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Northway Financial, Inc. Announces First Quarter Earnings


April 26, 2013 - North Conway, NH

Northway Financial, Inc. (the "Company") (OTCBB: NWYF) reported net income for the quarter ended March 31, 2013 of $2,028,000 compared to net income of $1,483,000 for the quarter ended March 31, 2012.

CEO William J. Woodward said, "I am pleased to report that the earnings strategy we have been implementing at Northway continues to produce strong results. As you will read in the Financial Highlights below, a contributing factor to this performance is the 12.6% increase in loan balances, compared with the first quarter of 2012. A significant part of that growth was due to our Southern New Hampshire Growth Strategy, anchored by our loan production offices in Bedford and Portsmouth.

We expect that Northway Bank's presence in southern New Hampshire markets will be strengthened this year when we open our two new full-service branches in Manchester and Portsmouth, scheduled for June 1, 2013 and September 1, 2013, respectively. With these new branches, Northway Bank will become firmly established as a statewide commercial banking franchise offering our customers a broad selection of banking products and an unparalleled level of service.

We are pleased with the strong level of earnings as well as the significant increase in the market price of the Company's common stock. At March 31, 2013, the market price of NWYF common stock was $15.85, an increase of $4.85, or 44%, from the same date a year ago.

I also am pleased to report that William Zafirson has joined Northway Bank as Senior Vice President, Retail Lending and Marketing; he brings with him 30 years of extensive experience in these areas of banking. He will assume the responsibilities previously filled by John Stratton, who is retiring. We welcome Bill to Northway Bank, and thank John for his twenty-two years of dedicated service to the Bank and the Community."

Financial Highlights

  • The Company's returns on average assets and average equity for quarter ended March 31, 2013 were 0.96% and 10.06%, respectively, compared to 0.72% and 7.81% for the same period last year.
  • The efficiency ratio for the quarter ended March 31, 2013, was 71.18% compared to 76.53% 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.
  • Net loans increased $64,100,000, or 12.6%, to $571,684,000 at March 31, 2013, compared to $507,584,000 at March 31, 2012. For the quarter ended March 31, 2013, commercial and industrial loans increased $5,569,000, which is an annualized growth rate of 6.5%. This growth is reflective of our efforts to increase small business lending throughout the state.
  • Total deposits increased $39,046,000, or 6.3%, to $656,969,000 at March 31, 2013, compared to $617,923,000 at March 31, 2012.
  • Total stockholders' equity increased $5,381,000, or 7.1%, to $81,368,000 at March 31, 2013, compared to $75,987,000 at March 31, 2012. Equity increased as a result of net income for the twelve months ended March 31, 2013 of $7,039,000 as well as an increase in other comprehensive net income of $197,000, which was partially offset by dividend payments to common and preferred stockholders of $1,855,000.
  • Regulatory capital ratios exceed minimum requirements. The Company's total risk-based capital ratio is 18.05% compared to a regulatory requirement of 10.0%; Tier 1 risk-based capital is 16.71% compared to a regulatory requirement of 6.0% and Tier 1 capital to average assets is 10.89% compared to a regulatory requirement of 5.0%.

Earnings Summary

As noted above, the Company recorded net income of $2,028,000 for the quarter ended March 31, 2013 compared to $1,483,000 for the same period in 2012. For the quarter ended March 31, 2013, $1,948,000, or $0.74 per common share, was available to common stockholders compared to $1,340,000, or $0.51 per common share, for the same period last year.

Net interest and dividend income for the quarter ended March 31, 2013, increased $186,000 to $6,537,000 compared to $6,351,000 for the same period last year. The provision for loan losses for the quarter ended March 31, 2013 increased $182,000 to $920,000 compared to $738,000 for the same period in 2012. This increase is due to both an increase in net loans and a target reserve on a significant commercial credit. Net gains on sales of securities were $1,616,000 compared to $1,060,000 for the quarter ended March 31, 2012, an increase of $556,000. Gains on sales of loans increased $438,000 to $642,000 for the quarter ended March 31, 2013 compared to $204,000 for the same period last year. All other noninterest income increased $133,000 to $1,337,000 compared to $1,204,000 for the same period last year due primarily to an improvement in the value of the Company's mortgage servicing rights. Total noninterest expense increased $116,000 to $6,440,000 for the quarter ended March 31, 2013, compared to $6,324,000 for the same period last year. This increase resulted primarily from an increase in staffing levels which was partially offset by lower marketing expense. Income tax expense for the quarter ended March 31, 2013, increased $470,000 from the same period last year.

