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.

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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