Northway Financial, Inc. Announces First Quarter Earnings

NORTH CONWAY, N.H., April 28, 2017 (GLOBE NEWSWIRE) -- Northway Financial, Inc. (the “Company”) (OTCQB:NWYF), the parent company of Northway Bank (the “Bank”), today reported net income for the quarter ended March 31, 2017 of $1.7MM, or $0.61 per basic common share.

President and Chief Executive Officer, William J. Woodward, stated, “Our net interest margin has improved 38 basis points as a result of both an increase in the yield on earning assets and a decrease in our cost of interest-bearing liabilities. Our efforts over the past year to reduce our higher costing liabilities and reduce excess liquidity are starting to pay off as our cost of funds decreased 28 basis points from a year ago and the yield on our total earning assets increased 16 basis points. We continue to see strong growth in our core customer deposits, which have increased 11% since March 2016.

I am pleased to announce that during the first quarter, G. Frank Teas joined the Northway Bank Commercial Lending Department as SVP/Chief Commercial Banking Officer. Frank brings over 25 years of extensive banking experience in the New England area, most with a focus in commercial lending. Frank has held many commercial assignments in his career from Analyst to Senior Commercial Lender. Most recently Frank was the SVP/Director of Banking Services for Lake Sunapee Bank. We are happy to have Frank join our team.”

Financial Highlights

  • The market price of our common stock increased to $27.50 as of April 26, 2017, a 2.6% improvement from the end of 2016.
  • Total assets were $878MM, total loans were $546MM, and total deposits were $727MM at March 31, 2017.
  • Net interest margin improved to 3.43% compared to 3.17% at December 31, 2016 and 3.03% at March 31, 2016. The yield on earning assets improved 10 basis points and 16 basis points to 3.80% compared to December 31, 2016 and March 31, 2016, respectively. The cost of interest-bearing liabilities has been reduced to 0.46% compared to 0.65% and 0.74% at December 31, 2016 and March 31, 2016, respectively.
  • Regulatory capital ratios at March 31, 2017 were 10.13% Tier 1 Leverage, 16.26% Total Risk Based Capital, and 11.60% Common Equity Tier 1.
  • Nonperforming loans as a percentage of total loans stood at 0.57% at March 31, 2017 compared to 0.60% at December 31, 2016 and 1.05% at March 31, 2016.

Earnings Summary

As noted above, the Company recorded net income of $1.7MM or $0.61 per common share for the quarter ended March 31, 2017 compared to $1.6MM or $0.56 per common share for the same period in 2016.

Net interest and dividend income for the quarter ended March 31, 2017 increased $448 thousand to $6.8MM compared to $6.3MM for the same period last year. Interest income decreased $139 thousand to $7.5MM at March 31, 2017 compared to $7.7MM at March 31, 2016 due to lower average loan balances of $14MM and a lower average loan yield of seven basis points. The yield on total earning assets increased 16 basis points as the mix of earning assets shifted from cash to higher yielding investments. Interest expense decreased $587 thousand due primarily to a decrease in the rate paid on balances of 28 basis points and a decrease in the average balance of $56MM.

Based on the continued improvement of the credit quality of our loan portfolio and other factors relevant to the adequacy of our allowance for loan losses, there was no provision for loan losses for the quarters ended March 31, 2017 and 2016. The allowance for loan losses as a percentage of nonperforming loans increased to 244% at March 31, 2017 compared to 236% at December 31, 2016 and 147% at March 31, 2016.

Noninterest income, excluding net gain on sales of loans and net securities gains, increased $337 thousand compared to the same period in 2016 primarily from a gain of $316 thousand related to the sale of a parcel of land adjacent to our Campton branch. Net gains on sales of securities decreased $370 thousand to $482 thousand compared to $852 thousand in 2016. Noninterest expense increased $306 thousand in 2017 due primarily to a $299 thousand payment the Bank made to the employee 401(k) Plan as part of the enhancements made to the 401(k) Plan in conjunction with the termination and subsequent liquidation of the Defined Benefit Plan.

