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Northwest Bancorporation, Inc. Reports First Quarter 2015 Financial Results

SPOKANE, Wash., April 28, 2015 (GLOBE NEWSWIRE) -- Northwest Bancorporation, Inc. (OTCQB: NBCT) (the "Company"), the holding company of Inland Northwest Bank (the "Bank" or "INB"), today reported financial results for the quarter ended March 31, 2015.

Net income for the first quarter of 2015 was $697 thousand, compared to $588 thousand for the corresponding period in 2014, representing an increase of $109 thousand, or 18.5%. Earnings per diluted share increased 14.3%, from $0.14 for the first quarter of 2014, to $0.16 for the first quarter of 2015.

Financial highlights

  • Achieved thirteenth consecutive quarter of profitability, with net income of $697 thousand.
  • Total revenue for the quarter was $5.0 million, which was up 13% over the first quarter last year.
  • Nonperforming assets decreased 68% year over year.
  • Noninterest bearing deposits increased 10% year over year.
  • Loans grew by $45 million, or 15%, year over year.
  • Book value of the Company's stock increased 2.15% during the first quarter, to $9.51 per share.
  • The market price of the Company's stock increased $0.95 per share, or 11% during the first quarter, to $9.60 per share. The price is up $1.65, or 21%, over the price on March 31, 2014.

Company President and CEO, Randall Fewel, commented, "The new year is off to a great start for us with earnings up 18%, loans up 15%, and total assets up 12%. And it is particularly gratifying to see these excellent results starting to be reflected in our stock price, which is up 21%."

Balance sheet

As of March 31, 2015, the Company had total assets of $447.5 million, compared to $421.8 million on December 31, 2014 and $398.5 million on March 31, 2014. This represents an increase of $25.7 million, or 6.1%, over year end and an increase of $49.0 million, or 12.3%, year over year.

The investment portfolio was $40.3 million as of March 31, 2015, down $1.9 million, or 4.5%, from $42.2 million at December 31, 2014. The decrease reflects a shift in the deployment of capital from investments to loans. The net unrealized gain in the portfolio was $1.3 million, 10% higher than the $1.2 million net unrealized gain at year-end 2014.

The net loan portfolio was $350.2 million on March 31, 2015. This was up $13.8 million, or 4.1%, from year end and was up $44.7 million, or 14.6%, from March 31, 2014, when the loan portfolio was $305.5 million. The increase from prior periods primarily reflects increased commercial lending activity. "Under the leadership of the Bank's Chief Revenue Officer, Mark Dresback, we have assembled an outstanding team of commercial bankers and support personnel in both Spokane and North Idaho. This team has generated incredible momentum in terms of building a high quality loan pipeline that is translating to impressive loan growth for us," Fewel commented.

Deposits at March 31, 2015 were $383.5 million, an increase of $24.8 million, or 6.9%, compared to December 31, 2014 and an increase of $46.9 million, or 14.0%, compared to March 31, 2014. Core deposits (all deposits except time deposits) ended the quarter at $288.9 million, which is 75.3% of total deposits; this represents an increase of $13.5 million, or 4.9%, since the beginning of the year and an increase of $30.2 million, or 11.7%, over the $258.7 million level on March 31, 2014.

Noninterest bearing deposits, a subset of core deposits, were $94.1 million at quarter end, representing 24.5% of total deposits. This compares to noninterest bearing deposits of $85.7 million, or 25.5% of total deposits, at March 31, 2014, and to $96.4 million, or 26.9% of total deposits, at year-end 2014. The level of noninterest bearing deposits at quarter end represented growth of $8.4 million, or 9.8%, compared to March 31, 2014.

Asset quality, provision and allowance for loan losses

The Bank's nonperforming assets ("NPAs") were $1.5 million at quarter end, representing 0.34% of total assets. NPAs are defined as loans on which the Bank has stopped accruing interest and includes foreclosed real estate. NPAs at the end of 2014 were $1.4 million, representing 0.33% of total assets, and at March 31, 2014, NPAs were $4.8 million, representing 1.19% of total assets.

The Bank achieved net loan recoveries of $6 thousand for the three-month period ending on March 31, 2015, compared to net loan charge offs of $149 thousand for the comparable period in 2014. The provision for loan losses was $60 thousand for the three-month period ending on March 31, 2015, compared to $250 thousand for the comparable period in 2014. As of March 31, 2015, the allowance for loan losses was $5.8 million, or 1.62% of gross loans. This is slightly higher than on December 31, 2014, when it was $5.7 million and represented 1.67% of the loan portfolio.

Capital

Shareholders' equity increased $840 thousand during the first quarter of 2015. The increase reflects earnings retention and an increase in accumulated other comprehensive income and equity-based compensation costs. The book value of the Company's common stock was $9.51 per share on March 31, 2015, up $0.20, or 2.1%, over the $9.31 per share on December 31, 2014, and up $0.83, or 9.6%, over the $8.68 per share on March 31, 2014.

