HONESDALE, Pa., April 20, 2018 (GLOBE NEWSWIRE) -- Lewis J. Critelli, President and Chief Executive Officer of Norwood Financial Corp. (Nasdaq:NWFL) and its subsidiary, Wayne Bank, announced earnings of $3,129,000 for the three months ended March 31, 2018 which represents a $753,000, or 31.7%, increase from the $2,376,000 recorded during the same three-month period of last year. The increase was principally due to a higher level of net interest income and reduced operating expenses. Earnings per share on a fully diluted basis were $0.50 in the first quarter of this year compared to $0.38 in the first quarter of 2017, after adjusting for the 50% stock dividend declared in August, 2017. The annualized return on average assets was 1.13% in the first quarter of 2018 and the annualized return on average equity was 11.00%, compared to 0.87% and 8.54%, respectively, in the first quarter of 2017.
Total assets were $1.127 billion as of March 31, 2018, an increase of $15.4 million compared to the prior year total. Total loans increased $56.2 million compared to March 31, 2017, total deposits increased $8.7 million over the past twelve months, and stockholders’ equity increased $886,000 during the past year.
Non-performing assets totaled $3.1 million or 0.28% of total assets at March 31, 2018 comprised of $1.7 million of non-performing loans and $1.4 million of foreclosed real estate owned, compared to $4.1 million of non-performing assets or 0.37% of total assets at December 31, 2017. As of March 31, 2017, non-performing assets totaled $6.7 million, or 0.60% of total assets. Net charge-offs for the three-month period ending March 31, 2018 were $84,000 compared to $162,000 of net charge-offs in the first quarter of last year. Based on management’s analysis, the Company determined that it would be appropriate to provide additional reserves and added $550,000 to the allowance for loan losses in the current period compared to $600,000 during the same period of last year. The allowance for loan losses was 1.04% of total loans outstanding on March 31, 2018 compared to 1.00% on December 31, 2017 and 0.96% on March 31, 2017. As of March 31, 2018, the reserve for loan losses was 482% of non-performing loans, compared to 308% on December 31, 2017 and 345% on March 31, 2017.
Net interest income (fully taxable equivalent, or fte) was $9,083,000 during the first quarter of 2018 which is $40,000 higher than the comparable three-month period of last year, despite a lower tax-equivalent adjustment. A $48.2 million increase in average loans outstanding contributed to the increased interest income. Interest income fte was negatively impacted by the reduction in the corporate tax rate and a lower level of tax-exempt securities, as reflected in the $270,000 decrease in the tax-equivalent adjustment. The fte yield on interest-earning assets improved 5 basis points compared to the prior year while the cost of funds increased 14 basis points. As a result, the net interest margin (fte) decreased to 3.46% from 3.51% in the quarter ended March 31, 2017.
Other income totaled $1,694,000 in the first quarter of 2018 compared to $1,643,000 during the same period of last year, notwithstanding a non-recurring gain of $209,000 in the 2017 period relating to the sale of the Bank’s former West Scranton Office. The increase is attributable to a $136,000 increase in net gains on sales of securities as well as a higher level of service charges and fees and increased earnings on life insurance policies.
Operating expenses totaled $6,248,000 in the first quarter and were $366,000 lower than the $6,614,000 recorded in the same period of last year due primarily to a $591,000 decrease in foreclosed real estate costs. All other operating expenses increased $225,000, or 3.7%, net.
