SOURCE: Northway Financial, Inc.

Northway Financial, Inc.

October 31, 2014 09:48 ET

Northway Financial, Inc. Announces Third Quarter Earnings

NORTH CONWAY, NH--(Marketwired - October 31, 2014) - Northway Financial, Inc. (the "Company") (OTCQB: NWYF), the parent company of Northway Bank, today reported net income for the quarter ended September 30, 2014 of $1,838,000, or $0.64 per basic common share, compared to net income of $1,600,000, or $0.56 per basic common share, for the quarter ended September 30, 2013, an increase of $238,000. For the nine month period ended September 30, 2014, the Company reported net income of $5,070,000, or $1.77 per basic common share, compared to net income of $5,295,000, or $1.90 per basic common share, for the same period in 2013, a decrease of $225,000, or 4%, driven largely by a slowdown in mortgage refinance activity which impacted the gain on sale of loans originated.

Financial Highlights

  • Total deposits increased $63,577,000, or 9.3%, to $748,039,000 at September 30, 2014, compared to $684,462,000 at September 30, 2013. For the nine months ended September 30, 2014, total deposits increased $53,680,000, which is an annualized growth rate of 10.3%.
  • The Company's returns on average assets and average equity for the nine months ended September 30, 2014 were 0.73% and 7.84%, respectively, compared to 0.82% and 8.89% for the year ended December 31, 2013 and 0.81% and 8.74% for the nine months ended September 30, 2013. 
  • Core earnings comprised 65.4% of net income for the nine months ended September 30, 2014, compared to 59.6% 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 and dividend income for the nine months ended September 30, 2014 increased $811,000 year over year. Further, the provision for loan losses for the nine months ended September 30, 2014 decreased $964,000 year over 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 $838,000 and $1,187,000, respectively.
  • Regulatory capital ratios at September 30, 2014 exceeded minimum requirements. The Company's total risk-based capital ratio was 17.86% compared to the regulatory requirement of 10.0%; Tier 1 risk-based capital was 16.56% compared to the regulatory requirement of 6.0% and Tier 1 capital to average assets was 10.69% compared to the regulatory requirement of 5.0%.

Earnings Summary

As noted above, the Company recorded net income of $5,070,000 for the nine months ended September 30, 2014 compared to $5,295,000 for the same period in 2013. For the nine months ended September 30, 2014, $4,869,000, or $1.77 per common share, was available to common stockholders compared to $5,081,000, or $1.90 per common share, for the same period last year. 

Net interest and dividend income for the nine months ended September 30, 2014 increased $811,000 to $21,514,000 compared to $20,703,000 for the same period last year. The provision for loan losses for the nine months ended September 30, 2014 decreased $964,000 to $1,365,000 compared to $2,329,000 for the same period in 2013. Net gains on sales of securities were $2,159,000 compared to $2,997,000 for the nine months ended September 30, 2013, a decrease of $838,000. Gains on sales of loans decreased $1,187,000 to $536,000 for the nine months ended September 30, 2014, compared to $1,723,000 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 $349,000 to $4,560,000 compared to $4,211,000 for the same period last year due primarily to the recording of a gain on sale of land adjacent to one of our branches. Total noninterest expense increased $405,000 to $20,566,000 for the nine months ended September 30, 2014, compared to $20,161,000 for the same period last year. The increase was due primarily to write-downs on other real estate owned, and higher levels of salaries and debit card expense. Income tax expense decreased $81,000 to $1,768,000 for the nine months ended September 30, 2014, compared to $1,849,000 for the same period last year; the effective tax rates were 25.9% each year.

For the quarter ended September 30, 2014, the Company recorded net income of $1,838,000 compared to $1,600,000 for the same period in 2013. For the quarter ended September 30, 2014, $1,771,000, or $0.64 per common share, was available to common stockholders compared to $1,533,000, or $0.56 per common share, for the same period last year. 

Net interest and dividend income for the quarter ended September 30, 2014 decreased $207,000 to $7,168,000 compared to $7,375,000 for the same period last year. The provision for loan losses for the quarter ended September 30, 2014 decreased $324,000 to $405,000 compared to $729,000 for the same period in 2013. Net gains on sales of securities were $866,000 compared to $356,000 for the quarter ended September 30, 2013, an increase of $510,000. Gains on sales of loans decreased $207,000 to $203,000 for the quarter ended September 30, 2014, compared to $410,000 for the same period last year. All other noninterest income decreased $184,000 to $1,329,000 compared to $1,513,000 for the same period last year. Total noninterest expense decreased $251,000 to $6,582,000 for the quarter ended September 30, 2014, compared to $6,833,000 for the same period last year. Income tax expense increased $249,000 to $741,000 for the quarter ended September 30, 2014, compared to $492,000 for the same period last year.

