SOURCE: Northway Financial, Inc.

Northway Financial, Inc.

August 01, 2014 09:30 ET

Northway Financial, Inc. Announces Second Quarter Earnings

NORTH CONWAY, NH--(Marketwired - Aug 1, 2014) -  Northway Financial, Inc. (the "Company") (OTCQB: NWYF), the parent company of Northway Bank, today reported net income for the quarter ended June 30, 2014 of $1,925,000, or $0.68 per basic common share, compared to net income of $1,667,000, or $0.60 per basic common share, for the quarter ended June 30, 2013, an increase of $258,000. For the six month period ended June 30, 2014, the Company reported net income of $3,232,000, or $1.13 per basic common share, compared to net income of $3,695,000, or $1.34 per basic common share, for the same period in 2013.

CEO William J. Woodward said, "Northway's deposit growth remains strong, with an 8% increase over the prior year. Our expansion into Southern New Hampshire continues to show positive results as our newest offices in Manchester and Portsmouth are experiencing strong deposit growth.

With the advances in technology, customers are becoming more reliant on banking remotely via the Internet, or using mobile devices. In order to remain committed to ensuring that "The Right Bank makes a Real Difference," we have made a significant investment in upgrading our technology. Our goal is to ensure that we are providing our customers and employees with the tools they need to bank either at one of our many facilities or remotely, whichever they choose. 

As part of our ongoing effort to allocate resources efficiently, we have made the decision to close the Ashland branch office, effective September 26, 2014, and to relocate the staff and customers into nearby Northway banking offices. We will continue to provide a full service ATM at the Ashland facility and will continue to maintain a strong presence throughout the Plymouth and Lakes Region. This consolidation is being done with great sensitivity for the concerns of both our customers and employees."

Financial Highlights

  • Total deposits increased $55,500,000, or 8.3%, to $721,624,000 at June 30, 2014, compared to $666,124,000 at June 30, 2013. For the six months ended June 30, 2014, total deposits increased $27,265,000, which is an annualized growth rate of 7.9%.

  • The Company's returns on average assets and average equity for the six months ended June 30, 2014 were 0.71% and 7.64%, respectively, compared to 0.82% and 8.89% for the year ended December 31, 2013 and 0.86% and 9.08% for the six months ended June 30, 2013. 

  • Core earnings comprised 61.6% of net income for the six months ended June 30, 2014, compared to 49.8% for the same period last year. Core earnings exclude non-recurring items such as gains on sales of investment securities and represent earnings generated from our principal banking activities. Net interest income for the six months ended June 30, 2014 increased $1,018,000 over last year. Further, the provision for loan losses for the six months ended June 30, 2014 decreased $640,000 from last year as many of our problem credits have been resolved. Overall, net income has decreased due primarily to a decrease in gains on sales of investments and loans of $1,348,000 and $980,000, respectively.

  • Regulatory capital ratios at June 30, 2014 exceeded minimum requirements. The Company's total risk-based capital ratio was 17.01% compared to the regulatory requirement of 10.0%; Tier 1 risk-based capital was 15.68% compared to the regulatory requirement of 6.0% and Tier 1 capital to average assets was 10.88% compared to the regulatory requirement of 5.0%.

Earnings Summary

As noted above, the Company recorded net income of $3,232,000 for the six months ended June 30, 2014 compared to $3,695,000 for the same period in 2013. For the six months ended June 30, 2014, $3,098,000, or $1.13 per common share, was available to common stockholders compared to $3,548,000, or $1.34 per common share, for the same period last year. 

Net interest and dividend income for the six months ended June 30, 2014 increased $1,018,000 to $14,346,000 compared to $13,328,000 for the same period last year. The provision for loan losses for the six months ended June 30, 2014 decreased $640,000 to $960,000 compared to $1,600,000 for the same period in 2013. Net gains on sales of securities were $1,293,000 compared to $2,641,000 for the six months ended June 30, 2013, a decrease of $1,348,000. Gains on sales of loans decreased $980,000 to $333,000 for the six months ended June 30, 2014, compared to $1,313,000 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. All other noninterest income increased $533,000 to $3,231,000 compared to $2,698,000 for the same period last year due primarily to the recording of a gain on sale land adjacent to our Ashland branch. Total noninterest expense increased $656,000 to $13,984,000 for the six months ended June 30, 2014, compared to $13,328,000 for the same period last year. The increase was due primarily to higher salaries, pension, debit card, and consulting expense. Income tax expense decreased $330,000 to $1,027,000 for the six months ended June 30, 2014, compared to $1,357,000 for the same period last year; the effective tax rates were 24.1% and 26.9%, respectively.

For the quarter ended June 30, 2014, the Company recorded net income of $1,925,000 compared to $1,667,000 for the same period in 2013. For the quarter ended June 30, 2014, $1,858,000, or $0.68 per common share, was available to common stockholders compared to $1,600,000, or $0.60 per common share, for the same period last year. 

Net interest and dividend income for the quarter ended June 30, 2014 increased $407,000 to $7,198,000 compared to $6,791,000 for the same period last year. The provision for loan losses for the quarter ended June 30, 2014 decreased $125,000 to $555,000 compared to $680,000 for the same period in 2013. Net gains on sales of securities were $865,000 compared to $1,025,000 for the quarter ended June 30, 2013, a decrease of $160,000. Gains on sales of loans decreased $503,000 to $168,000 for the quarter ended June 30, 2014, compared to $671,000 for the same period last year. All other noninterest income increased $540,000 to $1,901,000 compared to $1,361,000 for the same period last year. Total noninterest expense increased $71,000 to $6,959,000 for the quarter ended June 30, 2014, compared to $6,888,000 for the same period last year. Income tax expense increased $80,000 to $693,000 for the quarter ended June 30, 2014, compared to $613,000 for the same period last year.