The Bank continues to maintain capital levels in excess of the requirements to be categorized as "well-capitalized" under newly implemented Basel III and Dodd Frank regulatory standards. As of March 31, 2015, the Bank's Tier 1 leverage capital to average assets ratio was 11.2%, its common equity Tier 1 capital ratio was 11.4%, and its total capital to risk-weighted assets ratio was 12.6%.

Total revenue

Total revenue was $5.0 million for the first quarter of 2015, compared to $4.4 million for the same period in 2014, representing an increase of $566 thousand, or 13%. Total revenue is defined as net interest income plus noninterest income, and the results for the first quarter of 2015 reflect improved income in both categories.

Net interest income

Net interest income was $4.2 million for the quarter ended March 31, 2015, an increase of $496 thousand, or 14%, from the comparable period in 2014. The net interest margin (the "NIM," defined as interest income minus interest expense, divided by average earning assets) improved from 4.03% in the first quarter of 2014 to 4.14% in the first quarter of 2015.

Noninterest income

Noninterest income increased by $70 thousand, or 9.0%, from $780 thousand in the first quarter last year, to $850 thousand in the first quarter this year. The increase in noninterest income was primarily related to higher gains from sales of residential mortgage loans, which increased by $85 thousand, or 53%. Net gains on sales of investment securities were $0 and $21 thousand for the quarters ended March 31, 2015 and 2014, respectively.

Noninterest expense

Noninterest expense for the first quarter increased by $497 thousand, or 14.7%, from $3.4 million last year to $3.9 million this year. The primary contributors to the rise in noninterest expenses were higher employee-related costs, higher auditing costs and higher deposit account product-related costs.

Key ratios

Return on average assets ("ROA") for the quarter was 0.65%, compared to 0.60% for the first quarter of 2014. Return on average equity ("ROE") was 7.12%, compared to 6.65%, for the same quarter last year. Yield on earning assets was 4.66% for the quarter, compared to 4.62% for the same period last year, and the cost of funds was 0.71% this year versus 0.82% last year.

Summary

Fewel summarized the quarterly results by saying, "We continue to build on the successes we have achieved the last two years. We have worked hard to build a strong infrastructure at INB, with the best bankers in the market, and a winning business strategy. It is exciting to see that effort begin to generate the kind of results we knew we were capable of."

About Northwest Bancorporation, Inc.

Northwest Bancorporation, Inc. is the parent company of Inland Northwest Bank, a state-chartered community bank which operates seven branches in Spokane County, Washington, and four branches in Kootenai County, Idaho. INB specializes in meeting the financial needs of individuals and small to medium-sized businesses, including professional corporations, by providing a full line of commercial, retail, mortgage and private banking products and services. More information about INB can be found on its website at www.inb.com. The Company's stock is quoted on the OTC Market's OTCQB Marketplace, www.otcmarkets.com, under the symbol NBCT.

