AmericanWest Bancorporation Announces 2007 First Quarter Financial Results.SPOKANE, Wash. -- AmericanWest Bancorporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : AWBC AWBC Australian Wine Brandy Corporation ) today announced its first quarter 2007 financial results, which included the following highlights: * Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.19, an increase of 27% over the prior year * Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. deposit growth of 16% * Annualized loan growth of 9%; 16% excluding reduction in agricultural loans * A significant reduction of non-performing assets, to 0.47% of total assets * Annualized net charge-offs of 0.15% Net income for the quarter ended March 31, 2007 was $2.2 million, or $0.19 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, as compared with $1.6 million, or $0.15 per diluted share, for the first quarter of 2006. Excluding the impact of severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs of $364,000, merger-related expenses of $102,000, and a gain on the sale of foreclosed property of $166,000, net of related tax effects, diluted earnings per share for the first quarter of 2007 were $0.21. "Although we are pleased with the continued significant improvement in our asset quality, as evidenced by the ratios of total non-performing assets and total non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. ratios falling below 50 basis points for the first time in over five years, there is still much work to be done to improve our operating performance," remarked Robert M. Daugherty, President and Chief Executive Officer. "The focus for upcoming quarters will be on managing expenses and optimizing the expected financial benefits of the recently completed merger with Far West Bancorporation." Net Interest Margin: The tax equivalent net interest margin for the first quarter of 2007 was 4.69%, a decrease of 33 basis points from the prior quarter and 46 basis points from the same period in 2006. Effective January 1, 2007, the Company implemented an adjustment to its method of accounting for loan fees for new loans with a contractual maturity of one year or less. This change resulted in the increased deferral deferral - Waiting for quiet on the Ethernet. of approximately $800,000 of loan fee income which, under the prior method, would have been recognized as interest income during the first quarter of 2007. The impact of this change represented approximately 25 of the 33 basis points of margin compression from the prior quarter. The average yield on loans for the first quarter of 2007 was 8.02%, a decrease of 20 basis points from the fourth quarter of 2006 and an increase of 40 basis points from the same period in 2006. The reduction in the average yield on loans from the fourth quarter of 2006 is principally due to the change in the accounting for deferred loan fees and origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real costs. During the first quarter of 2006, the average yield on loans was reduced by approximately 15 basis points due to the reversal of interest for a large loan placed on non-accrual status. The Company's net interest margin was also adversely impacted by the cost of interest bearing deposits, which increased by 17 basis points over the fourth quarter of 2006 and 97 basis points over the same period in 2006. These increases were driven principally by a shift in the Company's deposit mix, with a reduction in non-interest bearing deposits, which had to be replaced with higher cost money market and certificate of deposit accounts. Loan Growth and Asset Quality: Loans grew at an annualized rate of 9% for the first quarter of 2007, ending the period at $1.25 billion, despite a reduction in agricultural related loans of $21 million from year-end 2006. Excluding the impact of the reduction in agricultural related loans, the Company's loan portfolio grew at an annualized rate of 16% during the first quarter of 2007. The reduction in agricultural related loans was due in part to seasonality of line usage and the Company's continuing efforts to improve the credit risk profile of the loan portfolio. Approximately $19 million of the first quarter loan growth was generated by the Company's loan production office located in South Jordan, Utah South Jordan is a city in Salt Lake County in the U.S. state of Utah. The population was 29,437 at the 2000 census. As of September 1, 2007, the population was estimated at 50,109 [1]. South Jordan has been one of the fastest-growing cities in Utah since the early 1990s. . Significant improvement in the Company's asset quality continued during the first quarter of 2007. Total non-performing loans, net of government guarantees, were 0.47% of total loans at March 31, 2007, as compared to 0.94% at December 31, 2006 and 1.33% at March 31, 2006. Included in the balance of non-performing loans at December 31, 2006 was one aggregate lending relationship of $6.2 million, of which $2.8 million was subject to a government guarantee. During the first quarter of 