SPOKANE, Wash., Oct. 20, 2017 (GLOBE NEWSWIRE) -- Northwest Bancorporation, Inc. (OTC:NBCT) (the “Company”), the holding company of Inland Northwest Bank (the “Bank” or “INB”), today reported financial results for the quarter ended September 30, 2017.
On July 14, 2017, the Company completed its acquisition of CenterPointe Community Bank (“CenterPointe”). Company President and CEO, Russell Lee, commented, “We are very happy to have completed the acquisition of CenterPointe Community Bank in the third quarter of this year and welcome the customers and staff of this very successful company to INB. INB brings a bigger product offering and larger ability to meet customers’ needs in the Hood River and The Dalles markets where CenterPointe was a market leader. Additionally, this partnership gives INB a foothold in the Portland Metro area which, due to recent bank consolidation, is not served by a mid-sized community bank such as INB. In addition to the balance sheet growth that came from this acquisition, INB has had significant organic growth over the same period in 2016 with organic loan growth accounting for more growth over this period than that from the acquisition.”
Prior to adjustments for one-time acquisition costs, net income for the third quarter of 2017 was $960 thousand, compared to $1.05 million for the previous quarter and $1.55 million for the third quarter of 2016. Earnings per diluted share decreased from $0.16 for the second quarter of 2017, to $0.13 for the third quarter of 2017, and are down $0.11 from the third quarter of last year. Excluding acquisition costs, net of tax, quarterly core earnings were up $669 thousand and $0.07 per diluted share compared to the previous quarter and up $319 thousand and $0.02 per diluted share compared to the third quarter of last year.
For the nine months ended September 30, 2017, net income was $2.98 million, compared to $3.67 million for the corresponding period in 2016, representing a decrease of $682 thousand, or 18.6%. Earnings per diluted share decreased 21.4% year over year, from $0.56 for the first nine months of 2016 to $0.44 for the first nine months of 2017. Year over year core earnings for the first nine months of the year were up $153 thousand, but earnings per diluted share were down $0.01 due to additional shares of the Company’s common stock issued in connection with the acquisition of CenterPointe.
Balance sheet
As of September 30, 2017, the Company had total assets of $827.7 million, compared to $639.7 million on June 30, 2017 and $647.9 million on September 30, 2016. Total assets increased $188.1 million, or 29.4%, during the third quarter, of which $150.6 million is related to the acquisition of CenterPointe. Year over year, assets are up $179.9 million, or 27.8%.
The investment portfolio doubled in size during the third quarter with the acquisition of CenterPointe. As of September 30, 2017, the investment portfolio totaled $51.0 million, up $25.7 million from the previous quarter end.
The net loan portfolio was $677.5 million on September 30, 2017, representing an increase of $147.4 million, or 27.8%, during the third quarter of 2017. The quarter included organic loan growth of $51.6 million, or 9.7%, combined with $95.8 million acquired from CenterPointe. Year over year, the net loan portfolio was up $206.8 million, which includes organic growth of $111.0 million, or 23.6%.
Deposits were $721.7 million at September 30, 2017, compared to $549.6 million on June 30, 2017 and $560.1 million on September 30, 2016. During the third quarter, organic deposit growth totaled $34.2 million, or 6.2%, while the CenterPointe acquisition added $137.9 million to total deposits. Year over year, deposits increased $161.6 million, which includes organic growth of $23.7 million, or 4.2%. Noninterest bearing deposits represented 33.3% of total deposits as of September 30, 2017, compared to 30.2% at June 30, 2017, and to 31.6% at September 30, 2016.
Asset quality, provision and allowance for loan losses
The Bank’s nonperforming assets (“NPAs”) were $1.9 million at quarter 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 $1.7 million, representing 0.26% of total assets, and at September 30, 2016, NPAs were $1.6 million, representing 0.24% of total assets.
