Northway Financial, Inc. Announces Fourth Quarter Earnings

Northway Financial, Inc. Announces Fourth Quarter Earnings 
NORTH CONWAY, NH -- (Marketwired) -- 02/07/14 --  Northway Financial,
Inc. (the "Company") (OTCQB: NWYF) reported net income for the
quarter ended December 31, 2013 of $1,911,000 compared to net income
of $1,859,000 for the quarter ended December 31, 2012, an increase of
$52,000, or 3%. For the year ended December 31, 2013, the Company
reported net income of $7,206,000 compared to $6,494,000 for the same
period in 2012, an increase of $712,000, or 11%. 
CEO William J. Woodward said, "2013 was the fourth consecutive year
of record earnings for the Company, as net income reached $7.2
million, an increase of 11% over last year. Loan growth of 12% this
year continued the strong growth of 15% recorded last year. Deposit
balances are higher than last year by 3.9%, and the cost of deposits
is lower -- both of these are positive measures. Total Assets at the
end of this year also reflect continued growth; we reached almost
$900 million, 2.8% greater than at the end of 2012.  
"During 2013, we restructured our branch network to improve
efficiency and further implement our growth strategy. To improve
efficiency, we consolidated two branches with other existing
facilities. To continue our growth strategy, and to more firmly
establish Northway Bank in the southern New Hampshire markets, we
opened new branches in Manchester and Portsmouth. Both are situated
in vibrant markets, and we look forward to them playing an important
role in Northway's continuing growth. 
"It is noteworthy that the market price of Northway's common stock
moved upward 42% during the year, from $12.30 per share at the
beginning of 2013, to $17.50 at the close of the year. 
"I am very pleased with the progress we made in 2013, and look
forward to continuing that progress in 2014." 
Financial Highlights 


 
--  Net loans increased $67,504,000, or 12%, to $631,069,000 at December
    31, 2013, compared to $563,565,000 at December 31, 2012. Commercial
    and industrial loans increased $64,030,000 and now comprise 64% of
    gross loans. This growth is reflective of our efforts to increase
    small business lending throughout the state.
    
    
--  Total deposits increased $25,895,000, or 3.9%, to $694,359,000 at
    December 31, 2013, compared to $668,464,000 at December 31, 2012. For
    the quarter ended December 31, 2013, total deposits increased
    $9,897,000, which is an annualized growth rate of 5.8%.
    
    
--  The Company's returns on average assets and average equity for the
    year ended December 31, 2013 were 0.82% and 8.89%, respectively,
    compared to 0.77% and 8.25% for the same period last year.
    
    
--  The efficiency ratio for the year ended December 31, 2013, was 71.87%
    compared to 75.81% 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 December 31, 2013, exceeded minimum
    requirements. The Company's total risk-based capital ratio was 17.20%
    compared to a regulatory requirement of 10.0%; Tier 1 risk-based
    capital was 15.85% compared to a regulatory requirement of 6.0% and
    Tier 1 capital to average assets is 10.73% compared to a regulatory
    requirement of 5.0%.