Mr. Critelli stated, “Our first quarter results provide a good start for 2018 and are in-line with our budget. Our annualized loan growth was over 6%, our core operating expenses remain well controlled, the reduced corporate tax rate had a positive impact on earnings and our capital base remains above regulatory “Well Capitalized” targets. We 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 fourteen 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, risks associated with the acquisition of Delaware Bancshares, Inc., the ability to control costs and expenses, demand for real estate, government fiscal 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% for 2018 and 34% for 2017. 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, | |||
| 2018 | 2017 | |||
| Net interest income | $8,807 | $8,497 | ||
| Tax equivalent basis adjustment | 276 | 546 | ||
| Net interest income on a fully taxable equivalent basis | $9,083 | $9,043 | ||
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 | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| ASSETS | ||||||||||||||||
| Cash and due from banks | $ | 10,103 | $ | 12,057 | ||||||||||||
| Interest-bearing deposits with banks | 2,039 | 7,785 | ||||||||||||||
| Cash and cash equivalents | 12,142 | 19,842 | ||||||||||||||
| Securities available for sale | 265,862 | 295,801 | ||||||||||||||
| Loans receivable | 775,681 | 719,443 | ||||||||||||||
| Less: Allowance for loan losses | 8,099 | 6,901 | ||||||||||||||
| Net loans receivable | 767,582 | 712,542 | ||||||||||||||
| Regulatory stock, at cost | 2,545 | 1,939 | ||||||||||||||
| Bank premises and equipment, net | 13,808 | 13,073 | ||||||||||||||
| Bank owned life insurance | 37,270 | 36,352 | ||||||||||||||
| Foreclosed real estate owned | 1,436 | 4,703 | ||||||||||||||
| Accrued interest receivable | 3,687 | 3,532 | ||||||||||||||
| Goodwill | 11,331 | 11,331 | ||||||||||||||
| Other intangible assets | 427 | 571 | ||||||||||||||
| Deferred tax asset | 5,622 | 8,923 | ||||||||||||||
| Other assets | 5,325 | 3,006 | ||||||||||||||
| TOTAL ASSETS | $ | 1,127,037 | $ | 1,111,615 | ||||||||||||
| LIABILITIES | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Non-interest bearing demand | $ | 204,027 | $ | 192,735 | ||||||||||||
| Interest-bearing | 736,122 | 738,678 | ||||||||||||||
| Total deposits | 940,149 | 931,413 | ||||||||||||||
| Short-term borrowings | 29,905 | 28,383 | ||||||||||||||
| Other borrowings | 33,093 | 28,877 | ||||||||||||||
| Accrued interest payable | 1,456 | 909 | ||||||||||||||
| Other liabilities | 8,596 | 9,081 | ||||||||||||||
| TOTAL LIABILITIES | 1,013,199 | 998,663 | ||||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||||||
| Common Stock, $.10 par value, authorized 10,000,000 shares | ||||||||||||||||
| issued: 2018: 6,257,563 shares, 2017: 4,164,723 shares | 626 | 416 | ||||||||||||||
| Surplus | 47,548 | 47,678 | ||||||||||||||
| Retained earnings | 72,179 | 68,268 | ||||||||||||||
| Treasury stock, at cost: 2018: 5,729 shares, 2017: 2,566 shares | (188 | ) | (93 | ) | ||||||||||||
| Accumulated other comprehensive loss | (6,327 | ) | (3,317 | ) | ||||||||||||
| TOTAL STOCKHOLDERS' EQUITY | 113,838 | 112,952 | ||||||||||||||
| TOTAL LIABILITIES AND | ||||||||||||||||
| STOCKHOLDERS' EQUITY | $ | 1,127,037 | $ | 1,111,615 | ||||||||||||