The Bank had net loan recoveries of $16 thousand and net loan charge-offs of $93 thousand for the three and nine-month periods ending on September 30, 2017, compared to net loan recoveries of $23 thousand and net loan charge-offs of $79 thousand for the comparable periods in 2016. The provision for loan losses was $386 thousand and $842 thousand for the three and nine-month periods ending on September 30, 2017, compared to $60 thousand and $363 thousand for the comparable periods in 2016. As of September 30, 2017, the allowance for loan losses was $7.0 million, or 1.29% of nonacquired gross loans, compared to 1.32% for the previous quarter and 1.49% for the comparable period in 2016.
Capital
Shareholders’ equity increased $10.5 million, or 15.3%, during the third quarter of 2017. The increase primarily reflects issuance of 783,142 shares of the Company’s common stock as partial consideration for the acquisition of CenterPointe. Tangible book value of the Company’s common stock was $9.21 per share on September 30, 2017, down $0.28, or 3.0%, from the $9.49 per share on June 30, 2017; year over year, tangible book value is up $0.25 per share, or 2.8%. The quarterly decrease in tangible book value per share reflects the combined result of the increase in shareholders’ equity, net of intangible assets resulting from the CenterPointe acquisition, and the increase in number of shares outstanding.
The Bank continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” under regulatory standards. As of September 30, 2017, the Bank’s Tier 1 leverage capital to average assets ratio was 10.1%, its common equity Tier 1 (“CET1”) capital ratio was 10.1%, and its total capital to risk-weighted assets ratio was 11.0%. 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 $9.9 million for the third quarter of 2017, representing an increase of $2.2 million, or 28.2%, from the previous quarter, and representing an increase of $2.2 million, or 29.1%, over the comparable quarter in 2016. Total revenue was $24.8 million for the first nine months of 2017, compared to $22.2 million for the same period in 2016, representing an increase of $2.6 million, or 11.6%. Total revenue is defined as net interest income plus noninterest income.
Net interest income
Net interest income was $8.6 million for the quarter ended September 30, 2017, an increase of $2.2 million, or 34.6%, from the previous quarter and an increase of $2.2 million, or 33.6%, from the third quarter of 2016. Net interest income was $21.0 million for the nine months ended September 30, 2017, an increase of $2.3 million, or 12.2%, from the comparable period in 2016. The net interest margin (interest income minus interest expense, divided by average earning assets) was 4.82% for the third quarter of 2017, compared to 4.37% the previous quarter; excluding net purchased loan discount accretion, the net interest margin was 4.66% and 4.30%, respectively. Year to date, the net interest margin was 4.46% compared to 4.48% last year through September; excluding net purchased loan discount accretion, the net interest margin was 4.34% and 4.28%, respectively.
Noninterest income
Noninterest income was $1.3 million during the third quarter of 2017, down $30 thousand, or 2.2%, from the previous quarter; this decrease was primarily related to lower revenues from sales of residential mortgage loans and was partially offset by increases in services charges on deposits arising from the CenterPointe acquisition. Noninterest income for the first nine months of 2017 was $3.8 million, an increase of $292 thousand, or 8.4%, over the same period in 2016. This year over year increase in noninterest income was related to higher NSF income, higher debit and credit card interchange income, higher rental income and a $90 thousand recovery on an acquired written off loan, as well as additional revenues related to the CenterPointe acquisition.
Noninterest expense
Noninterest expense totaled $8.0 million for the third quarter of 2017, up $2.1 million, or 36.5%, from the previous quarter. Included in noninterest expense during the quarter were nonrecurring acquisition-related costs totaling $1.3 million, as well as higher operating costs related to the CenterPointe acquisition. CenterPointe added four additional locations to our branch network as well as additional personnel. Noninterest expense for the first nine months of 2017 was $19.3 million, an increase of $2.9 million, or 17.4%, over the same period in 2016. Year-to-date noninterest expense included $1.5 million in nonrecurring acquisition-related costs, compared to $476 thousand for the same period in 2016; excluding the acquisition-related costs, noninterest expenses are up $1.8 million, or 11.3%, year over year reflecting the Company’s investment in its human capital and technology infrastructures.
