SPOKANE, Wash., April 28, 2015 (GLOBE NEWSWIRE) -- Northwest Bancorporation, Inc. (OTCQB: NBCT) (the "Company"), the holding company of Inland Northwest Bank (the "Bank" or "INB"), today reported financial results for the quarter ended March 31, 2015.
Net income for the first quarter of 2015 was $697 thousand, compared to $588 thousand for the corresponding period in 2014, representing an increase of $109 thousand, or 18.5%. Earnings per diluted share increased 14.3%, from $0.14 for the first quarter of 2014, to $0.16 for the first quarter of 2015.
Financial highlights
- Achieved thirteenth consecutive quarter of profitability, with net income of $697 thousand.
- Total revenue for the quarter was $5.0 million, which was up 13% over the first quarter last year.
- Nonperforming assets decreased 68% year over year.
- Noninterest bearing deposits increased 10% year over year.
- Loans grew by $45 million, or 15%, year over year.
- Book value of the Company's stock increased 2.15% during the first quarter, to $9.51 per share.
- The market price of the Company's stock increased $0.95 per share, or 11% during the first quarter, to $9.60 per share. The price is up $1.65, or 21%, over the price on March 31, 2014.
Company President and CEO, Randall Fewel, commented, "The new year is off to a great start for us with earnings up 18%, loans up 15%, and total assets up 12%. And it is particularly gratifying to see these excellent results starting to be reflected in our stock price, which is up 21%."
Balance sheet
As of March 31, 2015, the Company had total assets of $447.5 million, compared to $421.8 million on December 31, 2014 and $398.5 million on March 31, 2014. This represents an increase of $25.7 million, or 6.1%, over year end and an increase of $49.0 million, or 12.3%, year over year.
The investment portfolio was $40.3 million as of March 31, 2015, down $1.9 million, or 4.5%, from $42.2 million at December 31, 2014. The decrease reflects a shift in the deployment of capital from investments to loans. The net unrealized gain in the portfolio was $1.3 million, 10% higher than the $1.2 million net unrealized gain at year-end 2014.
The net loan portfolio was $350.2 million on March 31, 2015. This was up $13.8 million, or 4.1%, from year end and was up $44.7 million, or 14.6%, from March 31, 2014, when the loan portfolio was $305.5 million. The increase from prior periods primarily reflects increased commercial lending activity. "Under the leadership of the Bank's Chief Revenue Officer, Mark Dresback, we have assembled an outstanding team of commercial bankers and support personnel in both Spokane and North Idaho. This team has generated incredible momentum in terms of building a high quality loan pipeline that is translating to impressive loan growth for us," Fewel commented.
Deposits at March 31, 2015 were $383.5 million, an increase of $24.8 million, or 6.9%, compared to December 31, 2014 and an increase of $46.9 million, or 14.0%, compared to March 31, 2014. Core deposits (all deposits except time deposits) ended the quarter at $288.9 million, which is 75.3% of total deposits; this represents an increase of $13.5 million, or 4.9%, since the beginning of the year and an increase of $30.2 million, or 11.7%, over the $258.7 million level on March 31, 2014.
Noninterest bearing deposits, a subset of core deposits, were $94.1 million at quarter end, representing 24.5% of total deposits. This compares to noninterest bearing deposits of $85.7 million, or 25.5% of total deposits, at March 31, 2014, and to $96.4 million, or 26.9% of total deposits, at year-end 2014. The level of noninterest bearing deposits at quarter end represented growth of $8.4 million, or 9.8%, compared to March 31, 2014.
Asset quality, provision and allowance for loan losses
The Bank's nonperforming assets ("NPAs") were $1.5 million at quarter end, representing 0.34% of total assets. NPAs are defined as loans on which the Bank has stopped accruing interest and includes foreclosed real estate. NPAs at the end of 2014 were $1.4 million, representing 0.33% of total assets, and at March 31, 2014, NPAs were $4.8 million, representing 1.19% of total assets.
