SPOKANE, Wash., April 28, 2016 (GLOBE NEWSWIRE) -- Northwest Bancorporation, Inc. (OTC Pink:NBCT) (the “Company”), the holding company of Inland Northwest Bank (the “Bank” or “INB”), today reported financial results for the quarter ended March 31, 2016.
Net income for the first quarter of 2016 was $839 thousand, compared to $726 thousand for the previous quarter and $697 thousand for the first quarter of 2015. Excluding nonrecurring first quarter acquisition expenses of $238 thousand, net of tax, earnings for the first quarter of 2016 would have been $1.077 million. Earnings per diluted share increased 18.2%, from $0.11 for the fourth quarter of 2015, to $0.13 for the first quarter of 2016, but are down $0.03 from the first quarter of last year due to a 53% increase in the number of shares outstanding resulting from the Company’s capital raise during the third quarter of 2015. Earnings per diluted share for the first quarter of 2016, excluding the nonrecurring acquisition expenses, would have been $0.17 per share.
Company President and CEO, Russell Lee, commented, “We are very happy with our first quarter financial results and their reflection of our acquisition of Fairfield Financial Holdings Corp. and the Bank of Fairfield in 2015. This should be the last quarter to be significantly impacted by one-time expenses related to this acquisition, and we are looking forward to continuing our efforts to integrate all of our new customers into the legacy INB business”
Balance sheet
As of March 31, 2016, the Company had total assets of $604.3 million, compared to $610.8 million on December 31, 2015 and $447.5 million on March 31, 2015. The decrease in assets of $6.5 million, or 1.1%, during the first quarter is primarily related to a decrease in deposits. Year over year, assets are up $156.8 million, or 35.0%; this increase is primarily related to the acquisition of Fairfield Financial Holdings Corp. (“Fairfield”) during the fourth quarter of 2015.
The investment portfolio was $37.1 million as of March 31, 2016, down $12.1 million, or 24.5%, from $49.2 million at December 31, 2015. The decrease is primarily due to the maturity of short-term investments acquired from Fairfield. The net unrealized gain in the portfolio was $958 thousand, 10.0% higher than the $871 thousand net unrealized gain at year-end 2015.
The net loan portfolio was $476.5 million on March 31, 2016. This represents a decrease of $855 thousand, or 0.2%, over last quarter and is related to the seasonality of our agriculture loan portfolio. Year over year, the net loan portfolio was up $126.3 million, or 36.1%.
Deposits at March 31, 2016 were $518.7 million, a decrease of $7.2 million, or 1.4%, compared to December 31, 2015 and an increase of $135.2 million, or 35.3%, compared to March 31, 2015. The increase over last year is primarily due to the acquisition of Fairfield’s deposits. Noninterest bearing deposits were $143.3 million at quarter end, representing 27.6% of total deposits. This compares to noninterest bearing deposits of $158.6 million, or 30.2% of total deposits, at December 31, 2015, and to $94.1 million, or 24.5% of total deposits, at March 31, 2015.
Asset quality, provision and allowance for loan losses
The Bank’s nonperforming assets (“NPAs”) were $2.2 million at quarter end, representing 0.36% 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 2015 were $1.6 million, representing 0.25% of total assets, and at March 31, 2015, NPAs were $1.5 million, representing 0.34% of total assets.
The Bank had net loan charge offs of $41 thousand, representing 0.10% of average loans, for the three-month period ending on March 31, 2016, compared to net loan recoveries of $6 thousand for the comparable period in 2015. The provision for loan losses was $182 thousand for the three-month period ending on March 31, 2016, compared to $60 thousand for the comparable period in 2015. As of March 31, 2016, the allowance for loan losses was $6.2 million, or 1.27% of gross loans; this is slightly higher than on December 31, 2015 when it was $6.0 million and represented 1.24% of the loan portfolio.
Capital
Shareholders’ equity increased $993 thousand, or 1.6%, during the first quarter of 2016. The increase primarily reflects earnings retention and an increase in accumulated other comprehensive income. Tangible book value of the Company’s common stock was $8.50 per share on March 31, 2016, up $0.16, or 1.9%, over the $8.34 per share on December 31, 2015.