Key ratios
Return on average assets (“ROA”) for third quarter 2017 was 0.49%, compared to 0.66% in the previous quarter and 1.01% in the third quarter last year. For the nine-month periods ended September 30, 2017 and 2016, ROA was 0.58% and 0.80%, respectively. Core ROA (ROA excluding nonrecurring acquisition expenses) were 0.96% and 0.81% for the three and nine-month periods ended September 30, 2017, and 1.01% and 0.87% for the same periods in 2016. Return on average equity (“ROE”) was 5.22% for third quarter 2017, compared to 6.23% in the previous quarter and 9.69% for the third quarter last year. For the nine-month periods ended September 30, 2017 and 2016, ROE was 5.68% and 7.79%, respectively. Core ROE (ROE excluding nonrecurring acquisition expenses) were 10.22% and 7.87% for the three and nine-month periods ended September 30, 2017 and 9.75% and 8.46% for the same periods in 2016.
About Northwest Bancorporation, Inc.
Northwest Bancorporation, Inc. is the parent company of Inland Northwest Bank, a state-chartered community bank which currently operates 21 offices across Washington, Idaho and Oregon. 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) | ||||||||||
| Sep. 30, | Jun. 30, | Sep. 30, | ||||||||
| (dollars in thousands) | 2017 | 2017 | 2016 | |||||||
| Assets: | ||||||||||
| Cash and due from banks | $ | 39,704 | $ | 23,887 | $ | 23,183 | ||||
| Interest bearing deposits | 9,477 | 21,812 | 82,132 | |||||||
| Time deposits held for investment | 5,895 | 3,920 | 2,000 | |||||||
| Securities available for sale | 45,146 | 21,464 | 29,904 | |||||||
| Federal Home Loan Bank stock, at cost | 1,379 | 1,036 | 1,047 | |||||||
| Loans receivable, net | 677,524 | 530,169 | 470,725 | |||||||
| Loans held for sale | 2,142 | 1,682 | 3,084 | |||||||
| Premises and equipment, net | 15,604 | 14,690 | 14,032 | |||||||
| Bank-owned life insurance | 9,385 | 7,113 | 7,028 | |||||||
| Accrued interest receivable | 4,188 | 2,765 | 3,217 | |||||||
| Goodwill | 9,483 | 6,206 | 6,206 | |||||||
| Core deposit intangible | 2,811 | 1,167 | 1,320 | |||||||
| Foreclosed real estate | 702 | 652 | 524 | |||||||
| Other assets | 4,309 | 3,134 | 3,495 | |||||||
| Total assets | $ | 827,749 | $ | 639,697 | $ | 647,897 | ||||
| Liabilities: | ||||||||||
| Deposits: | ||||||||||
| Noninterest bearing deposits | $ | 240,410 | $ | 166,023 | $ | 176,877 | ||||
| Interest bearing transaction and savings deposits | 368,602 | 271,385 | 259,282 | |||||||
| Time deposits | 112,711 | 112,204 | 123,923 | |||||||
| 721,723 | 549,612 | 560,082 | ||||||||
| Accrued interest payable | 139 | 149 | 122 | |||||||
| Borrowed funds | 22,421 | 17,877 | 18,912 | |||||||
| Other liabilities | 4,685 | 3,740 | 3,963 | |||||||
| Total liabilities | 748,968 | 571,378 | 583,079 | |||||||
| Shareholders' equity: | ||||||||||
| Common stock | 62,387 | 52,959 | 52,575 | |||||||
| Retained earnings | 16,062 | 15,102 | 11,672 | |||||||
| Accumulated other comprehensive income | 332 | 258 | 571 | |||||||
| Total shareholders' equity | 78,781 | 68,319 | 64,818 | |||||||
| Total liabilities and shareholders' equity | $ | 827,749 | $ | 639,697 | $ | 647,897 | ||||
