×

Northwest Bancorporation, Inc. Reports First Quarter 2017 Financial Results

SPOKANE, Wash., April 20, 2017 (GLOBE NEWSWIRE) -- Northwest Bancorporation, Inc. (OTC Pink:NBCT) (the “Company”), the holding company of Inland Northwest Bank (the “Bank” or “INB”), today reported financial results for the quarter ended March 31, 2017.

Net income for the first quarter of 2017 was $970 thousand, compared to $839 thousand for the first quarter of 2016 and $1.41 million for the fourth quarter of 2016. Earnings per diluted share increased 15.4% year over year, from $0.13 in the first quarter of 2016 to $0.15 in the first quarter of 2017, but are down $0.06 from the previous quarter.

Company President and CEO, Russell Lee, commented, “We are pleased with our results to date in 2017. We have accomplished a considerable amount of infrastructure development in the past year and still achieved our targets for financial performance. This should place the Company in an excellent position to complete our recently announced acquisition of CenterPointe Community Bank and to begin to welcome its employees and customers to INB.”

Balance sheet

As of March 31, 2017, the Company had total assets of $641.7 million, compared to $636.5 million on December 31, 2016 and $604.3 million on March 31, 2016. This represents an increase of $5.1 million, or 0.8% over the previous quarter and $37.3 million, or 6.2%, year over year.

The investment portfolio was $27.4 million as of March 31, 2017, down $2.5 million, or 8.4%, from $30.0 million at December 31, 2016. The net unrealized gain in the portfolio was $339 thousand, 8.4% lower than the $370 thousand net unrealized gain at December 31, 2016.

The net loan portfolio was $494.2 million on March 31, 2017. This represents an increase of $3.4 million, or 0.7%, from last quarter. Year over year, the net loan portfolio was up $17.7 million, or 3.7%.

Deposits at March 31, 2017 were $552.1 million, an increase of $3.6 million, or 0.7%, compared to December 31, 2016 and an increase of $33.4 million, or 6.4%, compared to March 31, 2016. Noninterest bearing deposits were $162.3 million at quarter end, representing 29.4% of total deposits. This compares to noninterest bearing deposits of $164.0 million, or 29.9% of total deposits, at December 31, 2016, and to $143.3 million, or 27.6% of total deposits, at March 31, 2016.

Asset quality, provision and allowance for loan losses

The Bank’s nonperforming assets (“NPAs”) were $1.7 million at quarter end, representing 0.26% 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 last quarter were $1.5 million, representing 0.23% of total assets, and at March 31, 2016, NPAs were $2.2 million, representing 0.36% of total assets.

The Bank had net loan charge-offs of $95 thousand, representing 0.23% of average loans, for the three-month period ending on March 31, 2017, compared to net loan charge-offs of $41 thousand for the comparable period in 2016. The provision for loan losses was $203 thousand for the three-month period ending on March 31, 2017, compared to $182 thousand for the comparable period in 2016. As of March 31, 2017, the allowance for loan losses was $6.4 million, or 1.27% of gross loans; this was slightly higher than on December 31, 2016 when it was $6.3 million and represented 1.26% of the loan portfolio.

Capital

Shareholders’ equity increased $1.1 million, or 1.6%, during the first quarter of 2017, which was mostly related to earnings retention. Tangible book value of the Company’s common stock was $9.30 per share on March 31, 2017, up $0.17, or 1.9%, over the $9.13 per share on December 31, 2016; year over year, tangible book value is up $0.80 per share, or 9.4%.

The Bank continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” under regulatory standards. As of March 31, 2017, the Bank’s Tier 1 leverage capital to average assets ratio was 11.1%, its common equity Tier 1 (“CET1”) capital ratio was 11.8%, and its total capital to risk-weighted assets ratio was 13.0%. The regulatory requirements to be considered “well-capitalized” for these three ratios are 5.0%, 6.5%, and 10.0%, respectively.

Total revenue

Total revenue was $7.1 million for the first quarter of 2017, representing a decrease of $337 thousand, or 4.5%, from the previous quarter, and representing a decrease of $16 thousand, or 0.2%, over the comparable quarter in 2016. Total revenue is defined as net interest income plus noninterest income.

