SPOKANE, Wash., Jan. 26, 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 December 31, 2016.
Net income for the fourth quarter of 2016 was $1.41 million, compared to $1.55 million for the previous quarter and $726 thousand for the fourth quarter of 2015. Earnings per diluted share decreased 12.5%, from $0.24 for the third quarter of 2016, to $0.21 for the fourth quarter of 2016, but are up $0.10, from the fourth quarter of last year.
For the year ended December 31, 2016, net income was $5.07 million, compared to $3.06 million for the corresponding period in 2015, representing an increase of $2.01 million, or 65.7%. Earnings per diluted share increased 27.9%, from $0.61 in 2015, to $0.78 in 2016. Operating results for 2016 include a full year of contribution from the former Bank of Fairfield, whose parent company was acquired in October 2015.
Company President and CEO, Russell Lee, commented, “It is gratifying to see that the hard work of the entire INB Team has been positively reflected in the Company’s 2016 financial results. We have been focused on executing our long-term plan of strategic growth, and the benefits to our shareholders of this plan are becoming evident.”
Balance sheet
As of December 31, 2016, the Company had total assets of $636.5 million, compared to $647.9 million on September 30, 2016 and $610.8 million on December 31, 2015. The decrease in assets of $11.4 million, or 1.8%, during the fourth quarter was primarily related to an expected decrease in deposits from a single customer. Year over year, assets are up $25.7 million, or 4.2%.
The investment portfolio was $30.0 million as of December 31, 2016, down $1.9 million, or 6.1%, from $31.9 million at September 30, 2016. The net unrealized gain in the portfolio was $370 thousand, 57.2% lower than the $865 thousand net unrealized gain at September 30, 2016.
The net loan portfolio was $490.8 million on December 31, 2016. This represents an increase of $20.1 million, or 4.3%, from last quarter; loan growth during the fourth quarter of 2016 is primarily related to INB’s new loan production office in Richland, Washington. Year over year, the net loan portfolio was up $13.5 million, or 2.8%.
Deposits at December 31, 2016 were $548.4 million, a decrease of $11.7 million, or 2.1%, compared to September 30, 2016 and an increase of $22.5 million, or 4.3%, compared to December 31, 2015. The decrease during the fourth quarter was partially related to a short-term $16 million deposit from one customer on the last day of the third quarter; without this temporary deposit, total deposits would have increased $4.3 million during the fourth quarter. Noninterest bearing deposits were $164.0 million at year end, representing 29.9% of total deposits. This compares to noninterest bearing deposits of $176.9 million, or 31.6% of total deposits, at September 30, 2016, and to $158.6 million, or 30.2% of total deposits, at December 31, 2015.
Asset quality, provision and allowance for loan losses
The Bank’s nonperforming assets (“NPAs”) were $1.5 million at year end, representing 0.23% 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 $1.6 million, representing 0.24% of total assets, and at December 31, 2015, NPAs were $1.6 million, representing 0.25% of total assets.
The Bank had net loan recoveries of $29 thousand and net loan charge-offs of $79 thousand for the three and twelve-month periods ending on December 31, 2016, compared to net loan recoveries of $4 thousand and $76 thousand for the comparable periods in 2015. The provision for loan losses was $0 and $363 thousand for the three and twelve-month periods ending on December 31, 2016, compared to $40 thousand and $220 thousand for the comparable periods in 2015. As of December 31, 2016, the allowance for loan losses was $6.3 million, or 1.26% of gross loans; this was slightly higher than on December 31, 2015 when it was $6.0 million and represented 1.25% of the loan portfolio.
