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Norwood Financial Corp. Announces First Quarter Earnings

By GlobeNewswire,  April 19, 2019, 08:15:00 AM EDT


HONESDALE, Pa., April 19, 2019 (GLOBE NEWSWIRE) -- Lewis J. Critelli, President and Chief Executive Officer of Norwood Financial Corp. (Nasdaq Global Market - NWFL) and its subsidiary, Wayne Bank, announced earnings of $3,190,000 for the three months ended March 31, 2019, increasing from the $3,129,000 recorded during the same three-month period of last year.  The increase was principally due to a higher level of net interest income, which was partially offset by increased operating expenses.  Earnings per share on a fully diluted basis were $0.51 in the first quarter of this year compared to $0.50 in the first quarter of 2018.  The annualized return on average assets was 1.09% in the first quarter of 2019 and the annualized return on average equity was 10.37%, compared to 1.13% and 11.00%, respectively, in the first quarter of 2018.

Total assets were $1.204 billion as of March 31, 2019, an increase of $76.6 million compared to the prior year total.  Total loans increased $88.5 million compared to March 31, 2018, total deposits increased $34.3 million over the past twelve months, and stockholders' equity increased $12.9 million during the past year. 

Non-performing assets totaled $2.9 million or 0.24% of total assets at March 31, 2019 comprised of $1.1 million of non-performing loans and $1.8 million of foreclosed real estate owned, compared to non-performing assets of $3.1 million, or 0.28% of total assets as of March 31, 2018.  Net charge-offs for the three-month period ending March 31, 2019 were $553,000 compared to $84,000 of net charge-offs in the first quarter of last year.  The increase in net charge-offs was due to one credit, which was transferred to foreclosed real estate during the first quarter of 2019.  The allowance for loan losses totaled $8,349,000 as of March 31, 2019 compared to $8,099,000 as of March 31, 2018.  As of March 31, 2019, the allowance for loan losses was 761% of nonperforming loans, compared to 482% on March 31, 2018.

Net interest income (fully taxable equivalent, or fte) was $9,536,000 during the first quarter of 2019, which is $453,000 higher than the comparable three-month period of last year.  A $90.0 million increase in average loans outstanding contributed to the increased interest income.  The fte yield on interest-earning assets improved 29 basis points compared to the prior year while the cost of funds increased 40 basis points due primarily to a 64 basis point increase in the average rate paid on certificates of deposit.  As a result, the annualized net interest margin (fte) decreased to 3.43% from 3.46% in the quarter ended March 31, 2018.  

Other income totaled $1,560,000 in the first quarter of 2019 compared to $1,694,000 during the same period of last year.  The decrease is attributable to a $142,000 reduction in net gains on sales of securities due to the absence of sales in 2019.  All other categories of other income increased $8,000, net. 

Operating expenses totaled $6,648,000 in the first quarter and were $400,000 higher than the $6,248,000 recorded in the same period of last year.  Salaries and benefits costs rose $187,000 and data processing costs increased $129,000.  All other operating expenses increased $84,000, or 3.4%, net.

Mr. Critelli stated, "Our first quarter results provide a good start for 2019 and are in-line with our budget.  Our loans have increased 11.4% over the past twelve months, our core operating expenses remain well controlled, and our capital base remains above regulatory "Well Capitalized" targets.  We are looking forward to expanding our markets into Luzerne County, Pennsylvania with the upcoming opening of our Hanover Township Office.  We will continue to search out opportunities available to us, and we look forward to serving our growing base of stockholders and customers."

Norwood Financial Corp. is the parent company of Wayne Bank, which operates from thirteen offices throughout Northeastern Pennsylvania and twelve offices in the Southern Tier of New York.  The Company's stock trades on the Nasdaq Global Market under the symbol "NWFL".

Forward-Looking Statements.

