Northway Financial, Inc. (the "Company") (OTCBB: NWYF) reported net
income for the year ended December 31, 2011 of $5,111,000 compared
to net income of $4,713,000 for the same period in 2010, an
increase of $398,000, and a record year. For the year ended
December 31, 2011, net income available to common stockholders was
$4,115,000, or $1.57 per common share, compared to $4,068,000, or
$1.55 per common share, for the same period last year. For the
quarter ended December 31, 2011, the Company reported net income of
$334,000 compared to net income of $1,638,000 for the quarter ended
December 31, 2010, a decrease of $1,304,000. For the quarter ended
December 31, 2011, net income available to common stockholders was
$67,000, or $0.02 per common share, compared to $1,476,000, or
$0.56 per common share, for the same period last year.
On February 2, 2012, the Company's Board of Directors declared a
semi-annual dividend on the common stock in the amount of $0.15 per
share. This dividend will be payable on February 21, 2012 to
stockholders of record on February 13, 2012.
2011 Financial Highlights
- During the fourth quarter, two long-term Federal Home Loan Bank
(FHLB) advances totaling $19,000,000, with an average rate of
4.52%, were pre-paid in order to restructure the Company's
wholesale funding portfolio as well as improve its liquidity
position and future net interest income. This early redemption
resulted in a pre-payment penalty of $1,604,000.
- Due primarily to investment portfolio restructuring, net gains
on sales of securities were $3,482,000 compared to a net loss of
$165,000 in 2010.
- Due primarily to the continued high level of nonaccrual loans,
the 2011 level of loan loss provision expense increased $1,325,000
to $4,660,000 from $3,335,000.
- Total assets decreased $11,434,000, or 1.4%, to $820,539,000 at
December 31, 2011 from $831,973,000 at December 31, 2010 due to the
sale of three banking centers in May 2011.
- Net loans decreased $22,937,000, or 4.5%, to $489,746,000 at
December 31, 2011, compared to $512,683,000 at December 31, 2010.
The sale of the banking centers resulted in a reduction in loans of
$33,375,000 which was partially offset by an increase in loans of
$10,438,000 due to increases in residential real estate and
commercial loans.
- Total deposits decreased $34,687,000, or 5.4%, to $611,133,000
at December 31, 2011, compared to $645,820,000 at December 31,
2010. The sale of the banking centers resulted in a reduction in
deposits of $63,800,000. This was partially offset by organic
deposit growth of $29,113,000.
- During 2011, investment securities increased $93,558,000 to
$252,273,000 from $158,715,000. This was due to a $23,000,000
leverage in January 2011 as well as the deployment of excess funds
to improve the net yield on earning assets.
- On September 15, 2011, the Company received $23,593,000 from
the Small Business Lending Fund ("SBLF"), for which the Company
issued to the U.S. Department of the Treasury a new Series C
Preferred Stock. The SBLF is a voluntary program intended to
encourage small business lending by providing capital to qualified
community banks and bank holding companies at favorable rates.
- The Company used $10,500,000 of the SBLF funds to redeem all of
the outstanding shares of preferred stock previously issued to the
U.S. Department of the Treasury under the TARP Capital Purchase
Program.
- The Company's returns on average assets and average equity for
the year ended December 31, 2011 were 0.62% and 7.87%,
respectively, compared to 0.58% and 8.65% for the same period last
year.
Earnings Summary
The Company recorded net income of $5,111,000 for the year ended
December 31, 2011 compared to $4,713,000 for the same period in
2010. For the year ended December 31, 2011, $4,115,000, or $1.57
per common share, was available to common stockholders compared to
$4,068,000, or $1.55 per common share, for the same period last
year.
Net interest and dividend income for the year ended December 31,
2011 decreased $344,000 to $24,012,000 compared to $24,356,000 for
the same period last year. The provision for loan losses
year-to-date 2011 increased $1,325,000 to $4,660,000 compared to
$3,335,000 for the same period in 2010. For the year ended December
31, 2011, the Company recorded a net gain on the sale of the three
banking centers of $3,772,000. Net gains on sales of securities
were $3,482,000 compared to net losses on sales of securities of
$165,000 for the year ended December 31, 2010, an increase of
$3,647,000. Gains on sales of loans decreased $1,795,000 as of
December 31, 2011 compared to the same period last year. All other
noninterest income decreased $537,000 to $5,292,000 compared to
$5,829,000 for the same period last year. Total noninterest expense
increased $2,569,000 to $26,714,000 for the year ended December 31,
2011 compared to $24,145,000 for the same period last year. This
increase resulted primarily from: 1) a pre-payment penalty of
$1,604,000 on two FHLB Advances; 2) one-time costs associated with
the sale of the three banking centers and 3) costs associated with
the Company's expansion into new markets - Concord, Meredith and
Manchester, NH. Income tax expense for the year ended December 31,
2011 increased $451,000 from the same period last year.
