SOURCE: Northway Financial, Inc.

April 30, 2008 16:48 ET

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

BERLIN, NH--(Marketwire - April 30, 2008) - Northway Financial, Inc. (the "Company") (OTCBB: NWYF) reported net income for the quarter ended March 31, 2008 of $1,021,000, or $0.41 per share-basic, compared to $846,000, or $0.29 per share-basic, for the same quarter in 2007, an increase of $175,000, or 20.7%. 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, which occurred on September 11, 2007.

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

"We are pleased to report that, even in today's uncertain and volatile economy, our net income surpassed that of the same quarter last year by 20.7%. This is the result of several factors, including a significant improvement in net interest and dividend income, gains on the sale of investment securities, and careful monitoring of overhead expenses. The increase of $32,000,000 in our loan portfolio is reflective of Northway's strong lending position in northern and central New Hampshire.

"With the assistance of our new executive management team, we are ramping up our efforts to be the 'Bank of Choice,' by strengthening and expanding relationships with our customers. This is an intensive Bank-wide initiative that we expect will yield positive and lasting results.

"We also are pleased to report that we have not participated in the sub-prime lending that has been so damaging to many other lenders. Nevertheless, in today's rapidly evolving economy, our Board of Directors and management remain alert to changes that might threaten shareholder value, and will address such situations with all of the resources at our disposal."

On April 30, 2008, the Board of Directors declared a dividend of $0.135 cents per share, an increase of 8% over the dividend declared last quarter. This dividend is payable on May 19, 2008 to shareholders of record on May 9, 2008.

Net interest and dividend income for the quarter ended March 31, 2008 increased $225,000 to $5,409,000 compared to $5,184,000 for the same period last year due primarily to an increase in average earning assets of $28,000,000. The provision for loan losses for the quarter ended March 31, 2008 increased $150,000 to $270,000 compared to $120,000 for the same period in 2007, primarily due to the potential impact of the current unfavorable economic conditions; and, to a lesser degree, a 7% increase in gross loans. Securities gains for the quarter ended March 31, 2008 increased $120,000 to $261,000 compared to $141,000 for the same period last year. Other noninterest income for the quarter ended March 31, 2008 decreased $119,000 to $1,185,000 compared to $1,304,000 for the same period last year. Other operating expense decreased $180,000 to $5,342,000 for the quarter ended March 31, 2008 compared to $5,522,000 for the same period last year due primarily to a decrease in salaries and benefits expense and equipment expense. Income tax expense for the quarter ended March 31, 2008 increased $81,000 from the quarter ended March 31, 2007.

At March 31, 2008, the Company had total assets of $683,881,000 compared to $678,729,000 at March 31, 2007, an increase of $5,152,000. Federal funds sold decreased $17,065,000 from March 31, 2007 to March 31, 2008. Securities available-for-sale decreased $8,397,000 to $135,341,000 at March 31, 2008 compared to $143,738,000 at March 31, 2007. Loans at March 31, 2008 increased $32,745,000 to $499,535,000 compared to $466,790,000 at March 31, 2007. Total deposits were $477,819,000 at March 31, 2008 compared to $489,080,000 at March 31, 2007, a decrease of $11,261,000. Securities sold under agreements to repurchase increased $8,599,000 to $48,718,000 at March 31, 2008 compared to $40,119,000 at March 31, 2007. Other borrowings increased $18,800,000 to $106,730,000 at March 31, 2008 compared to $87,930,000 at March 31, 2007.

Total equity decreased $7,761,000 to $45,100,000 at March 31, 2008 compared to $52,861,000 at March 31, 2007 due primarily to the shares cashed out in the reverse and forward stock split transactions. Stockholders' equity of $45,100,000 resulted in a book value of $17.99 per share at March 31, 2008, based on 2,506,804 shares of common stock outstanding, an increase of $0.30 per share.

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.

Earnings per share and shares outstanding have been adjusted to reflect the impact of the reverse and forward stock split transactions completed September 11, 2007.

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:                            March 31,
                                                    2008            2007

Total assets                                    $  683,881      $  678,729
Federal funds sold                                       -          17,065
Securities available-for-sale                      135,341         143,738
Federal Home Loan Bank stock                         4,851           3,671
Loans held-for-sale                                    139              65
Loans, net of unearned income                      499,535         466,790
Allowance for loan losses                            6,433           5,701
Nonperforming loans                                  7,713           4,678
Nonperforming assets                                 8,565           4,700
Deposits                                           477,819         489,080
Securities sold under agreements to repurchase      48,718          40,119
Other borrowings                                   106,730          87,930
Stockholders’ equity                                45,100          52,861

Book value per share                            $    17.99      $    17.69
Tangible book value per share (1)                    13.07           13.40
Tier 1 capital to risk weighted assets               11.45%          13.99%
Total capital to risk weighted assets                13.86           15.93
Leverage ratio                                        7.52            9.20
Allowance for loan losses to total loans              1.29            1.22
Shares outstanding                               2,506,804       2,988,348


                                                   For the Three Months
                                                      Ended March 31,
Operating results:                                 2008            2007
Net interest and dividend income(2)               $5,409          $5,184
Loan loss provision                                  270             120
Securities gains, net                                261             141
Other noninterest income                           1,185           1,304
Other operating expense                            5,342           5,522
Income before tax                                  1,243             987
Income tax expense                                   222             141
Net income                                        $1,021          $  846

Earnings per share – basic                        $ 0.41          $ 0.29
Return on average assets                            0.61%           0.52%
Return on average equity                            8.99%           6.54%

(1) Includes a deduction of $12,328 and $12,821 for goodwill, core
    deposit intangible and mortgage servicing assets for 2008 and 2007,
    respectively.
(2) Net interest and dividend income FTE was $5,832 and $5,467 for the
    three months ended March 31, 2008 and 2007, respectively.

Contact Information

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