BERLIN, N.H., Feb. 1 /PRNewswire-FirstCall/ -- Northway Financial,
Inc. (the "Company") (NASDAQ:NWFI) reported net income for the
quarter ended December 31, 2005 of $69,000, or $0.05 per
share-basic, compared to $934,000, or $0.62 per share-basic, for
the same quarter in 2004, a decrease of $865,000 or 93%. Net income
for the year ended December 31, 2005 was $2,673,000, or $1.78 per
share-basic, compared to $3,388,000, or $2.26 per share-basic, for
the year ended December 31, 2004, a decrease of $715,000 or 21%.
Commenting on the fourth quarter and annual results, William J.
Woodward, President and Chief Executive Officer of the Company,
stated: "During the fourth quarter, several major steps were taken
as part of our ongoing plan to improve the operating efficiency and
profitability of the Company. One of the most notable events was
the consolidation on October 1, 2005, under the name Northway Bank,
of our two operating subsidiaries, The Berlin City Bank and
Pemigewasset National Bank of Plymouth, NH. Also in this quarter:
the Bank's investment portfolio was restructured, the two branches
located in Shaw's supermarkets in Berlin and North Conway were
closed, and we entered into an agreement to acquire in the spring
of 2006 two branches in Tilton and Belmont from Washington Mutual
(branches previously owned by Providian National Bank). In
addition, because the data processing and item processing
operations in West Plymouth were relocated and consolidated in
Berlin earlier in the year this facility was sold along with
several properties, which had become non- strategic. Several of
these repositioning actions resulted in one-time costs, some of
which significantly impacted the fourth quarter and others of which
impacted earlier quarters of the year. We expect that each of these
initiatives will result in efficiencies and other benefits that
will have a positive impact on earnings in future years." Mr.
Woodward further explained that, throughout 2005, there were
significant increases in the volume of direct consumer, commercial,
and mortgage loans, resulting in an improvement in the mix and
profitability of the loan portfolio. "All in all, 2005 has been a
very busy year for Northway Financial, and we feel that we are
strongly positioned to continue building the Company to perform
well in a very competitive banking environment," Mr. Woodward
concluded. The Company declared a quarterly dividend on January 31,
2006 of $0.18 per share, payable February 20, 2006 to shareholders
of record on February 10, 2006. Net interest and dividend income
for the fourth quarter of 2005 was $5,730,000 compared to
$5,876,000 for the fourth quarter of 2004, a decrease of $146,000.
There was no provision for loan losses for the fourth quarter of
2005, compared to $105,000 for the fourth quarter of last year. The
provision is established based upon a review of the adequacy of the
allowance for loan losses. This review includes consideration of,
among other factors, the Company's loan loss experience and the
Company's decision to terminate indirect auto lending. At December
31, 2005 the allowance for loan losses was 1.12% of total loans,
compared to 1.10% at December 31, 2004. Net securities losses for
the quarter were $761,000 compared to net securities gains of
$13,000 for the same period last year. During the quarter, the
Company repositioned a segment of the securities portfolio by
purchasing approximately $20 million in municipal bonds. To
accomplish this, the Company sold $10 million of US Government
Agency bonds and $4 million of corporate bonds, at a loss of
$688,000. Other noninterest income for the quarter increased
$57,000 to $1,138,000 compared to $1,081,000 for the same period
last year. Other noninterest expense was $6,272,000 for the
quarter, compared to $5,517,000 for the same period last year, an
increase of $755,000. During the quarter, the Company realized
merger-related expenses totaling approximately $620,000. Net
interest and dividend income for the year ended December 31, 2005
increased $330,000 to $23,176,000, compared to $22,846,000 for the
same period last year. The provision for loan losses for the year
ended December 31, 2005 decreased $420,000 to $75,000, compared to
$495,000 for the same period a year ago. Net securities losses for
the year ended December 31, 2005 were $551,000 compared to net
securities gains of $753,000 for the same period a year ago due
primarily to the securities losses recognized during the fourth
quarter. Other noninterest income increased $203,000 to $4,547,000
for the year ended December 31, 2005, compared to $4,344,000 for
the same period last year. Other noninterest expense increased
$1,188,000 to $23,582,000 for the year ended December 31, 2005,
compared to $22,394,000 for the same period last year. For the
