Northway Financial, Inc. Announces Third Quarter Earnings
NORTH CONWAY, NH--(Marketwired - Nov 1, 2013) - Northway Financial, Inc. (the "Company") (OTCBB: NWYF) reported net income for the quarter ended September 30, 2013 of $1,600,000 compared to net income of $2,229,000 for the quarter ended September 30, 2012, a decrease of $629,000, or 28%. For the nine months ended September 30, 2013, the Company reported net income of $5,295,000 compared to $4,635,000 for the same period in 2012, an increase of $660,000, or 14%.
CEO William J. Woodward said, "I am pleased to report that our after-tax earnings from banking operations, through three quarters of 2013, are $826,000, or 35%, greater than for the same period of 2012. Contributing significantly to this improvement was our strategic decision to strengthen our Commercial Banking division, which resulted in a 17.5% growth in our total loan portfolio. Also contributing to our improvement in earnings was our ability to significantly reduce our cost of funds.
"As we continue to expand our presence into southern New Hampshire, I am pleased to announce the opening of our newest branch located at 750 Lafayette Rd, Suite 1, Portsmouth, New Hampshire. This branch was opened on September 30th."
Financial Highlights
Net loans increased $96,360,000, or 17.5%, to $648,335,000 at September 30, 2013, compared to $551,975,000 at September 30, 2012. During this period, commercial and industrial loans increased $92,629,000 and now comprise 63% of gross loans. This growth is reflective of our efforts to increase small business lending throughout the state.
Total deposits increased $21,440,000, or 3.2%, to $684,462,000 at September 30, 2013, compared to $663,022,000 at September 30, 2012. For the quarter ended September 30, 2013, total deposits increased $18,338,000, which is an annualized growth rate of 11.01%.
The Company's returns on average assets and average equity for the nine months ended September 30, 2013 were 0.81% and 8.74%, respectively, compared to 0.74% and 7.96% for the same period last year.
The efficiency ratio for the nine months ended September 30, 2013, was 71.50% compared to 74.90% for the same period last year. This improvement was driven by an increase in both net interest and dividend income and gains on sales of loans partially offset by an increase in noninterest expense.
Regulatory capital ratios at September 30, 2013, exceeded minimum requirements. The Company's total risk-based capital ratio was 15.14% compared to a regulatory requirement of 10.0%; Tier 1 risk-based capital was 16.46% compared to a regulatory requirement of 6.0% and Tier 1 capital to average assets is 10.70% compared to a regulatory requirement of 5.0%.
Earnings Summary
As noted above, the Company recorded net income of $5,295,000 for the nine months ended September 30, 2013 compared to $4,635,000 for the same period in 2012. For the nine months ended September 30, 2013, $5,081,000, or $1.90 per common share, was available to common stockholders compared to $4,136,000, or $1.58 per common share, for the same period last year.
Net interest and dividend income for the nine months ended September 30, 2013, increased $1,612,000 to $20,703,000 compared to $19,091,000 for the same period last year. The provision for loan losses for the nine months ended September 30, 2013 increased $535,000 to $2,329,000 compared to $1,794,000 for the same period in 2012. This increase is due to both an increase in net loans and a target reserve on significant commercial credits. Net gains on sales of securities were $2,997,000 compared to $2,536,000 for the nine months ended September 30, 2012, an increase of $461,000. Gains on sales of loans increased $221,000 to $1,723,000 for the nine months ended September 30, 2013 compared to $1,502,000 for the same period last year. All other noninterest income increased $232,000 to $4,211,000 compared to $3,979,000 for the same period last year due primarily to increases in NSF overdraft fees, alternative investment income, debit card fees, and income on serviced loans. Total noninterest expense increased $624,000 to $20,161,000 for the nine months ended September 30, 2013, compared to $19,537,000 for the same period last year. This increase resulted primarily from an increase in salaries and employee benefits relating to normal salary increases and an increase in pension expense, as well as increases in legal expenses and loan workout expenses. Income tax expense for the nine months ended September 30, 2013, increased $707,000 to $1,849,000 for the nine months ended September 30, 2013, compared to $1,142,000 for the same period last year.
For the quarter ended September 30, 2013, the Company recorded net income of $1,600,000 compared to $2,229,000 for the same period in 2012. For the quarter ended September 30, 2013, $1,553,000, or $0.56 per common share, was available to common stockholders compared to $2,033,000, or $0.78 per common share, for the same period last year.
Net interest and dividend income for the quarter ended September 30, 2013, increased $918,000 to $7,375,000 compared to $6,457,000 for the same period last year. The provision for loan losses for the quarter ended September 30, 2013 increased $411,000 to $729,000 compared to $318,000 for the same period in 2012. Net gains on sales of securities were $356,000 compared to $1,141,000 for the quarter ended September 30, 2012, a decrease of $785,000. Gains on sales of loans decreased $507,000 to $410,000 for the quarter ended September 30, 2013 compared to $917,000 for the same period last year. All other noninterest income increased $9,000 to $1,513,000 compared to $1,504,000 for the same period last year. Total noninterest expense increased $194,000 to $6,833,000 for the quarter ended September 30, 2013, compared to $6,639,000 for the same period last year. Income tax expense decreased $341,000 to $492,000 for the quarter ended September 30, 2013, compared to $833,000 for the same period last year.
