NORTH CONWAY, NH--(Marketwired - July 29, 2016) - Northway Financial, Inc. (the "Company") (
President and Chief Executive Officer, William J. Woodward, stated, "We are pleased to report that our level of nonperforming loans continues to decline, a reflection of our efforts to resolve our problem loans. The market for loans, both commercial and consumer, continues to be extremely competitive. Our continued focus on increasing our loan portfolio has resulted in a modest increase in loan balances in the second quarter. The protracted period of low interest rates negatively impacts our depositors while providing our loan customers an unprecedented opportunity to borrow money at very favorable rates. The consequence to community banks is that these times result in a decrease in our margin.
"I am happy to welcome Peter Clarke to the Board of Directors. Peter is the Chief Operating Officer of The Baldwin & Clarke Companies and has served as a financial consultant to the Bank for many years. I am excited about the addition of Peter to the Board."
Financial Highlights
- Noninterest expense decreased $245 thousand or 1.9% for the quarter ended June 30, 2016 compared to the same period in 2015.
- Nonperforming loans as a percentage of total loans stood at 0.74% at June 30, 2016 compared to 1.18% at December 31, 2015 and 1.16% at June 30, 2015.
- Total Assets were $925MM, total loans were $554MM, and total deposits were $746MM at June 30, 2016.
- Regulatory capital ratios at June 30, 2016 were 9.95% Tier 1 Leverage, 16.19% Total Risk Based Capital, and 11.57% Common Equity Tier 1 Ratio.
Earnings Summary
As noted above, the Company recorded net income of $3.1MM or $1.12 per common share for the six months ended June 30, 2016 compared to $3.5MM or $1.22 per common share for the same period in 2015.
Net interest and dividend income for the six months ended June 30, 2016 decreased $500 thousand to $13.1MM compared to $13.6MM for the same period last year. Interest income decreased $800 thousand to $15.7MM at June 30, 2016 compared to $16.5MM at June 30, 2015 due primarily to a decrease in the yield on earning assets of 21 basis points as well as a shift in average earning asset balances from higher yielding loans to cash and investments. Interest expense decreased $300 thousand due primarily to a decrease in the rate paid on balances of 7 basis points as well as a decrease in the average FHLB advances of $8.0MM partially offset by an increase in average deposit balances of $8.3MM and average securities sold under agreements to repurchase with the Company's customers, also known as customer sweep accounts, of $9.8MM.
Consistent with prior periods there was no provision for loan losses for the six months ended June 30, 2016 and 2015. The allowance for loan losses as a percentage of nonperforming loans increased to 204% at June 30, 2016 compared to 129% at December 30, 2015 and 126% at June 30, 2015.
Noninterest income, excluding net gain on sales of loans and net securities gains, decreased $71 thousand compared to the same period in 2015 as fees from checking accounts continue to be negatively impact by regulatory changes. Net gains on sales of securities were $1.2MM compared to $1.3MM in 2015. Noninterest expense decreased $245 thousand in 2016 due primarily to decreases in pension 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.
Balance Sheet Summary
At June 30, 2016, the Company had total assets of $925MM compared to $934MM at December 31, 2015 and $938MM at June 30, 2015. Since year end, deposits and securities sold under agreements to repurchase have decreased $13MM due primarily to management's decision to not renew maturing higher rate customer and institutional certificates of deposits. This has resulted in a decrease in the interest-bearing deposits of the Bank. The decrease in deposits has resulted in a decrease in cash and due from banks. In addition, cash and due from banks was further reduced as funds were invested in securities available-for-sale, which increased $5.1MM, and loans, which increased $7.0MM. Equity has increased $6.1MM since year end due to net income year to date and an improvement in the market value of securities held for sale, which increased other comprehensive income.
Compared to June 30, 2015, total assets have decreased $13.2MM. Equity decreased $14.5MM, which was due to the redemption, in December 2015, of $24MM of outstanding preferred stock issued to the US Department of Treasury under its Small Business Lending Fund. Notwithstanding this transaction, equity has increased $9.1MM due to net income of $6.1MM over the last twelve months and an increase in comprehensive income of $4.9MM partially offset by dividends of $1.9MM for the last twelve months. In addition to the decrease in Equity there was a decrease in long-term borrowings of $4.9MM. These decreases were partially offset by an increase in securities sold under agreements to repurchase with the Company's customers, also known as customer sweep accounts, of $7.6MM.
Compared to June 30, 2015, the Company continued to see a shift in total assets as net loans decreased $22.1MM and securities available-for-sale decreased $5.7MM partially offset by an increase in cash and due from banks and interest-bearing deposits of $20.1MM.