Balance Sheet Summary

At March 31, 2013, the Company had total assets of $849,928,000 compared to $821,167,000 at March 31, 2012, an increase of $28,761,000, or 3.50%. Net loans at March 31, 2013, increased $64,100,000 to $571,864,000 compared to $507,584,000 at March 31, 2012. Securities available-for-sale decreased $43,628,000 to $207,519,000 at March 31, 2013, compared to $251,147,000 at March 31, 2012; this decrease was used to fund the significant loan growth.

Total deposits were $656,969,000 at March 31, 2013, compared to $617,923,000 at March 31, 2012, an increase of $39,046,000, or 6.30%. Securities sold under agreements to repurchase decreased $2,340,000 to $16,708,000 at March 31, 2013 compared to $19,048,000 at March 31, 2012. Other borrowings decreased $11,556,000 to $87,691,000 at March 31, 2013, compared to $99,247,000 at March 31, 2012.

Total stockholders' equity increased $5,381,000 to $81,368,000 at March 31, 2013 compared to $75,987,000 at March 31, 2012. Stockholders' equity available to common stockholders totaled $57,868,000, resulting in a book value per common share of $22.08 per share at March 31, 2013, based on 2,620,755 shares of common stock outstanding, an increase of $2.04, or 10.18% per share, from March 31, 2012. Tangible book value per common share increased $1.82, or 11.50%, to $17.64 at March 31, 2013 compared to $15.82 at March 31, 2012.

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 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
------------------------
3/31/2013 3/31/2012
----------- -----------

Interest and Dividend Income $ 7,808 $ 8,207
Interest Expense 1,271 1,856
Net Interest and Dividend Income 6,537 6,351
Provision for Loan Losses 920 738
Securities gains, net 1,616 1,060
Gains on sales of loans, net 642 204
All Other Noninterest Income 1,337 1,204
Noninterest Expense 6,440 6,324
Provision for Income Tax 744 274
Net Income 2,028 1,483
Net Income Available to Common Stockholders 1,948 1,340
Earnings per Common Share, Basic 0.74 0.51
Dividends Declared per Common Share - -




3/31/2013 3/31/2012
------------- -------------

Total Assets $ 849,928 $ 821,167
Cash and Due from Banks and Interest-Bearing
Deposits 19,524 15,228
Securities Available-for-Sale, at Fair Value 207,519 251,147
Loans, Net 571,684 507,584
Total Deposits 656,969 617,923
Federal Home Loan Bank Advances 67,071 78,627
Securities Sold Under Agreements to Repurchase 16,708 19,048
Junior Subordinated Debentures 20,620 20,620
Stockholders' Equity 81,368 75,987
Net Interest Margin 3.43% 3.52%
Yield on Earning Assets 4.06 4.48
Cost of Interest Bearing Liabilities 0.75 1.11
Efficiency Ratio 71.18 76.53
Book Value Per Share of Common Shares
Outstanding $ 22.08 $ 20.04
Tangible Book Value Per Share of Common Shares
Outstanding 17.64 15.82
Tier 1 Core Capital to Average Assets 10.89% 10.45%
Tier 1 Risk-Based Capital 16.71 17.63
Total Risk-Based Capital 18.05 18.95
Common Shares Outstanding 2,620,755 2,620,755
Return on Average Assets 0.96% 0.72%
Return on Average Equity 10.06 7.81
Nonperforming Loans as a % of Total Loans 2.64 3.27
Allowance for Loan Losses as a % of
Nonperforming Loans 66.34 64.02

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

MarketWire

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