  
Earnings Summary 
As noted above, the Company recorded net income of $7,206,000 for the
year ended December 31, 2013 compared to $6,494,000 for the same
period in 2012. For the year ended December 31, 2013, $6,925,000, or
$2.57 per common share, was available to common stockholders compared
to $5,854,000, or $2.23 per common share, for the same period last
year.  
Net interest and dividend income for the year ended December 31,
2013, increased $2,270,000 to $28,049,000 compared to $25,779,000 for
the same period last year. The provision for loan losses for the year
ended December 31, 2013 increased $708,000 to $2,820,000 compared to
$2,112,000 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 $3,815,000
compared to $3,789,000 for the year ended December 31, 2012, an
increase of $26,000. Gains on sales of loans decreased $212,000 to
$2,038,000 for the year ended December 31, 2013 compared to
$2,250,000 for the same period last year. All other noninterest
income increased $585,000 to $6,009,000 compared to $5,424,000 for
the same period last year due primarily to increases in NSF overdraft
fees, debit card fees, and cash management fees. Total noninterest
expense increased $497,000 to $27,377,000 for the year ended December
31, 2013, compared to $26,891,000 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 other
real estate owned expenses. Income tax expense for the year ended
December 31, 2013, increased $763,000 to $2,508,000 for the year
ended December 31, 2013, compared to $1,745,000 for the same period
last year. 
For the quarter ended December 31, 2013, the Company recorded net
income of $1,911,000 compared to $1,859,000 for the same period in
2012. For the quarter ended December 31, 2013, $1,843,000, or $0.67
per common share, was available to common stockholders compared to
$1,718,000, or $0.65 per common share, for the same period last year. 
Net interest and dividend income for the quarter ended December 31,
2013, increased $658,000 to $7,346,000 compared to $6,688,000 for the
same period last year. The provision for loan losses for the quarter
ended December 31, 2013 increased $173,000 to $491,000 compared to
$318,000 for the same period in 2012. Net gains on sales of
securities were $818,000 compared to $1,253,000 for the quarter ended
December 31, 2012, a decrease of $435,000. Gains on sales of loans
decreased $433,000 to $315,000 for the quarter ended December 31,
2013 compared to $748,000 for the same period last year. All other
noninterest income increased $353,000 to $1,798,000 compared to
$1,445,000 for the same period last year. Total noninterest expense
decreased $138,000 to $7,216,000 for the quarter ended December 31,
2013, compared to $7,354,000 for the same period last year. Income
tax expense increased $56,000 to $659,000 for the quarter ended
December 31, 2013, compared to $603,000 for the same period last
year. 
Balance Sheet Summary 
At December 31, 2013, the Company had total assets of $898,329,000
compared to $873,629,000 at December 31, 2012, an increase of
$24,700,000, or 2.8%. Net loans at December 31, 2013, increased
$67,504,000, or 12.0%, to $631,069,000 compared to $563,565,000 at
December 31, 2012. Securities available-for-sale decreased
$22,176,000 to $184,527,000 at December 31, 2013, compared to
$206,703,000 at December 31, 2012. Cash and due from banks and
interest-bearing deposits decreased $20,706,000 to $33,391,000 at
December 31, 2013, compared to $54,097,000 at December 31, 2012.
These decreases were the result of funding loan growth.  
Total deposits were $694,359,000 at December 31, 2013, compared to
$668,464,000 at December 31, 2012, an increase of $25,895,000, or
3.9%. Securities sold under agreements to repurchase increased
$5,195,000 to $35,465,000 at December 31, 2013 compared to
$30,270,000 at December 31, 2012. Other borr
owings decreased
$6,860,000 to $80,796,000 at December 31, 2013, compared to
$87,656,000 at December 31, 2012. 
Total stockholders' equity increased $1,310,000 to $82,188,000 at
December 31, 2013 compared to $80,878,000 at December 31, 2012.
Stockholders' equity available to common stockholders totaled
$58,665,000, resulting in a book value per common share of $21.32 per
share at December 31, 2013, based on 2,751,650 shares of common stock
outstanding, a decrease of $0.58, or 2.6% per share, from December
31, 2012. Tangible book value per common share decreased $0.47, or
2.7%, to $17.05 at December 31, 2013 compared to $17.52 at December
31, 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.  
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        Year Ended     
                                 --------------------- ---------------------
                                 12/31/2013 12/31/2012 12/31/2013 12/31/2012
                                 ---------- ---------- ---------- ----------
                                                                            
Interest and Dividend Income     $    8,641 $    8,135 $   33,029 $   32,487
Interest Expense                      1,295      1,447      4,980      6,708
Net Interest and Dividend Income      7,346      6,688     28,049     25,779
Provision for Loan Losses               491        318      2,820      2,112
Securities gains, net                   818      1,253      3,815      3,789
Gains on sales of loans, net            315        748      2,038      2,250
All Other Noninterest Income          1,798      1,445      6,009      5,424
Noninterest Expense                   7,216      7,354     27,377     26,891
Provision for Income Tax                659        603      2,508      1,745
Net Income                            1,911      1,859      7,206      6,494
Net Income Available to Common                                              
 Stockholders                         1,843      1,718      6,925      5,854
Earnings per Common Share, Basic       0.67       0.65       2.57       2.23
                                                                            
                                                                            
                                                     12/31/2013  12/31/2012 
                                                     ----------  ---------- 
                                                                            
Total Assets                                         $  898,329  $  873,629 
Cash and Due from Banks and Interest-Bearing                                
 Deposits                                                33,391      54,097 
Securities Available-for-Sale, at Fair Value            184,527     206,703 
Loans, Net                                              631,069     563,565 
Total Deposits                                          694,359     668,464 
Federal Home Loan Bank Advances                          60,176      67,036 
Securities Sold Under Agreements to Repurchase           35,465      30,270 
Junior Subordinated Debentures                           20,620      20,620 
Stockholders' Equity                                     82,188      80,878 
Net Interest Margin                                        3.54%       3.46%
Yield on Earning Assets                                    4.13        4.30 
Cost of Interest Bearing Liabilities                       0.70        0.98 
Efficiency Ratio                                          71.87       75.81 
Book Value Per Share of Common Shares Outstanding    $    21.32  $    21.90 
Tangible Book Value Per Share of Common Shares                              
 Outstanding                                              17.05       17.52 
Tier 1 Core Capital to Average Assets                     10.73%      10.68%
Tier 1 Risk-Based Capital                                 15.85       16.76 
Total Risk-Based Capital                                  17.20       18.05 
Common Shares Outstanding                             2,751,650   2,620,755 
Weighted average number of common shares, basic       2,698,216   2,620,755 
Return on Average Assets                                   0.82%       0.77%
Return on Average Equity                                   8.89        8.25 
Nonperforming Loans as a % of Total Loans                  2.21        2.13 
Allowance for Loan Losses as a % of Nonperforming                           
 Loans                                                    78.78       81.90 

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