FirstBank NW Corp. Reports Record First Quarter Earnings and Loan Growth

Highlights for the First Fiscal Quarter 2006:







CLARKSTON, Wash., Aug. 12  /PRNewswire-FirstCall/ -- FirstBank NW Corp. (the Company) (NASDAQ:FBNW) today announced another quarter of strong financial results driven by the ongoing economic strength in its market areas. For the quarter ended June 30, 2005, diluted earnings per share increased 19.2% to $0.62 compared to $0.52 for the same quarter a year ago.  Net income for the quarter was up 19.3% to $1.9 million compared to $1.6 million for the same quarter a year ago.  At June 30, 2005, net loans receivable was 23.6% higher than a year ago, and grew at a 29% linked-quarter pace (annualized) during the first fiscal quarter.  Similarly, deposit balances as of June 30, 2005 were 17.7% higher than the quarter ended June 30, 2004 and increased at a 33% linked-quarter pace (annualized).

For the first fiscal quarter of 2006 the Company's return on average tangible equity was 13.7% compared to 12.8% for the quarter ended June 30, 2004, while the return on average assets for the current quarter and the comparable quarter in 2004 remained relatively unchanged at 0.9%.  The net interest margin was higher for the quarter ended June 30, 2005, at 4.47% compared to 4.43% in the quarter ended June 30, 2004.

"While we continue to realize excellent loan demand throughout our market area, the loan growth during the quarter was primarily driven by construction lending in the Boise, Idaho market, and commercial real estate in the Boise and Coeur d'Alene, Idaho and Spokane, Washington markets," said Clyde E. Conklin, President and Chief Executive Officer.

LOAN GROWTH AND CREDIT QUALITY:

At June 30, 2005, net loans receivable grew to $603.0 million, up $115.1 million from $487.9 million a year ago.  Loan growth on a linked-quarter basis was $40.9 million, a 29% (annualized) pace.  Loan growth was well distributed by region and by loan type, as commercial, construction, and commercial real estate lending were strong.

The credit quality of the Company's loan portfolio remained good with total non-performing assets of $2.4 million, or 0.28% of total assets at June 30, 2005 compared to $2.5 million, or 0.35% of total assets at June 30, 2004, and $2.8 million, or 0.35% of total assets at March 31, 2005.  Net loan charge-offs for the first fiscal quarter were $151,000 compared to the quarter a year ago of $269,000, and $151,000 for the quarter ended March 31, 2005.

The reserve for losses on loans and loan commitments at June 30, 2005 remained unchanged at 1.32% of net loans at June 30, 2004, and essentially unchanged from 1.29% at March 31, 2005.  In keeping with the quarter's strong loan growth, loan loss provision expense was $868,000 for the quarter ended June 30, 2005, up from $376,000 for the quarter ended June 30, 2004, and $488,000 for the quarter ended March 31, 2005.  The increase in the loan loss provision expense reflects the increase in the Company's loan portfolio during the quarter.  Management believes the reserve is at an appropriate level considering the credit quality demonstrated, loan loss histories, and prevailing economic conditions.

FUNDING:

At June 30, 2005, total branch deposits were $502.3 million, consisting of $311.5 million, or 62.0% in core deposits and $190.8 million, or 38.0% in time deposits compared with the comparable period a year ago of $453.4 million in total branch deposits, which consisted of $279.6 million, or 61.7% in core deposits and $173.8 million, or 38.3% in time deposits.  Brokered deposits at June 30, 2005 totaled $59.4 million as compared to $23.8 million a year ago, an increase of $35.6 million.  Federal Home Loan Bank (FHLB) and other borrowings at June 30, 2005 totaled $193.8 million as compared to $168.2 million a year ago, an increase of $25.6 million.  "Branch deposit growth with an emphasis on core deposit growth remains essential to long term funding and earnings," noted Conklin.

NET INTEREST MARGIN AND INTEREST RATE RISK:

The Company's net interest margin was 4.47% for the first fiscal quarter of 2006 compared to 4.43% for the quarter ended June 30, 2004.  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 27 basis points during the current quarter to 6.82% compared to 6.31% for the quarter ended June 30, 2004.  Meanwhile, the average rates paid on interest-bearing liabilities increased 19 basis points during the current quarter to 2.33% compared to1.90% for the quarter ended June 30, 2004.  The yield curve continues to fluctuate with the economy with the net interest margin remaining under pressure.  Attainment of branch deposit growth objectives as opposed to continued reliance on high cost of FHLB borrowings is essential to maintenance of the net interest margin.

NON INTEREST INCOME AND EXPENSE:

Non-interest income for the quarters ended June 30, 2005 and 2004 remained unchanged at $1.7 million. Non-interest income is driven by gain on sales of loans and transaction account fees.

Non-interest expense for the quarter ended June 30, 2005 was $6.0 million, or 4.6% above the quarter ended June 30, 2004 of $5.7 million. Non-interest expenses are expected to increase as the Company invests in new branches and complies with increased regulatory and audit requirements.

CAPITAL:

At June 30, 2005, Tier 1 capital (leverage ratio based on average assets) was $53.2 million, or 6.6%, and total risk capital (to risk-weighted assets) was $63.7 million, or 10.6%. Risk capital for the current quarter was enhanced by issuance of $3.0 million in subordinated debt by the Company's subsidiary, FirstBank Northwest, to US Bank.

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, local expertise and leadership.  FirstBank Northwest operates 20 branch locations in Idaho, eastern Washington and eastern Oregon, in addition to residential 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.

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 and requirements of the Sarbanes Oxley Act of 2002  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, 2005.

