Market Overview

Northway Financial, Inc. Announces Third Quarter Earnings


NORTH CONWAY, N.H., Oct. 27, 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 September 30, 2017 of $1.8MM, or $0.67 per basic common share.  Year-to-date, the Company reported net income of $5.6MM, or $2.02 per basic common share.

Financial Highlights

  • The market price of our common stock increased to $32.00 as of October 25, 2017, a 19.4% improvement from the end of 2016. Compared to September 30, 2016, the stock price has increased $9.85, or 44%.
  • For the 9 months ending September 30, 2017 Return on Average Assets was .84% and Return on Average Equity was 9.62%.
  • Total assets were $883MM, net loans were $569MM, and total deposits were $710MM at September 30, 2017.
  • Non Maturity Deposits including Customer Repo Accounts increased $34MM or 6% when compared to September 30, 2016.
  • Net interest margin improved to 3.47% compared to 3.17% at December 31, 2016 and 3.15% at September 30, 2016.  The yield on earning assets improved 13 basis points and 11 basis points to 3.83% compared to December 31, 2016 and September 30, 2016, respectively.  The cost of interest-bearing liabilities has been reduced to 0.46% compared to 0.65% and 0.70% at December 31, 2016 and September 30, 2016, respectively.
  • Regulatory capital ratios at September 30, 2017 were 10.41% Tier 1 Leverage, 16.36% Total Risk Based Capital, and 11.79% Common Equity Tier 1.
  • Nonperforming loans as a percentage of total loans stood at 0.54% at September 30, 2017 compared to 0.60% at December 31, 2016 and 0.63% at September 30, 2016.

Earnings Summary

As noted above, the Company recorded net income of $5.6MM or $2.02 per common share for the nine months ended September 30, 2017 compared to $4.4MM or $1.61 per common share for the same period in 2016.

Net interest and dividend income for the nine months ended September 30, 2017 increased $1.3MM to $20.7MM compared to $19.4MM for the same period last year.  Interest and dividend income decreased $82 thousand to $23.0MM for the nine months ended September 30, 2017 compared to $23.1MM for the same period in 2016 due primarily to a lower average loan yield of 19 basis points as well as a lower average cash balance of $46.1MM, partially offset by higher average investment balances and yields of $19.8MM and 22 basis points, respectively.  Interest expense decreased $1.4MM due primarily to a decrease in the rate paid on balances of 24 basis points and a decrease in the average balance of $39.5MM.

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 quarter ended September 30, 2017.  The allowance for loan losses as a percentage of nonperforming loans was 247% at September 30, 2017 compared to 236% at December 31, 2016 and 226% at September 30, 2016.

Noninterest income, excluding net gain on sales of loans and net securities gains, for the nine months ended September 30, 2017, increased $144 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 as well as a $127 thousand improvement in the cash surrender value of life insurance partially offset by a decrease in service charges and fees on deposit accounts of $62 thousand and a decrease in swap fee income of $242 thousand.  Net gains on sales of securities for the nine months ended September 30, 2017 were $1.6MM, $588 thousand lower than for the same period in 2016.  Noninterest expense decreased $592 thousand for the nine months ended September 30, 2017.  In September 2016, the Company recognized a prepayment fee on the prepayment of $33MM in FHLB long-term advances of $993 thousand.  In addition, salary and employee benefits expense for the nine months ended September 30, 2017 is $803 thousand higher compared to a year ago due to increases in salary expense and 401(k) expense primarily as a result of 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.  These increases were partially offset by lower expense related to health insurance and pension expense. In addition, expense reductions were recognized for audit fees, FDIC insurance, write down of OREO and telecommunication expense.

Balance Sheet Summary

At September 30, 2017, the Company had total assets of $883MM compared to $890MM at December 31, 2016 and $888MM at September 30, 2016.  Since year end, the decrease in total assets was the result of a reduction in cash and due from banks and interest-bearing deposits of $30.0MM while total gross loans increased $23.3MM.  Total deposits decreased $27.7MM and securities sold under agreements to repurchase ("Customer Repos") decreased $1.3MM from year-end 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 resulted in a decrease in interest-bearing time deposits of $43.0MM since December 31, 2016, while non-maturity deposits increased $15.3MM.  Overnight FHLBB advances increased $17.7MM since year-end.  Stockholders' equity increased $5.2MM as a result of year-to-date income of $5.6MM and a decrease in other comprehensive loss of $1.4MM partially offset by the declaration and payment of common stock dividends of $1.8MM.

Compared to September 30, 2016, total assets decreased $5.4MM.  Cash and due from banks and interest-bearing deposits decreased $51.6MM, partially offset by an increase in securities available-for-sale and loans, net of $29.9MM and $16.8MM, respectively.  Since September 30, 2016, liabilities decreased $9.0MM as $59.0MM of time deposits were reduced, partially offset by an increase in non-maturity deposits, Customer Repos and FHLBB overnight borrowings of $19.9MM, $14.0MM and $17.7MM, respectively.

Stockholders' equity available to common stockholders totaled $79.6MM at September 30, 2017 resulting in a book value per common share of $28.94, based on 2,751,650 shares of common stock outstanding, an increase of $1.90 compared to December 31, 2016 and $1.30 compared to September 30, 2016.  Tangible book value per common share increased $1.91 and $1.32 to $25.31 at September 30, 2017, compared to $23.40 and $23.99 at December 31, 2016 and September 30, 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   Nine Months Ended
  9/30/2017   9/30/2016   9/30/2017   9/30/2016
Interest and Dividend Income $ 7,790   $ 7,389   $ 23,042   $ 23,124
Interest Expense   727     1,060     2,294     3,712
Net Interest and Dividend Income   7,063     6,329     20,748     19,412
Provision for Loan Losses   -     -     -     -
All Other Noninterest Income   1,396     1,748     4,423     4,301
Noninterest Expense   6,429     7,343     19,258     19,850
Net Income Before Securities Gains   2,030     734     5,913     3,863
Securities Gains, Net   423     995     1,602     2,190
Net Income Before Taxes   2,453     1,729     7,515     6,053
Provision for Income Tax   607     397     1,956     1,634
Net Income $ 1,846   $ 1,332   $ 5,559   $ 4,419
Net Income Available to Common Stockholders $ 1,846   $ 1,332   $ 5,559   $ 4,419
Earnings per Common Share, Basic $ 0.67   $ 0.48   $ 2.02   $ 1.61

    9/30/2017   12/31/2016   9/30/2016  
Balance Sheet              
Total Assets   $ 882,955   $ 889,598   $ 888,402  
Cash and Due from Banks and Interest-Bearing Deposits     14,810     44,854     66,364  
Securities Available-for-Sale, at Fair Value     262,855     261,008     232,991  
Loans, Net     569,304     545,594     552,480  
Total Deposits     710,023     737,732     749,117  
Federal Home Loan Bank Advances     17,700     -     -  
Securities Sold Under Agreements to Repurchase     49,208     50,528     35,232  
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