SPOKANE, Wash., April 20, 2017 (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, 2017.
Net income for the first quarter of 2017 was $970 thousand, compared to $839 thousand for the first quarter of 2016 and $1.41 million for the fourth quarter of 2016. Earnings per diluted share increased 15.4% year over year, from $0.13 in the first quarter of 2016 to $0.15 in the first quarter of 2017, but are down $0.06 from the previous quarter.
Company President and CEO, Russell Lee, commented, “We are pleased with our results to date in 2017. We have accomplished a considerable amount of infrastructure development in the past year and still achieved our targets for financial performance. This should place the Company in an excellent position to complete our recently announced acquisition of CenterPointe Community Bank and to begin to welcome its employees and customers to INB.”
Balance sheet
As of March 31, 2017, the Company had total assets of $641.7 million, compared to $636.5 million on December 31, 2016 and $604.3 million on March 31, 2016. This represents an increase of $5.1 million, or 0.8% over the previous quarter and $37.3 million, or 6.2%, year over year.
The investment portfolio was $27.4 million as of March 31, 2017, down $2.5 million, or 8.4%, from $30.0 million at December 31, 2016. The net unrealized gain in the portfolio was $339 thousand, 8.4% lower than the $370 thousand net unrealized gain at December 31, 2016.
The net loan portfolio was $494.2 million on March 31, 2017. This represents an increase of $3.4 million, or 0.7%, from last quarter. Year over year, the net loan portfolio was up $17.7 million, or 3.7%.
Deposits at March 31, 2017 were $552.1 million, an increase of $3.6 million, or 0.7%, compared to December 31, 2016 and an increase of $33.4 million, or 6.4%, compared to March 31, 2016. Noninterest bearing deposits were $162.3 million at quarter end, representing 29.4% of total deposits. This compares to noninterest bearing deposits of $164.0 million, or 29.9% of total deposits, at December 31, 2016, and to $143.3 million, or 27.6% of total deposits, at March 31, 2016.
Asset quality, provision and allowance for loan losses
The Bank’s nonperforming assets (“NPAs”) were $1.7 million at quarter end, representing 0.26% 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 last quarter were $1.5 million, representing 0.23% of total assets, and at March 31, 2016, NPAs were $2.2 million, representing 0.36% of total assets.
The Bank had net loan charge-offs of $95 thousand, representing 0.23% of average loans, for the three-month period ending on March 31, 2017, compared to net loan charge-offs of $41 thousand for the comparable period in 2016. The provision for loan losses was $203 thousand for the three-month period ending on March 31, 2017, compared to $182 thousand for the comparable period in 2016. As of March 31, 2017, the allowance for loan losses was $6.4 million, or 1.27% of gross loans; this was slightly higher than on December 31, 2016 when it was $6.3 million and represented 1.26% of the loan portfolio.
Capital
Shareholders’ equity increased $1.1 million, or 1.6%, during the first quarter of 2017, which was mostly related to earnings retention. Tangible book value of the Company’s common stock was $9.30 per share on March 31, 2017, up $0.17, or 1.9%, over the $9.13 per share on December 31, 2016; year over year, tangible book value is up $0.80 per share, or 9.4%.
The Bank continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” under regulatory standards. As of March 31, 2017, the Bank’s Tier 1 leverage capital to average assets ratio was 11.1%, its common equity Tier 1 (“CET1”) capital ratio was 11.8%, and its total capital to risk-weighted assets ratio was 13.0%. 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 2017, representing a decrease of $337 thousand, or 4.5%, from the previous quarter, and representing a decrease of $16 thousand, or 0.2%, over the comparable quarter in 2016. Total revenue is defined as net interest income plus noninterest income.
Net interest income
Net interest income was $6.0 million for the quarter ended March 31, 2017, a decrease of $158 thousand, or 2.6%, from the previous quarter and a decrease of $36 thousand, or 0.6%, from the first quarter of 2016. The decrease in net interest income is primarily due to declining levels of purchased loan discount accretion. The net interest margin (interest income minus interest expense, divided by average earning assets) decreased from 4.21% in the fourth quarter of 2016 to 4.13% in the first quarter of 2017; excluding net purchased loan discount accretion, the net interest margin was 4.01% and 4.00%, respectively.
Noninterest income
Noninterest income was $1.1 million for the first quarter of 2017, down $179 thousand, or 14.2%, compared to the previous quarter, but up $20 thousand, or 1.9%, compared to the first quarter of 2016. The decrease in noninterest income during the first quarter of 2017 was largely related to lower revenues from sales of residential mortgage loans which is normal for the first quarter of the year.
Noninterest expense
Noninterest expense totaled $5.5 million for the first quarter of 2017, up $80 thousand, or 1.5%, compared to the previous quarter, but down $284 thousand compared to the first quarter of 2016 which included $361 thousand of nonrecurring acquisition-related costs. Compared to the fourth quarter of 2016, salaries and employee benefits increased $106 thousand, or 3.5%, and other noninterest expenses decreased $189 thousand, or 12.8%.
