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 LOSSES14,014   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%