SOURCE: Northway Financial, Inc.

Northway Financial, Inc.

April 29, 2016 10:16 ET

Northway Financial, Inc. Announces First Quarter Earnings

NORTH CONWAY, NH--(Marketwired - April 29, 2016) -  Northway Financial, Inc. (the "Company") (OTCQB: NWYF), the parent company of Northway Bank, today reported net income for the quarter ended March 31, 2016 of $1.6MM or $0.56 per basic common share. 

President and Chief Executive Officer, William J. Woodward, stated, "It is with sadness that I note the passing of Director John Noyes in March of this year. John served as a director of Northway Financial and Northway Bank since 1997. Prior to that, John was a director of the Pemigewasset National Bank in Plymouth, NH dating back to 1994. John was not only a valuable director, but a close personal friend as well. He will be truly missed by all that knew him.

"Our level of nonperforming loans continues to improve as we diligently work toward helping some of our borrowers resolve their situation. As a result, our percentage of nonperforming loans to total loans decreased to 1.05%. We continue to operate in a difficult environment characterized by low interest rates and extremely competitive asset pricing. We remain focused on controlling our overhead expenses and whenever possible reducing our cost of funds."

Financial Highlights

  • Noninterest expense decreased $151 thousand or 2.4% for the quarter ended March 31, 2016 compared to the same period in 2015.
  • Nonperforming loans as a percentage of total loans stood at 1.05% at March 31, 2016 compared to 1.18% at December 31, 2015 and 1.40% at March 31, 2015.
  • Total Assets were $901MM, total loans were $549MM, and total deposits were $736MM at March 31, 2016.
  • Regulatory capital ratios at March 31, 2016 were 9.49% Tier 1 Leverage, 16.50% Total Risk Based Capital, and 11.75% Common Equity Tier 1 Ratio.

Earnings Summary

As noted above, the Company recorded net income of $1.6MM or $0.56 per common share for the quarter ended March 31, 2016 compared to $1.9MM or $0.66 per common share for the same period in 2015.

Net interest and dividend income for the quarter ended March 31, 2016 decreased $0.6MM to $6.3MM compared to $6.9MM for the same period last year. Interest income decreased $0.7MM to $7.7MM at March 31, 2016 compared to $8.3MM at March 31, 2015 due primarily to a decrease in the yield on earning assets of 37 basis points as well as a shift in average earning asset balances from higher yielding loans to cash and investments. Interest expense decreased $0.1MM due primarily to a decrease in the rate paid on balances of 7 basis points as well as a decrease in the average FHLB advances of $8.2MM partially offset by an increase in average deposit balances of $15.8MM and average securities sold under agreements to repurchase with the Company's customers, also known as customer sweep accounts, of $8.4MM.

There was no provision for loan losses for each of the quarters ended March 31, 2016 and 2015. The allowance for loan losses as a percentage of nonperforming loans increased to 147% at March 31, 2016 compared to 129% at December 30, 2015 and 108% at March 31, 2015.

Noninterest income, excluding net gain on sales of loans and net securities gains, decreased $115 thousand compared to the same period in 2015 as fees from checking accounts continue to be negatively impact by regulatory changes. Net gains on sales of securities were $0.9MM compared to $0.8MM in 2015. Noninterest expense decreased $151 thousand in 2016 due primarily to decreases in pension expense and management recruitment expense. The Company froze its defined benefit plan as of December 31, 2015 and is currently working through the plan termination process.

Balance Sheet Summary

At March 31, 2016, the Company had total assets of $901MM compared to $934MM at December 31, 2015 and $917MM at March 31, 2015. Since year end, deposits and securities sold under agreements to repurchase have decreased $36MM due to the normal seasonal fluctuations in municipal deposits and management's decision not to renew maturing higher rate customer and institutional certificates of deposits. This has resulted in a decrease in the interest-bearing deposits of the Bank. 

Compared to March 31, 2015, total assets have decreased $16.4MM. In December, the Company redeemed $24MM of outstanding preferred stock issued to the US Department of Treasury under its Small Business Lending Fund resulting in a decrease in interest-bearing deposits. Equity was positively impacted by earnings and the decrease in accumulated other comprehensive loss. In addition to the net decrease in equity of $18.5MM, the Company saw a decrease in long-term borrowings of $7.7MM. These decreases were partially offset by an increase in deposit balances of $6.4MM and securities sold under agreements to repurchase with the Company's customers, also known as customer sweep accounts, of $6.4MM. 

