses) arising during the ........... (24) (441) (103) (577)
period
Unrealized holding gains (losses) arising during prior ......... -- -- -- --
periods, realized during current period
----------- ----------- ----------- -----------
Income tax (expense) benefit related to items of other
comprehensive income .......................................... 9 150 38 196
----------- ----------- ----------- -----------
Other comprehensive income, net of tax .................... (15) (291) (65) (381)
----------- ----------- ----------- -----------
COMPREHENSIVE INCOME ............................................... $ 2,255 $ 950 $ 4,434 $ 1,572
=========== =========== =========== ===========
Income per share:
Basic and diluted earnings per share ............................... $ 0.30 $ 0.17 $ 0.59 $ 0.26
=========== =========== =========== ===========
Weighted average shares outstanding ............................ 7,580,427 7,424,337 7,581,171 7,502,002
=========== =========== =========== ===========
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FIRSTIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 2000 and 1999 (Unaudited)
(In thousands)
Six months ended June 30,
2000 1999
------------ ------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income ................................................................... $ 4,499 $ 1,953
Adjustments to reconcile net income to cash provided by operating
activities:
Provision for loan losses ............................................... 2,930 1,454
Depreciation and amortization ........................................... 651 555
Net gains from sale of loans ............................................ (401) (594)
Proceeds from sale of loans held for sale ............................... 18,523 31,226
Origination of loans held for sale ...................................... (24,673) (27,975)
Investment securities transactions, net ................................. 0 175
Changes in deferrals and accruals:
Other assets ............................................................ (1,240) 1,933
Other liabilities ....................................................... 2,501 (4,000)
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Net cash provided by operating activities ............................. 2,790 4,727
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Cash flows from investing activities:
Net (increase) decrease in federal funds sold ............................. (52,884) 10,770
Net (increase) decrease in interest bearing deposits in other banks ....... (171) 3
Purchase of investment securities available-for-sale ...................... (4,565) (58,148)
Purchase of investment securities held-to-maturity ........................ -- (127)
Proceeds from maturities/paydowns of investment securities ................ 5,456 39,039
Net increase in loans ..................................................... (111,250) (124,734)
Expenditures for bank premises and equipment .............................. (965) (1,254)
Proceeds from sale of real estate
owned ................................................................... -- 162
------------ ------------
Net cash used in investing activities ................................. (164,379) (134,289)
------------ ------------
Cash flows from financing activities:
Net increase in deposits .................................................. 172,552 109,032
Advances from Federal Home Loan Bank ...................................... (24,758) (57)
Proceeds from note payable ................................................ 11,940 3,600
Payments on note payable .................................................. -- (8,790)
Proceeds from trust preferred securities .................................. -- 23,000
Proceeds from sale of common stock ........................................ 1,285 --
Debt issuance cost ........................................................ (14) (1,102)
------------ ------------
Net cash provided by financing activities ............................. 160,714 130,166
------------ ------------
Net increase in cash and due from banks ........................................ (875) 604
Cash and due from banks at beginning of period ................................. 27,049 13,892
------------ ------------
Cash and due from banks at end of period ....................................... $ 26,174 $ 14,496
============ ============
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FIRSTIER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three month period ended June 30, 2000 and 1998
(Unaudited)
1. Summary of significant accounting policies
The accompanying unaudited interim financial statements have been
prepared in accordance with the instructions for Form 10-QSB and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. All
adjustments that are, in the opinion of management, of a normal
recurring nature necessary for a fair statement of results for the
interim periods presented have been made. The results of operations for
such interim periods are not necessarily indicative of results of
operations for a full year. The statements should be read in
conjunction with the summary of significant accounting policies and
notes to consolidated financial statements of the Company included in
the Company's annual report on form 10-KSB for the year-end December
31, 1999.
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the
financial position of the Company at June 30, 2000 and December 31,
1999, and the results of operations and cash flows for the three month
periods ended June 30, 2000 and 1999.
The consolidated financial statements include the accounts of the
Company's respective subsidiaries. All material intercompany
transactions have been eliminated in consolidation.
2. Nature of Operations
FirsTier Corporation (the "Company" or "FirsTier"), a multibank holding
company, offers full service community banking through 16 banking
locations in metropolitan Denver and northern Colorado, and two banking
locations in western and central Nebraska. FirsTier's Colorado bank
opened six new branches during 1999 and one branch in 2000.