Balance Sheet Summary
At December 31, 2011, the Company had total assets of
$820,539,000 compared to $831,973,000 at December 31, 2010, a
decrease of $11,434,000. Cash and due from banks and
interest-bearing deposits decreased $73,851,000 to $32,381,000 at
December 31, 2011 compared to $106,232,000 at December 31, 2010.
Securities available-for-sale increased $93,558,000 to $252,273,000
at December 31, 2011 compared to $158,715,000 at December 31, 2010.
The increase in securities available-for-sale was due primarily to
a $23,000,000 leverage in January 2011, which locked in a positive
interest income spread for a minimum of two years, and the
redeployment of overnight funds during the year. Loans at December
31, 2011 decreased $22,937,000 to $489,746,000 compared to
$512,683,000 at December 31, 2010. This decrease was the result of
the sale of $33,375,000 in loans as part of the banking center sale
and was partially offset by an increase in commercial loans and
residential real estate loans.
Total deposits were $611,133,000 at December 31, 2011 compared
to $645,820,000 at December 31, 2010, a decrease of $34,687,000 and
securities sold under agreements to repurchase decreased $6,521,000
to $33,291,000 at December 31, 2011 compared to $39,812,000 at
December 31, 2010. These decreases resulted from the sale of the
three banking centers as total deposits and securities sold under
agreements to repurchase sold totaled $63,800,000 and $3,200,000,
respectively. Excluding the impact of the banking center sale,
total deposits increased $29,113,000. Other borrowings increased
$10,696,000 to $94,278,000 at December 31, 2011 compared to
$83,582,000 at December 30, 2010 due primarily to the $23,000,000
leverage implemented in January 2011 and the issuance of $7,000,000
in one new advance partially offset by the prepayment of
$19,000,000 in long-term FHLB advances.
Total equity increased $18,895,000 to $74,892,000 at December
31, 2011 compared to $55,997,000 at December 31, 2010, of which
approximately $13,000,000 was an additional investment from the U.
S. Department of the Treasury during 2011 as noted above.
Stockholders' equity available to common stockholders totaled
$51,007,000, resulting in a book value per common share of $19.46
per share at December 31, 2011, based on 2,620,755 shares of common
stock outstanding, an increase of $2.13, or 12.3% per share, from
December 31, 2010.
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 new loan
production office located in Bedford, 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 Twelve Months Ended
----------------------- -----------------------
12/31/2011 12/31/2010 12/31/2011 12/31/2010
---------- ----------- ----------- -----------
Interest and Dividend Income $ 8,144 $ 8,276 $ 32,500 $ 34,345
Interest Expense 2,079 2,265 8,488 9,989
Net Interest and Dividend
Income 6,065 6,011 24,012 24,356
Provision for Loan Losses 1,415 690 4,660 3,335
Noninterest Income 3,226 2,846 13,350 8,263
Noninterest Expense 8,015 6,140 26,714 24,145
Provision for Income Tax (473) 389 877 426
Net Income 334 1,638 5,111 4,713
Net Income Available to
Common Stockholders 67 1,476 4,115 4,068
Earnings Per Common Share,
Basic 0.02 0.56 1.57 1.55
Dividends Declared per
Common Share 0.15 0.12 0.27 0.24
12/31/2011 12/31/2010
---------- ----------
Total Assets $ 820,539 $ 831,973
Cash and Due from Banks and Interest-Bearing
Deposits 32,381 106,232
Securities Available-for-Sale, at Fair Value 252,273 158,715
Loans, Net 489,746 512,683
Total Deposits 611,133 645,820
Federal Home Loan Bank Advances 73,658 62,962
Securities Sold Under Agreements to Repurchase 33,291 39,812
Junior Subordinated Debentures 20,620 20,620
Stockholders' Equity 74,892 55,997
Book Value of Common Shares Outstanding 19.46 17.33
Tangible Book Value of Common Shares Outstanding 15.16 12.72
Tier 1 Core Capital to Assets 10.25% 8.13%
Common Shares Outstanding 2,620,755 2,620,755
Return on Average Assets 0.62% 0.58%
Return on Average Equity 7.87 8.65
Nonperforming Loans as a % of Total Loans 3.44 3.18
Contact: Richard P. Orsillo Senior Vice President and Chief
Financial Officer 603-752-1171
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