Northway Financial, Inc. Announces 2023 Earnings and Declares Semi-Annual Dividend

Rhea-AI Summary

Northway Financial, Inc. reported a significant increase in net income for the year ended December 31, 2023, reaching $5.8 million, compared to $2.7 million in the previous year. The company's Board of Directors declared a semi-annual cash dividend of $0.35 per common share. President and CEO William J. Woodward commented on the challenging year due to the Federal Reserve's interest rate hikes, which negatively impacted deposit and loan balances. However, the company aims to enhance profitability and increase shareholder value in 2024.

Positive

• None.

Negative

• The Year-to-Date Net Interest Margin decreased from 2.90% to 2.63%, and the company experienced a $1.8 million loss from the sale of fixed income securities, impacting net income.

NORTH CONWAY, N.H., Jan. 26, 2024 (GLOBE NEWSWIRE) -- Northway Financial, Inc. (the “Company”) (OTCQB: NWYF), the parent company of Northway Bank (the “Bank”), today reported net income for the year ended December 31, 2023 of $5.8 million, or $2.10 per basic common share, compared to $2.7 million, or $0.97 per basic common share for the year ended December 31, 2022.

The Board of Directors declared a semi-annual cash dividend of $0.35 per common share, payable on February 12, 2024, to common stockholders of record on February 5, 2024.

President and CEO William J. Woodward commented: “This past year was a difficult year for us as we dealt with the Federal Reserve’s interest rate hikes, which started in March 2022 and continued into 2023. These 11 rate increases significantly impacted our deposit and loan balances. We experienced a loss of deposits as customers used funds deposited with us to pay for the increases in food and energy as a result of inflation. We also lost some deposits, as competitors were offering high-rate CDs, which we were not willing to match. Loan production was down substantially from prior years as higher rates kept many borrowers on the sidelines and caused us to be highly selective in granting new loans. The instability in the economy negatively impacted our customers, our communities, and our Bank. We have taken actions like selling securities at a loss to improve future earnings without significantly impacting current capital. As we move into 2024, we are still operating under an uncertain economic environment. We will continue to seek opportunities to enhance profitability and increase shareholder value.”  

Financial Highlights

• Year-to-Date Net Income increased $3 million from December 31, 2022.
• Net Income was negatively impacted by a $1.8 million loss from the sale of fixed income securities.
• The Year-to-Date Net Interest Margin decreased from 2.90% to 2.63% as funding costs increased 1.17% while the yield on earning assets increased .66%, when compared to year-to-date December 2022.
• Total assets were $1.3 billion, loans, net, were $910 million, and total deposits were $996 million at December 31, 2023.
• The loan portfolio contracted $18 million, or 2%, compared to December 31, 2022.
• Residential mortgage loan balances decreased $5 million and commercial real estate loan balances decreased $12 million.
• Securities available-for-sale decreased $42 million primarily due to the sale of $30 million of fixed income securities.
• To reduce earnings volatility, Marketable Equity Securities were reduced by $8 million during the year.
• Stockholders’ Equity increased $9 million compared to December 31, 2022, the result of an increase in Net Income and an increase in the market value of the securities available-for-sale.
• Nonperforming loans as a percentage of total loans stood at 0.31% compared to 0.23% at December 31, 2022.
• Total delinquent loans as a percentage of total loans were 0.34% compared to 0.88% at December 31, 2022.
• The Bank’s regulatory capital ratios at December 31, 2023 exceeded all well-capitalized ratios as defined under FDIC’s prompt corrective action rules.
• The market price of our common stock, as of January 25, 2024, was $18.70.

Northway Financial, Inc.
Selected Financial Highlights
(Unaudited)
(Dollars in thousands, except per share data)	Three Months Ended								Year Ended
	12/31/2023				12/31/2022				12/31/2023				12/31/2022
Interest and Dividend Income	$	13,317			$	11,579			$	51,577			$	39,917
Interest Expense		5,038				2,237				17,040				4,307
Net Interest and Dividend Income		8,279				9,342				34,537				35,610
Provision for Loan Losses		(405	)			750				(405	)			1,800
All Other Noninterest Income		1,436				1,324				4,971				3,662
Noninterest Expense		7,532				7,837				31,562				32,020
Net Income Before Gain (Loss) on Securities		2,588				2,079				8,351				5,452
Loss on Securities Available-for-Sale, net		(1,871	)			-				(1,871	)			-
Gain (Loss) on Marketable Equity Securities		194				2,937				(115	)			(2,708	)
Income before Income Tax Expense (Benefit)		911				5,016				6,365				2,744
Income Tax Expense (Benefit)		(150	)			1,097				594				69
Net Income	$	1,061			$	3,919			$	5,771			$	2,675
Net Income Available to Common Stockholders	$	1,061			$	3,919			$	5,771			$	2,675
Earnings per Common Share, Basic	$	0.39			$	1.42			$	2.10			$	0.97

		12/31/2023			12/31/2022
Balance Sheet
Total Assets		$	1,290,467		$	1,302,602
Cash and Due from Banks and Interest-Bearing Deposits			68,887			26,520
Securities Available-for-Sale, at Fair Value			246,756			288,576
Marketable Equity Securities, at Fair Value			2,589			10,586
Loans Held-for-Sale			-			208
Loans, Net			909,781			918,170
Total Liabilities			1,217,230			1,238,166
Non Municipal Non-Maturity Deposits			734,741			817,305
Municipal Non-Maturity Deposits			133,100			125,257
Certificates of Deposit			127,726			119,079
Securities Sold Under Agreements to Repurchase			55,353			78,793
Short-Term Borrowings			15,000			55,000
Long-Term Borrowings			110,000			-
Junior Subordinated Debentures			20,620			20,620
Stockholders' Equity			73,237			64,436
Profitability and Efficiency
Net Interest Margin			2.63	%		2.90	%
Yield on Earning Assets			3.90			3.24
Cost of Interest Bearing Liabilities			1.63			0.46
Book Value Per Share of Common Shares Outstanding		$	26.62		$	23.42
Tangible Book Value Per Share of Common Shares Outstanding			22.83			19.63
Common Shares Outstanding			2,751,650			2,751,650
Weighted Average Number of Common Shares, Basic			2,751,650			2,751,650
Capital Ratios for the Bank
Tier 1 Core Capital to Average Assets			8.33	%		8.15	%
Common Equity Risk-Based Capital			14.44			13.47
Tier 1 Risk-Based Capital			14.44			13.47
Total Risk-Based Capital			15.70			14.72

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 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.

FAQ

What was Northway Financial, Inc.'s net income for the year ended December 31, 2023?

Northway Financial, Inc. reported a net income of $5.8 million for the year ended December 31, 2023.

What was the declared semi-annual cash dividend per common share?

The Board of Directors declared a semi-annual cash dividend of $0.35 per common share.

What was the President and CEO's comment on the company's performance?

President and CEO William J. Woodward commented on the challenging year due to the Federal Reserve's interest rate hikes, negatively impacting deposit and loan balances.

What was the change in the Year-to-Date Net Interest Margin?

The Year-to-Date Net Interest Margin decreased from 2.90% to 2.63%.

What was the impact of the sale of fixed income securities on the company's net income?

The company experienced a $1.8 million loss from the sale of fixed income securities, impacting net income.