SOURCE: Northway Financial, Inc.

Northway Financial, Inc.

October 30, 2015 10:39 ET

Northway Financial, Inc. Announces Third Quarter Financial Results

NORTH CONWAY, NH--(Marketwired - October 30, 2015) - Northway Financial, Inc. (the "Company") (OTCQB: NWYF), the parent company of Northway Bank, today reported net income for the nine months ended September 30, 2015 of $4.9MM or $1.72 per basic common share.

President and Chief Executive Officer, William J. Woodward, stated, "For the past year we have continued to focus on reducing the level of nonperforming assets. The results for the first nine months of 2015 shows the success we have had in meeting this objective. We continue to remain focused on expense management and asset quality to achieve our profitability and efficiency goals."

Financial Highlights

  • Operating expenses decreased $1.4MM or 6.9% for the nine months ended September 30, 2015 compared to the same period in 2014.
  • Nonperforming loans as a percentage of total loans stood at 1.18% at September 30, 2015 compared to 2.04% at September 30, 2014.
  • Retail demand deposit account balances increased $23MM or 23.9% from December 2014 and $14MM or 14.0% when compared to the same time last year.
  • Total Assets were $945MM, total loans were $560MM, and total deposits were $752MM at September 30, 2015
  • Regulatory capital ratios at September 30, 2015 were 11.38% Tier 1 Leverage, 19.76% Total Risk Based Capital, and 11.01% Common Equity Tier 1 Ratio.

Earnings Summary

As noted above, the Company recorded net income of $4.9MM for the nine months ended September 30, 2015 compared to $5.1MM for the same period in 2014. For the nine months ended September 30, 2015, $4.7MM, or $1.72 per common share, was available to common stockholders compared to $4.9MM, or $1.77 per common share, for the same period last year.

Net interest and dividend income for the nine months ended September 30, 2015 decreased $962 thousand to $20.6MM compared to $21.5MM for the same period last year. Interest income decreased $892 thousand to $24.9 at September 30, 2015 compared to $25.8MM at September 30, 2014 due to a decrease in average loan balances of $46.1MM and a decrease in the yield on investments of 28 basis points. This was partially offset by an increase in the yield on loans of 8 basis points and an increase in average investment balances of $33MM. Interest expense increased $70 thousand to $4.4MM at September 30, 2015 compared to $4.3MM for the same period last year due primarily to an increase in average deposits of $23.4MM and an increase in rates on FHLB advances of 53 basis points partially offset by a decrease in average FHLB advances of $14.5MM.

The provision for loan losses for the nine months ended September 30, 2015 decreased $1.4MM; no provision expense was recorded in the first nine months of 2015 compared to $1.4MM for the same period in 2014. The allowance for loan losses as a percentage of nonperforming loans increased to 129% at September 30, 2015 compared to 85.2% at December 31, 2014 and 78.7% at September 30, 2014.

Net gains on sales of securities for the nine months ended September 30, 2015 were $1.7MM, compared to $2.2MM for the same period last year, a decrease of $415 thousand. Gains on sales of loans decreased $454 thousand to $82 thousand for the nine months ended September 30, 2015 due to a reduction in new loan production. All other noninterest income decreased $1MM to $3.6MM compared to $4.6MM for the same period last year due primarily to a $460 thousand one time gain in 2014 of a bank property, a change in the market value in the cash surrender value of a life insurance policy of $184 thousand and a decrease of $121 thousand in fees collected for insufficient funds associated with demand deposit accounts. Total noninterest expense decreased $1.4MM to $19.2MM for the nine months ended September 30, 2015, compared to $20.6MM for the same period last year. Approximately 35% of the decrease is attributable to lower salary and benefits while the remainder was spread out among multiple areas such as marketing, legal, other real estate owned related expenses, and ATM and debit card expenses. Income tax expense increased $123 thousand to $1.9MM for the nine months ended September 30, 2015, compared to $1.8MM for the same period last year; the effective tax rates were 27.7% and 25.9%, September 30, 2015 and September 30, 2014, respectively.

Balance Sheet Summary

At September 30, 2015, the Company had total assets of $945MM compared to $925MM at December 31, 2014 and $941MM at September 30, 2014. The asset composition has seen a shift from loans to cash and investments as net loans decreased $35MM since December 31, 2014 and $61MM since September 30, 2014. Conversely, cash and investments, net, have increased $55MM and $75MM since December 31, 2014 and September 30, 2014, respectively.

