Australia Markets close in 2 hrs 51 mins

Norwood Financial Corp Announces Third Quarter Earnings

  • Oops!
    Something went wrong.
    Please try again later.
·15-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

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 30

Nine 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 30

Nine 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

%


Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting