<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended September 30, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________________ to ______________
Commission File Number 000-23129
NORTHWAY FINANCIAL, INC
(Exact name of registrant as specified in its charter)
New Hampshire 04-3368579
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Main Street
Berlin, New Hampshire 03570
Address of principal executive offices (Zip Code)
(603) 752-1171
(Registrant's telephone number, including area code)
No Change
(Former name, former address and former fiscal year, if changed since last year)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past ninety (90) days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date. At October 29, 1999, there
were 1,648,169 shares of common stock outstanding, par value $1.00 per share.
<PAGE>
INDEX
NORTHWAY FINANCIAL, INC.
PART I. FINANCIAL INFORMATION PAGE
Item 1.
Financial Statements (Unaudited)
Consolidated Statements of Income for the Three
Months and Nine Months Ended September 30, 1999
and 1998 ........................................................ 3
Consolidated Balance Sheets at September 30, 1999
and December 31, 1998 ........................................... 4
Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1999 and 1998 ........................ 5
Notes to Consolidated Financial Statements ...................... 7
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................. 8
Item 3.
Quantitative and Qualitative Disclosures about
Market Risk ..................................................... 12
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings ............................................... 13
Item 2.
Changes in Securities ........................................... 13
Item 3.
Defaults Upon Senior Securities ................................. 13
Item 4.
Submission of Matters to a Vote of Security Holders ............. 13
Item 5.
Other Information ............................................... 13
Item 6.
Exhibits and Reports on Form 8-K ................................ 13
Signatures ............................................................... 14
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
NORTHWAY FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
(Dollars in thousands, except per share data) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest and dividend income:
Loans $ 6,967 $ 6,208 $ 19,201 $ 18,107
Investment securities available-for-sale 823 836 2,424 2,547
Investment securities held-to-maturity 137 169 423 530
Federal funds sold 9 163 228 547
Interest bearing deposits 2 2 5 4
---------- ---------- ---------- ----------
Total interest and dividend income 7,938 7,378 22,281 21,735
---------- ---------- ---------- ----------
Interest expense:
Deposits 2,514 2,717 7,438 8,077
Borrowed funds 365 213 804 646
---------- ---------- ---------- ----------
Total interest expense 2 ,879 2,930 8,242 8,723
---------- ---------- ---------- ----------
Net interest and dividend income 5,059 4,448 14,039 13,012
Provision for loan losses 135 135 405 405
---------- ---------- ---------- ----------
Net interest and dividend income after provision for loan losses 4,924 4,313 13,634 12,607
---------- ---------- ---------- ----------
Noninterest income:
Service charges on deposit accounts and fees 232 206 683 623
Securities gains, net 85 16 496 408
Other 338 175 808 463
---------- ---------- ---------- ----------
Total noninterest income 655 397 1,987 1,494
---------- ---------- ---------- ----------
Noninterest expense:
Salaries and employee benefits 2,227 1,650 6,265 4,783
Office occupancy and equipment 670 492 1,908 1,414
Amortization of deposit purchase premium 104 75 254 226
Other 1,139 930 3,229 2,686
---------- ---------- ---------- ----------
Total noninterest expense 4,140 3,147 11,656 9,109
---------- ---------- ---------- ----------
Income before income tax expense 1,439 1,563 3,965 4,992
Income tax expense 483 516 1,352 1,683
---------- ---------- ---------- ----------
Net income $ 956 $ 1,047 $ 2,613 $ 3,309
========== ========== ========== ==========
Comprehensive net income $ 683 $ 1,182 $ 1,639 $ 3,486
========== ========== ========== ==========
Per share data:
Earnings per common share $ 0.58 $ 0.60 $ 1.55 $ 1.91
Cash dividends declared $ 0.14 $ 0.14 $ 0.42 $ 0.28
Weighted average number of common shares 1,661,223 1,731,969 1,690,097 1,731,969
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
NORTHWAY FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
Sept. 30, Dec. 31,
(Dollars in thousands, except per share data) 1999 1998