| NORWOOD FINANCIAL CORP. | ||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| INTEREST INCOME | ||||||||||||||||
| Loans receivable, including fees | $ | 8,487 | $ | 7,806 | ||||||||||||
| Securities | 1,524 | 1,618 | ||||||||||||||
| Other | 18 | 10 | ||||||||||||||
| Total Interest income | 10,029 | 9,434 | ||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||
| Deposits | 1,029 | 766 | ||||||||||||||
| Short-term borrowings | 52 | 28 | ||||||||||||||
| Other borrowings | 141 | 143 | ||||||||||||||
| Total Interest expense | 1,222 | 937 | ||||||||||||||
| NET INTEREST INCOME | 8,807 | 8,497 | ||||||||||||||
| PROVISION FOR LOAN LOSSES | 550 | 600 | ||||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 8,257 | 7,897 | ||||||||||||||
| OTHER INCOME | ||||||||||||||||
| Service charges and fees | 980 | 936 | ||||||||||||||
| Income from fiduciary activities | 137 | 106 | ||||||||||||||
| Net realized gains on sales of securities | 142 | 6 | ||||||||||||||
| Gains on sale of deposits | - | 209 | ||||||||||||||
| Earnings and proceeds on life insurance policies | 273 | 255 | ||||||||||||||
| Other | 162 | 131 | ||||||||||||||
| Total other income | 1,694 | 1,643 | ||||||||||||||
| OTHER EXPENSES | ||||||||||||||||
| Salaries and employee benefits | 3,462 | 3,219 | ||||||||||||||
| Occupancy, furniture and equipment | 892 | 911 | ||||||||||||||
| Data processing and related operations | 319 | 344 | ||||||||||||||
| Taxes, other than income | 175 | 233 | ||||||||||||||
| Professional fees | 230 | 249 | ||||||||||||||
| FDIC Insurance assessment | 92 | 95 | ||||||||||||||
| Foreclosed real estate | (19 | ) | 572 | |||||||||||||
| Amortization of intangibles | 34 | 41 | ||||||||||||||
| Other | 1,063 | 950 | ||||||||||||||
| Total other expenses | 6,248 | 6,614 | ||||||||||||||
| INCOME BEFORE TAX | 3,703 | 2,926 | ||||||||||||||
| INCOME TAX EXPENSE | 574 | 550 | ||||||||||||||
| NET INCOME | $ | 3,129 | $ | 2,376 | ||||||||||||
| Basic earnings per share * | $ | 0.50 | $ | 0.38 | ||||||||||||
| Diluted earnings per share * | $ | 0.50 | $ | 0.38 | ||||||||||||
| * Per share data has been restated to give retroactive effect to the 50% stock dividend declared August 8, 2017. | ||||||||||||||||
| NORWOOD FINANCIAL CORP. | ||||||||||||||||
| Financial Highlights (Unaudited) | ||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||
| For the Three Months Ended March 31 | 2018 | 2017 | ||||||||||||||
| Net interest income | $ | 8,807 | $ | 8,497 | ||||||||||||
| Net income | 3,129 | 2,376 | ||||||||||||||
| Net interest spread (fully taxable equivalent) | 3.31 | % | 3.40 | % | ||||||||||||
| Net interest margin (fully taxable equivalent) | 3.46 | % | 3.51 | % | ||||||||||||
| Return on average assets | 1.13 | % | 0.87 | % | ||||||||||||
| Return on average equity | 11.00 | % | 8.54 | % | ||||||||||||
| Return on tangible equity | 12.25 | % | 9.57 | % | ||||||||||||
| Basic earnings per share * | $ | 0.50 | $ | 0.38 | ||||||||||||
| Diluted earnings per share * | $ | 0.50 | $ | 0.38 | ||||||||||||
| As of March 31 | ||||||||||||||||
| Total assets | $ | 1,127,037 | $ | 1,111,615 | ||||||||||||
| Total loans receivable | 775,681 | 719,443 | ||||||||||||||
| Allowance for loan losses | 8,099 | 6,901 | ||||||||||||||