3. Corporate Restructuring
On September 14, 1999 the Company changed its state of incorporation to
Colorado and changed its name to FirsTier Corporation from First
Western Corp. As a result of the re-incorporation, the Company's common
stock and surplus accounts have been combined. Also, the Company
effected a 52.47623 for one common stock split. All share and per share
amounts contained in these financial statements have been restated for
this reorganization.
4. 1999 Stock Incentive Plan
In September 1999 the Company adopted the 1999 Stock Incentive Plan to
provide incentives for eligible persons, including employees,
non-employee directors and consultants to the Company and its
subsidiaries. The number of shares of common stock of the Company to be
issued under this plan may not exceed 1,700,000. To date, all stock
options granted permit the holder to purchase, under certain
limitations, the Company's common stock at a price not less than 100%
of the market value of the stock on the date the option was granted. At
the time of the initial adoption of the plan, an option for 500,000
shares was granted under this plan to an executive officer at an
exercise price of $12.00 per share.
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5. Acquisition
In the first quarter of 1999, the Company exchanged 232,994 shares of
its common stock for the 8.6% of Firstate Bank (Kimball, NE) that it
did not own. Individuals already affiliated with the Company owned
these minority shares. As the Company and its four shareholders at the
time of the exchange owned 99.6% of the Nebraska bank and the remaining
0.4% was owned by other persons who were affiliated with the Company,
it was determined by the boards of both entities that a book value
exchange ratio represented a fair value for all parties. The fair value
determined for this transaction was $683,000. No goodwill was
recognized in connection with this transaction.
6. Offering of Trust Preferred Securities by FW Capital I
On February 16, 1999 the Company and its wholly owned subsidiary FW
Capital I (the "Trust"), completed the sale of $23.0 million of 9.375%
Cumulative Trust Preferred Securities of the Trust. Net proceeds were
approximately $21.9 million after payment of sales commissions and
other offering costs, and were invested in Junior Subordinated
Debentures maturing February 16, 2029, issued by the Company to the
Trust in connection with the public offering.
Interest on the Junior Subordinated Debentures is paid by the Company
to the Trust. This interest is the sole revenue of the Trust and the
source for distributions by the Trust to the holders of the Trust
Preferred Securities.
For financial reporting purposes, the Trust is treated as a subsidiary
of the Company, and accordingly, the accounts of the Trust are included
in the consolidated financial statements of the Company. The Trust
Preferred Securities are presented as a separate line item in the
consolidated balance sheet under the caption "Company obligated
mandatorily redeemable preferred securities of subsidiary trust holding
solely Junior Subordinated Debentures." For financial reporting
purposes, the Company records distributions payable on the Trust
Preferred Securities as interest expense in the consolidated statements
of income.
The Junior Subordinated Debentures are unsecured and rank junior and
are subordinate to all senior debt of the Company and constitute a full
and unconditional guarantee on a subordinated basis by the Company of
the obligations of the Trust under the Preferred Securities.
7. Accounting Standard Implemented in 2000
In June, 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities", which establishes accounting and reporting standards for
derivative instruments and hedging activities. Under Statement 133,
derivatives are recognized on the balance sheet at fair value as an
asset or liability. Changes in the fair value of derivatives is
reported as a component of other comprehensive income or recognized as
earning through the income statement depending on the nature of the
instrument. Statement 137 was issued in June 1999, and deferred the
effectiveness of Statement 133 to all quarters of fiscal years
beginning after June 15, 2000, with earlier adoption permitted. The
Company has not yet adopted Statement 133, but it is not expected to
have a material impact on the consolidated financial statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the Consolidated
Financial Statements and related notes. FirsTier's future operating results may
be affected by various trends and factors, which are beyond FirsTier's control.
These include the factors set forth in "Risk Factors" and "Cautionary
Statements" included in the registration statement of the Company declared
effective on February 10, 1999 SEC File Nos. 333-67197 and 333-67197-01.
Accordingly, past results and trends may not be reliable indicators of future
results or trends. With the exception of historical information, the matters
discussed below include forward-looking statements that involve risks and
uncertainties. FirsTier cautions readers that a number of important factors
could affect FirsTier's actual results and cause actual results to differ
materially from those in the forward-looking statements.