- --------------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Cash and due from banks and interest bearing deposits $ 11,972 $ 14,948
Federal funds sold -- 36,475
Investment securities available-for-sale 55,583 50,567
Investment securities held-to-maturity 11,107 6,509
Loans held for sale 450 535
Loans 349,226 284,158
Unearned income (720) (332)
Allowance for loan losses (4,761) (4,404)
-------- --------
Loans, net 343,745 279,422
-------- --------
Real estate acquired by foreclosure 172 158
Accrued interest receivable 2,142 1,846
Deferred income tax asset, net 1,959 1,222
Premises and equipment, net 10,267 9,963
Deposit purchase premium 1,393 860
Other assets 3,915 1,467
-------- --------
Total assets $442,705 $403,972
======== ========
Liabilities and Stockholders' Equity
Liabilities:
Interest bearing deposits $301,460 $305,113
Non-interest bearing deposits 50,847 45,808
Securities sold under agreements to repurchase 8,972 6,791
Short-term Federal Home Loan Bank advances 12,950 1,583
Long-term Federal Home Loan Bank advances 24,528 1,528
Other liabilities 4,360 2,193
-------- --------
Total liabilities 403,117 363,016
-------- --------
Stockholders' equity:
Preferred stock, $1 par value; 1,000,000
shares authorized; none issued -- --
Common stock, $1 par value; 9,000,000 shares
authorized; 1,731,969 shares issued and
1,653,169 outstanding September 30, 1999
and 1,729,969 outstanding December 31, 1998 1,732 1,732
Additional paid-in-capital 2,101 2,101
Retained earnings 38,986 37,084
Treasury stock, at cost (78,800 and 2,000
shares, respectively) (2,351) (55)
Accumulated other comprehensive (loss) income,
net of tax (880) 94
-------- --------
Total stockholders' equity 39,588 40,956
-------- --------
Total liabilities and stockholders' equity $442,705 $403,972
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
NORTHWAY FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months
Ended September 30,
(Dollars in thousands) 1999 1998
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 2,613 $ 3,309
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for:
Loan losses 405 405
Depreciation and amortization 933 828
Deferred income taxes (123) 5
Write-down of real estate acquired by foreclosure 39 5
Gains on sales of investment securities
available-for-sale, net (496) (408)
Amortization of premium on investment and mortgage-backed
securities, net 64 97
Increase (decrease) in unearned income, net 388 (135)
Gains on sales of real estate acquired by foreclosure -- (83)
Net decrease (increase) in loans held for sale 85 (330)
(Increase) decrease in accrued income receivable (296) 61
(Increase) in other assets (2,448) (4,182)
Increase in other liabilities 2,167 3,667
--------- ---------
Net cash provided by operating activities 3,331 3,239
--------- ---------
Cash flows from investing activities:
Proceeds from sales of investment securities
available-for-sale 5,038 3,059
Proceeds from maturities of investment securities
held-to-maturity 3,160 4,686
Proceeds from maturities of investment securities
available-for-sale 4,896 18,000
Purchase of investment securities available-for-sale (20,561) (19,974)
Purchase of investment securities held-to-maturity (9,242) (6,827)
Principal payments received on investment securities
held-to-maturity 1,452 --
Principal payments received on investment securities
available-for-sale 4,487 3,951
Net increase in loans (65,468) (12,987)
Proceeds from sales of real estate acquired
by foreclosure 299 418
Additions to deposit purchase premium (787) --
Additions to premises and equipment (983) (1,359)
--------- ---------
Net cash used in investing activities (77,709) (11,033)
--------- ---------
Cash flows from financing activities:
Cash received from acquisition of branches 18,040 --
Net (decrease) increase in deposits (16,654) 7,956
Advances from Federal Home Loan Bank 315,200 3,041
Repayment of Federal Home Loan Bank advances (280,833) (6,252)
Net increase in securities sold under agreements
to repurchase 2,181 679
Purchases of treasury stock (2,296) --
Cash dividends paid (711) (485)
--------- ---------
Net cash provided by financing activities 34,927 4,939
--------- ---------
Net decreases in cash and cash equivalents (39,451) (2,855)
Cash and cash equivalents at beginning of period 51,423 31,396
--------- ---------
Cash and cash equivalents at end of period $ 11,972 $ 28,541
========= =========
Cash paid during the period for:
Interest $ 8,098 $ 9,153
========= =========
Income taxes $ 1,429 $ 1,628
========= =========
Supplemental disclosures of non-cash activities:
