SOURCE: Northway Financial, Inc.

Northway Financial, Inc.

February 06, 2012 09:51 ET

Northway Financial, Inc. Announces Fourth Quarter and Year-End Results and Declares Dividend

NORTH CONWAY, NH--(Marketwire - Feb 6, 2012) - Northway Financial, Inc. (the "Company") (OTCBB: NWYF) reported net income for the year ended December 31, 2011 of $5,111,000 compared to net income of $4,713,000 for the same period in 2010, an increase of $398,000, and a record year. For the year ended December 31, 2011, net income available to common stockholders was $4,115,000, or $1.57 per common share, compared to $4,068,000, or $1.55 per common share, for the same period last year. For the quarter ended December 31, 2011, the Company reported net income of $334,000 compared to net income of $1,638,000 for the quarter ended December 31, 2010, a decrease of $1,304,000. For the quarter ended December 31, 2011, net income available to common stockholders was $67,000, or $0.02 per common share, compared to $1,476,000, or $0.56 per common share, for the same period last year.

On February 2, 2012, the Company's Board of Directors declared a semi-annual dividend on the common stock in the amount of $0.15 per share. This dividend will be payable on February 21, 2012 to stockholders of record on February 13, 2012.

2011 Financial Highlights

  • During the fourth quarter, two long-term Federal Home Loan Bank (FHLB) advances totaling $19,000,000, with an average rate of 4.52%, were pre-paid in order to restructure the Company's wholesale funding portfolio as well as improve its liquidity position and future net interest income. This early redemption resulted in a pre-payment penalty of $1,604,000.

  • Due primarily to investment portfolio restructuring, net gains on sales of securities were $3,482,000 compared to a net loss of $165,000 in 2010.

  • Due primarily to the continued high level of nonaccrual loans, the 2011 level of loan loss provision expense increased $1,325,000 to $4,660,000 from $3,335,000.

  • Total assets decreased $11,434,000, or 1.4%, to $820,539,000 at December 31, 2011 from $831,973,000 at December 31, 2010 due to the sale of three banking centers in May 2011.

  • Net loans decreased $22,937,000, or 4.5%, to $489,746,000 at December 31, 2011, compared to $512,683,000 at December 31, 2010. The sale of the banking centers resulted in a reduction in loans of $33,375,000 which was partially offset by an increase in loans of $10,438,000 due to increases in residential real estate and commercial loans.

  • Total deposits decreased $34,687,000, or 5.4%, to $611,133,000 at December 31, 2011, compared to $645,820,000 at December 31, 2010. The sale of the banking centers resulted in a reduction in deposits of $63,800,000. This was partially offset by organic deposit growth of $29,113,000.

  • During 2011, investment securities increased $93,558,000 to $252,273,000 from $158,715,000. This was due to a $23,000,000 leverage in January 2011 as well as the deployment of excess funds to improve the net yield on earning assets.

  • On September 15, 2011, the Company received $23,593,000 from the Small Business Lending Fund ("SBLF"), for which the Company issued to the U.S. Department of the Treasury a new Series C Preferred Stock. The SBLF is a voluntary program intended to encourage small business lending by providing capital to qualified community banks and bank holding companies at favorable rates.

    • The Company used $10,500,000 of the SBLF funds to redeem all of the outstanding shares of preferred stock previously issued to the U.S. Department of the Treasury under the TARP Capital Purchase Program.

  • The Company's returns on average assets and average equity for the year ended December 31, 2011 were 0.62% and 7.87%, respectively, compared to 0.58% and 8.65% for the same period last year.

Earnings Summary

The Company recorded net income of $5,111,000 for the year ended December 31, 2011 compared to $4,713,000 for the same period in 2010. For the year ended December 31, 2011, $4,115,000, or $1.57 per common share, was available to common stockholders compared to $4,068,000, or $1.55 per common share, for the same period last year.

Net interest and dividend income for the year ended December 31, 2011 decreased $344,000 to $24,012,000 compared to $24,356,000 for the same period last year. The provision for loan losses year-to-date 2011 increased $1,325,000 to $4,660,000 compared to $3,335,000 for the same period in 2010. For the year ended December 31, 2011, the Company recorded a net gain on the sale of the three banking centers of $3,772,000. Net gains on sales of securities were $3,482,000 compared to net losses on sales of securities of $165,000 for the year ended December 31, 2010, an increase of $3,647,000. Gains on sales of loans decreased $1,795,000 as of December 31, 2011 compared to the same period last year. All other noninterest income decreased $537,000 to $5,292,000 compared to $5,829,000 for the same period last year. Total noninterest expense increased $2,569,000 to $26,714,000 for the year ended December 31, 2011 compared to $24,145,000 for the same period last year. This increase resulted primarily from: 1) a pre-payment penalty of $1,604,000 on two FHLB Advances; 2) one-time costs associated with the sale of the three banking centers and 3) costs associated with the Company's expansion into new markets - Concord, Meredith and Manchester, NH. Income tax expense for the year ended December 31, 2011 increased $451,000 from the same period last year.

