Norwood Financial Corp Announces Third Quarter Earnings

10/26, 2:15 PM (Source: GlobeNewswire)

HONESDALE, Pa., Oct. 26, 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 September 30, 2021 of $6,981,000 which represents an increase of $1,982,000, or 39.6%, over the $4,999,000 earned in the same three-month period of 2020. The increase in earnings was due to a $1.7 million increase in net interest income, including fee income recognized on Paycheck Protection Program (“PPP”) loans forgiven, and a $1.1 million reduction in the provision for loan losses. Earnings per share (fully diluted) were $0.85 in the three-months ended September 30, 2021, which represents an increase from the $0.62 earned in the same period of 2020. The annualized returns on average assets and average tangible equity for the current three-month period were 1.36% and 15.72%, respectively, compared to 1.11% and 11.72% for the three-month period ended September 30, 2020. Net income for the nine months ended September 30, 2021, totaled $18,277,000, which is $8,710,000, or 91.1%, higher than the same period of 2020, primarily due to the benefits derived from the Company’s acquisition of UpState New York Bancorp, Inc. (“UpState”), which closed on July 7, 2020. Earnings per share (fully diluted) for the nine months ended September 30, 2021, totaled $2.23 per share compared to $1.39 per share in the 2020 period.

Total assets as of September 30, 2021 were $2.054 billion, with loans receivable of $1.371 billion, deposits of $1.723 billion and stockholders’ equity of $202.6 million. Total assets have increased $211.6 million during the past twelve months while loans have decreased $43.7 million and deposits have increased $206.6 million. The increases in assets and deposits reflect growth due to significant stimulus funds received as a result of PPP loans that have been forgiven and the Coronavirus Aid, Relief, and Economic Security Act, (“CARES Act”), while the decrease in loans includes a $59.2 million reduction in PPP loans due to forgiveness.

For the three months ended September 30, 2021, net interest income, on a fully taxable equivalent basis (fte), totaled $17,186,000, which represents an increase of $1,639,000, compared to the same period in 2020. A $150.5 million increase in average securities contributed to the increased income. Net interest margin (fte) for the 2021 period was 3.61%, compared to 3.73% for the similar period in 2020. Net interest income (fte) for the nine months ended September 30, 2021 totaled $49,429,000, an increase of $13,891,000, compared to the similar period in 2020 due primarily to a higher volume of earning assets. The net interest margin (fte) year-to-date for the 2021 period was 3.54%, which exceeded the 3.51% recorded in the same period of 2020. All increases include the benefits derived from the acquisition of UpState.

Total other income for the three months ended September 30, 2021 was $2,128,000, compared to $2,072,000 for the same period in 2020. The increase in total other income is primarily due to a higher level of service charges and fees. For the nine months ended September 30, 2021, total other income was $6,304,000, compared to $5,119,000 in the same period of 2020.

Total other expenses were $9,592,000 for the three months ended September 30, 2021, compared to $9,380,000 in the same period of 2020. The higher level of expense during the three months ended September 30, 2021, was due primarily to a $679,000 increase in salaries and benefits costs. For the nine months ended September 30, 2021, other expenses totaled $28,536,000, compared to $24,531,000 for the same period in 2020. The increase includes costs related to the operation of four additional community offices acquired from UpState in 2020.

Mr. Critelli commented, “Our results for the first nine months of 2021 reflect the positive impact of, and earnings accretion resulting from, our acquisition of UpState, as well as the continued impact of economic stimulus on our earnings and balance sheet. We recently broke ground on our new facility in Penn Yan, New York, and we look forward to serving the community from our new location. We appreciate the opportunity 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 fully taxable equivalent net interest income, which is a non-GAAP (Generally Accepted Accounting Principles) financial measure. Fully taxable equivalent net interest income was 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 fully taxable 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 taxable equivalent basis:

(dollars in thousands)Three months ended September 30Nine months ended September 30
  2021  2020  2021  2020 
Net interest income$16,989 $15,330 $48,817 $34,862 
Tax equivalent basis adjustment using 21% marginal tax rate 197  217  612  676 
Net interest income on a fully taxable equivalent basis$17,186 $15,547 $49,429 $35,538 


