HONESDALE, Pa. , July 26, 2019 (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 June 30, 2019 of $3,522,000, which represents an increase from the $3,513,000 earned in the similar period of 2018. Earnings per share (fully diluted) were $0.56 in both the 2019 and 2018 periods.  Annualized return on average assets for the three months ended June 30, 2019 was 1.16% with an annualized return on average equity of 10.93%.  Net income for the six months ended June 30, 2019 totaled $6,712,000, which is $70,000 higher than the same six-month period of last year due primarily to improved net interest income.  Earnings per share (fully diluted) for the six months ended June 30, 2019 and 2018, each totaled $1.06.

Total assets as of June 30, 2019 were $1.223 billion with loans receivable of $887.7 million, deposits of $981.2 million and stockholders’ equity of $131.5 million.  Loans receivable increased $83.9 million since June 30, 2018 while total deposits increased $30.3 million. 

Non-performing assets, which include non-performing loans and foreclosed assets, totaled $3.0 million and represented 0.25% of total assets as of June 30, 2019 compared to $2.7 million, or 0.23% of total assets, as of June 30, 2018.  The increase was due primarily to a $291,000 increase in foreclosed real estate owned.  The allowance for loan losses totaled $8,228,000 as of June 30, 2019 and represented 0.93% of total loans outstanding, compared to $8,326,000 and 1.04%, respectively, on June 30, 2018.  As of June 30, 2019, the reserve for loan losses was 607% of nonperforming loans compared to 655% on June 30, 2018.

For the three months ended June 30, 2019, net interest income, on a fully taxable equivalent basis (fte), totaled $9,878,000, an increase of $394,000 compared to the similar period in 2018.  An $88.1 million increase in average loans outstanding contributed to the increased income.  Net interest margin (fte) for the 2019 period was 3.49%, compared to 3.54% in 2018 period.  The tax-equivalent yield on interest-earning assets increased 27 basis points to 4.27% compared to the prior year while the cost of interest-bearing liabilities increased 42 basis points to 1.02%.  Net interest income (fte) for the six months ended June 30, 2019 totaled $19,413,000, which was $846,000 higher than the similar period in 2018 due to the higher volume of earning assets.  The net interest margin (fte) was 3.46% in the 2019 period and 3.50% during the first six months of 2018.  The decrease in the net interest margin (fte) reflects the increase in the rate paid on time deposits due to the renewal of maturing certificates of deposit at market rates.

Other income for the three months ended June 30, 2019 totaled $1,641,000 compared to $1,774,000 for the similar period in 2018.  The decrease can be attributed to a lower level of service charges and fees and a reduction in earnings and proceeds on bank-owned life insurance policies.   Net gains from the sale of loans and securities increased $73,000.  For the six months ended June 30, 2019, other income totaled $3,201,000 compared to $3,468,000 in the 2018 period.  Net gains from the sale of loans and securities decreased $26,000, while earnings and proceeds on bank-owned life insurance policies decreased $144,000. 

Other expenses totaled $6,785,000 for the three months ended June 30, 2019, an increase of $432,000, or 6.8%, compared to the $6,353,000 reported in the similar period of 2018.  Salaries and employee benefits rose $193,000 over the same period of last year while all other expenses increased $239,000, net.  For the six months ended June 30, 2019, other expenses totaled $13,433,000 compared to $12,600,000 for the similar period in 2018.  The increase includes a $380,000 increase in salaries and employee benefits, while all other expenses increased $453,000, or 7.9%, net.

Mr. Critelli commented, “Our earnings for the first half of 2019 have increased over the first six months of last year.  Our annualized loan growth exceeded 8.0%, operating expenses remain well controlled and our capital base remains above regulatory “well capitalized” targets.  The Bank also expanded its market area into Luzerne County, Pennsylvania with the recent opening of our Hanover Township Office.  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 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 net interest income, which is a non-GAAP (Generally Accepted Accounting Principles) financial measure.  Tax-equivalent net interest income was derived from GAAP net interest income using an assumed tax rate of 21%.  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 taxable equivalent basis:

