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