| Total deposits | 940,149 | 931,413 | ||||||||||||||
| Stockholders' equity | 113,838 | 112,952 | ||||||||||||||
| Trust assets under management | 153,190 | 143,055 | ||||||||||||||
| Book value per share * | $ | 18.45 | $ | 18.06 | ||||||||||||
| Tangible book value per share * | $ | 16.56 | $ | 16.12 | ||||||||||||
| Equity to total assets | 10.10 | % | 10.16 | % | ||||||||||||
| Allowance to total loans receivable | 1.04 | % | 0.96 | % | ||||||||||||
| Non-performing loans to total loans | 0.22 | % | 0.28 | % | ||||||||||||
| Non-performing assets to total assets | 0.28 | % | 0.60 | % | ||||||||||||
| * Per share data has been restated to give retroactive effect to the 50% stock dividend declared August 8, 2017. | ||||||||||||||||
| NORWOOD FINANCIAL CORP. | ||||||||||||||||
| Consolidated Balance Sheets (unaudited) | ||||||||||||||||
| (dollars in thousands) | ||||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | ||||||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | ||||||||||||
| ASSETS | ||||||||||||||||
| Cash and due from banks | $ | 10,103 | $ | 16,212 | $ | 13,947 | $ | 16,055 | $ | 12,057 | ||||||
| Interest-bearing deposits with banks | 2,039 | 485 | 368 | 348 | 7,785 | |||||||||||
| Cash and cash equivalents | 12,142 | 16,697 | 14,315 | 16,403 | 19,842 | |||||||||||
| Securities available for sale | 265,862 | 281,121 | 285,706 | 300,667 | 295,801 | |||||||||||
| Loans receivable | 775,681 | 764,092 | 756,014 | 735,026 | 719,443 | |||||||||||
| Less: Allowance for loan losses | 8,099 | 7,634 | 7,760 | 7,419 | 6,901 | |||||||||||
| Net loans receivable | 767,582 | 756,458 | 748,254 | 727,607 | 712,542 | |||||||||||
| Regulatory stock, at cost | 2,545 | 3,505 | 3,115 | 2,435 | 1,939 | |||||||||||
| Bank owned life insurance | 37,270 | 37,060 | 36,839 | 36,575 | 36,352 | |||||||||||
| Bank premises and equipment, net | 13,808 | 13,864 | 12,922 | 12,953 | 13,073 | |||||||||||
| Foreclosed real estate owned | 1,436 | 1,661 | 4,243 | 4,523 | 4,703 | |||||||||||
| Goodwill and other intangibles | 11,758 | 11,793 | 11,827 | 11,862 | 11,902 | |||||||||||
| Other assets | 14,634 | 10,757 | 14,732 | 14,288 | 15,461 | |||||||||||
| TOTAL ASSETS | $ | 1,127,037 | $ | 1,132,916 | $ | 1,131,953 | $ | 1,127,313 | $ | 1,111,615 | ||||||
| LIABILITIES | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Non-interest bearing demand | $ | 204,027 | $ | 205,138 | $ | 212,844 | $ | 200,364 | $ | 192,735 | ||||||
| Interest-bearing deposits | 736,122 | 724,246 | 711,178 | 732,107 | 738,678 | |||||||||||
| Total deposits | 940,149 | 929,384 | 924,022 | 932,471 | 931,413 | |||||||||||
| Other borrowings | 62,998 | 78,475 | 79,000 | 67,522 | 57,260 | |||||||||||
| Other liabilities | 10,052 | 9,318 | 11,239 | 11,153 | 9,990 | |||||||||||
| TOTAL LIABILITIES | 1,013,199 | 1,017,177 | 1,014,261 | 1,011,146 | 998,663 | |||||||||||
| STOCKHOLDERS' EQUITY | 113,838 | 115,739 | 117,692 | 116,167 | 112,952 | |||||||||||
| TOTAL LIABILITIES AND | ||||||||||||||||
| STOCKHOLDERS' EQUITY | $ | 1,127,037 | $ | 1,132,916 | $ | 1,131,953 | $ | 1,127,313 | $ | 1,111,615 | ||||||
| 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 | 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||
| INTEREST INCOME | ||||||||||||||||
| Loans receivable, including fees | $ | 8,487 | $ | 8,503 | $ | 8,289 | $ | 7,925 | $ | 7,806 | ||||||
