Questions? +1 (202) 335-3939 Login
Trusted News Since 1995
A service for global professionals · Tuesday, March 19, 2024 · 696,999,900 Articles · 3+ Million Readers

Norwood Financial Corp Announces Third Quarter Earnings

HONESDALE, Pa., Oct. 22, 2018 (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, 2018 of $3,710,000 which represents an increase of $769,000 over the $2,941,000 earned in the same three-month period of 2017.  Net interest income improved $518,000 and other income increased $139,000 over the three-month period ending September 30, 2017.  Earnings per share (fully diluted) were $0.58 in the 2018 period, increasing from the $0.47 earned in the similar period of last year.  The annualized returns on average assets and average equity for the current three-month period were 1.28% and 12.55%, respectively, compared to 1.03% and 9.85% for the three-month period ending September 30, 2017.

Net income for the nine months ended September 30, 2018 totaled $10,352,000, which is $2,311,000 higher than the same period of 2017 primarily due to a $1,387,000 increase in net interest income and a $450,000 reduction in the provision for credit losses.  Earnings per share (fully diluted) for the nine months ended September 30, 2018 totaled $1.64 per share compared to $1.28 per share in the 2017 period. 

Total assets as of September 30, 2018 were $1.157 billion with loans receivable of $819.2 million, deposits of $939.7 million and stockholders’ equity of $116.7 million.  Total assets have increased $24.8 million during the past twelve months while loans and deposits have increased $63.2 million and $15.7 million, respectively. 

Non-performing assets, which include non-performing loans and foreclosed real estate owned, totaled $2.4 million or 0.20% of total assets as of September 30, 2018 compared to $2.7 million or 0.23% of assets as of June 30, 2018 and $6.2 million or 0.55% of total assets as of September 30, 2017.  Net charge-offs were $421,000 for the quarter and totaled $704,000 for the nine months ended September 30, 2018 compared to $259,000 and $503,000, respectively, for the similar periods in 2017.  The allowance for loan losses totaled $8,280,000 as of September 30, 2018 and represented 719% of total non-performing loans, compared to $7,760,000 and 387% of non-performing loans as of September 30, 2017.

For the three months ended September 30, 2018, net interest income, on a fully taxable equivalent basis (fte), totaled $9,645,000, which represents an increase of $226,000 compared to the similar period in 2017 despite a lower tax-equivalent adjustment.  A $68.7 million increase in average loans outstanding contributed to the increased income.  Net interest margin (fte) for the 2018 period was 3.57% compared to 3.60% for the similar period in 2017, reflecting the lower tax-equivalent adjustment resulting from the Tax Cuts and Jobs Act.  Net interest income (fte) for the nine months ended September 30, 2018 totaled $28,212,000, an increase of $551,000 compared to the similar period in 2017 due primarily to a higher volume of earning assets.  The net interest margin (fte) year-to-date for the 2018 period was 3.52% compared to 3.55% in the same period of 2017.  The decrease in the net interest margin (fte) reflects the lower tax-equivalent adjustment resulting from the reduced corporate tax rate.

Other income for the three months ended September 30, 2018 totaled $1,997,000 compared to $1,858,000 for the similar period in 2017.  The increase was primarily attributed to non-recurring income related to the settlement of litigation.  For the nine months ended September 30, 2018, other income totaled $5,466,000 compared to $5,158,000 in the 2017 period.  Gains on sales of loans and securities totaled $228,000 in the 2018 year-to-date period compared to $234,000 in the corresponding 2017 period.  The 2017 period also includes a gain on the sale of deposits in the amount of $209,000.  Excluding gains from sales, other income improved $523,000 over the first nine months of 2017 primarily due to the non-recurring income related to the litigation settlement.

Other expenses totaled $6,572,000 for the three months ended September 30, 2018, compared to $6,239,000 in the similar period of 2017.  The higher level of expense during the 2018 period includes an increase of $368,000 for salaries and employee benefits offset partially by reduced foreclosed real estate costs.  For the nine months ended September 30, 2018, other expenses totaled $19,173,000 compared to $18,984,000 for the similar period in 2017, an increase of $189,000, or 1.0%.

