Northway Financial, Inc. Announces First Quarter Earnings

Marketwired

NORTH CONWAY, NH--(Marketwired - Apr 25, 2014) -  Northway Financial, Inc. (the "Company") (OTCQB: NWYF), the parent company of Northway Bank, today reported net income for the quarter ended March 31, 2014 of $1,307,000, or $0.45 per basic common share, compared to net income of $2,028,000, or $0.74 per basic common share, for the quarter ended March 31, 2013, a decrease of $721,000. The result of the first quarter of 2013 included securities gains of $1,616,000, compared to $428,000 for the first quarter of 2014.

CEO William J. Woodward said, "We continue to execute our strategic objective of improving core earnings, which have increased over last year. Loans and deposits have each increased $53 million compared to the prior year and have resulted in an increase in net interest income of $611,000. I am also pleased with the execution of our strategy to improve asset quality, which has allowed us to reduce our provision for possible loan losses by $515,000 compared to the previous year.

We continue to experience strong traction as we move into Southern New Hampshire and are particularly pleased with the deposit growth at our two newest branches located in Manchester and Portsmouth."

Financial Highlights

  • Net loans increased $53,331,000, or 9.3%, to $625,015,000 at March 31, 2014, compared to $571,684,000 at March 31, 2013. Commercial loans increased $44,956,000 and comprise 62.1% of gross loans. This growth is reflective of our efforts to increase small business lending throughout the state.

  • Total deposits increased $52,873,000, or 8.0%, to $709,842,000 at March 31, 2014, compared to $656,969,000 at March 31, 2013. For the quarter ended March 31, 2014, total deposits increased $15,483,000, which is an annualized growth rate of 8.9%.

  • The Company's returns on average assets and average equity for the quarter ended March 31, 2014 were 0.58% and 6.31%, respectively, compared to 0.96% and 10.06% for the same period last year. 

  • Core earnings comprise 71.8% of net income for the quarter ended March 31, 2014, compared to 43.4% for the same period last year. Core earnings exclude non-recurring items such as gains on sales of investment securities and represent earnings generated from our principal banking activities. Interest income has increased $678,000 over last year due primarily to the increase in the loan portfolio. Further, the provision for loan losses has decreased $515,000 as many of our problem credits have been resolved. Overall, net income has decreased due primarily to a decrease in gains on sales of investments and loans of $1,188,000 and $477,000, respectively.

  • Regulatory capital ratios at March 31, 2014 exceeded minimum requirements. The Company's total risk-based capital ratio was 17.24% compared to the regulatory requirement of 10.0%; Tier 1 risk-based capital was 15.91% compared to the regulatory requirement of 6.0% and Tier 1 capital to average assets was 10.75% compared to the regulatory requirement of 5.0%.

Earnings Summary

As noted above, the Company recorded net income of $1,307,000 for the quarter ended March 31, 2014 compared to $2,028,000 for the same period in 2013. For the quarter ended March 31, 2014, $1,240,000, or $0.45 per common share, was available to common stockholders compared to $1,948,000, or $0.74 per common share, for the same period last year. 

Net interest and dividend income for the quarter ended March 31, 2014 increased $611,000 to $7,148,000 compared to $6,537,000 for the same period last year. The provision for loan losses for the quarter ended March 31, 2014 decreased $515,000 to $405,000 compared to $920,000 for the same period in 2013. Net gains on sales of securities were $428,000 compared to $1,616,000 for the quarter ended March 31, 2013, a decrease of $1,188,000. Gains on sales of loans decreased $477,000 to $165,000 for the quarter ended March 31, 2014, compared to $642,000 for the same period last year. 2013 gains were positively impacted by the high level of refinance activity that occurred given the then record low level of long-term interest rates. All other noninterest income decreased $7,000 to $1,330,000 compared to $1,337,000 for the same period last year. Total noninterest expense increased $585,000 to $7,025,000 for the quarter ended March 31, 2014, compared to $6,440,000 for the same period last year. The increase was due primarily to higher salaries expense, pension, and consulting expense. Income tax expense decreased $410,000 to $334,000 for the quarter ended March 31, 2014, compared to $744,000 for the same period last year; the effective tax rates were 20.4% and 26.8%, respectively.