Key ratios
Return on average assets (“ROA”) for first quarter 2017 was 0.61%, compared to 0.88% in the previous quarter and 0.55% in the first quarter last year. Return on average equity (“ROE”) was 5.83% for first quarter 2017, compared to 8.59% in the previous quarter and 5.47% for the first quarter last year. Excluding nonrecurring acquisition expenses, ROA would have been 0.71% and ROE would have been 7.02% for the first quarter of 2016.
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, one branch in Central 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) | 2017 | 2016 | 2016 | ||||||||
| Assets: | |||||||||||
| Cash and due from banks | $ | 21,715 | $ | 22,183 | $ | 19,717 | |||||
| Interest bearing deposits | 61,160 | 53,259 | 33,885 | ||||||||
| Time deposits held for investment | 4,640 | 4,640 | 4,797 | ||||||||
| Securities available for sale | 22,796 | 25,328 | 32,337 | ||||||||
| Federal Home Loan Bank stock, at cost | 1,050 | 1,033 | 1,075 | ||||||||
| Loans receivable, net | 494,210 | 490,816 | 476,481 | ||||||||
| Loans held for sale | 1,391 | 3,824 | 683 | ||||||||
| Premises and equipment, net | 13,967 | 14,061 | 14,256 | ||||||||
| Bank-owned life insurance | 7,084 | 7,054 | 6,971 | ||||||||
| Accrued interest receivable | 2,366 | 2,642 | 2,517 | ||||||||
| Goodwill | 6,206 | 6,206 | 6,290 | ||||||||
| Core deposit intangible | 1,214 | 1,262 | 1,435 | ||||||||
| Foreclosed real estate | 652 | 745 | 308 | ||||||||
| Other assets | 3,204 | 3,475 | 3,567 | ||||||||
| Total assets | $ | 641,655 | $ | 636,528 | $ | 604,319 | |||||
| Liabilities: | |||||||||||
| Deposits: | |||||||||||
| Noninterest bearing deposits | $ | 162,251 | $ | 164,027 | $ | 143,312 | |||||
| Interest bearing transaction and savings deposits | 275,953 | 261,432 | 258,207 | ||||||||
| Time deposits | 113,860 | 122,962 | 117,162 | ||||||||
| 552,064 | 548,421 | 518,681 | |||||||||
| Accrued interest payable | 126 | 151 | 120 | ||||||||
| Borrowed funds | 18,222 | 18,567 | 19,600 | ||||||||
| Other liabilities | 4,123 | 3,334 | 4,049 | ||||||||
| Total liabilities | 574,535 | 570,473 | 542,450 | ||||||||
| Shareholders' equity: | |||||||||||
| Common stock | 52,849 | 52,733 | 52,391 | ||||||||
| Retained earnings | 14,047 | 13,078 | 8,846 | ||||||||
| Accumulated other comprehensive income | 224 | 244 | 632 | ||||||||
| Total shareholders' equity | 67,120 | 66,055 | 61,869 | ||||||||
| Total liabilities and shareholders' equity | $ | 641,655 | $ | 636,528 | $ | 604,319 | |||||
| Northwest Bancorporation, Inc. | |||||||||||||
| Consolidated Statements of Operations | |||||||||||||
| (Unaudited) | |||||||||||||
| Three Months Ended | |||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | |||||||||||
| (dollars in thousands, except per share data) | 2017 | 2016 | 2016 | ||||||||||
| Interest and dividend income: | |||||||||||||
| Loans receivable | $ | 6,337 | $ | 6,477 | $ | 6,322 | |||||||
| Investment securities | 164 | 230 | 252 | ||||||||||
| Other | 125 | 104 | 62 | ||||||||||
| Total interest and dividend income | 6,626 | 6,811 | 6,636 | ||||||||||
| Interest expense: | |||||||||||||
| Deposits | 401 | 419 | 373 | ||||||||||
| Borrowed funds | 181 | 190 | 183 | ||||||||||
| Total interest expense | 582 | 609 | 556 | ||||||||||
| Net interest income | 6,044 | 6,202 | 6,080 | ||||||||||
| Provision for loan losses | 203 | - | 182 | ||||||||||
| Noninterest income: | |||||||||||||
| Service charges on deposits | 219 | 216 | 212 | ||||||||||
| Gains from sale of loans, net | 277 | 451 | 225 | ||||||||||
| Other noninterest income | 582 | 590 | 621 | ||||||||||
| Total noninterest income | 1,078 | 1,257 | 1,058 | ||||||||||
| Noninterest expense: | |||||||||||||
| Salaries and employee benefits | 3,143 | 3,037 | 2,862 | ||||||||||
| Occupancy and equipment | 432 | 411 | 441 | ||||||||||
| Depreciation and amortization | 304 | 310 | 302 | ||||||||||
| Advertising and promotion | 272 | 216 | 237 | ||||||||||
