Exhibit 99.1
Press Release for FirstBank NW Corp. dated November 6, 2006
Press Release FirstBank NW Corp. (FBNW)
Company Release - 11/6/06
________________________________________________________________________________
FIRSTBANK NW CORP. REPORTS STRONG
SECOND QUARTER RESULTS
Highlights for the Second Fiscal Quarter 2007:
o Diluted earnings per share growth of 29.7% to $0.48 per common
share compared to the second fiscal quarter one year ago.
o Pro forma diluted earnings per share growth of 37.8% to $0.51
per common share before merger related expenses compared to
the second fiscal quarter one year ago.
o Net loans receivable growth of 12.7% year over year.
o Deposit growth of 12.8% year over year.
o Net interest margin increased 20 basis points to 4.78%
compared to the second fiscal quarter one year ago.
CLARKSTON, WA - November 6, 2006 - FirstBank NW Corp. (the Company) (NasdaqGM:
FBNW) today announced another quarter of strong financial results. On June 5,
2006, FirstBank NW Corp. announced the signing of a definitive agreement in
connection with the proposed merger of FirstBank NW Corp. and Sterling Financial
Corporation. Merger related expenses of $145,000, tax effected, are reflected in
the Statement of Income for the quarter ended September 30, 2006. For the
quarter ended September 30, 2006, diluted earnings per share increased 29.7% to
$0.48 compared to $0.37 for the same quarter last year. Net income for the
quarter increased 31.7% to $3.0 million compared to $2.3 million for the same
quarter a year ago. At September 30, 2006, net average loans receivable was
12.2% higher than a year ago, and grew at a 14.6% linked-quarter pace
(annualized) during the second fiscal quarter of 2007. Similarly, average
deposit balances as of September 30, 2006 were 11.4% higher than the quarter
ended September 30, 2005 and increased at a 29.6% linked-quarter pace
(annualized) during the second fiscal quarter of 2007.
For the second fiscal quarter of 2007, the Company's return on average tangible
equity was 18.64% compared to 16.06% for the quarter ended September 30, 2005,
while the return on average assets was 1.35% for the current quarter compared to
1.07% for same quarter one year ago. Pro forma return on average tangible equity
was 19.55% and pro forma return on average assets was 1.41% for the quarter
ended September 30, 2006, which reflects performance before merger related
expenses (tax effected) incurred during the quarter. The net interest margin was
higher for the quarter ended September 30, 2006, at 4.78% compared to 4.58% for
the quarter ended September 30, 2005.
In addition to results presented in accordance with generally accepted
accounting principles in the United States of America (GAAP), this press release
contains certain non-GAAP financial measures. FirstBank believes that providing
non-GAAP financial measures provides investors with information useful in
understanding our financial performance. FirstBank provides measures based on
"Pro forma net income", which exclude merger related expenses. Pro forma net
income per basic and diluted share is calculated by dividing pro forma net
income by the same basic and diluted share total used in determining basic and
diluted earnings per share.
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A reconciliation of these non-GAAP measures to the most comparable GAAP
equivalent is included in the following financial table or where the non-GAAP
measure is presented.
Three Months Ended Three Months Ended
September 30, 2006 September 30, 2005
------------------ ------------------
(Dollars in thousands, except per share data)
Net income $ 2,964 $ 2,250
Add back: Merger related expenses, net of tax 145 0
--------------- ---------------
Pro forma net income $ 3,109 $ 2,250
=============== ===============
Earnings per share - basic:
Net income $ 0.50 $ 0.38
Pro forma net income $ 0.52 $ 0.38
Earnings per share - diluted:
Net income $ 0.48 $ 0.37
Pro forma net income $ 0.51 $ 0.37
LOAN GROWTH AND CREDIT QUALITY:
At September 30, 2006, net loans receivable totaled $671.2 million, up $75.5
million, or 12.7%, from $595.7 million a year ago and up $38.7 million from
$632.5 million at our fiscal year ended March 31, 2006.
Non-performing assets totaled $1.6 million, or 0.18% of total assets, at
September 30, 2006 compared to $2.1 million, or 0.26% of total assets, at
September 30, 2005, and $1.2 million, or 0.14% of total assets, at our fiscal
year ended March 31, 2006. Net loan charge-offs for the second fiscal quarter
were $67,000 compared to the same quarter a year ago of $57,000, and $618,000
for the quarter ended March 31, 2006.