The Bank achieved net loan recoveries of $6 thousand for the three-month period ending on March 31, 2015, compared to net loan charge offs of $149 thousand for the comparable period in 2014. The provision for loan losses was $60 thousand for the three-month period ending on March 31, 2015, compared to $250 thousand for the comparable period in 2014. As of March 31, 2015, the allowance for loan losses was $5.8 million, or 1.62% of gross loans. This is slightly higher than on December 31, 2014, when it was $5.7 million and represented 1.67% of the loan portfolio.
Capital
Shareholders' equity increased $840 thousand during the first quarter of 2015. The increase reflects earnings retention and an increase in accumulated other comprehensive income and equity-based compensation costs. The book value of the Company's common stock was $9.51 per share on March 31, 2015, up $0.20, or 2.1%, over the $9.31 per share on December 31, 2014, and up $0.83, or 9.6%, over the $8.68 per share on March 31, 2014.
The Bank continues to maintain capital levels in excess of the requirements to be categorized as "well-capitalized" under newly implemented Basel III and Dodd Frank regulatory standards. As of March 31, 2015, the Bank's Tier 1 leverage capital to average assets ratio was 11.2%, its common equity Tier 1 capital ratio was 11.4%, and its total capital to risk-weighted assets ratio was 12.6%.
Total revenue
Total revenue was $5.0 million for the first quarter of 2015, compared to $4.4 million for the same period in 2014, representing an increase of $566 thousand, or 13%. Total revenue is defined as net interest income plus noninterest income, and the results for the first quarter of 2015 reflect improved income in both categories.
Net interest income
Net interest income was $4.2 million for the quarter ended March 31, 2015, an increase of $496 thousand, or 14%, from the comparable period in 2014. The net interest margin (the "NIM," defined as interest income minus interest expense, divided by average earning assets) improved from 4.03% in the first quarter of 2014 to 4.14% in the first quarter of 2015.
Noninterest income
Noninterest income increased by $70 thousand, or 9.0%, from $780 thousand in the first quarter last year, to $850 thousand in the first quarter this year. The increase in noninterest income was primarily related to higher gains from sales of residential mortgage loans, which increased by $85 thousand, or 53%. Net gains on sales of investment securities were $0 and $21 thousand for the quarters ended March 31, 2015 and 2014, respectively.
Noninterest expense
Noninterest expense for the first quarter increased by $497 thousand, or 14.7%, from $3.4 million last year to $3.9 million this year. The primary contributors to the rise in noninterest expenses were higher employee-related costs, higher auditing costs and higher deposit account product-related costs.
Key ratios
Return on average assets ("ROA") for the quarter was 0.65%, compared to 0.60% for the first quarter of 2014. Return on average equity ("ROE") was 7.12%, compared to 6.65%, for the same quarter last year. Yield on earning assets was 4.66% for the quarter, compared to 4.62% for the same period last year, and the cost of funds was 0.71% this year versus 0.82% last year.
Summary
Fewel summarized the quarterly results by saying, "We continue to build on the successes we have achieved the last two years. We have worked hard to build a strong infrastructure at INB, with the best bankers in the market, and a winning business strategy. It is exciting to see that effort begin to generate the kind of results we knew we were capable of."
About Northwest Bancorporation, Inc.
Northwest Bancorporation, Inc. is the parent company of Inland Northwest Bank, a state-chartered community bank which operates seven branches in Spokane County, Washington, and four branches in Kootenai County, Idaho. INB specializes in meeting the financial needs of individuals and small to medium-sized businesses, including professional corporations, by providing a full line of commercial, retail, mortgage and private banking products and services. More information about INB can be found on its website at www.inb.com. The Company's stock is quoted on the OTC Market's OTCQB Marketplace, www.otcmarkets.com, under the symbol NBCT.