RESULTS OF OPERATIONS
Net interest income for the Company increased $4.2 million (82%) from $5.1
million for the three month period ended June 30, 1999, to $9.3 million for the
three month period ended June 30, 2000 and $8.5 million (91%) from 9.4 million
for the six month period ended June 30, 1999 to $17.9 million ended for six
month period ended June 30, 2000. The major components of this increase were:
1. Interest income increased $9.5 million (90%) from $10.5 million for
the three month period ended June 30, 1999 to $20.0 million for the
three month period ended June 30, 2000 and increased $18.9 million
(103%) from $19.1 million for the six month period ended June 30, 1999
to $38.0 million for the six month period ended June 30, 2000.
Approximately $8.6 million of this increase is a result of average
earning assets increasing $350.6 million (80%) from $438.2 million for
the three month period ended June 30, 1999 to $788.8 million for the
three month period ended June 30, 2000 and increasing $344.6 million
(85%) from $407.7 million for the six month period ended June 30, 1999
to $752.3 million for the six month period ended June 30, 2000. Most
of the Company's earning assets (89% at June 30, 2000) are loans, a
large portion of which have floating rates and are tied to the prime
rate.
2. Interest expense increased $5.3 million (98%) from $5.4 million for
the three month period ended June 30, 1999 to $10.7 million for the
three month period ended June 30 ,2000 and increased $10.2 million
(104%) from $9.8 million for the six month period ended June 30, 1999
to $20.0 million for the six month period ended June 30, 2000.
Approximately $5.0 million of this increase is a result of average
interest bearing liabilities increasing $332.6 million (90%) from
$369.7 million for the three month period ended June 30, 1999 to
$702.3 million for the three month period ended June 30, 2000, and
increasing $324.3 million (93%) from $349.4 million for the six month
period ended June 30, 1999 to $673.7 million for the six month period
ended June 30, 2000.
3. Net interest margin decreased 0.24% (5% change) from 4.65% for the
three month period ended June 30, 1999 to 4.41% for the three month
period ended June 30, 2000 and increased 0.10% (2% change) from 4.6%
for the six month period ended June 30, 1999 to 4.70% for the three
month period ended June 30, 2000. The sources of these changes are:
a) Yields on earning assets increased 0.56% (6% change) from 9.61%
for the three month period ended June 30, 1999 to 10.17% for the
three month period ended June 30, 2000 and increased 0.70% (7%
change) from 9.39% for the six month period ended June 30, 1999
to 10.09% for the six month period ended June 30, 2000. This
reflects the impact of an average 1.00% increase in the prime
lending rate on the Company's variable rate loans.
b) Costs of interest bearing liabilities increased 0.22% (4% change)
from 5.88% for the three month period ended June 30, 1999 to
5.70% for the three month period ended June 30, 2000, and
increased 0.35% (6% change) from 5.59% for the six month period
ended June 30, 1999 to 5.94% for the six month period ended June
30, 2000. This is the result of an increase in rates paid for
fixed rate time deposits, an average increase of 0.10% from 5.78%
in 1999 to 5.88% in 2000, as well as the impact of $23.0 million
of trust preferred securities at 9.375% included in the liability
mix.
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Provision for loan losses increased by $1.7 million (323%) from $0.5 million for
the three month period ended June 30, 1999 to $2.2 million for the three month
period ended June 30, 2000 and increased by $1.5 million (105%) from $1.4
million for the six month period ended June 30, 1999 to $2.9 million for the six
month period ended June 30, 2000. In response to a sustained significant growth
rate in the Company's loan portfolio, management reviewed and revised the
methodology for estimating the adequacy of the allowance for loan losses in the
fourth quarter of 1998. The methodology was further revised in the first quarter
of 1999 which resulted in special loan provisions. Management believes that the
revised methodology permits a closer match between period loan loss provisions
and period loan originations.