                              FIRSTBANK NW CORP
  FINANCIAL HIGHLIGHTS
  (unaudited)  (dollars in thousands except share and per share data)

                                    Three Months Ended    Three Months Ended
                                          June 30,              June 30,
                                             2005                2004

  Interest Income                          $12,140             $9,510
  Interest Expense                           4,328              2,982
  Provision for Loan Losses                    868                376
  Net Interest Income After Provision
   for Loan Losses                           6,944              6,152

  Non-Interest Income
    Gain on Sale of Loans (1)                  338                504
    Service Fees and Charges                 1,217              1,181
    Commission and Other                       102                 33
  Total Non-Interest Income                  1,657              1,718

  Non-Interest Expenses
    Compensation and Related Expenses        3,639              3,418
    Occupancy                                  706                744
    Other                                    1,605              1,528
  Total Non-Interest Expense                 5,950              5,690

  Income Tax Expense                           799                628
  Net Income                                $1,852             $1,552

  Basic Earnings per Share                   $0.63              $0.54
  Diluted Earnings per Share                 $0.62              $0.52
  Weighted Average Shares Outstanding-
   Basic                                 2,928,855          2,866,090
  Weighted Average Shares Outstanding-
   Diluted                               2,990,800          2,996,698
  Actual Shares Issued                   2,998,695          2,965,268



  FINANCIAL STATISTICS
  (ratios annualized)
                                         June 30, 2005     June 30, 2004

  Total Assets                              $843,961         $732,662
  Cash and Cash Equivalents                  $43,994          $37,007
  Loans Receivable, net                     $602,997         $487,861
  Loans Held for Sale                         $8,383           $5,285
  Mortgage-Backed Securities                 $59,401          $71,180
  Investment Securities                      $48,325          $49,326
  Equity Securities, at cost                 $12,789          $12,628
  Deposits                                  $561,655         $477,233
  FHLB Advances and Other Borrowings        $193,823         $168,197
  Stockholders' Equity                       $73,960          $69,671
  Tangible Book Value per Share (2)           $18.61           $16.92
  Tangible Equity/ Total Tangible
   Assets                                      6.61%            6.86%
  Number of Full-time Equivalent
   Employees (3)                                 262              257

                                    Three Months Ended    Three Months Ended
                                          June 30,              June 30,
                                             2005                 2004

  Return on Average Assets                   0.90%               0.88%
  Return on Average Tangible Equity         13.67%              12.76%
  Return on Average Equity                  10.05%               8.92%
  Average Equity/Average Assets              8.94%               9.88%
  Efficiency Ratio (4)                      60.10%              65.16%
  Non-Interest Expenses / Average
   Assets                                    2.89%               3.23%
  Net Interest Margin (5)                    4.47%               4.43%



  LOANS                               June 30, 2005       June 30, 2004
  (unaudited)  (dollars in thousands except share and per share data)

  LOAN PORTFOLIO ANALYSIS:            Amount  Percent     Amount  Percent
  Real Estate Loans:
    Residential                      $117,565   19.16 %  $117,436   23.68 %
    Construction                       86,023   14.02      47,594    9.59
    Agricultural                       20,204    3.29      19,648    3.96
    Commercial                        191,347   31.18     126,590   25.52
       Total Real Estate Loans        415,139   67.65     311,268   62.75

  Consumer and Other Loans:
    Home Equity                        40,265    6.56      31,430    6.34
    Agricultural Operating             26,739    4.36      29,079    5.86
    Commercial                         90,860   14.81      81,551   16.44
    Other Consumer                     40,634    6.62      42,693    8.61
       Total Consumer and Other
        Loans                         198,498   32.35     184,753   37.25

  Total Loans Receivable             $613,637  100.00 %  $496,021  100.00 %



  ALLOWANCE FOR LOAN LOSSES         Three Months Ended    Three Months Ended
                                       June 30, 2005        June 30, 2004

  Balance at Beginning of Period             $7,254          $6,314
  Provision for Loan Losses                     868             376
  Charge Offs (Net of Recoveries)              (151)           (269)
  Balance at End of Period                   $7,971          $6,421
  Loan Loss Allowance / Net Loans               1.32%           1.32%
  Loan Loss Allowance / Non-Performing
   Loans                                      825.16%         554.01%



  NON-PERFORMING ASSETS                      June 30, 2005     June 30, 2004

  Accruing Loans - 90 Days Past Due                $272              $0
  Non-accrual Loans                                 694           1,159
  Total Non-performing Loans                        966           1,159
  Restructured Loans on Accrual                   1,345             827
  Real Estate Owned (REO)                             0             525
  Repossessed Assets                                 93              28
  Total Non-performing Assets                    $2,404          $2,539
  Total Non-performing Assets/Total
   Assets                                           0.28%           0.35%
  Loan and REO Loss Allowance as a
   Percentage of Non-
       Performing Assets                          331.57%         252.89%



  AVERAGE BALANCES AND AVERAGE
   YIELDS/COSTS                     Three Months Ended    Three Months Ended
                                          June 30,              June 30,
                                            2005                  2004

  Total Average Interest-Earning
   Assets                                  $737,425           $634,028
  Total Average Assets                      824,707            704,761
  Average Deposits and Other Borrowed
   Funds                                    743,171            627,699
  Average Total Tangible Equity              54,178             48,643

  (1) Gain on sale of loans includes recovery of mortgage servicing rights
      of $19 at June 30, 2005 and $134 at June 30, 2004.
  (2) Calculation excludes unallocated shares in the employee stock
      ownership plan (ESOP) June 30, 2005 -- 68,704 and June 30,
      2004 -- 77,060 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 total
      interest-earning assets.


DATASOURCE: FirstBank NW Corp.



CONTACT:  Larry K. Moxley of FirstBank, [phone]



Web site:  http://www.fbnw.com/ 

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