Northway Financial, Inc. Announces Third Quarter Earnings

Northway Financial, Inc. Announces Third Quarter Earnings 
NORTH CONWAY, NH -- (Marketwired) -- 11/01/13 --  Northway Financial,
Inc. (the "Company") (OTCBB: NWYF) reported net income for the
quarter ended September 30, 2013 of $1,600,000 compared to net income
of $2,229,000 for the quarter ended September 30, 2012, a decrease of
$629,000, or 28%. For the nine months ended September 30, 2013, the
Company reported net income of $5,295,000 compared to $4,635,000 for
the same period in 2012, an increase of $660,000, or 14%. 
CEO William J. Woodward said, "I am pleased to report that our
after-tax earnings from banking operations, through three quarters of
2013, are $826,000, or 35%, greater than for the same period of 2012.
Contributing significantly to this improvement was our strategic
decision to strengthen our Commercial Banking division, which
resulted in a 17.5% growth in our total loan portfolio. Also
contributing to our improvement in earnings was our ability to
significantly reduce our cost of funds.  
"As we continue to expand our presence into southern New Hampshire, I
am pleased to announce the opening of our newest branch located at
750 Lafayette Rd, Suite 1, Portsmouth, New Hampshire. This branch was
opened on September 30th." 
Financial Highlights 


 
--  Net loans increased $96,360,000, or 17.5%, to $648,335,000 at
    September 30, 2013, compared to $551,975,000 at September 30, 2012.
    During this period, commercial and industrial loans increased
    $92,629,000 and now comprise 63% of gross loans. This growth is
    reflective of our efforts to increase small business lending
    throughout the state.
    
    
--  Total deposits increased $21,440,000, or 3.2%, to $684,462,000 at
    September 30, 2013, compared to $663,022,000 at September 30, 2012.
    For the quarter ended September 30, 2013, total deposits increased
    $18,338,000, which is an annualized growth rate of 11.01%.
    
    
--  The Company's returns on average assets and average equity for the
    nine months ended September 30, 2013 were 0.81% and 8.74%,
    respectively, compared to 0.74% and 7.96% for the same period last
    year.
    
    
--  The efficiency ratio for the nine months ended September 30, 2013, was
    71.50% compared to 74.90% for the same period last year. This
    improvement was driven by an increase in both net interest and
    dividend income and gains on sales of loans partially offset by an
    increase in noninterest expense.
    
    
--  Regulatory capital ratios at September 30, 2013, exceeded minimum
    requirements. The Company's total risk-based capital ratio was 15.14%
    compared to a regulatory requirement of 10.0%; Tier 1 risk-based
    capital was 16.46% compared to a regulatory requirement of 6.0% and
    Tier 1 capital to average assets is 10.70% compared to a regulatory
    requirement of 5.0%.