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 September 30Nine months ended September 30
(dollars in thousands) 2021  2020  2021  2020 
     
Average equity$205,848 $187,478 $201,102 $157,695 
     
Average goodwill and other intangibles (29,712

)

 (17,800) (29,757) (13,643)
Average tangible equity
$176,136 $169,678 $171,345 $144,052 

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)    
  September 30
  2021  2020 
ASSETS    
Cash and due from banks $28,353  $23,874 
Interest-bearing deposits with banks 191,580   100,566 
Cash and cash equivalents 219,933   124,440 
     
Securities available for sale 361,988   197,436 
Loans receivable 1,371,002   1,414,662 
Less: Allowance for loan losses 16,103   11,674 
Net loans receivable 1,354,899   1,402,988 
Regulatory stock, at cost 3,898   3,876 
Bank premises and equipment, net 17,364   18,124 
Bank owned life insurance 39,864   39,400 
Foreclosed real estate owned 1,876   965 
Accrued interest receivable 6,049   6,104 
Goodwill 29,266   30,213 
Other intangible assets 434   565 
Other assets 18,120   17,996 
TOTAL ASSETS $2,053,691  $1,842,107 
     
LIABILITIES    
Deposits:    
Non-interest bearing demand $442,534  $372,237 
Interest-bearing 1,279,988   1,143,685 
Total deposits 1,722,522   1,515,922 
Short-term borrowings 78,246   69,294 
Other borrowings 33,136   46,438 
Accrued interest payable 1,341   2,194 
Other liabilities 15,838   17,712 
TOTAL LIABILITIES 1,851,083   1,651,560 
     
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: 8,245,951 shares, 2020: 8,210,982 shares 825   821 
Surplus 96,100   95,108 
Retained earnings 105,668   90,422 
Treasury stock, at cost: 2021: 51,568 shares, 2020: 13,778 shares (1,423) (469)
Accumulated other comprehensive income 1,438   4,665 
TOTAL STOCKHOLDERS' EQUITY 202,608   190,547 
     
TOTAL LIABILITIES AND    
STOCKHOLDERS' EQUITY $2,053,691  $1,842,107 
     


NORWOOD FINANCIAL CORP.          
Consolidated Statements of Income           
(dollars in thousands, except per share data)          
(unaudited)          
 Three Months Ended September 30,  Nine Months Ended September 30,
  2021  2020   2021 2020
INTEREST INCOME          
Loans receivable, including fees$16,859  $16,260  $49,107 $37,711
Securities 1,468   1,031   3,936  3,272
Other 72   18   174  43
Total Interest income 18,399   17,309   53,217  41,026
           
INTEREST EXPENSE          
Deposits 1,167   1,676   3,627  5,096
Short-term borrowings 71   61   214  244
Other borrowings 172   242   559  824
Total Interest expense 1,410   1,979   4,400  6,164
NET INTEREST INCOME 16,989   15,330   48,817  34,862
PROVISION FOR LOAN LOSSES 750   1,850   3,750  3,850
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 16,239   13,480   45,067  31,012
           
OTHER INCOME          
Service charges and fees 1,485   1,301   4,268  3,201
Income from fiduciary activities 209   205   550  533
Net realized gains on sales of securities  35   33    56  71
Gains on sales of loans, net  39   164    177  285
Earnings and proceeds on life insurance policies 200   217   767  638
Other 160   152   486  391
Total other income 2,128   2,072   6,304  5,119
           
OTHER EXPENSES          
Salaries and employee benefits 5,491   4,812   15,616  11,878
Occupancy, furniture and equipment 1,163   1,109   3,568  2,983
Data processing and related operations 594   746   1,760  1,649
Taxes, other than income 229   214   763  641
Professional fees 189   292   1,072  735
FDIC Insurance assessment  177   144    512  186
Foreclosed real estate (15) 31   27  44
Amortization of intangibles 28   35   96  79
Merger related  -   386   0  1,983
Other 1,736   1,611   5,122  4,353
Total other expenses 9,592   9,380   28,536  24,531
           
