SOURCE: Northway Financial, Inc.

Northway Financial, Inc.

February 06, 2015 09:03 ET

Northway Financial, Inc. Announces Fourth Quarter Earnings

NORTH CONWAY, NH--(Marketwired - February 06, 2015) - Northway Financial, Inc. (the "Company") (OTCQB: NWYF), the parent company of Northway Bank, today reported net income for the quarter ended December 31, 2014 of $2,783,000, or $0.99 per basic common share, compared to net income of $1,911,000, or $0.67 per basic common share, for the quarter ended December 31, 2013, an increase of $872,000, or 45.6%. For the year ended December 31, 2014, the Company reported net income of $7,853,000, or $2.76 per basic common share, compared to net income of $7,206,000, or $2.57 per basic common share, for the same period in 2013, an increase of $647,000, or 9.0%.

President and Chief Executive Officer, William J. Woodward stated, "We are pleased to report that 2014 was another year of record earnings for Northway, making it the fifth year in a row of record earnings. The 2014 year-over-year improvement of $647,000 is 9.0% more than 2013. In 2014, we made significant progress in resolving problem loans, reflected in reduction in the loan loss provision of $1.3 million. Our deposit base continues to grow, particularly in new markets, and is $32.3 million, or 4.6%, greater than it was a year ago. Supported by our 2014 net income of $7.9 million, stockholders' equity grew 10.6% during the year. The market price of Northway's common stock continued to improve in 2014, ending the year at $20.45, a 21.0% improvement over last year."

Financial Highlights

  • The Company's net income increased $647,000, or 9.0% for the year ended December 31, 2014 compared to the prior year.
  • Returns on average assets and average equity for the year ended December 31, 2014 were 0.84% and 8.96%, respectively, compared to 0.82% and 8.89% for the year ended December 31, 2013. 
  • Nonperforming loans as a percentage of total loans decreased to 1.71% at December 31, 2014 from 2.21% at December 31, 2013.
  • Total deposits increased $32,271,000, or 4.6%, to $726,630,000 at December 31, 2014, compared to $694,359,000 at December 31, 2013. 
  • Regulatory capital ratios at December 31, 2014 significantly exceeded minimum regulatory requirements.

Earnings Summary

As noted above, the Company recorded net income of $7,853,000 for the year ended December 31, 2014 compared to $7,206,000 for the same period in 2013. For the year ended December 31, 2014, $7,585,000, or $2.76 per common share, was available to common stockholders compared to $6,925,000, or $2.57 per common share, for the same period last year. 

Net interest and dividend income for the year ended December 31, 2014 increased $311,000 to $28,360,000 compared to $28,049,000 for the same period last year. The provision for loan losses for the year ended December 31, 2014 decreased $1,317,000 to $1,503,000 compared to $2,820,000 for the same period in 2013 as credit quality improved as many of our problem credits have been resolved. Nonperforming loans as a percentage of total loans decreased to 1.71% at December 31, 2014 from 2.21% at December 31, 2013. The allowance for loan losses as a percentage of nonperforming loans increased to 85.16% at December 31, 2014 to 78.8% at December 31, 2013.

Net gains on sales of securities were $4,189,000 compared to $3,815,000 for the year ended December 31, 2013, an increase of $374,000. The substantial bond market rally of 2014 offered opportunities for the Company to realize additional gains when compared to 2013. Gains on sales of loans decreased $1,238,000 to $800,000 for the year ended December 31, 2014, compared to $2,038,000 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. The gain for 2014 included a fourth quarter gain of $245,000 due to the sale of the Company's mortgage servicing asset. All other noninterest income decreased $43,000 to $5,966,000 compared to $6,009,000 for the same period last year.

Total noninterest expense increased $158,000 to $27,535,000 for the year ended December 31, 2014, compared to $27,377,000 for the same period last year. The increase was due primarily to write-downs on other real estate owned, an increase in the unfunded allowance for loan commitments and a higher level of debit card expense partially offset by lower pension and marketing expense. 

Income tax expense decreased $84,000 to $2,424,000 for the year ended December 31, 2014, compared to $2,508,000 for the same period last year; the effective tax rates were 23.6% for 2014 and 25.8% for 2013. During the fourth quarter of 2014, the Company recorded a $354,000 one-time State of New Hampshire tax benefit. This resulted from the Company's ability to file consolidated State of New Hampshire tax returns in 2014. In so doing, the Company was able recapture prior years' individual company filer losses which under New Hampshire tax law it could not previously utilize.

For the quarter ended December 31, 2014, the Company recorded net income of $2,783,000 compared to $1,911,000 for the same period in 2013. For the quarter ended December 31, 2014, $2,715,000, or $0.99 per common share, was available to common stockholders compared to $1,843,000, or $0.67 per common share, for the same period last year. 

Net interest and dividend income for the quarter ended December 31, 2014 decreased $500,000 to $6,846,000 compared to $7,346,000 for the same period last year. The provision for loan losses for the quarter ended December 31, 2014 decreased $353,000 to $138,000 compared to $491,000 for the same period in 2013. As discussed above, credit quality improved during the quarter as many of our problem credits have been resolved.