Forward-Looking Statements
This release contains forward-looking statements that are not historical facts and that are intended to be "forward-looking statements" as that term is defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, but are not limited to, statements about the Company's plans, objectives, expectations and intentions and other statements contained in this release that are not historical facts and pertain to the Company's future operating results. When used in this release, the words "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward-looking statements. Actual results may differ materially from the results discussed in these forward-looking statements, because such statements are inherently subject to significant assumptions, risks and uncertainties, many of which are difficult to predict and are generally beyond the Company's control. These include but are not limited to: the possibility of adverse economic developments that may, among other things, increase default and delinquency risks in the Company's loan portfolios; shifts in interest rates; shifts in the rate of inflation; shifts in the demand for the Company's loan and other products; unforeseen increases in costs and expenses; changes in accounting policies; changes in the monetary and fiscal policies of the federal government; and changes in laws, regulations and the competitive environment. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Northwest Bancorporation, Inc. | |||
Consolidated Statements of Financial Condition | |||
(Unaudited) | |||
Mar. 31 | Dec. 31 | Mar. 31 | |
(dollars in thousands) | 2015 | 2014 | 2014 |
Assets: | |||
Cash and due from banks | $ 13,428 | $ 14,398 | $ 13,486 |
Interest bearing deposits | 17,044 | 3,384 | 1,240 |
Time deposits held for investment | 2,185 | 1,935 | 2,655 |
Securities available for sale | 38,131 | 40,287 | 49,975 |
Federal Home Loan Bank stock, at cost | 1,135 | 1,148 | 1,183 |
Loans receivable, net | 350,222 | 336,421 | 305,550 |
Loans held for sale | 2,277 | 740 | 288 |
Premises and equipment, net | 14,775 | 14,888 | 15,376 |
Accrued interest receivable | 1,363 | 1,322 | 1,371 |
Foreclosed real estate | 1,050 | 1,050 | 1,315 |
Bank-owned life insurance | 4,228 | 4,201 | 4,190 |
Other assets | 1,649 | 2,033 | 1,906 |
Total assets | $ 447,487 | $ 421,807 | $ 398,535 |
Liabilities: | |||
Deposits: | |||
Noninterest bearing deposits | $ 94,058 | $ 96,386 | $ 85,679 |
Interest bearing transaction and savings deposits | 194,883 | 179,016 | 173,043 |
Time deposits | 94,530 | 83,278 | 77,801 |
383,471 | 358,680 | 336,523 | |
Accrued interest payable | 121 | 124 | 127 |
Borrowed funds | 20,982 | 21,327 | 22,362 |
Other liabilities | 3,360 | 2,963 | 3,766 |
Total liabilities | 407,934 | 383,094 | 362,778 |
Shareholders' equity: | |||
Common stock | 33,019 | 32,960 | 32,718 |
Retained earnings (accumulated deficit) | 5,644 | 4,947 | 2,277 |
Accumulated other comprehensive income | 890 | 806 | 762 |
Total shareholders' equity | 39,553 | 38,713 | 35,757 |
Total liabilities and shareholders' equity | $ 447,487 | $ 421,807 | $ 398,535 |
Northwest Bancorporation, Inc. | |||
Consolidated Statements of Operations | |||
(Unaudited) | |||
Three Months Ended | |||
Mar. 31 | Dec. 31 | Mar. 31 | |
(dollars in thousands, except per share data) | 2015 | 2014 | 2014 |
Interest and dividend income: | |||
Loans receivable | $ 4,363 | $ 4,274 | $ 3,792 |
Investment securities | 297 | 321 | 393 |
Other | 12 | 16 | 10 |
Total interest and dividend income | 4,672 | 4,611 | 4,195 |
Interest expense: | |||
Deposits | 339 | 340 | 343 |
Borrowed funds | 184 | 189 | 198 |
Total interest expense | 523 | 529 | 541 |
Net interest income | 4,149 | 4,082 | 3,654 |