Stockholders' equity available to common stockholders totaled $76.4MM at June 30, 2016 resulting in a book value per common share of $27.78, based on 2,751,650 shares of common stock outstanding; an increase of $2.23 and $3.30 compared to December 31, 2015 and June 30, 2015, respectively. Tangible book value per common share increased $2.24 and $3.32 to $24.13 at June 30, 2016, compared to $21.89 and $20.81 at December 31, 2015 and June 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 | |||||||||||||
| (Unaudited) | |||||||||||||
| (Dollars in thousands, except per share data) | Three Months Ended | Six Months Ended | |||||||||||
| 6/30/2016 | 6/30/2015 | 6/30/2016 | 6/30/2015 | ||||||||||
| Interest and Dividend Income | $ | 8,069 | $ | 8,188 | $ | 15,735 | $ | 16,514 | |||||
| Interest Expense | 1,299 | 1,470 | 2,652 | 2,921 | |||||||||
| Net Interest and Dividend Income | 6,770 | 6,718 | 13,083 | 13,593 | |||||||||
| Provision for Loan Losses | - | - | - | - | |||||||||
| All Other Noninterest Income | 1,314 | 1,278 | 2,553 | 2,633 | |||||||||
| Noninterest Expense | 6,283 | 6,377 | 12,507 | 12,752 | |||||||||
| Net Income Before Securities Gains | 1,801 | 1,619 | 3,129 | 3,474 | |||||||||
| Securities Gains, Net | 343 | 558 | 1,195 | 1,332 | |||||||||
| Net Income Before Taxes | 2,144 | 2,177 | 4,324 | 4,806 | |||||||||
| Provision for Income Tax | 607 | 577 | 1,237 | 1,313 | |||||||||
| Net Income | $ | 1,537 | $ | 1,600 | $ | 3,087 | $ | 3,493 | |||||
| Net Income Available to Common Stockholders | $ | 1,537 | $ | 1,533 | $ | 3,087 | $ | 3,359 | |||||
| Earnings per Common Share, Basic | $ | 0.56 | $ | 0.56 | $ | 1.12 | $ | 1.22 | |||||
| 6/30/2016 | 12/31/2015 | 6/30/2015 | ||||||||||
| Balance Sheet | ||||||||||||
| Total Assets | $ | 925,065 | $ | 933,605 | $ | 938,268 | ||||||
| Cash and Due from Banks and Interest-Bearing Deposits | 72,572 | 91,727 | 52,482 | |||||||||
| Securities Available-for-Sale, at Fair Value | 259,526 | 254,476 | 265,248 | |||||||||
| Loans, Net | 554,385 | 547,300 | 576,447 | |||||||||
| Total Deposits | 746,182 | 757,922 | 745,828 | |||||||||
| Federal Home Loan Bank Advances | 32,930 | 34,907 | 37,870 | |||||||||
| Securities Sold Under Agreements to Repurchase | 42,487 | 44,042 | 34,886 | |||||||||
| Junior Subordinated Debentures | 20,620 | 20,620 | 20,620 | |||||||||
| Stockholders' Equity | 76,435 | 70,307 | 90,934 | |||||||||
| Profitability and Efficiency | ||||||||||||
| Net Interest Margin | 3.18 | % | 3.23 | % | 3.33 | % | ||||||
| Yield on Earning Assets | 3.79 | 3.88 | 4.00 | |||||||||
| Cost of Interest Bearing Liabilities | 0.74 | 0.79 | 0.81 | |||||||||
| Book Value Per Share of Common Shares Outstanding | $ | 27.78 | $ | 25.55 | $ | 24.48 | ||||||
| Tangible Book Value Per Share of Common Shares Outstanding | 24.13 | 21.89 | 20.81 | |||||||||
| Capital and Credit | ||||||||||||
| Tier 1 Core Capital to Average Assets | 9.95 | % | 9.08 | % | 11.82 | % | ||||||
| Common Equity Risk-Based Capital | 11.57 | 11.63 | 10.63 | |||||||||
| Tier 1 Risk-Based Capital | 14.93 | 15.14 | 17.82 | |||||||||
| Total Risk-Based Capital | 16.19 | 16.39 | 19.07 | |||||||||
| 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 | 0.68 | % | 0.69 | % | 0.76 | % | ||||||
| Return on Average Equity | 8.44 | 7.01 | 7.63 | |||||||||
| Nonperforming Loans as a% of Total Loans | 0.74 | 1.18 | 1.16 | |||||||||
| Allowance for Loan Losses as a% of Nonperforming Loans | 204.49 | 128.83 | 126.45 | |||||||||
Contact: Gary Laurash Chief Financial Officer 603-326-7377