Mr. Critelli commented, “Our earnings in 2018 have improved significantly over the first nine months of last year.  Pre-tax income has improved 18.8%, while net income increased 28.7%, reflecting the benefit of the reduced corporate tax rate.  Our key performance metrics improved over last year, annualized loan growth exceeds 9% in 2018, operating expenses remain well controlled 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 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 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 interest income and net interest income, which are non-GAAP (Generally Accepted Accounting Principles) financial measures.  Tax-equivalent interest income and net interest income are derived from GAAP interest income and net interest income using an assumed tax rate of 21% for 2018 and 34% for 2017.  We believe the presentation of interest income and net interest income on a tax-equivalent basis ensures comparability of interest income and 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 30
Nine months ended
September 30
    2018   2017   2018   2017
Net interest income $9,388 $8,870 $27,410 $26,023
Tax equivalent basis adjustment using marginal tax rate  257 549 802 1,638
Net interest income on a fully taxable equivalent basis $9,645 $9,419 $28,212 $27.661

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 30
Nine months ended
September 30
(dollars in thousands) 2018   2017   2018   2017  
         
Average equity $117,306   $118,420   $115,897   $115,647  
         
Goodwill and other intangibles (11,707
) (11,842 ) (11,739 ) (11,944 )
                 
Average tangible equity $105,599   $106.578   $104,158   $103,703  

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            
    2018   2017            
ASSETS                    
  Cash and due from banks  $ 17,073  $ 13,947            
  Interest-bearing deposits with banks   295   368            
  Cash and cash equivalents   17,368   14,315            
                     
  Securities available for sale   247,517   285,706            
  Loans receivable    819,197   756,014            
  Less: Allowance for loan losses   8,280   7,760            
  Net loans receivable   810,917   748,254            
  Regulatory stock, at cost   3,261   3,115            
  Bank premises and equipment, net   13,797   12,922            
  Bank owned life insurance   37,718   36,839            
  Foreclosed real estate owned   1,209   4,243            
  Accrued interest receivable   3,792   3,729            
  Goodwill   11,331   11,331            
  Other intangible assets   364   496            
  Deferred tax asset   6,268   8,304            
  Other assets   3,206   2,699            
  TOTAL ASSETS  $ 1,156,748  $ 1,131,953            
                     
LIABILITIES                    
  Deposits:                    
  Non-interest bearing demand   $ 218,979  $ 212,844            
  Interest-bearing    720,735   711,178            
  Total deposits   939,714   924,022            
  Short-term borrowings   52,820   47,229            
  Other borrowings   36,649   31,771            
  Accrued interest payable   1,705   1,167            
  Other liabilities   9,180   10,072            
  TOTAL LIABILITIES   1,040,068   1,014,261            
                     
STOCKHOLDERS' EQUITY                    
  Common Stock, $.10 par value, authorized 10,000,000 shares                    
  issued:  2018: 6,274,513 shares, 2017:  6,246,662 shares   628   625            
  Surplus   48,087   47,467            
  Retained earnings   76,645   71,210            
  Treasury stock, at cost: 2018: 5,729 shares, 2017: 11,724 shares   (188)   (341)            
  Accumulated other comprehensive loss   (8,492)   (1,269)            
  TOTAL STOCKHOLDERS' EQUITY   116,680   117,692            
                     
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 1,156,748  $ 1,131,953            
                     
                     
                     
                     
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,
    2018   2017       2018   2017
INTEREST INCOME                    
  Loans receivable, including fees $ 9,301 $ 8,289     $ 26,645 $ 24,020
  Securities   1,483   1,605       4,543   4,856
  Other   2   2       63   37
  Total Interest income   10,786   9,896       31,251   28,913
                     
INTEREST EXPENSE                    
  Deposits   1,116   828       3,198   2,392
  Short-term borrowings   111   82       201   138
  Other borrowings   171   116       442   360
  Total Interest expense   1,398   1,026       3,841   2,890
NET INTEREST INCOME   9,388   8,870       27,410   26,023
PROVISION FOR LOAN LOSSES   375   600       1,350   1,800
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   9,013   8,270       26,060   24,223
                     
OTHER INCOME                    
  Service charges and fees   1,129   1,105       3,211   3,056
  Income from fiduciary activities   151   160       463   395
  Net realized gains on sales of securities     13     129         213     167
  Gains on sales of loans, net      15     -         15     67
  Gains on sale of deposits     -     -         -     209
  Earnings and proceeds on life insurance policies   297   320       848   850
  Other    392   144       716   414
  Total other income   1,997   1,858       5,466   5,158
                     