| FDIC assessments | 45 | 9 | 103 | ||||||||||
| Gain on foreclosed real estate, net | (20 | ) | (53 | ) | - | ||||||||
| Acquisition-related costs | - | (23 | ) | 361 | |||||||||
| Other noninterest expense | 1,286 | 1,475 | 1,440 | ||||||||||
| Total noninterest expense | 5,462 | 5,382 | 5,746 | ||||||||||
| Income before income taxes | 1,457 | 2,077 | 1,210 | ||||||||||
| Income tax expense | 487 | 672 | 371 | ||||||||||
| NET INCOME | $ | 970 | $ | 1,405 | $ | 839 | |||||||
| Earnings per common share - basic | $ | 0.15 | $ | 0.22 | $ | 0.13 | |||||||
| Earnings per common share - diluted | $ | 0.15 | $ | 0.21 | $ | 0.13 | |||||||
| Weighted average common shares outstanding - basic | 6,420,161 | 6,404,319 | 6,368,798 | ||||||||||
| Weighted average common shares outstanding - diluted | 6,594,681 | 6,544,481 | 6,432,280 | ||||||||||
| 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) | 2017 | 2016 | 2016 | ||||||||||||||||
| PERFORMANCE RATIOS (annualized) | |||||||||||||||||||
| Return on average assets | 0.61 | % | 0.88 | % | 0.55 | % | |||||||||||||
| Return on average equity | 5.83 | % | 8.59 | % | 5.47 | % | |||||||||||||
| Yield on earning assets | 4.53 | % | 4.62 | % | 4.76 | % | |||||||||||||
| Cost of funds | 0.58 | % | 0.60 | % | 0.57 | % | |||||||||||||
| Net interest margin | 4.13 | % | 4.21 | % | 4.36 | % | |||||||||||||
| Noninterest income to average assets | 0.68 | % | 0.78 | % | 0.70 | % | |||||||||||||
| Noninterest expense to average assets | 3.44 | % | 3.35 | % | 3.79 | % | |||||||||||||
| Provision expense to average assets | 0.13 | % | 0.00 | % | 0.12 | % | |||||||||||||
| Efficiency ratio (1) | 76.7 | % | 72.2 | % | 80.5 | % | |||||||||||||
| Mar. 31, | Dec. 31, | Mar. 31, | |||||||||||||||||
| 2017 | 2016 | 2016 | |||||||||||||||||
| ASSET QUALITY RATIOS AND DATA | |||||||||||||||||||
| Nonaccrual loans | $ | 1,004 | $ | 740 | $ | 1,884 | |||||||||||||
| Foreclosed real estate | $ | 652 | $ | 745 | $ | 308 | |||||||||||||
| Nonperforming assets | $ | 1,656 | $ | 1,485 | $ | 2,192 | |||||||||||||
| Loans 30-89 days past due and on accrual | $ | 469 | $ | 1,598 | $ | 2,180 | |||||||||||||
| Restructured loans | $ | 3,203 | $ | 3,589 | $ | 5,453 | |||||||||||||
| Allowance for loan losses | $ | 6,372 | $ | 6,263 | $ | 6,165 | |||||||||||||
| Nonperforming assets to total assets | 0.26 | % | 0.23 | % | 0.36 | % | |||||||||||||
| Allowance for loan losses to total loans | 1.27 | % | 1.26 | % | 1.27 | % | |||||||||||||
| Allowance for loan losses to nonaccrual loans | 634.7 | % | 846.4 | % | 327.2 | % | |||||||||||||
| Net charge-offs | $ | 95 | (2 | ) | $ | 44 | (2 | ) | $ | 41 | (2 | ) | |||||||
| Net charge-offs to average loans (annualized) | 0.23 | % | (2 | ) | 0.11 | % | (2 | ) | 0.10 | % | (2 | ) | |||||||
| CAPITAL RATIOS AND DATA | |||||||||||||||||||
| Common shares outstanding at period end | 6,421,361 | 6,419,861 | 6,368,798 | ||||||||||||||||
| Tangible common equity | $ | 59,700 | $ | 58,587 | $ | 54,144 | |||||||||||||
| Tangible book value per common share | $ | 9.30 | $ | 9.13 | $ | 8.50 | |||||||||||||
| Shareholders' equity to total assets | 10.5 | % | 10.4 | % | 10.2 | % | |||||||||||||
| Total capital to risk-weighted assets (3) | 13.0 | % | 13.0 | % | 12.5 | % | |||||||||||||
| Tier 1 capital to risk-weighted assets (3) | 11.8 | % | 11.8 | % | 11.3 | % | |||||||||||||
| Tier 1 common equity ratio (3) | 11.8 | % | 11.8 | % | 11.3 | % | |||||||||||||
| Tier 1 leverage capital ratio (3) | 11.1 | % | 10.8 | % | 10.7 | % | |||||||||||||
| DEPOSIT RATIOS AND DATA | |||||||||||||||||||
| Core deposits (4) | $ | 438,204 | $ | 425,459 | $ | 401,519 | |||||||||||||
| Core deposits to total deposits | 79.4 | % | 77.6 | % | 77.4 | % | |||||||||||||
| Noninterest bearing deposits to total deposits | 29.4 | % | 29.9 | % | 27.6 | % | |||||||||||||
| Net loan to deposit ratio | 89.5 | % | 89.5 | % | 91.9 | % | |||||||||||||
| 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. | |||||||||||||||||