SOURCE: Northway Financial, Inc.

Northway Financial, Inc.

October 28, 2016 09:08 ET

Northway Financial, Inc. Announces Third Quarter Earnings

NORTH CONWAY, NH--(Marketwired - October 28, 2016) - Northway Financial, Inc. (the "Company") (OTCQB: NWYF), the parent company of Northway Bank (the "Bank"), today reported net income for the quarter ended September 30, 2016 of $1.3MM, or $0.48 per basic common share. Year-to-date, the Company reported net income of $4.4MM, or $1.61 per basic common share.

Financial Highlights

  • Total assets were $888MM, total loans were $552MM, and total deposits were $749MM at September 30, 2016.
  • Regulatory capital ratios at September 30, 2016 were 9.89% Tier 1 Leverage, 16.16% Total Risk Based Capital, and 11.55% Common Equity Tier 1 Ratio.
  • Noninterest expense included a $993 thousand prepayment penalty tied to early redemption of $33MM in Federal Home Loan Bank ("FHLB") borrowings.
  • Nonperforming loans as a percentage of total loans stood at 0.63% at September 30, 2016 compared to 1.18% at December 31, 2015 and September 30, 2015.
  • Core deposits increased $31MM at September 30, 2016 compared to September 30, 2015.

Earnings Summary

As noted above, the Company recorded net income of $4.4MM or $1.61 per common share for the nine months ended September 30, 2016 compared to $4.9MM or $1.72 per common share for the same period in 2015.

Net interest and dividend income for the nine months ended September 30, 2016 decreased $1.1MM to $19.4MM compared to $20.5MM for the same period last year. Interest income decreased $1.8MM to $23.1MM at September 30, 2016 compared to $24.9MM at September 30, 2015 due primarily to a decrease in the yield on earning assets of 24 basis points, a shift in average earning asset balances from higher yielding loans to cash, and an overall decrease in earning assets. Interest expense decreased $660 thousand due primarily to a decrease in the rate paid on balances of 11 basis points.

Consistent with prior periods there was no provision for loan losses for the nine months ended September 30, 2016 and 2015. The allowance for loan losses as a percentage of nonperforming loans increased to 226% at September 30, 2016 compared to 129% at both December 30, 2015 and September 30, 2015.

Noninterest income, excluding net gain on sales of loans and net securities gains, decreased $610 thousand compared to the same period in 2015 as the cash surrender value of life insurance gain increased $312 thousand and other noninterest income for 2016 included $349 thousand of swap fee income partially offset by a decrease in service charge revenue which has been negatively impacted by regulatory changes. Net gains on sales of securities were $2.2MM compared to $1.7MM in 2015. Noninterest expense increased $695 thousand in 2016 due primarily to the recognition of a prepayment fee on the prepayment of $33MM in FHLB long-term advances of $993 thousand partially offset by lower pension expense, marketing expense, and management recruitment expense. As mentioned last quarter, the Company froze its defined benefit plan as of December 31, 2015 and is currently working through the plan termination process, which is expected to be completed prior to year-end.

Balance Sheet Summary

At September 30, 2016, the Company had total assets of $888MM compared to $934MM at December 31, 2015 and $945MM at September 30, 2015. Since year end, deposits and securities sold under agreements to repurchase have decreased $18MM due primarily to management's decision to not renew maturing higher rate customer and institutional certificates of deposits. Additionally, during the third quarter, the Bank prepaid $33MM of FHLB long-term advances, reducing these borrowings to zero. These changes in liability balances have resulted in a decrease in both the interest-bearing deposits of the Bank and securities available-for-sale, which decreased $25MM and $21MM, respectively, during the third quarter. Net loans increased $5.2 million compared to year-end. Equity has increased $5.7MM since year end due to net income year to date and an improvement in the market value of securities available-for-sale, which increased other comprehensive income.