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, 2016, the Bank’s Tier 1 leverage capital to average assets ratio was 10.7%, its common equity Tier 1 (“CET1”) capital ratio was 11.3%, and its total capital to risk-weighted assets ratio was 12.5%. The regulatory requirements to be considered “well-capitalized” for these three ratios are 5.0%, 6.5%, and 10.0%, respectively.
Total revenue
Total revenue was $7.1 million for the first quarter of 2016, representing an increase of $188 thousand, or 2.7%, from the previous quarter, and representing an increase of $2.1 million, or 42.8%, over the comparable quarter in 2015. Total revenue is defined as net interest income plus noninterest income.
Net interest income
Net interest income was $6.1 million for the quarter ended March 31, 2016, an increase of $142 thousand, or 2.4%, from the previous quarter and an increase of $1.9 million, or 46.5%, from the first quarter of 2015. The net interest margin (interest income minus interest expense, divided by average earning assets) improved from 4.14% in the first quarter of 2015 to 4.36% in the first quarter of 2016.
Noninterest income
Noninterest income was $1.1 million during the first quarter of 2016, up $46 thousand, or 4.6%, from the previous quarter. This increase in noninterest income was primarily related to higher debit and credit card revenues, partially offset by decreases in deposits account fee income and revenues from sales of residential mortgage loans.
Noninterest expense
Noninterest expense totaled $5.7 million during the first quarter of 2016, down $107 thousand, or 1.8%, from the previous quarter. Included in noninterest expense during the quarter are nonrecurring acquisition costs totaling $361 thousand, which were down from the $618 thousand reported for the fourth quarter of 2015. Without these acquisition costs, noninterest expense would have increased $150 thousand, or 2.9% over the previous quarter. The primary contributors to this rise in noninterest expenses during the quarter were higher occupancy costs, advertising costs, and FDIC assessments.
Key ratios
Return on average assets (“ROA”) for the first quarter in 2016 was 0.55%, compared to 0.57% in the previous quarter and 0.65% in the first quarter last year. Return on average equity (“ROE”) was 5.47% for the first quarter in 2016, compared to 4.80% in the previous quarter and 7.12% for the first quarter last year. Excluding the nonrecurring acquisition expenses, ROA would have been 0.71% and ROE would have been 7.02% for the first quarter of 2016. Yield on earning assets was 4.76% and 4.66% for the quarters ended March 31, 2016 and 2015, respectively, and the cost of funds was 0.57% and 0.71%, respectively.
About Northwest Bancorporation, Inc.
Northwest Bancorporation, Inc. is the parent company of Inland Northwest Bank, a state-chartered community bank which currently operates eleven branches in Eastern Washington, and four branches in Northern Idaho. INB specializes in meeting the financial needs of individuals and small to medium-sized businesses, including professional corporations and agriculture-related operations, by providing a full line of commercial, retail, agricultural, and 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 Pink 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; lower-than-expected revenue or cost savings in connection with acquisitions; 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) | 2016 | 2015 | 2015 | |||||||||||
| Assets: | ||||||||||||||
| Cash and due from banks | $ | 19,717 | $ | 21,253 | $ | 13,428 | ||||||||