Balance Sheet Summary

At March 31, 2017, the Company had total assets of $878MM compared to $890MM at December 31, 2016 and $901MM at March 31, 2016. Since year end, the decrease in total assets was the result of a reduction in cash and investments of $11MM while total gross loans were unchanged. Total deposits and securities sold under agreements to repurchase decreased $21MM due to the normal seasonal fluctuations in municipal deposits and management’s decision to not renew maturing higher rate customer and institutional certificates of deposit. This has resulted in a decrease in interest-bearing time deposits of $22MM since December 31, 2016, while non-maturity deposits were relatively unchanged. Stockholders’ equity has increased $1.4MM as a result of first quarter income of $1.7MM and a decrease in other comprehensive loss of $600 thousand partially offset by the declaration and payment of a common stock dividend of $900 thousand.

Compared to March 31, 2016, total assets decreased $23MM, led primarily by a reduction in cash and investments of $20MM. Gross loans excluding municipal loans increased $15MM since March 31, 2016 while municipal loans were lower by $18MM due to the maturity of a $20MM short-term note. Since March 31, 2016, liabilities decreased $25MM as $90MM of time deposits and wholesale borrowings were reduced while the Bank’s non-maturity deposits increased $63MM. The average rate paid on the maturing customers’ certificate of deposits that were not renewed was 1.76%, while the average rate on the wholesale borrowings that were paid off was 4.14%.

Stockholders’ equity available to common stockholders totaled $75.8MM at March 31, 2017 resulting in a book value per common share of $27.54, based on 2,751,650 shares of common stock outstanding; an increase of $0.50 compared to December 31, 2016 and $0.83 compared to March 31, 2016. Tangible book value per common share increased $0.51 and $0.86 to $23.91 at March 31, 2017, compared to $23.40 and $23.05 at December 31, 2016 and March 31, 2016, 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
3/31/2017 3/31/2016
Interest and Dividend Income $7,527 $7,666
Interest Expense 766 1,353
Net Interest and Dividend Income 6,761 6,313
Provision for Loan Losses - -
All Other Noninterest Income 1,569 1,239
Noninterest Expense 6,530 6,224
Net Income Before Securities Gains 1,800 1,328
Securities Gains, Net 482 852
Net Income Before Taxes 2,282 2,180
Provision for Income Tax 604 630
Net Income $1,678 $1,550
Net Income Available to Common Stockholders $1,678 $1,550
Earnings per Common Share, Basic $0.61 $0.56

3/31/2017 12/31/2016 3/31/2016
Balance Sheet
Total Assets $878,113 $889,598 $900,817
Cash and Due from Banks and Interest-Bearing Deposits 26,457 44,854 56,831
Securities Available-for-Sale, at Fair Value 268,378 261,008 257,133
Loans, Net 546,438 545,594 548,746
Total Deposits 727,257 737,732 736,124
Federal Home Loan Bank Advances 8,000 - 33,152
Securities Sold Under Agreements to Repurchase 39,754 50,528 31,302
Junior Subordinated Debentures 20,620 20,620 20,620
Stockholders' Equity 75,786 74,403 73,487
Profitability and Efficiency
Net Interest Margin 3.43% 3.17% 3.03%
Yield on Earning Assets 3.80 3.70 3.64
Cost of Interest Bearing Liabilities 0.46 0.65 0.74
Book Value Per Share of Common Shares Outstanding $27.54 $27.04 $26.71
Tangible Book Value Per Share of Common Shares Outstanding 23.91 23.40 23.05
Capital and Credit
Tier 1 Core Capital to Average Assets 10.13% 9.83% 9.49%
Common Equity Risk-Based Capital 11.60 11.61 11.75
Tier 1 Risk-Based Capital 14.93 14.93 15.25
Total Risk-Based Capital 16.26 16.23 16.50
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 0.77% 0.44% 0.67%
Return on Average Equity 9.09 5.38 8.60
Nonperforming Loans as a % of Total Loans 0.57 0.60 1.05
Allowance for Loan Losses as a % of Nonperforming Loans 244.24 236.02 147.32

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

Source:Northway Financial Inc.