| Northwest Bancorporation, Inc. | ||||||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| Sep. 30, | Jun. 30, | Sep. 30, | Sep. 30, | Sep. 30, | ||||||||||||||||
| (dollars in thousands, except per share data) | 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Interest and dividend income: | ||||||||||||||||||||
| Loans receivable | $ | 8,856 | $ | 6,654 | $ | 6,733 | $ | 21,847 | $ | 19,569 | ||||||||||
| Investment securities | 310 | 193 | 230 | 667 | 711 | |||||||||||||||
| Other | 68 | 119 | 59 | 312 | 174 | |||||||||||||||
| Total interest and dividend income | 9,234 | 6,966 | 7,022 | 22,826 | 20,454 | |||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | 436 | 394 | 401 | 1,231 | 1,151 | |||||||||||||||
| Borrowed funds | 202 | 187 | 186 | 570 | 557 | |||||||||||||||
| Total interest expense | 638 | 581 | 587 | 1,801 | 1,708 | |||||||||||||||
| Net interest income | 8,596 | 6,385 | 6,435 | 21,025 | 18,746 | |||||||||||||||
| Provision for loan losses | 386 | 253 | 60 | 842 | 363 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Service charges on deposits | 267 | 224 | 214 | 710 | 636 | |||||||||||||||
| Gains from sale of loans, net | 339 | 387 | 436 | 1,003 | 996 | |||||||||||||||
| Other noninterest income | 722 | 747 | 601 | 2,051 | 1,840 | |||||||||||||||
| Total noninterest income | 1,328 | 1,358 | 1,251 | 3,764 | 3,472 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 3,761 | 3,111 | 2,912 | 10,015 | 8,583 | |||||||||||||||
| Occupancy and equipment | 480 | 520 | 400 | 1,432 | 1,250 | |||||||||||||||
| Depreciation and amortization | 410 | 311 | 300 | 1,025 | 905 | |||||||||||||||
| Advertising and promotion | 265 | 261 | 201 | 798 | 701 | |||||||||||||||
| FDIC assessments | 70 | 59 | 85 | 174 | 279 | |||||||||||||||
| Gain on foreclosed real estate, net | - | (9 | ) | (1 | ) | (29 | ) | (1 | ) | |||||||||||
| Acquisition-related costs | 1,288 | 237 | 13 | 1,525 | 476 | |||||||||||||||
| Other noninterest expense | 1,714 | 1,363 | 1,418 | 4,363 | 4,255 | |||||||||||||||
| Total noninterest expense | 7,988 | 5,853 | 5,328 | 19,303 | 16,448 | |||||||||||||||
| Income before income taxes | 1,550 | 1,637 | 2,298 | 4,644 | 5,407 | |||||||||||||||
| Income tax expense | 590 | 583 | 746 | 1,660 | 1,741 | |||||||||||||||
| NET INCOME | $ | 960 | $ | 1,054 | $ | 1,552 | $ | 2,984 | $ | 3,666 | ||||||||||
| Earnings per common share - basic | $ | 0.14 | $ | 0.16 | $ | 0.24 | $ | 0.45 | $ | 0.58 | ||||||||||
| Earnings per common share - diluted | $ | 0.13 | $ | 0.16 | $ | 0.24 | $ | 0.44 | $ | 0.56 | ||||||||||
| Weighted average common shares outstanding - basic | 7,094,730 | 6,423,845 | 6,385,511 | 6,648,716 | 6,374,570 | |||||||||||||||
| Weighted average common shares outstanding - diluted | 7,296,177 | 6,618,430 | 6,527,075 | 6,837,629 | 6,515,290 | |||||||||||||||
| Northwest Bancorporation, Inc. | ||||||||||||||||||||||||||||
| Key Financial Ratios and Data | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
| Sep. 30, | Jun. 30, | Sep. 30, | Sep. 30, | Sep. 30, | ||||||||||||||||||||||||
| (dollars in thousands, except per share data) | 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||
| PERFORMANCE RATIOS (annualized) | ||||||||||||||||||||||||||||
| Return on average assets | 0.49% | 0.66% | 1.01% | 0.58% | 0.80% | |||||||||||||||||||||||