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements.  When used in this discussion, the words "believes", "anticipates", "contemplates", "expects", and similar expressions are intended to identify forward-looking statements.  Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected.  Those risks and uncertainties include changes in federal and state laws, changes in interest rates, the ability to control costs and expenses, demand for real estate, government fiscal and trade policies, cybersecurity and general economic conditions.  The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Measures

This release references tax-equivalent net interest income, which is a non-GAAP (Generally Accepted Accounting Principles) financial measure.  Tax-equivalent net interest income is derived from GAAP using an assumed tax rate of 21%.  We believe the presentation of net interest income on a tax-equivalent basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.  The following reconciles net interest income to net interest income on a fully taxable-equivalent basis:

(dollars in thousands) Three months ended March 31,
   2019    2018
Net interest income $ 9,271     $ 8,807  
Tax equivalent basis adjustment      265          276  
Net interest income on a fully taxable equivalent basis  $ 9,536     $

9,083  
               

This release also references average tangible equity, which is also a non-GAAP financial measure.  Average tangible equity is calculated by deducting average goodwill and other intangible assets from average stockholders' equity.  The Company believes that disclosure of tangible equity ratios enhances investor understanding of our financial position and improves the comparability of our financial data. The following reconciles average equity to average tangible equity:

(dollars in thousands) Three months ended March 31,
  2019

  2018

Average equity $ 124,746     $ 115,320  
Goodwill and other intangibles   (11,650 )     (11,772 )
Average tangible equity $ 113,096     $

103,548

 
               
               

Contact: 

William S. Lance

Executive Vice President &

Chief Financial Officer

Norwood Financial Corp

570-253-8505

www.waynebank.com 

                                     
                                     
NORWOOD FINANCIAL CORP.                                    
Consolidated Balance Sheets                                     
(dollars in thousands, except share and per share data)                                    
 (unaudited)                                    
    March 31                  
    2019      2018                   
ASSETS                            
Cash and due from banks  $ 13,583     $ 10,103                    
Interest-bearing deposits with banks   6,291       2,039                    
Cash and cash equivalents   19,874       12,142                    
                             
Securities available for sale   240,621       265,862                    
Loans receivable   864,198       775,681                    
Less: Allowance for loan losses   8,349       8,099                    
Net loans receivable   855,849       767,582                    
Regulatory stock, at cost   3,132       2,545                    
Bank premises and equipment, net   14,165       13,808                    
Bank owned life insurance   38,134       37,270                    
Foreclosed real estate owned   1,792       1,436                    
Accrued interest receivable   4,089       3,687                    
Goodwill   11,331       11,331                    
Other intangible assets   307       427                    
Other assets   14,301       10,947                    
TOTAL ASSETS  $ 1,203,595     $ 1,127,037                    
                             
LIABILITIES                            
Deposits:                            
Non-interest bearing demand  $ 206,806     $ 204,027                    
Interest-bearing   767,609       736,122                    
Total deposits   974,415       940,149                    
Short-term borrowings   37,824       29,905                    
Other borrowings   47,955       33,093                    
Accrued interest payable   2,457       1,456                    
Other liabilities   14,172       8,596                    
TOTAL LIABILITIES   1,076,823       1,013,199                    
                             
STOCKHOLDERS' EQUITY                            
Common Stock, $.10 par value, authorized 10,000,000 shares                            
issued:  2019: 6,301,263 shares, 2018:  6,257,563 shares   630       626                    
Surplus   48,559       47,548                    
Retained earnings   80,115       72,179                    
Treasury stock, at cost: 2019: 13,807 shares, 2018: 5,729 shares   (455 )     (188 )                  
Accumulated other comprehensive loss   (2,077 )     (6,327 )                  
TOTAL STOCKHOLDERS' EQUITY   126,772       113,838                    
                             
TOTAL LIABILITIES AND                            
STOCKHOLDERS' EQUITY  $ 1,203,595     $ 1,127,037                    
                             
                             
                             
                             
NORWOOD FINANCIAL CORP.                            
Consolidated Statements of Income                     
(dollars in thousands, except per share data)                            
 (unaudited)                    
  Three Months Ended March 31,        
    2019 