Balance Sheet Summary

At December 31, 2011, the Company had total assets of $820,539,000 compared to $831,973,000 at December 31, 2010, a decrease of $11,434,000. Cash and due from banks and interest-bearing deposits decreased $73,851,000 to $32,381,000 at December 31, 2011 compared to $106,232,000 at December 31, 2010. Securities available-for-sale increased $93,558,000 to $252,273,000 at December 31, 2011 compared to $158,715,000 at December 31, 2010. The increase in securities available-for-sale was due primarily to a $23,000,000 leverage in January 2011, which locked in a positive interest income spread for a minimum of two years, and the redeployment of overnight funds during the year. Loans at December 31, 2011 decreased $22,937,000 to $489,746,000 compared to $512,683,000 at December 31, 2010. This decrease was the result of the sale of $33,375,000 in loans as part of the banking center sale and was partially offset by an increase in commercial loans and residential real estate loans.

Total deposits were $611,133,000 at December 31, 2011 compared to $645,820,000 at December 31, 2010, a decrease of $34,687,000 and securities sold under agreements to repurchase decreased $6,521,000 to $33,291,000 at December 31, 2011 compared to $39,812,000 at December 31, 2010. These decreases resulted from the sale of the three banking centers as total deposits and securities sold under agreements to repurchase sold totaled $63,800,000 and $3,200,000, respectively. Excluding the impact of the banking center sale, total deposits increased $29,113,000. Other borrowings increased $10,696,000 to $94,278,000 at December 31, 2011 compared to $83,582,000 at December 30, 2010 due primarily to the $23,000,000 leverage implemented in January 2011 and the issuance of $7,000,000 in one new advance partially offset by the prepayment of $19,000,000 in long-term FHLB advances.

Total equity increased $18,895,000 to $74,892,000 at December 31, 2011 compared to $55,997,000 at December 31, 2010, of which approximately $13,000,000 was an additional investment from the U. S. Department of the Treasury during 2011 as noted above. Stockholders' equity available to common stockholders totaled $51,007,000, resulting in a book value per common share of $19.46 per share at December 31, 2011, based on 2,620,755 shares of common stock outstanding, an increase of $2.13, or 12.3% per share, from December 31, 2010.

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 new loan production office located in Bedford, 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 Twelve Months Ended
12/31/2011 12/31/2010 12/31/2011 12/31/2010
Interest and Dividend Income $ 8,144 $ 8,276 $ 32,500 $ 34,345
Interest Expense 2,079 2,265 8,488 9,989
Net Interest and Dividend Income 6,065 6,011 24,012 24,356
Provision for Loan Losses 1,415 690 4,660 3,335
Noninterest Income 3,226 2,846 13,350 8,263
Noninterest Expense 8,015 6,140 26,714 24,145
Provision for Income Tax (473 ) 389 877 426
Net Income 334 1,638 5,111 4,713
Net Income Available to Common Stockholders 67 1,476 4,115 4,068
Earnings Per Common Share, Basic 0.02 0.56 1.57 1.55
Dividends Declared per Common Share 0.15 0.12 0.27 0.24
12/31/2011 12/31/2010
Total Assets $ 820,539 $ 831,973
Cash and Due from Banks and Interest-Bearing Deposits 32,381 106,232
Securities Available-for-Sale, at Fair Value 252,273 158,715
Loans, Net 489,746 512,683
Total Deposits 611,133 645,820
Federal Home Loan Bank Advances 73,658 62,962
Securities Sold Under Agreements to Repurchase 33,291 39,812
Junior Subordinated Debentures 20,620 20,620
Stockholders' Equity 74,892 55,997
Book Value of Common Shares Outstanding 19.46 17.33
Tangible Book Value of Common Shares Outstanding 15.16 12.72
Tier 1 Core Capital to Assets 10.25 % 8.13 %
Common Shares Outstanding 2,620,755 2,620,755
Return on Average Assets 0.62 % 0.58 %
Return on Average Equity 7.87 8.65
Nonperforming Loans as a % of Total Loans 3.44 3.18

Contact Information

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