• Norwood Financial Corp Announces First Quarter Earnings

    Source: Nasdaq GlobeNewswire / 23 Apr 2021 07:15:00   America/Chicago

    HONESDALE, Pa., April 23, 2021 (GLOBE NEWSWIRE) -- Lewis J. Critelli, President and Chief Executive Officer of Norwood Financial Corp (Nasdaq Global Market – NWFL) and its subsidiary, Wayne Bank, announced record earnings of $5,542,000 for the three months ended March 31, 2021, increasing 80% from the $3,079,000 recorded during the corresponding period of 2020. The increase reflects the benefits derived from the Company’s acquisition of UpState New York Bancorp, Inc. (“UpState”), which closed on July 7, 2020. Earnings per share on a fully diluted basis were $0.67 in the first quarter of 2021 compared to $0.49 in the first quarter of 2020. The annualized return on average assets was 1.18% in the first quarter of 2021 and the annualized return on average equity was 11.39%, compared to 1.01% and 8.79%, respectively, in the first quarter of 2020.

    Total assets were $2.010 billion as of March 31, 2021, an increase of $767.5 million compared to March 31, 2020. As of March 31, 2021, total loans increased $493.0 million compared to March 31, 2020, total deposits increased $695.0 million compared to March 31, 2020, and stockholders’ equity increased $52.9 million compared to March 31, 2020. The increases reflect the balances acquired from UpState and the impact from economic stimulus, including loans originated through the Payroll Protection Program (“PPP”). During the three months ended March 31, 2021, we originated 633 new PPP loans totaling $54.3 million, and had $30.0 million of loans forgiven that were originated in previous periods. As of March 31, 2021, the total of all PPP loans outstanding was $119.3 million.

    Net interest income (fully taxable equivalent, or fte) was $15,981,000 during the three months ended March 31, 2021, which is $6,078,000 higher than the comparable three-month period of 2020. A $491.3 million increase in average loans outstanding over the corresponding period in 2020 contributed to the increased interest income. During the three-months ended March 31, 2021, the fte yield on interest-earning assets decreased thirty-two basis points compared to the three months ended March 31, 2020, while the cost of funds decreased fifty-five basis points. As a result, the annualized net interest spread (fte) improved to 3.46% from 3.23% in the quarter ended March 31, 2021 compared to the corresponding three-month period in 2020.

    Other income totaled $1,989,000 for the three months ended March 31, 2021 compared to $1,654,000 during the corresponding period of last year. The increase is due primarily to an $184,000 increase in service charges due primarily to service charges and fees related to the acquisition of UpState. Earnings and proceeds on bank-owned life insurance policies also increased $166,000 over the first quarter of last year. All other categories of other income decreased $15,000, net.

    Operating expenses totaled $9,452,000 in the three months ended March 31, 2021 and were $2,393,000 higher than the $7,059,000 recorded in the same period of last year. The increase reflects the costs of operations acquired from UpState, including four new Community Offices.

    Mr. Critelli stated, “Our first quarter results reflect the revenue generated and the costs associated with our acquisition of UpState, as well as the continued impact of economic stimulus on our balance sheet. We remain committed to providing the financial resources that will help our customers emerge from the restrictions related to the COVID-19 pandemic, and continue to provide the resources to allow our employees the ability to perform their functions in a safe work environment. We look forward to continuing to serve our expanded base of stockholders and customers.”

    Norwood Financial Corp. is the parent company of Wayne Bank, which operates from fourteen offices throughout Northeastern Pennsylvania and sixteen offices in Delaware, Sullivan, Ontario, Otsego and Yates Counties, 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 risks and uncertainty posed by, and the effect and impact of, the COVID-19 pandemic on the economy and the Company’s results of operation and financial condition, 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 interest income and net interest income 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,
      2021 2020
    Net interest income$15,776$9,665
    Tax equivalent basis adjustment using 21% marginal tax rate 205 238
    Net interest income on a fully taxable equivalent basis$15,981$
    9,903

    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, 
      2021  2020 
    Average equity$197,243 $140,962 
    Average goodwill and other intangibles (29,798) (11,552)
    Average tangible equity$167,445 $
    129,410
     


    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      
     2021  2020       
    ASSETS          
    Cash and due from banks $20,364  $14,712       
    Interest-bearing deposits with banks 190,135   23,706       
    Cash and cash equivalents 210,499   38,418       
               
    Securities available for sale 275,224   196,998       
    Loans receivable 1,421,568   928,565       
    Less: Allowance for loan losses 14,509   9,088       
    Net loans receivable 1,407,059   919,477       
    Regulatory stock, at cost 4,043   3,770       
    Bank premises and equipment, net 17,648   14,071       
    Bank owned life insurance 39,471   38,971       
    Foreclosed real estate owned 844   1,077       
    Accrued interest receivable 6,317   3,669       
    Goodwill 29,290   11,331       
    Other intangible assets 495   212       
    Other assets 18,946   14,297       
    TOTAL ASSETS $2,009,836  $1,242,291       
               
