March 27, 2024

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Norwood Financial Corp Announces Earnings for the Fourth Quarter and Year

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HONESDALE, Pa., Jan. 27, 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 earnings for the three months ended December 31, 2020 of $5,513,000 compared to $3,596,000 earned in the corresponding period of 2019. The increase in earnings reflects the benefits derived from the Company’s acquisition of UpState New York Bancorp, Inc. (“UpState”), which closed on July 7, 2020. For the year ended December 31, 2020 net income totaled $15,080,000, an increase of $865,000 from the $14,215,000 earned in the prior year. The increase reflects the benefits derived from the acquisition of UpState, which offset a $4,200,000 increase in the provision for loan losses and $2,049,000 of merger related expenses. 

Earnings per share (fully diluted) were $0.67 and $0.57 for the three-month period ended December 31, 2020 and 2019, respectively. For the year ended December 31, 2020, earnings per share on a fully diluted basis were $2.09, compared to $2.25 for the year ended December 31, 2019. For the year ended December 31, 2020, the return on average assets was 0.97%, and the return on average equity was 9.06%, compared to 1.18% and 10.83%, respectively, for the year ended December 31, 2019.

Total assets were $1.852 billion as of December 31, 2020. Loans receivable totaled $1.411 billion as of December 31, 2020, with total deposits of $1.535 billion and stockholders’ equity of $194.8 million as of December 31, 2020.

Loans receivable increased $486.2 million from the prior year-end due primarily to the $420 million of loan balances acquired from UpState and $66 million of Paycheck Protection Program (“PPP”) loans originated during the year ended December 31, 2020. For the three months and year ended December 31, 2020, net charge-offs totaled $125,000 and $809,000, respectively, compared to $96,000 and $1,194,000, respectively, for the corresponding periods in 2019.

Net interest income, on a fully taxable equivalent basis (fte), totaled $15,821,000 for the three months ended December 31, 2020, an increase of $5,755,000 compared to the same period in 2019. For the year ended December 31, 2020, net interest income (fte) totaled $51,359,000, an increase of $11,747,000 compared to 2019 due primarily to the higher volume of earning assets, including a $292.0 million increase in average loans outstanding.   

Other income for the three months ended December 31, 2020 totaled $2,661,000 compared to $1,696,000 for the similar period in 2019. Gains on the sale of loans and securities increased $176,000, while all other items of other income increased $789,000 in the aggregate due primarily to service charges and fees related to the acquisition of UpState. Other income for the year ended December 31, 2020 totaled $7,780,000 compared to $6,778,000 in 2019, an increase of $1,002,000 due primarily to a $665,000 increase in service charges and fees. Gains on the sale of loans and investment securities increased $175,000 in the aggregate, while all other items of other income increased $165,000, net. 

Other expenses totaled $9,909,000 for the three months ended December 31, 2020, compared to $7,088,000 in the similar period of 2019. The $2,821,000 increase reflects the costs of the operations acquired from UpState. For the year ended December 31, 2020, other expenses totaled $34,440,000 compared to $27,311,000 for 2019, an increase of $7,129,000. The increase reflects the costs of operations acquired from UpState, including four new Community Offices, and $2,049,000 of merger related expenses.

Mr. Critelli commented, “Our results for the 2020 year have been significantly impacted by our efforts to assist our customers during the COVID-19 pandemic, restrictions on business activity, and the costs associated with and the revenue generated by our acquisition of UpState New York Bancorp, Inc. Our balance sheet reflects the full impact of the UpState acquisition, resulting in a Company with over $1.8 billion of total assets, $1.4 billion of loans and $1.5 billion of deposits. Our cash dividend of $0.26 per share declared in the fourth quarter of 2020 represents a 4.0% increase over the same period of last year. We appreciate the opportunity to serve our Wayne Bank customers and our new customers at the Bank of the Finger Lakes and Bank of Cooperstown locations. We continue to search out opportunities available to us as we service 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 sixteen offices in Delaware, Sullivan, Ontario, Otsego and Yates Counties, New York. The Company’s stock is traded 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 interest income and net interest income, which are non-GAAP (Generally Accepted Accounting Principles) financial measures. 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 interest income on a tax–equivalent basis ensures comparability of interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.