INCOME BEFORE TAX 8,775   6,172   22,835  11,600
INCOME TAX EXPENSE 1,794   1,173   4,558  2,033
NET INCOME $6,981  $4,999   $18,277 $9,567
           
Basic earnings per share$0.85  $0.62  $2.23 $1.39
           
Diluted earnings per share$0.85  $0.62  $2.23 $1.39
           

  

NORWOOD FINANCIAL CORP.    
Financial Highlights (Unaudited)    
(dollars in thousands, except per share data)    
     
For the Three Months Ended September 30 2021  2020 
     
Net interest income$16,989  $15,330 
Net income 6,981   4,999 
     
Net interest spread (fully taxable equivalent) 3.49%  3.55% 
Net interest margin (fully taxable equivalent) 3.61%  3.73% 
Return on average assets 1.36%  1.11% 
Return on average equity 13.50%  10.64% 
Return on average tangible equity 15.72%  11.72% 
Basic earnings per share$0.85  $0.62 
Diluted earnings per share$0.85  $0.62 
     
     
For the Nine Months Ended September 30 2021  2020 
     
Net interest income$48,817  $34,862 
Net income 18,277   9,567 
     
Net interest spread (fully taxable equivalent) 3.43%  3.30% 
Net interest margin (fully taxable equivalent) 3.54%  3.51% 
Return on average assets 1.23%  0.88% 
Return on average equity 12.19%  8.13% 
Return on average tangible equity 14.26%  8.87% 
Basic earnings per share$2.23  $1.39 
Diluted earnings per share$2.23  $1.39 
     
As of September 30 2021  2020 
     
Total assets$2,053,691  $1,842,107 
Total loans receivable 1,371,002   1,414,662 
Allowance for loan losses 16,103   11,674 
Total deposits 1,722,522   1,515,922 
Stockholders' equity 202,608   190,547 
Trust assets under management 187,689   155,166 
     
Book value per share$24.90  $23.30 
Tangible book value per share$21.27  $19.55 
Equity to total assets 9.87%  10.34% 
Allowance to total loans receivable 1.17%  0.83% 
Nonperforming loans to total loans 0.14%  0.29% 
Nonperforming assets to total assets 0.18%  0.27% 
     


NORWOOD FINANCIAL CORP.           
Consolidated Balance Sheets (unaudited)           
(dollars in thousands)           
  September 30 June 30 March December 31 September 30 
  2021  2021  2021  2020  2020  
ASSETS           
Cash and due from banks$28,353 $34,831 $20,364 $19,445 $23,874  
Interest-bearing deposits with banks 191,580  170,342  190,135  92,248  100,566  
Cash and cash equivalents 219,933  205,173  210,499  111,693  124,440  
            
Securities available for sale 361,988  333,636  275,224  226,586  197,436  
Loans receivable 1,371,002  1,386,654  1,421,568  1,410,732  1,414,662  
Less: Allowance for loan losses 16,103  15,340  14,509  13,150  11,674  
Net loans receivable 1,354,899  1,371,314  1,407,059  1,397,582  1,402,988  
Regulatory stock, at cost 3,898  4,084  4,043  3,981  3,876  
Bank owned life insurance 39,864  39,665  39,471  39,608  39,400  
Bank premises and equipment, net 17,364  17,298  17,648  17,814  18,124  
Foreclosed real estate owned 1,876  844  844  965  965  
Goodwill and other intangibles 29,700  29,727  29,785  29,820  30,778  
Other assets 24,169  23,823  25,263  23,815  24,100  
TOTAL ASSETS$2,053,691 $2,025,564 $2,009,836 $1,851,864 $1,842,107  
            
LIABILITIES           
Deposits:           
Non-interest bearing demand$442,534 $435,824 $415,395 $359,559 $372,237  
Interest-bearing deposits 1,279,988  1,253,117  1,269,793  1,175,826  1,143,685  
Total deposits 1,722,522  1,688,941  1,685,188  1,535,385  1,515,922  
Borrowings 111,382  119,858  112,283  105,762  115,732  
Other liabilities 17,179  16,266  17,258  15,932  19,906  
TOTAL LIABILITIES 1,851,083  1,825,065  1,814,729  1,657,079  1,651,560  
            