Provision for loan losses | 60 | (200) | 250 |
Noninterest income: | |||
Service charges on deposits | 217 | 235 | 226 |
Gains from sale of loans, net | 244 | 255 | 159 |
Gain on investment securities, net | -- | -- | 21 |
Other noninterest income | 389 | 463 | 374 |
Total noninterest income | 850 | 953 | 780 |
Noninterest expense: | |||
Salaries and employee benefits | 2,086 | 1,874 | 1,782 |
Occupancy and equipment | 316 | 333 | 341 |
Depreciation and amortization | 277 | 277 | 293 |
Advertising and promotion | 116 | 131 | 102 |
FDIC assessments | 61 | 64 | 66 |
Loss (gain) on foreclosed real estate, net | -- | 200 | (63) |
Other noninterest expense | 1,027 | 1,008 | 864 |
Total noninterest expense | 3,883 | 3,887 | 3,385 |
Income before income taxes | 1,056 | 1,348 | 799 |
Income tax expense | 361 | 410 | 211 |
NET INCOME | $ 695 | $ 938 | $ 588 |
Earnings per common share - basic | $ 0.17 | $ 0.23 | $ 0.14 |
Earnings per common share - diluted | $ 0.16 | $ 0.22 | $ 0.14 |
Weighted average common shares outstanding - basic | 4,157,632 | 4,134,865 | 4,117,673 |
Weighted average common shares outstanding - diluted | 4,250,854 | 4,224,144 | 4,189,288 |
Northwest Bancorporation, Inc. | |||
Key Financial Ratios and Data | |||
(Unaudited) | |||
Three Months Ended | |||
Mar. 31 | Dec. 31 | Mar. 31 | |
(dollars in thousands, except per share data) | 2015 | 2014 | 2014 |
PERFORMANCE RATIOS (annualized) | |||
Return on average assets | 0.65% | 0.88% | 0.60% |
Return on average equity | 7.35% | 9.92% | 6.65% |
Yield on earning assets | -8.38% | 4.67% | 4.62% |
Cost of funds | -1.51% | 0.74% | 0.82% |
Net interest margin | -7.27% | 4.14% | 4.03% |
Noninterest income to average assets | 0.79% | 0.89% | 0.79% |
Noninterest expense to average assets | 3.61% | 3.64% | 3.44% |
Provision expense to average assets | 0.06% | -0.19% | 0.25% |
Efficiency ratio(1) | 77.7% | 77.2% | 76.3% |
Mar. 31 | Dec. 31, | Mar. 31 | |
2015 | 2014 | 2014 | |
ASSET QUALITY RATIOS AND DATA | |||
Nonaccrual loans | $476 | $354 | $3,446 |
Foreclosed real estate | $1,050 | $1,050 | $1,315 |
Nonperforming assets | $1,526 | $1,404 | $4,761 |
Loans 30-89 days past due and on accrual | $4,343 | $3,421 | $3,719 |
Restructured loans | $5,820 | $5,023 | $8,392 |
Allowance for loan losses | $5,794 | $5,728 | $5,904 |
Nonperforming assets to total assets | 0.34% | 0.33% | 1.19% |
Allowance for loan losses to total loans | 1.65% | 1.67% | 1.93% |
Allowance for loan losses to nonaccrual loans | 1217.23% | 1618.08% | 171.33% |
Net charge-offs | ($6)(2) | $149(2) | |
Net charge-offs to average loans (annualized) | -0.01%(2) | 0.19%(2) | |
CAPITAL RATIOS AND DATA | |||
Common shares outstanding at period end | 4,157,632 | 4,157,632 | 4,117,673 |
Book value per common share | $9.51 | $9.31 | $8.68 |
Tangible common equity | $39,553 | $38,713 | $35,757 |
Shareholders' equity to total assets | 8.8% | 9.2% | 9.0% |
Total capital to risk-weighted assets (3) | 12.6% | 13.4% | 13.6% |
Tier 1 capital to risk-weighted assets (3) | 11.4% | 12.2% | 12.4% |
Tier 1 leverage capital ratio (3) | 11.2% | 11.1% | 11.2% |
Tier 1 common equity ratio (3) | 11.4% | ||
DEPOSIT RATIOS AND DATA | |||
Core deposits (4) | $288,941 | $275,402 | $258,722 |
Core deposits to total deposits | 75.3% | 76.8% | 76.9% |
Noninterest bearing deposits to total deposits | 24.5% | 26.9% | 25.5% |
Net loan to deposit ratio | 91.3% | 93.8% | 90.8% |
Notes: | |||
(1) Efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income). | |||
(2) Net charge-offs for the three-month period. | |||
(3) Regulatory capital ratios are reported for Inland Northwest Bank. | |||
(4) Core deposits include all deposits except time deposits. |