2007, the borrower repaid $4.4 million leaving a remaining balance of $1.8 million, of which $1.5 million is subject to a government guarantee. The Company expects to collect the remaining outstanding balance by June 30, 2007. Total non-performing assets, net of government guarantees on loans, were 0.47% of total assets at March 31, 2007, as compared to 0.86% of total assets at December 31, 2006 and 1.25% of total assets at March 31, 2006. Total foreclosed assets at March 31, 2007 had a carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of $1.0 million and comprised three properties, all of which are expected to be sold without any significant loss by the end of 2007. During the first quarter of 2007, the Company recognized a gain of $166,000 on the sale of a foreclosed property which had no carrying value. A loss of approximately $340,000 was recognized for the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of a foreclosed property during the first quarter of 2006. The Company did not recognize a provision for credit losses for the quarter ended March 31, 2007, due in part to the significant reduction in non-performing loan levels realized principally through borrower repayments. The provision for credit losses was $782,000, or 32 basis points of average loans on an annualized basis, for the quarter ended March 31, 2006. For the quarter ended March 31, 2007, net charge-offs as a percentage of average loans were 0.15% as compared to 1.06% in the same quarter of the prior year. Recoveries represented approximately 18% of gross charge-offs for the first quarter of 2007. The allowance for credit losses, which is comprised of the allowance for loan losses and reserve for unfunded commitments, was $15.6 million, or 1.25% of total loans, at March 31, 2007 as compared to $16.0 million, or 1.31% of total loans, at December 31, 2006. The allowance for credit losses represented 268% of total non-performing loans (net of government guarantees) as of March 31, 2007. Deposits and Borrowed Funds: Total deposits grew at an annualized rate of 16% for the first quarter of 2007, ending the period at $1.17 billion. Average non-interest bearing deposits declined from the fourth quarter of 2006 by approximately $15 million, while average savings/money market accounts increased by $7 million and average certificates of deposit increased by $34 million. Total FHLB FHLB Federal Home Loan Bank advances and other borrowings decreased by approximately $24 million during the first quarter of 2007. This reduction was principally funded by the increase in certificates of deposit, which had a weighted average cost of approximately 40 basis points less than the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. FHLB advances and an average term of six months. The Company issued $20.6 million of junior subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". on March 22, 2007 to provide a portion of the cash consideration for the merger with Far West Bancorporation. The debentures will bear a fixed rate of interest of 6.53% for the first five years and thereafter will bear interest at a rate equal to the 3 month LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 1.63%. The $30 million of cash consideration for the Far West Bancorporation merger, which included the proceeds from the issuance of the junior subordinated debt, was transferred to an escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. account on March 30, 2007 and is included in the "Cash and Due from Banks" section of the March 31, 2007 Consolidated Statement of Condition in the tables below. As previously announced, the merger was completed on April 1, 2007 and the funds in escrow were released. Non-interest Income and Expense: Non-interest income was $2.4 million for the quarter ended March 31, 2007 as compared to $1.8 million for the quarter ended March 31, 2006. This increase is due principally to growth in deposit service charges of $224,000, increased mortgage banking revenue of $62,000, increased bank-owned life insurance revenue of $126,000 and a gain of $166,000 recorded in connection with the sale of foreclosed property during the first quarter of 2007. The growth in deposit service charges is due to an increase in debit card debit card, card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser's checking account. They can also be used at automated teller machines for withdrawing cash from the user's checking account. interchange fees Interchange fee is a term used in the payment card industry to describe a fee that bank card networks such as Visa and MasterCard require merchants to pay card-issuing banks when merchants accept their credit and debit cards for purchases. of $138,000 and growth in the number of deposit accounts from the acquisition of Columbia Trust Bancorp, which was completed on March 15, 2006. Non-interest expense was $13.8 million for the quarter ended March 31, 2007 as compared to $11.7 million for the quarter ended March 31, 2006. The increase is related mainly to salaries and employee benefits