Compared to March 31, 2015, the Company continued to see a shift in total assets as net loans decreased $30.1MM partially offset by an increase in cash and due from banks and interest-bearing deposits of $12.8MM and an increase in securities available-for-sale of $4.6MM. 

Total deposits were $736MM at March 31, 2016 compared to $758MM at December 31, 2015 and $730MM at March 31, 2015. Securities sold under agreements to repurchase with the Company's customers, also known as customer sweep accounts, totaled $31MM at March 31, 2016, a decrease of $13MM from December 31, 2015 and an increase of $6MM from March 31, 2015. Other borrowings were $54MM at March 31, 2016, compared to $56MM at December 31, 2015 and $61MM at March 31, 2015. The decrease in other borrowings is attributable to long term FHLB advances that matured and were not replaced.

Stockholders' equity decreased $18.5MM compared to the same period last year due primarily to the redemption of the Preferred Stock in December 2015. Compared to year-end stockholders' equity has increased $3.2MM due to net income YTD of $1.6MM and a decrease in accumulated other comprehensive loss of $2.5MM partially offset by common dividends declared and paid of $0.9MM. Stockholders' equity available to common stockholders totaled $73.5MM at March 31, 2016 resulting in a book value per common share of $26.71, based on 2,751,650 shares of common stock outstanding; an increase of $1.16 and $1.85 compared to December 31, 2015 and March 31, 2015, respectively. Tangible book value per common share increased $1.16 and $1.85 to $23.05 at March 31, 2016, compared to $21.89 and $21.19 at December 31, 2015 and March 31, 2015, respectively. 

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 17 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
    3/31/2016   3/31/2015
             
Interest and Dividend Income   $ 7,666   $ 8,326
Interest Expense     1,353     1,451
Net Interest and Dividend Income     6,313     6,875
Provision for Loan Losses     -     -
All Other Noninterest Income     1,239     1,355
Noninterest Expense     6,224     6,375
Net Income Before Securities Gains     1,328     1,855
Securities Gains, Net     852     774
Net Income Before Taxes     2,180     2,629
Provision for Income Tax     630     736
Net Income   $ 1,550   $ 1,893
Net Income Available to Common Stockholders   $ 1,550   $ 1,826
Earnings per Common Share, Basic   $ 0.56   $ 0.66
             
                   
                   
    3/31/2016     12/31/2015     3/31/2015  
                   
Balance Sheet                        
Total Assets   $ 900,817     $ 933,604     $ 917,179  
Cash and Due from Banks and Interest-Bearing Deposits     56,832       91,727       44,074  
Securities Available-for-Sale, at Fair Value     257,133       254,476       252,504  
Loans, Net     548,746       547,299       578,585  
Total Deposits     736,124       757,922       729,703  
Federal Home Loan Bank Advances     33,151       34,907       40,843  
Securities Sold Under Agreements to Repurchase     31,302       44,042       24,857  
Junior Subordinated Debentures     20,620       20,620       20,620  
Stockholders' Equity     73,487       70,307       91,983  
Profitability and Efficiency                        
Net Interest Margin     3.03 %     3.23 %     3.36 %
Yield on Earning Assets     3.64       3.88       4.01  
Cost of Interest Bearing Liabilities     0.74       0.79       0.80  
Book Value Per Share of Common Shares Outstanding   $ 26.71     $ 25.55     $ 24.86  
Tangible Book Value Per Share of Common Shares Outstanding     23.05       21.89       21.19  
Capital and Credit                        
Tier 1 Core Capital to Average Assets     9.49 %     9.08 %     11.51 %
Common Equity Risk-Based Capital     11.75       11.63       10.40  
Tier 1 Risk-Based Capital     15.25       15.14       17.60  
Total Risk-Based Capital     16.50       16.39       18.88  
Common Shares Outstanding     2,751,650       2,751,650       2,751,650  
Weighted Average Number of Common Shares, Basic     2,751,650       2,751,650       2,751,650  
Return on Average Assets     0.67 %     0.69 %     0.83 %
Return on Average Equity     8.60       7.01       8.34  
Nonperforming Loans as a % of Total Loans     1.05       1.18       1.40  
Allowance for Loan Losses as a % of Nonperforming Loans     147.32       128.83       107.69  

Contact Information

  • Contact: 
    Gary Laurash
    Chief Financial Officer
    603-326-7377