Loans transferred to real estate acquired
by foreclosure $ 352 $ 336
========= =========
Loans charged off, net of recoveries $ 48 $ 175
========= =========
Financed sales of real estate acquired by
foreclosure $ 44 $ 267
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
NORTHWAY FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
1. Basis of Presentation.
The unaudited consolidated financial statements of Northway Financial, Inc.
and its two wholly owned bank subsidiaries (collectively "the Corporation")
included herein have been prepared by the Corporation in accordance with the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted in accordance with such rules and regulations. The
Corporation, however, believes that the disclosures are adequate to make the
information presented not misleading. The amounts shown reflect, in the opinion
of management, all adjustments necessary for a fair presentation of the
financial statements for the periods reported.
The results of operations for the three and nine month periods ended
September 30, 1999 and 1998 are not necessarily indicative of the results of
operations to be expected for the full year or any other interim periods.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Introduction
The following discussion and analysis and related consolidated financial
statements include Northway Financial, Inc. and its wholly-owned subsidiaries,
The Berlin City Bank and Pemigewasset National Bank (collectively the
"Corporation").
Certain statements in this Form 10-Q are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward looking statements may include, but are not limited to, projections of
revenue, income or loss, plans for future operations and acquisitions, plans
related to products or services of the Corporation and its subsidiaries, and the
statements made in the Year 2000 discussion. Such forward looking statements are
subject to known and unknown risks, uncertainties and contingencies, many of
which are beyond the control of the Corporation. To the extent any such risks,
uncertainties and contingencies are realized, the Corporation's actual results,
performance or achievements could differ materially from anticipated results,
performance or achievements. Factors that might affect such forward looking
statements include, among other things, overall economic and business
conditions, the demand for the Corporation's products and services, competitive
factors in the industries in which the Corporation competes, changes in
government regulations, the timing, impact and other uncertainties of future
acquisitions, and the Corporation's handling of the Year 2000 issue.
Financial Condition
On July 9, 1999, the Corporation, through its Pemigewasset National Bank
subsidiary, completed the purchase of two branch offices from the Vermont
National Bank. The branches, located in Franklin and Tilton, New Hampshire, hold
deposits totaling approximately $18.0 million. Proceeds from the assumption of
deposit liabilities pursuant to the branch purchase were used to pay down short
term debt to the Federal Home Loan Bank of Boston.
The Corporation's total assets at September 30, 1999 were $442.7 million
compared to $404.0 million at December 31, 1998, a $38.7 million increase. Net
loans, including loans held for sale, increased $64.2 million to $344.2 million,
principal because installment loans outstanding, primarily indirect auto,
increased $50.5 million during this period. Investment securities, primarily
U.S. Government Agency and municipal obligations, increased $9.6 million to
$66.7 million. Cash and cash equivalents decreased $39.5 million to $12.0
million as a result of the increases in loan and investment securities balances.
Total deposits increased $1.4 million. The increase was primarily caused by the
purchase of the two branches described above. The increase in deposits from the
branch purchase was offset by a withdrawal of a $14.5 million temporary money
market deposit on January 6, 1999 which was deposited on December 31, 1998.
Federal Home Loan Bank advances increased $34.4 million while repurchase
agreements increased $2.2 million. Total stockholders equity declined $1.4
million from $41.0 million at December 31, 1998 to $39.6 million at September
30, 1999. The decline in stockholders' equity was a result of treasury share
purchases totaling $2.3 million, dividend payments of $0.7 million and a decline
in the market value of securities available for sale of $1.0 million. This
decrease in stockholders' equity was partially offset by net income of $2.6
million.