Balance Sheet Summary

At March 31, 2014, the Company had total assets of $920,287,000 compared to $849,928,000 at March 31, 2013, an increase of $70,359,000, or 8.3%. Net loans at March 31, 2014, increased $53,331,000, or 9.3%, to $625,015,000 compared to $571,684,000 at March 31, 2013. Securities available-for-sale increased $20,567,000 to $228,086,000 at March 31, 2014, compared to $207,519,000 at March 31, 2013. 

Total deposits were $709,842,000 at March 31, 2014, compared to $656,969,000 at March 31, 2013, an increase of $52,873,000, or 8.0%. Securities sold under agreements to repurchase increased $6,600,000 to $23,308,000 at March 31, 2014, compared to $16,708,000 at March 31, 2013. Other borrowings increased $7,464,000 to $95,155,000 at March 31, 2014, compared to $87,691,000 at March 31, 2013.

Total stockholders' equity increased $3,067,000 to $84,435,000 at March 31, 2014, compared to $81,368,000 at March 31, 2013. Stockholders' equity available to common stockholders totaled $60,903,000, resulting in a book value per common share of $22.13 per share at March 31, 2014, based on 2,751,650 shares of common stock outstanding, an increase of $0.05 per share, from March 31, 2013. Tangible book value per common share increased $0.25, or 1.4%, to $17.89 at March 31, 2014, compared to $17.64 at March 31, 2013. 

About Northway Financial, Inc.

Northway Financial, Inc., headquartered in North Conway, New Hampshire, is a bank holding company. Through its subsidiary bank, Northway Bank, the Company offers a broad range of financial products and services to individuals, businesses and the public sector from its 18 full-service banking offices and its loan production offices located in Bedford and Portsmouth, New Hampshire.

Forward-looking Statements

Statements included in this press release that are not historical or current fact are "forward-looking statements" made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Northway Financial, Inc. disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events or circumstances.

 
 
Northway Financial, Inc.
Selected Financial Highlights
(Unaudited)
         
(Dollars in thousands, except per share data)   Three Months Ended
    3/31/2014   3/31/2013
             
Interest and Dividend Income   $ 8,486   $ 7,808
Interest Expense     1,338     1,271
Net Interest and Dividend Income     7,148     6,537
Provision for Loan Losses     405     920
Gains on Sales of Loans, Net     165     642
All Other Noninterest Income     1,330     1,337
Noninterest Expense     7,025     6,440
Net Income Before Securities Gains     1,213     1,156
Securities Gains, Net     428     1,616
Net Income Before Taxes     1,641     2,772
Provision for Income Tax     334     744
Net Income   $ 1,307   $ 2,028
Net Income Available to Common Stockholders   $ 1,240   $ 1,948
Earnings per Common Share, Basic   $ 0.45   $ 0.74
             
             
             
    3/31/2014     3/31/2013  
                 
Balance Sheet                
Total Assets   $ 920,287     $ 849,928  
Cash and Due from Banks and Interest-Bearing Deposits     20,659       18,933  
Securities Available-for-Sale, at Fair Value     228,086       207,519  
Loans, Net     625,015       571,684  
Total Deposits     709,842       656,969  
Federal Home Loan Bank Advances     74,535       67,071  
Securities Sold Under Agreements to Repurchase     23,308       16,708  
Junior Subordinated Debentures     20,620       20,620  
Stockholders' Equity     84,435       81,368  
Profitability and Efficiency                
Net Interest Margin     3.51 %     3.43 %
Yield on Earning Assets     4.13       4.06  
Cost of Interest Bearing Liabilities     0.74       0.75  
Book Value Per Share of Common Shares Outstanding   $ 22.13     $ 22.08  
Tangible Book Value Per Share of Common Shares Outstanding     17.89       17.64  
Capital and Credit                
Tier 1 Core Capital to Average Assets     10.75 %     10.89 %
Tier 1 Risk-Based Capital     15.91       16.71  
Total Risk-Based Capital     17.24       18.05  
Common Shares Outstanding     2,751,650       2,620,755  
Weighted Average Number of Common Shares, Basic     2,751,650       2,620,755  
Return on Average Assets     0.58 %     0.96 %
Return on Average Equity     6.31       10.06  
Nonperforming Loans as a % of Total Loans     2.37       2.64  
Allowance for Loan Losses as a % of Nonperforming Loans     75.91       66.34  
Contact:

Russell A. Cronin, Jr.
Senior Vice President
and Chief Financial Officer
603-326-7398
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