Northwest Bancorporation, Inc. Reports First Quarter 2017 Financial Results

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.            
                   

CONTACT: For more information contact:

Russell A. Lee, President and CEO
Holly Poquette, Chief Financial Officer
509.456.8888
nbct@inb.com

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