		Three months ended June 30								Six months ended June 30
(dollars in thousands)		2019				2018				2019				2018
Net Interest Income		$	9,612			$	9,215			$	18,882			$	18,022
Taxable equivalent basis adjustment  using 21% marginal tax rate			266				269				531				545
Net interest income on a fully taxable  equivalent basis		$	9,878			$	9,484			$	19,413			$	18,567
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 June 30								Six months ended June 30
(dollars in thousands)		2019				2018				2019				2018
Average equity		$	129,215			$	115,042			$	126,993			$	115,180
Average goodwill and other intangibles			(11,621	)			(11,738	)			(11,635	)			(11,755	)
Average tangible equity		$	117,594			$	103,384			$	115,358			$	103,425

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)
		June 30
		2019			2018
ASSETS
Cash and due from banks	$	14,207		$	15,193
Interest-bearing deposits with banks		4,265			914
Cash and cash equivalents		18,472			16,107
Securities available for sale		238,083			259,442
Loans receivable		887,673			803,773
Less: Allowance for loan losses		8,228			8,326
Net loans receivable		879,445			795,447
Regulatory stock, at cost		3,155			2,313
Bank premises and equipment, net		13,880			13,894
Bank owned life insurance		38,340			37,485
Foreclosed real estate owned		1,677			1,386
Accrued interest receivable		3,979			3,672
Goodwill		11,331			11,331
Other intangible assets		280			394
Other assets		13,886			9,122
TOTAL ASSETS	$	1,222,528		$	1,150,593
LIABILITIES
Deposits:
Non-interest bearing demand	$	221,764		$	216,472
Interest-bearing		759,460			734,417
Total deposits		981,224			950,889
Short-term borrowings		48,094			43,325
Other borrowings		44,024			30,283
Accrued interest payable		3,008			1,461
Other liabilities		14,695			9,102
TOTAL LIABILITIES		1,091,045			1,035,060
STOCKHOLDERS' EQUITY
Prefered Stock, no par value per share, authorized 5,000,000 shares		-			-
Common Stock, $.10 par value per share,
authorized: 2019: 20,000,000 shares, 2018: 10,000,000 shares		630			627
issued: 2019: 6,304,413 shares, 2018: 6,266,388shares
Surplus		48,741			47,815
Retained earnings		82,127			74,315
Treasury stock, at cost: 2019: 13,807 shares, 2018: 5,729 shares		(455	)		(188	)
Accumulated other comprehensive loss		440			(7,036	)
TOTAL STOCKHOLDERS' EQUITY		131,483			115,533
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	1,222,528		$	1,150,593
NORWOOD FINANCIAL CORP.
Consolidated Statements of Income
(dollars in thousands, except per share data)
(unaudited)
	Three Months Ended June 30,									Six Months Ended June 30,
		2019			2018						2019			2018
INTEREST INCOME
Loans receivable, including fees	$	10,328		$	8,857					$	20,298		$	17,344
Securities		1,435			1,536						2,876			3,060
Other		51			43						66			61
Total Interest income		11,814			10,436						23,240			20,465
INTEREST EXPENSE
Deposits		1,839			1,052						3,568			2,082
Short-term borrowings		85			38						209			90
Other borrowings		278			131						581			271
Total Interest expense		2,202			1,221						4,358			2,443
NET INTEREST INCOME		9,612			9,215						18,882			18,022
PROVISION FOR LOAN LOSSES		300			425						750			975
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		9,312			8,790						18,132			17,047
OTHER INCOME
Service charges and fees		1,052			1,101						2,083			2,082
Income from fiduciary activities		145			175						287			311
Net realized gains on sales of securities		64			58						64			200
Gains on sales of loans, net		67			-						110			-
Earnings and proceeds on life insurance policies		207			279						408			552
Other		106			161						249			323
Total other income		1,641			1,774						3,201			3,468
OTHER EXPENSES
Salaries and  employee benefits		3,599			3,406						7,248			6,868
Occupancy, furniture and equipment		940			857						1,864			1,749