    LIABILITIES          
    Deposits:          
    Non-interest bearing demand $415,395  $213,359       
    Interest-bearing 1,269,793   776,801       
    Total deposits 1,685,188   990,160       
    Short-term borrowings 72,917   40,656       
    Other borrowings 39,366   51,350       
    Accrued interest payable 1,370   2,895       
    Other liabilities 15,888   15,043       
    TOTAL LIABILITIES 1,814,729   1,100,104       
               
    STOCKHOLDERS' EQUITY          
    Preferred Stock, no par value per share, authorized 5,000,000 shares                              -   -       
    Common Stock, $.10 par value per share,          
    authorized: 20,000,000 shares,          
    issued: 2021: 8,240,081 shares, 2020: 6,342,568 shares 824   634       
    Surplus 95,717   49,644       
    Retained earnings 97,201   88,032       
    Treasury stock, at cost: 2021: 21,568 shares, 2020: 12,007 shares (656) (400)      
    Accumulated other comprehensive income 2,021   4,277       
    TOTAL STOCKHOLDERS' EQUITY 195,107   142,187       
               
    TOTAL LIABILITIES AND          
     STOCKHOLDERS' EQUITY $2,009,836  $1,242,291       
               
               
               
               
    NORWOOD FINANCIAL CORP.          
    Consolidated Statements of Income         
    (dollars in thousands, except per share data)          
    (unaudited)        
     Three Months Ended March 31,   
     2021  2020       
    INTEREST INCOME       
    Loans receivable, including fees$16,146  $10,683       
    Securities 1,112   1,179       
    Other 43   6       
    Total Interest income 17,301   11,868       
               
    INTEREST EXPENSE          
    Deposits 1,255   1,790       
    Short-term borrowings 69   111       
    Other borrowings 201   302       
    Total Interest expense 1,525   2,203       
    NET INTEREST INCOME 15,776   9,665       
    PROVISION FOR LOAN LOSSES 1,500   700       
    NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 14,276   8,965       
               
    OTHER INCOME          
    Service charges and fees 1,247   1,063       
    Income from fiduciary activities 160   153       
    Net realized gains on sales of securities                           21   38       
    Gains on sales of loans, net                           29   56       
    Earnings and proceeds on life insurance policies 374   208       
    Other 158   136       
    Total other income 1,989   1,654       
               
    OTHER EXPENSES          
    Salaries and  employee benefits 4,953   3,777       
    Occupancy, furniture and equipment 1,220   968       
    Data processing  and related operations 603   437       
    Taxes, other than income 305   214       
    Professional fees 540   218       
    FDIC Insurance assessment                        181   0       
    Foreclosed real estate 30   16       
    Amortization of intangibles 35   22       
    Other 1,585   1,407       
    Total other expenses 9,452   7,059       
               
    INCOME BEFORE TAX 6,813   3,560       
    INCOME TAX EXPENSE 1,271   481       
    NET INCOME $5,542  $3,079       
               
    Basic earnings per share$0.68  $0.49       
               
    Diluted earnings per share$0.67  $0.49       
            
           
               
    NORWOOD FINANCIAL CORP.        
    Financial Highlights (Unaudited)          
    (dollars in thousands, except per share data)          
               
    For the Three Months Ended March 31 2021  2020       
              
    Net interest income$15,776  $9,665       
    Net income 5,542   3,079       
              
    Net interest spread (fully taxable equivalent) 3.46% 3.23%      
    Net interest margin (fully taxable equivalent) 3.59% 3.48%      
    Return on average assets 1.18% 1.01%      
    Return on average equity 11.39% 8.79%      
    Return on average tangible equity 13.42% 9.57%      
    Basic earnings per share$0.68  $0.49       
    Diluted earnings per share$0.67  $0.49       
               
               
    As of March 31 2021  2020       
            
    Total assets$2,009,836  $1,242,291       
    Total loans receivable 1,421,568   928,565       
    Allowance for loan losses 14,509   9,088       
    Total deposits 1,685,188   990,160       
    Stockholders' equity 195,107   142,187       
    Trust assets under management 173,263   137,059       
            
    Book value per share$23.82  $22.52       
    Tangible book value per share$20.20  $20.70       
    Equity to total assets 9.71% 11.45%      
    Allowance to total loans receivable 1.02% 0.98%      
    Nonperforming loans to total loans 0.83% 0.30%      
    Nonperforming assets to total assets 0.63% 0.31%      
              
           
              
    NORWOOD FINANCIAL CORP.          
    Consolidated Balance Sheets (unaudited)      
    (dollars in thousands) 
     March December 31 September 30 June 30 March 31
     2021 2020 2020 2020 2020
    ASSETS 
    Cash and due from banks$20,364 $19,445 $23,874 $15,387 $14,712 
    Interest-bearing deposits with banks 190,135  92,248  100,566  67,989  23,706 
    Cash and cash equivalents 210,499  111,693  124,440  83,376  38,418 
              