Non-interest income increased $1.4 million (131%) from $1.0 million for the
three month period ended June 30, 1999 to $2.4 million for the three month
period ended June 30, 2000 and increased $1.6 million (84%) from $1.9 for the
six month period ended June 30, 1999 to $3.5 million for the six month period
ended June 30, 2000. The two major components of the increase were:
1. Fees for other customer services increased $0.2 million (49%) from
$0.5 million for the three month period ended June 30, 1999 to $0.7
million for the three month period ended June 30, 2000, and increased
$0.5 million (56%) from $0.9 million for the six month period ended
June 30, 1999 to $1.4 million for the six month period ended June 30,
2000. This increase resulted from additional customer accounts at our
branch locations.
2. The Company sold a branch location in Loveland, Colorado and
recognized $1.1 million gain on the sale. This one-time gain is
included in the second quarter non-interest income.
Non-interest expense increased $2.2 million (58%) from $3.8 million for the
three month period ended June 30, 1999, to $6.0 million for the three month
period ended June 30, 2000, and increased $4.5 million (64%) from $7.0 million
for the six month period ended June 30, 1999, to $11.5 million for the six month
period ended June 30, 2000. The major components of the increase were:
1. Salaries and employee benefits increased $1.3 million (68%) from $1.9
million for the three month period ended June 30, 1999 to $3.2 million
for the three month period ended June 30, 2000, and increased $2.5
million (68%) from $3.7 million for the six month period ended June
30, 1999 to $6.2 million for the six month period ended June 30, 2000.
The increase is the result of staffing four additional branch
locations and a loan production office.
2. Net occupancy expense of premises increased $0.3 million (51%) from
$0.6 million for the three month period ended June 30, 1999 to $0.9
million for the three month period ended June 30, 2000, and increased
$0.8 million (80%) from $1.0 million for the six month period ended
June 30, 1999 to $1.8 million for the six month period ended June 30,
2000. The increase represents the cost of adding five additional
banking facilities during 1999.
3. Purchased services increased $12,000 (3%) from $440,000 for the three
month period ended June 30, 1999 to $452,000 for the three month
period ended June 30, 2000, and increased $144,000 (19%) from $755,000
for the six month period ended June 30, 1999 to $899,000 for the six
month period ended June 30, 2000. The majority of this increase is
related to data processing services for new branches and the increased
operating costs of using year 2000 compliant data processing services.
4. Other non-interest expenses increased $0.4 million (50%) from $0.8
million for the three month period ended June 30, 1999 to $1.2 million
for the three month period ended June 30, 2000, and increased $1.1
million (82%) from $1.2 million for the six month period ended June
30, 1999 to $2.3 million for the six month period ended June 30, 2000.
This increase resulted from additional expenses relating to telephone,
marketing, and FDIC insurance, and was attributable to the increase in
banking facilities.
Net income increased $1.1 million (92%) from $1.2 million for the three month
period ended June 30, 1999 to $2.3 million for the three month period ended June
30, 2000 and increased $2.5 million (125%) from $2.0 million for the six month
period ended June 30, 1999 to $4.5 million for the six month period ended June
30, 2000.
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FINANCIAL CONDITION
Total assets increased $167.7 million (24%) from $706.8 million as of December
31, 1999, to $874.5 million at June 30, 2000. This growth was the result of:
1. Cash and due from banks decreased $0.8 million (3%), decreasing from
$27.0 million at December 31, 1999 to $26.2 million at June 30, 2000.
2. Federal funds sold increased $52.9 million , from $0 at December 31,
1999 to $52.9 million at June 30, 2000. This is the short term
investment vehicle for excess liquidity generated from deposit
promotions prior to final investment in longer term assets.
3. Investment securities decreased by $1.0 million (2%), decreasing from
$42.4 million at December 31, 1999 to $41.4 million at June 30, 2000.
4. Loans held for sale increased $6.6 million (600%), from $1.1 million
at December 31, 1999 to $7.7 million at June 30, 2000. As a result of
staff turnover in the second half of 1999, reduced production levels
resulted in a lower level of loans outstanding in the loans held for
sale category at December 31, 1999. The new employees increased the
Company's loan production activities in the first half of 2000 leading
to a higher level of loans held for sale outstanding at June 30, 2000.
5. Net loans receivable increased $108.3 million (18%), increasing from
$615.6 million at December 31, 1999 to $723.9 million at June 30,
2000. This resulted from an increase in loans in the Company's market
areas and the continued growth of the Company's branches.