| Interest bearing deposits | 33,885 | 24,781 | 17,044 | |||||||||||
| Time deposits held for investment | 4,797 | 14,946 | 2,185 | |||||||||||
| Securities available for sale | 32,337 | 34,242 | 38,131 | |||||||||||
| Federal Home Loan Bank stock, at cost | 1,075 | 1,041 | 1,135 | |||||||||||
| Loans receivable, net | 476,481 | 477,336 | 350,222 | |||||||||||
| Loans held for sale | 683 | 1,971 | 2,277 | |||||||||||
| Premises and equipment, net | 14,256 | 14,080 | 14,775 | |||||||||||
| Bank-owned life insurance | 6,971 | 6,924 | 4,228 | |||||||||||
| Accrued interest receivable | 2,517 | 2,706 | 1,363 | |||||||||||
| Goodwill | 6,290 | 6,290 | - | |||||||||||
| Core deposit intangible | 1,435 | 1,493 | - | |||||||||||
| Foreclosed real estate | 308 | 308 | 1,050 | |||||||||||
| Other assets | 3,567 | 3,430 | 1,649 | |||||||||||
| Total assets | $ | 604,319 | $ | 610,801 | $ | 447,487 | ||||||||
| Liabilities: | ||||||||||||||
| Deposits: | ||||||||||||||
| Noninterest bearing deposits | $ | 143,312 | $ | 158,576 | $ | 94,058 | ||||||||
| Interest bearing transaction and savings deposits | 258,207 | 248,441 | 194,882 | |||||||||||
| Time deposits | 117,162 | 118,867 | 94,530 | |||||||||||
| 518,681 | 525,884 | 383,470 | ||||||||||||
| Accrued interest payable | 120 | 131 | 121 | |||||||||||
| Borrowed funds | 19,600 | 19,947 | 20,982 | |||||||||||
| Other liabilities | 4,049 | 3,963 | 3,361 | |||||||||||
| Total liabilities | 542,450 | 549,925 | 407,934 | |||||||||||
| Shareholders' equity: | ||||||||||||||
| Common stock | 52,391 | 52,294 | 33,019 | |||||||||||
| Retained earnings | 8,846 | 8,007 | 5,644 | |||||||||||
| Accumulated other comprehensive income | 632 | 575 | 890 | |||||||||||
| Total shareholders' equity | 61,869 | 60,876 | 39,553 | |||||||||||
| Total liabilities and shareholders' equity | $ | 604,319 | $ | 610,801 | $ | 447,487 | ||||||||
| Northwest Bancorporation, Inc. | ||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three Months Ended | ||||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | ||||||||||||
| (dollars in thousands, except per share data) | 2016 | 2015 | 2015 | |||||||||||
| Interest and dividend income: | ||||||||||||||
| Loans receivable | $ | 6,322 | $ | 6,177 | $ | 4,364 | ||||||||
| Investment securities | 252 | 274 | 297 | |||||||||||
| Other | 62 | 41 | 12 | |||||||||||
| Total interest and dividend income | 6,636 | 6,492 | 4,673 | |||||||||||
| Interest expense: | ||||||||||||||
| Deposits | 373 | 369 | 339 | |||||||||||
| Borrowed funds | 183 | 185 | 184 | |||||||||||
| Total interest expense | 556 | 554 | 523 | |||||||||||
| Net interest income | 6,080 | 5,938 | 4,150 | |||||||||||
| Provision for loan losses | 182 | 40 | 60 | |||||||||||
| Noninterest income: | ||||||||||||||
| Service charges on deposits | 212 | 234 | 217 | |||||||||||
| Gains from sale of loans, net | 225 | 259 | 244 | |||||||||||
| Other noninterest income | 621 | 519 | 389 | |||||||||||
| Total noninterest income | 1,058 | 1,012 | 850 | |||||||||||
| Noninterest expense: | ||||||||||||||
| Salaries and employee benefits | 2,862 | 2,912 | 2,086 | |||||||||||
| Occupancy and equipment | 441 | 387 | 316 | |||||||||||
| Depreciation and amortization | 302 | 299 | 277 | |||||||||||
| Advertising and promotion | 237 | 177 | 116 | |||||||||||
| FDIC assessments | 103 | 79 | 61 | |||||||||||
| Acquisition-related costs | 361 | 618 | - | |||||||||||
| Other noninterest expense | 1,440 | 1,381 | 1,026 | |||||||||||
| Total noninterest expense | 5,746 | 5,853 | 3,882 | |||||||||||
| Income before income taxes | 1,210 | 1,057 | 1,058 | |||||||||||