expense which increased $1.5 million. Salary and employee benefits expense for the first quarter of 2007 was reduced by approximately $400,000 due to the change in the deferral of certain direct origination costs associated with loans with a term of one year or less. The increase in salary and employee benefits expense is principally attributable to staffing additions associated with the Columbia Trust Bancorp acquisition, the opening of four new financial centers and the loan production office in South Jordan, Utah. In addition, salary and employee benefits expense for the first quarter of 2007 included $364,000 related to severance benefits for employees terminated in connection with the Company's expense reduction initiative and $96,000 related to stock options granted to non-employee board members during the first quarter of 2007. Total occupancy and equipment expense increased by $677,000 over the first quarter of 2006. This increase is principally attributable to costs associated with new and acquired facilities and other remodeled or relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. buildings. Additionally, vendor service contracts have increased with the larger number of employees and volumes of business. Foreclosed assets expense decreased by $378,000 as compared to the first quarter of 2006. This improvement is attributed to a $340,000 write-down on a property that was recognized during the first quarter of 2006. Included in other non-interest expense are costs associated with mergers that do not qualify for capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. . Total merger expenses recognized during the first quarter of 2007 were $102,000, as compared to $68,000 for the fourth quarter of 2006 and $57,000 for the same period in 2006. The efficiency ratio was 78.6% for the quarter ended March 31, 2007 as compared to 77.2% for the quarter ended March 31, 2006. Income Taxes: The effective tax rate for the quarter ended March 31, 2007 was 35.2%, as compared to 37.4% for the fourth quarter of 2006 and 34.8% for the first quarter of 2006. The decrease in the effective tax rate is principally related to the recapture recapture n. in income tax, the requirement that the taxpayer pay the amount of tax savings from past years due to accelerated depreciation or deferred capital gains upon sale of property. (See: income tax) RECAPTURE, war. of certain tax credits during 2006. Earnings Conference Call: The first quarter earnings conference call will be held Tuesday, April 24, 2007 at 10:00 a.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT (1:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ). Management will discuss the first quarter 2007 results and provide an update on the recently completed merger with Far West Bancorporation. Shareholders, analysts and other interested parties are invited to join the call. The telephone access number is (877) 407-0782 and the pass code is "AWBC." About AmericanWest Bancorporation: AmericanWest Bancorporation is a bank holding company whose principal subsidiary is AmericanWest Bank, a community bank with 62 financial centers and four loan production offices located in Eastern and Central Washington Central Washington is a region of the United States defined as the western half of Eastern Washington, or those counties lying east of the Cascade Mountains but west of the 119th meridian. , Northern Idaho and Utah. For further information on the Company, please visit our web site at www.awbank.net/IR. This press release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , and AmericanWest Bancorporation intends for such statements to be covered by the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements describe AmericanWest Bancorporation's expectations regarding future events, including the improvements in operating performance resulting from the merger with Far West Bancorporation, expense reduction initiatives and the disposition of foreclosed real estate and other foreclosed assets. Future events are difficult to predict and are subject to risk and uncertainty which could cause actual results to differ materially and adversely. Additional information regarding risks and uncertainties is included in AmericanWest Bancorporation's periodic filings on Forms 10-K and 10-Q with the Securities and Exchange Commission. AmericanWest Bancorporation undertakes no obligation to revise or amend any forward-looking statements to reflect subsequent events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] The above net interest margin tables include non-accrual and loans held for sale in the average loan balances. Tax exempt securities Exempt securities Instruments exempt from the registration requirements of the Securities Act of 1933 or the margin requirements of the SEC Act of 1934. Such securities include government bonds, agencies, munis, commercial paper, and private placements. income has been presented using a tax equivalent basis and an assumed tax rate of 34%. |
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