Total deposits increased $172.5 million (29%) from $602.0 million as of December
31, 1999 to $774.5 million at June 30, 2000. The change was the result of:
1. Demand non-interest bearing deposits increased $20.5 million (35%),
from $58.6 million at December 31, 1999 to $79.1 million at June 30,
2000. This increase was attributable to the continued growth of the
Company's branches and the addition of a cash management function.
2. Demand interest bearing deposits increased $3.1 million (16%),
increasing from $20.0 million at December 31, 1999 to $23.1 million at
June 30, 2000. This resulted primarily from the addition of several
seasoned bankers who focus on cash management services, and servicing
high net worth customers.
3. Time deposits increased $148.9 million (28%), increasing from $523.4
million at December 31, 1999 to $672.3 million at June 30, 2000. The
Company utilized promotional campaigns, designed to generate an
increase in certificates of deposit with balances of less than
$100,000, to achieve this growth.
Federal funds purchased and securities sold under agreements to repurchase
decreased $0.3 million (4%) from $8.2 million as of December 31, 1999 to $7.9
million at June 30, 2000.
Note payable increased $12.4 million (107%) from $11.6 million as of December
31, 1999 to $24 million at June 30, 2000. In March 2000, the Company drew $12.4
million on its line of credit to fund capital needs of its Colorado bank.
Allowance for loan losses increased $2.4 million (45%) from $5.3 million as of
December 31, 1999 to $7.7 million at June 30, 2000.
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The following table presents, for the periods indicated, an analysis of the
allowance for loan loses and related ratios:
Six months Ended
June 30, 2000 June 30, 1999
------------- -------------
(in thousands)
Balance beginning of period .................................... $ 5,322 $ 2,187
Provision for loan losses ...................................... 2,930 1,429
Net charge offs ................................................ (531) (5)
------------- -------------
Balance end of period .......................................... $ 7,721 $ 3,611
============= =============
Ratios:
Allowance for loan losses to total loans ....................... 1.07% 0.87%
Allowance for loan losses to non-performing loans .............. 211% 528%
The allowance for loan losses represents management's recognition of the risks
of extending credit and its evaluation of the quality of the loan portfolio. The
allowance for loan losses is maintained at a level that is considered adequate
to provide for anticipated loan losses, based on various factors affecting the
loan portfolio, including a review of problem loans, business conditions,
historical loss experience, evaluation of the underlying collateral and holding
and disposal costs. The allowance is increased by additional charges to
operating income and reduced by loans charged off, net of recoveries.
The following table presents information and ratios of the Company's
non-performing assets as of the dates indicated:
June 30,
----------------
2000 1999
------ ------
(in thousands)
Loans 90 days or more delinquent and still accruing interest ........ $ 90 $ 334
Non-accrual loans ................................................... 3,568 352
Restructured loans .................................................. -- --
------ ------
Total non-performing loans ..................................... 3,658 686
Real estate acquired by foreclosure ................................. -- --
------ ------
Total non-performing assets .................................... $3,658 $ 686
====== ======
Ratios:
Non-performing assets to total assets ............................... 0.42% 0.14%
Non-performing loans to total loans ................................. 0.49% 0.17%
Non-performing assets for the Company increased $3,000,000 (429%) from $700,000
at June 30, 1999, to $3,700,000 at June 30, 2000. The major component of this
increase is one loan relationship which totals $2,400,000 (80% of the $3,000,000
increase). This relationship is secured by real estate and management believes
the bank is adequately collateralized. As of June 30, 2000, there were no
significant balances of loans excluded from non-performing loans set forth
above, where known information about possible credit problems of borrowers
caused management to have serious doubts as to the ability of such borrowers to
comply with loan repayment terms and which may result in such loans becoming
nonperforming.
10
12
LIQUIDITY
FirsTier continuously forecasts and manages its liquidity in order to satisfy
cash flow requirements of depositors and borrowers and to allow FirsTier to meet
its own cash flow needs. Management has identified two major categories of
liquidity:
1) Ongoing business cash flows:
The Company's major source of cash flows is provided by financing
activities, $79.2 million for the three-month period ended June 30,
2000 and $69.1 million for the three-month period ended June 30, 1999.
Cash provided consisted primarily of an increase in deposits, for the
three-month period ended June 30, 2000. For the three-month period
ended June 30, 1999 the major components were the issuance of trust
preferred securities, deposit growth and proceeds from the note
payable.