The following table reconciles net interest income to net interest income on a fully tax-equivalent basis:

(dollars in thousands)   Three months ended
December 31
  Year ended
December 31
    2020   2019   2020   2019
Net interest income   $ 15,614   $ 9,833   $ 50,476   $ 38,606
Tax equivalent basis adjustment                         
using 21% marginal tax rate     207     233     883     1,006
Net interest income on a fully                         
taxable equivalent basis   $ 15,821   $ 10,066   $ 51,359   $ 39,612

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:

    Three months ended   Year ended
    December 31,   December 31,
(dollars in thousands)   2020   2019   2020   2019
                         
Average equity   $ 193,740   $ 136,920   $ 166,427   $ 131,271
Average goodwill and other Intangibles     (30,747)     (11,575)     (17,942)     (11,611)
Average tangible equity   $ 162,993   $ 125,345   $ 148,485   $ 119,660
                         
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)                            
    December 31                  
    2020      2019                   
ASSETS                            
Cash and due from banks  $ 19,445     $ 15,038                    
Interest-bearing deposits with banks   92,248       377                    
Cash and cash equivalents   111,693       15,415                    
                             
Securities available for sale   226,586       210,205                    
Loans receivable   1,410,732       924,581                    
Less: Allowance for loan losses   13,150       8,509                    
Net loans receivable   1,397,582       916,072                    
Regulatory stock, at cost   3,981       4,844                    
Bank premises and equipment, net   17,814       14,228                    
Bank owned life insurance   39,608       38,763                    
Foreclosed real estate owned   965       1,556                    
Accrued interest receivable   6,232       3,719                    
Goodwill   29,290       11,331                    
Other intangible assets   530       235                    
Other assets   17,583       14,242                    
TOTAL ASSETS  $ 1,851,864     $ 1,230,610                    
                             
LIABILITIES                            
Deposits:                            
Non-interest bearing demand  $ 359,559     $ 207,299                    
Interest-bearing   1,175,826       750,230                    
Total deposits   1,535,385       957,529                    
Short-term borrowings   63,303       62,256                    
Other borrowings   42,459       56,438                    
Accrued interest payable   1,601       2,432                    
Other liabilities   14,331       14,527                    
TOTAL LIABILITIES   1,657,079       1,093,182                    
                             
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: 2020: 8,236,331 shares, 2019: 6,340,563 shares   824       634                    
Surplus   95,388       49,471                    
Retained earnings   93,796       86,536                    
Treasury stock, at cost: 2020: 10,263 shares, 2019: 12,007 shares   (342 )     (400 )                  
Accumulated other comprehensive income   5,119       1,187                    
TOTAL STOCKHOLDERS’ EQUITY   194,785       137,428                    
                             
TOTAL LIABILITIES AND                            
STOCKHOLDERS’ EQUITY  $ 1,851,864     $ 1,230,610                    
                             
                             
                             
                             
NORWOOD FINANCIAL CORP.                            
Consolidated Statements of Income                            
(dollars in thousands, except per share data)                            
  (unaudited)                            
  Three Months Ended December 31,       Twelve Months Ended December 31,
    2020      2019            2020      2019 
INTEREST INCOME                            
Loans receivable, including fees $ 16,336     $ 10,815           $ 54,046     $ 41,889  
Securities   1,064       1,159             4,337       5,314  
Other   29       11             72       81  
Total Interest income   17,429       11,985             58,455       47,284  
                             
INTEREST EXPENSE                            
Deposits   1,514       1,784             6,610       7,139  
Short-term borrowings   81       124             325       468  
Other borrowings   220       244             1,044       1,071  
Total Interest expense   1,815       2,152             7,979       8,678  
NET INTEREST INCOME   15,614       9,833             50,476       38,606  
PROVISION FOR LOAN LOSSES   1,600       200             5,450       1,250  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 14,014       9,633             45,026       37,356  
                             
OTHER INCOME                            
Service charges and fees   1,913       1,168             5,115       4,450  
Income from fiduciary activities   150       156             682       610  
Net realized gains on sales of securities         21             71       254  
Gains on sales of loans, net   241       44             527       169  
Earnings and proceeds on life insurance policies   208       200             845       830  
Other   149       107             540       465  
Total other income   2,661       1,696             7,780       6,778  
                             
OTHER EXPENSES                            
Salaries and employee benefits   5,243       3,740             17,121       14,655  
Occupancy, furniture and equipment   1,165       938             4,148       3,719  
Data processing and related operations   808       469             2,457       1,869  
Taxes, other than income   356       232             997       751  
Professional fees   328       362             1,062       1,113  
FDIC Insurance assessment   213       3             399       153  
Foreclosed real estate   8       9             53       45  
Amortization of intangibles   35       22             114       101  
Merger related   66                   2,049        
Other   1,687       1,313             6,040       4,905  
Total other expenses   9,909       7,088             34,440       27,311  
                             