Balance Sheet Summary

At June 30, 2014, the Company had total assets of $946,471,000 compared to $898,329,000 at December 31, 2013 and $883,743,000 at June 30, 2013. The increase in total assets of $48,142,000 and $62,728,000 from December 31, 2013 and June 30, 2013, respectively, was primarily the result of two items. First, in late June, the Bank restructured approximately $22 million of the investment portfolio. As a result, at June 30, 2014, due to trade date accounting rules, the Bank had $22,962,000 and $21,157,000, respectively, in security sales receivable and securities sales payable. These balances will clear in late July and total assets will be reduced accordingly. The remainder of the increase in assets is attributable to an increase in the investment portfolio of $43,061,000 and $45,964,000 compared to December 31, 2013 and June 30, 2013, respectively. 

Total deposits were $721,624,000 at June 30, 2014, compared to $694,359,000 at December 31, 2013 and $666,124,000 at June 30, 2013, an increase of $27,265,000, or 3.9%, and $55,500,000, or 8.3%, respectively. Other borrowings decreased $5,280,000 and $25,910,000 to $75,516,000 at June 30, 2014, compared to $80,796,000 and $101,426,000 at December 31, 2013 and June 30, 2013, respectively.

Total stockholders' equity increased $6,087,000 and $9,537,000 to $88,275,000 at June 30, 2014, compared to $82,188,000 at December 31, 2013 and $78,738,000 at June 30, 2013. Stockholders' equity available to common stockholders totaled $64,735,000, resulting in a book value per common share of $23.53 per share at June 30, 2014, based on 2,751,650 shares of common stock outstanding, an increase of $2.21 per share, from December 31, 2013 and $3.46 per share from June 30, 2013. Tangible book value per common share increased $2.27, and $3.53, to $19.32 at June 30, 2014, compared to $17.05 and $15.79 at December 31, 2013 and June 30, 2013, respectively. These improvements relate to the increase in retained earnings as well as an improvement in 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 18 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   Six Months Ended
    6/30/2014   6/30/2013   6/30/2014   6/30/2013
                         
Interest and Dividend Income   $ 8,655   $ 8,003   $ 17,141   $ 15,811
Interest Expense     1,457     1,212     2,795     2,483
Net Interest and Dividend Income     7,198     6,791     14,346     13,328
Provision for Loan Losses     555     680     960     1,600
Gains on Sales of Loans, Net     168     671     333     1,313
All Other Noninterest Income     1,901     1,361     3,231     2,698
Noninterest Expense     6,959     6,888     13,984     13,328
Net Income Before Securities Gains     1,753     1,255     2,966     2,411
Securities Gains, Net     865     1,025     1,293     2,641
Net Income Before Taxes     2,618     2,280     4,259     5,052
Provision for Income Tax     693     613     1,027     1,357
Net Income   $ 1,925   $ 1,667   $ 3,232   $ 3,695
Net Income Available to Common Stockholders   $ 1,858   $ 1,600   $ 3,098   $ 3,548
Earnings per Common Share, Basic   $ 0.68   $ 0.60   $ 1.13   $ 1.34
                         
                         
                         
       
                   
    6/30/2014     12/31/2013     6/30/2013  
                         
Balance Sheet                        
Total Assets   $ 946,471     $ 898,329     $ 883,743  
Cash and Due from Banks and Interest-Bearing Deposits     24,926       33,391       19,902  
Securities Available-for-Sale, at Fair Value     227,588       184,527       181,624  
Loans, Net     623,673       631,069       628,718  
Total Deposits     721,624       694,359       666,124  
Federal Home Loan Bank Advances     54,896       60,176       80,806  
Securities Sold Under Agreements to Repurchase     33,018       35,465       30,093  
Junior Subordinated Debentures     20,620       20,620       20,620  
Stockholders' Equity     88,275       82,188       78,738  
Profitability and Efficiency                        
Net Interest Margin     3.54 %     3.54 %     3.47 %
Yield on Earning Assets     4.18       4.13       4.08  
Cost of Interest Bearing Liabilities     0.77       0.70       0.72  
Book Value Per Share of Common Shares Outstanding   $ 23.53     $ 21.32     $ 20.07  
Tangible Book Value Per Share of Common Shares Outstanding     19.32       17.05       15.79  
Capital and Credit                        
Tier 1 Core Capital to Average Assets     10.88 %     10.73 %     10.98 %
Tier 1 Risk-Based Capital     15.68       15.85       15.51  
Total Risk-Based Capital     17.01       17.20       16.82  
Common Shares Outstanding     2,751,650       2,751,650       2,751,650  
Weighted Average Number of Common Shares, Basic     2,751,650       2,698,216       2,643,897  
Return on Average Assets     0.71 %     0.82 %     0.86 %
Return on Average Equity     7.64       8.89       9.08  
Nonperforming Loans as a % of Total Loans     2.33       2.21       2.47  
Allowance for Loan Losses as a % of Nonperforming Loans     76.11       78.78       67.94  

Contact Information

  • Contact:
    Russell A. Cronin, Jr.
    Senior Vice President
    and Chief Financial Officer
    603-326-7398