| Income tax expense | 371 | 331 | 361 | |||||||||||
| NET INCOME | $ | 839 | $ | 726 | $ | 697 | ||||||||
| Earnings per common share - basic | $ | 0.13 | $ | 0.11 | $ | 0.17 | ||||||||
| Earnings per common share - diluted | $ | 0.13 | $ | 0.11 | $ | 0.16 | ||||||||
| Weighted average common shares outstanding - basic | 6,368,798 | 6,341,958 | 4,157,632 | |||||||||||
| Weighted average common shares outstanding - diluted | 6,432,280 | 6,392,056 | 4,250,854 | |||||||||||
| 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) | 2016 | 2015 | 2015 | ||||||||||||||||
| PERFORMANCE RATIOS (annualized) | |||||||||||||||||||
| Return on average assets | 0.55 | % | 0.57 | % | 0.65 | % | |||||||||||||
| Return on average equity | 5.47 | % | 4.80 | % | 7.12 | % | |||||||||||||
| Yield on earning assets | 4.76 | % | 5.67 | % | 4.66 | % | |||||||||||||
| Cost of funds | 0.57 | % | 0.69 | % | 0.71 | % | |||||||||||||
| Net interest margin | 4.36 | % | 5.19 | % | 4.14 | % | |||||||||||||
| Noninterest income to average assets | 0.70 | % | 0.80 | % | 0.79 | % | |||||||||||||
| Noninterest expense to average assets | 3.79 | % | 4.60 | % | 3.61 | % | |||||||||||||
| Provision expense to average assets | 0.12 | % | 0.03 | % | 0.06 | % | |||||||||||||
| Efficiency ratio (1) | 80.5 | % | 84.2 | % | 77.6 | % | |||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | |||||||||||||||||
| 2016 | 2015 | 2015 | |||||||||||||||||
| ASSET QUALITY RATIOS AND DATA | |||||||||||||||||||
| Nonaccrual loans | $ | 1,884 | $ | 1,242 | $ | 476 | |||||||||||||
| Foreclosed real estate | $ | 308 | $ | 308 | $ | 1,050 | |||||||||||||
| Nonperforming assets | $ | 2,192 | $ | 1,550 | $ | 1,526 | |||||||||||||
| Loans 30-89 days past due and on accrual | $ | 2,180 | $ | 630 | $ | 4,343 | |||||||||||||
| Restructured loans | $ | 5,453 | $ | 5,942 | $ | 5,820 | |||||||||||||
| Allowance for loan losses | $ | 6,165 | $ | 6,024 | $ | 5,794 | |||||||||||||
| Nonperforming assets to total assets | 0.36 | % | 0.25 | % | 0.34 | % | |||||||||||||
| Allowance for loan losses to total loans | 1.27 | % | 1.24 | % | 1.65 | % | |||||||||||||
| Allowance for loan losses to nonaccrual loans | 327.2 | % | 485.0 | % | 1217.2 | % | |||||||||||||
| Net charge-offs | $ | 41 | (2 | ) | $ | (4 | ) | (2 | ) | $ | (6 | ) | (2 | ) | |||||
| Net charge-offs to average loans (annualized) | 0.10 | % | (2 | ) | -0.01 | % | (2 | ) | -0.01 | % | (2 | ) | |||||||
| CAPITAL RATIOS AND DATA | |||||||||||||||||||
| Common shares outstanding at period end | 6,368,798 | 6,368,798 | 4,157,632 | ||||||||||||||||
| Tangible common equity | $ | 54,144 | $ | 53,093 | $ | 39,553 | |||||||||||||
| Tangible book value per common share | $ | 8.50 | $ | 8.34 | $ | 9.51 | |||||||||||||
| Shareholders' equity to total assets | 10.2 | % | 10.0 | % | 8.8 | % | |||||||||||||
| Total capital to risk-weighted assets (3) | 12.5 | % | 12.5 | % | 12.6 | % | |||||||||||||
| Tier 1 capital to risk-weighted assets (3) | 11.3 | % | 11.3 | % | 11.4 | % | |||||||||||||
| Tier 1 common equity ratio (3) | 11.3 | % | 11.3 | % | 11.4 | % | |||||||||||||
| Tier 1 leverage capital ratio (3) | 10.7 | % | 11.1 | % | 11.2 | % | |||||||||||||
| DEPOSIT RATIOS AND DATA | |||||||||||||||||||
| Core deposits (4) | $ | 401,519 | $ | 407,017 | $ | 288,940 | |||||||||||||
| Core deposits to total deposits | 77.4 | % | 77.4 | % | 75.3 | % | |||||||||||||
| Noninterest bearing deposits to total deposits | 27.6 | % | 30.2 | % | 24.5 | % | |||||||||||||
| Net loan to deposit ratio | 91.9 | % | 90.8 | % | 91.3 | % | |||||||||||||
| 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. | |||||||||||||||||