STOCKHOLDERS' EQUITY 202,608  200,499  195,107  194,785  190,547  
            
TOTAL LIABILITIES AND           
STOCKHOLDERS' EQUITY$2,053,691 $2,025,564 $2,009,836 $1,851,864 $1,842,107  
            
            
            
NORWOOD FINANCIAL CORP.           
Consolidated Statements of Income (unaudited)           
(dollars in thousands, except per share data)           
  September 30 June 30 March 31 December 31 September 30 
Three months ended 2021  2021  2021  2020  2020  
INTEREST INCOME           
Loans receivable, including fees$16,859 $16,102 $16,146 $16,336 $16,260  
Securities 1,468  1,356  1,112  1,064  1,031  
Other 72  59  43  29  18  
Total interest income 18,399  17,517  17,301  17,429  17,309  
            
INTEREST EXPENSE           
Deposits 1,167  1,205  1,255  1,514  1,676  
Borrowings 243  259  270  301  303  
Total interest expense 1,410  1,464  1,525  1,815  1,979  
NET INTEREST INCOME 16,989  16,053  15,776  15,614  15,330  
PROVISION FOR LOAN LOSSES 750  1,500  1,500  1,600  1,850  
NET INTEREST INCOME AFTER PROVISION           
FOR LOAN LOSSES 16,239  14,553  14,276  14,014  13,480  
            
OTHER INCOME           
Service charges and fees 1,485  1,532  1,247  1,913  1,301  
Income from fiduciary activities 209  181  160  150  205  
Net realized gains on sales of securities 35  -  21  -  33  
Gains on sales of loans, net 39  109  29  241  164  
Earnings and proceeds on life insurance policies 200  194  374  208  217  
Other 160  171  158  149  152  
Total other income 2,128  2,187  1,989  2,661  2,072  
            
OTHER EXPENSES           
Salaries and employee benefits 5,491  5,171  4,953  5,243  4,812  
Occupancy, furniture and equipment, net 1,163  1,186  1,220  1,165  1,109  
Foreclosed real estate (15) 13  30  8  31  
FDIC insurance assessment 177  154  181  213  144  
Merger related -  -  -  66  386  
Other 2,776  2,968  3,068  3,214  2,898  
Total other expenses 9,592  9,492  9,452  9,909  9,380  
            
INCOME BEFORE TAX 8,775  7,248  6,813  6,766  6,172  
INCOME TAX EXPENSE 1,794  1,493  1,271  1,253  1,173  
NET INCOME$6,981 $5,755 $5,542 $5,513 $4,999  
            
Basic earnings per share$0.85 $0.70 $0.68 $0.67 $0.62  
            
Diluted earnings per share$0.85 $0.70 $0.67 $0.67 $0.62  
            
Book Value per share$24.90 $24.47 $23.82 $23.72 $23.30  
Tangible Book Value per share 21.27  20.85  20.20  20.10  19.55  
            
Return on average assets (annualized) 1.36% 1.15% 1.18% 1.18% 1.11% 
Return on average equity (annualized) 13.50% 11.59% 11.39% 11.32% 10.64% 
Return on average tangible equity (annualized) 15.78% 13.63% 13.42% 13.46% 11.75% 
            
Net interest spread (fte) 3.49% 3.32% 3.46% 3.50% 3.55% 
Net interest margin (fte) 3.61% 3.44% 3.59% 3.65% 3.73% 
            
Allowance for loan losses to total loans 1.17% 1.11% 1.02% 0.93% 0.83% 
Net charge-offs to average loans (annualized) 0.00% 0.19% 0.04% 0.04% 0.14% 
Nonperforming loans to total loans 0.20% 0.28% 0.22% 0.24% 0.29% 
Nonperforming assets to total assets 0.22% 0.24% 0.20% 0.24% 0.27% 
            

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