Capital
Shareholders’ equity increased $5.2 million, or 8.5%, during 2016, which was mostly related to earnings retention. Tangible book value of the Company’s common stock was $9.13 per share on December 31, 2016, up $0.78, or 9.3%, over the $8.35 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 regulatory standards. As of December 31, 2016, the Bank’s Tier 1 leverage capital to average assets ratio was 10.8%, 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 $7.5 million for the fourth quarter of 2016, representing a decrease of $227 thousand, or 3.0%, from the previous quarter, and representing an increase of $509 thousand, or 7.3%, over the comparable quarter in 2015. Total revenue was $29.7 million and $22.8 million for the years ended December 31, 2016 and 2015, respectively, which represents an increase of $6.9 million, or 30.0%. Total revenue is defined as net interest income plus noninterest income.
Net interest income
Net interest income was $6.2 million for the quarter ended December 31, 2016, a decrease of $233 thousand, or 3.6%, from the previous quarter and an increase of $264 thousand, or 4.4%, from the fourth quarter of 2015. The decrease is net interest income during the fourth quarter is largely due to declining levels of purchased loan discount accretion. Net interest income was $24.9 million for year ended December 31, 2016, compared to $18.8 million for the comparable period in 2015.
The net interest margin (interest income minus interest expense, divided by average earning assets) decreased from 4.44% in the fourth quarter of 2015 to 4.21% in the fourth quarter of 2016. For the year, the net interest margin was 4.41% in 2016 compared to 4.22% in 2015; excluding net purchased loan discount accretion, the net interest margin was 4.21% and 4.19%, respectively.
Noninterest income
Noninterest income was $1.3 million for the fourth quarter of 2016, up $245 thousand, or 24.2%, compared to the fourth quarter of 2015; this increase was largely related to higher revenues from sales of residential mortgage loans. Noninterest income ended 2016 at $4.7 million, an increase of $737 thousand, or 18.5%, over the same period in 2015. This year over year increase in noninterest income was partially due to higher revenues from sales of residential mortgage loans and partially due to increased revenues related to the Fairfield acquisition.
Noninterest expense
Noninterest expense totaled $5.4 million for the fourth quarter of 2016, down $471 thousand, or 8.0%, compared to the fourth quarter of 2015; excluding nonrecurring acquisition-related costs, noninterest expense would have increased $170 thousand, or 3.2%. Noninterest expense ended 2016 at $21.8 million, an increase of $3.7 million, or 20.6%, over 2015; excluding nonrecurring acquisition-related costs, noninterest expense would have increased $4.3 million, or 25.1%. This year over year increase in noninterest expense was primarily due to increased operating expenses related to the Fairfield acquisition.
Key ratios
Return on average assets (“ROA”) for fourth quarter 2016 was 0.88%, compared to 1.01% in the previous quarter and 0.49% in the fourth quarter last year. For the year ended December 31, 2016, ROA was 0.82%, compared to 0.63% for 2015. Excluding nonrecurring acquisition-related costs, ROA would have been 0.87% for the three and twelve-month periods ending December 31, 2016, compared to 0.76% and 0.77% for the three and twelve-month periods ending December 31, 2015, respectively.
Return on average equity (“ROE”) was 8.59% for fourth quarter 2016, compared to 9.69% in the previous quarter and 4.80% for the fourth quarter last year. For the year ended December 31, 2016, ROE was 8.00%, compared to 6.39% for 2015. Excluding nonrecurring acquisition-related costs, ROE would have been 8.50% and 8.47% for the three and twelve-month periods ending December 31, 2016, respectively, compared to 7.50% and 7.78% for the three and twelve-month periods ending December 31, 2015, respectively.