The Corporation maintains an allowance for loan losses to absorb future
charge-offs of loans in the existing portfolio. The allowance is increased when
a loan loss provision is recorded as an expense in the income statement. When a
loan, or portion thereof, is considered uncollectible, it is charged against
this allowance. Recoveries of amounts previously charged off are added to the
allowance when collected. At September 30, 1999 the allowance for loan losses
was $4.8 million, or 1.36% of total loans, as compared to $4.4 million, or 1.55%
of total loans at December 31, 1998. The adequacy of the allowance for loan
losses was based on an evaluation by each bank's management and Board of
Directors of current and anticipated economic conditions, changes in the
diversification, size and risk within the loan portfolio, and other factors. An
analysis of the allowance for loan losses for the three month and nine month
periods ended September 30, 1999 and 1998 is as follows:
Three Months Nine Months
Ended September 30, Ended September 30,
(Dollars in thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------
Balance at beginning of period $4,637 $4,344 $4,404 $4,156
------ ------ ------ ------
Charge-offs (98) (131) (264) (381)
Recoveries 87 38 216 206
------ ------ ------ ------
Net Charge-offs (11) (93) (48) (175)
Provision for loan losses 135 135 405 405
------ ------ ------ ------
Balance at end of period $4,761 $4,386 $4,761 $4,386
====== ====== ====== ======
Nonperforming loans totaled $1.7 million as of September 30, 1999, compared
to $2.5 million at December 31, 1998. The ratio of nonperforming loans to total
loans was 0.48% as of September 30, 1999 compared to 0.90% at December 31, 1998
and the ratio of nonperforming assets to total assets was 0.42% as of September
30, 1999 compared to 0.67% at December 31, 1998.
Results of Operations
The Corporation reported net income of $956 thousand, or $0.58 per share,
for the three months ended September 30, 1999, versus $1,047 thousand, or $0.60
per common share, for the three months ended September 30, 1998. Net income for
the nine months ended September 30, 1999 was $2.6 million, or $1.55 per share,
as compared to $3.3 million, or $1.91 per share, for the nine months ended
September 30, 1998. The decrease in net income is a result of the implementation
of several strategic initiatives in 1998 that have increased noninterest expense
and reduced short term earnings in 1999. These initiatives include the opening
of new branches in Conway Village and Tilton, New Hampshire; the creation of a
statewide indirect lending program; and an expansion of the Corporation's
traditional lending programs. Additional staffing and office facilities required
by these initiatives is the primary cause for the increases in salaries and
benefits and occupancy and equipment expenses.
Net interest income for the third quarter increased $611 thousand to $5.0
million as compared to $4.4 million for the third quarter of the prior year. For
the nine months ended September 30, 1999 net interest income increased $1.0
million to $14.0 million as compared to $13.0 million for the same period of the
prior year. The increase is a result of higher average loan balances which
enabled the Corporation to maintain the level of interest income while interest
expense decreased due to a more favorable deposit mix and lower interest rates.
Noninterest income increased $258 thousand to $655 thousand in the third
quarter of 1999 versus $397 thousand in the third quarter of 1998. For the nine
months ended September 30, 1999 noninterest income increased $0.5 million to
$2.0 million as compared to $1.5 million for the same period of the prior year.
The increase was primarily attributable to increases in security gains and
increases in other noninterest income items resulting from the imposition of an
ATM surcharge, the creation of mortgage servicing assets and loan fees.
Noninterest expense increased $1.0 million to $4.1 million for the quarter
ended September 30, 1999 compared to the $3.1 million recorded during the same
period last year. For the nine months ended September 30, 1999 noninterest
expense totaled $11.7 million, an increase of $2.6 million over the $9.1 million
recorded for the same period of the prior year. The increase was principally
attributable to the implementation of the strategic initiatives outlined above.
Income Tax Expense
The Corporation recognized income tax expense of $1.4 million and $1.7
million for the nine months ended September 30, 1999 and 1998, respectively. The
effective tax rate was 34.1% and 33.7% for those respective periods. The
increase in the effective tax rate is due to the fact that on April 29, 1999 New
Hampshire adopted a new tax law that increased the rate of the Business Profits
Tax from seven to eight percent of income. The tax applies to the Corporation's
1999 fiscal year.