Net gains on sales of securities were $2,030,000 compared to $818,000 for the quarter ended December 31, 2013, an increase of $1,212,000. As mentioned above, the substantial bond market rally of 2014 offered opportunities for the Company to realize additional gains when compared to 2013. Gains on sales of loans decreased $51,000 to $264,000 for the quarter ended December 31, 2014, compared to $315,000 for the same period last year. As mentioned above, the quarterly gain included the gain of $245,000 from the sale of the mortgage servicing asset. All other noninterest income decreased $392,000 to $1,406,000 compared to $1,798,000 for the same period last year.

Total noninterest expense decreased $247,000 to $6,969,000 for the quarter ended December 31, 2014, compared to $7,216,000 for the same period last year. Income tax expense decreased $3,000 to $656,000 for the quarter ended December 31, 2014, compared to $659,000 for the same period last year. As noted above, during the fourth quarter of 2014, the Company recorded a $354,000 one-time State of New Hampshire tax benefit.

Balance Sheet Summary

At December 31, 2014, the Company had total assets of $925,713,000 compared to $898,329,000 at December 31, 2013. The increase in total assets of $27,384,000 from December 31, 2013 was primarily the result of an increase in the investment portfolio of $37,120,000 and an increase in cash and due from banks of $33,302,000 compared to December 31, 2013. This was partially offset by a decrease in net loans of $36,282,000 compared to December 31, 2013. This decrease resulted from the Company's balance sheet restructuring strategy. 

Total deposits were $726,630,000 at December 31, 2014, compared to $694,359,000 at December 31, 2013, an increase of $32,271,000, or 4.6%, driven by expansion in new markets in Southern New Hampshire. Other borrowings decreased $15,362,000 to $65,434,000 at December 31, 2014, compared to $80,796,000 at December 31, 2013 due to the maturity and prepayment of Federal Home Loan Bank long-term borrowings.

Total stockholders' equity increased $8,730,000 to $90,918,000 at December 31, 2014 compared to $82,188,000 at December 31, 2013. Stockholders' equity available to common stockholders totaled $67,362,000, resulting in a book value per common share of $24.48 per share at December 31, 2014, based on 2,751,650 shares of common stock outstanding, an increase of $3.16 per share, from $21.32 at December 31, 2013. Tangible book value per common share increased $3.75 to $20.80 at December 31, 2014, compared to $17.05 at December 31, 2013. These improvements result from an increase in retained earnings as well as a reduction in the level of 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 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  Year Ended
   12/31/2014  12/31/2013  12/31/2014  12/31/2013
                 
Interest and Dividend Income  $8,380  $8,641  $34,196  $33,029
Interest Expense   1,534   1,295   5,836   4,980
Net Interest and Dividend Income   6,846   7,346   28,360   28,049
Provision for Loan Losses   138   491   1,503   2,820
Gains on Sales of Loans, Net   264   315   800   2,038
All Other Noninterest Income   1,406   1,798   5,966   6,009
Noninterest Expense   6,969   7,216   27,535   27,377
Net Income Before Securities Gains   1,409   1,752   6,088   5,899
Securities Gains, Net   2,030   818   4,189   3,815
Net Income Before Taxes   3,439   2,570   10,277   9,714
Provision for Income Tax   656   659   2,424   2,508
Net Income  $2,783  $1,911  $7,853  $7,206
Net Income Available to Common Stockholders  $2,715  $1,843  $7,585  $6,925
Earnings per Common Share, Basic  $0.99  $0.67  $2.76  $2.57
                 
                 
                 
  12/31/2014  12/31/2013 
         
Balance Sheet        
Total Assets $925,713  $898,329 
Cash and Due from Banks and Interest-Bearing Deposits  66,693   33,391 
Securities Available-for-Sale, at Fair Value  221,647   184,527 
Loans, Net  594,787   631,069 
Total Deposits  726,630   694,359 
Federal Home Loan Bank Advances  44,814   60,176 
Securities Sold Under Agreements to Repurchase  34,850   35,465 
Junior Subordinated Debentures  20,620   20,620 
Stockholders' Equity  90,918   82,188 
Profitability and Efficiency        
Net Interest Margin  3.42%  3.54%
Yield on Earning Assets  4.08   4.13 
Cost of Interest Bearing Liabilities  0.79   0.70 
Book Value Per Share of Common Shares Outstanding $24.48  $21.32 
Tangible Book Value Per Share of Common Shares Outstanding  20.80   17.05 
Capital and Credit        
Tier 1 Core Capital to Average Assets  10.83%  10.73%
Tier 1 Risk-Based Capital  17.94   15.85 
Total Risk-Based Capital  19.22   17.20 
Common Shares Outstanding  2,751,650   2,751,650 
Weighted Average Number of Common Shares, Basic  2,751,650   2,698,216 
Return on Average Assets  0.84%  0.82%
Return on Average Equity  8.96   8.89 
Nonperforming Loans as a% of Total Loans  1.71   2.21 
Allowance for Loan Losses as a% of Nonperforming Loans  85.16   78.78 

Contact Information

  • Contact:
    Richard P. Orsillo
    Senior Vice President and Controller
    603-326-1044