Balance Sheet Summary

At September 30, 2014, the Company had total assets of $940,532,000 compared to $898,329,000 at December 31, 2013 and $902,296,000 at September 30, 2013. The increase in total assets of $42,203,000 and $38,236,000 from December 31, 2013 and September 30, 2013, respectively, was primarily the result of an increase in the investment portfolio of $47,397,000 and $46,452,000 compared to December 31, 2013 and September 30, 2013, respectively. This was partially offset by a decrease in net loans of $10,442,000 and $27,708,000 compared to December 31, 2013 and September 30, 2013, respectively.

Total deposits were $748,039,000 at September 30, 2014, compared to $694,359,000 at December 31, 2013 and $684,462,000 at September 30, 2013, an increase of $53,680,000, or 7.7%, and $63,577,000, or 9.3%, respectively. Other borrowings decreased $5,896,000 and $34,636,000 to $74,900,000 at September 30, 2014, compared to $80,796,000 and $109,536,000 at December 31, 2013 and September 30, 2013, respectively.

Total stockholders' equity increased $6,577,000 and $8,958,000 to $88,765,000 at September 30, 2014, compared to $82,188,000 at December 31, 2013 and $79,807,000 at September 30, 2013. Stockholders' equity available to common stockholders totaled $65,217,000, resulting in a book value per common share of $23.70 per share at September 30, 2014, based on 2,751,650 shares of common stock outstanding, an increase of $2.38 per share, from December 31, 2013 and $3.24 per share from September 30, 2013. Tangible book value per common share increased $2.48 and $3.32, to $19.53 at September 30, 2014, compared to $17.05 and $16.21 at December 31, 2013 and September 30, 2013, respectively. 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   Nine Months Ended
   9/30/2014   9/30/2013   9/30/2014   9/30/2013
                
Interest and Dividend Income  $8,675   $8,577   $25,816   $24,388
Interest Expense   1,507    1,202    4,302    3,685
Net Interest and Dividend Income   7,168    7,375    21,514    20,703
Provision for Loan Losses   405    729    1,365    2,329
Gains on Sales of Loans, Net   203    410    536    1,723
All Other Noninterest Income   1,329    1,513    4,560    4,211
Noninterest Expense   6,582    6,833    20,566    20,161
Net Income Before Securities Gains   1,713    1,736    4,679    4,147
Securities Gains, Net   866    356    2,159    2,997
Net Income Before Taxes   2,579    2,092    6,838    7,144
Provision for Income Tax   741    492    1,768    1,849
Net Income  $1,838   $1,600   $5,070   $5,295
Net Income Available to Common Stockholders  $1,771   $1,533   $4,869   $5,081
Earnings per Common Share, Basic  $0.64   $0.56   $1.77   $1.90
                    
             
    9/30/2014   12/31/2013   9/30/2013  
                  
Balance Sheet                 
Total Assets   $940,532   $898,329   $902,296  
Cash and Due from Banks and Interest-Bearing Deposits    37,036    33,391    17,550  
Securities Available-for-Sale, at Fair Value    231,924    184,527    185,472  
Loans, Net    620,627    631,069    648,335  
Total Deposits    748,039    694,359    684,462  
Federal Home Loan Bank Advances    54,280    60,176    88,916  
Securities Sold Under Agreements to Repurchase    22,810    35,465    21,164  
Junior Subordinated Debentures    20,620    20,620    20,620  
Stockholders' Equity    88,765    82,188    79,807  
Profitability and Efficiency                 
Net Interest Margin    3.50 %  3.54 %  3.53 %
Yield on Earning Assets    4.15    4.13    4.12  
Cost of Interest Bearing Liabilities    0.78    0.70    0.70  
Book Value Per Share of Common Shares Outstanding   $23.70   $21.32   $20.46  
Tangible Book Value Per Share of Common Shares Outstanding    19.53    17.05    16.21  
Capital and Credit                 
Tier 1 Core Capital to Average Assets    10.69 %  10.73 %  10.70 %
Tier 1 Risk-Based Capital    16.56    15.85    15.14  
Total Risk-Based Capital    17.86    17.20    16.46  
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    2,680,209  
Return on Average Assets    0.73 %  0.82 %  0.81 %
Return on Average Equity    7.84    8.89    8.74  
Nonperforming Loans as a % of Total Loans    2.04    2.21    2.23  
Allowance for Loan Losses as a % of Nonperforming Loans    78.71    78.78    73.71  
                  
           

Contact Information

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

    3424 White Mountain Highway
    North Conway, New Hampshire 
    03860