Compared to September 30, 2015, total assets have decreased $57.1MM. Stockholders' equity decreased $16.7MM, which was due to the redemption, in December 2015, of $24MM of outstanding preferred stock issued to the U.S. Department of the Treasury under its Small Business Lending Fund. Notwithstanding this transaction, equity has increased $6.9MM due to net income of $6.0MM over the last twelve months and an increase in comprehensive income of $2.7MM partially offset by dividends of $1.8MM for the last twelve months. In addition to the decrease in stockholders' equity, there was a $37.9MM decrease in long-term borrowings.

Compared to September 30, 2015, the net loans decreased $7.6MM, securities available-for-sale decreased $40.2MM, and cash and due from banks and interest-bearing deposits decreased $4.3MM.

Stockholders' equity available to common stockholders totaled $76.0MM at September 30, 2016 resulting in a book value per common share of $27.64, based on 2,751,650 shares of common stock outstanding; an increase of $2.09 and $2.51 compared to December 31, 2015 and September 30, 2015, respectively. Tangible book value per common share increased $2.10 and $2.52 to $23.99 at September 30, 2016, compared to $21.89 and $21.47 at December 31, 2015 and September 30, 2015, respectively.

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
(Dollars in thousands, except per share data)  Three Months Ended  Nine Months Ended
   9/30/2016  9/30/2015  9/30/2016  9/30/2015
Interest and Dividend Income  $7,389  $8,410  $23,124  $24,924
Interest Expense   1,060   1,451   3,712   4,372
Net Interest and Dividend Income   6,329   6,959   19,412   20,552
Provision for Loan Losses   -   -   -   -
All Other Noninterest Income   1,748   1,050   4,301   3,683
Noninterest Expense   7,343   6,403   19,850   19,155
Net Income Before Securities Gains   734   1,606   3,863   5,080
Securities Gains, Net   995   412   2,190   1,744
Net Income Before Taxes   1,729   2,018   6,053   6,824
Provision for Income Tax   397   578   1,634   1,891
Net Income  $1,332  $1,440  $4,419  $4,933
Net Income Available to Common Stockholders  $1,332  $1,373  $4,419  $4,732
Earnings per Common Share, Basic  $0.48  $0.50  $1.61  $1.72
   9/30/2016   12/31/2015   9/30/2015  
Balance Sheet             
Total Assets  $888,402   $933,605   $945,471  
Cash and Due from Banks and Interest-Bearing Deposits   66,364    91,727    70,638  
Securities Available-for-Sale, at Fair Value   232,991    254,476    273,181  
Loans, Net   552,480    547,300    560,068  
Total Deposits   749,117    757,922    751,805  
Federal Home Loan Bank Advances   -    34,907    37,890  
Securities Sold Under Agreements to Repurchase   35,232    44,042    34,016  
Junior Subordinated Debentures   20,620    20,620    20,620  
Stockholders' Equity   76,047    70,307    92,729  
Profitability and Efficiency                
Net Interest Margin   3.15 %  3.23 %  3.30 %
Yield on Earning Assets   3.72    3.88    3.96  
Cost of Interest Bearing Liabilities   0.70    0.79    0.80  
Book Value Per Share of Common Shares Outstanding  $27.64   $25.55   $25.13  
Tangible Book Value Per Share of Common Shares Outstanding   23.99    21.89    21.47  
Capital and Credit                
Tier 1 Core Capital to Average Assets   9.89 %  9.08 %  11.38 %
Common Equity Risk-Based Capital   11.55    11.63    11.03  
Tier 1 Risk-Based Capital   14.88    15.14    18.51  
Total Risk-Based Capital   16.16    16.39    19.76  
Common Shares Outstanding   2,751,650    2,751,650    2,751,650  
Weighted Average Number of Common Shares, Basic   2,751,650    2,751,650    2,751,650  
Return on Average Assets   0.65 %  0.69 %  0.71 %
Return on Average Equity   7.92    7.01    7.15  
Nonperforming Loans as a % of Total Loans   0.63    1.18    1.18  
Allowance for Loan Losses as a % of Nonperforming Loans   226.06    128.83    129.02  

Contact Information

  • Contact:
    Gary Laurash
    Chief Financial Officer