    2018                   
INTEREST INCOME                                
Loans receivable, including fees $ 9,970     $ 8,487                    
Securities   1,441       1,524                    
Other   15       18                    
Total Interest income   11,426       10,029                    
                             
INTEREST EXPENSE                            
Deposits   1,729       1,029                    
Short-term borrowings   123       52                    
Other borrowings   303       141                    
Total Interest expense   2,155       1,222                    
NET INTEREST INCOME   9,271       8,807                    
PROVISION FOR LOAN LOSSES   450       550                    
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   8,821       8,257                    
                             
OTHER INCOME                            
Service charges and fees   1,031       980                    
Income from fiduciary activities   142       137                    
Net realized gains on sales of securities     -       142                    
Gains on sales of loans, net     42       -                    
Earnings and proceeds on life insurance policies   202       273                    
Other   143       162                    
Total other income   1,560       1,694                    
                             
OTHER EXPENSES                            
Salaries and  employee benefits   3,649       3,462                    
Occupancy, furniture and equipment   924       892                    
Data processing  and related operations   448       319                    
Taxes, other than income   161       175                    
Professional fees   250       230                    
FDIC Insurance assessment   71       92                    
Foreclosed real estate   23       (19 )                  
Amortization of intangibles   29       34                    
Other   1,093       1,063                    
Total other expenses   6,648       6,248                    
                             
INCOME BEFORE TAX   3,733       3,703                    
INCOME TAX EXPENSE   543       574                    
NET INCOME $ 3,190     $ 3,129                    
                             
Basic earnings per share $ 0.51     $ 0.50                    
                             
Diluted earnings per share $ 0.51     $ 0.50                    
                   
                 
                             
NORWOOD FINANCIAL CORP.                      
Financial Highlights (Unaudited)                            
(dollars in thousands, except per share data)                            
                             
For the Three Months Ended March 31   2019       2018                    
                             
Net interest income $ 9,271     $ 8,807                    
Net income   3,190       3,129                    
                             
Net interest spread (fully taxable equivalent)   3.20 %     3.31 %                  
Net interest margin (fully taxable equivalent)   3.43 %     3.46 %                  
Return on average assets   1.09 %     1.13 %                  
Return on average equity   10.37 %     11.00 %                  
Return on average tangible equity   11.44 %     12.25 %                  
Basic earnings per share $ 0.51     $ 0.50                    
Diluted earnings per share $ 0.51     $ 0.50                    
                             
As of March 31                    
                   
Total assets $ 1,203,595     $ 1,127,037                    
Total loans receivable   864,198       775,681                    
Allowance for loan losses   8,349       8,099                    
Total deposits   974,415       940,149                    
Stockholders' equity   126,772       113,838                    
Trust assets under management   159,339       153,190                    
                   
Book value per share $ 20.16     $ 18.45                    
Tangible book value per share $ 18.31     $ 16.56                    
Equity to total assets   10.53 %     10.10 %                  
Allowance to total loans receivable   0.97 %     1.04 %                  
Nonperforming loans to total loans   0.13 %     0.22 %                  
Nonperforming assets to total assets   0.24 %     0.28 %                  
                                     
                                     
                                     
NORWOOD FINANCIAL CORP.                                    
Consolidated Balance Sheets (unaudited)                                    
(dollars in thousands)                                    
    March 31     December 31     September 30     June 30     March 31
    2019     2018     2018     2018     2018
ASSETS                                    
Cash and due from banks $ 13,583     $ 18,039     $ 17,073     $ 15,193   $ 10,103  
Interest-bearing deposits with banks   6,291       309       295       914     2,039  
Cash and cash equivalents   19,874       18,348       17,368       16,107     12,142  
                             