Balance Sheet Summary
At September 30, 2013, the Company had total assets of $902,296,000 compared to $863,064,000 at September 30, 2012, an increase of $39,232,000, or 4.5%. Net loans at September 30, 2013, increased $96,360,000, or 17.5%, to $648,335,000 compared to $551,975,000 at September 30, 2012. Securities available-for-sale decreased $39,896,000 to $185,472,000 at September 30, 2013, compared to $225,368,000 at September 30, 2012. Cash and due from banks and interest-bearing deposits decreased $ 21,054,000 to $17,550,000 at September 30, 2013, compared to $38,604,000 at September 30, 2012. These decreases were used to fund the loan growth.
Total deposits were $684,462,000 at September 30, 2013, compared to $663,022,000 at September 30, 2012, an increase of $21,440,000, or 3.20%. Securities sold under agreements to repurchase decreased $1,451,000 to $21,164,000 at September 30, 2013 compared to $22,615,000 at September 30, 2012. Other borrowings increased $18,918,000 to $109,536,000 at September 30, 2013, compared to $90,618,000 at September 30, 2012.
Total stockholders' equity decreased $545,000 to $79,807,000 at September 30, 2013 compared to $80,352,000 at September 30, 2012. Stockholders' equity available to common stockholders totaled $56,292,000, resulting in a book value per common share of $20.46 per share at September 30, 2013, based on 2,751,650 shares of common stock outstanding, a decrease of $1.24, or 5.7% per share, from September 30, 2012. Tangible book value per common share decreased $1.19, or 6.8%, to $16.21 at September 30, 2013 compared to $17.40 at September 30, 2012. The decrease in book value per common share and tangible book value per common share was partially attributable to the payment of a 5% stock dividend resulting in a decrease in book value per share of $1.00 and tangible book value of $0.79 per share. In addition, book value per common share and tangible book value per common share were negatively impacted by the change in other comprehensive loss.
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 | Nine Months Ended | ||||||||||
9/30/2013 | 9/30/2012 | 9/30/2013 | 9/30/2012 | |||||||||
Interest and Dividend Income | $ | 8,577 | $ | 8,052 | $ | 24,388 | $ | 24,352 | ||||
Interest Expense | 1,202 | 1,595 | 3,685 | 5,261 | ||||||||
Net Interest and Dividend Income | 7,375 | 6,457 | 20,703 | 19,091 | ||||||||
Provision for Loan Losses | 729 | 318 | 2,329 | 1,794 | ||||||||
Securities gains, net | 356 | 1,141 | 2,997 | 2,536 | ||||||||
Gains on sales of loans, net | 410 | 917 | 1,723 | 1,502 | ||||||||
All Other Noninterest Income | 1,513 | 1,504 | 4,211 | 3,979 | ||||||||
Noninterest Expense | 6,833 | 6,639 | 20,161 | 19,537 | ||||||||
Provision for Income Tax | 492 | 833 | 1,849 | 1,142 | ||||||||
Net Income | 1,600 | 2,229 | 5,295 | 4,635 | ||||||||
Net Income Available to Common Stockholders | 1,533 | 2,033 | 5,081 | 4,136 | ||||||||
Earnings per Common Share, Basic | 0.56 | 0.78 | 1.90 | 1.58 | ||||||||
9/30/2013 | 9/30/2012 | |||||||
Total Assets | $ | 902,296 | $ | 863,064 | ||||
Cash and Due from Banks and Interest-Bearing Deposits | 17,550 | 38,604 | ||||||
Securities Available-for-Sale, at Fair Value | 185,472 | 225,368 | ||||||
Loans, Net | 648,335 | 551,975 | ||||||
Total Deposits | 684,462 | 663,022 | ||||||
Federal Home Loan Bank Advances | 88,916 | 69,998 | ||||||
Securities Sold Under Agreements to Repurchase | 21,164 | 22,615 | ||||||
Junior Subordinated Debentures | 20,620 | 20,620 | ||||||
Stockholders' Equity | 79,807 | 80,352 | ||||||
Net Interest Margin | 3.53 | % | 3.45 | % | ||||
Yield on Earning Assets | 4.12 | 4.34 | ||||||
Cost of Interest Bearing Liabilities | 0.70 | 1.03 | ||||||
Efficiency Ratio | 71.50 | 74.90 | ||||||
Book Value Per Share of Common Shares Outstanding | $ | 20.46 | $ | 21.70 | ||||
Tangible Book Value Per Share of Common Shares Outstanding | 16.21 | 17.40 | ||||||
Tier 1 Core Capital to Average Assets | 10.70 | % | 10.25 | % | ||||
Tier 1 Risk-Based Capital | 15.14 | 16.76 | ||||||
Total Risk-Based Capital | 16.46 | 18.06 | ||||||
Common Shares Outstanding | 2,751,650 | 2,620,755 | ||||||
Weighted average number of common shares, basic | 2,680,209 | 2,620,755 | ||||||
Return on Average Assets | 0.81 | % | 0.74 | % | ||||
Return on Average Equity | 8.74 | 7.96 | ||||||
Nonperforming Loans as a % of Total Loans | 2.23 | 2.46 | ||||||
Allowance for Loan Losses as a % of Nonperforming Loans | 73.71 | 75.07 | ||||||