year, merger-related expenses totaled approximately $1,161,000,
one-time costs associated with the relocation and consolidation of
certain back room functions were approximately $120,000 and branch
closure expenses were approximately $125,000. At December 31, 2005,
the Company had total assets of $632,734,000 compared to
$638,418,000 at December 31, 2004. Net loans, including loans
held-for-sale, at December 31, 2005 decreased $14,137,000 to
$455,676,000, compared to December 31, 2004. Investments, including
federal funds sold, at December 31, 2005 increased $5,572,000 to
$123,560,000 compared to December 31, 2004. Total deposits were
$464,456,000 at December 31, 2005, a decrease of $10,903,000
compared to December 31, 2004. Total borrowings at December 31,
2005 increased $5,095,000 to $114,983,000 compared to $109,888,000
at December 31, 2004. Total stockholders' equity at December 31,
2005 increased $740,000 to $50,250,000 compared to December 31,
2004. Northway Financial, Inc., headquartered in Berlin, 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 full service banking offices. Certain statements in
this press release are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements can be identified by the use of the
words "expect," "believe," "estimate," "will" and other expressions
which predict or indicate future trends and which do not relate to
historical matters. Forward-looking statements may include, but are
not limited to, expectations for impact of new products on
noninterest income and expense, projections of revenue, income or
loss, and plans related to products or services of the Company and
its subsidiaries. Such forward-looking statements are subject to
known and unknown risks, uncertainties and contingencies, many of
which are beyond the control of the Company. The Company's actual
results could differ materially from those projected in the
forward-looking statements as the result of, among other factors,
changes in interest rates, changes in the securities or financial
markets, a deterioration in general economic conditions on a
national basis or in the local markets in which the Company
operates, including changes in local business conditions resulting
in rising unemployment and other circumstances which adversely
affect borrowers' ability to service and repay our loans, changes
in loan defaults and charge-off rates, reduction in deposit levels
necessitating increased borrowing to fund loans and investments,
expectations regarding the impact of the restructuring, the passing
of adverse government regulation, and changes in assumptions used
in making such forward-looking statements. These forward-looking
statements were based on information, plans and estimates at the
date of this press release, and the Company does not promise to
update any forward-looking statements to reflect changes in
underlying assumptions or factors, new information, future events
or other changes. Contact: Richard P. Orsillo Senior Vice President
and Chief Financial Officer 603-752-1171 Northway Financial, Inc.
Selected Consolidated Financial Data (Unaudited) (In thousands,
except for ratios and per share amounts) Period end balance sheet
data: December 31, 2005 2004 Total assets $632,734 $638,418 Loans,
net (1) 455,676 469,813 Investments (2) 123,560 117,988 Deposits
464,456 475,359 Borrowings 114,983 109,888 Stockholders' equity
50,250 49,510 Book value per share $33.70 $32.93 Tangible book
value per share (3) 25.39 24.02 Leverage ratio 8.96% 8.43% Shares
outstanding 1,491,174 1,503,574 For the Three Months For the Twelve
Months Ended Dec. 31, Ended Dec. 31, Operating results: 2005 2004
2005 2004 Net interest and dividend income $5,730 $5,876 $23,176
$22,846 Securities (losses) gains, net (761) 13 (551) 753 Other
noninterest income 1,138 1,081 4,547 4,344 Loan loss provision --
105 75 495 Other noninterest expense 6,272 5,517 23,582 22,394
Income (loss) before tax (165) 1,348 3,515 5,054 Income tax expense
(benefit) (234) 414 842 1,666 Net income $69 $934 $2,673 $3,388
Earnings per share-basic $0.05 $0.62 $1.78 $2.26 Return on average
assets 0.04% 0.58% 0.43% 0.54% Return on average equity 0.55% 7.47%
5.33% 6.97% (1) Net of unearned income and the allowance for loan
losses. Includes loans held-for-sale. (2) Includes federal funds
sold, Federal Home Loan Bank stock, Federal Reserve Bank stock and
investment securities available-for-sale. (3) Includes a deduction
of $12,384 and $13,400 for goodwill, core deposit intangible and
mortgage servicing assets for 2005 and 2004, respectively. First
Call Analyst: FCMN Contact: DATASOURCE: Northway Financial, Inc.
CONTACT: Richard P. Orsillo, Senior Vice President and Chief
Financial Officer of Northway Financial, Inc., +1-603-752-1171
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