  
Earnings Summary 
As noted above, the Company recorded net income of $5,295,000 for the
nine months ended September 30, 2013 compared to $4,635,000 for the
same period in 2012. For the nine months ended September 30, 2013,
$5,081,000, or $1.90 per common share, was available to common
stockholders compared to $4,136,000, or $1.58 per common share, for
the same period last year.  
Net interest and dividend income for the nine months ended September
30, 2013, increased $1,612,000 to $20,703,000 compared to $19,091,000
for the same period last year. The provision for loan losses for the
nine months ended September 30, 2013 increased $535,000 to $2,329,000
compared to $1,794,000 for the same period in 2012. This increase is
due to both an increase in net loans and a target reserve on
significant commercial credits. Net gains on sales of securities were
$2,997,000 compared to $2,536,000 for the nine months ended September
30, 2012, an increase of $461,000. Gains on sales of loans increased
$221,000 to $1,723,000 for the nine months ended September 30, 2013
compared to $1,502,000 for the same period last year. All other
noninterest income increased $232,000 to $4,211,000 compared to
$3,979,000 for the same period last year due primarily to increases
in NSF overdraft fees, alternative investment income, debit card
fees, and income on serviced loans. Total noninterest expense
increased $624,000 to $20,161,000 for the nine months ended September
30, 2013, compared to $19,537,000 for the same period last year. This
increase resulted primarily from an increase in salaries and employee
benefits relating to normal salary increases and an increase in
pension expense, as well as increases in legal expenses and loan
workout expenses. Income tax expense for the nine months ended
September 30, 2013, increased $707,000 to $1,849,000 for the nine
months ended September 30, 2013, compared to $1,142,000 for the same
period last year. 
For the quarter ended September 30, 2013, the Company recorded net
income of $1,600,000 compared to $2,229,000 for the same period in
2012. For the quarter ended September 30, 2013, $1,553,000, or $0.56
per common share, was available to common stockholders compared to
$2,033,000, or $0.78 per common share, for the same period last year. 
Net interest and dividend income for the quarter ended September 30,
2013, increased $918,000 to $7,375,000 compared to $6,457,000 for the
same period last year. The provision for loan losses for the quarter
ended September 30, 2013 increased $411,000 to $729,000 compared to
$318,000 for the same period in 2012. Net gains on sales of
securities were $356,000 compared to $1,141,000 for the quarter ended
September 30, 2012, a decrease of $785,000. Gains on sales of loans
decreased $507,000 to $410,000 for the quarter ended September 30,
2013 compared to $917,000 for the same period last year. All other
noninterest income increased $9,000 to $1,513,000 compared to
$1,504,000 for the same period last year. Total noninterest expense
increased $194,000 to $6,833,000 for the quarter ended September 30,
2013, compared to $6,639,000 for the same period last year. Income
tax expense decreased $341,000 to $492,000 for the quarter ended
September 30, 2013, compared to $833,000 for the same period last
year. 
Balance Sheet Summary 
At September 30, 2013, the Company had total assets of $902,296,000
compared to $863,064,000 at September 30, 2012, an increase of
$39,232,000, or 4.5%. Net loans at September 30, 2013, increased
$96,360,000, or 17.5%, to $648,335,000 compared to $551,975,000 at
September 30, 2012. Securities available-for-sale decreased
$39,896,000 to $185,472,000 at September 30, 2013, compared to
$225,368,000 at September 30, 2012. Cash and due from banks and
interest-bearing deposits decreased $ 21,054,000 to $17,550,000 at
September 30, 2013, compared to $38,604,000 at September 30, 2012.
These decreases were used to fund the loan growth.  
Total deposits were $684,462,000 at September 30, 2013, compared to
$663,022,000 at September 30, 2012, an increase of $21,440,000, or
3.20%. Securities sold under agreements to repurchase decreased
$1,451,000 to $21,164,000 at September 30, 2013 compared to
$22,615,000 at September 30, 2012. Other borrowings increased
$18,918,000 to $109,536,000 at September 30, 2013, compared to
$90,618,000 at September 30, 2012. 
Total stockholders' equity decreased $545,000 to $79,807,000 at
September 30, 2013 compared to $80,352,000 at September 30, 2012.
Stockholders' equity available to common stockholders totaled
$56,292,000, resulting in a book value per common share of $20.46 per
share at September 30, 2013,
 based on 2,751,650 shares of common
stock outstanding, a decrease of $1.24, or 5.7% per share, from
September 30, 2012. Tangible book value per common share decreased
$1.19, or 6.8%, to $16.21 at September 30, 2013 compared to $17.40 at
September 30, 2012. The decrease in book value per common share and
tangible book value per common share was partially attributable to
the payment of a 5% stock dividend resulting in a decrease in book
value per share of $1.00 and tangible book value of $0.79 per share.
In addition, book value per common share and tangible book value per
common share were negatively impacted by the change in other
comprehensive loss. 
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 18 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    Nine Months Ended  
                                 --------------------- ---------------------
                                  9/30/2013  9/30/2012  9/30/2013  9/30/2012
                                 ---------- ---------- ---------- ----------
                                                                            
Interest and Dividend Income     $    8,577 $    8,052 $   24,388 $   24,352
Interest Expense                      1,202      1,595      3,685      5,261
Net Interest and Dividend Income      7,375      6,457     20,703     19,091
Provision for Loan Losses               729        318      2,329      1,794
Securities gains, net                   356      1,141      2,997      2,536
Gains on sales of loans, net            410        917      1,723      1,502
All Other Noninterest Income          1,513      1,504      4,211      3,979
Noninterest Expense                   6,833      6,639     20,161     19,537
Provision for Income Tax                492        833      1,849      1,142
Net Income                            1,600      2,229      5,295      4,635
Net Income Available to Common                                              
 Stockholders                         1,533      2,033      5,081      4,136
Earnings per Common Share, Basic       0.56       0.78       1.90       1.58
                                                                            
                                                                            
                                                    9/30/2013    9/30/2012  
                                                   -----------  ----------- 
                                                                            
Total Assets                                       $   902,296  $   863,064 
Cash and Due from Banks and Interest-Bearing                                
 Deposits                                               17,550       38,604 
Securities Available-for-Sale, at Fair Value           185,472      225,368 
Loans, Net                                             648,335      551,975 
Total Deposits                                         684,462      663,022 
Federal Home Loan Bank Advances                         88,916       69,998 
Securities Sold Under Agreements to Repurchase          21,164       22,615 
Junior Subordinated Debentures                          20,620       20,620 
Stockholders' Equity                                    79,807       80,352 
Net Interest Margin                                       3.53%        3.45%
Yield on Earning Assets                                   4.12         4.34 
Cost of Interest Bearing Liabilities                      0.70         1.03 
Efficiency Ratio                                         71.50        74.90 
Book Value Per Share of Common Shares Outstanding  $     20.46  $     21.70 
Tangible Book Value Per Share of Common Shares                              
 Outstanding                                             16.21        17.40 
Tier 1 Core Capital to Average Assets                    10.70%       10.25%
Tier 1 Risk-Based Capital                                15.14        16.76 
Total Risk-Based Capital                                 16.46        18.06 
Common Shares Outstanding                            2,751,650    2,620,755 
Weighted average number of common shares, basic      2,680,209    2,620,755 
Return on Average Assets                                  0.81%        0.74%
Return on Average Equity                                  8.74         7.96 
Nonperforming Loans as a % of Total Loans                 2.23         2.46 
Allowance for Loan Losses as a % of Nonperforming                           
 Loans                                                   73.71        75.07 

  
Contact: 
Russell A. Cronin, Jr.
Senior Vice President and Chief Financial Officer
603-326-7398 
 
 
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