Forward-Looking Statements

This release contains forward-looking statements that are not historical facts and that are intended to be "forward-looking statements" as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, but are not limited to, statements about the Company's plans, objectives, expectations and intentions and other statements contained in this release that are not historical facts and pertain to the Company's future operating results. When used in this release, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward-looking statements. Actual results may differ materially from the results discussed in these forward-looking statements, because such statements are inherently subject to significant assumptions, risks and uncertainties, many of which are difficult to predict and are generally beyond the Company's control. These include but are not limited to: the possibility of adverse economic developments that may, among other things, increase default and delinquency risks in the Company's loan portfolios; shifts in interest rates; shifts in the rate of inflation; shifts in the demand for the Company's loan and other products; unforeseen increases in costs and expenses; changes in accounting policies; changes in the monetary and fiscal policies of the federal government; and changes in laws, regulations and the competitive environment. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Northwest Bancorporation, Inc.
Consolidated Statements of Financial Condition
(Unaudited)
Mar. 31 Dec. 31 Mar. 31
(dollars in thousands) 2015 2014 2014
Assets:
Cash and due from banks $ 13,428 $ 14,398 $ 13,486
Interest bearing deposits 17,044 3,384 1,240
Time deposits held for investment 2,185 1,935 2,655
Securities available for sale 38,131 40,287 49,975
Federal Home Loan Bank stock, at cost 1,135 1,148 1,183
Loans receivable, net 350,222 336,421 305,550
Loans held for sale 2,277 740 288
Premises and equipment, net 14,775 14,888 15,376
Accrued interest receivable 1,363 1,322 1,371
Foreclosed real estate 1,050 1,050 1,315
Bank-owned life insurance 4,228 4,201 4,190
Other assets 1,649 2,033 1,906
Total assets $ 447,487 $ 421,807 $ 398,535
Liabilities:
Deposits:
Noninterest bearing deposits $ 94,058 $ 96,386 $ 85,679
Interest bearing transaction and savings deposits 194,883 179,016 173,043
Time deposits 94,530 83,278 77,801
383,471 358,680 336,523
Accrued interest payable 121 124 127
Borrowed funds 20,982 21,327 22,362
Other liabilities 3,360 2,963 3,766
Total liabilities 407,934 383,094 362,778
Shareholders' equity:
Common stock 33,019 32,960 32,718
Retained earnings (accumulated deficit) 5,644 4,947 2,277
Accumulated other comprehensive income 890 806 762
Total shareholders' equity 39,553 38,713 35,757
Total liabilities and shareholders' equity $ 447,487 $ 421,807 $ 398,535
Northwest Bancorporation, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
Mar. 31 Dec. 31 Mar. 31
(dollars in thousands, except per share data) 2015 2014 2014
Interest and dividend income:
Loans receivable $ 4,363 $ 4,274 $ 3,792
Investment securities 297 321 393
Other 12 16 10
Total interest and dividend income 4,672 4,611 4,195
Interest expense:
Deposits 339 340 343
Borrowed funds 184 189 198
Total interest expense 523 529 541
Net interest income 4,149 4,082 3,654
Provision for loan losses 60 (200) 250
Noninterest income:
Service charges on deposits 217 235 226
Gains from sale of loans, net 244 255 159
Gain on investment securities, net -- -- 21
Other noninterest income 389 463 374
Total noninterest income 850 953 780
Noninterest expense:
Salaries and employee benefits 2,086 1,874 1,782
Occupancy and equipment 316 333 341
Depreciation and amortization 277 277 293
Advertising and promotion 116 131 102
FDIC assessments 61 64 66
Loss (gain) on foreclosed real estate, net -- 200 (63)
Other noninterest expense 1,027 1,008 864
Total noninterest expense 3,883 3,887 3,385
Income before income taxes 1,056 1,348 799
Income tax expense 361 410 211
NET INCOME $ 695 $ 938 $ 588
Earnings per common share - basic $ 0.17 $ 0.23 $ 0.14
Earnings per common share - diluted $ 0.16 $ 0.22 $ 0.14
Weighted average common shares outstanding - basic 4,157,632 4,134,865 4,117,673
Weighted average common shares outstanding - diluted 4,250,854 4,224,144 4,189,288
Northwest Bancorporation, Inc.
Key Financial Ratios and Data
(Unaudited)
Three Months Ended
Mar. 31 Dec. 31 Mar. 31
(dollars in thousands, except per share data) 2015 2014 2014
PERFORMANCE RATIOS (annualized)
Return on average assets 0.65% 0.88% 0.60%
Return on average equity 7.35% 9.92% 6.65%
Yield on earning assets -8.38% 4.67% 4.62%
Cost of funds -1.51% 0.74% 0.82%
Net interest margin -7.27% 4.14% 4.03%
Noninterest income to average assets 0.79% 0.89% 0.79%
Noninterest expense to average assets 3.61% 3.64% 3.44%
Provision expense to average assets 0.06% -0.19% 0.25%
Efficiency ratio(1) 77.7% 77.2% 76.3%
Mar. 31 Dec. 31, Mar. 31
2015 2014 2014
ASSET QUALITY RATIOS AND DATA
Nonaccrual loans $476 $354 $3,446
Foreclosed real estate $1,050 $1,050 $1,315
Nonperforming assets $1,526 $1,404 $4,761
Loans 30-89 days past due and on accrual $4,343 $3,421 $3,719
Restructured loans $5,820 $5,023 $8,392
Allowance for loan losses $5,794 $5,728 $5,904
Nonperforming assets to total assets 0.34% 0.33% 1.19%
Allowance for loan losses to total loans 1.65% 1.67% 1.93%
Allowance for loan losses to nonaccrual loans 1217.23% 1618.08% 171.33%
Net charge-offs ($6)(2) $149(2)
Net charge-offs to average loans (annualized) -0.01%(2) 0.19%(2)
CAPITAL RATIOS AND DATA
Common shares outstanding at period end 4,157,632 4,157,632 4,117,673
Book value per common share $9.51 $9.31 $8.68
Tangible common equity $39,553 $38,713 $35,757
Shareholders' equity to total assets 8.8% 9.2% 9.0%
Total capital to risk-weighted assets (3) 12.6% 13.4% 13.6%
Tier 1 capital to risk-weighted assets (3) 11.4% 12.2% 12.4%
Tier 1 leverage capital ratio (3) 11.2% 11.1% 11.2%
Tier 1 common equity ratio (3) 11.4%
DEPOSIT RATIOS AND DATA
Core deposits (4) $288,941 $275,402 $258,722
Core deposits to total deposits 75.3% 76.8% 76.9%
Noninterest bearing deposits to total deposits 24.5% 26.9% 25.5%
Net loan to deposit ratio 91.3% 93.8% 90.8%
Notes:
(1) Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
(2) Net charge-offs for the three-month period.
(3) Regulatory capital ratios are reported for Inland Northwest Bank.
(4) Core deposits include all deposits except time deposits.

CONTACT: Randall L. Fewel, President and CEO Holly Poquette, Chief Financial Officer 509.456.8888 nbct@inb.comSource:Northwest Bancorporation, Inc.