Yield on earning assets was 4.82% and 4.71% for the years ended December 31, 2016 and 2015, respectively, and the cost of funds was 0.59% and 0.67%, 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) | |||||||||||
| Dec. 31, | Sep. 30, | Dec. 31, | |||||||||
| (dollars in thousands) | 2016 | 2016 | 2015 | ||||||||
| Assets: | |||||||||||
| Cash and due from banks | $ | 22,183 | $ | 23,183 | $ | 21,253 | |||||
| Interest bearing deposits | 53,259 | 82,132 | 24,781 | ||||||||
| Time deposits held for investment | 4,640 | 2,000 | 14,946 | ||||||||
| Securities available for sale | 25,328 | 29,904 | 34,242 | ||||||||
| Federal Home Loan Bank stock, at cost | 1,033 | 1,047 | 1,041 | ||||||||
| Loans receivable, net | 490,816 | 470,725 | 477,336 | ||||||||
| Loans held for sale | 3,824 | 3,084 | 1,971 | ||||||||
| Premises and equipment, net | 14,061 | 14,032 | 14,080 | ||||||||
| Bank-owned life insurance | 7,054 | 7,028 | 6,924 | ||||||||
| Accrued interest receivable | 2,642 | 3,217 | 2,706 | ||||||||
| Goodwill | 6,206 | 6,206 | 6,206 | ||||||||
| Core deposit intangible | 1,262 | 1,320 | 1,494 | ||||||||
| Foreclosed real estate | 745 | 524 | 308 | ||||||||
| Other assets | 3,475 | 3,495 | 3,513 | ||||||||
| Total assets | $ | 636,528 | $ | 647,897 | $ | 610,801 | |||||
| Liabilities: | |||||||||||
| Deposits: | |||||||||||
| Noninterest bearing deposits | $ | 164,027 | $ | 176,877 | $ | 158,576 | |||||
| Interest bearing transaction and savings deposits | 261,432 | 259,282 | 248,442 | ||||||||
| Time deposits | 122,962 | 123,923 | 118,867 | ||||||||
| 548,421 | 560,082 | 525,885 | |||||||||
| Accrued interest payable | 151 | 122 | 131 | ||||||||
| Borrowed funds | 18,567 | 18,912 | 19,947 | ||||||||
| Other liabilities | 3,334 | 3,963 | 3,962 | ||||||||
| Total liabilities | 570,473 | 583,079 | 549,925 | ||||||||
| Shareholders' equity: | |||||||||||
| Common stock | 52,733 | 52,575 | 52,294 | ||||||||
| Retained earnings | 13,078 | 11,672 | 8,007 | ||||||||
| Accumulated other comprehensive income | 244 | 571 | 575 | ||||||||
| Total shareholders' equity | 66,055 | 64,818 | 60,876 | ||||||||
| Total liabilities and shareholders' equity | $ | 636,528 | $ | 647,897 | $ | 610,801 | |||||
| Northwest Bancorporation, Inc. | |||||||||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||
| Dec. 31, | Sep. 30, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||||
| (dollars in thousands, except per share data) | 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||
| Interest and dividend income: | |||||||||||||||||||||
| Loans receivable | $ | 6,477 | $ | 6,733 | $ | 6,177 | $ | 26,046 | $ | 19,793 | |||||||||||
| Investment securities | 230 | 230 | 274 | 941 | 1,105 | ||||||||||||||||
| Other | 104 | 59 | 41 | 278 | 93 | ||||||||||||||||
| Total interest and dividend income | 6,811 | 7,022 | 6,492 | 27,265 | 20,991 | ||||||||||||||||
| Interest expense: | |||||||||||||||||||||
| Deposits | 419 | 401 | 369 | 1,570 | 1,421 | ||||||||||||||||
| Borrowed funds | 190 | 186 | 185 | 747 | 741 | ||||||||||||||||
| Total interest expense | 609 | 587 | 554 | 2,317 | 2,162 | ||||||||||||||||