The reserve for losses on loans and loan commitments to total loans decreased to
1.28% of net loans at September 30, 2006 from 1.37% at September 30, 2005, and
was essentially unchanged from 1.29% at March 31, 2006. The decrease in the
percentage reserve for losses on loans and loan commitments to total loans was
primarily the result of the charge off of a larger agricultural loan during the
fourth quarter of fiscal 2006 and the growth in our loan portfolio, partially
offset by additions to the reserve. Loan loss provision expense was $165,000 for
the quarter ended September 30, 2006, $272,000 for the quarter ended September
30, 2005, and $237,000 for the quarter ended March 31, 2006. Management believes
the reserve is at an appropriate level considering the credit quality
demonstrated, loan loss histories, and prevailing economic conditions.
FUNDING:
Deposit balances as of September 30, 2006 increased $72.0 million, or 12.8%, to
$633.4 million from $561.4 million at September 30, 2005. At September 30, 2006,
total branch deposits were $587.6 million, consisting of $354.6 million, or
60.3% in core deposits and $233.0 million, or 39.7% in time deposits. At
September 30, 2005, there were $519.3 million in total branch deposits, which
consisted of $321.1 million, or 61.8% in core deposits and $198.2 million, or
38.2% in time deposits. Brokered deposits at September 30, 2006 totaled $45.8
million as compared to $42.1 million a year ago, an increase of $3.7 million.
Federal Home Loan Bank (FHLB) and other borrowings at September 30, 2006 totaled
$151.2 million compared to $160.6 million a year ago, a decrease of $9.4
million.
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NET INTEREST MARGIN AND INTEREST RATE RISK:
The Company's net interest margin was 4.78% for the second fiscal quarter of
2007 compared to 4.58% for the quarter ended September 30, 2005. The flattening
of the yield curve continues to pressure the net interest margin, however, the
Company's asset sensitivity continues to accommodate timely market pricing as
the cost of deposits and borrowed funds continues to increase. Yields on earning
assets increased by 95 basis points to 8.06% compared to 7.11% for the quarter
ended September 30, 2005. Meanwhile, the average rate paid on total deposits and
borrowed funds increased 87 basis points to 3.39% compared to 2.52% for the
quarter ended September 30, 2005.
NON-INTEREST INCOME AND EXPENSE:
Non-interest income for the quarter ended September 30, 2006 was $1.7 million
compared to $1.8 million for the quarter ended September 30, 2005. Non-interest
income is primarily the result of gain on sale of loans and transaction account
fees.
Non-interest expense for the quarter ended September 30, 2006 compared to the
quarter ended September 30, 2005 remained unchanged at $6.4 million. Total
non-interest expense related to merger activities was $239,000, or $145,000 tax
effected, for the quarter ended September 30, 2006.
CAPITAL:
At September 30, 2006, the Tier 1 capital of FirstBank Northwest, FirstBank's
wholly-owned subsidiary, was $63.1 million, or 7.4% leverage ratio based on
average assets, and total risk-based capital was $74.3 million, or 11.3%
risk-based capital ratio based on risk-weighted assets.
PROPOSED MERGER:
FirstBank NW Corp. and Sterling Financial Corporation announced on June 5, 2006
that they have entered into a definitive agreement to merge FirstBank NW Corp.
into Sterling Financial Corporation. The transaction is expected to close in the
last calendar quarter of 2006 (pending FirstBank shareholder and regulatory
approval and the satisfaction of certain other conditions). Under the terms of
the Merger Agreement, which was unanimously approved by the Boards of Directors
of both companies, each share of FirstBank common stock will be converted into
the right to receive 0.789 shares of Sterling common stock and $2.55 in cash,
subject to certain conditions.
CASH DIVIDEND:
On September 13, 2006, FirstBank NW Corp. announced that its Board of Directors
declared a quarterly cash dividend of $0.10 per share. The dividend was paid on
October 11, 2006 to shareholders of record as of the close of business on
September 27, 2006.