INCOME BEFORE TAX   6,766       4,241             18,366       16,823  
INCOME TAX EXPENSE   1,253       645             3,286       2,608  
NET INCOME  $ 5,513     $ 3,596            $ 15,080     $ 14,215  
                             
Basic earnings per share $ 0.67     $ 0.57           $ 2.09     $ 2.27  
                             
Diluted earnings per share $ 0.67     $ 0.57           $ 2.09     $ 2.25  
                             
                             
                             
NORWOOD FINANCIAL CORP.                            
Financial Highlights (Unaudited)                            
(dollars in thousands, except per share data)                            
                             
For the Three Months Ended December 31   2020      2019                   
                             
Net interest income $ 15,614     $ 9,833                    
Net income   5,513       3,596                    
                             
Net interest spread (fully taxable equivalent)   3.50 %     3.33 %                  
Net interest margin (fully taxable equivalent)   3.65 %     3.59 %                  
Return on average assets   1.18 %     1.18 %                  
Return on average equity   11.32 %     10.42 %                  
Return on average tangible equity   13.46 %     11.38 %                  
Basic earnings per share $ 0.67     $ 0.57                    
Diluted earnings per share $ 0.67     $ 0.57                    
                             
                             
For the Twelve Months Ended December 31   2020      2019                   
                             
Net interest income $ 50,476     $ 38,606                    
Net income   15,080       14,215                    
                             
Net interest spread (fully taxable equivalent)   3.36 %     3.28 %                  
Net interest margin (fully taxable equivalent)   3.55 %     3.53 %                  
Return on average assets   0.97 %     1.18 %                  
Return on average equity   9.06 %     10.83 %                  
Return on average tangible equity   10.16 %     11.88 %                  
Basic earnings per share $ 2.09     $ 2.27                    
Diluted earnings per share $ 2.09     $ 2.25                    
                             
                             
As of December 31   2020      2019                   
                             
Total assets $ 1,851,864     $ 1,230,610                    
Total loans receivable   1,410,732       924,581                    
Allowance for loan losses   13,150       8,509                    
Total deposits   1,535,385       957,529                    
Stockholders’ equity   194,785       137,428                    
Trust assets under management   168,085       170,685                    
                             
Book value per share $ 23.72     $ 21.67                    
Tangible book value per share $ 20.10     $ 19.84                    
Equity to total assets   10.52 %     11.17 %                  
Allowance to total loans receivable   0.93 %     0.92 %                  
Nonperforming loans to total loans   0.85 %     0.09 %                  
Nonperforming assets to total assets   0.70 %     0.19 %                  
                             
                             
                             
NORWOOD FINANCIAL CORP.                            
Consolidated Balance Sheets (unaudited)                            
(dollars in thousands)                            
    December 31     September 30     June 30     March 31     December 31
    2020      2020      2020      2020      2019 
ASSETS                            
Cash and due from banks $ 19,445     $ 23,874     $ 15,387     $ 14,712     $ 15,038  
Interest-bearing deposits with banks   92,248       100,566       67,989       23,706       377  
Cash and cash equivalents   111,693       124,440       83,376       38,418       15,415  
                             
Securities available for sale   226,586       197,436       196,735       196,998       210,205  
Loans receivable   1,410,732       1,414,662       988,679       928,565       924,581  
Less: Allowance for loan losses   13,150       11,674       10,312       9,088       8,509  
Net loans receivable   1,397,582       1,402,988       978,367       919,477       916,072  
Regulatory stock, at cost   3,981       3,876       3,677       3,770       4,844  
Bank owned life insurance   39,608       39,400       39,183       38,971       38,763  
Bank premises and equipment, net   17,814       18,124       14,040       14,071       14,228  
Foreclosed real estate owned   965       965       965       1,077       1,556  
Goodwill and other intangibles   29,820       30,778       11,522       11,543       11,566  
Other assets   23,815       24,100       26,676       17,966       17,961  
TOTAL ASSETS $ 1,851,864     $ 1,842,107     $ 1,354,541     $ 1,242,291     $ 1,230,610  
                             