OTHER EXPENSES                    
  Salaries and  employee benefits   3,577   3,209       10,445   9,639
  Occupancy, furniture and equipment   910   799       2,659   2,519
  Data processing  and related operations   368   354       1,027   1,022
  Taxes, other than income   153   233       480   693
  Professional fees   301   217       760   706
  FDIC Insurance assessment   87   97       265   283
  Foreclosed real estate    (26)   303       68   1,028
  Amortization of intangibles   29   35       97   115
  Other    1,173   992       3,372   2,979
  Total other expenses   6,572   6,239       19,173   18,984
                     
INCOME BEFORE TAX   4,438   3,889       12,353   10,397
INCOME TAX EXPENSE    728   948       2,001   2,356
NET INCOME  $ 3,710  $ 2,941      $ 10,352  $ 8,041
                     
Basic earnings per share  $ 0.59 $ 0.47     $ 1.66 $ 1.29
                     
Diluted earnings per share  $ 0.58 $ 0.47     $ 1.64 $ 1.28
                     
                     
                     
NORWOOD FINANCIAL CORP.                    
Financial Highlights (Unaudited)                    
(dollars in thousands, except per share data)                    
                     
For the Three Months Ended September 30   2018   2017            
                     
Net interest income  $ 9,388  $ 8,870            
Net income   3,710   2,941            
                     
Net interest spread (fully taxable equivalent)   3.40%   3.48%            
Net interest margin (fully taxable equivalent)   3.57%   3.60%            
Return on average assets   1.28%   1.03%            
Return on average equity   12.55%   9.85%            
Return on average tangible equity   13.94%   10.95%            
Basic earnings per share   $ 0.59  $ 0.47            
Diluted earnings per share   $ 0.58  $ 0.47            
                     
For the Nine Months Ended September 30   2018   2017            
                     
Net interest income  $ 27,410  $ 26,023            
Net income   10,352   8,041            
                     
Net interest spread (fully taxable equivalent)   3.37%   3.44%            
Net interest margin (fully taxable equivalent)   3.52%   3.55%            
Return on average assets   1.21%   0.96%            
Return on average equity   11.94%   9.30%            
Return on average tangible equity   13.29%   10.37%            
Basic earnings per share   $ 1.66  $ 1.29            
Diluted earnings per share   $ 1.64  $ 1.28            
                     
As of September 30                    
                     
Total assets  $ 1,156,748  $ 1,131,953            
Total loans receivable   819,197   756,014            
Allowance for loan losses   8,280   7,760            
Total deposits   939,714   924,022            
Stockholders' equity   116,680   117,692            
Trust assets under management   164,852   151,373            
                     
Book value per share   $ 18.49  $ 18.46            
Tangible book value per share   $ 16.62  $ 16.54            
Equity to total assets   10.09%   10.40%            
Allowance to total loans receivable   1.01%   1.03%            
Nonperforming loans to total loans    0.14%   0.27%            
Nonperforming assets to total assets   0.20%   0.55%            
                     
                     
                     
NORWOOD FINANCIAL CORP.                    
Consolidated Balance Sheets (unaudited)                    
(dollars in thousands)                    
      September 30     June 30     March 31     December 31     September 30
    2018   2018   2018   2017   2017
ASSETS                    
  Cash and due from banks  $ 17,073  $ 15,193  $ 10,103  $ 16,212  $ 13,947
  Interest-bearing deposits with banks   295   914   2,039   485   368
  Cash and cash equivalents   17,368   16,107   12,142   16,697   14,315
                     
  Securities available for sale   247,517   259,442   265,862   281,121   285,706
  Loans receivable    819,197   803,773   775,681   764,092   756,014
  Less: Allowance for loan losses   8,280   8,326   8,099   7,634   7,760
  Net loans receivable   810,917   795,447   767,582   756,458   748,254
  Regulatory stock, at cost   3,261   2,313   2,545   3,505   3,115
  Bank owned life insurance   37,718   37,485   37,270   37,060   36,839
  Bank premises and equipment, net   13,797   13,894   13,808   13,864   12,922
  Foreclosed real estate owned   1,209   1,386   1,436   1,661   4,243
  Goodwill and other intangibles   11,695   11,725   11,758   11,793   11,827
  Other assets   13,266   12,794   14,634   10,757   14,732
  TOTAL ASSETS  $ 1,156,748  $ 1,150,593  $ 1,127,037  $ 1,132,916  $ 1,131,953
                     