| Net interest income | 6,202 | 6,435 | 5,938 | 24,948 | 18,829 | ||||||||||||||||
| Provision for loan losses | - | 60 | 40 | 363 | 220 | ||||||||||||||||
| Noninterest income: | |||||||||||||||||||||
| Service charges on deposits | 216 | 214 | 234 | 852 | 897 | ||||||||||||||||
| Gains from sale of loans, net | 451 | 436 | 259 | 1,447 | 1,259 | ||||||||||||||||
| Other noninterest income | 590 | 601 | 519 | 2,430 | 1,836 | ||||||||||||||||
| Total noninterest income | 1,257 | 1,251 | 1,012 | 4,729 | 3,992 | ||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||
| Salaries and employee benefits | 3,037 | 2,912 | 2,912 | 11,620 | 9,380 | ||||||||||||||||
| Occupancy and equipment | 411 | 400 | 387 | 1,661 | 1,411 | ||||||||||||||||
| Depreciation and amortization | 310 | 300 | 299 | 1,215 | 1,130 | ||||||||||||||||
| Advertising and promotion | 216 | 201 | 177 | 917 | 649 | ||||||||||||||||
| FDIC assessments | 9 | 85 | 79 | 288 | 266 | ||||||||||||||||
| Gain on foreclosed real estate, net | (53 | ) | (1 | ) | - | (54 | ) | (142 | ) | ||||||||||||
| Acquisition-related costs | (23 | ) | 13 | 618 | 453 | 1,014 | |||||||||||||||
| Other noninterest expense | 1,475 | 1,418 | 1,381 | 5,730 | 4,393 | ||||||||||||||||
| Total noninterest expense | 5,382 | 5,328 | 5,853 | 21,830 | 18,101 | ||||||||||||||||
| Income before income taxes | 2,077 | 2,298 | 1,057 | 7,484 | 4,500 | ||||||||||||||||
| Income tax expense | 672 | 746 | 331 | 2,413 | 1,440 | ||||||||||||||||
| NET INCOME | $ | 1,405 | $ | 1,552 | $ | 726 | $ | 5,071 | $ | 3,060 | |||||||||||
| Earnings per common share - basic | $ | 0.22 | $ | 0.24 | $ | 0.11 | $ | 0.79 | $ | 0.62 | |||||||||||
| Earnings per common share - diluted | $ | 0.21 | $ | 0.24 | $ | 0.11 | $ | 0.78 | $ | 0.61 | |||||||||||
| Weighted average common shares outstanding - basic | 6,404,319 | 6,385,511 | 6,341,958 | 6,382,048 | 4,910,233 | ||||||||||||||||
| Weighted average common shares outstanding - diluted | 6,544,481 | 6,527,075 | 6,426,076 | 6,511,253 | 4,999,185 | ||||||||||||||||
| Northwest Bancorporation, Inc. | |||||||||||||||||||||||||||||||||
| Key Financial Ratios and Data | |||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||||||||||||||
| Dec. 31, | Sep. 30, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||||||||||||||||
| (dollars in thousands, except per share data) | 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||||
| PERFORMANCE RATIOS (annualized) | |||||||||||||||||||||||||||||||||
| Return on average assets | 0.88 | % | 1.01 | % | 0.49 | % | 0.82 | % | 0.63 | % | |||||||||||||||||||||||
| Return on average equity | 8.59 | % | 9.69 | % | 4.80 | % | 8.00 | % | 6.39 | % | |||||||||||||||||||||||
| Yield on earning assets | 4.62 | % | 4.97 | % | 4.86 | % | 4.82 | % | 4.71 | % | |||||||||||||||||||||||
| Cost of funds | 0.60 | % | 0.59 | % | 0.59 | % | 0.59 | % | 0.67 | % | |||||||||||||||||||||||
| Net interest margin | 4.21 | % | 4.55 | % | 4.44 | % | 4.41 | % | 4.22 | % | |||||||||||||||||||||||
| Noninterest income to average assets | 0.78 | % | 0.81 | % | 0.68 | % | 0.77 | % | 0.82 | % | |||||||||||||||||||||||