Liquidity
Liquidity risk management refers to the Corporation's and its subsidiaries'
ability to raise funds in order to meet their existing and anticipated financial
obligations. These obligations are the withdrawal of deposits on demand or at
their contractual maturity, the repayment of borrowings as they mature, the
ability to fund new and existing loan commitments and the ability to take
advantage of new business opportunities. Liquidity may be provided through
amortization, maturity or sale of assets such as loans and securities
available-for-sale, liability sources such as increased deposits, utilization of
the FHLB credit facility, purchased or other borrowed funds, and access to the
capital markets. Liquidity targets are subject to change based on economic and
market conditions and are controlled and monitored by the Corporation's
Asset/Liability Committee.
At the subsidiary bank level, liquidity is managed by measuring the net
amount of marketable assets after deducting pledged assets, plus lines of
credit, primarily with the FHLB, which are available to fund liquidity
requirements. Management then measures the adequacy of that aggregate amount
relative to the aggregate amount of liabilities deemed to be sensitive or
volatile liabilities. These include core deposits in excess of $100,000, term
deposits with short maturities, and credit commitments outstanding.
Additionally, the parent holding company requires cash for various
operating needs including dividends to shareholders, the stock repurchase
program, capital injections to the subsidiary banks, and the payment of general
corporate expenses. The primary source of liquidity for the parent holding
company is dividends from the subsidiary banks.
The Corporation's current level of liquidity and funds availability from
outside sources are sufficient to meet the Corporation's needs, however the
Corporation has been successful in its efforts to increase its lending
capabilities and may need to identify additional sources of liquidity as the
loan portfolio builds.
Capital
The Corporation's Tier 1 and Total Risk Based Capital ratios were 12.76%
and 14.01%, respectively, at September 30, 1999. The Corporation's leverage
ratio at September 30, 1999 was 9.13%.
As of September 30, 1999, the capital ratios of the Corporation and all its
subsidiary banks exceeded the minimum capital ratio requirements of the "well
capitalized" category under the Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA).
Impact of the Year 2000 Issue
The statements in the following section include "Year 2000 readiness
disclosures" within the meaning of the Year 2000 Information and Readiness
Disclosure Act.
There is considerable concern over the ability of many computer software
programs to function when the year 2000 arrives. This concern arises because
many existing programs use only the last two digits to refer to the year. As
such, programs do not recognize the difference between a year that begins with
"20" instead of the current "19."
The Corporation has developed a Year 2000 strategic plan and a Year 2000
test plan. The Corporation appointed a dedicated Year 2000 project manager. Each
of the Corporation's subsidiary banks have Year 2000 action teams. These teams
and the Year 2000 project manager work together closely.
The first phase of this project called for the identification of all
information and non information technology systems, both in house and those
provided by third party vendors. All systems have been identified.
The second phase was to complete a risk analysis assessment of each
information and non information technology system. This second phase has been
completed.
The third phase was to renovate the information and non information
technology systems to ensure Year 2000 compliance based upon conclusions reached
in the risk analysis assessment phase. Renovation of the subsidiary banks' core
operating hardware was completed on September 19, 1998. Renovation of the banks'
core operating software was completed on October 10, 1998. Renovations to the
critical mission operating systems was completed by March 31, 1999.
The fourth phase was to validate the renovations to the system. The testing
of the core operating systems was substantially completed by December 31, 1998.
The Corporation hired an outside independent third party to review the
Corporation's validation and testing procedures. Validation of the core
operating systems was completed on March 31, 1999.
The fifth phase was to implement Year 2000 compliant systems. The
Corporation believes that all mission critical systems are now operating on a
Year 2000 compliant basis.
The Corporation has identified both customers and vendors with whom it has
a material relationship and has determined that the risk that these third party
relationships pose to the Corporation is low. For those customers where a
borrowing relationship exists, the subsidiary banks have completed a customer
risk assessment to determine the status of their Year 2000 efforts.
