SOURCE: Northway Financial, Inc.

Northway Financial, Inc.

February 10, 2011 08:00 ET

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

BERLIN, NH--(Marketwire - February 10, 2011) - Northway Financial, Inc. (the "Company") (OTCBB: NWYF) reported net income for the year ended December 31, 2010 of $4,713,000 compared to net income of $2,033,000 for the year ended December 31, 2009, an increase of $2,680,000. Net income available to common stockholders was $4,068,000, or $1.55 per common share, for the year ended December 31, 2010, compared to $1,441,000, or $0.56 per common share, for the year ended December 31, 2009, an increase of $2,627,000. For the quarter ended December 31, 2010, the Company reported net income of $1,638,000 compared to net income of $584,000 for the same quarter in 2009, an increase of $1,054,000. Net income available to common stockholders increased $1,053,000 from $423,000, or $0.28 per common share, for the quarter ended December 31, 2009 to $1,476,000, or $0.56 per common share, for the quarter ended December 31, 2010. The Company's returns on average assets and average equity for the year ended December 31, 2010 were 0.58% and 8.65%, respectively.

CEO William Woodward stated, "I am particularly pleased with our results for 2010. Not only did we have three consecutive quarters of record earnings, but we also had a record year. Achieving these financial results in a very challenging economy is a tribute to our staff, which was very focused on controlling overhead and improving asset quality and earnings."

Net interest and dividend income for the year ended December 31, 2010 increased $2,645,000 to $24,356,000 compared to $21,711,000 for the same period last year due primarily to an improvement in the net interest margin of 18 basis points. This improvement, from 3.27% to 3.45%, was due primarily to a 71 basis point decrease in the cost of interest-bearing liabilities. The provision for loan losses for the year ended December 31, 2010 increased $1,225,000 to $3,335,000 compared to $2,110,000 for the same period in 2009. Noninterest income increased $2,028,000 due primarily to an increase in gain on sale of loans of $1,759,000, primarily reflecting the sale of $29.6 million of portfolio fixed-rate residential mortgage loans. Noninterest expense decreased $730,000 to $24,145,000 for the year ended December 31, 2010 compared to $24,875,000 for the same period last year. The provision for income tax for the year ended December 31, 2010 increased $1,498,000 from the same period in 2009 due primarily to the increase in net income before taxes of $4,178,000.

Net interest and dividend income for the quarter ended December 31, 2010 increased $191,000 to $6,011,000 compared to $5,820,000 for the same period last year. The provision for loan losses for the quarter ended December 31, 2010 decreased $70,000 to $690,000 compared to $760,000 for the same period in 2009. Noninterest income increased $1,023,000 due primarily to an increase in gain on sale of loans of $989,000 resulting primarily from the sale of $10.8 million of portfolio fixed-rate residential mortgage loans. Noninterest expense decreased $270,000 to $6,140,000 for the quarter ended December 31, 2010 compared to $6,410,000 for the same period last year. The provision for income tax for the quarter ended December 31, 2010 increased $500,000 from the quarter ended December 31, 2009.

At December 31, 2010, the Company had total assets of $831,973,000 compared to $807,357,000 at December 31, 2009, an increase of $24,616,000. Cash and due from banks and interest-bearing deposits increased $49,844,000 to $106,232,000 at December 31, 2010 compared to $56,388,000 at December 31, 2009. Securities available-for-sale increased $38,463,000 to $158,715,000 at December 31, 2010 compared to $120,252,000 at December 31, 2009. Loans at December 31, 2010 decreased $66,159,000 to $512,683,000 compared to $578,842,000 at December 31, 2009. This decrease was primarily the result of the sale of $29.6 million in fixed-rate portfolio mortgages as part of a strategy to reduce our exposure to long-term fixed-rate loans that are secured by real estate. In addition, the Company's decision to sell new originations in the secondary market has contributed to the decline in residential real estate loans. Total deposits were $645,820,000 at December 31, 2010 compared to $628,991,000 at December 31, 2009, an increase of $16,829,000. Securities sold under agreements to repurchase increased $4,541,000 to $39,812,000 at December 31, 2010 compared to $35,271,000 at December 31, 2009.

Total equity increased $4,434,000 to $55,997,000 at December 31, 2010 compared to $51,563,000 at December 31, 2009 due to net income of $4,713,000 and a decrease in the unrealized loss on available-for-sale securities of $905,000 partially offset by dividends paid in the amount of $1,174,000. Considering the rights of preferred stockholders, stockholders' equity available to common stockholders at December 31, 2010 was $45,439,000. The book value of stockholders' equity available to common stockholders at December 31, 2010 was $17.34 per share, an increase of $1.70 per common share from December 31, 2009.

On February 9, 2011, the Board of Directors declared a common stock dividend of $0.12 per share. This dividend is payable on February 22, 2011 to common stockholders of record on February 14, 2011. On February 9, 2011, the Board of Directors also declared a 5% dividend on the Preferred Stock Class A shares, and a 9% dividend on the Preferred Stock Class B shares. Both of these dividends are payable to the U.S. Department of Treasury on February 15, 2011, and are required as part of the U.S. Department of Treasury's investment in Northway Financial, Inc.

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.

                         Northway Financial, Inc.
                      Selected Financial Highlights

(Dollars in thousands,
 except per share data)       Three Months Ended          Year Ended
                            ----------------------  ----------------------
                            12/31/2010  12/31/2009  12/31/2010  12/31/2009
                            ----------  ----------  ----------  ----------

Interest and Dividend
 Income                     $    8,276  $    8,885  $   34,345  $   35,669
Interest Expense                 2,265       3,065       9,989      13,958
Net Interest and Dividend
 Income                          6,011       5,820      24,356      21,711
Provision for Loan Losses          690         760       3,335       2,110
Noninterest Income               2,846       1,823       8,263       6,235
Noninterest Expense              6,140       6,410      24,145      24,875
Provision for Income Tax           389        (111)        426      (1,072)
Net Income                       1,638         584       4,713       2,033
Net Income Available to
 Common Stockholders             1,476         423       4,068       1,441
Earnings Per Common Share,
 Basic                            0.56        0.28        1.55        0.56
Earnings Per Common Share,
 Assuming Dilution (1)            0.56        0.28        1.55        0.56
Dividends Declared per
 Common Share                     0.12        0.12        0.24        0.24


(1) Diluted earnings per share are caclulated using the weighted average
number of shares outstanding for the period, including common stock
equivalents, as appropriate.


                                                12/31/2010    12/31/2009
                                                ----------    ----------

Total Assets                                    $  831,973    $  807,357
Loans, net                                         512,683       578,842
Securities available-for-sale, at fair value       158,715       120,252
Federal Funds Sold                                  95,672        45,501
Total Deposits                                     645,820       628,991
Federal Home Loan Bank Advances                     62,962        63,000
Securities Sold Under Agreements to Repurchase      39,812        35,271
Junior Subordinated Debentures                      20,620        20,620
Stockholders' Equity                                55,997        51,563
Book Value of Common Shares Outstanding              17.34         15.64
Tangible Book Value of Common Shares
 Outstanding                                         12.72         11.14
Tier 1 Core Capital to Assets                         8.15 %        7.82 %
Common Shares Outstanding                        2,620,755     2,620,755
Return on Average Assets                              0.58 %        0.27 %
Return on Average Equity                              8.65          4.05
Nonperforming Loans as a % of Total Loans             3.18          2.03

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.

Contact Information

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