| Noninterest expense to average assets | 3.35 | % | 3.45 | % | 3.94 | % | 3.54 | % | 3.74 | % | |||||||||||||||||||||||
| Provision expense to average assets | 0.00 | % | 0.04 | % | 0.03 | % | 0.06 | % | 0.05 | % | |||||||||||||||||||||||
| Efficiency ratio (1) | 72.2 | % | 69.3 | % | 84.2 | % | 73.6 | % | 79.3 | % | |||||||||||||||||||||||
| Dec. 31, | Sep. 30, | Dec. 31, | |||||||||||||||||||||||||||||||
| 2016 | 2016 | 2015 | |||||||||||||||||||||||||||||||
| ASSET QUALITY RATIOS AND DATA | |||||||||||||||||||||||||||||||||
| Nonaccrual loans | $ | 740 | $ | 1,036 | $ | 1,242 | |||||||||||||||||||||||||||
| Foreclosed real estate | $ | 745 | $ | 524 | $ | 308 | |||||||||||||||||||||||||||
| Nonperforming assets | $ | 1,485 | $ | 1,560 | $ | 1,550 | |||||||||||||||||||||||||||
| Loans 30-89 days past due and on accrual | $ | 1,598 | $ | 540 | $ | 630 | |||||||||||||||||||||||||||
| Restructured loans | $ | 3,589 | $ | 3,929 | $ | 5,942 | |||||||||||||||||||||||||||
| Allowance for loan losses | $ | 6,263 | $ | 6,308 | $ | 6,024 | |||||||||||||||||||||||||||
| Nonperforming assets to total assets | 0.23 | % | 0.24 | % | 0.25 | % | |||||||||||||||||||||||||||
| Allowance for loan losses to total loans | 1.26 | % | 1.32 | % | 1.25 | % | |||||||||||||||||||||||||||
| Allowance for loan losses to nonaccrual loans | 846.4 | % | 608.9 | % | 485.0 | % | |||||||||||||||||||||||||||
| Net charge-offs | $ | (29 | ) | (2 | ) | $ | (23 | ) | (2 | ) | $ | (4 | ) | (2 | ) | $ | 79 | (3 | ) | $ | (76 | ) | (3 | ) | |||||||||
| Net charge-offs to average loans (annualized) | -0.07 | % | (2 | ) | -0.06 | % | (2 | ) | -0.01 | % | (2 | ) | 0.02 | % | (3 | ) | -0.02 | % | (3 | ) | |||||||||||||
| CAPITAL RATIOS AND DATA | |||||||||||||||||||||||||||||||||
| Common shares outstanding at period end | 6,419,861 | 6,393,244 | 6,368,798 | ||||||||||||||||||||||||||||||
| Tangible common equity | $ | 58,587 | $ | 57,292 | $ | 53,176 | |||||||||||||||||||||||||||
| Tangible book value per common share | $ | 9.13 | $ | 8.96 | $ | 8.35 | |||||||||||||||||||||||||||
| Shareholders' equity to total assets | 10.4 | % | 10.0 | % | 10.0 | % | |||||||||||||||||||||||||||
| Total capital to risk-weighted assets (3) | 13.0 | % | 13.0 | % | 12.5 | % | |||||||||||||||||||||||||||
| Tier 1 capital to risk-weighted assets (3) | 11.8 | % | 11.9 | % | 11.3 | % | |||||||||||||||||||||||||||
| Tier 1 common equity ratio (3) | 11.8 | % | 11.9 | % | 11.3 | % | |||||||||||||||||||||||||||
| Tier 1 leverage capital ratio (3) | 10.8 | % | 11.0 | % | 11.1 | % | |||||||||||||||||||||||||||
| DEPOSIT RATIOS AND DATA | |||||||||||||||||||||||||||||||||
| Core deposits (4) | $ | 425,459 | $ | 436,159 | $ | 407,018 | |||||||||||||||||||||||||||
| Core deposits to total deposits | 77.6 | % | 77.9 | % | 77.4 | % | |||||||||||||||||||||||||||
| Noninterest bearing deposits to total deposits | 29.9 | % | 31.6 | % | 30.2 | % | |||||||||||||||||||||||||||
| Net loan to deposit ratio | 89.5 | % | 84.0 | % | 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. | |||||||||||||||||||||||||||||||