Data processing  and related operations		472			340						920			658
Taxes, other than income		179			153						340			327
Professional fees		226			229						476			459
FDIC Insurance assessment		84			86						155			178
Foreclosed real estate		(10	)		114						13			95
Amortization of intangibles		27			33						56			68
Other		1,268			1,135						2,361			2,198
Total other expenses		6,785			6,353						13,433			12,600
INCOME BEFORE TAX		4,168			4,211						7,900			7,915
INCOME TAX EXPENSE		646			698						1,188			1,273
NET INCOME	$	3,522		$	3,513					$	6,712		$	6,642
Basic earnings per share	$	0.56		$	0.57					$	1.07		$	1.07
Diluted earnings per share	$	0.56		$	0.56					$	1.06		$	1.06
NORWOOD FINANCIAL CORP.
Financial Highlights (Unaudited)
(dollars in thousands, except per share data)
For the Three Months Ended June 30		2019			2018
Net interest income	$	9,612		$	9,215
Net income		3,522			3,513
Net interest spread (fully taxable equivalent)		3.24	%		3.40	%
Net interest margin (fully taxable equivalent)		3.49	%		3.54	%
Return on average assets		1.16	%		1.23	%
Return on average equity		10.93	%		12.25	%
Return on average tangible equity		12.01	%		13.64	%
Basic earnings per share	$	0.56		$	0.57
Diluted earnings per share	$	0.56		$	0.56
For the Six Months Ended June 30
Net interest income	$	18,882		$	18,022
Net income		6,712			6,642
Net interest spread (fully taxable equivalent)		3.22	%		3.35	%
Net interest margin (fully taxable equivalent)		3.46	%		3.50	%
Return on average assets		1.12	%		1.18	%
Return on average equity		10.66	%		11.63	%
Return on average tangible equity		11.73	%		12.95	%
Basic earnings per share	$	1.07		$	1.07
Diluted earnings per share	$	1.06		$	1.06
As of June 30
Total assets	$	1,222,528		$	1,150,593
Total loans receivable		887,673			803,773
Allowance for loan losses		8,228			8,326
Total deposits		981,224			950,889
Stockholders' equity		131,483			115,533
Trust assets under management		163,103			158,117
Book value per share	$	20.90		$	18.35
Tangible book value per share	$	19.06		$	16.47
Equity to total assets		10.76	%		10.04	%
Allowance to total loans receivable		0.93	%		1.04	%
Nonperforming loans to total loans		0.15	%		0.16	%
Nonperforming assets to total assets		0.25	%		0.23	%
NORWOOD FINANCIAL CORP.
Consolidated Balance Sheets (unaudited)
(dollars in thousands)
	June 30				March 31			December 31			September 30			June 30
		2019			2019			2018			2018			2018
ASSETS
Cash and due from banks	$	14,207		$	13,583		$	18,039		$	17,073		$	15,193
Interest-bearing deposits with banks		4,265			6,291			309			295			914
Cash and cash equivalents		18,472			19,874			18,348			17,368			16,107
Securities available for sale		238,083			240,621			243,277			247,517			259,442
Loans receivable		887,673			864,198			850,182			819,197			803,773
Less: Allowance for loan losses		8,228			8,349			8,452			8,280			8,326
Net loans receivable		879,445			855,849			841,730			810,917			795,447
Regulatory stock, at cost		3,155			3,132			3,926			3,261			2,313
Bank owned life insurance		38,340			38,134			37,932			37,718			37,485
Bank premises and equipment, net		13,880			14,165			13,846			13,797			13,894
Foreclosed real estate owned		1,677			1,792			1,115			1,209			1,386
Goodwill and other intangibles		11,611			11,638			11,667			11,695			11,725
Other assets		17,865			18,390			12,718			13,266			12,794
TOTAL ASSETS	$	1,222,528		$	1,203,595		$	1,184,559		$	1,156,748		$	1,150,593
LIABILITIES
Deposits:
Non-interest bearing demand	$	221,764		$	206,806		$	201,457		$	218,979		$	216,472
Interest-bearing deposits		759,460			767,609			745,323			720,735			734,417
Total deposits		981,224			974,415			946,780			939,714			950,889
Borrowings		92,118			85,779			105,330			89,469			73,608
Other liabilities		17,703			16,629			10,164			10,885			10,563
TOTAL LIABILITIES		1,091,045			1,076,823			1,062,274			1,040,068			1,035,060