The major use of cash flows for the Company is in investing activities,
which amounted to $91.5 million for the three-month period ended June
30, 2000 and $68.6 million for the three-month period ended June 30,
1999. For the three-month period ended June 30, 2000, the major
components of this use were a $45.8 million increase in net loans, a
$48.9 million increase in federal funds sold and a net decrease of $3.2
million in investment securities. For the three-month period ended June
30, 1999, the major components of this use were a $70.8 million
increase in net loans, and a net increase of $11.3 million in
investment securities and a 13.5 million decrease in Fed Funds Sold.
2) Backup sources of liquidity
Management believes it has developed sufficient backup sources of
liquidity to meet the Company's needs for the foreseeable future. These
internal and external sources include, but are not limited to:
1. The ability to raise deposits through branch promotional
campaigns;
2. Maturity of overnight federal funds sold ($21.7 million available
as of June 30, 2000);
3. Sale of unpledged available-for-sale securities ($14 million
available as of June 30, 2000) and
4. Available borrowing lines ($64.5 million available as of June 30,
2000).
11
13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(i) Exhibits filed with this Form 10-QSB:
Exhibit No. Description
27 Financial Data Schedule.
(ii) Exhibits previously filed and incorporated herein by reference:
Exhibit No. Description
2 Articles of merger merging First Western Corp. into FIRSTIER
CORPORATION(1)
3i Articles of Incorporation of FIRSTIER CORPORATION(1)
3ii Bylaws of FIRSTIER CORPORATION (1)
4.1 Form of Subordinated Indenture dated February 15, 1999 between
the Registrant and Wilmington Trust Company, as Indenture Trustee
(2).
4.2 Form of Junior Subordinated Debenture (included as an exhibit to
Exhibit 4.1).
4.5 Form of Amended and Restated Trust Agreement of FW Capital I
(2).
4.7 Form of Preferred Securities Guarantee Agreement (2).
10.14 1999 FirsTier Corporation Stock Incentive Plan adopted as of
September 15, 1999 (1).
10.15 Agreement concerning the sale of FIRSTIER mark, dated September
17, 1999, by and between U.S. Bancorp, U.S. Bank National
Association and Firstate Bank of Colorado (1).
99 Risk Factors incorporated by reference from First Western's Rule
424(b) Prospectus filed on February 10, 1999 (3).
- ---------
(1) Filed with the 10-QSB on November 3, 1999
(2) Filed with the Registration Statement on Form SB-2, SEC File No. 333-67107,
on November 13, 1998.
(3) Filed with the 10-QSB on August 11, 1999.
(b) Reports on Form 8-K -- None
12
14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRSTIER CORPORATION
Date: August 11, 2000 By: /s/ Timothy D. Wiens
--------------- ----------------------------------
President
Date: August 11, 2000 By: /s/ Brian L. Svendsen
--------------- -----------------------------------
Brian L. Svendsen, Chief Financial
Officer
15
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
2 Articles of merger merging First Western Corp. into FIRSTIER
CORPORATION(1)
3i Articles of Incorporation of FIRSTIER CORPORATION(1)
3ii Bylaws of FIRSTIER CORPORATION (1)
4.1 Form of Subordinated Indenture dated February 15, 1999 between
the Registrant and Wilmington Trust Company, as Indenture
Trustee (2).
4.2 Form of Junior Subordinated Debenture (included as an exhibit to
Exhibit 4.1).
4.5 Form of Amended and Restated Trust Agreement of FW Capital
I (2).
4.7 Form of Preferred Securities Guarantee Agreement (2).
10.14 1999 FirsTier Corporation Stock Incentive Plan adopted as of
September 15, 1999 (1).
10.15 Agreement concerning the sale of FIRSTIER mark, dated September
17, 1999, by and between U.S. Bancorp, U.S. Bank National
Association and Firstate Bank of Colorado (1).
27 Financial Data Schedule.
99 Risk Factors incorporated by reference from First Western's Rule
424(b) Prospectus filed on February 10, 1999 (3).
- ---------
(1) Filed with the 10-QSB on November 3, 1999
(2) Filed with the Registration Statement on Form SB-2, SEC File No. 333-67107,
on November 13, 1998.
(3) Filed with the 10-QSB on August 11, 1999.