BUSINESS STRATEGY:
FirstBank NW Corp. (headquartered in Clarkston, Washington) is the holding
company for FirstBank Northwest, a Washington state chartered savings bank
founded in 1920, and has a track record of consistent above-average growth and
improving profitability, operating in the rural markets of eastern Oregon,
eastern Washington and central Idaho, in addition to the larger and growing
markets of Boise and Coeur d'Alene, Idaho and Spokane, Washington. FirstBank
Northwest is focused on each community served, striving to deliver competitive
financial products and services through exceptional customer service standards,
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local expertise and leadership. FirstBank Northwest operates 20 branch locations
in Idaho, eastern Washington and eastern Oregon, in addition to loan centers in
Lewiston, Coeur d'Alene, Boise and Nampa, Idaho, Spokane, Washington, and Baker
City, Oregon. FirstBank Northwest is known as the local community bank, offering
its customers highly personalized service in the many communities it serves.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
Sterling has filed with the Securities and Exchange Commission a registration
statement on Form S-4, and FirstBank has mailed a proxy statement/prospectus to
its security holders, containing information about the proposed merger
transaction. Investors and security holders of Sterling and FirstBank are urged
to read the proxy statement/prospectus and other relevant materials because they
contain important information about Sterling, FirstBank and the proposed merger.
In addition to the registration statement that was filed by Sterling and the
proxy statement/prospectus that was mailed to the security holders of FirstBank,
Sterling and FirstBank file annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange Commission.
Investors and security holders may obtain a free copy of the proxy
statement/prospectus and other relevant documents (when they become available)
and any other documents filed with the Securities and Exchange Commission at its
website at www.sec.gov. The documents filed by Sterling may also be obtained
free of charge from Sterling by requesting them in writing at Sterling Financial
Corporation, 111 North Wall Street, Spokane, WA 99201, or by telephone at (509)
227-5389. In addition, investors and security holders may access copies of the
documents filed with the Securities and Exchange Commission by Sterling on its
website at www.sterlingfinancialcorporation-spokane.com. The documents filed by
FirstBank may also be obtained by requesting them in writing at FirstBank NW
Corp., 1300 16th Avenue, Clarkston, WA 99403 or by telephone at (509) 295-5100.
In addition, investors and security holders may access copies of the documents
filed with the Securities and Exchange Commission by FirstBank on its website at
www.fbnw.com.
Sterling, FirstBank and their respective officers and directors may be deemed to
be participants in the solicitation of proxies from the security holders of
FirstBank with respect to the transactions contemplated by the proposed merger.
Information regarding Sterling's officers and directors is included in
Sterling's proxy statement for its 2006 annual meeting of shareholders filed
with the Securities and Exchange Commission on March 24, 2006. Information
regarding FirstBank's officers and directors is included in FirstBank's proxy
statement for its 2006 annual meeting of shareholders. A description of the
interests of the directors and executive officers of Sterling and FirstBank in
the merger is set forth in FirstBank's proxy statement/prospectus and other
relevant documents filed with the Securities and Exchange Commission.
FORWARD LOOKING STATEMENTS:
Certain matters in this News Release may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements may relate to, among others, expectations of
the business environment in which the Company operates, projections of future
performance, including operating efficiencies, perceived opportunities in the
market, potential future credit experience and statements regarding the
Company's mission and vision. These forward-looking statements are based upon
current management' expectations, and may, therefore, involve risks and
uncertainties. The Company's actual results, performance, and achievements may
differ materially from those suggested, expressed or implied by forward-looking
statements due to a wide range of factors including, but not limited to, the
general business environment, interest rates, the real estate market in
Washington, Idaho and Oregon, the demand for mortgage loans, competitive
conditions between banks and non-bank financial service providers, regulatory
changes, costs of implementing additional securities requirements, requirements
of the Sarbanes Oxley Act of 2002, the risk that the proposed merger with
Sterling may not be approved by shareholders of FirstBank or the necessary
regulatory approvals are not obtained, the risk that other closing conditions of
the proposed merger are not satisfied, and other risks detailed in the Company's
reports filed with the Securities and Exchange Commission, including its Annual
Report on Form 10-K for the fiscal year ended March 31, 2006. Forward-looking
statements are effective only as of the date they are made and the Company
assumes no obligation to update this information.