STOCKHOLDERS' EQUITY		131,483			126,772			122,285			116,680			115,533
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	1,222,528		$	1,203,595		$	1,184,559		$	1,156,748		$	1,150,593
NORWOOD FINANCIAL CORP.
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
		June 30			March 31			December 31			September 30			June 30
Three months ended		2019			2019			2018			2018			2018
INTEREST INCOME
Loans receivable, including fees	$	10,328		$	9,970		$	9,759		$	9,301		$	8,857
Securities		1,435			1,441			1,476			1,483			1,536
Other		51			15			10			2			43
Total interest income		11,814			11,426			11,245			10,786			10,436
INTEREST EXPENSE
Deposits		1,839			1,729			1,446			1,116			1,052
Borrowings		363			426			370			282			169
Total interest expense		2,202			2,155			1,816			1,398			1,221
NET INTEREST INCOME		9,612			9,271			9,429			9,388			9,215
PROVISION FOR LOAN LOSSES		300			450			375			375			425
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		9,312			8,821			9,054			9,013			8,790
OTHER INCOME
Service charges and fees		1,052			1,031			1,085			1,129			1,101
Income from fiduciary activities		145			142			126			151			175
Net realized gains on sales of securities		64			-			-			13			58
Gains on sales of loans, net		67			42			-			15			-
Earnings and proceeds on life insurance policies		207			202			277			297			279
Other		106			143			112			392			161
Total other income		1,641			1,560			1,600			1,997			1,774
OTHER EXPENSES
Salaries and  employee benefits		3,599			3,649			3,575			3,577			3,406
Occupancy, furniture and equipment, net		940			924			1,036			910			857
Foreclosed real estate		(10	)		23			104			(26	)		114
FDIC insurance assessment		84			71			83			87			86
Other		2,172			1,981			2,005			2,024			1,890
Total other expenses		6,785			6,648			6,803			6,572			6,353
INCOME BEFORE TAX		4,168			3,733			3,851			4,438			4,211
INCOME TAX EXPENSE		646			543			552			728			698
NET INCOME	$	3,522		$	3,190		$	3,299		$	3,710		$	3,513
Basic earnings per share	$	0.56		$	0.51		$	0.53		$	0.59		$	0.57
Diluted earnings per share	$	0.56		$	0.51		$	0.53		$	0.58		$	0.56
Book Value per share	$	20.90		$	20.16		$	19.43		$	18.49		$	18.35
Tangible Book Value per share		19.06			18.31			17.58			16.62			16.47
Return on average assets (annualized)		1.16	%		1.09	%		1.12	%		1.28	%		1.23	%
Return on average equity (annualized)		10.93	%		10.37	%		11.02	%		12.55	%		12.25	%
Return on average tangible equity (annualized)		12.01	%		11.44	%		12.23	%		13.94	%		13.64	%
Net interest spread (fte)		3.24	%		3.20	%		3.33	%		3.40	%		3.40	%
Net interest margin (fte)		3.49	%		3.43	%		3.54	%		3.57	%		3.54	%
Allowance for loan losses to total loans		0.93	%		0.97	%		0.99	%		1.01	%		1.04	%
Net charge-offs to average loans (annualized)		0.19	%		0.26	%		0.10	%		0.21	%		0.10	%
Nonperforming loans to total loans		0.15	%		0.13	%		0.13	%		0.14	%		0.16	%
Nonperforming assets to total assets		0.25	%		0.24	%		0.19	%		0.20	%		0.23	%
total NAL (net of specific credit mark)		1,354,667			1,097,440			1,140,442			1,114,599			1,270,967
past due 90+		-			-			-			-			-
total non performing loans		1,354,667			1,097,440			1,140,442			1,114,599			1,270,967
OREO		1,677,000			1,791,675			1,115,494			1,208,943			1,386,315
total Non performing assets		3,031,667			2,889,115			2,255,936			2,323,542			2,657,282
total loans		887,672,717			864,197,793			850,181,654			819,196,863			803,772,975
total assets		1,222,529,298			1,203,594,916			1,184,559,213			1,156,748,475			1,150,592,577
net charge off's, this quarter		420,911			553,355			203,024			420,863			197,931
average loans, this quarter		876,117,767			857,437,767			834,360,524			813,091,861			788,025,551
Loan loss reserve		8,228,078			8,348,989			8,452,344			8,280,368			8,326,231
		.			.

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