Q3 2018 Hart Charts Press Release

For Immediate Release

October 22, 2018

Mergers, Acquisitions and Rising Rates Impact Local Companies in Third Quarter

Hart Capital Management, Inc. has released its Third Quarter 2018 Hart Capital Inland Northwest Index & Composite (the Hart Charts). The Index, which tracks eight of the largest and most influential publicly traded companies in the Inland Northwest in a methodology similar to that of the Standard & Poor’s 500 (S&P 500), decreased 3.6% over the last three months, compared to the S&P 500 that increased 7.2%. During the same period, the Hart Capital Inland Northwest Composite fell $911.3 million, or 7.5%.

For the quarter, Clearwater Paper Corporation (CLW) rose 28.6% largely due to a late August announcement of the sale of its Ladysmith mill in Wisconsin for $72 million to pay down debt and fund the expansion of their Shelby, North Carolina mill. Itron, Inc. (ITRI) was the next biggest leader, rising 6.9% in the quarter. Rounding out the winners for the three months, both W.T.B. Financial Corporation (WTBFB) and Key Tronic Corporation (KTCC) gained 0.9%. Hecla Mining Company (HL) was the worst performer in the Index, declining 19.8% in the same period. The company’s equity has been negatively impacted by flailing production and an ongoing strike at its Lucky Friday Mine, which is now in its 17th month.

On a year-to-date basis, Idaho Independent Bank (IIBK), Key Tronic Corporation (KTCC) and W.T.B. Financial Corporation (WTBFB) led the index on a year-to-date basis, rising 28.4%, 12.2% and 7.9% respectively. Banks have been performing well nationwide as the Fed continues to raise rates, enabling banks to begin making profits on deposits and other spread products. Clearwater Paper Corporation was the laggard, losing 34.6% in the period due to declining profits.

For the twelve-month period ending September 28, Idaho Independent Bank (IIBK), W.T.B. Financial Corporation (WTBFB) and Key Tronic Corporation (KTCC) led the index once again, increasingly 35.2%, 28.6% and 6.1% respectively. Clearwater Paper Corporation (CLW) was again the worst performer, down 44.4% in the last twelve months.

The Inland Northwest has not been immune to increased merger and acquisitions activities nationwide. Northwest Bancorporation, Inc. (NBCT) dropped out of the Hart Charts on August 17th when it was acquired by First Interstate BancSystem, Inc. (FIBK) of Billings, MT. The all-stock transaction was valued at approximately $160.9 million in aggregate, or $21.03 per share.

First Interstate BancSystem, Inc. also announced on 10/11/18, that it has plans to acquire Idaho Independent Bank (IIBK). According to the details released, IIBK shareholders will receive 0.5 FIBK share per IIBK share, representing an implied purchase price of $22.73 per share based on Oct. 5 closing price, or an aggregate value of $181.3M, including a $5.4M cash consideration for option holders.

The Hart Capital Composite fell $911.3 million, or 7.5% in the third quarter. PotlatchDeltic Corp (PCH) pulled it down with a $621.3 million reduction in its market capitalization. The company’s stock price fell as a result of weak lumber pricing. However, PCH, was the leader on a year-to-date basis due an increased share count from the merger that created the company back in February. Over the trailing twelve months, the Composite fell $1.0 billion or 8.6%.

A copy of the most recent Hart Charts has been included with this release for review.

Hart Capital Management, Inc. is an independent, research-focused investment firm that serves the Inland Northwest from its offices in Spokane, Washington and Coeur d’Alene, Idaho.

For detailed information related to Hart Capital Management, Inc. or the Hart Charts, please contact us directly.

Contact: Craig Hart, (509) 444-7007, craig@hartcap.com

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