| Securities | 1,524 | 1,560 | 1,605 | 1,633 | 1,618 | |||||||||||
| Other | 18 | 12 | 2 | 24 | 10 | |||||||||||
| Total interest income | 10,029 | 10,075 | 9,896 | 9,582 | 9,434 | |||||||||||
| INTEREST EXPENSE | ||||||||||||||||
| Deposits | 1,029 | 985 | 828 | 797 | 766 | |||||||||||
| Borrowings | 193 | 206 | 198 | 129 | 171 | |||||||||||
| Total interest expense | 1,222 | 1,191 | 1,026 | 926 | 937 | |||||||||||
| NET INTEREST INCOME | 8,807 | 8,884 | 8,870 | 8,656 | 8,497 | |||||||||||
| PROVISION FOR LOAN LOSSES | 550 | 400 | 600 | 600 | 600 | |||||||||||
| NET INTEREST INCOME AFTER PROVISION | ||||||||||||||||
| FOR LOAN LOSSES | 8,257 | 8,484 | 8,270 | 8,056 | 7,897 | |||||||||||
| OTHER INCOME | ||||||||||||||||
| Service charges and fees | 980 | 1,023 | 1,105 | 1,016 | 936 | |||||||||||
| Income from fiduciary activities | 137 | 116 | 160 | 128 | 106 | |||||||||||
| Net realized gains on sales of securities | 142 | 181 | 129 | 31 | 6 | |||||||||||
| Gains on sales of loans, net | - | - | - | 67 | - | |||||||||||
| Earnings and proceeds on life insurance policies | 273 | 283 | 320 | 275 | 255 | |||||||||||
| Other | 162 | 151 | 144 | 139 | 340 | |||||||||||
| Total other income | 1,694 | 1,754 | 1,858 | 1,656 | 1,643 | |||||||||||
| OTHER EXPENSES | ||||||||||||||||
| Salaries and employee benefits | 3,462 | 3,211 | 3,209 | 3,212 | 3,219 | |||||||||||
| Occupancy, furniture and equipment, net | 892 | 841 | 799 | 809 | 911 | |||||||||||
| Foreclosed real estate | (19 | ) | 136 | 303 | 152 | 572 | ||||||||||
| FDIC insurance assessment | 92 | 94 | 97 | 91 | 95 | |||||||||||
| Other | 1,821 | 1,604 | 1,831 | 1,866 | 1,817 | |||||||||||
| Total other expenses | 6,248 | 5,886 | 6,239 | 6,130 | 6,614 | |||||||||||
| INCOME BEFORE TAX | 3,703 | 4,352 | 3,889 | 3,582 | 2,926 | |||||||||||
| INCOME TAX EXPENSE | 574 | 4,195 | 948 | 858 | 550 | |||||||||||
| NET INCOME | $ | 3,129 | $ | 157 | $ | 2,941 | $ | 2,724 | $ | 2,376 | ||||||
| Basic earnings per share | $ | 0.50 | $ | 0.03 | $ | 0.47 | $ | 0.44 | $ | 0.38 | ||||||
| Diluted earnings per share | $ | 0.50 | $ | 0.03 | $ | 0.47 | $ | 0.43 | $ | 0.38 | ||||||
| Book Value per share | $ | 18.45 | $ | 18.61 | $ | 18.46 | $ | 18.29 | $ | 18.06 | ||||||
| Tangible Book Value per share | 16.56 | 16.71 | 16.54 | 16.37 | 16.12 | |||||||||||
| Return on average assets (annualized) | 1.13 | % | 0.05 | % | 1.03 | % | 0.97 | % | 0.87 | % | ||||||
| Return on average equity (annualized) | 11.00 | % | 0.52 | % | 9.85 | % | 9.45 | % | 8.54 | % | ||||||
| Net interest spread (fte) | 3.31 | % | 3.44 | % | 3.48 | % | 3.44 | % | 3.40 | % | ||||||
| Net interest margin (fte) | 3.46 | % | 3.56 | % | 3.60 | % | 3.54 | % | 3.51 | % | ||||||
| Allowance for loan losses to total loans | 1.04 | % | 1.00 | % | 1.03 | % | 1.01 | % | 0.96 | % | ||||||
| Net charge-offs to average loans (annualized) | 0.04 | % | 0.28 | % | 0.14 | % | 0.05 | % | 0.09 | % | ||||||
| Non-performing loans to total loans | 0.22 | % | 0.32 | % | 0.27 | % | 0.35 | % | 0.28 | % | ||||||
| Non-performing assets to total assets | 0.28 | % | 0.37 | % | 0.55 | % | 0.63 | % | 0.60 | % | ||||||
| * Per share data has been restated to give retroactive effect to the 50% stock dividend declared August 8, 2017. | ||||||||||||||||