The Corporation has developed a Year 2000 budget which includes
administration, cost of new technology and the cost of testing. Total expenses
from Year 2000 compliance are estimated to be $263,000 a $6,000 increase over
the Corporation's prior estimate. Actual expenses incurred to date are $202,000.
Expenses incurred to date in 1999 are $123,000 and it is projected that total
Year 2000 expense in 1999 will approximate $162,000, a $16,000 decrease over the
prior estimate.
The development of a Business Resumption Contingency Plan, to deal with the
Corporation's worst case scenario, loss of electric power, has been completed.
Contingency planning teams have been appointed and are led by the Year 2000
project manager. The Corporation hired an outside independent third party to
assist the Corporation in preparing the contingency plan. The four phases to the
plan include developing organization planning guidelines, performing a business
impact analysis, drafting a business resumption contingency plan and validating
the plan.
Should the Corporation's worst case scenario, the loss of electric power,
occur, the Corporation now has in place an electric generator at its operations
center. This should allow the Corporation to continue to run its core operating
system. Transactions that would be performed at a number of the Corporation's
locations would then have to be transported to the operations center for input.
This would continue until such time as electric power is restored.
The Year 2000 project manager provides progress reports to the
Corporation's and the subsidiary banks' Boards of Directors on a monthly basis.
The Corporation's subsidiary banks are subject to regulation by the Federal
Deposit Insurance Corporation and the Office of the Comptroller of the Currency.
In the event the Corporation's efforts as described above fail to adequately
resolve any such Year 2000 issues affecting the Corporation's subsidiary banks,
the Corporation could be subject to formal supervisory or enforcement actions by
their respective regulators.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For information regarding quantitative and qualitative disclosures about
market risk, see the Corporation's discussion under Item 7A of its Annual Report
on Form 10-K for the fiscal year ended December 31, 1998. Between December 31,
1998 and September 30, 1999, there were no material changes in the Corporation's
market risk.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number
(27) Financial Data Schedule
(b) The Corporation did not file any Reports on Form 8-K during
the quarter ended September 30, 1999.
<PAGE>
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTHWAY FINANCIAL, INC.
November 12, 1999 BY: \S\ William J. Woodward
-------------------
William J. Woodward
President & CEO
(Principal Executive Officer)
November 12, 1999 BY: \S\ George L. Fredette
-------------------
George L. Fredette
Senior Vice President & CFO
(Principal Financial and Accounting
Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT AND FROM THE MANAGEMENT DISCUSSION AND ANALYSIS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND
MANAGEMENT DISCUSSION.
</LEGEND>
<S> <C>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1999
<CASH> 11,877
<INT-BEARING-DEPOSITS> 95
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 55,583
<INVESTMENTS-CARRYING> 11,107
<INVESTMENTS-MARKET> 11,079
<LOANS> 348,956
<ALLOWANCE> 4,761
<TOTAL-ASSETS> 442,705
<DEPOSITS> 352,307
<SHORT-TERM> 21,922
<LIABILITIES-OTHER> 4,360
<LONG-TERM> 24,528
0
0
<COMMON> 1,732
<OTHER-SE> 37,856
<TOTAL-LIABILITIES-AND-EQUITY> 442,705
<INTEREST-LOAN> 19,201
<INTEREST-INVEST> 2,847
<INTEREST-OTHER> 233
<INTEREST-TOTAL> 22,281
<INTEREST-DEPOSIT> 7,438
<INTEREST-EXPENSE> 8,242
<INTEREST-INCOME-NET> 14,039
<LOAN-LOSSES> 405
<SECURITIES-GAINS> 496
<EXPENSE-OTHER> 11,656
<INCOME-PRETAX> 3,965
<INCOME-PRE-EXTRAORDINARY> 3,965
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,613
<EPS-BASIC> 1.55
<EPS-DILUTED> 1.55
<YIELD-ACTUAL> 7.96
<LOANS-NON> 1,683
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,236
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,404
<CHARGE-OFFS> 264
<RECOVERIES> 216
<ALLOWANCE-CLOSE> 4,761
<ALLOWANCE-DOMESTIC> 3,571
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,190
</TABLE>
