SOURCE: Northway Financial, Inc.

October 24, 2007 17:00 ET

Northway Financial, Inc. Announces Third Quarter Results and Declares Quarterly Dividend

BERLIN, NH--(Marketwire - October 24, 2007) - Northway Financial, Inc. (the "Company") (OTCBB: NWYF) reported net income for the quarter ended September 30, 2007 of $1,080,000, or $0.38 per share-basic, compared to $854,000, or $0.29 per share-basic, for the same quarter in 2006, an increase of $226,000, or 26.5%. Net income for the nine months ended September 30, 2007 was $2,742,000, or $0.93 per share-basic, compared to $2,690,000, or $0.90 per share-basic, for the nine months ended September 30, 2006, an increase of $52,000, or 1.9%. Per share results were favorably affected by the reduction in outstanding shares as a result of the previously reported reverse and forward stock split transactions.

Commenting on the third quarter results, William J. Woodward, President and Chief Executive Officer of the Company, stated:

"During the third quarter, the Company completed the reverse/forward stock splits, and other steps necessary to terminate registration of its common stock with the Securities and Exchange Commission, and to suspend reporting obligations to that agency.

"We are very pleased to report that the earnings for the third quarter showed a 26% improvement over the same quarter a year ago. While the interest rate environment has kept the net interest margin under pressure, overhead expense is significantly lower as a result of steps taken by management to reduce these costs. Additionally, earnings were improved because we significantly grew our earning assets -- loans and investments -- using funds provided by our successful Cash Management program and by borrowings from other sources."

On October 24, 2007, the Board of Directors declared a dividend of $0.12 cents per share, payable on November 13, 2007 to shareholders of record on November 2, 2007. This dividend represents an increase of 20% over the prior quarter dividend of $0.10 cents per share reflecting the reduction in outstanding shares as a result of the effect of the reverse and forward stock splits.

Net interest and dividend income for the third quarter of 2007 was $5,661,000 compared to $5,558,000 for the third quarter of 2006, an increase of $103,000. The provision for loan losses for the third quarter of 2007 increased $90,000 to $210,000, compared to $120,000 for the third quarter of the previous year. Net securities gains for the quarter increased $43,000 to $148,000 compared to $105,000 for the same period last year. Other noninterest income for the quarter decreased $47,000 to $1,353,000 compared to $1,400,000 for the same period last year. Other operating expense was $5,681,000 for the quarter compared to $5,904,000 for the same period last year, a decrease of $223,000.

Net interest and dividend income for the nine months ended September 30, 2007 decreased $531,000 to $16,317,000 compared to $16,848,000 for the same period last year. The provision for loan losses for the first nine months of 2007 increased $195,000 to $540,000 compared to $345,000 for the first nine months of 2006. Securities gains for the first nine months of 2007 increased $141,000 to $495,000 compared to $354,000 for the same period last year. Other noninterest income year-to-date decreased $54,000 to $3,989,000 compared to $4,043,000 for the same period last year. Other operating expense decreased $445,000 to $17,079,000 for the first nine months of 2007 compared to $17,524,000 for the same period last year.

At September 30, 2007, the Company had total assets of $685,445,000 compared to $629,322,000 at September 30, 2006, an increase of $56,123,000. Loans, including loans held-for-sale, at September 30, 2007 increased $25,662,000 to $484,545,000 compared to $458,883,000 at September 30, 2006. Investments increased $29,545,000 to $151,126,000 compared to $121,581,000 at September 30, 2006. Total deposits were $479,435,000 at September 30, 2007 compared to $474,027,000 at September 30, 2006, an increase of $5,408,000. Securities sold under agreements to repurchase increased $28,048,000 to $52,231,000 at September 30, 2007 compared to $24,183,000 at September 30, 2006. Other borrowings increased $30,585,000 to $105,620,000 at September 30, 2007 compared to $75,035,000 at September 30, 2006. Total equity decreased $8,085,000 to $44,489,000 at September 30, 2007 compared to $52,574,000 at September 30, 2006.

Northway Financial, Inc., headquartered in Berlin, 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 full-service banking offices.

Certain statements in this press release may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can be identified by the use of the words "expect," "believe," "estimate," "will" and other expressions which predict or indicate future trends and which do not relate to historical matters. Forward-looking statements may include, but are not limited to, expectations for impact of changes in our branch network on new products, on noninterest income and expense, projections of revenue, income or loss, and plans related to products or services of the Company and its subsidiary. Such forward-looking statements are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of the Company. The Company's actual results could differ materially from those projected in the forward-looking statements as the result of, among other factors, changes in interest rates, a prolonged continuation of the current interest rate environment, changes in the securities or financial markets, a deterioration in general economic conditions on a national basis or in the local markets in which the Company operates, including changes in local business conditions resulting in rising unemployment and other circumstances which adversely affect borrowers' ability to service and repay our loans, changes in loan defaults and charge-off rates, reduction in deposit levels necessitating increased borrowing to fund loans and investments, the passing of adverse government regulation, and changes in assumptions used in making such forward-looking statements. These forward-looking statements were based on information, plans and estimates at the date of this press release, and the Company does not promise to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

                              Northway Financial, Inc.
                      Selected Consolidated Financial Data
                                  (Unaudited)
                (In thousands, except for ratios and per share amounts)

Period end balance sheet data:                      September 30,
                                             2007                   2006

Total assets                               $ 685,445           $   629,322
Loans, net (1)                               484,545               458,883
Investments (2)                              151,126               121,581
Deposits                                     479,435               474,027
Securities sold under agreements
 to repurchase                                52,231                24,183
Other borrowings                             105,620                75,035
Stockholders' equity                          44,489                52,574

Book value per share                       $   17.75           $     17.63
Tangible book value per share (3)              12.73                 13.20
Leverage ratio                                  7.25%                 9.13%
Shares outstanding                         2,506,700             2,982,348

                              For the Three Months    For the Nine Months
                                  Ended Sep. 30,          Ended Sep. 30,
Operating results:               2007        2006        2007        2006
Net interest and dividend
 income                        $  5,661    $  5,558    $ 16,317   $ 16,848
Loan loss provision                 210         120         540        345
Securities gains, net               148         105         495        354
Other noninterest income          1,353       1,400       3,989      4,043
Other operating expense           5,681       5,904      17,079     17,524
Income before tax                 1,271       1,039       3,182      3,376
Income tax expense                  191         185         440        686
Net income                     $  1,080    $    854    $  2,742   $  2,690

Earnings per share - basic     $   0.38    $   0.29    $   0.93   $   0.90
Return on average assets           0.62%       0.53%       0.55%      0.57%
Return on average equity           8.49%       6.60%       7.06%      7.04%

(1) Net of unearned income and the allowance for loan losses.
    Includes loans held-for-sale.
(2) Includes federal funds sold, Federal Home Loan Bank stock and
    investment securities available-for-sale.
(3) Includes a deduction of $12,786 and $12,027 for goodwill, core deposit
    intangible and mortgage servicing assets for 2007 and 2006,
    respectively.

Contact Information

  • Contact:
    Richard P. Orsillo
    Senior Vice President and Chief Financial Officer
    603-752-1171