| Return on average equity | 5.22% | 6.23% | 9.69% | 5.68% | 7.79% | |||||||||||||||||||||||
| Yield on earning assets | 5.18% | 4.77% | 4.97% | 4.85% | 4.89% | |||||||||||||||||||||||
| Cost of funds | 0.53% | 0.58% | 0.59% | 0.56% | 0.58% | |||||||||||||||||||||||
| Net interest margin | 4.82% | 4.37% | 4.55% | 4.46% | 4.48% | |||||||||||||||||||||||
| Noninterest income to average assets | 0.68% | 0.86% | 0.81% | 0.73% | 0.76% | |||||||||||||||||||||||
| Noninterest expense to average assets | 4.09% | 3.69% | 3.45% | 3.76% | 3.60% | |||||||||||||||||||||||
| Provision expense to average assets | 0.20% | 0.16% | 0.04% | 0.16% | 0.08% | |||||||||||||||||||||||
| Efficiency ratio (1) | 80.5% | 75.6% | 69.3% | 77.9% | 74.0% | |||||||||||||||||||||||
| Sep. 30, | Jun. 30, | Sep. 30, | ||||||||||||||||||||||||||
| 2017 | 2017 | 2016 | ||||||||||||||||||||||||||
| ASSET QUALITY RATIOS AND DATA | ||||||||||||||||||||||||||||
| Nonaccrual loans | $1,199 | $1,002 | $1,036 | |||||||||||||||||||||||||
| Foreclosed real estate | $702 | $652 | $524 | |||||||||||||||||||||||||
| Nonperforming assets | $1,901 | $1,654 | $1,560 | |||||||||||||||||||||||||
| Loans 30-89 days past due and on accrual | $1,885 | $1,838 | $540 | |||||||||||||||||||||||||
| Restructured loans | $2,329 | $2,342 | $3,929 | |||||||||||||||||||||||||
| Allowance for loan losses | $7,013 | $6,611 | $6,308 | |||||||||||||||||||||||||
| Nonperforming assets to total assets | 0.23% | 0.26% | 0.24% | |||||||||||||||||||||||||
| Allowance for loan losses to total loans | 1.02% | 1.23% | 1.32% | |||||||||||||||||||||||||
| Allowance for loan losses to nonaccrual loans | 584.9% | 659.8% | 608.9% | |||||||||||||||||||||||||
| Net charge-offs | ($16) | (2) | $14 | (2) | ($23) | (2) | $93 | (3) | $79 | (3) | ||||||||||||||||||
| Net charge-offs to average loans (annualized) | -0.03% | (2) | 0.03% | (2) | -0.06% | (2) | 0.02% | (3) | 0.02% | (3) | ||||||||||||||||||
| CAPITAL RATIOS AND DATA | ||||||||||||||||||||||||||||
| Common shares outstanding at period end | 7,218,241 | 6,425,361 | 6,393,244 | |||||||||||||||||||||||||
| Tangible common equity | $66,487 | $60,946 | $57,292 | |||||||||||||||||||||||||
| Tangible book value per common share | $9.21 | $9.49 | $8.96 | |||||||||||||||||||||||||
| Shareholders' equity to total assets | 9.5% | 10.7% | 10.0% | |||||||||||||||||||||||||
| Total capital to risk-weighted assets (3) | 11.0% | 12.5% | 13.0% | |||||||||||||||||||||||||
| Tier 1 capital to risk-weighted assets (3) | 10.1% | 11.4% | 11.9% | |||||||||||||||||||||||||
| Tier 1 common equity ratio (3) | 10.1% | 11.4% | 11.9% | |||||||||||||||||||||||||
| Tier 1 leverage capital ratio (3) | 10.0% | 11.3% | 11.0% | |||||||||||||||||||||||||
| DEPOSIT RATIOS AND DATA | ||||||||||||||||||||||||||||
| Core deposits (4) | $609,012 | $437,408 | $436,159 | |||||||||||||||||||||||||
| Core deposits to total deposits | 84.4% | 79.6% | 77.9% | |||||||||||||||||||||||||
| Noninterest bearing deposits to total deposits | 33.3% | 30.2% | 31.6% | |||||||||||||||||||||||||
| Net loan to deposit ratio | 93.9% | 96.5% | 84.0% | |||||||||||||||||||||||||
| 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. | ||||||||||||||||||||||||||||