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FIRSTBANK NW CORP
(unaudited) (dollars in thousands except per share data)
FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
September 30, September 30,
2006 2005 2006 2005
------------ ------------ ------------ ------------
Interest Income $ 16,004 $ 12,998 $ 31,088 $ 25,138
Interest Expense 6,696 4,765 12,835 9,093
Provision for Loan Losses 165 272 537 1,140
------------ ------------ ------------ ------------
Net Interest Income After Provision for Loan Losses 9,143 7,961 17,716 14,905
------------ ------------ ------------ ------------
Non-Interest Income
Gain on Sale of Loans (1) 264 448 671 786
Service Fees and Charges 1,384 1,266 2,599 2,483
Commission and Other 70 52 112 154
------------ ------------ ------------ ------------
Total Non-Interest Income 1,718 1,766 3,382 3,423
------------ ------------ ------------ ------------
Non-Interest Expense
Compensation and Related Expenses 3,737 3,729 7,891 7,368
Occupancy 718 763 1,450 1,469
Other 1,906 1,944 4,352 3,549
------------ ------------ ------------ ------------
Total Non-Interest Expense 6,361 6,436 13,693 12,386
------------ ------------ ------------ ------------
Income Tax Expense 1,536 1,041 2,440 1,840
------------ ------------ ------------ ------------
Net Income $ 2,964 $ 2,250 $ 4,965 $ 4,102
============ ============ ============ ============
Basic Earnings per Share (2) (6) $ 0.50 $ 0.38 $ 0.84 $ 0.70
Diluted Earnings per Share (2) (6) $ 0.48 $ 0.37 $ 0.81 $ 0.68
Weighted Average Shares Outstanding- Basic (2) (6) 5,943,579 5,867,066 5,939,604 5,862,414
Weighted Average Shares Outstanding- Diluted (2) (6) 6,126,446 5,999,644 6,113,303 5,990,800
Actual Shares Issued (6) 6,062,186 6,007,294 6,062,186 6,007,294
FINANCIAL STATISTICS
(ratios annualized)
At September 30, 2006 At September 30, 2005
---------------------------- ----------------------------
Total Assets $ 884,167 $ 812,983
Cash and Cash Equivalents $ 26,965 $ 24,140
Loans Receivable, net $ 671,157 $ 595,743
Loans Held for Sale $ 4,337 $ 6,776
Mortgage-Backed Securities $ 50,155 $ 56,152
Investment Securities $ 47,869 $ 48,057
Equity Securities, at cost $ 12,789 $ 12,789
Deposits $ 633,418 $ 561,403
FHLB Advances & Other Borrowings $ 151,202 $ 160,554
Stockholders' Equity $ 82,764 $ 75,712
Tangible Book Value per Share (2) (6) $ 10.82 $ 9.62
Tangible Equity / Total Tangible Assets 7.43% 7.12%
Number of full-time equivalent Employees (3) 247 269
Three Months Ended Six Months Ended
September 30, September 30,
2006 2005 2006 2005
---------------------------- ----------------------------
Return on Average Assets 1.35% 1.07% 1.14% 0.99%
Pro Forma Return on Average Assets (7) 1.41% 1.07% 1.26% 0.99%
Return on Average Tangible Equity 18.64% 16.06% 15.83% 14.89%
Pro Forma Return on Average Tangible Equity (7) 19.55% 16.06% 17.57% 14.89%
Return on Average Equity 14.43% 11.94% 12.20% 11.01%
Pro Forma Return on Average Equity (7) 15.14% 11.94% 13.55% 11.01%
Average Equity / Average Assets 9.34% 8.98% 9.33% 8.96%
Efficiency Ratio (4) 55.43% 61.73% 60.81% 60.95%
Pro Forma Efficiency Ratio (7) 53.35% 61.73% 56.82% 60.95%
Non-Interest Expenses / Average Assets 2.89% 3.07% 3.14% 2.98%
Pro Forma Non-Interest Expenses / Average Assets (7) 2.78% 3.07% 2.93% 2.98%
Net Interest Margin (5) 4.78% 4.58% 4.75% 4.53%
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LOANS At September 30, 2006 At September 30, 2005
---------------------------- ----------------------------
LOAN PORTFOLIO ANALYSIS: Amount Percent Amount Percent
------------ ------------ ------------ ------------
Real Estate Loans:
Residential $ 129,775 19.04% $ 116,292 19.18%
Construction 113,859 16.71 92,486 15.26
Agricultural 19,193 2.82 20,824 3.43
Commercial 208,064 30.53 178,144 29.39
------------ ------------ ------------ ------------
Total Real Estate Loans 470,891 69.10 407,746 67.26
------------ ------------ ------------ ------------
Other Loans:
Home Equity 42,996 6.31 40,901 6.75
Agricultural Operating 24,806 3.64 27,384 4.52
Commercial 104,972 15.40 88,258 14.56
Other Consumer 37,809 5.55 41,928 6.91
------------ ------------ ------------ ------------
Total Other Loans 210,583 30.90 198,471 32.74