LIABILITIES                    
  Deposits:                    
  Non-interest bearing demand   $ 218,979  $ 216,472  $ 204,027  $ 205,138  $ 212,844
  Interest-bearing deposits   720,735   734,417   736,122   724,246   711,178
  Total deposits   939,714   950,889   940,149   929,384   924,022
  Borrowings   89,469   73,608   62,998   78,475   79,000
  Other liabilities   10,885   10,563   10,052   9,318   11,239
  TOTAL LIABILITIES   1,040,068   1,035,060   1,013,199   1,017,177   1,014,261
                     
STOCKHOLDERS' EQUITY   116,680   115,533   113,838   115,739   117,692
                     
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 1,156,748  $ 1,150,593  $ 1,127,037  $ 1,132,916  $ 1,131,953
                     
                     
                     
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   2018   2018   2018   2017   2017
INTEREST INCOME                    
  Loans receivable, including fees  $ 9,301  $ 8,857  $ 8,487  $ 8,503  $ 8,289
  Securities   1,483   1,536   1,524   1,560   1,605
  Other   2   43   18   12   2
  Total interest income   10,786   10,436   10,029   10,075   9,896
                     
INTEREST EXPENSE                    
  Deposits   1,116   1,052   1,029   985   828
  Borrowings   282   169   193   206   198
  Total interest expense   1,398   1,221   1,222   1,191   1,026
NET INTEREST INCOME   9,388   9,215   8,807   8,884   8,870
PROVISION FOR LOAN LOSSES   375   425   550   400   600
NET INTEREST INCOME AFTER PROVISION                    
  FOR LOAN LOSSES   9,013   8,790   8,257   8,484   8,270
                     
OTHER INCOME                    
  Service charges and fees     1,129     1,101     980     1,023     1,105
  Income from fiduciary activities     151     175     137     116     160
  Net realized gains on sales of securities     13     58     142     181     129
  Gains on sales of loans, net     15     -     -     -     -
  Earnings and proceeds on life insurance policies     297     279     273     283     320
  Other      392     161     162     151     144
  Total other income   1,997   1,774   1,694   1,754   1,858
                     
OTHER EXPENSES                    
  Salaries and  employee benefits     3,577     3,406     3,462     3,211     3,209
  Occupancy, furniture and equipment, net     910     857     892     841     799
  Foreclosed real estate      (26)     114     (19)     136     303
  FDIC insurance assessment     87     86     92     94     97
  Other      2,024     1,890     1,821     1,604     1,831
  Total other expenses   6,572   6,353   6,248   5,886   6,239
                     
INCOME BEFORE TAX   4,438   4,211   3,703   4,352   3,889
INCOME TAX EXPENSE    728   698   574   4,195   948
NET INCOME  $ 3,710  $ 3,513  $ 3,129  $ 157  $ 2,941
                     
Basic earnings per share   $ 0.59  $ 0.57  $ 0.50  $ 0.03  $ 0.47
                     
Diluted earnings per share   $ 0.58  $ 0.56  $ 0.50  $ 0.03  $ 0.47
                     
Book Value per share  $ 18.49 $ 18.35 $ 18.45 $ 18.61 $ 18.46
Tangible Book Value per share   16.62   16.47   16.56   16.71   16.54
                     
Return on average assets (annualized)   1.28%   1.23%   1.13%   0.05%   1.03%
Return on average equity (annualized)   12.55%   12.25%   11.00%   0.52%   9.85%
Return on average tangible equity (annualized)   13.94%   13.64%   12.25%   0.58%   10.95%
                     
Net interest spread (fte)   3.40%   3.40%   3.31%   3.44%   3.48%
Net interest margin (fte)   3.57%   3.54%   3.46%   3.56%   3.60%
                     
Allowance for loan losses to total loans   1.01%   1.04%   1.04%   1.00%   1.03%
Net charge-offs to average loans (annualized)   0.21%   0.10%   0.04%   0.28%   0.14%
Nonperforming loans to total loans   0.14%   0.16%   0.22%   0.32%   0.27%
Nonperforming assets to total assets   0.20%   0.23%   0.28%   0.37%   0.55%

 

Norwood Financial Corp Logo

Powered by EIN News


EIN Presswire does not exercise editorial control over third-party content provided, uploaded, published, or distributed by users of EIN Presswire. We are a distributor, not a publisher, of 3rd party content. Such content may contain the views, opinions, statements, offers, and other material of the respective users, suppliers, participants, or authors.

Submit your press release