Total deposits were $752MM at September 30, 2015 compared to $727MM at December 31, 2014 and $748MM at September 30, 2014, an increase of $25MM, or 3.5%, and $4MM, or 0.5%, respectively. The increase in deposits was primarily attributed to growth in demand deposit accounts, as previously mentioned, offset by a decrease in municipal deposits of $13MM and $8MM compared to December 31, 2014 and September 30, 2014, respectively. Securities sold under agreements to repurchase with the Company's customers, also known as customer sweep accounts, totaled $34MM at September 30, 2015, a decrease of $834 thousand from December 31, 2014 and increase of $11MM from September 30, 2014. Other borrowings decreased $7MM and $16MM, respectively, to $59MM at September 30, 2015, compared to $65MM at December 31, 2014 and $75MM at September 30, 2014. The decrease in other borrowings is attributable to long term FHLB advances that matured and were not replaced.

Total stockholders' equity was $93MM at September 30, 2015, an increase of $2MM and $4MM compared to December 31, 2014 and September 30, 2014, respectively. Total equity was negatively impacted by a decrease in the fair market value of the securities portfolio caused by an increase in market interest rates. The change in value is recorded in the capital account under other comprehensive income. For the period of December 31, 2014 to September 30, 2015 the market value of the securities portfolio declined $1MM. Stockholders' equity available to common stockholders totaled $69MM resulting in a book value per common share of $25.13 at September 30, 2015, based on 2,751,650 shares of common stock outstanding; an increase of $0.65 and $1.43 compared to December 31, 2014 and September 30, 2014, respectively. Tangible book value per common share increased $0.67 and $1.94 to $21.47 at September 30, 2015, compared to $20.80 and $19.53 at December 31, 2014 and September 30, 2014, 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
(Unaudited)
             
(Dollars in thousands, except per share data)  Three Months Ended  Nine Months Ended
   9/30/2015  9/30/2014  9/30/2015  9/30/2014
             
Interest and Dividend Income  $8,410  $8,675  $24,924  $25,816
Interest Expense   1,451   1,507   4,372   4,302
Net Interest and Dividend Income   6,959   7,168   20,552   21,514
Provision for Loan Losses   -   405   -   1,365
All Other Noninterest Income   1,050   1,532   3,683   5,096
Noninterest Expense   6,403   6,582   19,155   20,566
Net Income Before Securities Gains   1,606   1,713   5,080   4,679
Securities Gains, Net   412   866   1,744   2,159
Net Income Before Taxes   2,018   2,579   6,824   6,838
Provision for Income Tax   578   741   1,891   1,768
Net Income  $1,440  $1,838  $4,933  $5,070
Net Income Available to Common Stockholders  $1,373  $1,771  $4,732  $4,869
Earnings per Common Share, Basic  $0.50  $0.64  $1.72  $1.77
             
   
   9/30/2015   12/31/2014   9/30/2014  
              
Balance Sheet             
Total Assets  $945,471   $925,713   $940,532  
Cash and Due from Banks and Interest-Bearing Deposits   70,638    66,693    37,036  
Securities Available-for-Sale, at Fair Value   273,181    221,647    231,924  
Loans, Net   560,068    594,787    620,627  
Total Deposits   751,805    726,630    748,039  
Federal Home Loan Bank Advances   37,890    44,814    54,280  
Securities Sold Under Agreements to Repurchase   34,016    34,850    22,810  
Junior Subordinated Debentures   20,620    20,620    20,620  
Stockholders' Equity   92,729    90,918    88,765  
Profitability and Efficiency                
Net Interest Margin   3.30 %  3.42 %  3.50 %
Yield on Earning Assets   3.96    4.08    4.15  
Cost of Interest Bearing Liabilities   0.80    0.79    0.78  
Book Value Per Share of Common Shares Outstanding  $25.13   $24.48   $23.70  
Tangible Book Value Per Share of Common Shares Outstanding   21.47    20.80    19.53  
Capital and Credit                
Tier 1 Core Capital to Average Assets   11.38 %  10.83 %  10.69 %
Common Equity Risk-Based Capital   11.03    n/a    n/a  
Tier 1 Risk-Based Capital   18.51    17.94    16.56  
Total Risk-Based Capital   19.76    19.22    17.86  
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   0.71 %  0.84 %  0.73 %
Return on Average Equity   7.15    8.96    7.84  
Nonperforming Loans as a % of Total Loans   1.18    1.71    2.04  
Allowance for Loan Losses as a % of Nonperforming Loans   129.02    85.16    78.71  
             

Contact Information

  • Contact:
    Gary Laurash
    Chief Financial Officer
    603-326-7377