------------ ------------ ------------ ------------
Total Loans Receivable $ 681,474 100.00% $ 606,217 100.00%
============ ============ ============ ============
ALLOWANCE FOR LOAN LOSSES Six Months Ended Six Months Ended
September 30, 2006 September 30, 2005
---------------------------- ----------------------------
Balance at Beginning of Period $ 8,138 $ 7,254
Provision for Loan Losses 537 1,140
Net Charge-Offs (114) (208)
------------ ------------
Balance at End of Period $ 8,561 $ 8,186
============ ============
Loan Loss Allowance / Net Loans 1.28% 1.37%
Loan Loss Allowance / Non-Performing Loans 1317.08% 713.69%
NON-PERFORMING ASSETS
At September 30, 2006 At September 30, 2005
---------------------------- ----------------------------
Accruing Loans - 90 Days Past Due $ 193 $ 0
Non-Accrual Loans 457 1,147
------------ ------------
Total Non-Performing Loans 650 1,147
Restructured Loans on Accrual 888 970
Real Estate Owned (REO) 0 0
Repossessed Assets 76 7
------------ ------------
Total Non-Performing Assets $ 1,614 $ 2,124
============ ============
Total Non-Performing Assets / Total Assets 0.18% 0.26%
Loan Loss Allowance as a Percentage of Non-Performing Assets 530.42% 385.40%
AVERAGE BALANCES Six Months Ended Six Months Ended
September 30, 2006 September 30, 2005
---------------------------- ----------------------------
Total Average Interest Earning Assets $ 806,334 $ 746,643
Total Average Assets 872,114 831,934
Average Deposits and Other Borrowed Funds 783,930 749,263
Average Total Tangible Equity 62,719 55,107
(1) Gain on sale of loans includes recovery (impairment) of mortgage servicing
rights of $0 and $(44) for the three months ended September 30, 2006 and
2005, respectively. Gain on sale of loans includes recovery (impairment) of
mortgage servicing rights of $55 and $(25) for the six months ended
September 30, 2006 and 2005, repectively.
(2) Calculation excludes unallocated shares in the employee stock ownership
plan (ESOP) September 30, 2006 -- 116,518 shares and September 30, 2005 --
133,230 shares.
(3) Number of full-time equivalent employees is the quarterly average.
(4) Calculation is non-interest expense divided by tax equivalent non-interest
income and tax equivalent net interest income.
(5) Calculation is tax equivalent net interest income divided by average daily
balance of total interest-earning assets.
(6) The outstanding shares, weighted average shares outstanding, and earnings
per share have been adjusted to reflect the two-for-one stock split in the
form of a 100% per share stock dividend announced on January 4, 2006.
(7) Non-GAAP Financial Measures:
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In addition to results presented in accordance with generally accepted
accounting principles in the United States of America (GAAP), this press release
contains certain non-GAAP financial measures. FirstBank believes that providing
non-GAAP financial measures provides investors with information useful in
understanding our financial performance. FirstBank provides measures based on
"Pro forma net income", which exclude merger related expenses. Pro forma net
income per basic and diluted share is calculated by dividing pro forma net
income by the same basic and diluted share total used in determining basic and
diluted earnings per share.
A reconciliation of these non-GAAP measures to the most comparable GAAP
equivalent is included in the following financial table or where the non-GAAP
measure is presented.
Three Months Ended Six Months Ended
September 30, September 30,
2006 2005 2006 2005
---------------------------- ----------------------------
Net income $ 2,964 $ 2,250 $ 4,965 $ 4,102
Add back: Merger related expenses, net of tax 145 0 546 0
------------ ------------ ------------ ------------
Pro forma net income 3,109 2,250 5,511 4,102
------------ ------------ ------------ ------------
Earnings per share - basic:
Net income $ 0.50 $ 0.38 $ 0.84 $ 0.70
Pro forma net income $ 0.52 $ 0.38 $ 0.93 $ 0.70
Earnings per share - diluted:
Net income $ 0.48 $ 0.37 $ 0.81 $ 0.68
Pro forma net income $ 0.51 $ 0.37 $ 0.90 $ 0.68
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