    Securities available for sale 275,224  226,586  197,436  196,735  196,998 
    Loans receivable 1,421,568  1,410,732  1,414,662  988,679  928,565 
    Less: Allowance for loan losses 14,509  13,150  11,674  10,312  9,088 
    Net loans receivable 1,407,059  1,397,582  1,402,988  978,367  919,477 
    Regulatory stock, at cost 4,043  3,981  3,876  3,677  3,770 
    Bank owned life insurance 39,471  39,608  39,400  39,183  38,971 
    Bank premises and equipment, net 17,648  17,814  18,124  14,040  14,071 
    Foreclosed real estate owned 844  965  965  965  1,077 
    Goodwill and other intangibles 29,785  29,820  30,778  11,522  11,543 
    Other assets 25,263  23,815  24,100  26,676  17,966 
    TOTAL ASSETS$2,009,836 $1,851,864 $1,842,107 $1,354,541 $1,242,291 
              
    LIABILITIES          
    Deposits:          
    Non-interest bearing demand$415,395 $359,559 $372,237 $284,754 $213,359 
    Interest-bearing deposits 1,269,793  1,175,826  1,143,685  801,484  776,801 
    Total deposits 1,685,188  1,535,385  1,515,922  1,086,238  990,160 
    Borrowings 112,283  105,762  115,732  106,027  92,006 
    Other liabilities 17,258  15,932  19,906  19,612  17,938 
    TOTAL LIABILITIES 1,814,729  1,657,079  1,651,560  1,211,877  1,100,104 
              
    STOCKHOLDERS' EQUITY 195,107  194,785  190,547  142,664  142,187 
              
    TOTAL LIABILITIES AND          
     STOCKHOLDERS' EQUITY$2,009,836 $1,851,864 $1,842,107 $1,354,541 $1,242,291 
     
              
              
    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 2021  2020  2020  2020  2020 
    INTEREST INCOME          
    Loans receivable, including fees$16,146 $16,336 $16,260 $10,767 $10,683 
    Securities 1,112  1,064  1,031  1,063  1,179 
    Other 43  29  18  19  6 
    Total interest income 17,301  17,429  17,309  11,849  11,868 
              
    INTEREST EXPENSE          
    Deposits 1,255  1,514  1,676  1,630  1,790 
    Borrowings 270  301  303  352  413 
    Total interest expense 1,525  1,815  1,979  1,982  2,203 
    NET INTEREST INCOME 15,776  15,614  15,330  9,867  9,665 
    PROVISION FOR LOAN LOSSES 1,500  1,600  1,850  1,300  700 
    NET INTEREST INCOME AFTER PROVISION          
    FOR LOAN LOSSES 14,276  14,014  13,480  8,567  8,965 
              
    OTHER INCOME          
    Service charges and fees 1,247  1,913  1,301  837  1,063 
    Income from fiduciary activities 160  150  205  175  153 
    Net realized gains on sales of securities 21  -  33  -  38 
    Gains on sales of loans, net 29  241  164  65  56 
    Earnings and proceeds on life insurance policies 374  208  217  212  208 
    Other 158  149  152  103  136 
    Total other income 1,989  2,661  2,072  1,392  1,654 
              
    OTHER EXPENSES          
    Salaries and  employee benefits 4,953  5,243  4,812  3,289  3,777 
    Occupancy, furniture and equipment, net 1,220  1,165  1,109  906  968 
    Foreclosed real estate 30  8  31  (2) 16 
    FDIC insurance assessment 181  213  144  42  - 
    Merger related 22  66  386  1,597  - 
    Other 3,046  3,214  2,898  2,260  2,298 
    Total other expenses 9,452  9,909  9,380  8,092  7,059 
              
    INCOME BEFORE TAX 6,813  6,766  6,172  1,867  3,560 
    INCOME TAX EXPENSE 1,271  1,253  1,173  379  481 
    NET INCOME$5,542 $5,513 $4,999 $1,488 $3,079 
              
    Basic earnings per share$0.68 $0.67 $0.62 $0.24 $0.49 
               
    Diluted earnings per share$0.67 $0.67 $0.62 $0.24 $0.49 
     
    Book Value per share$23.82 $23.72 $23.30 $22.62 $22.52 
    Tangible Book Value per share 20.20  20.10  19.55  20.80  20.70 
              
    Return on average assets (annualized) 1.18% 1.18% 1.11% 0.45% 1.01%
    Return on average equity (annualized) 11.39% 11.32% 10.64% 4.17% 8.79%
    Return on average tangible equity (annualized) 13.42% 13.46% 11.75% 4.54% 9.57%
              
    Net interest spread (fte) 3.46% 3.50% 3.55% 3.03% 3.23%
    Net interest margin (fte) 3.59% 3.65% 3.73% 3.25% 3.48%
              
    Allowance for loan losses to total loans 1.02% 0.93% 0.83% 1.04% 0.98%
    Net charge-offs to average loans (annualized) 0.04% 0.04% 0.14% 0.03% 0.05%
    Nonperforming loans to total loans 0.83% 0.85% 0.89% 0.30% 0.30%
    Nonperforming assets to total assets 0.63% 0.70% 0.74% 0.29% 0.31%

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