Net interest income

Net interest income was $6.0 million for the quarter ended March 31, 2017, a decrease of $158 thousand, or 2.6%, from the previous quarter and a decrease of $36 thousand, or 0.6%, from the first quarter of 2016. The decrease in net interest income is primarily due to declining levels of purchased loan discount accretion. The net interest margin (interest income minus interest expense, divided by average earning assets) decreased from 4.21% in the fourth quarter of 2016 to 4.13% in the first quarter of 2017; excluding net purchased loan discount accretion, the net interest margin was 4.01% and 4.00%, respectively.

Noninterest income

Noninterest income was $1.1 million for the first quarter of 2017, down $179 thousand, or 14.2%, compared to the previous quarter, but up $20 thousand, or 1.9%, compared to the first quarter of 2016. The decrease in noninterest income during the first quarter of 2017 was largely related to lower revenues from sales of residential mortgage loans which is normal for the first quarter of the year.

Noninterest expense

Noninterest expense totaled $5.5 million for the first quarter of 2017, up $80 thousand, or 1.5%, compared to the previous quarter, but down $284 thousand compared to the first quarter of 2016 which included $361 thousand of nonrecurring acquisition-related costs. Compared to the fourth quarter of 2016, salaries and employee benefits increased $106 thousand, or 3.5%, and other noninterest expenses decreased $189 thousand, or 12.8%.

Key ratios

Return on average assets (“ROA”) for first quarter 2017 was 0.61%, compared to 0.88% in the previous quarter and 0.55% in the first quarter last year. Return on average equity (“ROE”) was 5.83% for first quarter 2017, compared to 8.59% in the previous quarter and 5.47% for the first quarter last year. Excluding nonrecurring acquisition expenses, ROA would have been 0.71% and ROE would have been 7.02% for the first quarter of 2016.

About Northwest Bancorporation, Inc.

Northwest Bancorporation, Inc. is the parent company of Inland Northwest Bank, a state-chartered community bank which currently operates eleven branches in Eastern Washington, one branch in Central Washington and four branches in Northern Idaho. INB specializes in meeting the financial needs of individuals and small to medium-sized businesses, including professional corporations and agriculture-related operations, by providing a full line of commercial, retail, agricultural, and 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 Pink 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; lower-than-expected revenue or cost savings in connection with acquisitions; 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) 2017 2016 2016
Assets:
Cash and due from banks$ 21,715 $ 22,183 $ 19,717
Interest bearing deposits 61,160 53,259 33,885
Time deposits held for investment 4,640 4,640 4,797
Securities available for sale 22,796 25,328 32,337
Federal Home Loan Bank stock, at cost 1,050 1,033 1,075
Loans receivable, net 494,210 490,816 476,481
Loans held for sale 1,391 3,824 683
Premises and equipment, net 13,967 14,061 14,256
Bank-owned life insurance 7,084 7,054 6,971
Accrued interest receivable 2,366 2,642 2,517
Goodwill 6,206 6,206 6,290
Core deposit intangible 1,214 1,262 1,435
Foreclosed real estate 652 745 308
Other assets 3,204 3,475 3,567
Total assets$ 641,655 $ 636,528 $ 604,319
Liabilities:
Deposits:
Noninterest bearing deposits$ 162,251 $ 164,027 $ 143,312
Interest bearing transaction and savings deposits 275,953 261,432 258,207
Time deposits 113,860 122,962 117,162
552,064 548,421 518,681
Accrued interest payable 126 151 120
Borrowed funds 18,222 18,567 19,600
Other liabilities 4,123 3,334 4,049
Total liabilities 574,535 570,473 542,450
Shareholders' equity:
Common stock 52,849 52,733 52,391
Retained earnings 14,047 13,078 8,846
Accumulated other comprehensive income 224 244 632
Total shareholders' equity 67,120 66,055 61,869
Total liabilities and shareholders' equity$ 641,655 $ 636,528 $ 604,319