LIABILITIES                            
Deposits:                            
Non-interest bearing demand $ 359,559     $ 372,237     $ 284,754     $ 213,359     $ 207,299  
Interest-bearing deposits   1,175,826       1,143,685       801,484       776,801       750,230  
Total deposits   1,535,385       1,515,922       1,086,238       990,160       957,529  
Borrowings   105,762       115,732       106,027       92,006       118,694  
Other liabilities   15,932       19,906       19,612       17,938       16,959  
TOTAL LIABILITIES   1,657,079       1,651,560       1,211,877       1,100,104       1,093,182  
                             
STOCKHOLDERS’ EQUITY   194,785       190,547       142,664       142,187       137,428  
                             
TOTAL LIABILITIES AND                            
STOCKHOLDERS’ EQUITY $ 1,851,864     $ 1,842,107     $ 1,354,541     $ 1,242,291     $ 1,230,610  
                             
                             
                             
NORWOOD FINANCIAL CORP.                            
Consolidated Statements of Income (unaudited)                            
(dollars in thousands, except per share data)                            
    December 31     September 30     June 30     March 31     December 31
Three months ended   2020      2020      2020      2020      2019 
INTEREST INCOME                            
Loans receivable, including fees $ 16,336     $ 16,260     $ 10,767     $ 10,683     $ 10,815  
Securities   1,064       1,031       1,063       1,179       1,159  
Other   29       18       19       6       11  
Total interest income   17,429       17,309       11,849       11,868       11,985  
                             
INTEREST EXPENSE                            
Deposits   1,514       1,676       1,630       1,790       1,784  
Borrowings   301       303       352       413       368  
Total interest expense   1,815       1,979       1,982       2,203       2,152  
NET INTEREST INCOME   15,614       15,330       9,867       9,665       9,833  
PROVISION FOR LOAN LOSSES   1,600       1,850       1,300       700       200  
NET INTEREST INCOME AFTER PROVISION                            
FOR LOAN LOSSES   14,014       13,480       8,567       8,965       9,633  
                             
OTHER INCOME                            
Service charges and fees   1,913       1,301       837       1,063       1,168  
Income from fiduciary activities   150       205       175       153       156  
Net realized gains on sales of securities         33             38       21  
Gains on sales of loans, net   241       164       65       56       44  
Earnings and proceeds on life insurance policies   208       217       212       208       200  
Other   149       152       103       136       107  
Total other income   2,661       2,072       1,392       1,654       1,696  
                             
OTHER EXPENSES                            
Salaries and employee benefits   5,243       4,812       3,289       3,777       3,740  
Occupancy, furniture and equipment, net   1,165       1,109       906       968       938  
Foreclosed real estate   8       31       (2 )     16       9  
FDIC insurance assessment   213       144       42             3  
Merger related   66       386       1,597              
Other   3,214       2,898       2,260       2,298       2,398  
Total other expenses   9,909       9,380       8,092       7,059       7,088  
                             
INCOME BEFORE TAX   6,766       6,172       1,867       3,560       4,241  
INCOME TAX EXPENSE   1,253       1,173       379       481       645  
NET INCOME $ 5,513     $ 4,999     $ 1,488     $ 3,079     $ 3,596  
                             
Basic earnings per share $ 0.67     $ 0.62     $ 0.24     $ 0.49     $ 0.57  
                             
Diluted earnings per share $ 0.67     $ 0.62     $ 0.24     $ 0.49     $ 0.57  
                             
Book Value per share $ 23.72     $ 23.30     $ 22.62     $ 22.52     $ 21.67  
Tangible Book Value per share   20.10       19.55       20.80       20.70       19.84  
                             
Return on average assets (annualized)   1.18 %     1.11 %     0.45 %     1.01 %     1.18 %
Return on average equity (annualized)   11.32 %     10.64 %     4.17 %     8.79 %     10.42 %
Return on average tangible equity (annualized)   13.46 %     11.75 %     4.54 %     9.57 %     11.38 %
                             
Net interest spread (fte)   3.50 %     3.55 %     3.03 %     3.23 %     3.33 %
Net interest margin (fte)   3.65 %     3.73 %     3.25 %     3.48 %     3.59 %
                             
Allowance for loan losses to total loans   0.93 %     0.83 %     1.04 %     0.98 %     0.92 %
Net charge-offs to average loans (annualized)   0.04 %     0.14 %     0.03 %     0.05 %     0.04 %
Nonperforming loans to total loans   0.85 %     0.89 %     0.30 %     0.30 %     0.09 %
Nonperforming assets to total assets   0.70 %     0.74 %     0.29 %     0.31 %     0.19 %
                             


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