Securities available for sale   240,621       243,277       247,517       259,442     265,862  
Loans receivable   864,198       850,182       819,197       803,773     775,681  
Less: Allowance for loan losses   8,349       8,452       8,280       8,326     8,099  
Net loans receivable   855,849       841,730       810,917       795,447     767,582  
Regulatory stock, at cost   3,132       3,926       3,261       2,313     2,545  
Bank owned life insurance   38,134       37,932       37,718       37,485     37,270  
Bank premises and equipment, net   14,165       13,846       13,797       13,894     13,808  
Foreclosed real estate owned   1,792       1,115       1,209       1,386     1,436  
Goodwill and other intangibles   11,638       11,667       11,695       11,725     11,758  
Other assets   18,390       12,718       13,266       12,794     14,634  
TOTAL ASSETS $ 1,203,595     $ 1,184,559     $ 1,156,748     $ 1,150,593   $ 1,127,037  
                           
LIABILITIES                            
Deposits:                            
Non-interest bearing demand $ 206,806     $ 201,457     $ 218,979     $ 216,472   $ 204,027  
Interest-bearing deposits   767,609       745,323       720,735       734,417     736,122  
Total deposits   974,415       946,780       939,714       950,889     940,149  
Borrowings   85,779       105,330       89,469       73,608     62,998  
Other liabilities   16,629       10,164       10,885       10,563     10,052  
TOTAL LIABILITIES   1,076,823       1,062,274       1,040,068       1,035,060     1,013,199  
                                 
STOCKHOLDERS' EQUITY   126,772       122,285       116,680       115,533     113,838  
                                 
TOTAL LIABILITIES AND                            
STOCKHOLDERS' EQUITY $ 1,203,595     $ 1,184,559     $ 1,156,748     $ 1,150,593   $ 1,127,037  
                                     
                                     
                                     
NORWOOD FINANCIAL CORP.                                    
Consolidated Statements of Income (unaudited)                                    
(dollars in thousands, except per share data)                                    
    March 31     December 31     September 30     June 30     March 31
Three months ended   2019

    2018

    2018

    2018     2018

INTEREST INCOME                            
Loans receivable, including fees $ 9,970     $ 9,759     $ 9,301     $ 8,857   $ 8,487  
Securities   1,441       1,476       1,483       1,536     1,524  
Other   15       10       2       43     18  
Total interest income   11,426       11,245       10,786       10,436     10,029  
                           
INTEREST EXPENSE                            
Deposits   1,729       1,446       1,116       1,052     1,029  
Borrowings   426       370       282       169     193  
Total interest expense   2,155       1,816       1,398       1,221     1,222  
NET INTEREST INCOME   9,271       9,429       9,388       9,215     8,807  
PROVISION FOR LOAN LOSSES   450       375       375       425     550  
NET INTEREST INCOME AFTER PROVISION                            
FOR LOAN LOSSES   8,821       9,054       9,013       8,790     8,257  
                           
OTHER INCOME                            
Service charges and fees   1,031       1,085       1,129       1,101     980  
Income from fiduciary activities   142       126       151       175     137  
Net realized gains on sales of securities   -       -       13       58     142  
Gains on sales of loans, net   42       -       15       -     -  
Earnings and proceeds on life insurance policies   202       277       297       279     273  
Other   143       112       392       161     162  
Total other income   1,560       1,600       1,997       1,774     1,694  
                             
OTHER EXPENSES                            
Salaries and  employee benefits   3,649       3,575       3,577       3,406     3,462  
Occupancy, furniture and equipment, net   924       1,036       910       857     892  
Foreclosed real estate   23       104       (26 )     114     (19 )
FDIC insurance assessment   71       83       87       86     92  
Other   1,981       2,005       2,024       1,890     1,821  
Total other expenses   6,648       6,803       6,572       6,353     6,248  
                           
INCOME BEFORE TAX   3,733       3,851       4,438       4,211     3,703  
INCOME TAX EXPENSE   543       552       728       698     574  
NET INCOME $ 3,190     $ 3,299     $ 3,710     $ 3,513   $ 3,129  
                           
Basic earnings per share $ 0.51     $ 0.53     $ 0.59     $ 0.57   $ 0.50  
                             
Diluted earnings per share $ 0.51     $ 0.53     $ 0.58     $ 0.56   $ 0.50  
 

Source: Norwood Financial Corp.

This article appears in: News Headlines

Referenced Stocks: NWFL










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