Northwest Bancorporation, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
Mar. 31, Dec. 31, Mar. 31,
(dollars in thousands, except per share data) 2017 2016 2016
Interest and dividend income:
Loans receivable$ 6,337 $ 6,477 $ 6,322
Investment securities 164 230 252
Other 125 104 62
Total interest and dividend income 6,626 6,811 6,636
Interest expense:
Deposits 401 419 373
Borrowed funds 181 190 183
Total interest expense 582 609 556
Net interest income 6,044 6,202 6,080
Provision for loan losses 203 - 182
Noninterest income:
Service charges on deposits 219 216 212
Gains from sale of loans, net 277 451 225
Other noninterest income 582 590 621
Total noninterest income 1,078 1,257 1,058
Noninterest expense:
Salaries and employee benefits 3,143 3,037 2,862
Occupancy and equipment 432 411 441
Depreciation and amortization 304 310 302
Advertising and promotion 272 216 237
FDIC assessments 45 9 103
Gain on foreclosed real estate, net (20) (53) -
Acquisition-related costs - (23) 361
Other noninterest expense 1,286 1,475 1,440
Total noninterest expense 5,462 5,382 5,746
Income before income taxes 1,457 2,077 1,210
Income tax expense 487 672 371
NET INCOME$ 970 $ 1,405 $ 839
Earnings per common share - basic$ 0.15 $ 0.22 $ 0.13
Earnings per common share - diluted$ 0.15 $ 0.21 $ 0.13
Weighted average common shares outstanding - basic 6,420,161 6,404,319 6,368,798
Weighted average common shares outstanding - diluted 6,594,681 6,544,481 6,432,280

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) 2017 2016 2016
PERFORMANCE RATIOS (annualized)
Return on average assets 0.61% 0.88% 0.55%
Return on average equity 5.83% 8.59% 5.47%
Yield on earning assets 4.53% 4.62% 4.76%
Cost of funds 0.58% 0.60% 0.57%
Net interest margin 4.13% 4.21% 4.36%
Noninterest income to average assets 0.68% 0.78% 0.70%
Noninterest expense to average assets 3.44% 3.35% 3.79%
Provision expense to average assets 0.13% 0.00% 0.12%
Efficiency ratio (1) 76.7% 72.2% 80.5%
Mar. 31, Dec. 31, Mar. 31,
2017 2016 2016
ASSET QUALITY RATIOS AND DATA
Nonaccrual loans$1,004 $740 $1,884
Foreclosed real estate$652 $745 $308
Nonperforming assets$1,656 $1,485 $2,192
Loans 30-89 days past due and on accrual$469 $1,598 $2,180
Restructured loans$3,203 $3,589 $5,453
Allowance for loan losses$6,372 $6,263 $6,165
Nonperforming assets to total assets 0.26% 0.23% 0.36%
Allowance for loan losses to total loans 1.27% 1.26% 1.27%
Allowance for loan losses to nonaccrual loans 634.7% 846.4% 327.2%
Net charge-offs$95 (2)$44 (2)$41 (2)
Net charge-offs to average loans (annualized) 0.23%(2) 0.11%(2) 0.10%(2)
CAPITAL RATIOS AND DATA
Common shares outstanding at period end 6,421,361 6,419,861 6,368,798
Tangible common equity$59,700 $58,587 $54,144
Tangible book value per common share$9.30 $9.13 $8.50
Shareholders' equity to total assets 10.5% 10.4% 10.2%
Total capital to risk-weighted assets (3) 13.0% 13.0% 12.5%
Tier 1 capital to risk-weighted assets (3) 11.8% 11.8% 11.3%
Tier 1 common equity ratio (3) 11.8% 11.8% 11.3%
Tier 1 leverage capital ratio (3) 11.1% 10.8% 10.7%
DEPOSIT RATIOS AND DATA
Core deposits (4)$438,204 $425,459 $401,519
Core deposits to total deposits 79.4% 77.6% 77.4%
Noninterest bearing deposits to total deposits 29.4% 29.9% 27.6%
Net loan to deposit ratio 89.5% 89.5% 91.9%
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.


For more information contact: Russell A. Lee, President and CEO Holly Poquette, Chief Financial Officer 509.456.8888 nbct@inb.com

Source:Northwest Bancorporation, Inc.